Market Update

Christmas - Resolute - Sheffield

Good afternoon

as bushfires and heatwaves rage throughout NSW and Australia ( another record: 41.9 degrees across Australia!!! ) , we wish everybody a Happy Christmas, and hopefully, a quiet time in good health!

Looks like we will have a strong end to the year , while trending higher, no major changes in equities - and even less action in metals and bonds today. The US$ is strong.

Resolute - the Syama-roaster went back on stream! This is a very important step for the company…the most important one , though, still remains: Bringing Syama Underground into full production, hopefully over the first half year. If that can be achieved, Resolute is probably the cheapest, mid-sized producer listed in Australia. The next Quarterly report will be closely watched for progress on the rate of mining.

Sheffield - I fear not much news recently - the market is keenly awaiting the outcome of UBS´s search for a strategic equity partner in their zircon-heavy, mineral sands project in Western Australia. Results will obviously not be announced before Christmas, but I believe, that they are very close to finding a partner. I still believe, that this is a VERY cheap company….Broker Bridge Street today reiterated, that the zircon market is still looking very sound, if not bullish, in the medium term - and for TiO2 in a similar way. Several production issues and project delays have been reported over the last few weeks, and a supply-shortfall looks almost certain from 2022 / 2023 anyway, due to exhausted mines. Psycholically, it´s a very difficult thing to constantly average down on a stock - but I am pretty convinced, that this is what you should be doing. The Bridge-Street-NPV for the project is still above 1.50 A$/share = 5x current share price, and while I have no doubt, that value will be diluted by an incoming partner, it should be possible to make some nice returns in this stock. The share price has been driven down by frustrated and stale investors - but fundamentally, nothing is wrong here, The early part of 2020 could be exciting for Sheffield, and it should also be rewarding, to hold them for the longer term!

This is the last email for 2019, which has been another difficult one for the resources sector - despite some nice improvements in the underlying commodities. The first 6 month have been very disappointing, before we witnessed a strong run-up of equity prices in the 3rd Quarter - only to see frustration gaining hold again more recently. It shows, just how important a positive mood for gold is for smaller resources companies in Australia!

Country risk has been a major factor for valuations - I think this will not change. It´s becoming ever more difficult to develope resources projects, and 2020 will not be any different.

For the resources space, 2020- and 21 will be watershed years for the takeup of electric vehicles. This could become a major story again, if early promises from the US and Europe can be fullfilled. But don´t underestimate gold as well - we could have another good price performance. And last but not least, M&A should provide us with more fun in 2020.

I am hoping for some success to be had in stocks like Panoramic, West African, Sheffield, Strike, Bellevue, Genex, Tietto, Evolution, Apollo Consolidated, Graphex to name a few - most of whom will present in Zurich on the 21st of February at our yearly resources conference, to which you and your colleagues are invited. Please keep the date free! I will send out invitations as soon as I will return from South Africa ( where I hopefully will have enough power to lighten the plastic christmas tree! ), once the list of presenters is fixed .

Have a wonderful Christmas time, and a great start into a promising 2020!

Yours

Wilhelm Schröder

General - Hot Chili/Centaurus/Apollo - Strike Energy - Bellevue - Breaker

Good afternoon

equity markets are in holiday mode, while bonds continue to slip. Is the end of sub-zero interest rates in sight, as the world economy is looking a bit brighter for 2020??? The Swedish Central Bank raises interest rates, not because of their economy doing so well, but to avoid unintended consequences of ultra-low interest rates. It´s being discussed relatively widely today - an example for others in 2020? Is that our main risk for the new year - rising interest rates?

Metals are little changed, except for nickel, which is recovering today by 2.5%. Macquarie reports about a large, recent fall of stainless steel stockpiles in China.

Australian exports of commodities to hit 280 bill A$ this year, driven by iron ore, coal and LNG.

Not much news out today in our space!

Hot Chili announces good drill results from it´s project in Chile - 80m with 0,8% copper and 0,3g gold/t are not as mindboggling as recent results, but importantly, start from surface. More results are expected shortly. I still do not own any, but I am getting more tempted by the day!

Centaurus Minerals - has identified several new high priority drill targets at it´s Jaguar Nickel Sulphide project in Brazil. As i wrote recently - they are targeting to establish some smaller, higher grade deposits within the large resource, established by Vale over the last few years. More drilling results from the current program are expected in mid-January. Again - I do not own any, but I am tempted!

Apollo Consolidated - is another one I am tempted to buy! The company owns 20% ( free carried until decision to mine ) of the Bagoe and Liberty projects in Ivory Coast, which are being explored by Exore. Exore today announced some more strong drilling results from them. The main proejct , though, is the Lady Rebecca project, 150km East of Kalogoorlie. The company has an active drilling programm going on there, and the first resource estimate is expected early in the new Quarter.The resource could be not far away from 1 mill oz at reasonable grades, driven by many, strong drilling results over the year.

All three companies have sufficient cash for now.

Breaker Resources - broker Patersons took up coverage today, valuing them - at what they believe to be conservative assumptions - 55ct/share. Good news for the company - tehy are trading very friendless, despite the recent 8 mill$ placement at 35ct to a North American resources investor.

Strike Energy - Credit Suisse is teh first , major broker , which started coverage of the stock today! This is not to be underestimated, even though the timing of it is a bit useless - just a few days before Christmas, Australian fundies are occupied with drinks and Christmas parties! CS value the stock at 28ct, with upside to 50-60ct, depending on the outlook for gas prices in WA, as well as on exploration success. Like Rystad the other day, they see substantial potential for exploration success - every 500 mcf on top of the 1.18 tcf resource are worth 7ct/share, according to them.

Bellevue Gold - broker Argonaut sees medium term potential of 4-5 mill ounces in resources here, following a recent field trip - this is vs the current 1.8 mill oz , inferred resource. For the enxt resource estimate in the second Quarter 2020, they see potentially 500-600.000 oz as a maiden, indicated resource, and an overall increase of the resource by 500.000 oz or so. As I reported, BGL had several positive announcements with strong results over the last few month, and has 8 drill rigs working on the project. Interestingly, they have put a number to BGL´s recent announcement, to dewater the old undergound mine, of 6-8 mill A$ to open up access as a base for future resource-upgrade drilling from underground.

Have a nive evening!

Schröder Equities GmbH

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Geschäftsführer: Wilhelm Schröder

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General - Strike - Genex - Northern Star

Good afternoon

equities continue to consolidate today, with a slight upward bias. Metals are seeing some profittaking- while Palladium is pretty weak, following it´s intra-day record of just above 2000$/oz yesterday, gold is slightly up, and base metals are slightly down…

German Business Confidence improves for the third month in a row…

Australia experiences the hottest day in history - 40.9 degrees on average across the country! That´s hot, indeed!

Strike - very positive update from a research/consultancy house called Rystad, a worldwide oil& gas specialist. They confirm, what we have been thinking: As larger the gas accumulation in the Perrth Basin becomes, the better! The consultant sees the domestic market as well supplied in the short run, but notes higher long term contract prices are still at 4-5$…they also see Waitsia ( Mitsui + Beach Petroleum ) and West Erregulla ( STX and Warrego ) as the cheapest , potential producers in Western Australia, with total costs below 3A$/GJ.

They see strong upside, if resources can be increased slightly, to get petrochemical industry basing itself in Western Australia, due to extremely low energy costs ( 1 GJ in WA costs about 4.50-5 GJ, while on the East Coast, contracts are close to 10A$ ). They see even better upside, if the Perth Basin operators can establish resources of 4-5-or more TCF, which would warrant the large capex to build a LNG plant, prices would move to world market prices, potentially even higher and with few size-restrictions. I think this report has been the driving factor behind today´s move. It would confirm, that the market sees marketability of the relatively large gas resource as the major risk - as this report is adressing this issue.

If you want more info, please let me know. In my opinion - a very cheap stock!

Genex - announced the financial close for the Jemalong Solar Plant in NSW. Construction has now started, and will take 12 month for the 50 MW plant. First production late in 2020. The existing loan for the Kidston Solar Plant has been refinanced at the same time, at preferential interest rates. The project has a life of 30 years, using well known Tier 1 equipment providers.

Northern Star - incredible, how deep markets are these days, when it comes to stocks, which are included in major indices! The large placement in NST went very well, and was “heavily oversubscribed”. The SPP will induce some pressure, as will the fact, that placees are making a very quick 10% at today´s strong share price. I think there might be some temptation to let some go, once the new stock becomaes tradeable in a few days time! But obviously, the market is excited about a JV between two of the best Australian gold mining MDs.

Have a nice evening

General - Iluka - Northern Star - Panoramic - Oklo - Bellevue

Good afternoon

equity markets are consolidating so far today….as are the metals. Not all that much action!

Strong numbers from the US building industry, as well as in Industrial Production.

Panoramic - Independence Gold have extended the takeover bid to the by one month to the 17th of January, but with the same, old conditions ( after the market closed ). If they had seen something negative so far in the due diligence, they would not do so…it shows: These guys are dead-serious. It will probably not the last extension - this thing will drag on - so far, nobdy has accepted! I am waiting for bidding competition here - but for as long as IGOP does not increase the bid / and or drop the tight conditions, nobody else would be in a hurry!

Iluka - announced a large ( and expected ) write-off of their Sierra Rutile subsidiary, which was written down to just 50 Mill US$. Guidance for that asset for the current year has also ben reduced, but not for 2020. Interesting,that Macquarie expects their zircon production to start falling away heavily from 2022 ( that´s about the same time, as production from one of my favourites, Sheffield Resources will come online ). Kenmare also announced new, lower production guidance for it´s mineral sands production this year, due to technical problems. Macquarie is also estimating rising prices for ilmenite and rutile, and stganant prices at a high level for zircon. Iluka would be pretty damned without their wonderful iron ore royalty!

Northern Star - bought the 50% stake of the Golden Mile from Newmont for 1.16 bill A$, about 5% more, than Saracen´s price. I am sure, that the small premium is easily justified by becoming the operator. The transaction will be financed with a 765 mill$ equity raising + 50 mill A$ shareholder purchase plan , both at 9$/share + about 400 mill$ in debt. Gearing following this tarnsaction is very limited - they should have just short of 500 mill A$ in net debt. The deal is positive under most metrics - longer term, a very reasonable aquiisition, but not a reason to re-rate the stock. Share price should be under a bit of pressure, given the discounted placement, and the SPP. I think the transaction is ok - it will certainly extend the average mine life of Northern Star - this is probably the most important benefit. For how much longer than the planned 12 years the mine will produce, remains to be seen…and cash flow over the next 2-3 years will not be all that great. If you are a holder, I would take up my rights - but the aquisition is not a catalyst for something fantastic - so for non-holders, no desperation warranted to get into the stock.

Oklo Resources - once again, some good drilling results from their main project in Mali: 20m with 3,1g / 50m with 1.55g / 14m with 2.65g / 8m with 5.26g should certainly add some tonnage . Results from another 25 drill holes are pending. I continue to believe, that the stock should be accumulated. The big advantage of OKU: In my opinion, tehy will nothave to develope any mine here, as they will be taken out by one of it´s neighbours, if they can establish a nice enough resource.

Bellevue Gold - and yet more results from their Deacon discovery: 2.3m with 39g / 3m with 10g / 0,8m with 69g / 3m with 12 g , which isopen in all directions. The bellevue Lode also delivered more results: 3.4m with 12g / 2.8m with 47g / 1.5m with 36g / 3m with 19g. The potential for Bellevue and surrounding area is definitely still excellent! They will start dewatering the Belelvue underground workings, to enable more cost effective drilling ( mainly transfer to higher confidence-status ) from undergound - and at some stage, it has to be done anyway. Extremely active drilling continues, with the enxt resource update expected for the 2nd Quarter 2020. The share price performance seems a bit boring - but there is 50% upside or more from this company, in my opinion, for 2020.

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 - Perseus - Liontown - Fortescue

Good afternoon

the festive season has started in earnest today! Equity markets look pretty determined to avoid last year´s December-desaster, being as strong as a bull! Base metals are stronger as well, and Palladium seems to be determined to hit 2000 US$/oz before Christmas! In this enviroment, it might even be surprising, that the gold price is holding it´s level!

I guess a set of quite strong economic numbers from China have helped: IP very strong, retail sales as well…fixed asset management still a bit subdued with a rise of “only” 5.2%. In Germany, the PMI for the manufacturing sector weak, while being stronger for services.

Pretty frentic M&A activity in major markets….and once again, in the gold sector:

Northern Star is said to raise 700 mill A$ for the purchase of 50% of the Golden Mile from Newmont. Stock is suspended, and no announcement has been made as yet. They will have to pay a bit more than Saracen in it´s recent aquisition of the other 50% from Barrick, as Newmont is the operator of the mine. As I said , when the latter deal was done: I think there has not been a sale by a mjor, where it did not work out for the buyer….! At least I cannot remember one, where Australian buyers have been involved.

Equinox Gold is buying Leagold, another Canadian gold producer, with assets predominantly in Brazil. Equinox, headed by Canadian gold mining identity Ross Beaty, has also support from Mubadala Investments, Abu Dhabi-based sovereign wealth fund. Beaty is also heavily involved in Lumina Gold Corp, Osino Resources and others.

Aussi gold miners did not bounce back as expected today - but I guess the 700 mill$ capital raising of NST is the main reason here…As you know, share prices tend to overshoot - but fundamentally, Aussie, medium sized gold producers like EVN, RRL etc are back into value-territory!

Perseus - will be included in both North American gold miner Indices from the 23rd of Dec - estimated buying necessary is more than 5% of the company. This might help to explain the very recent strength of Perseus, and I think we might see a few more cents between now and inclusion. Perseus have had agreat run this year - but perhaps one should not forget, that the newes mine, Yaoure, will not be in production until the end of 2020. If the stock goes for a bit of a run the next few days, it might make sense to take a few off the top.

Resolute - is the Australian gold miner, which to my knowledge, is the most shorted one . Nearly 9% of the equity has been shorted, rising quite strongly over the last few days. As we all know, there are some risks associated with bringing the large and highly automated Syama underground mine into production, and the country ( Mali ) is having some risks. But I dare to say, that the shorts might get pretty itchy, if the next Quarterly should show strong progress on underground mining rates at this important mine.

Liontown - the company announced some more, excellent drilling results from their lithium project in Western Australia, Kathleen Valley. 31m with 1,8% etc are certainly the kind of intersections needed to propell the resource past 100 millt. The only problem: We have enough lithium already! But while the price is currently under pressure from a slow take up of EV´s , I think this might look very different in 2-3 years time. The current price weakness makes it very difficult to keep spodumene mines profitable - and makes it next to impossible to finance new projects . This might well look different by the time they are ready to make a final investment decision. Congrats to the management: They raised money, when the iron was hot at 10ct, to be fully financed incl finishing a feasibility study in 2020. The timing of Kathleen Valley could be very good, and by that time, corporate interest might well come back to the sector as well.

Fortescue - looks like finishing the year as the second best performer of the S&P 1200 global Index - and it´s boss Elizabeth Gaines as the second most important business woman of the year, only behind Microsoft´s boss ( according to Fortune )! What an achievement ! Congrats!

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