Market Update

General - Evolution - Resolute-- Fortescue - Oklo - Sheffield

Good morning - sorry, this should have gone out yesterday - see today´s report at the bottom...

the disappointing performance of gold stocks is a little sursprising to me. I guess some people are taking profits in light of this strong chart resistance at around 1260 US$. The physical, though, is still edging higher - 1252 as I am writing...Personally, I think we might need some consolidation following the recent, strong move - but once we go through 1260 US$/oz, I think we will have a lot of fun again!

Even though fundamentally it should not have an impact, a strong gold sector is always good for sentiment in the general resources space - in so far I am very hopeful, that we can end the current range trading within the next 2 weeks or so. We are currently seeing a classic wave of profit-taking in resources stocks - they have had a great move over the last 12 month, the initial re-weighting of investment protfolios has taken place - but now we need some fresh momentum coming from somewhere. With Trump not making much progress yet on a new tax-system in the States, and none at all on his fantastic infrastructure 1 Trill $ thing, the market is in wait-and-.see mode right now.

World steel production numbers for Feb have been very strong, up by 4.1%. This, alongside with the Chinese closure of many induction furnaces ( which use steel scrap and no iron ore to cook steel ), certainly explaines teh strong iron ore price. Macquarie mentioned the number of an additional 60 millt of iron ore needed on a yearly basis to replace production from steel scrap - Fortescue had mentioned this number 6 weeks ago....

New Home Sales in the US very strong.

Cobalt with yet another high in London...A lot of people do not see that as sustainable - I think it very well might! Speculators seem to hold 6.000t ( of a market of about 110.000 t ) - that´s not crazily much - and Glencore is controlling a commanding share of world mining production. At the same time, demand is growing by 6% p.a. or so, mainly from EV-batteries. I don´t believe, though, that prices will move much higher, as substitution will become a factor.

Evolution - Citi sold 85 mill shares at 2$ today. I have heard two stories: The official one: Egyptian Billionaer Sawiris hedged his position with a collar ( write calls, buy puts ). The unofficial one: He wanted to realise some funds for something else. Not sure about teh second story...( as at Friday, teh second story has been confirmed! )In any case, it´s not positive in my opinion, as such a large option position will increase volatility in both directiosn - when the stock goes down, Citi has to sell more stock - when it goes up, they have to buy more to stay neutral on their hedge. Whatever the technicals - what a great buy for investors at 2$, with the A$ gold price at 1635!

Resolute - came out withs ome very good drilling results from their Bibiani asset in Ghana. They bought that a few years ago in an ill-fated aquisition, but the story finally seems to come halfway right. The recent feasibility study was calling for production of 100.000 oz at 850 US$ AISC, against capex of 72 Mill US$, for a proven 5 years - nothing to get me excited. But the current drilling looks certain to increase reserves , and also grade of existing resources. Some more results like this, and this might actually become a reasonably good mine! Resolute is in a very sound position, having 275 mill A$ in cash & bullion. The company is unusual in holding a lot of bullion on their balance sheet- as part of their cash management, as they say, which is holding A$, US$ and Euro´s - and now bullion. I do not really like that - but it increases the potential upside, if and when gold moves higher. I am not a holder - but stock is not uninteresting at current levels.

Have a nice day

Good afternoon - Update dated Friday, the 24th:

Eurozone PMI very strong...German manufacturing very strong...US PMI ....Durable Goods Orders strong again as well. Chinese PMI only next Friday - but so far, a pretty good set of numbers!

Heard an interesting and very plausible explanation for the relative weakness of our smaller resources stocks today: Apparently, quite a few Australian small cap managers have seen substantial outflows recently ( usually, these guys have a ex-ASX 100 mandate ), amounting to something like 5 bill A$ over the last few month. The funds seem to be allocated to large-cap funds, and Index funds. That´s a lot of money for the Australian small cap sector, and explains some of the recent reluctance of good stories in the developer-space , to go higher.

Fortescue - reduced debt by another 1 bill US$....at the current iron ore price, will be debt free late this year!This is a money-printing machine! And soon, it will be a dividend-machine, as this is the only way for Andrew Forrest to take money out of the company.

