General - Finders

Good afternoon

with all this hype around battery-metals, the market might finally wake up to the fact, that some good old-fashioned metals like copper , managnese and nickel are also needed for batteries, or wiring of electrical cars! For the first time, one could feel speculative interest in stocks like Panoramic today! may it last long! 

Obviously, the demand for nickel is not significantly influenced by battery-demand at this stage - but this will change over the enxt few years. It might be a bit early to buy nickel now - but a miner with a 10-year mine life - and probably much longer - which is not wasting it´s reserves to supply into a market, which at this stage is not tight at all, should have it´s attractions in times, when you get no interest for your money, anyway! And this is even before you count on the cobalt as a meaningful byproduct.

Zinc got some attention again, with Glencore buying control in a large, privately owned zinc producer, Volcan, for a price, which looks pretty full. We had heard before, that Glencore is still very bullish on zinc - this action would certainly underline their buliishness - and Glencore is the largest trader/producer of zinc by a very large margin. In other words: If somebody knows, where zinc prices are heading, it´s Glencore! It might be worthwhile to revisit some of our zinc stories, like Heron Resources, Venturex and especially Foran Mining in Kanada! Trevali in Kanada has made a new 6-year high yesterday, and Lundin Mining, a mored iversified base metal producer, is trading just below it´s high.

Having started pretty strong, metals are giving in to a slightly stronger US$, and some profit-taking ahead of the weekend. 

German factory orders very strong today, while labor market numbers were weaker, as a consequence of teh hurricanes, I guess. Weekly earnings rising faster than expected - in my opinion, higehr interest rates in the US as well as some form of tightening are inevitable. Mrs.Lagarde is indicating, that the IMF will upgrade their GDP forecast from 3.5% this year, and 3.6% next. Resources are still the place to be, in my opinion - for as long as ineterest rates don´t move too strongly.

Finders Resources - takeover! BUT I think this is the first takeover I am unhappy with! In fact, I am pretty worried! The two largest shareholders + another, Indonesian party have joined a JV to pool their shares ( 19.8% ) and have made their intention clear, to shortly make a formal 23ct- cash takeover-bid. No premium at all, for a company, which is very cheap...any bid should at least have a 3 in front....These shareholders have been very instrumental in Finders getting ( finally ) all government permissions to build the kine on Wetar, which previously, had taken them years of waiting. Obviously, these guys are well conencted and pretty powerful. They have also stated, that tehy would exit Finders register alltogether, if the bid would not succeed, as the current investment would be way too smal for them to worry about. This is, what frightens me a little. But even more frightening is, that the takeover-parties are the same, who made a bid for Intrepid, another Indonesian-, and very dirty story, indeed, a few years ago, which ended horribly for independant shareholders. I will be in Pertrh the week afetr enxt, and have already made contact to the chairman, and another director, to discuss, as I ahve a significant shareholding in this company, as you know. I have not discussed the takeover with anyone in Australia today - so the above comments are my very personal and subjective comments, as usual!

Have a good weekend

WS

General - Finders - Breaker

Good afternoon

as I have been in London for 2 days, I did not report on the PMI´s, which have been publisched over the last few days, which were all very positive. One thing is for sure: Manufacturing and Industrial Production around the world are doing very well! Being the most metal-sensitive parts of the economy, this is very important, and very positive. The only negative: How much better can it get? Even slightly lower activity would certainly eat into stock piles, and is met by largely stagnant production, as few new projects of size are coming on stream!

Today, Factory Orders and Durable Gods have been very strong.

The massive interest in battery metals is continuing, with most of these stocks roaring ahead, while early shareholders are selling to institutional guys, who must not miss this hype. Looking at valuations across the sector, they are still rather on the cheap side, looking out 2-3 years. The main problem for valuations is, that none of us knows, 1 - just how strongly demand will grow - and 2.- there are very few experts on these minerals / metals, and even they might have very doubtful price forecasts. But for now, I think the wave will continue to be with us!

Mr. Tillerson apparently calls his boss a moron! Nice one! But I think he is much worse than that!

Trump wipes out Puerto Rico-debt...??? Again, Nero Part II...let´s wait for the day he requires Angie Merkel to stay over night...

Copper strong +2,7%, nickel slightly better, and some profit-taking in zinc + lead, which are trading at multi-year highs.

Breaker - strong move today following the announcement of very positive, metallurgical results. Testing is not finished, but I think it can take for granted, that recoveries for oxide- as well as fresh ore will be very good. Test results gave 95% recovery for both. This is another important step to de-risk the project. The next step will be more drilling results, and especially the first resource estimate by Christmas. 

