IMF to raise its world economic growth forecasts in three weeks, MD Christine Lazard said.
• A revision is said to be driven by more confidence in the global recovery and an improved economic outlook for the US.
• Currently, the IMF expects world economy to grow 3.6% this year.
US – health and safety issues come to the fore as 15 miners are killed in mines in the last quarter of 2013
• The number of fatalities in US mining more than doubled year on year in the US in the last quarter of last year.
• The number, while still relatively low is highlighted by a reduction in the number of inspectors watching over the industry.
• The inspection department is suffering from budget cuts effected by the Obama Administration and is naturally kicking up a bit of a fuss.
• A series of major incidents in the US including two chemical plant explosions in Louisiana plus grain explosions in Indiana and a gas tank blast in Florida not to mention the massive West Chemical and Fertilizer plant explosion in West Texas serve to highlight the problem.
• Part of the problem is probably down to older plants being run on fewer staff and lower investment levels due to the impact of the financial crisis.
• By comparison China killed around 1,049 people in mining accidents according to official figures a vast improvement on the 1,300 fatalities seen in 2012 and the 1,973 in 2011. Unofficial figures are somewhat higher.
Bingham Canyon landslide triggered earthquakes according to study
• A new report from scientists in Utah claims that the gigantic land slide at Rio Tinto’s Bingham Canyon copper mine triggered some 16 earthquakes
• The landslide moved at 70mph hitting speeds of over 100mph triggering earthquakes as it developed
• The mine is possibly the world’s largest ever man made excavation at nearly 1km depth
• The landslide is thought to have triggered a 2.5 Richter scale earthquake shortly after the event
• While the land slide was expected the sheer scale of the pit wall failure caught experts by surprise burying some machinery which was thought to have been parked be out of harms way.
US - Trade deficit dropped to a four year low in Nov on lower imports of crude oil. Trade balance came in at -US$34.25bn, nearly US$6bn less than forecast.
• The 12-month average oil imports dropped to a 17-year low of 7.7m barrels, highlighting growing US energy independence amid growing shale gas production.
• Ahead of government released non-farm payrolls this Friday, a private estimate prepared by ADP Inc. (Automatic Data Processing) is forecast to come in at 200k in Dec, up from 215k in Oct.
• Official NFPs are estimated to come in at 195k, slightly down on 203k in Nov.
• Fed will release its 17-18 Dec meeting minutes. The FOMC decided to cut its monthly bond purchases to US$75bn from US$85bn starting in Jan during their last meeting.
China - Inflation numbers will be released tomorrow morning with estimates suggesting price appreciation has slowed to 2.7%yoy in Dec.
• This compares to 3.0% recorded in Nov and is comfortably within the official full-year 3.5% target.
Euro zone - Annual CPI fell to 0.8% in Dec, down from 0.9% in Nov. This compares to the ECB inflation target of 2%.
• The index hit a four-year low in Oct falling to 0.7%.
• Previously, the ECB warned of deflation risks in the euro zone noting a “subdued outlook for inflation extending into the medium term, given the broad-based weakness of the economy and subdued monetary dynamics”.
• The ECB will hold its monetary policy setting meeting tomorrow with expectations for the refinancing rate to remain unchanged at record low of 0.25%.
• Employment report due today may show jobless rate remained at 12.1% in Nov, 0.1pp less than a record high seen in Oct.
Germany - Trade surplus climbed to a near record in Nov, the fact, that is likely to attract more political pressure on Germany to rebalance the economy away from export-led growth and stimulate more spending to help struggling partners in the EU.
• Trade balance came in at €18.1bn compared with €17.9bn in Oct and €18.9bn forecast. The surplus hit a record of €20.3bn in Sep last year.
Indonesia - The government is considering moving the deadline for the unprocessed mineral ores exports ban until 2017.
• The Mining Ministry might propose a regulation that would allow shipments of some ore concentrates for another 3 years.
• Post 2017, companies will only be allowed to export metal or refined material.
• Although, the proposal is said to not include nickel and bauxite concentrates for now.
• Shipments of unprocessed ores are due to be banned from Jan 12 under current regulation. The ban is part of a 2009 mining law aimed at raising the value of the national natural exports.
