General - Apollo - Highfield

Good afternoon

Factory orders in germany weaker than expected - even though up my more than 8% vs Jan 2017. Still, we have had a few, weaker tha expected economic numbers from germany recently. Also some talk, that companies are scrambling with high capacity utilisation, and a shortage of skilled workers - holding back growth.

China´s trade numbers were very strong. Normally, I would say: great! But in the current enviroment, probably rather a negative and ammunition to Trump´s ideas.

Germany will definitely get a new foreign minister - that´s a pity, as the old one was pretty reasonable, and the last thing we need, is a greenhorn being confronted with the current turmoil in the world.

Looks a bit like financial markets have singled out the metals as potentially being the most negatively affected by a trade war. To be honest - I have no idea...the last trade war happenend way before I was born, I think! But limitations to trade should certainly affect world growth, which in turn would have to be negative for metals. In any case - I believe, that Trump wants to feel great, ( especially, as he has to compensate trouble with Melania !!! ( joke,...) ), and most of his electorate will be stupide enough to believe, that a steel/alu tariff will be tremendous news. That might do him...if he continues with more tariffs, we will have a big problem, indeed! In any case, equities should be driven up  or down by the same reasons as metals, at least in the moment - so something has to give here!

Highfield - hard to believe, but the two missing reports from relevant authorities have only now being received, and the issues being raised in them, are in the process of being answered by the company. I was under the impression, that this sort of backward-and forwards had been finished before Christmas! I start to loose faith here...I have been extremely patient , but am starting to ask myself, whether Spain is really that bad, or whether the process has been badly handled....You can read my tendency between the lines!

Cobalt 27 - the Pala-created cobalt-vehicle has increased their placement from 130 to 185 mill $...good effort in this market and shows the substantial interest. In the meantime, cobalt is making new highs at 38 US$/lb...

Apollo Minerals - the company has aquired the 20% of the Couflens gold/tungsten project in France, which they did not own. Only small, actual outlay - more to be paid on progress to develope this asset. Down payment now + payment in 4 month is only 550.000 A$ - potentially, another 3 Mill A$ in different stages over later years, depending on progress. Not a major deal, but very positive - always much better to own 100% than having to talk to  a french partner forever!

have a nice evening

WS

General - Metro Mining

Good afternoon

Trump has had two halfway reasonable guys in his team - Tillerson and Cohn - one is now gone. Very bad news - Nero is continuing to run the show on his own! This cannot be good for the confidence , which any economy needs! Cohn´s retreat certainly raises the risk of Nero doing more stupid things!

The good news is certainly on North Korea...those two countries seem to manage their future themselves, without the US, who are lightyears behind the curve here.

Strong labor numbers by ADP in the States, and Unit Labor Costs rose by 2.5% - both numbers we probably do not like in the current enviroment.

Metals are giving up today, what they made yesterday amid persistent fears after Cohn´s departure, that a Trade War might be upon us.

Macquarie is cautious on short term nickel prices, as Chinese producers of high-quality stainless steel have announced some production closures, amid negative margins. Also, Indonesian stainless steel production from NPI is growing strongly. For the year 2018 however, Macquarie sees another year of close to 100.000t gap between supply and demand - hence another reduction in nickel stocks this year. 

Freeport and Codelco, two of the largest copper producers worldwide, see excellent conditions for a strong copper market in coming years, as supply is restrained by limited capex in new mines.

Metro Mining - the big line which was overhanging from a fund-wind up of 56 mill shares has finally been done today at 28ct - nice price for some insto´s to get in tehre! To buy this thing, which according to their feasibility study has a NPV10 of 600 mill A$ at a little more  half that valuation, is a great entry! And with production to start next month, the discount rate should also move from 10- to 8% at least. China´s bauxite imports are seen to more or less double over the next 8-10 years, and these guys own a mine close to China. There are sexier things in town - but in terms of risk-reward, Metro is very cheap indeed!

Have a nice evening

WS

General - Paringa - West African

Good afternoon

amid a wave of disagreement, Trump administration is expected to not eat as hot as they cook their stupid announcement of tariffs for steel and aluminium, which is hurting Americans, Canadians and Europeans much more than the Chinese, which he seems to target...,some pretty drastic words come to my mind, which I will not write down here..The latest rumour is, that Gary Cohn would leave his job, if Trump will finally announce the tariffs.

Equities are having a pretty goodd ay today across the board , as are metals, which profit from a weaker US$. Copper is back above 7000$, and gold at 1336 US$. Even the GDXJ is up by 3% today!!

