Dividend-Paying Gold Mining Stocks to Assess Purchasing After a Coup D’état
By: Paul Dykewicz,
Dividend-paying gold mining stocks to assess purchasing after a coup d’état in Mali during August have slid enough in price to let investors buy the shares at a comparative discount.
Three dividend-paying gold mining stocks to assess purchasing after a bloodless coup d’état in Mali are worth weighing after mutinying soldiers forced out President Ibrahim Boubacar Keita, who initially won election in 2013 to fill a vacancy caused by a March 2012 coup that removed the previous president. Keita won re-election in 2018 to stay in office but he faced severe problems that include 49% of Malians living in “extreme poverty,” based on data from the United States Agency for International Development (USAID).
A group of armed military members caught Keita by surprise with their mutiny on Aug. 18, leading to his announcement on state television the next day that he was resigning, dissolving the general assembly and choosing to do so to avoid any bloodshed. His exodus from office marked the fourth coup d’état in Mali since 1960, when the country gained its independence from France.
Coup Leads to Restrictions by Other Nations on Mali’s Free Flow of Goods and Commerce
The coup sparked international condemnation from the United States, France, the United Nations (UN), the regional 15-nation Economic Community of West African States (ECOWAS), the African Union and others. Since the Aug. 18 mutiny in Mali, border crossings have been closed or had severely limited operations, impacting the free flow of goods and commerce outside the country, according to the U.S. State Department.
“We remain concerned for the safety of detained government officials and their families and call for their immediate release,” a U.S. State Department spokesman said. “We can confirm that former President Keita traveled to the United Arab Emirates for medical treatment.”
Keïta suffered a minor stroke in the days following the coup and left a hospital in Mali’s capital of Bamako on Thursday, Sept. 3, after a two-day stay to receive further treatment in the United Arab Emirates’ capital of Abu Dhabi. Representatives of the Economic Community of West African States and the UN held talks with the coup leaders to allow Keita to leave the country temporarily with his expected return to Mali within 15 days of his departure, according to the BBC.
Dividend-Paying Gold Mining Stocks to Assess Purchasing After a Coup D’état by Soldiers
The mutinying soldiers, reportedly led by Col. Malick Diaw, deputy head of the country’s Kati military camp, and another commander, Gen. Sadio Camara, also detained the nation’s Prime Minister Boubou Cissé. A spokesman for the soldiers who seized the country’s leaders called for “a civil political transition leading to credible general elections.”
Whoever ends up as the next president will face daunting problems that include a weak economy worsened by the COVID-19 pandemic, highway banditry, a jihadist insurgency, alleged corruption and public protests. Another tall challenge is that 65 percent of Mali’s total land area is desert or semi-desert, forcing most economic activity to stay confined to areas along the Niger River, according to the USAID, an independent U.S. government agency that is primarily responsible for administering civilian foreign aid and development assistance.
The Economic Community of West African States responded to the coup by swiftly closing borders with conflict-ravaged Mali for land and air transportation, as well as by banning trade and by insisting on stake holders in the country consulting together to appoint a transitional civilian president and a prime minister by Sept. 15. The ECOWAS heads of state who attended an ordinary meeting on Sept. 7 in Niamey, Republic of Niger, also reaffirmed their previous call for constitutional order to be restored quickly in Mali with the next civilian president and prime minister serving for 12 months, according to a communique.
3 Dividend-Paying Gold Mining Stocks to Assess Purchasing After a Coup D’état
Three of the world’s 12 largest gold mining companies conduct operations in Mali and they announced their businesses are continuing uninterrupted after the coup. The two biggest mining operators in Mali feature global heavyweights Toronto-based Barrick Gold Corporation (NYSE:GOLD) and AngloGold Ashanti Limited (NYSE:AU), of Johannesburg, South Africa.
Barrick Gold and AngloGold Ashanti announced on Aug. 31 that they accepted an offer of $22-27 million in cash to sell their 80% controlling interest in Mali’s Morila mine to publicly traded Mali Lithium Limited (ASX:MLL), of Perth, Australia. With the Morila mine becoming a tailings retreatment operation since 2014 and winding down operations for final gold production in 2021, the transaction was not caused by the coup, according to Barrick Gold.
The deal to sell the Morila mine, announced on Aug. 31, provides the equal partnership between Barrick Gold and AngloGold Ashanti with an exit strategy that will remove the political risk inherent in operating a business in a country that is undergoing civil upheaval. The final sale price will depend on adjustments at the time the deal is closed, possibly as soon as October, as well as meeting conditions that include approval of the transaction by Mali’s government, which owns the other 20% of the Morila gold mine.
In contrast, Vancouver, Canada-based B2Gold Corp. (NYSE:BTG) reported on the day of President Keita’s resignation that it will continue to operate its Fekola mine in Mali unimpeded as it monitors the nation’s “evolving political situation.” B2Gold’s Fekola mine is the second-biggest gold producer in Mali behind Barrick Gold’s Loulo-Gounkoto mine. Barrick Gold, the largest gold miner in Mali, confirmed its Loulo-Gounkoto mine operation — consisting of 9% of the company’s expected production this year — remains unaffected by the coup.
