SP Angel – Morning View – Thursday 08 11 18
China seen moving to strike new trade deals outside US
Galantas Gold (LON:GAL) – Channel samples from Kearney Vein
Calidus Resources (ASX:CAI)
New Chinese trading drive could bring fresh metal support
- China is increasing efforts to develop new, longer-term global trading ties in response to rising tensions with the US, according to head of BHP Billiton. CEO Andrew Mackenzie adds “they are more active than they have been for a while in looking at the kind of trade arrangements that may allow them to trade with many, many countries of the world, to make up for the shortfall they may suffer from the United States”.
- Mackenzie, a member of a Global CEO Council of Western executives, an influential global business advisory group, visits the nation about three times a year and said he had a private meeting with President Xi Jinping in June. “He came out with the quote when I was talking to him about protectionism – which was all over the world’s media – that you know, in the West you have a thing: ‘Turn the other cheek. In China, we punch back.’” BHP made its first ever export in 1890s with a shipment of lead sent to Suzhou in eastern China.
- Melbourne-based BHP, the world’s biggest miner, is focused on iron ore, copper, coal and petroleum and wins about 53% of revenue from China, the world’s top commodities consumer, according to data compiled by Bloomberg.
- China’s exports rose in dollar terms in October on a year earlier, as companies seek to make shipments before higher U.S. tariffs kick in. The U.S. is set to increase tariffs on $200bn worth of imports from China to 25% in January, a move seen by ING Bank NV as likely to have a more apparent effect on products including metals, textiles, chemicals, and plastic goods.
- “There’s no doubt that the Chinese will be seeking to offset the impact of some of the trade issues that they are facing,” Mackenzie told reporters. “Knowing the Chinese, they will be prepared to use all of the levers they have as a government to in the first instance, stimulate domestic demand.”
- BHP is looking to capitalise on the new trade efforts, with a large procurement organisation in the country and a Shanghai-based unit that develops internal company applications for mobile devices. “We are relatively well connected”, highlighting he’s the only representative of the mining sector on the CEO advisory group.
Vandium – prices continue to rise in Europe as buyers compete for available supply
- Ferro-vanadium prices are reported to have risen by a further 3.4% in Western Europe to US$120-125/kgV by Fastmarkets (Metal Bulletin).
- We wait to see if the ferro-vanadium price might continue to rise in China.
- Fastmarkets MB report prices held steady in China over the past week due to lacklustre activity while European markets continuing to gain strength on increased activity, closing the gap to the Chinese market.
Dow Jones Industrials
HK Hang Seng
FTSE 350 Mining
AIM Basic Resources
US – FOMC decision is due later today with expectations for no change in benchmark rates range of 2-2.25%.
- Markets are currently pricing in a 78% chance the Fed will hike durig its last meeting before the end of the year in December.
- “Fed officials will be satisfied if the November FOMC meeting is a relative non-event for financial markets,” Bloomberg Economics said.
- Investors would be looking for changes in the economic outlook mentioned in the FOMC statement while latest strong inflation and low unemployment numbers support a case for further tightening.
China – Trade expands more than forecast in October as China as orders are being rushed in before the tariffs hit.
- Weaker Chinese renminbi also helps local exporters; USDCNY was down 4.6% compared to last October.
- Trade surplus with the US came in at $31.8bn during the month, down from a record $34.1bn in September.
- YTD trade surplus with the US totalled $258.2bn compared to a total of $275.8bn for FY17.
- Exports (%yoy, US$ terms): 15.6 v 14.4 in September and 11.7 forecast.
- Imports (%yoy, US$ terms): 21.4 v 14.5 in September and 14.5 forecast.
Germany – Weak trade numbers released this morning come in following positive data reported earlier this week showing a pickup in German factory orders and industrial output in September.
- The central bank highlighted Q3 slowdown was due to temporary difficulties in the auto industry which is forecast to be temporary.
- Although outlook remains fragile given an escalation of trade tensions and a general global growth slowdown.
- Car registrations dropped 7%yoy in October following a 30.5%yoy decline in September amid the introduction of the new emissions testing regime, known as WLTP.
- Exports (%mom): -0.8 v 0.1 in September and 0.4 forecast.
- Imports (%mom): -0.4 v -2.4 in September and 0.8 forecast.
UK – Brexit related uncertainty and a lack of new buyers weighs on UK housing market which recorded a modest drop in values in October, according to the Royal Institution of Chartered Surveyors.
- The RICS index hit a six year low last month with the report coming on the heels of Halifax and Nationwide data pointing to slower properties prices growth.
- Negative trend in the overall market is primarily led by the south and east regions of England.
