Gold prices hit >$2,010/oz as Israel conflict shows escalation potential
MiFID II exempt information – see disclaimer below
Anglesey Mining (AYM LN) – Drilling equipment on site for resource infill work at Parys Mountain
Arc Minerals* (ARCM LN) – BUY – Anglo American joint venture steps ahead
Asiamet Resources (ARS LN) – BKM project financing progress report
Aura Energy* (AURA LN) – Quarterly report
Bushveld Minerals* (BMN LN) – BUY, 9.0p – Vametco interest consolidated to 100%
Cornish Metals* (CUSN LN) – Valuation 48p/s – Filing of the new mineral resource report for South Crofty
Glencore (GLEN LN) – Quarterly production report
Golden Metal Resources (GMET LN) – BLM approval for trenching and drilling at the Golconda Summit project, Nevada
Orosur Mining* (OMI LN) – Quarterly results
Tietto Minerals (TIE AU) – Takeover offer from Zhaojin Capital and Q3 Production report
Gold prices hover around $2,000/oz as Israeli-Palestine conflict intensifies
- Gold prices pushed higher to $2,016/oz on Friday before paring gains slightly this morning.
- Haven demand is increasing as Israel conducts air strikes on Gaza.
- Focus also turns to the Federal Reserve, with US Treasuries bouncing off recent lows, with the 10-year hitting 5% before falling back to 4.85%.
- The Fed is expected to remain hawkish following a series of bumper economic data prints, with the labour market still hot and inflation persistent.
- The market is pricing in a 96% chance of Powell holding rates steady at the 5.25-5.5% range.
Tin – Beijing-Myanmar relations weaken, threatening tin supply
- Bloomberg reports that relations between China and Mynamar are weakening over cyber-scams.
- The scams target Chinese nationals and are reportedly enabled by Wa State Army officials.
- Wa State is a major provider of China’s tin ore for smelting, and the state has cracked down on exports of the metal in recent months.
- The date for mining resumption is reportedly being pushed back, expecting to push tin prices higher.
- Indonesia is also cracking down on exports of tin ore, likely pushing China to seek alternative sources.
- The refined tin market stood at 377kt in 2022, with 50% of this directed at solders and 16% for chemicals.
Myanmar economic crisis worsen as exports collapse
- Myanmar is suffering a runaway trade deficit of close to $1bn vs $66m for the previous six months according to figures released last week
- Exports have fallen 46% yoy over the past six months
- We suspect the smuggling of tin and illegal drugs into China will continue
Nigerian lithium process plant is not backed by who you think is backing it (Bloomberg)
- Lithium process plant in the central Nasarawa state is reported to be backed by Ganfeng, Tianqi and CATL
- BUT, they are not the Ganfeng, Tianqi and CATL who you think they are
- The 18,000tpa, $250m planned investment is from Ganfeng Lithium Industry Ltd., Tianqi Lithium Industrial Ltd. and Ningde Era Industrial Ltd.
- They have nothing to do with the Chinese companies listed in China.
- The Nigerian Ganfeng, is owned by the Nigeria-based Tianqi and Ningde Era and has described itself as a ‘renowned and reputable Chinese mining firm’ with ‘no formal affiliation whatsoever’ to the larger Ganfeng.
- Maybe I’m old fashioned but something does not smell right here!
| Dow Jones Industrials | -1.12% | at | 32,418 | |
| Nikkei 225 | -0.95% | at | 30,697 | |
| HK Hang Seng | +0.04% | at | 17,406 | |
| Shanghai Composite | +0.12% | at | 3,022 |
Economics
US – NFPs and FOMC meeting week with markets to watch closely for changes in Fed outlook over “the higher for longer” strategy or even potential rate hikes.
- PCE numbers released last Friday showed that inflation has been cooling down lately with the preferred Fed’s measure (Core PCE) coming in at 3.7% in September v 3.8% in the previous month, although, monetary authorities will assess whether the pace of the slowdown is consistent with the policy outlook.
China – National financial work conference starts with focus on resolving debt, strengthening supervision amid property crisis (SCMP)
- Debt risks and strengthening CCP supervision likely to lead the agenda
- Senior bankers get together with political leaders, state executives and regulators every five years to focus on financial policies and development.
- This time, they need to figure out how to restructure the property sector while enabling these highly indebted companies to finish the developments they started, and in many cases pre-sold.
- LGFVs ‘Loal government Financing Vehicles also needs to be urgently restructured and refinanced, which little support to come from property transactions.
- The issuance of CNY1tn of government bonds will raise China’s budget deficit ratio to ~3.8% of GDP and should help support the economy as the financiers restructure the debt with some of this funding likely to be used to restructure ‘bail out’ the property sector.
