Market Update

General - Independence - Sheffield - Gascoyne - Lynas

Good afternoon

5 Democrats ahead of Trump in the polls…I would not have thought this…The pressure is on this strange man…As is the pressure on Johnson…big uproar against him in the English press…while Italy has found a new government…

China is trying to calm down the tariff-war.

German labor market is showing a few cracks…US growth 2nd Quarter revised down a touch to 2.0%

Equities in Europe very strong, I guess mainly based on Chinese comments as above.Bonds are weaker - base metals strong…nickel above 1600 US$ and at a staggering 24.300 A$/t , equalling 11,02 A$/lb.

I bought some more Panoramic last night…To be honest, even if the unprobable event of another raising happens - I do not really care that much. You will never get the low, and over the years, current prices around 33-34ct will deliver very handsome profits! Even if I assume an additional 1A$/lb in operating costs - which might turn out to be realistic - the company should make North of 80 Mill A$ in EBITDA at the current nickel price, for the first full financial year of production from Savannah North in 2020/2021

Macquarie reports very strong Chinese production for stainless steel incl July, and strong production plans for August and September. Probably the main reason for the strong nickel market.

Sheffield - signed another offtake-agreement for premium zircon - they are sold out now! The announcement is worth reading - gives a lot of background to the uircon market, which is looking solidly supported at the current pricing level for years to come. If new projects should stumble, it could go quite a bit higher. Sheffield announced tehir very positive feasibility study update exactly 4 weeks ago - I think we might have to give them another 6-8 weeks to find a partner for the project. So no major hurry to buy more right now - but just a reminder, how cheap this stock is, holding a world-class proejct in a world-class location.

Independence Group - reported a good result for the first time in a while…Nova, their nickel mine, has been firing, and will be a major beneficiary from currently very strong nickel prices. Mine life is an issue - I think only 6 years left - but the company is trying to adress this with a large, 66 mill A$ exploration program this year, most which is earmarked for exploration surrounding Nova. The stock is not really cheap - but has strong leverage to nickel. Tropicana gold remains a little disappointing - lot´s of money has to be spent on cutback and underground development. But the asset is certainly profiting big time from the ultra-strong A$ gold price. Still..not one of my favourites - though hard to go past for institutions due to the small number of reasonably large companies around in Australia.

Gascoyne - the company came out with a new resource estimate…using a 2400 A$ pit-shell and a cut-off grade of 0,3g/t, they are arriving at 28 millt at 0,89g/t for 803.000 oz - significantly smaller than the pre-mining estimate, despite the lower cut-off. The grades look pretty awful, and when I look at their resources and their pit-shell, there seems to be a large cut-bsck necessary . I am very doubtful as to GCY´s future…does not feel good, even though I am not close anymore. Who knows - perhaps the stunning A$ gold price will ensure survival - but I really doubt it!

Lynas - yearly resulöt, which looks good on the face of it. What I do not like at all are their comments re the changing metallurgy of their mining source at Mt.Weld. Lynas are running a very complicated process to recover Rare Earth from the concentrate - I can only imgaine, that changes to the metallurgy should have a significant impact, and will see - at least temporary - cost increases / and or smaller production. At least, this is a risk. Anyway - I think the medium- to long term story is certainly intact here, and weakness could be a good busing opportunity. I would like to see some comments from analysts over the next few days .

have a nice evening

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General - Graphex - Oz Minerals -Perseus

Good afternoon

Mr.Johnson wants to suspend the parliament of the worlds oldest democracy…

Amidst all the curent uncertainty, equities are under some pressure today - bonds up again, as is gold. Late in the European day, US equities are dragging our market here close to zero - and up quite nicely in the States. the It´s quite incredible, how nickel is defying weakness in other base metals, once again…it´s trying to regain the 16000 US$-level - and is trading only 500 A$/t below the recent 8-year high in A$ terms at 23.000 A$/t! I think I might have to buy a few more Panoramic! They will have their day in the sun as soon as the market will see more improvement at Savannah ( which I am anticipating ) , removing the risk of a further capital raising!

