Amur Minerals* (LON:AMC) – New resource expands to 101.3mt at 1.03% NiEq
Finnaust Mining* (LON:FAM) – Greenland betters exploration licenses terms
Risk on sentiment drives equities higher with safe haven assets as government bonds and gold trading lower on Trump remarks to roll out proposed revisions to business taxes potentially within the next “two or three weeks”.
• US equities indices hit record high on Thursday boosting sentiment in European (FTSE 250 at record high) and Asian markets with MSCI All-Country World Index hitting the highest level since Jun/15.
• Additionally, news over Trump agreeing to back the “one China” policy serving to ease tensions between two nations is adding to positive market momentum.
• Metal prices follow general market optimism with additional boost from stronger than forecast Chinese trade data; although, seasonal variations in exports/imports at the start of the year complicate direct comparison.
• Iron ore futures prices surged as much as 8.3% to CNY694/t ($101/t) at some point today before settling at CNY 668/t on the Dalian Commodity Exchnage while spot iron ore for 62% Fe for delivery in Qingdao climbed to $83.8/t, the highest since Oct/14.
Dow Jones Industrials +0.59% at 20,172
Nikkei 225 +2.49% at 19,379
HK Hang Seng +0.21% at 23,575
Shanghai Composite +0.42% at 3,197
FTSE 350 Mining +2.25% at 16,601
AIM Basic Resources +1.30% at 2,662
Economic News
US – Weekly jobless claims remained well anchored through the first week of Feb supporting growth momentum in the labour market.
Date Index Period Actual Est Previous
Tuesday JOLTS Job Openings Dec '000 5,501 5,580 5,505
Trade Balance Dec $bn -44.3 -45.0 -45.7
Thursday Weekly Jobless Claims '000 234 249 246
Friday UoM Consumer Sentiment Feb 97.8 98.5
Source: Bloomberg
China – Trade growth accelerated in Jan coming in significantly above forecast numbers.
• Comparability of data in the first two months is complicated given the timing of Lunar New Year holidays.
• A surge in numbers is partly explained by a weak base with exports contracting 10.9%yoy in Jan last year, Bloomberg Intelligence reports.
• Quarterly data will provide more insight into the state of the trade sector and whether a rebound in exports growth established itself.
• Exports (US$ terms %yoy): 7.9 v -6.2 in Dec and 3.2 forecast.
• Imports (US$ terms %yoy): 16.7 v 3.1 in Dec and 10.0 forecast.
UK – Strong Dec industrial production numbers capped a better than forecast performance for the total of Q4/16.
• Numbers match the highest level of activity recorded in the manufacturing sector in Dec in over two years, as measured by Markit PMI numbers.
• “The boost to competitiveness from the weak exchange rate has undoubtedly been a key driver of the recent turnaround,” Markit wrote in Jan.
• More recent numbers show the sector also benefiting from an increase in new orders from the domestic market.
• Industrial Production (%mom/%yoy): 1.1/4.3 v 2.0/2.2 in Nov and 0.2/3.2 forecast.
• Manufacturing Production (%mom/%yoy): 2.1/4.0 v 1.4/1.7 in Nov and 0.5/1.7 forecast.
France – Despite a slowdown in growth rate in the final month of the year, industrial production posted the first quarterly increase in 2016.
• After surging in Nov, numbers showed some correction in Dec while quarterly data are estimated to have contributed 0.2pp to 0.4% GDP growth during the period.
• This compared to a negative contribution in the previous three quarters.
• While Feb Markit PMI data showed the sentiment continued to improve at the start of 2017, outlook may be challenged by increasing political uncertainty regarding results of presidential elections in May.
• Industrial Production (SA %mom/%yoy): -0.9/+1.3 in Dec v 2.4/1.9 in Nov and -0.7/+1.4 forecast.
Greece – Two year bond yields are coming down as the dialogue between the government and a group of creditors continues.
• Creditors are expected to present a set of measures targeted at completing the stalled bailout programme to the government today.
• The idea is to iron out all disagreements ahead of the euro area finance ministers meeting scheduled for Feb 20.
Currencies
US$1.0645/eur vs 1.0709/eur yesterday. Yen 113.60/$ vs 112.23/$. SAr 13.310/$ vs 13.458/$. $1.251/gbp vs $1.258/gbp.
0.765/aud vs 0.764/aud. CNY 6.881/$ vs 6.864/$.
