(MENAFN- ProactiveInvestors) Economic News
US – Vehicle sales in Feb miss bullish analysts’ forecasts on the back of bad weather.
• Total US sales climbed 5.3%yoy to 1.3m units versus a 7.1%yoy increase forecast.
• The annualized sales rate came down to 16.2m units from strong Jan 16.7m units.
• Lower oil prices continued to affect electric vehicles sales (Chevrolet Volt sales -43%yoy Ford C-Max hybrid -26%yoy Nissan Leaf -16%yoy). At the same time big truck sales continued to show strength (Chevrolet Silveado +24%yoy GMC Sierra +6%).
• Ford F-series pickup production is still in a ramp up to full capacity stage with sales showing a modest decline of 1%yoy.
• Economic news due today:
o Feb ADP employment report (219k v 213k in Jan) Feb ISM services PMI (56.5 v 56.7 in Jan)
Eurozone – Feb services and composite PMIs revised downwards but remained above the 50.0 threshold marking the strongest growth rate since Jul/14.
• Eurozone Services/Composite PMIs: 53.7/53.3 v 53.9/53.5 estimated previously.
• Composite PMIs in hit 2-months high in Ireland (60.7 Spain (56.0) and Italy (51.0).
• France exited stagnation recording the strongest increase in both output and new business since Aug/11 (5.2).
• Germany’s composite PMI climbed to 4-month high (53.8).
India – The RBI cut the benchmark rate by 25bp to 7.5% in an unscheduled meeting today.
• Faster than expected decline in the inflation rate cited as a reason for the decision.
• Benchmark CPI fell to 5.1% in Jan versus the 8% short term target.
• From Apr/16 onwards the RBI mandate is to keep to inflation within a band 2% above or below 4%.
Australia – Q4 GDP climbed slightly less than forecast (+0.5%qoq v +0.4%qoq in Q3 and +0.6%qoq expected) on the back of weaker mining investment slower public spending and a fall in business inventories.
• Net exports were the main contributor to growth (+0.7%pp) on the back of higher volumes and despite a fall in its terms of trade (down 1.7%qoq).
• Market expectations are for the RBA to announce an interest rate cut in H1/CY15 following the decision this week to leave the benchmark unchanged at 2.25%.
Ukraine – A methane gas blast at a coal mine in eastern Ukraine traps tens of miners underground and leaves at least 30 people dead officials say.
• Rescuers have not reached the site of the blast at the Zasyadko mine in Donetsk.
• The site suffered the worst mining accident in Ukraine in Nov/07 when 101 people were killed.
Canada - Canada is looking to extend the Mineral Exploration Tax Credit for a year in a move to support investment in junior mining space.
• The government is planning to offer the 15% tax credit for investors in flow-through shares until Mar/16 according to the Department of Finance.
US$1.1133/eur vs 1.1173/eur yesterday. Yen 119.58/$ vs 119.74/$. SAr 11.778/$ vs 11.730/$. $1.533/gbp vs 1.537/gbp
A$0.7835aud/usd vs 0.7810aud/usd. – Euro continues to weaken
Commodity News
Precious metals:
Gold US$1203/oz vs US$1209/oz yesterday –
• Australia the second largest gold miner after China saw a 4% increase in annual gold production in 2014m according to Surbiton Associates.
• Record high output in over 10 years comes on the back of weak gold prices which forced miners to raise volumes through better utilization of existing capacities and high grading.
Platinum US$1182/oz vs US$1186/oz yesterday
Palladium US$825/oz vs US$825/oz yesterday
Silver US$16.28/oz vs US$16.41/oz yesterday
Base metals:
Copper US$5802/t vs US$5840/t yesterday
• Spot premiums in Shanghai increase slightly as market participants return from the Chinese New Year holiday.
• The latest quotes show US$85-100/t on an in-warehouse basis in Shanghai versus US$85-95/t recorded last week.
Aluminium US$1789/t vs US$1794/t yesterday –Qatar Aluminium sees strong demand in the auto sector for the refined metal.
Nickel US$13650/t vs US$13690/t yesterday
Zinc US$2028/t vs US$2043/t yesterday –
Lead US$1748/t vs US$1740/t yesterday
Tin US$17860/t vs US$17900/t yesterday –
Energy:
Oil US$60.7/bbl unch vs US$60.7/bbl yesterday –
Natural Gas US$2.738/mmbtu vs US$2.655/mmbtu yesterday
Uranium US$39.50/lb vs US$39.00/lb
• Mongolia is ruled to pay out US$100m to Khan Resources for the expropriation of the Dornod uranium project back in 2009.
• The company originally demanded US$354m compensation from the government which cancelled its mining license and transferred it to Russian producer ARMZ.
Bulk commodities:
Iron ore spot price index (62% fines Tianjin) $62.40/t unch vs $62.20/t
Thermal Coal (CFR European ARA price) $62.40/t vs $62.30/t Yesterday –
China ferro-alloy imports in January:
• Ferrochrome imports into China rose by +16.20% yoy to 213588t in January
• Chrome ore imports fell by 16.53% yoy to 772500t in January as China maintained the closure of a number of ferrochrome furnaces
• Manganese ore imports fell by 2.04% yoy to 1506265t
Speciality metals and alloys:
Tungsten APT European US$292.5/mtu unch vs US$292.5/mtu last week
Company News
() – Lenigas jumps onto board of Bacanora
• announces today the self-appointment of David Lenigas to the board.
• Lenegas knows Bacanora’s Borates / Lithium project well as he is ceo of which currently holds at 15.02% stake in as well as a 30% stake in Bacanora’s subsidiary ‘Mexalit S.A de CV’ which holds title to the El Sauz El Sauz 1 El Sauz 2 Fleur and Fleur 1 concessions in Mexico.
o Bacanora has two principal projects at Magdalena and Sonora:
o Magdalena Borate Project (100% Bacanora): contains Colemanite to be refined into Boric acid for the glass and ceramics industries as well as agriculture.
o The team are looking at production of 25000tpa of boric acid from El Cajon which has has a NI 43-101 indicated resource of 11.06mt grading 10.6% to give 1.170mt of B₂O₃ at an 8% cut-off.
o The Bacanora team have built a pilot plant and test pit at E; Cajon producing 99% purity Boric acid to test the process and expect a total capital cost of around $10m for the project as an initial estimate.
o The project is to be mined as an open pit is located in northern Mexico and is close to infrastructure including rail.
o Boric acid sells for somewhere between $600-900/t depending on location.
o Sonora Lithium project (100% Bacanora): comprised of the following concessions:
o La Ventana (100% Bacanora) El Sauz (70% with REM 30%) Fleur (70% with REM 30%) San Gabriel (70% with REM 30%) Buenavista (70% with REM 30%).
o Bacanora’s has an attributable NI-43101 resource of 160013000t grading 3145 ppm Li (1.67% Lithium carbonate ‘LCE’) or 2680000t LCE.
o Lithium carbonate sells for around $2.8/lb or around $6000-6200/t.
o The company has spent some $11.5m on the project (on exploration and on a pilot plant) to date and has achieved Battery-grade LCE production of >99.5% purity from samples.
o La Ventana: hosts 2.7mt grading 0.3% Li metal contained and is planned to produce some 35000tpa of Lithium carbonate over a 20 year mine life.
o The mine might start processing a grade of around 2.25% enabling higher initial production in its early years.
o Capital cost are forecast at $114m in last year’s PEA though this is expected to rise to over $200m.
o Operating costs are expected to be around $1958/t.
o Sales of around $210mpa are forecast by the company assuming a Lithium carbonate price of around $6000/t giving an NPV @ 8% of around $848m.
§ Prefeasibility work in conjunction with Hatch Engineering and Process Engineering at the Sonora Lithium project included work on the design of a mine and processing plant capable of producing 50000tpa of LCE.
§ Buenavista and La Ventana: Drilling continues at the Buenavista and Ventana properties to upgrade resources and to aid mine design.
§ New CEO: We expect news on the appointment of a new CEO with relevant technical development and production experience soon to help move the key project’s forward.
§ Cash: Bacanora is well-funded to complete further work with a cash balance of C$11.9m at the year end.
Conclusion: Bacanora has two well advanced and projects which it are moving towards potential development and eventual production. There are a number of funds looking for development ready projects and we expect to see further interest in as the company advances its key projects. We await news of the new CEO to drive the two most advanced projects towards production.
