Market Update

General - Syrah - Foran - Oceana - Mineral Res - Paringa - Sheffield

Good afternoon

Very good to see, that the two nice guys are getting on so well with each other, to develope what Trump calls a special relationship! So nice.......

CPI in the States exactly in line with expectations. German Investor Confidence falling quite heavily! OECD sees Germany growing by 2.1% this year and enxt, after 2.5% in 2017 - with risks to the downside from protectionism and Brexit...and I guess Italy!

Lots of positive vibes from the ultra succesfull listing of China´s largest manufacturer of batteries yesterday at a 45% premium. The new boss of Swedish mining company Boliden bullish for copper, based on additional demand from EV-industry - and certainly on nickel. He is expecting different markets for nickel for batteries, and nickel from NPI for some types of stainless steel.

Interesting play developing between the biggest mining egos of Western Australia! In the first place, Min Res ( Chris Ellison ) made a bid for Atlas Iron - then Andrew Forrest bought 20% of it...and today, Gina Rinehart ( Australia´s richest person and the iron ore baroness ) has also bought 20% of Atlas!!! Big stuff...no doubt, that Gina has the deepest pockets - but not sure about her intentions!

Somebody is still investing in the DRC...and not surprisingly, it´s China! CITIC is buying 20% of Ivanhoe Mines in a placement at a premium to the market. Ivanhoe is devloping a huge copper project in the country.

Cobalt 27 and Wheaton are doing a streaming deal for Cobalt with Vale, giving them 690 mill $ to develope undergound resources of nickel and cobalt at their large mining complex in Canada.

Syrah - what will be the world´s largest graphite miner is under presssure from sovereign risk! About 500km from the mine in Mocambique, islamist terrorist beheaded some people. I have not ehard about this kind of story from Mocambique so far....certainly bad news. But operations of SYR have not been impacted in any way so far. Let´s hope, that this kind of terrorist activity does not spread in the country!

Oceanagold - the company announced some really excellent drilling results from their Waihi project in NZ. 5m with 60g gold; 9m with 30g; 42m with 7 and similar results from two different veins open up a realistic chance for a much longer mine life. OGC is now much more seen as a North American mining company, than an Australian one...so they are subject to the well-known, negative vibes in that market. I think the stock is worth a very good look! Yes, there are country risks with OGC - but country risks seem to be nearly everywhere these days!

Foran Mining -placed about 7 mill Can$ today/yesterday ( stock was suspended) at effectively 48ct. A special Canadian way in doing so...company placed some stock at 66ct to Canadians, who are able to get some immediate tax write-offs to effectively pay around 48ct as well. So the company gets the placement done to raise 7 mill$ for approx 12.9 mill new shares at average price of approx 54ct. Excellent news - the company is now easily financed to decision to construct a mine, expected by mid 2019. Foran is finishing their part of the deal - convert resources to reserves - over the next few month, before Glencore takes over to finish their part of teh feasibility study within 9 month. A lot of work has been done in the past - so I would really not be surprised to see them finishing faster than that. The project is more copper-than zinc-sensitive at current price levels, so they do like copper at nearly 3.30 US$/lb! If I assume, that all is going to plan, Foran will come into production at a time, when very limited, new supply is coming on stream....It took a long time ( as usual!!!! ) , but perhaps it actually works to the companies benefit! Stock should have a nice move now, I hope!

Mineral Resources - it looks like the company might not achieve it´s target for shipments of Direct Shipping Ore Lithium for the year to 30th of June, based on port figures up to the end of May. A rare miss for this excellent company! I think current weakness is providing a good buying opportunity!

Paringa - suspended ! management changes expected.....someone has to take the blame for recent disappointments? I think it would be well deserved!

Sheffield Resources - the Minister for the Enviroment has cleared most appeals to the Works Approval for the Thunderbird Project, with some minor, suggested changes to conditions. Over the coming weeks, SFX will finalise the consultation process, with definite approval expected early in the 3rd Quarter - I guess that is in July! Another step in the de-risking process, even though this one was totally expected. The main news will still be Native Title Approval - the Native Title Tribunal is expected to make a decision this month - anything else but a positive one would be a sensation...

Have a nice evening

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General - Metro Mining - Mineral Resources

Good afternoon

so it looks like China will import much more agricultural product from the States...keeping Mr.Trump happy... Hi Australlan vasalls will love to hear that! Got to be bad for Australian meat exporters especially.

