Albemarle – approval from Corfo to expand lithium production in Chile
Central Asia Metals (LON:CAML) – Reports record annual copper production
FinnAust Mining* (LON:FAM) - BUY Target Price 15p – Government approval for Avannaa acquisition completed and new exploration license awarded
Galaxy Resources – Trading halt on ASX - reports suggest Galaxy may sell up to 30-40% of Sal de Vida in Argentina to help fund project
IronRidge Resources* (LON:IRR) – Expanding its gold exploration portfolio in Ivory Coast
Kolar Gold (LON:KGLD) – issue of equity to raise stake in Finland joint venture
FTSE100 hit fresh intra-day high this morning on the back of gains by housebuilders and miners.
US equities continued to climb for a second day this year with the Dow approaching the 20,000 level.
The MSCI Emerging Markets Index is higher 0.9% today reaching a three-week high.
Gold is stronger this morning as the US$ index trades lower as the FOMC minutes showed the central bank’s preference for a “gradual” pace of rate hikes over the coming years.
Brent is off slightly as markets weigh the effect of increasing Libyan supply, exempt from production cuts, as part of re-opening of the last major export terminal that was shut during internal conflict.
Iron ore futures are up marginally with Chinese benchmark steel prices slightly down.
Indonesia – may be about to start revoking non-Clean and Clear mining permits
The Corruption Eradication Commission has stepped in to monitor and supervise the evaluation of the permits.
The move should be good for the environment and also reduce production capacity from informal mining within Indonesia
Tesla – starts making lithium batteries at its $5gn Gigafactory in Nevada
The company reckons it could almost double global lithium battery output over the next few years
Dow Jones Industrials +0.30% at 19,942
Nikkei 225 -0.37% at 19,521
HK Hang Seng +1.46% at 22,457
Shanghai Composite +0.21% at 3,165
FTSE 350 Mining +1.12% at 15,000
AIM Basic Resources +1.34% at 2,386
Economic News
US – Potential fiscal stimulus and tax cuts under the new administration risk the US growth to outpace Fed forecasts and may warrant adjustments to the forecast monetary policy tightening pace, the latest FOMC meeting minutes suggested.
“Participants agreed that it was too early to know what changes in these policies would be implemented and how such changes might affect the economic outlook,” the minutes concluded.
A separate report showed auto sales reached new all-time high in 2016 beating market estimates with 17.5m units sold in the year reflecting good private consumption growth momentum as well as low petrol prices.
China – Services sector expanded at the fastest pace in 17 months, the latest Caixin PMI data show.
Coupled with strong manufacturing numbers released earlier this week, the economy demonstrated good growth momentum accumulated towards the end of last year.
New orders both in manufacturing and services industries strengthened with the composite measure hitting the fastest growth rate since Mar/13.
On inflation, “companies operating in both sectors suggested that higher raw material costs had underpinned the latest increase in input costs… overall input prices rose at the most marked pace for 69 months”.
Services sector outlook ended the year on strong note with the degree of optimism reaching a four-month high.
“The Chinese economy performed better in the fourth quarter than in the previous three quarters… it is out of the question the government’s full year growth target will be reached,” the survey said.
Caixin Services PMI: 53.4 v 53.1 in Nov.
Caixin Composite PMI: 53.5 v 52.9 in Nov.
UK – Auto sales peak in 2016 climbing 2.2% to 2.7m units and marking the fifth annual consecutive increase.
The SMMT, the UK motor industry body, forecasts the market to contract in 2017 (-5%); although, the SMMT emphasized that the decline is not attributed to the Brexit vote, but rather to a normalisation of growth rates.
2016 growth rate was the weakest since the rebound took hold in 2011.
Services sector is reported to have grown for third straight month to 17-month high in Dec; while new business expanded at fastest rate since Jul/15.
Inflation in the services sector hit 68-month record.
“There were reports of export business buoyed by the weak pound, adding to the strength of domestic demand… however, sterling’s persistent lows added more pressure to input prices,” Markit said.
Markit Services PMI: 56.2 v 55.2 in Nov and 54.7 forecast.
Markit Composite PMI: 56.7 v 55.3 in Nov and 55.0 forecast.
Switzerland – Following reports of accelerating inflation elsewhere, Switzerland showed consumer prices were unchanged through Dec ending more than two years of deflation.
Increasing fuel costs are reported to have been driving a slowdown in the deflation pace.
The nation reported an average annualised inflation rate for 2016 of -0.4%.
Currencies
US$1.0510/eur vs 1.0430/eur yesterday. Yen 116.36/$ vs 117.80/$. SAr 13.591/$ vs 13.680/$. $1.228/gbp vs $1.227/gbp.
