Antofagasta (LON:ANTO) – 2016 copper production expected to meet lower end of guidance at lower cash cost
Atlantis Resources (LON:ARL) – Foundations for tidal turbines installed using jack up vessel
Mariana Resources (LON:MARL) – Additional high grade drill intersections from Hot Maden.
Sierra Rutile (LON:SRX) – Iluka merger update
Sula Iron & Gold (LON:SULA) – Ferensola gold project offering greater potential
Wolf Minerals (LON:WLFE) – Grant of ASX Listing Rule Waivers for £20m Bridge Facility with Resource Capital Funds
Miners pull back with weaker oil prices weighing on energy names seeing FTSE 100 Index down this morning.
Apple results disappoint posting a first annual sales decline since 2001 amid what have been a relatively positive earnings season with 3/4s of the S&P 500 Index constituents beating market estimates.
Uncertainty over results of US elections seem to be subsiding with the Democratic candidate hitting the highest approval rating of 86.5%, according to FiveThirtyEight.
Brent is off this morning extending losses to a third day now trading at the lowest in three weeks as Russia said it is not planning to join OPEC in cutting its oil production.
Gold prices climbed for a second trading session led by physical purchases ahead of the Diwali festival with holdings in gold ETFs climbing slightly to 0.1moz.
Iron ore futures grow stronger in China posting another daily increase with CNY prices hitting the highest level for the year (+2.3% today) amid no change in steel prices.
Economic News
US – Consumer confidence index fell to the lowest in three months with declines reported in both current situation and consumer expectations.
Despite the pull back from a strong run recorded over the last five months “consumers’ expectations regarding their income prospects in the coming months were relatively unchanged”, the Conference Board said.
“Overall, the sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.”
Germany – Consumer confidence measure by the GfK Index surprisingly fell in Nov on the back of a weak external trade sentiment, according to the report.
The decline “is not caused primarily by the hard facts of domestic trends, such as those relating to employment and income levels”, GfK said.
“It is more a consequence of an external trade environment that has become increasingly difficult.”
GfK Consumer Confidence: 9.7 v 10.0 in Oct and 10.0 forecast.
UK – The pound slid nearly 1.3% at some point yesterday hitting a low of 1.2083 before recovering most of its losses as Mark Carney suggested that there is are limits to stimulus and the MPC willingness to “look through” the effect of annual inflation overshooting a 2% target.
The Governor said inflation could pick up to 1.5-1.8% by the spring of 2017 from 1.0% recorded in the 12 months to Sep/16 led by rising imported goods bill.
The MPC is due to announce its course of the monetary policy on Nov 3.
Australia – The currency climbed against the US$ on the back of stronger than forecast increase in inflation in Q3/16.
CPI (%yoy): 1.3 v 1.0 in Q2/16 and 1.1% forecast.
The currency is trading 0.7% higher on the day.
Indonesia – The government is set to discuss the metal export policy with miners and smelters next week, according to the Energy and Mineral Resources Ministry.
Currencies
US$1.08929/eur vs 1.0889/eur yesterday. Yen 104.07/$ vs 104.40/$. SAr 13.768/$ vs 13.829/$. $1.221/gbp vs $1.224/gbp.
0.769/aud vs 0.764/aud. CNY 6.768/$ vs 6.776/$.
Commodity News
Precious metals:
Gold US$1,274/oz vs US$1,269/oz last week –
Gold ETFs 65.8moz vs 65.7moz last week
Platinum US$967/oz vs US$954/oz last week
Palladium US$638/oz vs US$639/oz last week
Silver US$17.77/oz vs US$17.77/oz last week
Base metals:
Copper US$ 4,728/t vs US$4,734/t last week –
Aluminium US$ 1,670/t vs US$1,669/t last week – Prices climbed to the highest level in nearly two years in China on speculation that logistics bottlenecks will reduce the availability of the metal.
Futures trading on the Shanghai Futures Exchange climbed 5.2% to CNY 13,995/t ($2,068/t), the highest level since Nov/14, coupled with a surge in trading volumes.
