Market Update

General - Panoramic - Perseus - Independence - Heron - Northern Star

Good afternoon

Yellen did not really say anything - noting, that some economic numbers had improved since the March-meeting. I guess, that she is referring to China here....But they are "closely watching" - hence, undecided whether we will see a rate-increase in June or not. My bet is: not!

Labor Market numbers in the States in line - but 1st Quarter GDP was only up by 0,5% vs expected 0,7%. Some promising labor market news in Germany today.

In any case - if anything, the US$ is a touch weaker, and gold a touch better, indicating, that the market does have my view as well...

Equities in Europe turned around big time this afternoon, and after the US-numbers - from 1-2% in the red to just green now!

Little action for most of the day in base metals - .but as the day progresses, they are all trading higher...BUT GOLD IS LOOKING GOOD! It´s just about to test resistance at 1260 US$/oz - and in fact, while I am writing, it´s gone through it - trading at 1265 US$ or 1656 A$/oz. The Market Vectors is also making new highs!

Panoramic - great Quarterly - most of it had been reported earlier on. Record production from Savannah, at record low costs of 3.48 AS$/lb for payable nickel. At these costs, tehy would certainly keep on producing - but tehy were helped a lot by PAN finishing up with ongoing development, which generally costs about 1$/lb. Nevertheless - this was a great number. Cash + liquids are at 27 Mill A$, plus from yesterday, additional 10.2 mill A$ from the rights issue. That´s more than 37 Mill A$ cash backing, or 8.6 ct/share. PÜAN will continue to explore at Savannah North, as well as completing a feasibility study for it, to be development-ready, as soon as the nickel price permits. For the Lanfranchi Mine, which is already on care&maintenance, they announced a first resource for the new Lower Schmitz, which has 6.500t of nickel , at very good grades of 5.1% - but I think Lanfranchi will be valued by the market at close to Zero.

That cannot be said for Gidgee, which has a NPV5% of 58 Mill A$ at 1700 A$/oz gold price, based on the last study, which was targeting only a small, oxide-only operation.

In any case - while gold + cash ( 37 Mill )are paying for today´s 55.7 mill A$ market cap, investors are probably holding it for the free option on the nickel price.

The rights issue closed the other day, and resulted in just under 80% take-up. Always amazing to see, that some shareholders are not taking these things up! In any case, quite a good outcome, which will keep major shareholder Zeta Resources, which was a partial underwriter to the deal, at about 20% - far from a controlling stake.

Heron Resources - are continuing with work on the BFS for the Woodlawn Zinc/copper project, which should be finished late this Quarter, alongside a new resurce estimate. The company as at today has abou 27 Mill AS$ in liquids - only about 3 mill$ needed to finish the study. A few triggers for this one coming up - in my opinion, one of the few zinc projects, which could get of the ground and into construction within the next 9 month.

Perseus - this was not a good Quarter! 37.000oz at 1034 US$/oz cash costs, + 310 US$ in sustaining and other capex, resulted in 1441 US$/oz All-In-Site-Costs. The company is currently doing some pre-stripping ,a s well as the relocation - both is included. Costs have probably been 100$ higher than planned. As flagged earlier, they had to use low-grade stockpiiles to supplement mining ore. I assume, that they will not have enough mining ore for the current Quarter, either - but guidance of 75-90.000oz for the current half obviously incorporates improvements - the current Quarter should see minimum production of 38.000 oz, and up to 50.0000 oz. All-on-site-costs will remain high for this calendar year - but that is not a surprise.

Still - the company has reduced ambitious guidance of 95-115.000oz for this half year, to 75-90.000 oz. The timing of this new guidance will not be liked by the market, as PRU had completed their paper-based takeover of Amara. only very recently.

I see no reason for a completely new assessment and still like PRU for the medium- as well as long term - but this will probably hurt the stock tomorrow, unless it´s saved by the gold price!

Northern Star - good Quarter - some of it pre-reported. Excellent exploration - we spoke about that earlier - and generally solid production, except for Plutonic. As announced earlier, this mine has been put up for sale - but I doubt, whether anybody will buy it. Costs continue to be way above the current gold price...The best possible outcome would be to give it away more or less for free - leaving the enviromental responsibilities and costs of it to somebody else. some one-off´s left AISC at 1975 A$/oz for the Quarter - but this would not be representative of a "normal" Quarter. Still - they will get very little cash, if any, for it. We have spoken about NST recently - the company will have to deliver outstanding exploration results, to prep up mine life. Until then, they remain pretty fully valued.