Cobalt has probably seen the lows - it´s up nearly 20% over the last few days from recent lows, as Glencore´s mining suspension for a Congolese mine should balance the market.

Graphex - announced a nice increase of their indicated resource, which now stands at 10,5% TGC for 1.1 Millt of containe dgraphite. There is substantial upside to this resource - but the above is more than needed already for the financing of the mine, equivalent to more than 10 years mine life. The company points out, that as part of doing the final feasibility study, the resource will convert to a reserve. The final feasibility study is expected for early November now. Originally, it should have been out 3-4 month earlier - but sometimes things take longer in Africa. I am 100% sure, that the delay is not an indication for a less favourable outcome, as some might suspect - especialls in light of the current, terrible share price. It´s not reflective at all of the strong progress teh company has made over the last 12 month, despite the delays mentioned above. the financing stands, and the resource increase satisfies an important condition of the financing. The enxt steps will be final documentation from the government, and off-take arrangements. I have added a few shares here and there - but in the moment, there seems to be a larger selelr out there, depressing the stock. Just a little reminder, that the NPV of Graphex is nearly 10x higher than the share price! I do not know, when this little thing will be turning - but I think investors are well advised to accumulate stock at this depressed level. I think the current malaise of lithium producers has some impact on graphite hopefuls as well - but Graphex will be producing for the building material industry in China mainly.

Oz Minerals - a solid result from Australia´s best copper producer. Headline numbers appear weak - but a significant amount of copper concentrate has been produced, and will only be sold in the current Quarter.. Prominent Hill continues to do well, and in line with guidance for the full year. Carapateena will produce first concentrate before the end of the year, probably in November. This mine has been develoepd from existing cash + cash flow, and despite a significant amount of exploration and corporate developement, the company remains substantially net cash positive - some would say: Undergeared. OZL have a large pipeline of new projects and pre-feasibility / feasibility studies ongoing in Australia , as wella s in Brazil, incl the Cassini JV, on which I will elaborate more tomorrow. OZL has expansion studies ongoing for Prominent Hill, as well as Carapateena…

Perseus - a good result today, in line with expectations. The company has net cash of 80 Mill A$ following the exercise of options, and solid cash generation last year. The company still is a relatively high cost producer, with all-in costs probably around 1200 US$ - hence a good stock to own in the current gold enviroment. Edikan could also profit a lot from higher gold prices, extending it´s mine life. And last but not least, production growth is pretty outstanding in Australia, thanks to Yaoure coming into production in late 2020, if all goes to plan. Because of necessity, PRU had to run a reasonable tight ship over the last few years -that could be an advantage in an enviroment, where not only the gold pricce is rising, but also costs. But the gold price feels very good, momentum is on our side - and I think PRU are relatively correctly valued vs other Australien gold producers - but also at lower quality than the strong names. However - at current levels, and despite having had a good run, they still offer good exposure to a rising gold price for the next 6 month or so. After that, the market might well concentrate on comissioning risk at Yaoure.

Have a nice evening

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General - Strike Energy - Northern Star - Echo Resources - Tietto - Evolution - Pilbara

Good afternoon

German exports slumped last month…another indication for Germany being in a mild recession for now.

Equities are strong, bonds are, base metals are - the wonder of liquidity! And needless to say these days: There is nothing stopping gold, which is up by 15$ currently!

