Market Update

Australian Resources Conference Zurich - General - Perseus - Graphex

Good afternoon

Invitation to our yearly Australian Resources Conference in Zurich - please use this link to have a look at attendees, and a form to attend:

Fantastic snow here in Munich, and even more in the Northern Alps!

Equities currently recovering most of their early losses, metals slightly up - again. Nickel stocks down quite heavily today - now at levels last seen at the end of 2013 - and less in terms of weeks of consumption…

Uncertainty in the DR Congo - elections have been a surprise, but a lot of noise about rigged elections…

Many of our beaten up names are finding price-support these days - I wonder, whether we could have a bit of a rally , once and if Mr.Nero ends the government shut-down, and trade negotiations are finding some solutions? As you know, January is generally a month of good moeny inflow as well.

BHP very weak today - but they went ex 1.02 US$ special div - taken that into account, they were actually up!

Brent Oil continuing to trade above 61 US$….what a difference two weeks make! Very hard to react to those moves…perhaps time to buy some BP at 6.5% yield?

Or perhaps some Norilsk even, as one of my clients suggests? PE of 8.5 and 10% yield for 2019 - producing a lot of nickel, copper and palladium?

Or some Middle Island?? They have a resource of 500.000 oz and a resource target double that - but very limited financing to drill that that out. A small, 1.35 mill$ rights issue is just about to be finished, and at a market cap of 5 mill$ even after today´s rise, this is the stock to make 10x your money, if gold continues it´s run. Until recently, I did not plan to take up my rights - but gold is feeling increasingly good, and volatilty of markets will undoubtedly continue, supporting further gold inflows into Gold ETF´s. Momentum players will have their attention on gold now, and a move through 1300 could quickly see more gains. When gold traded at 1350 last, back in mid 2016, the GDXJ was trading more than 60% higher than today! I fear, though, that the real bargains are not in the larger stocks like my old favourite Evolution, et al…

Perseus - time to revisite? 130 mill options are expiring at 0,44 A$ in April - resulting from their takeover o gain the Yaoure project 2 years or so ago - that´s limiting short term performance, as the stock is trading just below the exercise price. But as a high-cost producer, and holding a reserve of more than 3 mill oz, the stock is cheap with a market cap of only 420 mill A$ = about 100 US$/oz reserve. IF they get the options exercised, I think the chances of financing Yaoure without any fresh equity are rising again….and looking at Macquarie-numbers, operational EBITDA should approach 190 mill$ on an annualized basis, using todays gold price and exchange rate. Will be interesting to see their Quarterly Report - the last one was pretty good. Today, they announced the engineering contract for Yaoure to Lycopodium - they intend to book the last profit from it in the first half of calendar 2012, giving PRU some time to deliver the cash flow to pay for the new mine, which should improve the asset quality of PRU quite substantially. So - not a raging buy, but a good stock to accumulate in a rising gold price enviroment!

Graphex Mining - the Tanzania Minister of Mines got the sack and has been replaced by the previous Deputy. I think this might be good news - the various issues plaguing mining companies in the country did not make all that much progress, except for some positive noise, under the old Minister…perhaps the new one is showing some more enthusiasm to get bitterly needed investment in Tanzania going again?! I guess we will get a better feel for this over the next month or so.

have a nice evening


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