Gold prices muted as the US earnings season pace picks up
MiFID II exempt information – see disclaimer below
Aura Energy* (AURA LN) – Uranium exploration targets offer potential for to raise Tiris project to world-class scale
Base Resources (BSE LN) – Base Resources said to be making good progress in discussions with the Madagascar government.
Castillo Copper (CCZ LN) – Strategic review of assets
Celsius Resources* (CLA LN) – Drilling results from Sagay project, Philippines
Petra Diamonds (PDL LN) – Latest sales tender confirms weakness of the rough diamond market
Rio Tinto (RIO LN) – Q3 production leaves full year guidance largely intact
Savannah Resources* (SAV LN) – BUY, 21.1p – NED dealings
Serabi Gold (SRB LN) – Q3 reports highest level of gold output this year
Syrah Resources (SYR AU) – Quarterly Activities Report and graphite market update
Thor Explorations (THX LN) – Q3 production report and project updates
Zinnwald Lithium (ZNWD LN) – Operational update following drill campaign completion
IGTV: New lower lows in base metals keep coming – why? https://youtu.be/1KWgI2HTUGw?si=VlVfQtpW-mrI7slD
Copper will still move up despite a gear shift down in carbon-zero targets https://youtu.be/jbywf2hmEU8?si=yxJcwGiE1_V121Ok
VOX: 06/10/23: https://audioboom.com/posts/8379837-john-meyer-on-diamond-price-weakness-petra-anglo-asian-bushveld-power-metal-resources
*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts. We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.
Copper weakens as traders cautious on elevated rates, weak China demand and geopolitical concerns
- Copper prices are holding lower around the $7,900/t mark, with the high dollar and rates weighing on demand fundamentals.
- Inventories are holding around their October 2021 highs on LME whilst the Shanghai stocks saw a build last week.
- The 10-year moved above 4.7% again yesterday, adding pressure to trader financing capacities, forcing them to sell down holdings to meet margin requirements.
- Geopolitical concerns are also weighing on appetite for metals.
- The LMEX base metals index is down 10% ytd.
- Goldman released a report yesterday suggesting that the copper market is likely to face short-term headwinds on a global growth slowdown.
China vehicle sales continue to grow
- 2.85m vehicles rolled off Chinese assembly lines in September, up 6.6% yoy, according to the China Association of Automobile Manufacturers (CPCA)
- 2.41m units were sold within the Chinese market, up 4.5% yoy.
- In the first nine months of this year, 17.68m vehicles were sold in China, up 1.9% yoy.
- Exports reached 444,000 vehicles for September with ~96,000 EVs making up that figure.
- September was the second month in a row to see China’s outbound vehicle shipments exceed 400,000 units.
- China has exported 3.39m vehicles January-September, with 825,000 of those vehicles being EVs
| Dow Jones Industrials | +0.93% | at | 33,985 | |
| Nikkei 225 | +1.20% | at | 32,040 | |
| HK Hang Seng | +0.75% | at | 17,773 | |
| Shanghai Composite | +0.32% | at | 3,083 |
Economics
US – Retail sales, one of key economic news this week, are due later today with expectations for growth cooling down in September.
- Headline retail sales are expected to grow 0.3%mom v 0.6% August.
- On a different note, markets will be tracking FOMC members comments this week before a blackout period kicks in ahead of the November meeting (31Oct-01Nov).
China – Country Garden is yet to pay a $15.4m coupon by the end of a 30-day grace period October 17-18 to avoid a default.
- ‘Singles Day’ shopping jamboree due on 11th November.
- The event will see >800 million products discounted till 13 November according to John Browing of Bands.financial
- Many Chinese consumers will be waiting for the ‘Singles Day’ shopping event with sales figures giving a good indication of the state of domestic consumption in the Chinese market.
- Alibaba is reported to be getting off to an early start with by pushing sellers to promote deals from 24th October to 11th November.
UK – Growth in wages slowed more than expected in the three months to August in a welcome news to monetary authorities.
