Market Update

General - Highfield - Syrah - Prairie, sorry, again!

Good afternoon

Equities obviously like the US elections…the US$ is weaker, US bonds are stronger - I guess the market expects the Democrats being able to reduce excessive spending by Trump.

Metals are unchanged today, while cobalt is strong, following the announcement of Glencore, that high levels of radioactivity in a large part of their Congo-production stop sales of it, and will severely impact 1st half 2019 production as well. From surplus to supply deficit in one day!

Analysts from Goldman´s, Antaike and Glencore do not believe as yet in a threat to nickel prices from new HPAL production, planned for 2020 in Indonesia. HPAL projects have a terrible history in reaching production in time and on budget, and in this case, it will be even more complicated to eventually produce battery-grade material ( which is an entirely new process ).

The main , German government advisory group has reduced their growth estimate from 2.3% to 1.6%.

Highfield - very strong today, for a change - Mosaic in the States came out with a very strong result, and a positive outlook for fertilizers.

Syrah - also strong today, after having signed a relatively large off-take agreement with a Chinese group for 20.000t of graphite.

Prairie Mining - the CEO of JSW, Poland´s largest coking coal producer, stated publicly today, that they want to take over control of Prairie and expect to conclude talks in the 1st Quarter 2019. They are now progressing internal approvals, and will work on a valuation of Prairie, without commenting any further. Very timely - as we said yesterday - something will happen here. Prairie jumped by 12% today in Polish trading, on very strong turnover.

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General - Sheffield - Prairie Mining - West African Resources

Good afternoon

equities slightly down in Europe , slightly up in the States - metals slightly down as well except for nickel. Goldman´s and Glencore are of the opinion, that it´s too early to see Indonesian nickel production , using a new process, suitable for electric vehicles. I might add: Even IF - at least 140.000 US$/t nickel have been quoted as production costs, which is 10% above todays level.

Glencore came out yesterday with a very bullish presentation on nickeln…Goldman´s still see 15.000$/t in 3 month / 16.000 in 6 month/ 18.000 in 12 month! Would be nice!!

Prairie Mining - there have been several newspaper articles in Poland recently, where politicians were calling for Jan Karski to be developed, and Debiensko to be brought into production via a neighbouring mine of JSW….the prime minister has verbally and publicly supported, that JSW makes a deal With Prairies….the old Boss of JSW will continue to run the company. Various research reports are seeing the need for a deal between JSW and Prairie, to revive the underperforming company. For me, the only question is, which deal can be done , while saving the face for the Polish. Remember: Prairie bought the two assets for a token - now the Polish will ahve to buy them back. Reportedly, JSW has done extensive due diligence, and should be ready by now to have formed a view. Hard to say, what will happen excatly - but there got to be a deal, and while it will not be a deal close to what the assets are worth, it will have to be at a considerable premium to the current share price of PDZ.

Sheffield - have now the “voluntary” aboriginal agreement, as well as won the court case - nothing in the way anymore to develope this excellent asset, except for one small little problem: the necessary equity! I am still hoping, that it will be provided by a corporate - but the share price is telling me, that it won´t! Pity - the stock is sooo cheap…

West African Resources - no one can say, that the company is just waiting to be taken over! They have started the boxcut for the decline, and have placed order for the sag mill, which is a long lead item, with Otoukumpu. They have also a capable management team in place, which has has built several plants in Africa including Burkina. The amount of equity needed should be relatively small, as debt-capacity of the project is very significant and should be North of 160 Mill US$. The company is also still drilling and should be on the way to produce more than 200.000 oz p.a. for 7 years, given recent exploration success. But this we will only know some time during the 1st Quarter 2019.

Have a nice evening!

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General - Genex - Graphex - Perseus

Good afternoon

The trade war rollercoaster continues …following a really nice week, today metals are under pressure again - the market is rather disappointed today , as the trade war seems to have no end in sight. Tomorrow, the strong man could loose the elction - it remains to be seen, whether he will moderate a little.

European equities are trading slightly positive, while we are angry about the US going it alone on Iran, and pressing everybody to play to their tuen - well, most - some got nice exemptions! Very strange - and we are just letting them get on with it!

US Services Industry still having great momentum.

Genex - had their AGM today. Nothing enw there - except for a comment from the Chairman stating, that the company would expect progress on financing for the hydro project - namely offtake ( agreement ) - in the “very near term”. This sounds great! A good offtake agreement is the last, important issue to be solved before financing can be completed, I believe! And the “very near term” I would think is within weeks, rather than month!?

Graphex - announced a very positive, potential financing for their graphite mine in Tansania, with private equity group Castlelake. having said this - it´s very complicated, and there are many IF´s to be cleared up, before th majority of it can take place. For now, they will advance up to 5 mill US$ to the company, to facilitate everything to for the project to be construction-ready - so the company does not have to raise any more cash before the bankable feasibility study is finished. The debt is expensive - 15%, for 2 years, and 1.6 mill shares for free. Castlelake will provide over time up to 40 mill$ in equity and 40 mill$ in debt to construct the project. GPX wants to keep total equity owned by Castlelake at no more than 40% of the company , though - and the placement will not take place higher than 28ct. The whole thing is subject anyway to various Tansanian approvals. So in a way - yes, we have a financing - but then, it´s highly conditional….The most positive is, that these guys are coughing up the 5 mill now , and will also put in equity later - that´s something tehy have not done in previous financings for mining venuture. So tehy have significant skin in the game at company-equity-level….should prevent them of screwing GPX too badly on loan terms. Having said this - 15% is very expensive - but who would finance something in Tansania these days?! And with a payback of less than a year, I am not too fussed. Will be interesting to see, where this all leads to. A new research report on their webpage from respected analyst Chris Baker. He arrives at 1.69A$ target…In a nutshell: The story is still very good…but I had certainly hoped for a more definite agreement!

