SP Angel – Morning View – Wednesday 20 02 19 Dramatic deficit forecast even as palladium reaches new record
Paul Kettle
SP Angel Research Notes -3 min read
10:45, 20th February 2019

 

SP Angel – Morning View – Wednesday 20 02 19

Dramatic deficit forecast even as palladium reaches new record

MiFID II exempt information – see disclaimer below

  

Anglo Asian Mining (AAZ LN) BUY – 96p (from 108p) – Earnings update

CLICK FOR PDF

Glencore (GLEN LN) – Glencore claim record EBITDA on strong copper mine performance

Landore Resources (LND LN) – BAM Gold Preliminary Economic Assessment

Pan African Resources (PAF LN) – Earnings climb as operations refocus on profitable ounces

Transense Technologies plc (TRT LN) – 2nd mining contract announced this week for mining heavy truck tracking & tyre pressure monitoring

 

 CISRO develops new smelting process to produce soluble phosphate for fertilizer from low value ores

  • International Mining report that CSIRO, the national science agency of Australia has developed a new smelting process which is more economical and eliminates hazardous waste making production more environmentally sustainable.

 

Tesla – unable to meet huge demand for Powerwall battery packs

  • It’s a good problem to have when a company creates extraordinary demand for its products.
  • Tesla’s Model 3 production ramp-up is using up batteries that would have otherwise gone into growing sales of Tesla Powerwall battery packs.
  • The situation suggests further good news for Tesla and ongoing strong growth for the company in autos and in domestic battery instillations.
  • We suspect Tesla may not be looking to supply grid instillations while battery supply is running short..

 

Tump nominated for Nobel Peace Prize

  • The nomination is for positive developments on the Korean Peninsula.
  • Trump has been nominated by two Norwegian lawmakers and also by the Japanese prime minister.

 

Greggs new Vegan sausage roll prompts profits upgrade

  • Greggs profits and shares have taken off since the launch of its new green sausage roll which sells for £1.
  • Maybe Patisserie Valerie might also like to go for some Vegan options: Croque transgender or cruelty-free eggs Benedict etc…, a sure winning menu!
  • Time to pop down to the Harrod’s vegetable butcher – apparently they have the ‘knowledge of an old-fashioned greengrocer’ and the ‘knife skills of a sushi chef.’
  • On another note; Dairy UK have objected to Vegan Cheese – due to its lack of real milk

 

Dow Jones Industrials

 

+0.03%

at

  25,891

Nikkei 225

 

+0.60%

at

  21,431

HK Hang Seng

 

+0.86%

at

  28,472

Shanghai Composite

 

+0.20%

at

   2,761

FTSE 350 Mining

 

+0.57%

at

  19,330

AIM Basic Resources

 

-0.66%

at

   2,150

 

Economics

US – Asian shares climbed to 4.5-months high today on bets for the US and China to negotiate a deal de-escalating their year-long tariff war. MSCI Asia Pacific (ex Japan) climbed as much as 1.1% on Wednesday.

Global trade data worsens as the US negotiates with China

  • Investors expect president Trump to meet Chinese President Xi next month after Chinese annual congress meeting starting from March 5.
  • FOMC January meeting minutes are to be released today as more p0olicymakers are dialling down their rhetoric on the pace of future interest rate increases.
  • New York Fed President John Williams said on Tuesday he was comfortable with the level US interest rates are at currently, and sees no need to raise them again unless growth or inflation shift to an unexpectedly higher growth pace.
  • Updated economic projections and FOMC members rate forecasts are due during the March meeting (19-20Mar).

 

Japan – Overseas shipments dropped more than expected last month in the latest sign of slowing growth momentum in the region amid US/China trade spat.

  • Exports fell 8.4%yoy marking the steepest decline since October 2016 with deliveries to China down 17.4%yoy.
  • The report come on the back of lower exports from South Korea and Singapore released earlier.

 

Turkey – Consumer sentiment drops for third-straight month in February with respondent highlighting concerns over risks of higher unemployment.

  • GDP numbers for Q4 are due next month with market expectations for the economy to have fell in a deep recession following the 1.1%qoq decline in Q3.