- Number of people employed surprisingly pulled back in September as tightness in the labour market starts to ease.
- Payrolled Employees Change: -11k v -8k August (revised from -1k) and 3k est.
- In a separate news, Rolls Royce said it will cut 2,500 jobs as part of its global restructuring aimed at streamlining operations and cutting duplication.
- That amounts to ~6% of its 42,000 workforce.
- Av Weekly Wages (3m yoy%): 8.1 v 8.5 July and 8.3 est.
- Av Weekly Wages ex Bonus (3m yoy%): 7.8 v 7.9 July and 7.8 est.
Israel – President Biden will be flying to Israel to hold talks with Prime Minister on Wednesday.
- Biden will discuss Israel’s planned ground operation in Gaza that has been postponed for now.
- US President will also travel to Jordan to meet King Abdullah, President Abdul Fattah al-Sisi of Egypt and the Palestinian leader Mahmoud Abbas.
Madagascar – Elections due to finish at the year-end
- Base Resources said to be making good progress in discussions with the Madagascar government.
Currencies
US$1.0549/eur vs 1.0525/eur previous. Yen 149.61/$ vs 149.58/$. SAr 18.735/$ vs 18.899/$. $1.218/gbp vs $1.217/gbp. 0.636/aud vs 0.632/aud. CNY 7.315/$ vs 7.312/$.
Dollar Index 106.34 vs 106.47 previous.
Commodity News
Precious metals:
Gold US$1,920/oz vs US$1,910/oz previous
Gold ETFs 86.7moz vs 86.8moz previous
Platinum US$895/oz vs US$886/oz previous
Palladium US$1,144/oz vs US$1,154/oz previous
Silver US$22.56/oz vs US$23/oz previous
Rhodium US$5,250/oz vs US$4,750/oz previous
Base metals:
Copper US$ 7,923/t vs US$7,984/t previous
Aluminium US$ 2,173/t vs US$2,201/t previous
Nickel US$ 18,465/t vs US$18,600/t previous
Zinc US$ 2,410/t vs US$2,457/t previous
Lead US$ 2,084/t vs US$2,040/t previous
Tin US$ 25,235/t vs US$25,087/t previous
Energy:
Oil US$89.8/bbl vs US$90.4/bbl previous
Natural Gas €47.050/MWh vs €55.000/MWh previous
- Energy prices moved lower following reports of intense US diplomatic efforts to contain hostilities between Israel and Hamas in Gaza.
- Following Algerian regulatory approvals, Repsol and Wintershall Dea have completed the ~$100m acquisition of Edison’s 11.25% interest in the Reggane Nord gas field, which sells c.2.8bcm of gas per annum to Sonatrach.
- Marathon Oil announced a new 5-year sales agreement with Glencore for part of the Equatorial Guinea LNG volumes linked to the Dutch TTF index, signalling the conclusion of the legacy US Henry Hub linked contract.
- SSE and its partner TotalEnergies have announced that all 114 Vestas 10MW wind turbines at the 1.1GW Seagreen Offshore Wind Farm off the coast of Scotland are now fully operational and generating electricity.
Uranium UXC US$69.00/lb vs US$72.75/lb previous
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$117.4/t vs US$115.4/t
Chinese steel rebar 25mm US$537.7/t vs US$538.9/t
Thermal coal (1st year forward cif ARA) US$137.8/t vs US$133.0/t
Thermal coal swap Australia FOB US$152.0/t vs US$149.5/t
Coking coal swap Australia FOB US$321.0/t vs US$321.0/t
Other:
Cobalt LME 3m US$33,420/t vs US$33,420/t
NdPr Rare Earth Oxide (China) US$71,426/t vs US$72,460/t
Lithium carbonate 99% (China) US$22,624/t vs US$21,690/t
China Spodumene Li2O 6%min CIF US$2,230/t vs US$2,230/t
Ferro-Manganese European Mn78% min US$1,018/t vs US$1,017/t
China Tungsten APT 88.5% FOB US$300/mtu vs US$300/mtu
China Graphite Flake -194 FOB US$635/t vs US$635/t
Europe Vanadium Pentoxide 98% 6.4/lb vs US$6.5/lb
Europe Ferro-Vanadium 80% 27.25/kg vs US$28.25/kg
China Ilmenite Concentrate TiO2 US$314/t vs US$315/t
Spot CO2 Emissions EUA Price US$86.9/t vs US$83.7/t
Brazil Potash CFR Granular Spot US$340.0/t vs US$345.0/t
Battery News
EV safety highlighted in new Mercedes crash test
- Mercedes-Benz has recently completed a crash test of two its EVs, in what it claims to be an industry-first EV frontal offset crash.
