General - Foran - saracen - Oz Minerals - St Barbara

Good afternoon

lots of numbers out today...

China growth in 1st Quarter was a strong and expected 6,8% - driven more by retail sales than Fixed Asset investment

German investor confidence is very weak - I think politics/trade conflict etc taking their toll

US Housing numbers positive, and especially Industrial Production. I think the latter numberw as instrumental in turning metal markets, which have been pretty weak before. All LME stocks have been up today - I think market participants might deliver stocks held off-market previously, if they have been pruchased from Russian producers?? Still lots of talk and speculation around aluminium and the ptential impact of sanctions against Rusal. 

Gold was also slightly weaker earlier on, but appears well supported by inflows into gold ETF´s.

Oz Minerals - Quarterly out today, which was a touch weaker than expected, as costs were up a little. Nevertheless - a very good Quarterly, with cash costs of copper production below 1$/lb, and AISC of 1.36 US$/lb, the company is generating lots of cash from it´s mine Prominent Hill. The open pit has been finished now - from now on, stockpiled- and udnerground ore will be treated. Guidance for costs as well as tons is unchanged for the full year. 

The cash pile of 640 mill A$ is bing used to drive the development of Carapateena, which is making good progress ahead of plan and will start producing late in 2019. Following the takeover bid for Brazilian copper developer Avanco, OZL are still on the search for more projects. Management has done a very good job so far - if they do aquisitions as well as managing the assets, the stock will have a long way to go. It remains Australia´s prime exposure to copper...

Saracen - good Quarterly, stock made a new high today - much the same as Regis, St Barbara and Evolution. But of those top-performers in Australia, none is cheap - and if I had to buy one, you know which one I would buy, anyway...Market is obviously prepared to pay a little premium for Austzralian-based production. Given all the recent , bad experience, I can understand that very well!! Indonesia...Poland..Tansania...etc etc etc...As somebody said today - mining is a tough game anyway - the last thing you need is problems with nationalistic regulators and authorities!

St Barbara - have made anotehr inevstment in an exploration company the other day, and said , that they are still on the look-out to transfer their underground mining expertise ( that is something these guys do VERY well!)They are mainly looking at North Americab markets, as they believe, that investments are cheaper over there.

Foran Mining - I just cannot believe, how cheap they are! They fell out of bed with just 250.000 shares turnover - no bad news - just a lack of interest! Very anyoing! That´s the disadvantage of small stocks, especially in resource development: When the general mood is risk-off, turnover in tehse things can be very limited, and once there is a forced seller, it can have a massive impact. Recent drilling results have been good - the market in copper/zinc is still fantastic, and tehre are very very few large, new mines on the horizon to fill the increasing demand from urbanization + electric vehicles. Cynics would ask, why no serious miner would be making a takeover bid for Foran?  Well, management + Pierre Lassonde are holding 25% at least, and I would be very surprised, if they would be sellers below 1$ - in fact, probably rather 1.50$....The NPV of the project is currently around 500 mill Can$ or about 10x the share price...and probably it´s growing via exploration larger tha that! Great busing opportunity for the patient investor - and hopefully, not that much patience required!

Have a nice evening - I am frustrated and will have a beer in the sun now!

WS

General - Perseus

Good afternoon

hopefully, the rethoric is one thing, and the action a different one....Putin has probably understood, that Mr.Trump needs his face saving exercises, but that the US-attack on Syria will be a very limited one. Surprising, though, that France and England have joined Trump! I can find a few reasons for Theresa May to divert attention from home, though! Anyway, the world is a very cynical place these days, and it´s very difficult to find out the truth in many issues!

Retail Sales in the States rebounded nicely - car sales looking especially strong. But growth numbers for Europe continue to be trimmed back - now at 2.2% consensus for 2018. Politics are not helping confidence!
Citibank upgrades nickel on the back of their positive outlook for EV´s to average prices of 13.000/13.500 and 15.500$/t for 2020. Nickel is making new highs today. The boss of Cobalt 27, Anthony Milewski, is talking his book and believes, that market participants are underestimating the dynamic in EV-growth. He sees 30-35% market penetration by 2025. Cobalt continues to trade around record highs around 41$/lb. About time, that Panoramic finishes the recent consolidation! No news here - but the stock is trading 20% below recent highs!

At the copper week in Chile, CRU gave a bullish presentation on copper. They see potentially new alltime highs for copper, unless some new developments will be announced in the short term.

