Dalradian Resources (LON:DALR) – Sprott reports sale of 4.4m shares in Dalradian Resources
Metals Exploration* (LON:MTL) – Talks on $5m of additional funding due to delays
Plymouth Minerals (LON:PLH) – Lithium resource verified in historical work at San Jose in Spain
Dow Jones Industrials +0.73% at 18,506 Another record close
Nikkei 225 +0.68% at 16,498
HK Hang Seng +0.46% at 21,659
Shanghai Composite +0.01% at 3,054
FTSE 350 Mining -1.66% at 11,649
AIM Basic Resources -0.52% at 2,106
Economic News
European stocks are rangebound this morning after having recovered early morning losses on the news of a terrorist attack in Nice.
• Copper is nearing the $5,000/t mark helped by better than expected Chinese GDP numbers and a slight decline in the US$ index.
• Gold is flat this morning after posting a c.1% decline as the BoE decided to hold rates unchanged and as US equities closed at a new record high on better than expected corporate earnings.
• Oil prices are falling amid forecasts prices may go as low as $40/bbl as demand slows and halted production restarts. Brent is off c.1% trading at $46.8/bbl at the time of writing.
• Sovereign bond are trading lower this morning: (UK10y +3bp at 0.83%, GER10y +4bp at -0.03%, US10y +0.1bp at 1.54%).
US – The Philadelphia Fed President Patrick Harker said as many as two interest rate hikes remain on the cards before the end of the year.
• Markets are currently pricing in a 6% probability rates will go up as early as Jul and assign a 35% chance to a hike before Dec.
• In a promising sign for a potential recovery in the inflation pace, producer prices growth accelerated through Jun.
Date Index Period Actual Expected (Bloomberg) Previous
Tuesday JOLTS Openings May 5,500k 5,650k 5,845k (revised from 5,788k)
Wednesday Fed Beige Book
Monthly Budget Jun $6.3bn $19.0bn $50.5bn
Thursday PPI Jun 0.5%mom/0.3%yoy 0.3%mom/0.0%yoy 0.4%mom/-0.1%yoy
Core PPI Jun 0.4%mom/1.3%yoy 0.1%mom/1.0%yoy 0.3%mom/1.2%yoy
Weekly Jobless Claims 254k 265k 254k
Friday Retail Sales/Core Jun 0.1%mom/0.4%mom 0.5%mom/0.4%mom
CPI Jun 0.3%mom/1.1%yoy 0.2%mom/1.0%yoy
Core CPI Jun 0.2%mom/2.2%yoy 0.2%mom/2.2%yoy
New York Manufacturing Jul 5.0 6.0
Industrial Production Jun 0.3%mom -0.4%mom
Capacity Utilization Jun 75.1% 74.9%
UoM Consumer Sentiment Jul 93.0 93.5
Source: Bloomberg
China – Economic growth remained unchanged through Q2 coming in 0.1pp higher than forecast helped by stimulus with latest Jun data pointing to an increased lending.
• A weaker currency provided support for exporters with the yuan trading posting a 7% drop against the US$ over the last year.
• Government spending was up 20.3%yoy in Jun.
• Q2 GDP: 6.7%yoy v 6.7%yoy in Q1/16 and 6.6%yoy forecast.
• Separate reports for industrial production and retail sales pointed to an acceleration in growth in both metrics beating market estimates.
• On a less positive note, capital investments growth (ex rural) has come down driven by slower private investments in fixed assets.
• Industrial Production (YTD): 6.0%yoy v 5.9%yoy in May and 5.9%yoy forecast.
• Retail Sales (YTD): 10.3%yoy v 10.2%yoy in May and 10.2%yoy forecast.
• Investments (YTD): 9.0%yoy v 9.6%yoy in May and 9.4%yoy forecast.
• Money supply measures have all beaten forecasts accelerating in Jun as government seems to have eased access to credit to help economic growth.
• The broad M2 supply measure was up 11.8%yoy in line with May and 0.4pp higher than forecast. Government annual growth target is 13%.
