Market Update

General - Cassini - Oz Minerals

Good afternoon

strong credit numbers and strong exports in China - but imports can´t impress! Especially the former brings some enthusiasm back to the metals today ( copper and zinc up by nearly 2% in the afternoon )….and to equities. Import Prices in the US increase by more than expected. Bonds weak today.

Gold can´t profit from a weaker US$…higher bond yields biting as well as positive China-numbers.

Chevron makes a 33 bill US$ move on Anadarko, giving them exposure to the Permian Basin and LNG, as oil could make a new high today at 71,58 US$ for WTI currently.

Ebola is spreading faster in Eastern Congo…

Cassini Resources - Oz Minerals announced the new resource for the Musgraves proejct: 141 mt indicated resource, grading 0,36% nickel and 0,38% copper, plus some silver/cobalt/palladium, for about 500.000t of contained nickel + 537.000t contained copper. Additionally, there is an inferred resource at very similar grades, for 300.000t of nickel and 330.000t of copper. This is a big resource! Reportedly, Oz Minerals are now working with average annual production of around 30.000t of copper and just uner 30.000t of nickel p.a. from late 2022 / early 2023. Total pre-production capital could be around 800-850 mill A$ for a 12 mill t project. OZ Minerals have now earned 70% of the project ( 14 month ahead of time ) and will finance the 30% stake of CZI in this project until a bankable feasibility study has been finished ( to be paid back by CZI only 5 years after first production ). There are a few interesting trigegrs coming up for Cassini: Very late this Quarter, or early July, OZL will announce results of the pre-feasibility study - for the first time, the market will be able to model the value with some confidence. OZ Minerals don´t need a feasibility study for the financing - they have 320 mill A$ cash in the bank + a 300 mill$ corporate facility. They have every interest to avoid project finance as well - giving the fianciers to much say in teh devlopment. So their interest will be to help Cassini with their part of the financing as much as they can - or alternatively, macke Cassini an offer for the 30% stake they cannot refuse! I would completely rule out, that OZL would go hostile here: OZL has repeatedly indicated, that they want to be seen as a JV-partner of choice for Australian juniors - that´s also the feedback we have from Cassini. But without any doubt, having to help the financing of CZI, and also commit to a bankable feasibility study, which will probably cost 25 mill A$ or so + take 12-15 from mid-year is anuisance to them. OZL´s new mine, Carapateena, will strat ramping up in December of this year - so it would be ideal, if they could switch the development team straight on to Musgrave, starting progressively from say March 2020.

So while the release of the pre-feasibility study in 3 month time will enable us to value Musgrave properly, it could also lead OZL to put a friendly offer on the table for the 30% stake, currently not owned. I would very much doubt, that CZI´s 30% will only be worth 20ct/share…I would rather believe this to be closer to 200 mill$ + vs current market cap of 41 mill ( incl 7-8 mill in cash ). If I would be OZL, I would rather pay these guys say 120 mill$ and contril 100% of the asset, than have the nuisance of a junior JV-partner, who needs to be assisted in the financing….And I think if an ofefr of say 30ct/ share equivalent for the project would be made, Cassini would have to let shareholders decide.

So in my opinion - CZI are joined into one of the most interesting base metal developments in Australia by one of the best mining companies in Australia - derisking this thing quite dramatically. Great time to accumulate stock ahead of a potentially very strong share price trigger in 3 month time….Equally important: MD Richard Bevan comes across as genuine and honest manager - and I have positive feedback on him from Australian contacts as well. I am currently a VERY small shareholder.

OZ Minerals - excellent Quarterly from them today…5% more copper production than expected, 10% more gold production from Prominent Hill due to better than expected grades. This is also the reason for much better than expected costs. of only 0,91 US$/lb AISC. Let´s disregard the bad Quarterly from their very small, Brazilian mine…Conservatively, OZL have left guidance for calendar year 2019 unchanged. Their new mine Carapateena will be in production before the end of this year - all going according to plan here, also the expansion study for the Block Cave mine. OZ Minerals underpinned their standing as an excellent copper producer with this report - a good company to own for copper fans, and one of the few choices for Australian institutions, who need liquidity.

I will be away for nearly two weeks…

Have a good time


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