General - the relentless fall of nickel stocks on the LME - Panoramic

Good afternoon

markets like the prospect of corporate tax cuts in China to support the economy…but this BREXIT-stuff is not helping at all, and as the day progresses, stocks are coming under pressure

Producer Price Index in the States a touch lower than expected, especially ex Food and Energy.

Preliminary comments from the Office of Statistics in Germany imply, that the last Quarter 2018 has been slightly positive for German GDP-growth - following -0,2% in teh 3rd Quarter. Rather weak, following a great goldi-locks time for Germany. Government is already thinking about possible support-programs….German 10-year bonds are tarding at 0,2% yield - the lowest ever except for a few month back in 2016. About a year ago, the yield hit a recent high of 0,75%.

Gold ETF-holdings rise for the 12th consecutive day, while gold is hovering just below the important 1300-level. I guess we might need a breather, before it hopefully manages to break to the topside!

Metals also greenish - nickel the standout at about +1.7% late afternoon. Charts are sometimes hard to believe - but the nickel chart looks very good and has a target of 14.000US$t and 18.000 A$/t ( from 16.000 as we speak ). That would be an excellent price! UBS sees continued deficits, averaging 45.000 t per year for the next few years , and expect higher prices, needed to incentivise higher production . Even at 10% higher prices than todays 11.500 US$t, not much new nickel will come to markets! We spoke to Western Areas last month, and their new mine will have breakeven at I guess 15.600 A$/t ( they only quote cash breakeven of 6.10 A$/lb = 13500 A$/t, and that would not include sustaining capital, estimated at 1$/lb - not even to talk about depreciation of the 300 Mill A$ pre-production capex, and a risk-premium ). This project is a good example - without expecting significantly higher nickel prices, new mines will be a rare thing! Nickel stocks in London down by another 1590 t today - we are currently experiencing the largest 5-day fall in a long time.

Panoramic - updated on ramp-up of Savannah today. Company had a few little issues, mainly relating to a tight market for labor - about 60 out of 240 or so jobs are currently filled by contractors - and a severe storm, which did some damage. The company gas drawn the credit line of 40 mill A$ to 28 Mill A$, with cash at bank estimated to be close to 10 Mill A$ - so liquidity is no issue at all. Once cash comes in, I think net debt won´t be far off 40 mill A$ - but that has been expected. By early January, throughput was exceeding 2.000t per day - ultimately, the plant will be able to do about 2.700t/day. Concentrate shipments have been started to the port, and first shipment to China will be in early February - probably 2 weeks later than I hoped for. But all good, and equally important, the development of Savannah North has started, to enable access to that ( higher grade ) ore body from late this year.

Peter will present at our conference on the 22nd of Feb in Zurich - by that time, the ramp-up might be finished, and cash is coming into the door!

Have a nice evening

WS

Schröder Equities GmbH

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General - Newmont takeover - Syrah - Drogba

Good afternoon

Chinese exports as well as imports down - not good! Chinese government targets growth of between 6-and 6.5% this year. If we should have a 6 in front, I would be more than happy!

Chinese copper imports fall in December vs previous month as well as previous year! Given this data, metals are actually holding up pretty well - down by about 0,7% - nickel stocks down by another 1.500t on the LME…

Trump wants to destroy NATO-partner economically, if Turkey moves against the Kurds…I guess both are “nice allies” to have!

Chinese car sales down 4% in 2018…Continental warns of weaker sales in the first half of 2019

Soccer player Drogba sells his 5% stake in the Ity gold mine in Ivory Coast to Endeavour for paper worth 20 mill Can$. Looks like he is not only a better soccer player than myself, but also a better mining investor!

Hot week for BREXIT…

And here we go: Newmont taking over beaten up Goldcorp for paper, paying a 17% premium - 10 bill US$ agreed deal…..big is better! IS BIG BETTER??? I doubt it….even though the company has identified 100 mill A$ in cost custting - the history of the North American Miners taking somebody over, is NOT good…For now, it should be positive for numbers of Newmont, as GG is really beaten up…but these big beasts usually are difficult to manage. The second big company, which will sell assets - and usually, the smaller guys like the Australians have managed to cut costs substantially, when tehy bought from North American majors. In so far - an opportunity for the Evolution/Northern Stars of this world?

Syrah - declared commercial production from 1.1.2019. Production in the 4th Quarter was actually in line with reduced guidance, at 33.000t of graphite , following several disappointments earlier in 2018. Syrah is now looking to further ramp up production. Investors will also be watching, at what price the market can absorb the production. SYR will be the largest producer of graphite in the Western World - not for expandable graphite, though, which has a different target market - not for EVs, but for flame retardent building materials. Given past experience, one should be cautious - but I am toying with the idea to buy a few, as the stock is very cheap, if the company can halfway achieve it´s targets.

