May 4th, 2023 | 08:00 CEST
Commerzbank, Blackrock Silver, JinkoSolar - Banking crisis fuels demand for precious metals
Table of contents:
"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
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.
Commerzbank - Ahead of quarterly figures
The turbulences in the banking sector did not leave Commerzbank unscathed. However, it must be noted that European banks should be better positioned than financial institutions in America due to Basel III regulations. Commerzbank is benefiting from the rising interest rates, as the lending business constitutes a large part of its core business. Experts estimate that each percent gives the bank a plus of around EUR 600 million. This also explains the best operating result in 2022 for more than 10 years. The consolidated profit more than tripled to EUR 1.4 billion.
The question is whether the lending business will continue to boom, as the higher interest rates could lead to a reluctance to take out new loans. Commerzbank already predicted a decline in the lending business in February, which is also due to the tightened credit conditions. After all, nobody wants bad loans on their books. Bank sources say they are trying to avoid real estate financing because there could be defaults since many private households have bought property due to the low-interest rates. With the next refinancing, the loans could no longer be manageable due to increased interest rates and higher inflation-related expenses.
On May 17, the Company will present its quarterly figures. At the end of the month, the annual general meeting will be held, and a dividend will be approved for the first time. After the recent weak years without dividends, this should please investors. After the share price fell to EUR 8.31 following the demise of Silicon Valley Bank, it rose again to over EUR 11. Since First Republic Bank encountered difficulties, the share price has fallen again to EUR 9.68. Shares from the financial sector remain under pressure for the time being.
Blackrock Silver - Lithium deposits expanded
Blackrock Silver has two striking gold and silver projects in Nevada. A bonanza discovery was recently made at the Silver Cloud project, exposing up to 70 g/t gold and 606 g/t silver. The Company's flagship project is called Tonopah. It is considered one of North America's most significant silver districts with a historical background. According to an estimated mineral resource, the Tonopah West zone hosts 42.65 million silver-equivalent ounces. Last year, a new gold and silver zone was discovered on the property, which returned high-grade results at shallow depths. In addition, there is a lithium project that is operated in a joint venture.
In October last year, a lithium deposit was found in the Tonopah North zone. The Company has granted Tearlach Resources an option to acquire up to a 70% interest in the lithium mineral, subject to cumulative exploration expenditures of CAD 15 million and completion of a feasibility study within 5 years. The Phase I core drilling programme has been completed and produced initial results. The initial discovery has been confirmed with significantly higher lithium grades than previously reported. The mineralized area has been extended to 2.0 x 2.75 km following results from 8 of its 11 drill holes. Tearlach expects to release its maiden mineral resource estimate before the end of 2023.
This means Blackrock Silver has three irons in the fire. A 4,300m drill programme is due to start on the Silver Cloud project before the end of May, which will test up to 500m of strike potential from the discovery. After the announcement of the private placement, which ultimately brought CAD 4.38 million into the coffers, the share came under pressure and fell to CAD 0.275. The share then rose by more than 40% to CAD 0.39. Since then, the share has been consolidating and is currently trading at CAD 0.335. In view of the fact that renewable energies are being promoted and silver is essential for the production of solar modules, the demand for silver should increase and, with it, the price of silver.
JinkoSolar - Strong 1st quarter
Rising energy costs ensure that, where possible, more and more private individuals have a solar system installed on their roof, as the investment should have paid for itself within 3 years. The expansion of photovoltaics is also being driven forward in other areas - ideal conditions for JinkoSolar. The Company was also able to confirm this with its figures for the 1st quarter. The demand for solar modules increased by more than 60% compared to the previous year. Interestingly, China, in particular, is driving the expansion of renewable energies.
Revenue increased 58% YOY to USD 3.4 billion, while net profit rose to USD 114.8 million. The Company also achieved an increased gross margin of 17.3%, compared to 15.1% in the previous year. In addition, JinkoSolar successfully issued USD 1.4 billion in bonds to support capacity expansion for advanced N-type cells. JinkoSolar's 2023 order book exceeds 60%, with overseas orders accounting for the largest share. Overall, the Company is posting solid financial results and strong demand for its products.
The increased margin is due to a decline in polysilicon prices. It remains to be seen whether the rising silver price will have a negative impact on the upcoming quarterly figures. Should the margin shrink again, that would be one of the reasons. The quarterly figures provided positive momentum for the share, but it was not enough to break out of the sideways phase between USD 42.41 and USD 51.71. From a chart perspective, the share still has to close the gap to USD 56.16.
After the silver price had been really low for a long time, silver production declined. Now that demand is growing and the silver price is rising, people could invest more in the precious metal again. Especially since silver is seen as an entry point for private investors for whom gold is too expensive. Commerzbank is currently under pressure from the financial turmoil. Inflation and monetary system uncertainties drive investors into precious metals. Blackrock Silver holds both gold and silver. Recently, lithium has also been added to the portfolio. JinkoSolar needs silver for its production, and increasing demand has led to strong figures in the first quarter.
Conflict of interest
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