The publicationlast week of disappointing jobs figures in the U.S. delivered a jolt to hopes ofa seamless economic recovery, and sent the price of most mined commodities sharplylower. The headline job's growth figure of 160,000 in the U.S. was less than expectedand below the 208,000 gain that had been reported in March. Although average earningswere higher than anticipated, the U.S. jobless rate of 5% caused concern amongstanalysts.
As aresult of this disappointing performance, there is now only a 50-50 expectationamongst analysts of an increase in U.S. interest rates this year. The delay in monetarytightening by the Federal Reserve had already pushed the dollar index to a 15-monthlow, and the U.S. currency retreated again last week.
Dollarweakness has become the currency trend of the year, and it threatens the export-growthstrategy of various nations, most notably Japan, where Prime Minister Shinzo Abe'squantitative easing strategy is failing. Ironically, under new provisions of the2015 Trade Facilitation and Enforcement Act, the U.S. Treasury has singled out China,Germany, Japan, Korea and Taiwan to be monitored as potential currency manipulators.This has raised the temperature in what is becoming a currency war as nations seekto gain competitive advantage in tight markets.
U.S.equities suffered a net outflow of US$11.2 billion in the seven days to May 4, bringingredemptions by portfolios invested in that asset class to US$60 billion since January.
The slowdownin the U.S. could also have serious implications for the global economy, and internationalequity markets eased to their lowest levels in three weeks. Trading volumes in Europehave already fallen dramatically, with the notional average daily trade on the pan-Europeantrading platform BATS Europe at just €46 billion in April, compared with €56 billiona year ago. The London Stock Exchange, Euronext and Deutsche Börse all registeredyear-on-year declines of more than 20% last month.
The ReserveBank of Australia has cut interest rates to a record low of 1.75% in an attemptto stimulate the economy and boost what it described as "unexpectedly low"inflation. The decision sent yields to record lows, with the return on the government'stwo-year bond falling below 1.6% on May 6, and yields on the five-year bond below1.8%.
At leastAustralian yields are not below zero. Negative-yielding bonds now amount to almostUS$10,000 billion, two-thirds of which are long-term bills, and investors are concernedthat this will start to pose a challenge to long-term investors, such as insurancecompanies and pension funds, whose portfolios rely on sovereign debt.
Theselow interest rates are expected to result in a flood of corporate bond issues ascompanies take advantage of cheap debt. Euro bonds are likely to be particularlypopular this month, and analysts predict a large volume of "reverse Yankee"deals — U.S. companies selling euro-denominated debt. These deals already representalmost 30% of year-to-date European debt sales.
The InternationalMonetary Fund warned last week that economic growth in sub-Saharan Africa will slowto 3% this year. The IMF blamed low commodity prices for the slowdown, and urgedAfrican governments to implement "urgent and substantial" reforms. Policyresponses, particularly among commodity exporters, to the falling prices has "generallybeen behind the curve," according to the IMF.
Announcementsdue in the week to May 13 include Chinese and Swedish inflation figures for April,German industrial production for March, Norwegian first quarter growth, and an interestrate decision on May 12 by the Bank of England.
Despitethe lower U.S. dollar, it was a bad week for metals, with only gold improving amongstthe major metals.
Iron ore led the retreat, falling 11.5%to US$57.70 per tonne (62% Fe material). The London Metal Exchange's three-monthcontract for copper closed on Friday5.2% lower than a week earlier at US$4,790 per tonne. Week-on-week the three-monthprice of nickel slumped 4.9% to US$9,025per tonne, aluminum fell 4.3% to US$1,607per tonne and zinc slipped 3.6% to US$1,874per tonne. Gold was the only beneficiaryof the falling U.S. dollar, rising 2.6% to US$1,289 per ounce.
On thecorporate front, Glencore Plcannounced lower year-over-year productionin the first quarter for copper, zinc, lead and coal. Production from own sourcesin the three months to end-March dropped 4% for copper to 335,000 tonnes, 28% forzinc to 257,100 tonnes and 6% for lead to 71,000 tonnes. Coal production fell 17%,compared with the year-ago quarter to 29.7 million tonnes. Production of nickel,gold, silver and cobalt improved on a yearly basis.
The priceof thermal coal (6,000kcal/kg, FOB Richards Bay) improved 2.4% last week to closeon Friday at US$53.50 per tonne. Though, the price for the year to date is stillalmost 10% higher.
Nevertheless,Moody's last week reiterated its grim outlook for the coal industry, suggestingthat recovery is unlikely for several years. In a research note, Moody's explainedthat the North American coal industry "has undergone a severe long-term structuralshift," and warned that "a material recovery for U.S. thermal or seabornemetallurgical coal is unlikely over the next several years."
Moody'sestimates that the North American coal-mining industry's EBITDA will drop by morethan 10% over the next 12 to 18 months, during which time the seaborne coal marketswould likely continue to face weak prices and oversupply. In the meantime, the U.S.thermal coal industry faces challenges from low natural gas prices and regulatorypressure.
