General - Evolution - Oz Minerals - Western Areas - Horizon Gold

Good afternoon

exciting times! The Redditt-boys are creating havoc fro some and it´s an interesting movement to watch - but I do not believe, that this is big enough to create some real trouble. But you never know, how many people will start playing these things! It is unbelievable for me, that TRump had an approval rate of 34% even at the very end of his presidency - who knows, how crazy these crazy Americans will get in the end! Certainly something to watch! In any case, they have managed to push silver up by 15% or so!

PMI in China was still expansionary, but weaker tha expected…lossing some momentum on exports. Japan also not good - rest of Asia much better. China injected some more liquidity into it´s systems.

Western Australia orders a 5-day lockdown - a security guy caught the virus and his 60 contacts are being traced. Australia had 8 new cases today - ming relatively unaffected, as it´s essential business.

Navalny protests in Russia are gaining more numbers…brave people!

A little bit of selling around for copper and zinc - but nickel is up by 1%, and gold is up strongly to a current 1866 US$ - probably in sympathy with silver.

J.P Morgan expect 1,7 mill EV´s this year in China - + 41%….I guess Europe will see at least a similar increase, probably much more!

a few important Quarterlies last week:

Evolution - production of 180.000 oz was better than expected, and costs were a very low 1166 A$ AISC. All-In costs of 1.582 A$/oz ( that is basically everything incl exploration, but before headoffice ) are excellent!! Their large contributors Cowal, Ernest Henry are doing very well - the small mine Carlton is disappointing and could be sold one day? For now, they are trying to get it going again -I think it will depend on more exploration success at their recently aquired Crush Creek property nearby. They left guidance of 670-730.000 for the full year, at 1240-1300 A$ AISC unchanged, which looks very conservative to me on the cost side. EVN had group cash flow of 99 mill A$ in the Quarter, which reconciles well with a nebt debt reduction of 93 mill A$ to only 86 mill A$. Red Lake transformation is progressing well - they will achieve the first target of 200.000 oz p.a. at leass than 1000 US$/oz early. The big thing for EVN remains the potential expansion of this asset to 300-500.000oz in the long run. First test of this target will come with the reserve increase , expected later this Quarter. I am expecting a big number vs the reserve of 1.2-1.4 mill oz at the time of aquisition. The Quarterly shows once again, why I believe, that EVN are Australia´s best gold miner…

OZ Minerals - also had a strong Quarter, with copper- as well as gold production exceeding guidance. The Prominent Hill-complex incl Carapateena is doing very well! AISC of 0,57 US$/lb copper are excellent! The Brazilian assets - which are small - continue to be difficult. OZ Minerals will continue to be the prime copper producer in Australia for institutional investors!

Western Areas - reported an even weaker Quarterly than the previous one! Despite the positive nickel price, I think they are making very little money currently. Reporting of the company is not very good -so it´s hard to find out how much money excatly they made, after accounting for development expenditure on their new mine, Cosmos. But after head office and exploration, it´s probably just 2-3 mill A$. I would like to be more positive, as they are the potential predator of Panoramic, of which they own 19.9%. But I do not like what I see here!

Horizon Gold - excellent Quarterly! Drilling results - so far not released - included 29m with 9g, 9m with 12,7g/12m with 7,4g / 21.m with 2,8g and 8m with 7g from Swift ( previous open cut resources so far 840.000t at 7,2g for 195.000 oz ) and 17m with 3,7g and 24m with 2,7g from Swan North ( previous open cut resource of 960.000t at 7g for 216.000 oz ). Especially Swift should see a potential increase in resources. The immidiate aim is to increase inferred resources to the indicated status, to enable public reporting on scoping/feasibility studies. The company has also initiated a complete review of all geological data, which has established multiple near term targets for more gold mineralisation. Once a complete review has been finished, the company will report on this in the coming weeks. The stock is very cheap at current gold prices, and I am holding a large position despite the corporate governance concerns I have.

Have a nice evening!

WS

General - Lynas - Dacian - Foran - Genex

Good afternoon

for a change, markets are concentrating on bad corona news around the world! Equities are weak, metals are taking a breather, while bonds are stronger. But towards the European close, metals as well as equities are looking much better

Gold went for a bit of a rolllercoaster today…from 1856 early in Europe today, to 1837 by early afternoon, and at 5 pm European time back to 1858!

German government is reducing it´s growth forecast for the current year from 4,4% to 3%.

The PMI´s in the States strong - better than expected. Ho,me Sales also better.

Volkswagen is posting a surprising 12.2 bill US$ operating profit for 2020! Not a bad effort during Covid-times!

Genex - the share price has slowly responded to the fact, that the company has given it´s hydro-power project the go-ahead just before Christmas - even before financial close has been reached. This was certainly a huge tick of confidence to get all remaining pieces of this endless puzzle into place! Financial close is expected for February - I would hope, that this can be achieved over the next fortnight or so.Early works have already begun! The stock should move higher, once all this has been announced!

