Market Update

Regarding this blog - KGL - Highlands Pacific - Sheffield

Good afternoon

I have had some complaints recently - so I would like to take the opportunity to express again, that this is a very superficial blog only! This is no research, no proper analysis - I am only expressing my very personal views here, written somewhere in between during my normal workday - when and if I work, and if there is any worthwhile news ! Whoever does not like it, obviously should not read it!

Nickel is trading at 9 A$/lb now..but nickel producers are not moving! some profit-taking in base metals otherwise....and more and more people talking about the effects of Brent trading at 80 US$+....and about the fact, that most producers have done their home work and have cut costs substantially.

KGL Resources - I do not follow them as closely as I used to these days...but the resource estimate, announced today, validates good old Simon Kidston, who has always been a believer in this asset: 384.000t of copper at 1,53% copper, basically all underground and at a cut-off grade of 1% for underground - material. This is an increase of 18% in t, and by 43% in grade - the latter being very important for the potential viability of the project. Exploration is nowhere finished, nor ar the main ore bodies closed off. This is still not a definite goer - only time will tell...but for the patient investor, this thing is a hold with some light at teh end of the tunnel. Certainly the best state this company is in for many years!

Highlands Pacific - this is a very different animal! They had their AGM today. The resources they have are massive - but they are all in PNG = at the end of the world - and HIG is only a minority holder! They currently own 8,6% of the Ramu Nickel Project, which is producing 34.000t of nickel and 3.300t of cobalt for the long term ( 30 years + ), and an asset, from which HIG is getting dividends now. They own the Star Mountains gold/copper project, and they also hold 20% of the Frieda River project, which has 13 millt of copper, and 20 mill oz of gold in resources - but which is a many years away from production. IF the EV-story does what many believe it could to the long term demand of copper, assets like this one could be very vaulable a few years down the track. An interesting stock to watch, and I have no doubt, that the underlying long term value of this company is much higher than the current 81 Mill A$. But when this value will be realized, is anybodys guess! Given the current interest in nickel + cobalt, I think the stock could be in for a bit of a run this year, following 9 month of consolidation.

Sheffield - their Native Title hearing was concluded today, with a decision expected within the next 4-6 weeks. The company is also talking directly to the Aboriginal groups to get a deal done, potential before that.

Have a nice, long weekend!

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Genertal - Nickel/Panoramic - Liithium/Mineral Resources - Paringa

Good afternoon

well finally the Europeans seem to plan independence from this ex-allie ! Trump is cancelleing a mutually agreed, agreement with Iran - unprecetended action - and is expecting Europeans not only to follow with this breach of international law - he even wants to sanction European companies, which are sticking to international law! Incredible, that it took Europe so long to raise it´s voice against this lunatic...

The US 10-years are now clearly through 3% - I am pretty sure, that this is behind last days pronounced weakness of gold....Base emtals in general have been performing quite ok in light of the strong US$, which has been helped by some strange comments out of Italy....

Nickel is the standout - except for a few hot days, when the market was speculating about more US-sanctions, it´s trading at the highest in 3 years - and at 19.500 A$ in the moment = 8,84 A$/lb. With copper at 3,10 US$, cobalt above 90$, and the A$ at 75ct, Panoramic will make a killing once they reopen Savannah. I have not heard anything new - but I am of the strong believe, that the company will be ready before the 30th of June to give it a go-ahead. At 8,80 A$/lb, the company should generate nearly 100 mill A$ free cash flow from the mine - obviously, that´s pre tax and pre head office as well as pre exploration. But nevertheless, at 5x free cash before tax, that should be sufficient for 400 millA$ EV...or a share price of 81ct = 60% upside from today....not bad for a stock with very limited operationally risk. Goldmans are very bullish for nickel for years to come - one caveat: in the short term, they could well see some weakness. That risk certainly is a real one: NPI producers are making a lot of moeny at current nickel prices, and tehre is every incentive to churn out as much of it as possible. That´s meeting a market, which for now only needs a limited amout of "traditional" nickel, as I call it, as the EV-market is only gaining pace in 2019/2020.

In the long run, and with some xciting exploration results hopefully being announced over the enxt few month, my good olf favourite PAN can go a lot higher....especially, if Goldmans are right!

Paringa - what a nightmare! I have very limited time today, but a mixture of regulator demands, bad weather, and more time to cash flow have led to a large placement/rights issue today. As you know, I always regarded the financing as very tight...but I would have never expected a 30 mill A$+ capital raising - rather 10 mill! There will be a 1:3 rights issue for all shareholders, and there is ample time to form a view. I will talk in detail about this one next week. In any case, it has been a communication nightmare for all of us - management is looking very bad here, in my opinion. But at the proposed rights issue price of 22ct ( the stock is trading ex from tomorrow an ) , this thing is certainly priced to get this done easily, and management is taking up 2 mill$ worth of stock!

