Market Update

General - Lynas - Bellevue - West African - Gold Road - Sheffield

Good afternoon

China is on the move today for tariffs on US-goods….driving down metal prices a little, which were stronger before this news broke. A very volatile day in base metals will probably see them close in the green again! Same with gold….which is back above 1500 US$ currently, and at 2226 A$/oz. And as I am finishing this blog, gold is running hot at 1525 and 2254 A$ - a new high! Trump wants to fight back later today on tariffs, and the FED leaves the door open for further cuts!

Equities are showing the same pattern as base metals today - strong initially, they tanked a bit following the Chinese announcement, but seem to close in positive territory - at least in Europe.

Macron slams Brazil for burning rainforrest for agricultural use…Many don´t, but I do like this guy. At least he seems to be someone opening his mouth and not hiding behind diplomatic rethoric all the time! Don´t get me wrong - I do not like Trump all of a sudden - who certainly cannot be blamed for diplomatic rethoric! The most recent example of his outrageous behaviour has been his Danish escapade!

SQM are pretty bearish for lithium this year…

Lynas - Wesfarmers have formally withdrawn the bid! The stock dropepd - potentially a few event-driven jumping ship? Rumours of China using Rare Earth to retaliate against US-tariffs have recently become pretty quiet as well. In any case - this is a very strategic asset, and the company has made very substantial progress in talks with the Malaysian government, including a new license to operate for another year. The stock is probably worth another look now…

Bellevue - I spoke to them today…it´s probably the only gold stock having gone down since I started my holiday. Apparently, some early investors have exited, lokking for stocks in z´the junior space with more upside. This is understandable from a speculative point of view - probably hard to double your money from the 60ct-level in the stock. They are not very sensitive to a rising gold price, as the very high grade nature of the ore body will probably see them having low costs . Also, a larger US-fund has exited, for unknown reason. On the exploration-front, everything has gone well, and BGL announced an new ore zone during Diggers & dealers conference. They have multiple targets left to drill, and I have no doubt, that resources will continue to grow. Before we will see potential corporate action from one of the neighbourinmg plants-owners, tehse guys will want to see at least some conversion from inferred- to indicated resources - understandable, So we will need to see more exploration hits, and/or anotehr resource increase before more substantial upside. The company has 35 mill$ cash in the bank - lot´s of drilling and studies can be financed from this! I think BGL should be accumulated at current levels.

West African Resources - the share price has hit a new high the other day - well warranted! Like with BGL, the sensitivity to a rising gold price is stronegr for higehr cost producers, but 1500 US$ are nevertheless another bonus for them! Deep drilling will start again relatively soon. The company has good visibility of capex now, as more than 50% of the construction are complete and the underground development is making good progress. WAF is now talking production by mid-year, and not the 3rd Quarter anymore , showing confidence of being at least in time and also within cost budget. This will leave ample cash for some nice drilling. The company also notes, that deepest drilling results of 25m with 15g gold are some 140m below the bottom of the calculated reserve. Any additional drilling should improve confidence for longer mine life underground, and back-on-the-envelope, every year shoudl add 100 mill A$ in value to the stock. While we were hoping for a takeover of the company at say 65ct a few month ago, at 1500 US$ for gold, this would need to be at least 75-80ct at 1500 US$/oz. But while I am hoping for this to happen, the company makes it very clear, that their aim is to bring this mine into production properly, and add value to the stock wherever they can - most probably by exploration!

Gold Road - today, Gold Fields used the strength of the share price to offload their 10% shareholding at about a 100% profit. Nice, if you can get it! I think my old mates at Macquarie might have miscalculated the market here - looks as if tehy took on the line at 1,45 A$ - but the share price at 1,30 A$ today tells me, that they have not been able to find a home for all of it! The stock is probably still not dirt-cheap - but anotehr 10ct lower, I would get very tempted to buy a few!

Sheffield - there has been some talk about general weakness in the zircon market following the Iluka result a few days ago. This is probably not correct….It´s rather a question of Iluka being able to produce standard-vs quality zircon….Indicatively, this looks correct to me, as Iluka have left their price for quality zircon unchanged going forward. And Iluka also agree, that zircon 2-3 years out will be having a very strong outlook due to diminishing production from existing mines around the world. Unfortunately for us holders, the process of finding a corporate JV-partner ( or potentially, right-out buyer of the company ) has been dragged out because of the new feasibility study, which ahs been very positive, but which has been announced only one month ago. Any corporate making a decision will want to have a very close look at the new study . I still expect this developing worldclass asset to be valöued at 1$/share SFX or higher!

Have a nice weekend!