IronRidge Resources* (LON:IRR) - Board change
Metal Tiger (LON:MTR) – link to MOD Resources ASX letter
Mariana Resources (LON:MARL) – Schedule for start of drilling at Dona Ines and Exploradora East copper projects in northern Chile
Metminco * (LON:MNC) – Raising £0.5m
Sierra Rutile (LON:SRX) – Positioning for any recovery in prices
SolGold* (LON:SOLG) – Hole 14 shows massive extension at eastern end of Alpala
Lithium batteries – stronger for longer, according to research
• Research into the performance and lifespan of lithium batteries used in electric vehicles ‘EV’ is reported to show less degradation and better performance than has been expected.
• The news is of interest to groups interested in using batteries for stationary energy storage systems.
• The idea is that EV batteries can be reused for stationary storage applications.
• Battery management electronics are providing better battery management thus preserving value within older batteries. If you have a lithium battery do not repeatedly run it down after it runs out of power. This is what kills a lithium battery as we have discovered in our own tests.
• The good news is that EV owners should get better performance for longer out of their lithium batteries and to then trade in the batteries more easily. The bad news is that we bet the trade in values being offered may not be that great.
Miners to go better today following statement from Chicago Fed Chairman
• The Chicago Fed chair “would be surprised if Fed met conditions for rate rise in April”
• The statement lends weight to Janet Yellen’s dovish indications on the potential for further delays to US interest rate rises
• The US economy has met Fed targets for near-full employment and interest rates at close to 2% so the Fed now appears to be focussing on maintaining economic growth
• Lower rates for longer will help highly leveraged miners to pay down debt to more manageable levels and to restore credit ratings
• A weaker US dollar should help commodity prices higher as China restocks on raw materials and looks to maintain 6.5% GDP growth
• The Fed appear to be looking to hold back a stronger US dollar and to maintain US economic growth as potential new conditions before monetary tightening
o Lower power, restructured labour and other input costs should not create margin growth for producing miners
o Lower capital costs for construction are also making the development of new mines increasingly attractive
o In short we believe the recovery in mining shares should be well supported by improving fundamentals
South Africa – President Zuma ordered to repay costs of upgrading house by constitutional court
• The president spent ZAR216m on new security features at his personal residence and has 60 + 45 days to repay the funds
• Security features include a swimming pool, chicken run, cattle kraal and an amphitheatre
• On Zuma’s current salary repayment it would take 63 years to repay the debt
Extel survey – voting for the Extel survey is open
• Please feel free to express your appreciation for our work by voting using the link below
• https://www.extelsurveys.com/QuickVote
Dow Jones Industrials +0.47% at 17,717 – The index is up 1.7% in Q1
Nikkei 225 -0.71% at 16,759
HK Hang Seng -0.13% at 20,777
Shanghai Composite +0.11% at 3,004 – down 15.1% in Q1
FTSE 350 Mining -0.31% at 8,903 – up 20.9% in Q1
AIM Resources +0.31% at 1,737 – up 6.5% in Q1
Economic News
US – The dollar index hovers around a five-month low on the back of dovish Janet Yellen comments made earlier this week.
• Economic news due this week:
Date Index Period Actual Expected (Bloomberg) Previous
Monday PCE Deflator Feb -0.1%mom/1.0%yoy -0.1%mom/1.0%yoy 0.1%mom/1.3%yoy
PCE Core Feb 0.1%mom/1.7%yoy 0.2%mom/1.8%yoy 0.3%mom/1.7%yoy
Personal Spending Feb 0.1%mom 0.1%mom 0.0%mom (revised from 0.4%mom)
Pending Home Sales Feb 3.5%mom 1.2%mom -3.0%mom
Tuesday S&P/CS Property Prices Jan 5.8%yoy 5.7%yoy 5.7%yoy
Wednesday Consumer Confidence Mar 96.2 94.0 94.0
ADP Employment Change Mar 195k 200k 205k
Thursday Weekly Jobless Claims 265k 265k
Friday NFPs Mar 205k 242k
Unemployment Rate Mar 4.90% 4.90%
Av hourly Earnings Mar 0.2%mom/2.2%yoy -0.1%mom/2.2%yoy
Source: Bloomberg
China – Business activity accelerated in Mar, but the pickup was largely driven by the property sector with ther areas remaining weak, according to the China Business Actvity from FT Confidential Research.
