Antofagasta (LON:ANTO) – Q4 Production
ASA Resources Group (LON:ASA) BUY, Target price 2.5p - INITIATION - Renaissance underway in Zimbabwe
(Today we publish a 30 page note on ASA Resources)
Aston Bay Holdings (TSX:BAY) – David Broughton, expert in sediment-hosted deposits, joins Aston Bay as Chief Geologist
BHP Billiton (LON:BLT) – H1 production and reduced copper production guidance
FinnAust Mining* (LON:FAM) – BUY Target Price 15p - Ilmenite marketing advisor
Rambler Metals (LON:RMM) – 2017 production guidance
Tethyan Resources (LON:TETH) – Drilling results from the Rudnitza prospect in Serbia
Jevons paradox – China likely to repeat challenge of UK Industrial Revolution
China is experiencing similar issues seen in the UK in the Industrial Revolution of the 18th century and members of the China’s Central Committee might like to consider the Jevons paradox as part of their plans to create greater energy efficiency.
The English economist William Stanley Jevons, in his book ‘The Coal Question’ published in 1865 coined the Jevons paradox in relation to the need to mine more coal in order to create more energy efficient machinery to cause the mining of less coal.
The paradox says that increasing energy efficiency may not reduce fuel consumption. Interestingly, improved efficiency is said to lower the relative cost of using an energy resource which tends to raise demand
With China’s National Development and Reform Commission proposing to spend $165bn on energy saving technologies and China’s National Energy Administration also reporting plans to spend $360bn it may be that these activities actually raise the tonnages of coal and other fossil fuels required rather than lower them. Hence the Jevons paradox!
With China allowing coal mines to work more days to meet increased demand perhaps we are already seeing the Jevons paradox in action.
We bring the sad news that Walton Imrie, former Chairman of Shanta Gold has passed away following a short illness
Walton Imrie was a founder and chairman of Shanta Gold which continues to mine gold in Tanzania enabling hundreds of jobs for local people.
Before Shanta he founded and ran Kestrel SA as Swiss-based asset manager as well as serving on the boards of Francistown Mining, Pan African Mining, Simmer & Jack Mines and Southern Prospecting.
Imrie was a committed Zimbabwean holding a number of farms in the region through the troubles and never giving up on the country he so loved.
The team at SP Angel remember Walton well and will miss his unique enthusiasm and charm.
The world is a lesser place without Walton Imrie, though the water buffalo may now roam without his challenge.
121 / SP Angel Mining Investment conference Cape Town, 6th-7th February 2017
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
Bank robber robs bank to get away from wife
A 70-year old man decided to rob a bank, grabbing $3,000 in cash and then waited for the police to turn up
The man said he robbed the bank to get away from his wife and he would rather be in jail than at home.
Curiously his wife accompanied him to court on Monday. Presumably to ensure he pleaded guilty.
The judges dilemma here is as to what is the worse, a 20-year custodial sentence or to send him home for the inevitable hard labour
Dow Jones Industrials +0.57% at 19,913
Nikkei 225 +1.43% at 19,058
HK Hang Seng +0.43% at 23,049
Shanghai Composite +0.22% at 3,150
FTSE 350 Mining +1.18% at 17,296
AIM Basic Resources +0.95% at 2,554
Economic News
Germany – business confidence weakens uexpecteedly from highest level in three years indicating that European economic momentum may have weakened.
Currencies
US$1.0728/eur vs 1.0668/eur yesterday. Yen 113.67/$ vs 114.80/$. SAr 13.368/$ vs 13.523/$. $1.252/gbp vs $1.234/gbp.
0.752/aud vs 0.755/aud. CNY 6.885/$ vs 6.876/$.
Senegal is to will mint its own crypto-currency this year in an attempt to improve financial inclusion across its economy according to DCE partners.
The eCFA is designed to work with existing mobile money platforms and allows national treasuries to benefit from specific fintech advantages without relinquishing control to decentralised organisations such as Bitcoin.
On successful roll-out, the eCFA will have a multiplier effect across the region’s monetary union of eight countries and reassuringly issued by the Banque Régionale de Marché.
State-sponsored e-currencies are being hailed as the hottest new opportunity for emerging economies to adopt new technologies and partially leapfrog legacy development paths.
Ecuador led the charge in 2015, with Tunisia being the first African country to digitise its currency in 2016 using block-chain technology.