Moody'sanalysts said coal consumption would fall 4% this year, with a 12% drop in productionas utilities worked through "unusually high inventories." Overall, NorthAmerican coal companies have dropped from an average B2 rating in the beginningof 2014 to an average Caa3 rating by March 2016, according to Moody's.
's chairman,Steele Li, was quoted in the Financial Timeslast week as saying thecommodities cycle has reached a bottom and that it would be looking to acquire moremining assets. The Chinese miner recently announceda US$1.5 billion deal to acquire AngloAmerican Plc's niobium and phosphate businesses in Brazil, and has overUS$4 billion earmarked for further acquisitions.
Financingin Canada during the past week included a planned underwritten bought deal privateplacement by to raise C$12.5million. The company also plans a non-brokered placement to raise the same amount.The placements will each see the issue of 20.8 million shares, with an overallotmentallowance of 3.1 million shares.
enlisted a syndicateof agents, including M Partners and Primary Capital Inc., for a private placementof 8.3 million units to raiseC$2.5 million. The company will use the proceeds on its gold assets in the DominicanRepublic.
closed itspreviously announced bought-deal financing, raisinga total of C$40 million, including the full exercise of the underwriters' overallotmentoption. The offering was led by TD Securities Inc. and Scotia Capital Inc., andincluded Raymond James Ltd, BMO Nesbitt Burns Inc. and Haywood Securities Inc. Altiusplans to use the proceeds for its US$61 million copper-purchase agreement with YamanaGold Inc.
will raise aboutC$10.0 million through an issueof flow-through shares on a bought-deal basis. A syndicate of underwriters, co-ledby Dundee Securities Ltd. and TD Securities Inc., agreed to purchase 12.2 millionflow-through shares. Proceeds will be used on exploration at Denison's uranium projectsin Saskatchewan.
isto raise C$30 million under a bought-deal offering.Proceeds will be used to develop the company's Back River gold project in Nunavut, Canada. A syndicate ofunderwriters, co-led by BMO Capital Markets, Canaccord Genuity and Cormark, hasagreed to buy 18.4 million shares at C$1.63 each.
closed itspreviously announced bought-deal offering of 10.5 million shares, a total of C$17.3 million, includingthe full exercise of the underwriters' overallotment option. The underwriters wereco-led by National Bank Financial Inc. and Mackie Research Capital Corp., and includeDundee Securities Ltd., Clarus Securities Inc. and M Partners Inc. Wesdome has earmarkedthe proceeds for mill expansion and associated infrastructure at the company's gold complex inOntario.
entered into anagreement with underwriters,co-led by Haywood Securities Inc. and Beacon Securities Ltd., to purchase 17.1 millionshares for gross proceeds of C$8.7 million. Net proceeds will be used for explorationand development of the BetaHunt nickel-gold mine in Western Australia. Royal Nickel intends toacquire the remaining 34% of Beta Hunt by the end of the month through the issueof 24.3 million shares.
is undertaking a non-brokered placementof up to 40.0 million shares to raise C$2.0 million. Net proceeds will fund furtherexploration at the Abu Marawatand Fatiri goldconcessions in Egypt.
increased of its recently upgradednon-brokered private placement, which now targets C$4.2 million from previouslyC$2.8 million previously. Callinex Mines intends to put the proceeds toward facilitatingexploration and for general working capital.
is raisingC$25 million from an offeringof 10 million units, and has entered into an agreement with a syndicate of underwritersco-led by TD Securities Inc. and Clarus Securities Inc. Net proceeds will be usedon the Buriticagold project in Colombia.
is raisingat least C$3 million byoffering company units on a best-efforts basis, with Paradigm Capital Inc. as theagent. The company plans to use the proceeds for exploration and metallurgical workat its Golden Summitgold project and Shorty Creekcopper project in Alaska.
completed itspreviously announced bought-deal offering,raising C$14.9 million, including full exercise of the underwriters' overallotmentoption. Under the financing, the company issued 4.3 million common shares and 4.7million flow-through shares. The offering was conducted by a syndicate of underwritersled by Beacon Securities Ltd., and including PI Financial Corp., Canaccord GenuityCorp. and Echelon Wealth Partners Inc.
raised C$2.5million in a private placement,through which Solitario Exploration & Royalty Corp. obtained an 11.2% stakein the company. If Solitario exercises all the warrants, it will lift its staketo over 18.1%. Resource Capital Fund VI LP will continue to hold a 39.8% stake inthe company. The proceeds will be used to develop the Pegmont lead-zinc sulfide project in Queensland,Australia.
plans toraise C$3.5 million througha non-brokered private placement of up to 12.1 million units. Millrock plans touse the proceeds for exploration and development.
is raisingC$4.3 million from a private placementof 27.0 million units. The company plans to put the proceeds toward its and gold projects in Canada'sYukon Territory.
