28. May 2021 | 09:12 CET
First Majestic Silver, NewPeak Metals, K+S - Soaring commodity prices
Commodity prices continue to soar. If we compare the first quarter of 2021 with 2020, we can assume an average price increase of 36.7%. As the raw materials market is currently unable to respond quickly enough to the high demand in many countries, prices are rising. An end to this spiral is currently not foreseeable, as more and more countries are slowly getting to grips with the Corona pandemic. Thus the demand for raw materials will continue to grow. We have picked out three exciting companies from the commodities sector today.
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ISIN: CA32076V1031 , AU0000104374 , DE000KSAG888
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
First Majestic Silver - Acquisition of a gold mine
First Majestic Silver announced the acquisition of the Jerritt Canyon Mine in Nevada at the end of April. The unique thing about it - the silver producer bought a gold mine and is now operating outside Mexico for the first time. The area is 308 km², and in the last 20 years, about 9.7 million ounces of gold have been mined there. The mine's seller is Sprott Mining, whose owner, Canadian billionaire Eric Sprott, now holds approximately 11.3% of First Majestic Silver's shares.
According to CEO Neumeyer, they looked at silver mines worldwide. The most exciting acquisition was this very gold mine, what with the life of the mine, the size of the land package and the expandability. Nevada is one of the best mining areas for the Company, as evidenced by its investment in Blackrock Silver, which is also active in the area. Shares were subscribed for CAD 1.25 million in a private placement.
The figures from the first quarter were good. Sales increased by 17% year-over-year, although at the same time, production fell slightly due to Corona. The increased silver price made it possible. In addition, record sales of silver coins and gold bars were achieved, and a dividend was announced. The stock has moved up since the numbers, but one should not forget the dwindling reserves. Assuming a rising silver price, First Majestic Silver can undoubtedly profit from this in the short term. It remains exciting.
NewPeak Metals - Which project will bring the breakthrough?
NewPeak Metals is an Australian junior explorer whose primary focus is on gold. The Company is diversified and owns various projects worldwide in Argentina, New Zealand, Finland and Sweden. Sweden takes a special place in this list, as tungsten and other strategic industrial metals are suspected there. Furthermore, the Company owns 30% of Lakes Blue Energy.
The goal for 2021 is to increase the Company's market value through the discovery of new promising deposits. The Company recently announced the completion of the drilling program at the Cachi Gold Project in Argentina, which, according to the Company, discovered an extensive mineralized precious metal system extending 10 km wide and 5 km long. The drilling program at New Zealand's Cap Burn Gold Project has also been completed and results are expected shortly.
Drilling is expected to commence on the two Finnish gold projects, Satulinmäki and Hopeavuori, starting this summer. The evaluation program of the Sweden project will be used to plan the exploration program, which is expected to begin in the third quarter. MMG Capital UK has been retained to advise on capital raising in Europe.
If Lakes Blue Energy's shares are allowed to trade again, it would significantly increase the investment value. Despite the large number of shares, the market capitalization is very low. The Company has many irons in the fire. Speculative investors should consider an investment.
K+S - On the upswing
K+S is benefiting from the good development of raw material prices in the agricultural sector. For a few days now, the tensions between the EU and Belarus have been helping the K+S share to make smaller price jumps. Investors hope that the EU sanctions will also affect the competitor Belaruskali, which served about 17% of the total potash market in 2020. If this supplier to Western Europe fails, it could additionally drive the price of potash.
The long winter has already done the Company well, as seen from the first-quarter figures. Revenues rose by 13.3% and EBITDA by over 26%. Analysts had expected much worse figures. The expected EBITDA for 2021 was raised by EUR 60 million. In addition, the US business was sold in April for EUR 2.6 billion and used to repay debt. No dividend is planned for this year.
The share has broken its downward trend, which had lasted since 2018, and at the same time established an upward trend. The next resistance at EUR 11.30 has almost been reached. The expected sanctions should be priced in by now. Before getting in, one should wait for a setback. However, the share must not fall below EUR 9.50; otherwise, the technical chart picture will cloud over significantly.