Alecto Minerals (LON:ALO) – Conversion of convertible
Amur Minerals* (LON:AMC) – New MKFL JORC resource shows a 25% growth in Ni contained and delineates high grade pockets in the deposit
Aureus Mining (LON:AUE) – Approval of debt deferral
Asiamet Resources (LON:ARS) – Results of Beruang Kanan Main (BKM) PEA
Caledonia Mining (LON:CMCL) – Quarterly dividend
DiamondCorp (LON:DCP) – Diamond sales raise $1m as mine development advances towards block cave
Brink’s Mat gold moved through Pamanian company linked to Mossak Fonseca in Panama
• A co-founder of Mossak Fonseca, the Panamanian law firm, is reported in the Guardian to have advised on the laundering of gold from the Brink’s Mat gold robbery.
• Jurgen Mossack is said to have unwittingly at first, advised the fugitive money launderer Gordon Parry.
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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
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Dow Jones Industrials -0.31% at 17,737
Nikkei 225 -0.42% at 15,733
HK Hang Seng -1.57% at 20,177
Shanghai Composite +1.45% at 3,053
FTSE 350 Mining -3.67% at 8,520
AIM Basic Resources +0.68% at 1,747
Economic News
India – Reserve Bank of India cuts main repo rate by 0.25% to 6.5% and may cut further this year.
• The move is related to falling energy costs.
US – Factory orders report underperforms estimates posting a larger than forecast declines in Feb.
• Stronger US currency and weak demand from the energy sector are reported to have contributed to weaker data.
Japan – Wage growth rebounded in Feb growing by the most in seven months.
• The news is welcome in the Shinzo Abe camp that was looking for ways to boost labour earnings and stimulate domestic consumption.
• Average monthly cash earnings grew 0.9%mom in Feb beating market expectations for a 0.2%mom increase.
• Jan reading was revised to 0.0%mom, down from a 0.4%mom increase estimated earlier.
Eurozone – Producer prices posted another monthly and annual decline in the single currency bloc in Feb.
• Lower input costs allow producers to reduce final goods prices attracting new orders but weighing down on general inflation levels.
• Producer prices: -0.7%mom/-4.2%yoy v -1.0%mom/-2.9%yoy in Jan and -0.5%mom/-4.0%yoy forecast.
• Unsurprisingly, the energy sector is said to have been one of the most important drags on inflation, with prices down 12.8%yoy in Feb.
• Ex energy prices’ change, industrial prices were down 0.8%yoy.
• The Eurozone grew slower than initially estimated at the end of the first quarter on Markit numbers.
• Markit Composite PMI climbed to 53.1 in Mar from the previous month but down on 53.7 estimated previously.
• “The Eurozone economy failed to show any significant gain in momentum. Sluggish growth is the result of lacklustre demand, accompanied by falling prices as firms compete at the expense of profit margins,” market said.
• The economy is estimated to have growth 0.3% in Q1/16 matching the pace of the previous quarter, Markit data suggests.
Germany – Factory orders disappointed in Feb recording a 1.2%mom decline v a 0.3%mom increase forecast.
• This was the lowest reading in six months.
• On a more positive note, Jan numbers have been revised upwards with orders seen climbing 0.5%mom compared to a 0.1%mom decline recorded previously.
• On year-on-year basis, the gauge was up 0.5%yoy, short of expectations for a 2.2%yoy increase.
Azerbaijan – conflict in Nagorno-Karabakh reported by BBC. Fighting in the region in the late 1980s killed around 30,00 people as the Soviet Union collapsed.
Currencies
US$1.1369/eur vs 1.1373/eur yesterday. Yen 110.45/$ vs 111.58/$. SAr 14.904/$ vs 14.779/$. $1.423/gbp vs 1.421/gbp
0.757/aud vs 0.762/aud. CNY 6.473/$ vs 6.482/$.
