Market Update

General - Paringa - Panoramic - Troy - Kingsgate - Venturex - West African - Genex - Strike

Good afternoon

much weaker than expected GDP-numbers in the States - no interest rate rises on the horizon, I guess!

Equities certainly like that, metals are unchanged ( after beaing weaker earlier on ), and the US$ is currently loosing nearly 1ct against the Euro...

Gold is on the way up - gold mines in the States are trading at the recent high!!!

The world continues to benefit people, who have financial and property assets....the poor guys are being left behind even more by the day!

Amazon followed Google, Facebook and Apple yesterday with super-earnings....while Oracle bids 10 bill$ for a clout-based business, Netsuit, 40% or so owned by Larry Ellison.

Erdogan continues on his path to dictatorship, and will confiscate all private assets of 3000 people he has taken to jail....unbelievable, that we have little chance but to still communicate with this bastard!

Before I go on holidays, a massive day in terms of Quarterly Reports today...

Iluka - the mineral sands producer is making a bid for Sierra Rutile in London, another mineral sands operaotor. The consolidation in the sector has only just started, I believe....Low interest rates, ample investor appetite for resources , and a dirst of new, quality projects are driving it!

Barrick are putting their 50% share of the Golden Mile in Kalgoorlie on the block....Bloomberg says, that price target is 1 bill A$. Perhaps the next one for Evolution? Chinese companies would also be interested,e specially Zijin.

Gold mining stocks in the US trading just 1.5% below the recent high...the race continues!

One little number I really like: Macquarie Bank has a larger market cap than Deutsche Bank today...who would have been brave enough 10 years ago to see, that this would happen! Macquarie is still one of the best banks 20.000 miles around, and I am very grateful for having worked their for 16 years - and hence, my fund is a holder. The yield of 5.6% and PE of 12 is not demanding at all!

Paringa - the coal minnow made a placement yesterday, raising 6.5 Milöl$ at 17ct. I took a small slice of it for my fund. PNL are one of the ebst stories still, in my opinion....coal in Kentucky....almost a dirty word tehse days. But coal fired poower will be with us in teh States for many many years to come. Most listed coal producers over there have gone up by 100-200% this year...and PNL will be the enxt one going into production. Initially, 1.8 millt p.a. ( of which 55% are already contracted to power stations ) from a small mine called Buck Reef No2, requiring only 39 Mill US$ capex - followed by Buckreef No.2, which will bring total production to 5.5. millt - so quite sizeable. Buckreef No.1 has all approvals in place - Buckreef No.2 needs another 12 month for approivals, and then anoither 12 month to be in production ( company has changed plans recently to start with Buckreef No.2 due to very low capex needed ).. Broker Argonaut have a 216 mill US$ proejct valuation, vs market cap today of about 30 mill US$.....Their valuation for the company is 0,98 A$...vs 0,21 A$ today. As always, the truth will be somewhere in the middle...In any case, the stock should be very cheap for a relatively low, risk, good quality project. Some of you might remember Taso Arima, who presneted the company at our conference in Zurich 2 years ago. As always, we were too early - but the story is outstcanding, in my opinion!!

Kingsgate - Quarterly out today. Stock still suspended...and very little hope, that Kingsgate will be able to operate the Chatree Mine in Thailand after 31.12.2016, when their metallurgical license expires. The Government just does not wantz an gold mining! IF the debt , held by subisidiary Akara Mining, is ringfenced from Kingsgate itslef, teh stock is cheap - if not, they have a problem! Cash incl bullion is 55 mill A$, debt ( within Akara ) is 75 mill$...and the only, significant asset remaining is KCN´s silver development in Chile. Measured by the NPV, Kingsgate should be cheap, based on this aset - but nobody will touch teh stock, until the debt situation is 100% certain. What a nightmare!

