Amur Minerals* (LON:AMC) – Development works update ahead of the 2018 field programme
Ceres Power (LON:CWR) – New 5kw fuel cell stack announced
European Metals (LON:EMH) – MoU with Czech Ministry of Industry and Trade
Galileo Resources (LON:GLR) – Star Zinc drilling results
Savannah Resources (LON:SAV) – Licence approvals in Oman
Stratex International (LON:STI) – Dalafin earn-in agreement
Rio Tinto (LON:RIO) – Rio Tinto faces $84bn shareholder revolt over membership of minerals council
Steel and aluminium tariffs trigger sharp stock market sell off in US and Asia
- World stock markets have tumbled after Donald Trump has said the United States would impose tarrifs of 25% on steel imports and 10% on aluminium next week
- Treat of a trade war with China and higher goods prices led to a sharp sell off in Wall Street on Thursday causing Asian markets to take fright on Friday
- The Nikkei index in Japan fell 2.4%, Hong Kong and South Korea were down 1.6%, and the ASX200 in Sydney was off 1% in early afternoon trading. Asian steelmakers bore the brunt. South Korea’s Posco fell 3% and Japan’s Nippon Steel 4%
South Africa’s mining charter to be finalised in three months
- South Africa’s new mining minister Gwede Mantashe said on Wednesday he will finalise the latest version of an industry charter which lays out requirements for black ownership levels and other targets in the next three months
- Uncertainty around the charter has deterred investment into mining which accounts for around 8% of GDP
- The government has said it will consult with mining companies on the new charter, prompting the Chamber of Mines to temporarily suspend a legal challenge to the previous version drawn up by the former minister of mines
We ask:
- Can the new charter realistically be turned around in three months with full industry consultation?
- Will the BEE equity component be adjusted to encourage new investment and reduce the burden on companies and shareholders?
- Will the BEE scorecard also be adjusted to simplify the BEE process?
- Will the Minister focus more on job and value creation than previous ministers
Dyson – recruits 300 to work on Electric Vehicle project reaffirming Dyson’s £2bn commitment to EV production
- James Dyson the designer and inventor famed for his cyclone vacuum cleaners has launched his electric vehicle project.
- Press reports have been circulating for some time with Dyson now gearing up to produce its first electric car in the next two years.
- Dyson has had a team of 400 working on the project for some time and doubled the number of scientists working on Dyson’s battery program last year.
- The company plan on producing three EV cars starting with a low volume model at <10,000 units="" li="">
- We wonder if the cars will come with a road sweeping and hairdryer attachments.
British Army mobilised to rescue hundreds of stranded drivers caught in snow
- The Army has been called into rescue stranded motorists who failed to heed warnings not to travel in the extreme conditions seen over the past 48 hours.
- Blizzards have brought roads to a standstill in the East and South West of England. More snow is to follow today.
Dow Jones Industrials
-1.68%
at
24,609
Nikkei 225
-2.50%
at
21,182
HK Hang Seng
-1.48%
at
30,583
Shanghai Composite
-0.59%
at
3,255
FTSE 350 Mining
-0.72%
at
17,828
AIM Basic Resources
-0.12%
at
2,518
Economics
US – Trump said he is looking to sign an order next week placing tariffs of 25% on steel and 10% on aluminium imports “for a long period of time”.
- The announcement sparked a warning from the EU trade commission over a potential to impose “safeguard” tariffs on its imports of steel and aluminium in response.
- Cecilia Malmstrom, EU trade commissioner, said officials in Brussels will wait to see the formal announcement over tariffs before taking any action, FT reports.
- EU authorities highlighted that the national security argument in the debate over metal imports was of particular interest since it makes uhse of a loophole in global trading rules intended to be employed only in times of war or other national emergencies.
- Stock prices of steel producers in Japan and South Korea recorded heavy losses with Topix index posting the biggest move (-1.8%) among Asia Pacific equities.
- Kobe Steel dropped 3.1%, JFE Holdings was down 3.2% and Japan Steel Works fell 3.5%.
- In South Korea, Posco fell 2.9% and the benchmark Kospi was off 1.5%.
Japan – The BoJ pointed that the central bank will be discussing how to exit the monetary stimnulus programme aroun the fiscal year starting in Apr/19.
- This marks the first time the BoJ Governor referred to a potential tightening which saw the yen climbing against the US$ and led to a sell off in Japanese sovereign debt market.
- In separate economic data releases, unemployment continued to decline reaching 2.4%, the lowest level since 1993, while inflation in Tokoy climbed more than expected in February.
