Market Update

General - Cameco - MMG

Good afternoon - sorry, this was meant to go out yesterday.....

base metals are weak again, following the short respite yesterday. The sector is clearly consolidating....China´s import numbers , as mentioned, have not been good at all, and point to some slow down over the winter month. Stainless steel production has been frentic over the last few month, with numbers, which are not sustainable - impacting nickel consumption, which at this stage, is easily dominated by stainless steel production. So after the strong run since mid-June, we might well see a bit more weakness. The world is looking good - as witnessed by anotehr increase of growth-estimates by the European Union today, from 1.7% in 2017 to 2.2%, and 2.1% next year - so any correction should not be too bad!

Gold continues to look quite good, edging higher again to 1287 US$ currently, or a very strong 1678 A$/oz. Leading, Australian gold producers have been quite strong recently, as they should! No real bargains here, but valuations are about in line with fundamentals.

As slimy as it appears - it´s probably good news, that Xi and Trump seem to be getting on o.k., reducing the risk of trade wars. 

Lithium stocks have been pretty strong once again, many of which made new highs yesterday / last night - perhaps helped by some rumours, that RIO was bidding for the stake of Potash Corp in the world´s second largest producer SQM.

Cameco will close the world´s largest Uranium mine temporarely, for 10 month. This will cut world suppy by about 10%. Big story - BUT Cameco is sitting on stockpiles of similar size. I do not believe, that this will change the equation in the long term...even France now wants to cut it´s dependance on nuclear power. Ongoing falling costs of solar-and windpower will not increase demand for this source of energy!! Certainly, base load will be neede for the foreseeable future. But would you commit to a muli-billion, long term development at a time, when batterie-storage is making good progress?? I really believe, that coal will be the base load of choice - carbon-emissions here or there - for some time to come. The short term strength of uranium stocks might turn out to be a good selling opportunity?!

MMG have officially opened the Dugald River Mine in Australia, which will produce 170.000t p.a. of zinc in concentrate. Not exactly a cheap producer - cash costs have been quoted at 68-78 USct/lb ( so I guess total costs close to 1$/lb ). Nevertheless, this is the first, large zinc mine to have opened for some time. Much needed, I think, in light of the current supply-deficit.