Horizonte Minerals (LON:HZM) 2.2 pence, Mkt Cap £16.1m – PFS for Araguaia nickel project
Kodal Minerals* (LON:KOD) 0.1p, mkt cap $4.0m – Funding for lithium exploration in Mali
Shanta Gold (LON:SHG) 11.8p, Mkt Cap £68.5m – High grade drill intersections at Singida
Vast Resources (LON:VAST) 0.3 pence, mkt Cap £9.3m –Commercial zinc production at Manaila
FTSE 100 is up 0.9% this morning led by gains in energy and mining stocks on the back of good Chinese PMI numbers released over the weekend.
• Friday reports suggesting Deutsche Bank might agree a reduction in $14bn settlement with the DOJ to proposed $5.4bn have not been confirmed.
• Trading in Deutsche shares will resume trading in US markets later today with German markets closed for a public holiday.
• The pound is off 0.9% against the US$ this morning as Theresa May suggested the UK should file Article 50 “no later than the end of Mar”.
Dalradian – Angry Irish locals blockade mine tour
https://www.midulstermail.co.uk/news/business/watch-opposition-to-sperrins-gold-mine-intensifies-as-locals-blockade-dalradian-tour-1-7602469
Dow Jones Industrials +0.91% at 18,308
Nikkei 225 +0.90% at 16,599
HK Hang Seng +1.23% at 23,584
Shanghai Composite - 3,005 China National Day, week long holiday this week
FTSE 350 Mining +1.28% at 12,876 FTSE 350 +75% since 1st January
AIM Basic Resources +0.01% at 2,508 AIM Basic Resources +54% since 1st January
Economic News
US
Date Index Period Actual Est Previous
Friday Personal Income Aug %mom 0.2 0.2 0.4
Personal Spending Aug %mom 0.0 0.1 0.3
PCE Aug %mom 0.1 0.2 0.00
PCE Aug %yoy 1.0 0.9 0.8
Core PCE Aug %mom 0.2 0.2 0.1
Core PCE Aug %yoy 1.7 1.7 1.6
Monday Markit Manufacturing PMI (Final) Sep 51.4 51.4
ISM Manufacturing PMI Sep 50.3 49.4
Wards Auto Sales Sep mln 17.5 16.9
Wednesday ADP Jobs Sep '000 163 177
Markit Services PMI (Final) Sep 52.0 51.9
Markit Composite PMI (Final) Sep 52.0
Factory Orders Aug mom% -0.2 1.9
Thursday Weekly Jobless Claims '000 255 254
Friday NFP Sep '000 170 151
Unemployment Rate Sep % 4.9 4.9
Av Hourly Earnings Sep %mom 0.3 0.1
Av Hourly Earnings Sep %yoy 2.6 2.4
Source: Bloomberg
China – Manufacturing and services PMI data released over the weekend point to the industrial sector holding onto a rebound in growth rates in Q3/16 with non-manufacturing segment showing good growth momentum.
• Manufacturing PMI (Official): 50.4 v 50.4 in Aug and 50.5 forecast.
• Services PMI (Official): 53.7 v 53.5 in Aug.
Germany/France – Both economies reported final manufacturing PMI data showing no changes from previous estimates in German numbers (54.3 in Sep v 53.6 in Aug) and a slight improvement in French figures (49.7 v 48.3 in Aug and 49.5 estimated before).
Italy – The third largest economy in the single currency block posted a rebound in the manufacturing sector activity in Sep, following the first contraction in over a year recorded in the previous month.
• New orders returned to growth led by a stronger increase in new business from abroad.
• “September was a better month for Italian manufacturers, with an export-led increase in new orders driving slightly stronger production growth and job creation,” Markit said.
• “However, the performance across the third quarter as a whole was disappointing, as the PMI recorded its three lowest readings seen since the start of 2015.”
• Manufacturing PMI: 51.0 v 49.8 in Aug and 50.3 forecast.
Spain – One of the fastest growing economies in the Eurozone released strong manufacturing PMI numbers for Sep.
• A rebound in the growth rate follows a downward trend in the index since Jan/16.
