Assore, South Africa’s major iron ore producer, has agreed to buy ARM’s stake in the Dwarsrivier chrome mine
• Assore has bought out the other half of the mine from African Rainbow Minerals’ s (ARM) 50% stake in the mine for SAr450m ($37m) to consolidate its ownership.
• Assore reckons the long-term fundamentals of the chrome ore market support the purchase and help the firm expand its chrome capacity.
‘IS’ Islamic State is minting gold and silver ‘caliphate’ coins
• Buy one and get a beheading for free. Offer only applies to infidels who have not previously converted to Islam
It’s a crazy world out there
• Russian bus drivers have said they will start observing traffic rules in protest against a cut in fares
• Canadians have been asked not to flush goldfish down the lavatory as the fish are growing large and multiplying
Economic News
US – Consumer spending climbed 0.9%mom on strong car sales in May beating forecasts for a 0.7%mom gain.
• This was the biggest increase since Aug/09 suggesting a strong recovery from weak Q1/15 GDP numbers.
• Weekly jobless claims remain at historically low levels (271k v 268k in the previous week and 273k forecast).
Japan – Consumer prices inflation slowed in May on the back of lower oil prices.
• Inflation increased 0.5%yoy last month compared with a 0.6%yoy increase in Apr and +0.4%yoy forecast.
• Excluding volatile food component, prices are reported to have climbed 0.1%yoy, down from the 0.3%yoy increase in Apr.
• ON a more positive note, consumer spending rebounded with a 4.8%yoy increase in May marking the first positive reading since Mar last year.
• This compares to -1.3%yoy recorded in Apr and +3.6%yoy forecast.
Brazil – Unemployment report adds to a series of weak economic data released in Brazil this year.
• Jobless rate climbed for the fifth consecutive month hitting 6.7% in May, up from 6.4% in Apr and 6.6% forecast.
• This is the highest reading since Apr/10.
• The fact that hiring/laying off process is expensive in Brazil makes the declining trend in employment numbers makes it even more worrying economic development.
Greece – Eurozone finance ministers are planning to hold their fourth meeting this week agree a €7.2bn tranche for Greece.
• Negotiations are set to continue this Saturday.
US$1.1213/eur vs 1.11196/eur yesterday. Yen 123.38/$ vs 123.73/$. SAr 12.114/$ vs 12.124/$. $1.576/gbp vs 1.570/gbp
US$0.770/aud vs0.774/aud
Commodity News
Precious metals:
Gold US$1,177/oz unch vs US$1,175/oz yesterday – China to introduce Rmb-denominated gold fix by year-end
Platinum US$1,079/oz vs US$1,076/oz yesterday – Amplats cuts >400 jobs
Palladium US$677/oz vs US$695/oz yesterday –
Silver US$15.88/oz vs US$15.85/oz yesterday
Base metals:
Copper US$ 5,757/t vs US$5,696/t yesterday –
• DRC - Glencore confirmed the purchase of a state-owned copper mining permit in the DRC in Feb.
• The deal is estimated at less than US$50m with the property located close to the Mutanda project.
• Teck Resources suspends SXEW plant production at the Quebrada Blanca mine in Chile following an unexpected ground movement near the facility yesterday.
• Mine operations continue as normal.
• The Quebrada Blanca produced 48.1kt of copper in 2014.
Zambia - The government of Zambia has asked Vedanta to delay the processing of copper concentrates from Chile at the Konkola copper smelter till it puts in place measures to avoid pollution. The Chilean concentrates are reported to contain 4% arsenic vs 1% which is more normal for cleaner Zambian material.
Aluminium US$ 1,712/t vs US$1,710/t yesterday
Nickel US$ 12,545/t unch vs US$12,675/t yesterday
Zinc US$ 2,026/t vs US$2,034/t yesterday –
Lead US$ 1,786/t vs US$1,784/t yesterday
Tin US$ 14,850/t vs US$14,885/t yesterday
Energy:
Oil US$63.1/bbl vs US$63.7/bbl yesterday
Natural Gas US$2.835/mmbtu vs US$2.758/mmbtu yesterday
Uranium US$36.75/lb unch vs US$36.75/lb yesterday –
Bulk commodities:
Iron ore 62% Fe spot (cfr Tianjin) US$62.60/t vs US$62.70t –
Thermal Coal $59.9 unch vs $59.8 cif ARA Europe – The Guardian reports that three French banks have turned down investment into the Rampal power plant in Bangladesh.
