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12 February 2020 07:38 AM
Overseas Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Dow Jones Industrial Average29,27629,2770.000.001.57
S&P 5003,3583,3526.000.172.83
NASDAQ9,6399,62811.000.115.01
FTSE 100 Index7,4997,44753.000.71-1.17
DAX 3013,62813,494134.000.991.07
CAC 40 Index6,0556,01639.000.650.29
Nikkei 225 (Japan)23,68623,828-142.00-0.60-0.69
HKSE27,58427,241343.001.26-3.68
SSE Composite Index2,9022,89011.000.39-6.16
S&P/TSX Composite Index17,77717,74137.000.213.15
NZ 5011,86011,83525.000.212.67
US Volatility (Vix)15
Overseas Market Report

US sharemarkets were mixed on Tuesday. There was positive news on the slowing of coronavirus cases. Shares in T-Mobile rose 11.8% after a judge approved its merger with Sprint. And the Federal Reserve chair hailed the resilience of the US economy. The Dow Jones index was flat after being up 138 points. The S&P500 index rose by 0.2%; the Nasdaq rose by 10.6 points or 0.1%. 

Global oil prices rose by up to 1.4% on Tuesday. Investors were encouraged by a report that the number of coronavirus cases had slowed in China. That report eased fears of longer-term weakness in energy demand. Brent crude rose by US74 cents or 1.4% to US$54.01 a barrel. The US Nymex price rose by US37 cents or 0.7% to US$49.94 a barrel. 

Base metal prices were higher by between 0.7-3.3% on Tuesday with zinc up the least and lead up the most. 

The gold futures price fell by US$9.10 an ounce or 0.6% to US$1,565.60 an ounce. Spot gold was trading near US$1,568 an ounce in late US trade. Iron ore rose by US$3.85 or 4.7% to US$85.55 a tonne.

CommoditiesCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Oil Brent54.0153.270.741.39-16.88
Oil - West Texas crude50.1249.940.180.36-15.11
Gold Spot $/OZ1,567.001,568.00-1.30-0.080.27
Silver Spot $/OZ17.6017.600.00-0.07-2.65
Iron Ore76.2076.60-0.30-0.42-13.46
Thermal Coal Newcastle69.0068.100.901.25-2.75
APAC Hard Coking Coal FOB150.50150.500.000.00-2.59
Aluminium ($US/t)1,7091,67435.002.09-4.02
Copper ($US/lb)2.592.580.300.12-8.09
Lead ($US/t)1,8561,79660.003.34-3.00
Nickel ($US/t)13,02612,800227.001.77-7.72
Zinc ($US/t)2,1402,12615.000.68-10.35
Tin ($US/t)16,47016,320150.000.92-4.29
Uranium ($US/lb)25.0025.000.000.000.20
Australian Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
ASX All Ords7,1847,15133.000.462.03
S&P/ASX 2007,0877,05531.000.442.27
ASX 24 Futures7,015
Australian Market Report

Tuesday 11 February 2020 - close. Australian shares have hit a two-week high after an upbeat lead from Wall Street, with gains across the board. The S&P/ASX200 benchmark index finished Tuesday up 42.8 points, or 0.61 per cent, at 7,055.3, while the broader All Ordinaries index climbed 43.4 points, or 0.61 per cent, to 7,151.4.

Ashanti Headlines

Cassini Resources Ltd (CZI.ASX, 11cps, m.cap A$47.1m with 427.8m SOI, Cash cA$7.3m, Base Metals Explorer)

