November 27th, 2020 | 10:12 CET
Ballard Power, Varta, SolGold - Trillions of Biden!
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"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
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.
Ballard Power - Continuous burner fuel cell
Hydrogen, as well as fuel cells, are now present every day. No matter how the drive for individual mobility is designed in the future, it will not be pure electrification, because the energy capacities needed worldwide are not available. Ballard Power Systems, an expert in the field of fuel cells, is taking advantage of the opportunity to raise larger amounts of capital. It was recently announced that due to strong demand, a consortium of underwriters, led by National Bank Financial Inc. and Raymond James Ltd., has agreed to significantly increase the size of the previously announced USD 250 million tender offer. Under the new transaction terms, the underwriters have now decided to purchase 18,182,000 common shares for an amount of USD 350 million. Remarkable!
The consolidated financial results for the third quarter of 2020 were announced in early November. "Although Ballard's employees and operations have not been significantly impacted by COVID-19 up to this point, delays in product launches and customer orders are still impacting our sales and results for 2020," said Randy MacEwen, President and CEO. In the third quarter, Ballard reported sales of USD 25.6 million with a gross margin of 19%. However, Adjusted EBITDA was negative USD 7.7 million.
Ballard is making good progress in key target markets. China's goal of operating around 1 million fuel cell electric vehicles and 1,000 hydrogen filling stations by 2030 sets a new policy framework with strong prioritization. A competitive hydrogen energy supply does not yet exist on the planet with all projects still being in the test phase. Sourcing this supply is a massive field of activity for Ballard and its Chinese allies, but also years of investment and research. The Company currently has a market capitalization of USD 5.3 billion - with no profits available, this is a mighty leap of faith.
Varta - pressure on the battery
Varta AG develops and produces through its subsidiaries worldwide microbatteries and energy storage solutions. The Company was founded in 1887, and its headquarters are in Ellwangen. Varta AG has been majority-owned by Montana Tech Components AG for several years.
The industrial group, Montana Tech Components of the investor Michael Tojner, earned significantly less in the first three quarters of 2020 than in the same period of the previous year. The profit for the period collapsed by almost 40% from just under EUR 51.0 million to EUR 30.7 million. However, sales of the group, which is listed in Switzerland, improved by 30% to EUR 1.29 billion. Out of sympathy with the parent Company, Varta's share price plummeted for the first time. The share price fell like a stone from EUR 115 to EUR 101 at a low point and only stabilized at around EUR 107 in yesterday's trading. Investors fear disappointments for Varta as well.
Regardless of the Covid-19 crisis, the group of companies is operating in a challenging environment with its latest investments in highly competitive locations. Still, the management emphasizes the continued robust positioning of the group. Varta therefore slightly raised its sales and earnings forecast and now expects sales of EUR 840 to 860 million for the full year 2020, with an adjusted EBITDA of EUR 230 to 235 million.
So far so good, but the impression remains that business is becoming increasingly difficult, partly because of growing competition from Asia. With a market capitalization of EUR 4.2 billion, the share has doubled since March 2020. The chart has now turned around the EUR 120 mark for the third time. There is noticeable pressure here!
SolGold - Copper fantasy as gold hedge
SolGold is a British public Company headquartered in Brisbane, listed on both the LSE and TSX and focused on copper-gold exploration in Ecuador, Solomon Islands and Australia. SolGold currently has 76 concessions covering approximately 3,200 square kilometers, making it the largest and most active concession holder in Ecuador.
Following the discovery of the Alpala deposit, SolGold has attracted the attention of some of the world's largest mining companies, such as Newcrest Mining and BHP Billiton. Both have bought SolGold shares on several occasions at a premium to prevailing market prices, demonstrating the widespread support of the majors for promising projects. More prospects may follow because copper is experiencing a remarkable rallye.
Meanwhile, SolGold has confronted its shareholders with some news at the annual general meeting. The Company will continue its regional exploration program with a budget of USD 40 million over the next 12 months. Additional funds will be reserved for more intensive resource definition programs. SolGold's medium-term strategy is to build an integrated pipeline of exploration projects, developments and mines in Ecuador. It is now laying the foundation for the creation of a world-class copper and gold producer.
The speculative value currently has a capitalization of CAD 1.25 billion and has recently increased by 15% despite the declining gold price. You can feel that the copper clock is ticking at SolGold. Market participants are entirely ignoring the unfavourable environment for gold, and this could accelerate significantly after the "Taxloss Season" in Canada, especially if gold stabilizes. One should therefore definitely take hold on weaker days in the coming weeks.
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