Dow Jones Industrials -0.31% at 21,513
Nikkei 225 -0.10% at 19,955
HK Hang Seng +0.02% at 26,852
Shanghai Composite -0.21% at 3,244
FTSE 350 Mining +2.67% at 15,975
AIM Basic Resources -0.26% at 2,463
Anglo Asian Mining* (LON:AAZ) – Ugur may potentially deliver 190koz in-situ gold; JORC statement due in Q3/17
Bluebird Merchant Ventures* (LON:BMV, Standard List) – Update on investigation of the Gubong gold mine
Gem Diamonds (LON:GEMD) – Trading update for H1 2017
Georgian Mining* (LON:GEO) – Exploration update
Kodal Minerals* (LON:KOD) – Results from Ngoualana drilling
Strategic Minerals* (LON:SML) – Permits secured for exploration programme at CARE
Base metals and miners are trading higher today on improved Chinese growth forecasts released by the IMF and yesterday’s comments from the country’s Central Committee conference that the Chinese government plans to follow a “proactive” fiscal policy and “prudent” monetary policy in the second half of the year.
• The US$ index is little changed trading around the weakest level since May/16 as top three Trump campaign aides face the Senate Intelligence Committee.
• Gold is flat trading around $1,255/oz, the strongest in more than a month, as the FOMC kick off its two day policy meeting today.
• Jared Kushner while confirming meeting with Russia during the presidential campaign denied any allegations over collusions with Kremlin to affect US elections.
• “I did not collude, nor know of anyone else in the campaign who colluded, with any foreign government; I had no improper contacts. I have not relied on Russian funds to finance my business activities in the private sector,” Kushner said in written testimony released yesterday.
• Donald Trump Jr and former campaign Chairman Paul Manafort are due to go before Senate committees on Wednesday.
• While no details have been provided on actual actions and growth plans, “proactive” fiscal policy was viewed to stand for an increased government spending.
• Steel (+0.94%) and iron ore (+2.16%) futures trading in China are up today.
• Brent is up 0.6% trading close to $49.0/bbl after climbing 1.4% on Monday as Saudi Arabia promised deep cuts to crude exports next month; the nation will cap siphments at 6.6mmbbl per day from August 1, 1mmbbl less than a year earlier.
Economic News
US – Private sector expanded at the strongest pace in six months in July on the back of acceleration in the manufacturing sector growth while service providers recorded unchanged growth from June’s five month peak.
• New orders climbed strongly while payroll numbers increased “at a solid pace in July, with the rate of job creation the fastest so far in 2017…indicative of NFPs growing at a rate of around 200,000”.
• Interestingly, “the principal weak spot in the economy remained exports, with foreign goods orders dropping (albeit only marginally) for the first time since last September, often blamed on the strength of the dollar.”
• Falling US$ index may see a turnaround in the exports sector in H2/17.
Germany – Business sentiment improved for a sixth month in July, based on a survey of 7,000 German companies from manufacturing, trade and construction industries carried by IFO Institute.
• “Sentiment among German businesses is euphoric; Germany’s economy is powering ahead,” IFO concluded in the report.
• The report matches latest nation’s PMI numbers as well as more optimistic growth forecasts released by the IMF with the Fund highlighting robust domestic demand and strengthening global trade as major tailwinds for the economy.
• IFO Business Climate Index: 116.0 v 115.2 in Jun and 114.9 forecast.
ECB – Yves Mersch, an Executive Board member at the Governing Council, says stimulus remains required to help inflation reach the 2% target.
• “A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation,” Mersch said during an event in Singapore on Tuesday.
• “Price pressures in the early stages of the pricing chain remain strong but have still not transmitted to the later stages.”
• However, supporting ECB concerns, Mersch highlighted the fact that wage growth remained muted despite strengthening labour market.
• On a positive note, Mersch noted reduced political risks with a “newfound confidence in the reform process, and newfound support for European cohesion”, which is expected to “unleash pent-up demand and investment, if confirmed by decisive action”.
