Today's Market View Including: Condor Gold Gemfields Polymetal

Date

4/5/2016 7:03:37 AM

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(MENAFN- ProactiveInvestors - UK) SP Angel Mon

Condor Gold (CNR LN) 2.6m Fund raising and introduction of new investor
Gemfields (GEM LN) Lusaka Emerald and Amethyst auctions.
Polymetal (POLY LN) US$100m acquisition of the Komarovskoye gold mine in Kazakhstan

Economic News
US The economy added more jobs in Mar than forecast coupled with better than expected increase in labour earnings the data released in Friday showed.
Unemployment edged higher driven by a 0.1%mom increase in the labour participation rate a measure of American who are employed or actively seeking for job.
While the Apr FOMC meeting is unlikely to see another rate hike announce chances of another round of tightening during the Jun meeting increased.
Surprisingly the US dollar index closed little changed on Friday with 10-year Treasury yields finishing lower on the day.
In a different set of news light vehicle sales declined to 16.45m units annual pace in Mar down 6%mom and 4%yoy.
This came in below estimates for 17.6m units.
Despite a Mar setback sales in the first three months remain up c. 3%yoy.
Economic news due this week:
Date Index Period Actual Expected (Bloomberg) Previous
Friday NFPs Mar 215k 205k 245k (revised from 242k)
Unemployment Rate Mar 5.00% 4.90% 4.90%
Av Hourly Earnings Mar 0.3%mom/2.3%yoy 0.2%mom/2.2%yoy -0.1%mom/2.3%yoy
Monday Factory Orders/Core Feb -1.8%mom/-0.5%mom 1.6%mom/-0.2%mom
Tuesday Ism Services PMI Mar 54.1 53.4
JOLTS Job Openings Feb 5541k
Wednesday Initital Jobless Claims 270k 276k
Consumer Credit Feb $14.9bn $10.5bn
Source: Bloomberg


China Markets are closed today as the nation celebrates Ching Ming Festival also known as Tomb Sweeping Day.

Germany 10-year Bund yields hit a five-week low this morning on the back of accelerated purchases by the ECB and lower oil prices driving down inflation expectations.
The ECB increased bond buying programme by 20bn to 80bn per month on Friday.
Yields were down 2bp in the morning at 0.119% v 0.103% the lowest in ten months seen in Feb.

UK Growth in construction industry remained at a 10-month low in Mar on the back of weak residential housing sector.
Residential property recorded the weakest pace of growth since Jan/13.
'Heightened uncertainty about the business outlook appears to have weighed on overall construction demand so far in 2016 with survey respondents citing cautious client spending patterns and a reduced willingness to commit to new projects' Markit said.
Markit construction PMI: 54.2 in Mar unchanged from Feb and a little better than 54.1 forecast.

Australia Retail sales disappointed in Feb staying put matching a Dec reading and underperforming expectations for another monthly increase.
Retail sales: 0.0%mom v 0.3%mom in Jan and 0.4%mom forecast.
A separate report showed core consumer price growth moderated to 1.7% in Mar down from 2.1% in Feb.
Weaker rate of inflation provides more headroom for the RBA to ease the monetary policy further should it opt to do so.
The RBA policy meeting is scheduled for tomorrow with estimates for rates to remain at a historic low of 2%.
The Aussie dollar was off 0.7% at US$0.7614 driven by poor retail sales and a fall in inflation.

Spain Unemployment in Spain contracted more than forecast in Mar reversing an increase in recorded in Feb.
Unemployment: -58.2k v 2.2k in Feb and -50.0k forecast.
Jobless rate in Spain remains the second highest among Eurozone members.

Currencies
US$1.1373/eur vs 1.1386/eur yesterday. Yen 111.58/$ vs 112.22/$. SAr 14.779/$ vs 14.714/$. $1.421/gbp vs 1.435/gbp
0.762/aud vs 0.768/aud. CNY 6.482/$ vs 6.465/$.

Commodity News
Precious metals:
Gold US$1217/oz vs US$1233/oz on Friday
Gold ETFs 56.7moz vs US$56.7moz on Friday
Platinum US$952/oz vs US$983/oz on Friday
Palladium US$562/oz vs US$574/oz on Friday
Silver US$14.98/oz vs US$15.41/oz on Friday

Base metals:
Copper US$ 4822/t vs US$4890/t on Friday
Aluminium US$ 1537/t vs US$1541/t on Friday
Nickel US$ 8295/t vs US$8490/t on Friday
Zinc US$ 1860/t vs US$1839/t on Friday
Lead US$ 1740/t vs US$1731/t on Friday
Tin US$ 16600/t vs US$16550/t on Friday

Energy:
Oil US$38.4/bbl vs US$40.3/bbl on Friday
Natural Gas US$1.978/mmbtu vs US$1.960/mmbtu on Friday
Uranium US$27.80/lb vs US$28.05/lb on Friday

Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$53.2/t vs US$52.7/t
Thermal coal (1st year forward cif ARA) US$41.1/t vs US$42.4/t on Friday

Other:
Tungsten - APT European prices stood at $170-185/mtu vs $168-185/mtu last week

Company News

Condor Gold (LON:CNR) 40.5p Mkt Cap 18.6m 2.6m Fund raising and introduction of new investor
Condor Gold reports that it is raising 2.578m through a proposed issue of 6.445m new units at a price of 40p/unit. Each unit comprises one share and 2/3rds of an unlisted warrant entitling the holder to purchase an additional share at a price of 60p/share within a period of 24 months.
The Canadian mining entrepreneur Ross Beatty has subscribed for 1.5m of the issue giving Mr Beatty a 7.18% holding in Condor Gold post the placement. In addition 'The Company welcomes a specialist resource fund managed by an affiliate of Sprott Inc. as a shareholder.'
The funds 'will be used to fully permit Mina La India in Nicaragua pay the remaining US$670000 for the purchase of the Espinito-Mendoza concession secure the surface rights for the rural land that host and surround the future mine infrastructure and continue work to demonstrate the significant exploration upside of the 2.4m oz gold resource at 4.0g/t gold at La India Project.'
Conclusion: The placing provides a financial base to enable the future progression of the promising La India project. The inclusion of a significant mining specialist investor should add impetus to the advancement of the project.

Gemfields (LON:GEM) 45 pence Mkt Cap 245m Lusaka Emerald and Amethyst auctions.
Gemfields has announced the results of its recent auction held in Lusaka between 30th March to 3rd April. The emerald auction realised US$33.1m from the sale of 469000 carats of high quality emeralds. The auction had offered a total of 0.56m crats of emeralds for sale of which 89% were sold.
The average sale price of US$70.68/ct represents a new record approximately 21% higher than the US$58.42/ct realised at the previous auction held in Singapore in early September 2015 and approximately 39% above the average US$51/ct realised from the sale of 3.2m carats in the preceding 5 auctions.
As well as emeralds higher quality amethyst from Kariba Minerals operation (50% owned by Gemfields) were also sold in Lusaka. The auction realised a total of US$0.22m on the sale of 6.6m carats (an average price of US$3.26/ct) with 70% of the 9.4m carats offered being sold.
The next auction is expected to take place in Jaipur during May and is 'anticipated to be predominantly comprised of lower quality emerald and beryl from the Kagem emerald mine in Zambia.'
CEO Ian Harebottle commented 'Demand for and prices of emeralds clearly remain as robust as ever and gemstone mining represents one of the healthier segments of the sector. We're delighted that in collaboration with our partners the Government of the Republic of Zambia the Kagem and Kariba operations continue to perform strongly.'
Conclusion: Gemfields' emeralds are attracting robust prices. The company is indicating that its next sale in Jaipur in May is of the lower quality stones perhaps in part representing that portion of the Lusaka offering which did not sell so we would not expect to see the record prices of the Lusaka sale repeated in Jaipur nonetheless Gemfields has established a solid market presence.

Polymetal (LON:POLY) 664.5 pence Mkt Cap 2.82bn US$100m acquisition of the Komarovskoye gold mine in Kazakhstan
Polymetal reports that it has concluded a binding agreement with the Glencore subsidiary Kazzinc to acquire the Komarovskoye gold mine located in north western Kazakhstan. The mine is approximately 187 km by rail from Polymetal's Varvarinskoye gold mine and has been in operation since 2006.
The mine has been selling primary ore to Varvarinskoye since 2010 and 'A total of over 1Mt at an average grade of 2.5 g/t have been processed at Varvara in 2010-2013 with average recovery of 88%.'
The mine has a JORC compliant inferred resource of 28mt at an average grade of 1.5 g/t gold (1.4m oz) to a depth of 280m. Mineralisation is known however to extend to 450m depthand Polymetal expects to produce a JORC reserve estimate by the end of 2016.
Polymetal expects to rail up to 1mtpa of ore from Komarovskoye for processing at Varvarinskoye increasing production by 'approximately 70Koz at lower cash costs. Komarovskoye ore will partially replace the lower-grade own feed at the Leach Circuit and will significantly extend its life of mine.'
The transaction is expected to be satisfied in cash for US$100m from the company's existing cash balances and available credit facilities. In addition the vendor will receive a deferred consideration in the form of a quarterly royalty on gold sales above US$1250/oz. The total royalty is capped at US$80m
Conclusion: The acquisition of Komarovskoye should extend the life at Varvarinskoye. The ore is known to be treatable at the Polymetal plant and seems likely to supplant lower grade material in the existing plant feed. For Glencore which is undertaking group-wide debt reduction the disposal of a non-core asset for cash is a pragmatic solution which would seem to benefit both parties.