Market Update

General - Beadell - Breaker - Evolution - Prairie Mining

Good afternoon

things are looking much better today for gold...after breaking all support intra-day on Friday, we saw a nice reversal, and more of it today. Fund inflows into the large gold ETF have been very strong on Friday, to the highest total holding since June 2013 - obviously, the sell-off did not scare off investors . Long positions in the futures market have reduced substantially last week, and new shorts have been put on....The reversal on Friday/today certainly is a good show of underlying strength! But are we really out of the woods as yet? Not 100% sure in the moment....

Base metals are having a good day today...strong bounce by nickel, but also by lead, followed by zinc and then copper...Positive Manufacturing numbers from China over the weekend have helped, and also very strong, German export figures today probably added some interest. The pressure on Mr.Schäuble, to increase government spending, will increase further with German exports booming,a nd the current account blowing out further!

Not surprisingly, BHP/Anglo/RIO as industry leaders are making new, recent highs today, and even Antofagasta as a pure copper producer have put on 20% over the last 4 weeks!

German policymakers are thinking about banning all new diesel-and petrol car admissions from 2030...could be a big boost to electrical cars.

Beadell - some more, stunning exploration results from Tap AB1 Lode: 32m with 9.84 g the best - and Tap AB2 Through Lode, the best being 28m with 47g, as well as some sniffs of new deposits within trucking distance of Tucano. The above results are mainly within the current pit-design, and are all within oxide-ore. Mining of the stuff should happen within 6 month, potentially keeping up strong production this half ( aided by Duckhead ) into the next half. All additional oxide reserves push out the date for installing an additional circuit to the plant as well... We should know about the extent of additional resources/reserves by the end of this year, when the company plans to issue a new estimate.

Evolution - the stock has come back quite a bit from it´s high just above 3$ to 2.23 A$ currently. In my opinion, EVN are the best-managed goldminer in Australia, and have improved the asset quality quite dramatically over the last 12-18 month. Jake the other day emphasized, that cost-cutting and exploration would be seen as the main value drivers for now. I think the market might fear, that EVN get dragged into a pricy purchase of Barrick´s 50% stake in the Super Pit, which might cost about 1 bill $...Past experience has shown, that this company is only making value-adding aquisitions, and not aquisitions for the sake of growth. I have every confidence, that this will be the case in the future as well. In my opinion, EVN at 2.20 AS$ are very good buying - on the charts, they might go to 2$ - but I can see this only happening with a weak gold price.

Prairie Mining - I have not written about them in detail for a while...you might remember: a great coal asset, directly adjacent to Bogdanka, a serious, thermal coal mine in the Lublin Basin, listed in Warzaw. Interesting enough, the stock has been going up very gradually in Australia - but the real reason for this is some reasonable interest for the stock on the Polish market, where the stock has a second listing. I wonder, whether Polish punters know more, than we do?? Currently, there is more turnover in Poland than in Australia - today, nearly 400.000 shares have changed hand, best turnover in a long time. Bogdanka are generating about 200 Mill A$ p.a. in EBITDA - PDZ´s market cap is only 33 Mill A$....and in buying PDZ, Bogdanka can cut costs, gain much longer mine life, and get rid of a competitor, which in a few years time, could be a serious problem for them in a fight for market share. Prairie could be a large mine, producing 6 millt of good quality coal p.a. for free cash flow of 350 mill A$ p.a., at a longterm coal price sub 80 US$....but at total capex of around 600 mill US$. For Bogdanka, the capex would be dramatically less...and I suggest, that these guys could easily pay double today´s share price and make a very value-acretive aquisition. Worth holding a few, in my opinion!

Breaker - within 1-2 weeks, we should see more drilling results from them. The Executive Chairman, Tom Sanders, ahs participated in the recent placement, and has invested another 500.000 A$ into his company in the recent placement, without ever selling some. That is a major sign of confidence! Tom does not know, what Mother Earth will deliver to him - but at least he is putting his money where his mouth is!!

