logo-loader

Morning View - Amur Minerals; Mkango Resources and more...

Amur Minerals* (LON:AMC) – EGM notice Highland Gold (AIM:HGM) – Kayen exploration license sold for $15m and 2% royalty Keras Resources* (AIM:KRS) - Global manganese ore output falls 22% in April  Mkango Resources* (LON:MKA) – COVID-19 medical equipment donated to main Malawi hospital Rambler Metals* (AIM:RMM) – US$1m bridging loan

.

SP Angel . Morning View . Tuesday 02 06 20

Miners set to gain on improving PMIs and iron ore prices reach new all-time high

 

MiFID II exempt information – see disclaimer below    

    

Amur Minerals* (LON:AMC) – EGM notice

Highland Gold (AIM:HGM) – Kayen exploration license sold for $15m and 2% royalty

Keras Resources* (AIM:KRS) - Global manganese ore output falls 22% in April 

Mkango Resources* (LON:MKA) – COVID-19 medical equipment donated to main Malawi hospital

Rambler Metals* (AIM:RMM) – US$1m bridging loan

 

Rising economic indicators lift miners

Economic indicators highlighting recovery from Lockdown lows are lifting mining and related equities.

Supply / demand balances remain uncertain as mine stoppages serve to offset much of the expectation for weaker demand.

Metal inventory levels have continued to fall in China post the end of the lockdown as local stimulus adds to demand for raw materials.

Ongoing restrictions in many Western nations and disruption caused by centres of viral outbreaks will cause some further disruption.

 

China Steel PMIs show why iron ore hits new price high and inventory levels fall at the dockside

Iron ore September futures hit US$108.9/t on the Dalian Commodity Exchange its highest levels since the contract was launched in 2013

Chinese steel producers continues to increase ahead of public stimulus announcements driving demand for quality iron ore yet higher.

Other manufacturing is thought to be >85% capacity - The authorities put the city of Shulan (700,000 people) into a Wuhan-style lockdown in May

May manufacturing PMI is reported at 50.6 for May vs 50.8 in April.

Caixin China 50.7 in May vs 49.4 for April

Steel industry PMI 50.9 in May vs 45.9 in April

Steel output PMI 56.4 vs 53.4

Steel new orders PMI 52.9 vs 39.9

Brazilian iron ore exports fall 28% in May yoy

Brazil exported 21.50mt of iron or last month vs 29.87mt in May 2019 according to the country's economy ministry (Fastmarkets MB). 

Iron ore prices have been rising in recent weeks, due to concerns over supply from Brazil along with robust demand from top consumer China. 

Brazil has the second-largest number of cases worldwide with 498,400 confirmed infections, and by mid-May, 81 of Vale's employees had tested positive for Covid-19 in the company's operations centre in Itabira city, Minas Gerais. 

 

COVID-19 driving online sales of air conditioners, refrigerators, freezers and dishwashers and most other household appliances in China

The Coronavirus lockdown is driving demand for most household appliances from online sites.

The surge in online demand appears to be outpacing traditional in-store retain sales in almost all items

Working from home also requires bigger fridge and freezer space for families as home working requires bigger stocks of most consumables

Consumers are seen buying new and larger fridges and freezers as they make less frequent trips to the shops even as lockdown restrictions ease

Many consumers also want to be better prepared in case there is a second wave of virus infection

China make around three quarters of the global production mainly for non-Chinese brands we suspect

Freezers sold out in NY early in the Coronavirus crisis as New Yorkers who normally eat out allot bought more fridge and freezer space for stocking up.

The increase in online sales is reported to be keeping manufacturers busy. This should help offset much lost demand for metals in the auto industry.

 

Stimulus

China – The central bank will start to buying bank loans issued by local lenders to small firms this week in an effort to ease the flow of credit.

$140bn - The programme will be for as much as CNY 1tn ($140bn).

$56bn - The PBOC also announced a Rmb400bn ($56bn) purchase loan program to boost available credit by supporting bank loans to small businesses.

>15tn from 14.8tn - Total up from $13.2bn based on expanded EU package and massive new Japan stimulus

 

Dow Jones Industrials

+0.36%

at

25,475

Nikkei 225

+1.19%

at

22,326

HK Hang Seng

+0.64%

at

23,884

Shanghai Composite

+0.08%

at

2,918

 

Economics

PMIs going better

Australia PMI 41.6 in May vs 35.8 April

Japan 38.4 in May vs (41.9 April

Taiwan 41.9 in May vs 42.2 April

South Korea 41.3 in May vs 41.6 April

India 30.8 in May vs 27.4 – India suffering resurgence of Coronavirus infections following lifting of restrictions

Russia 36.2 in May vs 31.3 April

Poland 40.6 in May vs 31.9 April

France 40.6 in May vs 31.5 April

Germany 36.6 in May vs 34.5 April

EU 39.4 in May vs 33.4 April

UK 40.7 in May vs 32.6 April

 

US – President Trump called for a tougher government response to the violent unrest that followed widespread peaceful protests sparked by the death of George Floyd.

“Mayors and governors must establish an overwhelming law enforcement presence until the violence has been quelled,” Trump said. “If a city or state refuses to take the actions that are necessary to defend the life and property of their residents, then I will deploy the United States military and quickly solve the problem for them.”

Chinese authorities ordered major state owned agricultural companies to pause purchases of some American farm goods including soybeans as Beijing evaluated the escalation in tensions with the US over Hong Kong, Bloomberg reports.

US construction spending fell 2.9% in April vs 0% in March

 

China – The central bank will start to buying bank loans issued by local lenders to small firms this week in an effort to ease the flow of credit.

The programme will be for as much as CNY 1tn ($140bn).

The PBOC also announced a Rmb400bn ($56bn) purchase loan program to boost available credit by supporting bank loans to small businesses.

Parastatal soft commodity traders ordered to suspend buying of soybeans and other farm products

China may break its trade deal agreements if the US interferes in Hong Kong

China is to introduce zero tariffs in Hainan province indicating that the region may take over from Hong Kong .

 

Hong Kong government to extend social-distancing measures after outbreak in housing estate

Officials have locked down a housing estate in HK due to super spreader fears in the city (South China Morning Post)

 

Germany – Angela Merkel will be trying to agree a €50-100bn stimulus package with the ruling coalition, according to Bloomberg.

Possible measures include from debt relief for struggling municipalities to cash bonuses to stimulate car sales and aid families with children.

 

UK – House prices posted the sharpest monthly drop since Feb/09 last month, according to Nationwide.

Price dropped 1.7%mom versus a 0.9%mom increase in April.

Data is likely to be distorted by low market liquidity with activity reported to have picked up since the reopening of May 13 and Nationwide said the results were robust.

UK automotive output fell 99.7% in April yoy according to Society of Motor Manufacturers and Traders (SMMT)

The UK produced a total of just 197 premium and luxury sports vehicles of which 45 went to UK customers.

 

France – The economy can post a 20% drop in Q2 and 8% for the whole year of 2020 if activities return to pre-crisis levels by July, according to national statistics institute INSEE.

GDP dropped 5.%yoy in Q1.

The economy is currently running “at roughly 4/5s of its pre-crisis level” compared to 2/3s during the lockdown period, the institute said.

 

Singapore – The government is getting ready to start easing the lockdown after two months of restrictions.

Selected businesses and schools will resume operations today that should see 75% of the economy coming back online with a third of Singapore’s workers expected to be back in their offices and factories.

 

South Korea – The nation joined the ranks of countries with negative inflation in May amid low oil prices and a drop in economic activity.

CPI dropped 0.3%yoy last month with a 19%yoy drop in the price of oil products reported.

A separate report showed, the economy contracted a revised 1.3%qoq in Q1 marking a slightly smaller contraction than previously estimated.

Markets currently expect a similar drop in Q2 with reopening of the economy in the latter half of the quarter helping to ease a drop from the lockdown.

 

Currencies

US$1.1130/eur vs 1.1143/eur yesterday.  Yen 107.77/$ vs 107.58/$.  SAr 17.401/$ vs 17.406/$.  $1.254/gbp vs $1.241/gbp.  0.680/aud vs 0.675/aud.  CNY 7.121/$ vs 7.120/$.

 

Commodity News

Official LME Week 2020 cancelled due to Covid-19

The London Metal Exchange has formally cancelled this year's LME Week, announcing that all of its official events will no longer take place during October/ early November and instead a virtual forum will be held. 

Although official events will not be happening, some market participants have suggested the potential for one-on-one meetings to take place.

 

Precious metals:         

Gold US$1,737/oz vs US$1,742/oz yesterday

   Gold ETFs 100.4moz vs US$100.2moz yesterday

Platinum US$852/oz vs US$844/oz yesterday

Palladium US$1,959/oz vs US$1,962/oz yesterday

Silver US$18.20/oz vs US$18.32/oz yesterday

           

Base metals:  

Copper US$ 5,462/t vs US$5,438/t yesterday – Copper prices hit three month high in Shanghai 

The price of copper in Shanghai rose to its highest in nearly three months on Tuesday morning, as Chinese demand continues to recover.

Domestic investment is thriving in China, especially in infrastructure, and supply/ transport slowdowns from South America are also supporting prices according to Chinese copper traders. 

The most-traded copper July copper contract on the Shanghai Futures Exchange (ShFE) rose 0.9% to 44,660 yuan ($6,275)/t this morning- and hit its highest since the 6th of March earlier in the session (Reuters).

