Georgian Mining Corporation* (LON:GEO) – Resource at Kvemo Bolnisi
Randgold Resources (LON:RRS) – Looking for record Q4 production at Loulo-Gounkoto
Rainbow Rare Earths Ltd (LON:RBW) – New listing today
Thor Mining (LON:THR) – Exploration application to extend Molyhil
Vast Resources (LON:VAST LN) – Partial disposal of Pickstone Peerless to raise funds for Romania
Equities fall with metals prices mixed amid controversial Trump immigration orders and as Chinese are out for the week for New Year celebrations.
The FOMC will be holding its first monetary policy meeting this week with the decision due on Wednesday while US NFP numbers to be released on Friday.
No change in the policy rate forecast with job numbers expected to come in close to a 12M average and earnings to grow at 2.7%yoy, the fifth strongest reading in the last seven years.
Brent is off for a second consecutive day extending declines to 1.5% over the period on the back of increased US supply concerns.
Friedland left speechless!
Robert Friedland is speechless, an unusual event for a man of such great speaking ability.
The Kakula deposit at the southern end of the Kamoa project in the DRC has expanded its length by 40% in recent drilling.
The project is held within Ivanhoe Mines Ltd, where Friedland is the largest shareholder and which is now worth US$2.5bn.
Friedland’s previous successes were at Voisey’s Bay and in the definition and development of Oyu Tolgoi which was acquired after BHP walked away due to exploration cut backs in 1999.
At this rate Friedland will be jumping the queue for another new private jet.
Dow Jones Industrials -0.04% at 20,094
Nikkei 225 -0.51% at 19,369
HK Hang Seng 23,361 Markets are closed for holidays
Shanghai Composite 3,159 The nation celebrates Chinese New Year
FTSE 350 Mining -1.55% at 16,602
AIM Basic Resources +0.44% at 2,552
Economic News
US – GDP growth slowed in the final quarter of 2016 on the back of a negative contribution from the trade sector while private consumption business investments showed positive trends.
Trade growth is being constrained by a strong dollar and weak overseas markets while aggressive President Trump rhetoric towards US significant trading partners dampens outlook.
Exports were down 4.3%qoq, the biggest decline since early 2015, with imports increasing 8.3%qoq, the most in two years.
Domestic spending ended the year on a strong note adding 1.7pp to GDP growth rate.
Sales to domestic consumers which excludes a change in inventories and exports climbed 2.5%qoq, the strongest reading since Q3/15.
Business investment climbed 3.1%qoq marking the first increase in five quarters.
Positive durable goods and capital goods orders reports for Dec point to an improvement in the business sentiment as companies increase their capital spending.
Germany – State-by-state inflation numbers are due later today with forecasts for prices to have recorded a decline in Jan but coming in strong on annual basis.
A YoY acceleration in the inflation pace is likely to reflect higher energy prices.
Spain – Flash GDP numbers showed the economy maintained strong growth momentum in 2016 as growth averaged 3.2%yoy, in line with the 2015 pace.
This made the Spanish economy the second fastest growing in the Eurozone (after Ireland).
The government is currently busy to take the 2017 budget through the fragmented Parliament with the European Commission suggesting the draft comes in line with the region’s fiscal guidelines.
A recovery is expected to slowdown in 2017 with both the Bank of Spain and markets forecasting a 2.5% growth.
Q4 GDP (%qoq): 0.7 v 0.7 in Q3 and 0.7 forecast.
Q4 GDP (%yoy): 3.0 v 3.2 in Q3 and 3.0 forecast.
Currencies
US$1.0699/eur vs 1.0675/eur last week. Yen 114.83/$ vs 115.12/$. SAr 13.619/$ vs 13.474/$. $1.254/gbp vs $1.254/gbp.
0.754/aud vs 0.753/aud. CNY 6.884/$ vs 6.884/$.
