April 21st, 2021 | 09:19 CEST
NEL, Varta, Kodiak Copper: The market has missed this news
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"[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper
NEL: When orders cause disappointment
The shares of the Norwegian full-service provider for hydrogen, NEL, have come back a little after spectacular months and are now trading around EUR 2.50. Although the Company was able to announce some cooperations and orders recently, the air is out of the share a little. Just two weeks ago, NEL announced that it had received an order to build a hydrogen filling station in Quebec, Canada. What was supposed to be a positive signal fizzled out for a company that is still valued at around EUR 3.5 billion - investors were finally hoping for the big hit. A hydrogen filling station is not enough.
Nevertheless, the numerous announcements and NEL's partnerships in the maritime sector show that the Company is the first port of call for many potential contacts. If the hydrogen topic picks up speed, the NEL share should also pick up again. However, weakness currently prevails. Below EUR 2.40, the share could quickly drop to the EUR 2.15 range. Even though NEL is well positioned with its solutions for the storage, transport and production of hydrogen, investors need not panic at present. With such a volatile stock, investments in individual tranches are a good idea anyway.
Varta: Currently no pressure to act
Varta currently presents a similar picture. The battery manufacturer is known for its high-performance button cells and now also offers itself as a manufacturer of batteries for electric cars. After the electric car fantasy had been swirling around Varta's stock for months, the Company itself acknowledged its plans and announced its intention to develop larger cell formats. So the Company is fully on course for e-cars. But the share price has been developing rather weakly for months. The reason for this is the great advanced praise that the market has distributed, especially in the past year. Even after the correction in the share price, the fantasy surrounding electromobility has been priced in. Although car batteries from Germany are an exciting topic in the medium term, there is currently no pressure to act.
Kodiak Copper buys up and significantly expands MPD property
One share where the market has already priced out all positive expectations is Kodiak Copper. In this context, the MPD copper project in British Columbia is considered extremely attractive within the mining scene. In 2020, discoveries of copper deposits caused the share price to shoot up to over CAD 3 at its peak - the share is currently trading at around half that price. Kodiak was able to publish further encouraging drill results and launch a new drilling program. The latest acquisition also underlines that the MPD project is receiving almost all the attention: Kodiak secured the 4,980-hectare Axe property, which is immediately adjacent to MPD. In total, Kodiak now has 14,716 hectares of land in the prospective copper area. The geology of Axe is similar to the nature of MPD and similar to rock formations already exploited by several producing mines in the immediate vicinity.
The Axe property was previously explored in the 1960s. At that time, significant grades of copper and gold were found, particularly near the surface. Highlights include 124 meters of 0.38% copper and 0.22 grams of gold per tonne and a high-grade zone within the drill section with 10.5 meters of 1.55% copper and 0.94 grams of gold/tonne. Kodiak Copper calls the acquisition a perfect match and expects excellent exploration potential, especially at depth and in previously little-explored areas.
"The unprecedented positive market conditions for copper make Kodiak's control of an easily accessed copper-gold region within the prolific Quesnel belt a compelling opportunity for our shareholders. Previous drilling on the property could have missed Gate zone-style high-grade copper-gold targets that may also exist at Axe. Kodiak will now apply the same systematic exploration approach that led to the discovery of the Gate zone at MPD.," summarizes Kodiak Chairman Chris Taylor. Kodiak is paying 950,000 shares for the property and granting a net smelter return of 2%, of which 0.5% can be redeemed at any time for payment of CAD 2 million. Other smaller cash payments are linked to the Ax property development and are payable on such matters as drilling, resource estimates, and feasibility studies.
Kodiak Copper: Broad demand and dynamic growth?
While stocks such as NEL or even Varta are still trading at a high level, Kodiak Copper's stock has already found its bottom. As a copper company, Kodiak Copper is benefiting from rising demand from the electric car industry. There is around three times more copper in every electric car than in conventional combustion engines. In addition, there is copper demand from construction and infrastructure projects. The imminent opening of the economy after the pandemic could give the industrial metal an additional boost. Kodiak Copper's stock is attractive in the long term. The picture of the large copper project in British Columbia is becoming increasingly apparent. All speculation-oriented investors should take a closer look at the value.
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