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Today's Market View - Monumental trade agreement could reverse metals trade trend

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SP Angel – Morning View –Friday 05 04 19

Monumental trade agreement could reverse metals trade trend

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Bushveld Minerals (LON:BMN) – Reshuffle at Vametco

Erris Resources (LON:ERIS)  – 2018 results and exploration update

Georgian Mining Corporation (LON:GEO) – Letter to Georgia prime minister goes some way to explaining slow business climate

Newmont Mining (NYSE:NEM) – Goldcorp shareholders approve combination with Newmont

Talga Resources* (ASX:TLG) – Graphite intersects exceed current Nunasvaara resource

 

Japanese Hayabusa-2 probing for pristine asteroid material

  • The Japanese Hayabusa-2 spacecraft is thought to have detonated its explosive charge in an effort to explore and sample pristine asteroid material to explore its resource potential.
  • The Small Carry-on Impactor device was deployed on Friday, with the 14kg conical container packing plastic explosive targeting a 10m-wide impact hole.
  • "We will try to find that artificial crater two weeks later, by descending to a lower altitude and making extensive observations", according to mission project manager Yuichi Tsuda.
  • If all goes to plan, Hayabusa-2 will return to the blast site to collect pristine samples of the asteroid that have not been exposed to the harsh environment of space and cosmic radiation, with hopes to shed some light on the early formation of planets in the solar system.

 

Cornish mining revival

  • Media reports appear to be heralding a revival in the Cornish mining scene.
  • A reporter spotted an Australian lithium company, Metampere Limited, flying around the vastness of Cornwall in a helicopter.
  • Sky News also reports this morning on Cornish Lithium’s plans to start testing samples for lithium later this year
  • Strongbow Exploration and Strategic Minerals* are both looking to develop tin mines in Cornwall.
  • Strongbow is looking to dewater and restart the historic and high-grade tin mine at South Crofty – where I worked as a lad!
  • Strategic Minerals* is also drilling and delineating tin, copper and tungsten resources at its Redmoor project in Cornwall.
  • The number of companies advancing in mining in Cornwall is testament to the support being provided by local government and the willingness of investors to fund development in the region.
  • We look forward to further positive developments.

 

Dow Jones Industrials

 

+0.64%

at

  26,385

Nikkei 225

 

+0.38%

at

  21,808

HK Hang Seng

 

-0.17%

at

  29,936

Shanghai Composite

 

+0.94%

at

   3,247

FTSE 350 Mining

 

-1.06%

at

  20,594

AIM Basic Resources

 

+0.40%

at

   2,148

 

Economics

US – Equities extended gains in a sixth consecutive session on Thursday helped by Trump comments on the progress of trade negotiations.

  • “We’re getting very close to making a deal… that doesn’t mean a deal is made, because it’s not, but we’re certainly getting a lot closer,” Trump said.
  • “I would think with, oh, within the next four weeks or maybe less, maybe more, whatever it takes, something very monumental could be announced.”
  • March non-farm payrolls an eagerly anticipated set of data is set to provide evidence if a February was just a blip and employment gains are for a rebound.
  • Estimates are for a 177k reading, up from 20k in February.
  • On a separate note, President Trump is nominating Herman Cain, a fellow Republican who ran for the 2012 Presidential nomination, for a vacant seat on the Fed Board.
  • Concerns are that Cain and Moore nominations may see two political loyalists joining the Board of the central bank shaking the independence of the institution from the government. Although nominations will need to be confirmed by the Senate.

 

Germany – Industrial production climbed on gains in construction while manufacturing output continued to slide in February.

  • Construction sector gained helped by relatively mild weather during the month.
  • Although outlook remains weak amid “weak development in orders and the gloomier business climate”, the Economy Ministry said.
  • Industrial orders dropped by the largest margin in more than two years in February, falling 4.2%mom.
  • Leading economic institutes are reported to have more than halvef 2019 GDP growth estimates yesterday warning the economy may slowdown much more in case of a no-deal Brexit.
  • GDP is forecast to slowdown to 0.8% from previous 1.9% with commentators highlighting increased risks since last autumn.
  • Industrial Production (%mom/yoy): 0.7/-0.4 v 0.0/-2.7 (revised from -0.8/-3.3) in January and 0.5/-1.4 forecast.

 

Japan – Real labour earnings slip in February while January numbers have been revised down to a drop from previously estimated increase reflecting weak business conditions.

  • Real cash earnings were down 1.1%yoy in February while January data showed a 0.7%yoy drop v 1.1%yoy reported previously.
  • Labour unions are said to have proposed lower pay rises for 2019 despite low unemployment levels.
  • “The sudden slump  in wage growth makes no sense that the unemployment rate remains around its slowest level in 25 years… as such, a rebound in the near-term looks all but inevitable,” Capital Economics commented on numbers.
  • The data is an unwelcome news for the central bank that has been struggling to get local demand going and see inflation rates reaching target 2%.

 

UK – EC President Donald Tusk proposed an offer of a 12-month extension to the Brexit date, according to a senior EU wours.

  • The “flexible” offer allows the UK to leave sooner should Parliament approve the deal.
  • PM May is reported to have written the Tusk asking for an extension to June 30 citing the start of talks with opposition leader Jeremy Corbyn aimed at breaking Brexit deadlock.
  • “It is frustrating that we have not yet brought this process to a successful and orderly conclusion,” May wrote. “The UK government remains strongly committed to doing so.”
  • As of today, the UK is set to leave on 12 April should no extension be secured or Parliament does not ratify any deal.
  • The pound is marginally stronger against the € this morning trading around 1.1669.

 

Venezuela – Oil production collapsed in March on the back of power cuts with daily run rate hitting less than 0.6mmbbl.

  • For the full month, daily production averaged 0.9mmbbl v above 1.0mmbbl recorded in 2018 and 2.0-2.5mmbbl produced pre-2015.

 

Currencies

US$1.1228/eur vs 1.1236/eur yesterday  Yen 111.63/$ vs 111.39/$  SAr 14.085/$ vs 14.182/$  $1.310/gbp vs $1.318/gbp  0.713/aud vs 0.712/aud  CNY 6.708/$ vs 6.715/$

 

Commodity News

Precious metals:         

Gold US$1,290/oz vs US$1,293/oz yesterday

   Gold ETFs 71.9moz vs US$71.8moz yesterday

Platinum US$897/oz vs US$881/oz yesterday

  • Platinum remains on track for the biggest weekly gain in more than two years, drawing investor interest as its discount to palladium has surged in 2019, while traders weigh the potential impact of strike issues in South Africa, the largest producer.
  • Consumed in autocatalysts of diesel engines and in jewelry, the metal is seeing a rebound after tumbling 14% during 2018.
  • According to Business Day reports, the Association of Mineworkers and Construction Union sought to appeal a court ruling that blocked its intention to widen a strike at Sibanye Gold Ltd. to other mining companies.
  • Holdings in exchange-traded funds backed by platinum have surged this year to record levels.

Palladium US$1,367/oz vs US$1,413/oz yesterday

Silver US$15.16/oz vs US$15.14/oz yesterday

           

Base metals:   

Copper US$ 6,446/t vs US$6,503/t yesterday

  • Base metals could begin to regain value as remarks out of both the US and China signal progress is being made in trade talks. Chinese President Xi Jinping is pushing for a rapid conclusion and U.S. President Donald Trump talked up prospects for a “monumental” agreement that may still be some weeks away.
  • The copper market shrugged off the progress as LME-registered warehouses leaped by 30,375t to 198,325t, the highest in six months and nearly double the level three weeks ago. On-warrant inventories also increased 21%.
  • Weakening German factory data also underlined concerns over the outlook for demand, with industrial order falling by 4.2% - the sharpest rate in more than two years on a slump in foreign demand.

