Market Update

General - Highfield - Lucapa - Heron - Breaker - Resolute

Good afternoon

Deutsche Bank and Volkswagen getting sucked by the Americans...anyway, today they rebound a little - until the next bit of bad news comes???Not that I have a lot of sympathy with them - but I think it´s outrages, that American judges are trying to work out the well-being of VW, to see how large damages they can extract from them....we should try the same with Google...the US would be laughing....but there is no doubt, that Deutsche and VW will be paying big time...

The likes of Teck, BHP etc keep on running, probably for teh right reason: coal prices just refuse to come down, as does does iron ore....

Looks like Iran/Saudi are getting a little closer to a deal - oil is strong....

Some other commodities like sugar are racing as well ( 4-year high ).....just oil is under a bit of pressure today, while base metals are all edging higher so far today.

Mosaic, the large phosphate producer, is having a real and nasty problem...apparently, they have put 212 mill barrels of radioactive waste water into a sinkhole, which now seems to affect an aquifer....that could become very very nasty....Uranium is usually a by-product of phosphate production, hence the mess....No wonder that a subsidiary of Australian Uranium Equities has found Mosaic as an interested partner for their revolutionary uranium-extraction process from phosphate deposits...

Highfield - great news for sad reasons: there are still some 50 mill performance shares will most probably not vest. They are to be issued to the original vendors of the asset, if all operating approvals are in place by Oct 2017. Normally, the last round of approvals will only be granted, once the plant is finished - and teh company has stated, that this will take up to 24 month. So the board has eliminated some provisions for these 50 Mill performance shares today. The impact on the longer term valuation of HFR is very significant: The total, fully diluted amount of shares outstanding falls by 50 mill from 414 mill shares, to 364 mill shares. Especially if you believe, that the company could well be taken out at some stage at say 3$, that woulde change the total price for the company from quite a bit. For a change, good news, while we are waiting!!!

Lucapa - sold 2200 ct for 4.1 Mill US$ in the last sale. The company hast stated operating costs of 1.2 mill US$/month - last month production was 2.850 ct, so even 30% more than the last diamond sale....July was even larger in terms of production, and the last two large stones of 104ct and 172 ct had not been part of this sale. Longer term, LOM will only have 40% of the asset - still, these numbers add up to quite big profits. And diamond stocks around the world are doing well on an improving market  for the stones. As I said - LOM are far from xpensive..., but not for the fainthearted. as we can witness with the Phillippnes in the moment, country risk is a very real risk in mining.

Breaker - reportedly, the placement got increased from 10 mill to 12.5 mill$,. and was still 4x oversubscribed. The market is genuinely excited by this one...a lot of people talking about it in Perth...Again, a hot stock and not for widows, but I think they will open strong again tomorrow.

Heron Resourecs - excellent results from B-Lens of their Woodlawn Project - 5.7m with 14% ZnEq; 2.5m with 19.5%ZnEq. Downhole aeromagnetic survey froma that hole has been indicating a significant extension to N-Lens, which could add 1 millt to the resource, and have a nice impact on the project valuation. No idea, why that stock is not moving at all - perhaps they have more shareholders like myself, who got bored and have sold out! Still - I am still watching this story carefully....

Resolute - UBS completed a 150 mill A$ placement at 1.96 A$. I think this was a little opportunistic...the company is debt-free, and is generating massive cash in my opinion, they would have been easily capable of financing their growth projects with a very limited amount of debt, which I would have preferred. Perhaps tehy want to buy something ? perhaps one of our little babys in Africa, like Cardinal? I am only speculating. Van Eck have increased their holding big time, and only very recently - good time to fill up the Australian institutions, and that´s exactly what has happened with this placement. In the short term, one does not need to own RSG in my opinion....

Have a nice evening


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