Lynas - will be building a rare earth separation plant in Texas, jointly with the Defense Department, and fed with concentrate form it´s Australian resource. The stock jumped by 700 mill A$ or so in market cap - not bad for a 60 Mill US$ development, which is 50% owned! The market in these battery-related stocks is certainly mad these days - even though Lynas continues to be one of the real players in the field! Excellent management, and a “rare” company - while rare earth prices are continuing to be on the run.

Foran - announced the first resource estimate for it´s Bigstone Deposit, adjacent to their existing resource. Approx 2 mill t indicated resources , and 1.9 millt of inferred resources at 2.1-2.2% copper are representing a 20% increase in indicated. An excellent start - but more to come here from exploration drilling during the summer. I think tehy will end up finding more of these add-on deposits, and will end up with more than 20 millt in indicated, I think - and in canada, close to a very hungry smelter. The recent capital raising does give them enough fire power for a very active 2021!!! I continue to hold a large psoition!

Dacian - after producing 600.000oz at 1356 A$ AISC in the first half, their full-year guidance of 110-120.000 oz at 1400-1500 A$ AISC looks very conservative, especially with regards to costs. The net cash position of 14.5 mill A$ is a 15 mill A$ improvement from the end of September! The hedged position of 55.000oz at only 2.140 A$ is also starting to be a thing of the past….The merger with NTM Gold should be completed by mid-march, giving the company a much needed, longer mine life! I think Leigh Junk is slowly, but surely turning this thing around!

have a nice weekend!

WS

General - Marvel - Bellevue - Perseus - Sheffield

Good afternoon

not much happening in equity markets today - they are pretty stable. Same in metals -mixed but little action - except for nickel…it´s up about 1% and about to make a new , recent closing high.

The ECB will continue to print money, as they see Europe in a recession. Probably right, given the current lockdown!

Sheffield - Quarterly out, but not all that much news, as expected! The JV with the Chinese has been signed, and will be fully consumated shortly. The bankable feasibility is ongoing, and should be finished next month or so. Final Investment Decision is expected this half. Investors are a little bit uncertain in the moment - given the announced changes to the feasibility study - on what that really means for capex, operating costs and expected returns. If we assume, that the above will not dramatically change - and that´s what I expect - the stock should be worth a lot more going into production! Next bit of news will be the BFS-announcement, and relatively shortly thereafter, the new financing ( which could be a lot cheaper via Chinese banks or an increased participation of NAIF ? ) , followed by FID in a few month time. Production could/should start before the end of 2022 - so not that long to go to cristallize full profit here! I continue to hold a large position.

Marvel Gold - as you know, this is the old Graphex Mining. When the company was restructured about 6 month ago, nobody put much value on it´s Tanzanian graphite asset any more! But tiems have changed dramatically since then, and the battery-metals sector is on fire big time. The worth of Black Rock Mining, which has many similarities, has trippled over the last few month, and the company is now capped at 117 mill A$. I would not be surprised, if Marvel could actually realise much more than the 8 mill $, which it has in debt with the original private equity fund. Marcel only has a market cap of about 25 mill A$ - so an extra 10 mill A$ would make a significant difference to it´s valuation. With about 1 mill oz in resources, the stocks is probably on the cheap side, given it´s excellent exploration potential - and the value of Graphite is completely disregarded in the moment.

Bellevue Gold - also came out with the Quarterly today. Not that much news in it, except for that they have announced renowned financial advisor Orimet as debt-advisor. Another step forward to go it alone, if they have to. But for just over 1 mill oz in indicated resources ( even though at 11,4 g !! ), I maintain, that BGL is not dirt cheap .

Perseus - also out with it´s Quarterly. Not as strong as the Sept-Quarter, but still very respectable, producing 68.600 oz at 1036 US$ AISC. Yaoure poured first gold in December - fantastic achievement in times of Covid! - and will contribute to the current half guidance of 175-190.000 oz of gold at AISC of between 950-and 1.150 US$. That is very respectable indeed! PRU has 3 mines in two countries running run, which will bring them on course to above 500.000 oz p.a., once Yaoure is firing! They remain one of the cheaper stocks in a sector, which still feels a bit tired after all the excitement last year!

Have a nice evening

WS

General

Trump gone - but what I find amazing is that his approval rate is still 35%!!! That´s crazy and does not augur very well for things to come in the US! But markets are greeting Biden in a positive spirit, thanks mainly to his proposed spending program. I guess we all know, that markets will see some challenges from a demo

Metals are looking stronger again today - except for nickel, which is down 0,5% but still holding 18.000!

