Market Update

General - Evolution - Dacian - West African - Sheffield

Good afternoon

Angela Merkel shaking again - health issues with her is the last we need in the moment, when Trump is driving anybody crazy. I have the feel, though, that more and more people are raising their vorices against him - England the otehr day, and today, some Iran Energy mission does not really want to play to his crazy tune! Good news in a way - but also dangerous stuff. This guy loves to play with fire - and who knows, perhaps even with very young “woman” like his one-time friend, Mr. Epstein. At least he has been very aware of that guys faible for very young woman, as he once told a magazine.

Bonds are a bit weaker today, equities little movement…metals are very strong - in the case of copper, recovering yesterday´s heavy losses even, and in nickel, a new recent high..In A$ terms, nickel has only traded any higher for a few days this year. The last time it was trading this high, our little Panoramic traded between 40-and 45ct…I do not believe, that their comission-risks are as high as the share price is telling us.

And gold is running again - every wekaness seems to be very short lived these days! Feels good!

Dacian - came out with their LOM plan…170.000oz p.a. xpected for the next 5 years at AISC incl sustaining capital of 1340-1440 A$/oz. That is very positive, and the mine will probably produce 68 mill A$ in cash on average p.a. and before tax and financing - based on these numbers. Macquarie analysts point out, though, that these numbers require a better plant performance and higher recoveries than expected from the bankable feasibility study, which makes me very nervous. The company has a track record of overpromising and underdelivering, and under the circumstances, you would expect a management team to come out with forecasts at the rather conservative end of things…One needs to ask the questions: what else might they be NOT conservative one?? Admittedly, the stock is very cheap, if the LOM-forecasts come in - also, you would expect an extension of mine life from exploration success. But the other thing, which makes me nervous, is the fact, that the forecast for the current financial year is only 150-170.000oz, at between 1400-and 150 A$ AISC incl sustaining capital. Obviously, the nearby-numbers are weaker than the average 5-year numbers - and tehy are even skewed towards the second half. So this generally positive announcement has not assured me, that theydo NOT need any fresh money! They stress, that they are also looking out for corporate involvement - and that makes sense, as the company is a one-mine producer, and has we have seen over the last 12 month, their mine is not the easiest one around.

If we see corporate action, there is certainly upside - but I hate baking on it. So I am inclined to take some profits in DCN, awaiting either a placement, or more clarity over time.

Evolution - I have to praise the slightly boring story of constistency again…but as we have seen many times in the mining spectrum, boring consistency is very difficult to achieve and is worth a lot! Quarterly production was in line with expectations as well as guidance - as usual! Ove rthe full year, costs have been a slight miss. This is partially due to lower copper prices as by-product in the last Quarter / higher royalties , due to higher gold prices. The weak A$ does not help some costs in the business, either. But there is also no doubt, that tehy are cost pressures at work in Australiaßs mining sector , and EVN have done very well to mitigate them. The outlook for the current financial year is for the current year, and the preliminary outlook for 2020/2021 is essentially unchanged from last years performance. Interestingly, tehy are brave enough to expect unchanged costs for the next 24 month.

Evolution will spend 80-100 mill A$ in exploration this year, up from 50 mill…by far the largest budget is for Cowal, followed by Mungari. The large Cowal-budget is an expression of the big expectations tehy have for the underground discovery there - Mungari is perhaps more driven by the need to find mine life extensions!

Net mine cash flow of 500 mill A$ in the year, of which 155 mill A$ in the June Quarter, is outstanding and enabled EVN to be in a net-cash position now! Amazing - from basically zero to 750.000oz of production, generating 500 mill$ free cash flow in a year, and with no debt - that is the track record of Jake Klein in 8 years. Absolutely outstanding! EVN continues to be Australia´s best gold mining company, in my opinion !

Sheffield - announced a reserve update today. Reserves increased by about 10%, and underpin Thunderbird as one of the ebst ( and probably the best, taking country-risk into account ) mineral sand developments in the world - even as the current share price continuous to tell us a different sory!! The company elaborates a bit more on the framework of the enhanced feasibility study, which will be announced over the next 2-3 weeks: There is no doubt, that capex will substantially, decrease, risk will decrease, financing/equity needs will decrease, and NPV will increase substantially! Remember, that previous numbers valed the company at 1.50/share+ - this valuation might get close to 24/share now. Don´t get me wrong - no potentially incoming corporate will pay this kind of price in the current enviroment - but I would be very happy for now with 1$/share! This stock is cheap! Nonsense - it´s VERY cheap!

West African Resources — announced yet some more infilld rilling results, this time, from the M1 open pit ore body. Results are consistent with the feasibility study estimates…the project was 45% completed recently, so not only are grade risks reducing - also budgetary risks are decreasing, while the gold price has gone higher ( though as a sub-500 US$ costs producer for year one, and not much higher therafter, the stock is not very sensitive to the gold price. Normally, infill-drilling results would not be announced by a company - WAF are doing this because of the recent bad surprises we have had in the Australian market, once mining / milling of new deposits started. I thinkw e can be more and more assured, that this will not be the case with WAF. The main risk is Burkina faso country-risk here…and I think that is vastly overdne , as no mine in Burkina has lost any production as yet because of the state of the country - even the ones in much more dangerous area than Sanbrado, which has not had any issues ever. Having said this - I am still waiting for a corporate to show his hand, which will most probably start some bidding tension for this first-class development project.

Have a nice evening!


Schröder Equities GmbH


80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10




eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder


The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by