Pinned straw:
Interesting. ALQ was down 10% at one stage and cut through the 200 MA before recovering to finish above that.
Citing headwinds in the mining division. That is interesting given that the gold price has been going to the moon recently.
Does that mean higher the gold price imply less discoveries and hence less work???
I'm still working out if 5% NPAT down is an overreaction.
I note that on page 23 of their 2024 Annual Report ALS said they had experienced, "margin dilution from some recent acquisitions, minor impacts from lower volumes in Minerals, and unfavourable currency impacts in the high margin Commodity locations in emerging markets."
So there may be less tests being required, or ALS could be losing market share to competitors. Regarding gold specifically, I don't know what percentage of testing across their Minerals division is in the gold sector, and whether declines in the prices of other commodities have more than offset the rise in the gold price because of their commodity mix - in terms of demand fluctuations for their testing services (such as drill core assay results). I.e. there would be almost zero companies drilling for nickel at this point I would have thought, as just one example, except in Indonesia.
One minor factor that may become more of a factor over the next few years are large miners buying PhotonAssay devices from Chrysos Corporation (C79) and then doing their own testing in-house rather than getting testing companies like ALS to do it for them. We know Barrack and a few other large goldies have already purchased PhotonAssay systems, and more will follow, but it would be very unlikely to extend all the way down the foodchain to explorers and project developers because of the minimum test numbers p.a. required for it to be economically viable for C79 to install the systems. They are all going to go to the customers who do the most tests per year - at least for the next few years - as C79 are constrained by the cost and logistics of building and installing these units, and then training up staff at the site to use them. I assume ALS have already switched over from Fire Assay to PhotonAssay @edgescape - for gold testing?
Fire Assay not dead yet. ALS uses 3 methods including PhotonAssay
https://www.alsglobal.com/en/geochemistry/precious-metals-analysis
I'm thinking that assays are done by volume so if there is less potential of discovery, then there will be less volume process.
Looking around all the exploration companies and we are pretty starved of a decent discovery since maybe Azure and Chalice.
I can't think of any large scale gold or copper discoveries off the top of my head too. Maybe one potential is Southern Cross Gold in Victoria who still haven't defined a resource yet.
I haven't really kept track of the majors that already have something or any others that have expanded their resource except for CMM (I sold CMM for example because I got upset about them destroying Maleefowl habitat!). Maybe Spartan is a good example.
As you can see I've been out of the gold and mining scene for a while. However the below slide shows ALQ still sees Gold as a big but diminishing opportunity.
Analysts were forecasting EPS of 0.68 so 5% impact would be 0.65. Implying flat earnings growth from last report
ALS was trading at around 22x PE (underlying EPS 0.65). So maybe the multiple now should be 19x??
I guess the share price should go lower, maybe wait till it breaches 13. No need to rush in and I don't think highly of the CEO either.