05. November 2020 | 11:06 CET
Defense Metals, Orocobre, Aurubis – Everyone is a specialist!
Strategic metals are indispensable. They are very rare in the earth's crust and only occur in certain places. For the free economy, there is a procurement problem per se, because, on the one hand, China has the largest reserves, on the other hand, the states intervene in the distribution of the existing quotas. In times of a pandemic, mine closures lead to minor shortages in these metals, but prices are usually negotiated with buyers on a long-term basis. Since the metals usually cannot be procured in alternative ways, it is in everyone's interest to improve the supply situation. But how to procure, if not steal...?
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ISIN: CA2446331035 , AU000000ORE0 , DE0006766504
"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
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.
Defense Metals - Now it really starts
Defense Metals is doing well. Further to its news release dated October 27, 2020, Defense Metals Corp. has completed a private placement of 2,525,000 units for gross proceeds of CAD 505,000. As previously announced, the offer price per share was 20 cents and included one common share and a 12-month warrant at 25 cents.
There is a reason for the excellent mood among the strategic metals experts. Work on the flotation pilot plant has just completed, and the first 1,200 kilograms of high-grade REE mineral concentrate has been delivered. Now, the recently completed financing round will enable the Company to announce the completion of a preliminary economic evaluation (PEA) for the Wicheeda REE project by the end of the first quarter of 2021. Defense Metals has an option to acquire 100 percent of the 1,708-hectare Wicheeda rare earth element property near Prince George, B.C., Canada. Because it is one of the few strategic metals projects in North America, great efforts are being made to develop the property as quickly as possible.
The Company will now continue its Wicheeda drilling projects, the funds raised will last until mid-2021. By then, the feasibility studies will be in place, and Defense Metals can take the next steps towards production planning. The stock has risen 150% since the March sell-off, but with a market capitalization of CAD 9.2 million, the Company is still very favourably valued. Larger Rare Earth investors are not likely to wait for the next resource estimate to come in!
Orocobre - Lithium in abundance
Hardly any other topic is more en vogue than the industrial electrification of mobility. Elon Musk had set the starting point for the new era with his vision 13 years ago in Palo Alto, then, with a few years delay, the "lithium rush" began. Since 2018, investors have experienced one thing in particular - disillusionment due to a sharp drop in prices. Orocobre, one of the most-watched lithium stocks, has since lost more than two-thirds of its value. Today the share is listed at EUR 1.53, in 2018 it was at a high of EUR 4.53. The market capitalization is EUR 480 million, and the Company has invested more than USD 500 million to date.
Orocobre, a dual-listed lithium mine operator, reported a decline in production for the three months to September compared to the previous corresponding period as the Covid-19 restrictions took their toll. Sounds like a standard excuse these days, but lithium production for the three months ended September was down 2,352 tonnes from 2,511 tonnes in the previous corresponding period.
To avoid having to write off inventory due to lack of demand, Orocobre even sold excess stock, which pushed sales to a full 3,393 tons. However, the average selling price also fell by 21%. Market prices fell steadily over the summer months, with producers' buyers using the existing market surpluses for their aggressive purchasing policy. "The manufacturers of electric cars and batteries must now pay higher prices to secure future access to lithium". With these words, Reuters quotes the CEO of lithium producer Livent Corp. Paul Graves. The ASX- and TSX-listed Company recently told shareholders that lithium prices appear to have bottomed out, and we hope the same is true for Orocobre shares!
AURUBIS - German recycling specialist for copper
Aurubis AG is one of the world's largest copper producers and copper recyclers. The Company produces marketable copper cathodes from copper concentrates, copper scrap and other recycling raw materials. These are processed in the Group into continuous cast wire rods and shapes, rolled products, strips as well as speciality wires and profiles made of copper and copper alloys. The product range also includes precious metals and several other products, such as sulphuric acid and iron silicate.
Customers include companies in the semi-finished copper product industry, the electrical, electronics and chemical industries, as well as suppliers for the renewable energy, construction and automotive sectors. For the current fiscal year 2019/20, the Aurubis Group expects revenues of about EUR 11 billion, operating EBT of between EUR 185 million and EUR 250 million and a return on capital of between 8% and 11%. Aurubis is relying on relatively stable copper demand despite the pandemic, even if the production figures from the automotive sector will continue to be subdued.
Aurubis finds its shares too cheap and is continually repurchasing them. The total number of shares acquired under the second tranche of the share buy-back programme in the period from September up to and including yesterday amounts to 583,722 shares. This amount corresponds to an arithmetical share of EUR 1,494 million in the capital stock and thus approx. 1.3% of the shares in circulation. Scarcity is what shareholders love, but Aurubis buys at annual highs and should probably do this in downturns. Overall, Aurubis is standard stock in the MDAX with high substance - a German raw material pearl - for those who like it solid.