March 10th, 2022 | 10:22 CET
Nordex, K+S, Desert Gold: Commodities out of control
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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
Desert Gold - Goes full throttle after convincing resource estimate
Of course, the industry giants Barrick Gold and Newmont benefit from the rising gold price. Those who like it more speculative buy shares of exploration companies. One example is Desert Gold. The Canadians own two exploration projects in Mali, SMSZ and Djimbala. Another project (Rutare) is located in Rwanda. For the SMSZ project, the important NI 43-101 resource estimate was recently published. According to this, SMSZ has indicated mineral resources of 8.47 million tonnes grading 1.14 g/t gold. That equates to a total of 310,300 ounces. And from this, inferred mineral resources of 20.7 million tonnes grading 1.16 g/t Au totaling 769,200 ounces of gold.
Desert Gold CEO Jared Scharf is confident, "This initial mineral resource is a significant milestone for the Company and represents an excellent starting point. The Company believes that further drilling will significantly expand these resources and develop new resource areas such as the 1.6 km Gourbassi North West discovery. We anticipate a busy 2022 with a planned drill program of more than 20,000 meters and high expectations for positive drill results."
Desert Gold shares trade on numerous German exchanges - including Tradegate - and their home exchange in Canada. The security is currently trading at 9 cents, well below its 2020 all-time high of 19 cents. Desert Gold is currently valued at around EUR 13 million.
Nordex - Figures for 2021 disappoint
Nordex has been suffering from high material and transport costs for months. Due to the announcement - among others by Finance Minister Lindner - that even more is to be invested in the expansion of renewable energy in the coming years, the difficult operating development at Nordex was ignored by many investors. With yesterday's publication of the preliminary figures for 2021, investors were brought back down to earth. The wind turbine manufacturer increased sales by 15% to EUR 5.4 billion. However, earnings margins were down. EBITDA fell from EUR 94 million to EUR 50 million. A disappointment. Midday Wednesday, Nordex stock is down 4% in a positive overall market. The only bright spot is order intake. It increased from 6.0 to 7.95 GW. The first analyst reaction to the figures came from Jefferies. For them, the development is as expected. Accordingly, the buy recommendation was confirmed with a price target of EUR 20.
K+S - No longer a buy?
Since Russia's attack on Ukraine, the fertilizer price practically only knows the way up. Russia and Belarus are important potash exporters. As a result of the sanctions, these are no longer available for the time being, and at the same time, the growing season for crops is beginning in the northern hemisphere. As a result, prices for urea fertilizer on the Chicago exchange rose by 46% to USD 805 per ton between February 24 and March 8. Interest in K+S is correspondingly strong at present. However, analysts' comments are increasingly cautious. Since February 28, there has been no buy recommendation among three research updates. Yesterday, Deutsche Bank raised the price target for the K+S share from EUR 17 to EUR 22 but left the rating at "Hold". On Monday, JPMorgan had even confirmed its "Underweight" rating. K+S should benefit from the rising prices for potash, but the share has just also already run well. Previously, UBS had already spoken out with a "Neutral" recommendation and a price target of EUR 17.10.
Volatility on the stock markets is expected to remain high. News around the war drove the prices of commodities and shares - positive and negative. K+S and Nordex have already run well and are driven by momentum; how long this will last remains to be seen. Desert Gold is still a long way from its old highs, although - apart from the higher gold price - it has made significant operational progress.
Conflict of interest
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