Good afternoon
Banking earnings are under eral pressure - housing starts much weaker than expected , as were building permits - the US is not the world´s locomotive these days! No interest rate rises in sight - hence the US$ is weak, and gold is responding strongly - trading at 1250 US$ - but that´s only just above 1600 in A$ terms!!
Zinc is making new, recent higs - and generally, my feeling is, that interest in the resources space is rising - despite the relatively weak US-economy. In the end , about 50% of the world´s metal consumption is in China...copper is also gradually recovering all day - Coldelco having problems with ehavy rains, and Newmont cancelling the development of a very large copper mine in Peru...At the end of the day, the entire sector is deeply covered in green! it almost feels like a bull market....!!!!!!!!!!!!!!!!!!!!!!!
Perseus Mining - have completed the takeover of Amara - quick and dirty! In my opinion, this is a good aquisition, as I said before. Bringing diversity, long life, doubling of production, even more leverage to gold, and done with a proven management team! At roughly 450.000 oz of production for 2019 or 2020, the stock could have an EV of 1.2 bill A$ in 2019/2020 - that´s roughly 1.1$/share in a few years time. That´s at least the upside potential at an unchanged gold price...perhaps a bit bullish, as most probably, the mine life of the existing Edikan Mine will be only 4 years in 2020. But the really bullish news in the shorter term has been from today´s announcement on a revised mine plan for Edikan!
The company is giving up a little bit of long term production - but 7.5 years planned is not bad at all, and after that, it´s gold price dependant. For the next few 5 years, PRU are planning to produce around 258.000 oz p.a., at AISC of 920 US$/oz, producing an NPV of 287 mill US$ or just under 400 mill A$ at a very high 10% discount rate, at 1200 US$ oz gold price. That alone is worth about 50ct/share( based on the increased capital following Amara takeover ) today - and that does not include a ct for Amara´s assets, which are worth about 150 mill A$ today. So lots of upside and excitement in PRU! I am a very happy holder, and while PRU is not for the really conservative investor, they are one of the few cheap, Australian-listed gold stocks today.
Panoramic - last day of rights-trading yesterday - so no more pressure from it! Shareholders have another few days to exercise the rights - so there will be a bit more selling potentially left over for this week. But we have seen today, that the stock wants higher, really. The next halfway important announcement will be the outcome of the current rights-issue. Very hard to say - in my opinion, there will be a high take-up of up to 80%, limiting the influence of the underwriter, Zeta Resources - that´s good news. Nickel stocks had a big move today - for long term investors, PAN are dirt cheap down here - the only problem: I have no idea, WHEN they will move - but I am dam sure, THAT they will move!
RIO - have cut the production forecast for Pilbara iron ore for next year by 10-20 millt, due to some problems with the new, automated train system. Another positive for iron ore, which is holding nicely at around 60 US$/t. If China can halfway continue the recent, very strong performance of the property sector , there is probably much less downside than feared for....
St Barbara - an excellent Quarterly from Gwalia Deeps - production of 66.000 oz at 770 A$ AISC. Guidance for the full year is 260-265.000 oz at around 810 A$/oz + capex of around 30 mill A$ = about 115 A$/oz. That is truly great! Simberi, though, had production of 25.400 oz at 1400 AS$/oz AISC - guidance is here for around 105.000oz at about 1400 A$, + another 100 A$/oz in capex. This asset, having 3 years mine life remaining on oxide ore, has hardly generated any cash and will not really do so, either, for the rest of this year. The PFS for Simberi has been finished, but has not been detailed. The comment " the outcome of the economic valuation is sensitive to commodity and econpmic assumptions" could well be interpreted as negative....
Gwalia Deep is a fantastic mine - I recall, that it was opened in 1985 as one of the first, new Australian gold mines, with 5 years mine life back then - and today, it has 7.5 years. But this thing is really getting deep now - current exploration is drilling down to 2200m - very deep, especially considered, that the ore is bing trucked!!!
Have a good evening,
WS