Market Update

General - Paringa - Prairie - Resolute

Good afternoon

it´s amazing, but Trump seems to succeed with his make America great story....Americans will have loved his State Of The Nation speech yesterday...talking the economy up, talking infrastructur etc....certainly good for resources!

Chicago PMI was strong again, Home Sales doing well, new jobs doing well.....PMI in China was down, but still all signs of expansion. I guess this cannotbe a surprise, given the pollution-measures taken during the Chinese winter.

Inflation in Europe just does not want to go any higher...Could this be with us permanently, because of vast technolgy-improvements??

A little surprising to me, given Trumps speach yesterday, is the fact, that the US$ is making new lows against the Euro - which is certainly liekd by the emtals, which staged a nice comeback to day - up by 1% or more.

Resolute - their Quarterly was not all that good...AISC of 1392 A$/oz were a negative surprise, based on lower production of Syama in Mali. It has been made very clear to the market before, that this financial year is a transitional year, with large caapex programs being run at both large mines, in Australia as well as in Australia. But those programs are on track, and costs will start falling from next year. Currently, the company is eating intop it´s large cash position - again, not that unexpected. RSG ahve two long life assets, especially Syama, and is a great stock for gold bulls. But operational performance is a big part of that - let´s hope, that management will do the right thing. So far, there is no reason to expect differently. There are not many , producing companies with a market cap below 1 bill A$, and 4.1 Mill ounces currently within the mine plan. Syama is one of these mines, which will still be in production in 20 years time, provided the gold price is holding!

Paringa - Quarterly...not much news, other than that construction is going well. Reading the report, I think it will definitely be rather Aug/Sept to see first procution - but I have commented on that before. I think PNL are a save bet...operational risks will be very low - the main risk is, that gas prices will be down over the next few years ( andgas is competing with them ) t prices substantially below 3$/GJ. Except for this issue, I think a price quite a bit higher can be expected between here and year end...I continue to like this story, and have a large position in the stock, similar as to:

Prairie Mining - which is still the big story it always was! They have not been a bad performer over the years - but I would also say, that it´s a bout time to put butter by the fiah, as we say here! Theire talk in the Quarterly is very promising as to both projects - but hard facts, i.e. numbers especially for the development of the Jan Karski Mine, are not in the public domain as yet. We have been promised some early in the year....so hopefully, more detail will be out soon. As has been said numerous times before - I like the management - I like the fact, that both mines have a NPV very substantially higher than todays price - but it´s really time for facts!

Today I had a look at many resources funds, incl my own, resources-orientated Australia fund....very disappointing performance of all of them - they are generally up just by a few percentage points over one year. Admittedly, it´s looking much better over two years - still, disappointing! My explanation is, that general investors still do not believe in this resources boom, which we certainly are having. In the early stages of the last boom, we had the same situation. Let´s hope ( and I strongly believe so! ) that it´s still to come!

Have a nice evening

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General - Perseus - Evolution - Newcrest - Beadell - Kasbah - Middle Island - Fortescue

Good afternoon

equities in Europe continue the little set-back, which started in the US last night...markets are currently down by about 0,5% or so, also driven by a weaker US$. That´s helping gold, currently trading at 1345 US$/oz, and the base metals, which were pretty weak early on in Europe, and are now slowly but surely moving up again. Unfortunately, late this afternoon, everything is moving south again - especially nickel, which is down by more than 3%.

The US economy is still looking good...house prices are rising fast, and consumer confidence is sky-high! Even the consumer outlook, which has lagged for some time, showed a strong increase today.

Perseus - Quarterly out - ok, but not great. 56.000 oz produced at all-in site costs of 1093 US$, which is a furtehr improvement, but not as much as hoped for. Grades were not great at 1.1g/t, and mining costs are rising, as the pit gets deaper. Anyway - a credible performance. The company is sticking to it´s guidance of around 150.000 oz this half, at around 1000 US$ all-in site costs - that includes Sissingue, which starts commercial production by 31.3., most probably. This is an excellent achievement, and once in full rpiduction, it will help to bring costs overall down. It has been a good decision to develope Sissingue, which at the time, was just ok - but at 1350 US$ for gold, it should make more than reasonable money for PRU, and reduce risk. Whether this is enough to develope Yaoure without having to do a capital raising? I am not sure - it gets tight, and we shoudl know by mid year. I would not be too surprised, if PRU would need to raise 50 mill A$ - and might raise as much as 100 Mill A$ to help kick start the development of this large mine. With a current market cap of about 450 mill$, this should not be a big problem. I think it all depends on the gold price - PRU are certainly extremely sensitive to better gold prices, as Edikan will always be a high cost producer, and as the current ( and even more so, the future- ) production / market cap is small in comparison.

