Economic News
US – Retail sales surprisingly contract (-0.3%mom) in Mar on the back of soft auto sales numbers.
Auto sales are reported to have contracted 2.1%mom.
Ex volatile autos, retail sales climbed 0.2%mom underperforming expectations as consumers spent less on clothing and eating out.
China – Q1 GDP numbers are due tomorrow with expectations for the data to show the managed slowdown in economic growth rates.
In addition, numbers on Mar industrial production, retail sales and fixed assets investments will be released.
Q1/16 GDP: 6.7%qoq v 6.8%qoq in Q4/15.
Industrial production (YTD): 5.5%yoy v 5.4%yoy in Feb.
Retails sales (YTD): 10.2%yoy v 10.2%yoy in Feb.
Fixed assets (YTD): 10.4%yoy v 10.2%yoy in Feb.
On a separate note, Chinese power demand climbed 3.2%yoy to 1.4tn kWh in Q1/16, up 2.4pp from the same period last year.
The strongest growth was recorded in services industry (10.9%yoy) with primary and secondary industry expanding at a slower pace (7.8%yoy and 0.2%yoy, respectively).
Services sector starts to play an increasingly important role in the make-up of the power consumption while growth rates in the manufacturing industry remained lukewarm.
Eurozone – Revised inflation numbers show the Eurozone exited deflation in Mar, but only just.
Inflation rates have been upgraded to 0.0%yoy v -0.2%yoy recorded in Feb (revised down from -0.1%yoy).
Australia – The Aussie dollar is down today following the Moody’s warning that the country may lose its Aaa credit rating if the government does not raise taxes to cut budget deficit.
“Australia Treasurer announced that the budget to be released on 3 May would focus on curbing spending to lower the government’s fiscal deficit.”
The government “excluded measures to raise revenues”.
“Without such measures, limited spending cuts are unlikely to meaningfully advance the government’s aim of balanced finances by the fiscal year ending Jun/21 and government debt will likely continue to climb, a credit negative for Australia.”
New Zealand – The Central Bank will be discontinuing the release of the monetary policy decision to journalists and analysts ahead of the press release after the latest decision was leaked.
The Reserve Bank of New Zealand has previously sent the announcement with journalists and analysts before the release as they wait in separate rooms with external communications forbidden, FT reports.
Last month, one journalist is reported to have emailed the decision to a colleague who then sent it to a blogger, a former RBNZ employee who then informed the Bank.
Currencies
US$1.1262/eur vs 1.1355/eur yesterday. Yen 109.17/$ vs 108.94/$. SAr 14.620/$ vs 14.765/$. $1.417/gbp vs 1.422/gbp
0.769/aud vs 0.766/aud. CNY 6.483/$ vs 6.466/$.
Commodity News
Precious metals:
Gold US$1,241/oz vs US$1,249/oz yesterday – Gold sales in Japan jumped in the first three month of the year as the BoJ pursued the policy of negative benchmark rates.
Gold bar sales increased 35%yoy to 8.2t in Q1/16.
Latest data supports previous reports on strong gold consumer demand in Japan.
Purchases almost doubled to 32.8t in 2015 from 17.9t in 2014, according to the World Gold Council.
Gold ETFs 56.8moz vs US$56.7moz –
Platinum US$992/oz vs US$994/oz yesterday
Palladium US$543/oz vs US$548/oz yesterday
Silver US$16.14/oz vs US$16.11/oz yesterday
Base metals:
Copper US$ 4,809/t vs US$4,811/t yesterday
Aluminium US$ 1,557/t vs US$1,543/t yesterday
Nickel US$ 8,885/t vs US$8,895/t yesterday
Zinc US$ 1,873/t vs US$1,853/t yesterday
Lead US$ 1,754/t vs US$1,731/t yesterday
Tin US$ 17,180/t vs US$16,900/t yesterday
Energy:
Oil US$44.1/bbl vs US$44.3/bbl yesterday – Oil prices fall ahead of the 17 Apr meeting between major producers in Doha and higher than forecast US inventory build-up.
The meeting will be held among both member and non-members of the OPEC.
The IEA reported that US crude stockpiles increased 6.6Mbbl last week, taking total crude stocks to a new record high of 536Mbbl.
Estimates were for a 1.85Mbbl increase.
OPEC cut global oil consumption growth rates forecast in 2016 yesterday pointing to a larger supply surplus this year.
Natural Gas US$2.034/mmbtu vs US$2.034/mmbtu yesterday
Uranium US$27.75/lb vs US$28.25/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$56.6/t vs US$56.6/t
Thermal coal (1st year forward cif ARA) US$42.3/t vs US$41.7/t yesterday
Other:
Tungsten - APT European prices stood at $175-190/mtu vs $170-185/mtu last week
Potash – Producers in negotiations with China over this year’s contract prices. Press reports suggest prices may fall significantly from last year’s US$315/t contract price.
