Market Update

General - Lucapa - Bellevue - Breaker - Paringa - gascoyne

Good afternoon

following a stellar recovery in January, some profit-taking today in equities, as well as in base metals - surprisingly except for nickel, despite it´s 20% run from recent lows - it´s up by another 0,8% so far.

PMI´s around the world slightly negative for growth….but the new, dovish stance of teh FED and some conciliatory comments regarding US-Chinese trade negotiations are certainly still helping. And today, sensational payroll numbers in the Sates - nearly double as strong as expected.Very strong labor market, despite a downgrade of the prior month by nearly 90.000.

Amazon with a shitty Quarterly after hours yesterday.

BHP/RIO and FMG had a great run this week - unfortunately on the back of the tragedy in Brazil. Many questions remain as to the reason for it, and the impact on regulations ( i.e. cost of production ) not only in Brazil. Perhaps time to wright some calls on these stocks?

Sorry, hard to keep the pace with all these Quarterlies out….

Lucapa Diamonds - I think the stock has turned the corner. The first tender under the new, Angolan sales regime went extremely well - 23 mill A$ worth of sales for just 7 stones - an average of 33.500 US$/carat. This follows on from a strong Quarterly. A discovery of a new, high-value pipe at Lulo; finishing the drill program at their exciting Brooking discovery in Australia; initial production at their new mine in Lesotho, which produced an average of 3.94cts per 100 t, vs reserve grade of 1.92ct…..On top of all this good news, 7 special diamonds were discovered in Lesotho - the ebst once with 78 and 38cts. The plant is producing well, and will reach name plate capacity in the current Quarter. The stock has been very depressed because of the general market, and tight financing in the run up to Lesotho coming on stream, and uncertainties about just how well the enw sales regime in Angola would work. I think 31 parties have been bidding for the stones - that´s very positive indeed. Recent negative press about diamonds relate to the lower-quality market segment. These and other sales show, that the market for quality stones is still fully intact!

Lucapa is now producing from two mines in two countries - and I think they are priced on one mine only. I guess LOM could be one of the highlights at INDABA next week.

With regards to a few gold stocks following: If you would run a sizeable company, which company would you take over first: a company like Breaker, where at least in the past, there have been some doubters as to regards of the quality of the resource ( I am not one of those, by the way ) - or Gascoyne, with numerous issues, but a well functioning plant - or Bellevue, where some work to tighten up the resource has to be done still, but grades are 22g/t???? I know for which one I would stick out my finger first!

Breaker Resources - strong Quarterly yesterday: 9m with 14g; 4m with 20g;15m with 5g; 4m with 10g - excellent stuff. Many results with 1-2 g and more with good width from a few to about 20m…One analyst in Australia now expects 1.5 mill oz in the next resource estimate, and believes, that 2 mill ounces by year end are a distinct possibility. He compares the stock to the two recent, unsuccesfull explorere-bids in Australia, and on that basis, values the company at a minimum of 41ct, and 81ct respectively. Wherever BRB have been drilling - in-fill as well as extensional drilling - the company has found ore! It all looks like this thing has not been finished off at all - undergrounds, as well as extensions in all directions offer very good potential, still. The company is spending heavily on exploration, with headoffice costs still examplary low. The current Quarter will see another 3.4 mill A$ in exploration spend - after that, we will see another resource upgrade, and at some stage mid-year, also the next placement. Nothing wrong with that, if the company delivers, what I expect them to! Normally, I would tout the company as a takeover-target - but Tom Sanders, with his 20% shareholding, will want to realize full value for his baby!

Bellevue Gold - anothe good Quarter from an advanced exploration stock. 3m with 86g , 6.4m with 28g, 4m with 59g from the Viago lode, which will see an addition to resources. Also high-garde results from the “Bellevue Surrounds” of 2.4m with 26g, 4m with 16g etc….The next resource estimate should be with us soon - will be evry interesting to watch! As says - there are many mills from much larger producers in trucking distance, which are always hungry for grades like the above!

Paringa - and yet another disappointment! Production start-up delayed for about 8 weeks for all sort of reasons…the projct continues to under-deliver! The worst is, that financing is tight - some more money might well be needed. All nice and good, that tehy have concluded anotehr sales contract - but I never doubted the markets ability to take their coal. The stock is way too cheap to sell it - but beware of another disappointment! Downside should be very limited - the only reasong I can see for it is another placement! Other North American coal producers must be very tempted to make an end to this sad management story! Having said this - the new MD has been in his job for only a very short time, and I guess cannot be made responsible for this delay.

