March 2nd, 2022 | 13:21 CET
MAS Gold, Nordex, Hensoldt - Profit from the crisis!
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"[...] One focus will be on deposits near the surface. These would be good arguments for a quick production decision using the low-cost heap leaching method. [...]" Brodie Sutherland, CEO, Tocvan Ventures
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
MAS Gold - Drilling start and further area acquisitions
The prospect of a massive increase in inflation due to the Ukraine conflict - the Institute of the German Economy calculates up to 6.1% for Germany - has again led investors to turn to the crisis currency, precious metals. In recent days the price of gold has risen well above the USD 1,900 per troy ounce mark. Depending on the duration and progress of further developments, the all-time high of USD 2,063.01 seems to be within reach again. These are good prospects for gold explorers and gold producers.
The good general conditions should also pay off for the Canadian gold explorer MAS Gold. The Company, led by CEO and mining veteran Jim Engdahl and his team, has four properties covering an area of around 34,000 hectares in the northeast of the La Ronge Gold Belt in the province of Saskatchewan, which is known for its mining-friendly legislation. The site, which has good infrastructure, is home to the former Contact Lake gold mine, which was operated by Cameco until 1998 and whose rights MAS Gold was able to secure until 2021. Production was not economically viable at a gold price of around USD 280 at the time.
MAS Gold recently started an 8,000m drill program. It is intended to further expand the mineralization of Preview North (currently: 494,000 ounces) and Greywacke Lake (currently: 156,000 ounces). Together with the other two properties, Elizabeth Lake and Henry Lake, the Company assumes a resource of at least 1 million ounces of gold. In addition, the Canadians plan to take over another 843 hectares from Comstock Metals, which are adjacent to the Preview North area. At currently CAD 15.5 million, the Company is moderately valued.
Nordex SE - Special boom
In order to reduce the heavy dependence on Russian natural gas, the German cabinet has resolved to accelerate the expansion of regenerative energy sources. Germany is to cover 100% of its electricity requirements from green electricity as early as 2035. The news helped the shares of the Hamburg-based Nordex Group to soar, even though the Company has been struggling with problems for some time. A few days ago, for example, the Hanseatic Company announced the closure of its rotor production facility in Rostock due to customer demand shifting towards larger rotor blades that could not be produced at the site in Mecklenburg-Western Pomerania.
The Company announced a redundancy plan for the roughly 600 employees to be coordinated with the works council. Nevertheless, Nordex should benefit from a higher order backlog, provided they manage to get a grip on the margins, which have been declining for years. And investors would certainly welcome it if the Company refrained from further capital increases in the near future to finance its debt. The number of shares has almost doubled from 153 million to 267 million in the last ten years.
Hensoldt - Defense stocks among the big crisis winners
Unsurprisingly, the shares of one industrial sector, in particular, benefited strongly from the escalation of the Ukraine crisis: the papers of defense companies. However, these also benefited from something else. After the German armed forces had been making a fuss for years due to outdated equipment and the poor condition of its equipment, the Russian invasion of a neighboring European country was obviously the much-needed wake-up call. Immediately, Chancellor Scholz and Finance Minister Lindner decided to set up a EUR 100 billion special fund to modernize the German armed forces and raise current arms spending to 2% of GDP in line with the NATO countries' target.
To put this in perspective, the regular defense budget in 2021 was around EUR 47 billion. And not even the Green coalition partner protested. So much unity made the shares of the well-known German defense companies hum. The shares of the Düsseldorf-based Rheinmetall Group were up more than 30%. The Bavarian Company Hensoldt, which emerged from Airbus Defense and Space division in 2017, did even better.
The specialists for radars, avionics and electronic warfare did not enter the Prime Standard until 2020 at an issue price of EUR 12. Already in December, the Company was promoted to the SDAX. The shares are currently trading at around EUR 21, an increase of around 63% compared to the previous week. Analysts also hastened to predict the great potential for the share. Thus JPMorgan changed its investment recommendation directly at the start of trading on Monday from "Neutral" to "Overweight" and raised the price target from EUR 15 to EUR 22.50.
Negative effects of any crisis on the stock market as a whole are certainly unavoidable, but those who react quickly and wisely have the opportunity to use the momentum to their advantage. Shares that benefit from an accelerated energy turnaround or rising defense spending are certainly a recommendable investment at the moment. But especially commodity stocks like MAS Gold should be an interesting alternative in the current market environment because a rising gold price is expected in the medium term.
Conflict of interest
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