Market Update

General - Beadell - Breaker - Evolution - Prairie Mining

Good afternoon

things are looking much better today for gold...after breaking all support intra-day on Friday, we saw a nice reversal, and more of it today. Fund inflows into the large gold ETF have been very strong on Friday, to the highest total holding since June 2013 - obviously, the sell-off did not scare off investors . Long positions in the futures market have reduced substantially last week, and new shorts have been put on....The reversal on Friday/today certainly is a good show of underlying strength! But are we really out of the woods as yet? Not 100% sure in the moment....

Base metals are having a good day today...strong bounce by nickel, but also by lead, followed by zinc and then copper...Positive Manufacturing numbers from China over the weekend have helped, and also very strong, German export figures today probably added some interest.  The pressure on Mr.Schäuble, to increase government spending, will increase further with German exports booming,a nd the current account blowing out further! 

Not surprisingly, BHP/Anglo/RIO as industry leaders are making new, recent highs today, and even Antofagasta as a  pure copper producer have put on 20% over the last 4 weeks!

German policymakers are thinking about banning all new diesel-and petrol car admissions from 2030...could be a big boost to electrical cars.

Beadell - some more, stunning exploration results from Tap AB1 Lode: 32m with 9.84 g the best - and Tap AB2 Through Lode, the best being 28m with 47g, as well as some sniffs of new deposits within trucking distance of Tucano. The above results are mainly within the current pit-design, and are all within oxide-ore. Mining of the stuff should happen within 6 month, potentially keeping up strong production this half ( aided by Duckhead ) into the next half. All additional oxide reserves push out the date for installing an additional circuit to the plant as well... We should know about the extent of additional resources/reserves by the end of this year, when the company plans to issue a new estimate. 

Evolution - the stock has come back quite a bit from it´s high just above 3$ to 2.23 A$ currently. In my opinion, EVN are the best-managed goldminer in Australia, and have improved the asset quality quite dramatically over the last 12-18 month. Jake the other day emphasized, that cost-cutting and exploration would be seen as the main value drivers for now. I think the market might fear, that EVN get dragged into a pricy purchase of Barrick´s 50% stake in the Super Pit, which might cost about 1 bill $...Past experience has shown, that this company is only making value-adding aquisitions, and not aquisitions for the sake of growth. I have every confidence, that this will be the case in the future as well. In my opinion, EVN at 2.20 AS$ are very good buying - on the charts, they might go to 2$ - but I can see this only happening with a weak gold price.

Prairie Mining - I have not written about them in detail for a might remember: a great coal asset, directly adjacent to Bogdanka, a serious, thermal coal mine in the Lublin Basin, listed in Warzaw. Interesting enough, the stock has been going up very gradually in Australia - but the real reason for this is some reasonable interest for the stock on the Polish market, where the stock has a second listing. I wonder, whether Polish punters know more, than we do?? Currently, there is more turnover in Poland than in Australia - today, nearly 400.000 shares have changed hand, best turnover in a long time. Bogdanka are generating about 200 Mill A$ p.a. in EBITDA - PDZ´s market cap is only 33 Mill A$....and in buying PDZ, Bogdanka can cut costs, gain much longer mine life, and get rid of a competitor, which in a few years time, could be a serious problem for them in a fight for market share. Prairie could be a large mine, producing 6 millt of good quality coal p.a. for  free cash flow of 350 mill A$ p.a., at a longterm coal price sub 80 US$....but at total capex of around 600 mill US$. For Bogdanka, the capex would be dramatically less...and I suggest, that these guys could easily pay double today´s share price and make a very value-acretive aquisition. Worth holding a few, in my opinion!

Breaker - within 1-2 weeks, we should see more drilling results from them. The Executive Chairman, Tom Sanders, ahs participated in the recent placement, and has invested another 500.000 A$ into his company in the recent placement, without ever selling some. That is a major sign of confidence! Tom does not know, what Mother Earth will deliver to him - but at least he is putting his money where his mouth is!!

Have a nice evening!


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