Good afternoon
very strong numbers from the US on services industry, while Europe´s growth in the sector is weakening.
Trump is asking his Saudi-mates to increase oil output by 1 mill barrel/day - that´s the rumour. WTI is now trading 10% below it´s recent highs. Still a nice price, though!
Base metals strong despite renewed strength of the US$ - copper helped by some agressive union talk at Escondida, and a Bloomberg report about the enviromental mess at the Grasberg Mine, while nickel ist trading at a new, recent record price amidst a strong drawdown of LME stocks in Asia. Nickel now above 20.700 A$/t or nearly 9.40 A$/lb!
Gascoyne - is now producing gold! It took them until 31st of May - so not as quick as expected by some, but still several weeks ahead of original plan. They are now fine tuning the plant, and especially recoveries. This is usually done with lower grade material, to avoid any waste of "good ore" - so do not expect any huge numbers for the current Quarter. I think they might take until End July to be fully up to speed. The two main issues now are: do grades stack up to expectations? And does the metallurgy work? Not to be under-estimated - but this should be a relatively easy mine, so I am positive for the ramp-up to live up to expectations. In the meantime - to be exact: today - the company announced some excellent drilling results between two planned open pits. Grades were substantially higher than reserve grade, and in so far, these results open up the possibillity of some better grade, near mine reserves. Another 40 drill holes to follow up have been started already. Following receipt of these, it should be easier to see, whether there is real potential. But certainly, a very good start. Just a reminder - every year of additional mine life should be worth something like another 15ct in the share price, due to the current, limited mine life. So - still some risks out there, as always - but it feels pretty good so far! If they can show substantial upside from exploration, they would be a prime takeover candidate for some of the fabulous 5 - producers in Australia.
Mineral Resources - quite a bit of speculation surrounding their sale of a big stake in their Wodgina Lithium asset. This asset is making up a very large part of the valuation ( MIN are currently capped at 3.4 bill A$ ). Bought only a few years ago for 50-60 Mill A$, it has been a stunning success for them - producing direct shipping lithium ore, and in the process of building 750.000t of capacity of spodumene production ( lithium concentrate ). The feasibility study for the production of 56.000t of lithium hydroxide ( battery lithium ) is in full swing. The company has indicated, that they expect capex to be around 600 mill US$, which should be about in line with expectations. We have had some positive noises from the battery /EV industry again....Pilbara reported to be sold out, and to have many additional enquiries, while AUDI and GM are pushing hard to bring new models for the chinese market. Daimler had to push out their release dates for a few models - apparently, a shortage of batteries behind it. So I am very sure, that there will be a lot of interest in MIN´s sale of 50% or so of Wodgina. The transaction should value the asset at anything between 2.5-and 3 bill A$. The company has some big plans ahead, and some cash will be needed for those - but i am also expecting a large, special dividend + perhaps a buy-back as well. The largest shareholder is the CEO - so a big div is more probable than the buy back. Chris Ellison does not muck around - so this sale will not take very long to be announced. I still like this stock - if tehy shoudl get close to teh 3 bill A$-mark, the stock should be trading closer to 25$ than 20$, in my opinion.
Prairie Mining - following JSW´s remarks yesterday, and especially their comment "to hopefully make a decision in July " regarding a deal with Prairie, the stock shot up 24% in Poland today and was also strong in London - both markets now trading at the equivalent of about 45 Australian ct. Perhaps the Polish trust their courts and government bodies more, than we do!!
Have a nice evening
WS
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