- The company crashed an EQA and EQS SUV under conditions that it claims were more stringent than Euro NCAP testing.
- It crashed the two vehicles, both weighing a significant amount more than a Euro NCAP crash test trolley (the EQA 2.2t, the EQS SUV approximately 3.0t) on a 50% overlap at 56km/h.
- Mercedes-Benz installed four crash dummies – three female and one male – each with up to 150 measuring points.
- The crash test dummies didn’t sustain any major injuries, which indicated a low risk of serious injury or death because of the incident.
- Importantly for EV safety, Mercedes reported that the high-voltage batteries of both vehicles remained intact, and the high-voltage systems switched off automatically on impact.
Are EVs still a greater fire hazard than ?
- Following the car-park fire at Luton Airport that grounded flights, questions over EV safety have come to the fore again.
- Bedfordshire’s chief fire officer has said the fire is believed to have started with a diesel vehicle, although that has not yet been verified.
- EV FireSafe, a private company that receives funding from the Australian Department of Defence to research EV battery fires, says global fires recorded between 2010 and 2020 indicate a 0.0012% chance of passenger EVs catching alight.
- Statistics for ICE vehicles suggest there is a 0.1% chance of a petrol or diesel vehicle catching fire.
- Tesla’s 2020 Impact Report said, “there is approx.. 1 Tesla vehicle fire for every 205m miles travelled.”
- By comparison, data from the National Fire Protection Association shows that in the US there is one vehicle fire for every 19m miles travelled.
Anson Resources achieve 1.5m tonnes of lithium carbonate equivalent
- Anson Resources Ltd has announced a substantial mineral resource estimate of 1.5m tonnes of LCE, now attributed to its Paradox Lithium Project in southeastern Utah.
- Anson recently acquired the nearby Green River Lithium Project which expands the project area by 8% to 231.35sqkm.
- The new project area has reportedly increased the lithium resource by 45%.
Mystery group stirs up criticism of US battery plants linked to China
- The mystery group known as the EV Taxpayer Taks Force has released a 7m30s documentary highlighting concerns about battery plants being built in Michigan.
- The battery plants, operated by Gotion Inc. and Ford Motor Co., have come under fire due to their ties to China and the state incentives they have secured.
- The group has no identified representatives, no registered nonprofit status, and no disclosed address or phone number.
- Despite concerns raised in the documentary, some experts argue that the fears regarding intellectual property theft and national security are misplaced.
Company News
Aura Energy* (AURA LN) 14.18p, Mkt Cap £84m – Uranium exploration targets offer potential for to raise Tiris project to world-class scale
(Aura holds 85% of the Tiris Uranium Project, Mauritania with 15% held by ANARPAM, a Mauritanian Government entity.)
- Aura Energy has identified potential significant additional mineralisation at the Tiris uranium project in Mauritania
- Management are planning to drill the new area on two targets to the East and West as extensions of the known uranium resource.
- The team plans to potentially double the existing 58.9mlbs U3O8 Resource of 113mt @ 236ppm U₃O₈ as previously defined on 21,990m of drilling at a cost of US$11.9m (US$0.20 per lb U₃O₈).
- Preliminary work has identified seven Exploration Targets in Tiris East as extensions of the existing resources:
-
- 30 – 60 mt at 120 – 240 ppm U3O8 for 8 – 32 mlbs U₃O₈
- Additional radiometric survey data and a review of historical drilling indicates meaningful extension to the uranium resource.
