Market Update

General - Foran Mining - Prairie - Holiday in Australia

Good afternoon

thank´s god Trump is getting on with his young mate Macron - at least somebody in Europe seems to have at least a little influence in Washington. Good to see, that Trump is also getting on with the "very honourable" Kim! My father once told me: Show me your friends and I tell you who you are....The most annoying thing is, that this way, Trump actually seems to get somewhere..

10-year bonds trading above 3% again...a mixture of good growth, rising inflationary expectations, and a 1 trill US$ budget deficit....Well 3% are not good for gold - but anything else should make you think of buying at least some gold for protection...If Trump´s bet does not come in, his legacy might be pretty nasty. At some stage, the market might not be happy to finance this? For now, a lot of investors are happy with 3% yield which is the best "risk-free" return in many years...As some commentators remarked today - the move in 2-year bonds from a low of 0,2% to 2.5% yield has been extraordinary and could / should scare a few people!

Metals are actually looking pretty ok today...at least considered a strong US$...Alu and nickel up slightly, copper down slightly, zinc down by 3% on a relatively large LME-stock increase.

Caterpillar with a stellar-Quarterly, and upgraded guidance - but also commenting: This is a good as it gets!- creating a lot of confusion...stock opens up strongly, only to close down sharply....( yesterday )

Google - result not that bad really, but investors in FAANG´s are pretty nervous these days. Looks like they are wasting some of their "hard"-earned income - well, this tends to happen, when you have 50 bill US$ in EBITDA this year!!!!! Investors put the FAANG`s all in one basket - but Google are trading at 12x EV/EBITDA ( I think Facebook as well, according to Bloomberg consensus ) Netflix at 70x....one is printing money, the other one is burning it....Interesting to watch for a small cap mining investor!

Roskill, commodity research house, expects the usage of nickel in batteries to go up 10x until 2027...and obviously, only nickel sulphate is of interest here, which is produced preferrably from nickel sulphides - only about 50% of world production and falling! The PAN´s of this world will have a lot of fun...definitely in a few years time!!!!

Freeport - the latest company to get screwed by a funny country! All the current noises from Indonesia re enviromental damage etc are going into one direction: Yes, we will buy it of you - but we will pay at best half price!!! Could actually be a medium term positive for copper...

Prairie Mining - I think a very important press release today: Firstly, a Polish court has decided, that nobody else than PDZ can get aby concessions over the Jan Karski mine for as long as the litigation is outstanding ( which could be 12 month or even longer ). Secondly, the provincial enviromental authority have officially promised to hand down their decision on enviromental approval before 30th of June ( as they should ). Both developments are very positive for PDZ - perhaps Poland is a real member of the EU, in the end, and not a third world country? The stock is up strongly today in all markets, where it´s listed - except for Australia, obviously. The last thing the government wants is to have the project in limbo for a long time, and at the same time, risking it´s image as an investment destination ( which is bad enough, anyway! ). I see real potential for everybody to get their act together - nice try, Poland - hopefully that was it!

Foran Mining - another set of good drilling results has been announced today. Zinc grades not fantastic this time, but excellent copper grades close to 3% over up to 11m, and also containing soime good gold gardes over 1g/t - silver up to 30g. Management comments, that recent drilling " could increase the size and grade of the resource ". In saying something like this in an announcement in 2018, you need to be pretty sure about it. The stock should have seen the end of the recent correction and has recovered 20% from the lows - bt is also still 20% below recent highs!

Australia has been closed today for ANZAC DAY .. Galipolis in ( I think ) 1917...

Have a nice evening

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General - Resolute - Doray

Good afternoon

Business Confidence in Europe is falling heavily - thank you, Mr.Trump! Consumer Confidence in the US is rising - I guess "we" are first again in the States! Also, strong housing market data out in the States. A still strong US$ does not hold gold down today - up by a few bugs - and metals - copper back up through 7000 US$, nickel holding this level around 14.300 US$/t.

The A$ is weak...just 76ct agains the US...resulting in good metal prices for Australian producers. A$ gold at 1750; copper at 9220 A$; nickel at 18830 A$ are great prices for most!