Oklo Resources - Chalice increased it´s shareholding again to 9% now...From what I am hearing, the company is very excited about what they call a look-alike of early results at Fekola, which was Papillons major gold find in Mali, before they were taken out by B2Gold ( about which I am hearing positive stories ). I have to say, that I find the stock pretty pricy for the early stage of their exploration, but obviously, I am not a geologist! Would certainly be great for the market to have a major gold find here.

Sheffield Resources - published a very positive BFS for their Thunderbird mineral sands project in Western Australia. Mine life of 42 years, pre-tax NPV10 of 676 mill A$ , IRR of 25% could make them a compelling target for Iluka or RIO, both of whom have declining assets in this space, and limited reserves. The project is planned to produce 51.000t of Premium Zircon, 49.000t of Zircon-concentrate, and 264.000t of Ilmenite p.a.. Assumptions used in the study are conservative for Ilmenite, and probably realistic for Zircon. The initial capex of 350 mill A$ is large for a 100 mill$ company - but this is a problem we are all used to, I think. The company is currently in talks with regards to off-take agreements, which could pave the way for a large financing. Interesting story to follow - unfortunately, few people over here are looking at mineral sands.

Have a nice weekend!

General - Evolution - Breaker - West African

Good afternoon

Finally, the gold price is gaining a bit of speed - I guess based on the political turmoil in the US. Some money found it´s way back into the large, US gold-ETF yesterday, and gold has just moved through 1250 US$ ( and this time, it´s also moving in A$, trading at 1630 A$/oz ). Chartists unisono report about quite heavy resistance at at 1260 US$/oz, which is the recent high a few weeks ago, and also the level of the 200-day moving average. Perhaps this explains, why gold stocks are not as strong as you would expect them to bet at 1250 US$oz.

Van Eck increased most positions in their Australian gold miners last week - mainly PRU has been decreased by 17 mill shares. As one analyst wrote last week - the increasing portion of Australian gold miners held by the passive Index-ETF is a little disturbing, as in some cases, it´s approaching 20% of outstanding shares!

Base metals are slightly weaker on average, continuing their recent consolidation, while equities are reeling from US politics.

The Brazlian beef-crisis widens...the country is exporting 5.5 bill US$ worth of the stuff, and the biggest consumer for it is China, which is particular sensitive to food-scares. This can only be good news for Australia, where Australian Agriculture AAC could be a major beneficiary.

West African Resources - is currently drilling with 4 rigs to expand their resource, especially underground. Some excellent results out today: At the M5 orebody, best results were 29m with 5g gold/t; 15m with 5g, and 20m with 3.3 g from depth of 128 - to 256 m. At the Northern end of the same orebody, a hole returned 30m with 2.6g from 94m, which could extend the planned open pit. The probably best intersection has not been assayed as yet. The core has visible gold, and could extend a relatively large structure down by another 115m. I am surprised, that the stock did not move any stronger today. Turnover was pretty good at close to 3 mill shares - I think some large, institutional seller might be finishing the sale of a previously large position in the moment. The updated feasibility study, including the underground mine, will be finished in the 3rd Quarter. In the moment, it´s all about drilling-results! I am sure, that B2Gold as a neighbour is watching with interest!

Breaker - helped by the better gold price, the stock is also edging higher. Next results should also be close here - the company is drilling full speed ahead , more than fully financed until the end of the year. I know, that many are watching this one - the strike length, as well as the depth-potential make their discovery potentially very sizeable, and large enough for more senior players to be very interested! The company is currently infill-drilling, as well as trying to confirm extensions to the current strike length of 2.2 km.

Evolution - is currently hosting an analyst trip to the Ernest Henry Mine, which they aquired approx 6 month ago. The mine is not that large - it produces around 80.000oz of gold p.a. - but copper as by-product make it a very sexy money-spinner. For Jan/Feb, the mine produced 13.200 oz at a negative 378 A$/oz. The company also said, that the current Quarter should see a total of 200.000oz for EVN, and that tehy should comfortably achieve guidance of 800-860.000 oz at AISC of 900-960 A$ for the financial year to 30th of June. Given that EVN produced 217.000 oz in the Dec-Quarter, the market might have been very slightly disappointed. Will be interesting to see the analyst-reports over the next few days, as I obviously have not been on the site-visit - and I am not exactly sure, whether the company is toning down expectations a little, of whether they are just conservative.

