Good afternoon
Chinese retail investors sontinue to be taken to the cleaners by hedge funds...the wave of specualtion has taken the iron ore future up by 33% since 11.th of April, and down again by 25% - just about the same in steel rebar! Every bubblemtends to burst - and then overshoot on the downside. The latter probably has not happened as yet - but fundamentally,a s well as on the charts, we should build a floor at around current prices.
Gold, base metals and oil are doing this today, at least so far - feels a bit like the rout could be over for now. The same for the A$, which had a fair correction from it´s surprise rally, and probably is roughly in line with fundamentals. It might well test 70ct aginst the US$ again, once prospects for another rate cut in August become clearer.
Canadian broker GMP highlights, that corporate transactions liek yesterday´s purchase of Tengke Copper Mine ( in Democratic Republic of Kongo, not really a nice place to do business ) are taking place at valuations, which imply a longer term copper price of at least 2.85 US$/lb versus todays price of 2.13 US$/lb
Berkeley Energia - raised 10 Mill US$ today from Resources Capital Fund, one of the most experienced resources private equity funds. 5 Mill US$ were raised at the equivalent of 0,625 A$, and for another 5 Mill US, RFC will be receiving a 0,375% net-smelter-royalty. A good deal for BKY, as it was done at a slight premium to the share price, and as it allows BKY to continue with some infrastructure spending in Spain, as well as agressive exploration for more Zona 7-type resources in the area. The full mine financing will be done in the second half. I expect this do be done by/in conjunction with an off-take agreement with a large consumer of uranium. I am hoping, that no furtehr equity will be needed...BKY continue to be a great story in a very volatile enviroment for resources in general!
Genex Power - have announced a very important, binding agreement with Ergo, the owner of the existing electricity network, which connects the former Kidston Gold Mine with electricity markets in Queensland. The contract governs the terms and conditions of the substation upgrade works, as well as the transmission of the 50 MW electricty from Stage 1 of Genex´project, the solar plant. This is almost an essential agreement for GNX, to be able to debt-finance the project, and to progress discussions with equity partners,"to fund all or part of the equity". All approvals are now in place - once financing will be completed ( within 6 month? ), first cash flow is planned within 12 month of construction start!
This is only the first part of GNX´s plans - the much larger, and more interesting hydro-project is being driven independently of the solar plant, which has been de-risked by today´s announcement. I would expect, that Australian investors will start to wake up now! Today´s market was a good start, with the best turnover since listing 6 month ago.
Have a good eveing
WS