Independance - a very disappointing Quarterly. Their gold asset, tropicana, produced 101.000 oz ( they own 30% of it ) at 1067 AS$/oz AISC - both numbers are disappointing. The otehr, producing abse metal mines were just about in line. The company produced 29 mill A$ in EBITDA - that´s not a lot, especially, when you are in the middle of a large nickel development, which needs to spend another 170 mill A$ until it´s finished late this year. The company has net debt of 200 mill A$ as at today - hmmmm - need more equity? Probably not - but there is not that much room for another bad Quarter. IF they need to do a placement, I will very carefully look at it - might be a good entry into a reasonably good story long term.

There was more news out today - but I was spending half the day at a Bloomberg compliance seminar, much to my delight! More tomorrow....

Have a nice evening - go-gold.. go!!

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General - Beadell - Gold Road - Breaker - Berkeley - Perseus

Good afternoon

oil is trading at the highest level since November today...base metals are largely unchanged, except for weaker copper prices, while gold is creeping higher....1250 as I am writing. Iron ore is still trading around 62 US$ - obviously down from 70$ a few days ago, but still way higher, than anyone would have expected a month or two ago!

The A$ took a beating today - the Australian CPI was announced at lunch time, and it was the first down Quarter since 2008, leading to what the Central Bank calls "underlying inflation" of 1.3% YoY- that´s way below the lower end of the target band of 2-3%. Chances for a rate cut in May have risen dramatically, especially, as this fall in inflation has taken place at a time, when the A$ was very weak! I dare to say: The A$ has seen it´s recent highs, and unless commodities surprise to the upside, we will see 73ct to the US, and potentially 70ct again in the not too distant future. Great news for the miners - only halfheartedly great for us as European investors.

Investors seem to view this the same way - gold stocks as prime beneficiaries of a weaker A$ have been very strong today across the board - stronger then you would have expected from a just slightly higher gold price in US$ ( it was 1243 US$oz at market close this morning ). The A$ gold price is currently trading at 1642 A$ vs a recent low of 1576 A$/oz.

Australian banks were pretty weak today - banks have a hard time making money in an ultra-low interest rate enviroment.

Apple got a hammering after market closed yesterday on worse than feared numbers for their iPhone. Ok they will have a new iPhone in Sept - but that could also imply even weaker numbers over the summer, as consumers wait for it...

Beadell - Quarterly out today - slightly disappointing to me. 32.000 oz produced at 902 US$oz AISC - that´s reasonable, costs were a rather positive surprise. But when I reconcile cash at bank vs placement proceeds, and debt repaid during the Quarter, I am missing some 6-7 mill$....the company actually burnt something like 3 -4 mill$ in the Quarter - implying, that the true costs must have been quite a bit higher than the quoted AISC. This overshadows an otherwise very succesfull Quarter on the exploration front, a positive reserve statement, and a positive BFS for Urucum Underground. Also on the psoitive side, mining was doing rather well during the wet season, which saw the wettest March on record.

Overall - this result gives me some food for thought - not really sure about it - stock is on the watch-list!

Gold Road - not unexpected and sort of flagged by the company, a large caital raising of 75 Mill AS$ today - 45 mill$ placement and 1:10 rights issue...3 US-insto´s taking 20 mill$ between them. Hard on the heals of a corporate shareholder selling out, this will fill demand for the stock, and will keep a lid on it. Also, this raise will only fill at best 50% of the equity needed for the project - so the stock remains cum-placement. No need to be here....

OZ Minerals - the copper producer has hedged 172.000 oz of gold, which is a by-product for the company.

Breaker -suspended for a small capital raising - if you want some stock, please call/ send email!

Berkeley Resources - the Quarterly today did not give us all that much new information. The company is working on the Bankable Feasibility study, to be released in June, and is indicating, that results from the pre-feasibility will be bettered. BKY are very actively talking to off-takers for their uranium, being large utilities in Europe, the US, and Asia. Simultaneously, and I assume partially with the same people, they talk about financing the project. They state, that the most probable outcome will be the sale of a minority equity stake in the project, together with an off-take for part of the production ( for which the company would expect a nice premium to the share price ). BKY have 6 mill$ in cash, which is easily sufficient to finish the feasibility, but would leave nothing for development. Selling a 25% stake for 35-40 mill$ should do the job! I am expecting such a deal only, once the feasibility study has been completed.

