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The Allegiance Coal Ltd (ASX: AHQ) share price soared 40.3% higher today, before shares entered a trading halt at 2.15 pm AEDT at the company’s request. Allegiance requested the trading halt pending the release of a new announcement.

Today’s big share price gains followed on an earlier announcement, released this morning, relating to the company’s New Elk coking coal mine. That mine is located in southeast Colorado in the United States.

What did Allegiance Coal report to send its shares up 40%?

In this morning’s ASX release, Allegiance Coal delivered a progress report stating that its New Elk start-up mine plan has been finalised. The company expects production, subject to raising the start-up capital requirement, to start in the second quarter of 2021.

Back in April, Allegiance Coal announced its New Elk mine plan involves mining 22.2Mt of saleable coal reserves from the Blue seam. Today’s release revealed a change in rescheduling labour and equipment by a reduction in production units from four to two. This means the coal reserves will be mined over a period of 24 years instead of 15.

Earlier in December, the company reported that its acquisition of the Pratt seam coal from Mays Mining, Inc would offset the loss in annual sales from the reduced rate of production at Blue seam.

The reduced production units have seen the start-up capital required also reduced to US$13.5 million (AU$17.8 million) from the initial US$24 million. The company plans to fund this with project debt.

According to the release, coal sales should commence in June 2021 at 75ktpm. Allegiance Coal plans to increase this to 137ktpm by December 2021. It reported it expects to mine 40ktpm of Blue seam coal from June 2021, with that level increasing to 73ktpm by December. The company also plans to mine 35ktpm of Pratt seam coal from June 2021, with that level increasing to 64ktpm by December.

At the end of next year, Allegiance forecasts its annualised coal sales will hit 1.6Mt , a level it expects to maintain over the following years.

With both assets located in the US, the company noted that the Chinese ban on Aussie coal has created short-term opportunities for US coking coals.

Allegiance Coal snapshot

Allegiance Coal is an Australia-based company engaged in the acquisition and exploration of coal tenements.

Allegiance shares had a rough start to the year, tumbling 63% by 24 March. Despite today’s 40.3% leap, the Allegiance share price remains down 50% year-to-date.

For comparison the broader All Ordinaries Index (ASX: XAO) is up 2% for the year.

More reading

• Can these 2 outperforming ASX gold miners shine on through 2021?
• The Neometals (ASX:NMT) share price is soaring. Here’s why
• Why the Imricor (ASX:IMR) share price is edging higher today
• Buy these ASX blue chip shares in 2021
• If you thought 2020’s tech share rally was impressive, hold on for 2021!

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX gold miners have delivered a mixed performance this year.

Some, like Newcrest Mining Ltd (ASX: NCM) and Regis Resources Limited (ASX: RRL) have seen their share prices fall in 2020.

Both the Newcrest share price and Regis share price are down 14% since 2 January.

But a number of other S&P/ASX 200 Index (ASX: XJO) gold shares have delivered investors some outsized gains in this highly turbulent year.

The Evolution Mining Ltd (ASX: EVN) share price, for example, is up 33% in 2020.

Saracen Mineral Holdings Limited (ASX: SAR) shareholders have enjoyed an even more profitable year. Saracen’s share price is up 42% year-to-date.

By comparison the ASX 200 is down just under 1% in that same time.

What’s next for ASX gold shares?

The widely divergent share price gains (and losses) among the ASX gold miners mentioned above tell you that their performance in 2021 is going to depend on more than just the price of the yellow metal they dig from the ground.

The quality of their assets (how much gold is on their turf, and how much does it cost to bring it to market), their debt levels, and the management teams and geologists they have in the field are just some of the other core factors you need to consider before investing in these companies.

With that said, the gold price does have a tremendous influence on gold mining shares. That’s why you’ll hear that gold miners are leveraged to the price of the yellow metal.

You see, a gold miner’s costs are fixed, regardless of the price of gold. Imagine it costs a miner $1,000 per ounce to bring their gold to market. At a gold price of $1,500 per ounce, they’re turning a profit of $500 per ounce.

Now imagine gold shoots higher, to $2,000 per ounce. With its costs remaining constant, the miner is now turning a profit of $1,000 per ounce. In other words, a 33% increase in the gold price sees this fictional miner’s profits increase by 100%.

As you likely know, gold’s had a pretty great run this year. Back on 2 January it was worth $1,517 per ounce. Gold hit record highs (in US dollar terms) of US$2,063 per ounce on 6 August. It’s slipped some since then, currently trading for US$1,886 per ounce. Still, that’s up 24% over 12 months.

Will gold set new record highs again in 2021?

Forecasting the price of gold is not unlike forecasting the weather. The further into the future you try to predict the price, the more variables there are that could undermine your forecast.

With that caveat covered, Harry Tchilinguirian, head of commodity research at BNP Paribas, predicts gold will again top US$2,000 per ounce in 2021.

In a telephone interview with Kitco News, he pointed to the record global monetary policies and fiscal stimulus measures in place, saying these will keep bond yields low or even negative in the near term, helping support higher gold prices:

Negative real yields will be very important for at least in the next two quarters. But after that, the situation changes a bit because people’s view on the economy changes.

Tchilinguirian forecasts gold will peak in the second quarter of 2021 near US$2,010 per ounce. Throughout next year he predicts an average price in the range of US$1,945 per ounce.

While the 7% gold price rise he forecasts is significantly less than what we saw in 2020, if he’s right, it should still offer some solid tailwinds for leading ASX gold shares in 2021.

More reading

• Is the surging Bitcoin an existential threat to ASX gold miners?
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Neometals Ltd (ASX: NMT) share price has been on the move after a flurry of updates last week from the small-cap mineral project developer. 

The company’s shares have flown more than 12% today to 28 cents per share, putting the Neometals share price up by 21.74% in just over a week.

The recent gains take Neometals’ returns for the year to 40%, excluding dividends.

A second life for lithium

One of Neometals’ key projects is its lithium-ion battery recycling joint venture with SMS group and Primobius.

On 21 December Neometals informed the market that the joint venture is making strong progress towards commercialisation of lithium-ion battery recycling in Europe. Construction has been permitted for its German demonstration plant, where the recycling process and performance will be showcased.

In the release, Neometals highlighted that “Primobius goes into its demonstration plant trial with confidence from pilot trial data that the key payables (nickel and cobalt sulphate) are higher purity than required by Chinese national specifications for cathode use.”

Neometals also highlighted that it is in discussions with potential ‘off-takers’ of materials that are recovered during the demonstration trials.

Simplified production

On 22 December, Neometals notified the market that it has established a ‘breakthrough’ simplified process for separating ilmenite and vanadium-rich magnetite concentrates that meet commercial specifications.

The method reportedly uses ‘conventional reduction roasting’ and magnetic separation of concentrates. Samples are in transit to the Institute of Multipurpose Utilisation of Mineral Resources Chinese Academy of Geological Sciences in China for validation of the process.

Neometals stated that it has also engaged contractors for an onsite mining and gravity concentrate operation based on this process.

There’s more where that came from

Lastly, on 23 December, an update regarding Neometals’ Zabel Nickel mineral deposit was released. The company increased its estimates of tonnes and grade to now be 351,000 tonnes at 1.9% nickel.

The new estimates are a result of the ongoing review of historical findings and new data. Neometals plans to undertake future drilling to gather more information before moving towards mining studies.

Tailwinds

The urgency for lithium-ion recycling has been ushered in by new mandates in Europe to recognise such batteries as hazardous waste. As more government regulations are introduced internationally there will be a high demand for a recycling solution.

In addition to that, we’re coming into an era of electric vehicles (EV), and demand for these EVs are growing rapidly. Small lithium-ion batteries in our mobile devices are one thing, but soon enough we may have tens of millions of car-sized lithium-ion batteries. These resources are also finite, therefore with time, sourcing the materials to manufacture batteries will become increasingly expensive unless there is the ability to recycle. 

