(MENAFN- ProactiveInvestors) UK Election - Socialist slaughter causes sterling to soar
• Socialists cast aside by voters as election reaffirms Britain’s drive to get back to work.
• Labour must be ruing the day they allowed Ed Miliband and Union officials to depose his more popular brother who might well have won the election.
• Scotland votes overwhelmingly in favour of the SNP ‘Scottish National Party’ .
• Ed Balls and Douglas Alexander loose seats. Alexander loses to a 20-year old girl acting for the SNP
• The non-socialist workers have voted to continue with a Conservative government
• Ed Miliband is expected to resign at noon today.
• Now the electorate have spoken the politicians can get on with the job and ignore the public as usual
• The conservatives need 326 seats and are +21 at 321 at the last count. Labour are – 26 at 228 SNP +50 at 56 and Lib Dems -46 to retain just 8 seats
Invention – A British company has invented a new design air compressor – so why are we interested
• Mines drive allot of machinery using compressed air.
o Underground mines use allot of compressed air machines. The air is also good for cooling and ventilation.
o Open cast mines use compressed air for drilling and in some processing plants.
• Industry in general spends around 10% of its energy costs on compressing rising to 40% for some companies.
• We reckon the figure might be even higher for the South African deep level underground mines though cable winders conveyors and plant energy costs are also significant.
• The global compressor market is reported to be worth some £20bn pa with compressors using 10TWh of electricity and contributing some 4.3mt of CO2 to the atmosphere as a result
• We recommend miners look at lontra.co.uk for the product designer and Sulzer who have licenses manufacturing.
Copper – Chinese traders cut short positions in copper as funds go long on equity markets
• The recent recovery in copper prices and potential for China to bring in new stimulus may have prompted a change in strategy by the China Chaos fund.
• The fund is rumoured to have cut its short positions.
Tin bath race – entries for the World Tin Bath championships must be in by Sunday
• The race is held in the Isle of Man in the Castletown middle harbour.
• We suggest only good swimmers apply.
• Snake charmers are also wanted. Snakes are provided. No experience required.
Economic News
Greece – to stick to promises to voters and to break austerity conditions promised to lenders
• The Grexit draws closer to its inevitable end!
IMF – asks China to allow greater flexibility in its currency
• The IMF have asked China to allow a greater trading range for its currency which is widely seen as managed lower to support exports.
• The Yuan is seen as effectively pegged to the US dollar which has recently fallen on disappointing economic news.
• The IMF reckon China should use fiscal stimulus to support economic growth rather than supporting a weaker currency
US – Weekly jobless claims came in less than forecast with 4-week average falling to the lowest level since 2000.
• Weekly claims climbed 3k to 265k versus 278k expected.
• Apr NFP are due late today with estimates for a 228k increase up from soft data recorded in Mar (+126k).
• Unemployment rate: 5.4% expected v 5.5% in Mar.
• Hourly earnings: +0.2%mom/+2.3%yoy expected v +0.3%mom/+2.1%yoy in Mar.
China – Trade balance significantly underperforms expectations in Apr with exports down for a second consecutive month.
• Trade exports (CNY): -6.2%yoy v -14.6% in Mar and +0.9% forecast.
• Trade imports (CNY): -16.%yoy v -12.3% in Mar and -8.4% forecast.
• Trade balance (US$): +US$34.1bn v +US$3.1bn in Mar and +US$39.6bn forecast.
UK – The British pound surges on preliminary general election results suggesting Conservatives may secure an outright majority in parliament.
Australia – The RBA updated its economic growth and inflation forecasts from its previous Statement on Monetary Policy released in Feb.
• Economic growth: +2.5% (unchanged) in 2015 and 2.75-3.75% (down from 3-4%) in 2016.
• Inflation: +2.5% (from 2-3%) in 2015 and 1.75-2.75% (from 2-3%) in 2016.
• Commenting on future monetary policy the RBA said it “will continue to assess the outlook and adjust policy as needed to foste sustainable growth in demand and inflation outcomes consistent with the inflation target over time”.