- The IMF estimated China’s LGFV debt at CNY66tn (US$9tn) more than double that in 2017.
- IFF ‘Institute of International Finance’ forecasts China’s economy to grow by 5.2% and 5% in 2023 and 2024 vs global economic growth of 3.1% in 2024
- The IFF reckon advanced economies will grow by 1.3% and developing economies growing by 4.3% next year.
China looking to exploit seafloor mining
- China has claimed rights to mine over 92,000sq miles of international seabed
- China is planning to start seabed mining as soon as 2025 and holds five of the 30 exploration licences branted by the ISA ‘International Seabed Authority’.
- We reckon the simple engineering challenge of mining on the sea bed below 1,000m will take many more years to overcome.
- Technology and equipment exist to mine at >2,000m depth but processes for economically lifting thousands of tonnes of ore to surface are far from proven.
- Deep Reach Technology in the US reckon they have a solution but much remains unproven.
- Mining for phosphate and other nodules may be feasible in relatively shallow water of up to 400 or500m.
Germany – The economy contracted in Q3/23 as the nation struggles to bounce back from an energy induced downturn last winter that was followed by two quarters of stagnation, according to Bloomberg.
- Inflation data is out later today with regional numbers released so far pointing to a further slowdown in consumer prices growth rate.
- GDP (%qoq): -0.1 v 0.1 Q2/23 (revised from 0.0) and -0.2 est.
- GDP (%yoy): -0.8 v -0.4 Q2/23 (revised from -0.6) and -1.0 est.
Spain – CPI (%mom): 0.3 v 0.6 September and 0.5 est.
- CPI (%yoy): 3.5 v 3.3 September and 3.8 est.
UK – Mortgage approvals continued to drop hitting their lowest level in eight months in September amid high borrowing costs.
- Banks and building societies approved 43.3k home loans last month, down from 45.4k in August, according to BOE data.
- Mortgage rates hit a 15 year high this summer with the BOE estimating current borrowing costs at ~5.0% at the moment, more than triple levels in early 2022, Bloomberg writes.
Israel – Oil prices are pulling back this morning as the recently launched ground operation by Israel in the Gaza strip is yet to evoke significant, military retaliation from Iran or its proxies, Bloomberg reports.
- Despite a muted reaction from markets, senior officials warned of potential risks of the crisis dragging more parties into the conflict.
- US National Security Advisor Jake Sullivan highlighted “elevated risks of spillover while Iran said the war may “force everyone to take action”.
Around 60 US and UK military transport planes flew into the Middle East since yesterday
- Some commentators see this as a sign for potential escalation of the conflict in Gaza.
- We suspect the buildup may be to contain Hezbollah within the Lebanon.
- The major Middle Eastern powers do not appear to be in favour of a broader conflict with Iran blamed for funding and stirring up trouble.
Drones – China has developed a new low-cost engine at 1/5th the cost of international figures
- The new generation of high-speed, long-endurance drones has already entered service (SCMP)
- US military drones use US$4m engines vs the new Chinese drones at under $1m per engine and also fly at >65,000 feet
- The new single-shaft engine also consumes 1/3rd less fuel than the two-shaft engines with 70% fewer mechanical parts and cheaper servicing reducing the total cost by ~80%.
- China is building a 32 acre facility to support drone development which can simulate the extreme environment of flight at Mach 6 at ground level and use X-rays to study hidden structural changes of the engine and drone in ground tests.
Currencies
US$1.0550/eur vs 1.0560/eur previous. Yen 149.63/$ vs 150.20/$. SAr 18.852/$ vs 18.928/$. $1.209/gbp vs $1.212/gbp. 0.635/aud vs 0.633/aud. CNY 7.318/$ vs 7.318/$.
Dollar Index 106.66 vs 106.61 previous.
Commodity News
Precious metals:
Gold US$1,993/oz vs US$1,987/oz previous
Gold ETFs 86.6moz vs 86.7moz previous
Platinum US$908/oz vs US$911/oz previous
Palladium US$1,122/oz vs US$1,142/oz previous
Silver US$23.08/oz vs US$23/oz previous
Rhodium US$4,450/oz vs US$4,400/oz previous
Base metals:
Copper US$ 8,116/t vs US$8,037/t previous
Aluminium US$ 2,240/t vs US$2,202/t previous
Nickel US$ 18,500/t vs US$18,130/t previous
Zinc US$ 2,476/t vs US$2,446/t previous
Lead US$ 2,115/t vs US$2,102/t previous
Tin US$ 25,070/t vs US$24,910/t previous
Energy:
Oil US$89.2/bbl vs US$89.4/bbl previous
- Crude oil prices fell over the weekend following success in diplomatic efforts to contain the conflict following the invasion of Gaza by Israel, which has cooled fears regarding potential disruptions to crude supplies.
