Beowulf Mining (LON:BEM) – Åtvidaberg Exploration Update
Savannah Resources (LON:SAV) – Savannah reports progress at Mahab 4 and Maquail South in Oman
Lithium – demonstrates critical nature in nuclear fusion
• The U.S. and China recently announced progress in their joint collaboration in developing the use of lithium to control plasma within experimental nuclear fusion reactors.
• For fusion to generate substantial energy, the ultra-hot plasma that fuels reactions must be kept from cooling and remain stable.
• Experiments to test how suitable lithium is for this job was conducted by US researchers from different universities as well the scientists from General Atomics which participated via a separate grant.
• In order to test lithium, they deployed it in the Chinese tokamak in three different ways: through a lithium powder injector, a lithium granule injector, and a flowing liquid lithium limiter.
• Recent results of the experiment have shown lithium, to be extremely effective in both keeping cool and remaining stable and could potentially be optimised to control plasma.
• Nuclear Fusion takes place in a hollow steel donut surrounded by powerful super conducting magnets (called a Tokamak) whose fields are used to contain charged gas (plasma) that is heated to 100 million degrees.
• The high temperature causes deuterium and tritium in the plasma to undergo nuclear fusion. Energy is created, which, in can be captured to generate electricity.
• The reaction creates fast neutrons which, when absorbed by a Lithium blanket within the Tokomak, interact with the lithium to breed more tritium as fuel.
• Careful injection of lithium into the hot plasma under certain conditions of turbulence has also recently been found by U.S. scientists to significantly increase the temperature and pressure of the plasma, and crucially, the time that it stayed at high pressures required for fusion to occur.
• Nuclear Fusion, despite promising vast amounts of energy for the future is proving hugely expensive to research and develop to a fully working stable source of power generation.
• The latest experimental fusion reactor called ITER is under construction in France and it is estimated it will cost €20bn by completion.
• The UK, as part of Brexit, stated in January this year that it would, as part of Brexit, pull out of the European Atomic Energy Community
*Our Technology analyst formerly worked at the JET project at Culham in Oxfordshire.
Lithium –
Dow Jones Industrials -0.07% at 21,360
Nikkei 225 +0.56% at 19,943
HK Hang Seng +0.20% at 25,617
Shanghai Composite -0.30% at 3,123
FTSE 350 Mining +0.36% at 14,430
AIM Basic Resources -2.33% at 2,543
Economic News
Gold prices trade around $1,255/oz after losing more than $20/oz on Thursday on the back of hawkish FOMC and MPC announcements.
• The US$ is little changed holding onto its yesterday’s gains.
• Base metals show varied performance with strong gains in nickel, lead and zinc, with the remainder metals broadly flat and the LME index set for a weekly decline (-1.6%) reflecting stronger US$ and mixed Chinese economic data.
• Brent is cautiously higher with prices on course to post a 1.8% weekly decline making it the fourth consecutive one amid reports of strong supply and a weaker than forecast drop in US inventories; the IEA reported that US stocks are running more than 100mbbl above the five year average.
• Both steel rebar (+1.1%) and iron ore (1.5%) futures are higher in China on Friday.
Japan – With the BoJ balance sheet nearly three times what it was in 2013 when Kuroda took over as the Governor of the central bank, inflation continues to hover significantly below the 2% target.
• The latest policy meeting ruled to leave key elements of the monetary policy unchanged by a 7-2 vote.
• Economic growth estimates for the FY17-18 was revised up slightly to 1.6%, up 0.1pp from estimates in Jan.
• Inflation forecasts were lowered to 1.4%, down from 1.5%, for the same period.
UK – Unexpectedly the MPC saw an increasing number of members supporting an early rate hike minutes of the 14 Jun meeting showed.
• The MPC voted 5-3 to maintain the benchmark rate at 0.25% compared to a 7-1 score recorded in May.
• Minutes highlighted risks of accelerating inflation, moderating labour earnings and slowing consumer demand.
• “GDP growth declined markedly in Q1, in part reflecting weaker household spending; it remains to be seen how large and persistent this slowdown in consumption will prove; in recent months, there have been further signs of slowing housing market and new car registrations have fallen sharply.”
• The MPC noted that the additional 2.5% depreciation in sterling over the past month post general elections “will add to that imported inflationary impetus”.
• Latest economic data showed inflation hit 2.9% in May while wages climbed at 1.7% in Apr.
• It looks more likely Mark Carney will be writing to the Treasury once the inflation crosses the 3% mark.
• Hawkish minutes of the MPC meeting led to a revision in rate hike expectations with markets now pricing in a 31.1% chance of a tightening before year end compared to 6.5% forecast before the meeting.
• The pound held up relatively well against the US$ which climbed against other major currencies after also a relatively hawkish FOMC meeting announcement on Wednesday.
South Africa – The rand recorded the worst daily performance among other emerging markets currencies amid unexpected changes to the mining charter announced by the government yesterday.
• Proposed changes include miners obligation to raise black-owned interest to 30% from current 26%.
• Additionally, miners will be expected to pay 1% of its annual turnover to local communities.
• Major miners with SA operations recorded heavy losses yesterday including AngloGold Ashanti (-6.8% over two days), Sibanye Gold (-6.9%) and Anglo American (-8.5%).
• The Chamber of Mines, a mining lobby in South Africa, said it will challenge changes to the charter in court arguing the rules are unfair and will hurt investment.
Greece – The government agreed the release of €8.5bn from EU creditors with the IMF offering only “approval in principle” for a standby facility given no resolution on the debt sustainability issue.
• The IMF approval would have allowed Greek bonds to participate in ECB QE programme, according to EU officials.
• “Approval in Principle would allow the IMF to be supportive of the progress made on policies while release of resources under the IMF arrangement would be conditional upon Greece’s European creditors providing commitments for debt relief sufficient to secure debt sustainability,” the IMF said.
• “We have… seen progress on debt relief, although further discussions are needed on the scope and type of measures to be provided by Greece’s European creditors,” Lagarde said.
• Released funds would allow the government to honour its debt repayments of €7bn coming due next month .
• 10y Greek bond yields fell 9bp to 5.75% this morning on the news.
Currencies
US$1.1156/eur vs 1.1180/eur yesterday. Yen 111.19/$ vs 109.56/$. SAr 12.834/$ vs 12.704/$. $1.277/gbp vs $1.273/gbp.
0.759/aud vs 0.760/aud. CNY 6.812/$ vs 6.795/$.
Commodity News
Precious metals:
Gold US$1,254/oz vs US$1,262/oz yesterday
Gold ETFs 60.3moz vs US$60.7moz yesterday
Platinum US$922/oz vs US$934/oz yesterday
Palladium US$871/oz vs US$860/oz yesterday
Silver US$16.80/oz vs US$16.88/oz yesterday
Base metals:
Copper US$ 5,658/t vs US$5,664/t yesterday
Aluminium US$ 1,873/t vs US$1,880/t yesterday
Nickel US$ 8,920/t vs US$8,900/t yesterday
Zinc US$ 2,529/t vs US$2,509/t yesterday
Lead US$ 2,109/t vs US$2,084/t yesterday
Tin US$ 19,380/t vs US$19,150/t yesterday
Energy:
Oil US$47.2/bbl vs US$46.9/bbl yesterday
Natural Gas US$3.062/mmbtu vs US$2.937/mmbtu yesterday
Uranium US$20.00/lb vs US$20.00/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$54.6/t vs US$53.8/t – The Iranian iron ore sector is experiencing egregious times.
• Of the 145 medium and small iron ore mines operating in the year 2013-14, only nine are still producing today according to Bahram Shakouri, the deputy head of Iranian Iron Ore Producers and Exporters Association.
