Market Update

General - Strike - Evolution - Graphex - Gascoyne

Good afternoon

What a great surprise! Chinese PMI is expansionary again! The German PMI, though, is very weak again!!

US Retail Sales pretty weak, from an upward-revised previous month - PMI pretty strong, though.

There are more indications for a trade deal…helping equities and commodities as well today. Zinc stocks on the LME are even lower now than back in 2007, when the zinc price hit 4.000$/t. Metals generally could not hold their highs, but are green - nickel up by 1.8% or so. The US$ is slightly stronger.

.Bonds are weaker, as you would expect.

RIo will ship 14 millt of iron ore less bacause of the recent cyclone…I guess BHP and FMG-numbers will be relatively small - anyway - combined with the recent Vale numbers, opportunities for marginal producers abound! And the price shoudl be relatively save above 80$ for this year - with smaller discounts for lower quality ore…and Andre Forrest is up by anotehr 350 mill A$ today!

Goldman´s still expect gold to trade at 1450 US$ in 12 month time, driven by low interest rates, BREXIT and economic uncertainty!

good old Macquarie Bank´s market cap is now about 20% higher than the combined Deutsche Bank / Commerzbank ( about 28.5 bill Euro vs 24 bill Euro ). Tells you something about good / bad management!! 10 years ago, the combined Coba/Deutsche was about 80 bill Euro - Mac-Bank was about 7 bill Euro! What a classic example of value distruction vs value generation by good management! And the above numbers are before dividends - including those, the difference would be much larger even! And all of that despite the DAX outperforming the ASX massively over that period ( + 180% vs +110% )!!!!!

Strike - managed a 3-month extension of their loan, which CBA provided based on expected R&D payments by the government. Unusual for a bank - and I guess this should give us great hope for STX to receive the R&D payment - as they really should. The funds are crucial to drill the highly promising West Erregulla well, and do give STX some more time to evealuate other alternatives, IF the R&D does not come through. The company hints at various activities to this regard in the announcement!

Evolution - are continuing the tendency of the midsized gold miners, to do JV´s with juniors. They can earn up to 80% by spending 6 millA$ in exploration on Enterprise Metals´Murchison acreage ( near the old Big Bell Mine, which produced 4.5 mill oz ) , and a small upfront payment. Exploration will be managed by Evolution.

Graphex - announced a new board member. Castlelake, the large PE fund, has nominated an experienced mining engineer to the board. The fact, that Castlelake has a boardmember now, shows the strong support for the project in Tanzania, and the strong interest they have in it - or rather will have. At this point, they have only extended a 5 mill$ loan to the company - equity is to follow, once feasibility study has been finished by mid-year. I believe, that the company is also working on additional local, as well as international equity investment in the project / the company, to reduce the equity requirement from existing shareholders further. I think this year will be make or break for Graphex, with substantial upside, if things work out. The main requirements are a positive outcome from the feasibility study - which I am very positive on - and more clearing up from the government of Tanzania. The latter cannot be taken for granted - but recent moves and comments suggest, that we are also getting much closer here to a positive outcome.

Gascoyne - has now fixed placement as well as underwriting of the large, 24 mill$ capital raising . The additional equity, support of it´s banks, as well as a new, major shareholder should not only improve sentiment, but also should give them a fair chance ( another one! ) to finally bring the mine up to previously expected performance. The second half should give a strong indication of that. Upside has been materially diluted, because of the rights issue ( 4:5 ). I think investors should play the game here - but it has to be regarded as highly speculative, given the experience of the last 9 month, which have been devastating for the company. The old production target of 100.000oz p.a. is expected to still be achievable - but not at 1000 A$ AISC, as originally expected - I guess it will be rather 1200 A$/oz. Still - at 1800 A$/oz, that would leave a large margin for them, available to apy down the current 80 Mill A$ of liabilities + make some for shareholders! And certainly, the exploration upside at both projects remains.

Have a nice evening



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