Have a nice evening

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General - Peak - Finders

Good afternoon

if Mr.Trump would be an Australian mining executive, I would call him a lyer and crook, and would never invest in him. I find it amazing, that large parts of the Republican Party are still supporting such an individual! This guy is a shame for the USA! Unfortunately, he is not just that - in his position, he is an outright danger for all of us!

The market in base metals is a bit tired in the moment...copper does not move anymore, even though the three largest copper mines worldwide do not produce in the moment, and some production in Peru seems to be affected by torrential rains in the country...gold is strenghtening somewhat...while the US$ is weak. I think fundamentally, nothing has changed, and the world´s manufacturing industry continues to do pretty well. Hopefully, the market is only digesting the relatively strong performance of the last 9-12 month, before we will see another leg up. It will be interesting to see, whether the closure ofn Escondida , Grasberg and Cerro Verde will have an impact on copper soon, as it usually takes a few weeks for a shortage of copper concentrate to impact copper cathode. Traditionally, demand for metals and minerals should be strong until June, before the Northern hemisphere summer will start to see demand quieten down somewhat. Even iron ore has had a weak day today - I guess this has been long awaited, and should not really be a surprise.

Gold ETF-inflow has slowed down in Germany, and has reversed in the States for now.

A nice little comparison: Which bank is the best performing bank, as measured by total return over 10 years: Macquarie + 123% / Goldmans + 73% / Deutsche - 73% / Commerzbank -95%. Amazing numbers! The MSCI World is up by 62% over 10 years.....

Peak Resources - have received en´viromental approval for their rare earth development in Tansania. This is very positive - especially in rare earth developments, we have seen major problems to get this approval for other projects.

Finders Resources - the excellent MD, Barry Cahill, has increased his personal shareholding by 30%, at a price of 18ct. I repeat myself - but I think this stock is a steal at 18ct, and at current copper prices. This coming Quarterly Report, or the next one in July, should be catalysts for the stock, as the market should start to see, that the mine is capable to produce better than the name plate 28.000t of copper p.a. - and every additional 1.000t will be highly profitable tonns! Every 1.000t extra should generate an extra 6-7 mill US$ in cash flow - equal to 8-9 Mill A$ p.a.. That´s a huge impact on a 139 Mill A$ market cap - stock!

have a nice evening

Gold - Strike - West African - Berkeley

Good afternoon

I think there is every chance, that Yellen will be proved as being behind the curve! Real short term interest rates will most probably stay negative this year, and that´s helping gold, while the world economy seems to be on a pretty sound footing this year - well sound for as long as interest rates stay low! Beware of the day, when indebted governments around the world will have to pay more meaningful interest on their massive debt-positions! And as one commentator said the other day - the US$ could be in for some more weakness, given negative rates and probably fewer rate increases than the market feared.

On the charts, the US$ gold price has clearly gone through the 50-and 100-day moving average, next target could be the 200-day MA at around 1260 US$/oz.

In A$, gold seems to be stuck in it´s trading range of 1570-1630 A$/oz, which has been in place since the year started. A nice price for Australian producers, but not very incentivising to increase positions in gold stocks!

The GDXJ-and GDX-reweighting at the market clsoe today created a lot of turnover, and some distortions. In general, it has been supportive for Australian stocks today.

Strike Energy - received 2 Mill of the 24 Mill A$ South Australian government grant to support additional gas production. That´s positive in itslef, but we had hoped for 4-6 mill A$. An additional round of 24 mill A$ has also been announced, and Strike is hopeful of getting some of this as well. In any case, the company has now about 10 mill A$ to play with, as at 31.12.. This should give them another few month to prove up commerciality, or/and to find JV-partners, and find new management until say July, when they will have to raise some more - unless a deal happens until then.

Berkeley - some nice drilling results from their high-grade resource Zona 7, most notably beeing 12 m with 1000 ppm uranium. Zona 7, which is forming the cream of their resource ( and which contrary to their mine deposit, does not have mining approval as yet ), looks pretty certain like growing further. The company is in negotations with offtake-partners as well as financiers to bring the mine into production. Following their capital raising a few month ago, initial contsruction activities as well as orders for long lead items have started. Negotiations with power stations are nothing you can do overnight - but if and when the company will find a deal - presumably in the 2nd Quarter - we could have some fun here again.

