Market Update

Mineral Resources - Berkeley

Good afternoon

Some talk around about some end to the ECB buying bonds could be discussed soon is not helping European equities today.

SQM, the biggest Chilean producer of battery lithium, is trading at about 10x EV/EBITDA for 2020, while Mineral Resources in Australia is trading at 5x....and is probably the much better company. SQM is probably 25% too expensive, while MIN is 25% too cheap! While waiting for this gap to close, you are sitting on a 5% div-yield in MIN as well! I think a lot of investors shy away from MIN, as the stock has more than quadrupled since early 2016 - but their value-generation via lithium projects has been stunning - from about zero, to one of the largest miners in the world of contained lithium now. Bloomberg predicts, that  capacity of lithium production until 2020 will be sufficient - but needs top quadruple again over the following 10 years or so. There is still room for fast movers!? 

Copper is making a new high 7-year high today in A$ terms - and is getting close to recent highs in US$. Traders just love this Escondida strike threat! While Escondida went on strike last year for an unprecetended 44 days, this year, the copper market is much tighter - hence a prolonged strike could have a big impact. The weaker US$ is certainly helping as well, especially gold, which is trading at 1300 in the moment.

Berkeley Energia - is listing now on the Main Board in London, and will soon also list in Madrid and Barcelona. The uranium price is finally moving, as the largest producer, Kazachstan, has promised more capacity cuts. Last time, these cuts did not come through as expected - so I am sure, that there is some wait-and-see attidude with investors. 

Otherwise, a thin day today in terms of news!

have a nive evening