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The Aussie 2 year bond yield almost quadrupled i think and is a wonderful example of how suddenly markets can change when what was absolutely impossible yesterday just happened. I would hope that the PM market has a similar if less violent moment in the not too distant future when people realise that CBs are NOT going to be fighting inflation and actually want it. Then perhaps gold will catch a bid beyond 2k, silver will follow and dividend paying miners with strong balance sheets will be rewarded. GLA
The MAG silver Q3 update says everything is on track and this quarter will see the mine working towards nameplate capacity. At full loads ( 4,000 tonnes per day) this will add 11million OZ to FRES production in 2022. To me this should be the gamechanger that this stock needs. Yes the legacy mines are slowing down, but all things being equal 2022 should see 60m + oz per produced 20% more than 2021.
I have 2 questions.
1 am i wrong about the potential for the JV with MAG?
2 when does this value start to get attributed to the SP ?
MAG silver is up about 30% from its lows a month ago, FRES up about 12% I know we are living clown world, but the market is either over valuing MAG or undervaluing FRES.
answers on a postcard please.
Hi oligarch, this is a FRES board so it will be skewed to the positive in terms of outlook.
labour reforms should be a drag, but i would want to check with a Mexican labour expert
power outages are only serious if they drag on.
FRES is the largest silver miner in the world which has been grappling with declining ore grades and management who like to trickle bad news out over several years. The also produce a decent amount of gold and handy by product in zinc and nickle. This name seems to be v unloved with good reason in the past. a lot of people on here, myself included see it as a name that will have its day in the sun again. When the market starts to price in non transitory inflation gold and silver could rise quickly at which point this name should befit a lot and quickly. Look at the 10 year chart for the kind of moves that can happen. If gold and silver goes nowhere or lower then it will probably yield less than 2% and be a bit of a dog. POLY yields a lot more for a similar play.
I have no idea on the Q3 report, but since they haven't really had a report the market has liked for a long long time i feel that the bar is set very low on this one. FRES is still down 27% YTD ex dvds. IF they can suggest they are going to hit the range or even top end of the range then it would be a positive imo. The big one for me is gold production as they were so far ahead of the yearly target after q2 that if they can get close to repeating the last quarters numbers ( 200k oz) then this should be taken as a big step forward. As a reminder they have already done 428k oz in H1 vs a full year target of 675k to 725k
Having said all that its a FRES update and they usually stink.
At some point, i hope in 2022, this name will make a run at and surpass its ATHs. £20+. On a financial basis 2011 was its best year with a GP of $1.5bn and a NP of $900m. On the back of my fag packet, sustained $28 silver and $2,000 gold would make that happen. With all the other commodities mooning at some point in the last 6 months gold and silver should have their turn , so if they really get going and im looking at silver to be the main driver , then something above £20 should well be within reach. A big spike in the PM market, say because turkey has bought all the silver, china is launching a gold backed crypto, Taiwan gets invaded or just another $4 TRILLION dollars gets printed to spend on nothing, could easily imo make this happen. I am in this for the long haul and will wait.
Who knows with this one. Q3 production update next week could help one way or the other. For sure some profit taking for anyone who bought 10-15% ago, but nothing out of the ordinary. Nothing goes up in a straight line. Hopefully just a rest before another leg up.
Copper is having its own Physical squeeze with trafigura taking 150,000 tonnes out of the LME leaving stockpiles at lowest levels since 2006. Pretty soon there wont be any physical copper backing that contract. Everywhere companies are stockpiling to ensure they can continue production. Silver with its demand from the PV industry amongst others will surely be on the list of raw materials that firms will be looking to stockpile to ensure production can continue , not to mention the competition from investment dollars to ride out the 10% + realworld inflation heading down the tracks.
Fres is on track to sell about 110k tonnes of ZINC this year for c $300m so back of the fag packet calculations are that this price rip could be worth $30-60m to the bottom line depending upon how they trade it , how much they hedge etc etc etc.
Im not complaining, but todays move higher is a little odd and against the prevailing trench lower in this SP and also PM prices.
Could this be that the market has finally noticed that inflation is not going to be transitory and is looking for a lifeboat in the coming storm ?
TGA has been a belter.
Read this article. The world needs 70 Terawatts of installed capacity to hit 2050 carbon reduction levels. Within 4/5 years global solar output could be at 1 Terawatt per asnnum up from the current 150Gw The below sentence is the most pressing issue for the industry.
If we don’t change anything, at the one-terawatt level we will be using 100% of the silver production worldwide.
https://www.pv-magazine-australia.com/2021/09/27/pierre-verlinden-cautions-its-hi-ho-silver-no-more-as-pv-approaches-multi-terawatt-production/
PV demand is useful, but investment demand is what will move the needle on this one. 2021 rates are running at double if not more.
Financials ( profits) in this calendar year will match if not exceed those in 2017 when the SP was in the £14 range. go figure