Metals come back a little now, having started the day very strong and giving in to some profit-taking now. But copper still up more than 1.4%, nickel by o,6%. Quite incredible! The weaker US$ is helping a bit - the Euro is getting stronger, as the market is expecting a more definite end to the ECB´s bond buying. Having said this - German Factory Orders were pretty weak today, and actually down a fraction on a year ago! European exports also weaker. Germany´s economy is holding about because of consumption and building/construction - but I am surprised, how well consumer confidence has been coping with all the political schlamassel!

Macquarie has turned much more positive on nickel! From being cautious in the short term, they are now expecting prices of 17-18.000 US$/t ( ! versus 15.700 today ) by year end - mainly based on strong stainless steel production, and enviromental crack-down on some NPI production in China! Also, respected broker Euroz with a strong update-report on Panoramic. They only expect re-start announcement in the 3rd Quarter 2018. I guess that´s anybodies guess - might well be, in any case, it won´t be long!

Mineral Resources - sorry,a gain! As you know, MIN ahve made a takeover-bid for Atlas Iron, an existing iron ore producer. The main attraction of them is a substantial allocation of port capacity at Port Hedland. For me, this bid made a lot of sense strategically, even though it increased iron ore leverage of MIN. Today, Fortescue have bought a blocking stake of 20$ in Atlas Iron, at a relative hefty price of 4ct. Their bid can only have two reasons: Prevent new competition increasing it´s market share, and blocking access / increasing their own access to valuable port capacity. Nobody believes, that MIN will be drawn into a bidding war here - hence, the stock was up today. As I said - strategically I liked MINs move - but for now, lithium and the pending sale of a stake in Wodgina are of dramatically more relevance!

Metro Mining - have suffered a few small delays to bring their brand-new bauxite mine into production , but have landed ( and received payment ) for the first cargoes into China. They have also secured the first spot-sale, which took a little time as well. Cash is always tight in the early days of a new mine - so the question is, whether these guys might need a little bit extra! The share price is down by a few ct, showing these concerns. Whatever happens with short term cash - this is a good story, with a cash-printing mine, once in full production. I would wait a little, to be on the safe side - but in the medium term, 21ct will prove to be a bargain for this stock.

Have a nice evening

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Mineral Resources - Berkeley

Good afternoon

Some talk around about some end to the ECB buying bonds could be discussed soon is not helping European equities today.

SQM, the biggest Chilean producer of battery lithium, is trading at about 10x EV/EBITDA for 2020, while Mineral Resources in Australia is trading at 5x....and is probably the much better company. SQM is probably 25% too expensive, while MIN is 25% too cheap! While waiting for this gap to close, you are sitting on a 5% div-yield in MIN as well! I think a lot of investors shy away from MIN, as the stock has more than quadrupled since early 2016 - but their value-generation via lithium projects has been stunning - from about zero, to one of the largest miners in the world of contained lithium now. Bloomberg predicts, that capacity of lithium production until 2020 will be sufficient - but needs top quadruple again over the following 10 years or so. There is still room for fast movers!?

Copper is making a new high 7-year high today in A$ terms - and is getting close to recent highs in US$. Traders just love this Escondida strike threat! While Escondida went on strike last year for an unprecetended 44 days, this year, the copper market is much tighter - hence a prolonged strike could have a big impact. The weaker US$ is certainly helping as well, especially gold, which is trading at 1300 in the moment.

Berkeley Energia - is listing now on the Main Board in London, and will soon also list in Madrid and Barcelona. The uranium price is finally moving, as the largest producer, Kazachstan, has promised more capacity cuts. Last time, these cuts did not come through as expected - so I am sure, that there is some wait-and-see attidude with investors.

Otherwise, a thin day today in terms of news!

have a nive evening

General - Gascoyne - Mineral Resources - Prairie Mining

Good afternoon

very strong numbers from the US on services industry, while Europe´s growth in the sector is weakening.

Trump is asking his Saudi-mates to increase oil output by 1 mill barrel/day - that´s the rumour. WTI is now trading 10% below it´s recent highs. Still a nice price, though!

Base metals strong despite renewed strength of the US$ - copper helped by some agressive union talk at Escondida, and a Bloomberg report about the enviromental mess at the Grasberg Mine, while nickel ist trading at a new, recent record price amidst a strong drawdown of LME stocks in Asia. Nickel now above 20.700 A$/t or nearly 9.40 A$/lb!