• The index climbed to 57.9 from 50.6 in Feb. The reading above 50.0 marks an expansion in the economy.
• An offshore unit of Guosen Securities, China’s eighth largest investment bank, is reportedly defaulted on its CNY1.2bn “dim sum” bond issued in 2014.
• Bonds issued in Hong Kong but denominated in Chinese renminbi were released in Apr/14 at an interest of 6.4%.
• It is surprising to see the state-owned parent company reluctant to step in and fix financial difficulties of its affiliate.
• The parent Company is one of the largest mainland brokerages holding the 12th place in the league table for onshore equity underwritings in 2015. The Shenzhen government is the lasrget shareholder of the local Company.
Eurozone – France and Spain posted negative inflation rates in Mar while Germany managed to avoid deflation this month, but only marginally.
• France CPI: -0.1%yoy v 0.0%yoy in Feb and -0.1%yoy forecast.
• Spain CPI: -1.0%yoy v -1.0%yoy in Feb and -0.8%yoy forecast.
• Germany CPI: 0.1%yoy v -0.2%yoy in Feb and 0.0%yoy forecast.
• On a separate note, retail sales in Germany recorded weak start to the year as sales fell in Feb while Jan numbers have been significantly revise downwards.
• Germany Retail Sales: -0.4%mom in Feb, marking the largest decline since Aug, v -0.1%mom in Jan (revised from 0.7%mom) and 0.4%mom forecast.
UK – The government is urged to bail out local steelmakers as it did the banks during the financial crisis, the head of the Unite trade union, the biggest in Britain, said
• Comments have been driven by the news Tata Steel is planning to divest its loss making UK operations and may possibly close down plants employing 40,000 people should it fail to find the buyer.
Australia – Low interest rates drove growth in private sector credit including home, personal and business loans in Feb.
• Private sector lending increased 6.6%yoy, up from a 6.5%yoy growth recorded in Jan and forecasts for a 6.5%yoy pick up forecast.
Currencies
US$1.1363/eur vs 1.1319/eur yesterday. Yen 112.33/$ vs 112.22/$. SAr 14.814/$ vs 14.998/$. $1.439/gbp vs 1.439/gbp
0.768/aud vs 0.766/aud. CNY 6.464/$ vs 6.467/$.
Commodity News
Precious metals:
Gold US$1,236/oz vs US$1,239/oz yesterday – gold price rose by 16.3% in Q1
• Gold ETF total – 56.6moz – demand rose 12.5% in Q1
Platinum US$973/oz vs US$972/oz yesterday
Palladium US$571/oz vs US$576/oz yesterday
Silver US$15.36/oz vs US$15.37/oz yesterday
Base metals:
Copper US$ 4,829/t vs US$4,888/t yesterday – Copper price rise by 2.6% in Q1
Aluminium US$ 1,502/t vs US$1,495/t yesterday –
Nickel US$ 8,380/t vs US$8,517/t yesterday – The Koniambo ferro-nickel project has been funded through to the end of the year, but its status will be reviewed should it fail to operate as lanned by Jun.
• The Company recognised a $1.4bn writedown ($4.0bn including the share of JV partners) on Koniambo in its latest set of accounts.
Zinc US$ 1,782/t vs US$1,792/t yesterday
Lead US$ 1,712/t vs US$1,745/t yesterday
Tin US$ 16,750/t vs US$16,810/t yesterday
Energy:
Oil US$39.00/bbl vs US$39.65/bbl yesterday – oil prices rose by 4.5% in Q1
Natural Gas US$1.997/mmbtu vs US$1.850/mmbtu yesterday
Uranium US$28.45/lb vs US$29.70/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$55.6/t vs US$55.8/t – strengthening steel prices in China seen supporting iron ore futures prices
• Iron ore price rose by 40.6% in Q1
Steel – The industry is set for an “Ice Age” amid slowing steel demand and excess capacity, Angang Steel, the fourth largest producer in China, said.
• Angang production dipped 4.4%yoy in 2015 coming in line with a general trend.