The initial stage of the project is fully permitted, but the Zona 7 -part of the project, which is a significant value-driver thank´s to very high grades, will need another 15-18 month to get all approvals. Exploration during the Quarter has not been very active due to wet weather - that should change in the current Quarter, and I believe this to be a nice value-driver for BKY going forward.

I continue to hold a large position in Berkeley - it´s a world class story, in my opinion, and while uranium spot prices are terrible, long term contracts reportedly are changing hands at about 44 US$, vs expected cash costs of Berkeley´s production of around 15 US$ ( that includes production from both ore bodies, incl Zona 7). To my knowledge, these are the lowest production costs in the Western World.

Perseus - not sure what happened there today - break-out on the charts? My impression is, that the Market Vectors Junior Gold Miners had quite a bit of buying in the Australian market today, and they might re-weight PRU, following the successfull merger with Amara.

Have a nice evening!

General - Peak Resources - Newcrest - Lucapa - KGL Resources

Good afternoon

every man and his dog are writing about the commodity frenzy in China....everybody expecting a set-back...fertil ground for funds to put on a few new shorts. Understandable - but the underlying tone has certainly changed recently to the positive side, generally. Everybody agrees, that China has managed to fire up it´s economy - the big question is now, whether the private economy follows on from the government stimulus. The jury is out, and we will watch closely...

Australia is handing out a 35 bill US$, long term contract over many years to France for building a new fleet of submarines, to be manufactured partially in Australia.

Durable Goods continue the string of slightly disappointing, US economic numbers. the PMI was slightly ahead - but consumer confidence also slipped a little, again.

Peak Resources - give a good example for how unfashionable it is to invest in Rare Earth! Hard to believe, in a time, when everybody is chasing anything which has a lithium exploration property somewhere! I can only say: Buy straw hats in winter - we have seen recently, just how quickly things can move! The company placed 1 mill$ worth of stock at 5ct( and I bought my initial position ), to be followed by a 10:36 rights issue to all shareholders, to raise another 6 mill$. Appian, the major shareholder, will take up it´s rights and will provide a loan of up to 6 mill$ to make up for all shares, which will NOT be taken up in the rights isue. On top of this, Appian will inject another 3.5 mill$ into the Tansania-JV. These financings will ensure, that the bankable feasibility study can be completed. Appian will end up with 20% direct ownership, the World Bank ( IFC ) with 5%, and Peak Resources with 75%. On top of that, IFC and Appian ( private equity fund ) will own about 20% of the listed company. I want to stress again, how important it is, to have the IFC as an ongoing financier on board.

This is a very positive outcome for Peak, as they can theoretically take in additional JV-Partners of up to 24% in the Tansanian, operating company, without lossing control - and thereby help financing the project, which is planned ( as ber PFS ) top need capital of about 300 mill $.

PEK own one of the best Rare Earth development projects worldwide - see attached, latest presentation-link: http://www.peakresources.com.au/IRM/PDF/2955/InvestorUpdateApril2016

Good size, very good grades, good people, the right mixture of Rare Earth, and fully financed to BFS, which should be finished before year end - and last but not least, in production by 2019 - what more does one need! ( well, except for the time-line! )

Just today, the German government will decide on a 5000 Euro/car subsidy for electrical cars. I think there is nothing stopping electrical cars in the long run - even though I do not like to drive these things! The future of the diesel engine will be in electrical cars - in a word: Buy Rare Earth - there is no way to get around them in the foreseeable future!

I declare my personal interest via the Nestor Australian Fund.

Newcrest - good Quarterly, probably just about in line with expectations. Gold/copper production was generally in line - as usual for a mining company, some well performing mines and some not so good ones. 60% of the valuation is in the Cadia Mining Complex, while Gosowong will be running out in a few years time, and Lihir continues to be a complicated asset - although the last Quarter was a reasonably good one. Telfer, another large mine, was going to be in real trouble, when gold was weak a few month ago - and the company is still having about 2.6 bill$ in debt. In my opinion, the stock is definitely overvalued, and the only reason to hold it, is the liquidity....

