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>>> That Was The Week That Was ... In Australia

>>> 10 May 2014

>>> by Our Man in Oz <<<

Minews. Good morning Australia. Your market seems to have gone absolutely nowhere last week.

Oz. That’s not a bad observation if you’re looking only at the key indices. But if you rummage around there was an interesting crop of outperformers, and an entire sector uplifted by a sharply higher price for its underlying commodity.

Minews. Nickel, presumably is the where the best results were achieved.

Oz. Correct, though that’s only part of an interesting week, when the metals and mining index and the all ordinaries index closed on Friday within a few points of their Monday opening. Gold was the only relatively strong performer as a sector with its index rising by two per cent.

Minews. Let’s move straight to the newsmakers to see if there are any fresh investment ideas from your part of the world for our London readers.

Oz. Most of the nickel stocks should be well-known, with the strongest performer last week being Sirius Resources (SIR) which added A45 cents (13.7 per cent) thanks to a combination of the nickel price rising above US$9 a pound, and investors giving their approval at a special meeting to a revised deal with the company’s biggest shareholder, the prospector, Mark Creasy.
...

Source >>> www.minesite.com
 
>>> Recovering Steel Industry Lifts ArcelorMittal
>>> by Stanley Reed | New York Times
May 9, 2014

ArcelorMittal, the steel and mining giant, said on Friday that it had a loss of $200 million in its first quarter, less than the $345 million loss it posted for the period a year earlier. The report was taken as a sign that conditions were improving in the steel industry, considered a proxy for overall economic activity.
...
 
Nickel Rises And Iron Ore Falls, But The Backdrop Is The Same: Ongoing Chinese Growth

12 May 2014

>>>>> by Rob Davies <<<<<

Two commodities present very different stories: iron ore and nickel.

Media comment has focussed relentlessly on the negatives in iron ore to support the current zeitgeist about the Chinese economy.

Perhaps the caveat is that volumes in one commodity are a lot larger than in the other.

Much has been made of the falling price of iron ore.

Last week it fell to US$100 a tonne and many observers say this is because of a weakening Chinese economy.

It is hard to put this politely, but that argument is rubbish. China is still growing at over seven per cent.

While it is true to say that this is less than nine per cent it is patently incorrect to say the economy is slowing down.

It isn’t, it is still the powerhouse of economic growth for the world as demonstrated by the 24 per cent increase in iron ore imports last year.

It is also worth noting that while China is still the driving force for growth it is receiving some support from other parts of the world.

Arcelor Mittal, the global steel company, stated that it expects European manufacturing to pick up this year, adding two per cent or three per cent to its steel consumption.

That is an increase from the 1.5-to-2.5 per cent predicted only as recently as February. Globally Arcelor Mittal shipped 2.4 per cent more steel in the first quarter.

What has happened in iron ore is that economics and market force have worked their magic. New production has been added in Australia which is bringing down the full marginal cost of production.

Rio Tinto sits comfortably at the bottom of the cost curve at US$37 per tonne according to investment bank UBS. Next is BHP Billiton at US$41 a tonne.

More recently Fortescue Metals has added 100 million tonnes of capacity. Even though its costs are a relatively high US$56 a tonne, it is still acting to drive down the average marginal cost of production.

Economics tell us that will ultimately act to reduce price at which demand and supply are in balance.

These things take time and Chinese iron ore producers with costs of US$80 to US$ 90 a tonne will naturally seek to hang on as long as possible before acting to cut capacity.

There is too the complicating factor that in an economy like China that is still transitioning from a command one to one based on the market. So these painful actions may not be taken quickly.

Contrast the news coverage of weak iron ore prices with that of booming nickel markets. Last week three month nickel was quoted at over US$20,000 a tonne and its 3.6 per cent jump was the biggest in four years.

The reason for the increase was production problems at Vale’s Goro operation in New Caledonia. There is of course an oversupply of nickel at the moment with Bloomberg estimating a surplus this year of 70,000 tonnes.

