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Caledonia Mining (LON:CMCL) – Q2 gold production 10,424 oz
DiamondCorp (LON:DCP) – Open Offer Update
ECR Minerals (LON:ECR) – Itogon trenching results
Richland Resources (LON:RLD) – Marketing Update
Sierra Rutile (LON:SRX) - Good Operational Update
China – Shanghai market recovers 8% following moves to support the market
• Mainland Chinese markets recovered this morning as the authorities moved to support the market following the loss of some 30% or $3tr of value in the market in recent weeks
• China’s key brokerages are reported to have promised not to sell shares till the market recovers 4,500 points
• The brokerages agreed to put $19bn into a stabilisation fund
• All new share issues are suspended and the central bank is providing liquidity support, eg lending funds to investors to boost the market
• The government appears to be supporting the market to appease the millions of new investors who had flooded into the market after watching it gain 150% to its peak over the past year.
• Many of these new investors will have supported the listing of government stock issues – (Tell Sid!, it’s not a new idea)
• The strategy is said to be to enable the state to sell state owned enterprises into public hands and to move parastatal debt into public hands – is this a communist government?
• Thankfully, the support indicates the Chinese government is keen to support the economy and keep its investors happy, even if it requires ‘firm’ intervention
• The fall in China’s markets appears to have caused the Shanghai Chaos fund to pull its giant short position on copper (FT) see copper comment
US – Economic news due this week:
• Monday: Jun ISM services PMI (56.4 v 55.7 in May)
• Tuesday: May JOLTS job openings (5,300k v 5,376k in Apr)
• Wednesday: Jun 16-17 FOMC meeting minutes
• Thursday: Weekly jobless claims (277k v 281k in the previous week)
China – A set of measures have been announced during the weekend to help arrest declines in publicly traded stocks.
• The stock market recorded a c.30% drop in the last three weeks.
• The China Securities Regulatory Commission will be providing liquidity to China Security Finance, the body responsible for margin finacing of local brokers.
• Biggest local brokerages pledged to collectively buy at least CNY 120bn of shares to help steady the market.
• At the same time, dozens of firms have decided to delay their IPOs.
• The Shanghai Composite closed up 2.4% following a volatile session. The index opened 7.8% up, before slumping into red through the day and recovering most of losses led by gains in blue chip stocks.
• The Shenzhen Composite Index closed 2.7% down.
Germany – Factory orders fall 0.2%mom in Jun led by lack of business confidence on escalating Greek debt crisis.
• Estimates were for a 0.4%mom contraction marking the end of two consecutive months of expansion.
Australia – Inflation climbed 0.1%mom/1.5%yoy in Jun running well below the RBA target 2-3%.
• Inflation has been coming in below the official band for seven consecutive months.
• The RBA will be holding its monetary policy meeting with estimates for the RBA to rule no further easing for now.
Greece – Greeks vote “No” (61% in favour) in a Sunday referendum regarding the terms of the latest bailout package.
• Finance Minister Varoufakis submitted his resignation letter this morning.
• The central bank is considering cutting the daily withdrawal allowance to €20 from €60 and demanding an increase in the ELA from the ECB.
• Capital controls remain in place with banks closed today while the government has not been clear whether lenders are to re-open tomorrow as previously planned.
• Banks might consider a possible “bail-in” of depositors amounting to a 30% haircut on deposits above €8,000, FT said quoting local bankers and businesspeople with knowledge of the measures.
• Having secured the mandate for a revised set of proposals to be presented to international creditors, the government is working on a new plan to offer to the Eurogroup ahead of the Grek summit in Brussels on Tuesday.
US$1.1070/eur vs 1.1055/eur last Thursday. Yen 122.53/$ vs 123.51/$. SAr 12.408/$ vs 12.324/$. $1.556/gbp vs 1.559/gbp
US$0.751/aud vs0.762/aud
Commodity News
Precious metals:
Gold US$1,165/oz unch vs US$1,165/oz last Thursday –
Platinum US$1,065/oz vs US$1,079/oz –
• 524 NUM members went on strike at the Twickenham mine operated by Amplats in Limpopo following a number of retrenchments announced.
