Bushveld Minerals (LON:BMN) – SP Angel appointed as a broker to Bushveld Minerals
Ncondezi Energy (LON:NCCL) – Update on JDA negotiations
Shanta Gold (LON:SHG) – Underground development reaches ore at New Luika
Tertiary Minerals* (LON:TYM) – Storuman permitting update
Anglo Asian Mining* (LON:AAZ)
US equities bounced marginally yesterday (S&P +0.4%) following a sharp decline on the FOMC announcement day while European stock indices are broadly flat today.
Gold is up slightly this morning after hitting a low of $1,123/oz yesterday and as the US$ index climb paused.
The metal is on course to post its sixth weekly decline.
10y Treasury yields dropped marginally from a two-year high following a six-day long increase.
Brent is little changed trading around $54/bbl.
Iron ore futures and steel prices in China are little changed holding up well around this year’s record levels.
Capesize freight rates have had a wild ride this year with prices collapsing again this week
Freight prices bottomed at US$ 2,000/day in Q1 vs operating costs of around US$7,000/day with rates stabilising at around subsistence levels (i.e. +/- operating costs).
Rates have spiked a couple of times since September briefly rallying to above US$20,000/day due to better coal and iron ore demand from China. Prices were not sustained due to the large number of capsize vessels available on the market despite there being better than expected Chinese demand.
For now a structural surplus of capacity in the bulk carrier market is holding rates down with fleet growth running ahead of tonne-mile demand growth. The sector needs to accelerate scrappage and to stop building new ships for a few years.
It’s probably a great time to buy second-hand ships selectively so long as you can survive low rates for another few years.
Stock movements continue to show influx of copper into Shanghai and LME warehouses
Higher copper prices appear to be drawing tonnages of copper metal into Shanghai and LME warehouses.
Shanghai stocks rose by 12,076t today adding to another 11,775t into the LME.
The stock inflows may well hold back copper prices through the Christmas period.
‘Pie at night’ – British scientists have sent a meat and potato pie into space
The BBC report today that a meat and potato pie has been sent into space attached to a weather balloon.
The British Space program aims to determine if the molecular structure of the pie will change with its interstellar journey.
The pie, which can be seen on the BBC website may have been frozen on its ascent and is expected to cook on re-entry.
It’s one small step for man, one giant leap for a pie
Dow Jones Industrials +0.30% at 19,852
Nikkei 225 +0.66% at 19,401
HK Hang Seng -0.18% at 22,021
Shanghai Composite +0.17% at 3,123
FTSE 350 Mining -0.42% at 14,414 FTSE 350 +96% since 1st January
AIM Basic Resources -2.65% at 2,300 AIM Basic Resources +41% since 1st January
Economic News
US – Core CPI continued to run at above 2% level with increasing gas prices narrowing the gap with the headline number.
Manufacturing PMI hit a 21-month high in Dec finishing the year on a strong note and marking the seventh consecutive month of expansion.
Jobs growth and inventories build up accelerated during the month pointing to an increased firms’ economic outlook; whereas, output and new order growth moderated slightly from Nov.
Inflation rate climbed for the third time in the last four months as producers mentioned rising input costs and higher steel prices and oil, in particular.
“A buoyant domestic market, reflecting a combination of rising consumer demand and inventory building, is helping offset export woes caused by the strong dollar,” the report said.
“The fourth quarter has seen the strongest PMI readings for one-and-a-half years, suggesting the goods-producing sector is growing at an annualised rate of 2-2.5%” pointing to a change in momentum compared to a soft performance earlier this year.
CPI (%yoy): 1.7 in Nov v 1.6 in Oct and 1.7 forecast.
Core CPI (%yoy): 2.1 v 2.1 in Oct and 2.2 forecast.
Markit PMI: 54.2 in Dec v 54.1 in Nov and 54.5 forecast.
China – The PBoC continued to weaken the renminbi amid escalating demand for US$ following the FOMC hawkish statement.
The trading band was weakened 0.32% to CNY 6.95 marking the lowest level since May/08.
UK - In line with expectations, the BoE left benchmark rates unchanged at 0.25% and the size of bond holdings at £435bn in a unanimous vote.
The BoE referred to positive domestic economic data and improved world growth outlook driven, in particular, by expectations of looser fiscal policy in the US.
Among risks to global growth mentioned were increasing debt in China, banking sector issues in Italy and pressures on emerging economies on the back of the appreciating US$.
