Good afternoon
the PMI´s from around the world have been good enough to indicate further growth, but at a slowing level, A raft of not-so-strong numbers, as well as continued low inflationin Europe is helping the US$ to the highest level since early january. Gold is shrugging the currency off today - at 1377 US$ and 1750 A$, it´s pretty strong ( and in A$ terms, it´s just 10$ below the recent high). The base metals also slightly better, and nickel is back up through 14.000 US$/t.
Equities have been stable earlier on, but are now dragged down by the US-market - apparently on some unfavourable results from the financial sector.
Our resources market feels a bit boring and worn out, still - this is despite global equities having anotehr good year so far! It´s hard to believe - but with all the bad news and issues we have had this year, stock markets around the world are up by 2-3% in US$/terms, by 5-6% in Euro-terms. That is much better than you would think, isn´t it?
Goldman´s strategists believe, that resources should be ideally placed for this time of the cycle...growth quite good, interest rates still low, a little bit of inflation on the horizon.
Elon Musk think´s that analysts are boring - well in many cases he might be right - still, it´s smarter to talk to them! He did say, though, that Tesla have managed to substantially reduce the amount of cobalt needed in their batteries, while increasing the use of nickel. If not for Glencore´s ongoing legal issues in DRC, and a disappoint March-Quarter production report for cobalt, cobalt prices in London most probably would have been much weaker today. In actual fact, they look to be slightly up to 90.500 US$/t in London.
Mr.Macron finds Mr.Turnbull´s wife "delicious"...good on him...I don´t think too many people would subscribe to that!
Lucapa Diamonds - the company is back on my inevstment board....they have done a relatively large placement recently at 23ct ( no discount at the time ) to a couple of large funds, done by respected broker Euroz. The funds are to be used to drive exploration at their exciting exploration project Brooking in Australia, only 50km from the old Ellendale Diamond Mine, where they discovered 119 small diamonds in a singe 87kg sample from one drill hole. The company has also had a good Quarterly from their 40%-owned Luo Diamond Mine in Angola, and reported today the find of a large, pink diamond. In Lesotho LOM is developing the Mothae Diamond Mine, which is now fully financed and which will go into production in the second half 2018 - I guess it will be October. The company has now two very advanced projects, one great exploration target, and Euroz as a backer. The Euroz placement brought a range of institutional investors to the company for the first time. I think LOM are worth a very good look again.
Panoramic - have a new and very experienced board mmeber - good to balance the influence of PAN´s 30%-shareholder. Nicolas Cernotta has 30 years of experience, has been Director of Operations at Fortescue, and before that, COO of MacMahon , a larger mining services company. Euroz have listed PAN amongst their "Best Buys" for this month, expecting a psoitive mining decision. They see peak EBITDA of 120 mill A$ for PAN, and believe, that the stock will move to 1$+ over time.
Kingsgate - have put Nueva Esperanza, their Chilean-based silver asset, on the block! KCN ahve currently 3.5 millA$ cash in the bank - not enough for the litigation, and not enough to drive Nueva forward. At todays level of 63 mill A$ market cap, the stock is probably cheap - but do you want to own a mine, which si quite desperately mining in the courts? The hearings with Thailand are planned for late 2019, indicating just how long this could take. Negotiations with the country insurer could be finished earlier - but do you want to bet on this???
Mineral Resources - have put their current flagship asset, Wodgina, on the block - or more exact, 49% of it + offtake agreement. MIN will remain the minings ervices company, providing everything from pit to port, which will also be lucrative over time. 50% of Wodgina could be worth up to 1 bill A$, depending on what prices you want to use for Lithium , Lithium Hydroxide, and which discount rate. Some funds will be needed to develope the automated, Pilbara-based train system, and some for building up the grahpite-projects - but I think tehre would also be a very significant pay-out to shareholders. Chris Ellison, the MD of teh conmapny, has done a legendary job and as he cannot be seen as a seller, he will onyl be able to get cash out of the company via dividends. The stock ahs had a good run - but it´s probably worth 10% more than today, and Chris Ellison is probably also worth a few$ extra. As a holder, I am very happy in any case - always difficult to find undervalued, larger caps, and this is one.
Battery Minerals - have announced a 30 Mill$ debt-and equity placement with RCF, a very prominent and smart investor group - subject to additional 28 Mill A$ raising. RCF is receiving 333 mill Options at 10ct , for 5 years...I don´t like that ( significant ) part of tehd eal! You can always see it again: If you ahve the cash, you are getting a great deal! Anyway, I only mention this to show the significant interest from private equity type of mining funds in graphite - even in Mozambique. 10% interest, 2% establishment fee, 333 Mill options...not bad ! But this transaction, alongside the placement to free shareholders, will be enough to bring the Stage 1 into production. If the company proceeds as planned - Stage 2 next year, and then again a doubling of production - the options and teh % will be forgotten in 2-3 years. But obviously, some patience is needed here!
Have a nice evening!
WS
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