General - Foran - Dacian - Gascoyne - Apollo Cons

Good afternoon

everybody is trying to get positioned for the year - I think this might be the reason for the volatility in metal markets. Base metals are very strong today - after having been very weak yesterday!

Cold weather and high energy demand, the upcoming US government spending program, weak bond markets - all these things affect commodities. Gold is strong today as well, as is oil. and Goldman´s are pushing very hard for the entire commodities-complex!

Gold stocks were very disppointing in Australia today - I think there has been a lot of carry-over selling from a weak, Northern American market in gold, which should bounce very nicely today, if gold holds the current 1860 US$/oz.

Eramet have ongoing problems at their nickel division, as locals continue to block their operations.

Foran - is using strong demand for it´s shares to raise 20 mill Can$ - at 65ct for some, and at 91ct for so called Flow-Through shares, which are eligible for tax reductions in Canada. Sahes need to be held for at least 4 month. This is good news - the company needs money to convert resources and drill. Currently, there are about 34 m t of resources, but only 11 M t can be used in feasibility studies. The value of the stock can increase substantially, if mineable reserves can be increased ( which should not be too hard! ) and therefore mine life extended. As I said yesterday - with a target of 2-3 years, the stock can easily exceed 2$/share, if this happends - and as it get´s closer to production! Using 10% to discount the NPV, the advantage of progressing towards production is obvious! To enable the company to progress exploration and feasibility study through this placement, is very good news for Foran, as is the placement price.

Dacian - released preliminary production numbers for the last Quarter. At 27.200 oz ( despite a 7day shutdown of the plant ), the Quarter has been excellent and year-to-date production of 60.000 oz agurs well for the full year guidance of 110-120.000 oz. The net-cash position improved to 14.5 mill A$ , from just net-cash negative at the end of September! This is despite reducing the hedge book by 6.000oz, which now stands at 55.500 oz at 2.140 A$/oz. The merger with NTM is scheduled to be completed by mid-March - also good news, as it will extend the mine life of Dacian, probably by several years and athigher grades than currently mined at Dacian´s operations. We are waiting for further news here from the Quarterly, and updates from NTM´s Redgecliff proejct throughout the year. But at this stage, I think there is good upside left in DCN.

Gascoyne - also delivered very solid, preliminary Dec-Quarter production numbers. Production of 20400 oz was in line with a strong, previous Quarter. The company has a net-cash position now as well - just - following net-debt of just uner 10 mill A$ at the end of September. The company ahs 53.700 oz hedged for the next 18 month - at this stage, in the money at 2.611 A$/oz.GCY also had some strong exploration results during the Quarter - this is very important, as the current 80.000oz p.a. production for only 4 years or so is not getting anyone excited, despite the stock being cheap! Exploration is the key here - mine and plant are doing well and have been doing well for some time!

Apollo Consolidated - announced a set of strong exploration results from their Rebecca Deposit 150km East of Kalgoorlie. strong intersections of 10-20 m with around 2 g gold/t augur well for the upcoming , next resource estimate in the 2nd Quarter. The company has currently 18.6 mill A$ in cash + the very valuable royalty on the Roxgold project Seguela in the Ivory Coast, for which they recently got the mining permit. Roxgold is aiming to produce 150.000oz p.a. for 10 years, with an investment decision due early this year.

Have a nice evening!

WS

General - Strike - Foran - Sheffield

Good afternoon

finally, the eyear has started in earnest! Moving the office and watching all this craziness has occupied me somewhat! But back in full swing now!

The year started with yet more strength in equity markets, as well as in commodities. It seems to be consensus, that the Democrats will print money and increase government speneding substantially - especially in areas of broadbank and Alternative Energy. Good for some metals like copper, and certainly some more commodities like lithium. The US will become greener - probably in the car sector as well.

Gold should have been stronger in that enviroment - also in an enviroment, where some people feared for a civil war in the US. And in fact, we might have gotten close - but thank´s god, it looks like Trump has found enough enemies now, to prevent the worst. Still, the fact that 56% of Americans ( only!!! ) would like to see him stepping down immediately tells me, that there are a lot of very unhappy people around in this country. The situation there leaves me speechless - and you have read enough about it, anyway! But strange enough, gold did not profit from this except for a few days, driven lower by rising interest rates around the world. The biggest risk, though, I can see here for technology stocks. Their sky-high valuations are derived by very low interest rates for a very long time, and hence, are very sensitive to higher interest rate assumptions.

