Market Update

General - Strike - Evolution - Graphex - Gascoyne

Good afternoon

What a great surprise! Chinese PMI is expansionary again! The German PMI, though, is very weak again!!

US Retail Sales pretty weak, from an upward-revised previous month - PMI pretty strong, though.

There are more indications for a trade deal…helping equities and commodities as well today. Zinc stocks on the LME are even lower now than back in 2007, when the zinc price hit 4.000$/t. Metals generally could not hold their highs, but are green - nickel up by 1.8% or so. The US$ is slightly stronger.

.Bonds are weaker, as you would expect.

RIo will ship 14 millt of iron ore less bacause of the recent cyclone…I guess BHP and FMG-numbers will be relatively small - anyway - combined with the recent Vale numbers, opportunities for marginal producers abound! And the price shoudl be relatively save above 80$ for this year - with smaller discounts for lower quality ore…and Andre Forrest is up by anotehr 350 mill A$ today!

Goldman´s still expect gold to trade at 1450 US$ in 12 month time, driven by low interest rates, BREXIT and economic uncertainty!

good old Macquarie Bank´s market cap is now about 20% higher than the combined Deutsche Bank / Commerzbank ( about 28.5 bill Euro vs 24 bill Euro ). Tells you something about good / bad management!! 10 years ago, the combined Coba/Deutsche was about 80 bill Euro - Mac-Bank was about 7 bill Euro! What a classic example of value distruction vs value generation by good management! And the above numbers are before dividends - including those, the difference would be much larger even! And all of that despite the DAX outperforming the ASX massively over that period ( + 180% vs +110% )!!!!!

Strike - managed a 3-month extension of their loan, which CBA provided based on expected R&D payments by the government. Unusual for a bank - and I guess this should give us great hope for STX to receive the R&D payment - as they really should. The funds are crucial to drill the highly promising West Erregulla well, and do give STX some more time to evealuate other alternatives, IF the R&D does not come through. The company hints at various activities to this regard in the announcement!

Evolution - are continuing the tendency of the midsized gold miners, to do JV´s with juniors. They can earn up to 80% by spending 6 millA$ in exploration on Enterprise Metals´Murchison acreage ( near the old Big Bell Mine, which produced 4.5 mill oz ) , and a small upfront payment. Exploration will be managed by Evolution.

Graphex - announced a new board member. Castlelake, the large PE fund, has nominated an experienced mining engineer to the board. The fact, that Castlelake has a boardmember now, shows the strong support for the project in Tanzania, and the strong interest they have in it - or rather will have. At this point, they have only extended a 5 mill$ loan to the company - equity is to follow, once feasibility study has been finished by mid-year. I believe, that the company is also working on additional local, as well as international equity investment in the project / the company, to reduce the equity requirement from existing shareholders further. I think this year will be make or break for Graphex, with substantial upside, if things work out. The main requirements are a positive outcome from the feasibility study - which I am very positive on - and more clearing up from the government of Tanzania. The latter cannot be taken for granted - but recent moves and comments suggest, that we are also getting much closer here to a positive outcome.

Gascoyne - has now fixed placement as well as underwriting of the large, 24 mill$ capital raising . The additional equity, support of it´s banks, as well as a new, major shareholder should not only improve sentiment, but also should give them a fair chance ( another one! ) to finally bring the mine up to previously expected performance. The second half should give a strong indication of that. Upside has been materially diluted, because of the rights issue ( 4:5 ). I think investors should play the game here - but it has to be regarded as highly speculative, given the experience of the last 9 month, which have been devastating for the company. The old production target of 100.000oz p.a. is expected to still be achievable - but not at 1000 A$ AISC, as originally expected - I guess it will be rather 1200 A$/oz. Still - at 1800 A$/oz, that would leave a large margin for them, available to apy down the current 80 Mill A$ of liabilities + make some for shareholders! And certainly, the exploration upside at both projects remains.

Have a nice evening

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General - Min Res - Metals Ex

Good afternoon

as much as I like it - these markets are starting to scare me! More and more bad economic news from around the world….BREXIT….ok - perhaps some more hope for a trade deal - but still…I am amazed by the run of equities! The bad days in December are completely forgotten, and liquidity is ruling again!