Gascoyne - is now producing gold! It took them until 31st of May - so not as quick as expected by some, but still several weeks ahead of original plan. They are now fine tuning the plant, and especially recoveries. This is usually done with lower grade material, to avoid any waste of "good ore" - so do not expect any huge numbers for the current Quarter. I think they might take until End July to be fully up to speed. The two main issues now are: do grades stack up to expectations? And does the metallurgy work? Not to be under-estimated - but this should be a relatively easy mine, so I am positive for the ramp-up to live up to expectations. In the meantime - to be exact: today - the company announced some excellent drilling results between two planned open pits. Grades were substantially higher than reserve grade, and in so far, these results open up the possibillity of some better grade, near mine reserves. Another 40 drill holes to follow up have been started already. Following receipt of these, it should be easier to see, whether there is real potential. But certainly, a very good start. Just a reminder - every year of additional mine life should be worth something like another 15ct in the share price, due to the current, limited mine life. So - still some risks out there, as always - but it feels pretty good so far! If they can show substantial upside from exploration, they would be a prime takeover candidate for some of the fabulous 5 - producers in Australia.

Mineral Resources - quite a bit of speculation surrounding their sale of a big stake in their Wodgina Lithium asset. This asset is making up a very large part of the valuation ( MIN are currently capped at 3.4 bill A$ ). Bought only a few years ago for 50-60 Mill A$, it has been a stunning success for them - producing direct shipping lithium ore, and in the process of building 750.000t of capacity of spodumene production ( lithium concentrate ). The feasibility study for the production of 56.000t of lithium hydroxide ( battery lithium ) is in full swing. The company has indicated, that they expect capex to be around 600 mill US$, which should be about in line with expectations. We have had some positive noises from the battery /EV industry again....Pilbara reported to be sold out, and to have many additional enquiries, while AUDI and GM are pushing hard to bring new models for the chinese market. Daimler had to push out their release dates for a few models - apparently, a shortage of batteries behind it. So I am very sure, that there will be a lot of interest in MIN´s sale of 50% or so of Wodgina. The transaction should value the asset at anything between 2.5-and 3 bill A$. The company has some big plans ahead, and some cash will be needed for those - but i am also expecting a large, special dividend + perhaps a buy-back as well. The largest shareholder is the CEO - so a big div is more probable than the buy back. Chris Ellison does not muck around - so this sale will not take very long to be announced. I still like this stock - if tehy shoudl get close to teh 3 bill A$-mark, the stock should be trading closer to 25$ than 20$, in my opinion.

Prairie Mining - following JSW´s remarks yesterday, and especially their comment "to hopefully make a decision in July " regarding a deal with Prairie, the stock shot up 24% in Poland today and was also strong in London - both markets now trading at the equivalent of about 45 Australian ct. Perhaps the Polish trust their courts and government bodies more, than we do!!

Have a nice evening

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General - Strike - Prairie Mining - Paringa - Genex - West African

Good afternoon

from my best friends 60th birthday in Mallorca, I am back in the real world!

We have just finished the warmest May since at least 1881 here, and everybody is wondering, what will happen in summer, with spring seeing several days with above 3o degrees! No - there is no global warming!!!

I am absolutely amazed, how well financial markets are doing! Trade war, Trump, Italy, Spain - a G6-against 1 meeting of finance ministers on the weekend, and what promises to be an interesting "G6-against 1" coming up - nothing seems to be bad enough to derail markets!

Some excellent labor-market numbers in the States have certainly helped to bolster confidence, but the ( much less important ) investor confidence in Germany today was hit by the Italian malaise.

Escondida´s workers handed in the most agressive pay-demand seen so far, pointing out, that the world´s largest copper mine cash costs are falling, while copper prices have generally been rising...This one could turn out to be ugly, and many others are watching the outcome. So far, we have had relatively little disruption of copper production this year - this could change!

Nickel has been the absolute standout base metal this year so far. Most commentators are surprised about the short term strength, given the fact, that current prices of around 7 US$/lb are great incentive for NPI producers to churn out whatever is possible. Perhaps todays announcement by the Shanghai Metals Exchange, to think about starting a seperate contract for nickel briquette ( = Nickel Cathode for battery-use ) has been bullish for some investors. In any case - what a fantastic price for producers like IGO, WSA and my favourite, Panoramic ( from which we are all expecting an announcement to go back into production some time this month?? ). Until now, it has been a golden decision to not rush back into production, especially, as financing for nickel projects is becoming more agressive by the month!

