General - Oceana - Breaker - Kasbah - Paringa

Good afternoon

business confidence in Germany the strongest in 20 years or so....Durable Goods orders in the States much weaker than expected, sending the US$ down somewhat.

Gold saw selling of 1.8 mill oz within 60 seconds at excatly 10 am European time today...some say it was a fat finger, some think it´s manipulation...whatever it was, somebody sold a lot of gold in a very short space of time, sending gold down to 1235 US$/oz. It has subsequently recovered and is now trading at around 1240 US$.

Metals are having another positive day today - despite the lacklustre US-numbers.

Paringa - have now let a fixed price ECP contract for more parts of their new coal mine Poplar Grove.All major contracts have now been fixed...indications are, that numbers from the feasibility study will be a undercut by a few percentage points. Production start remains July 2018. The project is now dramatically derisked - but the negative is, that we might be in for a boring time now. One big story remains open, potentially: More off-take contracts with power stations. I would hope for some more before Quarter end Sept 2017. The stock remains very cheap, even though gas price below 3$ are not helping thermal coal prices in the States.

Kasbah - the aspiring tin producer has announced an unsual capital raising 1:2 at 1.5ct. It had an institutional component, and the larger players could decide, whether tehy wanted take up their rights, do nothing, or sell their existing holding at the same price! The IDC, investment arm of the World Bank, did the sale-alternative! )8 mill shares were sold, the largest buyer being Acorn, one of Australia´s best small cap funds. Tin is looking very interesting - semiconductors esepcially are doing well, and KAS`s project is looking quite good at today´s prices of just under 200.000 US$/t. Retail investors have some time to decide on taking up the rights.

Breaker Resources - have done anotehr round of aircore drilling, which was designed to test more strike length of their discovery. The drilling was very wide spaced, only down to 20m . Importantly, teh same formations and rock types as within the existing resource has been found, indicatina high chance for adding another 2km strike length to the current 6km. Deeper and more closely spaced drilling is now to follow. Tom Sanders continues to do the right thing!

Oceana - had a succesfull AGM today - 99% of shareholders approved salaries, which is unusual these days! Their brand-new mine Haile is having some smaller issues, hence it will take a littler longer for it to perform as planned. All issues are well defined, and should be rectified by August. The company has therefore reduced guidance by roughly 20%. Didipio is doimg unusally well on the other hand, resulting in overall unchanged production- and cost guidance of 550-600.000 oz at 600-650 AISC plus 18-19.000t of copper. Exploration is doing very well at Waihi in NZ, where resources are growing despite production, Didipio and Haile. Oceana is really a very well-run company, and is one of the most profitable gold miners around. The small debt-position should be eliminated in the enxt 6 month - especially, as Haile is cash-psoitive despite the small problems.

Have a nice evening

WS

General - West African Resources

Good afternoon

European PMI strong in manufacturing, not so strong in services - French GDP estimate for the Quarter got increased again, gaining some momentum! Europe as a whole is looking better than it ahs been for a long time. In the US, the PMI was slightly weaker, but still expansionary, while housing market numbers recovered from the last, negative set of numbers.

Gold, having held it´s level above the 200-day moving average, has bounced a bit. My feeling is, that the recent fall,as well as today´s/yesterdays rise, have been largely technical. Holdings in the large gold ETF have been more or less unchanged for more than a week now.

Base metals are having the second good day in a row, helped I guess by another steep fall of LME stocks for zinc, accompanied by a large position in cancelled warrants - indicating a further retreat coming. As boring as teh sector feels in the moment, it might be surprising, that zinc as well as copper are trading at the highest price since late March/ early April. Things are obviously not that bad!

Glencore topped the Chinese bid for RIO´s Hunter Valley-based coal assets, again! Interesting! Obviously, Glencore would have substantial synergies with it´s neighbouring mines - but without any trust in the long term demand for coal ( and nobody knows the demand better tha GLEN! ), they certainly would not have done this!

The demise of Peter Hambro as chairman of Petropavlosk ( previously Peter Hambro Mining ) ended a nearly 25 year leadership at teh gold miner. Hambro drove teh stock to fantastic highs before the crash, only to nearly bancrupt it over the last few years.

West African Resources - North American brokers completed a heavily oversubscribed placement in WAF today. The placementw as planend to be 15 mill$, and was increased to 17 mill A$ at 32ct following heavy demand. Initially, I had been slightly disappointed about the placement, as the company does not need the money, and it came as a total surprise. The company claims, that they had not really planned for it, either, but used teh situation opportunistically. They are spending about 4 mill$ on exploration at full speed per Quarter ( less next Quarter due to wet season ), and the way it looks, they might well continue at that pace for a few Quarters. Rather than risking to need money at a time, when it´s hard to raise, they accepetd the offer. The company has now 32 Mill$ at it´s disposal, incl the 6,5 mill$ coming soon from option exercise. That´s enough for all potential drilling and much more. There are many drilling results pending, so I think no end to the good news for WAF!!! The stock was initially suspended today, but traded later as normal later in the day.

