Market Update

General - Newcrest - Paringa - Berkeley - Finders

Good afternoon

3 out of 4 polls have the POM´s exiting...and the market is obviously VERY worried about the potential impact...

Retail numbers in the US have been quite good....and the US equity market continues to outperform....

The North American markets are the only, main markets in green this year....Europe is down 10-15%....and good old Australia is just negative....

Not to forget : gold is up by nearly 22% - gold stocks up by more than 100%...performance sucks! But our stocks have become a bit lacklustre of late, and I have to admit, that I have been thinking about reducing my gold-exposure somewhat before the BREXIT-vote on the 22nd of June, as I still just cannot believe, that the English gonna do IT!

German 10-year Bunds are trading at negative yield for the first time in history! Absolutely crazy, when you think about it...Germany is getting money from YOU, if you give it credit!!! There was an interesting article in the FT today about what could be the "risk-free rate of return in the year it the German Bund???? If yes, you got top continue buying equities with your ears pinned back - and even more so: gold....That´s what Ken Rogoff has told central banks to do!

Anyway...let´s stick to some micro-news...that´s easier!

Graphex - my first venture into Graphite listed today - nice one...80% premium! Very lucky....but as I said the otehr day: in relative terms, tehy are very cheap - and if the Chinese partners, who have signed an MOU ( which is not all that much ), and who will continue their techncial due diligence, sign up to something more meaningful, the stock is still cheap not only in relative terms, but also in absolute terms. It´s worth having in mind, what Elon Musk siad the other day, when he was confronted with the risk of not having enough lithium for his batteries: He said, that this would not be an issue, but that nickel and graphite would be much more important! 

Anyway - having said all this, I have to admit, that I am playing the market here up to some degree....even though I believe, that the Graphex-project is one of the good ones around, and that the stock offers great risk-return, given the small market cap vs the quality of the resource ( and again - little word of caution: I have invested in gold- and base metal stocks for more than 30 years....I bought my first graphite stock 6 weeks ago!!!)

Finders - I am feeling much more comfortable here, and I know, that it´s cheap - but the damned thing just does not want to move, because it´s not fashionable! Markets are a peculiar thing! FND are now in real production of LME-copper cathode in Wetar...110t have been stripped within 3 days, from a project, which is planned to produce 28.000t p.a. at cash costs of below 90ct/lb...the project is obviously ramping up nicely, and for a proejct like this one, postive cash generation should tsrat very quickly.

Paringa Resources - as part of the bankable feasibility study, they have now completed the estimated for capex. Just 39 Mill US$ are required vs a previous estimate of 44 mIll US$ for the No.2 mine ( which will be first to be developed ), and which is going to produce 1.8 millt of coal p.a. The No.1 mine is planned to produce 3.8 millt , but due to the big task to get financing for a small company like PNL, will be developed once No.1 is up and running. The company is in "continued discussions with potential financiers and have received exceptional feedback". Still - this is not going to be easy - but given the relatively small amount needed, sounds well possible!The company has also indicated, that due to lower employment costs etc, operating costs will also be lower than planned. The BFS is due in the Sept-Quarter, financing and start of construction is planned for 2nd Q 2017, production for 2018. 

Berkeley - have now started a large exploration program at Zona 7, and at a target just 5km North. I think the chances are very high for them to come up with some exciting stuff here -  very limited drilling below the existing resourcve has already come up with the goods, and the second target has had some good intersections from historic drilling. The market in London ( and that´s where the stock now has the highest turnover generally ) is making a new high today! Nice one!

Newcrest - Gosowong in Indonesia, which had a seismic event early in the year, has been completely reopened now - but it will need a few month to ramp up to full production. The company has stated, that production is expected at the bottom end of guidance for this mine, for the year 2016. I think the market had expected this.

Just an interesting note to finish, as highlighted by my friends from Investec : The Sino Iron project in Australia, owned by CITIC, is now in production! This is great news for them! Originally expected to be on stream in 2011, full production is now expected in 2018...after 12 bill US in spending, vs original budget of 2.5 bill.... Mining is no easy game, as many incl myself have found out many times -but this got to be a negative record, and in percentage terms, is even worse than Anglo´s experience in Brazil! 

Have a nice evening


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