Market Update

General - Newcrest - Regis

Good afternoon

PMI in Germany still strong, but not as positive as expected and lower than in May. PMI in the US better than expected

The US$ continues to be under pressure against basically all other currencies. I guess Trumps attempts to destabilize Sessions, his own Attorney General, and his twittering about the president to pardon himself don´t help. Who as ever thought about pardoning himself in a democracy??? But it´s a nice thought! I think Louis XIV would have thought about the same lines!

Metals and gold being helped by the US$.

UBS published another interesting paper about the effects of the rise of electric vehicles late last week. They expect, that an additional 300-900.000 t of nickel might be used in 2025, depending on which type of batteries would predominantly be favoured. Say 500.000t of nickel would be roughly 50% of today´s non-NPI production! And that´s when more than half of the worlds applicable nickel production is loosing money on a cash-basis today! Nickel from NPI cannot be used for batteries. 

I would have thought, that a price of at least 6 US$ /lb is needed to start  additional production. of sulphide mines of any meaningful size. A very nice thought for holders of Panoramic, like myself! The only negative: Any meanimgful demand from that source is a few years away.

Newcrest - a strong Quarterly from Australia´s largest gold miner, taking into account the partial closure of Cadia during the Quarter because of the little earthquake. I am still of the opinion, that this event should increase the risk-level of the company, as Cadia is such an important part of the company. Therefore, I do not view Newcrest as a cheap stock. Lihir had an excellent Quarter, while Telfer disappointed with high costs yet again. I am wondering, what NCM´s long term plans in Africa re - Bonikro is a pretty meagre asset, and it´s existence is more a nuisance than a benefit for company like NCM. Newcrest will have problems to deliver even stable profits over the next few years - not very attractive, either!

Regis - as announced on Friday, had a very good Quarter. The coampany has also guided for slightly stronger production in 2017/18, at roughly the same costs. Over the Quarter, RRL have increased the cash balance by nearly 40 Mill$ to 152 Mill A$ ( no debt ). They will be able to cement their position as the best div-yielding stock of all senior, Australian gold miners. Their asset in N.S.W. remains an option for more substantial growth.- but I do not see this at the current gold price. Overall , I can understand, why the company has many friends - but I also find it hard to see substantial upside. I prefer EVN for diversity, RSG for valuation, and PRU for leverage and growth!

Have a nice evening