Amur Minerals* (LON:AMC) – Preparatory works for the 2017 field season are in full swing
Atalaya Mining (LON:ATYM) – High Court adjudication of the Astor case
Golden Star Resources (TSX:GSC) C$0.96, Mkt Cap C$352.1m – Wassa high grade drilling intersections
Metal Tiger (LON:MTR) 2.425 pence, Mkt Cap £18.9m – MOD Resources intersects new copper zone below T3
Ortac Resources* (LON:OTC) 0.0295p, mkt cap £2.4m – Topping up its investment in CASA Mining
Thor Mining (LON:THR) 1.075 pence, Mkt Cap £3.9m – Drilling at Pilot Mountain intersects scheelite mineralisation
China – lower China GDP target should have a short term impact on miners in our view
• Statisticians and economists have questioned China’s official GDP numbers for some years with some reckoning a 5% GDP rate as more realistic
• China moving its GDP target to 6.5% may be part of equalising the official stats to a more realistic number, though they may also be signalling a less aggressive approach to growth.
• We suspect the arrival of President Trump will cause China to finally get on with stimulating domestic demand.
• A new focus on curbing pollution is also a major driver in reorienting the economy towards less ‘industrial’ activity
India – government considering US$59bn infrastructure spending
• If there is one major country worse than the US for infrastructure it is India.
• Government initiatives to improve Indian infrastructure are long overdue and news of a potential US$59bn for steel-intensive infrastructure spending is good news for India.
• Indian steel companies account for 29% of total banking bad debts of US$135bn on government data so a big infrastructure program may have more benefits than just providing new infrastructure.
Iron ore – new tax on iron ore production in Western Australia could generate A$7.2bn for WA government
• The proposed tax could add A$0.25-5.00/t to the cost of iron ore extraction.
Tata Steel said to be in constructive discussions with ThyssenKrupp over merging its European steel assets
• The deal could cut costs and reduce overcapacity according to the ThyssenKrupp ceo.
• Tata is involved in seeking regulatory approval for the £15bn scheme
Gold is little change after sliding 0.8% in the previous session while copper is trading around the lowest level in nearly a month following a 1% drop on Monday.
• Iron ore prices are off 2.2% marking a third daily decline.
• Brent prices are flat for a third session today as concerns over increasing US shale oil production has been offsetting the impact from production cuts agreed by OPEC.
BIS – warns Emerging market economies are trapped between a rock and a hard place, on China’s growing debt levels and continued growth
• BIS, the ‘Bank of International Settlements’ eg the bank for Central Banks has warned on a number of risks facing global growth
• The bank highlights a ‘precipitous decline in correlations across asset classes, sectors and regions’ as political issues drive investor thinking.
• US dollar credit to non-bank borrowers in foreign nations has rose by $420bn last year according to the BIS.
• Overall US dollar debt to emerging market economies now stands at $3.6tr.
The number of advanced economies with consumer-driven growth has gone up in recent years - BIS data.
• The BIS quarterly paper say that growing share of household spending in GDP growth may lead to problems with sustainability of expansion if consumers accumulate excessive amounts of debt in the process.
• “High household debt service rations tend to become a potent drag on economic growth, frequently leading to costly deleveraging processes,” the BIS said.
• “The increasing prevalence of consumption-led growth since 2012 therefore presents new challenges for policymakers in several economies.”
Mining M&A deals increased 41%yoy to $7.6bn in the first two months of the year, Bloomberg
• That marked the best start to the year since 2013.
• Premiums for available deals in Feb averaged 33%, the strongest level since Aug/16.
• One of the largest deals announced this year was a buyout of Dan Gertler share in two Congolese cobalt and copper mines by Glencore for $960m.
Tesla – looking to build a US$4bn lithium-ion battery factory in Northern Europe
New hybrid Black Cab being tested in secret in the Norwegian Artic by the London Taxi Company
• The new Black Cabs are said to cost £40,000 and are said to be mostly zero emission with a small petrol engine on board to charge the batteries.
• There are 22,500 Black Cabs operating in London vs 25,000 Uber driver total of 62,000 taxis and private hire vehicles in London and 297,600 in England as a whole in 2015
• Uber cars are almost exclusively low emission Toyota Prius’ with low emissions and around 75-100mpg according to our conversations with drivers.
• As an occasional users of Uber we can say that conversations with their drivers have immeasurably improved our knowledge of socio-political events in many emerging markets. Most memorable was the reaction of a driver from Biafra (in Nigeria) and his views on the genocide.
Dow Jones Industrials -0.24% at 20,954
Nikkei 225 -0.18% at 19,344
HK Hang Seng +0.36% at 23,681
Shanghai Composite +0.26% at 3,242
FTSE 350 Mining +1.13% at 16,231
AIM Basic Resources -0.79% at 2,620
Economic News
Germany – Factory orders slump 7.4%mom in Jan following a robust end to the previous year.
