Market Update

General - Pilbara - Gascoyne - Doray - Antipa - Independence

Good afternoon

the POM´s are just putting the last bit of sympathy we have with them at risk!! Britsih parliament voting down 8 different alternatives for BREXIT - what a joke this country has become! I would not really mind if they did that to themselves - but it´s bad news for all of Europe, at least!

UD GDP for last Quarter got revised down to only 2.2% growth….talk about 1.5% this Quarter. Pending Home Sales also weak…Trump under pressure to deliver a trade deal with China….cutting taxes last year, and being a world apart from his target of 3% growth eats into the budget - which had the largest defict on record last month and is on target to a 1 bill$ deficit for the financial year….nobody talking about that, though….

Palladium has given up 250$ from i´s recent high! Platinum weaker as well…as is gold at only 1293 US$ and 1826 A$. A strong US$ is not helping these metals, while base metals except for nickel are slightly stronger. LME stocks across the board falling marginally.

Vale expects to produce 50-75 millt less iron ore this year - this is probably a larger number, than expected and shoudl be good for the Australian miners, and should ensure strong iron ore prices for this year! The numbers for the major, Australian players are massive - these guys are producing an aggegrate of more than 500 millt of iron ore - using 10$ higher prices, than before the desaster in Brazil, gives you an additional 5 bill A$ in EBITDA - and probably another 2-3 bill$ on top of that, as discounts for lower quality material have substantially reduced.

Just on the sidelines - if you are looking for a well-managed, global equity fund: Here is Fundsmith, a London-based fund ( with I believe around 20 bill US under management ) : over 5years, 1 year, Year-to-date as well as 1 month: In the upper 1% of all funds…over 3 years, “only” in the upper 2% of all similar funds !! The fund has outperformed it´s peers every year since inception in late 2011, currently holding a concentrated portfolio of only 27 stocks. Incredible!! Seeing something like this, I might give up what I am doing, have a glass of wine, and enjoy the day!

Gascoyne - Mayday? not quite, thank´s god - but the expected bad news. Company has raised 3.85 Mill A$ at 5ct, and is doing a rights issue to all shareholders of 4 new for 5 old shares held, at same price and to raise just above 20 mill A$. Lower grades did persist ( at least until March ), more dilution in mining ( 25% vs expected 8% ), and general mining issues - and lastly a small plant shut-down all hindered production, which is running at about oz / month. expected production for the June-Quarter is expected to be close to 6.000oz /month, and for teh second half of approx 9.000 oz / month. The placement and rights issue, which is underwritten = guaranteed, will insure the survival, if those production numbers will be achieved. On all metrics, shareholders should play the game at subcribe - but I can understand everybody, who has had enough! The recent history has been absolutely terrible, and the dilution of this large rights issue is massive. The whole story is too complicated to discuss in detail here - if you want to have a chat, please feel free to call us and discuss.

Pilbara Minerals - a reasonable positive announcement yesterday, which updated on 1st Quarter production. Most numbers look improved - but they still have problems with recoveries. The company claimes, that some of those problems have been overcome, and that planned recovery-rates of 75% will be progressively reached until year end. What has driven the share price, in my opinion, has been the announcement re a particial sale of the operation. macquarie ( who did the job for Mineral Resources very succesfully ) has been appointed as their corporate advisor. The proceeds will assist in financing of the expansion, and especially, potential downstream activities. The big numbers achieved for MIN could make the selldown a very attractive number, and at the same time, reduce the risk here.

Doray Minerals - the merger with Silevr Lake has been approved today, and tomorrow will be the last day of trading. As I said before - this is a sensible transaction, and Silver Lake will profit in future from the excellent exploration potential.

Antipa - announced yesterday, that RIO has approved a 3.4 mill A$ exploration budget for the JV, to be spent in the current year. It´s good news, that AZY will conduct the exploration, which shoudl ensure, that they get a lot more bang for their Dollar!

Independence Gold - continues it´s less than stellar performance. The undergound mine of Tropicana has been approved by JV partners. Slightly negative surprise is the lower grad of 3.5g vs feasibility study 3.7g, and capex increased by 10%. Nevertheless - the combined mine will produce around 450.000 oz p.a.over the next 5 years - a big mine - at AISC of probably just below 1000 A$/oz. I continue to dislike IGO - the stock is too expensive and is trading at the current price because of a scarcity of midsized mining companies in Australia…in my opinion.

Have a nice evening


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