Good afternoon
markets stabilizing more today! I think the relentless selling at any price seems to be done…let´s hope, that I am right! But totay, I would not be a buyer - it´s now running too hard! Hard assets are racing as well…copper up by 6%, nickel 3,3%…gold at 1618 as I am leaving…
Gold especially is looking better by the day. I think / hope, that purely liquidity driven selling has largely been done…and as I believe in a stabilisation of markets generally, I think gold is a raging buy!! Virtually unlimited quantitative easing by central banks around the world, massive fiscal support…there is absolutely no doubt , in my opinion, that this is very bullish for gold and hard assets generally - incl equities. But gold is the much saver bet, until we have a clearer picture about just how bad this recession will be, and how short/long it will be. Gold has hit a new A$ all time high today - currently at 2734 A$/oz!
It should not take all that long for smaller gold stocks to join in the rally…and things like Bellevue, Apollo Consolidated, Oklo, or Horizon ( to mention a few ) which will produce gold at some stage ( or probably get taken out! ) , and preferrably are based in Australia ( not so Oklo, obviously ) should be bought while few investors want them! The GDXJ is up by 14%, as I am writing - at 5.30 pm my time.
South Africa is closing all mines for 21 days…is this perhaps done to be able to send many thousand workers home, and to prevent unrest at the mines???? I think South Africa is very vulnerable to major political trouble - people are very unhappy with the current situation, very high unemployment and a large percentage of population having absolutely nothing - and many millions living in home towns, where you cannot escape the virus. potentially, a very explosive situation!!!!! And in any case - major bull points for palladium/platinum and also up to a degree, gold.
Mine closures/reductions of operations are now happening just about everywhere! Australia, though, is treating mines as essential industry. I think this is a smart move - small part of the population in mostly remote areas, generating a large part of exports/GDP. I think Australia will be the last place to shut down it´s mines. And once again - buy Evolution - just about all production in Australia, from many different mines….
SEMAFO - takeover from Endeavour, at a 27% premium - paper only. Makes perfect sense for me - creating a West African “major”….Obviously, Endeavour, which knows Western Africa very well, is not afraid at all to buy Burkina ! Should be very good for West African Resources, which is bloody cheap vs SEMAFO - probably half their valuation, depending which measure you are using - if you use earnings, probably 1/3rd!
Metro Mining - announced, that they will be going into production as planned, following the wet season . Mining will again in early April, with first loading of a vessel in mid-April. All production for the April Quarter has been confirmed as “wanted” by Chinese customers. I guess that´s as much as you can hope for in the current enviroment. Still - except for indigenous workers from the mine area, all staff I believe are working on a fligh-in-fly-out basis, which does not make things any easier these days. But they are lucky - enough time to plan things properly, and the most important thing: Customers still want the material! Freight rates are low, and I believe have been fixed, and the A$ is ultra-low - so the price received for their bauxite should be ok. This should perhaps not be surprising: You wonder about all this production from Guinea, which is all shipped to China - and usually, is produced by operations, owned by Chinese companies. They will have thousands and thousands of Chinese working there. You wonder about the virus on their mines…and the security of supply from Guinea ( which also has what looks like a difficult election late this year ). In any case, I am very sure, that Chinese alumina smelters will want to assure diversity of supply as much as they can!
Bellevue Gold - I was a bit disappointed to see the stock suspended the other day - for a capital raising!!! With 10 mill$ in the bank, I thought the currently very low share price was very disadvantageous to raise equity! But looking at it in more detail, I think the placement is very opportunistic: 20 Mill A$ are going to a corner stone investor ( we will only find out in the next few days about the identity ) at 30ct. This is very dilutionary, and yes - the share price is very low. But these days, it´s probably wise to be financially strong, and the company still needs a few Quarters of drilling to bring say 1 Mill oz into indicated resources, and find out about the potential size of this deposit. So I believe, that the company will be able to get a lot of value out of these 20 mill A$ - hopefully multiples. Personally, I had just bought stock at 35ct and 32,5ct - so bad timing! Bad with gold at 2700 A$/oz, I sincerely hope, that the stock will open much stronger !
Strike Energy - have mad a non-binding proposal to the board of Warrego, to take them over at a ratio of 1.2 shares STX for 1 share of Warrego, which was turned down by WGO´s board as inaedquat. It would have given Warrego shareholders 31% of the enlarged company.This transaction would have been very positive for both parties, I believe…and I think also reasonable fair to WGO shareholders. STX have much larger, prospective acreage in Western Australia, much better board and management, much higher cash position ( Warrego will only have just over 6 mill AS$ cash by the end of the current Quarter ), and the much better shareholder structure. Pity, that it was not accepted….
Chalice - announced their first drill hole from a property called Julimar, just 70 km North of Perth. What a stunner!! 19m with 2,6% of Ni/1% Copper/8,4g platinum and 1,1g palladium from 48m are absolutely incredible, and every explorers dream! Especially notable is the occurence of significant PGM´s in the result! Stock had a big rise of just over 100% since the announcement! Anotehr big winner for the Tim Goyder camp, following Liontown and Strike Energy! But don´t get too carried away just yet - one hole is obviously not a mine! But everybody including outside geologists is very excited - it is certainly highly unusual to have such a result with the first hole, proving their good work as well as their instincts + good luck! This is certainly one to follow, and in normal market circumstances, I would tell you to buy some! They will continue drilling here.
Oklo Resources - more excellent drilling as well from their Seko property in Mali. Very recently, they had announced stunning results from the occurence SK1 - this time not amazing, but good grades from SK2 and SK3: 36m at 3,2 gold /43m at 2,77g / 27m with 3,95g / and so on….Not sure, wheather the drill density is tight enough for these results to be included in the maiden resource statement, due some time in the 2nd Quarter. SK1 has also seen more drilling, but no results out as yet. The company has raised a fresh 12.5 mill A$ just 3 weeks ago - so they are going well cashed up into this difficult time! All expats have left Mali, but the local team will continue drilling - at least for now. Great results - the stock would never trade at 16ct , if not under the current circumstances! the capital raising took place at 21ct! With Black Rock, Ruffer, Resolute and Dynamic, the top 4 shareholders are all professional and smart gold investors!
Tietto Minerals - announced more hoels from their property called AG in Ivory Coast: 10m with 13g gold / 6m with 9g below the current resource ( 19,3 millt at 2,2g for 1,38 mill oz ), extending it down by another 50m. AG is open down dip and along strike. The deepest hole so far, down to 550m, has also been drilled - assays pending.. AG drilling ahd more, but lower grade intersects like 13m with 1,43g, which should aslo add to the resource. Drilling continues….I do prefer more advanced stocks in the moment…but Tietto are very very cheap at a market cap of 53 mill, of which about 15 Mill$ in cash!!!
Have a nice evening, and stay well
WS