General - Oklo - Chalice - Metro

Good afternoon

the gold market continues to be in disarray…futures are having a much larger premium, as tehy should…traders fear, that their buyers will ask for physical delivery. You start to ask the question, wheather the gold is really there!!

In any case, inflow into ETF´s continues, as is physical buying - but we are down a few $ in the moment, following a very strong close last night, at 1647 US$/oz.

The A$ is having a very strong day…nearly 62ct in the moment…Australia has been doing well in the crisis - reacting fast politicially as well as on the fiscal side…The ASX has lived a life on it´s own for a while now, and has performed well of late ( my fund is up by about

Amidst tentative signs around the world, that the virus-situation is improving - especially in Europe - equity markets are very strong, again…and metals as well - up between 1% for nickel and 4% for copper. As Bloomberg said : Dr.Copper indicated the weakness coming - is it now indicating the strength coming?

Anyway - the search for yield is continuing - but there are some question marks about regulators continuing to clamp down on dividends…my fund is up by about 36% since 23rd of March - after fallen by half earlier! A good deal of the fall as well as the rise is due to a very volatile currency - but I think we have some more room in the currency against Euro, and much more so in the underlying equitiy holdings!

BMW sold 20% fewer cars in the 1st Quarter - but surprisingly, they increased sales of EV´s by 13% in the Quarter. That´s certainly a promising development!

Must Americans get used to have not enough meat on the table? Big meat producers like Tysons are having substantial trouble with the virus, and have to close some facilities. There is nothing better than a old fashioned farm with a few hundred and maybe one thousand pigs ….than these massive meat-fabrics!

Chalice - announced some more gold-sniffs from their drilling on the gold prosepct Karri in Victoria - nothing to do with the recent multi-metal find in Western Australia. The target area of CHN at Karri is very large, and at this stage, I would regard the occurence of any unusual gold grades a success and as progress along the search for the real ore body! But gold in Virtoria might be nice, but nickel/copper/palladium/platium in WA is really what made them move like a rocket. Drilling there will start again imminently - and could weaken them in the case of non-success, or drive them through the roof, if they can repeat those kind of recently announced numbers. I am hoping for the latter!

Oklo - have completed the first metallurgial test of their ore from Seko - very succesfully, with 94% recovery for oxide, and 85-88% for transitional and fresh ore. The hardness of the ore is pretty moderate and comparable to other projects around. This is good news, even though not unexpected! It would not have been the first project to get killed by unfortunate, metallurgical issues! More drilling results should be in the pipeline - but they might wait for the Quarterly sometime late this month for publishing, unless they are very material. The question is always: Is more of the same material or not? I guess it will be, if they continue with the recent rate of success, as it will bring them ever closer to having a mineable deposit in Mali. Let´s hope, that they will be able to continue drilling! They have more money than they need…

Metro Mining - have started mining again a few days ago. A day shift has started and did exceed budgeted rates of 4 millt equivalent. Port capacity has been increased , and everything is working well. The ore is still a bit wet - but that´s not really unexpected, sinnce the company is always suspending operations until the end of March. There is still a little bit of rain up there - but with 33 degrees every day, this should not be problem going forward. The Alumina price is down, impacting some of the prices received - but the A$ is down as well, as are freight rates! All should be good here, especially, as freight rates ( and they are a huge part of costs ) are still only just above multi-year lows! Non-site costs ( and nearly all of that will be transport to China ) have been 20,68 A$/t last year….they should be 4-5 $ down this year , of which about 2$ might be lost to the weak A$ ( freight costs are in US$ ).

Have a nice evening!

WS

General - Strike Energy - Northern Star - Panoramic - Resolute

Good afternoon

I am sorry, if my report is very late recently - at least sometimes. This is not under our control - the blog is scheduled to be published between 6-and 7 pm Central European time. I guess, that the late sending out is a sign of the internet - or at least google - being under some stress.

More than 4000 have died as yet in New York - more than in entire China, if those numbers are right. Austria, which was pretty early in taking a tough stance, has just had about 1000 new cases or 10% of the total in the last 4 days…showing, that the lockdown can work. They have announced the relaxation of some of the lockdown-measures. Many European countries also look like seeing reduced absolute numbers, and defitinely reduced % of new cases.

This is inducing fresh optimism into equities! Australia was strong last night, Europe is strong, the US is strong…

I think the biggest risk to equities is from the regulatory/political side…Some neews-feds are talking about a one-off wealth-tax …5% in a hit - others are talking about a 20% levy on net worth for the rich, to be paid over 20 years….

Base metals also stronger - 0,5-1% up, and gold is looking pretty sexy at 1644 US$ in the moment, and 2710 A$/oz. It climbed higher all day basically, since Europe woke up. And even North American gold stocks are very strong! ETF inflow into the physical was strongly continuing on Friday.

One thing I wanted to mention the other day and I forgot: The huge numbers being announced by governments around the world to support their respective economies are most probably no actual numbers, and never will be.

In most cases, they describe total support - mainly in credit - available to support large and small businesses, and individuals. These numbers probably will never be achieved!

But unfortunately, in many cases they will support businesees, which have been weak anyway - and companies, which are smart enough to use it! I have no doubt, that many Private Equity-owned businesses will make good use of the cheap money available!!! I have spoken to the owners of a few private enterprises, and they are actually pretty relaxed - provided the lockdown does not last for much after the 1st of May! I am sure, that this is very different for many self-employed people, and for many small businesses like shop-owners etc - for them the going is VERY tough!

Northern Star - announced the first corona case at their Canadian mine Pogo. Australia continues to be relatively little affected - but I am sure, that it´s a question of time until we see the virus arrive at Australian mine sites.

Strike Energy - Hartley´s started coverage today - 12-month target 22ct, but with significant upside to that. As you know, I think this stock is a steel! Oil/gas will normalize at some stage, and corpoarte buyers tend to have a longer than 6-month view ( well, I would hope so! ). They believe , that corporate action in the Perth Basin will be plentiful….It would certainly be a great situation for a healthy company like Beach Energy to get their hand cheaply on what Hartley´s are calling a world-class gas find! Woodside hve delayed/totallyput aside plans for some very large LNG projects off the coast of WA - that could well be enough to see the gas market in Western Australia in deficit in a few yars time. In any case, it should be a lot cheaper for the majors to produce some onshore gas just outside of Perth,and close to the major market, than produce 100km and more to the North, offshore and after billion and billions of investment!

Panoramic - are getting a 8 mill$ loan at 6% from the largest shareholder, Zeta Resources. Zeta is geeting a huge premium for it: 28 mill options in PAN, exercisable at 16ct, IF shareholder do not approve the latest sale of 17 Mill Horizon shares at 17ct ( and the loan includes eventual payment for these shares ), they will still loan PAN 8 mill$ as I understand it, but receive 50 mill of these options. It´s great for PAN to get 8 mill$ one way or the other - but in my opinion, the largest shareholder is taking advantage of the difficult situation, PAN are in. Also, 8 mill A$ will not be sufficient to bring them into profitability, I think. Caught out by ramp-up problems, and the virus-induced bad nickel price as well as some production difficulties ( I guess ) because of virus-lockdown, it would be very hard for an outsider to do proper due diligence ( the virus makes it hard to go to the mine for outside people ). Panoramic probably have no choice to accept this - unless a white knight comes along! As I had mentioned before - in my opinion, Horizon Gold is worth a multiple of today´s price, eventually. But if they do not approve a rights issues, it will be impossible to prove this! The largest shareholder Zeta could quickly change this - but they are playing their cards to the detriment of small shareholders, in my opinion - of which I am one, in both stocks!

Resolute - released early production numbers for the Quarter, which were in line, but with a slightly unexpected composition. 111.000 oz were in line with company guidance of 430.000 for the calendar year,. Syama oxide production and Mako saved the bakon, once again - but Syama Sulphie produced less than expected - and that is the crucial on,e longer term. Recoveries were only 75% against a target of 85% , and mining - while substantially improved - also still a little short of expectations. Perhaps the smelter did not work 100%, after the close-down in December? Nota bad result overall, but Syama Underground( = Sulphide ) remains a unfulfilled story!

Have a nice evening and enjoy the European spring!

WS

General - Tietto - oil

Good afternoon

Following a bit of a late sell-off in New York yesterday evening, I feared for a real setback today…however, it did not eventuate! Australia not looking to bad today, and Europe as well as the US are looking slightly green…despite new corona infections in the US in absolute numbers still increasing pretty badly.

Metals looking ok so far, no unusual volatility and no major changes in price!

Trump has nothing better to do than to play the blame game with the Chinese government…as if he had nothing better to do…US cases still exploding…New York death are now exceeding 2200 people, and authorities as well as the health system seem very stretched.

Oil is very strong - China wants to buy for the strategic reserve. Oil stocks very strong - Royal Dutch up by more than 12% in the moment. Trump tweets, that Saudi/Russia are cutting 10 mill barrel oil, maybe 15…he forgot to mention wheather per day or per month or whatever? .but I am sure, that he does not know any details anyway. For now, oil is jumping big time to 30$!

US unemployment numbers up by a record amount again…comments say, that analysts had been surprised by the size of the jump. What do these guys smoke? Don´t they read the newspaper??? Nevertheless - the numbers were bad enough to give the gold price a bit of a run, which currently is trading at 1612 US$ or 2670 A$

Tietto - announced another round of positive drilling results from their main prospect. It increasingly looks like they will also have good potential underground, on top of the open pit resource. Drilling is continuing full steam ahead at this stage. The company took some measures to counteract virus risks in early February already. The fact, that the MD is of Chinese origin, and that most of the drilling team is from China, is probably good news - in the first place, I feared the opposite. But they have had no cases at all, and that means, that they will not have any any time soon as well. All Chinese drilling people returning from home, had to go into a 2 week voluntary quarantine. There are more assays outstanding, and we should also see shortly first results from the area immediately to the North, where has been intense , artisinal mining activity in the past ( which is certainly no guarantee, just an indication ). Stock still looks extremely cheap…

I looked at a few valuations today…Chalice with one drill hole drilled, 146 Mill A$ / Legend with a few more holes 320 mill A$ / Staveley with 85 mill A$ / Mincor 171 mill A$ ( with smaller reserves and resources ) and then you have Panoramic, in production ( even though no full production as yet ), great reserve, substantial exploration upside…capped at 95 mill A$. I think it might come down to the old saying: Never mine a good ore body! Having said this, I bought a few Chalice today…as I said the other day: Absolutely EVERY geologist I talk to loves this thing…

Have a nice evening

WS

General - physical gold/ETF´s - Nestor Australien top holdings etc

Good afternoon

A little bit of advertising for my own fund today, the Nestor Australien Fund.

Top 10 positions:

Genex Power - upside at least 100% on 12-month view - energy producer

Metro Mining - upside at least 100% on 12 month view - bauxite producer

West African Resources - upside at least 100% on 12 month view - gold producer

Tassal Group - upside at least 30% on 12 month view - Australia´s largest producer of salmon

Strike Energy - upside at least 100% on 12 month view - gas developer

Macquarie Group - upside at least 30% on 12 month view - the world´s best investment bank

Panoramic Resources - upside at least 100% on 12 month view - nickel producer

Marley Spoon - upside at least 50% on 12 month view - home delivery of food/ready-made meals

Foran Mining - upside at least 100% on 12 month view - copper/zinc developer

The weighting of above stocks in the portfolio is 35,7% - the largest at the top of the list with 5,5% - the lowest at the bottom of the list with 3,2% weighting. The fund concentration is limited by Luxemburg rules, which means, that the top 8 positions are not allowed to comprise more than 40% of the fund.

The fund is also holding numerous other stocks you will know - Evolution/Sheffield/Tietto/Oklo/Nine Entertainment/Alliance Aviation/Macmahon/Perenti/Origin/Graphex/Bellevue/Fleetwood/IVE Group,Beach Petroleum to name a few of the larger holdings - usually above 2% weighting.

