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Today's Market View including: Berkeley Energia, Stratex International, Goldplat, European Metals, Wolf Minerals and others

Published: 10:48 29 Jan 2016 GMT

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Aston Bay Holdings (CVE:BAY) - sign LOI with BHP to advance Storm Copper project in Canada
Berkeley Energia (LON:BKY) – Quarterly update highlights the strong economics of the Salamanca Uranium project.
Blenheim Natural Resources Plc (LON:BNR) - Interim results
European Metals (LON:EMH) – Quarterly Activities Report
Goldplat* (LON:GDP) – Completion of Resource Estimate at Tailings Storage Facility
Stratex International (LON:STI) – New NED
Wolf Minerals (LON:WLFE) – Quarterly update, tungsten market comment and £25m equity facility
Vedanta Resources (LON:VED) – Third Quarter Production Release

Sharps Pixley – opens new shop in St James’s London
• London’s gold bugs descended on St James’s St last night as Sharps Pixley the bullion merchants opened their first shop. 
• Not only can you now pick up a gold bar/sovereign as you wander up St James’s but for those looking for an alternative present they have a wide selection of gold/silver items including silver dipped roses, silver bulls and bears and (what I have my eye on) a very pretty gold nugget on a chain.
• Storage is not an issue either with a large gold vault and a number of safety deposit boxes should you need somewhere to store you hoard.
• Ross Norman the CEO says “it is high time that buying gold was not just something to be done over the internet, there is nothing like seeing a bar of gold to understand the ancient lure”

London gets first driverless cars - no tracks not driver back chat not fumes.
• London gets its first driverless taxis in Greenwich today.  The vehicles are electric and look like a cross between a golf buggy and a milkfloat.
• We suspect they will prove popular and we wonder if they might take over from the large and polluting busses which ferry tourists and commuters around the city.
• Trials are also to take place in Bristol, Coventry and Milton Keynes (land of a thousand roundabouts)
• The £8m project is jointly funded with support from the UK government agency Innovate.
• Wonder what your average Black Taxi driver is going to think of that? – does anyone dare to ask?

121 / SP Angel conference is the only place to be in Cape Town this year
8th-9th February 2016 - in the beautiful and historic gardens of the Welgemeend farm house in Cape Town, close to the Mount Nelson Hotel
• Investors go for free.  See registration form in link below
https://www.weare121.com/121mininginvestment-cape-town/registration/register-investor

Dow Jones Industrials                          +0.79% at           16,070
Nikkei 225                                              +2.80% at           17,518
HK Hang Seng                                       +2.54% at           19,683
Shanghai Composite                             +3.09% at            2,738
FTSE 350 Mining                                    -0.71% at            6,711
AIM Basic Resources                             +0.21% at            1,581

Economic News
US – Unexpectedly durable goods orders recorded a sharp decline in Dec with previous month’s numbers revised downwards.
• Core durable goods: -1.2%mom in Dec v -0.5%mom (revised from 0.0%mom) in Nov and -0.1%mom forecast.
• Capital goods orders (ex defence and aircrafts) also recorded a severe fall: -4.3%mom v -1.1%mom (revised from -0.3%mom) in Nov and -0.2%mom forecast.
• Advance Q4 GDP data (1st of three updates) is due later today and is expected to show economic expansion slowed towards the end of the year: 0.8%qoq forecast v 2.0%qoq in Q3/15.

Japan – The BoJ in an unexpected move decided to take interest rates to -0.1% in an effort to drive inflation to target 2%.
• While markets forecast no change to monetary policy, negative rates are only limited to bank reserves resulting from its programme of asset purchases.
• In a complicated three-tier system negative rates apply only to a fraction of all bank reserves and thus will have a partial effect on the system.
• Nevertheless, the decision saw the yen falling more than ¥2.2 to ¥120.8 against the US dollar.

Germany – Dec retail sales disappointed contracting on a mom basis against forecasts for growth.
• Retail sales: -0.2%mom/1.5%yoy in Dec v 0.4%mom/1.9%yoy forecast.

France – GDP climbed 1.1%yoy in 2015, marking an improvement on 0.2%yoy recorded in the previous year.
• Although growth remains relatively modest compared to other major economies while unemployment remains on the rise.
• Q4 GDP growth came in line with estimates at 0.2%qoq, down from 0.3%qoq in Q3/15.
• Inflation (CPI EU harmonised) ticked up by 0.1pp to +0.4%yoy this month, in line with market forecasts.

Spain – Inflation moved deeper into a negative territory in Jan/16 highlighting risks of reviving inflation expectations in the Eurozone.
CPI (EU harmonised): -0.4%yoy v -0.1%yoy in Dec and -0.1%yoy forecast.
• On a brighter side of things, GDP growth came in line with expectations in the final quarter of the year to take growth for FY15 to 3.2%, a marked improvement given the nation exited recession in mid-13.
• GDP growth: 0.8%qoq/3.5%yoy in Q4/15 v 0.8%qoq/3.4%yoy in Q3/15 and 0.8%qoq/3.4%yoy forecast.
• Unemployment saw a record fall in unemployment as rate falls by 12.4% to 4.78m

Currencies
US$1.0910/eur vs 1.0911/eur yesterday.   Yen 120.84/$ vs 118.78/$.  SAr 16.049$ vs 16.278/$.   $1.436/gbp vs 1.432/gbp
0.710/aud vs 0.709/aud.  China CNY6.578/usd vs CNY6.576/usd –

Commodity News
Precious metals:
Gold US$1,114/oz vs US$1,118/oz yesterday – HK gold imports recorded 861.7t vs 813.1t in 2014 impressing the market
Platinum US$864/oz vs US$884/oz yesterday –
Palladium US$494/oz vs US$501/oz yesterday – 
Silver US$14.27/oz vs US$14.15/oz yesterday

Base metals:
Copper US$4,550/t vs US$4,558/t yesterday – Escondida workforce to be cut 2.4% driven by weak copper industry outlook.
• The Mining Federation of Chile and one union opposed the decision and called for protests.
Aluminium US$1,522/t vsUS$1,525/t yesterday –
Nickel US$8,580/t vs US$8,600/t yesterday –
Zinc US$1,607/t vs US$1,590/t yesterday –
Lead US$1,699/t vs US$1,665/t yesterday
Tin US$14,655/t vs US$14,270/t yesterday

Energy:
Oil US$34.40/bbl vs US$33.90/bbl yesterday –
• Lower oil prices appear to be causing a deliberately manufactured crisis of uncertain duration suiting Saudi Arabia and US political ambitions.
• The impoverishing of Russia, Iran, Iraq and other oil producers may help to restore regional stability
• It will be interesting to see who follows Azerbaijan in the queue to the IMF
Natural Gas US$2.263/mmbtu vs US$2.133/mmbtu yesterday
Uranium US$34.75/lb vs US$34.75/lb yesterday -

Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$41.10/t vs US$41.10/t yesterday –
Thermal coal (1st year forward cif ARA) US$37.70/t vs US$40.50/t on 30 December –

Other:
Tungsten - APT European prices $160-175/mtu vs $150-175/mtu last week  vs $165–175/mtu a the week earlier – prices may at long last be turning
Ferrochrome – Benchmark prices collapsed to 92c/lb in December for Q1/16.

Company News
Aston Bay Holdings (CVE:BAY) C$0.3/s, mkt cap C$11.6m - sign LOI with BHP to advance Storm Copper project in Canada
• It is great to see entrepreneurial and well run companies being supported by the majors in the current low metals price environment
• Ben Cox the company’s inspirational CEO has negotiated for BHP to potentially earn a 75% interest in the project with a provision for this to be converted into a joint venture agreement.
• BHP can earn its 75% stake through the minimum expenditure of C$40m including a minimum C$2.5m within the first two years.
• Aston Bay is not required to spend any funds on the project for four years from the signature of the Definitive Agreement
• BHP has also agreed to pay Aston Bay C$325,000 at the time of signature.
• The Storm Copper Project, located on Somerset Island, Nunavut, covers a 100km-plus strike length of mineralized showings within stratigraphy favourable for sediment-hosted copper mineralization.
• Historical drilling focused on the mineralized zones cropping out at surface and included 110 metres (m) of 2.45% copper and 56m of 3.07% copper at the 2750N zone, as well as 49m of 1.79% copper at the 2200N zone.
• Exploration by Aston Bay has identified a number of coincident conductivity and gravity anomalies that are consistent with regional mineralizing processes that have significance for property-wide exploration.
• See https://astonbayholdings.com/storm-copper for more information on the Storm project.

Berkeley Energia (LON:BKY) 24.875 pence, Mkt Cap £45.2m – Quarterly update highlights the strong economics of the Salamanca Uranium project.
Berkeley Energia’s quarterly report highlights the progress being made with its Salamanca Uranium Project in western Spain which the company describes as “one of the few projects in the world that commences development in 2016 and will be ideally placed to benefit from the forecast rise in demand for uranium from 2018 onwards.”
• The company has reiterated the low cost nature of the development where projected operating costs of US$15.60 per pound of U3O8 are “less than half the current spot uranium price” and the capital costs of US$81m required to achieve initial production are “one of the industry’s lowest”.
• Recently announced drill intersections of wide high grade uranium mineralisation at depth beneath the Zona & deposit, which is planned to be among the first of several deposits to be mined, are being followed up with additional exploration due to commence shortly. Further exploration will also target “multiple Zona 7 deposits elsewhere on the licence”.
• The project already has most of its major permits in place and initial development work is expected to start in March.
Conclusion: Berkeley Energia’s Salamanca Uranium project is among a number of significant mining projects underway in Spain including  Atalaya (formerly EMED) which has recently re-commissioned the Rio Tinto mine, Highfield Resources is advancing its Muga Potash project, Ormonde Mining is developing its Barruecopardo tungsten project and W Resources is preparing a development plan for its La Parilla tungsten deposit.

Blenheim Natural Resources Plc (LON:BNR) 1.3p, mkt cap £2.3m - Interim results
(Formerly Coburg Group)
• Blenheim Natural Resources, an investment company today reports its interim results to end October 2015.
• The company runs on the smell of an oily rag with expenses of just £56,542 for the six month period
• Adding this to this finance costs of £17,732 and finance income of a whopping £19 and the company cost its shareholders just £68,621 through the period
Total assets have increased to £369,702 from £277,212 at end April 2015.
• The company raised £141,750 and £640,000 respectively as well as extending the maturity date of convertible loan notes Totalling £275,000 to 15 April 2017 in the period.
• It is interesting to note that the entire board of Blenheim Natural Resources hold non-executive roles leading us to wonder who is really responsible for the activities of the company, though we note that Chris Ells, the non-exec Chairman has written the Chairman’s statement for the interim report.
• Chris Cleverley of African Potash also joined the board as an NED.
• The statement does not appear to give much of an update on the underlying holdings within the company’s investment portfolio

European Metals (LON:EMH) 7.25 pence, Mkt Cap £6.3m – Quarterly Activities Report
• European Metals which dual listed on AIM at the end of last year updated on a quarterly basis.
• The company is progressing the Cinovec Lithium/Tin project.
• During the quarter the company completed 1,655.3m of drilling with four core holes completed.
• The drill programme is targeted to upgrade the inferred resource at Cinovec to an indicated category.
• The company plan to do bench scale test work to look at various recovery techniques for the extraction of lithium.
• A 420 kg bulk sample has been collected from Cinovec which has been shipped to Australia for further metallurgical test work.
• A scoping study has been completed on the project.
• Rare Earth Minerals has a 12% stake in the company with Mr Morzaria the CEO of REM joining the board as a NED.
Conclusion:  European Metals is a new addition to the AIM market with a potentially large lithium project in the Czech Republic. We look forward to further updates from the company as they progress work on the resource and met test work.

Goldplat* (LON:GDP) 4 pence, Mkt Cap £6.7m – Completion of Resource Estimate at Tailings Storage Facility
• Goldplat has built up a resource at its Tailings Storage Facility while treating material containing gold and other minerals since 2003 at its South African gold recovery operations.
• The company have now formally assessed the potential resource held within the Tailings Facility with a view to assessing the viability of reprocessing this material.
• A JORC compliant resource has been established Totalling 1.2 Mt with a grade of 1.92 g/t gold and 2.77 g/t silver in the TSF and a further 0.23 Mt at 1.33 g/t gold and 2.66 g/t silver in the tailings footwall.
• This gives a Total JORC resource of 1.43 Mt at 1.34 g/t gold containing 81,959 oz and 4.7 g/t silver containing 216,094 oz.
• Uranium oxide is also contained with the resource at a grade of 61.32 g/t containing 193,276 lbs.
• More detailed metallurgical test work will be done but it is estimated that a 15-20% recovery rate for gold can be achieved through a tailings circuit.
Conclusion:  This is good news for Goldplat giving them additional revenue stream. This is essentially a source of “free” material which can be processed through existing circuits. This will provide a boost to revenues in the South African operations and help at a time when the company is re-building profitability at its operations.
*SP Angel act as Nomad and Broker to Goldplat plc

Stratex International (LON:STI) 1.6p, Mkt cap £7.5m – New NED
• Stratex report today that Chris Worcester has joined the board as a new NED at Stratex.
• Mr Worcester is known in the City of London for his attempts to secure debt finance for resource companies.
• Worcester was formerly involved with a failed attempt to combine the ownership of the Vizcachitas copper project in Chile with one half held by Los Andes Ltd, a Canadian company and the other side held by a local entrepreneur.

Wolf Minerals (LON:WLFE) 8.5 pence, Mkt Cap £68.8m – Quarterly update, tungsten market comment and £25m equity facility
• Wolf Minerals reports today on progress at its new Drakelands mine in Devon where the company has been ramping up production following the commissioning of the process plant and the company taking over plant operations from the contractor late in the September quarter. As is normal industry practice during this phase, the company is not publishing operating statistics on throughput rates, recoveries or output of product.
• The company spent the last quarter familiarising itself with the detailed operation of the process plant and identifying outstanding items with the contractor; “Plant run times increased steadily before manufacturing faults in a number of pieces of equipment in late December 2015 resulted in unplanned down time. The faults are covered under warranty and are being rectified in conjunction with manufacturers and GRES.” Teething troubles of this nature are not uncommon with new plants and we are hopeful that there will be no long term repercussions.
• The company is continuing with 7 day per week 24 hour operation on a test basis and is “keen to maintain this arrangement and remains engaged with Devon County Council and the local community to achieve this objective”.  This would be highly beneficial to Wolf Minerals as, if this working pattern can be established on a permanent basis, the mine will have effectively improved its operating capacity by over 25% for no additional capital outlay.
• Wolf Minerals has submitted an application to extend the term of its planning permission which was originally granted in 1986 for a period of 35 years by an additional 15 years until 2036.
• In addition, the company has completed a number of trial blasts during the quarter in order to establish ground vibration and noise data. As the pit movers deeper into less weathered material, “Blasting on a regular basis is anticipated to commence in the March quarter.” Although blasting can sometimes be a controversial topic, it is already a regular feature of mining and quarry operations in south west England and elsewhere which, carried out responsibly, should not be a problem for the Drakelands operation.
• Commenting on the state of the tungsten market Wolf Minerals points out that the reference price of ammonium paratungstate (APT) declined by 14% during the quarter to average US$178/metric tonne unit and that it is “almost 50% lower than what it was when construction commenced in March 2014.” We would add that the APT price currently sits at around the lowest level it has achieved since at least early 2010 (US$160/175 per mtu). The company goes on to note that “During the quarter demand for tungsten concentrate remained sound in Japan and Europe as a result of steady output from the automotive sector. Demand in other regions remained low as a result of soft conditions in the mining, oil and fracking industries and the economic slowdown in China.”
• Against this background, Wolf Minerals has also announced that it has established a £25m equity facility with its major shareholder, Resource Capital Funds (RCF). Under the terms of the standby fund, “RCF will subscribe for a maximum amount of £25m … at 9.19p  … per share (“Issue Price”), an approximate 13% premium to the share price as at close on 28 January 2016”.  “Drawdowns from the Facility will be used to support operations at Drakelands and facilitate the Company’s debt repayments.”  We note, however, that no debt repayments fell due during the December quarter so there is no suggestion that Wolf Minerals has missed any payments and we view the agreement with RCF to support the balance sheet as a prudent move to ensure that issues do not arise as a result of the current commodity price weakness in the future.
Conclusion: Wolf Minerals is proceeding to ramp up its operations at Drakelands and is addressing the teething troubles associated with bringing a new plant to full scale commercial operation. While the commodity prices remain weak, Wolf Minerals is fortunate to be receiving additional support from its major shareholder to strengthen its balance sheet.

Vedanta Resources (LON:VED) 247 pence, Mkt Cap £666m – Third Quarter Production Release
• Zinc India – mine metal production was 5% lower in Q3 at 228,000 tonnes as a result of a change in mining mix from the Sindesar Khurd and Kayad Mines.
• Revenues were down 17% for the quarter at US$612m and EBITDA down 35% on a quarter on quarter basis.
• Zinc International – production was down to 51,000 tonnes as a result of the closure of the Lisheen mine and lower production from Skorpion.
• Revenues were down 64% with a negative EBITDA of US$0.2m.
• Iron Ore – Production Totalled 1.4 Mt for the quarter with 146,000 tonnes of pig iron produced.
• Revenues were down 10% to US$81.7m with EBITDA of US$11m.
• Copper – India – copper cathode produced was 89,000 tonnes for the quarter generating revenues of US$686.9m and EBITDA of US$91.3m.
• Revenues were down 16% on a quarter on quarter basis with EBTIDA up 4% as a result of an export incentive scheme recently introduced.
• Copper – Zambia – Mined metal up 11% of 32,000 tonnes resulting in revenues down 17% on a quarter on quarter basis and EBITDA of US$10.8m.
• Aluminium production was up 5% on a year on year basis at 234,000 tonnes and flat on a quarter on quarter basis.
• Oil & Gas production was flat on a quarter basis at 18.65 m boe and down 7% on a year on year basis.
• Average gross production was 202,668 barrels of oil equivalent per day – 1% lower due to lower volumes from offshore assets.
• Group revenues for the quarter was down 27% at US$2.45 bn with Total group EBITDA down 51% at US$493.6bn down 27% and 51% respectively.
Conclusion: Both volumes and prices are down on a quarter on quarter basis impacting the top line by 27% and EBITDA by 51% across the group although there should be no major surprises from this announcement.

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