Lithium stocks - two very big announcements over the last 2 days: Firstly, the Chinese are buying the large stake in market leader SQM at a fantastic price...secondly, Tesla has signed a long term off-take agreement with Australian hard rock producer Kidman Resources. This is amazing and especially interesting, as KDR will only start producing in 3 years time, at a time, when there will be ample lithium on the market - well, that´s what some lithium bears have been telling us! Basiacally all up-and coming producers have told us over the last few month, that they are finding multiple parties as offtakers for their product - perhaps the market is way too cautious od prices for lithium spodumene, and certainly battery-lithium??? This augures well for my favourtie Mineral Resources, who finally have now put 50%& of their lithium interests on the market. Looking at SQM for example, and teh uncertainties there, MIN might find a valuation for 100% of it´s lithium much closer to 3 bill A$ than 2 bill A$? The stock could well see 25$ thius year, which is 2%% upside for a stock with very strong dividends, and a great management team!

So far so good, have a good evening!

General - Albemarle/Min Res - Peel Mining/Foran - West African - Highfield

Good afternoon

the Sun King most have a that warm and fuzzy feeling again...45 Palestinians dead in Gaza , and the Chinese happier with him , as he overturns the sanctions on ZTE Corp.....what a disgrace!

Equities are shrugging off every bit of bad news these days - they are stronger in the US and are strengthening currently in Europe...bonds weaker in Europe...the 10-year holding at 3% in the States for now.

Metals are mixed - nickel is up quite strongly today, apparently on technical buying ( according to Bloomberg ).

Albemarle is reporting, that industrial customers now want 10-year contracts for delivery of battery-lithium - that is unheard of in the mining industry. Does not really sound as if battery-producers believe the story of ample supply coming! I think quality producers like Mineral Resources, who are heavily investing in downstream rather than just producing spodumene ( = lithium concentrate 6% ), are still absolutely ok to hold, or even buy. They have the added sex-appeal of being in the process to sell part of their lithium assets - presumably at a fantastic price. The company has a habit of looking after it´s shareholders ( well, the MD owns 11% of the stock ) , and I have no doubt, that we will be looked after again, if the sale price is exceeding 1 bill$....which the company does not really need for current expansion plans. By the way - it´s not that MIN want to get out of lithium - but the earnings are extremely heavily geared to it, and I believe, that they just want to balance the companies assets a bit better.

Peel Mining - the company announced some more drilling results from deeper drilling., which confirmed continuity with excellent grades. St.Barbara had a good idea of buying them earlier on, to currently own 16% of the company. But at 120 mill A$ market cap, and Foran at 50 mill A$, I know which one I would prefer! PEX have not even announced a resource as yet, while Foran is much more advanced, having completed a PEA and working on the feasibility study.

West African - have today completed the placement. Van Eck International Investors - that´s the Joe Foster managed fund, not the Index fund - have become substantial shareholder with 37 mill shares.

Highfield Resources - the company is currently fine-tuning the feasibility study - as if they have not had the last 2 years to do so???? The comapny is indicating higher capex, based on this work. The company believes, that this optimisation work will be finsihed by the end of August!! I am asking: What the f..k have you done over the last 12 month????And reading this announcement, it will not get just a few mill $ more expensive...they will also include the salt plant into Stage 1, not only Stage 2. And they even dare to ask for a 45-day extension to the ministerial deadline to answer recent questions! someone urgently needs the sack, I think...but I have not spoken to the company as yet.

Have a nice evening

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General - Sheffield

Good afternoon

Industrial Production in Euroland was weak in Quarter 1....

Europe is just soooooo p...ed off with Trump following the cancellation of the Iran-agreement! Nobody seems to worry about the Saudi Arabia role in all these Mideast-conflicts...Ah yes - I forgot - they are buying American weapons! Oil is filling their coffers once again, and they can replace all these weapons being destroyed in Jemen. I do not believe, that oil will be going through the roof...."somebody" will supply enough of it !...On an other issue, it looks like Mr.Cohen has received a lot of money over the last 2 years for "consultancy-work" - some from large corporates, wanting an inside into Washington action, and apparently ( but unconfirmed ) from Mr.Vekselberg....The Cohen-investigation could be still good for a few, wonderful stories, I think!

The US- Ambassodor in Germany is off to a flying start with some extremely tactless remarks......everybody loves him already!

