Market Update

General - Gascoyne - Strike Energy

Good afternoon

Equities just don´t stop…and I think that does not help gold currently, which is also held back by a strong US$.

Metals are mixed today - zinc continues to rise, and nickel is holding above 18.000, while copper is a little weaker.

Norilsk expect a smaller deficit in nickel for next year, as the impact of the trade war hits - despite the Indonesian export ban for nickel from 31.12.2019.

Rumours about Indonesia also imposing an early ban on bauxite exports - that would be major good news for one of my favourites, Metro Mining.

Faulty parts in many of the 58 French nuclear power stations may potentially affect 10% of French power generation ( Macquarie ), helping thermal coal and electricity prices in Europe.

Had a meeting today with

Gascoyne - not an easy story, obviously! The management alongside the Administrator are trying to revive and recapitalise the company. /8 mill in bank debt + I guess another 30 mill with contractors etc don´t make this task an easy one. They are trying to get to the core zone of the Gilby pit, where the main reserves are, as quickly as possible, which requires a cut-back. Since the administrator took over, the company has not lost any money - thanks to very strong A$ gold prices, which raises some hopes for equity-holders to recover some money. The administrator is running a simultaneous process of operating the mine, generating corporate interest, and/or finding new equity investors. In any case - new equity will be needed, and quite a bit of it, to get this thing properly up and running. A potsntial capital raising is some time away, in any case - my best guess is, that by Christmas time, we should no more.It was interesting, in any case, to listen to their story as to what went wrong….seems to be a mixture of Mother Earth sometimes delivering bad surprises, as well as management not seeing this early enough and therefor, not implementing changes.

Strike Energy - made a significant upgrade to the Kingia gas disovery today, announcing a net pay zone of 58m vs the original 41m. Some estimates flying around in the market believe Kingsia to contain 1 TCF of gas - and the otehr zones perhaps another 0,4-0,5 TCF! On the back of the envelope, 1 TCF is worth 6 bill A$ - the NPV of it perhaps 1 Bill A$….so potentially, there is quite a bit of room left in STX, as is in the JV-partner, Warrego. As I said before - there is a high chance, that this will develope into a corporate play - and as operator, STX would be the prime target. For a resource this size, even some of the major players in offshore LNG in Western Australia could become interested! Also, STX have a substantial ground position in the Perth Basisn, which will increase substantially in value because of this find. West Erregulla could just be the start here!? Jaws is flowing gas consistently - that´s very good news - but not at commercial rates as yet - for which we had hoped by now. But the Jaws - story is not over - remember, that it could be worth just about anything between say 5 mill and 500 Mill A$….over time. The company will present at a big oil- and gas conference on Thursday in Perth. It will be interesting to see, whether they will give further indications. Slight negative, but short term: Both companies involved will need to raise more funds.

Have a nice evening


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