Firestone Diamonds (LON:FDI) – First sale of Liqhobong diamonds realises $8.14m
Georgian Mining* (LON:GEO) – Drilling shows long 114m intersection grading 1.70% copper from 18m depth at Kvemo Bolnisi
Kefi Minerals* (LON:KEFI) – £5.62m financing and operational update for Tulu Kapi
Miners continue to break new ground as prospects for stronger earnings drive value
• Escondida declares ‘Force Majeure’ causing copper prices to take off at a time when Chinese traders are expected to come back into the market
• Copper prices have broken-out convincingly on the upside to hit US$ 6,119/t this morning versus US$5,927/t seen on Friday morning.
• Cyclones and heavy rains are causing some concern in Western Australia disrupting iron ore and nickel shipments.
• Chris Lynch, CFO at Rio Tinto comments that iron ore prices will defy forecasts of a dramatic collapse as Chinese economy remains strong
China – looking to make further cuts in coal, steel and aluminium
• China is getting tougher on its polluting industries in an effort to reduce pollution levels and create a more efficient economy
• The authorities have banned coal from landing at a major port and have closed fertilizer and other polluting plants
• This winter’s smog is driving the acceleration of anti pollution policies as major cities are choked by swathes of smog
Electric vehicle sales fall on cut in subsidies
• Sales of new energy vehicles fell 74% yoy to 5,682 units following the state’s slashing of subsidies by more than 20%
• New energy vehicle sales rose 53% to 507,000.
• We suspect sales will pick up again on higher oil prices and as producers adjust prices to account for the loss of subsidies
• Overall Chinese vehicle sales rose by 2% yoy in January including all types of vehicles.
121 conference - Cape Town – well done to the team for organising such a well attended 121 conference in Cape Town last week - Sponsored by SP Angel
• Schedules were packed with meetings between investors and companies with little time to spare to enjoy the serene surroundings of the historic gardens at Welgemeend.
• The event was attended by an impressive list of institutional and family office investors alongside a good number of high quality mining companies.
• There is increasing investor interest across a broad range of commodities from battery materials to specialised metals and rare earths.
• A significant number of new generalist and specialist investors came to the two day event to meet with many up and coming companies.
• This was the third and largest event organised by the 121 team in Cape Town supported by SP Angel demonstrating that this is the ‘go-to’ event where growth companies get to meet with quality investors.
Dow Jones Industrials +0.48% at 20,269
Nikkei 225 +0.41% at 19,459
HK Hang Seng +0.58% at 23,711
Shanghai Composite +0.63% at 3,217
FTSE 350 Mining +0.88% at 16,966
AIM Basic Resources +0.94% at 2,687
Economic News
EU – European Commission expects GDP growth of 1.6% (was 1.5%) in 2017 and 1.8% (was 1.7%) in 2018 in the Eurozone
Japan – finance ministry cuts holdings in US Treasuries by US$21bn, the most in nearly four years
China – Holding in US Treasuries at seven year low at just over US$1tr
Philippines – President Duterte backs mine closures being ordered by the new minister of mines having seen the damage done to the environment by a number of poorly run miners. Many of the mines to be closed are mining surface sand and beach deposits in delta areas with little regard for the damage being done to the environment and long term damage to fishing and water quality.
Currencies
US$1.0653/eur vs 1.0645/eur yesterday. Yen 113.65/$ vs 113.60/$. SAr 13.292/$ vs 13.310/$. $1.253/gbp vs $1.251/gbp. 0.767/aud vs 0.765/aud. CNY 6.877/$ vs 6.881/$.
0.765/aud vs 0.764/aud. CNY 6.881/$ vs 6.864/$.
Commodity News
Precious metals:
Gold US$1,231/oz vs US$1,226/oz yesterday
Gold ETFs 58.3moz vs US$58.1moz yesterday
Platinum US$1,010/oz vs US$1,003/oz yesterday
Palladium US$781/oz vs US$777/oz yesterday
Silver US$17.93/oz vs US$17.62/oz yesterday
Base metals:
Copper US$ 6,119/t vs US$5,927/t yesterday – Escondida declares ‘Force Majeure’ causing copper prices to rise
Aluminium US$ 1,880/t vs US$1,869/t yesterday
Nickel US$ 10,755/t vs US$10,455/t yesterday – FQM’s Ravensthorpe nickel mine is cut off by rains but has yet to declare Force Majeure.
• The plant is targeting 25,000t of nickel production this year vs global demand of around 2mtpa.
Zinc US$ 2,952/t vs US$2,890/t yesterday
Lead US$ 2,433/t vs US$2,379/t yesterday
Tin US$ 19,790/t vs US$19,250/t yesterday
Energy:
Oil US$56.5/bbl vs US$56.2/bbl yesterday
Natural Gas US$2.979/mmbtu vs US$3.054/mmbtu yesterday
Uranium US$26.75/lb vs US$26.65/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$87.2/t vs US$82.9/t
Chinese steel rebar 25mm US$507.8/t vs US$507.5/t
Thermal coal (1st year forward cif ARA) US$65.8/t vs US$66.1/t yesterday
Premium hard coking coal Aus fob US$164.6/t vs US$167.8/t
Other:
Tungsten APT European US$000.0/mtu vs US$000.0/mtu
FeCr lumpy Charge 52% Cr US$0.00/lb vs US$0.00/lb yesterday
Quarterly hard coking coal US$285.0/t vs US$285.0/t
Other:
Tungsten - APT European prices $196-205/mtu vs $194-200/mtu
Company News
Firestone Diamonds (LON:FDI) 52 pence, Mkt Cap £164.3m – First sale of Liqhobong diamonds realises $8.14m
• Firestone Diamonds has reported the results of its first sale of diamonds from its 75% owned Liqhobong diamond mine in Lesotho which took place in Antwerp between 6th to 10th February.
