SP Angel Morning View -Today’s Market View, Wednesday 28th August 2024

Gold holds steady as dollar sell off pauses as investors gauge strength of US economy

MiFID II exempt information – see disclaimer below

Anglesey Mining (AYM LN) – Further insights into mineralisation controls at Parys Mountain

Ariana Resources (AAU LN) – Exploration results from theSalinbas project

Beowulf Mining* (BEM LN) – Update to Graphite Anode Materials Plant

Bezant Resources (BZT LN) – Licence extension in Namibia

Cobra Resources (COBR LN) – In-Situ Recovery bench scale test work shows high recovery rates on Boland REEs

Gem Diamonds (GEMD LN) – Letšeng yields 10^th >100 carat diamond so far this year

Hochschild Mining (HOC LN) – Half year results show growing production profile

Kavango Resources* (KAV LN) – Drilling results from the Hillside gold project, Zimbabwe

Rome Resources (RMR LN) – Further news on drilling at Kalayi, DRC

Eurasia Mining* (EUA LN) SUSPENDED – Corporate update

Sovereign Metals* (SVML LN) – Hydraulic mining trial starts

Tertiary Minerals* (TYM LN) – £880k placing to support dual-pronged exploration strategy

Gold ($2,507/oz) holds steady as dollar sell off pauses as investors gauge strength of US economy

• Gold prices are steady just above $2,500/oz level, having struggled to break the $2,525/oz mark.
• US Treasuries sold off yesterday, with 10 year yields touching 3.86%, before easing last night to 3.83%.
• The dollar has bounced off recent lows, having touched April 2022 levels.
• The weaker dollar has been a boon to gold prices as Treasuries have rallied.
• Traders continue to weigh up the chance of a 50bp rate cut in September, which would likely be supportive to gold prices.
• Inflation data is due on Friday, but the market is likely placing greater weight on employment data at this stage of the cycle, with Powell now emphasising his mandate to support the labour market.

More positive signs for lithium as Albemarle auctions spodumene at $870/t

• Albemarle has reportedly sold 16,150t of spodumene 6% concentrate at $870/t in China, excluding taxes. (West Australian)
• The price is notably above market price providers, with Fastmarkets reporting $760/t and SMM at $780/t.
• However, the price marks a substantial decline from their March $1195/t auction.
• SMM reports that the rate of lithium carbonate price declines is slowing, with traders picking up some supply despite pessimism from upstream salt plants.
• China EV sales are seemingly improving, with 490k units sold in the first 18 days of August, up 58% yoy and 27% mom.

The IGI ‘International Gemological Institute’ has filed for an IPO in India with the intention of raising INR 40 bn (~$477m)

• The IPO is looking for a $3.5bn valuation on the Bombay and another exchange but we are surprised at the valuation.
• We understand the IGI specialises in verifying the quality, size and value estimates of diamonds and precious stones, a service that feels more important than ever given the rise of Lab Grown Diamonds.
• The IGI can also provide certificates stating the quality of natural diamonds as well as LGD synthetic stones.
• Rappaport state ~75% of the IPO will be allocated to qualified institutional buyers (QIBs), and about 15% to non-institutional investors with the remaining 10% open to retail investors.
• Some of the funds will be used to acquire outstanding stock in IGI Belgium and IGI Netherlands from shareholders.
• Blackstone bought IGI from Fosun International and former IGI CEO Roland Lorie for ~$570m so $3.5bn is a big uplift if it gets away.
• The IGI operates 31 labs and 18 schools across 10 countries and is the world’s second-largest independent certification and accreditation services provider behind the GIA with ~33% of the grading market.
• IGI is larger than GIA when it comes to LGD at 65% and earned INR 2.15 bn (~$25.7m) in sales in the last quarter mainly from grading reports with ~60% LGD, 18.8% for natural diamonds and 19.9% for jewellery and coloured stones.
• IGI’s total revenue rose to INR 6.5 bn (~$75.1m) in 2023 from INR 4.99bn (~$57.8m) in 2022.
• The IGI team estimates rough LGD production will rise to 25-30m cts by 2028 from 11m cts in 2023 with China and India producing around 80% of global output last year. The US produces ~10%.
• Problem is the market is suffering an existential threat with LGD highlighting the loss of value between buying a diamond and its sale causing Chinese and other investors to shy away from diamonds in favour of gold.
• Pre-LGDs you could bank on a modest increase in price year after year, today you are likely to be looking at sizeable losses.
• If the IGI IPO gets away, could Anglo look to IPO DeBeers in a similar vein?