Have a nice evening!

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General - Gold looking.... well, f...ed - for now

Good afternoon

UK going to splendid isolation via a not-so-splendid currency slide...on it´s way to new all-time lows against the Euro. Will that revive their manufacturing??? I tend to agree with what May had to say over the weekend...just about time, that the country diverts from it´s good old two-class system....let´s start with education!!!

I was really getting nervous for gold, as it looked like having broken not only through the 6-month upward trend at about 1310, but also through the 200-day average at about 1254.US$/oz ( same for the large gold miners ETF )....but then we had the US labor market figures in the States today, which got things moving. While being lower than expected, previous month got upgraded a little...underlying trnd is being interpreted as still strong, as the pool of available workers is shrinking....This was enough to trigger a rally in gold, back up through the 200-day and some...trading at 1258 US. mid-afternoon our time. I am not so sure, that we are in safe territority again...In the end, equities as well as bonds are not showing a clear direction since the numbers came out, same for the US$....

So - in a word - I am still not relaxed! We need a convincing move higher in gold, otherwise the risk will still be on the downside for the next few weeks. For now, I am not really sure, what the trigger could be...unless Mr.Trump becomes president, certainly!

But that´s "only" gold....the rest is looking better, still! Thermal coal moving to new , recent highs ( 10% up this week! ), iron ore holding up...lead + zinc looking very strong - copper above the lows - oil back up through 50$ - BHP/RIO/Anglo making new highs - this is still feeling very good! In history, rising interest rates tended to go along with rising metal prices - this time, it should be the same again! And while the entire compelx is looking so good, I am not seriously bearish for gold....

But over the near future, it might be more promising to pick up small stocks in the space ex gold...the zinc/lead developers I am following, have doen next to nothing as yet, as well as coal developers. Obviously, the market is not ripe for them as yet...but one day, these things will quickly catch up.

Not much to report in terms of micro-news over the last few days...so have a nice weekend!

And as I am going home, gold is gone....1243...next target is 1200, I fear!!

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General - Gold broken? - Oceana - Crusader - Marindi

Good afternoon

despite good manufacturing numers, and strong car sales in the US, metals in the end turned south yesterday, and are continuing to do so today.

BHP/RIO/Anglo - even Antofagasta as a pure copper play - continue their recent run - testimony to a reweighting of institutional investors of the resources-sector.

Nickel is not being helped by renewed talk about a loosening of the export ban for nickel ores by Indonesia. To be honest, I cannot imagine a straight relaxation, as so much money has been inevsted in local refineries - it would be macro-economic nonsense to do so, and it would seriously hurt foreign investment...we will see. Some talk about relaxation of rules, countered by a rising export tax...Whatever the outcome, I can only emphasize, that costs will continue to rise for nickel pig iron roduction, supporting the nickel price. But above mentioned comments are certainly creating some nervousness - nickel is down by just under 2% today in London.

Gold is looking a bit vulnerable on the charts, while gold holdings of the large gold ETF are falling very slightly.While I am writing this report, gold has broken the chart....could it go back to 1200$/oz ?? I fear on the charts, it could....The Yen might have turned the corner, and the Euro is weakening again...all bad news for us gold bulls. Trump & friends don´t seem to worry the markets enough to keep gold up....

The A$ continues to edge higher - makes sense, probably, as iron ore is holding up well, and coal prices are still rising.

Sterling is making new lows amidst talk of an agressive Brexit. Well I am going to London tomorrow - for the first time in a long time, it might actually be halfway cheap to visit!

Oceana - well Mick Wilkes startegy to be outspoken and vocal might have been right. The company reports about very constructive discussions with the government, and confirms the guidance for the year. Didipio has not been stopped at all so far, and OGC are confident of this staying this way. Overall, it sounds like the potential mine suspensions will not be eaten has hot as cooked! Good news for the miners involved - not good news for me, as I started to like this government, being a Panoramic shareholder! The latter is certainly a bit of a joke....But I am dead sure, that the mining audit has not been the last trouble we have seen from the Phillippines...

