Diesel engines – an open letter in the Torygraph from Sir Anthony Bamford highlights the emission benefits from running more efficient engines
• Running engines ‘hotter’ to reduce emissions cuts their fuel economy, using more ltrs per mile and exacerbating emissions issues.
• Stop start technology is in many respects a better solution than many others as it cuts emissions from idling engines but does not impact normal running.
• Regulators should consider the gains to be made through optimising efficiency as these will naturally reduce emissions.
Glencore appears to be driving sentiment in the market.
• Glencore is acting as a proxy for the commodities market which in turn are acting as a proxy for Chinese growth.
• Since the Fed connected the US rate rise with China and its impact on global growth, the key focus of markets appears to be China.
• Chinese PMI data this morning shows manufacturing is still falling but the market appears to have been expecting worse.
• The official PMI data was 49.8 for Sept versus 49.7, a three year low, in Aug.
• Reality on earnings is to start kicking in the US markets with Alcoa reporting starting the earnings season next Thursday.
Economic News
US – Economic news due this week:
China – On both private and public gauges manufacturing sector recorded another month of negative growth highlighting economic outlook concerns in China.
• Official Manufacturing PMI: 49.8 in Sep v 49.7, a three year low, in Aug.
• Caixin/Markit Manufacturing PMI: 47.2 v 47.0 released in a flash reading last week and 47.3 recorded in Aug.
• In a services sector, growth slowed significantly through Sep (50.5 v 51.5 in Aug). This month’s reading marks the lowest level after the services PMI hit 50.0 in Jul/14.
• Local markets are closed today and will remain so through most of the week as the nation celebrates “Golden Week” public holidays.
Japan – Manufacturing growth slowed through Sep after hitting the strongest reading since Jan/15 in Aug.
• Manufacturing PMI: 51.0 v 50.9 released in a flash reading last week and 51.7 in Aug.
• Industrial sector outlook deteriorated among large and small sized companies in Q3 as measured by the BoJ’s quarterly Tankan survey.
• Tankan Large/Small Manufacturing Outlook: 10/-2 v 16/0 in Q2 and 10/-4 forecast.
• Services sector outlook weakened slightly among large businesses (19 v 21 in Q2) and remained unchanged among small enterprises (1 v 1 in Q2).
IMF – The institution expects 2015 world economic growth to come in below the 2014 reading amid high market volatility led by the prospect of increasing rates in the US and slowing economic activity in China.
• “Global growth will likely be weaker this year than last with only a modest acceleration expected in 2016,” Christine Lagarde said.
• “India remains a bright spot. China is slowing down. Countries such as Russia and Brazil are facing serious economic difficulties. Growth in Latin American countries, in general, continues to slow sharply.”
India – Manufacturing PMI dropped to seven month low (51.2 v 52.3 in Aug).
• In particular, the report read that new business from abroad expanded at the slowest pace in two years.
South Korea – Manufacturing growth remains in a negative territory through Sep (49.2 v 47.9 in Aug).
• Production, new orders and employment all contracted las month.
• “Several surveyed participants mentioned a fall in trade volumes with China as the key driver behind the fall in international demand,” Markit said.
• Consumer prices inflation declined at the fastest rate in six and a half years.
South Africa – National Union of Mineworkers calls for strike in coal sector
• The NUM gave 48 hour notice yesterday to call strikes by their members.
• The Union which was originally seeking wage hikes of 50% at one point are now asking for a rise of 13%.
• Coal producers had raised their offer to 8.5% for the lowest paid workers from 8% previously.
• There continues to be a disconnect between profitability under current prices and what is being demanded by the workforce.
Ukraine – Ukraine and pro-Russian separatists in the east of the country agreed to withdraw small-calibre weapons from front-lines.
• The agreement was reached yesterday and offers hope the conflict that claimed nearly 8,000 lives is nearing its end.
Currencies
US$1.1146/eur vs 1.1216/eur yesterday. Yen 120.13/$ vs 120.22/$. SAr 13.7601/$ vs 13.817/$. Sterling $1.5141/gbp vs 1.517/gbp
0.707/aud vs 0.703/aud
Commodity News
Precious metals:
Gold US$1,113/oz vs US$1,125/oz yesterday
Platinum US$916/oz vs US$926/oz yesterday
Palladium US$660/oz vs US$668/oz yesterday
Silver US$14.60/oz vs US$14.69/oz yesterday
Base metals:
Copper US$ 5,210/t vs US$5,075/t yesterday
Aluminium US$ 1,592/t vs US$1,574/t yesterday
Nickel US$ 10,505/t vs US$10,030/t yesterday
Zinc US$ 1,710/t vs US$1,682/t yesterday
Lead US$ 1,684/t vs US$1,672/t yesterday
Tin US$ 15,450/t vs US$15,525/t yesterday
Energy:
Oil US$48.97/bbl vs US$48.2/bbl yesterday
Natural Gas US$2.529/mmbtu vs US$2.596/mmbtu yesterday
Uranium US$36.65/lb vs US$36.65/lb yesterday
Bulk commodities:
Iron ore 62% Fe spot (cfr Tianjin) US$52.3/t vs US$56.5/t
Thermal coal (1st year forward cif ARA) US$48.45/t vs US$48.90/t
Other:
Tungsten - APT European prices $180/200 per mtu from $180/190 last week –
• Re: Vital Metal’s Watershed project. We are told the JOGMEC process to find a jv partner to help develop the mine is still running and might see a last minute solution as happened with Lynas.
