general - Gold looking great - Cardinal

Good afternoon

I have to admit, that this time, Trump has my sympathy in a way - even though these US_bomardements have never helped things, and usually created more problems and killing in their aftermath...

Labor-market numbers in the US were rather disappointing, while Industrial Production in Germany has been surprisingly strong.

Gold through resistance today - let´s wait, whether it holds the current 1269 US$ in the US tonight. The HUI Gold Miners Index in the US is also breaking out...and last but not least, the A$ gold price at 1685 is very sexy. Gold stock performance in Australia was actually a touch disappointing - I guess we will see more on Monday, if the gold price holds up here.

Not so sexy are iron ore and steel rebar - both down by 5% today, while thermal coal and especially coking coal are still strong as a bull following reports, that rail-disruptions in Queensland might last for a bit longer. The explosive move of coking coal by nearly 90% or so, just because of a ( really bad ) cyclone in Australia ( and these things tend to happen more often because of climate changes ), gives further credit to Prairie Mining´s plans, to start their coking coal mine in Poland. Currently, nearly 50% ( !! ) of all seaborne trade in this type of coal comes from Australia!! Metals were also disappointing, most of them down a little except for nickel - possibly showing risk-off by investors today.

Quite large demonstrations in South Africa today, demanding the resignation of Zuma.

Cardinal Resources - market sources tell me, that not only Gold Fields is sitting there with 10% - apparently, also IGO have accumulated a 4.9% position in the stock - just below the official radar screen. This stock looks more certain now to be the next playground for M&A in Western Africa, and should benefit the sector. 

Still - it´s very important to carefully watch, what to buy...The recent problems of Blackham, which is reopening some old Wiluna-based mines, and Eastern Goldfields, which is doing the same with several old orebodies near Kalgoorlie, show us, that an old & bad mine does not just turn into a good mine, because the A$ gold price is looking sexy!

Have a nice weekend - I will be away for a week

WS

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General - Cardinal - S32 - Talisman - Paringa

Good afternoon

The FED´s thought´s of potentially ending QE made markets nervous late yesterday. You would have thought, that this would be slightly negative for gold - but it recovered a few$ and is hanging in there in the 1250ties. The A$ gold price is looking very good, though. The  move of "our" currency towards the bottom of the recent ttrading range near 75ct has driven the gold price to 1660A$/oz again, the highest since Nov 2015. A very nice price level for Australian gold miners, which tend to have AISC of around 1000 A$/oz, and total costs of around 1200 . Perhaps time again to look for some Australian-based production, and I am having a look at Dacian Gold, which could be the enxt, halfway sizeable producer, and is fully financed into production.

German factory orders recovered from a temporary blip, while some commentators are starting to doubt Trump´s grand plan to cut taxes, get infrastructur programs off the ground etc...Too little has been achieved by his administration so far. 

Base metals had been all green earlier on, helped by ongoing talk about the effect of China´s 3rd economic zone getting developed - but later in the day, they are mixed, with nickel giving up 1/3 of yesterday´s strong advance.

Good news of the day: Mr.Bannon has been removed from the National Security Council...strange...who knows...the next news might be, that he has been planning the world revolution with the Russians?? Crazy man in any case...

Cardinal Resources - strange placement...company has got ample cash, but is doing a 15 mill$ placement in conjunction with a TSX-listing. I am not a buyer, as I do not believe, that Gold Fields will make a corporate move anytime soon...in my opinion, they have bought a secure seat at the table, and will now wait and see. 

S32 - their sizeable, Australian mine Cannington ( 150t of lead/70t of zinc and 16 mill oz silver p.a ) has had a fire underground, which will stop production for about 4 weeks. Not a major drama for the supply/demand equation, but another problem in a tight lead/zinc market. The company is gaining more from currently very high coking coal prices ( above 210 US$ following the cyclone now ) at least in teh short run, than the fire will detract. Bot factors should be shorter term issues.

Talisman - this is no shorter term issue! The companis main asset is a 30% stake in Sandfire´s Monty development, a very high grade copper resource of about 1 millt at 9% copper + 1.6g gold. Today, Sandfire delivered the awaited feasibility study. While the mine will be brought into production by the 4th Quarter 2018, the costs are higher than I had hoped for at 1.90 A$ AISC/lb...resulting in a NPV8 of 46 Mill A$.  There certainly might be an element of Sandfire having no interest to make this thing look good - but the share price has already a little bit of furtehr exploration success built in. I think there are sexier stories around! 

Paringa - the expected capital raising was launched today - a tick larger than I had thought, 52 mill A$, at 52ct - which I find a little disappointing, given recent tarding in the mid-sixties. I ahve heard rumours, that there is a large, new cornerstone investor, which would explain the price to me - these deals don´t get done in a day, and as recently as 2 weks ago, the stock was still tarding at those levels. Still - the discount is large, and you almost have to paly, if you are an existing holder. In 2 years time, when the stock will probably tarde above 1$, we will all look back and kick ourselves for not having invested more in this relatively low-risk, now fully financed company. 

