Close menu




July 14th, 2022 | 12:27 CEST

New opportunities for copper - Rheinmetall, Alpha Copper, Nordex

  • Copper
  • Defense
  • renewableenergies
Photo credits: pixabay.com

Last year, the expansion of renewable energies, for which copper is elementary due to its conductivity, proclaimed a new supercycle. The result was a new 10-year high for the red metal and prices above the USD 10,000 mark per ton. Currently, the specter of recession hovers over the markets, and the correction of the base price passed the 25% mark this week. However, copper will remain a scarce commodity in the coming years and the already tight supply will not be able to keep up with the substantial increase in demand. Thus, there is a second chance for investors in the long run.

time to read: 6 minutes | Author: Stefan Feulner
ISIN: RHEINMETALL AG | DE0007030009 , NORDEX SE O.N. | DE000A0D6554 , ALPHA COPPER CORP | CA02074D1087

Table of contents:


    No alternative for copper

    The world is in the transition phase into renewable energies, which requires not only a lot of time and investment but also significant amounts of raw materials, especially metals. Due to its nature, copper plays a fundamental role, and demand is expected to explode in the coming years despite recession concerns. An electric car, for example, contains an average of around 83 kg of copper, four times as much as a car with an internal combustion engine. Inventories of the red metal are currently at a multi-year low, and at the same time, some copper mines have been shut down in the last decade. Already in 2019, the market was short 383,000t. In 2020, the supply deficit increased to 559,000t, the highest value in over a decade.

    There is simply a lack of new high-grade projects to balance supply and demand. Goldman Sachs analysts thus stated, "The copper market is unprepared for this critical role!" The winners of this phenomenon are not only the large producers but also smaller mining companies such as Alpha Copper, which has already secured promising mining claims.

    Attractive options at Alpha Copper

    In the course of the severe correction on the copper market - the base price has lost around 36% since its peak in March of the current stock market year - the young exploration company Alpha Copper also lost about 70%. However, these movements are considered normal for extremely volatile underlying stocks. Smaller, promising mining companies react to such fluctuations with significant leverage. Thus, if the copper price rises, an outperformance of Alpha Copper should not be unrealistic. The Company is traded in Toronto and Germany and currently has a market capitalization of EUR 11.33 million.

    Currently, the Vancouver-based company is holding 2 hot irons. The flagship Indata project, with an area of 3,189 hectares, contains 16 claims and is located only a few kilometers away from Northwest Copper's Kwanika project, one of Canada's most attractive copper discoveries. The Central Zone of the Kwanika project already has 57.7Mt at 0.48% copper and 0.55 g/t gold in the indicated category. Alpha Copper is primarily targeting the known copper porphyry in the so-called Lake Zone, which lies approximately 500m west of an area of polymetallic veins. A total of four copper mineralization zones have been discovered at Indata to date, with historical drill results including 148m at 0.2% copper including 24.1m at 0.37% copper. A total of approximately 5000 metres of drilling is planned on the property this year. Alpha Copper holds an earn-in option to earn a 60% interest in return for shares or cash totaling CAD 400,000 to the optionor, Eastfield Resources, and CAD 2 million in capital expenditures by June 20, 2023.

    The second 4,613-hectare copper and molybdenum project, Okeover, is located on the south coast of British Columbia, just 25km from the deep water port facilities of Powell River, and is equipped with world-class infrastructure and contains 11 mineral claims. Alpha Copper can acquire up to 100% here by handing over shares worth CAD 250,000 after signing, further shares for CAD 500,000 within twelve months, and CAD 750,000 within two years.

    It has now been announced that in addition to the 5000m drill program on Indata, drilling will also commence on Okeover ahead of schedule. Alpha Copper's experienced management has engaged the experts at Superior Diamond Drilling to conduct a program totaling 2,000m of drilling on the project. The objective is to expand the North Lake zone, where the historic resource is located. In the past, less drilling has been done at depth. Alpha Copper now wants to change this and try to present a report that complies with the Canadian NI 43-101 standard as early as 2023. Incidentally, a historic 2007 drill hole near the western boundary of the North Lake zone assayed a cumulative 76 meters of 0.34% copper and 0.02% molybdenum sulfide, including an intercept of 19 meters of 0.42% copper and 0.02% molybdenum sulfide.

    Even though Alpha Copper is still in the early stages of its development, it is worth taking a closer look at the stock and at least putting it on the watch list.

