Market Update

General

Good afternoon

base metals are having a strong day, as trade tensions cool down further. Equities are also a bit stronger, while bonds are weak. the very dovish measures taken by Draghi yesterday are not backed by some important Central Banks in Europe, putting them into question.

Nickel is having a weak day - after gradually increasing recently, LME stocks got a big lift today by 100.000t to abbout 166.700 t ( the absolute low recently had been 142.000t ). But to be honest - who cares? 17.500 US/t is a fantastic price and equities never exhibited them anyway.

Palladium at a new alltime high, Platinum the strongest since March 2018!

Gold is creeping ack up through 1500, following a very volatile session yesterday.

Australian mid-sized producers back now to buying level? I think yes! A few weeks ago, all funds scrambled for cover and bought the Evolutions and Northern Stars - their performance as Index stocks had been increasingly strong, while most of the investors/funds had been underweight - so everybody piled into them - only to be caught by very pronounced weakness! The recent correction drove them down by between 20-30% - and I think to a level, which is worth buying again. The gold story does not feel at all like beeing over, so I think one should accumate these stocks!

I think Evolution, Resolute, Saracen, St Barbara or Northern Star are all looking ok again - to mention a few.

Strike Energy - back in 2017, Orica provided a loan to Strike over 2.5 Mill A$ to provide capital for the drilling activities in Jaws. The company has now elected to convert the loan to STX shares at anaverage price of 0,2064 A$ ( the 30-day volume weighetd average price ). A good vote of confidence - a conservative company like Orica would not have made this decision lightly. Orica are a very large consumer of gas.

Oceana - court hearing in the Phillippines on the 18th of Sept, which will hopefully end the access restrictions imposed by the local governor. Oceana is most probably the cheapest of the midsized producers - but the country risk in the Phillippiens remains always good for really bad headlines!

Have a nice weekend

WS

General - Strike - Lucapa

Good afternoon

ECB easing even further - as expected - but still some movement: equities strong, US$ strong, bonds very strong, gold strong….and base metals ( especially copper and nickel ) were strong beforehand - just what the spirit needed for the big US gold conferences!

Good mood is also helped by some indications of China - US getting a bit more accomodative.

Industrial Production in Germany weak, one again!

Following on from Citi, also Macquarie increased the gold price going forward, leading to positive recommendations for most Australian stocks - some to neutral from sell, but many “buys” as well. I think tehy are right - stocks have retreated quite considerably from their recent, very overbought prices, and are in ok-territory again - generally speaking.

Strike - their JV-partner are in the market today to raise 10 mill$ at only a small, 5% discount…from what I hear, going very easily, to mainly institutional investors…that augurs well for STX, as I have no doubt, that Strike will come to the market soon as well. Strike´s presentation today at the Good Oil Conference was very technical - very obvious, that tehy are targeting corporates with that! But people are reporting, that the Perth Basin was the only talk at the conference among investors! Strike slightly weaker today, probably on some switching into Warrego-placement. On the face of it, Warrego are quite a bit cheaper - the question really is, how much value you attach to Jaws, and the big ground position Strike is holding in W.A.. As I said yesterday - for a corporate, there would only be one target!

Lucapa - in my absence, came out with a production update. I cannot believe, that this one did not move the market! The only explanation for it is the generally weak performance of diamond stocks. LOM, though, are different, as they not only ramp up production without any further capital needs, but also produce quality diamonds, which are not affected by the weak market for smaller stones. Production for both mines hat new records for August by a long shot, and especially Lulo produced at nearly double the carat/t as planned. The only problem I have with the stock is, that I do not know what could trigger performance, if not these numbers! Broker Euroz, which is very credible, reaffirmed the price target of 61ct = 4x the current price!

Have a nice evening

WS

Schröder Equities GmbH

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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 - Gascoyne - Strike Energy

Good afternoon

Equities just don´t stop…and I think that does not help gold currently, which is also held back by a strong US$.

