Market Update

General - Sheffield

Good afternoon

German exports in March rose by a faster than expected 1,5% MoM. The CPI in the States was slightly lower than expected.

Good bounce in equities today, led by a 3,6% rise in China - but not in the States! Uber also not helping…. Metals recover yesterday´s losses.

Sheffield - I have not written about them for a while, as there is no news…But now, the share price has fallen to a level, which is redicilous ! As you might remember, SFX are developing the Thunderbird mineral sands deposit in the Canning Basin in the North of Western Australia, containing 680 millt with a content of 11,3% mineral sands. Glbally, a significant resource in a top jurisdiction, and largely financed by Taurus. There are 70-80 mill$ in equity left to do, and the compnay expects this to achieve via a partial selldown of the asset to a JV partner. UBS have been mandated in mid-Jan to formally start this process, and a data room has been opened. I believe, that there is substantial interest in this deposit, as the world will experience a supply deficit in zircon ( SFX´s main product ) soon and for many years to come, unless new mines will be developed.

The project NPV is anywhere between 1 - and 2$/share ( fully diluted for future capital raisings ), depending on which scenario you use ( % of selldown, discount to NPV, price of zircon etc )) vs the current 50ct share price. The stock has been languishing ever since the 65ct capital raise back in december, on no news…There will be no news,either, as naturally, teh compnay has substantially reduced activities to preserve cash, while they are running the sales process ( which, by the way, might well end up in a full bid for the company ). Unfortunately, such a sales process, while ongoing, dramatically reduces the ability of the company to either release news, or talk to investors.

Fundamentals, though, have not changed - it´s a great project, the zircon market will be in need for more supply, and in the hands of a merger, the NPV of currently 600-800 mill A$ would probably be quite a bit higher due to lower costs for a major to develope Thunderbird ( potentially larger production, earlier kick-in of Stage 2, lower intereste rates, existing distribution channels etc ). I would have said the same at 80ct - but I think the really outstanding quaility of this project , in conjunction with demonstrated and substantial resource upside from the current 42.year mine life ( ! ) and great fundamentals for zircon, make the company an outstanding buying opportunity for investors. The current sales process will not go on forever - latest by this summer, somebody will make a move!

Have a nice weekend



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