General - West African - Perseus - Panoramic/other FIFO miners

Good afternoon

Australia continues it´s strange life on it´s own….

German economic advisor see GDP-contraction of up to 5% this year, potentially followed by 1,1% growth in 2021. There probable outcome is for less contraction - more like 2.5-3% - and a rapid expansion of 3+ in 2021. I fear, that their first case might be the probable outcome - but that is probably priced in !

Equities are having an unsually “quiet” day today….mixed in Europe, a little stronger in the States so far.

Trump is trying to be a star later by painting a negative picture now…100.000 death etc…

I have to say the way corona is exploding in his hometown - much worse than ever in Italy - is pointing to something like it! They claim to have made many hundred thousand of test - but reportedly, results often take a week or longer to com back…

Base metals and gold are little changed today as well, as the Junior Gold mines Index ETF, GDXJ, is recovering by about 3% right now, following this crazy fall of 10% on Friday night.

Genex - big win for some of us today, as GNX is announcing the long-awaited signature for a 10-year, vinding offtake agreement with EnergyAustralia! But tehy are not going to take equity - so some more equity is needed, which GNX probably is going to get from a larger investment by JD, the Japanese power group. Financial close is now expected in the 3rd Quarter. I understand, that the Queensland- as well as the Federal Government - is strongly supporting the project, and in fact , probably stronger than ever, as beside of being needed as a regulator of energy supply/demand, the project is also generating 500 jobs in the construction phase. I think equity in this project is highly desirable , genrating easy double-.digit returns for the foreseeable future in an extremely low interest rate enviroment. I have not had teh chance to talk to the company today, will do tomorrow…But the initial move of the stock to 19ct looks to me a much more appropriate valuation ( for now ) than today´s close of 15ct! More tomorrow!

West African Resources - are as yet unaffected by the virus, at least in terms of operational performance. No cases within the workforce or in local communities reported as yet, production going very well and teh plant has been running ahead of nameplate capacity, with recoveries of 92,2%. 94 kg of gold have been produced until 26th of March. Export og gold to Euroepan smelters in conjunction with other gold producers in the country via harter flight. Supply of consumables etc working consistently. The mineralised zone of the underground has been intersected, with grades of higher than 30g experienced…Open pit mining at M% and M1 South continues, as M1 North is being opened up now, increasing flexibility. A Broker analyst from Hartley´s expects, that once comissioning is finished ( any time very soon I guess ), the company will have more than satisfactory liquidity of 40 mill US$. 95% of the workforce are Burkinese, and the company is in negotiation with the government to allow some kind of travel for the expats. All continuing to go EXTREMELY well here - except for the share price, which is a joke at 43ct - despite the country risk, analysts value them from 90ct upwards!

Perseus - published their new Life Of Mine Plan, which is calling for Edikan to produce 212.000 oz on average for the remaining 6,2 years , including 231.000 oz on average for the next 4 years.The company expects all-in site costs ( which iclude ecverything except for tax, headoffice, and exploration ) of between 870-890 US$oz, and see the mine produce after-tax cashflow of 356 Mill US$ at a flat gold price of only 1300 US$ over the reminder of the mine life. I think this is very positive, also taking into account, that PRU currently have a second mine, Sissingue, and the potentially largest and most important mine, Yaoure, coming on stream sometime in teh next 12 month ( company says, that construction is going well, still - which would see first ore very late this year. But tehy also state, that there are certainly risks going forward from Corona, which could impact the timetable ).

Panoramic - the WA government has said today, that mines should be prepared for no FIFO workers being allowed from interstate from sometime in a few days on - unless tehy go on a 14day quarantine once entering WA. About 25% of PAN´s workforce incl contractors are from other states than WA - probably quite similar to most FIFO-gold mines in WA. The impact of this can be mitigated by workers incl their families - where possible - being relocated to WA, or be replacement from WA-based workers ( which might be difficult in a tight market ). It cannot be ruled out, this new initiative by the government will make it increasingly difficult to stick to original production targets for every mine in the State, which needs relies on a FIFO-workforce ( and that is most mines ).

