Good afternoon
the labor market is very strong in the US...Import Prices are rising....and still, , bonds are recovering further. Empire manufacturing numbers also good.
Equities are slightly higher across the board, while metals are under some pressure today from a strengthening US$.
I guess some automotive companies will be slightly disturbed by Glencore selling about 30% of 2018-2020 cobalt production to a Chinese company...GLEN are the worlds largest producer by a long shot, and the race to secure battery metals seems in full swing! Another Chinese company is in talk to Altura Mining, an Australian lithium spodumene producer. the myriad of deals in lthium - offtakes, investments, takeovers - is telling us, that the stuff must be tighter than most of us believe??
Piedmont - announced some more, positive drilling results from their asset in the US...while it´s certainly a big advantage to be based over there, and develope a resource locally, the stock might be fully valued at a market cap of 90 Mill? At least, I would like to see the first resource estimate, which is due before mid-year.
Apollo Minerals - stock has started to move, following last weeks announcement of them having secured a deal to go to 100% of the Couflens Mine in France. I believe, that the company has got access to the underground mine now, which will allow them to inspect thousands of meters of drill core, before they start bringing drill rigs themselves. I am not sure, when this might happen - I guess we are not too far away! Probably time is running out to secure a little foot in the door here.
St Barbara - the short strike at Simberi is over...company reconfirmed guidance for the current year.
Paringa - updated the market today re construction progress of their coal mine in Illinois. Bad news: The worst flooding in 20 years saw construction completely stopped for 2 weeks, and some minor repair needed another 2 weeks. Conditions overall have been difficult, resulting in additional 4-6 weeks construction time. Additional costs are minor - but time is money as well! The company is still well within the 10% contingency of the budget. Still - I am a little worried, that they have to top up their coffers with a small amount - say 4-5 mill. I am saying this, without having ahd contact with management - I hope, that I will be wrong. Very good news, though, from the coal market. Coal stocks in the US have been continously falling, and interest for longer term offtake agreements is rising. Also, renewed consolidation in teh sector is making a new entry very interesting for power generators. Recent announcements of steel-and aluminium producers following Trumps tariff shock, to start idled plants etc, are expected to result in anotehr 2000 MW of power demand, much of which in areas, where PNL´s coal could be delivered to. That could almost double teh estimated power consumption growth of 0,7% in the States. Overall - IF no additional equity needed, more good news than bad! I think the stock could well profit from teh excitement surrounding Prairie - many investors ( like myseld ) will be shareholders of both companies, and there certainly is some temptation to switch some PDZ-money into PNL at these levels. PDZ , by the way, are abit quieter in Poland today - large turnover of 1.3 Mill shares one hour before the close, trading at the equivalent of 0,94 A$.
Gascoyne - the stock found some more interest recently. Construction is coming to the end...first gold production is planned now about one month early, for late May. All within budget. Exploration should have started now, or is imminently starting - a very large drilling program is planned + financed for the current year, and I would be very surprised, if that would not deliver. Every year of increased mine life should add about 15-20% to NPV, given the currently short mine life of 6 years. Looking at Dacian, which is the otehr new entry into the producer-league this year, and which si expected to announce the first gold production within a fortnight, I think Gascoyne is undervalued. About 1rd of the resource base, but roughly 50% of reserves and production at Dalgaranga compared to Dacians new mine, production costs slightly lower at 1000A$/oz - but the EV, once producing, will be about 255 mill A$ vs about 700 MillA$ for Dacian...both stocks shoudl have similar exploration upside. And this very superficial comparison does not include any value for Gascoyne´s potential second project, Glenburgh. As I mentioned before - Dalgaranga is an easy project, no hickups expected - and I think Gascoyne is something like 30% undervalued without an improving gold price, and without any exploration success. There is a real shortage of new gold mining projects of reasonable size in Australia, and if the share price won´t improve, there will be a few cash-rich Australian gold miners be looking at Gascoyne, which does not have a major shareholder. I am holding some in my fund.
Have a nice evening
WS