Good afternoon
a strong German PMI seems to put fears regarding the virus aside…a little surprising to me, as the Chinese are taking very drastic measures to contain it, which will definitely have some impact on their economy. This is THE time of the year for the Chinese consumer to spend money…
Equities in Europe are very strong, bonds not much changed, same for the metals. Rhodium makes a new all time high, while Plat and Pall are consolidating. Gold is holding above 1560m US$ and is tarding at a wonderful 2282 A$/oz currently.
Intel, the world´s biggest chipmaker with a market cap of 270 bill US$, continues to surge after publishing a good result.
The underlying appetite for gold stocks seems to be pretty strong, still…placements in Resolute for 200 mill A$, and Emerald Resources for 75 mill A$ have been quite easily completed, as these two companies reported.
Oklo - Quarterly out today…and while I think all of the drilling results had been pre-released, having all of the Quarters results in one document is very impressive! There is a lot of work to do, but their Seko Project in Mali is truly delivering. Excellent hits in many parts of the project, within a tight radius of a few km….As at the end of 2019, they had 7.7 Mill A$ in cash…pretty good. Some of the results : 50m with 3,99g / 37m with 3,24g / 29m with 3,52g / 20m with 3g / 50m with 1,55g / 65m with 7g / 53m with 4,3g / 47m with 10,9g……very impressive indeed! The market cap of 70 mill is not ultra-cheap for a stock, which does not have a resource as yet - but results like the above certainly let us hope, that they are up to something substantial….I think they will go higehr before they need more cash by the middle of the year, I guess.
Mineral Resources - Quarterly stated slightly better than expected production of iron ore, but slightly less sales from stock piles as expected. They are a high cost producer vs the big boys, and that will never change - they just do not have the economies of scale. But at current prices, they are very profitable, and this will bring them over lean years for lithium, which will probably only recover in 2-3 years. A strong company with a strong balance sheet and an outstanding, core mining services business - but they have had a good run over the last 3 month, and are probably a hold only above 17 A$.
Tietto - announced some good drilling results from it´s APG deposit, which is 7km south of it´s high-grade AG deposit. 14m with 2,45g / 28m with 1,04g / 9m with 2,32 g don´t sound exciting, but they will add to the existing low-grade resource of 11 millt at 1g gold/t. This deposit will could be mined as a blend with AG, which has a resource of 19.3 millt with 2,2g gold. Drilling of both deposits is ongoing.
Metro Mining - Quarterly was out yesterday. The company achieved the very top of guidance, as reported previously, shipping 3,505 Millt of bauxite in 2019. In the Dec-Quarter ( which sees finishing operations just befre Christmas, for the wet season ) they shipped 1,204 millt at a margin of just over 10$ t, incl transport etc. Production- and shipping rates were roughly in line with the excellent Sept-Quarter. Shipping costs were up by 2$/t vs the previous Quarter, while price recieved was also down 1$/t. The company had 40 mill in cash and receivables at year end, vs 35 mill in debt…so net cash positive by 5 mill A$. Currently, freight rates are very low - they have fallen more than 30% this year! - but they are very volatile, hence we will need to see, what tehy will be in April, when shipping starts again. Freight costs for MMI are nearly as high as site costs …so important to watch! The other big variable is obviously the price of bauxit, which is looking a little vulnerable due to weak prices of Alumina in the moment. Not a fantastic Quarterly, but very reasonable! The stock is still cheap longer term, as the planned expansion will once again cut costs - especially because of larger ships being used. Margins should also be protected by the large freight differential between Guinea ( the main competitor ) and Northern Australia!
Have a nice weekend!
WS
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