Market Update

General - West African Resources - PNG/Newcrest - Chalice - Bellevue - Prairie - Trevali

Good afternoon

Mnuchin apparently proposes to cut all tariffs with China…well, god knows - I think this is the most volatile government I have seen except for the ancient Kingdom of Ougadougou! ! But markets like anything which could make an end to the trade war - so equities are up strongly in Europe today, metals up by 1% or so, and nothing much happening in currencies.Strong Manufacturing Output as well as Industrial Production in the States also helped! Unsiverty of Michigan Confidence Index very weak - I guess no surprise in light of the long government shut-down!!

As bad as December was, as good January is shaping up to be…equity markets around the world are now up by 6% or so.

The FT´s Edward Luce in an article stops just short of saying, that Trump is a Russian spy….that would be funny indeed! But it would also explain a lot…

Gold ETF´s see their 15th, succesive inflow yesterday - but I guess that might come to a halt today, as gold is down a few bugs and Mnuchin´s comments will reduce the need for a hedge, at least for today!

Macquarie reduced their A$ forecast to around current levels in the shorter term, to rise to 74ct over the next few years against the US$. Probably pretty much consensus. They also increased their gold price forecast by 7-8% over the next few years, to around 1400 US$/oz between 2020 and 2023. This led to quite substantial earnings upgrades for the Aussie miners. Still, all the quality names are not cheap - while the foreign producers are all cheap. The market is still very aware of country risks! The West African producers PRU, RSG and developer WAF are the cheapest stocks in their universe.

West African - I looked at them today vs Endeavour and Iamgold, which both have substantial operations in West Africa / Burkina. Both would see substantially improved valuation metrics from a takeover of WAF - especially in cash flow. The only measure, which does make them look a bit expensive in a takeover at say 50ct, would be reserves/market cap. While EDV might be a bit stretched for cash - they have 500 mill or so in debt - Iamgold has 600 mill $ in cash . AISC of EDV are 50% higher than for WAF - for IAM, they are 100% higher. So not everybody is punished for being active in West Africa to the same degree, as WAF!! Yesterday, a Canadian geologist working without security and right at/ or across the border to Niger ( for a private company )has been kidnapped and killed…and that´s just the latest incident in the country. Everything quiet, though, in the central- and western part of Burkina. MD Richard Hyde is currently in the country, and reportedly, he is sleeping well at night! The project is progressing as planned - updated feasibility study due in late March, and I still expect a slightly larger plant and prolonged mine life at the super-high grades, resulting in EBITDA of around 250 mill A$+ p.a. for the first 4-5 years of operation. The company is still very actively drilling, and I am expecting more results contained in the Quarterly, which will be out in the last week of January.

PNG / Newcrest - at the Goldfields/Newcrest JV Wafi, operations have been halted because of violent potests against the project….yet another country which is no good to work in! I guess, though, that this is not nearly as bad as having ISIS etc in your country! The PNG-protest except for in Boungainville Island have tended to be pretty dis-organised and chaotic, and never lasted long.

Chalice Gold - lots of positive noise in the Quarterly, and lots of drilling going on in Victoria as well as Canada - but no majore results out so far…the vast majority of assays is pending, and both drilling programs are still in fulls wing. The company had about 10ct or 21 mill A$ cash in the bank after the recent pay-back of capital to shareholders.

Bellevue Gold - making a new high today! Macquarie has nominated them as their top exploration-pick…Drilling with 3rigs ( and 4 soon ) has started again last week - I would expect some results in early February. I am sure, that all the cashed-up, Australian quality names are watching this one with great interest! We will get first-hand information on our conference in Zurich, 22nd of Feb.. While tehy are not dirt-cheap, tehy will jump, if the company can show more high-grade extensions! The market is in love with high grade, since Kirkland is kicking all these goals!

Prairie Mining - in Poland today, the highest possible court finally rejected Bogdanka´s attempt, to take the concession for the Jan Karski project off Prairie. That´s very good news! The bad news: The Ministry of Enviroment failed to give Prairie an extension of being first in production by 2018, to secure the license od Debiensko, the second project. The Polish Government, though, through it´s action/inaction, had made it impossible to work within this timeframe. PDZ issued a very strongly worded document to that regard, and has stated to take all legal action necessary, in Polisha nd International courts. PDZ is still the owner of the land etc at Debiensko. Will be interesting to watch….on Monday, tehre is a board meeting of JSW, which could possibly remove the CEO of JSW, who has been a big supporter ( I understand ) of doing a deal ( whatever that might look like ) with PDZ on Debiensko and potentially also Jan Karski.

Difficult to judge for me - I am not a lawyer! Share price in Poland is slightly up…will hopefully find out more next week…

Trevali - president and chairman got the sack ( well, I guess so - in any case, they are gone) Trevali is one of the worst casualties within the ranks of reasonably sized, Canadian base metals producers - stock hit 1.70 Can$ early in 2018, to trade at 37ct today! The market had clearly lost all confidence in the company, which has Glencore as it´s largest shareholder. With 25% of the company, Glencore is calling the shots. The share price of this zinc-producer shows me, that it was about time to do something!

Have a nive weekend - but don´t believe, that trees are growing into the sky!



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