Good afternoon
the Trump-presidency will not last for long!!
Strong Housing Starts in the States.
Duerte ( the next maniac ) has confirmed his support for Gina Lopez´action with regards to the mine closures. Long life Gina Lopez - well, at least if you are long Australian nickel stocks!
The gold price is still profiting from yesterdays inflation numbers, I think, while we are seeing some limited profit-taking in the base metals today Nickel is trading above 11.000 US$/t - for the first time since the Indonesian export ban was loosened up, while cobalt is stronger again in London.
Evolution came out with a good Half-Yearly result today, in line with expectations. Pretty much all record numbers...Net mine operating cashflow of 213 mill A$ swa them paying back 160 mill A$ of their debt, to end the year at 22% gearing. The strong cash generation is not really a surprise, given AISC of 738 US$/oz in the last Half. AISC will be lower again in the current Half, driven by a full contribution of Ernest Henry, and better copper prices.
The company is putting great emphasize on Cowal, the most important asset. Board approved a 230 mill A$, massive cutback to increase mine life by 8 years to 2032, and an additional 30-40 mill A$ for improvements to the process, to increase recoveries by 10-14.000oz p.a. . Reserves at Cowal have been increased by 679.000 oz, resources by more than 2 mill oz. This asset is shaping up better and better - it was a great aquisition. The mine has 3.2 Mill oz in Reserves now, and more is expected over time.
The company is highlighting exploration upside from the Tennant Creek JV, from Mungari ( mainly the old Phoenix-ground ), and Mt.Carlton. EVN underpinned it´s position as Australia´s No.2 behind Newcrest...and is continuing to increase it´s average asset quality. The stock is just about correctly priced - perhaps 10% upside at current gold prices, like most Australian gold producers, as the strength of the A$ has the A$ gold price only going sideways in the moment. At 2.30 A$ EVN have not priced in a premium for management at all - and tehy have proved over the last few years, that the company is capable of doing smart aquisitions, as well as managing operations in a very efficient manner. Jake has got every reason to be a very proud presenter in Zurich next week!!
Breaker - there is continued talk about BRB being on the way to a large orebody...by very smart people! I know that they have had a great run, and I have taken some profits myself - but the market cap of 78 Mill A$ is not demanding at all, and is not pricing a lot of blues sky in. The market cap of 78 Mill A$ would be small, if they continue with their recent exploration success. Again, we will hear a bullish story from Tom Sanders next week! He could be a big winner, and few people deserve it more than him!
Venture Ex - have announced some refinements to their previous feasibility study, which are very positive. The 1 Milltpa base case delivers 32.000t of zinc, and 12.000t of copper for 12 years, to arrive at an pre-tax NPV of 338 mill A$ and an IRR of 52%, for a peak-cash outlay of 183 Mill A$. The short payback of 1.6 years for capital expenditure, and the high IRR are big +es for this project. The feasibility study has been done at a zinc price of 2535 US$/t, 6.450 for copper, and 19$ for silver, which should be realistic and perhaps conservative. The project also has considerable exploration upside, as VXR have lived hand-in-mouth for the last few years. Overall, a good speculation on zinc prices, which some analysts have going to 3.600 US$/t over the next 12-24 month ( I personally think, that this is too bullish, given the possibility of Glencore bringing on suspended operations again later this year ).
Independence Group - announced some very good exploration results around their Jaguar copper/zinc/lead mine. Not enough really to move a 2.6 bill$ company, but certainly positive. The main stories for IGO remain Tropicana Gold, and especially their new nickel mine, which is ramping up.
Genex - official press release from the premier and the Minister of Enviroment as to the government support of GNX´s solar project - with multiple references to to their hydro-pump project. Turnbull specificially mentioned it in a speach in parliament today as well. You can just feel the big, political support for this project. Turnbull is under pressure from the polls, and the elctricity situation in Australia is very critical, and subject to press articles every day. GNX has multiple meetings lined up with several government bodies - this is a dream constellation, and I have absolutely no doubt, that this small company will recive massive support to finance this thing - and at a reduced time frame! One should not chase the share price, I guess, as the current righst issue will only be finished in 2 weeks time. The market cap is now 60 mill - the solar project is worth 40 mill approx....the pump-hydro will be 5x larger ( in terms of power produced ). I am genually excited to meet management again at our conference in Zurich!
S32 - BHP´s ugly duckling announced a good result today, but dividend disappointed. Given the massive free cash generation of 600 Mill US$ last half, and 860 Mill US$ cash in the bank with no debt, a 200 Mill US$ dividend is very paltry indeed. Even as they have potential aquisitions like RIO´s Samancor on their mined, this could be very easily financed with free cash generation at this level. There is some speculation as to S32 announcing a large share buy-back with 3rd Quarter results - still, I am an old-fashioned man, preferring a dividend in my pocket! They made very positive comments on nickel, and on the potential coal mine curbs in China.
have a nice evening!
WS
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