Commodity News
Precious metals:
Gold US$1,232/oz vs US$1,217/oz yesterday
• Gold ETFs 56.7moz unch vs US$56.7moz
Platinum US$957/oz vs US$952/oz yesterday – Royal Bafokeng sells 5% stake in Impala Platinum cutting its stake to 6.3%.
• The sale accounts for a stake of about 8.3% in the Rustenburg Lease asset, which means it is now around 18% percent controlled by BEE holders.
• South African BEE legislation requires black citizens hold a minimum of 26% of an operation for licenses to operate. Miners are contesting this rule in court.
Palladium US$557/oz vs US$562/oz yesterday
Silver US$15.15/oz vs US$15.98/oz yesterday
Base metals:
Copper US$ 4,784/t vs US$4,822/t yesterday – CESCO copper conference in Chile ditches hippodrome horse racing venue for more modest location as numbers fall by 15%
Aluminium US$ 1,537/t vs US$1,537/t yesterday
Nickel US$ 8,370/t vs US$8,295/t yesterday
Zinc US$ 1,830/t vs US$1,860/t yesterday
Lead US$ 1,709/t vs US$1,740/t yesterday
Tin US$ 16,560/t vs US$16,600/t yesterday
Energy:
Oil US$37.6/bbl vs US$38.4/bbl yesterday
Natural Gas US$2.012/mmbtu vs US$1.978/mmbtu yesterday
Uranium US$27.90/lb vs US$27.80/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$53.3/t vs US$53.2/t – Iron ore exports out of Port Headland rise by 7.9% mom in March as China continues to take up increasing tonnages of Australian ore.
• Exports from the port hit 39.5mt vs 36.6mt in February partly due to the week-long Chinese New year holiday in February
Steel – Vale is selling its stake in the Brazilian steel mill venture CSA to Germany partner ThyssenKrupp as part of the a strategy to dispose of non-core assets to help improve its balance sheet.
• Vale is aiming to reduce its debt load and exposure to outstanding CSA liabilities on completion of the deal.
• The deal would “not have a significant impact on its financial results” and was “part of its initiative to simplify its asset portfolio”, the Company said.
• The CSA plant located in Brazil cost US$10bn to build and had €2.6bn in total liabilities at the end of 2015.
• The plant has a total production capacity of 5mt per annum.
Thermal coal (1st year forward cif ARA) US$40.9/t vs US$41.1/t yesterday – Japanese power utilities reported to be close to agreeing a new benchmark contract price at around 10c/t lower than last year.
• South African coal exports fell 19.7% yoy to 4.82mt in February following a 7.2% fall in January. Reports suggest this is due to relatively firm South African prices
Other:
Tungsten - APT European prices stood at $170-185/mtu vs $168-185/mtu last week –
Company News
Alecto Minerals (LON:ALO) 0.1 pence, Mkt Cap £3.2m – Conversion of convertible
• Alecto Minerals report the conversion of $495,365 worth of convertible notes held by Paternoster Resources into 433,501,250 new shares.
• Paternoster had acquired the notes from C3W Limited.
Amur Minerals* (LON:AMC) 6.2p, Mkt Cap £31.4m – New MKFL JORC resource shows a 25% growth in Ni contained and delineates high grade pockets in the deposit
• New Maly Kurumkon/Flangovy mineral resource has been released this morning showing 90.6mt at 0.40% Ni and 0.12% Cu for 367kt Ni and 110kt Cu.
• This compares to 52.9mt at 0.56% Ni and 0.16% Cu for 294kt Ni and 85kt Cu recorded in the previous Jul/13 mineral resource statement.
