unfortunately for our commodity markets, Mr.Trump has lost a lot of credibility over the last few month, when it comes to delivery of his "grand plan" to boost infrastructure, and cut taxes to boost the US-economy...Running a country in a very complex world does take a bit more than tweeting a few stupid words!
US 10 year bonds, as well as German bonds, are back to where they traded last in early Nov 2016 - and metals/minerals have generally been under pressure lately, while equities have lost their momentum as well.
Only gold has had a good run over the last few weeks - no wonder perhaps, as geopolitical tensions have been rising, and interest rates falling.
The Quarterly reporting season is in full swing now:
Evolution - getting almost boring, as they deliver again and again and again! Production of 203.000 oz a tounch lower than previous Quarter, as expected - compnay on track to deliver guidance for the full year of 800-860.000oz. Including the expected 210.000oz for the current Quarter, we should arrive at 835-840.000 oz for thr full year: But the Quarter actually had a pleasant surprise: That is on costs! AISC of 840 A$/oz or 637 US$ are nothing short of exceptional...and the company is now guiding for AISC for the full financial year at the lower end of guidance ( 900-960 A$/oz ), which implies another Quarter with AISC below 900 A$, and probably rather 850 A$/oz! At current gold price and forex, Evolution´s mines deliver 500 mill A$+ in free cash per annum! Some of the larger competitors would love to be able to show these kind of numbers. And currently, the A$ gold prise is 90$ higher than the average of last Quarter....
Standouts were Ernest Henry, helped by an improving copper price, and especially Mt Carlton, which had AISC of only 509 A$/oz, delivering a net mine cash flow of a staggering 22.2 mill A$ in the Quarter ( and that was despite a 5 day shut-down due to mega-cyclone Debbi! )! The downside was still Edna May - that´s the smallest mine, but also the weakest one...The current Quarter will see a much improved Quarter for Edna May, though. The mine is not up to EVN´s standard, and nobody would be surprised, if they would sell it, once performance has been turned around.
The updated reserve statement was also very positive - after mining depletion of the last 12 month month, reserves increased by about 200.000 oz + the aquired 960.000oz of reserves of Ernest Henry. EVN now have an average mine life as per reserves only of more than 8 years, and is continuing to increase this, especially at Cowal, their largest mine, and Mt Carlton, their most profitable one ( except for Ernest Henry after copper.-credits ). Newcrest might still be the No1 by mine life and reserves - but EVN is Australia´s best gold miner, in my opinion!!
Resolute - reported their Quarter as well. Much more compelx than EVN - I will need to do more work on it tomorrow - free cash flow has not been that great, and I will need to check on this. But guidance for the fully ear has been increased for production, and exploration ahs been very succesfull....company is extremely sound, with more than 260 mill A$ net cash in the bank = 30% of market cap. More tomorrow.
St Barbara - a very good Quarterly, as indicated by an earlier announcement. The company generated free cash of 68 Mill A$ in the Quarter, from 95.300 oz at AISC of 862 A$/oz! Gwalia was teh standout at AISC of 786 A$/oz, but Simberia at AISC of 1.025 A$ generated cash as well. The company has incerase guidance by 5.000oz, and decreased cost guidance also slightly. But Simberi is not really going anywhere, I think, and has short mine life - while Gwalia is a very deep mine. They are handling it VERY well - but effectively, SBM are a one-mine stock. Given the stock overhang from Van Eck´s large position, there is not really a compelling reason to buy them here. The incerasing cash pile will burn a hole into their pocket....Pehaps the fully financed Dacian is starting to become attractive for them?? I am purely guessing here.
Have a nice evening
Schröder Equities GmbH
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 email@example.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.