Market Update

General - Nevsun - Prairie -

Good afternoon

a pretty uneventless day today....

OPEC meeting without any changes - no production ceiling. Oil price a little weaker - but I guess 48$ for WTI is a price the world can live with anyway.

Iron ore slipped under 50$ again yesterday, for the first time in some time.

Base metal prices, gold, currencies and equities are barely changed today., and ecomomic numbers in the States have been boring as well - markets expecting important labor market numbers tomorrow. Markets are holding the breath for the Brexit vote...new polls are indicating, that the POM´s are planning for "splendid isolation". Would be a pity - I prefer Champions League with English teams!

A story which caught my eye today: Softbank invested 20 mill$ in Alibaba in 2000, and were holding a 32.2% stake as at yesterday. They have sold a 4.2% stake for 8 bill$!!!! Absolutely amazing.....400x their money realized, and still 28% of the company left....

Nevsun Resources - announced some great exploration results from their Asheli prospect, within the Bisha District, where they have their existing copper/zinc mine in Eritrea. 13m with 0,9% co and 28% Zn follow on from previous results like 44m with 2% Co and 9% Zn....they already had great results from underneath their existing orebody earlier this year as well, with 30m at 2% co and 9% Zn ...Clearly, the mine will have much longer life than the current 9 years left, and the district is shaping up as a typical VMS - if you find one, there are more!

Workers at Cerro Matoso, a large, 36.000t nickel mine in South America - previously owned by BHP, now by their spin-off South 32, will probably go on strike. South 32 is trying to cut costs from last Half´s 9700 US$/t operating costs ( price today is 8420 US$/t ). Management making big noise about the fact, that they are loosing money , and that they cannot afford to operate the mine at consistent losses. This could actually be the first large nickel mine to close - no smelter attached, and new management, which has not been responsible for the original decision to build it. Would be fantastic news for the nickel market - but not to be expected in the short term.

Investor APAC has put it´s 20% stake in Metals Ex on the block - more corporate action for Australian gold producers should be expected.

Prairie Mining - had an offical ceremony yesterday to announce the positioning of their planned shaft for the new coal mine in the Lublin area in Poland. It was very obvious, that the company has got big support for the project, which would bring thousands of jobs and tax income to this poor area. The event got nationwide attention. Prairie really is not suited for short term players, and nobody seems to like coal anymore - but they clearly have a very good project here, and I have little doubt about it´s development. The only question is when, and by whom - I hope that the obvious candidate, Bogdanka, will make a move in the next year or so.

Have a nice evening

Schröder Equities GmbH

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email: wschroeder@schroeder-equities.com

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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 - Lucapa - Finders - Ken Rogoff

Good afternoon

The PMI came in stable, as expected, for China, and manufacturing numbers in the US were pretty strong, while car sales slumped more than expected.

The market is probably worried today about another weak day for the Chinese currency hence equites as well as metals are trading lower as well.

Growth in Austrlia was very strong in the 1st Quarter, 1.1% QoQ and 3.1% YoY - but really driven by exports, and not the lacklustre, local economy. I think there is still a good chance for more interest rate cuts in Australia later this year.

Pretium Resources in the States gave us a good example on how you can legally try to manipulate the market...the company announced a drill intersection of 31m with 150 g, which is fantastic - but they also announced 0,5m at 9200 g included in the above. If you compare the numbers, it turns out, that the 30.5 ex this fantastic grade had an average of about 1g in them....But it certainly sounds a lot nicer, when you report 31m at 150g...anyway - great results - but as so often, it´s worthwhile to look at the details!

Lucapa Diamonds - the long awaited drilling to search for the source of their excellent, alluvial diamond deposits in Angola is only starting now, as some approvals had been held up unexpectedly before. In the meantime, the news on great prices for quality diamonds at auctions continues, and Alrosa also reported a good result the other day. Lucapa is a very speculative stock, but since option expiry , they are holding more trhan 20mill$ in cash, and will put part of that at work for exploration, and some to increase mining rates. As you probably know, the market is not paying all that much for production from alluvials, as the consistency of it does not tend to be very reliable - finding the source is the big price her, and I would be surprised, if they found it immediately. But having said that, I am holding a position in LOM.

