Good afternoon
China is setting equity markets on fire today! The government controlled newspaper inspired Chinese people to buy equities - and so they did! China was up by nearly 6% today, and is now trading 14% up from the beginning of the year! Europe floowed up with nice gains, and the US is now firing as well. The money, which has been waiting on the sidelines, is at least partially coming into the market now…
Despite terrible virus-statistics in many countries, base metals are also very strong, up by 1-3% today, lead by copper and nickel. And gold is also looking good - trading above 1780 US$ and pushing the GDXJ to new, recent highs.
The Services PMI in the States was stronger than expected - but factory orders in Germany gained 10%, which is worse than expected.
Gold has been steeling the limelight, but base metals are now at a level, which I think makes it worthwhile to look at smaller base metal stocks, which have been laggards in this unprecetended bull market since March. Gold stocks are also seeing massive supply ( and possible market saturation? ) from several, quite large capital raisings in relatively mediocre developments, potentially leading to a more lacklustre performance of the sector.
Here are two base metal developers you know already well, which might be ripe for better performance:
Panoramic - nickel prices are hitting recent highs, yet Panoramic is still suffereing from the large and very dilutive capital raising at 7ct. Technically, these things are bad, and certainly, a very large emergency raising like the one we have seen recently are bad news for the price target. But I assume, that most of the eraders of this blog have averaged down and have subscribed for the raising. If you have not, I think it´s time to llok at PAN at today´s price of only 7.4ct! Nickel is coming back into vogues, as stainless steel markets in China have improved, and as EV sales in Europe are gaining pace and market share. Also, the recent nickel discovery of WSA has improved it´s share price, making it more feasible to make a paper-bid for PAN. As you will recall, WSA has taken a big part of teh ercent capital raising and has emeregd as the largest holder of PAN, with 19,9%. That´s a great springboard for a full bid - WSA is up by 20% or so, while PAN is languishing! Also fundamentally and just looking as it´s own merits, PAN are cheap at around the rights issue price. I do not expect a board decision to go into production any time soon, while the company is active to finish the ventilation situation, as well as finishing all underground development work to be able to start mining underground in full swing - once a decision to restart has been made. That will only happen closer to the end of this year, provided nickel prices are looking halfway positive. But once it´s happening, it might be too late to buy the stock - at least for the initial 20-30% improvement. So I think it´s time to refill your boots with Panoramic! The forced suppy cut by Russion regulators at Norilsk ( following the large diesel spill ) for 90% over much of the procution will also help the supply/demand equation in nickel - so we could see a nice surprise from this as well.
Foran Mining - I have not bene talking about them for a while, as the stock has been completely friendless and dead in the water. Hopes for a corporate deal have not come true, and therefore , the stock has trickled down. But except for needing a lot of money to get a mine up and running in Canada, I would remind you, that at 3$ for copper and 1$ for zinc, this is a very profitable operation! The share register is very tight and controlled by smart money, which does not really care about making a little bit of profit in the short run, but a lot of money in the long term. That might be a problematic approach for minority shareholders, especially, if tehy are public funds, which need to perform also in the short term. But for the first time in ages, the stock is now well bid, and it looks like tehse bids ( like in the past ) are not being hit with supply from bored investors immediately. Just before the virus hit markets, FOM was tarding at 23-25ct/share - now they are trading at 12-13ct! I don´t think it will take long for the stock to go back there, if the current strength in the physical metals continues. Copper is already back to pre-corona levels, and zinc is just 5% below that ….So I think for private investors, there is a nice punt here! For institutional guys, the stock - unfortunately - is too thin and illiquid!
Have a nice evening!
WS
Schröder Equities GmbH
Seitzstr.7a
80538 München
Tel. +49-89-4613440-0
Fax +49-89-4613440-10
email: wschroeder@schroeder-equities.com
website: www.schroeder-equities.com
eingetragen im HR München, HRB 166985
Geschäftsführer: Wilhelm Schröder
The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by