Amur Minerals (LON:AMC) – Preliminary MKF economic study points to improved Kun Manie economics
Aurum Mining (LON:AUM) 5.1p, Mkt Cap £17m – £6m equity placing; change of business focus
Petropavlovsk (LON:POG) 6.7p, Mkt Cap £220m – Refinancing update
Kibo Mining (LON:KIBO) 6.5p, Mkt Cap £23m – Financing facility with Sanderson Capital Partners
European equities are off slightly this morning after hitting the highest level in a year on Tuesday with volumes and volatility falling, based on the Stoxx Europe 600 Index.
• US equities are set to finish the year on a strong note as well with S&P 500 closing a point below an all-time high while Dow Jones Industrial Average is nearing the 20,000 level.
• US$ index is down 0.1% today after strengthening for two consecutive days and is on course to record the largest quarterly increase since Q3/08.
• Gold prices are little changed trading around $1,130/oz level, not far off the 10-month low hit late last week.
• Oil prices climb on the back of reports showing US inventories contracted last week.
The big shift of copper into 'official' warehouses reflects the recent move in prices, the increasing cost of financing metal stocks, strength in the US dollar and lastly increasing risk presented by a Trump presidency.
• The impact of higher stocks is to depress prices and high Auto inventory levels at major US Auto manufacturing plants is causing some slowing of production as manufacturers wait to see if new demand will shift this stock.
• Trump's triumph has created a euphoria of optimism in many markets but a Trump crunch may come if new demand does not meet recent supply growth.
• Rising Fed rates may hold back some consumer demand though strong employment and expected GDP growth looks good for the sector as a whole.
Dow Jones Industrials +0.46% at 19,975
Nikkei 225 -0.26% at 19,444
HK Hang Seng +0.37% at 21,810
Shanghai Composite +1.11% at 3,137
FTSE 350 Mining +0.47% at 14,485 FTSE 350 +97% since 1st January
AIM Basic Resources -1.25% at 2,254 AIM Basic Resources +38% since 1st January
Economic News
US
Date Index Period Actual Est Previous
Monday Markit Services (Prelim) Dec (Prelim) 53.4 55.2 54.6
Markit Composite (Prelim) Dec (Prelim) 53.7 54.9
Wednesday Existing Home Sales Nov %yoy -1.8 2.0
Thursday Durable Goods Orders (ex Transport) Nov (Prelim) %mom 0.2 0.8
Capital Goods Orders Nov (Prelim) %mom 0.5 0.2
Weekly Jobless Claims 259k 254k
Q3 GDP (Final Reading) %qoq (ann) 3.3 3.2
Q3 Core PCE (Final Reading) %qoq (ann) 1.7 1.7
PCE Nov %yoy 1.5 1.4
Core PCE Nov %yoy 1.7 1.7
Friday New Home Sales Nov %mom 2.1 -1.9
Source: Bloomberg
China – 24 cities in Northern China issued warnings over dangerously high air pollution levels yesterday.
• Emergency closured of power plants, steel mills and ports have been ordered.
• A number of schools were temporarily closed while hundreds of government inspectors patrolling Beijing streets enforcing a cap on the use of cars on the roads.
• The air quality index in Tangshan of Hebei province, one of the major steel-producing regions, stood at 578 this morning; whereas red alerts are issued once the AQI exceeds 200 for more than four consecutive days, 300 for more than two days and 500 over the last 24 hours.
• In Beijing, the PM2.5 measure of air pollutants hit 360µg/m3 today with recommended safe levels of 10µg/m3 guided by the WHO.
• Pollution exerts huge costs on the economy is one of top priorities of the current administration which is trying to out the nation’s growth model on a more sustainable footing.
UK – UK consumers are expecting inflation to hit 3% over the next five to ten years, the latest YouGov poll results show.
• It was the fifth consecutive month expectations have been revised upwards following the EU membership referendum results.
• A more short term outlook suggests prices growth to reach 2.43% over the next 12 months, up from 2.36% expected previously.
• This is below BoE projections for 2.7% inflation rated for next year.
France – Deflation pressures are abating as seen in a slowing pace of declines in producer prices in Nov on the back of increasing energy costs.
• Refined petroleum products prices climbed 2.0%yoy while mining, quarrying, energy and water prices were up 0.6%yoy.
• Factory gate prices remained in a negative territory (including occasional brief period of positive readings) since H1/13.
• PPI (%yoy): -0.2 v -0.8 in Oct.
• The report follows Germany PPI numbers released yesterday that showed producer prices posted the first positive reading since Jun/13.
Spain – The European Court of Justice ruled that mortgage floor clauses imposed by Spanish banks including Sabadell, Caixabank, Popular and Liberbank were “unfair” suggesting lenders may potentially face billions of euros in compensation to affected borrowers.
• Floor clauses imposed minimum interest rate on floating rate mortgages limiting the extent to which a borrower may benefit from low rates in the market.
• “The finding that ‘floor clauses’ are unfair must allow the restitution of advantages wrongly obtained by the seller or supplier to the consumer’s detriment,” the court said.
• In 2013, the Spanish high court decided those caps were illegal but did not suggest that financial institutions compensate clients.
• It is the latter part of the decision was challenged by borrower in the European Court.
• Spanish bank shares have all posted losses following the announcement.
Currencies
US$1.0399/eur vs 1.0387/eur yesterday. Yen 117.64/$ vs 118.04/$. SAr 14.008/$ vs 14.156/$.
$1.233/gbp vs $1.238/gbp. 0.725/aud vs 0.724/aud. CNY 6.951/$ vs 6.950/$.
Commodity News
Precious metals:
Gold US$1,138/oz vs US$1,138/oz yesterday
Gold ETFs 57.5moz vs 57.5moz yesterday
Platinum US$916/oz vs US$917/oz yesterday
Palladium US$664/oz vs US$674/oz yesterday
Silver US$16.05/oz vs US$15.88/oz yesterday
Base metals:
Copper US$ 5,530/t vs US$5,528/t yesterday
Aluminium US$ 1,724/t vs US$1,715/t yesterday
Nickel US$ 10,955/t vs US$10,970/t yesterday
Zinc US$ 2,628/t vs US$2,610/t yesterday
Lead US$ 2,190/t vs US$2,170/t yesterday
Tin US$ 20,945/t vs US$21,070/t yesterday
Energy:
Oil US$55.8/bbl vs US$55.0/bbl yesterday
Natural Gas US$3.334/mmbtu vs US$3.365/mmbtu yesterday
Uranium US$20.40/lb vs US$20.40/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$75.3/t vs S$74.3/t
Chinese steel rebar 25mm US$506.8/t vs US$510.4/t
Thermal coal (1st year forward cif ARA) US$67.5/t vs US$67.8/t yesterday
Premium hard coking coal Aus fob US$256.1/t vs US$259.0/t
Other:
Tungsten - APT European prices $187-198/mtu vs $182-200/mtu
Company News
Amur Minerals (AMC LN) – Preliminary MKF economic study points to improved Kun Manie economics
• Consultants Runge, Pincock, Minarco prepared a preliminary economic study on the Maly Kurumkon / Flangovy (MKF) deposit at the Kun-Manie nickel-copper sulphide project.
• The RPM Mining Trade-Off Study was based on total mineral resources produced by SRK in May/16 and, thus, do not take into account 2016 drilling programme.
• The Study estimates the MKF may potentially host 44.5mt at 0.75% Ni and 0.19% Cu for 332kt Ni and 83kt Cu in mineral reserves, accounting for nearly a half of the total Kun Manie LoM.
• The split between open pit and underground operations referred to in the study is:
o 12.9mt at 0.63% Ni and 0.18% Cu susceptible to open it operations involving a 3.4 t/t waste stripping ratio;
o 31.7mt at 0.79% Ni and 0.19% Cu identified for underground development.
• This compares to previous MKF economic study contained in the PEA (Jun/15) which targeted for 45.5mt of ore at 0.53% Ni and 0.15% Cu for 241kt Ni and 69kt Cu
• The PEA MKF split between open pit and underground development was:
o 17.4mt at 0.59% Ni and 0.16% Cu for open pit at a 2.7 waste-to-ore ratio;
o 28.1mt at 0.49% Ni and 0.15% Cu for underground.
• Better grades in the updated study translate into “a total increase in the estimate of the metal value within the concentrate of US$990m” over the PEA using same nickel and copper price assumptions ($16,530/t and $5,510/t , respectively).
• The RPM is currently working on an updated mineral resource at the MKF with completion targeted for Q1/17.
• Additionally, the Company should soon receive metallurgical test results from Gipronickel regarding a half ton MKF bulk sample.
Conclusion: A prospective upgrade to the reserve grade and expansion of the mineral inventory at the MKF deposit, the largest in the Kun Manie project, holds a significant upside potential to the current economics of the project as the RPM study shows. We are looking forward to the MKF resource update which should incorporate the 2016 drilling programme data and allow the team to progress the Kun Manie DFS further.
* SP Angel act as Nomad and broker to Amur Minerals
Aurum Mining (LON:AUM) 5.1p, Mkt Cap £17m – £6m equity placing; change of business focus
• The Company has conditionally placed up to 150m shares at 4p for £6m in gross proceeds of which certain directors planning to subscribe for 18.1m shares.
• The Company is set to divest its mining assets “over coming months” and focus on “acquisitions and development of businesses within the fields of information security and cyber security” in the UK.
• Raised funds will provide the necessary capital to identify, acquire and develop right opportunities.
• The Board advised to change the name of the Company to Shearwater Group (SWG LN).
• All of the above are subject to a shareholders’ approval with a General Meeting scheduled for 9 Jan/17.
Petropavlovsk (LON:POG) 6.7p, Mkt Cap £220m – Refinancing update
Hold
• Refinancing regarding the $430m outstanding principal with Sberbank and VTB has now been completed.
• The remainder $100m in commodity linked loan facility with Sberbank remains on schedule for completion in Q1/17.
• Additionally, IRC is reported to have made the $26m principal and interest payment to the ICBC on time.
Kibo Mining (LON:KIBO) 6.5p, Mkt Cap £23m – Financing facility with Sanderson Capital Partners
• The management has entered into a binding term sheet with Sanderson Capital Partners to borrow $2.9m in cash to be made available in five tranches through Jun/17.
• Kibo will repay the outstanding amount on receipt of the $3.7m receivable from SEPCO III following a financial close of the Mbeya Coal to Power Project.
• Sanderson is getting $0.7m (25% of the borrowed amount) worth of stock at the 30d VWAP calculated from the date of signing the term sheet (20 Dec/16).
• Additionally, Sanderson has an option to convert up to £1.5m of amount drawn down into Kibo shares at 30d VWAP prior to the repayment date of the facility.