Market Update

General - Oz Minerals - Perseus - West African Resources

Good afternoon

Chinese PMI´s decline again - but new orders and expectations looking much better. In the US, GDP slowed down less than expected in 4th Quarter 2018 to 2.6%, driven by business investment. Labor market numbers a little bit weaker today. The PMI was VERY strong….Bonds around the world are down.

The US$ weakened a liitle over the last 2-3 days, helping the metals complex - all base metals slightly stronger today, all LME stocks down. Copper and lead at recent highs, while nickel and zinc marginally below recent highs ( in A$-terms , all base metals with new, recent highs today ). Platinum/palladium basket price still rocketing to 2426 US$ oz ( 1554 + 872 ) currently…and Impala sees a structural deficit, hence wants to bring on a new mine for start-up 2024. The gold price is down a few $ - GDP, PMI and some relieve for the India/Pakistan-situation not helping it today.

3g, the Brazilian smart boys, are feeling a bit better today, following a good result from Anheuser Busch. Perhaps it´s not all that easy to print billions just by cost-cutting? ABI have about halved over the last few years, Kraft is down by 70% or so. To create a good longterm business is more than just to be ruthless? I would like this to be true - even though I have to admit, that I have been one of their admirors for a long time…

Oz Minerals - came out with a good result, in line with expectations. Prominent Hill continues to genrate a lot of cash, and Carapateena will be in production late this year, more than replacing reducing production from Prominent Hill over the next few years. The major, 1 bill A$ development of Carapateena has been achieved withoit ever reducing the cash balance below zero - and despite of having paid a healthy dividend over the years! But at least equally important is the growth pipeline of OZL: We are expecting a new resource statement from the JV with Cassini this Quarter, soon results from a scoping study to expand Carapateena, a DFS from Cassini JV in the 2nd Quarter, and progressively news from the various, Brazilian assets ove rthe year. And these projects are just the development projects - many things happening in various exploration JV´s around the globe. Oz Minerals are one of the best managed, Australian mining groups, offer excellent participation to the price of copper, and have good growth ahead - not much more wanted!

West African Resources - reserve definition drilling at M1 and M5 has been finished, with some more intersections like 14m with 12g; 3m with 132 g; 3.5m with 41g - underpinning super-grades from their underground development. M1 has shown to extend at least another 200m below the current limit of the resource - I am mot sure, though, whether we will see much more drilling to increase the resource, or whether additional drilling will be conducted later from underground ( which is cheaper ). The company has earmarked 15 mill$ in exploration, still - so I guess that leaves room for one-or the otehr deep hole as well. Good to see, that the M5 ore body also saw some very good intercepts, making it increasingly likely, that we will see underground mining here as well in years to come. The big story remains the release of the updated feasibility study at the end of this Quarter.

Perseus - the most important event: The stock is trading above 44ct! It´s self-fulfilling prophecy: of the stock continues to trade above 44ct, the chance for exercise of 130 mill options , exercisable in April at 44ct, is very high. If they get this money in, debt-financing of Yaoure should not be a problem. If not, I think it might be possible, but it´s tough! With it´s Half Yearly Report the otehr day, PRU reported a net debt position of 5.7 mill A$ - that´s clearly a nice balance sheet, and both mines shoudl generate nice free cash at at the current gold price. But I had hoped for them to be in a solid, cash-psoitive situation by now, going into the Yaoure-financing. On the face of it, and using the PRU mine plan, financing should nopt be hard - but Edikan has a mixed history, and I am pretty sure, that banks see this the same way. Longer term, and assuming a halfway clean development and ramp-up of Yaoure, the stock is very cheap, and Yaoure alone could support the current share price.

Have a nice evening



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