July 12th, 2021 | 13:36 CEST
NIO, Kainantu Resources, BASF - Bright prospects
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"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
High government debt, historically low interest rates and continued money printing by the central banks in the face of rising inflation are also the breeding ground for a long-term price increase on the gold market. With the presentation of her monetary policy strategy in the middle of this week, ECB President Christine Lagarde impressively demonstrated that the negative interest rate policy is likely to accompany us for longer than expected. The inflation target was set at 2%; previously, it had been just below 2%. However, it is important to note in this context that the ECB, similar to the FED, also wants to accept a slightly higher price increase. That means that the time for a first interest rate hike will be pushed back unnoticed.
Due to negative interest rates, the money in the savings account is becoming less and less. Gold serves as a means of wealth preservation, both through purchasing bars or coins and gold mining shares. In addition to the major gold producers, one should also take a closer look at second-tier exploration companies. These are, of course, more speculative but offer leverage to a rising gold price.
Profiting from the big players
Since its independence in 1975, the island nation of Papua New Guinea (PNG) in the Asia-Pacific region has been one of the world's most important mining countries. The mining of gold, copper and nickel, and crude oil and gas production is responsible for 86% of exports and contributes 26% to the gross domestic product. The government promotes the mining and oil and gas industries and, through long-standing stable laws, facilitates access to the country's natural resources for global giants from the precious metals industry and the oil and gas sector such as ExxonMobil and TOTAL.
PNG is not in the headlines like other countries due to its high gold deposits, but the country is home to some of the best-stocked deposits in the world. In addition to Newcrest Mining's Lihir Mine and Barrick Gold's Porgera Mine, both of which produce hundreds of thousands of ounces of gold annually, K92 Mining's Kainantu Mine hosts a measured and indicated 1.3 million tons of gold and had the fourth-highest production level in the world in 2020.
Near the K92 Mine, one of the highest-grade deposits in the world, Kainantu Resources has two prospective projects. KRL South covers 597 sq km and is located in the Eastern Highlands province, approximately 30 kilometers from K92 Mine. The project is located on a large, unexplored goldfield bisected by the Kainantu fault line, a geological structure that also hosts K92's flagship project.
In doing so, Kainantu Resources was able to identify four "ring features" on the property, geological structures that may indicate shallow pockets of gold in igneous rocks. These form the core of the planned drilling program, which identified six prospects and collected soil samples. At one of these ring features, Tirokave, the Company has already observed occurrences of visible gold in pan samples. Over the past two years, Kainantu has collected over 2500 samples, consistently confirming the property's potential - and its possible similarities to the high-grade K92 mine.
Now the Company is conducting a much more extensive sampling campaign to discover targets at Tirokave that will serve as the basis for an upcoming drill program.
KRL North is smaller at 129 sq km, located on the central Bilimoia mineral field and directly adjacent to K92. A field mapping and sampling program is planned on the property this year. Last month, Kainantu Resources secured the May River project in the Frieda River copper and gold district. The area consolidates three adjacent concessions and is less than 15 km from the well-known Frieda River project owned by PanAust.
The experienced management team has a track record of developing gold projects in the Asia-Pacific region. It is supported by Asia Pacific Energy Ventures, which has many years of operational experience in PNG and helped Kainantu Resources acquire the two world-class deposits despite strong competition, particularly from Chinese investors. In the long term, the Canadian Company aims to build a high-quality Asia-Pacific junior gold mining company. To date, projects are at an early stage, but the location and geology alone promise great potential and high long-term value growth.
NIO goes global
At the "Power Day" held by Chinese electric car manufacturer NIO, the global strategy was announced for the next few years. More than 4,000 battery swap stations are to be installed by 2025, and 1,000 outside China. By the end of this year, the Company expects to have 700 completed swap stations. The advantage of changing the battery is the time factor. The driver merely swaps the battery and escapes a longer charging time at the e-fueling station.
The charging and battery swap systems are to be offered not only for electromobility but also for other industries. NIO has cleared one hurdle for the already announced European expansion by receiving the TÜV certificate. Now the battery exchange stations and chargers can be both operated and sold in all EU member states.
Higher demand, especially in the plastics business, and increased prices prompted BASF's leadership to raise its full-year forecast once again. Full-year sales are expected to reach EUR 74 billion - EUR 77 billion in 2021, up more than EUR 6 billion. The estimate for EBIT was raised from EUR 5.0 billion - EUR 5.8 billion to now EUR 7.0 billion - EUR 7.5 billion. The revised forecast is justified by the strong business performance in the first half of the year. However, the increase is only tenable if there are "no severe restrictions on economic activity as a result of measures to combat the Covid-19 pandemic," the press release states.
The strategy of central banks worldwide to promote growth rather than fight inflation continues to bode well for both equity and precious metals markets. BASF is poised to break through its high for the year at EUR 73. At NIO, the signs are pointing to consolidation despite good fundamental reports. The share of Kainantu Resources offers itself as a speculative portfolio addition in the long term.
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