Nickel US$ 10,170/t vs US$10,300/t last week
Zinc US$ 2,357/t vs US$2,364/t last week
Lead US$ 2,054/t vs US$2,064/t last week
Tin US$ 20,225/t vs US$20,175/t last week
Energy:
Oil US$50.1/bbl vs US$51.8/bbl last week
Natural Gas US$2.754/mmbtu vs US$2.866/mmbtu last week
Uranium US$20.00/lb vs US$20.00/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$60.2/t vs US$57.7/t
Chinese steel rebar 25mm US$405.9/t vs US$405.4/t
Thermal coal (1st year forward cif ARA) US$70.8/t vs US$70.0/t last week
Premium hard coking coal Aus fob US$245.5/t vs US$245.5/t
Other:
Tungsten - APT European prices $190-198/mtu vs $191-197/mtu unch last week
Mineral sands – Huntsman increased prices for its titanium dioxide pigments effect Jan/17 with charges of $160/t in the EMEA, APAC and Latin America regions and $0.07/lb in North America.
Company News
Antofagasta (LON:ANTO) 504p, Mkt Cap £4.96bn – 2016 copper production expected to meet lower end of guidance at lower cash cost
Antofagasta has reported an 8.7% increase in Q3 copper production to 180,600 tonnes compared to the 166,200 tonnes produced in Q2 2016.
With year to date production of 503,900 tonnes, the company now expects “full year 2016 copper production … to be close to the lower end of the original guidance range of 710,000 to 740,000 tonnes.”
This guidance implies that final quarter output is likely to be in excess of 200,000 tonnes of copper which, we infer, reflects the ramp up of production at Antucoya where the mine reached production capacity during August.
The company has indicated that it now expects to produce between 685-720,000 tonnes of copper in 2017. The guidance for next year reflects increased output following the completion of the Centinela concentrates expansion and the new Antucoya mine offset by a decline in expected grades at Centinela and lower throughput at Los Pelambres as it processes a higher proportion of hard ore.
The company has been focussing on costs and reports a 5.6% reduction to US$1.18/lb for the quarter and year to date costs of US$1.23/lb “We now expect cash costs for the full year to be US$1.25/lb,5c/lb lower than previously guided.”
The company notes that “Following the announcement of a forecast 10-20% total cost overrun for the Alto Maipo hydroelectric project, combined with the expected significant decrease in long term energy prices in Chile resulting from the growing contribution of solar and wind power generation, Los Pelambres is reviewing its options with respect to the project and the potential impact on the carrying value of this investment”.
Conclusion: The company is achieving important cost reduction but may also be signaling a review of the carrying value of the Alto Maipo hydropower development at its Los Pelambres operation.
Atlantis Resources (LON:ARL) 74p, mkt cap £86.5m – Foundations for tidal turbines installed using jack up vessel
Atlantis Resources report they have installed the four foundations required for their tidal power project in the Pentland Firth, Scotland.
The foundations were installed using a Geosea jack-up rig in a high-flow location
The project remains on track to have all turbines installed and connected to the grid in time for first power delivery in the world’s largest tidal power project by the year end.
We look forward to further news on the success of this renewable power scheme.
We note that very sadly Tidal Energy Ltd appointed administrators earlier this month highlighting the risk of private companies pioneering tidal energy projects. Tidal Energy successfully installed Wale’s first full-scale tidal stream generating device in Ramsey Sound, Pembrokeshire.
The market also waved goodbye to Aquamarine Power another private company which folded last year due to lack of private sector support in December 2014. Aquamarine was listed among the top five emergent wave energy companies after it was granted consent for a 40MW wave energy farm off the Western Isles, Scotland, in 2013.
Mariana Resources (LON:MARL) 68.5p, Mkt Cap £83.3m – Additional high grade drill intersections from Hot Maden.
Mariana Resources has reported results from a further 13 infill and extension drill holes at the Hot Maden copper / gold project in north-eastern Turkey.
Among the results from the infill drilling, which is designed to tighten the drill hole spacing for resource estimation purposes and to provide geotechnical data for mine development studies, hole HTD-71 intersected 69.6m of mineralisation grading 62.7 g/t gold and 2.68% copper from a depth of 210m downhole and hole HTD-72 intersected 34.5m at an average grade of 19.4g/t gold and 1.31% copper from a depth of 180.5m.
