Market Update

General - Saturn - Tietto - Strike/Warrego

Good afternoon

corona is continuing to unnerve investors…despite some relatively heavy restrictions, it´s booming…and equities are pretty weak today. In Europe, also driven by a weak result/forecast from SAP, Germany´s largest company by market cap, which is down more than 20%.

Currencies are not doing much - gold is holding above 1900 but feels a bit fragile to me. Base metals are weaker, but above the worst.

German IFO institute numbers ( business confidence ) fell for the first time in a few month..I guess this is no surprise, with corona staging a massive comeback!

In Australia , NO NEW CASES today…Victoria is opening the borders to it´s neighbours aagin, as well as opening restaurants, bars etc…

Marley Spoon, the German meal-delivery company with a main listing in Australia ( where tehy have had their largest market at the time of IPO ), did a relatively strongly oversubscribed placement at 3,22 A$ ( 50 mill$ ! ), just to see it´s share price settle at 2,36 A$ on the first day of trading! Very odd….most probably, a nice buying opportunity…

Generally, a bit of fatigue in the market today, following some fantastic wekas/month, especially in exploration stocks.

Saturn Metals - announced more positive drilling results today. I think it´s a done deal , that the resource will grow with the next estimate due in calendar 2020 to something above 1 mill oz. The grade of the existing resource at 1g/t should also improve a little, as most drill holes exceeded this grade over the last few month. Some analysts have very high numbers for Saturn in prospect - I am not so sure about these expectations. That´s my only problem with the stock, though - they are cashed up, have strong managemenat which has done everything right over the last few month. But at this stage, I think they might just be short of the magic 100.000oz in potantial production for some time yet. The stock is a good hold - but no need to rush here in my opinion.

Tietto - very disappointing today, as the resource increased to 3,02 mill oz at average grade of 1,2g/t. This overall resource for the project includes the AG Deposit, which containes 22.8 mt at 2,18g for 1.6 mill oz. Again , AG includes an indicated resource of 24.1 mt at 1,6g/t for 1,24 mill oz - an increase of 44%. I think these numbers are highly respectable, and the company is very well cashed up with more than 60 mill A$ for an EV of 165 Mill. I think it´s very highly likely, that we will see a mine here…but the real test is to come, when they will show a mineable resource/reserve. The drilling has revealed a lot of high grade results, but sometimes relatively thin, surrounded by many low grade results. The trade-off between a high, mineable resource and grades will be the key here. Still -the markets reaction came as a surorise to me today…also given that they raised all this money at 62ct vs today´s price of 50ct. Perhaps there is also an element of just performing in line with expectations, and some disgruntled takers of the placement selling out.

Strike/Warrego - experienced some more drilling problems at their current, important well. Nothing terrible as yet - especially, it has nothing to do with the potential resource, but with technical problems. But not good…let´s hope, that this will continue under better stars! At this stage, we are only talking some cost overruns for the well, as it will take a little longer.

Have a nice evening

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General - Base Metals - Gascoyne

Good afternoon

interesting situation: Bnd yields in the US are slowly rising, as the US$ is falling. Whether Pelosi or Trump - both are jockeying fr the electorate. We are talking a 2 trill$ spending package here - will bond buyers be able to finance this? Or could we see a confidence crisis developing here? Are the US still the undisputed leader of the Western World?? In any case - gold is stronger today, and there remain many reasons to own it!!

European equity markets are falling victim too seemlingly exponentially rising corona numbers. They are also rising very strongly in the States - but the market there is concentrating on the potential spending program!

Base metals are stronger - helped by the US$, but especially by a very bullish research piece from Goldmans. They see base metals very strong, especially copper and aluminium, driven by lacklustre production on the supply side, but even more so, by very strong demand next year from China, a Western World recoevring strongly, and not lastly, by higher demand for use in green technology. As I said yesterday - these thing are trading at very sexy levels for nearly all producers, but nobody is really talking about it.

How can we proit, if Goldmans are right ( and there discussion sounds plausible to me! )?

Well - certainly by buying the blue chips. But their performance might be limited, as they are all depending on bulk commodities ( and especially iron ore ) which might not be so sexy next year.

So what´s next? Certainly quality producers loke Oz Minerals. After that, there is nothing but a big gap in terms of size. IGO I do not really like, and their dependence on base metals is also limited. But I think Western Areas could be one, for nickel exposure. The stock has done next to nothing so far, but has been a reliable nickel producer for many years. WSA has been overrated for a long time, never really producing as much cash as investors were hoping fr - depsite seemingly low operating costs. They have been punished for that with a constant derating by the market. But the advent of nickel as battery metal might well put an end to this, and their new underground mine ( which was a bit of a bet n the nickel price ) looks like it might be coming into prduction jast as more nickel is needed. I think they are worth a hard look with nickel at 10,30 A$/lb!

Certainly my old and beaten-up favourite, Panoramic, if - as expected - the mine will restart operations in 6 month time. The biggest risk to this is probably a shortage of labor - otherwise, I cannot see too much in the way for PAN to really print money at current nickel prices!

Gascoyne - relisted today. Following a 1:20 consolidation, they closed effectively only just above the recent rights issue at 2,5ct/share. That´s very disappointing - I guess the stock had not been listed for a long while, and some inevstors might have just gone for significant tax losses. The Quarterly incl costs etc is still to come and I will wait for detailed comments until then. I believe, though, that Gascoyne are very cheap for a 80.000oz producer in Australia, and I also believe, that the rights issue was priced to make some money for long suffering shareholders. But unfoortunately, I need some more inf for more detail!

Have a nice evening

General - Gascoyne - Perseus

Good afternoon

The Reserve Bank of Australia believes, that more stimulus might be needed…that drove the A$ down to test recent lows at just above 0,7 US$! That is firing up the A$ gold price to 2707 A$/oz, and also base metals in A$-terms. Copper, nickel and zinc making new highs ( copper highest since 2011, zinc highest since Nov 2019, nickel also since Nov 2019 - but before that, nickel at 10,23 A$/lb only had higher A$ prices back in 2011!! ). I only say one word, which I am sure you are sick & tired of: Panoramic!!!

Gold is not up - despte a weak US$

Mixed housing numbers in the US today, but there is some hope for a budget deal, again…

New Antitrust action against Google in the US - but equity prices worldwide are trading higher, nevertheless!

Gascoyne - will relist tomorrow, and will probably celebrate to be one of the few miners to ever escape alive from administration! They also annunced sme good exploration results today. Exploration ( = mine life extensions ) will be the best ingredient to push the stock to a succesfull relisting. No doubt, that there will be a lot of doubters around, and stale bulls! Perhaps a good opprtunity to soak up some stock!

Perseus - Quarterly Report out today and better, than the share price would suggest! Edikan was a bit average with 40.000oz at 1240 US$ AISC, but Sissingue had an excellent result with 29.000 oz at only 587 US$/oz AISC, driving operational cash flow of 43 US$ and overall AISC of 940 US$/oz. The company maintained guidance for the half year of 125-139.000 z at 940-1025 US$ AISC. The company only had net debt 0f 2 Mill US$, with Yaoure approaching production in December, and so far, trailing just below budget . Hedging of 310.000 oz at 1481 US$ = 20% of production for next three years remains a drag on profits! At the current 1,30 A$/share, I think PRU are trading a little on the cheap side. This does not apply to many gold producers these days!

Have a nice evening!

General - Resolute - Panoramic

Good afternoon

following from a strong start, equity markets are about unchanged today.

Base metals are stronger, especially zinc, but also copper, as the complex is aided by a weaker US$, but also a good set of numbers from China. Lundin is preparing the suspension of a relatively sizeable copper mine in Chile. Overall, the current new round oof demonstrations might be setting the tone for difficult wage negotiations generally. Even though below recent, bullish expectations, the Chinese economy managed to grow by 4,9% YoY in the 3rd Quarter. Retail strong at +3,3% / Industrial Production at 6,9% - while Fixed Asset Investment was the laggard with just 0,8%.

Resolute - surprise resignation by long term MD John Welbourne, who I believe has lost trust of his shareholders. The CFO becomes interim CEO. It will be interesting to see the forthcoming Quarterly - while the departure is good news, I am a bit concerned over near term news.

Panoramic - company is making good progress on development of the ventilation, and the contractor, Barminc, is now working full time on mine development. The A$-nickel price is continuing to run, as metal analysts around the wrld are becoming more postive n the metal. A bit surprising to me, that the stock was down today, when it probably should have been up!

