Market Update

General - West African Resources

Good afternoon

European PMI strong in manufacturing, not so strong in services - French GDP estimate for the Quarter got increased again, gaining some momentum! Europe as a whole is looking better than it ahs been for a long time. In the US, the PMI was slightly weaker, but still expansionary, while housing market numbers recovered from the last, negative set of numbers.

Gold, having held it´s level above the 200-day moving average, has bounced a bit. My feeling is, that the recent fall,as well as today´s/yesterdays rise, have been largely technical. Holdings in the large gold ETF have been more or less unchanged for more than a week now.

Base metals are having the second good day in a row, helped I guess by another steep fall of LME stocks for zinc, accompanied by a large position in cancelled warrants - indicating a further retreat coming. As boring as teh sector feels in the moment, it might be surprising, that zinc as well as copper are trading at the highest price since late March/ early April. Things are obviously not that bad!

Glencore topped the Chinese bid for RIO´s Hunter Valley-based coal assets, again! Interesting! Obviously, Glencore would have substantial synergies with it´s neighbouring mines - but without any trust in the long term demand for coal ( and nobody knows the demand better tha GLEN! ), they certainly would not have done this!

The demise of Peter Hambro as chairman of Petropavlosk ( previously Peter Hambro Mining ) ended a nearly 25 year leadership at teh gold miner. Hambro drove teh stock to fantastic highs before the crash, only to nearly bancrupt it over the last few years.

West African Resources - North American brokers completed a heavily oversubscribed placement in WAF today. The placementw as planend to be 15 mill$, and was increased to 17 mill A$ at 32ct following heavy demand. Initially, I had been slightly disappointed about the placement, as the company does not need the money, and it came as a total surprise. The company claims, that they had not really planned for it, either, but used teh situation opportunistically. They are spending about 4 mill$ on exploration at full speed per Quarter ( less next Quarter due to wet season ), and the way it looks, they might well continue at that pace for a few Quarters. Rather than risking to need money at a time, when it´s hard to raise, they accepetd the offer. The company has now 32 Mill$ at it´s disposal, incl the 6,5 mill$ coming soon from option exercise. That´s enough for all potential drilling and much more. There are many drilling results pending, so I think no end to the good news for WAF!!! The stock was initially suspended today, but traded later as normal later in the day.

I personally always hate to be holder, and then see large insto´s coming into teh stock via a discounted placement. But it´s a fact, that larger insto´s never go into the market in such a small stock - but once they have a position via placement, they tend to look after it and they are also there potentially for the large placement - I guess next year, but defintely not before - to build a plant. The old game - to get them to buy stock later, you have to give them some cheap stock first!

Have a nice weekend!