15. October 2020 | 13:30 CET
General Electric, Varta, SolGold: Three times copper is gold!
According to research by IDTechEx (2020), the introduction of electric traction motors in road vehicles will lead to a significant increase in copper demand over the next ten years. The study commissioned by the International Copper Association (ICA) shows that by 2030, the windings in electric traction motors in electric vehicles will require over 250,000 tonnes of copper per year. The increase in copper demand follows the development of the global automotive market, where pure battery-electric cars are due to gain the largest share of the market at the expense of internal combustion engines and hybrid vehicles. By 2030, electric and plug-in hybrid vehicles will account for 19% of the total market, which, according to IDTechEx, will rise to 72% by 2040.
time to read: 2 minutes by André Will-Laudien
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
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.
General Electric - Have we bottomed out?
A few days ago, the new GE CEO Larry Culp announced that General Electric is to report a positive cash flow in the second half of the current year 2020. This announcement signals nothing less than a turnaround for the Company. The low point has passed, if GE generates sufficient cash to finance all investments and restructuring from current operations, then there is no need to fear any further divestitures or capital increases. The proceeds of which will play a role in solving past problems.
GE can grow again and should return to profit soon. Once one of the most valuable companies in the world, GE now has a capitalization of only USD 59.17 billion at a share price of USD 6.76. That's the way it is with the old economy!
Varta - Continue under heavy current
Varta AG is a clear representative of the New Economy - this is about e-mobility and power storage. Varta shows strength with the latest figures and continues its high growth in sales and earnings. According to the Company's statement, consolidated sales increased by 158% to EUR 390.7 million in the first half of 2020. Organic sales growth was 66% (in each case excluding the first-time consolidation of VARTA Consumer).
Adjusted EBITDA increased by 174% to an outstanding EUR 102.1 million, the corresponding margin improved by 1.5% points to 26.1%. Net income also more than doubled, rising by 105% to an astonishing EUR 39.8 million. Consequently, the Company's forecasts for the entire fiscal year 2020 have increased: Sales between EUR 810 and 830 million (previously: EUR 780-800 million), adjusted EBITDA between EUR 210 and 215 million (previously: EUR 175-185 million), and CAPEX for further capacity expansion between EUR 320 and 360 million (previously: EUR 300-330 million). With a market capitalization of EUR 4.66 billion, the share is trading near its all-time high. Well done to Varta!
SolGold - From Junior to Multi-Metal Resource
The shares of SolGold plc recently rose more than 30% on the TSE after the Company released an update on the Blanca Project in Ecuador. Rock chip sample results returned gold grades of up to 6.8 g/t. As the Blanca Project is located on the productive Andean copper belt, it is believed to contain a fair amount of copper in addition to gold and silver. BHP and Franco Nevada have already opened their pockets to get in early. The Andes are known for almost half of the world's copper production, and we should get some news about further drilling here.
The day before yesterday there was news on the Porvenir project, about 100 km north of the Peruvian border. The mineralization located there in Cacharposa Creek is part of a 1,700 m long, north-trending mineralized corridor up to 1000 m wide. The type, size, and geometry of the formation are consistent with the surface exposure of a vertically extended, well-preserved porphyry copper-gold system. An extensive porphyry copper-gold system is highly probably at Cacharposa, based on highly encouraging visual estimates and a strong correlation between mineralization, hydrothermal alteration, and magnetic susceptibility measurements from the first hole PDH-20-001. The resource is owned by 100% subsidiary Green Rock Resources SA and the current drill program totals 50,000 m.
Conclusion: The Company has now reached a market capitalization of EUR 855 million with a quadrupling of the share price since March 2020. There is now some good visibility, and major producers are lining up. In the event of a takeover, of course, they want to know that the explorer has completed extensive preparatory work. SolGold has done its homework exceptionally well and is now on the launchpad to become a prosperous multi-metal producer. The share remains interesting, current prices around CAD 0.66 invite to long-term investment.