Gold is having a relative volatile day, touching 1857 US$ earlier on, coming down to 1835 and now trading at just under 1850 again…

Brent oil at 56,30 US$ is touching recent highs…before corona hit, it was around 60 US$ - we are nearly there again! Perhaps a good idea to buy some blue chip oil stocks? BP or Royal Dutch for example used to trade about 50% higehr than today in those days! But dividends certainly have been severely cut since then as well…

Not really much to report today from the micro side…I think many Australians are still on holidays. Next week, the Quarterly Reporting season will be in full swing - I guess most people will be back by then.

Have a nice evening

WS

General - Strike - Tietto - Panoramic

Good afternoon

okay, I admit, that I have been a very slow starter this year!

Markets are fighting it out in the moment: value? Commodities? Or Tech, still? For now, at least big tech is loosing the battle, and is underperforming smaller stocks, and cyclicals!

The iron ore price is still around 170 US$/t, supporting some of the largest resources stocks like BHP, RIO, Anglo, Vale or Fortescue. There is considerable action in some of the battery-industry players - especially lithium stocks are racing. But I have no doubt, that there is some exhuberance in the sector - stocks like Vulcan Energy or Rock Tech in Canada appear to carry very lofty valuations - at least for my taste. But there is enough value left in many stocks to make a buck, if many analysts will be proved right, who believe in a strong US-recovery, along a strongly growing Chinese economy. This could drive commodities much higher!

Goldmans believe, that we are at the early stage of a bull market in equities! As you have heard before, tehy are also very bullish commodities! As a resources investor, I am used to everybody beeing very cautious on our sector - hence,. I am a bit vary! But without doubt, 1.9 trill stimulus of the new US government, along with strong programs in Europe and a generally very accomodative central bank policy just about everywhere, will drive demand.

But I have little doubt, that both will drive inflation! And that´s bad for bonds. While nobody can afford much higher rates, this might well impact the world economy, and especially bonds later this year. While it does not feel all that good to be a gold investor this year so far, I can see many reasons to still own gold!!! In the short run, it looks tired, though.

Markets are awaiting Yellens talk tonight, and the inauguration of Biden. As we have seen recently, this might well be accompanied by some upheavel. ´The mere fact, that 25.000 soldiers , who´s task is to ensure a save change of government in the US, should make us think! Trump is gone - but what has he made with this country!!!???

Base metals are up again - nickel has decisively moved through 18.000, and copper just through 8.000 US$/t. Oil also strong - Brent nearly at 56 US$/barrel. Gold is roughly unchanged and

Strike Energy - I have been looking in more detail at the companies plans to produce Urea, a fertilizer, using gas from West Erregulla´s resource. This could be a very positive story for Strike! It uses it´s own gas at competive pricing ( 6 A$??) and could produce Urea at costs of between 20-40% lower than competing, imported urea. Strike believes, that the search for equity partrners is already advanced, and has met with strong interest already. We could see strong announcements over the next 12 month! I can see the company generate 200 or 250 mill A$ in EBITDA p.a. from gas and it´s share of the urea project - and this could lead to higher valuations in therms of EBITDA-multiples than just being a natural resources producer. I would think, that 6-7x EBITDA would not be excessive - potentially giving them a 1.2- 1.7 bill A$ market cap - potentially approx 1$/share. And what is even better: The company is confident, that the competitive tender for partners will give them a 30% carried interest in the JV. All of the above certainly only in case the company will surive until then - without being taken over before! MInd you, I think we would need say 3 -4 years to get to such a valuation. For now, all depends on further drilling success. The new well will start drilling in a few days time, and the results should be known approx 3 month from now. Strike are moving from a pure natural resources/exploration story to an industrial player over the enxt few years, reducing risks on the way! I am holding and will continue to hold a very large stake in my fund"! Great story - but I fear analysts will need a bit of time to come to grips with it!

Panoramic - even while recent development work has been very succesfull, and faster than expected, the company sticks to it´s production target of July 2021. Panoramic is sitting on about 30 mill A$ in cash, and will need another 5-6 mill A$ in capex for various small items over the next few month. And they will certainly need working capital - I´d say 20-30 mill A$. Obviously, the company will spend more than the capex in ongoing fixed costs until first cash is coming into the door - probably by mid-to late August. But I cannot see a problem at all to finance this - be it with banks, project financiers or through a pre-payment from the off-taker Jinchuan. So overall - some more patience is needed - but I guess nothing wrong with waiting for 7-8 month to see a 50% higher share price than the current 17ct! And who knows - there is so much excitement and exhuberance in the market for battery commodities, that firstly, nickel could go higehr above 20.000 US$t this year, and secondly , valuations for nickel producers could rise substantially. Looking at these highly speculative lithium stocks from above, nickel producers could potentially be valued much higher than today.

Tietto - secured a very senior guy from the West African Resources-stable as Chief Operating Officer. he directly managed construction of Sanbrado - obviously, he must have done an excellent job there! Tietto is on track to deliver the PFS in the current Quarter and securing such a strong and experienced person for the construction augurs very well for the PFS!!

Have a nice evening

WS