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Today's Market View Including: Aureus Mining, BHP Billiton, Kibo Mining, Petra Diamonds,Strategic Minerals

Published: 10:18 21 Jun 2016 BST

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Aureus Mining (LON:AUE) – First Tranche of new funding
BHP Billiton (LON:BLT) – Coal business update
Kibo Mining (LON:KIBO) – Mbeya Project Update
Petra Diamonds (LON:PDL) – Large white diamond discovered at Cullinan.
Strategic Minerals (LON:SML) – £429,000 equity issue

Different polls show various results over the way the EU referendum vote might go on Thursday with the pound slightly up this morning.
• A YouGov poll of 1,652 voters for the Times released yesterday showed Leave getting 44% against 42% for Remain.
• A survey of 800 people by ORB for the Daily Telegraph had Remain at 53% v 46% for Leave with the higher discrepancy attributed ot the exclusion of “don’t knows” from results.
• Equites are range bound this morning while the US$ index is slightly off as Ms Yellen prepares to testify before authorities Tuesday and Wednesday as part of a semiannual report.
• Commodities are trading lower led by uncertainty over the Brexit vote results.

Dow Jones Industrials                         +0.73%             at         17,805
Nikkei 225                                            +1.28%             at         16,169
HK Hang Seng                                     +0.77%             at         20,668
Shanghai Composite                           -0.35%              at         2,879  
FTSE 350 Mining                                 -1.40%              at         9,326
AIM Basic Resources                           -0.69%              at         1,886

Economic News
US – Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Wednesday Existing Home Sales May   1.8%mom 1.7%mom
Thursday Weekly Jobless Claims     270k 277k
  Markit Manufacturing PMI     50.9 50.7
Friday Durable Goods Orders/Core May   -0.4%mom/0.1%mom 3.4%mom/0.5%mom
  Capital Goods Orders May   0.3%mom -0.6%mom
Source: Bloomberg    

Japan – Finance Minister Taro Aso said the yen has already priced in Brexit to some degree with the government unlikely to intervene into the market to weaken the currency without the due consideration.

Germany – Economic growth is expected to slow down through Q2/16 dragged down by weaker industrial exports and volatility in the construction sector before accelerating in H2/16.
• Consumer spending remain strong while ECB QE is forecast to add support to the economy  with annual GDP increase estimated at 1.7% this year, in line with 2015.

UK – House prices growth slowed in Jun with London prices recording a decline ahead of the EU referendum vote.
• Asking prices climbed 0.8%mom/5.5%yoy this month compared to 0.4%mom/7.8%yoy change in May, according to Rightmove data.
• Average price across the UK currently stands at £310k.
• London prices were down 0.2%mom with the uncertainty over the vote exacerbated by changes in the stamp duty that came into effect in Apr.

ECB – The bank accumulated €2.25bn in private debt in eight days since the start of purchases in Jun as part of an expanded QE programme.
• Investment grade European company debt holdings are thought to include utilities, insurers and telecoms companies.
• Analysts expected purchases not to exceed €3bn in the first month while given the strong start to the month, holdings are likely to surpass €7bn in Jun.

Russia – Retail sales declines accelerated in May extending annual losses to 17 months now driven by falling real wages.
• Retail sales: 0.8%mom/-6.1%yoy in May v -1.0%mom/-4.9%yoy in Apr and 2.0%mom/-4.8%yoy forecast.
• Real wages: -1.0%%yoy in May v -1.1%yoy in Apr (revised from -1.7%yoy) and -1.9%yoy forecast.
• Real Disposable Income: -5.7%yoy in May v -7.0%yoy in Apr and -4.3%yoy forecast.

Nigeria – The currency lost 30% yesterday as the central bank switched to a market-based floating exchange rate.
• The currency was pegged at c. 197 naira per US$ before Monday.
• The naira jumped to 285 yesterday but has regained some of its losses since then and is currently trading at 258.

Currencies
US$1.1336/eur vs 1.1338/eur yesterday. Yen 104.44/$ vs 104.51/$. SAr 14.703/$ vs 14.904/$.  $1.472/gbp vs $1.463/gbp.
0.749/aud vs 0.746/aud. CNY 6.577/$ vs 6.580/$.
Commodity News
Precious metals:
Gold US$1,283/oz vs US$1,282/oz yesterday
Gold ETFs 60.9moz v 60.9moz yesterday
Platinum US$987/oz vs US$973/oz yesterday
Palladium US$547/oz vs US$542/oz yesterday
Silver US$17.43/oz vs US$17.43/oz yesterday
           
Base metals:   
Copper US$ 4,613/t vs US$4,622/t yesterday – Exports from China hit the strongest level since 2012 climbing for a third consecutive month with net imports down 19%mom.
• Shipments of unwrought copper and products increased to 126.0kt in May v 73kt in Apr and 66kt a year ago.
• Exports in the first months of the year totalled 351kt, up 11%yoy, with imports at 2.3mt, up 22%yoy.
• Separate reports show bonded stockpiles in China that are not publicly disclosed rose for a third month in May to the most in nearly a year, according to Bloomberg.
• LME tracked stocks in Asia located outside China have more than tripled since bottoming in Mar.
Aluminium US$ 1,634/t vs US$1,621/t yesterday
Nickel US$ 9,205/t vs US$9,190/t yesterday
Zinc US$ 2,010/t vs US$2,008/t yesterday
Lead US$ 1,716/t vs US$1,714/t yesterday
Tin US$ 16,950/t vs US$17,125/t yesterday  
        
Energy:           
Oil US$50.3/bbl vs US$50.2/bbl yesterday
Natural Gas US$2.716/mmbtu vs US$2.681/mmbtu yesterday
Uranium US$25.75/lb vs US$25.75/lb yesterday         

Bulk:    
Iron ore 62% Fe spot (cfr Tianjin) US$48.1/t vs US$48.3/t – “One of the markets that will take longest to come back into balance is the iron ore market,” BHP CEO said highlighting a potentially long recovery in the steel making ingredient market.
• “The reality is we’ve settled down now to a price that we would say is more realistic on the basis of fundamentals of supply and demand.”
• “We’ve had such a long boom. To walk that through, in my view, may take another 10 years.”
• On other hand, BHP remains optimistic on oil and copper fundamentals and is seen increasing exploration and investment in those two segments.
Thermal coal (1st year forward cif ARA) US$59.4/t vs US$57.2/t yesterday

Other:
Tungsten - APT European prices stood at $200-220/mtu vs $205-222/mtu last week – tungsten prices slide

Company News

Aureus Mining (LON:AUE) 3.875 pence, Mkt Cap £21.0m – First Tranche of new funding
• Aureus Mining announces that it has closed the first, US$15m, tranche of its recently announced funding with MNG Gold.
• The US$15m comprises the issue of some 59.5m shares at a price of 3.21 pence (equivalent to approximately US$2.7m) and a promissory note for US$12.3m.
• The second tranche for a further US$15m “is to be completed upon clearance by the Toronto Stock Exchange (“TSX”) of the required personal information forms and receipt of the required AIM approvals. On completion of Tranche 2 the Promissory Note is automatically convertible into shares.”
• When the two tranches of funding are completed, MNG Gold will become a 55% owner of Aureus Mining.
Conclusion: The injection of funds by MNG Gold should provide Aureus with the financial stability to complete the ramp up of production at the New Liberty mine following a series of problems during the commissioning and ramp-up phases. It should also reassure the lenders who have seen initial debt repayments deferred from January to April to May and  most recently to 30th June.

BHP Billiton (LON:BLT) 838 pence, Mkt Cap £48.2bn – Coal business update
• In an update to investors BHP Billiton’s President Operations Minerals, Australia, Mike Henry, “told investors at a Coal briefing that the Company saw significant opportunity to further increase the competitiveness of its coal operations – both in terms of costs and volumes.”
• Mr Henry told the meeting that the company had moved to improve their operations “rather than waiting for higher prices”, BHP Billiton’s Coal division had realised over US$3bn of productivity gains since 2012  and expecting a further US$600m by the end of the 2017 financial year.
• Pointing out that “the developing world needs steel, steel needs coking coal, and we have the strongest resource position in the seaborne market” Mr Henry asserted confidence that “the base demand in emerging economies will remain resilient for decades to come and our higher quality coals position us well in an increasingly carbon constrained world.”

Kibo Mining (LON:KIBO) 5.125 pence, Mkt Cap £18.1m – Mbeya Project Update
• Kibo Mining has released an update on progress with the power, mining and environmental aspects of its Mbeya Coal-to-Power Project in Tanzania.
• The Definitive Power Feasibility Study and the EPC specification have now been completed and pre-bidding is underway in association with the Chinese based EPC contractor SEPCO III.
• The Definitive Mining Feasibility Study is expected to be completed by the end of June with key components already finished, including the Pit Optimisation, the Logistics Study and EPC budget quotes already received from eight bidders for the mine construction.
• Environmental studies are progressing well with specialist field work and the socio-economic consultations complete and the hydrology and water modelling nearing completion.

Petra Diamonds (LON:PDL) 102.75p, Mkt Cap £538.4m – Large white diamond discovered at Cullinan.
• Petra Diamonds has announced the recovery of a 121.26 carat Type II white diamond at its Cullinan mine in South Africa.
• The stone is described as “of exceptional colour and clarity, and is an outstanding example of the large, high quality diamonds for which the mine is known”.
• The newly discovered diamond is to be sold in the last diamond tender of the financial year which is currently underway in Johannesburg.
• The sale, which will also include a number of other high quality diamonds should help to provide a boost to revenues and “deliver an improved product mix at the mine in the last quarter of FY 2016.”
• The sale of this new diamond will follow a number of other high profile sales of exceptional diamonds. In March this year, a 32 carat pink diamond from Petra’s Williamson mine sold for US$15m while a 24 carat blue diamond, “the Cullinan Dream”  described in press reports as “the largest and most expensive fancy intense blue diamond ever sold at auction” also from the Cullinan mine and comprising the largest cut stone produced from a 122 carat rough diamond  was sold in New York earlier this month for US$25.3m.
Conclusion: Petra Diamonds is continuing to discover large high quality diamonds both at Cullinan and Williamson the latest discovery joins a list of rare stones from the Cullinan mine including the “Cullinan Dream” and the “Blue Moon” as well as the famous Cullinan diamond itself discovered in 1905 and now part of the Crown Jewels as the “Great Star of Africa.”

Strategic Minerals (LON:SML) 0.29 pence, Mkt Cap £2.6m – £429,000 equity issue
• Strategic Minerals has raised £429,000 by the issue of 143m new shares at a price of 0.3p/share.
• The funds are to be used to acquire an additional interest and fund drilling in the Redmoor tin/tungsten project in south west England a and to fund drilling at the Hanns Camp nickel project in Western Australia.
• The funds raised are not required to meet normal operating expenditure as “the Company [is] seeking to maintain its operating costs within the cash flow generated by its Cobre magnetite stockpile operations in New Mexico, USA.”

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