Have a nice evening!

Schröder Equities GmbH

Seitzstr.7a

80538 München

Tel. +49-89-4613440-0

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email: wschroeder@schroeder-equities.com

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eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

General - Panramic - Malachite? - Bellevue

Good afternoon

European car sale in Sept with a surprise 1,1% up YoY - Germany and Italy especially strong, others still down. Daimler with stellar 3.Quarter result, Volvo also positive! Automotive stocks very strong, and corona-winners generally very strong in positive equity markets.

Nickel and up to a degree, also zinc strong…copper is down a touch. Eurpean bonds are stronger - unchanged in the US.

Looks like Trump got a hard time yesterday in the TV-questioning…Biden perhaps not a star, but certainly not such a crazy bugger, and a serious man!

Very strong retail sales in the US.

Macquarie comments on nickel market. See very strong growth of Indonesian supply of nickel pig iron this year and next, and oversupply generally. But for the next few month, see potential for shortage of nickel, driven by extremely small export of nickel ore frm the Phillippines ( wet season ). Interesting situation stainless steel production in China, which has been strong generally, but really booming in high-quality stainless, which uses a lot of nickel.

In nickel ore, Malachite Resources MAR , could be a hot speculation for your private accounts, as it is a very small company. The company has recently bought two nickel ore resources in the Solomon Islands. No JORC-compliant resource as yet, but company has started drilling to validate old resource. Previous owners could not get mining approval because of resistance by landowners. In those days, landowners had no equity - this time, they have 20% of the project and I believe around 10% of Malachite. Not all that many details known as yet - but it´s very easy t bring directing shipping ore into production - basically a story of digging + shipping. This could be a great story, with current market cap of around 7 mill A$ only! Could become ht, if market starts talking about the strng rise in pricing of nickel ore!

Gold slightly down but so far holding above 1900 US$ or 2690 A$/oz, which is the highest since mid - August.

Panoramic - nickel prices are making new highs at 10 A$/lb, nickel explration stcks generally are having a good time! But our little Panoramic has been left behind, perhaps still feeling the large rights issue/placement at 7ct in June. The stated production costs, nce back in production in the 2nd Quarter of CY 2021 ( assumed board approval with nickel at these levels ) are 7,80 A$/lb - but this estimate I believe to be ultra conservative! Understandably, the new MD ( now bord for just under one year ) wanted to start with a clean plate, since Panoramic had a few hick-ups, and wants to deliver positive surprises. Based n the above numbers, the mine will generate 48 Mill A$ p.a. in net mine operating profit. I believe, that with a bit of luck, production costs could well be 20% lower, if not more! That wuld deliver another 40 mill A$ p.a.! However - even at 48 Mill A$, the stock is trading at just over 4x net mine operating profit! Some analysts believe(d), that PAN would need some more equity to be brought back int production. I think the recently announced sale of Panton for 12-15 Mill A$ should have put these concerns to bed. I think whatever might be needed, especially for working capital, should easily be available frpm financiers as prject finance ( currently, no debt at all ).

Exploration has started, and that´s the area the market is paying for in the moment. I think there is no question, that PAN has very substantial exploration potential. Any good drilling results should be viewed very positively by so called RobinHood-investors!

And last but not least - Western Areas will not want to stay at 19,9% of PAN forever! Once tehy see further de-risking ( for example finishing of underground ventilation some time in the 1st Quarter ), they will be very tempted to make a move! I would be surprised, if they get the company under 18ct and depending on exploration/ mine leife extensions, potentially more.

In this market, where it´s not easy to find value, I think my good old Panoramic is very good value indeed!

The same might actually also the case for Western Areas. They have underperformed the nickel price as well, and have good upside, I believe, if nickel stays at current levels!

Bellevue - the stock has benefited from 3 things: Strong exploration / the NST-SAR merger / the Diggers & dealers conference. But at an EV of about 1 bill A$, I prefer to watch out for the next one….culd be Tietto ( resource estimate soon ), Apollo Consolidated, perhaps smething like Matador Mining, or Dacian Gold. All these stocks have potential triggers, and rather than squeezing BGL for the last 10-20%, these stocks are value with much higher , potential upside!

Enjoy yoour weekend!