General - Resolute

Good afternoon

all base metals are either making new, recent highs today, or are just about to do so...also the bulks, like iron ore, coking coal, thermal coal - the latter make me believe, that there is genuine- ( and not only investor-) demand behind it. Also, large stocks have been mopving strongly, like BHP/RIO /Anglo/Freeport/Teck/Antofagasta, as have midcapped stocks like Lundin, OZ Minerals etc. And even the small stocks have started - PAN, FND etc pp. The mood has dramatically improved towards our sector. What a change! Feels good!! But also a word of caution: The sudden rise of base metals is probably a bit overdone:

Copper + 16% since early May / Zinc up by 16% since early June / Lead up 13% since mid June / Nickel up 16% since mid June / Tin up by 10% since early June

In my opinion, fundamentals for all of the metals are relatively good - but not strong enough to warrant a major bull market, or markedly higher prices in the short term. Price movements have been substantially driven by the weak US$. The big question probably is, whether this will continue - and I have to say, that the Euro is looking extremely good on the charts - it could go to 1.25 from the current 1.17, favouring metals and gold , at least in US$ terms ( and that is driving sentiment everywhere! ).

All of this might not be helping the producers, which mainly trade in Can$ and A$ - but as I said above, these things are very sentiment driven by strength in US$ prices for the metals. So hopefully, some more room left for these stocks, making them fundamentally more expensive, though. Mind you - I am talking the 3 month outlook here - longer term, I am more bullish for the sector

The rise in the bulks ( coking coal close to 180 US$, thermal close to 90$ ) will see many upward revisions for those producers. 

I would like to point out again, that the A$ gold price cannot join the recent rally of the US$ gold price. At just 1577 A$/oz it´s trading above recent lows, but still 100$ lower than the average of last Quarter. So not that much excitement here for Australian-based producers, who will only benefit from fund inflow into the GDXJ and sentiment

US durable goods orders softened a bit from a strongly, upward revised May number.

Jeff Bezos richest man of this crazy world - Facebook and Amazon ( the latter ahead of result ) are just booming ahead. Brave new world!

Resolute - Quarterly out today. they are in the middle of a big transition at both assets. In Mali, basically all production was coming from stockpiles, as the company is progerssing the devlopment of the underground mine. For the next few Quarters, more ore will be coming from underground developement ore, which should have 2.5-3g gold/t, and a satellite pit, increasing gold production somewhat. The underground development is curently ahead of schedule, which is good to see, given the importance of the underground! In Australia, the mine will also transit to an extension - but not all necessary approvals have been recived as yet. That might be of some concern. A highlight of RSG continues to be exploration at/surrounding Syama. It looks like better grades are being established here, augmenting mining from the sublevel cave, once fully operational in late 2018. The company is sitting on nearly 300 mill$ in cash, of which 160 mill will be spent this financial year.

Bibiani did not get a mention in the Quarterly....will they sell it? It´s probably not worth all that much - perhaps rather an option on higher gold prices.

Guidance for the year is 300.000oz at 1280 A$ AISC - that is not sexy at all - but it´s a transition year. Positive triggers will be approvals for Australia, and good progress with the sub-level cave in Mali. 

Have a nice evening!

WS

General - Independence - St Barbara

Good afternoon

The Americans imposing sanctions against Russia, with only one aim: To support the American energy industry - well, that´s the interpretation many are believing in. What a joke! As one of the reasons for the sanctions, they are citing Russians influencing the US-election. According to Trump, they did not interfere.....

Australian CPI was 0,2% only QoQ, vs expected 0,4%. The A$ initially sold off, but recovered most of the ground now.

Base metals except for copper saw some profit-taking this morning, but are trading almopst square now except for copper, which is up by nearly 2% again. We are approaching 6500 US$/t, which I think could be a big hurdle. As I am finishing this, all the bease metals except for zinc are in the green! Very strong indication for me, that they could not only hold recent, strong gains, but even managed to put on a few cents!

Independence Group - a pretty bad Quarterly out today. Resource downgrade by about 15% (!) for the Nova nickel project, production guidance for it cut as well, with higher operating costs. Tropicana Gold more or less as expected, but not fantastic, either. It´s a good asset, but not oustanding, and while Nova had been seen as an outstanding asset, it has been disppointing for a few Quarters now. I have never really liked the stock - I still don´t like it. With all the buy-recommendations surrounding the stock, it´s not one which I need to own.