Strike Energy - I am sure you can imagine my gratification about the best turnover in the stock in many years!! Nearly 20 mill shares changed hands, and the stock closed 28% up!! I have been waiting for this one for sooooo long! Anyway - the company announced, that the 7-day fracking has been completed, and has been very succesfull! This is the first fracking of this kind being done in Australia, and I think many specialists have been watching it with quite a bit of scepticism! The gas has been known to be in place for some time - the fracking has been very successfull - now the most important part of this well Jaws-1 is to come: The flow-rate! Technical risk has been minimised now, the pumps will start pumping by latest mid-July. But in the meantime, I am expecting some more technical information, which should keep interest at a very high level. So - some more luck needed - but since we have been waiting for it for at least five years ( and sometimes in despair! ), I think it would be very well deserved!!

Genex - the ramp-up of Stage1 of their solar-pump-wind project is more or less fully ramped up now, and so called practical completion is to be expected as anticipated in July, from which time on the guaranteed price deal will be in place. Financing for the pump-hydro and the Solar Stage 2 projects is advancing - political pressure on the North Australian Infrastructure Fund, to finally get a few projects going, is still massive. Not sure, whether the plan to have a breakthrough here in June can be fulfilled - but by July I am very hopeful to see strong progress. I am not sure, whether I have reported here about a possible add-on deal, to install 150 MW of wind power as well. Basic landowner agreements have been but in place, and GNX could be the first project ( I think worldwide ) to combine solar-, wind- and hydro-power on large scale. I am still a large holder here as well.

West African Resources - reported some more excellent drilling results last week. Infill drilling from shallower zones at the M1 highgrade resource delivered as planned, as well as step-out drilling at a depth of about 550m, and about 20m apart from previous high grade results. The latter assays are not out as yet, but the drill core included intersections with visible gold. This latest extension will not be included in the up-coming resource estimate, as they are too late for this to be included. The announcement is expected this month! Important also, that results from drilling of the M5 deposit have also been very positive, and should help to start a scoping study into underground mining of this deposit as well. As you know, I ahve been slightly disappointed by the size of the recent placement ( which as heavily oversubcribed ) at the current price of 32ct. But as the company is now planning to go it alone on development, it made sense - enabling early development of underground access to the very high grade ore. I remain very positive here - the resource/reserve statement, as well as the full feasibility study within a month, should be very exciting!!

Prairie Mining - oh no!! Another blow! It appears that they got completely f...ed over by Polish nationalism! Yes, they have positive court decisions on their side...but does that help them? No....International arbitration is certainly a very valid option, and I do expect the company to take this route - they have to, in the interest of their shareholders money, and to protect this. Obviously, that will / would take time, I suspect years. The other way out is certainly still a sale to JSW, the Polish coal miner. The CEO of JSW is today quoted in Polish newspapers, to still talk to PDZ about buying some subsidiaries, some assets, or the entire company. At the same time, he is talking down the assets. I guess negotiations between JSW and PDZ will have to arrive at a reasonable price to avoid international arbitration - but what will a resonable price be?? Certainly far from "real value" - but I suspect above current share price? The company has exercised it´s right to force conversion of some convertible bonds at 33 USct - that´s about 43 Act. I think it would be very unfair to come to a deal with JSW below a valuation of thet price. Nobody really knows at this stage...I am keeping the stock in my portfolio, but I do not dare to buy any, as one probably should.

Paringa - the disappointing and surprisingly large placement/rights issue closes this week. As one would expect, the stock has come down to the placement price of 22ct. Broker estimates I have seen post the rights issue value them at anything between 33ct and 55ct....The market leader in this field in the States, Alliance Resource Partners, have jumped from recent lows below 16$ to nearly 20$...A much nicer share price to make a paper bid for PNL? In any case, I believe that the current pricing in the market is more due to technical issues, than fundamentals...deep value, in my opinion - and thank god, it´s not in Poland!! The first mine will now be in production in the 4th Quarter, to be cash flow positive in the second Quarter 2019. On company numbers, they should produce 41 mill A$ in EBITDA in 2019/2020, and more thereafter.

Australian gold miners have now outperformed their North Amrican counterparts for 5 years or so...and this outperformance has continued this year, and even last month. To be very honest - and you know, how much sympathy I have for my Australian friends, and especially Evolution - this cannot continue??!! It only applies to the fabulous 5 - EVN, SBM, NST, RRL and SAR...especially the stocks active in Western Africa have been left behind big time, like Perseus or Resolute. In light of the detoriation of some of theses countries, perhaps understandable - but also overdone?

Have a nice evening

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