Katanga Mining, falls from 1.80 Can$ to 84ct on extended government/Glencore fighting. Glencore owns 86% of this company, which is capped at 1.6 bill Can$ even after the fall, and which is meant to underwrite the worlds growth in cobalt consumption. I am surprised, that cobalt is not making new highs.

Bloomberg reports about a deteriorating situation in Mali, where Jihadist attacks are getting stronger despite the UN forces being enlarged. Apparently, last week Jihadist groups destroyed the airport of Timbuktu and injured 14 French soldiers. Very bad for Mali - not good for the rest of West Africa, either! I am surprised, that Randgold still carries a premium rating, despite all this trouble in Mali ( also discussion about new mining code! ) and DRC, their most important countries.

Anglo having a longer than expected production outage of their iron ore operations in Brazil. The mine will be closed now into the last Quarter 2018 - orginally, analysts had expected, that the mine would be up and running again some time this Quarter. Perhaps this also explains, that the discount for inferior iron ore has been reducing for the first time in - I guess - 2 years. That´s good news for

Fortescue - they came out with their Quarterly today. Costs have been rising by 9% - the first rise in a long time, I think, albeit from an extremely low level. The reasons are not too much to worry about: Higher oil prices than assumed in their forecats, and also a slightly higher A$. I have to say, that the stock is in no-mans land for me in the moment. Unless the discount for their material is softening substantially, the stock is probably trading where it should.

Resolute - their Quarterly has not been good! Syama, which is very much in a transition-year, has been slightly disappointing. The big test is coming by year end, The company has reduced guidance from 300.000 oz at 1280A$/AISC to 280.000oz at 1360A$/AISC. That does not leave much room for cash generation - usually, it´s safe to add 200 A$ to AISC to arrive at total costs. The company has a very strong balance sheet with 110 mill A$ cash at the end of teh Quarter - all should be fine to finish the current transition to sub-level cave mining from Dec 2018. But that better works! I am always a bit cautious of sub-level cave mining -but that´s probably more an emotional thing, as I find it still an amazing mining methode! I think it´s worthwhile to hold the company through this period, still - if things work as planned, the stock has excellent price-potential, which cannot be said about many gold miners in Australia!

Doray - announced their Quarterly...company produced 18.000oz and 1000t of copper at AISC of 986 A$...pretty good Quarterly, and teh company has certainly turned the corner now. The company is now in net cash of about 8 mill A$, following a 24 mill$ placement last Quarter. Mine life at the current mine, Deflector, is limited - so much depends on the new orebody Da Vinci, which is currently being developed from the existing underground mine Deflector. The size of Da Vinci is unknown - initial grade from the first stope of 11g is very promising. I would be holding the stock - but to turn a buyer, I would want more confidence in Da Vinci.

Have a nice evening

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General - West African - Foran Mining - Gold Road

Good afternoon

Composite PMI in Euro area ta 55.2 still pretty strong, but manufacturing PMI slipping a bit more - while doing well in Japan, and strong in the States. manufacturing PMI there is at it´s highest since mid-2014.

Turnbull, the probably most faithfull vasall of the US government, in Berlin today, Macron and Merkel in the States later this week.

Speculation in metals on further sanctions hase more or less evaporated....all prices back to normal in industrial metals except for Alu. Nickel, following massive swings last week, is back to 14.260 US$/t - that´s a nice price, but certainly a bit disappointing vs the fantastic prices achieved last week of up to 16.800 US$/t. The US are also softening sanctions on Rusal, provided Deripaska gives up control. I am sick & tired of being at the mercy of politicians! Gold is also retreating a little further today, as the US$ is quite strong. Equities are up but having a slow start to the week.

The A$ is making recent lows against the US today.

West African - have extended the underground mineralisation by a furtehr 90m at deapth. Every drill hold now takes 3 weeks to drill, and in to tal 5 weeks to assay results. The new resource will now be announced together with results of the final feasibility study, in early June. Later than expected for the resource, earlier for the study. I acn assure you, that this is not another breaker. Every 100.000 ounces increas the NPV by about 50 mill A$, according to Sprott. I fear we will be needing a bit more patience here - but unless gold falls completely out fo bed, I am still very convinced, that West African are cheap. If corporate action does not happen, resulting in WAF going it alone, they might start financing the development themselves - that will also include quite a bit of equity, once the study has been published

Galaxy - produced less lithium last Quarter than expected, -16% QoQ. The slight hick-ups in production continue, which probably explains MIN´s comments recently about better than planned pricing for spodumene.

Gold Road - increased the forecast of the planned capex to the higher end of the originally expected range. This is all still within the parameters sugegsted in the original agreement with Gold Fields, but interesting to see, that cost pressures in the industry are definitely emerging. The timing for comissioning has also slipped a little, from 3rd Quarter the 4th Quarter 2019.

Foran Mining- finally some research from a respectable broker! Paradigm have initiated coverage with a 1$ valuation, which is based on slightly higehr operating costs, and loing term zinc prices of 1.10 US$ ( 25% lower than today, but probably fair ), copper of 3.10 US$ ( vs 3.13 US$ today and probably pretty conservative ) , and a Can$/US$ exchange rate of 85ct ( vs 78ct today, and very conservative ). On that basis the broker arrives at a tarhet price of 1$/share. I would be happy with 80ct for now!

Have a nice evening!

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Geschäftsführer: Wilhelm Schröder

General -Evolution - Genex

Good afternoon

well the craziness in metal markets is cooling down a bit...good for everybody involved, I think. Base metals are slightly up ( lead and zinc ) to unchanged ( copper / alu ) and weaker in the case of nickel - but I guess 14.770 US$/t as in early afternoon, is a great level.

Gold is also calming down a little - but again, 1342 US$ or 1743 A$ ( which is just 80$ shy of the alltime-high!! ) are excellent prices for any halfway reasonable producer! Gold is certainly feeling much better now - it just does not want to fall in a serious way, and is consistently working at the importantz level of 136-1350 US$/oz. If it should go through 1400 US$, a test of the old highs at 1800 is even possible! And as you know, with regards to the world economy, there is a realistic chance, that we could end up between a rock and a hard place: Growth is cooling a little bit, and could get a real schock from a trade war, while inflation is slowly raising it´s ugly head! That could be an explosive scenario for gold.

Evolution - their Quarterly yesterday was another stunner! Just unbelievable - this company is going like a clock...111 Mill A$ net cash flow from the mines, after all capex ( sustaining as well as major ) ....EVN produced 191.500 oz at 768 A$/ oz AISC, and ALL-In costs of 1000 A$....that´s AISC of just 600 US$, placing them amongst the cheapest gold producers worldwide. Net bank debt after tax-payment and dividends will be below zero by year end! And even though it´s not very obvious from their recent Quarterlies, exploration is also delivering quite well: Depsite the sale of Edna May and one year´s production of about 800.000 oz, resources as well as reserves increased slightly! At the current rate of production, the company has 9 years of reserves. Some of EVN´s mines are just a license to print money - Ernest Henry ist just outstanding, but Cowal, Mt.Rawdon and Mt Carlton are also doing very well in that regard. Honestly, I can only repeat what I said earlier: Why the hell should one own Newcrest, if one can have some EVN? The stock is down a little today, as Mr.Sawiri sold another 5% of EVN late eyterday after market in a book-build. Good on him - it´s a bit annoying for investors and for the company, but the guy has trippled is money in a few years, and he is still holding 15% of EVN Evn though EVN are very liquid already, Sawiri´s sell-downs will only improve liquidity further from the current 30 mill$/day.

The company has slightly increased guidance for the year in terms of production, and has lowered the forecast for AISC to a sensational 780-820 A$/oz, while cutting forecasts for capex to 260-280 mill A$ from 260-345 Mill A$.

We are all sick & tired of delays, approval problems, nationalistic tendencies etc etc ion all sort of countries - Australian production clearly deserves a premium!!

Genex - while we are waiting for some kind of financing approval from the Northern Australian Infrastructure Fund ( NAIF ), an independant comission has advised the government to loosen the investment rules for the fund. The 5 bill A$ fund, established 2 years ago, has only made one investment over 16 mill A$ so far. In a parlamentiary hearing in Feb, the MD of the fund had told a hearing, that the fund was expecting to make 2 bill A$ worth of inevstments before the 30th of June. We expect, that one of these investments will be Genex´s project. In any case - inevstment guode lines should be made easier soon, which is good news for GNX, as the NAIF-inevstment in subordinated financing would be very very important for the project.

