Good afternoon
well the new week has started as the old week finished…equities on the run! DAX with new, recent high, ASX as well as Nasdaq and probably S&P ( as measured by their respective futures - it´s Memorial Day in the US today )….more of the recent story: Looking for bargains and late movers!
Base metals with very little action today, as London markets are closed as well.
German IFO-Institute confidence numbers are looking strong - not for current conditions, but looking forward.
Gold ETF holdings are making a new high - but weaker inflow than more recently. Gold feels a bit vulnerable in the short term?
Panoramic - the long awaited rights hissue and placement is here! Company is raising 90 Mill A$ - 28 m in a placement, and 61 Mill in a rights issue to existing holders, on the basis of 1.15 new shares for one existing share. Certainly this is disappointing…but if you are halfway positive on nickel, I think you will need to take it up! Western Areas, the prominent Australian nickel producer, is taking a 19,9% stake via the placement and priority underwriting of the rights issue. The existing largest shreholder, Zeta Resources, which has not been good for minority shareholders, will get diluted to between 14-and 18% of the company, which is very good news. They will also have to give up on the chairmanship, as Nick Cernotta becomes Independent Chairman. Funds will be spent on all debt repayment, the full development of Savannah North including the ventilation shaft, and care and maintenance costs. Unfortunately, only 1 mill$ have been earmarked for exploration - but this could certainly change. I think that the planned mine life could be much longer than 7 years, and a say 12-15 year mine life would add a new dimension.
The question , whether you should take up the rights issue ore not, is relatively easily answered, in my opinion: As recently as 6 month ago, IGO ofered the equivalent of 45-48ct/share in a takeover offer, which was turned down. The offer valued PAN at 320 millA$+ - the rights issue price values the company at 241 mill A$. The long term outlook for Panoramic has not changed dramatically, in my view….and in the press as well as from analysts, Western Areas is being cheered for a great little deal!
I am very hopeful, that shareholders will vote down the sale of the remaining 22.5% shareholding in Horizon Gold at 20ct to Zeta. The money is not neded that badly in the moment. While the management of Horizion ( led by Zeta ) in my opinion is scandalous, the stock is worth a lot more than 20ct!!!!
Strike Energy - the company last week released a principal agreement with AGIP, an experienced pipeline operator in Australia, and owned by Li Ka-Shing, Honhkongs wealthiest man with an estimate 29 bill US$ net worth. AGIP will build and operated all necessary infrastructure to process the gas, produced by STX in Western Australia. The cost of capital for AGIP is dramatically smaller than for STX, and I believe, that by using them, this is the cheapes alternative for STX, partnering with deep pockets at a very competitive pricing for their services. I understand, that JV-partner Warrego will also be able to use AGIP´s services, should they want to. STX will no move full steam ahead I believe to drill the next well, and get a better understanding of the total size of West Erregulla, and subsequently, to drill two more wells. This will keep the pressure on Warrego to continue to find development-dollars: I think that´s also good strategy - this project in one hand is much easier to handle, and in this case, 1+1 should add up to at least 2, and probably 3! It would be very psoitive, if both companies cold agree on a merger, and I think the recently made offer of 1.2 shares in Strike for 1 share of Warrego, continues to be a fair offer. It would/should result in a furtehr re-rating of both companies! I am now waiting for the date of the start of drilling the second well as next catalyst for Strike to move higher. We are not even close to full value for Strike, I believe!
Have a nice evening
WS
WS
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