Market Update

Genertal - Nickel/Panoramic - Liithium/Mineral Resources - Paringa

Good afternoon

well finally the Europeans seem to plan independence from this ex-allie ! Trump is cancelleing a mutually agreed, agreement with Iran - unprecetended action - and is expecting Europeans not only to follow with this breach of international law - he even wants to sanction European companies, which are sticking to international law! Incredible, that it took Europe so long to raise it´s voice against this lunatic...

The US 10-years are now clearly through 3% - I am pretty sure, that this is behind last days pronounced weakness of gold....Base emtals in general have been performing quite ok in light of the strong US$, which has been  helped by some strange comments out of Italy....

Nickel is the standout - except for a few hot days, when the market was speculating about more US-sanctions, it´s trading at the highest in 3 years - and at 19.500 A$ in the moment = 8,84 A$/lb. With copper at 3,10 US$, cobalt above 90$, and the A$ at 75ct, Panoramic will make a killing once they reopen Savannah. I have not heard anything new - but I am of the strong believe, that the company will be ready before the 30th of June to give it a go-ahead.  At 8,80 A$/lb, the company should generate nearly 100 mill A$ free cash flow from the mine - obviously, that´s pre tax and pre head office as well as pre exploration. But nevertheless, at 5x free cash before tax, that should be sufficient for 400 millA$ EV...or a share price of 81ct = 60% upside from today....not bad for a stock with very limited operationally risk. Goldmans are very bullish for nickel for years to come - one caveat: in the short term, they could well see some weakness. That risk certainly is a real one: NPI producers are making a lot of moeny at current nickel prices, and tehre is every incentive to churn out as much of it as possible. That´s meeting a market, which for now only needs a limited amout of "traditional" nickel, as I call it, as the EV-market is only gaining pace in 2019/2020. 

In the long run, and with some xciting exploration results hopefully being announced over the enxt few month, my good olf favourite PAN can go a lot higher....especially, if Goldmans are right!

Paringa -  what a nightmare! I have very limited time today, but a mixture of regulator demands, bad weather, and more time to cash flow have led to a large placement/rights issue today. As you know, I always regarded the financing as very tight...but I would have never expected a 30 mill A$+ capital raising - rather 10 mill! There will be a 1:3 rights issue for all shareholders, and there is ample time to form a view. I will talk in detail about this one next week. In any case, it has been a communication nightmare for all of us - management is looking very bad here, in my opinion. But at the proposed rights issue price of 22ct ( the stock is trading ex from tomorrow an ) , this thing is certainly priced to get this done easily, and management is taking up 2 mill$ worth of stock!

Lithium stocks - two very big announcements over the last 2 days: Firstly, the Chinese are buying the large stake in market leader SQM at a fantastic price...secondly, Tesla has signed a long term off-take agreement with Australian hard rock producer Kidman Resources. This is amazing and especially interesting, as KDR will only start producing in 3 years time, at a time, when there will be ample lithium on the market - well, that´s what some lithium bears have been telling us! Basiacally all up-and coming producers have told us over the last few month, that they are finding multiple parties as offtakers for their product - perhaps the market is way too cautious od prices for lithium spodumene, and certainly battery-lithium??? This augures well for my favourtie Mineral Resources, who finally have now put 50%& of their lithium interests on the market. Looking at SQM for example, and teh uncertainties there, MIN might find a valuation for 100% of it´s lithium much closer to 3 bill A$ than 2 bill A$? The stock could well see 25$ thius year, which is 2%% upside for a stock with very strong dividends, and a great management team! 

So far so good, have a good evening!