• While the average grade of the resource has come down, the update has significantly increased the confidence level in the resource (MI category more than tripled in tonnage terms and more than doubled in Ni contained terms) as well as delineated higher grade parts of the deposit.
o Measured and Indicated category of the resource currently stands at 68.4mt at 0.42% Ni and 0.12% Cu for 285kt Ni and 84kt Cu.
o An expanded MI resource will contribute towards an upgrade of an existing mineral reserve.
o The resource is based on the MKFL drilling data including the 2015 infill and step out drilling programme and incorporates a new modelling method.
o A change in resource estimation methodology is driven by a change in development plans from purely open cast mining operation to a combination of open pit and underground mining methods.
o An updated MKFL mineral resource is provided below along with previous Jul/13 estimates for comparison:
• The latest resource estimate like previous statements assume 0% Ni cut off grade.
• The Company released a table showing sensitivity of the MKFL mineral resource to the different COG levels.
• Applying 0.2% Ni cut off grade to the MKFL resource yields 318.6kt of Ni contained, up 8% on previous estimates (calculated at 0% Ni COG), and raises an average grade to 0.63% Ni, up 12.5pp.
• At close to current spot US$8,800/t Ni price, the MKFL resource comes in at 35mt at 0.79% Ni for 280kt Ni contained which is equiValent to a cut off grade of 0.3-0.4% Ni.
• The plan is to complete the review of Kubuk and Ikenskoye/Sobolevsky mineral resources using updated modelling method and commence works on a new reserves statement.
Conclusion: New MKFL resource significantly expands the MI base that will be used to upgrade existing mineral reserves. Additionally, a delineation of high grade pockets of the resource will allow the Company to develop the project using both underground and open cast mining methods improving the quality of the feed to the plant and significantly cutting waste stripping ratios potentially benefiting Kun Manie economics. Updated resoruces for remaining deposits including Ikenskoe/Sobolevsky and Kubuk are reported to have been received and are currently under review by the Company. Application of an updated modelling method may see an increase in the resource at those targets. Results will be released once the review is finalised.
*SP Angel act as Nomad and Broker to Amur Minerals
Aureus Mining (LON:AUE) 6.25 pence, Mkt Cap £33.9m – Approval of debt deferral
• Aureus Mining reports that its lenders have agreed to defer the first debt repayment until 29th April 2016. The agreement to defer repayments had been widely expected following earlier discussions with the lender group and the formal declaration of commercial production at the New Liberty mine which came into effect on 1st March.
• The original schedule called for an initial repayment on 31st January however, setbacks on bringing the plant to full design performance as early as originally planned led to an announcement in January that the Company was in discussion with the lenders in relation to a deferral of the first payment and a rescheduling of the debt repayment profile.
• Aureus Mining continues to work with its consultants, SRK, to develop an optimised mine plan for New Liberty based on the updated orebody model generated from detailed grade control drilling.
• The revised mine plan “will be used as the basis for discussions between the Company, Nedbank Limited (“Nedbank”), Rand Merchant Bank (“RMB”) and the Export Credit Insurance Corporation of South Africa Limited (“ECIC”) (collectively, the “Lenders”) to mutually agree an appropriate debt repayment schedule.”
Conclusion: Aureus Mining has demonstrated a constructive relationship with its lenders to find a practical solution to the consequences of teething troubles at New Liberty. In our view, the company also has a good relationship with the Government having delivered the New Liberty Mine against a background of the West African ebola epidemic and the GFC. A strong relationship with Government should stand AureusMining in good stead as it establishes a firm operating base at New Liberty and moves forward with a number of other promising projects in Liberia including Ndblama and the recently acquired Sarama area.
Asiamet Resources (LON:ARS) 4 pence, Mkt Cap £23.0m – Results of Beruang Kanan Main (BKM) PEA
• Asiamet Resources has announced the headline results of its Preliminary Economic Assessment (PEA) on the BKM copper deposit in Kalimantan, Indonesia.
• The study, which was prepared by the independent, Australian based mine planning consultants, Oreology, in accordance with the Canadian NI 43-101 standards, envisages an 8 year duration shallow open pit mining operation mining up to 7mtpa of ore for treating via heap leaching and SX/EW recovery to produce an average 25,000 tpa of copper cathodes.
