Market Update

General - Lucapa - Graphex - Dacian

Good afternoon

the headlines are like: Weakest growth since 1992…but the 6,2% GDP-growth announced by China is in line with expectations, and some numbers give also room for encouragement looking ahead.

Equities are continuing their mild growth-trend, while metals are mixed so far: copper strong compared to the Australian close, while other base metals see little change. Some volatility in nickel today, and it´s trying to end the day in positive territory, following the very strong finish on Friday. Prices are at around 1-year highs, in US$ as well as in A$. Finally, nickel stocks in Australia are also responding!

Oil has also recovered quite nicely - up about 10% now since mid-June, and gold is giving up a few$.

Lucapa Diaomonds - strong Quarterly out today. In Lesotho, the relatively new mine Mothae saw production 20% higher than planned, despite still mining from the low-grade part of the pit. Production from the higher grade part will start soon, for the first time. The company had deferred mining, as they have been building a dam to take the water , which will later be used as part of the production process. Cash operating costs were 14% better than planned, and importantly, the best-value diamond ( a 126ct-stone ) will only be sold in their next auction later this month. In Angola, production was in line with the previous Quarter - again, a large 130ct stone and a 46ct pink stone will be sold at the next auction, also in July. New equipment has arrived, and production will be substantially increased from this Quarter on. Cash flow to the holding company Lucapa should increase also from here - capex has been completed, and increased cash flow will start paying back the outstanding loan, which Lucapa has with the Angola-JV, as well as dividends to the JV-partners. I still believe, that LOM are very cheap - the reduced risk-profile from operating two mines now ( and both running very well! ) has not resulted in a higher valuation. I think the forthcoming sale of 3 very high-value stones + sales from normal operations will be positive - but the market will probably also re-rate the stock, once more meaningful cash will flow back to the company. So far, the market is questioning the cash being repatriated to Australia. This should start soon - I guess sometime late this Quarter.

Graphex - have completed a 2.5 mill$ placement easily - though at a disappointing price of 20ct. I had some doubts as to easy the capital raising would be - given that no news has been out, and the still fickle market at the very small end, a placement is certainly not easy. However - it ended up being substantially oversubscribed, and the vast majority has been taken up by existing shareholders. The company I guess wants to demonstrate a certain degree of independence from major financier Castlelake. Within the next 3 month, we will have the final fesibility study, as well as -hopefully - all necessary documentation from the Tanzanian government to finish the financing with them. Compared to Walkabout, which has a nearly 5x larger market cap, I think GPX will show to have the better project! This is still a speculative investment - but within my portfolio, probably the one with by far the most upside!

Dacian - announecd production results from the June-Quarter - full Quarterly REport to follow later in June. The company produced 36.600 oz - very recent guidance was 36-38.000oz at 1500-1600 A$ AISC. Costs were at the lower end, with 1519 A$ AISC - that´s quite pleasing. I am waiting for the full Quarterly for an assessment…at this stage, I am neutral - the recent announcement containg the 5-year Life-Of-Mine plan seemed to be a bit on the bullish side, and there are still some lingering doubts, as to whether they need some more equity.