More reading

• Why the Imricor (ASX:IMR) share price is edging higher today
• Buy these ASX blue chip shares in 2021
• If you thought 2020’s tech share rally was impressive, hold on for 2021!
• 2 more small cap ASX shares to watch in 2021
• Why the Electro Optic (ASX:EOS) share price has faltered in 2020

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Imricor Medical Systems Inc. (ASX: IMR) share price is edging higher today following two major announcements. During later afternoon trade, the medical device company’s shares are marginally up 0.44% to $2.30.

Clinical sites update

In the first announcement, Imricor provided an update in regards to the signing of new agreements with European clinical sites.

Management said that having faced severe disruptions from the second wave of COVID-19, its sales process has been delayed. Originally, the company planned to have 14 clinical sites with agreements to purchase Imricor’s products at the end of 2020. However, with the emergence of significant COVID-19 cases on the rise, the company revised its forecast for the new year.

Imricor now anticipates it will have sales agreements with 9 clinical sites in early 2021. Furthermore, the company is projecting a strong short-term sales pipeline.

What did the head of Imricor say?

Commenting on the challenges, Imricor chair and CEO Mr Steve Wedan said:

November and December were extremely difficult in Europe particularly for targeted clinical sites in Germany and The Netherlands where further COVID-19 containment measures were implemented during this period.

… We have continued to make excellent progress with many of these sites, with agreements advanced to the stage of final review and execution. We therefore expect these delays to be minor and continue to schedule and plan installation and training with our new sites accordingly.

Looking beyond our commercialisation plans in Europe, our product development is on track, our geographical expansion into the US and Australian markets are progressing as planned and clinical trials for expanding our product indications are moving forward on schedule.

New COO appointment

Further to the announcement, management advised it has created a new role of chief operating officer (COO). Effective 1 January 2021, Mr Gregg Stenzel will take up the COO appointment, which was created to enable the group to focus on achieving its strategic objectives.

Mr Stenzel previously held the position of vice president of operations in Imricor. His duties included overseeing the company’s operations and development of manufacturing strategies.

Chair and CEO, Mr Wedan, commented:

The Board and I are thrilled to appoint Gregg to this important role along with the opportunity it provides to increase my focus on our sales and marketing efforts as we approach an exciting year ahead for Imricor and the acceleration of the commercialisation phase of our growth strategy.

About the Imricor share price

The Imricor share price has performed well over the course of the year, jumping above 90%. Although its shares tumbled to an all-time low of 75 cents in March, shareholders who bought then would be sitting on gains of 206%.

It’s worth noting that the company’s shares recently hit an all-time high of $2.94 in late October.

Based on current share price levels, the company commands a market capitalisation of around $288 million.

More reading

• Buy these ASX blue chip shares in 2021
• If you thought 2020’s tech share rally was impressive, hold on for 2021!
• 2 more small cap ASX shares to watch in 2021
• Why the Electro Optic (ASX:EOS) share price has faltered in 2020
• Why the IGO (ASX:IGO) share price has soared in December

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re a fan of blue chip shares, then you’re in luck. Right now, there are a number of blue chips on the Australian share market with very positive outlooks.

Two that have been rated as buys are listed below:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first blue chip share to look at is Domino’s. This pizza chain operator is targeting strong growth over the long term through the expansion of its store network across the Australia, New Zealand, Belgium, France, the Netherlands, Japan, Germany, Luxembourg, and Denmark markets.

At the end of FY 2020, the pizza chain operator had a network of 2,668 stores across these countries. This might sound like a lot of pizza restaurants, but management believes there is still significant room for more in the markets it currently operates in. By 2033, the company is aiming to more than double the size of its network to 5,500 stores. And that doesn’t include any potential expansions into new territories.

In addition to this, Domino’s has set itself a medium term target of growing its same store sales by 3% to 6% per annum. If it delivers on both these targets, then the combination of organic and inorganic growth should result in strong top line growth. 

Goldman Sachs believes Domino’s can growth its earnings at a strong rate in the coming years. So much so, its analysts have put a conviction buy rating and $88.00 price target on its shares.

ResMed Inc. (ASX: RMD)

Another blue chip share to look at is ResMed. Like Domino’s, it has been growing at a strong rate over the last decade. So much so, it has now become one of the world’s leading sleep treatment companies.