• Chinese output fell 2.3%yoy last year and is set to contract further 2.6%yoy in 2016.
• Benchmark steel prices dropped 31% in China last year.
Thermal coal (1st year forward cif ARA) US$41.90/t vs US$41.20/t yesterday – Weak demand in Europe seen depressing prices
Other:
Tungsten - APT European prices stood at $168-185/mtu unch vs $165-180/mtu last week –
Company News
IronRidge Resources* (LON:IRR) 4.6 pence, Mkt Cap £10.90m - Board change
• IronRidge report the replacement of Mr Thomas Ueda with Kenichiro Tsubaki as a Non-executive director on the board.
• Mr Ueda has acted as a director on behalf of Sumitomo Corporation who are a significant funder and shareholder alongside Assore (Asmang).
• Mr Tsubaki is currently head of Sumitomo’s iron and steel making raw materials department in Tokyo. He has previously acted as an alternate director to Mr Ueda.
• We understand Sumitomo invested alongside Assore (Asmang) for IronRidge’s iron ore projects in Gabon.
• IronRidge state in their interim report last week “Extensive field mapping, rock chip sampling, pitting, geophysical surveys and auger drilling programmes were completed during the period focusing on iron ore in Gabon and titanium and bauxite in Australia.”
• The key iron ore projects are Belinga Sud, which we believe is an extension to the giant Belinga iron ore discovery in the north east of Gabon and Tchibanga in the south.
• Potential development at Belinga Sud is likely to depend to some degree on the development of the main Belinga iron ore project due to its location.
• Tchibanga is close to the coast and to port and road infrastructure and could be developed on a shorter timeframe.
• Field work continues at Tchibanga continues. “Mapping, pitting and assay results confirmed the presence of iron rich duricrust and canga type iron ore mineralization at average 44% Fe (maximum 57.8% Fe) and low contaminants forming surface weathering enriched plateaus over a combined surface area of 2.3km2 in the south-eastern portion of the project area. Given mineralization defined was open to the south, an additional license application (Tchibanga Sud) was submitted to the Ministry of Mines and Industry during the period.”
• The relatively good grade and low contaminant levels are critical to the potential development of the project
Conclusion: IronRidge continue to make progress in Gabon and on its bauxite project in Queensland, Australia.
*SP Angel act as Nomad and Broker to IronRidge Resources
Metal Tiger (LON:MTR) 3.95 pence, Mkt Cap £19.7m – link to MOD Resources ASX letter
• Metal Tiger has issued a link to a letter sent to the ASX listings compliance department in Perth.
• The letter is a response to a ‘Price and Volume Query’ by the ASX.
• MOD Resources comment that they are aware of information which has not been announced to the market and that MOD is not able to make an immediate announcment.
• MOD is taking steps to accelerate the turnaround of assay results. Assays have been received from six drill holes at T4 where visible disseminated bornite and chalcocite copper mineralisation was announced on 2 March. MOD expects to be in a position to provide further information on these results following an interpretation of the data.
• https://www.asx.com.au/asxpdf/20160331/pdf/4365zn16xqydc9.pdf
Mariana Resources (LON:MARL) 1.95 pence, Mkt Cap £16.7m – Schedule for start of drilling at Dona Ines and Exploradora East copper projects in northern Chile
• Mariana Resources announces that it expects to start reverse circulation (RC) drilling at its Dona Ines gold/silver property and the adjacent Exploradora East copper projects in northern Chile during mid-April.
• The drilling is being funded by Asset Chile Exploracion Minera Fondo de Inversion Privado (Asset) as part of its obligation to invest US$1.65m to earn a 50% interest in the project.
• The Asset investment is part of the US$150m Fenix programme sponsored by the Chilean Government to “provide risk capital financing for exploration projects located within Chile”.
• The drilling programme is following up geological mapping and geochemical and geophysical surveys which have identified the initial targets from what are reported to be areas with no historical drilling.
Conclusion: Mariana Resources has had significant success with the exploration of the Hot Maden project in Turkey where its local partner has now earned a 70% interest. The commencement of initial drilling of promising targets in Chile under a programme supported by the Government adds diversity to the company’s activities at little direct cost to Mariana Resources.
