Economic News
World trade recorded a 13.8%yoy decline (US$ terms) in 2015, marking the first contraction since 2009.
• The decline is attributed to slowing growth momentum in China and other emerging economies.
• In volume terms, trade is reported to have climbed 2.5%yoy.
• This is below the 3.1% global economic growth; whereas, trade growth used to come in at double the rate of global output for decades before the 2008 crisis.
US – A series of positive durable goods and capital investments reports released yesterday dilutes a raft of worse than expected news seen earlier.
• Core durable goods orders and capital goods order ex aircraft, a proxy for business spending, both recovered from a previous month’s slump pointing to a strong start tot the year.
• On a separate note, jobless claims climbed marginally higher than forecast, but remained at low levels compared to historical data series.
• Economic news due this week:
China – The central bank reminds markets of its “easing bias” as part of the current monetary policy.
• “China still has some monetary policy space and multiple policy instruments to address possible downside risks,” Governor of the PBoC said ahead of the G20 finance ministers’ meeting in Shanghai.
• The PBoC currently characterises its monetary policy as “prudent with a slight easing bias”.
• In a separate comment, Finance Minister Lou Jiwei confirmed “China still has the room to loosen fiscal policy”.
• Markets expect further reserve requirements ratio cuts and benchmark rate cuts in 2016.
Japan – Strengthening yen and soft commodity prices weigh on local inflation.
• CPI was flat at 0.0%yoy in Jan/16, down from an 0.2%yoy increase recorded in Dec/14.
• Core inflation (ex fresh food and energy) climbed 0.7%yoy v +0.8%yo in Dec/14 and +0.7%yoy forecast.
France – Q4 GDP revised upwards on stronger business investment while Feb inflation data disappointed.
• Q4 GDP climbed 0.3%qoq/1.4%yoy, up from initial estimates for a 0.2%qoq growth.
• The economy posted a 1.1%yoy increase for FY15, up considerably from +0.2%yoy in 2014.
• Inflation came in at 0.3%mom/-0.1%yoy, both below market estimates.
Spain – Inflation significantly misses market estimates.
• Prices dipped 0.9%yoy in Feb, lower than forecast and lower than -0.4%yoy seen in Jan.
• The data shows the economy remained in a deflation on a yoy basis since May/14.
• On a monthly basis, the index fell 0.4%mom compared with a 2.5%mom drop in the previous month.
South Africa – Eskom fights for the government cash injection arguing the Company complied with all necessary conditions to grant the release of funds.
• Previously, Treasury decided to withhold R5bn of R23bn allocation to power utility saying Eskom had not complied.
DRC – The national royalty proceeds crash amid a slump in commodity prices.
• The government estimates the budget may lose as much as US$1.3bn in combined mining and oil revenues.
• Regional royalty revenues from copper and cobalt sales proceeds in areas of Lualaba and Haut-Katanga halved last month (US$7.1m, down from US$14.1m).
Currencies
US$1.1017/eur vs 1.0008/eur yesterday. Yen 112.90/$ vs 112.20/$. SAr 15.623/$ vs 15.709/$. $1.404/gbp vs 1.391/gbp
0.722/aud vs 0.718/aud.
CNY 6.539/$ vs 6.535/$
Commodity News
Precious metals:
Gold US$1,233/oz vs US$1,235/oz yesterday –
• Gold ETFs at 54.0moz up from 53.9moz yesterday and 52.8moz a week ago
• Chinese gold imports from Hong Kong fell to the smallest since 2011 in Jan as prices climbed the most in a year and the USDCNY rate depreciation slowed during the month.
• Net purchases fell to 17.6t from 111.3t in Dec/15 and 71.6t in Jan/15.
• Net import surged 67%mom in Dec from a month earlier amid concerns that the Chinese currency would continue to weaken.
• The currency has been losing 1.3-1.4% per month in the Nov-Jan period.
Platinum US$922/oz vs US$939/oz yesterday – Impala guides for “lower-for-longer view of prices”.