But this is not a permanent feature. Next year the news agency is quoted as saying there will be a deficit of 104,000 tonnes.

Both these commodities are heavily reliant on China. Yet the bearish one is taken as an indicator for the prospects of the world’s largest economy when the complete story is far more positive, as the detail and the nickel market demonstrate.

Strangely, such positive aspects do not get much coverage in the mainstream press. But when did good news ever sell a newspaper?


Source >>>>> www.minesite.com
 
>>> Nickel Rises to 27-Month High Amid Vale Plant Suspension

>>> by Jae Hur <<<

>>> May 13, 2014

Nickel climbed for a sixth day to trade near a 27-month high as Vale SA said operations remain halted at a plant in New Caledonia, further crimping supply that’s been hit by Indonesia’s ban on ore exports.

The contract for delivery in three months on the London Metal Exchange advanced as much as 3.4 percent to $21,625 a metric ton, the highest level since Feb. 10, 2012, and was at $21,500 at 10:34 a.m. in Tokyo. The metal jumped 55 percent this year, making it the best performer on the LME.
...


Source >>> http://www.bloomberg.com/news/2014-...27-month-high-amid-vale-plant-suspension.html
 
>>>>> That Was The Week That Was ... In Australia

17 May 2014

>>>>> by Our Man in Oz


Minews. Good morning Australia, you seem to have had a slightly better week, though that late fall in the iron ore price must be a worry.

Oz. Correct, on both points. There was increased demand for mining stocks, with a number of interesting upward moves, offset by a handful of equally interesting falls.

As for the iron ore price dipping close to the psychologically important hurdle of US$100 a tonne in Shanghai after we had closed on Friday, that could have an effect on Monday.

When we closed last week, the ASX metals and mining index was up a modest 1.2 per cent, which was comfortably above a fall of 0.3 per cent by the all ordinaries index, and also better than the flat gold index, which closed down just one point, a negligible move on a percentage basis.

Minews. Your country’s budget is also making waves.

Oz. Yes, the big issue down this way was the release of a very tough budget by the Australian government led by Tony Abbot. The budget is making political waves across the country and could set the scene for an early election.

Mining investors will be closely watching the political posturing in Canberra because of the growing divide between the political left which wants to hit miners with higher taxes and the political right which wants to encourage business.
...

Source >>>>> www.minesite.com
 
>>> Nickel Is Still Up By 39 Per Cent This Year, In Spite Of The Recent Correction

>>> 19 May 2014

>>> by Rob Davies



Nickel has been a star performer in 2014.

A year, so far, in which many markets have recorded lackluster returns. So the 49 per cent gain that nickel had made by last week made it quite exceptional.

It is therefore perhaps not surprising that it was due for a correction. That duly happened last week and saw the price fall 11 per cent before recovering a little by the close.

All that does is reduce the year to date gain to 39 per cent and still beats the socks of most equity and bond markets.

Anyone thinking that this marks the top of the market needs to be aware of the research from Macquarie and Citicorp.

The Australian investment bank recently raised its nickel price forecast for the fourth quarter of 2014 to US$23,500 tonne. That though seems tame compared to that from the US bank of an average price of US$30,000 a tonne it now expects for 2015.

There is now widespread consensus that a recovery is underway in most parts of the developed world. It might be low key compared to recoveries in the past but it is happening all the same. A 13.2 per cent increase in US housing starts this year to an annual rate of 1.07 million is further confirmation of the trend.

Other capital markets are taking a more cautious view.

Equities in the developed world have, at best, trod water this year, even if they have, grudgingly, made new highs.

Bonds have done surprisingly well which rather suggests that some investors are preparing for more subdued times, or perhaps higher volatility in the months to come.

Either way it is clear that without a specific story, as there is with nickel, riskier assets are being shunned in favour of more defensive ones. That is most obvious in small growth companies that have suffered a large de-rating in favour of larger and less risky global mega-caps.

The large mining companies fall into this category and they have certainly experienced a recovery in valuations. Although that may be in part due to expectations of corporate activity.

