Today's Market View Including: Anglo Asian Mining, Asiamet Resources, Aurasian Minerals, Eurasia Mining, Graphene NanoChem, Rambler Metals
Date
5/26/2016 7:42:19 AM
(MENAFN- ProactiveInvestors - UK) SP Angel, Wed
Anglo Asian Mining* (LON:AAZ) Cash costs cut on stronger production and weaker manat; stronger 2016 outlook reiterated
Asiamet Resources (LON:ARS) Moving to Resource Definition Drilling at BKM
Aurasian Minerals (LON:AUM) Option on Serbian gold project
Eurasia Mining (LON:EUA) Contract mining to start at West Kytlim
Graphene NanoChem (LON:GRPH) commercial application of PlatSurF oilfield addative
Rambler Metals (LON:RMM) Third Quarter Production increases
Lithium Breathable lithium Air batteries offer 5-10x power density in next five years
The development is all down to a new catalyst called dimethylphenazine developed by a team at UT Dallas along with researchers at Seoul National University
Nissan which is to build its next generation of battery modules and electric vehicles in Sunderland, UK announced earlier this week expectations to more than double the range of its electric vehicles within 10 years.
In the meantime new figures show that China tripled lithium-ion battery production last year with >$400m invested in the lithium battery sector already this year.
China is reported to have produced some 5.6bn li-ion cells last year with a capacity of around 15.7GWh.
Equity markets are trading higher this morning following strong performance in the US and Asia.
US stocks climbed led by gains in financial and tech names with S & P500 up 1.4% posting the best one-day run since Mar 11. Nasdaq and Dow were up 2.0% and 1.2% respectively.
US$ index is slightly off this morning but continuing to trade around the strongest level since Mar/16.
Gold prices are off this morning (-0.4%/-US$4.6/oz) trading at US$1,224/oz extending the losing streak dragged by the strengthening US$.
Oil prices are up this morning on the back of the API numbers showing a 5.1mmbbl drop in US stockpiles last week.
Crude climbed 1.3% today and is currently trading at US$49.2/bbl, closing the gap with this year's highest reading of US$49.3/bbl recorded last week.
China manufacturing sector acquiring technology
China is seen buying technology and not just resources these days as the nation moves to shift its focus towards value added production.
China overtook the US in the first four months of this year in terms of technology acquisitions at US$65.7bn spent with a 45% market share of global technology M & A
The US by comparison, spent US$45.6bn on deals representing 31% of the technology M & A market
Vale to cancel HK listing
Bloomberg report that Vale, the world's largest iron ore producer is going to cancel trading in its HK listed depository receipts
Just 1.8m of Vale's depository receipts traded over the last year vs 7.38bn equivalent ADRs listed in the US and 1.87bn shares in the Brazil listed stock
Dow Jones Industrials +1.22% at 17,706
Nikkei 225 +1.57% at 16,757
HK Hang Seng +2.71% at 20,368
Shanghai Composite -0.23% at 2,815
FTSE 350 Mining +1.22% at 8,929
AIM Basic Resources -0.43% at 1,900
Economic News
US Markit services and composite PMIs are due later today with estimates for a non-manufacturing sector to grow stronger in May offsetting some negative effects of the industrial segment.
On Monday, manufacturing PMI came in at the lowest level in years (50.5 v 50.8 in Apr and 51.0 forecast) on slowing orders and falling exports.
Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Monday Markit Manufacturing PMI May 50.5 51.0 50.8
Tuesday New Home Sales Apr 16.6%mom 2.4%mom -1.3%mom
Wednesday Markit Services PMI May 53 52.8
Markit Composite PMI May 52.4
Thursday Weekly Jobless Claims 275k 278k
Durable Goods Orders 0.5%mom 0.4%mom
Durable Goods Orders (Core) 0.3%mom -0.3%mom
Capital Goods Orders (ex Air) 0.3%mom -0.8%mom
Friday Q1 GDP (2nd reading) 0.9%qoq 0.5%qoq (1st reading)
Core PCE (2nd reading) 2.1%qoq 2.1%qoq (1st reading)
Source: Bloomberg
China The PBoC lowered the reference renminbi rate to the lowest since Mar/11 as the greenback strengthened due to a revision in the Fed rate hike expectations.
Germany A set of economic data show an improved consumer and business sentiment through May-Jun.
GfK Consumer Sentiment: 9.8 in Jun and 9.7 in May and forecast.
Consumer confidence has been on a rising trend since the start of the year helped by low interest rates and increasing wages.
Private consumption together with business investments were main drivers of GDP growth through Q1/16 (0.7%qoq/1.3%yoy).
The economy expanded the most in two years through Q1/16.
IFO Business Current Assessment: 114.2 in May v 113.2 in Apr and 113.3 forecast.
IFO Business Expectations: 101.6 in May and 100.5 in Apr and 100.8 forecast.
Russia The government placed US$1.75bn of Eurobonds marking the return to international debt markets despite US and EU sanctions remaining in place.
Bonds yield 4.75% with a 10-year maturity.
The placement was oversubscribed with US$7bn bids recorded and more than 70% of issue placed with foreign investors.
The government may potentially place additional US$11.25bn of Eurobonds by the end of 2016.
Greece Creditors reached an agreement required for the release of 10.3bn of aid funds to Greece starting from 7.3bn due next month.
Funds would mark the first cash injection since the end of 2015 and is expected to see Athens through Oct.
Debt restructuring has been postponed until the end of the bailout programme is set to expire in 2018.
Importantly, the decision allows Germany to negotiate concrete debt relief options post elections due in 2017.
Currencies
US$1.1144/eur vs 1.1187/eur yesterday. Yen 110.24/$ vs 109.57/$. SAr 15.650/$ vs 15.740/$. $1.464/gbp vs 1.459/gbp
0.719/aud vs 0.716/aud. CNY 6.562/$ vs 6.555/$
Commodity News
Precious metals:
Gold US$1,224/oz vs US$1,244/oz yesterday Azerbaijan has recorded a significant increase in gold reserves on the back of increased exploration activity and upgrades to the drilling rigs base, Minister of Ecology and Natural Resources said in a local interview.
Gold ETFs 59.3moz unch v 59.4moz yesterday small slippage since big jump in ETF holdings on Monday
Platinum US$1,002/oz vs US$1,008/oz yesterday
Palladium US$536/oz vs US$547/oz yesterday
Silver US$16.26/oz vs US$16.30/oz yesterday
Base metals:
Copper US$ 4,627/t vs US$4,586/t yesterday -
Aluminium US$ 1,551/t vs US$1,555/t yesterday
Nickel US$ 8,395/t vs US$8,365/t yesterday
Zinc US$ 1,836/t vs US$1,824/t yesterday
Lead US$ 1,655/t vs US$1,644/t yesterday
Tin US$ 15,655/t vs US$15,795/t yesterday
Energy:
Oil US$49.4/bbl vs US$48.0/bbl yesterday
Natural Gas US$1.982/mmbtu vs US$2.070/mmbtu yesterday
Uranium US$28.15/lb vs US$28.50/lb yesterday
Bulk
Iron ore 62% Fe spot (cfr Tianjin) US$48.3/t vs US$47.8/t The iron ore trading on China's Dalian Commodity Exchange fell 2.5% today to a 10-month low of US$53.4/t.
Thermal coal (1st year forward cif ARA) US$47.4/t vs US$46.7/t yesterday China thermal coal imports fall 18.8% yoy to 7.11mt in April (Platts)
Steel - prices in China continue to fall with October delivery prices falling by >6%.
Other:
Tungsten - APT European prices stood at $213-225/mtu vs $215-225/mtu
Company News
Anglo Asian Mining* (LON:AAZ) 10.8p, Mkt Cap 11.5m Cash costs cut on stronger production and weaker manat; stronger 2016 outlook reiterated
Record gold production of 72.0koz (2014: 60.3koz) posted in 2015.
Gold sales (post 12.75% PSA) amounted to 63.9koz (2014: 50.6koz) at an average gold price of US$1,161/oz (2014: US$1,267/oz).
Group revenues totalled US$78.1m (2014: US$68.0m) benefiting from the sale of gold/silver dore bars as well as SART and flotation concentrates.
Operating cash costs (C1) totalled US$724/oz (2014: US$971/oz) on the back of stronger gold production and the currency depreciation.
EBIT came in at US$3.2m (2014: -US$8.9m) as higher DA charge, a US$6.8m fall in inventories and a US$3.3m decline in capitalised waste stripping costs contributed to a 9.7% increase in cost of sales (US$75.2m v US$68.5m in 2014).
