July 20th, 2022 | 13:18 CEST
Nel with a liberation blow - When will Varta and Almonty Industries take off?
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Almonty: Not only tungsten but also molybdenum
Almonty Industries is known for its tungsten projects. The Canadians operate mines in Spain and Portugal: but the trigger for the share is in South Korea. There, Almonty is currently building the Sangdong tungsten mine. When fully commissioned, the Sangdong mine will be the largest tungsten mine in the world. Almonty would then be responsible for 50% of the world's tungsten production outside China, making it strategically important for the security of supply in Western industrialized countries. Tungsten is indispensable for the modern high-tech industry. In electromobility, tungsten is on its way to overtaking the environmentally harmful cobalt.
But Almonty also has other exciting projects. For example, a molybdenum deposit is located right next to the Sangdong mine. On Monday, an initial resource estimate of this AKM project was released: 21.48 million tonnes at 0.26% MoS2 with a cutoff grade of 0.19% MoS2. CEO Lewis Black commented, "We are pleased that based on a review of previous exploration work, the MRE shows significant potential. The deposit appears to be open in multiple directions and also has the potential to delineate a high-grade zone within the current ore body. The project can be operated concurrently with our tungsten mine as both can utilize the same existing mining infrastructure, dramatically reducing development costs." Almonty's shares are also traded in Germany and are trading in a narrow range between EUR 0.56 and EUR 0.74 this year (currently EUR 0.63). Given the importance of the Sangdong mine, the market capitalization of around EUR 140 million appears attractive.
Nel: Liberation strike successful and analysts see more potential
Investors have been waiting a long time for a major order at Nel. Now the time has finally come, and the share reacted with a jump in price. Nel's subsidiary Nel Hydrogen Electrolyser will supply alkaline electrolyzers with a capacity of 200 MW to the USA. The client was not yet named, but it is said to be an existing customer. The order is worth more than EUR 45 million and delivery is expected to be completed by mid-2024. An order extension is not ruled out, Nel said. Nel CEO Håkon Volldal said, "We are pleased to announce the largest order ever for Nel. This project will demonstrate Nel's delivery and execution capabilities on a large scale and will be a valuable reference for future large orders." Volldal expects a significant, positive impact on practically all levels of the Company: financials, electrolyzer product and production costs, technology development and scale-up plans. Analysts also expressed positive views. Goldman Sachs, Jefferies and RBC recommend Nel shares as a buy, with price targets of the equivalent of EUR 2.05 to EUR 2.24. The stock is currently trading at EUR 1.54.
Varta: Chart-technically battered and insiders sell
Shareholders of Varta currently have little reason to rejoice. The share of the battery specialist is quoted just above EUR 70 and is dangerously close to the 52-week low of EUR 68. If the share price slips below this mark, there is the threat of a further sell-off - in the worst case, down to the 3-year low at EUR 50. Investors are waiting in vain for positive company news - such as a cooperation partner in the field of batteries for electric cars. On the contrary: insider Prof. Dr Michael Tojner is selling shares again. The majority shareholder and Supervisory Board member sold 200,000 shares at a price of EUR 78 on July 11. The value of the package was thus over EUR 15 million. This was his second course of action within a few weeks, as he had already sold Varta shares in a volume of EUR 22 million in June. This is anything but confidence-building.
Nel's burst of freedom shows how quickly a share can go up. Almonty also seems ripe for such a move. At Varta, there is nothing to indicate this.
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