06. October 2020 | 11:02 CET
K+S, ThyssenKrupp, Newlox Gold: Hope for old friends!
The stock market is continually reinventing itself. Last week, no one wanted to bite the bullet, and prices trended down across the board. Even favourites from the technology corner like Tesla and Apple had to give up at short notice. On Monday, we took a deep breath after Donald Trump once again had enough oxygen. The major stock exchanges increased with a good 1-2% growth, and the Nasdaq even ticked up a bit more. Is the correction over? We don't know, but it's worth taking a look at old acquaintances we haven't had on our radar for some time.
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ISIN: CA65151R1001 , DE000KSAG888 , DE0007500001
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.
K+S - Sale of the American salt division
K+S is close to its goal with the planned sale of its American salt business. According to a report by Bloomberg, the US subsidiary Morton Salt is to be sold to the Kissner Group for about USD 3.0 billion. Informed circles report that the transaction is due to be completed as early as this week.
K+S had bought the Company for around USD 1.7 billion and announced in March that it wanted to sell the division because of the high level of debt. The Kassel-based Company had accumulated this debt by building a potash plant in Canada, which cost billions. In 2012, construction work began on the new potash site in the province of Saskatchewan, in which K+S has again invested EUR 3.0 billion. The Bethune plant was officially opened on May 2, 2017, and has a planned final capacity of just under three million tons per year.
In 2015, a takeover bid by its local rival, the Potash Group, was rejected. Due to high levels of debt and collapsing potash prices, the market value of the K+S share fell by a full 90%. Yesterday, the share price turned around and made up 15% in price alone. The €7 mark was reached again. The resurrection of the traditional German commodity value may have begun.
ThyssenKrupp - The silverware sold, is the recovery coming?
Thyssen is not quite out of the headlines, even after significant balance sheet restructuring. In February, under pressure from its creditors, the steel and industrial group sold its extremely profitable elevator division in its entirety for 17.2 billion euros to a consortium led by financial investors Advent and Cinven and the Essen-based RAG Foundation.
Due to the emergency sale, there is a shortfall of around one billion euros in free cash flow in the liquidity statement for the coming year. "The recent rapid decline in the value of the industrial group's shares now adequately reflects the operating risks," a Morgan Stanley analyst wrote on Monday. After a share price quartering since 2019, the new group structure is now even more vulnerable to stormy weather conditions, as the highly profitable elevator division was previously considered a stabilizer against economic uncertainties.
But in February Corona was not yet on the radar screen. So whether the former steel and technology giant will be back on its feet again is still up in the stars. Yesterday, the Company headed north and reached the EUR 4 mark with a daily gain of almost 11%.
Newlox Gold - Slag heaps and recycling
The third resource company on our list has no accounting or operational problems. On the contrary, Newlox Gold Ventures has set out to revive the environmentally unfriendly, historic gold mining operations in Costa Rica, Central America.
Newlox has settled in the middle of an established mining belt and uses the slag heaps of the past decades for ore extraction. Agreements are in place with all primary local mining cooperatives, covering a total of over 30 mining sites. The company is working with Dr Luis Sobral of the Brazilian Center for Mineral Technology (CETEM) to establish a novel mercury recovery system. The elimination of historical pollution from artisanal mining is a desired side effect.
Newlox plans to operate a mill in the Boston District/Costa Rica with a processing capacity of 150 tons per day at mineralization grades of approximately 15 grams per ton of gold and an expected gold recovery of ~90%. All feedstocks are to be provided by the adjacent partners, and profits will be shared equally between the parties. Full operation in the first half of 2021 will be preceded by development, engineering, construction, and commissioning phases during the remainder of the year. All regulatory concessions have already been granted.
Conclusion: With 94.6 million shares outstanding and a price of 0.10 CAD, the Company is valued at only 5 million EUR; the share price was already at a high of 0.19 CAD. Those who prefer a green coat of paint in their speculative precious metal investments are investing in the environmentally friendly activities of Newlox Gold Ventures. The volatility in this stock is not much higher than the fluctuation of the precious metals themselves. Only a few gold and silver stocks on the price list manage to achieve the attribute of sustainability.