- Historic drilling shows a strong correlation between zones of high radiometric signature and mineralisation.
- Uranium mineralisation lies within weathered, partially decomposed red granite or in colluvial gravels developed on or near red granites with some uranium also in other rock types.
- The mineralisation appears to have developed within shallow depressions where colluvial material has accumulated in desert sheet wash events.
- Drilling: Aura plans to start a two-month, 15,500m, air core drill program to grow the Tiris East resource covering 78sqkm with mobilisation due to start on 16th October.
- The crew will drill 1-20m through calcrete-hosted uranium mineralisation with an average depth of 7m.
- Grades: U₃O₈ equivalent grades are determined from downhole gamma measurement through calibration with assay and disequilibrium analysis on drill samples.
- Tenement Status: The Targets fall on mineral exploration permits held 100% by Aura Energy
- Exploitation Permit: The Oum Ferkik is currently under application for transfer from an Exploration Permit to an Exploitation Permit.
- Tiris Project DFS:
-
- Simple free dig, open cast mining,
- AISC of US$ 28.77 / lb U3O8,
- 18-month construction time line
- Capex US$87.9m + additional capex of US$90.3m,
- Production 2.0mlbs pa U3O8,
- Process enables quick increase to >2,000ppm U3O8
- NPV of US$ 226M – post-tax – Assumes: US$64/lb U3O8 price and 30-year mine life
- IRR of 28%,
- NPV8% of US$347m – Assumes US$79/lb and 17-year mine life.
- IRR of 35%
- Aura forecasts 57% cash margins,
- 76% of forecast production from Proved and Probable Reserves, and 24% from Inferred Mineral Resources
- The enhanced feasibility study is based on a 52% increase in Measured and Indicated Resources at the Tiris Uranium Project#
- Current JORC ore reserve: 40.3mt at an average grade of 254ppm U3O8 with around 48% of the reserve tonnage (19.3mt at a grade of 257ppm) classed as ‘Proved’ with the balance defined as ‘Probable’ under the JORC (2012) classifications.
- The Enhanced Feasibility Study envisages annual production of 2mlbs of U3O8 from the 29.6m lbs contained in ‘Measured and Indicated’ mineral resources.
- Measured and Indicated Resources at Tiris Uranium Project to 29.6 Mlbs U3O8, 62.1mt grading 216 ppm U3O8 at a 100ppm grade cut-off.
- FEED ‘Front-End Engineering Design’ on the Tiris project is now 80% done with a final investment decision due in Q4.
- Pre-construction geo-technical drilling and trial mining also planned for the proposed mine and plant site.
- Cash: Aura reported a 30th June cash balance of A$11.27m.
- Häggån (Sweden): Scoping Study on the extraction of vanadium and other strategically important minerals expected shortly.
- The Swedish government is now seen as taking a more pragmatic and deliberate approach towards the decarbonisation of the Swedish economy.
Conclusion: The potential increase in mineral resources highlights the potential for Tiris to achieve world-class scale.
We look forward to further detail from the FEED work on low-cost power generation, cost-effective water desalination and the generation of alkali for the leach tanks.
*SP Angel acts as Nomad and Broker to Aura Energy
Base Resources (BSE LN) 8.5p, Mkt cap £102m – Base Resources said to be making good progress in discussions with the Madagascar government.
- We understand via a local source that Base Resources is making good progress in discussions with the Madagascan Ministry of Mines.
- The Toliara ilmenite / rutile project is hugely important to Base as its Kenyan mine runs down.
- Toliara is seen as one of the world’s best undeveloped mineral sands projects.
- Visitors to site may wish to pack a box of cyprobay antibiotics to combat the Campylobacter bacteria that is endemic across Madagascar.
Castillo Copper (CCZ LN) 0.38p, Mkt Cap £5.7m – Strategic review of assets
- Castillo Copper reports that, following recent management restructuring, it is undertaking a strategic review of the company’s assets to identify the core assets and maximise their exploration potential.
