Market Update

general - Panoramic - Perseus - Lucapa Diamonds

Good afternoon

China is supporting liquidity by lowering the reserve ratio for banks. Pending home sales in the States pretty weak, as was the Chicago PMI, resulting in slightly higher bonds - unsurprisingly - but also a stronger US$. I think the latter might be influenced by the ongoing, political problems in Europe, as to the closure/non-closure of borders. 

While the financial upheavel of the last few years did little, in the end, to dent support for the Euro, the current, political trouble I think could be much more dangerous! Are thoughts like this perhaps the reason for the underperformance of the DAX? In the case of a end to the Euro, the DAX would see a free-fall!

Gold saw a sudden fall on Friday - only to recover nicely today....the very good feeling about the yellow stuff continues! In A$ terms, gold at 1728 is a wonderful thing, in Brazilian Real at 4900 it´s just 1% below all time high....

Several smaller Australian gold stocks are doing placements...the window for equity financing is opening up again!

Panoramic - on Friday, reported a nasty Half Yearly Report - I guess no big surprise, and it had been indicated before via the Quarterlies, and it also included closure costs for Lanfranchi. it´s snow from yesterday anyway - one mine closed entirely, and the otehr one n phasing-.out mode to close in May. With no capex for development anymore, this should not be bad at all - hopefully even making a little free cash. Redundany payments will amount to 8.6 mill$ for Savannah. The company also updated with regards to Gidgee Gold, noticing renewed interest in the asset. While most of the scoping study had been done at feasibility study level, the updated study, due this month, will also be reported as a scoping study. This update could be interesting, with gold trading at 1730 A$/oz!

Perseus Mining - officialy, are merging with Amara Gold...but really, it´s a takeover of Amara by PRU, which is paying a 42% premium. I do like the deal...without having spoken to anybody about it as yet. Amara´s principal asset is the Yaoure Gold Project in Ivory Coast, on which Amara just finished a optimised Pre-Feasibility. The study called for capital costs of 334 Mill USD$, to prouce 248.000 oz on average for the first 5 years, and average production over the mine life of 15 years of 203.000 oz at AISC of 667 US$/oz. At a very conservative pit shell, based on 880 US$/oz, the mione has a mineral reserve of 3.25 Mill ounces - at 1500 US$, the measured & Indivated Resource would be 5.1 Mill oz. This is a big deposit, with reasonable grades of 1,82g/t. The relatively high costs would reduce by 60 Mill US$, if they chose contractor mining. The NPV of the project would be 700 Mill US$ at a gold price of 1300 US$, and the IRR approx 45%. These numbers are good numbers by all means - but with 4 Mill $ in cash, very hard to finance....In my opinion, a very good fit for PRU, which has about 120 Mill A$ in working capital, and is budgeted to throw off nice cash from teh financial year starting 1.7.2017. To finish the transaction, complete a bankable feasibility study would take 15-18 month in my opinion - so the timing also sounds good. 

I need to dig a bit further - but my initial impression is very favourable!

Lucapa Diamonds - we reported of their large diamond found in Angola. The stone has been sold for 22.4 Mill US$! This is big money for them - might well be enough for now, to avoid a placement. Sorry I have not come around to do my homework - but this is a very interesting story to follow.

Evolution - used the strong A$ gold price, to hedge additional 150.000 oz to increase the total hedge position to 800.000 oz at 1690 A$/oz. 50.000 oz to support capex for going underground at Edna May next year, and 50.000 each for the two financila years ending in July 2020. As you know, the company is producing about 800.000 oz p.a. - so overall, a small hedge position - but some people might not like it. I thimnkl it´s only prudent to lock in some nice profits...

Have a nice evening