Anglo Asian Mining* (LON:AAZ) – Ugur development in progress with latest drilling returning good wide intersections
Dalradian Resources (LON:DALR) – Positive reconciliation from test mining at Curraghinalt
Kodal Minerals* (LON:KOD) – Suay Chin investment agreement finalised
Metminco* (LON:MNC) – In Specie distribution of stake in Los Calatos delayed
Macron tipped to support Mining in France - A pro-free market centrist Emmanuel Macron won presidential elections on Sunday securing 66% of total votes.
• The President is set to announce an interim prime minister to lead a caretaker government until parliamentary elections on 11 and 18 of June.
• France has parliamentary elections on 11 and 18 June and it is these elections which may enable Macron to reshape the future direction of France and may enable Macron to start to change many Socialist policies
• Macron’s independent ‘En Marche’ party is forecast to win 240-286 seats in the National Assembly out of 577 taking most of their seats from the socialist parties. This would leave them short of a majority. The socialist party is forecast to collapse from to 28-43 seats from 280 held currently.
• The new parliament will be able to either confirm or change the cabinet with latest polls pointing Macron’s ‘En Marche’ party to secure a majority of seat in the 577 seats National Assembly, though this may still be short of a majority increasing chances for a coalition government.
• Macron has pledged reform workplace practices and to liberalise France’s draconian employment laws and with the socialists largely out of the way parliament may well vote for reform.
• Macron was formerly a civil-servant, serving as the Minister Industry and economic affairs. While in this role Macron signed off on a number of mineral exploration projects in France
• In 2015 Macron on the subject of mining in France said: “It participates fully in the mining renewal of France. Through the overhaul of the mining code, which is widely consulted, and work on the responsible mine, we want to restore prospects to this activity. First, by clearly saying that metropolitan France and overseas have a mining future. There are a lot of exploitable minerals, and we have had a strong tradition and culture in this area.”
China builds large passenger jet
• China plans to rival Boeing and Airbus with the C919 commercial airliner.
• The Chinese plane looks suspiciously like an Airbus to us. Let’s hope the plane flies better than the Russian copy of Concord the Tu-144 ‘Concordski’ which broke up at the Paris Air show in 1973
121 Mining Investment conference – sponsored by SP Angel - 10–11 May 2017
• The 121 team are running the London 121 Mining Investment conference at No 8 Fenchurch Street in The City on 10-11 May.
• The event is for registered investment professionals, mining and exploration companies and mining analysts and brings the industry together alongside a series of investor briefings.
• 65 quality producers, developers and explorers attending / presenting
• I’m talking at 3:00 on the Thursday on: ‘UK mining outlook - A new era of UK funded exploration and production’.
• Follow link for investor passes - https://www.weare121.com/121mininginvestment-london/registration/register-investor/
Dow Jones Industrials -0.03% at 20,951
Nikkei 225 +0.70% at 19,446
HK Hang Seng -0.84% at 24,476
Shanghai Composite -0.78% at 3,103
FTSE 350 Mining +2.35% at 14,211
AIM Basic Resources -0.88% at 2,623
Economic News
US – Strong jobs report released in Apr made up for losses recorded in Mar providing more support for the Fed continuing its gradual tightening policy.
• Of note, is little change in the pace of earnings growth amid falling unemployment levels pointing to only mild inflation pressures from tightening labour market.
China – The Shanghai Composite Index is at the lowest level since October today extending losses seen in previous weeks as authorities are reducing liquidity in the banking system with short term lending rates at the highest in two years.
• Liquidity tightening has seen $453bn of value being lost in Chinese stocks and bonds since mid-Apr and led to $21bn in cancelled debt sales.
• Sales of asset-management products by lenders and trust companies decline by more than 30%.
• Trading data released today show a normalisation in exports and imports growth rates in Apr
• Exports (%mom, US$ terms): 8.0 v 16.4 in Mar and 11.3 forecast.
• Imports (%mom, US$ terms): 11.9 v 20.3 in Mar and 18.0 forecast.
Germany – Factory orders climbed in Mar for a second consecutive month boding well with latest reports showing the nation’s business confidence was at its highest in almost six years while the central bank points to a strengthened growth momentum in Q1/17.
• The Bundesbank said the economy is benefiting from strong consumer spending and a brightening outlook for manufacturers.
• Factory orders (%mom/yoy): 1.0/2.4 v 3.5/4.7 Feb and 0.7/2.1 forecast.
UK – National house prices posted the first quarterly decline in more than four years, Halifax numbers showed.
• Prices dropped 01%qoq and were up 3.8%yoyo in the three months to Apr.
• Among other data pointing to a slowing momentum in the housing market, mortgage approvals are reported to have declined to a six-month low in Mar.
• “Signs of a decline in the pace of job creation, and the beginnings of a squeeze on households’ finances as a result of increasing inflation, may also be constraining the demand,” Halifax said.
• On a separate note, consumer spending slowed in Apr to one of the weakest growth rates seen in the past three years, according to a report from Visa.
Currencies
US$1.0967/eur vs 1.0961/eur yesterday. Yen 112.65/$ vs 112.30/$. SAr 13.474/$ vs 13.629/$. $1.298/gbp vs $1.293/gbp.
0.740/aud vs 0.740/aud. CNY 6.904/$ vs 6.900/$.
Commodity News
Precious metals:
Gold US$1,231/oz vs US$1,233/oz yesterday
Gold ETFs 59.6moz vs US$59.7moz yesterday
Platinum US$916/oz vs US$912/oz yesterday
Palladium US$815/oz vs US$807/oz yesterday
Silver US$16.34/oz vs US$16.45/oz yesterday
Base metals:
Copper US$ 5,490/t vs US$5,567/t yesterday
Aluminium US$ 1,890/t vs US$1,918/t yesterday
Nickel US$ 9,035/t vs US$8,975/t yesterday
Zinc US$ 2,552/t vs US$2,578/t yesterday
Lead US$ 2,158/t vs US$2,182/t yesterday
Tin US$ 19,650/t vs US$19,860/t yesterday
Energy:
Oil US$49.4/bbl vs US$48.5/bbl yesterday
Natural Gas US$3.237/mmbtu vs US$3.216/mmbtu yesterday
Uranium US$22.75/lb vs US$22.65/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$60.9/t vs US$59.4/t
Chinese steel rebar 25mm US$533.5/t vs US$543.0/t
Thermal coal (1st year forward cif ARA) US$65.0/t vs US$65.1/t yesterday
Premium hard coking coal Aus fob US$211.8/t vs US$219.8/t
Other:
Tungsten - APT European prices $210-219/mtu vs $212-219/mtu
Company News
Anglo Asian Mining* (LON:AAZ) 18p, Mkt Cap £20m – Ugur development in progress with latest drilling returning good wide intersections
• Ugur gold deposit is going through an accelerated development programme with first production targeted for Q4/17.
• The latest set of core drilling results return with good wide intersections with selected results provided below:
• In total, 55 vertical RC dril holes for 1,842m and 39 core drill holes for 5,472m have been completed at Ugur confirming an oxide gold-rich zone to a depth varying between 50-60m over the 350mx250m aread.
• The team continues with infill drilling using a narrower 20x20m grid to estimate JORC reserves (due in Q3/17) and prepare mining schedule.
• Previous metallurgical test-work showed the amenability of Ugur ores both to heap and agitation leaching.
• Mining equipment from Gedabek to be redeployed for transportation of stockpiled ores, construction of the infrastructure and setting up of open pit mining operations at Ugur as well as raising the tailings dam walls.
• Processing of copper rich stockpiled sulphide ores will see the plant to be re-configured to float the feed first before tank leaching the tailings between Feb/17 to Aug/17; the ciruict will be reverted to leaching-floation from Sep/17 as supply of ores from Gadir, Gosha and subsequently from Ugur ramps up.
• Gedabek mining operations are expected to resume at the beginning of 2018.
• Annual production target reiterated at 64-72koz gold equivalent.
Dalradian Resources (LON:DALR) 66.5 pence, Mkt Cap £166m – Positive reconciliation from test mining at Curraghinalt
• Dalradian Resources reports that processing of almost 14,500 tonnes of mineralised material derived from underground development and test stoping at Curraghinalt in Northern Ireland has recovered considerably more gold than predicted by the resource block model.
• The test programme on 3211 tonnes of material from testing stoping yielded a 40% improvement over the predicted grades to produce 42% more gold (1,621 oz) than had been expected. Recovery rates of 95.8% were 1.5% higher than anticipated.
