Anglo American (LON:AAL) – Leadership Changes
Fox Marble Holdings (LON:FOX) – Results highlight disappointing year
IronRidge Resources* (LON:IRR) – Soil Sampling results from Ivory Coast
LSC Lithium (CVE:LSC) – LSC consolidates control of lithium salar's in Argentina as its partner Enirgi Group’s DXP pilot plant ‘breaks the code’
Scotgold Resources (LON:SGZ) – Sale of gold from Cononish
Sula Iron & Gold (LON:SULA) – Assay result from Ferensola
Gold and currencies are mute ahead of the ECB meeting and UK general elections due tomorrow.
• Copper is up marginally helped by a weaker US$ and a decline in LME stockpiles which fell to the weakest in a month level.
• Nickel is up 1.0% as declines pause after prices hit a one-year low on the 02Jun amid concerns over a ramp up in nickel supplies from Indonesia.
• Iron ore futures are off slightly amid reports of record high supplies of the ore from Australia; iron ore shipments from Port Hedland, the world’s largest bulk-export terminal, climbed to a record of 44.1mt last month (38.0mt of which were sent to China), up from 42.3mt in Apr and 39.4mt last year.
• Brent prices are off 0.7% this morning after having climbed 1.1% on Tuesday.
BHP looking to move to crewless ships
• We wonder what the RMT Union will have to say about that – comrade Jezza.
Gold – India sets 3% GST tax on gold
• Indian has announced a new 3% Goods and Service Tax ‘GST’ on precious metals and Jewellery.
• This is better than the 5% which was feared
• The government has already approved tax bands of between 0-28% for goods and services in other sectors indicating that gold has got off lightly.
• The lower new tax rate is an indication of how important gold is to the Indian economy though India does already have a 10% import duty and 1% VAT applied in most states.
• Therefore the overall tax rate for gold may rise by just 1% as the government has not changed the import duty.
• The government has also levied an 18% GST on the making of jewellery which effectively takes the tax on gold jewellery to 16% from around 12.5%, though in some states the overall tax rate may be lower.
• We suspect this is part of a grand overhaul to get Indians to pay tax following on from the withdrawal of larger bank notes late last year which caused significant disruption to the gold market the population was forced to tender larger bank notes to banks and then pay any suspected due tax on the money lodged.
• The gold tax overhaul should enable gold imports to rise again though it might reduce demand for jewellery.
Dow Jones Industrials -0.23% at 21,136
Nikkei 225 +0.02% at 19,985
HK Hang Seng -0.28% at 25,923
Shanghai Composite +1.23% at 3,140
FTSE 350 Mining -0.64% at 14,649
AIM Basic Resources -0.03% at 2,653
Economic News
US – Available jobs increased to a record high in Apr pointing to a strong demand for workers.
• A slight parting between a pickup in job openings and a slowdown in new jobs created suggests there might be a shortage of skilled labour with tightening present only in certain parts of the labour market, Bloomberg Intelligence reports.
• This suggests that broad-based wage pressure acceleration is not imminent, BI said.
Date Index Period Actual Est Previous
Monday ISM Services PMI May 56.9 57.1 57.5
Factory Orders (%mom) Apr -0.2 -0.2 1.0 (revised from 0.2)
Factory Orders (ex Auto) Apr 0.1 0.2 (revised from -0.3)
Tuesday JOLTS Job Openings ('000) Apr 6,044 5,750 5,743
Thursday Weekly Jobless Claims ('000) Jun-03 240 248
Source: Bloomberg
Germany – Factory orders growth slowed in Apr, but continued to expand at a solid pace reflecting strong business confidence that has lately hit an all-time high.
• A slowdown in factory orders may be attributed to the timing of Easter this year.
• Factory Orders (%mom): -2.1 v 1.1 in Mar and -0.3 forecast.
• Factory Orders (%yoy): 3.5 v 2.5 in Mar and 4.7 forecast.
UK – House prices contracted posted another drop in three months to May, according to the Halifax data.
• This comes on top of the first three-month decline in five years recorded in Apr.
• YoY prices were 3.3% higher down from a 3.8% increase in Apr and compared to a peak of 10% recorded in Mar/16.
• Halifax suggests prices to remain well supported by low supply and cheap credit “over the coming months”.
• House Prices (3m %yoy): 3.3 v 3.8 in Mar and 3.0.
Australia – The A$ climbed against the US$ (+0.6%) as Q1 GDP numbers came marginally better than market estimates.
• Many expected quarterly GDP numbers to come in lower amid the RBA warnings that growth slowed in the Mar quarter.
• Quarterly GDP (%yoy): 1.7 v 2.4 in Q4/16 and 1.6 forecast.
Currencies
US$1.1252/eur vs 1.1248/eur yesterday. Yen 109.25/$ vs 109.66/$. SAr 12.865/$ vs 12.761/$. $1.290/gbp vs $1.293/gbp.
0.755/aud vs 0.748/aud. CNY 6.793/$ vs 6.798/$.
Commodity News
Precious metals:
Gold US$1,293/oz vs US$1,289/oz yesterday
Gold ETFs 60.1moz vs US$60.1moz yesterday
Platinum US$960/oz vs US$959/oz yesterday
Palladium US$857/oz vs US$846/oz yesterday
Silver US$17.71/oz vs US$17.64/oz yesterday
Base metals:
Copper US$ 5,597/t vs US$5,569/t yesterday
Aluminium US$ 1,904/t vs US$1,899/t yesterday
Nickel US$ 8,945/t vs US$8,880/t yesterday
Zinc US$ 2,453/t vs US$2,477/t yesterday
Lead US$ 2,076/t vs US$2,100/t yesterday
Tin US$ 19,580/t vs US$19,905/t yesterday
Energy:
Oil US$49.9/bbl vs US$49.4/bbl yesterday
Natural Gas US$3.055/mmbtu vs US$2.990/mmbtu yesterday
Uranium US$19.15/lb vs US$19.15/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$55.3/t vs US$54.4/t
Chinese steel rebar 25mm US$568.4/t vs US$568.0/t
Thermal coal (1st year forward cif ARA) US$68.5/t vs US$69.0/t yesterday - Indonesia – sets thermal coal price at $75.46/t
Premium hard coking coal Aus fob US$149.5/t vs US$149.5/t
Other:
Tungsten - APT European prices $220-225/mtu vs $215-225/mtu
Company News
Anglo American (LON:AAL) 1063 pence, Mkt Cap £13.7bn – Leadership Changes
• Anglo American has announced that the former Chairman of ARM Holdings and Rexam plc, Stuart Chambers, is to assume the role of Chairman when the current incumbent, Sir John Parker retires from the Board on 31st October.
• Chief Executive, Mark Cutifani, paid tribute to Sir John’s service with the company saying “Sir John Parker has chaired Anglo American through challenging times with his trademark even hand and focus on the critical business issues. I have valued his guidance enormously.”
• Cutifani also welcomed the appointment of Mr Chambers “I am looking forward to working with Stuart as we continue our rebuilding of Anglo American. Stuart has led and chaired major global businesses with many parallels to our organisation, in areas such as manufacturing process and technology led innovation. We have materially restored Anglo American's balance sheet and transformed the business performance over the last three years, and our task now is to unlock the very considerable value that we can see from our world-class asset base.”
• The incoming Chairman commented that “It is a great privilege to be appointed Chairman of a company as iconic as Anglo American, in this its centenary year. Anglo American has emerged from the commodity price downturn more resilient and with a renewed sense of purpose, both strategically and in terms of the role it plays in society.”
Fox Marble Holdings (LON:FOX) 9.8p, mkt cap £17.7m – Results highlight disappointing year
• Fox marble’s statement paints a picture of expansion and demand.
• The results tell a different story of lower production tonnages and losses for last year though gross profits did double from €0.3m from €0.1m a year earlier.
• Admin expenses rose to €3.3m vs €2.5m a year earlier.
• Operating losses also rose to €3.0m from €2.4m while sales increased to €801k from €229k for the year.
• The group loss for the year reduced slightly to €2.8m from €3.0m.
• Expenditure on property plant and equipment rose to €1.3m vs €0.7m.
• There is a new stock provision of €0.2m which adds to the cost of materials sold at €0.5m
• The results are supported by a Foreign Exchange gain of €0.35m vs a loss on forex of €0.2m a year earlier.
• Net finance income of €0.04m was also very much better than a net finance loss of €0.25m a year earlier
IronRidge Resources* (LON:IRR) price 36.4p, Mkt Cap £87m – Soil Sampling results from Ivory Coast
• IronRidge Resources reports the completion of a soil sampling programme over the Bianouan and Bodite projects in Cote d’Ivoire.
• The results from over 3900 samples assayed for gold and taken at 50m intervals along a series of lines spaced 400m apart have defined eight anomalous zones at Bianouan and seven zones at Bodite.
• Individual anomalies at Bianouan extend up to 4.5km in length and up to 800m wide. “Within three of these anomalies, high grade strong and continuous … gold in soil anomalous ‘cores’ have been identified.”
• At Bodite, the survey has identified “individual anomalies up to 3.5 km long and 800m wide. The anomalous gold trends coincide as potential oblique splays off a major thoroughgoing structural corridor. As further support a new artisanal alluvial gold mining site has recently commenced down slope from the most anomalous soil results.”
• The company is following up with additional infill sampling on line spacing of 200m over the more promising targets which should more closely define the extent of the anomalies and “the Company envisions targeted auger traverses to define or otherwise drill targets.”
• “At Bianouan, a 400m and 200m line spacing by 20m sample spacing hand-auger drill programme is … underway. A total of 2500 auger drill holes are planned across the eight broad soil anomalies defined.”
Conclusion: The recently completed soil sampling has defined a number of broad gold anomalies in favourable geo-structural settings which are now being followed up with closer spaced sampling to help define possible targets for drilling. Although the work is still at a relatively early stage, the presence of artisanal gold mining on one of the sites helps to validate the more scientific exploration from soil sampling.
*SP Angel act as Nomad and Broker to IronRidge Resources
LSC Lithium (CVE:LSC) C$1.3, mkt cap C$110m – LSC consolidates control of lithium salar's in Argentina as its partner Enirgi Group’s DXP pilot plant ‘breaks the code’
• LSC Lithium'S partner Enirgi Group which is commissioning a demonstration running a trial lithium ‘DXP’ processing plant in Argentina has announced the acquisition of strategic tenements from Orocobre and an option from Advantage Lithium.
• The move consolidates control of the centre of what is reported to be a high-grade lithium salar known as the Salinas Grandes Salar.
• We sat down with the Chairman of LSC, Wayne Richardson who also runs the Enirgi Group, a global conglomerate with an engineering services division and is backed by The Sentient Group in Australia.
• Richardson’s innovation team appears to have cracked the technology for processing lithium directly out of lithium brine solution though the use of membranes (osmosis) in tubes.
• The process plant at Rincon in Argentina currently works at around 1t of Lithium carbonate per day and while this appears to prove the concept the product is not yet independently tested to be of battery grade quality.
• We expect the process to work better in time though it is possible that costs may rise if additional processes are required to achieve better grades.
• This is not the first time a company has tried using a membrane technology for the processing of lithium a feat which is regarded as the ‘holy grail’ of lithium processing.
• The process may also benefit other lithium brine producers and may even help hard rock lithium miners as well if the economics prove acceptable.
• This is critical for Argentina as most if not all Argentine salars suffer from elevated rainfall rendering their evaporation ponds less effective than in the Chilean Atacama.