• This marked the sharpest decline since 2009.
• Although on a YoY basis, industrial order came in more than 4% stronger versus Jan/16.
Australia – The RBA held rates unchanged at 1.5% following the news that the economy returned to growth in the final quarter of 2016 avoiding recession.
• Growth momentum has been helped by a recovery in commodity markets towards the end of 2016 leading “a significant boost to Australia’s national income”.
• The Australian dollar strengthened against the US$ and stocks in Sydney gained following the announcement.
Philippines – President Duterte seeks ‘happy compromise’ between environment and mining according to Reuters
• You would be a brave company to test what that means with this president.
Currencies
US$1.0593/eur vs 1.0629/eur yesterday. Yen 113.83/$ vs 113.64/$. SAr 12.946/$ vs 12.992/$. $1.221/gbp vs $1.227/gbp.
0.761/aud vs 0.759/aud. CNY 6.898/$ vs 6.893/$.
Commodity News
Precious metals:
Gold US$1,225/oz vs US$1,234/oz yesterday
Gold ETFs 58.6moz vs US$58.7moz yesterday
Platinum US$974/oz vs US$990/oz yesterday – COO of Lonmin leaves. Platinum prices continue to fall. It’s not much fun being a platinum miner these days
Palladium US$772/oz vs US$772/oz yesterday
Silver US$17.72/oz vs US$17.83/oz yesterday
Base metals:
Copper US$ 5,830/t vs US$5,883/t yesterday – another 26,726t into LME warehouses did nothing to help copper prices this morning
Aluminium US$ 1,870/t vs US$1,881/t yesterday – LME aluminium stocks fell 23,650t
Nickel US$ 10,965/t vs US$10,965/t yesterday – LME nickel stocks rose 3,816t
Zinc US$ 2,705/t vs US$2,734/t yesterday – LME zinc stocks fell 425t
Lead US$ 2,221/t vs US$2,208/t yesterday – LME lead stocks unchanged
Tin US$ 19,350/t vs US$19,330/t yesterday – LME tin stocks fell 95t
Energy:
Oil US$56.0/bbl vs US$55.5/bbl yesterday
Natural Gas US$2.874/mmbtu vs US$2.916/mmbtu yesterday
Uranium US$25.75/lb vs US$25.50/lb yesterday – Cominco considering sale of US uranium operations following six year slump in uranium prices.
• Cameco’s US mines produce 1-2mlbs of uranium per year.
• Trump supporters are looking forward to a potential new boarder tax on uranium imports potentially making domestic uranium production more valuable and the new president curbing the power of the feared US EPA potentially assisting future uranium production growth
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$81.8/t vs US$81.7/t
Chinese steel rebar 25mm US$573.0/t vs US$576.5/t
Thermal coal (1st year forward cif ARA) US$66.4/t vs US$66.7/t yesterday
Premium hard coking coal Aus fob US$163.1/t vs US$162.4/t
Tungsten – APT European prices $210-217/mtu (from the 03Mar/17 week) v $197-207/mtu previously
Company News
Amur Minerals* (LON:AMC) 8p, Mkt Cap £48m – Preparatory works for the 2017 field season are in full swing
• The 2017 drilling programme is planned for 15,000m to be split between Ikenskoye/Sobolevsky (IKEN) and Kubuk (KUB) deposits of the polymetallic Kun Manie project.
• The Company is bringing equipment and supplies enough to complete 20,000m of drilling should weather permit.
• At Kubuk, 10,000m are targeted for both infill (6,000m) and step out (2,000m) drilling with the balance to be completed to collect metallurgical bulk samples.
• Kubuk currently hosts 10.9mt at 0.74% Ni and 0.20% Cu for 81kt nickel and 22kt copper in-situ in Inferred Mineral Resource category, accounting for nearly a half of Kun Manie Inferred Resources.
• Step out drilling, in turn, is planned to focus on 800-1,000m target to the east of KUB and a 3,000m target to the west of the deposit (in the direction of IKEN which lies exactly 3km to the east of KUB).
• At IKEN, 5,000m of drilling is planned with 2,000-2,500m to be driven into the south-east part of the deposit with the remainder testing the extension in the direction of KUB as well as generating metallurgical bulk samples.
• In addition, the Company has mobilised further equipment to carry onsite engineering work and additional studies including hydrological tests to locate sources of process and potable water for future operations.
• New equipment is reported to have come at a $1.0m capital cost, have already been delivered to BAM rail head and to be transported to the Kun Manie site in due course.
