(MENAFN- ProactiveInvestors)First Quantum Minerals notices of 'force majeure' on Kansanshi and Sentinel operations • Zesco the Zambian state-run power company has imposed restrictions on power supply to mines in the North West Province. • As a result First Quantum Minerals has received notices of 'force majeure' on its operations at Kansanshi and Sentinel operations. • Power allocations to Kansanshi have been reduced by around 24% to 117 megawatts from 153 megawatts while supply to Sentinel has been cut to 42 megawatts from 55 megawatts. • Both operations are now operating at reduced capacities and First Quantum Minerals comments that it 'is unable to provide estimates on the length of the supply reduction or its impact on production.' • The power disruption which had been on the cards since early July stems from reduced hydroelectric power generation as a result of low water levels during the current drought. • So far there do not appear to be comments on the power supply situation from other operators in Zambia including Glencore Barrick and Vedanta. Economic News US – Core durable goods orders beat estimates in Jun offering a positive set of numbers before the FOMC starts its two-day policy meeting. • Although an increase in orders has come on top of a downwards revised May reading. • Core durable goods orders: +0.8% v -0.1% (revised from +0.5%) in May and +0.5% forecast. China – Shanghai Composite was down more than 4% in early morning trading before recovering some of losses and closing -1.7%. • The bounce from low for the day was led by shares in state owned banks which some analysts suggest might have been the target of state-directed buying in the market. France – Unemployment climbed by 1300 people in Jun stabilizing at around 3.55m according to the French Labour Ministry. • The total is up 4.7%yoy. US$1.1064/eur vs 1.1074/eur yesterday. Yen 123.65/$ vs 123.53/$. SAr 12.587/$ vs 12.612/$. $1.557/gbp vs 1.552/gbp US$0.731/aud unch vs0.729/aud. US dollar weakened due to ongoing collapse in Chinese equity markets and contagion with HK and US markets falling in sympathy Commodity News Precious metals: Gold US$1096/oz vs US$1102/oz on Friday – Chinese net imports via Hong Kong dropped 48%mom and 8%yoy to the lowest levelsince Aug/14 according to the latest HK customs. • We note gold inbound shipments through Hong Kong is not the single shipment route to the mainland China. • In particular Shanghai Futures Exchange and Shanghai Gold Exchange import gold directly. Platinum US$983/oz vs US$984/oz – Palladium US$619/oz vs US$625/oz – Silver US$14.62/oz vs US$14.74/oz – Base metals: Copper US$ 5225/t vs US$5225/t – Freeport is in the process of renewing its export permits after the previous one expired on Jul 25. • 'We had scheduled shipment but don't want to break laws so we are discussing with the government getting an export permit as soon as possible' the Company said. • The Company is planning a US$2.3bn investment in capacity expansion at the Gresik copper smelter. o Codelco temporarily suspends its Salvador division the smallest in the Group on the back of protests by contractors. Aluminium US$ 1649/t vs US$1647/t - Alumina prices fell through the US$300/t level for the first time since the start of estimating the Index in Aug/10. • The Alumina Index has declined around 15% in the last two months. • The downward trend is led by an abundance of supply rather than by the lack of supply traders say. • Production hit 120mt in the last 12 months up from 116mt in the previous 12 months. • Most of the increase is attributed to China as domestic output climbed to 59mt over the last 12 months up from 51mt in the previous period. • North American imports of aluminium are reported to have climbe 32.5%yoy to 536mlbs in May with most of the material coming from China. • This brings the total for the first five months of the year to 2.61bnlbs up 25.4%yoy. Nickel US$ 11230/t unch vs US$11080/t – Zinc US$ 1945/t vs US$1944/t – Lead US$ 1712/t vs US$1710/t – Tin US$ 15850/t vs US$15425/t – Energy: Oil US$52.80/bbl vs US$54.50/bbl Natural Gas US$2.778/mmbtu vs US$2.759/mmbtu Uranium US$36.15/lb unch vs US$36.15/lb – Bulk commodities: Iron ore 62% Fe spot (cfr Tianjin) US$51.10/t unch vs US$51.10t – Thermal Coal $56.7 vs $56.8 cif ARA Europe – Tungsten - APT European prices price $220.0/mtu unch vs $225/mtu – price change as spreads widen Company News Aquarius Platinum (LON:AQP) 7 pence Mkt Cap £105.5m – Quarterly Production Results • Attributable production was up 5% quarter on quarter at 88803 PGM oz and 6% from the same time last year. • Production from Kroondal was up 5% and 6% respectively at 56012 oz. • Mimosa was up 5% and down 1% respectively at 30018 oz. • PlatMile was up 9% on the previous quarter at 2773 oz. • A weighted average prices of US$1006/oz was achieved for the quarter down 4% from the previous quarter and down 16% from the same time last year. • Cash cost are running at US$763/oz down 4% on the previous quarter and up 20% on the same time last year. • Kroondal continues to perform well on costs down 4% on the previous quarter and down 2% from the same time last year in rand terms. • During the quarter the Kroondal work force is said to have maintained a positive outlook. • The market for PGMs remains weak with palladium remaining particularly weak. • Platinum imports in China fell for the second straight month in May down 15% month on month but have risen modestly since then. • Palladium imports into China fell for the eight straight month with imports down 27% year on year and 36^ month on month. Conclusion: These numbers look respectable in terms of production and costs. End markets still remain weak with weak demand from China particularly for palladium not helping prices. Labour relationships appear to have stabilised which should keep supply coming – demand needs to pick up to help prices. Base Resources (LON:BSE) 6 pence Mkt Cap £33.8m – Quarterly Operational Update • For the quarter the company produced 206123 dmt of HMC in line with the previous quarter and giving a total of 751285 dmt for the full year. • Production of Ilmenite was up to 113476 dmt up 7.3% on the previous quarter with production above design capacity at 109%. • Rutile production was up strongly by 16% over the previous quarter as a result of higher throughput and recoveries of 98%. • Zircon produced was 6484 dmt was up 20% on the previous quarter with average recoveries up to 62% from 54% in the previous quarter. • Further improvements are being made to the zircon circuit to improve recoveries with a design level of 78%. • Average mined ore remained high at 9.2% HMC as mining continued through the high grade Central Dune ore body. • Tonnage mined remained steady throughout the quarter at 2.3 Mt. • 100000 tonnes was shipped directly to customers in China in small quantities to satisfy demand from smaller scale customers. • Costs per tonne for the quarter for the combined products was US$97/t against US$11/t for the previous quarter. • Pricing pressure continues in the pigment market as producers compete for market share resulting in weak prices for high grade titanium dioxide feedstock including rutile. • Ilmenite prices improved over the quarter as supply from Chinese producers was cut back. • Zircon prices remained stable due to discipline supply from major suppliers. • On the first June Base made its first principle payment of U S$11m on its Kwale Debt Facility. • The company is currently looking to refinance its current debt facility. • The company is due US$25m in VAT payments from the Kenyan tax authorities which they are trying to expedite. • Unrestricted cash stood at A$40.9m at the end of the quarter with restricted cash of A$6.5m. • Debt drawn stood at US$224m. Conclusion: Operationally all appears to be going to plan at Base Resources – however end markets remain relatively weak and the company still has a high level of debt relative to equity. Berkeley Resources (LON:BKY) 17.25pence Mkt Cap £31.1m – Changing name to Berkeley Energy • Berkeley Resources is proposing to change its name to Berkeley Energy. • It's a sensible move first because as a company with a uranium project in Spain it's a mining / energy business and second because the name has often been confused with the lesser company Berkeley Mineral Resources where the family of Masoud Alikhani recently agreed to return around £1m of assets to the company. Mr Masoud Alikhani is reported to have Alzheimers though this did not appear to stop him from remembering to syphon funds out of the company not so long ago. • Thankfully Berkeley Resources soon to be Berkeley Energy is a far better and more respectable company. • We like the look of and prospects for the Salamanca project in Spain and see the recent appointment of Paul Atherley formerly of Leyshon Resources as a positive move for the company. • The recent release of a favourable report by the Nuclear Safety Council allows for the construction of preliminary infrastructure works to access the plant and is binding for the Ministry of Industry Energy and Tourism. This was the first step in a three stage process needed to gain an operating permit for Berkeley's proposed plant. • Berkeley Resources already has an 'Exploitation Permit' for its Retortillo Project and this together with the Alameda Zona 7 and Gambuta deposits make up the larger Salamanca Project. Leed Resources* (LON:LDP) 0.05p mkt cap £1.6m - Corporate Update - High Mannor quarry and wall panel business further investment and update • Leed Resources report their further investment in the High Mannor quarry and wall panel business in Perth Australia which sells under the brand 'Cultural Limestone'. • Construction activity continues at a pace in and around the Perth area and this should drive demand for ready made stone wall panels. • The panels which are ready made reconstituted stone walls replace the need for builders to use bricklayers to build perimeter walls mainly on new housing developments. • The walls lift easily into place and fit directly onto foundations enabling a quick and simple instillation. They are also allot less easy to steal than the stone blocks they replace. • Leeds Resources are ramping up the production of walls through the use of additional moulds for the wall panels . • The company are investing a further A$480000 (approx. £230000) in Battalion International Limited ('Battalion') taking its total investment in Battalion loan notes to A$1.68 million. • The investment is part of a A$1.3m increase in Battalion's convertible notes with the new notes being issued on identical terms to the notes referred to in the announcement of 8 January 2015. • This takes Battalion's total loan notes to A$4.55m. • The additional funds are to enable Battalion's subsidiary the quarry and panel company High Mannor Pty. Limited to introduce a second generation of reconstituted limestone wall panels into the Western Australian construction industry. • Leeds recently took delivery of a second batch of five moulds and twenty mould bases for making wall panels at the High Mannor quarry just north of Perth. • Production facilities have been upgrade and the moulds pre-tested with wall panel production now in progress. First deliveries and instillation of instillation of ready made wall panels are expected in August. • A significant new contract for wall panels has been received with more contracts in discussion. • The new funds also strengthen High Mannor's working capital position for the sale of additional panels at a time when other investors were also keen to support the business • If Leed's loan notes are converted the company would hold 18.4% of Battalion which currently holds a 61% interest in the equity of High Mannor rising to 76% if Battalion's loan notes are also converted. • The investment takes Leed Resource's total commitment to A$1.88m (£1.08m) in convertible notes paying a 12%pa interest rate. This rises to 14% after two years if not converted. • Leed Resources received its first £15k coupon from its investment in April and expects the second in July. • WA Housing market: Commitments for new housing construction in Western Australia was strong last year according to the Australian Bureau of Statistics indicating ongoing depth and strength in the market and good demand for building materials for some time to come. Building approvals have pulled back in Western Australia reflecting a fall in confidence but last year's record approvals still means the market should be strong for some time. Conclusion: The high interest rate on the loan notes make this investment look compelling. Ongoing construction activity in the Perth area appears to run counter to the dramatic loss of earnings seen in the mining industry in Australia. However the Australian construction market appears to have good ongoing growth potential and might continue to run counter to the mining sector making investment in Leeds' Resources a more robust investment in the sector. * SP Angel acts as nomad and broker to Leed Resources Serabi Gold* (LON:SRB) 3.875p Mkt Cap £25.4m – Q2 production results • The company reports that it produced 8237 ounces of gold from its Palito and Sao Chico mines in Brazil during Q2 bringing the total gold output for H1 to 15626 ounces. The company's guidance of 35000 oz of gold output in 2015 at an all-in- sustaining cost of between US$900-950 per ounce is maintained. • In 2015 Serabi Gold expects to produce 28-29000 ounces of gold from the Palito mine and from treating the stocks of flotation tailings accumulated during 2014. In addition the company is looking for a further 6-7000 ounces of production from the Sao Chico operation located approximately 23 km south-west of Palito. • The plant processed 33729 tonnes of ore at an average grade of 8.28 g/t gold during the quarter at a recovery rate of around 93%. This is a marked improvement of the 86% recovery achieved during Q1. • Sao Chico which is expected to achieve full commercial production later this year generated 783 ounces of production mainly from lower grade development ore during the quarter which implies a significant ramp up at Sao Chico during the second half of the year. • Two development levels have now been established at the 216 and 182 metre levels at Sao Chico and the first production stope on the upper level was started during June while the lower level is still under development. • The company notes that of the 600 metres of development on the first level '250metres of the development divided in four distinct ore zones having been in high grade ore. As is the case in most vein mines drilling alone does not provide the full story and it is underground 'on lode' development that ultimately defines the ore blocks.' The presence of 4 distinct mineralised zones should ultimately provide operational flexibility underground but suggests that production will need to be well controlled. Conclusion: Serabi Gold has moved ahead with development at the high grade Sao Chico deposit while the Palito mine and tailings stockpiles provide a stable underlying production base for the company. As Sao Chico moves from development into full scale production and starts to produce higher grade ore from production stopes output should continue to improve during the second half of the year. *An SP Angel analyst has visited Serabi's Palito gold mine and other properties
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