Market Update

General - Heron Resources - manas - Breaker

Good afternoon

personal spending in the States in line, inflation non-existent - no interest rate increase in sight!

Base metals are not only holding yesterday´s strong advance - as the day progresses, they want to go a little higher!

Gold and "other" currencies are relatively quiet today - and equities look like everybody in the investment world wants to see a halfway positive end to the Quarter - and in fact, the end of the financial year ( in Australia ).

Heron Resources - released their much awaited BFS today for their fully permitted Woodlawn ZinC project. This is a viable project - well, just - and while they own one of the few zinc mines potentially coming on stream, I was a touch disappointed. Over the proved and probably mine life of 9.5 years, tehy will produce 284.000t of zinc, 67.000t of copper, 87.000t of lead, 7.5 mill oz of silver and 28.000 oz of gold. Steady state production of 40kt Zn/ 10 kt of Cu/ 12 kt PBN / 900koz of silver and 4 koz of gold, for C1 costs of 0,06 US$/lb of zinc and C3 costs of 0.34 US/lb zinc. First production is targeted for early 2018 - by which time zinc should be in very short supply, and might well trade 20-30% higher than today. There also remains very good upside from exploration to extend the mine life, and from converting resources.

Being an old mine, infrastructure is excellent - but peak cash demand will still be 164 Mill A$ - which is pretty good.

but here is the big BUT: They are using an exchange rate of 0,71 A$/USD - which might be realistic - but they are using 1.01US$ for Zn / 3 US$ for Cu ( 0.91 US$ for Pb - all of which is higher than today, especially for copper. To develope this asset today, somebody ahs to take a view on metal prices. I think this might well be possible - but it would not be the bankers!! Heron only has an EV of about 30 mill A$ after cash - somebody might well take a view and take them over. But for the company, as an independent entity, I think any financing would be very hard to achieve as at today, and in the current market.....

Manas - some investors might still have an old shareholding in the bottom draw. The company doubled today, on the very surprising news, that Resolute, the predominantly African gold miner, bought 6% of the company. Will be interesting to watch, what tehy are planning - even after doubling in value today, market cap of Manas is only 7 Mill$. I would be surprised, if Resolute were interested in MSR´s small gold project in Kyrgysia - it might rather be their newly aquired, Tansanian asset, which found their attention. We will find out!

Breaker Resourecs - some very promising aire core drilling results out today, up to 8g/t of gold. But a little word of caution - we have been here before , and subsequently, deeper drilling did not deliver any meaningful gold assays ( that was in teh same, wider area, but not this project. I remain a shareholder and watch with interest!

Have a nice evening

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General - Evolution - Cardinal - Caravel

Good afternoon

I have been pretty harsh on England the last few days, and I feel the same today - perhaps even more so, listening to the comments of this lunatic Johnson. But I also want to emphasize, that 48% of British people voted "remain" - and I guess that 80% of people I know have been voting this way. These guys must feel much worse than we do in Europe - they will be fearing for their prosperity and for the future of their kids - and my sympathy is with them!

BUT - I think about 99.9% of Europeans sorrowly enjoyed Englands defeat against Island last night!! What an irony - England sensationally thrown out of the EUROPEAN campionship by an even smaller island.....

Enough of Brexit....there finally is some meaningful micro-news today, and the most important one is a great pleasure to talk about for me:

Evolution - had the first day of their corporate days today, concentrationg on a few presentations, before mine visits to follow.

Evolution has for the first time come up with three years guidance for production and costs, mine by mine. Anyone of us who has been in this game knows, just how extraordinary difficult and brave it is to come up with a three year forecast on every single operating mine, and normally I would very much question this. But Evolution has been exemplary in delivery of it´s forecasts over a very long time - hence I trust the numbers.

The 2016 financial year will finish with a record Quarter of 213.000 oz at 1075 A$ AISC - for 800.000oz in total at 1000 A$ AISC for FY 2016, resulting in a operating mine cash flow of 600 Mill A$, and net mine cash flow of 405 Mill A$. VERY impressive numbers indeed! Total debt repaid this Quarter is 115 Mill A$, and 322 Mill A$ in the last 10 month. Group debt is down to net 270 Mill A$ only!