Lyft listed today with almost perfect timing - size increased, bookbuild increased, and trading at a Wall Street bankers are getting very excited and som am I!

I think this weight of cash is also affecting base metals. While we all know, that major companies are having price-protection of their products at the forefront of their minds - hence very limited future supply coming - these mediocre ( to say the least ) economic numbers are certainly not positive for metal consumption, either - but the prices are very strong again today - 1-2% up ( and LME stocks down again - as nearly every day! ). All of this despite a strong US$…

I think we are in urgent need for a trade deal to avoid a further deterioration of economies aroudn the world…but I think that even Mr.Trump does understand this - otherwise his budget deficit will finish him in his current job!

BHP and RIO very strong again , following Vale´s presentation yesterday. Fortescue, as pure iron ore producer , is trading at the strongest since Sept 2008 - much to the delight of Andrew Forrest, who is now worth about 9 bill A$! Not a bad run from about zero in 2003! RIO declared force majeur on some iron ore deliveries from the Pilbara, following the cyclone….Chile produced 8% less copper in February because of heavy rain…perhaps the world starts to understand, that commodities are a rare thing, and don´t just get delivered by UPS as you need them??

Mineral Resources - should be worth another look, in this context! They are proucing 10 Mt of iron ore this year, and 12-13 Mt ove rthe enxt few years. Their costs are high - but that´s where the leverage is! They will be a major profiter from reducing discounts of 58%-ore, and could make 200 mill$ in EBITDA from iron ore this calendar year. Add 260 mill$ from mining services, and not least, one of the better lithium producers in JV with Albemarle, and you have a pretty compelling story here!

Russia is buying more gold…diversifying from US-$ bonds as currency reserve

Metals Ex - Talky Newton´s tin- and copper miner has had a very hard time…their copper mine, Nifty, went from disappointment to disappointment, and the market feels very much let down, having provided the company several times with fresh equity - and much higher share prices. But I guess everything has it´s price…I have shyed away from MLX forever - Nifty always has been a mediocre asset, and hast chewed a lot of cash, while the Renison tin mine is a good asset. Macquarie estimates, that at spot prices, the tin operations are worth more than the share price. Nifty has had another bad Quarter just ended…but if this asset ever recovers to levels even close to original expectations, the upside is dramatic. In the end, Nifty should produce 30.000t of copper p.a. at ASIC of around 2.30-2.40 US$/lb. The relatively high costs give them massive leverage to the copper price as well. But for now, it´s all about operational improvement. The balance sheet looks strong, still - trade payable and debt of about 40 mill A$, while operationg cash is close to 80 mill A$. To me, this stock looks like one which has been abandooned by many institutions, fearing the worst. A good punt, if you like tin - a great punt, if you like copper as well! But obviously, given many Quarters of disappointment, not for widows…To build a reasonable 30.000t p.a. producing copper mine these days, would cost the best part of 300 mill A$ - in many case, ratrher 400 mill A$…this stock is capped at 160 mill A$. I am not brave enough as yet - but worth following it!

Have a nice weekend!

General - Pilbara - Gascoyne - Doray - Antipa - Independence

Good afternoon

the POM´s are just putting the last bit of sympathy we have with them at risk!! Britsih parliament voting down 8 different alternatives for BREXIT - what a joke this country has become! I would not really mind if they did that to themselves - but it´s bad news for all of Europe, at least!

UD GDP for last Quarter got revised down to only 2.2% growth….talk about 1.5% this Quarter. Pending Home Sales also weak…Trump under pressure to deliver a trade deal with China….cutting taxes last year, and being a world apart from his target of 3% growth eats into the budget - which had the largest defict on record last month and is on target to a 1 bill$ deficit for the financial year….nobody talking about that, though….

Palladium has given up 250$ from i´s recent high! Platinum weaker as well…as is gold at only 1293 US$ and 1826 A$. A strong US$ is not helping these metals, while base metals except for nickel are slightly stronger. LME stocks across the board falling marginally.

Vale expects to produce 50-75 millt less iron ore this year - this is probably a larger number, than expected and shoudl be good for the Australian miners, and should ensure strong iron ore prices for this year! The numbers for the major, Australian players are massive - these guys are producing an aggegrate of more than 500 millt of iron ore - using 10$ higher prices, than before the desaster in Brazil, gives you an additional 5 bill A$ in EBITDA - and probably another 2-3 bill$ on top of that, as discounts for lower quality material have substantially reduced.

Just on the sidelines - if you are looking for a well-managed, global equity fund: Here is Fundsmith, a London-based fund ( with I believe around 20 bill US under management ) : over 5years, 1 year, Year-to-date as well as 1 month: In the upper 1% of all funds…over 3 years, “only” in the upper 2% of all similar funds !! The fund has outperformed it´s peers every year since inception in late 2011, currently holding a concentrated portfolio of only 27 stocks. Incredible!! Seeing something like this, I might give up what I am doing, have a glass of wine, and enjoy the day!

Gascoyne - Mayday? not quite, thank´s god - but the expected bad news. Company has raised 3.85 Mill A$ at 5ct, and is doing a rights issue to all shareholders of 4 new for 5 old shares held, at same price and to raise just above 20 mill A$. Lower grades did persist ( at least until March ), more dilution in mining ( 25% vs expected 8% ), and general mining issues - and lastly a small plant shut-down all hindered production, which is running at about 4.ooo oz / month. expected production for the June-Quarter is expected to be close to 6.000oz /month, and for teh second half of approx 9.000 oz / month. The placement and rights issue, which is underwritten = guaranteed, will insure the survival, if those production numbers will be achieved. On all metrics, shareholders should play the game at subcribe - but I can understand everybody, who has had enough! The recent history has been absolutely terrible, and the dilution of this large rights issue is massive. The whole story is too complicated to discuss in detail here - if you want to have a chat, please feel free to call us and discuss.

Pilbara Minerals - a reasonable positive announcement yesterday, which updated on 1st Quarter production. Most numbers look improved - but they still have problems with recoveries. The company claimes, that some of those problems have been overcome, and that planned recovery-rates of 75% will be progressively reached until year end. What has driven the share price, in my opinion, has been the announcement re a particial sale of the operation. macquarie ( who did the job for Mineral Resources very succesfully ) has been appointed as their corporate advisor. The proceeds will assist in financing of the expansion, and especially, potential downstream activities. The big numbers achieved for MIN could make the selldown a very attractive number, and at the same time, reduce the risk here.

Doray Minerals - the merger with Silevr Lake has been approved today, and tomorrow will be the last day of trading. As I said before - this is a sensible transaction, and Silver Lake will profit in future from the excellent exploration potential.

Antipa - announced yesterday, that RIO has approved a 3.4 mill A$ exploration budget for the JV, to be spent in the current year. It´s good news, that AZY will conduct the exploration, which shoudl ensure, that they get a lot more bang for their Dollar!

Independence Gold - continues it´s less than stellar performance. The undergound mine of Tropicana has been approved by JV partners. Slightly negative surprise is the lower grad of 3.5g vs feasibility study 3.7g, and capex increased by 10%. Nevertheless - the combined mine will produce around 450.000 oz p.a.over the next 5 years - a big mine - at AISC of probably just below 1000 A$/oz. I continue to dislike IGO - the stock is too expensive and is trading at the current price because of a scarcity of midsized mining companies in Australia…in my opinion.

Have a nice evening

Schröder Equities GmbH

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Geschäftsführer: Wilhelm Schröder

General - Lynas - Paringa - West African - Resolute - Horizon - Pilbara

Good afternoon

consumer confidence getting much weaker in the States - very positive on curent conditions, mut way weaker for the outlook. Housing starts also weaker than expected.

Equities are very strong today, following the recent breather - still, a bit of a surprise, given mediocre economic news.

Metals were trading lower this morning, but the opening of the US market drove them higher - nickel up by 1.4%, as is zinc - only lead is fractionally weaker. Palladium is down by 2% currently.

Lynas - has received a highly conditional takeover bid from Australian conglomerate Wesfarmers - 2,25 A$ in cash - but only, if Lynas can continue to operate with all necessary licenses. A bit of a joke - IF they can keep their operation licenses, the stock will probably trade above 2,25 A$ even without a bid. But certainly interesting - a large corporate is taking a positive view on the business. This in turn triggered some interest for Peak Resources.