• New CNY loans jumped 40%mom to CNY1,380bn v CNY986bn in May and CNY1,000bn forecast.
UK – The nine-member BoE monetary policy committee voted 8-1 to keep rates unchanged at 0.5%.
• The pound jumped on the news as markets assigned more than an 80% chance of a rate cut.
• Although, the BoE stood ready to ease later in Aug.
• “Most members of the committee expect monetary policy to be loosened in Aug,” minutes read.
• “The committee discussed various easing options and combinations thereof. The exact extend of any additional stimulus measures will be based on the committee’s updated forecast, and their composition wil take account of any interactions with the financial system.”
Philippines – The Mabilo gold copper project in Camarines Norte, Luzon, has got an environmental clearance certificate and renewed its exploration permit.
• The news comes amid a heightened concern over the effect of the recently launched state audit of existing mining licenses in the country on the metals’ supply.
Currencies
US$1.1138/eur vs 1.1108/eur yesterday. Yen 105.96/$ vs 105.61/$. SAr 14.317/$ vs 14.354/$. $1.344/gbp vs $1.323/gbp.
0.765/aud vs 0.764/aud. CNY 6.682/$ vs 6.687/$ -
Commodity News
Precious metals:
Gold US$1,332/oz vs US$1,327/oz yesterday –
Gold ETFs 64.3moz v 64.4moz yesterday –
Platinum US$1,095/oz vs US$1,083/oz yesterday –
Palladium US$645/oz vs US$638/oz yesterday
Silver US$20.18/oz vs US$20.19/oz yesterday
Base metals:
Copper US$ 4,965/t vs US$4,955/t yesterday –
Aluminium US$ 1,684/t vs US$1,679/t yesterday – Chinese aluminium production fell 2.4%yoy to 2.7mt in Jun taking the total for the first six months to 15.3mt (-1.9%yoy).
Nickel US$ 10,370/t vs US$10,470/t yesterday –
Zinc US$ 2,211/t vs US$2,2201/t yesterday –
Lead US$ 1,912/t vs US$1,886/t yesterday
Tin US$ 18,045/t vs US$17,945/t yesterday
Energy:
Oil US$46.9/bbl vs US$46.5/bbl yesterday -
Natural Gas US$2.710/mmbtu vs US$2.747/mmbtu yesterday
Uranium US$26.00/lb vs US$26.20/lb yesterday – Congress slam EPA for war on American Uranium
• The Daily Caller report “The House of Representatives just dealt a huge blow to the Environmental Protection Agency (EPA) uranium mining regulations, which may force the US to depend entirely on imported nuclear fuel.
• The House barred the EPA from erecting new regulatory hurdles Wednesday that could make it much harder for American uranium to compete with the world.
• “In January 2015 the EPA introduced a rule that would greatly extend the amount of time it takes to permit a uranium mine,” Harry Anthony, President of the Uranium Producers of America, told The Daily Caller News Foundation.
• “The new rule would add two years to the permit process in the name of protecting water, even though the agency admits there has never been a case of contamination in 30 years. It already takes five or six years to permit a uranium permit right now. This is the most regulated industry in the world, but its never harmed anything!” Anthony said.
Read more: https://dailycaller.com/2016/07/14/congress-slams-epa-for-war-on-american-uranium/#ixzz4ET1e1TL0
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$54.4/t vs US$55.5/t – Iron ore inventories in Chinese ports climbed for fifth week marking the longest run of gains since Dec/15.
• Stockpiles currently stand at 105.4mt or roughly 10% of the nation’s annual seaborne iron ore demand.
Steel – Brexit might enable the UK government to bail out the British steel industry. Bail outs are currently not allowed under EU regulations.
Thermal coal (1st year forward cif ARA) US$59.3.0/t vs US$60.0/t yesterday
Other:
Tungsten - APT European prices dropped to $185-200/mtu vs $185-210/mtu from the previous week
Company News
Dalradian Resources (LON:DALR) 61.3 pence, Mkt Cap £132.9m – Sprott reports sale of 4.4m shares in Dalradian Resources
• Sprott the Canadian asset manager have sold 4.4m shares in Dalridian Resources
• We hope this is just a bit of profit taking and not something more ominous as the company moves towards larger scale production
• Dalradian recently announced encouraging metallurgical results showing overall gold recovery of 94.3% is achievable with a simplified processing circuit.