Metminco * (LON:MNC) 0.21 pence, MKT Cap £6.4m – Raising £0.5m
• Metminco has announced that it has raised approximately £0.5m (A$1.0m) through the placing of 250m new shares at a price of £0.002/share.
• The funds are to be used to advance the feasibility study work on the recently acquired 2.8m oz Quinchia gold property in Colombia where the acquisition of Mineral Seafield from RMB Australia Holdings is on course for completion by 31st May 2016.
• The Quinchia property has 2.8m oz of resources under the Canadian NI-43-101 reporting standard, largely at the Miraflores prospect (1.88m oz classed as “measured”, “indicated” and “inferred”) and the Dosquebrados property (1.04m oz classed as “inferred”) as well as “access to a number of prospective concessions in the Quinchia district with the potential to substantially increase the estimated mineral resource …”
• Successful conclusion of the feasibility work at the Miraflores should provide Metminco with an opportunity to develop near term production in the prolific Cauca Gold Belt of Colombia which already hosts a number of large producing gold mines including Anglogold Ashanti’s 33m oz La Colosa deposit and Gran Colombia’s 12m oz Marmato gold mine.
Conclusion: Metminco has now secured the funding to bring feasibility work on its recent Colombian gold acquisition to completion and show a clear pathway for the development of near term production in an established gold producing area.
*SP Angel act as joint-broker to Metminco
Sierra Rutile (LON:SRX) 18 pence, Mkt Cap £94.0m – Positioning for any recovery in prices
• Sierra Rutile reports a 10% deterioration in revenue during 2015 to US$105.8m (2014 – US$117.8m) and a 6% decline in pre-tax losses to US$9.4m (2014- US$8.9m).
• Following tax charges of US$3.7m, (2014 –US$0.6m) the company reports a loss for the year of US$13.2m (2014 – US$9.5m) or 2.5cents/share (2014 – 1.8 cents).
• The result reflects a weakening of commodity prices despite a record production year which amounted to 126,021 tonnes of rutile, which is the highest level of output since the resumption of operations.
• Production costs of US$614/t are approximately 5% below the US$643/t reported in 2014.
• Net debt increased to US$46.4m (2014 – 36.4m) reflecting a sharp increase in expenditure on mining property and equipment (US$30.6m vs US$16.8m in 2014).
• The company reports that it is currently trading in line with its expectations and is approximately 11% ahead of Q1 2015, though as a result of seasonal factors Q1 is approximately 33% lower than Q4 2015. Production guidance for the year is between 120-135,000 tonnes which represents up to a 7% increase over the 2015 and would place the company on course to achieve its 2018 target of over 200,000 tonnes.
• The dry mine project at Gangama is on track for commissioning, on schedulae and budget, in June 2016 and this should add around 45,000tpa of production capacity at a between US$540-590/t.
Conclusion: Sierra Rutile is expanding production and reducing its cost profile which should put it in a good position to benefit from any improvements in the pricing environment.
SolGold* (LON:SOLG) 3.25p, Mkt Cap 31m – Hole 14 shows massive extension at eastern end of Alpala
• SolGold report drill results from the eastern extension of Hole 14 at Alpala, Cascabel, Ecuador
• Drilling continues to show massive intersections of relatively good grade copper and gold.
• Drill hole 15 is currently underway and is reported to be in mineralised porphyry at a depth of 725m. This hole is testing a higher grade area to the north at Alpala which returned a massive 420m intersection grading 1.00% copper and 1.34g/t gold. Not results you would want to ignore!
• Drill hole 14 assay results summary:
o 768m @ 0.50 % copper and 0.45 g/t gold, including
o 476m @ 0.63 % copper and 0.65 g/t gold, including
o 222m @ 0.83 % copper and 1.08 g/t gold.
o Alpala is shown to have a strike length of >650m x 300m wide and 1.8km deep making this a sizeable mineralised porphyry system, potentially suitable for the next generation of automated block caving system.
o Hole 16 “assay results from 764m are pending but are expected to extend the previously reported open-ended intersection of 216m @ 0.94 % Copper and 1.26g/t Gold from 548m”.
o Major copper miners are increasingly interested in the potential for this type of giant porphyry orebody for automated block caving. See video below: