Atalaya Mining (LON:ATYM)– Temporary suspension of tailings disposal
Metals Exploration* (LON:MTL)– Lifting of Partial Suspension Order
Sirius Minerals (LON:SXX) – Results to 31st December 2015
Tri-Star Resources (LON:TSTR)– Pilot plant pours first metal
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Dow Jones Industrials +0.12% at 18,004
Nikkei 225 -0.76% at 17,439
HK Hang Seng -0.76% at 21,304
Shanghai Composite -0.42% at 2,947
FTSE 350 Mining -3.31% at 10,099
AIM Basic Resources -0.66% at 1,907
Economic News
US – Manufacturing PMI report released on Friday showed the weakest reading of economic activity since Sep/09.
• “Softer rates of manufacturing output and new business growth, alongside a weaker rise in staffing numbers, were the main factors weighing on the headline PMI figure during Apr,” market wrote.
• In a domestic market, “uncertainly in relation to the economic outlook and political climate had weighe on client spending in Apr.”
• New export orders are reported to have also performed poorly.
• “The survey data are broadly consistent with manufacturing output falling at an annualised rate of over 2% at the start of Q2.”
• “With prior months’ survey data pointing to annualised GDP growth of just 0.7% in Q1, the deteriorating performance of manufacturing suggests that growth could weaken close towards stagnation in Q2.”
• On a more positive note, manufacturers said the cost base increased slightly in Apr, ending a seven-month period of sustained input price declines and potentially filtering into an increase in output prices.
• Durable goods orders (Tuesday), FOMC rate decision (Wednesday) and Q1/16 GDP (Thursday) are all due this week:
Date Index Period Actual Expected (Bloomberg) Previous
Friday Manufacturing PMI Markit Apr 50.8 52.0 51.5
Monday New Home Sales Mar 1.6%mom 2.0%mom
Tuesday Durable Goods Orders/Core Mar 1.9%mom/0.5%mom -3.0%mom/-1.3%mom
Capital Goods Orders Mar 0.7%mom -2.5%mom
S&PCS Propoerty Prices Index Feb 0.8%mom/5.5%yoy 0.8%mom/5.75%yoy
Markit Services PMI (P) Apr 52.0 51.3
Markit Composite PMI (P) Apr 51.3
Wednesday FOMC Rate Decision 0.25%-0.50% 0.25%-0.50%
Thursday Q1 GDP (A) 0.6%qoq 1.4%qoq
Q1 Core PCE (A) 1.9%qoq 1.3%qoq
Weekly Jobless Claims 260k 247k
Friday PCE Mar 0.1%mom/0.8%yoy -0.1%mom/1.0%yoy
Core PCE Mar 0.1%mom/1.5%yoy 0.1%mom/1.7%yoy
Source: Bloomberg
Japan – The BoJ is reported to hold more than half of nation’s ETFs, according to Bloomberg.
• “The central bank’s holdings have been rising since it began buying Japanese exchange traded funds at the start of the decade, and now account for more than half of those ETFs.”
• The Bank may choose to expand its ETF holdings this week as the Board holds a monetary policy meeting this Thursday.
• The BoJ is also argued may cut rates on the Stimulating Bank Lending Facility to below 0%.
• The Stimulating Bank Lending Facility has been used for ¥24.4tn (US$223bn) of loans as of Apr 10 with 0% interest charged on borrowings.
Germany – Ifo economic study show a fall in business sentiment in Apr coming in below market estimates.
• Ifo business climate: 106.6 v 106.7 in Mar and 107.1 forecast.
UK – Q1 GDP numbers are due on Wednesday with estimates for a 0.4%qoq/2.0%yoy growth, a slight slowdown on 0.6%qoq/2.1%yoy recorded in Q4/15.
Brazil – Senate sets up a special committee on impeachment against President Dilma Rousseff.
• Should the committee recommend the acceptance of the impeachment and the Senate moves to accept the motion, Rousseff will need to step down for the time of the trial.
• The Central Bank will hold its monetary policy meeting on Wednesday with estimates for rates to be left unchanged at a nine year high of 14.25%.
Saudi Arabia – The three-month SIBOR (Saudi Interbank Offered Rate) broke the 2% level touching the highest level since Jan/09.
• The rate climbed 46bp this year on the back of a drop in the liquidity in the banking system driven by lower commodity prices.
• “We have seen government deposits falling in the banking system, at the same time its borrowing requirement have increased,” Abu Dhabi Commercial Bank commented on the data.
• Rates may drift lower in days ahead as the government is reported to be close to close a US$10bn syndicated loan with international banks.
Currencies
US$1.1255/eur vs 1.1273/eur yesterday. Yen 111.18/$ vs 110.36/$. SAr 14.499/$ vs 14.386/$. $1.443/gbp vs 1.434/gbp
0.771/aud vs 0.775/aud. CNY 6.495/$ vs 6.494/$.
