General - Strike - Panoramic - West African - St Barbara

Good afternoon

another up-day for equities, it seems! Outstanding result from Google, fantastic xcash generation at Microsoft, but otherwise slightly disappointing the market. Apple and Facebook will report later tonight. And for metals , another good day- a little bit of profit-taking in copper just under the 10.000$/t level, which certainly is heavy, psychological resistance, and which is also the 2011-high….but nickel easily charged through 17.000 US$/t and has broken the charts to the upside….

Goldmans see another 13% upside in commodities generally over the enxt 6 month, while UBS also sees 10% upside. That´s a bullish call, following on from massive, recent rises….

St Barbara - their Quarterly today has been a disppointment across the board….they will be very hard pressed to make guidance for the curent financial year to June…and COVID is creating more, potential problems at Simberi, which is in PNG. The virus is a big issue there…further disruptions are a high chance. The takeover in North America has not added any value over recent Quarters….This is not a gold stock one needs to have!

West African - this is a gold stock to have, despite a very slightly disappointing Quarter - even though the company claimes, that the Quarter has been a good one relative to what they had in their budget to reach a full year guidance ( calendar year ) of 250-280.000oz at 720-800 US$/oz AISC. The Quarter saw 56.000oz at 957 US$ AISC…which was yet another improvement - but I guess the market had hoped for just a little more at just less costs. There have been small issues- one-off - with underground mining, but mainly, underground grades have been lower than reserve grade, and lower than expected. The reason for this, though, i s apositive one: The underground delivered more ore than expected in this location - but at lower grades for the addtional ounces. Rather than leaving this stuff behind , the company has rightly mined them alongside the “good” stuff. The 10-year outlook for WAF is to produce 216.000 oz on average at per annum, which i s a great outcome. The current Quarter will see further increases in production at falling costs, and the drilling campaign for Toega will be finished, to enable the feasibility study to be finished by the end of this year. Toega currently has an inferred resource of 22 millt at 1,9g gold/t. It´s a one-mine stoxk, yes - but it´s way too cheap! Imagine they merge with Perseus - 4 mines in three countries, generating s…loads of cash - I think the market might like that…But despite PRU being a relatively cheap stock - I think some kind of a premium there would need to be to satisfy me!

Strike - nothing really new in the Quarterly…but I am not surprised, that the stock made a new high today. Just take the time to read it…everything has been going their way, and the management is doing a great job, developing fresh and innovative ideas for their asset. Last but not least, West Erregulla is shaping up to be a large resource - flow testing should be finished by the middle of May - and the company is very excited about the improving prospects for South Erregulla, which could double their gas resource yet again!. the stocks performance following the large placement, and the current SPP, has been unusual, to say the least….and there is still no need to sell the stock! Two brokers now have valuations of above 50ct/share now…and who knows, what Stuart Nicholls will come up with next!!

Panoramic - had a very good conference call with Victor, the MD today. The mine has been unrisked in a big way , and mining will finally start on the 1st of July. The company is completely financed, with spare liquidity , to bring the Savannah Mine back on ! It will need a few Quarters of patience, though, for investors, as no one is giving the benefit of the doubt to PAN….once bitten, twice shy!!!! But I find the conservative forecasts almost too conservative - if not misleadingly conservative. But Victor wants to rebuild trust in the market, which is understandable. In arriving at the numbers quoted recently in their lates presentation ( on the webpage ), PAN are using mining dilution of 22% vs a historical number of 12%…using plant throughput of 900.000t p.a., which could potentially be as high as 1.200.000t in 1-2 years time….the contract with the offtaker is much sexier than in the past - payability for nickel inm concentrate is 80% and could be 82%, depending on the nickel price…tehy are also receiving 55% of the copepr contained, and 50% of the cobalt - I think historically, these numebrs have also been lower, even though the yhave never been publicised. And last but by no means least, the company has used a conversion of 48,5% of resources to reserves - historically, that number has been around 75%!!!

You can see - extréme conservatism everywhere - and at least some analysts are using even more conservative numbers! I think that´s stupid - but understandable, as they have been hurt by disappointments as well.

But I feel once again very validated here with my large position in the stock! Very cheap, I believe…

Have a nice evening

WS

General - Strike - Evolution - Chalice - Perseus

Good afternoon

oh I have been very lazy…and a bit demotivated! This bloody lockdown does not really increase my activity-level, I have to admit. And I am definitely missing a trip to Australia, for fresh ideas!! And this is despite a lot of interesting things happening!

Equity markets, which have raced from one high to the enxt, are becoming a little tired? At least today, tehy are. Base metals were incredible strong earlier on, but are now quietening down as well - just green now.

I think stronger then expected inflation is almost assured…corn/wheat/soybean/sugar/alu/copper/iron ore/steel/lumber/palladium making new highs nearly on a daily basis - and oil is not far behind, having risen very strongly until recently. So this will definitely filter through to manufacturers, industrial production, construction and the consumer. Everybody is expecting 2-3% inflation - what if this number suddenly rises to 5-or 6%? My gut feel is, that these sort of numbers are not impossible - despite the official CPI numbers being manipulated downwards by the way they are measured.