0.730/aud vs 0.727/aud. CNY 6.887/$ vs 6.949/$.
Commodity News
Precious metals:
Gold US$1,174/oz vs US$1,163/oz yesterday
Gold ETFs 57.0moz vs US$57.0moz yesterday
Platinum US$953/oz vs US$937/oz yesterday
Palladium US$734/oz vs US$721/oz yesterday
Silver US$16.57/oz vs US$16.42/oz yesterday
Base metals:
Copper US$ 5,630/t vs US$5,528/t yesterday - Konkola copper mine workers on strike over pace of wage talks
Aluminium US$ 1,694/t vs US$1,684/t yesterday
Nickel US$ 10,195/t vs US$9,980/t yesterday
Zinc US$ 2,617/t vs US$2,541/t yesterday – good news for zinc. Even small quantities of zinc in your diet prevent wear and tear of DNA and boosts the immune system so says the Daily Mail Online.
Lead US$ 2,071/t vs US$2,037/t yesterday
Tin US$ 21,140/t vs US$20,975/t yesterday
Energy:
Oil US$56.3/bbl vs US$56.1/bbl yesterday
Natural Gas US$3.267/mmbtu vs US$3.295/mmbtu yesterday
Uranium US$21.65/lb vs US$20.50/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$71.2/t vs US$71.3/t
Chinese steel rebar 25mm US$481.1/t vs US$478.3/t
Thermal coal (1st year forward cif ARA) US$63.0/t vs US$61.5/t yesterday
Premium hard coking coal Aus fob US$217.9/t vs US$224.3/t
Other:
Tungsten - APT European prices $187-198/mtu vs $187-198/mtu
Company News
Albemarle – approval from Corfo to expand lithium production in Chile
Albemarle has agreed with the Chilean Economic Development Agency ‘Corfo’ to increase the company’s authorised lithium quota at its Salar de Atacama in Chile.
The new agreement allows Albemarle to increase production to over 80,000tpa of technical and lithium salts over the next 27 years in its expanding battery grade facility in La Negra, Antofagasta.
The statement does not say precisely how much more lithium Albemarle will be able to produce though it does take time to ramp up production due to the long lead time for recovery from evaporation ponds.
Central Asia Metals (LON:CAML) 235 pence, Mkt Cap £262m – Reports record annual copper production
Central Asia Metals has reported that its Kounrad plant in Kazakhstan has produced a record 14,020 tonnes of copper during 2016 (2015 12,071 tonnes)
Sales of 13,938 tonnes of copper during the year are approximately 16% higher than the 2015 reported sales of 12,040 tonnes. “The copper was sold predominantly through CAML's off-take sales arrangement with Traxys.”
The company is indicating 2017 production guidance of between 13-14,000 tonnes of copper cathode and notes that “The majority of 2017 copper production will be leached from the Eastern Dumps. From Q2 2017 onwards, CAML expects an increasing percentage of overall copper production to be leached from the Western Dumps.”
Production from the Western Dumps “will commence on schedule in Q2 2017.”
The company also reports that at 31st December 2016, it held cash of US$40m which is a US$10m increase on the US$30m held at 30th June.
FinnAust Mining* (LON:FAM) 7.0p, Mkt Cap £42.5m – Government approval for Avannaa acquisition completed and new exploration license awarded
BUY Target Price 15p
FinnAust Mining have at long last completed the acquisition of Avannaa Exploration in Greenland from Cairn Energy for a total of 7.6m new shares in FinnAust worth £0.5m at a price of 6.6p/s.
The Avannaa was previously owned 100% by Cairn Energy, originally set up as part of their strategy to acquire and evaluate world large scale metal occurances the region. Cairn were initially looking for oil however recognised were attracted to the Disko project via GEUS personnel whop later worked for Avannaa in 2012.
The Cairn Energy team advanced the Avannaa licenses through extensive exploration until the oil price collapsed in H2 2014. The cost of running what was a relatively expensive team through a period of low oil prices persuaded Cairn to look for alternatives with FinnAust as an obvious contender with other assets in the region.
Avannaa’s two principal assets are the giant Disko nickel sulphide project where >$50m has been spent by a number of larger mining companies and Kangerluarsuk the high grade and also very large Sedimentary Exhalative ZN,Pb,Ag deposit
At Disko seven anomalies have been identified for drill testing. A 28t boulder has been identified assaying 6.9% Nickel & 3% Copper sparking interest in the area and supporting geological indications of a potentially very large Norilsk Nickel-type polymetallic orebody.
Kangerluarsuk: is the second of the principal targets drilled by Cominco with further work done by Rio Tinto. With historical results including 41% zinc, 9.3% lead and 596 g/t silver.