• Upscaling: Enirgi plans to upscale its $20m pilot plant to a 50,000tpa producing unit once it has completed commissioning, testing signed off by the Qualified Person and then financing of the scalable facility.
• Breaking the code: We understand the pilot plant ‘breaks the code’ when it comes to lithium extraction from brines and that it’s simple process enables the company to recycle reagents out of the brine solution.
• Enhanced Process Chemistry: The project uses ‘Enhanced Process Chemistry’ and is said to work on lower lithium grades than other processes which are being evaluated in the market.
• Capital costs at around $750m for a 50,000tpa plant are estimated to be around 75% of that for conventional brine plants as there no need to build large-scale evaporation ponds and associated infrastructure for the extraction of lithium. We note that LSC may reinject the brine solution or opt build evaporation ponds for the extraction and sale of other minerals from the brine post lithium extraction.
• Commissioning risk should also be lower as recent commissioning in the brine space are not thought to have gone well. We note that evaporation ponds do not work so well in Argentina due to the higher rainfall compared with ponds in the Atacama in Chile.
• Working Capital should also be significantly lower due to the added benefit of much quicker residence times through the avoidance of evaporation before lithium extraction.
• Operating costs are estimated to be US$2,070/t LCE by the Enirgi Group vs US$3,200-4,200/t which they reckon for conventional brine LCE production.
Conclusion: LSC Lithium seems to have partnered with the right group and broken the code when it comes to bringing new lithium production to market in record time (lithium processing). If the process upscales well, and hydrometallurgy usually does in our experience, then LSC Lithium should have a great future. We just have to hope that the next Peronist government in Argentina is smart enough to keep its hands off.
Scotgold Resources (LON:SGZ) 0.5p, Mkt Cap £8.4m – Sale of gold from Cononish
• Scotgold has announced the sale of 16oz of gold produced as part of the bulk processing trial at its Cononish project to two jewellers.
• The gold sale, under which the Scottish provenance of the gold is authenticated by both the refiners and the Edinburgh Assay Office, was implemented at a premium understood to be in excess of 30%.
• CEO, Richard Gray commented that “This is yet another pleasing milestone and validates our belief in the strength and value of combining Scottish Gold of proven provenance with the skill and prestige of the Scottish jewellery industry”.
• The sale of a small quantity of gold from Cononish demonstrates the concept of premium sales of authenticated Scottish gold and provides the jewellers the opportunity to establish the viability of what may well eventually become a premium market to visitors, residents and the wider Scottish diaspora.
Sula Iron & Gold (LON:SULA) 0.4p, Mkt Cap £19.5m – Assay result from Ferensola
• Sula reports that it has received the assay results from the first hole drilled into the “TZ4, the Southern target” at its Ferensola gold project in northern Sierra Leone.
• The result comes from the recently completed 3783m, 14 hole, drilling programme “across Sanama Hill (TZ0), Eastern Target (TZ2), Southern Target, (TZ4) and the Kuwait artisanal anomaly”.
• Hole FDD021 intersected a 1.22m wide zone of mineralisation grading 5.2g/t gold from a depth of 116.45m in a hole angled at 55⁰ towards the south east.
• CEO, Roger Murphy, commented “With this hole, we have demonstrated that gold mineralisation is not restricted to Sanama Hill and it supports our belief, based on our extensive geophysical work, and the intense artisanal activity in numerous sites across the licence, that there are multiple gold deposits across our Ferensola licence area.”
• Mr Murphy goes on to note that “the Southern Target is much longer than Sanama [which is located some 2km to the north]…, where we already have an Exploration Target of 0.8m oz - 1.5m oz. This further demonstrates our strong belief that Ferensola hosts a significantly larger gold system than the original Exploration Target."
Conclusion: The initial drill hole result from the Southern target at Ferensola is promising, however there is clearly considerable additional exploration required and we look forward to further results from the recent drilling and to learning of the company’s plans to advance the project.