Beadell - as know before, not a great Quarter - and certainly not as great as planned by the company! certainly, the Quarter has been betetr in comparison - but if not, it would have been a catastrophe. If I am correct, we are now also entering the set season - not good for mining, not good for costs. And the company needs to do 30 mill$ in capex this half. Unfortunately, the chances for more equity are rising! I do not see them completing the upgarde without some fresh equity....As this is my view, no hurry to invest at all...and hence no reason to write here in much detail.

Evolution - I repeat myself...it´s getting a bit boring! EVN are delivering just Quarter for Quarter. While production was perhaps a few thousand oz less than some had expected, costs were down a little again...just amazing....186.500 oz at AISC of 784 A$ / oz ( or 602 US! ) have been produced, for an operating mine cash flow of 204 mill A$, and net mine cash flow of 134 mill A$. Not surprisingly, Ernest Henry with it´s significant copper by-product credit was the absolut standout, generating net cash of 55 Mill A$ in the Quarter!!! But Cowal as well as Mt.Carlton have also been good performers. Net bank debt has been reduced by 32% to 231 Mill A$ - at current metal prices, that will turn positive around mid-year.

EVN expect to comfortably exceed midpoint of the guidance for this financial year ( between 750.000-805.000 oz ) , and for AISC to be at the bottom or below guidance of 820-870 A$/oz.

Successfull exploration at Cracow should deliver mine life extensions, They proved again today, to be the premier gold miner in Australia, in my opinion - or at least on the way there!

Newcrest - the good news from their Quarterly is, that Cadia is up and running again. Telfer also had a good Quarter - but Lihir had some problems with their plant, which are now rectified. They had some regulatory problems with their Indonesian project - the government wants a larger slice. Not such an important asset anymore - but a slight negative. As Newcrest is a significant copper producer as by-product, the strong copper price could help them to keep cost just belwo guidance for the year. Certainly, Newcrest is a good company - but I cannot see the big upside anywhere. Why pay a premium - just for size??

Fortescue - they are producing iron ore now at 12US$/t - great achievemnt for the last Quarter, which was headed by Nev Power. The large discount of their inferior iron ore is a bit of a worry - but the company expects it to get smaller again from the second Quarter on, when the winter curbs in China will not exist anymore. That should be righjt - but the dscount will certainly stay larger, than would have been expected only 6 month ago! A clear negative for FMG. The Quarter saw only production of 40 millt vs expectations of 42 Millt - I would not be surprised, if they did not produce more to avoid even more pressure on prices.

The company wants to diversify in the long run - but not by aquistion of advanced assets, but by exploration - Lithium in Australia, copepr/gold in Columbia and Ecuador, where they have applied for massive ground positions.

Middle island - Kerry Harmanis, the legendary ex-boss of nickel producer Jubilee Mines, has bought 6% of the company. Kerry is certainly smart, but not always a successfull investor - I would not mind, if he will be right here! As I wrote before - ore sorting could be a game changer for them.

Kasbah - or sorting is also an option for them, and more details should become available with the delivery of their finalk feasibility study in June. KAS are developing a Tin mine in Marocco....one of the very few tin-assets around. Very small company, controleld by Pala Investment. KAS have a 55.000t reserve, and their old feasibility study, which was done prior to Pala´s involvement, arrived at an NPV of 51 Mill US$. Operating costs were then estimated to be 11.500 US$/t, and they used a tin price of 17.800 US$. Tin is today trading at 21.700 US$/t, with very good prospects going forward from increasing demand from the semiconductor industry especially. I expect the outcome of the enw study to be very different - but more positive. The involvement from Pala should also make financing easier. An interesting stock to watch - I am holding a very small position here.

