Good afternoon
conference revisited - I am looking at the stocks, which presented at our conference on the 21st of February. As at today, about 3 month and one crash later, the performance has been as follows:
THE WINNERS
Chalice + 435%
Tietto + 31%
Evolution + 27%
Oklo + 22,5%
THE LOOSERS
Graphex - 61,8%
Metro - 28,5%
Liontown - 25%
Breaker - 11%
Strike - 8%
Genex - 5%
THE NEUTRALS
Cassini +/-0
Bellevue +/-0
If you had bought every stock, obviously the profit would have been great thanks to Chalice. If we exclude the best, and the worst performer, you would be roughly breakeven, which is not too bad, either in a post-corona valuation.
More importantly, though, what to do next and what happend to these companies?
Obviously and first of all, Chalice. Tim Goyder did it again, alongside his top MD Alex Dorsch. They discovered what might be a very large palladium/platinum/nickel discovery in Western Australia. They just raised 30 mill $ in fresh equity the other day, to drive this discovery further. At today´s price of 1,22 A$, I would hold them, but not buy more.
Tietto, Evolution and Oklo are all gold stocks, and it´s probably not surprising to see them up strongly - but in actual fact, the GDXJ Index is down a fraction in A$, as well as in US$ since the conference - hence these stocks have vastly outperformed their peers. In my opinion, EVN is a hold at current levels, and will run with the gold price. Tietto is cheap still for what they have ( 2,2 Mill oz resource and growing in Ivory Coast ), Oklo is a hold, and I want to wait until they have released their maiden resource to see what the size of it will be.
Graphex is a said story, and their proposed financing of their excellent graphite deposit became a victim of Corona uncertainty. The company will be restructured, and we wait for news here, befor we can reasses the worth of it. Metro Mining are also a victim of corona uncertainty - the immediate future of bauxite prices is uncertain due to the recession. Operationally, they have had an excellent start to the year, and I am accumulating stock here at 10ct. Liontown again is subject to world economic uncertainty, and uncertainty of demand for electric vehicles. Their main project has advanced nicely ( another large resource increase ) - but lithium is not very much wanted in the moment! I am accumulating here as well. Breaker is a bit disappointing to me - the big breakthrough to show the market, that their resource will be mineable and economic, is still outstanding. Genex has delivered the hoped-for offtake agreement for it´s hydro project. The company is in the middle of the process to sell down equity in the project to a financier. That could take another 6-8 weeks or so. The stock is an accumulate as well. Strike - the company has had no major news ( which was not expected, either ) but has confirmed appraisal drilling in the second half. They have also done more groundwork on neighbouring properties, and the stock is as cheap as ever! Broker Euroz valued them at up to 42ct the other day - and I tend to agree with that target! Bellevue Gold - probably cheap as chips - some further strong drilling, a nice resource increase, Blackrock becoming a major investor, cash is ample - a stock worth buying. And lastly Cassini - as a base metal developer, perhaps not in the “wanted” space in the moment. But interestingly - they have a large ground position close to Chalice new find, which generates some interest and makes them interesting not only for long term buyers.
Overall - I think all companies are worth revisiting , except for Graphex , pending further news, and perhaps Breaker, of which I am becoming a bit lukewarm. But I am sure, that the majority of underperformers have a very good chance of making up lost ground to the others over the next three month!
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Equity markets are continuing to climb the wall of worry! Like EVERYBODY else, I am also cautious and my cash levels are higher than normal …but soooo many investors are in my position! Wheather you listen to large fundmanagers ( Druckenmiller, Dalio, Flossbach v,Storch just to mention a few prominent names ) - everybody is waiting for the “second leg", resulting in the story being unchanged for years now: corrections are only very small and short, and liquidity is ample! During the day, US-Chinese trade frictions were coming to the forefront again - this p..k , who runs the US, is creating more trouble and is trying to save his re-election!
A raft of numbers from the US…retail sales very weak, -16.4% / industrial production down by 11,2% / sentiment indicators betetr than expected, inflationary expectations are rising
China with positive numbers for Industrial Production +3,9% have been very strong in April, the consumer still finds the going very tough with retail sales down by 7,5%. Consumption is the largest part of any developed economy, and it´s proving to be the hardest sector to get going again. This is probably the main reason, why few people are now expecting a V-shaped recovery!
German GDP sank by 2,2% in the first Quarter, and the second Quarter will undoubtedly be much worse.
Gold ETF´s saw a large inflow of nearly 500.000 oz yesterday….about 24 bill US$ went into ETF´s this year…and gold is looking strong at 1743 US$ ( 2717 A$/oz ), once again! The bull is feeding the bull…not so hard to buy some more, if you bought some lower already! And momentum is certainly with us! And in gold-equities we can see, that the large gold stocks ( GDX ) are moving more strongly than the smaller ones ( GDXJ), which have not made new highs as yet. Big money is moving into our sector!
Oil continues to move higher - highest level in a month at 31,70$ for Brent…but forward curve relatively flat, with Brent at 37,26$ 12 month out.
Panoramic - have finally sold their platinum assets in Canada for approx 5 mill A$ cash now, and the same over the next 3 years in three instalments. I think this comes as a pleasant surprise. I assume, that a large capital raising will be with us shortly - so I assume, that I will VOTE AGAINST Panoramic selling the remaining holding in Horizon Gold at a token to the largest shareholder, Zeta Resources! The necessary AGM or EGM has not been called as yet - so there will be a lot of time to organise the voting. In my opinion, Horizion is woth dramatically more than the 20ct/share offered by Zeta.
Sheffield - they have not really recovered so far…on the 31st of January they were trading at 30ct, today at 12ct vs an absolute low of 7ct in March. Major shareholder Colonial ( following a change of fundmanager , I believe ) , have completed their selling then, and a few traders, who bought stock at rock bottom, are continuing to sell out at current levels. Prices for mineral sands have not really fallen - some have gone up! Production problems/closures of mines ( Richards Bay, Sierra Rutile ) have reduced supply by more, than demand has fallen. And there will be more mines running out of reserves over the next few years. In my opinion, the positive outlook for these things has not really changed, provided the world economy will get slowly back on it´s feet ove rthe next 12-18 month. The story remains unchanged - the company needs a lot of equity to get their excellent project going - and that is very hard to come by in the current investment climate. I believe, though, that Sheffield is still in talks to some interested parties, while they are rebouting the project to something, which needs much less capital. I am expecting more news re those plans for the next Quarterly Report, which will be out in July - maybe earlier. Everybody I speak to still likes this project…I am acuumulating stock here, while there is some around. In a halfway normal market, it´s not hard to see them going back to levels from earlier this year, and longer term, potentially more. I think it´s very worthwhile to keep this stock in mind and buy some, while very few people are doing so! Just look at a 1-or 2-year chart and you know, what I am talking about!!
This is the end of a busy week! Have a nice one!
WS
WS
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