Market Update

General - Berkeley ( sorry, again! )

Good afternoon

Retail sales in the States were down a touch, as expected - but revised down to negative from a little growth last month. Certainly not a reason to increase rates for Yellen...

Valeant getting smashed in the States, taking Pershing Square and Paulson down with them....Ackmann lost more than a billion bugs today!!Good work for a single day!

Oil and iron ore continue their descent....hitting big miners like BHP, which has given up all of it´s recent gains now and is down by 15% since the recent high on the 7th of March...Metals are roughly unchanged today.

Gold stocks in Australia continue to be under pressure from index-reweightings, and a lower gold price. Most of the larger producers are down another 5% or so today....Clearly, the weight of money is against Australia this week, and investors fear, that 2016 will be similar to 2015, when gold stocks got off to a flying start, only to get slammed for the rest of the year.

I personally believe, that this new "bull market" in gold is not over! Statiscially, the last 5 bull markets lasted for at least 700 days - and while this is no reason in itself to say that the current bull run is still on, I think the enviroment of politicial uncertainty, high indebtness, and negative interest rates is creating a very fair chance for gold to go higher, once this consolidation is over. This week is the week to buy Aussie gold´s, while te reweighting is testing the buyers liquidity! On the side, it´s interesting, just how willingly investors in GDXJ get repeatedly hurt by these re-weightings...you should use these to invest against them!

Berkeley Energia - have started the development of their uranium project near Salamanca. the upgrading of a local road as well as electricity line has started. Not a major story as yet, as cash reserves of 8.4 mill A$ as at 31.12. are far from being sufficient to start in earnest - but BKY are certainly showing their commitment, which might put pressure on current talks with possible off-takers and/or JV-partners. I guess the locals will also like it...I don´t want to bore you with this stock - but I really like it!

Otherwise, very little to report today! Have a nice eveing!

general - Index Changes - Regis - Berkeley

Good afternoon

Merkel loosing some State elections on the weekend - but perhaps not as devastating, as feared. In any case, established parties incl the Greenies got a hammering, and the new right wing party managed to get 12-13% in the old west, and 24% in Sachsen, which is the old East! In Sachsen, nearly 30% of the electorate voted for right wing parties - a good deal of that coming from people, who did not participate in previous elections, and also some from the left wing! clearly many voters voted in protest to the old establishement parties! Almost looks like the Germans are not much better than the Americans, loving this Trump!

Surprisingly, European market pretty strong today - most markets are slowly but surely approaching break even for the year!

Metals are bareley changed today...but they are coming under pressure this afternoon.

The main story of the day are Index Changes to the gold index in the States, to be effected on Friday. Evolution, Northern Star, Oceana got excluded all together, as they had grown too big for the smaller miners index, and Kingsgate got excluded for not being useful , I guess? This triggers a lot of selling for Australian gold stocks - about 60 mill shares in EVN, and an similar $-amount in Northern Star - following hot on the heels of the Newmont sell-down in Regis.

At the same time, the ASX 200 is getting reweighted ( all effective 18.3. ), seeing Medusa and Kingsgate depart the index, and St.Barbara getting included.

These two , largely "artifcially" events, open the chance for liquidty, and also for us moving positions against these changes.

St Barbara/Northern Star are expensive ( even though I have already said that at lower levels! ) , and Regis/Evolution getting very cheap, based on 2016/17 numbers:

Stock EV US$ EV/ oz of productionEV/reserves AISC 2016/2017

Evolution 2.046 Bill 2500 US$ 360 US$/oz 700 US$/oz

Regis 850 Mill 2450 US$ 300 US$/oz 650 US$/oz

St.Barbara 1.1 Bill A$ 3250 US$ 550 US$/oz 740 US$/oz

Northern Star 1.4 Bill US$ 2350 US$ 930 US$/oz 810 US$/oz

Given, that SBM´s mine in Australia is getting very deep, and that the quality of their second mine in the Solomons is not all that great, I think they are a sell. Northern Star has relatively limited reserves, and most of their mines are very old mines - again, I think way too much is relying on their good management, and significant exploration success.

Regis - also announced a reserve increase today from two properties within trucking distance to existing operations, at similar grades to the ore mined currently, and by 360.000 oz which is slightly more than a year of production. They also announecd some excellent drilling results close to Garden Well today, which look like they will amost certainly add to resources here. Regis do not have the diversity of Evolution, and probably also not the same, top-class management - but on above numbers, they are currently probably the cheapest of the larger, Australian producers.

