Good afternoon
so Yellen keeps on being our friend! sh´ll keep on printing...like Draghi, like the BoJ, like China....everybody is printing - still, the economy is still stuttering and at best, ticking along!
Obviously, her action - or better: her wording! - had big implications for bonds, the US$, equities and metals.Todays labor market numbers, and the Leading Index, came out as expected and would do nothing to change the mixed expectations most investors have about the US economy. In any case, it was great to watch an exciting FC Bayern match, and at the same time, watch the gold price going through the roof!
But I think yesterday´s/today´s moves should not make us too bullish, as the moves we have seen, have been largely in just currency-based...in A$ terms, gold has done nothing, copper nothing - just oil and especially zinc have performed well in A$.
Be prepared for some volatility tomorrow - Index Changes for the gold stocks, and the various S&P ASX Indices happening tomorrow.
The run of oil lately has certainly been very impressive. There are some indications, that the Saudi´s have had enough, and we should not forget, that they are also still working on an IPO for the world´s largest company, Aramco...WTI is just about hitting the 40$-mark today for the first time since the beginning of the year!
Regis, Perseus, BHP all had new, substantial shareholder notices today - it´s obvious, that insto´s have some more appetite for resources stocks!
Tiger Resources - guidance for this year is a little bit on the disappointing side - 26-28.000t of copper at AISC of about 1.60 US$/lb. If you have 190 mill US$ in debt, the resulting mine profit ( before headoffice etc ) of about 35 mill US$ is not a lot to service that debt - and that´s in a country, where you always have to expect some kind of disruption. They are ultra-leveraged to copper - but do we really want to be that leveraged to copper from current levels? I don´t....
Northern Star - announecd some excellent drilling results from Kanowna Belle ( best intercept of 24m with 30g ), and also increased production of 125.000 oz p.a. from 2017. But to put this into context: Kanowna Belle in the moment has 168.000 oz in reserves, and the company has already guided for an increase of production in total to 700.000oz from 2018, vs 570.000oz p.a. currently. With total reserves today of 1.5 mill oz, these calls are very brave indeed, and the company has to deliver outstanding exploration success and positive announcements like today, just to meet very high guidance and expectations. In my opinion, the stock is clearly overvalued.
Breaker Resources - continue with interesting exploration results, which keep the potential open for a substantial resource, but stopped short of delivering a real break through, in my opinion. The story continues to find a lot of interest, and the stock is holding up very well in light of some profit taking from substantial shareholders, who have been supporting the company through thick and thin since the IPO in 2012. The company made a rights issue in October at 4ct, and is now trading in the thirties - incredible, and well deserved. Good to see, that some investors are still long term investors these days!
Have a nice evening
WS
Wilhelm Schröder
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