Market Update

General - Berkeley - perseus

Good afternoon

We would like to invite you to our yearly Australian Resources Conference in Zurich, 24th of February, Hotel Baur au Lac. As always, the attending companies are inviting all interested investors and other interested followers. Please pass on the information to your colleagues as well! 

Please register by clicking this link:

Australian Resources Investment Conference

This year, following companies will attend:

Evolution Mining / Perseus Mining / Panoramic Resources / Prairie Mining / Genex Power / Graphex Mining / Breaker Resources / Peak Resources / Finders Resources / Energia Minerals


Market update

US economic numbers out today painted a mixed picture, with a lot of underlying strength in the economy. Price pressure was limited - but I guess that might change, as labor costs are on the rise especially.

A serious trade war seems to be developing between US and Mexico...hopefully, this will not tell us what´s going to happen with us and Asia....that could be a serious threat not only to world growth, but also to US growth, even though Trump does not seem to realise this. The guy is completely out of his brain...and taken that into account, I just cannot believe, nor understand, that the gold price is falling. I think gold should be bought with the ears pinned back....

German Import Prices advanced by 3.5% (!!!!!) in December. This was the largest increase in 5 years, following a 1.9% rise in Nov. Clearly, inflation is increasing in Europe, and alongside Trump-trouble, that will trigger a lot more buying for gold. German bonds pretty much got a hammering recently, but at just 0,47% yield for the 10-year, they are still VERY expensive, in my view. Lock in your mortgage, if you can....Hard to believe, that banks are still charging us up to 0,5% in negative interest for cash being held on accounts...that is clearly unsustainable!

Chinese New Year holiday has started...we will have to do largely without Chinese players! It will be interesting to see, what happens in 10 days time on their return...traditionally, metal markets are rather cautious before this long break, and tend to go stronger once it´s finished.

Panoramic - Zeta, the largest shareholder, increased it´s holding by 5 mill shares to now 25.98% . Good to see the largest shareholder having faith in the company - still, not 100% sure, whether I like that! Nickel has taken a bit of a bath lately, and whether Indonesian ore exporters will be able to export again or not, the vast majority of nickel production is loosing money down here - even the most modern, Chinese pig iron producers will have a problem in making some cash here.

Northern Star - are still being backed by Blackrock in a major way. They increased the shareholding to 17%! I would not feel very comfortable with that, as pointed out yesterday - but who knows, perhaps I am wrong with my cautious view on the stock!

Perseus - Aussi gold stocks got a beating today - but PRU especially so, and I have to say: Understandably so! The Quarterly was as bad as foreshadowed in the recent update, but the guidance was taken lower substantially by 25% to around 100.000oz for the current half. I had expected some sort of downgrade, but not that badly! A combination of reduced grade, but especially the mining of much more oxide- and transitional or, than fresh ore contributed. And for the next few month, some of these issues will persist, resulting in this heavy downgrade. The company has looked at their way of resource estimate, and as they have found the hard way  via mining, it has been incorrect! This has been rectified now, and consultants are working on a new resource estimate, as well as on a resulting, new mine plan. The future does not necessarely have to look bleak - I guess once the company digs into deaper part of the pits, the amount of fresh ore and better grades will turn out to be correctly estimated. But this cannot taken for granted, given recent experience. If you want to be on the safe side, wait for the new mine plan, to be announced by the end of next month. I am sure, that PRU are working high speed on it, to have it completed by the time of their presentation at our conference on the 24th of Feb. 

Cash is starting be a little worry....during this Quarter, the cash balance will dive below 20 Mill$, which is not a lot for a mining company with a large operation. PRU are debt free, so I am not too worried...but if we should have another horrible Quarter like the one just finished, they might have to raise some fresh money at the time of a very depressed share price. I do not expect this to happen - but the recent history of PRU has been pretty volatile. Perseus are currently talking to Macquarie about a credit-line, which would remove the risk of a new issue.

Berkeley - they ahve done just so well! The stock made a new all time high today - not a bad effort, considered that BKY are developing a uranium mine, which is trading just above all time lows! The stock is still a long way below real value, I think - and still, if the stock continues to trade as strong as now, the company got to be tempted to finance a larger part of the development by fresh equity. Don´t get me wrong - I have heard no rumours, just thinking loud here. If tehy get a great off-take deal with somebody large, this could eliminate all speculation in that regard. But it never hurts to take a few of the top, when you have easily doubled your money!

Have a nice weekend!


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