Chinese steel rebar 25mm US$571.9/t vs US$566.4/t
Thermal coal (1st year forward cif ARA) US$68.2/t vs US$68.3/t yesterday
Premium hard coking coal Aus fob US$145.9/t vs US$145.9/t
Other:
Titanium – The US will likely have lighter titanium bullets and titanium machine guns upgrades for large hundreds of thousands of soldiers over the next ten years.
• Titanium aerospace fasteners have evolved over the years with the continuous transformation of the aerospace industry.
• They are widely used in commercial and military aircraft, their parts and components, ballistic missiles and rockets, and aftermarket service.
• The analysts forecast the global aerospace titanium fasteners market to grow by 6.93% during the period 2017-2021, which should in turn provide a noticeable increase in demand for titanium.
Company News
Beowulf Mining (LON:BEM) 9 pence, Mkt Cap £47m – Åtvidaberg Exploration Update
• Beowulf today reports that it has a gaggle of three geologists in the or maybe a field somewhere in Sweden.
• The team are mapping and are ground-checking airborne magnetic targets, V-Tem targets and geological anomalies.
• This is all relatively early stage stuff though it is important work with regard to the potential discovery of polymetallic prospects in the Åtvidaberg area.
• Beowulf also held a three day workshop at Åtvidaberg in April bringing in external experts to help their work.
• The company has been struggling with local issues in relation to its Kallak magnetite project in Sweden.
• The team are also working on the Aitolampi graphite prospect in Finland which shows ‘substantial’ graphite mineralisation in drilling and a massive 113.5m intersection of graphitic material
Conclusion: While this is one of the more underwhelming press releases we can remember, it is important to remember that new and valuable discoveries often only come after this sort of methodical work. We can only hope that the Swedish authorities will be quicker and more positively disposed with their approvals for what ever is found on the Åtvidaberg area licenses.
Savannah Resources (LON:SAV) 5.1p, Mkt Cap £27.4m – Savannah reports progress at Mahab 4 and Maquail South in Oman
(Savannah holds 65% in holder of Mahab 4 and Maquail South deposits within Block 5)
• Savannah Resources reports that it has received in principal approval for its tailings storage facility ‘concept’ in Oman.
• The in principal approval is subject to further studies and test work to be presented to MECA for review and consideration.
• The tailings ‘concept’ involves the use of the abandoned ‘Lasail West pit’ for tailings storage, this is adjacent to the historic Lasail mine which produced 13mt grading 2% copper.
• Savannah report that all regulatory applications for copper mine development at both Mahab 4 and Maqail South have now been submitted with mining expected to start in H1 2018.
• A map in the press release indicates the projects which Savannah are currently working on within Block 4 along with a whole lot of other copper prospects within other license blocks where Savannah is not currently involved.
• The map indicates to us that the region is highly prospective for copper mining and exploration and that a series of small, or maybe not so small, VMS-deposits might be expected to see development over the coming years.
• Mahab 4 is estimated to host 1.51mt at 2.1% copper in a JORC compliant Inferred Resources
• Savannah is looked to use a standard copper floatation circuit based on preliminary metallurgical results on ore from the Mahab 4 project which indicate >90% recoveries and suggesting a potential for a >23% Cu saleable concentrate with gold and silver by-products..
• The presence of sphalerite will require zinc depression during floatation to keep zinc grade in the concentrate below 3% Zn.
• Rock hardness tests showed the processed ore to be relatively soft.
• Sulphide mineralisation is predominantly pyrite, chalcopyrite (the sole copper bearing mineral) with minor amounts of sphalerite (a zinc containing sulphide mineral).
Conclusion: Lower oil and gas prices a causing oil-rich states to look for longer-term alternative sources of employment and income with renewed focus on other mineral extraction and processing. Tri-Star Resources is constructing an antimony roaster in Oman with an associated gold process plant and other extractive industries are likely to follow.