Metals are mixed today - zinc continues to rise, and nickel is holding above 18.000, while copper is a little weaker.

Norilsk expect a smaller deficit in nickel for next year, as the impact of the trade war hits - despite the Indonesian export ban for nickel from 31.12.2019.

Rumours about Indonesia also imposing an early ban on bauxite exports - that would be major good news for one of my favourites, Metro Mining.

Faulty parts in many of the 58 French nuclear power stations may potentially affect 10% of French power generation ( Macquarie ), helping thermal coal and electricity prices in Europe.

Had a meeting today with

Gascoyne - not an easy story, obviously! The management alongside the Administrator are trying to revive and recapitalise the company. /8 mill in bank debt + I guess another 30 mill with contractors etc don´t make this task an easy one. They are trying to get to the core zone of the Gilby pit, where the main reserves are, as quickly as possible, which requires a cut-back. Since the administrator took over, the company has not lost any money - thanks to very strong A$ gold prices, which raises some hopes for equity-holders to recover some money. The administrator is running a simultaneous process of operating the mine, generating corporate interest, and/or finding new equity investors. In any case - new equity will be needed, and quite a bit of it, to get this thing properly up and running. A potsntial capital raising is some time away, in any case - my best guess is, that by Christmas time, we should no more.It was interesting, in any case, to listen to their story as to what went wrong….seems to be a mixture of Mother Earth sometimes delivering bad surprises, as well as management not seeing this early enough and therefor, not implementing changes.

Strike Energy - made a significant upgrade to the Kingia gas disovery today, announcing a net pay zone of 58m vs the original 41m. Some estimates flying around in the market believe Kingsia to contain 1 TCF of gas - and the otehr zones perhaps another 0,4-0,5 TCF! On the back of the envelope, 1 TCF is worth 6 bill A$ - the NPV of it perhaps 1 Bill A$….so potentially, there is quite a bit of room left in STX, as is in the JV-partner, Warrego. As I said before - there is a high chance, that this will develope into a corporate play - and as operator, STX would be the prime target. For a resource this size, even some of the major players in offshore LNG in Western Australia could become interested! Also, STX have a substantial ground position in the Perth Basisn, which will increase substantially in value because of this find. West Erregulla could just be the start here!? Jaws is flowing gas consistently - that´s very good news - but not at commercial rates as yet - for which we had hoped by now. But the Jaws - story is not over - remember, that it could be worth just about anything between say 5 mill and 500 Mill A$….over time. The company will present at a big oil- and gas conference on Thursday in Perth. It will be interesting to see, whether they will give further indications. Slight negative, but short term: Both companies involved will need to raise more funds.

Have a nice evening

WS

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

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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 Gold - Sheffield Resources - Genex Power - Syrah - Index moves - Saturn Metals

Good afternoon

I am managing an equity fund, so I am not complaining…but I am amazed, just how well these markets are doing in the face of crazy Johnson, crazy Trump, and economies around the world, which are cooling quite dramatically!

Equities don´t do a lot today in Europe - but the US gets dragged down by tech. Small movement in metals… Interesting to note, that most brokers have cut their metal price forecasts by so much, that Macquarie for example pointed out today, that there is substantial upside risk to earnings, if metals are holding at current levels…

Nickel is back up through 18.000US$t or 26.000 A$ = 11.80 A$/lb ( !!! ).