Finders - it has taken a few month longer than expected, but the company announced the first production of copper plate from their new plant/min in Indonesia! Well done and congrats! My god - for how long have I been in that stock! It took years to get approvals, and building a mine on some remote island in Indo does take time as well. All homours to people, who can do that! At just above 2$ for copper, this is not the ripper we origonally expected - but at full production, the cash costs of 88ct/lb are among the lowest in the world - certainly for new projects. Once ramped-up over the enxt few month, the company will concentrate on exploration nearby, to expand the 11 year mine-life.. I think there is no major rise in front of us here ( 23-25ct I am not calling major for such a stock ) - but once copper trades much higher hopefully in 2018 or 2019, we will also see much higher prices for this excellent project.

The other day I read an interesting article, which was referring to well known economist Kenneth Rogoff. he is suggesting, that the central banks of emerging countries increase their holding of gold within their currency reserves, at a time, when shorter term interest rates in many countires are negative, and where there is a shortage of bonds. At first glance, a "shortage of government bonds" sounds absolutely crazy - but in a world, where many institutions are pressed to buy bonds for regulatory reasons, he might have a good point!

Have a nive 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

General - Cardinal - Breaker - Foran

Good afternoon

sell in May and go away - it looks like not many investors have done that this year, and certainly not in Australia. Cash levels are relatively high and have been for some time- so there is probably enough caution in the market, to prevent too heavy fallouts from all these potential pitfalls in June - especially BREXIT, and a Fed-move.

While Personal Income in the Sates rose, as expected, Personal Spending was very strong - at the same time, the PMI was pretty good, as was Consumer Confidence. So certainly not a good day for those, who are hoping for a FED stand-still.

In Australia, stronger than expected Net Exports inspired a stronger A$ today.

Gold is finding some friends again today - probably reacting to a slightlöy weaker US$, but I feel, that we have some work to do to convince the market, that gold will not dive below 1200 US$ again.

Cardinal Resources- announced some excellent infill drilling today, as tehy are reducing the drill space from 100 x 100m to 50 x 50m. 220 m of mineralized sone is certainly what the market likes - including 59m with 1.42g; 30m with 1.2g; 15 m with 1.7g and 9m with 3.44g. The resource continues to hold all the promises for a large 2-3 mill oz deposit, but I guess we will have to wait for more drilling ( which is fully financed ) and the first resourcee stimate to get a feel for what is possible in terms of size, grade and perhaps also strip ratio. I have little concern for size and strip ratio - but I am not totally convinced about the grade of the deposit. I am holding, but not adding CDV at these levels.

Breaker - managed to raise 2.1 mill$ to finance further exploration, and started to sell some exploration properties, which reduces the holding costs of their large land bank. For, now, all good - knowing Tom sanders, of the 2.1 mill raised, the vast majority will go into drilling...but it´s still a promising exploration play - not more.

Macquarie published a comprehensive document on lithium and related stocks - name by name, the big brokers are now entering the game. But tehy correctly point out, that lithium is in strong demand now and probably will be for years to come, but that there are many lithium deposits out there, and a myriad of projects in the development/planning stadium, which could meet an oversupplied market, once the majority of them will enter it in 2018/2019. So there might be some money in it for now - but you don´t want to be the one holding the baby in the end!

