Birimian Limited (ASX:BGS) A$0.31, mkt cap A$58.67m – Scoping study puts figures round Bougouni Goulamina lithium pegmatite project in Mali
Centamin (LON:CEY) 163 pence, Mkt Cap £1.9bn – Record 2016 gold production underpins proposed final dividend of 13.5 US cents
Kodal Minerals* (LON:KOD) 0.445p, Mkt Cap £23.2m – Kodal Bougouni lithium project update
Metminco* (LON:MNC) 5.1p, mkt cap £6.5m, – A$4.85m fundraising and Quarterly Report
Savannah Resources (LON:SAV) 5.9 pence, Mkt Cap £26.5m – Completion of drilling at Mutamba project, Mozambique
Miners are stronger today with commodity prices consolidating yesterday’s gains on a weaker US$ and solid Chinese PMI numbers.
• The US$ index is flat today stabilising after a drop recorded yesterday as Trump administration Expressed their preference for a weaker currency.
• Trump criticised US trading partners arguing Germany, Japan and China are devaluing their currencies at a disadvantage to the US.
• “Every other country lives on devaluation,” Trump said.
• The FOMC will be releasing its policy announcement today with no change to rates from current 0.50-0.75% expected.
• Gold is little changed holding onto its gains from a decline in the US$ in the previous trading session.
• Copper prices have briefly touched the $6,000/t this morning on the news a major labour union at Escondida rejected the management offer paving the road for a strike.
Gold prices rise as Trump aid accuses China, Japan and Eurozone (Germany) of manipulating currencies indicating he may look to move US dollar lower
• Many in the world was shocked to see the election of Donald Trump. We were less shocked as we understand that few voters change the direction of their vote through the campaign process and we believe the Republicans had the election in the bag before campaigning started. If anything Trump was losing voters as the campaign progressed but just didn’t lose as many as he needed to lose the election.
• What is somewhat shocking investors is that Trump is now doing what he said he would do.
• Rather rarely this many of words is also a man of action
• This is scaring markets and investors and lifting gold prices as markets interpret the new risk to the global economy
• Is Trump treating his office as a form of reality TV show or is Trump simply enacting Republican policies designed to ‘Make America Great Again’
• Trump’s firing of the acting US attorney general for refusing to enact one of his orders signals a determination to enforce his orders beyond normal political norms.
• Peter Navarro, head of Trump’s new National Trade council, comments that the Euro was a grossly undervalued Deutsche Mark and accusations of China and Japan of also using monetary policy to devalue their currencies suggests that the US is about to get tough on its trading partners and to move to even the score in terms of two-way trade.
• Fortunately, the UK appears to be on the right side of US trade policy for now.
Scientists make graphene using soybean oil
• Scientists in Australia appear to have turned ordinary cooking oil into graphene which may eventually lead to lower cost graphene production
• The move should not change the market for graphite production but may take some of the wind out of the sales of promoters for prospective graphite producers
Moon Express – receives permission to travel beyond Earth orbit to land on the Moon
• The company has raised a further $20m in PE financing to fund its maiden lunar mission
• Moon Express has raised $45m from investor to date
• Co-founder Naveen Jain reckons the company now has sufficient cash to land a small robotic spacecraft on the surface of Moon towards the end of this year
• The team hope to win the $20m Google Lunar XPRIZE and help jump-start a new era of space exploration
Dow Jones Industrials -0.54% at 19,864
Nikkei 225 +0.56% at 19,148
HK Hang Seng -0.18% at 23,318
Shanghai Composite 3,159 The nation celebrates Chinese New Year
FTSE 350 Mining +1.09% at 16,939
AIM Basic Resources -0.03% at 2,568
Economic News
US – Consumer confidence eased in Jan led by deteriorating economic expectations including business conditions, employment and incomes outlook.
• The index measuring expectations over the next six month fell from 106.4 to 99.8 last month marking the sharpest drop since Nov/15.
• Respondents anticipated stronger inflation and interest rates over the coming year.
• On a positive note, current conditions index climbed on pro-stimulus Trump administration stance.