Crusader - some good drilling results, very high grade, from the Juruena district. Some of them will help moving inferred to indicated resources, some will increase overall resources. They have also gained a trial mining license, allowing them to mine 50.000 t p.a.. This is usually the way small mines are operating in Brazil. Stock has come back all teh way to the just abover the placement price...I fear that was to be expected - I do not like the Shareholder Purchase Plans used in Australia to keep small shareholders happy. They are usually selling down to just above the issue price, to take up the placement...always damaging for the share price. In my opinion, small holdersare much rather be helped by a classic, one-off placement, than by a SPP, which tend to put share prices under pressure for weeks.

Marindi - this is an interesting, and very hot one....I have been invested for a two years or so, putting a very limited amount of money into the MD Joe Treacy, who is a genuine, experienced Australian miner. Many will know him from his days at Kagara Zinc, which went under at a time, when zinc prices were very low. He started MZN with some zinc/copper exploration assets, which still look promising, but have not delivered nything as yet, which could be brought into production in the foreseeable future. Their aquisition of a 30% interest in the excellent Reward Zinc Deposit is under consideration by Teck , which have a pre-emptive right. In case MZN will be allowed to buy it, they will need a small capital raising to pay for it - but would also gain a red-hot asset.

What is driving MZN is something which was meant to be a side-show, but is gaining substantial, speculative interest: Lithium. Kidman Resources KDR have discovered something which could be a world-class litium pegmatite deposit, and their share price has gone up 8-fold since mid-year to a market cap of 250 mill A$ today. This discovery is just 2 km from a large ground position of MZN, which has been mined historically for tantalum, which is contained in a pegmatite , also containing lithium. No modern days exploration has been carried out, and when the tantalum was produced, the lithium was completely ignored. This could be a hot stock - market cap is only 25 mill$, and you have a few options here. But this one is a punt - you have the risk of loosing half of your money as well. I have actually sold some stock today - but this is only for risk management...I like the people, and I like the multiple options in this company.

have a nice evening and endure the short attack on gold!

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General - Highfield - Berkeley - bullmarket in base metals!

Good afternoon

The Chinese PMI has been in positive territory again, for the second month in a row - providing good support for commodities today.

The Index of LME-traded base metals has entered into a bull market, being up by more than 20% since the lows of January this year....Following a lacklustre start to the week in Asia, metals are moving higher in London...

Some relief for Deutsche Bank today...stock is strong - but I do not see this as a real change of trend....the problems are not solved!

May is setting a clearer time table for BREXIT...so far, the effects of it have been very limited...But financial instituitions are just watching, for now. I remain of the view, that it will have pretty bad consequences for London...we will find ou!

Uranium has made a fresh 11-year low, falling to just 22.50 US$/lb....Not many companies would be making money at these prices, but as you know, the contract price ( longer term price, under which the majority of uranium is being delivered generally ) is still at about 39 US$/lb.

Power has not been fully restored as yet to South Australia, following a storm-induced failure on Thursday afternoon. Mines like Olympic Dam of BHP are still on care and maintenance....Full deivery of power should start very soon again

Highfield - the head of teh socialist party in Spain, Sanchez, has resigned. He did not have the support of the majority of his party anymore, to continue with his un-compromising policy, which stopped the conservative party to form a new government. It is highly likely now, that Rajoy will be forming a socialist-tolerated, conservative minority government. We all hope, that the 9-month stand-still of Spanish politics will come to an end soon, resultinmg also in enviromental approval for Highfield´s new potash mine in Northern Spain.

Berkeley Energia - big jump in London today...trading at the equivalent of 93ct in Australia! Stock has been tipped in the Sunday Times!

Not much to report otehrwise on a quiet day!

