Is Uranium Hotting Up?
· Uranium deposits appear to be coming back into favour with Cameco launching a higher bid for the Canadian Uranium Junior, Hathor Mining
· Cameco is raising its bid for Hathor at an 8% premium to the agreed offer by Rio Tinto.
· Bid activity continues elsewhere in the sector with the China Guangdong Nuclear Power Corp (CNGPC) still in talks with Kalahari Minerals.
· CNGPC is doing the reverse of Cameco, coming back with a lower price of 243.5 pence a share against their original offer price of 290 pence a share of the company.
· Kalahari’s key asset is its 42.7% interest in Extract Resources, the owner of the Husab uranium project in Namibia which is the world’s fourth largest uranium only deposit.
· Rio Tinto holds a 11% stake in Kalahari and 14% of Extract Resources.
· The large uranium players appear to be taking a bet that sentiment has turned positive for the nuclear industry despite the recent Fukushima incident in Japan.
· On the downstream side, the bet on nuclear as a base load source of energy appears to be mixed with countries like the UK planning 12 new reactors by 2025 while France and Germany closing down some plants.
Amusingly Indonesia sold US$1bn of Islamic Bonds at half the rate of the 2009 debut and 2%+ less than that of Italy. The 2018 bonds were sold at 4%.
· The country is targeting growth of 6.29%
· The country’s foreign currency is rated BB+ increasing the chances that it will reach investment grade imminently.
Speculation is that Italy’s bond rating is now effectively Ba2 on the back of sale yesterday. With a growth expectation of 0.1% in 2012
Europe – Concerns of stagnant growth and the threat of a return to recession hit sentiment last night.
· Angela Merkel is calling for more Europe rather than less Europe – meaning closer political ties.
· Eurozone economic Growth figures will be released this morning. Forecasts are for growth of 0.2% QoQ and 1.4% yoy.
· German Q3 Economic growth was in line with expectations according to official figures released today, GDP rose 0.5% from Q2.
· Yesterday Italy auctioned €3bn of 5 year bonds at the highest yield since the introduction of the Euro.
· Additionally yields on Spanish debt hit 6% for the first time since August.
· Revised figures released this morning show that French GDP increased by 0.4% in Q3 supported by industrial production and consumer spending.
· Confidence at French Factories fell to a two year low in October according to recent figures – suggesting that GDP will not improve in Q4.
· German confidence report will be released later today and is expected to show a decline to a 3 year low.
· Greece plans to sell €1bn of 13 week treasury bills today – the only financing available that is not from the IMF or the EU.
US – Federal Reserve Bank of Dallas President has bullishly stated that he sees signs that the US economy is “poised for growth” – The comments are a stark contrast to that of FED Chairman Ben Bernanke who has previously predicted that the pace of growth will be “frustratingly slow”.
China – The IMF has called for China to expand oversight of banks as risk increases from off balance sheet lending and soaring property prices.
UK - David Cameron has distanced himself from Angela Merkel call for political union in Europe. Cameron speaking last night stated that “we should look sceptically at grand plans an utopian visions”
Japan – Interbank funding rates are forecast to drop in the coming months as the Government increases stimulus to encourage more lending and boost the economy. Policy makers meet tomorrow.
Singapore – Retail sales declined in September for the first time in seven months on the back of falling vehicle sales. The retail sales index fell 0.1% from a year earlier.
Thailand – The devastating flooding that has engulfed large parts of the country is prompting speculation that Japanese industries will relocate to Indonesia and Vietnam.
Australia – PM Gillard is seeking to overturn a ban on Australian Uranium exports to India in an attempt to strengthen diplomatic ties and boost the economy.
· Exports of Uranium to the country have been banned as India has not sighted the Nuclear Non-Proliferation Treaty.
Zambia – The government doubled mineral royalty payment to 6% for metals and 5% for precious minerals.
· Zambia is expected to come up with new metals export regulations, one of which may require minerals trade to go through the central bank to give the government oversight of the industry.
Currency – The euro declined today ahead of the German investor confidence report and the GDP data. Contagion concerns still dominant the market with Spain coming under increasing pressure.
· The dollar is up this morning as worries remain over the borrowing costs in Europe.
· The yen is marginally off today as speculation continues to mount that the BOJ will add more stimulus.
US$1.3602/eur vs 1.3762/eur yesterday. Yen 76.98/$ vs 77.08/$. SAr 8.029/$ vs 7.870/$. $1.593/gbp vs 1.606/gbp
Gold US$1,769/oz vs US$1,788/oz yesterday – Gold is down on strong dollar.
