Good afternoon
the world is looking good for resources!!
As Jamie Dimon said today: We could be in for a strong upswing which could well last into 2023! The IMF increasing it´s forecast to 6% for world GDP - which might look conservativ! PMI´s, labor market looking very very strong in the US, the FED and the ECB are still printing as fast as they possibly can, and Biden is doing the rest! And in 2022, we will have Europe moving strongly out of the COVID-situation. And on top of it, we have a rampant market for EV´s, and Brazil increasingly in trouble….the world is looking so good for resources, that I wonder about the next Black Swan!
I am amazed, that the bond market is holding it´s level more recently…the only possible reason I have for this: Never fight the FED…the old rule still seems to hold. But I certainly see some strong risks from this side of the equation. For now, I think the market is certainly expecting some inflationary pressures - but investors are seeing them ( if they eventuate ) as temporary. Let´s hope, that they are right. Under those circumstances we are in absolute goldilocks: Strong growth, no real inflation - so the entire market can continue to ove - cyclicals as well as tech´s.
Overall - my instinct tells me: Fantastic - but a little too good to be true!
Gold might be a good investment , if my instincts are right…certainly good to have some!
Panoramic - finally, tehy have made the formal decision to go ahead with Savannah, and start ming again in August, which si one month later than I had assumed. A few surprises here: Panoramic will not only use a contractor to run the mine ( by the way, with brand new equipment! ), but also one to run the plant! Only 40 Panoramic-employees. This will substantially derisk ( in light of a very tight labor market in Western Australia ) a restart of Savannah, which ahs been derisked as much as it otherwise could anyway…
Costs will be a little higehr because of using a contractor , but I still support PAN´s decision here. The contractor will be incentivised to do the job well - i.e. with regards to recoveries as well as throughput. And tehre is yet anotehr derisking built into teh start-up: The company will mine a 100.000t stockpile first, before starting the plant….Understandable - you do not want to run a contractor running the plant and pay him, and have a risk of not having enough ore. This decision will delay first cash flow to December.
The company has also signed a new offtake agreement from 2023, once the current agreement matures, with Trafigura. Trafigury will extend vearious credit lines top Panoramic, without hedging, and light on covenants + competitive interest rates, totalling 45 mill US$. That will be more than enough…PAN expect only to use 41 mill A$ at the worst.
Overall - I really like PAN, as you know. Savannah is a top asset, long mine life competitive costs - but the upside is capped because of new nickel market developments over the last few month. So the stock IS cheap - but we will not see it doubling and trippling . Well doubling perhaps in a takeover….I continue to own a very large psoition in PAN.
Foran Mining - some ore excellent drilling results out today. 22m with 2,71% CuEq and 8.7m with 2,11% CuEq are exactly what it needs to increase the resource to the shorter term target of 20 millt….As you know, there are not so many great copper/zinc resources with some gold in top jurisdictions and undeveloped as yet…At current commdity prices, FOM are still cheap as crazy as it sounds ( after having gone up by more than 13x from the lows last year ). But the stock also feels a bit tired and probably will treat some water here.
Oklo Resources - the stock came back to earth by delivering a maiden resource in line with expectations! The total resource now stands at 11.3 millt at 1,83g for 670.000oz, of which 69% are already in measured&indicated category. This is a pretty good, maiden resource - but the stock was probably a bit rich before, as the market might have been hoping for better grades, given all these wonderful high grades drilling results! But this is not the end - the company has 15 mill A$ in cash and will keep on drilling….And one should not forget two large neighbours within trucking distance. I think the current weakness makes the stock atractive again.
Have a nice evening
WS