Climate change has stripped away much ice and snow from many targets through the summer making these targets easier to explore with no soil cover to work through and bare rock to examine once the winter snow and ice has melted.
FinnAust remains principally focussed on the potential development of the high grade Pituffik titanium mineral sands project in the Moriusaq Bay area and Interlak Delta in Greenland.
*SP Angel act as nomad and broker to FinnAust and acted for FinnAust in this placing
Galaxy Resources – Trading halt on ASX - reports suggest Galaxy may sell up to 30-40% of Sal de Vida in Argentina to help fund project
Galaxy Resources is looking at the potential sale of a 30-40% of its Sal de Vida lithium project in Argentina to help fund its US$376m share of the construction cost.
The lithium-bearing brine project is proposed to produce 25,000tpa of lithium carbonate and 95,000tpa of potash.
A recent DFS estimated a post-tax NPV of US$1.4bn on sales of US$354m and an average operating pre-tax cash flow of US$273m.
Galaxy recently restarted its Mt Cattlin mine in Australia, producing lithium and tantalum from spodumene found in hard-rock pegmatites.
The mine is planned to produce some 137,000tpa of Li2O and 56,000tpa of Ta2O5 (tantalum)
IronRidge Resources* (LON:IRR) 13.5p, Mkt Cap £32.1m – Expanding its gold exploration portfolio in Ivory Coast
IronRidge has announced that it has added a further 1200 sq km to its existing gold exploration portfolio in the Ivory Coast via earn-in agreements with local exploration companies Eburnea Gold Resources and Kestrel Mining Exploration.
The agreements “whereby IronRidge can acquire up to 100% of the projects through staged earn in arrangements and expenditure to Feasibility Study subject to each company retaining an NSR of 2.5% of which 40% may be acquired for between US$2.5 million to US$3 million at any time” do not appear to have a defined minimum purchase price suggesting that IronRidge will deploy its funds to advance the in-ground exploration.
The new ground, which lies adjacent to the company’s existing concession at Kineta, will bring IronRidge’s land holdings in Ivory Coast to a total of 3510 sq km mostly located within “secondary structures off the Province Scale Wa-Lawra shear along strike from multi-million ounce gold projects”. Maps presented with the announcement show the project areas lying south of Azumah’s 2.2m ounce Wa-Lawra gold project and Centamin’s 3.3m oz Konkera gold project.
Among the exploration targets which IronRidge has identified within the licence areas are “Two significant splay structures off the Sassandra Shear Zone … Similar splay-off structures host the world-class Syama (7Moz) and Tongon (5Moz) gold mines”. The company also interprets the area as “The southern extension of the hugely prolific Ahafo (23Moz – Bibiani (7Moz) – Chirano (5Moz) structure into Ivory Coast” from Ghana.
The area is reported to host extensive and large-scale artisanal gold workings stretching over a distance of approximately 8 km.
The agreements are subject to the “completion of satisfactory Due Diligence by IronRidge over the next two months.” At this stage, the company is not disclosing details of its plans and priorities for advancing the exploration of the newly acquired ground.
Conclusion: IronRidge is assembling a significant land package in Ivory Coast which is an area attracting increasing exploration attention from industry majors and where, in November last year, Randgold Resources and Newcrest Mining announced that they were establishing an exploration joint venture. Randgold’s Chief Executive, Mark Bristow, was recently quoted saying “We’ve always believed in the prospectivity of Côte d’Ivoire and we are becoming increasingly confident that it will deliver our next world-class discovery.” We look forward to further news from IronRidge as their own exploration programme proceeds.
*SP Angel act as Nomad and Broker to IronRidge Resources
Kolar Gold (LON:KGLD) 9p, mkt cap £9m – issue of equity to raise stake in Finland joint venture
Kolar Gold is issuing 8.5m new shares to Mineral Exploration Network in return for 150 shares in Kalevala Gold Oy to take its stake in the Finnish joint venture to 15.4%.
The company is committed to €350,000 to take its stake to 28.3% by 28 February and has an option to take this to 50% by end Q2.
The shares have an implied price of 1.6p/s with reference to the consideration of €150,000.
The company is looking to produce over 3,000oz of gold from a 10,000t bulk sample at the Kalevala gold project in Finland in Q3 which could provide material revenues for the group.
“Option for Kolar to provide up to a further €1m to be expended over 2017, to earn up to 50% of JV.
Subject to at least 100kg (3,215 oz.) of gold being produced in 2017 from initial target, 17m warrants exercisable at 3.2p each expiring in October 2018, to be issued to JV partner.”