EBITDA climbed 85% to US$18.7m (2014:US$10.1m).
The Company posted a positive FCF of US$3.4m (2014: -US$6.9m) despite spending US$14.3m in capex (2014: US$16.3m).
The capex breakdown includes US$6.6m on waste stripping, US$3.0m tailings dam works, US$3.2m on flotation plant and US$0.9m on Gadir mine development.
Given US$10m in debt repayment completed through the year under the ATB loan, the Company refinanced some of its liabilities with net debt coming down slightly to US$49.0m (2014: US$52.4m).
Gold and copper production targets for 2016 reiterated at 72-77koz and 1.7-2.1kt (2015: 1.0kt), respectively.
2016 outlook remains positive as the Company is expected to benefit from flotation plant copper concentrate sales and a weaker national currency.
The latter is estimated to generate US$13m in cost savings through 2016 based on the USDAZN 1.5 exchange rate (1.49 current spot).
Conclusion: While the 48% manat depreciation against the US$ last year has been a massive tailwind for the Group's financial performance, the management has also worked on the sustainability of the business by adding a small underground operation to the portfolio (Gadir) and the commissioning of the new floatation circuit at Gedabek. Strong 2016 production outlook will need to be accompanied by an improvement in operating margins as current 24% EBITDA margins are running low given debt repayments schedule of the Group. We are looking forward to Company updates on the production and costs side of Azerbaijan operations.
*SP Angel act as Nomad and Broker to Anglo Asian Mining
Asiamet Resources (LON:ARS) 2.325 pence, Mkt Cap 13.4m Moving to Resource Definition Drilling at BKM
Asiamet Resources reports that, following the positive outcome to the Preliminary Economic Assessment (PEA) of its Beruang Kanan Main copper discovery in Central Kalimantan, it is now proceeding with resource definition drilling as part of a Feasibility Study.
The drilling, which is expected to amount to approximately 9000 metres in 110 diamond drill holes, is aimed at upgrading 'the majority of the current Inferred Resource of 49.7 million tonnes grading 0.6% Cu to the Measured and Indicated Resource categories. Indicated resources at BKM currently contain 231m lbs in 15.0M tonnes grading 0.7% Cu at a 0.2% reporting cut.'
The company intends to report results from the drilling as they become available and to be able to generate an updated resource estimate by the end of Q3 2016.
In addition to the resource drilling and environmental and permitting work, the company is planning geotechnical drilling which should help to define the open-pit design parameters and large diameter core drilling to provide material for a programme of metallurgical testing.
Conclusion: Asiamet is moving systematically towards a feasibility study on the BKM deposit in Indonesia. The infill drilling programme should generate a resource upgrade as inferred resources are moved into indicated or measured. We look forward to drilling results as they become available
Aurasian Minerals (LON:AUM) 0.65pence , Mkt Cap 3.0m Option on Serbian gold project
Aurasian Minerals reports that it has agreed an option to acquire an 80% interest in the Gokcinica gold project in southern Serbia from the Rockstone Group.
The agreement relates to two adjacent permits with a total area of 110 sq km located in an area of historic mining some 5 km north of the town of Josaniska Banja.
Historic work in the area and recent exploration by 'a major copper company' points to the possibility of 'porphyry and epithermal style mineralisation as well as deeper level replacement base metal and gold deposits'.
Previous mapping, soil geochemistry and drilling over a 6km long section of the licences by Euromax during the period 2006-2008 'intersected multiple gossan and massive sulphide intervals, one of which reported 12.4 metres at 1.5% copper, 1.4% lead, 0.8% zinc, 62 g/t silver and 1.6g/t gold. This program also defined a 3km by 2km magmatic complex at the southern end of the trend which remains undrilled.'
The agreement with Rockstone comprises an initial 10,000 payment and the issue of 2m Aurasian shares within a 30 days period. In addition, Aurasian will pay a finder's fee of 20,000 and 5 million shares to an un-named party. Following the initial payments, Aurasian can earn a 51% interest by completing a minimum of US$500,000 of exploration , including at least 1000m of reverse circulation or diamond drilling plus mapping, trenching sampling and geophysics / geochemistry as appropriate within 2 years.
The agreement allows for Aurasian to increase its holding to 70% of the Gokcinica project by completing a pre-feasibility study within 5 years. An 80% interest accrues if Aurasian completes a Bankable Feasibiilty Study 'within the time frame of the exploration permits, their renewals or conversion to a mining permit.'
