Good afternoon
Mr. Trump think´s, that it´s a good time to stop payments to the WHO! The world of politics is ruthless - using even the Corona-Virus for campaigning…anyway, this also happens in Germany!
Factory output in the States slumped by 6,3% - apparently more than expected, although I find this number very reasonable in light of the situation. But investors are looking for a reason to sell some stock today anyway, following the very sharp and relentless rally recently. Equities are currently pretty weak across the world, down by 2-4%. I think the market is not happy with the oil price at all - potentially, it has bad repecussions, for example for US credit markets!
Oil does not seem to have a floor at all…I think prices are falling so heavily, as everybody trying to produce as much as tehy can before the agreed cuts fall into place in 2 weeks time…and reportedly, there is no storage left to arbitrage with later deliveries. The fall of oil I believe to be a temporary thing…but obviously, I am not an expert here! But at 20$ for WTI, and sub-2$ for gas, you will not see many shale producers survive !
The lockdown get´s weakened more and more…Germany also starting on the 4th of May…
The corona infection curve seems to be flattening everywhere now…Australia continues to be just about the best-in-class…
Gold ETF´s saw the equivalent of about 40t of inflow over the last 2 days…that´s massive! ! Approx 2 bill US$…and Newmont/Barrick with anoother high today. Is big money finally moving into gold? As the A$ has given up some of it´s massive gains today, gold in A$ is currently at 2726 A$/oz, while it´s trading around 1720 US$.
Gold stocks continue to be well supported - some money seems to move into the more adventurous part of the market!
Chalice - another big move today!! Company announced more drilling results, some of them containing nice Palladium grades like 33m with 6,5g Pd/0,7g Pt/1,6% Ni and 0,7% Cu - some wide intersections of lower grades like 119m with 0,6g Pd and 0,1g PT and 142m with 0,6g Pd and 0,1g Pt - for the latter holdes, assay results for base metals still outstanding. All holes have not be assayed as yet for Rhodium ( having a price of 8000$/oz! ) and other PGM´s. There is only one laboratory in Australia, which can do this - it´s very rare in Australia! The results confirm the expectation, that this could be a massive deposit of 10´s of million tonns - but obviously, and just with a few drill holes now, it´s still early days. And very important: we have no metallurgical testing as yet…that will need a bit of time as well. Drilling is ongoing, assaying is ongoing - we will have continues news-flow here over the next few weeks and month! As you know - the company is very well cashed up and does not need any money, even to continue drilling a potentially very large deposit like this one. Still - I am sure, that if Blackrock came along and offered them to take a placement of 20 mill A$, they would be very tempted to take that - and probably, they should. I find it absolutely unbelievable, that a Tim Goyder-related company has done it again! The gentleman-explorer with the Midas-touch!
Nobody has ever died of taking some profits - and everybody should probably take a few chips off the table! But I would like to remind you, that the Nova nickel discovery in Western Australia has been sold for 1.8 bill A$, only I think 2 years after the discovery hole! This Julimar-thing of Chalice looks like it might be of a similar magnitude. That would leave a lot of money still to be made…Broker Euroz issued a very bullish note today, having a next target of 1.50 A$ on the shares. I think any target would have to be very tentative and speculative in nature - it´s just too hard to value a potentially very large deposit - but with only a few drill holes drilled as yet!
Great to have some good news in Chalice, as there is always some bad news around as well:
Panoramic - and this one is bad news, indeed! I have been pushing and believing in them for a long time, but today really was not my day…The mine is being put on care and maintenance with immediate effect! PAN have been bleeding cash fro some time as a consequence of the well documentated start-up problems. Operations have become even more difficult with the arrival of the corona virus, and associated measures taken, which have slowed down the operation a bit. Having said this, the Savannah North ore body so far has performed as expected, which is very good news longer term. But for now, the weak nickel price, and ove rthe last few days, the very strong A$ have jeopardized any progress…
Mind you: PAN are not bancrupt! Yes, the company has 30 millA$ in debt with Macquarie Bank, and no hedging ….I believe, though, that the comnpany has a double digit million $ cash position, still, leaving room to pay off the contractor, and whatever there will be in open bills. But certainly, this is a very tough situation for the management, and I am sure, that fresh financing will be needed. This leaves the door open to fresh equity, more debt ( which would come under tough terms ! ), and also corporate action. It sounds odd - but I have no doubt, that this asset is worth more in the longer term than the current equity + debt….In any case, care & maintenance is bad news for shareholders. The company will stay suspended on the ASX until probably 4th of May, when management wants to announce results of a financial and operational review. Until then, there is room for a lot of speculation…
Sorry about this one!!!!! A victim of a mixture of bad luck, and bad circumstances….I do not believe, that the current management has done anything wrong here. That is not to say, that I am happy with the major shareholder…their action re Horizon Gold is very disappointing, and is neglecting the interests of smaller shareholders.
Metro Mining - are having a great start to the year at their bauxite mine! The first ship has been loaded today, as 142.000t have been mined already. The larger trucking fleet, as well as the larger ore screener are performing well and should ensure higher production this year. No corona issues so far….I think bauxite prices are somewhat lower in the moment, but so is the A$ and are shipping rates. I have seen a broker report saying, that the expansion will be a few month delayed because of the late clearance of the 47 mill$ financing…but the same broker sees the company valued at 30% free cash flow yield, once the expansion will be in place some time in the second half of 2021, and has a share price target of 26ct…I continue to believe, that Metro Mining are relatively low risk - the only negative being, that it is a one-mine company, which has some risks in itself!
Genex - share price has been pretty weak today…for no reason. This started yesterday - after a strong opening, some selling pressure came into the market, which intensified today. Rumour is, that there is a large fund behind it, who has some issues and is rumoured to have significant money outflow, and which is currently selling the balance of his holding. A good buying opportunity!
Silver Lake - released a strong Quarterly, producing 65.500 oz at AISC of 1380 A$/oz. The company has upgraded guidance again, by 10.000 oz. Excellent result , especially in light of corona-implications. The company has grown it´s net cash position by 41 Mill A$ to 227 Mill A$. SLR have 1 total of 184.000 oz hedeged until June 2022, at an average price of 2100 A$/oz. Not nice, but not too bad either! The company also announced some nice drilling results from Easter Hollows, next to the existing Daisy development.
Oz Minerals - a good Quarterly, even though costs were a little higher than expected. But production of 20.200t of copper and 55.600 oz of gold was higher than expected as well. Costs at the old mine, Prominent Hill, were higehr than expected, but the new Carapateena Mine has started well. OZ Minerals have minimal debt, but cash will build up again in the second half, when Carapateena is approcahing full production. All well here - OZ Minerals remains the prime copper exposure in Australia!
Have a nice evening
WS