Amur Minerals* (LON:AMC) – Heads of terms with the state-owned development fund signed
FinnAust Mining* (LON:FAM) – Raised £1m to progress the Pituffik Titanium Project in Greenland
Metminco * (LON:MNC) – 2015 Financial Results
SolGold* (LON:SOLG) – Initial assays from Hole 16 at Alpala Central and samples from the Trevinio prrospect
Copper prices take off on expectations for further stimulus from China’s National Peoples Congress
• Copper and other selective metals are posting new gains on expectations for new stimulus programs to be announced by China’s National Peoples Congress.
• The annual Congress which starts tomorrow sets the plan for the Chinese economy for the year.
• The congress is to finalise China’s 13th 5-year plan which is expected to focus on innovation and environmental issues
• China’s congress is also expected to set goals for economic and social policy.
• China is expected to set an annual GDP target within a range between a range, possibly 6.5-7%. This would be good news for markets.
• Given last year’s anti-corruption and other purges within China’s Communist party few officials will dare to disappoint
• Last year saw economic growth sacrificed as the Communist party refocussed its priorities, the party may now look to reactivate lost growth
• Chinese traders are said to have closed unpatriotic short positions ahead of the congress
• The Yuan has soared ahead of the congress as forex traders buy into the currency ahead of positive expectations on news from the congress
Key issues for this year’s congress are:
• Transition to a more consumption led economy
• Expansion of the service sector
• “Supply side reform” is said to be China’s new catchphrase in the reduction of surplus capacity in steel and coal
• Rationalisation of the steel, coal (recently announced) and similar sectors (cement), though these are still difficult policies to push through.
• Migration of jobs and people away from inefficient industries into new cities and more consumer led sectors
• Stabilisation of the stock market which suffered huge swings and losses last year.
• Long-term structural reform or short-term stimulus.
• Jobs, Jobs, Jobs!
• China announced plans to cut 100mt-150mt of steel capacity and >500mt of coal capacity over the next five years.
Copper continued…
• We see copper prices further supported by a probable fall in recycling as lower prices lead to lower recycling levels
• New investment in gold indicates to us that investor sentiment is moving back into hard assets on the potential for new growth in China
• A weakening of the US dollar is helping metals prices as investors worry about the potential impact of Trump gaining entry into the Whitehouse.
• We also suspect some profit taking on an already strong dollar and caution ahead of today’s Non-Farm Payroll figures.
• Sovereign wealth fund sales by oil rich nations is likely to have slowed with the rise in the oil price today. These funds have sold hundreds of billions of dollars worth of assets in the past six months across all asset classes.
Dow Jones Industrials +0.26% at 16,944
Nikkei 225 +0.32% at 17,015
HK Hang Seng +1.18% at 20,177
Shanghai Composite +0.50% at 2,874
FTSE 350 Mining +3.31% at 9,201
AIM Basic Resources +1.65% at 1,710 – positive move led by gold and copper
Economic News
US – It is the nonfarm payrolls day with estimates for a rebound in employment numbers (195k v 151k in Jan).
• Positive payrolls and earnings growth numbers will add to the tightening case and is likely to drive the US dollar higher.
• On a separate report, factory orders climbed the most in seven months in Jan the report released yesterday showed.
China – Asian equities posted the strongest weekly performance in months on a rebound in interest for risky assets driven by better than forecast US economic data and a rebound in oil and commodity prices.
• C. 3,000 top nation’s officials are meeting during the National People’s Congress this Saturday discussing policy plans including growth drivers for the next five years.
• Details of discussions will be particularly sought after at the time of escalating concerns over uncertain growth outlook in one of the world’s largest economies.
Japan – The BoJ is not considering taking interest rates lower into the negative territory, a governor Haruhiko Kuroda said this morning.
• The BoJ cut rates on excess reserves to a record low of -0.1% during its previous meeting on Jan 29.
• The next meeting is due 14-15 Mar/15.
ECB – “Euro area inflation dynamics continue to be weaker than expected,” Mario Draghi said this week.
• Soft inflation expectations outlook adds to pressure for the ECB to expand the easing programme during its policy meeting next week.
Australia – Retail sales picked up in Jan (+0.3%mom) from a modest no-change reading in the previous month.
• Sales have been robust growing at 0.4-0.5%mom in four months before slipping to 0.0% in Dec.
