Coal of Africa (LON:CZA) – Suspension of water licence
Base Resources (LON:BSE) – March Quarter 2016 production report
Galaxy Resources (ASX:GXY) – Reopens Mount Cattlin lithium mine in Western Australia
Haydale Graphene Industries plc (ASX:HAYD) - screen printing of graphene enhanced ink
Metal Tiger (LON:MTR) – MOD Resources goes into trading halt on ASX
Economic News
US – Janet Yellen said the Fed remains on track for further rate rises this year yesterday.
• She also rejected any claims the Dec decision to start the tightening cycle was a mistake noting a “tremendous progress” in the US economy since the financial crisis.
• The talk was attended by former three Fed Chairmen including Ben Bernanke, Alan Greenspan and Paul Volcker.
• Commenting on the size of the Fed balance sheet and potential steps to unwind all the risk taken by the central bank following the financial crisis, Ben Bernanke noted: “Fortunately I don’t have to.”
• Nevertheless, Bernanke argued the process should not be “terribly problematic”.
• Should the economy take another dive, Bernanke though the Fed had additional stimulus measures to fight the downturn, although fiscal policy will need to be involved as well.
• On economic news, separate reports showed consumers are took out more loans in Feb while weekly jobless claims continued to hover around multi-year lows.
Japan – Rapidly appreciating currency led Finance Minister to step out with a comment that the government would be ready to act as needed should the yen strengthening trend persist while declining to comment on any intervention in the market.
• Earlier this week Prime Minister argued authorities will avoid arbitrary interventions in the forex market and target devaluation of the currency.
• The yen bounced back late afternoon after hitting 107.67 previously, the lowest since Oct/14.
ECB – Mario Draghi reiterated the ECB determination to continue with expansionary monetary policy in line with its mandate to bring inflation close to target 2% yesterday.
• “We have no shortage of tools available,” Draghi said referring to a potential stimulus measures that may be introduced if necessary.
Germany – Exports beat expectations recovering from a slump in the previous month.
• Exports climbed 1.3%mom in Feb compared with expectations for a 0.5%mom increase forecast marking the strongest reading since Sep/15.
• Exports were down 0.6%mom in Jan.
• Imports increased 0.4%mom v 1.3%mom in Jan and 0.3%mom forecast.
UK – Industrial and manufacturing production both contracted in Feb dampening optimism over the nation’s economic outlook.
• Industrial production: -0.5%yoy v 0.1%yoy in Jan and -0.2%mom forecast.
• Manufacturing sector: -1.8%yoy v -0.3%yoy in Jan and -0.7%yoy forecast.
France – The nation reported sluggish industrial production growth in Feb woth only a handful of industries recording an annual increase.
• Industrial production: 0.6%yoy v 1.7%yoy in Jan and 1.7%yoy forecast.
Kuwait – OPEC Governor from Kuwait pointed said there are positive indications major producers would reach a production limit agreement at a meeting scheduled for Apr 17.
• An increase in oil prices have also been driven by a surprise decline in US stockpiles, the first in two months, according to latest reports.
Currencies
US$1.1385/eur vs 1.1374/eur yesterday. Yen 108.96/$ vs 108.41/$. SAr 15.116/$ vs 15.157/$. $1.410/gbp vs 1.406/gbp
0.755/aud vs 0.757/aud. CNY 6.473/$ vs 6.471/$.
Commodity News
Precious metals:
Gold US$1,235/oz vs US$1,236/oz yesterday –
• Gold ETFs 56.7moz unch vs US$56.7moz – ETF holdings
Platinum US$957/oz vs US$952/oz yesterday –
Palladium US$542/oz vs US$551/oz yesterday
Silver US$15.21/oz vs US$15.21/oz yesterday
Base metals:
Copper US$ 4,667/t vs US$4,727/t yesterday –
Aluminium US$ 1,508/t vs US$1,509/t yesterday
Nickel US$ 8,470/t vs US$8,530/t yesterday – New Caledonia allows two miners to export nickel ore to China
Zinc US$ 1,765/t vs US$1,775/t yesterday
Lead US$ 1,701/t vs US$1,705/t yesterday
Tin US$ 16,700/t vs US$16,480/t yesterday –
Energy:
Oil US$40.6/bbl vs US$40.1/bbl yesterday
Natural Gas US$2.030/mmbtu vs US$1.904/mmbtu yesterday
Uranium US$28.50/lb vs US$28.30/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$53.3/t vs US$52.7/t –
Thermal coal (1st year forward cif ARA) US$40.8/t vs US$41.1/t yesterday – .
Lithium
• Low doses of lithium has been shown to prologue the life of fruit flies in laboratory experiments.
• Given the value of extending ones life and delaying the impact of Alzheimers and other age related diseases then lithium demand might not only be driven by new battery demand
Other:
Tungsten - APT European prices stood at $170-185/mtu vs $168-185/mtu last week –
Company News
Coal of Africa (LON:CZA) 1.95 pence, Mkt Cap £37.6m – Suspension of water licence
• Coal of Africa reports that the Integrated Water Use Licence for its Makhado coal project has been suspended by the Department of Water and Sanitation following an appeal by a group called the Vhembe Mineral Resources Forum and other interested parties.
• In January this year, the Company announced that the Department had granted the Company the licence valid for a period of 20 years and today’s announcement reverses that decision.
• The company’s statement does not elaborate on the reasons for the appeal though it does say that it is making urgent representations that the licence should remain in force pending the final conclusion of the appeal.
