Porsche, Gazprom, Teck Resources, GSP Resource - The raw materials rally continues!

Porsche SE - Own battery production at the start

Porsche AG will develop and produce battery cells for electric sports cars in a new joint venture with German lithium-ion specialist Custom Cells GmbH. The Zuffenhausen-based Company is investing a high double-digit million euro sum for this purpose and acquiring an 83.75% share in the Cellforce venture. Small-scale production of the high-performance batteries is scheduled to start as early as 2024.

"The battery cell is the combustion chamber of the future," Porsche said in the weekend announcement. The new subsidiary will play an important role in research, development, production, and high-performance cell sales. The German premium manufacturers are thus taking the bottleneck topic of "batteries" onto their agenda. It should be clear that the first manufacturer of a sensible battery will capture a significant market share. Special batteries for sports cars must also cope with high temperatures, charge quickly, and recuperate energy effectively. The top issues of range, performance and charging time are now to be optimized in the engineering burgs.

The new cells will allow charging in less than 15 minutes, Porsche CEO Oliver Blume said in an interview with Welt am Sonntag. Currently, the Taycan model takes about 22.5 minutes to charge the battery from 5 to 80%. In addition, Porsche plans to use silicon as the anode material for higher energy density and a more compact battery. The plant outside Stuttgart will have an annual capacity of at least 100 megawatt-hours, enough to produce cells for about 1,000 sports cars a year.

Porsche shares have rushed from high to high in recent weeks, and the current positive scenario surrounding automotive stocks is likely to continue for a while. The all-time high of EUR 158 was reached in 2007; the share is now back just below the EUR 100 mark for the first time in 13 years. Hold!

Gazprom - Super pay and rising energy prices

Gazprom is one of the largest energy producers globally, especially in natural gas and oil. The Russian natural gas giant is currently benefiting from rising oil and gas prices. Sales volumes are also significantly higher than a year earlier due to weather conditions. Discussions about Nord Stream II are continuing, but construction is ongoing in part, and this project should be completed despite all objections.

Natural gas exports to countries outside the former Soviet Union climbed 26.7% year-on-year to 92.3 billion cubic meters on a half-year basis. At 241.4 billion cubic meters, gas production was even a full 17.2% higher than a year earlier. Therefore, we should not be particularly surprised to see the commodities group's profits reach a substantial level in the current year. As a result, an EBITDA increase of about 50% to around USD 30 billion is expected.

In addition to a very low P/E ratio of 4, the share also offers a dividend yield of over 6%. The price-to-book ratio of 0.4 compared to 1.2 in the industry is also outstanding. With a slightly corrected price level of EUR 6.22 compared to the high of EUR 6.40, one can place favorable buy limits again.

GSP Resource - A Prospective Neighbor of Teck Resources

GSP Resource Corp. is a mineral exploration and development Company specializing in properties in southwestern British Columbia. The Alwin Mine Project is in close proximity to its neighbor Teck Resources. The Company holds an option to acquire 100% of the Alwin rights, a claim for mining copper, gold and silver located in the Kamloops Mining Division, 18 km west of Logan Lake. GSP also owns 100% of the Olivine Mountain project, located approximately 600 kilometers away in the Tulameen complex.

Adjacent to GSP in Highland Valley is the active mine of Teck Resources, one of the major resource producers focused on copper. With GSP Resource having already drilled grades of 1.29% copper equivalent over a distance of 14.1 m in initial drill samples and plans to explore further in 2021, the next set of results should provide even more indication of the property's recoverability. The historic underground mine, which was laid out over a length and depth of 500 meters by 300 meters, had already produced 233,100 tonnes of rock from five major sub-vertical zones from 1916 to 1981, containing a total of 3,786 tonnes of copper, 2,729 kilograms of silver and 46.2 kilograms of gold. The average diluted head grade was 1.5% copper. These are numbers that make economic mining feasible.

With the current low capitalization of only CAD 6 million, GSP Resource should soon come into the focus of a major. The obvious geographical proximity would, of course, point to Teck Resources in the first place. Of the 24.2 million fully diluted shares, 23% are in the hands of management and other insiders, the free float is stated at about 50%. In our opinion, the low valuation is unlikely to last much longer with the current drilling.