General - Evolution - Apollo - Oceana - Ramelius/Spectrum/Chalice

Good afternoon

the virus infections are growing much less now in percentage terms, and could also be past their peak in absolute numbers. But the news are full of bad news from corporates, which are affected…not really raising our spirit! One risk seems to be, that a lot of infections with only small symptoms are not really counted for. Be that as it may…my feeling is, that tehy start to have this thing much better under control as time goes by.

Not much action in metals today - better initially, copper/zinc are now a little weaker, while nickel is up . Gold is still very well supported, holding above 1570 US$ all day and around a fantastic 2350 A$/oz.

The US$ and bonds are slightly stronger, while equities don´t really know what to do today!

Amazon / Google / Microsoft / all with new highs today

Heavy rain in large parts of New South Wales over the weekend - 175 mm in Sydney from Sunday to Monday morning - bringing potentially new problems, but extinguishing most fires finally.

Mrs. Kramp-Karrenbauer, the Merkel choosen successor as the next German Chancellor, steps down…well I am not crying about it…she was never capable of doing it!

Ramelius/Spectrum metals - and another bid - this time, it´s agreed! RMS are bedding 1:10 shares and 1,7ct/cash share for all of Spectrum…Spectrum was a recent high flyer, before they got held up in a law-case about title ( which was now settled for 850.000 A$ ). Spectrum have a ( largely ) underground resource of 799.000 oz at 13,8g, incl 468.000oz of indicated at 17,8g gold/t - nice grades! - in two adjacent prospects in Western Australia. Dynamic, the US Fund, is largest shareholder - but our Chalice Gold also own 7% = 97 mill shares and if I am right, they double their money on it = roughly 6-7 -8 mill$ pre-tax. Chalice got to be one of the best corporate asset traders in Australia…they have done it several times, paying some back to shareholders, and exploring very actively with the rest. For Ramelius, with nearly 90 mill A$ in cash, probably an interesting deal. But I am not a big fan of them at current levels - their mines are relatively high cost. Management is doing a good job with mediocre assets - but I am not a buyer for now here.

Oceana - came out with guidance today. As we all know, they are very unlucky with Didipio, which remains closed ( for no reason ) - that´s a pity, because it´s OGC´s cash cow! It´s great what tehy have done over the years in Newzealand, and a bit down the track in 2022 latest - they will generate nice cash from Waihi. And Macraes continues to amaze me - it´s one of these stories: Good mines never stop! But actual cash generation this year at least is no all that great, either. the Haile Gold Mine in the US seems to become right slowly but surely - but I think the market might want to see that, before it´s priced in, as the history so far has not been all that great. So unless you want to speculate on a resolution soon for Didipio, there are not that many reasons to hold them in the shorter term - even though I do like the management. Not so easy to manage operations in NZ, the Phillipines, and the US for what is not that large a company.

There are some really good firsttier gold miners in Australia like Evolution, Northern Star and Saracen. But behind that, there is nothing really compelling at current levels. In the small stocks, that´s a bit different. They still do not really exhibit a 2350 A$ goldprice. You know, that I like Horizon Gold - another one is

Apollo Consolidated - they announced todaya 1.035 Mill oz resource at 1,2g, of which about half is indicated at a 0,5g cut-off.Their Rebecca deposit alone has 775.000oz within a pit-shell, of which 71% is indicated. Since cut-off date for the resource estimate, tehy have announced 40m with 5g/51m with 2.9g/ 9m with 10.5g - indicating, that the above resource really is a first estimate only. They had 7.5 mill$ cash at at the beginning of the year - but I think they want to go hard here , and that money might not last all that long.They are not as cheap as Tietto - but they are in Australia, not far away from Saracen´s Caruso Dam Mine. I am sure, that Saracen would not be doing anything, before tehy have bedded down the recent Golden Mile aquisition- but in 12 month time, AOP might well have grown quite a bit, and by that time, could fit needly into Saracen!

Evolution - now we probably know, why they underperformed recently - La Mancha today ceased to be a substantial shareholder ( 5% ) and I can only imagine, that they want to get rid over the rest as well in teh not too distant future. I can only reiterate - if you are looking for a stable, very well managed gold producer in Australia, with one promising asset in North America - a nice div-yield of about 3% and very little hedging, this is the one! I think their next grwoth will come from taking over Bellevue (??? ) which in my opinion would fit well, once they have done a lot more drilling - but until then, EVN will want to make Red Lake work, and another deal might be 12 month down the road?

Have a nice eveing

WS

General - Strike - Bellevue - Friedland

Good afternoon

some mild profit-taking at the end of the week in equities . Bonds are a bit stronger, as is the US$ - perhaps on the back of some pretty bad numbers for industrial production in Germany. Metals down a bit more - all these reports about Virus-impact not helping today! A$ gold price very strong indeed, but also better in US$.

I think it´s very encouraging, that the rate of increase of virus infections continues to fall - it has more than halved from 25% 8 days ago, to just 11% yesterday. having said this, the economic impact in places is very substantial….Burberry today reported, that tehy had closed 1/3 of their shops in China. The remaining ones saw sales fall by between 70-80% over the last 2 weeks. I guess you have seen, that some commodity consumers in China have also announced force majeur on their purchases. But on the positive side: I am sure, that the Chinese government will respond with a great stimulus program, once the virus has been bedded down in a month or two.

Strike - I think the sentiment in gas markets currently might hurt them a bit. But I guess nobody expects freight rates to stay close to zero ( as they currently do! ) nor gas prices to stay at a level, which does not even cover operational costs ( again, as currently the case! ). As you know, Strike is a while away from production anyway! And if infuture somebody can cope with low prices, it will be these guys due to their superior asset quality. Strike are currently involved in groundwork - seismic, and revieing their large acreage holding in the ( potentially hosting a very large gas resource ) Perth Basin. This could result in some pretty bullish stuff. I believe, that they will update to that regard within a few weeks. Investors should really use the relatively weak prices to add or accumulate stock. The underlying worth of Strike is probably North of 30ct today ( vs 17.5ct share price ), with a chance to add substantially more value. And this is not the all-or-none situation anymore, which it was say 12 month ago! So I think the risk-return ratio is a very psoitive one here.

Bellevue Gold - the stock jumped todayfor no fundamental reason. Dynamic, the well regarded North American gold fund, increased it´s shareholding to now 13.5% of the company - even for them, a big bet. This might have changed sentiment in the stock, along with a better gold price. The rise was long overdue anyway. I looked at some numbers again today, and I think a takeover for say 500 mill A$ to pick a round number ( about 85 ct / share ) would be VERY accretive to the earnings of the larger, Australian producers - especially with the ones having existing plants in the area. As you know, they continue to have a frantic drill program on now and for the next few month, to convert their 1.8 mill oz inferred resource at 11g/t to indicated, as well as find more. It´s a bit early to say without a feasibility study - but this mine could produce 150 Mill A$ in free cash p.a. for many years. If you compare this with say Northern Star, who´s cash geneartion should be about 900 mill A$ in 2021/2022, that would add 1/6 to NST free cash, for an outlay of 1/15 of it´s market cap ( at 500 mill A$ for BGL ) . Bellevue continues to be one of my favourites, even though the share price performance has been pretty lacklustre.

Further below, you find an article which I have stolen from the Mining Journal. Good reading…Robert Friedland continues to be one of the best mining marketers of all time, and some of his comments below are very amusing and make for a good weekend!

Mining Journal:

The latest coronavirus is believed to have originated in a food market in Wuhan, China, possibly from bats. Friedland wasn't surprised, saying some of the meals he'd been offered in China had "horrified" him. "I'm a bit of a hippy - I'm happy with some tofu," he told the Cape Town stop of the Benchmark Mineral Intelligence World Tour. He expects the current virus to be contained by mid-year, but tipped coronaviruses to be an ongoing problem. "This current virus, it's not even the big one," he said. "It will mutate very rapidly."[The virus cells] don't want to kill their host, they prefer us to walk around spreading it like zombies."There will be wave after wave after wave after wave of coronaviruses."Friedland said the virus would grow, become more robust, "then it will kill you"."The only way to limit this is to cover everything in copper," he said."Silver also works but it's too expensive."Friedland said all US military facilities will have copper surfaces. This coronavirus is going to accelerate this," he said.

He added that he'd shook hands with so many people while in Cape Town that he was going to ask the Japanese to make copper gloves.Friedland noted gold had gone up due to the outbreak and copper had dropped."I think the market reaction is wrong," he said."There is absolutely no disruptive use for gold."We used to put it in our teeth. Now if you have a gold tooth you look like the Russian mafia."Copper has lost as much as US$700 per tonne since the coronavirus outbreak."It's priced for Armageddon because the media has got everyone freaked out about this virus," Friedland said."We can't build too many mines on $5500 per tonne. We need $11,000 or $12,000 per tonne.

Notwithstanding the impacts of the virus, Friedland believes the green revolution will see copper demand rise 900% by 2027."That's tomorrow morning!" he said."Not enough copper is being discovered to meet future demand.Demand is going to be like trying to get the contents of the Hoover Dam through a garden hose."The deficit in copper is going to be like the deficit in palladium."Friedland likened Chile's ageing, low-grade copper mines like Escondida to "little old ladies lying in bed waiting to die".The biggest drivers of copper demand would be the need to replace the ageing US power grid, new air conditioners as the world continued to urbanise, and electric vehicles.These babies [EVs] are really copper intensive," Friedland said.Friedland noted the surging valuation of EV-maker Tesla, which now has a market cap of $150 The price of Tesla just went to Uranus," he said."You need a telescope to see the share price.How can Tesla have that valuation and mining companies don't when Tesla needs our metals?

Revenge of the miners is opening soon at a theatre near you."If you want to clean the air, copper is the king of green metals."

In that sense, enjoy the weekend!

WS

General - Tietto - De Grey Mining

Good afternoon

the rate of increase of infected people is coming back strongly…from +15% a week ago to 19.5% 4 days ago to only 15.5% yesterday…99% of infected people in China, of which 80% in Hubei…probably they have it in hand? Well let´s hope so - that´s what markets are saying…equities strong again today….base metals roughly unchanged…but gold is edging higher to 1564 US$ in the moment. The safe haven, bonds, is retreating, while the US$ is staying strong.

No major numbers out in the States - in German, factory orders were weak today.

The provincial arm of Merkel´s party looks like having worked together with the ultra-right and the Liberals, to install a Liberal local PM in Thuringia. I have been thinking of it for a while - today I finally left the Liberal Party.

Twitter with an excellent result …I am sure Trump has been helping it´s popularity.

Substantial ( and in some places more than that! ) rain started today and will be intensifying over the enxt few days in N.S.W. and will be of great help against the bushfires - but might bring us different problems! But places like Evolutions Cowal Mine will like this rain

Tietto - won the price for the most compelling story at INDABA…I can only agree! Cheap overheads,cheap drilling, an already significant resource of nearly 2.2 mill oz, and a substantial drlling program ahead of resource estimate in full swing! As you know - I totally agree…this stock is cheap! But then, many others are as well…Panoramic / Strike / Sheffield / Graphex / Bellevue / Horizon just to mention a few names I own and where I am licking my wounds!

De Grey Mining - may have found a large gold deposit 80km from Port Hedland, in Western Australia. The company is run by ex-stockbroker Simon Lill - Ed Eshuys, whom many of us know from a long corporate history ( not always favourable and often in conjunction with Mr.Gutnik, but undoubtedly a strong geologist ), is on the board. The company has a 1.7 milloz resource in the area, spread across a few deposits already - but the larger part of it is in fresh rock, potentially not the starightforward to treat ( Please note, that I have not followed them closely in the past ). They announced 24m with 7.5g / 49m with 3,7g / 36m with 4 g from their Hemi Prospect, Section A and 15m with 2,5g / 21m with 2,5g / 24m with 4,2g from Section B - ending in mineralisation. The two prospects are 640m apart and there is reason to believe, that the two belong to the same structure. This could be exciting stuff - worthwhile following! More assay results are pending.

Let´s hope, that the new-found strength in markets will see some follow-through with our small stocks!

have a nice evening

WS

General - Liontown - Oklo

Good afternoon

US services industry is very strong, while in Europe, manufacturing is stabilizing, and the overall PMI was better than expected.

these Americans are crazy - well they probably are, but they are certainly crazy about their Tesla, and anything related! The Tesla-virus spilled over to lithium stocks, and many things to do with batteries…Albemarle went trough the roof, now trading 50% above the lows from November…and in Australia, the lithium sector was very strong as well. Today, though, Tesla is down by 11% as I am writing this in late afternoon…

I giuess todays strength in metal prices also had to do with it….there was some profit-taking once I had left yesterday, but today, they are all powering ahead again: nickel + 3,3% / copper +2,3% ….palladium not far below recent all time highs…gold a little bit weaker, currently 1550 US$. And equities are shooting the lights out, once again…the virus and Chinese ( very valid ) growth concerns get oushed aside amid the expectation, that we will see big stimulus in China, if we really see a slowdown, and prolonged impact from the virus-outbreak. Later in the afternoon, metals retreated from their highs - probably not helped by a strong US$.

The fact, that infections are pretty mutch concentrated to Heibu Province, gives markets some hope, that authorities will be able to contain it.

Trump has got 49% approval rating - the highest since he took the job.

Oklo - and another round of spectacular results from extension drilling! The two drill holes we spoke about a few days ago came in - and they surely did not disappoint! 30m with 8,5g gold and 13m with 15.8 g are the stuff which gets us excited! They might well have 600-700.000 oz by now, at average grade of say 3g/t - but this is pure speculation. Their very actice drilling program is ongoing, and their first resource estimate will come in Q2 of this year. The stock is getting so much attention, as tehy are in elephant country - and next to a few big mines in the neighbourhood. 103 mill A$ market cap is probably not dirt cheap - 100 mill A$ market cap for no resource as yet - but I think well warranted. I am having a foot in the door he, and you should was well, I think!

Liontown - was not only dragged higher by the general lithium-frenzy today, but also announced excellent drilling results from their main project, Kathleen Valley: Numbers like 13m with 3,1% Li2O / 33m with 2% / 40m with 1,7% / 58m with 1,3% are truly oustanding and easily underpin the “exploration target” of an additional 25-50 mill t ( on top of existing 75 Millt at 1,3% )at 1,2-1,5% LI2O. The next, interim resource estimate will be published in mid-February and gathering from these and other results, should not disappoint!!

Have a nice evening

WS

General - Tietto - Metro

Good afternoon

I will have to leave at lunch time today - cut-off for my blog is earlier than usual today…

Terrible start for the Democrats in Iowa…could you guess the results, please? In future, they might well use AI to find out caucus results! Never mind voting!

Metals are going through the roof today…nickel up by 3.5% / copper 3% / zin 3.% currently….

Equities are having another strong day…bonds are weak, as you would expect, and gold is currently down by 9$ to 1567 US$. Looks as if investors are happy enough so far with measures taken by China to containe the virus….I am sure we will continue to see volatility….US stocks, led by Tesla, are going through the roof ! Remember when Volkswagen went from 200 to 1000 back in 2008 on a short-squeeze? It ended with Volkswagen being back to 200 only 2 month later! As good as Tesla might be - this feels similar! Stock is up another 10% pre market at 850 US$!!

Gold held by ETF´s rose to a new all time high.

Tietto - I contacted the company today re their drilling crews, which in part are from China, as is the MD ( well, he has been living in Australia for many years ). The company is handling the situation well…all drilling operations are generally supervised by Chinese guys, and helped by local guys. The company has had the current drilling team on site since the 6th of January, and all are well. Some people will be returning from China over the next few weeks - all wll be held in voluntary quaratine for 14 days on their return to Ivory Coast. The MD himself, who has been in China recently, is working from home for 2 weeks in total. The situation appears to be very well managed, using high precautions which will most probably be unnecessary - but which make perfect sense! Drilling operations are going as planned….But the MD did cancel his trip to INDABA. We should see more drilling results relatively soon, as the company is drilling about 5.000m/month.

Metro Mining - 100% of their bauxite goes to China. At this stage, there is no reason to believe, that cargos could be impacted - but who knows? Probably it´s good, that they will only start mining again in about 2 month time - by then, I would hope the virus saga to be cooled down! The company has a great chance currently to sign up excellent contracts for freight , which would be subject to force majeur clauses - i.e. if Chinese clients declar force majeur , MMI could cancel out freight contracts. As I wrote the other day - freight rates can be nearly as high as mining cost - so this is a significant plus for MMI and will mitigate any potential impact from potentially weak bauxite price due to the virus-outbreak. MMI also are in a strong balance sheet position. Any further weakness should be a good buying opportunity, as the mining season will start again in 8 weeks.The stock has held relatively well under the circumstances - perhaps there is a chance developing to get them 1-2ct cheaper than today.

Have a nice evening

WS