Lithium – Tesla meeting to potentially tie-up with Codelco in Chile
Tesla which is building the Giga-Factory in Nevada has met with Codelco, the Chilean state government
Codelco, backed by the Chilean government could potentially start scale production of Lithium from sources in Chile.
SQM in Chile is reported to be the world’s largest producer of the metal with lithium extracted from lithium rich brines from sources in the Andes.
Codelco is the world’s largest producer of copper and could easily turn its focus to the mining and extraction of lithium.
It is possible that the involvement of Codelco could lead to a seismic shift in the scale and cost of production of lithium carbonate / hydroxide.
Customs seize 15,000 unsafe hoverboards
Port Authorities are seizing thousands of unsafe hoverboards following a spate of fires
The hoverboards must not be left on charge without supervision and must not be left charging overnight
The same applies to a range of products with lithium-ion batteries.
We recommend always using a timer so as not to overcharge batteries. This has the added benefit of prolonging battery life and reducing your electric bills
https://www.belkin.com/uk/support-product?pid=01t80000003HeEtAAK
Economic News
US – The dollar strengthened this morning following a sharp depreciation against the euro yesterday and ahead of Nov NFP due later today.
Strong payroll numbers will contribute towards the monetary tightening case with the probability of a 25bp rate increase now standing at 76%.
On a separate note, final Markit services PMI reading showed business activity and new orders picked up at a stronger pace in Nov with jobs growth up from eight month low in Oct.
“The PMI surveys indicate that US economic growth hit a six-month high in Nov, indicating 0.5% (2.0% annualised) GDP growth so far in the fourth quarter.”
ECB - A long awaited announcement by the ECB came in below expectations as Mario Draghi cut deposit rate less than forecast and decided not to add to current monthly bond purchases.
The deposit rate was cut to -0.3% compared with expectations of -0.4%.
Monthly bond purchases programme will continue at €60bn with the schedule extended until the end of Mar/17 instead of Sep/16.
The extension will take the value of the programme up to €1.5tn from €1.1tn.
The ECB updated its inflation forecasts to +1.0% in 2016 and 1.6%% in 2017, down 0.1pp from previous estimates. Consumer prices are forecast to climb 0.1% this year.
The euro climbed sharply following the announcement with equity markets in Europe and the US closing lower yesterday.
Germany – Factory order climbed 1.8%mom with gains nearly equally spread between overseas and domestic markets.
Gains in Eurozone and non-Eurozone orders totalled 1.8%mom while domestic orders climbed 1.7%mom.
Brazil – President Dilma Rousseff faces impeachment following accusations of violating government finances and vilating Brazil’s fiscal laws.
The news about the impeachment sent he nation’s Bovespa equity index up by 5% and the real by up as much as 1.7% against the dollar.
Currencies
US$1.0883/eur vs 1.0561/eur yesterday. Yen 122.78/$ vs 123.50/$. SAr 14.394/$ vs 14.323/$. $1.511/gbp vs 1.493/gbp
0.732/aud vs 0.733/aud. ECB primes the market for more QE
Commodity News
Precious metals:
Gold US$1,060/oz vs US$1,050/oz yesterday
Platinum US$849/oz vs US$832/oz yesterday
Palladium US$538/oz vs US$528/oz yesterday
Silver US$14.12/oz vs US$13.95/oz yesterday
Base metals:
Copper US$ 4,610/t vs US$4,526/t yesterday
Aluminium US$ 1,503/t vs US$1,467/t yesterday
Nickel US$ 8,980/t vs US$8,935/t yesterday –
Zinc US$ 1,551/t vs US$1,534/t yesterday
Lead US$ 1,672/t vs US$1,636/t yesterday
Tin US$ 14,845/t vs US$14,750/t yesterday –
Energy:
Oil US$43.9/bbl vs US$43.3/bbl yesterday
Natural Gas US$2.191/mmbtu vs US$2.161/mmbtu yesterday
Uranium US$36.10/lb vs US$36.10/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$39.0/t vs US$38.8/t
Thermal coal (1st year forward cif ARA) US$45.5/t vs US$45.2/t yesterday
Other:
Tungsten - APT European prices $165-175/mtu unch again
Steel – 85% of Chinese steel mills reported to now operate at a loss
Company News
DiamondCorp (LON:DCP) 6.375 pence, Mkt Cap £24m – Completes Fund Raise
The company has completed its placing of 66,666,667m shares at 6 pence to raise £4m.