What the action in nickel has clearly demonstrated though is the low correlation that commodity markets have with other asset classes.

Even though base metals as a whole are virtually unchanged for the year so far, the individual dynamics of each metal are vitally important.

Nickel is in the sweet spot of having an improving demand and supply balance that has then had an interruption to the supply chain imposed on it. It also benefits from being a relatively small industry with only a few major suppliers.

Finally, after many years of suffering the woes from single metal miners the industry is now mostly composed of mining conglomerates that can afford to close mines completely in order to defend prices.

That was something the old mono-metal miners simply could never afford to do. Every company needs revenue and if your only source is selling nickel your business strategy is pre-determined.

This dramatic evolution of the mining industry should act to reduce volatility and improve returns for investors. This year nickel has proved that point very well.


Source >>> www.minesite.com
*****
 
Russia, China Sign $400 Billion Gas Deal After Decade of Talks

by Elena Mazneva and Stepan Kravchenko

May 21, 2014

Russia’s $400 billion deal to supply natural gas to China after more than a decade of negotiations is tilting the world’s largest energy exporter toward Asia as ties worsen with the U.S. and Europe.
...

Source >>> http://www.bloomberg.com/news/2014-05-21/russia-signs-china-gas-deal-after-decade-of-talks.html

[The article has already more than 740 comments from readers]
 
Russian Gas for China

La Vanguardia - Spain

Russia and China surprise the West

The new alliance between Moscow and Beijing has caught the West off guard, the conservative daily La Vanguardia comments: "A tremendous performance in Shanghai. ... The plot: Putin pulls off a strategic turnaround to show the world that he's not alone. And China secures part of the energy it will need to continue on its dizzying growth curve. ... A surprising turnaround that has caught the West fully unprepared. The speed with which Russia and China clinched this energy deal forces the West to correct its stance towards Moscow. Putin has demonstrated the sovereignty and diplomatic skill to break out of his international isolation and once more assume an important role in global politics. China, for its part, is on the way to taking the economic pole position." (22/05/2014)
 
>>> China-Russia: A Match Made In Heaven

>>> by Anatole Kaletsky

>>> 22 May 2014

Vladimir Putin’s trip to Shanghai could “mark the start of a strategic realignment between nuclear superpowers comparable to the tectonic shifts that began with President Richard M. Nixon’s visit to China in 1972″. The decline of American dominance opens the way for Russia and China to sink their historic differences, and to build on their common economic and political interests.



http://blogs.reuters.com/anatole-ka...ia-is-a-match-made-in-heaven-and-thats-scary/
 
>>> The Bull And Bullabulling

>>> 20 May 2014

>>> by Our Man in Oz <<<


It’s embarrassing to have the kitchen light turned on just as you dip your fingers into the biscuit jar for a midnight snack - a colourful way of describing the reaction of the Chinese-controlled Norton Goldfields to an astonishing “neither fair nor reasonable” verdict of its A7 cent-a-share takeover offer for fellow ASX-listed Bullabulling Gold, which is also listed on AIM.

Under the glare of that damning assessment by BDO Corporate Finance, the independent expert assigned with the job of assessing the bid, Norton rushed to the Australian Takeovers Panel crying foul – which is just what naughty boys do when trying to nick a bickie.

Norton’s four points of complaint to the Panel centred on a letter sent by Bullabulling to its shareholders which Norton reckons omits important information such as how Bullabulling will fund the development of its namesake project near Australia’s gold capital, Kalgoorlie and how Bullabulling management knows that 41.8 per cent of its shareholders have already said they will not accept A7 cents a share.

Without prejudging what the Panel might find, the simple answer to that final point can be found in the BDO document which values Bullabulling at A14.6c a share, with a lower price of A11.1 cents, and an upper price of A16.1 cents – with A14.6 cents chosen as a neat mid-point.

No prize for noticing that the independent expert’s value is more than double Norton’s A7 cent offer, and while there might be cause to argue with the stock market (which values Bullabulling at A7.1 cents) it is a different matter to dispute the impartial calculations of the bean-counters at BDO.

