Asiamet Resources (LON:ARS) 2.4 pence, Mkt Cap £15m – Additional drilling confirms the continuity of shallow mineralisation
Dalradian Resources (LON:DALR) 94 pence, Mkt Cap £205m – Warrants bring in C$24.5m
Goldplat* (LON:GDP) 5.6 pence, Mkt Cap £9.4m – Anumso Gold project in Ghana deal earn-in option completed
Horizonte Minerals (LON:HZM) 2.3 pence, Mkt Cap £16.8m – Completes acquisition of Glencore licences at the Araguaia nickel project
Sierra Rutile (LON:SRX) 29.5p, Mkt Cap £176m – Illuka merger update
Mining shares, which have been volatile recently, appear to be continuing their recovery
• The recovery appears to be led by yesterday’s strong inventory drawdown in the major base metals both on the LME and Shanghai markets
• The market has struggled to find direction given a lack of visibility and certainty from policymakers in the US and China with the BoJ also wavering
• Ongoing economic growth indicates that consumers still have appetite to grow demand for metals but some of this is still policy led
• Equity prices for miners remain relatively depressed but appear willing to lift on better news
China house prices – destocking of unsold property has potential to cause house prices to continue to rise
• Figures suggest it will take just over three years to destock surplus housing inventory if sales maintain existing levels.
• Housing stock should reach a turning point much sooner allowing prices to rise faster.
One in five company corporate executives are psychopaths according to a study at Bond University
• The proportion of corporate executives who exhibit psychopathic traits are similar to the prison population.
• Successful psychopaths may be inclined to unethical or illegal practices.
• The authors reckon the supply chain management study involving 261 people was the most interesting.
• Psychopaths appear to be over-represented in certain occupations according to the report including politics, business and high-risk sport.
• Psycopaths tend to be ‘charming and flamboyant which make it easier to be successful in the short-run but this is often at the expense of long-term failure’.
Dow Jones Industrials -0.18% at 18,035
Nikkei 225 -1.26% at 16,405
HK Hang Seng +0.63% at 23,336
Shanghai Composite 0.00% at 3,003 – Mid Autumn festival holiday in China
FTSE 350 Mining -0.24% at 11,082 FTSE 350 +51% since 1st January
AIM Basic Resources +0.77% at 2,414 AIM Basic Resources +48% since 1st January
European and US index futures are currently range bound following a five day slide on investors’ concerns central banks are less eager to add to monetary stimulus.
• US to release a set of economic data including retail sales, industrial production and producer prices with mixed expectations on numbers.
• The Fed to hold its monetary policy meeting next week with the decision to come in on Wednesday while chances for a rate hike to continue to fall away standing at 20% at the moment.
• Gold is trading a notch lower on the back of a stronger US$ index.
• Oil prices are up 0.5% this morning following a two day drop of nearly 6% on concerns over waning demand and increasing supply on the back of recovering production rates at Libya and Nigeria.
• Copper is trading at the highest level since mid-Aug on the back of yesterday’s reports showing that Chinese credit growth accelerated more than forecast in Aug.
• With Chinese exchanges closed today iron ore futures unchanged today at the lowest level since late Jul (CNY393/t or $59/t for the Jan contract).
US
Date Index Period Actual Est Previous
Thursday Core Retail Sales (ex Auto) Aug %mom 0.2 -0.3
Core PPI (ex Food, Energy) Aug %mom 0.1 -0.3
Core PPI (ex Food, Energy) Aug %yoy 1.0 0.7
Industrial Production Aug %mom -0.2 0.7
Capacity Utilization Aug % 75.7 75.9
Manufacturing Production Aug %mom -0.3 0.5
Friday Core CPI (ex Food, Energy) Aug %mom 0.2 0.1
Core CPI (ex Food, Energy) Aug %yoy 2.2 2.2
UoM Consumer Sentiment Sep 90.6 89.8
UoM Current Conditions Sep 107.6 107.0
Source: Bloomberg
China – Mainland China is off for a two day celebration of a mid-autumn festival with market to only open on Monday.
