21. May 2021 | 10:44 CET
BASF, White Metal Resources, Deutsche Telekom - The winners of future trends
By 2025, there will be around 1.5 billion vehicles on the road worldwide. This figure is alarming since today we have to contend with rising air pollution and the consequences of climate change. However, the energy transition, which is being accelerated more and more by both politics and business, will increasingly require scarce raw materials and novel technologies. These requirements give rise to young companies that will benefit in the long term from rising sales and bubbling profits.
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ISIN: DE000BASF111 , CA9640461062 , US2515661054
BASF - Strategic joint venture
When it comes to electromobility, hardly anyone is aware of the important role played by the chemical Company BASF. Yet, the Ludwigshafen-based Company is a leading global supplier of cathode materials to battery manufacturers for electric vehicles. Cathode materials are essential for higher battery performance in terms of energy density and efficiency. Business in Europe has already been strengthened in the recent past with the construction of plants in Harjavalta, Finland, and Schwarzheide in Brandenburg, Germany. Joint ventures were also established with Toda of Japan to strengthen the market in Japan and the USA.
To gain access to construction materials in the world's largest electric car market, China, BASF yesterday announced a joint venture with Chinese supplier Shanshan. In the deal, the German chemical giant will hold a 51% majority stake in the joint venture, which will produce cathode materials and their precursors in China. The merger, which is expected to be completed by September at the latest, will increase BASF's annual capacity for cathode materials to 160 kilotons worldwide by 2022.
White Metal Resources - Promising portfolio
The junior exploration Company White Metal Resources is pursuing a more than interesting approach. The Company's strategy is to acquire mineral land packages, particularly in attractive mining jurisdictions such as Ontario and Newfoundland, targeting gold projects with potential future mining opportunities. There are currently 40 operating mines in Ontario, including 20 that are active. In 2019, Ontario produced CAD 10.7 billion worth of minerals, accounting for 25% of Canada's total production.
Initially, the Canadians act as a project generator. Thus, interesting exploration objects are searched for and developed in cooperation with a suitable joint venture partner. In Ontario, four projects have already been filtered out, focusing on the Tower Stock Gold project. Here the Company has an option to acquire 100%. The concession area, where little exploration has been undertaken for more than eight years, is located approximately 40 km northwest of the port city of Thunder Bay and covers an area of roughly 1,968 ha. Here, the 3D IP survey result was recently announced, providing additional target areas for follow-up work to clarify the anomalies' sources.
In addition to Canada, the second focus area is Namibia. The country is rich in mineral resources, some of which have been mined for more than 110 years. With a share of 9.4% of the gross domestic product in 2019, mining was the most important industry in Namibia. Here, White Metals maintains its second main project, the 95%-owned Okohongo copper-silver project. The property covers an area of 19,850 ha. The geology is analogous to the Central African Copperbelt (CAC) in Zambia. CAC is estimated to contain 5 billion tons of copper at grades up to 4%. A 3,000m C drilling program was recently completed here to confirm the historical resource. The drilling returned 45 m of 2.02% copper and 33g of silver per ton. The project generator portfolio continues to grow.
With the establishment of further joint ventures and the development of the two flagship projects in Canada and Namibia, the intrinsic value should be significantly higher than the current market value, which is currently only EUR 4.46 million.
Deutsche Telekom - A logical step
Deutsche Telekom's US subsidiary, T-Mobile US, is the leader in the future market of 5G networks in the United States. T-Mobile US' 5G network, which is currently still under construction, reaches almost 300 million people. Compared with the nearest competitor, AT&T, this means twice as much network coverage.
Reason enough for the Bonn-based Company to exercise its purchase option to obtain a majority stake of 51%. An agreement with Softbank ensured that the latter would be allowed to sell shares in T-Mobile US worth around USD 21 billion. In return, Deutsche Telekom received call options for 101 million share certificates from the merged company, which can be drawn until June 2024.
Deutsche Telekom currently holds around 43% of the US subsidiary. However, a date for the transaction has not yet been set. In addition, the CEO announced at the specially organized Capital Markets Day that the Company intends to grow more strongly in terms of revenue and profit. The Bonn-based company plans further to increase revenue by between 1 and 2% annually. Boosted by T-Mobile US, revenue climbed by a quarter to EUR 101 billion in 2020, reaching triple digits for the first time. The dividend is also set to rise. Driven by the positive statements of the Company's CEO, the share rose by over 2.5% to EUR 17.10, not far from the high for the year at EUR 17.37. Due to the positive growth prospects, we expect new highs in the short term.