Good afternoon
bond staged a recovery yesterday - and tech stocks as well as gold reacted strongly! Indications from the Chinese government to scale down stimulus rattled commodity markets, as well as the local, Chinese equity market. Today it´s all a bit quieter - well , so far!
The market was relieved today by CPI numbers in the States, which came in as expected at 1,7% YoY. At least no inflation as yet!
Equities are behaving well - tech´s seem to be able to hold the strong gain from Tuesday, despite bonds in the US being weaker.
Western Areas - the company disappointed investors yet again by raising 85 mill A$ in a placement at 2,15 A$ - on top of recently receiving a 75 mill$ dent facility. Still not enough to pay for their new nickel mine, and despite strong nickel prices over the last few month. This company has generated less cash than you would expect continously for a long time, and the new Odysseus mine looks as it will merely replace WSA´s old assets, rather than growing the production profile. The company has had a few issues over the last 12-18 month, and I am not sure, whether the management has to be held responsible here? For me, WSA are currently uninvestable! The placement yesterday was underwritten by Goldman´s at 2,15 A$ - they either asked for a few favours, or they are loosing money here, as the stock closed at 2,03 A$ only today! But I think this is small beer for them - when you see the billion $ profits being made by investors in US IPO´s recently, I think they might have gotten this one away easily!
West African Resources - new guidance and Life-Of-Mine Plan yesterday! for 2021 calendar year, tehy see 250-280.000oz at AISC of between 720-and 800 US$ AISC ( which includes everything exl exploration and financing, but including head office ). This is a cash machine , regardless of the gold price being 1600, 1700 or 1800 US$/oz! The LOM is stating 216.000 oz p.a. on average for the next 10 years. To arrive there, the company has also used some inferred resources from Togea ( an orebody, which seems to be very consistent ) and M1 South Deeps ( again, a very consistent orebody even with regards to grades, but some infill holes left to do this year ). So there is a bit of work left for WAF to do here to make their LOM water-proveI think this a very well managed company with one top asset, which should ultimatively have a much longer mine life than 10years! But at this point, WAF is a one mine wonder - to derisk and to be assigned a much higher rating, WAF need a second mine, preferrably in a different country. Alternatively, one of the other West African gold-players with higher valued stock might take them out.
Horizon Gold - as expected, HRN are raising fresh equity! Surprisingly, the 1:4.4 rights issue at 35ct is not underwritten by the largest shareholder, which is good….The company will raise 7 mill A$ before costs, and plans to drill 40.000m, starting in April. This is aggod news…I have written often about the problematic governance situation at HRN, with Zeta controlling the company. This is a clear negative! But the stock is so dramatically undervalued, in my opinion, that I am keeping a relatively large position.
Have a nice evening
WS