- The US Baker Hughes rig count was up 1 unit to 625 rigs last week (-143 or 19% y/y), with oil rigs rising by 2 to 504 units (-106 y/y) and gas rigs down 1 to 117 units (-39 y/y) as Texas added 3 to 311 rigs (-57 y/y).
- The UK North Sea Transition Authority (NSTA) has awarded 27 new licences in the 33rd Oil and Gas licensing Round, which were prioritised because they have the potential to go into production more quickly than others.
- The EIA expects North America’s liquefied natural gas (LNG) export capacity to more than double from to c.24bcf/d by YE27, as both Mexico (1.1bcf/d) and Canada (2.1bcf/d) place into service their first LNG export terminals and the US adds 9.7bcf/d to the existing 11.4bcf/d of LNG capacity.
Natural Gas €54.000/MWh vs €51.200/MWh previous
Uranium UXC US$73.00/lb vs US$69.00/lb previous
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$120.1/t vs US$117.1/t
Chinese steel rebar 25mm US$534.0/t vs US$533.7/t
Thermal coal (1st year forward cif ARA) US$133.0/t vs US$133.0/t
Thermal coal swap Australia FOB US$134.5/t vs US$134.4/t
Coking coal swap Australia FOB US$325.0/t vs US$325.0/t
Other:
Cobalt LME 3m US$33,420/t vs US$33,420/t
NdPr Rare Earth Oxide (China) US$69,894/t vs US$69,831/t
Lithium carbonate 99% (China) US$21,248/t vs US$21,250/t
China Spodumene Li2O 6%min CIF US$2,010/t vs US$2,010/t
Ferro-Manganese European Mn78% min US$1,018/t vs US$1,019/t
China Tungsten APT 88.5% FOB US$300/mtu vs US$300/mtu
China Graphite Flake -194 FOB US$630/t vs US$630/t
Europe Vanadium Pentoxide 98% 6.2/lb vs US$6.2/lb
Europe Ferro-Vanadium 80% 26.25/kg vs US$26.25/kg
China Ilmenite Concentrate TiO2 US$311/t vs US$314/t
Spot CO2 Emissions EUA Price US$83.2/t vs US$83.3/t
Brazil Potash CFR Granular Spot US$342.5/t vs US$340.0/t
EV and battery news
China’s EU Ambassador Says Bloc’s Probe Into EV Subsidies Is ‘Unjustifiable’
- China’s ambassador to the EU criticized the EU’s investigation into China’s electric vehicle subsidies as unfair and regrettable.
- He warned against protectionist measures and emphasized the need for global cooperation in addressing climate change.
- This response marks a change from China’s previous more positive stance regarding the EU’s investigation.
- China cautioned the EU against initiating similar probes into China’s solar panel and wind sectors.
- The EU is taking steps to protect its wind sector amid China’s growing manufacturing influence, with Germany’s Siemens Energy seeking a €16 billion backstop from the government.
- China stressed the need for mutual benefits and resistance against protectionism to foster positive energy and certainty in the global fight against climate change.
Eatron Technologies’ AI-powered software predicts EV battery failures
- Eatron Technologies, a UK-based company, is using AI in its battery management software to predict and prevent EV battery failures, reducing the risk of fires.
- EV battery fires, though rare, have raised concerns among consumers, making it crucial for the industry to regain trust.
- One common cause of battery failure is lithium plating, occurring during fast charging at low temperatures, leading to short circuits and thermal runaway.
- Traditional methods of detecting lithium plating involve examining electrodes, but this is impossible once the battery is in a vehicle.
- Eatron’s AI-based approach utilizes feature extraction to transform raw battery health data, making anomalies easier to identify.
- Their proprietary AI pipeline accurately captures battery behavior and predicts cell failures with up to 90% accuracy and zero false positives.
- Detecting failures before they happen allows for effective and convenient management, minimizing further damage and enabling timely service visits.
- This technology enhances safety and addresses consumer concerns, vital for the widespread adoption of electric vehicles.
Le Mans organizer reveals MissionH24 hydrogen-electric racer
- MissionH24 is a hydrogen-electric sports prototype race car developed by the ACO for the 24 Hours of Le Mans to promote hydrogen as a clean racing fuel by 2026.