Commodity News
Precious metals:
Gold US$1,202/oz vs US$1,213/oz yesterday
Gold ETFs 57.0moz vs US$57.1moz yesterday
Platinum US$989/oz vs US$980/oz yesterday
Palladium US$782/oz vs US$790/oz yesterday
Silver US$16.93/oz vs US$17.11/oz yesterday
Base metals:
Copper US$ 5,951/t vs US$5,807/t yesterday
Aluminium US$ 1,866/t vs US$1,856/t yesterday
Nickel US$ 9,705/t vs US$9,840/t yesterday
Zinc US$ 2,811/t vs US$2,800/t yesterday
Lead US$ 2,381/t vs US$2,342/t yesterday
Tin US$ 20,500/t vs US$20,125/t yesterday
Energy:
Oil US$55.1/bbl vs US$55.3/bbl yesterday
Natural Gas US$3.269/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$80.7/t vs US$78.2/t
Chinese steel rebar 25mm US$498.8/t vs US$501.0/t
Thermal coal (1st year forward cif ARA) US$67.8/t vs US$68.9/t yesterday
Premium hard coking coal Aus fob US$170.2/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
Antofagasta (LON:ANTO) 845p, Mkt Cap £8.33bn – Q4 Production
Antofagasta has reported a strong fourth quarter with production increasing 13.8% from the previous quarter to 205,500 tonnes and a 20% year-on-year decline in net cash costs to $1.20/lb.
As a result, Antofagasta is reporting a 15% increase in full year 2016 copper production to 709,400 tonnes. This is marginally below the company’s previously announce 2016 guidance range of 710-740,000 tonnes. Gold production increased by 26.6.6% during the year to 270,900 ounces.
The company attributes much of the increase in both copper and gold output to the performance of the Centinela mine where increased throughput, aided by improved copper recovery rates, improved copper output by 24% to 180,400 tonnes. Centinela was able to reduce its net cost of copper production by almost 36% to $1.19/lb.
Antofagasta’s production and cost guidance for 2017 is for 685-720,000 tonnes of copper production and 185-205,000 oz of gold plus 8,500-9,500 tonnes of molybdenum.
On an individual mine basis the company is expecting increased copper production at all the mines with Los Pelambres (330-345,000 tonnes vs 355,400 tonnes in 2016); at Centinella (220-230,000 tonnes vs 180,400 tonnes) and at Antucoya (80-85,000 tonnes vs 66,200 tonnes) while production at Zaldivar is expected to rise from 51,700 tonnes to 55-60,000 tonnes.
The Los Pelambres mine is also expected to produce 45-55,000 oz of gold (2016 – 57,800 oz) and 8,500-9,500 tonnes of molybdenum. Gold production guidance for Centinela is expected in the range 140-150,000 oz (2016 – 213,000 oz).
Cash costs in 2017 are expected to increase from $1.20/lb to $1.30/lb. On a net cash cost basis, Los Pelambres is expected to be the Group’s lowest cost producer at $1.15/lb (2016- $1.06/lb), with Centinela at $1.35/b (2016- $1.19/lb), Antucoya at $1.60/lb (2016 - $1.83/lb) and Zaldivar at $1.50/lb(2016 - $1.54/lb).
Against the background of the 2017 guidance, the company remains “focused on operating and cost efficiencies and achieving our production targets”
Antofagasta comments that it believes “the industry has passed the low point of this commodity cycle, uncertainty persists and we need to build carefully on the solid foundations of our existing operations.”
Conclusion: Antofagasta marginally missed its 2016 copper production guidance, however, with the Centinela operation and Antucoya operations building up the company is looking for a similar level of production in 2017. The company expresses a view that the current commodity cycle has passed the low point although uncertainty remains.
ASA Resources Group (LON:ASA) 1.675p, mkt cap £55m - INITIATION - Renaissance underway in Zimbabwe
BUY, Target price 2.5p (Today we publish a 30 page note on ASA Resources)
CLICK FOR PDF
Highlights
Comparing consensus PE ratios of similar AIM listed mining companies we estimate that, excluding the Zani Kodo gold project or a restarting of nickel refining in Zimbabwe, ASA Resources is worth £82.6m
This accords reasonably well with our estimated NPV10% of £75.8m.
Valuing the Zani Kodo project at US$40/oz of its current Measured and Indicated Resource base adds a further potential £20m to our estimate and offers additional potential for value creation as the balance of the 3m oz resource is upgraded or extended as exploration proceeds.
Over the next two years, gold output is increasing by over 30% at the Freda Rebecca mine in Zimbabwe.
Costs of nickel production at Bindura are declining significantly and the recommencement of smelting operations should enable ASA Resources to capture more of the nickel value chain
Significant projects in the pipeline could include the development of the 3m oz gold resource at Zani Kodo in the DRC, where relatively high grades are available in the Zani Kodo Main deposit, and the restart of nickel refining at Bindura
P&L (US$m) Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Revenue 142.5 152.3 121.3 137.3 154.4 168.3 168.3
Cost of Sales (76.1) (93.5) (86.0) (81.5) (90.2) (99.1) (98.7)
Gross Profit 66.3 58.8 35.4 55.8 64.2 69.2 69.6
EBITDA 25.0 18.8 (0.3) 21.7 26.1 27.9 28.6
Pre-Tax Profit 43.9 14.9 (5.2) 7.6 13.2 15.7 17.4
Net Profit 50.6 7.0 (9.6) 4.7 9.1 11.0 12.5
* SP Angel acts as Nomad and broker to ASA Resouces and its analysts have visited ASA’s Bindura Nickel, Freda Rebecca and Zani Kodo assets.
Aston Bay Holdings (TSX:BAY) 0.17c/s, Mkt cap C$10.1m – David Broughton, expert in sediment-hosted deposits, joins Aston Bay as Chief Geologist
Aston Bay Holdings reports that it has received the complete set geochemical results for the summer soil sampling program at the Storm Property on Somerset Island, Nunavut in Northern Canada.
The $2m soil survey saw the collection of 2,005 soil samples over an area of approximately 120 km north-south and 20 to 40 km east-west on the property.
The press release shows two maps showing the occurrence of relatively high-grade copper and zinc in soil samples with the copper at >47.3ppm and the zinc running at >87.8ppm.
“The soil sampling survey has both replicated previously-known copper in soil anomalies, as well as delineated several new areas with anomalous copper and zinc concentrations,” according to Thomas Ullrich, CEO of Aston Bay and a former geologist with Antofagasta.
Most importantly Dr. David Broughton a world renown sediment-hosted deposit specialist has joined Aston Bay as Chief Geologist on the Storm and Seal Projects. Significantly, Broughton is happy to join Aston Bay despite the recent notice of termination by BHP of its Option Agreement with the company.
Broughton reviewed the drill core in November and confirmed it is indeed a sedimentary hosted copper prospect with potential as part of his personal review of the property.
Previously Broughton oversaw Ivanhoe Mines’ discovery of two major Mineral Deposits at Kamoa in the DRC and Flatreef in South Africa.
He has extensively experience exploring in Canada with Hemlo Gold, Agnico-Eagle, Canamax and Cyprus Amax and was project manager for Cyprus Amax’ Kansanshi pre-feasibility project, now Zambia’s largest producing copper mine.
He was also part of the AMIRA P544 research team focused on mineralization controls in the Zambian Copperbelt later working as a consulting geologist specializing in stratiform copper deposits in Zambia, the Democratic Republic of Congo (DRC), Namibia, China, United States, Canada and Poland.
Broughton was co-leader of the Kamoa discovery team that received the prestigious Prospectors & Developers Association of Canada’s Thayer Lindsley Award in 2015. The award recognizes an individual or a team of explorationists credited with a recent significant mineral discovery.
Prior to Ivanhoe he was Exploration Manager, Sediment-Hosted Copper Deposits for Phelps Dodge Exploration Corp./Freeport Exploration focusing on projects in the DRC (Tenke-Fungurume), Zambia, Canada, United States and Peru.
Dr. Broughton is a Fellow of the Society of Economic Geologists and a Fellow of the Geological Association of Canada. He also is a member of the Society for Geology Applied to Mineral Deposits and the Geological Society of South Africa.
BHP's exit further frees up the Seal zinc prospect along with the potential for further zinc discoveries along the belt.
BHP's $3m drilling program has given Aston Bay the answer to how to find the copper deposits using ‘VTEM’ remote sensing
Previously released drill results show visible copper mineralisation with assay results below:
true widths estimated to be 75-100% of core)
16m at 3.07% copper and 12.26g/t silver from 93m down hole
4m at 1.17% copper
20m at 0.44% copper
The company is at the ‘Roundup’ conference in Vancouver this week.
Further details can be found at https://astonbayholdings.com/storm-copper
Conclusion: Dave Broughton brings a wealth of geological experience to better focus Aston Bay’s exploration program and to hopefully nail one or more meaningful copper and zinc discoveries in the region.
The company are meeting with new potential joint venture partners and a number of major funds; CDF, Mackenzie and JP Morgan continue to back the company.
The Aston Bay team are working towards a new 43-101 resource on the Seal Zinc project with plans for a PEA in the Autumn.
*SP Angel act as broker to Aston Bay
BHP Billiton (LON:BLT) 1467.5 pence, Mkt Cap £84.68bn – H1 production and reduced copper production guidance
BHP Billiton reports increased H1 production for iron ore (up 4% to 118 million tonnes) and metallurgical coal (up 1% to 21 million tonnes).