Gascoyne - delivered anotehr disappointing Quarterly, just below the lower end of mch reduced guidance. The only good news: Net debt has only increased by 3 mill A$ in the Quarter to 48 mill. The plant is doing well - grade reconciliation and mining, along with increased dilution, are the main reasons for the underdelivery. In January, these problems got worse…The company is adament, that mining as well as grades will improve in the current Quarter ( reserve garde is 1.3 g vs mined grade of 0,48g in January, as I understand ) - but we have heard that before, and company was very confident for grades to increase above 1g/t as early as late November. I am p…ed off! Yes - IF they deliver on the promises, the stock is worth 2-3x current market cap, and the plant-issues have been rectified…but Jesus - this is a tough ride indeed!

Have a nice weekend, nevertheless!

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

Fax +49-89-4613440-10

email: wschroeder@schroeder-equities.com

website: www.schroeder-equities.com

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

General - galena - Newcrest - Liontown - Syrah

Good afternoon

equity markets are gradually moving higher today - investors are happy with Apple and Boing´s earnings - I guess investors are also eagerly watching the FED as well as US/Chinese negotiations today. Bonds continue their sideways move at high level, and metals are having another good day! Copper and nickel the standout

Gold ETF´s had another very big day yesterday, with inflows of 300.000 oz.

Markets are just so often exhibiting all signs of herd mentality…the latest examples being cobalt and nickel. Cobalt, for which VW asked mining companies to tender in a long term contract, without getting a single offer, has fallen from a top of nearly 95.000$/t to 36.500 in just 7 month. Some analysts are calling down to 20.000$ or so….I am sure, that enough of the stuff will be needed by EV´s / batteries over the enxt few years, to have the price back up to at least 50.000$, probably more. At current levels, you will not see a single, new project get off the ground!

The trend is your friend - rising prices are sucking in investor money - and certainly, rising prices in commodity are getting momentum-funds moving! All this applis to gold currently - feels good! I think we need much higher share prices for the North American producers to get into the aquisition-frenzy again - but we are getting there! I am watching the likes of Iamgold, Semafo, B2Gold - the latter 2 are moving strongly - for them to finally get enough appetite to swallow my little, and redicioulisly cheap, West African Resources!

Nickel is another one - nobody wanted it one month ago. Now it´s trading nearly 20% higher - with no apparent reason except for the fear, that Vale will have to curtail not only it´s iron ore production, but also some nickel production. - and certainly the fact, that it was very cheap ..and hopefully, still is!

The POM´s still don´t know what to do with themselves, and are playing strange games re BREXIT

Vale is still the big story in the mining world today. The company will cut 40 millt of iron ore production - closing a few tailing dams - but is also expecting to ramp up production at other mines to make up for it. But 40 millt is a lot of material - you just cannot increase production by that amount within say 1-2 month. And when courts have frozen your bank accounts ( to potentially come up for the tragedy ) , it does not make it any easier! Sadly, Vales dimiss has been a major boon to Australian iron ore producers today…especially Fortescue went through the roof today. The iron ore price without any doubt will profit big time from the desaster - the only question whether it will trade 5-or 10$ higher because of it. FMG especially is highly leveraged to iron ore - that´s all they do! - while RIO as well as BHP profit significantly from it as well. It will be interesting to watch, which type of iron ore will profit the most - whether it´s high grade ore from companies like Mt.Gibson, or low-grade material from MIN or FMG. There is also some talk about shipping rates coming under pressure again because of less material being shipped from Brazil - at least in the short term.

Galena Mining - Galena is developing the Abra lead deposit in Australia. Today, the company announced the sale of 40% of the project to Toho, the Japanese smelting/mining company, for 90 mill A$. 20 Mill immediately, another 10 after the feasibility study is finished, and 60 mill A$, once the balance of project finance has been approved. An update PFS is sue soon - the BFS will be out by mid-year. For Galena, certainly very good news: The company is capped at only 80 mill EV, which is obviously a lot less than the 60% of the project they keep, based on the transaction. Great to see, that corporates are still doing deals even pre a BFS, and at a significant premium to the share price. Initial production is planned for 2021. This is anotehr good example, for how long mining developments often take - and this is not a major project, nor is it in some weird country….I invested in Abra Mining ( the owner of the original owner of the deposit ) on the advice of some smart geologists back in 2007!

Newcrest - had a strong Quarter! Cadia was outstanding: 239.000 oz in the Quarter at AISC of 121 US$/oz are clearly outstanding. The other mines were ok - but Cadia is the outstanding cash generator for the company. Newcrest is not really cheap, despite it´s long underperformance - and Cadia accounts for about 60% of it´s value. The well-documented problems of the main ( dam-failure, seismic activity ) over the last year or so make Newcrest vulnerable to any potential problems at this mine complex. Depsite this strong Quarter, little reason to buy NCM, in my opinion!

Liontown - the first broker report in a long time was published yesterday; arriving at a 12ct/share ( NPV10%) versus current share price of 2.5ct. The report followed on from the announcement of a positive scoping study by Liontown the other day . I like management, and I like the project - and not to forget, the company has got a second lithium project, which is shaping up to be sizeable as well. The pre-production capex of 230 mill A$ is not all that crazy as well. All good enough to have a foot in the door here. The problems: I am not 100% sure, whether the market will be happy to finance yet another lithium project, since share prices of more advanced companies have been rather weak. Recent corporate deals, though, indicate, that there is still appetite out there for lithium. Secondly - the company has got less than 1 mill$ cash in the bank…some kind of equity raise cannot be far away. It will be interesting to see their presentation in Zurich , 22nd of Feb!

Syrah - this remains a hard call! Stock fell quite heavily today, folllwing the Quarterly Report. Costs continue to be an issue, and will only trend down to 400 US$/t over the year - which is a rather cautious statement by the company, which expects to receive between 500-and 600 US$/t for it´s product. There is very little room for error here - and one has to say, that over the recent history of Syrah, “errors” and similar surprises, coupled with bad luck, have been the norm rather than the exception! Some people are also of the opinion, that the design of the plant has been wrong from the beginning - producing the wrong material. It´s very hard to judge on this - the industry is very young, and there are very few experts out there. The price is big, as Syrah could/should be the major graphite producer in the world…and if would be a holder, I would probably keep them - but I am not a buyer until things become clearer!

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

website: www.schroeder-equities.com

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

General - panoramic - Peak - Resolute - Metro

Good afternoon

base metals along with gold are edging higher today, as nickel stands out and makes a new 3-month high . Gold is looking positive as well, having established it´s price above 1300 US$ now ( sorry, yesterday I mentioned 1400…that was obviously a fat finger! ) and at around 1825 A$/oz. Next target is 1350 US$. Well possible - ETF´s saw a strong inflow of nearly 200.000 oz yesterday!

Aussie gold miners looking very strong today - especially EVN made a new all time high and is trying to move past 4$ for the first time! A lot of insto´s making good money here - great news and another reason for them to look at the sector in a bit more detail ( and hopefully moving to buy also some lower-priced stocks! ). Finally, North American gold stocks are strong, too and not only for one day this time!

Wood Mackenzie are pretty bearish for cobalt and lithium this year, as to a mismatch of production increases and demand increase only gaining strength with EV-ramp-up in 2020 or even 2021.

Panoramic - Quarterly out today. The mine is currently about 2 weeks behind my expected schedule - first shipment to go out before the 10th of Feb. But basically, all within normal parameters. Problems to higher enough miners are the main reason for being slightly behind. Early in january, mill throughput exceeded 2000t/day = 750.000-800.000t annualized. Target production is 940.000t p.a. - this rate should be achieved shortly. Recoveries as expected, and sufficient cash is available until first cash flow will arrive this Quarter ( remember - there is a time delay between production and first concentrate payment ). All in hand here, and the stock should move with the increasing nickel price. T:he next catalyst will probably, when the company announces full poduction rates - probably with the report for the current Quarter. For the current Quarter, the main task will be to complete recruiting of the permanent workforce, as I assume, that contract work ( currently 50 out of 250 people ) will be more expensive.

Metro Mining - production numbers had been released earlier, but full numbers out today. Some cyclone-related stoppages ( 6 days ) in december, but guidance of 2 millt of sales/production has been easily achieved. Loading rates hit a new record in december, and the mine is doing well on all aspects. Demand and prices for bauxite in China, where 100% of shipments are going to, are both looking strong, and the weak A$ is also helping. Shipping rates had been higehr than budgeted earlier in the Quarter, but have come back late in the Quarter to budgeted levels. Weaker oil prices are helping here. From April, the company is moving to owner mining, which will reduce costs further, and higher production following 7 mill A$ capex will also help to reduce costs. The company generated 8 mill A$ in EBITDA for the Dec-Quarter. The feasibility study for the expansion from 3.5 millt ( 2019 guidance ) to 6 millt will be finished in the 2nd Quarter 2019 - expected capex of around 40 mill A$ should be easily financable from cash flow, and existing debt-lines. This company is developing into the expected cash machine! Even relatively conservative investors should be buying at current levels! As at Quarter end, the company had less than 2 millA$ in net debt. Even though this will change ( no mining in the current Quarter during wet season ), the company is VERY conservatively financed.

Peak Resources - have a strong move today, following a tough 2nd Half 2018! The company has reported good progress on receiving the Special Mining License in difficult Tanzania - the Mining Comission has recommded to go ahead with it to the new Mininster of Mines. Peak needs better prices for Rare Earth to go ahead with mine devlopment - but the undecided fate of Lynas in Malaysia is showing us again, how urgently new supply will be needed at some stage. Reports from China are also strongly indicating, that the clamp-down on smuggling and illegal mining in China will be intensified this year. Prices for Rare Earth have treated water for the last Quarter or so - but we all know, that this should change over the next 2-3 years with increased take-up of electrical cars. Peak will probably remain a sleeper, and will also need more cash relatively soon - but when the opportunity comes up, I think patient investors should take stock!

Resolute - their Quarterly was pretty mixed. While their main operation, Syama, was disappointing, while the new oxide-satellite performed very well. Ravenswood in Australia is having very high costs and the future is undecided. The ramp-up of the new Syama block-cave is all-important for RSG. Macquarie for example is expecting full ramp-up to mid-2019 - that could well be optimistic. Nevertheless - the stock is very sensitive to better gold prices, and I would accumulate stock at current levels - being always prepared for start-up problems at Syama.

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

website: www.schroeder-equities.com

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

General

Good afternoon

the terrible tailings dam accident in Brazil certainly overshadows the mining world today! Vale hit again - and we know, how rare it is for properly designed tailings dams to break! You wonder what will come out of the investigations, and whether the reason for it to burst will ever be found out. One can certainly understand the media asking, why this is happening again in Brazil, and again to Vale! I think the consequences for the Brazilian mining industry could be quite massive in terms of regulatory changes - nobody wants to have something like this happen to a third time!

Gold ETF´s see further inflow on Friday, following a short break to this strong trend. Expected, dovish comments from the FED have been cited for the strong rise of gold on Friday, pushing it through 1400 US$/oz for the first time since June 2018. Metals otherwise are trading a little softer today.

Caterpillar with a lower than expected result, and scales back expectations for this years result as well. Even worse for Nvidia, the chipmaker. Equities weak following these warnings…

Australia Day on the weekend - hence markets were closed today. For Aboriginals, it`s apparently called Invasion Day! In any case, a good day to spend in the pool ( for as long as you don´t feel like a boiling frog! )- 45 degrees in parts of New South Wales are probably no fun! The Australian electricity system is being tested - 200.000 homes without electrity, even though companies like Alcoa have been asked to shut their smelters.

Germany decides exit from coal by 2038…India has record imports of thermal coal in 2018…

Have a nice eveing!

General - Evolution - Northern Star - St Barbara - Strike - Oz Minerals

Good afternoon

while we have no solution to this BREXIT-craze, a continued shut-down in the US, and not much progress really to end the trade war, I am amazed how well equity markets are doing! It´s either a sign of a lot of underlying strength, or a good reason to sell! I fear recent experience tells me, that it´s time to run for cover! You might want to be grateful for the strong markets in 2019 so far, and call it quits for now!

Especially the extended shut-down is calling for caution - I would be very surprised, if we did not see quite an impact on growth for the first Quarter. So if you asked me, and if you are tarding orientated: Sell half your exposure or even more - at least if you are lucky enough to be in very liquid names!!

Metals are a touch stronger - despite a slightly stronger US$. The A$ is reasonable weak - resulting in A$-gold to trade above 1800 again ( 1807 A$/oz ). That could not prevent some pretty heavy profittaking in our top Australian names - and there is also some reason for this:

Evolution - my favourite gold miner finally had a weaker than expected Quarter! Gold production of 182.000 oz at 973 A$ AISC is great by any measure - BUT the previous Quarter was 200.000 oz at below 900 A$ AISC. Full year guidance, though, remains unchanged at 720.000 to 770000 oz at 850-900 A$ AISC - but at the higher end of the cost guidance. Company is very comfortable with the production guidance - the June Quarter especially is expected to be a good one. Their largest mine, Cowal had a problem with the SAG mill, resulting in a 5-day shutdown. Mungari had slightly lower production than expected due to some seismic issues ( that´s a word I do not like to hear ). Mt Carlton had a reasonably positive Quarter - especially in light of a severe rain event: 400mm in 12 hours! That´s nearly as bad as waterboarding in Guantanamo! Mt Rawdon was also a little weakish - while Ernest Henry had a good Quarter, but also lower than in the Sept-Quarter. The Group cash balance increased by nearly 20 mill A$ despite 53 mill$ paid in taxes and 20 mill debt-reduction