Strike Energy - what a day for them - and for many of us! The stock has not only found gas at West Erregulla, It has found what the MD calls a “truly exceptional outcome”. The well has “exceeded Strike´s highest expectations and indicate a significant discovery that appears to have higher reservoir quality than the Waitsia gas field”. Waitsia was owned by AWE Ltd and led to a protracted takeover-fight, in which several companies were involved. Some back-on-the-envelope calculations are already talking 1.7 Tcf potential - perhaps a little early to say - but a figure like that would imply significantly higher share prices for STX and JV-partner WGO! Also, Strike had secured a substantial acreage position in the Perth Basin, which has definitely increased in value because of the find. Waitsia had been the best onshore well in Australia drilled in 40 years - this one could be better! It´s also one of the deepest wells ever drilled onshore Australia, and will change the perception of the Perth Basin. Previously, gas companies had assumed, that gas reservoirs as deep as this one - about 5.000m - would not have sufficient porosity, and therefore, were deemed to be uncommercial. Takeover rumors are already flying - Beach Petroleum ( cash rich 5 bill$-company ) and Mineral Resources ( which lost in the takeoverbattle for AWE to Mitsui ) have been mentioned - I guess Mitsui would also be interested. I would not even rule out Woodside, given the potential size of the discovery and their dominant position in offshore gas in Western Australia - and Fortescue is always on the hunt for large projects, and has shown interest in gas before. At least 5 potential bidders with deep pockets - what a beauty!!!!!!!

This is clearly a major gas find, which has the potential to change the entire West Australian gas landscape! Congratulations go to Tim Goyder, who I believe brought them the deal, the MD Stuart Nicholls, who firstly grabbed the opportunity against many sceptics, and executed superbly with his team on a technically challenging program!!

My fund is a very substantial shareholder and has been for many many years - you can be assured, that I will not exit Strike, before the potential has been further defined! I admit of having been lucky here - but it shows again, that you need to back good people in this business! They always get at least two chances,a and sometimes even more than that!

Tietto - I am very surprised, that the stock did not move today! Goode xploration results from their 100% owned Abujar project in Ivory Coast like 73m with 2,8g from 218 m ( incl 17m with 8,8g gold/t ) and 8m with 3.5g from 241m as part of the current 30.000m program are certainly positive. Total strike length is 1.4km, and teh resource so far contains 1.06 mill oz gold at average grade of 2.1g/t.

Echo Resources - got the awaited takeover bid from Northern Star at 0,33 A$ = about 225 mill A$. NST already control 21% - I would therefor be very surprised to see another bidder. It´s also very close to NST´s assets in WA. The bid values resources at about 130 A$/oz, which is very high - but EAR also have substantial infrastructur in place like a processing plant ( no idea what the cost of refurbishment would be ) - I have red the figure of 40 Mill A$. NST also own some 60.000 oz of open-pit material close by. Perhaps not a bargain - but it gives good exploration upside, and some flexibility to Northern Star. In any case - 230 mill A$ fresh cash for a sector, which is on fire already! 144 mill shares traded today - so nearly 50 mill$ looking for a new home!

Northern Star - result out today…I think it´s not unexpected, that like most of the other, larger producers, NST also struggle to exhibit value at current levels. Cost pressures, albeit mild, are evident for just about every producer. Northern Star is doing an absolutely fabulous job with regards to productivity - still, not easy to keep costs down. With AISC of 1200-1300 A$ guided, the higher gold price will do wonders for NST. True costs will probably be around 1550-1650 A$ - hence the recent jump in the gold price from about 1900 A$/oz to above 2200 A$/oz will nearly double their margin! Very nice indeed - but probably not good enough to justify a 7.5 billA$ market cap? Pogo is shaping up to be a great aquisition: on the exploration front, their seems to be substantial upside from an already significantly increased resource. It remains to be seen, whether NST will eb able to come close to Australian levels of productivity. From what I have heard from them, they seem to be doing all the right things ( well, I should really not judge on this - I am a farmer and not a miner!! ). Pogo might be the key to halfway justify their share price - otehrwise, they will just run with the gold price.

Evolution - reported their result during my holidays. 500 mill A$ in net mine cash flow ( which in my eyes, is the key-figure to watch ) are a great number….still, the market cap of about 8.5 bill ia as well! The main difference to NST is the significantly lower cost base and hence the sustainability of their production throughout the cycle - and the company is also less agressively managed than NST. Jake is continuing to point out, that EVN will only do aquisitions, which are accretive to shareholder value, and to asset quality. But as the share price continues ( generally ) to move higher, the pressure will increase to do an aquisition - either EVN will have to look at targets outside of North America and Australia, or they will have to pay up! Alternatively, they can take a view and buy at an earlier stage? Bellevue comes to my mind…not the cheapest aquisition, but if you include some upside from exploration, it will probably turn out to be cheap eventually!? The result was a good one and included no surprises - the hike in diividens had been flagged before as well. Strong exploration spending will probably assure some production growth at Cowal - but I think this is well anticipated by the market now, unless EVN can push this asset substantially above 300.000 oz p.a. because of replacing lower grade material from open pit, with high grades from underground. Nothing in the result , though, which makes me very bullish from current levels - but also confirming EVN´s status as the premeir, Australian gold producer, in my opinion!

Pilbara - Macquarie could not find a buyer for a minority holding in Pilgangoora at a sufficient price! The company stresses, that interst has been received at levels higher than the current, relatively low market cap. Still - a disppointment for sharehodlers, I am sure, and also for other lithium producers. So far the story had been, that there was limited inevstor interest, but still very strong corporate interest in top-class lithium assets! The good news for the lithium market is now, that the Stage 2 expansion will happen much slower, and the Stage 3 expansion has been entirely scrapped for now. I fear no reason to own PLS in the moment!

Have a nice evening!

Schröder Equities GmbH

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Geschäftsführer: Wilhelm Schröder

General - explorers - Osino - Metro - Fortescue - Prairie - Resolute

Good afternoon

while Trump is running very very hot , equities are recovering some of their large losses from Friday. London is closed - so no trading on the LME. Bond prices are treating water today, at extremely high levels.

Gold has hit a remarkarble 1550 US$ early in Asia, and continues a few $ ahead - 2265 A$/oz in A$! At current levels, somebody like Evolution had doubled net-margins at current levels - and lesser producers by much more.

Durable Goods orders are weaking in the States exaircraft, and business confidence in Germany is at a 6 year low…

Exploration for gold is definitely on the go again. Not only are small companies able now to find fresh equity ( Saturn Metals today being the latest to fill their coffers again, to further explore their 650.000oz resource ) - especially all larger producers in Australia are increasing their budgets in a very meaningful way. Aquisition targets outside of the very junior end are very sparce - hence exploration is being beefed up. Echo Resources are still in trading halt, pending a change of control….Duketon sold a small gold deposit with good upside to Regis today for 20 Mill plus more on success - just 6 month ago, the entire company was capped at 10 mill$!

Drilling companies will be writing a lot of business! The sexiest driller I know is Swick Mining ( which I own in my fund ), consistently announcing new underground drilling contracts with major companies, at improved rates.

The latest micro-cap in the gold space, which I own and which reported results + recently raised some more cash, is very close to my heart , as the MD is a good friend and relative:

Osino Resources in Canada reported some pretty exciting intersections from their Twin Hills property in Namibia. They are in very good country, having cornered a very large ground position next to two existing gold mines, owned by a private group and B2Gold. 104m with 0,7g gold, 189m with 0,69g and 78m with 0,64g are intersections these companies will take notice of - a bit of grade would be very welcome, though. The theory of the company is, that this is a sedimentary hosted deposit, typical for these grades - but also typical to find much higher grades at specific parts of the deposit. The drilling will continue - and with much better defined geology. This drilling augures very well for a large deposit - extremely promising, and no surprise, that the stock is running! OSI have very strong backing from Ross Beaty! I hope, that his nose will prove right again! The stock si coming down from today´s highs - probably a good opportunity to pick some up and go for the ride!

Prairie Mining - there is more noise about JSW/Bogdanka, the state-controlled coal miners, to hammer out a deal with them before elections in Poland in mid-October. Both companies have been underperforming operationally, and could do with some potentially very cheap additions to their neighbouring assets, which are owned by PDZ. While I have no doubt, that PDZ will get f—-ed over relative to their mega-large NPV, there could still be a good deal for shareholders at the very depressed level of PDZ´s current pricing. management of PDZ are sick & tired of Poland, which I can understand given recent experience in Poland - so both parties will see the need to do a deal! The share price in Poland, where by far most of the trading is done, is up a few ct again today. Let´s hope, that we can end this disappointig saga soon! I would be happy with a 100 mill$ valuation vs 2-or 3 billion $ worth of NPV!!! We have certainly learned our lesson here: Poland is part of the EU in a way - but unfortunately, only in a way!!

Metro Mining - the stock continues to languish, following some short-lived strength in early-to mid July.. The market is probably a bit skittish about the final feasibility study, which was meant to be out already, and is not. I am very convinced, though, that there is no negative reason for this. The board of MMI have shown before, that they are very conservative - I am sure, they will check the study backwards and forwards, before they release anything. I bought a few more today for the fund. And while the Yuan is down a few percent , the cross-rate to the A$ is more favourable than a few mont ago. Also , increasing freight rates ( while slightly negative for MMi ) will be much more negative for Chinese imports from Guinea, which have to be shipped around half the world!

Fortescue - released their result today, which was in line with substantially increased estimates. Free cash flow as 4,4 mill US$ - about doble the current net debt! No surprise, that dividends were announced again, of 24ct - bringing the dividend for the last 12 month to a huge 1,14 A$/share. If history is any guide, markets do overshoot - hence I do not dare buying the stock! But at prices of say 70 US$/t for iron ore, the company will continue to generate ample free cash, and a yield of around 10% for the next few years! They continue to do everything right - increase reserves, develope new mines ( but no major overall production increase ), increase average grade of ore produced - and not least, continue to develope their 1st-class relationships in China. Trump has a good chance to drive the world into recession - so I am a bit cautious for FMG, being a one-trick pony at this stage and very reliant on the price of iron ore.

Resolute - one of the few Australian producers, which is not overvalued - if things go ok in Syama! One little caveat: 190.000 oz are hedged at an average of 1337 US$/oz - that is a relatively large hedge book.The company has bought Toro Gold in the Ivory Coast, a privately held gold company. Some smart money has been developing this asset - so 274 Mill US$ have probably been no bargain! But numbers look ok, with cash costs of around 800 US$ for 140.000 oz of yearly production ( and more this year ), for 6.5 years. New country, but a relatively good one - and further making them an African producer. Quarterly production from existing assets around Syama was very positive - the oxide open pit performed very well and above general expectations, and more importantly, the ramp-up of the syama underground mine continued strongly. The latter is the most important asset by a long way! The Australian operations at Ravenswood continue to underperform, and the current gold price enviroment might enable RSG, to get a reasonable price for it….with Bibiani becoming an even greater chance to go into production under the improving gold price scenario. Not my favoured stock - but show me many more, which still have upside fundamantally ( and not only from momentum! ). Having said this - the world has so relatively small investments in gold, that gold stocks will continue to run well an increasing gold price scenario.

Last but least - Strike Energy have been suspended today…back on latest by Wednesday, pending exploration results from West Erregulla!! We have been waiting 10 years for this company to be successfull - now they are on the cusp of a major discovery. Let´s keep our fingers crossed!!!

Have a nice evening!

General - Lynas - Bellevue - West African - Gold Road - Sheffield

Good afternoon

China is on the move today for tariffs on US-goods….driving down metal prices a little, which were stronger before this news broke. A very volatile day in base metals will probably see them close in the green again! Same with gold….which is back above 1500 US$ currently, and at 2226 A$/oz. And as I am finishing this blog, gold is running hot at 1525 and 2254 A$ - a new high! Trump wants to fight back later today on tariffs, and the FED leaves the door open for further cuts!

Equities are showing the same pattern as base metals today - strong initially, they tanked a bit following the Chinese announcement, but seem to close in positive territory - at least in Europe.

