Iron ore price soars

Iron ore price soars

The Northern China import price of 62% Fe content ore jumped 6.5% on Tuesday to trade at $59.10 per dry metric tonne according to data supplied by The Steel Index. The most actively traded iron ore futures contract on the Dalian Commodity Exchange advanced 6% to  456.5 yuan ($67) per tonne. The price of the steelmaking raw material is now up more than 10% from year lows hit two weeks ago.

Iron ore price bulls took heart from higher steel prices, but part of the move could also be explained by futures speculators “window dressing” ahead of the end of the quarter reports Reuters:

“High margins after the government’s effort to eliminate low-grade steel are enticing mills to produce more steel, which increases the need for iron ore,” said Zou Mingdong, Shanghai-based steel manager at Zhongcai Merchants Investment Group.

“However, the rising price doesn’t change the fundamental situation of oversupply and weak demand.”

Shares of  the world’s top iron ore miners reacted positively led by Kumba Iron Ore units trading in New York which surged 6.7% on Tuesday. The South African company, controlled by diversified giant Anglo American, produces more than 40m tonnes per year. The stock is worth $3.6 billion in New York and is trading in positive territory for 2017.

Iron ore is expected to continue to soften averaging $58 next year and $54 in 2019

Australia’s Fortescue Metals Group, a pure play iron ore producer, added 3.8% on the Australian stock exchange and some 10% on US over the counter markets. FMG stock is still down by 18% in 2017 and the Perth-based firm is now worth US$11.5 billion on the ASX.

World number one Vale gained 3% in Brazil trading, lifting the Rio de Janeiro-based company’s market capitalization to $43.8 billion after 12.6% gains this year. Diversified giants Rio Tinto and BHP Billiton also advanced, up 3.3% and 2.4% respectively, although the Melbourne-based companies both show declines year to date.

Today’s move in the price goes counter to what most analysts believe is in store for the market which has been in oversupply for more than two years.

Morgan Stanley this week sharply cut its forecast for the iron ore price in the third quarter with the investment bank now seeing an average of $50 over the period, climbing to $55 in the final three months. For the year as a whole Morgan Stanley sees the commodity averaging $63 compared to a year-to-date average of $74.  Iron ore is expected to continue to soften averaging $58 next year and $54 in 2019.

The latest forecast from the Morgan Stanley is more optimistic than predictions in a research note Citigroup released last week.  The bank lowered its price outlook by a fifth saying iron ore will average $48 a tonne in Q4 2017, down from $60 in its previous prediction:

Both analysis blame growing global supply  – most notably from Vale’s S11D mine and Roy Hill in Australia hitting full production – for the weak outlook. According to Citigroup, 2017 will see a surplus of 118m tonnes following a more than 60m tonnes glut last …read more

Gemfields shares collapse on imminent delisting

Shares in Gemfields (LON:GEM) got hammered Tuesday after Pallinghurst Resources, the firm largest shareholder, revealed it has secured support to push ahead with its plans to de-list the emerald and ruby miner.

The news comes only a day after Pallinghurst shareholders voted in favour of selling their stakes to the South African private equity group, in a move that removed the last potential stumbling block and nullified a rival offer from China’s Fosun Gold, a unit of Fosun International.

Pallinghurst Resources aims to buy all the shares it doesn’t already own in Gemfields to perform an overhaul of the miner that includes delisting it.

Gemfields told investors it still believes Pallinghurst’s bid “undervalues” the company and its prospects “as a leading player in the coloured gemstone sector.”

“However, in light of Pallinghurst’s current holding and acceptances exceeding 75%, largely as a result of Pallinghurst concert parties accepting the offer, we are now of the view that Gemfields shareholders should seriously consider whether to accept Pallinghurst’s all share offer,” Graham Mascall, Chairman of the Independent Committee created to review the competing bids said in a statement.

“The alternative is to hold shares in what is likely to become an unquoted Gemfields,” Mascall said.

Pallinghurst already owns a 47% stake in the gemstones producer. Its offer, first presented in May, is open to Gemfields shareholders until July 18.

Gemfields, which owns the luxury Fabergé jewellery brand, is the world’s biggest coloured gems producer, accounting for roughly a third of the world’s emeralds and rubies from two mines in Mozambique and Zambia.

Pallinghurst has stakes in a manganese mine in South Africa’s Northern Cape, as well as in Sedibelo Platinum Mines, an unlisted platinum group metal firm.

Gemfields’ shares fell as much as 13% on Tuesday afternoon, to close 10.88% lower at 31.75p.

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New Gold on track to open Ontario mine in September

Canada’s New Gold (TSX:NGD; NYSE-MKT:NGD) said Tuesday it remains on track to begin operations at its large Rainy River project, located in Ontario, this September, with commercial production expected in November.

“Through the second quarter, our team has both successfully commenced the staged commissioning of our process facility and delivered on our mining plan,” Hannes Portmann, president and chief executive officer said in a statement.

“As the pit has opened up, our operations team has recently delivered further increases in the mining rate, including several days over 130,000 tonnes per day,” he added.