EIA reports significant growth in US solar and battery storage in 2024

• The United States Energy Information Administration (EIA) has revealed that 20.2GW of utility-scale generating capacity in H1 2024, a 21% increase from the same period in 2023.
• Solar power has contributed 12GW (60%) of new capacity, alongside 4.2GW of battery storage systems.
• The report anticipates a further 42.6GW to be added in H2, as the shift to renewables intensifies.

Japanese researchers manganese EV battery reaches 820Wh/kg

• Researchers at Yokohama National University have demonstrated a promising alternative to nickel and cobalt-based batteries for EVs, using manganese in the anode to create a high-energy density battery that is both cost-effective and sustainable.
• Currently EV manufacturers prefer nickel and cobalt batteries since they deliver higher energy density, translating to more range in a smaller battery pack.
• Post-synthesis testing revealed that a battery with a LiMnO2 electrode reached an energy density of 820Wh/kg compared to a 750Wh/kg obtained with a nickel-based battery and a lower energy density of around 500Wh/kg in lithium-based batteries.
• Previous work using manganese had seen voltage decay in batteries, wherein voltage output dropped over time, reducing performance – however, with the new LiMnO2 electrode, the researchers did not observe such outcomes.
• The researchers are confident that their work has contributed to developing a new offering that is competitive with existing options, sustainable to produce, and environmentally friendly in the long run.

Sharepickers: In 10 Years Time People Will Wonder Why They Bothered Looking at Combustion Engines: https://www.youtube.com/watch?v=kJuJeemXs7g

• Podcast: https://audioboom.com/posts/8560481-john-meyer-in-10-years-time-people-will-wonder-why-they-bothered-looking-at-combustion-engines

Economics

US – Equity futures are little changed this morning as markets await quarterly results that will set the tone for risk assets.

• Results will provide another datapoint to gauge AI spending momentum across much of the technology sector with markets forecasting revenues growing more than 70% in the July quarter.
• Property prices reported a 5.4%yoy increase in June, down on 5.9% recorded in the previous month, as measured by Case Shiller US HPI.
• Consumer confidence picked up more than expected in August hitting a six month high, although latest signs of weakness in the labour market remain a concern.
• “Consumers’ assessments of the current labour situation, while still positive, continued to weaken, and assessments of the labour market going forward were more pessimistic,” Conference Board reported.
• Conference Board Consumer Confidence (Aug/Jul/Est): 103.3/101.9(revised form 100.3)/100.8

Australia – Inflation rate pulled back, albeit, slightly less than expected in July led by slowing price growth in clothing and footwear, electricity and fuel.

• Core inflation also slowed.
• The data follows RBA Governor comments earlier this month that no rate cuts are planned for this year and warned further policy tightening may still be needed.
• The central bank left rates at a 12-year high of 4.35% three weeks ago.
• The A$ is trading slightly higher this morning.
• CPI (%yoy, Jul/Jun/Est): 3.5/3.8/3.4
• Core CPI (%yoy, Jul/Jun/Est): 3.8/4.1/NA

Ukraine – President Zelensky is planning to present Joe Biden and his two potential successors a peace plan.

• Kursk incursion is reported to be part of the plan along with other proposed steps on the economic and diplomatic fronts.
• Zelensky is hoping to travel to travel to the US in September to attend the UN General Assembly in NY, Reuters reports.

Argentina – The government will cut the import tax to 7.5% from 17.5% in an effort to slow inflation rate further.

• Current government raised the tax earlier in December addressing Argentina’s fiscal deficit with the move proving to be a major source of government revenues.
• The tax cut will come into effect from early September.

