Good afternoon
Gold ETF´s continue to see outflow…not massive, but steady. A bit worrying, if an old gold bull like Gundlach is moving to bitcoins…Gold tried to recover this morning, only to come back and to trade unchanged by late afternoon.
Labor market numbers in the States were weak…following on from a strongly rising PPI yesterday, Import-as well as export prices rose strongly last month. Bonds are weak, yet again…they are starting to worry me…
Base metals are booming on the first day after the Chinese holiday! Copper up 2,8% and approaching 4 US$/lb nickel up 1,25% and trying to go through 19.000 USD$/t and approaching 9 US$/lb!!! Zinc also strong, but no new highs as yet. Having said this, mining stocks are having a break - just the large end of town is moving nicely! And iron ore is trading at the recent high, making billions for the large producers and their shareholders! I wonder, what investors will do with the exorbitant dividends being paid out soon..just the big three Australians will be paying out more than 15 bill A$!
Kingsgate - good old Kingsgate…Apparently there was a discussion in the Thai parliament yesterday, which also referred to the situation suurounding the Chatree Mine. It apparently became clear, that the Thai government has been advised by it´s legal advisors, that tehy might have to pay compensation to Kingsgate! KCN seems to make progress on receiving potentially a few hundred mill A$….Additionally, tehy have their Chilean silver asset, which at current levels for silver, is a very valuable asset. If you have held on for so long, I would definitely continue to do so…sounds promising - but obviously never a safe bet to depend on court outcomes!
Fortescue - The expected, strong result, and as expected by many, a larger than planned div of 1,47$/share ! The result was in line with expectations, and FMG commented, that the capex-increase for Iron Bridge might well be limited to 500 Mill A$ or so.Not too bad, if you generate substantially more than 13 bill in EBITDA!! Andrew Forrest to receive another 1.6 bill A$ in dividends!
Bellevue - got a hammering today, following the release of the PFS today. Disappointing outcome: Capex much higher than anticipated, reserve grade down, Maiden reserve of only 690.000oz , using a 1750 US$ gold price ( as compared to somebody like EVN, which is using 1450 AUSTRALIAN $ ). Life-of-Mine costs of 1080 A$/oz, which given the grade, will also be a disappointment for many. The story is far from over, and I am sure, that over time, a lot of ounces will be added. But it´s also clear, that they falied the first big test, and that was this PFS! Let´s face it - 1080 ASIC is an excellent number, and the 160.000oz of production on average for the first 5 years will probably be extended. But expectations have been very high for this one, and in conjunction with a gold price, which looks vulnerable, probably no hurry to revisite the stock!
OZ MInerals - just an excellent mining company, with steady growth to come! Not dirt cheap here, but great copper exposure. The result was as expected - cash flow a little better, which led to a surprise 17ct dividend. Not bad to be able to pay a nice div, if you just have finished building a large, new mine! And West Musgrave is shaping up to be another strong project - but a few years away. You only buy them., when you are bullkish on copper, which might not be that easy from current levels. I am holding out here, as it is so difficult to find good copper exposure!
Foran - this is one of the few exceptions! They were subject of a very bullish research report out today, which values them at 1.90 Can$ and potentially above 3$. For Foran to justify these kind of valuations, they will have to increase resources/reserves. They are in the process of doing so, with a 30.000m drilling program - the biggest in their history. Some success is important for the stock medium term, but I think, that the chances are pretty good to do so. I am continuing to hold a large position in Foran - it´s one of the two non-Australian investments I have in my fund. They are consolidating trheir recent, strong move in the moment. In early March, they will present at the prstigious BMO conference, where they should be able to meet a strong audience.
Have a nice evening
WS