Good afternoon
a bit of excitement in the metals today: copper is touching the magical 6.0000$/t mark ( 6020 right now! ), zinc very strong, and nickel can lift it´s price by 1.5% as well, following the 4% rise on Friday. Copper actually feels like it might get through resistance - we have seen a market where lows have been constantly rising, and this time , we might have momentum being helped by a generally weak US$.
The main reason for strong commodities today have been the positive set of numbers for China on Saturday: Industrial Production was much stronger than expected, rising by 7,6% vs expected 6,5%, and retail sales as well as Fixed Asset Investment have been strong , resulting in Chinese growth of 6,9% - in line with the previous Quarter, but 0,3-0,4% higher than expected. On top of this positive news, LME stockpiles for all metals continued to shrink today.
Chinese punters ( ? ) reacted the way you´d think: They bought more iron ore and steel rebar!
Prairie Mining - Quarterly out today. Most of the news was old news- but overall, a very impressive report. Strong progress at both projects:
Debiensko Mine - scoping study had been finished already - looking very strong and potentially, Debiensko will be the lowest cost producer shipping into Europe. The company did use a long term price of 142 US$t coking coal - current price is 167 US$ - and PDZ should receive an approximately 15$ higher price, due to the expected 30$ differential in transport costs vs Australian coal. The coal is of excellent quality....
Jan Karski Mine - more quality testing of the coal confirmed the excellent quality of Jan Karski coal, which could/should result in a 10% premium price versus the benchmark for semisoft coaking coal, mainly because of it´s very low ash-content. The yield of 75% of coal as product vs coal mined is very high as well. The other 25% will be sold as thermal coal. Both should have a ready market in Europe. China Coal have submitted a fraft of the bankable feasibility study. the full study should be completed shortly, providing the basis of an EPC contract with them, and finialising of a contsruction funding package from Chinese banks. The mining lease application is making progress, and the company should be in a position to submit an applicationit in the 1st Quarter of 2018.
As you know - these coal projects do need time. But the Chinese involvement, coupled with very strong local and political support for both projects, will make investment very rewarding over the next 2 years, as both projects should continue to progress strongly, resulting in continued de-risking of PDZ. PDZ have about 19 mill A$ in the bank to finish feasibilities for both projects easily. I have seizable exposure to the stock, and as you know, I am of the opinion, that long term, it´s worth multiples! This should be underpinned by the strong performance of JSW and Bogdanka ( more recently ), the latter being the immediate neighbour of the Jan Karski Mine.
Have a nice evening, and enjoy the new optimism!
WS
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