FinnAust Mining* (LON:FAM) – Royal IHC to support FinnAust on Pituffik titanium project
Stratex International (LON:STI) – Dalafin, Senegal gold project update
Wishbone Gold (LON:WSBN) – $3m trading facility
Iron ore prices jump as China inventories fall for first time in three weeks
• The Dalian exchange iron ore futures price jumped to $54.4/t vs $52.4/t last week as investors ignored state action to limit futures speculation
• CFR Qingdao price it $50/t on Friday
• This combined with a weaker US dollar following very weak non-farm payroll numbers on Friday is causing metals and mining shares to rise
• China appears intent on raising domestic demand in part through the stimulation of local and international infrastructure development
DRC – copper production falls 20% in Q1
• The DRC mined just 219,009t of copper in Q1 this year vs 274,201t yoy
• Cobalt production also fell similarly nu 19% to 16,396t
• Gold production fell by just 8% to 230,394oz from 250,809. Part of the fall is due to a decline in gold grades at Randgold’s Kibali gold mine.
Iran – the Islamic Republic of Iran has announced a plan for economic cooperation with Aurubis, the German copper smelter
• Aurubis officials are reported by the Tasnim news agency to be ready to cooperate with Iran and to invest in its copper industry
• Glencore and Trafigure are also reported to have held talks
‘Float like a butterfly, sting like a bee’ what a great man was Muhammad Ali
Dow Jones Industrials -1.80% at 17,807
Nikkei 225 -0.37% at 16,580
HK Hang Seng +0.20% at 20,988
Shanghai Composite -0.16% at 2,934
FTSE 350 Mining +3.43% at 9,235
AIM Basic Resources +1.43% at 1,950
Economic News
Poor NFPs numbers led a selloff in the US$ on Friday driving US$-denominated gold higher.
• Gold surged more than US$30/oz in one day is trading up 2.4% compared to Thursday last week.
• The US$ index was down 1.5% during the same period.
• Chances of a rate hike during the Jun meeting have collapsed to 4%, down from 22% before the NFPs numbers had been released. At the same time, the probability of the Jul move halved (27%, from 54%).
US – Nonfarm payrolls collapsed in May while a decline in the participation rate drove the unemployment rate lower.
• NFPs came in at 25k in May, down from 130k in Apr (revised from 171k) and 150k forecast.
• Given a downwards revision in Apr, one could argue the economy created no jobs in May.
• On a more positive note, hourly earnings held up relatively well on the yoy basis.
• Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Friday NFP May 25k 160k 123k (reviesed from160k)
Unemployment Rate May 4.7% 4.9% 5.0%
Av Hourly Earnings May 0.2%mom/2.5%yoy 0.2%mom/2.5%yoy 0.4%mom/2.5%yoy
Wednesday JOLTS Jop Openings Apr 5,650k 5,757k
Thursday Weekly Jobless Claims 270k 267k
Friday UoM Consumer Sentiment Jun 94.0 94.7
Source: Bloomberg
Japan – The yen has briefly traded below the 107.0 level this morning on its way towards the strongest it has been this year on the back of poor labour data released in the US late last week.
• The currency touched 105.55 early in May as the BoJ refrained from adding to the monetary stimulus programme.
Germany – Factory orders disappoint with a 2.0%mom/0.5%yoy decline registered in Apr driven by a fall in foreign orders (-4.3%mom).
• Domestic demand has favoured better (+1.3%mom).
• At the same time, Mar numbers have been revised upwards to a 2.6%mom/2.4%yoy growth compared to an 1.9%mom/1.7%yoy increase estimated previously.
• A late report major order is said to have pushed up preliminary numbers.
• Industrial production data is due tomorrow with estimates for a rebound in growth rates (0.7%mom/1.0%yoy v -1.3%mom/0.3%yoy in Mar) following a sharp deceleration in Mar.
UK – The pound is down on results of weekend polls showing the Leave camp is taking the lead in the Brexit 23 Jun referendum vote.
• The latest Observer/Opinium poll showed the Brexiters now stand on 43% with 40% supporting the Remain camp.
• The remainder said they undecided.
• Results suggest the Remain campaign lost 4pp in the last two weeks.
• Brexit odds climbed to 28%, up from 19% in May, according to Betfair.
• The pound is down 0.4% against the US$ this morning undoing a jump recorded on Friday due to poor NFPs.
Australia – The RBA Board is meeting tomorrow with expectations for the policy to hold the course despite the latest data showing inflation slowing to the weakest in more than a decade.
• Prices climbed 1.0% in may, the slowest pace since the series began in 2003 and down from 1.5%yoy in Apr.
• The RBA cut the rate to a historic low of 1.75% in May and is targeting the rate of inflation of between 2-3%.
