Botswana Diamonds (LON:BOD) – Active exploration starts on two licenses in Orapa
Plymouth Minerals (ASX:PLH) – A$3m placing to speed exploration on Gabon potash project
Shanta Gold* (LON:SHG) – Shanta receives $9.1m for power station financing
Gold prices pull back as US dollar gains on Brussels terror attacks
• The US dollar continued to gain following the Brussels attacks continuing a four days of gains.
• Comments from Fed committee members indication a potential earlier than expected rate rise is the overriding issue
• Gold prices have pulled back from $1,283/oz to $1,234/oz as the US dollar gains
• Base metals have held firm and posted gains through the USD appreciation indicating underlying strength in these markets
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PlOD along to the 121 Mining Investment Conference in London on 14th -15th April at 8 Fenchurch Place, Fenchurch Street Station
• See the inflatable PODs at the 121 Mining Investment Conference - Investors and analysts go free:
https://www.weare121.com/121mininginvestment-london/registration/register-investor/
Dow Jones Industrials -0.23% at 17,583
Nikkei 225 -0.28% at 17,001
HK Hang Seng -0.25% at 20,615
Shanghai Composite +0.35% at 3,010
FTSE 350 Mining -0.54% at 9,171
AIM Basic Resources +0.98% at 1,733
Economic News
US – Manufacturing expanded nearly at the same rate as in the previous month in Mar coming in below forecasts on the back of waning global demand, stronger US dollar and weaker oil prices weighing on the activity in the oil and gas space.
• Markit PMI: 51.4 v 51.3 in Feb and 51.9 forecast.
• “US factories continue to endure their worst spell for three and a half years,” Markit said.
• A lack of rebound In Mar was particularly disappointing as a number of companies attributed a slowdown in activity at the start of the ear to bad weather.
• Economic news due this week:
Date Index Period Actual Expected (Bloomberg) Previous
Monday Existing Home Sales Feb -7.1%mom -3.0%mom 0.4%mom
Tuesday Markit Manufacturing PMI Mar 51.4 51.9 51.3
Wednesday New Home Sales Feb 3.2%mom -9.2%mom
Thursday Weekly Jobless Claims 268k 265k
Durable Goods Orders Feb -3.0%mom 4.7%mom
Core Durable Goods Feb -0.3%mom 1.7%mom
Capital Nondefence Goods Orders Feb -0.5%mom 3.4%mom
Friday Q4 GDP (Final Reading) 1.0%qoq 1.0%qoq (previous estimate)
Q4 Core PCE 1.3%qoq 1.3%qoq (previous estimate)
Source: Bloomberg
Eurozone – PMI data released yesterday point to a modest growth in the area’s GDP through Q1 with “plenty of worrying signs” remaining.
• Composite PMI climbed to 53.7 from 53.0 in Feb hitting a three-month high mark.
• The increase was driven by stronger services sector helped by marginal growth in new business.
• Manufacturing once again lagged services.
• Composite index showed new order growth “barely improved on the one-year low seen in Feb”.
• “Job creation slowed further.”
• “Deflationary pressures also remain stubbornly widespread as a lack of demand led to further discounting in Mar.”
Germany - Economic sentiment continued to slide in Mar on the back of pessimism over slowing global economic growth.
• ZEW index of current economic confidence came in at 50.7, down from 52.3 in Feb and 53.0 forecast.
• On a more positive note, the index of future conditions performed better coming in at 4.3, up from 1.0 in Feb and below 5.4 forecast.
• “The uncertainty associated with the future economic development of important emerging economies, with the development of the oil price and with the external value of the euro continues to call for caution,” the report said.
Currencies
US$1.1188/eur vs 1.212/eur yesterday. Yen 112.68/$ vs 111.46/$. SAr 15.302/$ vs 15.256/$. $1.417/gbp vs 1.430/gbp
0.759/aud vs 0.758/aud. CNY 6.497/$ vs 6.491/$ unch.
Commodity News
Precious metals:
Gold US$1,234/oz vs US$1,253/oz yesterday – Prices fell to the lowest in a week on back of a recovery in the US dollar led by hawkish comments by a number of regional Fed Reserve Banks heads.
• Charles Evans, a President of the Federal Bank of Chicago and an alternate voting member of the FOMC, sees two hikes in interest rates this year as “not at all unreasonable”.
