Good afternoon
Gold is fighting with 1190 US$...chart resistance is at 1200 US$...as the US$ is a bit stronger today. I would expect some headwind from a stronger US$, which as yet, has not clearly broken to the upside against the Euro as yet.
As the day developes, we are seeing some small profit-taking today in base metals, which are very slightly weaker in the moment, following a very strong close yesterday. Only nickel is clearly weaker, giving up most gains from Tuesday.
The world is waiting for Trump´s press conferences later today, trying to get a clue for his moves early into his presedency.
Uranium has been the big story late yesterday: The world´s largest producer, Kazatomprom, announced a surprise cut of production of 2.000t p.a., equal to 3% of the world´s production. Kazachstan is by far the largest producer, mining about 40% of all uranium. The country had increased production dramatically over the last 10 years, and has been the main reason for weak spot prices. Spot uranium has hit 18.00$/lb a few weeks ago, and has increased to 24.30 US$/lb yesterday - a rise of 10% on the day, following the news.
Uranium stocks around the world were the top performers yesterday, lead by Cameco, which was up by 10%. Berkeley in Australia traded as high as 1.19 A$ ( up 15% ), before closing at 1.08 A$. I expect a furtehr strengthening of uranium prices, as very few producers are making money at the current spot price. The production cut of Kazatomprom will push the world´s uranium consumers into more agressive contract negotiations with producers, especially, as the cost of uranium is a very small part of their total costs, and it´s much more important to secure supply, than to wait for even lower prices.
World exploration expenditure worldwide dropped by 21% last year, while Australian mining capital expenditure dropped by 35% year-on-year in the Sept-Quarter to 9.7 billA$, the lowest in 6 years, and comparing to 25 bill A$ at the top of the cycle in 2012! Exploration spend will almost certainly rise this year, capex probably as well - but both will take years to have an impact on the supply side.
Iron ore prices as well as steel rebar in China very strong, again. Iron ore should trade above 80$/t in London again today - amazing, taking into account record shipments of Australian as well as Brazilian producers. The largest iron mine ever, owned by Vale, will progressively ramp up production over the next three years, further increasing supply. The Australian government forecaster is expecting more than 200 bill A$ in Australian mineral exports this financial year to the 30th of June - iron ore is a major part of this, while LNG is also showing strong growth, in terms of volume definitely, and lately, also better prices. China is growing demand very strongly, and will continue to do so, in light of the massive enviromental problems they are having. The pressure will be on Australian explorers, to find more gas, to keep prices from rising any further locally. So we are keeping our fingers crossed for little Strike Energy, to finally prove commerciality of their massive resource in South Australia - hopefully in the short term!!!
Perseus - the stock has recovered more or less in line with otehr gold stocks, following the turbulent inclusion into the GDXJ-Index, and their profit warning late last year. The Quarterly will be eagerly awaited by shareholders, to see, just how bad the Quarter has been, and whether there has been some improvement late in the year - I expect that to have happened. Some investors have been put off by the recent turmoil in Ivory Coast - but that also seems to have been bedded down now as well, and I expect a resource estimate for their satellite deposit there shortly. Within their corporate update in december, the company stated, that the mine plan would be looked at again, but that guidance for this year would be "unchanged at this stage". To me, that implies a slight downgrade from the very positive outlook - I think the market has already taken that into it´s stride - same as the 20 mill$ payment as settlement with the previous contractor for Youare, which took as all by surprise. I guess that was one of the things which can come out of a takeover from left field! Cash + cash flow for developing Sissingue, and subsequently the much larger Youare, have always been kind of tight - I think the company will now look at alternatives to come up with some financing, outside of fresh equity, which would only be the last resort, and which would only be needed some time in the future, I guess in 2018. I would like to wait for confirmation from the Quarterly, but I think things are ok again for Perseus - which in turn means, that the stock is a very good buy for gold bulls!
Finders Resources - the stock has tended to be a little weaker recently, perhaps driven by rumours about very wet weather in Wetar. I think these concerns are grossly overdone, and the mine should have continued it´s ramp-up last Quarter, and should have reached name plate production. This and the next Quarter will show, whether they can do even slightly better, and the stock should smoothly trend higher - provided copper prices are not tanking. A strong property market in China, and high levels of infrastructur spending should let copper trend a little higher, in my opinion, helping sentiment for the sector further.
Have a nice evening
WS
WS
Schröder Equities GmbH
Seitzstr.7a
80538 München
Tel. +49-89-4613440-0
Fax +49-89-4613440-10
email: wschroeder@schroeder-equities.com
website: www.schroeder-equities.com
eingetragen im HR München, HRB 166985
Geschäftsführer: Wilhelm Schröder
The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by unauthorized persons.