Have a nice evening!

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General - Apollo Minerals - Mineral Resources - Strike Energy

Good afternoon

the metal-boom is in full swing...not a surprise, given the concerted growth around the world, I guess, and the very limited exploration-and capex spend of major mining companies over the last 5 years or so! We all know, that metals have run hard - sometimes it´s good to put numbers on it, just to get a feel for the extend of it!

31.12.1016 today percentage change highest price today since

Copper 4.700$/t 7150 52% July 2014

Zinc 1600 $/t 3545 121% July 20017

Lead 1790 S$/t 2630 47% Aug 2011

Tin 14500$/t 21900 51% Aug 2014

Nickel 8800$/t 13850 57% July 2015

And last but not least, WTI also ran from 48 US$ to 66 US$ since 31.12.2016, while Brent is even up more, from 37 to 70 US$. Inflation, I can finally hear you coming??

Most analysts believe, that metals have run ahead of their fundamentals - I think they are just ok! Financial players are always earlier than the fundamentals, and given the fantastic enviroment, I think if anything, there is upside for the balance of this year. The only metal at risk of correcting is probably zinc - large producers, especially Glencore, will have to watch out, that their market will not shrink because of substitution!

The US$ looks broken - at least on the charts, adding further upward pressure to metal prices. Against the Euro, there is considerable downside - more than 10% on the charts - and against the A$, about the same. Nobody can see the A$ at 90ct today - but given the positive scenario for world growth, I would not rule that out. What is speaking against the A$, is the outlook for bulk commodities, which are still Australia´s largest export goods! Iron ore as well as the different types of coal look pretty expensive - and if they retreat somewhat, a strong A$ could potentially act as a double whammy to the earnings of the majors, BHP and RIO. But I am not too concerned about this, as their valuations already assume some kind of lower prices for their bulk commodity earnings. But performance-wise, I think pure metal producers could be sexier from here.

Wages and salaries in the US are growing as expected, and so is consumer spending

Strike Energy - announced, that tehy also managed to renegotiate their second, large gas contract with Orora, a large packaging group in Australia, similar to the contract with Orica. That´s very good news - even though the exact details are confidential, I assume a significant advantage in NPV to Strike. But as usual - this is all subject to them getting their gas flowing! A new research report has been published today ( even though it was comnissioned by the company ), giving an initial valuation of 12.4ct to the stock - but with potential to multiply this, should the JAWS well be successfull. The well will sopudd ( = start drilling ) on the 14th of February, and will be the largest well of it´s kind in Australia so far. The stock has started moving over the last week - I hope, that this is only the beginning! We have been waiting for sooooo long!

Mineral Resources - Australia´s largest lithium producer ( + iron ore + mining services ) has found competition in it´s fight for AWE Ltd, a large gas producer in Australia. Mitsui is the third party to make a takeover bid for AWE, and the market is a little worried, that MIN will have to pay over the top to get their hand on AWE. But interesting to see, just how much interest there is in gas - AWE was trading at 50ct in mid November - today, they are nearly double this. IF our little STX can deliver sustained, commercials gas flows, corporate interest in them will be very large!

Apollo Minerals - this small company, being part of the highly successfull Ian Middlemas stable, is about to really get going with their Tungsten- Gold asset in Spain. The company has been a major producer of tungsten until the 1980ties, wenn prices were dramatically lower. Before the mine closed, a high grade gold resource had also been established. Until now, Apollo does not have permission to enter the underground mine, for government/safety regulations. That should change very soon. The price of tungsten increased by 50% last year. This could be a hot project - but it´s in Spain, which does not make things much easier!! Nevertheless, interesting stock to put on the watch list.They will present in Zurich 23rd of February - by then, I would hope for some progress.

Have a nice evening

General - Northern Star - Finders - Foran

Good afternoon

business - as well as consumer confidence sky-high in Germany....The Leading Index in the States up by 0,6% vs 0,5% expected.

Mnichin talking the $ down, Draghi complaining about it! I think the former is begging for a hug from Trump in Davos!