Conclusion: 2017 field season (May-Oct) is approaching with a primary focus of the Company being an expansion of Measured and Indicated categories at KUB and IKEN for the use in mineral reserves estimation and inclusion in the mine plan. Step out drill holes will test extensions of the currently defined deposits with a view of proving up a mineralised link between KUB and IKEN which would benefit a large scale of the planned operation.
*SP Angel act as Nomad and broker to Amur Minerals
Atalaya Mining (LON:ATYM) 146 pence, Mkt Cap £170.4m – High Court adjudication of the Astor case
• Atalaya Mining reports that the High Court has judged that Atalaya did not act “in bad faith in not obtaining a Senior debt facility” and that the “intra-group loans by which funding for the restart of mining operations was made available … did not constitute a “Senior Debt Facility” so as to trigger payment of the Deferred Consideration.”
• The Court has also found that the deferred consideration “did not start to become payable when permit approval was granted” however “While the Company is not in breach of any of its obligations, the Master Agreement and its provisions remain in place. Accordingly, other than up to US$10 million a year which may be required for non-Proyecto Riotinto related expenses, Atalaya Riotinto Minera S.L. cannot make any distribution or any repayment of the money lent to it by its holding company and must apply any excess cash to pay the Deferred Consideration, until this has been paid in full.”
• Welcoming the High Court’s decision “that it is not in breach of its obligations as no instalments of the Deferred Consideration have yet fallen due.”, CEO, Alberto Lavandiera, commented that “The High Court's decision also sets out that in the absence of a Senior Debt Facility, the Deferred Consideration is only payable out of excess cash generated by Proyecto Riotinto. The Board believes this has removed a significant uncertainty as it removed the threat of having to pay the Deferred Consideration as a lump sum or according to a fixed schedule, regardless of the cash generation of Proyecto Riotinto. The Company will however consider whether it is appropriate to appeal the Court's decision that excess cash should be used in this way and will update the market accordingly."
Conclusion: The High Court’s decision has removed uncertainty and should assist the company in planning and managing the cash flows from Proyecto RioTinto. The company’s indication that it may appeal the restriction on using excess cash generated solely to repay the Deferred Consideration may prolong the legal wrangling, but if it successfully instituted an appeal it would perhaps result in earlier distributions to shareholders.
Golden Star Resources (TSX:GSC) C$0.96, Mkt Cap C$352.1m – Wassa high grade drilling intersections
• Golden Star Resources has reported high grade gold intersections from its infill drilling programme at the Wassa underground gold mine in Ghana. The results come from the final 15 holes of a 24 hole programme undertaken in late 2016 to test the continuity of the high grade “B” shoot where mining is expected to start in the third quarter 2017.
• Among the results reported today are an intersection of 30.2m at an average grade of 15.3 g/t gold from a depth of 270m in hole BS16DD013; 24.5m averaging 12.1 g/t gold from 280m in hole BS16DD021; and 25.2m grading 6.4g/t gold from 245.7m in BS16DD023.
• The reported results include shorter, higher grade sections which range as high as a 0.9m wide section at an average grade of 65.5 g/t gold from a depth of 262.5m in hole BS16DD023 and 4.6m averaging 41.2 g/t in BS16DD013.
• The holes are generally steeply inclined (at angles in excess of 70⁰) and are drilled towards the east at azimuths between 079⁰ and 084⁰.
• The drilling results “suggest that the high grade zones continue to plunge to the north … [and] … we will assess the viability of adding additional stopes to the North of the current mine plan with the intension of increasing Wassa Underground’s Mineral Reserves.” The company also notes that “The results from the most Northern holes from this programme indicated that the ore body is open to the North”
Conclusion: The recent drilling results from the “B” shoot area of the Wassa underground mine point to the potential to extend the mining area of high grade mineralisation further towards the north than currently envisaged which would lead to an increase in the reserves in this part of the mine which were recently upgraded to 5.5mt at an average grade of 4.21 g/t gold.
Metal Tiger (LON:MTR) 2.425 pence, Mkt Cap £18.9m – MOD Resources intersects new copper zone below T3
• Metal Tiger plc reports that its partner, MOD Resources has encountered a “Substantial New Copper Zone below the T3 Resource” in the Kalahari Copper Belt of Botswana where Metal Tiger holds a 30% interest in the project (MOD Resources 70%).
• The new zone, which was intersected in borehole MO-G-65D “comprises multiple intervals of disseminated, laminated, cleavage and vein hosted copper sulphides including bornite, chalcocite, covellite and chalcopyrite” and yielded an in-hole intersection of 72.6m at an average grade of 1.5% copper and 27 g/t silver from a depth of 250m.
• The intersection includes a higher grade section of 18m averaging 2.7% copper and 52g/t silver from a depth of 280m. The company indicates that the true width of the intersection is likely to exceed 50m based on its “early interpretation of the geometry of the intersection.”