  • JV Partners OZL and CZI (70/30%) have announced the results of the West Musgrave, Nebo-Babel Pre-Feasibility Study
  • This is the first time that either Cassini or OZ Minerals has released an NPV estimate of ~A$800M for the WMP, a material development and potential line in the sand for the market’s perception of value (both from OZL and CZI’s perspective)
  • The WMP is one of Australia’s most advanced base metals development projects, with OZ having spent >A$50M delivering the PFS, it has few (if any) peers
  • The metal output averages ~27ktpa Ni and ~33ktpa Cu over the first 5 years of operation, which is worth ~A$800M to A$1,000M p.a. in revenue, depending on ultimate metal payability
  • This production rate is equivalent to 40ktpa NiEq. or 103ktpa CuEq. demonstrating the impressive scale of the operation. FY2020 guidance of notable mid-tier miners shown below for reference:
    • WSA: 22kt Ni
    • IGO: 46kt NiEq. (11.7kt Cu, 28.5kt Ni, 142.5 koz Au)
    • SFR: 80kt CuEq. (71kt Cu, 39koz Au)
    • OZL: 145kt CuEq. (91.5kt Cu, 220.5koz Au)
  • The cost of production of either nickel or copper (net of by-products) makes the WMP one of Australia’s lowest cost producers
    • ~US$1.30/lb Ni
    • ~US$(0.90)/lb Cu
  • We believe there is inherent strategic value in a large scale, long life base metals producer – an attractive proposition to mid-tier miners that are actively seeking future projects (e.g. SFR, IGO) or off takers / end users that are seeking security of supply
  • We continue to be bullish mid-long term on both nickel and copper supply / demand fundamentals and the expected price response for both metals
  • JORC Resources have grown from 238Mt at 0.35% Ni and 0.38% Cu to 340Mt at 0.33% Ni and 0.36% Cu
  • A maiden JORC Reserve of 220Mt at 0.33% Ni and 0.36% Cu underpins the geological confidence of the long life project
  • Please contact your adviser or the desk on +61 8 6319 7807 should you wish to discuss further

AuMake International Ltd (AU8.ASX, 7.8cps, m.cap A$25.9m with 332.4m SOI, Cash $12.1m (Consumer Discretionary)

  • AU8 has provided an update in relation to business developments as a result of Novel coronavirus (2019-nCoV).
  • Since the Company’s market update announcement on 28 January 2020, restrictions have been placed on travel by Chinese visitors to and from Australia & New Zealand. These temporary restrictions will materially impact the Company’s earnings.
  • At this stage, the Company is unable to provide a definitive timeframe as to when these restrictions will be lifted. However, based on industry consultation, including an understanding that a proportion of travel bookings to Australia & New Zealand will not be cancelled but rather deferred, the Company believes that the situation will only have a temporary impact on the AuMake business.
  • Whilst these travel restrictions are in place, the Company will implement cost mitigation measures including closing/reducing trading hours of certain stores, placing some staff on leave and standing some staff down, deferring all non-essential expenses and working with all strategic partners to adequately manage the Company’s cash position for the foreseeable future.
  • AU8 has advised that online and local customer (daigou) segments of the AuMake business have responded positively since the onset of the virus, providing an ongoing source of revenue to the Company and partially offsetting the temporary decline of tourist related revenue:
    • From 28 January to 10 February 2020 (14 days) online sales have exceeded $1 million compared to $0.46 million for the period 1 to 27 January 2020; and
    • Total sales (online & offline) during this Chinese New Year (CNY) period (24 January to 8 February 2020) have also increased 66% vs CNY 2019 (including a marked increase in sales of facial masks, sanitisers and immunity related health supplement products).
  • With the implementation of cost mitigation measures, the ongoing contribution of non-tourist related segments of the AuMake business and the benefit of Broadway’s experience in successfully managing SARS in 2003, the Company is confident that it is well positioned to assess any potential consolidation in the Asian tourist industry
  • Please contact your adviser or the desk on +61 8 6319 7807 should you wish to discuss further

Cobre Ltd: (CBE.ASX, 23.5cps, m.cap A$22.7m with 96.8m SOI, Cash $10m, Base Metals Explorer)

  • CBE has drilled its first diamond hole at the Schwabe Prospect
  • Portable XRF and visual observations confirm Volcanogenic Massive Sulphide (VMS) mineralisation over a 5.5m intercept from a depth of 50m
  • Hole was drilled 5m adjacent to the previous RC hole completed in June 2019
  • The initial RC hole at Schwabe intersected 5m of very-high grade VMS mineralisation, including 9.75% copper, 3.2g/t gold, 34g/t silver and 3.1% zinc from 50m depth
  • The next diamond hole will be in the centre of the prospect, with the remaining two holes on the margins to confirm the extent of mineralisation
  • Drilling program will be followed by a down-hole electromagnetic (EM) study to help identify further drill targets at Schwabe
  • The company has also drilled two diamond core holes at the Zinco Lago Prospect
  • Disseminated and stockwork base metal mineralisation are present in both core samples
  • These initial drill results at Zinco Lago confirm the mineralisation discovered during historic drilling in the 1970’s and from Cobre’s own surface sampling


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