Market Update

General - Dacian - Genex - St Barbara

Servives Industries in Europe as well as in the US are still doing well - manufacturing ok in the US, but weaker in Europe. Machinery Orders in Germany 11% weaker than a yer ago!

Markets are expecting more rate cuts around the globe…some people talking about negative ECB-rates!

The IMF reduces it´s optimistic forecast of 3.6% world growth this year to 2,6%…

GDP growth in Australia only 1.8% vs year ago in the first Quarter

Equities can hold yesterday´s strong gains - metals mixed to slightly weaker. A relatively strong rise of nickel LME-stocks today, by 5100t to 164.000t ( which is still low! ). Gold traded as high as 1344 US$ - but as I am going home, only up a few $ to 1329 US$.

Dacian - that´s the enxt shocker! Not as bad perhaps as the share price fall from 1,58 A$ to 0,51 A$ might suggest, though! But things are pretty bad…the market had been assured as recently as 29.4. with a guidance for the current Quarter of 50-55.000oz at 1050-1150 A$ AISC. Only 5 weeks later, they are warning of only 36-38.000oz at 1500-1600 AISC!! They are citing lower grades, underground contractor issues, and a ball mill failure, leading to a 3 day shut down of the plant. I really wonder, weather none of this was on the cards 5 weeks ago?! The company is now expecting 160-180.000 yearly production ( no AISC given ) for the enxt 5 years…that well down on around 210.000 expected very recently. The company has limited ebt - I think net debt is around 80 mill A$, which appears managable…But the market has lost all confidence in them …understandably so! A lot of talk about a corporate coming in, taking a placement - we will see. But too risky for me to get involved. These guys would be in real trouble, if not for this fantastic A$ gold price! Certainly not good for our market - too many stocks with problems! The next one is:

St Barbara - their profit-warning came right in the middle of their retail offer to finance the recent aquisition. Bad enough - but the company will pay back those retail investors, which had already subscribed….that is certainly debatable ( even though nice of them ! ), and the underwriter, Deutsche Bank, will have a nice fight on their hands! Nothing to improve sentiment for gold stocks!

Genex - the AFR after market is reporting about japanese hydro power company Jpower buying a 19.9% stake in GNX, at well above market prices. That would be nice I guess - but let´s wait for the news to come out tomorrow ( that´s what the AFR expects )

Have a nice evening


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