- The car is designed to weigh 1,300 kg (2,866 pounds) and achieve a top speed of 199 mph, showcasing high performance with hydrogen technology.
- Its powertrain features an 871 horsepower electric motor driving the rear wheels, powered by hydrogen fuel cells and a small lithium-ion battery for added power during high loads.
- Hydrogen tanks at the rear feed the mid-mounted fuel cell, combining hydrogen with oxygen to generate electricity in an almost emission-free process.
- The car’s assembly and track testing are set to begin in October 2024, evaluating its performance and reliability under racing conditions.
- This initiative aligns with the automotive industry’s push for sustainable motorsports, with Formula 1 also transitioning to carbon-neutral synthetic fuels by 2026.
- Toyota and other automakers are exploring hydrogen-powered race cars, indicating a broader shift towards environmentally friendly racing technologies.
- The development emphasizes hydrogen’s potential not only in everyday transportation but also in the competitive realm of motorsports.
Company News
Anglesey Mining (AYM LN) 1.18p, Mkt Cap £4.9m – Drilling equipment on site for resource infill work at Parys Mountain
- Last week, Anglesey Mining reported the arrival on-site of a drilling rig to undertake infill drilling of the Northern Copper Zone at its Parys Mountain project on Anglesey.
- The announcement envisaged drilling starting on 27th October with a programme of ~3,700m in six holes expected to “take up to 25 weeks to complete”.
- The company explains that the “overall objective of this program is to upgrade a significant zone of the NCZ from the Inferred to Indicated category for use in the planned Pre-Feasibility Study. The drilling will also be testing for extensions of the nearby, high-grade Garth Daniel and Central Zone”.
- The current, ‘Inferred’ resource for the Northern Copper Zone is 9.4mt at an average grade of 1.27% copper with “minor Au, Ag, Zn and Pb credits (1.6% CuEq)” although the company comments that “very few holes were assayed for all the metals”.
- Commenting on the planned drilling, CEO, Jo Battershill, said that drilling the Northern Copper Zone offered the potential to “upgrade portions of the resource into the Indicated category … [and] … provide significantly higher confidence going into the next round of mine designs and study work”.
- He explained that “Our technical partner, Central Alliance, will now conduct the initial survey utilising the first 600 metre drill hole to be completed in the upcoming program. By using the deeper drill hole, the survey will ultimately provide significant additional coverage over and above the original plan of using the shallower Morris Shaft and will include the large disseminated Northern Copper Zone and the Garth Daniel and Central Zones, both of which consist of higher-grade massive sulphide zones”.
- Copper mining at Parys Mountain has a long history and is said to have started during the Bronze Age and, according to the company’s website, Parys Mountain eventually “became probably the world’s largest copper mine in the 1780s. Until 1800 most mining was by open cast but from 1810 Cornishmen opened up significant underground workings. By 1910 all significant mining activity had ceased”.
- In a separate announcement last week, reporting that as “a result of the voting at the general meeting”, Anglesey Mining confirmed that its long-serving Chairman, “John Kearney has ceased to be a Director of the Company with immediate effect” and that “Andrew King will act as interim chairman and the Company will now commence a formal process to appoint a permanent successor”.
- Speaking on behalf of the board and Mr. Kearney’s colleagues at Anglesey Mining, Finance Director, Danesh Varma, thanked “John for his highly significant contribution to Anglesey Mining during his tenure as Chair … [and said that] … John has played an instrumental role in the life of the Group over the past 29 years and will be sorely missed”.
Conclusion: The latest phase of drilling at Parys Mountain aims to upgrade ‘Inferred’ resources on the NCZ and provide additional information for mine design, We await the results of the latest drilling with interest.
Arc Minerals* (ARCM LN) 3.3p, Mkt Cap £42m – Anglo American joint venture steps ahead
BUY – CLICK FOR PDF
(Arc holds 67% of Unico Minerals Limited with 33% held by Kopara Investments. Arc effectively holds 72.5% of Zaco, 66% of Handa in Zambia and 66% of Cheyeza license. Arc also holds 75% in Alvis-Crest (Proprietary) Limited which holds two licenses in the Kalahari Copper Belt, known as Virgo covering >210km2, around 10km south east the recently commissioned Khoemacau Copper in Botswana.)
- Arc Minerals reports the completion of the share subscription with Anglo American with respect to its jv agreement in Zambia.
- Substantive regulatory conditions precedent have been satisfied allowing a subsidiary of Anglo American to acquire 70% of Unico Minerals Ltd.
- Arc now holds 30% of the license portfolio through Unico Minerals which is a 76% subsidiary of Arc Minerals
- The joint venture has already started drilling on one of the key jv licences under the direction of Anglo American following the end of the local wet season.
