Market Update

General - Fortescue - Talisman - Placements - Perseus

Good afternoon

Retail Sales in the States were much weaker than expected - nevertheless, US stocks are very strong, as is the US$...the only reason for this I can see in the PPI, which was lower than expected - making any interest rate moves a remote chance! Still - this does not explaine the strong US$. Are US-investors perhaps afraid of the bl....y English leaving the Euro??? "Splendid Isolation" has not been a good thing more than a century ago, and it isn´t now, either! 

In light of the strong US$, and equity markets, which seem to signalise, that the world is well, the gold price is actually holding up well, and is tarding just below 1250 US$. 

Industrial metals are having a good week, too: Even nickel is scratsching 9000 US$/t again, driven by very tight availability of scrap metal, and strong order books for stainless steel. Iron ore is trading above 60$ again - amazing and conbtrary to I think every analyst in town! Very important stuff for:

Fortescue Metals - which came out with a stunning Quarterly again today, once again. Nev Power, the MD, got to be one of the most succesfull MD´s in Australia....the company produced above budget, and costs continued to fall, despite the strong A$....FMG´s costs are now just below BHP´s costs - an unbelievable effort!!! The copmpany continues to be very highly leveraged to the iron ore price, and to a lesser degree, the A$. I have been sitting like a mouse in front of a hole and waited to buy them - mistake! They had a strong run recently, and as longer as the iron price holds above say 50$, as easier it will be for them to reduce their debt burden! Operationally, this company is one of the best mining companies in the world!!

West African Resources - placement!

Peak Resources - placement!

Talisman/Sandfire - the operator, Sandfire, published the first resource for the Monty JV, which was a little disappointing vs very high expectations: just over 1 millt at just over 9% copper and 1.6 g gold - obviously, a great resource - but market had hoped for 1.3-1.4 millt. Interestingly enough, nearly all of the resource is in indicated resourecs - normally, you would have inferred resources on top of that. In my opinion, this is all a game...Sandfire does have a very real interest in buying the 30% of this assset, owned by TLM, on the cheap - or make a cheaky bid for TLM. Over time, this will work out and TLM are now in a very strong financial position to finally realise the true value of the asset. But it also does not look like happening tomorrow!

Perseus Mining - shareholders have voted in favour of the merger with Amara Mining, clearing the way for Amara shareholders having PRU-paper instead by the 21st of April. For PRU, this will add growth, a second project, even better leverage to the gold price + a lot of work - I think the merger is a good one, and should result in PRU becoming a sizeable producer of about 400.000 oz over time! The only downturn: unless the gold price improves further ( and probably even then! ) PRU will ultimately need a bit of money to develope their second mine - I would not regard this as an overhang, as the financing is probably still 18 month away! For investors, who are bullish on gold, this is probably onbe of the best vehicles to invest in.

Have a nice evening