Market Update

General - Strike - Breaker

Good afternoon

these cowboys are continuing to trouble the world…Iran is not helping continuing fears of a trade war. Equities are very jittery again today…which helps gold ( currently breaking through 1300 ) and bonds, which are very strong across the world except for in Italy! Well this was right for most of the day…but then, this crazy man twittered again…delaying potential auto-tariffs for 6 month, which created a 1.6% jump in the DAX within minutes. Oh my god….Trump must be long volatility! He also finished the breakout of the gold price, and turned all metals nicely into positive territory.

German GDP growth last Quarter was as expected at +0,4% QoQ. In the States, Retail sales weaker than expected at -0,2%, following a very strong +1.7% in March, and Industrial Production fell by 0,5% vs 0,0 expected.

Chinese economic numbers were not godd - all below expectations ( in brackets ): Retail + 7,2% ( 8.6% ); Industrial Production +5,4% ( 6.5% ) and Fixed Asset Investment +6,1% ( 6,4% ). Still growing nicely by most standards - but not as nicely as wanted and expected!

St Barbara - oh yes, this cash has burnt a big big hole into their pocket!!! Raising funds at a 13% discount, and paying a 41% premum for something, which is not all that cheap + needs substantial capex sounds like a pretty desastrous deal to me, at least at first glance! SBM make a bid for Atlantic Gold in Canada, bidding 2.90 Can$ or 802 mill Can$ - raising 490 mill A$ in an underwritten rights issue of 1:3.1 at 2,89 A$/share. They are paying more than 400 Can$ per ounce reserve - for a mine, which only produces 95.000 oz of gold at AISC of around 780 Can$ ( which is obviously very low…). But the mine needs substantial capex to increase production to 250.000 oz yearly production from 2022. Certainly the aquisition price includes the expectation, that SBM will get everything right here!!! The rights issue at 2,89 A$ will hold the stock back anyway - no need to own SBM for a while definitely, and we will watch further news and presentations to find out, whether our initial, negative view needs to be changed….For now, the company claimes, that there is substantial reserve upside and the next reserve estimate will be out in August.

Strike - wonderful!!!! Finally, gas is consistently flowing again at their original project in the Cooper Basin! The company is happy with the way JAWS 1 is progressing, and we should be at critical stage about a short month from here for much larger, commercial flows. Let´s not forget, that STX was capped at 140 mill A$ or so just 18 month ago, when hopes were high to get the deep coal-gas project in the Cooper Basin going….and today, their 50% JV-partner in Strike´s other asset, Western Erregulla, , Warrego, is capped at 85 mill A$ - implying that the current market valuation for Jaws is only about 30-40 mill A$, if that ( Strike also holds a lot of ground surrounding West Erregulla through the recent takeover of UIL Energy, which is not in JV with Warrego )

In any case, today´s announcement is very re-assuring, that JAWS 1 is still on track, and will hopefully produce commercial quantities of gas by late June. Remember, that Strike has got a very large resource there - but one which is obviously not that easy to extract. If proven commercial, the upside to STX is still a multiple of current prices from this asset alone. Hope is back here! And the well in West Erregulla, which could be a company maker in it´s own right, is confirmed to be on track to drill by the end of May.Could be 2-3 very very big month ahead for Strike!!!

Breaker - raised 6.3 mill A$ at 30ctin a placement. Considered, that the last placement was done at the same price, it´s a little disppointing. The company had announced various rounds of successfull drilling…but the relatively late , next resource increase targeted for July has spooked the market a bit. I think that´s unwarranted - but given last years experience, when analysts expected a higher, maiden resource than was actually delivered, is still on investors mind. Markets are still very diffiult at the junior dend, despite a new alltime-closing high today for A$ gold at 1878! I continue to be of the view, that the next resource eincrease will be very meaningful. BRB expect to deliver the results of a pre-feasibility study in late September/early October. This should be important, as the market will be able for the first time to get a feel for the financials of the project, stripping ratio etc…This and the next resource estimate will hopefully do their part to get Breaker at least closer to analysts-targets, which are a lot higher than today´s price!

Iron ore - sevral analysts increase their forecasts for prices for the enxt few years even. One analyst believes, that it will go well past 100 US$/t this year….every 10$ extra make RIO an additional 2 bill$ free cash after tax extra, - that´s the CEO saying it! One other body is extremely happy as well - that´s the Australian tax man! Australia is exporting more than 800 millt of iron ore each year should generate something like 7-8 bill A$ for Western Australia in royalties alone - + massive corporate tax for the Federal Government.

have a nice evening


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