Caledonia Mining (LON:CMCL) – Quarterly Production - maintaining 2016 50,000 oz production target
Central Asia Metals (LON:CAML) – Q1 production update
Connemara Mining (LON:CON) – Inishowen, Donegal
Kodal Minerals* (LON:KOD) – Proposed acquisition and fundraising
Bacteria batteries
• EurekaAlert report researchers have apparently combined, for the first time, two separate microbial energy systems: one uses bacteria to form acetate from electricity and the other converting the produced acetate back into electricity.
• The battery charges over a 16-hour period and discharged it over the next 8 hours.
• The cycle was repeated 15 times in 15 days.
• Optimization of the process could raise energy densities to be competitive with conventional technologies.
South Africa – Funds distance themselves from Oakbay Resources over scandal of political influence and potential corruption with the Guptas
Oakbay Resources & Energy (formerly Uranium One) (ORL SA) - ZAR2.3, mkt cap ZAR18.4bn
• Oakbay Resources & Energy owns 74% of the Shiva Uranium Mine, reported to be the largest uranium resource in South Africa and in the world’s top five.
• A scandal over potential corruption and influence over members of President Zuma’s family and other politicians threatens to engulf the South African government.
• Funds invested in Oakbay appear to be distancing themselves from Oakbay in short order.
• So far Sasfin, KPMG, ABSA and First National Bank have cut ties with the company.
• Oakbay Resources & Energy lists Atul Gupta and Varun Gupta as Chairman and CEO
• Oakbay Resources & Energy listed on the JSE in South Africa in November 2014 advised by Sasfin Capital with KPMG as reporting accountants.
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121 Mining Investment Conference -
London on 14th -15th April at 8 Fenchurch Place, Fenchurch Street Station
New companies presenting are:
• Amur Minerals, Premier African Minerals, Atalaya (formerly EMED), Bushveld Minerals, Caledonia Resources, Keras Resources, Sol Gold, Horizonte Minerals.
• Also Newmarket a TSX listed company with three producing gold mines backed by Sprott is attending
• Investors and analysts go free:
https://www.weare121.com/121mininginvestment-london/registration/register-investor/
Dow Jones Industrials +0.64% at 17,716
Nikkei 225 +0.22% at 15,750
HK Hang Seng +0.29% at 2,266
Shanghai Composite -1.38% at 3,008
FTSE 350 Mining +1.92% at 8,717
AIM Basic Resources +0.29% at 1,748
Economic News
US – FOMC Mar meeting minutes highlighted a divide among officials on the timing of the next rate increase.
• A number of participants “indicated that an increase in the target range at the Committee’s next meeting (26-27 Apr) might well be warranted” should incoming economic data support the view.
o Policymakers scaled back forecast changes to the 2016 interest rates to two 25bp increases on the back of risks to the US outlook from financial markets and weaker external growth.
Date Index Period Actual Expected (Bloomberg) Previous
Japan – The yen continued to appreciate towards levels last seen in Oct/14 when the BoJ stepped up its QE programme.
• The currency is on track for its fifth consecutive day of gains currently trading at 108.6 level.
• With 10.2% gains recorded against the US dollar so far this year, the yen is now the best performer among major global currencies.
UK – House prices growth accelerated in Mar hitting the strongest pace since Jul/14.
• Halifax house price index: 10.1%yoy in Mar v 9.7%yoy in Feb and 9.5%yoy forecast.
• The report highlights the prospects for the UK economy growth and uncertainty over the EU membership referendum have not affected property prices inflation so far.
• Tight supply as well as “continuing low interest rates and a healthy labour market” point to further gains moving forwards.
ECB – ECB executive board member Peter Praet suggested the monetary policy may be further eased should further adverse shocks were to materialise.
• Defending the easing programme Praet said policy measures “have provided significant support to output and inflation”.
• In the absence of the programme, “inflation would have been negative in 2015 and 0.5pp lower in the 2016-17 period”.
• The policy is also 1.5pp to GDP growth in the period 2015-18.
• “If inflation has remained weak, it is not because policy has been ineffective, but rather because new shock have hit the economy in the meantime.”
• “The scaling up of our policy measure has hence been appropriate response in the face of intensifying headwinds.”
Angola – The government asked for a US$1.5bn liquidity package from the IMF amid deteriorating public finances driven by weak oil prices.