China – Jan PMI data point to a growth pace consolidation, according to official numbers.
• Private sector PMIs are due later this week with estimates suggesting manufacturing sector growth to have stabilised in Jan, but at a slightly higher pace.
• Manufacturing PMI: 51.3 v 51.4 in Dec and 51.2 forecast.
• Services PMI: 54.6 v 54.5 in Dec.
Eurozone – Manufacturing sector in the single currency zone hit the highest level in nearly six years, according to revised Markit PMI numbers.
• The report has also highlighted building up inflationary pressures led by a weaker euro and a rise in commodity prices.
• “If current growth of manufacturing activity and the associated rise in prices is sustained, rhetoric at the ECB is likely to become more hawkish,” Markit said.
• Despite an increasing political uncertainty regarding the Brexit vote and coming up general elections in the region, the survey highlighted strong business sentiment which climbed to the highest since the debt crisis.
• Manufacturing PMI: 55.2 v 55.1 (preliminary reading) and 54.9 in Dec.
UK – Parliament is set to hold a final vote on Brexit later today with PM expecting the bill to pass ahead of the start of the two year Brexit process by the end of Mar.
• On a separate note, the average UK house price inched up 0.2%mom in Jan amid market forecasts for a flat month.
• Although the pace of price increases did slow down from 0.8%mom recorded in Dec.
• For 2016 prices climbed 4.5% coming in line with the 2015 pace despite the Brexit vote.
Currencies
US$1.0795/eur vs 1.0697/eur yesterday. Yen 113.39/$ vs 113.90/$. SAr 13.514/$ vs 13.591/$. $1.258/gbp vs $1.245/gbp.
0.758/aud vs 0.755/aud. CNY 6.884/$ vs 6.884/$.
Commodity News
Precious metals:
Gold US$1,210/oz vs US$1,197/oz yesterday
Gold ETFs 56.8moz vs US$56.8moz yesterday
Platinum US$995/oz vs US$988/oz yesterday
Palladium US$763/oz vs US$751/oz yesterday
Silver US$17.52/oz vs US$17.18/oz yesterday
Base metals:
Copper US$ 5,956/t vs US$5,908/t yesterday
Aluminium US$ 1,817/t vs US$1,812/t yesterday
Nickel US$ 10,000/t vs US$9,935/t yesterday
Zinc US$ 2,860/t vs US$2,827/t yesterday
Lead US$ 2,353/t vs US$2,378/t yesterday
Tin US$ 19,855/t vs US$19,850/t yesterday
Energy:
Oil US$55.6/bbl vs US$55.1/bbl yesterday
Natural Gas US$3.179/mmbtu vs US$3.179/mmbtu yesterday
Uranium US$24.65/lb vs US$24.50/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$81.1/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$66.9/t vs US$65.9/t yesterday
Premium hard coking coal Aus fob US$169.7/t vs S$169.8/t
Other:
Tungsten - APT European prices $194-200/mtu vs $$191-200/mtu
Company News
Birimian Limited (ASX:BGS) A$0.31, mkt cap A$58.67m – Scoping study puts figures round Bougouni Goulamina lithium pegmatite project in Mali
• Birimian Limited report results and the detail of its scoping study on the Bougouni lithium project in Mali.
• The report is a rough study and is not sufficient to support ore reserve estimation or give assurance of economic development.
• Capital cost of US$47.2m to kick start the project including infrastructure with a total estimated capital cost of US$83.4m for a two stage development. This includes a US$10.9m contingency.
• Mine ore production 1mtpa. Dense Media Separation plant to recover 75% over the life of mine followed by flotation.
• Strip ratio just 3:1 is relatively good for a hard-rock project.
• Sales price estimated at US$537/t for a 6% Li2O concentrate.
• Cash costs estimated at US$326/t of concentrate
• The process does not go through to produce lithium carbonate but simply upgrades the spodumene to a 6% concentrate from a 1.5% grade.
• While spodumene concentrate prices may generally follow lithium carbonate prices it is possible that supply / demand factors may cause concentrate prices to vary significantly.
