Anglo Asian Mining* (LON:AAZ) – Second mill in place and annual production guidance reiterated
Mariana Resources (LON:MARL) – Preliminary Economic Assessment underway
Metals Exploration* (LON:MLT) – Runruno commissioning update
Shanta Gold (LON:SHG) – Permits for underground mining
Results released and all votes counted, however, consequences of the UK decision to leave the EU are far from well known.
• The ruling party is in search of a new leader while the nation is heading into lengthy negotiations on terms of the withdrawal agreement (although, given the mutually beneficial nature of trade agreements we expect it would in both parties’ interests to expedite talks).
• UK equities fell less than their European peers on Friday helped by the BoE comments to provide additional liquidity to the market as well as by a sharp decline in the pound against the euro and the US$.
• US equities closed more than 3% down on Friday with futures trading lower suggesting markets are likely to continue their downwards move once opened.
• It is currently unclear what would be the breadth of adverse economic effects of the vote on the UK including a slowdown in business investments and productivity.
• Will a weaker growth lead to Budget revisions and a potential fiscal tightening to meet previous debt level forecasts?
• Will years of negotiations between the UK and the EU and potential effects on GDP growth lead businesses to slow down on hiring?
• While initial reaction to results was a fall in UK government yields and markets currently assigning a more than 50% chance for a rate cut by the BoE before year end, a medium term effect of a weaker currency on an acceleration in inflation rates leading to a monetary tightening and a squeeze on after-interest disposable income remains to be seen.
• These are early days to address those questions with certainty, but one thing that most economists seem to agree on is that there will be costs to the leave vote.
• EU comments demanding an immediate 'notification of exit' indicate that certain politicians prefer the UK out of Europe.
• This indicates to us that certain nation states may be manipulating the environment toward excluding the UK from the European Common Market as quickly as possible as they see the UK is a major competitor.
• Perhaps this is why the EU offered so very little in the way of negotiation or reconciliation?
Dow Jones Industrials -3.39% at 17,401
Nikkei 225 +2.39% at 15,309
HK Hang Seng -0.16% at 20,227
Shanghai Composite +1.45% at 2,896
FTSE 350 Mining +0.61% at 9,627
AIM Basic Resources +1.75% at 1,916
Economic News
US – Weak May durable goods orders point to a soft contribution from the manufacturing sector in Q2/16.
Date Index Period Actual Expected (Bloomberg) Previous
Friday Durable Goods Orders/Core May -2.2%mom/-0.3%mom -0.5%mom/0.1%mom 3.3%mom/0.5%mom
Capital Goods Orders May -0.7%mom 0.4%mom -0.4%mom
Monday Markit Services PMI Jun 51.9 51.3
Markit Composite PMI Jun 50.9
Tuesday GDP (Terminal) Q1 1.0%qoq 0.8%qoq
Personal Consumption (Terminal) Q1 2.0%qoq 1.9%qoq
Core PCE (Terminal) Q1 2.1%qoq 2.1%qoq
SP/CS 20 City Apr 0.6%mom/5.5%yoy 0.9%mom/5.4%yoy
Wednesday Personal Income May 0.3%mom 0.4%mom
Personal Spending May 0.4%mom 1.0%mom
PCE May 0.2%mom/1.0%yoy 0.3%mom/1.1%yoy
Core PCE May 0.2%mom/1.6%yoy 0.2%mom/1.6%yoy
Thursday Weekly Jobless Claims 267k 259k
Friday ISM Manufacturing PMI Jun 51.4 51.3
Wards Total Vehicles Sales Jun 17.3m 17.4m
Source: Bloomberg
China – Industrial profits growth slowed in in the first five months of the year to 6.4%yoy from 6.5%yoy recorded during the Jan-Apr period.
• A slight decline in the growth pace was led by a weaker growth rate in manufacturing profits which more than offset a slowdown in the mining sector declines.
UK – Chancellor of the Exchequer George Osborne provided assurances this morning that the government is looking at previously shortlisted contingency plans to minimize economic stress of the Leave vote.
• Previously, Osborne argued Brexit will cost £4,300 per household by 2030 with a potential for emergency tax increases and spending cuts required to close a £30bn budget gap that would open.
