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."
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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.
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