Foran Mining - even though in Canada, a good story, as mentioned before. Stock had a big jump yesterday and got an enquiry - but company had no explanation for the move. They are one of the few with a good zinc deposit, close to infrastructure and especially close to a very hungry smelter. Zinc stocks fell strongly the other day on the LME, and while we all know, that LME-stocks are not the strong indicator they used to be ( because of all the Chinese off-market stocks for lending purposes ), the fall of zinc stocks over the last 18 month or so has been quite astounding. Back in 2006/7, when stocks were at their all time lows, the metal jumped more than 4-fold . I am not expecting this his time - but zinc is certainly the metal with the strongest fundamentals, and hence, I do like companies like FOM or NSU in Canada, and little Heron Resources in Australia. They might not be as hot as lithium stocks, but definitely are much deeper value!! I have small position in FOM, and in HRR.

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

General - Highfield - genex - Panoramic - Paringa

Good afternoon

ok I admit - have been travelling again, this time to israel, where we enjoyed some tremendous hospitality, and great people + experiences.

The gold market has been under pressure from interest rate expectations, and therefore, also a strengthening US$ - gold is still under some pressure today, even though it´s recovering from the day´s lows during Asian trading, But my feeling is, that 1200 US$ needs to hold - otherwise all might be over again! ??

The A$ continues to be weak, and looks on target to retreat furtehr to the 68-70ct level against the US$, from the current mid-71 level. Obviously, this is helping the Aussie miners, which had a weak day today, but have held up relatively well recently. I had lightended up my gold holdings last week, and am waiting for 1200 US$ to hold, before committing again.

Base metals have been mixed - while copper last week edged higher, and zinc held up well anyway, nickel seems to be under pressure, still. I am sure copper sentiment has been helped by some corporate activity in the sector, which took place at prices, which imply a positive medium-term outlook. Today, the US as well as UK are closed - so not much action!

Capex in Australia lst week was a negative number - mining capex looks set to drop to about 30 bill A$ vs more than 90 bill$ annualized during the good days in 2011 and early 2012.

Lithium speculation still continues to occupy investor´s minds...companies like General Mining, Magnis or Galaxy are still running, why the pure mention of some Lithium-JV drives retail buying into the very junior end as well. Galaxy, one of the larger companies, today announced a merger with General Mining. I have to admit, that these stories escaped my attention - I was never quite asure about it, and still believe, that we will see a lot of blood on the streets in this sector.

Genex - much to my delight, the first broker took up coverage last week - send me an email, if you want it. The solar project is developing nicely, and should be erady for financial close by the end of the 3rd Quarter this year, while the efasibility study for the - much more important and much larger - hydro-project will be finished next Quarter as well. Once this is done, the market will have visibility of future earnings for the first time, which should be a major trigger for sustained performance. The stock has started to move, but I am still of the opinion, that the Australian market is grossly uner-valuing this stock. The market down-under has little experience with enviromental power stocks, and while the risks are high, the returns could be as well!

Highfield - today announced their first off-take agreement for 320.000t of potash p.a., which is a great start ( expected production in year 1 is 500.000t, rising to 1 millt ). The counterparts are regional distributors in Southern France and Spain, and the company is pointing again at the large freight advantage of the project. if planned costs will be met, HFR´s potash procution costs incl transport to the customer, will be around 120$/t - the enxt ebst competitors have costs of 150$, and the majority has 200$. HFR are also pointing out, that according to recent announcements, about 1 millt of European production will be shut between 2018- and 2019 - good timing for HFR to enter the market in early 2018 with a string of projects, which could produce 2 millt by 2020-2022. The stock has been a bit boring in recent times, as everybody is waiting for enviromental approval ( which appears a little bit buried in the Spanish administration, expecting the outcome of fresh elections at the end of June )...But I can only highlight the earnings power of this company, looking ahead a few years, and even more so, the strategic appeal for the majors. The major trigger will certainly be the enviromental approval - if we are unlucky, this is 4-5 month away, but it could also happen any day.

Panoramic - corporate update out today...some excellent exploration results from Savannah North again, with abest intersection of 23m with 2.1% nickel and 1% copper. Some drilling is being done for resource conversion, but also some extensional drilling, which will increase the resource and bring it closer to existing development.

