Good afternoon
European car sale in Sept with a surprise 1,1% up YoY - Germany and Italy especially strong, others still down. Daimler with stellar 3.Quarter result, Volvo also positive! Automotive stocks very strong, and corona-winners generally very strong in positive equity markets.
Nickel and up to a degree, also zinc strong…copper is down a touch. Eurpean bonds are stronger - unchanged in the US.
Looks like Trump got a hard time yesterday in the TV-questioning…Biden perhaps not a star, but certainly not such a crazy bugger, and a serious man!
Very strong retail sales in the US.
Macquarie comments on nickel market. See very strong growth of Indonesian supply of nickel pig iron this year and next, and oversupply generally. But for the next few month, see potential for shortage of nickel, driven by extremely small export of nickel ore frm the Phillippines ( wet season ). Interesting situation stainless steel production in China, which has been strong generally, but really booming in high-quality stainless, which uses a lot of nickel.
In nickel ore, Malachite Resources MAR , could be a hot speculation for your private accounts, as it is a very small company. The company has recently bought two nickel ore resources in the Solomon Islands. No JORC-compliant resource as yet, but company has started drilling to validate old resource. Previous owners could not get mining approval because of resistance by landowners. In those days, landowners had no equity - this time, they have 20% of the project and I believe around 10% of Malachite. Not all that many details known as yet - but it´s very easy t bring directing shipping ore into production - basically a story of digging + shipping. This could be a great story, with current market cap of around 7 mill A$ only! Could become ht, if market starts talking about the strng rise in pricing of nickel ore!
Gold slightly down but so far holding above 1900 US$ or 2690 A$/oz, which is the highest since mid - August.
Panoramic - nickel prices are making new highs at 10 A$/lb, nickel explration stcks generally are having a good time! But our little Panoramic has been left behind, perhaps still feeling the large rights issue/placement at 7ct in June. The stated production costs, nce back in production in the 2nd Quarter of CY 2021 ( assumed board approval with nickel at these levels ) are 7,80 A$/lb - but this estimate I believe to be ultra conservative! Understandably, the new MD ( now bord for just under one year ) wanted to start with a clean plate, since Panoramic had a few hick-ups, and wants to deliver positive surprises. Based n the above numbers, the mine will generate 48 Mill A$ p.a. in net mine operating profit. I believe, that with a bit of luck, production costs could well be 20% lower, if not more! That wuld deliver another 40 mill A$ p.a.! However - even at 48 Mill A$, the stock is trading at just over 4x net mine operating profit! Some analysts believe(d), that PAN would need some more equity to be brought back int production. I think the recently announced sale of Panton for 12-15 Mill A$ should have put these concerns to bed. I think whatever might be needed, especially for working capital, should easily be available frpm financiers as prject finance ( currently, no debt at all ).
Exploration has started, and that´s the area the market is paying for in the moment. I think there is no question, that PAN has very substantial exploration potential. Any good drilling results should be viewed very positively by so called RobinHood-investors!
And last but not least - Western Areas will not want to stay at 19,9% of PAN forever! Once tehy see further de-risking ( for example finishing of underground ventilation some time in the 1st Quarter ), they will be very tempted to make a move! I would be surprised, if they get the company under 18ct and depending on exploration/ mine leife extensions, potentially more.
In this market, where it´s not easy to find value, I think my good old Panoramic is very good value indeed!
The same might actually also the case for Western Areas. They have underperformed the nickel price as well, and have good upside, I believe, if nickel stays at current levels!
Bellevue - the stock has benefited from 3 things: Strong exploration / the NST-SAR merger / the Diggers & dealers conference. But at an EV of about 1 bill A$, I prefer to watch out for the next one….culd be Tietto ( resource estimate soon ), Apollo Consolidated, perhaps smething like Matador Mining, or Dacian Gold. All these stocks have potential triggers, and rather than squeezing BGL for the last 10-20%, these stocks are value with much higher , potential upside!
Enjoy yoour weekend!
WS