The good news is that ResMed has started FY 2021 strongly and appears well-placed to deliver further impressive growth this year. During the first quarter, the company reported a 10% increase in revenue to US$751.9 million and a 37% jump in profit to US$185.4 million. ResMed has been benefiting from strong demand for ventilators and also its core sleep treatment products.

Another positive this year has been the rapid growth of its digital health ecosystem. At the end of FY 2020, this ecosystem reached over 12 million cloud connectable medical devices. This provides ResMed with strong recurring revenues and a material amount of high quality data.

Last month, analysts at Morgans put an add rating and $30.99 price target on the company’s shares.

More reading

• 2 stellar ASX growth shares to buy in January
• Invest like Warren Buffett and buy and hold these ASX shares in 2021
• 3 of the best ASX shares to buy right now
• 7 top ASX biomedical shares in 2020
• 2 blue chip ASX shares to buy for 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With ASX technology shares joining their US counterparts to trade at or near all-time highs, you might think the biggest share price gains are behind them.

If you own shares in 2020’s top two S&P/ASX 200 Index (ASX: XJO) gainers – yes, we’re looking at you Afterpay Ltd (ASX: APT) and Kogan.com Ltd (ASX: KGN) – you may even be tempted to sell them. And if you’ve been sitting on the sidelines waiting for tech shares to retrace from their record highs before buying, you may find yourself waiting for quite some time yet.

According to Nick Maggiulli, the COO at Ritholtz Wealth Management, shares trading at or near record highs is actually quite bullish. Maggiulli says (quoted by the Australian Financial Review):

The data suggests that for many risky assets (stocks, bitcoin, gold, etc.), all-time highs are a bullish indicator, at least in the near term… All-time highs tend to follow other all-time highs. Of course, this process won’t last forever, but it can go on longer than you think.

FAANG shares charging higher

Take Apple Inc (NASDAQ: AAPL), for example.

Although shares closed down 1.3% yesterday (overnight Aussie time), Apple hit a new all-time closing high on Monday, gaining 3.6% on the day. Apple’s share price is up 85% for the year. And that follows on from a 95% gain in 2019.

Among the recent announcements driving investor interest in the stock is a report that Apple intends to build its own self-driving car. The company is aiming to commence production in 2024.

But it’s not just Apple. All the so-called FAANG shares have had a stellar year.

The Facebook, Inc. Common Stock (NASDAQ: FB) share price – still below its September all-time highs – is up 32% year-to-date. That gives Zuckerberg’s company a market cap of US$788 billion (AU$1.0 trillion).

And the Amazon.com, Inc. (NASDAQ: AMZN) share price is up 75% year-to-date, making Bezos’ company worth US$1.7 trillion (AU$2.2 trillion).

So are these astounding share price gains and mind boggling market caps justified? Well, based on their FY2020 revenues, it would seem so.

According to the AFR, the two companies, together, raked in more than the Australian government:

Facebook and Amazon brought in a combined $US391 billion ($518 billion) in revenue for the last reported 12 months, while the federal government’s actual revenue collection for financial year 2020 was $469 billion.

The case for investing in technology shares in 2021

Mark Arnold is the chief investment officer at Hyperion Asset Management.

As the AFR reports, Arnold has been highly successful backing shares that benefit from disruption. And he plans to keep backing those types of shares, like Paypal Holdings Inc (NASDAQ: PYPL) and Square Inc (NYSE: SQ).

PayPal and Square are among the Hyperion Global Growth Companies Fund’s largest holdings. And Arnold thinks their disruptive powers could, eventually, supersede traditional banks. With Arnold believing the banks and energy companies (among others) will find it difficult to post regular gains over time, that could prove a drag on the wider indexes.

According to Arnold:

[W]e think the major indices – they’ll have a recovery in terms of earnings growth over the next 12 to 18 months – but beyond that, it gets more difficult because you’ve got a lower growth economic environment…

The indices have already enjoyed the benefit of lower discount rates which are as low as they will go. So, it really comes down to organic revenue growth and then creative disruption and what’s going on with the major components of the indices.

The combination of low growth and lots of disruption going on means that the indices are going to find it more difficult over the next five to 10 years in terms of producing attractive returns.