Finders - had some stunning drilling results from the satellite deposit Lerokis. Best result was 22m with 13,3% copper + gold etc...others were not as spectacular, but still excellent like 22m with 5.6%; 25m with 7% etc pp.Unfortunately, they sound like a lot of tonnes, but they are not! The Lerokis orebody is pretty small, and whilst these results are certainly positive, we only talk of Lerokis delivering 6 month of additional feed or so. Nevertheless, an additional 6 month are worth approx 2ct to Finders share price.

Have a nice evening

WS

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General - Panoramic - Oz Minerals

Good afternoon

German unemployment rate at record low...

Consumer Confidence in the States a little bit weaker - the hurricanes did not help, I guess. But a concern remains the weak future expectations - Americans are still not that confident in their future.

Metals looking well supported today, probably helped a bit by the slightly weaker US$.

Panoramic - new reserve estimate - should not be a big surprise to followers of the stock. Nickel reserves increased by 424% to 116.000t; copper by 355% to 52.000t; cobalt by 744% to 7.600t. Reserves have been calculated by actual + forward prices of respective metals. Nickel Resources total 313.000t, copper 99.000t and cobalt 15.000t. The current reserve of savannah would support a 10 year mine life, as reported with their latest feasibiliyt study. That´s a lot of nickel, having in mind, that by 2205, the world could / should need an additional 500.000t of this type of nickel every year.

OZ Minerals - have started stage 1 of the Carapateena project developmeent, building airtsrip ect. Production is planned for late 2019. This will be a good asset - the only negative is, that building will consume most of the current cash next year, and in 2019, limiting dividends. But OZL are a well managed company, and will be a significant copper producer for a long time to come. Given the potantial long term upside for copper from the EV-theme, I think the stock is well worth a look again, following the recent correction.

Have a nice weekend

WS

General - Pilbara - Syrah - Venturex - Resolute

Good afternoon

Euro-area index of consumer-and industry confidence at 10 a 10-year high...GDP-and labor numbers in the States as expected....Trump cutting tax ( or at least trying to! ) for corporates...no big surprise, that interest rates are edging higher. 

German GDP-estimates increased slightly for this year, and next

Metals looking healthier today - all green, as the US$ cannot push higher, at least for now.

The A$ looks a little sick in the moment. I could see it come down to 76.50 US$ or so, but medium term, I think we might stay in the recent band of 76.50-to 81 US$.

China is setting a quota for 10% of all cars being sold in 2019 being EV´s, and 12% in 2020. This theme is still having very strong momentum, and I think general funds are still very much underinvested here. From cobalt to graphite, lithium, nickel, copper - we should have more fun in front of us!

The "Australian Bre-X" ( do you remember, the geologist falling out of the helicopter 10 years or so ago?? ) -story, Novo Resources, continues to edge higher, and all neigbours are flying. Good fun, fantastic turnover and nice share prices for all the neighbours - some of whom are immediately ( and smartly! ) raising fresh equity on the back of it. I am still a non-believer...Novo themselves have said, that they have no idea as yet, how to establish a resource from this nuggety stuff...I might be a bit harsh here, and I certainly DO NOT want to imply, that the Novo Story is fraud - as was Bre-X - but the level of excitement and speculation surrounding it start to be comparable!

Venturex - they are one of the beneficiaries from this Novo-story, as they are next door to one of the recent nugget-discoveries ( De Grey Mining ). I would like to point out, that nuggets have been found in Australia for hundreds of years...anyway, shareprice recently started to move on the back of some strong intersections, while drilling their core asset, the copper/zinc project. Assays are pending, but could open up a much improved story . But over the last few days, the stock doubled on incredible turnover , being a property neighbour to one of the nugget-discoveries. They have been very lucky, as can be seen from today´s announcement, which included the sentence: "Venturex intends to send its geological team to inspect the area and undertake sampling if warranted" . Very funny indeed - effectively saying: we have absolutely now idea! The nice thing about VXR is, that the company´s project for copper/zinc is potentially worth the current markt cap of 50 mill A$ anyway. VXR have struggled with their project for some time, but got recapitalised recently by some strong backers. 

Pilbara Minerals - this upcoming producer of lithium announced a new off-take agreement today with China Great Wall , one of China´s largest automotive producers. They are taking 75.000t of lithium spodumene ( that is 6% lithium concentrate ) over 5 years - so a sizable agreement. This agreement certainly shows, that consumers of lithium see very strong demand coming, and contrary to some very cautious analysts in the market, want to secure long term supply. The Chinese are providing PLS with a 50 Mill US$ debt facility for it´s Stage 2 expansion of their Western Australian project. Pilbara, Galaxy, Mineral Resources and Orocobre are the most advanced and largest lithium stocks in Australia - all worth watching, while Kidman especially is looking interesting, but some way behind in terms of stage of developement. After that, there is myriad of more or less advanced explorers - I am following Piedmont PLL, and Marindi MZN more closely.

