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March 16th, 2022 | 12:20 CET

Rheinmetall, Nordex, Kodiak Copper: The 100% stock sensation in copper and nickel!

  • Copper
  • Nickel
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At the start of this week, the London Metal Exchange (LME) had to suspend the futures market on nickel because the margin calls overwhelmed some market participants. Forward prices had exploded from USD 25,000 to USD 100,000 within two weeks. As a result, the critical industrial metal is more expensive than ever before. The LME will resume nickel trading today. It will be interesting to see where the short squeeze will drive the price. In the meantime, the few producers of the metal have probably also set out to bring their mined goods to the market in the best possible way. Similar shortages now exist in the electrical conductor metal, copper, and some other battery and high-tech metals. We present a few interesting investments.

time to read: 4 minutes | Author: André Will-Laudien

Table of contents:

    Nickel and copper become scarce commodities

    The LME announced yesterday there are now upper and lower limits for nickel and other base metals prices. The banks also agreed on a standstill agreement with Tsingshan, whose short-covering helped drive the nickel price up so much. The reason for the panic is the sanctions against Russia, which are also permanently limiting the production of companies there, such as Norilsk Nickel, the world's largest nickel and palladium producer. Both metals are urgently needed in the automotive industry and are now running heavily into undersupply. The same scenario applies to copper, as important cable harness producers are located in Ukraine. Copper itself has been in a shortage situation for 3 years. Some automotive producers now have to stop the assembly lines due to the crisis, as there is a shortage of both the raw material and the intermediate products.

    Kodiak Copper - Fresh drill results and a capital increase

    The spot price of the coveted metal CU has risen from USD 9,500 to almost USD 11,000 in 2022 and consolidated to around USD 9,900 in the last few days. The initial crisis hysteria seems to be over, but the long-term scarcity problems are likely to remain. As there are very few mines capable of production, the market is focusing its attention on interesting properties that can come into production in the next few years.

    One project moving forward very well is owned by Kodiak Copper, a British Columbia explorer. Its MPD property is located in Southern British Columbia, close to well-known mines such as Copper Mountain, Highland Valley and New Afton. In addition, Kodiak also owns the Mohave copper-molybdenum-silver porphyry project in Arizona, near the world-class Bagdad mine.

    The Company recently delivered new drill results for the MPD project and announced a major financing. Results from 5 additional holes drilled in 2021 at the Gate Zone show significant copper-gold grades over major intervals and define a broad mineralized envelope surrounding a high-grade central zone. The new drilling has now also extended the mineralization further east and to depth. The porphyry target in the Gate Zone remains expandable in multiple directions.

    Claudia Tornquist, President and CEO of Kodiak, said, "The fact that this is just one of several target areas for further drilling underscores the potential to expand the mineralized envelope at Gate significantly. We will continue to systematically drill the Gate Zone and look forward to using the same approach that led to this discovery to unlock the potential of several other targets at MPD in 2022."

    To fund the 2022 drilling plans, the recently announced private placement has been significantly expanded in size. The Company will now issue 3,875,000 charity flow-through common shares in a private placement at a price of CAD 2.08 per share, providing Kodiak with total gross proceeds of CAD 8.06 million. In addition, conventional flow through common shares will be offered at CAD 1.92 for an additional CAD 500,000.

    Kodiak shares jumped 17%, when financing was announced.. The projects are now very well-financed and still promising. Market capitalization has reached around CAD 90 million, up from just under CAD 60 million last year - a great performance for invested investors. Therefore, stay invested and add a few shares in the current correction. Copper remains a permanent theme.

    Rheinmetall and Nordex - If only they could deliver

    Just as the Russian invasion of Ukraine began, the shares of Rheinmetall and Nordex knew only one direction: north! They rose against the generally weak trend on the stock market, which mainly affected industrial and high-tech stocks.

    The approach is based on the one hand on the argument of expected defense contracts for Rheinmetall and the other hand on the accelerated expansion of alternative energies concerning the extreme increase in the price of fossil fuels. In our opinion, however, this is a bit too short-term because the shortages of essential metals and core components of high-tech equipment affect both profiteers equally. Added to this is the seemingly endless strain on supply chains, exacerbated by sanctions, plant closures and flight bans.

    In the case of Rheinmetall, we certainly see the EUR 100 billion investment budget for the German armed forces and the many European orders as a medium-term upside scenario that will also generate significantly higher profits if order intake increases sharply. However, at the same time, as with Nordex, it is not the flood of orders alone that will improve the figures in the short term. Both figures depend on the availability of raw materials, which they first have to refine in their industrial processes in order to be able to deliver the desired product to the customer. We currently have extreme doubts about this fact, because even the necessary increase in personnel cannot be achieved within a few weeks.

    In the case of Rheinmetall, the increase was a good 50%; at Nordex, it is somewhat less. Resourceful investors of the first minute are happy about the right decision at the beginning of the war and are now cashing in. Both Rheinmetall and Nordex are currently losing a lot of momentum and are very susceptible to corrections in the near future. In the medium to long term, a long investment can still pay off, but the stock market must first return to normal mode.

    Volatility and uncertainty characterize the stock market. The shortage of raw materials is becoming a showstopper for many industrial companies. At some automotive producers, the assembly lines are already at a standstill. In particular, the high-tech specialists Rheinmetall and Nordex have recently risen strongly, so the profits should be taken. Some of the proceeds can be safely invested in Kodiak Copper because the long-term setup is right here.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
    For this reason, there is also a concrete conflict of interest.
    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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