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06 August 2019 06:50 AM
Overseas Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Dow Jones Industrial Average25,71826,485-767.00-2.90-4.47
S&P 5002,8452,932-87.00-2.98-4.87
NASDAQ7,7268,004-278.00-3.47-5.34
FTSE 100 Index7,2247,407-183.00-2.47-4.36
DAX 3011,6590-214.00-1.80-7.24
CAC 40 Index5,2425,359-117.00-2.19-6.30
Nikkei 225 (Japan)20,72021,087-367.00-1.74-4.72
HKSE26,15126,919-767.00-2.85-9.12
SSE Composite Index2,8212,868-46.00-1.62-6.30
S&P/TSX Composite Index16,27216,377-105.00-0.64-1.63
NZ 5010,57810,766-188.00-1.75-0.36
US Volatility (Vix)25
Overseas Market Report

US sharemarkets slumped on Monday on a widening of the US China trade war. China's Commerce Ministry said that Chinese companies have stopped buying US agricultural products. China also allowed its currency to depreciate, a move called a "major violation" and "currency manipulation" by US President Trump. A weaker yuan serves to make Chinese goods more competitive on the global stage. Technology stocks were hardest hit with Apple down 5.2%. After being down 961 points, the Dow Jones lost 767 points or 2.9% with the S&P500 down 3.0%, while the Nasdaq fell by 278 points or 3.5%. 

Global oil prices slumped in line with equities as traders fretted about global crude demand with the widening of the US-China trade war. US prices saw some support on data showing that stocks at the Cushing storage hub fell by 2.4 million barrels last week. The Brent crude price fell by US$2.08 or 3.4% to US$59.81 a barrel. And the US Nymex price fell by US97 cents or 1.7% to US$54.69 a barrel.

Base metal prices fell by between 0.4-1.5% on the London Metal Exchange on Monday. Aluminium and tin fell the least with zinc down the most. But nickel rose 3% and lead rose 0.8%.

The gold futures price rose by US$19 or 1.3% to US$1,464.60 an ounce. The spot gold price was trading near US$1,461 an ounce in late US trade. Iron ore fell by US$9.30 or 8.6% to US$99.15 a tonne.

CommoditiesCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Oil Brent59.8161.89-2.08-3.36-6.88
Oil - West Texas crude54.0754.69-0.62-1.13-5.98
Gold Spot $/OZ1,474.001,464.009.900.675.32
Silver Spot $/OZ16.5016.400.100.629.98
Iron Ore112.70115.40-2.70-2.36-3.68
Thermal Coal Newcastle68.9069.20-0.30-0.36-9.58
APAC Hard Coking Coal FOB158.00158.000.000.00-14.59
Aluminium ($US/t)1,7341,741-7.00-0.39-2.79
Copper Mar-18 ($US/lb)2.542.540.000.00-4.31
Lead ($US/t)1,9611,94616.000.805.66
Nickel ($US/t)14,87814,448430.002.9819.81
Zinc ($US/t)2,3052,341-36.00-1.54-4.12
Tin ($US/t)16,90716,971-64.00-0.38-7.89
Uranium ($US/lb)25.0025.000.000.003.26
Australian Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
ASX All Ords6,7116,846-135.00-1.98-1.77
S&P/ASX 2006,6406,769-128.00-1.90-1.64
ASX 24 Futures6,460
Australian Market Report

Monday 5 August - close. The Australian share market has suffered its biggest loss since December 10, with every sector deep in the red after signs that China is striking back against the US in their escalating trade war. The benchmark S&P/ASX200 index finished down 128.3 points, or 1.9 per cent, to 6,640.3 points at 1615 AEST on Monday, while the broader All Ordinaries was down 135.5 points, or 1.98 per cent, to 6,710.6 points.

Ashanti Headlines

Diggers and Dealer - Day 1

A couple of notes from Diggers Day 1.

  • Very well attended Diggers
  • Quite a buoyant mood (despite the market being down today)
  • John needs to trim his eyebrows
  • Gold is the talk of the town – both in terms on recent improvement and Monday’s trading
  • A close second in terms of overall interest would be Nickel, with many speculating a resurgence in WA’s nickel industry
  • Interestingly, most of the MDs we spoke to were quick to note that their stocks were undervalued!

A few notes from selected presenters:

Bellevue Gold (BGL) A$0.63 (+3.3%)

A curiously well-timed gold discovery beneath the 12th level of the Bellevue Mine intersected gold with highlights including 3.6m @ 18.3g/t and 2.5m @ 5.1g/t

Currently capped at A$334M with 1.8Moz of Inferred Gold Resources grading 11g/t – mineralisation remains open in all directions along 1km of strike

Presentation was well attended and general feedback seemed positive from our conversations after

There’s little doubt that this discovery will become a highly profitable high-grade mine and will either provide significant cashflows for long term BGL holders, or an attractive takeover target for mid-cap gold companies seeking to bolster production.

Growth in Resources key for the company over the coming year - 6 diamond rigs are active on site

                                                                                                                                 

Galena Mining (G1A) A$0.38 (-1.3%)

Full steam ahead for Galena, with MD Alexander Molyneux claiming that it is the highest returning base metals development project underway globally

Project funding does not appear to be a problem

Galena diluting to 60% ownership

 

Boss Resources (BOE) A$0.06 (-0.8%)

Attractive uranium exposure – fully permitted, little to no execution risk given it has operated before, fully permitted  and low cost of production

Solid institutional investor on the register, with both Paradice and Tribecca owning 10% each

More than likely to be the next uranium mine to come online globally

Any material move in share price is going to be reliant on a move in U (obviously) but project does not have a lot of technical risk on care and maintenance

 

Cardinal Resources (CDV) A$0.38 (+2.7%)

One of the few gold stocks on the ASX that you could make a strong argument for it being undervalued

North American investors showing interest and have recently bought up to 38% of the company

Feasibility Study (due end of Q3) has not been over-promoted but we think there is a strong chance that the overall economics could improve from the already impressive PFS

Inclusion of the AachenTM Shear Vessel  in the processing circuit (post floats, pre-leach) provide increased recoveries, reduced power, reagents and consumables

Gold price in the study will be increased from US$1,250 (PFS) to US$1,350 (FS)

Final investment decision expected pre-Christmas, so expect strong news flow over the coming 5 months

Current market cap of A$144M leaves plenty of room to the upside of this +5Moz Gold Reserve

 

Kalium Lakes (KLL) A$0.49 (-7.5%)

One of only a handful of Sulphate of Potash projects globally

Messaging from the MD Brett Hazelden was very positive that all aspects of the project were progressing smoothly

Most importantly (for an industrial minerals company) Kalium Lakes has secured a 10yr offtake (100% of production) with a reputable German fertiliser group, K + S

Large dip in share price on Monday may present attractive buying considering no bad news from this advanced developer

Large scale piloting of production concept has reduced execution risk of the project

Kalium Lakes aims to pay large dividends once in production supported by the project’s 30-50yr LOM and 60% EBITDA margin

 

Western Areas (WSA) A$2.14 (-3.6%)

MD Dan Lougher provided a detailed update on the Odysseus project, which now has a 10+ yr LOM

Early works have commenced at the project, but the bulk of spending will not be required until FY21

The 13kpta Nickel production will supplement existing operations nicely, though the cost is higher at A$3.50/lb AISC (vs. ~A$2.97/lb existing)

Unsurprisingly(!) Lougher has a positive outlook on the Nickel market, believing that supply/demand deficits will lead to improved pricing in the near term

WSA is well leveraged to an improving nickel market but without significant price increases, most operating profits will be funnelled into the Odysseus development

Other notes

New Century Resources currently commissioning an expanded cleaning circuit which Management believe will increase recoveries toward ~65%. Once this is compete, the next improvement is to increase the live capacity of the slurry feed tank and also improve mixing to ensure homogeneity to the plant. The improvements, coupled with a stepped change from 8Mtpa to 10Mtpa to 12 Mtpa provide significant upside in production over the coming 12 months. 


Have a question? admin@ashanticapital.com.au

ERA Communications