Alecto Minerals (LON:ALO) – Matala project sampling results
Asiamet Resources (LON:ARS) – PEA on BKM copper project in Indonesia
Aureus Mining (LON:AUE) – Commercial Production at New Liberty
DiamondCorp (LON:DCP) – Lace mine resource update
Glencore (LON:GLEN) – Glencore looking at stake in Anglo Colombian Coal Mine
SolGold* (LON:SOLG) – New presentation for PDAC conference in Canada
Tertiary Minerals* (LON:TYM) – Storuman Mining Permit
Economic News
US – Manufacturing PMI improved in Feb but remained below the 50 mark suggesting the sector continued to contract.
• The fall in production is attributed to struggling energy sector and stronger US$.
• ISM Manufacturing PMI: 49.5 v 48.2 in Jan and 48.5 forecast.
• A recovering momentum in the manufacturing sector led US stocks higher.
• Economic news due this week:
China – Moody’s cut Chinese sovereign credit outlook on the back of increasing debt and falling foreign exchange reserves.
• The outlook has been downgraded to negative from stable with the rating remaining at Aa3.
• The scoring is in line with the S&P AA- rating and higher than a A+ estimate from Fitch.
• Commenting on targeted reforms aiming for rebalancing the economy Moody’s noted they “could indeed slow growth in the short term”.
• “[But] if they were reforms that pointed toward levelling off of leverage and more efficient allocations of capital, then we would see that as a positive.”
• “There will be significant further fiscal and monetary stimulus to maintain growth at robust levels. If that stimulus then delays reform, then we think it’s a negative signal.”
Australia – The Aussie dollar climbed today on the back of better than forecast Q4 GDP numbers.
• A surprising pick up in the final quarter led to an upwards revision in FY15 numbers.
• GDP: 0.6%qoq in Q4/15 v 1.1%qoq in Q3/15 and 0.4qoq forecast.
• FY15 GDP: 3.0%, up from a revised 2.7%yoy in the 12 months to Sep/15 and 2.5% forecast.
• The main driver behind Q4 GDP numbers were strong household consumption and public spending adding 0.4pp and 0.2pp to growth, respectively.
• The RBA forecasts GDP to average 2.5-3.5% in 2016.
Currencies
US$1.0870/eur vs 1.0864/eur yesterday. Yen 114.38/$ vs 113.11/$. SAr 15.713/$ vs 15.715/$. $1.392/gbp vs 1.396/gbp
0.722/aud vs 0.715/aud. CNY 6.551/$ vs 6.549/$.
Commodity News
Precious metals:
GOLD US$1,231/oz vs US$1,241/oz yesterday –
• GOLD ETFs 55.1moz vs 54.7moz yesterday – a good rise in GOLD ETF inflows indicating strong investor demand
Platinum US$939/oz vs US$938/oz yesterday
• Platinum deficit to fall 64% to 135koz this year, after being halved in 2015, according to latest World Platinum Investment Council data.
• Demand to be little changed at 8.2moz in 2016 amid stronger purchases by auto manufacturers (+3%) and a fall in investment demand (-50%).
• Mine supply to be little changed at 6.1moz after climbing 17% in the previous year.
• Recycling to grow 14% taking total supply to 8.0moz (+3%).
Palladium US$515/oz vs US$504/oz yesterday
Silver US$14.81/oz vs US$14.89/oz yesterday
Base metals:
Copper US$ 4,789/t vs US$4,699/t yesterday - – Codelco does not expect copper prices gains sustainable amid market surpluses forecast for 2016 and 2017.
• Prices above US$3.0/lb do not “look plausible”, the Company said.
• Instead, Codelco forecasts prices to fluctuate at around US$2-2.1/lb (US$4,400-4,600/t) for a couple of years, with extreme volatility.
Aluminium US$ 1,582/t vs US$1,580/t yesterday
Nickel US$ 8,800/t vs US$8,600/t yesterday
Zinc US$ 1,809/t vs US$1,775/t yesterday
Lead US$ 1,795/t vs US$1,766/t yesterday
Tin US$ 16,125/t vs US$15,885/t yesterday
Energy:
Oil US$36.6/bbl vs US$36.7/bbl yesterday –
• Supply from the OPEC has declined to 32.37mbpd in Feb from a revised 32.65mbpd in Jan.
Natural Gas US$1.698/mmbtu vs US$1.700/mmbtu yesterday
Uranium US$32.15/lb vs US$32.15/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$49.8/t vs US$48.7/t –
• Prices at the Dalian Commodity Exchange climbed 1.5% to CNY 383/t (US$58.5/t), the highest level in almost five months.
