Market Update

Waiting for Yellen - Crusader - Perseus - Kingsgate - Lucapa - Paringa

Good afternoon

waiting for Godot - well, at least waiting for Yellen! But similar to the book, we do not really know, what will happen, IF, nor, IF not...rising interest rates have been good for commodities historically , but we have never had a situation like the current one before. All I know is, that commodities so far this year have done relatievly well, and that China has been defying all gloomy predictions - even though with debt-driven measures. We will find out soon!

For now, gold is having a good day, trading about 10$ higher than in Australia early this morning...

The Phillippines will close anotehr 12 mines, mainly nickel ore mines, and also including some sizeable ones - but which ones exactly, and what they have to change to re-open, will only be announced on Monday. Base metals are very slightly lower today - nickel is up a fraction.

Equity markets so far at least are happy....let´s hope, that Yellen will keep printing....

Crusader - reported another fantastic hit with 1m at 1992 g gold from their Juruena deposit in Brazil, as well as 4.8 m with 11.9g and 4m with 27g. This is not the right sort of thing to get to a large resource - but the target is to have a resource of 300.000t of mineable material at say 10g, to enbale the go-ahead for a 10 mill$, 100-150.000t p.a. plant, which would cost them just 10 mill$, and would have cash costs below 600 US$/oz. At production of about 30.000oz p.a., that would generate enough cash flow to enable systematic exploration of their highly prospective ground position. The iron ore market in Brazil is also looking better for their Posse Mine - some smaller operations had to close down, as their tailings dam´s ran out of capacity, and new approvals are hard to come by in the aftermath of the Samarco-desaster. It would be a nice outcome, if they could sell Posse one day, to have enough equity for the gold plant. And last but not least, the approval process for a mining lease for Borborema is making good progress. A lot of unfinished work at Crusader, and given past experience, I am still a bit cautious - but there are strong signs of life here!

Perseus - a very impressive presentation at the Denver Gold Show! Very detailed numbers for many years ahead for their two mines in production, and under construction resp.. If tehy can get halfway, where they want to be, the stock is very cheap...

Kingsgate - the company, which has been suspended for a few month now because of the evry uncertain situation in Thailand, ahs received a takeover bid last week at a horrendous 4.2ct. Net debt of Kingsgate is about 40 mill A$ - but most of it is debt of their subsidiary Akara Mining. Not absolutely sure, that this is waterproven let´s assume, that tehy actually have 40 mill in net debt, which is a worst case scenario. I think their Chilean silver asset is worth somewhere between 50-and 100 mill A$ ....even at the lowest end of this, the company would be worth I would not react to the bid. I think it´s very cheaky - the guy behind it is a former business partner of Kingsgate in Thailand. looks all very dedgy to me...and while I have not been a KCN fan for a long time, the company should be worth substantially more than the bid price.

Lucapa Diamonds - the Angolan , alluvial diamond producer has now ramped up mining to more than 20.000 bcm/month, as planned. July and August have been recoed month in terms of earth moving, treatment, and diamonds produced. Grades have been excellent as well, and while tehy reported the discovery of a 36ct fancy coloured stone, the company reported today the recovery of a 104 ct white diamond....This operation is going very well indeed, and the Quarterly should again verify my expectation of nice cash generation. The main target, though, is the discovery of the kimberlitic source op these diamonds. Given a lot of past ground work, they have strong indications for it, and exploration ahs started, while it should be bumped up following the renewal of a 3-year exploration license by the end of this month, hopefully. Lucapa remains a great story - not for the fainthearted, though! The only worry I have - and that is very subjective: For my gut feeling, more and more special stones are being recovered in Africa lately - I guess because of more sophisticated exploration- and production techniques. I wonder, whether there is enough , fugitive, chinese money around to buy all these beautiful things!

Paringa - natural gas prices in the States are going higher and have hit a 16-month high yesterday, making coal very competitive again. The share price of Alliance Resource Partners, which is doing very similar stuff to the mines planned by Paringa in Illinois, at very similar costs, has gone up by 100% since Feb to a respectable market cap of 1.6 bill$ again....Paringa is still languishing at 18ct, even though the company has never had stronger fundamentals than today. I think it´s very worthwhile to accumulate straw hats in winter!

have a nice evening


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