New Gold has said it expects to produce 380,000-430,000 ounces of gold in 2017, potentially higher than the 381,663 ounces it generated last year, boosted by the start of operations at Rainy River.

At full production, the mine is expected to generate an average of 325,000 ounces of gold annually, during its 14-year estimated mine life. In the first nine years of production, Rainy River would be mined as an open pit, after which operations will move underground.

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US Supreme Court rejects New Mexico’s suit against Colorado over mine spill

US Supreme Court rejects New Mexico’s suit against Colorado over mine spill

The US Supreme Court has dismissed a lawsuit by New Mexico’s government claiming that Colorado environmental regulators played a direct role in the 2015 mine waste spill, which polluted nearby rivers.

The leak, containing high concentrations of heavy metals such as arsenic, mercury and lead, was accidentally triggered by a US Environmental Protection Agency’s (EPA) clean-up team working at an old Colorado gold mine.

The court did not provide details about its decision to dismiss the case; it just said most magistrates opposed hearing the lawsuit.

Court did not provide details about its decision to dismiss the case; it just said most magistrates opposed hearing the lawsuit.

New Mexico had argued that Colorado authorities were aware of the risk of a spill and that their “disastrous environmental decision-making” set the stage for the “catastrophic blowout” that polluted a river known for being a source of water for tens of thousands.

According to an EPA report published in January, the total amount of metals dumped into the Animas River following the spill was comparable to four to seven days of ongoing acid drainage from the inactive Gold King mine (GKM).

The agency noted said the spill of 3 million gallons of toxic waste water (more than 11 million litres) that flood from the Animas River in Colorado to the San Juan River in New Mexico, lasted about nine hours, setting a record for mine leaks in the region.

It also found the total amount of metals released into the streams, dominated by iron and aluminum, was comparable to four to seven days of ongoing acid drainage from the dormant mine, or the average amount of metals carried by the river in one to two days of high spring runoff.

It further acknowledged that the concentrations of some metals in the Gold King mine plume were higher than historical mine drainage in the area.

Despite the report, EPA refused later to pay 73 claims totalling $1.2 billion filed by tribes, river-raft companies, farmers and local governments for damages, citing sovereign immunity.

Gold King Mine spill emergency retaining ponds built in 2015. (Image by EPA)

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Canadian Company Regains 100% Ownership of Portugal Project

Source: The Gold Report 06/27/2017

A junior explorer has taken back the reins of a project in Portugal that is showing results.

Avrupa Minerals Ltd. (AVU:TSX.V, 8AM:FWB) announced on June 19 that it has restored 100% ownership in the Alvalade copper-lead-zinc project in Portugal, reaching agreements with its two partners.

In a June 26 press release, Avrupa announced a private placement to raise $500,000, which will “be used for exploration and operations in Portugal, Kosovo, and Vancouver, and for general working capital.”

Paul Kuhn, Avrupa’s president and CEO, commented, “Now that we have successfully consolidated the Alvalade copper-zinc project, we have work to prepare for the next stage of drilling.”

Kuhn explained that Avrupa already has “a number of compelling targets [at Alvalade] in the immediate surrounding sectors at Sesmarias, as well as drill-ready targets at Monte da Bela Vista (10 km north of Sesmarias) and in the Pombal area (15 km south of Sesmarias). We are actively engaging potential partners for the opportunity to JV into the Project.”

In the June 16 edition of J. Taylor’s Gold, Energy & Tech Stocks, Jay Taylor stated that “promising values from several holes drilled on this property. . .have been drilled over an 1,800-meter strike length to a depth of 300 meters in a single, structurally deformed sedimentary rock unit.” Taylor highlights that one target “likely to be tested in the not-too-distant future is the possible faulted extension of the Sesmarias West Target. In addition, massive sulfides have been identified on the shallow dipping eastern flank of this structure in a setting similar to operating world-class mines within the Iberian Pyrite Belt.”

Taylor concluded, “the Alvalade project that appears to hold the potential to host a world class VMS deposit. . .is likely to soon become the flagship project for Avrupa and one that I think will fire up the imagination of the market. Living within the prospect generator model, I would expect Avrupa to prudently advance this project along to the point where it would attract a major mining company’s interest.”

Read what other experts are saying about:

Avrupa Minerals Ltd.

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Disclosure:
1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies …read more

The Discoveries Keep on Coming for Quebec Gold Explorer

Balmoral Project Map

Source: The Gold Report 06/27/2017

Balmoral Resources’ drilling keeps discovering new zones of gold mineralization at the Martiniere property in Quebec, says CEO Darin Wagner, and he expects the trend to continue with the summer drill program just getting underway.

The Gold Report: Darin, it’s a pleasure to have you with us. Would you bring us up to date on what’s happening at Balmoral Resources Ltd.’s (BAR:TSX; BALMF:OTCQX) Bug South deposit in Quebec?