• The company sold all of the 75,936 carats it was offering for sale and achieved an average of US$107 per carat for a total of US$8.14m.
• Among the diamonds offered for sale was “a 37 carat type 2a internally flawless white stone [which] was sold for well over US$1.0million.” In addition, “A number of yellow and fancy yellow stones included in the sale also achieved competitive prices".
• The company comments that “the carats sold were recovered from predominantly lower quality ore areas and are not necessarily representative of the run of mine ore.” Chief Executive, Stuart Brown noted that “Prices were strong in the better quality diamonds, with the prices for the smaller stones being reflective of the current weaker market conditions”.
• Firestone Diamonds plans to hold diamond sales twice every quarter with the second sale expected in late Q1 2017.
• Previous guidance from the company indicates that It expects the mine to produce “between 380,000 and 450,000 carats” from 1.8-2mt of ore during the financial year ending in June 2017.
Conclusion: The sale of its first diamonds from the Liqhobong mine is a landmark event for Firestone Diamonds. The mine is currently ramping up its production and as output increases, and the mine accesses wider areas of diamond bearing kimberlite ore, average values of the production are expected to improve.
Georgian Mining* (LON:GEO) 9.4p, Mkt Cap £7.5m – Drilling shows long 114m intersection grading 1.70% copper from 18m depth at Kvemo Bolnisi
• Results from the first three drill holes completed at the Kvemo Bolnisi copper/gold project as part of the 50-holes 10,000m programme to expand current mineral resources.
• Two drill holes demonstrated high grade, wide and close to surface intersections including:
o 113.7m at 1.70% Cu from 18.4m (KED011)
o 28.6m at 1.60% Cu and 0.80g/t Au from 47.4m (KED008)
o Identified mineralisation zones remain open at depth and along strike.
o These results are not included in the latest mineral resource statement released on 30 Jan/17 and point to good chances of expanding the available mineral inventory.
o Drilling currently focused on Copper Zone 1 of the KB deposit targeting “copper-gold mineralisation similar to the mineralisation mind and processed at the nearby Madneuli mine”.
o Assays from another 17 holes are currently being prepared and “should be available shortly”.
o The Company further highlighted that current drill holes were limited to a vertical depth of less than 200m with the Madneuli deposit “with a similar geology to KB, remains open at a current pit floor depth reported to exceed 500m”, suggesting exciting potential to grow the resource.
o Both assay results highlighted above are well beyond expectation and indicate significant upside resource potential. The larger 113.7m intersection is particularly impressive and will put Georgian on the map for larger copper producing companies.
*SP Angel acts as Nomad and Broker to Georgian Mining.
Kefi Minerals* (LON:KEFI) 0.355p, Mkt Cap £13.8m – £5.62m financing and operational update for Tulu Kapi
• Kefi Minerals has announced that it is raising a total of £5.62m to help fund the “finalisation of financing arrangements and the triggering of development at the Company’s flagship Tulu Kapi project, as well as additional exploration work in Ethiopia and Saudi Arabia.”
• The financing, which is priced at 5.61 pence per share consists of three components:
o A placing of 10.7m shares to raise £600,000
o “a subscription by certain of the Directors, employees and [the engineering firm] Lycopodium raising £400,000” and
o a “subscription by Lanstead Capital LP, an institutional investor raising £4,620,000 (gross)”
o The company comments that “Of the gross proceeds of the Lanstead Subscription, £693,000 (being 15%) will be retained by the Company and the balance of £3,927,000 will be pledged by the Company pursuant to the Sharing Agreement. The Sharing Agreement entitles the Company to receive back those proceeds on a pro rata monthly basis over a period of 18 months, subject to adjustment upwards or downwards each month depending on the Company's share price at the time”.
o Kefi Minerals clarifies the operating position in Ethiopia saying that “The declaration of a six-month State of Emergency by the Ethiopian Government on 8 October 2016 had no effect on operations and activities continued as normal. [and the] … calm and improving situation in Ethiopia, combined with the range of financing scenarios being considered by the Company, make the Board confident that the Tulu Kapi Gold Project can proceed to development in 2017.”
o Kefi Minerals also confirms that, as previously announced, it has “fully discharged the inherited VAT liability and is now entitled to a refund of approximately £2,600,000. KEFI has received formal confirmation that this payment is now owed to the Company by the Ethiopian tax authorities and will update the market accordingly upon resolution. Funds received from this repayment will further boost the Company's financial position and be directed to the advancement of Tulu Kapi.”
o The fundraising is to be subject to formal shareholder approval at a meeting to be held on 1st March. This meeting will also be asked to approve a proposed share consolidation on a 17:1 basis which will, if both resolutions are approved, result in the company having approximately 332.7m shares in issue.
Conclusion: Kefi Minerals is pressing ahead with the development of Tulu Kapi and is resolving historical legacy issues with the Ethiopian Government over its VAT which should contribute an additional £2.6m to the company’s coffers.
*SP Angel act as Nomad and broker to Kefi Minerals