• The scoping study now gives the team a basis on which to begin a more definite Pre-Feasibility study which is due for completion in the ‘June Quarter’.
Bougouni Goulamina project Scoping Study Parameters and LOM Operating Assumptions
• Potential Mine Life (Years) 13
• Indicated Resources 40%
• Inferred Resources 60%
• Annual throughput 1.0mtpa
• Strip ratio 3:1
• Average feed grade 1.54 %Li2O
• Recovery 75%
• Potential Annual Production 190,000tpa Li2O 6% concentrate
• Open pit mining costs US$62/t of concs
• Processing cost US$90/t concs
• Transport Cost US$72/t concs
• Port & Handling Cost US$89/t concs
• General and admin US$13/t concs
• Capital Cost - Stage 1 (incl. contingency) US$47m
• Capital Cost - Stage 2 (incl. contingency) US$36m
• Corporate tax and royalty rates 25% and 6%
• Average Cash Cost US$326/t concs
• Concentrate Price US$537/t
Conclusion: Birimian has worked up the key parameters for advancing the Bougouni lithium project. High levels of interest in securing new lithium supply look likely to help secure the necessary funding for a project which currently ranks relatively well in terms of lithium pegmatite grade. It is possible that Chinese interest in the project may return once restrictions on the export of capital out of China are eased.
Centamin (LON:CEY) 163 pence, Mkt Cap £1.9bn – Record 2016 gold production underpins proposed final dividend of 13.5 US cents
• Centamin reports that, following its sevenths successive year of production growth at the Sukari mine, it is proposing a final dividend of 13.5 US cents per share.
• The company reports that, if approved, the final dividend would bring the full year payout to “US$178 million, equivalent to approximately 70% of our net free cash flow in 2016.”
• During 2016 the company recouped the capital investment in Sukari and “profit share commenced with the Egyptian Government during the third quarter”.
• Production during the year amounted to 551,036 oz of gold at a cash cost of US$513/oz and an all-in-sustaining cost (AISC) of US$694/oz and the company is guiding towards 540,000oz of production at a cash cost of US$580/oz (AISC US$790/oz).
• “Centamin remains debt-free and unhedged with cash, bullion on hand, gold sales receivable and available-for-sale financial assets of US$428 million at 31 December 2016, up 85% (2015 US$231 million).”
• The company maintains a focus on cost control at Sukari and “Ongoing optimisation of the processing and mining operations continues to offer scope for further increases in productivity and production growth”
• Exploration at Sukari continues to focus on delineating extensions of the high-grade underground resource and reserve along strike and at depth. The company expects release a further resource and reserve update during 2017.
• The company plans further exploration work in Cote d’Ivoire where is has already defined an indicated resource of 0.3m oz of gold with a further 1m oz classed as inferred at the Doropo prospect in the northeast of the country.
• Drilling and other exploration work across the border from Doropo in Burkina Faso is being reviewed and further exploration is planned for 2017.
Conclusion: Centamin is generating strong cash flow from Sukari, is financially strong and debt-free. It is now becoming a consistent dividend payer with a policy of distributing at least 30% of net free cash flow.
Kodal Minerals* (LON:KOD) 0.445p, Mkt Cap £23.2m – Kodal Bougouni lithium project update
• Kodal Minerals updated the market yesterday on their own Bougouni lithium project, not to be confused with Birimian’s Bougouni Goulamina project which is around 75km away.
• Kodal has “re-commenced field work at Bougouni with a programme of surface mapping, rock chip sampling and trench excavation of the strike extensions of identified lithium mineralised pegmatite units.
• The Company expects that this continued exploration programme will define additional targets for reconnaissance drill testing for a follow-on drilling programme which is expected to commence in February 2017.
• In addition, the Company is pleased to announce that it expects to receive the sample results imminently for the reconnaissance reverse circulation ("RC") drilling programme, which was completed in December 2016. The sample analysis has involved numerous steps from initial delivery to the laboratory group, ALS Global, in Bamako, Mali, road transport to Ouagadougou, Burkina Faso for preparation and then final shipment to Vancouver, Canada for analysis.
