Asset Acquisitions Continue at Gold Companies

Source: Adrian Day   02/01/2022

Adrian Day looks at companies that have made recent acquisitions and whether you should add them to your portfolio.

Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) continues its recent string of smaller acquisitions with a $175 million stream on Curipamba polymetallic project in Ecuador. A feasibility is expected in the fourth quarter. The stream could generate a rate of return in the high single digits, with growth upside, though it is a small stream in a risky jurisdiction. Buy.

Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) saw its soon-to-be acquired Kirkland report record production, in its last quarter as an independent company, with all of its assets performing well. The merger with Agnico is expected to close by mid-February at the latest after receipt of final government approvals. Stock weakness around a major company merger is not unusual. Strong buy.

Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) participated in the acquisition of the Tintic project by 75%-owned Osisko Development, demonstrating the symbiotic relationship between the two. OR will pay between $20 million and $40 million for a stream on the Utah project, which includes a small, high-grade private mine. The stream shows a 6% IRR but the companies expect much upside in exploration on the property. Strong buy.

BEST BUYS: Our general advice last week was to wait for lower prices, and many stocks closed the week at significantly lower prices than they did the prior week, particularly the gold stocks. Most stocks on our list would be “buys” now, but best, in addition to above, are: Gladstone Investment Corp. (GAIN: NASDAQ); Vista Gold Corp. (VGZ:NYSE.MKT; VGZ:TSX); Franco-Nevada Corp. (FNV:TSX; FNV:NYSE); Lara Exploration Ltd. (LRA:TSX.V); Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE); Barrick Gold Corp. (ABX:TSX; GOLD:NYSE); and Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ).

There are some great prices among the gold stocks right now. But we could see lower prices in the week ahead, particularly if gold follows through on the downside, so there is no urgency to buy add-on positions. However, Pan American is at a particularly attractive price (as are Agnico and Osisko above), while Gladstone (recovering from a sell-off) and Vista (awaiting news) could be more time sensitive.

Originally published on Jan. 29, 2022.

Adrian Day, London-born and a graduate of the London School of Economics, is editor of Adrian Day’s Global Analyst. His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

Disclosures:
1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Wheaton Precious Metals, Osisko Gold Royalties, Agnico Eagle, Gladstone Investment, Franco-Nevada, Pan American Silver, Fortuna Silver, Barrick Gold, Vista Gold, and Lara Exploration. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day’s newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals, Osisko Gold Royalties, Agnico Eagle, Franco-Nevada, Pan American Silver, Fortuna Silver, Barrick Gold, Vista Gold, and Lara Exploration, companies mentioned in this article.

Adrian Day’s Disclosures: Adrian Day’s Global Analyst is distributed by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. Publisher: Adrian Day. Owner: Investment Consultants International Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. ©2021. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.