• The latest reading suggest a resumption in growth momentum with the pace falling in the middle of the -0.1%/+0.7%mom range seen in 2015.
Currencies
US$1.0969/eur vs 1.0873/eur yesterday. Yen 113.65/$ vs 113.98/$. SAr 15.667/$ vs 15.653/$. $1.414/gbp vs 1.408/gbp
0.737/aud vs 0.732/aud. CNY 6.517/$ vs 6.542/$.
US dollar weakens ahead of Non-farm payroll numbers
Commodity News
Precious metals:
Gold US$1,272/oz vs US$1,242/oz yesterday – Indian jewellers are considering to extend the 3-day old shutdown protesting against the proposed 15% excise tax.
• Stores across India remained closed since Wed after Finance Minister announced the measure in federal budget on Feb 29.
• The strike is set to continue until either tax is withdrawn or assurance of withdrawal given, the India Bullion and Jewellers Association said.
Gold ETFs 55.1moz unch on yesterday –
Platinum US$958/oz vs US$935/oz yesterday
Palladium US$540/oz vs US$520/oz yesterday
Silver US$15.43/oz vs US$14.95/oz yesterday
Base metals:
Copper US$ 4,895/t vs US$4,821/t yesterday – Freeport-McMoRan sold its stake in a copper/gold project in Serbia to Lundin Mining for US$263m (US$135m payable on completion) as part of its exercise to cut outstanding debt and focus on core assets.
• The deal is expected to be finalised in Q2/16.
• As part of the deal, Freeport is set to give up 100% of its interest in the upper zone of the Cukaru Peki deposit characterise by high grade massive and semi-massive sulphide mineralisation, but to retain a 72% interest in the lower zone of the deposit.
• The project is 45% owned by Reservoir Minerals with the deal subject to the Company’s right of first offer.
• According to the latest NI43-101 the deposit hosted 65.3mt at 2.6% Cu and 1.5g/t Au in the Inferred category as of Jan/14.
• Lundin underground mining expertise is expected to benefit the development of the project.
• Yesterday we saw that production in Peru surged 40%yoy to 157.3kt in Jan/16 driven by completed growth in output at Freeport, Chinalco and Hudbay Minerals operations.
• Additionally, Las Bambas which is set to produce 250-300kt this year started in Jan.
• Peru produced 1.7mt last year, up 23%yoy on 2014.
Aluminium US$ 1,576/t vs US$1,591/t yesterday
Nickel US$ 8,980/t vs US$8,840/t yesterday
Zinc US$ 1,839/t vs US$1,834/t yesterday
Lead US$ 1,836/t vs US$1,826/t yesterday
Tin US$ 16,545/t vs US$16,510/t yesterday
Energy:
Oil US$37.0/bbl vs US$36.8/bbl yesterday –
• Supply from the OPEC has declined to 32.37mbpd in Feb from a revised 32.65mbpd in Jan.
Natural Gas US$1.627/mmbtu vs US$1.677/mmbtu yesterday
Uranium US$31.80/lb vs US$32.05/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$49.6/t vs US$50.8/t – Prices came off multi-year highs yesterday on the back of maple inventories in China.
Thermal coal (1st year forward cif ARA) US$39.50/t vs US$39.20/t yesterday
Other:
Tungsten - APT European prices stood at $165-185/mtu shows prices rising vs $160-180/mtu last week
Company News
Amur Minerals* (LON:AMC) 7.6p, Mkt Cap £30.5m – Heads of terms with the state-owned development fund signed
• The Company signed a non-binding Heads of Terms Agreement with the Far East and Baikal Region Development Fund regarding “intentions to expand their collaboration on fuding” of the Kun Manie copper/nickel sulphide project.
• The Fund will review the potential for federal funding of the mine, processing plant, smelter and infrastructure.
• “The Agreement provides a launching point for detailed negotiations establishing technical requirements, funding needs, terms and conditions, and timelines.”
• The Fund is a government controlled investment vehicle with a target to accelerate social and economic development in the sparsely populated Far East region including the Oblast of Amur where the project is located.
• “The creation of a mining cluster based on this deposit will give a significant lift to the regional economy, tax revenue and will create thousands jobs,” the Fund said.
Conclusion: The signed agreement sets the stage for future development funding negotiations with the Fund and reflects the government interest in the project as a driver of economic activity in the region.