• They also released a impressive updated NI 43-101 resource from SRK on the Curraghinalt project showing around 2.1moz of gold at an average grade of around 11.6 g/t as a measured an indicated resource and 2.3moz grading 10.1g/t inc in the inferred category.
• We note that director Thomas Obradovich also sold 150,000 shares as reported on 1 July.
• Dalradian announced the start of its Test Stoping Program in April, starting on the v-75 vein at just 90m below surface with the program to start with two test stopes .
• The idea is to accurately replicate the planned mining techniques for a full-scale mine and may add up to two more stopes.
• The stoping program should be completed in the second half but it would be helpful if the company were to provide some update on this to the market on progress within the test mine.
Conclusion: The stock sales may be perfectly innocent but we have learnt to start asking questions when directors and investors report selling. It is rare to discover such a high-grade gold resource in scale and we sincerely hope the company will be able to show its amenability for mining to the market.
Metals Exploration* (LON:MTL) 9.4p, Mkt Cap £162m – Talks on $5m of additional funding due to delays
• Metals Exploration report they are in talks for $5m of additional working capital to cover the company while it completes debt restructuring.
• Debt restructuring is required due to the failure to pay $15m of capital due on 30 June.
• The payment of bi-annual interest now requires the company to seek $5m of additional working capital to continue to meet its commitments while debt restructuring talks continue.
• The company plan to restructure $75m of debt and an $8m cost overrun facility
• Ore milling has restarted at the Runruno project in the Philippines following temporary suspension due to problems with mill bearings and permits required to restart the operations.
• Metals Exploration made the interest payments scheduled for 30 June 2016 but has not made the capital repayment.
Conclusion: The good bit is that the mine and plant are now largely complete. Management now need to complete the debt restructuring to secure the company’s finances.
*SP Angel act as Broker to Metals Exploration
Plymouth Minerals (LON:PLH) A$0.2, mkt cap A$26m – Lithium resource verified in historical work at San Jose in Spain
• Plymouth Minerals reports that it has verified a ‘historic estimate of mineralisation’ for the San Jose lithium project in Spain.
• Work was done on the resource from 1985-1991 pre-dating JORC resource guidelines.
• Historic pre-feasibility work shows >90% Li recoveries by calcining and atmospheric pressure only sulphuric acid leaching to create a saleable lithium carbonate end product. Tin was also recovered to +80% in this process flow sheet..
• The mineralisation is mainly found in the micas of muscovite-fengite type in the host rock, and in lesser proportion in the amblygonite-montebrasite of the veins.
• There has been some discussion in the industry over the recovery of lithium from historic tin mines where lithium is contained in micas and is often contained in waste dumps.
• Australian company Lithium Australia run by the rather controversial Adrian Griffin reckons lithium can be extracted from micas and can reduce production costs to under $2,000/t. The company make the case for processing lithium micas in the following presentation https://lithium-au.com/wp-content/uploads/2013/09/434yps28f9ks3n.pdf
• If the process works then it should effectively open up a number of new sources for lithium production.
• “The San Jose Deposit was formed by an amalgamation of quartz and quartz-pegmatite veins, which formed a stockwork hosted by a metasediments. The mineralisation is disseminated in both the host as lithium micas and the veins hosting tin as cassiterite, lithium as amblygonite-montebrasite and minor tungsten as wolframite.”
o Plymouth also holds the Morille tungsten project in Spain and the Banio and Mamana potash projects in Gabon.
o See: https://www.plymouthminerals.com/
Conclusion: Plymouth Minerals is expanding on a number of fronts creating new opportunities for potential success. The San Jose project provides further opportunity for the company to succeed in Spain at a time when tungsten prices are less than compelling.