 

UK - Honda says plant closure driven by electric vehicle transition due to 'Unprecedented changes'

  • Honda has confirmed it is to close its Swindon car plant in 2021, with the loss of around 3,500 jobs, citing the "unprecedented changes" facing the global auto industry as a result of the emergence of EVs. 
  • The company is acutely aware of new competition in EVs from China and elsewhere and is adopting an ambitious electrification strategy, targeting two thirds of sales to come from EVs and plug-in hybrids by 2030. The move is part of a global restructuring programme designed to step up EV production.
  • A recent move by the EU to remove import tariffs from Japan also removes some of the economic rationale for producing cars in the UK, though the EV restructuring is a bigger factor in all this.
  • The strong, special and long-running relationship between the UK and Japan is likely to cause a return of Japanese manufacturing as the industry restructures.

 

Brazil – ban on upstream tailings dams

  • Brazil has moved to ban the use of all upstream tailings dams for mining projects.
  • The move closes some 84 upstream tailings dams is hardly surprising considering the recent Brumadinho dam disaster where >150 people are still missing.
  • Stabilisation of these dams is a major priority to prevent further loss of life over the longer term and will probably involve dewatering, capping with concrete and further support.

 

UK – Labour party loses eight MPs

  • Resignations from the UK Labour party continue in protest over the leadership of Jeremy Corbyn.
  • Corbyn is reported to be moving quickly to change rules so he can deselect defecting members of parliament.

 

Currencies

US$1.1352/eur vs 1.1304/eur yesterday  Yen 110.87/$ vs 110.69/

nbsp; SAr 14.103/$ vs 14.186/
nbsp; $1.304/gbp vs $1.292/gbp  0.717/aud vs 0.712/aud  CNY 6.721/$ vs 6.767/$

 

Commodity News

Precious metals:         

Gold US$1,344/oz vs US$1,326/oz yesterday - Gold prices look set for a good year as central banks load up and the rise of the US dollar stalls on weaker trade

Prices look poised to break $1,350/oz this week

   Gold ETFs 72.6moz vs US$72.6moz yesterday

  • Confidence gained in the market from central bank buying is helping to support gold prices. Central banks
  • Net central bank purchases rose 74% to 651t last year. The second highest year for purchases since 1971 when dollar convertibility into gold was stopped.
  • Central banks have been net buyers of gold for nine years following a long run of net sales from 1989 to 2009 with Russia buying another 274t last year bringing the value of its gold holdings to about US$2.8bn.
  • Recent comments by the US Federal Reserve indicates a slowing if not a stalling of interest rate rises in the US with the US dollar now seen as potentially having peaked.
  • Some even reckon the US Fed may ease monetary policy if the US falls into recession, though this currently seems unlikely
  • The slide in the Japanese yen is also helping to lift prices as investors look for an alternative currency in which to park their funds. Gold is so often the instrument of default when currencies are on the turn..
  • More physically; ongoing strike action at a number of significant gold mines in South Africa and the potential for strike escalation may also serve to disrupt physical trade flows in the short term.
  • The collapse in Bitcoin prices and fall in ICO issuance may have also turned investors back to gold.
  • ETF holdings remain unchanged indicating that CTA’s ‘Commodity Trading Advisors’ and central banks may be more responsible for the move that the millions of smaller investors who buy and sell gold.
  • There appears to be a degree of positive momentum in the gold chart (we are not chartists but charts do often give interesting direction when supported by underlying fundamentals).

Platinum US$823/oz vs US$809/oz yesterday

Palladium US$1,495/oz vs US$1,481/oz yesterday - Palladium price breaks $1,500 with deficit to widen ‘dramatically’

