Good afternoon
Asian markets are dragging equities down today…the new virus-scare might cut growth expectations for China. Once the relatively stable US-market opened, Europe recovered somewhat. I would think - not eaten as hot as it´s being cooked! Base metals also under some pressure for the same reason…Not much happening in the gold market in the morning - but after lunch, it was down 12$, before it´s now recovering close to the end of the European day. PGM´s finally giving in to profit-taking - and as you would imagine, Plat/Pall are down quite heavily.
German businesses have improved expectations for 2020
The renowned Fraunhofer Insitute in Germany estimates, that EV´s have a 15-30% CO2-saving over their lifetime vs combustion cars. While their manufacturing process incl the battery is a lot more damaging, this is all but made up over the life of the car. This is for todays cars/batteries, and should improve further over time. They also come to the conclusion, that electricity demand will rise by 3-4.5% until 2030, assuming 7-10 mill EV´s are in use by then. All the above numbers apply to Germany only and might well be different in other countries.
UBS is quite positive on China´s economy, especially in the first half of 2020 - Goldmans are generally positive on commodities, i.e. gold and copper.
Resolute - are raising 200 mill A$ at a relatively small discount - price is 1.10 A$. Largest shareholder Duncan Saville is putting in 25 mill A$…retail will get acces via a 25 Mill A$ SPP, numbers of which are included in the above. Overall, and hard on the heel of a 50 mill cash injection from the sale of Ravenswood, this seems to be a rather larger capital raising. I would have thought, that 100 mill A$ would have done the job. Two thoughts here: Syama needs longer for the ramp-up - or the company is still targeting aquisitions, as mentioned the other day. We will find out…The discount is not all that compelling, and the SPP will keep pressure on the share price - so perhaps no hurry to play the game here!? The boss says, that he absolutely delighted with the getechnical properties of the Syama deposit - which does not necessarely mean, that he is delighted with everything?
West African Resources - making strong progress on construction of Sanbrado in Burkina! Underground development is now at a depth of 160 m - so cannot be far away from hitting dirt. The plant is 90% complete, most other stuff is more or less done - incl a nice fence and a stone wall surrounding the accomodation village!! Electrification of the plant has started, mining is delivering the first ore to the rom-pad. My guess - plant will start treating ore in 2 month time! Officially, the company is still targeting first gold production “by mid-year”….Looks very conservative to me! As I reiterated before - 300.000 oz in year one at a margin of 1000 US$/oz in the first 12 month of full operation - which could well be equivalent to the financial yeal 2020/21. What a steel - if not for Burkina, stock would probably trade 50% higher! Broker Euroz has a 80ct valuation for them…
Strike Energy - apparently Woodside management have said, that there would be no new deal, before tehy have done a deal on supplying gas from their Browse project into the existing , large gas processing facility, which has partially different JV-partners. This makes sense - it has been said, that a deal would be close here…so leaving room for a new deal with Waitsia, and subsequently, a much stronegr market for doemstic ( onshore ) gas in Western Australia. As I said - this would be an absolute game changer for STX/Warrego and give them potentially a massive valuation-uplift.
Emerald Resources - anotehr large capital raising, beside Resolute. EMR are raising 75 mill A$ for theie Okvau project in Cambodia. Including existing cash, and a debt-proposal from Sprott ( which seems to me not that favourable ), this is the final financing before development/production. A lot of money for a relatively small market cap, in a retatively unknown mining-jurisdiction…and a project, which is not that large - at least for now ( 105.000oz p.a. for 7 years )… not easy, despite of this being a good project with strong management. Like in RSG - probably not a major mistake for now to miss this placement.
Western Areas - BHP and Jinchuan signed new offtake-agreements with WSA. Their have been a reported 19 bidders for the offtake, which leds broker Euroz ( probably correctly so ), that WSA will get a very high payability of high-seventies percent of the contained nickel. Positive for all nickel producers - this metal is very much wanted - partially depending on the development of the EV-market.
Have a nice weekend!
WS
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