Market Update

General - Beadell - Gold Road - Breaker - Berkeley - Perseus

Good afternoon

oil is trading at the highest level since November today...base metals are largely unchanged, except for weaker copper prices, while gold is creeping higher....1250 as I am writing. Iron ore is still trading around 62 US$ - obviously down from 70$ a few days ago, but still way higher, than anyone would have expected a month or two ago!

The A$ took a beating today - the Australian CPI was announced at lunch time, and it was the first down Quarter since 2008, leading to what the Central Bank calls "underlying inflation" of 1.3% YoY- that´s way below the lower end of the target band of 2-3%. Chances for a rate cut in May have risen dramatically, especially, as this fall in inflation has taken place at a time, when the A$ was very weak! I dare to say: The A$ has seen it´s recent highs, and unless commodities surprise to the upside, we will see 73ct to the US, and potentially 70ct again in the not too distant future. Great news for the miners - only halfheartedly great for us as European investors.

Investors seem to view this the same way - gold stocks as prime beneficiaries of a weaker A$ have been very strong today across the board - stronger then you would have expected from a just slightly higher gold price in US$ ( it was 1243 US$oz at market close this morning ). The A$ gold price is currently trading at 1642 A$ vs a recent low of 1576 A$/oz.

Australian banks were pretty weak today - banks have a hard time making money in an ultra-low interest rate enviroment.

Apple got a hammering after market closed yesterday on worse than feared numbers for their iPhone. Ok they will have a new iPhone in Sept - but that could also imply even weaker numbers over the summer, as consumers wait for it...

Beadell - Quarterly out today - slightly disappointing to me. 32.000 oz produced at 902 US$oz AISC - that´s reasonable, costs were a rather positive surprise. But when I reconcile cash at bank vs placement proceeds, and debt repaid during the Quarter, I am missing some 6-7 mill$....the company actually burnt something like 3 -4 mill$ in the Quarter - implying, that the true costs must have been quite a bit higher than the quoted AISC. This overshadows an otherwise very succesfull Quarter on the exploration front, a positive reserve statement, and a positive BFS for Urucum Underground. Also on the psoitive side, mining was doing rather well during the wet season, which saw the wettest March on record. 

Overall - this result gives me some food for thought - not really sure about it - stock is on the watch-list!

Gold Road - not unexpected and sort of flagged by the company, a large caital raising of 75 Mill AS$ today - 45 mill$ placement and 1:10 rights issue...3 US-insto´s taking 20 mill$ between them. Hard on the heals of a corporate shareholder selling out, this will fill demand for the stock, and will keep a lid on it. Also, this raise will only fill at best 50% of the equity needed for the project - so the stock remains cum-placement. No need to be here....

OZ Minerals - the copper producer has hedged 172.000 oz of gold, which is a by-product for the company. 

Breaker  -suspended for a small capital raising - if you want some stock, please call/ send email!

Berkeley Resources - the Quarterly today did not give us all that much new information. The company is working on the Bankable Feasibility study, to be released in June, and is indicating, that results from the pre-feasibility will be bettered. BKY are very actively talking to off-takers for their uranium, being large utilities in Europe, the US, and Asia. Simultaneously, and I assume partially with the same people, they talk about financing the project. They state, that the most probable outcome will be the sale of a minority equity stake in the project, together with an off-take for part of the production ( for which the company would expect a nice premium to the share price ). BKY have 6 mill$ in cash, which is easily sufficient to finish the feasibility, but would leave nothing for development. Selling a 25% stake for 35-40 mill$ should do the job! I am expecting such a deal only, once the feasibility study has been completed.

The initial stage of the project is fully permitted, but the Zona 7 -part of the project, which is a significant value-driver thank´s to very high grades, will need another 15-18 month to get all approvals. Exploration during the Quarter has not been very active due to wet weather - that should change in the current Quarter, and I believe this to be a nice value-driver for BKY going forward.

I continue to hold a large position in Berkeley - it´s a world class story, in my opinion, and while uranium spot prices are terrible, long term contracts reportedly are changing hands at about 44 US$, vs expected cash costs of Berkeley´s production of around 15 US$ ( that includes production from both ore bodies, incl Zona 7). To my knowledge, these are the lowest production costs in the Western World.

Perseus - not sure what happened there today - break-out on the charts? My impression is, that the Market Vectors Junior Gold Miners had quite a bit of buying in the Australian market today, and they might re-weight PRU, following the successfull merger with Amara.

Have a nice evening!