November 24th, 2021 | 13:05 CET
Gazprom, Tembo Gold, Nvidia - Inflation and rare goods
Table of contents:
"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Gazprom - Poker for Nord Stream 2
The price of gas has been rising to unimagined heights for a few months now, from which Gazprom, as the largest producer of natural gas, is, of course, benefiting massively. After the nuclear phase-out and the imminent coal phase-out, Germany needs an alternative, which is currently gas. There are now two ways to obtain gas from Russia. The old pipeline via Ukraine, on which transit costs are due, and the new Nord Stream 2. There have been political power plays over the new pipeline for years. In July, it seemed as if the US would give up its opposition, but on November 23, the US reimposed sanctions around Nord Stream 2.
The question now is how to proceed. Russia is one of the few countries that can influence Belarus and Lukashenko concerning the migrants on the border with Poland. They are currently being used as leverage. An entry into Europe is presently not granted, and there is no way back for the migrants at the moment. President Putin has made several phone calls to Angela Merkel, and his help will probably be conditional. Gazprom itself is trying to comply with the EU rule that producers and pipeline owners must separate by setting up a new company.
Time is probably currently playing in Gazprom's favor because if gas prices continue to remain this high, it will be an expensive winter in Germany if one is dependent on gas. Thus, the pressure on the government is growing. Regardless, the stock has had a real rally since the beginning of the year, pushing the price up to EUR 9.44 at the beginning of October. Since then, the share has been consolidating, but the upward trend is still intact. The P/E ratio is 8 and can thus be regarded as favorable. Therefore, the share, which also pays a good dividend, still has potential.
Tembo Gold - Reactivated after years
The Canadian junior gold explorer Tembo Gold is active mainly in East Africa, more precisely in Tanzania. There, the Company owns 100% of the rights to the Tembo Gold project and covers an area of about 174 sq km. The deposit currently holds 6 prospecting permits and has applied for one more. The project has been idle for a good 7 years but has been reactivated since May this year. The reason for the long pause was the old government of Tanzania, which hindered mining. Since the change of government, the view has changed, and reactivation makes sense again. The Company has raised a good 2.2 million Canadian dollars (CAD) for this purpose through a private placement.
The Tembo area is in direct extension to the massive Bulyanhulu Gold Mine, operated by Barrick Gold and estimated at 20 million ounces of gold. Five other producing gold mines surround the Company's deposit. After seven years, the old camp is being renovated. It is all being done under the guidance of experienced administrative manager Paul Magege, handling all administrative tasks, especially government and community affairs. Andrew Pedley has been hired as manager for the exploration work the Company announced on October 21. Using artificial intelligence from GoldSpot Technologies, they have identified 54 new drill targets based on historical data. The soon-to-be-launched exploration program calls for 7,000m of drilling.
A look at the various drill zones at the Tembo project shows the potential of the explorer. Ngula 1 has returned results up to 22.81 g/t gold, Nyakagwe East up to 8.09 g/t gold, Mgusu up to 19.1 g/t gold and Nyakagwe Village up to 79.1 g/t gold. The stock was trading at CAD 0.12 until the first reactivation announcement and managed to climb to CAD 0.30 in mid-November. Currently, the stock is trading at CAD 0.255. At one point in March 2012, the share was at CAD 6.87. If drilling is successful, the share likely has further upside potential due to takeover fantasies resulting from the proximity to the large Barrick Gold Mine.
Nvidia - Excellent quarterly figures
The shelves of graphics cards have been empty for months. Even online, there are rarely any offers. And even if they are, they are often far above the recommended retail price and are out of stock within minutes. One profiteer is the graphics card specialist Nvidia. Its graphics cards are considered particularly suitable for mining cryptocurrencies. When the bitcoin suddenly fell this year, there was also a small temporary drop in the price of GPUs. However, with the renewed rise of bitcoin, that was also quickly over again. Intel chief Gelsinger predicted a chip shortage for the entire industry by 2023.
The Company has been using revenue from its graphics card business to enter new business areas such as data centers, networking, artificial intelligence and the Nvidia Omniverse. The figures from the third quarter were a positive surprise. On November 17, the Company reported record revenue of USD 7.1 billion, up 50% YOY. The data center increased by 55% and the gaming division by 42%.
Experts expect the Company to increase its revenue by an average of 26% in the coming years. The expected figures of the analysts were exceeded, and thus the share reached a new all-time high of USD 346.47 after the stock split. Even though the Company is excellently positioned and will in all likelihood continue to grow, the P/E ratio of around 65 is quite expensive. As an investor, you should wait for a major setback if you want to get in.
All three companies have future potential in their own way. Gazprom is fundamentally cheap and pays dividends, Tembo Gold can finally continue exploration and is a potential takeover candidate, and Nvidia is an industry leader and growing in all areas. However, the share is fundamentally expensive.
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