Goldplat PLC (LON:GDP) – Operational Update at Recovery Operations
Kaz Minerals (LON:KAZ) – Initial production at new copper mine
Lonmin PLC (LON:LMI) – Shareholders take up 70.93% of shares offered in underwritten rights issue
North River Resources (LON:NRRP) – appointment of Rod Beddows as NED
Petra Diamonds (LON:PDL) Buy, Target Price 156 pence – Flat Pricing for Second Tender but improved product mix
Metals output rises in China despite slowdown in domestic demand
• China saw an 8.4% yoy rise in the output of 10 nonferrous metals between January and October this year
• Aluminum production rose by 11.3% yoy to 26.46mt
• Copper rose 6.8%
• Zinc rose 8%
• Alumina oxide rose 10.6%
• Lead fell 4.6% yoy as the government cracked down on polluting companies
China – luxury brands closing outlets in China as anti-corruption drive hits home
• Some of the reason for this is that 78% of all Chinese luxury purchases were made outside China
• Prada closed 16 while Chanel closed 11 and Burberry closed 3.
121 Group Mining Investing Conference – Cape Town 8-9 February 2016
CLICK FOR 121 Investor Conference (Cape Town) PDF
• Investors are signing up for the 121 Mining investment conference in Cape Town
• Last year this was the perfect place for investors and companies to get together with ‘well managed’ schedules full.
• The garden of the historic Welgemeend farm house provide the perfect setting for 1-2-1 investor meetings.
• Buy-side investors and analysts are able to attend the summit for free. See registration form in link below
https://www.weare121.com/121mininginvestment-cape-town/registration/register-investor
• We are sponsoring because we think the 121 service is brilliant!
Dow Jones Industrials +0.47% at 17,575
Nikkei 225 +0.97% at 19,230
HK Hang Seng -1.11% at 21,464
Shanghai Composite -0.61% at 3,435
FTSE 350 Mining -3.52% at 7,204
AIM Basic Resources -0.20% at 1,595
Economic News
US – Jobless claims picked up slightly last week while monthly budget statement showed the deficit expanded to US$64.4bn last month.
China – Credit growth accelerated in Nov with aggregate financing up at CNY 1,020.0bn v CNY 476.7bn in Oct and CNY 970.0bn forecast.
• Money supply climbed 13.7%yoy last month v 13.5%yoy in Oct and 13.4%yoy forecast.
• A separate report showed FDI in China grew at a slower pace compared to the previous month (1.9% v 4.2% in Oct and 0.2% forecast).
• Amid slowing growth and faltering trade data, the PBoC is reported to have cut its CNY rate guidance to the weakest level in more than four years.
South Africa – The currency continued to collapse to new record lows yesterday reaching 15.55 per USD this morning
• The collapse follows the sacking of the Finance Minister
Argentina – the new prime minister replaces the central bank governor today. The new man has pledged to float the Argentine peso
Currencies
US$1.0939/eur vs 1.0966/eur yesterday. Yen 121.97/$ vs 121.76/$. SAr 15.659/$ vs 14.093/$. $1.515/gbp vs 1.518/gbp
0.723/aud vs 0.728/aud
Commodity News
Precious metals:
Gold US$1,068/oz vs US$1,073/oz yesterday –
Platinum US$855/oz vs US$861/oz yesterday
Palladium US$544/oz vs US$554/oz yesterday
Silver US$14.05/oz vs US$14.20/oz yesterday
Base metals:
Copper US$ 4,687/t vs US$4,592/t yesterday
Aluminium US$ 1,505/t vs US$1,483/t yesterday – 15 major smelters pledged not to restart halted capacity and promised to exercise flexible approach to production, Metal Bulletin reports.
• Any new capacity will not be brought online for at least a year.
• Year to date, aluminium smelters cut output by 4.4mtpa with another 0.5mtpa to be taken offline later taking total cuts to 4.9mt.