• Indonesia is the world’s largest exporter of nickel ore, thermal coal and refined tin.
US$1.3601/eur vs 1.3629/eur yesterday. Yen 104.96/$ vs 104.34/$. SAr 10.667/$ vs 10.659/$. $1.641/gbp vs 1.638/gbp
Gold US$1,227/oz vs US$1,239/oz yesterday
• SPDR gold holdings remained unchanged at 794.6t (25,548koz) valued at US$31.4bn.
Platinum US$1,406/oz vs US$1,411/oz yesterday - Zimbabwe budget proposal to increase royalties for platinum miners to over 25%
• The proposed increase in royalty rates gives platinum miners a year’s grace to build one or more platinum refineries or suffer this punitive penalty.
Palladium US$738/oz vs US$735/oz yesterday
Silver US$19.60/oz vs US$20.08/oz yesterday
Copper US$ 7,356/t vs US$7,311/t yesterday
Aluminium US$ 1,783/t vs US$1,775/t yesterday
Nickel US$ 13,528/t vs US$13,561/t yesterday
Zinc US$ 2,051/t vs US$2,033/t yesterday
Lead US$ 2,163/t vs US$2,167/t yesterday
Tin US$ 21,840/t vs US$21,600/t yesterday
• Indonesian tin shipments totalled 13,562t, up 161%mom, in Dec.
• The activity has picked towards the end of the year as more traders adjusted to new regulations and joined the Indonesia Commodity and Derivatives Exchange.
• Previously, the government ruled that exporters of the metal need to trade the commodity through the local exchange before shipping overseas.
Oil US$107.4/bbl vs US$107.3/bbl yesterday
Natural Gas US$4.328/mmbtu vs US$4.340/mmbtu yesterday
Uranium US$34.70/lb (07/01/14) unchanged on the previous close
Iron Ore - US$133.8 (07/01/14) vs US$134.8 (06/01/14) 62% Fe spot (cfr Tianjin)
• Iron ore exports into China from Port Headland, Australia rose 19.4% to 24mt in December from 20mt
• The rise in iron ore exports is particularly impressive despite the cyclone which closed the port at the end of last year and has displaced iron ore exports to China from India and Brazil
Shanghai rebar continues to pull back as sentiment holds back prices.
• The market is concerned that government measures to limit regional borrowing and to further regulate informal lending might hold back construction and development.
Coal – coal futures fall with the March futures falling 25c to $79.25c/t
Shaanxi Coal plans $1.6bn IPO for Shanghai Stock Exchange
• Shanghai Stock Exchange prepares for the biggest IPO in more than two years as Shaanxi Coal Industry is looking to raise CNY 9.83bn (US$1.6bn) later this month.
• Proceeds will be used to fund projects worth CNY 18.3bn, according to a statement from the company.
• Chinese regulators have temporary frozen new share placements since Oct 2012 as the government dealt with fraud and misconduct among advisers and issuers.
• The ban has been lifted on Nov 30.
• More than 700 companies have applied to place shares and are waiting for approval. 50 companies are reported to be ready for the IPO by the end of Jan, the Chinese regulator said.
• Anglo Asian has today released drilling results testing a high grade gold mineralisation 400m north of the operating gold/silver/copper Gedabek mine.
• Best intersections from hole 107 include:
o 5m intersection grading 47.2 g/t gold from 245m to 250m down hole depth
The intersection includes: 1m at bonanza 207.1g/t gold, 42.02g/t silver and 2.86% copper;
• 6m intersection grading 7g/t gold from 277-283m
• 10m intersection grading 3.04g/t gold from 302 to 312m
• Drill hole, no 107, has been driven to a depth of 450m and located in close proximity (c.20m) to previously completed holes 86 and 106.
• Hole 106 drilled in October last year showed impressive results including:
o 233-241m with grades ranging from 4.96g/t (Au) and 14.07g/t (Ag) to 36.19g/t (Au) and 129.27g/t (Ag);
o 296-337m containing 41m at 7.6g/t (Au) including 1m at 101g/t (Au) and 78.7g/t (Ag) at 313m level.
o Management plans to complete two more drill holes for a total of 900m in the area as part of its c.3,000m exploration programme in Q1/14.
o Exploration slowed towards the end of 2013 as the diamond drilling rig was relocated for use within the Gedabek gold mine.
o A geophysical survey is planned for the second quarter to determine future drilling targets.
o The depth of the mineralisation suggests the Company might drive an adit into the side of the Gedabek hill to access this ore.
o Exploration results have so far demonstrated good intercepts, but more drilling is required to define the continuity of the mineralisation in order to consider the area for future mine expansion. Geophysics and additional holes will provide further insight into the potential of the discovered area.