St Barbara - Quarterly out...most had been known before. Another excellent Quarter from this cash machine! But cash generation will come down now for a while, as Gwalia should revert to the average reserve grade slowly, but surely. Also, more capex to be done this year, and we still don´t know, what is going to happen with their Solomon Island-asset in the longer term. Good company, well managed, and with net cash of 161 mill A$, which should grown by about 110-120 mill in the current financial year to June 2018. They should either pay a big div - or buy something sensible. The latter might be difficult to do! 

Have a nice evening

WS

Finders, Genex, Oz, Foran

Good afternoon

business confidence in Germany at it´s highest since 1991 - surprising, in light of the weak US$!

Iron ore rebounding, as Gina Rhinehart´s big mine is having some trouble, and as Tata Steel expects Indian iron ore demand to grow by up to 200 millt p.a. until 2025. India will become the No.2 steel consumer in the world very soon. If those numbers are right, iron ore miners will have problems to deliver  - at least at current prices.

Base metals are having yet another strong day! Copper firmly established above 6000 US$ now - I hope! - while nickel feels like touching the 10.000$-mark very soon...

Freeport warned of about 90.000t less copper produced this year, vs their estimate as recently as June! This is in a market, which is pretty closely balanced...so the impact is much larger than it would normally be.Copper is up by 3% in the moment, trading at it´s highest level in about 2 years. Finders , Foran as well as Evolution ( of my favourite stock ) will be laughing all the way to the bank!

Acacia Mining - the Tanzanian miner has been presented with a 190.000.000.000 US$ taxbill. Looks like that country is trying to catch up with the Phillippines Duerte, who wants to "tax  miners to death", in case they damage the enviroment. He also wants them to value-add instead of just exporting ore...more trouble ahead for the mining industry there? The rethoric does sound that way. Good for nickel!

Finders Resources - they are a good indication for things getting a little bit more interesting: while it would have been impossible as recently as probably 4 weeks ago, Australian institution Acorn sold 5% of the company or about 36 Mill shares in just a few days on the market to ready buyers...some institutional interest finally coming back into our sector!

Genex - respected broker Euroz initiates on GNX, with a price target of 36ct - this values just the existing solar project ( at 19ct ) and the following two projects on a heavily risked basis. they will upgade the valuation with further derisking of the projects.

OZ Minerals - a good Quarterly from them, placing them to reach the middle of their guidance for the full year. Excellent cash costs of 81ct/lb copper, and higher gold production making up for slightly lower copper production. Carapateena is making good progress - all on track here. The only negative was, that they have spotted a potential ground-stability problem at Prominent Hill. Ecen though tehy say, that they have taken emasures to thios issue not becoming a problem, they at least saw it necessary to give it a mention in the Quarterly. In light of the very strong copper price, I think there is no downside risk to OZL. The company had 525 Mill A$ cash in the bank - more than enough to develope Carapateena without any financing. Stcok remains excellent, pure copepr exposure, but is currently underperforming stocks like Antofagasta due to the strong A$.

Foran Mining - a smallish producer like Finders is finding a lot of interest - next in line will be the developers like Foran. They have been completely neglected - but with copper, zinc as well as lead running, I think it makes sense to revisit them!

Have a nice evening.

WS

General - Newcrest - Regis

Good afternoon

PMI in Germany still strong, but not as positive as expected and lower than in May. PMI in the US better than expected

The US$ continues to be under pressure against basically all other currencies. I guess Trumps attempts to destabilize Sessions, his own Attorney General, and his twittering about the president to pardon himself don´t help. Who as ever thought about pardoning himself in a democracy??? But it´s a nice thought! I think Louis XIV would have thought about the same lines!

Metals and gold being helped by the US$.

UBS published another interesting paper about the effects of the rise of electric vehicles late last week. They expect, that an additional 300-900.000 t of nickel might be used in 2025, depending on which type of batteries would predominantly be favoured. Say 500.000t of nickel would be roughly 50% of today´s non-NPI production! And that´s when more than half of the worlds applicable nickel production is loosing money on a cash-basis today! Nickel from NPI cannot be used for batteries. 

