Good afternoon
European car sales in January were very weak - but the US saw some massive numbers today: The PPI ex Food and Energy rose by 2% YoY vs expected 1,2%…Retail Sales advanced by 5.3% vs expected 1,1%!!! Industrial Production up by 0,9% vs expected 0,4%!!
Bonds had a big day - opening weaker once again, the US Bond rallied to make up for some of yesterdays heavy losses. Still, I think there is a clear path for interest rates, and that´s up I fear! Tech stocks won´t like that!
Gold is not looking any good..it´s down by another 22$ currently and looks to break some chart support…
Not much action in base metals, but they are slightly weaker today.
RIO came out with another strong result…dividend a big surprise like in BHP….Those two stocks alone will go ex div for 12 bill$ or so in early March and will pay in late March
Some talk about China limiting the export of Rare Earth sent the sector on fire….from Lynas to little Peek
Evolution - stock fell 10% despite a better than expected result…and a nice reserve increase! Ore erserve up by 49% ( 2.9 mill oz at Red Lake, 1 Mill oz at Cowal underground ). Decline to access Campbell underground reserve at Red Lake approved, first production by the end of 2nd Quarter 2022. Cowal underground ready to be developed as soon as approvals are in place. Underlying net profit up by 57% to 234 mill A$ is a little better tha expected, but should not be a big surprise given the excellent gold price during the half year. Group cash flow though has been down by 105. Reason for this is mainly Red Lake - high sustaining capex and high costs, following the aquisition. I think we will have to live with that for a while, even though as costs will slowly come down. But this is a very long life asset, and the old and tired mine is being rejuvenated, which initially, costs a lot of money. This is an investment in the future of Evolution, which will end up owning three Tier 1 assets with Cowal, Red Lake and Ernest Henry, which is a fantastic cash cow and will remain so, even as the gold price is under some pressure, because of the large copper by-product credits ( copper in A$ is up by 10% on average so far this year, vs the last half year ). I am not very keen on gold in the short term - but this has been an excellent result from an excellent company! Especially the falling gold price will expose a lot companies - not so Evolution, which is still calculating it´s reserves at 1450nA$/oz, which will preserve a high margin and much better than everybody else!
Have a nice evening
WS