Market Update

General - Resolute - Lynas - Highfield

Good afternoon

Yellen , we love you...her comments have been taken very positively...very slow and limited rate rises amid no inflation in sight...good for bonds good for equities good for gold: goldilocks!!

At least Chinese punters are positive: Steel making new highs, iron ore, coking-as well as thermal coal trading strongly and at recent highs. Base metals looking sexy: zinc a new, recent high, and the rest looks pretty bullish, too!

While ex-Goldman´s Cohn is rumoured to become Yellen´s successor ( Wall Street and equity investors like ourselves will like it, at least in the short run! ), Trump´s son is trying desperately to prove, that he is even more stupid than his father!

Resolute - two pretty nice announcements this week fail to get the share price going, surprisingly: Excellent drilling results from several properties close to the Syama mine in Mali. Good results from an underground taget only 250m from existing development, which almost certainly will become a resource/reserve and can be accessed via a relatively smalle xtension to the existing underground developement; some great oxide results from a property 40km South to Syama, which should offer feed in the future to the oxide circuit; and some good results from an area a few km to the North of Syama. They are proving, that there will be a lot more gold to increase the ( already ) long mine life, but also potentially at better grades. Today, they gave production figures for the year just ended, which exceed increased guidance by a few thousand ounces, as well as undercut AISC-guidance by 30 A$/oz.

Guidance for 2017/2018 is positive as well: 300.000 oz at 1280 A$/oz, which is slightly better than expected, even though costs will be higher. Cash + bullion + investments of 290 Mill A$ will very easily support planned capex for Syama Underground and Ravenswood of 162 Mill A$ this year. The company is doubling the exploration effort to spend 38 mill A$ this year -that´s what I call agressive, but I like that! The stock will never be a low cost producer like say Evolution - but results are very good, mine life is excellent,a nd they are finding more gold! At current gold prices, their net margin after everything is probably only 200 A$/oz - still, at 300.000 oz production p.a., that´s very nice free cash flow! The heavy activity in development is limiting their free cash flow , and will do so for at least another 18 month - but the longer term is looking very promising for RSG. Growth should come from the Bibiani mine.

Highfield - company announced today, that the Ministry in Madrid will yet again open the documentation for the enviromental application to the public. They are reasoning, that the last consultation process has taken place in 2014 - so long time - and that the project has had a few changes since then. Probably, they are right - but I guess they could have done that at least 6 weeks ago! Anyway - nothing negative is expected from the process - but it will only start on the 1st of Sept, making it hard to have a decision before November. I am still sure, that we are only talking administrative nonsense here, and no fundamental flaws! In any case, yet another, very frustrating delay! I could not get hold of them today - will try again tomorrow!

Lynas - another good Quarterly today. cash generation of 15.8 mill A$ vs 11.6 Mill in the previous Quarter ( before interest ). Production was good, but lower than in the previous, record Quarter. Price for NdPR are still going higher- from 34$ to 39 US$ at the end of the June Quarter ( and 43$ in early July!! ). As you know - debt is a real problem, but the company will survive especially, as the lenders have shown their support at times, when things were dramatically worse! I am sure, that the company will raise additional equity at some point - but I also believe, that it will only happen enxt year, unless the share price goes substantially higher in the short term.

Despite the massive debt position, and because of a strongly improving cash position, I think Lynas is slowly but surely becoming investable again!

Have a nice evening!

General - Genex

Good afternoon

as we saw on Friday, the labor market in the States was strong last month, even though Weekly Earnings just don´t want to go up! German exports were very strong today, and Industrial Pproduction in Europe has been strong also last month, as announced on Friday.

Donal is making a real joke out of himself, claiming wonderful collaboration with the Russians ( !!!! ) on cybersecurity....big breakthrough after talking to Putin....as you would imagine, this thing was burried as soon as he returned to the US....I am sure, that Putin had a very good laugh after that meeting with Trump!

Hamburg is not happy with the weekend!

Mining companies with assets in Tanzania continue to get slaughtered. If these guys don´t watch out and change tack soon, nobody will finance any mining ventures in that country for a long time!

Genex - Tesla claimes this fantastic deal, which will cure the energy problems of South Australia! Typical PR for Tesla/Musk, as well as for the South Australian government. Tesla was choosen to built the worlds largest litium-ion based battery, 100 MW, within 3 month ( and a few important conditions on that time frame! ). The cost has not been disclosed - Forbes etsimated 200 Mill, the S.A.government did not want top disclose, but indicated below 150 mill. For 15x that storage, incl generation of 520 MW, the cost will be 750 mill....so dramatically cheaper. But Tesla certainly can offer some immediate help, even though 100 MW is pretty small. This deal just shows you, how desperate the political side is, to come up with some solutions !