Dividend-Paying Gold Mining Stocks to Assess Purchasing After a Coup D’état in Africa
Mali is Africa’s fourth-biggest gold miner and its output rose to 71.1 tons in 2019, with the government earning revenue of 403.6 billion CFA ($734,311,051) from gold mining companies. Mali uses the West African CFA franc as its currency, as do seven other independent states in West Africa: Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Niger, Senegal and Togo.
Other gold miners that operate in Mali include Perth, Australia-based Resolute Mining, London’s Hummingbird Resources and Tortola, British Virgin Islands-based Cora Gold, with each reporting that their operations and staff have been unaffected by the coup d’état. However, the share prices of their stocks that are listed on the London Stock Exchange fell on Aug. 19 after the military takeover.
On that day, the larger companies’ share prices proved more resilient than the smaller ones, as Barrick Gold dipped 2.7%, AngloGold Ashanti slipped 4%, B2Gold fell 8.8%, Resolute Mining dove 11.7%, Hummingbird dropped 9.4% and Cora Gold plunged 9.3%.
Profits Eyed With 3 Dividend-Paying, Gold Mining Stocks to Assess Purchasing After Coup
The gold mining companies are not directly comparable due to their varying sizes and divergent paths to extract value from their current mining assets in Mali. The financial stakes are high as silver and gold, respectively, have soared 50.59% and 28,11% this year through Sept. 10 to beat all of the U.S. stock market indexes.
The precious metals have outperformed the NASDAQ Composite, jumping 21.70%; the S&P 500, rising 3.17%; and the Dow Jones Industrial Average, dipping 3.52%, also through Sept. 10. The strong rise of silver and gold followed $6-trillion-plus in COVID-19 aid from federal stimulus and Federal Reserve actions.
Big Dividend-Paying Gold Mining Stocks to Assess Purchasing After a Coup D’état
Barrick Gold and AngloGold Ashanti, the world’s second- and third-largest gold mining companies, announced on Aug. 31 that the new ownership of the Morila mine would bring access to additional resources and a different approach about how the infrastructure can be used to prolong the life of its mining operations. The sale would allow Barrick Gold to focus on its strategy of discovering, developing, owning and operating Tier One assets, its officials said.
The Morila mine first produced gold in October 2000 and laid the foundation for Randgold Resources, the property’s previous owner, to develop into one of the world’s biggest precious metals mining companies. The large mine, once known as “Morila the Gorilla,” produced 6.9 million ounces of gold and paid more than $2.5 billion to its stakeholders through taxes and dividends.
Billionaire Warren Buffett announced in mid-August that his investment company Berkshire Hathaway (NYSE:BRK.B) had purchased half a billion dollars of Barrick Gold stock. Buffett traditionally has avoided investing in gold, but the current investing climate is gaining the attention of people who previously looked elsewhere for profitable opportunities.
Chart courtesy of www.StockCharts.com
Kramer Eyes Dividend-Paying Gold Mining Stocks to Assess Purchasing After a Coup D’état
“This is a classic transaction that tells us a lot about where we are in the commodity cycle, said Hilary Kramer, host of a national radio program called “Millionaire Maker” and head of the GameChangers and Value Authority advisory services.
Senior mining companies such as Barrick Gold dig for profits, Kramer said. Barrick Gold is experienced at pursuing big projects efficiently and, when needed, will put transformational initiatives together by assembling the right property package and allocating production to squeeze the best overall return out of every pound of ore, she added.
That approach can mean rolling the dice and selling rights to the ore in the ground to another company, such as a junior mining operator, Kramer said.
GOLD Is 1 of 3 Dividend-Paying Gold Mining Stocks to Assess Purchasing After a Coup
Barrick Gold Corp. recently produced a 38% share price gain and a 213% profit in call options in less than two months as a recommendation in the Fast Money Alert investment advisory service. Barrick Gold turned into a top performer in the trading service co-led by Mark Skousen, PhD., and stock picker Jim Woods, who also heads the Successful Investing, Intelligence Report and Bullseye Stock Trader advisory services.
Paul Dykewicz interviews Jim Woods before the COVID-19 crisis.
Skousen, a Presidential fellow at Chapman University who also leads the Forecasts & Strategies investment newsletter, has been advocating the purchase of gold mining stocks since 2019. He cited the large deficit spending of countries around the world, easy-money policies to keep interest rates low and government stimulus programs as catalysts for gold and silver prices.
Barrick Gold has more than doubled in price in the past year to beat the SPDR Gold Shares fund (NYSE:GLD), among others, said Skousen, who also leads the Five Star Trader, Home Run Trader and TNT Trader advisory services. The company has $3.3 billion in cash as a financial cushion to back its $5.5 billion in long-term debt, added Skousen, whose accomplishments include receiving the inaugural Triple Crown in Economics in 2018 and ranking as one of the world’s 20 most influential living economists.