• Moody’s downgrades Vale debt instruments to ‘junk’, S&P still at ‘BBB-‘.
Thermal coal (1st year forward cif ARA) US$38.20/t vs US$38.40/t yesterday
Other:
Tungsten - APT European prices stood at $165-185/mtu shows prices rising vs $160-180/mtu last week
Company News
Alecto Minerals (LON:ALO) 0.07 pence, Mkt Cap £2.1m – Matala project sampling results
• Alecto reports that sample results from its recently acquired Matala GOLD project in south central Zambia validate an historic report prepared in 1984 for the Zambian Indusrtial and Mining Corportaion (ZIMCO).
• The results of Alecto’s sampling programme include grades between 3.87 g/t and 8.37 g/t GOLD from the mill tailings dump; between 0.39-7.96 g/t GOLD from the “Scree Rubble Deposit” and between 0.72-3.88 g/t GOLD from the waste dump. In addition samples from the slimes dump range between 0.32 and 0.63 g/t GOLD.
• Alecto also notes that “four confirmatory samples taken from the main Matala Lode and the oxidised leached cap at Matala replicated excellent grades for the in-situ material with an average grade of 5.59 g/t Au.”
Asiamet Resources (LON:ARS) 1.2 pence, Mkt Cap £6.9m – PEA on BKM copper project in Indonesia
• Asiamet Resources has released a Preliminary Economic Assessment ‘PEA’ on the Beruang Kanan Main deposit in Kalamantan, Indonesia.
• The PEA gives an early view on the potential economics of developing an open pit mine and heap leach SX-EW processing facility for near-surface copper resources.
• The SX-EW would produce copper metal at site.
• >70% recoveries are seen in acid leaching tests at Core Resources’ in lab in Brisbane indicating high short term recoveries.
• The open pit mine shells are being planned by Oreology to take advantage of the valley topography with a partial valley fill to enable short haul roads to nearby leach pads and for contained process ponds.
• Low cash costs should result from the low waste to ore stripping ratios and short haul distances should .
• Power: small scale hydropower is being considered to reduce the cost of local power generation.
• Logistics: road and barge points are being considered for shipping equipment in and metal out of the site. Large truck and barge fleets are already active in the area by forestry and coal companies in the region.
• The project has an indicated resource of 15mt grading 0.7% copper plus an inferred resource of 49.7mt at 0.6% copper.
Conclusion: The information in today’s update is tantalising and indicates to us the PEA could deliver some promising numbers in terms of CAPEX, operating costs and value. Toni Manini and his team are well respected and we look forward to seeing the PEA figures when they are published.
Aureus Mining (LON:AUE) 4.6 pence, Mkt Cap £25.1m – Commercial Production at New Liberty
• Aureus Mining has declared formal Commercial Production with effect from 1st March.
• This milestone follows increasing GOLD production, throughput rates averaging 88% of design rates over the last 60 days and improved recovery rates reaching 90% by the end of February.
• The company notes that February GOLD production exceeded 9000 oz and that with the previously announced 5,478 oz achieved during January “Year to date production is over 14,000 ounces of GOLD.”
• GOLD recovery has benefitted from the introduction of additional carbon to the leach tanks “overall GOLD recovery has continued to improve in February and is now at 90% which is in line with overall plant operating specifications.”
Conclusion: In mid-February, Aureus Mining announced that it expected to achieve commercial production by the end of March – achieving this milestone by the beginning of the month suggests increasing management confidence that the initial setbacks at New Liberty have been overcome.
DiamondCorp (LON:DCP) 8.5 pence, Mkt Cap £37.9m – Lace mine resource update
• DiamondCorp has announced an updated resource estimate for its Lace diamond mine in the Free State Province of South Africa.
• The update reflects a recognition that the smaller diamonds below 1mm in size are the lowest in value and that they contribute a minimal economic benefit to the project. By increasing the minimum size of stones to be recovered to 1.25mm, the average value of the Lace production is now expected to rise to $164/ct (March 2012 $160/ct). Although the forecast seems to be consistent with the grades seen in the current ramp up of mining on the UK4 block, “the actual carat value achieved will be known when we commence diamond sales in Antwerp in the last week of March.”
• The company notes that this estimate “does not include any values achieved from the recovery of special stones for which Lace as known during its previous production period pre-Great Depression, including diamonds up to 122 carats in size.” We also suspect that there may be benefits to the cost structure of future production by increasing the lower size limit of stones to be recovered.
