Good afternoon
sorry I deleted yesterday´s report, when I wanted to post it…after that, I could not be bothered!!
Just two quick points from yesterday:
Perseus - have treated the first batch of ore at Yaoure - the ball mills are turning! Let´s hope, that the comissioning phase will continue as smooth as the beginning! So far, all looks good. Theproejct was completed within it´s so called stretch-target - to produce first gold in December 2020. I think this is a remarkable achievement at a time, when COVID made everything difficult! Back in March/April, I would have bet quite a bit of money on this porject being delayed by a couple of month! Well done and congrats!!
West African - announced some more very high grade hits around 20g gold with good length from their current underground drilling at a depth of 850 m - extending the current resource by another 500m down dip! This is excellent news! Two more holes in progress - tehy need to be finsihed, before a new ( inferred ) resource can be estimated, which will only be in January. My guess is, that the LOM-plan, which was originally expected for December, might take until late Jan/early Feb 2021. Every drill hole down to this depth does cost approx 500.000$ - so further drilling to establish a higehr confidence class of resources will be done over time from underground, which will be a lot cheaper. The strong consistency of the underground ore body should be good enough, even with only inferred resources, to get the LOM-plan done! WAF look like almost certain to produce 200.000oz over 10 ýears or mroe now - and that´s before Togea comes into play, with 1,1 mill oz in resources, at betetr grades than the current open pits. Drilling of Togea to increase confidence, extend the resource and enable a feasibility study, will start next week. Can´t believe, just how cheap WAF are under 1$ - despite the location in Burkina Faso.
Today:
The US$ gas clearly fallen through a strong support level, and could now extend losses by another 3% or so - that´s the target on the charts - some analysts expect another 10-15% over next year, which might be possible! That´s not good for our miners in Australia, as the A$ seems to be well on it´s way to 80ct against the US, from the current 74,50. That means more downside from the currency - but the way base metals are behaving, their price performance is easily making up for the strength of the currency.
Today, base metals are struggling a little higher, following a weaker start this morning. Gold is stronger and tzrading at around 1837 US$/oz currently, equivalent to 2466 A$/oz. That´s up from a recent low at 2400 - but I am not sure about the A$ gold price. Further gains could be very limited here because of the strengthening currency. While there are many reasons to continue to buy/hold gold, I think Macquarie is right to expect a strongly steepening yield curve next year, which would have some negative implications for gold. Heavy outflows of Gold ETF´s are continuing, and the performance of the GDXJ in North America does not inspire a lot of enthusiasm for gold in the short term!
The big news today is the disappointing production forecast from Vale, cutting it´s guidance by about 10-20 millt this year as well as next! The iron ore price reacted with a new 7-year high at about 139 US$/t, and this has put a rocket under Fortescue as well as RIO and BHP´s share prices. Mr.Wong, the legendary investor in Fortescue, made another 200x his investment back in 2003 ( he invested 1,2 mill $ and kept all his 93 mill shares ever since!!! )
Foran Mining - canadian broker Paradigm isued a research report today, with a first target of 1,10 Can$/share and a NPV of 1,98 Can$/share. They see furtehr upside to it, if FOM can deliver on exploration, which seems highly probably given they have had some promising intersections outside of the current resource already. Paradigm is making a few assumptions to arrive at their valuations - but I think those are very reasonable. They are using a copper price longterm of 3,08 US$/lb - today we are at 3,50 US$, and Goldman´s see a retest of 4,50 US$/lb on the cards!!
Evolution - talking about copper…EVN are producing about 22.000t p.a. of copper as by-product. This could add additional 20 mill$ in profits p.a. vs the last Quarter, annualized, and is a very nice little extra for them!
Have a nice evening!
WS