The stand-out recently in commodity markets has been LNG, liquified gas. The spot price has gone through the roof - some articles are quoting prices in the mid-thirties US$ - driven by a cold weather in the Northern Hemisphere. Prices had hit an also crazy 2$ during the corona crisis . In any case it shows to us, that some of these commodity markets are very vulnerable to one side or the other, depending on issues the market does not expect!

Base metals started ultra-strong, but within Friday and today, have almost given it all up! Again, higher interest rates are probably teh reason , especially for today´s sell-off. Copper is down 3,2% currently, as is nickel.

Strike Energy - have found what is probably a lot of gas - but the pressure has been so high, that the well had to be abandoned and will need different equipment to cope with it, to drill the last 2-300m of it and properly test the reservoir. hence, it is not possible to quantify their drill success other than to say, that it contains a lot of gas! I have read some broker research, which also suggests, that the West Erregulla success increases the likelihood of South Erregulla containing gas as well. I am not sure about this - but we will find out! Strike is now moving the rig to drill West Erregulla 4, before returning to the No.3 well and finish it off - once the new equipment has arrived. Results of No.3 should be with us at about the end of the 1st Quarter 2021.

the real surprise, though, was today´s announcement about Strike planning the development of a 1.4 millt ureaplant near Geraldton, 120 km from their gas find. The production of Urea ( Harnstoff und Ammonium-Nitrat in German ) for the fertilizer industry is a very energy-intensive process - 60-70% of the cost of production is energy. Strike believes, that it could get a 30% free carry into a 1.8 bill US$ urea development, by deliverinbg gas to the project at competitive pricing. Australia currently imports about 1 bill$ p.a. of this fertilizer. STX have secured a 60ha site with port access as well as train access, and are calling for interest in a tender to develope the project. The Western Australia weat-belt alone consumes about 230.000t of urea p.a. STX believe, that production of such a facility could be 25-40% cheaper than imported fertilizer. I could not get hold of the company today but will try again tomorrow to get some more background. The project could add substantial value to Strike - but so could a connection to the large, Western Australian exporters of LNG.

Sheffield - have signed the binding JV agreement with their Chinese partner the other, after receiving FIRB-aaproval just before Christmas. The next trigegr will be the announcement of the update, bankable feasibility study and a refreshment of the financing agrrements with NAIF and Taurus. This will further de-risk the project - but the share price should be higher today than 35ct! I think the market has to digest, that very significant turnover has taken place last year between 7ct and 15ct - those püeople are sitting on very substantial profits have might have to lighten up their positions ( as I had to with my internal rule, to not own more than 5% in a single stock ).

Foran Mining - respected broker Cormark has issued a new research report on FOM…tehs see earnings of around 25ct/share for the stock, once in production, and have a target price of 1,25 Can$ for the stock, at base metal prices below today´s prices. Their NAV10% is 1,47 can$ and increases to above 2$, using 8% and current spot prices!

More on Dacian and Gascoyne tomorrow!

Have a nice evening

WS

General - Geopacific - Chesser - Sheffield

Good afternoon

PMI´s in Europe were surprisingly strong, and also stronger than expected for manufacturing in the States - but Retail Sales in the States were down an unexpected 1,1%! The latter took markets by surprise - still, investors are still buying the expected recovery! A timulus program in the States is looking more likely

Base metals want higher, still…especially zinc and copper…nickel is now also trying to get into positive territory!

Gold tried to go higher this morning, but is largely unchanged late this afternoon!

Macquarie have increased their expectations for EV demand…they now expect EV-penetration of 12% in 2021, and 31% in 2025 for Europe. They have increased global battery demand to grow by an additional 12% vs previous forecast in 2021, and an additional 23% from previous forecast for 2025. I think they might be very right - the EV-trend is becoming stronger, and we will see contiuned strong demand for nickel, graphite, lithium, cobalt and copper over the next few years! As you know, some countries/States like England or California do not want ANY new sales of non-EV´s by 2030!

