Investors Eye Gold Stocks as Price Continues to Move Higher

Investors Eye Gold Stocks as Price Continues to Move Higher

PR Newswire

NEW YORK, June 10, 2020

FN Media Group Presents Microsmallcap.com Market Commentary

NEW YORK, June 10, 2020 /PRNewswire/ -- Gold prices continue to climb as investors flock to safe-haven assets amid financial uncertainty around the globe. The renewed excitement in gold investments is boding well for gold miners and exploration companies alike. From gold producers Harmony Gold Mining Company Limited (NYSE:HMY), SSR Mining Inc. (NASDAQ:SSRM) (TSX:SSRM) and New Gold Inc. (NYSE:NGD) (TSX:NGD) to gold royalty company Sandstorm Gold Ltd. (NYSE:SAND) (TSX:SSL) to gold exploration company Genesis Metals Corp. (TSX-V:GIS) (OTCQB:GGISF),  there are various ways to gain exposure to the gold sector.

Due to the increased interest in gold, Canadian gold ETFs pulled in C$382-million in April, which represents the biggest monthly gain in four years. Now, Canada's gold ETF market is worth nearly C$3 billion, double from a year ago. At the same time, gold ETFs across the globe have attracted $14.5 billion in investments in under five months, topping the $11.7 billion that flowed into the funds in 2009.

This influx of investment into the sector helped junior gold exploration company Genesis Metals Corp. (GIS.V) (GGISF.QB) to raise C$1 million in financing earlier this year and fund ongoing drilling at its 290 square kilometers Chevrier Project in the Abitibi Greenstone Belt, one of the world's most gold-endowed regions.

Gold Mining Activity Resumes Following Pandemic-Related Shutdowns

After pandemic-related shutdowns in March and April, Genesis Metals Corp. (GIS.V) (GGISF.QB) resumed drilling at Chevrier in May and has now completed the Phase I drilling program at Chevrier with a total of 2,502 metres in 9 holes drilled.

The company plans to announce its second phase drilling program once all assays are received and evaluated. Genesis Metals Corp. also expects to begin a surface exploration program this month to assess target areas identified in 2019 property-wide glacial till survey, all of which is fully funded.

Gold royalty company Sandstorm Gold Ltd. (NYSE:SAND) also recently announced infill drill results from the Hod Maden project in Turkey, which were reported by its 70% partner Lidya Madencilik San. ve Tic. A.S. A total of 2,864 metres in 24 drill holes have been completed in 2020 at Hod Maden and continued infill, geotechnical, hydrological and exploration drilling is expected to resume once travel and work restrictions are lifted in Turkey.

M&A activity has also continued in the gold industry, with SSR Mining Inc. (NASDAQ:SSRM) (TSX:SSRM) announcing a no-premium, all-stock merger of equals with Denver-based Alacer Gold Corp. on May 11. The post-merger company will save on expenses and control a diversified portfolio of high quality, long-life operating mines that will help to mitigate risk as output from each mine will be proportionately less significant.

Meanwhile, Harmony Gold Mining Company Limited (NYSE:HMY) is expanding its gold portfolio through the purchase of AngloGold Ashanti's last remaining assets in South Africa. Last month, the company announced its plan to raise up to $US200 million via a share issue to fund part of the purchase, which includes the world's deepest gold mine, Mponeng.

New Gold Inc. (NYSE:NGD) (TSX:NGD) also recently closed a strategic partnership deal with Ontario Teachers' Pension Plan which resulted in upfront cash proceeds of $300 million.  New Gold Inc. now has total available liquidity of $590 million, which includes approximately $390 million in cash and cash equivalents.  Under the terms of the partnership, Ontario Teachers' will acquire a 46.0% free cash flow interest in the New Afton mine with an option to convert the interest into a 46.0% joint venture interest in four years, or have their interest remain as a free cash flow interest at a reduced rate of 42.5%.

Gold Investments Continue to Grow

With monetary stimulus expected to continue and a potential global recession on the horizon, gold continues to be seen as an investment hedge. Although gold prices continue to face volatility, the long-term forecast for the yellow metal remains bullish.

Investors continue to put cash into gold ETFs, with the 2020 inflows already exceeding any full year on record. The biggest contributor is the SPDR Gold Share ETF, which experienced its best month since 2009 in April and brought in another $1.4 billion in May. Meanwhile, BlackRock's iShares Gold Trust is close to hitting its yearly record with $3.7 billion in inflows so far in 2020.

Gold producers like Harmony Gold Mining Company Limited, SSR Mining Inc. and New Gold Inc. and gold exploration companies like Genesis Metals Corp. (GIS.V) (GGISF.QB) are also experiencing increased investor interest.

For more information about Genesis Metals Corp. (TSXV:GIS) (OTCQB:GGISF)  click here.

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