Good afternoon
Finally a day, on which the virus is not grapping all headlines! And looking at the numbers, we seem to be behind the worst, as China is slowly getting back to work!
Equities are stronger , the US$ looks like it might test old highs again ( Europe´s economy still very lacklustre, and German politics don´t help either ) , and base metals are better. Bonds are down a little, while ( perhaps surprisingly ) gold is holding against the backdrop of a strong US$ and a declining virus-risk.
West African - there have been more deadly attacks over the last few weeks, killing many civilians in the North of the country. So far, the violent attacks seem to be confined to the very East, and the North of the country. let´s hope that it stays that way! In the meantime, WAF is making very strong progress with construction, and is getting close to comissioning - 3 month or so ahead of plan! At current gold prices, WAF will make more than 1000 US$ in net cash per ounce in the early year or two of operation - on close to 300.000 ounces, Sanbrado will generate more than 300 mill US$ in the first 12 month of full operation! They will have a payback period of less than 12 month …Importantly, they will start deep drilling again soon. Given, that they have previously reported excellnt results from an area 200m below the current resource, any news here will be well received. Every additional year of undergound operation will be worth about 20% of the current market cap! Semafo, which is the mining company who´s mine had to be closed a few month ago following a bad terrorist attack, is generating less EBITDA and is capitalsied at nearly 3x WAF´s market cap. I dare to say, that WAF will be rerated, once in full production - even though probably not to 1$ or so, as they should, because of the one-mine risk, which in Burkina, is more prevalent even than in other countries! WAF continues to be one of my major positions in the fund.
Evolution - I forgot yesterday, that La Mancha also had a structured option position outstanding in Evolution. That is good news in so far, as by now, La Mancha should have finished selling - closing out a long and very profitable relationship with the company. Well done, Mr.Saviris - even though I am not so sure, that you will become happier with your position in Endeavour Mining! The safe haven Australia has got many advantages!
Have a nice evening
WS