Metals are holding their extraordinary gains from yesterday, as the US$ was very slightly recovering, until Draghi showed himself little concerned about the strong Euro. It´s now making new lows!: Copper stocks are substantially up for a 3rd day in a row - still, the metal is slightly up again. Zinc , lead and nickel making new , recent highs. Nickel especially went on a huge run yesterday, after breaking the 13.000-resistance. Not as strong as that in A$ - but still trading at a 2.5 year high. On the charts, it looks like it could go 15-20% higher over time. Would be nice indeed!

German bonds are yielding the most in 24 month today, 0,61% for the 10-year bond.

Northern Star - their Quarterly today was not all that great...33 mill A$ in free cash generation, production fell for a third Quarter in a row, while ASIC of 1067 A$/oz were ok but not as good as usually. The company claims, that the emphasis has been on growth in the Quarter - well, they will have to improve quite a bit from the last Quarter to make guidance. Bill Beamot has done a great job with the company, has rejuvenated his aquired assets and is pushing them very hard - but I doubt, whether they will get any better than they are today. I have been wrong so far - but I think the the company is fully valued at least. They have more than 400 Mill$ on the balance sheet, and could easily make a full bid for Echo Resources, of which they own 19%. I am not that sure, though, that this would be a good move! The exploration update in February could be quite xciting, giving their almost frentic activity - but the valuation of the stock does need this.

Foran Mining - Glencore has completed the technical revue of the project, and Foran with asistance of Glencore is now moving towards a full feasibility study. They point out, that the NPV7 of the project, based on 1,06$ for zinc ( which is now trading at 1.56 $ ) according to the PEA has been 382 Mill can$! Market cap of Foran, following the placement recently and the strong share price move, is only 65.5 Mill Can$! A lot more fun to come here, I think and certainly hope! Largest shareholder, Pierre Lassonde, whom many will know as co -founder and chairman of Franco Nevada, increased his shareholding at 49ct by 1.1 mill shares to 12.07% of the company.

Finders Resources - as announced previously, they only produced 4.100t of copper in the Quarter, due to well-documented problems. Despite the much lower production ( at steady state, they produce 7.200t/ Quarter ) , tehy still generated cash and made EBITDA of 6.8 Mill A$. AISC were 2.53 US$/lb. More important is, that production will from now normalize. I do not expect the current Quarter be back to above 7.000t, but definitely the June-Quarter. All operations are now running as they are planned to do. It will be interesting to see, whether this will lead to a higehr takeover-bid, which definitely woould be required to get above 50%. At current levels of 3,20$/lb , and once back in production, the project will generate more than 115 Mill$ in cash p.a. - about 75% of this belongs to FND. - EV i about 2.5 years of cash generation, vs a proven and probable reserve which lasts 7 years at this stage. Takeover games are boring for me - but unless the bid gets very close to 30ct, I do not want to sell this cash machine.

Have a nice evening - Australia will be closed on Friday because of Australia Day.

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General - Panoramic - Metals Ex - Aurelia - Black Rock Mining -

Good afternoon

European purchasing managers Index very strong, and stronger than expected - pointing to quarterly growth approaching 1%! Manufacturing numbers for Germany slightly weaker, but very strong, still - despite the political issues here and a looming strike by metal workers. Price pressure is emerging - probably not only driven by higher oil-and metal prices. France under Macron is doing very well indeed! New spirit, new drive! And later in the day, the US have reported a very strong Manufacturing PMI as well!

This is putting renewed pressure on the US$ - and is beefing up the gold price ( currently at 1350 US$ and approaching a zone of quite heavy resistance between 1360-and 1400 US$/oz ). If gold would be going through that level, we will see a major bull market - but I would be surprised, if gold would do that without considerable work . Nickel is currently up by 220$ - breaking important resistance at 13.000 US$/t - and copper is recovering from the small sell-off yesterday. Interesting to see - the sell-off is obviously seen as a nice buying opportunity.

