Today's Market View Caledonia, Coal Of Africa, Sirius Minerals And Vast Resources

This is source I found from another site, main source you can find in last paragraph

Caledonia Mining (LON:CMCL) – Currency effects on 2016

Coal of Africa (LON:CZA) –Update on Makhado Environmental Authorisation

Sirius Minerals  – Progress on the Stage 1 Financing

Vast Resources (LON:VAST) – Drilling starts on Baita Plai polymetallic tailings

European equities following US markets lower on the back of latest polls showing a tightening gap between US presidential candidates with gain recorded in safe haven assets such as gold and the yen.

• The US$ index is at the lowest level in nearly a month as the Fed is expected to announce no changes to its monetary policy a little less than a week ahead of US presidential elections.

• Brent is off 1% this morning and trading around $47.6/bbl marking the weakest level since late Sep

• Iron ore futures closed nearly flat today holding onto gains recorded through Oct with rebar prices posting a 2.2% increase and trading at the highest in two months.

Base and precious metals continue to rise as US election polls cause dollar to fall

• Voting polls indicate a potentially close call in the US election raising the possibility of a Trump victory.

• The US dollar is taking fright over this uncertainty and is more likely to recover if Hilary Clinton takes the lead.

• Markets are bracing for a rise in the potential for a Trump victory with funds moving into hard assets.

• A Trump victory would bring economic and political uncertainty and would likely cause longer term flight of capital out of the USA and out of the US dollar

• This is good for metals prices and it may be that Trump will move decisively to stimulate new infrastructure and house building (more Trump Towers) it is, after all, what he knows best.

• Our simple view is that voters tend to vote for the party which they wanted to win at the start of the election process with relatively few voters actually swayed by the political rhetoric in the run-up to the election, as happened with Brexit.  Many voters started out with the idea to vote out the Democrats after two consecutive terms and to bring in the Republicans who are generally seen as a more nationalistic party.  It may be that Trump could win more by default despite recent revelations.

• You do have to wonder how they are going to organise the photograph at the next G20 summit.  President Trump could feel a bit hemmed in with Mrs May, Mrs Merkel on each flank.

Lithium Batteries – Toyota engineers claim more power at no significant extra cost (Japan Today)

• Toyota look set to grow their lead in the production and sale of electric vehicles with the claim that they can pack more power into their lithium batteries at no significant extra cost.

• While Toyota has concentrated on hybrid vehicles it now looks set to enter the market for all-electric vehicles.

• Toyota claim to have double braced and triple braced their battery pack to make sure they’re fail-safe.

Brexit – Wetherspoon’s chairman offers wise words to Europe

• "Angela Merkel of Germany and François Hollande of France have supported the stance of the unelected EU 'President' Juncker in stating that the "UK must pay a price" for leaving the EU and that there "must be a threat" to the UK. According to press reports, Juncker told European business leaders, in October, not to negotiate with UK companies and to adopt an "intransigent" attitude. This suggested approach puts an unfair burden on the excellent European suppliers with which UK companies, like Wetherspoon, have traded for many decades. For example, Wetherspoon normally agrees on trade deals with suppliers for 3 to 10 years. If we, and companies like ours, are unable to agree on tariff-free transactions, it will inevitably result in a loss of business for European companies which have done nothing to deserve this outcome. Indeed, the ultimate sanction will be in the hands of UK consumers, should they take offence at the hectoring and bullying approach of Juncker and co. Fren ch wine, Champagne and spirits, German beer and Swedish cider, for example.

Dow Jones Industrials  -0.58% at       18,037 

Nikkei 225   -1.76% at       17,135 

HK Hang Seng   -1.45% at       22,811  

Shanghai Composite    -1.63% at         3,103 

FTSE 350 Mining   -1.51% at       13,703  FTSE 350 +87% since 1st January

AIM Basic Resources   +0.21% at        2,649  AIM Basic Resources +62% since 1st January

Economic News

US – In line with separate reports, ISM reported an acceleration in manufacturing sector growth in Oct.

• Previously, Markit said manufacturing expanded at the fastest pace in a year in Oct benefiting from “rising domestic and export sales”.

• Markit report also pointed to building inflationary pressures with factory prices climbing by the most in five years suggesting it “will will further fuel speculation that the Fed will hike interest rates again in Dec”.

• YTD (Jan-Oct) auto sales were little changed at 14.4m from the previous year, a record sales year for the industry, on the back of consumer incentive programmes.

Date Index Period   Actual Est Previous

Monday Personal Income Sep %mom 0.3 0.4 0.2

  Personal Spending Sep %mom 0.5 0.4 -0.1

  PCE Core Sep %mom 0.1 0.1 0.2

  PCE Core Sep %yoy 1.7 1.7 1.7

Tuesday ISM Manufacturing Oct   51.9 51.7 51.5

  Auto Sales Oct mln 17.9 17.6 17.7

Wednesday ADP Employment Change Sep '000  165 154

  FOMC Rate Sep %   0.25-0.5 0.25-0.5

Thursday Weekly Jobless Claims Sep '000  255 258

  Factory Orders Sep %mom   0.2 0.2

Friday NFPs Oct '000  175 156

Unemployment Rate Oct %  4.9 5.0

Av Hourly Earnings Oct %mom  0.3 0.2

  Av Hourly Earnings Oct %yoy   2.6 2.6

Source: Bloomberg     

Germany – Positive employment numbers bode well for estimated strengthening growth forecasts in H2/16.