Conclusion: The high grade intersections suggest this area could provide high grade ore from underground mining for blending with run of mine ore from Gedabek to substantially increase the overall value of the mine. Further drilling should confirm the value and overall potential impact of ore from this areas relatively quickly.
* SP Angel acts as Nomad & Broker to Anglo Asian Mining
Goldplat* (LON:GDP) – Board changes as expected
• Mr Hansie van Vreden who joined the board of Goldplat at the end of last year is to take on the role of COO.
• Dr Robert Pitts as previously announced has stepped down from his executive role as part of his retirement.
Conclusion: These changes were expected following the announcement of Dr Robert Pitts retirement and Hansie van Vreden’s appointment to the board. Hansie brings fresh energy and good metallurgical experience to push forward initiatives in the gold recovery business.
The fall in the gold price is likely to have put a strain on the gold recovery operations in the second half of last year (H1 2014) as the company manages contracts negotiated at higher gold prices and will need a strong focus on initiatives to bring costs down.
*SP Angel act as nomad and broker to Goldplat
• Agreements with CMZ have been confirmed on the cash payment of US$3.65m and the exploration commitment of US$5.35m.
• The first payment of $100,000 has been paid of the staged payments over 4 years.
• In addition to the cash payment, CMZ is required to undertake a 6 DC hole programme for a minimum of 4,800m.
• The 4,800m programme has been valued at US$1.35m and a further $4m of investment is required in the project within 4 years.
• Exploration started at the beginning of this year with CMZ on track to start drilling before 31 March 2014 as agreed.
Conclusion: This is a confirmation of a deal agreed at the tail end of last year. Early exploration work shows potential at Ilo Norte for a copper porphyry and it is good that Latin have found a local partner with capital to take the exploration forward as it would have been too expensive for them to pursue on their own. We look forward to news flow once drilling has started.
*SP Angel analysts have visited the Latin Resources Projects including the Ilo Norte project.
Ormonde Mining (LON:ORM) – Permitting Update at Barruecopardo
• The company have received formal written confirmation from the Regional Environmental Department on a positive outcome in the “Report of the Nature Network” (IRNA).
• The IRNA approval states that the Barruecopardo project based on submissions from Saloro, Ormonde’s local subsidiary, will not have any adverse impacts on local biodiversity close to the mine.
• This IRNA approval is a precursor to full environmental approval in the form of the Environmental Impact Declaration (EID) for the project.
• It is expected that the EID will follow the IRNA and will form the basis for the mining exploitation concession.
Conclusion: It is good to see that the environmental impact study has been accepted with respect to local wildlife and flora and fauna. The processing of tungsten is largely a physical process using water with no reagents required for the initial gravity concentration stage and tailings are likely to be largely inert.
This is an important step forward for Ormonde in getting full environmental approval and the basis for an exploitation licence. The company is currently subject to a bid approach from Almonty Industries. Almonty have till the 31 January to either come up with a formal offer or will be prevented from making an offer. The Board has rejected the initial approach which was based on 1 Almonty share for every 12.2 Ormonde shares – this was based on a share price for Almonty of C$1.10 which has since fallen by 17% to C$0.91.
Against progress on the permitting front, the company are now better positioned with funding discussions said to be at an advanced stage.
• The company has recently completed a drill programme at its tungsten project in Zimbabwe.
• 12 DC holes were drilled at a total of 1,300m.
• Quartz veins with visible tungsten mineralisation has been found in wolframite.
• Dill results will be used to update the geological model and resource statement.
• The company completed a PEA at the project in August.
• The PEA showed a capital cost of US$13.5m to develop a 6 year mine producing 192,000 tonnes based on a SAMREC resource of 1.09 Mt at 8.7 kg/t of WO3.