IronRidge Resources* (LON:IRR) – Geochemical soil anomalies at Bodite prospect, Ivory Coast
Kefi Minerals* (LON:KEFI) – Ethiopia’s State of Emergency lifted
Lonmin PLC (LON:LMI) 93 pence, Mkt Cap £262.7m – Maintained 2017 sales guidance
Iron ore, steel and coking coal prices rise dramatically in China overnight as steel mills and buyers bring forward purchases ahead of production cuts
• Production capacity cuts and recent Chinese policy statements have combined to lift prices for steel and related bulk commodities
• Coking coal prices have risen by a further $7.4-10.4/t in China
• Steel rebar futures prices were limit up overnight at >6% up as China asked steel producers to cut production in four provinces in the north through the peak winter heating months. This expands existing restrictions already seen in Beijing and Tianjin.
• Iron ore prices added >5% with related futures prices >7% higher
• China continues to close polluting and illegal steel mills restricting capacity and cutting exports lifting steel prices globally and enabling European steel producers to raise imports of iron ore and coking coal.
• Chinese Q2 numbers are better than expected with further positive figures expected this week.
• We are due China trade data tomorrow, inflation data on Wednesday and bank lending numbers later in the week. China industrial output, retail sales and investment numbers are due next Monday.
• The figures indicate potential for a strong Q3 following from a solid and better than expected first half
• This could continue to support higher prices for copper and other base metals which have posted solid gains over the last two weeks
Dow Jones Industrials +0.30% at 22,093
Nikkei 225 +0.52% at 20,056
HK Hang Seng +0.47% at 27,693
Shanghai Composite +0.53% at 3,279
FTSE 350 Mining +1.65% at 16,929
AIM Basic Resources -0.48% at 2,461
Economic News
US – non-farm payrolls rise by 209,000 in July adding to 231,000 new jobs created in June revised higher from 222,000. The July gain was better than expected
• 6,000 jobs were added in US construction in July with 900 added in the retail sector
• US auto sales fell 6.1% in July yoy to a seasonally adjusted rate of 16.73m vehicles
Germany – Industrial output sees unexpected falls 1.1% in June despite 1.8% rise in Q2
• The fall is due to lower construction and output of intermediate, consumer and capital goods
China – foreign reserves increase by US$23.9bn to US$3.081tr
Currencies
US$1.1807/eur vs 1.1882/eur yesterday. Yen 110.76/$ vs 110.09/$. SAr 13.393/$ vs 13.368/$. $1.305/gbp vs $1.316/gbp. 0.792/aud vs 0.798/aud. CNY 6.718/$ vs 6.718/$
Commodity News
Precious metals:
Gold US$1,258/oz vs US$1,269/oz yesterday
Gold ETFs 66.2moz vs US$66.4moz yesterday
Platinum US$961/oz vs US$966/oz yesterday
Palladium US$877/oz vs US$886/oz yesterday
Silver US$16.24/oz vs US$16.71/oz yesterday
Base metals:
Copper US$ 6,367/t vs US$6,367/t yesterday
Aluminium US$ 1,924/t vs US$1,908/t yesterday
Nickel US$ 10,375/t vs US$10,400/t yesterday
Zinc US$ 2,825/t vs US$2,827/t yesterday
Lead US$ 2,365/t vs US$2,373/t yesterday
Tin US$ 20,640/t vs US$20,730/t yesterday
Energy:
Oil US$52.1/bbl vs US$52.0/bbl yesterday
Natural Gas US$2.803/mmbtu vs US$2.786/mmbtu yesterday
Uranium US$20.40/lb vs US$20.40/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$75.4/t vs US$71.5/t
Chinese steel rebar 25mm US$614.5/t vs US$614.5/t
Thermal coal (1st year forward cif ARA) US$75.0/t vs US$75.1/t yesterday
Premium hard coking coal Aus fob US$191.3/t vs US$182.3/t
Other:
Tungsten APT European US$230-235/mtu vs US$226-231/mtu
Company News
IronRidge Resources* (LON:IRR) 33.75p, Mkt Cap £88.6m – Geochemical soil anomalies at Bodite prospect, Ivory Coast
• IronRidge Resources has reported results from its infill soil sampling programme at its Bodite prospect area in the Ivory Coast. A total of 1510 samples were collected from a 200m spaced grid within the original 400m grid.
• The survey has identified a 3km long Central gold anomaly extending over some 3km of strike length with a suite of seven gold-in-soil anomalies at grades in excess of 50ppb (parts per billion).
• The anomalies are reported to occur “within favourable structural settings” and are to be followed up with trenching and further infill auger drilling of the most promising targets following consultation with the local communities.
• Commenting on the results, Chief Executive Vincent Mascolo remarked that “We are excited with the rapid exploration progress and positive results we are generating on our gold projects in Ivory Coast”.
