Market Update

General - Gold Road - Evolution - Berkeley - Kentor - Beadell - Troy - "Sin" Mining

Golds does find a lot of resistance at 1300 US$ - tried this level again on Friday, and failed - but ounces held in the ETF are still rising - and it´s price is holding up nicely at 1728 A$/oz - but down 22$ as I am writing to 1265 US$.....The A$ has definitely turned down...and has sold off from 1.45 - to 1.55 against the Euro since 21.4.!

Chinese speculators are driving metals, iron ore and Steel Rebar down almost as quickly as they drove them up! All theses things have had a pretty horrible weak, and the rout continues today. Just oil escaped the sell-off for most of our day - but that´s also down 1% now.

The appetite for placements in the gold space is still excellent - Oklo Resources raised 10 Mill$ for it´s Mali-based gold project, and was heavily oversubscribed. The other recent West African placements, Cardinal and West African, continue to run strongly as well....

MMG Limited reportedly to be bidding for Freeport´s copper assets in the DRC - the company recently stated, that they had a war chest of up to 5 Bill US$ for aquisitions, backed by Chinese money.

Gold Road received mining approval for the Gruyere project in Western Australia. Interesting to see in this stock, that institutional investors apparently happy to buy, where corporate investors are not. This tells you something about ( some ) investors outlook, which is obviously for higher gold prices ( must be - hard to justify these prices otherwise, in my opinion ).

Evolution - I am a little proud of them hitting a new all time high today! 

Berkeley - almighty BlackRock became a substantial shareholder today!

Kentor - announced some more drilling results, which were nice, but not out of the usual. I have not managed yet to get to the ground of what looks like a dismissal of previous CEO, Simon Milroy. Simon has got a few things wrong over the years - but over the last 2-3 years, seemed to be doing a good job in advancing the Australien Copper project.

Beadell Resources - new presentation out, and the announcement of some spectacular drilling results from their Tip AB open pit - the best one with 58g gold over 24m. The intersection has not been included in the recent resource uipdate, but is within the planned pit-design - and also important, it´s largely in oxide ore, which is  more valuable to the company, as it extends processing with the current plant. The company is spending 7 mill$ this year on mine- and near mine exploration, and has had some pretty good success so far.

I had previously commented about the slightly disappointing Quarterly production to March.Looking into the second half, the performance will be much improved. The company is guiding for 145-160.000 oz of production this calendar year. The improved production in the Dec-half will be mainly due to Duckhead delivering - and that´s for one Quarter only. But looking behind that, I think the company should be producing 145-155.000 oz p.a anyway - as pits are getting deeper, grades should improve towards the reserve grade of above 1.4g, and drilling reports like the one today will give them the odd Quarter in between, in which they mine higher grades than this. 

The balance sheet is much improved since this last ( too cheap ! ) placement, with approx 10 mill A$ in net cash. Cost guidance for thios year is better than what most analysts are expecting - AISC of 715-815 US$/oz. This year, and in the medium term, the company should generate something like 55-60 mill$ free cash from operations p.a. - that is a nice improvement, and the EV of about 340 Mill A$ does not value exploration at all. Compared to many other stocks, which have continued to run quite hard, BDR has been left behind more recently, and is showing value.

Troy - also out with a fresh presentation, which sums up this desaster....Their mine in Argentina has been a desaster and has been sold for a token, while their new mine Karouni took 6 month longer than planned! They are citing Leicester as a good teamwork like the one at Troy - well, one important difference: The former became Champion - Troy f...ed up! They boast about their 3% dividend yield story over 13 years - well, until 4 years ago!!! and since then, they raised 80 mill$ in fresh equity! They have 50 mill in net debt, 75.000 oz hedged at 1113 US/oz, a little over 2 years proven reserves, Enterprise Value of 270 Mill A$. The existing production, based on existing reserves, I would value at just 100 - 110 Mill A$ - the remaining 160 mill A$ are for exploration. Well - need I say more?

well...a little sin of the past to end up with: I stumbled across Kin Mining today ( Sin Mining??? )...they own the Leonora assets, previously owned by Navigator, before they went into administration a few years ago...Mea culpa.....this company announced a very positive scoping study ....well - not for me - I have burnt my fingers ( and yours, sorry! ) in this one too badly to ever touch it again!

Have a nice evening


Wilhelm Schröder
Schröder Equities GmbH
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