With a potential interest rate cut from the Federal Reserve, analysts believe gold prices will head significantly higher this year. In fact, as noted by Seeking Alpha, “Central banks are ramping up their gold purchases as a hedge against geopolitical and economic uncertainties. Lower interest rates diminish the opportunity cost of holding non-yielding assets like gold. Additionally, persistently high inflation continues to erode the purchasing power of paper currencies, further bolstering gold's appeal as a safe haven.” All of which will have a positive impact on gold stocks, including Calibre Mining Corp. (TSX: CXB) (OTCQX: CXBMF), Barrick Gold (NYSE: GOLD) (TSX: ABX), Royal Gold Inc. (NASDAQ: RGLD), Franco Nevada (NYSE: FNV) (TSX: FNV), and Newmont Corp. (NYSE: NEM) (TSX: NGT).
Analysts at Citi have a $3,000 price target on gold over the next 18 months, especially with Middle East tension and the Federal Reserve. Bank of America has said gold could also test $3,000 in the next 12 to 18 months. Goldman Sachs says it could rally to $2,700 by 2025.
Look at Calibre Mining Corp. (TSX: CXB) (OTCQX: CXBMF), For Example
Calibre Mining Corp. just announced its first ore delivery to the Libertad Mill from its 100% owned Volcan Deposit located 5 km south of the mill. Volcan is anticipated to be a meaningful contributor to the Company’s production profile during the second half of 2024.
Darren Hall, President and Chief Executive Officer of Calibre, stated: “I am pleased with the rapid progress at the Volcan open pit considering first ore delivery to the mill during July within a month of receiving environmental permits. Volcan will contribute to higher production in H2 given the initial open pit resource averages 2.0 g/t gold, and consequently we remain confident in delivering into our annual production guidance of 275,000 – 300,000 ounces. The addition of Volcan demonstrates the effectiveness of our hub and spoke operating strategy, with surplus capacity at the Libertad mill there remains strong potential for low cost, high return on investment growth.”
“Additionally, with engineering of the fully funded Valentine Gold Mine at 98%, and construction at 77% we are confident in delivering first gold during Q2 2025 establishing Calibre as a quality mid-tier gold producer.”
Other related developments from around the markets include:
Barrick Gold reported preliminary Q2 production of 948 thousand ounces of gold and 43 thousand tonnes of copper, as well as preliminary Q2 sales of 956 thousand ounces of gold and 42 thousand tonnes of copper. As previously guided, Barrick’s gold and copper production in 2024 is expected to progressively increase each quarter through the year with a higher weighting in the second half. The Company remains on track to achieve our full year gold and copper guidance.The average market price for gold in Q2 was $2,338 per ounce while the average market price for copper in Q2 was $4.42 per pound.
Royal Gold reported net income of $81.2 million, or $1.23 per share, for the quarter ended June 30, 2024, on revenue of $174.1 million and operating cash flow of $113.5 million. Adjusted net income was $82.6 million, or $1.25 per share. “The second quarter of 2024 was an excellent quarter for Royal Gold, with near-record revenue, and increased operating cash flow and earnings. After minor adjustments, earnings for the quarter were a quarterly record,” commented Bill Heissenbuttel, President and CEO of Royal Gold. “Our portfolio performed well and benefited from the record high quarterly gold price, and we took advantage of the strong results to continue to pay down our debt. Including a further repayment in July, we have repaid $225 million of debt so far in 2024 and have now returned to a net cash position with total available liquidity of approximately $1 billion."
Franco Nevada announced that its wholly-owned subsidiary, Franco-Nevada (Barbados) Corporation has acquired a gold stream from SolGold plc with reference to production from the Cascabel project located in Ecuador. FNB has partnered with Osisko Gold Royalties Ltd.’s subsidiary, Osisko Bermuda Limited, to provide a syndicated financing package on a 70%/30% basis. FNB will provide a total of $525 million and Osisko a total of $225 million of funding for a total $750 million. FNB will provide $70 million and Osisko $30 million for a total of $100 million in pre-construction funding available as three equal sized staged payments. The first tranche will be funded at closing with two further tranches, subject to development milestones.
Newmont announced second quarter 2024 results and declared a second quarter dividend of $0.25 per share. "Newmont delivered a solid second quarter, producing 2.1 million gold equivalent ounces and generating $594 million in free cash flow," said Tom Palmer, Newmont's President and Chief Executive Officer. "We continued to advance our divestiture program and, to date, have announced $527 million in proceeds this year. With this momentum, we completed $250 million in share repurchases and repaid $250 million in debt. As we head into the second half of the year, we remain confident in our ability to continue executing on shareholder returns, meet our full year guidance and deliver on our commitments."
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