Market Update

Crazy World - Happy Couple - West African - Marindi - Berkeley Energia

Good afternoon

Sorry forgot to send this on here is today´s report, and Friday´s in the end...

The most important thing today is to wish Daniel and his WIFE Manuela all the best today - they got married and I can assure you, that they are making a wonderful and good looking couple!!!


I am sure all of us were surprised by the attempted military coup in Turkey late on Friday....Disgusting to see, how Erdogan is using it to clean up with his opposition, and even more disgusting is, that our hands are bound, as we need Turkey to control the flow of refugees into Europe! But I guess Erdogan is driving it too hard now...we just cannot stay quiet! Another problem we don´t need, and the US is not looking as if it wants to be quiet, either! The mnarket in gold will be at least nervous and well supported, until the US elections are over in early November.

The Philippines have closed the third nickel ore mine...and the nickel price is creeping up...tarding at 10.500 US$ now, while zinc and copper are also a little stronger.

West African Resources - added some very nice hig grade results...18m with 107g from 98m / 3m with 145g from 125 m  / 4m with 43 g from 174 m, all from the M1 South prospectare certainly what gold explorers dream of! The crucial point in development will be the maiden resource estimate for M1 South and M1 North - it´s not 100% clear to me, that all these recent results are hanging together, even though the company believes so., If it does, we could see a very important upgrade to the plans later this year, from a smallish heap leach mine, to a CIL plant, potentially producing 140.000oz or so at reasonably low costs. At this point, I am a strong believer, and see WAF as the most hopeful newcomer in West Africa.

Marindi Metals - I have been holding a small position here for some time. The company is exploring for zinc and copper in Western Australia, but also has some ground right next to the property, where Kidman Resources have been succesfull in drilling some good lithium intersections ( the stock is now capped at 80 mill and doubled in two trading days, under massive turnover ). I am in there for copper & zinc - but in this market, nothing is better than lithium! Marindi is capped at only 19 mill$, and today more than 15% of the capital were traded. Worth keeping an eye on!


And here Friday´s report:



Chinese numbers for June were pretty good today: Industrial Production + 6.2% ( vs expected 5.9% ) / Retail sales + 10.6% ( vs 9.9% ) / Fixed Asset Investment + 9% ( 9.4% ). Very strong credit growth also...

US Retail Sales very strong : +0.6% ( exp.0,1% ) / CPI ex Food and Energy 2.3% ( vs exp 2.2% ). Inflation creeping up....?

Potash prices have been agreed upon with China - 219 US$ is a terrible price vs last year, but a few$ better than feared for. Potash producers reacted positively, like Kosaic, Potash, K+S - perhaps also still reacting to the closure of a large Mosaic-mine the other day. This is also helping the sentiment in Highfield, our little Australian puppy!

I am sure, that you have all heard about the tragedy in Nice...surpisingly, European stocks are shaking it off, as banking stocks trade up from the worst.

Berkeley Resources - announced their bankable feasibility study BFS yesterday - unsurprisingly, a very positive study. The NPV declibed, because of lower pricing - capex rose by 11% to 95 Mill US$ - but that´s the only bad news...much more positive news: Total cash costs are expected to be 17.15 US$/lb - that´s easily in the bottom Quartile of worldwide costs, in a safe country! The NPV 8% is 532 Mill US$, and the IRR is 60%, for a 14 year production of 3.5 mill lbs p.a. on average.. The company is using a uranium price of 39$ short term, going to 68$ in the very long term. Using a 44$ flat price, the NPV does actually go up. Price targets of Broker Numis is 1 Pound/Sterling or 1.75 A$, Dundee have 1.10 Pound = 1.92 A$/share. This is a world class project,a nd can be improved via exploration success ( highly probable ), and converting resources to reserves = additional mine life. 

As the BFS has been finished, the company can now enter into serious discussions with off-takers, and strategic investors. IF somebody buys say 20% of the asset at project level, at a 20% discount to the ( already discounted ) NPV, the company should be able to proceed with full development without any more equity raised. From previous conversations with management, I believe, that they prefer to have very little or no debt - that might get a little tough - and that´s also the reason, why the stock is still trading at a fraction of the NPV: a placement is clearly expected. We will find out - such a placement might never materialize - that´s why I would certainly buy 50% of any planned shareholding now. You don´t have the chance too often, to buy a world class project at a 50% or more discount! Alongside Highfield, BKY are one of my favourite stories....and I declare my substantial interest via the fund!

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Have a nice day


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