Have a nice evening!

BONDS - Breaker - Resolute - St Barbara - Prairie - Berkeley

Good afternoon

the really big story is bonds today! Bonds received a hammering today, following a bad auction of French bonds, and in an enviroment, which looked highly fragile for bonds anyway. German bunds fell through support, and yields in the moment are at the highest since Jan 2016! As teh day progresses, bonds continue to fall further....Not feeeling good!! That is an important change, and it´s reflecting on equities today. Base metals are holding - in times of rising rates, commodities as well as commodity equities tend to outperform.

Labor market numbers in the States without any surprises - services industry is doing well. Factor orders in Germany were o.k. - but not more than that . IP numbers to follow tomorrow.

Breaker - announced some more infill drilling results today - 5-20m intersections with 1-2-3-4g /t gold. Nothing to set the world on fire, but certainly adding more ounces, again. Perhaps more important, they intersected strong sulphides over good width at about 350m depth - assays are pending. The story continues to go into the right direction!

St Barbara - another good Quarter from Gwalia, and an excellent Quarter from Simberi. The company has exceeded the top range of guidance for both mines in 2016/17. Yet Simberi does have very short mine life, and at current prices, I doubt wheather SBM will go the long way and develope the sulphides - tehy would need a completely new plant for that. The cash position of SBM is now 161 Mill A$ - no debt! That´s a very long way from being a very highly leveraged mining compnay as recently as 3 years ago! Gold mining can be VERY profitable, if you have a good ore body, and if it´s well managed! More detailed news at the end of this month with the full Quarterly Report.

Resolute -bought a large exploration license in Egypt. Well - not too sure what I should thiink about that....Centamin, which is running a great mine in Egypt and has been dooing so for many years, did not bid, as the government terms are so unattractive for the mining companies. Resolute is acknowledging this, and will adress the terms with the government in the future. Money to be spent will be relatively limited - but I am not sure, wheather its a wise strategy to find something first, and discuss terms later. Governments tend to get greadyer over time - not less gready!! Hopefully, RSG will not spend 1us of millions here.... I am not that convinced of this purchase. It would have been smarter to buy West African Resources.....

Prairie Mining - the largest shareholder put a little more money in to keep the relative shareholding unchanged, following the recent placement to general shareholders. PDZ now have about 20 Miull A$ cash in the bank - that should be enough to drive forward both mine developments - certainly for the next 12 month and probably longer.

Berkeley - are getting closer to being in full development mode. Optimisations ahve cut capex again, even though by only about 1 mill$. But these things also derisk the project, hence it´s good news. We are waiting for the final straw - that is somebody getting the offtake and taking a good slice of the asset/ the company, to fully finance the mine. Given terrible uranium prices, this might not be that easy....

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General - Peak Resources

Good afternoon

not much action today in bonds or equities - US$ is strengthening again, as the world is watching events in Kore, Qatar and the G-20....Base metals and gold continue to see profit-taking, as copper stocks rise strongly again today. The market should get used to this...it´s happening every few month, and then stocks trickle down again!

Steel Rebar is trading near recent record highs - there seems to be pretty big, Chinese speculation in it again. Iron ore is trading at a very healthy 63 US$, and coking coal at a recent high of 153 US$/t . Even thermal managed to trickle above 80 US$/t again....All of this is pointing to a Chinese economy, which at least continues to bubble along.

Peak Resources - prices for Rare Earth continue to increase - not by leaps, but consistently. NdPr are now trading in the high 40ties, up by about 30% over the last 9 month. Once prices hit 60 US$ - and I have little doubt, that thy will this year or early next - their project becomes very interesting. I think we will need this price-level for the project to be financable. In teh emantime, the company is trying to add value by reducing costs, as well as by advancing their flurspat asset, which is part of the Rare Earth project, which could add meaningful revenue. Fluorspat is being used by cement producers, and is currently imported from Asia into Africa. A resource here would save meaningful transport costs for African cement producers in the order of 20$/t or more. Unsurpisingly, Lynas is moving in the right direction, by the way, driven by the positive outlook for Rare Earth.

The new, Tansanian legislation, which made headlines over the last few days, will probably only affect PEK in a limited way. Royalties will increase by 1% - hat´s for sure, but not too bad. Comapnies, which ahve had tax-concessions in the past, look like having to hand over 16.66% of their proejcts to the government - bad news for some, but Peak is not affected here. BUT there is one remaining uncertainty: The government wants to limit the export of concentrates. It remains to be seen, wheather PEK will be affected by this measure. The company will do some value add to their ore, but will NOT produce a finished product...we will have to wait for more detail...The stock has been weak lately - I believe and think, that all is in the price. Buy straw-hats in winter - I know, that I have said this before!!

