Good afternoon
unbelievable volatility has now spread to currencies: The A$ startet the day at 1,88 A$/Euro, fell out of bed to 1,97 very early our time, and is trading at 1,82 A$/Euro at about 5.00 pm European time! We really have to think about limiting the trading of machines….entire countries are at the mercy of robots…no good! A$ gold at 2520 A$/oz is very high, and is back to where it started the day!
But for whatever reason, my feeling today is, that we are behind the worst in markets - perhaps only, because it´s so quiet in the streets!
Lagarde´s 750 bill-whatever-it-take Bazooka has done the job so far today: Bonds of periperal, European countries are very strong, US$ bonds also strong but to a much lesser degree, while German yields for the 10-year bond are now minus 0,19% - the smalles negative yield in a while. This makes sense, as Germany looks like helping out other European countries in the current situation.
Equities are having a relatively “quiet” day and trade within a trading range of down 2% to up 2%
A lot of talk about metal demand falling from a cliff this year - which probably is right. But supply will drop as well - Codelco producing reduced amounts of copper, Peru scaling down production ( both because of the virus ), RIO-Kennecott out of production because of an earthquake. Let´s wait and see, when the first mine will have to close because of corona!
West African Resources - what a story! First gold pur today, 4 month ahead of original planning…The plant has been running at design capacity for a week now/recoveries above 90% /grade so far reconciles exactly as expected/first development ore mined, with visible gold OUTSIDE of the mine plan/3-6 month of everything needed in stock for production on the mine site/probably 40 mill US$ in liquidity! What a text book build-and comissioning story - and run by a geologist! Within the first 20-24 month of operation, and at current gold price/exchange rate, WAF will have paid all debt back + will have generated it´s market cap in cash! And more excitement coming, as fine tuning of the plant will probably make it exceed design capacity + exploration drilling starting very soon, unless it has been canceleld due to the circumstances!
The risk is obviously a)Burkina and b) corona….but I think both are more than in the price! The only negative: WAF have substantially outperformed all potentially interest aquirers. So WAF might have no choice, but to become more than a 1-mine producer! They will soon have enough cash + cash flow to do that….B2Gold´s Burkina asset is in trucking distance ( but would need to come cheap, as we would want WAF to process their higher grade material first to maximise NPV ), Tietto are cheap, or even Australian juniors ( like Bellevue ) sound like sexy merger partners or targets to me.
I will go home now, play table tennis with one of my daughters!
Have a good one
WS