Perseus - completes a scoping study for a potential, Yaoure underground development. A preliminary , inferred underground resource of 600.000oz at 6,2g has been estimated, which is quite meaningful. But production from this resource will be starting only years after the open pit has started production…something like 2026. In terms of today´s valuation, this is not all that meaningful, but positive.

Have a nice evening

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General - Evolution - Panoramic - Bellevue Gold

Good afternoon

markets are still extremely nervous…no fun!

The strong labor market in the US is showing up: Personal consumption ( + 4% ) driving a stronger than expected 3.5% growth rate last Quarter. Business investment growing by much less at 0,8%, while inflation pressures very subdued only. Bond markets very strong, once again…

Unfortunately, metals weak today - the US$-strength is not helping, and macro fears are driving them down.

Amazon/Google are dragging US markets down, even though some companies like Intel, Tesla ( Larry Ellison is shareholder! ) and Twitter are going the other way.

Evolution - got permit for the exploration decline at Cowal. Remarkable, how quickly tehse things can be processed in Australia! The first exploration holes can be drilled 3 month after work has started - so we could see first results in Q1 2018. I guess, though, that it might take a little longer, as the recent high grade drilling results are from an area, which will only be drilled further down the track.

Panoramic - interesting enough, the largest shareholder bought another 1% of teh company. He is a private invidual, so no reason to prop up the share price. I wonder what his motives are?

Bellevue Gold - the company announced an exciting resource increase from the are aof the old gold mine with the same name near Leinster in Western Australia - right in the middle of mining country. The discovery of a new lode propelled the resource up by 550.000oz at 22g gold/t, to a total of 1.04 mill oz at 12.3g. The company is run by Steve Parsons, who´s image since running Gryphon Minerals ( and over-promotingit substantially ) is a little bit mixed. There seems to be a lot of upside, still - some people are reminded of Kirkland´s Australian gold mine, which surprised everyone again and again. The diluted market cap is already 220 mill A$…but it looks to be well justified. The company easily raised 15 mill$ at 0,34 A$ yesterday, and has some smart , institutional shareholders. They are worth watching, I think.

Have a nice weekend - I will escape these frustrating markets for a week. The only area of some green spots is gold - but even the HUI got hammered yesterday!

General - Mineral Resources - Gascoyne - Lynas

Good afternoon

well well well…not a nice finish yesterday!

Today, European equities are recovering despite being closed yesterday, when the worst fall happened in N.Y. - certainly helped by some nice moves after market in the States, like Tesla and especially Microsoft. The market continues to be extremely unforgiving!

Base metals looking all right again - unless we see a substantial deterioration in the global growth outlook, most metals appear to be undersupplied in the moment.

IIFO-Institute numbers in Germany , though, suggest just this: Confidence is not looking good here! Bonds are having another postive day today.

Lynas - excellent Quarterly Report out today. Technically and operationally they seem to have averything in hand just perfectly, and the month of September saw a new production record, auguring well for this Quarter - IF they get all the approvals they need. The company has a yearly limit of the lantahnide concentrate they can process. because of strong production so far, they need approval to treat more shortly - otherwise they will ahve to close the plant for December ( which they can use for maintenance ) . The most promising part of the Quarterly was a comment, that some other approvals they needed have started to come through! So there is some kind of friendly collaboration with the auhorities. The much-talked about parliamentary comission will visit the company in early November.

Demand for their rare earth production is rising, and everything looks set for rising prices. IF something negative comes out of the comission report, the price for Neodynium / Praesodynium will sky-rocket, I think! 1/3rd of traditional Chinese production has been closed down for enviromental reasons, and lynas is the only producer outside of China.

Gascoyne - suspended because of board change!!?? Well half od the board incl a new chairman has been renewed a few weeks ago. Unless the new Chairman resigns - I think that would be an event hardly ever seen before! - I can only say, that the Managing Director is also a board member. The fact, that the stock is suspended, makes me think of him….I am pretty sure, that the market would welcome a new MD or CEO, given all the issues we have had. If things are slowly improving - and I believe that the soon-to-be-published Quarterly will show that - the stock is very cheap at a gold price of 1750 A$/oz!!!

Mineral Resources - investor visit to the new spodumene plant in Wodgina. The development is 8 weeks late - very unusual for MinRes! But on the positive side, the company reports on very strong pricing for spodumene - despite recent rumours of price weakness. I think we might ahve to wait for analyst reports on the mine trip - I guess tomorrow - to find out a bit more. Intersting note on the side: MInRes have employed another 830 people last 12 month, and had no big problem to do so. But the MD has mentioned, that the market is tightening up, and labor shortages will emerge soon. Just ok I think for our friends at Panoramic to come into production - anotehr few month wait might have changed that!

Have a nice evening

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