    Back and forth for Nordex

    An eventful week is drawing to a close for wind turbine manufacturer Nordex. The fact that the Hamburg-based company would have to turn to the capital market at some point due to weak margins and high production costs was probably not too big a surprise. A capital increase of EUR 212.00 million with subscription rights is to be placed. Nordex had last announced a private placement with its major Spanish shareholder Acciona two weeks ago, which was expected to raise a good EUR 139 million gross. Acciona itself continues to stand behind the turbine manufacturer like a wall and announced its intention to exercise the subscription rights for its current 39.66% share in the capital stock. According to Sunday's announcement, the subscription price for the new shares were set at EUR 5.90. US investment bank Goldman Sachs left its rating for Nordex at "neutral" on the occasion of the capital increase with a price target of EUR 13.70. Bank of America is becoming more skeptical. After the latest measure, the analysts have reduced the target from EUR 15.00 to EUR 14.00, but the verdict was repeated with "buy".

    On the other hand, the latest news regarding the expansion of the cooperation with UKA, one of Germany's top 3 wind operators, and the Nordex Group was more positive. The cooperation currently comprises a volume of 80 wind turbines, which equates to an output of around 500 megawatts. The first orders for turbines with a total capacity of 100 megawatts have been placed and are scheduled to be connected to the grid in 2023. The shares traded at a discount to the subscription price and were quoted at EUR 8.90, down more than 10%. It remains difficult to maintain margins in such a challenging environment, let alone increase them. Thus, it would not be surprising if capital should be sought again in the coming months. Although short-term speculation could be profitable, a long-term investment in Nordex will likely entail enormous risks.

    Rheinmetall correction continues

    As mentioned weeks ago, the relative strength of defense stocks, particularly Düsseldorf-based Rheinmetall, are clearly weakening. The relative strength index already produced a sell signal last week, and the trend-following indicator MACD followed suit this week. The first price target should still be the resistance at EUR 162.95. In the longer term, the price gap that Chancellor Scholz tore with the announcement of a special fund for the German Armed Forces of EUR 100 billion should also be closed at EUR 107.35 again.

    On the orders side, Rheinmetall continues to deliver like a model student. New orders come across the ticker almost daily. This time, another significant order in the mid double-digit million euro range was received for the supply of fuel cell components. As the MDAX group announced, a European fuel cell manufacturer placed an order with the MDAX member to supply cathode valves. The order is for flap systems with integrated bearing electronics, which are used as bypass and shut-off valves for fuel cells.


    Copper is a fundamental raw material for climate change, and demand is expected to grow significantly in the coming years due to the development of renewable energies. Alpha Copper has options on two promising copper deposits and could perform in the long term. At Nordex and Rheinmetall, the risk currently outweighs the reward.


    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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



    Related comments:

    Commented by Juliane Zielonka on November 25th, 2022 | 10:29 CET

    TubeSolar, Nordex, Siemens Energy - Energy drivers for the portfolio

    • photovoltaics
    • Solar
    • renewableenergies

    German Engineering is a seal of quality, also abroad. What sometimes takes a little longer in development pays off in the long run. Solar system manufacturer TubeSolar from Augsburg can be pleased about a TÜV certification for its patented products. In Germany, the share of photovoltaics in the power grid rose by 11.2%, and worldwide the CAGR of PV installations increased by 32%. JinkoSolar, a leading Chinese manufacturer of solar modules, has also played a significant role in this growth. However, China shares entail risks. Siemens Energy is not without risk at the moment either. The management heads are changing in the internal takeover game of the Spanish wind energy company Gamesa.

    Read

    Commented by Juliane Zielonka on November 24th, 2022 | 14:14 CET

    Rheinmetall, Saturn Oil + Gas, Amazon - These shares are growing in the face of crises

    • Mining
    • Oil
    • Gas
    • Defense
    • ecommerce

    Tech groups like Amazon are laying off 10,000 employees to get back on track. Shareholders will be happy, and Amazon's Alexa department employees should quickly sign up with Indeed. The department is posting the biggest losses in 2022. Rheinmetall AG is off to a good start through the crisis. Thanks to the "ring swap" deal, the Düsseldorf-based company is now supplying the Greeks with fresh tanks. In turn, the Greeks give their Soviet-designed tanks to Ukraine's soldiers. Rheinmetall's share price has risen by 127.14% since the beginning of the year. Also among the crisis winners is Saturn Oil & Gas. With its numerous active oil drilling projects, investors have a broadly diversified portfolio at their disposal.

    Read

    Commented by Stefan Feulner on November 24th, 2022 | 14:01 CET

    BYD, Globex Mining, Nordex - When does it really start?

    • Mining
    • Commodities
    • Electromobility
    • renewableenergies

    Climate change is one of the greatest challenges of our time. With tighter targets for climate neutrality and billions in subsidies, politicians are stepping on the gas. Renewable energies are the only way to achieve a CO2-neutral world. Despite the long-term rosy prospects, companies in the peace energy sector have corrected sharply in recent months, with even market leaders posting losses of over 50% on the stock market. This represents a new opportunity to participate in the energy transition over the long term.

    Read