Geopacific Resources - incredible, what is possible in this market! The company raised 140 mill A$ at 42ct ( and in 2 Tranches, as well as a SPP , “assuring” underperformance until mid Feb ), without having the 100 Mill US project finance signed as yet ( I guess they have advanced it to a state, where it might be a formality now ). The market cap of the company is only 75 mill A$ so far! And this is for a project in Papua Neuginea, grading 1,1g gold/t, on a remote island! Good luck to them - I have to say, that I am absolutely impressed by this capital raising - but I did not take any…I think there are many things which could go wrong…

Chesser - announced some excellent drilling results from their main project in Senegal. the best results being 1m with 23g gold/t and 35m with 9,8g…But looking at it, I think the tonnage potential might be limited here. The market cap is just short of 100 mill A$ already…Anyway - I sold mine too early, and if I would still own tkhem, I would hold the stock based on these results.

Sheffield - I saw the first broker research today, following the FIRB approval…it values the company at 1,54 A$/share - but subject to confirmation from the updated BFS in the February 2021 ( I guess, but certainly during the first Quarter ). Well - I am certainlypositioned for SFX going higher! As you know, these things never reach their full potential, until they have show reliable production for some time - and that will be the case in late 2022. And so often, something is coming in the way, making some more equity necessary at some stage. But I would be very happy with 1 $ in 24 month time!!!

I might call it Christmas today, unless something very exciting happens tomorrow! The kids will ahve early holidays because of the virus, and we have to arrive in Austria by the 18th - after that, everybody arriving will have to go into quarantine! Returning late in Dec - and then 5 days quarantine!

If we should not speak until then, I wish you a great time, all the best, and a year coming up, which will hopefully be much quieter than this crazy 2020!!! I guess we all have done very well thios year - certainly, if you consider, that the world has just gone through a major crisis! But not everybody has done well - as usual, people with financial assets have been in the prime seat! So don´t forget to get your cheque book out before Christmas for the less-fortunate!

All the best!

WS

General - Sheffield - Resolute - Apollo Consolidated - Strike/Warrego

Good afternoon

equities in Europe are mixed today - Germany is stronger mainly because of Volkswagen, which is up by 8% or so, The US is stronger across the board…amazing!

Industrial production in China as strong as a bull - up by 7% - while retail was also positive +5%. In the US, we also had stronger than expected numbers for IP as well as manufacturing. Unless this virus drives us completely mad, we will have a strong year ahead of us for resources! As I said before - the big stocks will continue moving ahead - but the real money is in teh small ones, like Venturex, Foran, Panoramic etc…Investors are still a bit gun shy here - but we have seen it before! In the end, all of these companies will trade at lofty valuations — from large siscounts to NPV today. So a good mixture of these things should continue to provide us with fun next year!

As I said before - the mainstream funds have underweight positions in resources ( and some of them hold none at all! ) - and tehy find it very hard to say goodbye to any growth stock, and move into some value ! Eventually, they will all do it…

Metals are doing it a bit tough today - but copper is just ahead, and nickel is up by yet another 0,7% to a staggering 17.100 US$t or 23500 A$ = 10,66 A$/lb. I guess I don´t have to tell you, which stock is my favourite at current levels….!! Gold is currently up by 20$ - probably on progress in the US for another large stimulus.

Cameco temporarely had to suspend their very large uranium mine Cigar Lake, because of a virus outbreak. This has put a rocket under many uranium stocks last night.

The big news for my fund today was

Sheffield Resources - SFX received Foreign Investment Review Board approval today, signed by Josh Frydenberg, Australia´s Treasurer! Good to see, that common sense seems to prevail in Australia! The approval was aboslutely no done deal, as you would usually expect - the future JV partner of SFX is a ( private ) large steel producer - and it´s Chinese! Given the massive problems AUstralia and China are having between each other in the moment, there had been considerable doubt, as to whether SFX would get the deal done. The Chinese are still very keen, and the JV-agreement is basically done . The changes, which had to be incorporated into the BFS - mainly regarding the production of Ilmenite, which goes to the new partner in future under an offtake-agreement - have been worked on for some time and looking at today´s presentation, should be done by the middle of next Quarter. Only then we will be able to put a definite value on this development. I am not expecting dramatic changes, though, and the NPV should be around 900 mill A$ for the project ( 100% ), with pre-production capital of about 480 mill A$. Following the placement in SFX to the partner Yansteel , and their contribution of 130 mill A$ equity into the JV, I think financiers will fall over themselves to partner them. Originally, Taurus as well as NAIF had been signed up - but I would not be surprised to see a larger inviolvement from NAIF, which would be much cheaper, I guess -usually NAIF is providing funds for 10 years + at 3.5-4% to projects, where “normal” project finance would be much closer to 10%.

