Report Date: 8 February 2016

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Contents

Where are we in the Cycle?
  As growth forecasts are wound back, the duration of the metal price cyclical trough becomes more prolonged although the depth of the cycle might not be affected materially.  Growth prospects and exchange rates are working against recovery, presently.   More...

Market Directions
The relative performance of the resources sector has been improving with gold equity gains being particularly strong.  Despite their recent rise, gold bullion prices remain in a downtrend dating from 2012.    More...

Portfolio Performance and Positioning
The Phase I segment of the portfolio models contributed strongly to the overall outcome n the past week with phosphate mine developer Potash West leading the way. The recovery of larger cap Phase III companies put them ahead of overall sector outcomes. Several portfolio changes reduced recommended portfolio cash holdings.       More...

Stock Reviews and Rating Analysis 
MZI Resources (MZI:AU) is one of the few companies to emerge from the cycle as a producer. The WA mineral sands miner was the subject of a PortfolioDirect rating report in May 2015 which highlighted the importance of a resource base extension to validate a longer operational life.  The ‘3’ rating received by the company assumed that the operational life of the Keysbrook project would be extended beyond the 5.5 years to which the company is committed formally.  Unusually for Australian miners, MZI is operating on lands granted prior to 1899 when mineral rights (with a few exceptions) were attached to surface holdings.  Production intentions will consequently be subject to landowner approvals making definitive statements about business plans more difficult and leaving the company with a higher risk profile than would have otherwise been the case.         
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DAILY BRIEFING: The PortfolioDirect market diary offers brief thoughts on current issues affecting sector investment strategies.

Although the statements of fact in this communication have been added from and are based upon sources E.I.M. Capital Managers Pty Ltd, the publisher, believes to be reliable, their accuracy is not guaranteed and any such information may be incomplete or condensed. 

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