December 7th, 2022 | 09:48 CET
Nordex, Kodiak Copper, Geely - Exploding demand, rising prices
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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
Kodiak Copper - New high-grade discovery
According to the German Copper Institute, an electric vehicle contains nearly three times as much copper as a vehicle with an internal combustion engine. The generation of electricity from renewable energy sources and the infrastructure required to charge electric vehicles also create a significantly higher demand for copper. Here, the exploding demand meets a limited supply. And the expansion of copper production takes time. Expanding existing mines takes about three years, and a completely new project takes at least eight years, according to the International Energy Agency (IEA). In addition, there has been little investment in new projects over the past decade due to a weak copper price, so promising properties are few and far between and should thus benefit disproportionately from a rising base price over the long term.
One of these lighthouse projects is owned by Kodiak Copper, a company belonging to the Discovery Group. Founder and Chairman is Chris Taylor, who already enjoys an excellent reputation in the mining industry for his successful gold discoveries at Great Bear Resources. The 147 sq km copper-gold porphyry project and 100% owned MPD project is located in the Quesnel Trough in south-central British Columbia, Canada. Following Kodiak's discovery of the Gate Zone in 2020, the size and depth of known mineralization has been greatly expanded in recent years to a 1km strike length, 350m thickness and 900m depth. In addition, the Company is now expanding its exploration efforts to new areas and evaluating copper-gold zones such as Dillard, Man and Axe.
That high-grade discoveries in the area are no coincidence is demonstrated by the fact that the producing mines of Copper Mountain, Highland Valley and New Afton are located in the immediate vicinity. Currently, the most extensive drilling program in the Company's history is underway, with 25,000 meters of drilling, from which further results should be announced shortly. Concurrent regional exploration programs are underway to evaluate previously untested copper-gold targets on the MPD property. Here Kodiak Copper has made a new high-grade gold-silver discovery at the surface with the "Beyer Zone". A 2022 surface sample returned 14.15 grams of gold per tonne and 9.40 silver per tonne. Trenching samples extend this new gold-silver discovery to over 12m at 3.02 g/t gold and 24.18 g/t silver. The newly discovered "Beyer Zone" is now earmarked for additional prospecting and drilling as part of the 2023 program.
Claudia Tornquist, Kodiak's President and CEO, stated, "The Beyer gold-silver discovery is a highly exciting new development as it lies within several kilometers of a completely untested new gold-in-soil trend. This is notable because this is the first time that significant intercepts of high-grade gold-silver mineralization have been intersected at the MPD project. Mineralization and alteration are open along strike, making the extension of these trenches an obvious follow-up for 2023. The discovery at the Beyer Zone is a testament to the excellent prospectivity of the MPD Project and provides new opportunities and value creation potential for our shareholders."
To benefit from the rising copper price in the long term, Kodiak Copper has high growth potential at discounted levels due to the attractiveness of its two projects. In addition to MPD, the Company still owns 100% of the Mohave copper-molybdenum-silver porphyry project in Arizona, not far from the world-class Bagdad mine.
Nordex - The tailwind is weakening
Wind turbine maker Nordex has been one of the hottest rebound opportunities in recent weeks. Since the interim low in mid-October at EUR 7.24, the Hamburg-based stock has risen by an impressive 73%. At least a breather should now be taken at the vertical resistance area at around EUR 12.50; various indicators are too overbought and already show negative divergences. A setback to the EUR 11 area would only be healthy in the long term to initiate a sustainable bottoming. On the upside, however, a sustained breach of the resistance would open the way to the next hurdle at around EUR 13.25.
From a fundamental perspective, Nordex was able to announce closer cooperation with The Fraunhofer Institute for Wind Energy Systems IWES. With a jointly developed in-house test rig, the time required for measurements can now be significantly reduced from over 12 to 3 months. On this test rig, the electrical drive train of the wind turbine is tested in isolation on a grid simulator, with the distinct advantage that all components of the turbine are simulated live, and the test rig can, of course, be operated independently of the weather.
The Head of IR, Felix Zander, is presenting Nordex SE today at the 5th IIF - International Investment Forum. Registration for the virtual event is here.
Geely - Significant recovery
Like wind turbine manufacturer Nordex, Geely was also able to recover strongly from the lows in mid-October. Thus, the share price of the Chinese automobile and motorcycle manufacturer headquartered in Hangzhou rose from HKD 8.32 to currently HKD 12.36. In the process, the trend-following indicator MACD generated a fresh buy signal on a weekly basis, and the relative strength index also still has considerable room for improvement. The next short-term target should be the downward trend formed since January 2021 at around HKD 16.04. A sustainable breakthrough should then take the electric car manufacturer to the area of HKD 19.20.
Last year, Zeekr, a pure premium brand for electric cars, was introduced and passed its market entry with flying colors. ZEEKR Intelligent Technology Holding Limited, which the Geely Group does not wholly own, reported a total of 11,011 vehicles delivered in November. That represents a 447% increase over the same period last year. Expansion into Europe is now planned for 2023. According to brand CEO An Conghui, the Company plans to start with two models, a sedan and an SUV. In the medium term, the product range for Europe is then to be expanded to six models.
Demand for copper is high due to electrification and the swing to renewable energy. Kodiak Copper has long-term potential, especially with its promising MPD project. After the recent price increase, Nordex could take a breather. By contrast, the carmaker Geely continues to have recovery potential.
Conflict of interest
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