Commodities
Diamonds and precious stones
Alrosa announced Q1 results last night. As previously noted sales volumes rose 41% to 14.1Mcts and revenues rose 38% to R84.4bn. Importantly though, given the production number of 8.9Mcts, we can clearly see that destocking has continued and the Indian demonetisation impact has reduced. Additionally, the company confirmed this week that they would be partnering Endiama to develop the largest known deposit in Angola, the Luele kimberlite pipe, part of the Luaxe concession.
Whilst details are limited, the company has confirmed that this is the largest pipe discovered in the last 60 years, certainly since the discovery of deposits in Yakutia. The total commercial value of the deposit has been estimated at over $35bn.
Precious metals
So a little while back I noted that when I started putting my ruler on the screen it looked as though we were approaching “golden cross” territory?
Only happened four times in the last five years…
To the pub then
And the Fed has slipped to #3 in balance sheet expansion race stabilising at $4.5tn since October 2014, whilst the BOJ and ECB continue to accumulate…
Happy to remain long precious metals, more to come on the silver markets in coming weeks…
Company announcements/news/meetings:
A couple of bits this week, obviously Acacia and Gemfields continue to hold the headlines but the news that the new South African Mines Minister Mosebenzi Zwane is reportedly looking to increase black ownership stakes of mining assets to 30% from the current 26%. This will send a shudder down the backs of investors, especially given the fact the Zimbabwean tourism minister recently lectured the SA Govt on land appropriation considerations… Oh, the irony.
Acacia (LON:ACA)(Under Review): Where now?
I think I have bored enough of you in the past with my views on the company, certainly when the shares were in danger of establishing a new life in 600 plus pennies-town but the events of this week actually leaves me with some sympathy with the company.
Personally I do not for one minute believe Brad and the boys intentionally sought to defraud the Tanzanian Government by falsely declaring total gold content in their concentrate sent for export but instead have an overwhelming feeling that the Presidents to do list from his missus goes something like…
As I said before, I would value North Mara at around 275p to 285p ex any impact from the closure of Buzwagi and Bulyanhulu, which I think is more likely than not unless the ban can be lifted quick sharp.
All our recommendations remain under review but for me, I would not be keen to catch the proverbial knife just yet…
Gemfields (LON:GEM) (Under review): Observations from the investment community...
As noted to me by an unnamed fund manager this week:
“The last time someone tried a gemstone heist this big, it was in Hatton Garden”
“Those chaps are now inside”
And somewhat amusingly my word of the day sent to me last Friday was: Purloin.
Hmmm.
Gem Diamonds (LON:GEMD) (Buy)*: Q1 update
“Gem Diamonds Q1 trading update confirmed what investors already suspected, Q1 was tough. But the recent trend of larger diamond recoveries point to further improvements whilst the mine plan forecasts a significant increase in higher value satellite pit production as the year progresses. Despite this, we have taken a cautious approach to our FY17 sales volumes trimming our estimates towards the lower end of guidance (from 110kcts to 108kcts). We retain our Buy recommendation and apply a new target price of 135p”.
Lucapa Diamond Co (ASX:LOM) (Buy): Financing agreed for Mothae
Lucapa today announced that a funding package worth up to A$19m to fund the acquisition and development of the Mothae project in Lesotho has been completed. The package includes cash repatriated from Lulo, the underwriting of A$0.20c options, a bridging loan and new options to be issued. In total this package leaves Lucapa well-funded to commence commissioning at Mothae in Q1 2018.