Market Update

General - Foran - Panoramic - Dacian - Genex

Good afternoon

another relatively volatile day for gold…initially a bit weaker, despite a weak US$, but recovered in the afternoon…

Base metals are having a huge day…strong in Asian trade, followed by some profit-taking - and then they took really off! Goldmans with very bullish statements, especially on copper, which is up by 4,5% late afternoon, and nickel up by 3%! Copper at 5,15 A$/lb / Nickel at 11,34 A$/lb….copper above 4US$lb !!!

PMI´s in the States remain very strong, as expected.

Worry: Bonds continue to sell off! US$ 1o-year now at 1,33% yield - up from 0,48% 6 month ago! But Yellen wants to pump up the economy!

Foran - looks like it wants to finish the consolidation, and break out to the topside!! new research report values them at 1.90 Can$ 12 -month view, and at above 4$ long term. But that is at 3,25 US$lb for copper - we are currently trading at 4,05 US$/lb, and some analysts are calling for a 500.000 t deficit this year demand vs supply! Copper stocks generally - Antofgasta, FM, Lundin etc are all through the roof! The smaller end will follow suite!

Panoramic - feels like they will never break out!!! But believe me - deep value down here, and they will be chased up soon! Nickel has some chart resistance at 20.000$/t - but I do not know a single forecaster, who would have current prices in his estimates! And not only that - PAN will be producing 5000t of copper approx from mid year - and 650t of cobalt! Both prices are racing, cutting costs for nickel production very substantially! We will have fun…one day - perhaps Monday??

Dacian - soon to be merged NTM announced some excellent drilling results from 30-40-50m depth: 9m with 20g / 17m with 11g / 6m with 15g and more of this type. This is infill drilling on a 25x25m space, which will end up being a nice , indicated resource. Good for a nice start to the merged entity! And obviously in trucking distance to the existing plant. This is what Daacian needs most: More mine life - a little bit like Gascoyne, but at a larger scale.

Genex - what a yawn! Another extension…now until end March. Boring, but will happen!

Have a nice weekend!

WS

General - Kingsgate - Fortescue - Bellevue - Oz Minerals - Bellevue

Good afternoon

Gold ETF´s continue to see outflow…not massive, but steady. A bit worrying, if an old gold bull like Gundlach is moving to bitcoins…Gold tried to recover this morning, only to come back and to trade unchanged by late afternoon.

Labor market numbers in the States were weak…following on from a strongly rising PPI yesterday, Import-as well as export prices rose strongly last month. Bonds are weak, yet again…they are starting to worry me…

Base metals are booming on the first day after the Chinese holiday! Copper up 2,8% and approaching 4 US$/lb nickel up 1,25% and trying to go through 19.000 USD$/t and approaching 9 US$/lb!!! Zinc also strong, but no new highs as yet. Having said this, mining stocks are having a break - just the large end of town is moving nicely! And iron ore is trading at the recent high, making billions for the large producers and their shareholders! I wonder, what investors will do with the exorbitant dividends being paid out soon..just the big three Australians will be paying out more than 15 bill A$!

Kingsgate - good old Kingsgate…Apparently there was a discussion in the Thai parliament yesterday, which also referred to the situation suurounding the Chatree Mine. It apparently became clear, that the Thai government has been advised by it´s legal advisors, that tehy might have to pay compensation to Kingsgate! KCN seems to make progress on receiving potentially a few hundred mill A$….Additionally, tehy have their Chilean silver asset, which at current levels for silver, is a very valuable asset. If you have held on for so long, I would definitely continue to do so…sounds promising - but obviously never a safe bet to depend on court outcomes!

Fortescue - The expected, strong result, and as expected by many, a larger than planned div of 1,47$/share ! The result was in line with expectations, and FMG commented, that the capex-increase for Iron Bridge might well be limited to 500 Mill A$ or so.Not too bad, if you generate substantially more than 13 bill in EBITDA!! Andrew Forrest to receive another 1.6 bill A$ in dividends!

Bellevue - got a hammering today, following the release of the PFS today. Disappointing outcome: Capex much higher than anticipated, reserve grade down, Maiden reserve of only 690.000oz , using a 1750 US$ gold price ( as compared to somebody like EVN, which is using 1450 AUSTRALIAN $ ). Life-of-Mine costs of 1080 A$/oz, which given the grade, will also be a disappointment for many. The story is far from over, and I am sure, that over time, a lot of ounces will be added. But it´s also clear, that they falied the first big test, and that was this PFS! Let´s face it - 1080 ASIC is an excellent number, and the 160.000oz of production on average for the first 5 years will probably be extended. But expectations have been very high for this one, and in conjunction with a gold price, which looks vulnerable, probably no hurry to revisite the stock!

