Market Update

General - Mineral Resources - Liontown - Lynas - Bellevue Gold - Osino

Good afternoon

sorry this one did not get out yesterday….so at the end of this blog, you will find today´s update…please scroll down…

a lot happened in politics over the weekend…looks like Modi won the election in India, Kurz in Austria having a wonderful crisis on his hands, and not least, the Australian Liberals staged a surprise recovery and made it again, much to the relief of Australian business. Good for mining - especially coal - very good for the banks! And most probably, also good for the Australian economy!

The Bundesbank sees a continuation of the trend of weakerGerman economy, despite the slightly better numbers for the 1.Quarter.

Huawei-tuzzle continues and is certainly affecting business!

European equities are very weak today, metals a little weaker as well. Surprising to me, that gold is not going higher.. - oil is strong on tough OPEC-talk and the ongoing Iran desaster.

Lynas is working with a Texas-based , experienced company to further seperate rare earth concentrate in the US. These days, certainly favourable been looked at by the Trump-government - and also done I guess with a view to show Malaysia,that money can also be invested elsewhere! The takeover story is probably not over - we have not heard anything from Wesfarmers, though, for a while. There are some rumours, that China might curtail the export of rare earth to the US - that would hit Tesla hard, and would certainly make Lynas an even more strategic asset.

Liontown - we certainly continue to hear from them! Announecd another round of absolutely first class drilling results - up to 5m with 2,4%; 43m with 1,7% - and one with 90m ( not ture thickness ) at 1,3% certainly let teh speculation live on, that the resource target will be increased once again, and that the new resource estimate due late enxt month will provide a lot of fun for punters and investors alike! What a dream for day-traders - 70% of the company traded within 11 days now! And it seems, that valuations of LTR have not seen their high as yet! This project is definitely growing into a range, which interests all the major players in the sector. The market cap is now about half of teh valuation paid by SQM for their stake in the JV with Kidman - and Kidman itself is now under takeover of 5x LTRS`s market cap, without having finished a full feasibility study as yet. Not sure, who still ahs appetite on a corporate level - but we might well be able to gage that soon from Plibara trying to find a corporate investor for their sell-down at asset level. I saw some rsearch which valued LTR´s assets at between 25- and 40ct , using the KDR valuation of the takeover.

Liontown certainly has the advantage of owning a brand-new orebody, and it´s development will profit from the experience gained in the first batch of Australian lithiumm producers - all of which ahdtheir fair share of problems to start with, and some still have. On the other side, while there still seems to be a lot upside, it´s certainly tempting to take some profits - and given the massive turnover in the stock, some investors are doing just that.

Mineral Resources - Perth-based billionair, and director of MinRes, Tim Roberts, has put another 20 mill$ into buying MinRes last week. I am surprised, that teh stock has not reacted more to teh fantastic rally in iron ore prices…I guess the market would like to get some more certainty, that Albemarle really consumates the recent purchase on some parts of MinRes´ lithium assets. I would think, that teh deal si done and only subject to foreign investmenr board go-ahead…but one has seen even horses throwing up - and when it coems to coughing up 1.15 bill US$, even more so! I have really no reason to believe so - but there must be a reason, why the stock does not move any higher! Fundamentally, I still like the stock a lot: Great short term earnings from iron ore - in the medium-to-longer term, great earnings from litium - and a very strong base from the original mining services business! Macquariee stimates, that MIN will increase their EBITDA by 55%, if iron ore priecs hold at the current level for another 12 month - which seems well possible.

Have a nice evening!


And here we are again - Market Update 21.5.2019:

Good afternoon

these markets are getting boring - no news from the trade war today ( except some loosing up on the Huawei-ban )…and equities are stronger….bonds + metals basically unchanged…gold a little weaker, again.

The A$ gave up yesterday´s ( election ) gains against the US$, as the Reserve Bank of Australia strongly hinted at cutting the cash rate ( at which the RBA lends to the banking system overnight ) from 1.5% at the next meeting in early June.

Zambia is moving one step closer to ruin it´s battered reputation even further - on the brink to nationalise a Vedanta-owned copper mine. We all know, what this would mean to foreign investment in this important copper-producer-country….

The A$ gold-producers moved nicely today ( EVN, NST, RRL, SAR ) despite a slightly weaker US$ gold price - I think some Australian insto´s are getting set in an enviroment, where the A$ falls further, benefitting gold producers. I think for all of these stocks, we are up there again - close to the top of the recent trading range. I would be very surprised to see them making new highs -perhaps trade some?? Once again, the Aussies have nicely outperformed North American producers…

Lynas - was the story of the day. The company hosted it´s investor day today. Timing could not have been better - China not importing Mynamar concentrate of rare earth anymore, and playing with rare earth as a weapon in the trade conflict (? ). Chinese producers rocketed through the roof over the last few days, and Lymas, as the only western producers of any size, oulined plans to double production by 2025, and diversify production away from Malaysia to Australia and the US. The company also gave indications, that they are making progress with the Malaysian government re dis-location of tailing etc. I think it´s fairly obvious, that malaysia wants to come to a fair solution here, whidch would not risk the country´s image even further. Lynas are almost the ultimate hedge for a trade war - if China would stop exporting to the US, Lynas would rocket - and Tesla would probably need to limit production …The more detailed growth plans of the company got a few analysts really bullish today - and it looks liek the current, Japanese financiers are happy to support them.

Interesting, that the other Australian hopefuls in the sector came to life as well today - Peak Resources very strong, as well as Greenland Minerals ,Alkane and others. More of what we saw recently in Liontown : The punters are back to the small end, and if the story is good, they give it a go! Good to see…

Bellevue Gold - another good round of drilling announced today…1-3.5m at between 12 and 22g/t from the Viago and Tribune Lodes . The drilling will extend their strike length. At least equally important, the first deep drill hole underneath the old Bellevue Mine, discovered the “right” mineralisation” with visible gold over 5m at a depth of approx 750m - assays are pending. Overall - more of the same - 5 drill rigs now drilling - a substantial resource increase by the end of the current Quarter is expected. I do not believe, that it will be possible to show 2 mill oz with the next estimate - but medium term, I would be surprised, if this target would not be hit and probably surpassed. The limited capex for this project ( the very high grades only need a small plant to produce say 150-200.000 oz + a lot of existing infrastructure ) , alongside many existing mines within trucket distance continue to make Bellevue an attractive aquisition target! They offer just what a few Australian larger producers need - and I am sure those guys are watching!

Osino Resources - have raised 2 mill can$ today at 35ct incl half a warrant, exercisable at 55ct. The new shares have a holding period of 4 month, and will be placed to investors including Ross Beaty and the RCF Fund - both highly sophisticated and highly regarded investors. Some existing investors, who got in in the high 40ties in the IPO, might be a bit disappointed - but in light of the desastrous market for North American exploration stocks, I think this is a good outcome and testimony to the good progress the company has made. The company will use the funds to further drill it´s ground in Namibia. I think this continues to be a very strong story - but still early days, and ultimately, the size of the play might make it necessary to get a large player in. But who knows - Ross Beaty and the RCF have deep pockets…I declare my personal interest + relationship to management…The next few month should be interesting,a s the company will deploy the funds soon, I think.

Have a nice evening


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