(MENAFN- ProactiveInvestors) US – Economic news due this week:
• Monday: Nov industrial production (+0.7% v -0.1% in Oct) Nov capacity utilization (79.4% v 78.9% in Oct)
• Tuesday: Dec Markit manufacturing PMI (55.5 v 54.8) Nov housing starts (+3.1%mom v -2.8%mom in Oct) Nov building permits (-2.5%mom v +5.9%mom in Oct)
• Wednesday: FOMC rate meeting (fed funds rate to remain unchanged at <0.25%) nov="" core="" cpi="" 0="" 1="" mom="" 8="" yoy="" v="" 2="" in="" oct="" li="">
• Thursday: Weekly jobless claims (295k v 294k in the previous week) Dec Markit services PMI (56.3 v 56.2 in Nov)
China – The economy to grow 7.1% in 2015 compared with forecast 7.4% this year according to the People’s Bank of China research centre.
Japan – Shinzo Abe claims victory in snap elections amid the lowest voter turnout in the postwar era.
• The ruling coalition won a two-thirds majority in the Parliament giving Abe a mandate to continue with his reforms.
UK – House prices growth slowed more in Dec capping a 7.0%yoy appreciation for the year down from +8.5%yoy recorded in Nov according to Rightmove.
• Prices are expected to post a 4-5% increase in the UK next year despite weak growth in real earnings and tighter mortgage application rules according to the property website estimates.
Russia – The US Congress passed a legislation allowing President Barack Obama to place tougher sanctions on Russia and “provide lethal assistance to Ukraine’s military”.
• Obama has not signed the Act yet.
• The measure mandates sanctions against Rosoboronexport the state owned arms trade division and Gazprom.
Australia – 5 hostages fled gunman in Sydney with an undisclosed number of people still kept being kept in the café in Martin Place.
• Authorities raised the terrorist threat alert to the highest level in a decade in Sep on the back of growing numbers of violence by people associating themselves with the Islamic State.
• The government has postponed its mid-year economic outlook announcement on the back of the news.
Greece – The parliament to elect a new head of state by 29 Dec.
• A failure to support the Prime Minister backed candidate will lead to general elections which are forecast to won by leftist anti-bailout Syriza political party.
US$1.2421/eur vs 1.2422/eur yesterday. Yen 118.58/$ unch vs 118.58/$. SAr 11.589/$ unch vs 11.589$. $1.570/gbp vs 1.572/gbp
A$0.826 vs 0.828 yesterday -
Commodity News
Precious metals:
Gold US$1211/oz vs US$1222/oz yesterday –
Platinum US$1219/oz vs US$1240/oz yesterday –
Palladium US$812/oz vs US$817/oz yesterday
Silver US$16.87/oz vs US$17.10/oz yesterday
Base metals:
Copper US$6504/t vs US$6456/t yesterday –
• Chile’s copper exports slowed in Oct as a fall in non-refined material shipments outpaced a growth in cathode exports.
• Bulk shipments (cements concentrates and secondary copper) was down 19%yoy at 471.5kt.
• Copper blister and anodex exports fell 25% to 42.3kt.
• Refined copper shipments were up 2.4%yoy at 229.7kt.
• Total copper shipment in the first 10 months of the year increased only slightly (+1%yoy) to 4.71mt.
Aluminium US$1948/t vs US$1940/t yesterday –
Nickel US$16820/t vs US$16435/t yesterday –
Zinc US$2201/t vs US$2178/t yesterday -
Lead US$1994/t vs US$1979/t yesterday –
Tin US$20490/t vs US$20316/t yesterday
Energy:
Oil US$62.90/bbl vs US$63.20/bbl yesterday –
• Major oil producers are not planning to support the price should oil hit US$40/bbl the United Arab Emirates said.
• The market will stabilize itself the UAE Energy Minister said.
• Weak demand forecasts released last Friday have exacerbated a fall in oil prices last week.
• The IEA cut its estimate for global oil demand growth in 2015 by 230000bbl/day. This is the fourth cut in the last five months
Natural Gas US price US$3.895/mmbtu vs US$3.670/mmbtu yesterday –
Thermal Coal $70.20/t unch vs $70.10/t
Uranium US$37.25/t unch vs US$37.25/t
Other:
Iron ore spot price index (62% fines) $69.7 unch vs $69.7/t –
Seabourne Coking coal (quarterly) – US$117/t unch vs US$117/t – small $2/t cut in the quarterly coking coal price
Tungsten APT European US$317.5/mtu no change
Ferrochrome HC $1.15/lb Cr Q4 vs $1.19/lb Q3 quarterly Benchmark pricing
Company News
Conroy Gold & Natural Resources () – Possibility of an antimony by-product from Clontibret.
• Conroy Gold & Natural Resources has announced that metallurgical test work has identified the possibility of producing economic quantities of antimony at its Clontibret deposit where the company is working on the possible development of an 800000tpa gold mine to produce around 50000oz pa.
• Clontibret has a JORC compliant indicated and inferred resource of 11.71mt at an average gold grade of 1.6g/t for a contained gold content of 601000oz of which just over 40% (260000oz) is classified as indicated. The published resource for Clontibret on the company’s website does not however disclose the antimony grades.
• The company’s website reports that an antimony mine was worked at Clontibret during the early 1800s and that it was the dewatering of these historic workings during the 1950s which originally led to the identification of the gold potential in the area.
• The company will be undertaking additional metallurgical work to establish a process route for the production of a saleable antimony product.
Conclusion: The possibility of an additional revenue stream from Clontibret may assist in the economic viability of the project however there will be a trade off against any extra capital expenditure needed to recover an antimony product. We await further news on the additional testing.
() – Management Update
• John Leach the CFO is taking a leave of absence on health grounds.
• He is expected to be back in his role at the end of January 2015 once his treatment is completed.
Conclusion: We are sorry to hear the news of John Leach. He has been instrumental in putting together the financing package. John Leach is also on the board of Kefi as a part time Finance Director.
() – Raises £300000 short term facility
• The company has raised £300000 through a loan which carries a 10% interest rate repayable at the company’s discretion.
• The loan from the consortium includes Dave Reeves the CEO.
Conclusion: This is a small amount to raise and we wonder what the funds are to be used for. Board cash renumeration totalled £275000 with the main payout to Dave Reeves at £125000 the only Executive Director. If the directors decide to take a moratorium on pay the funds can be used to progress on the ground projects otherwise it is just keeping the board in place.
() – Acquisition of additional ruby licences in Mozambique
• report the acquisition of controlling interests in two more ruby licenses in the Montepuez district of Mozambique.
• The new licences cost US$3.5m and are valid for 25 years and are adjacent to existing licenses.
• ’ local subsidiary holds a 75% interest in the licenses.
• The licences do not border each other with each sharing a boundary with Gemfield’s existing ruby deposits.
• The licences cover 19000 and 15000 hectares respectively and are valid for 25 years.
Conclusion: The licenses are necessarily large and in our view reflect Gemfield’s drive to expand its alluvial ruby mining operations.
The company appear to be successful in the recovery of better quality rubies from the alluvial mines and we believe much of the $43.3m of revenue from the recent high-end auction in Singapore with values of $688/carat.
These figures make the Montepuez alluvial operations comparable with diamond mining operations and the team appear to be currently successful in their mining of historic paleochannels for the recovery of better quality rubies.
*An SP Angel analyst has visited Gemfield’s emerald mines in Zambia and ruby mine in Mozambique
* () – IFL not affected by ESKOM load shedding
• IFl report today that it has not been affected by recent load shedding by ESKOM in South Africa.
• It is unlikely load shedding will impact IFL over the South African Christmas break as ESKOM should be prepared manage power supplies though the period.
• Rreduced working in offices and factories through the holiday should serve to reduce the draw on ESKOM power while oil stocks have risen to supply short term demand peaks.
• ESKOM have so far restricted load shedding to local municipalities with no impact on the ferrochrome industry.
• We believe IFL’s furnaces should have returned to normal operation following their temporary shutdown following a Co gas incident at the facility.
* SP Angel acts as Broker to IFL. The author recently visited IFL’s ferrochrome plant in South Africa.
() – Sells Gold and Silver Refining Business
• The company has sold its precious metals refining business to Asahi Holdings for US$186m (£118m).
• Asahi Holdings is a collector refiner and recycler of precious and rare metals from waste materials.
• For FY 2014 (March YE) the division had sales of £44m and for the six months ended 30th Sept 2014 sales were £19m.
• Refining sales in FY 2014 were down 9% from the previous year (down 2% on a constant currency basis).
• The weakness was mainly due to weak sales in gold and silver with profits also down for the division.
Conclusion: While return on sales has been around 25% for the division this is likely to have come down with gold and silver prices under pressure. An exit multiple of around 10.8x seems a good price to have achieved (assuming EBITDA of around US$17.3m.
* () – Additional mineralisation identified at Jibal Outman Saudi Arabia
• reports that additional reverse-circulation drilling and trenching at its Jibal Outman prospect in Saudi Arabia has added a further non- JORC compliant inferred resource of 138000 oz at an average grade of approximately 0.8g/t to the previously reported JORC resource of 495194oz at 0.92g/t.
• This brings the total resource including the non-JORC compliant portion to 22.04mt at an average grade of 0.90g/t (633461 oz). Approximately 70% of this total (435338 oz) is classed as a JORC compliant indicated resource.
• The additional work has also identified additional areas of interest and the company has applied for four further exploration licences surrounding Jibal Outman.
• The company also reports that “a significant portion of material is expected to be amenable to heap leach processing” raising the prospect of lower capital costs and a shorter timetable to production. Metallurgical testing indicates that gold recovery rates of around 90% may be achievable without the need for agglomeration of the ore.
• The company is apparently considering a 1.5mtpa heap-leach operation which we estimate could produce around 35000 oz pa at the 80% recovery rate the company is using for its internal assessments.
Conclusion: The discovery of additional mineralisation at Jibal Outman and the metallurgical tests showing its amenability to heap leaching is encouraging though the grades are relatively low with an in-ground value of approximately $35/tonne at a $1200/0z gold price. The company’s main focus is however the development of the Tulu Kapi project in Ethiopia.
*SP Angel act as Nomad to .
() – Grid connection to halve energy costs for La Parrilla Mine
• has halved its power costs with the potential to save some €400000pa through connection to the Grid in Spain
• Production at the La Parrilla tin tungsten mine have risen to target of around 1 tonne per day.
• The company’s September presentation targets production from the La Parrilla Tailings of 450tpa of WO3 (tungsten trioxide) with sales of €7mpa.
• The La Parrilla open pit Mine grades a rather low 0.09% though fortunately the company’s other tungsten project at Regua grades a much more respectable 0.31%WO3.
• This is the one of very few projects which we know of where the grade of the tailings at 0.12%WO3 is higher than the mine at 0.09%
• The tailings project cost just €2.4m in capital commitment. The team have also upgraded the plant to start production of tin in H1 2015 to provide another source of revenue.
• The La Parrilla open cast mine might be suitable for low cost mining but it is hard to see how this will be economic with the grades indicated in their presentation.
• It will be interesting to see metallurgical results and other study work on the Regua tungsten project. The company are currently drilling the Regua project to increase its JORC resource in H1 2015. The team have a trial mining license for Regua which should speed things up going forward.
• We can not immediately see any news on operating costs and can only assume that the small scale of the La Parrilla tailings operations renders the operation relatively high cost for now.
Conclusion: it is good to see production in progress and we look forward to potential good news on the JORC resource and metallurgical characteristics from the historic Regua mine in the new year.