- Despite a continuing tightening in the labour market, wages growth remains weak constraining consumer demand and weighing on prospects for stronger nationwide inflation.
Germany – Retail sales, a volatile data series, bounced back in January but underperformed market estimates.
- Private spending has been cooling down lately and the latest retail numbers do not offer much optimism over a significant rebound in the trajectory outlook.
- Retail sales (%mom/yoy): -0.7/+2.3 v -1.1/-0.2 in December and 0.7/3.0 forecast.
UK – PM May is set to give her speech today outlining a broad framework to future trade negotiations to follow before the Mar/19 Brexit deadline.
- The speech is expected to provide a “warm message to Europe” and an acknowledgement that the UK is set to lose access to single market, FT says.
- May is set to propose high alignment in regulations for complex industries such as cars, chemicals, medicines and aviation while using less rigid principle of mutual recognition of EU and UK regulations in services industries including the financial sector.
- The “mutual recognition” principle which suggests the UK and EU agree on common regulatory outcomes but have freed to set their own rules has already been rejected by the EU side.
- “In the absence of a common discipline, in the absence of EU law that can override national law, in the absence of common supervision and a common court, there can be no mutual recognition of standards, Mcihel Barnier, EU chief negotiator, said.
Currencies
US$1.2272/eur vs 1.2199/eur yesterday. Yen 105.74/$ vs 106.84/$. SAr 11.855/$ vs 11.867/$. $1.377/gbp vs $1.376/gbp. 0.777/aud vs 0.774/aud. CNY 6.348/$ vs 6.345/$.
Commodity News
Precious metals:
Gold US$1,317/oz vs US$1,312/oz yesterday
Gold ETFs 72.3moz vs US$72.3moz yesterday
Platinum US$964/oz vs US$975/oz yesterday
Palladium US$985/oz vs US$1,034/oz yesterday
Silver US$16.45/oz vs US$16.35/oz yesterday
Base metals:
Copper US$ 6,924/t vs US$6,905/t yesterday
Aluminium US$ 2,137/t vs US$2,118/t yesterday
Nickel US$ 13,380/t vs US$13,670/t yesterday - Vale aims to cut nickel output costs as world glut looms
- Vale, the world’s largest nickel producer, plans cut >$150m in costs across its nickel operations
- The company is aiming to raise earnings from nickel to >30% as it diversifies away from iron ore
- Local reports suggest that Litel Participacoes, a group of Brazalian pension funds, is preparing to sell its stake in the company
Zinc US$ 3,385/t vs US$3,418/t yesterday
Lead US$ 2,452/t vs US$2,471/t yesterday
Tin US$ 21,510/t vs US$21,580/t yesterday
Energy:
Oil US$63.8/bbl vs US$64.9/bbl yesterday
Natural Gas US$2.688/mmbtu vs US$2.659/mmbtu yesterday
Uranium US$21.65/lb vs US$22.00/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$75.7/t vs US$77.2/t – Futures slide on proposed US steel import tariffs with contracts in Singapore losing as much as 4.4% and trading at $73.9/t.
- Prospects of a trade war between the US, EU and China has fuelled fears of a correction in steel prices which in turn would weigh on mills’ margins and weaker demand for steel raw materials.
- Coking coal prices have also pulled back with May/18 futures off slightly and trading at $218/t v $224/t at the start of the week.
Chinese steel rebar 25mm US$690.8/t vs US$689.7/t - China steel exports falling
- China exported 36.6% yoy less steel in January at 4.65mt the lowest monthly figure since February 2013.
- The pullback is mainly due to Chinese anti-pollution measures cutting local production as well as ongoing Chinese construction growth.
- Trump is also due to implement new Tariffs on steel and aluminium.
Thermal coal (1st year forward cif ARA) US$77.2/t vs US$78.0/t
Premium hard coking coal Aus fob US$234.9/t vs US$234.9/t
Other:
Tungsten APT European US$319-326/mtu v US$319-325/mtu
Cobalt LME 3m US$81,000.0/t vs US$81,000.0/t - Apple and BMW put charge into Chinese cobalt stocks
- China’s cobalt mining stocks are soaring as companies like Apple, BMW and Volkswagen rush to secure supplies of the metal used in lithium ion batteries for smartphones and electric cars
- Shares of Chinese cobalt miner Jinchuan Group International Resources have soared over 70% in Hong Kong since the start of this year, whilst Shangai listed Zhejiang Huayou Cobalt have risen by nearly 50% and Shenzhen listed Nanjing Hanrui Cobalt gained over 20%
- Annual global supply for cobalt currently totals about 100,000 tons compared with supply of around 97,000 tons
Lithium - battery that works at -70o could power missions to space
- Researchers in China have developed a battery with organic compound electrodes that can function at -70 oC far colder than the temperature at which lithium-ion batteries normally lose most of their ability to conduct and store energy
- Previously, whilst batteries can operate in relatively cold climates, they have their limits. Most perform at only 50% of their optimal level when the temperature hits -20 degrees Celsius, and by -40 degrees Celsius, lithium-ion batteries only have about 12% of their room temperature capacity
- Findings could aid engineers in developing technology suited to withstand the coldest reaches of outer space or the most frigid regions on Earth
- SP Angel analysts have also discovered a very cold place is on a houseboat on the River Thames where a senior partner of SP Angel lives
Company News
Amur Minerals* (LON:AMC) 4.9p, Mkt Cap £31m – Development works update ahead of the 2018 field programme
- Construction of the 350km ice road connecting the rail head on the BAM to the Kun Manie project site was completed on 15 February 2018.