Peninsula Energy/Berkeley - I am not following PEN so closely these days, but one interesting announcement from them on Friday: They entered into a sizeable, long term sales agreement for their uranium product with a large, European company. The price has not been disclosed, but is believed to be in the 45-50 US$/lb range, while some analysts are speculating, that the buyer is EDF, the large, French company. This is a big positive for the uranium market, indicating, that there is good demand for long term contracts, at good prices vs the currently depressed spot market of 28 US$/lb. PEN have production costs in the low thierties, while BKY will have costs of around 25$ from the Stage 1 project, and 15 US$, once Zona 7 is included ( and once they have has all permits for the latter in place! ). I have been wondering, why BKY is staying so cheap - the weak spot price for uranium might well be the reason. Hence, it´s paramount, that the long term market is still well and alive!

Have a good day

Draghi - Genex Power - Evolution Mining

Good afternoon

so, Draghi is getting out the bazooka! At least! Increasing interest rates for banks parking funds over night to - ( yes, Minus!! ) 0,4% ( do you actually call negative interest rates "interest rates"? we might start calling them rather "penalty rates" or something like that....), benchmark interest rate cut to zero, monthly bond-buying increased from 60 bill to 80 bill Euro´s, and corportate bonds are now included! Great thing - instead of having the nusance of having to place new corporate bonds with clients, investment banks now just have to call EZB to get it done!! I am waiting for the day, when they start to buy issues of mining-dreadfuls!

As you would expect, equities are very strong, European bonds are as well - the US$ is very strong and was putting some pressure on gold + metals initially - but they are now essentially unchanged, and the Euro is even much stronger - based probably on Draghi´s comments, that this is it! More negative interest rates, more money printing got to be good for gold.....

Iron ore is correcting from this crazy price of 62$/t - but yesterday´s 58 US$ are still a very good price!

Genex - as I said before - I am very pleased with the positive acceptance of this little, ugly and unwanted duckling, at our recent conference in Zurich! Left completely behind in Australia, they are quietly progressing the project. There are several milestones/progress reports to be expected over the next 2-3 month, which will hopefully get even Australian investors enthused:

- The connection agreement with the current owner of the existing power line, to get the solar-project off to a start - very important, as they have some competition here, I believe

- The deliovery of the feasibility study for the solar-project

and perhaps most importantly: The Australian government is working on a 5 bill$ fund to invest at very preferential terms in energy-projects in the Northern part of Australia. The way it looks today, the fund might be investing in subordinated debt, behind "normal" project financing, potentially significantly reducing the amount of equity needed for these projects. This could get the pumped hydro project off to a flying start. NOBODY in Australia owns Genex Power - NOBODY is writing any research on them. I have little doubt, that both will change over the next 6 month, and you should be invested before that happens - IF you are a small enough investor to move into this little puppy !

Evolution Mining - their share price is a real surprise to me , and I think provides everybody with a great buying opportunity! I can see no reason, why the stock has been under quite a bit of pressure lately, other than the build-up of a reasonable short position, and some limited weakness of the A$ gold price ( from a high of 1760, it retreated to a low of about 1670 A$ yesterday, and about 1700 A$/oz as I am writing ). Readers will be aware, that I know Jake Klein very well - but I think every unbiased reader will agree with me, that the management team has done a great job here over the years. I think EVN will add a lot of value via the drill rig over the next 6 month or so. Aussie investors have been chasing the second- and third-liners over the last 2 weeks - I think it´s time to look at the quality side again! 5.2 mill oz in reserves equal only 336 US$/oz reserves, and just above 2000US$market cap/oz production are cheap, if you produce gold within the lowest Quartile of worldwide costs, and exploration starting to deliver!

Have a nice evening

Wilhelm Schröder

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

website: www.schroeder-equities.com

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at bscott@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by unauthorized persons.

General - Talisman

Good afternoon

yesterday saw the biggest sell-off in metals in 7 month - today we are seeing a strong comeback by between 1.2% ( copper ) and more than 3% ( nickel ). Oil is stronger on lowered production forecast for US-production in 2017, and gold is consolidating. Just about every analyst is calling metal-and gold prices overdone - Goldman´s being the most bearish. In light of that, metal performance today is quite remarkable.

New Gold today announced a hedge of 270.000 oz ...let´s hope, that not too many companies will do that....

Equity prices are also back racing higher again...Draghi, I can hear you coming?

The A$ has staged a remarkable recovery over the last few weeks - from 68.50 to tzhe US, we are now heading towards 75 - a move, which for me is probably overdone. Against the Euro, the Aussie has moved from 1.62 just 4 weeks ago, to 1.465 as at today - again - feels overdone to me! Time to take profits or to put on some currency-hedging!

The A$-development is not to be underestimated: As you know, Australian resources stocks have benefitted massively from what I call a "normalisation" of the currency from an artificially strong currency over the last year or two - so any further strength of our currency could be quite negative for share prices! Some of this can already be seen in EVN or NCM - both are down quite heavily ( and probably too heavily ) from recent highs.

Talisman - this interesting story has been very quiet lately, as Sandfire ( which owns 70% of the Monty copper asset now) and Talisman ( which is the small borther, owning 30% ) are fighting it out. SFR does own the operating mine Degrussa nearby, and has massive cash-flow. SFR are very keen to expand the mine life of Degrussa - and to replace some of their 100% owned ore with higher grade Monty-ore.At the end of this Quarter, TLM will have around 22-23 Mill A$ in cash - market cap after today´s placement of 16 mill$ at 45ct is 86 Mill A$.

SFR clearly would dearly want 100% of Monty....but TLM have as largest shareholder Kerry Harmanis, who used to run Jubilee Mines. He will not give this away cheaply...SFR will explore full steam ahead this year...currently, the JV is spending about 8-9 Mill$/Quarter on exploration! The days of TLM got to be counted. You will not get rich from it, but I think you can make 30% from it or more, if they continue their exploration success The placement was closed before we were awake today - quite remarkable, given the small discount and relatively large size!

Have a nice evening

Wilhelm Schröder

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

website: www.schroeder-equities.com

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

Fortescue - Highfield - Prairie Mining

Good afternoon

crazy times! ( I wonder, how often I have said that over the last 10 years!! ) Iron ore moving 18$ in a day...but China delivering pretty bad export numbers today schocked the market. Surprisingly, oil is actually up, again, today - metals are seeing some profit-taking - but nothing seems to be stopping the gold price from going higher! I guess just about everybody is expecting some consolidation - but its creeping higher and is trading at 1273 US$ in this moment. Probably this is an expression of the fact, that nobody has got any....Anyway - all this written about 2 hours ago, the world has changed again...equities.gold, metals - all is getting a beating! The only thing I said above, which is still true: crazy times!!

Industrial Production numbers for Germany today have been the strongest since 2009 - probably unsustainable, though!

The big story of the day has been the Fortescue/Vale JV. Fortescue are producing iron ore of inferior quality to the iron ore contract, grading around 58%, while the contract is based on 62% iron content ( and that´s the stuff RIO and BHP are producing ). FMG are therefore receiving a discount of about 15% for their ore. Vale in turn are producing iron ore with about 65% iron content, FMG´s ore has some more favourable qualities like low impurities and it´s better sintering. FMG and Vale are planning to blend a total of 80-100 millt of their respective ore, once arrived in China, which would result in FMG getting full price for their ore. For Vale, it would also improve the quality of their ore, and over time, would give them more market share in China than tehy have right now. Vale is also planning, at their discretion, to buy up to 15% of the capital of FMG in the m,arket. For my old friend Andrew Forrest, this is a transaction which should cement FMG as one of the world´s top 4 producers for a long time to come! BHP and RIO will hate him even more for that....

Production of nickel pig iron in China fell to an annualized level of 282.000t p.a. on average in Jan/Feb. This is lower than expected - perhaps we are seeing some light at then end of the tunnel for nickel prices!

Highfield - I have been able to put things rght - the company has no other information on the approval process - so tehy are still expecting approvals to be in by the end of March. What tehy are saying is, that tehy need them before teh end of June, to be able to stick to the time table of first production before the end of 2017! So let´s keep our fingers crossed - the end of March is pretty close!!! There could/should be some very good news around the corner!

Prairie Mining - the company has today delivered an excellnt prefeasibility study for their Lublin Coal Project in Poland. The numbers are fantastic - sub 600 Mill US$ in development costs, for annual free cash flow of around 300 mill US$, once in full production, and at reasonable coal prices! The cost of production will only be around 25 US$/t - that´s cheaper than most in the world, and costs to the client in Middle Europe should be around 44 US$/t - again, at the very bottom range of the cost curve. The only problem: Coal mines, unfortunately, are there for a long time - and they tend to have long lead times! PDZ are planned to be in full production by 2023...that´s a few years too long for me! But in any case, this excellent study has opened the door for somebody making a bid - or partial bid - for this small company. I am not getting too excited because of the time table - but certainly a great outcome....Their neighbour Bogdanka should make a move rather sooner than later!

Have a nice evening