RIO is reported to have some major security  issues at their South African mineral sands operation. Good news for their rival Iluka, which made a new high today, and for our little bay Sheffield - but they need to clear their land access problems first!

Mr.Comey sees Mr.Trump as morally unfit to be president...well, nothing new to most of us, but I guess unusual to hear this from the former director of the FBI.

Perseus - their Quarterly was out today. Sissingue comissioning went very well, with very high recoveries and excellent plant throughput. The mine will be terated as fully operational from the qst of April onwards, and will greatly assist in cutting overall production costs, and strong cash generation. But Edikan - while being in line with löast year - has been slightly disappointing to me . AISC of 1100 US$/oz do not leave all that much room for massive cash generation, as I would have hoped. Certainly, at the current 1350 US$/t, the mine is profitable and should generate something like 50 Mill US$ in free cash - but I doubt, whether this will be strong enough to finance the development of Yaoure form cash flow and bank financing. I fear the chances for some additional capital beeing raised sometime in the summer are rising. Nevertheless, it´s very difficult to find a serious gold producer with better leverage to the gold price, and as gold is increasingly feeling like it wants to break out, Perseus should still be a good investment!

Have a nice evening!

WS

General - Mineral Resources - Crusader

Good afternoon

base emtals are very weak today - zinc down 3.7%; lead down 3,5%; copper down 2.3%; and nickel as well as alu  down 1.5% . I have no idea, why this is happening - perhaps it has to do with the Russian sanctions? Somebody liquidating? Glencore with some problems due to Russian exposure? No idea....

Equities are edging higher, as Mr.Trump seems not so certain anymore, whether he wants to send these beautiful things to Syria...which in turn, is creating some profit taking in gold. Still - technically, gold has a very good feeling about it, and buying for the large ETF´s has apparently been pretty strong.

Mineral Resources - I managed to listen to their conference call today, following the agreed takeover of Atlas Iron. In a word: Very  very impressive! This transaction is all about cost cutting for the entire operation, using common infrastructure - that is the BOSS automated railway system ( to be developed for about 1.5 bill A$ ), as well as the use of common port infrastructure. MIN expect to cut costs of their current 35$/t by at least 50%! On 18-20 millt of iron ore, that is 350 mill A$ p.a. or more! The takeover also opens blending or ore , where Atlas-ore and MIN-ore have different impurities, which can be favourably blended, resulting in a better, overall product! For the BOSS system, there are potential outside investors knocking at the door, as well as other financiers. MIN will use the BOSS system to open the servive as well to other users, in conjunction with selling those clients also other services like crushing etc. 

Overall - and I realize, that the above has to be very superficial in this blog - I think this will be a very positive transaction for MIN-shareholders in the medium term, and even more so for Atlas Iron shareholders. This is another step in the impressive long term  evolution of this company....you should be a shareholder. Interesting and  on the sidelines, the company also announced, that they are envisaging a price for their spodumene of 960 US$/t vs previous expectations of 900 US$.

Crusader- placed 6.5 mill A$ worth of stock at 0,055 A$. Not sure, why they are talking about net proceeds of only 4.5 mill A$ - part of which goes to debt. I ahve to say, that it has not been a bad exercise to raise 6.5 mill$ in light of the companies history - but I wonder where the 2 mill$ are going to. Also, the company wanted to raise at least double this amount....

Have a nice evening

WS

General - Prairie Mining

Good afternoon

20 days without a smoke as at today - life is not good anymore!!

well it´s always nice to send a few rockets, when you have trouble at home...will be interesting to see, what comes out of the search of Trump´s lawyer....European markets are under some pressure today, following Trump´s tweet to send a few rockets towards Syria. There is no day these days without any bloody tweet...I hate it! Equities are purely reacting to political issues these days...

As you would imagine, investors are reacting with buying some gold...base metals also looking a bit stronger. led again by aluminium - but as the day progresses and the US are coming into the market, we are seeing some profit-taking. The American consumer is paying the bills for higher alu-prices...Just imagine, that the US president does not find anybody to sleep with, or has a bad night for otehr reasons,  and imposes sanctions on more oligarchs...for example, the one controlling Norilsk...Nickel would immediately go through the roof!

CPI in the States is edging up - core inflation up by 2.1% YoY, which is in line with expectations.

S32 - Australian resources company S32 owns the Cerro Matoso Mine in Colombia, planned to produce 41.000t of nickel this year. They have been accused of pollution, and being responsible for serious health issues in the immidiate neighbourhood of the mine. I am not sure, how much substance these allegation do have - in any case, the mine is in trouble, at least for now. 

