Market Update

General - Strike - Dacian - Chalice

Good afternoon

German and US manufacturing ( especially new orders ) numbers looked better, at least just ahead of the virus really taking off.

just how much cash is still in the system one can see in today´s equity bounce…News from China really is not good -whatever this virus will bring us, the economic effect of what´s happening will be felt, without any doubt. As large parts of the Chinese economy are closed, and many Western companies set to see disruption to their supply chain, the effect will be larger than from SARS. But obviously, normally quick to react equity markets have just seen a very mild correction.

Base metals just a little weaker, gold down about 1%, and bonds, the otehr safe haven, also down somewhat.

Bell Potter see lithium prices potentially bottomin in the middle of 2020 already - based on the expectation, that Europe will catch up with larger numbers of EV´s being sold, and China will hold the subsidies. I think they might be early - but in tendence, I am seeing it in a similar way. But there is a lot of capacity, which can be brought on quickly - like the new ( and immediately mothballed ) operation of Mineral Resources / Albemarle.

Nevertheless, markets are nervous…as can be seen in the performance of some of our small caps…No doubt, that there is some fear out there!

Strike - is one of those, which got hit over the last few days. Yes - LNG prices are very low, and yes - China is the fastest growing market for it. But LNG prices have always been volatile, and the virus will be over long time before Strike will be in production. What is much more imporatnt here is that a rumoured deal of the Waitsia JV ( Beach / Mitsui ) will imediately remove the supply overhang from the local, Western Australian market. Even if this deal should not happen - as we have discussed before, there are multiple reasons, why the gas market will develope, and why Strike are very cheap - not only in my opinion. Institutional investors have very limited exposure to Strike - and private guys are driven by fear these days.The only - potentially - negative news I can imagine in the short term for Strike would be a takeover bid for Warrego - and I have absolutely no doubt, that such a takeover would be very positive in the medium- to longer term. So in my opinion, this is an even better buying opoortunity for Strike than a few days ago! It hurts in the moment to see our investment falling in value - but don´t get spooked into selling!

Dacian - the company produced largely in line with expectations last Quarter - even though production was lower, and costs higher than in the preceeding Quarter. Net debt of just under 60 Mill A$ , payable within the next 30 month. BUT in a seperate annoucement, the company asked for voluntary suspension , as the company is to make a material announcement with regards to a reduction in the reserves of the Westralia Underground Mine…and only due in the week beginning 24th of Feb. This does not sound good at all…!! The new MD, ex MD of Doray, started on the 6th of Jan - it seems that he has not been happy with everything he saw at Dacian!

Chalice - reported some encouraging results ( 4m at 4g ) from drilling on their Victorian Karri gold trend. Drilling at this early stage is only done on a very wide 500x50m grid, hence this early intersection is being seen as very encouraging. Results of another 55 holes are still pending!

Have a nice evening

General - Panoramic - Tietto - West African - Breaker

Good afternoon

incredible days in the US-tech market….Microsoft, Apple, Tesla , Inteland Amazon with incredible Quarterlies ( as well as the Australian star, Atlassian ) and big moves, while Facebook is struggling!

Following earlier attempts to go higher, equities are weaker today….while base metals are about unchanged( surprisingly? ) and gold is back above 1580 US$ currently. The A$ is being pushed below 67ct to the US$ today - testing 10-year lows - A$ gold price with a new all time high of currently 2366 A$/oz

China will be largely on holidays at least for next week as well, disrupting the economy. And as analysts point out - when SARS hit in 2002/2003, China´s economy was dramatically smaller , especially as a percentage of the world economy. The number of infected people has now increased to more than SARS - but it remains largely confined to China at this point. Looks like the outbreak is being handled quite well - but as I said - the economic impact will undoubtedly be felt around the world. Surpeisingly, Fortescue yesterday, commenting on an excellent Quarterly Report, said that not a single cargo had been cancelled as yet

Tonight at 12 pm, the POM´s will leave Europe. Let´s hope, that relationships will improve from here! We like our love-hate with the English!

Freight rates are falling like a stone!

West African Resources - Quarterly out today and they are saying publicly, that comissioning will start this Quarter! That is 3 month earlier than originally planned! Mining has started on 21st of Dec at the open pit with 7 trucks and two excavators on site. The plant is basically done on he mechanical side, while electrification is in full swing. The underground development is going very well - development ore should be mined in March. So I think we will see more or less full production from he beginning of the financial year, if comissioning goes well! I have a lot of respect for engineers, who develope a mine somewhere in the middle of nowhere - but even more so, if it goes that well! Let´s hope, that they will continue to do so well on the homestraight! They continue to be one of my largest positions…

Panoramic - thanks god, that they recovered today! The Quarterly brought nothing new on the operational side - that was announced with the new guidance yesterday. But my confidence in the new mine, Savannah North, was bolstered again by strong infill drilling results…long intersections between 1.5% and 2.5% nickel should be in line with the reserve grade of 1,53%, after mining dilution. And again - they are still in “change of control” negotiations! Interesting enough, the MD of IGO has been publicly asked, whether tehy would contemplate making a new bid - and he said “never say never”. The company has just under 24 mill A$ in cash, and while they are burning cash in the moment and until Savannah North is in serious production, they have time on their side to get something done on the debt-side! All indications are, that the company will avoid another equity raising, which would be very damaging!

Tietto - the Quarterly did not contain so much news...the company ahd previously released a new resource ( as at early November - I guess cut-off mid-October ), TIE had a resource of 45 Mt at 1,5g gold/t for 2,15 mill oz of gold, which includes a high grade resource of 1.4 mill oz at 2,2g/t. Drilling with 4 rigs - and soon 5 rigs - which are all company owned and therefor, the company is a very cheap explorer. They will come out with a new resource estimate in the 3rd Quarter of this year. Tietto have raised 17 Mill A$ in Nov/jan and are well cashed up, spending about 2 mill$ this Quarter. They are planning to finish a 50.000m drilling program by the end of the 3rd Quarter 2020. Some people regard this little company as the best prospect in Ivory Coast. I cannot judge on this - but I agree, that the stock has a lot of potential, and I am a shareholder.

Breaker Resources - raised 8 mill A$ at 35ct last Quarter with a gold-focussed, US fund. They announced their Quarterly today . No stunning drilling results in there, but some good intersections from new areas, but all within a few km from their existing, 1 Mill oz resource. I think for Breaker, it´s make-or-break this year - the market is becoming a little impatient, which might be unfair - but it seems to be the case, looking at the share price. I think most people agree, that there is considerable potential - but Breaker needs to show this year, that the resource will be mineable.

I hope you will have a nice weekend!

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Panoramic - Graphex - Genex

Good afternoon

what a bugger of a day…in the first place, Panoramic severely impacted on my mood…and while I have recovered ( a little bit ) from that, I accidentially deleted my daily report…..

So I fear you need to be happy with a short version of it today…

Panoramic - what a nightmare…another cut in production guidance today, from 7.0-to 7.5kt in the year to the 30th of June 2020, to 5.2-to 6.6kt now. That is a cut by 25-30% and definitely in it´s extend, completely unexpected. Difficult mining conditions in the old ore body, Savannah, continue to impact production, resulting in mine scheduling changes for the remnant ore - pushing out the mining of better stopes into the next financial year. On top of this, the failure of a chiller has impacted the underground refrigeration capacity, which is responsible for a short-terkm reduction in mined volume, until the repair is finished in 4 weeks time. I think this is bad luck!

Impacting for the next few month is also the fact, that the mobilization of the new underground contractor, Barminco, is taking longer than expected. The labor market is still very tight in Western Australia, and Barminco ( which is a large and very experienced mining company ) needs until the 1st of March to start mining, and to the end of March, to fully mobilise people and new equipment, which is coming from Finland. I think Panoramic´s new MD has been too optimistic here in his operational update in December. But again - this has been out of his reach, up to a large degree.

The liquidity position of Panoramic is still strong in the moment, following the recent capital raising - but I am sure, that with this announcement, funds will not last long enough. The company has stated, that they are working on additional debt ( Macquarie has a 20 mill$ loan out to PAN, which has some debt covenants attached - but I think we can be sure, that these covenants will be rolled. Usually, such a situation is being reviewed on a monthly basis, and as the loan should be considered as being pretty safe, I think we will see Macquarie continue to roll ). I am sure, that they will be talking to the largest shareholder, who has provided debt before ( and a few weeks ago, strongly opposed the takeover! ), and probably to Jinchuan, Panoramics offtaker, as well as others. I think it´s very difficult for outsiders to come up with excat numbers - but my guess would be, that PAN will need another 15-20 mill A$ in debt.

Im well aware of the fact, that I have probably lost some credibility here - but I think it´s extremely important to understand, that the current problems are short term problems, and have nothing to do with the viability of Savannah North, and Panoramic´s medium/longer term cash generation potential. After speaking to the MD and several other people today, I am also of the opinion, that our MD is the right man to turn the ship around and make us some money - finally! But no doubt, that it will take a few Quarters to get confidence of investors back!

Graphex - yeah, that´s complicated, indeed! Sometimes I wish, that I would invest in gold stocks only - much easier to come to grips with! Graphex has announced the feasibility study ysterday, and while it´s complicated, it´s also impressive. The MD Phil Hoskins has put so much work into this, alongside his financier, who has been very cloosely involved in the study. The project needs 87 Mill US$ in capex - and probably 30 mill US$ more in working capital, etc etc….But as crazy as it sounds, I think it´s financable. The project ti fully approved by Tanzania - what we still need is confirmation of a few issues like local participation in work, and bank accounts. I think these things are very advanced and should finished within a month or two - but I think the company will take longer than this anyway to get the financing done.

The results of the feasibility are impressive…the copany will not just produce graphite concentrate, but will be a manufacture of high-value , different graphite products - especially Expandable Graphite for flame retardent materials. The reserve of GPX will be able to support production for 18 years - but is far from being finished off. The project has a NPV of 331 Mill US$ to start with . But as GPX will ramp-up production of specific product qualifications, this NPV will actually increase to more than 500 mill US after a few years. Sounds starnge - but the reason for this is, that the highly specific types of grahite to be produced, will be sold at substantial premiums, once endusers have been satisfied with the product. Product acceptance will take usually 24 month - hence the ramp-up of NPV is happening.

GPX have put years of effort into establishing contacts with users, and has validated it´s work with several independent labs as well as research institutes. This extensive effort had partially been required by the financier, who is also haveing a board seat of GPX. Buyers of this material will not only be in China, as concentrated on earlier on in the pace, but also in the US and Europe, derisking the marketing side of the business - and capturing a much improved margin between various sales prices for the different products, and just a concentrate. Once fully ramped-up, the feasibility study expects a steady state EBITDA of more than 80 Mill$ p.a.

Graphex wants to be in a position by the end of the 2.Quarter, with the help pf it´s financier, to make a Final Investment Decision FID. This timetable would allow ore-comissioning in teh 4th Quarter 2021. Personally, I think the big task will be the financing….Normally, I would see the marketing of the product as the biggest issue after that - but Phil Hoskins has put a few years effort into this , and is probably unrivalled as an expert in this new area of mining within Australia. And we have a market here, which is screaming for product - and even more so for product, which would be independent of Chinese sources. This is really a quick rund-down only and as you know, this is just a blog and no research product….so if you are interest, just have a look at the very detailed information on the DFS, and today´s presentation, on GPX´s webpage. I think it´s worth the effort - and otehrwise, just listen to Phil´s presentation in Zurich, 21st of Feb!

Genex - the company release their Quarterly today. Unfortunately, they have had a software glitsch at their solar plant at the old Kidston Mine, which resulted and next to no electricity being generated in October. This has been rectified a while ago, and the operation has produced as normal over December. The loss of production amounted to approx 1 mill A$ in revenue. There is a chance to recoupe the lost revenue from insurances - but not sure as yet. GNX had 21.8 Mill A$ cash in the bank at the end of the year, and construction of their second proejct, the Jemalong Solar Project, has started. Most important, though is the Pumped-Hydro Project at Kidston. As we know, the project has been fully debt financed by the Northern Australian Infrastructure Fund, with a 610 mill$ loan, and an equity injection by J-Poer from Japan. The Queensland government will finance 132 mill$ for the necessary power line. But all three components are subject to an offftake agreement, which was to be fixed with EnergyAustralia, and fell over at the very last minute, when the Hongkong-based holding companie´s board did not sign off on it. All three mentioned agreements have been extended, and the good news is, that Genex is still in intensive consultation with EnergyAustralia to complete an offtake agreement. I stand by my little Genex, and continue too hold a large position in the stock! They have, what Australia needs: large scale electricity storage in form of a Pumped-Hydro project - just one step away from getting going and adding a a lot of value to the company as well as Queensland!

General - Oklo - Evolution - Northern Star - Graphex - Antipa - Horizon Gold

Good afternoon

From Toyota to Apple and Lufthansa - you see a lot of business disruption outside of China because of the virus and efforts to contain it.

The German government raised it´s growth forecast by 0,1% this year , while the consumer here ist still well and alive!

Base metals are not really sure, where tehy want to go next - gold is holding well at around 1570 US$, especially taking into account, that equities are stronger once again. High cash holdings & low interest rates seem to be stronger than virus-induced growth fears!

Torrential rain in Brazil´s is not only raising fears about tailings dams, but there are also persistent rumours about rail problems. Substantial rain is also forecasted for teh enxt few weeks - this has the potential t be significant and have a prolonged, positive influence over the iron ore price.Now a cyclone in the Pilbara ( which is not unusual at all at this time of the year ) , and you could have a big spike in iron ore prices…

Oklo - great drilling results from their Seko property, in trucking distance to a few major gold mines in Mali….55m with 7,6g / 51m with 4,28g / 31m with 7,1g / 32m with 4,55g are truly great, following on from the recently reported 47m with 11g…and there are another two holes pending, which are visibly having similar characteristics, which could extend this for another 75m. The company speaks a bout a game changer - well tehy might eb right…if the enxt two hoeld come in, I might agree. But the area drilled is not large enough yet to talk about something really big. Nevertheless - even 500.000oz of these grades - and I have recently reported about many positive, but lower grade hits in other areas close by - would potentially be a mine maker - unless some of the large neigbours will want this! Stock had a big jump today to about 100 mill in market cap, which at this stage I think is appropriate. In any case - big breakthrough for OKU!

Horizon Gold - Quarterly out today - cash is down to 400.000$ and the company is talking about a 1 mill$ drilling program to upgrade the inferred resources at Swan and Swift - 400.000 oz+ at this stage - to the indicated status, to push this into feasibility studies. Equally, they talk a lot about the large potential of the recently found Altair copper/zinc project, which is in the same area. It appears to be a bit low grade - but only a smart part of the potential area, which is full of conductors, has been drill tested. Again, HRN want to explore much more agressivle here. In both cvases - gold as well as copper/zinc, they mention a few options they have to fund this exploration. I guess tehy are talking to JV partners, or potential off-takers to get funding from them. But perhaps, tehy should add some more value themselves here? Not that easy to raise some money in the moment - but 2-3 mill would bring them a long way, potentially.

Graphex - the long and keenly awaited DFS out today!! It´s a reasonable complicated one, and given my limited experience with Graphite, I will not comment before I have spoken to Phil Hoskins. First I was out -then he was out - I will talk to him tomorrow. In any case it looks like the project has become more expensive, but is also going one step further in processing to 99% graphite…

Antipa Minerals - speculation has completely gone out of this stock…RIo´s WINU copper find has also become quiet publicly, despite a massive exploration spend by RIO …tehy will announce more detail later this year. In any case, RIO has extended the JV with AZY and has now started to spend another 14 mill A$, to go to 65% of the JV. Unfortunately for AZY, though, I think this year´s 2 mill$ will be largely spent on ground work, not that much on drilling. AZY is still a very interesting stock - but I see no urgency right now to own them. They will have there time again , perhaps later this year!

Evolution - Quarterly out! Production of 171.000oz at 1069 A$ AISC ( = 730 US$ ) had been pre-released. EVN continue to be one of the lowest cost producers worldwide. What Ialso like, is the very detailed and open reporting - everybody can work out the numbers! Beside of Cowal and Ernest Henry, which continue to deliver exceptional profits and free cash to EVN, the much smaller Mt Carlton has been the disappointment, as reported earlier. After sustaining as well as growth capex, the mine delivered net mine cashflow of a negative 20 mill A$ in the Quarter. The mine experienced a narrower ore body earlier in it´s life than expected - this could impact them in the future as well, even though it should be unusual for the mine to deliver negative free cash.

it was great to see exploration continue to fire.Exploration had been a bit of a weak spot in Evolution until a few Quarters ago. But in the Dec Quarter, Cowal Underground continued to deliver excellent results, and the company will conduct a DFS for an underground mine here, which could add quite substantially to future production. Another potential breakthhrough ahs been delivered at Mungari Underground - also very important, as mine life here is a bit short for my taste. For the 6-month to date, EVN produced 362.000oz at ALL-In-COSTS of 1446 A$/oz - this is about exactly 1000 US$/oz. That´s truly excellent, and includes really all costs, incl headoffice, exploration etc. The guidance of around 725.000 oz at AISC of 940-990 A$ assumes a copper price as at today, and a gold price of 2100 A$. Royalties at todays gold price would be rising - but obviously and much more so, the gold price received.

Gold price received last QUARTER has been 2080 A$/oz vs today´s price of 2330 A$/oz. EVN have a small hedge position of 350.000oz at about 1900 A$, out to mid 2023 - about 15% of production - so the gold price received should go up as well.

The next trigger for EVN will be from exploration success and first resource estimates for Cowal, and by April, more detailed guidance as to the new aquisition, Red Lake in Canada. The purchase will be completed by the end of March.

While Northern Star and Saracen are also excellent companies and well managed, the consistency, low operating costs and outstanding management make EVN still the best Australian gold miner, in my opinion!

Northern Star - had a good Quarter as well, producing 216.000 oz at 1421 A$/oz AISC ( here you can see the big differnce to EVN, having costs of 1041 A$ in the Quarter ). The existing mines were in line with expectations,a s was the Pogo Mine in Canada - but Pogo, which has been aquired about a year ago for memory, had been a reasonable difficult performer so far, and the market had some doubnts, whether the Australia underground-”artists” around Bill beamont would make it work. But the Dec Quarter showed substantial improvement, and the last month , december, shot all the lights out, producing 21.500 oz at AISC of US$ 964 AISC ( vs 41.600 oz for the Quarter ). One month is not a year - but this augurs well and was the really positive surprise in the Quarter. Beside of this, the aquisition of 50% of the Golden Mile alongside Saracen added some long life to NST, and in the current enviroment of an improving gold price, more production is certainly good production!”

Have a nice evening

Schröder Equities GmbH

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General - Saracen - Perenti - Resolute - Gascoyne

Good afternoon

Consumer confidence in the US is still very high - Durable Goods Orders are strong, but mainly based on defense…

Everybody is talking about the virus, and it´s potential economic consequences. People point out to me, that Influenza is responsible for 20.000 deaths or so every year…and that the numbers involved in the new Coronavirus are still very small indeed. But then, the highly unusual measures being taken, like effectively cutting off 45 mill people, sending 2500 doctors and nurses, building hospitals etc are very highly unusual - in fact, they are unparralleld. One has to ask the question, whether we ( as the public ) do know everything we should about the virus??? On the positive side, it´s good to see markets steadying, and it´s also good to see, that the very substantial majority of cases is happening in one prvince, indicating, that the extreme measures taken yield some success. We will find out - but in the meantime: markets hate uncertainty!

But risk is on again - at least a little bit. As the day progresses, equities are getting stronger, and base metals - while bonds are giving up some of yesterday´s gains, and gold is back to around 1570 US$

RIO seem to have some big obstacles left to progress their giant copper mine in Mongolia…government agreements, fresh cash needed, cost overruns still continuing…the underground mine will not be in production before 2023, and possibly later. RIO´s 51%-owned Turquoise Hill is a problem for them…

Saracen - excellent Quarterly from them, again. Record production of 120.000 oz at 1100 A$ AISC, with guidance of 500.000 oz this financial year, and 600.000 oz next year - driven by the recent aquisition of 50% of the Golden Mile in Kalgoorlie. SAR do purchase some ore for Carusoe Dam - so AISC have do be adjusted for that, which adds another 150 A$ or so to the last Quarter´s AISC - still very reasonable !! Exploration success coupled with what could turn out to be a good aquisition ( Golden Mile ) have catapulted Saracen into the small league of high class Australian gold miners, generating significant free cash flow. The NSTSAR JV, which operates the Golden Mile now, wants to update the market on the significant ct-back currently ( and for the next 2 years or so ) undertaken. This could be another positive trigger for the stock.

Resolute - is making use of the capital raised recently and is buying back a royalty, which financier Taurus had over their recently aquired Mako Mine in Senegal. I think this is positive - but not really value-adding to anything.

Perenti Global - better known as Ausdrill, it´s previous name - has been under pressure ever since Semafo had to close it´s mine in Burkina following a terrorist attack in early November, and an unforeseeable (and not related to PRN ) end to a Ghanaian manganese mining contract. Following those two events, PRN cut their full year guidance from 140 mill A$ profit to 115-120 mill A$, by 15-20%. The share price since then is down by 34%. While the stock was not really expensive before those events, it´s certainly cheap now, and includes a significant risk-premium for it´s activities in Western Africa. PRN have recently started mining at West African´s Sanbrado project, and will fully ramp up soon to full production. PRN´s main activity is contracting for gold miners, open pit as well as underground - and they are a leader in both areas. I think it´s very worthwhile to buy a few here…the fall is overdone. The company is still a little bit too heavily leveraged for the husiness they are in - approx 1.3x EV/EBITDA - but this will reduce over time , as they are increasing free cash flow over the next few years quite significantly , despite a healthy 5% dividend yield. I think the stock is worth closer to 2$ than 1,50$/share, currently trading at 1,53A$.

Gascoyne - update from the administrator. The last Quarter was still a bad one, but some light at the end of the tunnel. The administartor continues to invest in a cut-back of the Gilbey Pit, which will reach the higehr grade zone very soon - probably already has. Gilbey represents 90% of existing reserves, and the administartor is hoping for a 7 year mine life . They expect 70-.80.000 ou of production at around 1800 A$/oz all in costs - whereby they see production slightly falling after 2020, but all in costs also stabilizing at around 1525 A$/oz.The strong A$ gold price is certainly helping, and the way operations are shaping up, the chances for equity-investors to recover some of their money are rising! Never mind - investors will loose a lot of money here, but at least they should be able to have an option for the future here!

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

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