The Chinese Year of the Pig is strating well. I am a ChinesePig, which might not surprise you - but it´s actually a good sign: Usually nice guys, not overly intelligent, but always some money! I cannot suscribe to the “always” in the latter, but things are certainly improving! So let´s hope, that the Year of the Dog ( which was a real prick of a year! ) is behind us not only in the Chinese calendar!
Equities just don´t want to stop going up in the moment, and metals are also looking quite healthy today, as gold is down a few dollars without great activity. At least this was the case at lunch time! Later, the worst Retail sales numbers in teh States were published - a great excuse to take some profits in equities. I guess these weak numbers won´t last, as wages are growing, as is employmen. In December we had the very long governmant shut-down - i am sure, that this did not help consumer confidence at all! In any case - bonds are having a strong afternoon! The same applies to base metals - looked good in the morning, but slightly weaker in the afternoon!
The increased risk appetite is now slowly but surely - and long last!!! - coming down to our stocks…some nice support developing for things like Graphex, Black Rock, West African Caravel or Venturex, to name a few. Suddenly these things are trading 10-20% higher…which is still a very unsactisfactory level, but at least it´s going into the right direction. And last but not least, Breaker has put on 30% over the course of the week!
Johnson Matthey published their yearly review of PGM´s and expect a Palladium deficit for many years to come. Hard to see, where all this stuff should be coming from! They explain at great length, that it´s not so easy to replace palladium with platinum in catalysts. Hence one should expect the platinum price to remain under pressure. All mines produce both, to a varying degree - in Russia more palladium, in South Africa more platinum. And in Panoramic´s case, it´s more palladium as well. I can only repeat myself - PAN´s 2.4 mill oz PGM deposit near Savannah will be worth 50 mill$ one day!? Or more?
Panoramic - first shipment is sailing towards China! 7500t of nickel concentrate for 8.5-9 millA$ are on their way! Peter Harold will be delighetd to be a nickel miner again! The enxt thing now is to ramp up to full production , which should be achieved over this Quarter - and then development of the new Savannah ore body will take centre stage. Full production will only be reached, once the new part of the orebody has been developed, which will happen towards the end of the year. The market is pretty aware of it, and analyst numbers are expecting this. From then on, we will see a more agressive move into exploration. Should be a clear and straight path forward. After that, everything depends on the nickel price - and if the take-up of EV´s is happening as expected, better nickel prices over the course of the next few years should be relatively certain - except for the world going into recession, which we do not expect!
Newcrest - I do like their very stupid comments today: They have set themselves a deadlind to the end of 2020, to aquire another Tier 1- asset - that is 300.000oz for at least 15 years, and a couple of Tier 2 assets over the next decade! If you like to own a potential money-destroyer, buy Newcrest! Add a declining production profile at Cadia, and the risk of another “seismic” event - and you definitely don´t want to own it! I save myself to even look into details of their result, which was up strongly, but if anything, weaker than expected.
Caravel Minerals - announced a nice resource upgrade for their copper project in Western Australia, just 160km North of Perth, increased to 1.28 millt of copper : 366 millt at 0,35% copper and 66 ppm molybdenum, using a 0,25% cut-off grade. The company has done a scoping study a few years ago, which gave the project excellent profitability, but high capex front up, making it hard to finance. the current management has been working on a smaller plant, higher initial grades, and hence, lower capex with a faster pay-back. This has had some initial success, with good drilling results recently. Still - I think we need better copper prices, to get this project off thebground, and/or more higher grade material, which can be put through the plant early. Both is possible, though - and arguably, Caravel is one of the best - if not the best - long dated call on copper! I think the secret here will be to find a strong partner. For now, though, the company wants to add more value by drilling and is in the middle of a rights issue.
Have a nice evening
Schröder Equities GmbH
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