Have a nice evening!

General - Prairie Mining

Good afternoon

a little bit of profit-taking in equities, bonds trading little changed at relatively high yields, and some profit-taking in metals. The US are closed today, while the world is gearing up for one of the more interesting G-20 meetings in recent times. Everybody is watching Trump´s action, as well as the new-found European unity! Unfortunately, we will also see a lot of nasty scenes - hard-nosed left wingers from all over Europe against hard-nosed German policemen - both of them I would not like to meet at night!!

Steel prices holding at very high levels, same for iron ore...absolutely amazing, how analysts keep on getting it wrong. A few of them even calling it down to 40 US$ very recently - it´s now trading in the mid-sixties again. By all means - that´s a hefty difference! I am not saying, that iron will go up - but I think anything below 50 US$ will be seen as a great buying opportunity.

Somebdy has sent me a recent UBS-report on all aspects of the rise of the electric vehicle, with input from 37 different analysts. One aspect of it is, UBS believes, that the use of Lithium would go up by 30x, for cobalt by nearly 20x, and for Rare Earth by 6.5x , even for nickel it would double, if the world would only buy electric vehicles in 2030. I do not want to rule this out at all....but even at 50% use of EV´s, we would need to find another 1 millt p.a. of "conventional" nickel - as opposed to NPI - which would roughly be equivalent to a doubling of conventional nickel production. Given that 80% of conventional nickel production is loosing cash today, prices would have to go up very substantially to incentivise this kind of production growth. The negative side of it - it might be some time, before base demand for nickel from this source will make a meaningful difference.

In any case, very difficult not to see higher prices long term for cobalt, Rare Earth, nickel and copper, if the rise of the EV continues, as it should. The outstanding looser would be platinum, as we would not need any catalysts anymore! Lithium might hold it´s high prices for longer, as we believe today: The world is full of the stuff - but it´s not easy to produce it in the form, which is needed by the battery industry.

I think when a cities like Munich and Stuttgart, home towns of BMW, Daimler and Porsche, are seriously thinking about a ban for diesel-powered cars from it´s streets, it´s time to look at scenarios, under which the use of EV´s will sky-rocket!

In the absence of interesting micro-news, I have had another look at

Prairie Mining. A few triggers are on the cards for them - but realistically, all after the summer. Their Chinese potential partner is probably about to finish their feasibility study on the Jan Karski Mine. The only problem is, that we will not hear that much about it, as it will be a so-called "Chinese Feasibility Study", which will NOT be JORC-compliant and as such, cannot be published. From what I have been hearing, the results should be pretty much in line with the results of PDZ´s pre-feasibility study: That called for 24 years of production at cash costs of 25 US$t, / yearly production of 8 mtpa / about 600 MIll US$ in capex, working capital etc / 257 Mill US$ net cash flow at price of 75 US$/t thermal coal vs 79 US$ today. The disandvantage of a "chinese" feasibility study I´ve talked about above - the advantage is, that Chinese banks want one - and they are the prime contenders to finance this development. A Term Sheet with them will be the next major trigger - but probably, it cannot be expected much before year end.

The second project, Debiensko, is a little bit behind the Jan Karski Mine in terms of where it´s at in the development, even though it will probably go into production much earlier. A revised Mining permit ( the mine is fully permitted currently, but PDZ would like some changes ) should come through in Sept/Oct, enabling further progress. Both mines together have an NPV10 of more than 2 bill US$ at 125 US$/t for coking- and 75 US$/t for thermal coal - even taking into account, that total capex will be around 1.1 bill US$, this leaves dramatic room for an improvement in the share price. While both mines are years from production - as usual for coal mines, which need long lead. times - we have seen over the last 1- as well as 2 years, that some of these mine developers do rise, if the story is good enough, on progress ( PDZ´s share price doubled over the last two years ). Obviously, there is no major hurry to pile into PDZ - but once good news is out, they could move quickly. And last but not least: Even though these rumous have not continued, it would still be decent deal for JSW, or / and Bogdanka, to take this company over! The strategic value of PDZ is not to be underestimated, as Europe is importing 70% of it´s coking coal from places 10-20.000 km away! And while we do not like thermal coal these days, it´s a fact, that we will need it for a very long time to come. In terms of valuation, a lot depends on the price of future equity raisings, which will certainly be needed. But in the long run, we are talking a target valuation of multiples of today´s price!

So be patient, and have a nice evening!

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80538 München

Tel. +49-89-4613440-0

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eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder