Goldplat* (LON:GDP) – Update shows slow progress
Herencia Resources (LON:HER) – Peter Reeve takes over of Chairman of Herencia
SolGold (LON:SOLG) - BUY – Geophysical survey identifies additional anomalies
Trans-Siberian Gold (LON:TSG) – Mineral resources update for Asacha
Miners are up slightly this morning recovering from heavy losses recorded on Tuesday driven by weaker gold, copper and iron ore prices.
• Gold prices are flat after touching the lowest level in more than a month on the back of the stronger US$.
• Copper prices are set for a fifth consecutive monthly decline; LME prices fell 1.2% on Tuesday and touched the lowest level since early June this morning.
• Brent is off 0.9% this morning taking this week’s losses to 3.7% on reports Libya, an exempt from the OPEC-led production rationing programme, is pumping at the highest rate in four years while oil inventories held offshore in tankers reached a 2017 high this month.
• US producers seem to be adding to the supply glut with the number of operational rigs climbing for 22 weeks now marking the longest run in 30 years.
• Prices are currently trading at the lowest since Nov/16 with oil technically in the bear market having fallen more than 20% from the recent January high of $57/bbl.
• Iron ore futures are down 1.4% with benchmark prices hovering around a one-year low of $53.4/t on the back of concerns of Chinese demand and strong supply fundamentals.
• The announcement by Atlas Iron this morning to defer its Corruna Downs iron ore development project highlight challenges falling prices place on economics of proposed lower grade operations.
• The greenfield Corruna Downs project is estimated to produce c.57% Fe at a rate of 4mtpa.
Day of Rage – turns into day of hot and stroppy
• We advise investors avoid central London and the London underground (it’s just too hot today).
Titanium - 3D printing – Carpenter Technology begins commercial production of titanium powder
• The titanium powder is a custom alloy suitable for 3D printing and is used across all metal manufacturing industries, with unmatched factors in fabrication, strength-to-weight ratio and biocompatibility. It is also capable of withstanding temperatures up to almost 800°C.
China – wealthy Chinese upgrading to three-ply lavatory paper as consumers move towards more luxury products
• The FT report today that the Chinese had added a new layer to the Chinese economic picture.
• Wealthy Chinese are moving toward premium products as marked by increasing sales in three-ply lavatory paper from the more normal two-ply variety.
• Domestic brands are said to have been quicker to respond to rush in demand for three-ply paper and other luxury products leaving international brands losing market share.
• A shift to online purchasing is also helping domestic brands over their international rivals.
Dow Jones Industrials -0.29% at 21,467
Nikkei 225 -0.45% at 20,139
HK Hang Seng -0.57% at 25,694
Shanghai Composite +0.52% at 3,156
FTSE 350 Mining +0.16% at 14,090
AIM Basic Resources -1.58% at 2,533
Economic News
China – Following a number of failed attempts, Chinese A shares will be added to the MSCI’s global benchmark equity index for the first time next year.
• MSCI said it will add 222 A-shares large-cap stocks that would account for 0.73% of the flagship index.
• Chinese equity and bond markets are the second- and third-largest in the world while foreign investors hold less than 2% of each, FT reports.
• While the index provider highlighted that further inclusions would require further market reforms and “a greater alignment of China with international accessibility and trading standards”.
• Nevertheless, it marks an important step and lays the base for further integration of local markets into global financial system.
• Equities climbed on the news with the CSI 300, an index of A-shares listed on the Shanghai and Shenzhen stock exchanges, posting a 1.17% increase.
UK – The pound fell sub the 1.26 level as Mark Carney made an announcement that “now is not yet the time” to raise rates cooling monetary tightening expectations.
• Markets started to build in higher rates’ estimates on the back of increasing number of the MPC members voting in favour of a hike.
• Unclear status of the deal between the Conservatives and Nrother Ireland’s Democratic Unionist Party ahead of the today’s Queen’s Speech today and the key vote on Thursday June 29 does not help the currency either.
• Although, Arlene Foster, the DUP leader, has earlier said that 10 DUP MPs will support 318 Conservative MPs passing the Speech avoiding the vote of no confidence.
Angola – Luanda has regained its title as the world’s most expensive city for expats
• The cost-of-living survey sees Luanda regain its title pushing Hong Kong into second place.
• London is just 30th on the list for expats driven by the high cost of renting.
• Rental prices in Luanda are estimated at $13,000/m or £10,300/m in an appropriate neighbourhood
Currencies
US$1.1135/eur vs 1.1154/eur yesterday. Yen 111.16/$ vs 111.61/$. SAr 13.090/$ vs 13.015/$. $1.261/gbp vs $1.269/gbp.
0.756/aud vs 0.762/aud. CNY 6.829/$ vs 6.828/$.
Commodity News
Precious metals:
Gold US$1,246/oz vs US$1,251/oz yesterday
Gold ETFs 60.2moz vs US$60.2moz yesterday
Platinum US$920/oz vs US$927/oz yesterday
Palladium US$870/oz vs US$870/oz yesterday
Silver US$16.48/oz vs US$16.63/oz yesterday
Base metals:
Copper US$ 5,639/t vs US$5,685/t yesterday – Global refined copper market had a surplus of approximately 165,000mt in the first quarter of 2017 according to preliminary data released on Tuesday by the International Copper Study Group.
• An analyst from the Lisbon-based research firm asserted that "this is mainly due to (a) decline in Chinese apparent demand".
• Data claims that, factoring to changes in private, unreported copper stocks in China, the first-quarter surplus rose to about 310,000mt.
• Overall, the world mine production is estimated to have declined by around 3.5% year on year in the first quarter to 4,63mt, with concentrate production declining by around 3%.
• Miners at Grasberg copper mine are set to extend the strike into a third month as no resolution of the dispute has been reached, the labour union representative said.
• The union said that around 5,000 workers remain on strike since May 1 representing around 15% of total 33,000 staff recorded at the end of last year.
• The Company noted Grasberg operations continue to run, although, at a sub-optimal rate.
• Concentrate shipments have not been affected by the strike, the Company noted declining to give further details.
• Base metals producer Nevsun Resources has resumed sales of copper concentrate produced from primary ore at the Bisha mine, in Eritrea.
• This Tuesday, the Vancouver-based miner reported that it has sold and shipped 5800t of concentrate to an international trader on competitive commercial terms.
• The company is scheduled to load further shipments at the Port of Massawa in the coming weeks.
• During the last quarter of 2016, Nevsun reported that Bisha was only able to produce a bulk concentrate in the copper circuit and was unable to consistently produce a saleable copper concentrate as it mined through boundary ore in the openpit.
• During the quarter ended March 31, Bisha achieved improvements in production of its desired copper and zinc concentrates. The company said that owing to several changes being implemented at the Bisha mine, they were able to reduce the activation of zinc sphalerite ore in the copper circuit.
• This in turn resulted in the production of meaningful quantities of copper concentrate during February and March.
• According to the CEO of the company, the improved separation is also resulting in significantly increased amounts of zinc concentrate being produced in the zinc circuit, with far less bulk concentrate output.
Aluminium US$ 1,874/t vs US$1,883/t yesterday
Nickel US$ 8,915/t vs US$8,975/t yesterday
Zinc US$ 2,560/t vs US$2,538/t yesterday
Lead US$ 2,120/t vs US$2,138/t yesterday
Tin US$ 19,600/t vs US$19,640/t yesterday
Energy:
Oil US$46.0/bbl vs US$47.2/bbl yesterday
Natural Gas US$2.898/mmbtu vs US$2.954/mmbtu yesterday
Uranium US$20.00/lb vs US$20.00/lb yesterday
Battery metals
Lithium – Neometals (ASX:NMT) has lodged three U.S. provisional patent applications associated with its technology to recover high‐value materials from spent lithium batteries.
• The scoping study which valued the operation at $84m, completed to date, confirm that the technology can economically recover high‐value cobalt (99.2% recovery), at potentially lowest quartile operating cost.
• Neometals is constructing a 100 kilograms per day pilot plant which is expected to be completed in the September quarter, in Canada, to accelerate the commercialisation of the battery recycling technology.
Cobalt – Greatland Gold, announced that they have submitted an application for a major cobalt exploration property in the Pilbara Region of Northern Western Australia.
• The Cobalt Project will be covered by two adjoining exploration licences over 130 square kilometres in the Pilbara Region, described by the company as “potentially the largest coherent cobalt streams anomaly in Western Australia.”
• Greatland Gold is trying to capitalise on the predicted future growth in the demand for EVs, renewable energy storage and portable devices such as laptops and smart phones that will see a “dramatic acceleration” in global consumption of cobalt.
• Further work on the project will include a review of airborne aeromagnetics and integration of geological and geochemical data. Resultant targets will be subject to geological reconnaissance, soil sampling and rock chip sampling during Q3 2017.
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$55.8/t vs US$55.3/t
Chinese steel rebar 25mm US$571.7/t vs US$571.7/t – Mill Steel Co., a distributor of flat-rolled carbon steel based in Michigan, has expanded into Houston with a new 100,000-square-foot facility.
• According to the CEO of the company, the new location houses three production lines that will turn the Houston site into one of the company's flagship service centers.
• Mill Steel will distribute its entire product line from the location, including hot-rolled, cold-rolled, painted and coated steel.
• "The addition of this location represents Mill Steel's entry into the significant Southern United States market and furthers our customer and product diversification," said CEO in his statement.
Thermal coal (1st year forward cif ARA) US$69.8/t vs US$68.6/t yesterday
Premium hard coking coal Aus fob US$142.5/t vs US$141.9/t
Other:
Tungsten APT European US$220-226/mtu vs US$220-226/mtu
Company News
Goldplat* (LON:GDP) 7.1p, Mkt Cap £11.9m – Update
• Goldplat start off their update announcement today with a paragraph on ‘Changes to the South African Mining Charter’.
• Given that Goldplat do not actually mine anything in South Africa we regard this paragraph as a bit of a red herring, though we are mindful that the new Charter may impact Golplat’s feedstock suppliers.
• Ironically if more gold mines and shafts shutdown in the Johannesburg area then there may be more gold bearing scrap material available for Goldplat to reprocess.
• Kilimapesa: Goldplat does do some small scale gold mining at Kilimapesa in Kenya, which is totally unaffected by the South African mining charter. The mine is now commissioning stage two of its process plant upgrade, which is slightly delayed to take throughput to 120t of ore per day (42,720tpa assuming 365day operation) and to bring forward connection to grid power which will cut energy costs.
• At the resource grade of 2.4g/t gold production should rise to around 3,000ozpa worth around $4m in sales.
• Ghana: a second hand 3-tonne elution plant is being acquired for around US$155k in South Africa which is seen as a better option than moving the company’s existing 4-t elution plant. The cost of instillation is estimated at US$1m.
• It also sounds like progress has been made on the signing of the first of recurring contract for gold bearing carbon from Latin America destined for Ghana.
• Goldplat remains in dispute with the Rand Refinery of South Africa, not people you normally want to argue with.
• The company holes it should ultimately recover the ~£780,000 which it claims is owed to it by the Rand Refinery.
*SP Angel analysts have visited the Goldplat’s recycling plant at Benoni in Johannesburg
Herencia Resources (LON:HER) 0.05p, mkt cap £3,3m – Peter Reeve takes over of Chairman of Herencia
• Peter Reeve has stepped into the chairman role at Herencia replacing John Moore who is stepping aside to become a non-executive director.
• Reeve who has had an illustrious career has been acting as a non-executive director since March.
• Reeve is a professional metallurgist having worked with Rio Tinto, Shell-Billiton, Newcrest Mining and Ivanhoe Australia which he co-founded.
• The company recently reported the sale of it’s 70% stake in the Paguanta project in northern Chile for a total consideration of US$2.3m plus the offloading of $2.1m of contingent liabilities to avert a working capital crisis and to keep the company trading.
• Picachos project in Chile is located 8km to the west of the large Andacollo copper-gold project operated by Teck Resources.