• Ivory Coast is emerging as a favoured gold exploration area and we noted as recently as last week, for example, that RandGold Resources had reported exploration successes in the Fonondara corridor where it was optimistic of delineating in excess of 3m oz of gold.
Conclusion: Ivory Coast is becoming a sought-after jurisdiction for gold exploration and IronRidge is generating promising early stage exploration results from its Bondite licence. We look forward to continuing news as the exploration progresses through trenching to the potential identification of drill targets.
*SP Angel act as Nomad and Broker to IronRidge Resources
Kefi Minerals* (LON:KEFI) 4.725p, Mkt Cap £15.7m – Ethiopia’s State of Emergency lifted
• Kefi Minerals reports that the State of Emergency in Ethiopia, which was imposed in October 2016, has been lifted following a parliamentary vote.
• Kefi Minerals has, with the support of the Government, has been able to progress its Tulu Kapi development during the State of Emergency and has previously reported that it is “targeting to commence development of Tulu Kapi in 2017 and open-pit gold production in 2019.”
• The company’s latest economic assessment suggests that Tulu Kapi should produce around 115,000oz pa of gold for a period of approximately 8.5 years at an estimated all-in-sustaining cost of US$777/oz which places the project in the “bottom cost quartile of existing gold producers.”
Conclusion: The company was able to progress Tulu Kapi during the State of Emergency in Ethiopia, however its removal is welcome news and should enhance the country’s profile as an investment destination described in June 2017 by the World Bank’s Global Economic Prospects as “the world’s fastest growing economy in 2017”.
*SP Angel act as Nomad and broker to Kefi Minerals
Lonmin PLC (LON:LMI) 93 pence, Mkt Cap £262.7m – Maintained 2017 sales guidance
• Lonmin is maintaining its 2017 sales guidance at 650-680,000 ounces of platinum following a quarter of improved mine production, particularly from the key “Generation 2“ shafts which increased output by 18.6% to 2.2mt during the quarter and by 9% compared with Q3 2016.
• “Traditionally, the fourth quarter is our strongest in terms of production and we anticipate this momentum to continue absent any unforeseen interruptions to the mining production run”. Production at the K3 shaft (806,000 tonnes) increased by 38.3% quarter-on-quarter and the company reports that the 290,000 tonnes achieved during May was the highest since July 2013 while the 528, tonnes delivered from the Rowland Shaft was the highest quarterly total “since the fourth quarter of the 2011 financial year and the best Q3 output in the last eight years.”
• The Saffy Shaft increased production by 16.8% during the quarter to 580,000 tonnes while the 4B Shaft produced 314,000 tonnes, a decrease of 26.5% on the prior year period, impacted by safety stoppages associated with the two fatalities.
• Production from the higher cost, “Generation 1” shafts continues to be cut back in line with the company’s rationalisation plan to adjust to the “lower prices for longer” environment with an 18.1% reduction to 431,000 tonnes.
• On the processing side, the plant treated 2.7mt of ore as planned with “Concentrator recoveries for the quarter continue to be excellent at 86.8%.”
• Costs of R11,278/PGM ounce were 4.7% lower during the quarter, largely attributed to the improved mining performance. The company notes that “This is at the lower end of our revised guidance of between R11,300-R11,800.”
• The company’s net cash position improved to US$86m compared with US$75m at the end of the previous quarter.
Conclusion: Lonmin is making progress in its rationalisation plan with significant improvements in the productivity of key shafts and improvements to its costs and net cash position
Premier African Minerals (LON:PREM) 0.475p, Mkt Cap £25.0m – Further pegmatite intersections in the south-east zone at Zulu
• Premier African Minerals reports that it has now completed over 2000m of diamond drilling in 14 drill holes in the recently discovered South East Zone of its Zulu lithium prospect near Fort Rixon, Zimbabwe.
• “Significant visible lithium mineralisation [has been] intersected in all holes” though at this stage assay results are not yet available. Some of the holes have intersected multiple zones of pegmatite at intersection widths up to in excess of 100m.
• The drilling is intended to expand the existing 20.1mt resource which grades 1.06% Li2O and the company comments that the “New zone in [the] south-east of [the] licence area has [the] potential to exceed [the] Main Zone tonnage.”
• CEO, George Roach, commented “These new substantial intersections of pegmatites with visually high-grade Li-bearing mineralisation in the south-east of the claims block area yet again confirm the potential of the new Zulu Lithium Project and support the Board’s decision to add value to Zulu before proceeding with any of the strategic offers Premier has received to date.”
Conclusion: The new south-east zone appears to offer promising potential to expand the resource base at Zulu. We await the assay results with interest. Meanwhile, the company is hinting that a corporate transaction for the future of the project may be under consideration.