I would have thought, that a price of at least 6 US$ /lb is needed to start  additional production. of sulphide mines of any meaningful size. A very nice thought for holders of Panoramic, like myself! The only negative: Any meanimgful demand from that source is a few years away.

Newcrest - a strong Quarterly from Australia´s largest gold miner, taking into account the partial closure of Cadia during the Quarter because of the little earthquake. I am still of the opinion, that this event should increase the risk-level of the company, as Cadia is such an important part of the company. Therefore, I do not view Newcrest as a cheap stock. Lihir had an excellent Quarter, while Telfer disappointed with high costs yet again. I am wondering, what NCM´s long term plans in Africa re - Bonikro is a pretty meagre asset, and it´s existence is more a nuisance than a benefit for company like NCM. Newcrest will have problems to deliver even stable profits over the next few years - not very attractive, either!

Regis - as announced on Friday, had a very good Quarter. The coampany has also guided for slightly stronger production in 2017/18, at roughly the same costs. Over the Quarter, RRL have increased the cash balance by nearly 40 Mill$ to 152 Mill A$ ( no debt ). They will be able to cement their position as the best div-yielding stock of all senior, Australian gold miners. Their asset in N.S.W. remains an option for more substantial growth.- but I do not see this at the current gold price. Overall , I can understand, why the company has many friends - but I also find it hard to see substantial upside. I prefer EVN for diversity, RSG for valuation, and PRU for leverage and growth!

Have a nice evening

WS

Strike Resources

Good morning

will have to leave early today - going North to my families farm for the weekend.

Following Draghi´s comments yesterday, the US$ went stronger initially - but then tanked, based on his comments, that the EZB will revisit a potential scaling down of bond-buying in the autum.

Gold profited to a little degree - one has to say, that golds performance in light of this weak US$ is not very convincing.

Surprisingly, European equities are holding so far.

Base metals are having a strong day- aided by the US$-weakness, following2-3 days of consolidation. Copper is back up through 6000 US$/t and wants to make a new, recent high today.

A good Quarterly today from Regis - more on that on Monday, and a new presentatiopn from Finders, incorporating June production numbers - slightly weaker than the record-May numbers. More also on Monday.

Strike Energy - Quarterly out yesterday - and I am surprised, that the stock does not move a bit! Obviously, many disgruntled shareholders, sick & tired of waiting - I am sick & tired as well, but am buying more, if anything! The new MD I am very happy with...he is cutting costs, is relocating to Adelaide ( much cheaper to perate, and the asset is in South Australia ), which will give them access to relocation-subsidies. More importantly, he and his team have reviewed all technical aspects ( he has been in the job for 100 days now ). All three Klebb-wells are now comissioned with new pumps, Most importantly, the wells are responding very positively - gas flares at all wells, and production increasing strongly late in the Quarter - and I believe, continue to do so in July!

I am of the opinion, that we will see this Quarter what the company calls "technical Success" from these wells. This is NOt equivalent to "Commercial Success"., though. His team believes - and that has been indicated by the company before - that commercial success will NOT be erached with the Klebb wells, but with drilling horizontal welsl called Jaws 1 and 2.. I am not at all worried about this. Let´s face it - the old management ahs tried for 2 years or so to make a commercial success out of the Klebb wells - without getting there. What tehy have done though, is to pave the way for more succesfull wells, enabling learning from those old wells. 

Technical Success is very important, as it will pave the way for JV-agreements with much larger companies, coming into the JV. This is what I have been waiting for for some time - somebody with big $, who can help paying for the learning-curve and eventually, make this stock the success I am still believing in! I understand, that the company is talking to various parties here.

The company indicvated, that talks with Orica re a new gas sales agreement are progressing very well - I am also expecting a solution here this Quarter. The situation is unchanged - the market is short of gas, and large consumers like Orica are desperate to get their hands on it!

And last but not least at all, the company is very hopeful to get "up to 8 Mill$ in grants from the South Australian goevrnment ( on top of the 2 Mill$ they have received ). Reading between the lines, I think STX would be disappointed, if tehy did not get the whole amount. That would certainly solve all cash shortages for some time!

I am of the opinion, that the new team is doing a rey good job -technically,, as well as on corporate level. Don´t loos faith - I think the time between now and year end could be very exciting for us shareholders!

have a nice weekend

WS