US – Construction sector stabilized following a weather-related slow down this winter with housing starts little changed (907k v 909k in Jan and 910k forecast) and building permits up (1,018k v 945k in Jan and 960k forecast) in Feb.
Japan – Trade balance deficit increased more than expected on the back of weaker exports growth (+9.8%yoy v +12.5%yoy exp) and higher imports (+9.0%yoy v +7.2%yoy) despite a fall in the yen.
Germany – ZEW economic expectations index fell to 46.6, the lowest since Aug, in Mar on the back of a political turmoil in Ukraine, Chinese slow down and strong euro.
• Estimates were for a drop to 52.0, down from 55.7 in Feb.
• The gauge reflects investor and analyst expectations of the economic health in six months.
• Current situation index climbed to 51.3 compared with 50.0 in Feb and 52.0 forecast.
UK – Employment numbers are out this morning showing the jobless rate held at 7.2% in the three months through Jan.
• Jobless claims fell more than forecast (-34.6k v -25.0k) in Feb while wage growth accelerated.
• A decline recorded last month is the 16th in a row reflecting strong growth momentum.
• Aggregate unemployment fell 63k to 2.33m people in the three months through Jan.
• Geogre Osborne is due to deliver a 2014 Budget speech today.
• The OBR is expected to revise growth forecasts to 2.7% versus 2.4% estimated previously for this year. Inflation is likely to be revised downwards.
• Market expectations are for the BoE to raise rates by 25bp by May 2015.
Russia – President Putin signed an accord yesterday kick starting the official process of Crimea’s annexation, despite threats by the US and EU to expand the list of economic sanctions.
• British Prime Minister urged European leaders to agree additional measures against Russia when they meet tomorrow in Brussles.
• Merkel said there are no plans to evict Russia from the G8 at the moment while participation in the next summit in Sochi has been suspended. Germany’s Chancellor comments followed the French Minister Laurent Fabius statement made earlier that “as for G8, we decided to suspend Russia’s membership”.
US$1.3921/eur vs 1.3911/eur yesterday. Yen 101.58/$ vs 101.38/$. SAr 10.685/$ vs 10.778/$. $1.661/gbp vs 1.660/gbp
Gold US$1,353/oz vs US$1,361/oz yesterday
• SPDR gold holdings held unchanged at 812.8t (26,132koz) valued at US$35.4bn yesterday.
Platinum US$1,468/oz vs US$1,455/oz yesterday
Palladium US$770/oz vs US$770/oz yesterday
Silver US$20.81/oz vs US$21.05/oz yesterday
• US silver recorded strong performance last year with 73% of jewellers reporting increased sales, according to the Silver Institute’s survey.
• Sales climbed 17% on average, with 25% of respondents saw an increase over 25%.
• Silver is predominantly industrial metal with jewellery accounting for 22% of the aggregate demand.
Copper US$ 6,467/t vs US$6,486/t yesterday
• Freeport is bullish on Chinese copper demand despite signs of an economic growth slow down.
• The long term outlook remains solid with consumption expanding for “more than a decade”, the company said.
• On a supply side, Freeport may issue force majeure on its copper concentrate sales from the Grasberg mine in Indonesia as the company has refused to pay an escalating export tax introduced on Jan 12 as part of new regulations on unprocessed and semi-processed minerals. The mine is said to be operating at half of its capacity and has not shipped any concentrate since mid-Jan.
• The mine produced 415kt of contained copper last year, with company’s target for 500kt for this year now on under risk amid the state’s regulation.
• MMG, the Australian-based offshore subsidiary of Chinese state-owned Minmetals, have confirmed it is in talks with GlencoreXstrata regarding the purchase of the US$5bn Las Bambas copper project in Peru.
• No binding agreement has been reached so far.
• A number of other companies are reported to have been taking an interest in the project including Chinese state-owned CITIC Group and Hong Kong registered Guoxin International Investment.
Aluminium US$ 1,743/t vs US$1,726/t yesterday
Nickel US$ 16,365/t vs US$16,132/t yesterday
Zinc US$ 1,979/t vs US$1,960/t yesterday
Lead US$ 2,078/t vs US$2,050/t yesterday
Tin US$ 23,225/t vs US$23,018/t yesterday
Oil US$106.7/bbl vs US$106.7/bbl yesterday
Natural Gas US$4.467/mmbtu vs US$4.516/mmbtu yesterday
Uranium US$34.90/lb (18/03/14) vs US$34.75/lb (17/03/14)
Iron Ore - US$110.5 (18/03/14) US$109.6 (17/03/14) 62% Fe spot (cfr Tianjin)
Tungsten - US$367.5/mtu (18/03/14) vs US$367.5/mtu (17/03/14) APT European
• A RAB drilling programme has been completed at the project.
• Fence lines have been drilled to cover the geophysical and geochemical anomalies at the Gourbassi East prospect.
• This is one of three target areas identified at the project.
• The 1,505m RAB drilling programme was designed to complement the recently completed diamond and RC drilling programmes.
• The previous drill programme included a total of 5 DD hole of 749m and 13 RC holes of 1,626m was testing extensions at depth and SW to current resource at Gourbassi East.
• A total of seven RAB fences were drilled across targets outside the main resource zone to test potential for parallel mineralised structures.
• A total of 541 composite samples have been collected and sent to SGS Labs in Mali for analysis.
Conclusion: We look forward to results from the latest drilling programme. Best results from previous drilling wee from GRC55 and GRC58 with widths ranging from 2-18m and grades of 18 mt at 1.1 g/t gold to 2m at 7.59 g/t gold.
• The company has declared a proved and probable reserve at the Nguallla deposit of 20.7 Mt at 4.54% REO giving 941,000 REO tonnes.
• Breakdown of reserves shows 48.2% Cerium, 27.6% Lanthanum, 16.6% Neodynium, 4.74% Praseodymium, 1.6% Samarium and the balance of the rare earths at under 1%.
• In calculating the reserve, the consultants Orelogy Group completed a detailed mining plan.
• The plan was based on the weathered Bastnaesite zone of the measured and indicated portions of the mineral resource with a 3% REO cutoff grade.
• Key factors in the plan are a production rate of 10,000 tonnes of separated REO at a mining cost of US$2.69/t and a processing cost of $257.72/t.
• FOB transport and port costs are assumed to be US$5.57/dmtu.
• The process assumes a weighted average recovery of the individual rare earth grades of 62% with higher recoveries of Lanthanum, Cerium, Praseodymium and Neodymium.
• Recoveries for Europium, Dysprosium and Yttrium run at below 50%.
• The PFS done before the reserve estimate showed an average mine feed of 355,405 tonnes, life of mine (LOM) of 58 years.
• Average LOM grades, strip ratios and REO recovery were 4.54%, 2.23 and 62% respectively.
• Average annual production in the PFS was for 10,069 tonnes of REO 22% from Neodynium/Praseodynium oxide, 30% from Lanthanum Oxide, 45% from Cerium Oxide and the balance a mixed heavy REO.
• No capital cost assumptions were used in the reserve calculation by the consultants but the PFS used capital cost of US$367m.
• The PFS assumes a power plant, processing plant, TSF and other infrastructure services at site.
• An 80 km access road to site requires upgrade with trucking to the deep water port of Dar es Salaam for export to off take customers.
• The PFS assumes an average C1 LOM cash cost of US$11.74/kg and a product basket price of US$29.29/kg
• Assuming royalties of 4.3% and a corporate tax rate of 30%, the company derives a post tax NPV of US$1bn and IRR of 39%.
Conclusion: The JORC reserve estimates which have been based on a detailed mine plan should give further support to the PFS. On paper the project appears to stack up – it has the right type of REOs with good grades from a weathered zone which results in a relatively low mining costs. The issue is how this can be executed in Tanzania which is not an environment for the sophiscticated processing associated with rare earths and the transport of key consumables.
• The company has announced an investment of A$1.2m to take a 12.7% stake in the Celamin Holdings.
• Celamin is advancing a BFS on its Chaketma phosphate project in Tunisia.
• Celamin holds 51% in the licence with 49% owned by its Tunisian partner.
• A scoping study was completed on the project in August 2012.
• An inferred JORC resource of 130 Mt at a grade of 20.5% P2 O5 across 2 of the 7 prospects at the project.
• Metallurgical test work at the time showed potential for a 31% concentrate of P2 O5 .
• The project is said to be 35 km from the nearest railhead in Tunisia with the country said to have well developed infrastructure with available power and gas.