• Similar improvements in recovery rates (1.7% higher than expected at 96.0%) were recorded from the 11,162 tonnes of development ore treated although grades at 7.1g/t gold were only 6.6% higher than expected in the resource modelling.
• The company does not elaborate on any possible explanation as to the reason for the higher grades recovered during stoping, however, it is clear that, at least in the areas tested, resource modelling is under-reporting grades by a significant level. We speculate that, in a deposit known to be high grade, as confirmed again by the latest drilling results released last week, the “top-cut” criteria used in the resource assessment may have been unduly severe.
• The January 2017 NI-43-101 Technical Report showed that, as is appropriate in complex orebodies, different levels of grade capping were applied to each of the veins and mineralised domains at Curraghinalt rather than implementing a single uniform threshold. We imagine that this is an issue which management will be keeping under review as any enhanced understanding of grade distributions within the individual mineralised structures is likely to provide additional insight into the design of future grade control programmes.
Conclusion: The positive reconciliation of ore recovered during test mining compared to the modelling suggests that there may be more upside in the Curraghinalt resource than previously reported. The use of conservative parameters is an obvious risk mitigation, but we would not be surprised to see a revision of the resource estimate at some point in the future.
Kodal Minerals* (LON:KOD) 0.33p, Mkt Cap £17.6m – Suay Chin investment agreement finalised
• Kodal Minerals reports that it has now finalised the previously announced equity subscription agreement with the Singapore based, Suay Chin International for the investment of a further £4.3m in Kodal Minerals.
• The company has already received £3.3m of the total funding from Suay Chin and expects to receive the balance shortly. The new investment of £4.3m is in addition to Suay Chin’s original £0.5m investment in Kodal which was announced in March and will take Suay Chin’s interest in Kodal Minerals to 20%.
• In addition to the equity subscription, Kodal Minerals also reports that it has entered into a binding term-sheet to provide the framework for a future off-take agreement for any production from the Bougouni project. The new agreement relates “to the terms on which the parties will negotiate an extended off-take agreement for between 80% and 100% of the spodumene product produced at the Company’s Bougouni Lithium Project in Southern Mali … for a period of three years, an increase from the 20% of production previously announced.”
• Detailed “Negotiation of the extended off-take agreement to commence following the completion of a scoping study for the project.”
• In the meantime, “Kodal Minerals will collect a bulk sample for shipment to allow assessment of the mineralisation characteristics to assist in determining the future treatment plant requirements”
• Commenting on the announcement, Kodal Minerals’ CEO, Bernard Aylward, highlighted that “The investment by Suay Chin leaves us well funded and will enable us to focus our efforts on the exploration, metallurgical testing, resource estimation and future development of Bougouni.”
Conclusion: The Suay Chin investment should now provide the financial firepower for Kodal Minerals to advance the technical evaluation of Bougouni. The agreement to increase the potential level of offtake of spodumene product accessible to Suay Chin, which is subject to the outcome of the scoping study, provides the basis of a long term customer relationship and highlights Suay Chin’s confidence in Bougouni.
*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) 3.625p, mkt cap £4.6m – In Specie distribution of stake in Los Calatos delayed
• CD Capital, the London-based private equity fund which agreed to invest up to US$45m into the Los Calatos copper project in Peru has settled its investment agreement.
• Metminco is to use its ‘best endeavours’ to distribute at least 90% of its effective holding in the Los Calatos project which is held through its holding in subsidiary Hampton Holdings.
• We expect CD Capital to continue to invest in and potentially develop or sell the Los Calatos project once further value has been added.
• Metminco is working on resolving ‘complex funding, legal and tax arrangements relating to the distribution’ which has delayed the in-specie distribution.
• Investors will be updated further in due course.
• Metminco currently hold 49% of the Los Calatos copper porphyry which is currently being funded by CD Capital under an agreement whereby CD Capital has a right to earn up to 70% of the project through expenditure of US$45m on a pre-feasibility and feasibility study.
• CD Capital investment schedule US$45m made up of:
o Tranche 1 – US$16m – 51% Equity
o Tranche 2 – US$14.5m – 65% Equity (Total)
o Tranche 3 – US$14.5m – 70% Equity (Total).
• The Los Calatos resource which currently stands at 352mt grading 0.76% copper and 318ppm of molybdenum.
*SP Angel act as broker to Metminco. SP Angel analysts have previously visited Los Calatos in Peru and Miraflores project in Colombia