Have a nice weekend!

General - Nickel - Strike - Breaker - Gascoyne

Good afternoon

US consumers will love Trump...Aluminium up by another 4% or so to 2627$/t, up by 30% since sanctions were imposed. Yes, it hurts Rusal - but it hurts consumers around the world much more. Goldmans see potential for Alu to go to 3000....in the meantime, gold is marching...currently at 1352 $...and the entire base metal complex is very strong. Nickel is up by more than 1000$ to 16260 US$lb in early afternoon...!!! Copper is trading above 7000 US$ for the first time since late February.

Inflation in the EU has been revised down to 1.3%...

Nickel producers WSA and IGO have made new highs in Australia today, while my darling Panoramic has been up, but is still trading 20% below recent highs ( I think, though, that teh stock had run a little ahead of itself ). In any case - at todays currency and at 114.800 US$, the NPV of PAN´s Savannah Mine is 360 mill A$ = 73ct/share....On the charts, next stop for nickel is 20000$/t - at that level, the NPV will be around 1.50 A$. But there is no doubt, that current base metals prices are politically driven, and might be short-lived. In the long term, I see no problem for higher prices, though. BHP reported today in Shanghai, that they will be trying to beef up their nickel production , as off-take from the battery-industry is very strong, partially driven by increased use of 8:1:1 batteries, which use dramatically more nickel than lithium-ion batteries used until recently . These comments were along the same line as yesterday´s comments from Cobalt 27, who were talking of a stronger and quicker uptake of electrical vehicles, driven by China, than estimated by many market participants. And last but not least, Vale´s nickel production fell by 18% last Quarter ( though mainly by mine closures, which were unprofitable at last Quarter´s prices )

I am expecting an announcement from Panoramic on financing/re-start of Savannah before the end of June, and if the current run-up of nickel prices looks sustainable, I would even Lanfranchi to re-open at some stage....

Gascoyne - updated the market today on construction progress. Fair to say, that construction is just about to be finished...first gold pour is expected now for mid-May, more than a month early, and the project is under budget. I think the stock should be rerated, once comissioning-risk is gone...At the current gold price of 1740 A$/oz, the mine should generate something like 88 mill A$ in operating cash flow for each of the first two years. The EV of GCY should be around 290 Mill A$, once the mine has been comissioned - that makes GCY very cheap, in my opinion. Any hint of additional mine life ( currently only 6 years ) via exploration could see them quite easily at 75ct vs the current 53ct share price. Again - I think we should see something similar as we have seen in the gold sector: There is hardly any country risk for Australian producers, and they should trade at a premium! The same, by the way, should apply to Canadian base metal producers....you should buy some Foran Mining!

Breaker - what a disappointment! I have to say: the market is always right! The stock had been on a slow retreat since early this year, amid rumours, that the resource does not hang together. Consistent, pretty bullish talk by the MD, Tom Sanders, has been proved wrong today. The maiden resource of 624.000oz ( 11.8 millt at 1.6g gold ), about half of which are in the indicated category, are disappointing. I would have hoped for a resource close to 1 mill oz. While there is clearly upside from drilling here, this maiden resource, which came out 3 month late ( i.e. had 3 additional month of drilling ) is underwhelming.

Strike Energy - two announcements today re JAWS 1, the very important exploration/production testing well. The injection of concrete could not sufficiently stabilze the well bore. Hence, the company along with rig operator Halliburton have decided to side-track the well, which to me, looks very unproblemematic. The well will now be fracked from below the seam ( see announcement today ). I cannot judge, whether this frack will be as good as the originally planned one - obviously, it has not been the first choice to frack this way. According to the announcement, fracking has been done succesfully this way in the States. Let´s keep our fingers crossed - my feeling is, that we need a bit of luck here!+

As I am finishing, metals are mega strong...nickel at 15.360 + 1145US$/t! That´s pretty amazing...

Have a nice day