UK – The BoE to make its monetary policy announcement at midday with estimates for no change in the benchmark rate (0.25%) and targeted inventories of government bonds purchased (£435bn).
• The BoE rolled a set of easing measure during the previous meeting including cutting rates, pledging to buy £10bn worth of corporate debt obligations and increase the stock of UK bonds by £60bn to £435bn, in addition to a £100bn Term Funding Scheme for lenders.
• Given a recovery in growth momentum since Aug, the BoE is expected to stay put leaving itself room to step in if needed.
• On a separate note, core retail sales came off through Aug falling less than forecast and confirming the volatile nature of the data. Although, YoY growth rate climbed 0.1pp to hit 5.9%yoy, the strongest reading since end of Jul/14.
• Core Retail Sales: -0.3%mom/5.9%yoy v 2.1%mom/5.8%yoy in Jul and -0.7%mom/4.8%yoy forecast.
Australia – Aug employment data showed the economy lost 3,900 jobs compared with consensus for a 15,000 increase.
• Despite a negative change in employment, the jobless rate lost 0.1pp coming at 5.7%, helped by a 0.2pp reduction in the participation rate.
• Full-time jobs were seen increasing by 11,500 taking the total change over the last 12 months to only a quarter of the number seen last year, according to Bloomberg.
• This implies a slowing momentum in the jobs market that is likely to slow consumption growth ahead.
• The A$ weakened against the US$ on the news currently trading 0.2% since end of the day yesterday.
Japan – earthquake on Kyushu may be precursor to erruption
• A series of earthquakes on the Japanese island of Kyushu are causing concern.
• The island is a manufacturing hub for cars and chip manufacturer with a population of 13m.
• Sony has suspended production at its plant in Kumamoto near the epicentre of the earthquakes. The plant makes image sensors for cameral and smartphones including the iPhone.
• The island also hosts factories for Toyota, Nissan, Mitsubishi, Honda, Aisin Seiki, Renesas Electronics and Fuji Film.
EU – Junkers asks for permanent structure for new EU military force
• Mr Junkers has called for a ‘permanent structure’ for a new EU military headquarters.
• The EU defence budget was €195bn in 2014
• UK contribution €48bn followed by France at €39bn, Germany €35bn and Italy at €18bn.
• Currently the military of the European Union comprises the various cooperative structures that have been established between the armed forces of the member states.
• A permanent structure may enable quicker decision making and a more co-ordinated approach to military intervention.
• If the EU were to ever truly develop its own force then we have to wonder how ever would they decide on their uniforms, marching styles and rations?
EU plans free wi-fi in public spaces
• While we applaud the idea we have to wonder how good this sort of free service will be and how it will be ?
• The policy will be a vote winner particularly with younger people but as we saw in the recent UK referendum giving out funds and free services does not appear to buy voter support.
• We wonder which lucky company will get the contract to supply Europe-free Wi-fi and if the free wi-fi will be restricted to European Community citizens or to everyone in Europe.
• It could be a job for Hybrid Air Vehicles new Airlander Airship or for some Satellite-based system.
Myanmar – Visit to US by Suu Kyi may persuade US to ease sanctions
• The Obama administration is expected to ease US sanctions against Myanmar on this visit.
• Easing of sanctions would be hugely helpful for Myanmar and should also reflect the progression of democracy in the nation
Currencies
US$1.1236/eur vs 1.1234/eur yesterday. Yen 102.36/$ vs 102.66/$. SAr 14.316/$ vs 14.334/$. $1.323/gbp vs $1.321/gbp.
0.749/aud vs 0.748/aud. CNY 6.675/$ vs 6.673/$.
