Good afternoon
well late yesterday the correction started...but given the massive rises we have seen, the correction is a very modest one, at least until now...Most of these things are trading at the second highest price this year...most metals are just giving up, what they made yesterday. I had feared for something more substantial than this. However, it might still come!
The gold price , unfortunately, under renewed pressure from a stronger US$...
Stronger 3rd Quarter GDP-numbers in the States: 3.2% vs 3% expected, Personal Consumption + 2,8% vs expected 2.3%....no inflation, GDP Price Index + 1.4% vs expected 1.5%
Very interesting piece of research from Macquarie yesterday, confirming, that the recent rally is not just Trump- or speculation driven, but at lease to some degree, from better demand around the world:
metal demand growth expectation for 2016 in Jan 16 demand growth expect in Nov 2016
Copper 1.9% 2.2%
Alu 2.6% 3.8%
Zinc 1.5% 1.6%
Nickel 1.3% 8,0%
Steel - 0,7% 0,2%
Iron Ore - 1,9% 0,6%
Some of these changes appear to be small - but in fairly balanced markets, a change in demand by 1% can be very substantial! And I guess demand expectations for 2017 will certainly be higher again, since China is humming along quite well, and since we have some strange phenomenon called Trump ruling the world´s largest economy now!
Prairie Mining - English Broker Mirabaud came out with an update on them...They only value the Lublin coal project, as no numbers are available as yet for the new, coking coal project. They want to see a scoping study first, which is starting now, and should be available in may/June 2017.Mirabaud are using 130 US$/t for coking coal long term, and 75 US$ for thermal coal long term - I think that makes sense. While thermal coal estimates might be a bit on the high side, the company would probably get better prices than world market due to it´s much lower transport costs vs say Australian coal to Germany.
Very hard to say, what the new project could be worth....Infrastructur is in place, transport would be close, demand in Europe good for coking coal...and Polish labor costs are cheap. So the value of their coking coal project on top of Lublin, would certainly be a 3-digit number.
The next bit of news will be a JORC-compliant resource estimate early in the new year. Following that, we should see a lot of important news-flow from the feasibility study on Lublin, and the scoping study for Debiensko.
Berkeley - London broker W.H.Ireland today increased it´s valuation target for BKY to 1.28 Sterling = 2.10 A$, based on a furtehr de-risking of the project, as the equity placement of 30 Mill $ is out of the way, and as first production ahs been sold forward at 43,75 US$/t. Personally, I think using an uranium price of 65 US$ long term might be a bit rich - but at 55 US$, the valuation would still be above 1.65 A$....Not bad for a project, which will most probably be the lowest cost producer in the West, and in a save jurisdiction ( well, if something like this does exist these days....). In the longer term, there is additional, substantial upside potential from exploration ( Zona 7 + Zona7-type of established targets ), and using a lower discount rate than 10%, once the asset is producing!
Genex Power - I am hearing from Australia, that an outright sale of solar projects , once government grants have been accepted, would not go down well ( very understandable! )! So Genex would not go down that path, but raise some more equity at some stage in the next month or two?! In any case - I am also hearing, that the government in Canberra, as well as the local government in Queensland, have learnt a lesson from the massive problems we have seen in South Australia over the last few month regarding imbalances/outages of the power system, and are extremely supportive of this new hydro project. I understand, that meetings at highest level have already taken place, or will so in the near future. This would increase the chances for getting a favourable price-guarantee, similar to the solar project, which in turn would enable a VERY high percentage of the project to be financed via grants, subordinated government debt, etc.. In suche a case, even valuations like the recent ones from broker Canaccord could look conservative as they are assuming the raising of substantial amounts of fresh equity.
The stock has become a little quiet - next news should be financial close for the solar project within a couple of weeks, to underwrite the current market cap without showing anything for the main project, the hydro-pwer plant - and I still believe GNX to represent a fantastic opportunity!
Have a nice evening - I will be in South Africa for a few days
WS
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