Anglo American (LON:AAL) – Latest De Beers diamond sales.
Ariana Resources (LON:AAU) – Vein system at Arzu identified during Kiziltepe drilling
ASA Resource Group* (LON:ASA) – Freda Rebecca lawsuit
Rio Tinto (LON:RIO) – $2.45bn sale of Coal & Allied
Strategic Minerals* (LON:SML) – Increases its interest in Redmoor to 50%
121 / SP Angel Mining Investment conference Cape Town, 6th-7th February 2016
Located in the beautiful and historic gardens of the Welgemeend farm house in Cape Town, close to the Mount Nelson Hotel
Investors go for free. Please ask for conference brochure
Trump tears up the Trans-Pacific Partnership Agreement ‘TPP’ with the US
The TPP may continue without the US as many nations will be reluctant to drop it and the new trade bloc may live on in the hope of bring the US back on board when Trump leaves power.
Many Americans were unhappy with the opening up of trade access for Asian nations and saw the deal as further eroding jobs within the US marketplace
Foxconn (Taiwan) confirms new $7bn investment in US
Foxconn, which makes iPhones for Apple has confirmed it plans on spending $7bn to build new factories in the US.
The move may create 50,000 new jobs as iPhone production is brought back to the US.
China to spend $165bn on energy saving technologies by 2021 across 13 key industries
The National Development and Reform Commission has published a list of 296 types of energy saving technologies and methods to reduce carbon emissions. (Bloomberg)
Key industries for reform are: coal-fired power, electricity, steel, non-ferrous metals, petroleum, petrochemical, chemical, construction materials, machinery, light industry, textiles, transportation and communications industries.
China’s National Energy Administration has also announced plans to spend around $360bn on renewable energy sources over the coming four years.
China is constantly looking at how to retain value within China with the cost and national security implications of rising oil imports a particular area of concern.
China is increasingly focussed on cutting carbon fuel imports from both a pollution and balance of payments perspective and finds this a good excuse to stimulate growth in the emerging industries of electric vehicles and other energy efficient applications. Eg its just a good idea all round to make everything more energy efficient.
Chinese Lunar Chinese New Year / Chinese Spring Festival starts January 28, 2017 till February 15, 2018
In China the rooster represents fidelity and punctuality, for it wakes people up on time.
People born in the year of the Rooster are beautiful, kind-hearted, hard-working, courageous, independent, humorous and honest.
They like to keep home neat and organized. On the other side, they might be arrogant, self-aggrandizing, persuasive to others and wild as well as admire things or persons blindly.
The rooster is regarded as the god's ambassador and people born in the year of the rooster also have the ability to discern what is coming, like good analysts.
The rooster people born in different periods of a day have different personalities and fortune:
The rooster people born in the morning are highly-motivated and conscientious in the performance of their duties.
The rooster people born at noon are ardent and conscientious in doing their work.
Dow Jones Industrials -0.14% at 19,800
Nikkei 225 -0.55% at 18,788
HK Hang Seng +0.22% at 22,950
Shanghai Composite +0.18% at 3,143
FTSE 350 Mining +3.10% at 17,065
AIM Basic Resources +0.21% at 2,529
Economic News
Eurozone PMI slips slightly to 54.3 in January from 54.4 in December (HIS Markit)
An upturn in hiring activity leads the largest monthly rise in employment for nine years in more optimistic markets.
The ECB is concerned about low levels of price growth despite ongoing stimulus, low interest rates and higher import prices as the Euro depreciates
Trump action may cause Emerging Markets to continue to reform
The comment from Jordi Visser at the US hedge fund Weiss on Bloomberg is an optimistic view on the potential effect of Trump’s actions on the rest of the world.
Our view is that when the Fed moves to raise interest rates sufficiently to raise funds for Trump’s ‘rebuild America’ construction that this risks a catastrophic flow of funds out of the emerging markets.
UK – Supreme court rules that legislation to trigger Brexit must be approved by parliament
The UK government has lost its appeal in the Supreme Court to trigger Article 50 for Brexit.
The devolved assemblies of Scotland and Northern Ireland do not need to approve before Article 50 is triggered.
