Good afternoon
markets continue their liquidity-driven, and in the US, partially results-driven run! Equities strong, Bonds strong, gold strong....central banks around the world are sending their best wishes! this will end in tears - just when we don´t know....it certainly could be years away! In any case, ample reason to own some gold!
Durable Goods orders in the US much weaker than expected,
German consumer confidence a tick lower - but that was before these terrible attacks, whioch could have a ( most probably: temporary ) negative impact in the next round of numbers.
Fortescue - amazing! Quarterly out today....record production was known anyway, but costs came in at 13.10 US$/t for the month of June, despite higehr A$ vs US$! This is the best managed resourecs company I know, alongside Evolution - but obviously, on a different scale. They are producing 165-170 mill t this year, at costs of about 12-13 US$/t ( guidance ) - in the last Quarter, they received also a better than expected 49 US$/t for their slightly inferior product! Freight is about 4-4.50 US$/t to China, and sustaining capital is about 2$/t - so total cash costs at arrival in China will be below 20 US$/t! That is a fantastic result, and as I said earlier - they are paying off debt in frentic speed, and dividends will grow substantially over the years. This is all happening at a time, when BHP and RIO are not- or just achieving their production guidance, and as Gina Finehart´s new mine is having some problems as well. The iron ore price is trading at 58 US$ - but I tend to agree with basically all analysts, that this is unsustainable. All 4 major iron ore producers are generating fantastic returns at the current price....it just has to come down! This is the only thing prveneting me from owning a pile of FMG!
Perseus - their Quarterly was a touch worse than negative expectations, in my opinion. But this is obviously a company, which is going through a difficult time: Grade problems are slowly but surely left behind, the relocation of existing housing is progressing and will be finished by the end of this year, and lastly, cutbacks/pre-stripping of new orebodies will gradually be finished as well. All these are erasons for the current, very high costs, and will largely be over and done with by the end of this year. Company guidance is unchanged, and if you believe them ( I largely do, except for the odd little surprise on the way you tend to have in Africa ), this is one of the evry few stocks, which have upside from the current share price, if the goldprice is not changing much. Macquarie have a price target of 90ct, Cannacord have 1.05$. I think without any help from the gold price, we might need 2-3 years for these prices to be reached.But that´s much betetr value than most established producers, which probably rather have 10-20% downside at unchanged gold price!
Have a nice evening,
WS