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Today's Market View - Amur Minerals Corporation, Asiamet Resources, DiamondCorp PLC, Sierra Rutile Ltd

Published: 21:17 22 Nov 2016 AEDT

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Amur Minerals Corporation (LON:AMC) – Agreement with the Far East Investment and Export Agency

Asiamet Resources (LON:ARS) – Metallurgical test-work from BKM

DiamondCorp PLC (LON:DCP) Suspended – Business rescue practitioner appointed

Sierra Rutile Ltd (LON:SRX) – Iluka merger cleared

Lundin – artisanal miners rush to Tenke Fungurume

13 clandestine miners have been killed in at the Tenke Fungurume mine site last week following an invasion of the property by artisanal miners.

The timing of this artisanal rush to the Tenke Fungurume mine which involved some 5,000-10,000 miners is interesting

We suspect the rush is related to some form of political interference with the timing potentially related to the agreement by Lundin Mining to sell its 30% stake in the mine to a Chinese group for $1.14bn.  Freeport also agreed to sell its 56% stake to China Molybdenum in May

Gecamines, the DRC state miner which holds a 20% stake in the mine is trying to block the sale

Risk on sentiment is driving metal prices and miners higher.

Four major US equities indices including Dow Jones, S&P500, Nasdaq and Russell 2000 hit record highs since 1999.

Brent climbed 5% yesterday reaching a three-week high on expectations for OPEC to agree a detailed plan to cut output during an official meeting next week.

Copper is up 1.7%/$94/t hovering around the highest in a week with reports demonstrating strong interest in the metal. US money managers hheld the largest net-long copper futures position on record as of Nov 15, according to the CFTC data.

Gold prices increased slightly amid flat US$ index.

Jan iron ore futures jumped 3.3% on the Dalian Commodity Exchange on the back of reports suggesting issues with deliveries of the material due to bad weather. A jump in iron ore is mirrored in steel and coking coal markets.

LME stocks fall as metal is withdrawn from warehouses

Copper stocks fell 4,800t to 242,275t

Aluminium fell 8,050t to 2,144,100t

Zinc fell 75t 445,000t

Nickel stocks rose 1,026t to 367,482t

Tin fell 75t to a relatively modest 3,010t

Lead stocks fell 1,025 to 187,825t

Dow Jones Industrials  +0.47% at 18,957
Nikkei 225   +0.31% at 18,163
HK Hang Seng   +1.43% at 22,678 
Shanghai Composite    +0.94% at   3,248
FTSE 350 Mining   +3.17% at 14,688 FTSE 350 +100% since 1st January
AIM Basic Resources   +1.39% at   2,420 AIM Basic Resources +48% since 1st January

Economic News

Japan – Authorities lifted the most severe tsunami warning issued in the country in the last five years as the risks to life reduced.

A 7.4 magnitude earthquake struck off the coast of Fukushima this night causing no significant damages to residents or onshore infrastructure recorded.

Currencies

US$1.0646/eur vs 1.0646/eur yesterday.   Yen 110.72/$ vs 110.67/$.   SAr 14.091/$ vs 14.230/$.   $1.249/gbp vs $1.235/gbp.     
0.740/aud vs 0.736/aud.   CNY 6.885/$ vs 6.894/$ – Yuan strengthens a touch but remains at an eight-year low vs the US dollar

Commodity News

Precious metals:

Gold US$1,218/oz vs US$1,216/oz yesterday 

Gold ETFs 61.8moz vs 62.1moz yesterday – ETF holdings continue to fall as investors cut lower yield investments in favor of equities and potential rate rise

Platinum US$948/oz vs US$932/oz yesterday – Market deficit has been cut to 170koz in 2016, down from previous estimates for a 520koz shortage, according to the World Platinum Investment Council.

A revision is attributed to softer Chinese jewellery sales on stronger than forecast recycling by retailers.

Global jewellery demand is set to decline 10%yoy this year.

Global deficit is expected to narrow to 100koz in 2017, marking the sixth consecutive annual deficit, with both supply and demand estimated to drop.

Above ground stockpiles are estimated to further come down to 2.1moz (YE16) and 2.0moz (YE17) compared with 2.3moz (YE15).

This equivalent to 14, 13 and 14 weeks of demand respectively.

Palladium US$741/oz vs US$730/oz yesterday 

Silver US$16.87/oz vs US$16.73/oz yesterday

Base metals:   

Copper US$ 5,664/t vs US$5,576/t yesterday –

Aluminium US$ 1,748/t vs US$1,715/t yesterday –

Nickel US$ 11,445/t vs US$11,165/t yesterday –

Zinc US$ 2,627/t vs US$2,586/t yesterday

Lead US$ 2,204/t vs US$2,185/t yesterday

Tin US$ 21,095/t vs US$20,585/t yesterday – Prices may hit $30,000/t in 2018/19 on the back of a market deficit as new supply lags demand growth, ITRI estimates suggest.

Tin market is set to record a 10-15kt deficit this year and same in 2017.
 

China, the world’s largest supplier of the metal, is expected to post a recovery in mine output in 2017.
 

Ore output fell 17.6%yoy in 2015 and is set to decline 6.0%yoy in 2016, according to Yunnan Tin estimates.
 

Indonesia, the second biggest producer, is expected to come in at 60-70kt (2015: 50kt; 2014: 76kt (USGS).