For us resources guys, that´s good news - at least so far.

It´s incredible, what a copper price of say 4$ does to forecasts vs a copper price of 3$ . Most producers have costs of above 2$ total costs - so even the low cost producers are seeing their margin doubling! And currently, we are trading at 4,50 US$/lb! New projects, which have been marginal at 3$ and impossible to attract financing, are suddenly getting fresh equity, and debt!

Hence we have had fantastic runs in the market - stocks like Foran Mining, Venturex, or Caravel Minerals have gone up by 10x and more from their lows just a year ago - and probably rightly so! Feeding say 4,50 US$/lb for copper, and an 8% interest rate, makes you suddenly arrive at valuations of 7-or 8$ for something like Foran MIning! The iron ore minres especially are killing it - at spot prices, Fortescue alone should make something like 18-19 bill A$ in EBITDA! So this is teh otehr side of the coin: I think the A$ will continue it´s upward bias, and will go higher - in turn putting some pressure on otherwise fantastic profit margins of Australian commodity producers.

Here a little bit of catch-up with my most important names:

Strike Energy - raised a tiday 75 mill A$ in an oversubscribed placement, followed by a 5-10 mill$ Share Purchase Paln, also at 30ct. The stock never looked back - trading as high as 36ct today, despite the ongoing SPP! Testing of West Erregulla 4 shoudl be completed within the next 3 weeks or so - and the company is very certain, that the results so far and what they have seen in geology & seismic, has increased the chances of South Erregulla ( which is 100% owned! ) to be gas bearing as well. The company is also attracting sustainability funds now, as tehy are planning their sensible Urea-project with nearby gas, and geothermal power - much improving the carbon print! Broker research is unisono positive - targets are generally above 40ct/share and more, without taking account of various upside scenarios. More fun to have had here!

Evolution - announced a pretty average Quarterly, for a change - but this was in line with companies expectations. The only unexpected were the well-telegraphed, heavy rains in Australia some weeks ago, which resulted in reduced production at the relatively small Mt.Rawdon. The company kept it´s production guidance roughly unchanged, but reduced it´s cost guidance by 60A$/oz or so. This, though, has been largely a result of the strong copper price ( copper is by-product at Ernest Henry ) . Nevertheless, very impressive at a time of general cost pressures in the industry!!! Red Lake , Cowal and Ernest Henry, the three most important assets, are contiunung to do well. The recent add-on aquisition in Canada comes with a mill, new reserves, ampel opportunity for processing from Red Lake, and 200 mill Can$ in tax losses!!!

Following some improvement of the price of gold lately, Australian gold producers generally have done very well - as have EVolution. So at current prices for gold, it´s hard to find strong value in the sector. The same applies probably to EVN. But outflows from gold ETF´s have come to a standstill now, and as we all know, there is plenty of reason why gold could/should go higher!

Chalice - continues to shoot out all lights! Exploration continues to deliver to highest expectations, and the strong palladium price also helps. Recent drilling confirmed mich upside, and this is all still without drilling in the forestry reserve, which could bring the size of the resource to a completely new level! And the resource is very palladium-rich, beside of nice grades of Pt, Ni,Co and gold…..I completely missed the last few $ in Chalice - but I am very grateful for the money I made in the stock! And certainly, I am very proud to have had Alex Dorsch and Tim Goyder at our last resources conference in Feb 2020 in Zurich, when the stock was trading at 20ct or so!!

Perseus - have also recently released an excellent Quarterly Report! They should have no problems to hit the upper end of their guidance this financial year. Yaoure, as their most important asset going forward, is ramping up very nicely, and exploration there is also delivering!! The company has no net-debt - only a few month after going into production at Yaoure! That´s an excellent outcome. The companies wording is strongly hinting at the first dividend payment very soon, probably for the current financial year ending 30th of June. Definitely a positive surprise. The company is very happy to look at aquisitions - but at a price. West African producers are still attracting discounts to first world producers - still, I think PRU is one of the very few cheap stocks around.

Have a nice evening

WS

General - Strike Energy

Good afternoon

yet another positive day for equities…funny enough, bonds also stronger…as are base metals, with copper being the stand-out +2,2% in the moment.

Gold strong at 1764 US$ currently - poised to test 1800 soon?? I think the $ will lead the way….it has given up on the recent strength.

Retail Sales in the US very strong, labor market strong - Industrial Production was up, but by less than expected, while manufacturing activity continues to be strong. Not sure, why bonds are so strong…this is not fundamentally driven, but from the firm believe, that the FED will not be letting the market down for some time to come!

Very strong buying around for copper-names…Lundin, First Quantum, Antofagasta, BHP , RIO - you name them. I can only say, that I am feeling more comfortable with those names as compared to some tech-stocks, which are trading at 40x revenue!!!