Currencies
US$1.0738/eur vs 1.0668/eur yesterday. Yen 113.29/$ vs 114.80/$. SAr 13.442/$ vs 13.523/$. $1.250/gbp vs $1.234/gbp.
0.756/aud vs 0.755/aud. CNY 6.860/$ vs 6.876/$.
Commodity News
Precious metals:
Gold US$1,213/oz vs US$1,213/oz yesterday - World Gold Council sees India’s average use at 850-950t by 2020
The World Gold Council expects consumption will not return to normal levels till 2018
The WGC lowered its consumption forecast for India to 650-750t last year vs 858t in 2015 as the Modi government instituted measures to force businesses to pay tax reducing cash liquidity in the economy.
Gold ETFs 57.1moz vs US$57.1moz yesterday
Platinum US$981/oz vs US$980/oz yesterday
Palladium US$779/oz vs US$790/oz yesterday
Silver US$17.13/oz vs US$17.11/oz yesterday
Base metals:
Copper US$ 5,828/t vs US$5,807/t yesterday
Aluminium US$ 1,852/t vs US$1,856/t yesterday
Nickel US$ 9,740/t vs US$9,840/t yesterday
Zinc US$ 2,801/t vs US$2,800/t yesterday
Lead US$ 2,335/t vs US$2,342/t yesterday
Tin US$ 20,135/t vs US$20,125/t yesterday
Energy:
Oil US$55.7/bbl vs US$55.3/bbl yesterday
Natural Gas US$3.306/mmbtu vs US$3.216/mmbtu yesterday
Uranium US$22.90/lb vs US$22.90/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$81.1/t vs US$78.2/t
Chinese steel rebar 25mm US$500.6/t vs US$501.0/t
Thermal coal (1st year forward cif ARA) US$69.1/t vs US$68.9/t yesterday
Premium hard coking coal Aus fob US$171.5/t vs US$172.6/t
Other:
Tungsten - APT European prices $191-200/mtu vs $187-198/mtu - Putin orders the resumption of tungsten production (Investor Intel)
Company News
Anglo American (LON:AAL) 1196.5 pence, Mkt Cap £15.43bn – Latest De Beers diamond sales.
Anglo American reports that De Beers achieved sales of US$720m for its 1st diamond sale of 2017.
This level of sales is approximately 70% above the US$422m achieved in the equivalent sale in 2016.
The company points to “good demand across the majority of our assortment during the first sales cycle of the year, as the industry entered the period when rough diamond demand is traditionally strongest.”
Commenting on the situation following the imposition of demonetisation controls in India, the company says “While the reopening of some diamond polishing operations in India saw something of an increase in demand for smaller, lower quality rough diamonds, we maintain a cautious outlook for these categories as the Indian industry continues to adjust to the post-demonetisation environment.”
Conclusion: De Beers’ sales have started the year strongly though, echoing similar observations from Petra Diamonds yesterday, the company expresses caution on demand for smaller, lower quality rough diamonds as India adjusts to demonetisation.
Ariana Resources (LON:AAU) 1.7p, Mkt Cap £14.5m – Vein system at Arzu identified during Kiziltepe drilling
Ariana Resources reports that its 2016 drilling programme, conducted in 2 phases, has identified an extensive vein system at the Arzu prospect within its Kiziltepe project in Turkey. The project forms part of the Red Rabbit joint-venture with Proccea Construction where Ariana Resources will hold a 50% interest “once the mine is operational in Q1 2017”.
The programme of reverse circulation (RC) drilling aimed “to target an area that contained the highest probability of vein mineralisation” and to refine target definition and an understanding of the geological setting of the vein mineralisation.
The exploration focussed on the Arzu area and drilling encountered mineralisation in every hole including an intersection of 11m at an average grade of 0.95g/t gold and 35.91 g/t silver. Drilling of disseminated arsenopyrite rich stockwork zones encountered an 11m at 2.24g/t gold and 11.06g/t silver in hole KTP-RC-44-15.
Interpretation of the drilling results suggests that the sub-surface “mineralisation trending from Arzu South is oriented at 295 degrees in strike … [and] … This suggests that mineralisation between Arzu North and Arzu South probably does exist but is not trending at the 315 degree strike orientation as originally modelled”.
