Good afternoon
this is all happening very fast...just incredible, just how fast markets are moving these days! But for the underlying equities, it takes much longer. At least the large stocks like BHP/RIO/South 32 are not expressing the extremely bullish sentiment in those markets...Everybody expects a massive setback of physical prices, hence nobody is buying the equity...If you take BHP as an example...they produce something like 300 millt of iron ore p.a., the price of which is about 20$ higher today, than consensus would have had it just a few month ago. That´s a 6 bill$ difference in EBITDA p.a. ...all I am saying is, that there is still considerable upside in these stocks from today´s level, and they are very worthwhile holding.
Today, equity-, bond and precious metals markets are just waiting for the election...surprisingly, bulk commodities as well as industrial metals continue to march ahead - perhaps driven by some big budgets by China to invest in power + the grid over the enxt few years, which is very copper consuming. Copper has broken out today, as has nickel...more fun to come?!! And Caterpillar is up 12% in 2 day´s trading...
The real fun, though, will be in the smaller end - as ususal, and with a time leg. Most of these names are completely unknown to institutional investors at large, and hedge funds, and they are either developing assets, or a small producers. Examples are Prairie Mining, Paringa Resources - both are developing coal assets - or Stanmore Coal, a smallish coal producer. In copper we have a company like Finders Resources, which just started copper production and which is in the middle of a capital raising ( and it looks like it´s not going easy, despite the copper price and the fact, that they are producing copper at 1.10 US$/lb! ). Companies like them have substantially underperformed their large brothers...for no reason generally, but their size!
Much fun for me today from Panoramic, which finally responded with a nice move to better nickel prices, from Strike Energy, for which respected broking house Taylor Collison started coverage today with a price target of 37ct!, or even more so Genex, for which an initiation report from Cannacord has a risked valuation of 75ct, and un-risked of 1.69 A$! If you are interested in furtehr info on STX or GNX, let us know.
Strike Energy - to be honest, I am sick & tired to report about them and tell you once again, that they will prove commerciality shortly....I am still of the opinion, that STX are sitting on an extremely valuable project, and that the gas resource can be produced profitably. But all comments from the company indicate to me, that they in fact need some more time - and time is money. I have also no doubt, that they will need money...and the share price is expressing the markt´s disappointment about the time it takes to reach a commercial project, and my expectation, that they need more equity. You have also read my above comment, that a respected broker values them at 37ct....I also know, that large shareholders want to see somebody running the company, who has a strong, technical industry background. this makes sense to me. In the meantime, I am holding my position!
Genex - have published their technical feasibility study for the hydro power project today. It´s slightly disppointing to me in so far, as it does not contain any financial parameters - and for the technical stuff, you really have to be an engineer to understand it. But essential for me: The project is technical feasible - although that does not really surprise me. Of more importance is the above mentioned initiation report of Taylor Collison, as it is the first report coming up with definite numbers - and they are calling the stock to at least tripple, which is obviously music in my ears!
Kingsgate - interesting development last week...a Thai newspaper reported comments from the Thai Ministry of Industry, that they were uncertain as to the right of prematurely closing the Chatree Mine, that there is no evidence of hazadous waste contamination from the mine, and that the Ministry is discussing legal implications of the premature closure of Chatree with the Deputy Prime Minister. Kingsgate itself has not offically informed about anything of the above...buit it looks to me, that there is some movement behind the scenes. If I assume, that KCN can fulfill it´s budget and have it´s subsidiary Akara debt free by year end or at least nearly debt free, cash in the holding company + Nueva Esperanza are worth more than teh share price today. IF they can somehow realize some value at least for Chatree, or in the ebst case, get full permitting back, KCN will be worth dramatically more than today´s 52 mill A$.
In the meantime, it will be interesting to see what the world looks like when we wake up tomorrow!
WS
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