Prairie Mining - well, while due diligence and talks with JSW are in full swing re Debiensko, the situation at Jan Karski is difficult to assess, even for the company itself. Fact is, that somebody in the bureaucracy is making life very difficult for Prairie. A court case could take years to be decided - nobody really knows. At the same time, there is definitely interest to bring on additional coking coal capacity in Poland, and while it´s in the courts, nobody will eb able to develope Jan Karski. But I have taken the conservative stance, that realisation of this asset - be it via sale, JV or development with the Chines - could take time. So it will be all down to Debiensko! I ahve seen a recent valuation of 1.8 bill Zloty or 690 mill A$ by some polish broker - and we have seen the company-stated NPV of 1.4 bill US$ before as well. I am hoping, that PDZ will do a sensible deal with JSW - be it JV, takeover, sale of the asset - we just don´t know as yet. The undiluted market cap of PDZ is 92 mill A$ right now - the vast majority of options is exercisable at 60ct, so 10% above today´s share  price. The best, potential deal for PDZ could actzually be a joint development with JSW, using their adjacent underground development and infrastructur. Even in the current situation, and valuing Jan Karski at zero, there is massive upside in PDZ. But given the really terrrible, Polish behaviour re Jan Karski, I will be a seller at 1$ and not 1.50$, as expected previously. And we might even have to reduce that target as well, as obviously, Poland is not really behaving like a EU-country, as it should. Still - from 55ct to say 85ct is more than 50% upside - not bad.

Interesting to see, that major hedge fund Lansdowne Partners, have used teh recent weakness to increase their stake in PDZ. I understand, that they have followed JSW for a long time, and that they have an investment in them as well. They are nearly 10% below this year´s high, still, while my darling Evolution is making new highs every day. EVN have outperformed Newcrest over one year by  60%, and the Van Eck Index by 55%. Amazing and with good reason...but any further performance is depending on the gold price now. 

Finally, even North American gold stocks are moving today...as gold is preparing a little breakout??

Have a nice evening

WS

General - Strike - Mineral Resources

Good afternoon

unbelievable - I just tried to get a price for Rusal in London, and Bloomberg is displaying: Security is subject to US and/or EU and/or UN sanctions! It does not even give a price for the stock anymore! Whatever we think about sanctions - but I think this is really bad...perhaps I will not get a price for Glencore by tomorrow, as they have contracts with Rusal????

Producer Prices in the US are rising quite strongly....is inflation finally coming? Gold at least is pretty strong, as are base metals and equities.

Mr.Xi trying to be friendly.....and markets like that! Trump must be thinking, that he is just about to move into the ranks of the greatest American presidents ever!!

Strike Energy - the company has entered into a very interesting JV in Western Australia, just a few km away from the recent high profile discovery Waitsia, and teh producing asset Beharra Springs. Very little, initial outlay, but up to 11 mill$ to spend over 24 month to earn 50% for Strike. The JV is targeting conventional gas, similar to Waitsia, which was discovered by AWE two years or so ago, and led to the current takeover of the company by Mitsui. This could be great fun for STX...but rather in 2019, than 2018. For now, all financial resources are to be used for the big well in the Cooper Basin, which is progressing towards completion. The well is a few days behind, and will be finished in late April/early May, before fracking/testing can begin. I do like STX´s new aquisition - just in case something is going wrong with Jaws, the company has an interesting fall-back project. Important from a de-risking view point - but without any doubt, the huge upside is in the Cooper Basin, and not in W.A.

Mineral Resources - have instigated a takeover for Atlas Iron, a smaller, Pilbara-based iron ore producer. Similar to MIN, Atlas will be hard presse to make any moeny from their iron ore production at current prices/discounts, as their iron ore has got grades of just under 58%, attracting a large discount to BHP/RIO -quality ore. The biggest problem for Atlas: They are trucking the ore to Port Hedland, which will cost them  up to 25 A$/t - roughly 50% of cash costs! For MIN, the added production from Atlas should make the new, automated railway system more feasible, as economies of scale are imperative here. The other attraction of Atlas is, that they have access to some lithium via their JV with Pilbara, and especially, a lot of spare port capacity, which is attractive for MIN. At this stage, I am not surfe, whether I like teh transaction - will wait for tomorrow´s conference call.

Have a nice evening

WS