• Angola, a second largest African oil producer, is eligible for a little over US$500m in assistance per annum unless waivers are secured under the IMF rules.
• It is the second time in the last decade the country turned to the IMF for help with the first US$1.4bn package released in 2009.
• The 2009 loan remains in the process of repaying.
Venezuela – President Nicolas Maduro set all Fridays for Apr-May months to be national holidays as part of a 60-day plan to fight the energy crisis.
• A severe drought coupled with poor investment and maintenance in energy infrastructure challenge power supply in Venezuela that depends on hydropower for 60% of its electrcitiy.
• “We’ll have long weekends,” Maduro said during his state television appearance yesterday.
Currencies
US$1.1374/eur vs 1.1351/eur yesterday. Yen 108.41/$ vs 110.41/$. SAr 15.157/$ vs 15.211/$. $1.406/gbp vs 1.411/gbp
0.757/aud vs 0.755/aud. CNY 6.471/$ vs 6.483/$.
Commodity News
Precious metals:
Gold US$1,236/oz vs US$1,227/oz yesterday – Central banks slowing gold purchases in seasonal slowdown with the exception of Russia and China.
• Gold ETFs 56.7moz vs US$56.7moz – ETF holdings
Platinum US$952/oz vs US$958/oz yesterday –
Palladium US$551/oz vs US$554/oz yesterday
Silver US$15.21/oz vs US$15.13/oz yesterday
Base metals:
Copper US$ 4,727/t vs US$4,780/t yesterday – FT reckons China wants to buy more copper mines to secure supply.
• China Minmetals vp is quoted as saying China is very short of copper resources and the only way to secure supply is to go overseas
Aluminium US$ 1,509/t vs US$1,509/t yesterday
Nickel US$ 8,530/t vs US$8,520/t yesterday – New Caledonia allows two miners to export nickel ore to China
Zinc US$ 1,775/t vs US$1,794/t yesterday
Lead US$ 1,706/t vs US$1,700/t yesterday
Tin US$ 16,480/t vs US$16,415/t yesterday –
Energy:
Oil US$40.1/bbl vs US$38.7/bbl yesterday
Natural Gas US$1.904/mmbtu vs US$1.923/mmbtu yesterday
Uranium US$28.30/lb vs US$28.15/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$52.7/t vs US$53.2/t –
Thermal coal (1st year forward cif ARA) US$41.1/t vs US$41.8/t yesterday – Japanese power utilities reported to be close to agreeing a new benchmark contract price at around 10c/t lower than last year.
Other:
Tungsten - APT European prices stood at $170-185/mtu vs $168-185/mtu last week –
Company News
Caledonia Mining (LON:CMCL) 60 pence, Mkt Cap £31.3m – Quarterly Production - maintaining 2016 50,000 oz production target
• Caledonia Mining reports that its 49% owned Blanket mine in Zimbabwe produced 10,822 ounces of gold during Q1 2016.
• This is approximately 9% higher than the 9,960oz produced in Q1 2015 but 6% lower than the production for Q4 2015. The company notes, however, that Q1 2016 included both the New Year and the Easter holiday periods.
• The company is maintaining its guidance for 50,000oz of production in 2016 as the inclusion of increasing volumes of ore from below the 750m level during the year is expected to bring production “progressively to approximately 14,000 ounces by the fourth quarter of 2016”.
Conclusion: Maintaining the 50,000oz production target for 2016 is a further signal that the redevelopment plan at Blanket, which accesses ore from below the 750m level, remains on track. The target implies that the mine will average just over 13,000 oz of gold production for each of the remaining three quarters.
Central Asia Metals (LON:CAML) 166.5 pence, Mkt Cap £186m – Q1 production update
• Central Asia Metals has updated the market on its Kounrad copper production in Kazakhstan.
• The tailings retreatment plant is a simple dump leach SX-EW recovery process enabling low cost recovery of copper.
• Q1 produced 3,207t of copper vs 2,350t yoy.
• Sales lagged production by some way at 2,550t but should catch up in the next quarter
• Management state they are on track for guidance of 13,000-14,000tpa this year.
• CAML has just started its Stage 2 expansion to further expand production through the treatment of a larger resource within the Western Dumps.
