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Gemfields (LON:GEM) – Ruby Auction
121 Group Mining Investing Conference – Cape Town 8-9 February 2016
Link to program
• 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!
Economic News
US – More than 2/3s of economists surveyed by FT expect the Fed to announce the next 25bp rate increase in Mar/16 to the 0.5-0.75% range.
• The view which is close to projections released by the Fed contrasts with market expectations for a more gradual tightening moving forwards.
• Markets see the federal funds rate to remain below 1% in 2017 pointing to a slower pace of increases than the median of Fed’s “dots”.
• Economic news this week include final Q3/15 GDP reading (Tue), durable goods orders (Wed) and weekly jobless claims (Thu).
Brazil – The Finance Minister steps down as the government battles with a recession and an expanding budget deficit.
• Joaquim Levy will be replaced by the current planning minister Nelson Barbosa who is considered to be more dovish on fiscal austerity.
• The real weakened nearly 3% on following the announcement on Friday.
Spain – Preliminary results of general elections show no party managed to secure an absolute parliamentary majority.
• With 99% of votes counted, centre-right Popular Party led by current prime minister Mariano Rajoy won 123 out of 350 seats.
• The PP is followed by the opposition Socialists with 90 seats, the anti-austerity Podemos with 69 seats and the centrist Ciuadanos with 40 seats.
• Should parties fail to form even a minority government, Spain will need to hold a new early election next year.
Currencies
US$1.0856/eur vs 1.0820/eur yesterday. Yen 121.46/$ vs 121.74/$. SAr 15.018/$ vs 15.181/$. $1.490/gbp vs 1.491/gbp
0.716/aud vs 0.715/aud
Commodity News
Precious metals:
Gold US$1,072/oz vs US$1,054/oz yesterday
Platinum US$866/oz vs US$843/oz yesterday
Palladium US$559/oz vs US$549/oz yesterday
Silver US$14.23/oz vs US$13.75/oz yesterday
Base metals:
Copper US$ 4,690/t vs US$4,632/t yesterday – Prices are slightly off this morning amid thinner trading before Christmas despite the news of a potential commercial stockpiling of the metal and production cuts by Chinese smelters.
• Chinese ten largest copper producers have agreed to reduce output by 350kt next year based on reports by a newspaper close to the China Non-Ferrous Metals Industry Association.
Aluminium US$ 1,521/t vsUS$1,489/t yesterday
Nickel US$ 8,915/t vs US$8,775/t yesterday
Zinc US$ 1,530/t vs US$1,502/t yesterday
Lead US$ 1,693/t vs US$1,638/t yesterday
Tin US$ 14,725/t vs US$14,595/t yesterday
Energy:
Oil US$36.4/bbl vs US$37.2/bbl yesterday
Natural Gas US$1.823/mmbtu vs US$1.734/mmbtu yesterday
Uranium US$33.75/lb vs US$35.25/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$43.7/t vs US$44.2/t yesterday
Other:
Tungsten - APT European prices $170–190/mtu vs $170–185/mtu
Ferrochrome – Benchmark prices collapse to 92c/lb for Q1/16 marking a 11.5% decline.
Company News
Gemfields (LON:GEM) 40p, Mkt cap £218m – Ruby Auction
Buy, Target Price 82 pence
• Gemfields reports the results of an auction of rubies from its 75% owned Montepuez mine in Mozambique. The auction, of 90,642 carats, was held in Singapore between 14th to 18thDecember. Thirty-six companies placed bids.
o The company has previously held two other auctions this financial year, predominantly comprising higher emeralds and beryl from the Kagem mine in Zambia. The next auction, of “predominantly higher quality emeralds from Kagem is presently expected to take place during March 2016.”
o The auction realised US$28.8m, averaging US$317.92/ct. A total of 45 of the 49 lots offered was sold “providing a clear indication with respect to the level of demand for these goods.”
o The company points out that “Given that the quality mix offered at this auction comprised a new blend of both higher and medium quality rubies, the reults cannot be directly compared wioth prior Gemfields auctions. On a quality-for-quality basis, however, the carat prices achieved remained broadly consistent with those achieved at previous auctions.”