Mariana Resources (LON:MARL) – Raising up to £6m (including US$5m with a strategic N American investor)
Petra Diamonds (LON:PDL) – Q3 Production, sales and increased production guidance
Sierra Rutile (LON:SRX) – Plant commissioning of Gangama Dry Mine Project
Solgold* (LON:SOLG) – Cascabel drilling update and modelling of the geometry of mineralisation
Economic News
US – New home sales unexpectedly contracted in Mar while Feb numbers have been revised down.
• Mar saw a third monthly decline in newly built homes sales.
• Dynamics differed across regions with the West posting a 23.6%mom decline, the Northeast unchanged and the Midwest showing a 18.5%mom increase.
• The data follows a 8.8%mom decline in housing starts and a 7.7%mom fall in new property building permits.
• Market commentators point to the warmer than expected winter which might have pulled forward homebuilding activity from spring.
• This week economic news:
China – Declines in industrial profits accelerated to 13.8%yoy in Q1/16 driven by losses in petroleum, coal, steel and nonferrous metals industries.
• This compares to an annual 6.7% fall in 2015.
UK – The Pound climbed to the strongest level in 10 weeks against the US dollar as betting odds show a 75% chance of the Remain campaign success.
• Sterling traded at 1.457 this morning, up from 1.448 recorded yesterday.
Currencies
US$1.1298/eur vs 1.1255/eur yesterday. Yen 110.87/$ vs 111.18/$. SAr 14.471/$ vs 14.499/$. $1.457/gbp vs 1.443/gbp
0.774/aud vs 0.771/aud. CNY 6.493/$ vs 6.495/$.
Commodity News
Precious metals:
Gold US$1,235/oz vs US$1,234/oz yesterday
Gold ETFs 56.4moz vs 56.5moz yesterday
Platinum US$1,014/oz vs US$1,006/oz yesterday
Palladium US$600/oz vs US$603/oz yesterday
Silver US$17.01/oz vs US$16.95/oz yesterday
Base metals:
Copper US$ 4,949/t vs US$4,987/t yesterday – Prices fell below US$5,000/t declining for a second consecutive day amid climbing inventories and weak industrial profits’ numbers in China.
• LME inventories increased to 152,400t yesterday, the highest level since Mar 21.
• Codelco production target not to be affected by a three-day stoppage at El Teniente this month due to heavy rains.
• A number of tunnels at El Teniente remain flooded.
• The management expect operating levels to be dewatered in a week.
Aluminium US$ 1,647/t vs US$1,637/t yesterday
Nickel US$ 9,040/t vs US$9,070/t yesterday
Zinc US$ 1,867/t vs US$1,883/t yesterday
Lead US$ 1,732/t vs US$1,777/t yesterday
Tin US$ 17,350/t vs US$17,270/t yesterday
Energy:
Oil US$44.8/bbl vs US$44.5/bbl yesterday – The Saudi Arabian cabinet approved a plan to IPO a 5% stake in state-run oil company Aramco based on a more than US$2tn valuation.
Natural Gas US$2.068/mmbtu vs US$2.147/mmbtu yesterday
Uranium US$27.50/lb vs US$28.00/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$61.8/t vs US$62.1/t yesterday – Iron ore track Chinese steel prices lower as local exchanges continue to tighten trading rules to supress speculation.
Thermal coal (1st year forward cif ARA) US$43.0/t vs US$45.5/t yesterday
Other:
Tungsten - APT European prices stood at $188-210/mtu vs $190-200/mtu last week
Company News
Mariana Resources (LON:MARL) 1.925p, Mkt Cap £16.5m – Raising up to £6m (including US$5m with a strategic N American investor)
• Mariana Resources has announced that “A strategic North American royalty company and its consortium have agreed to participate in the private placement for a committed US$5m. Mariana has already received commitments in excess of the minimum placement amount of GBP4million, with the ability for the raising to be increased up to GBP6million.”
• The placement of up to 330m new share will include a warrant for every two shares subscribed. The warrant will be exercisable for two years and allow the holder to acquire an additional share in Mariana at an exercise price of 2.5p.
• The funds will assist the work for a Preliminary Economic Assessment, and ultimately feasibility work on the 30% owned Hot Maden project in Turkey where the company has already announced a maiden resource of over 2m oz of gold equivalent.
Petra Diamonds (LON:PDL) 125p, Mkt Cap £653.5m – Q3 Production, sales and increased production guidance
• Petra Diamonds reports a 26% increase in Q3 (to March 2016) diamond output to 995,905 carats (Q3 2015 – 791,443 carats). The increased output benefitted from a 15% increase in ROM production plus a 53% rise (to 349,055 carats) from tailings production as a result of the integration of the Kimberley tailings operations acquired in January 2016.
