Market Update

General - Cardinal - S32 - Talisman - Paringa

Good afternoon

The FED´s thought´s of potentially ending QE made markets nervous late yesterday. You would have thought, that this would be slightly negative for gold - but it recovered a few$ and is hanging in there in the 1250ties. The A$ gold price is looking very good, though. The  move of "our" currency towards the bottom of the recent ttrading range near 75ct has driven the gold price to 1660A$/oz again, the highest since Nov 2015. A very nice price level for Australian gold miners, which tend to have AISC of around 1000 A$/oz, and total costs of around 1200 . Perhaps time again to look for some Australian-based production, and I am having a look at Dacian Gold, which could be the enxt, halfway sizeable producer, and is fully financed into production.

German factory orders recovered from a temporary blip, while some commentators are starting to doubt Trump´s grand plan to cut taxes, get infrastructur programs off the ground etc...Too little has been achieved by his administration so far. 

Base metals had been all green earlier on, helped by ongoing talk about the effect of China´s 3rd economic zone getting developed - but later in the day, they are mixed, with nickel giving up 1/3 of yesterday´s strong advance.

Good news of the day: Mr.Bannon has been removed from the National Security Council...strange...who knows...the next news might be, that he has been planning the world revolution with the Russians?? Crazy man in any case...

Cardinal Resources - strange has got ample cash, but is doing a 15 mill$ placement in conjunction with a TSX-listing. I am not a buyer, as I do not believe, that Gold Fields will make a corporate move anytime my opinion, they have bought a secure seat at the table, and will now wait and see. 

S32 - their sizeable, Australian mine Cannington ( 150t of lead/70t of zinc and 16 mill oz silver p.a ) has had a fire underground, which will stop production for about 4 weeks. Not a major drama for the supply/demand equation, but another problem in a tight lead/zinc market. The company is gaining more from currently very high coking coal prices ( above 210 US$ following the cyclone now ) at least in teh short run, than the fire will detract. Bot factors should be shorter term issues.

Talisman - this is no shorter term issue! The companis main asset is a 30% stake in Sandfire´s Monty development, a very high grade copper resource of about 1 millt at 9% copper + 1.6g gold. Today, Sandfire delivered the awaited feasibility study. While the mine will be brought into production by the 4th Quarter 2018, the costs are higher than I had hoped for at 1.90 A$ AISC/lb...resulting in a NPV8 of 46 Mill A$.  There certainly might be an element of Sandfire having no interest to make this thing look good - but the share price has already a little bit of furtehr exploration success built in. I think there are sexier stories around! 

Paringa - the expected capital raising was launched today - a tick larger than I had thought, 52 mill A$, at 52ct - which I find a little disappointing, given recent tarding in the mid-sixties. I ahve heard rumours, that there is a large, new cornerstone investor, which would explain the price to me - these deals don´t get done in a day, and as recently as 2 weks ago, the stock was still tarding at those levels. Still - the discount is large, and you almost have to paly, if you are an existing holder. In 2 years time, when the stock will probably tarde above 1$, we will all look back and kick ourselves for not having invested more in this relatively low-risk, now fully financed company. 

Have a nice evening


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