Market Update

General - Cassini - Venturex - Doray/Silver Lake

Good afternoon

interesting to watch these games surrounding Boeing…mighty interests playing behind the scenes!

The English are completely out of hand…BREXIT is a never ending story and we are all sick & tired of it - but a hard BREXIT should not be underestimated!

Gold has made a solid move through 1300 US$/oz and is trading above 1850 A$ again…next target 1340 US$/oz. Base metals are flat today, following a strong upward move yesterday, especially in zinc.

Abramovich uses the recent strong performance of Norilsk to sell 500 mill US$ worth of stock in a bookbuild, which has been increased due to strong demand. Shows the underlying appetite for nickel stocks!

The Producer Price Index in the States shows no indication of inflation. Durable Goods Orders and Construction activity have been positive numbers today, and equities are having another, quite strong day - even with BREXIT dampening the enthusiasm.

The discount for lower quality iron ore continues to shrink, making Fortescue as well as smaller producers like Mineral Resources interesting once again. Fortescue is just printing money in the moment and will probably pay another very big dividend for the current half year, while the pricing enviroment allows MIN to make some money as well. Interesting also, that the premium for very high quality iron ore has more than halved.

Cassini Resources - OZ Minerals referred to their JV the other day in a presentation…results of the pre-feasibility study are getting close, incl a new resource statement. OZL are forecasting production of around 30.000t of copper p.a., and around 23.000t of nickel - that´s a pretty substantial project, and Cassini will own 30% of it, once OZL have finished the required spending to have earned 70%. It is to be expected, that OZL will be very helpful to organise financing for the junior partner, or even do the financing on their behalf themselves. In any case, the market cap of just over 30 mill A$ make Cassini a very interesting investment for the patient investor - start-up of operations is about 3.5 years away. OZ Minerals are strongly suggesting a mine life of +15 years here, and substantial exploration upside. While OZL are probably a good investment for institutional investors, I think Cassini has got some very good upside - not least in the short term, with a project update around the corner. The MD presented recently at our conference, and made a very positive impression!

Venturex - are making progress with their copper/zinc project. They ahve good backing from several groups, and are in active talk about off-take agreements and financing from those parties. They have managed to get relief from Toho Zinc with regards to an earlier off-take agreement - they gave up their right to the first 230.000t of zinc in concentrate and instead, will have the opportunity to market 280.000t of zinc, following an initial 5-year production. This gives a lot more negotiating-power back to VXR. The proposed debt:equity split will be 60:40, and the Northern Australia Infrastructure Fund could finance around 40 mill A$ of the total capital ( incl working capital, contingency etc ) of 200-210 mill A$ needed. If I calculate correctly , VXR would need around 70 Mill A$ in equity - that is a big number, but sounds doable to me. One to watch - I bought a smallish holding a few month ago to have a foot in the door.

Doray/Silver Lake - their merger got a major bosst today, as DRM´s largest shareholder, Australian fund Perennial ( holding 12% ) agreed to the merger.

Have a nice evening



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