Mining Roundup

Anglo American’s (LON:AAL) shares were up in late trading after it said operational improvements continue across the portfolio, delivering a 4% production increase on a copper equivalent basis in the third quarter, and a 12% increase compared to Q2 2016.

Chief executive Mark Cutifani said: “The latter increase is largely due to the strong recovery at Kumba’s Sishen mine, a 46% production increase, following the successful completion of its restructuring.

“In our diamond and platinum businesses we continue to maintain discipline on volumes by mining to demand, whilst the ramp-ups at Minas-Rio and Grosvenor are progressing well, and Barro Alto has now reached nameplate capacity. The modestly higher production at De Beers is reflective of improved market conditions relative to Q3 2015, but we maintain a cautious outlook.”

– Diamond production increased by 4% to 6.3 million carats compared with Q3 2015 when production was reduced in response to the prevailing trading conditions.

– Platinum production (expressed as metal in concentrate) was broadly unchanged, increasing by 1% to 619,000 ounces. Refined platinum production increased by 14% to 694,700 ounces, following recovery at the Precious Metals Refinery.

– Copper production from the retained operations decreased by 9% to 139,800 tonnes. Expected lower grades at Los Bronces and the impact of strikes at Los Bronces and El Soldado, were partly offset by strong plant performance and higher grades at Collahuasi.

– Nickel production increased by 66% to 11,300 tonnes following the successful completion of the Barro Alto furnace rebuilds in 2015. – Iron ore production from Kumba increased by 3% (33% vs. Q2 2016) to 11.8 million tonnes due to productivity improvements at Sishen following its restructuring.

– Iron ore production from Minas-Rio increased by 53% to 4.5 million tonnes (wet basis) as the operation continues to ramp-up.

– Export metallurgical coal production was broadly unchanged, increasing by 1% to 5.5 million tonnes due to the ramp-up at Grosvenor and a longwall move at Moranbah in Q3 2015, offsetting geological issues at Grasstree and the sale of Foxleigh, which completed on 30 August 2016. – Export thermal coal production remained flat at 8.8 million tonnes. An increase in production at Cerrej�n was offset by a ramp-down at Drayton where mining activities will cease in Q4 2016.

* * *

Sirius Minerals (LON:SXX) has entered into a royalty financing agreement for its North Yorkshire polyhalite project with Hancock British Holdings, a subsidiary of Hancock Prospecting Pty.

Under the agreement, Hancock has agreed to: purchase a royalty on the Project of 5% gross revenue on the first 13 million tonnes per annum (mtpa) of sales produced in each calendar year and 1 per cent for sales volumes above 13 mtpa in return for $250m.

It had also agreed that upon drawdown of the Royalty purchase amount, Hancock would subscribe for new ordinary shares in the Company in an amount of $50m, subject to certain conditions.

“The structure of the Royalty Financing Agreement is similar to that of the arrangements with mineral rights holders and runs for the life of the Project or 70 years, whichever is longer,” said Sirius in a statement.

“The funding obligations of Hancock under the Royalty Financing Agreement are guaranteed by Hancock Prospecting Pty Ltd.

“The Royalty Financing Agreement is conditional upon the Company completing its Stage 1 financing (taking into consideration amounts received under the Royalty Financing Agreement) and two confirmatory due diligence items which will be satisfied prior to the Stage 1 financing being finalised.

“Once completed, drawdown of funds under the Royalty Financing Agreement is conditional on, inter alia, notice having been given to Hancock that the Company has expended $630 million of the total amount of its stage 1 financing; creation of the royalty interest including the granting of certain obligations and arrangements to secure such obligations in favour of Hancock, to ensure that the Royalty attaches to certain assets which comprise the Project; all material permits, commercial arrangements and authorisations for the Project remaining in place; and other drawdown conditions typical for an agreement of this nature.”

* * *

Vedanta Resources (LON:VED) will announce its results for the half year ended 30 September on 10 November.

* * *

Alba Mineral Resources (LON:ALBA) has completed a detailed gravity survey and soil sampling programme on its 100% owned prospecting licence (PL3824) in County Limerick in Ireland.

The objective of the survey is to identify possible structural targets with associated gravity variations and soil geochemistry anomalies that may be associated with the concentration of base metal mineralisation, notably zinc and lead.

Alba’s contractor has now demobilised from site and the detailed results of the survey are being processed and analysed prior to expected release within the next few weeks.

* * *

KEFI Minerals (LON:KEFI) has issued an update on its discussions with the government of Ethiopia on various aspects involved in formalising the agreements for the development of the Tulu Kapi gold project.

It says the main points are:

– Equity investment: In October, the government of Ethiopia announced the formation of Ethiopian Mines, Petroleum and Bio-Fuel Corporation, which will be the Ethiopian investing entity.

– Development loan: Negotiations with the Development Bank of Ethiopia are at an advanced stage and now await the appointment of the selected co-lender. The government’s recent policy directive requiring a maximum 50% debt gearing policy for new projects is considered consistent with KEFI’s plans because clarifications received from the National Bank of Ethiopia (the regulator) indicate that historic spend on the project of approximately US$60 million counts as equity in the calculation.

– Resettlement: The Ethiopian government experts and the project’s social licence advisers are ensuring that calculations and plans comply with Ethiopian law and IFC (World Bank) principles. KEFI is playing a supporting role to the government’s efforts and is committed to assist where it can.

At 4:18pm:

(LON:AAL) Anglo American PLC share price was +45.75p at 1111.25p

(LON:ALBA) Alba Mineral Resources PLC share price was +0.01p at 0.33p

(LON:BEM) Beowulf Mining PLC share price was -0.18p at 5.13p

(LON:BKY) Berkeley Energia Ltd share price was +1.5p at 48.25p

(LON:CEY) Centamin PLC share price was +1.85p at 156.35p

(LON:CHL) Churchill Mining PLC share price was -0.5p at 28.5p

(LON:CZA) Coal of Africa Ltd share price was +0.19p at 3.47p

(LON:FDI) Firestone Diamonds PLC share price was +0.75p at 56.5p

(LON:FRES) Fresnillo PLC share price was +29p at 1642p

(LON:GEMD) Gem Diamonds Ltd share price was +2.25p at 119p

(LON:HOC) Hochschild Mining PLC share price was +3.4p at 272.9p

(LON:KEFI) KEFI Minerals PLC share price was +0.01p at 0.39p

(LON:KMR) Kenmare Resources PLC share price was -5.37p at 313.13p

(LON:SXX) Sirius Minerals PLC share price was +1.5p at 35.75p

(LON:VED) Vedanta Resources PLC share price was +23.5p at 705p

Story provided by StockMarketWire.com