Anglo American (LON:AAL) – Latest De Beers diamond sales in line with expectations.
Bushveld Minerals (LON:BMN) – South African competition commission approves acquisition
European Metals (LON:EMH) – Production of lithium carbonate under test conditions
Tertiary Minerals* (LON:TYM) – Annual Results for year to 30th September
Dow Jones Industrials +0.20% at 19,796
Nikkei 225 +0.50% at 19,251
HK Hang Seng +0.06% at 22,447
Shanghai Composite +0.07% at 3,155
FTSE 350 Mining -1.32% at 15,136 FTSE 350 +106% since 1st January
AIM Basic Resources +0.47% at 2,386 AIM Basic Resources +46% since 1st January
Economic News
China – Property market growth slowed marginally in the first 11 months of the year; although, absolute growth levels remain impressive.
New housing sales were up 24.3% YTD in Nov, down 2.5pp from the previous month.
Investments in real estate development climbed 6.5% YTD in Nov, down 0.1pp from Oct.
A separate set of Nov economic data showed better than expected retail sales numbers while fixed asset investments and industrial production growth rates came broadly in line with estimates posting little change from Oct.
Retail Sales (%yoy YTD): 6.0 v 6.0 in Oct and 6.0 forecast.
Industrial Production (%yoy YTD): 10.4 v 10.3 in Oct and 10.3 forecast.
FAI (%yoy YTD): 8.3 v 8.3 in Oct and 8.3 forecast.
UK – Inflation accelerated in Nov beating forecasts marginally and pointing to building up pricing pressures..
UK BoE inflation forecasts released in Nov guided for prices growth to climb above 2% in early 2017 and hitting 2.75% in mid-2018 before starting to slow down.
The pound strengthened against the US$ on the news climbing to 1.2720. The USDGBP is currently trading at 1.2698.
CPI (%yoy): 1.2 v 0.9 in Oct and 1.1 forecast.
Core CPI (%yoy): 1.4 v 1.2 in Oct and 1.3 forecast.
Germany – Nov inflation was confirmed at 0.7% (EU Harmonised measure) which is significantly below the Eurozone wide target of 2%, but demonstrates a positive trend with consumer prices growth standing at the highest in nearly two years.
Philippines – Gina Lopez, who led the mining industry audit this year, might not get a reappointment as the Secretary of the Philippines Department of Environment and Natural Resources.
Lopez was not confirmed by the 25-person Commission on Appointments bypassed her in Oct.
According to procedures, the commission will have another chance to vote on her appointment on Dec 17; otherwise, the President can reappoint Lopez himself or find a replacement.
Currencies
US$1.0609/eur vs 1.0594/eur yesterday. Yen 115.43/$ vs 115.86/$. SAr 13.752/$ vs 13.806/$. $1.270/gbp vs $1.259/gbp.
0.748/aud vs 0.746/aud. CNY 6.903/$ vs 6.914/$
Sterling gains on higher than forecast UK Inflation
Commodity News
Precious metals:
Gold US$1,158/oz vs US$1,155/oz yesterday
Gold ETFs 58.9moz vs 59.0moz yesterday
Platinum US$925/oz vs US$916/oz yesterday – Lonmin – President Zuma warns Lonmin could lose mining license if it fails to submit a compliant housing plan (The Times Live, South Africa)
Lonmin are busy converting hostels into 776 family units and 1,908 single apartments as required under the mining charter
The company may be subject to inspection on a bi-monthly basis to ensure compliance according to President Zuma
Palladium US$725/oz vs US$732/oz yesterday
Silver US$17.01/oz vs US$16.85/oz yesterday
Base metals:
Copper US$ 5,756/t vs US$5,770/t yesterday – Workers at the giant Chuquicamata copper mine will vote on Thursday on a new pay deal.
Negotiations started early ahead of the end of the current operating pay deal.
Copper prices are significantly lower than seen in the last negotiating round in 2012 but expectations are less quick to come down.
Aluminium US$ 1,745/t vs US$1,739/t yesterday – Aluminium production in China hit record high in Nov as mothballed smelters were brought back online amid a recovery in prices, according to the National Statistics Bureau data.
Output climbed 3.8%yoy to 2.8mt in Nov having accelerated since the start of the year following a 16% rise in prices.
Supply in the first 11 months was down 0.7%%yoy at 29mt.
The China Nonferrous Metals Industry Association called recent price gains irrational saying demand is expected to cool around the Lunar New Year at the end of Jan weighing on aluminium prices.
Nickel US$ 11,435/t vs US$11,290/t yesterday
Zinc US$ 2,760/t vs US$2,696/t yesterday
Lead US$ 2,388/t vs US$2,320/t yesterday
Tin US$ 21,280/t vs US$20,900/t yesterday
Energy:
Oil US$55.9/bbl vs US$56.8/bbl yesterday
Natural Gas US$3.494/mmbtu vs US$3.561/mmbtu yesterday
Uranium US$18.40/lb vs US$18.40/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$79.0/t vs US$79.8/t
Chinese steel rebar 25mm US$534.3/t vs US$524.5/t – Chinese steel production was flat in Nov compare to the previous month amid government led environmental checks across seven provinces.
The nation produced 2.21mt of steel in Nov, little changed from Oct, and down 3.2%yoy, according to the NBS.
Last week, Hebei and Jiangsu provinces said to close separate scrap recycling plants on environmental compliance concerns.
Authorities plan to shut as much as 13% or 150mt of annual capacity by 2020 pushing for more consolidation in the industry improving efficiency of existing operations.