I personally always hate to be holder, and then see large insto´s coming into teh stock via a discounted placement. But it´s a fact, that larger insto´s never go into the market in such a small stock - but once they have a position via placement, they tend to look after it and they are also there potentially for the large placement - I guess next year, but defintely not before - to build a plant. The old game - to get them to buy stock later, you have to give them some cheap stock first!

Have a nice weekend!

WS

General - Genex - Gold Road

Good afternoon

there is very little indeed to report today....

Indonesian reports, that a few nickel smelters have been closed , led to some short covering of heavily shorted nickel stocks like WSA and IGO ( both have 16% of their capital shorted! ) yesterday - only to give it all up today, despite nickel looking a little stronger, as well as the other base metals.

Goldfields have hedged 75% of their Australian production for the balance of this year - this is one of the larger hedges I ahve seen recently. Dacian also announced a few days ago to have hedged 25% of the 2019/2020 production. 

Van Eck came out with several substantial shareholde notices today, following Friday´s reweighting. SBM down from 16% to 9,6% - SAR down from 17.6% to 11%, Perseus no substantial shareholder at all anymore, i.e. below 5%. Good, that we have this thing behind us. 

Gold Road - came out with an update of their development plans for Gruyere in JV with Goldfields. Costs for GOR will rise by 2%, and the JV has signed a power purchase agreement with APA, which is building a 180km conenction pipe line to the large WA-pipeline. The project is planned to produce gold in the 1st Quarter of 2019.

Genex Power - respected broker Baillieu took up coverage today with a good report. They value ths stock at 26ct/share, with upside of 15%, once in production. This valuation is entirely based on the Solar Stage I project, which is only 50 MW. Solar Stage II is 270 MW, and Pump Hydro is 250 MW. In my opinion, the valuation is probably a bit rich just based on Solar Stage I, and should probably be rather 50-60 Mill A$ = around 21-22ct/share. The analyst argues, that a valuation of the two larger projects is impossible at this stage due to too many moving parts. The main question remains financing....the Australian press is full every day of articles surrounding the power/gas crisis we are having in Australia, and the government remains under intense pressure to deliver solutions. Still, I think it will be some time, before GNX will be able to announce a comprehensive financing package, because of the size and complexity involved. The governments announcement to build the necessary power line at it´s costs the otehr week is a good indication, taht they are doing everything they can to enable this project!!

have a nice evening

WS

Newcrest - Crusader - Finders - Pilbara - Genex

Good afternoon

Gold is testing the 200-day moving average to the downside today...after having failed to move through restistance at 1300 10 days or so ago. Pity - it felt so good back then! Yellens comments did not help last week, and the enxt move by the EZB will be to tighten somewaht as well. The two large gold stock ETFs in the States saw a combined 400 mill US$ in outflow in the week to Thursday, the 15th of June.

Soth Africa is intensifying the enriching-process of a very few by increasing the level of black ownership in mining projects by 4% to 30%. The market is asking, when they will change that to 35%?????? The country seems to have put the worst electricity problems behind itself - most probably for the short term. Now people are seeing water usage being rationised...

Other metals are pretty strong today, despite some disappointing US housing market numbers on Friday. From China, though, we saw some solid numbers late last week.

There is nothing stopping European equity markets this week...very strong again today, probably on the back of a decisive win by Macron´s new movement on Sunday in parliamentary elections, while Theresa May does everything she can to undermine her negotiating position in BREXIT talks, starting today. 

Newcrest - took another placement in Solgold today - 40 Mill US$ at 41ct, bringing their position to 15% of the company. They must really like Ecuador, and Cascabel - which I can understand. Not sure about the market cap, though - the company is capped at more than  600 mill Sterling now.

Crusader - Stratex has clearde the due diligence now, and the two companies are now going the formal way of a friendly merger. I am sure, that it will go through - the price is right, and the emrged entity will have some cash to play with. For Crusader shareholders, this is like a placement at a premium - even though that premium is coming down. At todays share price of Stratex, the valuation of Crusader stock is 14.5ct/share.

Finders - the company update shareholders last week on production. In April, the mine produced 2174t of copper at 1,03 US$/lb cash costs - in May, 2401t were a new recoed for the mine, at 0,98 US$/lb cash costs. Fair to say, that the mine is doing well. Porduction on a monthly basis exceeded nameplate for the first time, at costs 7% belwo feasibility study. At the time of reporting, June was shaping up well also. Stock is cheap - but there is just no interest in smaller resources stocks in the moment!

Pilbara Mines - is one of the more advanced and upcoming producers of Lithium from a hard rock mine in Australia. The company has now raised 100 Mill US$ in bonds, and last week completed a 80 Mill$ placement of equity. The stocks in the sector are still not running again - so there is probably no hurry. Technical issues have plagued qute a few companies - this is the main reason, why Macquarie have upgraded their forecast prices for Lithium for the next few years. I am still watching, but am not really involved in this segment. Stocks like MIN, ORE, GXY or PLS, to name a few of the more advanced delopers/producers, are on my watch list. I thought it was interesting to see in PLS, that the placement was done at a small discount only, and was slightly increased in size due to good demand. 