Energy:

Oil US$49.6/bbl vs US$47.5/bbl yesterday 

Natural Gas US$2.981/mmbtu vs US$2.928/mmbtu yesterday

Uranium US$18.50/lb vs US$18.50/lb yesterday – Latest Japanese tsunami is unlikely to accelerate the return to full scale nuclear power generation in Japan.

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$69.0/t vs US$67.3/t 

Chinese steel rebar 25mm US$446.6/t vs US$443.4/t 

Thermal coal (1st year forward cif ARA) US$67.0/t vs US$63.0/t yesterday

Premium hard coking coal Aus fob US$308.8/t vs US$308.8/t – remains unchanged for a week, not sure exactly why?

Ordinary hard coking coal is $270.0/t vs $270.4/t (Dalrymple Bay Coal Terminal)

Other:

Tungsten - APT European prices $198-203/mtu vs $198-203/mtu unch last week – boringly unchanged.  Price will have to start rising sometime soon if Trump goes for growth.

Company News

Amur Minerals Corporation (LON:AMC) 9.1p, Mkt Cap £46.9m – Agreement with the Far East Investment and Export Agency

The Company signed a Financial Advisory Agreement with the government Far East Investment and Export Agency (FEIE).

The FEIE Agency is a newly established organisation, a subordinate of the Far East Development Ministry, responsible for attracting investment and finding strategic partners in local projects.

In particular, the Agency is reported to have access to an extensive network of investors and trading companies in Russia, India and China.

“We will use our core investment banking experience and wide investor network to provide the development of Amur’s Kun Manie nickel project with necessary capital,” Petr Shelakhaev, the head of the FEIE said.

The team will continue cooperation with the Far East Development Fund (FEDF) regarding the Kun Manie infrastructure development

Conclusion: Local authorities remain supportive of the Kun Manie nickel/copper project with the FEIE Agency offering assistance in attracting development funds.

Asiamet Resources (LON:ARS) 2.7 pence, Mkt Cap £17.0m – Metallurgical test-work from BKM

Asiamet has reported results of metallurgical testing on samples from its Beruang Kanan Main (BKM) deposit in central Kalimantan.

The testing addressed two main aspects of the plant; the  crushing characteristics of the ore types within the proposed mining area; and the leachability and potential for the generation of acid drainage.

Tests have shown that “The BKM ore types will require mineral crushing [and will produce] … Relatively low wear rates … for the metal components within the crushing plant.” These characteristics will require low energy within the crushing circuit and are “expected to provide a favourable capital cost outcome for the BKM crushing facilities.”

Geochemical testing of 79 samples of ore and waste has demonstrated “that the mineralogy of the BKM heap leach feed material will be acid generating and limit the need for acid importation to support the processing activities on site. This is considered a favourable outcome for the operating and capital cost requirements at the BKM heap leach facility.”

In our opinion, the acid generating capacity of the ore at BKM, while it clearly offers economic benefits as described, will also require a detailed plan to manage fluid movements within the site area and ensure that any potential for leakage of acidic water to the wider environment is minimised.

Addressing this issue, “Detailed waste and water management plans will be developed to ensure protection of water resources and incorporated into the Feasibility Study and Environmental and Social Impact Assessment (AMDAL) for the project.” The company is planning a second phase of geochemical assessment work to support the continuing assessments.

Conclusion: Testing indicates that crushing and leaching of BKM ore should be relatively low-cost and this work will be incorporated into the feasibility studies currently underway. We look forward to the release of the study which will help provide a view on the economics of the project. Today’s news in addition to the resources drilling programme which is finding shallow mineralisation should have a positive impact.

DiamondCorp PLC (LON:DCP) Suspended – Business rescue practitioner appointed

DiamondCorp which entered into Business Administration last week has appointed Daniel Terblanche of Deloitte & Touche as their business rescue practitioner in accordance with the provisions of section 129 of the Companies Act, 71 of 2008.

The company put the Lace mine into South African Business Administration to protect the asset against its creditors and to preserve the mine for a potential rescue or sale.  Business Administration is the equivalent to Chapter 11 in the US.  The mine is likely to remain closed for more than 12 weeks according to a report on ‘diamonds.net’ which reckons the mine would take more than seven days to pump the production level dry.  That is once the pumps are reinstated.

The mine was forced to take this drastic action following severe flooding in the region which caused the Lace mine to suddenly flood in an event which overwhelmed the mine pumping system and forced its evacuation.

Pictures show water in the historic open pit and water in the decline.  There were two extreme thunderstorms on November 11 which resulted in almost 90mm of rain in just over an hour equivalent to almost a third of annual rainfall at the mine.

Sierra Rutile Ltd (LON:SRX) 34.5p, Mkt Cap £205.5m – Iluka merger cleared

Sierra Rutile and Iluka Resources have announced that the German Antitrust Authority has cleared the merger between the two companies.

In statements released by Sierra Rutile and Iluka Resources the companies stated “The Merger is now expected to become effective and closing is expected to occur on or around 29 November 2016.”

Sierra Rutile’s shareholders have previously approved the merger and  the clearance by the German investigation has removed the impediment to completion of the deal in which Sierra Rutile shareholders are to receive 36p/share in cash.

Australian Strategic Materials signs US$600 million LoI

Rowena Smith, CEO and managing director of Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF), joins Jonathan Jackson in the Proactive studio to discuss the company’ s Dubbo Project, in Central West New South Wales. This project aims to extract and process critical minerals and rare earth...

6 hours, 22 minutes ago