Market Update

General - panoramic - Peak - Resolute - Metro

Good afternoon

base metals along with gold are edging higher today, as nickel stands out and makes a new 3-month high . Gold is looking positive as well, having established it´s price above 1300 US$ now ( sorry, yesterday I mentioned 1400…that was obviously a fat finger! ) and at around 1825 A$/oz. Next target is 1350 US$. Well possible - ETF´s saw a strong inflow of nearly 200.000 oz yesterday!

Aussie gold miners looking very strong today - especially EVN made a new all time high and is trying to move past 4$ for the first time! A lot of insto´s making good money here - great news and another reason for them to look at the sector in a bit more detail ( and hopefully moving to buy also some lower-priced stocks! ). Finally, North American gold stocks are strong, too and not only for one day this time!

Wood Mackenzie are pretty bearish for cobalt and lithium this year, as to a mismatch of production increases and demand increase only gaining strength with EV-ramp-up in 2020 or even 2021.

Panoramic - Quarterly out today. The mine is currently about 2 weeks behind my expected schedule - first shipment to go out before the 10th of Feb. But basically, all within normal parameters. Problems to higher enough miners are the main reason for being slightly behind. Early in january, mill throughput exceeded 2000t/day = 750.000-800.000t annualized. Target production is 940.000t p.a. - this rate should be achieved shortly. Recoveries as expected, and sufficient cash is available until first cash flow will arrive this Quarter ( remember - there is a time delay between production and first concentrate payment ). All in hand here, and the stock should move with the increasing nickel price. T:he next catalyst will probably, when the company announces full poduction rates - probably with the report for the current Quarter. For the current Quarter, the main task will be to complete recruiting of the permanent workforce, as I assume, that contract work ( currently 50 out of 250 people ) will be more expensive.

Metro Mining - production numbers had been released earlier, but full numbers out today. Some cyclone-related stoppages ( 6 days ) in december, but guidance of 2 millt of sales/production has been easily achieved. Loading rates hit a new record in december, and the mine is doing well on all aspects. Demand and prices for bauxite in China, where 100% of shipments are going to, are both looking strong, and the weak A$ is also helping. Shipping rates had been higehr than budgeted earlier in the Quarter, but have come back late in the Quarter to budgeted levels. Weaker oil prices are helping here. From April, the company is moving to owner mining, which will reduce costs further, and higher production following 7 mill A$ capex will also help to reduce costs. The company generated 8 mill A$ in EBITDA for the Dec-Quarter. The feasibility study for the expansion from 3.5 millt ( 2019 guidance ) to 6 millt will be finished in the 2nd Quarter 2019 - expected capex of around 40 mill A$ should be easily financable from cash flow, and existing debt-lines. This company is developing into the expected cash machine! Even relatively conservative investors should be buying at current levels! As at Quarter end, the company had less than 2 millA$ in net debt. Even though this will change ( no mining in the current Quarter during wet season ), the company is VERY conservatively financed.

Peak Resources - have a strong move today, following a tough 2nd Half 2018! The company has reported good progress on receiving the Special Mining License in difficult Tanzania - the Mining Comission has recommded to go ahead with it to the new Mininster of Mines. Peak needs better prices for Rare Earth to go ahead with mine devlopment - but the undecided fate of Lynas in Malaysia is showing us again, how urgently new supply will be needed at some stage. Reports from China are also strongly indicating, that the clamp-down on smuggling and illegal mining in China will be intensified this year. Prices for Rare Earth have treated water for the last Quarter or so - but we all know, that this should change over the next 2-3 years with increased take-up of electrical cars. Peak will probably remain a sleeper, and will also need more cash relatively soon - but when the opportunity comes up, I think patient investors should take stock!

Resolute - their Quarterly was pretty mixed. While their main operation, Syama, was disappointing, while the new oxide-satellite performed very well. Ravenswood in Australia is having very high costs and the future is undecided. The ramp-up of the new Syama block-cave is all-important for RSG. Macquarie for example is expecting full ramp-up to mid-2019 - that could well be optimistic. Nevertheless - the stock is very sensitive to better gold prices, and I would accumulate stock at current levels - being always prepared for start-up problems at Syama.

Have a nice evening


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