Market Update

General - Lynas - Peak Resources - Caravel

Good afternoon

and another strong day for bonds today…

German labor market, which has been very strong for a long time, is stottering somewhat…number of unemployed rose, as well as the numebr of employed people ( due to some statistical changes ). Not a warning yet - but more signs of an accelerating slow-down?

Equities get hurt - but are trading better than at their worst in laste afternoon. Metals are also weaker on this sentiment - but not too badly so.

Officially backed newspapers in China are reporting, that China might well use Rare Earth as retaliation weapon the the trade war. Wll as we all know, at least 80% of the worlds Rare Earth are being produced in China - and the only significant, other producers is Lynas!

Lynas - stock sky-rocketed again today, as signs are getting stronger, that China will limit the export of Rare Earth! If that should come true, the stock´s rise would be far from finished! In German trading, the stock is trading at 3,13 A$ late in the day - on 1 Mill shares traded! As somebody else said today: This is probably Australia´s most strategic company!

Peak Resources - rocketed as well, on the best turnover since 2011! As you might remember, they have finished a feasibility study quite a while ago - but so far, the market in Rare Earth has been so subdued, that a financing was just impossible. Especially, as the company needs higher prices for Nd/Pr still - probably 70 US$/kg or so. Anyway - the price of these things could go there quickly, and even if not - the fragility of supply of Rare Earth has suddenly come back to people´s mind. Peak could be a good punt on China´s export politics…

Caravel - this little minnow reported results of a scoping study, following an increase of resources in April. The resource now stands at Indicated Resources of 393 millt at 0,29% copper, and additional Inferred Resources of 268 Millt at 0,27% - cut-off grade 0,15% . The stripping ratio over the first 5 years will only be 0,5:1…recovery rate 95%. There is upside to the project from ore sorting, as well as from exploration. The NPV7 at copper of 3.00 US$/lb and an exchange rate of 0,72 A$ is just above 1 bill A$ - potentially 50% higher ( I believe ) with copper at 3.30 US$/lb. The problem with the project is, that capex of nearly 500 mill A$ for production of 45.000t of copper p.a. ( and after expansion in year 5, 65.000t ) is within normal parameters - but for small company, probably impossible to come up with. Cash costs C1 look like being 1,45 US$/lb - very reasonable….This little stock can be used as a long-dated copper option…If Codelco´s recent forecast of a copepr shortage of 4 millt p.a. in 10 years time will find more followers, copper could move way higher than 4 US$/lb - and this stock would be swallowed up by some larger entity like OZ MInerals at 10x the current market cap. To be honest - if the bigger boys are serious about their believe in copper, why not take this little one out rather sooner than later?!

have anive evening, and a nice day off tomorrow!


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