SP Angel . Morning View . Metal prices marginally higher with trade talks progress in focus
Paul Kettle
SP Angel Broker Notes -3 min read
11:09, 11th January 2019

SP Angel – Morning View – Friday 11 01 19

Metal prices marginally higher with trade talks progress in focus

 

MiFID II exempt information – see disclaimer below

  

BlueRock Diamonds* (BRD LN) – 2018 review highlights increased diamond sales

Georgian Mining* (GEO LN) – Exploration permit

Trans-Siberian Gold (TSG LN) – Asacha expected to exceed production guidance

 

Dow Jones Industrials

 

+0.51%

at

  24,002

Nikkei 225

 

+0.97%

at

  20,360

HK Hang Seng

 

+0.55%

at

  26,667

Shanghai Composite

 

+0.74%

at

   2,554

FTSE 350 Mining

 

+1.19%

at

  17,835

AIM Basic Resources

 

-0.15%

at

   2,158

 

Economics

US – Fed Chairman comments that the central bank had the ability to be patient regarding monetary policy helped the sentiment in the market yesterday with US equities closing higher for a fifth consecutive session.

  • Chinese Vice Premier Liu He is scheduled to visit Washington on January 30 and 31 for further trade talks, according to people familiar with the plans.
  • Liu is expected to meet with US Trade Representative Robert Lightizer and Treasury Secretary Steven Mnuchin.
  • Separately, Chinese Ministry of Commerce reassured the US that two nations are going to continue with trade talks as scheduled during a regular weekly briefing yesterday.
  • On a different note, President Trump reminded everyone that he has “absolute right” to declare a national emergency in order to source funding for the wall project as the impasse between the White House and congressional Democrats continued for its third week now.
  • One of Republican senators Lindsey Graham said that a “congressional path” to funding the border was now virtually closed and that Trump needs to use emergency powers to bypass the Congress.
  • Among those affected by the shutdown, the FBI reported that the situation affects national security as the bureau’s capacity to conduct investigations and run operations are being undermined.
  • “The failure to fund the FBI is harmful to special agents and our operations…. This is not about politics for special agents… for special agents, financial security is national security,” the FBI Agents Association representing around 13,000 FBI special agents told reporters.

 

UK – Industrial production reported the steepest annual decline since 2013 in November, echoing weakness across Europe.

  • GDP has also slowed during the month in November.
  • “Growth in the UK economy continued to slow in the three months to November 2018 after performing more strongly through the middle of the year… manufacturing saw a steep decline, with car production and the often-erratic pharmaceutical industry both performing poorly,” ONS commented on numbers.
  • Auto production was particularly badly hit with output down 4.3%yoy challenged by a slowdown in China, new EU-wide emissions tests and the decline of diesel engines as well as uncertainty over future trading arrangements.
  • Industrial Production (%mom/yoy): -0.4/-1.5 v -0.5/-0.9 (revised from -0.6/-0.8) in October and 0.2/-0.7 forecast.
  • GDP (3m/3m change): 0.3 v 0.4 in October and 0.3 forecast.

 

Italy – Industrial production dropped 1.6%mom and 2.6%yoy in November underperforming expectations and joining a disappointing series of economic data in other parts of the Eurozone.

  • The annual decline marks the sharpest drop since October 2014.
  • It is feared the economy entered a technical recession in H2/18 as GDP contracted 0.1%qoq in Q3/18.

 

Spain – Industrial production surprisingly dropped in November as well

  • Industrial Production (%mom/yoy): -1.5/-2.6 v 1.1/0.7 (revised from 1.2/0.8) in October and 0.4/0.3 forecast.

 

DRC - An opposition leader Felix Tshisekedi has been announced an unexpected winner in presidential elections yesterday.

  • While Tshisekedi is reported to have secured 38.6% of the more than 18m votes many observers questioned results and suggested President Kabila may have struck a deal with the winner as hoeps faded for a win for ruling party candidate Emmanuel Shadary who secured 4.4m votes.
  • The influential Catholic Church has also doubted results saying that its findings from 40,000 election observers did not match the official count.
  • Three dimplomats speaking anonymously to Reuters said the church tallies had showed Mr Fayulu winning.
  • Martin Fayulu, another opposition candidate, who earned 6.4m votes called the result “a coup and not the truth from the ballot”.

 

Currencies

US$1.1527/eur vs 1.1556/eur yesterday. Yen 108.25/$ vs 107.89/$. SAr 13.812/$ vs 13.859/$. $1.274/gbp vs $1.277/gbp. 0.721/aud vs 0.718/aud. CNY 6.747/$ vs 6.781/$.

 

Commodity News

Precious metals:         

Gold US$1,294/oz vs US$1,297/oz yesterday

   Gold ETFs 71.8moz vs US$71.8moz yesterday

Platinum US$824/oz vs US$828/oz yesterday

Palladium US$1,323/oz vs US$1,320/oz yesterday

Silver US$15.71/oz vs US$15.78/oz yesterday

           

Base metals:   

Copper US$ 5,977/t vs US$5,967/t yesterday

Aluminium US$ 1,855/t vs US$1,855/t yesterday

Nickel US$ 11,445/t vs US$11,295/t yesterday

Zinc US$ 2,477/t vs US$2,480/t yesterday

Lead US$ 1,993/t vs US$1,980/t yesterday

Tin US$ 20,235/t vs US$20,150/t yesterday

           

Energy:           

Oil US$62.1/bbl vs US$60.7/bbl yesterday

Natural Gas US$3.036/mmbtu vs US$3.012/mmbtu yesterday

Uranium US$28.90/lb vs US$28.90/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$72.3/t vs US$72.7/t

Chinese steel rebar 25mm US$593.0/t vs US$590.2/t

Thermal coal (1st year forward cif ARA) US$82.5/t vs US$80.5/t

Coking coal futures Dalian Exchange US$217.8/t vs US$214.9/t

           

Other:  

Cobalt LME 3m US$45,000/t vs US$44,000/t

China NdPr Rare Earth Oxide US$46,787/t vs US$46,528/t

China Lithium carbonate 99% US$10,158/t vs US$10,102/t

China Ferro Vanadium 80% FOB US$70.0/kg vs US$70.0/kg

China Antimony Trioxide 99.5% EU US$7.1/kg vs US$7.1/kg

Tungsten APT European US$270-280/mtu

 

Battery News

 

Company News

BlueRock Diamonds* (BRD LN)FOLLOW 0.335p, Mkt Cap £1.5m – 2018 review highlights increased diamond sales

  • BlueRock Diamonds reports that, following sales of 1,533 carats during q4 2018 it sold a total of 5,805 carats of diamonds during FY 2018, representing a 71% increase on the 3,385 carats sold during 2017.
  • The result reflects production improvements in both the annual tonnage, which increased by 24% to 189,990 tonnes, and grade, which rose 34% to 3.28 carats per hundred tonnes (cpht) and surpassed the company’s revised 3.0cpht guidance.
  • The average value of US$332 per carat during 2018 was, however, approximately 8% lower than the US$362/carat received during 2017 with an average of US$316/ct received on Q4 sales.
  • Commenting on the results, CEO, Adam Waugh, said that “The results from our second kimberlite pipe, KV1, which came on stream in June last year, and from the undiluted levels of our first kimberlite pipe, KV2, have shown a marked increase in grade, which we expect to continue into 2019”.
  • Mr. Waugh went on to express the view that the plans to move to 365 day operations in February, in conjunction with an increasing grade profile “makes the outlook for 2019 very encouraging”.

Conclusion: A broadly improving trend of grade during 2018, and plans to increase throughput by implementing 365 day working provide the company with encouragement of a sustainable operational improvement. We hope to see an improvement in values per carat as mining accesses the higher grades at depth in the KV2 pipe and in the KV1 kimberlite.

*SP Angel acts as Nomad & Broker to BlueRock Diamonds

 

Georgian Mining* (GEO LN)FOLLOW 6.05p, Mkt Cap £6.8m – Exploration permit

(Georgian’s assets in Georgia are held in a 50:50 joint venture)

  • Georgian Mining reports that its pending exploration permit was considered at a meeting of the Georgian cabinet held at the end of December 2018 ahead of the recess.
  • Expressing satisfaction that the Georgian Government was addressing the issue, Mike Struthers, CEO explained that “During the meeting there were minor points for clarification raised with the Mining Agency, which were satisfactorily addressed and we are now awaiting the final approval. It is our understanding that all of the Ministries have responded positively and there continues to be strong support for the application”.

Conclusion: The resolution of the delayed pending permits has evidently progressed as a result of the issue being considered at cabinet level. We await the outcome of the cabinet’s deliberations.

*SP Angel acts as Nomad and Broker to Georgian Mining. 

 

Trans-Siberian Gold (TSG LN) FOLLOW37.5p, Mkt Cap £41.3m – Asacha expected to exceed production guidance

  • Trans-Siberian Gold reports that, as a result of improved grades, it expects the Asacha gold mine to “slightly exceed the upper end of the full year total gold production guidance of 36,000 - 40,000 oz for 2018”. More detail is expected to be released later this month.
  • In addition, the company has disclosed that it has concluded “a new electricity supply agreement with Kamchatskenergo which will supply power to the Asacha Gold Mine at a reduced price of RUR 4.69/kWh (US$0.07/kWh) following the implementation of incentive measures to support the development of the Far East of Russia introduced by the government”. The revised agreement will initially cover a twelve month period.
  • Commenting on the power supply agreement, CEO, Alexander Dorogov, said that “Power is a significant production cost and we are pleased to have secured a substantial cost saving with the support of the regional Government of Kamchatka. We are grateful for this which affirms the Far East of Russia as an attractive place for gold mining'.”

 

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.

 

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