Good afternoon
thin markets in Europe because of a public holiday in most places…equities slightly stronger so far, while emtals are a little softer.
Following a relative strong increase of nickel stocks at the LME three days ago, two unusual large falls yesterday and today, to a new 6-year low. Copper stocks, though, were up by about 10% today.
Lots of talk in the press, the internet and even the TV-news about possible effects of a rare earth export ban or at least a quota. Continued big turnover - and mostly price rises - of rare earth stocks, even though Lynas were down a little today.
Lynas - after hours Mahathir made very positive comments about Lynas´plant in Malaysia: He wants it to continue operating, and they will need to find a solution to get rid of the residuce. If he closes it, the rest of the world will hate him - this is the only halfway reliable source of rare earth in any size, outside of China. The ebauty for Lynas: Anybody “hopeful” will need at least 2 years for meaningful production -probably 3 years even and in most cases, longer than that. So the market is chasing advanced stocks like Peak Resources - but they are still waiting on their special mining lease in Tanzania. This looks promising, but the company is a good example for the fact, that any near time production increases of rare earth are highly unrealistic. But I guess, that there will be several government agencies around the world now keen to finance a new player - very different to as recently as 3 weeks ago!
The best news of all of this is, that the punter seems to be abck - continued, very large turnover in Liontown, some strong demand for placements, and now massive turnover in little Peak Resources - and certainly, in lynas - show us, that speculative money is around for interesting projects. The only problem though is to find out, what the punter on the street likes!
Strike Energy - completed a surprise, 12 mill$ capital rasing at 6,5ct. The placement was to be originally only 10 mill$ - because of strong demand, it was increased to 12 mill$ On topn, there were 10 mill shares traded in the market today. It came a sa complete surprise to em - even though I am relatively close to the company. I had hoped for a corporate deal, or / and offtake agreement for gas to enable the compnay to pay back the R&D support ( Strike had, as is common practise, borrowed 5.3 Mill$ on expected 6 Mill$ subsidy ). The fact, that a bank gave them a loan, based on the R&, tells me, that the company had very high expectations to receive this grant - but forever reason, this did not take lace. STX might go to court -. but for now, they have to pay back I think 6 mill$ in old grants - received earlier and still in dispute - but certainly 5.3 mill$ loan before the end of July to Commonwealth Bank. So in a worst case scenarion - which has to be a realistic scenario following recent announcement - 11.3 mill$ will need to pay back, relating to R&D-grants / and or debt.
The good news, though , has also been announced: The company got 5 Mill A$ for an option to a subisdiary of large conglomerate Wesfarmers, to supply /receive up to 20% of the first few years production. This shows you , how concerned Australian manufaturers areabout their gas supply! This is a very positive announcement - but in the first place, the existence of the expected, large gas reservoir at West Erregulla has to be proved by the drill rig, which has arrived and should start drilling over the next few days. Let´s not forget about Haws - very different story: This is an unconventional gas resevoir, and while it´s pretty certain, that the stuff is there, STX need to find a way to extract it profitably. We should know more about this during June, and a final result should be available in July, if all goes to plan. Roughly the same timetable applies to the drilling of West Erregulla. Very exciting times for Strike…and for us, as very long term shareholders ( and largely, suffering shareholders! )We have to give it to the young MD, Stuart Nicholls - he has done everything right so far, I think - but now the prove will be in the pudding for both projects at the same time! So in 3 month time, this stock will be either heavily down, trade at close to 20ct in the case of success at West Erregulla, or 30-40ct in the case of success of both projects! Thes are not really share price targets - certainly, it also depends on the success: Exactly how much gas in Western Australia´s probably most exciting onshore well this year, and exactly how much gas can be m,ade flowing in the Cooper Eromanga Basin. I participated in the placement.
Tietto - announced some more, exciting drilling results from their project in Ivory Coast - 10m of 25,8g is the kind of result, which excites the market and gives great upside to the high grade resource of just over 1 mill oz, within a total project resource of 1.7 mill oz. Other good results were 25m with 2g, and 9m with 4,13g/t. The company will shortly have a 3rd drill rig on site, to speed up the 30.000m drilling program for this year. Definitely one to watch - probably one to own. my fund has a small position in TIE.
Have a nice evening
WS
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