Good afternoon
investors are nervous - but nervous enough to sell, it seems! Good earnings results from the very large end - Amazon and Google - are contravening the general feeling, that many stocks are expensive! And there certainly is a lot of doubt around, whether the virus can be beaten by the summer, as many had expected a few month ago! I think it´s fair to say, and no secret, that the world won´t grow as strongly this year, as we all had expected only recently.
Ultra-low interest rates are still helping equities, and certainly also the general economy. I heard today of a case, where a very normal person bought a flat in Munich, financing it with a loan carrying interest at 0,5% fixed for 10 years!
Having said this, equities are mixed to slightly stronger- no huge changes today - and base metals recovered nicely from a weaker morning session, There is some optimism around, that the Biden will be able to push through his stimulus program. The US$ is stronger, and that´s putting some pressure on gold.
Oil ( Brent ) is approaching 60 US$! That´s pre-corona-level! Yet oil companies around the world are trading far below pre-corona levels. Their valuations are being questioned , following some pretty heafty cuts in dividends. Still - I think there is value…whether it´s some oil majors, or midsized, well managed companies like Beach Petroleum in Australia ( which are debt-free, growing, and not that sensitive to the oil price, as they mainly produce gas ). I am privately holding some Royal Dutch, and Beach Petroleum among the producers.
Foran Mining - are trying to continue their recent run, as the new MD impresses, and as the upscaled placement to raise 25 millCan$ was heavily oversubscribed. There are not many serious copper-developers out there - and certainly not with assets in North America, close to a smelter! I continue to own a large position here, even though I had to take a few of the top for riskmanagement reasons.
Pacific Nickel - I had recently started writing about them - very small and very speculative nickel ore developer on the Solomon Islands. Like some other companies before, they have more recently discovered, that operating in this country is all but easy! They might well lose one of their properties - even though the prime ministers office seems to be of the opinion, that this was an “error”. The mere fact, that some strange and chaotic action like this is possible, tells you how hard it is. The stock is suspended, and might be for another 1-2 weeks or even longer, uintil there is more clarity on the legal side . Still - potential rewards are also high here. For now, we can only sit on the side lines at watch!
Marvel Gold - updated the market. Their Tabakorole project in mali had increased a few month ago to 910.000 oz at 1,2 g. That´s not having critical mass as yet - but has been increased from about 500.000 oz at 1g! Drilling is ongoing there, and we should see more results over the next few weeks. The company is very bullish on this project and given very positive, metallurgical results out the other day, this could well develope into a stand-alone operation ( which it has to, as there is no neighbour! ). But from what I hear, we could well see another 500.000oz or so in resources. To make such a project viable, I think at leat 7-8 years mine life at 100.000 oz p.a. are necessary - but that´s not out of question at all. In the moment, 900.000 oz somehwere in the bush in Mali are not worth all that much - but 1.5 mill oz, with nice metallurgy, would suddenly be worth 100 mill A$ or more. So the next few month are very important for them….The company has about 5.5 mill A$ in cash, which shoulde be enough to find out, whether this thing is viable. In the meantime, we could also have some fun with the old graphite asset in Tanzania! We have been following this drama for a while…and after all the disappointment, it´s valued at zero by everybody. But given the massive upswing in EV sales over the last few month, everybody is upgrading numbers and we could see a very strong market for battery materials for a few years to come. At his stage, the project is a wild card for me - but it could actually be worth a good deal of the 21 Mill A$ market cap, which Marvel has as at today.
I have a position, and I think they are cheap!
Tietto - bought anotehr 3% of it´s Abujar project in the Ivory Coast from the JV partner, and now have 88%. That should be a small positive…I can only guess, that more drilling results should be announced over the next few weeks and finally, the pre-feasibility study to be released this Quarter should be a trigger for TIE.
Have a nice evening
WS