Market Update

General - Prairie - Paringa

Good afternoon

sorry I forgot to send this report yesterday - so 2 in 1 today....

European manufacturing strongest in 6 years, while China´s rate of growth is slowing a bit.

BREXIT-talks starting to get a bit tolearnce from European leaders, trying to avoid more exits...unlucky for Mrs.May. Will be an interesting election - I guess some more people might vote for her, with Europe pushing her into a corner. 

Trump will not get finance for his wall...will he get it for infratstructure, for tax cuts? Investors are becoming a little more edgy, while f..k all has been happening so far! Rethoric has not made a great president, ever....

Merkel meeting Putin today. Sure Trump does not like that, either.

Gina Lopez got rejected by the parliament! Immediate impact on nickel negative - but reading the comments from the crazy premier and that ex-worldchampion in boxing, the saga is not over. The climate in the Phillippines remains pretty hostile to mining! But for now, the mine suspensions seem to be over

Van Eck Gold ETF´s have record money outflow last week: 779 Mill US$ for the GDX, and 289 Mill $ for the GDXJ. No wonder these stocks are under pressure! Total market cap of the 2 funds is now 14 bill US$

Resources markets feel very average lately- at least on the equity side. But base metals at least have actually improved quite nicely: Copper has been up for 7 of the last 8 days, in total by 5% - zinc is also up by 5% over the same time, lead up by 7%. Iron ore is actually up by 12%, and steel rebar by 11%. These markets are a good indication of generally positive, economic numbers, and these numbers do not really feel like the bull market is over at all!! Having written the above yesterday, to day looks different: for whatever reason, all base metals are currently down by 3% or so! Lopez and an increase of LME stocks cannot be the reason - in the end, copepr stocks have been falling for 6 weeks beforehand!

Highfield - the company is languishing, as is teh share price, while everybody is awaiting the enviromental/mining license in Spain. The revised, enviromental document has been submitted now. Following extensive consultation with all 7 government bodies involved, and some more work to clarify and support some issues, this process should not take too long. Some broker research expects a positive outcome by mid-2017....this sounds realistic to me, given that everybody involved shoudl be now have indepth knowledge of the project. But I guess you never know in Spain!  The potash market seems to have turned the corner finally, as expressed by the recent, positive Quarterly from major producer Potash Corp. The price has recovered to 265 US$/t in North America, from 214 US$ in June 2016. Potash estimates, that this years demand will be between 61-64 millt, following 60 millt last year, and haveing finished a very positive 1st Quarter. 

Paringa - the largest producer in the area, Alliance Resource Partners, came out with a very upbeat 1st Quarter Report. Balance sheet is very sound, debt has been refinanced, production was good, and demand continues to be good. The company would look at aquisitions in the Illionis Basin - that´s where PNL are. I guess they would want to wait, though, until PNL are very close to production, as the very high dividend yield of Alliance is what their investors are after, and you cannot improve yield by buying a developer, before it throws off any earnings! Production startof fully financed PNL will be mid 2018.

Prairie Mining - have done furtehr testwork to improve their product, along with initial marketing to European consumers of coal produced by their potential mine Jan Karski in Poland. 75% of their product can be sold as ultra-low ash, semi-soft coking coal, which is getting much better prices than thermal coal, and 10% more than "normal" SSCC. They have not really quantified the financial effect, but it would be very considerable, as production/capex costs would not really change much. The final feasibility study by their Chinese partners sounds like being a little late - "summer" became suddenly 2.nd Half.... Looking at their latest presentation, I think we might talk August or so...The presentation is worth a look - very informative, and extremely impressive!

Have a nice evening