Currencies

US$1.1153/eur vs 1.1168/eur previous. Yen 144.44/$ vs 145.06/$. SAr 17.793/$ vs 17.750/$. $1.324/gbp vs $1.321/gbp. 0.679/aud vs 0.678/aud. CNY 7.129/$ vs 7.128/$

Dollar Index 100.79 vs  100.82 previous

Precious metals:         

Gold US$2,510/oz vs US$2,509/oz previous

Gold ETFs 82.8moz vs 82.8moz previous

Platinum US$948/oz vs US$957/oz previous

Palladium US$966/oz vs US$970/oz previous

Silver US$29.55/oz vs US$30/oz previous

Rhodium US$4,750/oz vs US$4,750/oz previous

Base metals:   

Copper US$ 9,326/t vs US$9,345/t previous

Aluminium US$ 2,523/t vs US$2,508/t previous

Nickel US$ 17,025/t vs US$16,965/t previous

Zinc US$ 2,905/t vs US$2,902/t previous

Lead US$ 2,101/t vs US$2,110/t previous

Tin US$ 33,015/t vs US$32,870/t previous

Energy:           

Oil US$79.4/bbl vs US$81.5/bbl previous

• European energy prices edged higher with French nuclear reactor operating levels flat w/w at 66% of 61.4MW capacity and Gazprom reporting stable supply of 42.4mcm/d (~1.5bcf/d) via the Sudzha metering station.
• Wood Group announced the $165m sale (~4x FY23 EBITDA) of its interest in two non-core businesses, EthosEnergy and CEC Controls, as part of the Company’s strategic disposal programme.
• Santos has submitted a plan to the National Offshore Petroleum Safety and Environmental Management Authority (Nopsema) to cease production in 1H25 on the ~60kb/d Ningaloo Vision FPSO, offshore Australia.

Natural Gas €39.4/MWh vs €37.4/MWh previous

Uranium Futures $78.8/lb vs $80.2/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$101.5/t vs US$100.4/t

Chinese steel rebar 25mm US$474.3/t vs US$474.7/t

Thermal coal (1st year forward cif ARA) US$128.0/t vs US$126.5/t

Thermal coal swap Australia FOB US$146.8/t vs US$147.3/t

Coking coal swap Australia FOB US$195.0/t vs US$195.0/t

Other:  

Cobalt LME 3m US$24,300/t vs US$24,300/t

NdPr Rare Earth Oxide (China) US$56,744/t vs US$56,116/t

Lithium carbonate 99% (China) US$9,890/t vs US$9,890/t

China Spodumene Li2O 6%min CIF US$770/t vs US$770/t

Ferro-Manganese European Mn78% min US$1,110/t vs US$1,111/t

China Tungsten APT 88.5% FOB US$333/mtu vs US$333/mtu

China Graphite Flake -194 FOB US$447/t vs US$450/t

Europe Vanadium Pentoxide 98% 4.7/lb vs US$4.7/lb

Europe Ferro-Vanadium 80% 24.75/kg vs US$24.75/kg

China Ilmenite Concentrate TiO2 US$322/t vs US$322/t

Spot CO2 Emissions EUA Price US$80.7/t vs US$80.8/t

Brazil Potash CFR Granular Spot US$292.5/t vs US$292.5/t

Battery News

EPCA electrifies CAT 777 mining truck

• Electric Power Conversion Australia (EPCA) has converted a 100-tonne CAT 777 mining truck from diesel to battery-electric, branding it the ‘Green Machine’. (Electrive)
• The truck is powered by six Xerotech battery packs which provide a total capacity of 1,741.8kWh and 671V, and is claimed by EPCA to have “the world’s highest energy density” for such applications.
• The truck can operate continuously for eight hours on a single charge and can be fully recharged in just 50 minutes, ideal for mining operations.
• EPCA plans to produce 50 to 70 of these battery-electric mining trucks annually, responding to strong demand and positive feedback from the Australian mining sector.

BMW surpasses Tesla in European EV sales for first time

• In July, BMW’s sales of fully electric vehicles surged to 14,869 units, overtaking Tesla’s 14,561 units in Europe for the first time. (Reuters)
• BMW’s EV sales grew by 35% compared to the previous year, while Tesla’s European sales dropped by 16%.
• Analysts suggest that Tesla’s sales decline may be linked to negative consumer reactions to CEO Elon Musk’s support for climate-denier Donald Trump, particularly in Europe.
• Reports indicate that about a third of potential Tesla buyers are reconsidering their purchase, and nearly half of current owners are contemplating selling their vehicles due to Musk’s political endorsements.
• Despite Tesla’s continued global sales lead, with 178,700 units sold YTD compared to BMW’s 97,525, BMW’s July performance indicates significant momentum and competitive pressure on Tesla.

US awards $521m in grants to boost EV charging network

• The Biden administration will award $521m in grants to build out EV charging and deploying more than 9,200 EV charging ports. (Reuters)
• The Energy Department and Federal Highway Administration said $321m will be allocated for 41 community projects that expand EV charging infrastructure, while $200m will fund 10 corridor fast-charging projects.
• The Biden administration has faced harsh criticism for the slow deployment of EV charging stations from a $5-billion U.S. government program created in 2021.
• Drastically expanding EV-charging stations is crucial to the wide deployment of electric vehicles, key to U.S. efforts to reduce greenhouse gas emissions.
• The White House goal is to grow the nationwide network of chargers to 500,000 ports, including high-speed chargers at 80km intervals on highways.

Xpeng aims to build EVs in Europe to bypass tariffs

• VW Group’s Chinese partner, Xpeng, is in the initial; stages of finding a manufacturing site in Europe as Chinese automakers seek to mitigate new import tariffs brought in by the EU. (Automotive News Europe)
• Under new terms introduced by the EU Commission, Xpeng would be subject to an additional 21.3% on Chinese-made EVs.
• Xpeng also plans to set up a large-scale data centre in Europe as efficient software collection becomes paramount for cars’ intelligent driving features.

Chinese researchers develop new material for solid-state lithium batteries

• Chinese researchers from Qingdao Institute of Bioenergy and Bioprocess Technology (QIBEBT) have created a new cathode material that enhances the performance and safety of all-solid-state lithium batteries. (Xinhua)
• The material offers over 1,000 times the conductivity of traditional cathodes, simplifying production by removing the need for conductive additives.
• The battery’s energy density reaches 390Wh/kg, offering 30% longer battery life than current lithium-ion batteries.
• Large-scale production is expected in two to three years, with efforts to reduce costs by using silicon and less lithium.
• Future research will focus on recycling these batteries to enhance sustainability.

Company News

Anglesey Mining (AYM LN) 1.15p, Mkt Cap £5.4m – Further insights into mineralisation controls at Parys Mountain

• Yesterday, Anglesey Mining reported that its exploration has now traced the Northern Copper Zone (NCZ) at its Parys Mountain property in Anglesey over a strike length of 1.2km.
• The company says that “All three holes in the 2023-2024 drilling program (NCZ001, NCZ002 and NCZ003) intersected both broad zones of mineralisation and multiple higher-grade zones … [and showed] … good continuity and further supports the integrity of the geological model and drill targeting, with indications of greater mineralised volumes overall”.
• The current ‘Inferred’ mineral resource for the NCZ amounts to 9.38mt at an average grade of 1.27% copper, 0.38% zinc, 0.24% lead, 5t/t silver and 0.1g/t gold.  Additionally, the Garth Daniel zone contains a further ‘Inferred’ resource of 0.34mt at an average grade of 1.89% copper, 5.78% zinc, 2.76% lead, 66g/t silver and 0.1g/t gold.
• Commenting on the results from the interpretation of the latest drilling and the historical information CEO, Rob Marsden, explained that the “latest dataset … [supports and enhances the]… previous geological interpretation of the deposit”.
• The company explains that “Detailed understanding of the lithology in each of the recently completed holes will mean a new structural geological model can be constructed … [which] … could provide valuable insights into the controls and distribution of the various mineralized zones. It is expected that, once completed, the model will be able to be extrapolated on a wider scale and used in subsequent mine planning”.

Conclusion: The latest drilling is providing useful insights into the continuity of mineralisation and the wider geological context of the NCZ mineralisation which can be harnessed for future mine planning.