- The company explains that it aims to “align with strategic partners that are aiming to develop new copper supply chains” based around the core projects and to rationalise or sell the non-core assets.
- Today’s announcement confirms that the review “will assess the location, timing and sequence of planned exploration activities across the portfolio … across Zambia and Australia to optimise capital allocation”.
- The principal assets include exploration projects in the Mt Isa district in Australia as well as holdings in the historic mining areas around Broken Hill and Cangai, NSW and “Four high-quality prospective assets across Zambia’s copper-belt”.
Conclusion: Reviewing the relative merits of the various exploration projects seems a sensible approach from the newly constituted Board. We await the outcome of the review with interest.
Celsius Resources* (CLA LN) 0.6p, Mkt Cap £13.5m – Drilling results from Sagay project, Philippines
Click Link for SP Angel research report PDF note – MCB project NPV@8% US$463m, IRR of 34.3%
BUY
- Celsius Resources, which last month received official approval of its plans to develop the MCB copper/gold project in the Philippines, has released details of recent drilling at its Sagay project, also in the Philippines.
- A programme of 12 shallow diamond drill holes (824.70m) at the project, located on Negros Island, intersected a shallow and relatively flat-lying oxidised zone of copper mineralisation within less than 10m of the surface at Nabiga-a Hill.
- Among the results highlighted in today’s announcement are:
-
- An intersection of 69.3m at an average grade of 0.56% copper from a depth of 10.7m in hole SGY-040, including a 21.3m wide section at an average grade of 1.23% copper from 15m down-hole depth; and
- A 47.0m wide intersection averaging 0.84% copper from 33m depth in hole SGY-045 and including 35m at an average grade of 1% copper from 35m depth; and
- A 50.3m wide intersection at an average grade of 0.65% copper from 31.7m in hole SGY-049 and including 30m, from 52m down-hole depth, which averaged 0.85% copper.
- The company explains that the “higher-grade intervals, appear to be closely linked to breccia bodies and an intrusive medium grained porphyritic diorite rock which have a vertical orientation extending up into the shallow oxidised copper mineralisation zone”.
- An initial mineral resource estimate for Nabiga-a Hill, in November 2022, reported 302mt at an average grade of 0.41% copper and 0.11g/t gold “of which 15 million tonnes @ 0.45% copper and 0.11g/t gold is classified as Indicated and 287 million tonnes @ 0.41% copper and 0.11g/t gold is classified as Inferred”.
- Commenting on the recent drilling, Managing Director, Peter Hume, explained that the results “confirm the location of copper mineralisation starting from less than 10m beneath the surface. This shallow and relatively flat oxidised zone has potential for a new development to support the phased growth of Sagay”.
- He said that a “proposed phased approach for Sagay could deliver project self-reliance towards our goal of ultimately developing the much larger porphyry Cu-Au mineralisation which exists underneath this shallow copper mineralisation and Nabiga-a Hill”.
- The company indicates that development of the Sagay project “is approximately one year behind the Maalinao-Caigutan Biyog Copper-Gold Project (“MCB”) in approvals and has the potential for a rapid start up”.
Conclusion: Recent drilling at the Sagay project in the Philippines confirms shallow oxide copper mineralisation which potentially provides an opportunity for a phased development at Sagay approximately 1 year after the flagship MCB project
*SP Angel acts as broker to Celsius Resources.
Petra Diamonds (PDL LN) 53.2p, Mkt Cap £105m – Latest sales tender confirms weakness of the rough diamond market
- Petra Diamonds has announced that its second diamond sales tender of FY 2024, held in September/October, realised US$40.5m from the sale of 444,029 carats, including almost 38,000 carats from the resumption of production at the Williamson mine in Tanzania following the tailings dam incident in November 2022.
- The company says that sales on a like-for-like basis were “down 16.9% compared to Tender 1 held in August 2023 … reflecting prevailing market weakness”.
- Average prices per carat declined by 20% to US$91/carat compared to the US$114/carat achieved in the August sale.