“Future work will be directed towards the further expansion of the planned open pits at Arzu South, Arzu North and Derya in order to capture as much economic mineralisation as possible in this area. Alternatively, the Company may consider the development of a potential underground operation at Arzu Central in the event that further targeted drilling is successful in identifying higher-grade zones that could be accessed by underground development."
Conclusion: The drilling at Arzu has provided a number of encouraging targets and demonstrated that there is a more complex geological setting to the mineralisation than previously thought. Further work will, no doubt, be undertaken to assist the company in deciding whether to approach Arzu as a potential open-pit or underground mining opportunity. We await further news as the exploration unfolds.
*An SP Angel analyst has previously visited the Kiziltepe project in Turkey
ASA Resource Group* (LON:ASA) 1.625 pence, Mkt Cap £27.5m – Freda Rebecca lawsuit
ASA Resources has confirmed that it will oppose the legal claim brought by the Zindico Consortium in respect of its 85% owned Freda Rebecca gold mine.
The claim, which is against a number of parties including AS Resources, the National Indigenisation and Empowerment Board and the Ministry of Youth Development Indigenisation and Economic Empowerment, “seeks to compel all the respondents, jointly and severally, to indigenise the Freda Rebecca Gold Mine.”
ASA responds that, “Having taken legal advice, the Group does not believe that there is any merit to the claim and we have instructed our legal team in Zimbabwe to file opposing papers.”
The company confirms that operations at the mine are continuing as normal and that it does not expect the claim to result in any disruption to the operations.
Conclusion: It comes as little surprise that ASA Resources intends to contest the claims concerning the Freda Rebecca gold mine. We suspect that, with multiple parties involved, the litigation in the Zimbabwe High Court may prove to be protracted.
*SP Angel act as Nomad and broker to ASA Resources
Rio Tinto (LON:RIO) – 2996 pence, Mkt Cap £55,8billion – $2.45bn sale of Coal & Allied
Rio Tinto reports that it has reached agreement for the sale of its Coal & Allied Industries business in Australia’s Hunter Valley to Yancoal Australia for up to $2.45bn.
The sale will comprise an initial $1.95bn cash payment followed by $500m in aggregate deferred payments of $100m per year in cash for the following five years. There are also potential ryalty payments linked to the coal price.
Rio Tinto has made substantial divestments of its coal businesses and “has now announced or completed at least $7.7 billion of divestments since 2013. These transactions include the sale of Rio Tinto's interests in the Clermont coal mine, the Bengalla coal mine and the Mount Pleasant coal project.”
The purchaser, Yancoal Australia , “is listed on the Australian Securities Exchange. It is owned 78 per cent by Yanzhou Coal Mining Company Limited, which is listed on the Hong Kong, Shanghai and New York Stock Exchanges. Yanzhou is in turn owned 56 per cent by Yankuang Group Company Limited, which is controlled by State-owned Assets Supervision and Administration Commission of Shandong Province in the People's Republic of China.”
“Yancoal Australia operates a portfolio of seven mines, projects under feasibility study, a suite of exploration assets and infrastructure shareholdings across New South Wales, Queensland and Western Australia.”
Strategic Minerals* (LON:SML) 0.6 pence, Mkt Cap £7.1m – Increases its interest in Redmoor to 50%
Strategic Minerals reports that it is proceeding with its option to increase its stake in Cornwall Resources (CRL), the joint venture company operating the Redmoor tin tungsten project, to 50% by taking up “a further 248,864 shares in CRL at £3.39/share.”
When these shares have been issued, “expected to be in early February”, both Strategic Minerals and its partner, New Age Exploration, will each hold 309,838 shares in CRL.
These additional funds will enable CRL to go ahead with its planned, 2017, two-stage drilling programme aimed at increasing the “current 2.3Mt high grade Inferred Resource by a further two to three times and help to provide valuable information to assist in the preparation of a mine plan.”
Conclusion: Strategic Minerals and Cornwall Resources have already made considerable progress on advancing the Redmoor project, including the appointment of key staff to progress the exploration and community involvement and delivering a high-profile presentation of the project to an invited audience at the House of Commons in November. We look forward to the results of the exploration drilling when it gets underway later this year