Biden is leading the polls which is good news for the gold price. Pic: Getty Images
Experts
‘Guy on Rocks’ is a Stockhead series looking at the significant happenings of the resources market each week.
Former geologist and experienced stockbroker Guy Le Page, director and responsible executive at Perth-based financial services provider RM Corporate Finance, shares his high conviction views on the market and his “hot stocks to watch”.
So much happening in the US at the moment. But one thing’s for sure, according to Guy Le Page, and that is Trump = bad news for gold.
Luckily President wannabe Joe Biden is leading the polls.
“I think if the rumblings in the US are anything to go by for the next month leading up to the US election, it could be a good month for gold,” Le page says.
“The last week or so has been all about buying the dips in precious metals and I think the US debate and the rise of the extreme right in the US, together with the polls showing Biden well ahead, if that’s true there could be some real instability in the US.
“I think if Trump gets in, it’s probably not as good for gold because he’s seen by the market — while he’s a bit unpredictable, a bit unstable — as more of a positive for the markets and he’s got a better economic track record.”
The gold price is hovering just below the $US1900 ($2661) an oz mark after clawing its way back up this week.
Le Page said the dip down to close to $US1800 an oz saw an outflow of gold from exchange traded funds.
Meanwhile, more trouble for Brazilian iron ore giant Vale spurred the iron ore price on this week.
“We saw further production cuts with Vale in Brazil, which I’m sure that together with Chinese restocking saw a bit of a surge in iron ore over the last couple of days back over $US125,” Le Page said.
“We’ve got the Chinese holiday coming up next week so we saw a lot of restocking going on ahead of that.”
Chinese end users also seem to be buying more copper, according to Le Page.
Citi’s China copper end-user tracker showed a 6.6 per cent increase in Chinese copper consumption.
Le Page said it was the first time since 2014 that the copper end-user numbers were positive.
“That recovery in construction we saw in China has now spread across the rest of the economy,” he said.
“So that’s about as bullish as it gets in China at the moment. And we’re seeing that reflected across all the base metals.”
Several of Le Page’s previous mentions give back some of their gains this week, but he reckons that’s just a good buying opportunity.
“We saw a lot of the companies we recommended – Cobre (ASX:CBE), Venture Minerals (ASX:VMS), Tribune (ASX:TBR), Fenix (ASX:FEX) – take a bit of a dip from their highs,” he noted.
“Most of them are up between 10 and 20 per cent and I think looking at the broader economic indicators plus the outlook for the gold and precious metals, I think most of them have re-entered buying range at the moment.”
Le Page reckons Tribune has been the most heavily sold down.
“We’re predicting that Ghana on its own, the Adiembra desposit, is going to be worth well in excess of $6 a share.
“So trading at $6.97 with over $280m in cash and liquids, I think Tribune is probably the most undervalued, but obviously suffers from a lack of liquidity.”
Le Page’s picks this week are juniors breaking into hot new exploration provinces.
Former oil and gas/battery metals tiddler Enegex (ASX:ENX) just picked up four new nickel-copper-PGE projects, comprising 20 tenements and spanning around 3500sqkm just north of Chalice Gold Mine’s (ASX:CHN) company making Julimar discovery.
“A lot of the Yilgarn there has been covered by laterites and soils, which is obscuring the underlying Archean bedrock,” Le Page explained.
“Julimar started off as a modest sort of strike length now extending well over 26km. I think that’s pretty exciting, potential to open up a new mineral field and plenty of scope for the likes of Enegex to make a splash.”
Enegex has a market cap of just $5m and recently raised over $550,000 in cash from a rights issue.
“They’ve got one of the largest positions outside of Chalice. I think that’s certainly one to watch,” Le Page said.
“Early days, but they’re going to be doing some EM (electromagnetic work) in the first half of 2021.
“Once they get all these tenements granted, I think you’ll see activity pick up. Probably the only negative is there’s not a strong cash position, a little bit underdone on that front but pretty good leverage.”
Another one on Le Page’s radar is New Age Exploration (ASX:NAE), which recently picked itself up a patch of ground in the highly fertile Pilbara region of Western Australia.
“That puts them, particularly some of those northern tenements, right in the vicinity of De Grey Mining (ASX:DEG),” Le Page said.
“Very early stage, not a lot of work done. They’re not cheap but have an enterprise value (market cap + debt – cash) of around $12-13m.
“A pretty tight register, and just raised $2m.
“Most of those tenements are granted, so they’ll be able to get on the ground pretty quickly this year and have a real crack.”
At RM Corporate Finance, Guy Le Page is involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting and corporate advisory roles.
He was head of research at Morgan Stockbroking Limited (Perth) prior to joining Tolhurst Noall as a Corporate Advisor in July 1998. Prior to entering the stockbroking industry, he spent 10 years as an exploration and mining geologist in Australia, Canada and the United States.
The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.
Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
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