For the next 3 years, production is forecast to be 800-860.000oz at 985-1045 A$ AISC for 2017 / 800-860.000 oz at 930-990 A$ AISC for 2018 / 810-870.000 oz at 910-980 A$ AISC. Not much growth left, but costs falling by another 6-10% over time! That is an outstanding forecast! At todays gold price, net debt will be gone in 7-8 month - which brings us to M & A: One big change here: The company wants to stay focussed on Australia, but after having analized every halfway sizeable gold mine in Australia, the company does not rule out aquistions outside of Australia. That´s a big change!

And there is another big change: The company will - starting immediatley - pay out 4% of revenue in dividends - that´s double the rate so far. No wonder - the impressive numbers fas above for FY 2016 have been achieved at an average A$ gold price of 1600 A$/oz - today we are trading just below 1800 A$/oz, at which level the company should generate something like 450 mill A$ in free cash ( some hedging is detracting from the otherwise even higher number )

Jake emphazised, that the same , very careful and sorrow approach to aquisitions will continue - and only, if the asset quality of EVN´s portfolio can be improved.

Exploration is the mainstay of growth, and most $ will be spent near Kalgoorlie on ground aquired from La Mancha and Phoenix last year. I have not had time to listen to every bit of the 4 hour presentation, which is talking a lot about exploration and how the company will increase mine life.

Jake has built a great company here, with great values, and very happy employees. If you have the time, it´s worthwhile listening to his presentation on the webpage!

He wants to make EVN the premier, Australian gold mining company. I believe, that he is on the best way of getting there!

Cardinal - announced the next great drill hole, hitting 310 m of mineralisation, including 80m with 1,06g / 79m with 1,34g / 42m with 3.37g. The grades are of significance here - anything above 1.1-1.2g will be helpful to increase the overall resource grade, which so far, has been just a little on the low side for my taste. But a few more hoels like this one could change that very quickly! One can see, why a guy with the calibre of Julian Barnes has taken over as Technical Director!

Caravel Minerals - I have had a small shareholding in this minnow copper explorere for some time. They came out with a very positive scoping study today: 35-40.000t of copper production p.a. for 20 years, at cash costs of 1 US$/lb ( at exchange rate of 0,725 A$/US$ ), for an NPV7 pre tax of 520 Mill A$ at copper price 2.48 US$/lb, which is probably a realistic assumption. The payback of the 440 mill A$ pre-production capital ( incl 20% contingency ) would be 3 years. This sounds a a feasible project - low grade, low stripping ratio, good infrastructure, in Western Australia. This scoping study has been done on a high level, and that´s why only anpprox 1.5 mill A$ will be needed for the prefeasibility study. I could imgaine, that a small placement might be needed - but we are talking 2-3 mill$ here at worst, probably only 1.5 mill$.

The company has got some surpisingly good shareholders, given the very small size of the company - namely First Quantum, the major copper miner, which can contribute to costs, and would end up as a 50.1% shareholder. The project as it is, might be a touch on the small size for them - but I believe, that there is quite a bit upside to the project size. This little company is now firmly on my watch-list.

Last but not least - equities are rebounding very strongly today, and base metals are having their best day in a while - up by 2-3%, while gold is seeing some profit taking.

Have a nice evening

Schröder Equities GmbH

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General - gold - Highfield

Good morning

yeah let´s Brexit - or maybe later? or maybe not? maybe have another Referendum? maybe have Johnson as Prime Minister? Maybe he is not brave enough, loosing the next election??? Maybe f.ck the POM´s ( sorry, Andrew!! )? We are VERY angry! I hope we will have them out as quickly as possible, to get over and done with without too much damage to Europe! Absolutely amazing how little prepared English politics are for this outcome. UK banks are getting a hammering...probably assuming, that London property prices will fall by 10-20%, which would play havoc with their property lending books...the English pensioners, who voted for Brexit, might be driven out their houses! Barclays Bank et al down by 25-30% in two days...

Well - I don´t feel sorry for them - but this thing is now starting to reverberate...Italian banks are said to get a big bail-out from the government - Deutsche Bank trading at all time low.....not good!

Uk listed gold producers continue to sky-rocket...Randgold, Centamin etc very very strong..and inflows into gold ETF´s at the strongest in years....

