Good afternoon
yesterday saw the biggest sell-off in metals in 7 month - today we are seeing a strong comeback by between 1.2% ( copper ) and more than 3% ( nickel ). Oil is stronger on lowered production forecast for US-production in 2017, and gold is consolidating. Just about every analyst is calling metal-and gold prices overdone - Goldman´s being the most bearish. In light of that, metal performance today is quite remarkable.
New Gold today announced a hedge of 270.000 oz ...let´s hope, that not too many companies will do that....
Equity prices are also back racing higher again...Draghi, I can hear you coming?
The A$ has staged a remarkable recovery over the last few weeks - from 68.50 to tzhe US, we are now heading towards 75 - a move, which for me is probably overdone. Against the Euro, the Aussie has moved from 1.62 just 4 weeks ago, to 1.465 as at today - again - feels overdone to me! Time to take profits or to put on some currency-hedging!
The A$-development is not to be underestimated: As you know, Australian resources stocks have benefitted massively from what I call a "normalisation" of the currency from an artificially strong currency over the last year or two - so any further strength of our currency could be quite negative for share prices! Some of this can already be seen in EVN or NCM - both are down quite heavily ( and probably too heavily ) from recent highs.
Talisman - this interesting story has been very quiet lately, as Sandfire ( which owns 70% of the Monty copper asset now) and Talisman ( which is the small borther, owning 30% ) are fighting it out. SFR does own the operating mine Degrussa nearby, and has massive cash-flow. SFR are very keen to expand the mine life of Degrussa - and to replace some of their 100% owned ore with higher grade Monty-ore.At the end of this Quarter, TLM will have around 22-23 Mill A$ in cash - market cap after today´s placement of 16 mill$ at 45ct is 86 Mill A$.
SFR clearly would dearly want 100% of Monty....but TLM have as largest shareholder Kerry Harmanis, who used to run Jubilee Mines. He will not give this away cheaply...SFR will explore full steam ahead this year...currently, the JV is spending about 8-9 Mill$/Quarter on exploration! The days of TLM got to be counted. You will not get rich from it, but I think you can make 30% from it or more, if they continue their exploration success The placement was closed before we were awake today - quite remarkable, given the small discount and relatively large size!
Have a nice evening
WS
Wilhelm Schröder
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