Lucapa Diamonds - I have continued to incerase my position here...option exercise finished by the 29th of April - and the company has got all the cash it needs to drive the alluvial diamond mine in Angola further, and to agressively explore for the source of those diamonds. That´s the real price, and while the company has got many indications for where to drill, the wet season in Angola is only finished now. The next three month will see a full ramp-up to production again, and drilling drilling drilling. Today, the company announced the discovery of more high quality stones of 88cts and 33 cts, again from the new mining area E46,

KGL Resources - Simon Milroy might well be proved right, and get this asset to a development decision! 16 m with 3.3% copper + some gold/silver at about 300m depth, outside of the current resource, are pointing in the right direction. And just beneath, there is a very strong conductor, which will be drilled shortly. Still - this asset needs better copper prices - say another 15-20% or 2.75 US$/lb to get the go-ahead - but prices like this are well possible in say 2018/2019. I probably would not buy KGL today - but I would certainly hold it - as the next few drill holes could change the game again! The major shareholder, the Salim Group from Indonesia, installed a new board member today, who is one of the close people to Mr.Salim - that shows ongoing support, as showed the fact, that they took up their share in the recent, ( small ) rights issue .

Have a nice evening

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General - Nevsun/Reservoir

Good afternoon

public holiday in Australia today, but a few things happening around the world:

One interesting number from Bloomberg today: there are 48 Trill $ worth of government bonds outstanding in the world, yielding an average of 1.29% today. According to Bloomi-analysts, IF yield would increase by just 50 bps, this would trigger losses of 1.8 trill US$ for investors. I do not believe, that yields will go up any time soon - still, a very disturbing number. The world is a little scary of energy loans creating problems - the above event would be about 350x larger!

Early China indicators for April are seeing continuing strength in the economy....German Business Confidence falls slightly....

A lot of talk about massive explosion of trading activities by Chinese players in commodity-related futures, especially iron ore and steel, are casting some doubt on fundamentals of the recent recovery. I personally think,that there is some substance to it - steel production in March was 2.9% higher than pcp, and more furnaces being restarted in early April are positive indications as well. Even coal has now joined the list of rising commodities....

US Gasoline consumption rises by 3.4% on average for the 4 weeks ending April 15...that number could grow into the summer,, at the same time, as US-oil production is coming under more and more pressure. It took some time - but finally sonsumption-figures are showing the move from smaller to larger cars since oil prices came under pressure. Article in the FT today, talking about the long term impact of deep-water exploration by the current slump of oil prices, gives further substance to those analysts, who forsee very high prices in a few years time. Transocean, large oil services company in the States, have 12 out of 28 ultra-deep water rigs working the moment. As you will know, large offshore fields require a much longer devlopement time than onshore wells. Due to the longterm nature of this business, oil production numbers will only see the impact in a year or two... Perhaps I am too cautious on oil - the short term impact of Iran bumping up production, might easily be outweighed by the above....and long last, US-production falls have accelerated recently.

The gold price came under some pressure late on Friday, falling to a low of 1227 US$/oz - but it`s recovering a bit today. Also, holdings of gold-ETF´s have stooped rising for some more than 4 weeks now.

Nevsun Resources - merging with Reservoir Minerals, which is sitting on a spectatcular copper deposit in Serbia. They are paying all-time-high prices for RMC, but it looks like a top-class asset to me. Nevsun itself just reported an excellent Quarter, generating 22 mill$ in cash from about 15.000t of copper production in Eritrea. Their zinc circuit is done as well - first concentrate to be delivered in June, and the company is sitting on 440 mill Can$ cash - no debt...so there is room after Reservoir Minerals. Going forward and before Reservoir, Bisha, the mine in Eritrea, will contribute on a 50_50 split of zinc and copper and hence, offers some good exposure to the rising zinc price. I am not an expert on NSU, but have met them in the past. sounds like an interesting stock to own.

I think this transaction might add some attention and spice to base metal exploration stocks, like the ones mentioned last week. Even our fallen angel KGL Resources have inspired some buying recently - this type of stock should find some more friends over time.