Company News
Firestone Diamonds (LON:FDI) 27.3 pence, Mkt Cap £84.7m – Liqhobong on track for initial production in Q4
Firestone Diamonds reports that its 75% owned Liqhobong diamond mine (Lesotho Government 25%) is on track for initial production during Q4 2016 and the project remains within the $185.4m budget.
By the end of March, construction work was 72% complete and expenditure had reached 70% of budget. The weakening Rand appears to have played an important role in helping to ensure that the budgets are achieved.
Progress on the project development has been aided by good weather conditions and the granting of a number of important licences. The on-site water storage now has over 500,000 cubic metres available which is reported to be sufficient for the first full year of production.
Conclusion: The construction of the new Liqhobong mine is proceeding on track and we look forward to future news on progress and in particular that commissioning has started
Atalaya Mining (LON:ATYM) 89.5 pence, Mkt Cap £114.4m – Progress on the Phase 2 expansion
Atalaya has announced that its expansion programme to increase production at the Rio Tinto site in southern Spain to 9.5mtpa, is now 92% complete.
Commissioning of the expansion is due to start in early May and the company is expecting to ramp up production during the second and third quarters.
The existing Phase 1 operations are performing well as they ramp up and are now operating at an annualised rate of 4.9mtpa and achieving over 82% copper recovery rates and delivering concentrate to specification.
The company completed a 31,000 metres infill drilling campaign at the Cerro Colorado during February. The data from the 2 year long programme is currently part of a resource and reserve update being conducted by an independent consultant. The updated estimates are expected to be released by the end of Q2.
In addition to the drilling on the core Cerro Colorado area, the company has drilled almost 12,000 metres on “lateral extensions where potential higher grade material has been identified”
CEO, Alberto Lavandeira commented that “Proyecto Riotinto will return to maximum production significantly ahead of schedule and well under budget.”
Conclusion: The long awaited resumption of production at Rio Tinto has gone well and the company is close to achieving its goal of expanding production to the higher 9.5mtpa rate ahead of schedule. We look forward to the revised resource and reserve estimates and to information on the results of the extension drilling.
Hummingbird Resources (LON:HUM) 19.125 pence, Mkt Cap £ 20.5m – Update on Yanfolila
Hummingbird Resources has reiterated its progress on the Yanfolila gold project in Mali in the Chairman’s review of 2015.
The project remains on course for an initial gold pour during 2017.
The previously reported optimisation study for mine development shows that at a US£1250/oz gold price and using an 8% discount rate, the project delivers an NPV of $162m and an IRR of 60%. Annual LOM gold production averages 107,000 oz and the first year of production is expected to produce 132,000 oz. All in sustaining costs over the mine life are $695/oz.
The company also notes that a “Desktop Study on the Gonka deposit located 5km south of Yanfolila adds US$24m to the NPV8 and 169k oz gold to the mine life”
At The Dugbe project in Liberia, a pre-feasibilty study on the possible generation of hydroelectric power, which could have a major positive impact on the economics of the project, is nearing completion.
At 31st December 2015, the company held $7m of cash.
Lucara Diamond (CVE:LUC) CAD$2.9, Mkt Cap CAD$1,104m – Latest tender generates US$51.3m in revenues
The Company released results of its first Exceptional Stone Tender of 2016 today.
10 stones recovered from the Karowe mine, Botswana, totalling 1,525 carats generated US$51.3m in gross revenues translating into US$33,632 per carat values.
Of that, four stoned were sold for in excess of US$5.0m per lot and 7 diamonds sold for more than US$2.0m.
Three stones generated nearly 60% of revenues with respective values of US$41,088/ct, US$42,738/ct and US58,931/ct.
Weatherly International (LON:WTI) 0.3 pence, Mkt Cap £2.8m – Q3 production update
Weatherly International reports that Q1 copper production from its Tschudi heap leach SX/EW copper mine in Namibia reached 4442 tonnes of copper cathode during the quarter ending 31st March. This is approximately 4% above the plant’s nameplate capacity of 17,000 tpa.
Production cash costs of $3429/t are well below the guidance range of $4250-4350/tonne and the company notes that “Exchange rate movements have assisted us in keeping US dollar production costs well below forecast, although a focus on productivity and cost discipline by the team on site have also played important roles in delivering these satisfying results."
The company mined a total of 6.09m tonnes during the quarter to produce 583,000 tonnes of ore at an average grade of 0/81% copper.
Conclusion: Tschudi is now operating at above its designed nameplate capacity and appears to have put its early setbacks behind it.