Good afternoon
a very volatile day today - looks like the bulls will win! Base metals were relatively strong early this morning, but fell away to trade all down by lunch time - but recovered since to being unchanged on average. Gold is down by a few $ to about 1870 US$ currently - the US$ is very strong and trades at a recenbt high of 1,165 currently against the Euro. The A$ has tried to break below 70ct against the US, but has recovered slightly now to 0,702.
The US economy seems to withstand the virus - certainly helped by previously unseen government spending. Labor market numbers slightly better than expected, and the GDP grew by 33% ( exp 32%) lst Quarter, helped by strong personal consumption + 40,7%. The number is also a little better than expected - but as you know, the government handed out cheques left right and center ahead of the election! Pending Home Sales were down.
Equity markets very similar to base metals - strong at the open, falling away soon - but taking a lead from the US and now it´s all green over Europe as well. The EZB strongly indicated, that it will do more - Germany giving an extra 10 bill Euro to pubs, restaurants, theaters etc….basically paying these type of businesses 70-75% of lost revenue.
Fortescue - incredible Quarterly - costs down ( cash cost 12.70$/t ) / production up to 44,3 millt / price received up ( 105,7$/t ) and perhaps even more important, the discountz for the FMG-quality is reducing . Net cash is 1.3 bill$ - that augurs well for yet another big dividend coming! If iron ore prices hold halfway ok - which most analysts are NOT expecting ), the stock is trading at probably 15% yield!! Mr. Won, who is a Malayisan Chinese, living in Sydney, will bunker more cash! He bought 93 mill shares in 2003 and has hold them until now - and probably forever. He invested 1.2 mill$ - he has received about 400 mill $ in Dividends since then, and his stake is worth about 1.5 bill A$! Good job, I would say! And good on him! Nice story on the side…
Liontown - placed 12.5 mill$ worth of shares yesterday, to enable completion of the feasibility study. Management indicated, that tehy see further scope to improve the NPV! And not least, they will have enough cash now to do some drilling at the Julimar look-alike near Perth! Well done…placement apparently was heavily oversubscribed. Liontown is slowly but surely developing into a major story. Their recent scoping study into going further downstream and produce battery-lithium as opposed to the usual concentrate, would require something like 1.1 bill A$ in capex - but delivering even better returns. Perhaps a story for some larger company like RIO or FMG to enter the space??
Bellevue - had reported numerous drill holes and the discovery of another lode during the Quarter already. They drilled 40.000m and spent 10.5 mill$ in the Quarter ( also on widening the decline etc ), but still sit on nearly 150 mill A$….I guess even if they plan to go this alone - which I very much doubt - they might not need much more equity. They continue to do an excellent job - but stock is not that cheap.
Have a nice evening!
WS