- Respondents to the RICS survey were “doubtful” that UK sales momentum will pick up over the coming months.
Kazakhstan – Kazatomprom, the world’s largest producer of uranium, secured investors for its listing of 15% of the company in London this month, FT reports.
- The Company, owned by the government, is planning to raise up to $600m during the listing valuing it at $4bn.
- Uranium prices have been recovering lately on the back of production cuts from major suppliers hitting $29.00/lb yesterday, marking the highest level since March 2016.
- Nevertheless, current prices remain far way off over $50/lb levels seen before the Fukushima power plant disaster in 2011.
US$1.1435/eur vs 1.1470/eur yesterday Yen 113.71/$ vs 113.17/$ SAr 13.950/$ vs 14.001/$ $1.314/gbp vs $1.315/gbp 0.729/aud vs 0.726/aud CNY 6.928/$ vs 6.923/$
Gold US$1,224/oz vs US$1,232/oz yesterday
Gold ETFs 68.5moz vs US$68.7moz yesterday
Platinum US$872/oz vs US$876/oz yesterday
Palladium US$1,124/oz vs US$1,120/oz yesterday
Silver US$14.51/oz vs US$14.66/oz yesterday
Copper US$ 6,129/t vs US$6,190/t yesterday
Aluminium US$ 1,984/t vs US$1,962/t yesterday
Nickel US$ 11,695/t vs US$11,755/t yesterday
Zinc US$ 2,471/t vs US$2,492/t yesterday
Lead US$ 1,929/t vs US$1,920/t yesterday
Tin US$ 19,105/t vs US$19,090/t yesterday
Oil US$72.3/bbl vs US$71.8/bbl yesterday - OPEC considers cutting back output
- Following the US midterms and continued slide of crude futures, OPEC are reportedly discussing a change in their stance to resume cutting output next year.
- OPEC ministers and its allies will meet in Abu Dhabi on Sunday and discuss scenarios including the possibility of cutting production again next year, according to delegates.
- With Iran sanctions now in place and oil still in ample availability, OPEC-led production cuts next year cannot be ruled out, two OPEC sources said on Wednesday.
US now producing more oil than Russia and Saudi Arabia
- U.S. oil production jumped to a record 11.6m bpd last week, surpassing both Russian and Saudi Arabian output.
- West Texas Intermediate futures are now down 20% from the near four-year high reached on Oct. 3.
- U.S. production is up a stunning 2m bpd from the same period last year, and 400,000 barrels from the week earlier, based on U.S. government data.
- The U.S. government expects October production was 11.4m bpd and that production can grow to 12.1m bpd on average next year.
Natural Gas US$3.513/mmbtu vs US$3.518/mmbtu yesterday
Uranium US$29.00/lb vs US$28.80/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$71.9/t vs US$71.8/t
- Iron ore remains supported from BHP’s derailment, as the company continue shipments using port stockpiles in an attempt to offset delivery of fresh ore. CEO Andrew Mackenzie believes the company will “have the ability to supply our customers as contracted to do so” during the week-long recovery process.
- “We lost control of a train, we monitored what was going on through our remote control centre in Perth, we let it go through a number of points in the hope that it would slow down on its own”, according to Mackenzie. “As soon as it became a risk to bridges and trains in front, we derailed it”. Staff “realized if they didn’t force the derailment of this train it could’ve caused an awful lot more damage and could have been a real safety risk,” Mackenzie says. “So they actually threw the points at a time when they knew it was moving quickly to derail the train and stop it before it damaged anybody”
- BHP has ~130 people “working night and day to get things back to normal”, aiming to move quickly to restore production and satisfy customers.
- The company is sharing any findings with competitors in the hope to improve safety, while making more significant boosts in spending in rail safety.
Chinese steel rebar 25mm US$690.5/t vs US$693.9/t
Thermal coal (1st year forward cif ARA) US$92.4/t vs US$90.0/t
Coking coal futures Dalian Exchange US$199.2/t vs US$199.3/t
Cobalt LME 3m US$55,000/t vs US$55,000/t
China NdPr Rare Earth Oxide US$45,610/t vs US$45,642/t
China Lithium carbonate 99% US$10,103/t vs US$10,111/t
Unique technology claims draws scrutiny for Albemarle
- Major lithium brine producer, Albemarle, is drawing increased scrutiny from regulators and investors pushing for more details over claims to have developed a unique process that would more than triple lithium production from Chile’s Atacama Desert without using more water. The lack of clarity over the issue prompted Chile's nuclear commission (CCHEN), which oversees the sale and export of lithium in Chile, to deny Albemarle's request to increase its production quota for the white metal.
- While the agency says the company has yet to explain how its technology will allow it to extract more lithium from the same amount of brine in the world's driest desert, its potential could help Albemarle cement its position as the world’s largest lithium company, just as global demand is spiking for use in batteries that power electric vehicles and consumer goods.
- Albemarle says it "is preparing a revised request addressing CCHEN's concerns, which are of a technical nature" and that it expects to ultimately receive approval to produce more lithium.
- The company are expected to spend "hundreds of millions of dollars" to build a plant in the Atacama that would further refine brine concentrate to increase the amount of lithium recovered to 80%, up from "about half" today. Some industry analysts say the current lithium recovery figure is lower, around 30%.
- Water usage is closely watched by Chilean regulators, despite the $100m in royalties the country collects annually from Albemarle, due to concerns about water and brine levels in the Atacama.
- The company's lithium process, which relies heavily on evaporation ponds, was designed to extract potash fertilizer from salts, with lithium only as a by-product.
- Tweaking that technology to boost lithium recovery has long been an obsession of Albemarle and SQM. Indeed, rivals in Argentina, including Livent Corp, have developed methods that allow for nearly all lithium in brine to be recovered, a step made possible in part by the different chemical composition of Argentine brine.
- "The modification is made possible because Albemarle has developed a sustainable technology that allows us to increase the efficiency of our processes in the Salar de Atacama without using more brine or water, and as a consequence, produce more tons of lithium carbonate," Stephen Elgueta, Albemarle's Chilean manager, wrote to nuclear agency CCHEN on March 23.
- Outstanding questions about what exactly Albemarle have forced CCHEN to reject Albemarle’s request to increase its quota as the miner mainly failed to divulge how the “technology would permit the increase in efficiency”.
Rapid lithium brine extraction advances for MGX Minerals
- Following its partnership with Purlucid Treatment Solutions, MGX Minerals is advancing its third petrolithium and advanced wastewater treatment system to rapidly recover lithium from bine. Accelerating removal of lithium from brine is receiving broad interest from an industry struggling with evaporation pond residence periods of 12-18 months.
- In detail, MGC said the manufacturing of nano-filtration membrane housing is underway and primary nano-flotation, piping, and structural components are expected to commence fabrication in the second half of November.
- The company are targeting a system capable of processing 20m3/h and to treat one-through steam generator or OTSG boiler blowdown brine. MGX said that OTSG represents the largest water loss at steam assisted gravity drainage facilities, known as SAGD. “The system will treat water suitable for reuse, saving the majority of water loss and greatly reducing both the complexity and cost for new and expansion SAGD projects.”
- While the viability of the process on lithium brines across Western US and South America is unproven, the company have initial plans to deploy the system in Alberta.
- According to MGX, the technology is capable of extracting lithium and other elements very quickly from petrolithium or oil and gas wastewater, natural brine and other brine sources such as lithium-rich mine and industrial plant wastewater. This reduces the physical footprint and investment in large, multi-phase, lake-sized, lined evaporation ponds. The miner says it also enhances the quality of extraction and recovery across a complex range of brines.
Tungsten APT European US$275-295/mtu vs US$275-295/mtu
Nendo launches hand-generated battery charging
- Japanese design studio Nendo has released a portable charger for mobile phones which uses hand-generated centrifugal force to produce electricity.
- The Denqul stick is extendable and bends into an L shape, which is then swung and rotated.
- A lithium battery is positioned on the end to maximise the centrifugal force, utilising the weight of the battery as leverage.
- The device can also be plugged into mains electricity for everyday charging.
Ford to launch global fleet of e-scooters
- Ford has announced this morning that it is joining the race with Bird and Lime in the electric scooter rentals market, with a plan to deploy fleets in more than 100 cities by 2020.
- To accelerate its ambitions, Ford is buying Spin, one of several scooter rental start-ups to emerge in California over the past year.
- Ford did not disclose the price it paid for Spin, but Axios reported on Wednesday that it paid about $40m.
- The head of Ford X said that his target of launching the scooters in more than 100 cities over the next 18 months would require a “significant investment”.
Battery powered homes
- Residents of a new master planned community will save about $2000 a year in electricity bills thanks to ground-breaking technology.
- ‘Smart’ battery systems are set to power 74 townhouses in Mulpha’s northwest Sydney project, Essentia, by capturing daytime solar energy which is efficiently stored and ready for use on demand.
- Natural Solar founder Chris Williams said the cost-effective units had been tried and tested and would be rolled out in 2020 as part of a $1.5m installation deal with the developer.
- “The modelling suggests savings for home owners in this development could be between $2000 and $2200 per annum, and that’s not allowing for the expected electricity increases over the next few years,” he said.
- Set to hit the market next weekend with a starting price of $1.3m, the townhouses will come with rainwater tanks, home automation, intercom, LED lighting and double-glazed glass.
Galantas Gold (LON:GAL) 5.8p, Mkt Cap £11.1m – Channel samples from Kearney Vein
- Galantas Gold reports the results of two channel samples taken from underground development on the Kearney Vein at its Omagh gold mine in Northern Ireland.
- One sample, extending over a true width of 1.8m averaged 7.1g/t gold and 10.6g/t silver, while the second sample, over a true width of 3.2m averaged 10.4g/t gold and 22.4g/t silver.
- The company points out that “The first channel sample did not include some mineralised material which was obstructed by the hanging wall margin”.
- The results follow an announcement, in late August, of another channel sample on the same vein which averaged 12.8g/t gold and 33.1g/t silver over a width (though not necessarily a true width) of 1.7m “taken as close to 90 degrees across the vein as was practical, given some interference by ground support”.
Keras Resources* (LON:KRS) 0.35p, mkt cap £8.0m – New high-grade gold results from Calidus Resources add further value to Keras
Calidus Resources (ASX:CAI) A$0.03, mkt cap A$46.8m
(Keras currently hold 458m shares in Calidus Resources with an additional 265m new shares due to be granted by Calidus when the gold project PFS is published.
All Keras’ shares in Calidus are in escrow for two years with the lock up expiring on 23 June 2019.)
BUY, Target price 1.04p
- Keras Resources has reported on an announcement by its 35% owned Calidus Resources of high-grade gold results from the current infill and extension drilling programme aimed at firming up and extending the current 712,000oz indicated and inferred mineral resource at Warrawoona in the Pilbara region of Western Australia.
- The current resource estimate for Warrawoona, released in December 2017, comprises 8.4m tonnes grading 2.01g/t gold (541,000oz) classed as indicated and an additional 2.1mt classed as inferred grading 2.5g/t (171,00oz).
The drilling form part of a programme intended to support the start of a pre-feasibility study during 2019. Among the drill results, which highlighted in today’s announcement are:
- An intersection of 6m averaging 7.61g/t Au from a depth of 16m depth in hole 18GRC031 at the St George prospect;
- An intersection of 8m averaging 5.64g/t Au from a depth of 44m depth in hole 18GRC032, including single 1m intersections assaying 11.03,13.05 and 10.95g/t gold at the St George prospect;
- An intersection of 14m averaging 1.77g/t Au from a depth of 35m depth in hole 18GRC047 at the St George prospect;
- An intersection of 2m averaging 10.23g/t Au from a depth of 91m depth in hole 18GRC050 at the St George prospect;
- An intersection of 2m averaging 20.84g/t Au from a depth of 88m depth in hole 18KLRC152, including a single metre averaging 40.51g/t gold at the Klondyke East prospect;
- An intersection of 6m averaging 3.82g/t Au from a depth of 93m depth in hole 18KLRC148 at the Klondyke East prospect;
- An intersection of 15m averaging 0.97g/t Au from a depth of 97m depth in hole 18KLRC172 also at the Klondyke East prospect;
- An intersection of 2m averaging 7.29g/t Au from a depth of 66m depth in hole 18KLRC152, including a single metre averaging 12.75g/t gold at the Klondyke East prospect; and
- A single metre averaging 10.79g/t gold from a depth of 2m in hole KLRC158 at Klondyke East
- Commenting on the results from Warrawoona, the Managing Director of Calidus Resources, Dave Reeves, pointed out that the St George shear is only 150m north of Klondyke and that with “only 60% of this area to report and the tenor of the grade increasing to the west, I look forward to reporting these further results and the results of an initial diamond drill programme that is targeting resources beneath the potential open pit at Klondyke.”
- Calidus Resources also has a programme of hydrological and geological drilling underway to establish data for the PFS and reports that it is planning to start further geochemical sampling next week “infilling and extending a number of regional gold-in-soil anomalies across the ~550km2 Warrawoona tenure”
- Russell Lamming, CEO of Keras Resources underlined that “These high grade results from the St George Shear and Klondyke East underpin the prospectivity of the wider Warrawoona Gold Project and the strong potential for the current resource of 712,000oz to be materially increased in the near term”
Conclusion: Exploration at Warrawoona is continuing to intersect high grade gold mineralisation and looks in a good position to increase the existing 712,000oz resource estimate as it works towards a pre-feasibility study in 2019.
*SP Angel act as Nomad and broker to Keras Resources