- President Hakainde Hichilema and the Zambian government have prioritised foreign and local investment into the mining sector supporting the jv and welcoming Anglo American back into Zambia after a 20-year hiatus.
- The Minister of Mines and Minerals Development, Hon. Paul Kabuswe is supporting Anglo American’s commitment to a significant exploration program in the Northwest province with the hope of future discoveries in the region.
- “Certain minor procedural conditions are in the process of being satisfied after which the JVA will become unconditional in accordance with the commercial terms previously announced on 12 May 2022 and 20 April 2023. These remaining conditions are expected to be satisfied within the next 2 weeks.”
- Anglo American has the right to retain an Ownership Interest of 51%, by:
- Funding $24m of exploration expenditures by the end of Phase 1 which is within three years and 180 days of signing
- Making cash payments to Unico totalling up to USD 14,500,000, as follows:
- US$ 3,500,000 upon signing of the Joint Venture Agreement and satisfying the conditions precedent;
- US$ 1,000,000 on the first anniversary of the Effective Date;
- US$ 1,000,000 on the second anniversary of the Effective Date;
- US$ 1,000,000 on the third anniversary of the Effective Date; and
- US$ 8,000,000 by the Phase I End Date.
- Following the completion of Phase I, Anglo American will have the right to retain an additional ownership interest equal to 9% to get to 60% by funding US$ 20m of additional exploration expenditures within 2 years of the Phase I end date.
- Anglo American can also earn an additional 10% to get to 70% of another US$ 30m within 2 years of the Phase II End Date.
- Arc’s authorised share capital is: 1,225,744,782 shares.
- Cash: The Anglo jv brings $14.5m into Arc Minerals. Arc held £60,000 in cash and cash equivalents at end June.
- Arc is carrying £106,000 worth of shareholder loans at end September.
Copper mines in near geological proximity to Arc’s licenses:
- Arc’s licenses are within 40km of First Quantum Minerals’ Sentinel mining complex.
- First Quantum Minerals acquired the Sentinel (Kalumbila) project from Kiwara in 2010 for US$260m. Kiwara had an estimated resource at Kalumbila of 1.38bt grading 0.78% copper. The resources was later adjusted by FQM to 1.027bt grading 0.51% copper. Last year the mine reported an new resource of 0.88bnt grading 0.53% copper following production of 223,656t of copper in 2018.
- Kanshanshi: 200km to the east hosting 1.4bnt grading 0.64% copper resource, developed by First Quantum Minerals.
- Kamoa-Kakula: part of the reason for so much interest in the West of Zambia is the relatively recent Kamoa-Kakula copper/cobalt discovery to the north and across the border in the DRC. Kamoa-Kakula is the world’s largest, undeveloped, high-grade copper discovery and was discovered by Ivanhoe Mines geologists. The project is now a jv between Ivanhoe Mines (39.6%), Zijin Mining Group (39.6%) and the DRC (20%).
- Barrick Gold bought Equinox, for its Lumwana assets in 2011 for $7.8bn post construction with 322mt of copper ore grading 0.73% copper.
- Lumwana is 100km to the east and had reserves of around 678mt grading 0.49% copper and is producing >116,000tpa of copper.
- Barrck announced a $2bn expansion for Lumwana on 4 October to expand the mine to 240,000tpa of copper by 2028.
Conclusion: Zambia is the most prospective and welcoming of major copper producing nations though the land does not always reveal its riches so easily. Anglo recognise the need for a broad scale and comprehensive exploration program to track down the occurrence and concentration of copper in the Northwest province. News that Anglo’s drillers are already working gets the jv off to a flying start after an exhaustive due diligence process which kicked off in July 2020.
Arc management have negotiated a highly beneficial deal for their investors giving Arc 30% of the jv and enabling substantial upside potential on the value of any future discovery.
*SP Angel acts as Nomad and broker to Arc Minerals. An SP Angel analyst has driven across the Zambian copper belt, flying the British flag, to visit Arc’s licenses West of Solwezi.
Asiamet Resources (ARS LN) – 0.9p, mkt cap £21m – BKM project financing progress report
- Asiamet Resources has issued a further progress report on its project financing for the BKM copper project in Kalimantan.
- The company advises that the final technical report by the independent technical expert, SRK has been delivered to the “prospective lead bank [enabling it to] … commence its commercial and financial analysis leading to the request for initial credit committee approval to act as lead arranger for the BKM project debt finance”.
- The company confirms that it is continuing discussions with potential providers of offtake finance “with a detailed review of the indicative term sheet completed and feedback to be provided to the international metals trading group”.
- Asiamet Resources also says that following “significant engagement with Chinese and Indonesian engineering, procurement and construction (EPC) and EPC management (EPCM) groups, the Company intends to soon engage highly reputable engineering teams from both jurisdictions to deliver the next phase of project engineering works”.
- The company is also assessing the potential of “pyrite contained within BKM deposit … [as a] … source of sulphur for production of sulphuric acid needed for the ever-increasing production of nickel in Indonesia using acid leach processing”.
- Asiamet Resources identifies what it describes as “Cost-effective transportation … [as] … key to unlocking the value of this resource and a work programme has been initiated to study transportation costs for concentrate from BKM to known locations of HPAL nickel processing in the country”.
- In a separate announcement today, Asiamet Resources reports the retirement of Dr. Peter Pollard as a non-executive director and the appointment of “a representative of Asiamet’s largest shareholder, PT Delta Dunia Makmur Tkb (DOID)”, Mr. Peter Chambers, as a non-executive director.
- Executive Chairman, Tony Manini, thanked Dr. Pollard for “his highly valuable input at the Board level over a long period of time” and welcomed Mr. Chambers who, he said, “brings a strong background in the finance and commercial areas and extensive experience in accounting and audit gained across a range of industries including several companies operating in the Indonesian mining sector”.
Conclusion: We look forward to further news of progress on financing the BKM over the coming months.
Aura Energy* (AURA LN) 14.18p, Mkt Cap £84m – Quarterly report
(Aura holds 85% of the Tiris Uranium Project, Mauritania with 15% held by ANARPAM, a Mauritanian Government entity.)
- Aura Energy has issued its Q3 quarterly report today
- The team are busy working on the FEED ‘ Front End Engineering Design’ for the Tiris uranium project in Mauritania.
- Management are busy upgrading the 58.9mlbs U3O8 resource through the drilling of two targets to the East and West as extensions.
- The World Nuclear Association recently raised demand growth forecasts for Uranium.
- The recent coups in Niger has destabalised the uranium market helping to drive spot uranium prices higher and causing offtakers to look to further diversify supply.
- Aura management continue to discuss offtake potential while working through the processes for tenement renewal and exploitation.
- Häggån : Scoping Study indicates NPV range of US$380-1,231m before U3O8 by-product credits
- Management are working towards the application of a 25-year exploitation permit in Sweden.
- “The Scoping Study covers less than 3% of Häggån’s known 2.0bnt Mineral Resource Estimate.”
- Cash on hand as at end-September was A$8.55m.
*SP Angel acts as Nomad and Broker to Aura Energy
Bushveld Minerals* (BMN LN) 1.4p, Mkt Cap £22m – Vametco interest consolidated to 100%
BUY – 9.0p (from 7.9p)
- The Company is consolidating its interest in Vametco production unit to 100% by acquiring the 26% minority stake through a combination of stock and cash.
- The Company signed a definitive agreement with a Black Economic Empowerment consortium acquire the minority stake.
- Consideration includes 232.8m shares representing ~13% of the enlarged share capital, a R18m (~$1.0m) cash payment and a cancellation of a ~$0.5m loan to one of companies within the BEE structure.
- 70% of shares is subject to a six month lock in period.
- The transaction is conditional on the central bank approval (expected to be secured within six weeks).
Conclusion: The transaction allows the Company to simplify the ownership structure in a value accretive way as additional 26% interest in Vametco, an asset that accounts for most of the value in Bushveld on our estimates, more than offsets additional dilution.
*SP Angel act as nomad and broker to Bushveld Minerals
Cornish Metals* (CUSN LN) – 11.5p, Mkt cap £60m – Filing of the new mineral resource report for South Crofty
Valuation 48p/s
- Cornish Metals has now filed the technical report for its new mineral resources estimate (MRE) for the historic South Crofty mine in Cornwall with the Canadian SEDAR system providing detailed information supporting the estimate which was released on 13th September.
- The company is dewatering historic workings and progressing a feasibility study on the possibilities for a resumption of mining and we look forward to studying the details of the resources estimate contained in the technical report.
- As reported in September, the new estimate for the ‘Lower Mine’ area shows increases of over 30% in the tin content of the ‘Indicated’ resources and of over 15% in the contained tin within the ‘Inferred’ part of the resource compared with the June 2021 estimates.
- The new estimates are:
- Indicated Resource – 2,896,000t at an average grade of 1.50% tin (2021 – 2,084,000t at an average grade of 1.59% tin); and
- Inferred Resource – 2,626,000t at an average grade of 1.42% tin (2021 – 1,937,000t at an average grade of 1.67% tin).
