Market Update

General - Graphex

Good afternoon

big day today for Australian large cap gold miners…all up by at least 5%. You ask why? No idea! Some of them might have been a bit oversold, and I think some people believe, that the gold price has bottomed. Let´s hope so!

Bonds are weak again ( US 10 years at 3,09%, close to this year´s high ), equities very strong in Europe following the news, that China wants to cut tariff rates on imports. The US$ is weaker, helping the metals slightly higher following a few good days in the market. Could it be, that investors are concentrating more on the existing, still reasonably positive economic situation, and so much on the possible escalation ( and the impact ) of the trade war.

Quite positive labor market numbers in the States

Graphex - that was the big news for me today: They released the results of the updated feasibility study. In one word - to good to be true! Post tax-NPV10 of 273 Mill US$…post tax IRR of 130%, post tax payback 0,84 years!!!! Pre-production capital of 44 mill US$ for Stage 1 ( 58.000t of graphite for two years ) and then another 32.5 mill US$ for Stage 2 ( tobring total capacity to 100.000t ). Based on reserves only mine-life of 6.3 years - but the project has inferred resources for another 10years. The company is currently drilling, to transfer more resources into the mine plan. These numbers are crazy - NPV10 post tax of about 375 mill A$ for a market cap of 16.6 mill A$ as at today!!

There is no doubt, that this will be severely diluted - firstly, the government will get 16 - perhaps 20% - of the project for free. Secondly, the incoming financier - whoever that is - will want a significant part of the upside as well. I do not know, whether these guys will invest at project- or company-level. But in any case, they will have to pay a premium to today´s price of Graphex. Ecen if I dilute this NPV by a very very hefty 75% - I would be more than happy with an NPV for Graphex equivalent to 5-6x the current share price, post all financings!

The market is totally negligent, when it comes to Tanzania…this will only change , once GPX will have a completed financing. I am of the believe, that this will not be far away - the private equity guys have worked on it for some time, and now all the numbers are out! I am hoping for another announcement to that regard within the next 4-6 weeks, and before that, an exploration update.

Have a nice evening