• The union demands immediate reinstatement of laid off workers and an end of the third party labour services use.
Palladium US$675/oz vs US$704/oz –
Silver US$15.64/oz vs US$15.59/oz
Base metals:
Copper US$ 5,571/t vs US$5,809/t – ‘Shanghai Chaos’ fund closes short position on last week’s fall in the Shanghai stock market
• The fall in the Shanghai Composite caused investors to pull funds out of other markets and funds precipitating the closure of the funds huge short positions
• The FT speculated that the fund may have been forced to return funds to investors, maybe to cover losses in other areas
• This and other new Chinese hedge funds are increasingly influential in commodity trading, increasingly interconnecting Chinese and global markets.
• There is a 5% daily limit on the Shanghai Futures Exchange giving some protection against market manipulation and dramatic moves.
Aluminium US$ 1,693/t vs US$1,732/t
Nickel US$ 11,610/t unch vs US$12,215/t –
Zinc US$ 1,987/t vs US$2,048/t –
Lead US$ 1,737/t vs US$1,797/t
Tin US$ 13,975/t vs US$14,465/t
Energy:
Oil US$59.4/bbl vs US$62.4/bbl
Natural Gas US$2.746/mmbtu vs US$2.811/mmbtu
Uranium US$36.30/lb vs US$36.25/lb –
Bulk commodities:
Iron ore 62% Fe spot (cfr Tianjin) US$54.00/t unch vs US$54.10t
Thermal Coal $58.5 unch vs $60.5 cif ARA Europe –
Tungsten - APT European prices price $225./mtu vs $217.5/mtu on Friday
Lithium – Korean researchers have created a lithium-ion battery made from a porous solid - www.newelectronics.co.uk
• The team are using a honeycomb like structure to boost lithium-ion performance and cut the risk of overheating without the use of separators within the battery
• The molecules have 1D channels running through them, measuring 7.5Å on average. The porous structure enables the lithium ions to diffuse more easily
• Cycle tests shows no thermal runaway between 25 and 100°C for four days and hardly any change in conductivity.
• The framework may potentially enable lithium air batteries.
Samsung planning to use graphene to enhance the life and energy density of its lithium batteries by 1.8 times to carry a charge of >6,000mAh
• The report also says the graphite anodes would be replaced with silicon batteries coated with graphene
• It is reported that when the silicon is combined with lithium cobalt oxide cathode (commercial), the entire battery with the help of the silicone coated graphene (carbide-free) reaches a figure of 972 and 700 Whl-1 (volumetric energy density) in the beginning and at the 200th cycle
Battery technology is moving apace but in Australia one company ‘Australia Wide Solar’ has plans to enable homes to come off grid for under $10,000
• Mr Mobbs disconnected his home from the Australian grid last year using a $14,000 Alpha battery storage unit from China
• Tesla’s new Powerwall, home storage device, which had 800m orders of interest in its first week, is to be sold into Australia next year costing $7,000 to install
Company News
Caledonia Mining (LON:CMCL) 53 pence, Mkt Cap £27.6m – Q2 gold production 10,424 oz
• Caledonia Mining reports Q2 gold production of 10,424 oz from its 49% owned Blanket mine in Zimbabwe.
• Blanket mine has produced a total of 20,384 oz of gold during the first six months of 2015 and remains on course to achieve its target production of 42,000 oz for the year as production builds up during the second half of the year. Cost information is expected to be included with the formal Q2 results announcement which is due for release on 13th August.
• The completion of the tramming loop on 22 level, which increases underground ore haulage capacity, should help drive the production increases during the second half of the year and increase the rate of underground development which underpin the longer term growth plans for the mine.
• Blanket has also completed the No 6 winze (internal shaft) and is currently equipping the shaft which is expected to contribute ore from January 2016.