Golds has tanked a bit…back below 1500 US$…but is trying to recover in N.Y.. Citi can see the price at 2000 US$ , if the FED continues to loosen up…

General miners strike in Peru is starting, affecting many copper producers

Bellevue Gold - excellent exploration update out today - just in time for the large gold conferences in teh States, starting today. Steve Parsons is an excellent marketer - and let´s not forget, that marketing is a very integral part of running a small miining developer! Results are from the recently discovered lode Deacon ( not included in resources so far ), and has extended itz to 1400m - open in all directions. 4.4.m at 62g is among the very best drilling results so far….They also dscovered yet another lode, called Mavis - 2.2 m with 38g are an excellent start and show, that this asset is far from being closed off. There is a lot to come , and some Down Hole Electromagnetic conductors remain to be drilled - not to talk about regional exploration. 6 drill rigs double-shifting - so many new results to come! 35 mill A$ in the bank….Much more fun in train here, and I also believe, that there is some good catch-up potential, given that this exploration-driven stock has not had a run from the recent strength in the gold price.

Newcrest - for all followers of the region: The company announced some strong drilling results from the JV with Greatlands Gold, 45 km from the Telfer Mine. Relatively deep, but very promising! Not important enough, though, to have a price impact yet on Newcrest.

Genex - in my absence, the slightly unusual happend: The Government announced a funding package of 132 mill A$ for a transmission line between Kidston, and Mount Fox - built, owned and operated by State-owned Powerlink Queensland. This is exactly, what Genex is waiting and hoping for! The slightly change thing: It ahs not been signed as yet. Obviously, this can only be a formality now. The government has isued the statement for political reasons early, I guess….This agreement, once signed, it one of the two all-important announcements in the lead up to the full financing…the other one being the offtake agreement with the distributor Energy Australia. This is obviously taking longer than anticipated - They are an international company, with several layers of approval needed. GNX remain convinced to dust this project off before the end of the year.

I cannot believe, that it´s still possible to buy Genex at current prices….

Index moves - when is teh last time we saw an Australian gold producer or developer join an Index????? Normally, our companies got removed from Indizes for many years. This time around, we have Gold Road and Silver lake joining the ASX 200, and West African + Bellevue the ASX 300. This is good for these companies , but also for the entire gold space. Perhaps Australian fund managers have to learn something about the mining companies now!

Syrah - what a desaster! very weak demand for battery-class graphite led them to cut production by a staggering 70%!! prices seem to be around 400 US$/t only, down by more than 20% recently. The company is undertaking a strategic and operational review to get a better handle on the way forward…more bad news is possible. Thanks god our baby Graphex has got very little to do with this type of graphite!

Sheffield - another desaster! In late June, the company had announced a 10 mill US$ bridging facility to satisfy all working capital needs, while the sales process for a partner ( or potentially a full bid ) in the massive Thunderbird mineral sand project lasts. The board seems to have gone against such a loan, as it makes the sales process more complicated and difficult. I can understand this - but perhaps they should have thought about it in the first place??? Anyway, since that loan had been announced, the company reported a reserve increase, more offtake agreements for zircon and - importanly - ilmenite, a very strong and exciting , updated feasibility study, and not last, new board members. All very good news, indeed - yet the share price is almost back to the worst! The company has moved to replace the bridging loan with equity, and raised 18 mill A$ at 39ct. The placement got increased, and was taken up ( not sure, whether all of it, but in any case, the vast majority ) by existing , large shareholders. As we all know, a placement is nearly always bad for the share price…but this money should last them for 2 years, and gives them a very strong negotiating-position. I am still expecting a solution to the financing - i.e. a new JV-partner - within the next 2-3 month. I am repeating myself here, but I am of the opinion, that SFX are very very cheap!! Small shareholders did not have the chance to participate in this placement ( like for example my fund ), but the price is back to placement level anyway, and gives everybody the chance to average down - something I urge you to do! The desaster I have mentioned above definitely is one, on a short term view. But it has not changed fundamentals at all, and simply provides us with what I believe and hope to be the last buying opportunity…