• The 2013 Definitive Feasibility Study for Makhado envisages mining approximately 12.6mtpa of run-of-mine coal to produce 2.3mtpa of hard-coking coal plus a further 3.2mtpa of thermal coal from the proposed operation in the northern part of the Limpopo Province of S Africa. Mining during the first 16 year of operation is expected to be by open pit with the potential to move into underground mining later in the mine’s life.
• Although the Company states that it had anticipated this appeal, the suspension of the water licence raises the possibility that ultimately it will be revoked is a serious setback for the development of the Makhado Project which last year concluded a US$14.5m equity investment and a US$10m loan agreement with the Singapore-based private investment company, Yishun Brightrise Investment (Yishun).
Base Resources (LON:BSE) 3.25 pence, Mkt Cap £23.8m –March Quarter 2016 production report
• Base Resources reports that it mined 2.4m tonnes during the quarter to produce 110,760 tonnes of ilmenite, 21,194 tonnes of rutile and 7,865 tonnes of zircon at it Kwale Mineral Sands operation in Kenya.
• The mined production is around 15% higher than that of Q4 2015 and 5% above that achieved during Q1 2015.
• With the exception f zircon sales of 9,556 tonnes, which were 24% higher than the Q4 2015 and 85% above Q1 2015, sales during the quarter were lower and it would appear that stocks are building up.
• Ilmenite sales of 95,984 tonnes are approximately 7% lower than both Q4 2015 and Q1 2015 while rutile sales (14,500 tonnes) are 38% lower than Q$2105 and approximately 4% below the 15168 tonnes sold in Q1 2015.
• Costs of US$208/t are 15% lower than the $245/t of Q4 2015 though 9$ above the $191/t reported for Q1 2015.
• The company is indicating “a slight increase on previous guidance” for 2016 with rutile production in the range 82-86kt; Ilmenite 440-455kt and zircon 29-31kt.
• The company notes “The usual seasonal slow-down in demand through the March quarter, and the continued lack of a firm direction in the markets, resulted in ongoing cautious buying behaviour from customers.”, and, as previously announced in January received a force majeur notice from an ilmenite customer and in February was notified by a rutile customer of its intention to reduce its annual purchases by some 20,000 tonnes.
Conclusion: Although production is ramping up and costs are on a generally downward trend, sales conditions are proving difficult and there may be a risk of stocks building up if the market does not strengthen.
Galaxy Resources (ASXGXY) A$0.3, Mkt cap A$409m – Reopens Mount Cattlin lithium mine in Western Australia
• Galaxy Resources has reopened the Mount Cattlin lithium mine in Western Australia.
• The mine is around 500km southeast of Perth and will be the only new hard rock lithium mine to open in the world this year.
• Other new lithium mines are: Samsung’s new process brine extraction plant in Argentina and Bacannora’s trial plant at Sonora in Mexico.
• The Mount Cattlin mine and plant has production capacity of 137,000tpa of lithium concentrate
• Concentrate prices are said to have risen to around $600/t from $280/t in 2012 suggesting to us that the concentrate runs at around 10% lithium carbonate content
• The plant formerly sold concentrate to its Jiangsu processing factory in China which ran at around 25% operating capacity and ran up losses at a run rate of A$17mpa.
• The plant was sold a year ago for around US$180m to Sichuan Tianqi Lithium Industries which is listed in Shenzen, China.
• Galaxy and its new jv partner General Mining agreed to sell 60,000t of concentrate to Chinese buyers for US$36m.
• They also agreed to double the sale to 120,000t in 2017 with the price to be set in Q4 this year
Haydale Graphene Industries plc (LON:HAYD) 166p, mkt cap £25m - screen printing of graphene enhanced ink
• Haydale Graphene announced a deal yesterday for the supply of graphene enhanced ink for screen printing with Dowton Electronic Materials Co (Taiwan).
• The deal is interesting as it indicates developing interest in screen printing of inks incorporating carbon (graphene) and metals like palladium, silver, copper and nickel.
• Screen printing is great for low cost mass production, miniaturisation and rapid adaptation to customer needs.
• Haydale and Dowton have been working on pastes for bio-medical sensors with Dowton surprised at the superior performance of Haydale’s graphene
Metal Tiger (LON:MTR) 3.95 pence, Mkt Cap £19.1m – MOD Resources goes into trading halt on ASX
(Kalahari Copper joint venture 30% Metal Tiger. 70% MOD Resources.) Metal Tiger also holds 4.92% of MOD Resources
This gives MTR an effective 33.4% stake in the Kalahari copper joint venture
• MOD Resources and Metal Tiger have released information relating to their joint venture in Botswana
o Metal Tiger reports that drilling by its joint- venture partner MOD Resources on the T3 Prospect in Botswana (Metal Tiger 30%) has intersected copper mineralisation.
o Hole MO-G-10R intersected 4 metres at an average grade of 0.78% copper from a depth of 88m while hole MO-G-11R made multiple intersections of mineralisation including 12m @ 0.76% Cu from 69m down hole; 14m @ 1.97% Cu from 86m down hole (including 7m @2.9 % Cu from 92m) and 5 separate zones of Pb/Zn mineralisation over 84m from 64m depth.
o The company reports that there are now two diamond drilling rigs on site (the results noted above appear to be the results from reverse-circulation drilling) which should help to provide additional geological information and aid the geological and structural understanding of the mineralisation.
Conclusion: The intersection of copper mineralisation on the T3 Prospect is encouraging and we look forward to further results as the diamong drilling proceeds.