The materials sector (+7.64%), where metals and mining stocks belong, advanced the most in the last 30 days. Because of the strong upward momentum, the sector is now the second-best performer (+5.81%) year to date after technology (+18.63%).
As for individual stocks, B2Gold Corp. (TSX:BTO) and K92 Mining (TSX:KNT) have gained more than 9% in the last 10 days. Notably, Osisko Mining (TSX:OSK) is on a tear with its incredible 30.3% surge during the same period. These three gold stocks are strong buys as the materials sector continues its rally.
Low-cost senior gold producer
B2Gold reported record quarterly gold production of 367,870 ounces in Q4 2022. This $5.6 billion gold producer also achieved its annual guidance range of 990,000 and 1,050,000 ounces in 2022. The actual result of 1,027,874 ounces represents the mid-point of the said guidance.
It was the seventh consecutive year that B2Gold met or exceeded its annual production guidance. Fekola (Mali), Masbate (Philippines), and Otjikoto (Namibia) are the operating mines that contribute to total revenues, and a mine in Colombia (Gramalote) is under development.
For 2023, management forecasts the total gold production of the low-cost international senior gold producer to be between 1,000,000 and 1,080,000 ounces. At $5.52 per share (+9.78% year to date), B2Gold pays an attractive 4.27% dividend.
Tier 1 gold asset
K92 Mining owns the Kainantu Gold Mine in the Eastern Highlands province of Papua New Guinea. The high-grade, low-cost underground mine of this $1.9 billion gold producer is a rapidly expanding Tier 1 gold asset. Because the mine has significant resource growth, management is also focusing on expanding operations in the 830-kilometre land parcel.
In 2022, total production increased by 18% to 122,806 ounces AuEq (gold equivalent) versus 2021, a new annual production record for K92. The breakdown is 107,546 ounces of gold, 126,043 ounces of silver, and 6,247,950 pounds of copper. For 2023, management anticipates total production from 120,000 to 140,000 ounces AuEq, which already includes a contingency for supply chain-related delays.
The mining lease extension and Board-approved Stage 3 and 4 expansions aim to transform Kainantu into a world-class mine. As of this writing, the gold stock trades at $8.11 per share (+5.74% year to date). Market analysts recommend a buy rating, and based on their 12-month average price of $11.21, the return potential is 38.2%.
The trading volume of Osisko has more than doubled in the last three trading days. At $3.91 per share, the gold stock beats the broader market year to date, +11.71% versus +0.60%, respectively. OSK stock carries a buy rating from market analysts whose high price target in one year is $6.50 (+66.2%).
This $1.5 mineral exploration company operates in Canada and acquires, explores, and develops gold resource properties there. The core mineral properties are the Windfall Project, Urban-Barry, and Quévillon Osborne-Bell Project. In 2022, the net loss improved considerably to $5.8 million compared to a $22.9 million net loss in 2021.
The rally in the materials sector, particularly gold stocks, is worth watching. B2Gold and K92 Mining could breakout if the upward momentum sustains, while Osisko Mining could rise higher and deliver outsized gains.