logo-loader

Today's Market View - Bacanora Minerals, DiamondCorp, Kefi Minerals, Mkango Resources

Published: 13:09 18 Oct 2016 BST

no_picture_pai

Bacanora Minerals (LON:BCN) – Jamie Strauss appointed as non-executive director
DiamondCorp (LON:DCP) – Restart of mining following Section 54 shutdown and strategic review
Kefi Minerals* (LON:KEFI) – Q3 operational update
Mkango Resources* (LON:MKA) – The Phalombe license renewed until Jan/19

China – Credit expansion numbers released this morning show a pick up in the monetary base growth pace (M2 based) through Sep which bodes well with growth-supportive government measures seen so far this year.
• New Yuan Loans (CNY): 1,220bn v 949bn in Aug and 1,000bn forecast.
• Aggregate Financing (CNY): 1,720bn v 1,470bn in Aug and 1,390bn forecast.
• M2 Money Supply (%yoy): 11.5 v 11.4 in Aug and 11.6 forecast.
• A different report showed FDI by Chinese companies continued to grow at fast pace increasing 53.7%yoy in the first nine months of 2016 and coming in at $134.2bn (cumulative).

Stronger metals and Brent prices on the back of an improved risk appetite over better than forecast credit growth Chinese numbers drive equities higher this morning. 
• US$ index extended Monday’s decline from a seven-month high.
• Brent prices climbed 0.9% today reflecting lower US$ index and as markets are looking forward to the meeting of OPEC members later this month when national output quotas to be discussed.
• Iron ore futures prices post the first daily decline in the last six days despite steel prices growing stronger and hitting the highest level since May this year. China is due to release national steel production numbers tomorrow.

China – to build 50,000pa hybrid electric vehicle plant for Rmb2.02bn ($300m)
• China has approved a plan to build 50,000pa green vehicles .
• The plant is to be built by Qiantu Auto who unveiled a the K50 electric roadster in May this year which looks like a cross between a BMW i8 and a Bugatti Veyron.  The new K50 coupe is on sale this year with roadster sales next year.  Top speed 200kph, 0-100 in 4.6 seconds. Range 300km. Batteries unknown.  It has an aluminium frame and a carbon fibre body.  The car marks a new era in China’s entry into the top league of motor manufacturing.
• The Chairman of the Society of Automotive Engineers in China, Mr Fu Yuwu, said the nation may need another 15 years of development before reaching a world-leading level.
• Fu said: "Mild hybrid consumes less fuel than combustion, so our society propose hybrid technologies without plugs be included in the roadmap as energy saving vehicles."  Hybrid car buyers are eligible for incentives worth thousands of yuan which halved the tax on purchases of passenger vehicles with engines that are 1.6ltrs or smaller.

Dow Jones Industrials  -0.29% at 18,086
Nikkei 225    +0.38% at 16,964
HK Hang Seng    +1.55% at 23,394
Shanghai Composite    +1.40%  at 3,084
FTSE 350 Mining   +2.35% at 13,227 FTSE 350 +80% since 1st January
AIM Basic Resources   +0.83% at 2,514 AIM Basic Resources +54% since 1st January

Economic News
US – New York state manufacturing index recorded a third consecutive monthly contraction in Oct as producers are reported to be struggling with a strong US$ and cautious global economic outlook.
• On a more positive note, the report pointed to improved 6m outlook.
Date Index Period   Actual Est Previous
Monday New York Manufacturing Oct   -6.8 1.0 -2.0
  Industrial Production Sep %mom 0.1 0.1 -0.5
  Capacity Utilization Sep % 75.4 75.6 75.3
Tuesday CPI Sep %mom  0.3 0.2
CPI Sep %yoy  1.5 1.1
Core CPI Sep %mom  0.2 0.3
  Core CPI Sep %yoy   2.3 2.3
Wednesday Housing Starts Sep %mom  2.9 -5.8
  Building Permits Sep %mom   1.1 0.7
Thursday Weekly Jobless Claims    
  Existing Home Sales Sep %mom   0.4 -0.9
Friday Markit Manufacturing PMI Oct       51.5
Source: Bloomberg     

Australia – The RBA keeps a close eye on the nation’s unemployment and housing markets saying there is “considerable uncertainty” over momentum, released policy meeting minutes showed.
• While unemployment has been trending lower after hitting a more than a decade high at the end of 2014, the underemployment rate is reported to have increased over the past year pointing to the presence of slack in the labour market.
• Housing market is reported to be showing mixed dynamics with some parts of the country posting strong increases and declines recorded in others.
• A strong growth in new apartments is expected to be completed over the next few years with the RBA to be following the market closely measuring the effect of increased supply on prices.

Currencies
US$1.1018/eur vs 1.0996/eur yesterday.   Yen 104.04/$ vs 104.12/$.   SAr 14.062/$ vs 14.256/$.   $1.225/gbp vs $1.218/gbp.
0.768/aud vs 0.760/aud.   CNY 6.739/$ vs 6.738/$.

Commodity News
Precious metals:
Gold US$1,262/oz vs US$1,254/oz yesterday –
     Gold ETFs 66.0moz vs 66.0moz yesterday –
Platinum US$946/oz vs US$938/oz yesterday
Palladium US$641/oz vs US$648/oz yesterday
Silver US$17.65/oz vs US$17.39/oz yesterday

Base metals:   
Copper US$ 4,700/t vs US$4,687/t yesterday –
Aluminium US$ 1,675/t vs US$1,652/t yesterday –
Nickel US$ 10,375/t vs US$10,450/t yesterday –
Zinc US$ 2,308/t vs US$2,261/t yesterday –
Lead US$ 2,013/t vs US$1,999/t yesterday
Tin US$ 19,610/t vs US$19,550/t yesterday –

Energy:
Oil US$51.8/bbl vs US$51.9/bbl yesterday -
Natural Gas US$3.262/mmbtu vs US$3.238/mmbtu yesterday
Uranium US$21.65/lb vs US$21.90/lb yesterday

Bulk:    
Iron ore 62% Fe spot (cfr Tianjin) US$56.4/t vs US$55.9/t –
Chinese steel rebar 25mm US$406.2/t vs US$402.9/t
Thermal coal (1st year forward cif ARA) US$68.9/t vs US$67.0/t yesterday –
Premium hard coking coal Aus fob US$232.6/t vs US$226.3/t

Other:
Tungsten - APT European prices $191-197/mtu vs $183-197/mtu unch last week

Company News

Bacanora Minerals (LON:BCN) 83p, Mkt Cap £89.5m – Jamie Strauss appointed as non-executive director
• Bacanora Minerals has announced the appointment of Jamie Strauss as a non-executive director to the board.
• Having worked previously with Jamie at Societe Generale in London after it bought ‘Strauss Turnbull’ we can vouch for his good character.
• More recently Jamie worked for Hargreave Hale and BMO Capital Markets.
• Jamie a non-executive director of Altius Minerals and Gold Standard Ventures and was on the board of Extorre Gold Mines till its sale to Yamana in 2012.
• Bacanora is working towards the financing and construction of a 17,500tpa lithium carbonate mine and plant from lithium rich clays in Mexico.  The project should expand to 35,000tpa once the upscaling and expansion of the plant is proven to work from an economic and technical perspective.
• Bacanora are currently running a pilot plant for to prove the lithium extraction process, to produce samples for potential consumers/offtakers and to train staff and management ahead of the upscaling to the Phase 1, 17,500tpa plant.
• A pre-feasibility study reports an initial capital cost of US$240m and a further US$178m for the second phase of construction
• The full scale project is estimated in the PFS to have a capital cost of US$428m with an NPV of US$776m and a post tax IRR of 25% for the full 35,000tpa plant.  The project could payback in five years.  There is further potential to produce up to 50,000tpa of potassium sulphate in the third year for sale to the domestic fertiliser industry.
• A fuller feasibility study is expected in late Q1 of 2017.

DiamondCorp (LON:DCP) 3.3p, Mkt Cap £15.8m – Restart of mining following Section 54 shutdown and strategic review
• DiamondCorp have regained access to the Lace diamond mine following the DMR’s Section 54 shutdown to investigate the cause of a fire in a loader.
• The company has recovered quickly from the shutdown and should restart diamond production imminently. 
• DiamondCorp is acutely short of cash at this very sensitive point in its development and is also suffering from the effects of blasting into old workings causing problems with mining and mine development.
• The result has been to halve ore production from the mine at a particularly critical time in the mine commissioning process.
•  Management are to be commended for getting through the Section 54 shutdown with just four days of mining lost to the fire.
• The ‘strategic review’ and commencement of a potential ‘formal sale process’ appears to involve the City Code on Takeovers and Mergers.

Kefi Minerals* (LON:KEFI) 0.4p, Mkt Cap £16.7m – Q3 operational update
• Kefi Minerals has published an operational update for the third quarter.
• The company reports it has raised £3.8m mainly to support its pending project finance for the development of the Tulu Kapi gold project in Ethopia.
• Management also reckon the company is entitled to US$3.5m worth of VAT refund from the Ethiopian Tax Authorities.
• Mark Wellesley-Wood also joined the Kefi Minerals as a non-executive director in the last quarter to strengthen the board and help give confidence to project lenders.
• “The company also reports that community resettlement, livelihood restoration and community development programmes progressed and remain ongoing.
• Tulu Kapi project contract drafting advanced with Ausdrill for mining and Lycopodium for plant.
• Progressed drafting of shareholders' agreement with the Government of Ethiopia.
• Development Bank of Ethiopia completed its evaluation process and the National Bank of Ethiopia (the central bank) approved the proposed maximum senior debt-gearing.
• Updated the Project timetable with the Government, project contractors and potential finance syndicate and revised the date for start-up of production to mid-2018.
• Received formal Front End Engineering and Design ("FEED") proposal for US$68 million from Lycopodium under its proposed fixed price Engineering Procurement and Design ("EPC") contract. This capital item, which is the largest single component of total Tulu Kapi capital expenditure, has increased 4% since the tender twelve months ago, mainly due to currency movements.
• Reviewed other capital estimates with contractors and financial advisers. After also adding contingencies and provisions for non-Tulu Kapi costs, the estimated funding requirement has been increased to c. US$150-160 million, which is fully covered by the financing proposals being considered and remains significantly less than the original c. US$289 million Tulu Kapi capital expenditure estimates of the previous owner of the Project.”
*SP Angel act as Nomad and broker to Kefi Minerals

Mkango Resources* (LON:MKA) 3.9p, Mkt Cap £2.9m – The Phalombe license renewed until Jan/19
• The government extended the Exclusive Exploration Licence 0284 (EPL 0284) hosting the Company’s flagship Songwe Hill rare earth project by another two years.
• The Phalombe license is now set to run through Jan/19 allowing the Company to continue de-risking the project and advancing it towards the development stage.
*SP Angel acts as Nomad and Broker to Mkango Resources

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

55 minutes ago