Market Update

General - Paringa - Prairie - Resolute

Good afternoon

it´s amazing, but Trump seems to succeed with his make America great story....Americans will have loved his State Of The Nation speech yesterday...talking the economy up, talking infrastructur etc....certainly good for resources!

Chicago PMI was strong again, Home Sales doing well, new jobs doing well.....PMI in China was down, but still all signs of expansion. I guess this cannotbe a surprise, given the pollution-measures taken during the Chinese winter.

Inflation in Europe just does not want to go any higher...Could this be with us permanently, because of vast technolgy-improvements??

A little surprising to me, given Trumps speach yesterday, is the fact, that the US$ is making new lows against the Euro - which is certainly liekd by the emtals, which staged a nice comeback to day - up by 1% or more.

Resolute - their Quarterly was not all that good...AISC of 1392 A$/oz were a negative surprise, based on lower production of Syama in Mali. It has been made very clear to the market before, that this financial year is a transitional year, with large caapex programs being run at both large mines, in Australia as well as in Australia. But those programs are on track, and costs will start falling from next year. Currently, the company is eating intop it´s large cash position - again, not that unexpected. RSG ahve two long life assets, especially Syama, and is a great stock for gold bulls. But operational performance is a big part of that - let´s hope, that management will do the right thing. So far, there is no reason to expect differently. There are not many , producing companies with a market cap below 1 bill A$, and 4.1 Mill ounces currently within the mine plan. Syama is one of these mines, which will still be in production in 20 years time, provided the gold price is holding!

Paringa - Quarterly...not much news, other than that construction is going well. Reading the report, I think it will definitely be rather Aug/Sept to see first procution - but I have commented on that before. I think PNL are a save bet...operational risks will be very low - the main risk is, that gas prices will be down over the next few years ( andgas is competing with them ) t prices substantially below 3$/GJ. Except for this issue, I think a price quite a bit higher can be expected between here and year end...I continue to like this story, and have a large position in the stock, similar as to:

Prairie Mining - which is still the big story it always was! They have not been a bad performer over the years - but I would also say, that it´s a bout time to put butter by the fiah, as we say here! Theire talk in the Quarterly is very promising as to both projects - but hard facts, i.e. numbers especially for the development of the Jan Karski Mine, are not in the public domain as yet. We have been promised some early in the hopefully, more detail will be out soon. As has been said numerous times before - I like the management - I like the fact, that both mines have a NPV very substantially higher than todays price - but it´s really time for facts! 

Today I had a look at many resources funds, incl my own, resources-orientated Australia fund....very disappointing performance of all of them - they are generally up just by a few percentage points over one year. Admittedly, it´s looking much better over two years - still, disappointing! My explanation is, that general investors still do not believe in this resources boom, which we certainly are having. In the early stages of the last boom, we had the same situation. Let´s hope ( and I strongly believe so! ) that it´s still to come!

Have a nice evening


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