OZ MInerals - just an excellent mining company, with steady growth to come! Not dirt cheap here, but great copper exposure. The result was as expected - cash flow a little better, which led to a surprise 17ct dividend. Not bad to be able to pay a nice div, if you just have finished building a large, new mine! And West Musgrave is shaping up to be another strong project - but a few years away. You only buy them., when you are bullkish on copper, which might not be that easy from current levels. I am holding out here, as it is so difficult to find good copper exposure!

Foran - this is one of the few exceptions! They were subject of a very bullish research report out today, which values them at 1.90 Can$ and potentially above 3$. For Foran to justify these kind of valuations, they will have to increase resources/reserves. They are in the process of doing so, with a 30.000m drilling program - the biggest in their history. Some success is important for the stock medium term, but I think, that the chances are pretty good to do so. I am continuing to hold a large position in Foran - it´s one of the two non-Australian investments I have in my fund. They are consolidating trheir recent, strong move in the moment. In early March, they will present at the prstigious BMO conference, where they should be able to meet a strong audience.

Have a nice evening

WS

General - Evolution

Good afternoon

European car sales in January were very weak - but the US saw some massive numbers today: The PPI ex Food and Energy rose by 2% YoY vs expected 1,2%…Retail Sales advanced by 5.3% vs expected 1,1%!!! Industrial Production up by 0,9% vs expected 0,4%!!

Bonds had a big day - opening weaker once again, the US Bond rallied to make up for some of yesterdays heavy losses. Still, I think there is a clear path for interest rates, and that´s up I fear! Tech stocks won´t like that!

Gold is not looking any good..it´s down by another 22$ currently and looks to break some chart support…

Not much action in base metals, but they are slightly weaker today.

RIO came out with another strong result…dividend a big surprise like in BHP….Those two stocks alone will go ex div for 12 bill$ or so in early March and will pay in late March

Some talk about China limiting the export of Rare Earth sent the sector on fire….from Lynas to little Peek

Evolution - stock fell 10% despite a better than expected result…and a nice reserve increase! Ore erserve up by 49% ( 2.9 mill oz at Red Lake, 1 Mill oz at Cowal underground ). Decline to access Campbell underground reserve at Red Lake approved, first production by the end of 2nd Quarter 2022. Cowal underground ready to be developed as soon as approvals are in place. Underlying net profit up by 57% to 234 mill A$ is a little better tha expected, but should not be a big surprise given the excellent gold price during the half year. Group cash flow though has been down by 105. Reason for this is mainly Red Lake - high sustaining capex and high costs, following the aquisition. I think we will have to live with that for a while, even though as costs will slowly come down. But this is a very long life asset, and the old and tired mine is being rejuvenated, which initially, costs a lot of money. This is an investment in the future of Evolution, which will end up owning three Tier 1 assets with Cowal, Red Lake and Ernest Henry, which is a fantastic cash cow and will remain so, even as the gold price is under some pressure, because of the large copper by-product credits ( copper in A$ is up by 10% on average so far this year, vs the last half year ). I am not very keen on gold in the short term - but this has been an excellent result from an excellent company! Especially the falling gold price will expose a lot companies - not so Evolution, which is still calculating it´s reserves at 1450nA$/oz, which will preserve a high margin and much better than everybody else!

Have a nice evening

WS

General - BHP - Marvel Gold - Fortescue - Chalice

Good afternoon

equities take a bit of a break today…resources stocks still looking strong, though, at this stage. Gold is very volatile: touched a low of 1790 early afternoon, recovered to 1814 US$ - now back to 1803 US$. Base metals are little changed - but bonds are having another pretty horrible day! Inflation fears??

Plat and Pall are holding at very high levels.

Oil is holding at around 63 US$ for Brent…

Good to see, that the relatively new boss of BHP is still very positive on commodity markets…namely copper and nickel! And he is putting his money where his mouth is, declaring a mach larger tha expected div of 5 bill$ for the first half!!! The net result was 5% below expectations, but EBITDA and free cash generation were in line. Glencore also with strong numbers!