Greece – The government is preparing for a roadshow regarding the issue of a new Greek five-year bond marking the first international bond deal since 2014.
• Bookrunners including BNP Paribas, Bank of America Merrill Lynch, Citi, Deutsche Bank, Goldman Sachs and HSBC are taking indication of interest around 4.875% while the government is targeting a yield of around 4.7%.
• Bond sale proceeds are expected to cover a tender offer on €3bn bonds maturing in Apr/19 (five year notes issued in 2014) with the debt office suggesting to buy outstanding bonds at premium (€102.6).
Currencies
US$1.1655/eur vs 1.1654/eur yesterday. Yen 111.25/$ vs 110.86/$. SAr 12.981/$ vs 12.920/$. $1.303/gbp vs $1.301/gbp.
0.793/aud vs 0.795/aud. CNY 6.751/$ vs 6.752/$.
Commodity News
Precious metals:
Gold US$1,252/oz vs US$1,254/oz yesterday
Gold ETFs 59.2moz vs US$59.3moz yesterday
Platinum US$930/oz vs US$934/oz yesterday
Palladium US$862/oz vs US$842/oz yesterday
Silver US$16.40/oz vs US$16.47/oz yesterday
Base metals:
Copper US$ 6,155/t vs US$6,000/t yesterday
Aluminium US$ 1,919/t vs US$1,922/t yesterday
Nickel US$ 9,915/t vs US$9,605/t yesterday
Zinc US$ 2,832/t vs US$2,778/t yesterday
Lead US$ 2,297/t vs US$2,253/t yesterday
Tin US$ 20,250/t vs US$20,130/t yesterday
Energy:
Oil US$49.1/bbl vs US$48.0/bbl yesterday
Natural Gas US$2.922/mmbtu vs US$2.932/mmbtu yesterday
Uranium US$20.65/lb vs US$20.55/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$67.3/t vs US$66.3/t
Chinese steel rebar 25mm US$598.7/t vs US$598.6/t
Thermal coal (1st year forward cif ARA) US$72.0/t vs US$74.0/t yesterday
Premium hard coking coal Aus fob US$174.0/t vs US$174.0/t
Other:
Tungsten APT European US$226-231/mtu vs US$218-226/mtu
Company News
Anglo Asian Mining* (LON:AAZ) 20.3p, Mkt Cap £22.8m – Ugur may potentially deliver 190koz in-situ gold; JORC statement due in Q3/17
• Development works at Ugur progress on schedule with first ore from the newly discovered deposit due in Q4/17.
• Drilling and assaying are now complete as JORC compliant Resources and Reserves Mineral Statement is expected in Q3/17.
• Management estimates (in-house non-JORC compliant resource) put the deposit at c.195koz of in-situ gold.
• The exploration team completed 88 RC drill holes for 4,608m including 33 RC infill holes for 2,766m and additional 50 diamond drill holes for 6,355m so far (the plan of drill holes is available on the Company’s website).
• Drilling identified an oxide gold rich zone to a depth varying between 50-60m with “the area covered by this drilling and proposed open pit outline is 350m (east to north-east) by 250m (north to north-west)”.
• External western consultants are finishing QA and QC assaying ahead of the JORC compliant Resources and Reserves Statement.
• Geotechnical drill holes were assayed with independent rock strength tests completed showing good rock competency.
• Metallurgical tests showed gold was “highly amenable to agitation and heap leaching”, although no further details have been provided.
• Pre-stripping is planned to start later this month.
• The construction of a 4.6km long road connecting the Ugur deposit with Gedabek processing facilities started in May/17 with full completion expected by the end of Jul/17.
• Exploration drilling at Ugur and Gedabek are in progress with surface core drill holes sunk at the former testing down dip extension and six drill holes for 2,640m intersecting mineralisation and pointing to a potential resource expansion.
• Additionally, the Company is developing an adit from the Gadir underground mine in the direction of Gedabek orebody with the 465m link expected to be completed in Aug/Sep 2017.
• The plan is to fan drill Gedabek mineralisation below the open pit “to assess the future underground mining potential”.
• At Gedabek, exploration and optimisation drilling started in Jun/17 with two drill holes completed.
Conclusion: The Company is on course to launch production at Ugur by the end of the year sourcing oxide easily leachable ores for treatment at Gedabek processing facilities. It all good news and we are looking forward to the JORC statement that is in final stages and is due next quarter.
*SP Angel act as Nomad and Broker to Anglo Asian Mining
Bluebird Merchant Ventures* (LON:BMV, Standard List) 2.3p, Mkt Cap £4.2m – Update on investigation of the Gubong gold mine
• Bluebird Merchant Ventures reports that, partially as a result of information, photographs and documents provided by local inhabitants, it has located a steeply dipping shaft at the top of the historic Gubong gold mine in South Korea.
• Management will examine the scope of work required to reopen the old shaft for use in mine ventilation.
• The company is also deploying ground-penetrating radar to help it identify the exact location of the mine’s main adit (access tunnel).
• The Gubong mine, which is understood to have been South Korea’s second largest gold mine, closed in 1967 and was extensive with six shafts and operations on a number of levels.
• Bluebird Merchant Ventures is assessing the feasibility of reopening the mine as part of its commitment to a 50:50 joint venture with Southern Gold.
Conclusion: The engagement and implicit support of the local population to the potential re-opening of the Gubong mine should help facilitate Bluebird Merchant Ventures’ plans. On a practical level, if the old mine shafts and infrastructure are still serviceable, it may accelerate the timetable significantly.
Gem Diamonds (LON:GEMD) 80.3p, Mkt Cap £111m – Trading update for H1 2017
• Gem Diamonds reports that it has produced 50,478 carats of diamonds at an average grade of 1.59cpht from its Letseng mine in Lesotho during the six months ending 30th June. Production is broadly in line with the 50,825 carats produced during the preceding six months ending 31st December 2016.
• Prices have improved by 20% over the half year with sales averaging US$1779/carat compared to US$1480/carat achieved during the six months to December 2016.
• The company notes that “Contributing to the achieved US$ per carat was an 8.65 carat pink diamond which achieved US$ 164 855 per carat, making it the sixth highest price per carat achieved by a Letšeng rough diamond. One of the large high value white diamonds sold, achieved the highest price per carat for a Letšeng white diamond since February 2016.” The company also discloses that, during the period it sold 18 diamonds for more than US$1m each contributing US$37m to revenue.
• Commenting on the market, CEO, Clifford Elphick, said “The market for Letšeng's high-quality diamonds has remained firm over the Period with the last tender of the Period achieving over US$2 200 per carat. This positive trend has continued with the most recent July tender achieving an average price of US$ 2 3852 per carat.”
• Since the end of the period, a further large, 126.75 carat D-colour Type IIa diamond has been recovered.
• The Ghaghoo mine, which remains on care and maintenance, suffered damage from an earthquake located approximately 25km away. Although surface damage was largely superficial, seals to an underground water bearing fissure were damaged “leading to an influx of water. This resulted in an increase in the water pumping costs associated with care and maintenance of approximately US$ 0.6 million. The fissure will be required to be resealed and plans are underway to complete this process during Q3 2017.”
Conclusion: Gem Diamonds is fortunate that the Letseng mine produces such high value diamonds. Large, high value diamonds are delivered on a regular basis and the recent diccovery of a high quality 126 carat stone maintains the trend.
Georgian Mining* (LON:GEO)17.1p, Mkt Cap £20m – Exploration update
(Georgian’s assets in Georgia are held in a 50:50 joint venture)
STRONG BUY
• Georgian Mining reports that, as a result of its recent and continuing exploration work at the Kvemo Bolnisi East project and surrounding areas within its exploration licence, it is “on course to deliver the phase 2 target of 3-5Mt of combined copper-gold sulphide and gold oxide mineralisation.”
