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AIM Basic Resources +0.34% at 2,477
Amur Minerals (LON:AMC) – KUB drilling extend limits of the mineralisation
Weatherly International (LON:WTI) – Slower leaching rates hit Tschudi production
Gold is on course to post a 1.4% monthly increase on the back of Trump administration political woes and growing Fed concern with slowing inflation which saw the US$ index down 1.9% in July.
• Copper prices eased back slightly trading around $6,310/t and capping off a strong week (+5.2% WTD).
• S&P500 closed in the negative territory as a sudden sell off in tech stocks sent the index into the red after it hit new intraday record.
• Dow closed at a new high climbing 0.4% on the day on the back of good earnings from Boeing, Verizon, Walt Disney and Merck.
• European stocks followed its US counterparts with the Stoxx Europe 600 Index down 0.8% with technology shares falling 1.6%.
• Brent is approaching $52/bbl having climbed 7.6% this week and 8.0% in July.
• Iron ore futures climbed to the highest in more than a week marking the sixth weekly increase in seven along with other steel making ingredients also posting strong performance.
US – A slowdown in core durable goods orders in June point to a weakening business investment outlook.
• The three month annualised change in new orders for nondefense capital goods (ex aircraft) stood at 3.2%, the slowest pace since December.
• Headline durable goods orders jumped 6.5%mom in June on the back of a 131.2% surge in nondefense aircraft orders following the Paris Air Show.
• It appears the manufacturing sector is going through a revision in expectations as a post election business optimism seems to be reversing as promise changes to legislation are being delayed.
• Trump is set to sign off new sanctions on Russia after the House of Representatives and the US Senate voted in favour of the action in 419-3 and 98-2 votes, respectively.
France – The economy expanded at a steady 0.5%qoq rate as a boost from strong net exports was compensated by a drawdown in inventories.
• Private consumption contributed 0.2pp to the headline number compared to the four-quarter average of 0.1pp.
• Strengthening consumer demand should eventually exert upward pressure on wages and inflation.
• Despite, the above-trend economic growth unemployment has been sticky over the last two quarters.
• Little inflation pressures and slow declines in unemployment give the ECB more reasons to continue delay the start of monetary policy tightening.
• GDP (Advance %qoq): 0.5 v 0.5 in Q1//17 and 0.5 forecast.
• GDP (Advance %yoy): 1.8 v 1.1 in Q1/17 and 1.6 forecast.
• CPI (EU Harmonised July %mom): -0.4 v 0.0 in June and -0.4 forecast.
• CPI (EU Harmonised July %yoy): 0.8 v 0.8 in June and 0.8 forecast.
Spain – The economy climbed 3.1%yoy in Q2/17 marking the strongest rate of growth among four largest Eurozone economies.
• While no breakdown of growth drivers has been provided in the preliminary release, commentators argue stronger consumption from falling unemployment and resilient exports would have likely contributed materially to GDP expansion.
• Inflation numbers released separately showed consumer prices growth has stabilized from the recent drop through Q2/17 and accelerated slightly in July.
• Stronger inflation appears to be driven by higher fuel costs suggesting core inflation (released later) is unlikely to have materially changed from June.
• Nevertheless, stronger economic growth and falling unemployment levels should see the narrowing in the output gap leading to stronger inflation pressures.
• GDP (Preliminary %qoq): 0.9 v 0.8 in Q1/17 and 0.9 forecast.
• GDP (Preliminary %yoy): 3.1 v 3.0 in Q1/17 and 3.0 forecast.
• CPI (EU Harmonised July %mom): -1.2 v 0.1 in June and -1.3 forecast.
• CPI (EU Harmonised July %yoy): 1.7 v 1.6 in June and 1.6 forecast.
UK – Consumer confidence continued to slide in July hitting one of the lowest levels in the post-Brexit period.
• The GfK index slid to -12 which is weakest reading since 2013 excluding the post-referendum dip in July 2016.
• “All bets must now be on a further drift downwards in confidence… employment is booming, but wages have fallen in real terms since 2008 once inflation is taken into account,” GfK said.