Saturn Metals - the stock continues it´s recent run and made a new high at 0,465 A$ today. The gold explorer has a resource of close to 700.000 oz now, at a 0,5g cut-off, which ahs not been updated for a while. STN have continued to drill and has succesfully tried to deliniate higher grade pockets within the resource, which is low grade at 1g/gold t. Early metallurgical testing has been very positive, and the ore also seems to be suitable for ore sorting. More importantly, tehy have now established which seems to be a parralel, significant zone of mineralisation. there certainly is potential to double the existing resource, and at a gold price of 2200 A$/oz. producing gold should be a very profitable excersise. The frugal management team around MD Ian Bamborough, whom some of you might have met a few years ago at our resources conference, has done an excellent job here. Good chance to hit the 1 mill oz resource level relatively soon, and the company is cashed up from a recent 3.8 mill$ placement. I am stopping just short of buying them - but as holder, I would certainly hold on to Saturn.

have a nice evening

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

Panoramic - Metro Mining - West African

Good afternoon

finally and definitely back now!!

China increased liquidity of the banking system, while German exports delivered a rare, positive surprise.

Unfortunately, not only good news in my absence!

Panoramic - the unexpected became true - yes, they do need money. Their bank has reacted to what has been a difficult ramp-up period, and demanded the repayment of 20 mill of the 40 mill$ project-finance. While most probably absolutely unnecessary, I can understand these guys: It´s without question, that the ramp-up of the mining operation at Savannah has had it´s fair share of problems, culminating in underperformance of the existing orebody, Savannah, in July and August. Numbers were better compared to the previous Quarter, but 20% under budget. One has to understand the bank - in the end, these guys have only downside, no upside from a loan! The problems culminated in a small and isolated seismic event at Savannah in July, which made things even harder. So PAN are raising 27 mill A$ after costs to pay back 20 mill of the 40 mill$ loan ( which got extended a little ), accompanied by hedging ( which has previously been announced as part of the original loan ), which starts in Sept 2020 for 8.000t of nickel at approx 8,40 A$/t. The good news is, that development of Savannah North, the brand-new ore body, will hit ore in November, and should ramp up very quickly early in the new year. This will bring production to the planned 80.000t/month in the first Quarter, and will deliver very significant. cash flow. The operating costs should not be impacted by the problems of mining the old ore body, and costs are stille xpected to be 3.50 US$/lb sustaining costs for 10.800t of yearly production, vs the current spot price of 8,15 US$/lb! .

The drilling of the ventilation shaft has also overcome earlier problems now, and is progressing very well. In any case, it´s not needed before mid 2020 - and by then, it should easily be finished.

Also important: I understand, that Peter Harold will stay on until the current problems are behind the company!

Overall - big dissappointment, that PAN needs this extra cash - but I really view it as a fresh buying opportunity in what will be a very profitable mine, especially at current levels of the nickel price! All shareholders based in Australia, Switzerland and Germany + various others can participate .

Metro Mining - came out with a very positive production update ! Production and shipments have been very strong in July and August, with shipments around 450.000t/month. At those rates, it will be no problem to acheive guidance of 3.3-3.5 millt for the current year. This also implies, that costs should be very favourable. The Quarterly for this quarter should be very positive. This stock is a screeming buy! the share price reacted positively - but there is a lot of room left! I suspect, that the market is waiting for the results of the feasibility study to increase production from 3.5 mill to 6 millt p.a.. , which should come out any time now and which should be very positive. I recommend everybody to have another look at this stock! It´s such an easy operation - just digging up the stuff, and load it on a ship to China - a real cash machine!!

West African Resources - big announcement today about board changes, and appointments of senior personnel. The current Chairman, who is on numerous boards, resigns and Richard Hyde, the current CEO, will also become Executive Chairman. The board will have 4 independant, and 2 Executive Directors.WAF have also announced the appointments of several operational managers - all of which appear to be very experienced in Africa, as well as in senior, operational roles. I think the team to finish, comission and operate Sanbrado, which is making very strong progress, is now complete! Hartley´s recently updated their price deck, which is still below the current US$ gold price, and with a slightly higher A$ vs today, resulting in a NPV-valuation for WAF of 84ct/share.

Have a nice evening

WS