Panoramic - Quarterly major surprises, as production figures had been out before. Very low costs - but not represntative for the future, as there was no development in the Quarter,. and much btter grades than normal. Both nickel miens are now on care and maintenance. Exploration of savannah North continues to be very exciting - good intersections, good grades ( which are pointing to a resource of around 1.4% nickel and 0,6% copper + some cobalt ), which should result in a reserve ultimately at betetr grades than the previous ore body. The bankable feasibility study will be finsihed by year end....Compoany is sitting on 30 mill$ in cash + receivables, a reasonable gold asset ( most probably to be floated with a nice chance to make some profits from the entitlement to shareholders ), and what is probably going to ba nickel asset with a mine life of 15 years+....The price target for PAN is everybodies my opinion, and in a normalised nickel market, where not 60% of all prooucres loose cash, the stock is still very undervalued.

Troy Resources - another Quarter to forget...ongoing problems with their new mine in Guyana, which is vasically their only asset - beside of some debt! Liquids of about 10 mill US$ - need to pay back 5 millUS$ of debt every can see the risk here! The COO got sacked a few weeks ago - I can easily see, why! Nothing should go wrong...and I would not want to be a holder!

VentureEx - the re-activation of this company got another leg to it: Company raised some 4 mill$ from placement + rights issue at 0,006 A$....Good opportunity to byu a call option on zinc! Both mining areas have strong potential for more copper- as well as zinc-reserves, and as there is very little zinc exposure out there, zinc fans should be taking this up.

West African Resourecs - excellent infill drilling results from M5 yesterday - 41m at 2.2g/gold - that´s the kind of drilling which should increase grade in the new open pit. West African gold explorers are still finding a lot of interest, as existing producers are generally not cheap at all anymore. Next stop will be a resource estimate for M1 deposits, which could define the pathway to 150.000 oz of annual production - and the bankable feasibility study. The company has more than enough cash to finmish all necessary drilling/studies. WAF and Cardinal are still good stories - my fund is holding very reasonable positions in both companies.

Genex - Quarterly out yesterday. The company is still open track for some very important announcements with regards to their solar project in Septmeber: power purchase agreement, bank financing, feasibility study. I think government grants + debt will be sufficient for nearly 85% of the capex - very little capex left to be financed by equity - and even that might be done by some strategic investor. The hydro power project is still the main story - but solar will give them some early and good cash flow. NO Australian institution is buying this one - just too small...but that will change over time. My fund is holding a large position, at least relative to the small size of the company. 

Strike Energy - spoke to them today. We are still not there!!! BUT - Klebb 4 has been pumping now for 10 days, and is doing so very well - following some initial engineering problems. Within 4-to 6 weeks we will know, whether Klebb 4 brings the project to a commercial flow. As always - takes a bit longer than planned! There is certainly no guarantee, that this point will be reached ( I guess a minimum of 200.000 cbfeet/day is needed ) - but the chances are high and as good as never before. As we all know, STX are sitting on a massive resource, and I ahve no doubt, that it will be produced from - the only question is when....and how much more it will cost to get there. For now, Strike are well financed until at least year end - that is, at a strong activity level, spending 3-4 mill$ Quarterly. Once they have proven commerciality, there will be massive demand for the stock anyway, as the enviroment ahs never been better. Gas prices at the East Coast of Australia have sky-rocketed in June and July to a level, which is clearly unsustainable - but a possible longterm price of 8$ per GJoule lokks conservative vs teh spikes of up to 25$ we have seen recently. South Australia is having electricity outages, as coal fired power has been closed down, and power generation is depending on solar & wind, while some gas-fired power stations are sitting idle, as there is just no gas available!! STX´s asset is in South Australia, and could be readily delivered by exisiting pipelines.

In the moment, all gas is being sucked into the new, very large LNG developments in Queensland, following about 20 bill$ each capex into these projects. Any gas STX could produce, would find ready buyers at very attractive prices. The company has given indications in the past, which let me believe, that costs could be around 4$ for them - any pricing above 5$ would be good news, and I am expecting 7$+.

As you can see - I am still very bullish on STX, even though this story has needed way longer, than I originally anticipated. But the price is high - if successfull, the value of STX will be several times today´s price in a few years! STX are still one of my largest positions in my fund, alongside Highfield, Berkeley, Finders, and Starpharma.

Have a great weekend - I might send one or the other report from my holidays in Northern Germany. In any case, enjoy the summer!


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