Commodity News
Precious metals:
Gold US$1,190/oz vs US$1,184/oz last last week
Gold ETFs 56.8moz vs US$56.8moz yesterday
Platinum US$981/oz vs US$970/oz last week
Palladium US$731/oz vs US$716/oz last week
Silver US$17.12/oz vs US$16.72/oz last week
Base metals:
Copper US$ 5,895/t vs US$5,844/t last week
Aluminium US$ 1,810/t vs S$1,824/t last week
Nickel US$ 9,535/t vs US$9,385/t last week
Zinc US$ 2,763/t vs US$2,737/t last week
Lead US$ 2,279/t vs US$2,276/t last week
Tin US$ 19,750/t vs US$19,850/t last week
Energy:
Oil US$55.3/bbl vs US$56.1/bbl last week
Natural Gas US$3.310/mmbtu vs US$3.245/mmbtu last week
Uranium US$23.50/lb vs US$23.25/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$82.4/t vs US$82.4/t
Chinese steel rebar 25mm US$498.8/t vs US$498.8/t
Thermal coal (1st year forward cif ARA) US$65.0/t vs US$65.0/t last week
Premium hard coking coal Aus fob US$169.8/t vs US$170.2/t
Other:
Tungsten - APT European prices $194-200/mtu vs $$191-200/mtu
Company News
Georgian Mining Corporation* (LON:GEO) 9.375p, Mkt Cap £7.5m – Resource at Kvemo Bolnisi
Georgian Mining Corporation ‘GMC’ report a new and optimised in-pit mineral resource for their Kvemo Bolnisi project in Georgia.
The company should start mining the resource shortly with ore to be processed through the nearby Madneuli plant run by GMC’s jv partner.
The resource of 702,000 grades 0.99% copper and 0.17g/t gold equating to 6,950t of contained copper worth around $38m if fully recovered.
This is part of a slightly larger in-situ resource of 947,000t copper and 0.15g/t gold.
There is significant opportunity to expand the mineral resource with another 7,500m of drilling to be completed in H1 2017.
The presence of gold oxides at and close to surface could lead to further gold recovery through the joint venture partner’s heap leach operations.
The use of the Madneuli plant and a mining contractor saves hugely on GMC’s capital costs to the extent that there is not much for the company to spend capital on.
What capital costs there are may be covered by some form of forward sale agreement. We note there may be some costs associated with work to adjust and upgrade some components of the processing plant as well as costs relating to infrastructure and mobilisation at Kvemo Bolnisi.
The potential scale of Kvemo Bolnisi looks like it could turn out to be similar to the neighbouring Madneuli mine which has produced over 80mt of copper-gold and polymetallic ores.
We also expect GMC to continue to drill and delineate new resources at the Kvemo Bolnisi mine site, David Garedji and other prospects.
*SP Angel acts as Nomad and Broker to Noricum. The company has issued 267,750 warrants to SP Angel exercisable at 10p/s
Randgold Resources (LON:RRS) 6525 pence, Mkt Cap £6.1bn – Looking for record Q4 production at Loulo-Gounkoto
Randgold Resources reports that it expects its Loulo-Gounkoto mining complex in Mali to report “another new production record for the fourth quarter of 2016”.
Chief Exectutive, Mark Bristow, told local media in Mali that it was on track to exceed “its production guidance of 670,000 oz of gold for 2016, and would maintain an annual production of plus 600,000 ounces for at least the next 10 years.”
The company’s brownfields exploration around Loulo had added “over 600,000ounces of inferred resources … through drilling at Gara in 2016 while recent studies at the Yalea deposit had identified a number of targets for follow-up on 2017”.
Randgold Resources has continued its long term exploration in Mali “with exploration teams progressing targets across western Mali during the fourth quarter of the year.”
Elsewhere, the company reports that it is talks to end an illegal sit-in at its Tongon mine in Cote d’Ivoire where “some employees [are] demanding annual ex gratia payments.” The company notes that representatives of the union do not support the sit-in.
Conclusion: The scale and potential longevity of the Loulo – Gounkoto mining complex in Mali marks it out as a significant asset which should help to underpin the company’s continued presence in Mali for many years to come.
Rainbow Rare Earths Ltd (LON:RBW) – 11.25p, mkt cap £17.1 – New listing today
Rainbow Rare Earths Ltd has listed as a Standard listing on the main board of the London Stock Exchange today.
We have been working through the Competent Persons Report within the 325 page prospectus and will be interested to meet management tomorrow to better understand how the Gakara project will operate in Burundi.
See the Competent Person’s Report is contained within the full prospectus and not under the competent persons report heading on the webiste:
https://www.rainbowrareearths.com/wp-content/uploads/2017/01/Rainbow-Rare-Earths-Prospectus-25.01.17-FINAL.pdf
The report gives a good description of the mine plan and shows the month by month mine plan with expected ore production tonnages and stripping ratios.
