Market Update

General - Potash/Highfield - Index Changes - Lucapa - Crusader - Cardinal

Good afternoon

please use this link to look up the itinery for Friday´s AUSTRALIAN RESOURCES CONFERENCE in Zurich:

I know it´s getting boring - but inflow into the gold-ETF is still strong - 300.000 oz yesterday. According to Bloomberg, the current inflow is the strongest since 2009, when QE started. The Indian government has NOT decreased taxes on gold, as hoped by some - it has increased the sales tax for gold by 1%. Not a Major Story, but certainly negative - the Indian current account deficit is biting, and they would love to see lower imports of gold.

Even though the US$ is still strong, metals are strong, again...zinc is now up by 23% since mid January, lead by 12%; copper by 10%; nickel by 16% ( but that´s from mid Feb, when it had it´s recent low ). Not so badfor a time Frame, in which the US$ is unchanged! I guess today´s advance might have also to do with Glencore´s positive assessment of the market yesterday.

Codelco´s Boss is of a different opinion - he sees copper trading at 2.00-2.10 US$/lb for the next year or two, beforea more serious shortage developes by 2019. In any case I do agree with him, that 3$ for copper are not on the horizon again any time soon!

Potash´s CEO Jochen Tilk sees better prospects for potash prices going forward, and expects demand for potash to be 10 millt higher in 2010 than today. In the short term, they expect a recovery of demand from rising agricultural production, and rising affordability for farmers of potash vs product prices. They see a more or less balanced market going forward. I would put it that way: The large, North American producers will make sure via production cuts in the short term, that prices do not fall further! We are waiting for the approval´s for Highfield Resources`new mine near Pamplona in Spain...which is supposed to come before the end of the month. The stock has shown incredible strength over the last few month - despite a relatively large short position in the stock. relative strength usually is a good sign...let´s wait for the presentation on Friday!

INDEX Changes - Most probably, KCNas well as BDR will fall out of the ASX 300 Index , to be announced on the 11th for implementation on the 18th of March. I think the Placement in BDR might have come too late to avoid that. I am not too worried for the Impact on BDR´s share Price ( about 6 x average turnover ), but for Kingsgate it could be tougher - it´s an unwanted stock, and 9.5 days of average turnover might have to be sold. St.Barbara will probably be promoted to the ASX 200, resulting in an estimated buying of 8x average, daily turnover.

Crusader - wanted to raise 3 mill$, and ended up raising 5.5 mill$ due to heavy demand, which is good. Very dilutive - but this is a meaningful amount of Money, and they will spend it hopefully wisely on exploring , and updating the feasibility study for Borborema.

Cardinal Resources - raised also just over 5 mill$, incl directors chipping in 200.000$. It´s good to see all these Juniors seeing cashed up again - without money, no exploration! And CDV´s asset certainly has all the hallmarks of a large deposit - grade is the only question here.

Lucapa Diamonds - announced today the receipt of 8.3 mill A$ from the sale of their super-Diamond. This definitely removes all risk of a placement, especially, as they have 50 mill 30ct-options expiring at the end of April. Until then, the stock probably cannot move all that strongly, and I think it would be a good idea to start accumulating . As always with alluvial diamond mining, the real price is to find the kimberlite,  which is the source of them. Many indicators point to the pipe being very close to where they have been finding these very high quality stones - and as soon as the wet season is over ( normally end of March ), drilling will start. This is a very speculative play, and not for the fainthearted!

Have a nice evening, enjoy the new bull market in gold, and let´s meet at the conference on Friday morning!