Market Update

General - Lynas - Graphex - Doray

Good afternoon

Housing numbers in the States were solid today, as Import-and Export Prices are rising quite strongly. Investor confidence in Germany rises strongly, ahead of the elections on Sunday.

Metal prices are continuing with their recent consolidation, and are more or less unchanged today except for nickel, which is currently trading just below 11.000$/t. Copper stocks at the LME have been slightly lower today. following a strong buildup last week.

The Oktoberfest is progressing as we are used to - many drunken Germans, even more drunken Australians - but thank´s god without anything which smells like terrorism!! 

The market continues to show a lot of interest in the EV-theme...Galaxy; Orocobre making new highs, massive turnover continues in Lynas - Grahite finding some interest of late as well. Syrah Resources is using this for a quick & dirty 110 mill$ capital raising.

While there is certainly a shortage of lithium and many other commodities in the short term, especially the former does not seem to be immune against a correction. Without any doubt, there is a lot of material coming - the only question is the timing of it. For now, all is fine - but still, I wonder, whether some of these stocks have had enough of a run for now.

Lynas - came out with their full year accounts today. The company produced a respectable 31 mill$ in EBITDA - not bad given, that prices really moved only late in the year, starting in June. Debt continues to come down - today, another 35 Mill US$ got converted into equity ( at 11ct ), creating a nice profit for the - once - brave holders of the convertible. Total debt is now only 311 Mill US$, of which 126.5 mill US are in the convertble and will most probably be converted, unles the company can find a way to buy it back. For a mining company, debt is still relatively high, but is coming down very quickly now and has reached a managable level. Cash flow generation at current prices is very strong, and debt could be paid off by 2020 easily ( that´s the current maturity ).

Graphex - I have touched on this stock yesterday, but after having spoken to them today, need to talk them again! Their Chinese JV-partner is truly excited about the fantastic quality of graphite in GPX´s resource. This material is getting very tight in China, and the world, and it´s superior to the product of all other , known projects under development. The company is negotiating the final JV with their Chinese partner, and once that has been finalised, will enter into discussions with the Tanzanian government. I have no doubt, that Tanzania is gready - but they are not stupid either. With a Chinese-, powerful JV-partner I believe GPX to be in a much better position than Acacia, with their legacy in this country. GPX will be starting a new proejct from scratch, and Tanzania will profit from it, not only via the 16%, free carried interest, but also via jobs, taxes etc. Under the current price regime for Graphite, the project is looking stunning, and I would have thought, that financing from Chinese banks is still possible, even in the current, political situation.

China has been a big infrastructur provider for Tanzania, and Chinese clients are really desperate for this material. This should provide for a powerful alliance!

Peak Resources - that´s a bit different...another great project, another product, which is in desperate need - but they do not have a Chinese JV-partner! They do have the World Bank - but I guess those guys  are not as flexible, nor do they want to flex their muscles as a Chinese company would. Still, tehy are certainly influential. Peak are doing a placement at 4ct today, and will raise some more via a 1:8 rights issue to existing shareholders, also at 4ct. Both tranches will get a hlf, 6ct option with it. The terms are disappointing, given the strong performance of Rare Earth prices - but Tanzania is obviously a very difficult place for companies and investors. I will fully take up my rights - should the political situation normalize, the stock will rocket

Doray - production update today...Andy Well is in transition to care & maintenance - prodution of the remaining 2 month will be a little higher than originally planned ( 13-14.000 oz vs expected 11.500 oz . Deflector , their longer term mine, had lower than expected production to the middle of August, and as a result, guidance is for 60-65.000oz this financial year, at ASIC of 1250-1350 A$/oz - which means, that they will not genrate any cash ( I guess ) after developement capital. I just can´t become friends with Doray - costs are very high, the miens look pretty hungry for ongoing capital spend, and exploration delivers around the edges, but not significant enough to make a real change. At this stage at least, they look to me like a roughly 1500 A$/oz total cost producer, with  limited mine life and limited upside.

Have a nice evening