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Today's Market View Including Anglo American, Alecto Minerals, Horizonte Minerals, Randgold Resources and others

Last updated: 11:15 27 Apr 2015 BST, First published: 10:15 27 Apr 2015 BST

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Economic News

US – Durable goods orders report released on Friday showed the gauge excluding volatile orders for aircrafts fell 0.2% versus -1.3% in Feb and +0.3% forecast.

This was the sixth consecutive monthly decline core durable goods orders.

Factoring military orders out, the measure shows an even stronger contraction of 0.5% v -2.2% in Feb and +0.3% forecast.

Poor results led the US dollar lower on Friday.

Economic news due this week:

o Today: Apr Markit services PMI (58.8 v 59.2 in Mar), Apr Dallas Fed manufacturing index (-12.0 v -17.4 in Mar)

o Tuesday: Feb house prices measured by S&P/CS (+0.7%mom/+4.7%yoy v +0.87%mom/+4.56%yoy in Jan), Apr consumer confidence (102.5 v 101.3 in Mar)

o Wednesday: Advance (the first of three measures to be released) Q1/15 GDP (+1.0%qoq v +2.2%qoq in Q4/14), FOMC rate decision (no change from current 0-0.25% forecast).

o Thursday: Weekly jobless claims (290k v 295k in the previous week), Mar core PCE deflator, the Fed’s preferred measure of inflation (+0.2%mom/+1.4%yoy v +0.1%mom/+1.4%yoy in Feb)

o Friday: Apr ISM manufacturing PMI (+52.0 v 51.5 in Mar)

China – Industrial profits have fallen slightly in Mar (-0.4%yoy) marking the sixth consecutive decline.

The decline reflects general economic slowdown with Q1/15 GDP growth coming in at +7.0%yoy , down from +7.3%yoy in Q4/14.

Greece – No resolution of reforms-for-cash deal so far as Athens resist agreeing to bailout conditions.

Technical from Greece and its creditors will be holding a teleconference on Monday and meet on Wednesday to accelerate negotiations, according to the official involved in discussions.

Nepal – Death toll increased above 3,000 following the 7.9 magnitude earthquake that hit Nepal on Saturday.

More than 6,500 people have been injured.

Officials say casualties may rise as rescuers head to remote mountainous areas of western Nepal.

US$1.0868/eur vs 1.0878/eur yesterday. Yen 119.19/$ vs 119.48/$. SAr 12.113/$ vs 12.178/$. $1.517/gbp vs            1.513/gbp

0.781/aud vs 0.779/aud

 

Commodity News

Precious metals:

Gold US$1,183/oz vs US$1,193/oz last week

Platinum US$1,124/oz vs US$1,134/oz last week

Palladium US$772/oz vs US$774/oz last week

Silver US$15.85/oz vs US$15.87/oz last week

 

Base metals:

Copper US$ 6,071/t vs US$6,025/t last week

Aluminium US$ 1,836/t vs US$1,793/t last week

Nickel US$ 13,390/t vs US$12,895/t last week

Zinc US$ 2,277/t vs US$2,235/t last week

Lead US$ 2,086/t vs US$2,052/t last week

Tin US$ 15,905/t vs US$15,550/t last week

 

Energy:

Oil US$65.2/bbl vs US$65.6/bbl last week

Natural Gas US$2.483/mmbtu vs US$2.548/mmbtu last week

Uranium US$38.40/lb vs US$38.90/lb last week

 

Bulk commodities:

Iron ore 62% Fe spot (cfr Tianjin) US$50.0/t vs US$49.5/t

Thermal coal (1st year forward cif ARA) US$57.6/t vs    US$57.6/t last week

Seaborne hard coking coal index (quarterly) US$109.5/t vs US$109.5/t

 

Speciality metals and alloys:

Tungsten APT European US$257.5/mtu vs       US$257.5/mtu

 

Company News

Anglo American (LON:AAL) 1096 pence, Mkt Cap £15.4 bn – Listing may be considered as option for divesting SA platinum assets

Mark Cutifani said at the company’s AGM that listing may be the preferred option to divestment of SA platinum assets.

Current offers for these assets are below the company’s expectations.

Interested parties for the assets include Sibanye Gold, Northam Platinum and Baroka Platinum.

Anglo Plat is said to be breaking even based on currency depreciation and improvement in operational performance.

Conclusion: Selling at the low point in terms of South African political risk perception and poor performance for platinum despite supply fundamentals does not seem the best solution. Listing could therefore could be the best alternative.

 

Alecto Minerals (LON:ALO) 0.165 pence, Mk Cap £1.6m – Non-Jorc Resource Estimate at Kerboule Gold Project in Burkino Faso

A non-JORC resource estimated by Wardell Armstrong for Kerboule is for 6.2 Mt at 1.16 g/t for 230,758 oz with a cut-off grade of 0.5 g/t.

The resource has been estimated from historical data which covers 3,420m from 12 DC holes and 26,603m of RC drilling for 264 holes.

The resource was generated from 3 targets with the Kerboule-Yalema corridor.

