Author stories http://www.proactiveinvestors.co.uk Proactiveinvestors Author stories RSS feed en Tue, 26 Sep 2017 04:47:55 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) Today's Market View - Amur Minerals Corporation, Avocet Mining, Bushveld Minerals Limited, Karelian Diamond Resources Plc, Savannah Resources Plc, Stellar Diamonds PLC http://www.proactiveinvestors.co.uk/columns/sp-angel/28662/today-s-market-view-amur-minerals-corporation-avocet-mining-bushveld-minerals-limited-karelian-diamond-resources-plc-savannah-resources-plc-stellar-diamonds-plc-28662.html Amur Minerals* (LON:AMC) – IKEN/KUB drilling update and management estimates for potential resource expansion

Avocet Mining (LON:AVM) – Creditor discussions continuing

Bushveld Minerals (LON:BMN) BUY, Target price 14p – £8m convertible bonds issue

Karelian Diamonds (LON:KDR) – Indicator Minerals suggest a nearby kimberlite

Savannah Resources (LON:SAV) – Resumption of drilling at Mina do Barroso

Sunstone Metals* (ASX:STM) – Bramaderos project shows significant gold intersections in Ecuador

Stellar Diamonds (LON:STEL) – Confirms environmental payment for Tongo

 

Cobalt - Volkswagen looking for Cobalt contracts - Volkswagen is reported to be looking for serious long term contracts with cobalt producers for the production of lithium ion batteries to shift its focus towards electric vehicles

• The company has asked suppliers to submit proposals for a 10 year contract which would start in 2019

• A Volkswagen spokesman told Reuters that the company is looking to procure all the materials needed to meet its 2030 goals could result in a total order volume worth $50bn

• We suspect Volkswagen will struggle to secure solid contracts with respectable producers for this much cobalt unless it is prepared to pay a significant premium for future metal

• VW is also likely to look to sign contracts for other Rare Earth and Minor Metals to ensure longer-term production of batteries and Electric Vehicles

 

Iron Ore – Rising production rates and stock levels push iron ore back into bear market

• Iron ore slumps back into a bear market after posting biggest weekly loss in 16 months as rising production, stock levels and an easing of record demand in China causes process to slip

• Chinese steel mills have rushed to raise output through the summer ahead of enforced anti-pollution measures which are expected to close many furnaces through the winter.

• Benchmark iron ore prices rose as steel mills bought better quality Australian and Brazalian iron ore over lower grade and quality material.

• Rising premiums for >62.5% ores continue to indicate ongoing pressure on quality feedstock to reduce emissions levels.

• Economic data may also signal some cooling of growth in the Chinese economy.

• Losses probably driven by realisation that if as planned large amounts of steel capacity are taken offline during the winter months, will mean lower demand for iron ore

 

 

Economics

Germany – Angela Merkel re-elected for fourth term as far right AfD party gains 13% of vote

• Angela Merkel has won her fourth term as German Chancellor.

• Mrs Merkel remains three terms behind President Museveni of Uganda who famously wrote a book indicating that African leaders should only serve a single term.

• Merkel’s win is tempered by the rise of the far right AfD party which won 13% of the vote and has vowed to fight Germany’s foreign invasion.

 

Currencies

US$1.1908/eur vs 1.2001/eur yesterday.  Yen 112.26/$ vs 111.98/$.  SAr 13.299/$ vs 13.193/$.  $1.355/gbp vs  $1.358/gbp.  

0.796/aud vs 0.795/aud.  CNY 6.614/$ vs 6.593/$.

 

Currencies

US$1.1899/eur vs1.1908/eur yesterday.   Yen 112.11/$ vs.112.26/$.   SAr 13.281/$ vs3.299/$.   $1.353/gbp vs  $1.355/gbp. 0.796/aud vs0.796/aud.   CNY 6.621/$ vs 6.614/$.

 

Commodity News

Precious metals:

Gold US$1,292/oz vsUS$1,292/oz yesterday - Gold falls as dollar firms

• Gold prices fell this morning to near one-month lows hit last week as the US dollar firmed and concerns over the Korean peninsula eased

• US gold futures for December delivery slipped 0.2 per cent to $1,295.00/oz

• Market risk sentiment fell over the weekend, following a quiet period in North Korean news and the victory of Angela Merkel in the German federal elections.

• This combines with increasing market expectation for another U.S. rate rise by the year-end, supporting the dollar, which has strengthened against the trade partners’ currencies. Growing market sentiment is evident in CME Group’s FedWatch tool, which tracks interest rate odds, who identify a 71.4% probability of a policy raise to 1.25-1.5 in December.

• Sanctions aimed at achieving a peaceful resolution in North Korea have been extended to a U.S. travel ban. It is hoped the enormous economic and human burden of the sanctions will persuade Kim Jong-Un to end its nuclear programme.

• On the back of buoyant gold prices, rising 15 percent this year, Chinese mining executives announced an intensification in exploration and capital allocations in the ‘Belt and Road countries’, which account for 80 percent of global gold consumption. The ‘go global’ strategy initiated in 2005 is expected to bring further investment in overseas gold projects, with a platform to promote the internationalisation of the yuan.

   Gold ETFs 69.0moz vsUS$69.0moz yesterday

Platinum US$933/oz vsUS$933/oz yesterday

Palladium US$924/oz vsUS$924/oz yesterday

Silver US$16.92/oz vsUS$16.92/oz yesterday

           

Base metals:

Copper US$ 6,460/t vsUS$6,460/t yesterday

• The copper futures price rally appeared to wane at the end of last week from the disappointing news of broad increase in treatment and refining charges for Chinese concentrate across the 10-member China Smelter Purchase Team (CSPT).

• A previously recognised balanced market is experiencing fewer mine supply interruptions, with LME stock levels also rising, resulting in a minimum level for treatment fees set at $95 per tonne and refining charges at 9.5 cents per pound on the back of the latest meeting on Thursday.

• Despite the hike in TC/RCs, base metal prices have grown during the Asian morning trading session from a large drawdown in stocks ahead of China’s weeklong National Day holiday, beginning 1st October.

Aluminium US$ 2,143/t vsUS$2,144/t yesterday

Nickel US$ 10,525/t vsUS$10,530/t yesterday -

• Broad caution in Chinese industrial metals, most evident in declining iron and steel output, caused base metal future prices to plunge on Friday.

• Despite LME nickel and zinc price recoveries, 1.3 percent and 2 percent respectively, investors are showing restraints on the outlook for the economy for China. ShFE nickel fell for the second day, dropping an additional 1.9 percent.

• Investors are showing disappointment in fixed-asset investment potential, with encouragement to cash-in profits from the recently rising metal markets.

Amur anticipates sizeable increase in nickel resource at Kun-Maine

• Drilling has identified a minimum 2,200m of new mineralisation, drill results are expected to materially increase the current resource which stands at 770,00t nickel and copper

Zinc US$ 3,088/t vsUS$3,072/t yesterday

Lead US$ 2,494/t vsUS$2,481/t yesterday

Tin US$ 20,570/t vsUS$20,540/t yesterday

           

Energy:

Oil US$56.8/bbl vsUS$56.8/bbl yesterday

Natural Gas US$2.961/mmbtu vsUS$2.960/mmbtu yesterday

Uranium US$19.75/lb vsUS$19.75/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$63.0/t vsUS$63.0/t

• Iron ore demand uncertainties continue to hamper prices, with all indices registering large losses last week; in particular 62% content in Qingdao exhibiting the worst performance since May 2016 by falling 12%.

• The metal has registered a loss for every week in September. Expectations of rising sea-borne supplies from increasing large-scale mines ramping up production, competition from growing scrap feedstock, and peak steel production ahead of winter environmental production cuts, has analysts expecting further price drops before stabilizing around $60 per tonne (ANZ senior economist, Daniel Gradwell).

Chinese steel rebar 25mm US$624.1/t vsUS$624.9/t

Thermal coal (1st year forward cif ARA) US$82.3/t vsUS$81.9/t

Premium hard coking coal Aus fob US$200.6/t vsUS$200.6/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$310-335/mtu

 

 

Other:

Tungsten APT European US$300-315/mtu vs US$310-335/mtu a week earlier.

• Probably just a correction but it is the first decline since 30th June this year

Quarterly hard coking coal US$170.0/t vs

 

 

Company News

Amur Minerals* (LON:AMC) 7.91p, Mkt Cap £50.2m – IKEN/KUB drilling update and management estimates for potential resource expansion

• The exploration team is reported to have drill tested 2,200m of the 3,000km area between IKEN and KUB deposits.

• Nickel and copper mineralisation has been intersected along 1,900m or nearly 90% of the drilled area.

• The average intersection per hole amounted to 23.1m with average grades of 0.87% Ni and 0.24% Cu.

• Along the 1,900m area three zones (ISK-1, ISK-2 and ISK-3) returned nickel/copper bearing intersections with the fourth one comprising a 300m long barren fault block:

• ISK-1 is an expansion eastward of the IKEN deposit with completed drilling having extended limits of the mineralisation 500m along strike and 400m in the down dip direction to the northeast. Drilling in the area returned on average 31.8m at 0.98% Ni and 0.28%.

• The management estimates the area may potentially add 70-150kt in contained nickel to the latest mineral resource (IKEN 21.1mt at 0.69% Ni for 146kt Ni).

• ISK-2 lies right after the 300m long barren block with a continuous mineralised section identified 800m in length and 200-250m down dip.

• Driling returned intersections averaging 24.2m at 0.79% Ni and 0.21% Cu with mineralisation remaining open in both strike and down dip directions.

• In particular, one of the holes drilled 500m northward of the main main ISK-2 zone intersected 11.6m at 1.28% Ni.

• ISK-3 zone is the continuation of the KUB deposit in the IKEN deposit with mineralisation traced for 600m along strike and 200-300m down dip.

• Drilling returned average mineralised thicknesses of 19.1m at 0.79% Ni and 0.20% Cu.

• The management estimates the area may potentially add 60-120kt of contained nickel to the KUB resource (KUB 14.5mt at 0.77% Ni for 112kt Ni).

• This makes the 800m long area between ISK-2 and ISK-3 the only untested block in the 3,000km long IKEN/KUB link which the Company is planning to continue drilling with sufficient supplies on site but the plan being always subject subject to weather conditions.

Conclusion: New mineralisation intersected between IKEN and KUB is expected to expand the Kun Manie resources with management guidance for the mineral inventory to grow past 1,000kt in contained nickel excluding copper/Co/PGMs from current 770kt Ni. An opportunity remains to further increase the mineralised by testing down dip extensions at ISK-1 and ISK-2.    

*SP Angel act as Nomad and Broker to Anglo Asian Mining

 

Avocet Mining (LON:AVM) 23.75p Mkt Cap £5.0m – Creditor discussions continuing

• Avocet has announced that discussions with the major financial and trade creditors of its Inata mine (SMB) in Burkina Faso are continuing “with a view to reach agreement on a consensual restructuring of SMB’s balance sheet.”

• The board is to meet on 28th September to examine the status of the discussions and to assess “SMB’s liquidity position and the available options.”

• The company warns that “it is unclear whether agreement on a restructuring of the balance sheet can be reached before SMB has exhausted all available sources of financing.”

Conclusion: Avocet Mining has been working on a resolution with SMB’s creditors even after an agreed standstill expired in early September. It appears increasingly likely that a speedy resolution will be needed to allow the Inata mine to survive.

 

Bushveld Minerals (LON:BMN) 9.125p, mkt cap £73.5m – £8m convertible bonds issue

Target price 14p

• Bushveld Minerals reports that it has agreed to issue £8m of unsecured convertible bonds to Atlas Capital Markets and its New York based joint venture company, Atlas Special Opportunities Limited.

• The bonds, which have a 2 year maturity and carry a coupon of 7.5%, are to be issued in two tranches at 98% of the £25,000 face value.

• The first tranche of £4.5m was issued on 22nd September with the balance to be issued, at the Company’s discretion, within 40 days.

• The bonds are convertible at the average 5day VWAP of the shares assessed over the 10 working days prior to notice of conversion. In addition to the bonds, the company will issue 6.25m 3-year warrants with the first tranche and a further 4.86m (approximately) options in connection with the second tranche of bonds. The warrants are exercisable at any time and have a strike price of 14.4p.

• Commenting on the issue of the convertible bonds and the new relationship with Atlas Capital and Atlas Special Opportunities, CEO, Fortune Mojapelo, noted that they will “provide the required capital to enable the Company to continue to deliver on its strategy to build the world’s largest, lowest cost and most vertically integrated vanadium platform”.

Conclusion: Bushveld Minerals is expanding its Vametco vanadium operation from 3000tpa to 5000tpa and the additional finance should help to ensure that the expansion is not held back by financial constraints.

*An SP Angel mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

 

Karelian Diamonds (LON:KDR) 0.475 pence, Mkt Cap £2.8m – Indicator minerals suggest a nearby kimberlite

• Karelian Diamonds reports that kimberlite indicator minerals analysis of 22 samples taken in the Kuhmo area of Finland suggest that one of the samples were taken within “a couple of hundred metres of a kimberlite source”.

• The indicator minerals have been seen in the “down-ice” direction for two further samples and the indicator mineral anomaly has been closed off in an “up ice” direction giving the company confidence that it is close to the kimberlite source.

Conclusion: Indicator minerals sampling was used in the original Canadian discoveries in the Lac de Gras area – it is however an early stage exploration method and much additional work will be necessary to establish that any newly located kimberlite is both diamond- bearing and of sufficient size and grade to be potentially economic. We await further news as exploration proceeds.

 

Savannah Resources (LON:SAV) 5.625p, Mkt cap £31.6m – Resumption of drilling at Mina do Barroso

• Following the recent encouraging results, Savannah Resources has announced that it is resuming reverse-circulation drilling at the Mina do Barroso lithium project in Portugal .

• The initial focus of the renewed programme will be on the NOA deposit and on locating “potential extensions to the significant zones of mineralisation identified at Grandao and Reservatorio in recent drilling.”

• Mapping is also underway within the wider licence area to “define other lithium bearing pegmatites.”

• Savannah Resources has a 75% interest in the holder of the Mina do Barroso mining licence, Slipstream Resources Portugal Unipessol Lda.

Conclusion: Earlier this month, Savannah Resources reported a number of wide intersections grading over 1% Li2O from its earlier drilling at Mina do Barroso. At that time the company expressed its intention to resume drilling shortly and this is now underway. We await results with interest and to the initial JORC resource timetabled before the end of 2017.

 

Sunstone Metals* (ASX:STM) A$0.017, Mkt Cap A$15.1m – Bramaderos project shows significant gold intersections in Ecuador

(Sunstone Metals formerly called Avalon Minerals)

• Sunstone Metals reports significant intersections of gold in their first five Trenches in Ecuador covering an area of 100m x 100m.

• A further 15 trenches are planned within the 700m x 400m soil anomaly.

• Permits for drilling are expected by the year end.

• Sunstone is also looking to drill a gold-copper porphyry target at its Mramaderos Main and Limon target once permits are received.

o 22m at 4.8g/t Au (including 7m at 12.7g/t Au)

o 9m at 1.9g/t Au, and 

o 12m at 1.6g/t Au.

• The project lies adjacent to the Pan American Highway

• The company is run by Malcolm Norris who was formerly ceo at SolGold.

• Norris moved to Sunstone Metals, formerly called Avalon Minerals to develop the Viscaria project in the north of Sweden in the town of Kiruna which is renown for producing the world’s best quality iron ore pellets.

• Sunstone’s attention appears to have turned away from the Viscaria project in favour of more grass roots exploration in Ecuador.

• The Bramaderos project lies on a 4,949Ha concession in the Loja province, Ecuador and is subject to an earn-in joint venture agreement with Cornerstone Capital Resources which is listed on the TSX-V.  The concession was awarded to a subsidiary of Cornerstone on 5 January this year and then joint ventured with Sunstone on 10 April

• Historic drilling includes:

o 257m @ 0.6g/t gold and 0.14% copper in hole CURI-03 (inc 76m @ 0.9g/t Au and 0.2% Cu from 53m) at Bramaderos Ridge within the Bramaderos Main prospect.

• Significant results in historical trenching include:

o 42m @ 3.7g/t gold in Trench WZ-TR02 and 22m @ 4.7g/t gold at West Zone Breccia, with a peak gold value of 55g/t gold.

• The Bramaderos project is located near the town of Catacocha in Ecuador which lies close to the boarder with Peru.  It is an 11 hour drive from the capital Quito so there is little chance of former colleagues running into each other.

Conclusion: It is interesting to see the project generator model working with Cornerstone continuing to find and to feed projects in Ecuador to development companies

 

Stellar Diamonds (LON:STEL) 3.175 pence, Mkt Cap £1.7m – Confirms environmental payment for Tongo

• Stellar Diamonds reports that it has paid US$150,240 to the Sierra Leone Environmental Agency for the Togo licence.

• The issue of the Environmental is a key prerequisite for the consideration of the Mining Licence approval by Sierra Leone’s Minister of Mines and Minerals Resources.

• In addition to the licencing matters, the company also announced that it has agreed with Octea Mining to extend the dates for completion of their agreement on tribute mining at the Tongo-Tonguma mine to 31st October.

Conclusion: The payment of the environmental licence fee should help to keep the project to develop Tongo-Tonguma on track. We await further news before the expiry of the 31st October deadline for discussions with Octea.

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Mon, 25 Sep 2017 11:42:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28662/today-s-market-view-amur-minerals-corporation-avocet-mining-bushveld-minerals-limited-karelian-diamond-resources-plc-savannah-resources-plc-stellar-diamonds-plc-28662.html
Today's Market View - Bluerock Diamonds Plc, BlueJay Mining PLC, Metals Exploration Plc, Petra Diamonds http://www.proactiveinvestors.co.uk/columns/sp-angel/28621/today-s-market-view-bluerock-diamonds-plc-bluejay-mining-plc-metals-exploration-plc-petra-diamonds-28621.html Gold prices are trading at the lowest in three weeks as geopolitical woes subside and market focus on the FOMC meeting due later today.

• Estimates are for the Fed to stay put on rates; although, the central bank may shed more light on the timing of the third hike this year and a reduction in a $4.5tn balance sheet.

• Holdings in gold ETFs held steady hovering at the highest level since November last year.

• The US$ index is slightly weaker as the euro headed for a fourth daily advance.

• Base metals range bound with the LME index consolidating following two straight weeks of declines on profit taking and weaker than expected Chinese economic data.

• Brent is little changed trading close to the highest level in five months; Iraq said OPEC members are considering to  deepen output cuts by around…1%.

• Iron ore futures climbed for the first in the last four taking the September drop to 9.3%; steel prices are little changed today after having coming off from this year’s high reached earlier in September (rebar futures are 1.6% this month).

 

Steel - New hybrid steel opens up new design possibilities

• Swedish steelmaker Ovako claims that it's new hybrid steels represents one of the most significant developments in steel metallurgy 'for decades'

• Offers the properties of tool steel, maraging steel and stainless steel combined with the production economy of engineering steel – opening up possibilities to use steel components in demanding applications

 

Dresden Mining Conference – From Mine to Market - Dresden on Thursday 28th September

• The FAME Project, GKZ (Geokompetenzzentrum) and the Minor Metals Trade Association (MMTA). are sponsoring a mining conference in in Dresden to be attended by a range of European industrialists.

• Speeches range from minor metals to smelters and Europe’s approach to mining, metallurgy and downstream integration.

• SP Angel’s John Meyer, will delivering a key note speech on “Minor metals in mining and markets – the future has just begun”

 

Land Rover – Jim Ratcliffe of Ineos looking to restart production of a Land Rover Defender like  vehicle

• Ratcliffe is reported to be looking at three site options including one on the coast in the northeast of the UK.

• Other options including potentially taking over a mothballed plant or spare production capacity in Europe.

• We suspect Land Rover defenders sell better in the UK then in the rest of Europe.

