11. May 2021 | 10:45 CET
Varta, NIO, Standard Lithium, QMines: Total Copper Boom - Watch out!
Availability of copper is one of the bottlenecks in electromobility. Its price hit a new record high last week at USD 10.445 per ton. Other commodities such as iron ore and uranium have also been in high demand recently. There are reasons for the price boom on both, the demand and supply side. Demand is currently highly driven by the prospect of rapid economic improvement. The accelerating rate for Corona vaccinations gives hope for fewer restrictions and an upturn in economic activity. Supply is currently unable to keep up, especially for technological commodities such as copper, nickel and lithium. We take a look at key industry players.
time to read: 3 minutes by André Will-Laudien
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
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.
Varta - Moving forward with digitalization
Now things can really get going at Varta. The battery manufacturer wants to significantly increase battery production and align it in future with the help of digital processes. To this end, Varta is participating as a partner in a Fraunhofer research project. The core of the joint venture called "DigiBattPro4.0" is a holistic digitalization of battery cell production. This project is intended to help increase and stabilize the product quality of lithium-ion battery cells and significantly reduce manufacturing costs.
However, shareholders are likely to be looking at the numbers this week: Excitement is building, but investors should not expect big jumps in the first quarter. CEO Herbert Schein is not planning on stronger growth until the second half of the year. Therefore, the Board of Management is likely to confirm its forecast for the full year for the time being.
The Group expects organic sales growth in the high single-digit percentage range and earnings growth well into double digits in the current fiscal year. Sales are thus seen at around EUR 940 million after EUR 870 million. Although this is only an 8% increase, the operating margin is expected to rise disproportionately to around 30% of sales. That corresponds to an improvement of up to 2.5 percentage points. The share price is currently still stuck between EUR 115 to 125. We recommend a cautious pace, as analysts are also very cautious.
NIO - The leap to Europe
NIO is getting serious with its expansion plans: In September, the Chinese electric car startup plans to deliver its first electric vehicles in Norway, starting with the ES8 electric SUV. The electric-powered luxury sedan ET7 is then to follow in 2022. NIO would thus be active outside its home market for the first time and entering new marketing territory.
Meanwhile, the registration figures for April are cheerful: 23,816 units for the Chinese market, which corresponds to a market share of 10.4% and an increase of 414% compared to the Corona-dominated month of the previous year. Plug-in hybrids even reached a market share of 11.8% with 26,988 newly registered vehicles.
The NIO share also does not want to get off the ground at the moment. The only positive aspect is that, after a 40% drop, it has managed to hold the EUR 30 mark for the third time. If this line is broken, there is a threat of trouble on the chart because the next stop line would only be in the vicinity of EUR 18.
Standard Lithium - Collaboration with Lanxess in Arkansas
Standard Lithium is currently developing its flagship project, the 150,000-acre joint venture with Lanxess, located in southern Arkansas. Lanxess has long had a bromine production facility on site. The region hosts North America's largest brine deposit with more than five decades of commercial production, abundant, low-cost power, access to chemical reagents and water sources. Combine this with a progressive business-friendly environment, good infrastructure of road and rail, and a highly-skilled workforce.
With a capitalization of EUR 360 million, Standard Lithium Ltd is one of the TOP 20 lithium stocks on the shortlist. Using proprietary processing technologies and strategic partnerships, the Company is in a position to bring the first new lithium project in the US into production in over 50 years. Standard Lithium's stock has been on an upward trend since May 2020, but the EUR 3 mark has been a resistance so far. However, this could change soon.
QMines - Copper and gold on almost 1000 square kilometers
QMines, which was recently launched in Australia, offers a combination of two exciting investment themes. With a 983 square kilometer property in Queensland, the Company is taking advantage of the excellent infrastructure around the ports of Gladstone and Brisbane. The project traces its origins to the historic Mount Chalmers mining district, which has already produced 1.2 million tons at a copper grade of 2%.
With the cash from the IPO, QMines will soon start its drilling program based on a potential resource of 3.9 million tonnes of well-consumed rock. Historical results in the 4 different zones suggest rapid success. Between 32,000 and 60,000 meters are to be drilled and work will continue until early 2022.
QMines is launching the new projects at the right time. As both copper and precious metals are running up in spot prices, there is now a huge supply deficit for copper globally that can only be addressed by new mine developments. The decarbonization of the planet is at the top of the agenda of all parties, not least due to the election of Joe Biden, after Donald Trump had wholly ignored this topic.
QMines shares had a solid debut at AUD 0.27 and now stand at AUD 0.30. Gross proceeds raised of AUD 11.55 million were above the minimum subscription amount of AUD 10 million disclosed in the prospectus resulting in a current market capitalization of AUD 27.6 million. The exciting share should soon be listed in Frankfurt.