• Pre-sinking of the new Central Shaft is underway with the concrete work for the shaft collar in progress. The Central Shaft is planned to extend to 1,080 metres depth and open up the orebody below the existing 750 metre level providing the longer term ore required to increase production to 65,000 oz pa by 2017 and secure the long term future of the Blanket mine.
• Caledonia holds US$26.1m of cash and is debt free.
Conclusion: Caledonia is implementing a long term plan to secure the future of the Blanket mine. The company has the necessary financial resources available and is moving ahead on schedule with the main components of the mine development plan.
DiamondCorp (LON:DCP) 11 pence, Mkt Cap £39.4m – Open Offer Update
• 64% of the open offer was taken u of 13.38m shares.
• The balance of 7.513m shares available through the excess application was 4.9x oversubscribed.
• The company has therefore raised the maximum proceeds of £5.27m through the open offer and placing.
Conclusion: Funds are now in place make operational improvements while the company brings on stream commercial production. We are not surprised to see good interest in the offering as the company is now close to delivering commercial production from the Lace Mine.
*An SP Angel Analyst has recently visited the Lace mine
ECR Minerals (LON:ECR)– Itogon trenching results
• The company has reported results from 430.6 metres of trenching work at its Itogon epithermal gold exploration project in the northern Philippines which was carried out during May and June.
• The results from a total of 13 trenches include wide mineralised intersections in trenches TR02 (10m at an average grade of 1.39 g/t gold); TR05 (18m averaging 1.71 g/t and an additional 59 m averaging 1.32 g/t gold); and TR09 (60m at an average of 2.43 g/t gold and an additional 28.6m at an average of 3.61 g/t gold).
• TR 09 included a number of high grade assays over single metre sample intervals including 16.74 g/t; 42.29 g/t and 79.67 g/t. Additional assay results from the programme are awaited.
• The company is currently focussing on “formulating a cohesive geological model for the purposes of the planned resource estimate and accompanying NI43-101 technical report. The Directors anticipate that this report will be completed during September 2015.”
• The trench samples are testing the supergene oxide zone at Itogon and this geological environment may help account for some of the particularly high individual sample grades where secondary enrichment in the supergene zone may have concentrated gold values.
Conclusion: The forthcoming technical report may shed light on the detailed distribution of mineralisation at Itogon and we look forward to seeing this level of disclosure in due course and further assays as they become available.
Richland Resources (LON:RLD)– Marketing Update
• The company took part in the HK Jewellery Show where they held displayed sapphires from the Capricorn Sapphire Mine.
• 9 potential sight holders went to sessions which enabled them to view the sapphires and learn more about them.
• Samples were made available to sight holders to test polish and make further assessments.
• The company has also launched a B2C online platform.
• The site is offered directly to retail to buy loose cut stones as well as set jewellery.
Sierra Rutile (LON:SRX) - Good Operational Update
• Rutile production was up 8% in Q2 2015 from the same time last year at 29,933 tonnes.
• Production was up strongly from the previous quarter by 28%.
• Ilmenite production was down 51% from the same time last year at 4,117 tonnes.
• Zircon concentrate was down 32% from last year at 333 tonnes.
• The company are on target to meet full year production of 120,000 – 130,000 tonnes.
• C1 cash costs were US$527/t within 2015 guidance of US$520-530/t helped by increased production and higher by product revenue.
• Total operating costs was US$636/t outside the guidance range of US$596-615/t.
• All in cash costs was US$685/t also marginally outside the upper end of the range of US$650-670/t.
• Phase 1 of the Gangama Dry Mine project started over the quarter.
• Phase 1 will take 12 months to complete and will bring on stream 500 tph production or 20,000 tonnes of new production.
• As previously announced Wayne Venter has been appointed as COO and Matthew Hird, the ex-African Minerals FD, as CFO.
Conclusion: These are good production both at the revenue and cost line. Ilmenite production is down but is not material. Overall these are good results.