(MENAFN- ProactiveInvestors)Highfield Resources (ASX:HFR) – Release of independent report on Muga Potash Project Goldcrest Resources (GCRP) – Acqusition of Taoudeni Resources Rio Tinto (LON:RIO) – Q4 Production Numbers in Line Vedanta Resources (LON:VED) – Tender to buy back US$500m of convertible bonds maturing 2016 Shanta Gold* (LON:SHG) – Higher than expected grades drive greater gold production in Q4 2015 Lithium Air batteries – lithium hydroxide may allow for more stable lithium air batteries with up to 10x current power capacity • Lithium-Air batteries sometimes described as the 'ultimate battery' may prove to be the breakthrough smart-phone manufacturers are looking for. New chemistry using lithium hydroxide has been shown to result in fewer chemical reactions and > 2000 recharging cycles. • In further news the Argonne National Laboratory in Illinois has developed a lithium-superoxide battery which resolves many of the issues seen in past lithium air batteries. UK Parliament wastes 4 hours of government time debating potential ban of Donald Trump • Comments by Donald Trump led to the UK government wasting around 4 hours of time debating a petition to ban him from the UK • Surely the UK government has more pressing matters to deal with such as the loss of Jobs at Tata Steel or the potential future loss of the UK steel industry. Unilever (LON:ULVR) – Results show 7.1% growth in emerging markets recovery in Japan and China but price deflation impact in Europe • Consumer staples multinational Unilever which produces everything from soap powders to ice cream today announced 2015 full year results. • Earnings were in line with expectations and came from Revenue growth of 4.1% was eye catching in fragile markets-this driven by volume up 2.1% and pricing up 1.9%. • Emerging markets grew by 7.1% on volume however a number of oil related economies were weak. Developed markets were flat and good European volume growth was impacted by price deflation. • China showed recovery as did Japan however the CEO noted that going into 2016 he sees overall tougher market conditions and volatility ahead and set out that earnings growth will be driven by product innovation and prudent budgeting. • The results indicate ongoing growth in terms of consumer appetite Attend Cape Town in style and comfort with the 121 Group Mining Investing Conference – Cape Town 8-9 February 2016 • Join us in the beautiful and historic gardens of the Welgemeend farm house in Cape Town close to the Mount Nelson Hotel • Buy-side investors and analysts are able to attend the summit for free. See registration form in link below http://www.weare121.com/121mininginvestment-cape-town/registration/register-investor Economic News China – Economic growth came in line with the government target of around 7% rate. • Chinese growth totalled 6.9%yoy in FY15 with gains in production slowing towards the end of the year (Q4/15 +6.8%yoy v +6.9%yoy in Q3/15). • Industrial production retail sales and investments all fallowed same trajectory with growth down in the final month of the year. • Industrial production: 5.9%yoy/6.1%ytd in Dec v 6.2%yoy/6.1%ytd in Nov and 6.0%yoy/6.1%ytd forecast. • Retail sales: 11.1%yoy/10.7%ytd v 11.2%yoy/10.6%ytd in Nov and 11.3%yoy/10.7%ytd forecast. • Investments: 10.0%ytd v 10.2%ytd in Nov and 10.2%ytd forecast. • The Shanghai Composite Index closed up 3.2% today as weak economic numbers fuelled speculation of increased state stimulus. UK – Inflation edged up in Dec but only marginally with low gains in food prices keeping the rate well below the BoE target. • CPI: 0.1%mom/0.2%yoy in Dec v 0.0%mom/0.1%yoy in Nov and 0.0%mom/0.2%yoy forecast. • Core CPI: 1.4%yoy v 1.2%yoy in Nov and 1.2%yoy forecast. • Consumer prices growth averaged 0% last year amid increased competition between supermarkets limited gains in food prices while weak oil prices capped increases in fuel costs. Zimbabwe – Farmers miners and manufacturers rejected state-owned power utility offer to raise power costs by 49%. • Zesa Holdings is currently meeting aroung half of the nation's 2200MW demand for power with imports helping with the deficit. Currencies US$1.0871/eur vs 1.0908/eur yesterday. Yen 117.97/$ vs 117.43/$. SAr 16.606/$ vs 16.592/$. $1.431/gbp vs 1.436/gbp 0.694/aud vs 0.688/aud - Commodity News Precious metals: Gold US$1087/oz vs US$1083/oz yesterday – Platinum US$829/oz vs US$834/oz yesterday – Palladium US$500/oz vs US$486/oz yesterday – Silver US$14.01/oz vs