Good afternoon
I would not be surprised, if inflation would be the story for 2017 - with far reaching consequences!
The Chines PPI today shot up to 5.5% - from minus 6% only 12 month ago, and following on from 4 years of negative PPI´s...we have seen quite strong inflation numbers from Europe and the US already, the oild price has seen the low´s , and commodities have been strengthening over the last 9 month or so....US wages have seen the strongest increase in years....and last but not least, I cannot imagine, that Trump will impose imort tariffs without this leading to further inflation. And this is not to talk about the effescts his growth measures will have on the US-economy.
We have not tested gold as an inflation hedge for many, many years - but I would be surprised, if that would not work anymore! Physical demand has been much improved recently, production is not growing, and the world is as risky as it probably never was in recent times....! Real interest rates have actually been falling recently, and I don´t believe, that Yellen will catapult interest rates upward - so many arguments for a stronger gold price, and you should be in there! I would not want to own too many bonds.....
Iron ore and Steel Rebar had a very strong market overnight in China/Singapore - no wonder, that BHP/RIO/Anglo are approaching the highs from late Nov/early Dec! And metals are providing some fun in London today as well - currently, they are between 3.5% for zinc, and 1.3% for nickel....feels good!!
In Australia, one of the better known boutique fundmanagers, Hunter Hall, saw his top boss and founder and major shareholder resign...selling a big part of his stake at a big discount to the ( listed ) market price to Soul pattinson, another group. Thius could send tremours to some companies, like Doray and especially Talisman, in which Hunter Hall has large holdings. There is a good chance, that the group will sell. Especially for Talisman, this could trigger a takeover from JV-partner Sandfire, if they can get hold of that line.
Euroz - this is one of the ebxt brokers, and perhaps the best and most serious one, in Perth. They have also bulit a sizeable fundsmanagement subisdiary, managing more than 1 bill$ now. Euroz are probably a good and save way to play an improving resources market - much like a mining services company. In an improving resources market, their brokerage income will increase - but more importantly, underwriting fees, and M&A fees will rise substantially. They control two listed funds, in which tehy own stock worth about 52 mill A$. They have about 45 mill A$ in cash on their balance sheet, no debt. And their profits out of operations ( other than the revaluation profits from their investments ) have been 6.5 mill A$ in the first half of the current financial year. The market cap is only 169 mill A$ - so the EV is only about 105 mill A$, for a PE of about 8, if I assume the earnings unchanged in the current half....and looking forward, their sizeable and growing fundmanagement business will contribute more to earnings as well. In my opinion, a relatively save stock, and could trade 20% higher.
Marindi - one for the speculators...but very interesting. They reported excellnt, very high grade results from recent drilling of their lithium asset just before Christmas. They have a very good chance of establishing a nice high grade resource here themselves, but the real upside is from a courtcase, which they have started against their neighbour Kidman Resources ( I reported about that before ). Kidman have sky-rocketed to a market cap of 200 mill AN$ - almost entirely due to their own lithiul resource, which is next door. MZN claim, that they have negotiated a JV on the joint properties, and to me it looks like MZN really could have a chance, from what I am hearing. Assuming, that MZN will establish their own, high grade resource in the immediate neighbourhood ( just 1.5 km away ), it might be a smart idea for Kidman to come to a out-of-court settlement, establishing a JV over the whole thing with MZN. At a say 80:20 JV, this thing could be worth 45 mill$ to MZN - but something like a 70:30 JV sounds feasible as well....In the end, Kidman has to loose a lot, if they do not settle out of court - and I would imagine, that the stock is trading at a discount anyway, given the outstanding litigation.
MZN are well cashed up - a recent option exercise at 2ct raised just above 3 mill$, and they do not need a lot. This is out of the way now, and I would not be surprised to see a strong market on new drilling results. The company will start a new program in 10 days or so. A great punt, in my opinion.
My fund owns both, Marindi as well as Euroz
Have a great day
WS
Schröder Equities GmbH
Seitzstr.7a
80538 München
Tel. +49-89-4613440-0
Fax +49-89-4613440-10
email: wschroeder@schroeder-equities.com
website: www.schroeder-equities.com
eingetragen im HR München, HRB 166985
Geschäftsführer: Wilhelm Schröder
The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by unauthorized persons.