- Both the previous and current estimates are reported at a cut-off-grade of 0.6% tin.
- The company says that the “majority of new Mineral Resources are contained within the central part of the mine in No. 1, No. 2, No. 3, Main, Intermediate, North and Great Lodes following digitization and modelling of historical data”.
- We note that, the No. 1 and No.2 Lodes now represent around 14% of the contained tin classed as ‘Indicated’ and around 19% of the ‘Inferred’ tin and that, in the 2021 estimate the contribution of the No.1 Lode was not reported as a significant component indicating the additional value recognition of the remodelling of the historical information.
- The new estimate shows around 54% of the contained tin within the ‘Indicated’ part of the resource with the balance as ‘Inferred’.
- The company also updates the estimates for the ‘Upper Mine’ area showing an:
- Indicated Resource of 260,000t at an average grade of 0.69% tin, 0.78% copper and 0.59% zinc – reported as 0.99% on a tin equivalent basis (2021 – 277,000t averaging 0.67% tin, 0.78% copper and 0.57% zinc- 1.01% SnEq); and
- Inferred Resource of 465,000t at an average grade of 0.66% tin, 0.63% copper and 0.63% zinc – reported as 0.91% on a tin equivalent basis (2021 – 493,000t averaging 0.64% tin, 0.63% copper and 0.63% zinc- 0.93% SnEq).
- CEO, Richard Williams described the new estimate as “another positive development for South Crofty as we advance the project through to delivery of a Feasibility Study … by the end of 2024 … [said that it continues] … to demonstrate the potential to increase the Mineral Resource and extend the potential mine life”.
- The opportunity for further resource expansion was highlighted in the company’s September comment that “The major lode structures that comprise the Mineral Resource remain open along strike and at depth”.
- We note that, in July, the company reported assay results from its metallurgical drilling programme on the No.4, No. 8 and Roskear Lodes at the South Crofty which represent around 43% of the ‘Indicated’ and 35% of the new ‘Inferred’ resources reported today, including;
- Results from the No.4 Lode of
- A 2.44m true width intersection at an average grade 1.27% tin of the No 4 Lode in hole SDD20-001-C1 between 984.17m and 986.77m down hole; and
- A 1.66m true width intersection at an average grade 1.15% tin in hole SDD20-001-D between 981.65m and 983.46m down hole; and
- A 2.12m true width intersection at an average grade 3.24% tin in hole SDD20-001-between 980.44m and 982.74m down hole.
- Results from the No.8 Lode of:
- A 0.89m true width intersection at an average grade 1.80% tin in hole SDD20-001-C1 between 1,039.78m and 1,040.68m down hole; and
- A 2.77m true width intersection at an average grade 1.09% tin in hole SDD20-001-D between 1,031.15m and 1,033.97m down hole; and
- A 0.95m true width intersection at an average grade 0.03% tin in hole SDD20-001-E between 1,030.00m and 1,030.95m down hole.
- And from the Roskear Lode of:
- A 1.34m true width intersection at an average grade 1.27% tin in hole SDD22-001 between 924.67m and 926.21m down hole; and
- A 1.46m true width intersection at an average grade 4.66% tin in hole SDD22-001C! between 920.11m and 921.73m down hole.
Conclusion: We look forward to examining the detailed analysis supporting the recent mineral resource increase for the ‘Lower Mine’ area at South Crofty which shows increases in the tin content of both the ‘Indicated’ and ‘Inferred’ resource since the 2021 estimate and highlights that the mineralisation remains open both laterally and at depth. The increased resource is integral to the current feasibility study work on resuming production with the study remaining on track for completion by the end of 2024.
*SP Angel acts as Nomad and Broker to Cornish Metals. An SP Angel analyst formerly worked in the South Crofty tin mine in the 1980s and holds shares in Cornish Metals.
Glencore (GLEN LN) 450p, Mkt cap £55bn – Quarterly production report
- Glencore provides their Q3 production report.
- The Company produced 736kt Cu ytd, down 5% from same period 2022, with the reduction reflecting the sale of Cobar and weaker copper by-product output.
- African copper production 8% on improved volumes at Katanga and higher milling throughput at Mutanda.
- Cobalt production steady at 32.5kt whilst zinc production of 672kt was down 4% for the same period 2022.
- Nickel production down 16% yoy at 68.4kt on higher INO third party production and the Raglan mine strike.
- Ferrochrome output down 21% on smelter offline days on the back of elevated power prices.
- Vanadium pentoxide output increased 27% qoq to 4.4mlb and 4% ytd to 14.9mlb.