• The company has increased its full year production guidance for the year to June 2016 to 3.6-3.65 million carats from the previously indicated 3.3-3.4 million carats, indicating that it expects to produce at least 974,000 carats in the final quarter
• Revenues for the quarter rose 25% to US$120.5m as a result of “increased sales volumes and the sale of the 32.33 carat pink diamond from Williamson for US$15m.” Based on the reported sales of 937,526 carats, and including the “special” stone, sales value per carat has increased by approximately 11% to 128/ct.
• Petra Diamonds notes that industry measures to improve the rough diamond market taken in late 2015 through reduced production, increased marketing and price reductions has seen the market start 2016 on “a noticeably firmer footing with good sales demand from the midstream diamond pipeline (the cutting and polishing / manufacturing segment).” Petra, however, “remains cautious with regards to diamond pricing for the remainder of the financial year”
• The expansion projects at the Cullinan and Finsch mines and elsewhere are reported to be progressing “in line with expectations” and Petra remains “focussed on delivering the capital projects on time and within budget.”
• Petra reports that net debt at 31st march amounted to US$395.6m, however with undrawn bank facilities of US$114.2m as it nears “the end of its peak Capex year … the Group is confident that its revised covenant and debt facility levels are aligned to successfully complete its expansion programmes.”
• The company also announces that following “the completion of the acquisition of the Kimberley Mines from De Beers … Petra and Ekapa Mining have entered into negotiations with a view to combining the respective operations owned and operated by the consortium members in the Kimberley area – namely Petra’s Kimberley Underground operations, Ekapa Mining’s tailings operations … and the newly acquired Kimberley Mines tailings resources and associated assets including the Central Treatment Plant.”
Sierra Rutile (LON:SRX) 22.75p, Mkt Cap £135.5m – Plant commissioning of Gangama Dry Mine Project
• Sierra Rutile reports that construction has been completed at the Gangama Dry Mine project and that commissioning is now underway.
• The project remains on time and within budget and commercial production is expected to be achieved during Q2 2016.
• The company also announces that it “has restrted sales into the titanium metals market. After several years of subdued demand as stockpiles were depleted, the Company views this initial order as an encouraging sign that the demand for high-grade titanium feedstocks is continuing to strengthen.”
Solgold* (LON:SOLG) 3.275p, Mkt Cap £31.2m – Cascabel drilling update and modelling of the geometry of mineralisation
• Solgold reports on the progress of its exploration holes 15R2 and 17 at Cascabel.
• Hole 15R2 with a planned depth of 1800m has reached 1401m and intersected “over 400m of porphyry copper style copper sulphide mineralisation thus far”. Although assays are not yet reported, this is an encouraging result from a borehole designed to test the northward and depth extensions of the Alpala deposit approximately 100m north of the intersection in “Hole 9, which returned 1050.8 m @ 0.68% Cu and 0.92 g/t Au, including 420m @ 1.00% copper and 1.34 g/t gold.”
• The company is also reporting that Hole 17, which is testing upper extensions of the copper/gold mineralisation previously intersected in holes 5 and 12 “both of which returned world class intersections of over 1000m grading above 1% copper equivalent”. Hole 17 is currently at a depth of 519.4m in visible mineralisation and with a planned depth of 1300m.
• Solgold has achieved a high hit rate in its drilling programme to date with virtually every hole drilled to date encountering copper gold mineralisation. Much of this success can be attributed to the integrated use of geological and geochemical exploration, drilling information and advanced geophysical modelling which continues to provide an evolving “insight into the geometry of copper and gold mineralisation and the potential source of intrusions.”
• The company’s evolving understanding of the deposit is well illustrated in its most recent presentation and video (available at www.solgold.com.au – “April Presentation”), which shows a series of 3D interpretations at different copper cut off grades. Although the grade shell models do not yet constitute a resource, they show a continuity of the mineralised structure from surface to a depth of at least 1500m below surface (this continuity is particularly evident at the 0.3% cut-off illustrated on slide 60 of the presentation).
• Elsewhere in the same presentation (slide 49) the company indicates a “Pre-Resource Estimate of 426.4mt @ 1.05 Cu Eq” also using the 0.3% copper cut-off. “The Company continues to work towards the calculation of its maiden resource statement for the Cascabel project, the exact timing of which will be dependent on, amongst other things, the progress of drilling throughout the year.”
Conclusion: Solgold’s drilling at Cascabel continues to intersect copper/gold mineralisation and a recent company presentation, while stressing that this is not a formal resource estimate, gives an indication of the tonnage and grades which Solgold considers it may have located at Cascabel. Modelling released by the company also shows a continuity of mineralisation from surface to depth which may well ultimately provide the company with a variety of mine development options. We look forward to further assay results from the current drilling.
*SP Angel acts as Nomad and Broker to SolGold. An SP Angel analyst has visited the Cascabel project.