  • Palladium smashes through $1,500/oz, extending a powerful rally that’s been driven by an acute shortage of supply as car manufacturers scramble to get hold of the material to meet stringent emissions controls. Spot palladium climbed as much as +1.7% to $1,505.46/oz, with prices set for a seventh straight monthly gain.
  • The charge looks set to continues as Johnson Matthey Plc, a leading maker of autocatalysts, forecast the global deficit to “widen dramatically”, while BlackRock Inc.’s Evy Hambro highlights a “massive shortage” having built up as the auto market moves away from diesel-powered vehicles.
  • Until you get an increase in supply coming onstream, which isn’t going to happen for a few years yet, this is going to result in a tight market and prices generally trending higher,” Philip Klapwijk, managing director of Hong Kong-based consultant Precious Metals Insights Ltd.
  • Tightness of supply has prompted users to lease material from exchange-traded fund holders to meet their needs. Heraeus, a refiner, reports physical palladium ETF holdings fell to 700,000oz at the end of 2018, down from a peak of 2.9moz in 2014.
  • It’s hard to gauge the exact level of global stockpiles, but various sources have estimated a range between 10-18moz, which equates to roughly one to two years of demand, Heraeus said.
  • Tighter emissions rules are “outweighing the weakness in global auto sales and the growing threat from EVs”, according to Macquarie Group, as car sales in China continue to drop in January after their first full-year slump in more than two decades.
  • With emission regulations across Europe tightening, the bias toward palladium is strengthening, with modern cars using double the amount of the metal compared with a couple of years ago, according to Nornickel head of analysis and market development.
  • Global supply is heavily constrained, with more than 80% produced as a by-product from nickel mining in Russia and platinum mining in South Africa, so output depends on the extraction level and investment in co-minerals.
  • MMC Norilsk Nickel PJSC report the risk of automakers switching from palladium to platinum is low despite the price gap climbing to new records.
  • While the gap widened to above $620/oz, car manufacturers will begin to find ways to use more platinum in catalytic converters according to head of analysis and market development at Nornickel.
  • "With the current platinum to palladium price ratio, there is stimulus to start looking for swapping palladium to platinum," Anton Berlin said. "But it is not easy -- you need to do R&D, register the technology. It may take up to 18 months."

Silver US$16.05/oz vs US$15.80/oz yesterday

           

Base metals:   

  • Industrial metals saw broad support as Chinese and US trade negotiators began the next round of talks this week in Washington, following last weeks “very productive” discussions in Beijing.
  • The talks started on Tuesday with Vice Premier Liu He meeting with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Feb. 21-22, according to a statement from China’s Commerce Ministry. The talks are picking up pace as the March 1 deadline approaches, Steve Censky, the U.S. Department of Agriculture’s deputy secretary said yesterday, "but we still have ways to go."
  • While there remains key differences in the positions of both sides, Trump has said he’s open to pushing back the March deadline and considering a 60-day extension for negotiations. However, there still remains a strong threat of further escalation in the trade war if talks fail.
  • The two nations’ presidents agreed on the current truce when they met in December, and Trump has indicated he will need to meet with President Xi Jinping to agree on a final deal.

Copper US$ 6,332/t vs US$6,262/t yesterday

Aluminium US$ 1,866/t vs US$1,856/t yesterday

Nickel US$ 12,745/t vs US$12,460/t yesterday

Zinc US$ 2,671/t vs US$2,638/t yesterday

  • The global refined zinc market is expected to fall into sustained shortage into 2020, supporting prices and backwardation as stockpiles shrink to “effective zero”, according to ICBC Standard Bank Plc.
  • While the concentrate market will return to balance this year, refined metal is expected to fall 100-200kt short, extending the worldwide deficit.
  • The issue is exacerbated in China, where the deficit widens to 600-700kt this year. The SHFE-LME arbitrage is therefore expected to remain open, “pulling international metal and concentrate into China”, according to the note.
  • LME stockpiles fell to 90,275t on Tuesday, lowest since 2008; down from this decade’s peak at 1.24mt in 2012.

Lead US$ 2,025/t vs US$2,030/t yesterday

Tin US$ 21,200/t vs US$21,150/t yesterday

           

Energy:           

Oil US$66.4/bbl vs US$66.6/bbl yesterday

Natural Gas US$2.669/mmbtu vs US$2.642/mmbtu yesterday

Uranium US$28.70/lb vs US$28.70/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$85.5/t vs US$86.1/t

Chinese steel rebar 25mm US$602.4/t vs US$601.5/t

Thermal coal (1st year forward cif ARA) US$78.9/t vs US$78.8/t

Coking coal futures Dalian Exchange US$196.7/t vs US$195.4/t

           

Other:  