• Previous drilling at Picachos shows:
o 91m grading 1.42% copper and 13.5 g/t silver, (inc. 20m at 3.10% copper and 25.4 g/t silver)
o The shares have been hit by selling by the selling of shares following the conversion of convertible notes by ‘Lind Partners’ Australian Special Opportunities Fund which reports its holding has fallen to 12.87% from 19.81% previously. The company signed up for $200,000 of funds last October in what looks like a ‘drawdown facility’ from "Lind Partners" (Australian Special Opportunity Fund) and Oriental Darius Co. Ltd. The agreement entitled the two groups to 13,948,918,357 new shares if converted representing 79.82% at the time.
o Herencia topped up its funding requirements with a US$1.2m funding on 27th April through the placing of 6,758,972,388 new shares
Conclusion: Herencia have slashed overheads and director costs and should now be better set to evaluate the
SolGold (LON:SOLG) 38.5p, Mkt Cap £551m – Geophysical survey identifies additional anomalies
BUY
• SolGold has announced the results of a recently completed ground magnetic geophysical survey conducted over its Cascabel project area in Ecuador.
• The survey was conducted over 650 line km at a line separation of 50m giving a high level of detail and depth resolution and considerably enhancing “the detection of structures (e.g., faults and fracture zones) and intrusions.”
• The survey shows “several magnetic bodies to coincide with known copper gold mineralisation, such as at Aguinaga, Tandayama – America, Moran, Parambas, Carmen, Alpala West and Alpala East.”, and has identified additional potential targets for future exploration “to the east of America; northwest of Carmen, southeast of Cristal; and in the western and southwestern portions of the tenement.”
• The magnetic survey has indicated “major northwesterly- northerly- and northeasterly-trending gradients that locally coincide with mineralised corridors recognised by Solgold geologists through the mapping of copper sulphide minerals, porphyry related quartz veins and hydrothermal alteration.”
• Solgold is to start a follow-up hybrid induced polarisation (IP) geophysical survey in early July which should more directly detect sulphide mineralisation.
• During its exploration at Cascabel, Solgold has harnessed sophisticated geophysics techniques as a major exploration tool to target deep level mineralisation. This integrated exploration approach has proved successful in the past and the recent ground magnetic survey and the forthcoming IP survey continue this tested formula.
Conclusion: The recently completed geophysical survey has located additional targets for exploration, confirmed the known target areas and provided further insight into the geological structures and intrusions underlying Cascabel. These results should be supplemented by the forthcoming IP survey and even though Solgold is stepping up its drilling programme to deploy eight rigs by the end of the year it appears that they will not be short of targets.
*SP Angel acts as broker to SolGold
Trans-Siberian Gold (LON:TSG) 41.5 pence, Mkt Cap £45.7m – Mineral resources update for Asacha
• Trans-Siberian Gold has announced an updated mineral resource estimate for its Asacha gold deposit in Kamchatka.
• The new estimate, which is prepared in accordance with the JORC (2012) Code at a 4 g/t cut-off, shows a 9% reduction in the overall contained gold to 693,000 oz and a 2% decline in the contained silver to 1.76m oz.
• Approximately 61% of the contained gold (681,000 tonnes at an average grade of 19 g/t) is classified as measured and indicated with the balance inferred, while 68% of the silver (681,000 tonnes at an average grade of 55 g/t) merits the higher level resource classification.
• The resource at Asacha is made up of a Main Zone, which is currently being mined and contains 419,000 oz of measured and indicated gold and 1.2m oz of silver at an average grade of 19g/t gold and 55g/t silver, and a smaller higher grade as yet unmined East Zone which contains a further 3000 tonnes of indicated resource at an average grade of 56g/t gold and 30 g/t silver.
• The Main zone contains an additional inferred resource of 101,000 tonnes at an average grade of 14 g/t gold and 32 g/t silver while the inferred portion of the East zone is reported to contain 269,00t at an average grade of 26 gt gold and 53 g/t silver.
• The Competent Person responsible for the estimate is quoted saying “Based on the presence of the operating mine and mill, existing mine economics, the potential for incremental development across to deeper and more distal parts of the ore body, and the potential for further exploration success, it is considered that all the vein resources defined at Asacha have a reasonable prospect of eventual economic extraction.”
Conclusion: Trans-Siberian Gold is guiding for annual production in the range 32-36,000 gold so we infer that the current measured and indicated resource estimate covers in excess of 10 years production at this rate.