• Unemployment change (‘000): -13 in Oct v 0 in Sep and -1 forecast.

• Jobless rate (%): 6.0, a fresh record low, in Oct v 6.1 in Sep and 6.1 forecast.

UK – House prices stagnated for the first month in the last 15 in Oct, according to Nationwide Building Society.

• The report pointed to the housing activity remaining “fairly subdued”.

• The recent slowdown has been partly the consequence of the consequences of the stamp duty introduction of stamp duty on second homes back in Apr which led to a surge in activity ahead of the implemented regulation, Nationwide said.

• Nationwide House Price Index (%mom): 0.0 v 0.3 in Sep and 0.2 forecast.

• Nationwide House Price Index (%yoy): 4.6 v 5.3 in Sep and 4.9 forecast.

• Previously the CEBR (centre for Economics and Business Research) said Brexit is expected to weigh on Uk housing with growth in the secotr expected to slow to 2.6% in 2017, down from an estimated 6.9% growth in 2016.

Italy – Oct manufacturing growth rate remained little changed from the one in Sep and “well below its average seen during the first half of the year”.

• Modest growth pace is reported to be led by weaker increases in new orders.

• At the same time cost inflation reached 15-month high.

• Markit Manufacturing PMI: 50.9 v 51.0 in Sep and 51.4 forecast.

Spain – Manufacturing growth improved in Oct on “stronger rises in new orders and output”, according to Markit PMI.

• “Another development from the latest survey was a pick-up in cost inflation.”

• Markit Manufacturing PMI: 53.3 v 52.3 in Sep and 52.6 forecast.

Currencies

US$1.1077/eur vs 1.0995/eur yesterday.   Yen 103.55/$ vs 104.94/$.   SAr 13.646/$ vs 13.555/$.   $1.226/gbp vs $1.225/gbp.

0.765/aud vs 0.767/aud.   CNY 6.762/$ vs 6.772/$.

Commodity News

Precious metals:

Gold US$1,296/oz vs US$1,283/oz last week –

     Gold ETFs 65.7moz vs 65.6moz last week –

Platinum US$990/oz vs US$987/oz last week

Palladium US$632/oz vs US$627/oz last week

Silver US$18.53/oz vs US$18.09/oz last week

Base metals:   

Copper US$ 4,874/t vs US$4,872/t last week –

Aluminium US$ 1,711/t vs US$1,733/t last week –

Nickel US$ 10,380/t vs US$10,430/t last week

Zinc US$ 2,440/t vs US$2,451/t last week –

Lead US$ 2,053/t vs US$2,065/t last week

Tin US$ 20,780/t vs US$20,735/t last week

Energy:

Oil US$47.5/bbl vs US$48.7/bbl last week

Natural Gas US$2.825/mmbtu vs US$2.971/mmbtu last week –

Uranium US$18.90/lb vs US$18.75/lb last week

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$62.2/t vs US$61.6/t

Chinese steel rebar 25mm US$423.2/t vs US$417.0/t –

Thermal coal (1st year forward cif ARA) US$73.8/t vs US$74.1/t last week

Premium hard coking coal Aus fob US$258.5/t vs US$257.7/t

Other:

Tungsten - APT European prices $195-199/mtu vs $190-198/mtu unch last week

Company News

Caledonia Mining (LON:CMCL) 120 pence, Mkt Cap £62.7m – Currency effects on 2016

• Caledonia Mining has updated the market with respect to earnings expectations for 2016,

• Although 2016 earnings are expected to be “significantly higher than reported earnings for 2015” they have been impacted by a number of factors  which, taken together, lead to a situation in which reported profitability “seems likely to be below market expectations.”

• Describing these underlying factors, the company points out that the recent strength in the Rand against the US$ has increased the US$ cost of expenses incurred in Rand and that although the costs and operating performance of the Blanket gold mine are in line with expectations there will be an adverse currency impact.

• The company also reports that the rise in its share price “from $0.59 at the start of 2016 to $1.77 at the end of the third quarter has resulted in an increase in share based expenses.” In addition, the company has “incurred non-recurring costs in the evaluation of a number of investment opportunities.”

Conclusion: As was clearly apparent during the recent site visit for UK-based analysts, the Blanket mine is well advanced on its plans to increase gold production to 80,000ozpa by 2021 as it implements the long term plan for deeper level mining which underpins the long term future of the mine. The mine “remains robustly cash generative” and we believe that any adverse impact of today’s announcement should be short lived if investors look ahead to the benefits of the rejuvenation of what is already a mine with a century long production history.

Coal of Africa (LON:CZA) 3 pence, Mkt Cap £57.8m –Update on Makhado Environmental Authorisation

• Coal of Africa reports that South Africa’s Minister of Environmental Affairs has dismissed an appeal against the Environmental Authorisation Amendment for the Makhado coal project in the Limpopo Province.

