Good afternoon
a weaker Chinese currency last nigt ( in fact, the weakest day since last August ) and weak prices for Steel Rebar and Iron Ore in China led to very weak prices for many metal producers last night in Australia - BHP, RIO, SFR, FMG, IGO etc etc all down 5-10% ). The legal proceedings against BHP in Brazil, where the prosecutor is asking BHP/Samancor/vale for 44 bill US in damages, did not help, either ( these figures are a joke, and in previous cases, similar situations have consequently been settled at a fraction of what the prosecutor originally asked for )
In any case - not a nice market last night - and gold trading at 1281 US$ at the time of the Australian market close did put some pressure on gold stocks as well. But as so often before over the last few month, it´s recovering nicely today, trading at 1290 US$ or at 1723 A$/oz. This is a new recent high, supported by more weakness of the A$ against the US$.
Gold holdings of ETF`s are the highest since late 2013!
Unit Labor Costs in the States increased by 4.1% - more than expected, as productivity was weak.
Mark Moebius believes, that commodities- and their producers are cheap, and that the recovery has only started. He is not really known as a commodities-man - but his word is certainly been heard in Emerging Markets!
And last but not least - TRUMP has done it! Anyway - vs Cruz, potentially the smaller desaster, as he will hopefully find it tough to beat Clinton ( this is not to say, that I like that woman! )!
Chalice - have sold their Cameron Gold Project in Kanada for 32.26 Mill shares in First Mining Finance in Canada, a 370 mill Can$-company, with liquid trading in it. That equals about 25 mill A$, and brings total cash of 37 mill A$ + 25 Mill in shares to 62 Mill A$ in assets, or 22ct/share. Even though Tim Goyder has delieverd a good deal, once a gain, I am sure, that Chalice will continue to trade at a discount - but over time, probably not as large as today´s 20% discount. I would not be surprised to see, that Chalice will return a significant amount to shareholders ( as they did previously ), once the share holding in First Mining has been sold. Chalice need to hold them for at least 4 month.
The transaction is another sign, that M&A in the small sector is hottening up!
Middle Island - years ago, I have written quite often about them, and there might be some residual shareholdings left in Europe. Back then, they were exploring the promising Reo Gold Deposit in Burkina, and they still own that. Today´s rise, though, is based on MDI´s purchase of a small, 400.000oz resource in Western Australia, called Sandstone. The asset comes with a 600.000t p.a. plant, which has been on acre and maintenance for the last 6 years, and will need 5-8 mill$ in refurbishment. The transaction has been negotiated a few month ago, but it took until now, to finish the transaction, as the seller has been the liquidator of the previous owner, making such a transaction a lengthy deal.
The exploration potential of the asset is till very good - and Rick Yeates, the MD of MDI, still has my trust. Without any doubt, MDI will need to raise a few million $ in fresh equity in due course, having to pay 2.5 mill$ for the asset within 60 days.
In any case - there is some hope now for long term shareholders of MDI!
Highfield - there is a good chance according to Australian analysts, that Highfield will be included in the small cap index of the MSCI , to be announced on the 13th of May. Wilsons HTM believe, that 16 days of average daily volume would be needed, to fill resulting Index-related demand.
Have a nice day off tomorrow,
WS
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