Darin Wagner: We are just getting started on the summer drill program along the Bug Lake Trend and waiting for the last few holes from the spring program. Bug South is one of four deposits in a tight little cluster on the Martiniere property. All of the deposits have high-grade cores with results commonly in the quarter-ounce range. And all the deposits are open and the summer program will look to continue to grow them.

Bug South was a 2016 discovery. We spent the better part of the last nine months drilling it. We’ve chased it down to about 400 meters below surface. And it remains open below that depth.

The summer program has a dual-focus, both infill drilling on the Bug Lake deposits to get them ready for their debut—the initial resource—and also continuing to grow them, which is obviously key to shareholders, the continued growth of the system out there.

TGR: Your drilling at Bug South is following the deposit down plunge. What drilling do you have planned for continuing exploration?

DW: We would expect to see around 25,000 meters drilled out over the summer/fall, with the bulk of it being on that Martiniere property and a good chunk of it obviously on that expanding Bug South deposit.

We’ve moved into “underground” depths, so we’re chasing that high-grade core of the deposit down to depth, letting it lead us where it’s going to take us over the next few months, with the objective of having most of the area between surface and about 500m vertical depth drilled out as we head into the fall. That will form the basis for our next update on the project. At the same time, we’ll be working on some of the other components of that bigger system, the other deposits that are close by and a series of new high-grade gold discoveries.

TGR: When would you expect to start having some results back from the lab?

DW: We usually try and batch up a series of related holes. So, if we have 6 to 10 holes that are specific to Bug South, we’ll batch those up. We still have about 10 holes left over from the spring program that we’ll release in fairly short order, sometime in the next couple of weeks.

Once the drills have started to turn, every six weeks or so after that we will release results. It depends on the workflow through the lab. But usually every six weeks or …read more

Iron ore price: BHP starts work on $3.2 billion mine

The Northern China import price of 62% Fe content ore turned weaker again on Monday trading not far off 1-year lows at $55.50 per dry metric tonne according to data supplied by The Steel Index. The price of the steelmaking raw material is now down by more than 40% from its mid-March peak.

While demand from top consumer China has stayed robust – imports topped 1 billion tonnes for the first time last year and continued to grow in 2017 – industry attention has shifted to supply.

The board is expected to consider approval for the $3.2 billion project in mid-2018 and first ore would be targeted in 2021

In a recent research note Citigroup lowered its price outlook by a fifth saying iron ore will average $48 a tonne in Q4 2017, down from $60 in its previous prediction:

Even with prices dropping, global supply continues to rise, according to Citigroup, which forecasts a surplus of 118 million tons in 2017 after a glut of more than 60 million tons last year. Ongoing expansion by large miners, notably Vale’s biggest project S11D and Roy Hill, will probably contribute about 60 million tons of additional supply this year, the bank estimates.

Another indication that demand would not overshoot supply any time soon comes from world number three producer BHP Billiton which said on Monday it’s starting work on replacing depleting resources as it moves from 260mtpa capacity to 290mtpa over the next few years.

BHP on Monday said in a statement it has approved $184m to start work at its South Flank project as production at its Yandi 80-million-tonnes-per-year operation in the Pilbara begins to wane.

The board of the Melbourne-based company is expected to consider approval for the $3.2 billion project in mid-2018 and first ore would be targeted in 2021.

The capital cost for South Flank is expected to be in the range of $30 to $40 per tonne, with expenditure fitting within the company’s Western Australia iron ore division’s previously indicated average sustaining capital expenditure of $4 per tonne over the next five years according to BHP.

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Muppet drops gold price to 6-week low

The gold price started the week on the back foot with an unnerving early fall following a massive sell order that sent the metal to its lowest since mid-May.

Gold futures in New York for delivery in August, the most active contract, dropped to a low of $1,236.50, down 1.5% or $20 an ounce in European trade, a six-week low.

The gold market absorbed a massive $2.2 bln in gold sales in less than a minute and during a period of illiquidity

Source: CME Group

Ross Norman, CEO of gold trader Sharps Pixley, ascribes the sharp decline to a 60 second 56 tonne (1.8m ounces) trade executed at 9am in London:

This bears the hallmarks of a fat finger ‘muppet’ – a trade of 18,149 ounces would be a very typical trade, but a trade of 18,149 lots of a futures contract (which is 100 times bigger) would not be… it leaves us wondering if a junior had got confused between “ounces” and “lots”… or maybe an incorrectly programmed algo ahead of options expiry on COMEX … we just don’t know.

The gold price had recovered much of the lost ground in afternoon trade in New York, exchanging hands for $1,243.60 an ounce.

Norman points out that if the trade, which may also have been carried out by a central bank or a large-scale speculator opening a short position, was indeed an error the gold price bear who made the move is nursing a $36 million loss at this point:

The big take-away though from all this is that the gold market absorbed a massive $2.2 bln in gold sales in less than a minute and during a period of illiquidity … and it ONLY moved the needle 1% lower.

at Sharps Pixley

FLASHBACK: Year to the day of $200 shocker, another strange gold price plunge

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