Market Update

General - Highfield - Lucapa - Heron - Breaker - Resolute

Good afternoon

Deutsche Bank and Volkswagen getting sucked by the Americans...anyway, today they rebound a little - until the next bit of bad news comes???Not that I have a lot of sympathy with them - but I think it´s outrages, that American judges are trying to work out the well-being of VW, to see how large damages they can extract from them....we should try the same with Google...the US would be laughing....but there is no doubt, that Deutsche and VW will be paying big time...

The likes of Teck, BHP etc keep on running, probably for teh right reason: coal prices just refuse to come down, as does manganese...as does iron ore....

Looks like Iran/Saudi are getting a little closer to a deal - oil is strong....

Some other commodities like sugar are racing as well ( 4-year high ).....just oil is under a bit of pressure today, while base metals are all edging higher so far today.

Mosaic, the large phosphate producer, is having a real and nasty problem...apparently, they have put 212 mill barrels of radioactive waste water into a sinkhole, which now seems to affect an aquifer....that could become very very nasty....Uranium is usually a by-product of phosphate production, hence the mess....No wonder that a subsidiary of Australian Uranium Equities has found Mosaic as an interested partner for their revolutionary uranium-extraction process from phosphate deposits...

Highfield - great news for sad reasons: there are still some 50 mill performance shares will most probably not vest. They are to be issued to the original vendors of the asset, if all operating approvals are in place by Oct 2017. Normally, the last round of approvals will only be granted, once the plant is finished - and teh company has stated, that this will take up to 24 month. So the board has eliminated some provisions for these 50 Mill performance shares today. The impact on the longer term valuation of HFR is very significant: The total, fully diluted amount of shares outstanding falls by 50 mill from 414 mill shares, to 364 mill shares. Especially if you believe, that the company could well be taken out at some stage at say 3$, that woulde change the total price for the company from quite a bit. For a change, good news, while we are waiting!!!

Lucapa - sold 2200 ct for 4.1 Mill US$ in the last sale. The company hast stated operating costs of 1.2 mill US$/month - last month production was 2.850 ct, so even 30% more than the last diamond sale....July was even larger in terms of production, and the last two large stones of 104ct and 172 ct had not been part of this sale. Longer term, LOM will only have 40% of the asset - still, these numbers add up to quite big profits. And diamond stocks around the world are doing well on an improving market for the stones. As I said - LOM are far from xpensive..., but not for the fainthearted. as we can witness with the Phillippnes in the moment, country risk is a very real risk in mining.

Breaker - reportedly, the placement got increased from 10 mill to 12.5 mill$,. and was still 4x oversubscribed. The market is genuinely excited by this one...a lot of people talking about it in Perth...Again, a hot stock and not for widows, but I think they will open strong again tomorrow.

Heron Resourecs - excellent results from B-Lens of their Woodlawn Project - 5.7m with 14% ZnEq; 2.5m with 19.5%ZnEq. Downhole aeromagnetic survey froma that hole has been indicating a significant extension to N-Lens, which could add 1 millt to the resource, and have a nice impact on the project valuation. No idea, why that stock is not moving at all - perhaps they have more shareholders like myself, who got bored and have sold out! Still - I am still watching this story carefully....

Resolute - UBS completed a 150 mill A$ placement at 1.96 A$. I think this was a little opportunistic...the company is debt-free, and is generating massive cash now...so in my opinion, they would have been easily capable of financing their growth projects with a very limited amount of debt, which I would have preferred. Perhaps tehy want to buy something ? perhaps one of our little babys in Africa, like Cardinal? I am only speculating. Van Eck have increased their holding big time, and only very recently - good time to fill up the Australian institutions, and that´s exactly what has happened with this placement. In the short term, one does not need to own RSG in my opinion....

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

General - Cobalt - Phillippines - Oceana - Crusader - Beadell - Highfield

Good afternoon

oh boy! What a day! my stocks are racing...Panoramic, Peak, Lucapa, Highfield putting on big runs today!

Clinton and Trump fighting it out yesterday - the ugly faces of distrust vs racism! As you would have expected - she won on having done her homework - he won on playing to the voters, who are fed up with the political "elite"....depending whom you listen to. In any case - this thing is close, and it puts the spotlight on a country, which is deeply devided. I guess every country has the leaders it deserves....And I sincerely hope, that I do not have to use this phrase, when I talk about the German elections next year!

Deutsche Bank is crawling on it´s knees and is dragging others with them...I am not hearing anything positive about them! I am sure, that Deutsche Bank will not go bust - if the US really impose 14 bill US on them, somebody will either take them out, or bail out....but I am surprised, that investors are still having so much face in the system, and that gold is not going any higher today than it is!

