Good afternoon
second estimate for US-GDP in the third Quarter remains unchanged at +3,5%, driven by household consumption up by 3,6% and amid slow inflation of 1.5-1.7% - depending on which measure you use.
Trump is bullying the FED again.
A client highlighted to me, that zinc is showing the largest backwardation in at least 10 years - that is, when strong physical demand prices available metal at a premium to contracts further out. Given interest rates, that should be the other way round. Most financial players are using the 3-month contract and constantly roll it forward. Interesting also: zinc stocks on the LME have been lower than today only once in 27years - that was in Dec 2007. In terms of weeks of consumption, tehy are the lowest since 1991. Copepr stocks are at a 10-year low; nickel stocks at a 5 year low. Mind you - this is only one indicator for demand - but this is congruent with the opinion of many market participants, that demand for base metals is very strong this year.
Lynas - had their AGM today. Very impressive presentation….they will close theirmplant for a few weeks in Dec, as tehy have reached their yearly production quota, and could not get an increase in time. But all 5 government agencies involved in the review of LYC´s assets in Malaysia have noticed, that no adverse findings in the activities of Lynas have been found. I guess it´s more or elss impossible for the jury to come to a different opinion, then? Probably the stock is still a buy, given the excellent management and the strategic imnportance of being the only significant producer of Rare Earth outside of China.
Mineral Resources - after the market closed, the broking arm of UBS was bidding institutions for a large stake in the company.
Gascoyne - not out of the woods as yet! They updated the market today, and had to cut guidance from 19-22.000 oz this Quarter to 17-18.000 oz. An unusual rain event has set the mine under water in mid-November and made access difficult for 12 days. The plant had to treat low grade stock piles because of that. The good news: the mill is performing very well and is consistently performing substantially above design. Following extensive grade control drilling, the resource has been cut by 20.000 oz to 542.000oz. The certainty of this resource should be pretty high now. The resource has been reduced for oxide- and transitional ore because of lower grades - this is not so good, as this most probably forms part of the early production. Interesting to see, that one analyst is expecting a low point of cash of 10 mill$, while anotehr one is expecting 15 mill$…you can see the speculative nature of even short term forecasts here. I think all will be fine - but the company continues to experience a few bumps on the way! Unless the road is clear, the stock is highly speculative - even though I think ultimately, it will be worth quite a bit more than the current 9-10ct!
West African - have awarded the 110 mill US$, underground mining contract to Byrnecut, a very experienced underground miner, which also has substantial West African / Burkina mining experience. Step by step…..
Foran Mining - late last week, announced the last holes from their sumemr drilling program, which were excellent: 39m with 3,13% CuEq and 23m with 3,31% CuEq. Both these hoels as well as recently announced results will enable inferred resources to be transferred to indicated resources, and be used in the forthcoming feasibility study. Perhaps not surprising in this market, that nobody seems to be interested!
Next week, I will highlight Aurelia Metals and Explaurum…I need to do some more work here and will be on business travel the next 2 days.
have a nice evening!
WS