Market Update

General - Orecorp - West African - Prairie

Good afternoon

The Saudi drone attack is driving markets today. The strong oil price is hurting some markets, as is the threat of more geopolitical tension. The outage in Saudi might take longer than initially expected.

Vale has been allowed to fully start the Onco Puma nickel mine in Brazil again, putting pressure on the nickel price today on a day, when metal prices are generally weak amid fear, that the very strong oil price and the development in Saudi Arabia might put further pressure on the global economy.

Various Chinese data today was still strongly positive - but in every case, weaker than expected!

US shale producers jump today, after getting a bit of a beating over the last few month. As expected by many - their profitability has not been as promised, despite strong production increases. Without low interest rates, shale probably would not work - something always worth keeping in the back of our mind!

West African Resources - watched Richard Hyde´s latest presentation today - boasting with confidence, smiling all the way through - and you can understand him! He has an excellent, very experience team, and the project is 2/3rd complete now! Within budget,a nd slightly ahead of time - and probably nothing in the way to start production slightly early. payback at current gold price of 1500 US$ is 12 month! And looking at his resources, and his presentation, there is a very high chance of WAF prooducing 150.000 oz p.a. at say 700 US$ for the long term, and an average of 217.000 oz for the first 5 years at around 600 US$. Even the long term rate of 150.000 oz would generate something like 120 mill US or 175 mill A$ p.a….The only thing Richard cannot change is the location, which is not perfect, as Burkina Faso is not teh current anymore it used to be. Nevertheless - he quotes an NPV of 600 mill US = 875 Mill A$ for the project - roughly 1$/share - at the current gold price. So while I am always selling a few on the way up, simply for weighting / risk management reasons, there is still considerable upside from the current 55ct! I am still waiting for the corporates to show their hand - but as we can see, that´s not needed to drive the share price in a market, which is scrambling for good stories, but not finding many!

Orecorp - is making very good process on the regulatory front in Tanzania, which augures very well also for other projects. The Mining Comission ok´s the full aquisition of ORR´s project, and has said earlier, that a Special Mining Lease would be granted very soon after the transaction has been completed - which should be just days away. Excellent news not only for ORR, but also for other mining companies trying to progress their various projects liek Graphex. ORR have 22 mill A$ in cash, and own currently 100% of the Nyanzaga Project, with 3 mill oz of gold at average grade of 4g/t ( the Tnazanian government will get 16% of the project for free ). Nyanzaga should have a minimum of 12 year mine life, producing an average of 210.000oz at 840 US$/oz AISC p.a.. The mine remains to be financed - not that easy still in Tanzania, and pre production capital of 287 US$ ( incl 30 mill contingency ) for I guess total capital needs of close to 350 Mill US incl interest, financing costs etc etc is a large amount for the country. But I think it will be dooable, given the nice margin at the current gold price…Pay back period of 2.3 years approx is not nearly as good as for the outstanding WAF-project - but for a mine life of 12 years it looks ok to me. A stock to watch…and not a demanding valuation, despite the recent, good run of the share price. There remains upside to the above numbers from more metallurgical testwork to improve recovery, and use contractors vs owner mining.

Prairie Mining - jumps to the highest since early June in Polish trading , on good turnover as well…trading at about 0,32 A$ equivalent. I guess the Polish know something we don´t - at least I do not believe, that there has been any contact between Australian management and Polish companies like JSW recently.

Have a nice evening


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