Good afternoon
equity markets are consolidating so far today….as are the metals. Not all that much action!
Strong numbers from the US building industry, as well as in Industrial Production.
Panoramic - Independence Gold have extended the takeover bid to the by one month to the 17th of January, but with the same, old conditions ( after the market closed ). If they had seen something negative so far in the due diligence, they would not do so…it shows: These guys are dead-serious. It will probably not the last extension - this thing will drag on - so far, nobdy has accepted! I am waiting for bidding competition here - but for as long as IGOP does not increase the bid / and or drop the tight conditions, nobody else would be in a hurry!
Iluka - announced a large ( and expected ) write-off of their Sierra Rutile subsidiary, which was written down to just 50 Mill US$. Guidance for that asset for the current year has also ben reduced, but not for 2020. Interesting,that Macquarie expects their zircon production to start falling away heavily from 2022 ( that´s about the same time, as production from one of my favourites, Sheffield Resources will come online ). Kenmare also announced new, lower production guidance for it´s mineral sands production this year, due to technical problems. Macquarie is also estimating rising prices for ilmenite and rutile, and stganant prices at a high level for zircon. Iluka would be pretty damned without their wonderful iron ore royalty!
Northern Star - bought the 50% stake of the Golden Mile from Newmont for 1.16 bill A$, about 5% more, than Saracen´s price. I am sure, that the small premium is easily justified by becoming the operator. The transaction will be financed with a 765 mill$ equity raising + 50 mill A$ shareholder purchase plan , both at 9$/share + about 400 mill$ in debt. Gearing following this tarnsaction is very limited - they should have just short of 500 mill A$ in net debt. The deal is positive under most metrics - longer term, a very reasonable aquiisition, but not a reason to re-rate the stock. Share price should be under a bit of pressure, given the discounted placement, and the SPP. I think the transaction is ok - it will certainly extend the average mine life of Northern Star - this is probably the most important benefit. For how much longer than the planned 12 years the mine will produce, remains to be seen…and cash flow over the next 2-3 years will not be all that great. If you are a holder, I would take up my rights - but the aquisition is not a catalyst for something fantastic - so for non-holders, no desperation warranted to get into the stock.
Oklo Resources - once again, some good drilling results from their main project in Mali: 20m with 3,1g / 50m with 1.55g / 14m with 2.65g / 8m with 5.26g should certainly add some tonnage . Results from another 25 drill holes are pending. I continue to believe, that the stock should be accumulated. The big advantage of OKU: In my opinion, tehy will nothave to develope any mine here, as they will be taken out by one of it´s neighbours, if they can establish a nice enough resource.
Bellevue Gold - and yet more results from their Deacon discovery: 2.3m with 39g / 3m with 10g / 0,8m with 69g / 3m with 12 g , which isopen in all directions. The bellevue Lode also delivered more results: 3.4m with 12g / 2.8m with 47g / 1.5m with 36g / 3m with 19g. The potential for Bellevue and surrounding area is definitely still excellent! They will start dewatering the Belelvue underground workings, to enable more cost effective drilling ( mainly transfer to higher confidence-status ) from undergound - and at some stage, it has to be done anyway. Extremely active drilling continues, with the enxt resource update expected for the 2nd Quarter 2020. The share price performance seems a bit boring - but there is 50% upside or more from this company, in my opinion, for 2020.
Have a nice evening
WS
WS
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