• The appeal related to the transfer of the Authorisation “from  CoAL to Baobab Mining and Exploration Limited (Pty) Ltd, the legal entity for the Makhado Project”.

• The company is continuing its discussions with the Department of Water and Sanitation in relation to a, possibly separate, appeal lodged by the Vhembe Mineral Resources Stakeholders’ Forum in relation to the Integrated Water Use Licence for the project.

Conclusion: It appears that some of the issues are being resolved and that the company has received some support from the SA Government in its proposed development of the Makhado project. Outstanding appeals remain to be resolved, however.

Sirius Minerals 32.3 pence, Mkt Cap £646.1m – Progress on the Stage 1 Financing

• Following last week’s announcement of a US$250m royalty financing agreement for its North Yorkshire polyhalite development, Sirius Minerals has announced that it also secured a US$400m convertible bond financing and is making an open offer and placing of shares to raise a further £330-400m (approximately US$400-490m).

• The bonds, which are due in 2023 and expected to carry a coupon of 8-8.5%pa, are expected to have a conversion price “in the range 25-30% above the clearing price of the equity placement”. The bonds also have an increase option of up to an additional US$50m.

• A general meeting to approve the placing and the convertible bond issue is to be held on 25th November.

• The three elements of the financing together represent approximately 90% of the US$1.2bn Stage 1 financing to begin the construction of the North Yorkshire polyhalite project. According to the definitive feasibility study, the overall capital expenditure is estimated at US$2.9bn. The project requires US$1.4bn of this Total to bring the mine to production by the end of 2021 and build up to a production capacity of 10mtpa by mid-2024. The additional US$1.5bn to complete an expansion to 20mtpa “is expected to be funded with operating cash flow”.

Conclusion: Sirius Minerals has made significant progress in securing the financing required to bring its North Yorkshire project up to the initial 10mtpa production rate by 2024. We observe that, the £330-400m equity portion of the financing significantly exceeds the £266.5m total raised by all the mining companies listed on the AIM Market for the first 9 months of 2016. Optimists may conclude that this could be a turning point for the financing of mining projects on AIM – we hope they are right.

Vast Resources (VAST LN) 0.21 pence, mkt Cap £7.8m – Drilling starts on Baita Plai polymetallic tailings

• Vast Resources reports that it has started drilling at the Baita Plai polymetallic tailings dam.

• The dam is thought to contain some 4,080 tonnes of copper, 6,640 tonnes of zinc, 3,100 tonnes of lead, 35 tonnes of silver and 309kg of gold in-situ on historic drilling.

o A maiden JORC resource is due in Q1 next year with independent flotation test work and recovery optimisation to be done in the first quarter.

o Vast Resources’ also expects to produce around 630tpa of contained zinc metal in concentrate from its Manaila poymetallic mine in Romania

o The concentrates contain around 2.5g/t gold, 250 g/t silver and potentially some copper.

o Finance:  finance is tight for Vast with the company holding assets in Zimbabwe and Zambia as well as starting new operation in Romania

o Vast recently repaid the balance of a Darwin Bridge Loan Note for £325,000 + interest of £13,000.

o Bracknor Fund Limited gave converted £900,000 of its one-year convertible notes of £1,608,500 ($2m) into 428,571,428 new shares at an exercise price of 0.21p in accordance with the convertible loan as first reported on 11 October being 11.66% of the company.  The company also reported a further $3m of loan notes agreed with Braknor in tranches of US$1m each should Vast, without obligation, request this.

o The Bracknor Fund then converted a further £200,000 worth of is convertible notes on 28 October at 0.1p adding a further 105,263,158 new shares to the register.

o It was also agreed that the $2,000,000 Convertible Loan Notes issued to Bracknor on 11 October 2016 should be denominated in Sterling, with the aggregate initial value being £1,608,500.  Meaning that £508,500 of Convertible Loan Notes now remain outstanding.

o Total number of shares now is a vast 3,812,768,647 and we suspect the remainder of the convertible will be exercised delivering a significant number of additional shares to the Bracknor Fund.

o Turning to the Bracknor.com website indicates a total facility for US$6m in October 2016 which looks US$1m higher than the facility reported on 11 October.  Perhaps we missed something?

o The Bracknor Fund Investment Philosophy states “At the Bracknor Investment Group there is no such thing as traders nor traditional asset managers but entrepreneurs who believe in other entrepreneurs.”

Conclusion:  Vast is working hard to develop a mining business in Romania with relatively little cash to support its efforts.  While the Romanian business looks relatively small it should give the company an important base from which to work from.  Recourse to the use of convertible loan instruments has enabled the company to expand its operations but at the cost of delivering much of the company into the hands of the Bracknor Fund.

This is source I found from another site, main source you can find in last paragraph

Source : http://www.proactiveinvestors.co.uk/columns/sp-angel/26427/today-s-market-view-caledonia-coal-of-africa-sirius-minerals-and-vast-resources-26427.html

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