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December 21st, 2022 | 07:14 CET

Kodiak Copper, Volkswagen, Nordex - Copper price rises due to positive news from China!

  • Mining
  • Copper
  • Electromobility
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In mid-July, the copper price marked its low for the year. Since then, a slight upward trend has formed, indicating a robust economy. There are as many as three positive signals for copper. First, there is the weakness of the dollar, which is supporting demand for the red gold. Second, China's announcement that it plans to strengthen its economy after easing Corona measures is providing a boost. If China eases its monetary policy, this would strengthen the real estate sector and fuel the hunger for commodities. Third, M&A activity around copper appears to be increasing. Therefore, we look at three companies in the copper space.

time to read: 4 minutes | Author: Armin Schulz
ISIN: KODIAK COPPER CORP. | CA50012K1066 , VOLKSWAGEN AG ST O.N. | DE0007664005 , NORDEX SE O.N. | DE000A0D6554

Table of contents:

    Kodiak Copper - High-grade gold and silver discovery

    Kodiak Copper is an exploration company focused on copper porphyry projects in Canada and the United States. The Company is led by an experienced team of industry professionals and has attracted strategic investors such as Teck Resources. Kodiak Copper's most advanced project is the MPD copper-gold porphyry project in British Columbia, Canada. In 2020, the Gate Zone was discovered with high-grade mineralization. Subsequent drilling significantly expanded the size of the Gate Zone. In 2022, the Company drilled 41 holes totaling 26,103m on two target zones, Gate/Prime and Dillard, as part of its exploration campaign.

    This drilling extended the Gate zone to a length of 1km, a depth of 900m and identified a 400m long parallel copper porphyry trend in the Prime zone to a depth of 550m. In addition, prospecting led to a new high-grade gold-silver discovery, called the Beyer Zone, within a gold-soil corridor 2.2km long and 750m wide. The best sample assayed was 14.15 g/t gold and 24.18 g/t silver. Using the data collected, the Company plans to establish additional copper-gold porphyry drill targets for fieldwork in 2023. The Company is well funded, with over CAD 8 million to continue its exploration campaign.

    Kodiak President and CEO Claudia Tornquist said, "2022 was another successful year for Kodiak as we completed the Company's largest exploration program to date with 26,103m of drilling and extensive geophysical and geochemical surveys." In addition to the main project, the Company owns a copper-molybdenum-silver project called Mohave in Arizona, US, and the Kahuna Diamond Project in Nunavut, Canada. In contrast to the copper price, Kodiak Copper's stock went down until the end of September. The low was marked at CAD 0.50. After that, the stock rallied to CAD 1.40. The share has since been consolidating and is currently trading at CAD 1.12. As long as the closing price of CAD 0.93 is not broken, the upward trend remains intact.

    Volkswagen - Special dividend for shareholders

    Electric cars usually contain a relatively large amount of copper. It is an essential component of electric motors and the charging infrastructure of electric cars. It is also used in the electronics and cables of the vehicle. There are estimates that the average electric car contains about 80 to 100 kg of copper. Currently, Volkswagen ranks only 4th in electric car sales in Q3.

    The Volkswagen Group sold more cars in November than a year earlier. Deliveries rose 9.1% to 672,300 vehicles. However, YOY sales were down 9.2% to 7.4 million vehicles. Sales in Western Europe rose particularly sharply by almost a third. Audi had the most significant increase, up 23%. Porsche sold 6% more cars, while Traton sold 13% more trucks and buses. Volkswagen plans to unveil the new Tiguan in Wolfsburg in September 2023 and begin partial production of the ID.3 e-model in the new year, with full production scheduled for 2024.

    At the Extraordinary General Meeting on December 16, a special dividend of EUR 19.06 was approved. As a result, there was a supposed slide in the share price last Monday. However, at EUR 15.44, this was less than the dividend. That is a positive sign for the share. The current price per share is EUR 121.24. Following the Annual General Meeting, Warburg Research issued a buy recommendation with a target price of EUR 210. Bernstein Research, on the other hand, downgraded the stock to hold with a price target of EUR 160.

    Nordex - Large order from Turkey

    The amount of copper needed to build a wind turbine depends on various factors, such as the size and power of the wind turbine, the type of cables and wires used, and the type of fasteners and connections required. Generally, however, a wind turbine uses several hundred kilograms of copper. So the raw material plays a vital role for wind turbine manufacturer Nordex. When prices for copper and other raw materials skyrocketed in 2021, some wind turbine manufacturers had to issue profit warnings.

    Following the mixed quarterly figures and several capital measures, orders have recently increased again. The Nordex Group has received two orders for 150 MW from Eksim Yatirim Holding AS for the extension of two wind farm projects in Turkey. The Nordex Group will be supplying and installing a total of 22 N163/6.X turbines at the "Geyve" and "Silivri" wind farms. Both orders also include a ten-year premium service contract. The wind farms are expected to feed clean electricity into the Turkish grid from the end of 2023 and 2024, respectively.

    For Nordex, the decisive factor will be whether the target of an 8% EBITDA margin by 2024 can be achieved. If the Company can overcome its margin weakness, the future looks bright. There is still a long way to go until then. The stock has been on the upswing since mid-October. By December 8, it had risen from EUR 7.23 to EUR 12.91. Since then, the share has been trending sideways and is currently available at EUR 12.10. The latest analyst reports from Goldman Sachs and Jeffries see price targets between EUR 13.10 and EUR 14.00.

    Copper serves as an indicator of how the economy is doing. As long as the copper price rises more than it falls, this is a good sign. A rising copper price is ideal for the copper explorer Kodiak Copper. In addition to copper, the Company now has high-grade gold and silver discoveries to show. Volkswagen pays a big dividend, but the group's conversion to electric mobility will still cost money. Nordex's order books are filling up again, but the stock will only be worthwhile in the long term when margins improve.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author

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