- Coal held steady at 84mt, despite a 16% reduction in ytd Australian coking coal sales.
- The Company has slashed nickel guidance for the full year by 9% on weaker-than-expected Koniambo output, persisting impacts from the Raglan strike and planned maintenance at the Sudbury smelter.
- Glencore expects its trading division to make between $3.5-4bn in EBIT this year.
Golden Metal Resources (GMET LN) 7.5p, Mkt Cap £6.4m – BLM approval for trenching and drilling at the Golconda Summit project, Nevada
(Power Metal Resources (POW LN) 0.76p, Mkt cap £15m holds 62% of Golden Metal Resources)
- Golden Metal Resources reports that the Bureau of Land Management has accepted its submission for the excavation of 12 trenches and drilling from 9 sites on its Golconda Gold Project in the Walker Lane mineralised belt of Nevada.
- The trenching and drilling will follow up historic exploration by a previous operator in the late 1980s which “encountered significant gold mineralisation located within upper plate Havallah Sequence rocks at the “Trench Zone” … including mechanised trenching sample assay results of 7.6m @ 19.7g/t gold (Au) and 15.2m @ 7.1g/t Au”.
- Subsequent sampling by Golden Metal Resources has shown “strong arsenic (As) anomalism along the Golconda thrust fault, further validating the presence of a “feeder zone” and therefore the potential for Carlin-Type gold mineralisation at depth”.
- The company explains that “Arsenic anomalism is a lead indicator for Carlin-type gold systems … [which it considers] … highly encouraging given the known presence of multiple large gold deposits in the Getchell Trend and the Battle Mountain-Eureka Trend, at the confluence of which … the Golconda Project is located, in a very similar geological environment”.
Conclusion: After early-stage exploration work at Golconda Summit identified promising geochemical characteristics typically associated with the ‘Carlin-type’ gold mineralisation the company plans to follow up with trenching and drilling. We await the results with interest.
Orosur Mining* (OMI LN) 2.2p, Mkt Cap £4.5m – Quarterly results
- Orosur provides their quarterly results for Q1 of this fiscal year.
- The Company held $3.2m in cash at the end of the period, and $2.4m in cash today, leaving it well capitalised to finance new exploration opportunities.
- As regards exploration, Orosur is currently operating a portfolio of multi-commodity targets, ranging from Brazil to Colombia and recently to Nigeria.
- In Brazil, Orosur expects assay results from sampling near the Bom Futuro tin mine imminently, which should guide to future exploration activities.
- Although Colombian activity has been wound back as discussions continue over Monte Aguila, mapping and sampling activity is ongoing.
- In Argentina, sampling and ground magnetic surveys are ongoing, as the Company looks to further their understanding of El Pantano, having identified >70 quartz veins and gold pathfinder elements.
- The Company is also accelerating its lithium exploration activity with a JV in Nigeria, where there is brewing excitement for spodumene-bearing pegmatites similar to the Brazilian pegmatite fields.
*SP Angel acts as Nomad and Broker to Orosur Mining
Tietto Minerals (TIE AU) A$0.57, Mkt cap A$643m – Takeover offer from Zhaojin Capital and Q3 Production report
- Tietto Minerals, which operates the Abujar Gold Project in Ivory Coast, has received an all-cash takeover offer from Zhaojin Mining.
- The offer of A$0.58/share values the Company at US$415m.
- Zhaojin already holds 7% of the Company.
- Tietto also reported their Q3 update, with the Company doubling production to 33.75koz for the period.
- Tietto reports an updated LOM Plan for the Abujar project, which it expects will produce 170kozpa for the first nine years of production (2024-2032).
- Abujar is forecasted to produce at an AISC of US$982/oz for the 9 year period and holds a post-tax NPV5 of $853m assuming a $1,900/oz gold price.
No.1 in Copper: “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”
No1. In Gold: “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”
The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
Analysts
John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474
Sales
Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472
Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534
Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
SP Angel
Prince Frederick House
35-39 Maddox Street London
W1S 2PP
*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
| Sources of commodity prices | |
| Gold, Platinum, Palladium, Silver | BGNL (Bloomberg Generic Composite rate, London) |
| Gold ETFs, Steel | Bloomberg |
| Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt | LME |
| Oil Brent | ICE |
| Natural Gas, Uranium, Iron Ore | NYMEX |
| Thermal Coal | Bloomberg OTC Composite |
| Coking Coal | SSY |
| RRE | Steelhome |
| Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite | Asian Metal |
DISCLAIMER
This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.
This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.
This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.
This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.
Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.
Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.
SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).
SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.
MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.
A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).
SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%
