Good afternoon
Moderna seems to have vaccine as well..94%…equity markets love it, bonds don´t - as you can imagine! And gold does not like it, either…well you know my opinion: Whether we come to grips with the virus sould not really determine the longer term fate of gold, even though interest rates might still continue to rise - or at least, the yield curve might steepen further. By late afternoon, gold has fully recovered!
Australia signs up as a mamber of the large Free Trade Agreement incl China, Japan and South Korea. Well it´s called a free trade agreement, but as we can currently see in the resources space, it´s not really that! Anyway - it´s a psoitive move and shows, that the government is traying to smooth the realtionship with China?? If so, it would be very good news for Sheffield and others.
Base metals are having a very strong day - Industrial Production is up a very strong 6,9% in China yoy, while retail sales up by 4,3% are a touch on the disappoiting side. The central bank continues to add liquidity…But in any case, early in the afternoon : Copper is making new, recent highs at 7123 US$/t - which is equivalent to 9750 A$/t ( 10-year high ) vs an all time high of around 11.000!!! Nickel above 16.100 US$/t and above 10$/lb in Australian terms!! Zinc in A$ at a new 2020-high…and aluminium at a new 2-year high in US$!! The metals complex is looking very sexy to me…
Oil jumps on the back of the Moderna-news.
The Australian Stock Exchange had a technical problem today…trading stopped after about 20 min of trading…so prices today are probably a little meaningless.
Dacian Gold - is merging with NTM in a friendly merger. NTM have a high grade resource of 141.000oz at 4,92 g within a 100km distance from Dacians existing mine. The total resource of NTM is 679.000oz at 1,57g. If the cut-off grade is changed from 0,5g to 1g, the resource grade rises to 2,4g/t . As trucking is very cheap these days, this looks like a good aquisition to me! Mine life extensions are the main valuation driver for Dacian, and this aquisition could give them another 3-4 years of mine life. Some work needs to be done, though, to improve the confidence level of their resource. I think this will turn out to be a strong deal for Dacian, even though they pay a premium to general resource-valuations. On a NPV-basis, this looks very positive, and ultimately cheap!
Strike/Warrego - hmmm another hick-up…and will take a week to rectify. Let´s hope, that this difficult and very unlucky well will ultimately make the wait worth our while!
Panoramic - is making outstanding progress on the venilation shaft - again, much faster then planned, and it should be done by mid-Dec at the latest now! Underground development is also advancing faster than planned - the contractor , which started only in mid-Agust, is already one month ahead of schedule. This should tell us, that mining conditions are very good indeed! The stock continues to be derisked ahead of a March ? ) decision to go back into production! At prices of 10A$+ for nickel , this will be a great mine once again, and will make very strong returns.While the official feasibility number is 7,80 A$/lb AISC, I think there is a very realistic chance to get that down to nearly 6$, once in full production. At a planned production rate of about 10.000t pa or 22.000.000 lb, you can do the potential numbers easily by yourself! Panoramic will start production again at a time, which looks like providing us with a very strong pricing enviroment for nickel!
Gascoyne - had another strong mid-Quarter update with some good expoloration results, and even more importantly, production of 9364 for the fisrt 45 days of the Quarter - or 6240 oz for the month. The company re-affirms it´s guidance for 70-80.000 oz this year, at AISC of 1200-1300 A$/oz. This would make GCY very cheap - but the problem with the stock is, that a 70-80 koz producer with a mine life of 5-6 years does not really excited the market, even if it´s cheap!
Chalice - is continuing to work on it´s long term appeal wiith the aquisition of two important properties. The main one is hosting 85% of the anomaly, which is subject to intense drilling in the moment. While CHN have had an access-agreement in place, outright ownership is certainly preferrable, if you are intending to bring a mine with potentially 20-30 years of mine life into production!
Oz Minerals - will eb spending 47 mill A$ for the feasibility study of an expansion of Prominent Hill. The company will continue exploring at greater depth, following some favourable drilling results, and wants to validate the economics of a shaft, which would cost something like 450 mill A$ - in return, it will lengthen the mine life, decrease operating costs, and make the mine safer to operate. Good news - and with copper all the rage in the moment, Australia´s premier, pure copper producer ( alongside some gold ), OZL should continue to go higher ( by the way, I have still have not bought any stock…hmmmm…).
Have a nice evening!
WS
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