• Growth accelerated in such categories as output, new orders and employment.
• “The nascent recovery in new orders in the Spanish manufacturing sector continued in Sep, breathing life back into the sector and hopefully signalling an end to the recent patch,” Markit said.
• Manufacturing PMI: 52.3 v 51.0 in Aug and 51.5 forecast.
Hungary – 98.2% of voters backed the state led anti-immigration campaign in a weekend referendum; although, the turnout fell short of the required threshold (50%) for proposed legislation to become a law.
• It is reported that 43.9% of Hungarians turned up at poll stations.
Columbia – Colombians voted to reject a peace deal with the Farc in a nationwide referendum with the No vote winning by a narrow margin (57,000 votes).
• The split between Yes/No came in at 49.8%/50.2%.
• More than 13m people turned up to vote of a registered electorate of 35m beating expectations for a lower turn out.
• Both government administration and Farc representatives indicated their willingness to continue peace talks following the announcement of results.
• The No campaign led by Alvaro Uribe, the former president, argued the proposed deal was not hard enough on Farc rebels allowing a number of its members to avoid legal trials and potentially jail sentences.
Currencies
US$1.1231/eur vs 1.1183/eur last week. Yen 101.42/$ vs 101.06/$. SAr 13.649/$ vs 13.974/$. $1.288/gbp vs $1.295/gbp.
0.767/aud vs 0.761/aud. CNY 6.672/$ vs 6.669/$.
Commodity News
Precious metals:
Gold US$1,316/oz vs US$1,327/oz last week
Gold ETFs 65.3moz unch vs 65.3moz last week
Platinum US$1,020/oz vs US$1,032/oz last week – Impala platinum refinery strike
Palladium US$721/oz vs US$717/oz last week
Silver US$19.15/oz vs US$19.33/oz last week
Base metals:
Copper US$ 4,876/t vs US$4,827/t last week
Aluminium US$ 1,670/t vs US$1,664/t last week
Nickel US$ 10,435/t vs US$10,465/t last week
Zinc US$ 2,377/t vs US$2,354/t last week
Lead US$ 2,089/t vs US$2,075/t last week
Tin US$ 19,950/t vs US$19,925/t last week
Energy:
Oil US$50.7/bbl vs US$48.6/bbl last week
Natural Gas US$2.896/mmbtu vs US$2.954/mmbtu last week
Uranium US$22.40/lb vs US$23.00/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$52.9/t vs US$55.8/t
Chinese steel rebar 25mm US$389.3/t vs US$389.4/t
Thermal coal (1st year forward cif ARA) US$63.2/t vs US$64.9/t last week
Coking coal prices $213.4/t vs $210.8/t FOB Australia for Premium Hard Coking Coal (The Steel Index)
Other:
Tungsten - APT European prices vs $183-197/mtu vs $$180-200/mtu two weeks ago
Company News
Horizonte Minerals (LON:HZM) 2.2 pence, Mkt Cap £16.1m – PFS for Araguaia nickel project
• The company has released details of the pre-feasibility study for its wholly owned Araguaia nickel project located in the eastern part of Para State, Brazil.
• Based on a throughput of 0.9mtpa of ore feeding a single line Rotary Kiln Electric Furnace, the project is expected to produce around 14,500 tpa of nickel in ferronickel (30% nickel content) over a period of 28 years at a cash cost of US$3.15/lb, described as “on the lower range of the global cost curve”.
• The study envisages that a capital expenditure of $354m and an assumed nickel price of $12,000/t would generate an after tax NPV of US$328m, discounted at 8%, and an IRR of 19.3%. Using a higher assumed nickel price of $14,000/t increases the NPV to $581m and lifts the post-tax IRR to 26.4%.
• The company expects to start work on a full feasibility study for the project in 2017 and “In parallel with this we will be looking at the development funding options available as well as offtake partners.
Conclusion: The completion of the pre-feasibility study is an important milestone for the company as it looks for funding an offtake partners for Araguaia. We caution that the study assumes a long term nickel price higher than the current level of around $10,500/t, however, at least in the short term, moves in the Philippines to curtail some environmental issues associated with mining has provides positive impetus to the nickel price.