• The revised estimate of 38.48m tonnes at an average grade of 24.4 cpht (carats per hundred tonne) to the 920m level comprises approximately 7.5m tonnes (19.1%) at an average grade of 19.1 cpht classed as “indicated” with the balance as “inferred”. The mineralisation remains open at depth below this level
• The K4 kimberlite comprises around 60% of the tonnage and 87% of the contained diamonds at Lace has an estimated grade of 40cpht. The announcement also reports that “The small Satellite pipe which was incorporated into the previous resource statement is not included in the new resource statement as it is not considered a feasible mining proposition at this stage.”
Conclusion: The decision to exclude the smaller low value diamonds from the Lace resource estimate reflects a practical response to their minimal economic contribution to the mine. We look forward to news of the prices achieved in Antwerp at the end of this month.
Glencore (LON:GLEN) 130.6 pence, Mkt Cap £18.8 bn – Glencore looking at stake in Anglo Colombian Coal Mine
• Glencore are reported to be looking at buying a stake in a Anglo American’s Colombian Coal Mine.
• Anglo American holds a third of the giant Cerrejon coal mine alongside Glencore and BHP and is looking to sell the stake as part of its restructuring.
• Ivan Glasenberg built up Glencore’s massive coal trading business and knows how to turn a profit when it comes to coal and its trading.
• Glencore and BHP have first rights of refusal on any disposal and according to Glasenberg its not something Glencore would want to walk away from.
SolGold* (LON:SOLG) 2.5p, Mkt Cap 20.4m – New presentation for PDAC conference in Canada
• SolGold are issuing an updated presentation focussed on progress at the Cascabel porphyry copper project in Ecuador.
• Management are exhibiting fresh core samples from Hole 16 at Alpala, Cascabel.
• The team are looking forward to meeting with, Javier Córdova Unda, the Ecuadorian Minister of Mining at the Ecuadorian Day at the conference.
o The Republic of Ecuador, through the Ministry of Mining, is looking to position the Nation´s mining potential as an important opportunity for investment. During Ecuadorian day, the Minister of Mining will present the most important recent advancements in Ecuador's mining sector and outline the advantages of investing in the country. Significant developments in the status of the strategic mining projects will also be presented, along with new tax incentives and legal improvements approved in the past year. Finally there will be a presentation of the opportunities for exploration and investment..
Conclusion: Ecuador is making a big effort to promote the nation as a new destination for mining. SolGold is well placed to work with the Ecuadorian government in the potential development of the Cascabel copper porphyry and other potential project in Ecuador.
*SP Angel acts as Nomad and Broker to SolGold. An SP Angel analyst has visited the Cascabel project.
Tertiary Minerals* (LON:TYM) 1.2p, Mkt £2.6m – Storuman Mining Permit
• Tertiary Minerals has announced details of the terms of the Mining Permit granted to its wholly owned Storuman fluorspar project in north central Sweden.
• The licence is valid for a period of 25 years from 18th February 2016 and covers an area of 184.13 hectares. ”The concession area is predominantly limited to the area of the proposed open pit” and “Before mine construction can commence the detailed conditions of the operation must be set through the Environmental Permit process.”
• The company notes that Swedish permitting procedures allow for an appeal against the decision to grant the Mining Permit to be filed up until 24th March. Previous announcements by the company indicated that only one of the seven major stakeholders consulted in connection with the permit application had raised objections.
• The Sami reindeer herding community had opposed the application but today’s announcement states “The Swedish Mining Inspectorate has granted the Permit by giving precedence to the national interest of minerals over the national interest of reindeer herding.” “The view of the Mining Inspectorate is that continued sustainable reindeer husbandry can co-exist alongside the mining operations providing that the Company implements appropriate protective measures/precautions, the details of which will be set by the Swedish Land and Environmental Court.”
• The Mining Permit requires that the company pays 500,000 Swedish Krona to the Mining Inspectorate prior to the commencement of mining as security for site rehabilitation when the mine ultimately closes. With environmental permitting still to be completed, however, it does not appear that there is an immediate need to pay the rehabilitation security.
• Environmental permitting, under the Swedish Environmental Code will also consider the processing plant, tailings disposal arrangements and infrastructure.
Conclusion: Securing the Mining Permit for Storuman is a significant advance for the project but with environmental permitting still required, it may yet be some time before the project can proceed to development and construction.
*SP Angel act as Nomad and broker to Tertiary Minerals