June 8th, 2022 | 13:50 CEST
Shares: Plug Power and BYD with exclamation points! Patience is needed at Nevada Copper
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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
Nevada Copper: Making progress, but delays are a burden
The raw materials for electromobility include not only lithium but also copper. Exciting in this area is Nevada Copper. The Company owns the Pumpkin Hollow copper project in the US state of Nevada and is currently making a move from explorer to producer. New management has been on board since the fall of 2021 and has been optimistic so far. CEO Randy Buffington said in the Q1 report, "I am very pleased with the progress we are making on several fronts at Pumpkin Hollow. We have completed several important projects on site aimed at improving productivity, mining line availability and equipment reliability at the underground mine. The update of the pre-feasibility study for the fully permitted open pit project is well underway and will include key sustainable initiatives such as the solar project. In addition, the commencement of our exploration program is an important step towards our longer-term growth strategy."
Yesterday, however, Nevada Copper reported delays. Additional drilling is required in the East South zone of the underground mine due to previously unidentified rock structures. As a result, it will not be able to start producing larger volumes there until August and is looking to cut costs. In the East North zone, on the other hand, Nevada Copper is progressing according to plan. This is positive as this area has significantly higher copper grades and better geotechnical conditions. Management expects to have advanced to the larger and higher-grade deposits within the East North zone by the end of June. The open pit pre-feasibility study and drilling also continue to progress. Because of the delays, Nevada Copper needs new financing. Major shareholder Pala Investment is prepared to provide debt capital of up to USD 20 million. Additional funding is also currently being discussed. The transparent communication of the new management is positive, and such delays are not unusual for a commodity explorer. Due to the news, the stock lost significantly yesterday and is now trading below EUR 0.30 - in 2018, it was still above EUR 5. For investors with patience and courage, this could represent an entry opportunity.
Plug Power: Successful in Asia
Plug Power has delighted shareholders with numerous new orders in recent weeks. The latest success story comes from Asia. In South Korea, Plug Power's subsidiary SK Plug Hyverse has landed a government project. The client is the Korea Gas Corporation. SK Plug Hyverse is to build them a 1-megawatt PEM water electrolysis plant in the south of the island. In conjunction with a wind turbine, green hydrogen is to be produced and sold via charging stations. This is an initial pilot project. In addition, SK Plug Hyverse is building a fuel cell and water electrolysis plant in the west of the country. SK Plug Hyverse is a joint venture between Plug Power and the South Korean conglomerate SK Group. It seems to be well-positioned to benefit from South Korea's expansion goals. The South Korean government defined hydrogen as one of the cornerstones of its future industrial policy at the end of 2021. By 2040, a hydrogen economy worth USD 40 billion is to be created in the country. In Europe, Plug Power landed a major order in May. The Company will supply a 1-GW electrolyzer for the production of green hydrogen to H2 Energy Europe. The plant is to be built in Denmark. According to Plug Power, this is the largest electrolyzer order worldwide.
BYD: Deliveries strong in May
BYD's focus on electric mobility is paying off. At the beginning of the year, the Chinese vehicle manufacturer - offering passenger cars and commercial vehicles such as buses - announced that it would focus entirely on electric and hybrid models. The high demand proves BYD right: Deliveries climbed 148% YOY to 114,943 vehicles in May. This again surpassed the already strong figures from April with 106,042. A total of 512,363 vehicles were sold between January and May 2022. That is an increase of around 162% compared to the same period last year. These figures are all the more astonishing when one considers the repeated lockdowns in cities such as Shanghai. These were even more intense in recent months than in the actual Corona year 2020. Media reports show that BYD is preparing for a sustained high demand. Accordingly, the electric vehicle specialist is preparing to purchase six lithium mines in Africa. Because, unlike numerous competitors, BYD has its own battery production.
The energy and mobility revolution is in full swing. Hydrogen and electromobility will play important roles in this. BYD and Plug Power are each top players in their respective industries. Nevada Copper has to digest a setback. But the share price reaction seems excessive if it is only a matter of a few months and financing can be secured. After all, copper is in demand as never before.
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