US$13.83/oz yesterday Base metals: Copper US$4434/t vs US$4368/t yesterday – Codelco CEO forecasts copper prices to increase post Chinese New Year next month. Aluminium US$1493/t vsUS$1472/t yesterday – Nickel US$8680/t vs US$8435/t yesterday – Sumitomo forecasts a 43kt deficit in 2016 suggesting demand will outpace supy for the first time in six years. • Production cuts at Chinese mills are expected to have 'a big impact' on the global supply of the metal with NPI output estimated to come down 21%yoy to 300kt. • Global production is estimated to contract 3.6%yoy to 1.891mt this year with consumption climbing 1.6%yoy to 1.934mt. Zinc US$1520/t vs US$1482/t yesterday Lead US$1624/t vs US$1604/t yesterday Tin US$13345/t vs US$13255/t yesterday Energy: Oil US$29.60/bbl vs US$29.90/bbl yesterday – End to Iranian sanctions will help Iran but should not add new oil supplies into markets as Iran was selling oil despite the sanctions Natural Gas US$2.103/mmbtu vs US$2.109/mmbtu yesterday Uranium US$34.75/lb vs US$34.75/lb yesterday Bulk comodities: Iron ore 62% Fe spot (cfr Tianjin) US$40.80/t vs US$40.60/t yesterday – Chinese port inventories are set to surpass 100mt mark on the back of strong shipments from Australia and Brazil and seasonal weak demand in China. Stockpiles climbed 1.7% to 94.6mt an eight-month high last week following increases in the last four months. Current inventories beat respective five-year average of 92.7mt. Steel – China posted the first annual decline in steel production in a quarter century as demand slowed while the industry continues to battle with overcapacity. • Crude steel production fell 2.3%yoy to 803.8mt last year. • Dec production was down 5.2%yoy at 64.4mt. • Nearly 14% of annual production has been shipped overseas marking a 20%yoy increase in steel exports. • The China Iron & Steel Association forecasts more production cuts with 2017 output expected to come in at 783mt (-.6%yoy). Thermal coal (1st year forward cif ARA) US$38.30/t vs US$38.05/t on 30 December – Other: Tungsten - APT European prices $165–175/mtu vs $165–180/mtu last week and $165–185/mtu the week before – possibly due to Chinese clearout of stock ahead of the Chinese New Year Ferrochrome – Benchmark prices collapsed to 92c/lb in December for Q1/16 marking. Company News Highfield Resources (ASX:HFR) A$1.68 Mkt Cap A$521.8m – Release of independent report on Muga Potash Project • Highfield Resources has released highlights of a report prepared on behalf of the syndicate of European banks engaged in the project financing of its Muga project which suggests that 'Highfield is likely to be the highest margin potash producer globally' and the 'Muga Potash Mine [is] likely to be the lowest cost potash producer on a delivered to customer basis into its target markets of Europe Brazil and the United States.' • The report was prepared for the banking syndicate by the international independent consulting company specialising in the global fertiliser industry Argus FMB. • Highfield Resources is developing a series of potash deposits in the Ebro basin of northern Spain where it completed a Definitive Feasibility Study on the flagship Muga Project in March 2015. The company 'expects to receive a positive environmental declaration in the first quarter of 2016 to enable it to commence construction of the Mine'. • Today's announcement indicates that based on sales of 75% of product to the European and Brazilian markets with the remaining 25% going the US if the mine had been in production in 2015 it 'would have achieved a total cash margin of 61% in 2015.' Charts included in the press release suggest that this would be the world's highest margin for MOP (muriate of potash or potassium chloride). • Other charts released today also show that Highfield's production would be the lowest cost provider to deliver MOP to the European Brazilian and US markets. • The previously released information from the feasibility study indicates that Muga would have a mine life of 24 years producing 125000tpa of 'granular K62 potash' and a by-product of approximately 260000 tpa of industrial grade salt from an initial investment of $124m to generate an NPV of $222m (discounted at 10%) and an IRR of 33%. Goldcrest Resources (GCRP) 0.06pence Mkt Cap £1.2m – Acqusition of Taoudeni Resources • Goldcrest Resources reports that it has acquired Taoudeni Resources for shares in a transaction which gives Goldcrest 100% of the Asheba gold project in southeast Ghana. • The Asheba project which contains a non-JORC compliant resource of 176000oz of gold at an average grade of 1.8g/t is adjacent to Goldcrest Resources' Akoko project which currently has a JORC resource of 92800 oz of gold at an average grade of 1.9g/t. The Akoko project acquisition was announced in May 2015 for a series of staged payments totalling US$282500 plus US$200000 in shares and is conditional on additional payments related to the size of the ultimate resource outlined on the property up to a total of 2m oz. • Mining occurred in the area during the 1920s and artisanal mining has continued more recently. Mineralisation is reported to remain 'open in many areas.' • 'The Combined Project is located at the southern end of the prolific Ashanti Gold Belt….The Combined Project is close to existing infrastructure and located in one of Africa's most established mining jurisdictions.' • The acquisition consideration amounts to an initial 599177916 new shares in Goldcrest plus a deferred consideration of 617702713 shares and 102257114 warrants exercisable at a price of 0.05p for a period of 10 years giving the vendors of Taoudeni a potential 45% interest in the enlarged company (47% if the warrants are exercised). Rio Tinto (LON:RIO) 1704 pence Mkt Cap £31.4bn – Q4 Production Numbers in Line • Global iron ore shipments and production are up 11% and 10% respectively at 91.3 and 87.2 Mt from Q4 2014. • Production is flat quarter on quarter and in line with guidance and for the full year 309.9 mt on a 100% basis and 252.7 Mt for Rio's share. • Production was up in the second half due to completion of the expanded infrastructure. • Sales exceeded production by 4.2 mt as they drew down on inventories – around 22% was priced with reference to the prior quarter's average index and the remainder sold on current quarter average. • Achieved average pricing in 2015 was US$48.4 per wet metric tonne on an FOB basis. • For FY 2016 guidance is for 350 Mt on a 100% basis. • Mined copper is down 13% to 111.1 kt from Q4 last year giving full year production of 504.4 kt down 16% in line with guidance of 510 kt. • On a quarter on quarter basis mined copper is down 3%. • Lower copper production at KUC was offset by ramping up at Oyu Tolgoi. • Production at Escondida was down for the fourth quarter by 26% from the same time last year due to lower grades. • Around 416.75 kt of copper was provisionally priced at US$4828/t (189 m lbs at 219 cents per pound). • For 2016 Rio's shares of mined copper is guided to 575 – 625 kt. • Aluminium was up 4% at 864 kt with 3322 kt for the full year up 1%. • Bauxite was up 4% to 11.2 mt and for the full year up 4% to 43.67 mt. • Guidance for FY 2016 for Rio's share of production is 45 mt of bauxite 7.8 Mt of alumina and 3.6 Mt of aluminium. • For Diamonds – Argyle saw production up 86% to 3.368m carats giving full year production of 13.472m carats. • At Diavik carats recovered were down 11% due to processing plant stops in the fourth quarter and the absence of stockpiled ore. • For the full year diamond production stood at 17.315 m carats with guidance for 2016 of 21m carats. • Titanium dioxide slag production was down by 25% at 1.089 mt as production is optimised to meet weak demand. • For 2016 the company is guiding to 1 mt of titanium dioxide. • Pre-tax exploration expenditure was US$576m for 2015 compared with US$765m for 2014. • Breakdown of exploration spend - 38% was spent on copper 23% on diamond and minerals 6% on iron ore and 2% on aluminium. Conclusion: Production for FY 2015 was in line with guidance across most commodities. For FY 2016 production guidance for the main commodities range from 10-15% which suggests that there is no let up on Rio's strategy to pursue increasing low cost supply. Not particularly helpful for the sector or commodity prices. Vedanta Resources (LON:VED) 212 pence Mkt Cap £572m – Tender to buy back US$500m of convertible bonds maturing 2016 • The company has launched a tender to buy back a maximum of US$500m of the 5.5% July 2016 convertible bond. • The amount outstanding is US$1.134bn. • The bonds are trading at around 89.75 giving an effective yield to maturity of 29.9%. • The bonds are being bought back as part of the active management of Vedanta's balance sheet. Conclusion: Interesting to see Vedanta buying back these bonds now 'cheaply' than waiting till 2016 to redeem at par. Shanta Gold* (LON:SHG) 6.3p Mkt Cap £29.3m – Higher than expected grades drive greater gold