Market Update

General - Sheffield - Metro - Strike - Carawine - Graphex

Good afternoon

the FED-event in the States has been kind of a non-event - while mentioning the solid state of the uS economy in most sectors, they have cut interest rates. Market does interprete this as limited scope for more cuts?

Gold and base metals see limited movement today, limited profit-taking in bonds. Currencies also uninspired today - the A$ has weakened a liitle.

At the Nova Nickel Mine in Western Australia, one worker had a fatal accident. Looking at the cause, it does not seem to be structural mistake, but a true accident - hence limited impact.

The OECD has cut forecats for world economic growth this year to 2,9% and about unchanged from that for next year. No catastrophy, if we get there - but I think risks have to been seen on the downside! A few minor US economic numbers all better than expected.

Sheffield - The Department of Mines has given them Mining Approval. I think this was the last requirement - except for the all-important JV-partner. As a reminder: UBS is running the corporate process to find a JV-partner, who will effectively finance all equity requirements for the project. This process, obviously, could also lead to a full bid for the company. One of the cheapest stocks in my universe - yet also one with the most disappointing performance, which I can only put down to the lengthy prcess to find a partner. The recent equity raising ( instead of using interim financing from Taurus ) did not help either…but as said at 39ct - this should be the low of the share price. Since then, we even traded at 38ct!!

Graphex - are on track for release of their final feasibility study in about 6 weeks time. Recent progress in the Acacia-saga, and some approvals for Orecorp, have raised hopes, that the Tanzanian government will approve a Special Mining License for Graphex rather sooner than later. Broker Patersons value them at 70ct, Bridge Street at double that price - teh difference is mainly in the assumed price of the expandable graphite, which will be produced by GPX as opposed to the battery-market-graphite, which is being produced by the ( nearly ) failed market leader, Syrah. Alongside SFX, this is probably my most disappointing holding - even though fundamentally, everything is fine here. The third disappointing stock I own is

Metro Mining - but their are different to the above two: MMI are actually producing and most probably, generating very substantial cash flow from their Bauxite mine in Northern Queensland. The share price has recovered a little of late, following their very positive production report for August. In MMI, the market is probably awaiting the outcome of the final feasibility study for the enar-doubling of production rates - I guess some are fearing, that a placement has to be made to finance it. I think it will be an easy task to finance this with debt, given the healthy balance sheet, and proven cash generation of MMI. I also do not believe, that selling the product will be an impediment : China has an increasing need to import Bauxite, and firstly, MMI is very competitive given their huge tarnsport advantage to China, and secondly, China will not want to rely even more on imports from Guinea. MMI have put a lot of effort into marketing the material to China, and has been very successfull - the product is well accepted by alumina refineries now. Not many brokers are following the stock, and investors are not very well educated, when it comes to Bauxite prices as easily as say prices for copper or gold. But contrary to many other mining stocks, these guys are producing truck-loads of free cash, and once the mine will produce at expanded capacity in 2021, I think price targets of 26ct and 34ct resp by the two lonely brokers, who research it, might actually be conservative. Remember: This is not a risky development story, but a strongly cash flow-positive mining company. I have constantly added to my position in MMI.

Strike Energy - STX as well as Warrego are holding up nicely, following their great runs over the last month or so, and despite of many shareholders sitting on big profits -partially from recent placements at about 25% of the current price! As I ahve mentioned before - stocks are not that cheap but probably halfway correctly priced at a resource of 1 TCF for West Erregulla, but could well be valued 50% higher, if recent guestimates of up to 1.5 TcF become true. Also, and especially in the case of STX , we have to somehow value the potentially large impact on the Perth Basin and the repecitive ground holdiings of mainly STX. Within the next 2 weeks we should see some announcement re flow-testing, and I think within two month, the first resource estimate for the project. Both events could trigger more interest - and the latter especially, corporate interest. Another driver on valuations could be, if the Beharry Spprings well, which will be drilled very soon and is only 10-15 km away by Beach Energy comes in positively and helps to rerate the potential of the entire Basin. So a few triggers are still in the pipeline for the next few month - but I guess also a potential placement in Strike to replenish cash. Given the strong, institutional interest in the recent Warrego placement, I think raising 30-40 mill$ should prove relatively easy.

Carawine - got cashed up by a fresh placement of 2.5 mill$ today…the only negative: I think they should have raised more, as apparently there was very good demand. i guess the company was keen to avoid dilution, since they will continue to drill their promising Victoria-based asset, which has already delivered some pretty exciting intersections for gold. They also hold some good ground in the paterson province, where interest has cooled down a bit from dizzy heights about a year ago. I think the latter will come to investors mind again - but in the moment, Victoria is the hotspot thanks to Kirkland Gold. Chalice also pretty strong recently - I think they presented at Beaver Creak and found some fertile ground there! CWX are really small - but I guess some of you are holding it, as shares in CWX had been issued for free to Sheffield Resources-shareholders in the IPO. I have bought a very small position in CWX.

Have a nice evening


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