So far the Panel, which is an arm of the Australian Government, has kept itself at, dare it be said, arm’s length from the war of words which has surrounded the Norton raid on Bullabulling since it was launched on April 17, merely noting in its only comment so far that an application (complaint) has been received from Norton.

In time the Panel will have its say, and perhaps Bullabulling will be required to provide more information, including who amongst its blue-chip share register, which includes prominent resource investors such as Baker Steel and Henderson Global, has already said no to the A7 cent offer.

In truth, whatever Bullabulling says is meaningless alongside the BDO valuation which is a rare document in that not many observers of the mining scene, including Minesite’s Man in Oz over his 40 year career, can remember seeing an independent report which values a takeover target at more than double the bid on the table.

Having said that there is a need for Bullabulling’s directors to answer some of the obvious gaps in their “do not accept” argument, including the questions of where is the cash coming from to complete the feasibility study, where will the estimated A$300 million come from to re-develop the historic workings around the Eastern Goldfields mining centre of Bullabulling, and will current studies confirm that there is a way to cut the likely average cost of gold production from the current estimate of A$930 an ounce for the projected 175,000 ounces annually.

The gold price, and Australia’s high-cost environment has not been kind to Bullabulling, a company with a strong London following, but also a company with a project that has a low average gold grade of 1.45 grams a tonne.Despite the obstacle of low grade ore and a gold price which has been in retreat since Bullabulling listed in Australia in March, 2012, there is the advantage of having a handy 3.5 million ounces of gold, and the prospect of finding more.

Norton, despite being the aggressor with its low-ball A7 cent offer, is not really in a strong position itself, working the old and declining Paddington open pit on the northern outskirts of Kalgoorlie. This operation produced 38,600 ounces of gold in the March quarter at a C1 cash cost A$993 per ounce and a C3 total cost of A$1,347.

It is in the Paddington production numbers, and that C3 total cost which is alarmingly close to the current Australian dollar gold price of A$1,394 ounces that a reason for Norton’s opportunistic A7 cent offer for Bullabulling can be seen.Norton needs to find a fresh source of gold which might help it achieve greater economies of scale, and the Bullabulling project some 70 kilometres to the west could be just what the doctor ordered.

Unfortunately for Norton it has started the takeover process with an offer which is so low that it has been slammed by the independent expert which concluded that: “We have considered the terms of the offer as outlined in the body of this report and have concluded that, in the absence of a superior offer, the offer is neither fair nor reasonable to [Bullabulling] shareholders.

What now?

Until the Takeovers Panel comments on Norton’s complaints the answer is not a lot, though from past experience the government-appointed experts will probably tell Norton and Bullabulling to sort out their problems themselves before rushing to the headmaster with a story to tell.

Once that technical aspect of the matter is dealt with it will be up to Norton to address the “neither fair nor reasonable” finding by BDO.

In the meantime, Bullabulling is moving ahead with its definitive feasibility study (DFS) on its namesake project and will generate a maiden ore reserve when that study is completed.

The DFS would also allow the calculation of a discounted cash flow valuation of Bullabulling which, significantly, “may result in a higher value per share than that derived under the net asset value”, according to BDO.

In other words the current mid-point value of A14.6 cents a share could be the starting point, not the finishing point for valuing Bullabulling, and that observation alone indicates that for Norton to get any traction with its takeover offer it will have to do a lot better than A7 cents a share.

Source >>> www.minesite.com
 
These are some of the worst articles I think I have ever had the misfortune to scan.
The Nickel price has risen due to a government ban in Indonesia (a big producer) on exportation and the fact that Russia who is the worlds biggest exporter of Nickel may incur sanctions that effect that.

Nothing to do with growth in the world etc.

How any nitwit can write an article without mentioning that is not worth reading ever again.

Further, Russia China gas deal has been on the cards for decades and is simply Putin putting a signature down to make himself look good. China has got a hold on him because Europe are backing out of dependency on Russian gas. So it's likely to be a crap deal for Russia. Putin seems a bit desperate politically at home so is invading countries and looking to be the big deal maker to distract and strengthen his hold on power in Russia. Got nothing to do with some great tectonic shift in China/Russia relations. They won't even disclose the price because it's BS!
 
That Was The Week That Was ... In Australia

25 May 2014

>>> by Our Man in Oz <<<

...

Minews. Time for a sector-by-sector run down, starting with nickel as that remains the hot metal of the month.

Oz. It certainly does, but whether the Indonesian Government will stick to its ban on the export of unprocessed ores is the tricky question for investors.

After Western Areas, mentioned earlier, the trend across the nickel sector was strong, but not excessively, with a few minor falls.

Prominent moves included Sirius (SIR), up A17 cents to A$3.11, Mincor (MCR), up A5.5 cents to A94 cents, Independence (IGO), up A11 cents to A$4.26, Poseidon (POS), down half-a-cent to A7.9 cents, Cassini (CZI), down A1.5 cents to A18 cents, and Rox (RXL), down A0.2 of a cent to A4.9 cents.

Minews. Now for the other base metals, copper and zinc.

Oz. Copper was quite a mixed bag with one significant fall, that of Sandfire (SFR) which slipped A32 cents lower to A$5.74, a drop which came after it announced the replacement of its underground mining contractor.

Other copper moves were modest and included: OZ Minerals (OZL), up A4 cents to A$3.95, PanAust (PNA), down A1 cent to A$2.18, Altona (AOH), up A1 cent to A16.5 cents, and Hot Chili (HCH), up A1 cent to A23 cents.

Zinc stocks were flat. Ironbark (IBG) did not move, opening and closing at A5 cents. Terramin (TZN), slipped three-tenths of a cent lower to A3.8 cents.

Minews. Over to gold now as that remains of great interest in London.

Oz. There was very little movement in the Australian gold sector, which is hardly surprising as the metal opened and closed the week in our trading hours at US$1,293 an ounce, and the local dollar performed the same trick, opening and closing at US92.4 cents.

A sample of gold prices, some up and some down, included Silver Lake (SLR), down A2 cents to A38.5 cents, Newcrest (NCM), up A9 cents to A$10.30, Troy (TRY), down A4 cents to A97 cents, Endeavour (EVR), down A2 cents to A75.5 cents, Medusa (MML), down A4 cents to A$1.71, and Bullabulling (BAB), the takeover target we looked at last week, up one-tenth of a cent to A7.2 cents.

Minews. Iron ore next, please.

Oz. Down, but not by as much as might have been expected given the negative news around the underlying price of iron ore. Moves included: Atlas (AGO) down A3 cents to A72 cents, BC Iron (BCI), down A14 cents to A$3.66, Mt Gibson (MFX), up A3.5 cents to A78 cents, Fortescue (FMG), down A7 cents to A$4.51, and Red Hill (RHI), down A4 cents to A$1.40.

Minews. Coal and uranium next, please.

Oz. There was a weaker tone in both of the fuel sectors, but like in iron ore the falls could have been more severe given the weak price for both coal and uranium.

Coalspur (CPL), the Canadian coal hopeful hammered flat two weeks ago, kept falling last week, but only a bit. It lost A0.8 of a cent to A7.2 cents, meaning it has halved in less than a month. Other coal moves included: Atrum (ATU), down A2 cents to A$1.57, Prairie Downs (PDZ), down A2 cents to A44 cents, and Whitehaven (WHC), up A1 cent to A$1.49.

Paladin (PDN), the one-time uranium star, distinguished itself last week by hitting a 12-month low of A38 cents, before recovering to close at A39.5 cents, down A3 cents for the week. Other U-moves included: Greenland (GGG), down A1.5 cents to A12.5 cents, Berkeley (BKY), down A2 cents to A26.5 cents, and Energy and Minerals (EMA), down A0.9 of a cent to A5.8 cents.

Minews. Minor metals to close, thanks, starting with graphite.

