Today's Market View - Kibo Mining, Petra Diamonds
Date
7/10/2016 9:20:22 AM
(MENAFN- ProactiveInvestors - UK) SP Angel, Fri
Kibo Mining (LON:KIBO) Mbeya Mining Definitive Feasibility Study
Petra Diamonds (LON:PDL) Kimberley area joint venture
StratMin Global Resources (LON:STGR) Stratmin are selling their Graphite mine in Madagascar for $15.25m
Dow Jones Industrials -0.13% at 17,896
Nikkei 225 -1.11% at 15,107
HK Hang Seng -0.79% at 20,543
Shanghai Composite -0.95% at 2,988
FTSE 350 Mining +1.62% at 11,248
AIM Basic Resources -0.36% at 2,051
Economic News
European markets are little changed this morning as investors are expecting the US NFP report to be released later today.
Estimates are for jobs to pick up growth pace coming in at 180k in Jun, up from dismal 38k recorded in May.
Brent is up $0.4/bbl and trading at $46.8/bbl after losing nearly 5% yesterday after government data showed inventories dropped 2.2mbbl last week, less than the forecast 2.5mbbl and the 6.7mbbl decline reported by the API.
Meanwhile, US oil production continued to slide losing 2.3% from the previous week and coming in at 8.4mbbl/day.
Japanese yen is trading higher driving local equities lower with voters heading to the polls on Sunday for an upper-house elections.
US
Date Index Period Actual Expected (Bloomberg) Previous
Monday Bank Holiday
Tuesday Factory Orders May -1.0%mom -0.8%mom 1.8%mom (revised from 1.9%mom)
Factory Orders (ex Auto) May 0.1%mom 0.3%mom (revised from 0.5%mom)
Wednesday ISM Services PMI Jun 56.5 53.3 52.9
FOMC Minutes
Thursday ADP Employment Change Jun 172k 160k 168k (revised from 173k)
Weekly Jobless Claims 254k 269k 270k (revised from 268k)
Friday NFP Jun 180k 38k
Unemployment Rate Jun 4.8% 4.7%
Av Hourly Earnings Jun 0.2%mom/2.7%yoy 0.2%mom/2.5%yoy
Source: Bloomberg
China The government is considering helping 10 of its state-owned enterprises with Sinosteel Corp, the nation''s largest steel trader, being one of them, Bloomberg reports.
Japan Wages post the first decline in a year in May adding to concerns over the feasibility of achieving the 2% BoJ inflation target.
Labour earnings: -0.2%yoy v 0.0%yoy (revised from 0.3%mom) in Apr and 0.5%mom forecast.
Excluding inflation (or deflation rather) wages climbed 0.2%mom in May, down from 0.4%yoy in Apr (revised from 0.6%yoy).
Germany Trade data fall short of expectations in May with exports recording the first drop in four months.
Exports: -1.8%mom in May v 0.1%mom in Apr and 0.4%mom forecast.
Imports: 0.1%mom v -0.3%mom in Apr and 0.7%mom forecast.
UK Consumer confidence fell the most in 21 years as measured by a special post-referendum survey conducted from Jun 30 to Jul 5.
The GfKs index dropped to -9 from -1 earlier in Jun.
Leavers were less pessimistic about the economic outlook than Remainers with sub-indices for two groups reported at -5 and -13, respectively.
Six of 10 respondents to the survey of nearly 2,000 people expected the economic situation to worsen in the coming year, up from 46% in the Jun report.
Philippines The government is expecting to complete the audit of nation''s mining operations in three to four weeks with miners not complying with environmental standards to be closed down.
DRC Authorities will suspend VAT on imports for mining companies in a move to support troubled local miners, Finance Minister said.
The government will halt the collection of taxes on imports in the mining industry for 12 months to clear tax arrears owed by the government to local operators after the government ordered to stop reimbursing VAT in Apr.
The total outstanding amount by the government to firms in VAT rebates stands at $750m.
Currencies
US$1.1079/eur vs 1.1086/eur yesterday. Yen 100.65/$ vs 101.10/$. SAr 14.709/$ vs 14.615/$. $1.295/gbp vs $1.298/gbp.
0.750/aud vs 0.754/aud. CNY 6.688/$ vs 6.683/$ - Renminbi strengthens following fall of 1.5% since the Brexit vote
Commodity News
Precious metals:
Gold US$1,355/oz vs US$1,367/oz yesterday
Gold ETFs 64.2moz v 64.3moz yesterday ETF sales pull back as investors take profits in gold.
Chinese buyers hold back as prices rise but are expected to renew purchases if gold prices fall in Renminbi terms.
Recent weakening of the Renminbi may also have some impact on Chinese buying trends
Platinum US$1,080/oz vs US$1,086/oz yesterday
Palladium US$605/oz vs US$609/oz yesterday
Silver US$19.66/oz vs US$20.10/oz yesterday
Base metals:
Copper US$ 4,696/t vs US$4,765/t yesterday
Aluminium US$ 1,644/t vs US$1,657/t yesterday
Nickel US$ 9,700/t vs US$9,855/t yesterday
Zinc US$ 2,101/t vs US$2,126/t yesterday
Lead US$ 1,819/t vs US$1,847/t yesterday
Tin US$ 17,525/t vs US$17,670/t yesterday
Energy:
Oil US$46.9/bbl vs US$49.2/bbl yesterday -
Natural Gas US$2.759/mmbtu vs US$2.807/mmbtu yesterday
Uranium US$26.50/lb vs US$26.45/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$51.9/t vs US$50.9/t
Iron ore Australia cut its iron ore prices forecasts for 2017 by 205 to $44.8/t on a supply glut and weakening steel production in China, Department of Industry, Innovation and Science said in a quarterly report.