Alex Pollak, Loftus Peak’s chief investment officer, is also bullish on the outlook for tech shares in 2021. Pollak says (quoted by the AFR):

COVID-19 has amplified the digitisation of business. The booms in e-commerce, digital entertainment and remote work during the pandemic are speeding up change in business models and creating opportunity…

History is being written as technology redefines business. Investors need targeted exposure to that disruption and an eye on the new companies that will emerge and hit their stride over the next year or two.

Pollak also believes that increased investment in digital infrastructure in the US under President-elect Joe Biden will impact more than just tech shares:

Technology keeps getting kicked up further and further in terms of driving all of the things that are around us… At some point, all that increased demand has to find its own outlet through better and faster chips, more acceleration of digital infrastructure, which ultimately means more Uber cars driving around, more packages being shipped by Amazon. This doesn’t just lift our companies, it lifts all companies.

Foolish takeaway

Turning our focus back to ASX tech shares, the S&P/ASX All Technology Index (ASX: XTX) – which tracks 50 of Australia’s leading and emerging technology shares – has gained 147% since the 23 March low. That’s more than 3 times the 46% gain posted by the ASX 200.

As for the top two gainers of the ASX 200 in 2020 mentioned up top?

Online retailer Kogan’s share price is up 158% this year.

And the biggest share price gainer for the year, buy now, pay later darling Afterpay, is up a whopping 287%.

There’s no predicting which shares will sit at the top the ASX 200 leader board at the end of 2021. But it’s a good bet that tech shares will be in the mix.

To repeat Pollak’s quote from above, “History is being written as technology redefines business. Investors need targeted exposure to that disruption.”

Happy investing. And happy New Year.

More reading

• Here are 6 of the top performing ASX fintech shares of 2020
• Why Afterpay, DEXUS, Integrated Research, & Regis Healthcare are dropping lower
• Why AVZ Minerals, Immutep, Kogan, & Strategic Elements shares are pushing higher
• ASX 200 down 0.8%: Big four banks and tech shares drag the market lower
• Forget Tesla. Facebook is a better buy now

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Facebook, PayPal Holdings, and Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2022 $1940 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon, Apple, Facebook, Kogan.com ltd, and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This week I’ve been looking at a few small cap shares that have been tipped for big futures.

Continuing with that theme, here are two more to watch in 2021:

CleanSpace Holdings Limited (ASX: CSX)

CleanSpace is a designer, manufacturer, and seller of workplace respiratory protection equipment (RPE) for healthcare and industrial end markets. It shares have been strong performers since listing on the Australian share market through an IPO that raised a total of $131.4 million. Though, it is worth noting that only $20 million of this was primary capital. The remainder is for long term shareholders to realise some of their investments.

It will be using the proceeds from its IPO to support its growth plans. These include growing its current position and markets while positioning for a broad range of additional growth opportunities. Management is also aiming to build on the adoption of CleanSpace products in the healthcare and industrial markets, expand awareness, enter new international markets, and continue to expand and advance its product portfolio.

Pointerra Ltd (ASX: 3DP)

Another small cap ASX share to watch in 2021 is Pointerra. It is a growing technology company with a focus on the commercialisation of 3D geospatial data. The company’s software solution allows users to manage, visualise, and share extremely large digital 3D datasets. It can also extract vital information from the data quickly that would otherwise take many hours to do.

Pointerra has been growing strongly this year despite the pandemic. For example, the company recently revealed that demand was increasing and underpinned solid growth in its Annual Contract Value (ACV) in November. The company reported an 18% increase in ACV to US$5.82 million between October and November.

The good news is that this is still only a tiny portion of its overall market opportunity. Management estimates that its global market opportunity is currently worth a mouth-watering $500 billion annually.

More reading

• 5 exciting small cap ASX shares to watch in 2021
• Why the CleanSpace (ASX:CSX) share price is climbing today
• 2 exciting small cap ASX shares growing rapidly
• ASX small caps could get a boost with the Aussie dollar hitting 28-month highs
• Here are the best performing ASX tech shares in November

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointerra Limited. The Motley Fool Australia has recommended CleanSpace Holdings Limited and Pointerra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Electro Optic Systems Holding Ltd (ASX: EOS) share price has been a weak performer in 2020. After a strong start to the year, the company was marred by severe disruptions to its operations.