Commodity News
Precious metals:
Gold US$1,321/oz vs US$1,324/oz yesterday –
Gold ETFs 64.9moz unch vs 64.9moz yesterday
Platinum US$1,034/oz vs US$1,043/oz yesterday
Palladium US$655/oz vs US$660/oz yesterday
Silver US$18.97/oz vs US$19.00/oz yesterday
Base metals:
Copper US$ 4,767/t vs US$4,709/t yesterday – Antofagasta is interested in mining projects in Argentina Ivan Arriagada, CEO of the Chilean miner, said during an interview in Buenos Aires on Wednesday.
• “Argentina is very close to our main centres of operations. There should be geological potential and opportunities in Argentina.”
• The Company is currently more focused on exploration opportunities within the country compared to operating mines in Argentina.
• “Early-stage exploration targets are something that we would be quite keen at looking at.”
Aluminium US$ 1,583/t vs US$1,568/t yesterday –
Nickel US$ 9,825/t vs US$9,905/t yesterday –
Zinc US$ 2,263/t vs US$2,243/t yesterday –
Lead US$ 1,948/t vs US$1,912/t yesterday –
Tin US$ 19,300/t vs US$19,160/t yesterday –
Energy:
Oil US$46.0/bbl vs US$47.2/bbl yesterday
Natural Gas US$2.902/mmbtu vs US$2.900/mmbtu yesterday
Uranium US$25.40/lb vs US$25.40/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$53.6/t vs US$53.7/t –
Steel rebar, China 25mm US$387.3/t vs US$387.4/t –
Thermal coal (1st year forward cif ARA) US$57.4/t vs US$58.0/t yesterday -
Coking coal prices $196.0/t vs $195.7/t FOB Australia for Premium Hard Coking Coal (The Steel Index) – Prices hit $200/t somewhere
• Wongawilli coking coal mine set to resume production of around 1.2mtpa in Australia following jump in coking coal prices. The mine is owned by Jindal Steel.
Other:
Tungsten - APT European prices vs $180-200/mtu unch vs $185-200/mtu two weeks ago
Company News
Asiamet Resources (LON:ARS) 2.4 pence, Mkt Cap £15m – Additional drilling confirms the continuity of shallow mineralisation
• Asiamet reports that the current infill and extension drilling programme at its Beruang Kanan Main (BKM) copper deposit in Central Kalimantan is continuing “to demonstrate excellent continuity of shallow copper mineralisation”.
• Excluding 2 holes currently underway, the company has completed 38 drill-holes totalling 3800 metres of the planned programme with a further 80 hole (7800m) still to be completed.
• The drilling forms part of the work for a feasibility study on the BKM deposit and the results of ten holes are reported today. These comprise 5 holes in the southern part of the deposit, now referred to as the BK058 Zone, and five holes in the northern (BK044 Zone) part of the deposit.
• Among the results reported today, drillhole BKM32260-01, located in the northern area, showed 3 mineralised intersections; 20.4m at an average grade of 1.75% copper from a depth of 1.6m; 22.0m at an average grade of 0.62% copper from a depth of 26m; and 70.3m at an average grade of 0.49% copper from a depth of 54m.
• In the southern zone, the company highlights the results from 3 holes. BKM31655-01 intersected 2 zones of mineralisation, the first of 2m at an average grade of 1.62% copper from a depth of 37m and a lower 31m wide zone averaging 0.73% copper from a depth of 51m.
• Hole BKM31700-08, also in the southern zone, intersected 32m of mineralisation averaging 0.74% copper from 21m while hole BKM31900-01 produced a 5.3m wide intersection at an average grade of 1.27% from a depth of 28m.
• The company also reports that its work on the feasibility study is progressing to plan and that it expects the results from detailed heap leach test work in the near future while geotechnical, environmental and mine design work proceeds in parallel with the resource definition drilling.
Conclusion: Asiamet’s current infill drilling programme at BKM is now approximately 35% complete and continues to demonstrate continuity of shallow, high grade copper mineralisation. Other feasibility study work on the mining and environmental aspects of the project are continuing. We look forward to the results of the feasibility study in due course.