Commodity News
Precious metals:
Gold US$1,226/oz vs US$1,243/oz yesterday
Gold ETFs 58.1moz vs US$58.1moz yesterday
Platinum US$1,003/oz vs US$1,022/oz yesterday
Palladium US$777/oz vs US$774/oz yesterday
Silver US$17.62/oz vs US$17.81/oz yesterday
Base metals:
Copper US$ 5,927/t vs US$5,876/t yesterday
Aluminium US$ 1,869/t vs US$1,852/t yesterday
Nickel US$ 10,455/t vs US$10,440/t yesterday
Zinc US$ 2,890/t vs US$2,850/t yesterday
Lead US$ 2,379/t vs US$2,388/t yesterday
Tin US$ 19,250/t vs US$18,895/t yesterday
Energy:
Oil US$56.2/bbl vs US$55.7/bbl yesterday
Natural Gas US$3.054/mmbtu vs US$3.168/mmbtu yesterday
Uranium US$26.65/lb vs US$26.50/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$82.9/t vs US$80.7/t
Chinese steel rebar 25mm US$507.5/t vs US$508.0/t
Thermal coal (1st year forward cif ARA) US$66.1/t vs US$66.5/t yesterday
Premium hard coking coal Aus fob US$167.8/t vs US$168.0/t
Other:
Tungsten - APT European prices $196-205/mtu vs $194-200/mtu
Company News
Amur Minerals* (LON:AMC) 14.3p, Mkt Cap £85m – New resource expands to 101.3mt at 1.03% NiEq
• The Company released an updated JORC compliant resources statement covering four major nickel/copper sulphide deposits within the Kun Manie license.
• New resource increased to 101.3mt at 0.76% Ni, 0.20% Cu, 0.02% Co and 0.35g/t PGMs for 770kt nickel, 207kt copper, 15kt cobalt and 35t PGMs contained (0.4% Ni COG).
• Applying spot metal prices as of 1 Feb/17 (including $10,006/t Ni and $5,929/t Cu), the resource converts into 1,045kt of nickel metal equivalent contained at an average grade of 1.03% NiEq.
• This marks a 46% increase in ore tonnage terms and a 40%/47% growth in nickel/copper contained from the previous mineral resource statement adjusted for 0.4% Ni cut off grade.
• Additionally, the higher confidence measured and indicated category of the resource accounts for 80% of the total (81.2mt at 0.76% Ni and 0.21% Cu) offering a significant base to estimate updated reserves off.
• The data incorporates the latest set of step out and infill drilling programme completed at Maly Kurumkon/Flangovy through the 2016 field season.
• At 0.4% Ni cut off grade and applying 80% metallurgical recoveries based on Gipronickel Institute assay results, the Company estimates the project operating breakeven price of nickel at $3.4-5.7/lb ($7,500-$12,570/t) with the range reflecting the difference between assumed Russian and Australian based operating costs.
• An updated mineral reserves statement incorporating mining development plans for both open cast and underground operation is expected to benefit from expanded resource base as well as higher contained grades when compared to the latest PEA translating into a potential increase in annual nickel (+68%) and copper (+54%) production.
• The Company highlights “production of 40-60kt nickel (contained in concentrate) is anticipated and would place Amur in the top ten producers of nickel in the world, ranking around Number 8.”
Conclusion: The Company has done well by systematically expanding the Kun Manie resource building base for an updated reserve and moving closer to the development stage. As the Company is working on updated economic model, revisions to reserves are expected to improve processed grades at the plant benefiting annual production rate and unit costs. Increased mineral inventory with a possibility to grow it further as highlighted by successful step out drilling at Maly Kurumkon/Flangovy last year provides an opportunity to increase the life of mine and justify high project infrastructure investments.
We are looking forward to updates on the work on mineral reserves.
*SP Angel act as Nomad and broker to Amur Minerals
Finnaust Mining* (LON:FAM) 7.4p, Mkt Cap £46m – Greenland betters exploration licenses terms
• The government changed the Standard Terms for Exploration Licenses for Minerals (ex hydrocarbons) in Greenland.
• New conditions eliminate exploration expenditure obligations for the year 2017 for holders of licenses which are more than 5 years old and fall into the 6 to 11 years bracket.
• Terms changes apply to highly prospective Disko licenses where the Company is planning to follow on high grade targets of magmatic massive sulphides containing nickel, copper and platinum group metals.
• Flagship Pituffic mineral sands project will not be affected by highlighted changes since it is within the 0-5 year license bracket.
• Bulk sampling is planned to start at Pituffik later this year.
*SP Angel act as nomad and broker to FinnAust