On inflation prospects the BoE noted an over 6% appreciation in the trade-weighted exchange rate since the Nov meeting, which suggests prices’ growth may be slightly lower than previously forecast.
Although, the BoE continues to expect inflation to hit 2% in the next six months and overshoot the 2% target later in 2017 and through 2018.
“Monetary policy can respond, in either direction, the changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.”
A little less hawkish announcement form the BoE saw the currency to give way to the US$ with the exchange rate resuming decline.
Italy – Troubled Monte de Paschi di Siena has been granted approval by regulators to extend a voluntary debt to equity swap to retail investors by antoher five days through 21 Dec.
• The bank expects to raise €4.5bn through the exercise.
Currencies
US$1.0464/eur vs 1.0500/eur yesterday. Yen 118.05/$ vs 117.88/$. SAr 13.941/$ vs 14.073/$. $1.245/gbp vs $1.253/gbp.
0.734/aud vs 0.740/aud. CNY 6.758/$ vs 6.929/$
Commodity News
Precious metals:
Gold US$1,134/oz vs US$1,137/oz yesterday
Gold ETFs 58.1moz vs 58.2moz yesterday
Platinum US$905/oz vs US$923/oz yesterday
Palladium US$694/oz vs US$726/oz yesterday
Silver US$16.12/oz vs US$16.55/oz yesterday
Base metals:
Copper US$ 5,677/t vs US$5,700/t yesterday
Aluminium US$ 1,732/t vs US$1,737/t yesterday
Nickel US$ 11,275/t vs US$11,395/t yesterday
Zinc US$ 2,766/t vs US$2,802/t yesterday
Lead US$ 2,280/t vs US$2,345/t yesterday
Tin US$ 21,105/t vs US$21,180/t yesterday
Energy:
Oil US$53.9/bbl vs US$54.4/bbl yesterday
Natural Gas US$3.390/mmbtu vs US$3.542/mmbtu yesterday
Uranium US$22.00/lb vs US$22.00/lb yesterday – Surprise jump in price of uranium yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$77.6/t vs US$76.8/t
Chinese steel rebar 25mm US$522.5/t vs US$524.6/t – also pulls back
Thermal coal (1st year forward cif ARA) US$66.6/t vs US$66.6/t yesterday
Premium hard coking coal Aus fob US$260.5/t vs US$260.5/t
Other:
Tungsten - APT European prices $182-200/mtu vs $183-195/mtu – price range widens suggesting more poor quality material in the market.
Company News
Anglo Asian Mining* (LON:AAZ) 21p, Mkt Cap £23m – Ugur drilling update
Hold (from Buy) – 22p (from 25p)
The Company released the second set of drilling results on the neighbouring Ugur mineralised zone (3km away from the Gedabek processing plant).
Additional 35 reverse circulation (RC) drill holes for c.1,800m and 6 diamond (DD) drill holes for 1,200m were completed following the last updated announced in mid-Oct.
Selected DD intersections:
UGDD1: 59.2m at 2.0g/t gold (4m from surface);
UGDD2: 51.5m at 3.4g/t (3m from surface);
UGDD4: 43.5m at 1.8g/t (8m from surface).
The total Ugur alteration zone is reported to extend over the 1,000m by 500m area with central zone tested with DD drill holes of 225m by 130m.
Preliminary cyanide leaching tests point to 87% gold recoveries at low acid consumption levels with further metallurgical tests continuing.
Conclusion: Ugur drilling results include good intersections with the Company continuing exploration works accumulating data enough to prepare a mineral resources and reserves statements.
Bushveld Minerals (LON:BMN) 1.5 pence, Mkt Cap £10.2m – SP Angel appointed as a broker to Bushveld Minerals
SP Angel has been appointed as a broker to Bushveld Minerals.
The company recently received approval from the South African Competition Commission for its very well timed acquisition of Evraz’s Vametco vanadium operations in South Africa.
Bushveld is partnering with Yellow Dragon to acquire SMC through Bushveld Vametco Limited ("BVL"), a special purpose vehicle established for the purpose of the Acquisition. Yellow Dragon is a private, strategic investor in African resource projects”
Under the agreement, Yellow Dragon holds 55% of Vametco and Bushveld Minerals will hold 45%.
Bushveld gained an ‘IEA’ Integrated Environmental Authorisation for its Mokopane vanadium project in September and is moving on to approval of the mine works programme and the social and labour plan. The Mokopane project complements Bushveld’s vanadium development strategy.
The team are also working with the IDC ‘Industrial Development Corporation’ of South Africa on various initiatives within South Africa for the eventual development of the market for vanadium through the construction of vanadium redox batteries.
Bushveld have also recently agreed to buy a 41.65% stake in the Uis Tin project in the Erongo region of Namibia.
The deposit contains some 70.3mt of tin resource grading around 0.14% tin at the ML134 license as calculated in historic work.
Conclusion: Bushveld are moving to take a commanding position in the world vanadium market. They look well placed to capitalise on new potential demand for vanadium redox batteries for grid power support and for ongoing demand for vanadium for steel production
Expected new demand for high-carbon and high-speed steels in the US is likely to drive demand for vanadium while improving quality control in China is also likely to increase the use of vanadium. Vanadium content within steel is 0.15-0.25% for high-carbon steel and between 1-5% for high-speed took steels.
Vanadium pentoxide prices have recovered significantly in recent months to $4.95/lb from a low of around $2.4/lb last December. The move partially reflects new demand and price moves in steel. Roskill, the consultants, expect China’s intensity of use of vanadium in steel to continue to rise
Ncondezi Energy (LON:NCCL) 4.5 pence, Mkt Cap £11.3m – Update on JDA negotiations
Ncondezi Energy reports that it continues to progress its negotiations with Shanghai Electric Power to formalise the Joint Development Agreement for the 300MW Ncondezi power project in northern Mozambique.
The company expects that the relevant documentation will be completed during “Q1 2017 with SPIC [China’s State Power Investment Corporation] and Chinese Government approvals to follow.”
Ncondezi also comments that it is “monitoring cash requirements and taking steps to preserve cash. Existing cash and facilities are expected to cover costs until the end of Q1 2017.”
In August this year, the company announced that its largest shareholder, Africa Finance Corporation (AFC), had joined the existing US$1.32m Shareholder Loan Facility and had committed an additional US$3m to the Shareholder Loan Facility.
Conclusion: Although the negotiation process has been relatively protracted, it appears that the JDA is likely to be concluded in the early part of 2017 allowing the development of an integrated coal mine and power plant which could help to alleviate power shortages in the region as the project moves to deliver an initial 300MW with plans to expand eventually to 1800MW.
Shanta Gold (LON:SHG) 9p, Mkt Cap £52.5m – Underground development reaches ore at New Luika
Shanta Gold reports that the underground development work at Bauhinia Creek has now reached mineralisation.
The ore zone was encountered in the expected location based on the geological model of the deposit.
Chief Executive Toby Bradbury commented that “we remain on track to commence first stoping of ore in Q2 2017.”
Conclusion: Access to the underground ore at New Luika is key to the long term development strategy for the mine and to maintaining and extending its life. Data presented during the recent analysts’ site visit showed the underground development running ahead of schedule and now that the mineralisation has been encountered the mine team will be able to progress the preparatory development work in readiness for full production.
Tertiary Minerals* (LON:TYM) 1.1p, Mkt £2.8m – Storuman permitting update
Tertiary Minerals reports that its application for a mining permit at the Storuman fluorspar deposit, which has been the subject of an appeal by local interest groups representing the Sami reindeer herders and environmental interests, has now been referred for review by the Swedish Mining Inspectorate.
“The re-assessment will now include the impact that mining activity may have on its surroundings (the “wider area”).” Tertiary Minerals has expressed its view that “the Environmental Impact Assessment (“EIA”) prepared by Tertiary, and selected Swedish consultants, provides a sufficient description of the expected environmental impact on the wider area based on the extensive and detailed baseline environmental studies and reindeer husbandry impact analysis completed by the Company.”
Tertiary Minerals is planning to coordinate with the Mining Inspectorate during the course of the review and Managing Director, Richard Clemmey, commented “we are pleased to see progress is being made and are confident that the quality and extent of our EIA coupled with the expected continued support from key stakeholders in the project will provide support for a positive outcome for Tertiary in this process.”
Although we would confidently expect impartiality and rigour from the Swedish Mining Inspectorate during the conduct of the review we note that in March this year, commenting on the decision to approve the application which was announced in February, Tertiary Minerals reported that “The Swedish Mining Inspectorate has granted the Permit by giving precedence to the national interest of minerals over the national interest of reindeer herding”.
Conclusion: The decision to refer the Storuman permit appeal to the Swedish Mining Inspectorate will no doubt take time, however, it is clearly progress in resolving the impasse which has arisen over the permitting of Storuman and we look forward to the Inspectorate’s recommendation when it becomes available.