Market Update

General - Panoramic - Perseus - Independence - Heron - Northern Star

Good afternoon

Yellen did not really say anything - noting, that some economic numbers had improved since the March-meeting. I guess, that she is referring to China here....But they are "closely watching" - hence, undecided whether we will see a rate-increase in June or not. My bet is: not!

Labor Market numbers in the States in line - but 1st Quarter GDP was only up by 0,5% vs expected 0,7%. Some promising labor market news in Germany today.

In any case - if anything, the US$ is a touch weaker, and gold a touch better, indicating, that the market does have my view as well...

Equities in Europe turned around big time this afternoon, and after the US-numbers - from 1-2% in the red to just green now!

Little action for most of the day in base metals - .but as the day progresses, they are all trading higher...BUT GOLD IS LOOKING GOOD! It´s just about to test resistance at 1260 US$/oz - and in fact, while I am writing, it´s gone through it - trading at 1265 US$ or 1656 A$/oz. The Market Vectors is also making new highs!

Panoramic - great Quarterly - most of it had been reported earlier on. Record production from Savannah, at record low costs of 3.48 AS$/lb for payable nickel. At these costs, tehy would certainly keep on producing - but tehy were helped a lot by PAN finishing up with ongoing development, which generally costs about 1$/lb. Nevertheless - this was a great number. Cash + liquids are at 27 Mill A$, plus from yesterday, additional 10.2 mill A$ from the rights issue. That´s more than 37 Mill A$ cash backing, or 8.6 ct/share. PÜAN will continue to explore at Savannah North, as well as completing a feasibility study for it, to be development-ready, as soon as the nickel price permits. For the Lanfranchi Mine, which is already on care&maintenance, they announced a first resource for the new Lower Schmitz, which has 6.500t of nickel , at very good grades of 5.1% - but I think Lanfranchi will be valued by the market at close to Zero.

That cannot be said for Gidgee, which has a NPV5% of 58 Mill A$ at 1700 A$/oz gold price, based on the last study, which was targeting only a small, oxide-only operation. 

In any case - while gold + cash ( 37 Mill )are paying for today´s 55.7 mill A$ market cap, investors are probably holding it for the free option on the nickel price. 

The rights issue closed the other day, and resulted in just under 80% take-up. Always amazing to see, that some shareholders are not taking these things up! In any case, quite a good outcome, which will keep major shareholder Zeta Resources, which was a partial underwriter to the deal, at about 20% - far from a controlling stake.

Heron Resources - are continuing with work on the BFS for the Woodlawn Zinc/copper project, which should be finished late this Quarter, alongside a new resurce estimate. The company as at today has abou 27 Mill AS$ in liquids - only about 3 mill$ needed to finish the study. A few triggers for this one coming up - in my opinion, one of the few zinc projects, which could get of the ground and into construction within the next 9 month.

Perseus - this was not a good Quarter! 37.000oz at 1034 US$/oz cash costs, + 310 US$ in sustaining and other capex, resulted in 1441 US$/oz All-In-Site-Costs. The company is currently doing some pre-stripping ,a s well as the relocation - both is included. Costs have probably been 100$ higher than planned. As flagged earlier, they had to use low-grade stockpiiles to supplement mining ore. I assume, that they will not have enough mining ore for the current Quarter, either - but guidance of 75-90.000oz for the current half obviously incorporates improvements - the current Quarter should see minimum production of 38.000 oz, and up to 50.0000 oz. All-on-site-costs will remain high for this calendar year - but that is not a  surprise. 

Still - the company has reduced ambitious guidance of 95-115.000oz for this half year, to 75-90.000 oz. The timing of this new guidance will not be liked by the market, as PRU had completed  their paper-based takeover of Amara. only very recently.

I see no reason for a completely new assessment and still like PRU for the medium- as well as long term - but this will probably hurt the stock tomorrow, unless it´s saved by the gold price!

Northern Star - good Quarter - some of it pre-reported. Excellent exploration - we spoke about that earlier - and generally solid production, except for Plutonic. As announced earlier, this mine has been put up for sale - but I doubt, whether anybody will buy it. Costs continue to be way above the current gold price...The best possible outcome would be to give it away more or less for free - leaving the enviromental responsibilities and costs of it to somebody else. some one-off´s left AISC at 1975 A$/oz for the Quarter - but this would not be representative of a "normal" Quarter. Still - they will get very little cash, if any, for it. We have spoken about NST recently - the company will have to deliver outstanding exploration results, to prep up mine life. Until then, they remain pretty fully valued.

Independance - a very disappointing Quarterly. Their gold asset, tropicana, produced 101.000 oz ( they own 30% of it ) at 1067 AS$/oz AISC - both numbers are disappointing. The otehr, producing abse metal mines were just about in line. The company produced 29 mill A$ in EBITDA - that´s not a lot, especially, when you are in the middle of a large nickel development, which needs to spend another 170 mill A$ until it´s finished late this year. The company has net debt of 200 mill A$ as at today - hmmmm - need more equity? Probably not - but there is not that much room for another bad Quarter. IF they need to do a placement, I will very carefully look at it - might be a good entry into a reasonably good story long term.


There was more news out today - but I was spending half the day at a Bloomberg compliance seminar, much to my delight! More tomorrow....

Have a nice evening - go-gold.. go!!


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