Economic News
US – Economic news due this week:
• Tuesday: Aug ISM Manufacturing PMI (52.5 v 52.7 in Jul), Aug light vehicle sales (17.3m v 17.46m in Jul)
• Wednesday: Jul factory orders (+0.9% v +1.8% in Jun), Aug ADP employment change (+200k v +185k in Jul), Fed Beige Book release
• Thursday: Aug services PMI (58.2 v 60.3 in Jul), Weekly jobless claims (275k v 271k in the previous week), Jul trade balance (-US$42.2bn v –US$43.8bn in Jun)
• Friday: Aug NFP (+218k v 215k in Jul), Unemployment rate (5.2% v 5.3%), Average hourly earnings (+0.2%mom/+2.1%yoy v +0.2%mom/+2.1%yoy in Jul)
China – Manufacturing sector contracted in Aug at the fastest rate in three years according to official PMI numbers.
• Official manufacturing/services PMI: 49.7/53.4 v 50.0/53.9 in Jul.
• A decline in manufacturing activity may be attributed to a government order for factories around Beijing to temporarily slow down/suspend production tto curb pollution ahead of this week’s military parade commemorating the end of the WWII.
• The data matches private sector gauge of the sector’s performance with Caixin PMI at 47.3 in Aug, the lowest since early 2009, versus 47.8 in Jul.
• Weak economic data led major equity indices in the region lower (Shanghai Composite -1.23%, Shenzhen Index -4.61%, Hang Send -2.24%).
Japan – Corporate profits surged to a record JPY 20.3tn, up 23.8%yoy, in Q2/15 on weaker oil prices and depreciating currency.
• This compares to a 0.4%yoy increase in Q1/15 and a 2.2%yoy gain forecast.
• Despite stronger earnings growth, corporate capex spend expanded at a slower pace during the quarter (+5.6%yoy v +7.3%yoy in Q1/15 and +8.8%yoy forecast).
• On a separate note, vehicle sales rebounded in Aug from a decline in the previous month (+2.3%yoy v -1.3%yoy in Jul).
Eurozone – Manufacturing PMI revised downwards on weaker growth in Italy (53.8 v 55.3 in Jul), Spain (53.2 v 53.6 in Jul) and stronger decline in France (48.3 v 48.6 estimated previously).
• Germany posted a marginal upgrade in growth rates versus previous estimates (53.3 v 53.2).
• Unemployment data in Germany and Italy demonstrate positive dynamics through summer months:
Germany: Unemployment change (-7k in Aug v +8k in Jul and -4k forecast), Jobless rate (6.4% in Aug, unchanged from the previous month)
Italy: Jobless rate (12.0% in Jul v 12.5% in Jun and 12.7% forecast).
UK –Manufacturing PMI showed manufacturing growth slowed down in Aug but remains above the 50.0 threshold.
• Manufacturing PMI: 51.5 v 51.9 in Jul, 52.0 forecast and 53.0-54.0 in Q1/15.
Currencies
US$1.1311/eur vs 1.1227/eur yesterday. Yen 120.33/$ vs 121.22/$. SAr 13.266/$ vs 13.321/$. $1.539/gbp vs 1.549/gbp. 0.712/aud vs 0.714/aud
Commodity News
Precious metals:
Gold US$1,142/oz vs US$1,134/oz yesterday
Platinum US$1,016/oz vs US$1,005/oz yesterday
Palladium US$594/oz vs US$586/oz yesterday
Silver US$14.65/oz vs US$14.54/oz yesterday
Base metals:
LME was closed for Summer Bank Holiday yesterday
Copper US$ 5,098/t vs US$5,027/t Friday
Aluminium US$ 1,593/t vs US$1,552/t Friday
Nickel US$ 9,840/t vs US$9,820/t Friday
Zinc US$ 1,817/t vs US$1,734/t Friday
Lead US$ 1,725/t vs US$1,668/t Friday
Tin US$ 14,000/t vs US$13,745/t Friday
Energy:
Oil US$52.7/bbl vs US$49.3/bbl yesterday
Natural Gas US$2.686/mmbtu vs US$2.665/mmbtu yesterday
Uranium US$36.90/lb vs US$36.90/lb yesterday
Bulk commodities:
Iron ore 62% Fe spot (cfr Tianjin) US$54.7/t vs US$55.3/t
Thermal coal (1st year forward cif ARA) US$53.1/t vs US$53.1/t yesterday
Other:
Tungsten - APT European prices $190/mtu (range $190-200/mtu) as of Friday vs APT European prices $199/mtu (range $192-205/mtu) last Wednesday
Company News
Berkeley Resources (LON:BKY) 18pence, Mkt Cap £32.5m – Drilling results show Zona 7 may be more extensive than previously thought
• The company has announced the results from the first 39 reverse-circulation drill holes of its 90hole programme of infill drilling at the Zona 7 area of its Salamanca uranium project in Spain.
• The results are mainly from the southern part of Zona 7, which had previously been thought to be relatively low grade, however, the results reported today confirm “the continuity of thickness and grade above the 20099m U3O8 cut-off reported in the current MRE” [Mineral Resource Estimate].
• The results come from the southern area of the resource estimate or, “outside the resource boundary to the SE and SW, with some holes drilled into the high grade core of Zona 7”.
• The company highlights a number of wide intersections ranging from 5m to 40m in thickness at grades between 949ppm to 1800ppm U3O8 (0.09% to 0.18%).
