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Today's Market View Including: Bluerock Diamonds, Kodal Minerals, Scotgold Resources, SolGold, ZincOx

Published: 11:16 29 Apr 2016 BST

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BlueRock Diamonds* (LON:BRD) – Placing raises £700,000 to transform diamond mining and recovery at Kareevlei
Kodal Minerals* (LON:KOD) – Taruga Quarterly report
Scotgold Resources (LON:SGZ) – Authorities issue the PBT permit
Solgold* (LON:SOLG) – Hole 16 further extends known  mineralisation at Cascabel
ZincOx (LON:ZOX) – Completion of transfer of the Korean recycling plant to Korea Zinc

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Dow Jones Industrials                          -1.17%  at         17,831
Nikkei 225                                                                    16,666 (Markets closed – Bank holiday)
HK Hang Seng                                      -1.48%  at         21,071
Shanghai Composite                            -0.25%  at         2,938
                                                           
FTSE 350 Mining                                  +0.06% at         10,307
AIM Basic Resources                           +0.43% at         1,925

Economic News
US – Q1 GDP growth slowed more than expected driven by a decline in business investments, weaker consumer spending and a fall in exports on the back of strong USD.
• Q1 GDP: 0.5%qoq v 1.4%qoq in Q4/15 and 0.7%qoq forecast.
• With 2016 growth forecasts standing at 2.0%, the pace is set to accelerate through the year resembling the 2015 dynamics (Q2/Q3/Q4e in 2016: 2.3%/2.4%/2.4%).
• On a more positive note, inflation measure (ex energy) came in stronger than estimated though Q1/16.
• Core PCE: 2.1%qoq v 1.3%qoq in Q4/15 and 1.9%qoq forecast.
• This week economic news:
Date Index Period Actual Expected (Bloomberg) Previous
Monday New Home Sales Mar -1.5%mom 1.6%mom 2.0%mom
Tuesday Durable Goods Orders/Core Mar 0.8%mom/-0.2%mom 1.9%mom/0.5%mom -3.1%mom/-1.3%mom
  Capital Goods Orders Mar 0.0%mom 0.6%mom -2.7%mom (revised from -2.5%mom)
  S&PCS Propoerty Prices Index Feb 0.7%mom/5.4%yoy 0.8%mom/5.5%yoy 0.8%mom/5.7%yoy
  Markit Services PMI (P) Apr 52.1 52.0 51.3
  Markit Composite PMI (P) Apr 51.7   51.3
Wednesday FOMC Rate Decision   0.25%-0.50% 0.25%-0.50% 0.25%-0.50%
Thursday Q1 GDP (A)   0.5%qoq 0.7%qoq 1.4%qoq
  Q1 Core PCE (A)   2.1%qoq 1.9%qoq 1.3%qoq
  Weekly Jobless Claims   257k 259k 248k
Friday PCE Mar  0.1%mom/0.8%yoy -0.1%mom/1.0%yoy
  Core PCE Mar   0.1%mom/1.6%yoy 0.1%mom/1.7%yoy
   

Japan – The currency continues to test new highs (JPY appreciation) against the US dollar as the BoJ decided to stay put on further easing policies while poor economic data in the US led to adjustment in rate hike expectations.
• The USDJY pair gone below the 107 level briefly this morning hitting 106.97 the lowest reading since 2014.

Germany – Retail sales numbers disappoint posting a surprising mom decline in Mar.
• Retail sales: -1.1%mom/+0.7%yoy v 0.0%mom/+5.5%yoy in Feb v 0.4%mom/2.7%yoy forecast.

France – Growth accelerated through Q1/16 beating estimates while inflation remained in the negative territory in the first month of Q2/16.
• Q1/16 GDP: 0.5%qoq/1.3%yoy v 0.3%qoq/1.4%yoy in Q4/15 and 0.4%qoq/1.0%yoy forecast.
CPI: 0.1%mom/-0.2%yoy in Apr v 0.7%mom/-0.1%yoy in Mar and 0.1%mom/-0.1%yoy forecast.
• Apr marks the third consecutive month of annual declines as the second largest economy in the single currency zone struggles to escape deflation.

Spain – The economy expanded at 0.8%qoq in Q1/16 beating expectations for a 10bp slow down and coming in line with growth pace recorded in the previous two months.

Currencies
US$1.1376/eur vs 1.1357/eur yesterday. Yen 107.07/$ vs 108.17/$. SAr 14.230/$ vs 14.426/$. $1.460/gbp vs 1.459/gbp
0.763/aud vs 0.763/aud. CNY 6.485/$ vs 6.479/$.

Commodity News
Precious metals:
Gold US$1,275/oz vs US$1,258/oz yesterday
• Gold ETFs 56.5moz unch vs 56.4moz yesterday
Platinum US$1,059/oz vs US$1,034/oz yesterday
Palladium US$629/oz vs US$611/oz yesterday
Silver US$17.72/oz vs US$17.38/oz yesterday

Base metals:
Copper US$ 5,000/t vs  US$4,906/t yesterday
Aluminium US$ 1,673/t vs US$1,648/t yesterday
Nickel US$ 9,445/t vs US$9,170/t yesterday
Zinc US$ 1,933/t vs US$1,884/t yesterday
Lead US$ 1,782/t vs US$1,741/t yesterday
Tin US$ 17,210/t vs US$16,890/t yesterday

Energy:
Oil US$48.3/bbl vs US$47.2/bbl yesterday – Prices are heading towards new 2016 highs on the back of a falling USD and lower US production.
• US domestic oil output rate fell for a second week coming in at 8.9mmbbl in the week through 22/04/16, down from 9.0mmbbl in the previous period.
Natural Gas US$2.065/mmbtu vs US$2.145/mmbtu yesterday
Uranium US$27.40/lb vs US$27.65/lb yesterday

Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$62.0/t vs US$58.9/t
Thermal coal (1st year forward cif ARA) US$46.8/t vs US$46.2/t yesterday – Australian thermal coal exporters take 9.1% cut in annual contract prices to $61.6/t
• The settlement between Glencore and Tohoku Electric Power is better than expected as it is around $10.8/t higher than spot prices
• Less than half Australia’s thermal coal exports are now priced on the Japanese reference price indicating a move away from annual contract price settlement towards spot prices

Other:
Tungsten - APT European prices stood at $188-210/mtu vs $190-200/mtu last week

Lithium – lithium batteries are now finding new use in the marine environment
• Norwegian marine services group Østensjø Rederi AS has is commissioning a new offshore construction vessel with a hybrid diesel-electric system powered in part by a lithium ion battery.

Company News
BlueRock Diamonds* (LON:BRD) 14 pence, Mkt Cap £4.3m – Placing raises £700,000 to transform diamond mining and recovery at Kareevlei
• BlueRock Diamonds which is mining diamonds at Kareevlei, Kimberly, South Africa has raised further funds to improve its mine and process plant.
• The idea is to raise plant throughput and improve recovery rates.
• Directors agreed to underwrite 390,908 shares in addition to respective allocations.
• The investment should be transformational for the company.
*SP Angel acts as Nomad & Broker to BlueRock Diamonds

Kodal Minerals* (LON:KOD) 0.05p, mkt cap $0.525m – Taruga Quarterly report
• Kodal Minerals, which has previously announced plans to acquire the west African exploration assets of ASX listed Taruga Gold, highlights the issue of Taruga’s quarterly activities report.
• The assets are held in Taruga’s wholly owned subsidiary, International Goldfields (IG), and include 8 exploration licences including 4 licences in Mali and Cote d’Ivoire and an additional 2 licences under application in Cote d’Ivoire.
• IG has a joint venture with Resolute Mining to explore the Tiebissou and Nielle licences in Cote d’Ivoire, where it also has an application for the M’Bahaikro licence. Resolute Mining is funding US$3m of exploration in order to earn a 75% interest. The exploration areas lie along strike from Endeavour Mining’s Agbaou mine. Resolute completed a programme of reconnaissance drilling and geochemical sampling during the quarter.
• IG also has a joint venture with Newcrest Mining under which Newcrest is to spend $0.75m this year and and at least $1.7m by December 2018 to earn a 75% interest in Dabakala prospect also in Cote d’Ivoire. Initial auger drilling and geochemical sampling by Newcrest to identify follow-up targets is expected to be completed in the current quarter.
• In Mali, Taruga’s geologists have been working on site to identify areas for follow-up work on the Nangalasso and SLAM project areas.
• Formal approval of Kodal’s acquisition of the Taruga subsidiary, International Goldfields (Bermuda) will put to shareholders at a General Meeting on 13th May.
Conclusion: Kodal Miinerals proposed acquisition of exploration projects in west Africa should provide exposure to areas where increasing investor interest is evidenced by a number of recent transactions including the Amara Minerals / Perseus Mining merger and Endeavour Mining’s recent acquisition of True Gold with assets in neighbouring Burkina Faso.
*SP Angel acts as Financial Advisor and Broker to the company.
*The author of this report does not hold shares in Kodal Minerals.
Three Partners of SP Angel and SP Angel LLP hold stock in Kodal Minerals due to their long running financial support for the company.

Scotgold Resources (LON:SGZ) 0.8p, Mkt Cap £11.5m – Authorities issue the PBT permit
• The Loch Lomond and the Trossachs National Park Planning Authority issued an approval (subject to certain conditions) for the Bulk Processing Trial plant.
• The decision paves the way for the start of the BPT operations once all components arrive at the site.
• The plant is currently in transition is expected to be arriving to the Cononish mining site in early May.
• The operation is envisaged to process available on-site high grade stockpiles (7,000t at 7.9g/t gold and 39g/t silver) treating 2,400t in the first six months.
• The BPT will use gravity separation to recover coarse gold from the ore as well as produce a sulphide rich concentrate.
• The plant will test the production concept and will provide the basis for a potential revision in the available BFS from a full scale flotation plant to a less capital intensive option of a phased development of the Cononish project.
• The Company is well placed to commence its trial plant operations with the latest estimated cash balance of c.£600k as of Mar/16.  

Solgold* (LON:SOLG) 3.475p, Mkt Cap £33.1m – Hole 16 further extends known  mineralisation at Cascabel
• Solgold reports the final results from hole 16 at its Alpala deposit within the Cascabel project in Ecuador.
• Hole 16 has intersected 1145.6m of mineralisation grading an average of 0.63% copper and 0.78 g/t gold from a depth of 516m. The intersection includes a higher grade section of 108m from a depth of 548m at an average grade of 1.46% copper and 1.04 g/t gold.
• The broader intersection contains two main mineralised zones; a 152m wide Upper Zone from a depth of 612m with an average grade of 1.18% copper and 1.69g/t gold (using a 0.7% copper cut-off) and a 373.6m wide Lower Zone from a depth of 928m with an average grade of 1.00% copper and 1.34 g/t gold at the same cut-off.
• These latest results extend the known strike length of the Alpala deposit by a further 120m towards the southeast and takes the overall known development of the Alpala mineralisation “from Hole 13 in the northwest to Hole 16 in the southeast to some 700m in lengh.”
• The Alpala Central deposit still remains “open in virtually all directions, and is to date defined at greater than 0.7% copper over a strike length of 625m, a lateral width of 300m and a vertical extent of 1,800m”
• The company also highlights that “the extension of Alpala Central to the south east is accompanied by increased intensity of bornite mineralisation at surface and increasing intensity of veining with depth.”
Conclusion: As drilling proceeds at Cascabel, Solgold is continuing to extend the known mineralisation which still remains open laterally and at depth. The increasing recognition of near surface mineralisation including the copper rich mineral bornite (63% copper), as well as the extensive deeper mineralisation could ultimately provide Solgold with a range of development options.
*SP Angel acts as Nomad and Broker to SolGold. An SP Angel analyst has visited the Cascabel project

ZincOx (LON:ZOX) 0.7pence, Mkt Cap £1.5m – Completion of transfer of the Korean recycling plant to Korea Zinc
• ZincOx announces that it has now completed the previously announced transfer of a 90% interest in the Korean Zinc Recycling Plant to Korea Zinc through the conversion of the outstanding loans into equity of ZincOx (Korea).
• During the transition period since the announcement of the transfer in December, ZincOx (Korea) has received a further $5.4m in non-recourse loans from Korea Zinc which may also be capitalised. In this eventuality, ZincOx Resources’ residual interest would be reduced further to around 9.2%.
• “ZincOx Korea's share structure has been reorganised so that 90 per cent of the shares will be valued at US$57.1 million giving an imputed value to ZincOx Korea of US$63.4 million” – on this basis, ZincOx Resources stake in ZincOx (Korea) would be worth $6.3m.
• ZincOx has “continued to assist with the operation, as required, so as to enable a smooth transition into management by Korea Zinc.”
• In the meantime, ZincOx is in discussions with potential “strategic and project specific partners for the development of new recycling projects.”
• The company currently has £360,000 in cash and, under AIM rules “must carry out a reverse takeover within six months of the date of transfer, being 28 October 2016” in order retain its listing.
Conclusion: Despite the loss of the Korean project, ZincOx retains its proprietary technology and a wealth of operating expertise on its implementation. We wish the company well in its search for a new zinc recycling project.

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