- Sales volumes declined by 36% compared to the 696,194 carats sold in August and “were affected by the deferral of certain FY 2023 sales to Tender 1 of FY 2024 which was partially offset by the decision to bring forward the second tender due to the Indian import moratorium that commenced on 15 October 2023 and is expected to last for 2 months”.
- CEO, Richard Duffy, expressed confidence that the “actions taken by major producers to curb supply and the two-month Indian moratorium will assist in bringing stability and support to the market and prices as inventory levels reduce. While we anticipate that prices will remain volatile throughout CY 2023 and possibly into CY 2024, we continue to expect prices to benefit in the medium to longer term as a result of the structural supply deficit”.
Conclusion: Lower sales volumes and prices at Petra Diamonds’ second sales tender of FY 2024 reflect a wider weakness in the market for rough diamonds. Remedial measures to address the weaker market conditions include supply curbs from the major producers and a moratorium on imports into India.
Rio Tinto (RIO LN) – 5,140p, Mkt cap £65bn –Q3 production leaves full year guidance largely intact
- Following publication of its Q3 operational data, Rio Tinto confirms its current 2023 production guidance across all its principal commodity groups.
- Production guidance for IOC’s (Iron Ore Company of Canada) iron ore pellet and concentrate output has eased slightly from the previously indicated range of 10.0-11.0mt to 9.3-9.8mt reflecting “extended plant downtime and conveyor belt failures, while we also recovered from wildfires which took place in Northern Quebec in the prior quarter”.
- Rio Tinto reports that “China’s economy is showing signs of stability, with resilient steel demand as growth drivers shifted from property to infrastructure and manufacturing … [and that the] … US economy continues to adjust to the effects of tightening monetary policy. The net effect has been a slowing pace of economic activity which may still lead to a recession by year end”.
- Addressing the performance of its main commodity group, Rio Tinto says that Pilbara iron-ore shipments of 245.5mt during the first nine months of 2023 leave the full year guidance range of 320-335mt intact and with expectations to meet the upper parts of that range with expected unit cash costs also unchanged in the range US$21-22.5/t.
- “Iron ore prices rose by 7% during the quarter, lifting the average 62% Fe CFR China price to $114 per dry tonne, up 3% quarter-on-quarter”.
- YTD output of mined copper of 460,000t leaves full-year production and cost guidance unchanged in the range 590-640,000t at an average cash cost of between US$1.80-2.00/lb.
- Copper production of 169,000t during the quarter was 5% higher than Q2 2022 reflecting “the continued ramp-up of the high grade underground mine at Oyu Tolgoi and higher copper feed grades at Escondida … partially offset by lower production at Kennecott”.
- Commenting on progress at Oyu Tolgoi, where the acquisition of Turquoise Hill in December 2022 increased its interest to 66%, Rio Tinto says that the “operation is expected to ramp up to deliver average mined copper production of ~500ktpa (100% basis) between 2028 and 2036”.
- The company says that Chinese copper “demand continued to be resilient; however, ex-China demand has weakened, as high interest rates hit construction activity”.
- Bauxite output of 13.9mt during the quarter brought YTD output to 39.5mt leaving the full year guidance target of between 54-57mt intact.
- Q3 alumina production of 1.9mt (5.6mt YTD) leaves guidance of 7.4-7.7mt for 2023 unchanged as “operational stability improved at our Yarwun and Queensland Alumina Limited (QAL) refineries”.
- Rio Tinto confirms that “Aluminium production of 0.8 million tonnes was 9% higher than the third quarter of 2022 as we returned to full capacity at our Kitimat smelter and completed cell recovery efforts at our Boyne smelter” and that “All our other smelters continued to demonstrate stable performance during the quarter”.
- Commenting on the aluminium market Rio Tinto says that the “LME cash aluminium price rose by 10% over the quarter, although the $2,154/t average price was 5% lower than the second quarter”.
