Anglo Asian* (LON:AAZ) – JORC report on new mine shows 199,000oz gold and >1moz silver
Dalradian Resources (LON:DALR) – Step out drilling returns high grade intersections at Curraghinalt
Avocet Mining (LON:AVM) – Interims
China’s manufacturers supress slowing demand concerns with five year high PMI data
• Analyst concerns over China’s slowing growth were eased following Saturday’s announced rise in the Purchasing Managers Index (PMI). The development to 52.4 in September represents the 14th consecutive month of expansion for China’s manufacturing sector, growing at the fastest pace since 2012.
• The official release indicates the highest levels across production, total new order, and output prices with unwavering progress in the construction sector. The robust demand growth, assisted by government infrastructure spending, buoyant housing market and boosted exports have helped manufacturers boost annual profits.
• In particular miners, smelters and oil refiners are all benefitting from an enhancement in input prices, recording a 5% improvement to 68.4. Current air-quality production limits and supply-side capacity cuts are expected to continue improving supply-demand balances and support the growing commodity prices.
China’s clear sky initiatives begin production cuts ahead of National Party Congress
• Chinese steel-makers and aluminium smelters began tightening production in advance of mandatory pollution control measures introduced to curb the countries notorious smog issue.
• The Ministry of Environmental Protection (MEP) released stringent air quality standards across 28 northern cities, which necessitates production cuts up to 50%, in an effort to clear skies during the winter coal-fire heating season.
• The restrictions, which run broadly from October to March, appear to be coming into effect from Oct. 1, coinciding with the build-up to the 19th Party Congress held every five years. China appears adamant to avoid its damaging smog problem and present clear skies in Beijing, despite the knock-on effect of the economic impact.
Dow Jones Industrials +0.11% at 22,405
Nikkei 225 +0.22% at 20,401
HK Hang Seng +0.48% at 27,554
Shanghai Composite +0.28% at 3,349
FTSE 350 Mining +1.25% at 16,753
AIM Basic Resources +1.03% at 2,437
Economics
Currencies
US$1.1750/eur vs 1.1733/eur yesterday. Yen 112.80/$ vs 113.08/$. SAr 13.630/$ vs 13.681/$. $1.331/gbp vs $1.337/gbp.
0.781/aud vs 0.780/aud. CNY 6.653/$ vs 6.669/$.
Precious metals:
Gold US$1,274/oz vsUS$1,280/oz yesterday
• Growing expectations of a Fed inflation rate hike have aided lifting the dollar to its best performing week of 2017, curbing the 3% quarterly growth of gold. Federal President Patrick Harker stoked the fire by ‘pencilling in’ a December interest rate increase and three consecutive changes in 2018.
• The metal fell to its lowest in seven weeks as the dollar advanced against the yen during China’s week-long ‘Golden Week’ national holiday, and Euro trepidations ahead of an independence vote in Spain’s Catalonia.
o Geopolitical tensions remain subdued, despite U.S. president Donal Trump dismissing talks with North Korea as a waste of time.
Gold ETFs 69.4moz vsUS$69.3moz yesterday
Platinum US$914/oz vsUS$917/oz yesterday
Palladium US$937/oz vsUS$931/oz yesterday
Silver US$16.61/oz vsUS$16.72/oz yesterday
Base metals:
Copper US$ 6,498/t vsUS$6,439/t yesterday
• Encouraging official PMI data out of China helped encourage London investment in copper to boost prices on the news of the fastest growing manufacturing sector in more than five years.
• Concentrate production from Freeport’s Grasberg mine, the world’s second largest copper mine, will be once again permitted despite potentially unresolved negotiations with the Indonesian government.
Aluminium US$ 2,090/t vsUS$2,120/t yesterday
Nickel US$ 10,410/t vsUS$10,285/t yesterday
Zinc US$ 3,174/t vsUS$3,112/t yesterday
Lead US$ 2,509/t vsUS$2,461/t yesterday
Tin US$ 20,735/t vsUS$20,670/t yesterday
Energy:
Oil US$56.7/bbl vsUS$57.5/bbl yesterday
Natural Gas US$3.006/mmbtu vsUS$3.062/mmbtu yesterday
Uranium US$20.25/lb vsUS$20.60/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$61.6/t vsUS$64.1/t
• China’s active winter pollution campaign against excessing steel production is expected to apply further pressure to waning demand for iron ore, while seaborne supply remains strong. The metal, already down 20% in September, is expected to continue its downward trend over the winter period with stockpiles of the low-quality, polluting ore remaining at elevated levels.
• Top steel-producing provinces of Hebei, Henan and Shanxi all began enacting 50% production restrictions in preparation for its National Party Congress at the end of the month.
Chinese steel rebar 25mm US$621.2/t vsUS$621.3/t
Thermal coal (1st year forward cif ARA) US$77.9/t vsUS$81.6/t
Premium hard coking coal Aus fob US$190.9/t vsUS$197.9/t
Other:
Tungsten APT European US$310-335/mtu vs US$310-335/mtu
Company News
Anglo Asian* (LON:AAZ) 29.5p, £33.6m - JORC report on new mine shows 199,000oz gold and >1moz silver
• Anglo Asian Mining today publish the results of their JORC reserve and resource report for the new Uruguayan gold mine in Azerbaijan. The report reiterates the previously published stated reserves and resources.
• The mine benefits from its close proximity to the Gedabek copper/gold mine and process plant which it will use for processing.
• The main reserve and resource hosts some 199,000oz gold and 1.049moz silver.
• The Ugur deposit modelling shows grades of 0.9g/t for gold and 4.7g/t of silver and is currently being mined by open pit. The resource is calculated on tight 20m drill spacing and on a cut-off grade of 0.2g/t.
• A higher grade measured resource shows 164,000oz grading 1.2g/t of gold and 6.3g/t of silver.
• Proven plus probable reserves run at 147,000oz gold and 808,000oz silver (3.59mt at 1.3g/t Au and 7.0g/t, respectively).
• The orebody as defined for modelling is around 230m x 170m in plan and around 100m thick. The footprint of the whole mineralisation appears to be around 300m x 200m with around 110m overall thickness.
• Processing flowsheet involves treatment of higher grade material (>1.8g/t) at the agitation leaching plant maximising gold recoveries from oxide copper free ores (90%) with the balance sent onto heaps (applied recoveries ranged from 40% for the run of mine material to 70% for crushed material).
Conclusion: Ugur deposit comes online at the right time supplying easily treatable oxide ores to the processing facilities as the team continues infill drilling at the main Gedabek open pit and Gadir underground mines to better understand the orebody and optimise its operations.
*SP Angel act as Nomad and Broker to Anglo Asian Mining
Dalradian Resources (LON:DALR) 84.8p, Mkt Cap £224m – Step out drilling returns high grade intersections at Curraghinalt
• The Company reported results from its 15 drill holes for a total of 6,324m covering six holes competed from underground and the remaining nine from surface.
• Drilling from surface run by five drill rigs focused on step out programme targeting western extensions of the Curraginalt orebody.
• Selected intersections include:
o Step-out: 1.98 m of 32.54 g/t gold from the 106-16 vein and 383m depth in hole 17-CT-427
o Step-out: 0.94 m of 30.89 g/t gold from the T17 vein and 271m depth in hole 17-CT-428
o Step-out: 1.03 m of 40.09 g/t gold from the Crow vein and 187m depth in hole 17-CT-435
• The Company plans to complete 30,000m from surface both in step out and infill drilling programmes.
• Additionally, the Company reported results from six underground infill drill holes as the team is narrowing the drill-hole spacing aimed at converting resource ounces from the Inferred to the Indicated category.
• Selected intersections include:
o Infill: 1.21 m of 76.22 g/t gold from the No.1 vein in hole 17-CT-415
o Infill: 1.51 m of 41.04 g/t gold from the 106-16 vein in hole 17-CT-424
• The Company plans to complete 10,000m from underground in 2017 taking the total programme to 40,000m.
• True widths are said to “vary depending on the vein zone intersected but generally average 80% of the down hole”.
Conclusion: Results from the drilling programme with all nine step out drill holes intersecting extensions of existing narrow high grade veins bode well with a potential to expand the available mineral inventory at Curraghinalt.
Avocet Mining (LON:AVM) 22.0p, Mkt Cap £4.6m – Interims
• Gold sales dropped to 21.4koz at an average realised price of $1,235/oz (H1/16: 42.8koz $1,213/oz) on the back of a suspension of production in H1/17.
• EBITDA came in at -$2.0m (H1/16: $6.9m) and PAT of $5.5m (H1/16: $3.8m) after accounting for a $3.2 in interest costs and FX losses.
• A build up in trade creditors ($7.5m) and the release of working capital from inventories ($4.8m) helped to cover losses from operations, interest costs and debt repayments before the standstill agreement came into affect in May this year.
• As of H1/17, the Company held $3.9n in cash with $27.6m owed to Elliott and total amount repayable on demand and $19.7m due to local bank.
• Additionally, the inata gold mine has around $34m in trade creditors and $2.5m due in obligations to empliyees as of Sep/17.
• Creditors are said to be currently considering two potential transactions from third party investors regarding the restructuring of the Company’s 90% owned subsidiary SMB, an operator of the Inata mine.
• Directors reported to have seen proposals and “believe that the probability of a successful implementation of the two proposals differs between each proposal”.
• Without the deal “it is likely that SMB will enter into insolvency proceedings”.