Market Update

General - Heron Resources - manas - Breaker

Good afternoon

personal spending in the States in line, inflation non-existent - no interest rate increase in sight!

Base metals are not only holding yesterday´s strong advance - as the day progresses, they want to go a little higher! 

Gold and "other" currencies are relatively quiet today - and equities look like everybody in the investment world wants to see a halfway positive end to the Quarter - and in fact, the end of the financial year ( in Australia ).

Heron Resources - released their much awaited BFS today for their fully permitted  Woodlawn ZinC project. This is a viable project - well, just - and while they own one of the few zinc mines potentially coming on stream, I was a touch disappointed. Over the proved and probably mine life of 9.5 years, tehy will produce 284.000t of zinc, 67.000t of copper, 87.000t of lead, 7.5 mill oz of silver and 28.000 oz of gold. Steady state production of 40kt Zn/ 10 kt of Cu/ 12 kt PBN / 900koz of silver and 4 koz of gold, for C1 costs of 0,06 US$/lb of zinc and C3 costs of 0.34 US/lb zinc. First production is targeted for early 2018 - by which time zinc should be in very short supply, and might well trade 20-30% higher than today. There also remains very good upside from exploration to extend the mine life, and from converting resources.

Being an old mine, infrastructure is excellent - but peak cash demand will still be 164 Mill A$ - which is pretty good. 

but here is the big BUT: They are using an exchange rate of 0,71 A$/USD - which might be realistic - but they are using 1.01US$ for Zn / 3 US$ for Cu ( 0.91 US$ for Pb - all of which is higher than today, especially for copper. To develope this asset today, somebody ahs to take a view on metal prices. I think this might well be possible - but it would not be the bankers!! Heron only has an EV of about 30 mill A$ after cash - somebody might well take a view and take them over. But for the company, as an independent entity, I think any financing would be very hard to achieve as at today, and in the current market.....

Manas - some investors might still have an old shareholding in the bottom draw. The company doubled today, on the very surprising news, that Resolute, the predominantly African gold miner, bought 6% of the company. Will be interesting to watch, what tehy are planning - even after doubling in value today, market cap of Manas is only 7 Mill$. I would be surprised, if Resolute were interested in MSR´s small gold project in Kyrgysia - it might rather be their newly aquired, Tansanian asset, which found their attention. We will find out!

Breaker Resourecs - some very promising aire core drilling results out today, up to 8g/t of gold. But a little word of caution - we have been here before , and subsequently, deeper drilling did not deliver any meaningful gold assays ( that was in teh same, wider area, but not this project. I remain a shareholder and watch with interest!

Have a nice evening


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