May 15th, 2023 | 07:40 CEST
BYD, Orestone Mining, SMA Solar - Copper is the lifeline of the energy transition
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"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
BYD - Sales figures are rising again
The importance of copper for electric vehicles becomes evident when compared to internal combustion engine vehicles. A conventional car requires approximately 23 kg of copper, whereas an electric vehicle averages around 83 kg. About half of that goes back to the batteries, 34 kg is in electric cables, and the electric motor for the drive needs 10 kg. Since electric cars are becoming increasingly popular and the combustion engine is already a discontinued model, it quickly becomes clear why the demand for copper will increase worldwide. In 2019, the German automotive industry alone required around 9% of the global supply. Accordingly, the new No.1 e-car manufacturer BYD also needs a large supply.
In April, the group increased its sales figures by about 100% to 210,295 vehicles. Nevertheless, it is still lagging well behind its annual target of 3 million electric vehicles. Currently, about 750,000 cars have been sold. Recently, the price war in China has been stepped up, and prices have been lowered. The aim is to gain further market share. In addition, international sales are expected to increase significantly. This fits the news that the Company plans to start production in Vietnam. The electronics will be manufactured there; whether electric vehicles will also be monetized remains open.
The news situation remains positive. The only downer is Berkshire Hathaway's consistent selling. Warren Buffet's company has been reducing its holdings for months. Currently, it still holds 9.87%. Since many investors are closely watching the actions of the Oracle of Omaha, the share has been under latent pressure since the first sales. Nevertheless, the stock has been climbing since mid-March and is currently priced at EUR 28.40.
Orestone Mining - Next drill targets are fixed
Besides copper, Orestone Mining mainly owns gold on its property. The Company focuses on its Captain project, a gold-copper porphyry exploration project in Canada. The project covers 105 sq km in British Columbia and is located in the Quesnel Trough, Canada's longest mineral belt. The Captain project is surrounded by mid-tier gold producers, and CAD 5.4 million has already been invested. Included are 8,000 m of drilling, 44 km of induced polarization and resistivity surveys, 138 km of ground magnetic surveys and 215 km of airborne magnetotelluric (MT) surveys. Analysis data from the MT surveys revealed the size of the main target, called T1. The project also includes 61 approved well locations.
On May 9, the Company delineated the strongly mineralized gold-copper veins on its property, confirming the potential for an extensive porphyry system. The veins were discovered in holes C20-03, C21-01 and C21-02, showing gold-copper mineralization. They range in thickness from 4 to 110 m and contain up to 0.84 g/t gold and up to 1,700 ppm copper. The occurrence of these veins, in combination with the results of the MT surveys, indicate that they are interrelated. This increases the likelihood of further drilling encountering a similar gold-copper porphyry intrusive system with comparable grades.
The management team has been involved in the discovery of tens of millions of ounces of gold and the construction of 15 gold mines in their careers. Accordingly, they know how to raise a project. The next step is to raise up to CAD 1.5 million to start the drilling programme in the summer, which is expected to lead to further discoveries. Exploration plans call for at least two 1000 m holes to be drilled in the centre of the T1 porphyry target and additional MT surveys to extend the north-south trend. The stock currently trades at CAD 0.035, giving it a market capitalization of around CAD 2 million.
SMA Solar - Growth continues
SMA Solar Technology AG from Germany specializes in developing, producing and distributing photovoltaic (PV) system technology. The Company operates in various segments, including residential, commercial, utility, off-grid, storage and service. Copper is primarily required in the collection, storage and distribution of solar energy. After the annual figures for 2022 already showed decent growth, things are also running smoothly this year.
In Q1 2023, revenue increased by 66.5% year-on-year to EUR 367.2 million. All three of the Company's segments contributed to this positive result, with the Home Solutions segment, in particular, more than doubling its revenue. EBITDA increased significantly to EUR 60.0 million, corresponding to an EBITDA margin of 16.3%. The Company's order book stands at around EUR 2.5 billion. Management confirms the raised turnover and earnings forecast for the current financial year, which envisages a turnover of EUR 1.45 to 1.6 billion and an EBITDA of EUR 135 to 175 million.
Because the German government is stepping on the gas to expand renewable energies, the friendly business climate will likely last even longer. The share has gained nearly 70% since the beginning of the year. Last Friday, a new high for the year of EUR 111.40 was marked, but this was not maintained. The share exited Xetra trading at EUR 98.95. On May 12, Jeffries issued a buy recommendation with a target price of EUR 120. This year's annual general meeting will take place on May 24.
In Germany alone, several 1000 km of power lines must be built to ensure the switch to renewable energies. Electric vehicles are on the rise worldwide, so copper demand will increase accordingly. As a frontrunner in electric mobility, BYD continues to grow and will need more copper. Orestone Mining holds gold on its property in addition to copper. The next drillings could bring positive surprises, as all analyses point to large deposits. SMA Solar is on a growth course, requiring cables and the like made of copper.
Conflict of interest
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