Kodal Minerals* (LON:KOD) 0.1p, mkt cap $4.0m – Funding for lithium exploration in Mali
• Kodal Minerals reports that it has raised £750,000 (gross) via the placing (720m) and subscription (30m) of a total of 750m new shares at 0.1 per per share.
• The funds are to be used to progress exploration of the recently acquired 500 square kilometres Bougouni licences in southern Mali where geological reconnaissance work has shown multiple lithium bearing pegmatite veins with grades of up to 2.2% lithium oxide.
• The company plans to use the funds to implement a phased exploration programme consisting of initial geological mapping and sampling with follow up drilling of the most promising targets and some metallurgical test-work.
• “A second phase of drilling is then anticipated which will be used for geological modelling for detailed assessment and the declaration of a preliminary JORC Mineral Resource Estimate.”
• The company has also disclosed that it is issuing a further 21.4m shares priced at 0.1p per share to “certain of its advisors and consultants in accordance with its contractual arrangements”.
Conclusion: The funding will facilitate investigation of the recently acquired lithium projects and help in the preparation of a formal resource estimate which should build on the initial promising reconnaissance results and establish the standing of the Bougouni licences relative to other lithium projects. We look forward to news as exploration progresses.
*SP Angel acts as Financial Advisor and Broker to the company. *Robert Woodridge, a partner at SP Angel is also Chairman of Kodal Minerals.
Shanta Gold (LON:SHG) 11.8p, Mkt Cap £68.5m – High grade drill intersections at Singida
• Shanta Gold reports that it has recently completed a 4,204metres , 39 holes, drilling programme to investigate high-grade mineralisation in the hanging wall of its Gold Tree 1 resource at Singida in north-central Tanzania.
• The results include a 12m wide intersection averaging 9.24 g/t gold from a depth of 130m in borehole SC 679; a 5m intersection grading 6.91g/t from 69m in SC676 and a 3m wide intersection grading 9.94 g/t from 59m in SC657.
• A resource estimate for Singida, prepared in 2009, identified a measured and indicated resource of 550,000 oz of gold at a grade of approximately 3.7 g/t gold with a further 309,000 oz of inferred resources at an average grade of 2.3 g/t in the Gold Tree 1 structure. This initial work also included, “several deeper holes [which] intersected mineralisation high in the hanging wall. A very small proportion of the overall indicated and inferred resource was ascribed to these structures, Gold Tree 2 and Gold Tree 3 … but they remain underexplored.”
• The recent drilling programme goes some way to address this issue by confirming mineralisation in these hanging wall shear zones along some 400 metres of strike and to a vertical depth of around 100 metres. Further drilling is planned.
• In addition to the drilling, the company is planning to start pilot plant testing of the Gold Tree 1 mineralisation in Q2 2017 “while the Company prioritises expanding the resource through further exploration.”
• The company alludes to the potential economic benefits of the high grade hanging wall at Singida in lowering the overall stripping ratio of an open-pit to access the main Gold Tree 1 structure at Singida.
Conclusion: Shanta Gold has had considerable exploration success recently at the operating New Luika mine as well as at Ilunga and now at Singida. The continuing exploration of high grade mineralisation at Singida has the potential to improve the economics of open pit mining and we look forward to further news as results come in.
Vast Resources (LON:VAST) 0.3 pence, mkt Cap £9.3m –Commercial zinc production at Manaila
• As previously indicated by the company, Vast Resources’ Manaila poymetallic mine in Romania has now started commercial zinc production.
• The company reports that it has produced 50 tonnes of zinc concentrate since it started commissioning the plant during the first week of September. Production for October and thereafter is expected to be 150tpm.
• The concentrate, which is reported to also contain around 2.5g/t gold and 250 g/t silver, is expected to be produced at a grade of 35% in the long term, though 27% has been achieved during the first month.
• We estimate that the zinc stream from Manaila should produce around 630tpa of contained zinc metal.
Conclusion: The addition of a zinc revenue stream from the Manaila mine is an additional source of income from what remains predominantly a copper operation.