Let’s take a closer look at what’s been impacting the Electro Optic share price in 2020.

Electro Optic Systems 2020 overview

At the beginning of the year, the Electro Optic Systems share price took off to reach an all-time high of $10.80 in February. The business first made tailwinds by acquiring Audacy Corporation, a space communications company based in the United States. EOS advised the takeover would represent a new step towards the company entering the space communications market.

Roughly a month later, Electro Optic Systems reported a sound result on its 2019 full-year scorecard. Group revenue increased to $166 million, up 91% over the prior corresponding period (pcp). Earnings before interest and tax (EBIT) rose to $21.7 million, a 194% jump over the same time last year.

The pandemic hits

All seemed rosy until COVID-19 took the world by surprise in March. The sweeping pandemic threw logistical challenges to Electro Optic Systems as countries closed their borders for an unforeseen period of time. This, in turn, hit EOS’ multiple revenue streams as contracts were put on hold and equipment ready for delivery was unable to transit.

In response to the deepening situation, and the hole it was leaving in EOS’ pocket, the company initiated a capital raise. A $134 million placement was completed in April through institutional investors at an offer price of $4.75. The successful placement was undertaken to enhance liquidity and continue funding ongoing growth initiatives, as well as working capital requirements.

As the new financial year was about to dawn, the Australian Government announced a $270 billion defence spending package for the next 10 years. The initial purchase of 251 remote weapon stations for $100 million sent investors into a frenzy, causing the Electro Optic Systems share price to surge as high as $7.30 .

In late August, EOS reported its half-year results for the 2020 financial year. Revenue lifted to $75 million, 31% above the pcp, however the company saw an EBIT loss of $18.2 million, reflecting a 288% drop. The disappointing performance sent the EOS share price back down to around the $5 mark.

However, in September, the company announced a raft of positive updates. These included the release of a new counter drone product, the resumption of a major overseas delivery, and the completion of the Australian Government contract negotiations. The EOS share price started to gain traction again, rising to as high as $5.94 at the end of the month.

Most recently, Electro Optic Systems withdrew its profit guidance because of the short-term impacts of COVID-19. The original forecast of EBIT guidance of $20 million to $30 million is expected to flow into the next calendar year. Management said the company is experiencing a delay of around 12 days in shipments to foreign governments.

What’s next for the company?

While COVID-19 vaccines are being deployed to the public in an effort to halt the spread of the virus, Electro Optic Systems is patiently awaiting a return to ‘normal’ trading conditions. Closed international borders have affected supply chain logistics and resulted in EOS still having orders awaiting delivery.

On a positive note, broker Citi initiated a target price for Electro Optic Systems shares of $7.80 over the next 12 months. This represents a 30% gain on the current price of $5.98 (at the time of writing).

More reading

• Here’s why the Electro Optic (ASX:EOS) share price is down 7% today
• Electro Optic Systems (ASX:EOS) share price climbs on government contract win

Aaron Teboneras owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The IGO Ltd (ASX: IGO) share price has been on a tear this month following the mining company’s $766 million capital raise to acquire a stake in Tianqi Lithium Energy Australia Pty Ltd.

Shares in IGO have rallied 31.2% since the beginning of December on the news, compared to a 0.09% increase in the S&P/ASX 200 Index (ASX: XJO)

The nickel miner has optimism swirling around it with its plans to create a ‘unique clean energy metals company’.

Give me the details

On 9 December IGO announced to the market its intentions to acquire a 49% stake in Tianqi Lithium Energy Australia Pty Ltd. The deal would provide IGO with a 24.99% indirect interest in the Greenbushes Lithium Mining and Process Operation and a 49% indirect interest in the Kwinana Lithium Hydroxide Plant.

The total transaction value of the deal being considered is $1.9 billion. $1,100 million of this will be funded through new debt facilities; $766 million from their latest equity raise; and the remaining $85 to $149 million from existing cash reserves.

