30. August 2021 | 11:10 CET
Teck Resources, GSP Resource, Standard Lithium: Thinking of the good times
The summer has caused a lethargic mood on the stock market. There are inflation concerns, and also, the pandemic is again leading to many hospitalizations in many countries. Nevertheless, the markets seem to have weathered the worst. The closer we get to fall, the more likely future issues will dominate the market again. Whenever issues of mobility or regenerative energy come up, commodities also come into play. We take a look at three shares related to popular commodities.
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ISIN: TECK RESOURCES LTD. A | CA8787423034 , GSP RESOURCE CORP. | CA36249G1090 , STANDARD LITHIUM LTD | CA8536061010
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Teck Resources: The right mix
Teck Resources is a well-known producer of raw materials. The Company mines copper, zinc and coal for steel production and energy raw materials. The latter commodities have fallen out of focus in the wake of the ESG discussion, but they are still needed. Today, more than 50% of the global energy mix still consists of fossil fuels. While the share of renewable sources will grow, sustainably produced and wisely used fossil fuels will remain important worldwide. Teck Resources is therefore not on the sidelines with its business.
In addition, copper and zinc, in particular, are in high demand. New technologies such as electric drives and the batteries they require depend on industrial metals - Teck mines these metals in North America, among other places. Strict environmental regulations here ensure that mining is as sustainable as possible. In addition, raw material companies in this region are motivated to implement ESG criteria even more vehemently. Teck is working on electrifying even heavy equipment. The stock has weakened somewhat in the past three months but is still in stable waters. However, investors should not expect any major surprises.
GSP Resource: Mini valuation - Maximum opportunities
A company that operates in the immediate vicinity of Teck Resources is the small Company GSP Resource. Virtually surrounded by Teck's Highland Valley copper and molybdenum mine, GSP Resource holds a promising property. The Highland Valley mine represented USD 993 million in sales in 2020, and GSP Resource is looking to build on that success with its Alwin project or develop the project to the point where larger companies, Teck Resources being the obvious one, will make a takeover bid. Teck Resources' results to date indicate that the deposits that exist at Teck's mine also extend into GSP Resource's area. GSP drilled high grades of 0.313% copper equivalent over a distance of 61.7 meters in 2020. The 2019 ore grade (head grade) was 0.278% at the Highland Valley mine next door.
GSP Resource's stock is currently valued at less than EUR 5 million. The Company is currently drilling and doing everything to further develop the property near Teck Resources' mine. In addition, Olivine Mountain is a second copper project in British Columbia, located only a few kilometers away from the producing mine of Copper Mountain. The stock is highly speculative but has not yet been bought up by gamblers. As soon as industrial metals become a topic again, speculative-oriented investors should have the share on their radar.
Standard Lithium: Now going downhill
Many gamblers have the shares of Standard Lithium on their minds. The Company is pursuing the goal of becoming the lithium supplier for the US automotive industry. The share quickly surged and held steady around EUR 7 for weeks in the wake of this news. Recent, however, the value slipped below the EUR 5 mark. That suggests another sell-off, or at least that the hype value has run out of steam for the time being. Innovative lithium companies that mine sustainably and possibly focus on recycling have a great future - but investors should be cautious about short-term hype like that of Standard Lithium.
Especially during a sour period in the market, it is a good time for investors to do their homework. The risk of prices running away is low during this market phase. Those convinced of industrial metals and their importance for new technology can seize opportunities, especially in smaller companies with low capital investment. GSP Resource is a stock that can be profitable due to promising projects and small market capitalization.