Thermal coal (1st year forward cif ARA) US$65.0/t vs US$65.5/t yesterday
Premium hard coking coal Aus fob US$274.4/t vs US$283.6/t – Nippon Steel & Sumitomo Metal are reported to have agreed the highest coking coal price in more than five years for deliveries in Q1/17.
The steelmaker will pay $285/t for the Glencore coal marking the highest price agreed since Q4/11.
Other:
Tungsten - APT European prices $182-200/mtu vs $183-195/mtu – price range widens suggesting more poor quality material in the market.
Probably out of China and due to recent falls in the Chinese currency increasing its local value.
Company News
Anglo American (LON:AAL) 1196.5 pence, Mkt Cap £15.43bn – Latest De Beers diamond sales in line with expectations.
Anglo American reports that De Beers achieved sales of US$418m for its 10th diamond sale of 2016. The figure is “in line with seasonal expectations” and, though lower than the US$476m realised in the ninth sale, was significantly ahead of the US$248m of sales for the 10th sale of 2015.
The company points out that it is seeing good demand although “the trade in lower value rough diamonds is experiencing a temporary slowdown as a result of the demonetisation programme in India”.
Demand in other parts of the product range is, however, described as “healthy”.
We estimate that the latest sales cycle brings sales for the year to around US$6bn, a significant increase on the US$4.67bn reported in 2015.
Conclusion: De Beers is noticing the impact of the Indian demonetisation programme on sales, but overall 2016 has proved to be a better year for diamond sales than 2015.
Bushveld Minerals (LON:BMN) 1.55 pence, Mkt Cap £10.6m – South African competition commission approves acquisition
Bushveld Minerals has agreed to buy a 41.65% stake in the Uis Tin project in the Erongo region of Namibia.
To be more precise Bushveld is using its Greenhills Resources platform to buy a 49% stake in Dawnmin Africa Investments which holds an 85% interest in the Uis project. Much of the rest of the stake is held by Erongo Tin Ltd which holds 50.5% of Dawnmin.
The deposit contains some 70.3mt of tin resource grading around 0.14% tin at the ML134 license as calculated in historic work.
This added to potential resources at the other two licenses contained in the Dawnmin package gives potential for over 90,000t of contained tin.
Historic mining at Erongo has also created a series of tin tailings dumps in the Erongo region though these are not referred to in Bushveld’s announcement. The dumps are thought to contain fine grained tin which is difficult to recover using conventional process routes.
Bulsveld are issuing some 41m new shares to Dawnmin worth around £650,000 to fund the acquisition of the 49% stake in Dawnmin Africa Investments.
The tin assets will reside in Bushveld’s Greenhills Resources platform as part of the move to create a separate portfolio of pan-African tin assets.
European Metals (LON:EMH) 35.875 pence, Mkt Cap £46.4m – Production of lithium carbonate under test conditions
European Metals has announced that it has been able to produce battery grade lithium carbonate at >99.5% purity from lithium mica concentrates.
The material was produced using an industry-standard sodium sulphate roast based process which has now shown that a second process is applicable following the earlier work which used acid leach technology in the scoping study work last year.
These results are the first results from a larger project which will include metallurgical testing to further refine the process route to improve the company’s understanding of the impact of variable concentrate feed in the production of the lithium carbonate.
Conclusion: European Metals’ work is improving the understanding of the mineralisation and the most effective process route. We look forward to the results of the further testing as they become available.
Tertiary Minerals* (LON:TYM) 1.05p, Mkt £2.8m – Annual Results for year to 30th September
Tertiary Minerals reports a reduced loss of £473,506 for the year, compared to the loss of £674,991 recorded for the previous year. “in 2016 we have been successful in lowering our administration costs which we believe are amongst the lowest of all AIM traded companies.”
Cash balances at the year-end amount to £448,474 and the company is debt-free. During the year the company raised approximately £1.05m through the issue of additional shares.
Among the company’s operations, Tertiary Minerals secured an exploitation permit for its Storuman fluorspar project in Sweden. Local interests groups representing the Sami reindeer herders and environmental activists have, however lodged an appeal and although it remains confident that its permit will be upheld, “the Company has decided to place all metallurgical testwork and outstanding phases of the Preliminary Feasibility Study on hold until the appeal process has been brought to a conclusion.”
At its MB Fluorspar project in Nevada, following the completion of its fourth phase of drilling, the company has demonstrated both lateral and depth extensions to the previously identified fluorspar mineralisation during the year. Metallurgical testing, orebody and economic modelling is underway and the company is “targeting the completion of a Scoping Study in the first half of 2017.”
The company has received advice from the consulting geologist Dr Richard Sillitoe that “There is a reasonable possibility that the fluorspar grades could increase on approach to the inferred sub-surface intrusion in the north west region of the deposit. 1 or 2 northwest-directed core holes could easily test the possibility of increased fluorspar grades on approach to the inferred intrusion.”
Future and continuing work programmes, which may include the additional recommended drilling, involve additional metallurgical work to assess the possibility of producing acid grade fluorspar from different areas of the deposit and the potential of producing a marketable mica by-product as well as assessment and optimisation of transport logistics to deliver fluorspar product to the USA market and ports.
The company recently announced the rationalisation of its exploration portfolio with a disposal of non-core gold assets in Scandinavia, although Tertiary Minerals retains a NSR over future production and a possibility of additional payments depending on the scale of the resources discovered on the properties.
Conclusion: Tertiary Minerals is progressing its fluorspar projects and rationalising non-core assets. We look forward to the Scoping Study on the MB project during the first half of 2017.