Good afternoon
From Toyota to Apple and Lufthansa - you see a lot of business disruption outside of China because of the virus and efforts to contain it.
The German government raised it´s growth forecast by 0,1% this year , while the consumer here ist still well and alive!
Base metals are not really sure, where tehy want to go next - gold is holding well at around 1570 US$, especially taking into account, that equities are stronger once again. High cash holdings & low interest rates seem to be stronger than virus-induced growth fears!
Torrential rain in Brazil´s is not only raising fears about tailings dams, but there are also persistent rumours about rail problems. Substantial rain is also forecasted for teh enxt few weeks - this has the potential t be significant and have a prolonged, positive influence over the iron ore price.Now a cyclone in the Pilbara ( which is not unusual at all at this time of the year ) , and you could have a big spike in iron ore prices…
Oklo - great drilling results from their Seko property, in trucking distance to a few major gold mines in Mali….55m with 7,6g / 51m with 4,28g / 31m with 7,1g / 32m with 4,55g are truly great, following on from the recently reported 47m with 11g…and there are another two holes pending, which are visibly having similar characteristics, which could extend this for another 75m. The company speaks a bout a game changer - well tehy might eb right…if the enxt two hoeld come in, I might agree. But the area drilled is not large enough yet to talk about something really big. Nevertheless - even 500.000oz of these grades - and I have recently reported about many positive, but lower grade hits in other areas close by - would potentially be a mine maker - unless some of the large neigbours will want this! Stock had a big jump today to about 100 mill in market cap, which at this stage I think is appropriate. In any case - big breakthrough for OKU!
Horizon Gold - Quarterly out today - cash is down to 400.000$ and the company is talking about a 1 mill$ drilling program to upgrade the inferred resources at Swan and Swift - 400.000 oz+ at this stage - to the indicated status, to push this into feasibility studies. Equally, they talk a lot about the large potential of the recently found Altair copper/zinc project, which is in the same area. It appears to be a bit low grade - but only a smart part of the potential area, which is full of conductors, has been drill tested. Again, HRN want to explore much more agressivle here. In both cvases - gold as well as copper/zinc, they mention a few options they have to fund this exploration. I guess tehy are talking to JV partners, or potential off-takers to get funding from them. But perhaps, tehy should add some more value themselves here? Not that easy to raise some money in the moment - but 2-3 mill would bring them a long way, potentially.
Graphex - the long and keenly awaited DFS out today!! It´s a reasonable complicated one, and given my limited experience with Graphite, I will not comment before I have spoken to Phil Hoskins. First I was out -then he was out - I will talk to him tomorrow. In any case it looks like the project has become more expensive, but is also going one step further in processing to 99% graphite…
Antipa Minerals - speculation has completely gone out of this stock…RIo´s WINU copper find has also become quiet publicly, despite a massive exploration spend by RIO …tehy will announce more detail later this year. In any case, RIO has extended the JV with AZY and has now started to spend another 14 mill A$, to go to 65% of the JV. Unfortunately for AZY, though, I think this year´s 2 mill$ will be largely spent on ground work, not that much on drilling. AZY is still a very interesting stock - but I see no urgency right now to own them. They will have there time again , perhaps later this year!
Evolution - Quarterly out! Production of 171.000oz at 1069 A$ AISC ( = 730 US$ ) had been pre-released. EVN continue to be one of the lowest cost producers worldwide. What Ialso like, is the very detailed and open reporting - everybody can work out the numbers! Beside of Cowal and Ernest Henry, which continue to deliver exceptional profits and free cash to EVN, the much smaller Mt Carlton has been the disappointment, as reported earlier. After sustaining as well as growth capex, the mine delivered net mine cashflow of a negative 20 mill A$ in the Quarter. The mine experienced a narrower ore body earlier in it´s life than expected - this could impact them in the future as well, even though it should be unusual for the mine to deliver negative free cash.
it was great to see exploration continue to fire.Exploration had been a bit of a weak spot in Evolution until a few Quarters ago. But in the Dec Quarter, Cowal Underground continued to deliver excellent results, and the company will conduct a DFS for an underground mine here, which could add quite substantially to future production. Another potential breakthhrough ahs been delivered at Mungari Underground - also very important, as mine life here is a bit short for my taste. For the 6-month to date, EVN produced 362.000oz at ALL-In-COSTS of 1446 A$/oz - this is about exactly 1000 US$/oz. That´s truly excellent, and includes really all costs, incl headoffice, exploration etc. The guidance of around 725.000 oz at AISC of 940-990 A$ assumes a copper price as at today, and a gold price of 2100 A$. Royalties at todays gold price would be rising - but obviously and much more so, the gold price received.
Gold price received last QUARTER has been 2080 A$/oz vs today´s price of 2330 A$/oz. EVN have a small hedge position of 350.000oz at about 1900 A$, out to mid 2023 - about 15% of production - so the gold price received should go up as well.
The next trigger for EVN will be from exploration success and first resource estimates for Cowal, and by April, more detailed guidance as to the new aquisition, Red Lake in Canada. The purchase will be completed by the end of March.
While Northern Star and Saracen are also excellent companies and well managed, the consistency, low operating costs and outstanding management make EVN still the best Australian gold miner, in my opinion!
Northern Star - had a good Quarter as well, producing 216.000 oz at 1421 A$/oz AISC ( here you can see the big differnce to EVN, having costs of 1041 A$ in the Quarter ). The existing mines were in line with expectations,a s was the Pogo Mine in Canada - but Pogo, which has been aquired about a year ago for memory, had been a reasonable difficult performer so far, and the market had some doubnts, whether the Australia underground-”artists” around Bill beamont would make it work. But the Dec Quarter showed substantial improvement, and the last month , december, shot all the lights out, producing 21.500 oz at AISC of US$ 964 AISC ( vs 41.600 oz for the Quarter ). One month is not a year - but this augurs well and was the really positive surprise in the Quarter. Beside of this, the aquisition of 50% of the Golden Mile alongside Saracen added some long life to NST, and in the current enviroment of an improving gold price, more production is certainly good production!”
Have a nice evening
WS
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