Economic News
US – Key focus will be non-farm payrolls to assess potential Fed moves on rates
• Non-farm payrolls expected later today – Aug NFP expected to be marginally up +218,000 against 215,000 in July.
• Unemployment rate expected to be 5.2% against 5.2%.
• Average hourly earnings expected to be +0.2% mom and +2.1% year on year in line with numbers in July.
• Yesterday saw a stronger than expected reading on the ISM non-manufacturing index at 59 down from last month at 60.3 but the second highest reading since 2005.
• The measure of employment within the index decreased to 56 in August from 59.6 in the previous month.
• The manufacturing index by contrast expanded at the slowest pace since May 2013 reflecting slower demand from overseas markets and higher inventories.
Eurozone – Draghi lays foundation for further QE as forecast for inflation and growth revised down
• Draghi said the ECB would be prepared for further QE as the ECB downgraded quarterly projections for inflation and growth.
• The ECB have increased their potential purchase limit to 33% from 25% for any given bond.
• This was seen as a move to reset the ECB’s stimulus programme after a six month review.
• Bond purchases are expected to continue to at least Sept 2016.
• Inflation forecasts have been lowered to 0.1% from 0.3%, 1.1% next year from 1.5% and 1.7% from 2017 onwards from 1.8%.
• Growth has been revised down to 1.4% from 1.5%.
Zambia – Experts warn that without urgent repairs the Kariba Dam risks collapsing unleashing a catastrophe for the Zambezi Valley and reaching the Mozambique borders
Currencies
US$1.1147/eur vs 1.1237/eur yesterday. Yen 119.04/$ vs 120.25/$. SAr 13.6558/$ vs 13.4650/$. $1.5238/gbp vs 1.5277/gbp 0.6980/aud vs 0.7014/aud
Commodity News
Precious metals:
Gold US$1,125/oz vs US$1,132/oz yesterday
Platinum US$1,006/oz vs US$1,012/oz yesterday
Palladium US$575/oz vs US$584/oz yesterday
Silver US$14.79/oz vs US$14.74/oz yesterday
Base metals:
Copper US$ 5,193/t vs US$5,171/t yesterday
Aluminium US$ 1,628/t vs US$1,610/t yesterday
Nickel US$ 9,915/t vs US$9,940/t yesterday
Zinc US$ 1,795/t vs US$1,837/t yesterday
Lead US$ 1,700/t vs US$1,731/t yesterday
Tin US$ 15,000/t vs US$15,200/t yesterday
Energy:
Oil US$49.88/bbl vs US$50.23/bbl yesterday
Natural Gas US$2.705/mmbtu vs US$2.647/mmbtu yesterday
Uranium US$36.95/lb vs US$36.95/lb yesterday
Bulk commodities:
Iron ore 62% Fe spot (cfr Tianjin) US$54.93/t vs US$54.93/t
• Iron Ore shipments to China from Australia rose to a record last month to 33.9 mt for August against 29.5 Mt in July – this compares with 32 Mt the same time last year.
Thermal coal (1st year forward cif ARA) US$52.93/t vs US$52.93/t yesterday
Other:
Tungsten - APT European prices $190/mtu (range $190-200/mtu) unchanged from Friday last week
Company News
Anglo American Platinum Zar 34,223, Mkt Cap Zar 92.2 bn – Confirms in discussions with Sibanye Gold
• Amplats have confirmed they are in discussions with Sibanye on the sale of its Rustenburg operations.
Conclusion: Potential disposal of Rustenburg to Sibanye is part of Anglo’s stated intention of divesting of these assets. Disposal of part of its platinum operations particularly the deep underground mines at Rustenburg to Sibanye makes sense as the latter is an experienced operated of deep underground gold mining. This would also take Anglo American the parent closer to its stated strategy of de-risking and moving away from South Africa.
Beowulf Mining (LON:BEM) 2.55 pence, Mkt Cap £10.9m – Update on Kallak North Exploitation licence application
• Beowulf reports today that it has been invited by the Swedish Department of Enterprise and Innovation to respond to comments made by the local County of Norbotten concerning the Company’s application for an exploitation licence for its Kallak North iron ore project.
• The Company notes that it has until 14th September to make its representations and that it expects a Government decision on Kallak North “in autumn 2015”.
• Kallak North has an indicated JORC resource of 118.5m tonnes at an average grade of 27.5% iron and an additional inferred resource of 33.8mt at 26.2% iron. We note that this resource estimate is based on an iron ore price of $90/tonne for 62% iron ore fines which is significantly higher than prevailing prices.
• The company brought in new management last year and this team has established a dialogue with local communities and sought to allay fears of a negative impact from mine development at Kallak North while highlighting the potential economic benefits which could accrue to the area. The area is designated an Area of National Interest for minerals.
Conclusion: In the event that Beowulf is successful in being granted an exploitation licence later this year it will need to address the challenges of financing an iron ore project during a period of depressed prices.