Copper production fell by 7% to 712,000 tonnes reflecting a 30% decline at Olympic Dam, an 8% fall at Pampa Norte and a 9% reduction at Antamina. The flagship Escondida mine maintained its production levels unchanged at 452,000 tonnes. As a result of the lower output at Olympic Dam which resulted from power supply issues as well as unplanned maintenance during the period and the planned smelter maintenance campaign, the company is reducing its overall guidance for copper production for the year by 2% to 1.62 million tonnes.
The Group’s Western Australian iron-ore operations achieved record production during H1 as a result of the ramping up of capacity at Jimblebar as a result of a new primary crusher as well as improved relaiability and lower maintenance losses at Yandi.
FinnAust Mining* (LON:FAM) 6.8p, Mkt Cap £41.8m – Ilmenite marketing advisor
BUY Target Price 15p
FinnAust Mining has appointed a marketing advisor to direct the strategy the sale of mineral sand concentrates from the Pituffik project in Greenland.
Bruno Cavalancia, formerly at Rio Tinto and Kenmare is well used to working with mineral sands and customers for concentrate product.
The company plans on publishing a maiden JORC resource in the next few months.
See link below for company video presentation
https://www.youtube.com/watch?v=SKgETC0kMAA&feature=youtu.be
*SP Angel act as nomad and broker to FinnAust and acted for FinnAust in this placing
Rambler Metals (LON:RMM) 9 pence, Mkt Cap £37.7m – 2017 production guidance
Rambler Metals has announced production guidance for 2017 suggesting an increase of over 20% in copper production and a similar percentage decline in gold output.
In detail, the company is expecting to produce 5,100-5,800 tonnes of saleable copper in 2017 compared to 4,174 tonnes in 2016. Gold production guidance of 4,400-5,100 ounces is lower than the 6,132 ounces produced in 2016.
The guidance reflects “the first full year of massive sulphide ore blending from the Lower Footwall Zone. A key milestone for 2017, and the Phase II expansion plan, will be to reach full production at 1,250 metric tonnes per day (“mtpd”) by mid-calendar year.”
The company also notes that "While developing into the LFZ much of the initial material being mined and processed will be of lower grade, as seen in calendar Q4 2016. Mining this material for mill feed will increase the unit cost per pound. Once production can be sustained at 1,250 mtpd both the grade and unit cost will improve and stabilise."
Conclusion: Rambler Metals is building up production as it produces massive sulphide ore from the Lower Footwall Zone, although there has been some reduction in grades and increased costs during the transition period, by mid-year the company expects to production to stabilise and costs to improve as the grade of ore feed stabilises.
Tethyan Resources (LON:TETH) 3.875 pence, Mkt Cap £5.7m – Drilling results from the Rudnitza prospect in Serbia
Tethyan Resources continue to report meaningful copper, gold grades in drilling at their Rudnitza prospect in Serbia.
Tethyan Resources has reported the results from 3 more drill-holes of its 4 hole drilling programme (2,318m) at the Rudnitza copper-gold porphyry project in Serbia.
The company comments that “These three additional drill holes have significantly expanded the footprint of copper-gold porphyry-style mineralisation at Tethyan's Rudnitza prospect, which had previously been identified in RDD-001.”
The results are:
Drillhole RDD-004 356 m @ 0.38% copper and 0.31 g/t gold from 48 m
(including 30 m @ 1.45% Cu and 0.39 g/t Au from 102 m)
Drillhole RDD-003 285 m @ 0.31% copper and 0.33 g/t gold from 42 m
(including 16.7 m @ 1.55 % Cu and 0.20 g/t Au from 102 m).
This follows the earlier announcement of 567m at an average grade of 0.28% copper and 0.45 g/t gold in hole RDD-001
Including a higher grade intersection, between 122m and 160m, of 38m grading 1.18% copper and 0.38g/t gold which may represent a zone of supergene enriched mineralisation.
Hole RDD-002 also intersected mineralisation, albeit at a slightly lower grade and deeper, with 86m averaging 0.16% copper and 0.30g/t gold from a depth of 354m.
The Suva Ruda permit area was identified by Phelps Dodge in 2004. Phelps then “drilled 7 widely spaced drill holes over an area of 1.2km by 0.8km.” Tethyan Resources’ hole “RDD-001 was drilled very near to the site of one of the earlier Phelps Dodge drill holes which had reported 144m grading at 0.4% copper and 0.4 g/t gold but had been completed at 244m still in mineralisation.”
COO, Fabian Baker commented that “These encouraging results of Tethyan's first drill program at Rudnitza have confirmed a large copper-gold porphyry-style mineralised system.”
Conclusion: The results from Rudnitza are starting to make the Rudnitza project look like a meaningful discovery.