Have a nice evening

WS

General - Gold/Mining - Strike

Good afternoon

Trump is now getting the bill for playing the doctor of the nation…by the end of the day, we will probably have more than 100.000 infections in the US, and more in New York, than in Germany - and both numbers despite a later start to the pandemic in the US…He will potentially get his personal bill with elections in November…And Johnson already has got his: Tested positive! As well as his Secretary of Health….

Cases are still rising pretty strongly ove rhere - but really strong action has only been in place since the last weekend - with incubation of up to 14 days, our infection numbers should start coming back significantly early next week…I hope! But people are very disciplined generally over here, and it would be disturbing, if the extreme measure and the extreme change of behaviour will not have a massive impact - showing up in numbers - over the next few days.

Equity markets are expected by many to have a big bounce - and even if it´s only liquidity-driven - once this is all behind us. The big question is, how much of that bounce will take place before it´s actually happening? I would certainly not buy the market after it went up strongly 3 days in a row…My fear is, that we will have another massive rise in cases in the US and especially in New York in front of us. This could have a major effect on Wall Street, sentiment-wise.All markets are lower today - very understandable following a record 3-day rise in N.Y. and also elsewhere!

Metals are once again holding up really well - all green except for copper, which is down a fraction in the moment. Gold is having a relatively quiet day today, fluctuating around 1620 US$Oz over most of the day, and as I am leaving at bout 4 pm .

So while I see a good chance, that we have seen the absolute lows., I see a good chance for a few weak days in front of us.

The Northern Star profit warning the other day has many gold investors very concerned. In the conference call, they mentioned the transport of FIFO-workers as the main reason for their problems. As I have mentioned, my favourite Evolution only has one small mine, Cracow, working on a FIFO-basis…. As I wrote yesterday there are many Australian producers coping well in the moment. certainly, there is a risk of one mine or the other getting problems - - but even IF so, they would be temporary. I am still much happier to be a gold producer, than say a car producer! At least they can sell all their product, even at rising prices - and they have pretty remote operations. And this is not taking into account, that gold looks pretty good in my opinion for quite some time ahead!! Many people still wonder, why production at NST is so heavily impacted - numerous others

Perseus, as well as Panoramic, came out with virus-updates. The essential is, that operations of both companies work as scheduled. Interesting to note, that Savannah has worked since the new start-up on a 2-week-on-two week-off roster, something RIO has just moved to in it´s iron ore operations, to reduce travel from it´s previous 8-days-on / 6-days-off roster. Fortescue are doing the same. In the case of Savannah, 25% of FIFO-workers are from Interstate. They require special permission to travel as mining is an exempt industry and deemed necessary. Alternatively, the company is also replacing Interstate-workers with labor from Western Australia.

I have spoken to a few explorers today…none of these companies are running as “normal” - certainly, all of them have changed the operating enviroment to protect workers. But all three I have spoken to - Tietto, Bellevue and Apollo Consolidated - are currently drilling. Some of them experienced some minor problems, like staff arriving late due to travel restrictions, voluntary quarantine and things like that. But drill rigs are still turning here. More disruptions, though, have occured in other places, like the Northern Terrytories. At this stage, nobody is complacent anymore - everybody has taken responsible action to protect workers. But everybody is also uncertain, weather more restrictions might come into play for unnecessary activities - and in the short term at least, exploration is certainly not necessary. By the way - all three above mentioned companies are very cashed up and can sustain the storm very easily!

Strike - pointed out today, that today´s announcement from Woodside, to curtail capex by 60% and push decisions to bring Scarborough and Browse into production, will change the supply outlook for WA substantially. Even with a low-case demand scenario, supply/demand will be balanced by 2024, even without exporting any gas from the Perth Basin. In a stronger demand scenario, a balanced market is expected by the middle of 2023 already. Oil& gas stocks generally are very cheap in Australia currently - Strike is no exception here! But the upside medium term is certainly unchanged - the gas market is looking good , and while oil is under immens pressure in the moment, the market for gas is not totally uncorrelated, but looking better.

Have a quiet weekend, and hold tight!

WS

General - Northern Star - Resolute - Westgold

Good afternoon

US gehts overwhelmed with unemployed peopel - to be honest, this should not be a surprise! Perversely, equities in the US are up for now”on expectation of more stimulus”…crazy crazy crazy…

Europe saw some profit taking all morning, but at least by early afternoon, US markets are slowly but surely dragging us closer to zero for the day, and we will be closing green all over!

Gold continues to be fun…it tried to go below 1600 US$ a couple of times today, but always met with good buying…and now it´s looking strong at around 1630 US$. It´s more stable in A$ for much of the day, around 2700 A$/oz.

Base metals are behaving a little like yesterday - with US markets waking up, some more buying coming in, and they are mostly just ahead today.

Northern Star - a very strange profit warning today. They are not going to pay the interim div of 55 Mill A$, even though their net debt position of 170 mill A$ is only small. They are deferring hedges to next year, to be able to get the full current gold price instead - again maximising cash flow. They are warning, that production for the Quarter will be 10-15% lower because of Corona making things more difficult. 10-15% down for the Quarter equals at least 30% down for March - that sounds pretty outrageous for something, which was not worth a mention at the time of their half-yearly report in early March. At the end of Feb, we had 24 cases of corona in Australia, up from 22 a week earlier - nobody can tell me, that he took action, which put his production down by 30% then…Very strange…I did not have the chance to listen to their investor call, as it´s still not available at 3 pm our time - but there got to be something wrong, I would say! Stay away for now…and probably anyway…As you know, I prefer my Evolution - only 10% or one of the smaller mines depending on Fly-in-fly-out! FIFO is not a desaster necessarly in corona-circumstances, but it certainly makes it more complicated !

Resolute - also issued statement with regards to corona-impact. They sound very confident - production at their Mko Mine might be down a little ( that´s my interpretation ) because of operating with a reduced workforce. Both their mines are being operated now by a vast majority of local people. Syama seems to be going well, despite travel limitations etc. It did not sound at all as if anything would not go well there. Interesting announcement vs Northern Star, which sounded pretty alarming. Is this because Resolute management has been through Ebola-outbreak and all sort of problems, which are more usual in Africa? I am not sure, but in any case, this announcement is a very confident one.

Westgold Resources - the Western Australian gold producer also updated re corona. All three plants are unaffected so far, and are running at full capacity. Again - makes me really curious about Northern Star´s problems.

Have a nice evening

WS

General

Good afternoon

there is so much discussion going on, what should be done…and weather this unprecetended level of turmoil is in fact warranted by the virus. I think this is worth discussing - but we should not forget humanity in this discussion. Also, would a complete breakdown of the health system lead to social unrest etc? In my very personal opinion, I think the relatively hard lockdown we are currently seeing will have to reduce numbers of infections big time - everybody I know is behaving responsibly. Buying time for a cure, and hopefully also a vaccine at some stage, makes sense to me…

The best news is, that China seems to be back to 85% of normal economic activity. What remains to be seen is, weather this will also lead to infections rising again.

We are currently seeing a large, unvoluntary supply response by miners - many mines around the world, especially in copper and iron ore, are being closed - also some gold mines.

Once again, I think Australia is a relatively save place - but this could certainly change as well. So far, mining has full government support. The appointment of Nev Power ( former MD of Fortescue, and a director of our little Strike Energy ) to run an advisory commission to mitigate the impact of corona on business, has to be seen positive for mining and to for the government, to keep a cool head!

There seems to be turmoil in the physical gold market. normal gold dealers seem to be sold out , and even the Swiss banks have problems in getting their hands on physical supply. The closure of some refineries certainly does play a role here - god knows, weather the conspiracy theories of some banks being short gold big time will prove right. In any case, physical demand seems to be outstandingly strong, and that is good!!!!The GDXJ is also much less volatile today, which is also good - so far , it´s holding yesterday´s strong gains.

Base metals are green today - just….but across the board.

And equities are having another volatile day. Opening up to 5% higher this morning, the DAX for example traded down to - 2%, and is unchanged for the day now, while most of Europe is up by roughly 2% - as is the DOW . But this might change - who knows these days! The VIX has been coming down from recent highs, but has to come down quite a bit further until we have normality again!

Not all that much happening on the micro side today…

Have a nice evening!

WS

General - Gold - SEMAFO - Metro - Bellevue - Strike - Chalice - Oklo - Tietto

Good afternoon

markets stabilizing more today! I think the relentless selling at any price seems to be done…let´s hope, that I am right! But totay, I would not be a buyer - it´s now running too hard! Hard assets are racing as well…copper up by 6%, nickel 3,3%…gold at 1618 as I am leaving…

Gold especially is looking better by the day. I think / hope, that purely liquidity driven selling has largely been done…and as I believe in a stabilisation of markets generally, I think gold is a raging buy!! Virtually unlimited quantitative easing by central banks around the world, massive fiscal support…there is absolutely no doubt , in my opinion, that this is very bullish for gold and hard assets generally - incl equities. But gold is the much saver bet, until we have a clearer picture about just how bad this recession will be, and how short/long it will be. Gold has hit a new A$ all time high today - currently at 2734 A$/oz!

It should not take all that long for smaller gold stocks to join in the rally…and things like Bellevue, Apollo Consolidated, Oklo, or Horizon ( to mention a few ) which will produce gold at some stage ( or probably get taken out! ) , and preferrably are based in Australia ( not so Oklo, obviously ) should be bought while few investors want them! The GDXJ is up by 14%, as I am writing - at 5.30 pm my time.

South Africa is closing all mines for 21 days…is this perhaps done to be able to send many thousand workers home, and to prevent unrest at the mines???? I think South Africa is very vulnerable to major political trouble - people are very unhappy with the current situation, very high unemployment and a large percentage of population having absolutely nothing - and many millions living in home towns, where you cannot escape the virus. potentially, a very explosive situation!!!!! And in any case - major bull points for palladium/platinum and also up to a degree, gold.

Mine closures/reductions of operations are now happening just about everywhere! Australia, though, is treating mines as essential industry. I think this is a smart move - small part of the population in mostly remote areas, generating a large part of exports/GDP. I think Australia will be the last place to shut down it´s mines. And once again - buy Evolution - just about all production in Australia, from many different mines….

SEMAFO - takeover from Endeavour, at a 27% premium - paper only. Makes perfect sense for me - creating a West African “major”….Obviously, Endeavour, which knows Western Africa very well, is not afraid at all to buy Burkina ! Should be very good for West African Resources, which is bloody cheap vs SEMAFO - probably half their valuation, depending which measure you are using - if you use earnings, probably 1/3rd!

Metro Mining - announced, that they will be going into production as planned, following the wet season . Mining will again in early April, with first loading of a vessel in mid-April. All production for the April Quarter has been confirmed as “wanted” by Chinese customers. I guess that´s as much as you can hope for in the current enviroment. Still - except for indigenous workers from the mine area, all staff I believe are working on a fligh-in-fly-out basis, which does not make things any easier these days. But they are lucky - enough time to plan things properly, and the most important thing: Customers still want the material! Freight rates are low, and I believe have been fixed, and the A$ is ultra-low - so the price received for their bauxite should be ok. This should perhaps not be surprising: You wonder about all this production from Guinea, which is all shipped to China - and usually, is produced by operations, owned by Chinese companies. They will have thousands and thousands of Chinese working there. You wonder about the virus on their mines…and the security of supply from Guinea ( which also has what looks like a difficult election late this year ). In any case, I am very sure, that Chinese alumina smelters will want to assure diversity of supply as much as they can!

Bellevue Gold - I was a bit disappointed to see the stock suspended the other day - for a capital raising!!! With 10 mill$ in the bank, I thought the currently very low share price was very disadvantageous to raise equity! But looking at it in more detail, I think the placement is very opportunistic: 20 Mill A$ are going to a corner stone investor ( we will only find out in the next few days about the identity ) at 30ct. This is very dilutionary, and yes - the share price is very low. But these days, it´s probably wise to be financially strong, and the company still needs a few Quarters of drilling to bring say 1 Mill oz into indicated resources, and find out about the potential size of this deposit. So I believe, that the company will be able to get a lot of value out of these 20 mill A$ - hopefully multiples. Personally, I had just bought stock at 35ct and 32,5ct - so bad timing! Bad with gold at 2700 A$/oz, I sincerely hope, that the stock will open much stronger !

Strike Energy - have mad a non-binding proposal to the board of Warrego, to take them over at a ratio of 1.2 shares STX for 1 share of Warrego, which was turned down by WGO´s board as inaedquat. It would have given Warrego shareholders 31% of the enlarged company.This transaction would have been very positive for both parties, I believe…and I think also reasonable fair to WGO shareholders. STX have much larger, prospective acreage in Western Australia, much better board and management, much higher cash position ( Warrego will only have just over 6 mill AS$ cash by the end of the current Quarter ), and the much better shareholder structure. Pity, that it was not accepted….

Chalice - announced their first drill hole from a property called Julimar, just 70 km North of Perth. What a stunner!! 19m with 2,6% of Ni/1% Copper/8,4g platinum and 1,1g palladium from 48m are absolutely incredible, and every explorers dream! Especially notable is the occurence of significant PGM´s in the result! Stock had a big rise of just over 100% since the announcement! Anotehr big winner for the Tim Goyder camp, following Liontown and Strike Energy! But don´t get too carried away just yet - one hole is obviously not a mine! But everybody including outside geologists is very excited - it is certainly highly unusual to have such a result with the first hole, proving their good work as well as their instincts + good luck! This is certainly one to follow, and in normal market circumstances, I would tell you to buy some! They will continue drilling here.

Oklo Resources - more excellent drilling as well from their Seko property in Mali. Very recently, they had announced stunning results from the occurence SK1 - this time not amazing, but good grades from SK2 and SK3: 36m at 3,2 gold /43m at 2,77g / 27m with 3,95g / and so on….Not sure, wheather the drill density is tight enough for these results to be included in the maiden resource statement, due some time in the 2nd Quarter. SK1 has also seen more drilling, but no results out as yet. The company has raised a fresh 12.5 mill A$ just 3 weeks ago - so they are going well cashed up into this difficult time! All expats have left Mali, but the local team will continue drilling - at least for now. Great results - the stock would never trade at 16ct , if not under the current circumstances! the capital raising took place at 21ct! With Black Rock, Ruffer, Resolute and Dynamic, the top 4 shareholders are all professional and smart gold investors!

Tietto Minerals - announced more hoels from their property called AG in Ivory Coast: 10m with 13g gold / 6m with 9g below the current resource ( 19,3 millt at 2,2g for 1,38 mill oz ), extending it down by another 50m. AG is open down dip and along strike. The deepest hole so far, down to 550m, has also been drilled - assays pending.. AG drilling ahd more, but lower grade intersects like 13m with 1,43g, which should aslo add to the resource. Drilling continues….I do prefer more advanced stocks in the moment…but Tietto are very very cheap at a market cap of 53 mill, of which about 15 Mill$ in cash!!!

Have a nice evening, and stay well

WS