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19 December 2019 07:55 AM
Overseas Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Dow Jones Industrial Average28,23928,267-28.00-0.101.09
S&P 5003,1913,193-1.00-0.042.27
NASDAQ8,8288,8234.000.053.00
FTSE 100 Index7,5417,52515.000.212.96
DAX 3013,22213,288-66.00-0.490.01
CAC 40 Index5,9605,968-9.00-0.150.86
Nikkei 225 (Japan)23,93424,066-132.00-0.552.76
HKSE27,88427,84441.000.152.92
SSE Composite Index3,0173,022-5.00-0.182.83
S&P/TSX Composite Index17,03217,075-43.00-0.250.12
NZ 5011,39411,33064.000.574.60
US Volatility (Vix)13
Overseas Market Report

US sharemarkets were mixed on Wednesday. The S&P500 and Nasdaq indexes hit all-time intraday highs on optimism about global growth during the trading session. But investors were cautious with the US House of Representatives voting on two articles of impeachment against US President Donald Trump. Also holding back gains was a 10.0% fall in shipping giant FedEx's shares after the company lowered its fiscal 2020 profit forecast. Facebook (+2.1%) was the biggest boost to the S&P500 index as Deutsche Bank raised its price target on the stock. At the close of trade, the Dow Jones index fell by 27 points or 0.1%. The S&P500 index fell by just 1 point or 0.04%, but the Nasdaq was up by 4 points or 0.1% - a record close.

Global oil prices steadied near 3-month highs on Wednesday following a decline in US crude inventories. Stockpiles fell by 1.1 million barrels in the week to December 13 to 446.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop, according to the Energy Information Administration. The most active Brent crude contract rose by US7 cents or 0.1% to US$66.17 a barrel. But the US Nymex price fell by just US1 cent or 0.02% to US$60.93 a barrel. 

Base metal prices were mixed on the London Metal Exchange on Wednesday. Chinese refined copper production hit record highs of 909,000 tonnes in November with supply concerns weighing on copper prices (-0.4%). Lead was up 1.9%. 

The gold futures price fell by US$2.00 or 0.1% to US$1,472.60 an ounce. Spot gold was trading near US$1,475 an ounce in late US trade. Iron ore fell by US80 cents or 0.9% to US$92.30 a tonne as China debt worries hit steel sentiment.

CommoditiesCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Oil Brent66.1766.100.070.115.97
Oil - West Texas crude60.9160.93-0.02-0.0310.32
Gold Spot $/OZ1,476.001,475.000.500.030.23
Silver Spot $/OZ17.0017.000.000.04-0.75
Iron Ore85.1085.60-0.50-0.554.35
Thermal Coal Newcastle66.2065.900.300.46-1.93
APAC Hard Coking Coal FOB145.50139.006.504.680.69
Aluminium ($US/t)1,7551,7487.000.370.85
Copper Mar-18 ($US/lb)2.822.82-0.30-0.097.52
Lead ($US/t)1,9011,86636.001.90-1.95
Nickel ($US/t)13,80413,899-95.00-0.68-6.84
Zinc ($US/t)2,3012,28714.000.62-2.62
Tin ($US/t)17,30517,365-60.00-0.357.93
Uranium ($US/lb)25.0025.000.000.000.20
Australian Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
ASX All Ords6,9666,9579.000.130.76
S&P/ASX 2006,8606,8518.000.120.66
ASX 24 Futures6,865
Australian Market Report

Wednesday 18 December 2019 - close. The Australian share market has closed flat for a second straight day, as banks and the mining sector weighed on gains by CSL and the energy sector. The benchmark S&P/ASX200 index finished on Wednesday up 4.1 points, or 0.06 per cent, to 6,851.4 points, while the broader All Ordinaries was up 6.5 points, or 0.09 per cent, to 6,957 points.

Ashanti Headlines

Invictus Energy Limited: (IVZ.ASX, 2.9 cps, m.cap A$13.0m with 448.7m SOI, Cash ~$2.95m, O&G Explorer)

Invictus Energy is pleased to announce the signing of a Gas Sale MOU for a 500 MW Gas to Power project with Independent Power Producer Tatanga Energy.

Highlights

  • Invictus & Tatanga Energy sign Gas Sales MOU to progress gas supply from Cabora Bassa Project
  • Tatanga Energy to develop 500MW Gas to Power Project in Zimbabwe
  • MOU signed for the supply of up to 36.5 billion cubic feet of gas per year (Bcf) for 20 years (100 million cubic feet per day)
  • Second major Gas Sale MOU executed by Invictus for the Cabora Bassa Project

The proposed Gas to Power plant will be built in two phases with the first phase estimated at ±150MW and the second phase consisting of an additional ±350MW.

Commentary

The MOU offtake is for 100 million cubic feet per day for 20 years (which is equivalent to about 10% of WA’s daily consumption). This takes IVZ's total MOU offtakes to 170 million cubic feet per day between Sable and Tatanga (equates to 1.2 trillion cubic feet over 20 years) which is more than enough to make it a commercial project – and that is just ~13% of the independently estimated 9.25 Tcf prospective resource in our SG 4571 licence area.

The other interesting development that has been made official a couple of months ago but has been a long time coming is South Africa’s 2019 Integrated Resource Plan (IRP). The IRP now enables Eskom (SA state owned power producer) and other industrial customers to officially purchase power from Independent Power Producers (IPPs) and neighbouring countries through the Southern Africa Power Pool such as Invictus and Tatanga. Estimates are that up to 5,000MW of power will be required in the near future and 12,000MW (QLD & VIC total electricity consumption combined) in the medium term due the retirement of aging coal fired power plants.

IVZ's Cabora Bassa project is located within 100km of the central axis of the SAPP which enables them to sell power from Cape Town to the Congo. Zimbabwe has the second largest power consumption in the region, and ultimately they will target the large South African market (55,000 MW) which consumes nearly double Australia’s total electricity consumption. Power shortages and gas shortages are beginning to bite South Africa’s economy and the government is now taking sweeping measures to deal with it. See article below:

Link to article here: bit.ly/35AChgw

In addition they are also targeting the South Africa gas market in future through the pipeline infrastructure as well as Zambia, DRC, central Mozambique and Botswana through small scale LNG. So IVZ have a large market to target that did not exist when Mobil were exploring 25 years ago.

Some key terms of the deal below.

Key Terms

The key terms of the MOU are as follows:

• Minimum Daily Contract Quantity (DCQ) of 30 mmscf/d (~11 bcf per year)

• Tatanga can elect to increase DCQ to 100 mmscf/d (~36.5 bcf per year)

• Minimum Total Contract Quantity of 219 Bcf

• Maximum Total Contract Quantity of 730 Bcf

• Supply term of twenty (20) years from the date of First Commercial Gas Production

• Gas sales price commercial in confidence

Conditions Precedent

The conditions precedent in the MOU include:

• Confirmation of a commercial hydrocarbon discovery in SG 4571

• Completion of a Gas Sales and Purchase Agreement (GPSA) by 18 December 2022

• Completion of feasibility studies to identify suitable location of the plant

• The project securing a generation license from the Zimbabwe Energy Regulatory Authority (ZERA)


Have a question? admin@ashanticapital.com.au

ERA Communications