Market Update

General - Metro Mining - Lucapa Diamonds - Aurelia Metals

Good afternoon

markets are relatively quiet today, as England is putting in a Bank Holiday today, to help swallowing the elction result - and the US on holidays as well.

The European election - thanks god! - did not see the feared-for right wing landslide - though they were certainly the winners of the election! Established parties lost heavily just about everywhere - the worst were the Tories in the UK, ending up with just 9% of the vote!!

I guess european-friendly parties profited from the much larger part of the electorate to actually voted than previously! So we will not be in the crazy situation, that the European parliament would be having a anti-european majority!

A pretty bad eathquake in Northern Peru did not do any serious damage to a few large copepr mines, which are situated not that far away from the centre of the quake.

Iron ore continues to rocket higher…amazing…while one of Vale´s tailings dams is moving by an astonishing 12cm/day - meaning, that it will most probably break rather sooner than later. While teh relevant mine is not producing anymore, this new incident is certainly raising fresh questions…Stcopiles in China saw anotehr significant fall last week, and Fortescue is reporting another contraction of discounts for it´s ore. The big miners are just printing it…Just the additional 4 US$/t price increase of the last two trading days will give Fortescue another 700 mill$ in free cash after tax on a yearly basis! And it will safe Australia again….Without iron ore and coal, Australia would probably be in a serious recession…at least, the states budget would be super-red!

Victoria has introduced a royalty on gold - 2,75%. I reckon that´s not too bad - probably time to do it…Why should gold - contrary to just about anything else - be exempted from a royalty?? For some companies, that´s a lot of moeny, though - Kirkland will pay something like 30 mill$ in royalties on a yearly basis. But again - if you make a margin of something like 1000 A$/oz, why not pay 50$ to the State Government? The only problem with it is, that in the governments hands, the money will probably be wasted…

Prices of Neodynium jumped by about 20% since the Chinese Premier visited a large Rare Earth producer…

Chinese imports of bauxite rose 10% in April from March to a new record…on average for the first 4 month of 2019, imports rose to 8.9 millt p.m. from 6.8 millt in 2018! Looks like our friends at Metro Mining continue to have very strong appetite for the product! Their presentation atlast week´s AGM also showed, that prices have risen to just about the highest in the last 12 month - not to talk about the relatively weak A$, which has given them even more price performance! I still cannot believe, just how cheap this little thing is - and we are not talking a developer here, but a much derisked producer!

Aurelia Metals - announced some very good drilling results today, from the area above the high grade Chronos lode , part of their peak Mine: 24m with 30% PB+Zn, 15m with 35% Pb+Zn etc….but unfortunately, this thing is not big. Neverthelss, good stuff, and the company was in need of some good news, following the sudden departure of the CEO recently, and a bad Quarterly. I still believe, though, that tehre are too many uncertainties in the moment to invest in the stock.

Lucapa Diamonds - the company had it´s AGM today. Fresh from disovering a large 130ct stone in Lesotho last week, the chairman elaborated on their two succesfull diamond mines in Lesotho, and Angola. While Lesotho had a very succesfull ramping up of the mine, the company has so far only produced diamonds from a relatively low-grade area of the mine. The high grade are is located in a part of the pit, which is full of water. To safe water, the company is now waiting to de-water until the water dam is finished in the 3rd Quarter. I believe, that production, even from the lower grade part of the mine, is profitable. But the market might have been disappointed by the fact, that production guidance has been delayed towards the end of teh year, once the full mine is operational. Both plants - in Angola s well as in Angola - are currently being expanded, and mining is shifting one gear highe - in the case of Angola, from 2 shifts to 24/7-operation. In so far, cash flow for Lucapa is currently limited. This should be alleviated by 2 diamond tenders - one for each mine - which are going to take place in the next few days. The brand-new, 130ct stone will not be included here. At tehs ame time, as running the expansion in Angola, exploration there is also running at full speed…so I expect, that the company can afford it! Sounds like LOM have some cash flow issues in the moment - but all for good reason, and I assume, that some cash will be paid out by teh Angla-JV very soon.

Have a nice evening!



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