Have a nice evening

WS

Schröder Equities GmbH

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eingetragen im HR München, HRB 166985

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The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by

General - Costa Grroup - Prairie Mining - Sugar

Good afternoon

Trump looks like declaring a State of Emergency, as he is fearful for the security of the United States because of not having a wall to Mexico - how deep can this country fall???

CPI and Average Weekly Earnings in the States exactly in line with expectations at 1.9%.

Germany`s Minister of Development and Aid is stuck in Zambia since Monday, as his German and state-owned plane cannot fly because of a valve…well, Angie was late to the last G7 because of her plane not being able to either…Made in Germany….Sounds like an April-joke, but it´s fact!

Equities doing surprsingly well, once again, in Europe today so far - and metals as well! Nickel up nearly 2% at lunch time..stocks falling quite heavily again…nearly 4.000t in two days. Gold ETF holdings rising again for the 10th consecutive day.

The A$ is gradually overcoming it´s recent burst of weakness…now at 0,722 against the US, which is still below most analysts forecast of 74-75ct for this year. Incredibly enough, oil up again - Brent now trading at 62,3 US$ = up by 25% from recent lows. Momentum-Investment in full swing driving the biggEst weekly gain in two years.

Macquarie analysts see indications for much larger than expected cuts in subsidies for EV´s of 50% or so, to be announced in late Jan/eraly Feb.

Costa Group - I ahve been following them for while - but have been a shareholder only for a brief period last year. The stock became one of the market darlings and saw a material expansion of PE´s. Yesterday, the company announced a profit warning and fell out of bed. Code is CGC. Costa produce berries, tomatoes, mushrooms, citrus fruit and Avaocado in Australia, Marocco and China. In fact, often our daily Blackberries are from Marocco, produced by Costa. Hard to call this company an agricultural stock . it´s more industry than agriculture. But the tendency to good quality and healthy food is clearly benefitting them, and Costa is an excellent and generally well management company, with a lot of technical know-how. I am carefully watching them - their result will be out in late Feb, and as so often a second disappointing might well be following the first one. I will probably be waiting until then - but this is a quality investment, and hopefully, we will see even better investment opportunities coming up here.

Sugar - I have been a shareholder in an unlisted, quite substantial sugar-growing company in Australia for a couple of years, and will be looking to raise some capital for them later this year. Australia hs historically been a large sugar exporter, and is generally regarded as a very low cost producer. The best land available for growing sugar cane in Australia is the Burdekin in Queensland, where the company is one of the largest growers. The company has been growing quite nicely over the years, continually raising capital, whenever opportunites to aquire land and to consolidate their large ground position in the Burdekin became available. Cash Yields from farming sugar cane are unheard of in Europe and most other places, and the company has a good track record of growing returns / ha from aquired land. Economies of scale in this unusually fragmented farming area are still to be achieved, and the company has the backing of some of the best sugar-people in Australia. If you would be interested in average , high-single digit increases in land value in Australia, and a mid-single digit, yearly dividend on average, please give me a call to discuss.

Prairie Mining - two deputy CEO´s got the sack against the will of the unions - but the CEO himslef is staying on. He is important for the deal with Prairie Mining to go ahead - but certainly not good, that government as major shareholder and unions are fighting each other. Makes it much harder to get to a sensible transaction re Prairie….

The Aussies continue to be mainly interested in Cricket and Tennis…not much happening . It just took me 5 min to go through all ASX-announcements today!

I hope that next week will see some pick-up in activity….

Have a nice weekend

WS

Schröder Equities GmbH

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The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by

Australian Resources Conference Zurich - General - Perseus - Graphex

Good afternoon

Invitation to our yearly Australian Resources Conference in Zurich - please use this link to have a look at attendees, and a form to attend: https://www.schroeder-equities.com/conference/

Fantastic snow here in Munich, and even more in the Northern Alps!

Equities currently recovering most of their early losses, metals slightly up - again. Nickel stocks down quite heavily today - now at levels last seen at the end of 2013 - and less in terms of weeks of consumption…

Uncertainty in the DR Congo - elections have been a surprise, but a lot of noise about rigged elections…

Many of our beaten up names are finding price-support these days - I wonder, whether we could have a bit of a rally , once and if Mr.Nero ends the government shut-down, and trade negotiations are finding some solutions? As you know, January is generally a month of good moeny inflow as well.