Conclusion: The first tranche of results from the current drilling at Zona 7 provide considerable encouragement that the higher grade portion of the deposit is perhaps more extensive than previously thought. We look forward to the balance of the results as they become available and to an updated resource estimate in due course.
Mariana Resources (LON:MARL) 2.5 pence, Mkt Cap £19.1m – Further drilling extends mineralisation to the south
• Mariana Resources, which announced an initial resource estimate of 2.2m oz of gold for its Hot Maden gold/copper deposit in eastern Turkey in mid-August, reports that recent drilling has shown the high grade mineralisation extends beyond the area of the resource estimation both down dip and towards the north.
• The company reports that Hole HTD-18, which explores deeper levels of the mineralisation encountered in hole HTD-15 (117.3m at 13.9 g/t gold and 2.04% copper) and HTD-10 (100.2m at 5.6 g/t gold and 1.3% copper) intersected 108.2 metres of mineralisation grading 3.0g/t gold and 1.3% copper from a depth of 292m extending the mineralisation, which still remains open at depth beneath hole HTD-18.
• Hole HTD-20, which was drilled at the northern edge of the mineral resource area intersected a zone grading 1.8 g/t gold ansd 2.3% copper over a width of 88.5m from a depth of 1.5m.
• Hole HTD-22, drilled at the southern edge of the resource area hit 43.8m of mineralisation grading 7.7g/t gold and 1.2% copper from a depth of 342.2m including a 13.8m wide section at an average grade of 23.3g/t gold and 1.6% copper from 98m.
• In addition, exploration drilling to the south of the mineral resource area, in holes HTD-19 (12.1m grading 2.1 g/t gold and 0.7% copper) from a depth of 209.3m and HTD-21 (64.1m grading 0.8 g/t gold and 0.3% copper from 103.4m demonstrates that mineralisation, albeit at a somewhat lower grade extends southwards and may eventually link with the mineralisation encountered in holes HTD-03, -07 and -01 further to the south.
• Drilling is continuing at holes HTD-23in the southern area to the east of HTD-19 and hole HTD-24 in the centre of the resource area to test for near surface mineralisation extensions to the structures encountered in hole HTD10, -15 and -18.
Conclusion: Drilling at Hot Maden is continuing to identify extensions to the high grade mineralisation which may eventually lead to an increase to the current 8.36mt grading 8g/t gold and 2.0% copper (2.159m oz of gold).
Shanta Gold* (LON:SHG) 4.5p, Mkt Cap £20.9m – Interim Results
• Shanta Gold reports an after tax loss of US$8.3m for the first six months of 2015 (2014 US$4.1m after tax profit).
• The operations remain cash positive (operating cash flow of US$4.4m – H1 2014 US$16.7m).
• The company held cash of $5.9m at 30th June and net debt of $54.5m.
• The company is in a redevelopment phase as it reconfigures the Bauhinia Creek and Luika pits and as a result gold production for the period was 28,180 oz at an all in sustaining cost of US$1,310/oz (H1 2014 42,194/oz at US$965/oz).
• Shanta Gold points out that as a result of this reoptimisation work “we remain on track to deliver full year 2015 production of 72-77,000 oz at an AISC of US$850-900/oz”. This implies a considerable turn round in H2 to produce 44-49,000 oz of gold at an AISC of around US$550/oz to US$600/oz.
Conclusion: Shanta Gold is looking for considerable improvements during H2 as the benefits of re-engineering the New Luika operations start to feed through into increased production and reduced costs.
*SP Angel’s analyst has visited New Luika
SolGold (LON:SOLG) 2.0p, Mkt Cap £15.2m – Drilling update at Cascabel
• Hole 12 reached 1,065m as of Sep 1 demonstrating intersections of mineralised diorite porphyry and confirming depth potential of the south-easterly extension of the mineralisation at Alpala Central.
• In particular, the statement reads “the presence of continuous visible disseminated chalcopyrite and trce bornite mineralisation, in conjunction with “B”-type quartz veins and “C”-type veins, confirms the significant couth-easterly and depth extensions of the minerlaised system at Alpala Central”.
• Hole 12 intersected Main/Western limb of the mineralisation from 608m with copper grades reported to increase towards current depth of 1,065m.
• Assay results to be released once Hole 12 is completed.
• Testing of the Eastern limb zone which is believed to host larger and higher grade mineralisation at depth is planned in the near term.
• Second rig is currently engaged at Hole 13 at the Alpala North-West drill site testing the inferred porphyry centre in the area.
*SP Angel acts as Nomad and Broker to SolGold. An SP Angel analyst has visited the Cascabel project.
Wolf Minerals (LON:WLFE) 17.375 pence, Mkt Cap £140.6m – Initial tungsten concentrate production from Hemerdon
• Wolf Minerals has announced that it has produced its first tungsten concentrates at its Drakelands mine in Devon.
• The concentrates were produced according to the required customer specification and demonstrate that the plant, which is still in the commissioning phase, is operating according to design.
• The commissioning seems to be going well though the company reports that there was a manufacturing fault in part of the dense-media plant which has now been rectified and that it expects to receive formal handover of the plant from the EPC Contractor during September.
Conclusion: Wolf Minerals is on the verge of bringing its Drakelands tungsten mine into production. The construction phase has apparently gone very smoothly and despite the current weakness in tungsten prices, the low cost nature of the operations at Hemerdon should insulate the company to some extent.