As previously announced the placing will take place in two tranches with the first tranche of 32,337,000 with the balance in the second tranche.
An EGM will be held on the 7th January 2016 to approve the second tranche.
Conclusion: It is good to see that funds have been raised with dilution of 18% relatively modest against the current market backdrop. This should enable to complete their mine plans to start production next year. We reduce our target price to reflect the increased shares and reduce our discount rate from 13% to 12% to reflect the reduced risk now that the IDC loan has been rescheduled and funds are in place to start production.
Ferrex (LON:FRX) 0.45 pence, Mkt Cap £5m – Field work starts at Australian gold project
Field work has started at the deposits the company is to be mine under their agreement with Norton Gold Fields.
A land survey is being undertaken to assess existing drill hole data and previous mining operations.
Mining is to target shallow near surface laterite and oxide deposits.
The company are targeting to bring production of 20,000 to 30,000 oz starting in Q2 2016.
Conclusion: The move that the company has made into Australian gold assets is a good strategic move. With production expected to come on stream at a targeted A$900/oz (US$658/oz) with an additional 22% of royalties bringing costs up to around US$900/oz - the company has scope to generate margin of around US$150/oz with gold prices at US$1,050/oz.
Tertiary Minerals* (LON:TYM) 1.775p, Mkt £3.8m – Phase 4 drilling programme at the MB Project to start next week
Tertiary Minerals has announced that it plans to commence a drilling programme (Phase 4) of 5 reverse circulation (RC) holes at its MB Fluorspar project in Nevada on 7th December. The company raised £650,000 in October expressly in order “to commence the next phase of drilling this winter at our exciting MB fluorspar project in Nevada.”
The programme, consisting of 1800 metres aims to test the “lateral and depth extent of higher grade mineralisation in newly discovered Western Area.”
The company reports its intention to use an independent consultant to incorporate the Phase 4 drilling results, when they become available, to “re-model and upgrade the current JORC compliant Resource Estimate during the first half of 2016.” The current estimate, released in June 2015 stands at 86.4m tonnes at an average grade of 10.7% fluorite.
Tertiary Minerals intends to also address additional metallurgical testing; economic modelling; preparation of a scoping study and permitting during the second half of 2016.
The company has also updated the market on progress at its Storuman fluorspar project in Sweden. After a lengthy consultation process with interested parties following submission of its Exploitation Permit application in July 2014, the company expects that “a positive decision will be made shortly.”
Apparently six of the seven “key stakeholder groups” are supportive though “The Sami reindeer husbandry community has objected to the application despite the efforts of the Company and its consultants to find solutions allowing mining operations and reindeer husbandry to co-exist.”
Conclusion: It is encouraging to see the company progressing with the evaluation of the MB project in Nevada where the previous phase of drilling generated a 125% increase in resources from a larger exploration programme and also highlighted the new Western Area which is now being followed up. We do not necessarily expect a similar quantum of resource increase from the Phase 4 work but if the company can use this work to help deliver a scoping study and prepare the ground for a permitting application later in 2016 this should help provide clarity on the value of the MB Project. In Sweden, it will be interesting to learn the outcome of the permit application though the continuing opposition of the Sami reindeer herders to mining must remain a concern at least until a positive decision is granted by the Swedish Mining Inspectorate.
*SP Angel act as Nomad and broker to Tertiary Minerals