• Stage 2 production is scheduled for H1 2017 at a cost of $19.5m.
• C1 cash costs for FY 2015 is expected to fall towards the lower end of the $0.65-0.70/lb range helped by the devaluation of the Kazak Tenge late last year
o Cash: the company had some $42m at end-December.
o Other projects: There is no update on the Copper Bay (Chile), Handgait molybndenum project (Mongolia), Ereen gold exploration project (Mongolia)
Connemara Mining (LON:CON) 2.95p mkt cap £1.6m – Inishowen, Donegal
• Connemara Mining have discovered gold mineralisation in each of the three drill holes into the Inishowen project in Donegal, Ireland.
• These were very short inclined holes with just 121m drilled from surface.
• Key results:
o 3.05 m grading 5.8g/t from 23m inc 0.65m at 11.31g/t and 0.39m at 26.07g/t.
o 1.0m grading 1.3g/t from 30m
o 1.51m grading 0.3g/t from 35m followed by 1.5m at 0.23g/t from 39m
• Interestingly pyrite bearing mudstone in the hangingwall and footwall of each vein also contained anomalous gold grades up to 0.94g/t.
• The implication is that these mudstones may carry sufficient grade to be worth mining along with the gold bearing veins.
• It is possible that these grades may be underreported if the drillers were washing gold out of the mudstone through the drilling process.
• Further drilling will give a better indication of the potential for this project.
Kodal Minerals* (LON:KOD) 0.065p, mkt cap $0.68m – Proposed acquisition and fundraising
• Kodal Minerals has announced the proposed acquisition of West African gold exploration properties in Mali and Cote d’Ivoire from a wholly owned subsidiary (International Gold or “IGS”) of the ASX listed Taruga Gold.
• The £410,000 acquisition is to be funded by the issue of 1,025m new Kodal shares (the Consideration Shares) at a price of 0.04p/share. “Taruga will then distribute the Consideration Shares to its shareholders as an in specie distribution soon after completion.” In conjunction with the acquisition, Kodal “is proposing to carry out the Fundraising, which is intended to raise up to £680,000 (before expenses).”
• The fundraising comprises a Placing of shares at 0.04p (the placing price) to raise £305,000 and a direct subscription at the same price with certain investors to raise an additional £375,000.
• As a result of the acquisition, Mr Bernard Aylward, who is currently a director of IGS) will join the Board of Kodal as Chief Executive; Kodal’s incumbent, Luke Bryans, will remain on the Board as an executive in the role of Technical Director. Bernard Aylward is a professional exploration geologist with a number of discoveries to his credit, including a number in west Africa at Bepkong, Julie, Collette and Kunche in Ghana.
• IGS has an interest in 8 exploration licences including 4 licences in Mali and Cote d’Ivoire and an additional 2 licences under application in Cote d’Ivoire.
• Following a farm in agreement with Newcrest Mining in December 2015, under which Newcrest is committed to a minimum exploration expenditure of US$0.75m by 14th December 2016 and expenditure of at least US$1.7m by 14th December 2018 in order to earn a 75% interest in the Dabakala project in Cote d’Ivoire ,an auger drilling programme at started in January 2016 to follow up geochemical anomalies identified by Taruga in 2014.
• In another joint venture, with Resolute Mining, Resolute is funding exploration of at least US$3m on the Tiebissou and Nielle exploration licences and M’Bahaikro licence application area in Cote d’Ivoire in order to earn a 75% interest. Resolute completed a reconnaissance aircore drilling programme on the licences, which lie along strike from Endeavour Mining’s Agbaou Gold Mine ands Newcrest’s Bonikro Gold Mine, in February 2015 and results are pending.
• In Mali, Kodal Minerals is acquiring licences adjacent to the operating Syama Gold Mine at Nanagalasso where Taruga has previously reported aircore drilling results including 3m wide intersections of up to 7g/t gold within a wider intersection of 21m averaging 1.25 g/t gold.
Conclusion: The West African acquisition, the injection of additional technical management, and joint ventures with major mining companies changes the direction of Kodal Minerals towards gold exploration at a time when there is increasing optimism of a resurgence in gold. We look forward to news on the results of the recent drilling with Resolute Mining in Cote d’Ivoire and a continuing flow of results from across the portfolio as exploration proceeds.