´Good afternoon
just a quick note today..have been in Liverpool for the Champions League match with my son…Anfield Road…what a legendary place! And the match was good fun, even without any goals….I had to stand up for 120 min - that was the only bad news….And the POM´s ripped me off for a very expensive hotel night!
Just incredible, how equities are moving relentlessly higher…a bit scary…Loose monetary policy is doing wonders, once again - but this year, we do not ahve a nother round of tax-cuts in the States, to bolster earnings!
Much talk about the potentially devastating effect on Vale´s iron ore porduction in mInas Gerais, due to the use of wet tailings dams for 170 millt of iron ore production…nothing stopping the producers like BHP ( average result as expected ) Fortescue - see below, RIO and also Mineral Resources - but also very limited chance for these companies to substantially increase production.
The A$ gold price hitting new highs….currently 1877 A$/oz….what a dream, even for the “bad stories” like Gascoyne! Gold, gold stocks, PGM´s, and all base metals looking very strong indeed!
Fortescue - a sensational result! The discount for iron ore of lesser quality is reducing, still. The company has also been able to reduce shipping costs by using partially it´s own fleet now. And you all know, what iron ore price are doing in the moment! Just 20$ increase is driving an additional 3.4 bill $ in revenue = profit before tax! The company delivered also a nice dividend surpise - very shareholder friendly, as Andrew Forrest still controls 35% of the company and cannot be seen as a seller, obviously. Well , 30ct in dividends for the half year equals a nice 327 mill A$ in div for him - tax free due to being 100% franked! And at current levels for iron ore and the A$, another fantastic dividend for the current half to be expected! The stock is probably worth holding on to - even with a lot of future uncertainty re iron ore prices. The Australian producers are NOT using any wet tailings dams, and hence, will have a big competitive advantage vs Brazil.Australia remains lucky country!
St Barbara - result in line with expectations. The company declared a 4ct div - very very low, in my opinion. They pay out about 60% of free cash generation, while having a cash balance approaching 400 mill A$….Obviously, the company believes, that it´s stock is not that cheap - otherwise they would pay out heavy diiv instead of looking for aquisitions!
Lucapa Diamonds - I bought a small position in them the other day. Their new mine in Lesotho doing very well - plant exceeding design, grades better than reserve grade, large stones being discovered! At Lulo, their alluvial mine in Angola, the new sales process has delivered much improved prices, more large stones being discovered incl coloured ones - and production is planned to increase by 25% this year. The only negative news recently was, that exploration at their Australian asset Brooking has been less successfull than hoped - but i think success here has never been factored in anyway. The company is clearly getting more lukewarm on grassroots-exploration and will curtail spending there. LOM are benefitting of the strong interest in higehr-value ddiaomnds, and not exposed to a large degree to the weakness in the market for small stones.The company has really delieverd on it´s promises - and more - but the share price continues to go sidewas, because of the weakness of nearly all diamond producers in the world.
have a nice evening!
WS