Good afternoon
Central banks around the world are adding to their gold holdings, as are ETf´s - they were acting on the other side of hedge funds, who have been reducing. Who will win? As you know, there are many reasons for gold to go higher - the biggest point against buying gold is the fact, that it´s not trading any higher yet, amid all the trouble surrounding us! My feeling is, that if the current consolidation of the sector should end in an upward move, we could see some significant buying to drive it substantially higher.
The largest manager of gold stocks sees “complacency” as the main reason for gold not being any higher - that might be right to a degree, but what he is calling complacency I would rather call the hunt for any return - given the zero- to negative interest rate enviroment we are in. Equities are the typical, mainstream asset class alongside property for funds to go to for returns in the moment, while gold is only liked by a minority. This could change - as we all know : the bull is feeding the bull.
Barrick finally coming to an agreement with Tanzania re the Acacia-issue, is seen by many as a precursor to the country becoming pro-active again towards fresh mining investment in the country. This should be good news for:
Graphex Mining - Quarterly out. The company had an active Quarter, finishing many aspects of the efasibility study, which is nearly finished and will be announced next month. The good news from it: All potential customers assure GPX, that demand for it´s special type of Graphite is still very strong - everybody keen to take as much as possible! The bad news: In my opinion, pretty encrypted talk about the regulatory side of things in Tanzania. I will find out more during my trip to Australia , starting soon! The stock has been very disappointing so far, as investors have to sustain a really long period of not too much happening, and a slowly retreating share price - but the rewards should/could be substantial ! As you know, I am a believer and own a relatively large position in GPX.
Liontown - also Quartery out. the company had a very busy and hugely succesfull Quarter, having deliniated one of the best lithium projects in Australia. The company ahs started a very active drilling program at both it´s assets, planning to deliver a pre-feasibility study for Kathleen Valley by the end pf the year/January, convert some of the “resource potential” to a eal resource ( probably north of 100 millt ! ) and report the first resource estimate for Buldania in November. So lots of news flow over the next three month! Lithium is dead in the moment - but this should change again, if and when the very active roll-out of new EV-models gains pace in 2020.
Evolution - scared me this morning, when I saw news about a succession of seismic events, which were potentially to culminate in a major earthquake! Well - that was the story from ABC news - which turned out to be just a story. Yes - there have been seismic events at the Frog´s Leg mine in Western Australia, and work underground stopped for 24 hours. But theese evnts happened last week, and work is back to normal. Seismic events are kind of normal in underground mining - sometimes tehy are a nuisance, sometimes a major problem. In this case, I am pretty sure, that they have been a nuisance! At 4$, EVN are good buing!
Saracen - this is potentially another one, which represents good buying! The MD, raleigh Finlaysoon, has really done an outstanding job ehre over the last few years, culminating in record production ofm96.000oz at 964 A$ AISC ftom the new mines, Carusoe Dam and Thunderbox. The company ended the Quarter with net cash of 196 mill A$ from 154 mill A$ - despite spending 5 mill on cash, and 35 mill$ on exploration and growth.The company maintaines guidance of 350-370.000 oz production at 1025-1075 A$/oz AISC - this guidance looks conservative now. At this rate of production, they will have 7 years mine life as measured by reserves and the mining plan. SAR also delivered on the exploration, especially at Carousoe Dam, but also Thunderbox, and will continue to spend heavily on drilling. The only pity is the hedge book - 377.000 oz at 1874 A$/oz. SAR delivered 80.000oz into hedges last Quarter, and put on a new 38.000oz at 2225 A$/oz received. Total hedge book is stretched over 3 years but it looks as if tehy try to hedge 50.000% of nearby production ( for eample nearly 200.000 oz over the next 12 month - but only about 40.000 oz in 2022 hedged so far. I would prefer to see a little bit less heding, also in light of the low costs SAR have. I ahve liked them for a while, without never buying any…that might well change.
Gold Road - are worth a mention, even though I am not following them that closely…and I believe, that tehy are not that cheap, despite very good, forecast cash generation: The comissioning of the new Gruyere mine, operated by Goldfields, is going very well, and the company expects to be hitting guidance at the upper level for this half. That is very positive - at least some manage to bring their new mines into operation as planned, or as in this case, probably even better so!
Have a nice evening
WS
WS
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