Market Update

General - Evolution - Breaker - West African

Good afternoon

Finally, the gold price is gaining a bit of speed - I guess based on the political turmoil in the US. Some money found it´s way back into the large, US gold-ETF yesterday, and gold has just moved through 1250 US$ ( and this time, it´s also moving in A$, trading at 1630 A$/oz ). Chartists unisono report about quite heavy resistance at at 1260 US$/oz, which is the recent high a few weeks ago, and also the level of the 200-day moving average. Perhaps this explains, why gold stocks are not as strong as you would expect them to bet at 1250 US$oz.

Van Eck increased most positions in their Australian gold miners last week - mainly PRU has been decreased by 17 mill shares. As one analyst wrote last week - the increasing portion of Australian gold miners held by the passive Index-ETF is a little disturbing, as in some cases, it´s approaching 20% of outstanding shares! 

Base metals are slightly weaker on average, continuing their recent consolidation, while equities are reeling from US politics.

The Brazlian beef-crisis widens...the country is exporting 5.5 bill US$ worth of the stuff, and the biggest consumer for it is China, which is particular sensitive to food-scares. This can only be good news for Australia, where Australian Agriculture AAC could be a major beneficiary. 

West African Resources - is currently drilling with 4 rigs to expand their resource, especially underground. Some excellent results out today: At the M5 orebody, best results were 29m with 5g gold/t; 15m with 5g, and 20m with 3.3 g from depth of 128 - to 256 m. At the Northern end of the same orebody, a hole returned 30m with 2.6g from 94m, which could extend the planned open pit. The probably best intersection has not been assayed as yet. The core has visible gold, and could extend a relatively large structure down by another 115m. I am surprised, that the stock did not move any stronger today. Turnover was pretty good at close to 3 mill shares - I think some large, institutional seller might be finishing the sale of a previously large position in the moment. The updated feasibility study, including the underground mine, will be finished in the 3rd Quarter. In the moment, it´s all about drilling-results! I am sure, that B2Gold as a neighbour is watching with interest!

Breaker - helped by the better gold price, the stock is also edging higher. Next results should also be close here - the company is drilling full speed ahead , more than fully financed until the end of the year. I know, that many are watching this one - the strike length, as well as the depth-potential make their discovery potentially very sizeable, and large enough for more senior players to be very interested! The company is currently infill-drilling, as well as trying to confirm extensions to the current strike length of 2.2 km.

Evolution - is currently hosting an analyst trip to the Ernest Henry Mine, which they aquired approx 6 month ago. The mine is not that large - it produces around 80.000oz of gold p.a. - but copper as by-product make it a very sexy money-spinner. For Jan/Feb, the mine produced 13.200 oz at a negative 378 A$/oz. The company also said, that the current Quarter should see a total of 200.000oz for EVN, and that tehy should comfortably achieve guidance of 800-860.000 oz at AISC of 900-960 A$ for the financial year to 30th of June. Given that EVN produced 217.000 oz in the Dec-Quarter, the market might have been very slightly disappointed. Will be interesting to see the analyst-reports over the next few days, as I obviously have not been on the site-visit - and I am not exactly sure, whether the company is toning down expectations a little, of whether they are just conservative.

Have a nice evening


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