Aurum Mining (LON:AUR)* – Aurum raises cash pile
Bushveld Minerals (LON:BMN) – IEA granted for Mokopane Vanadium project
Edenville Energy (LON:EDL) - Updated financial model shows improved NPV
IronRidge Resources* (LON:IRR) – IronRidge to take 60% stake in Tekton
Rambler Metals (LON:RMM) – FY 2016 production results as production from LFZ builds up
Miners rising – Japan QQE adding to news from Rio Tinto and China indicating ongoing growth
• Japan’s new Quantitative and Qualitative Easing program is lifting markets today
• Yesterday news of new Chinese stimulus for a large number of new projects is also seen as lifting demand for metals and related commodities
• Rio Tinto ceo comments on firm demand for commodities following a recent two week trip to China is also supporting markets
Gold and the US$ index flat ahead of the Fed announcement with market expectations for US rates to be left in the 0.25-0.50% range.
• The BoJ reset its monetary policy from base money target to “yield curve control” pledging to keep 10 year bond yields at 0%.
• Nikkei climbed on the news supported gains recorded by financial stocks, while the yen after having fallen on the BoJ announcement has regained all its losses and is trading flat versus pre-event levels.
• Brent prices are up 1.8% this morning following the news that inventories fell by 7.5mmbbl last week on the API data.
• The API report also showed a fall of 2.5mmbbl in gasoline stocks; while chances of major oil producers’ meeting scheduled for 26-28 in Algeria remain minimal.
• Iron ore futures were little changed today after bouncing off a two-month low earlier this week. Prices are up 59% and 56% in CNY and USD terms YTD.
Dow Jones Industrials +0.05% at 18,130
Nikkei 225 +1.91% at 16,808
HK Hang Seng +0.60% at 23,672
Shanghai Composite +0.10% at 3,026
FTSE 350 Mining +1.18% at 11,803 FTSE 350 +61% since 1st January
AIM Basic Resources -0.13% At 2,445 AIM Basic Resources +50% since 1st January
Date Index Period Actual Est Previous
Tuesday Housing Starts Aug %mom -5.8 -1.7 1.4
Building Permits Aug %mom -0.4 1.8 -0.8
Wednesday FOMC Rate % 0.25-0.50 0.25-0.50
Fed Economic Projections
Thursday Weekly Jobless Claims 261k 260k
Existing HomeSales Aug %mom 1.1 -3.2
Friday Manufacturing PMI Sep 52.00 52.00
Japan – BoJ QQE program extends reach of stimulus program
• The BoJ has extended its action within financial markets to lift a broader range of Japanese equities through the buying of Equity ETFs covering the Topix index and also focussing on influencing the shape of the Japan bond yield curve.
• The BoJ left rates benchmark unchanged at -0.1% while pledging to keep 10-year government bond yields at 0% until inflation “exceeds the price stability target of 2% and stays above the target in a stable manner”.
• The central bank said it will buy less longer-term bonds allowing yields on those securities to increase and making it easier for banks to make profits.
• Although, the BoJ did not completely rule out a potential cut to rates taking them further into negative territory.
• On a separate note, trade data showed both exports and imports remained weak through Aug.
• Exports contracted for an 11th consecutive month on the back of stronger currency and a weaker external demand.
• Exports: -9.6%yoy v -14.0%yoy in Jul and -4.7%yoy forecast.
• Exports in the US were down 14.5%yoy, China -8.9%yoy and the EU -0.7%yoy.
• Imports: -17.3%yoy v -24.7%yoy in Jul and -16.6%yoy forecast.
• The Nikkei Index rose 1.9% while other Asian indices also rose
Sweden – cuts VAT to 12% from 25%
• Sweden has cut the VAT rate and extended tax refunds for the reclaim of half the labour cost on the repair of white goods and stoves.
• Given that the UK raised VAT rates to harmonise its tax with the rest of Europe we wonder how it is that Sweden, which is part of the EU is able to disregard EU harmonisation and halve its VAT rates?
• Shoe and clothes repairs are also subject to tax refunds.
• Question is can we take back our old Ikea furniture for repair and reclaim half the labour cost involved? Much as we love Ikea we suspect this might have a material effect on the finances of Sweden!
US$1.1159/eur vs 1.1189/eur yesterday. Yen 101.80/$ vs 101.74/$. SAr 13.771/$ vs 14.907/$. $1.298/gbp vs $1.302/gbp.
0.759/aud vs 0.755/aud. CNY 6.672/$ vs 6.671/$.
Gold US$1,320/oz vs US$1,316/oz yesterday –
Gold ETFs 64.9moz unch vs 65.0moz yesterday
Platinum US$1,040/oz vs US$1,028/oz yesterday
Palladium US$687/oz vs US$688/oz yesterday
Silver US$19.41/oz vs US$19.21/oz yesterday
Copper US$ 4,766/t vs US$4,775/t yesterday –
Aluminium US$ 1,576/t vs US$1,587/t yesterday –
Nickel US$ 10,250/t vs US$10,225/t yesterday –
Zinc US$ 2,283/t vs US$2,281/t yesterday –
Lead US$ 1,969/t vs US$1,966/t yesterday –
Tin US$ 19,430/t vs US$19,355/t yesterday –
Oil US$46.7/bbl vs US$46.7/bbl yesterday
Natural Gas US$2.088/mmbtu vs US$2.960/mmbtu yesterday
Uranium US$24.90/lb vs US$24.90/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$54.2/t vs US$53.2/t – BHP warned authorities in Western Australia that raising local royalties will likely reduce potential supply from Australian operations with competitors stepping in and replacing lower local shipments with iron ore from Brazil and other nations.
• Higher royalty are expected to jeopardise investments in the state and “would most definitely not be good for Australia”, the Company said.
• Comments follow Western Australia’s Nationals party leader Brendon Grylls proposal to increase tax charges on BHP and Rio Tinto iron ore operations to A$5/t, up from A$0.25/t.
• A survey of 1,700 respondents carried last week by a local newspaper showed that 45% of voters supported the proposal.
Steel rebar, China 25mm US$382.8/t vs US$380.9/t –
Thermal coal (1st year forward cif ARA) US$58.5/t vs US$59.2/t yesterday -
Coking coal prices $205.9/t unch again vs $205.9/t FOB Australia for Premium Hard Coking Coal (The Steel Index) – Prices holding new high level
Tungsten - APT European prices vs $180-200/mtu unch again vs $185-200/mtu two weeks ago
Aurum Mining (LON:AUR)* 1.1p, mkt cap £1.8m – Aurum raises cash pile
• Aurum Mining has raised a cash pile of £1.2m.
• The funding was done at one pence per share versus a mid market price of 1.05p/s.
• The new funding war chest is said to be used to provide for on-going working capital for the company.
• David Williams and Chris Eadie (via his wife) are taking up £300,000 and 35,000 worth of stock respectively – hope Mrs Eadie is happy with this or there is going to be trouble at home?
• David Williams, Aurum Chairman, comments it is his “intention to raise sufficient funds to enable the Board to identify a suitable opportunity which will enhance the value of our Company.”.
• Aurum last raised £257,500 at 1p/s in April this year.
Conclusion: We hope the Dynamic Duo at Aurum are able to identify something of interest soon. Lithium project anyone?
*SP Angel analysts have visited the Aurum gold and tungsten sites.
Bushveld Minerals (LON:BMN) 1.4 pence, Mkt Cap £8.5m – IEA granted for Mokopane Vanadium project
• Bushveld Minerals reports that the South African Mineral Resources Department has granted an Integrated Environmental Authorisation (IEA) for the company’s Mokopane vanadium project in the Limpopo Province,
• The granting of this permit is “a crucial step in the approval process for a mining right application”. The company comments that the next step in the process will be the “approval of the mine works programme and the social and labour plan.” The expected timetable for these additional approvals is not disclosed.
• The Mokopane Vanadium project complements the company’s vanadium development strategy with the acquisition of the Vametco operation from Evraz and the recently completed acquisition of the Brits Vanadium project.
Conclusion: The IEA permit marks an important step forward in the development of the company’s vanadium strategy.
Edenville Energy (LON:EDL) 0.48 pence, Mkt Cap £3m - Updated financial model shows improved NPV
• Edenville Energy reports that an updated financial model of its Rukwa Coal-to-Power Project, prepared by an independent power modelling consultant, Diamond Energy, shows an improved pre-tax NPV of US$252m using a 10% discount rate.
• The modelling, which uses the same basic assumptions of a 120MW plant operating at 80% utilisation over a period of 30 years as a model prepared in 2015, shows a 15% improvement in the NPV compared to the US$220m reported last year and a modest improvement in the pre tax IRR to 23.4% compared to 23.1%.
• In addition to the financial modelling work which the company points out was “independently constructed from first principles and provides a basis to engage in detailed discussions with relevant institutions for project financing and development” work is continuing on “an updated mining assessment; bulk sampling of the deposit and detailed coal wash plant requirements.”
• “Additionally, the work currently being completed by independent mining consultants, SMS, on evaluation of the mineable resource, will allow the potential for a larger power plant to be more fully assessed.”
Conclusion: The independent financial analysis should provide a basis for discussions with finance providers and aid the company in optimising the project as more detailed technical analysis and resource assessment may show opportunities to expand the project.
IronRidge Resources* (LON:IRR) 11.9p, Mkt Cap £28.1m – IronRidge to take 60% stake in Tekton
• IronRidge is raising its investment in Tekton, the Chad gold prospector, to 60%.
• IronRidge had previously agreed to invest US$3.5m to take up to 58% in Tekton. This is now rises to 60% through the subscription of a separate pre-investment interest.
• The Tekton team returned to Chad in late August to further work on a number of prospective gold targets.
• Dorothe: hosts two distinct gold mineralising events with a quartz vein swarm zone seen over 3x1km as defined by artisanal workings. High grade gold samples have been found in trenching and channel sampling in this area. Gold assays include 4m at 14.12g/t Au, 2m at 34.1g/t and 1m at 63.2g/t.
• Echbara: United Nations Development Program work shows long intersections of gold supported by later Tekton work on a 2km soil anomaly within micaceous schists.
• Am Ouchar: UNDP work showed tantalising intersections including 20m grading 6.8g/t, 16m at 4.7g/t and 12m at 5.7g/t.
• A series of other targets are also being looked at.
Conclusion: Chad looks highly prospective for gold and the team at Tekton are well experienced in working in Africa and in the delineation of resources. The Tekton management team are led by Alain Pillevuit ex Xstrata and Rio Tinto, Gary Vallerius ex Rio Tinto and Paul Reed, ex French Foreign Legion.
*SP Angel act as Nomad and Broker to IronRidge Resources
Rambler Metals (LON:RMM) 5.1 pence, Mkt Cap £21.2m – FY 2016 production results as production from LFZ builds up
• Rambler Metals reports that in the year ending 31st July 2016 it produced a total of 17,048 tonnes of concentrate containing 4,580 tonnes of copper, 7,549 oz of gold and 53,830 oz of silver.
• The production report shows that the contained copper content of the concentrate was within the company’s previously published guidance 4,500-6,000 tonnes of copper and comfortably exceeded guidance for precious metals contents of 5,500-6,500 oz of gold and 42,000-57,000 oz of silver.
• The company attributes the record level of gold within the concentrate to “adjustments made to the flotation circuit in the first half of the year”. The company’s focus during the second half of the year was directed at increasing mill throughput which has risen from 58,053 tonnes in Q1 to 69,874 tonnes in Q4.
• The company’s immediate plans are for further production increases to 1250tpd (approximately 113,000 tonnes per quarter) by the end of FY 2017 and “Rambler will also continue advancing engineering studies on ore pre-concentration (DMS) and shaft rehabilitation with a view to further increase production to 2,000 mtpd at the Ming Mine. In addition, Rambler has initiated a detailed study at the mill with a goal to increase gold recovery and production in the copper concentrator”.
Conclusion: Rambler Metals is delivering an ambitious plan to increase the scale of operations at the Ming mine by mining the Lower Footwall Zone (LFZ). As the expansion plan proceeds, work to enhance gold recoveries, if successful, should enhance the value of larger volumes of concentrate.
Aurum Mining (LON:AUR)* – Aurum raises cash pile