· Paulson hedge fund cut its holdings in the SPDR Gold Trust by 35%qoq to 20.3m shares as of Sep 30 according to SEC records.
· Soros increased holdings in the gold trust to 48,350 shares from 42,800 during the same period.
· Eton Park Capital Management sold all of holdings of 813,000 shares.
· SPDR gold trust holdings decreased to 1,268t (40.776moz) value US$72.407bn from 1,269t (40.789moz).
Platinum US$1,638/oz vs US$1,653/oz yesterday
Palladium US$662/oz vs US$664/oz yesterday
Silver US$33.96/oz vs US$34.61/oz yesterday
Rhodium US$1,655/oz vs US$1,613/oz yesterday
Copper US$ 7,748/t vs US$7,894/t yesterday – Copper held steady in the morning as markets await Q3 GDP figures for the Euro zone and inflation figures in the US.
Aluminium US$ 2,163/t vs US$2,193/t yesterday
· 10-15% of world’s total capacity may be cut down unless prices recover fro current low levels according to Rusal, the largest aluminum producer.
· A 22% price drop from its 2011 record of US$2,797 means 30% f producers are cash negative.
· North American aluminum orders dropped 2.6%mom in Oct amid general uncertainty over Euro zone sovereign debt crisis.
· Sheet and plate orders were down 4.9%, extrude shapes products dropped 4.6% and foil orders declined 15.6%. An exception was can sheet that recorded a 6.1% increase in orders last month.
Nickel US$ 17,762/t vs US$18,475/t yesterday
· Sumitomo Metal Mining, Japan’s largest nickel producer, may face a rise in costs and a 6-month delay at its US$1.3bn Taganito project in the Philippines as Maoist rebels damaged the site in Oct.
Zinc US$ 1,945/t vs US$1,963/t yesterday
· China’s zinc production may decrease 2.1% to 5.1Mt and consumption may climb 6.1% to 5.2Mt according to the China Nonferrous Metals industry Association.
Lead US$ 2,037/t vs US$2,030/t yesterday
· China, the largest exporter of the batteries for electrical bicycles and hybrid vehicles, closed down 90% of local 1,744 inspected lead –acid battery producers.
· Producers and recyclers were subject to government scrutiny after hundreds were lead poisoned in Zhejiang and Guangdong provinces in May and June. These regions produce 36% of total supply according to SMM Information & Technology.
· A clamp down on the industry comes in the traditionally peak demand replacement battery winter season.
· China supplied 160.2m Kilovolt-Ampere Hour of lead-acid batteries in 2010 that consumed 3.13Mt of lead. Total lead demand equalled 3.75Mt last year.
· World lead consumption is expected to rise to 10.15Mt (+6%yoy) in 2011 according to the ILZSG estimates in Oct. Supply should rise to 10.34Mt (+7%yoy) next year.
Tin US$ 21,600/t vs US$22,100/t yesterday
Oil US$112.06/bbl vs US$114.63/bbl yesterday – Brent for December settlement expires today on London-based ICE Futures Europe Exchange making slight gains from Monday’s drop to below $111.50 as Italy’s bond yield climbs, fuelling concern over the Euro-zone debt crisis.
· More active Brent for January delivery is at $110.79.
· A major high quality discovery off the coast of Brazil was announced yesterday by consortium partners Repsol, Sinopec, Petrobras and BG Group.
· Brazil’s National Agency for Petroleum, Natural Gas and Biofuels extended a deadline to December 2013 by which time the field must be declared commercial.
Natural Gas US3.574$/mmbtu vs US$3.655/mmbtu yesterday – Gas prices are taking another tumble as warmer than usual temperatures continue to dampen demand.
· Carin India Ltd. announced on Monday it has made a second natural gas discovery in the offshore Mannar Basin of Sri Lanka. The second well in a three-well frontier basin programme.
Uranium – US52.25$/lb vs $52.00/lb last week – Australia’s Prime Minister Julia Gillard calls for ban on Uranium supply to India to be ended citing economic benefits as one of the reasons.
· Cameco, Canada’s largest uranium miner has outbid Rio’s C$4.15 a share for Hathor Exploration with a C$625m ($615) offer or C$4.50 a share.
Coal – India’s power producers are refusing to buy high priced coal stacked up at Indian ports despite fuel shortage.
· Importers are unwilling to sell at a loss amid a depreciating rupee and the recent fall in international coal prices.
Rare Earths - On 11th November China’s Ministry of Industry and Information and Technology initiated a crack down on the illegal exploration, production and exports.
· An official has said the impact is likely to have an immediate impact on global supply.
Oxus Gold (LON:OXS) – Restoration of Trading
· Oxus which had been suspended has restored trading of its shares.
· This co-incided with the company releasing report and accounts for 12 months and interim results for the 6 months to 30 June 2011.
· The company remains in dispute with the Uzbek Government over its assets in Uzbekistan.
· Oxus is defending its interests and those of shareholders and served a Notice of Arbitration on Uzbekistan under the Investment Treaty between the UK and the Republic of Uzbekistan.
· The company is seeking full compensation for all losses related to assets at the Amantaytau Goldfields and the Khandiza base metal project amounting to $400m.
· The company continues to try to conserve cash and as at 21 October the group’s cash resources stood at approximately US$3.0m.
Rio Tinto/Cameco/Hathor – Cameco raises bid for Hathor Mining
· Cameco has raised its offer for Hathor the Saskatchewan Uranium Explorer.
· The offer of C$ 625m is 8% higher than the agreed offer of C$578m for the company by Rio Tinto.
· It is widely expected that Cameco would come back for this asset following their original bid for the company on Aug 26th prior to Rio’s agreed offer.
· The current bid from Hathor is 20% above Cameco’s original offer and a 69% premium to the share price on Aug 25th.
· A scoping study announced by Hathor for the deposit showed a pre-tax NPV of C$1.0bn based on a US$70/lb using a discount rate of 7% based on an estimated 11 year mine life and mill output of 5 m pounds of U3O6
· The study estimated a low cost of production of $14.44/lb of U3O6 based on a low daily milling rate of 200 tonnes per day as a result of compact and high grade and minimal separation of the West and East zones, high metallurgical recovery (97.7%) and shallow depth
· Capex has been estimated at $567m including a 25% contingency – the deposit is benefits from existing road infrastructure – the model expects mine construction to take four years
Mining last week:
Afferro Mining (LON:AFF) – Resource Upgrade to 2bn tonnes at Nkout Iron Ore Deposit
Discovery Metals (LON:DME) – Drilling shows high grade copper at Zeta NE Prospect
Ferrex PLC (LON:FRX) – Acquisition of Manganese Exploration Permit in Togo
Frontier Mining (LON:FML) – Benkala Operational Update
Highland Gold (LON:HGM) – Production guidance revised to 190,000oz-200,000oz for 2011
Minera IRL (LON:MIRL) – Q3 2011 Results
Trans-Siberian Gold (LON:TSG) – first gold sales from Asacha mine in Russia
African Iron (ASX:AKI) – Promising Iron Ore Project
Goldplat (LON:GDP) – Close to Award of Gold Licence in Kenya and commissioning in Q4 ‘11
Scotgold Resources (LON:SGZ) – BBC program on the recently approved Gold mine in Scotland’s Loch Lomond and Trossachs National Park
Ampella Mining* (ASX:AMX) – 3.1moz JORC gold resource ahead of expectations
First Quauntum (LON:FQM) – Funding Expansion in Zambia and Peru
Petra Diamonds (LON:PDG) – Petra steps up to LSE Official List from AIM
Medusa Mining* (LON:MML) – AGM Statement
Ormonde Mining* (LON:ORM) – Good drill results from Barruecopardo Tungsten Project
Ampella Mining* (ASX:AMX) – suspended – Bid rumours and JORC resource
Shanta Gold* (LON:SHG) – Investor presentations show gold production growth potential
African Eagle Resources (LON:AFE) – Proposed Investment by the IFC
Anglogold (JNB:ANG) – Q3 results show 51% increase in earnings yoy
Talvivaara Mining (LON:TALV) – Interims for Jan – Sept 2011
Aureus Mining (LON:AUE) – High Grades from New Liberty drilling results
Eastern Platinum (TSE:ELR) – Crocodile River Mine Suspended
Hambledon Mining* (LON:HMB) – Underground mining begins as plant restarts at Sekisovskoye
Anglo American conference call, key points
African Eagle Resources (LON:AFE) – Accelerating into Bankable Feasibility Study at Dutwa Project
European Goldfields (LON:EGU) – Executive Chairman on Leave of Absence
EMED Mining (LON:EMED) – Financing Proposals for Rio Tinto Mine
Evraz – shareholders vote for London listing and relocation to London.
Origo Partners (LON:OPP) - and Trafigura (private) – JV to invest in iron ore opportunities in Mongolia
Paragon Diamonds (LON:PRG) – Bulk Sampling at Lemphane in Lesotho