production in Q4 2015 We have just returned from an analyst site visit to Tanzania these are our initial thoughts on the company's progress • Shanta Gold today report their Q4 operational update for the New Luika Gold mine in Tanzania. • Better management practices and grade control have led to a substantial increase in tonnes mined and grade milled. • Mining ramped up to 184167t in Q4 from 94846t seen a year earlier. The mining team maintained a very steady strip ratio through the year with no element of high-grading. • Grade rose to 6.5g/t in Q4 vs 4.37g/t yoy. Grade picked up in November and substantial high grade material now placed onto the Run of Mine stockpile. • Resource: The grade in the area being mined was higher than anticipated giving positive reconciliation on the in-pit resource/reserve another good sign. o Gold production rose to 29139oz in Q4 vs 24532oz in Q3. o Production for the year came in at 81873 vs guidance of 72000oz - 77000oz though this was slightly lower than the 84028oz seen in 2014. o The plan is to maintain gold production 84000ozpa over the next four years though we would not be surprised to better numbers come through . Sales rose to $31.8m on the sale of 29228oz at an average price of $1087/oz through the quarter vs an average spot price of $1103/oz for the year. Costs on a cash cost basis fell to $401/oz in Q4 vs $453/oz on higher unit sales and improved mine performance. 2016 production: 82-87000oz guidance at an AISC cost of $750-800/oz AISC costs fell to $595/oz in Q4 from $608/oz for Q3. This compares very well with the All In Sustaining Cost for the year of $845/oz vs guidance of $850-900/oz for the year and $941/oz seen last year. Mine plan: Shanta is pressing ahead with its new 5-year mine development plan. The plan is to access high-grade gold ores by underground mining below the New Luika pit. This should prove to be more cost effective and has the benefit of relieving Shanta of the higher cost of contract mining at this pit. High-grade ores from the underground mine should then combine with lower grade ores from near surface resources at other lower cost open pits. Underground finance: Management are preparing to access high-grade ores underground at the New Luika pit with a $5m financing being finalised for buying equipment. The plan is for 70% of the gold to be mined to come from underground mining starting Q2 2017 and orders have been placed for $3.2m of equipment with deposits paid. The team are well versed in underground development and see this as a way of gaining access to higher grade gold ores at New Luika without the need for a further costly pushback in the pit. Resources: at total of 519000oz of gold in resource grading 2.91g/t currently sit outside the mine plan. Cash Flow: Generating 30-35m of Cash Flow at current gold price levels. Power plant: The team are preparing to install new long-life Heavy Fuel Oil generators to replace the current diesel gensets which are coming to the end of their 3-years lifespan. The new underground mine will use less fuel overall but will double demand for electrical power requiring the greater planned generation capacity. Capex: Shanta cut the planned capex to $16.7m ($6.2m+$7.3m+$3.2m = $16.7m inc underground equipment deposits) in H2 2015 from $27.8m previously planned Net debt at year end $41m and gross debt of $60m presumably this included the convertible. The company is looking at how it manages its debt going forward and will update the market in due course. Shanta has $25m of convertibles come due in April 2017. The convertibles carry an 8.5% coupon. Singida: management are currently looking at potential to reactivate this project probably with the involvement of a joint venture partner. Conclusion: These are a good set of results. The rise in gold production lowers costs and brings in much needed additional cash flow. The team now led by Tony Bradbury and Scott Yelland have made great progress in raising mine production and raising throughput grades. While some of this might be down to the geology much is likely to be down to better management control of the contractors and better grade control in the pit. Moving to underground mining should give further and more precise control. Shanta is making great progress and looks well set to benefit from the transition to underground mining in 2017. * The author of this report has visited the New Luika mine site on two occasions
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