Gold ETFs 56.8 moz yesterday unch vs 56.8moz yesterday – unchanged following big jump in gold ETF holdings yesterday
Platinum US$984/oz vs US$985/oz yesterday
Palladium US$595/oz vs US$604/oz yesterday
Silver US$15.64/oz vs US$15.98/oz yesterday
Base metals:
Copper US$ 5,056/t vs US$5,051/t yesterday –
Aluminium US$ 1,495/t vs US$1,502/t yesterday –
Nickel US$ 8,775/t vs US$8,640/t yesterday –
Zinc US$ 1,863/t vs US$1,846/t yesterday
Lead US$ 1,808/t vs US$1,823/t yesterday
Tin US$ 17,075/t vs US$16,785/t yesterday
Energy:
Oil US$41.5/bbl vs US$41.4/bbl yesterday –
Natural Gas US$1.850/mmbtu vs US$1.812/mmbtu yesterday
Uranium US$29.70/lb vs US$29.65/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$55.8/t vs US$55.7/t –
Thermal coal (1st year forward cif ARA) US$41.20/t vs US$42.50/t yesterday –
Coal – Mongolian Mining Corp, a local coking coal miner, is reported to have defaulted on its $200m loan facility triggering a cross-default on its bonds.
• The miner missed principal and interest payments on itd debt to BNP Paribas and Chinese ICBC without securing a waiver from the lenders.
• The Company sold 5.4mt of coal products in 2014 including 3.4mt of hard coking coal, 1.9mt of thermal coal and 0.1mt of semi-soft coking coal.
Other:
Tungsten - APT European prices stood at $168-185/mtu vs $165-180/mtu last week – tungsten prices appear to be turning slowly off a low base. The entry of new production from Wolf’s Drakelands tungsten mine in Devon
Ferrochrome – “The rand is destroying us: we are punished because our import costs rise and we are punished again because our customers in China ask for a lower price for ferro-chrome on the basis that the rand has devalued,” CEO of Afarak, an integrated chrome producer, said.
• A falling currency was an advantage for producers three or four years ago with clients of South African producers are now quick to negotiate lower prices reflecting a weaker currency.
• Customers are pushing producers to lower prices for ferrochrome when the rand falls.
• The depreciating currency has long been one of the few positives in an industry suffering from waning demand, unreliable power supply and escalating unit costs.
Company News
Botswana Diamonds (LON:BOD) 0.9 pence, Mkt Cap £2.7m – Active exploration starts on two licenses in Orapa
• Botswana Diamonds has started active exploration on two licenses in its Orapa license area in Botswana in joint venture with a team from Alrosa, the Russian diamond company.
• Sampling has started and mineralogists are due to arrive next week to analyse the samples with geophysics due to start shortly after.
• Diamond drilling is due to start on AK21 and PL260 in the first week of April with verification drilling to run concurrently on PL 201.
• The work program is fully funded by the joint venture
Conclusion: It is good to see exploration is underway and we look forward to the results as they come. The potential discovery of economic diamond pipes is all the more interesting these days given recent successes in the recovery of unusually large stones by Lucara in the region. New exploration methodologies should improve the chances of diamond discovery though the chances of finding a rich pipe are still relatively slim.
Plymouth Minerals (ASX:PLH) A$0.095, mkt cap A$4.3m – A$3m placing to speed exploration on Gabon potash project
• Plymouth Minerals has raised A$3m to expedite exploration at its Banio and Mamana potash project in Gabon.
• Plymouth recently exercised its option to acquire Equatorial Potash for its Banio project tin the south of Gabon close to the border with the ROC and Mamana which is closer towards the capital Libreville.
• The company give an interesting presentation on the location and logistics of both potash projects highlighting infrastructure close to both projects in Gabon.
• See: https://www.plymouthminerals.com/
• The company also holds the Morille tungsten project in Spain
Shanta Gold* (LON:SHG) 7.0p, Mkt Cap £32.8m – Shanta receives $9.1m for power station financing
• Shanta Gold have received $9.1m in financing from Bank M Tanzania for the construction of its 7.5MW power station at the New Luika Gold Mine.
• The power station is being built to support the new underground mine being planned to access high grade gold at New Luika.
• Electrical power demand will more than double at New Luika to around 6MW through the development of the underground mine.
• The use of diesel in trucks and other surface mining equipment will give way to more efficient underground mining as the New Luika open pit closes.
• Shanta Gold currently run on a power leasing agreement with substantial costs to the company starting in Q1 2017.
• The new power station, owned and operated by Shanta should cut costs significantly on a per kilowatt basis as well as enabling the operation of a more energy efficient fleet of underground equipment.
Conclusion: The power station project is another positive development in Shanta’s progression towards lower costs and longer term development. Shanta’s recent high-grade gold discover at Askari, just 14km away from the New Luika gold mine, announced last month was an important milestone towards the longer-term development of a larger gold mining business.