Market Update

General - Evolution - Strike - St barbara - Liontown

Good afternoon

Trade war getting closer to a solution?

I congratulate the POM´S to Mr.Johnson! He is certainly kind of entertaining…

Manufacturing PMI in the US on the verge of becoming negative…Services looking a bit better. Next interest rate cut - I can see you coming! Manufacturing in Europe is weak!

My fund, Nestor Australien, is fast catching up with last half´s underperformance…up by about 9.2% this month!

Following the very strong market yesterday, equities are mixed today…bonds strong as a bull…metals also better - nickel recovering from strong prodit-taking the last 2-3 days , as LME-stocks continue to fall strongly.

Gold is trying to go higher once again - currently at 1427 or a breathtaking 2043 A$/oz!

Evolution - good Quarterly…in terms of production, exactly in line - in terms of costs, 20$ abover the target range at 924 A$/oz - which is still fantastic. Total costs of about 1200 A$/oz leave a margin of more than 800 A$ for the company! This is such a bloody good company….The next few years are guided to be nearly exactly in line with the previous year. EVN will not get sucked into bull-market type of M&A! and for now, they will also not change their cut-off gold price of currently 1350 A$/oz , which would certainly increase reserves, but would probably also increase costs. Jake Klein confirms, that he wants to run a profitable business across the cycle. Nevertheless, if the A$ gold price will establish a new base price of 2000 A$/oz+, they might review this - and they probably should. In the last financial year, they received 1750 A$ for their production - the gold price is now nearly 300 A$ higher. I can only praise the company for it´s fantastic reporting - even an amateur can work out, what real costs of production is, and what free cash flow is. Both - the reporting standrad as well as the free cash generation - are second to none here! If you want more numbers, just read the Quiarterly - it´s all in there, nothing is hidden. The company is definitely not cheap - but what do you pay for superior quality?

EVN made some strong indications for paying a higher div going forward, as they are now net-cash positive. How can you possibly find a gold miner , which has gone from zero to 750.000 oz yearly production at world class prices, and no debt within 5-6 years????

This year, they will double the exploration budget to around 100 mill A$ - a littlle more than half of that will be thrown at Cowal, where the xploration drive has advanced to 550m and from which underground drilling will start now with one drill rig, and another one soon. Cowal is the prime exploration target and the company appears very confident to drive this mine from 250- to 300.000 oz + pa.a. via exploration sucess, and and replacement of low-grade open pit material by high-grade underground ore.

I would not be surprised, if the move to replace lower-quality mines like Cracow by better-quality stuff ( like Bellevue?? ) will continue this year.

Strike Energy - what a pleasure to see them moving like a rocket today! Highest turnover in the stock ever of 44 mill shares, + 42% speaks for what the market thinks of their gas-shows in the secondary target “Wagina”, which they hit today. Good pressure, good porosity speak for a good gas resource, which alone could well be worth 100 mill$ to Strike shareholders, ore about 6ct/share. And the primary target will be drilled only next week - this could be 3x larger. Testing will be run over the weekend/early next week - probably stock will be suspended for that result. And while it seems crazy, I have not given up on Jaws - some good news could come here any week - well, no news will probably be rather bad news. But as you know, this project alone could be worth 20-30ct /share. So while it´s speculative, I advise to ride this one out, afetr we have been waiting 10 years or so for it to happen!!! That´s what I call patience - some people would call it desperation, I guess!

St Barbara - in my opinion, they continue their slightly disappointing run with todays Quarterly. Perhaps one should call it differently: For the last few years, Leonora has punshed above it´s weight, mining much higher grades than long term reserve-grade, and Simberi has surprised everyone consistently on the upside. I think this trend has finished - one can see, why they were desperate to grow and probably overpaid for their recent, North American aquisition. Guidance is for lower production again - 200-210.000 oz at AISC of 1230-1290 A$, which is more than 50% higher then their best Quarters. On top of this, growth capex of about 200 A$/oz production, plus headoffice + exploration…the company is still pretty profitable, but this is thanks to a great gold price!

Don´t get me wrong: The current management has overseen a fantastic turnaround from a company, which was down to zero and got nearly buried in a pile of debt - extremely well done! But I think these days are over. Despite some people just loving the exploration upside of their aquistion Atlantic - in the first place, SBM will have to invest every spare penny into this asset! The good days could be over here? At least, I fail to see the upside unless it´s coming from the gold price.

In my opinion - SBM and RRL are prime targets for profit-taking !

Liontown - had some very nice drilling results the other day from Buldania, their second and less developed lithium-project. Results were between 12m and 58m with grades ranging from 1,00-to 1,6%. Probably in grade inferior to their No.1 project, and also in potential size. But it´s certainly worth to put more exploration$ into this asset as well. Buldania does increase the sex-appeal LTR has got anyway for some corporate, which wants to get his teeth into lithium for the long run. In terms of time and %age move, Liontown is probably the best performer ever from our many resources conferences - from 2ct to a high of 16,5ct since late Feb is an incredible performance…and at 2ct, one could buy many million shares! I am out in the moment - I just could not withstand this wonderful profit - but I would not be surprised at all to see LTR them continuing to perform on corporate interest. Good on ya, Tim Goyder! A well deserved win for one of W.A.´s mining finance veterans! Tim is also Chairman of Chalice, which is performing now and is a good company, and is a large shareholder in STX and has been Chairman/ director until recently!

have a nice evening



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