Market Update

General - Strike - Resolute - Tietto

Good afternoon

The US market is happy so far with the reporting season, and even managed to shrug off Amazone´s Quarterly today.

Consumer sentiment in the States is holding up quite well.

Unrest in Chile seems to quieten down a bit - but gaining more widespread following on the other side. It appears, that most mines are back to work…

Glencore with an average result….

Gold is up a few $, but currently trading below earlier highs - a relatively strong US$ is probably not helping, and despite another relatively strong day for US-equities. Base metals are mixed today, without a lot of price action. Nickel stocks on the LME have about halved this month - by about 80.000t ( which have a value of about 1.3 bill US$ ), the largest monthly fall ever by a long shot. Somebody must have a pretty big punt on! The price is nearly unchanged today at currently 16.810 US$/t.

Strike - announced an excellent flow rate of 69 Mill cubic feet/day from it´s West Erregulla well today. This is better than expected! There seems to be a bit on confusion in the market - the result compares very favourably to the Waitsia 1 well, drilled a while ago by AWE, before tehy got taken over. Waitsia 4 performed better than West Erregulla - but that achieved by using a much wider choke. Pressure, porosity as well as gas quality are all excellent to good, and an analyst today expected the flow results to lead to a higher than expected resource than previously expected , and fewer development wells to be drilled, saving capex. I am not sure, whether some investors are interpreting these results incorrectly, or whether they just acted on the old rule: Buy the rumour - sell the fact. I guess it might be the latter - especially, as everybody knows, that Strike will need some financing. In any case, great news from a fundamental perspective!! The next news will be the first, independant resource estimate - probably in November - and potentially some news on Jaws flow result, STX´s second project, in December.

Resolute - updated today on their roaster-problem at Syama, which has been out of work for the last two weeks. Problems will take anotehr 6 weeks to resolve…and I guess, might need a few weeks to be fully in production again thereafter.At this stage, the company maintains the 400.000oz production guidance for this year mainly, as above budget performance of it´s other miens is making up for some lost production at Syama. The cost of teh repair is about 5 mill$ less the savings by not operating it - so no major drama…more detail is expected on the 31st of October, when they will release the full Quarterly report. Market is happy to have more certainty now, and RSG have been strong today.

Tietto - a well know analyst, Chris Baker, came out with an initial assessment of their Ivory Coast-project, and was pretty upbeat on the company, I hope, that my slight concerns, raised yesterday, are unfounded…I will leave it as it is, until I have met him as well as the company in early November in Australia.

You will hear little if any of me over the next 2-3 weeks, when I will travel in Australia. Gives you some breathing space from my continued beating down of Trump, and talking up nickel and Panoramic!!

Have a good time!

Wille

WS

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

website: www.schroeder-equities.com

 

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

 

The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by

General - Tietto - Genex - Newcrest - Breaker - Sandfire

Gd afternoon

Selfish politicians are using the Syria-crysis for themselves…Trump claimes, that he saved this part of the world, while Mrs Kramp-Karrenbauer ( potentially successor to Angie Merkel, and the Minister of Defense ) makes a mockery out of herself to propose all sort of things, which nobody wants and nobody has been consulted on…only to give herself some headlines. She shows again, that the best thing about her is her strange name…

Durable Goods in the States were pretty weak, while PMI´s were much more positive…

Draghi´s last press conference today with a reltively weak economic assessment with comments, that the weakness in manufacturing is starting to have an impact on employment. The latter + retail sales have been the mainstay of the growth here - at least of the little growth, which is left! Yesterday, Prof.Schnabel was mad a director of the ECB. A German finance professor, she is seen as a supporter of the loose policy of the ECB and should be a supporter of Madam Lagarde.

A sensational result from Tesla, and good results from Microsoft, Daimler and BASF are sending the market higher today…DAX is trading at a new high for the year!

