Market Update

General - Pilbara - Syrah - Venturex - Resolute

Good afternoon

Euro-area index of consumer-and industry confidence at 10 a 10-year high...GDP-and labor numbers in the States as expected....Trump cutting tax ( or at least trying to! ) for big surprise, that interest rates are edging higher. 

German GDP-estimates increased slightly for this year, and next

Metals looking healthier today - all green, as the US$ cannot push higher, at least for now.

The A$ looks a little sick in the moment. I could see it come down to 76.50 US$ or so, but medium term, I think we might stay in the recent band of 76.50-to 81 US$.

China is setting a quota for 10% of all cars being sold in 2019 being EV´s, and 12% in 2020. This theme is still having very strong momentum, and I think general funds are still very much underinvested here. From cobalt to graphite, lithium, nickel, copper - we should have more fun in front of us!

The "Australian Bre-X" ( do you remember, the geologist falling out of the helicopter 10 years or so ago?? ) -story, Novo Resources, continues to edge higher, and all neigbours are flying. Good fun, fantastic turnover and nice share prices for all the neighbours - some of whom are immediately ( and smartly! ) raising fresh equity on the back of it. I am still a non-believer...Novo themselves have said, that they have no idea as yet, how to establish a resource from this nuggety stuff...I might be a bit harsh here, and I certainly DO NOT want to imply, that the Novo Story is fraud - as was Bre-X - but the level of excitement and speculation surrounding it start to be comparable!

Venturex - they are one of the beneficiaries from this Novo-story, as they are next door to one of the recent nugget-discoveries ( De Grey Mining ). I would like to point out, that nuggets have been found in Australia for hundreds of years...anyway, shareprice recently started to move on the back of some strong intersections, while drilling their core asset, the copper/zinc project. Assays are pending, but could open up a much improved story . But over the last few days, the stock doubled on incredible turnover , being a property neighbour to one of the nugget-discoveries. They have been very lucky, as can be seen from today´s announcement, which included the sentence: "Venturex intends to send its geological team to inspect the area and undertake sampling if warranted" . Very funny indeed - effectively saying: we have absolutely now idea! The nice thing about VXR is, that the company´s project for copper/zinc is potentially worth the current markt cap of 50 mill A$ anyway. VXR have struggled with their project for some time, but got recapitalised recently by some strong backers. 

Pilbara Minerals - this upcoming producer of lithium announced a new off-take agreement today with China Great Wall , one of China´s largest automotive producers. They are taking 75.000t of lithium spodumene ( that is 6% lithium concentrate ) over 5 years - so a sizable agreement. This agreement certainly shows, that consumers of lithium see very strong demand coming, and contrary to some very cautious analysts in the market, want to secure long term supply. The Chinese are providing PLS with a 50 Mill US$ debt facility for it´s Stage 2 expansion of their Western Australian project. Pilbara, Galaxy, Mineral Resources and Orocobre are the most advanced and largest lithium stocks in Australia - all worth watching, while Kidman especially is looking interesting, but some way behind in terms of stage of developement. After that, there is myriad of more or less advanced explorers - I am following Piedmont PLL, and Marindi MZN more closely.

Syrah - looking at the EV-theme, graphite certainly is one of the materials of interest. Used as anode for batteries, it is essential, and will probably continue to do so. It´s main, traditional use is as electrode in steel furnaces, and in this area, there is a major shortage right now. It has a vast array of other uses as well - look it up in wikepedia, if you need more. In any case, SYR are controlling the largest, developed resource worldwide , based in Mocambique. While historically, the company has ahd it´s fair share of problems, which often are associated with entrepeneurial, young and pioneering companies, management has changed some time ago, and very serious people are now running board and executive team. Chairman is Jim Askew, whom many of you have met - chairman of Oceana, boardmember of Evolution and Endeavour, to name a few of his current roles. Extremely positive! Syrah is virtually weeks away from production of grahite ( Stage 1 ), and about 6-7 month away from the production of battery anode graphite, which is a value-added product, and will get sold directly to battery producers. 

Syrah have just finished a large placement, putting to sleep all doubts, whether they have sufficient cash to get into production...Satge 1 and the Battery Anode Project are financed now. 

Syrah will be the largest producer of this stuff in the world - they can scale up the already large production - they are going downstream to capture more value - they have a strong team and a great resource. The downside is Mocambique, and certainly some comissioning-risk - but I think one should take that risk now - time to back these guys! Most probably, a world market leader in their speciality - one, which every EV these days needs!

Resolute - came out with anew reserve statement on Tuesday. A large reserve of 5.3 mill oz, and resources of 12 mill oz - long mine life at both their mines, and excellent exploration upside from here, especially at and around Syama in Mali. Obviously, there is some country risk, especially , as their mine in Australia is not the greatest mine around, and has high costs. But the valuation of RSG is way too low, in my opinion. The current year is a big year in terms of capex, and by establishing a sub-level cave underground operation at Syama, as well as big changes in Australia. The next financial year will see capex slightly come down, before they will earn big profits from the current program. While costs at Symama willö fall big time over the next 2 years, they will still make profits during the current, relatively high cost phase - and they are fully financed. 

While Resolute is way up the risk-curve compared to something like Evolution, I think RSG are a perfect stock to add some spice to your gold portfolio. 

Have a nice evening