Anglo American (LON:AAL) 1020 pence, Mkt Cap £13.2bn ? De Beers reports latest diamond sales ?slightly ahead of expectation.?
Ariana Resources (LON:AAU) 1.9p, Mkt Cap £15.8m ? Targeting commissioning and initial gold pour in Q4
Caledonia Mining (LON:CMCL) 136 pence, Mkt Cap £70.8m ? Quarterly dividend maintained at the higher rate initiated in July
FinnAust Mining* (LON:FAM) 7p, mkt Cap £34.6m ? Positive metallurgical testing results from Pituffik
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?.
Economic News
US ? Cleveland Fed Head Loretta Mester said the case of a rate hike remains ?compelling? regarding the next monetary policy meeting in Nov.
· She was one of three policy makers who supported an increase at the latest meeting in Sep with the vote split of 7/3 in favour of no change.
· The latest ISM manufacturing PMI topped market forecasts with the largest increase recorded in new orders category pointing to a positive growth outlook.
· Auto sales rebounded in Sep taking Q3/16 average (17.4m) to the strongest level YTD supported by improving labour market and low borrowing costs.
UK ? Construction activity surprisingly picked up in Sep to the strongest level in six months versus expectations for a steeper contraction.
· New orders returned to growth for the first time since Apr/16.
· While increased construction was recorded across all segments, gains were exceptionally strong in residential housebuilding.
· Construction PMI: 52.3 v 49.2 in Aug and 49.0 forecast.
· The report comes on the heels of strong manufacturing numbers (Markit PMI) released yesterday as activity climbed ot eh highest level since mid-2014.
· ?The rebound over the past two months has been encouragingly strong, and puts the sector on course to provide a further positive contribution to GDP in the third quarter,? Markit said.
· ?The weak sterling exchange rate remained the prime growth engine, driving higher new orders from Asia, Europe, the USA and a number of emerging markets.?
· Markit Manufacturing PMI: 55.4 v 53.4 in Aug and 52.1 forecast.
Currencies
US$1.1171/eur vs 1.1231/eur yesterday. Yen 102.35/$ vs 101.42/$. SAr 13.585/$ vs 13.649/$. $1.277/gbp vs $1.288/gbp.
0.767/aud vs 0.767/aud. CNY 6.672/$ vs 6.672/$.
Commodity News
Precious metals:
Gold US$1,310/oz vs US$1,316/oz yesterday
Gold ETFs 65.4moz unch vs 65.3moz yesterday
Platinum US$1,007/oz vs US$1,020/oz yesterday
Palladium US$714/oz vs US$721/oz yesterday
Silver US$18.82/oz vs US$19.15/oz yesterday
Base metals:
Copper US$ 4,811/t vs US$4,876/t yesterday ? Open pit operations at Grasberg have seen around 1,000 miners to go on strike with underground operations reported to remain unaffected.
· Grasberg complex employs 22,000 workers and the Company expects an issue to be resolved in the next 2-3 days with no effect on production.
Aluminium US$ 1,677/t vs US$1,670/t yesterday
Nickel US$ 10,350/t vs US$10,435/t yesterday ? Indonesia is about to release a regulations update regarding exports of metal concentrates as well as sales of untreated ores.
· The government is planning to extend a permission to ship concentrates for another three to five years given miners are in the process of constructing a local smelter and are to be taxed at a progressively higher rate, according an acting energy and mineral resources minister.
· Concentrate shipments will allowed for miners operating under mining business license and contracts of work including Freeport-McMoRan and Newmont Mining.
· Under current rules, export ban on concentrates exports comes into effect from the end of Jan/17.
· New regulations will apply to miners who have contracts to supply ore to smelters, while the government is considering to permit shipment of nickel ore with <1.8% Ni grades.
Zinc US$ 2,401/t vs US$2,377/t yesterday
Lead US$ 2,074/t vs US$2,089/t yesterday
Tin US$ 19,950/t vs US$19,950/t yesterday
Energy:
Oil US$50.6/bbl vs US$50.7/bbl yesterday
Natural Gas US$2.899/mmbtu vs US$2.896/mmbtu yesterday
Uranium US$22.40/lb vs US$22.40/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$53.2/t vs US$52.9/t ? While WA Nationals party is proposing to raise royalties on local iron ore producers from A$0.25/t to A$5.0/t, the government is reported to be talking to Rio and BHP with regards to a potential replacement of the royalty with a lump sum payment, according to Bloomberg.
Chinese steel rebar 25mm US$389.3/t vs US$389.3/t
Thermal coal (1st year forward cif ARA) US$65.0/t vs US$63.2/t yesterday
Premium hard coking coal Aus fob US$213.4/t vs US$213.4/t
Other:
Tungsten - APT European prices vs $183-197/mtu vs $$180-200/mtu two weeks ago
Company News
Anglo American (LON:AAL) 1020 pence, Mkt Cap £13.2bn ? De Beers reports latest diamond sales ?slightly ahead of expectation.?
