Market Update

General - Vanadium - Strike - Venturex

Good afternoon

Mixed numbers out today: New Home Sales in the US weak - PMI in the US strong, PMI in Germany still indicating growth, but falling and below expectations.

Boing reported a very good result, and a strong forecast…

European equities stronger, though not as strong as in the morning - US equities keep on falling. Bond markets strong across the world - except for our fellow Italians…and base metals/golds little changed - perhaps a good performance in light of a strong US$. Well - I wwrote the sentences at 4pm - now it´s 5.30 pm, and equity markets around the world are looking much uglier! Peak earnings?

Following George Soros the other day, the Clinton´s and Obama´s have been sent packages with explosives.

Vanadium stocks are getting some fresh attention, as it´s price is booming…up 70% since September, and up by 13 times since recent lows in early 2016. The metal is being used to harden steel - only a market of about 100.000t per annum. There are a few hopefuls in Australia with development projects - the only one I have been following a bit is TMT, Technology Metals, which has finished a PFS and is targeting to complete a DFS by June next year. The potential numbers at current prices for Vanadium are crazy - for example, these guys have used 13 US$/lb in their PFS. Potential costs are around 4.50 US$/lb….for production of 13.000t p.a. . I ahve not done enough work on these things as yet - but if you want to spend the time, it might be worthwhile! The use of vanadium in China is expected to grow strongly because of new regulations, which require harder steel to be used in construction. Currently, Chinese producers are using less vanadium than comparable producers in the West. Also, one of the new applications fr vanadium is for large scale batteries to store power. Their relatively high weight make them unusable for cars or any mobile applications.

Strike - announced timing fo the Shareholder Purchase Plan for retail investors. You will ahve to subcrbe before 16th of Nov. As usual, European banks will close the possible application a few days earlier. Every, in Australia registered shareholder can subscribe for up to 15.000 A$ at the placement price of 0,115 A$. Every holder here, whoholds his stock via the banking system, in fact IS A REGISTERED HOLDER, as his shares are being held in an AUSTRALIAN nominee account.You might have to kick a—e with your bank to be able to participate. The stock is trading ex rights to the SPP already. If you are interested, you might want to look at their new and very interesting presentation on the webpage. It shows excatly, where the company is at - early days, but we should have clarity, whether early gas flows at Jaws 1 will translate into a commercial flow before the end of this year. Results from the Western ustralian asset, Erregulla, will need a bit longer - drilling in march, results before the end of June. Two potential company makers - but both are not done yet, obviously! Excellent upside - but as the timing of the placement/SPP indicates, there is still some degree of uncertainty as to the success of JAWS 1. The Australian gas industry is following it with great interest - but some also with a degree of scepticism. As you know, I am very long, and I also participated in yesterdays placement.

Venturex - the company is coming to life again! At least 4 reasonable brokers are now publishing research, with valuations of 50-60ct, and like the project. I have one document in front of me, which expects 80-90 mill A$ EBITDA p.a. from production of 15.000t of copper and 30.000t zinc annually from mid 2020, with 170 mill$ in pre-production capital. Given that Northern Star own 19.9% of the company, and are very supportive, a good chance, that the project will go ahead. The project is a little bit on the small side to attract corporates, but as you can see, the profits potentially been generated are not small at all. My fund is holding a small position at this stage. There is certainly a good amount of fresh equity needed - I guess some in the not too distant future to speed up exploration, and one larger one to raise 50 mill$ or so some time next year. Apparently, the new MD is doing an excellent job - but I have not met him as yet. This project has been a long time coming!

But I fear before we contemplate to look at these things, we want general markets to calm down first - and hopefully see Mr.Trump calm down on his terrible tariff-politics after the upcoming elections in November! The world economy is showing relatively clear tendencies to be negatively impacted!

Have a nice evening, regardless!


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