- Aluminium smelter “restarts in Yunnan were completed, lifting Chinese production, but reported Chinese inventories remained low, due to strong demand driven by solar modules construction. However, aluminium shipments and orders, in the US, Europe and Japan, except for the transport sector, remained weak”.
- Exploration expenditure during Q3 “focused on copper in Australia, Kazakhstan, Peru, US and Zambia, nickel in Peru and Canada and lithium in Canada”.
- “Mine-lease exploration continued at Rio Tinto managed businesses including Bingham Canyon in the US and Pilbara Iron Ore in Australia”.
- Work continues to progress the environmental permitting at the Resolution copper project in Arizona while drilling and community engagement progressed at the Winu copper project in WA.
- Commenting on the highlights, Chief Executive, Jakob Stausholm confirmed that Rio Tinto is continuing to “make good headway ramping up our Oyu Tolgoi high-grade underground copper mine … [and is taking] … real steps to build our portfolio of materials needed for the future, signing agreements that will see us take a leading position in recycled aluminium in North America and agreeing to enter a joint venture with Codelco to explore for copper in Chile”.
Conclusion: Rio Tinto is maintaining its 2023 production guidance across all its main commodity groups with iron ore shipments expected to achieve the upper parts of the guidance range aided by expectations of resilient steel demand in China.
Savannah Resources* (SAV LN) 3.3p, Mkt Cap £62m – NED dealings
BUY – 21.1p
- Bruce Griffin, a Company’s NED, completed a maiden purchase of shares in the Company acquiring 111k shares worth £3.6k.
*SP Angel acts as Nomad and Broker to Savannah Resources
Serabi Gold (SRB LN) 36p, Mkt Cap £27m – Q3 reports highest level of gold output this year
- Serabi Gold reports gold production of 8,738oz of gold production during the 3 months to 30th September bringing output for the YTD to 25,262 oz (full year 2022 – 31,819 oz).
- The Palito operation produced around 75% of the total output (19,134 oz) with the balance from the new Coringa operation where production is ramping up with output of 6,128oz.
- CEO, Mike Hodgson, said that the “Coringa orebody continues to exceed expectations with payability of the development remaining very high. Simplistically put, we encounter very limited low-grade or waste zones as we advance, and this means the amount of development we need to do per ounce of gold is lower than forecast”.
- Mr. Hodgson also confirmed that “This is also the first time a total mineral resource inventory at Palito has exceeded 500,000 ounces, and the grades in each category have improved significantly”.
- The NI-43-101 compliant resource for Palito shows 377,800oz of contained gold at an average grade of 10.08g/t (formerly 5.23g/t) with inferred resources of a further 153,900oz at a 45% higher grade (7.01g/t) than the previous estimate of 4.83g/t).
- Serabi Gold also confirms that the “Vale Exploration Alliance continues to progress well with over 11,400 metres of drilling, which included 20 holes now drilled at the Matilda Copper target”.
Conclusion: Improving gold output as Coringa ramps up production and improved resource grades at Palito have helped lift Q3 gold output to the highest reported so far this year.
*An SP Angel analyst has visited the Serabi’s gold mining operations in Brazil
Syrah Resources (SYR AU) A$0.48, Mkt cap A$324m – Quarterly Activities Report and graphite market update
- Syrah report their Q3 results, selling 23kt natural graphite and shipping 4kt to their Vidalia plant in the US.
- 18kt produced from the reduced production campaign at a 73% recovery.
- Recoveries reportedly improved to 82% over the final fortnight of the quarter.
- Balama C1 costs of $484/t over the operating period and weighted average sales price of $528/t.
- Management points to higher fine flake sales and lower Chinese prices on the back of increased production as the two primary factors for weak pricing.
- The Company held $81m in cash at the end of the quarter, $31m of which is classed as unrestricted. (Q2 cash balance was $101m with $55m in unrestricted cash)
- Syrah has signed multi-year binding offtake agreements with US buyers Graphex and Westwater, alongside AAM offtakes with Tesla.
- Construction of the Phase 1 Vidalia AAM plant is nearing completion. CAPEX has been revised higher by $8m to $198m but initial production is set to begin this quarter.