 

Dow Jones Industrials  +0.28% at   22,331

Nikkei 225   +1.96% at   20,299

HK Hang Seng   -0.23% at   28,094

Shanghai Composite    -0.18% at    3,357

FTSE 350 Mining   -0.41% at   16,549

AIM Basic Resources   -1.39% at    2,485

 

Economics

US – Senate Republicans are considering a budget that would involve a $1.5tn in tax cuts over the next decade, the WSJ reports.

• Once approved the budget paves the way for a tax bill that would specify rate cuts and other policy changes.

• That should provide support to businesses lifting economic growth rates.

• Preliminary estimates suggest cuts are not going to be revenue neutral and may be dropped in 10 years time.

 

Currencies

US$1.1993/eur vs 1.1929/eur yesterday.   Yen 111.79/$ vs 111.34/$.   SAr 13.303/$ vs 13.201/$.   $1.354/gbp vs $1.354/gbp.     

0.798/aud vs 0.801/aud.   CNY 6.583/$ vs 6.563/$.

 

Commodity News

Global investment in the metals rises to highest since 2011

• The investment by hedge funds follows mounting inflow of money into industrial metals on the back of rising commodity prices.

 

Precious metals:

Gold US$1,309/oz vs US$1,315/oz yesterday

• Weakness in the U.S. dollar inched the index down 0.1 percent, with a fall against the yen.

• Gold price improved with market focus on the two-day Federal Reserve meeting beginning today. The meeting will determine the plan to reduce the $4.5 trillion portfolio of debt assets accumulated since the 2007-2009 financial collapse.

• The U.S. military maintained pressure on North Korea’s nuclear threat with combined staged bombing drills with South Korea, Russia and China ahead of a U.N. General Assembly meeting today.

• Kinross shares fell nearly 7% after the miner said on Monday it would spend more than $800m expanding its mines in Mauritania and Nevada

• The company expects to boost annual output to 634,000 gold ounces per year and for the project to generate over $2.2bn over its lifetime

   Gold ETFs 68.7moz vs US$68.7moz yesterday

Platinum US$959/oz vs US$968/oz yesterday

Palladium US$928/oz vs US$936/oz yesterday

Silver US$17.17/oz vs US$17.55/oz yesterday

 

Base metals:   

Copper US$ 6,526/t vs US$6,566/t yesterday

• North Korean tensions are felt in the base metals market as banks in South Korea with large exposure to copper are offloading holdings.

• London copper rose despite data showing a cooling Chinese property market. House prices for August rose at the slowest pace since the beginning of the year on the back of government cooling measures.

• Copper catalyst yields high efficiency co2 to fuel conversion

• Scientists have developed a new electrocatalyst that can directly convert carbon dioxide into multicarbon fuels and alcohols using record-low inputs of energy

• The work is the latest in a round of studies coming out of Berkeley Lab tackling the challenge of creating a clean chemical manufacturing system that can put carbon dioxide to good use

Aluminium US$ 2,106/t vs US$2,095/t yesterday

Nickel US$ 10,970/t vs US$11,165/t yesterday

Zinc US$ 3,096/t vs US$3,085/t yesterday

• Upcoming Chinese winter steel output restrictions and environmental closures has limited industry steel production, increasing profits across the sector. This has caused a revival in zinc and nickel prices, on prospects of negotiating higher raw material costs.

• Despite domestic supply of zinc falling in August, market supply is being met by advances in production from large international sources. Peru, largest supplier of zinc ore to China, is ramping up production to capitalise on higher prices, with July exports growing 50% from 2016 figures.

Lead US$ 2,384/t vs US$2,404/t yesterday

Tin US$ 20,675/t vs US$20,635/t yesterday

           

Energy:           

Oil US$55.7/bbl vs US$55.7/bbl yesterday

• U.S. shale output is forecast for its 10th consecutive rise in October 2017. Growing U.S. oil price above the $50 per barrel level has spurred production across seven principal shale plays since the beginning of the year, delivering a total of 6.1 million bpd.

Natural Gas US$3.147/mmbtu vs US$3.067/mmbtu yesterday

Uranium US$20.60/lb vs US$20.60/lb yesterday

Lithium - Albemarle has developed a novel technology to increase of annual lithium production in Chile on a sustainable basis to as much as 125,000tpa of LCE equivalent without requiring additional brine pumping.  Projects currently underway are expected to raise the company's total annual production capacity in Chile to more than 80,000tpa of LCE equivalent by 2020

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$69.6/t vs US$68.7/t

• The RBA is expecting iron ore prices to come down in the medium term on the back of “ongoing expansion of global iron ore supply following an extended period of strong investment”.

• More long term the Bank highlighted there is a chance India will step up its steel demand driven by an increase residential construction and transport infrastructure.

• 62% Fe iron ore delivered to Qingdao was priced at $71.8/t yesterday, down 9.1% this month but up 34.5% over the last three months.

Chinese steel rebar 25mm US$653.3/t vs US$656.4/t

• Uncertainties surrounding the trend in ferrous prices over the winter production period have caused steel and iron ore futures in China to fall.

Thermal coal (1st year forward cif ARA) US$82.2/t vs US$82.5/t

Premium hard coking coal Aus fob US$206.2/t vs US$207.3/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$310-335/mtu

Graphite

• Tightening supply from China for the crucial manufacturing element, graphite, is threatening to limit European steel production. More stringent Chinese environmental legislations threaten the source as production quotas and pollution limitations are leading to a shortage of the metal.

• European steelmakers consume 226 kt graphite electrodes each year, although Chinese exports in 2017 have fallen 29 percent in a bid to maintain domestic steel. The current tightness of electrode supply has driven the spot price of graphite electrodes 10x the price at the beginning of the year.

 

Company News

BlueJay Mining* (LON:JAY) 16.8p, Mkt Cap £129m – High Spec products seen in Metallurgical test work

STRONG BUY

Target Price 24p

• BlueJay Mining report the confirmation of high specification ilmenite products in metallurgical test work from its Pituffik project in Greenland.

• The further optimisation of the wet and dry magnetic circuits has improved the process efficiency liberating a particularly pure ilmenite product cheaply and cleanly.

• The new simple and flexible improved flow sheet should now give a homogenous and consistent grade of ilmenite ore which is suitable for sulphate and as well as for sulphate chloride slag production.

• The low levels of chromium oxide and vanadium oxide are particularly significant while radioactive elements are also below detection limits.

• BlueJay reckon they can produce a typical ilmenite product with the following constituents:

 

• TiO2 • 46.5%

• FeO • 39.2%

• SiO2 • 0.71%

• CaO • 0.15%

• MgO • 0.78%

• U • <10ppm

• Th • <10ppm

 

Conclusion:  Our current valuation is based on a base-case ilmenite price of $180/t.  If the company is able to sell a premium product then the price received may increase by up to $100/t on our estimate price. While a full $100/t premium seems unlikely it is possible that a $30-50/t increase as seen for Australian and Ukrainian ilmenite may be justifiable.

Assuming an ilmenite price of $210/t would raise our valuation to 33p/s and to 35p/s on a $230/t price assumption.  We assuming concentrate sales of 426,000tpa of ilmenite product by year three.

Our recent site visit confirmed potential to raise ilmenite concentrate production to this level at Pituffik using either dry mining or dredging.  The team are expected to ship >500t of screened concentrate material this field season demonstrating the relative simplicity of the mining operation.

Raising future production beyond our assumed 426,000tpa rate makes a significant difference to our valuation.  If we raise sales to 710,000tpa of ilmenite concentrate from year four our valuation rises to 39p/s assuming a base case price of $180/t.  This rises further to 49p/s at $210/t and to 56p/s at $230/t.

We await the results of the ongoing feasibility study for confirmation of the intended route/routes for mining and processing. Today’s announcement shows the conceptual process methodology by IHC Robbins.  See:  http://www.titanium.gl/announcements/metallurgical-process-developments-and-product-specifications-for-its-ilmenite-products-from-its-flagship-pituffik-project-in-greenland/

*SP Angel act as nomad and broker to BlueJay Mining.  An SP Angel mining analyst has visited the Pituffik ilmenite sands project in Greenland and has carried out his own density tests on the heavy mineral sands at Pituffik.

 

BlueRock Diamonds* (LON:BRD) 2.4p, Mkt Cap £3.2m – Interims highlight ongoing improvement in Kareevlei diamond grades and production

• BlueRock Diamonds resolved a number of management and contractor issues in the first half and are finally getting to their warranted throughput and grade levels.

• Bringing all mining in-house and improvement to the mining and process plant is helping to ramp up production as is the move into fresh kimberlite underlying the very hard calcrete material which has so hampered production.

• Run times are now at 16 hours a day vs the very poor 6.4 hours a day seen from March to May this year.

• The mine has yet to see its target diamond grade of 4.5cpht as estimated in the CPR consultant report and there is some evidence that grades could rise to this level potentially by the year end with Level 2 kimberlite material seen at significantly higher grade than the Level 1 material so far mined.

• Diamond sales values continue to do well with the last sale at $323/ct far over the $232/ct assumed in the CPR.  This is despite worsening liquidity in the diamond supply chain and a potential surplus of smaller stones seen in the market.

• Koedenza:  not wishing to be constrained by the one diamond mine, BlueRock are busy evaluating another kimberlite some 40km north of Kimberley with a potential 2,500t bulk sample being mined in the next month.

• We note there are another two kimberlite resources at Kareevlei with the K1 pipe grading 6.3cpht and K3 grading 3.7cpht.

• Interim Sales fell to £150,551cts through H1 from £206,072cts yoy.

• Interim Operating losses widened to £751,109ct vs £301,324ct yoy

• Total losses rose to £803,787 vs £574,588 yoy.

Conclusion:  BlueRock will almost certainly post a profit in the second half marking a dramatic turnaround.  While it is difficult to see this enabling a profit for the full year it is likely that the business should be in a position to post ongoing positive returns if it is able to meet its target throughput and grade rates.

*SP Angel acts as Nomad & Broker to BlueRock Diamonds

 

Metals Explorations (LON:MTL) 3.3p, Mkt Cap £67m – Algae in reprocessed water hampers BIOX processing

• The BIOX plant is reported to have experienced difficulties in ramping up throughput rates after reaching 50% of the design capacity with “currently limited material being processed through the citcuit”.

• The test work showed the presence of algae in the return water negatively affected the performance of the bacteria in the BIOX plant.

• Biomin, BIOX technology developers, have been called out to assist with remediation works and implement engineering solutions identified to fix the algae problem.

• No timing on a potential recovery in processing rates has been provided.

• On a positive note, cutting permit and all necessary blasting permits have been issued allowing the Company to start the access to the overflow waste dump site as well as increasing the supply of refractory ores to feed to the BIOX plant.

• The Company continues talks with lenders regarding a loan to refinance $12m in debt repayments and meet its working capital requirements.

 

Petra Diamonds (LON:PDL) 75p, mkt cap £399m – Petra having a bad week as it suffers labour disruption in South Africa following investigation in Tanzania

• Poor old Petra Diamonds is having a bad week.  First they are hit by the seizure of 71,655cts of diamonds worth around $14m by the Tanzania government and now they are suffering from labour disruption.

• The disruption is reported to be affecting Petra’s Finch and Kimberley Ekapa Mining JV operations in South Africa.

• Management are in discussions with the National Union of Mineworkers to finalise a new wage agreement.

• Things are hotting up in Tanzania with Petra’s latest parcel of diamonds seized by the government on suspicion that the stones had been undervalued before export.

• Petra management have said they will cut investment into Tanzania if the government continues to prevent the export of their diamonds out of the country.

• Petra shut down for four days but might still breach banking covenants if it is unable to resume diamond exports over the next two to three months.

• Petra is carrying net debt of around US$555m and while its banks are reported to have agreed to ease the terms of its covenants on its senior debt facilities it still leaves the company vulnerable to further disruption.

Conclusion: Labour disruption at Petra’s mines in South Africa has the potential to destabilise the company at a time when the Tanzanian government is also preventing diamond sales.  While Petra’s lenders are likely to remain accommodating shareholders are bound to suffer and there may well be further cost to this accommodation.

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Tue, 19 Sep 2017 10:33:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28621/today-s-market-view-bluerock-diamonds-plc-bluejay-mining-plc-metals-exploration-plc-petra-diamonds-28621.html
Today's Market View - Anglo Asian Mining Plc, Ironridge Resources Limited, Orosur Mining Inc, Golden Star Resources http://www.proactiveinvestors.co.uk/columns/sp-angel/28638/today-s-market-view-anglo-asian-mining-plc-ironridge-resources-limited-orosur-mining-inc-golden-star-resources-28638.html Anglo Asian Mining* (AAZ LN) – Earnings fall on weaker production; H2 output guided stronger as annual 64-72koz GE forecast reiterated

Golden Star Resources (GSC CN) – Drilling demonstrates extension to the “B Shoot” at Wassa

IronRidge Resources* (IRR LN) – High-grade gold intersections in trenching at Dorothe in Chad offer multi-million ounce potential

Orosur Mining (OMI LN) – Progress report on Uruguay exploration

 

Little change in Fed rates projections in near term as well as the start of Fed balance sheet unwinding in October point to policy makers’ determination to continue monetary tightening.

• US bond yields on 2y and 10y debts climbed 6bp and 5bp on the news, respectively.

• US equities dipped following the Fed press release but recovered all its losses later through the day to close flat on the day.

• The US$ bounced strongly climbing 1.2% on the news dragging metal prices lower.

• Gold continued to slide this morning falling past the $1,300/oz mark yesterday extending losses to c.$20/oz post the Fed announcement.

• Iron ore futures on the DCE slipped into a bear market after posting a 22% drop from August highs.

 

Rebuilding of buildings in Mexico City, Florida and hurricane hit islands to raise demand for metals

• The very tragic events seen in Mexico City and around the Gulf of Mexico over the past few weeks is likely to inspire new building and new building regulations.

• Mexico City withstood its most recent earthquake better than in the past though the death toll is still tragically high.

• Reconstruction, repair work and seismic retrofitting of earthquake-proof steel frames will require millions of tonnes of high-strength rebar containing higher vanadium content.

• China is now more stringently applying higher standards in construction since its last major earthquake and since the government cracked down on lax application of its new standards.

• Residents in islands hit by recent hurricanes will also want to construct more solid houses and apartments after the immediate clear-up is done.

• We suspect steel frame buildings will become more popular as they can be made to better withstand storms, earthquakes and floods.  The re-cabling, re-wiring, re-plumbing and re-building of affected areas will consume more copper, aluminium and other metals when reconstruction starts.  We expect manufacturers to start to restock in anticipation of massive reconstruction programs sometime soon.

 

Iron ore – premiums seen rising for high-quality magnetite as Chinese blast furnaces shun lower quality feedstock

• Headline prices for standard iron ore are falling due to a shift by blast furnaces to focus on higher-grade and cleaner feedstock

• Chinese steel producers are producing record tonnages of steel driven by better utilisation of blast furnace capacity through use of higher-grade magnetite

• Premiums for super-high grade Direct Reduction pellets with low phosphorous content are said to have risen dramatically.

• Pellet prices grading 65% are quoted at $127/t CFR Qingdao China vs $70/t for 62% iron ore concentrate. Higher-grade iron ore 66% concentrate is currently selling for $93/t

 

Rusatom, the Russian state nuclear company and world’s fourth largest uranium miner plans to start lithium mining

• The company plans to fully integrate the process from mining to the production of lithium and final battery production.

• Rusatom already makes lithium compounds and is looking to mine lithium projects in South America

• The move makes sense for a company which has long-standing expertise in producing the lithium isotopes used to prime so many hydrogen bombs aimed at the West.

• We suspect their move into South America might prove to be an expensive exercise.

 

Happy Rosh Hashanah

• Rosh Hashanah customs include sounding the shofar (a hollowed-out ram's horn), as prescribed in the Torah, following the prescription of the Hebrew Bible to "raise a noise" on Yom Teruah; and among its rabbinical customs is attending synagogue services and reciting special liturgy about teshuva, as also enjoying festive meals. Eating symbolic foods such as apples dipped in honey is now a tradition, hoping thereby to evoke a "sweet new year". (Wikipedia)

 

Dow Jones Industrials  +0.19% at   22,413

Nikkei 225   +0.18% at   20,347

HK Hang Seng   -0.04% at   28,115

Shanghai Composite    -0.24% at    3,358

FTSE 350 Mining   -1.55% at   16,452

AIM Basic Resources   +0.36% at    2,490

 

Economics

US – The FOMC voted to leave rates unchanged while announcing the start to the reduction of the balance sheet in October, broadly in line with market estimates.

• One more rate hike before year end remains on the cards with two meetings currently remaining.

• The committee noted near-term disruptions from the recent hurricane season, although policy makers did not believe there would be an impact on the overall national trend.

• In fact, the Fed revised its economic growth forecasts and employment projections slightly higher while bringing down its inflation estimates.

• Real GDP is expected to grow 2.4% in 2017, up from a previous estimate of 2.2% while 2018 was left unchanged at 2.1%; 2019 estimates were raised to 2.0%, up from 1.9% posted in June forecasts.

• Inflation forecasts were smoother only slightly leaving 2017 and 2019 estimates unchanged at 1.6% and 2.0%, respectively; whereas, 2018 estimates were brought down 0.1pp to 1.9%.

• Regarding future rates outlook, policy makers left 2017/18 projections unchanged at 1.4%/2.1% (median) while 2019 estimates were brought down 0.2pp to 2.7%; it is also worth noting that the longer term neutral policy rate was revised down to 2.8% from 3.0% suggesting the need for a more accommodative stance than previously forecast.

 

China – The PBoC and the China Banking Regulatory Commission are reported to be cracking down on consumer loans provided by local lenders for property purchases.

• Regulators issued a directive to suspend such lending activities as they are in breach of existing rules.

 

Japan – In contrast to US counterparts, the BoJ remained determined to continue with its monetary easing programme intending to keep the 10-year bond yield at around 0%.

• The bank reiterated it will continue to buy $711bn of debt on annual basis.

• The policy setting committee voted 8-1 to secure the status quo.

• The yen dropped to the lowest in two months against the US$ amid the hawkish announcement from the Fed earlier on Wednesday.

 

Russia – Another major lender asked for a emergency liquidity from the central bank following the rescue of Otkritie, formerly the largest privately owned bank by assets, last month.

• The central bank is reported to be taking major stake in B&N Bank and merging it with another troubled lender Rost Bank making it the eighth biggest in the country once the merger is complete.

 

Currencies

US$1.1909/eur vs 1.2008/eur yesterday.   Yen 112.53/$ vs 111.36/$.   SAr 13.357/$ vs 13.314/$.   $1.350/gbp vs $1.356/gbp.     

0.797/aud vs 0.804/aud.   CNY 6.594/$ vs 6.575/$.

 

Commodity News

Precious metals:

Gold US$1,296/oz vs US$1,314/oz yesterday

• Yesterday’s Federal Open Market Committee announcement to reduce its balance sheet was met with the strongest growth of the U.S. dollar index in six weeks.

• The growing probability of rate hikes in December and 2018 bolstered the strength of the dollar and depressed gold prices to its lowest in three weeks.

• U.S.  allies also reiterated the enforcement of international sanctions on North Korea as crucial to encourage Pyongyang to disband its nuclear development program while curtailing geopolitical risk.

   Gold ETFs 68.8moz vs US$68.8moz yesterday

Platinum US$941/oz vs US$954/oz yesterday

Palladium US$912/oz vs US$910/oz yesterday

Silver US$16.99/oz vs US$17.34/oz yesterday

           

Base metals:   

Copper US$ 6,463/t vs US$6,538/t yesterday

• International Copper Study Group (ICSG) revealed a 75kt market deficit in the first half of 2017.

• The ICSG identified a 2% YoY fall in global mine output, 1.7% decrease in concentrate production and solvent extraction-electrowinning diminishing by 3.5%.

• Chile mine output fell 9% on the back of strikes at the Escondida mine and reduced output from Codelco mines.