The only good thing about this is, that the increased uncertainty is probably playing into the hands of established parties, pushing back the growing influence of right wing parties in France, Germany etc. Let´s hope so!

Australia should be halfway insulated, for as long as this crisis stays a European crisis - even though the impact on metals demand should be felt to some ( small ) degree. This would certainly be different, if this developes into a real banking crisis ( which I do not believe ). But on the other side, existing Prime Minister Malcolm Turnbull should profit from the Brexit-crisis in Saturday´s elections, which is good for business in my opinion, and Australia could/should actually be a bit of a save heaven these days.

Gold - there got to be a good chance for gold to continue to see inflows. Volatility in financial markets will be with us for some time to come, increasing gold´s allure as a save heaven investment - and also as an alternative to ultra low interest rates. The FED will not be able to move any time soon - most probably not even this year, in my opinion. That should see gold testing 1400$ ...an it´s trading at 1800 A$/oz, which is an all time high in Australian currency! The large producers will have a good time, seeing inflows from generalists, while marginal producers should also do well. In our market Australia, stocks like Newcrest, Evolution will do well - but also something like Perseus could be sought after, having very high costs today and relatively high costs for the next 12 month or so, while having a low market cap per ounce produced, as well as low reserves/market cap. And obviously, new players with projects, which looked difficult to finance, or were marginal at lower gold prices, will greatly benefit. Here I have small companies like Panoramic ( with the triple option: nickel/gold/ cobalt ) in mind, or Crusader with a relatively large, undeveloped gold asset ( Borborema ), and even minnows like Middle Island, which wants to develope an initial 20-25.000oz p.a.only, but has a micro-cap capitalisation of only 10 Mill$ EV.

Highfield - well the elections in Spain have delivered the expected outcome in so far, as the formation of a new government still looks very difficult. BUT the conservative party has surprisingly won more seats, and teh pressure now is definitely on the oppoistion to show, that they are good democrats ahnd have to accept, that a new government can only be formed under the old prime minister. In any case the pressure from provincial governments on the central, Enviromental Ministry is growing to sign the enviromental approval...they are the guys who have to show responsibility on the ground! The good news of the scoping study for the SOP project, which should increase the NPV by at least 500 mill$, has gone largely unnoticed, as the market is clearly waiting for the permit.

Prices of potash have been holding up halfway well in Europe, and are around 300 US$ at the customers facility for SOP. That should roughly equal a price received for Highfield of around 275 US$ / t on average, giving them a 50% margin still.

Furthermore, prices on Indian contracts with Russian producers have been settled now at 227 US$, which is about as recently expected, and should positively impact talks with China, which is yet to settle. Some market analysts had been going for 200 US$ or even below - I think that´s more or less ruled out now. Also positive have been last weeks noises of Belarus, to join forces on the market front again with Uralkali. That would be VERY positive for the potash market - but apparently, Belarus has made similar comments before, without any resulting change to the current fight for market share.

There have been no meaningful micro-news in Australia today.

Have a nice 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

Good afternoon

I can´t be bothered today! Very disappointing outcome ! It´s all about macro-trading anyway!

The only interesting thing about it is just how wrong bookmakers and financial markets have got this!

Enjoy your weekend!

General - Fortescue - Resolute - Highfield - West African - Cardinal - Panoramic

Good afternoon

equities are rising in Europe, the Euro is as well against the US - Pound is stronger - gold is trading at a recent low of 1260 in the moment - if the saying: the market is always right ! has it´s time again, the English will stay with us! Probably good, that the BREXIT-vote is taking place before we beat them badly in the soccer!

The German PMI was quite positive today, holding up in the current enviroment, while labor-numbers in the States had no big surprises.

Base metals are little changed except for copper, which is up by 1.5% or so to the highest level since early May - perhaps on good, Chinese import numbers for copper concentrate. Nickel has found some friends again recently - stocks have fallen from a high of 4700.000t to 383.000t today - but that´s still very high. The enw Philippino prime minister has given the top ebnviromental job to an anti-ming crusader, as Bloomberg calls her - sounds like more pressure on nickel ore exportes in this country.

