December 28th, 2020 | 10:48 CET
Alibaba, FuelCell, Desert Gold - Bet on gold!
Table of contents:
"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Alibaba - The government intervenes
Alibaba can't get out of the negative headlines. The online business is developing less strongly than expected, and diversification is working out rather poorly than okay. Alibaba is trying to diversify its business with its manageable online margins into other sectors, especially financing and insurance, similar to its big role model from Seattle. The controversial Ant Group, in which Alibaba holds more than 30%, had to cancel its IPO in November unexpectedly. Now the government is harbouring new antitrust concerns.
China's central bank has ordered investor Jack Ma's Ant Group to refocus on its original core business. According to a statement issued by the central bank over the weekend, the financial firm should purge its business of lending, insurance, and asset management. Instead, Ant Group should return to its roots as a provider of payment services, it said.
While the central bank did not directly order the group's breakup, it made it unmistakably clear to the leadership that diversification efforts are to be shelved. The group will now have to set up a separate financial holding company with sufficient capital. The regulator also accused Ant Group of having too much market power, damaging competition, and hurting the interests of hundreds of millions of consumers. Thus the original voice from Beijing.
The Chinese central government recently changed the requirements for the lending business. In the future, after various restrictions, 30% equity is also to be required to be able to grant an online loan together with banks. The Alibaba share has moved away steadily from its high of EUR 271 and sitting currently at EUR 210. The chart is trending strongly south, within a month about 10% is missing in the price. The correction should not be over yet given the heavy crossfire.
FuelCell - Bad news, but frothing share price
Again, bad news for a hydrogen company. Californian fuel cell power plant operator FuelCell Energy has problems with several public tenders. As the Company surprisingly announced in a press release, FuelCell was deprived of state awards for three important projects. The stock was initially undeterred and rose to a new 52-week high over the week.
FuelCell CEO Jason Few railed against the government agency's decision, saying it improperly revoked previously approved state RFP awards for three fuel cell projects under the Shared Clean Energy facility program. The revocation of government contracts is likely to result in significant revenue losses for FuelCell Energy in the near future. The fact that the share could climb to a new 52-week high is utterly irrational from a fundamental point of view and is probably due to the euphoria about tax breaks for green developments in the USA.
The share price even peaked at USD 13.90, bringing the market capitalization to over USD 4 billion. Even in FuelCell Energy, there have been no profits yet, with a manageable turnover of just USD 65 million. Due to the hydrogen hype on the stock exchange, companies that are still at the beginning of their development and still have many breakdowns to go through are already endowed with valuations in the billions.
Desert Gold - A good setup for 2021
As we already suspected, after the "tax loss season", the price of Desert Gold is now also stabilizing. Over the late summer, the share suffered from the higher consolidating gold price, which corrected from a peak of USD 270. Producing gold mines had partially halved in price, with the explorers the consolidation made different waves, the Desert price is now stable on the market for a few days at CAD 0.15.
We look at the current projects, as Desert Gold has now submitted its plans for 2021. An additional and exciting part is the start of the drilling program of the joint venture partner Indigo Exploration, which has started its work program on the Djimbala gold project in southern Mali, West Africa. The Company's flagship project is the Senegal Mali Shear Zone project, which covers 410 square kilometers in West Mali.
Gold has a very long tradition in Africa, at least since the vast discoveries in South Africa. Today, major gold producers have set their sights on the continent once again to replace the partially expiring mines worldwide with new projects. Suppose Indigo's drilling proves successful in the short term, in that case, a major producer could acquire the entire concessions by making a takeover offer to Desert Gold who is sitting with a current total value of CAD 21 million. Desert Gold is currently also working on is assets, which could increase the value as well.
On the charts, gold should push through the USD 1,900 level again to the upside in the next few days. That's going to be year-end fireworks for some explorer stocks. Stay tuned for Desert Gold, because things can happen very quickly!
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