2016 estimates were little changed at $44/t compared with $45/t forecast in Mar.
Steel China Steel Exports climbed 6.4%yoy to a record 46.3mt in the first five months of the year.
Thermal coal (1st year forward cif ARA) US$58.0/t vs US$57.9/t yesterday
Other:
Tungsten - APT European prices dropped to $185-210/mtu vs $200-220/mtu from the previous week
Company News
Kibo Mining (KLON:IBO) 5.6 pence, Mkt Cap 19.9m Mbeya Mining Definitive Feasibility Study
Kibo Mining has announced the completion of the Mining Definitive Feasibility Study (MDFS) for its Mbeya coal-to power project in Tanzania.
The new study updates the Mining Pre-Feasibility Study (MPFS) released in August 2015 in the light of updated mineral resource estimates and pit optimisation studies.
The company comments that the MDFS reconfirms ''the Mbeya Coal Mine as a robust project with strong financial and commercial indicators'' including an improved IRR of 69.2% compared with the MPFS estimate of 53.9% and a 54% reduction of the peak funding requirement to US$17m compared to the earlier projection.
The updated mining study also envisages a 23% reduction in the overall coal requirement for the life of the plant as a result of improved precision in the mining method which is able to deliver a more precise range of thermal values to the power plant. The reduction in the total volumes required from the mine delivers a reduction in the overall environmental impact and drives reduced costs.
Improved control in the mining method has eliminated the need for coal washing which is expected to contribute to the reduction of environmental impact, while the improvement in the overall coal quality as a result of the mining improvements is expected to reduce emission levels from the power plant.
The company has now completed its feasibility work on both the mining and power plant aspects of the project and is now working to the delivery of a the combined Integrated Bankable Feasibility Study.
Conclusion: The conclusion of the detailed feasibility work on both the power plant and the mining aspects of the Mbeya Coal to Power Project and the involvement of the major Chinese based EPC contractor, SEPCO III in the power plant advance a project which has the potential to help address a significant shortfall in power generation capacity in Tanzania.
Petra Diamonds (LON:PDL) 114.5p, Mkt Cap 600.2m Kimberley area joint venture
Petra Diamonds reports a previously announced joint venture agreement combining its underground operations with Ekapa Mining''s tailings retreatment operations and Kimberley Mines'' tailings operations held via an existing 50.1% Ekapa Mining:49.9% Petra owned tailings retreatment operations).
The joint-venture became effective on 1st July and is held 75.9% by Petra Diamonds and its BEE partners and 24.1% by Ekapa Mining.
Chief Executive, Johan Dippenaar, commented ''The KEM JV is expected to bring significant synergies to the operations at Kimberley, including the ability to increase throughput and reduce operating costs thereby extending the operation''s mine life.'' Mr Dippenaar also remarked on the transaction''s benefits in terms of providing ''a sustainable future for the diamond mining industry in Kimberley, which will benefit the Kimberley Mines workforce and local community.''
The company plans to update its production guidance, presumably for the year to June 2017, in the light of the transaction when it releases its financial year trading update on 25th July. In April, on announcing its Q3 production results, the company upgraded its guidance for the year to 30th June to 3.6-3.65m carats
StratMin Global Resources (LON:STGR) 1.6p, Mkt Cap 2.7m Stratmin are selling their Graphite mine in Madagascar for $15.25m
StratMin Global are selling their key asset, a graphite mine in Madagascar to Bass Metals for up to A$15.25m through a combination of cash and shares in Bass Metals and a net smelter royalty as previously announced on 26 May.
The disposal is conditional on the approval of independent shareholders at a general meeting of the company on 29 July in London.
Payment is structured as follows:
o A cash payment of A$1,500,000 (approximately 735,000), in cash;
o An equity payment of A$8,750,000 in Bass shares in the following 3 tranches:
o A$750,000 worth of Bass shares at a price of A$0.01 per share upon execution;
o A$3,000,000 worth of Bass shares upon achieving production output of 1,250t of graphite concentrate over three consecutive months ("Tranche 2"); and
o A$5,000,000 worth of Bass shares upon achieving production output of 2,500t of graphite concentrate over three consecutive months ("Tranche 3").
o A net smelter royalty of 2.5% capped at A$5,000,000 beginning six months after execution of the Proposed Disposal.
o Base Metals are ASX listed and according to their website are interested in exploration and polymetallic resources in Tasmania as well as diversifying its interests more recently into exploration in Turkey.
o Stratmin recently reported the completion of a successful exploration program on the Mahefadok area next to the existing Loharano graphite mine where Stratmin are producing a proportion of 94% grade carbon in graphite
o Importantly the team reckon the operation is capable of sustaining a medium scale mine and flake graphite processing plant although the process plant will need some upgrading for longer term consistent and continuous operation.
o The good news is that StratMin now have the confidence to move to a BFS for a potential 12,000tpa high-grade flake graphite mine and processing plant.
o Stratmin have JORC compliant resources of over 200,000t of natural flake graphite in production at the Loharano mine.
o The company sold 150 tons of graphite in February 2015 and has proven its ability to its offtake partner in the production of >94% carbon in graphite.
o It should be relatively easy to develop a second small mine to take production to 12,000tpa and maybe on to 30,000tpa in time
Conclusion: It is interesting that StratMin should sell its 93.75% stake in its key asset after so much time taken to develop the project and establish production. Shareholders should question the rationale for the move.
SP Angel