This is commendable work but it does highlight the variable nature of expected ore production and the relatively high stripping ratio.
We note page 5 of the CPR “MSA is of the opinion that in order to estimate and report a Mineral Resource for the Gakara rare earth mineralisation, it is likely that a large amount of closely-spaced drilling, for example 5 m by 5 m or 10 m by 10 m, would be required. Such a grid would be necessary to constrain the geometry of the pinch and swell stockwork mineralisation to the degree of confidence required to report a Mineral Resource. Whether it would be financially viable to drill to the desired extent is not part of the scope contained in this report.”
Gakara is reported to be one of the highest-grade rare earths projects in the world with grades of around 47%-67% Total Rare Earth Oxide making this a particularly interesting project by any standards.
Gakara concentrates are weighted heavily towards the magnet rare earths, including neodymium and praseodymium.
Historically production from 14 different sites enabled the sale of a 66-71.5% TREO concentrate product to be sold to Rhone Poulenc and Th Goldschmidt AG from 1948-1978.
Mining is rather unusually to be done manually with no explosives in the Soft ground
The Gakara project has a JORC ‘Exploration Target’, of between 20,000-80,000t of mineralised material grading 47-67% total REO. This is a very approximate style of resource calculation not to be confused with the more rigorous JORC resources.
The company reports it has raised US$8m to fast-track what it says is a fully permitted project to production with first concentrate sales targeted within 9 months. The company reckon $4.8m has been invested in the mine to date.
Thor Mining (LON:THR) 0.06 pence, Mkt Cap £2.2m – Exploration application to extend Molyhil
The company is applying for an additional 68 sq km of exploration licences to extend its wholly owned Molyhil tungsten licences in the Northern Territory of Australia.
Based on “highly encouraging 2016 results from the exploration drilling programme to test for additional tungsten mineralisation” the company considers that “Even moderate exploration success in this new exploration area is likely to have a dramatically positive effect on the Molyhil NPV. In addition, there is very good potential to find another one or two similar prospects to Molyhil.”beneath the shallow soil cover of this new ground."
Based on an indicated and inferred resource of 4.7m tonnes at an average grade of 0.28% tungsten trioxide, and a probable reserve of 3mt at 0.31%, in January 2015 the company published details of a feasibility study under which a six-year mining life to produce tungsten concentrate at an average cost of US$112 per metric tonne unit. would generate an NPV of A$67m with an IRR of 44% after tax and royalty payments from a capex of A$70m.
We note that in January 2015 the price of ammonium paratungstate was around US$305/mtu compared to the current price of US$194/199.5 per mtu.
Conclusion: The additional ground at Molyhil, if granted, may provide the company the scope to extend the mine life at Molyhil beyond the currently proposed 6 years. Location of pods of higher grade skarn mineralisation would provide a boost to the resoucre grade which would be particularly welcome while APT prices remain subdued.
Vast Resources (LON:VAST) 0.415 pence, Mkt Cap £18.8m – Partial disposal of Pickstone Peerless to raise funds for Romania
Vast Resources has announced that it has conditionally agreed to sell 49.99% of its 50%interest in its Pickstone Peerless and Giant gold mines in Zimbabwe for S$4m in cash.
The transaction is subject to the satisfactory completion of due diligence by the purchaser, the Mauritian based investment company SSCG Africa Holdings (SSA), and to regulatory approvals.
In addition to the partial sale of the Zimbabwean gold assets, companies in the SSA group have agreed to lend Vast Resources a further US$4m, payable in two tranches each of US$2m over a 4 year period with interest payable at an interest rate of 1% per month.
The funds are to be used to complete the upgrade at the Manaila polymetallic mine in Romania and to develop “additional mining opportunities identified in Romania details of which the Company plans to announce in the near future.” as well as for corporate purposes.
The company’s Chairman, Brian Moritz, point out that reducing the company’s exposure to Zimbabwe is “prudent given the prevailing political and economic uncertainties of that country” while the CEO, Roy Pitchford, in addition to highlighting the opportunities available in Romania, now described as the area of the “Company’s core activities” comments that “Our immediate priority is to expand and develop or current resources in and around the Manaila Polymetallic Mine complex and establish one of Europe’s largest copper mining projects.”
Conclusion: The company is refocussing its priorities from Zimbabwe in order to expand its activities in Romania. The partial sale of the Zimbabwean gold assets retains some exposure for the time when the company judges that “conditions improve in the country”.