• Copper nanoparticles could help recycle co2 into fuel

• New catalyst converts carbon dioxide into 2 and 3 carbon compounds requiring a lower voltage

• Helps to move the bar in investigating the applications of copper-based catalysts for electrochemical transformation of CO2 to useful products

Aluminium US$ 2,171/t vs US$2,170/t yesterday

• Shanghai aluminium prices rise to a six year high after announced production cuts almost two months before China’s official winter restrictions.

• In efforts to avoid another smog-blackened winter the Ministry of Environmental Protection recently cemented plans to cut average concentrations of airborne particles (PM2.5) down 15% YoY.

• The 4 month seasonal suspension period (15th November – 15th March) eases coal-burning operations across 28 cities in the smog-prone provinces of Hebei, Shanxi, Shandong, and Henan.

• The premature closure of three smelters in Henan’s province allows the transfer of capacity out of the province in effort to control local pollution levels. The Commission of Industry and Information Technology of Henan Province announced 70,000 tpy aluminium capacity would be available for transfer throughout the country.

Nickel US$ 11,060/t vs US$11,325/t yesterday - Muted demand drags down nickel futures

• Nickel prices continue to ease in futures markets as traders cut positions, driven by subdued demand from consuming industries in the spot markets

• Analysts said the fall in nickel prices in futures trade is mostly attributed to tepid demand from alloy-makers at the domestic spot markets

Zinc US$ 3,099/t vs US$3,123/t yesterday

Lead US$ 2,464/t vs US$2,444/t yesterday

• Despite healthy lead demand, there is growing concern over tightening Chinese raw material supply.

• Shanghai stocks have fallen to their lowest since March 2016, dropping 80% since the peak in May to 16,568 tonnes.

• Global physical supply is in a squeeze, with imports of mine concentrate sinking 28% across the last year. This drop is further compounded by recent U.N. sanctions, with North Korea being the second-largest concentrate supplier by volume which recently added a further 45% growth over the first seven months of 2017.

• Import limitations are only applying further stress to domestic supply; of which 80% of ‘illegal’ secondary smelter have been closed. Limitations on the environmental performance has hit the entire industry supply chain, with a focus on lead and its association with toxicity.

Tin US$ 20,550/t vs US$20,720/t yesterday

           

Energy:           

Oil US$56.1/bbl vs US$55.4/bbl yesterday

Natural Gas US$3.079/mmbtu vs US$3.120/mmbtu yesterday

Uranium US$20.30/lb vs US$20.30/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$66.7/t vs US$66.8/t

• Following August’s peak near US$80/t, iron ore prices retreat for the fourth consecutive week.

• Faltering demand from a cooling property market, new house prices growing at an annualised pace of 5%, and reducing credit figures point to a decelerating economy

• Key-steel making areas, such as Hebei and Tianjin, have been ordered to cut output by up to 50% ahead of winter environmental controls

Chinese steel rebar 25mm US$647.2/t vs US$651.2/t

Thermal coal (1st year forward cif ARA) US$83.2/t vs US$83.9/t

Premium hard coking coal Aus fob US$205.6/t vs US$206.2/t

Lithium - Segue Resources reveals thick lithium discovery with drilling

• Confirmed lithium discovery through maiden drilling program at Malinda lithium project in Western Australia

• Assay results from the first six holes have confirmed significant lithium and tantalum mineralisation with intersections including 14 metres at 1.25% lithium oxide and 12 metres at 335ppm tantalum pentoxide

 

Other:  

Tungsten APT European US$310-335/mtu vs US$310-335/mtu - W resources gets licence extension for Tarouca Tungsten project

• Received a two-year extension to its Tarouca tungsten project in Portugal – licence now expires in 2019 and during this time expects to complete a 15 hole/1,500m reverse circulation drilling campaign

• Trench sampling at the Tarouca project has already indicated high-grade tungsten, drilling campaign at Tarouca will help to further delineate the resource with a view to increasing overall tungsten resource and production base

 

Company News

Anglo Asian Mining* (LON:AAZ) 30p, Mkt Cap £34.1m – Earnings fall on weaker production; H2 output guided stronger as annual 64-72koz GE forecast reiterated

• Total sales totalled $29.8m net of government PSA share of dore and concentrate sales (H1/16: $39.3m) reflecting weaker gold production during the period partially compensated by stronger copper concentrate sales.

• Gold and silver dore sales accounted for c. 2/3s of total revenues generated by the sale of 15.7koz at an average gold price $1,238/oz (H1/16: 27.8koz at $1,230/oz).

• Lower H1/17 gold production was attributed to a drop in processed gold grades as well as production optimisation initiatives implemented at Gedabek and Gadir mining operations.

• Copper concentrate production benefited from better copper grades in processed ores as well as higher flotation plant throughput, while a recovery in base metals prices helped to raise concentrate sales proceeds.

• Copper concentrate shipments totalled 5.4kt generating $10.3m in revenue net of PSA (H1/16: 2.9kt and $5.1m).

• AISC came in at $564/oz which include PSA share of dore and concentrate production (H1/16: $703/oz) reflecting high by-product revenues that are netted off costs.

• EBITDA ad EBIT totalled $8.6m and $0.6m (H1/16: $16.8m and $6.0m) with earnings margins lower on weaker grades and production rates.

• Operations remained FCF generative yielding $5.8m during the period (H1/16: $8.4m; FY16: $14.6m) as CFO of $10.8m more than covered interest costs of $1.5m (H1/16: $1.8m) and $3.5m (H1/16: $6.7m) in capex.

• Capex covered capitalised waste stripping, water treatment plant costs as well as Ugur development.

• PBT amounted to -$2.7m (H1/16: $0.4m).

• The Company had $1.5m in the bank (FY16: $1.4m) and $29.0m in ned debt (FY16: $34.6m) as repayments to ATB and Gazprombank continued as per schedule; both lenders provided waivers regarding the debt service cover ratio covenant though H1/17 (1.25 v reported 1.0 during the period).

• Ugur development works near completion with maiden dore production declared in September and daily output rates seen doubling in the first 10 days of the month compared to the previous eight months’ average; floatation plant is run separately utilizing a small 300-400tpd standalone mill and processing copper rich stockpiles (Ugur oxides do not contain copper and are treated directly by agitation leaching).

• The management reiterated its FY17 production guidance for 64-72koz GE (FY16: 72.3koz).

Conclusion: Results highlight lower earnings margins on the back of weaker processed grades partly compensated by stronger by-product concentrate revenues. Commissioning of the newly discovered Ugur mine helps to ramp up gold dore output rate and sees the management reiterating its full year guidance at 64-72koz implying a step up from the H1 production of 28.5koz GE (H1/16: 36.7koz).

*SP Angel act as Nomad and Broker to Anglo Asian Mining

 

Golden Star Resources (TSE:GSC) C$0.86, Mkt Cap C$324m – Drilling demonstrates extension to the “B Shoot” at Wassa

• Golden Star Resources reports that assays received from 11 of the 15 holes drilled to investigate the extent of the high grade B-Shoot at its Wassa mine in Ghana have shown that it extends approximately 50 metres to the north of the previously planned mining area and 200m to the south of the current inferred resource area “suggesting the potential to expand production in the short and longer term.”

• The programme comprised a total of 4.164m of drilling on the B Shoot North and 7000m on B Shoot South; further results are expected from the remaining holes during the second half of 2017, however among the results highlighted today are:

o A 14.9m wide intersection in the B Shoot North area at an average grade of 18.9g/t gold from a depth of 294m in hole BS17DD002, which included a higher grade section of 2m at an average grade of 91.8g/t from 300m and

o A 24.1m wide intersection at an average grade of 7.3g/t gold from a depth of 289.9m in hole BS17DD003, also in the B Shoot North area; and

o A 23.8m wide intersection in the B Shoot South area at an average grade of 6.1g/t gold from a depth of 1001m in hole BS17DD385M. This includes a 2m section from 1018m depth at an average grade of 20.1g/t gold and a 21.5m section from 1049.3m which averages 5.3g/t. In addition, this hole reports a second intersection of 21.7m width at an average grade of 5.3g/t gold from a depth of 1049.3m.

• The deeper B Shoot South drilling programme includes “two mother holes with up to four directional daughter holes being deflected from each of these.” Currently the first of the daughter holes of the first mother hole has been completed and a second is underway.

• A geological section on the company’s website illustrates the northward extension to the B Shoot beneath the Wassa Main open pit and the southern extensions apparently remaining open beyond hole BS17DD385 which appears to be currently the most southerly hole drilled.

• There remains additional assay information pending from a further four holes in the B Shoot North programme and results are expected to become available “during the fourth quarter of 2017, along with the results for the second mother hole and the daughter holes in the B Shoot South drilling.”

• Golden Star also comments that it expects to report drilling results from “definition and extension drilling at Prestea Underground during the third and fourth quarters of 2017.”

Conclusion: Golden Star’s drilling is helping to extend the B Shoot area at Wassa where the mine’s most recent overall proven & probable reserve is estimated at 5.4m tonnes at an average grade of 4.6g/t gold. High grade individual intersections in the recent drilling offer encouragement that the extensions now being identified will continue to maintain these high grades in any future resource update. We look forward to the remaining results from the programme as they become available.

 

IronRidge Resources* (LON:IRR) 38p, Mkt Cap £104m – High-grade gold intersections in trenching at Dorothe in Chad offer multi-million ounce potential

Chad (Tekton Gold 100%)

• IronRidge Resources report multiple high-grade gold intersections seen in fresh rock trenches at the Dorothe prospect in Chad held within its Tekton subsidiary.

• The combined grades and intersections are good for trenching and show the Main Vein zone to be open in all directions.

• The high-grade gold is close to surface as seen in IronRidge’s fresh trenches and in artisanal pitting.

• Management have dug 5,204m of trenches at Dorothe mostly using a 30 tonne excavator with the longest trench running at 1.74km in length. (See press release for trench locations)

• The surface extent covered by the Tekton program is around 3,000 x 1,000m covering the artisanal pitting zone.

• Trenching results:

o 8m @ 4.73g/t gold

o 12m @ 2.87g/t gold

o 10m @ 2.98g/t gold

o 10m @ 2.05g/t gold

o 4m @ 4.67g/t gold

o 4m @ 4.61g/t gold

o 2m @ 8.9g/t gold.

• Soil sampling has also identified three new target areas for follow-up sampling.  One at the north strike extension of the Dorothe prospect, a second to the north-west coincident with new artisanal workings and the third along a lithological contact zone.

• Previous sampling shows 14.12g/t of gold over 4m, 16m at 3.1g/t, 6m at 9.5g/t and 1m @ 63.2g/t Au and grades up to 103g/t, 99.6g/t and 94.5g/t in rock chips

• The spatial association between known gold occurrences in the region, granitic Intrusions and major fault corridors may suggest an Intrusion Related Gold System.

• The Ouaddaï Province potentially represents a metallogenic belt with possible analogies to the Tintina Gold Belt and other Intrusion Related Gold Systems hosting multi-million ounce deposits.

• The Dorothe area is characterised by two significant zones of mineralisation; the north-south striking ‘Main Vein Swarm’ defined over a 1km strike with potential extensions to 3km, and the north-east trending ‘Artisanal Pitting Zone’ over a 3x1km area. Previous sampling by Tekton has focussed on the Main Vein Swarm with significant trenching results over sub-vertical quartz veins.

• Further details are available on the company website:  https://www.ironridgeresources.com.au

Conclusion:  We reckon IronRidge’s geologist, Len Kolff, is doing a good job with the Tekton team on the Dorothe prospect. The discovery of very high-grade gold over widths of 2m-10m extending out to 14m in lower grade intervals as seen in the trenches reminds us of some previous major West African gold discoveries.  We look forward to future news of drilling on the prospect to confirm the lateral scale and depth extent of the discovery.

*SP Angel act as Nomad and Broker to IronRidge Resources

 

Orosur Mining (LON:OMI) 17.5 pence, Mkt Cap £20.6m – Progress report on Uruguay exploration

• Orosur Mining has provided information on the progress of its exploration work in Uruguay, including near mine projects close to the San Gregorio operation where the new San Gregorio West underground mine has produced 12,600 oz of gold.

• The company has completed around 15,000m of reverse-circulation and diamond core drilling during FY 2017 with a series of objectives including:

o The addition of short term reserves around the San Gregorio West mine (8,750m);

o The addition of reserves and resources to near mine open pit projects (6,060m); and

o Limited exploration of early stage opportunities within the Isla Cristalina greenstone belt

• Continuing exploration to continue these objectives is planned in 2018 with increased drilling close to the plant and along a 100km long belt of exploration licences.

• Near mine exploration has demonstrated the possibility of further eastward and depth extensions to the San Gregorio underground mineralisation where probable reserves currently amount to approximately 665,000 tonnes at an average grade of 1.62g/t gold.

• The company also identifies the Veta A project as a potential new underground mine beneath a “relatively small high grade open pit located next to the now reclaimed San Gregorio tailings dam which was in operation from September 2006 until March 2008” with historic production of approximately 29,000oz at an average grade of 3.1g/t.

Conclusion: Orosur Mining has demonstrated continuity of mineralisation at depth in the new San Gregorio West underground mine as well as identifying a new potential underground mining opportunity at Veta A. In the wider exploration area, continuing exploration of the 100km long licences within the Isla Cristina greenstone belt is characterised as having the scope for discoveries in excess of 100,000oz of gold. We look forward to further announcements as exploration progresses.

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Thu, 21 Sep 2017 10:54:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28638/today-s-market-view-anglo-asian-mining-plc-ironridge-resources-limited-orosur-mining-inc-golden-star-resources-28638.html
Today's Market View - Acacia Mining, Central Asia Metals Ltd, Golden Star Resources, Zanaga Iron Ore Company http://www.proactiveinvestors.co.uk/columns/sp-angel/28651/today-s-market-view-acacia-mining-central-asia-metals-ltd-golden-star-resources-zanaga-iron-ore-company-28651.html Acacia Mining (LON:ACA) – Metallurgical innovations at Buzwagi protecting jobs

Central Asia Metals (LON:CAML) SUSPENDED – Acquisition of Lynx Resources for $402.5m

Golden Star Resources (TSE:GSC) – Drilling confirms northward extension of West Reef at Prestea

Zanaga Iron Ore (LON:ZIOC) – Interim results give interesting update on small scale pellet potential in the RoC

 

Miners are off this morning amid weaker base metals and bulk commodities prices with the exception of Rio Tinto which is only slightly lower thanks to the provided support from the earlier announced share $2.5bn share buyback.

• Gold is steady following a sell off over the last two days on the back of hawkish Fed comments.

• The US$ is down today set to come back to its pre-Fed announcement levels.

• A decline in base metals’ complex on the back of escalated rhetoric between the US and North Korea as well as a Chinese rating downgrade may the LME index undoing its earlier gains this week and posting a third weekly decline.

• Iron ore futures together with steel prices continued to slide extending losses to seven of the last eight days now on the back of oversupply concerns and lower demand.

• Demand concerns have been further revived on speculations that local governments are checking compliance with capacity cuts at local steel mills.

 

Iron Ore – benchmark prices for 62.5% iron ore continue to fall as Chinese port stocks build and market moves to higher-quality low phos ores

• The market for iron ore is rapidly breaking into two due to China’s drive to ramp up production while creating less pollution at its steel making blast furnaces

• The premium for Direct Reduction pellets is running at over $50/t depending on grade

• Typical magnetite concentrates and blast furnace pellets are around $90/t for Fe 67% with $69.5-70/t running at >$100/t

• Zanaga expects substantial iron ore production expansions to come into the market in the second half to impact benchmark iron ore prices but does not expect a significant contraction of the attractive price premiums being achieved by high quality products.

 

Dresden Mining Conference – From Mine to Market - Dresden on Thursday 28th September

• The FAME Project, GKZ (Geokompetenzzentrum) and the Minor Metals Trade Association (MMTA). are sponsoring a mining conference in in Dresden to be attended by a range of European industrialists.

• Speeches range from minor metals to smelters and Europe’s approach to mining, metallurgy and downstream integration.

• SP Angel’s John Meyer, will delivering a key note speech on “Minor metals in mining and markets – the future has just begun”

Rocket Lab plans weekly rocket launches into space

• Rocket Lab, a New Zealand company is planning weekly rocket launches using a low cost ‘disruptor’ rocket for launching relatively small satellites into space.

• The company’s Elevation rocket reached space on its last and is targeted to cost $5m per launch.

 

Nambia – President Trump confuses followers with new nation of Nambia

• "Nambia's health system is increasingly self-sufficient," said US President Donald Trump at a lunch with African leaders in New York on Wednesday, reeling off a list of their nations' achievements.

• "I have so many friends going to your countries trying to get rich. I congratulate you, they're spending a lot of money," Mr Trump said.

• Either Trump has decided to merge Namibia and Zambia without telling them or it is possible that he may be referring to the nation represented in Eddy Murphy’s film Trading Places.

 

London Supermarket trials biometric payment system

Costco are trialling a new system which identifies the unique vein pattern in your fingertip to pay for goods.

 

Police officer – shoots himself in the foot – a role normally reserved for politicians

 

Dow Jones Industrials  -0.24% at   22,359

Nikkei 225   -0.25% at   20,296

HK Hang Seng   -0.82% at   27,881

Shanghai Composite    -0.16% at    3,353

FTSE 350 Mining   -1.33% at   16,384

AIM Basic Resources   -0.91% at    2,467

 

Economics

US – Trump ordered new sanctions on individuals, companies and banks doing business with North Korea on Thursday.

• The executive order allows the US Treasury Department to suspend operations with companies from the US financial system that do business with North Korea.

• China appears to be the largest trading partner of the pariah state.

 

China – S&P cut Chinese sovereign credit rating one notch from AA- to A+ on the back of strong credit growth which “diminished financial stability”.

• The is the second downgrade among major credit rating agencies following the Moody’s decision to take A1 (equivalent of A+ at S&P).

• Deleveraging is expected to take much longer than previously forecast while “credit growth in the next two to three years will remain at levels that will increase financial risks gradually”.

• The Finance Ministry rebuffed S&P comments saying the agency ignored the nation’s sound economic fundamentals and that authorities are able to maintain financial stability.

• Foreign investors’ ownership of Chinese sovereign debt remains low amounting to only 4% of the outstanding total at the end of August; although the announcement comes ahead of the $2bn tender of US$-denominated bonds to foreign investors due in coming weeks.

 

Eurozone – The region recorded strong growth momentum in September led by robust PMI numbers in France and German.

• Growth accelerated in both services and manufacturing sectors with new orders showing the largest monthly increase since April 2011.

• Employment climbed in both categories as well while price pressures intensified for a second successive month reaching the highest rates since Aril.

• “The survey data point to 0.7% GDP growth for the third quarter (v 0.6%qoq in Q2/17) (as) manufacturing…remains a major driver of the current upturn, export sales playing an important role in pushing order books higher and encouraging further investment in capacity expansion,” Markit wrote.

• “The stronger euro was cited as a concern among manufacturers, but as yet appears to have had only a modest impact on exports.”

• The euro was up 0.30% against the US$ on course to recover most of Wednesday losses when the Fed announced that it will start reducing its balance sheet in October.

• Markit Manufacturing PMI (Preliminary): 58.2 v 57.4 in August and 57.2 forecast.

• Markit Services PMI (Preliminary): 55.6 v 54.7 in August and 54.8 forecast.

 

UK – Theresa May is set to give her Brexit speech in Florence today amid little progress in negotiations with the bill of leaving the EU and the status of EU citizens being fiercely debated points.

 

Currencies

US$1.2001/eur vs 1.1909/eur yesterday.   Yen 111.98/$ vs 112.53/$.   SAr 13.193/$ vs 13.357/$.   $1.358/gbp vs $1.350/gbp.     

0.795/aud vs 0.797/aud.   CNY 6.593/$ vs 6.594/$.

 

Commodity News

Precious metals:

Gold US$1,297/oz vs US$1,296/oz yesterday

• Gold show small rebound follow the latest sanction announcements and an unprecedented personal rebuttal from Kim Jong-Un.