Nickel US$ 8,725/t vs US$8,620/t yesterday -
Zinc US$ 1,565/t vs US$1,527/t yesterday
Lead US$ 1,724/t vs US$1,696/t yesterday
Tin US$ 14,515/t vs US$14,540/t yesterday
Energy:
Oil US$39.5/bbl vs US$40.4/bbl yesterday
Natural Gas US$1.990/mmbtu vs US$2.054/mmbtu yesterday
Uranium US$36.15/lb vs US$36.15/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$38.6/t vs US$39.1/t
Thermal coal (1st year forward cif ARA) US$44.7/t vs US$45.2/t yesterday
Other:
Tungsten - APT European prices $170–177/mtu vs $165-175/mtu – first price rise for over a month
Ferrochrome – Benchmark prices collapse to 92c/lb for Q1/16 marking a 11.5% decline.
• Incorporating discounts signed between suppliers and buyers in Europe (up to 35%), realised prices may come in at below 60c/lb.
• This compares to current spot prices in Europe of 81-89c/lb.
• Benchmark prices are said to have dragged down by aggressive selling by FeCr producers in the spot market.
Company News
Goldplat PLC (LON:GDP) 3 pence, Mkt Cap £5m – Operational Update at Recovery Operations
• The company continue to implement operational improvements to both the South African and Ghanaian operations.
• In South Africa, a new on-site weighbridge is enabling the company to better control material into the various treatment circuits.
• In Ghana, as previously announced the company have been installing a new shot blast facility – this will bring another potential source of revenues at GRG.
Conclusion: Goldplat continue to make small incremental changes to both their recovery operations which should improve both efficiency and profitability.
Kaz Minerals (LON:KAZ) 94.2 pence, Mkt Cap £420.8m – Initial
• The company reports that it expects to start production at its new Bozshakol copper project in the Pavlodar region of Kazakhstan in January 2016.
• At full capacity, the mine is expected to treat up to 30mtpa of ore at an average grade of 0.36% copper over a period of 40 years.
• During the first 10 years of production, the company expects to produce 100,000 tpa of copper cathode and 120,000 oz pa of gold in concentrate at estimated net cash cost of US$0.80-1.00/lb.
• The news comes shortly after Kaz Minerals announced the start of production from its other large copper mine development at Aktogay in eastern Kazakhstan which has capacity to treat 25mtpa of ore for 50 years.
Lonmin PLC (LON:LMI) 0.979 pence, Mkt Cap £276.1m – Shareholders take up 70.93% of shares offered in underwritten rights issue
• Lonmin reports that it has received shareholder acceptances for 70.93% of the shares offered under the recent rights issue at 1p.
• The underwritten issue was intended to raise $407m gross to enable Lonmin to implement its restructuring plans which involve closure of uneconomic shafts, reductions in PGM production, and reductions capital expenditures and workforce numbers.
• Lonmin is also proceeding with consolidation of its shares on a 100:1 basis. The shares are expected to commence trading in their new form on 18th December.
North River Resources (LON:NRRP) 0.07pence, Mkt Cap £1.5m – appointment of Rod Beddows as NED
• North River Resources has appointed Rod Beddows an a new independent non-executive director.
• Mr Beddows is a corporate financier, also non-executive chairman at struggling zinc producer ZincOx and has previously worked at Hatch Ltd and his own firm Beddows & Co.
Petra Diamonds (LON:PDL) 65 pence, Mkt Cap £342m – Flat Pricing for Second Tender but improved product mix
Buy Target Price 156 pence
• Second tender achieves US$86.2m including the sale of the recent special pink for US$10.2m.
• This gives a total of US$154.9m for the year to date and for the first half.
• As usual Petra will hold four tenders in H2 FY 2016 which will leave them US$307m to deliver to meet our FY forecast of US$462m for revenues and US$270m for concensus numbers.
• Improved product mix saw an improvement in product mix with Finsch particularly benefitting with a 36% uplift in price to US$113/carat from US$108/carat.
• The company continue to guide to an improving trend in this regard with first significant input of undiluted ore on track to contribute to the Group’s production profile in H2 2016.
• With the exception of 3,200 carats, all goods of around US$166,000 were sold.
• Overall prices are down 9% on a like for like basis from Q4 FY 2015.
• The fall in the SA Rand should be very helpful to the company in terms of margins.
Conclusion: This is a positive result for Petra with Finsch, a major contributor to earnings seeing a positive trend in product mix. We continue to be buyers of the shares.