Have a nice evening

WS

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General - St Barbara

Good afternoon

as I am writing early afternoon, copper is approaching 6.000 US$ again, trading up 2% from yesterday - nickel and zinc are even stronger. It feels like the consolidation is over?! Iron ore and Steel Rebar are also recovering.- and coking coal/thermal coal are strong anyway. 

Strong ADP jobs-data in the States today, while sentiment in teh services industry is cooling somewhat.

But strong metals & equities are just too much good news for gold to go through resistance - and it´s reacting down instead, to take another breather!

St Barbara - another incredible Quarter...eraly version of Quarterly out today, and it look as if tehy produced yet anotehr Quarter with very strong cash flow, close to 70 Mio A$. Macquarie calculates, that SBM will be egnerating 450 mill$ in free cash over the next 2 years, at 1255 US$ for gold and 76ct currency. The company has already expressed, that they are on the lookout for aquisitions, as are several others. You can just feel the need for them to do something, especially, as the Solomon Island mine Simberi has very limited mine life! I would be very surprised, if they would catapult the dividend - even though this is what they should be doing, in my opinion! Both mines produced very well in the Quarter. More detail, once the Quarterly is out.

And I fear not much more to report!

Have a nice evening

WS

General - Cardinal/Gold Fields - St Barbara/PEX - Paringa

Good afternoon

coking coal prices ( from 150 to 176 US$/t ) and thermal coal prices ( from 80 to 88 $/t ) have immediately responded to the infrastructur problems caused by Cyclone Debbie in Queensland. Good for some, bad for others! But it shows, that there is not that much supply overhang, if any at all!

Gold is toying again with strong chart resistance...feeling good , despite a US$, which is tredning higher again. Base metals are slightlöy stronger as well, as I am writing this late afternoon.

The recent tendency, that larger gold producers are rather buying into exploration stories, than just take over producers, is intensifying:

Cardinal Resources - Gold Fields Ltd  have bought a fully diluted 10.35% stake in the company, via shares and options. Cardinal has a large resource of 4 mill oz, and potential to 6 mill ounces, at relatively low grade, and not that straightforward metallurgy, which looks managable...but with a 1.2g-ore body, might not be the easiest project. Very recent drilling results have been much better grade - perhaps GFI have done their homework and came to the conclusion, that overall grades can be improved.

Peel Mining - St Barabra have taken a 3 mill$ placement in the company, which I do not know that well. A Western Australian , polymetallic project seems to have the most potential.

Paringa Resources - very interesting announcement from Alliance Resource Operating Partners, which is the largest coal operator in PNL´s part of the US - they are placing 500 mill US$ worth of bonds...will be interesting as well, to see the terms on the 7th of April. This will increase their liquidity to 200 Mill US$ + very substantial credit lines. The EV of PNL is about 100 mill US$ today....Analysts have speculated in the past, that Alliance might want to further consolidate the sector, and remove a potential competitor....for say 145 Mill US$ they can have my shares! Let´s wait and see - this is all pure guesswork, but as you know, the NPV of PNL´s both projects is substantially higher than this.

Have a nice evening

WS

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General - Kingsgate

Good afternoon

In South Africa, things are hottening up...there might well be trouble ahead, before Zuma will throw in the towel...The Rand looks poised to go down further, helping the South African mmining industry, which has had to rely on a weak Rand for many years to stay competitive.

Building material stocks especially have been very strong in China today, as the government ahs declared a third economic zone beside of Shenzhen and Shanghai. The decision is believed to substantially support Chinese growth over the next few years.

Manufacturing surveys in the US as well as in Europe continue recent, strong trends - unemployment in Europe still on the way down.

The US care industry is feeling a bit weak. While numbers of cars being sold are slightly up, and SUV´s are still gaining market share, these numbers could only be achieved with large incentives for buyers. As Bloomberg reports, the 7 year rise of the industry in the US might come to an end.

Coal prices, especially coking coal prices, will probably be quiet strong for the enxt few month. The recent Cyclone has done substantial damage to rail infrastructure in Queensland, and some mines will not be able to export - or at least not in the past quantity - for a month or two to come. Good timing for the Quarterly negotiations. For companies like Stanmore Coal, which are financially not very robust, this could turn out to be a more serious problem.

Kingsgate - is now taking the first step to recover remedies and compensation from the Thai government. The Free Trade Agreement between Australia and Thailand require a consultation process first, before the case goes to an international tribunal. This could be a lengthy and expensive exercise, and Kingsgate is evaluating funding options - I guess they are talking to litigation financiers. I have no idea what sort of money is at stake - but I could well imagine, that the number is a 3-digit million number. Never nice to speculate on a court decision, especially not, if it´s potentially years away - but this is a free option anyway for shareholders.

Have a nice evening

WS

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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.