• U.S. President Donal Trump has signed new orders to target firms and financial institutions conducting business with North Korea. Trump measures single out textiles, fishing, information technology and manufacturing industries to ‘cut off sources of revenue that fund North Korea’s efforts to develop the deadliest weapons known to humankind’.

• Trump’s statement at the UN rattled the supreme leader, who interpreted the comments as ‘the most ferocious declaration of war in history’, with North Korea considering the ‘highest level of hard-line countermeasure’.

• The latest in ever increasing rhetoric over recent months was met by market movement to the safe-haven asset.

   Gold ETFs 69.0moz vs US$68.8moz yesterday

Platinum US$944/oz vs US$941/oz yesterday

Palladium US$917/oz vs US$912/oz yesterday

Silver US$17.01/oz vs US$16.99/oz yesterday

           

Base metals:   

• Metal prices tumbled following a combination of mounting geopolitical strains, anticipated U.S. interest rate hikes and Chinese debt uncertainties.

• Despite the recent strong performance on the back of robust Chinese demand and environmental-influenced supply restrictions, metals across London and Shanghai fell between 1-4.5%. In London, lead fell 4% while the worse performing metal in Shanghai was nickel.

• Yesterday, S&P Global Ratings downgraded China’s long-term sovereign credit rating. The cut from AA- to A+ follows warnings by the International Monetary Fund in August of a dangerous debt trajectory, raising considerable ‘economic and financial risks’.

Copper US$ 6,429/t vs US$6,463/t yesterday

Aluminium US$ 2,133/t vs US$2,171/t yesterday

Nickel US$ 10,615/t vs US$11,060/t yesterday

Zinc US$ 3,037/t vs US$3,099/t yesterday - Trevali Mining Corp which recently bought Rosh Pinar, Namibia and Perkoa in Burkina Faso reports the smooth integration of the businesses

• The acquisitions add to the company’s Canadian and Peruvian mines to position Trevali as an zinc intermediate producer with a strong base to build from

• The integration is expected to complete by year end, to increase throughput, lower costs.  Most notably changes to the flotation plants are expected to lead to recovery and concentrate grade increases.

Lead US$ 2,450/t vs US$2,464/t yesterday

Tin US$ 20,515/t vs US$20,550/t yesterday

           

Energy:           

Oil US$56.4/bbl vs US$56.1/bbl yesterday

• Oil prices remain flat ahead of today’s OPEC panel discussion to an extension of last year’s oil supply cut deal. Extending the pact beyond March 2018 aims to limit output by 1.2 million barrels per day to help clear the global oil supply glut and give stability to prices.

Natural Gas US$2.957/mmbtu vs US$3.079/mmbtu yesterday

Uranium US$20.25/lb vs US$20.30/lb yesterday - Enertopia says round two of Clayton Valley lithium processing underway

• Enertopia’s lithium project in Nevada is reported to be showing remarkably high lithium recovery numbers

• The project is targeting recovery rates >80% and minimum purity of 99.5% for battery grade product

• If technique proved economically viable, the project could be fast tracked to production in months rather than the years

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$62.9/t vs US$66.7/t

Chinese steel rebar 25mm US$637.5/t vs US$647.2/t

• Chinese domestic stainless-steel prices have fallen around 7.6% in the since the beginning of September on increased delivery and softening demand. Tsingshan Holding Group, who operate a recently opened 1 million-tpy stainless-steel slab mill in Indonesia, is expected to increase product to China’s domestic market.

• Strengthening of Chinese environmental laws has lead thousands of small factories across the country to jostle for capacity on heavily congested rail networks. In an aim to diminish air pollution, the shelving of diesel trucks will create additional steel demand as expansions to the countries rail networks will be essential.

Thermal coal (1st year forward cif ARA) US$81.4/t vs US$83.2/t - US Coal output continues to slip

• US coal production slipped for the fourth consecutive week but at 16.5 million still higher than same week of 2016

• Coal has benefited from a rebound in exports as well as a slight reduction in natural gas output

Premium hard coking coal Aus fob US$203.0/t vs US$205.6/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$310-335/mtu

Graphite:

• Rapidly tightening supply and rising graphite prices are creating sourcing issues for steelmakers; where electrodes are necessary to melt scrap in electric arc furnaces.

• Prices have rocketed nine-fold on environmental restrictions. This shortage of electrode production is leaving major Asian producers unable to handle orders due to the tight supply, leaving ‘a year-long waiting period for electrodes from manufactures’ according to CRU’s Brooks.

 

Company News

Acacia Mining (LON:ACA) 184 pence, Mkt Cap £756m – Metallurgical innovations at Buzwagi protecting jobs

• Acacia Mining reports that trials of additional reagents in the leaching circuit at its Buzwagi mine in Tanzania have delivered gold recovery rates of around 85% opening the way for the mine to increase its production of saleable gold dore.

• Prior to the Tanzanian Government’s imposition of a moratorium on sales of gold concentrate in March 2017, Buzwagi produced around 65% of its gold in the form of a copper/gold concentrate with only 35% as dore.

• As a result of the changes introduced “the mine has been unable to export and sell its concentrate, and as such has only been selling approximately 35% of its gold production, whilst incurring 100% of the cost of production”.

• The capacity to increase production of dore “will result in Buzwagi being able to sell an additional 8,000-10,000 ounces per month for the remainder of the year” and the mine “will solely produce doré from now until the end of its life in 2020”.

• This is expected to “more than double” Buzwagi’s revenue for the remainder of the year and the company believes “that the changes will move the mine from a monthly cashflow negative position to a monthly cashflow positive position, strengthening Acacia’s balance sheet and helping to protect thousands of direct and indirect jobs that the Company supports.”

Conclusion: The increased leaching capacity, albeit at “limited additional operating costs” offers Buzwagi the opportunity to ameliorate the impact of the concentrate export ban, repair its balance sheet, restore the payment of royalties and other local charges, and help preserve jobs.

 

Central Asia Metals (LON:CAML) SUSP – Acquisition of Lynx Resources for $402.5m

• Central Asia Metals has agreed, conditionally, to purchase Lynx Resources, the operator of the SASA lead/zinc mine in Macedonia for $402.5m.

• The mine, which is reported to have produced 22,515 tonnes of zinc and 28,955 tonnes of lead in concentrates during 2016 “is a low cost operation with strong operating track record and a reserve base supporting production until at least 2032”.

• The transaction which will be classed as a reverse takeover under AIM rules and hence subject to shareholder approval at a meeting scheduled for 11th October, will be financed by a combination of equity, debt and a deferred consideration as follows:

o Equity financing:

 $153.5 million in CAML ordinary shares via an Accelerated Book Build ("ABB") expected to be launched shortly

 $50 million in CAML ordinary shares to Orion via an equity subscription   

o Debt financing:

 $120 million senior debt facility with Traxys (4.75% + LIBOR, 5 year term)

 Roll over of estimated $67 million of existing Lynx net debt (5% + LIBOR, 5 years remaining)

o Deferred Consideration $12m

• The SASA underground mine is located approximately 150km east of Skopje and has been mined for more than 50 years following its discovery during the 1950s. The cash costs (C1) of production for 2017 are estimated at US$0.39/lb of zinc and US$0.29/lb of lead placing the operation “at the lower end of the second quartile of the zinc industry cost curve and in the lowest quartile of the lead industry cost curve”.

• Published resource estimates for the mine show an overall indicated and inferred resource of 23.37mt (13.3mt are indicated) at an average grade of 4.14% lead, 2.81% zinc  and 20.3g/t silver. The recent production history  indicates a mining rate of approximately 800,000tpa.

• The orebody is described as “a shallow dipping, stacked, variable thickness, lead-zinc-silver lens system” currently mined by sub-level caving though “the cut and fill method … should be reassessed to determine whether this is a more suitable method from a dilution, recovery, safety, production rate and economic perspective.”

• Based upon the existing ore reserve, and excluding any inferred resources, the SASA mine is reported to have an NPV(10%) of US$413m.

• Historical accounts indicate that in 2015, SASA generated a profit of US$40.2m so CAML is buying the asset on a multiple of 10x historic earnings.

• CAML also report interim earnings for the six months to 30th June of US$15m (13.2cents/share) based on the sale of 6870 tonnes of copper.

Conclusion: CAML’s purchase of Lynx provides it with an established, long life, lead/zinc/silver mine at a price of 10x historic earnings and close to an assessed NPV10% valuation estimate. Indications that there may be scope to improve mining practices through the implementation of a safer, less dilutive mining method may provide scope for an incoming management to introduce operational improvements and efficiencies.

 

Golden Star Resources (TSE:GSC) C$0.89, Mkt Cap C$335m – Drilling confirms northward extension of West Reef at Prestea

• Golden Star Resources reports that infill and extension drilling has confirmed that the West Reef extends towards the north beyond the currently defined mineral reserve providing potential for additional reserve ounces of gold and the possibility of increased production from the Prestea underground mine.

• The drilling reported today comprises results from 4 holes, of the five drilled, to investigate the extension of the West Reef and a further 7 infill holes which “confirm the previously modelled high grade nature, simple geometry, strong continuity of gold mineralisation and thickness of the West Reef ore body (averaging 1.1 metres.)”

• The company reports that drilling is expected to accelerate during the rest of 2017 and into 2018 with the deployment of a second underground exploration drill rig.

• Highlighted results from the extension drilling include:

o A 0.9m wide intersection, interpreted as 0.5m true width, at an average grade of 67.2g/t gold from a depth of 182.3m in hole WR17-24-274S19; and

o A 1.3m wide intersection, (0.8m true width), at an average grade of 11.6g/t gold from a depth of 192.4m in hole WR17-20-274S20; and

o A 1.9m wide intersection, (1.5m true width), at an average grade of 13.7g/t gold from a depth of 159.3m in hole WR17-22-274S22; and

o A 0.6m wide intersection, (0.5m true width), at an average grade of 132.4/t gold from a depth of 174.1m in hole WR17-25-274S19.

• The relatively narrow intersections seem consistent with the comment that the ”average true in situ thickness of the vein is approximately 1.8 m, ranging from 0.8 to 2.8 m” which was reported in the Technical Report on the Prestea Underground Gold Project authored by  the consultants, SRK, in November 2015. In our opinion, the high grades reported in individual drill hole intersections are likely to be diluted to values closer to the current 14 g/t reserve grade in future reserve/resource estimations  after dilution and minimum mining width criteria have been applied.

• Higher grade results from the infill drilling comprising 7 holes totalling 947m of drilling include:

o 0.5m (0.5m true width) at an average grade of 87.6 g/t gold from a depth of 141.1m in hole WR17-24-274S16; and

o 1.6m (1.5m true width) at an average grade of 64.5 g/t gold from 144.2m in hole WR17-24-274S17; and

o 1.2m (1.1m true width) at an average grade of 23.7 g/t gold from a depth of 152.7m in hole WR17-24-274S18.

• The company has also confirmed that it expects “to blast the first stoping ore at Prestea Underground before the end of the third quarter of 2017 and remains on track to commence commercial production during the fourth quarter of 2017.”

• Our independent collation of published reserve data, though not purporting to be comprehensive, tends to support the company’s assertion that it believes “that Prestea is one of the highest grade gold development projects in West Africa.”

Conclusion: The successful drilling programme at Prestea has improved the understanding of the West Reef and expanded its known extent towards the north. Commercial production from the Prestea underground mine is expected to start during Q4 2017 and the company is maintaining its 2017 production guidance of 255-280,000 oz of gold production at a cash cost of US$780-860/oz.

 

Zanaga Iron Ore (LON:ZIOC) 4.1 pence, Mkt Cap £11.4m – Interim results give interesting update on small scale pellet potential in the RoC

(Zanaga Iron Ore hold 44.99% of the Zanaga Iron Ore project in joint venture with Glencore)

• Zanaga Iron Ore which has a 50:50 joint venture with Glencore in the Republic of Congo provides an interesting update on its iron ore project.

• Sensibly the team are looking at an early stage pellet opportunity which could start the project with a “small-scale, low capex, low opex project utilising road and potentially rail transportation solutions as well as existing port infrastructure.”

• This sounds like a good way to go given volatility in iron ore price.

• The statement goes on to say:

• “On the supply side, we expect substantial production expansions to enter the market in the second half of the year, with only a small number of these acting as replacement projects for mines entering the final phases of their lives.  It is difficult to forecast the net new tonnage expected to enter the seaborne market in the next few months, but guidance from the major iron ore mining companies indicates that these tonnages will continue to provide net overall increases in global seaborne supply. This should result in a reduction in benchmark iron ore prices, but Zanaga does not expect a significant contraction of the attractive price premiums being achieved by high quality products - the product market on which we are focused.”

• “From a demand perspective, we are pleased to see robust consumption of high quality iron ore products, but are concerned by the continuing build up in Chinese iron ore port stocks which may have a negative effect on iron ore pricing through the end of the year if Chinese steel mill consumption slows..”

• Zanaga had a cash balance of US$4.2m as of 31 August.

• Zanaga’s potential contribution to the Zanaga project through the rest of 2017 is US$0.9m plus 49.99% of all discretionary spending approved jointly with Glencore.

• The company reported an interim loss of US$0.6m vs a loss of US$1.6m yoy with general expenses running at a slightly lower rate than last year.

Conclusion: Zanaga offers leveraged investment potential to future iron ore pellet prices. We look forward to further news on progress towards the construction of the potential early stage pellet opportunity.  We see this as offering a potentially good route to de-risking the project for future larger scale expansion

*A SP Angel Analyst has visited the Zanaga Iron Ore project

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Fri, 22 Sep 2017 11:37:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28651/today-s-market-view-acacia-mining-central-asia-metals-ltd-golden-star-resources-zanaga-iron-ore-company-28651.html
Today's Market View - BBluerock Diamonds Plc, Metal Tiger, Phoenix Global Mining Ltd, Stratex International plc http://www.proactiveinvestors.co.uk/columns/sp-angel/28612/today-s-market-view-bbluerock-diamonds-plc-metal-tiger-phoenix-global-mining-ltd-stratex-international-plc-28612.html BlueRock Diamonds* (LON:BRD) – Grades rise as management improves recoveries and mining progresses through calcrete layer

Metal Tiger (LON:MTR) – Metal Tiger postpones IPO of Thai joint venture

Phoenix Global Mining* (LON:PGM) – New Corporate video of Phoenix’s Empire mine project in Idaho

Stratex International (LON:STI) – Angry shareholders requisition meeting to vote against expensive acquisition of Crusader

 

European equities are following US markets higher with S&P 500 hitting new highs on the back of stronger risk appetite among investors.

• Safe haven assets like gold and the Japanese yen are off today.

• The US$ index is marginally stronger this morning.

• Both BoJ and Fed are due to hold their monetary policy meetings this week.

• Copper is slightly stronger today after posting a 2.8% drop last week and as LME inventories posted a slight drop this morning following a nearly 50% increase during the previous week.

• Iron ore futures continued to post new declines with most active contracts on the Dalian Commodity Exchange losing 16% from a recent peak on the back of the latest weak Chinese economic data.

 

Dresden Mining Conference – From Mine to Market - Dresden on Thursday 28th September

• The FAME Project, GKZ (Geokompetenzzentrum) and the Minor Metals Trade Association (MMTA). are sponsoring a mining conference in in Dresden to be attended by a range of European industrialists.

• Speeches range from minor metals to smelters and Europe’s approach to mining, metallurgy and downstream integration.

• SP Angel’s John Meyer, will delivering a key note speech on “Minor metals in mining and markets – the future has just begun”

 

 

Dow Jones Industrials  +0.29% at   22,268

Nikkei 225   +0.52% at   19,910

HK Hang Seng   +1.27% at   28,160

Shanghai Composite    +0.28% at    3,363

FTSE 350 Mining   +0.23% at   16,565

AIM Basic Resources   -0.18% at    2,520

 

Economics

US – Poor retail sales raise concerns over the strength of the US private consumption.

• While August numbers reflected Hurricane Harvey related disruptions, two months of the previous data were also revised downwards.

• Industrial production numbers have also been affected by extreme weather conditions with much of lost utility and energy production expected to be restored in October.

• September numbers are expected to come in weak reflecting Hurricane Irma aftermath in the South East of the country.

Date Event   Survey Actual Prior Revised

Friday Empire Manufacturing Sep 18.0 24.4 25.2 --

  Retail Sales Advance MoM Aug 0.10% -0.20% 0.60% 0.30%

  Retail Sales Ex Auto MoM Aug 0.50% 0.20% 0.50% 0.40%

  Industrial Production MoM Aug 0.10% -0.90% 0.20% 0.40%

  Capacity Utilization Aug 76.70% 76.10% 76.70% 76.90%

  U. of Mich. Sentiment Sep P 95.0 95.3 96.8 --

Source: Bloomberg     

 

 

China – Property prices growth slowed to the weakest pace in more than a year in August, according to Reuters data based on China’s National Bureau of Statistics numbers.

• Prices climbed 8.3%yoy in August marking the ninth consecutive month of deceleration from a peak of 12.6%yoy recorded in November 2016.

 

Japan – Speculations started to emerge Shinzo Abe might dissolve the lower house of Parliament when it convenes on September 28 and call snap elections.

• PM has been seeing his approval ratings recovering lately amid intensified geopolitical tension with neighbouring North Korea.

 

UK – Real household incomes are reported to have declined at the sharpest rate in the past three years in September on the back of stronger inflation and low wage growth, Markit survey showed.

• “the subdued picture looks unlikely to change any time soon…while pessimism about future finances eased somewhat in September, sentiment remained among the gloomiest seen over the past three years,” Markit wrote.

• On a separate note, UK house prices fell in September compared to the previous month dragged down by a weaker London market, according to Rightmove.

• “Usual autumn price bounce had so far failed to materialise” as prices were down 1.2%mom with London recording declines of 2.9% as price  infive out of six most expensive boroughs in the city dropped.

 

Portugal – Sovereign 10y bonds climbed to a 1-year high after S&P returned its debt investment grade rating.

• The spread over the German bunds tightened to 2.14% marking the narrowest discount since January 2016.

• The spread hit 11.5% at the height of the sovereign debt crisis in 2011-12.

• The decision to raise ratings was driven by the “solid progress (Portugal) has made in reducing its budget deficit and the received risk of a marked deterioration in external financing conditions”.

• Portugal debt was rated as junk since 2012 after the government took part in a rescue programme provided by the IMF and EU.

 

North Korea – Fuel prices soar on the back of a reduced natural gas and crude oil imports driven by the US Security Council sanctions, Reuters reports.

 

Precious metals:

Gold US$1,315/oz vs US$1,327/oz last week

• Strong performance of the dollar against the yen, combined with starting balance sheet discussions at the Fed Open Market Committee meeting and the prospect of a December interest rate hike drove gold prices to the lowest level in two weeks.

• Donald Trump’s United Nations world leaders address will bring back the focus on North Korean geopolitical risks on Tuesday.

   Gold ETFs 68.7moz vs US$68.8moz last week

Platinum US$968/oz vs US$980/oz last week

Palladium US$936/oz vs US$928/oz last week

Silver US$17.55/oz vs US$17.76/oz last week

           

Base metals:   

Copper US$ 6,566/t vs US$6,501/t last week

• Copper price climbs after the largest weekly inventory inflow into LME-registered warehouses since May 2017; increasing the 276,025 tonne total by 24%.

• The sale of metal holdings follows the release of disappointing Chinese investment data last Thursday, indicating the world’s second largest economy has slowed to its lowest growth rate in 18 years.

Aluminium US$ 2,095/t vs US$2,086/t last week

• Norwegian aluminium components producer, Sapa, will provide lightweight aluminium from a revived British plant to supply material for the country’s first electric London black cab vehicle factory.

• New environmental laws introduced by Sadiq Khan rules all new cabs in London must be zero-emission capable. Sapa is investing £9.6m to supply 148 weight-saving components to support the mass-produce electric vehicle trend.

Nickel US$ 11,165/t vs US$11,070/t last week

Zinc US$ 3,085/t vs US$3,014/t last week

Lead US$ 2,404/t vs US$2,314/t last week

• Chinese government environmental crackdown is recognised in falling lead and zinc output, with lead production figures falling to the lowest since November last year.

Tin US$ 20,635/t vs US$20,530/t last week

           

Energy:           

Oil US$55.7/bbl vs US$55.2/bbl last week

• U.S. crude oil prices break the $50 per barrel mark as oil refineries across the Gulf of Mexico and the Caribbean begin reporting higher recoveries following the hurricane Harvey and Irma closures.

• Despite U.S. energy firms cutting the number of rigs drilling for new production, signs of a tightening market may be distorted by hurricane production disruption figures, and bullish bets on U.S. futures and options continues to fall.

• As well as the damage to the oil price, hurricane Harvey spilt over 22,000 barrels of oil, refined fuels and chemicals and millions of cubic feet of natural gas and hundreds of tonnes of other toxic substances. These spills rank among the worst environmental mishaps in recent history.

Natural Gas US$3.067/mmbtu vs US$3.058/mmbtu last week

Uranium US$20.60/lb vs US$20.60/lb last week

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$68.7/t vs US$70.0/t

• Iron ore prices slumped as Chinese steelmakers ramp up production ahead of the winter mandatory cuts, with mills producing record tonnages in August.

• Despite the immediate fall in price, the value has surged from July lows following Chinese anti-pollution legislations forcing steelmakers to chase premium imports and avoid high-Fe domestic production.

• China’s revised environmental policy extends the winter shutdowns across October-March, pushing the supply market into a 40 million tonne surplus (HSBC - David Pleming) and driving prices lower.

Chinese steel rebar 25mm US$656.4/t vs US$662.2/t

Thermal coal (1st year forward cif ARA) US$82.5/t vs US$82.9/t

Premium hard coking coal Aus fob US$207.3/t vs US$207.8/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$310-335/mtu

 

Company News

BlueRock Diamonds* (LON:BRD) 2.5p, Mkt Cap £3.4m – Grades rise as management improves recoveries and mining progresses through calcrete layer

• BlueRock Diamonds reports diamond grades rising to 3.01cpht at its Kareevlei Diamond Mine, Kimberley, South Africa

• The latest reported parcel of 544.57cts of diamonds sold at tender, achieved an average of USD323/ct, slightly lower than the US$330/ct achieved in August and also lower than the US$395/ct seen in July, though this included a 5.5ct stone which sold for $7,054/ct.

• Note: the CPR average was $232/ct indicating that the achieved values remain significantly above the CPR values

• BlueRock are currently mining the K2 pipe which offers the potential for grades of around 4.5cpht according the inferred mineral resource statement.

• This is significantly better than the previous August tender production of 2.07 cpht.

• The average grade for total production in H2 is now 2.41 cpht vs 1.59 cpht for the first half of 2017.

• We expect diamond grades to rise at Kareevlei as mining progresses into the softer and fresher kimberlite underlying the calcrete layer.

• Production continues to improve with August’s production reaching 20,929t vs July at 20,200t.

• September throughput should rise towards management’s target of >25,000t/m.

 

Pipe Tonnes Carats Grade (cpht) Classification

K1 1,594,000 101,000 6.3 Inferred

K2 2,461,000 111,000 4.5 Inferred

K3 3,929,000 147,000 3.7 Inferred

Total 7,984,000 359,000  

 

Conclusion:  BlueRock is coming closer to realising its ambition to become a profitable diamond mining company.  We look forward to further positive news in relation to improving grades towards the 4.5cpht predicted in the fresh kimberlite, to potentially better diamond values as further high-value stones are recovered and to news on falling operating costs as throughput levels rise to the target 25,000t per month.  If grades and throughput rise to their target levels then the Kareevlei diamond mine should show significant potential over its current market valuation.

*SP Angel acts as Nomad & Broker to BlueRock Diamonds

 

Metal Tiger (LON:MTR) 1.9p, Mkt Cap £18.8m – Metal Tiger postpones IPO of Thai joint venture

• Metal Tiger has decided to postpone the IPO of its Thai Joint Venture business.

• The decision is said to be for commercial reasons relating to:

o Pre-marketing feedback;

o New Thai Minerals Act and National Mineral Management Policy Committee;

o Community vote; and

o Further clarification on the Master Plan

• See press release for further details.

• Metal Tiger also hold a 30% stake in the MOD copper project in Botswana .

 

Phoenix Global Mining* (LON:PGM) 4p, Mkt Cap £9.2m – New Corporate video of Phoenix’s Empire mine project in Idaho

• Phoenix Global Mining have released a new corporate video showing drilling at its Empire mining project in Idaho.

• The video shows results from core and RC drilling for the old Empire open pit which the company is working towards re-opening

• The video shows drilling from their 28 hole drill programme of 21 reverse-circulation ‘RC’ (1595m) and 7 large diameter diamond drill holes (537m) at the AP oxide pit.

• The old Empire mine is a skarn- deposit of both oxide and sulphide ore types containing copper, tungsten and gold with historic production of around 694,000t from the early 1900s and WWII.

• Recently released drilling shows assay results from the first 14 holes of:

o 21.3m grading 0.86% copper, 1.22% zinc, 13.03g/t silver and 0.14g/t gold from a depth of 41.2m in hole KX17-3;

 Inc. 4.6m at an average grade of 1.65% copper, 2.30% zinc, 3.37g/t silver and 0.04g/t gold from a depth of 56.4m also in hole KX17-3;

o 35.1m grading 0.29% copper, 0.70% zinc, 12.56g/t silver and 0.0.70/t gold from surface in hole KX17-7;

o 70.1m grading 0.34% copper, 5.85g/t silver and 0.38g/t gold from surface in hole KX17-9;

o 51.8m grading 0.42% copper, 9.16g/t silver and 0.24g/t gold from a depth of 13.7m in hole KX17-6; and

o 51.8m grading 0.51% copper, 0.11% zinc, 16.09g/t silver and 0.07g/t gold from a depth of 12.2m in hole KX17-11;

• Wider intersections show higher grade sections with grades as high as 2.06% copper over a 4.6m wide section within hole KX17-3 and a 16.8m wide section within hole KX17-11 from 12.2m depth which averaged 1.02% copper and 33.99g/t silver.

• Existing resource:  7.26mt grading of 0.55% copper plus an additional inferred resource of 5.55mt grading 0.51% copper

• PFS due Q2 2018.

Conclusion: Phoenix is looking to add to its existing resource and to develop a Pre-Feasibility Study early next year based on the updated and upgrades resource.

With copper, zinc and tungsten prices performing well and with the ever growing issue of commodity security the reopening of this historic mine is become ever more pressing.

*SP Angel acts as Nomad to Phoenix Global Mining

 

Stratex International (LON:STI) 1.4p, Mkt cap £6.3m – Angry shareholders requisition meeting to vote against expensive acquisition of Crusader

• Stratex’s major shareholders are joining together to vote against the acquisition of Crusader Resources.

AngloGold Ashanti and Teck Resources have taken the rather unusual step of supporting the shareholder revolt against the board of Stratex.

• We believe they see the deal with Crusader as overpriced and not in the interests of Stratex’s shareholders and against its previously communicated business strategy.

• The deal offers Crusader a hefty premium in value terms.  Crusader shareholders are offered 6.6 new Stratex International shares for each share in a deal valuing Crusader at approximately £31.1m and effectively giving Crusader shareholders holding approximately 71% of the enlarged Stratex turning the deal into an effective reverse takeover in our view.

• Stratex issued its latest RNS statement at the cunning time of 2:54 on a Friday afternoon, perhaps hoping that other shareholders might miss the announcement.

• The statement says “the Board does not welcome the requisition or proposed resolutions and considers them without foundation or merit and firmly believes that they are not in the best interest of the Company or shareholders  The Board and its advisors are in discussions to see a resolution to the concerns of the Requisitioning Shareholders”.

• It may be that the board and its advisors are in discussions but we wonder whether the board had consulted with its major shareholders on the acquisition who we think are justifiably hopping mad at the change of direction and unnecessarily high price being paid for what is essentially a low grade gold project and an as yet undefined gold prospect both in Brazil.

• Worse still there are details of the Crusader deal which we believe are unpalatable to a number of major shareholders.  Eg the unwarranted rise in the value of severance packages to two Crusader directors alongside the fees being paid to the company’s advisors.

• We noticed that the directors of Crusader Resources pay themselves remarkably well.  The ceo, Robert Smakman gets a gross base salary of A$375,000 with Exec director, Paul Stephen not far behind at A$350,000.  The less well paid cfo, Andrew Beigel is at a slightly more reasonable A$170,000 and Julio Nery is on BRL 591,444 (A$232,577).

• The Crusader directors have 45 day notice periods.

• Curiously, the contracts continue on current salaries under the Stratex Scheme with notice periods for Robert Smakman and Paul Stephen increasing to two years.  That’s severance payments of A$1.45m (A$750,000 and A$700,000) for the two principal directors.

• The Stratex Scheme implementation deed states:

• “5.8 Stratex executive appointments

o (a) Stratex must, on or before the Implementation Date, make offers of employment to Rob Smakman and Paul Stephen (conditional on the Share Scheme becoming Effective) for senior executive positions with Stratex.

o (b) The offers of employment made by Stratex to Rob Smakman and Paul Stephen must be on terms no less favourable than the terms of their employment arrangements with Crusader immediately prior to the Implementation Date (as determined by Crusader), have a term of at least two (2) years (subject to summary dismissal termination rights available at common law), and include the right to participate in an appropriate incentive plan (as determined by Crusader). Is this consistent with the notice periods for members of the Stratex board, and if not why not?”

o Are Robert Smakman and Paul Stephen so critical to the operations and why are they being treated differently to other Crusader directors?

o We feel compelled to ask if this is a good use of Stratex funds and wonder if shareholders might like to seek to vote on the matter.

o Also, why has Stratex agreed to provide interim funding of A$1m to Crusader for working capital via a convertible loan note when it might have been better to wait to strike a more competitive deal?

• Stratex International reports that a group of shareholders has requested a General Meeting to consider the termination of the proposed all-share acquisition of Crusader Resources and “to make certain changes to the board”.

• The company “is advised that the request is currently invalid” and advises shareholders to “take no action” although it indicates that it will make an “announcement in due course.”

• The Crusader acquisition represents a significant change in direction from the company’s roots in exploration in Turkey and Africa, which led amongst other achievements, to mine construction of the Altintepe gold mine, into Brazil where the new management of Stratex is looking to ally itself with Crusader to develop the Borborema and Juruena gold projects.

Conclusion: It appears that a number of major and important shareholders disagree with the new course mapped out for Stratex which would leave Stratex shareholders with just 19% of the enlarged company.

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Mon, 18 Sep 2017 11:11:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28612/today-s-market-view-bbluerock-diamonds-plc-metal-tiger-phoenix-global-mining-ltd-stratex-international-plc-28612.html
Today's Market View - Premier African Minerals Ltd, SolGold plc http://www.proactiveinvestors.co.uk/columns/sp-angel/28600/today-s-market-view-premier-african-minerals-ltd-solgold-plc-28600.html Premier African Minerals (LON:PREM) – Increase in Underground Resource at RHA tungsten mine in Zimbabwe

SolGold* (LON:SOLG) – Drilling continues to ramp up with an initial Alpala resource in December and 12 rigs due in operation by early 2018

 

Conference – Europe – From Mine to Market - Dresden on Thursday 28th September

• The FAME Project, GKZ (Geokompetenzzentrum) and the Minor Metals Trade Association (MMTA). are sponsoring a mining conference in in Dresden to be attended by a range of European industrialists.

• Speeches range from minor metals to smelters and Europe’s approach to mining, metallurgy and downstream integration.

• SP Angel’s John Meyer, will delivering a key note speech on “Minor metals in mining and markets – the future has just begun”

 

Miners are lower this morning on the back of a continuing decline in bulk commodities prices as well as a strong run in the British pound against the US$.

• The pound gained 2.5% over the last two days as the BoE indicated the rate hike is on the cards over the coming months amid strengthening inflation pressures.

• Gold prices and the US$ index are little changed this morning despite reports saying North Korea launched another missile over Japan in the Pacific for the second time in two months.

• Copper stockpiles surged 10% today to 304.4kt marking the highest level since July and taking a weekly increase to 43%; prices are down 3% this week.

• Iron ore prices continued to slide heading to its first back-to-back weekly drop since June with Dalian futures trading at a two-month low today.

 

Dow Jones Industrials  +0.20% at   22,203

Nikkei 225   +0.52% at   19,910

HK Hang Seng   -0.09% at   27,752

Shanghai Composite    -0.53% at    3,354

FTSE 350 Mining   -1.10% at   16,632

AIM Basic Resources   -0.79% at    2,525

 

Economics

US – Consumer prices inflation came in ahead of market estimates for the first time in six months with first signs of weather-related pressures making it into the data.

• Hurricane Harvey saw gasoline prices climbing 6.3%mom or 10.4%yoy last month during a period that is normally considered seasonally quiet.

• While core inflation measures excluding changes in energy prices also came in stronger than forecast stabilising following months of declines in growth rates.

• Weather related disruptions adding noise to inflation data may complicate Fed’s job slightly as policymakers are closely watching inflation amid the monetary tightening cycle.

 

China – Money supply numbers released today showed credit growth continued at a robust pace in August supporting growth dynamics ahead of the NPC opening on the 18th October.

• Total credit climbed 18.0%yoy in the first eight months of the year slightly down on 20.3% recorded through the January-July period but up on 16.4%yoy increase recorded in 2016.

 

UK – The pound rallied against the US$ yesterday on the back of the news the BoE may raise rates in “coming months” if the economy performs in line with authorities’ estimates.

• The rate setting committee voted 7-2 to leave rates unchanged at 0.25% for now, in line with market estimates.

• Greater attention is not turned to labour statistics and GDP numbers due on October 18 and 25, respectively.

• Should the data come in strong a rate increase in November may be a real possibility, Bloomberg reports.

• Markets are currently pricing in a one 25bp hike in February with a second one is not expected until beyond the same month in 2019.

 

Currencies

US$1.1919/eur vs 1.1900/eur yesterday.   Yen 110.73/$ vs 110.38/$.   SAr 13.146/$ vs 13.124/$.   $1.343/gbp vs $1.321/gbp.     

0.800/aud vs 0.800/aud.   CNY 6.546/$ vs 6.555/$.

 

Commodity News

Precious metals:

Gold US$1,327/oz vs US$1,324/oz yesterday - Gold prices slip further as US dollar steadies

• The yellow metal slipped below $1,322 per ounce this morning, but it has since risen back to $1,327.60, just 0.03 per cent below its closing price yesterday

• Improved US yields and rising USD demand could encourage a deeper downside correction. The key support to the two-month rise stands at $1,300

• Growing tensions over North Korea follow Friday’s missile launch over Japan’s northern Hokkaido far into the Pacific Ocean, prompting a flood of gold purchases.

• August’s U.S. consumer prices rose 0.4% on the back of increase gasoline and rental accommodation costs, causing an increased likelihood of December’s interest rate hike from the Federal Reserve.

• Despite the increase in domestic consumer prices, the U.S. dollar index fell 0.4%.

• The announcement of the close in trading on Chinese bitcoin exchange ‘BTCChina’ has triggered a shift back to more traditional safe-haven trades in the gold market.

Gold ETFs 68.8moz vs US$68.8moz yesterday     

Platinum US$980/oz vs US$981/oz yesterday

Palladium US$928/oz vs US$942/oz yesterday

Silver US$17.76/oz vs US$17.76/oz yesterday

           

Base metals:   

Copper US$ 6,501/t vs US$6,484/t yesterday - Copper continued slide yesterday on China data and inflows of copper stocks into warehouses.

• Note: we don’t trust stock numbers so much these days due to manipulation by hedge funds and strategic agencies.

• A downturn in Chinese infrastructure investment continues to send base metals prices to their lowest in September. August’s industrial production figures indicated the slowest growth rate since December 2016.

• Copper prices continue to fall on the back of investor profit-taking. London Metal Exchange warehouse stocks rose a further 16% Wednesday with investors dumping their copper holdings.

Aluminium US$ 2,086/t vs US$2,091/t yesterday - Buyers in Japan, Asia’s biggest aluminium importers, have agreed a 20% reduction in premiums of October to December quarter shipments at $95/t.

• The premiums to London Metal Exchange prices are representative benchmarks for the Asian region.

Nickel US$ 11,070/t vs US$11,235/t yesterday

Zinc US$ 3,014/t vs US$3,006/t yesterday – The zinc market remained in deficit through July seeing the cumulative shortage climbing to 227kt in the first seven months of the year

• This compares to a 214kt deficit recorded through January-July 2016, according to the ILZSG.

• Both demand and supply recorded weak growth rates of 0.3% and 0.4%, respectively, with cumulative numbers coming in at 7,850kt and 8,077kt.

Lead US$ 2,314/t vs US$2,277/t yesterday – Market recorded another monthly deficit in July according to the latest ILZSG data.

• Consumption totalled 1,023kt surpassing supply of 987kt taking the deficit to 36kt.

• This extended the shortage to 109kt in the first seven months of the year compared to a 42kt surplus recorded during the same period last year.

• Chinese lead stockpiles continue to fall to the lowest since May 2017 on the back of industrial pollution inspections. This declining market output is the result of the closure of approximately 80% illegal secondary smelting operations.

• August’s ban on North Korean lead exports have only acted to tighten the concentrate market, pushing up the physical premiums on Shanghai lead contracts.

Tin US$ 20,530/t vs US$20,575/t yesterday

           

Energy:           

Oil US$55.2/bbl vs US$55.1/bbl yesterday –

• Energy shares rose on the back of the weakening U.S. dollar index, while positive forecasting by the International Energy Agency on Wednesday proposed a more rapid rebalancing of the oil market.

Natural Gas US$3.058/mmbtu vs US$3.063/mmbtu yesterday

Uranium US$20.60/lb vs US$20.65/lb yesterday

Lithium - Kuehne + Nagel launches supply chain product for lithium battery industry

• The KN BatteryChain is designed to meet rapidly increasing global demand for lithium batteries and to offer safe reliable and efficient mass transport as well as storage.

• Transport of lithium batteries is complex given their classification as dangerous goods and the need to comply with new stricter regulations and restrictions.

• The KN solution complies with the respective international dangerous goods regulations and certified against ISO9001 and the leading automotive standard ISO16949

 

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$70.0/t vs US$72.3/t

Chinese steel rebar 25mm US$662.2/t vs US$663.6/t

Thermal coal (1st year forward cif ARA) US$82.9/t vs US$83.4/t

Premium hard coking coal Aus fob US$207.8/t vs US$208.9/t – coking coal prices cut by move by blast furnaces to more efficient higher-grade Australiana and Brazilian coals and lower feedstock throughput

• Thursday’s announcement of weak economic data from China, combined with tightening environmental legislations, have generated concerns over future demand for coking coal.

• The campaign to cut steel mill pollution, restricting raw material demand, has caused the greatest price drop in coking coal futures since inception in 2013.

 

Other:  

Tungsten APT European US$310-335/mtu vs US$285-300/mtu

 

Company News

Premier African Minerals (LON:PREM) 0.43p, Mkt Cap £23.8m – Increase in Underground Resource at RHA tungsten mine in Zimbabwe

Premier owns 49% of RHA. RHA is indebted to Premier in excess of US$20m and until such time as this is settled, all concentrate produced will be attributable to Premier)

• Premier African Minerals report an increase in the underground resource at their RHA tungsten mine in Zimbabwe.

• The resource has been prepared under the South African SAMREC code rather than JORC or NI 43-101.  We see SAMREC as a perfectly acceptable code for this sort of work.

• The company report a 32% increase in the underground Measured Resource category to 0.029mt and a 52% increase in grade to 5.45kg WO3/t.

• Plus a 33% increase in the underground Indicated Resource category to 0.076mt and a 95% increase in grade to 6.31kg WO3/t.

