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KFM Weekly Investment Update: Friday, 22 September 2017

Local Market Summary

• Minister for Mining Hon. Johnston Tuke has welcomed the board of PNG Chamber of Mines and Petroleum, Mineral Resource Authority and the extractive industry companies with suggestions on the 100-day ultimatum to accomplish what the Government had initiated for all economic ministries including the mining industry. Mr Tuke said he would like to work together with all these organisations to realise the government’s agenda and also assured the Board that the government was working on the review of the Mining Act. He also promised that the Wafi/Golpu and Frieda River mining projects would become operational

• Prime Minister Hon. Peter O’Neil said the Government would continue to pursue the Pacific Marine Industrial Zone Project (PMIZ) in Madang to create a regional tuna processing hub for the pacific Region. He added the funding arrangements were now in place and construction would begin soon. China Exim Bank had agreed to fund the project K350.0m concessional loan

• Israeli Investor, Innovative Agro Industry (IAI) an affiliate of LR Group has committed to invest and develop agriculture and farming in the Sepik Plains. CEO to IAI Mr Lior Crystal and Minister for National Planning and Monitoring Hon. Richard Maru travelled with a delegation to East Sepik to inspect the Sepik Economic Zone. Mr Crystal added that he was also there on behalf of his affiliation, LR Group. Investments projected include a modern cocoa plantation using Israeli technology that will produce 400.0% to 500.0% more yield than an average cocoa plantation. Mr Maru said that the affiliation are awaiting for the Government’s equity contribution of K14.0m in the joint venture between the State and LR Group

• The Board of Kumul Petroleum Holdings (KPHL) recently approved the sale of its stake in Oil Search (OSH). The shares were initially bought at AUD$8.0 per share and were sold at AUD$6.7 per share. However, Chairman Mr Moi Avei stated that this was a profitable decision and in the best interest of KPHL. KPHL also added that the sale does not affect its affiliation with OSH and they will continue to partner with the company in other petroleum and gas projects in the country

• Mayur Resources (MRL) will be listed on the Australian Stock Exchange (ASX) soon after an oversubscribed Initial Public Offering (IPO) that raised AUD$15.5m. According to the MRL, the funds raised through the IPO will be used to advance the company’s portfolio of mineral resource and energy development projects in the country (PNG) which are the Orokolo Bay Industrial Sands Project, the Port Moresby Limestone Project, the Lae Power Project as well as other mineral exploration activities

• This week’s BPNG auctions in Central Bank Bills were offered for 28 days only with an over-subscription of K5.0m out of total amount of K344.5m on offer. The weighted average yield for 28 days remained unchanged at 1.37% from the previous week

• This week’s BPNG auctions in Treasury Bills were under-subscribed by K51.1m out of a total amount of K180.1m on offer. Weighted average yields for 182 days, 273 days and 364 days were 4.73%, 6.71% and 8.00% respectively

• The KSi Index ended the week slightly up by 0.1% to close at 5,205.24 points reflecting the rise in share price of Oil Search which ended at K17.05. The KSi Home Index remained unchanged for the week at 11,005.79 points

International Market Summary

• A slide in technology companies weighed on US stocks on Thursday, pulling the market down. The Standard & Poor’s 500 index lost 7.64 points, or 0.3%, to 2,500.60 points while the Dow Jones industrials rose for the week by 0.4%, to 22,359.23 points.

• European stocks rose on Thursday morning after the US Federal Reserve set the date for unwinding assets on its balance sheet amassed as part of stimulus measures during the financial crisis and signaled another rate increase this year, which investors have judged as a vote of confidence in the outlook for the US economy. The FTSE, DAX and CAC 40 all rose for the week by 0.7%, 0.6% and 1.0% respectively

• Japan’s Nikkei average fell in choppy trade moving away from two-year highs as rising geopolitical tensions over North Korea sapped risk appetite however the Nikkei managed to rise for the week by 1.9% to 20,296.45 points.

• Australian shares slipped to a three-week low with broad-based losses after the US Federal Reserve signaled, it still expects one more interest rate hike by the end of the year despite a recent bout of low inflation. The S&P/ASX 200 index and S&PASX 50 both fell by 0.2% and 0.1% to end at 5,682.10 and 5,628.70 respectively

• Oil prices settled nearly flat on Thursday, the eve of a meeting of major oil producing countries in Vienna to discuss whether they will extend production limits that have helped reduce the global crude glut. US crude futures dipped by 0.3% to USD$0.14 to settle at USD$50.55 a barrel. Brent crude futures rose USD$0.14, or 0.3%, to end at $56.43 a barrel

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pdfKFM Weekly Investment Update: Friday, 22nd September 2017

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