Macquarie sees a growing copper shortage developing, as supply is growing by 1.1% p.a. over the next 4 years, and demand by 2.2%. As the time frame to develope large copper mines is so long, they see it as enivitable, that we will see a strong shortage from at least 2020, potentially earlier. It´s hard to believe - but 2020 is only 21 month away!!

13.7% of Galaxy are now being shorted, 10% of Pilbara, despite the recent, very positive announcement of the Posco-JV. I am not that familiar with Galaxy - Pilbara I think is well worth accumulating at current levels. Long term pricing of lithium is very debatable - ove rthe next year or two, they will certainly stay high, and it´s many years, until Albemarl´s and SQM´s expansion plans will come to fruition. Pilbara stage 2 has very efficient economics, and I think they will survive any potential weakness in pricing years from today.Having said this, I am not a holder currently -but I have no liquidity to play with!

West African - as you know, I cannot believe, that this thing is still tarding at around 40ct! Once again, they announced some important drilling results from Sambrado today. Firstly, they hit visible gold ( assays are outstanding ) in their first step-down hole, 80m down dip from drilling so far, indicating that the ore body is still continuing at depth and has not been closed off as yet. This is from the M1 ore body, which has got the fanatstic grades, which will be able to support production of the new mine at below 700 US$ or even lower - the feasibiliyt by mid-year will show. Secondly, they had some nice infill drilling results from M5, which is their planned, lower grade open pit: 20m at 2.2g; 18m at 2.2g; 22m at 2.4; and finally, 23m at 7.2g and 14m at 7.7g. These holes will increase confidence levels as well as the grade of the resource. This is all good news and it increases my hopes for an outstanding final feasibility released in summer, and a new resource in March ( this is still the date given by the company - but in light of the good results, I would not surprised to see the estimate a few eeks later). In any case, this will - once again - be an interim resource, as neitehr M1 nor M5 have been closed off. And I would like to add, that this small company has not been able at all yet to drill any of the regional targets, which might well add more ore bodies.

All major miners are scrambling for growth - here they can aquire it at levels substantially below NPV, as the feasibility will show.

Only one word of caution: Ougagdougo has seen anotehr terrorist attack a few days ago, as you might have seen. The country is not as save anymore as it was 2-3 years ago. People operating in the country are not seeing any impact in the countryside, but they are cautious in Ougadougo, the capital. Bad enough, and it´s not making the country more attractive as investment destination for sure!

Paringa - the stock recently slipped gradually down - yet it is one of teh saver mining stocks to invest in, even though it´s dirty thermal coal! Colonial is wining up one of their funds in the moment, forcing them to sell large lines of stock in companies like West African, Paringa, Beadell and others. It looks like their selling of close to 10 mill Paringa has depressed the share price - but finally, the line got cleared today at 34ct. Analysts have valuations for this company starting at a minimum of 70ct/share. The company is profiting fully from the recent tax cut in the States, which should add another 10ct or so to the valuation. The main risk to the company is, that gas prices in the States on a long term basis fall below 2.50 US$. This cannot be ruled out, as shale oil production is still rising, and gas is produced as a by-product. But exports of US LNG will be strongly increasing over the next 2 years, which could lead to gas prices well above 3-3.50$. That would be very bullish for PNL, as coal-powered electricity is directly competing with gas. Not inconceivable, that gas prices will rise quite a bit, and we all know, how much Trump likes American coal. 

Mining risks for Paringa´s new mine are very low - projects like thismone have been developed numerous time the basin, and the underground mine is very shallow. There is a small but realistic risk, though, that PNL will need a few million $ to bring the mine fully intoproduction. If that´s the case, we are talking something like 5 mill$ top-up only. procution start-up wlll be in 4 month or so. In my opinion, comparatively low risk for making a nice 50% or so return this year.

Have a nice evening!

WS

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General - Lynas - Crusader - Prairie Mining

Good afternoon

now Germany is finally ready to get a new/old government, Italy is in disaaray! The 3rd largest European economy had elections on the weekend, which saw the prtest party as well as the right wing gain substantially - but it will be extraordinary difficult to form a government. All bond markets are stroner today, except for the Italian market...same for equities...all European markets recovered a little except for Italy, and the UIS, which had a very strong finish late on Friday night, when Europe was closed.

Everybody is discussing Trump´s mad tariff-move....even his fellow Republicans. A world trade war is probably the biggest danger to the current recovery of the world economy.

European numbers again showed a slow-down of the strong economy here, while Markit PMI numbers in the States were positive. 

The A$ today is tarding at it´s lowest to teh Euro since 2015, and is also weaker against the US at 0,7733, a 2018-low. Good for the miners, though - the A$ gold price is trading at a recent high of 1710 A$/oz.