So all very good here! SFX are capped at 135 mill A$ - subject to the results of the BFS, this will be just about 1/3rd of the NPV ( 50% ). So there is much fun ahead, with short term drivers being the signing of the JV-agreement, and results from the BFS! I continue to hold a very large position in my fund.

Resolute - good news also from them…I have had some erservation as to their debt position - but given today´s announcement , this should not be an issue any more. Chifeng Gold has paid a deposit of 5 mill US$, and on finishing due diligence, they will pay another 100 mill US for RSG´s Bibiani Mine in Ghana. Unless the godl price continues to move higher, this is not a great asset - and analysts had valued it at dramatically less in the past. So if all goes well in the due diligence and on the approval side, the transaction should be done by March! Excellent news for RSG, which is only capped at 800 Mill A$!

Apollo Consolidated - Roxgold have announced a new resource for their Seguela Project, for which AOP are receiving a 1,2% net royalty on every ounce produced. ROXG announced just over 1 mill oz in M&I resource at 2,5g ( doubling it ! ) plus another 370.000oz in inferred resources at 4,8g gold/t. The feasibility study will be announced during the first half of 2021. It appears, that the resource is anything but finished, and should continue to grow over time. The royalty should be worth 20 mill A$ or so, in my opinion. Alonside current cash of about 18.5 mill for AOP, this values Apollo´s Australian 1 mill oz resource at only about 25 mill A$ - and this resource is far from finsihed, as indicated by strong, recent drilling results. I continue to hold a position here, even though I am not very bullish for gold for the next few month.

Strike/Warrego - the well is now at 4025 m and foloowing small changes, by now shoudl be drilling ahead - the big target is just ahead of them!!! Towards the end of the week, things will get exciting! Christmas is coming soon???

Have a nice evening!

WS

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General - Bellevue - Horizon Gold

Good afternoon

hard lockdown in Germany…similar measures being taken across Europe…yet equity markets are racing higher…markets are looking past the virus, expecting stimulus programs to carry economies past the worst, and a strong recovery once various vaccines are available…Let´s hope, that tehy are right! The hangover from the spending spree might be significant! But I guess everybody wants to have a strong finish for the year, and a lot of people will want their cash to be deployed early in the new year. After that - god knows!

Metals are also charging gigher, led by nickel - helped by trouble at Goro in New Caledonia, where separatists are a real problem. a little bit of profit taking in copper.

Some crazy people are speculating about Australia to retaliate against China, by imposing tariffs on iron ore exports to China!

Gold continues to be out! Down 10$ by late afternoon, and redemptions of Gold ETF´s have resumed following a short respite.

Bellevue - will become a member of the Junior Gold Index - the GDXJ has to buy an estimate 35 mill shares. That explaines some of the recent strength.

Horizon Gold - have finally announced some drilling results from the first round of drilling at their Gum Creek Gold Project, Swift and Swan deposits. These deposits have an inferred resource of approx 500.000oz at around 7g. Results have been excellent, from infill- as well as extensional drilling: 29m with 9g/9m with 12,7g / 12m with 7,4g / 21m with 2.8g etc. Once the company has converted inferred resources to indicated resources, they are allowed to publish scoping- or at a later stage, prefeasibility studies. IF resources can be increased substantially, a stand-alone plant would become an alternative - if not, trucking the ore could be a very sexy attraction. The project has an operational mining camp, as well as an airstrip. On my numbres, the mine could produce 25-30.000 oz at about 700 A$/oz cash operating costs for many years…plus additional costs of say 300 A$ to use somebodies plant! That adds ap to roughly 1000 A$/oz…or about 35-42 mill A$ p.a. before headoffice and exploration, and at todays A$ 2400/oz. ! To bring the mine into production on that basis, only roughly 20 mill A$ would be needed in pre-production capital! At a market cap of 41 mill A$, the stock is very cheap - and it´s not hard at all to see HRN double in value - despite it´s major shareholder Zeta Resources!

Have a nice evening

WS