- Second phase of Vidalia, to 45ktpa AAM, is anticipating FID in 1H24.
- $32m of convertible notes were issued over the quarter with an additional $32m to be issued no later than next week.
- Syrah has a total of $238m in total financing facilities.
- Management Graphite Market Outlook
-
- Syrah sold graphite at a weighted average CIF price of $528/t in the quarter, down 14.5% from the previous quarter.
- The Company highlights that EV sales grew 41% globally over the quarter on a yoy basis to 4.1m units.
- September alone saw 1.5m units sold, a record to date.
- Management suggests that synthetic graphite AAM production continues to rise in China, weighing on natural graphite prices.
- The Company reports that Chinese demand is improving for natural products as domestic production weakens into the winter.
- Management retains its view that current synthetic graphite AAM pricing is ‘unsustainable’ and remains highly vulnerable to ‘any increase in power, graphitisation or coke costs.’
- Domestic Chinese production is reportedly struggling from lower grade ore and poor recovery.
- Syrah believes the outlook for ex-China demand for both flake and AAM products remains strong and also that China will be forced to ramp up imports of natural graphite products, despite the ‘short-term volatility of China customer demand.’
Thor Explorations (THX LN) 15.4p, Mkt Cap £109m – Q3 production report and project updates
- Thor provides a quarterly production update from its Segilola project.
- The Company mined and processed 303kt and 262kt respectively at an average mined grade of 2.44g/t.
- Recovery rates of 92.3% saw 19.1koz recovered and exported alongside 2.7koz silver.
- Gold produced fell from Q2 of 23.1koz owing to lower mined grades, although this is not expected by management to persist.
- Mining rates are expected to continue at 5.5mt ore per quarter for the next two quarters.
- An upgrade to the leaching circuit is expected to be phased in during Q4, with final completion in 1Q24.
- Enhancements of the leaching circuit are expected to bring recoveries over the 94% reached during 1H23.
- Looking forward, full year guidance of 85koz produced is maintained at an AISC of $1,150-1,350/oz.
- Exploration campaigns continue with drilling at Segilola targeting regional targets alongside the Oyo lithium programme and the start of a drilling campaign at the Ekiti prospect – both in Nigeria.
- The Company also expects to complete the Douta, Senegal PFS by year-end.
- The Ekiti lithium prospect has returned rock chip results up to 2.92% Li20, whilst Oyo has returned RC assays including 11m @ 1.53% Li20, 9m @ 2.42% Li20 and 11m @ 2.61% Li20.
Zinnwald Lithium (ZNWD LN) 8.5p, Mkt Cap £40m – Operational update following drill campaign completion
- Zinnwald provides an update on its German Zinnwald Lithium Project.
- The Company has drilled an 84 hole, 27km in-fill campaign, expected to increase the size of the Zinnwald resource.
- The Albite Granite zone is reporting vertical thickness of 113m at grades averaging 0.43% li20.
- The Quartz-Mica-Greisen ore is reporting maximal thickness of 75m at an average grade of 0.66% Li20.
- The Company has been completing a hydrogeology drilling campaign with seven groundwater monitoring wells – results expected in Feb 2024.
- Zinnwald is exploring ways to include the Albite Granite section into the mine plan, deciding on sub-level stoping and backfill as the optimal method, advised by SRK.
- Met-testwork is ongoing with Metso, who see the Albite Granite as suitable for a flowsheet using comminution circuit and a rougher-scavenger wet magnetic separation circuit.
- SRK consultation has suggested li-recovery of the HGG domain above 85% and AG domain above 80%.
- Pilot scale tests are being executed in Germany under Metso supervision.
- An updated MRE is expected to be produced this quarter with a bankable feasibility study expected in 1H24.
- Zinnwald’s PEA released last year highlighted a post-tax NPV8 of $1bn for an IRR of 29% and a total CAPEX of $337m
- The company held €16.6m in cash at the time of reporting.
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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
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Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
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*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)
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| 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 |
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