· Anglo American reports that the eighth diamond sale of 2016 by its De Beers group realised US$485m, bringing the total for the year to date, we estimate, to almost US$5bn.
· On this basis, it appears that De Beers sales in the year to date have already exceeded the US$4.67bn achieved in calendar year 2015.
· The total realised is lower than the US$639m achieved in the previous, seventh, sale but the company comments that the result ?continued to reflect the improved midstream trading environment compared with 2015. Our rough diamond sales were slightly ahead of expectation during the Cycle, given the normal seasonal demand patterns, the shorter than usual and period between Sights 7 and 8 and the forthcoming holidays in some of the major diamond cutting centres.?
Conclusion: De Beers diamond sales are reported to reflect a slightly better trading environment
Ariana Resources (LON:AAU) 1.9p, Mkt Cap £15.8m ? Targeting commissioning and initial gold pour in Q4
· Ariana Resources reports that it expects to complete final commissioning and an initial gold pour at its Kiziltepe mine development in late Q4 2016. The expectation is qualified by ?tailings dam completion and weather permitting.?
· The company reports that it is stockpiling ore from the Arzu pit which should provide feed for the commissioning of the plant and that the joint venture, 50:50 with Proccea Construction, is ?developing a staged pit design that will optimise the cashflow and overall resource recovery from the Arzu South pit.?
· The work on the ?process plant area is now nearing completion and the only significant remaining hurdle before we can commence gold-silver production is the completion of the tailings dam, which is expected during Q4 2016.?
· Ariana Resources has previously announced that it expects to produce around 20,000 oz of gold per year from Kiziltepe over an 8 year period at a cash cost of US$600/oz.
Conclusion: Initial production at Kiziltepe is now expected late this year, with the only major caveat being the timely completion of the tailings dam, no doubt the management, will be hoping for benign weather conditions in the final quarter of the year will allow that work to go ahead unhindered.
Caledonia Mining (LON:CMCL) 136 pence, Mkt Cap £70.8m ? Quarterly dividend maintained at the higher rate initiated in July
· Caledonia Mining has announced a quarterly dividend of US$1.01375 per share, equivalent to an annualised 5.5 US cents per share. The dividend is payable on 28th October to shareholders on the record at 14th October.
· The company increased its quarterly dividend to the rate of 5.5 cents/share in July this year and this is the second quarterly dividend payable at the higher level.
· Commenting on the latest dividend, Chief Executive, Steve Curtis, pointed to the increased benefits of operational flexibility and higher production volumes resulting from the continuing investment programme over the last 20 months and reiterated his confidence that ?our production guidance of 50,000 ounces in 2016 will be achieved.?
· Looking towards the longer term, Mr Curtis pointed out that ?The planned increase in production up to 80,000 ounces by 2021 is expected to result in a lower average cost of production as fixed costs are spread across an increased number of gold ounces.?
Conclusion: Caledonia Mining?s long term development strategy is delivering increased production and the company?s decision to maintain its quarterly dividend at the higher level introduced in July underlines these achievements.
FinnAust Mining* (LON:FAM) 7p, mkt Cap £34.6m ? Positive metallurgical testing results from Pituffik
· FinnAust Mining reports that the of the second phase of metallurgical testing of samples from it Pituffik ilmenite project in Greenland has demonstrated that a ?commercially pure, high grade? ilmenite concentrate can be produced using gravity separation methods.
· Subsequent testing of the gravity concentrate to upgrade the concentrate by magnetic separation has shown that, under laboratory conditions at least, it is possible to produce a concentrate grading 46% titanium dioxide with favourable levels of chromium, silicon and aluminium oxides.
· The studies have shown that ?the ilmenite should be readily soluble in sulphuric acid at high process efficiency making it suitable for all digestion process options.? The company comments that the sulphate process for the production of titanium dioxide from ilmenite is ?anticipated to be the key growth driver for the consumption of ilmenite ores in the coming years? and that ?Further optimisation of the mineral separation flowsheet is expected to achieve material suitable for the chloride slag process? of producing pigment product.
· The testing has also shown that radioactive components and acid insoluble minerals, which could potentially have an impact on the commercial acceptability of the concentrate ?are better than industry benchmarks for sulphate ilmenite?.
· In parallel with the metallurgical testing, the company is working towards a mineral resource estimate for the Pituffik deposits later this year, paving the way for a programme of bulk sampling in 2017.
Conclusion: The testwork confirms the amenability of the Pituffik mineral assemblage to relatively simple gravity and magnetic separation techniques. More detailed work on bulk samples to be extracted during 2017 should assist in the detailed design of a separation flowsheet but the results so far and the resource estimate expected later this year suggest that a straightforward, simple flowsheet may be adequate to produce commercial concentrates.