Good afternoon
Vale - has been ordered to close down Onca Puma nickel mine, producing around 24.000t of Ni p.a.. This has happened a few times before, and Vale always appealed succesfully. But this time, in a changed climate post the problems in Brazil, it might well be different. Vale has been accused of polluting the nearby river.
Nickel is unchanged today, at 13.650 US$/t and at a new high of 19.400 A$/t - as are other base metals and equities. LME stocks for all base metals down again today.
Van Eck has been reducing Australian gold stocks - I guess some general outflow. A$ gold price is holding up well at 1830 A$/oz. The Aussie´s have come down a fair way from recent, over-extended highs, and most are now back in reasonable-value territory.
Panoramic - had multiple, small issues with the ramp-up, especially in February. each of them small in absolute terms - 30-40-50.000$-issues, but taking some time to get right. The biggest problem has been to get the paste plant properly running - now the case. But financing has been relatively tight. The company has therefore decided to do a placement of 5 mill$ ( some funds required by bankers before end of March ), the rest in form of a 1:13 rights issue at 38ct. If the stock comes down, great opportunity to buy more…especially in light of the strong nickel market. At current prices, the company will generate nearly 70 mill A$ in free cash p.a., once Savannah North is in production…at 38ct, that is equivalent to about 3x free cash/market cap. One issue persists: It´s not easy to get labor! I can only guess - but I would think, that this creates some upward pressure on opertaing costs going forward. Despite these current, small but very unwelcome problems, I am a firm believer in this thing…If nickel does over the next few years what I think it will do ( that is going up! ) , PAN should ultimately trade at something like 500 mill A$ market cap….or much higher, if some of the more bullish price targets for nickel come through. The only criticism some shareholders might have is, why tehy have not done a larger placement. I guess the largest shareholder has not been that keen…for them to take stock in a placement, requires shareholder approval. Overall, I think the market is crying out for more nickel exposure, and I understand, that there has been very substantial interest in the small placement.
Oz Minerals - released teh scoping study for the Carapateena expansion. The company is suggesting a block-cave, which would have substantial pre-production capex of up to 1.3 bill A$ - but alsolow cash costs of sub 1$/lb. It would more than double the mines production, and have 20 years mine life. It sounds dooable, and it sounds value-adding - but not drmatically so. OZL have a history of making smart development decisions, and I have no doubt, that they will be smart again. I guess it all depends on the copper price going forward as well. In any case - they will now continue with a pre-feasibility study, and that will take them 12 month at least.
have a nice evening
WS
WS
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