The really big news today have been from the Phillippino government....Mrs.Lopez has either closed or has threatened to close 75% of the countries´ mines...55% of the countries nickel ore miens could be affected, that´s about 11% of the world´s nickel production. The government will meet with individual mines of the coming weeks and tell them, what respective changes to enviromental or social practices are expected to be fulfilled, to stay open. I guess news will gradually filter through. nickel and zinc are slightly stronger today, but way down from highs reached earlier on in the day, oil is giving up yesterday´s gains. As you would expect, nickel stocks very strong today in Australia, once the news came out after lunch Australian time.

Interesting article by Macquarie: The majority of coal traders are expecting met coal to stay very high for the rest of this year, and still much higehr than currently expected in 2017. They are less positive for thermal coal and do not believe, that the recent price rise will be sustainable.

Cobalt - interesting article in the Australian Financial Review, which has picked up on the strongly rising use of lithium-ion batteries - they all need cobalt. Most of the cobalt production is coming from the Democratic Republic of Kongo - a brave battery-producer, who will rely on that! To my knowledge, the only other production of cobalt is coming from by-product, especially in nickel mines. Panoramic for example will be producing about 500t of cobalt p.a., once and if back in production. Cobalt prices have not done anything for a while, since coming down from lofty prices of up to 50$/lb historically, to 13-14 US$/lb these days. For somebody like Panoramic, additional by-product credits from cobalt would be around 20 mill$ p.a. at current prices, but could go as high as 42 mill A$, if cobalt would trade at 30 US$ at some stage. Anyway..could / would / should....but it´s another wild card for my friends. I had to sell very few today, as to the large size of my position...But I will keep as many as I am allowed to, as the move today has only been the starting point, in my opinion. Just look at their wonderful chart!!

Oceana - suspended, as their excellent project Didipio has been targeted by the Phillipnes for potential suspension. The company will only be able to get more clarity on the demands over the enxt few days. In my opinion - and I ahve not visited the mine - it´s complete nonsens, and Oceana have received a lot of praise in the past for their social engagement, as well as for their enviromental responsibility. But I can remember from the old days, when Oceana hs been waiting for approvals for a long time, how irrational some NGO´s and the church can be in the Phillippines. Hard to deal with people, who are irrational - and hard to know the eventual outcome, when youi ahve counterparts like Mrs.Lopez on the otehr side of the table! My best wishes to the company, to get things right....it´s very undiserved, and very bad for local people ( 98% of workforce of 1800 are from the area, or at lest from the region ). Only time will tell...

Crusader - completed a very dilutive, 8.5 Mill$ placement at 13ct to isntitutional investors very easily - placement significantly oversubscribed. Retail shareholders will have the opportunity to subscribe for up to 15.000$ at the same price, to raise another 1.5 mill$. As dilutive as it is - I think the placement is very good news for CASA. They will pay back 1 mill of the 3.5 mill in debt, and will have about 8.5 mill$ to play with in exploration for Juruena, and get Borborema to a stage, where they can JV- or sell it. The company has been spending about 1.3 mill$ in exploration/ Quarter this year - basically all for Juruena - and another Quarter should bring it to a stage, where they can borrow a few million $ ( needed are less than 10 mill$ in toal for the plant etc , from what I have heard ) to bring this potential money spinner into production. But I also would like to point out, that they will have problems to come back to the market, if they don´t use these funds for significant progress with Juruena, Borborema, and Posse. No excuses forgiven! I also subscribed for a few.

Beadell - have appointed a Head of Corporate Development...well, this half year will tell us, whether they have done their home work at the existing mine! But obviously, and as always expected, these guys want to go on the aquisition trail! The guy who was appointed, used to be the Head of Capital Markets for Scotia - he will know, how to raise moeny, and could certainly do his bit to increase awareness of Beadell. I am still a shareholder - and I think the stock is undervalued - but I do not like all I see....

Highfield - don´t ask me, why they are running so hard - but don´t ask me either, why they fell so hard earlier on! The only explanation I have : two provincial elections in Spain last weekend. In each case, the old, conservative party won - the socialists lost votes, once again. There has ben noisy criticism from outside, but also from inside the socialist party, and the pressure has increased for Sanchez to finally do a deal with Rajoy. This would be major good news for Highfield, as their enviromental approval has been on ice, since the country had a care-taker government.

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

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 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.

General - Finders - Peak Resources - Lucapa Diamonds ( sorry, again! ) - Evolution

Good afternoon

German IFO-Institute survey very positive: It rose to the highest since may 2014, which is a surprise. The IFO Institute conducts a survey of 7.000 companies, about their current and 6-month outlook. The positive number does not prevent the DAX from being down 2%, and European markets being generally weak, amid yet another new low for Deutsche Bank - down 6%, and weak banking stocks.