West African Resources - some highly unusual turnover this week, totalling 17 mill shares over two days. Looks like a large overhang has been removed. I am very surprised, that a large shareholder has sold down here...but sometimes there are funny reasons for somebody selling! In the low twenties, the stock is very good value for money, while analysts have valuations in the forties for the company. This could be further enhanced, once the company is progressing drilling and feasibility study on the underground mine. Should gold hold at current levels or even go higher, confidence in the developers should come back quickly.

Have a nice weekend

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

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eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

General - Prairie Mining - Strike Energy - Genex Power - Oklo Resources

Good afternoon

the CPI in teh US has risen by 2.7% over the last 12 month! That´s a pretty strong number, and even CPI ex energy at 2,2% has been strong. Given that interest rates ( until today at least! ) are still close to zero, pretty astounding, in fact! Manufacturing numbers quite strong, again, and Retail sales up, in line with expectations.

Metals are having a good day again, iron ore and steel continue to surprise on the upside.

Prairie Mining - came out with a very positive scoping study after the market closed. Trading in London as well as in Poland cannot be suspended, hence the stock is trading there - and it´s currently doing so at a more than 42% premium to the last close of 47ct in Australia - on several million shares turnover! The scoping study is calling for: 2.6 millt of yearly production of premium quality, hard coking coal for a 25 year mine life...cash costs of 47 US$/t, delivering a yeraly EBITDA of 282 Mill US$. Very low capital intensity to build the thing, of 197 US$/t and a total of approx 500 Mill US$ delivering a NPV8 of 1,16 Bill US$ after tax...that´s about 1.5 bill A$ at todays exchange rate for this project alone, against a market cap at the closing price of 47ct of 71 Mill A$. If I assume a 200 mill A$ equity portion for the financing, that still equals a potential share price of 5.5x todays price in 5 years time. And that leaves Jan Karskithe large thermal coal project completely aside, having a NPV of more than 1 bill$ itself! can see why investors seem to jump over each other to get into this neglected story! I declare my substantial interest in the stock and might even be a seller over the next few days, depending on price, for risk management reasons - but this stock should be taken over at some stage, and certainly not under 1$/share! Also interesting, that the share price of neighbouring Bogdanka, the thermal coal producer, has been pretty strong this year. PDZ and the China Land are currently working on the Bankable Feasibility study for Jan Karski, with a target for completion by mid-year. PDZ have had 13 Mill A$ in cash as at 31.12 and planned to spend 2.3 mill in the current Quarter.

Genex - also came out with an update of their small, 50 Mw starter solar project. Back testing over the last few years has given them a potential return of up to 15.2 Mill A$ p.a. in EBITDA - with a rising bias, as electricity prices are going up. If I extrapolate this to the planned, larger project in solar - an additional 270 MW - total EBITDA could be close to 90 Mill A$ p.a. - against potential debt of a total of 600 mill A$, once all would have been built. Using 5% interest rate, and paying back the debt over 10 years, would leave free cash flow of nothing - but 90 Mill A$ p.a. thereafter for 15 years ( 25 years is the usual maturity of a solar plant ). And all that without any government subsidies/financing/grant. I dare to say, that teh stock is very cheap based on solar alone...and the hydro project is the real jewel in their crown! I have sold a few today - but again, only for risk-management reasons!

Strike - published a new presentation today, concentrating on teh desperate energy/gas situation in Australia. It has never been looking hotter for STX...but the missing link is still the most important ingedient: demonstrating commercial flows from their massive resource!!! Bloomberg today is reporting, that industrial users in Australia find it impossible, to source contracts below 9A$ for gas - that´s much higehr than originally planned for by Strike. The only question I am asking myself here is, whether the company has to test a new approach in terms of techniques used, and also in terms of new management!? I am still holding a large position here as well.

Oklo Resources - stock shot up by another 25% to 25ct today, valuing them at 60 Mill A$. A pretty good market cap for a project, which only has seen auger drilling so far! But the company has defiend 2 km of strike length so far, which certainly is exciting - and exciting is also the neighbourhood of B2Gold and Randgold. Chalice have bought a substantial shareholding in OKU, and talk in Perth is, that Resolute have also bought a shareholding. I have to say, that at 60 mill$, the company has to prove a bit! When I compare this to West African, with a bankable feasibility study completed to produce 150.000 oz pa, and a market cap of 94 mill , I know which one I´d buy!

Have a nice evening!
WS