Explorationwise, this was another good Quarter, with good progress at Cowal underground ( where the company is confident to delinated a 1 mill oz+ resource ) and Mungari. Especially Cowal should generate more exitement, as a substantial drill programm from surface has been initiated, and the exploration decline has been approved.

The company pointed out, that it´s reserve calculations continue to use an A$ gold price of 1350 only - very conservative, but I think that´s the way it should be!

Overall - no drama - but certainly a little weaker than expected!

Northern Star - they had even less fun than EVN last Quarter! AISC increased quite substantially to 1365 A$/oz AISC - I guess total costs are 200 A$ higher than this, leaving not that much room for free cash. The company has left production guidance for the full year unchanged at 850-900.000 oz, but has increased AISC-guidance to 1200-1300 A$ in Australia, and to around 1400 A$ for the newly aquired Pogo mine. The company claims some increased costs for Pogo due to the implementation of changes there ( which makes sense to me ) , and some deliberate cost increases, as to mining lower grade material at the time of a very high Australian gold price. I am not 100% sure, whether I believe the latter, or whether it´s an excuse to explain a reasonably weak Quarter? In any case, it would show, that the company is not that certain about it´s reserve replacement? A few questions - but as you know, I have been wrongly on the cautious side for a long time, and hence, might be biased…In any case: Not a good Quarter!

St Barbara - also Quarterly out…good Quarter, but finally, grades are coming down at Leonora from previous exceptional levels, resulting in lower production and higher AISC. Simberi als a bit weaker on the cost side - but generally in line with the previous Quarter, which was a very good one. Strong exploration results from Simebri sulphide, increasing the chances of actually doing the capex, which would enable production from the different material. The company could certainyl easily afford it, with a slightly increased cash position of 357 mill A$ ( increase of 7 mill ) despite 46 mill A$ in tax payments. All good here - but also ( as expected ) a Quarter below the previous Quarter .

OZ Minerals - good Quarterly! On the production side, their main operation in Australia doing well in copper as well as gold - the much smaller operation in Brazil not so good - but the company views this one mainly as an exercise to learn about operating in Brazil, and as a hub for much more to come - makes sense to me. If you want to find something negative in the Quarterly: Some of their growth-projects got pushed out. But my impression is, that OZL have a very methodical approach to these things, without being big enough to have all these layers of headoffice, which make things hard. I like their space, and importantly, Carapateena in Australia is doing well - it seems all on budget and time, and this long term producer will start late this year. No doubt - OZL continues to be Australia´s best copper exposure - perhaps not in leverage, but certainly in quality.

Strike Energy - hmmmm..that is problematic! First, re Jaws: The well had a major gas desorption event on 1.1.2019. That´s what we want - but not from nearly zero to skyhigh! The sudden reelase of a large quantity of gas caused probelms…a sand deposit has interrupted the well! The company believes to have this problem in hand - it will take 3 weeks to have the well back in full operation…and it will certainly cost money - 300-500.000 A$.It´s good news, that such a major gas breakout occured - it´s bad news, that this happened so sudden, that the well has been impacted! Ok so much to the usual ups- and downs of gas exploration. The next problem is more unusual: The company expected to get a major reimbursement from the Australian ISA for past Research & Development - this has been ( initially? ) turned down. Commonwealth Bank has loaned STX 5,4 mill A$ in expectation of this reimbursement ( that is very common in Australia, and as you can guess, banks are doing major due diligence as to the validity of R&D work being done. STX will request a review of this decision, and is confident of getting the decision reversed ( I have seen these R&D payments very often in Australia - STX are certainly doing a lot mor R&D than most otehr companies, which have received this . Apparently, the company has ministerial support in this issue. If tehy would not get it, the bad news would be, that STX could not pay for the next well, West Eregulla, and would have to get fresh equity from somebody…or have to sell something! Both would be bad news. I think this R&D issue was the main reason behind yesterday´s fall in share price. Not good. in any case - a never ending story!

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

website: www.schroeder-equities.com

eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder