Market Update

General - Panoramic ( PGM´s )

Good afternoon

China induces some more liquidity into the banking system…markets are hoping for some more progress in US/China trade talks.

Metals looking ok today - nickel very strong + 2%. LME stocks, which had risen by more than 10.000t on the 12th, have since fallen by more than 12.000t…incl 3200t today. We are now back to 11.70 A$/lb!. Cash is trading at the largest premium to the forwards, indicating strong physical demand.

Big turnover in gold stocks generally today - reweighting of the GDXJ took place. More Index action, this time in the S&P ASX, affecting only a few of our stocks incl West African and Bellevue , will be taking place on the 23rd of Sept.

sorry, you have to listen again to my jibbery about Panoramic - this time, in relation to it´s Panton Platinum/palladium project.

Panoramic - Panoramic bought this asset a few years ago - I think it might have been in 2015. It contains 14.3 millt of ore, grading 2,19g/t Platinum, and 2,39g/t of Palladium, for just over 2 mill oz of PGM´s. It´s located close to PAN´s Savannah operation in the very North of Western Australia, which offers some potential synergies. Note also the higher grade in Palladium, as it´s price today is 2423 A$/oz vs Platinum 1390 A$/oz - so worth a lot more. But what is important is the basket price of the two metals: In the old days, between 2010 and 2015, the basket traded in a band of between 2100 - and 2900 A$/oz ( the high reached in 2015 ) . In 2018, this high was nearly reached again - 2800 A$/oz was the top in 2018. TODAY, THE BASKET IS TRADING AT A PRICE OF 3800 A$/oz, nearly 1000$ higher than the 10 year high prior to 2019, and 900A$ since the beginning of this year!!!!! Partially due to the weak A$, but mainly because of the big run Palladium has had over recent times. If I value this resource only at 50A$/oz, it´s worth 105 mill A$ or nearly 20ct/share Panoramic. Given the rare occurence of PGM-projects outside of Russia and South Africa, I think 50A$ is a very conservative valuation and equivalent to valuations of reasonable gold resources in the Australian market.

At current prices for PGM´s and nickel ( which will generate 100 mill A$ in free cash or more from some time in 2022, when the hedges are gone ), PAN could easily be worth 700 Mill A$ based on Savannah ( 500 mill at 5x free cash generation, that´s very conservative - also, the Feasibility study gave us 690 mill A$ NPV8 at nickel price of 8$ (( today 8,11 )) and 70ct exchange rate (( today 68ct )) , + PGM´s valued at 100$/oz….and the 50% shareholding in Horizon for free! That´s a sleasy 1,30 A$/share in PAN….Sounds a bit like dreaming - but why not? I think that would not be a crazy target for the patient investor. The stock has been hammered because of the well-documented problems in mining the old ore body, Savannah, and the need to raise some more equity - which is now behind us. Mining of the new ore body, Savannah North, should start in November and ramp up quickly - making the current problems forgotten very quickly, I hope and think!

Panoramic has it hands full to bring the Savannah/Savannah North ore bodies into proper production - but I think the incoming CEO ( whoever that might be and whenever until mid next year he will join ) will need to spend some time on a) exloration to show the possible upside of Savannah North to much more than 10 years mine life and b) getting some value from Panton, which is currently valued at zero, and has completely forgotten about by the market!! Platinum is tarding at it´s highest in A$ terms since late 2016, at 1395 A$/oz, while Palladium at 2439 A$ currently is up from 1000A$ as recently as the end of 2016!!

There is always something in mining, which goes wrong - but I see really strong potential in PAN from current levels. The restart-problems at Savannah should be forgotten within a few month, and PGM´s are a true wildcard!

For investors, who shy away from a single stock: My Nestor Australien Fund currently has a 3,75% weighting in Panoramic. My top recommendations West African, Strike, Genex, Sheffield, Graphex and Metro Mining incl Panoramic have a joint weighting of approx 27% - emphasizing the development nature and the upside of many of my holdings - but also some risk management across different minerals and metals/sectors. The largest non-resources holdings are Macquarie Bank, and Tassal Group, Australia´s largest salmon farmer. The fund is up by approx 20% this year - about in line with the market, and strongly outperforming since mid-year, following a dismal performance in the first half of 2019.

Have a nice weekend and enjoy the great sun shine - the end of summer! Following this, we finally should have some much-needed rain in Germany!

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General - Sheffield - Metro - Strike - Carawine - Graphex

Good afternoon

the FED-event in the States has been kind of a non-event - while mentioning the solid state of the uS economy in most sectors, they have cut interest rates. Market does interprete this as limited scope for more cuts?

Gold and base metals see limited movement today, limited profit-taking in bonds. Currencies also uninspired today - the A$ has weakened a liitle.

At the Nova Nickel Mine in Western Australia, one worker had a fatal accident. Looking at the cause, it does not seem to be structural mistake, but a true accident - hence limited impact.

The OECD has cut forecats for world economic growth this year to 2,9% and about unchanged from that for next year. No catastrophy, if we get there - but I think risks have to been seen on the downside! A few minor US economic numbers all better than expected.

Sheffield - The Department of Mines has given them Mining Approval. I think this was the last requirement - except for the all-important JV-partner. As a reminder: UBS is running the corporate process to find a JV-partner, who will effectively finance all equity requirements for the project. This process, obviously, could also lead to a full bid for the company. One of the cheapest stocks in my universe - yet also one with the most disappointing performance, which I can only put down to the lengthy prcess to find a partner. The recent equity raising ( instead of using interim financing from Taurus ) did not help either…but as said at 39ct - this should be the low of the share price. Since then, we even traded at 38ct!!

Graphex - are on track for release of their final feasibility study in about 6 weeks time. Recent progress in the Acacia-saga, and some approvals for Orecorp, have raised hopes, that the Tanzanian government will approve a Special Mining License for Graphex rather sooner than later. Broker Patersons value them at 70ct, Bridge Street at double that price - teh difference is mainly in the assumed price of the expandable graphite, which will be produced by GPX as opposed to the battery-market-graphite, which is being produced by the ( nearly ) failed market leader, Syrah. Alongside SFX, this is probably my most disappointing holding - even though fundamentally, everything is fine here. The third disappointing stock I own is

Metro Mining - but their are different to the above two: MMI are actually producing and most probably, generating very substantial cash flow from their Bauxite mine in Northern Queensland. The share price has recovered a little of late, following their very positive production report for August. In MMI, the market is probably awaiting the outcome of the final feasibility study for the enar-doubling of production rates - I guess some are fearing, that a placement has to be made to finance it. I think it will be an easy task to finance this with debt, given the healthy balance sheet, and proven cash generation of MMI. I also do not believe, that selling the product will be an impediment : China has an increasing need to import Bauxite, and firstly, MMI is very competitive given their huge tarnsport advantage to China, and secondly, China will not want to rely even more on imports from Guinea. MMI have put a lot of effort into marketing the material to China, and has been very successfull - the product is well accepted by alumina refineries now. Not many brokers are following the stock, and investors are not very well educated, when it comes to Bauxite prices as easily as say prices for copper or gold. But contrary to many other mining stocks, these guys are producing truck-loads of free cash, and once the mine will produce at expanded capacity in 2021, I think price targets of 26ct and 34ct resp by the two lonely brokers, who research it, might actually be conservative. Remember: This is not a risky development story, but a strongly cash flow-positive mining company. I have constantly added to my position in MMI.

Strike Energy - STX as well as Warrego are holding up nicely, following their great runs over the last month or so, and despite of many shareholders sitting on big profits -partially from recent placements at about 25% of the current price! As I ahve mentioned before - stocks are not that cheap but probably halfway correctly priced at a resource of 1 TCF for West Erregulla, but could well be valued 50% higher, if recent guestimates of up to 1.5 TcF become true. Also, and especially in the case of STX , we have to somehow value the potentially large impact on the Perth Basin and the repecitive ground holdiings of mainly STX. Within the next 2 weeks we should see some announcement re flow-testing, and I think within two month, the first resource estimate for the project. Both events could trigger more interest - and the latter especially, corporate interest. Another driver on valuations could be, if the Beharry Spprings well, which will be drilled very soon and is only 10-15 km away by Beach Energy comes in positively and helps to rerate the potential of the entire Basin. So a few triggers are still in the pipeline for the next few month - but I guess also a potential placement in Strike to replenish cash. Given the strong, institutional interest in the recent Warrego placement, I think raising 30-40 mill$ should prove relatively easy.

Carawine - got cashed up by a fresh placement of 2.5 mill$ today…the only negative: I think they should have raised more, as apparently there was very good demand. i guess the company was keen to avoid dilution, since they will continue to drill their promising Victoria-based asset, which has already delivered some pretty exciting intersections for gold. They also hold some good ground in the paterson province, where interest has cooled down a bit from dizzy heights about a year ago. I think the latter will come to investors mind again - but in the moment, Victoria is the hotspot thanks to Kirkland Gold. Chalice also pretty strong recently - I think they presented at Beaver Creak and found some fertile ground there! CWX are really small - but I guess some of you are holding it, as shares in CWX had been issued for free to Sheffield Resources-shareholders in the IPO. I have bought a very small position in CWX.

Have a nice evening

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General

Good afternoon

the chaotic market in the States for overnight credit, where interest rates quadrupled within two days, before the FED moved into the market in a big way, sound pretty alarming to me. While some of the reasons can be explained, I wonder about some risks we do not know about?

Markets are relatively quiet today in the run-up to the FED decision. Bonds are being bid up - certain, that the FED will cut rates this evening?

Gold trading at 1505 and back up at 2200 A$/oz

German car industry sees very weak sales in August - down 8%

Junior Gold Miners GDXJ : new members Gold Road and Dacian - no dramatic changes in Australian stocks otherwise. Both stocks are not very sexy at current levels…

West African - massive turnover - and cannot be explained by the forthcoming Index inclusion , which is only happening on the 23rd of Sept. More than 3% of the company changed hands today - 3 large block trades. I can see, that WAF presented very well, and what is a very cheap stock in Beaver Creek and Denver - but perhaps finally some corporate action here? The company is being valued at between 60ct and 1$ by brokers and represents one of the few stocks, which actually trade below NPV….and the risks are reducing quickly here.

Azumah Resources received a highly unusual and unsolicited takeover bid from it´s JV and financing partner, a private equity firm. More action at the junior end! Azumah are expecting the release of the final feasibility study for their project in Northern Ghana very shortly, and are urging shareholders to take no action. I have to say, that a near doubling of the share price of a previously completely friendless stock is not that bad….

I fear not much else to report!

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General - Evolution - Liontown - Graphex - Paringa - Genex

Good afternoon

metals are still battling with yesterday´s Chinese numbers and are weak once again. Nickel is down by 500$ or so but mind you - it´s still 1000$ higher than at the turn of the month!!

Today, ZEW confidence in Germany surprisingly rose. ( obviously, numbers taken before the drone attack ). Industrial Production in the US has been very strong last month as well - you would think, that these numbers counterbalance weak Chinese numbers from yesterday - but China is just so much more important for metal demand than the US is!

Equities are a little weaker again, as the world tries to digest, what´s happening in Saudi-Arabia. No major moves in currencies or bonds either. Trump - for a change - is supporting sentiment by saying, that he does not want a war! We are happy with precious little from him!

Evolution - signed two relatively large earn-in deals today, with Musgrave to spend up to 18 Mill A$ ( and 4 Mill over two years ) on some earlier success the company has had on some of it´s tenements in Western Australia, and with a private company in Queensland, in trucking distance to the Mt.Carlton Mine. Evolution also received inclusion in the Dow Jones Sustainability Index Australia - only the second gold miner to be included.

Liontown - announced some more drilling results from their No.2-project, Buldania. Some nice inetresections ranging from 10m with 1% LiO2 to 19m with 1,5% and 14m with 1,7%. The deposit is still open along strike, and at depth. Generally, the results start from at least 50m of depth. The first resource statement is due for November - but I doubt, whether this one will be as good as Kathleen Valley - though it will most probably be worth something. Unless the resource estimate will bring a positive surprise, I think LTR will concentrate on their flagship-project.

Graphex - much do about the recent Syrah announcement. SYR reported about heavily and quickly falling prices for battery-graphite, and some production cuts. Other market participants dsipute that strongly, one of them being Walkabout Resources, the otehr one Grapex. Broker Bridge Street is seeing some strong indications, that prices are not as weak as Syrah makes us believe. Rather, they believe in bad marketing strategies. In any case, tehy see even slightly rising prices for the large flakes, which will predominantly be produced by Graphex, and expects them to receive prices better than the ones used in the prefeasibiliyt study. The results of teh final feasibility study are expected in November, leading to financing of GPX´s mine before the end of the year. Personally I believe, that this time table for financing is tough to meet, even with their financier heavily involved in the study. But I totally agree with Bridge Street, that this stock is very cheap indeed. Given that SYR are the largest graphite miner listed in Australia, and their well-documented profits, this little company might not show it´s true value before they are in production early in 2021 ( my guess ). I continue to be a relatively large holder, and strong backer of GPX.