Commodity News
Precious metals:
Gold US$1,234/oz vs US$1,246/oz last week
Gold ETFs 56.5moz vs 56.5moz last week
Platinum US$1,006/oz vs US$1,030/oz last week
Palladium US$603/oz vs US$608/oz last week
Silver US$16.95/oz vs US$17.16/oz last week
Base metals:
Copper US$ 4,987/t vs US$5,008/t last week
Aluminium US$ 1,637/t vs US$1,643/t last week
Nickel US$ 9,070/t vs US$9,105/t last week
Zinc US$ 1,883/t vs US$1,905/t last week
Lead US$ 1,777/t vs US$1,779/t last week
Tin US$ 17,270/t vs US$17,200/t last week
Energy:
Oil US$44.5/bbl vs US$44.6/bbl last week
Natural Gas US$2.147/mmbtu vs US$2.088/mmbtu last week
Uranium US$28.00/lb vs US$26.75/lb last week
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$62.1/t vs US$65.3/t last week
Thermal coal (1st year forward cif ARA) US$45.5/t vs US$45.4/t last week
Other:
Tungsten - APT European prices stood at $188-210/mtu vs $190-200/mtu last week
Company News
Atalaya Mining (ATYM LN) 96.5 pence, Mkt Cap £112.6m – Temporary suspension of tailings disposal
• Atalaya Mining announced that the provincial government, the Junta de Andalucia, has ordered the “provisional stoppage of the deposition of tailings and has requested some additional information from the Company.”
• The Company which has recently re-opened the Rio Tinto copper project and is in the process of ramping up production to a rate of 9.5mtpa, states that “All pertinent reports have been provided to the Junta and the Company believes that it will result in the prompt lifting of the provisional suspension in the next few days.”
• In the interim, “The stoppage is not expected to have any material effect on the Company’s results because the time will be used for routine plant maintenance and as an opportunity to integrate the Expansion Project into existing facilities.”
• The Company’s statement does not shed light on the reasons, if any, which the Junta believes justify the suspension and Atalaya is “fully confident that it is adhering to best industry practices. Mining operations are unaffected and continue at normal rates.”
Conclusion: Provided that the suspension can be lifted speedily, Atalaya’s operations should not be materially impacted, however, until the reasons for the Junta’s actions become clear, there may be a negative perception. Spain has a number of high profile mining operations and developments underway including the Muga potash project, the Barruecopardo tungsten development and the Salamanca Uranium project. We point out to investors that mining in Spain is administered at the provincial government level and actions by the Junta in Andalucia would not affect operations in other provinces.
Metals Exploration* (MTL LN) 4.5 pence, Mkt Cap £77.9m – Lifting of Partial Suspension Order
• Metals Exploration has announced that the Mines & Geosciences Bureau has lifted the Suspension Order imposed on the RunRuno mine development in the Philippines in the wake of the October typhoon Lando which caused damage to mine infrastructure and the tailings disposal facility.
Conclusion: The suspension, which will be subject to performance monitoring in the future is welcome news and should enable Metals Exploration to complete the commissioning of RunRuno.
*SP Angel act as Broker to Metals Exploration
Sirius Minerals 17.75 pence, Mkt Cap £407.3m – Results to 31st December 2015
• Sirius Minerals reports a loss of £7m for the nine-months ending 31st December 2015. The company is changing its financial year end to December, hence the publishing of results for the nine-month period.
• Cash resources at the end of December amounted to £29.1m.
• Sirius Minerals has now obtained all the requisite planning approvals for the development of the North Yorkshire Polyhalite project and the period for objections to trigger a potential judicial review have now expired.
• Continuing work on securing financing for the project development (estimated at US$3.56bn) is examining a number of options “with debt funding likely to make up as much of the overall requirement as possible.”
Conclusion: Sirius Minerals has now completed much of the DFS level technical work, secured the necessary planning approvals and developed market support for its polyhalite product within the agronomy sector. We look forward to further news on the financing as it becomes available.
Tri-Star Resources* (TSTR LN) 0.11p, Mkt Cap £9.3m – Pilot plant pours first metal
(Tri-Star hold 40% of Strategic & Precious Metals Processing LLC ‘SPMP’, 40% Oman Investment Fund, 20% Dutco Group)
Buy - Target Price 0.36 pence
• The pilot plant designed to test the new furnace technology located in Johannesburg and operated by SPMP has successfully produced first high purity antimony metal.
• Test works continue using different ore sources supplied by international producers.
• The plan is to re-locate the plant to Sohar and use it as an onsite laboratory equipment for test work on feed material for the main plant.
Conclusion: First production from the trial plant delivered by the SPMP team concludes another step in a de-risking process of the new roasting technology to be used at the flagship project in Oman.