Market Update

General - Resolute - Lynas - Highfield

Good afternoon

Yellen , we love you...her comments have been taken very positively...very slow and limited rate rises amid no inflation in sight...good for bonds good for equities good for gold: goldilocks!!

At least Chinese punters are positive: Steel making new highs, iron ore, coking-as well as thermal coal trading strongly and at recent highs. Base metals looking sexy: zinc a new, recent high, and the rest looks pretty bullish, too!

While ex-Goldman´s Cohn is rumoured to become Yellen´s successor ( Wall Street and equity investors like ourselves will like it, at least in the short run! ), Trump´s son is trying desperately to prove, that he is even more stupid than his father!

Resolute - two pretty nice announcements this week fail to get the share price going, surprisingly: Excellent drilling results from several properties close to the Syama mine in Mali. Good results from an underground taget only 250m from existing development, which almost certainly will become a resource/reserve and can be accessed via a relatively smalle xtension to the existing underground developement; some great oxide results from a property 40km South to Syama, which should offer feed in the future to the oxide circuit; and some good results from an area a few km to the North of Syama. They are proving, that there will be a lot more gold to increase the ( already ) long mine life, but also potentially at better grades. Today, they gave production figures for the year just ended, which exceed increased guidance by a few thousand ounces, as well as undercut AISC-guidance by 30 A$/oz. 

Guidance for 2017/2018 is positive as well: 300.000 oz at 1280 A$/oz, which is slightly better than expected, even though costs will be higher. Cash + bullion + investments of 290 Mill A$ will very easily support planned capex for Syama Underground and Ravenswood of 162 Mill A$ this year. The company is doubling the exploration effort to spend 38 mill A$ this year -that´s what I call agressive, but I like that! The stock will never be a low cost producer like say Evolution - but results are very good, mine life is excellent,a nd they are finding more gold! At current gold prices, their net margin after everything is probably only 200 A$/oz - still, at 300.000 oz production p.a., that´s very nice free cash flow! The heavy activity in development is limiting their free cash flow , and will do so for at least another 18 month - but the longer term is looking very promising for RSG. Growth should come from the Bibiani mine.

Highfield - company announced today, that the Ministry in Madrid will yet again open the documentation for the enviromental application to the public. They are reasoning, that the last consultation process has taken place in 2014 - so long time - and that the project has had a few changes since then. Probably, they are right - but I guess they could have done that at least 6 weeks ago! Anyway - nothing negative is expected from the process - but it will only start on the 1st of Sept, making it hard to have a decision before November. I am still sure, that we are only talking administrative nonsense here, and no fundamental flaws! In any case, yet another, very frustrating delay! I could not get hold of them today - will try again tomorrow!

Lynas - another good Quarterly today. cash generation of 15.8 mill A$ vs 11.6 Mill in the previous Quarter ( before interest ). Production was good, but lower than in the previous, record Quarter. Price for NdPR are still going higher- from 34$ to 39 US$ at the end of the June Quarter ( and 43$ in early July!! ). As you know - debt is a real problem, but the company will survive especially, as the lenders have shown their support at times, when things were dramatically worse! I am sure, that the company will raise additional equity at some point - but I also believe, that it will only happen enxt year, unless the share price goes substantially higher in the short term.

Despite the massive debt position, and because of a strongly improving cash position, I think Lynas is slowly but surely becoming investable again!

Have a nice evening!