• Further uncertainty regarding Brexit negotiations outcome suggests “it is unlikely the overall index score will finds any tailwinds for some time”.
• GfK Consumer Confidence: -12 v -10 in June and -11 forecast.
US$1.1714/eur vs 1.1726/eur yesterday. Yen 111.22/$ vs 111.20/$. SAr 13.042/$ vs 12.897/$. $1.309/gbp vs $1.314/gbp.
0.796/aud vs 0.803/aud. CNY 6.742/$ vs 6.736/$.
Gold US$1,260/oz vs US$1,262/oz yesterday
Gold ETFs 66.5moz vs US$66.7moz yesterday
Platinum US$927/oz vs US$931/oz yesterday
Palladium US$882/oz vs US$875/oz yesterday
Silver US$16.59/oz vs US$16.74/oz yesterday
Copper US$ 6,323/t vs US$6,337/t yesterday
Aluminium US$ 1,929/t vs US$1,940/t yesterday
Nickel US$ 10,210/t vs US$10,115/t yesterday
Zinc US$ 2,771/t vs US$2,817/t yesterday
Lead US$ 2,298/t vs US$2,328/t yesterday
Tin US$ 20,730/t vs US$20,650/t yesterday
Oil US$51.6/bbl vs US$51.0/bbl yesterday
Natural Gas US$2.962/mmbtu vs US$2.916/mmbtu yesterday
Uranium US$20.50/lb vs US$20.50/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$68.3/t vs US$67.7/t
Chinese steel rebar 25mm US$600.1/t vs US$602.1/t
Thermal coal (1st year forward cif ARA) US$73.3/t vs US$73.0/t yesterday
Premium hard coking coal Aus fob US$178.7/t vs US$178.9/t
Tungsten APT European US$226-231/mtu vs US$218-226/mtu
Amur Minerals (LON:AMC) 6.2p, Mkt Cap £37.7m – KUB drilling extend limits of the mineralisation
• The Company released the second set of internally generated drilling assays at the KUB deposit with step out drilling showing the mineralisation extends in both the strike and dip directions.
• In particular, two areas referred to as BK and LK located to the west (in direction of IKEN) and east of the KUB deposit, respectively, demonstrate to expand the available mineral inventory.
• At the BK target which is a part of a larger 2,500m long area linking IKEN and KUB deposits 10 holes have been completed with all intersecting mineralisation open to the west.
• The mineralisation is estimated to extend further 500m westward from the previously defined mineral resource with drilling returning intersections averaging 14.3m per hole at 0.78% Ni and 0.20% Cu.
• Selected intersections at BK include:
o 5.5m from 339.5m to 345.0m at 1.19% NI and 0.31% Cu;
o 12.1m from 404.4m to 416.5m at 0.80% Ni and 0.21% Cu;
o 4.3m from 410.7m to 415.0m at 0.88% Ni and 0.11% Cu.
• At the LK area, the eastern extension of the KUB deposit, three step out drill holes have been completed testing 100m of the envisaged 1,000m target with shallower mineralisation intersections returning an average of 3.8m at 1.02% Ni and 0.28% Cu.
• Drill results from the LK (KUB) target include:
o 4.5m from 46.5m to 51.0m at 0.73% Ni and 0.16% Cu;
o 3.0m from 30.2m to 33.2m at 1.45% Ni and 0.47% Cu.
• Alex Stewart Laboratories completed assays on the first batch of samples from the 2017 field season with results currently under management review; the second batch of samples is in the progress of being assayed whiel the third one is in transit to the ASL.
• This brings the total of the 2017 drilling campaign to 52 holes for 13,028m at boht IKEN and KUB representing 65% of the budgeted 20,000m.
• “We believe we have added as much as another three years to our production through resource conversion to Indicated resource and newly defined mineralisation (at KUB),” the Company commented on results.
