Good afternoon
Minutes from the FED-meeting making clear, that the FED does have some growth concerns - good for bonds, certainly, but not so good for equities and the base metals - especially the latter are weak today. Gold is profiting from it, as well as from comments by the ECB, that they could do more, if needed - especially in A$ terms it´s looking better, trading at 1652 A$/oz, as I am finishing this report - highest price since the 18th of March.
Arrium - the largest Australian iron ore producer outside of Western Australia, is going into voluntary administration! The company has a sizeable mining consumables business - but total debt of 2.1 bill A$ will only grow through the process, and 30 banks ( largest part by Australian banks ) will probably have to write off more than 1 bill A$!
Northern Star - excellent update on their 51%-owned Kundana Mine! The mine produced 64.000 oz in the Quarter, more than budgeted - and especially, exploration results have been outstanding, possible joining up the three orebodies the company is currently mining underground, at depth. This has always been NST´s best asset, in my opinion, and it seems to be getting better! It should be a high probability, that Kundana will produce more than the 100.000 oz ( 51% share ) in 2018 and going forward, which is the current budget. a few weeks ago, the company had already announced very good results from one of their other mines, Kanowna Bell, which is also making budget for 2018 a reasonable one. I am always referring to financial year 2018, as this is teh year NST have promised to produce 700.000 oz -which I find a bit doubtful in light of their current reserve base of only 1.5 mill ounces. But at least 2 of their 6 mines now look capable of delivering into that plan ( mind you - that´s say 230.000 oz the planned 700.00 ). If they sell Plutonic, which they have put on the block ( and I am sure they have done that for a reason!! ), the target looks an impossible one to me. Plutonic has 1.5 years reserves in the moment....The stock has done better than I had thought it would...still, I am not a big fan even though they have delivered the above, great news! More of this stuff would be needed to justify the current share price!!
Panoramic - not the full Quarterly today, but a quick update. Record nickel production for Savannah in the last Quarter - still loosing money due to the terrible nickel price, and the ( recently ) strong A$. Some one-off´s in there - still, price adjustments due to the falling nickel price have cost them 2 Mill$ alone. Cash + receivables now stand at 27 mill A$, and even if I include higher closure costs than expected, the company should still enbd up with 12-15 millA$ after closure of all it´s mines, plus the 10 mill$ to be received from the current rights issue. Exploration is on full steam until about mid-June, has already delivered some outstanding results, and should be followed up by a nice resource increase / conversion from inferred- to indicated status in July/August.No stock for short term investment - but in the long run, I think you should make multiples - but that could be 2-3 years away. I am still a large holder and will take up my rights.
Strike - raised 6.7 Mill$ in a placement at 10ct. Let´s wait for the Quarterly cash report soon - but they should now have close 9 mill$ to play with, which will be easily enough to drill the next hole ( cost around 3.3 mill A$ ) plus multiple testing/ refinining of existing wells. I took part in the placement, which in part was going to new, institutional investors. 170.000 $ will be taken up by management, subject to approval at the AGM.
St Barbara - a good Quarter, though not as outstanding as some in the past. Production of Gwalia Deeps was excellent, while Simberi was in line with guidance, but a little weaker than previous Quarters. Also, costs in Simberi might well have been a bit higher than recently. In any case, the company managed to generate approx 50 Mill A$ in cash again ( the A$ gold price averaged 1635 A$ last Quarter - excactly in line with today´s price ). Total net debt outstanding is now only approx 135 mill A$ ( helped a little by the strong A$, as debt is all in US$ ). Still EV of 1.25 bill A$ does not make them look cheap for about 340.000oz yearly production at just under 1000 A$/oz AISC, of which Simberi will only produce for 3 years - or otherwise will incurr very substantial capex.
Cardinal Resources - announced more drilling results, which will add to the resource - both were showing long intersctions ( up to 57m ) and are confirming the expectation of a large, 1.2-1.3g orebody. The next round of drilling will be really interesting due to planned drilling locations - if they should hit ore, it would confirm a really large orebody of not only 1-2 mill oz, but potentially signifanctly more. We will have to wait for these results for another month or so. In the meantime, the stock had a good run and looks very interesting, but will need to do a bit more work at current levels.
West African - very similar to CDV in terms of market cap and share price as well as the country they are active in + the fact, that both stocks have had a good run - but otherwise a very different preposition They are further advanced, having completed a full feasibility study using a heap leach operation - but more recent results especially are pointing to a lot better grades, and possibly a CIL-plant. The stock is probably not far away from showing a production profile of approx 100.000 oz for 7 years or so -but to prove that, they will also need a bit more money at some stage! The company announced some nice drilling incl 20m with 5.8g gold/t yesterday, and extended this high grade zone to a strike length of 300m yesterday.
Gascoyne - are suspended for a capital raising. Like so many juniors, the exploration/development companies have all become pretty active again, and are using the new, speculative interest in the market to raise some cash, which makes a lot of sense if you can spend it sensibly - and Gascoyne certainly have enough potential to do so!
Have a nice evening!
WS