In Australia,Gold Road Resources Ltd.completed a previously announced placement,and the institutional component of its 1-for-10 accelerated non-renounceable pro-rataentitlement offering, raisinga total of A$56.6 million. The funds are for development of the Gruyere gold project,which forms part of Gold Road's Yamarnaventure in Western Australia.
A of 61.6 million sharesby Dakota Minerals Ltd.raised A$12.3 million. The company reported "strong support" for the placementfollowing exceptional grades from drilling of the Pilgangoora lithium project in the Pilgangooraregion of Western Australia.
ASX-listedOreCorp Ltd. is raisingA$16.2 million from a placementof 60 million shares. The company will use the proceeds to fund scoping and feasibilitystudies on its Nyanzagagold project in Tanzania, and follow-up drilling on the Akjoujt South gold-copper-nickel project in Mauritania.
subsidiaryTomingley Gold Operations Pty. secureda A$14 million loan, and entered a hedging facility. The agreement with MacquarieBank Ltd. comprises a A$7 million one-year loan facility, a A$7 million performancebond facility and an Australian dollar gold hedging facility of 72,633 ounces, ofwhich 48,633 ounces are hedged at A$1,715 per ounce and 24,000 ounces at A$1,618per ounce.
received commitmentsto place 162.5 million shares to raiseA$6.5 million. Proceeds will be used to accelerate resource drilling in the Cuevitaszone and at Tres Amigos, both of which form part of the Plomosas zinc project in northern Mexico.
In otherfinancings last week, PJSC Uralkalientered into a loan agreementof US$1.2 billion with 16 international banks. The loan bears an interest rate ofLIBOR plus 325 basis points, with maturity in five years. ING Bank NV, Natixis andAO UniCredit Bank acted as global coordinators. Coordinating lead arrangers andbookrunners of the pre-export finance facility were ING Bank, Natixis, AO UniCreditBank, Sberbank Europe AG, Société Générale Corporate & Investment Bank and PJSCRosbank.
announced a planto raise US$10 millionvia a share placement, and that it has secured a US$5.3 million silver streamingagreement from its New Luikagold mine in Tanzania with Silverback Ltd. Proceeds of the placement and the byproductstreaming deal will be used to fund work on the mine estimated at US$42.9 million.
secureda US$120 million loanfrom its 38.4% shareholder China NonferrousMetals International Mining Co. Ltd. to refinance a previous loan. Theloan will be secured over the company's 100% equity interest in , which indirectlyholds the Pakrutgold project in Tajikistan.
enteredinto an agreement witha syndicate of underwriters, led by BMO Capital Markets, to purchase 11.0 millionshares for gross proceeds of US$33 million. Proceeds will be used for undergrounddevelopment and the production ramp-up at the Project 1 Maseve platinum mine in South Africa.
Changesin senior management announced during the past week included the of Tan Tielong as managing directorand CEO of Nkwe Platinum Ltd..Tan Tielong has been with majority shareholder Zijin Mining Group Co. Ltd. since 2013, and will replaceZhilin Li, who resigned as managing director to pursue other commitments.
appointedClaude Lemasson as interim presidentand CEO to replace Donald Robinson, who has resigned. The company alsoannounced the resignation of James Bezeau as CFO, and that Cathy Butella will nolonger serve as the company's exploration manager.
The CEOof Marenica Energy Ltd.,Murray Hill, has been appointedas the company's managing director. Hill took on the company's CEO post in May 2012and is described as the principal architect in development and design of Marenica'sproprietary uranium concentration process, U-pgrade.
appointedAndreas Rompel as its new presidentand CEO. Rompel previously served as a director in charge of investigatingmineral opportunities in Latin America. He replaces Daniel Caamano, who remainsthe company's new vice president for corporate communications.
appointedJeffrey Williams, a nonexecutive director at the company for the past six years,as managing director.Williams replaces Morrie Goodz, who resigned from the post in July 2015. MacPhersonsalso announced that Brendan James is stepping down as CEO but will remain in a consultingcapacity.
Afterfive years in the position, Ian Pringle has retiredas the managing director of BrokenHill Prospecting Ltd..
appointed MiguelPalomino as its managing director.Palomino is the managing director of GPS Metal Group, which Condoto in February. Condoto plans to changeits name to Noble Metals Ltd. to better reflect the business of the new combinedentity.
RobertSebek has tendered his resignationas managing director of Iron MountainMining Ltd.. For the moment, Sebek's executive roles will be distributedamong existing management, and nonexecutive chairman Mark Gwynne will assume therole of executive chairman on a part-time basis.
appointeddirector Ned Goodman as presidentand CEO.
ASX-listedArrium Ltd., which hasbeen under voluntary administration since early April, has removed the CEO role, given the company's current position,and Andrew Roberts has stepped down as a result.