Market Update

General - Panoramic ( PGM´s )

Good afternoon

China induces some more liquidity into the banking system…markets are hoping for some more progress in US/China trade talks.

Metals looking ok today - nickel very strong + 2%. LME stocks, which had risen by more than 10.000t on the 12th, have since fallen by more than 12.000t…incl 3200t today. We are now back to 11.70 A$/lb!. Cash is trading at the largest premium to the forwards, indicating strong physical demand.

Big turnover in gold stocks generally today - reweighting of the GDXJ took place. More Index action, this time in the S&P ASX, affecting only a few of our stocks incl West African and Bellevue , will be taking place on the 23rd of Sept.

sorry, you have to listen again to my jibbery about Panoramic - this time, in relation to it´s Panton Platinum/palladium project.

Panoramic - Panoramic bought this asset a few years ago - I think it might have been in 2015. It contains 14.3 millt of ore, grading 2,19g/t Platinum, and 2,39g/t of Palladium, for just over 2 mill oz of PGM´s. It´s located close to PAN´s Savannah operation in the very North of Western Australia, which offers some potential synergies. Note also the higher grade in Palladium, as it´s price today is 2423 A$/oz vs Platinum 1390 A$/oz - so worth a lot more. But what is important is the basket price of the two metals: In the old days, between 2010 and 2015, the basket traded in a band of between 2100 - and 2900 A$/oz ( the high reached in 2015 ) . In 2018, this high was nearly reached again - 2800 A$/oz was the top in 2018. TODAY, THE BASKET IS TRADING AT A PRICE OF 3800 A$/oz, nearly 1000$ higher than the 10 year high prior to 2019, and 900A$ since the beginning of this year!!!!! Partially due to the weak A$, but mainly because of the big run Palladium has had over recent times. If I value this resource only at 50A$/oz, it´s worth 105 mill A$ or nearly 20ct/share Panoramic. Given the rare occurence of PGM-projects outside of Russia and South Africa, I think 50A$ is a very conservative valuation and equivalent to valuations of reasonable gold resources in the Australian market.

At current prices for PGM´s and nickel ( which will generate 100 mill A$ in free cash or more from some time in 2022, when the hedges are gone ), PAN could easily be worth 700 Mill A$ based on Savannah ( 500 mill at 5x free cash generation, that´s very conservative - also, the Feasibility study gave us 690 mill A$ NPV8 at nickel price of 8$ (( today 8,11 )) and 70ct exchange rate (( today 68ct )) , + PGM´s valued at 100$/oz….and the 50% shareholding in Horizon for free! That´s a sleasy 1,30 A$/share in PAN….Sounds a bit like dreaming - but why not? I think that would not be a crazy target for the patient investor. The stock has been hammered because of the well-documented problems in mining the old ore body, Savannah, and the need to raise some more equity - which is now behind us. Mining of the new ore body, Savannah North, should start in November and ramp up quickly - making the current problems forgotten very quickly, I hope and think!

Panoramic has it hands full to bring the Savannah/Savannah North ore bodies into proper production - but I think the incoming CEO ( whoever that might be and whenever until mid next year he will join ) will need to spend some time on a) exloration to show the possible upside of Savannah North to much more than 10 years mine life and b) getting some value from Panton, which is currently valued at zero, and has completely forgotten about by the market!! Platinum is tarding at it´s highest in A$ terms since late 2016, at 1395 A$/oz, while Palladium at 2439 A$ currently is up from 1000A$ as recently as the end of 2016!!

There is always something in mining, which goes wrong - but I see really strong potential in PAN from current levels. The restart-problems at Savannah should be forgotten within a few month, and PGM´s are a true wildcard!

For investors, who shy away from a single stock: My Nestor Australien Fund currently has a 3,75% weighting in Panoramic. My top recommendations West African, Strike, Genex, Sheffield, Graphex and Metro Mining incl Panoramic have a joint weighting of approx 27% - emphasizing the development nature and the upside of many of my holdings - but also some risk management across different minerals and metals/sectors. The largest non-resources holdings are Macquarie Bank, and Tassal Group, Australia´s largest salmon farmer. The fund is up by approx 20% this year - about in line with the market, and strongly outperforming since mid-year, following a dismal performance in the first half of 2019.

Have a nice weekend and enjoy the great sun shine - the end of summer! Following this, we finally should have some much-needed rain in Germany!


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