(MENAFN- ProactiveInvestors - UK) Mon
Birimian Limited (ASX:BGS) – Birimian terminates $AUD 10.75m agreement with Shandong Mingrui Group for its Birimian lithium project
DiamondCorp (LON:DCP) Suspended – DiamondCorp raises £1m
Edenville Energy (LON:EDL) - Sinohydro partnership for Rukwa development
Kibo Mining (LON:KIBO) – Integrated Bankable Feasibility Study for Mbeya Coal to Power Project
Petra Diamonds (LON:PDL) - H1 Production results and trading update.
Serabi Gold (LON:SRB) – Record 2016 gold production exceeds guidance
Chinese coal miners cancel holidays as government relaxes restrictions to stimulate supply
Mines are rushing to produce as much coal as possible while prices are high and before Beijing reintroduce output restrictions
Workers are said to be happy to keep going as mines offer 6,000-9,000 yuan in extra bonus for keeping mines running
China will still move to swing demand away from coal towards cleaner fuels and energy sources with time but even Chinese politicians understand the social consequences of insufficient fuel for power generation and heating when the weather is cold.
Coal prices will likely fall from their peak at $89/t but are likely to remain high as Beijing is expected to clamp down on coal supply and resume its ambition to cut 500mt of capacity once the immediate shortage is over.
Todd Corporation to back new $5bn iron ore mine in Western Australia
The mine is forecast to produce 6-10mpa of iron ore at a cost of around US$50/t.
China Moly to help BHR to buy Tenke Fungrume copper, cobalt mine in the DRC
China Moly is to help BHR, the Chinese private equity firm to fund its acquisition of 24% in the Tenke Fungurume coppe mine from Lundin Mining for around $1.14bn
China's CMOC is also buying a 56% stake in the mine from Freeport McMoRan for $2.65bn
Lithium – University of Calgary develops new garnet / lithium battery
We are normally used to seeing garnets as indicators for new diamond mines.
Today we read that the University of Calgary has developed a battery using a garnet electrolyte.
The new battery uses the lithium metal very efficiently, with the lowest interface-charge transfer resistance between the lithium electrode and the garnet electrolyte.
The new battery offers "negligible interface resistance" between the lithium metal anode and the ceramic electrolyte interface resulting in fast transport of charges and higher performance overall.
This may be good news for electric vehicles and battery technology but as will almost all new battery technologies is likely to take years to come to production`.
Dow Jones Industrials +0.48% at 19,827
Nikkei 225 -1.29% at 18,891
HK Hang Seng +0.06% at 22,899
Shanghai Composite +0.44% at 3,137
FTSE 350 Mining -0.03% at 16,415
AIM Basic Resources +0.38% at 2,524
Economic News
UK – UK government to take an active role in backing business in new government strategy
Masterplan to protect 40,000 jobs in the UK steel industry to involve cutting energy costs for manufacturers
China – China reported on Friday FY16 GDP growth of 6.7%, in line with estimates and marking a 0.2pp slowdown from the previous year.
The annual growth number came in the middle of the state-targeted 6.5-7.0% range.
Growth consolidation is coming at the at the expense of expanding credit with total debt to GDP is estimated to have climbed to 264% from 247% in 2015, Bloomberg Intelligence estimates.
BI forecasts growth to further slowdown to 6.3% with risks shifted to the downside. On the other end of the spectrum, the IMF estimates growth to stabilise at 6.7% next year.
On a separate note, investments slowed in Dec as a decline in the state-led FAIs (-1.5pp) outweighed modest gains in the private sector (+0.1pp). Government share in FAI ended the year at 35.7%, the highest level since Feb/11, reflecting a stimulus-oriented government stance this year.
GDP (YTD %yoy): 6.7 in Q4 v 6.7 in Q3 and 6.7 forecast.
Industrial Production (YTD %yoy): 6.0 in Dec v 6.0 in Nov and 6.0 forecast.
Retail Sales (YTD %yoy): 10.4 in Dec v 10.4 in Nov and 10.4 forecast.
FAI (YTD %yoy): 8.1 in Dec v 8.3 in Nov and 8.3 forecast.