Currencies
US$1.1037/eur vs 1.1117/eur last week. Yen 102.04/$ vs 102.82/$. SAr 15.178/$ vs 15.035/$. $1.335/gbp vs $1.390/gbp.
0.738/aud vs 0.756/aud. CNY 6.617/$ vs 6.580/$.
Commodity News
Precious metals:
Gold US$1,326/oz vs US$1,310/oz last week
Gold ETFs 61.8moz v 61.2moz last week
Platinum US$992/oz vs US$977/oz last week
Palladium US$553/oz vs US$550/oz last week
Silver US$17.77/oz vs US$17.76/oz last week
Base metals:
Copper US$ 4,720/t vs US$4,682/t last week
Aluminium US$ 1,617/t vs US$1,605/t last week
Nickel US$ 9,070/t vs US$8,970/t last week
Zinc US$ 2,006/t vs US$1,991/t last week
Lead US$ 1,712/t vs US$1,695/t last week
Tin US$ 17,075/t vs US$16,880/t last week
Energy:
Oil US$48.6/bbl vs US$48.9/bbl last week
Natural Gas US$2.684/mmbtu vs US$2.683/mmbtu last week
Uranium US$27.25/lb vs US$26.40/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$49.6/t vs US$49.6/t
Thermal coal (1st year forward cif ARA) US$55.1/t vs US$55.4/t last week
Other:
Tungsten - APT European prices stood unchanged at $200-220/mtu from last week
last week – tungsten prices slide
Company News
Anglo Asian Mining* (LON:AAZ) 15.5p, Mkt Cap £17.5m – Second mill in place and annual production guidance reiterated
• The Company has reiterated its annual production target of 73-77koz gold and 1.7-2.1kt copper for 2016 today.
• Second SAG mill has arrived at the site, installed and is going through commissioning.
*SP Angel act as Nomad and Broker to Anglo Asian Mining
Mariana Resources (LON:MARL) 3.2p, Mkt Cap £38.1m – Preliminary Economic Assessment underway
• Mariana Resources has announced the appointment of the consulting firm, Runge Pincock Minarco (RPM) to prepare an NI43-101 compliant Preliminary Economic Assessment (PEA) for the Hot Maden Project in Turkey.
• The company expects the report to be completed in late Q3 or early Q4, 2016 and will include an updated mineral resource estimate which is expected to be completed by early July 2016.
• The preparation of the PEA should define a plan to move the deposit trough development and give an initial indication of the value of the project, the likely capital and operating costs and details of the planned mining and processing.
• The company indicates that it is looking at a low footprint and the incorporation of sustainable methods to deliver a project with “first class international technical and environmental standards specific and appropriate for the Hot Maden Project”.
Conclusion: The PEA will give investors an insight into the key variables driving the value of Hot Maden: we look forward to the delivery of the study later this year.
Metals Exploration* (LON:MLT) 6.6p, Mkt Cap £114.7m – Runruno commissioning update
• Milling operations were temporarily suspended after having encountered issues with the feed end bearing on the mill.
• Representatives of the mill manufacturers CITIC are on site working on resolving the issue.
• A separate announcement to be released once assessment works are completed.
• The Company has recently produced first gold from the gravity circuit and moved into commissioning of the CIL and BIOX circuits.
• The leaching and BIOX operations are expected to take three months to ramp up to full 1.75mt capacity and 90-92% gold recoveries yielding low cost ounces.
*SP Angel act as Broker to Metals Exploration
Shanta Gold (LON:SHG) 7.1p, Mkt Cap £41.5m – Permits for underground mining
• Shanta Gold reports that it has received the required approvals for its underground development at the New Luika mine in Tanzania and that consequently it has started decline development to access the deposit.
• The underground project is “fully resourced in terms of employees and equipment”.
• The move into underground mining “provides on-going long term access to high grade resources in the Bauhinia Creek and Luika deposits for at least the next five years.”
• Shanta Gold reports that current production and operating and capital costs remain on target.
• The company also acknowledges “the constructive and timely assistance of the Tanzanian authorities in the processing of the Company's permits”.
Conclusion: Shanta Gold’s New Luika operation is moving to underground mining of higher grades and should be able to plan ahead for at least five years. We believe that exploration of near surface open pit deposits in the vicinity of the plant, such as the Elizabeth Hill deposit, continues and should provide opportunities to supplement ore feed from underground mining in the years ahead