Good afternoon
Western Australia, home to the majority of Australian mining companies, and the base of 50% or so of the world´s iron ore production, has a new government! Labor has won the election on the weekend, as the Liberal Party got the bill for it´s financial mismanagement of the last 10 years. From what I am hearing, no drama to have Labor , as it can´t get much worse than with the Liberals! More important for the iron ore miners is, that the candidate, who has been lobbying for a 20-fold increase in royalties, has lost many votes vs previous polls...
Lots of noice surrounding the looming gas shortage on the East Coast of Australia. McKinsey believe, that unless an additional 10 bill A$ will be spent over the next few years, gas prices will double to 12$ from the current price of 6$ - if big capex going into the industry, they still forecast a gas price of 8$ by 2020.
Iron Ore and Steel Rebar very strong today - in the case of steel, trading just about at a new high! Things can´t be as bad as recent share price action would make us believe!
Base metals also very strong - nickel, which got hit the hardest last week, is currently up by 3.6%, while gold is holding above 1204 US$. Gold stocks continue their strong performance from Friday, and in Australia today ( GDXJ us currently up by 10% from the close last Thursday! )
GDX and GDXJ- the large ( and often price-setting! ) gold stock ETF´s, will reweight on Friday at the market close. Australian stocks get nicely re-weighted - I am seeing dirrent views to as how many shares need to be bought, but as the buying will be spread across all names, it should have a positive effect.
Perseus Mining - has got a 60 Mill US$ financing from Macquarie: 40 Mill for the development of Sissingue, and 20 Mill US$ in working capital for Edikan. The way Edikan is going in the moment, tehse funds will not be needed: From a bad Dec-Quarter, producing just 32.500 oz, production in the current Quarter up to the 10th of March has already exceeded that, and is 37.800 Oz. This is on track to deliver on guidance of between 90-100.000 oz this Half Year ( seems to eb on track for just under 47.000 oz this Quarter ). The mine has been cash flow positive since December. As I said earlier - if PRU can deliver on it´s promises, it´s cheap!
WS
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