Good afternoon
Australian Resources Conference, Zurich, 21st of Feb is now nearly complete, with firm acceptances of
Evolution / Strike / Cassini / Graphex / Bellevue / Genex / Metro / Sheffield / Tietto / Liontown - the last 2-3 acceptances are still outstanding, due to those companies either being under takeover, or in the middle of something! Extremely happy with the mix of companies, and I think there will be many promising and appealing names in Zurich! And extremely grateful, that Jake Klein is supporting the smaller guys, once again!
Politics are ruling the markets in the moment..Trump states, that he is in no hurry to do a deal with China…also threatens to impose tariffs on some French products…extending the arm wrestling with Macron. Looks like “intense” discussions are taking place at the NATO-summit in Paris!
Equities are weaker today, as are metals…but as you can imagine, gold reacts positively to the trade woes ( currently up by 18$! )…and bonds are also strong today.
The HUI Index is looking exciting - having tested 36 as measured by the GDXJ 5x, it might now break to the topside, also helped by M&A in the sector.
And even more M&A in the gold sector…Endeavour is bidding for Centamin…EDV might be using the departure of the MD, and the current production problems at Sukaru, for an opportunistic bid - paper only, little premium…at a time, when EDV have outperformed the Index…might be a bit cheaky. Everybody is talking about the bids and pieces falling of the major´s table - this might well filter down…not sure, whether EDV wants all the assets of CEY, if successfull. But in general, nobody disputes the good things flowing from M&A - one of them being asset diversity, and certainly reduced headoffice costs…Also, larger entities are probably finding it easier to finance new developments.
Shaw & Partners taking up coverage of
Metro Mining, one of my favourites. Despite being quite conservative on costs ( I think Metro might do a little better than the brokers estimate of about 40A$/t costs , even on the expanded mine in 2021 and 2022 ) , conservative on currency ( using an A$ of 75ct going forward ) , they value the stock at 30ct, with a price target of 24ct because of some risks associated with the expansion. They also expect a flat bauxite price , which gives very little profit, if any, to Chinese miners in Guinea, the main export market - so this assumption might also turn out to be a little conservative. Shaw sees MMI making 3ct EPS by 2022, and pay a 2ct Div from 2021. I believe, that earnings might well be 20% higher for that year. In any case - I think the stock is as low risk as you can be as a one-mine-stop, generating much better cash flow than nearly all companies in my universe. This is mainly due to their very easy shovel & ship operation.
Saracen - JV-partner Newmont released updated guidance for it´s assets, including the Golden Mile. For Australia´s best known gold mine, tehy expect 500.000 oz more production in 2020, than as used by Saracen for their numbers in the recent aquistion - costs are very similar. Probably the first shot in the arm for SAR following the transaction - more is possible, oif the cutback following the wall slippage in 2018 needs less than 3 years to remedy, as some suspect!
Paringa - extremely heavy turnover over the last few days…20% of the company have been traded ! I am sure, that some inevstors simply had enough - but obviously, some see value. I am extremely disappointed iwth the fundamsntal,a s well as share price performance ove rthe last 2 years…but hesitant to sell, as it smells like corporate action somewhere along the track!
Carawine Resources - the little offshot of Sheffield ( and Sheffield retaining 26% of the company - is having assets in some of the hottest exploration areas in Australia - the Fraser Range ( where Legend Mining is still suspended amid rumours of sensational drilling results ), the Paterson province ( where RIo and Havieron have made substantial discoveries ) , and in Victoria, where Kirkland has sparket something like a new gold rush. RIO as well as Fortescue have jv´d the Paterson assets, each spending up to 6 mill$ in exploration, and in Victoria, CWX have stablished some nice porphyry copper/gold targets, which will be drilled in the first Quarter. The company has enough cash for now, from a placement a few month ago. The company is very small - only 18.5 mill market cap…so not that easy to trade, but could be a hot one.
Apollo Consolidated - reportedt some excellent drilling ersults from it´s Rebecca project, 150 km East of Kalgoorlie. They have had a number of high grade results in the past - this time, tehy reported 40m with 5g gold/t / 51m with 2,9g / 12m with 6,7g / 19m with 5.9g. These results are relatively deep, starting from 165m down to 240m…but still…very promising. I ahve followed the company for a few years…progress has been a bit slow. But as at the 30th of Sept, they had 9 mill A$ in cash, so we can expect more drilling this month from 2 drill rigs. The share price has done pretty little over the last two years - the usual story: placements necessary to finance exploration, and insto´s just waiting for the enxt placement. But this time, having completed a relatively large placement not too long ago ( if I remember correctly at 20ct ) , they should have funds for all of 2020. I do not own any stock, but I probably should! More advanced than Carawine - but not so many irons in the fire! Market cap of AOP is 47 Mill A$.
Musgrave Minerals - and another small one, market cap just under 40 mill. Interesting register: Westgold own 16%, Evolution 4.6% and Independence 2,2%…and EVN are spending 18 mill$ to go to 75% ( of which 4 mill to spend in the first2 years )of the main asset, in the Murchison Region of Western Australia, and close to several, operating mines. This asset will be explored very systematically by EVN. Within the same area, Musgrave retain full ownership of the two, established resources, the main one being Break of Day , which aleady has 200.000 oz of resources at 7g gold/t, plus several nice interesections, since this resource has been calculated. Today, tehse guys announced more drilling, 45m with 11.8g from 144m and then 23m at 16g from 166m. This could be significant especially, as the results seem to link two existing lodes, which would make development as an underground mine more amenable, due to adding resources per vertical m depth. More results will follow in December. I have not met these guys - so cannot judge on management at all. But given EVN´s involvement, I would not think to have a bad surprise here. Without doubt, another one worth following.
Have a nice evening
WS
WS
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