Good afternoon
Sorry - I forgot to send this out yesterday:
amazing…it took not very long for Wirecard to go bust! Absolutely appaling, that EY and the German watchdog f…ed this one up badly! I am sure, that tighter regulation will follow and will make life for the small firms like mine more miserable and more expensive - and I am also sure, that BaFin will not find the next fraudulent situation any earlier, still!!!!
Durable Goods orders in the States very strong, but labor market still weak! Corona cases in the States and South America remain very worrying indeed! Bloodbath politically - the US have tried to spend their way out of Corona - but all these trillions don´t help, if not accompanied by smart political respons as well. Countries like Germany, Australia and China have done well ( or at least: have been effective ), and under the circumstances, I would say that Italy, Spain etc have done relatively well also. South America has responded well, except for this lunatic Bolsonaro, but their large, unofficial economies have made it hard for them to be effective - same for India. Africa might be enxt? I hope not - yesterday, I spoke to a guy who is running a relatively large charity in Burkina, and he believes, that the situation in most West African countries is actually improving.
Base metals are doing little today, as is gold…and not much action in equities, either!
West African Resources - large Australian fund manager Mitsubishi ( the former Commonwealth Bank arm ) has sold 16 mill shares recently, reducing it´s shareholding to 60 Mill shares. Understandable - tehy have done very well out of it, and when that happens, you just should take some chips off the table. But fundamentally, this company is still one of the cheapest gold producers around! Richard Hyde does not make a secret out of being on the look for aquisitions, to reduce the one-mine and one-country risk. He has shown to be an excellent manager - but he still has to prove himself as an aquirer. He is a sensible guy and not a bull-shitter - so I ahve a lot of confidence in him! Still - there is a little bit of risk here. M&A game is different to the mining game! But I also believe, that there are a few good situations still around in Africa. Once in full rpoduction from underground - say 1.10.2020 - the company will generate something like 500 mill A$ in cash from Sanbrado - absolutely amazing! Net debt is only about 185 Mill A$…By year end, these guys could be debt-free or thereabouts - and ready to go on the aquisition trail. If the asset/company they will buy is not too large, they will probably move earlier! Something like Tietto - and I can think of 1-2 others - are small enough to be bought as soon as WAF prove, that their underground is going well…that might be by October or so. But the next trigger could be exploration results from underground drilling, later in July.
Mincor - announced an underwritten placement of 60 Mill A$ ( incl SPP ) at 72ct/share. Once in full production, their EV will be something like 300 Mill A$…That´s not cheap vs Panoramic, which is a similar company - producing a bit less but for longer, at similar cost. Exploration potential for both companies is excellent. But with MCR at 300 mill A$ and Panramic at about 170 Mill, I know which one I would buy! The share price dirrence can easily be explained by management: I think the guys at Mincor have done an excellent job, while Victor at Panoramic is still new to the public game, and still has to prove himself. And both have a similar, largest shareholder: MCR have IGO with 10%, and PAN have WSA with 20%! And Andrew Forrest also ahs a large shareholding in both companies…
Tietto - once again, tehy announced some more nice intersections from their Ivory Coast project. The next resource statement is due in September - hopefully, we will see 3 mill oz or thereabouts! The company continues to drill with 4 rigs around the clock…2000 asays are still oustanding from previous drilling. As far as I have heard, a very opportunistic, well known fund has been selling his original holding of 20 mill shares, and should be close to being finished! Taht would be great news - with 3 mill ounces, the company should be worth 300 mill A$!?
And in the following, today´s report - which does not really has so much to say, as we have little micro-news
Equity markets in Europe are looking stronger, following a volatile opening. Ongoing concern about new infections are creating some cautiousness among investors - but so far, liquidity is having the upper hand. I guess the 30th of June is also helping - Quarter end is always important for funds, and nobody wants to see prices tank ahead of it.
Base metals are pretty strong today - supply concerns regarding Chilean and Peruvian copper production are helping. Copper is nearly back now to where it started the year! Gold is having a quiet day.
The speculative wave in Australian exploration stocks still continues! Degrey, which traded at around 5ct 6 month ago, has hit a new high at 89ct today - a market cap of more than 1 bill A$! All a bit crazy, despite them having had a very succesfull 6 month in deliniating a substantial gold resource in Western Australia. But this kind of euphoria is certainly good for the market - for as long as it lasts! The last one is always bitten by the dogs, though!
Have a nice weekend!
WS