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Today's Market View Including Hummingbird Resources and Trans-Siberian Gold

Last updated: 11:41 17 Apr 2015 BST, First published: 10:41 17 Apr 2015 BST

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US dollar falls as traders square positions in thin liquidity following weaker economic data in the US

US and Japanese policy meetings expected later this month

 

Please vote for SP Angel in the Extel 2015 survey

Metals & Mining analysts:  John Meyer, Carole Ferguson, Simon Beardsmore and Sergey Raevskiy

Sales:   Richard Parlons, Bonnie Hughes. Click on:  www.extelsurveys.com/quickvote

 

Economic News

US – Housing starts climb after weather related weak start to the year, but underperform expectations (+2.0%mom in Mar v -15.3%mom in Feb and +15.9%mom forecast).

Building permits: -5.7%mom in Mar v +4.0%mom in Feb and -1.98%mom forecast.

Jobless claims climbed slightly rasing 4-week average to 282,750. The rolling average remains close to the lowest in decade.

Jobless claims: 294k v 282k in the previous week and 280k forecast.

Philly manufacturing survey showed an improvement in general activity and new orders in Apr (7.5 v 5.0 in Mar and 6.0 forecast). While both positive, readings remained low compared to last year’s numbers.

Economic news due today: 

o Mar CPI ex food and energy (+0.2%mom v +0.2%mom in Feb), Apr UoM sentiment (94.0 v 93.0 in Mar)

 

UK – Unemployment rate in the three months to Feb fell to 5.6%, down from 6.9% last year and the lowest level since Jul/08.

Earnings ex bonus climbed 1.8%yoy, beating expectations for a 1.7%yoy increase.

 

Greece – The IMF denies Athens to delay repayments of loans yesterday.

“Payment delays have not been granted by the board of the IMF in the last 30 years,” Christine Lagarde said.

“It is clearly not a course of action that would actually fir or be recommendable”.

Greek equities tanked and bond yields on sovereign notes soared on the news highlighting financial challenges the government is dealing with.

The nation is due €200m on May 1 and €770m on May 12.

Meanwhile, negotiations over conditions for the release of the next €7.2bn tranche of bailout funds are ongoing.

Alexis Tsiparis is due to meet Eurozone finance ministers on Apr 24 in Riga to discuss necessary reforms to unlock the funds.

 

Venezuela – Canadian miner, Gold Reserve Inc has been awarded $750m in settlement of arbitration proceedings in relation to the expropriation of its Venezuelan mining assets in 2009.

The ruling gives the company the right to seize assets owned by the government of Venezuela in other jurisdictions.

The Venezuelan government earns 96% of its income from crude oil exports indicating that the company should be able to seize $750m worth of crude oil at a dockside in the western world.

The company is reported to be in legal discussions with France, Luxembourg and the US. 

If Gold Reserve Inc is successful it will open the way to a number of other arbitration claims where the Venezuelan government has seized assets.

 

US$1.0819/eur vs 1.0640/eur yesterday   Yen 118.82/$ vs 119.23/$.   SAr 11.964/$ vs 12.087/$.   $1.500/gbp vs 1.484/gbp 

A$0.776aud/usd vs 0.776aud/usd – Euro strengthens as Greece teeters on the edge of its Grexit

 

Commodity News

Precious metals:

Gold US$1,204/oz vs US$1,206/oz yesterday

Platinum US$1,165/oz vs US$1,167/oz – 

Palladium US$782/oz vs US$769/oz 

Silver US$16.44/oz vs US$16.43/oz 

 

Base metals:

Copper US$6,134/t vs US$6,051/t – Anglo American is in progress of selling parts of its Norte and Sur units in Chile.

Assets shortlisted for disposal include Mantos Blancos, Matoverde and El Soldado copper mines and the Chagres smelter.

Los Bronces and Collahuasi mines in Chile and the development Quellaveco project in Peru have been identified as core assets.

Codelco expects prices to pick up with the market to move towards a deficit from H2/17 onwards.

Aluminium US$1,839/t vs US$1,838/t -  

Nickel US$12,775/t vs US$12,825/t – Workers go on strike at the Ambatovy ickel/cobalt plant operated by Sherritt in Madagascar only a month after a short similar action reported at the operation.

The plan continues to operate with no significant impact on production with the guidance held at 47-52kt nickel for 2015.

Zinc US$2,242/t vs US$2,224/t 

Lead US$2,042/t vs US$2,020/t 

Tin US$14,775/t vs US$15,810/t - Tin association in Indonesia said its members will halt sales of the metal at prices below US$17,000/t in an effort to stop a sharp sell off.

 

Energy:

Oil US$63.2/bbl unch vs US$62.7/bbl – China's crude oil imports up 7.5% in Q1.  Reckon China will be building new storage capacity as fast as it can

Natural Gas US$2.584/mmbtu vs US$2.584/mmbtu 

Uranium US$39.00/lb unch vs US$39.00/lb

 

Bulk commodities:

Iron ore spot price index (62% fines Tianjin) $48.60/t vs $48.60/t – Rio Tinto to continue with low cost iron ore expansion in Pilbara despite falling iron ore prices, CEO Sam Walsh said in London this week.

Brownfield expansion costs are estimated at only US$9/t.

The target is to grow total capacity to 360mtpa.

Fortescue Metals – announces plans to raise iron ore exports by 10mtpa

Fortescue had already increased its export guidance to 165mtpa from 160mtpa.  Todays announcement suggests Fortescue is now targeting 175mtpa vs 124mt exported last year

The company’s new targets are at odds with comments made at the company results meeting where Fortescue criticised Rio Tinto and BHP for flooding the market with iron ore

Rio Tinto and BHP raised iron ore production by 248mtpa over the last for years.  

Andrew Forrest has offered to cap Fortescue iron ore production at 180mtpa if his iron ore rivals also agree to cap their production. 

Thermal Coal (CFR European ARA price) $57.20/t vs $57.20/t.  Coking coal $108.5/t vs $108.5/t

 

Speciality metals and alloys:

Tungsten APT European US$257.5/mtu unch vs US$257.5/mtu last week – 

 

Company News

Hummingbird Resources (LON:HUM) 32 pence, Mkt Cap £30.3m – Start of civil works at Yanfolila

The company has confirmed that its construction team is mobilising to the Yanfolila site and earthworks are expected to start before the end of April using a local contractor in preparation for the start of civil construction.

Hummingbird has appointed a construction manager with specific experience in the development of mines elsewhere in Mali, at Tabakoto and Loulo, which should assist in the local operating environment.

Major long-lead time items of equipment for the plant, including the ball mill, mineral sizer, tower crane and carbon in leach tanks, have been ordered.

The Yanfolila project expects to pour its first gold in H1 2016 with 100,000 oz of production in its first full year of operation and an average of 79,000 oz pa over a 6.5 year mine life.

As previously announced, grade control drilling is underway at the Komana East and Komana West and Gonka deposits and 5,100m of a 10,000 metre programme is now complete. Effective grade control in advance of production should assist in providing the detailed information required on plant feed when the commissioning of the plant is underway as well as in the operational phase of mining.

The company has completed a US$9.5m placing and open offer including “US$4.5m from new and existing shareholders and a binding agreement with BCM International Ltd (“BCM”), a well established mining and civil earthworks contractor, to subscribe for up to US$5m of shares in lieu of payment for services during the construction phase.”

 

Trans-Siberian Gold (LON:TSG) 12.5 pence, Mkt Cap £13.8m – Asacha gold production slips back from record December quarter

The company reports that it produced 9,044 oz of gold from its Asacha gold mine in the March quarter 2015.  This is 1,266 fewer ounces than the record production of 10,310 oz produced during the December 2014 quarter.

The lower gold output reflects a decline in grade to 7.43g/t gold from the 8.74 g/t which was described as “ the highest grade achieved in any quarter in 2012, 2013 and 2014.”

The plant is reported to be operating at an average 13,233 tonnes per month or approximately 6% above the planned 12,500 tonnes rate.

Gold production in 2014 rose to 36,513oz, an increase of 23% on the 2013 total of 29,666 oz.

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