Market Update

General - West African - Lynas

Good morning

over 10 years, gold is up by 50% - Palladium is up by 500%, to be more expensive than gold for the firstb time in 16 years. Palladium at all time high - from what I read, driven by increased sales of gasoline cars vs diesel cars ( their catalysator is using platinum ). I always thought, that platinum and palladium can substitute each other? Does not seem to be that easy, obviously.

UBS bullish on base metals, especially nickel, for 2019 - driven by a more dovish FED, and signs of a trade agreement. With regards to the latetr, there seems some confusion around…Trump tweeting an greement - subsequently put into question by his paladines. But over night, China has put into train a few measures, and made some noises into the right direction.

Mrs May is getting slaughtered by her fellow country men. From hard BREXIT to NO BREXIT just about everything seems to be possible. I do not understand it, to be honest - have given up to understand English politics alltogether! I do understand the Bank of England: In the case of a hard BEXIT they expect property prices to fall by 30%, for example…

China PMI did recover somewhat…better than expected - that probably helped the metals today, which are basically unchanged today, while equity markets in Europe have been weak. Oil turned around from pretty weak this morning, to slightly better.

I thought the window for capital raisings had closed, as quite a few inst´s have closed their book for this year. But obviously, WAF raising money ( I hear it´s done ), and Sheffield also in trading halt for capital raising….same for Echo Resources…and probably others I do not know about.

West African Resources - placement to raise 43 mill A$ at 25ct…followed by a SPP for retail sharehodlers, who can subscribe for up to 15.000 A$ at the same price. Taurus, the finance group, is giving them 200 Mill US$ at 7,75% p.a. on drawn amounts, Quarterly payments, last one Dec 2024. Early repaymnet also possible, no penalty. No hedging required. These terms are incredible. There is an off-take agreement, which I do not understand - will talk to the company tomorrow. The proejct is now fully funded, incl a 10% contingency on capital costs, 33 mill$ in working capital, and 15 mill$ in exploration spend! This is testimony to the outstanding quality of the project. The bankable fesibility study includes 5 years of 210.000 oz p.a. at US$550 /oz AISC…a license to print money. The after tax NPV 5% is 540 mill A$, IRR of 50%. The company is currently working on anotehr update of the feasibility study, potentially producing even more over the first 5 years - and exploration has strongly indicated, that the high grade resource will extend by at least anotehr 220 undeground = additional 2.5 years of mine life at the high production rate. All pretty incredible…and production will comemnce during teh 2nd Half of 2020. I cannot believe, that nobody is taking these guys over - might be Burkina Faso country risk, might be the hope, that tehy will have a comissioning hickup, providing a great takeover opportunity. One reason, for sure, is the terrible state of the North American gold sector. I am a large holder, and while the placement price of 25ct is slightly disappointing ( in the end, the valuation is only very marginally affected by say a 2ct difference in placement price ), I am very happy with this financing package.

Lynas - are very unhappy! While 7 different agencies all gave them the thumps up for compliance with everything, the goevrnment came out with a statement today, expecting LYC to transport all residues back to Australia!! Malaysia got the investment, a great plant, 1000 direct jobs and anotehr 4000 indirect jobs, Australia will undoubtedly say: No thanks! A huge problem for LYC - we are talking 1.5 mill t of material! It could well be, that they will ahve to close the plant some time next year. I feel very sorry for them - such a well managed company, and the MD has done a fantastic job…No need to own them in the moment, though.

Have a nice evening