Large electricity blackouts in Texas are cerating havoc in the country at a time, when they have temperatures as low as minus 35 degrees! 2 mill barrels of daily oil production are down plus a lot of gas…

Marvel Gold - the old Graphex today announced, that tehy are looking at various options for their Chilao Graphite project in Tansania. They also showed valuations of several, similar projects, which vary from 30 mill to 150 mill A$….They are looking at possible trade sale , IPO, all options. The original investor, Castlelake, has the right to 7,5 mill US$ debt owed to them…after that, all possible funds are available to MVL or or it´s shareholders! EV of MVL as at today is about 22 mill A$…leaving a lot of room for speculation!!!

Fortescue - 3 persons from senior management - the COO and two project developers - got the sack! Apparently lasrge cost overruns for their new , potential magnetite project. Rmour is 500 mill to 1 bill A$! The company reacted imemdiately with a very strong announcement - the MD as well as the CFO will also forgo all bonus-related payments! This is just a great company…bad that this happened, but I just love the way management reacts to it!

Chalice - announced more positive, metallurgical results. Buit the announcement also reminds us, that you just do not get 90% recovery for all metals from a multi-metal deposit! Positive overall, though. - but a lot of work left to do! CHN are well cashed up with 132 mill A$ to do much more than drilling and metallurgicla studies!

Have a nice evening!

WS

Strike - Horizon - West African - Xanadu

Good afternoon

oil and base metals are strong - I guess this is the reason for very weak bond markets in Europe today.

Equities are broadly stronger in Europe, lead by oil stocks, as the US are on holiday today - but futures are also up in the States!

Ebola has broken out in Guinea, West Africa!

A shortage of micro-chips might restrict output of cars in 2021

Strike - drilling of West Erregulla 4 is going very well! After 22 days of drilling, the well is at 2600m depth already! The first target zone might be reached in another 20 days, if it´s continuing like it currently is. So far, the well has had hydrocarbon shows analogous to the previous two wells, which is another positive. Fast drilling shoudl reduce costs of the well, which certainly have been higher than planned for the previous two wells. No drama, though. I am looking forward to hear more detail from their plan to build a urea-plant in conjunction with a larger JV-partner. This, and certainly the outcome over the current well ( hopefully with initial results by late March! ) should end the current boredom ( well, that´s at least what the market seems to think! ) in the stock. The same certainly applies to Warrego - they are much cheaper, but without the upside from urea, and potentially, at the mercy of operator Strike to some degree..

Horizon Gold - published their geological review of Gum Creek, which came up with more than 40 targets within the asset to potentially increase resources. The company notes, that the majority of previous pits and resources have not seen any meaningful drilling for 20 years, and most holes have only been drilled to 65m depth. I think they might well be right, that there is a lot of potential at Gum Creek -the only problem being, that HRN do not have enough funds to explore properly. Knowing the major shareholder, I think the chance will be high for an underwritten, deeply discounted rights issue in the not too distant future, which will hold back the performance of HRN. If not for the controlling shareholder, this stock could trade a lot higher…

West African Resources - the stock has underperformed recently a generally weak gold sector. The market is probably waiting for the new resource/reserve estimate, and the Life-of-Mine plan to be published in mid-March. I think costs might be a little higher than originally expected, mainly because of COVID. Travel costs, labor, and general costs might be up a little from what has been budgeted in the past. This should not change the fact, though, that WAF will be one of the ebst ( if not the best ) cash generator among Australian-listed gold stocks. The company is still ramping up underground mining, and that should see costs fall quite a bit over this Quarter, and the next - probably to 650 US$ or so rather than the previously expected 550 US$/oz. Still a real cash machine, and the mine life should continue to grow from underground, as well as from their satellite deposit, aquired last year from B2Gold. They continue to be my largest gold holding.

Xanadu Mines - published some excellent drilling results from the copper-gold project in Mongolia, teh ebst hole being 226m with 0,68% Cu and 1,43g gold….that is a great result. Mongolia is certainly not the market´s favourite investment destinantion, since RIO experienced all sort of problems there. And exploration is expensive, when you have to drill these deep holes to 800-or 1000m. But this kind of success certaiynly warrants some closer following. The company had some 7 mill$ cash as at 31.1.2, which should give them some room before they have to come to the market again by mid year or so.

Have a nice evening

WS