Base metals looking ok as well - nickel especially strong, as Papua Neuguinea announces, that a close of Ramu Nickel is imminent. Spill from the tailings dam - that is something these days, which sets ALL alarm bells ringing. Ramu is a large mine, producing 34.000t of nickel p.a. …Sorry to say, but that´s what we needed…nickel is back up to 16.850 US$/t, and in A$ terms, is trading 8-9% below recent highs, but 60% higher than at the beginning of this year! The discussion about the strange action in the market is continuing, while stocks are still falling heavily, to about 79.000t and marking a fresh 10 year-low. Perhaps interesting to note, that Norilsk and Western Areas have made new highs today

Tietto - another round of strong drilling results from the Ivory Coast project today. 21m with 13g; 10m with 7g; 7m with 12g are exactly, what it needs. Looking into some more detail, though, I am not that positive: L for example, the 21m with 13g intersection reveals, that the sections includes 7m with 38g ( and that in turn includes 1m with 253 g ) . That automatically implies, that a large part of the 21m-intersection only carries say 1g-dirt. And this type of occurence we have throughout the recent drilling! So I am not really sure 1. how much tonnage do these results really add? and 2. how ill you mine it ? There got to be a massive amount of dilution in ore-to-the-mill. So while I am remaining underlying positive, and while I am a shareholder, I am watching closely. This is certainly not another West African Resources, at least for now! I will meet them in about 2 weeks time and will try to get a better understanding…

Genex - this stock just does not move! Energy Australia yesterday gave a presentation and included a page of their green projects, which includes a mention and a foto of Genex´s hydro project…not sure, how they can advertise this, without having signed an agreement…in any case, they seem to give it a very high probability of becoming ( partially! ) their project! One morning we will wake up, and the GNX share price is up by 20% or more! Be patient… this story remains one of my top priority stocks.

Newcrest - Quarterly out today - disappointing on almost every mine they operate. No dramas there - but just softish everywhere! Plant downtimes at Cadia and Lihir seem to be the major reason - Telfer is also continuing to struggle. I think the latter might be in real trouble, if not for the sensational A$ gold price - and even with the strong gold price, I would not bet on the future of this mine. I am sure, that closure is not imminent - there is too much excitement about exploration within trucking distance of the plant - but it certainly needs a trigger in the not too distant future to stay alive! I continue to see absolutely no reason to own them, with so many well managed Australian mid-sized gold miners around, like Evolution, Saracen, and Northern Star ( despite some questionmarks on Pogo ), which might not be dirt cheap, but at least are way cheaper than Newcrest!

Breaker - have found a large gold anomaly ( through aircore drilling ) , which us up to 2.5 km long and 500m wide, just 1.3 km from the Bombora gold desposit. The anomaly has many similarities to Bombora , and shows the exploration potential left in this stock. As you all know, a corporate review has just started and I would be surprised, if none of the neighbours would come to the table. By running this process, Breaker tries to avid the problem of many exploration stocks: Constant capital raisings dilute existing shareholders heavily, and result in many of these companies to trade “cum placement” every 6 month or so. It might make more sense to have a corporate come in with a sizeable amount and to give away some upside! Preferrably for shareholders, this should happen at the corporate level, not at project level - unless you believe, that the upside is 3-4-5x the current share price! But I have to admit that for now, I would be very happy with double the price…

Sandfire - Quarterly was about in line, but guidance has been lowered a little bit…more towards the lower end of previous guidance, so no drama. Degrussa, their only mine currently, will be running out of ore in 3.25 years, and so far, they have not been able to replace reserves, despite trying hard. It remains t be seen, what will happen with the recent aquisition MOD and it´s asset in Botswana…and approval for their US mine could be years away. While the stock is not expensive, I am missing sex appeal…and a more definite path to growth ( which, by the way, would chew up much of their cash generated by Degrussa ).The only - more or less pure - copper producer of size in Australia for me to invest in remains OZL.

Have a nice evening

WS

WS

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

website: www.schroeder-equities.com

 

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

 

The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by

General - Bellevue - Panoramic

Good afternoon

no major move in markets…no major macro-news, either . Reporting period in the States was ok so far - the heavyweights are still to come.

