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Quarterly season: focus on the forecasts of the mining companies

It’s getting serious: The quarterly season has started in the mining sector and, as CIBC analysts warn, the effects of the COVID19 pandemic could become apparent.

As the experts went on to say, often lower production figures due to mine closures may be offset by higher precious metal prices. In their view, investors should therefore pay less attention to the performance of the second quarter in the near future and instead focus on the forecasts of the mining companies.

The analysts believe that the market will tend to focus on the production and cost outlook for the second half of the year as most mines are back in operation. In addition, the outlook on future free cash flow and the company’s spending plans in the currently very positive gold price environment are of interest, it said.

According to CIBC, gold prices averaged $ 1,714 an ounce in the second quarter, an increase of 8.4% over the first quarter. The bank is also still positive about the gold price, which currently averages 2021, a level that has not been reached since 2011.

Beyond the coming year are some of CIBC’s favorites Agnico Eagle (WKN 860325), Alamos gold (WKN A14WBB), B2Gold (WKN A0M889) and Barrick gold (WKN 870450).

Teck Resources (WKN 858265), one of the largest copper producers in the world, recently released second quarter figures from the front row of raw material companies. The company reported an adjusted net profit of $ 44 million, or $ 0.03 per share, at the top end of analysts’ forecasts. During the same period in 2019, Teck had reported an adjusted net loss of $ 58 million, or $ 0.04 per share.

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