Macron slams Brazil for burning rainforrest for agricultural use…Many don´t, but I do like this guy. At least he seems to be someone opening his mouth and not hiding behind diplomatic rethoric all the time! Don´t get me wrong - I do not like Trump all of a sudden - who certainly cannot be blamed for diplomatic rethoric! The most recent example of his outrageous behaviour has been his Danish escapade!

SQM are pretty bearish for lithium this year…

Lynas - Wesfarmers have formally withdrawn the bid! The stock dropepd - potentially a few event-driven jumping ship? Rumours of China using Rare Earth to retaliate against US-tariffs have recently become pretty quiet as well. In any case - this is a very strategic asset, and the company has made very substantial progress in talks with the Malaysian government, including a new license to operate for another year. The stock is probably worth another look now…

Bellevue - I spoke to them today…it´s probably the only gold stock having gone down since I started my holiday. Apparently, some early investors have exited, lokking for stocks in z´the junior space with more upside. This is understandable from a speculative point of view - probably hard to double your money from the 60ct-level in the stock. They are not very sensitive to a rising gold price, as the very high grade nature of the ore body will probably see them having low costs . Also, a larger US-fund has exited, for unknown reason. On the exploration-front, everything has gone well, and BGL announced an new ore zone during Diggers & dealers conference. They have multiple targets left to drill, and I have no doubt, that resources will continue to grow. Before we will see potential corporate action from one of the neighbourinmg plants-owners, tehse guys will want to see at least some conversion from inferred- to indicated resources - understandable, So we will need to see more exploration hits, and/or anotehr resource increase before more substantial upside. The company has 35 mill$ cash in the bank - lot´s of drilling and studies can be financed from this! I think BGL should be accumulated at current levels.

West African Resources - the share price has hit a new high the other day - well warranted! Like with BGL, the sensitivity to a rising gold price is stronegr for higehr cost producers, but 1500 US$ are nevertheless another bonus for them! Deep drilling will start again relatively soon. The company has good visibility of capex now, as more than 50% of the construction are complete and the underground development is making good progress. WAF is now talking production by mid-year, and not the 3rd Quarter anymore , showing confidence of being at least in time and also within cost budget. This will leave ample cash for some nice drilling. The company also notes, that deepest drilling results of 25m with 15g gold are some 140m below the bottom of the calculated reserve. Any additional drilling should improve confidence for longer mine life underground, and back-on-the-envelope, every year shoudl add 100 mill A$ in value to the stock. While we were hoping for a takeover of the company at say 65ct a few month ago, at 1500 US$ for gold, this would need to be at least 75-80ct at 1500 US$/oz. But while I am hoping for this to happen, the company makes it very clear, that their aim is to bring this mine into production properly, and add value to the stock wherever they can - most probably by exploration!

Gold Road - today, Gold Fields used the strength of the share price to offload their 10% shareholding at about a 100% profit. Nice, if you can get it! I think my old mates at Macquarie might have miscalculated the market here - looks as if tehy took on the line at 1,45 A$ - but the share price at 1,30 A$ today tells me, that they have not been able to find a home for all of it! The stock is probably still not dirt-cheap - but anotehr 10ct lower, I would get very tempted to buy a few!

Sheffield - there has been some talk about general weakness in the zircon market following the Iluka result a few days ago. This is probably not correct….It´s rather a question of Iluka being able to produce standard-vs quality zircon….Indicatively, this looks correct to me, as Iluka have left their price for quality zircon unchanged going forward. And Iluka also agree, that zircon 2-3 years out will be having a very strong outlook due to diminishing production from existing mines around the world. Unfortunately for us holders, the process of finding a corporate JV-partner ( or potentially, right-out buyer of the company ) has been dragged out because of the new feasibility study, which ahs been very positive, but which has been announced only one month ago. Any corporate making a decision will want to have a very close look at the new study . I still expect this developing worldclass asset to be valöued at 1$/share SFX or higher!

Have a nice weekend!