Good afternoon
I spoke to a mining CEO today, about how Corona could affect mines…He believes, that the risk of mines actually closing is pretty low at this stage. They are taking precautions, like constantly checking on employees etc, seperating shifts and so on. Every worker returning from a problem area, is being sent to voluntary, 2 week quarantine etc etc….That does not remove all risk from the virus, but clearly some of it…I guess these things will add slightly to costs - but the very weak oil price on the other side is certainly helping the miners!
The very high death rate in Italy , as well as the very high number of infected people in neighbouring Switzerland, let us believe, that the true number of infections in Italy is much larger than the reported 10.000 cases - probably double, potentially triple! But italy also has the oldest average age of population in Europe - the average age of people dying from Corona is 81 years, and many of those, had pre-conditions.
Merkel and Trump are doing absolutely nothing so far- except for rethoric!
The crazy volatility does continue…metals are down by 1% ( nickel by 2%) , while gold is trading just below 1150 US$. Inflows into ETF´s are continuing…And so is the disappointing performance of gold stocks. I think they are generally very good value in the moment, as the A$ gold price at 2330 A$/oz is trading just a little below the all time high. By late afternoon European time, the GDXJ is trading at the same level as in July 2019, when gold was around 1400 US$/oz!! Gold currently is 1649 US$!
There certainly is some correlation between equity markets, and gold stocks - it´s even higher very short term than the correlation between gold and gold stocks: Over the last few trading days, gold is hardly changed, while gold equities as measured by the GDXJ are down by 12-13%!
BASF together with the large South African producers claims, that they have developed a catalyst, which uses platinum instead of palladium for gasoline engines. They believe, that it could have some impact in 2022-2023.
Evolution - Macquarie/BHP veteran Vicky Binns is joining the board…a smart woman, and a good addition! Great to join a board at a time, when the company is just printing money!
Perseus - updated development progress for Yaoure with a video. I have compared it with previous updates on West African Resources, which is now ready to go. I think PRU are still on target for comissioning of Yaoure before year end - so all looking ok at this stage. The stock has got quite a hammering, from a recent high of 1,30 A$ ( which probably was fully valuing PRU at the time ) to a current 0,925 A$. That is overdone, as is the case with many gold mines currently. PRU have delivered very well over the last few Quarters, and I would buy the stock down here. There is clearly some development/comissioning risk associated with Yaoure - but the company has previously shown with the smaller Sissingue, that the team is well capable of development on time and budget. One problem I see with it is, that tehre are many people running around at a construction side, and you cannot so easily control workers coming in and out of the site - hence the risk of some people catching the virus is much larger, than at a “normal” mine site. Still - I think the stock is very much on the cheap side here at current gold prices.
Newcrest - cut guidance for Lihir by about 1500.000oz or 15%, and for Telfer by 40-50.000 oz or about 10%…Cadia and Red Chris doing slightly better than expected, but not nearly enough to make up for Lihir especially. As I said so often - there is no reason to own NCM..and there is not after today´s fall, which was just a liitle bit worse than the average gold stock.
Panoramic - here comes Andrew Forrest?? According to a press article in Australia, his investment company has been buying a stake in PAN. Fact at this stage is, that somebody via Credit Suisse has been buying a lot of stock. Fact is also, that Andrew is the second largest shareholder of Poseidon Nickel ( where Peter Harold is now Managing Director!! ) , the largest shareholder of Mincor…and according to the press, has also held talks with Western Areas. Is he planning to consolidate the smaller, Australian nickel producers? This would not only make sense - it would also be typical for Andrew, who likes to think big! PAN responded to the press article, as you would expect: Holding talks with Third Parties, Data Room still open etc etc…That´s all tehy can legally say. Watch this space! Poseidon Nickel had 51 mill A$ in cash as at 31.12.2019, and tehy are spending very little, as they also have very little at this stage to spend the money on! 51 Mill A$ would ve very handy to bring PAN as well as MCR into full production…without any problems and financing constrains! Everybody knows here, that I am close to Peter Harold - but please do not believe, that any of the above is from him!!! He would not tell me anything…so I do not even worry about asking him!
Have a nice eveing, and try to relax with some soccer - albeit without any fans!
WS