Extension drilling has raised “the potential for the discovery of a deep (>250m), possibly fault offset block of Main Zone type mineralisation beneath the “Ridge” area” which lies at the southern limit of the Main Zone. Holes HTD-69 encountered a 7m wide intersection at an average grade of 19.7 g/t gold and 2.1% copper from a depth of 351m and hole HTD-76 found two mineralised intersection at a depth of 357m where it encountered 33m at ana average grade of 1.4 g/t gold and 0.99% copper and a deeper, 11m wide section grading 6.1 g/t gold and 0.97% copper from a depth of 443m.
The company has also completed additional drill holes in the “southern veinfield” area, which lies further to the south of the Main area and close to an area of historic mining by the Russians in the period before 1923, where hole HTD-73 hit 2m of mineralisation between 110m to 112m at an average grade of 29.2g/t gold and 0.4% copper and hole HTD-66 reported a 7.5m wide intersection averaging 4.6g/t gold between 115m and 122.5m depth.
Photographs of drill core attached to today’s announcement show massive sulphide mineralisation in a number of holes where assays are still pending as well as photographs of some of the assayed sections of holes HTD-72 and HTD-70.
Conclusion: Mariana Resources has already defined a resource of 2.85 moz of gold of which 2.79 moz are classed as indicated at Hot Maden. The current drilling, particularly in the new “Ridge” and “Southern Vein Field” areas looks likely to add additional resources when they are incorporated into the resource estimation modelling.
Sierra Rutile (LON:SRX) 31.5p, Mkt Cap £188m – Iluka merger update
Sierra Rutile has reconfirmed that while the German Antitrust Authority investigation into the proposed merger between Sierra Rutile and Iluka Resources is continuing, the two companies have each “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”.
The companies have extended the timetable until 4th November but do, however reserve their termination rights before then.
There is “no change to the Merger Consideration of 36 pence in cash for each SRL Share”.
Sierra Rutile also confirms that discussions are also continuing with the Government of Sierra Leone regarding any capital gains tax issues which could be triggered by the transaction.
Conclusion: Sierra Rutile and Iluka Resources are continuing their plans to merge which are being held in abeyance pending the completion of an investigation by the German Antitrust Authority.
Sula Iron & Gold (LON:SULA) 0.16 pence, Mkt Cap £2m – Ferensola gold project offering greater potential
Sula which is now being run by Roger Murphy and backed by Madani Minerals with Iain Macpherson and Ilja Graulich reports on its Flagship Ferensola gold project in Sierra Leone.
Additional geophysical work is reported to show greater potential for the Ferensola project than was previously defined in the company’s current exploration target.
This could potentially lead to a material increase in the Company's current JORC Exploration Target’ of 5-7mt grading at 4-8g/t Au for 0.8moz to 1.5moz Au.
Conclusion: We expect better news to come from the Ferensola project and for the injection of new management and funds to show greater value in the project
Wolf Minerals (LON:WLFE) 4.8p, Mkt Cap £51.5m – Grant of ASX Listing Rule Waivers for £20m Bridge Facility with Resource Capital Funds
Wolf Minerals has been granted a waiver of certain ASX listing rules to allow the company to draw down on RCF’s £20m bridge facility.
The company has been struggling with low recovery rates through its commissioning process largely caused by near surface oxidised ore and underperformance of the processing plant.
We believe the solution is to start mining the better quality ore sooner rather than later and to make certain improvements to the process plant.
Further details and conditions relating to the £20m facility are contained in the company’s press release.
The Company advises that the loan will be repaid or converted within the four year period and that the Security will be discharged at that time. .
Conclusion: Independent expert advice suggests that Wolf Minerals should be able to raise recovery rates by adjustment of the mine plan and certain amendments to the process plant. The problems being suffered are all the more acute with tungsten prices at persistent low levels of just $190-198/mtu caused by the release of stocks in China some of which were bought to support certain investment schemes which we believe have collapsed. We expect these stocks to be absorbed into the market and for prices to rise again relatively soon.
It is our view that if management take the right course of action that investors should do alright in the end.