logo-loader

Today's Market View Including London Mining and Serabi Gold

Published: 11:23 23 Dec 2013 GMT

no_picture_pai

Economic View

US - Final Q3 GDP reading surged to +4.1%qoq (annualised), up from +3.6% previously estimated, suggesting economic growth accelerated to the highest pace since the end of 2011.

Personal consumption climbed 2.0%, up from the +1.4% previous reading.

Business inventories contributed 1.7% to Q3 GDP increase, unchanged from the preliminary reading.

There are 3 versions of GDP released a month apart – Advance, Preliminary and Final.

There is a limited amount of economic data due this holiday season. Reports to keep an eye on include: 

o Nov core durable goods orders are due tomorrow. Estimates are for a 0.7% increase following a 0.6% decline recorded in Oct.

o New home sales due tomorrow are forecast to keep most of its gains recorded in Oct and come in at 440k in Nov. The gauge surged to 444k, a 4-month high, in Oct.

o Jobless claims for the week ended Dec 21 are expected to have come down to 347k, compared with 379k recorded in the previous week. This will take a less volatile 4-week average to 350k, the highest level since the end of Nov. Numbers are due this Thursday.

China - The People’s bank of China provided Rmb 300bn (US$49bn) in short term liquidity to cash strapped banks as cash squeeze worsened on Monday.

7-day repo rate reached 8.84% , the highest level since the cash crunch in late Jun, today.

This is nearly double its level seen last week.

Liquidity is seasonally tight in late Dec as banks are looking to book more deposits  to comply with the state’s regulations and companies withdraw more funds from operations. In addition, savers are shifting out of traditional bank deposits into higher yielding alternatives.

Market commentators blamed Chinese Central Bank for its reluctance to step into the market (before Friday last week) amid falling liquidity in the market place. 

UK - Households disposable income grew for a second quarter in Q3. Funds available for spending gained 0.4% after deducting inflation following a 3% increase in the previous quarter boosted by the timing of bonus payments.

Final Q3 GDP reading came in line with its Second Estimate at +0.8%qoq. Q2 GDP growth has been revised upwards to +0.8%qoq, up 0.1pp from previous estimates.

The report showed people increased spending as the savings ratio slipped to 5.4% from 6.2%. Consumer spending added 0.5pp to GDP in Q3 and 0.2pp in Q2.

Trade numbers were disappointing as current account recorded a deficit of £20.7bn during the quarter, up from a £6.2bn deficit seen in the previous three months. The deficit has reached 5.1% of GDP, the highest reading since the third quarter od 1989.

On a separate note, the ONS released its state budget estimates suggesting the government recorded a deficit of £16.5bn (excl. temporary support for banks) in Nov, up from £15.6 last year and £15bn forecast.

The shortage was led by higher net investment and a swing from surplus to deficit at local authorities.

The government net cash requirement or the amount the government needs to borrow by selling gilts was £9.4bn.

Net borrowings are forecast to come in at £111bn in 2013-2014, equivalent to 6.8%of GDP. The budget is expected to return to surplus in 2018-2019.

US$1.3682/eur vs 1.3641/eur last week. Yen 103.99/$ vs 104.49/$. SAr 10.358/$ vs 10.434/$. $1.637/gbp vs 1.634/gbp 

Commodity News

Precious metals:

Gold US$1,203/oz vs US$1,197/oz last week

SPDR gold holdings slightly increased to 814.1t (26,175koz) valued at US$31.3bn after hitting 808.7t (26,001koz), the lowest since Jan 2009, last week. Holdings lost nearly a third of the total from the start of the year.

Platinum US$1,338/oz vs US$1,327/oz last week

Palladium US$701/oz vs US$700/oz last week

Silver US$19.43/oz vs US$19.31/oz last week

Base metals:

Copper US$ 7,245/t vs US$7,256/t last week

Chinese refined copper imports climbed to 328,907t in Nov, up from 250,666t last year and 292,620t in Oct.

Aluminium US$ 1,787/t vs US$1,790/t last week

Chinese regulators will implement a progressive power tariff for aluminium producers in an effort to put more pressure on outdated capacities.

New tariffs will be effective from Jan 2014.

Nickel US$ 14,472/t vs US$14,343/t last week

Prices are slightly up this morning with nickel trading at a seven-week high on expectations Indonesian unprocessed ore exports ban will tighten the market.

Indonesia plans to prohibit all ore exports after Jan 12 in a move to promote the development of the local processing industry.

Zinc US$ 2,038/t vs US$2,013/t last week

Lead US$ 2,209/t vs US$2,193/t last week

Tin US$ 22,852/t vs US$23,000/t last week

Energy:

Oil US$111.7/bbl vs US$110.5/bbl last week

Natural Gas US$4.516/mmbtu vs US$4.483/mmbtu last week

Uranium US$34.50/lb (20/12/13) vs US$34.65/lb (19/12/13) 

Others:

Iron Ore - US$132.7 (20/12/13) 62% Fe spot (cfr Tianjin) unchanged on the previous close 

Company News

London Mining (LON:LOND) – Creditors approve recently proposed debt refinancing

London Mining has announced this morning bondholders of the US$110m convertible notes have agreed to extend the maturity of the bonds.

The maturity of convertible guaranteed bonds has been moved to 30 Apr 2019 and the interest rate has been raised to 12% from 8%. Conversion price remained unchanged a GBP4.75.

In addition, corporate debt facility has been expanded by US$20m to US$200m with the final maturity extended to 31 Mar 2019.

The stock was slightly up on the news this morning with a delay to debt repayments buying the Company more time to ramp up production to budgeted capacities.

Serabi Gold (LON:SRB) – Funding and operational update

The Company plans a share issue to raise £10m (before expenses) to finance development and underground drilling programme at the Sao Chico project and meet working capital requirements as gold production starts at the Palito project.

The placing will involve the issue of up to 200m units (one ordinary share + half of a warrant) at a subscription price of 5p per unit.

The subscription price offers a 2.1% discount to the weighted average price as at 19 Dec 2013.

The warrant is for one ordinary share and exercisable at 6p for a period of 2 years.

Fratelli Investments, the Company’s cornerstone shareholder, signed a conditional subscription agreement to take up £6.25m-£8.125m of the issue.

Fratelli together with parties acting in concert currently own 45.6% of outstanding shares. Post minimal investment of £6.25m the interest will increase to 57.3%. The investment is conditional on approval by the shareholders of the waiver of any obligations of Fratelli to make a general offer to shareholders pursuant to Rule 9 of the City Code.

In addition, Fratelli is reported to have agreed to loan £4.6m to the Company. The loan is for a period of 4 moths and will be drawn-down in up to 3 tranches.

The loan carries a 12%pa interest rate and a 3% arrangement fee.

The loan is expected to be repaid from the proceeds of the share placing.

On a separate note, processing plant is going through a commissioning stage with the entire circuit now being tested.

The entire plant has been operated five times for a period of two hours each processing some 800t of ore at 5g/t.

First gold production is expected in 2014. The management targets “life of mine” production rates by Q2/14.

Serabi has also announced today that Mr Cristopher Kingsman stepped down from his position as a non-executive director.

*SP Angel analyst has previously visited the Palito gold mine. 

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

54 minutes ago