Conclusion: The 2017 field season continues to deliver on the management plan to infill drill IKEN and KUB to translate the available Inferred Mineral Resource into a higher confidence Indicated category, while step out drill holes intersecting mineralisation provides potential to extend the resource and the potential life of mine. Intersected higher grade areas are expected to lead to adjustments to the mine plan and positively affect the economics of the Kun Manie project.
*SP Angel act as Nomad and Broker to Amur Minerals
Weatherly International (LON:WTI) 0.35 pence, Mkt Cap £3.7m – Slower leaching rates hit Tschudi production
• Weatherly International reports that copper cathode production from its Tschudi mine for the quarter ended 30th June 2017 was 3,386 tonnes, which is 20% below the plant’s nameplate capacity although it is approximately 5% above the output of the preceding, March quarter.
• Full financial year production of 14,759 tonnes achieved the revised production guidance of 14,500-15,000 tonnes but still fell “13% below the 17,000 tonnes per annum.”
• The improved output followed “particularly low levels in March and April. The improvement was due to an increased rate of stacking contained copper metal tonnages rather than any improvements in the rates of leaching on a percentage basis”.
• The high mining and stacking rates are attributed to the increased costs which rose by 7% to US$6344/tonne leaving average C1 costs for the full financial year at US$5,288/t “within the revised guidance range of US$5,250 to $5,350 per tonne.”
Conclusion: Weatherly International was able to meet its revised production and cost guidance but continues to struggle. The company is investigating how to improve copper leaching rates and is expanding its heap leach pad area.
Wolf Minerals (LON:WLFE) 3.1p, Mkt Cap £34m – Quarterly results and update
• Wolf Minerals reports that it increased plant throughput at its Drakelands tungsten mine by 7% during the June quarter and increased production of tungsten in concentrates by 15% compared with the March quarter implying that recovery rates are beginning to improve.
• The plant treated 490,297 tonnes of ore and produced 30,996 metric tonne units (mtu) of tungsten in concentrates while tin in concentrates remained stable compared to the previous quarter at 41 tonnes.
• The company recognises two key areas for improvement; “Recovery and run time”.
• Disclosure that recovery “of fine tungsten in the ore and generated in circuit, and downstream processing of recovered fines remain key challenges” implies that as well as the difficulties of processing naturally fine grained tungsten ore from the weathered, upper, parts of the orebody, some of the fine material may be produced from within the plant through overgrinding.
• The current resource definition drilling work should help to identify the distribution of finer grained material within the orebody while “specific equipment changes [which] will commence in late August with ongoing engineering and implementation continuing through until October 2017” should help to address the problems within the plant.
• On the mining side, benign weather conditions have aided progress on both the mine and on the mine waste facility. As the pit gets deeper it is encountering harder ore which should help to alleviate the feed problems to the plant and perhaps reduce the proportion of fine mineralisation.
• Also on the positive side, “Reconciliation of the grade of ore (%WO3) extracted to date continues to be positive when compared to the grade expected from the ore reserve. Ore mined for the Quarter averaged 0.22% WO3 and 0.04% Sn.” We note that, in this quarter at least, production grades for tungsten are running ahead of the overall reserve grade of 0.18% WO3 and 0.03% Sn.
• The operations consumed A$16m during the quarter, “including A$4m on development and A$11m on production and A$5m on finance costs, with revenue of A$6m.”
• After a lengthy decline, prices of the benchmark ammonium paratungstate product (APT) have started to recover and recorded a 5.9% improvement during the quarter. APT currently stands at US$226/231 per mtu compared with US$187/198 at the beginning of 2017.
• The company recognises that “The next six months is a pivotal time for Wolf to realise its’ objective of becoming a reliable steady-state producer.” and has put a turnaround plan into operation. The plan “aims to achieve a sustainable production platform during the December quarter, from which further volume and optimisation improvements can be made.”
Conclusion: Wolf Minerals is continuing to address the long term issues at the Drakelands operation and is reporting some limited early progress from its turnaround plan which aims to deliver a sustainable operation during the December quarter. Tungsten prices are recovering and we wish management well in their efforts to deliver an important long term western world tungsten producer at Drakelands.