Eurasia Mining (LON:EUA) 0.6p, mkt cap 7.8m Contract mining to start at West Kytlim
(West Kytlim 70% SKRS, 30% Eurasia by sales)
Eurasia Mining has signed a deal with SKRS 'OOO SK Region-Story for the mining of the West Kytlim alluvial platinum property in Russia.
The agreement gives 70% of all sales to SKRS leaving Eurasia with 30% which looks like a good deal for Eurasia on the surface.
SKRS will do all the work involved with the mining and processing while Eurasia's local subsidiary 'KK/Eurasia' will be responsible for continuing exploration work and the conversion of resources to reserves.
KK/Euraisa will also appoint the processing laboratory manager on site who will be responsible for the precious metal recoveries.
Conclusion: It's great to see Eurasia are finally moving into site construction with a contractor in place. Let's hope it doesn't take 20 years to develop the next one.
Graphene NanoChem (LON:GRPH) 14.25, mkt cap 16.6 commercial application of PlatSurF oilfield addative
Graphene NanoChem plc is a nanotechnology commercialisation company that designs, formulates, manufactures and markets a range of nano-enhanced solutions, from chemicals to performance materials with improved performance characteristics, focusing on the oil and gas sector.
The company today announces that following successful field trials it has received a firm commitment for the deployment of PlatSurF, its oilfield recovery additive in a two year 16-18 well drilling programme in Myanmar.
The first purchase orders are valued at US$198,864 for use in four wells
The company published an interesting abstract on the application of nano-graphene in improving drilling fluids performance last December
'Graphene enhanced lubricant improve the low end rheology of the 13.5 lb/gal HTHP WBM in the range of 200% without affecting the Plastic Viscosity and Yield Point readings, which is good to improve the hole cleaning and weighting materials suspension capabilities. API Fluids Loss is improved with the addition of the graphene enhanced lubricant, this could be the synergization between the nano graphene materials with the fluids loss control polymers'
http://www.graphenenanochem.com/system/files/press-release/pdf/Nano%20Graphene%20Application%20Improving%20Drilling%20Fluids%20Performance.pdf
Debt restructuring: The group recently completed a restructuring of around 16m its debt which was held under a short term arrangement with MDV into a longer term deal with a two year repayment moratorium and repayment obligations mapped against the growth plan of the group. The company also agreed to principal to repay 12m of long term debt held with Bank Pembangunan Malaysia Behad and Bank Rakyat, through the proposed disposal of non-cores assets with initial discussions said to be going well in a statement on 11 April. The debt bears an effective interest rate of 8%pa.
It is interesting that such a small company is holding so much debt.
The company has not yet reported its 2015 accounts. Profits fell to a loss of 0.2m for the six months to end June 2015 as sales fell to 7.0m from 20.4m a year earlier.
The company listed in 2013 and is headquartered in Malaysia.
Rambler Metals (lon:RMM) 3.75 pence, Mkt Cap 5.7m Third Quarter Production increases
Rambler Metals reports third quarter production for the 3 months ending 30th April of 4,530 tonnes of copper concentrate (1222 tonnes of contained copper) 'representing a 25 per cent increase over Q2/16 and a 14 per cent increase over Q3/15 results.'
The increase is ascribed to 'increases in mine and mill production, with ore from the massive sulphide zones blended with increasing amounts of Lower Footwall Zone ('LFZ') ore '.
Copper recovery for the quarter remained stable at 96.3% (previous quarter - Q2: 96.4%) while precious metals recoveries dipped slightly to 68.0% (Q2: 75.3%) for gold and 70.7% (Q2: 75.3%) for silver
The company is confident that it remains on track to achieve forecast guidance for the full year of treating 235-250,000 tonnes of ore to produce 17-21,000 tonnes of concentrate containing 4,500-6,000 tonnes of copper, 5500-6000 oz of gold and 42-57,000 oz of silver.
As the company moves ahead with its longer term plan to move to 1250tpd production capacity, 'a new ball mill will be installed in parallel with the existing circuit.' We estimate that the current quarter mill throughput of 56,695 tonnes averaged 630tpd so the installation of the new mill will represent a doubling of the company's processing capacity.
Conclusion: Rambler Metals is building up its production capacity and throughput in line with the long term development plan. Production guidance remains intact.
SP Angel