• MOD Resources also reports that another hole MO-G-66D, which has yet to be logged in detail or sampled had also “intersected what appears to be a deeper zone of disseminated copper mineralisation including bornite and chalcocite between approximately 432m and 468.7m down hole depth, approximately 250m below surface”.
• MOD Resources’ Managing Director, Julian Hanna, said that “We have agreed with our JV partner Metal Tiger to accelerate resource drilling of the new zone intersected in MO-G-65D and adjacent drill holes. If a substantial resource upgrade results from this drilling it will be incorporated into the T3 PFS which is in progress. Four drill rigs are now on site and MOD is well funded for the current programme with approximately $5 million in the bank.”
• The current T3 resource is reported to be 28.36m tonnes at an average grade of 1.24% copper and 15.7 g/t silver. Approximately 10.1m tonnes of the resource is classified as indicated with the balance as inferred.
• Metal Tiger has also announced that it has completed a pre-IPO private placing of 514,500 fully paid warrants raising £514,500 for its Thai joint-venture in KEMCO Mining plc. KEMCO plans to seek admission to the AIM market later this year. “Should the admission of KEMCO not occur by 13 October 2017, the warrants will automatically convert into Meta Tiger shares by reference to the 15 day VWAP following this date, less 20%.”
Conclusion: The intersection of a wide zone of copper mineralisation beneath the T3 area in Botswana may provide scope for an increase of the existing resources. At this stage, the extent and geometry of the lower zone is unclear and we await the results of the un-sampled holes and of any further drilling with interest.
Ortac Resources* (LON:OTC) 0.0295p, mkt cap £2.4m – Topping up its investment in CASA Mining
• Ortac Resources reports that it has increased its holding in Casa Mining to 21.71% through the acquisition via a private placement of a further 69,444 shares.
• Ortac CEO, Vassilios Carellas, commented that the placing “covers CASA’s short term working capital requirements and will enables it to complete an updated resources statement at its Akyanga project.”
• Akyango currently reports an inferred resource of 5.5mt of oxide material at ana average garde of 1.5 g/t gold for a total of approximately 272,000 oz of gold. In addition, the deposit has an inferred resource of transitional material totalling 16.2mt at an average grade of 1.8g/t gold for approximately 927,000 oz of gold.
• An independent scoping study for Akyanga indicates that using contract mining to achieve a total operating cost of US$628/oz, an initial capital investment of US$87.4m results in “an ungeared NPV (8%) and IRR of $171m and 35% respectively at a $1,300/oz gold price.”
Conclusion: The additional investment by Ortac should give CASA Mining the financial capacity to complete its mineral resource update update at Akyanga. We look forward to the update in due course.
*SP Angel acts as Nomad and broker to Ortac Resources
Thor Mining (LON:THR) 1.075 pence, Mkt Cap £3.9m – Drilling at Pilot Mountain intersects scheelite mineralisation
• Thor Mining reports that the second hole of its recent drilling programme at its wholly owned Pilot Mountain tungsten project located approximately 200 km south of Reno, Nevada, has intersected “51 metres of scheelite mineralisation, including 9 metres of visible sulphide mineralisation, including visible chalcopyrite”.
• The intersection has yet to be assayed but the intersection is located “25 metres to the east and approximately 50 metres closer to surface” than a high grade drillhole (DSDD015) completed in 2012 which intersected 13.9m at an average grade of 0.89% tungsten trioxide from a depth of 198m and 17.5m of 1.8% copper and 2.2% zinc from a depth of 196m.
• The company notes that the first hole of the current programme failed to intersect “any visible mineralisation, due to what appears to be a fault displacement above the targeted zone of mineralisation.”
• As a result of the success of the second hole, “a previously unplanned third hole has commenced targeting a further 25 metre extension of the Desert Scheelite deposit”.
• Executive Chairman, Mick Billing, commented that the drilling had achieved the original aim of rtesting for potential eastward extensions of the Desert Scheelite deposit and that although assay results were still awaited, there appeared to be an apparent thickening of the mineralisation.
• The Desert Scheelite deposit was originally investigated by Union Carbide during the 1970s.More recent drilling in 2012, including hole DSDD015 mentioned above, led to a resource estimate of 6.79mt at an average grade of 0.31% tungsten trioxide and 22.8g/t silver and 0.17% copper. The current exploration is aimed at validating and extending the work leading to that resource estimate.
Conclusion: The second hole at the Desert Scheelite project at Pilot Mountain has demonstrated continuation of the previously known mineralisation further towards the east and a third hole is being drilled to look a further 25m to the east. We look forward to the assay results from hole 2 and news of the third hole in due course.