Bushveld Minerals (LON:BMN) – Purchase agreement for vanadium mine and process plant
Lucara Diamonds (CVE:LUC) – $63m sale of 813 carat diamond
Metal Tiger (LON:MTR) – Thailand exploration shows new copper target
Battery breakthrough – Magnesium could potentially be the new lithium on new research
• Engineers at the Toyota Research Institute in North America have made a chance discovery in the search for an electrolyte to work with magnesium in battery applications.
• A fuel-cell researcher spotted that the properties of hydrogen storage material might be conductive to a magnesium anode without degrading the magnesium.
• Lithium miners should not worry just yet as it is likely to be 20 years before magnesium gets to replace lithium in commercial batteries
Dow Jones Industrials +0.45% at 17,741
Nikkei 225 +0.68% at 16,216 (Markets are back from holidays; change on Monday close)
HK Hang Seng +0.14% at 20,138
Shanghai Composite -2.79% at 2,832
FTSE 350 Mining -3.97% at 9,062
AIM Basic Resources +0.04% at 1,912
Economic News
US – Growth in payroll numbers eased more than expected in Apr while increase in earnings surprised on the upside.
The data suggests tightening labour market and may see the Fed decide to tighten further before year end.
Weaker than forecast NFP drove the probability of a rate hike during the Jun meeting to 8.0%, down from 10.0% before the data was released.
The US dollar index dipped on the announcement of numbers but has recovered through the session posting the best weekly gain in more than a month (+0.9% last week).
Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Friday NFP Apr 160k 200k 208k (revised from 215k)
Unemployment Rate Apr 5.0% 4.9% 5.0%
Labour Force Participation Apr 62.8% 63.0% 63.0%
Av Earnigns Apr 0.3%mom/2.5%yoy 0.3%mom/2.4%yoy 0.2%mom/2.3%yoy
Tuesday JOLTS Job Openings Mar 5,400k 5,445k
Thursday Weekly Jobless Claims 270k 274k
Friday Retail Sales/(ex auto) Apr 0.8%mom/0.5%mom -0.4%mom/0.1%mom
PPI/PPI (Core) Apr 0.3%mom/0.1%mom -0.1%mom/-0.1%mom
UoM Consumer Sentiment May 89.5 89.0
Source: Bloomberg
China – Trade data came in worse than forecast posting declines in both exports and imports.
Exports (in $ terms): -1.8%yoy in Apr v 11.5%yoy in Mar and 0.0%yoy forecast.
Imports (in $ terms): -10.9%yoy in Apr v -7.6%yoy in Mar and -4.0%yoy forecast.
Chinese equities are in the sell-off mode after falling more than 5% in the last two trading sessions on weak manufacturing PMI numbers, poor trade data and growing concerns over the increasing leverage in the economy.
The People’s Daily, the leading Communist Party paper, highlighted increasing number of nonperforming loans and argued a deleveraging programme should be prioritised ahead of short term growth.
Japan – The Japanese yen is off 0.6% today trading at 107.75 helping local equities to post the first increase in seven session.
Topix climbed 0.6% while Nikkei was up 0.7%.
Germany – Factory orders post a recovery in Mar led by growing demand in export markets while domestic orders surprisingly contract.
Export orders climbed 4.3%mom with ex-Eurozone orders up 6.2%mom v a 1.1%mom increase recorded in the single currency zone.
Domestic orders fell 1.2%mom.
Brazil – The senate is meeting on Wednesday regarding the impeachment motion against Dilma Rousseff.
Should the motion be given a go ahead, Ms Rousseff will be suspended for up to six months while vice-president Michel Temer will become acting president.
Switzerland - Consumer prices posted another monthly decline on the yoy basis; although, the pace of declines has been slowing down recently.
CPI: -0.4%yoy in Apr v -0.9%yoy in Mar and -0.7%yoy forecast.
Greece – 10-year bond yields fell to 8.1%, the lowest level since start of the year, as Eurozone finance ministers are holding talks on the progress of the Greek austetiry programme and a potential release of another tranche of bailout funds.
The parliament managed to pass the bill cutting local pensions on Sunday night.
The country needs funds before Jul, when €3.5bn in debt comes due.
Currencies
US$1.1391/eur vs 1.1427/eur yesterday. Yen 107.57/$ vs 106.94/$. SAr 14.933/$ vs 14.983/$. $1.439/gbp vs 1.450/gbp
0.735/aud vs 0.738/aud. CNY 6.507/$ vs 6.499/$.
Commodity News
Precious metals:
Gold US$1,279/oz vs US$1,280/oz yesterday
Gold ETFs 57.9moz unch vs 57.7moz yesterday –
Platinum US$1,070/oz vs US$1,062/oz yesterday
Palladium US$601/oz vs US$601/oz yesterday
Silver US$17.35/oz vs US$17.35/oz yesterday
Base metals:
Copper US$ 4,713/t vs US$4,790/t yesterday – Prices are down 1.7%c on the back of poor Chinese economic data and strengthening US$.
• Shipments of unwrought copper and products fell to 450kt in Apr, down from 570kt in Mar, Chinese customs reported on Sunday.
• Rio Tinto report that their $5.3bn Oyu Tolgoi copper mine will raise production in around four years to meet an expected copper deficit.
Aluminium US$ 1,584/t vs US$1,615/t yesterday
Nickel US$ 8,775/t vs US$9,980/t yesterday
Zinc US$ 1,861/t vs US$1,871/t yesterday
Lead US$ 1,737/t vs US$1,735/t yesterday
Tin US$ 17,320/t vs US$17,350/t yesterday
Energy:
Oil US$45.7/bbl vs US$44.8/bbl yesterday
Natural Gas US$2.093/mmbtu vs US$2.076/mmbtu yesterday
Uranium US$27.55/lb vs US$27.55/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$50.6/t vs US$55.0/t – Prices continued to fall as inventories in Chinese ports hit the highest in more than a year.
• Stockpiles climbed 1.4% to 99.9mt last week marking the highest reading since Mar/15.
• This takes the annual increase to 7.3%.
• Qingdao port delivered 62% Fe iron ore is quoted at US$58.3/t, according to Metal Bulletin data.
• Futures trading on the Dalian Exchange traded at CNy 403.5/t (US$62.0/t), down from CNY 412.5/t on Friday and CNY 479/t on 25 Apr/16.
Thermal coal (1st year forward cif ARA) US$46.0/t vs US$46.3/t yesterday
Other:
Tungsten - APT European prices stood at $215-225/mtu vs $205-215/mtu last week
Company News
Bushveld Minerals (LON:BMN) 2.5 pence, Mkt Cap £11.9m – Purchase agreement for vanadium mine and process plant
Bushveld Minerals has announced that it has reached a conditional agreement to acquire a 78.8 percent interest in a producing vanadium mine and process plant located 8km northeast of Brits in the North West Province of South Africa.
The assets are to be acquired in two tranches; an initial 23% interest for US$4.7m followed by a further 55.8% for US$12.5m. An initial US$0.5m has already been paid as previously announced and the balance, including a US$ 500,000 offset fee against non-completion of the first tranche, is due by 17th June.
The second tranche, which is subject to conditions including the approval of Bushveld’s shareholders and the Dept. of Mineral Resources in S Africa, is due within twelve months of the completion of tranche 1, although there is a provision for a six-months extension.
In addition to the purchase consideration, the vendor (Evraz Group) will receive additional payments of up to US$1.5m if the vanadium price exceeds “an agreed [undisclosed] minimum threshold price” between 2018 and 2025.
The company’s 31st August 2015 interim balance sheet shows cash of £6.1m (approximately US$8.9m at current exchange rates) indicating that Bushveld Minerals has adequate resources to meet the tranche 1 funding commitments but we speculate that it may need additional funds to complete the transaction by June 2018.
The company comments that the “transformational acquisition achieves Bushveld’s stated strategy to develop a significant, vertically integrated vanadium platform and accelerates Bushveld’s path to production by several years.”
The operation contains an ore reserve of 27mt at an average grade of 2.55% vanadium pentoxide in magentite giving the mine a 24 year operating life at current production rates. A larger resource of 135mt (also JORC compliant has an average grade of 2.1% “with scope to increase the reserve base by targeted exploration of the inferred resources.”
The existing process plant has scope “to expand production capacity from 2,750 to 3,340 tonnes of Vanadium per year through targeted de-bottlenecking interventions at limited capital expenditure.”
Bushveld Minerals describes the operation as “one of the cheapest primary producers of vanadium in the world: the all-in cash cost of production was US$17.33 per kilogram of Vanadium.”
Conclusion: Bushveld Minerals has secured an important strategic acquisition of an operating, low-cost, long life vanadium asset in South Africa.
Lucara Diamonds (CVE:LUC) C$3.80, Mkt Cap C$1440m – $63m sale of 813 carat diamond
• Lucara Diamonds reports that it has sold an 812.77 carat rough diamond, named “The Constellation”, recovered from its Karowe mine in Botswana for US$63,111,111 or US$77,649 per carat.
• “As part of the sale, Lucara has partnered with Nemesis International DMCC, and retains a 10% interest in the net profit received from the sale of the resultant polished diamonds.”
• William Lamb, President and CEO said that the sale represented “the highest price ever achieved for a rough diamond”.
• The Karowe mine is establishing a reputation for producing large rough diamonds. In its recent quarterly report the company noted that it had recovered 8 stones greater than 100 carats in size.
• The company will be selling the second largest rough diamond ever recovered, the 1109 carat Lesedi La Rona diamond, at Sothebys in London on June 29th.
Metal Tiger (LON:MTR) 4.90 pence, Mkt Cap £25.2m – Thailand exploration shows new copper target
• Metal Tiger which is largely focussed on copper in Botswana reports that it has discovered a new copper target at its 90% owned subsidiary in Thailand.
• The team have lodged three applications for Special Prospecting Licenses ‘SPLs’. The licenses once granted should run for five years.
• The subsidiary already holds 10 SPLs in Thailand in four different areas of the country highlighting the team’s activity in the region.
• Thailand is considered prospective for copper mineralisation where a number of other mining projects are in operation.
o Puthep Co (Phu-Kham mine) is a jv with Pan Australian Resources has 121mt grading 0.43% copper producing 78,449 copper in concentrate last year at AISC of US$1.56/lb.
o Kingsgate Consolidated runs the Chatree Gold Mine which produced 125,100oz last year at a total cash cost of US$690/oz.
o Padaeng runs the Mae Sod zinc Mine and processing operations.
Conclusion: The targets in Thailand give Metal Tiger interesting a regional diversification with which to occupy management. The region hosts a number of mines and potential for further mining activity.