ASX Live News | ASX Rises, Bed Bath & Beyond Jumps, FTX Finds US$5b in Liquid Assets

One of the largest assets held by collapsed crypto exchange FTX is Genesis Digital, a Cyprus-registered bitcoin miner. In total, FTX — via its heavily intertwined hedge fund Alameda Research — invested over US$1 billion in the miner.

But extracting anything close to the punt’s face value is doubtful.

As the Wall Street Journal reports:

“Extracting value from Genesis Digital could prove difficult. Bitcoin-mining company valuations have plummeted. Only around half of the Alameda funds in Genesis Digital went to the company’s operations, according to Cyprus corporate-registration documents and people familiar with Genesis Digital. More than $500 million bought existing shares from two Genesis Digital co-founders, a detail that hasn’t been previously reported. A Genesis Digital spokeswoman said that the company received money from Alameda “at market value” in the usual course of fundraising and that its founders own most of the company.”

If something cannot continue, then it won’t. It is such a simple concept.

But too few seem to grasp the rationale AND, more importantly, the lessons from history…ALL booms do bust.

Anyone who dare asks ‘why is that so’ or ‘this can’t possibly last’ in the midst of the hedonistic period is dismissed as ‘the boy who cried wolf’.

Confession time, having been around investment markets for almost four decades, has made me slightly paranoid.

In 1987, 2000, and 2008, I witnessed firsthand how swiftly and viciously markets can turn on investors…the ones who believed past returns could be confidently projected into the future.

On each occasion, the result were losses in excess of 50%.

Delivered in a brutal fashion to those who never saw it coming or refused to acknowledge historical precedent.

The cycle repeats over and over and over again.

Expensive markets become cheaper…without exception.

In recent years, my so-called paranoia reached a whole new level.

In all my time in the investment industry, I have never witnessed such an open display of market price manipulation…with cryptos being the poster child of ‘the worthless being considered priceless’ brigade.

During the boom, markets bestowed central bankers with an almost God-like reverence. With a determination to belatedly fight inflation, the central banker halo is starting to slip.

If push comes to shove and markets do go into freefall, the question on everyone’s lips will be: what are the central bankers going to do to arrest the market slide?

More QE, lower interest rates, money from helicopters, ban short selling, perhaps even ban selling altogether (that’s a new one they haven’t tried), OR let market forces do their job?

Who knows what measures they may or may not resort to.

But I suspect the game is no longer in their hands.

The market cat is playing with the central banker mouse.

Using history as a guide, 2022 was the year when we saw ‘a flick here, and a claw swipe there’.

Is 2023 the year of ‘the kill’?

https://www.dailyreckoning.com.au/2023the-year-of-the-big-loss/2023/01/10/

While some of the world’s major problems may start to fade in 2023…I’m thinking inflation and rising interest rates, there’s one problem which won’t be solved…energy.

Lack of oil and gas production, depleted US oil reserves, ongoing war in Europe and Russian gas supply threats, and a decade of record-low investment in the fossil fuel industry ensures the world will need to rapidly find alternatives to maintain energy stability.

Unfortunately, renewables won’t be the saviour everyone hopes for.

While I’m bullish on the critical metals needed for this ‘new age’, there’s simply not enough metal reserves available to build the solar panels, batteries, and wind turbines needed to provide massive base load power for the global economy.

It was always wishful thinking…political leaders have a concerning lack of understanding regarding the availability (or lack thereof) for critical metals needed to build a carbon-free future.

Yet, governments have closed the door on fossil fuels…ESG requirements prevent fund managers from investing in the oil, gas, and coal industries.

It means fossil fuels won’t be available when we need them most.

The development of new oil and gas fields need a decade or more of sustained investment to replace depleting reserves, yet the last few years have been among the lowest investment on record in the industry.

So herein lies the only viable solution to the world’s biggest problem.

Ensuring the global economy can meet base load power requirements means we need something far, far greater than any solar, tidal, hydro, or wind power generators could ever achieve.

It brings me to the only achievable alternative for our future energy needs…nuclear.

Love it or loathe it, as an investor, you can’t ignore the potential for uranium in fuelling the nuclear industry.

https://www.dailyreckoning.com.au/two-more-commodity-predictions-for-2023-part-two/2023/01/12/

Despite the concerns and critics, it is hard to envision a market that is not bullish for lithium and other critical battery metals right now.

The fact of the matter is that the energy transition is not slowing down, even if the global economy might be. I wouldn’t even be surprised if a slowdown hit supply harder than demand. After all, we’ve seen hefty underinvestment in new projects for a lot of commodities recently.

When it comes to lithium, this struggle to actually get the stuff out of the ground is very apparent when you look at global production. Take this chart, for instance:

Source: World Economic Forum

This shows the discrepancy between how much lithium each nation is known to have (orange) and how much it actually produces (blue). As you can see, Australia is the top dog when it comes to output, producing just over half of the world’s total lithium supply.

But despite our strong efforts, the real lithium output will need to eventually come from South America. The challenge for nations like Bolivia and Argentina, though, is getting mining operations up and running because that requires large sums of upfront capital.

And that’s where some keen investors could tip the scales…

https://www.moneymorning.com.au/20230112/the-rush-to-secure-critical-minerals-grows.html

Lithium explorer Lake Resources (ASX:LKE) provided an operational update this morning, rehashing recent announcements and drip feeding fresh news.

Among the biggest news was LKE targeting the completion of its Definitive Feasibility Study (DFS) by ‘mid 2023’.

In January 2022, Lake expected to complete the DFS ‘in mid 2022’.

In its FY22 report, Lake expected to complete the study by ‘around the end of calendar 2022’.

In other news, LKE said it ‘remains in discussions’ with SK On and WMC ‘regarding the implementation’ of conditional framework agreements (CFAs) announced in October 2022.

The CFAs are subject to LKE meeting certain conditions, including finalising the delayed DFS.

Lake also updated investors on its latest organisational changes.

While LKE has ‘expanded its operating team significantly’, it did tack on to today’s update that former chief operating officer Gautam Parimoo ‘has left the organisation’.

Gautam Parimoo was hired in November 2021 to ‘drive the development, construction, and operation’ of Lake’s crown jewel — the Kachi lithium brine project.

In an operational update, $LKE said it expects to complete its DFS 'by mid 2023.'

In its FY22 report, $LKE expected to complete the DFS by 'around the end of calendar 2022'.

This week, Lake reported a 100% increase for Kachi's
mineral resource estimate. #ausbiz #ASX

— Fat Tail Daily (@FatTailDaily) January 11, 2023

Pharmaceutical stock Mayne Pharma (ASX:MYX) opened 5% lower on Thursday after delaying a previously announced capital return to shareholders.

In October 2022, Mayne Pharma announced a swathe of ‘capital management initiatives’ worth around $115 million following the sale of a subsidiary business unit.

The $115 million included a $47 million fully franked special dividend and a pro-rate capital return of up to $65.5 million.

However, due to a license agreement entered with TherapeuticsMD following the proposed capital initiatives, Mayne Pharma thinks it ‘prudent to defer the capital return (but not the special dividend) by at least two months to March 2023.’

Importantly, MYX management now says it could ‘defer, reduce, or cancel the capital return’ if it determines this is ‘in the best interests of the company’.

Mayne Pharma Chair Frank Condella explained management’s thinking thus:

“The Board recognised the importance of returning funds to shareholders following the Metrics sale. Our main goal is to position Mayne Pharma for sustainable growth and the TXMD transaction is expected to solidify the Company’s place as a leader in the US women’s health market. It’s critical that we maintain the appropriate funding flexibility to achieve our strategic objectives.

“The deferral and further consideration of any possible reduction or cancellation of the capital return by the Board reflects the mismatch of timing of cash flows and a conservative approach to our balance sheet in the short term.