Palladium US$484/oz vs US$492/oz yesterday
Silver US$15.06/oz vs US$15.28/oz yesterday
Base metals:
Copper US$ 4,673/t vs US$4,645/t yesterday –
Aluminium US$ 1,572/t vs US$1,568/t yesterday
Nickel US$ 8,450/t vs US$8,560/t yesterday –
Zinc US$ 1,739/t vs US$1,770/t yesterday –
Lead US$ 1,717/t vs US$1,709/t yesterday
Tin US$ 15,995/t vs US$16,015/t yesterday –
Energy:
Oil US$35.6/bbl vs US$33.9/bbl yesterday –
Natural Gas US$1.804/mmbtu vs US$1.742/mmbtu yesterday
Uranium US$32.50/lb vs US$33.00/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$46.1/t vs US$46.0/t –
Steel - World crude steel production for 66 countries reporting to the World Steel Association (world steel) fell -7.1% yoy to 128mt in January 2016
Company News
Amara Mining (LON:AMA) 10.3 pence, Mkt Cap £43.1m – Yaoure pre-feasibility study shows new value
• Amara Mining have released details of their optimised Yaoure gold project in the Ivory Coast (Côte d'Ivoire).
The new pre-feasibility gives:
38% IRR at US$1,200/oz gold - US$555m NPV @ 8% discount
25% IRR at US$1,000/oz gold - NPV US$281m
Production 248,000ozpa in years 1-5.
Av 203,000ozpa over 15 years
Av grade 1.62g/t
Capex US$334m, inc US$44m and US$60m for the mining fleet. Use of a contractor could save on this capex
Cash cost US$618/oz
AISCost US$667/oz
Payback 2.1 years due to early focus on higher grade CMA zone which contains 72% of the Yaoure's Proven reserve
Total Open pit resource 3.2moz
Optimised PFS confirms Yaoure is a compelling gold development project in the current capital constrained market environment
Reworking the project with a smaller 4.5mt plant and better grade control gives lower initial capital costs, better feed grades and better returns at conservative gold prices.
Amara are preparing the ground for a Bankable Feasibility Study based on the smaller and more focussed mine plan
Conclusion: Shareholders should be impressed by the reworking of the Yaoure project which indicates the project should be financeable at current gold prices.
Connemara Mining (LON:CON) 1.5p mkt cap £0.8m – Drilling starts at Inishowen to test depth of gold seen in trenching
• Connemara Mining run by the indomitable John Teeling is to start drilling today at its Inishowen project at Inishowen, County Donegal, Ireland.
• The program is to test some juicy looking gold results gained from trenching the at the project.
• Trench results on their own don’t make a project but grades like these are a very good start and the sort of thing that grab out interest particularly with Dalradin Resources popping out high grade results on a regular basis at Curraghinalt.
• Key trench results:
o 0.80m at 7.95g/t Gold
o 1.1m at 1.78g/t Gold
• The plan is to drill four four short diamond drill holes along the strike to test depth, vein continuity, grade and .
• We hope Teeling will have the luck of the Irish with this one as there is much still to be discovered in Irish geology.
SolGold* (LON:SOLG) 2.5p, Mkt Cap 20.4m – Hole 16 hits another huge intersection of visible copper at Cascabel in Ecuador
• SolGold continue to knock out huge holes of massive copper mineralisation.
• The visible copper mineralisation will also carry gold with significant copper and copper equivalent grades improving the economics of any future project.
• It is interesting that the visible copper mineralisation is seen from 568m with a 405m intersection seen so far down to 973m.
• Hole 16 extends the Alpala deposit by 100m to the south east and is targeting a deep 1,800m if all goes well.
• The metallurgy of the mineralisation looks good for processing and are consistent with other economic massive orebodies being mined along the Andean range.
• The company remind us that a new road is being built by the Ecuadorian government to the Alpala camp from Santa Cecilla which will lower the cost of operating in the area.
• SolGold are looking to ramp up drilling activity with the addition of a second drill rig.
• It’s a great time to negotiate drilling contracts and Nick Mather and his team are intent on using this lower cost operating environment to press ahead and develop Cascabel from prospect to project and onto a mining position just as soon as the drill results allow.
• SolGold have published a set of supporting plan and x-sections on Hole 16 and the Alpala part of the Cascabel prospect
• See https://SolGold.com.au/userfiles/2016.02.25%20-%20Cascabel%20Exploration%20Update%20Hole%2016%20Progress.pdf
o Decline: Figure 8 shows a plan for a potential decline to drift directly into the lower portions of the Aguinaga and Alpala mineralisation
o A decline could enable lower per meter drilling costs for the lower part of the orebody while giving significant new information and potentially speeding up the future development of the orebody.
o The development of a decline into the orebody could allow flexibility in mine planning. Eg a potential mine plan could start with modest production or to ramp up into something with very significant scale to rival other bid copper / gold mines in Chile and Peru.