• Unexpectedly long delays occurred in the obtaining of an export permit from Burkina Faso. The Company has been in constant communication with ALS Global throughout the process and has been informed that the samples arrived in Vancouver on 24th January 2017 and should be processed and available to the Company in the very near future. “
• Bernard Aylward, CEO of Kodal Minerals, said: "We are eagerly anticipating the analytical results of our first phase drilling on the highly prospective Bougouni Lithium project. We have developed a targeted exploration programme that is designed to rapidly advance the project with follow-up drilling planned to commence as soon as results have been received and analysed.
Conclusion: It will be interesting to see what comes from the ‘reconnaissance’ RC drill program. A learned analyst once said, ‘time spent on reconnaissance is rarely wasted’.
*SP Angel acts as Financial Advisor and Broker to the company. Robert Wooldridge, a partner at SP Angel is also Chairman of Kodal Minerals.
Metminco* (LON:MNC) 5.1p, mkt cap £6.5m, – A$4.85m fundraising and Quarterly Report
• Metminco has announced the completion of the second tranche of the funding which was announced in November 2016. The company has issued 41.2m new shares at A$0.1185 to raise A$4.85m.
• As previously announced, the funds are to be used to help complete the Bankable Feasibility Study for the company’s Miraflores gold project in Colombia and to progress the project towards completion of the planned 50,000oz pa underground gold mine.
• The company has also outlined the milestones it is setting itself for the next five months.
o April 2017 decision by the Corporación Autónoma Regional de Risaralda (CARDER) on Metminco's application to commence underground development in the second half of 2017 at Miraflores under the current approved EIA licence.
o April 2017 completion of metallurgical testwork to confirm previous results following conditions established from the Feasibility Study test program, and to obtain additional design parameters (Phase 1 testwork).
o May 2017 completion of Phase 2 metallurgical testwork on flotation concentrate and tailings for the Feasibility Study.
o First Half 2017 completion of the Bankable Feasibility Study
o The company has also released its quarterly report for the 3 months ending 31st December 2016.
o In addition to the feasibility work for Miraflores, highlights within the wider Quinchia project area in Colombia included the identification of “a large gold porphyry system … with drill hole TS-DH-02 returning an intercept of 384 metres @ 1.01 g/t gold, 0.9 g/t silver and 0.08% copper from surface.” at Tesorito.
o Elsewhere, the initial US$16m of the CD Capital Natural Resources Fund investment into the Los Calatos project has been received securing CD a 51% interest in the project where the eventual phased investment of US$45m will lead to a 70% interest.
o The company’s cash position is reported to be approximately A$9.6m.
Conclusion: Metminco has now secured the finance to complete the VFS at Miraflores and has set a demanding timetable which delivers the BFS in the first half of 2017 and, subject to obtaining the regulatory approvals, leads to the commencement of early underground development in the second half of 2017.
*SP Angel act as broker to Metminco. SP Angel analysts have previously visited Los Calatos in Peru and Miraflores project in Colombia.
Savannah Resources (LON:SAV) 5.9 pence, Mkt Cap £26.5m – Completion of drilling at Mutamba project, Mozambique
• Savannah Resources has completed a total of 107 drill holes (2914m) at the Ravene deposit which forms part of the Mutamba mineral sands project in Mozambique which is being progressed with Rio Tinto as part of the consortium agreement.
• The drilling was aimed at infilling the coverage of an existing 1000m x 500m grid of high grade zones previously identified by Rio Tinto’s drilling to a 500m x 500m grid more appropriate for resource estimation purposes.
• Samples are currently being analysed with results expected during February and incorporated within the scoping study which is currently underway.
• Given the drill spacing and previous work completed, the company expects the results to generate “an initial inferred resource over the Ravene prospect to potentially increase the Mutamba Project's recently defined initial Indicated and Inferred Mineral Resource Estimate of 3.5 billion tonnes at 3.8% THM”.
Conclusion: We look forward to the results of the drilling and the subsequent initial resource estimate for Ravene.