Cobalt LME 3m US$31,000/t vs US$31,000/t

China NdPr Rare Earth Oxide US$46,119/t vs US$45,794/t

  • China’s rare earth export volumes fell 3.5% yoy in January 2019, equivalent to 3,753t of rare earth oxides, and a decrease of 30.8% from December 2018.
  • Average export prices commanded higher prices of US$9.75/kg, representing an 18.5% increase over the month prior and 28.0% yoy.
  • By value, China exported US$36.6m worth of rare earth oxides in January 2019 – marking a yoy increase of 23.6% versus the value exported in January 2018, and a mom decrease of 17.9% versus the value exported in December 2018.
  • Rising average prices is a positive signal for the rare earth sector, and will help support advanced stage exploration projects including Mkango Resources’ Songwe Hill. The company recently reported a 60% increase in the Measured and Indicated Resource to 21mt following cumulative 17,800m drilling campaigns.  

China Lithium carbonate 99% US$10,191/t vs US$10,119/t

China Ferro Vanadium 80% FOB US$71.3/kg vs US$71.2/kg

China Antimony Trioxide 99.5% EU US$6.9/kg vs US$6.9/kg

Tungsten APT European US$260-270/mtu unchanged from previous week

 

Battery News

Chinese space solar power station revealed

  • China is reportedly working on an experimental orbiting space power plant that would harness solar energy without any interference and beam it down to earth via a laser or microwaves to a receiving station.
  • China’s Science and Technology Daily report a possible “inexhaustible source of clean energy for humans”, with the station reliably supplying energy 99% of the time at six-times the intensity of earth-based solar farms.
  • The country plans on launching “small to medium-sized solar power stations” into the stratosphere between 2021 and 2025, while a “megawatt-level space solar power station” is planned for 2030.
  • The concept isn’t fresh, with Isaac Asimov floating the idea in the 1941 short story “Reason”.
  • Among other countries, Japan and India have discussed space-based solar power, while Caltech has an ongoing Space Solar Power Project.

 

Lithium-Ion Battery Recycling R&D Centre to ‘Recover Economic Value’ of Key Materials in US

  • A new lithium-ion battery recycling research and development centre, launched by the Department of Energy (DOE), has been opened at the Argonne National Laboratory. Aiming to reclaim and recycle critical materials (e.g., cobalt and lithium) from lithium-based battery technology.
  • The DOE says the ReCell Center will help the US grow a globally competitive recycling industry and reduce our reliance on foreign sources of battery materials.
  • The goal of the recycling center is to develop technologies to profitably capture 90% of all lithium-based batteries in the US and to recover 90% of the key materials from the collected batteries. Currently, lithium-ion batteries are collected and recycled at a rate of less than 5%, ReCell says.

 

Company News

Anglo Asian Mining (AAZ LN) FOLLOW81p, Mkt Cap £92m – Earnings update

BUY – 96p (from 108p)

CLICK FOR PDF

  • We have revised our gold equivalent (GE) production and earnings estimates in the light of 2019 guidance released by the Company earlier this month.
  • The Company guides for 82-86koz GE in 2019 (2018: 83.7koz) comprised of:
    • Gold production of 65.0-67.5koz (FY18: 72.8koz);
    • Copper production of 3.1-3.3kt (FY18: 1.6kt).
    • Gold and copper contained in flotation and SART copper concentrates are expected to account for 28-30koz GE or around a third of annual GE target (FY18: 17.8koz GE) reflecting full year of production from a standalone operating flotation circuit.
    • Stronger copper/gold concentrate production is expected to offset lower gold production from the agitation leaching circuit.
    • Additionally, the team highlighted that results from the maiden airborne geophysical survey across the Gedabek license area as well as mineral resources statement on the Gadir underground operation are due in Q1/19.

Conclusion: Our revised earnings estimates are driven by adjustments to forecast production numbers now brought in line with the guided range. Gold and copper production have been revised to 67.6koz and 3.3kt for FY19, down from 82.5koz and 4.1kt estimated previously. Changes are primarily driven by assumed lower throughput rates at the agitation leaching plant as a lower share of the softer Ugur ore is fed into the plant compared to the previous year as well as a reduction in the previously estimated mining rates at Gadir amending the blended processed grade. A slight reduction on our previous forecast copper production is a function of changes to throughput rates, although, processed tonnages are nearly double on levels recorded in FY18.

