November 5th, 2021 | 12:01 CET
Positive news at BYD, Nevada Copper and BMW
Table of contents:
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
BYD with bombastic growth
Despite the shortage of semiconductors, the Chinese electric mobility company BYD once again outgrew itself. The sector of NEVs, New Energy Vehicles, i.e. vehicles with alternative drive systems, exploded. BYD sold 81,040 NEVs in October, up 249% from a year ago and 14% from September this year. Among them were 80,003 passenger cars and 1,037 commercial vehicles.
Total sales amounted to 89,935 units. That, in turn, represents an increase of almost 88% compared to the same period last year. Accordingly, the month-on-month growth was 12%. BYD's Dolphin model has exceeded expectations since its launch, with nearly 10,000 orders in October.
Analysts at BofA Securities gave BYD a target price of HKD 405, equivalent to EUR 45.02, and reiterated their "buy" rating. The analyst firm is optimistic about the growth prospects for electric vehicle sales, better product mix, and improved margins due to the wider application of lithium iron phosphate batteries.
Nevada Copper - Strong restructuring
Copper is becoming increasingly important in an era of renewable energy and the implementation of climate targets. The red metal shines with its properties such as good conductivity and is needed for electromobility and the production of wind turbines and solar panels. Because the copper price was relatively weak before the decision to switch to renewable energy sources in the last decade and new projects were not very lucrative for investors, there was already too little supply in 2019. The only growth has been in high-risk projects under challenging jurisdictions such as Mongolia and Indonesia. It takes an average of more than 15 years from discovery to production at a copper mine.
In addition, there is a need for shorter, reliable supply chains, especially in North America, to reduce dependence on other regions of the world and lower costs and carbon footprints. Not far from US flagship companies Google and Tesla, Nevada Copper maintains one of the only production-ready new sources of copper supply in North America. Pumpkin Hollow has significant reserves and resources, including copper, gold and silver. The two fully-permitted projects include the high-grade underground mine and processing plant, now in the production phase, and a large-scale open pit project moving toward feasibility.
Historically, the 24,000-acre land area has experienced delays. It was not until the second quarter that the latest projections from management at the time were made. The open pit mine was expected to produce USD 200 million of copper annually, while the underground mine was estimated to produce USD 77 million annually. However, the schedule was again pushed back. Since the beginning of October, a new captain, Randy Buffington, has been at the helm. He has an extensive industry network in Nevada and can demonstrate considerable value creation both in the operation of underground mines and in large open pit mining projects. As such, he is ideally positioned to lead Nevada Copper to achieve stable underground mine production and realize the full potential of the fully permitted open pit project and extensive land holdings in the Yerington copper district. Buffington gained many years of experience in senior positions at Barrick Gold, Placer Dome and Cominco.
The newcomer's first actions are already bearing fruit. In addition to optimizing operational management, additional financing and a significant deferral and expansion of credit facilities have been achieved with KfW, a senior lender to Pumpkin Hollow, and major shareholder Pala Investments, which holds approximately 38% of Nevada Copper. As a result, there is increased balance sheet flexibility and support for the completion of the ramp-up of underground mining operations and the subsequent advancement of the open pit project and exploration of the broader property exploration targets.
The Pumpkin Hollow project is unique in North America. Now Nevada Copper must deliver operationally. In any case, the potential is still there.
BMW - Strong figures reverberate
Despite the global chip shortage, the surprisingly strong quarterly figures of carmaker BMW continue to reverberate with analysts. Compared to the same period last year, the Munich-based company raked in a record profit of EUR 2.58 billion, despite selling fewer units. The focus on high-priced and more expensive models allowed the semiconductor crisis to be forgotten. The Bavarian automotive group targets an EBIT margin of between 9.5% and 10% for the full year.
Meanwhile, BMW has decided to build a highly integrated battery production line for Manz AG. The order for BMW's Parsdorf site near Munich includes equipment for coating the electrode material and assembling the lithium-ion battery cells. The electrode coating sub-project will be implemented within Manz AG's established partner network.
Driven by positive analyst opinions, the share price is stalking towards the decisive EUR 80 mark. A significant breakthrough could give the Munich-based company a multi-year high and generate a clear buy signal.
Copper is becoming a scarce commodity and is considered the gold for the energy transition. Nevada Copper struggled with delays in recent years but is now well prepared for the future with new, experienced management and a debt restructuring. In addition to BYD, the Bavarian carmaker BMW also posted strong figures.
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