Good afternoon
another up-day for equities, it seems! Outstanding result from Google, fantastic xcash generation at Microsoft, but otherwise slightly disappointing the market. Apple and Facebook will report later tonight. And for metals , another good day- a little bit of profit-taking in copper just under the 10.000$/t level, which certainly is heavy, psychological resistance, and which is also the 2011-high….but nickel easily charged through 17.000 US$/t and has broken the charts to the upside….
Goldmans see another 13% upside in commodities generally over the enxt 6 month, while UBS also sees 10% upside. That´s a bullish call, following on from massive, recent rises….
St Barbara - their Quarterly today has been a disppointment across the board….they will be very hard pressed to make guidance for the curent financial year to June…and COVID is creating more, potential problems at Simberi, which is in PNG. The virus is a big issue there…further disruptions are a high chance. The takeover in North America has not added any value over recent Quarters….This is not a gold stock one needs to have!
West African - this is a gold stock to have, despite a very slightly disappointing Quarter - even though the company claimes, that the Quarter has been a good one relative to what they had in their budget to reach a full year guidance ( calendar year ) of 250-280.000oz at 720-800 US$/oz AISC. The Quarter saw 56.000oz at 957 US$ AISC…which was yet another improvement - but I guess the market had hoped for just a little more at just less costs. There have been small issues- one-off - with underground mining, but mainly, underground grades have been lower than reserve grade, and lower than expected. The reason for this, though, i s apositive one: The underground delivered more ore than expected in this location - but at lower grades for the addtional ounces. Rather than leaving this stuff behind , the company has rightly mined them alongside the “good” stuff. The 10-year outlook for WAF is to produce 216.000 oz on average at per annum, which i s a great outcome. The current Quarter will see further increases in production at falling costs, and the drilling campaign for Toega will be finished, to enable the feasibility study to be finished by the end of this year. Toega currently has an inferred resource of 22 millt at 1,9g gold/t. It´s a one-mine stoxk, yes - but it´s way too cheap! Imagine they merge with Perseus - 4 mines in three countries, generating s…loads of cash - I think the market might like that…But despite PRU being a relatively cheap stock - I think some kind of a premium there would need to be to satisfy me!
Strike - nothing really new in the Quarterly…but I am not surprised, that the stock made a new high today. Just take the time to read it…everything has been going their way, and the management is doing a great job, developing fresh and innovative ideas for their asset. Last but not least, West Erregulla is shaping up to be a large resource - flow testing should be finished by the middle of May - and the company is very excited about the improving prospects for South Erregulla, which could double their gas resource yet again!. the stocks performance following the large placement, and the current SPP, has been unusual, to say the least….and there is still no need to sell the stock! Two brokers now have valuations of above 50ct/share now…and who knows, what Stuart Nicholls will come up with next!!
Panoramic - had a very good conference call with Victor, the MD today. The mine has been unrisked in a big way , and mining will finally start on the 1st of July. The company is completely financed, with spare liquidity , to bring the Savannah Mine back on ! It will need a few Quarters of patience, though, for investors, as no one is giving the benefit of the doubt to PAN….once bitten, twice shy!!!! But I find the conservative forecasts almost too conservative - if not misleadingly conservative. But Victor wants to rebuild trust in the market, which is understandable. In arriving at the numbers quoted recently in their lates presentation ( on the webpage ), PAN are using mining dilution of 22% vs a historical number of 12%…using plant throughput of 900.000t p.a., which could potentially be as high as 1.200.000t in 1-2 years time….the contract with the offtaker is much sexier than in the past - payability for nickel inm concentrate is 80% and could be 82%, depending on the nickel price…tehy are also receiving 55% of the copepr contained, and 50% of the cobalt - I think historically, these numebrs have also been lower, even though the yhave never been publicised. And last but by no means least, the company has used a conversion of 48,5% of resources to reserves - historically, that number has been around 75%!!!
You can see - extréme conservatism everywhere - and at least some analysts are using even more conservative numbers! I think that´s stupid - but understandable, as they have been hurt by disappointments as well.
But I feel once again very validated here with my large position in the stock! Very cheap, I believe…
Have a nice evening
WS