It´s really amazing and very sad what happened to the German-American friendship! I guss following would emerge in a poll, asking : Whom do you regard as being friendly with Germany, the US or Russia

1970: 79% US / 3% Russia / 18% undecided

2000: 77% US / 7% Russia / 16% undecided

2005: 70% US / 9% Russia / 21% undecided

2018: 58% US / 16% Russia / 26% undecided...and I might well be conservative here!

All the above numbers are pure gusswork - but I could well imagine, that they might be representative. This is what Bush / Iraq war and Trump have done to the relationship!

Surprisingly, metals as well as equities looking all green today...

Sheffield Resources - I received a very good research report on them today, by RBC. They value SFX at 1.50 A$ on the basis, that tehy will have to raise 130 Mill A$ at a 15% discount to todays price to bring the project into production, using a 10% discount rate. Just imagine, that Iluka takes them out ( nearly debt free, with an estimated 400 mill$ free cash generation next year, and falling production from 2020, just as SFX´s project could be up and running ) - for them the company would not only be worth something like 2.50 A$ - it would also conserve their dominant market position. We all know, that Aboriginal approval is holding the project back...but while this is a risk, I have not seen a project in Australia falla way, unless it was in really sacred land, because of this issue. I am very hopeful, that SFX will have all approvals in place by 30th of June....that should see an immediate rerate of the stock, and open the doors for a takeover or alternatively, a large offtaker/trader taking a sizeable in the project, or the company. Well, I hope! But this is a classy project, and lots of players are watching!

Public Holiday all over Europe tomorrow...have a good time!

Schröder Equities GmbH

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Tel. +49-89-4613440-0

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email: wschroeder@schroeder-equities.com

website: www.schroeder-equities.com

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

General - Gascoyne - Genex - Strike

Good afternoon

sorry..I have to be a bit short today...

Industrial Production in Germany surprisingly strong, up by 1% vs expected 0,8% - that´s up by 3.2% YoY.

Chinese Export numbers were strong - imports even stronger...

The US$ is very strong against Euro as well as A$ - metals are actually holding up well - copper weak and down by 1%.

Dimon sees a very real chance of the 10-year bond falling to a yield of 4%, and I guess he is right so - historically and leaving the last 10 years aside, that is still relatively low! Since 1960, the average yield of the US 10 year has been 6,2%! - since early 2000, it has been 3,45% ( and that obviously includes all QE after the financial crisis )!

Nevsun under Siege from Lundin and Euro Sun, who were prepared to pay a 30% premium in a joint bid, which was turned dowen

Genex - have a new MD! This was actually a surprise for me - well kept secret! The old MD, co-founder Michael Addison, remains a non-executive director of the company. The new CEO, James Harding, has been GNX´s Executive General Manager since June 2016, and had a major role in building Stage 1 of the solar project. He has extensive experience in this space. The move looks very friendly and must have been planned for some time, as a new board member has also been announced: Teresa Dyson, ex-project finance and M&A lawyer, with several board seats in the energy and infrastructur space. I do not know her, but she seems to be a very strong, new director of the company with a great skill-set for what will be needed at GNX.

In the meantime , generation of the Stage1 solar project is increasing as planned.In March, the capacity factor was 25%, in April 31% - analysts have been using 33% long term, and that looks to be reached this month. So called "practical completion" had been scheduled for July, and should be easily achieved.

Gascoyne - very nice announcement today - even though not really unexpected. Ore comissioning of the new plant has started - they expect the first gold pour in Mid-May....that is a very good result, 6 weeks ahead of plan, and also under budget. Now we are off to the finish....all should be fine, and I guess we will know in a few weeks or say 2 month, whether grades are coming in as planned as well as recoveries. This is all pretty much standard - but we certainly have seen mines in the past, where "standard" did turn out to be a nightmare! But no indication at all for this here - Dalgaranga should make some very good money, and Gascoyne whould rerate over the next few month. Exploration will also be of interest - my impression is, that the company has been holding back in spending cash - that has changed, and drilling is in full swing.

Strike - the company is very positive on their well....They actually do not see the current tech ique as the second choice - but apparently, it has been the riskier choice, and they only took it out of necessity. Anyway - all going well, fracking should start in 1.5 weeks...and then we will wait! Once fracking has been completed, it will be another de-risking event....after that, "only" flow-testing. The chairman has bought another million shares as well. While thi is not all that much money for him, he is the type of guy who hates loosing some! In any case - 8ct feels a lot better than 5.5ct....and once we are in double digits here, I will start to feel better after a very long time!!!! As you all know - this is really ( nearly ) all-in.....the stock will not go to zero in case of fracking not working - but on the other side, this is a very large gas deposit, and the upside would be dramatic.

Have a nice evening

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

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eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder