Market Update

General - Tietto - Panoramic - Osino

Good afternoon

trees don´t grow into the sky! Some profit taking in equities tody, as well as in base metals. Bonds are stronger…for now at least, longer dated yields don´t want to go higher!

The EU stimulus budget has been put on hold because of Hungary and Poland…these guys don´t want to to sign-up as the stimulus payments can be stopped, if a country does not adhere to basic, democratic rules. As we know, this is the case…terrible, that this happens within the EU!

In the US, stimulus is realistically also on ice, at least for this year…

And Bank of America reports from their survey, that market participants are as bullish as never since 2002 on equities. Not good - but a caveat: Fund managers with a total of 500 bill US$ took part - that is just about the size of a medium-sized fund manager these days!!

Macquarie turns negative on gold, as they are expecting a substantially steepening yield curve next year - long bonds in the US possibly topping 2% yield from now 0,9%, and gold going to 1600 US$. Goldman Sachs re-affirm their expectation of 2300 US$ for gold….I have never been a fan of Goldman´s…but I think they are much closer to my expectation than Macquarie in this case!

Gold ETF saw relatively heavy outflow recently - about 1 mill oz in only 6 days. No good….

Tietto - are starting a new, 70.000m drilling program to increase their resource in Ivory Coast from the current 3 mill oz…Their pre-feasibility study is due late in the 1.Quarter 2021 - we will get more clarity , once that has been announced. The market is still having doubts about the quality of the resource.Tietto have nearly 60 mill A$ left in cash - so they will never come to the market again until decision to mine!

Panoramic - respected broker Foster issued some new research today, increasing their price target to 24ct. It´s based on realistic assumptions for nickel and the currency - but still halfway conservative on costs, and very conservative on production….As one client said today: Would be great if thy can get it going at the third or so attempt! I can only see one issue: Shortage of labor…assuming, that the nickel price will not fall like a stone!

Osino Resources - announced more low grade drilling results, potentially extending the strike lengfth of their Twin Hills deposit substantially. 27m with 1,22g / 76m with 0,75g / 22m with 1,19g are not what I call a mine-maker - but I have little doubt, that they will over time also have better grades. Another step in the right direction for them! The potential resource continues to grow with this sort of intersections. For a starter operation, I would certainly like to see some more, better grades as well!

Have a nice evening!

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General - Dacian - Strike/Warrego - Gascoyne - Panoramic - Chalice - Oz Minerals

Good afternoon

Moderna seems to have vaccine as well..94%…equity markets love it, bonds don´t - as you can imagine! And gold does not like it, either…well you know my opinion: Whether we come to grips with the virus sould not really determine the longer term fate of gold, even though interest rates might still continue to rise - or at least, the yield curve might steepen further. By late afternoon, gold has fully recovered!

Australia signs up as a mamber of the large Free Trade Agreement incl China, Japan and South Korea. Well it´s called a free trade agreement, but as we can currently see in the resources space, it´s not really that! Anyway - it´s a psoitive move and shows, that the government is traying to smooth the realtionship with China?? If so, it would be very good news for Sheffield and others.

Base metals are having a very strong day - Industrial Production is up a very strong 6,9% in China yoy, while retail sales up by 4,3% are a touch on the disappoiting side. The central bank continues to add liquidity…But in any case, early in the afternoon : Copper is making new, recent highs at 7123 US$/t - which is equivalent to 9750 A$/t ( 10-year high ) vs an all time high of around 11.000!!! Nickel above 16.100 US$/t and above 10$/lb in Australian terms!! Zinc in A$ at a new 2020-high…and aluminium at a new 2-year high in US$!! The metals complex is looking very sexy to me…

Oil jumps on the back of the Moderna-news.

The Australian Stock Exchange had a technical problem today…trading stopped after about 20 min of trading…so prices today are probably a little meaningless.

Dacian Gold - is merging with NTM in a friendly merger. NTM have a high grade resource of 141.000oz at 4,92 g within a 100km distance from Dacians existing mine. The total resource of NTM is 679.000oz at 1,57g. If the cut-off grade is changed from 0,5g to 1g, the resource grade rises to 2,4g/t . As trucking is very cheap these days, this looks like a good aquisition to me! Mine life extensions are the main valuation driver for Dacian, and this aquisition could give them another 3-4 years of mine life. Some work needs to be done, though, to improve the confidence level of their resource. I think this will turn out to be a strong deal for Dacian, even though they pay a premium to general resource-valuations. On a NPV-basis, this looks very positive, and ultimately cheap!

Strike/Warrego - hmmm another hick-up…and will take a week to rectify. Let´s hope, that this difficult and very unlucky well will ultimately make the wait worth our while!

Panoramic - is making outstanding progress on the venilation shaft - again, much faster then planned, and it should be done by mid-Dec at the latest now! Underground development is also advancing faster than planned - the contractor , which started only in mid-Agust, is already one month ahead of schedule. This should tell us, that mining conditions are very good indeed! The stock continues to be derisked ahead of a March ? ) decision to go back into production! At prices of 10A$+ for nickel , this will be a great mine once again, and will make very strong returns.While the official feasibility number is 7,80 A$/lb AISC, I think there is a very realistic chance to get that down to nearly 6$, once in full production. At a planned production rate of about 10.000t pa or 22.000.000 lb, you can do the potential numbers easily by yourself! Panoramic will start production again at a time, which looks like providing us with a very strong pricing enviroment for nickel!

Gascoyne - had another strong mid-Quarter update with some good expoloration results, and even more importantly, production of 9364 for the fisrt 45 days of the Quarter - or 6240 oz for the month. The company re-affirms it´s guidance for 70-80.000 oz this year, at AISC of 1200-1300 A$/oz. This would make GCY very cheap - but the problem with the stock is, that a 70-80 koz producer with a mine life of 5-6 years does not really excited the market, even if it´s cheap!

Chalice - is continuing to work on it´s long term appeal wiith the aquisition of two important properties. The main one is hosting 85% of the anomaly, which is subject to intense drilling in the moment. While CHN have had an access-agreement in place, outright ownership is certainly preferrable, if you are intending to bring a mine with potentially 20-30 years of mine life into production!

Oz Minerals - will eb spending 47 mill A$ for the feasibility study of an expansion of Prominent Hill. The company will continue exploring at greater depth, following some favourable drilling results, and wants to validate the economics of a shaft, which would cost something like 450 mill A$ - in return, it will lengthen the mine life, decrease operating costs, and make the mine safer to operate. Good news - and with copper all the rage in the moment, Australia´s premier, pure copper producer ( alongside some gold ), OZL should continue to go higher ( by the way, I have still have not bought any stock…hmmmm…).

Have a nice evening!

Schröder Equities GmbH

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Geschäftsführer: Wilhelm Schröder

General - Osino - Aurelia - Horizon Gold - Strike/Warrego

Good afternoon

nothing stopping these equity markets….money makes the world go ´round! Base metals all green, gold improving - a weaker US$ is helping.

CPI in the States showed few signs of inflation…CPI in Europe is negative. That was good for bonds, which have traded up from pretty weak levels . This is probably very important for gold and markets…it had started to look pretty ugly earlier this week, as the yield curve steepened quite dramatically.

Consumer Confidence in the US fell more than expected in early Nov - probably not beeing suuported by all this election s..t!

Aluminium is continuing to go higher….just about to eclipse the 2019-high!

Oil is retreating from recent highs.

At this stage, corona numbers are massive…150.000 in the US over last few days per day, 22-23.000 in Germany - 4 ( !! ) in Australia!!!

Osino Resources - excellent exploration results out yesterday! Their relatively low grades don´t seem to catch the imagination of the retail investor, though! But 327m at 0,76g gold/t incl 94m at 1,35g / 332m at 0,82 g incl 57m at 2,08g / 149m at 1,12g incl 60m at 1,7 g / 99m at 0,87g incl 8m with 3,7g and 3m with 5,1g are very exciting stuff!! Costs in namibia are low, and I could well imagine, that their resource ( which starts to look like having a low stripping ratio ) could well have an economic cut-off grade of 0,3g gold/t or so - making these kind of intersections very valuable. The company keeps on extending the strikle length and the with as well, auguring well for a very sizeable starter-resource . The company has currently 8 drill rigs drilling 35.000m until Christmas to enable a first resource calculation in the first Quarter 2021. The company already has a reasonable market cap - buit when I look of takeovers like the following, it´s still very cheap!

Aurelia Metals - is taking over a private gold mine in New South Wales …350.000oz at 7g in resources, 202.000 oz at 5,7g in reserves - 50.000 oz in production at about 1250 A$/oz AISC for less than 5 years proven - for 200 mill A$! The mine got comissioned a few month ago and is still ramping up to full production. I think this looks pretty desperate for growth…but I do not know the asset. It must have a lot of exploration potential to validate the price! Especially taking into account, that the company is taking on some hedging to finance the aquisition, and is placing equity at a 20%discount to recent prices! I was starting to look at AMI as I thought, that they look pretty sexy from an exploration püerspective, as well as offering some nice base metal exposure….but this takeover has prompted me to take a wait-and-see approach! Grade is king - but not everything! A potentially very nice and wide open pit at 1g might be more desirable than an underground mine at 5-6g at times!