Mineralisation within this corridor is said to be from steeply dipping quartz veins within the oxide and transitional zones.

The company plan to complete the work to upgrade the resource to a JORC estimate.

 

Horizonte Minerals (LON:HZM) 2.875 pence, Mkt Cap £14.2m – Bulk Sample work at Araguaia Nickel Project

The company has been drill testing selected bulk sample sites.

The aim of the drilling is to make sure that the in-situ grades within the bulk sample areas are better understood.

Augur drilling was completed on 64 holes totalling 944m on 4m drill girds across 4 bulk sample sites.

261 tonnes of material from 3 sites from 23 holes totalling 260.6m has been collected and sent to the pilot plant for testing.

The sampled material is to be used to produce ferronickel using a proved Rotary Kiln Furnace process. 

o A PFS for the project the development of the 21.2m tonne probable resource (grading 1.66% nickel) envisages a base case of 15,000 tpa of “nickel in ferro-nickel production with a 20% Fe-Ni product over a 25 year mine life.

Conclusion: : Delivering feed of the optimum size distribution and moisture content to the furnace is likely to be a critical element in the successful operation of the RKEF. We look forward to the test results.

 

Randgold Resources (LON:RRS) 4959 pence, Mkt Cap £4.6bn – Update on Tongon

The company’s Tongon gold mine in Cote d’Ivoire is on track to achieve production and cost guidance.

The commissioning of its new floatation circuit and the expansion of the crushing circuit is to result in Tongon achieving its designed performance level.

The construction of the upgraded floatation circuit is complete with automation and optimisation in progress.

Optimisation work is still being undertaken on the crushing circuit.

The mine is forecasting production of 260,000 oz of gold at a cash cost of US$820/oz in 2015.

Tongon’s mine life has been extended by a year as exploration has replenished all the reseves depleted by mining in 2014.

 

Thor Mining (LON:THOR) 0.07 pence, Mkt Cap £2.1m – Update on recent trading volumes in the shares

The board confirms they are not aware of what is behind the recent speculation and trading volume in the shares.

However, they are said to be reviewing a number of approaches for the Molyhill tungsten project.

The company are hoping that these approaches will lead to the financing of the project.

Molyhil currently has a JORC compliant reserve of 3m tonnes at an average grade of 0.31% tungsten trioxide contained within an overall resource of 4.7mt grading 0.28%.

The company sees a number of additional extension opportunities with the scope to enlarge the overall resource and it has also identified possibilities to improve the conversion of resources into reserves which alone could add between 0.3 to 0.5m tonnes to the reserves through optimisation of the mining plan.

As previously announced, the development plan for Molyhil is based around a six year mine life on a 500,000 tpa open-pit mining operation to produce 130,000 metric tonne units (mtu) of WO3 concentrate per year at a cash cost of $112/mtu. The estimated capital expenditure for the project is A$70m (US$56m).

The company has reported that “even at the low point of tungsten pricing for the past 4 years, that payback period is still no more than 2 years.”

Conclusion: Interest in the Molyhill tungsten highlights the scarcity of tungsten deposits and interest in financing/acquisitive interest.

 

Tri-Star Resources* (LON:TST) 0.11 pence, Mkt Cap £7.6m – Final Results highlight progress towards antimony roaster construction

The results highlighted progress made by the company during and after the results period towards the antimony roaster in Oman.

A number of steps have been taken to facilitate the building of the roaster.

Debt Funding: A facility offer letter has been signed with Bank Nizwa for the senior US$40m debt portion for the roaster.

A preliminary environmental permit has been received.

This permit will enable construction work to start on the roaster and SPMP to conduct business activities related to the roaster.

An updated engineering report confirmed the capital for the roaster of US$62.1m in line with previous estimates with total funding expected to be US$70m.

The capacity and the output of the roaster remain unchanged with treatment of 40,000t of concentrate for output of around 20,000 t of antimony metal and antimony trioxide.

SPMP, Tri-Star’s JV in Oman has signed heads of terms agreement with Traxys for a potential trading arrangement.

The basis of the discussions is for Traxys to supply feedstock and provide an offtake for the end product.

Traxys is also expected to provide an offtake agreement and related services.

At the Bald Hill project in Canada, the company has explored only a small portion of the tenement area and belives there are a number of potential targets.

Two gold deposits in which Tri-Star Antimony Canada has interests in have Ni 43-101 resources – Golden Pike (100%) has 214,000t at 9.6 g/t gold or 66,300oz.

Tri-Star Canada also has a 60% interest in Golden ridge which has an inferred resource of 17.78 mt at 0.91 g/t gold for 520,00 oz.

Both these assets are viewed as non-core.

Board changes have been made to reflect the next phase of development with Mark Wellesley-Wood appointed as Chairman.

For the year the group reported a loss of £2.397m

Cash and cash equivalents at the end of the period stood at £1.496m.

Conclusion: While there is no news in the results announcement, the steps taken to bring the antimony roaster into production in Oman shows the gathering momenturm to bring the roaster into production. We look forward to further positive news flow.

*SP Angel acts as Nomad and Broker to Tri-Star Resources

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