Good afternoon
I am sorry, if my report is very late recently - at least sometimes. This is not under our control - the blog is scheduled to be published between 6-and 7 pm Central European time. I guess, that the late sending out is a sign of the internet - or at least google - being under some stress.
More than 4000 have died as yet in New York - more than in entire China, if those numbers are right. Austria, which was pretty early in taking a tough stance, has just had about 1000 new cases or 10% of the total in the last 4 days…showing, that the lockdown can work. They have announced the relaxation of some of the lockdown-measures. Many European countries also look like seeing reduced absolute numbers, and defitinely reduced % of new cases.
This is inducing fresh optimism into equities! Australia was strong last night, Europe is strong, the US is strong…
I think the biggest risk to equities is from the regulatory/political side…Some neews-feds are talking about a one-off wealth-tax …5% in a hit - others are talking about a 20% levy on net worth for the rich, to be paid over 20 years….
Base metals also stronger - 0,5-1% up, and gold is looking pretty sexy at 1644 US$ in the moment, and 2710 A$/oz. It climbed higher all day basically, since Europe woke up. And even North American gold stocks are very strong! ETF inflow into the physical was strongly continuing on Friday.
One thing I wanted to mention the other day and I forgot: The huge numbers being announced by governments around the world to support their respective economies are most probably no actual numbers, and never will be.
In most cases, they describe total support - mainly in credit - available to support large and small businesses, and individuals. These numbers probably will never be achieved!
But unfortunately, in many cases they will support businesees, which have been weak anyway - and companies, which are smart enough to use it! I have no doubt, that many Private Equity-owned businesses will make good use of the cheap money available!!! I have spoken to the owners of a few private enterprises, and they are actually pretty relaxed - provided the lockdown does not last for much after the 1st of May! I am sure, that this is very different for many self-employed people, and for many small businesses like shop-owners etc - for them the going is VERY tough!
Northern Star - announced the first corona case at their Canadian mine Pogo. Australia continues to be relatively little affected - but I am sure, that it´s a question of time until we see the virus arrive at Australian mine sites.
Strike Energy - Hartley´s started coverage today - 12-month target 22ct, but with significant upside to that. As you know, I think this stock is a steel! Oil/gas will normalize at some stage, and corpoarte buyers tend to have a longer than 6-month view ( well, I would hope so! ). They believe , that corporate action in the Perth Basin will be plentiful….It would certainly be a great situation for a healthy company like Beach Energy to get their hand cheaply on what Hartley´s are calling a world-class gas find! Woodside hve delayed/totallyput aside plans for some very large LNG projects off the coast of WA - that could well be enough to see the gas market in Western Australia in deficit in a few yars time. In any case, it should be a lot cheaper for the majors to produce some onshore gas just outside of Perth,and close to the major market, than produce 100km and more to the North, offshore and after billion and billions of investment!
Panoramic - are getting a 8 mill$ loan at 6% from the largest shareholder, Zeta Resources. Zeta is geeting a huge premium for it: 28 mill options in PAN, exercisable at 16ct, IF shareholder do not approve the latest sale of 17 Mill Horizon shares at 17ct ( and the loan includes eventual payment for these shares ), they will still loan PAN 8 mill$ as I understand it, but receive 50 mill of these options. It´s great for PAN to get 8 mill$ one way or the other - but in my opinion, the largest shareholder is taking advantage of the difficult situation, PAN are in. Also, 8 mill A$ will not be sufficient to bring them into profitability, I think. Caught out by ramp-up problems, and the virus-induced bad nickel price as well as some production difficulties ( I guess ) because of virus-lockdown, it would be very hard for an outsider to do proper due diligence ( the virus makes it hard to go to the mine for outside people ). Panoramic probably have no choice to accept this - unless a white knight comes along! As I had mentioned before - in my opinion, Horizon Gold is worth a multiple of today´s price, eventually. But if they do not approve a rights issues, it will be impossible to prove this! The largest shareholder Zeta could quickly change this - but they are playing their cards to the detriment of small shareholders, in my opinion - of which I am one, in both stocks!
Resolute - released early production numbers for the Quarter, which were in line, but with a slightly unexpected composition. 111.000 oz were in line with company guidance of 430.000 for the calendar year,. Syama oxide production and Mako saved the bakon, once again - but Syama Sulphie produced less than expected - and that is the crucial on,e longer term. Recoveries were only 75% against a target of 85% , and mining - while substantially improved - also still a little short of expectations. Perhaps the smelter did not work 100%, after the close-down in December? Nota bad result overall, but Syama Underground( = Sulphide ) remains a unfulfilled story!
Have a nice evening and enjoy the European spring!
WS