Good afternoon
oil and base metals are strong - I guess this is the reason for very weak bond markets in Europe today.
Equities are broadly stronger in Europe, lead by oil stocks, as the US are on holiday today - but futures are also up in the States!
Ebola has broken out in Guinea, West Africa!
A shortage of micro-chips might restrict output of cars in 2021
Strike - drilling of West Erregulla 4 is going very well! After 22 days of drilling, the well is at 2600m depth already! The first target zone might be reached in another 20 days, if it´s continuing like it currently is. So far, the well has had hydrocarbon shows analogous to the previous two wells, which is another positive. Fast drilling shoudl reduce costs of the well, which certainly have been higher than planned for the previous two wells. No drama, though. I am looking forward to hear more detail from their plan to build a urea-plant in conjunction with a larger JV-partner. This, and certainly the outcome over the current well ( hopefully with initial results by late March! ) should end the current boredom ( well, that´s at least what the market seems to think! ) in the stock. The same certainly applies to Warrego - they are much cheaper, but without the upside from urea, and potentially, at the mercy of operator Strike to some degree..
Horizon Gold - published their geological review of Gum Creek, which came up with more than 40 targets within the asset to potentially increase resources. The company notes, that the majority of previous pits and resources have not seen any meaningful drilling for 20 years, and most holes have only been drilled to 65m depth. I think they might well be right, that there is a lot of potential at Gum Creek -the only problem being, that HRN do not have enough funds to explore properly. Knowing the major shareholder, I think the chance will be high for an underwritten, deeply discounted rights issue in the not too distant future, which will hold back the performance of HRN. If not for the controlling shareholder, this stock could trade a lot higher…
West African Resources - the stock has underperformed recently a generally weak gold sector. The market is probably waiting for the new resource/reserve estimate, and the Life-of-Mine plan to be published in mid-March. I think costs might be a little higher than originally expected, mainly because of COVID. Travel costs, labor, and general costs might be up a little from what has been budgeted in the past. This should not change the fact, though, that WAF will be one of the ebst ( if not the best ) cash generator among Australian-listed gold stocks. The company is still ramping up underground mining, and that should see costs fall quite a bit over this Quarter, and the next - probably to 650 US$ or so rather than the previously expected 550 US$/oz. Still a real cash machine, and the mine life should continue to grow from underground, as well as from their satellite deposit, aquired last year from B2Gold. They continue to be my largest gold holding.
Xanadu Mines - published some excellent drilling results from the copper-gold project in Mongolia, teh ebst hole being 226m with 0,68% Cu and 1,43g gold….that is a great result. Mongolia is certainly not the market´s favourite investment destinantion, since RIO experienced all sort of problems there. And exploration is expensive, when you have to drill these deep holes to 800-or 1000m. But this kind of success certaiynly warrants some closer following. The company had some 7 mill$ cash as at 31.1.2, which should give them some room before they have to come to the market again by mid year or so.
Have a nice evening
WS