The US-senate votes down a law, which would ban FBI-listed non-flyers from buying weapons!! Amazing country - you are a suspected terrorist, but they still alow you to buy a half-automated gun. And Trump is openly supporting this...perhaps you should buy some gold on the small chance, that this guy will be the next president????

Joke aside - if the English stay in the Euro-Zone, and they probably will - gold should be weak initially, perhaps providing us with a good buying opportunity. Gold ETF holdings have continued to rise every day, and that´s not just because of a possible BREXIT!

Fortescue - have paid back another 500 Mill US in debt, bringing the total pay-back to 2.9 bill$ in 12 month! At 50$ for iron ore, FMG are an amazing money printing machine. The CFO flags, that they could pay back another 2 bill over the next 12 month, potentially bringing gearing down to 30%. The days of FMG being a risky stock are definitely over!

Resolute - have published the final feasibility study for Bibiani. The mine has been a bad investment many years ago - but finally, it looks like it could add some value to RSG. Still not a great re-start, but 100.000 oz for 5.6 years at AISC of 895 US$ are certainly worth something. Resolute has become a net-cash gold producer over the last 12 month, ending a long story of being relatively highly geared. They will not have a problem to finance Bibiani. The stock has had a good run under John Welborn - I need to have a good look at them, but I thionk tehy might be one of the reasonably priced, Australian producers.

Highfield - have published the scoping study to convert about 40% of their MOP ( Muriate of Potash ) into 500.000t p.a. of SOP ( Sulphate of Potash ). SOP ( currently trading at around 680 US$/t ) is a much higher value product than MOP ( price is about 285 US$/t ). The cost to convert is about 100-120 US$/t for HFR - so adding a nice 290 US$/t of production. The company believes, that it´s more appropriate to use a 250 US$ long term price differential - that still leaves an additional 130-140 US$/t or more than 65 Mill US$ p.a. in operating profit, additional to the profits from MOP-production! The capital cost would be expected to be 123 Mill US$ + 20% contingency. The project should add very substantial value to the overall project in the vicinity of 500 Mill A$ - obviously depending on your long term price asumptions,a nd the interest rate used.

Highfield is making itself very very attractive to any of the major producers....!!!! The short position is still very high at over 7% of the stock.....somebody is very brave here, in my opinion, and must be punting on further delays to the grant of enviromental approval. Given the elections are happening on this Sunday, at the highly uncertain outcome, the shorts might have a point - but this is not a question of IF, rather on WHEN....Interesting enough, the two provincial governments involved in the mine, are both sort of left wing - and both are very supportive.

West African Resources - the company has presented to the National Comission of Mines of Burkina, and has got a favourable opinion. The enviromental and social impact study is due in July, and full permitting is expected during the 3rd Quarter. Resources drilling is in full swing, and while it will be continued throughout the year, the company will make a cut-off as at the end of June for a maiden resource estimate for the new ore body, M1, in the 3rd Quarter.

Nice foto of MD Richard Hyde with the President of Burkina as part of the announcement - obviously, Richard feels extremely comfortable in a dark suit!

I continue to like this stock!

Cardinal Resources - have appointed Julian Barnes as Technical Project Manager. That´s a big coup, and testimony to the quality of the project. Julian is not very well known outside the mining scene, as he has never worked for public companies in senior positions ( as far as I know ). He is regarded by many as one of the worlds best consultants for mining projects. The company ahs been light on in tzerms of management so far - this is a very important step for them.

Panoramic - as you know - I have more or less always liked this company...Of all my stocks, this is probably the only one this year, heavily impacted by tax-loss selling. Very few stocks of the mining universe in Australia are trading at prices substantially below prices earlier in the tax year, which is finishing on the 30th of June. I guess every mining investor in Australia has made good money this year - even more so everybody got to be very tempted to find and realize some tax losses. PAN got to be a prime candidate! Given my above comments on nickel, a healthy cash position of about 25 mill A$ ( after all mine closure costs, a great nickel project ( potentially worth a multiple of todays share price, if nickel ever gets back to a "normal" price level ), and a very reasonable gold project, this stock is just soooooo cheap!

Our thoughts are with the poor guys from Australian mining contractor Macmahon, who got kidnapped in Nigeria - presumably by islamists....

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