Market Update

General - Panoramic - Northern Star - Saracen - Graphex

Good afternoon

Chinese exports increased by 11.2% in June, while imports rose by just over 17%. Very respectable numbers!

The A$ is trading at the top of it´s 2-year trading range against the US$, probably due to the ongoing strength of bulk commodities especially. Not good for our resources stocks!

Base metals and gold see limited profit-taking today, not helped by a slightly stronger US$. LME stockpiles of zinc continue to fall at a strong pace - they are now at the lowest in nearly 9 years, and if the continue to fall at this years pace, will reach alltime lows in weeks of consumption soon. Not a guarantee, that prices will go even higher - but certainly supportive of it.

Panoramic - the stock is holding at low levels, while information flow has been very limited! The company is still working on the optimisation study, which should see meaningful improvements in operating costs for Savannah Nickel. The company is also drilling currently for extensions to the new nickel ore body at Savannah. Results from both should hopefully be released with the Quarterly Report some time later this month. In the meantime, the very strong cobalt price has been supportive of the share price. PAN are a relatively strong producer of it as a by-product. The value of cobalt, contained in PAN´s concentrate , has improved by nearly 30 Mill A$ p.a. over the last 12 month. The question remains, though, how PAN could capture a good deal of this by future agreements with their Chinese smelter. I also would hope for some indications for this in the Quarterly Report. Savaanh, once back in production, would have operating costs of 100 mill $ p.a. to talk very rough numbers, so if the value of teh cobalt content could somehow be increased, it shows the meaningful effect the cobalt price could have on production costs for the main product, nickel!

Northern Star - the company came out with a very strong Quarterly Report today. Production of 154.000 oz ( a new record ) at AISC of 938 A$/oz brought the yearly production to 514.700 oz at 1013 A$ AISC - both at the positive end of the guidance. Performance has bene driven by the great performance of Jundee, which produced 85.000oz at a stunning 754 A$/oz AISC - driven by vastly improved grades during the Quarter of 7,1g/t ( vs 4-something in the previous Quarter ). Jundee has certainly been a stunning aquisition from Barrick, at the time! Paulsons has been the big disappointment - but ths is a very small mine in comparison. The mine might not survive the enxt 12 month, unless they have strong exploration success. The flagship, Jundee, has only got about  2.5 years proven mine life - so the reserve/resource increase expected for August is a very important announcement for NST. They have definitely had very good exploration success with the 130 mill A$ spent on exploration company-wide ove rthe last 2 years - so the question is not, if, but how much additional ore they have been finding. At a yeraly production rate of around 550.000 oz targeted for the current year ( at 1000-1050 A$ AISC/oz ), any exploration success has to be quite substantial to just replace production!  The fact, that this highly aquisitive and cash generating company is sitting on 450 millA$ in cash with no debt tells you, that M&A targets in Australia are rare!

Saracen - the company announced some very good exploration numbers today, especially from their Karari property. intesction got longer and higehr grader, going deeper, auguring well for more extensive drilling planned in the current financial year. From being a very loved stock 2-3 years ago, the company went through a more diificult patch, when Quarterly costs regularly disappointed the market. The next Quarterly, out soon, should bring some light to this, hopefully. If tehy can indicate, that costs are falling, as planned, the stock will continue it´s recent outperformance. One to watch? 

Graphex Mining - being one of the Tanzania-victims, the stock nearly halved in value over the last few eeks, before recovering very strongly today. The company announced, that the proposed, Chines JV-partner renewed it´s interest in the graphite project, cutting the valuation only to 15-17 mill US$ from 18-20 Mill US$ for a 42% interest. This is certainly pretty convincing, given the substantial uncertainty surrounding any Tanzanian mining project these days!

Have a nice evening


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