Gold is looking a touch better, base metals unchanged to a touch weaker, bonds are stronger - oil is very strong amidst some optimism, that OPEC will come to some form of curtailment.

I wonder, hoch much further room there is for Australian producers within the GDXJ....van Eck, the fundmanager of the ETF, now owns between 15-and 18% of St Barbara, Resolute, Saracen and Regis....

Citibank sees US interest rates going up, if Trump wins - and therefore, sees downside for gold. I think that´s complete nonsense - risks around the world will go up dramatically in such a case, and gold should be very strong, in my opinion!

Evolution - an Australian survey called East Coles has done a survey for the 2016 Corporate Performance Award, which has been answered by 55 fundmanagers. The best CEO, as well as the best board went to Evolution Mining! I could not agree more! Yet the stock is not priced at a premium, as it should!

Finders Resources - I forgot to report their hedge restructure last week: They have closed out all hedges for a 42 Mill US$ gain,a nd put on a new hedge ( required by their bankks ) of 16.500t at the current price of 4.800 US$/t, for delivery between Jan 2017 and March 2019 - approx 50% of production for that time frame ). The funds have been used to reduce debt by the same amount, to 103 mill US$ ( all numbers are for their subsidiary, which is 75.9% owned by FND ). The 103 mill US$ debt includes a VAT-facility, which is expected to be repaid from VAT-refunds - so debt net of receivables should be 91 Mill US$. as reported earlier, the enw plant should produce at name plate by next month. At 2.40 US$lb for copper, respected broker Euroz expects FND to generate 98 Mill A$ in EBITDA in calendar year 2017., for EPS of 5ct/share. They value FND at 31ct. They are forecasting AISC of 1.30 US$/lb. Stock remains cheap, in my opinion, trading at 0,175 A$.

Peak Resources - updated on progress of their bankable feasibility study today, which should take about 4 weeks longer than expected, to Dec 2016 or early 2017. About 80% of teh study are complete. The site for the refinery in Europe has been choosen, and the company is currently negotiating on an option to purchase the site. In my opinion, the latter has been the biggest question mark behind Peak´s plans...firm plans for a Europe-based refinery, and the feasibility study for the African plant will be important steps for the market to value the project on much firmer numbers. I am holding Peak as a "sleeper" in my portfolio - there will be a day, when the market will be much more interested in Rare Earth, once again, and by that time, the stock will have jumped again!

Lucapa Diamonds - and another big stone! The company announced the discovery of a 172ct, IIa diamond today - the next large diamond within a few days. Big turnover in the stock - 8.8 mill shares today...To my knowledge and according to the company, they do not have a single institutional holder on their register, at least until now. When you look at the various, London-listed diamond stocks, they all have sveral insto´s as shareholders - and some of them have been doing very well lately. Alrosa, the large Russian producer, also announced some excellent sales-figures last week, indicating, that the diamond market is recovering nicely this year. A great enviroment for outperformance of Lucapa Diamonds, of which I am holding a reasonable position.

Have a nice week!

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 - Lucapa

Good afternoon

a little bit of profit-taking today across all markets - equities, bonds, oil - but gold, base metals and bulks/steel holding up very well. In fact, metals recovered a bit from weaker prices in the Asian time zone. Not a bad effort at thenend of a strong week!

September has been a pretty good month for most commodities so far - even copper is up by a few percent, and many of our resources stocks have seen strong interest as well.

It´s really funny, and pretty much teh same situation as in the early years of the bull market back in 2003-4-5: The analysts are adjusting their price forecasts from very low levels for stocks in coal, iron ore, gold ( and generally, nobody had foreseen these strong rises at the beginning of the year! ) - only to be still substantially lower than spot prices. As their earnings-estimates are based on their forecasts for prices/currencies, they are running behind the reality all the time! I like that - very healthy for the market!

Quite some talk about Deutsche Bank being in real trouble...provisions for litigation etc look like they are 5 bill$ ( that´s a guess...could be 2 and could be 10! ), and unfortunately for the bank, there is every willingness in the States to treat Europeans as badly as possible, following the 13 bill Euro tax claim against Apple. Not that I m hoping for Deutsche to go under - but I think a nice little banking crisis in Europe would´nt hurt the gold price.

Interesting little fact: The GDXJ ( Junior Gold Explorers - that contains all the midsized producers ) has outperformed the GDX ( large gold miners ) by a massive 45% this year! Basically all of this outperformance has happened since early March.