BHP very weak today - but they went ex 1.02 US$ special div - taken that into account, they were actually up!

Brent Oil continuing to trade above 61 US$….what a difference two weeks make! Very hard to react to those moves…perhaps time to buy some BP at 6.5% yield?

Or perhaps some Norilsk even, as one of my clients suggests? PE of 8.5 and 10% yield for 2019 - producing a lot of nickel, copper and palladium?

Or some Middle Island?? They have a resource of 500.000 oz and a resource target double that - but very limited financing to drill that that out. A small, 1.35 mill$ rights issue is just about to be finished, and at a market cap of 5 mill$ even after today´s rise, this is the stock to make 10x your money, if gold continues it´s run. Until recently, I did not plan to take up my rights - but gold is feeling increasingly good, and volatilty of markets will undoubtedly continue, supporting further gold inflows into Gold ETF´s. Momentum players will have their attention on gold now, and a move through 1300 could quickly see more gains. When gold traded at 1350 last, back in mid 2016, the GDXJ was trading more than 60% higher than today! I fear, though, that the real bargains are not in the larger stocks like my old favourite Evolution, et al…

Perseus - time to revisite? 130 mill options are expiring at 0,44 A$ in April - resulting from their takeover o gain the Yaoure project 2 years or so ago - that´s limiting short term performance, as the stock is trading just below the exercise price. But as a high-cost producer, and holding a reserve of more than 3 mill oz, the stock is cheap with a market cap of only 420 mill A$ = about 100 US$/oz reserve. IF they get the options exercised, I think the chances of financing Yaoure without any fresh equity are rising again….and looking at Macquarie-numbers, operational EBITDA should approach 190 mill$ on an annualized basis, using todays gold price and exchange rate. Will be interesting to see their Quarterly Report - the last one was pretty good. Today, they announced the engineering contract for Yaoure to Lycopodium - they intend to book the last profit from it in the first half of calendar 2012, giving PRU some time to deliver the cash flow to pay for the new mine, which should improve the asset quality of PRU quite substantially. So - not a raging buy, but a good stock to accumulate in a rising gold price enviroment!

Graphex Mining - the Tanzania Minister of Mines got the sack and has been replaced by the previous Deputy. I think this might be good news - the various issues plaguing mining companies in the country did not make all that much progress, except for some positive noise, under the old Minister…perhaps the new one is showing some more enthusiasm to get bitterly needed investment in Tanzania going again?! I guess we will get a better feel for this over the next month or so.

have a nice evening

WS

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

The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail at wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by

Australian Resources Conference Zurich 2019 - General

Good afternoon

Please see this link to find an invitation to this years Australian Resources Conference in Zurich, incl all participants: https://www.schroeder-equities.com/conference/ . Please also pass it on to interested friends and colleagues!

The press is consistently reporting about fundmanagers and individuals, who have/are/will reducing/ing their equity exposure - yet markets are off to a strong start! Looks like the trade talks might be getting somewhere…and perhaps, many cautious hands have reduced already? Trees will not grow into the sky this year, but especially small miners should see some relief from depressed levels.

The Worldbank today published their forecast for GDP-growth of 2.9% this year. I would be very happy, if we get there!

Metals as well as equities are continuing with their cautious recovery today…especially copper looking strong. Grasberg announced, that copper production will halve this year amid a move to underground mining. I do not believe, that such a big drop has been forecast…but not sure about it.

Palladium continuing it´s race - diesel needs more platinum, bezin-driven cars need palladium…Norilsk is expecting deficits in Palladium producttion for years to come. The highest combinded price for palladium/platinum I could find has been 2390 US$ ( 1 oz + 1 oz ) in mid 2014 - the loweset around 1700 in 2015. Today´s combined price is a relatively healthy 2164 US$ Pall+Plat-oz. As I said yesterday - I can se ethe day coming, when the market start talking about Panoramics sizeable deposits in Australia and Canada.

Oil is continuing it´s massive run - well, following a much more massive fall! After falling from 86$ to 50$ ( for Brent ) on Christmas Eve, it has recovered by a staggering 20% since then, hitting 60$ today. Machines and programs at work, I guess, supported by more evidence, that Saudi wants to ensure reasonable prices

In Australia, many investors are still on holidays this week..we will see a steady increase of activity over teh next 2 weeks, when everybody should be back on board.

Nevertheless, the market in general, but also in small stocks looks better supported - some bargain hunting is obviously around!

I fear there is not much more to report from Australia today!

have a nice evening

WS