Market Update

General - Resolute - Sheffield Resources

Good afternoon

PMI in Germany slightly weaker last month, driven by services - but still at a very expansionary level. The German economy is doing well! And the European PMI is very strong, surprisingly driven by France. US PMI still strong, but weaker - Housing Market still in full swing! 

A German/Russian man buys put options, and then throws a bomb at Borussia Dortmund ( which is listed ) god, the world is getting crazier by the day!

The Gold ETF had it´s biggest inflow for some time on Wednesday, but an outflow yesterday. In any case, the interest in physical gold is back, clearly! As it should....

Mr.Gorsuch´s first High Court vote clears the way for the execution of a death-penalty....well done, Mr.Gorsuch, I hope you sleep well!!!!

The French election taking place on Sunday - let´s hope for the Frogs to be sensible!

Resolute - A good Quarterly from the company, as mentioned yesterday, and guidance for the financial year has been increased. The company is not making all that much free cash in the moment, though - Syama in Mali will always be a relatively high cost producer, at least including all necessary re-investment. But it´s a long-life operation, and not fully explored as yet, as shown by recent, excellent drilling results. RSG are working on a programm in the moment to increase recoveries, which would be helpful. In Australia, the Ravenswood Mine is currently also a very high cost operation, and is even loosing them some money. That will change next year, when the underground will be in full production. And lastly, Bibiani, the old Anglo mine...not a fantastic asset so far, but recent exploration has delivered some very positive results. With Bibiani ( that´s not a done deal as yet, and would produce 100.000 oz p.a. from 2019 ), RSG will approach 450.000oz of yearly production - not bad at all for the current 600 Mill A$ in EV, and very good leverage to a higher gold price. 

Resolute was very lucky - or smart - to raise 150 mill A$ at 1,96A$ late in 2016....Those funds will undoubtedly burn a hope into Mr.Welborns pocket....RSG have aquired positions in Kilo Goldmines, and I think ( not confirmed officially )  Oklo Resources, two African explorers...

RSG have two long term assets, high costs, and an excellent balance sheet - one can see, why gold bulls are very attracted to this company. Van Eck´s Index ETF will have to divest 60-70 Mill shares in June - but I think arbitrage-players have already started to accommodate this. At current levels I do like RSG, and behind Perseus, they are my No.2-pick for investors, who want leverage to a stronger price for bullion

Sheffield - this is an interesting, but for most investors over here also an unusual one...Zircon and Ilmenite are no products, most of us know a lot about - even though we use this stuff numerous times during the day! Th emajor use for Zircon is in ceramics, while 90% of TiO2, Titanium Dioxide ( which isprocessed  off Ilmenite ), is being used as a pigment for paint, paper and plastic. The market has been in the doldrums for a few years, but has recovered lately, as witnessed by very strong results especially from Iluka ILU, the worlds largest, single producer of mineral sands ( the otehr one being RIO ). Iluka´s sales will start falling soon, as stock piles are being worked down, and reserves are falling. SFX have 100% ownership of a very large deposit in Western Australia, close to the cost/port/infrastructur, for which tehy have just finished a bankable feasibility study. For a detaield presentation, you should look up - some excellent material there. The stock has been valued by analysts at 1.50 A$ vs current share price of 59ct - the usual problem being financing, which is estimated to be 350 Mill A$ in total vs a current market cap of 100 Mill A$. The precarious position of Iluka, which is the world´s dominant producer, in terms of reserves etc make SFX an obvious takeover target for ILU ( which has a market cap of 3.6 Bill A$!). I think you should have a very good look at this one...before I repeat all the big numbers, please look up their latest presentation.

have a great weekend!


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