We have all got very much used to the unthinkable from just a few years ago, that Central Banks around the world are still embarking on 180 Bill US$ of QE every bloody month...governments and large corporates are issuing bonds , and tehy get soaked up straight away by the printing-department of a central bank - especially the BoJ, and the ETB. Just imagine the other untinkable: This lunatic becomes president of the US! large tax-cuts, big spending programs - and I guess all financed by the Central Bank, the treasuries of large banks around the world, who are regulated to be large buyers of these things...The last few years have lulled us into consternation, and in getting used to the unthinkable! Sometimes, and when you do your asset-allocation, not bad to remember this - and to remember, that commodities are hard assets! A t of copper is a ton of copper and will be a ton of copper in 5 years time - a government bond is a government bond, and will be what in 5 years time?????

Lucapa Diamonds - the chairman bought another 200.000 shares the other day - I know, that this is not small change for him...Lucapa are pretty much priced on their alluvial operation only, if that - if they find the pipe, it´s worth a multiple...Obviously, a few people are shying away from Angola. I think it would be very good news, if tehy´d list in London - the market there is much more used to diamonds, and to investment in weird countries...The company has stated, that they are contemplating this.

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 - am I getting too bullish? - my favourite...

Good afternoon

so she did not do it! Thank you very much - for now - god knows, where this is ending! Markets are certainly pretty excited - nice little relieve-rally in anything, which moves: gold, metals, equities, bonds ( German yield below Zero again ), A$....you name it...the wonders of liquidity....

New Home Sales in the States declined today.

An interesting theory from one of my more conspirative-theory-clients: Governments around the world have managed to reach the target to not pay any interest any more on borrowings....now to the next step: Spending to buy time, and buy the next election! And how do you do that? You spend on infrastructure....Certainly, this is what China is doing, what Clinton as well as this other lunatic are proposing to do with big $, what emerging countries are doing. And what do you need for this??? Steel steel steel...and iron ore and coal and nickel etc.....Is that what we are seeing?? Coking coal prices are up by 200% since early this year, thermal coal is up by nearly 50%, manganese up by 150% or so....Nobody believes, that these prices can stay up here - NOBODY has forecast even a 20% price increase for coke, not to talk about 200%, either! I do not believe, that they will stay up here, either - but in any case, it looks like the major producers will be in for major earnings surprises this year - and this will drag the small guys with them!

The same can happen to oil, nickel, copper etc pp - at various times. But the message is: You have to be set, BEFORE it starts....

Hardly anybody in the wider market has taken notice of the above mentioned, unbelievable prices for some of these commodities. Once they do, we will have a lot of money move to our sector.

And if this hope is not right? Well, we would have much less fun - but would be invested in one of the very few asset classes, which are still good value on a long term view! RIO and BHP have broken out, or are about to do so - the smaller sector will follow at some stage, and in a big way! These stocks have barely moved so far!

My absolute favourite in this scenario is little Panoramic - and I am sure that you guys are all sick & tired to hear this name! For 100 mill$ market cap, you get a stock which has never had more resources than today - and in fact, most probably has 15years+ in mine life at the right nickel price. As I said before - at a sustained nickel price of 12.000 US$ - and 16.000 A$ - which is only 15% higher than today, Savannah would be back in production at 11.000t of nickel p.a....if we go to 15.000 US$ or 20.000 A$/t, this mine could be generating 90 mill$ in operating cash flow p.a.!! Well - let´s not get too carried away, because the A$ would probably be up by 20% in such a scenario, costs would rise again etc pp....but this stock could well be capped at 1 bill$ in a crazy market...sounds completely crazy, but we have seen it before....And in the meantime, you should shortly see the details of the gold spin-off, which is planned to raise 15 Mill$, to be capped at 30 Mill$ at the IPO-price, while it should be worth at least 60 mill$, and perhaps 90 mill$ -which again does not sound outrageous for a 1 mill oz resource, with AISC of 1200 A$ or so, producing 70-80.000 oz p.a....As you can see, I am just so bullish on this stock - and I am putting my investors money, where my mouth is, having a 5% position of PAN in my fund...This is a quality stock, with an excellent MD, 30 Mill$ in cash, and it should be burried in your bottom draw!

So in case you are underweight resources, you should be buying a few BHP, RIO and S32, giving you exposure to all major commodities, and to some dividends...You should own a few Evolution as well for gold exposure, some AWE for oil/gas exposure...And then the fun begins: buy a few Panoramic, Prairie Mining, Paringa, West African, Highfield, Finders, Berkeley, Peak Resources, Strike, and Sheffield - and you have a portfolio across all relevant commodities, split between major blue chips and developing companies. Or alternatively, you put some money into our Nestor Australian Fund, which has no BHP or RIO, but all the rest, and is approx 50% weighted in resources...no hedging, no futures, full currency exposure!

Crusader - doing a placement today....disappointing, but they have put the last one to good use....and in the current enviroment, Borborema as well as Juruena are valued just too low...refer yesterday´s email...

Have a nice weekend and enjoy the ultra-low interest enviroment, while it lasts!

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