• The study indicates that, based on a life-of-mine average copper price of US$3.25/lb and an initial capital expenditure of US$163.8m, the project can deliver life-of mine average cash costs (C1) of US$1.28/lb of copper production, an after tax NPV of US$204.3m at a 10% discount rate, and an after tax IRR of 38.7%.
• Sensitivity analysis shows that at a 50 cents per pound lower copper price of US$2.75/lb the NPV at a 10% discount rate falls to US$74.6m and the IRR declines to 21.6% and that payback extends from 2.4 years in the base case to 3.7 years.
• The study identifies a number of possibilities to enhance the project economics, principally through increasing the overall size of the resource, which “remains open in several directions and locally at depth”, definition of additional local resources in the Beruang Kanan South Beruang Kanan West and BKZ Polymetallic zones. Additional opportunities to enhance the project include identifying ways to increase metal recoveries beyond the current 78% assumed in the study, investigating the opportunities to develop hydropower as an alternative energy supply and re-evaluating the use of contractors versus owner operation for mining, earthmoving and crushing.
Conclusion: Asiamet has demonstrated a robust copper project at BKM and highlighted possibilities for further enhancement of the project economics which may extend the scale of the operation beyond the 25,000tpa of copper cathode currently envisaged.
Caledonia Mining (LON:CMCL) 56.5 pence, Mkt Cap £29.5m – Quarterly dividend
• Caledonia Mining has announced a quarterly dividend of US$0.01125/share payable to shareholders on the record at 15th April. Payment will be made on 29th April.
• The payment will continue a policy established in January 2014 and represents the 10th quarterly dividend the company has paid.
• The company notes that “It is currently envisaged that the existing dividend policy of 4.5 United States cents per annum, paid in equal quarterly instalments, will be maintained.”
Conclusion: Caledonia Mining is engaged on a major redevelopment of the Blanket Mine in Zimbabwe to access deeper levels of ore and increase production and extend the mine life. We interpret the continuation of the dividend policy at a time of significant capital expenditure as underlining management’s confidence in the progress of the redevelopment plan.
DiamondCorp (LON:DCP) 8.3 pence, Mkt Cap £36.7m – Diamond sales raise $1m as mine development advances towards block cave
(DiamondCorp holds 74% of the Lace Diamond Mine in South Africa).
• DiamondCorp reports production progress at its Lace Diamond Mine in South Africa.
• The statement reports that the mine is on target to complete the necessary works for delivery of 30,000t per month of kimberlite to the process plant.
• A significant number of diamonds have been recovered and sold from development and tailings retreatment with two good size stones sold into the company’s joint venture for higher value stones.
• Production of 3,438cts from the first three months came from the processing of:
o 6,324t of K4 kimberlite grading 36cpht (carats per hundred tonne), K4 previous estimate grade around 40cpht representing around 60% of the mine resource tonnage
o 8,327t of K6 kimberlite grading 8cpht
o 18,307t of tailings at surface grading 5cpht.
o Sales of larger stones achieved $1.09m indicating a respectable $175/ct including two special stones sold for which a further 50% of the uplift in value when cut and polished will be received
o Sales of tailings and fine diamonds sold for $0.046m equating to $19/ct.
o Recent company estimates expect the mine to produce an average value of $164/ct
o A recently revised resource estimates the mine contains some 38.48mt of kimberlite material grading 24.4cpht to the 920m level with 7.5mt of indicated resource grading 19.1cpht and the rest as inferred suggesting a degree of uncertainty in the resource estimate.
o Cash: The company raised £4m through the issuance of 67m shares in December at 6p/s.
Conclusion: DiamondCorp is in a critical period of development as it runs down its available capital ahead of larger scale diamond production from the development of its block cave. The sale of $1m of stones is helpful though investors should watch out for the potential impact of any further delays. A shortage in the availability of trucks and loaders is being addressed through the purchase of equipment from other closed mines.