Oz. The graphite stocks were mixed. Talga (TLG) led the way up with a rise of A1.5 cents to A27 cents. Syrah (SYR) led the graphite stocks to fall with a loss of A22 cents to A$3.45. Other graphite moves included Lincoln (LML) up A0.7 of a cent to A5.5 cents, and Valence (VXL), down half-a-cent to A41 cents.

Base led a weaker titanium sector, with Mineral Deposits (MDL) another producer of the material to lose ground, closing at A$1.39 for a loss of A6 cents.

Rare earth stocks were mixed. Lynas (LYC) clawed back A1.5 cents of its recent heavy losses to settle at A13 cents. Alkane (ALK) lost A2 cents to A30 cents.

The bauxite stocks which caught investor attention last week included Bauxite Resources (BAU), up A1.5 cents to A13 cents, and Australian Bauxite (ABZ) which shed A2 cents to A20 cents.

Minews. Thanks Oz.


Source >>> www.minesite.com <<<
 
Commodities Stack Up Well Against Equities As An Asset Class, Even Allowing For Dividends And Inflation

26 May 2014

>>> by Rob Davies <<<

Market commentators love simple stories. Last week’s headline was that Wall Street was poised to hit a new record high.

In capital-only terms that may be true, but students of economics know that is not the full story.

Once dividends are factored in, through re-investment, developed equity markets are nearly 70 per cent higher than their previous peak at the end of the last millennium.

Metals do not generate any income so, as an asset class, they suffer when comparisons are made against equities, and even bonds, over the long term.

Despite that headwind metals have done well since the start of the millennium.

Gold is the stand out winner as trust in the financial system gradually evaporated. It has increased almost 500 per cent over the period.

However, even the less lustrous base metals have delivered pleasing gains to anyone who was far sighted enough to load up with them at the start of the century. It has been a roller coaster ride of course, but copper is up 280 per cent in net terms from its 2000 average of US$1,814 a tonne to today’s quote of US$6,990 a tonne.

Inflation cannot be ignored and that reduces the real return to 184 per cent. Nevertheless, that is handsomely ahead of the return from equities as an asset class.

Other metals have different histories and nickel certainly wins the prize for the biggest gain this century. Its’ run from US$5,000 to US$50,000 a tonne will be hard to beat in the years to come. It has given up most of the gains to the peak but its current quote of US$19,615 a tonne is still well ahead of the depressed prices at the turn of the century.

Investing in metals directly, whether base or precious, is not easy for the retail investor.

That is why one of the big appeals of mining shares is to act as a proxy for the underlying commodity. There is though another reason for investing in mining companies.

Unlike the metals themselves these enterprises do pay out cash as dividends. That way the investor benefits, or suffers, from changes in the underlying metal price, and the value added by the miner in finding, developing and exploiting the resource.

The cream on top is the consequential dividend flow that can be reinvested to gain more exposure and more cash flow. The whole business of comparing relative performances between asset classes is massively complex because of the effects of inflations and assumptions made on what happens to the dividends and interest they generate, if any.

Commodities don’t generate cash but their capital returns can be large enough to surpass those from assets that do. Moreover, returns from commodities give better protection against inflation.

Finally, history tells us that past performance provides a poor guide to future returns.

Indeed, it can sometimes be the case that when the immediate past looks so lacklustre that the time is right to go back into an asset class. Few people can time that right.

At least with mining shares that pay a dividend investors get a return, even in flat markets, until the sector is back in favour.



Source >>> www.minesite.com <<<
 
The Recovery Is Wobbling, And Metals Are Enjoying Mixed Fortunes As A Result

2 Jun 2014

>>> by Rob Davies <<<

The economic recovery in the West that began in March 2009, when interest rates were slashed to minimal levels, is now quite long in the tooth.

This is despite the widespread perception by many that they have yet to experience any meaningful effects from increased prosperity.

Nevertheless, the rebound has largely been good news.

Now though there are signs on the horizon that stormier times are ahead again even though the after effects of the last storm that swept over the West are still being felt.