The plant has been tested for some little changes in production rates, but also to improve recoveries, both of which has been very succesfull, as part of the feasibility study for Savannah North. The full study is expected late this year - officially in the 3rd Quarter, but I would not be surprised, if it needed a little longer due to the big changes possibly taking place in beefing up mining rates, as the plant could take more.

The Savannah Mine itself is being put on care & maintenance and produced it´s last concentrate on the 20th of May - not without beating the old monthly production record from 2011. By the end of this Quarter we should have a very good feeling for how much cash will be left after redundancy costs etc. A very cheap and deep value company - but only for patient investors, I think....

Paringa - coal does have a life, contrary to what you read in the press...PNL have started the permitting process last week for their No.2 mine, which is now definitely going into production first. They have permits in place for the No.1 mine, so the process should be pretty straight. The previously announced sale-agreement with power stations has been changed to aplly to the No.2 mine as well, and the company expects some significant reductions to planned operating- as well as capital costs due to the state of the market. construction should start in 2nd Quarter 2017, and first production by mid-2018. The financing will be the major trigger, and given that total capex will only be around 40 mill $ US, that should not be such a crazy target! again, a cheap investment for the patient investor at current levels.

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

General - Kingsgate - Chalice

Good afternoon

yesterday´s consolidation moved into a nice rebound today in metals markets! Base metals up between 0,5% for copper, and nearly 3% for zinc....

Oil down a little, despite Nigeria´s prduction problems, and US-production now under increasing pressure - but I guess we´ve had a great run this year so far.

Paul Singer, one of the smartest hedge fund managers world wide, renews his call for gold, while Stan Druckenmiller has gold as his biggest holding....and gold ETF´s holdings are still increasing. On the charts, we have seen the ( by some chartists ) expected fall to test the new upward trend, only to move back up quite convincingly...feels good, and gold stocks in the States confirm that with a strong move up today and yesterday.!!

As so often, gold producers have been holding the price back a little via hedging - Newcrest last week announced another 200.000 oz of forward selling. Not a big surprise, as the going is still tough for some, as witnessed by Kinross´Quarterly loss the other day.

In March, 7 US energy firms went bust with 1.9 bill US$ in aggregae debt - in April, this number balloned to 11 companies, owing an aggregate of 14.9 bill US$. This week, Chaparral Energy went into Chapter 11, with total debt of 2 bill US. Will be interesting to see, what these numbers will look like for May. This is not an existential problems for banks, but just another very negative story in a difficult enviroment for them.

Good old Macquarie Bank delivered all time high earnings the other day of 2.06 bill A$ with a flat outlook...clearly still a very well run institution!

Kingsgate - the going is certainly still tough for them - and getting tougher by the day! The major problems they have had over the last many years with Thai authorities escalated yesterday, with the Thai Minister of Industry being cited, that Chatree would not get a renewal of it´s license, and would have to close down before year end. They have not formally notified the company as yet - so I guess it has be taken as a strong rumour, rather than a fact at this stage...but it looks ugly, indeed - and as you know, the company has about 31 mill$ in net-debt. Apparently, they have the debt ringfenced to their Thai subsidiary, Akara Mining - which would be very good news, as it would turn around the net debt of 31 mill to net cash of 50 mill A$ , once the sale of the silver asset in Australia has been confirmed ( 18 Mill$ ). I think that sale should also only be taken for granted, once the cash has been transferred to Kingsgate. Tough times indeed - very tough times, and the stock will probably fall heavily, once the trading suspension has been lifted - probably on Monday next week.This will continue to be a very messy story...

Chalice - the Chairman is obviously very confident about the sale of his Canadian gold asset to First Mining Finance for 32.3 mill shares....he bought 2 Mill shares in the market at 16ct = a 27% discount to today´s NAV ( using share price of 0,8 Can$ for FF ).

Have a good evening

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 to wschroeder@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.