- Nine vehicles have been mobilised to deliver supplies to the site with two of the eight planned tip having already been done.
- The team is gearing up for the 2018 programme including 15,000m of drilling and collection of representative metallurgical samples as part of the PFS review.
- Commenting on a potential exercise of the next loan tranche, the Company highlighted two conditions that need to be met including “that the total daily traded value for the 30 days prior to the second advance date is greater than the total daily traded value for the 30 days prior to the initial advance date, and that the VWAP of the second advance date is 50% greater than the VWAP on the initial advance date”.
*SP Angel act as Nomad and Broker to Amur Minerals
Ceres Power (LON:CWR) 14.2p, Mkt Cap £144m – New 5kw fuel cell stack announced
- Ceres power have announced a new 5kw fuel cell stack that can scale significantly to power applications from 5kw to 100’s kw according to Ceres, it has been tested for 10 years operating life and offers 60% net efficiency
- In under two years five global OEM’s have signed joint development agreements to work with the Ceres SteelCell® including Cummins, Honda and Nissan.
- Microsoft is evaluating fuel cells and seeking to double the efficiency of its server farms. Microsoft plans to do a test run with a $45m 10MW installation in a few years.
- The fuel cell/data centre theme is very interesting indeed given that data centres are an increasing threat to power consumption related climate issues. I will follow news on this. Great opportunity for Ceres, Ballard et al
- Ceres Power has invested over £100m in developing its stainless steel fuel cell stack
- Full year results to June 2017 reported sales up 140% to £4.1m and a loss down by 11% to £10.3m.
- The strategy has since broadened beyond domestic the original focus market of domestic micro-CHP boilers, to target data centres and vehicles.
- The technology is now used for distributed power products that reduce operating costs, lower CO2,
- SOx and NOx emissions, to increase efficiency and to improve energy security.
- Ceres Power state that they have unique patented SteelCell technology generates power from widely available fuels at high efficiency and is manufactured using standard processing equipment and conventional materials such as steel, meaning that it can be mass produced at an affordable price for domestic and business use.
Conclusion: Ceres continues to advance the development of its Solid Oxide fuel cells. If the company is able to get traction on data center server farms then this could be the way forward for Ceres.
For more information see https://www.cerespower.com
* The author of this report has previously visited Ceres Power’s facilities
European Metals (LON:EMH) 24.1 pence, Mkt Cap £33.7m – MoU with Czech Ministry of Industry and Trade
- European Metals Holdings, which is working on the development of the Cinovec lithium project in the Czech Republic, reports that it “notes recent public statements by and correspondence it has received overnight from Mr Thomas Huner, Minister of Industry and Trade of the Czech Republic, purporting to terminate the Memorandum of Understanding dated 2 October 2017 between the Company and the Ministry of Industry and Trade (the "MoU")”
- The company emphasise that “All Company rights are derived from the current Czech legal system, notably the Geological and Mining Act, not the MoU. Any termination of the MoU would not in any way affect the exploration rights of the Company or the Company's tenure over its exploration permits and the Company continues to progress the project with ongoing metallurgical testwork, discussions with offtakers and preparations for feasibility drilling underway”.
- Understandably under the circumstances, the company looks “forward to meeting with the Minister in the near term to further these discussions”.
Conclusion: The possibility of friction between the company and the Czech Ministry of Industry and Trade has the potential to distract management from the feasibility work on the project and to undermine investor confidence. Although the legal system in Czech Republic may ultimately endorse European Metals’ position resort to this route is likely to be protracted and in many ways a speedy resolution of the Ministry’s issues (the nature of which are not clear from the announcement), without recourse to the courts, offers the preferable outcome.
Galileo Resources (LON:GLR) 1.55 pence, Mkt Cap £3.9m – Star Zinc drilling results
- The company has reported results from recent drilling at its 85% owned Star Zinc project in Zambia. Results “for three of the first four drill holes showed significant intersections of extremely high-grade zinc over good down-hole lengths from surface”. These include:
- An intersection at an average grade of 15.61% zinc from surface to 46m, which is somewhat confusingly reported as a 47m wide intersection, in hole 002. The intersection includes a higher grade portion reported from surface to 36m (identified as a 16m wide intersection) averaging 38.15% zinc.
- A 10m wide intersection from 8m to 18m downhole averaging 13.47% zinc and including a 6m wide portion averaging 25.12% zinc between 8m and 14m on hole 004; and
- A 9m wide intersection averaging 14.10% zinc from 12m downhole in hole 006.
- A further hole, designated 005, drilled “on the fringes of the orebody” reported 19m from surface at an average grade of 3.22% zinc.
- Galileo Resources reports that it has drilled more than1,100m in 24 holes so far and that the campaign has extended the known strike length of “high-grade mineralisation … by a further 30m in the eastern orebody to estimated aggregate 220m length (W-E) and widths between 50m (West) and 90m (East).”
- The mineralisation “remains open to the east and several other peripheral and outlying geophysical and geochemical anomalies remain to be explored”.
Conclusion: Despite the slight confusion relating to the widths of the reported intersections in hole 002, the recent drilling has encountered high grade zinc and extended the strike extent of the known mineralisation at Star Zinc. We look forward to further news of the assay results from the holes where results remain pending.
Savannah Resources (LON:SAV) 6.1p, Mkt cap £38.9m – Licence approvals in Oman
- Savannah Resources reports that it has “received for all eight of the required Government permitting approvals for the Maqail South Mining Licence application, and seven for Mahab 4, with only the Ministry of Housing remaining.” Continuing discussions with the Housing Ministry are said to positive.
- Commenting on the status of the applications, CEO, David Archer, noted that there was now only the single response from the Ministry of Housing outstanding “prior to the Public Authority of Mining being able to assess the Company's Mining Licence applications, with mining still planned to commence in 2018."
Conclusion: Savannah Resources has now cleared all but one of the required hurdles prior to the formal consideration of its application by the Mining Authority.
Stratex International (LON:STI) 0.9p, Mkt cap £4.1m – Dalafin earn-in agreement
- Stratex reports that it has reached an agreement for Iamgold to earn a 51% interest in the Dalafin gold project located in the prolific Kedougou-Kenieba belt in south-east Senegal.
- Iamgold has agreed to spend US$4m on exploration of the project over the next 4 years in order to earn its 51% interest, thereby diluting Stratex to approximately 41.65%. Iamgold has an option to earn an additional 19% interest, taking its holding to 70%, by spending a further US$4m at the project over the following 2 years and further diluting Stratex’s interest to approximately 25.5%. If Stratex elects to continue thereafter it will be on a pro-rata contributory basis.
- Iamgold already owns the contiguous ground in its Boto gold project where it has defined an indicated and inferred resource of “2.52 million ounces grading 1.61 g/t Au (inclusive of Proven and Probable Reserves of 1.4 million ounces grading 1.64 g/t Au)”.
- Stratex’s work at Dalafin has resulted in a number of promising drilling intersections including a 7m intersection, from 19m, at an average grade of 86.39g/t gold in hole FARC-007 and 96m at an average grade of 1.51g/t gold in hole FADD-002.
Conclusion: In some respects, the transaction with Iamgold at Dalafin mirrors the successful model Stratex has applied in the past with its exploration in Turkey where having identified attractive targets and completed sufficient exploration to demonstrate significant mineralisation it has brought in larger companies to fund and advance the follow up exploration while still retaining a meaningful stake in the upside of exploration success. We look forward to news of the continuing exploration at Dalafin.
Rio Tinto (LON:RIO) 3699p, Mkt cap £67.2bn – Rio Tinto faces $84bn shareholder revolt over membership of minerals council
- Rio Tinto faces a shareholder revolt over its membership of lobby groups including the Minerals Council of Australia and the role it plays in Australia’s climate and energy debate
- Global investors worth $84bn have joined together to file a shareholder motion calling on Rio Tinto to rethink its membership of the MCA, NSW Minerals Council (NSWMC) and the Queensland Resources Council (QRC)
- The group are demanding that Rio Tinto reveal all membership fees paid since 2012, review the consistency of the MCA’s lobbying positions with those held by Rio Tinto, and disclose what it would take for Rio to quit its membership of the MCA