A report last week that the US economy only grew at an annualised rate of one per cent in the first quarter is a reminder of how financially fragile that country remains.

That perception was reinforced by the news that US consumer spending dropped in April.

Since it accounts for 70 per cent of the US economy it cannot be ignored. While a weak GDP figure was expected because of the severe winter weather, the outturn was worse than predicted.

Across the Atlantic the situation is even worse. The European Central Bank never engaged in quantitative easing because of concerns from Germany.

It never suffered as much in the crash because the relatively weak euro was enough to protect its super-efficient manufacturing industry.

Other European countries suffered the collateral damage that arose from trying to compete with the Germans on their terms and without the periodic bailouts from devaluations.

However, Europe has never really enjoyed the recovery experienced in the Anglo-Saxon economies and is now facing the prospect of deflation.

Inflation is currently running at only 0.7 per cent and is substantially lower than its target of two per cent.

Even though interest rates are only 0.25 per cent there is speculation that they could be cut by 10 or 15 basis points.

It seems this effect took priority over the weak US data and helped to push the dollar higher over the week as demonstrated by a 3.2 per cent drop in the gold price to US$1,252 an ounce.

Despite its problems the greenback still retains it safe haven status. Base metals did not suffer the same fate and, as a group, they rose 1.4 per cent over the week.

Nickel was the prime mover in this case with its 5.5 per cent jump to US$19,615 a tonne as worries about supply continue to dominate its market.

Nickel is not the only base metal with positive fundamentals though. Copper may have only added US$5.00 to US$6,990 a tonne but the strikingly low levels of inventories are hard to ignore.

Last week metal in LME warehouses declined eight per cent to 175,850 tonnes. This low level is even more dramatic when it is viewed in the context of inventories of 915,000 tonnes last year. Current levels are now the same as five years ago.

Unfortunately the good news in base metals was not replicated in the iron ore market which saw prices decline to US$91.8 a tonne. This fall was the major factor in depressing mining shares over the week. Andrew Forrest of Fortescue does not expect any respite in the near future and he thinks prices could drift down to US$80 a tonne.

His views are echoed by Goldman Sachs which is forecasting an average price of US$109 a tonne for 2014 and US$80 in 2015. That is quite a drop from the year to date average of US$116 a tonne.

The simple reason is that supplies are projected to increase by 10 per cent but demand by only 3.7 per cent.

The details behind the forecasts are not available but presumably they rely on better growth in China than in Europe or the USA. If those last two weaken further than the forecast will need revising, downwards.



Source >>> www.minesite.com
 
>>> That Was The Week That Was ... In Australia
>>> 01 Jun 2014


>>> by Our Man in Oz <<<



Minews. Good morning Australia. Your market seems to have survived the annual May sell-off relatively unscathed.

Oz. You’re excused for thinking that’s the case if you only look at the big picture as measured by the all ordinaries index but dig a big deeper and it wasn’t such a good time for mining stocks.

Technically, the Australian market had its best May since 2010, but that’s a result of the all ordinaries creeping up by three miserable points, a rise which equates to a gain of 0.05 per cent, which is hardly a rise at all. It only looks good because in the previous years the all ordinaries fell in May.

The mining index lost three per cent in May, and gold lost eight per cent.

Minews. So, not so good after all. How about last week?

Oz. Much the same really. The all ordinaries was flat. Mining stocks slipped 1.7 per cent lower and gold stocks fell by five per cent.

Minews. Perhaps we should start our weekly look at prices by hunting out the newsmakers, good and bad.

Oz. That’s always a better approach because no-one really invests on the basis of index moves.

Unfortunately, most of last week’s newsworthy moves were down, although there was a smattering of solid upward share-price changes.

Lucapa Diamonds (LOM) caught the eye of a few traders last week after announcing a high-priced diamond sale and the award of a new licence in Angola. That helped the stock, which has just undergone a capital reconstruction, add A6.5 cents (31 per cent) to A27.5 cents. At one stage on Friday it was trading at A29 cents.
...



>>> Source >>> www.minesite.com
 

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