Ariana Resources (AAU LN) 1.98p, Mkt Cap £39m – Exploration results from theSalinbas project

• Ariana Resources reports drilling results from the Hizarliyayla part of its 23.5% owned Salinbas project in eastern Turkey.
• Among the results reported today are:
  • An intersection of 0.7m at an average grade of 1.16% copper, 0.72% lead and 29.39g/t silver from a depth of 293.3m in hole HZR-009 which also intersected 1.15m at an average grade of 0.76g/t gold, 22.09g/t silver and 1.46% zinc from 300m and 0.45m averaging 1.59g/t gold and 47.28g/t silver from 644.8m depth; and
  • An intersection of 0.5m at an average grade of 3.96g/t gold and 28.65g/t silver from 540.5m depth in hole HZR-010 which also intersected deeper mineralisation of 0.4m at an average grade of 10% zinc, 2.38% lead and 317g/t silver from 662.3m depth.
• The company describes “Geochemical and alteration zoning, particularly in the vicinity of a north-south-trending subvertical structure … [which] … may indicate proximity to a potentially mineralised porphyry intrusion in a structural setting akin to the world-class Hod Maden deposit”.
• Salinbas is located ~8.5km north of the 2.5moz Hot Maden deposit of Sandstorm Gold Royalties which hosts a ‘Proven & Probable’ reserve of 8.7mt at an average grade of 8.8g/t gold and 1.5% copper.
• In addition to the drilling, Ariana Resources also reports that it has completed an induced polarisation (IP) geophysical survey over 12 line km which has “defined, … a significant set of coherent chargeability and resistivity anomalies on the western flank of Hizarliyayla”.
• Managing Director, Dr. Kerim Sener, explained that the “latest diamond drilling and geophysics results from the Hizarliyayla exploration programme continue to demonstrate the lateral extent and depth of the mineralised system”.
• Commenting on the IP results, he said that they had identified “an important new target … on the western flank of Hizarliyayla, which coincides with a porphyry intrusion”.
• Dr. Sener explained that the geophysics supports “the interpretation that a mineralised porphyry intrusion exists near Hizarliyayla, underscoring the importance of further exploration in this area. Further work will be undertaken to enhance the model to accommodate the latest results and define targets within this system further”.

Conclusion: Continuing exploration in the Hizarliyayla area at Salinbas is showing geological similarities to the nearby Hot Maden discovery located around 9km to the south.

Beowulf Mining* (BEM LN) 21.5p, Mkt cap £8.4m – Update to Graphite Anode Materials Plant

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• Beowulf provides an update on its graphite anode materials plant in Finland.
• The Company has highlighted the ability to recycle sodium hydroxide in its water treatment flowsheet, supported by Anzaplan’s engineering.
• Testing has shown potential to recover over 90% of NaOH, able to reuse it for battery grade graphite production.
• The Company also sees the potential to utilise by-product lime to neutralise acidic wastewater.
• The wastewater is also shown to be ‘well below general limits for wastewater discharge into Finnish municipal sewage systems.’
• The Company also sees potential to sell excess Lime into other industries as a by-product revenue stream.

Conclusion: Beowulf continues to progress their GAMP facility alongside the engineering services of Anzaplan. Today’s findings are expected to be a positive boost for the upcoming updated PFS and permitting process for GAMP. OPEX is expected to reduce from reduced reagent costs through NaOH recycling and reducing wastewater management costs. GAMP has the potential to produce high quality graphite anode materials for the EU battery supply chain, and today’s development supports the progression of the project.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Bezant Resources (BZT LN) 0.03p, Mkt cap £3.6m – Licence extension in Namibia

• Bezant Resources reports that it has been granted an extension of its Environmental Clearance Certificate, until 12^th August 2027, for its Hope & Gorob Copper Project in Namibia.
• The extension covers an area of “approximately 30km of prospective Matchless Belt geology” and clears the way “for the Company to continue with exploration on this important extension to the pending Hope & Gorob Mining Licence and EPL 5796 exploration licence for which renewal is also in process”.
• Welcoming the licence extension, Executive Chairman, Colin Bird, said that the “licence forms part of an almost contiguous belt of prospective ground with Hope and Gorob and could host either extensions to that mineralisation or a separate resource to support a larger mining operation in the future”.
• The company’s website reports a 2023 ‘Indicated’ resource at the project of 1.24mt at an average grade of 1.6% copper and 0.4g/t gold at the Hope deposit plus an ‘Inferred’ resource of ~14mt at an average grade of 1.2% copper “across the Hope, Gorob, Vendome and Anomaly deposits, including approximately 3 million tonnes at 1.7% Cu and 0.4 g/t Au at Hope”.

Cobra Resources (COBR LN) 1.00p, Mkt cap £7.2m – In-Situ Recovery bench scale test work shows high recovery rates on Boland REEs

• Once in a while you come across a company that is doing something really interesting that has the potential to change the world we live in.
• Cobra Resources is working on the ISL ‘In-Situ Recovery’ of REEs ‘Rare Earth Elements’ from the Boland project in South Australia.
• ISL as the name suggests is the process whereby acid is pumped into the ground for the dissolution of minerals which are then pumped out via extraction wells.
• We have spent much time looking into ISL over the years, such as nickel ISL in Kazakhstan and Uranium ISL at Honeymoon Well just 80km from Broken Hill in NSW, Australia to name a few.
• We start with the premise that if you can get a license for a Uranium ISL in Australia as Boss Energy has done at Honeymoon Well then then a Rare Earths ISL should be relatively straightforward.
• Note ISL production makes up 60% of all the uranium mined in Australia, Kazakhstan and the USA and Boss Energy has recently restarted U3O8 production from Honeymoon Well in Australia
• Boland project recoveries:  
  • 82% recoveries of REEs
    • 78% Pr, 75% Nd, 77% Dy and 82% Tb using a pH 1.5 lixiviant
  • Low acid consumption in bench scale test work.
    • Total sulphuric acid consumption of 18.2 kg per tonne of ore treated
  • Low levels of impurities
• Process:
  • Diagnostic sample grade 5,230 ppm Total Rare Earth Oxide with Magnet Rare Earths grade: 1,046 ppm NdPr and 152ppm DyTb1
  • Ammonium sulphate is introduced at low pressure into a column of Boland mineralised sand at pH 3.
  • The leachate was >7 pH at the start of the study and has fallen in the study to < 4.4 pH
  • Fluid which has passed through the column ‘leachate’ is being collected at the column outlet
• Geology:
  • Importantly the Boland REEs “occur concentrated in a permeable horizon confined by impermeable clays.“
    • “This unique geology is amenable to ISR which has been successfully used for decades to recover uranium from geologically similar systems in South Australia.
    • Cobra is working to demonstrate that, with modification, ISR techniques will enable non-invasive and low-cost production of critical REEs from its Boland discovery.“
• ANSTO ‘The Australian Nuclear Scientific and Technical Organisation’ is running diagnostic and bench scale ISR trials on core samples from Boland.

Conclusion: While the bench-scale test is done in the Lab and not in the real-world environment we see this as an important step towards the design and testing of an in-ground, ISL demonstration plant.

Gem Diamonds (GEMD LN) 13.5p, Mkt Cap £18.9m – Letšeng yields 10^th >100 carat diamond so far this year

• Gem Diamonds reports the recovery of a 129.71 carat Type II white diamond, from its 70% owned Letšeng mine in Lesotho.
• This is the tenth diamond larger than 100 carats recovered from the mine this year.
• The latest large diamond maintains the mine’s established history of producing large diamonds including the 1,109 carat ‘Lesedi La Rona’, discovered in 2017 .

Hochschild Mining (HOC LN) 182p, Mkt Cap £942m – Half year results show growing production profile

• Hochschild reports adjusted EBITDA of $177m for 1H24, with revenue at $392m.
• Cash at $89m as of June 30^th, vs December 31^st position of $89m.
• Net debt at $271m vs $268m in December.
• Production saw 153koz gold equivalent produced over the half year, vs 137koz same period last year.
• AISC at $1,500/oz gold equivalent, down from $1,572/oz same period last year.
• Mara Rosa hit commercial production levels on 13^th May 2024.
• Company targeting 343-360koz GEOs this year, unchanged, with AISC of $1,510-1550/oz.
• CAPEX/SUSEX forecast at $171-178m.
• Company will explore options for capital returns in early 2025.
• Hochschild reports Mara Rosa ramp up is behind schedule on contractor delays and mechanical availability issues, whilst Inmaculada is performing better than expected.

