Market Update

General - Beadell - Strike - Highfield

Good afternoon

strong employments numbers in Germany today, "inflation" a touch stronger than expected.  In the US, no surprises today from labor market numbers.

Finally, some profit taking in European equities today, perhaps also driven by a slightly weaker US$, following Yellen´s indication yesterday, that interest rates would not rise any time soon.

The same was certainly very positive for gold, and also for base metals - gold is trading abover 1340 US$ in the moment, while base metals are having a strong day in London.

Oil is weaker again - I guess mining companies will be happy with that anyway. The recent run of oil to about 50$ had got some shale production going again in the States - but the retreat to about 41.50 US§$ for WTI will choke that off very soon again. We should have a new trading range for oil between 40-and 50$ for WTI, in my opinion, and I do not share the view of many analysts, who see the price of Brent hitting 60$ within 12 month, and 70$ a further 12 month out...

Many Quarterlies...will talk about a few only:

Beadell - this was a miss, as expected/feared! 24.500 oz production was up by 15% vs previous June-Quarter ( remember, weat season for just about all of the first half year ), but if you want to produce 150.000 oz p.a. on a sustained basis ( that is, without the additional benefit at times, when tehy mine from the small, but very high grade Duckhead deposit ), this is just not good enough. AISC of 1245 US$ were extremely high, partially driven by a strong Brazilian currency ( which was still lower than in June-Quarter 2015 ), increased exploration, and pre-strip/cutback - still, I am less than happy with this. Material movement increased by 35% - that was a positive. 

Having said all these negative things, exploration during the Quarter has delivered absolutely outstanding results from several deposits. But the operation continues to be a difficult one, and the enw management has not completely changed this at this stage at least. One must not forget: The cash flow of a mine is not generated by exploration, but by mining and processing! Overall, I have a position in BDR - but I am not really happy with it!

Strike Energy - I did not manage to talk to them today, after their Quarterly had been released. As always, very technical - I will talk to them tomorrow morning, and come back on this one in tomorrows report. One thing is for sure: gas prices at the East Coast have gone throuigh the roof in June and July....but more tomorrow

Highfield - Quarterly out...the most important thing is still outstanding: enviromental approval. I think realistically, they will not get it, until a new government ahjs been formed in Spain. In the moment, it looks like the conservative party will run a minority government, supported by the right wing. That might not last for very long - but HFR only needs a few month at worst. All oustanding questions have been answered a few month ago - there is absolutely no indication for anything negative - but without a new minister for enviroment, and one for mining, very little progress is obvious. The company will ahve a few things tom report about in the current Quarter: Hopefully an off-takle agreement for teh salt, the dfinitive financing with European banks, and a fix-sum contract with the contractor, who is building the project, Acciones. I will keep you posted, once progress can be reported on these issues - but the main point is still the approval! I continue to hold a very large position in HFR.

I have to finish for today... more tomorrow:


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