• The move follows the withdrawl of two Norwegan pension funds which pulled out of investment into India’s National Thermal Power Corporation some six months ago.
• The proposed Bangladesh power plant is within 10km of from the protected Sundarbans mangrove forest and might cause environmental degradation from increased shipping as well as air and water pollution.
Tungsten - APT European prices price $217.5/mtu vs $225/mtu last week
Lithium – 24M, a lithium technology spin off from MIT in the US reckons it has come up with a new lower cost method of producing lithium batteries
• The new ‘semisolid flow’ lithium-ion cell holds about 5x more material between each layer within the battery cell.
• ‘24M’ reckon they can build lithium-ion battery plants for just $11m a unit enabling the rapid development of the industry within the US
• The cost of the batteries could also fall to less than $100/kWh once the process is developed by 2020
Fertilizers
Potash – PotashCorp offered US$8.7bn (in cash) to buy German rival K+S AG valuing the Company just over €40 per share.
• The offer suggests 42% premium to the K+S closing price on Wednesday.
• K+S is Board is currently considering the offer and is expected to reject the offer as too low, according to the person familiar with the matter.
• A merger would yield the combined company nearly 27% of global potash capacity by 2017, when both companies are expected to complete new mines.
Company News
Condor Gold (LON:CNR) 58.5p, Mkt Cap £26.8m – Additional licence adjacent to La India project area
• The company has announced that it has been granted a 25 year exploration and mining concession over a 32 square kilometre area known as the Tierra Blanca Concession contiguous with the western part of Condor Gold’s La India concession in Nicaragua. The addition of this new area brings the total licence area of the wider La India project to 313 square kilometres.
• Following a field inspection by the company’s geologists, Condor Gold appears to have acted opportunistically to acquire what it believes is promising exploration ground within the centre of a 10km diameter circular structure, which is thought to be a volcanic caldera, as it became available.
• The northern part of this geological structure lies within ground already held by Condor Gold as part of the Cuchilla concession within the La India project area.
• The Tierra Blanca area lies approximately 30 km from B2Gold’s operating El Limon mine and 10 km due west of the La India prospect where earlier this year Condor Gold announced a maiden probable reserve of 6.9m tonnes at an average grade of 3 g/t gold and 5.3 g/t silver within an overall resource of 2.3m oz of gold at an average grade of 4g/t.
Conclusion: Condor Gold has expanded its exploration holdings in the La India region by around 10%. Exploration has already defined a reserve within an established area of gold mineralisation at La India. We look forward to news of results from the new Tierra Blanca area as exploration proceeds.
Paragon Diamonds (LON:PRG) 5.5 pence, Mkt Cap £15.3m – Final Results
• Results focussed on progress during the year with the company’s Lemphane project and the MOU to acquire Mothae.
• As previously announced the company intend to trial mine at Lemphane starting at 0.5 mtpa for a period of 18 months to 2 years.
• A mining licence has been granted for the project.
• The company are awaiting approval from the Lesotho Ministry of Mines for the acquisition of Mothae from Lucara.
• Mothae has an indicated and inferred resource of 39 Mt of 2.7 cpht at a valuation of US$1,060/carat.
• Mothae also has an existing plant which needs to be upgraded.
Conclusion: Little new news in this announcement and we await progress with their Mothae acquisition.
The company have a funding package in place which will help them through the first stages of development.
Zanaga Iron Ore (LON:ZIOC) 2.75 pence, Mkt Cap £7.7m – Results to Dec 2014
• The project is running with a minimum work programme against the current weak backdrop for iron ore prices.
• Cash balances at the end of 2014 stood at US$12.5m and were US$10.4m at the 13st May 2015.
• An impairment of US$110m has been taken on the carrying value of the project.
• A DFS is in place with operating costs likely to have come down further as a result of lower oil prices and currencies with freight costs much lower than.
• The company received a mining licence for the project in August last year with attractive fiscal terms.
• The licence is for 25 years effective from August 2014 and renewable for successive terms of 15 years.
• A mining royalty rate of 3% is payable with a 5 year tax holiday following the construction phase and a corporate tax rate of 15%.
Conclusion: The feasibility study projected capex standing around US$2.2bn for a 12 mtpa project – the end product was to be a high grade pellet product with potential for premium pricing. The cost of delivery into China was projected at US$50/t but is likely to have come down from there. Against the current iron ore supply scenario and the cost profile of the big three producers it is unlikely that this project to find the funding they require. Prices would have to return to a more sustainable range of between $80-$100/t before the project attracts funding.