Strike Energy - big, comprehensive presentation out today…concentrating on gas exploration- and production from Greater Erregulla/ urea ( fertlizer, “Harnstoff” in German ) production in Australia, based on gas and geothermal power from STX´s own resources / supply-demand equation for gas in Western Australia becoming increasingly more favourable for producers. The company is raiding 80 mill A$, most in a placement to institutional investors, and incl 5 mill$ to small investors ( up to 30.000$ per shareholder at 30ct ). The price is slightly disappointing, but in the overall scheme of things, 2-3ct don´t really make a difference. I think this will go like hot-cakes…STX have had a strong run over the last 12 month or so - but they have found a large gas desposit, which eventually, could well be 2- or 3 trillion cubic feet in size, That´s a big field by any standard, and could trigger the creation of entirely new industries in Western Australia. The exploration side has been substantially derisked now - large upside remains, though. And ths story is not just about gas here - it´s also on new industries, based on nearly carbon-free energy. It has been a long time and I would love to sell the stock to do something new - but I find it hard to find stocks, which offer a better risk-reward story! And last but not least at all - I am continuing to back an excellent management team! Stuart Nicholl´s saved the arse of longstanding shareholders like myself - he is now taking the company to new ventures…urea might not be Stuart Nicholl´s last idea! I have participated in the placement.

Have a nice evening

WS

General - Resolute

Good afternoon

export- as well as import price indices in the States very strong and higher than feared…as I said pretty often recently: I am amazed how the bond market deals with all these news…complacency, big time, in my opinion! I bought some more physical gold today - even though everybody else seems to buy bitcoin, which I refuse to understand. Probably too old-fashioned?? I just cannot get my mind around the concept!

Bonds are slightly weaker today, equities are higher again …new highs around the world….millions and billions are made everywhere - seems to be rather normal these days…absolutely crazy stuff!

Goldmans are still the mega-bulls…calling copper to 11.000 in 12 month, and 15.000 US$ /t in 2025….if that comes true, some of our stocks will continue to go through the roof big time! I don´t even dare to think about the Foran share price with copper at 15.000 - I guess the stock would be worth 10-12$ , once in production just in time for this boom! In any case, base metals are strong today…the A$ above 77ct against the US for the first time in a while.

Oil also very strong - IEA is more positive on demand, and inventories are falling in the States.

Gold stocks are behaving as if gold has bottomed…very strong across the board today in Australia.

Resolute - the Mining Lease for Bibiani has been restored - but with heavy conditions. In any case, the government does not accept the sale to the Chines. That leaves the balance sheet of RSG still in questionable condition…

Have a nice evening!

WS

General - Osino - Sheffield

Good afternoon

looks like markets can shrug of the negative news about J&J vaccine…and even the stronger than expected CPI in the States. I think the market is surprisingly sanguine, when it comes to inflation expectations…

Gold might be reacting to the CPI -it´s up 17$ currently - but also to a slightly weaker US$. Base metals are a bit stronger today.

Interesting to note, that GOLD ETF´s saw a small inflow the otehr day, followed by a very small outflow yesterday. Perhaps the tide is turning here? I think that would be very positive, potentially!

Osino Resources - classic buy the rumor sell the fact story yesterday! They announced a top-class maiden resource yesterday: 56 Millt at 1,06g gold for 1.9 mill oz! The overall resource contains 13.5 mill of indicated at 1g and 42.6 of iniferred at 1,08g, at what looks like a conservatice cut-off of 0,5g to me. This resource hangs very well together, will have a low strip ratio, and is profiting from low operating costs in a low-cost country, Namibia. The company expectes the vast majority of inferred resources to be converted to the indicated status. Metallurgical testing has also indicated high recoveries! The company is well cashed up for a large drilling campaign this year - and the evry quick discovery of 2 mill oz makes me think,that there is a lot more to come here!! And all of this with a nice, producing gold mine in trucking distance! I think Osino have had a good run and for most of recent times, they have traded at the upper band of valuations for a project at the respective point of development. But this announcement has been very positive, and the stock is probably now trading rather at the lower end of valuations. If Osino can show over the next few month, that this is not the end, the stock will close the year at 2$ I think! My wife´s cousin Heye Daun is doing a very good job!!! Some very nice hits with higher grades are giving me a lot of confidence, that the resource will ultimately be a little higher in grade, which would make a big difference!

Sheffield - Bruce Griffin, who has been appointed Comemrcial Director last year, has finally accepted his new role as Executive Chairman! This is very good news for one of my largest positions, and favourite, speculative story! Bruce is an excellent and very impressive man, and knows mineral sands inside out form very senior positions in the industry, over many years! The final, and changed feasibility study should be out within the enxt few weeks - and given the large equity contribution from the Chinese JV-partner, financing should be done quickly as well. I am hoping for start of construction some time this summer! Exact financial numbers we will only know, once the feasibility is out - but I would be very surprised, if the NPV will not be substantially above 1$ vs 43ct now. I think this is a great story - I like teh incomingboss, and the asset is great right in Western Australia. !!!

Have a nice evening

WS