Currencies
US$1.0740/eur vs 1.0668/eur yesterday. Yen 113.55/$ vs 114.80/$. SAr 13.506/$ vs 13.523/$. $1.245/gbp vs $1.234/gbp.
0.756/aud vs 0.755/aud. CNY 6.854/$ vs 6.876/$.
Commodity News
China refined copper exports surge in December by 38% to 29,067t
China's import and export statistics for metal show some big swings in the movement of metals .
Dec Year to date
tonnes pct chg $/tonne tonnes pct chg
Imports
Refined copper 359,838 -14.97 5,766.05 3,629,061 -1.33
Primary aluminium 69,329 1,448.29 1,801.23 197,683 29.26
Refined nickel, alloy 19,119 -47.64 11,079.57 370,728 22.18
Refined lead 710 138.86 2,334.14 1,075 7.82
Refined zinc 23,486 -75.13 2,631.75 424,438 -21.89
Zinc alloy 10,388 -14.5 2,651.11 100,842 -7.48
Refined tin, alloy 1,692 44.05 20,362.74 10,088 -2.14
Exports
Refined copper 29,067 38.75 5,531.12 425,620 101.17
Primary aluminium 250 -92.89 3,046.08 16,849 -44.45
Refined nickel, alloy 2,326 72.43 10,766.5 16,720 -58.84
Refined lead 22 -99.59 2,963.45 15,150 -69.52
Refined zinc 2,130 392.34 2,508.39 21,358 -77.73
Zinc alloy 40 -59.11 3,200.73 1,240 60.45
Refined tin, alloy 5 -98.92
Precious metals:
Gold US$1,213/oz vs US$1,204/oz yesterday
Gold ETFs 57.1moz vs US$57.1moz yesterday
Platinum US$980/oz vs US$959/oz yesterday
Palladium US$790/oz vs US$753/oz yesterday
Silver US$17.11/oz vs US$16.94/oz yesterday
Base metals:
Copper US$ 5,807/t vs US$5,720/t yesterday
Aluminium US$ 1,856/t vs US$1,821/t yesterday
Nickel US$ 9,840/t vs US$9,805/t yesterday
Zinc US$ 2,800/t vs US$2,731/t yesterday
Lead US$ 2,342/t vs US$2,270/t yesterday
Tin US$ 20,125/t vs US$20,450/t yesterday
Energy:
Oil US$55.3/bbl vs US$54.6/bbl yesterday
Natural Gas US$3.216/mmbtu vs US$3.302/mmbtu yesterday
Uranium US$22.90/lb vs US$22.75/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$78.2/t vs US$78.0/t
Chinese steel rebar 25mm US$501.0/t vs US$499.5/t
Thermal coal (1st year forward cif ARA) US$68.9/t vs US$67.6/t yesterday
Premium hard coking coal Aus fob US$172.6/t vs US$172.6/t
Quarterly hard coking coal US$285.0/t vs US$285.0/t
Other:
Tungsten - APT European prices $191-200/mtu vs $187-198/mtu - Putin orders the resumption of tungsten production (Investor Intel)
Vladimir Putin has decreed that tungsten production should resume in Russia to ensure its regular supply for domestic industrial production.
Production will restart at the Tyrnyauz tungsten-molybdenum plant at Kabardino-Balkaria in southern Russia.
The capital cost of the restart is estimated to be around US$250m for 1mtpa of ore
The Tyrnyauz field contains around 360mt of ore reserves and previously had a process plant capacity of 6.6mt.
Another Russian miner has also announced plans to invest around $60m in a tungsten project in Buryatia to produce some 2,800tpa of tungsten concentrates.
Strategically we wonder if Russia is concerned about more sanctions from Trump or China restricting the market for this strategic metal. Tungsten is important as a military metal due to its high strength.
Company News
Birimian Limited (ASX:BGS) A$0.31, mkt cap A$57.9m – Birimian terminates $AUD 10.75m agreement with Shandong Mingrui Group for its Birimian lithium project
Birimian Gold report that they have terminated their agreement 'LOI' with Shandong Mingrui Group for the $107.5m purchase of their lithium assets in Mali.