Lots of copper mines in Chile disrupted by warning strikes…it remains to be seen, how the situation in Chile developes.

Nickel had a very strong move up late yesterday, and saw some profit-taking early today. Later in the day, it moved higher again - also driven by another 3500t of withdrawals from the LME.

Gold is looking quite good today.

Bellevue Gold - not too much of interest in their Quarterly today…3 rigs are on infill-drilling, 3 rigs on extension-drilling…and if anything, more forecast for the current Quarter! Strong intersections had already been reported during the Quarter. The next big trigegr will be the resource estimate, out late this year - including important conversion from inferred- to indicated resources ( that´s what potential buyers will look at ?! Infill drilling has been hitting the right structures so far, in places where the company expected them - augurs well for strong conversion. I am sure, that we will see more updates during the Quarter on exploration success. Like all gold stocks, the stock feels like being in no-mans land in the moment…

Panoramic - new CEO has been appointed! His name is Victor Rajasooriar . Most recently, he has been MD of Echo Resources, a gold developer, which is currently being taken over by Northern Star. More importantly, he has been COO of Barminco previously, which is a large underground mining contractor. Underground experience is obviously, what is needed most - beside of developing scenarios for Horizon Gold and the PGM assets of PAN ( by the way, combined price of Plat + Pall is still at alltime high of 399 A$/oz ). His reputation in Perth seems to be positive. Peter said, that he would only leave a company in good order - so I assume, that development of Savannah North is going as planned!

Not that much to report today!

have a nice evening!

WS

General - Graphex - Liontown - Evolution - Saracen - Gold Road

Good afternoon

Central banks around the world are adding to their gold holdings, as are ETf´s - they were acting on the other side of hedge funds, who have been reducing. Who will win? As you know, there are many reasons for gold to go higher - the biggest point against buying gold is the fact, that it´s not trading any higher yet, amid all the trouble surrounding us! My feeling is, that if the current consolidation of the sector should end in an upward move, we could see some significant buying to drive it substantially higher.

The largest manager of gold stocks sees “complacency” as the main reason for gold not being any higher - that might be right to a degree, but what he is calling complacency I would rather call the hunt for any return - given the zero- to negative interest rate enviroment we are in. Equities are the typical, mainstream asset class alongside property for funds to go to for returns in the moment, while gold is only liked by a minority. This could change - as we all know : the bull is feeding the bull.

Barrick finally coming to an agreement with Tanzania re the Acacia-issue, is seen by many as a precursor to the country becoming pro-active again towards fresh mining investment in the country. This should be good news for:

Graphex Mining - Quarterly out. The company had an active Quarter, finishing many aspects of the efasibility study, which is nearly finished and will be announced next month. The good news from it: All potential customers assure GPX, that demand for it´s special type of Graphite is still very strong - everybody keen to take as much as possible! The bad news: In my opinion, pretty encrypted talk about the regulatory side of things in Tanzania. I will find out more during my trip to Australia , starting soon! The stock has been very disappointing so far, as investors have to sustain a really long period of not too much happening, and a slowly retreating share price - but the rewards should/could be substantial ! As you know, I am a believer and own a relatively large position in GPX.

Liontown - also Quartery out. the company had a very busy and hugely succesfull Quarter, having deliniated one of the best lithium projects in Australia. The company ahs started a very active drilling program at both it´s assets, planning to deliver a pre-feasibility study for Kathleen Valley by the end pf the year/January, convert some of the “resource potential” to a eal resource ( probably north of 100 millt ! ) and report the first resource estimate for Buldania in November. So lots of news flow over the next three month! Lithium is dead in the moment - but this should change again, if and when the very active roll-out of new EV-models gains pace in 2020.

Evolution - scared me this morning, when I saw news about a succession of seismic events, which were potentially to culminate in a major earthquake! Well - that was the story from ABC news - which turned out to be just a story. Yes - there have been seismic events at the Frog´s Leg mine in Western Australia, and work underground stopped for 24 hours. But theese evnts happened last week, and work is back to normal. Seismic events are kind of normal in underground mining - sometimes tehy are a nuisance, sometimes a major problem. In this case, I am pretty sure, that they have been a nuisance! At 4$, EVN are good buing!

