Market Update

general - S32 - Finders - Lucapa - Perseus/Beadell - Foran Mining

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 / Crusader Resources / Breaker Resources / Peak Resources / Finders Resources / Energia Minerals. Please note one change here: Graphex had to cancel, and Crusader will be presenting instead!

iron ore us yet up again...should trade at around 90 US$ in London today, after adding about 4% in Asian trading...just amazing. The numbers involved here for the major players are absolutely massive..RIO for example, are producing 330-340 millt p.a. of this stuff. Iron ore is now trading about 25$ higher than consensus numbers ...the current price would add an ADDITIONAL ( 8 bill US$ ) to their cash flow!!!! Div-surprises for the major players BHP/RIO/Vale/Fortescue and Anglo will be the norm this year! 

And the obviously strong steel market should also support other commodities like coal,manganese, nickel, and base metals in general. Base metals are up currently by another 0,5-1% in London, on top of mega-strong gains on Friday. Inflation, I can hear you coming, as oil is also up by roughly 25% from a year ago. Money continues to flow into the US- as well as the German gold ETF.

Zinc is trading at the highest level for just about 10 years today,a nd is targeting the 3000$/t -mark / copper is above the magical 6000 US$-mark, or just under 2,80 US$/lb / lead trading at 4 year highs / even nickel is trading at reasonable levels again.

Our little Foran Mining has a theoretical 673 Mill Can$ NPV7 at todays metal prices..and is trading at a market cap of 32 mill Can$...while Pierre Lassonde and other directors have taken up their options to cash up the company for the rest of this year, unless exploration drilling will be stepped up substantially. The next round of drilling is financed. I am not sure what will drive this stock - but if you are prepared to play the waiting game alongside one of the smartest mining investors in the Canadian market, this could turn out to be a smart investment. I have been waiting for longer than I originally planned - but I think it´s very worthwhile and hence own a reasonably large position.

You might want to look at S32 Ltd, which is not well known, yet has a market cap of 13 bill A$. S32 is the spin-off from BHP, housing all the "unwanted" BHP activities like coal, manganese, aluminium, zinc and nickel . S32 is making serious money, and according to Macquarie, is trading at a PE of just 6 for June 2018, and 5 for June 2019 financial yearsat current spot prices. The Div is substantial  and could be approaching 10%, as S32 has no debt, more than 1 bill A$ in cash, and should be generating about 1 bill A$ in free cash p.a., even at Macquarie´s offical estimates.

Finders - another one, which is undervalued...Company is now producing at name plate capacity, which should see them producing 28.000t of copper for the first full financial year of production , being June 2017/2018. AISC are estimated to be 1.60 US$/lb, what should be conservative. FND own 73.5% of the project, and the debt atributable to FND was 67 Mill US$ as at 31.12.2016 and is falling. net debt should be just under 87 Mill A$ as at today. The company should produce something like 50 Mill A$ in free cash for the year 2017/2018...and more later, once the hedge position of 16.000t at only 4800 US$/t has been worked through by March 2019 ( 25% of production ahd to be hedged because of the bank debt ). At 2.5 times free cash p.a. this stock is way to cheap....The last broker research I have been seeing valued the stock at 27ct - at coppe prices of between 2.75 US$lb at 2,95 for 2018/2019, which makes about sense. I am holding a large position in FND, so once in a while I have to sell a few, when the stock goes up - but I am only doing this to satisfy our internal risk management rules. Please note, that the above figures are before debt service - but within less than 2 years, they will have a net cash position.

Lucapa - discovered another very nice stone with 227ct, which should be valued at between 7-and 9 mill US$. Importantly, this diamond is from a new mine area, giving further credit to the quality of their alluvial production. As you know, the real price is in finding the kimberlitic source of these diamonds, but at current levels, the price can be justified from the alluvial production only. Unfortunately, the company has some 7 mill staff options expiring in April/May at 30ct, and 20 mill listed options ( 20ct ) in Oct of this year, which will hold the share price somewhat under pressure. Still, a good story to keep adding on any weakness, in my opinion.

Perseus and Beadell - Van Eck increased it´s holding in the two stocks by 12 mill shares each - so it does not look as if they would want to exit again, despite PRU`s slump in the market cap.

have a nice evening