Market Update

General - Prairie Mining

Good afternoon

20 days without a smoke as at today - life is not good anymore!!

well it´s always nice to send a few rockets, when you have trouble at home...will be interesting to see, what comes out of the search of Trump´s lawyer....European markets are under some pressure today, following Trump´s tweet to send a few rockets towards Syria. There is no day these days without any bloody tweet...I hate it! Equities are purely reacting to political issues these days...

As you would imagine, investors are reacting with buying some gold...base metals also looking a bit stronger. led again by aluminium - but as the day progresses and the US are coming into the market, we are seeing some profit-taking. The American consumer is paying the bills for higher alu-prices...Just imagine, that the US president does not find anybody to sleep with, or has a bad night for otehr reasons,  and imposes sanctions on more oligarchs...for example, the one controlling Norilsk...Nickel would immediately go through the roof!

CPI in the States is edging up - core inflation up by 2.1% YoY, which is in line with expectations.

S32 - Australian resources company S32 owns the Cerro Matoso Mine in Colombia, planned to produce 41.000t of nickel this year. They have been accused of pollution, and being responsible for serious health issues in the immidiate neighbourhood of the mine. I am not sure, how much substance these allegation do have - in any case, the mine is in trouble, at least for now. 

Prairie Mining - well, while due diligence and talks with JSW are in full swing re Debiensko, the situation at Jan Karski is difficult to assess, even for the company itself. Fact is, that somebody in the bureaucracy is making life very difficult for Prairie. A court case could take years to be decided - nobody really knows. At the same time, there is definitely interest to bring on additional coking coal capacity in Poland, and while it´s in the courts, nobody will eb able to develope Jan Karski. But I have taken the conservative stance, that realisation of this asset - be it via sale, JV or development with the Chines - could take time. So it will be all down to Debiensko! I ahve seen a recent valuation of 1.8 bill Zloty or 690 mill A$ by some polish broker - and we have seen the company-stated NPV of 1.4 bill US$ before as well. I am hoping, that PDZ will do a sensible deal with JSW - be it JV, takeover, sale of the asset - we just don´t know as yet. The undiluted market cap of PDZ is 92 mill A$ right now - the vast majority of options is exercisable at 60ct, so 10% above today´s share  price. The best, potential deal for PDZ could actzually be a joint development with JSW, using their adjacent underground development and infrastructur. Even in the current situation, and valuing Jan Karski at zero, there is massive upside in PDZ. But given the really terrrible, Polish behaviour re Jan Karski, I will be a seller at 1$ and not 1.50$, as expected previously. And we might even have to reduce that target as well, as obviously, Poland is not really behaving like a EU-country, as it should. Still - from 55ct to say 85ct is more than 50% upside - not bad.

Interesting to see, that major hedge fund Lansdowne Partners, have used teh recent weakness to increase their stake in PDZ. I understand, that they have followed JSW for a long time, and that they have an investment in them as well. They are nearly 10% below this year´s high, still, while my darling Evolution is making new highs every day. EVN have outperformed Newcrest over one year by  60%, and the Van Eck Index by 55%. Amazing and with good reason...but any further performance is depending on the gold price now. 

Finally, even North American gold stocks are moving gold is preparing a little breakout??

Have a nice evening