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Today's Market View - Acacia Mining, Berkeley Energia, Edenville Energy, FinnAust Mining, Noricum Gold, Oceana Gold, Vast Resources

Published: 10:33 27 Sep 2016 BST

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Acacia Mining (LON:ACA) –Resumption of normal processing operations at Bulyanhulu
Berkeley Energia (LON:BKY) – Appointment of AMEC Foster Wheeler at the Salamanca Uranium Project
Edenville Energy (LON:EDL) - Completion of Rukwa bulk sampling programme
FinnAust Mining* (LON:FAM) – Field season work shows exceptionally high grade samples of ilmenite
Noricum Gold* (LON:NMG) – Interim results highlight progress towards new tonnage target
Oceana Gold (ASX:OGC) Trading Halt – Didipio copper, gold mine suspended by Philippine authorities
Vast Resources (LON:VAST) – Maiden JORC Resource at  Manaila

FTSE100 is little changed today following the worst one-day move in three months recorded on Monday with investors closely watching results of OPEC members and other producers’ meeting in Algiers.
• Emerging market currencies gained against the US$ after markets considered Clinton winning the first of three American presidential debates.
• Oil prices are off 0.8% following a 1.5% in the previous trading session as major producers meet in Algiers over Sep 26-28.
• Nickel prices are up $200/t (+1.9%) this morning on announced results of the nationwide audit.
• Iron ore futures fell to the lowest in four days on the news rebar inventories hit the highest level since Apr 15. Benchmark rebar and coil prices continued to slide for a third consecutive day on Shanghai Futures Exchange.
• Gold and copper are flat.

OPEC – Saudi Arabia seeking to reach agreement with Iran to cut oil production
• Iran is seeking to raise oil production to pre-sanctions levels.
• Saudi Arabia is also looking to issue bonds to help cover its growing deficit.
• Saudi Arabia recently injected $5.3bn into its banks to by way of time deposits with 28-day repurchase agreements

France accuses Russia of War Crimes in Aleppo
• The move marks a dangerous turn in the civil war within Syria.
• Russia’s use of giant fuel-air incendiary bombs, the next most devastating bombs next to nuclear weapons, has inflamed the international community prompting the US Ambassador to accuse Russia of barbarism.

Dow Jones Industrials  -0.91% at 18,095 
Nikkei 225   +0.84% at 16,684 
HK Hang Seng   +1.09% at 23,572  
Shanghai Composite   +1.60% At   2,998 
FTSE 350 Mining   -0.34% at 12,291  FTSE 350 +67% since 1st January
AIM Basic Resources   +0.16% At   2,466  AIM Basic Resources +51% since 1st January

US
Date Index Period   Actual Est Previous
Monday New Home Sales Aug %mom -7.6 -8.3 13.8
Tuesday SPCS 20 City Index (SA) Jul %mom   0.00 -0.1
SPCS 20 City Index (NSA) Jul %yoy  5.1 5.1
Markit Services PMI Sep   51.2 51.00
Markit Composite PMI Sep    51.5
  Consumer Confidence Sep     99.0 101.1
Wednesday Durable Goods Orders (ex Transport) Aug (Prelim) %mom   -0.5 1.3
  Capital Goods Orders Aug (Prelim) %mom   -0.1 1.5
Thursday Weekly Jobless Claims       260k 252k
GDP Q2 (Final) %qoq  1.3 1.1*
Consumer Spending Q2 (Final) %qoq  4.4 4.4
  Core PCE Q2 (Final) %qoq   1.8 1.8
Friday Personal Income Aug %mom   0.2 0.4
Personal Spending Aug %mom  0.1 0.3
PCE Aug %mom  0.2 0.00
PCE Aug %yoy  0.9 0.8
Core PCE Aug %mom  0.2 0.1
  Core PCE Aug %yoy   1.7 1.6
* Previous Q2 GDP estimate; Q1 GDP change was +0.8%qoq   


China – Industrial profits growth accelerated through Aug coming in at 19.5%yoy, up from 11.0%yoy in Jul, on greater activity in auto, steel and refined oil sectors, according to the National Bureau of Statistics.
• Growth YTD climbed to 8.4%yoy.
• Among issues faced by industrials the Bureau highlighted overcapacity in a number of local industries and soft both domestic and global demand.

Philippines – 30 of the audited 41 mines to be suspended after due process government audit results show, the Department of Environment and Natural Resources said.
• Suspended mines accounted for 55.5% of local nickel production in 2015.
• The list of companies mentioned for suspension can be followed at #MiningAuditPH.
• The DENR presentation with 41 names of companies mentioned in the report can be found on their facebook  page - https://www.facebook.com/DENROfficial/.
• This constituted Phase 1 of the audit with Phase 2 to be based on 65 operating non-metallic mines and 10 mines under care and maintenance and to be completed this month.

Colombia - peace deal signed

Currencies
US$1.1245/eur vs 1.1239/eur yesterday.    Yen 100.52/$ vs 100.60/$.   SAr 13.578/$ vs 13.703/$.    $1.296/gbp vs $1.293/gbp.
0.767/aud vs 0.761/aud.   CNY 6.669/$ vs 6.669/$.  

Commodity News
Precious metals:
Gold US$1,336/oz vs US$1,334/oz yesterday –
     Gold ETFs 65.3moz unch vs 65.3moz yesterday
Platinum US$1,042/oz vs US$1,038/oz yesterday
Palladium US$697/oz vs US$691/oz yesterday
Silver US$19.44/oz vs US$19.42/oz yesterday

Base metals:   
Copper US$ 4,815/t vs US$4,821/t yesterday –
Aluminium US$ 1,668/t vs US$1,626/t yesterday –
Nickel US$ 10,685/t vs US$10,460/t yesterday –
Zinc US$ 2,213/t vs US$2,252/t yesterday –
Lead US$ 1,956/t vs US$1,910/t yesterday –
Tin US$ 19,815/t vs US$19,625/t yesterday –

Energy:           
Oil US$46.5/bbl vs US$45.8/bbl yesterday
Natural Gas US$3.001/mmbtu vs US$2.982/mmbtu yesterday
Uranium US$23.25/lb vs US$24.40/lb yesterday

Bulk:    
Iron ore 62% Fe spot (cfr Tianjin) US$55.6/t vs US$55.9/t –
Steel rebar, China 25mm US$389.6/t vs US$388.2/t –

Thermal coal (1st year forward cif ARA) US$61.3/t vs US$60.3/t yesterday -
Coking coal prices $206.4/t unch vs $206.4/t FOB Australia for Premium Hard Coking Coal (The Steel Index) – Prices holding new high level

Other:
Tungsten - APT European prices vs $180-200/mtu unch ‘again’ vs $185-200/mtu two weeks ago

Company News

Acacia Mining (LON:ACA) 503 pence, Mkt Cap £2061m –Resumption of normal processing operations at Bulyanhulu
• Acacia Mining reports that it has now operating the processing plant at its Bulyanhulu mine at normal throughput rates following the previously announced closure following overheating of the ball mill bearings.
• The resumption of processing leaves management’s production guidance for both the mine and for the group intact “with unchanged full year production guidance of at least 780,000 ounces of gold.”
• The mine has also been able to resume underground stoping now that the process plant is able to provide paste fill material
• Investigation has shown that the overheating was caused by flexing of the footplate mounting ”which led to increased friction on the bearing. The issue has been resolved by stabilising and reinforcing the base of the footplate.”
•  The company plans to implement further reinforcements to the mill bearings during scheduled maintenance of the plant in Q$ 2016 and to install “a full bearing housing replacement” during 2017 which should “provide a life of mine solution.”
• At an established mining operation, there is potential for deterioration of equipment as it ages, and it would appear that Bulyanhulu, which has produced in excess of 3m oz of gold since it started commercial operations in 2001, has fallen victim to this risk. We imagine that local management will have used the temporary suspension of operations to conduct particularly rigorous inspections of all the key equipment.
Conclusion: The news that full production is resuming at Bulyanhulu without impairing the company’s production target guidance is encouraging as is the news that the company has identified a solution which should prevent a recurrence of the problem for the remaining life of the operation.

Berkeley Energia (LON:BKY) 48.5 pence, Mkt Cap £97.3m – Appointment of AMEC Foster Wheeler at the Salamanca Uranium Project
• Berkeley Energia has announced that it has appointed the international engineering group, Amec Foster Wheeler “to undertake the Front End Engineering and Design (FEED) for the Salamanca mine.”
• Amec Foster Wheeler will be responsible for translating the overall engineering and process design within the Definitive Feasibility Study into “equipment procurement packages and awards to specialist subcontractors.”
Conclusion: The appointment of one of the world’s leading engineering firms, with “extensive experience in delivering uranium mining and processing solutions” is an important step forward in delivering what the company’s managing director, Paul Atherley, identifies as “the only uranium mine in the world currently in construction.”

Edenville Energy (EDL) 0.46 pence, Mkt Cap £2.9m -  Completion of Rukwa bulk sampling programme
• Edenville Energy has announced that it has completed a 20 tonnes bulk sampling programme from 3 coal seams at three sites at Mkomolo and Namwele within its Rukwa project area in Tanzania.
• The samples are “currently being shipped to SGS Laboratories in Johannesburg, South Africa”, where testing will be supervised by the same specialist coal consultant who authored the JORC compliant resource estimate for Rukwa in 2013 “which delineated a resource of 171 million tonnes of coal in the Measured and Indicated categories.”
• The consultant also supervised the extraction of the samples on site from “three box cuts, each approximately 25 metres in length along the strike of the two coal outcrops at Mkomolo and near previous workings at Namwele.”
• The sampling results will provide valuable data on the coal quality and its characteristics which should assist in wash plant design  and verify results of the earlier test-pitting programmes in 2014.
• The company notes that the coal seams are close to the surface and little initial waste stripping is required keeping overall stripping ratios low in “in certain areas”. The company also comments that “much of the overburden material” is free digging and does not require drilling and blasting which “will allow mining costs to be reduced.”
• The coal deposit at Rukwa is intended to provide the feedstock for an integrated coal-to-power project and “already has a mining licence and environmental certificate in place and we are working on options to assess the financial viability of a phase 1 operation to place the project into commercial production.”
• Earlier this month, the company published detail of an independent financial analysis which indicated that a 120MW plant operating at 80% utilisation over the next 30 years generated an NPV of US$252m using a 10% discount rate.
Conclusion: The bulk sampling programme and the resulting test results should assist in firming up the design parameters for the Rukwa coal-to-power project

FinnAust Mining* (FAM LN) 6.5p, mkt Cap £32m – Field season work shows exceptionally high grade samples of ilmenite
• Efficiencies implemented by contractor whilst on site in Greenland have enabled FinnAust Mining to complete its work program for the 2016 field season in good time.
• The Danish Geological Survey led by SRK mineral consultants under the direction of FinnAust should have done sufficient work to work up a maiden JORC resource on the titanium mineral sands within the Pituffik project in Greenland.
• The team completed 500 auger and vibracore drill holes along with extensive trenching and sampling. 
• Vibracore sampling is used for sampling in shallow marine environments and is a relatively quick and accurate method of gaining core samples.
• Results from 260 on-shore auger drill holes and trenches show:
• Moriusaq Bay:  areas of >85% ilmenite in a low-medium sized tonnage target.  Average ilmenite grades are >35%.
• Interlak:  grades of >70% estimated in some areas of this reported huge deltaic deposit.  A new area to the east shows >90% ilmenite.  The team expanded the work program here due to the high grade discovery with a further 26 trenches >1m deep to test as much of the areas as time allowed.  We expect further news on this material to come.
• A 500kg bulk metallurgical sample has been taken for testing in Perth.  This should help in the design and optimisation of an appropriate process for ilmenite concentration. 
• Drowned beaches:  240 vibracore samples drilled from the MV Kisaq vessel and from smaller pontoons in the shallow water.  Holes were drilled at 100m-1km spacings to 5m, 10m, 15m, 20m and 25m depth to test some 7.5km of coastline.
• Scout holes were also drilled into a depression which shows >25m thick sediment.
• Environmental Base Line study started in the Moriusaq region including areas outside the license area.
• Cash:  FinnAust had £425,046 of cash in the bank at end June and has since raised a further £500,000.
Conclusion:  The work done this field season should enable the completion of a JORC resource and this with results from the environmental impact assessment should enable the start of permitting for an exploitation license.
* SP Angel acts as nomad and broker to the company

Noricum Gold* (NMG LN) 0.125p, Mkt Cap £6m – Interim results highlight progress towards new tonnage target
• Noricum Gold report an operating loss of £0.5m for the first half of the year vs a loss of £0.27m a year earlier.
• Currency translation differences added a substantial £1.15m to the P&L creating a gain in total comprehensive income of £0.65m
• Earnings per share are reported at a loss of 0.012 pence per share attributable to the equity owners of the parent company of £0.45m.
• As previously announced the company reached agreement with the owners of the nearby JSC RMG Gold and Copper for the mining and processing of future production.
• The team also have a non-binding agreement with Caucasian Mining Group ‘CMG’ to jointly evaluate and develop the ‘David Garedji’ copper/gold prospect.  The project has a Soviet standard resource of 460,000oz gold grading 4.6 g/t, 740,000 oz silver at 7.3 g/t, 50,000 t at 1.6% copper along with some lead and zinc.  The resource might look different if converted to the more exacting parameters of the JORC code.
• Kvemo Bolnisi East: The team recorded a significant drill result through the period from the Kvemo Bolnisi East project which included a 33m intersection grading 1.04% copper  from surface and a 23.2m intersection grading 2.8% copper from 89.8m depth.
• The nearby Madnueli Deposit run by Noricum’s joint venture partner has produced over 85mt of copper ore at an average grade of 1.0% copper and 1g/t of gold.  The Madnueli mine has a current mine life of around 15 years. 
• Funding:  Noricum had current assets of £1.4m at end June and raised a further £1.1m via an equity placing in July.  The decision to defer mining of the Kvemo Bolnisi deposit means that the company may require further exploration funding before mining starts.  The toll treatment agreement with Noricum’s joint venture partners means that the company should realise funds relatively quickly after the supply of gold bearing ore to the Madnueli plant.
• Noricum’s focus is currently on Kvemo Bolnisi East to which the 50-70mt of copper/gold ore is targeted.
• JSC RMG Copper and JSC RMG Gold are companies owned by Noricum’s 50% JV partner. 
• The RMG companies are focused on production at the Madneuli and Sakdrisi mines.  CMG is the exploration arm.
Conclusion:  Noricum are making progress towards their target to define 50-70mt grading 0.30-1.00% copper and 0.101g/t gold within copper sulphide mineralisation and 0.5-5g/t for oxide gold at the Kvemo Bolnisi.
*SP Angel acts as Nomad and Broker to Noricum. 

Oceana Gold (OGC AU) Trading Halt – Didipio copper, gold mine suspended by Philippine authorities
• Oceana Gold shares are suspended on the ASX due to potential suspension of mining at the Didipio mine in the Philippines.
• CEO says there have been no environmental violations.
• The Minister of mines is reported to have closed around 20 mines on environmental grounds.
• In mining its always possible to find an environmental issue if you look hard enough.

Vast Resources (VAST LN) 0.31 pence, mkt Cap £9.9m – Maiden JORC Resource at  Manaila
• Vast Resources has reported a JORC compliant resource estimate for its Manaila poymetallic mine in Romania. The company notes that the current estimate does not “include gold and silver mineralisation which may provide additional upside.”
• Using a cut-off grade of 0.25% copper, the company has produced an estimate of indicated and inferred mineral resources amenable to open pit mining totalling 2.6m tonnes at an average grade of 1% copper, 0.4% lead and 0.9% zinc. Forty-five percent (1.16mt) of the resource is classified as indicated.
• In addition, the company has estimated a resource potentially capable of underground mining totalling 0.31m tonnes at average grades of 1.7% copper, 0.4% lead and 0.5% zinc using a 1% copper grade cut-off. Thirty-two percent of the underground resource is classified as indicated under the JORC Code with the balance inferred.
• The company has also outlined further “Exploration Targets” of 4.45 to 11.88 million tonnes of open-pittable material at grades of between 1.0-2.6% copper, 0.7-2.0% lead and 1.0-2.6% zinc and potentially underground mineable material of 5.92-15.78m tonnes at similar copper grades and higher lead (0.7-2.0%) and zinc (1.0-2.6%) grades.
• The company notes that the maiden JORC resource follows improved operational performance at the Manaila plant “where performance has improved significantly over the past four weeks, underpinned by the success of the metallurgical optimisation work completed during the June Quarter.”
Conclusion: The publication of a JORC compliant resource estimate for Manaila should help operating management as they plan feed to the palnt and further exploration to follow up the targets they have defined.

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