The A$ , fortunately / unfortunelay, depending on the point of view - is making a new, recent high at 80.50 vs the US$. For as long as commodities are going up by more, I guess Australian producers are not too unhappy! While the A$ gold price is at healthy levels as well, I guess South African producers are under pressure - the Rand gold price is trading at about 16.000, vs a high of more than 20.000 last year. The industry is also still under pressure in South Africa from constant wages growth, while the Rand has improved considerably, as chances to remove the corrupt government are increasing. Let´s hope, that it won´t be replaced by a new, similarely corrupt one!

Panoramic - I have rarely seen a company in our space announcing a rights issue ( 1:7 at 34 ct, also for shareholders in Germany, Switzerland, Luxemburg abd a few other jurisdictions ), and the share price goes up strongly! Good announcement today - sen by most as a precursor to a production start-up. The 20 Mill$ to be raised will be used for some early works like underground venitilation , as well as exploration. Especially the latter I think should produce results, showing substantial upside from the current 8.3 years to easily more than 10 years. All shareholders can apply for up to 50% more than their entitlement, without guarantees to get them - obviously very much dependant on the general takeup. The rights isue is fully underwritten by Pert quality-broker Euroz. Interesting to see, that also shareholders over here, even with registered address here ( mostly, we are holding stock via an Australian nominee company, which are rated as Australian registered anyway). According to Panoramic, this has easily been achieved - a good example for other Australian companies. If they want to - easy for us to participate!! You know, that I am very bullish nickel in the long run, and also Panoramic, given their very favourable economics at current prices for nickel, cobalt and copper. Great opportunity to add some cheap stock, even though this rights issue surprised me at the current time.

Metals Ex - an interesting example, that it sometimes pays to buy only companies with quality assets. Their Nifty Copper Mine missed targets by a big margin last Quarter, leading to substantially reduced profit numbers. Certainly, the upside in this type of company is substantial at times of rising commodity prices - but timing of buying these companies is essential.I think copper is looking great for years to come - but I would expect some more weakness in the stock.No hurry to buy them....

Aurelia Metals - I managed to sell my holding atabout 3 ct only 2.5 years ago - today they are trading at 30ct...I got cold feet at the time, and ran with the herd! The company has emerged from near-bancrupcy to being a relatively solid producer of zinc, lead, and gold - just at the right time. The recent aquisition of the Peak Mine, adding about 70.000 oz of yeraly gold as well as 8.000t copper, is shaping up to be a good one. Whether you believe it or not - I am having a good look at them again, as I believe metal prices to hold up much better than most expect today.

Black Rock Mining - we recently got attracted to this graphite developer, as our old friend and colleague, Richard Crookes, became chairman. Richard has been with the Macquarie Bank project finance team for many years, before starting to work as a director for EMR Capital, Owen Hegarty´s 2 bill PE-fund. This is the first chairman role he is taking on, and the first role in a company, where the PE-fund he is working for, is not involved. Richard is very high quality,a nd very experienced in the industry. Black Rock has a large graphite resource in Tansania. Not a good location, but I am hearing from different sources, that the government there is taking notice of the fact, that foreign mining investment has come to a halt - and more importantly, they seem happy to take the criticism on board. The next few month will show. Investment-wise, I think BKT are a good add-on to a holding in Graphex ( which are more advanced, especially on the financing with a Chinese partner ). The economics of BKT, based on the pre-feasibility study, are excellent...NPV10 of the project, and including a 16% free carried interest for the government, is 905 Mill US$, producing 250.000t of graphite. Even with a smaller case of about 1/3 the size, the IRR at about 1200 $ US for graphite ( 25-30%% or so below current prices ) would still be 35% after tax, and be 202 Mill US$ ( 90 mill US$ capex ). Again using the smaller scale, cash costs Free on board would still be only 513 US$/t vs the current 1700 $ or so....I think this will be a feasible project one day, and you are backing the judgement of Richard Crookes. The company has embarked on a final feasibility study this January, and raised 5 mill$ late last year at 6ct to pay for it. Interesting little company, which you should have on your watch-list.

As I am finishing this blog, metals are charging ahead - nickel up 3%, copper up 2,5%, gold at 1354 and up by 1%....and the US$ is getting hammered - now at a new recent low of 1.2380 against the Euro, down by 0,7% today.

have a nice day

Schröder Equities GmbH

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80538 München

Tel. +49-89-4613440-0

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eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder