Whittle Consulting – sign contract with Largo Resources to optimise the mine and operations at the Largo Maracas Menchen mine in Brazil
Indonesia – Sinabung volcano about to erupt according to experts.
• Sinabung is on the island of Sumatra. An eruption could disrupt flights in the region
Economic News
Greece – Debt negotiations drag out as both sides play hard ball
• Reports differ on progress on debt deal with Greece with June 30th set as a deadline based on Greece’s debt payments.
• Greece is already in technical default.
• What is clear is the European Commission is no longer willing to back track to keep Greece within the Euro.
• A sticking point remains the surplus targets being set by the creditors which Greece is resisting.
Japan – Yen rallies as Japan’s central bank governor says currency unlikely to fall further
• The Japanese yen moved up by 1.3% based on the central bank governor’s comments.
UK Industrial Production rose more than expected
• IP increased by 0.4% in April as a result of oil and gas extraction.
• Oil and gas was up 8.8% with factory output down 0.4%.
• Pharmaceuticals which were up 6.8% last month, fell by 6% in April.
Botswana – A sensible approach to royalties and returns for mining companies
• The Minister for Minerals, Energy and Water Resources of Botswana said that the government was planning to offer short term relief for the mining industry.
• Looking at requirements on a case by case basis, actions such as deferral of royalty payments may be considered.
• The Government are also looking to address energy and water issues and are targeting to be energy self-sufficient by 2019.
• The 600 Mw Morapule B power station is to undergo repair to ensure reliability.
• The State power utility Botswana Power Corporation is also to increase its diesel peaking plant to 195 Mw.
• The company is also trying to boost its renewables capacity – looking at 100 Mw of solar power.
• Cleaner energy in the form of a gas turbine plant is also being considered at Orapa.
• You can see why Botswana offers an attractive place to operate in within Africa with such a sensible and pragmatic approach.
China - trade data has given investors much to think about and showed the government 7% GDP growth target to be at risk
• Exports fell in May by 2.8% in Yuan value and imports dropped by a massive 18.1% partly due to lower raw materials imports ahead of the summer destocking as seen with iron ore
• But we do see news on the Chinese government helping local authorities to refinance and to fund infrastructure development
• The pull back in the Hang Seng and Nikkei is reported to be more down to the prospects for US rate rises but is also down to cooling Chinese domestic demand
• There are some concerns over the potential for deflation in China but with the CPI at 1.2% last month there seems to be much room for policy makers to continue easing
• China’s security regulator is also looking at changing its margin finance rules in an attempt to curb speculation
US$1.1309/eur vs 1.1283/eur yesterday. Yen 122.73/$ vs 124.35/$. SAr 12.332/$ vs 12.515/$. $1.545/gbp vs 1.529/gbp
0.776/aud vs0.766/aud
Commodity News
Precious metals:
Gold US$1,183/oz vs US$1,180/oz yesterday
Platinum US$1,115/oz vs US$1,113/oz yesterday
Palladium US$746/oz vs US$750/oz yesterday
Silver US$16.13/oz vs US$16.13/oz yesterday
Diamonds – Botswana closes two diamond cutting and polishing factories
• The narrowing of margins between rough and polished diamonds has taken a toll on the viability of these operations.
• High labour costs are also thought to have impacted profitability.
• The cutting and polishing sector has had to hold inventory as financing is being squeezed elsewhere in the system.
• 20 cutting and polishing factories still remain in Botswana.
• This has been a good lesson for the government who have been keen to have both upstream and downstream diamond activities done in country.
Base metals:
Copper US$ 6,042/t vs US$5,986/t yesterday
Aluminium US$ 1,763/t vs US$1,761/t yesterday
Nickel US$ 13,510/t vs US$13,530/t yesterday
Zinc US$ 2,176/t vs US$2,166/t yesterday
Lead US$ 1,954/t vs US$1,934/t yesterday
Tin US$ 15,350/t vs US$15,430/t yesterday
Energy:
Oil US$66.0/bbl vs US$63.6/bbl yesterday
Natural Gas US$2.845/mmbtu vs US$2.709/mmbtu yesterday
Uranium US$36.00/lb unch vs US$35.90/lb yesterday
Bulk commodities:
Iron ore 62% Fe spot (cfr Tianjin) US$63.3/t unch vs US$63.4/t - Iron ore imports fell 8.4% month on month in May to 17.8mt
Company News
Amur Minerals* (LON:AMC) 31p, Mkt Cap £134.6m – Issue of Kun Manie Licence
• The company confirms that, following its announcement on 22nd May that it had been awarded a “Detailed Exploration and Mine Production Licence” for its Kun Manie project, the licence has now been issued by the State Licensing Agency, Rosnedra and formally registered with the State Geological Fund.
• The company is in the process of transferring the required one – time fee of 23.6million roubles (approximately US$429,000) and expects this transfer to “be completed in the coming days”.
• The licence is valid until 1st July 2035 and grants Amur Minerals’ wholly owned subsidiary, ZAO Kun-Manie, rights “to recover all economically valuable minerals including nickel, copper, cobalt, platinum, palladium and other minor metals.”
• Detailed exploration and pre-production plans have been submitted to Government and are to be approved by 1st December. Under the agreement, the mining plan is to be approved by Government no later than 1st June 2020.
* SP Angel act as Nomad and broker to Amur Minerals
** An SP Angel analyst has visited the Kun Maine licenses in Russia
Mwana Africa (LON:MWA) 2p, Mkt Cap £28m – Rebel shareholders recast Mwana Africa board in board room coup
• Mwana Africa has lost its ceo in a board room coup by a group of activist shareholders.
• Mr Ning, a major shareholder and influential businessman based in HK, takes the role of Interim Executive Chairman, until a new Chairman is appointed.
• Mr Ning has been on the board for three years and has more than 20 years' experience in trading, investing and managing of non-ferrous and precious metals businesses. He has founded a number of mining companies including Congo International Mining Corporation SPRL, African PGM Processing SPRL and Fareast Nickel Mining Corporation. He is the chairman of Hoi Mor Industrial (Group) Limited, China International Mining Group Corporation, Hong Kong Mining Exchange Company Limited and previously Chairman of MBMI Resources Inc. Mr Ning also sat as the vice chairman of China Non-ferrous Metals Council. We understand Mr Ning has a grand vision for the company.
• Scott Morrison has been elected to the board as a director as a key role on the new board.
• Scott Morrison has a history of building shareholder value and returning cash to investors which is why the group of rebel shareholders have dug him out and voted him in.
• Morrison’s core skill as a metallurgist along with his experience as ceo of Metalor in running a metal refining and trading business will be critical through the commissioning of the Bindura Nickel smelter and future refinery.
• Mr Wellesley-Wood has been appointed as a director. Wellesley-Wood was previously a non-executive Chairman of the company and his past experience and knowledge of the group should prove valuable on the new board.
• Mr Barbeau was appointed as a director. Mr Barbeau is coo of BDO, the accountancy firm, in South Africa and acted as a partner of Moore Stephens working on mining companies with strong BEE shareholdings.
• Anne-Marie Chidzerowas appointed as a director. Ms Chidzero has worked with the World Bank and the UK Department for International Development. She is currently ceo of AfriCap, a $42m fund for microfinance in Africa as well as holding a board role at the $200m Africa Enterprise Challenge fund.
o Messrs Morris, Botha, Kudenga and Mashanyare were removed as directors.
o The company recently settled its differences and claims with CIMGS and Mr Ning.
Conclusion: Mwana is coming up to a critical point in its development. Cash Flow from the Freda Rebecca gold mine continues to support the company and its development while the reconstruction of the Bindura nickel smelter and potential restart of the old Klipspringer diamond fissure mine. We note the strength of Scott Morrison’s experience at Metalor and we reckon this will be critically important through the commissioning period of the Bindura nickel smelter. We look forward to further updates.
* SP Angel analysts have visited various Mwana Africa mines and exploration projects.
Tri-Star Resources* (LON:TSTR) 0.16 pence, Mkt Cap £11.1m – Simplification of the terms of Loan Notes
• Tri-Star Resources has announced a conditional agreement with Odey European on changes to the terms of the convertible unsecured loan notes which were issued at a nominal value of £6m in two tranches in June 2013 and August 2014. The Notes carry a non-cash coupon of 15% payable semi-annually.
• The conversion price of the bonds has now been fixed at 0.2 pence for the remainder of the term of the Loan Notes which extends until June 2018. This now locks in the conversion price, which under the original terms had been set at the holder’s option at a 10% discount to the lower of the latest equity funding round or any equity raised within 10 business days of the conversion notice.
• The agreement also provides the company the option to redeem the Loan Notes in cash which should enable the company to minimise further dilution.
• In the event that conversion of the Loan Notes would result in Odey European exceeding a 29.9% holding in Tr-Star, Odey is able to choose to continue to hold the Loan Notes or to elect to redeem the Notes in cash
• The changes to the terms are conditional on TriStar’s 40% owned operating company, Strategic Precious Metals Processing, achieving financial close of its Oman Antimony Roaster Project.
Conclusion: The changes to the terms of the Loan Note bring additional certainty to the financing of Tri-Star Resources as it moves forward with the development of the antimony roaster in Oman
*SP Angel acts as Nomad and Broker to Tri-Star Resources
Whittle Consulting – sign contract with Largo Resources (CVE:LGO) to optimise the mine and operations at the Largo Maracas Menchen mine in Brazil
• There are so many more mines which should benefit from full scale whittle optimisation
• Optimisation to enhance margins should be good for shareholders but may result in a pull back in production rates as the mine and plant focusses on net returns