• The overall underground grade rises by 11% to 4.72kg WO3/t and 16% increase in total underground Mineral Resources contained metal to 6,257,493 kg WO3

Table 1: Summary of the Underground Mineral Resources (September 2017)

Category Gross Net attributable Operator

Tonnes (millions) WO3 Grade (kg/t) Contained metal (kg) Tonnes (millions) WO3

Grade (kg/t) Contained metal (kg)

Underground      

Mineral Resources      

Measured 0.029 5.45 157,679 0.029 5.45 157,679 Premier

Indicated 0.076 6.31 479,936 0.076 6.31 479,936

Inferred 1.220 4.61 5,619,877 1.220 4.61 5,619,877

      

Total 1.325 4.72 6,257,493 1.325 4.72 6,257,493

      

 

Conclusion:  We view the grades as a bit skinny for the operation of an underground tungsten mine.  Mining costs are lower in Zimbabwe which should be a help. We sincerely hope that the rise in tungsten prices is sufficient to enable the survival of the RHA mine and to repay the $20m owned to Premier following problems encountered with the open pit and the process plant.

 

SolGold* (LON:SOLG) 32.8p, Mkt Cap £497m – Drilling continues to ramp up with an initial Alpala resource in December and 12 rigs due in operation by early 2018

• SolGold continue to press ahead with resource definition and drilling at the Alpala prospect in Ecuador.

• Solgold’s AIF (Annual Information Form) filed in Canada yesterday confirms that SolGold intend to issue an initial resource for Alpala in December

• The company are also committing to update the resource quarterly

• The team and planning a minimum 100,000m of drilling at Alpala alone to close off the deposit.

• In addition SolGold are looking at 165,000 - 170,000m of drilling on the other targets at Cascabel with a further estimate of 170,000m for resource definition.

• The additional 440,000m of drilling will keep the drilling and geological teams busy and give plenty of data to asses.

• SRK Exploration have been commissioned to qualify the complex geological modelling and to draft the Cascabel Technical Report covering the Alpala deposit.

• Alpala now appears significantly larger than previously understood leading to the deferment of the maiden mineral resource estimate to December due to excessive portions of the deposit remaining open.

• This has resulted in an additional minimum of 100,000m of drill testing to fully constrain the Alpala deposit.

• SolGold plans to release updated mineral resource estimates on quarterly basis till such time that the true dimension of the Alpala Deposit are realised.

• Additional porphyry copper-gold targets within the Cascabel Project will also require over 165,000m of drill testing, with a supplementary 170,000 m of drilling anticipated for resource definition at additional targets.

• Five man-portable diamond drill rigs are currently working at site with a further two man-portable rigs being mobilised to site in September.

• A further 5 large track-mounted drill rigs are being mobilised to site during the final quarter of 2017 bringing the total number of operating drill rigs to 12 by early 2018.

• SolGold will be using three drilling contractors at Alpala and on the Cascabel site to accelerate and better define the project.

Conclusion: The move to 12 drill rigs marks a significant step up in activity at the Cascabel site and should feed further exciting and massive copper, gold intersections for analysis.

The new higher level of activity could make the next 12 months a big year for SolGold.

*SP Angel acts as Nomad and broker to SolGold.  The mining team at SP Angel have raised funds for SolGold on at least eight occasions over the past 10 years.

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Fri, 15 Sep 2017 11:02:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28600/today-s-market-view-premier-african-minerals-ltd-solgold-plc-28600.html
Today's Market View - Dalradian Resources, Ortac Resources Ltd, Petra Diamonds, Stellar Diamonds PLC http://www.proactiveinvestors.co.uk/columns/sp-angel/28561/today-s-market-view-dalradian-resources-ortac-resources-ltd-petra-diamonds-stellar-diamonds-plc-28561.html US dollar gains as Huricane Irma loses power and North Korea fails to celebrate nation’s anniversary with missile firing

 

China considering ban on production of combustion engine vehicles

• China produced and sold >28m vehicles last year with EVs and hybrids rising by 50% to >500,000

 

Tungsten prices continue to gain - APT European US$310-335/mtu vs US$285-300/mtu last week

• Tungsten prices continue to rise.  The increase in prices may reflect proposals to rebuild strategic stocks while supplies of low grade tungsten from Chinese mines may be cut back.

 

China commodity imports may be running out of momentum

• The big question in base metals and other industrial commodity markets is on how much will environmental closures affect Chinese metals production?

• Reuters comments this morning on “China’s commodity imports show why rally in prices may stall”.

• Reuters’ focus is on falling imports for crude oil and coal which they see as tapering off in recent months.

• We are not surprised to see lower import numbers through August as China’s crackdown on polluting mines, smelters and other businesses should naturally reduce energy consumption.

• Furthermore, directives to enforce the closure of polluting businesses through the worst winter months are likely to prompt lower stock levels at power utilities, blast furnaces etc…

• Comparing the fall in commodity exports with import numbers should reveal more about underlying activity and overall demand trends within China

• China’s focus on electric vehicles is also likely to cause to a longer term increase in coal consumption while leading to a decline in crude oil imports.

• China already has some 200m e-bikes on the road with around 700 e-bike manufacturers.  There are so many e-bikes that legislation now limits e-bikes from certain parks of its major cities.

• China is also ramping up Electric Vehicle production to further reduce the nation’s dependence on oil imports, while the recent fall in oil imports may also reflect a slowdown in the construction and stocking of massive strategic storage facilities.

• While coal imports remain firm, local production is reported to be rising to better balance domestic needs though the quality of new local coal is likely to be significantly less than imported material.

• Imports for copper and iron ore remained relatively strong through August probably reflecting more ongoing internal demand growth for steel and copper products.

• Imports of unwrought copper were steady through June, July and August indicating that copper demand remained firm and that many processors continue to operate despite new environmental controls

• We expect to see lower export exports for many refined commodity products as polluting mines and furnaces close.  While some will reopen following work on their environmental compliance we suspect many will not as the cost of rehabilitation and environmental compliance will raise production costs beyond economic sense.

• We have already seen significant disruption to commodity imports and exports in some of the speciality metals such as antimony, vanadium, titanium and tungsten with prices rising strongly as a result of both temporary and permanent plant closures in China.

• Rare Earth Element prices are also seen rising strongly as resolving the pollution issues relating to the production of Rare Earths from clays in China is no easy matter.

 

Dow Jones Industrials  -0.10% at   21,785

Nikkei 225   -0.63% at   19,275

HK Hang Seng   +0.53% at   27,668

Shanghai Composite    -0.01% at    3,365

FTSE 350 Mining   -0.63% at   17,829

AIM Basic Resources   +0.04% at    2,606

 

Economics

Currencies

US$1.2047/eur vs 1.1966/eur yesterday.   Yen 107.64/$ vs 108.97/$.   SAr 12.821/$ vs 12.823/$.   $1.314/gbp vs $1.306/gbp.     

0.809/aud vs 0.801/aud.   CNY 6.466/$ vs 6.501/$.

 

Commodity News

Precious metals:

Gold US$1,337/oz vs US$1,354/oz yesterday - Gold retreats from 1 year high as dollar gains ground

   Gold ETFs 68.5moz vs US$68.5moz yesterday

• Gold fell early Monday morning after hitting highest level in over a year, with recovery in US dollar reining in any upward momentum in the metal

• Dollar recovered from last week’s low as a lack of geopolitical developments dented safe-haven appeal of gold

Platinum US$1,004/oz vs US$1,019/oz yesterday

Palladium US$949/oz vs US$956/oz yesterday

Silver US$17.85/oz vs US$18.18/oz yesterday

           

Base metals:   

Copper US$ 6,755/t vs US$6,807/t yesterday

Aluminium US$ 2,128/t vs US$2,094/t yesterday

Nickel US$ 11,600/t vs  US$11,940/t yesterday - New Australian nickel mine hoping to cash in on battery demand

• A new nickel mine in Australia is pinning its hopes on use of nickel in electric vehicle batteries which could significantly raise demand for the metal

Zinc US$ 3,096/t vs US$3,090/t yesterday

Lead US$ 2,283/t vs US$2,309/t yesterday

Tin US$ 20,630/t vs US$20,750/t yesterday

           

Energy:           

Oil US$53.8/bbl vs US$54.7/bbl yesterday

Natural Gas US$2.923/mmbtu vs US$2.971/mmbtu yesterday

Uranium US$20.75/lb vs US$20.90/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$73.2/t vs US$74.6/t - Iron Ore prices continue to pull back

• Some weakness is down to a sharp rally in the Chinese Yuan on Friday leaving it at fresh multi-year high against the US dollar

Chinese steel rebar 25mm US$674.2/t vs US$671.8/t

Thermal coal (1st year forward cif ARA) US$80.5/t vs US$80.0/t - Coal prices set to lose their spark

• Benchmark coal prices may pull back over next couple of years as China and India strive to meet demand with through domestic production

• Coal imports are expected to remain subdued because of low demand from coal-based units and the rise in renewable energy capacity

Premium hard coking coal Aus fob US$210.0/t vs US$210.0/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$285-300/mtu

Quarterly hard coking coal US$285.0/t vs US$285.0/t

 

Company News

Dalradian Resources (LON:DALR) 100 pence, Mkt Cap £264.2m – Taking a new look at Curraghinalt veins

• In a report which the company emphasises is not a new resource update, Dalradian Resources outlines the findings of a “sensitivity study” on two veins (T17 and V75) at its Curraghinalt gold deposit in Northern Ireland.

• The study, which lays increased emphasis on the detailed geology observed in the drilling, “yields 24% narrower veins accompanied by a 20% decrease in tonnage”.

• “This change in modelling sequence, … can in part explain the positive reconciliation between mill and resource (42% more ounces) resulting from the test stopes completed in 2016.”, leading to the conclusion that “The bottom line is that we have 32% more mineable ounces for the two veins tested."

• The results show that contained ounces of gold within the T75 vein are 3% higher than previously expected for the measured/indicated resource and 10% greater for the inferred resource with grades around 35% higher than originally modelled. On the T17 vein, measured and indicated ounces are 15% higher and inferred ounces of gold are 9% higher as a result of a 38% increase in modelled grades.

Conclusion: The higher grades seem better to reflect the results of the various trial mining exercises completed by the company and are reported to tie in better with the observed geology. The conclusion that the resources are contained within lower estimated tonnages is helpful but the mining of narrower veins will require rigorous control of mining operations in order to minimize dilution and capture the benefits of the higher grades.

 

Ortac Resources* (LON:OTC) 2.375p, Mkt cap £3.5m – New board emphasises African focus

• Ortac Resources has emphasised that under the direction of its new Chairman, Nick von Schirnding, the company is “to focus exclusively  on its high potential African exploration mining assets.”

• These comprise the copper assets of Zamsort in Zambia and the gold exploration of Casa Mining in the DRC where drilling of the priority target at Akyanga started in late August.

• The company is looking “to divest its investment in Eritrea” where it holds an 18.5% interest in Andiamo Exploration as well as considering “a number of strategic options with respect to its Slovakia (Kremnica) gold project”.

• In Slovakia, Ortac reports that it “is in constructive discussions with a number of parties, both local and international and in the interim, will keep associated expenditures to a minimum.”

Conclusion: The decision to focus on its principal African projects and move away from the Slovakian project where it has encountered repeated setbacks on permit issues, now largely resolved, comes as little surprise. We look forward to news of progress in Zambia and the DRC and of the possible divestment of Andiamo and the Slovakian interests.

*SP Angel acts as nomad and broker to Ortac Resources

 

Petra Diamonds (LON:PDL) 83p, mkt cap £441.5m – Tanzania blocks diamond exports from Williamson – mine operations temporarily shut down

• The company has confirmed that “a parcel of diamonds (71,645.45 carats) from the Williamson mine in Tanzania has been blocked from export to Petra’s marketing office in Antwerp and certain key personnel from Williamson are currently being questioned by the authorities.”

• As a result of the diversion of these “key personnel” from their usual duties, “operations at Williamson have temporarily been stopped for health and safety and security reasons.”

• The measures come as part of the Government’s implementation of new measures to control the minerals industry, however, the company makes clear that “the grounds upon which these actions have been taken have not been made clear to the Company as yet.” The company also indicates that it has yet to receive a copy of the report which led to the blocking of the export of this parcel of diamonds.

• Petra points out that the Government, which has a 25% interest in the mine, “has complete oversight of the diamonds produced at the mine, which are physically controlled by a number of different Government representatives in conjunction with Petra from the point of recovery until the point of sale.”

• Emphasising the transparency of the chain of custody, the company also points out that “the provisional valuation of the diamond parcels from Williamson before they are exported to Antwerp is carried out by the Government’s Diamonds and Gemstones valuation agency” and not by the company.

• This provisional valuation is the basis of provisional royalty payments to the Tanzanian Government with subsequent adjustments applied based on the actual sales achieved.

• The company emphasises its commitment to address the concerns raised by the parliamentary investigation and “to resolve this matter and ensure that the correct information is available to all parties.”

Conclusion: The company makes a strong case for the transparency of its operations at Williamson and emphasises the involvement of government, which is a 25% owner of the mine, at all stages of the production and sales process. We hope that there is a speedy resolution leading to a resumption of normal activity at Williamson before the impact on the mine workforce and the company becomes too onerous.

 

Stellar Diamonds (LON:STEL) 3.375 pence, Mkt Cap £1.4m – Placing and £200,000 open offer

• Stellar Diamonds reports that “it has conditionally raised £330,000 through the issue of 10,153,847 new Ordinary Shares of the Company at an issue price of 3.25 pence per share”.

• “In order to provide all Stellar shareholders with an opportunity to participate in the proposed issue of new ordinary shares of the Company, the Company proposes to raise up to approximately £200,000 (before expenses), at 3.25 pence each through an open offer”

• The funds are to be used to “prioritise payment of the Tongo environmental licence and renewal of the Tonguma environmental licence (estimated $250,000 for both”. The approval of the Tongo Mining licence in Sierra Leone is “subject to the payment of the Tongo environmental licence” and hence the financial capacity to secure the renewal of the environmental licences is a key milestone in the project development.

Conclusion: The funding should help to keep the longer term development of the Tongo project on track.

]]>
Mon, 11 Sep 2017 10:36:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28561/today-s-market-view-dalradian-resources-ortac-resources-ltd-petra-diamonds-stellar-diamonds-plc-28561.html
Today's Market View - Altus Strategies, Botswana Diamonds, Phoenix Global Mining Ltd, Petropavlovsk PLC http://www.proactiveinvestors.co.uk/columns/sp-angel/28573/today-s-market-view-altus-strategies-botswana-diamonds-phoenix-global-mining-ltd-petropavlovsk-plc-28573.html Altus Strategies* (LON:ALS) – Agdz copper silver project reconnaissance trenching update

Petropavlovsk* (LON:POG) - Interims

Botswana Diamonds (LON:BOD) – Exploration update on S African joint-venture

Phoenix Global Mining* (LON:PGM) – Further drilling results from Empire

 

121 Mining Investment Conference 27-28 November 2017 – London

• SP Angel are sponsoring the 121 Mining Investment Conference in London on Monday 27 and Tuesday 28 November.  .

• The event works well from an investor meeting perspective and we advise investors and directors register quick to ensure they get a place in the 121 meeting planner

• Please contact me for further details. 

 

Miners are marginally stronger today on the back of higher iron ore and coking coal prices while base metals and precious metals trade lower today.

• Gold is retreating trading around $1,350/oz as geopolitical concerns subside and risk appetite increases with S&P 500 hitting new record high.

• The US$ index is holding up to its gains rebounding from a multi year low earlier this month.

• Brent is weaker today giving some of its gains reported through September when US refineries reported restarting operations post Hurricane Harvey related temporary closures.

• Irma is said to have left seven million Americans without power with the storm expected to drop 8-15 inches of rain in parts of northern Florida as it moves up the coast.

• Steel rebar futures in Shanghai are up for the first day in five as investors see support from demand through the rest of the year, Bloomberg reports.

 

China deliberately moving to refocus economy on new, more efficient growth and away from old heavy industrial model.

• Comments published by Damien Ma, a fellow and associate at the Paulson Institute indicate that China is looking to develop a more modern service-orientated, domestic consumption and more efficient economy.

• He comments that there is a deliberate effort to really slow down the Chinese economy as it moves away from the old, heavy industrial model..

• China is aiming for 6.5% GDP Growth through to 2020 and to make china a high-income country by 2049 according to Ma who was talking at the ISRI Commodities Roundtable Forum in Chicago.

• China observers will note that 6.5% is less than 8.4% seen in 2010-2015 and slightly slower than 6.8% from 2015 to today (YTD).  The lower GDP target still reflects amazing growth for the world’s second largest economy.

• The pattern of development effectively follows other now advanced developing nations.  Eg Japan, South Korea and others, the difference being the Centralist Communist Government and its clear focus on strategic planning.

• Pollution is a key and immediate driver given the horrendous damage done to the environment in China and the urgent need to improve air quality particularly through the winter months.

 

China restricting exports of key industrial commodities as it moves to better balance rising domestic demand with internal production

• The move is causing prices of many industrial commodities to rise.

• Tungsten prices are continue to rise as China seen enforcing export quotas.

• Vanadium prices have risen on new regulations requiring more ferro-vanadium in rebar.

• Rare Earth Element prices rising on rising demand and an end to the destocking seen in recent years since the end of a number of failed collective investment schemes.

• The EU asked the WTO to look into Chinese export restrictions on Antimony, ferrochrome, cobalt, indium, copper, ferro-nickel, graphite, lead, tantalum and tin.

• We believe all the above metals are also seeing supply disruption caused by the enforcement of new environmental regulation on furnaces and on polluting mines.

 

China considering banning production of combustion engine vehicles to force producers and consumers to go electric. 

• Adding up the potential rise in electrical power demand to run the new generation of electric vehicles indicates a marked increase in the consumption of copper.

• Increasing demand is expected for cables in new Electric Vehicles as well as in the instillation of new charging points and for cabling to ensure sufficient power capacity to feed millions of new charging stations.

 

Lithium - Lithium ETF prices surged to new 6-year high on expected demand growth for lithium batteries after China announced commitment to EV only future

• Demand for lithium is expected to surge more than 30x 2030 as world shifts towards EV and industry standardizes on lithium-ion batteries

• Fears of shortage has already caused lithium carbonate prices to triple in China requiring more mines to support production

 

Tanzania - authorities block parcel of diamonds worth $29.5m claiming that Petra has under declared its value

Petra Diamonds may be left with no choice but to close the Williamson Diamond mine following a move to block the export of diamonds from the mine.

• Problem is that the provisional valuation of the diamonds is performed by the government’s own diamond and gemstone valuation agency.

• There is no reasonable way a diamond mining company can operate if its sales are impeded in this way and Petra’s Williamson diamond mine may not have sufficient funds to pay local staff and suppliers.

• While Acacia has alternative sources of income, Petra has no such fall back leading to potential mass redundancies.

• The move presents a worrying escalation in the aggressive approach the president is taking in relation to mining companies.

• Tanzania would do well to note the collapse of the Zambian copper industry which was caused by it’s nationalisation by President Kaunda

 

America First – Hurricanes Second

• Gun owners in the US have been advised not to shoot the storms.

• Graphics show bullets fired into Hurricane Irma being carried high by the storm winds before falling back to earth with potentially fatal consequences.

• It would be interesting to know the odds of being hit by your own bullet if you fired it directly into a storm cell, though it is probably allot less than shooting an Armadillo, another US pastime.

 

Dow Jones Industrials  +1.19% at   22,057

Nikkei 225   +1.18% at   19,777

HK Hang Seng   +0.05% at   27,968

Shanghai Composite    +0.09% at    3,379

FTSE 350 Mining   +0.12% at   17,718

AIM Basic Resources   -0.46% at    2,568

 

Economics

Currencies

US$1.1975/eur vs 1.2006/eur yesterday.   Yen 109.56/$ vs 108.50/$.   SAr 12.909/$ vs 12.938/$.   $1.321/gbp vs $1.319/gbp.     

0.805/aud vs 0.804/aud.   CNY 6.529/$ vs 6.519/$.

 

Commodity News

Precious metals:

Gold US$1,327/oz vs US$1,337/oz yesterday - Scientists have created a new wonder material that changes between mirror and window using gold nanoparticles

   Gold ETFs 68.6moz vs US$68.5moz yesterday

Platinum US$991/oz vs US$1,004/oz yesterday - Enzymes compete with platinum in new fuel cell

• Researchers succeeded in making an enzymatic fuel cell that is as good as fuel cells that work using platinum catalysts – make cheaper alternatives to fuel cells that require rare and expensive metals

Palladium US$944/oz vs US$949/oz yesterday - Palladium thought to be benefiting from strong Chinese car sales data due to its use in catalytic converters, though forecasts are for sales to fall

Silver US$17.79/oz vs US$17.85/oz yesterday

           

Base metals:   

Copper US$ 6,729/t vs US$6,735/t yesterday - Copper Prices bounce back from correction

• Three month copper price fell by over $200 at the end of last week but trading back at above $6,700/t this morning as inventories continue to fall.

• Rising electric vehicle production and renewable energy systems are expected to keep demand for copper at elevated levels.

Aluminium US$ 2,127/t vs US$2,128/t yesterday

Nickel US$ 11,720/t vs US$11,635/t yesterday - Sherrit International considers Nickel for Battery market

• One of worlds largest producers of Nickel looking to build plant to produce nickel sulphate a substance that can be used in batteries – main component of lithium ion batteries nickel

• BHP Billiton, world’s largest mining house planned to spend $43 million on repositioning its nickel business around batteries

Zinc US$ 3,090/t vs US$3,097/t yesterday

Lead US$ 2,277/t vs US$2,283/t yesterday

Tin US$ 20,705/t vs US$20,630/t yesterday

           

Energy:           

Oil US$53.7/bbl vs US$53.8/bbl yesterday

Natural Gas US$2.961/mmbtu vs US$2.923/mmbtu yesterday

Uranium US$20.65/lb vs US$20.75/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$72.3/t vs US$71.9/t

Chinese steel rebar 25mm US$664.4/t vs US$664.5/t

Thermal coal (1st year forward cif ARA) US$80.9/t vs US$80.5/t

Premium hard coking coal Aus fob US$209.4/t vs US$209.4/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$285-300/mtu

 

Company News

Altus Strategies* (LON:ALS) 10.1p, Mkt Cap £10.9m – Agdz copper silver project reconnaissance trenching update

• Exploration team completed a series of trenches at the Agdz Cu-Ag project located in central Anti-Atlas of Morocco and 14km south west from the newly opened Bouskou Cu-Ag operated by Group Managem.

• 275m trenching programme was done over two targets – Amzwaro and Makarn, – with a combined strike length of c.4km and widths up to 0.5km.

• Completed to an average depth of 0.5m, trenches targeted bedrock below a weathered material and guided by previously ddone ground magnetics and high grade surface samples.

• Trenches confirmed the presence of multiple alteration and breccia zones as well as oxide and sulphide copper mineralisation.

• One of the trenches at Makarn showed disseminated and vein-hosted copper oxide and copper sulphides over 14.8m with channel samples completed over 1m intervals returning grades of 0.2% Cu.

• At Amzwaro 237m have been completed with one done over 192m demonstrating “a series of weathered, highly altered, brecciated and fractured zones in packages over widths of up to 33m” with copper oxides and sulphides recorded having been near absent at surface.

• The Company is planning to continue with reconnaissance trenching through Q4/17 in the area combined with detailed structural and alteration mapping to identify most prospective drill targets.

Conclusion: Exploration works continue at the two most advanced targets across the Agdz copper silver project in Morocco where the exploration team is trench testing previously identified structures and alteration zones.

*SP Angel act as Nomad and Joint Broker to Altus Strategies

 

Petropavlovsk* (LON:POG) 7.2p, Mkt Cap £235m - Interims

• Revenues up 20% at $304m (H1/16: $254m) on the back of higher gold sales (231.8koz v 195.4koz in H1/16) and stronger realised gold price ($1,255/oz v $1,194/oz in H1/16).

• H1/17 gold sales benefited from the release of gold in circuit which amounted to 50.8koz across four operations.

• Forward gold contracts covering 100koz that matured in H1/17 contributed $2.8m (H1/16: -$5.5m) to cash revenues with another 500koz at an average price of $1,252/oz outstanding as of 30 Jun/17.

• TCC and AISC came in at $675/oz and $965/oz (H1/16: $663/oz and 762/oz) driven by an appreciation in the rouble against the US$, local inflation and weaker recoveries at Pioneer and Malomir.

• AISC totalled $965/oz (H1/16: $762/oz) including higher sustaining capex ($21.3m (incl sustaining exploration costs) v $3.9m in H1/16) due to Pioneer and Malomir underground projects and expansion of tailings dams at Pioneer and Albyn as well as increased central admin costs ($23.1m v $13.1m in H1.16).

• Higher admin costs were primarily “attributed to a $5.2m increase in staff costs, mainly as a result of the proposed key management bonus accrual, an increase in Russian staff costs due to the appreciation of RUB against US dollar and general increase in Russian salaries, and $4m professional fees incurred in relation to corporate projects”.

• EBITDA climbed to $114.1m (H1/16: $88.0m) and EBIT was at $64.9m ($34.2m).

• Capex (including exploration) increased to $41.9m (H1/16: $11.9m) as the Company restarted POX development project and continued exploration and development works to support the underground mining at Pioneer and Malomir.

• FCF (post interest) improved to $32.7m (H1/16: $18.0m (excluding sale proceeds for the disposal of Verkhnetisskaya and Visokoe assets)).

• Net debt came down 5% to $570m (HY16: $599m).

• 2017 annual target reiterated at 420-460koz with TCC expected to come in at the upper end of the original guidance for $600-700/oz; net debt is forecast to close at $560m by year end assuming current USDRUB rate and $1,265/oz average gold price through the remainder of the year.

Conclusion: Interim results show improved cash generation driven by stronger gold sales and prices while pressures from the USDRUB rate appreciation has been partially mitigated by a boost in production from the release of the gold in circuit in H1/17.

 

Botswana Diamonds (LON:BOD) 1.6 pence, Mkt Cap £7.1m – Exploration update on S African joint-venture

• Botswana Diamonds reports that it has now completed 17 reverse-circulation drill holes on the Zebediela kimberlite within its diamond exploration joint-venture project with Vutomi Mining, near Frishgewaagt in the Limpopo Province of S Africa.

• Details of the depth and location of these holes, which are described as “pilot holes for a Large Diameter Drilling programme which is scheduled to commence next month” have not been disclosed, however they “have been drilled to further delineate the extensive kimberlite pipe/fissure system” and will, presumably aid the detailed planning for the forthcoming large diameter programme which is probably mainly intended to provide a sufficiently large sample for the company to establish an initial view of the distribution of any diamonds within the system.

• The wider programme is aimed at the generation of an inferred mineral resource estimate for Zebediela by the end of the year. “Zebediela is located in close proximity to the … Marsfontein Mine, which had an average grade of 172cpht and diamond value of US$128/ct”; and no doubt Botswana Diamonds is hoping for a similar deposit on this ground.

• Elsewhere, detailed ground geophysical surveying at the company’s newly discovered Ontevreden kimberlite in the North West Province has identified an anomalous area measuring approximately 100m x 70m.

• Samples taken at Ontevreden are currently being assessed for kimberlite indicator minerals in conjunction with the University of Johannesburg. The discovery “is close to Petra's Helam Mine which has grades running as high as 500 cpht and diamond value of US$255/ct” and even at this early stage, we presume that the company is hoping for a similar outcome.

Conclusion: The exploration programmes in S Africa remain at an early stage with no assay data specific to the company’s properties yet disclosed. The licence areas are, however, in relatively close proximity to other known mineable diamond pipes. The large diameter drilling scheduled to start at Zebediela in the coming weeks is intended to help generate an initial, inferred, resource by the end of this year. We look forward to the results at both Zedediela and Ontevreden as they become available and to the initial resource estimates which should give the first tangible indication of the economic potential.

 

Phoenix Global Mining* (LON:PGM) 4.1p, Mkt Cap £9.5m – Further drilling results from Empire

• Phoenix Global Mining, which is working to re-open the historic Empire copper mine in Custer County, Idaho, reports that its 28 hole drilling programme comprising 21 reverse-circulation (1595m) and 7 large diameter diamond drill holes (537m) at the AP oxide pit has been completed.

• Assay results from the first 14 holes have been received and results from the remaining holes are expected “in forthcoming weeks”. Among the highlights reported today are:

o 21.3m at an average grade of 0.86% copper, 1.22% zinc, 13.03g/t silver and 0.14g/t gold from a depth of 41.2m in hole KX17-3;

o Including 4.6m at an average grade of 1.65% copper, 2.30% zinc, 3.37g/t silver and 0.04g/t gold from a depth of 56.4m also in hole KX17-3;

o 35.1m at an average grade of 0.29% copper, 0.70% zinc, 12.56g/t silver and 0.0.70/t gold from surface in hole KX17-7;

o 70.1m at an average grade of 0.34% copper, 5.85g/t silver and 0.38g/t gold from surface in hole KX17-9;

o 51.8m at an average grade of 0.42% copper, 9.16g/t silver and 0.24g/t gold from a depth of 13.7m in hole KX17-6; and

o 51.8m at an average grade of 0.51% copper, 0.11% zinc, 16.09g/t silver and 0.07g/t gold from a depth of 12.2m in hole KX17-11;

• The wider intersections reported above contain higher grade sections with grades as high as 2.06% copper over a 4.6m wide section within hole KX17-3 and a 16.8m wide section within hole KX17-11 from 12.2m depth which averaged 1.02% copper and 33.99g/t silver.

• The current drilling work is part of a programme to revise and update the existing resource estimate which is expected to be available during Q4 2017 to be followed by a preliminary feasibility study (PFS) early in Q2 2018.

• Phoenix Global Mining has appointed key consultants for the PFS. The PFS team will be led by M3 Engineering and Technology which is well known for its work in the design and commissioning of SX-EW copper plants in the US, supported by Hard Rock Consulting for the reserve and mining studies, Minerals Technology on the metallurgical testing and Cascade Earth Sciences to complete the environmental and permitting work.

• Among other developments at the Empire mine site, the company reports that it has engaged a mining contractor to regain access to the old workings in order to undertake a programme of sampling and appraisal of the deeper sulphide mineral potential beneath the AP pit area.

• Commenting on the wider potential, CEO, Dennis Thomas, pointed out that “Whilst the oxide resource offers the near term development opportunity, the deeper sulphide resource is of potentially significant value to us given the historic grades of up to 11.4% copper plus gold, silver and tungsten that have been recovered”. Once safe access to the extensive historic underground workings is established, the company plans to “commence a programme to assess the deeper sulphide potential beneath the AP pit oxides.”

Conclusion: Since its admission to the AIM market in June, Phoenix Global Mining has completed its initial drilling appraisal of the AP pit area at the Empire mine and is targeting an update of the existing resource, of 7.26mt at an average grade of 0.55% copper with an additional inferred resource of 5.55mt at an average grade of 0.51% copper, before the end of the year with a preliminary feasibility study expected during Q2 2016. We look forward to the remaining drilling results and the completion of the resource and pre-feasibility studies.

*SP Angel acts as Nomad to Phoenix Global Mining

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Tue, 12 Sep 2017 11:24:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28573/today-s-market-view-altus-strategies-botswana-diamonds-phoenix-global-mining-ltd-petropavlovsk-plc-28573.html
Today's Market View - Anglo Asian Mining Plc, Metminco, Tri-Star Resources, Vast Resources PLC http://www.proactiveinvestors.co.uk/columns/sp-angel/28581/today-s-market-view-anglo-asian-mining-plc-metminco-tri-star-resources-vast-resources-plc-28581.html Anglo Asian Mining* (LON:AAZ) – Start of mining at Ugur ramps up production rate

Metminco* (LON:MNC) – Interim results and progress report on Miraflores

Tri-Star Resources* (LON:TSTR) – Interim report and update

Vast Resources (LON:VAST) – Baita Plai mining licence expected shortly

 

Gold got a bit of support from escalated Pyongyang rhetoric that North Korea is planning to accelerate its nuclear programme in response to new sanctions approved by the UN Security Council on Monday.

• Gold ETF holdings climbed to 2,138t yesterday marking the highest level since mid-November.

• Copper prices correction continued amid an increase in LME stockpiles with money managers net long positions to 6-week low.

• “Oil markets have started to rebalance...pointing to firmer fundamentals,” the IEA said in its monthly report released today; “expectations are that markets are tightening and that prices will rise, albeit very modestly”.

• Oil demand growth has been revised upwards by 1.6mmbbl to 97.7mmbbl this year as strong growth momentum outpaces expected slowdown due to Hurricanes Harvey and Irma; this comes amid Opec countries and Russia plans to curb global supplies in an effort to reduce high oil inventories and boost prices.

• January iron ore and steel futures are trading higher for a second day today recovering from a slight drop at the start of the month.

 

Dow Jones Industrials  +0.28% at   22,119

Nikkei 225   +0.45% at   19,866

HK Hang Seng   -0.31% at   27,886

Shanghai Composite    +0.14% at    3,384

FTSE 350 Mining   -1.71% at   17,450

AIM Basic Resources   -0.49% at    2,555

 

Economics

Eurozone – The single currency region growth momentum remains strong with the latest employment numbers showing the pace of new jobs created by the economy keeping at the highest level since the financial crisis in 2008-09.

• The ECB is expected to announce plans on a revision in its €60bn per month QE programme during its October meeting.

• The euro is stronger against the US$ this morning extending gains seen through Q2/Q3 to 14% and hovering around the 1.20 mark.

• Employment Gains (%yoy): 1.6 in Q2/17 v 1.6 in Q1/17 (revised from 1.5).

 

UK – Unemployment continued to fall beating market estimates while growth in earnings slowed and lagged forecasts.

• The jobless rate now stands at the lowest level since 1975.

• Slowing gains in labour earnings are attributed to “an element of Brexit uncertainty”, according to BoE; whereas, different explanations include poor productivity and companies limiting wage increases amid an rise in import costs, Bloomberg reports.

• The pound fell 0.4% against the US$ following the release of the news coming off the strongest level since September last year.

• Unemployment (3 months, %): 4.3 in 3m to July v 4.4 in 3m to June and 4.4 forecast.

• Earnings ex Bonus (3 months, %yoy): 2.1 v 2.1 in June and 2.2 forecast.

 

Currencies

US$1.1991/eur vs 1.1975/eur yesterday.   Yen 109.97/$ vs 109.56/$.   SAr 13.027/$ vs 12.909/$.   $1.331/gbp vs $1.321/gbp.     

0.804/aud vs 0.805/aud.   CNY 6.528/$ vs 6.529/$.

 

Commodity News

Precious metals:

Gold US$1,333/oz vs US$1,327/oz yesterday

• U.S. President Donald Trump’s latest comments regarding U.N. sanctions with North Korea have improved the demand.

• U.S. Treasury Secretary Steven Mnuchin threatened new financial sanctions on Beijing to cut off access to the U.S. financial system if China doesn’t back up the U.N. sanctions.

   Gold ETFs 68.7moz vs US$68.6moz yesterday

Platinum US$987/oz vs US$991/oz yesterday

Palladium US$953/oz vs US$944/oz yesterday

Silver US$17.95/oz vs US$17.79/oz yesterday

           

Base metals:   

Copper US$ 6,603/t vs US$6,729/t yesterday

• Copper stocks in LME approved warehouses rose over 10,000 tonnes (4.7%) following commodity fund sales of copper.

• Strengthening of the U.S. dollar encouraged the sale of positions in London metals.

Aluminium US$ 2,132/t vs US$2,127/t yesterday

Nickel US$ 11,725/t vs US$11,720/t yesterday

Zinc US$ 3,053/t vs US$3,090/t yesterday

Lead US$ 2,285/t vs US$2,277/t yesterday

• Tightening concentrate supply concerns in China continues to encourage positive buying interest.

• Equipment failure at Chinese Haicheng Chengxin Nonferrous Metal Co. suspended production at the 100 Ktpa smelter.

Tin US$ 20,695/t vs US$20,705/t yesterday

           

Energy:           

Oil US$54.3/bbl vs US$53.7/bbl yesterday

Natural Gas US$3.010/mmbtu vs US$2.961/mmbtu yesterday

Uranium US$20.65/lb vs US$20.65/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$72.3/t vs US$72.3/t

Chinese steel rebar 25mm US$664.6/t vs US$664.4/t

• Major Chinese steel maker Baoshan Iron Steel announced higher steel product prices for October bookings.

Thermal coal (1st year forward cif ARA) US$80.5/t vs US$80.9/t

Premium hard coking coal Aus fob US$208.9/t vs US$209.4/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$285-300/mtu

 

Company News

Anglo Asian Mining* (LON:AAZ) 26.8p, Mkt Cap £30m – Start of mining at Ugur ramps up production rate

• Production commenced at Ugur located within the Gedabek license area and linked by a 4.6km long road to the Company’s processing facilities.

• Processing of Ugur ores contributed to increased gold dore daily production rates which climbed 116% to 212oz in the first 10 days of September compared to the previous eight months.

• Average daily production is expected to improve further as Ugur operations ramp up to full capacity.

• As a result the Company reiterated its FY17 annual production guidance for 64-72koz of gold equivalent.

• Ugur ore is being treated at the agitation plant at Gedabek while flotation plant is running at 300-400tpd processing mainly high sulphide stockpile ore.

Conclusion: The team has done well in delivering a reserve/resource statement and commissioning mining operations at Ugur in a year since the discovery. Production start at Ugur lends confidence to the management team to reiterate annual production guidance supplying oxide ores to the agitation plant while Gedabek and Gadir operations go through a production review.

*SP Angel act as Nomad and Broker to Anglo Asian Mining

 

Metminco* (LON:MNC) 2.5p, Mkt Cap £3.2m – Interim results and progress report on Miraflores

• The Company has announced a loss of A$30.7m for the six months ending 30th June. The loss included a A$27.2m on the sale of its Los Calatos project in Peru to CD Capital as well as an unrealised loss of A$1.6m on a derivative instrument. Cash at 30th June stood at A$6.3m.

• The company expects to complete  the Bankable Feasibility Study on proposed underground mining of its flagship, Miraflores Gold Project, by the end of Q3 2017. Miraflores, which is located in the Middle Cauca Belt of Colombia, contains a Measured and Indicated, JORC compliant, resource of 9.3m tonnes at an average grade of 2.82g/t gold and 2.77 g/t silver.

• The company estimates that it will mine 4.32m tonnes of ore at a grade of 3.3g/t gold and 2.56 g/t silver to produce around 50,000 oz pa of gold over a 9 years mine life.

• Under the planned development, mining will use three access tunnels, designated the South, North and Main Portals, to open up the orebody to trackless mechanised mining. The decision to develop Miraflores as an underground mine significantly reduces the surface environmental disturbance of open-pit mining envisaged by the project’s previous owners and is expected to accelerate the permitting process as a result.

•  The company notes that it has achieved “significant operating cost savings” through “optimisation of the mining plan and schedule” and that metallurgical testwork has “confirmed previous testwork results with gold recovery of 91% confirmed.”

Conclusion: We look forward to the detailed results of the BFS and to news on the progress of the permitting for Miraflores.

*SP Angel act as broker to Metminco. SP Angel analysts have previously visited Los Calatos in Peru and the Miraflores project in Colombia.

 

Tri-Star Resources* (LON:TSTR) 0.15p, mkt cap £28.5m – Interim report and update

• TriStar Resources reports a loss of £5.7m (0.06p/share) for the six months ending 30th June as it presses ahead with the development of the 40% owned Oman Antimony Roaster (OAR) by the Omani company, Strategic and Precious Metals Processing (SPMP).

• The loss includes a £3.6m, non-cash charge arising as  a result of the conversion of Loan Notes held by Odey Asset Management (OAM) which took place in June and resulted in OAM holding 54% of TriStar Resources’ equity.

• Administrative costs have been reduced by 14% to £410,000 (H1 2016 £478,000). Cash at 30th June amounted to £1.1m.

• The company recaps on the progress of the OAR where construction has been underway since early in the year and on design changes which facilitate the treatment of a wider range of feedstock, including the construction of a gold treatment circuit and the associated gas handling infrastructure.

•  Independent test-work has confirmed good recoveries of antimony and gold and aided the design changes which are now being implemented in the plant construction. These changes which, we consider will increase the flexibility of the plant and, in particular, enhance the ability to treat a wide range of mineral concentrates, have resulted in the previously announced increase in the capital budget to $96m.

• These design changes and the increased budget make it “highly likely that TriStar will be required to contribute significant additional capital to SPMP in order to maintain the Company’s 40% stake in the OAR project.” At this stage, in the absence of further information we are maintaining our view that an additional contribution of around US$7.5m may be required from TriStar.

• Earlier this year, in June, the company announced that SPMP had agreed a long term mineral concentrate supply agreement with the international trading business of Traxys Europe in order to source antimony and gold concentrates for the roaster.

• The company observes that environmental measures in China compounding seasonal weakening in demand has seen subdued Chinese production but that “In recent months, antimony prices have increased  have increased amid tightening of supply of the metal  over the summer months.”

Conclusion: TriStar Resources has stabilised its finances through the conversion of its debt which has given it an historically supportive long term major shareholder in OAM. Operationally construction is now well underway with an expanded design capability to treat a wider range of mineral concentrate material. Access to these feedstocks is enhanced by the supply agreement with Traxys.

*SP Angel acts as Nomad and Broker to Tri-Star Resources

 

Vast Resources (LON:VAST) 0.39 pence, Mkt Cap £18.3m – Baita Plai mining licence expected shortly

• Vast Resources reports that it expects to receive permission to mine the Baita Pali polymetallic mine in Romania “during September”. The outstanding step in the permitting process requires the payment of US$1.6m which “has been provided by a 180 day loan facility from Sub-Sahara Goldia  Investments(“Sub-Sahara”)”.

• The loan which carries an interest rate of 1% per month, repayable by 9th March 2018, “has been added to the existing US$4 million loan previously announced on  30 January 2017 and is on the same terms. … The Company’s 49.9 per cent stake in Sinarom Mining Group … has been provided as additional security for the Loan.”

• The company comments that “Obtaining the right to mine at Baita Plai will represent a significant milestone in the process of expanding the mining operations of Vast in Romania becoming the Company’s second mine in country alongside its Manaila Polymetallic Mine”.

Conclusion: The permitting of Baita Plai is expected to be concluded later this month adding a second mine in Romania emphasising the company’s shift from its earlier roots in Africa. The loan finance is in place to complete the transaction though given the terms which include the pledge of its Romanian assets as security and the comment that “Vast now looks forward to securing the strategic investment to support growth initiatives planned at both mines”, we would not be surprised by a refinancing.

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Wed, 13 Sep 2017 11:08:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28581/today-s-market-view-anglo-asian-mining-plc-metminco-tri-star-resources-vast-resources-plc-28581.html
Today's Market View - Amur Minerals Corporation, Gem Diamonds, Metminco, SolGold plc, Tethyan Resources PLC http://www.proactiveinvestors.co.uk/columns/sp-angel/28590/today-s-market-view-amur-minerals-corporation-gem-diamonds-metminco-solgold-plc-tethyan-resources-plc-28590.html Amur Minerals* (LON:AMC) – Drilling at KUB points to a potential resource expansion

Gem Diamonds (LON:GEMD) – Demand for Letseng quality diamonds remains strong

Metminco* (LON:MNC) – Miraflores underground exploration approved

SolGold* (LON:SOLG) – Annual results and operational update

Tethyan Resources* (LON:TETH) – Drilling results from the Rudnitza prospect

 

Base metals and bulk commodities pull back on disappointing Chinese industrial production, investment and retail sales

• Copper is retreating for a third session and is trading at a one month low.

• January iron ore futures slump 5.8% today extending losses in September to 8.9%; steel rebar futures were off 1.7%.

• Gold is level after posting losses on Wednesday amid an increase in the US$ and US equities posting new highs.

• US inflation data to be released later today will be watched closely as the latest slowdown in core consumer prices growth raised questions over the course of the future monetary policy tightening.

• Brent is holding onto its earlier gains on the back of stronger demand forecasts from the IEA and OPEC; Chinese oil production continued to decline to the lowest in eight years with output drop accelerating in August on the back of an outage at offshore fields; Nigerian Petroleum Minister is looking to raise production to 1.8mmbbl per day or 170kbbl more than it is currently pumping before agreeing to a new potential OPEC output cut.

 

New nickel catalyst transforms greenhouses gases

• Scientists have designed a water soluble nickel catalyst that transforms carbon dioxide to carbon feedstock.

• The discovery opens door to creating faster more efficient first-row transition metal catalysts for carbon dioxide conversion.

 

PotashCorp looking at selling stake in world’s largest lithium producer as part of deal to enable merger with Agrium

• PotashCorp is looking at selling its 32% stake in SQM, the world’s largest lithium producer

• The 32% stake is worth around US$4.6bn on the NYSE but may sell for more given growing interest in securing lithium production.

• Rumors reported on Mining.com suggest PotashCorp may be considering the sale of a 20% stake in SQM to GSR Capital, a Chinese Private Equity firm.

• PotashCorp are looking to merge with Agrium a smaller potash producer to create a combined business worth around $36bn.

• The deal has been approved by the Canadian competition bureau but Chinese and Indian appear to want PotashCorp to divest certain minority holdings in the Canadian firm.

• While we know SQM as a lithium company, investors should note that SQM is really a potash producer with a lithium co-product.

• The new combined entity will be called Nutrien if the merger goes through.

 

Dow Jones Industrials  +0.18% at   22,158

Nikkei 225   -0.29% at   19,807

HK Hang Seng   -0.42% at   27,777

Shanghai Composite    -0.38% at    3,371

FTSE 350 Mining   -1.88% at   17,027

AIM Basic Resources   -0.41% at    2,545

 

Economics

US – Headline inflation picked up in August driven by an increase in energy prices.

• Despite a pick up in core inflation measures price pressures seem to be well contained for now.

• Hurricane Harvey related effect has not been accounted for in August numbers, although as historic data suggests inflation measures may remain elevated for a few months post storm incidents.

 

China – Economic growth unexpectedly slowed further in August following a weaker July with industrial production, investment and retail sales cooled.

• Infrastructure spending growth was down at 19.8% in the first eight months compared to 20.9% recorded in the first seven months.

• Regulatory efforts to rein in credit expansion saw home sales growing at the slowest pace in almost three years last month.

• On the positive side of things, steel production hit record high.

• Retail Sales (%yoy/YTD): 10.1/10.4 v 10.4/10.4 in July and 10.5/10.4 forecast.

• Industrial Production (%yoy/YTD): 6.0/6.7 v 6.4/6.8 in July and 6.6/6.8 forecast.

• FAI ex Rural (%YTD): 7.8 v 8.3 in July and 8.2 forecast.

 

UK – John Lewis, a supermarket and department store chain, reported a 53% drop in PBT on the back of weak consumer demand, adverse FX currency moves and restructuring charges.

• The group expected difficult consumer market conditions to persist in H2/17 exercising pressure on operational margins.

• Property prices in London are reported to have recorded the weakest month since 2008, according to the Royal Institute of Chartered Surveyor survey.

• A net 56% of respondents saw a drop in prices in London last month against a net 6% nationally seeing a price increase.

• Although, subdued outlook for property prices in the capital seem to be driven largely by prime central London locations, the report said.

 

Australia – The A$ climbed 0.5% against the US$ on surprisingly strong August employment numbers.

• Encouragingly most of the increase in the number of jobs came from the full time category accounting for c. 3/4s of the total increase.

• Additionally, the number of people actively looking for job continued to rise.

• Despite strong numbers, the RBA is expected to stay put with regards to a potential rate hike as underemployment remains high and wage growth continues to be weak, Bloomberg reports.

• Employment Change (‘000): 54.2 v 29.3 in July and 20.0 forecast.

• Unemployment Rate (%): 5.6 v 5.6 in July and 5.6 forecast.

 

Currencies

US$1.1900/eur vs 1.1991/eur yesterday.   Yen 110.38/$ vs 109.97/$.   SAr 13.124/$ vs 13.027/$.   $1.321/gbp vs $1.331/gbp.     

0.800/aud vs 0.804/aud.   CNY 6.555/$ vs 6.528/$.

 

Commodity News

Precious metals:

Gold US$1,324/oz vs US$1,333/oz yesterday - Growth in the U.S. dollar index applied pressure to the precious metal markets, pulling gold prices moderately lower.

• Stronger U.S. consumer inflation data released in the August report today at 12.30 GMT could advance increased future interest rate expectations.

   Gold ETFs 68.8moz vs US$68.7moz yesterday

Platinum US$981/oz vs US$987/oz yesterday – Ballard Power claims technology breakthrough allows replacement of platinum in fuel cell design

• The technology non-precious metal catalyst design is said to reduces amount of platinum required by >80%

• Historically less platinum in fuel cells has meant less power and conversion efficiency.  Problem has been that platinum catalysts tend to run rather hotter than most consumers and manufacturers feel comfortable with.  Previous platinum-rich designs ran at >400oC in the days when Ballard Power was a darling of the Dot.Com boom.

• If Ballard’s new designs work well then their fuel cells may provide a good supplement or alternatives to batteries in Electric Vehicles.

Palladium US$942/oz vs US$953/oz yesterday

Silver US$17.76/oz vs US$17.95/oz yesterday

           

Base metals:   

Copper US$ 6,484/t vs US$6,603/t yesterday – 29,450t increase in LME approved copper warehouse stock brings the total to 276,025t, following further fund sales of the metal.

• Copper producers to benefit from hurricanes

• Texas hurricane costs estimated at $180bn with significant new demand for copper wiring and plumbing to come from need to rebuild houses, businesses and infrastructure

Aluminium US$ 2,091/t vs US$2,132/t yesterday - Chinese gov’t efforts to minimise excess smelting capacity limited August aluminium output, which fell to the lowest since April ‘16.

• August production was reduced following the forced closure of illegal capacity of top aluminium producers China Hongqiao and Xinfa Group.

Nickel US$ 11,235/t vs US$11,725/t yesterday – Indonesian discussions to increase nickel exports to China cause a 2% price drop amid concerns of excessive supplies.

Zinc US$ 3,006/t vs US$3,053/t yesterday

Lead US$ 2,277/t vs US$2,285/t yesterday

Tin US$ 20,575/t vs US$20,695/t yesterday

 

Energy:           

Oil US$55.1/bbl vs US$54.3/bbl yesterday - Record premium for high grade iron ore

Natural Gas US$3.063/mmbtu vs US$3.010/mmbtu yesterday

Uranium US$20.65/lb vs US$20.65/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$72.3/t vs US$72.3/t -

• China’s environmental legislations are driving increasing premiums for high-grade iron ore, enhancing the output from steel mills while reducing associated emissions.

• Combined with August production highs of 74.6mt, the gap between the two iron ore grades is the greatest since August 2011.

• The environmental clean-up is pushing more steel producers to use higher quality feedstock material, eg Australian iron ore and has driven Australia and Brazil’s market share to >80% of China’s total iron ore imports.

• This is also forcing shippers of lower grade material to offer steeper discounts to draw in buyers

Chinese steel rebar 25mm US$663.6/t vs US$664.6/t

Thermal coal (1st year forward cif ARA) US$83.4/t vs US$80.5/t

Premium hard coking coal Aus fob US$208.9/t vs US$208.9/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$285-300/mtu

 

Company News

Amur Minerals* (LON:AMC) 9.3p, Mkt Cap £57m – Drilling at KUB points to a potential resource expansion

• The Company reports the third drill update at KUB as part of its 30,000m field season in 2017.

• The team completed 21,933m of drilling through 8 September 2017 across IKEN and KUB deposits, part of the Kun Manie sulphide nickel/copper project.

• Infill drilling in the central part of the KUB deposit has been completed with the Company expecting high conversion ratios of the available Inferred Resources (10.9mt at 0.74% Ni and 0.20% Cu) to the Indicated category.

• Step out drilling in the eastward direction targeted 1,000m long segment of the 3,000m long continuous anomaly running between IKEN and KUB.

• A total of 14 holes that intersected mineralisation along the 500m long part returning an average thickness of 20.1m per hole (10.8m per mineralised interval) at average grades of 0.580% Ni and 0.21% Cu.

• Results “confirm that economic grades and thicknesses are similar to drill results defined and used in the generation of the KUB mineral resource estimates”, the Company highlighted.

• The remaining drilling scheduled over the next eight weeks until the end of the season is expected to test another 500m along the identified anomaly and potentially confirm IKEN and KUB are parts of a 4.5km long deposit similar to the MKF deposit.

• Conveniently, step out drilling is being completed at a spacing used in the identification of the Indicated Resource category suggesting the 2017 field season is likely to see “a substantial increase over current global 100mt inventory reported within four deposits”.

*SP Angel act as Nomad and Broker to Amur Minerals

 

Gem Diamonds (LON:GEMD) 76p, Mkt Cap £106m – Demand for Letseng quality diamonds remains strong

• Gem Diamonds report good demand for Letseng’s high quality diamonds. 

• A recently recovered 126.75 carat D-colour Type IIa diamond and a 7.78 carat pink sold for $56,400/ct and $202,000/ct.

• The company reported an interim after tax profit in mid-August of just US$578,000 vs a loss of US$15.9m yoy.

• A combination of lower ore tonnages treated due to reduced plant availability and reduced recovered grades, which at 1.59cpht was lower than both the 1.79cpht achieved in H1 2016 and the targeted 1.63 cpht for H1 2017, led to a 12% decline in the overall production to 50,478 carats (H1 2016 57,380 carats).

• Gem Diamonds is focussing on the production of larger, higher value diamonds with improvement evident in this area.

Conclusion: If recoveries of larger stones continues to improve then Gem Diamonds looks likely to report further positive progress going forward.

 

Metminco* (LON:MNC) 2.875p, Mkt Cap £3.7m – Miraflores underground exploration approved

• Metminco has received approval for up to 2000 metres of underground development at its Miraflores gold project in Colombia.

• The development “will allow the Company to expose the previously defined ore zones on multiple levels and complete infill diamond drilling for stope definition ahead of a final decision to construct the processing facilities and supporting infrastructure”.

• The company plans to access the mineralisation on multiple levels which should provide detailed information on the mining characteristics of the deposit as well as providing sites for further underground drilling and significant quantities of mineralised material for further metallurgical testing.

• The company reiterates that it remains on course to complete the Miraflores feasibility study during Q3 2017. Given the timing, it is unlikely that the information gained from the initial exploratory underground work will be available to be incorporated in the feasibility study itself, however it should provide detailed information for the planning and implementation phases of a future mine development at Miraflores.

• In our view, gaining underground access to the mineralisation at Miraflores should provide important geological, mining and metallurgical information to help de-risk the project. It should also provide an opportunity for the company to demonstrate its operating credentials to local regulatory authorities and other interested parties within the local communities.

Conclusion: Approval for limited underground development at Miraflores should help to de-risk the project and provide detailed information for the future development.

*SP Angel act as broker to Metminco. SP Angel analysts have previously visited Los Calatos in Peru and the Miraflores project in Colombia.

 

SolGold* (LON:SOLG) 33p, Mkt Cap £500.4m – Annual results and operational update

• SolGold has reported a pre-tax loss of A$8.3m for the year ending 30th June 2017 (2016 – A$5.7m loss). The increased pre-tax loss is attributed to “A$2,239,533 (2016: A$nil) recognised as a share based payments expense representing the fair value of share options granted to employees and contractors during the year and an unrealised foreign exchange loss of A$1,032,010 (2016: gain of A$126,619) recognised on funds held in United States dollars.”

• After allowing for an A$3.8m tax benefit, the company reports an overall loss for the year of A$4.5m or 0.3Acents per share (2016 – A$5.7m loss or 0.7Acents)

• The company reports a 30th June cash balance of A$89.3m.

• The year has seen Newcrest Mining invest a total of US$62.8m in order to bring its holding in Solgold to 14.5% and the increased funding and support of a major industry player has enabled Solgold to escalate its exploration activity at Cascabel to the point where, with over 44,500m of drilling completed, the company is targeting “the Company’s maiden resource estimate for the Alpala Prospect, which is expected to be completed by the end of 2017.”

• Drilling at Cascabel “over a 2200m by 700m surface area along an 1800m deep vertical column has now defined a northwesterly-trending, steeply northeast-dipping zone of multi-phase porphyry style stock-work veining and associated phases of diorite to quartz diorite stocks and dykes”. As the company escalates its drilling campaign to a complement of 10 rigs by early 2018, the overall extent of the known mineralisation is likely to increase.

• In addition to the work at Alpala and in the greater Cascabel licence area, where only 4 targets of 15 identified and have yet been drilled, Solgold has secured a further 59 exploration tenements totalling 2,496km2 throughout Ecuador.

Conclusion: The past year has been pivotal for Solgold as it moves to its initial resource estimate at Alpala by the end of 2017.

*SP Angel acts as Nomad and broker to SolGold.  The mining team at SP Angel have raised funds for SolGold on at least eight occasions over the past 10 years.

 

Tethyan Resources* (LON:TETH) 3.125p, Mkt £5.3m – Drilling results from the Rudnitza prospect

• Tethyan Resources has announced results from its recently completed 4 holes diamond drilling programme at the Suva Ruda licence within its Rudnitza prospect in Serbia.

• The programme which totalled 2127.6m of core “drilling at Rudnitza has confirmed that this is a very extensive mineralised system.” Among the highlighted results are:

o A 460m long intersection at an average grade of 0.21% copper and 0.20 g/t gold from surface in hole RDD-006. This intersection includes a higher grade section of 20m from a depth of 92m which averaged 1.04% copper and 0.20g/t gold; and

o A 260m long intersection at an average grade of 0.22% copper and 0.20 g/t gold from a depth of 6m in hole RDD-005. This intersection includes a higher grade section of 12m from a depth of 116m which averaged 0.78% copper and 0.13g/t gold; and

o Hole RDD-007 reported an intersection of 572m from surface at an average grade of 0.11% copper and 0.16 g/t gold including a higher grade section of 80m, from a depth of 106m at an average grade of 0.3% copper and 0.16g/t gold; and

o RDD-008 which intersected 341.7m at an average grade of 0.17% copper and 0.24 g/t gold from a depth of 138m.

• Tethyan Resources comments that “The results of these drill holes have expanded the known extent of the Rudnitza porphyry system” and that following detailed geological interpretation, the results will help the exploration team to identify areas of “higher grade mineralisation” for future drilling.

• Today’s results add to the previously reported holes RDD-001 to RDD-004 which also showed relatively near surface, long intersections at similar grades, also including some higher grade sections within the hole.

• Although the assays reported today, and earlier in the programme, are relatively low, they confirm an extensive system of disseminated mineralisation close to the surface. Until the detailed interpretation is completed, the geometry, particularly of the higher grade sections of mineralisation, remains obscure, however we would expect the company to be planning further drilling once the more promising targets have been identified.

Conclusion: Drilling confirms an extensive system of disseminated mineralisation and has provided geological information which should help identify potential higher grade targets within the system for future exploration.

*SP Angel act as broker to Tethyan Resources

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Thu, 14 Sep 2017 10:59:00 +0100 http://www.proactiveinvestors.co.uk/columns/sp-angel/28590/today-s-market-view-amur-minerals-corporation-gem-diamonds-metminco-solgold-plc-tethyan-resources-plc-28590.html