May 24th, 2023 | 12:00 CEST
Electricity for minus 0.8 cents - a licence to print money? Encavis, JinkoSolar, Blackrock Silver
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"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
Encavis: Focus on growth
The wind and solar park operator Encavis is currently the talk of the town. Analysts also raised their thumbs after the good quarterly figures a week ago. With increasing revenues and earnings, there should be no two opinions about the stock. Nonetheless, the share price has recently fallen back a little. After the cancellation of the dividend in March, investors had hoped Encavis could backtrack. However, Encavis refused to do so. On the other hand, analysts took a positive view of falling prices for PV modules and the good figures despite the somewhat mixed weather in the first quarter. Any indication that Encavis is less cyclical than feared is well-received in the market. This could also favour the acceptance of the growth strategy proclaimed by the Company.
Although the share has lost around 18% over six months, Encavis has recently recovered. Even the temporarily negative electricity prices should not worry the Company - for much of the day, electricity still costs so much that there remains an interesting margin for companies like Encavis. However, the solar park business could soon only work well with electricity storage. Companies in the sector would gain flexibility and could feed electricity into the grid when it is also well paid for. The latest company announcement is also interesting: Encavis published two sustainability reports for the first time. This could help to tap into new investor groups. "Since our first sustainability report for 2020, we have achieved many of the goals we set ourselves and have learned a lot in the process. Above all, one thing has become clear: For all our efforts, more can always be done, and more must always be done. Resting is not an option," says Christoph Husmann, Spokesman of the Executive Board and CFO of Encavis AG.
JinkoSolar: Margin pressure simply rolls off
True to the motto "one man's joy is another man's sorrow", falling market prices for PV modules are weighing on their manufacturers. However, industry leader JinkoSolar seems largely immune to the margin squeeze. Most recently, it reported a 58% increase in sales for the first quarter and a gross margin that climbed from 15.1% to 17.3%. The strong sales growth indicates that the market potential is far from exhausted. Even if a price war is raging in the market - who, if not JinkoSolar, should emerge stronger from it?
Blackrock Silver: Drilling underway
One company that can indirectly profit from the electrification of entire areas of life is Blackrock Silver. The Canadians are exploring for gold and silver in Nevada and have recently made an exciting lithium discovery. The Tonopah lithium project was optioned to Tearlach Resources and could become an attractive long-term investment for Blackrock Silver. But there is also progress around the precious metals projects. On Tuesday, Blackrock Silver announced that they had received the approval for exploration drilling on their Silver Cloud project and want to start drilling work at the beginning of June. A service provider has been contracted for this purpose. "The Silver Cloud permit area, located along the Northern Nevada Rift, between and along the course of two of Nevada's highest-grade historic gold mines, has significant potential and could be the missing link in a comprehensive, high-grade system. In January 2023, we reported the highest grade intercept recorded as a company on this discovery: 1.52 m grading 70 g/t gold and 600 g/t silver in core hole SBC22-020 in Northwest Canyon. Based on historical drill data showing a grade of 5.61 g/t gold over 12.2 m, the Company believes the vein could extend up to 2 km along a north-northwest alignment. This Phase I program will test the first 500 m of this strike potential," said Andrew Pollard, President and CEO of Blackrock Silver.
The Company is advancing another project with the now-announced drill program alongside Tonopah West, which has a resource estimate of 42.65 million ounces of silver equivalent. Silver Cloud is located close to two mines, and if the drilling in early June confirms the promising prospects of the property so far, more investors are likely to take notice of Blackrock Silver. A year ago, the share was trading at EUR 0.89 - yesterday, the value jumped above the EUR 0.20 mark. In view of rising precious metal prices and operational progress, investors can take a closer look at the share.
While many stocks that appear to benefit from the energy turnaround are already ambitiously valued and, like many manufacturers of PV modules, are suffering from the price war in the industry, silver stocks are still trading under the market's radar. Silver is considered both a precious metal and an industrial metal, and it is used in PV panels, among other applications. The continuing demand for PV modules should also support the silver price. Blackrock Silver is a speculative but equally promising option within the sector.
Conflict of interest
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