Lower processed grades and weaker annual production translates into higher unit costs for the year with AISC (incl PSA) revised to $603/oz for 2019 v $552/oz estimated previously driving a reduction in EBITDA and FCF for the year – $36m and $20m, respectively, v $48m and $27m forecast before.

With a targeted c.25% of FCF dividend policy in place as well as a focus on sustainability of dividends indicated for FY18, we estimate Anglo Asian to pay out at least 6USc per annum with an upside revision potential subject to FCF generation levels. This translates into a 5.8% yield for FY19 (on 81p/share), one of the highest among London listed precious metals miners and accounting for less than 20% of EBITDA19, which is in addition to exploration upside exposure offered by the extensive yet underexplored AAZ land package.

Target price: We have upped our EV/EBITDA multiple to 4.0x from 3.5x on the back of improved outlook for the gold sector and applied it to an average of revised EBITDA19 and EBITDA20 estimates for $36m and $38m, respectively (v previous estimates for $48m and $45m) to arrive at 96p target price (down from 108p). As mentioned in our previous earnings updates we remain buyers of Anglo Asian Mining shares highlighting low cash costs of operations, robust balance sheet with $6.1m in net cash as of YE18, dividend paying status, strong FCF generation capacity and exciting exploration potential allowing to extend LoM past the currently envisaged 2025. We reiterate our BUY recommendation.

(Dec year end)

 

2014

2015

2016

2017

2018E

2019E

2020E

Gold price

US$/oz

1,267

1,161

1,253

1,261

1,271

1,313

1,350

Copper price

$/t

6,828

5,505

4,872

6,196

6,554

6,313

7,000

Gold production

koz

60.3

72.0

65.4

59.6

72.8

67.6

65.7

Copper production

kt

0.8

1.0

1.9

2.0

1.6

3.3

3.6

GE production

koz

65.0

77.0

75.2

71.6

83.8

86.3

86.9

AISC (incl PSA, reported)

US$/oz

1,050

858

616

604

612

603

594

Revenue

US$m

68.0

78.1

79.2

71.8

90.8

95.8

99.1

EBITDA

US$m

10.1

18.7

33.7

32.0

39.8

35.8

38.2

FCF

US$m

-6.9

3.4

14.6

16.3

27.6

19.8

22.0

EV/EBITDA

x

7.7

3.1

1.7

1.7

1.9

3.1

2.9

PER

x

-

-

5.5

13.9

8.9

16.0

12.0

DY

%

-

-

-

-

8.8%

5.8%

5.8%

Net Debt

US$m

52.4

49.0

34.6

18.1

-6.1

-19.1

-34.2

Prices as of 18/02/19 (81p)

Source: SP Angel, Company

 

Glencore (GLEN LN) FOLLOW304p, Mkt Cap £42.4bn – Glencore claim record EBITDA on strong copper mine performance

  • Reporting on the results of what the company described as a “challenging operating environment” Glencore has reported a 5% increase in net income “before significant items”(mainly related to US$1.6bn relating to impairments at Mopani copper in Zambia and Mutanda in the DRC as well as settlements relating to Katanga and “various historical disputes with Gecamines” in the DRC) and a record adjusted EBITDA of US$15.8bn.
  • Earnings per share declined to US40.24/SHARE (2017 – US$0.41/sh).
  • Operating cash flow, after a gain of US$1.43bn from working capital movements (2017 – outflow of US$5.12bn) amounted to US$13.12bn (2017 – US$US$6.20bn) and capital expenditure of US$4.90bn (2017 – US$3.79bn) and distributions of US$5.14bn (2017- US$1.18bn) net debt (after adjusting for “readily marketable inventories” at 31st December 2018 rose to US$14.71bn (2017 – US$10.22bn).
  • Approximately 63% (US$10.2bn) of adjusted EBITDA was generated by Glencore’s metals and minerals businesses, including US$1.8bn from minerals marketing with energy businesses, including marketing and the group’s coal and oil operations, contributing around 37%.
  • Within the operating minerals businesses, which generated US$8.48bn of adjusted EBITDA, copper dominates contributing 55% (2017 – 53%) of the total followed by zinc at 27% (2017 – 32%) and nickel at 9% (2017 – 8%).  
  • Overall, the copper businesses generated adjusted EBITDA margins of 40% (2017 – 42%) the African operations contributed around 28% of the EBITDA (US$1.32bn) while the South American operations including Collahuasi (US$902m) and Antamina (923m) generated US%2.76bn or 58% of the total EBITDA from copper.
  • Zinc operations generated US$2.32bn at an adjusted EBITDA margin of 37% (2017 – 41%)  dominated by Kazzinc (US$1.16bn or 50% of the total contribution of zinc).
  • Total capital expenditure within the minerals businesses amounted to US$4.00bn, of which 73% (US$2.92bn) is allocated to sustaining existing operations with the remaining US$1.07bn allocated to expansion projects.
  • Reflecting the contribution to cash generation, copper accounted for 57% of the capital expenditure on minerals businesses with the African operations accounting for US$0.93bn (41%) with South America, including Collahuasi (US$288m) and Antamina (US$208m) attracting a further 40% (US$924m).
  • Capital expenditure of US$956m on the zinc businesses, including US$182m of expansion capital, was dominated by Kazzinc (US$336m or 35%) and the Australian operations (US$279m or 29%).

Conclusion: Glencore has reported a 5% increase in earnings before impairments and other adjustments and a record adjusted EBITDA. Within the minerals businesses, copper dominates both cash generation and in terms of the deployment of capital.

 

Landore Resources (LND LN)FOLLOW 1.025 pence, Mkt Cap £10.7m – BAM Gold Preliminary Economic Assessment

  • Landore Resources has announced the results of a Preliminary Economic Assessment (PEA) on its BAM Lake gold property at Junior Lake, Ontario.
  • The study, prepared by the independent consultants, Cube Consulting in accordance with Canada’s NI-43-101 standards includes an updated mineral indicated resource estimate of 12.35mt at an average grade of 1.21g/t gold (480,000oz of contained gold) and an additional inferred resource estimate of 1.19mt at an average grade of 1.07g/t gold (41,000oz) using a cut-off grade of 0.3g/t gold.
  • The base-case study envisages the development of two open pits and a 2.2mtpa processing plant operating for 5.75 years to produce a total of 489,000oz of gold.
  • The base case, using a US$1300/oz gold price expects capital expenditure of $73.53m, plus $20.3m of pre-production capital expenditure to generate an after tax NPV of  US$69.2m and an IRR of 22.4m.
  • The study also considered an “extended case” based on a presumed resource of 19.7mt at a grade of 1.26g/t (800,000oz of contained gold) with a longer mine life of 9.25 years generating an after tax NPV of US$123.7m and an IRR of 27%

Conclusion: The PEA base case would appear to include some inferred resources as well as the indicated resource of the BAM project and will presumably need additional work to firm up the estimates while the extended case appears to incorporate a significantly enhanced resource yet to be reflected in the formal mineral resource estimate.

 

Pan African Resources (PAF LN) FOLLOW10.4p, Mkt Cap £232m – Earnings climb as operations refocus on profitable ounces

  • Revenue from continued operations climbed 52.8% to R1,383m reflecting higher production.
  • Gold produced from continuing operations (excl contribution from large scale underground mining at Evander operations) climbed to 81.0koz (H1/FY17: 52.5koz).
  • Average realised price was little changed in ZAR terms as lower US$ price ($1,222/oz v $1,281/oz) was compensated by a depreciation in the ZAR exchange rate (14.19 v 13.39).
  • EBITDA climbed 92.3% to R343m on higher production and lower unit costs.
  • AISC from continuing operations came down to $975/oz (H1/FY17: $1,097/oz) reflecting contribution of lower cost ounces.
  • PAT from continued operations increased 20.9% to R138m.
  • FCF remained negative during the period reflecting capital intensive period during the construction and commissioning of the Elikhulu processing plant (R495m or 84% of capex spent in H1/FY18). Net CFO amounted to R317m, up from R171m in H1/Fy17.
  • Net debt climbed to R1,880m (Dec/17: R653m) including R1,000m Elikhulu loan facility.
  • Elikhulu was successfully commissioned on time and within budget reaching 1mtpm processing rates in October 2018 with incorporation of the existing ETRP (0.2mtpm) completed in December 2018. Optimisation is ongoing with throughput rates expected to ramp up to 1.2mtpm from February 2019. The facility contributed 15.3koz in gold production treating 3.5mt at c.0.3g/t in four months through December recovering 0.135g/t.
  • Barberton mines produced 50.6koz with 38.6koz form underground operations and 12.0koz from BTRP. The Barberton unit completed a three-year wage agreement during September 2018.
  • Surface operations and the mining and vamping of the remaining high-grade stopes at Evander Mines contributed 15.2koz during the period.
  • The Company reiterates production target of c.170koz at AISC <$950/oz (@ USDZAR 14.00).
  • Key focus areas for FY19 include improving safety performance, production targets, Elikhulu ramp up to target 1.2mtpm, improving the balance sheet as well as advancing growth projects.

Conclusion: Positive interim results include an increase in production and earnings from continued operations with the Company guiding for an improvement in unit costs in H2/FY19 as Elikhulu operations ramp up. Net debt has now peaked with Elihkulu capex spend coming to an end in the next few months and should now decline moving forwards with low cost surface operations (AISC <$650/oz v $1,100/oz from underground) expected to account for more than a half of annual output.

 

Transense Technologies plc (TRT LN)FOLLOW 58p, Mkt Cap £6.4m – 2nd mining contract announced this week for mining heavy truck tracking & tyre pressure monitoring

  • The company has patented Surface Acoustic Wave (SAW) sensor technology that is piezo based. 
  • The Transense sensors can measure pressure, torque and  temperature fluctuation. The sensors are for heavy duty off road vehicles including mine-haul trucks, commercial trucks, buses and passenger cars.
  • iTrack sensors on heavy Mining trucks provide fast real-time measurement of tyre pressure and temperature coupled live vehicle tracking 24/7. The iTrack system also supports data analytics.
  • Transense already supports Southern Copper’s Cuajone mine  Cat 797F haul truck fleet, announced earlier this week orders for 50 installations in North America.
  • The company has announced this morning also won a further contract (on a rental and service basis)for 41 iTrack monitoring systems for Nordgold at their BISSA mine in Burkina Faso. 
  • Transense is a small UK based company with specialist technology which we believe has real value to the mining industry. This as the industry focusses on safety, costs and  increasingly, on the use of autonomous vehicles. 

 

 

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

Phil Smith (Technology) – 0203 470 0475

Zac Phillips (Oil & Gas) – 0203 470 0481

 

Sales

Richard Parlons – 0203 470 0472

Jonathan Williams – 0203 470 0471

 

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

 

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

 

DISCLAIMER

This note has been issued by SP Angel Corporate Finance LLP (“SP Angel”) in order to promote its investment services.

This information is a marketing communication for the purpose of the European Markets in Financial Instruments Directive (MiFID) and FCA’s Rules. It has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research.

This document is not based upon detailed analysis by SP Angel of any market; issuer or security named herein and does not constitute a formal research recommendation, either expressly or otherwise.

The value of investments contained herein may go up or down. Where investment is made in currencies other than the base currency of the investment, movements in exchange rates will have an effect on the value, either favourable or unfavourable. Securities issued in emerging markets are typically subject to greater volatility and risk of loss.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. This information is for the sole use of Eligible Counterparties and Professional Customers only and is not intended for Retail Clients, as defined by the rules of the Financial Conduct Authority (“FCA”) and  subject to SP Angel’s Terms of Business as published or communicated to clients from time to time.

It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. This document should not to be relied upon as authoritative or taken in substitution for the exercise of you own commercial judgment. SP Angel is not responsible for any errors, omissions or for the results obtained from the use of the information in this document.

This document has been prepared on the basis of economic data, trading patterns, actual market news and events, and is only valid on the date of publication. SP Angel does not make any guarantee, representation or warranty, (either expressly or implied), as to the factual accuracy, completeness, or sufficiency of information contained herein. This document has been prepared by the author based upon information sources believed to be reliable and prepared in good faith.

SP Angel, its partners, officers and or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SP Angel Corporate Finance LLP is a company registered in England and Wales with company number OC317049 and whose registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SP Angel Corporate Finance LLP  is authorised and regulated by the Financial Conduct Authority whose address is 25, The North Colonnade, Canary Wharf, London E14 5HS and is a Member of the London Stock Exchange plc. 

Advertisement
Comments
info
Login or register to post comments

Advertisement
Recent Articles