Goldplat (LON:GDP) 2.5 pence, Mkt Cap £4.2m – Update highlights progress on operational initiatives
• Goldplat have been implementing improvements to their operations against a weak gold price environment.
• In their South African recovery operations GPL, a new electric boiler is being commissioned which has helped the utilisation rate of the two existing 1 tonne elution plants.
• This will enable to increase throughput to 5 tpd of loaded carbon through these two plants.
• The boiler has been installed ahead of the first 4 tonne elution column acquired from DRD Gold.
• A new woodchipplant at a cost of Zar 2.5m was commissioned in mid-August which has enabled recovery of an additional 2 kg (70 oz) of gold per month from existing stockpiles.
• Goldplat is to be paid treatment and refining charges for toll processing a large batch of by product material for Rand Refinery.
• The high grade circuit will be dedicated to processing this material for two months with a further four months to complete the elutions.
• Material to be treated by the high grade circuit will be switched to the low grade circuit scheduled to be commissioned in mid-September.
• Goldplat is still processing material not accepted by Rand Refinery at the Aurubus Refinery in Germany but Rand Refinery is selectively treating batches of ash on an ad hoc basis.
Conclusion: It is good to see that operational initiatives being put into place in Goldplat’s South African recovery operations are coming through. The company have also imporved their working relationship with Rand Refinery to the extent that they are now toll processing material for Rand Refinery.
Kodal Minerals* (LON:KOD) 0.035p, mkt cap $0.37m – Final Results and project update and amendment to comment of 21 August
• Kodal Minerals has reported a loss of £3.96m for the year to 31st March 2015 (2014 £0.23m). The results reflect an impairment charge of £3.412m relating to the write off of the Kodal project due to the “dramatic fall in the iron ore price.”
• Cash balances at 31st March amounted to £307,000, though a share placement in May subsequently raised £0.4m (gross).
• The decline in the iron ore price (62% Fe) during the financial year from $112/t to $57/t and the subsequent continued decline in iron ore prices, with little immediate prospect of a recovery has prompted the project write off and a scaling back of activity to minimal levels other than a continuation of the environmental baseline work and community dialogue as part of the planning process. In March2014, the company was, however, granted an additional 7 exploration licences Totalling almost 20 sq km surrounding the Kodal project.
• In July, 2014, the company was granted exploration licences over an area of historic copper mining at the Grimeli project located approximately 150 km north of Bergen, Norway. Further exploration of Grimeli including mapping and sampling both on surface and in the old underground workings, ground geophysics and limited drilling has been the prime focus of the company’s exploration during the year.
• Drilling and underground channel sampling results have demonstrated the presence of high grade copper mineralisation in the Grimeli project area with grades ranging up to 8% copper and 7% zinc over relatively narrow widths. In the geological context of the Grimeli project, mineralisation may be present in high-grade lenses and the company highlights channel sampling results which “represent a previously un-mined, vein-like massive sulphide occurrence which has been defined over 150 metres strike and remains open in all directions”.
• The drilling programme had mixed results including grades of 6.39% copper and 0.82% zinc over an interval of 0.97m and 4.29% copper and 6.98% zinc over 0.50m but also encountered zones where “current geophysics does not appear to distinguish between high grade copper zinc zones and the non-economic disseminated iron sulphides. The Company is currently assessing alternative techniques that may assist in targeting future drilling locations.”
• Please note that comments attributed to Mr Galen White at CSA Global on our comment of the 21st August should have been attributed to Luke Byran the CEO.
*SP Angel acts as Financial Advisor and Broker to the company.
*The author of this report does not hold shares in Kodal Minerals.
Three Partners of SP Angel and SP Angel LLP hold stock in Kodal Minerals due to their long running financial support for the company.
Medusa Mining (ASX:MML) A$0.42, A$87.3m – Update on Mineral Resource Estimate
• Total inferred and indicated mineral resources at Co-O have been estimated as at 30 June 2015 at 3.5 Mt at 10.2 g/t gold for a Total of 1.15 m oz.
• This compares with an estimate on the 25 September 2014 of 4.34 Mt at 10.1 g/t gold for 1.41 m oz.
• The oz in the indicated category remain largely unchanged as a result of a higher grade (12.2 g/t gold) and conversion from inferred to indicated.
• The reduction in the overall resource is due to a number of factors.
• Resource depletion of 105,000 oz accounted for 40% of the difference.
• The balance is due to untreated mined low grade material, reduction of interpreted vein thickness at depth and the addition of a higher proportion of internal waste for the discontinuous nature of some veins.
• Inclusion of further underground drilling results enabled the upgrade of inferred material to the indicated category.
• Total indicated and inferred resources at Bananghilig stood at 24.5 Mt at 1.4 g/t gold for 1.136 m oz and for Saugon at 81.5 tonnes at 5.97 g/t gold.
• These resources have not been updated for the JORC 2011 code and remain unchanged since 2013.
• The re-interpreted geology for the Bananghilig deposit will be used for a revised estimate expected in Dec 2015.