“At the time the capital management initiatives were announced in October 2022 and at the AGM, the Board did not anticipate that the TXMD transaction would be agreed upon, but recognised that the portfolio of TXMD products would be a strong strategic fit and highly complementary. The Board believes that deferring the capital return is a prudent approach whilst it manages the timing of cash flows from recent and potential transactions and any renewed financing facilities.”

Euro Manganese (ASX:EMN) entered a term sheet with French battery manufacturer Verkor for the sale of manganese sulphate monohydrate.

The term sheet is non-binding. However, EMN and Verkor intend to enter a legally binding offtake agreement if both parties satisfy certain conditions, one of which includes Euro Manganese qualifying its manganese sulphate.

EMN said the Verkor term sheet is its first for a long-term offtake. The explorer anticipates ‘ more term sheets or agreements will follow in the near term as a result of the offtake tender process, which is currently underway.’

Atlantic Lithium — seeking to develop the first lithium mine in Ghana — released the final assay results from its exploration drilling programme completed at its Ewoyaa lithium project.

The lithium explorer singled out the following drill intersections at the Kaampakrom North, Grasscutter North, Anokyi and Grasscutter West targets:

o GRC0825: 36m at 1.23% Li2O from 42m
o GDD0102A: 22.2m at 1.62% Li2O from 73.3m
o GRC0837: 20m at 1.6% Li2O from 44m
o GDD0103: 15.1m at 1.24% Li2O from 55.4m
o GRC0842: 12m at 1.55% Li2O from 93m
o GRC0839: 13m at 1.35% Li2O from 99m
o GRC0850: 12m at 1.24% Li2O from 96m
o GRC0341: 12m at 1.03% Li2O from 134m
o GRC0844: 7m at 1.69% Li2O from 162m
o GRC0872: 8m at 1.48% Li2O from 34m

A11 is targeting a resource upgrade for Q1 2023 to inform its upcoming Definitive Feasibility Study scheduled for ‘mid-2023’.

Gold Road Resources reported that its Gruyere mining site has delivered to 2022 annual guidance.

Annual production from Gruyere totalled 314,647 ounces, coming in at the lower bound guidance range of 300,000 to 340,000 ounces.

During the December quarter, Gruyere produced 74,201 ounces of gold, down 11% from the September quarter.

GOR sold 37,295 ounces during the December quarter at an average price of A$2,476 per ounce. The gold miner said its production is now fully unhedged.

 

Shares of Bed Bath & Beyond jumped 69% overnight, in a record daily price spike for the home goods retailer, after announcing steep cuts to avoid bankruptcy.

Commenting on the company’s third quarter results, CEO Sue Gove said Bed Bath & Beyond is looking to turn things around:

“We are implementing our plan expeditiously while managing our financial position in a changing landscape. We are delivering on our aggressive second half commitment of $250 million in SG&A optimization, or $500 million in annualized savings. We are also on track to achieve the 150 store closures that we previously outlined, which will further enable us to allocate resources according to customer demand. Our organization is more streamlined and we have adopted a more focused infrastructure that reflects our current business.”

Q3 net sales fell 33% to US$1.26 billion, with the net loss for the quarter came in at a higher than expected US$392.97 million.

Bed Bath & Beyond hit a three decade low on January 6, falling to US$1.31 a share. It has rallied 150% since.

“Perhaps the sheer tenacity of those in charge, and the fact they didn’t just come to the table and fold, has given investors a sliver of hope that things can be turned around,” AJ Bell analyst Danni Hewson told the Financial Times on Tuesday.

In a business update last week, the retailer admitted bankruptcy was a viable possibility:

“While the Company continues to pursue actions and steps to improve its cash position and mitigate any potential liquidity shortfall, based on recurring losses and negative cash flow from operations for the nine months ended November 26, 2022, as well as current cash and liquidity projections, the Company has concluded that there is substantial doubt about the Company’s ability to continue as a going concern.

“The Company continues to consider all strategic alternatives including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code. These measures may not be successful.”