Have a nice evening

General - Breaker - Paringa/Prairie - Oceana - Genex

Good afternoon

OPEC wants higher prices...and well, they don´t exactly know at this stage, which country will be cutting...and obviously, this is the crucual point! But my feeling is, that the fact, that saudi´s and Iranian´s have found some kind of agreement, is very important. This could be a major change...and it could also mark the low point of inflation...and interest rates!

A bit early perhaps to actually move in terms of asset allocation...but we are getting very close to a major turning point.

Metals are having a strong day...nickel being teh strongest, after being sold off quite heavily yesterday.

Everybody is speculation about the size of production cut especially in nickel ore, following the government audit. I think we should note two points: For one, this government is completely irrational, and anything is possible. In any case, they are very hostile towards mining and follow the history in the country of having very strong anti-mining NGO´s, and a catholic church. For two, whatever mines will be closed - I think it´s on the horizon, that costs of production will go up. Whether thats because of higher taxes, higher royalties, or stricter enviromental controls - in any case, they will go up. And that´s a major positive for Australian nickel stocks, as it puts upward pressure on the cost of producing nickel pig iron in China, which is based on ore imports from the Phillippines. In my view, the nickel prices will hit 12.000$/t before year end. Not to disregard: thermal coal is making a ne whigh today - I think it´s a two-year high - while zinc and lead are strong, too - making 8-year highs in A$ terms...Copper at it´s best in 8 weeks...

Diamond prices have gradually edged higher for most of the year, according to Bloomberg. But with an important twist: Demand for the quality end has increased, while the price of mass-market stones has actually fallen by 10-15%. So you should look at the kind of stuff your investments are producing...

Oceana Gold - Mick Wilkes, the excellent MD of Oceana, has been pretty outspoken in an interview in Manila. He is 100% correct, when he is criticising the actions against mining in the country - but I think it´s not smart to publicly and harshly criticism of irrational ministers....These things can backfire...I would much prefer to work behind closed doors....The trouble in that country will persist, and for now, I would not touch any mining stocks with operations there...

Breaker - had a phenomenal come-back after being suspended for the placement....The company has had a tough time to raise 1 mill$ a few month ago at 13 ct ( for memory ) - this time, a 10 mill$ placement got increased to 12.5 Mill$ at a price of 50ct - 4x oversubscribed - and the stock traded as high as 75ct yesterday! There are not many quality stories around, and the few are getting chased up by institutional investors! IF Tom Sanders can fill up the gap between his two discoveries with more intersections, this one could have much fun in store, still - but it´s pretty hot!

Genex - you cannot imagine, just how much fun I am having with this one! I have been the lonely buyer of thios stock for weeks - and it does not feel any good to be more or less the only buyer of halfway size in a stock!! Anyway - finally and long last, teh Australian market is now taking note of it, and just a bit of buying drove the stock ro the new level of 25ct. At this price, the solar project is fully valued - but the deasibility study for the hydro pump project should be out soon. I cannot value it at all in the moment - I have too little experience with this kind of project - but you are not paying anything for it anyway! It could be worth a multiple of teh solar project - we will find out - and you should still buy some stock, as it´s very nice to get an option for free!

Prairie Mining and Paringa - two very different stocks, but both will be producing coal for power stations. I have written often about them....Prairie is coal in Poland, imemdiately adjacent to Bogdanka, a large mine. Anything but a takeover of PDZ by these guys does not make any sense...but the timing is very uncertain. This is a very good project in it´s own right - but production would be a long way and substantial capex away from here. Still, the stock is very undervalued....Paringa is a different preposition. Belonging also to the Middlemas-stable of companies, they have a great project, but way smaller than PDZ - but only 18-24 month from production, with very small capex. US coal stocks like Alliance Resource Partners, which is producing in the neighbourhood, and coal with very similar characteristics and the same clients for it, at similar cost of production, have the financial muscle to take out these guys very easily....In my opinion, they should definitely do so, to protect their own back-yard, by increasing profits at the same time....This is pure speculation on my side - but by buying these two companies, I think you will see solid returns over the next 12 month. The price of Alliance has more than doubled over the last few month!

Have a nice weekend

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