Paringa - hopefully some light at the end of the tunnel here. John Middleton, ex-Director of Gelncore´s underground coal mining and manager of several coal mines in his life, will become a non-executive Director, specificially to provide guidance on PNL´s new coal mine in the US. Him taking the role should derisk the company somewhat - and he is obviously seeing a good chance of Poplar grove becoming a success to lend his name to it. The company recently update on production and remains confident to achieve name plate production of 1.8 mill t on an annualized basis by the end of this year. I think this might be crucial to secure the full financing from it´s PE-partner - not sure about it, but any PE-financing always has a security net built in ( well, security for them!! ). I don´t dare buiyng more at these bombed out levels - but I am holding them!

Genex - new presentation out today…as I said before - dirt bloody cheap but few seem to want it! I am very confident still on this one, and am holding a very large position privately as well as for the fund. There is still a very high chance to complete the transmission agreement ( as you know, already announced by the government ! ) as well as the JV-deal + equity injection! Analyst value it between 45-and 80ct - I would be very happy for now with 50ct some time late next year or early 2021 and I believe this to be a realistic target. By that time, construction of the much-needed hydro project should be in full swing,a nd Jemalong, their second solar plant, will be up and running.

Have a nice weveing

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General - Orecorp - West African - Prairie

Good afternoon

The Saudi drone attack is driving markets today. The strong oil price is hurting some markets, as is the threat of more geopolitical tension. The outage in Saudi might take longer than initially expected.

Vale has been allowed to fully start the Onco Puma nickel mine in Brazil again, putting pressure on the nickel price today on a day, when metal prices are generally weak amid fear, that the very strong oil price and the development in Saudi Arabia might put further pressure on the global economy.

Various Chinese data today was still strongly positive - but in every case, weaker than expected!

US shale producers jump today, after getting a bit of a beating over the last few month. As expected by many - their profitability has not been as promised, despite strong production increases. Without low interest rates, shale probably would not work - something always worth keeping in the back of our mind!

West African Resources - watched Richard Hyde´s latest presentation today - boasting with confidence, smiling all the way through - and you can understand him! He has an excellent, very experience team, and the project is 2/3rd complete now! Within budget,a nd slightly ahead of time - and probably nothing in the way to start production slightly early. payback at current gold price of 1500 US$ is 12 month! And looking at his resources, and his presentation, there is a very high chance of WAF prooducing 150.000 oz p.a. at say 700 US$ for the long term, and an average of 217.000 oz for the first 5 years at around 600 US$. Even the long term rate of 150.000 oz would generate something like 120 mill US or 175 mill A$ p.a….The only thing Richard cannot change is the location, which is not perfect, as Burkina Faso is not teh current anymore it used to be. Nevertheless - he quotes an NPV of 600 mill US = 875 Mill A$ for the project - roughly 1$/share - at the current gold price. So while I am always selling a few on the way up, simply for weighting / risk management reasons, there is still considerable upside from the current 55ct! I am still waiting for the corporates to show their hand - but as we can see, that´s not needed to drive the share price in a market, which is scrambling for good stories, but not finding many!

Orecorp - is making very good process on the regulatory front in Tanzania, which augures very well also for other projects. The Mining Comission ok´s the full aquisition of ORR´s project, and has said earlier, that a Special Mining Lease would be granted very soon after the transaction has been completed - which should be just days away. Excellent news not only for ORR, but also for other mining companies trying to progress their various projects liek Graphex. ORR have 22 mill A$ in cash, and own currently 100% of the Nyanzaga Project, with 3 mill oz of gold at average grade of 4g/t ( the Tnazanian government will get 16% of the project for free ). Nyanzaga should have a minimum of 12 year mine life, producing an average of 210.000oz at 840 US$/oz AISC p.a.. The mine remains to be financed - not that easy still in Tanzania, and pre production capital of 287 US$ ( incl 30 mill contingency ) for I guess total capital needs of close to 350 Mill US incl interest, financing costs etc etc is a large amount for the country. But I think it will be dooable, given the nice margin at the current gold price…Pay back period of 2.3 years approx is not nearly as good as for the outstanding WAF-project - but for a mine life of 12 years it looks ok to me. A stock to watch…and not a demanding valuation, despite the recent, good run of the share price. There remains upside to the above numbers from more metallurgical testwork to improve recovery, and use contractors vs owner mining.

Prairie Mining - jumps to the highest since early June in Polish trading , on good turnover as well…trading at about 0,32 A$ equivalent. I guess the Polish know something we don´t - at least I do not believe, that there has been any contact between Australian management and Polish companies like JSW recently.

Have a nice evening

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