Good afternoon
well the craziness in metal markets is cooling down a bit...good for everybody involved, I think. Base metals are slightly up ( lead and zinc ) to unchanged ( copper / alu ) and weaker in the case of nickel - but I guess 14.770 US$/t as in early afternoon, is a great level.
Gold is also calming down a little - but again, 1342 US$ or 1743 A$ ( which is just 80$ shy of the alltime-high!! ) are excellent prices for any halfway reasonable producer! Gold is certainly feeling much better now - it just does not want to fall in a serious way, and is consistently working at the importantz level of 136-1350 US$/oz. If it should go through 1400 US$, a test of the old highs at 1800 is even possible! And as you know, with regards to the world economy, there is a realistic chance, that we could end up between a rock and a hard place: Growth is cooling a little bit, and could get a real schock from a trade war, while inflation is slowly raising it´s ugly head! That could be an explosive scenario for gold.
Evolution - their Quarterly yesterday was another stunner! Just unbelievable - this company is going like a clock...111 Mill A$ net cash flow from the mines, after all capex ( sustaining as well as major ) ....EVN produced 191.500 oz at 768 A$/ oz AISC, and ALL-In costs of 1000 A$....that´s AISC of just 600 US$, placing them amongst the cheapest gold producers worldwide. Net bank debt after tax-payment and dividends will be below zero by year end! And even though it´s not very obvious from their recent Quarterlies, exploration is also delivering quite well: Depsite the sale of Edna May and one year´s production of about 800.000 oz, resources as well as reserves increased slightly! At the current rate of production, the company has 9 years of reserves. Some of EVN´s mines are just a license to print money - Ernest Henry ist just outstanding, but Cowal, Mt.Rawdon and Mt Carlton are also doing very well in that regard. Honestly, I can only repeat what I said earlier: Why the hell should one own Newcrest, if one can have some EVN? The stock is down a little today, as Mr.Sawiri sold another 5% of EVN late eyterday after market in a book-build. Good on him - it´s a bit annoying for investors and for the company, but the guy has trippled is money in a few years, and he is still holding 15% of EVN Evn though EVN are very liquid already, Sawiri´s sell-downs will only improve liquidity further from the current 30 mill$/day.
The company has slightly increased guidance for the year in terms of production, and has lowered the forecast for AISC to a sensational 780-820 A$/oz, while cutting forecasts for capex to 260-280 mill A$ from 260-345 Mill A$.
We are all sick & tired of delays, approval problems, nationalistic tendencies etc etc ion all sort of countries - Australian production clearly deserves a premium!!
Genex - while we are waiting for some kind of financing approval from the Northern Australian Infrastructure Fund ( NAIF ), an independant comission has advised the government to loosen the investment rules for the fund. The 5 bill A$ fund, established 2 years ago, has only made one investment over 16 mill A$ so far. In a parlamentiary hearing in Feb, the MD of the fund had told a hearing, that the fund was expecting to make 2 bill A$ worth of inevstments before the 30th of June. We expect, that one of these investments will be Genex´s project. In any case - inevstment guode lines should be made easier soon, which is good news for GNX, as the NAIF-inevstment in subordinated financing would be very very important for the project.
Have a nice weekend!
WS