Dalradian Resources (LON:DALR) 94 pence, Mkt Cap £205m – Warrants bring in C$24.5m
• Dalradian Resources, which is working on a full feasibility study to mine the Curraghinalt gold deposit in N Ireland has announced that a number of shareholders have exercised warrants at C$1.04 bringing in approximately C$24.5m.
• We note that, at 30th June 2016, the company’s balance sheet showed a cash balance of C$22.7m
• The company is working towards making a formal planning application later this year to mine at Curraghinalt and the additional funds should provide a useful financial cushion as Dalradian Resources prepares the detailed technical and environmental documents required to support the application.
Conclusion: The additional finance from the warrants is tangible evidence of shareholder support of a project which is delivering significant technical improvements to the resource estimate, mine development plan and process design as it moves through the feasibility study work ahead of submitting an application for permission to mine at Curraghinalt later this year.
Goldplat* (LON:GDP) 5.6 pence, Mkt Cap £9.4m – Anumso Gold project in Ghana deal earn-in option completed
• Goldplat have completed an earn-in agreement with Gulf Shore Resources (now called Ashanti Gold Corp).
• The earn in entitles the new Ashanti Gold Corp to earn into 75% of Goldplat’s 90% interest in the Anumso project.
• Anumso hosts a JORC resource of 166,865oz of gold grading 2.04g/t.
• The agreement has two option periods. The first is to earn 51% through the obligation to spend $1.5m on the project. .
• The second which earns a further 24% (eg up to 75% of Goldplat’s 90% stake) requires another $1.5m of expenditure.
• “Both parties will contribute pro-rata to further development with either non-contributing party being diluted. If either party is diluted to 10%, this interest will be converted into a 1.5% Net Smelter Return ("NSR"), which can be bought out by the other party for US$100,000 per 0.1% NSR, for an aggregate of US$1.5m”.
• The Amansie project has a ten-year renewable mining lease for gold and associated minerals covering an area of 29 sq km and located in the prospective Amansie East and Asante Akim South Districts of the Ashanti Region in Ghana.
• This looks like a good deal for Goldplat as it advances the project but still allows Goldplat an interest in the project.
*SP Angel analysts have visited the Goldplat’s recycling plant at Benoni in Johannesburg
Horizonte Minerals (LON:HZM) 2.3 pence, Mkt Cap £16.8m – Completes acquisition of Glencore licences at the Araguaia nickel project
• Horizonte Minerals reports that it has started work on data collection for the environmental and base line work at the recently acquired Araguaia nickel project.
• The study is being undertaken on the company’s behalf by “Leading Brazilian sustainability consultants, including Brandt Meio Ambiente”, which has “been involved in a number of major mining projects in the Carajas region.”
• “The objective of the new social and environmental baseline data programme at GAP is to integrate the Vale dos Sonhos deposit into the advanced permitting schedule for the enlarged Araguaia project.”
Conclusion: The company is working to integrate the former Glencore ground into its feasibility study for the wider Araguaia nickel project.
Sierra Rutile (LON:SRX) 29.5p, Mkt Cap £176m – Illuka merger update
• Sierra Rutile has clarified that, following the decision of the German Antitrust Authority to review the proposed merger with Iluka, they are in continuing discussions with Iluka over the next 30 days (the Consultation Period) “as to how to proceed in respect of the Phase II proceedings and, in particular, the respective rights and obligations of the parties during the Phase II Proceedings”.
• Both Sierra Rutile and Iluka “have confirmed to the other that they do not presently intend to exercise their respective rights to terminate the MIA in connection with the Phase II Proceedings but reserve their right to do so at any time during the Consultation Period.”
• The two companies have reaffirmed their intention to continue their cooperation with the German authorities and also confirmed that there has been no change to the terms of the Merger Implementation Agreement between them.
• Discussions are also continuing with the Government of Sierra Leone regarding any capital gains tax issues which could be triggered by the transaction.