Copper inventories in ShFE warehouses dropped at the fastest pace since September 2017 last week. 

Chile copper production rose 2.8% yoy in April to 475,000t,

Copper and copper alloy fabrication products fell 7.9% yoy to 59,600t Japanese Copper and Brass Association.

Aluminium US$ 1,535/t vs US$1,550/t yesterday

Nickel US$ 12,625/t vs US$12,590/t yesterday - China nickel manufacturing expands for third consecutive month

Manufacturing activity across nickel downstream sectors expanded for the third consecutive month in May, although the expansion was at a softer pace than April.

The PMI for downstream nickel industries including stainless steel stood at 51.44 in May, down 0.32 from April. 

The preliminary nickel downstream sectors PMI for June is assessed at 51.16, down 0.28 from the final reading for May (SMM News). 

Zinc US$ 2,011/t vs US$1,993/t yesterday

Lead US$ 1,678/t vs US$1,679/t yesterday

Tin US$ 15,715/t vs US$15,540/t yesterday

           

Energy:           

Oil US$38.7/bbl vs US$37.8/bbl yesterday

Oil prices ticked up on reports that OPEC+ is set to bring forward its meeting to Thursday, with a short extension of the current production cuts as the most likely outcome

Originally scheduled to take place on 9 June, OPEC is now looking at moving it up to 4 June

Market consensus suggests the group will extend the current output restrictions for one to three months

As it stands, without an extension the extraordinary cuts agreed upon in April – 9.7MMbopd will expire at the end of June

However, nothing has been agreed yet and there are conflicting signals over how unified the OPEC+ parties are on an extension

Saudi Arabia reportedly wants to extend the cuts until the end of the year, while Russia has characteristically shown reluctance

Russia may not want to extend beyond another month or two, which raises questions about what will occur later this year. At some point, there will be pressure to begin unwinding the production cuts

Natural Gas US$1.783/mmbtu vs US$1.790/mmbtu yesterday

Natural gas prices moved lower yesterday, hitting a lower low and a lower close which is a sign of a downtrend

Natural gas deliveries to US LNG export facilities have declined to the lowest level since October 2019

The weather is expected to remain warmer than normal in the US mid-west and east coast for the next two weeks driving up cooling demand

Stronger manufacturing should also help buoy industrial demand

The opening of the economy which should include the opening of office buildings should increase electricity demand and therefore natural gas consumption

Uranium US$33.70/lb vs US$33.95/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$97.3/t vs US$97.1/t

Chinese steel rebar 25mm US$545.9/t vs US$545.9/t

Thermal coal (1st year forward cif ARA) US$53.0/t vs US$51.9/t

Coking coal swap Australia FOB US$104.5/t vs US$104.5/t

 

Other: 

Cobalt LME 3m US$30,000/t vs US$30,000/t

NdPr Rare Earth Oxide (China) US$38,057/t vs US$38,063/t

Lithium carbonate 99% (China) US$4,915/t vs US$4,986/t

Ferro Vanadium 80% FOB (China) US$28.0/kg vs US$27.5/kg

Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.0/kg

Tungsten APT European US$215-225/mtu vs US$215-225/mtu

Graphite flake 94% C, -100 mesh, fob China US$485/t vs US$485/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,350/t vs US$2,350/t

 

Battery News

China - Beijing to allocate a further 20,000 license plates for Electric Vehicles in the second half 

 

Company News

Amur Minerals* (AMC LN) 1.1p, Mkt Cap £12m – EGM notice

The Company announced an Extraordinary General Meeting to be held on 19 June 2020 in London.

Amur Minerals will be seeking shareholder approval to increase the number of shares that the Company is authorised to issue from 1,000m to 2,000m.

There is currently ~968m shares in issue.

The team highlights the expanded capacity will offer the Company flexibility to benefit from potential corporate transactions including mergers, acquisitions and investments  in the mining sector.

*SP Angel act as Nomad and Broker to Amur Minerals

 

Highland Gold (HGM LN) 262p, Mkt Cap £952m – Kayen exploration license sold for $15m and 2% royalty

The Company sold the Kayenmivaam (Kayen) exploration license for cash consideration of US$15m plus a 2% royalty on gold produced and sold from the deposit in excess of 500koz for a period of 30 years.

The Kayen license is an early-stage exploration asset covering 1,214km2 in the Chukotka region of Russia acquired as part of the Valunisty deal in 2018.

The asset is treated as non-core due to its location from the Valunisty mine and Kekura development project.

The cash consideration will be paid in two instalments with the first one at closing and the second following the legal transfer of shares.

The transaction is subject to the Federal Anti-Monopoly Service approval which is expected to be completed later in the year.