Currencies
US$1.1363/eur vs 1.1144/eur yesterday. Yen 107.16/$ vs 108.97/$. SAr 15.134/$ vs 15.594/$. $1.442/gbp vs 1.443/gbp
0.735/aud vs 0.725/aud. CNY 6.564/$ vs 6.586/$
Commodity News
Precious metals:
Gold US$1,241/oz vs US$1,211/oz yesterday
Gold ETFs 59.7moz v 59.5moz yesterday –
Platinum US$985/oz vs US$959/oz yesterday –
Palladium US$556/oz vs US$539/oz yesterday
Silver US$16.40/oz vs US$16.08/oz yesterday
Base metals:
Copper US$ 4,747/t vs US$4,657/t yesterday –
Aluminium US$ 1,553/t vs US$1,547/t yesterday
Nickel US$ 8,695/t vs US$8,525/t yesterday
Zinc US$ 2,026/t vs US$2,001/t yesterday
Lead US$ 1,743/t vs US$1,732/t yesterday
Tin US$ 16,800/t vs US$16,400/t yesterday
Energy:
Oil US$50.10/bbl unch vs US$50.10/bbl yesterday
Natural Gas US$2.452/mmbtu vs US$2.425/mmbtu yesterday
Uranium US$28.30/lb vs US$28.00/lb yesterday
Bulk
Iron ore 62% Fe spot (cfr Tianjin) US$46.8/t vs US$44.9/t – yesterday – Iron ore prices jump as inventories fall for first time in three weeks
Thermal coal (1st year forward cif ARA) US$53.3/t vs US$52.1/t yesterday –
Other:
Tungsten - APT European prices stood at $208-222/mtu unch vs $213-225/mtu – Tungsten prices fall in a surprise move breaking what we thought was a new and steady uptrend
Lithium - Altura Mining (AJM AU ) SUSPENDED last at A$0.22c, Mkt Cap A$217m (pre placement) reported to be raising $20m
• An Australian investor appears to have leaked news of a A$20m fund raising for Altura Mining to the Australian Financial Review
• Altura is reported to be trying to place 100m new shares at 20c/s representing a 9.1% discount to the last closing price
• Altura has $2.8m cash pre placement at 31 March
• Altura Mining are focussed on the Pilgangoora lithium project, a spodumene hard rock project, in Australia.
• A feasibility study completed in Q1 this year reportedly shows a A$382m NPV on a current ore reserve estimate of 18.4mt grading 1.07% Li2O
• Throughput 1.4mtpa
• Life of Mine cash cost est of A$298/t of spodumene concentrate.
• Capital cost est A$129m with an estimated payback of 2 years.
• First production est Q3 2017 if DFS and funding is delivered in Q3 2016. This is an ambitious time line in our view.
• The company has a binding offtake agreement with Lionergy, a Chinese based group to supply 100,000-150,000tpa of spodumene concentrate.
Company News
FinnAust Mining* (LON:FAM) 5.6p, mkt Cap £29m – Royal IHC to support FinnAust on Pituffik titanium project
• Royal IHC, the Dutch dredging company is to support FinnAust Mining on the development of the Pituffik titanium mineral sands project in Greenland.
• Support from Royal IHC is a major advance for FinnAust as the company is able to mobilise and supply significant resources to help FinnAust in progress towards development.
• Royal IHC is a world leader in dredging in deep and shallow marine environments and will work closely with FinnAust to define and optimise development solutions for the Pituffik project.
• The two companies will work together to produce a ‘proof-of-concept’ bulk sample next year and will work on expanding the operation into a long-life operation.
• Pituffik appears to host a low impurity ilmenite. Offtakers look for low impurity ilmenite concentrates for blending and onward supply to consumers for pigment production with pigment estimated to have risen by 6-12% in Q1 yoy.
• The ability to ship this material with relatively simple and little processing should be a key advantage for the Pituffik project.
Conclusion: FinnAust is de risking the Pituffik project in a methodical process. The support of such a large dredging company ‘Royal IHC’ is a major step toward the eventual development of the project.
* SP Angel acts as nomad and broker to the company
Stratex International (LON:STI) 2.075p, Mkt cap £9.7m – Dalafin, Senegal gold project update
• Stratex report progress at their Dalafin gold exploration project in Senegal.
• An infill soil sampling program at Fare has extended the gold anomaly by another 750m.
• Outcrop sampling gat Baytilaye also shows reasonable gold occourances of
o 1.6 g/t, 1.37 g/t, 1.23 g/t, and 0.92 g/t
Wishbone Gold (LON:WSBN) – 0.66p, Mkt Cap £5m – $3m trading facility
• Wishbone Gold the AIM listed metals trading and exploration company has agreed a two-year loan facility
• The facility from Sanderson Capital partners is to support Wishbone’s gold trading facility
• The facility carries an unusually low interest rate of 2%pa plus 0.5% on each trade of precious metals where the facility is utilised supporting a letter of credit or in direct trading.
• A much larger 10% commitment fee is payable in ordinary shares in Wishbone to Sanderson Capital partners better aligning Sanderson with shareholders