Have a nice evening

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general - more diesel scandals? - Lucapa - Gold Road - Oz Minerals - Western Areas

Good afternoon

what a week! It took a while for the positive, Chinese economic numbers to sink in - but the market took heart and a lot of analysts followed! Iron ore + 22% to above 70$&/t - amazing, and despite BHP´s comments, that they see the price coming down ( and from this very high level, I do agree). Copper up by 4%, oil up by 6% - despite no results from Doha...all pretty good. The US-labor maket numbers were positive, which was a relieve, as a few other indicators in the US have not been looking good at all! And Mr.Draghi capped a good week by his promise to keep on printing...gold was thankful for that!

Chinese import numbers for metals have been very positive in March, and steel prices have rocketed, giving me some hope, that this demand is real and not only based on funny financing deals, which nobody seems to fully understand!

There is absolutely no doubt, that the sentiment has been really good this week - but it remains questionable, how much of this change has been due to economic fundamentals, and how much to short covering?

Whatever the outcome - only time will tell - investors should take a lesson from this: These days, money is moving very fast indeed, and you have to get set in our sector, when nobody wants it!

For now at least, I am riding this wonderful wave, which is finishing with some nice moves in base metals today.

Newpapers report, that GM, BMW, Daimler, and Misubishi could have similar problems with emission-cheating as Volkswagen....If that´s true - and I think this is a very good chance - the use of diesel engines will come under mroe pressure...electrical cars will profit! So Rare Earth should be a story - yet every man and his dog are punting like hell on lithium stocks...of which we have many - but we do not have many Rare Earth stocks, which nobody wants. Lynas is certainly the front runner here - but they are at the mercy of their debt-providers. Peak Resources, which presented at our conference in Zurich recently, are a great story in my opinion - currently suspended for a capital raising.

Gold Road - at mid-week, IGO sold their stake in GOR below the then prevailing market price! You would have thought, that there might have been a corporate buyer for the stake, paying a premium - but that does not seem to have been the case. Not a good sign...and then today, the company issued a new resources statement, using a higher A$ gold price than in the previous estimate ( 1700 A$/oz vs 1600 previously ), to make things look sexy. This is not the only case, where the company is presenting itself in the best possible light: They talk about 450 mill$ in capital for their mine - but this excludes working capital, which will be very high for such a big operation ( 30-40 Mill$? no idea really ), and on top of that, project financiers always want to see a healthy cash buffer of 10% of the finance, so probably another 30 mill$ or so...The company has basically putting itself on the block, and no buyers seem to emerge. The new resource is 10% higher at a massive 6.2 mill oz at 1.3g - regardless of my criticism, this is certainly very impressive. But I do not believe, that you have to be in this name...I am not that confident in the management...It´s always very subjective to say that - anyway - that´s my very personal opinion.

Lucapa Diamonds - I ahve been talking about them before..consistently producing very high quality stones from their asset in Angola from alluvials, they should have started the enw exploration programm by now - or it´s iiminent, following the end of the wet season. This will also see mining rates going up again...and the option exercise of about 60 mill options is now nearly done...29th of April is the last date to do so, which will take a lot of pressure from the market. Interestingly, the company has NOT tried to have the option exrcise underwritten - they have more money than they need. A speculative country and a speculative subject - but I think a stock worth having a punt on.

OZ Minerals and EMR Capital, the major shareholder of Highfield, are reported to be the frontrunners in teh bidding for Glencore´s Cobar Mine in Australia, which is being divested to reduce Glencore´s debt burden. 300 mill A$ seems to be the price tag here. I would like OZL to win - provided the price is right. They have done a great job with Prominent Hill, and the new management team is impressive - and tehy could do with another project, having 530 Mill A$ sitting on a very lazy balance sheet.

Western Areas - Quarterly out today. This is a good example of terible transparency...they emphasize their very low cash costs of about 2.20 $/lb for nickel, yet they are burining cash ( 12 mill$ last Quarter ), and had to raise 60 mill$ in fresh equity recently. Cash costs are more or less irrelevant - cash costs for payable nickel is more important ( generally, the nickel producers in Australia only receive about 70% of their metal in concentrate - the balance goes to the smelter ). And we all know, that the ongoing development capital for an underground mine can be very significant, + new development. I think a lot of Australian analysts had to learn that lesson recently - none of them had expected the company to burn cash!

As I am leaving into the weekend, copper and zinc are probably ending the week with new closing-highs - nice one!

Have a nice WE