December 23rd, 2021 | 12:39 CET
Varta, Nevada Copper, JinkoSolar - Copper in desperate demand
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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
Varta - New impulses needed
In a world where everything is supposed to be wireless and electric vehicles are on the rise, batteries, or more precisely, rechargeable batteries, are needed. Varta is a leader in the field of button cells so that the small rechargeable batteries are installed in Apple's headphones, for example. In the future, the Company wants to conquer the market for rechargeable batteries in electric vehicles, for which a lot of copper is needed. The announcement was made in March, followed by the presentation of the V4Drive cell in April. Pilot production is to start this year. In the middle of the year, Porsche was presented as a partner.
At this point, the share rally began, which led up to EUR 165.90. Since then, things have been going downhill, culminating in the profit warning that sent the share plummeting to EUR 99.70 on November 5. After a brief counter-reaction that failed to close the gap, the share is falling again. Almost all analysts no longer see any great potential in the stock. It would need new impetus, such as a Porsche with a V4Drive cell that can boast short charging times and a long range.
In addition, supply chains are causing problems for Varta customers. Production is sluggish due to a lack of parts from overseas, which means customers are ordering less from the battery manufacturer. Nevertheless, Varta is investing in new production facilities to be prepared for the time after the Corona Crisis. Should the share fall below EUR 99.70, a test of the EUR 90 mark is likely.
Nevada Copper - New start with new CEO
At the copper producer Nevada Copper, a lot has been happening since Randy Buffington, a former Barrick Gold manager, took the helm. The Canadian Company, whose main project Pumpkin Hollow is located in Nevada, is already producing copper from the underground mine. The area additionally contains gold and silver. The Company's Achilles heel was its debt. This problem was solved by a capital increase, which raised CAD 125.4 million. The proceeds will allow the Company to meet all of its loans from its senior lender.
The Company owns the only new production-ready copper wells in North America. Although the ramp-up of production faltered a bit initially, it has been running better for several months. In the latest mine update on December 21, the Company reported record mining rates. In December alone, mining is 50% higher than in November and 100% higher than in August. The use of a bolter miner has had a positive impact on output. Starting in January, two additional machines will be deployed to increase production further. Mining of the Sugar Cube, a high-grade copper area, is scheduled to commence in the first quarter.
The underground mine is further expandable. The open pit project has also been approved, and a feasibility study is currently underway there. The Company places a lot of emphasis on sustainability and addresses issues such as water management and the use of solar power. Nevada Copper is in a much better position after the restructuring. The stock has fallen from its May high of CAD 3.15 to currently CAD 0.58. First due to debt issues and now due to the capital increase.
JinkoSolar - Weaker after quarterly figures
JinkoSolar needs copper for its conductivity for storage and feeding into the power grid. For one of the world's largest solar panel manufacturers, the failure of Joe Biden's climate change package was a bitter pill to swallow. JinkoSolar could likely have booked a more significant portion of the subsidies as revenue. In Germany, on the other hand, support for photovoltaic systems is being implemented. As a result, the solar industry in this country can look forward to high sales. The high price of electricity also helps to conclude contracts.
Whether the sales from Germany can make the failed US climate package forgotten is doubtful. Nevertheless, the climate is friendly for the renewable energy industry worldwide. The figures for the third quarter, however, were disappointing. Sales and profits were down YOY, with sales down 2.3%, while profits were down as much as 13.3%. The margin deteriorated by 2%.
Positive for the coming months is the introduction of the Tiger Neo modules. It can increase energy production by 3-4% and extend the service life to 30 years. However, the positive news could not make up for the poor numbers, and the stock continued to decline to USD 39.33. The upward trend remains intact as long as the closing price does not fall below the USD 35.64 mark.
Copper will be in greater demand in the coming years. Varta will not be as affected by rising copper prices. Nevada Copper offers investors the opportunity to invest in a growing copper production, where all problems have been solved. JinkoSolar can recycle the old photovoltaic equipment and provide copper replenishment.
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