Market Update

General - Resolute

Good afternoon

all base metals are either making new, recent highs today, or are just about to do so...also the bulks, like iron ore, coking coal, thermal coal - the latter make me believe, that there is genuine- ( and not only investor-) demand behind it. Also, large stocks have been mopving strongly, like BHP/RIO /Anglo/Freeport/Teck/Antofagasta, as have midcapped stocks like Lundin, OZ Minerals etc. And even the small stocks have started - PAN, FND etc pp. The mood has dramatically improved towards our sector. What a change! Feels good!! But also a word of caution: The sudden rise of base metals is probably a bit overdone:

Copper + 16% since early May / Zinc up by 16% since early June / Lead up 13% since mid June / Nickel up 16% since mid June / Tin up by 10% since early June

In my opinion, fundamentals for all of the metals are relatively good - but not strong enough to warrant a major bull market, or markedly higher prices in the short term. Price movements have been substantially driven by the weak US$. The big question probably is, whether this will continue - and I have to say, that the Euro is looking extremely good on the charts - it could go to 1.25 from the current 1.17, favouring metals and gold , at least in US$ terms ( and that is driving sentiment everywhere! ).

All of this might not be helping the producers, which mainly trade in Can$ and A$ - but as I said above, these things are very sentiment driven by strength in US$ prices for the metals. So hopefully, some more room left for these stocks, making them fundamentally more expensive, though. Mind you - I am talking the 3 month outlook here - longer term, I am more bullish for the sector

The rise in the bulks ( coking coal close to 180 US$, thermal close to 90$ ) will see many upward revisions for those producers. 

I would like to point out again, that the A$ gold price cannot join the recent rally of the US$ gold price. At just 1577 A$/oz it´s trading above recent lows, but still 100$ lower than the average of last Quarter. So not that much excitement here for Australian-based producers, who will only benefit from fund inflow into the GDXJ and sentiment

US durable goods orders softened a bit from a strongly, upward revised May number.

Jeff Bezos richest man of this crazy world - Facebook and Amazon ( the latter ahead of result ) are just booming ahead. Brave new world!

Resolute - Quarterly out today. they are in the middle of a big transition at both assets. In Mali, basically all production was coming from stockpiles, as the company is progerssing the devlopment of the underground mine. For the next few Quarters, more ore will be coming from underground developement ore, which should have 2.5-3g gold/t, and a satellite pit, increasing gold production somewhat. The underground development is curently ahead of schedule, which is good to see, given the importance of the underground! In Australia, the mine will also transit to an extension - but not all necessary approvals have been recived as yet. That might be of some concern. A highlight of RSG continues to be exploration at/surrounding Syama. It looks like better grades are being established here, augmenting mining from the sublevel cave, once fully operational in late 2018. The company is sitting on nearly 300 mill$ in cash, of which 160 mill will be spent this financial year.

Bibiani did not get a mention in the Quarterly....will they sell it? It´s probably not worth all that much - perhaps rather an option on higher gold prices.

Guidance for the year is 300.000oz at 1280 A$ AISC - that is not sexy at all - but it´s a transition year. Positive triggers will be approvals for Australia, and good progress with the sub-level cave in Mali. 

Have a nice evening!