Good afternoon
the virus infections are growing much less now in percentage terms, and could also be past their peak in absolute numbers. But the news are full of bad news from corporates, which are affected…not really raising our spirit! One risk seems to be, that a lot of infections with only small symptoms are not really counted for. Be that as it may…my feeling is, that tehy start to have this thing much better under control as time goes by.
Not much action in metals today - better initially, copper/zinc are now a little weaker, while nickel is up . Gold is still very well supported, holding above 1570 US$ all day and around a fantastic 2350 A$/oz.
The US$ and bonds are slightly stronger, while equities don´t really know what to do today!
Amazon / Google / Microsoft / all with new highs today
Heavy rain in large parts of New South Wales over the weekend - 175 mm in Sydney from Sunday to Monday morning - bringing potentially new problems, but extinguishing most fires finally.
Mrs. Kramp-Karrenbauer, the Merkel choosen successor as the next German Chancellor, steps down…well I am not crying about it…she was never capable of doing it!
Ramelius/Spectrum metals - and another bid - this time, it´s agreed! RMS are bedding 1:10 shares and 1,7ct/cash share for all of Spectrum…Spectrum was a recent high flyer, before they got held up in a law-case about title ( which was now settled for 850.000 A$ ). Spectrum have a ( largely ) underground resource of 799.000 oz at 13,8g, incl 468.000oz of indicated at 17,8g gold/t - nice grades! - in two adjacent prospects in Western Australia. Dynamic, the US Fund, is largest shareholder - but our Chalice Gold also own 7% = 97 mill shares and if I am right, they double their money on it = roughly 6-7 -8 mill$ pre-tax. Chalice got to be one of the best corporate asset traders in Australia…they have done it several times, paying some back to shareholders, and exploring very actively with the rest. For Ramelius, with nearly 90 mill A$ in cash, probably an interesting deal. But I am not a big fan of them at current levels - their mines are relatively high cost. Management is doing a good job with mediocre assets - but I am not a buyer for now here.
Oceana - came out with guidance today. As we all know, they are very unlucky with Didipio, which remains closed ( for no reason ) - that´s a pity, because it´s OGC´s cash cow! It´s great what tehy have done over the years in Newzealand, and a bit down the track in 2022 latest - they will generate nice cash from Waihi. And Macraes continues to amaze me - it´s one of these stories: Good mines never stop! But actual cash generation this year at least is no all that great, either. the Haile Gold Mine in the US seems to become right slowly but surely - but I think the market might want to see that, before it´s priced in, as the history so far has not been all that great. So unless you want to speculate on a resolution soon for Didipio, there are not that many reasons to hold them in the shorter term - even though I do like the management. Not so easy to manage operations in NZ, the Phillipines, and the US for what is not that large a company.
There are some really good firsttier gold miners in Australia like Evolution, Northern Star and Saracen. But behind that, there is nothing really compelling at current levels. In the small stocks, that´s a bit different. They still do not really exhibit a 2350 A$ goldprice. You know, that I like Horizon Gold - another one is
Apollo Consolidated - they announced todaya 1.035 Mill oz resource at 1,2g, of which about half is indicated at a 0,5g cut-off.Their Rebecca deposit alone has 775.000oz within a pit-shell, of which 71% is indicated. Since cut-off date for the resource estimate, tehy have announced 40m with 5g/51m with 2.9g/ 9m with 10.5g - indicating, that the above resource really is a first estimate only. They had 7.5 mill$ cash at at the beginning of the year - but I think they want to go hard here , and that money might not last all that long.They are not as cheap as Tietto - but they are in Australia, not far away from Saracen´s Caruso Dam Mine. I am sure, that Saracen would not be doing anything, before tehy have bedded down the recent Golden Mile aquisition- but in 12 month time, AOP might well have grown quite a bit, and by that time, could fit needly into Saracen!
Evolution - now we probably know, why they underperformed recently - La Mancha today ceased to be a substantial shareholder ( 5% ) and I can only imagine, that they want to get rid over the rest as well in teh not too distant future. I can only reiterate - if you are looking for a stable, very well managed gold producer in Australia, with one promising asset in North America - a nice div-yield of about 3% and very little hedging, this is the one! I think their next grwoth will come from taking over Bellevue (??? ) which in my opinion would fit well, once they have done a lot more drilling - but until then, EVN will want to make Red Lake work, and another deal might be 12 month down the road?
Have a nice eveing
WS