(MENAFN- ProactiveInvestors) Anglo Pacific () – Narrabri coal royalty update
Exxaro – Better SA coal operating performance dragged lower by writedown on Mayoko iron ore project in the ROC
() – High grade grab samples from Morille
China – environmental crackdown in Shandong shuts 29 blast furnaces finds problems in environmental protection – why are we not surprised
• Mysteel Statistics report that 29 blast furnaces have been shutdown in Shandong province following visits by China’s Environmental Protection Supervision Center ‘ECEPSC’.
• The closures cut some 38400t/d of hot metal production which was consuming some 47000t/d of iron ore.
• One SOE mining company is also had pellet production (capacity 500000tpa) stopped temporarily though its concentrate production continues.
Noble Group – refutes ‘Iceberg’ accounting allegations (Bloomberg)
• Noble Group shares are staging some recovery following allegations by ‘Iceberg Research’ in an 11-page report that the company had been inflating its balance sheet value of contracts.
• “the company also provided more information about the ex-employee it believes is behind Iceberg.” We suspect there is no smoke without fire and we would not be surprised if some adjustment are made to the value of contracts in relation to movements in commodity prices. The same might be said of other commodity traders and some mining companies. Note valuations can go up as well as down!
Diamond miners
• Diamond miners looking to create association to combat increasing threat of manmade stones which are occasionally passed off as natural diamonds.
• Tourists might note there is no green glass in the traffic lights in the town of Zambia’s largest emerald mine.
• The same would apply to red lights in the town near the major ruby mine in Mozambique but there are no traffic lights and if there were nobody would stop anyway!
Economic News
US – The US dollar is at 11 year high versus the euro ahead of the Feb employment report.
• Estimates are for the economy to have added 235k in Feb v 257k in Jan.
• This would mark the 11th consecutive >200k monthly reading imlying strong growth momentum in the jobs market.
• Earnings are expected to grow 2.2%yoy little changed from the rate recorded in Jan.
• Jobless rate expected at 5.6% down from 5.7% in Jan.
• Economic reports released yesterday showed weekly claims fell more than estimated and factory orders unexpectedly for a 6th consecutive month in Jan.
• Factory orders are said to have been hurt by softening demand in Europe and Asia as well as strong dollar and lower oil prices which led a number of energy companies to delay on capital expenditure projects.
ECB – The Bank provided details of its €1.1tn QE programme which is scheduled to start next Monday.
• The ECB will buy €50bnpm of government debt at least until Sep/16 and €10bnpm of private sector debt.
• The programme may be extended should inflation fail to accelerate towards targeted 2%.
• The public debt purchases include all member states apart from Greece and Cyprus.
• In addition the programme would apply to public sector organisations such as the European Atomic Energy Community the European Investment bank and Nordic Investment Bank.
• The ECB raised its economic growth forecasts for the Eurozone to 1.5% in 2015 from 1.0% forecast previously. The economy to expand at 1.9% and 2.1% in 2016 and 2017.
• Inflation forecasts cut 0% (from current -0.3%) from +0.7% expected in Dec. Cosumer prices to grow 1.5% in 2016 and 1.8% in 2017.
Germany – Industrial production posted strong growth in Jan marking the 4th consecutive monthly increase.
• Output climbed 0.6%mom v +1.0%mom in Dec (revised from +0.1%mom) in Dec and +0.5%mom expected.
• Weaker oil prices helped demand for German exports as well as a fall in the euro.
UK – New car sales recorded the 36th consecutive monthly increase in Feb.
• Sales climbed 12%yoy indicating robust growth in the consumer seniment according to the Society of Motor manufacturers and Traders.
• Business car registrations outpaced the private market which also implies srong business confidence in the UK.
• “Over the course of 2015 however we are expecting a more stable market to emerge given there has already been an extended period of consisten growth (3 years)” the SMMT said.
• The BoE left benchmark rates unchanged at 0.55 yesterday in line with expectations.
• The decision marks the 6th anniversary of low rates in the UK.
• The Bank slashed rates to 0.5% back in Mar/09.
• Estimates for the first increase have been pushed forward to Q1/16 recently compared to Q3/15 expected in early Feb.
• With inflation running at the weakest pace in decades (+0.3%yoy in Jan) there is less pressure on the MPC to begin tightening policy this year.
Russia – Feb inflation has come down from levels seen in Jan but continue to run at double digits pace.
• CPI: +2.2%mom/+16.7%yoy v +3.9%mom/+15.0%yoy in Jan and +2.2%mom/+16.7%yoy forecast.
South Sudan – The petroleum and mining minister of South Sudan signed an order to regulate extraction
• The order is reported to be in line with the Mining Act 2012.
• The new regulations are designed to attract investors to the mining sector to stop illegal mining activities and reduce the nations dependency on oil which accounts for up to 98% of the nation’s budget.
US$1.0972/eur vs 1.1037/eur yesterday. Yen 120.06/$ vs 119.97/$. SAr 11.809/$ vs 11.802/$. $1.520/gbp vs 1.524/gbp
A$0.7806aud/usd vs 0.7813aud/usd. – Euro collapse continues – ECB QE starts Monday
• Negative interest rates in the Eurozone combined with the ECB QE program is having a marked and ongoing impact on the Euro.
• The Euro is now close to its starting point with the USD of US$1.1743/eur in 1999 and could go to parity this year by our reckoning. The Euro fell to 0.8252 shortly after its launch but then gained strength as the world’s second major reserve currency for investors who did not want to hold US dollars.
• An overpriced Euro has had a dramatic negative effect on the economies of Southern Europe which are struggling to recover. Germany appears to have been a beneficiary.
Commodity News
Precious metals:
Gold US$1194/oz vs US$1200/oz yesterday
Platinum US$1176/oz vs US$1184/oz yesterday
Palladium US$824/oz vs US$829/oz yesterday
Silver US$15.99/oz vs US$16.20/oz yesterday
Base metals:
Copper US$5788/t vs US$5858/t yesterday - Brazil imposed anti-dumping tariffs on imports of refined copper tube from China and Mexico.
• The nation imported more than 6600t of copper tube in 2014 with 5000t coming from China and 1000 from Mexico.
Aluminium US$1796/t vs US$1813/t yesterday –
Nickel US$14240/t vs US$14100/t yesterday
Zinc US$2018/t vs US$2043/t yesterday –
Lead US$1801/t vs US$1790/t yesterday
Tin US$18150/t vs US$17950/t yesterday –
Energy:
Oil US$60.8/bbl unch vs US$61.0/bbl yesterday –
Natural Gas US$2.856/mmbtu vs US$2.763/mmbtu yesterday
Uranium US$39.65/lb unch vs US$39.65/lb
Bulk commodities:
Iron ore spot price index (62% fines Tianjin) $60.50/t unch vs $61.20/t
Steel rebar prices fall on lower China GDP
• Rebar futures prices fell 0.1% on the Shanghai Futures Exchange this morning on a weaker outlook for economic activity in the region.
Thermal Coal (CFR European ARA price) $60.00/t vs $62.40/t Yesterday –
Vanadium pentoxide price falls to 450c/lb from 490c/lb
Speciality metals and alloys:
Tungsten APT European US$292.5/mtu unch vs US$292.5/mtu last week
• China Minmetals Nonferrous Metals and Ganzhou Tungsten Assn raised offer prices for tungsten concentrate for Mar on tight market following the Chinese New Year.
• Black tungsten concentrate (65% content) is offered at CNY 86000/t up from CNY 85000/t in Feb according to MetalBulletin.
• White tungsten concentrate is offered at CNY 85000/t v CNY 84000/t in Feb.
• Local APT prices raised to CNY 135000/t up from CNY 134000/t last month.
Company News
Anglo Pacific () – Narrabri coal royalty update
• Anglo Pacific has announced that “it has agreed to delay completion of the purchase of the royalty interest in the Narrabri coal project in order to allow additional time for certain conditions precedent to be satisfied.” The company expects completion now to occur next week and has extended the completion date until 13th March.
• The 1% revenue Royalty covers the Narrabri North underground longwall mine and the adjacent Narrabri South exploration area. Narribri North has JORC compliant Proven & Probable Reserves of 140m tonnes of coal included within an overall resource for the project area of 180mt of indicated resources and 380m tonnes of inferred resources.
• The mine which is operated by ASX listed Whitehaven Coal Ltd (WHC AU) is located in the Gunnedah Basin and produced 3.7m tonnes of coal in FY 2013 and 5.7m tonnes in FY 2014. Target production for FY 2015 is 6.5mt and 7mt in FY 2017. The Narrabri North mine has an estimated life of 22 years.
Conclusion: The acquisition of a long term coal royalty over a newly established mine operated by an established listed mining company in a stable jurisdiction is a positive enhancement of Anglo Pacific’s portfolio.
Exxaro – Better SA coal operating performance dragged lower by R5.76bn writedown on Mayoko iron ore project in the ROC
• Exxaro has reported a loss of some R3.3bn due to its massive R5.76bn writedown on the Mayoko iron ore project in the Republic of the Congo.
• Exxaro’s South African coal exports rose 19% to 5.3mt with volumes produced rose by 1% to 39.1mt
• Export prices fell to $63/t in November from $83/t in January last year.
• Total sales rose by 21% to R16.4bn with cash flow up 88% to R4.083bn
() – High grade grab samples from Morille
• has released further assay and other information from its 80% owned Morille tungsten project in Salamanca Province Spain.
• The results are largely from grab samples in areas which have not previously been sampled and include some high grade assays of up to 10% tungsten tri-oxide.
• Grab sample results can be highly subjective however has clearly extended the potential areas of tungsten mineralisation within a large exploration area of some 57 sq km.
• The company plans to follow up these results with a programme of shallow trenching which should yield increased geological understanding of the mineralised structures and more systematic grade information.
Conclusion: The Morille project is still at a relatively early stage of exploration however “The focus at Morille is to explore for shallow open-pittable mineralisation which could be rapidly advanced towards production.” We look forward to the trench results as they become available.
*An SP Angel analyst has visited the Morille tungsten project in Spain.