This deal is strategically focused to put IGO on the map when it comes to supplying metals that are required in the clean energy future.

IGO expects the transaction to be earnings per share accretive from FY23. Subject to shareholder approval the completion of the deal is expected to be in the June 2021 quarter.

Broker upgrades

Broker, Jarden, is particularly pleased with the acquisition and has upgraded IGO to “outperform” from “neutral” – calling it a “game changer” for the company.

The deal comes at an opportune time, addressing the concerns of the short mine life of IGO’s flagship Nova nickel mine – which is estimated to only have roughly 6 years left in it.

Jarden points out that they believe IGO managed to get an exceptionally attractive price for their stake in these high-quality assets.

Next steps from here

IGO will need to get shareholder approval in early February 2021, which shouldn’t be an issue given the optimism. From there it is a process of completing the Tianqi restructure and signing off on the transaction completion in the June quarter of 2021.

We will have to keep a watch to see how well IGO leverages these new assets, and what cost synergies may form.

IGO Ltd’s market capitalisation is $4.65 billion at the time of writing.

More reading

• ASX 200 Weekly Wrap: ASX 200 hits a 6! Thank iron ore
• These were the best performing ASX 200 shares last week
• UBS just downgraded these outperforming ASX mining stocks
• ASX 200 down 0.3%: CSL sinks, Zip’s Facebook deal, IGO rockets
• Why Eagers Automotive, IGO, Marley Spoon, & Zip shares are charging higher

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the IGO (ASX:IGO) share price has soared in December appeared first on The Motley Fool Australia.

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Silver Lake Resources Limited (ASX: SLR) shares are not having a great day today. At the time of writing, the Silver Lake share price is down 1.12 % to $1.77.

Mind you, the S&P/ASX 200 Index (ASX: XJO) is not having a great day either. But the ASX’s flagship index is currently down 0.77%, so Silver Lake shares are still underperforming today. And that’s probably not what Silver Lake investors would like to see right now.

The Silver Lake share price is still healthily in the green for 2020 thus far (up 28.36% year to date). It’s also up almost 64% since 16 March. But Silver Lake shares are still down more than 35% from the 52-week high we saw back in July. They are also down more than 10% since 21 December alone.

So what’s the latest from this mid-tier ASX gold miner?

Well, the company has released a number of significant announcements to the market over the past two weeks or so.

Firstly, on 23 December it told investors that, as of 18 December, the VanEck Vectors Gold Miners ETF (ASX: GDX) has increased its holding in Silver Lake. This represented a move from 84.98 million shares to 94.52 million shares. The latter represents 10.72% of Silver Lake voting power.

Silver Lake’s latest sale

Secondly, Silver Lake told investors on 23 December it has decided to divest its Andy Well and Gnaweeda projects in Western Australia to Latitude Consolidated Ltd (ASX: LCD) for approximately $8 million. This transaction is “expected to close in early 2021”. According to the company, it “realises immediate value for two non-core projects for Silver Lake shareholders, whilst providing the best opportunity for the Andy Well and Gnaweeda project to realise their potential within a focused exploration company”.

These two projects reportedly cover 343sq kms. The projects are estimated to contain approximately 776,000 ounces of gold (measured and indicated reserves). The release notes that these two fields were placed on “care and maintenance” in September 2017. This was due to low gold prices and capital requirements of the mines’ then-owner Doray Minerals Limited.

Silver Lake notes that the mines’ existing reserves have returned samples indicating a gold ore concentration ranging from 9.4 grams per tonne to 64.9 grams per tonne.

Latitude’s management was pleased with the acquisition. It noted that:

This is a tremendous development for Latitude and after diligently reviewing several project opportunities over recent months, we are pleased to report the acquisition of the Andy Well and Gnaweeda Gold Projects in WA. The Board’s intention has been to identify a strategic acquisition opportunity that provides our shareholders with exposure to a compelling geological story, with a clear pathway to generate growth through brownfields exploration, and we believe Andy Well and Gnaweeda tick both of these boxes comfortably.

More reading

• These were the worst performing ASX 200 shares in November

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Silver Lake (ASX:SLR) shares have been in the news lately appeared first on The Motley Fool Australia.

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