Market Update

General - Bellevue Gold - Sheffield Resources - Genex Power - Syrah - Index moves - Saturn Metals

Good afternoon

I am managing an equity fund, so I am not complaining…but I am amazed, just how well these markets are doing in the face of crazy Johnson, crazy Trump, and economies around the world, which are cooling quite dramatically!

Equities don´t do a lot today in Europe - but the US gets dragged down by tech. Small movement in metals… Interesting to note, that most brokers have cut their metal price forecasts by so much, that Macquarie for example pointed out today, that there is substantial upside risk to earnings, if metals are holding at current levels…

Nickel is back up through 18.000US$t or 26.000 A$ = 11.80 A$/lb ( !!! ).

Golds has tanked a bit…back below 1500 US$…but is trying to recover in N.Y.. Citi can see the price at 2000 US$ , if the FED continues to loosen up…

General miners strike in Peru is starting, affecting many copper producers

Bellevue Gold - excellent exploration update out today - just in time for the large gold conferences in teh States, starting today. Steve Parsons is an excellent marketer - and let´s not forget, that marketing is a very integral part of running a small miining developer! Results are from the recently discovered lode Deacon ( not included in resources so far ), and has extended itz to 1400m - open in all directions. 4.4.m at 62g is among the very best drilling results so far….They also dscovered yet another lode, called Mavis - 2.2 m with 38g are an excellent start and show, that this asset is far from being closed off. There is a lot to come , and some Down Hole Electromagnetic conductors remain to be drilled - not to talk about regional exploration. 6 drill rigs double-shifting - so many new results to come! 35 mill A$ in the bank….Much more fun in train here, and I also believe, that there is some good catch-up potential, given that this exploration-driven stock has not had a run from the recent strength in the gold price.

Newcrest - for all followers of the region: The company announced some strong drilling results from the JV with Greatlands Gold, 45 km from the Telfer Mine. Relatively deep, but very promising! Not important enough, though, to have a price impact yet on Newcrest.

Genex - in my absence, the slightly unusual happend: The Government announced a funding package of 132 mill A$ for a transmission line between Kidston, and Mount Fox - built, owned and operated by State-owned Powerlink Queensland. This is exactly, what Genex is waiting and hoping for! The slightly change thing: It ahs not been signed as yet. Obviously, this can only be a formality now. The government has isued the statement for political reasons early, I guess….This agreement, once signed, it one of the two all-important announcements in the lead up to the full financing…the other one being the offtake agreement with the distributor Energy Australia. This is obviously taking longer than anticipated - They are an international company, with several layers of approval needed. GNX remain convinced to dust this project off before the end of the year.

I cannot believe, that it´s still possible to buy Genex at current prices….

Index moves - when is teh last time we saw an Australian gold producer or developer join an Index????? Normally, our companies got removed from Indizes for many years. This time around, we have Gold Road and Silver lake joining the ASX 200, and West African + Bellevue the ASX 300. This is good for these companies , but also for the entire gold space. Perhaps Australian fund managers have to learn something about the mining companies now!

Syrah - what a desaster! very weak demand for battery-class graphite led them to cut production by a staggering 70%!! prices seem to be around 400 US$/t only, down by more than 20% recently. The company is undertaking a strategic and operational review to get a better handle on the way forward…more bad news is possible. Thanks god our baby Graphex has got very little to do with this type of graphite!

Sheffield - another desaster! In late June, the company had announced a 10 mill US$ bridging facility to satisfy all working capital needs, while the sales process for a partner ( or potentially a full bid ) in the massive Thunderbird mineral sand project lasts. The board seems to have gone against such a loan, as it makes the sales process more complicated and difficult. I can understand this - but perhaps they should have thought about it in the first place??? Anyway, since that loan had been announced, the company reported a reserve increase, more offtake agreements for zircon and - importanly - ilmenite, a very strong and exciting , updated feasibility study, and not last, new board members. All very good news, indeed - yet the share price is almost back to the worst! The company has moved to replace the bridging loan with equity, and raised 18 mill A$ at 39ct. The placement got increased, and was taken up ( not sure, whether all of it, but in any case, the vast majority ) by existing , large shareholders. As we all know, a placement is nearly always bad for the share price…but this money should last them for 2 years, and gives them a very strong negotiating-position. I am still expecting a solution to the financing - i.e. a new JV-partner - within the next 2-3 month. I am repeating myself here, but I am of the opinion, that SFX are very very cheap!! Small shareholders did not have the chance to participate in this placement ( like for example my fund ), but the price is back to placement level anyway, and gives everybody the chance to average down - something I urge you to do! The desaster I have mentioned above definitely is one, on a short term view. But it has not changed fundamentals at all, and simply provides us with what I believe and hope to be the last buying opportunity…

Saturn Metals - the stock continues it´s recent run and made a new high at 0,465 A$ today. The gold explorer has a resource of close to 700.000 oz now, at a 0,5g cut-off, which ahs not been updated for a while. STN have continued to drill and has succesfully tried to deliniate higher grade pockets within the resource, which is low grade at 1g/gold t. Early metallurgical testing has been very positive, and the ore also seems to be suitable for ore sorting. More importantly, tehy have now established which seems to be a parralel, significant zone of mineralisation. there certainly is potential to double the existing resource, and at a gold price of 2200 A$/oz. producing gold should be a very profitable excersise. The frugal management team around MD Ian Bamborough, whom some of you might have met a few years ago at our resources conference, has done an excellent job here. Good chance to hit the 1 mill oz resource level relatively soon, and the company is cashed up from a recent 3.8 mill$ placement. I am stopping just short of buying them - but as holder, I would certainly hold on to Saturn.

have a nice evening


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