Good afternoon
Chinese import- as wella s export numbers down and weaker than expected…
Syrian war seems to escalate…thank´s, Mr.Trump! Europe under pressure…Hard t believe, that Turkey is a NATO member…but what is NATO these days?? Probably hardly worth the paper it´s written on…a hawk running it, and countries like the US, England and worst of all, Turkey, as members…
Industrial Production in Europe wa stronger last month - but that probably remains a short episode!
Investors doubt the merits of the trade mini-deal, and even, whether it will be signed…lot´s of time for tweeds left!
Unsurprisingly, metals and equities weaker today, even though both went to limit the losses as the day progressed. Gold more or less unchanged, as I am writing! Another day of inflows into gold-ETF´s…but we are getting used to this…20th consecutive day…but let´s see it in perspective: Inflow of 120 mill US$ is really miniscule in the overall sceem of things these days. At this stage, still only a trickle!
Gold stock were sold down in the US on Friday - and even more so in Australia today, with falls of 5% -7% being the norm. The sector is now back to levels worth accumulating….Even if the “trade agreement” holds - the real story behind gold is monetary policy, and the US budget deficit. I am still amazed, that nobody is talking about it…Trump´s tax cuts are a gigantic failure, as growth is way below what is needed to stabilize the numbers!
I was unaware of just how negative the outcome of Mrs. Warren as President would be for fossile fuels…in case of her becoming the candidate, and even more so, the president, you would not want to be near anything close to it in the States!
Metro Mining - announced most details of their final feasibility study today, and a production outlook. First production…is expected to go from 3.5 millt of bauxite last year, to 4 millt next year…and 6 millt in 2021.
The company will install a new Floating Terminal, capable of loading a minimum of 6 millt p.a.. A new conveyor system will also be built, and when operating at capacity, the system will be able to load much bigger numbers, than required. this will give Metro spare capacity to make up for wheather-related, or other interruptions to shipping, should they arise. Total cost will be about 51 millA$ - that apprx 10% more, than originally expected - but the original number included a loading system, which had no spare capacity.
The company expects 18% cost improvement vs the current operation - theoretically, that would be about 8$ t….4-5 $ from being able to load larger ships ( with lower freight rates ), the rest being economies of scale. Metro are talking about “ up to 18 month” payback from the “incremental” production - that would be on the addtional 2.5 millt produced! MMI should produce something like 90 mill$ in free cash p.a., once the expansion is up and running - vs about 35-38 mill from the current operation ( these numbers are befor head office and financing costs of say 7-8 mill A$ ). Importantly, the expanded operation will place MMI within the lowest 25% of the cost curve for bauxite landed in China!
We had expected, that the company would announce the debt-financing for the project at the same time as the feasibility study - that has not happened and might disappoint a few investors. But the company expects debt to be fixed soon, alongside with the announcement of a few remaining details of the feasibility study. My birthday is on the 17th of Nov, being also the day of my arrival back in Germany from an Australia-Trip…I am pretty sure, that we will have this announced before then! In the meantime, this company is trading at less than 2.5x free cash before tax, based on the expanded operation! Extremely deep value!
Saturn Metals - announced a new resource estimate today, 781.000oz at 1,0g gold , an increase of 96.000 oz. 3000.000 oz at 1,0g of this resource are in the indicated category, and increase of 250%. The new estimate I think might be a little disappointing….even though the indicated resource has increased quite considerably. But 18 month of work and 28.000m of drilling had ben completed ahead of the new estimate…obviously, it´s hard work to add many ounces. However - too early to call it a failure, as exploration is open in most directions, and more recently my impression has been, that they started to get a better handle on where to add higher grades. Drilling is already in progress. One to watch - but I fear not one to buy as yet. I would like to see better grades!
Have a nice evening
WS
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