PAAS - Gold Co. Beats Estimates as Panama Goes to the Polls | Benzinga
Source: Adrian Day 05/08/2024
Global Analyst Adrian Day looks at quarterly results from a couple of gold majors, as well as mostly positive developments at some others.
Franco-Nevada Corp. (NYSE: FNV) reported first-quarter results somewhat above expectations as it looks ahead to production growth of 2.3% this year, driven by new mines on which it holds streams, Greenstone and Tocantinzinho, both ramping up in the second half. Franco's guidance now excludes Cobre Panama, which it has written off, though opportunities for recovery, either from a mine restart or from an arbitration award, are real. Franco has a rock-solid balance sheet, with $2.3 billion of available capital.
It has an active pipeline of new deals, with a focus on gold, though CEO Paul Brink said they were looking at other resources, including lithium. Most opportunities it is reviewing now are streams on byproducts of base metals producers, with the company seeing somewhat larger opportunities than recently, with opportunities above $300,000.
Hope for Cobre Panama as Country Votes
Elections for a new president in Panama are taking place today. Polls have already closed, and the results are expected late tonight. All of the candidates except one are, to differing extents, pro-business. The front runner, José Mulino, who was the running mate of the popular ex-President Ricard Martinelli — he dropped out after a court upheld his conviction for money laundering — is known to support new negotiations with First Quantum to reopen the mine.
However, as Brink noted, the candidates have been mostly circumspect in commenting on what their approach will be, adding that once a new government is in place, he is sure dialog will take place. In addition to the loss of GDP, tax revenue, and jobs from the mine closure and the threat of an international arbitration award, there are also heavy costs to permanently closing the mine, estimated at between $3 billion and $6 billion. Some politicians have suggested that mine owner First Quantum should pay those costs, but that is highly unlikely. All in all, the country stands to lose huge amounts of money if it shuts down the mine permanently, in addition to the credit downgrade and loss of credibility. With top management, a solid balance sheet, and a well-diversified portfolio by asset, operator, geography, and commodity, Franco remains a core holding.
Given the recent price recovery, we are holding, except for new investors who can buy.
Barrick Can't Get No Respect
Barrick Gold Corp. (NYSE: GOLD) reported first-quarter earnings somewhat better than expected, though of course the company had already pre-released lower production and higher cost guidance. It was a weak quarter, but for Barrick, production usually increases during the year, and the company re-iterated its 2024 guidance, looking for increased production from Pueblo Viejo on the back of the plant expansion as well as the restart of Porgera.
Gold cash costs at $1,051 were up from less than $1,000 in the prior quarter but in line with implied guidance as per-ounce costs increased on lower production. Other costs are under control, and G&A was down.
Talks With Mali and Company Says "No" to Anglo Bid
CEO Mark Bristow rejected reports that the Mali government is about to nationalize the Loulo-Gounkoto mine, saying that ...