Genex - the company had a few positive announcements recently: Firstly, construction of their first, 50 MW solar plant is going to plan and will start producing electricty by year end. More importantly, the Government will build and finance the power line, which is necessary to transport the electricity from Solar Stage II ( 270 MW ) and the all-important pump-hydro project ( 250 MW ). THis is major good news, as GNX would have had to do this themselves, or find somebody to do it. It will save them 7-8-9 Mill A$ p.a. in costs as well, as the government will charge them less to use it, than a private operator would. The only - and not unimportant question is, how long the government will need to build this thing. Normally, I would say a long time - but the political pressure to stabilize the power system in Australia is massive, and it´s in everybodies interest to have the line finished by 2019. That´s when Solar Stage II could be up and running.

Also last week, the long awaited Finkel-comission findings of an independent review  and proposals for Australia´s energy systems were announced. the comission explicitly pointed out the need for energy storage, and specificially, for pump-hydro projects to secure the energy system. A few days later, Josh Frydenberg, the Minister for Resources and Energy, pointed out the same, specificially pointing to the Kidston project of Genex.  Don´t ask me, why the stock is not moving...one day, it will!!!

Have a nice evening

WS

General - Strike Energy

Sorry I have been writing my butt off today, and now this thing got deleted...I had previously saved some of it, but cannot be bothered to write the missing stuff again....

Mbeki negated the existence of AIDS - Trump negates the existence of man-made climate-change...what an irresponsible moron! Honestly, do you regard the US as an ally, still? At least their politics are hostile. What Bush initiated with the war in Iraq, Trump is now fullfilling: The end of the Western Alliance!?

We need another 20$ in the gold price for a very clear break out...probably only 10$....gold stocks are not moving because of all this crazy index stuff in the States...This will be over and done with in 2 weeks...in the meantime, use the weakness to buy affected stocks....Gold is trading at 1278 US$ as I am writing this, and at a new recent high in A$ terms of 1718 A$/oz!!!! Buy PRU/DCN/WAF and EVN as a core holding....

Strike Energy - the market is scared...as you can see in the market. Very weak, erratic share price following the new strategy presentation by the new MD, Stuart Nicholls. 

Please have a look at the webpage for the presentation itself.

STX is one of my major positions, and has been for some time - and I am obviously under water here. So let´s spend some time on it!

The market is scared off because:

1. Potential litigation with Orica. Orica had advanced STX 7.5 mill$ to Strike, as a pre-payment for future gas deliveries. Without going into legal details of teh agreement, STX is pretty sure of having had the right to cancel this agreement, without having to give the 7.5 mill back. That at least is the legal advice they have. As part of that agreement, Orica had the right to receive delivery of 250 PJ of gas over a certain time frame, at a certain price ( which has always been confidential ). If I assume, that this price was 6$ ( and I have reason to believe, that it was lower, given the gas price at the time it was negotiated ), and look at the current gas price, which is 10$ - and will probably go higher - the revenue difference is 1.5 bill A$! Yes- 1.5 bill.....STX´s managements view is, that even IF they have to pay back the 7.5 mill A$, the opportunity arising from the cancellation of the transaction, in terms of profits, as well as in terms of giving STX much more freedom to get strategic investors / Jv-partners / off-takers is dramatically worth more than 7.5 mill$......I fully agree with this view. Also, STX are pretty sure, that IF they should loose a potentail court case here, they would be able to negotiate a medium term time table to pay it back in gas or even in cash, if wanted.

2. I think we all agree, that a fresh approach to recovering this massive resource commercially, is essential. STX have struggled now for 2 years at least, to prove commercial gas flows....STX new management is adament, that a lot of capital will be needed to fully develope this asset, and that a large JV-partner will therefore be needed. I also agree. The MD claims ( and he is ex-Shell ), that for a big company coming in, the project has to be de-risked further. The main question to tick is the actual gas-content of thecoal resource. The currentyl existing wells will be able to answer this question up to a degree, but not to the full extent needed. The MD believes, though, that a major could be interested to amke an initial invstment, based on results from existing wells - these results should be available within the next 4-latest 5 month. To get answers to the open questions to a full extent, STX will ahve to drill Jaws 1 - at a probable cost of around 12 mill A$. At this stage, STX does not have the cash or the financing to do this. Initial discussions with the South Australian Government are creating some hope, that additional liquidity for STX might be gathered from this source.

Some investors are scared of Orica - others from the time table - some of teh risk of additional equity being needed. 

I think the company has adressed these risks. If anything, the shre price should have been up substantially because of the cancellation of the Orica-deal. The new management is bringing a large-company approach to teh story - I think, that this is neded for a project, which has some work left to be done, but which could bring to an end the looming gas shortage of Easternm Australia.

Risks remain - no doubt at all - but I am more bullish than ever....

I have a very positive impression of the new MD. Tim Goyder is back on the board, protecting "normal" investors interests - and with John Poynton running  it now, the big end of town is now involved - all good...just for one thing, which is the most important: The share price is f....ed!!! You make your own decision, as my advice on STX has been wrong in the past....

Sorry - the above is not very structured, and written down as I think about the issues. But I believe to have covered the main areas of concern here.

Have a nioce week - I will be in Greece for a week

WS