Good afternoon
strong safe heaven buying in bonds today….London closed, so no metals trading - equities get beaten up, but recover from their lows on more muted US-response to Trump´s bomb-shell Tweed over the weekend. Investors debating, whether it´s his usual threat-deal making, or whether tehre is a realrisk to a trade deal falling through. In any case: markets are nervous! If we are lucky, this is just a little correction in a market, which is driven by liquidity, some better economics than feared a few month ago, and a set of strong corporate earnings for the first Quarter.
Liontown - stock continues to boom - up anotehr 25% today, on a massive 80 mill shares traded, before they suspended themselves. Lawyers worried, that the company, by publishing the latest research update from Bridge Street Partners, endorses the findings of the report. Companies in Australia are only allowed to publish JORC compliant reserves and resources - and the report speculated in that regard. Anyway - the stock might be down a littletomorrow, as the announcement after market erads, as if the company potentially disagrees….but this is typical lawyer-stuff. I can only say, that the analyst, who wrote the report, Chris Baker, is a very experienced and highly regarded analyst. Certainly , he can also be wrong…but I would think, that the chances of him being right here, are pretty high! I continue to like the story, but nothing can go up like a rocket in a straight line!
Perseus - gave the formal go-ahead for construction of the Yaoure Mine in Ivory Coast. 265 Mill US$ in pre-development costs, financed by a 150 mill US credit facility, 40 mill US$ worth of underwritten warrants ( those fund should be imminently in the bank ), 81 mill US of cash and bullion, plus future cash flow. certainly, the company also needs some working capital and cannot use all the above funds - but the two existing mines are in good shape, and the financing sounds pretty solid to me! First gold production is targeted for Christmas 2020 - that´s only next year! On top of the development, the company is alsoplanning an extensive drilling program at Yaoure, to increase the current 9 year mine life.
Echo Resources - the gold developer finished a 15 mill A$ placement to institutional investors and including to 21%-shareholder Northern Star. they took up their pro-rata share. The company has disappointed a little this year, but the exploration potential remains excellent. NST is producing gold nearby - the takeover potantialis still there, but it would need some good exploration results to re-ignite it! Worth watching the company.
Genex - the share price has been languishing for a few mont now, in absence of important news. The stock has come under a little pressure for three reasons: 1. no fresh news 2. I believe, that largest shareholder Zhefu ( I Chinese producer of turbines, which contrary to it´s expectations, did not get the deal for turbines for the hydro project ) has tried to seel. While there has been a bid for the entire stake at market prices, I believe, that the Chinese company wanted a little more ( all this is rumour and got never confirmed by Genex ) and 3. a research report a few weeks ago only valued them at 34ct incl a succesfull development of the hydro project. This reaerch report has used very debatable, probably wrong assumptions to arrive at this fairly disappointing result. I think once the company has reached a conenctivity agreement with the state-owned, Queensland grid operator, the way is free for a firm debt agreement with the Northern Australian Infrastructure Fund. The company is still expectinmg to close the financing for their hydro project before 30th of June - so the agreements above need to be signed off within the next 4-5 weeks , if the time table should be performed on. especially the connectivity agreement would be a major milestone for GNX. The elections in Australia should not be negative for GNX - if the Liberals win, nothing is changed - if Labor wins, it should be a lot easier to bring alternative energy projects to the market. I think teh stock is very cheap at 22ct….the solar and wind projects alone are probably worth 20ct at least…
The following little comment got cut-off halfway through on Friday…here is the full version
Tietto Resources - I mentioned the stock recently. They finished a well subscribed placement of 7 Mill$ at 15ct over Easter, yet are trading at only 14ct now ( where I bought some stock today ). I think the chances are very high, that TIE will increase the existing high grade resource of just over 1 mill oz at 2,1g, as well as the nearby lower grade resource ( total combined resource is 1.7 mill oz ). The market cap of just 36 mill AS$ ( of which about 8 mill is cash ) is not doing justice even to the existing resource. As a ball park, the market is starting to get interested, when a company can show production of 125-150.000 oz p.a. - in the case of West Africa, it might be a little higher. But TIE should be well on track to get there. For now, though, the stock is a pure exploration play, and as such, I think they will add a lot value = several hundred thousand oz of resources - before year end. All demand seems to have satisfied in the placement ( in which I did not take part because I had no cash at the time ) - now the stock entered into very lacklustre , downward performance with little turnover. I would be very surprised, if they would not recover to 20ct quickly on some further drilling updates- and god knows, what the potential is here. Too early to tell - but anything above 2 mill oz becomes very interesting, especially if they can grow resources by adding material with good grades.
have a nice evening
WS