Gold Fields a Buy
Gold is heating up as the Ukraine-Russia situation heats up, and some of the blue-chip senior and mid-tier gold miners are showing conspicuous signs of relative strength. Since mining stocks tend to outperform gold in a precious metals bull market, it’s time to take a closer look at the leading miners.
South Africa-based Gold Fields Ltd. (GFI) is one of the world’s largest gold miners with total attributable annual gold-equivalent production of over 2 million ounces, attributable gold-equivalent mineral reserves of 52 million ounces and mineral resources of 116 million ounces. The stock typically outperforms the physical metal when gold is in an established intermediate-term rising trend.
Gold Fields just reported that its net income jumped 9% from a year ago in fiscal 2021, to $789 million, on revenue of $1.8 billion (up 8%) in spite of higher production costs. Attributable gold equivalent production for 2021 was 5% higher from a year ago and above guidance, while all-in sustaining costs were $1,063 an ounce—well below gold’s current price of around $1,900 an ounce.
Management said it expects production to grow by an additional 20 to 30% over the next three to four years and expects growth to be “more or less linear” in the years ahead, with 2022 production forecast to increase around 7% from last year.
The stock is admittedly a bit stretched after its earnings-related rally today, but if you’re game you can nibble here or wait for a pullback. (I’ll have more to say about GFI in next week’s report.) I suggest using an initial stop-loss at around 10.90. BUY A HALF