The reason, unsurprisingly, was 'Due to increasing regulatory protocols on the transfer of funds from China, the deposit was not received when due, and the LOI agreement has been terminated.'
Birimian required the receipt of a deposit for A$10.75m on or before 20th January for the acquisition to proceed.
We are aware that China has clamped down massively on fund transfers as it works to control its currency and stem the outflow of funds from the country.
We had hoped that the 'energy material' sector would be spared and it is possible that other battery makers / lithium processors might be allowed to continue to fund developments abroad.
Genfeng Lithium, a major Chinese lithium producer also signed an investment agreement with Lithium Americas for a US$174m investment for the development of its Cauchari-Olaroz lithium project in Jujuy, Argentina. Given Genfeng's status in China we would expect this deal to go through.
Birimian's Goulamina project has one of the world's known highest grade lithium resources grading 1.48% Li2O for 15.5mt to contain 229,000t Li2O.
Three drill rigs are currently active on site which are due to complete the second phase of a 10,000m drill program.
Initial assay results are expected this month with next phase metallurgical test work due in February.
The company plans to update its resource estimate in Q1 with PFS and maiden reserve reporting due in Q2.
The deposit is high grade, close to surface and should allow for early cash flow generation.
Current drilling is expected to add to the resource through resource extensions with 1.67% seen in the West Zone
The Goulamina resource ranks as the fifth highest on our list of known hard rock lithium resources and is currently at no.15 in terms of resource size though it looks like it will become a larger project.
Details of the JORC resource are in the link below along with pictures of the block model, cross sections, plan views and a particularly grade/tonnage curve. See: http://www.birimian.com/pdfs/MaidenResourceAtGoulaminaConfirmsLithiumDeposit27Oct16.pdf
DiamondCorp (LON:DCP) Suspended – DiamondCorp raises £1m
DiamondCorp has raised £1m from investors.
The placing is conditional on 'Admission becoming effective and the Group concluding a labour agreement with the Association of Mineworkers and Construction Union that is on terms approved by the Business Rescue Practitioner, on behalf of LDM, and by the Board of DiamondCorp.'
The new shares have been placed at a price of 4 pence per share and with one warrant per new placing share exercisable at 1 pence per share anytime between 1 Novermber 2017 and 30 June 2019.
Conclusion: The placing gives new confidence over the company's debt restructuring and its ability to return the Lace diamond mine to production.
The company remains in a state of 'Business Administration' following the recent fire and subsequent flood which forced the closure of the mine.
Closure of the mine during its critical production 'ramp-up' stopped cash flow generation when the company had spent virtually all its cash and was at its most indebted. We expect the mine to reopen shortly and for the shares to resume trading sometime soon.
Edenville Energy (LON:EDL) 0.965 pence, Mkt Cap £7.3m - Sinohydro partnership for Rukwa development
Edenville Energy reports that it has developed a strategic partnership with a major Chinese construction company, Sinohydro Corporation, to develop the Rukwa coal to power project in Tanzania.
Under the terms of the Memorandum of Understanding, Sinohydro is to complete a bankable feasibility study for the development of the power plant while Edenville Energy will retain the responsibility for the coal mine and for the supply of fuel.
Sinohydro, which is reported to currently have '486 international projects under construction in more than 72 countries, with a total contract value of nearly US$43 billion' will also 'use their considerable experience of working with Chinese and other financial institutions to assist in exploring appropriate funding options available for development capital to be used for construction.'
Today's announcement describes Sinohydro carrying out 'extensive review work on site along with completing a technical proposal and an independent financial model' during the second half of 2016 and prior to signing the MoU.
Conclusion: Although the MoU is non-binding at this stage, the decision of a major international entity with previous experience of constructing coal and hydropower plants, roads and associated infrastructure in Kenya, Uganda, Zimbabwe and the DRC, is likely to be construed as an important endorsement of the project.
Kibo Mining (LON:KIBO) 6.125 pence, Mkt Cap £22.3m – Integrated Bankable Feasibility Study for Mbeya Coal to Power Project
Kibo Mining reports the finalisation of the Integrated Bankable Feasibility Study for the 250-350 MW Mbeya Coal-to-Power project with the delivery of the Integrated Financial Model.
