Market Update

General - Independence - Sheffield - Gascoyne - Lynas

Good afternoon

5 Democrats ahead of Trump in the polls…I would not have thought this…The pressure is on this strange man…As is the pressure on Johnson…big uproar against him in the English press…while Italy has found a new government…

China is trying to calm down the tariff-war.

German labor market is showing a few cracks…US growth 2nd Quarter revised down a touch to 2.0%

Equities in Europe very strong, I guess mainly based on Chinese comments as above.Bonds are weaker - base metals strong…nickel above 1600 US$ and at a staggering 24.300 A$/t , equalling 11,02 A$/lb.

I bought some more Panoramic last night…To be honest, even if the unprobable event of another raising happens - I do not really care that much. You will never get the low, and over the years, current prices around 33-34ct will deliver very handsome profits! Even if I assume an additional 1A$/lb in operating costs - which might turn out to be realistic - the company should make North of 80 Mill A$ in EBITDA at the current nickel price, for the first full financial year of production from Savannah North in 2020/2021

Macquarie reports very strong Chinese production for stainless steel incl July, and strong production plans for August and September. Probably the main reason for the strong nickel market.

Sheffield - signed another offtake-agreement for premium zircon - they are sold out now! The announcement is worth reading - gives a lot of background to the uircon market, which is looking solidly supported at the current pricing level for years to come. If new projects should stumble, it could go quite a bit higher. Sheffield announced tehir very positive feasibility study update exactly 4 weeks ago - I think we might have to give them another 6-8 weeks to find a partner for the project. So no major hurry to buy more right now - but just a reminder, how cheap this stock is, holding a world-class proejct in a world-class location.

Independence Group - reported a good result for the first time in a while…Nova, their nickel mine, has been firing, and will be a major beneficiary from currently very strong nickel prices. Mine life is an issue - I think only 6 years left - but the company is trying to adress this with a large, 66 mill A$ exploration program this year, most which is earmarked for exploration surrounding Nova. The stock is not really cheap - but has strong leverage to nickel. Tropicana gold remains a little disappointing - lot´s of money has to be spent on cutback and underground development. But the asset is certainly profiting big time from the ultra-strong A$ gold price. Still..not one of my favourites - though hard to go past for institutions due to the small number of reasonably large companies around in Australia.

Gascoyne - the company came out with a new resource estimate…using a 2400 A$ pit-shell and a cut-off grade of 0,3g/t, they are arriving at 28 millt at 0,89g/t for 803.000 oz - significantly smaller than the pre-mining estimate, despite the lower cut-off. The grades look pretty awful, and when I look at their resources and their pit-shell, there seems to be a large cut-bsck necessary . I am very doubtful as to GCY´s future…does not feel good, even though I am not close anymore. Who knows - perhaps the stunning A$ gold price will ensure survival - but I really doubt it!

Lynas - yearly resulöt, which looks good on the face of it. What I do not like at all are their comments re the changing metallurgy of their mining source at Mt.Weld. Lynas are running a very complicated process to recover Rare Earth from the concentrate - I can only imgaine, that changes to the metallurgy should have a significant impact, and will see - at least temporary - cost increases / and or smaller production. At least, this is a risk. Anyway - I think the medium- to long term story is certainly intact here, and weakness could be a good busing opportunity. I would like to see some comments from analysts over the next few days .

have a nice evening


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