Aluminium US$ 1,907/t vs US$1,895/t yesterday

Nickel US$ 13,170/t vs US$13,225/t yesterday

Zinc US$ 2,908/t vs US$2,928/t yesterday

Lead US$ 2,003/t vs US$2,014/t yesterday

Tin US$ 21,210/t vs US$21,125/t yesterday

           

Energy:           

Oil US$69.2/bbl vs US$69.2/bbl yesterday

Natural Gas US$2.637/mmbtu vs US$2.679/mmbtu yesterday

Uranium US$25.75/lb vs US$25.85/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$91.5/t vs US$91.0/t

Chinese steel rebar 25mm US$629.1/t vs US$627.6/t

Thermal coal (1st year forward cif ARA) US$72.0/t vs US$70.3/t

Coking coal futures Dalian Exchange US$187.6/t vs US$187.6/t

           

Other:  

Cobalt LME 3m US$31,500/t vs US$31,500/t

NdPr Rare Earth Oxide (China) US$41,443/t vs US$41,443/t

Lithium carbonate 99% (China) US$9,690/t vs US$9,690/t

Ferro Vanadium 80% FOB (China) US$56.0/kg vs US$56.0/kg

Antimony Trioxide 99.5% EU (China) US$6.5/kg vs US$6.5/kg

Tungsten APT European US$271-282/mtu vs US$271-282/mtu

 

Battery News

Fastest EV chargers are waiting for batteries to catch up

  • Automakers and energy companies are spearheading the global rollout of ultra-fast charging pumps, encouraging EV mass adoption as thousands of installations from Shanghai to Germany and California offer the capacity to charge enough for 20 miles in 1 minute.
  • While the EV fleet will is expected to comprise more than half of all new car sales in 2040 (Bloomberg NEF), more than $50bn investment into charging infrastructure is needed through 2030 to meet power demand, according to McKinsey & Co.
  • A typical, slow-speed public EV charger offers about 20 miles of driving distance per hour at the plug. Fast chargers can add about 75 miles in 30 minutes, according to EVgo Services LLC.
  • Tritium makes pumps that add more than 215 miles of range in 10 minutes for 350kW. Customers include Ionity GmbH -- a consortium of carmakers, including Volkswagen and Ford, that’s partnering with energy giants such as Royal Dutch Shell Plc and Kuwait Petroleum International.
  • Electrify America, a Volkswagen unit created under a settlement in the automaker’s emissions scandal, is spending $2 billion on refueling stations in the U.S. over a decade.
  • ABB CEO Ulrich Spiesshofer added high-speed charging is “a real breakthrough in terms of convenience… We barbecued a couple of cars until we got there”.
  • Limiting factors on charging speed include battery size, voltage of the pack and charger current, while it may be years before suitable battery packs become mainstream.
  • Investment across the sector is significant. By the end of 2018, there were more than 630,000 public charging points installed globally, the bulk of which were in China, according to BNEF. By 2030, there may be demand for more than 20m public EV charging pumps, the International Energy Agency forecasts.

 

Company News

Bushveld Minerals (LON:BMN) 33.5p, Mkt cap £375m – Reshuffle at Vametco

STRONG BUY (from BUY) - Target Price 87p

(Bushveld Minerals now hold 74% of Vametco and 84% of Bushveld Energy it’s vanadium redox battery unit)

  • Bushveld Minerals report the appointment of a new General Manager at Bushveld Vametco and Group Head of Finance
  • Bertina Symonds is appointed as the new General Manager of Vametco combing the roles of CEO and COO.
  • Bertina brings over 20 years of mining and beneficiation experience, most recently as the General Manager of the Nkomati Nickel Mine owned by JSE-listed African Rainbow Minerals. Bertina is reported to have a solid track record in general management, stakeholder engagement and operations improvement.
  • Bertina takes over duties and responsibilities from Malcolm Curror, who will continue to provide consulting services to Bushveld.
  • Lyndon Williams is moving to a new role at Bushveld's Head Office as Group Vanadium Specialist in support of operations integration and technical support to the Group's product marketing initiatives.
  • Hiten Ooka is appointed as Group Head of Finance reporting to Finance Director, Geoff Sproule and will be responsible for the Group's financial management.
  • Hiten is a qualified chartered accountant with 10 years of financial management experience in mining including 4 years as a group financial manager at Trafigura and three years as a divisional finance director for Eurasian Resources Group, ERG Africa.
  • The changes are part of Bushveld's new operating model intended to enhance coordination between Bushveld and its operating companies, as the company aims to reach 10,000mtV per annum in the next 3-5 years. Our current modelling has Vametco moving to 10,000tpa in 2023.
  • Bushveld is also moving to add value in the energy storage industry through Bushveld Energy where further appointments are to be announced.
  • Group capital allocation and dividend policy will be outlined in the CY 2018 Annual report.
  • It is significant that Malcolm Curror will continue to provide consulting services to Bushveld. Malcolm has been instrumental at Vametco supported by Taff Williams in recent months.

*SP Angel act as nomad and broker to Bushveld Minerals

 

Erris Resources (LON:ERIS) 5.5p, Mkt Cap £1.7m – 2018 results and exploration update

  • European focussed exploration company, Erris Resources has reported a 2018 loss of €1.1m (2017 loss - €0.5m).
  • The result reflects, in part, a €0.3m impairment charge against exploration projects as well as increased administrative expenses of €0.7m (2017 - €0.2m).
  • The company’s cash balance at 31st December 2018 amounted to approximately €2.4m and “In line with current market conditions, the Company has been reducing its costs across all areas.”
  • In a review of the year’s activities the company points to “significant work”, including surface and underground drilling at its Abbeytown zinc-lead-silver-copper project in Ireland where follow up work has included soil sampling work on “a new target area near the Ox Mountains Fault” and metallurgical test work.
  • Looking forward to future work at Abbeytown, “In line with our strategy focused on accelerating resource delineation and development, we are now focused on evaluating alternatives to advance the project. This could be through a joint venture or industry partnership or further drilling to further expand the footprint of the project”.
  • Elsewhere, the company continues to work with TSX listed Centerra Gold on Scandinavian projects where, “In addition to ongoing work in Sweden, the strategic alliance will now focus its efforts on two areas in Finland: the Laivakangas district in Central Finland; and the Central Lapland Greenstone belt in Northern Finland”.
  • Commenting on the future outlook for the company in what he characterised as a challenging market for junior exploration companies, Non-Executive Chairman, Jeremy Martin, pointed to the company’s “strong cash position and team with a proven track record of discovery and value creation” and said that “we have already demonstrated the potential of Abbeytown, and we are now reviewing other projects that fit our investment criteria in low-risk jurisdictions internationally.  With the right strategy we believe that significant value can be created for shareholders.”

Conclusion: Erris Resources is part of a resurgence of mineral exploration in Ireland where amongst others, Arkle Resources* (ARK LN) (formerly Connemara Mining) is actively exploring for zinc and for gold. We look forward to news on the progress of exploration at Abbeytown.

*SP Angel is Nomad and Joint-Broker to Arkle Resources formerly Connemara Mining

 

Georgian Mining Corporation (LON:GEO) 3.5p, Mkt Cap £4m – Letter to Georgia prime minister goes some way to explaining slow business climate

  • A spokesperson for the Georgia’s ministry of economy and sustainable development has defended the country’s business climate following criticism in an open letter from a leading businessman.
  • The local chairman of International Chamber of Commerce Georgia (ICC), wrote to the Georgian prime minister to appeal against aggression against local businesses and foreign investors.
  • The letter is critical of a former prime minister and the founder of the ruling Georgian Dream party who is also the country’s richest man and is still influential.
  • “As a daily observer of your government since 2013, I notice that there are two sides running the country,” writes Mr Asly. “There is an official but powerless side represented by some of the government’ ministers and their teams, who understand how a country should be run and who work around the clock to promote Georgia, encourage foreign investment, fight poverty and improve the business environment, and an unofficial side that is the real power in the country, represented by Bidzina Ivanishvili.”
  • Mr Asly points to a recent drop in foreign direct investment as evidence that businesses are increasingly being put off from investing in Georgia.
  • “If I, the chairman of the International Chamber of Commerce in Georgia don’t feel safe or confident to invest in my own country how can I encourage any foreign investor to do so?”
  • In response, the ministry of economy and sustainable development said that business in Georgia has never had such strong support from the state, and points out that the country is ranked sixth in the World Bank’s Ease of Doing Business Report.
  • “We have very productive cooperation with international and local investors in order to resolve the problems they face within the framework of Georgian and international legislation. Moreover, our goal is to focus on even stronger cooperation with investors. We are working on a more efficient, simplified and less bureaucratic scheme of cooperation with investors,” the ministry told Emerging Europe.
  • “However, there might be rare cases where foreign investors start cooperation with dishonest local partners, while some individual public servant might abuse their discretion. Such negative cases are very rare, however, so it would be a mistake to judge the attitude towards investors in Georgia and make general conclusions based on those rare cases. We carefully study each negative case in order to provide assistance to a certain business and, at the same time, further improve the investment environment. We call on all investors with a negative experience in our country to address us immediately in order to receive our timely support.”

Conclusion: The letter goes some way to explaining the impasse in Georgia for Georgian Mining. Though it may not provide a full explanation sometimes it takes a bit of a shakeup to get things moving.

*SP Angel acts as Nomad and Broker to Georgian Mining. 

 

Newmont Mining (NYSE:NEM) US$36.5, Mkt Cap US$19.4bn – Goldcorp shareholders approve combination with Newmont

  • Shareholders of Goldcorp have overwhelmingly approved the proposal to combine with Newmont Mining with 97% of votes in favour of the $10bn transaction.
  • Newmont’s shareholders will vote on the transaction, which will create the worl’s largest gold mining company, on 11th April.
  • In the, seemingly unlikely, event that the Newmont shareholders fail to approve the transaction, Goldcorp would receive a $650m break fee.

 

Talga Resources* (TLG AU) A$0.6, Mkt Cap A$131m – Graphite intersects exceed current Nunasvaara resource

  • The ongoing diamond core drilling programme at the Niska prospect targeted a series of prominent electromagnetic anomalies located 1-2km northeast along strike of the Nunasvaara JORC resources, part of the Company’s flagship Vittangi graphite project.
  • The first drill holes at Niska North successfully intersected Nunasvaara-type graphite starting from near surface, in two separate units with an unexpected easterly dip. Subsequently several ‘scissor’ holes have confirmed true widths of 60-75m from the western unit and 15-20m from the eastern unit.
  • The width of the western unit exceeds the widest drilled intersection on the whole Vittangi project, and is more than three-times the average width of the Nunasvaara resources – which is significant for potential resource growth.
  • At Niska South, 1km south from Niska North, nine drill holes also successfully intersected Nunasvaara-type graphite units up to 25m in true width over approximately 100m strike.
  • Current drilling at Niska North is focusing on defining the western unit of 25-50m sections over 200-300m strike, with mineralisation remaining open at depth and along strike.
  • The programme aims to define a maiden mineral resource for both Niska North and South, building on prominent rock chip samples with grades of 35.8%Cg at Niska North and 37.3%Cg at Niska South (ASX announcement Sept 2014).
  • Analysis is being completed by Scott Geological in Malå, with Talga targeting initial resource estimate before the end of June quarter.

Conclusion – Preliminary intersections are significant for enhancing the world’s highest-grade graphite resource, with initial core indicating up to three-times the average width of visually similar Nunasvaara resource. We look forward to understanding the Niska resource scale and suitability for the production of lithium-ion battery anodes and graphene products.

*SP Angel acts as UK broker to Talga Resources. SP Angel analysts have visited the leading battery R&D institution WMG partnering with Talga.  

 

 

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