Company News
Amur Minerals* (LON:AMC) 12.8p, Mkt Cap £57m – The last Lanstead ESA completed
• The Equity Swap Agreement signed in Jul/13 for 24 settlements has now been completed.
• Total proceeds from Lanstead amounted to £8.3m, c.66% over planned £5m at the time of agreeing the deal.
• The Company and respective ESA settlements have significantly benefited from a sharp increase in its share price in H1/15 after securing the mining permit.
• Cash in the bank stood at US$8.3m as of Jun/15 following the exercise of 18 settlements suggesting the Company is well funded to continue with the 2015 field work, metallurgical studies as well as independent audit of the latest in-house PEA on the Kun Manie sulphide nickel copper project.
*SP Angel act as Nomad and Broker to Amur Minerals
BlueRock Diamonds* (LON:BRD) 18.5 pence, Mkt Cap £5.9m – Interims
• The interims provided an update of mining activities at the Kareevlei diamond mine.
• Over the period the company have been commissioning a new 80 tph plant.
• Recovery from the plant has been disappointing so far with 607 carats recovered to date giving a recovered grade of 2 cpht.
• The company expect to improve this grade once mining starts at depths greater than 20-22m.
• Post period, they have processed material below 22m and achieved grades have increased ot 5 cpht.
• 1,000 carats have been recovered to date and the consultant who did the CPR on valuation believes fewer fine diamonds have been found and there is significant variability at the coarser end of the sample.
• The company plan to increase throughput at the mine by working with a subcontractor who will establish a second processing plant at site.
• The contractor Diacar will process the oversize stockpiled at the mine at a rate of over 40 tph.
• BlueRock will market all diamonds recovered and is entitled to 60% of revenues from the Diacar production.
• The zero coupon convertible expires on the 16 Oct 2019 and has a conversion premium of 20%.
• The convertible carries a charge over the Kareevlei Mining Pty Ltd.
• Over the period the company reported an operating loss of £328,275 against revenues of £33,042.
• Cash at the end of the period stood at £107,364.
• The company intend to fund expansion and working capital at the mine by increasing the existing convertible loan note by £400,000 to a Total of £850,000.
Conclusion: Mining at Kareevlei is being done on a small budget with a next stage of expansion using a subcontractor to help to increase throughput and to process the oversize stockpile. Grades so far have been too low to be economic and we look forward to further news flow on better recoveries as throughput increases. A sufficient parcel is still to be available to test valuations.
*SP Angel acts as Nomad & Broker to BlueRock Diamonds
North River Resources (LON:NRRP) 0.195 pence, Mkt Cap £3.9m – Results of Open Offer
• The company has raised £243,500 through their open offer.
• 121,753,863 new shares were issued.
• The balance of 778,924,047 shares will be available to be placed at a price of not less than 0.2 pence with institutional and other investors.
• The shortfall is said to be effectively conditionally underwritten by Greenstone.
Ortac Resources* (LON:OTC) – Zamsort investment raises $2m to advance copper production in Zambia
• Ortac Resources holds a 20% interest in Zamsort a copper miner with significant exploration licenses in Zambia.
• Zamsort has raise $2m from Kopara Investments to help expand and transform its copper production in Zambia.
• The deal gives Kopara a 20% stake in Zamsort, equal to Ortac’s stake
• Ortac also holds a loan note with if converted would give Ortac a further 19.35% in Zamsort to take its stake to 39.35%.
• Zamsort has raised a Total of $3.2m over the past six months to develop production and to for the maintenance of its mining license as well as other valued exploration licenses
Conclusion: This funding was expected by Zamsort and should enable the business to move to develop more efficient production within its operating copper mine
*SP Angel acts as Nomad and broker to Ortac Resources
W Resources (LON:WRES) 0.575 pence, Mkt Cap £20.6m – Interim results and project update
• W Resources has reported a loss of £359,000 for the six months top 30th June (2014 - £119,000 loss).
• Following “Three capital placements completed Totalling £3.2 million.”, the company holds cash of £1.46m.
• The results mainly reflect an increase in administrative expenses to £334,000 from £119,000 as the development programmes at La Parilla in Spain and Regua in Portugal build up and depreciation on the La Parilla tailings facility.
• At La Parilla, the company is working towards a 3.5mtpa open pit mining operation producing 5,100tpa of tungsten concentrate grading 66% tungsten trioxide. The present plan is for an initial, “fast-track” mine development at a rate of 2.2mtpa requiring capital expenditure of US$16m to produce at a rate of 1200-1300tpa of tungsten trioxide in concentrate in mid-2016 with a further $20m required to expand to the full planned production rate by 2018.
• Environmental approvals for the fast track mine development was granted in July 2015 and the company reports that “Mines department authorisation is on track for grant in Q4 2015.”
• The company is targeting operating costs of US$121/metric tonne unit of tungsten trioxide (equivalent to 10kg) at La Parilla.
• At Regua in Portugal a recent drilling programme (previously reported) has encountered a number of high grade intersections, some at shallow depths which should add to an updated resource estimate due in Q4. Currently, the resources at Regua stand at 4.46mt at an average grade of 0.3% tungsten trioxide.
Conclusion: W Resources has made significant progress on its Spanish and Portuguese tungsten projects and we look forward to the updated resource estimates for Regua and for details of any metallurgical testing which may point to the nature of the flowsheet as well as for confirmation of the Mines Department approvals for La Parilla.