Conclusion: The Company disposed of the non-core Kayen exploration property for a cash consideration of $15m as the Company is going through a capital period while retaining upside to the asset through a 2% royalty should the asset be developed into an operating mine. The property is an early stage project that has seen ~23km of drilling completed as of mid-2018 and $15m invested historically with two areas identified as most prospective ( Levoberezhny / Aryk – 0.2moz Au at 2.5g/t Au and 11moz Ag at 120g/t in C2/P1; Televeem / Televeem North).

 

Keras Resources* (KRS LN) 0.15p, Mkt cap £4.18m - Global manganese ore output falls 22% in April 

Global manganese ore production contracted by 22% in April from March due to the Covid-19 pandemic, according to data from the International Manganese Institute (IMnI). 

Global supply was 1.2mt in April, with output from all producing countries falling month-on-month - with the biggest regional fall coming from Africa and the Middle East which saw production drop 24% in April to 679,000 tonnes. 

Production fell by 16% in the first four months of the year compared to the same period in 2019, despite increases in supply from Gabon, South Africa and Australia. 

Fastmarkets' manganese ore index 37% Mn fell by 6.2% to $5.93 per dry metric tonne unit (dmtu) on the 29th of May from $6.32 per dmtu on the 22nd of May.

*SP Angel act as nomad and broker to Keras Resources

 

Mkango Resources* (MKA LN) 4.12p, Mkt cap £5.5m – COVID-19 medical equipment donated to main Malawi hospital

Mkango Resources report on their donation of new anaesthetic machine to The Queen Elizabeth Central Hospital in Malawi.

The, state of the art, machine will help enable the Queen Elizabeth Central Hospital to set up a new operating theatre for emergency operations, specifically for patients who are suspected of having the COVID 19 virus.

The donation is seen as very timely as the machine will help in the safe anaesthesia for patients through the Coronavirus pandemic.

The hospital has 1,000beds  and is the largest public and teaching hospital in Malaw.

Conclusion: It is good to see Mkango doing its bit for public service in Malawi in yet another demonstration of how UK-listed mining companies work for the longer-term benefit of local communities. We saw miners in West Africa saving lives through the use of their organisation and logistical skills through the Ebola crisis in West Africa and we continue to see reports of junior miners working to protect lives elsewhere as the Coronavirus adds to the list of health and safety services which UK-listed miners provide.

*SP Angel are proud to act as nomad and broker to Mkango Resources

 

Rambler Metals* (RMM LN) 1.7p, Mkt Cap £22.0m – US$1m bridging loan

CLICK FOR PDF

Rambler Metals reports that it has agreed a short term bridging loan for US$1m with Aether Real Assets Co-Investment.

Aether is ʺdeemed to be an associate of both CE Mining II Rambler Limited ("CEII") and CE Mining III Rambler Limitedʺ. According to the current annual report, at 31st December 2019,  CE Mining II Rambler owns a 60% interest in the company.

The loan, which is unsecured and attracts a 10% pa interest rate, is due to mature after 120 days, on 5th October 2020, and comes after an earlier US$830,000 loan from the same source announced on 7th May 2020.

ʺIt is the intention for the Aether Bridge Loan to convert into equity on completion of a fundraising, subject to agreement on pricing and other terms of conversion between Aether and the Company. Rambler is currently progressing an ongoing fundraising which is currently expected to be completed by the end of Q2 2020.ʺ

The fundraising is primarily intended to expand production and treatment capacity to a rate of 1500tpd, from the current 1350tpd rate, mining and processing ore grading around 2% copper.

Conclusion: The continuing support of its principal shareholder through a short term loan gives Rambler Metals & Mining the opportunity to complete its expansion funding .

*SP Angel act as Nomad and broker to Rambler Metals & Mining

 

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

 

Sales

Richard Parlons – 0203 470 0472

Abigail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535

 

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.

 

Sources of commodity prices

 

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel

Bloomberg

Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt

LME

Oil Brent

ICE

Natural Gas, Uranium, Iron Ore

NYMEX

Thermal Coal

Bloomberg OTC Composite

Coking Coal

SSY

RRE

Steelhome

Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal

Tungsten

Metal Bulletin

 

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

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.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. 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. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, 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).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II - Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins ([email protected]).

SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of Amur Minerals Corp. named herein, including the promotion by the Company of Amur Minerals Corp. in any Content on the Site, the Company...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

GoviEx Uranium CEO talks new gold anomalies in Mali and updates on eagerly...

GoviEx Uranium Inc's (CVE:GXU) (OTCQB:GVXXF) Daniel Major discusses with Proactive's Andrew Scott new gold in soil anomalies at its Falea project in Mali. He says it indicates potential extensions of the Sirabaya West and Siribaya-Bambadinka gold trends and may intersect within the Falea...

4 hours, 7 minutes ago

18 min read