*SP Angel act as Nomad and Broker to Amur Minerals
FinnAust Mining* (LON:FAM) 2.15p, mkt Cap £9.2m – Raised £1m to progress the Pituffik Titanium Project in Greenland
• FinnAust reports that it has raised £1m via the issue of 50m new shares at 2p/share. “Approximately half of the amount raised came from existing shareholders with the balance from new investors.” “This placing complements the £200,000 investment committed by major shareholder Western Areas Limited and the current management team, which was also at a placing price of 2 pence”.
• The proceeds are mainly to be used to advance the recently acquired Pitufflik titanium sand project in Greenland where “positive results from the bathymetry (depth) and seismic profiling survey and extensive sampling programme at Pitufflik have demonstrated that the shallow marine environment hosts very large volumes of potentially high grade titanium”. Greenland’s Authorities are expected to grant formal approval of the transfer of control of the project to FinnnAust Mining shortly.
Conclusion: It is encouraging to see that FinnAust Mining has secured the support of existing shareholders and also attracted new investors to help fund the evaluation of its newly acquired titanium mineral sands project in Greenland.
* SP Angel acts as nomad and broker to the company
Metminco* (LON:MNC) 0.235 pence, Mkt Cap £7.0m – 2015 Financial Results
• Metminco reports a loss of A$49.1m for 2015 (2014 – Loss of A$12.9m).
• The 2015 results include an impairment charge of A$43.5m relating to the Mollacas Project in Chile where Chile’s Supreme Court ruled to uphold a decision of a lower Court to deny the Company access to the property.
• The impairment charge reduces the book value of Mollacas to A$3.9m “being the value of the land and water rights owned by the Company”. In addition, Metminco has provided A$2.8m for associated VAT in Chile. Stripping out the impairment charge and the provision and similar charges reported last year suggests that on an underlying basis, Metminco has reduced its annual loss to A$2.8m from A$5.7m in 2014.
• The company’s principal asset is the Los Calatos copper project in Chile where Metminco is seeking a strategic partner to assist in developing the current resource of 352m tonnes at an average grade of 0.76% copper as an underground mine. Metminco comments that “a number of parties are working through their due diligence. The process is taking longer than anticipated, mainly due to current market conditions.”
• During 2015, the company raised a total of A$5.3m and completed the year with a cash balance of A$0.95m.
• In February, the company announced that it had started drilling on a possible extension to the Los Calatos mineralisation which remains open in a number of directions.
Conclusion: Metminco continues to search for a strategic partner to assist in developing Los Calatos and is exploring possible extensions to the mineralisation. We look forward to news on these initiatives as it becomes available.
*SP Angel act as joint-broker to Metminco
SolGold* (LON:SOLG) 2.825p, Mkt Cap 23.2m – Initial assays from Hole 16 at Alpala Central and samples from the Trevinio prrospect
• SolGold has reported the initial assays from its hole 16 at the Alpala Central zone of its Cascabel project in Ecuador. The results so far show a 216m long intersection at an average grade of 0.94% copper and 1.26 g/t gold from a depth of 516m.
• The hole remains in mineralisation at a depth of 1217m and drilling is continuing towards a planned depth of 1800m. Drilling progress is approximately 30m per day and “The hole is projected to intersect the upper surface of the typically high grade Quartz Diorite intrusive at a depth of 1270m.” At this rate of progress, hole 16 may be expected to enter this zone within the next few days.
• SolGold comments that “The intersections achieved in Hole 16 increase the known strike extent of copper and gold mineralisation along the greater Alpala trend to over 650m.”
• The company has also released the results of its surface and channel sampling work on the Trevinio prospect where results “indicate surface copper gold mineralisation of up to 0.43% copper and 0.43g/t gold” over an area measuring 300 x 400 metres so far.
Conclusion: SolGold’s latest drilling at Alpala Central has again encountered extensive copper gold mineralisation with results so far showing almost 1% copper and 1.26g/t gold over 216 metres. Further assays should be in the pipeline. The hole is now close to entering what the company flags as potentially a higher grade zone. In addition surface sampling at Trevinio has confirmed copper/gold mineralisation over a significant area and follow up drilling is planned within the next 6 months.
*SP Angel acts as Nomad and Broker to SolGold. An SP Angel analyst has visited the Cascabel project.