Market Update

General - Cardinal - Evolution

Good afternoon

Cruz refrains from supporting a presidential candidate Trump - Trump would not necessarely bystand NATO-allies - Trump´s adviser Baldasaro calls for Mrs.Clinton to be shot for treason - Erdogan escalating sackings/detensions even more - this world is crazy and dangerous! I am pretty sure, that the current weakness of gold is a good buying opportunity amid all this uncertainty!

Perefct econoimic numbers in the States today: strongish - but strong enough to fear for interest rates to go up any time soon!  In my opinion, it won´t happen before the election on 6th of Nov anyway....if at all this year.

China more than doubled import of refined nickel in the first half, as imports of nickel ore slumped by 24% - mainly driven by weak production in the Philippines ( due to bad weather ) - over the last few weeks, several mines have been closed there, for enviromental reasons, or as they ran out of reserves. The new Enviromental Minister, Lopez, is playing hardball: yesterday, another mine has not only be ordered to close, but to re-fill 1.4 millt of stockpiled nickel ore into the open pit! Meanwhile, stainless steel production in China is expected to increase by more than 4% this year. Nickel and zinc very strong and are making new highs in London today, while other base metals are edging higher as well. It seems, that gold is finding a few friends again.

The UN came out with an interesting study, as reported by Investec ( unfortunately, I do not have the original study ): Excavation of primary materials is to triple by 2050, after tripling from 1972 to 2010. Main reason for this is cited to be the higher amount of material per unit of GDP, as growth is moving to material inefficient economies.

Cardinal - today´s drilling results were exactly the kind of results I need to become even more confident, that their asset in Ghana will be a mine! 119 m from surface at 1,72g / 98m from surface at 1.31g / 49m at 1.39g / 31m at 1.57g / 9m at 4.62 g  -  that is exactly what is needed to get this resource from a large tonnage resource, grading 1-1.2g gold/t, to somethinmg like 1.2-1.3g, which would make me much more confident. This is the second round of results, hintinmg at these better greades for the overall resource, and at least equally positive is, that they are from surface - potentially even further reducing the stripping ratio. Assay results from more holes are pending - but unless they will bring up something substantial, the immediate re-rating, following a large placement, and at a weak gold price, probably has happened. The next major story will be the declaration of a resource target ( given the size of the resource,  some more drilling is probably needed for a formal resource ) , which could well be around 3 mill oz. 

Evolution - the Quarterly today was not really anything exciting, as nearly everything had been announced before, and I have been praising them here for it. The company had an outstanding financial year, has paid off most debt much earlier than expected ( and will be completely debt free in 9 month at latest ), has doubled the div-payout with imemdiate effect. What is very apparent is the increased emphasis on exploration, not only by doubling the budget since last year, but also by giving it much more room in the Quarterly. At Cowal, they have been very successful in finding additional ore to facilitate a large cut-back, which would increase mine life to something like 15 years - the feasibility study for this will be finished by about mid 2017. No news about potential divestments ( I think Edna May may not be up to the standard of the other mines, and no news about aquisitions, or which country they might be targeting. The good, average asset quality, the excellent management, the fantastic cash-generation and the size make EVN kind of a base investment for anybody investing in Australian gold stocks.

Have a nice evening


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