December 8th, 2021 | 13:44 CET
Nordex, Osino Resources, Standard Lithium: Politics as a guarantor of returns
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"[...] I wouldn't be surprised if the project ends up showing more than 5 million ounces. [...]" Gary Cope, President and CEO, Barsele Minerals
Nordex: Political tailwind, but the margin...
The markets are riding a roller coaster; the economy is sputtering. These are arguments to stay away from the market. But haven't we all experienced how painful it is to chase the market? Not for nothing is a stock market saying, "time in the market beats timing in the market". Instead of constantly jumping wildly back and forth, it pays to stay with it. Sectors that are politically favored or benefit from other megatrends can prove to be a good choice in uncertain times. Renewable energies are one example. Wind turbine manufacturer Nordex can hope for a tailwind from the traffic light coalition. The plans in the coalition agreement are already finding favor with Nordex. However, there is still some skepticism when a company spokesman comments to researchanalyst.com: "It is now up to the politicians to create a framework to leverage the growth potential in the long term. In addition to new land, simplified and faster approval processes, harmonization of environmental regulations and further promotion of acceptance among the population play an important role here." The traffic light coalition will be measured against its promises, that is for sure. After all, the coalition partners seem to agree, and it appears that there is a window of opportunity for action on measures around reducing bureaucracy and simplifying procedures.
But will the coming years be a foregone conclusion for companies like Nordex? Although the Company is growing not only in Germany but also abroad, with orders recently reported from Peru and Brazil, there is still one major problem: margins. Most recently, the Company announced that its margin has now dropped to 1%. The new Delta 4000 platform should stabilize the margin, but the figure speaks a different language. While a look at competing companies shows that there is good money to be made in wind power, Nordex needs to get its horsepower on the road first.
Osino Resources drills and the central banks do the rest
The situation is different at Osino Resources. Here, the engine keeps roaring, but the bolide is not yet on the road - the reason: Osino Resources is developing a gold project in Namibia that is not yet in production. The project is advanced, and the team around CEO Heye Daun has already successfully led a gold project in the immediate vicinity towards production with the Ojikoto mine, which is now operated very profitably by B2Gold. Daun confirmed in an interview on news.financial in the summer that this comparison is anything but far-fetched: "Both projects are located in the same geological belt and have a very similar geological structure. The size is almost identical, and so is the infrastructure. Differences as of today still lie in lower gold grades and a lower recovery rate at Twin Hills. However, we want to influence these factors with the planned drilling program positively," says the commodities expert and Africa connoisseur. The Company recently reported 1.22 g/t gold over a distance of 35 meters. By the end of the year, Osino plans to outline the feasibility of its Twin Hills project except for a few residual risks.
While the stock must be considered speculative due to its stage of development, the gold sector can be regarded as supported, especially these days: The gold price developed steadily and even increased despite the Corona panic. In addition, the fall in the price of oil gives central banks more leeway to maintain their expansive monetary policy for a while longer. So Osino's investment story is politically supported and also holds intrinsic potential because of the Company's current stage.
Standard Lithium: There is a lot of hype here
Also considered politically supported could be lithium stocks like Standard Lithium. After several acquisitions in the industry, the US government's support for domestic producers, and the global e-car boom, an investment in lithium could be an obvious choice. Recently, some stocks from the industry have come back. But the best-known representatives, in particular, are still heavily hyped. The chances around lithium seem better with stocks from the second row. Here also, the charts still give a better picture.
Sectors that benefit directly or indirectly from political action can be attractive in difficult market phases. But even here, investors are not protected from high valuations, as the example of Standard Lithium shows. Stocks such as Osino Resources are currently receiving little attention, even though they are making progress operationally. That could be an opportunity.
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