The fund is down by about 36% this year as at today, representing a fall of about 12% in the currency, the rest in stocks. In my opinion, the above holdings have the potential to add 100% in value on a 12 month view, assuming, that the virus story will be largely behind us in June/July of this year. The Wertpapierkennummer is 570769, the ISIN is LU0147784119. It´s a typical, Luxemburg-based fund as thousands of other funds, tradeable on a daily basis.

Bloomberg reports, that the SPDR Gold Trust saw 2.9 Bill US$ in flow last week alone - that´s about 56t of gold at 1600 US$/oz! That´s the largest physical gold fund…Blackrocks Ishares saw about 6t equivalent inflow on Monday alone…these numbers are incredibly large…and make it of little relevance, that Russia stopped buying gold ( total purchases of central banks last year about 50t p.m.)- and should make up for more than the lost demand from jewellery ( which is about 190t p.m. in total ). If inflows like this persist, it will be replacing the entire jewellery- and central bank demand! That probably won´t happen - but just to show you, how big demand has been very recently. Obviously, there are more, smaller ETF´s around - and certainly, there is also large physical demand for coins & bars as well! The risk is, that central banks will not only stop buying, but start selling…but I think this might be highly unlikely, in light of zero interest rates around the world, and the ever reducing value of all currencies except for gold!

The Americans and Trump especially discover, that corona or in American language , “the Chinese virus” is a bad thing…oh my god…and his approval ratings are rising. What a country! Anybody surprised about the first economic numbers coming out recently, from corona-affected times, got to be stupid! And anybody expecting banking stocks ore any companies, which get support from governments, cutting dividends to zero, as well! It would be scandalous, if companies get government aide on one side, and continue to pay shareholders a dividend on the other!

Stocks are weaker today so far, but too badly so. Base metals have been hit a bit - copper down 3% as I am going home, the rest more like 1,5%. Gold is holding it´s level at around 1590 US$, and you would not believe it - the GDXJ is currently up by 4%!

Not that much to report today!

Have a nice evening

WS

General - Oklo - Liontown - Chalice - Genex

Good afternoon

Chinese PMI´s very strong today - but obviously coming from a very low base. Anyway - China seems to find it´s way back - except for that export markets are now contracting big time.

Goldman´s now see GDP in the States plunging by 34% in the second Quarter, and recover by 19% in the third. As you know, I am pretty cautious - but given that consumption is 65% or so of the US economy, with some resilience in some sectors, I think that´s an excessive number! At least that´s my gut feeling!

European equities started the day stronger, but came gradually down to being slightly negative by mid-afternoon, and are now slightly green, with Us markets only down a fraction.

Base metals not doing that much but all green now, with copper up 2%. I think these metals have already traded down into the respective cost curves, and that´s why we see some resilience here. Not many companies make solid cash at 2,20 US for copper, or at 5 US$ for nickel!! Also, we obviously have some strong supply issues with corona-closed or reduced operations in many countries, incl top copper producers Chile and Peru. You can be assured, that all investment decisions in new capacity are being put on the backburner these days, anyway!

Gold ETF´s continue to see strong inflow, while Russia will stop buying gold as at this Wednesday. That´s a negative - but booming physícal demand from investors easily makes up for that in the moment ( and also for reduced buying from jewellers!) Gold is currently trading at 1610 US$ - down a little from yesterday but nowhere justifying this crazy World Junior Goldminers Index, which is trading roughly at the same level,when gold was 1100-1200 US$/oz! I can only assume, that investors are pricing in mine closures because of corona - but the Index is down much more than most other things recently - and VW and Daimler have closed their factories already! I still believe, that it´s wise to invest in something like EVN ( strong balance sheet, many different mines, 90% resident work force ) and West African Resources ( I would much prefer to be miner in Burkina than in Canada in the moment! ). I think both stocks are outstanding cheap below 4$ for EVN, and at round 41ct for WAF - and yes, I am talking my book!

Some good micro news from Australian companies today:

Oklo - another round of really exciting drilling from Seko in Mali. SK1 North got extended to more than 500m strike length, with hits like 38m at 5,6g gold / 32m with 10.5g / 26m with 7,5g etc….They had reported good results from SK2 and SK3 just a few days ago. Grade is king, and the market is paying for them! Something like Tietto with 2.2 milloz already under their belt, find it hard to attract significant interest - Oklo, which has not had a maiden resource estimate out as yet ( will do in the 2nd Quarter ) will be below 1 mill oz at this stage! But the high grades, and the neighbourhood to two large, existing mines in easy trucking distance, make this a very desirable asset. More drilling is taking place, and more assay results are outstanding - so most probably more good results pending! I bought a few more today…despite some uncertainty, for how much longer they can explore. Contrary to mining , exploration I guess is no essential business! I think OKU are still a buy - great shareholders, great cash position, great projects coukpled with ongoing news flow and experienced management are an excellent mix!

Liontown - announced some more fantastic lithium drilling results for Kathleen Valley. Few people want to know about lithium in the moment - and that´s very understandable! But 96m with 1,9% incl 36m with 3,6% LiO2 are oustanding. The company is defining a very high grade underground resource here, additional to their large open-pit resource. Stock has actually held up quite well since all this s..t started at 6,8ct/share - so some people are indeed buying straw hats in winter. LTR also announced, that given recent drilling success and the terrible enviroment, rather than doing a full final feasibility study, they are just doing an updated PFS - including a potential addition of an underground mine, and also very important, more metallurgical work. Improved recoveries could have as much impact as a better lithium price! I would not be completely surprised, if some corporate would also decide, that buying straw hats in winter is a good idea!

Genex - since closing the deal with EnergyAustralia, quite a few broker updates were published, mostly valuing them at 33-35ct/share vs the current 15ct. There certainly is a limited dgree of execution risk to build the hydro-power station - but I think that´s very excessive at these levels. The share price should be well underpinned by the existing solar project at Kidston, plus the second project Jemalong in NSW, currently under construction and on target for operation by year end 2020 ( I would not be that surprised to see this being a few month late due to corona ). The agreement with EnergyAustralia is confident - so it´s hard to do numbers on it. But NAIF is giving them a 610 mill A$ credit line, and even while this is kind of a government support agency, they need to make sure, that credit facility can be serviced as well as paid back - so cash flow must be very considerable and the project will be running for 80 years. In the original agreement, EnergyAustralia was going to take equity in the project as well, to largely finance GNX into it. As this is not going to happen, somebody has to be found now to replace them. Thjis could well be JD Power from Japan, incerasing their planned investment - or somebody completely different. For this project, interest should be quite high - and the company is actively searching and talking to interested parties.

Unfortunately, always something left to do to get to fiancial close! But I think Genex have done a good job to hold the project together through trade war and corona, and the evyr fact, that they have been able to get to the current state in this enviroment, is testimony to the quality of the project. There is a lot of upside from current levels - unfortunately the stock only went from 9ct to 15ct on the back of this announcement…a few month ago, it would have gone from 20 to 30ct…and always keep in mid: the solar farms will produce for 20 years at least, the hydro project for 80 years+ !

Chalice- I saw the first serious broker report about them today ( share price target 80ct for now, with a chance to multiply your money ), since they announced this fantastic hole from their Julimar project 70km NE of Perth….containg nickel/copper/Pd and Pt! The broker estimates 7,5% nickel equivalent grades in the hole, with the metal content worth 750 A$/t! The broker compares it to the recent Nova/Bollinger find, which was later pruchased by IGO for 1.8 bill A$. Chalice is still on the run - 57ct today! - and the best is: contrary to all experience, they do not need fresh equity, with something like 26 mill A$ cash+investments! And not to forget: We all liked Chalice at our recent conference for it´s Victorian gold ground - the high hopes for this one are very much alive as well! Chalice continues the most remarkable run of the Tim Goyder-camp: First Liontown ( see above ) with their world-class lithium asset, followed by Strike Energy with their fantastic gas find in Western Australia, and now this one! Good on this Australian gentleman-investor!

P.S. mind you, Chalice is only a one-hit wonder at this stage - but every geologist I am talking to in Western Australia is highly excited!

have a nice, corona-free evening!

WS

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