Market Update

General - Antipa - Sheffield - Venturex - Gascoyne

Good afternoon

nervous markets calming down today...equities up across the board, metals mixed but generally well supported, and the US$ is stabilizing at slighty stronger levels.

Initial jobless claims in the US higher than expected, but continuing claims lower...Import- as well as Export Price Index lower than expected. Industrial production as well as manufacturing numbers in the States strong!

Cerberus kicking ar.e at the German banks...buying stakes in Commerzbank as well as Deutsche....

VW planning to spend 12 bill US$ until 2025 in China alone on developing and building EV´s with their local JV-partner...want to sell 1.5 mill EV´s p.a. by 2025, based on 40 models...No wonder these guys tried to fix their cobalt-needs for 10 years - but nobody was stupid enough to give it to them . Except for Glencore and the DCR kids mining brigade, nobody else would have been able to anyway, I guess. Whether it makes sense or not - EV´s will be taking off!

Harbour Energy said to prepare a bid worth 11 bill A$ for Santos, one of Australia´s largest oil&gas producers.

Antipa Minerals - announced the maiden resource for their Minayri project, 40km north of Telfer in WA. 11 millt at 2g gold, 0,24% copper and 380 ppm cobalt is a good start. I do like the grade, which is very reasonable, especially including the byproducts. The other major asset of Antipa is a JV with RIO, in the same area, where RIO has spent 8 mill$ so far, and can spend a total of 60 mill$ to earn 75% of the project. AZY had 3.8 mill$ in cash at Quarter end, with 1.6 mill$ planned to be spent this Quarter. I guess they will raise some more cash relatively soon - this could be a good opportunity to buy some stock. Currently, there is drilling activity on several projects  - so accumulating some ahead of any potential placement does make sense. The m,arket cap of AZY is only 27 mill A$ - that´s relatively cheap, and certainly cheap vs a lot of others! I have met the management twice - good and experienced people.

Venturex - was suspended today, awaiting a capital raising. They also announced some more, pretty exciting copper/zinc exploration results from their Sulphur Springs deposit in WA, indicating more and higher grade- resources for them. As I said the other day - some high grade stuff, which could be processed early in the mine life, would prove a big win for them, and potentially completely change project-parameters. The stock has had a good run lately - so I would hope for a nice discount. Northern Star is the largest shareholder - it will be interesting to see, whether they continue to support the project.

Gascoyne - I saw them recently in Australia, and without getting really excited, I like the project as well as the people, after having firstly visited them a year ago. Company has made very good progress - some of the readers might recall having seen them at our resources conference in Zurich. They are good and experienced people, with a sensible board. Construction of their Dalgaranga Mine in WA is in full swing, and first production is planned for June 2018. Production in the first 2 years will be 120.000 ozp.a., and 80.000 thereafter, at average costs of 1000 A$/oz AISC. So far, 650.000oz are in the mine plan, and there is strong exploration potential in the area. To mitigate the risk, they recently sold forward 80.000oz at close to 1700 A$/oz. The company has accepted a debt facility of up to 60 mill A$ , on top of a 55 mill A$ capital raising at 50ct back in March. The project is a very standard, WA gold project, and no problems are expected to bring it into production. No debt has been drawn so far, and as at 30.9., the company had 21 mill$  cash left. They should be fully financed until first production - if they want to agressively continue with exploration, they might need another few million for that ( even though I do not expect any placement just for exploration, given their relatively depressed share price ). GCY have a second project, called Glenburgh, also in WA and with 1.05 mill oz in resources. A pre-feasibility study has been done on it, and will be updated - and again, there is still strong exploration potential. You have this for free, anyway...

GCY should generate something like 50 mill A$ in free operating cash flow from the mine in each of the first two years, enabling them very rapid pay-back of the up to 60 Mill$ in debt ( I assume, that most of it will be drawn ). Market cap is only 160 mill A$, people are good, and the risks are very limited here. You can buy this little stock at a 30% discount to NPV10, and get Glenburgh for free - and on the charts, 40ct should be rock bottom. Despite the limited size of the resource at this stage, I like this one at 42 ct! It will not make you rich - but I see absolutely no reason, why they should not trade at 60ct in 12 month time. If not, they might well end up with somebdy larger!

Sheffield - as you know, they placed 30 mill$ worth of stock at 70ct recently - and now, also their SPP closed heavily oversubscribed - that is pretty rare! SFX have now more cash than needed to push ahead with their project to become a significant producer of zircon and ilmenite in 2 years time - in a market, where supply is gradually shrinking because of exhausted mines, and demand is steadily growing, as reported by major producer, Iluka, on a regular basis. Stage 1 capex is 261 mill US$ - 200 mill US in debt has been organized with Taurus - so including working capital etc, there might be another 60 mill$ needed. The company has been talking for some time to corporates to come in at the project level - this is an event, which I expect to show a more realistic ( = higher ! ) valuation of this company. The big detriment currently is a courtcase by a very small, "dissident" aboriginal group, who have lost twice before. Their case will be heard on the 8th of Dec in the Federal Court, and anything but another defeat would be extraordinary surprising. But no corporate would ever do a deal, with this overhanging. I believe, that SFX are a great stock to accumulate at current levels and between now and the 8th of Dec, which should see a small re-rating, followed by a much nicer move on any potential, corporate action in the 1st Quarter. For anybody with some experience in investing in Mineral Sands, a good story!

Have a nice evening!


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