Syrah - looking at the EV-theme, graphite certainly is one of the materials of interest. Used as anode for batteries, it is essential, and will probably continue to do so. It´s main, traditional use is as electrode in steel furnaces, and in this area, there is a major shortage right now. It has a vast array of other uses as well - look it up in wikepedia, if you need more. In any case, SYR are controlling the largest, developed resource worldwide , based in Mocambique. While historically, the company has ahd it´s fair share of problems, which often are associated with entrepeneurial, young and pioneering companies, management has changed some time ago, and very serious people are now running board and executive team. Chairman is Jim Askew, whom many of you have met - chairman of Oceana, boardmember of Evolution and Endeavour, to name a few of his current roles. Extremely positive! Syrah is virtually weeks away from production of grahite ( Stage 1 ), and about 6-7 month away from the production of battery anode graphite, which is a value-added product, and will get sold directly to battery producers. 

Syrah have just finished a large placement, putting to sleep all doubts, whether they have sufficient cash to get into production...Satge 1 and the Battery Anode Project are financed now. 

Syrah will be the largest producer of this stuff in the world - they can scale up the already large production - they are going downstream to capture more value - they have a strong team and a great resource. The downside is Mocambique, and certainly some comissioning-risk - but I think one should take that risk now - time to back these guys! Most probably, a world market leader in their speciality - one, which every EV these days needs!

Resolute - came out with anew reserve statement on Tuesday. A large reserve of 5.3 mill oz, and resources of 12 mill oz - long mine life at both their mines, and excellent exploration upside from here, especially at and around Syama in Mali. Obviously, there is some country risk, especially , as their mine in Australia is not the greatest mine around, and has high costs. But the valuation of RSG is way too low, in my opinion. The current year is a big year in terms of capex, and by establishing a sub-level cave underground operation at Syama, as well as big changes in Australia. The next financial year will see capex slightly come down, before they will earn big profits from the current program. While costs at Symama willö fall big time over the next 2 years, they will still make profits during the current, relatively high cost phase - and they are fully financed. 

While Resolute is way up the risk-curve compared to something like Evolution, I think RSG are a perfect stock to add some spice to your gold portfolio. 

Have a nice evening

WS

General - Perseus - Lynas - Finders - Cardinal

Good afternoon

Manufacturing Confidence in Sweden at record, in Italy at 10-year high today....not that these countries are important, but they show, that Europe is certainly doing very well - and the renewed strength of the US$ will certainly help confidence further.

Industrial profits in China very strong, as well as durable goods orders in the States.

BHP believe, that One Belt - One Road program in China will see steel-demand continue to grow over the next few years. They are also bullish EV´s, and believe, that the potential increase of copper demand from EV´s is underestimated by the market. EV´s use 4x as much copper as conventional cars, and further applications continue to grow this ratio. BHP sees 2017 as the big turning point of EV´s, finally getting real traction. Macquarie have increased their sales forecast for EV´s. In a world, where it´s not easy to make a buck, I am sure, that this investment-theme will continue to find new fans.

Perseus - in the latest presentation they state, that at 1200 US$/oz, the two mines will generate 225 Mill UIS$ in free cash until 30th June 2019. I find this a very ambitious statement - at the current 1300 US$, this numebr would rocket again. Anyway - Jeff Quartermaine is a guy, who knows, that it´s important for PRU to continue to deliver, if the company wants to regain trust. They brought out some more bullish forecasts for NPV...if Jeff is right,. the stock should be able to double from here! In dubio pro reo - that´s my attitude, but I thiink the market in general wants to see more evidence, before it believes!

Finders - hmmmm...unlucky...the first real hick-up, since they started production. Without going into much detail, a human mistake was responsible for some solution overflowing into the elctrowinning circuit. One could argue, that something like that should have been monitióred bý sensors or something similar - and I understandm, that such a thing will be installed. Anyway - no major drama, but a little hickup, costing 500t production in Sept, and perhaps a smaller amount as well in Oct. More detail in the Quarterly Report on Friday. The stock is very cheap anyway....but got a little cheaper today! Most probably, another good buying opportunity.

Lynas Corp - another 10 mill US of the convertible bond got exercised. The only negative is, that I guess all of these new shares will be sold - some might have been sold even beforehand. In the absence of new incentive to buy the stock, the continuing exercise of warrants and convertibles will add new supply. The market cap, though, is already 1 bill A$, and EV fully diluted is about 1.5 bill A$...( of which 115 MillUS$convertible debt and 185 mill US$ straight debt ).- so I have NO doubt, that LYC will be included in the next Index-Review in ASX 200 - and I believe, that they are not yet included in the MSCI as well. Both would be pretty positive events.

Cardinal - Goldfields have continued buying, and have increased their holding by more than 10 mill shares to 8.8% of the company....I still don´t see, that the situation re land title is fully cleared up - until that happens, they would never make a full bid. But obviously, Goldfields are confident enough to build their position up to a blocking stake.

Have a nice evening

WS