The company further offers a dividend yield of 1.06%. Barrick Gold’s consensus forward price-to-earnings ratio is 25.58.
Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz.
In addition, Barrick Gold last year produced 5.5 million ounces of gold, achieved profit margins above 40% and earned $4 billion on revenues of $9.7 billion. Wall Street has noticed, with TD Securities hiking its rating of Barrick Gold to a “buy” on April 1, when the brokerage set a price target of $28. Another upgrade occurred on March 26 when Deutsche Bank initiated a “buy” on Barrick Gold and gave the stock a price target of $25. GOLD already has topped both price targets in only months.
AngloGold: Dividend-Paying Gold Mining Stock to Assess Purchasing After a Coup D’état
AngloGold Ashanti, a recommendation in Skousen’s Five Star Trader advisory service, has more than one dozen properties in Africa, North and South America and Australia. The company sold its last gold mine in South Africa to Harmony Gold (NYSE:HMY) earlier this year and now has no operations in South Africa.
South Africa has been politically unstable, along with Mali. In 1970, South Africa was the top gold producer in the world by a wide margin. Now, South Africa is the world’s eighth-biggest producer of gold. Since AngloGold Ashanti combined with Goldfields in 2004, it has spread its gold-producing properties well beyond South Africa.
With rising gold and silver prices, as well as improved ways to reduce costs, AngloGold Ashanti’s profit margins now exceed 10%. Its revenues rose 26% in the past year to reach $3.9 billion, while its earnings skyrocketed 287% to $619 million. The company has $1.3 billion in cash, with only $2.9 billion in long-term debt.
Chart courtesy of www.StockCharts.com
Value-Priced, Dividend-Paying Gold Mining Stock to Assess Purchasing After a Coup D’état
AngloGold Ashanti’s headquarters in South Africa cause its shares to sell “more cheaply” than its rivals Barrick Gold and Newmont Gold (NYSE:NEM), Skousen said. The stock now sells for roughly 12 times earnings for 2020 and has a price/earnings-to-growth (PEG) ratio of 0.54. Anything less than 1 is considered excellent, added Skousen, who also heads the TNT Trader and Home Run Trader advisory services.
The company offers a modest dividend yield of 0.32%. AngloGold Ashanti’s consensus forward price-to-earnings ratio is 10.30, less than half Barrick Gold’s ratio, offering investors a better value.
AngloGold Ashanti’s mines have weathered the COVID-19 crisis and are increasing profits and cash flow. On Sept. 1, Christine Ramon, who had been the company’s chief financial officer, succeeded Kelvin Dushnisky as the chief executive officer.
B2Gold Joins Dividend-Paying Gold Mining Stocks to Assess for Purchase After Coup D’état
Interest in gold is fueled by the most aggressive monetary and fiscal policies since 2008, Skousen said. In his Forecasts & Strategies investment newsletter, he is recommending B2Gold Corp. a mid-tier Canadian gold mining company.
The stock briefly topped $7 a share before it pulled back after the political coup in Mali. Despite its share price slipping recently, B2Gold officials said the company’s operations at its Fekola mine are continuing normally and the Malian government’s 20% stake in the operation provides a financial interest in preserving operations at the mine and the safety of employees.
B2Gold offers a dividend yield of 2.46%. Its consensus forward price-to-earnings ratio is 13.53, nearly half of Barrick Gold’s ratio and just above the one of AngloGold Ashanti.
Chart courtesy of www.StockCharts.com
3 Volatile, Dividend-Paying Gold Mining Stocks to Assess Purchasing After a Coup D’état
Investors can profit from rising precious metals prices by purchasing shares in dividend-paying gold mining companies, said Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. But beware that the share prices of mining companies are “far more volatile” than the prices of gold and silver themselves, he added.
Carlson, who also leads the Retirement Watch advisory service, said investors should remember that mining company shares are affected by reasons other than the price of precious metals. Key variables include a company’s debt level, management skill, labor issues and COVID-19 risks, he added.
Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz in an interview before social distancing became the norm after the outbreak of COVID-19.
Dividend-Paying Gold Mining Stocks to Assess Purchasing After Mali’s Coup D’état
Despite gold prices and mining stocks dipping recently, the situation should reverse soon, said Rich Checkan, president and chief operating officer of Asset Strategies International, a full-service tangible asset dealer in Rockville, Maryland.
Rich Checkan, president, Asset Strategies International
COVID-19 pandemic’s huge human toll includes 28,176,532 cases and 909,679 deaths globally, along with 6,397,245 cases and 191,791 deaths in the United States, with Mali reporting 2,909 cases and 128 deaths, as of Sept. 11. America has amassed the most cases and deaths by far of any country in the world, including China, where COVID-19 originated.
Dividend-paying gold mining stocks to assess purchasing after the coup d’état in Mali have the potential to produce superior returns compared to U.S. market indexes into next year and possibly beyond. But political instability in Mali adds increased risk to the gold mining companies operating in that troubled country.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.