The model shows that the 'Total capital requirement for the integrated project reduced 21.1% from the original integrated prefeasibility study ('IPFS') figure' which we believe was $640-760m, suggesting the figure is now around US$550m.
Over the projected 25 year project life, Mbeya is expected to deliver an 'Indicative post tax Equity IRR between 21% and 22%, an increase of 11% on the indicative IPFS post-tax Equity IRR.'
Citing is obligations to commercial confidentiality agreements, the company comments that it 'remains restricted in its ability to release certain detailed information relating to the IBFS due to the fact that the company is engaged in highly confidential discussions with various parties including regulatory authorities.'
Conclusion: The company has made progress through the completion of the Integrated Bankable Feasibility Study, however with details of the Study's findings limited at this stage, it is difficult, as an outside observer, to form a balanced view. We look forward to the details when they become available.
Petra Diamonds (LON:PDL) 156.5p, mkt cap £829.6m - H1 Production results and trading update.
Petra Diamonds reports that H1 diamond production, for the six months to 31st December 2016 increased by 24% to 2,015,087 carats. The company reports that it remains 'on track to deliver 4.4-4.6Mcts' for the full year.
Revenue and sales volumes increased by 48% (to US$228.5m) and 47% (to 1,910,113 crats) respectively although rough diamond prices remained flat.
The company comments that it expects the second half to be stronger 'due to the timing of tenders being weighted towards the latter half of Petra's financial year.'
The underground projects at the Finsch mine Block 5 and at Cullinan's Phase 1 c-cut remain on track and have started to deliver initial mine production. The company reports that the development at Cullinan is improving grades by around 15% to 34.5 cpht while grades at Finsch have improved by around 20% to 54.5cpht.
Commenting on the state of the market for rough diamonds, Petra Diamonds notes that it is seeing 'steady demand across the majority of size ranges, except in the smaller, lower value categories which have been experiencing some pressure due to the Indian government's demonetisation of high value banknotes and the subsequent impact of smaller midstream players on liquidity in the Indian diamond market.'
The company also reports that average prices received during H1 at its Cullinan, and Williamson mines are currently exceeding its published guidance, with Cullinan selling at ana average of $127/carat (guidance $105-115/ct) and Williamsons sales at $305/ct (guidance $220-230/ct). The other mines, Finsch $98/ct actual vs guidance of $100-105, Koffiefontein $495/ct (guidance $520-550/ct) and Kimberley Ekapa at $93/ct compared to guidance in the range $125-130 are currently running behind guidance which we speculate may be a manifestation of the issues in India
Petra is expecting the diamond market to remain stable during its' H2.
Conclusion: Petra Diamonds is starting to see the benefits of its capital programmes at the Cullinan and Finsch mines and despite the knock on effects on smaller classes of stones from the Indian demonetisation programme the company sees the market stabilising and expects a stronger second half.
Serabi Gold (LON:SRB) 5 pence, Mkt Cap £34.9m – Record 2016 gold production exceeds guidance
Serabi gold reports that it achieved record annual gold production of 39,390 ounces in 2016 exceeding the 37,000 ouces guidance and representing a 19% increase on the production in 2015.
The company is now forecasting 2017 production of 40,000 ounces of gold at an all-in-sustaining cost of $950-975 per ounce.
At the Sao Chico mine, which contributed 9,968 tonnes of ore at an average grade of 14.28g/t gold, new licences have been acquired to both the east and to the west which are currently being explored and offer the possibility of expanding the known extent of the deposit.
The ramp access at Sao Chico has now been deepened to approximately 170m below the surface and stoping is underway on three levels.
At Palito, head grades dipped slightly during the final quarter of the year 'as a result of ore being 'cemented' in two stopes. This ore is not lost, and is being slowly recovered but not as fast as we had budgeted.'
The company notes that, given the remoteness of its location, the company has benefitted from the installation of a third mill which has helped to maintain throughput rates during short term breakdowns in both October and December.
Conclusion: The beating of the guidance target for 2016 and a further slight increase in guidance for 2017 indicate management confidence and we await evidence of the possible expansion of the scale of the Sao Chico deposit as exploration proceeds.