Good afternoon
I am reading so many negative headlines and views - yet equity markets are continuing to climb the wall of worry, as are base metals! And continued , strong inflows into the ETF´s as well as physical buying support the gold price at around 1720 US$. I have to say, though, that it has lost it´s momentum for now.
The A$ is still making up lost ground, and we are just 2ct away against the US$ from pre-coronma-crash levels, and about the same in percentage terms against the Euro. It feels like the currency wants to go back all the way to where it came from!
Strike - have made an important announcement today: Agreed with the JV partner on the drilling program this year for West Errgeulla. West Erregulla 3 and 4 to be drilled , whereby the drilling of WEG3 is planne for the 3rd Quarter 2020. Shortly thereafter, it´s planned to be West Erregulla 4, and by November, the JV will make a final decision as to drill WEG 5 immediately afterwards, to catch some cheap drilling rates. The official wording for the cost of WEG has been 15-20 mill A$ ( 100% ), but given the circumstances, I would not be surprised to see the costs closer to 15 mill A$ , and below that for the two subsequent wells. Strike is dficinetly financed for the next 2 wells, possibly 3 - but that will also depend on the cash burn for other activities. In any case, Warrego will need to find some cash or get diluted - tehy had just uner 6 Mill A$ left at the end of the last Quarter. So - some more wait until Aug/September to get another uplift in valuation - unless we will see some news on offtake agreements, which both companies try to negotiate, as well as project finance ( which would be very positive, as it will potentially finance Strike without having to come to the market this year).
Genex - revenue from the Kidston Solar Project was a strong 3,3 mill A$, from 31.500 Mwh generated. This was up by 31% from the previous Quarter, and back to normal. The project operated at a Capacity Factor of 32%, the highest of any solar farm in Australia.
Genex remains “deeply engaged” with other stakeholders, to complete the project financing for the pumped hydro project. That sounds positive - you will remember, that Energy Australia signed a binding offtake agreement, but the necessary sell-down of the project to a third party will need to be done for the equity part of the finance. Very important step - it will give us a valuation of the project, and will determine the future NPV of the pumped hydro pr0ject to GNX-shareholders. I would expect this process to be finalized by mid-year.
Liontown - Quarterly out…the company has been very busy to re-work the pre-feasibility study and adjust it to the new, much higher resource. There is also detailed metallurgical work being progressed, and the pre-feasibility is generally being update to show an improved outcome of +-15% vs the previous +-25%. The company jhjas submitted all completed drilling to the independant consultant, which will deliver an updated resource by the End of May/early June. Based on the excellent drilling results announced, I would expect anotehr sizeable resource upgrade from the previous resource of 139 Millt at 1,3% - already one of the leargest in Australia, 100% owned, and without any offtake-restrictions. The company has 5,8 Mill A$ left - all drilling is completed - and funds will be sufficient to complete the re-worked PFS. Liontown now has the added sex-appeal from exploration close to where stablemate Chalice discovered the recent nickel/PGM find. If they want to drill that one halfway properly, they would need some cash…we will see…interesting dilemma for the company: dilute a little bit at what is probably a low long-term valuation for added upside? I think they might want to watch the success of Chalice for a while, before they will make a decision. In any case, this is a nice worry to have!!
Lucapa Diamonds - good Quarterly in terms of production and exploration - but both mines are currently producing zero, being closed down by the corona virus….That´s tough…hence the company has announced a fresh capital raising at 5ct + 10ct options, to finance further exploration ( and I think they can do with some money at holding company-level ! ). The company assets are very promising…but the repatriation of cash from Angola still raises eybrowes. In the current context, probably no time to rush into buying LOM, I fear!
Have a nice evening
WS
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