() – 2014 Results
• Attributable profit declined by 54.95 to US$108.4m with revenues falling by 12.5% to US$1413.7m.
• The results reflect lower metal prices with silver and gold prices declining by 18.4% (to $18.60/oz) and 10.2% (to $1258/oz) respectively compared to 2013.
• Costs adjusted for profit sharing and the effects of exchange rate hedging rose by 19.4% to $678m. The increase reflects higher variable costs as a result of the resumption of operations at Herradura higher stripping ratios at Herraddura and Noche Buena partially offset by “the efficiencies achieved at several of our mines” and the beneficial impact of a 4.1% devaluation of the Mexican Peso / US$ exchange rate.
• EBITDA fell by 22.3% to US$567.3m with margins declining to 45.2% from 40.1%.
• Silver production rose by 4.9% to a record 45m oz exceeding the company’s 43m oz guidance due in part to increased throughput at the Saucito mine. Gold output of 596 koz was in line with the company’s revised guidance although 2.4% lower than in 2013 due to stoppages at the Soledad Dipolos operation .
• Capex fell by 25.6% during the year to $425.6m mainly directed at construction of Saucito II and the San Julian projects. The company forecasts an increase of capital expenditure to $700m in 2015 with funds deployed “to mining works at Herradurra and Saucito construction of a pyrites plant in the District construction at San Julian sustaining capex at current mines and pending approval and market conditions expansions at Cienega and Herradurra.”
• Despite a lower than budgeted exploration expenditure of $184.5m the company’s mineral resources rose by 3m oz opf gold (+45%) and 102m oz of silver (+21%). The company budgets $170m of exploration expenditure in 2015.
• ’s cash balances fell by approximately $802m during the year to US$449m. “The decrease was largely explained by the acquisition of Newmont’s 44% interest in Penmont .. for US$450m the purchase of property plant and equipment of US$425.6m and dividends and net interest paid of US$124.6m”.
Conclusion: has had a challenging year and is continuing to focus on operating efficiency and productivity improvements as well as growth through developing new projects. The company is taking a long view and is targeting a significant expansion in its gold business to 750000 oz of annual production by 2018. is aiming for annual silver production of 65m oz by 2018.
Kefi Minerals* () 1.075 pence Mkt Cap £13.3m – Saudi joint venture highlights progress on plan
• Kefi Minerals reports on exploration progress at its 40% joint venture in Saudi Arabia.
• Jibal Qutman: shows good gold grades from surface trenching from the following parts of the prospect
• Red hill:
o 17m at 2.65 g/t Au and 14m at 1.00 g/t Au from drilling
o 24m at 1.90 g/t Au 20m at 2.92 g/t Au and 26m at 2.23 g/t Au from trenching; and
o 34m at 1.41 g/t Au from rock chips along channels.
o Mineralisation is seen in trenching within an area of 1600m x 600m
o 3K Hill: 13m at 1.12 g/t Au and 9m at 1.72 g/t Au – best result
o 4K Hill: 24m at 1.90 g/t Au (including 4m at 5.12 g/t Au – best result
o Non-JORC compliant resource:
§ 201237t at 0.93 g/t Au in oxidised zone
§ 428711t at 0.90 g/t Au in deeper sulphide ore
§ Hawiah:
§ 53 trenches over 6km. Grades include:
§ 6m at 2.22 g/t Au
§ 2m at 8.69 g/t Au
§ 6m at 1.94 g/t Au
§ 3m at 5.76 g/t Au
§ 2m at 7.54 g/t Au
§ 8m at 3.04 g/t Au.
§ Kefi Minerals are the only group to have received licenses in the area for some years giving the group a potential first mover advantage with the authorities and potential access to low-cost finance from local development funds.
Conclusion: The progress reported and results shown appear to support the business plan as set out in the company press release. The plan is to assemble sufficient gold resources for >250000oz of oxidised material with gold recoveries >90% and potential for additional gold resources. The plan sees Jabal Qutman as a self-funding opportunity with funds to potentially come from the joint venture and a potential low-interest project finance loan from a local development bank. The Hawiah project shows potential for gold at surface with base metals at depth.