Horizon Gold - had their AGM the other day, which highlighted just how much esploration potential the company has at Gum Creek. I totally agree and have been advocating exploration/drilling for many month…Well, they are finally drilling - results should be out shortly! If the company would have a different controlling shareholder ( for example one which does not only think of his own benefit ) and if governance would be halfway normal at this company, the share price probably would be substantially higher already!!!

Strike Energy - the well is drilling at about 2460m and all is going ok now. The final target is about 4000m - so some time ago and we will not know full results long before Christmas. Interesting to note, that the well so far is looking very similar to the very successfull West Erregulla 2! Some interesting article in the Australian press today, which could be very bullish for gas demand as well as gas prices in Western Australia in the longer term:

North West Shelf output 'could decline 30pc' (Financial Review)

Output at Australia's biggest LNG producer could fall by about 30 per cent, requiring two of the North West Shelf venture's five trains to be shut down in the next five years because of a lack of gas, Macquarie Equities said.

The estimate follows the outlook given on Wednesday by the venture operator, Woodside Petroleum, for production at its Karratha gas plant, which confirmed that spare capacity would emerge as of next year as gas fields mature. The news has ramped up pressure on negotiations by the North West Shelf venture partners to settle on alternative supplies of the fuel to limit the drop-off.

Woodside signalled that spare capacity at the Karratha plant would grow to up to 50 per cent by 2028 in the absence of gas from third parties to supplement the venture's own supplies.

The company is targeting deals this quarter with third party owners of gas, including Mitsui and Beach Energy, to provide alternative supplies. But agreeing on the terms for processing external gas has been hugely problematic between the five partners of the North West Shelf venture, leading to lengthy delays.

Head of operations Fiona Hick said that in the absence of third party gas, Woodside would likely close down one of the smaller and older of the five LNG production trains in Karratha in 2024.

have a nice weekend!

Schröder Equities GmbH

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Tel. +49-89-4613440-0

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Geschäftsführer: Wilhelm Schröder

General - Teranga - Saturn - Bellevue - Fortescue

Good afternoon

This is from yesterday—-today at the bottom….

hmmm where to from here? We have had a great move in equities - but there are many problems remaining or in sight. To name a few:

- Covid is far from over

- We might face a Republican Senate, which would potentially block a new stimulus program

- We might even have the Democrats conquering the senate, to complete the Blue wave - not good, either

- The strength of a recovery in 2021 is not certain

- Interest rates seem to be rising

- Inflationary pressure could/should emerge

I am sure there are many others…all I want to say is, that there is substantial risk to these markets, still! And vice versa, there are still many reasons to own gold!!! And possibly, base metals…

Teranga Gold - are in discussions to be taken over by Endeavour! Apparently, EDV are considering to offer paper only at a small premium to the current price of Teranga. I think this would certainly improve financial parameters of Endeavour ( using Bloomberg consenus for both companies ). I am not sure about measures like resources- or reserves/market cap, mine life etc. But it would certainly create a relatively large company with activities soleley in various Western African nations, and across many mines. Given recent share price history of Northern Star, I think the market likes large companies…so it would probably be a move greeted by the market with enthusiasm, if and when it becomes more definite. At this stage, they stress, nothing has been done and in the poast, EDV have niot been shy to call something off, if it did not go their way! It might well have repercussion for valuations in otehr Western African companies, like West African Resources, Perseus, Resolute or others. All these names appear cheaper than Teranga to me on financial metrics.

Saturn Metals - was one of the very few gold stocks going higher last night - even though on low turnover. The company has announced another set of drilling results - pretty positive, but grades indicate more of the same as the current resource ( 1g ). Ove rthe last few month, STN have released many good results, and I have no doubt, that the enxt resource eincerase will be a positive one. But whether it´s time to buy a low-grade developer in the moment, as the gold price is under a little bit of pressure? I much prefer something like Apollo Consolidated - they have 20% higher grades, a 20% larger resource ( and the next estimate will also be up ), but 40% less EV, if I include the worth of the royalty they own )! So I fear only a hold for Saturn!

Today, equity markets are trending higher again…cash, which has been waiting on the sidelines pending the outcome of US elections, is still looking for a home! there has been a big shift to value and also cyclicals over the last few days, which should also benefit resources stocks.

Generally, I am seeing a good time for us ahead: Metals have been holding very nicely this year. Even when taking some corona-related suppyl disruptions into account, a probably strong rebound of growth next year should see the sector in good demand! This probably includes iron ore and lithium - not only the base metals.

By early afternoon, base metals are unchanged today, while gold is falling slightly, partially because of a strengthening US$. Bonds seem to make a pause from the recent sell-off. oil is continuing it´s run…Brent up another 2% currently to 44.56 US$, testing it´s highest level since Covid hit

Bellevue - you know, that I have been cautious on BGL recently for valuation-reasons…today, my view has been confirmed, in my opinion - though not in the markets opinion!! The company is- and has been conducting a massive exploration program. Today´s resource increase - 20% increase in indicated to 2.82 Mt at 11,4 g gold for 1,04 Mill oz and a 7% increase in inferred ( in which the indicated is included ) to 7,46 Mt at 10g for 2,41 Mill oz in my opinion is disappointing for a company with an EV of more than 1 bill A$ and spending massively month for month on drilling! Yes - grades are fantastic - but for example, a company like WAF have 650.000oz at 10,2g in Probable Reserves underground, and 1 mill oz in Probable Reserves at 1,6g open pit - plus Toega…..It remains to be seen, what percentage of resources will finally end up in reserves for Bellevue! Don´t get me wrong - great project, great location, great cash position - but for a company with no pre-feasibility study done as yet, this is a rich valuation and I would at best rate BGL a hold at 1,40 A$.

Fortescue - hmm…I missed the company of my old mate Andrew Forrest for most of the last 15 years! But I am thinking of buying a few! Iron ore prices are still very strong at 122 US$/t, and discounts for lower% ore like Fortescue´s are falling,. indicating strong demand. Steel prices in China are strong…and I am sure, that at some stage, the US will get a very large stimulus program going…So it´s probably not crazy to expect iron ore prices to be largely unchanged - which is contrary to what just about every analyst says. But it´s also true, that these guys have never over the last 10 years had a view on the mineral, which proved right!!! I also like Fortescues proactive move into equal rights, and enviromental conciousness. Further, I think there is no company in Australia, which has closer ties to China - to consumers, as well as politicians.

For Andrew Forrest, the only way to get money out of the comnpany and to diversify his fantastic wealth, is via dividends. So I am expecting a continuation of a high pay-out ratio, which should give investors a yield above 10% this year and probably next as well. The company has a fantastic balance sheet - despite new mines being developed, it has never been any stronmger than today, and the company is undergeared, if anything. So overall, I have to say that FMG is tempting me!!!!

have a nice evening

Schröder Equities GmbH

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eingetragen im HR München, HRB 166985

Geschäftsführer: Wilhelm Schröder

General

Good afternoon

it´s not crazy to have somebody like Trump - it´s amazingly crazy, though, that 40-45% of Americans seem to vote for this p..k! I sincerely hope, that Biden wins - not so much because I think he is great, but to safeguard the last bit of American friendship I can feel! And to protect the little bit, which is left of humanity and political culture in this strange country! I am very far away from being a socialist - but it´s just not right, that the upper 1% have 32 trillion in financial assets, and the lower 50% own 2 trillion! And it´s just not right, that many millions are being starved of the humanitarian minimum in the most developed ( ?? ) country of this world - that is health insurance!

It looks like Biden will win - but it also looks like we will not see a Blue Wave , which is probably the best possible outcome for stock markets! Does that mean Trump will go bust? Does that mean ne will be lokked after by the prosecutor? All of this is well possible - that´s why he is so desperate to clinge to his job!

Equities are through the roof - mainly the FANG´s - base metals have turned from red to slightly positive, bonds are very strong indeed, gold is holding above 1900 ( well, just ) and oil is strong! So there cannot be much more to ask for for an investor! The only thing which is down, is the US$ - good for base metals and gold!

To recapitulate: Biden should be good for everything which is green - and therefore the base metals - i.e. copper and nickel.. The demand for lithium should also be helped. He will try to get a very large spending program going - but without a Blue Wave, he will have to compromise. Still - he should be slightly negative for bonds, but positive for gold. Gold will continue to be a story for the next few years - the world will keep on printing as much as possible !

Have a nice evening - hopefully more micro-stuff tomorrow!