Good afternoon
now Germany is finally ready to get a new/old government, Italy is in disaaray! The 3rd largest European economy had elections on the weekend, which saw the prtest party as well as the right wing gain substantially - but it will be extraordinary difficult to form a government. All bond markets are stroner today, except for the Italian market...same for equities...all European markets recovered a little except for Italy, and the UIS, which had a very strong finish late on Friday night, when Europe was closed.
Everybody is discussing Trump´s mad tariff-move....even his fellow Republicans. A world trade war is probably the biggest danger to the current recovery of the world economy.
European numbers again showed a slow-down of the strong economy here, while Markit PMI numbers in the States were positive.
The A$ today is tarding at it´s lowest to teh Euro since 2015, and is also weaker against the US at 0,7733, a 2018-low. Good for the miners, though - the A$ gold price is trading at a recent high of 1710 A$/oz.
All metal stocks on the LME are down today - except for zinc, which had the largest rise of LME stocks in 30 years today! Having said that, stocks are only back to the level seen in early Dec 2017, and at 209.000t, only less than half of stocks at the beginning of 2017. Still - not good for zinc bulls. the zinc market ahs been in large backwardation, which makes it very expensive for funds to continue rolling their future positions. While metals were holding up well for most of the day, they saw some pressure, when the US market awakend - only to recove those losses now .
Exploration spending in 2017 increased by 17%, and is expected to rise by another 20% this year, according to S&P Global Market Intelligence. I do not view this as negative - it takes so many years from discovery to production! 10 days ago, Southern Copper gave the formal go-ahead to a large copper development in Peru, which will see it in first production by 2025!!
Lynas Corp - impressive result today for the Dec-Half...17% growth in production at contained operating costs saw them produce cash flow of 80 mill $ from operating activities, vs 6.7 mill$ in the Dec-Half 2017. But since Sept, rare earth prices have given up most of their gaines again. The company ahs substantially improved it´s previously rotten balance sheet - from 425 mill US$ debt is down to 257 Mill US$ ( net debt 236 Mill US$ ) - a lot of taht debt reduction through the exercise of convertible bonds. Warrants are down to 27 mill from a staggering 522 mill - the market has taken all the resulting, new stock very well in 2017! Lynas are the clear Western World market leader in rare earth now, and in fact, also the only, serious investment proposal in this market. Still - at an EV of nearly 1.7 bill A$, tehy are not exactly a bargain! I am currently not a holder.
Crusader - as you know, I am disspointed with them - but this certainly cannot be said of their long term chairman and supporter Steve Copoulos. The wealthy, Australian business man continues to support them, and will convert his personal loan of 1.5 mill to the company into further equity at the same price, as the forthcoming placement to list on the AIM market in London. Good on him - he is certainly putting his money, where his mouth is!
Prairie Mining - they are holding up incredibly well in this market, following a nice rise in February! On good turnover of about 500.000 shares / day they have bene trading at 44.5p in London throughout all the recent upheavel in the world. I am not aware of any imminent, major news from them other, that any deal with JSW for Debiensko could make them look very cheap indeed! I understand, that 30-35% of the stock is now being held in Europe/UK - probably, this makes a lot of sense given their assets are all in Poland. The stock should certainly warrant a disount to other mining developers because of that - but I remind you, that the NPV of their two operations is larger than 3 bill US$.... Given substantial financing risk, and country risk ( coal mining is a highly political thing there ), I still believe, that investors shoudl see nice upside even from the current 5-year high.
Have a nice evening
WS