Market Update

General - Perseus - Berkeley

Good afternoon

Chinese PMI continiues to be strong, at the highest for 5 years. German labor market is very strong - 600.000 more people imployed than a year ago...will be good for tax receipts, lower social security payments, and consumption!

Zuma is escalating South Africa´s problems by sacking his well-regarded finance minister...what a nightmare this president is! His action could have serious repercussions for the country incl a rating-downgrade. Having said, this, the many strange sagas going on in Washington are probably not that much better!

Base metals are weak, I guess not helped by weaker sentiment following an end to strikes at Escondida, and Cerro Verde - copper dragging the others with it.

Cobalt is making new highs, about to move through 55.000US$/t. Even if I assume, that PAN receives only 50% of the value of cobalt as part of their concentrate, the difference of their BFS-study and reality amounts to 10 US$lb, being an additional 10 mill A$in revenue - very meaningful for a 120 mill$ market cap-company.

Perseus - the Life-Of-Mine Plan for their second mine, Sissingue, ahs been announced. The mine is fully financed, and about 40% complete, with first production expected 1st of March 2018. The resturn on investment is not fantastic at the assumed gold price of 1200 US$, as indicated by the pay-back of 39 month. The After-tax cashflow is 104 Mill US$ ( against 107 Mill US$ capex ), the IRR is 28%. One can see, why the company has very carefully thought about bringing it into production. PRU have some 70.000 ounces sold forward at average price of 1300 US$, which helps. Clearly, there are some benefits from having a second operation, in a second country - and tehre is considerable upside from exploration. The all-on-site costs ( incl sustaining capital ) of 625 US$ are excellent, but the total estimated production  of 358.000t is only providing for a 5 year mine life. Any additional 1 year or 70.000 oz, even if I assume higehr costs of say 800 US$, would add another 35 mill A$, which is a lot for a company with only 320 mill A$ market cap. Overall - not a massive story as yet, just a little positive. Exploration can turn this into a very profitable and benficial contributor to the company. Overall, I think the stock is cheap here. You might remember, that they already announced a very positive production update to the 10th of March, and indications are, that production has continued on this high level. Another Quarter like this, and the company will gain back some lost confidence in the market!

Berkeley Energia - the aspiring spanish uranium producer has come under considerable pressure over the last few weeks. General sentiment towards uranium has been sinking, and the Westinghouse/Toshiba problems have not helped, either. Also, since having published the feasibility study, there is a dirth of new news now - the market is waiting for the final financing incl off-take, strategic investor/partner etc - and possibly another placement? Fundamentally, the stock is coming back to a very-good-.value level now - the large, substantially oversubscribed placement took place at 45p, just under today´s price, and that level ( = 70ct in A$ ) is providing good chart support as well. Stock is worth a good look again here - but at the same time, there probably is no urgency to buy right now.

Have a nice weekend! 22 degrees in Munich - spring is here!


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