South Africa – MPs to disclose financial and private interests by end June this year
• The disclosure if properly made could lead to widespread revolt among the population.
• The disclosures if truthful could allow other political parties to potentially break the dominance of the ANC.
• The problem is that the disclosures are voluntary and failure to disclose is not a criminal offence
• Any contracts that MPs hold with public institutions will need to be declared so the committee can ensure that the contracts are fulfilled and not renewed..
US$1.1237/eur vs 1.1358/eur yesterday. Yen 120.02/$ vs 1219.32/$. SAr 12.016/$ vs 12.008/$. $1.547/gbp vs 1.520/gbp
0.791/aud vs 0.795/aud – Further weaker of US dollar again on poor economic data
Commodity News
ANZ Bank slashes commodity price forecasts on expectations for sustained weakness in China
• The downgrade comes at a time when the market is expecting renewed stimulus in China to lift economic activity
Glencore – blames miners for metals oversupply. Glasenberg is working to convince competitors to be more disciplined on the supply side and is still optimistic for the outlook for copper nickel and zinc
Precious metals:
Gold US$1187/oz vs US$1182/oz yesterday
Platinum US$1138/oz vs US$1136/oz yesterday
Palladium US$789/oz vs US$791/oz yesterday
Silver US$16.41/oz vs US$16.32/oz yesterday
Base metals:
Copper US$ 6416/t vs US$6424/t yesterday – Chinese imports of unwrought copper and copper products were 430kt in Apr up 4.9%mom/-4.4%yoy.
• Cochilco cut its forecast 2015 copper price to US$6107/t down US$683/t from previous estimates.
• Slower economic growth in China and the normalisation of US monetary policy are expected to weigh on prices while a lower surplus is expected to provide support to copper.
• The agency cut its estimate for the 2015 surplus to 154k nearly half the 275kt forecast in Dec/14.
Aluminium US$ 1894/t vs US$1907/t yesterday - Chinese unwrought aluminium and aluminium products exports climbed 30%yoy in Apr with YTD growth coming in at +39.6%.
Nickel US$ 14270/t vs US$13925/t yesterday –
Zinc US$ 2380/t vs US$2365/t yesterday
Lead US$ 2084/t vs US$2076/t yesterday
Tin US$ 16145/t vs US$16100/t yesterday
Energy:
Oil US$65.6/bbl vs US$68.3/bbl yesterday – China crude oil imports hit new record in April at 7.4m bbs per day up 8.6% yoy partly due to lower oil prices
Natural Gas US$2.738/mmbtu vs US$2.773/mmbtu yesterday
Uranium US$36.75/lb vs US$36.45/lb yesterday - $800bn is being invested in Asia on new nuclear reactors. The new reactors should generate massive demand for new uranium as they come on stream.
Bulk commodities:
Iron ore 62% Fe spot (cfr Tianjin) US$58.4/t vs US$59.3/t – Chinese iron ore imports fell 4%yoy in Apr as traders were reluctant to put in new orders amid volatile prices.
• The nation imported 80.2mt last month versus 83.4mt in Apr/14 and 80.5mt in Mar/15.
• YTD imports totalled 307.3mt compared to 305.0mt last year.
Thermal coal (1st year forward cif ARA) US$57.7/t vs US$58.2/t yesterday – China coal shipments fall 26% yoy in April due to slower economic activity and despite low coal prices
Seaborne hard coking coal index (quarterly) US$109.5/t unch vs US$109.5/t
Speciality metals and alloys:
Ferrochrome – Stainless steel prices in East Asia recover on the back gains in the nickel prices.
• However demand in the stainless steel sector “has yet to recover” according to an exporter based in eastern China.
Company News
Avalon Resources () A$0.033 A$7.5m – Raises funds to progress Viscaria Copper Project
• The company has completed an A$2.1m placement to continue progressing their work programmes at Viscaria.
Conclusion: It is good to see the company has raised funds to progress drilling at the Viscaria copper project. Results so far show potential for a new footwall and hanging wall copper zone which could increase mineralisation to the A zone mineral resource. We expect the company will be using these funds for a planned drill programme at the A zone prospect with a view to establishing a JORC resource.
Gold Road Resources (ASX:GOR) A$0.36 Mkt Cap A$214.2m – Metallurgical test results from Gruyere
• Gold Road Resources has announced the results of an initial metallurgical testing programme on a range of different types of mineralisation at its 3.8m oz Gruyere gold deposit in Western Autralia.
• The test results confirm the assumptions used in the Scoping study announced in January 2015 which envisaged a 5mtpa open pit mine producing around 190000 oz per year of gold at a cost of A$838/oz over an 11 year mine life.
• Results confirm that of the 5 different ore types tested 4 achieved recoveries of over 95% (ranging up to 97.5% for oxide material) while the “fresh gold mineralisation” showed recoveries of over 92.5%.
• The ore has also been shown to be largely free-milling with gravity recovery rates of between 22.3% to 84.9% suggesting that a future flowsheet design is likely to incorporate a gravity circuit which should help to keep capital costs for a leach circuit relatively low.
• Grinding and comminution tests have shown that the Gruyere ore is classed as either “hard” or “moderately hard”. A number of other W Australian gold deposits are treating harder material and consequently Gruyere’s mineralisation should not pose any unduly difficult challenges to the crushing and grinding section of a future plant design.
• Further test-work is already underway to refine these results further and to investigate issues such as reagent consumption and the effect of coarser grinding on recovery rates.
Conclusion: The company is establishing the technical parameters which it needs as part of the project evaluation for pre-feasibility and ultimately definitive feasibility studies of the Gruyere deposit. At an average grade of 1.2 g/t Gruyere is relatively low grade but given the scale of the deposit and what is looking like relatively straightforward metallurgy we are optimistic that the deposit will ultimately prove viable.
() 161 pence Mkt Cap £831m – Pricing of bond issue
• The coupon for the US$300m 2020 bond has been set at 8.25%.
• The coupon is payable on a semi-annual basis.
Conclusion: The coupon is attractive for bond investors and we are not sure reflects the risk profile for Petra itself and maybe more of a reflection of South Africa where the mines are rather than the diamond industry. managed to price a US$650m 2022 bond around this time last year at 6.25% with overall yields if anything lower now.
() 0.675 pence Mkt Cap £5.48m – Baoule Diamond Sale
• The company has recovered 4439 carats from trial mining in Baoule.
• The stones are being offered for sale through the eDiamond auction platform during May.
• The goods will be available to be viewed in Dubai and Antwerp prior to the auction which closes at the end of May.
• A total of 15000 carats are being targeted.
Conclusion: We look forward to results from the auction.
() Suspended – Orion to subscribe $5.2m
• is to raise approximately $5.2m via the issue of 171.9m shares at 2p/share to Orion Mine Finance (Master Fund). The issue amounts to approximately 18.1% iof the enlarged company. Orion has also agreed subject to Weatherly shareholders’ consent to subscribe a further $2.8m at the same proice as part of a “proposed placing to be effected by the Company in the coming weeks.” Orion may also elect to subscribe a further $2.5m in the above placement provided that its shareholding does not exceed 29.9%.
• The need for additional finance comes about as a result of the slow ramp-up of operations at Tschudi and the losses incuyrred in the Central operations exacerbated by low copper prices.
• The Central operations produced 1050 tonnes of copper at a cost of $7763/t during the March quarter.
• At Tschudi initial leach - copper production was adversely effected by a leached cap containing a significant clay content overlying the western part of the orebody which resulted in lower and slower copper recovery than anticipated. Most of this material occurs within the upper 30 metres of the orebody and mining has now largely taken this material so recoveries should now recover slowly with 70% design capacity of 1400tpm copper to be achieved during Q3 2015.
• The long-standing CEO Rod Webster is to retire on 30th June 2015 but will continue to serve as a non-executive director.
• Weatherly’s shares have been suspended since February and are now expected to resume trading on AIM on 11th May.