In today’s briefing:
- Will Copper Shine Brighter than Gold?
- Long-Term Breakouts for Emerging and Frontier Markets; Treasury Yields and Commodities Rising YTD
- Chariot Limited (AIM: CHAR): Initiating a strategic review of the Transitional Power business to focus on gas
- Valeura Energy (TSX: VLE): Net cash up by >US$40 mm since YE23
Will Copper Shine Brighter than Gold?
- Copper supply facing headwinds with a shortage of copper ore which has led to spiraling copper refining margins.
- Copper futures trading sharply higher than cash prices and term structure for copper futures has steepened.
- Gold to copper ratio can be used to express a bullish view on copper prices with relatively lower risk compared to a straightforward long copper position.
Long-Term Breakouts for Emerging and Frontier Markets; Treasury Yields and Commodities Rising YTD
- The bullish outlook we initiated in early November 2023 remains intact. The SPX and QQQ still refuse to close below their 20-day MAs/21-day EMAs for more than 2-3 consecutive days.
- Even if/when they do, important supports are close by, including 4983-5050 on the S&P 500 and $425-$433 on QQQ (gap supports from 2/22/24). Anything above 4800 SPX is a buy.
- We continue to get an ever-increasing number of global indexes/Sectors with long-term breakouts, the latest being the MSCI Emerging Market and Frontier indexes. Clearly risk-on behavior.
Chariot Limited (AIM: CHAR): Initiating a strategic review of the Transitional Power business to focus on gas
- The farm-out transaction with Energean has now completed.
- Chariot has received the US$10 mm cash upfront payment and retains 30% of in the Lixus licence (where the Anchois project is located) and 37.5% of the Rissana licence, offshore Morocco.
- A rig contract has also been signed with Stena Drilling to drill the high impact Anchois-East appraisal and development well in 3Q24.
Valeura Energy (TSX: VLE): Net cash up by >US$40 mm since YE23
- 1Q24 production was 21.9 mbbl/d in line with our expectations.
- Production at the end of March was ~23 mbbl/d.
- Net cash of US$193.6 mm (US$176.3 mm unrestricted) was high given that the company sold only 1.8 mmbbl in 1Q24 with inventory building-up ~0.21 mmbbl vs YE23 to 0.9 mmbbl.
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