Market Update

General - Kingsgate - Chalice

Good afternoon

yesterday´s consolidation moved into a nice rebound today in metals markets! Base metals up between 0,5% for copper, and nearly 3% for zinc....

Oil down a little, despite Nigeria´s prduction problems, and US-production now under increasing pressure - but I guess we´ve had a great run this year so far.

Paul Singer, one of the smartest hedge fund managers world wide, renews his call for gold, while Stan Druckenmiller has gold as his biggest holding....and gold ETF´s holdings are still increasing. On the charts, we have seen the ( by some chartists ) expected fall to test the new upward trend, only to move back up quite convincingly...feels good, and gold stocks in the States confirm that with a  strong move up today and yesterday.!!

As so often, gold producers have been holding the price back a little via hedging - Newcrest last week announced another 200.000 oz of forward selling. Not a big surprise, as the going is still tough for some, as witnessed by Kinross´Quarterly loss the other day.

In March, 7 US energy firms went bust with 1.9 bill US$ in aggregae debt - in April, this number balloned to 11 companies, owing an aggregate of 14.9 bill US$. This week, Chaparral Energy went into Chapter 11, with total debt of 2 bill US. Will be interesting to see, what these numbers will look like for May. This is not an existential problems for banks, but just another very negative story in a difficult enviroment for them.

Good old Macquarie Bank delivered all time high earnings the other day of 2.06 bill A$ with a flat outlook...clearly still a very well run institution!

Kingsgate - the going is certainly still tough for them - and getting tougher by the day! The major problems they have had over the last many years with Thai authorities escalated yesterday, with the Thai Minister of Industry being cited, that Chatree would not get a renewal of it´s license, and would have to close down before year end. They have not formally notified the company as yet - so I guess it has be taken as a strong rumour, rather than a fact at this stage...but it looks ugly, indeed - and as you know, the company has about 31 mill$ in net-debt. Apparently, they have the debt ringfenced to their Thai subsidiary, Akara Mining - which would be very good news, as it would turn around the net debt of 31 mill to net cash of 50 mill A$ , once the sale of the silver asset in Australia has been confirmed ( 18 Mill$ ). I think that sale should also only be taken for granted, once the cash has been transferred to Kingsgate.  Tough times indeed - very tough times, and the stock will probably fall heavily, once the trading suspension has been lifted - probably on Monday next week.This will continue to be a very messy story...

Chalice - the Chairman is obviously very confident about the sale of his Canadian gold asset to First Mining Finance for 32.3 mill shares....he bought 2 Mill shares in the market at 16ct = a 27% discount to today´s NAV ( using share price of 0,8 Can$ for FF ). 

Have a good evening


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