All metal stocks on the LME are down today - except for zinc, which had the largest rise of LME stocks in 30 years today! Having said that, stocks are only back to the level seen in early Dec 2017, and at 209.000t, only less than half of stocks at the beginning of 2017. Still - not good for zinc bulls. the zinc market ahs been in large backwardation, which makes it very expensive for funds to continue rolling their future positions. While metals were holding up well for most of the day, they saw some pressure, when the US market awakend - only to recove those losses now .

Exploration spending in 2017 increased by 17%, and is expected to rise by another 20% this year, according to S&P Global Market Intelligence. I do not view this as negative - it takes so many years from discovery to production! 10 days ago, Southern Copper gave the formal go-ahead to a large copper development in Peru, which will see it in first production by 2025!!

Lynas Corp - impressive result today for the Dec-Half...17% growth in production at contained operating costs saw them produce cash flow of 80 mill $ from operating activities, vs 6.7 mill$ in the Dec-Half 2017. But since Sept, rare earth prices have given up most of their gaines again. The company ahs substantially improved it´s previously rotten balance sheet - from 425 mill US$ debt is down to 257 Mill US$ ( net debt 236 Mill US$ ) - a lot of taht debt reduction through the exercise of convertible bonds. Warrants are down to 27 mill from a staggering 522 mill - the market has taken all the resulting, new stock very well in 2017! Lynas are the clear Western World market leader in rare earth now, and in fact, also the only, serious investment proposal in this market. Still - at an EV of nearly 1.7 bill A$, tehy are not exactly a bargain! I am currently not a holder.

Crusader - as you know, I am disspointed with them - but this certainly cannot be said of their long term chairman and supporter Steve Copoulos. The wealthy, Australian business man continues to support them, and will convert his personal loan of 1.5 mill to the company into further equity at the same price, as the forthcoming placement to list on the AIM market in London. Good on him - he is certainly putting his money, where his mouth is!

Prairie Mining - they are holding up incredibly well in this market, following a nice rise in February! On good turnover of about 500.000 shares / day they have bene trading at 44.5p in London throughout all the recent upheavel in the world. I am not aware of any imminent, major news from them other, that any deal with JSW for Debiensko could make them look very cheap indeed! I understand, that 30-35% of the stock is now being held in Europe/UK - probably, this makes a lot of sense given their assets are all in Poland. The stock should certainly warrant a disount to other mining developers because of that - but I remind you, that the NPV of their two operations is larger than 3 bill US$.... Given substantial financing risk, and country risk ( coal mining is a highly political thing there ), I still believe, that investors shoudl see nice upside even from the current 5-year high.

Have a nice evening

WS

General

Good afternoon

what a joke of a president...for the sake of 100.000 steel workers ( if that ) this guy is risking a world trade war! Irresponsible is one of the mildest words I have for his action! But let´s wait and see, whether thiswill be really implemented without many if´s and but´s.....as erratic as he is ( as shown by his action re Amricans under guns ), probably everything is possible.

Metals are actually holding up quite well amid all this turmoil...they are hardly down today. The A$, probably seen as a potential looser from a trade war, is making a new, recent low against the US at 0,784...against the Euro, the A$ has now lost nearly 4% this calendar year. The US$ is also under pressure - not surprising, is it?? That´s helping gold, which is now trading at 1325 US$ - and at 1710 A$/oz, refelcting the weaker A$, and very close to the high since Sept 2016! But that´s seen in our local  producers like EVN, NST, RRL or SBM, which are all tarding at or around multi-year highs! And well deserved, I might add - the Aussies have put their house in order!

Equities are getting another hammering - but this seems to be pretty controlled, and I think there is absolutely no reason for a crash...this is oredrly retreat, induced by a f......g stupid man! So markets are just reacting to the uncertainty he is creating - this is not the interest-rate inspired well-off we have seen a few weeks ago.

Lithium stocks continue to be unbder pressure amid some negative research - but probably mainly because all the big boys ( now Albemarle ) are driving up production - or to be exact: expansion plans - as much as they can. The brine -producers are trying to protect their turf from the new bred, being the Australian hard rock producers like MIN, PLS, KDR etc. I am undecided here as yet, and exept for an investment in MIN; do not hold any lithium stocks currently. But I am watcching - brine production does take a lot of time to come on, and in the end, it all depends on the uptake of electrical vehicles. While I fear very bullish on this, based on massive investment by just about every car producer, and big political pressure to get it going, exact numbers are really guesswork!

I fear I cannot add much in terms of micro-news, again...so you ahve a nice weekend - and forget about the markets!

WS