• The company has completed 1500 metres of infill and boundary drilling at “Gold Zone 2”. Following around 2-3 weeks of sample preparation, samples from this phase of drilling will be assayed and form part of the database for resource estimation and mining feasibility work leading to negotiations with the company’s joint-venture partner over processing of the gold oxide material at the partner’s nearby mine and processing plant.
• Drilling work is now underway at the “Gold Zone 1” area where the depth of the gold oxide mineralisation and extent of the underlying copper sulphide mineralisation. Drilling is likely to extend to depths of around 180 metres, considerably deeper than work during 2016 which used hand-held equipment to drill to just 10 metres.
• In August, a second drill rig is to be deployed to test high grade copper mineralisation at Gold Zone 2.
• Regional exploration work, including mapping and soil geochemical sampling is also progressing within the wider 860 sq km licence area. Efforts are targeted on the Dambludka epithermal gold project located some 8 km south-west of the Madneuli mine, the Tsitel Sopeli area located approximately 12 km north-east of Madneuli and approximately 6km east of Kvemo Bolnisi, where induced polarisation (IP) geophysical surveying has “identified a Hot Maden type target” and at Tamarsi where a further IP survey is due to start in the coming weeks. [Hot Maden, in Turkey, has a high grade resource of over 2.2m oz of gold at an average grade of 8 g/t gold, and 2% copper and remains open both laterally and at depth]
Conclusion: Exploration at Kvemo Bolnisi is on course to deliver initial targets and set the scene for discussions with the company’s joint venture partner on initial processing at the latter’s existing processing plant. Wider scale exploration has identified a number of promising targets adding to the pipeline of projects available to Georgian Mining. We look forward to drilling results as they become available.
*SP Angel acts as Nomad and Broker to Georgian Mining.
Kodal Minerals* (LON:KOD) 0.32p, mkt cap £19.7m – Results from Ngoualana drilling
• Kodal Minerals has reported the final outstanding result from its recently completed reverse-circulation drilling programme at the Ngoualana lithium prospect in southern Mali.
• Borehole KLRC055 intersected 7m of mineralisation grading 1.52% lithium oxide (using a 1% cut-off) from a depth of 79 metres.
• The company notes that this hole is located at the eastern end of the prospect area, which remains open. Further drilling is expected to take place following the end of the wet season.
• Further results from the 5 diamond-drill holes at Ngoulana are pending.
Conclusion: Ngoulana continues to deliver wide intersections of lithium mineralisation. We look forward to further news following the resumption of drilling after the wet season.
*SP Angel act as broker to Kodal Minerals. A partner at SP Angel acts as Chairman to the company.
Strategic Minerals* (LON:SML) 1.90p, Mkt Cap £23.7m – Permits secured for exploration programme at CARE
• Strategic Minerals has announced that it has received the necessary permits to undertake a 2000m programme of aircore drilling at the Hanns Camp project of its wholly owned subsidiary, CARE, near Laverton, Western Australia.
• The work, which is expected to be completed during Q3 2017, will comprise 40 to 50 aircore drill holes aimed primarily at identifying and refining the cobalt mineralisation potential detected in earlier results.
• A coincident nickel anomaly “may also be defined from the laterite deposits that have previously been recognised in the area.”
• The company also comments that “it is considered that the findings from these drill holes may also provide indicators for prospective nickel sulphides targets, which may be tested by future drilling.”
• Strategic Minerals assumed control of CARE, which had previously been its joint venture partner in the project, earlier this year when it became apparent that it was unable to fund its share of the proposed exploration programme. Strategic Minerals, which generates cash from its Cobre operation in New Mexico, is funding “this programme, along with its planned stage two programme, without diluting existing shareholders.”
Conclusion: Strategic Minerals is moving ahead to investigate the recently identified cobalt potential at Hanns Camp using internally generated funds. We look forward to the results of the initial aircore programme.
*SP Angel act as Nomad and joint broker to Strategic Minerals