Saracen - this is potentially another one, which represents good buying! The MD, raleigh Finlaysoon, has really done an outstanding job ehre over the last few years, culminating in record production ofm96.000oz at 964 A$ AISC ftom the new mines, Carusoe Dam and Thunderbox. The company ended the Quarter with net cash of 196 mill A$ from 154 mill A$ - despite spending 5 mill on cash, and 35 mill$ on exploration and growth.The company maintaines guidance of 350-370.000 oz production at 1025-1075 A$/oz AISC - this guidance looks conservative now. At this rate of production, they will have 7 years mine life as measured by reserves and the mining plan. SAR also delivered on the exploration, especially at Carousoe Dam, but also Thunderbox, and will continue to spend heavily on drilling. The only pity is the hedge book - 377.000 oz at 1874 A$/oz. SAR delivered 80.000oz into hedges last Quarter, and put on a new 38.000oz at 2225 A$/oz received. Total hedge book is stretched over 3 years but it looks as if tehy try to hedge 50.000% of nearby production ( for eample nearly 200.000 oz over the next 12 month - but only about 40.000 oz in 2022 hedged so far. I would prefer to see a little bit less heding, also in light of the low costs SAR have. I ahve liked them for a while, without never buying any…that might well change.

Gold Road - are worth a mention, even though I am not following them that closely…and I believe, that tehy are not that cheap, despite very good, forecast cash generation: The comissioning of the new Gruyere mine, operated by Goldfields, is going very well, and the company expects to be hitting guidance at the upper level for this half. That is very positive - at least some manage to bring their new mines into operation as planned, or as in this case, probably even better so!

Have a nice evening

WS

WS

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

website: www.schroeder-equities.com

 

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

 

The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by

General - St Barbara - Perseus

Good afternoon

In 2017, the US budget was a deficit of 460 bill US$ for the year incl September…in 2018, it was 552 bill US$….in 2019, it is

Widespread chaos in Chile, as the government has declared State of Emergency for Santiago, and many other places. Apparently, the superficial reason behind the chaos seems to be an increase of underground tickets from 1 Euro to 1,04 Euro - showing, that some very negative sentiment is cooking below the surface… in Chile….as it is in Venezuela, in Ecuador, in Argentina, in Mexcio, in Brazil at varying degrees. The continent seems to be in trouble…and we all know, how important it is for some base metals, and especially copper. So far, miners have joined the chaos only to a very limited degree…and they are the ones, who get high salaries anyway in comparison to average workers. But there are certainly risks, that copper production could be affected.

Perseus -announced a new board member today, David Ransom. Most probably, a great win - David has been running the mining side of Acorn, a large fund manager, until recently and has been one of the most respected fundmanagers in Australia. Very knowledgeable, and very likeable! Great person, and should be a plus for PRU. Probably more important was their Quarterly, also out today…66.000oz at 922US$AISC was a good result - Edikan producing at 1027 US$ and Sissingue at 709 US$. Yaoure remains on track and on budget for first production by the end of 2020. Yaoure will provied a step-change for the company, and will be their

St Barbara - announced a pretty rough cut in guidance on Friday, by about 10% in terms of ounces, and by 12-14% in terms of costs. The main reason for the cut of production ís the Gwalia extension project, which impacts negatively on production at Gwalia, as there is lmited air-availibility, until the new ventitaltion shaft has been completed. Forecasts for sustaining capex as well as growth capex have also increased slightly…overall I fear there is no hurry to buy this one! Cash & Bullion decreased by 7 mill US in the Quarter - but that is after spending 23 mill on Yaoure. Cash is ok at this stage to get Yaoure done - and with continued cash generation from production, it should continue so, especially, as the company expects the 1st half of calendar year 2020 to deliver stronge grades from existing mines. PRU have been a consistent performer and this should not change!

have a nice evening

WS