KFM Weekly Investment Update: Friday, 07 April 2017

Local Market Summary

• The National Government supported the decision by Total SA’s to erect the second LNG plant at Caution Bay in Central province instead of Gulf. This was announced by Petroleum and Energy Minister Nixon Duban in Parliament. Total E&P PNG Limited MD Phillipe Blanchard also confirmed that the resolution passed for Caution Bay as the location will remain

• PNG’s first Neutral Internet Exchange Point (IXP) was launched by National Information and Communication Technology Authority. CEO Charles Punaha stated that the facility will generate reliable benefits which includes improved accessibility, affordability and provide quality services for ISP’s and end users

• The Executive Director of PNG Chamber of Mines and Petroleum Greg Anderson said the industry of mining and petroleum is experiencing tough challenges despite improvements in commodity prices. However, he pointed out positive outcomes received last year with two mining lease applications received from PanAust Australia for Frieda River project and Newcrest Mining for Walfi Golpu project

• Representatives from Mineral Resource Authority (MRA) advised investors at the Hongkong Mines and Money Convention that it promotes transparency and working towards becoming a full member of Extractive Industries Transparency Initiative. MRA’s Manager for Geographical Information System, Marketing and Information, Arnold Lakamanga said MRA developed a digital tenements management system to enhance online accessibility for license holders and general public

• The landowners of Ok Tedi mining in Western Province will receive K1.5m from The Royalty Trust. This was announced by the chairman Joel Dangkim. He stated that it was an investment trust established in 2004 and has yield from an investment portfolio of K6.0m in 2006 to K120.0m in current

• The PNG Laboratory Accreditation Scheme renewed Oil Search’s (OSH) Laboratory ISO17025 after showcasing its competence in chemical and microbiology testing. OSH PNG general manager Julian Fowles said that being ISO-17025 accredited means that the laboratory is able to produce accurate test data that is done similarly anywhere in the world

• According to Nautilus Minerals, the seafloor mining machines for its underwater project arrived for testing. Vice President Adam Wright stated that it is a significant step forward for project’s development. He added that the machine trials and testing will be carried in Motukea Island near Port Moresby

• Ramu Nickel project signed a deal with Kurumbukari Landowner Association and Mapai Transport to transport Chromite from Kurumbukari to Lae wharf for overseas shipment. The Company stated that it found a market in China and stated that the price is not lucrative as other minerals in PNG

• Steamships Trading Company reported a profit after tax and minority interests of K84.2m, a decrease of 14.9% for 2016 financial year compared to K99.0m generated in 2015. The firm explained that the decrease in results were the outcome of prolonged weakness in economic conditions in 2016. The company also proposed a final dividend of 0.35 toea per share to be paid to shareholders once it is approved

• This week’s BPNG auctions in Central Banks Bills were offered for 28 days and 63 days with an over subscription of K2.5m out of a total of K579.2m on offer. The weighted average yield was 1.20% and 2.34% respectively

• This week’s BPNG auctions in Treasury Bills were undersubscribed by K27.8m out of a total of K252.0m on offer indicating weak appetite for longer dated securities. Weighted average yields for 182 days and 364 days were 4.73% and 7.82% respectively

• The KSi Index retreated 0.5% to close at 5,459.82 points. Likewise, the KSi Home Index dipped 0.5%to conclude the week at 11,011.35 points, reflecting a decline in share price of CCP, KAM and OSH by 5.1%, 1.0% and 1.4% respectively

International Market Summary

• Minutes from the mid-March meeting on Wednesday shows US Fed wants to start shrinking its $4.5 trillion balance sheet later this year. The US Fed decided to raise its benchmark interest rate for the third time in this economic cycle. At the meeting, it raised it by 25 basis points, to a range of 0.75% to 1.0%

• The Reserve Bank of Australia (RBA) has maintained the official cash rate at a historic low of 1.5% for the seventh consecutive meeting in a row

• Japanese stocks hit a four-month low after the US strike on Syria hurt risk sentiments with the Nikkei share average down a mere 1.3% at 18,664.83 points, its weakest since December 7.The index had risen as much as 1.00% in early morning trade, lifted by an initially weaker yen and overnight gains on Wall Street

• Gold inched up more than 1.0% to reach a 5-month high as investors sought safe-haven assets following the United States launch of cruise missiles against a Syrian air base. Light Crude and Brent Crude followed the same trend, to finish at US$52.36 & US$55.51, up 3.5% and 5.1% respectively from the previous week

• PGK/USD remained flat for the week to close at 0.3145, PGK/AUD appreciated by 1.6% to end at 0.4179, while AUD/USD depreciated by 1.6% to end the week at 0.7526 07 April 2017


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