Paringa - the saga continues - the authority only gave them permission to truck coal with one vehicle at the time, triggering plans to operate with a conveyor instead. This will delay the first shipment for another month…not a killer - thanks to the new financing - but the market was not happy to see yet another delay! The ventilation work will be finished shortly. The time is getting tighter for delivering all contracted coal this year - further delays might make it necessary for PNL to puchase some coal on the stock market, and deliver into the contract. The sums involved are not that large - and at this stage, the company should be ok anyway. Total contracts for this calendar year are only 1.24 mill t. If they would fall short of say 200.000t, it might cost them 5-6-7-$/t to purchase the coal on spot vs their contracted price.

Resolute - the stock has broken through resistance today. Much like Perseus , the stock is probably being bought as a laggard, despite the usual risks of comissioning a new mine. In their case, the risks are probably even a little higher, because of the nature of mining being used, which is very cost effective, but probably riskier to bring into production than more traditional underground mining. But if it all works, the stocks is probably 20-30% undervalued compared to peers.

West African Resources - the stock also broke resistance today, on very strong turnover of more than 6 mill shares. Here, the risk is mainly the country, as very conventional mining methods will be used. There will also be some speculation in the market as to the updated feasibility study, which is scheduled for release this week or next. The new update should lead to an increase of valuation - probably from around 60ct to something like 70ct. Trading at 34ct, that would offer substantial upside and better than for any other “quality” stock in Australia - but remember, that the mine will onyl be in production mid-2020. I call it quality, as the size of 250.000oz p.a. is unusual, as are the planned production costs of 550 US$/oz - subject to the update study. Burkina Faso, though, has been subject to a few islamist attacs over the last 12 month or so. Up to you, how much discount you want to apply for that! Last but not least, many of the smaller/midsized Australian producers had a good run recently, and the market is on the search for laggards. WAF are certainly a laggard, having not reacted to multiple good news over the last 6 month or so!

Horizon Gold - some ntable hits from their recent exploration program like 15m with 2,33% Zn and 0,27% copper / 78m with 1,3% Zn and 0,32% copper / 35m with 2,4% Zn and 0,43% copper. Interesting - but no more at this stage, as grade appear too low to me for development.

Pilbara Minerals - closed a long planned 50 mill$ share issue to Gangfenf for a Stage 3 expansion of their lithium project, for possible start-up in 2021. Not a done deal as yet - but the scoping study has been promising , with operating costs of only around 300 US$/t vs forecasts of 700-800 US$ for spodumen. Not sure, though, wether the market will be large enough enough by 2021 to take all this product. No doubt, that at some stage it will - but the proejct might be a bit too early. In any case, it offers more optionality to the company, which could use some of the additional product to diversy downstream.

Have a nice evening

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

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eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

General - Dacian Gold

Good afternoon

IFO business confidence in Germany rises for the first time in 7 month.

Equities are a little weaker again, following a slightly better start - not really recovering from Friday´s sell-off.

Chaotic court-action in Brazil - iron or mines get opened and closed again, following court decisions.

Canadian researcher Adamas Intelligence ( I have not heard of them before ) believes, that the use of nickel in batteries produced in China increased by a staggering 253% in January form pcp. More EV-sales, but mainly larger batteries and a shift to NCM-technology are seen as the reason. If those numbers are true, we are on track for nearly 100.000t of nickel in battery-usage this year. Sounds high to me - but it seems to go into the right direction.

Newmont/Goldcorp might well go ahead now, after Newmont offers a 88ct dividend to smooth the process…

Gold price back through 1320 US$…and 1357 A$, the highest since end February. A mixed day for base metals - following weaker prices around lunchtime, copper + zinc are slightly up now, while nickel is down by 0,4%.

Dacian Gold - their ramp-up has had it´s fair share of problems…the mine started producing about 12 month ago, and was originally expected to produce around 190.000oz this financial year. They have had a few issues since in production - the latest one being announced today: Equipment availability will result in underground development reaching better grades a bit later than expected. Expected production for this financial year is now down to around 155.000 oz. The June Quarter should be fairly assured to produce at a yearly rate of 200.000oz+, at AISC of around 1100 A$/oz. Once again - it shows us, that it´s not THAT easy to bring a new mine into production - not even in Australia! I will keep them on my radar screen - the stock is probably in value-territory now….

Not much happening elsewhere today!

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