Kavango Resources* (KAV LN) 1.45p, Mkt Cap £22m – Drilling results from the Hillside gold project, Zimbabwe

• Kavango Resources reports that results from three diamond drill holes at its Hillside project (Prospect 3) in Matabeleland, southern Zimbabwe have “returned what Kavango believes to be significant assay results”.
• In addition to the results of the previously reported hole BRDD-001 which intersected 7.2m at an average grade of 9.95g/t gold from a depth of 50.64m and a second 2m wide intersection of 2.12g/t gold from 86m depth, the subsequent two holes intersected:
  • 2m at an average grade of 0.53g/t gold from 163m depth and a single metre at a grade of 3.73g/t gold from 263m hosted in “narrow shear zones where gold and associated sulphides were hosted in narrow quartz veins” in hole BRDD-002; and
  • 2m at an average grade of 5.27g/t gold from 312.5m depth as well as a single metre assaying 7.94g/t gold from 315m depth in hole BRDD-003 in “a series of shear zones, hosting gold and associated sulphides in anastomosing quartz veins, at various intervals down hole”.
• Chief Executive, Ben Turney, said that “We are extremely pleased with the rapid progress and achievements Kavango is making in Zimbabwe. When we first entered this country, our strategy was to use modern exploration technology to find bulk-mineable gold ore bodies that Kavango could bring into production. Subsequent exploration has identified several potentially bulk mineable targets, together with possible underground opportunities that now need to be drill tested, assessed, and ranked as potential deposit”.
• Describing its plans to advance the Hillside project, Kavango Resources says that it “aims to complete the current scope and exploration diamond drill programme with additional holes at Prospect 1 and Prospect 4, after which it plans to assess all four prospects and rank them as potential deposits to be drilled with the aim of defining a mineral resource and future Exploration Targets”.
• Further assay results are awaited from holes NSDD-001, 002 and 003 at the Nightshift area in Prospect 3 which “subject to further drilling, … [could] … become a source of low-tonnage, high-grade ore”.
• Earlier this month, the company reported a gold in soil geochemical anomaly covering around 1.5km² over the Propsect 4 area at Hillside where relatively shallow mineralisation “forms part of a larger and yet untested system that is within 13km by tar and dirt road from Prospect 1”.

Conclusion: The Hillside prospect is beginning to look more extensive than previously thought with potential for shallow bulk underground mining as well as the possibility of deeper underground mining opportunities.  We look forward to further news as the exploration programme develops.

*An SP Angel Analyst holds shares in Kavango

Rome Resources (RMR LN) 0.3p, Mkt Cap £13.9m – Further news on drilling at Kalayi, DRC

• Rome Resources reports that its second drillhole at the Kalayi prospect in North Kivu Province, DRC, KBDD-006 has intersected tin mineralisation between 29-52m depth below mineralisation encountered in a surface trench (KBTT-001).
• Although assay information is not yet available, tin mineralisation was “identified from Niton XRF portable analyser readings in several areas of intense alteration within the zone of interest, presumed to be weathered chlorite”.
• The company says that “The next drillhole will be situated where a cassiterite vein was encountered while clearing the drill pad 100m to the NW of KBDD006”.
• CEO, Paul Barrett, expressed satisfaction that “such a significant intersection of mineralisation … [had been recorded] … so early in the drilling campaign, confirmed from drillsite analysis as tin-bearing”.
• The company confirms that “Mobilisation of the second and third drill rigs to site … [is ]… expected to be completed by the end of this week”.

Conclusion: Early-stage drilling results from Kalayi show the presence of tin mineralisation although the grades will need to be confirmed by assay.

Eurasia Mining* (EUA LN) SUSPENDED – Corporate update

• The Company reports the FY23 audit is progressing towards completion.
• On available liquidity, the Company reports limited cash runway in the UK with sufficient working capital lto meet ongoing obligation until November this year.
• The team is in discussions with a lender regarding a trade finance loan to meet constrained liquidity position until the inventory of PGM concentrate or the Company’s assets are sold.
• Trading in shares remain suspended pending the release of FY23.

*SP Angel act as Nomad and Broker to Eurasia Mining

Sovereign Metals* (SVML LN) 32p, Mkt Cap £194m – Hydraulic mining trial starts

(Sovereign currently holds 100% of the Kasiya project. The government has a right to a 10% free carry in the project.

Rio Tinto acquired an initial strategic interest of 15% for a $40.6m and has also bought another A$0.7m of stock to raise its stake to 19.9%)

STRONG BUY – Valuation 55p

• Sovereign Metals has started hydraulic mining at the pilot mining pit on the Kasiya rutile and graphite project in Malawi.
• The trial will be followed by backfilling the main trial pit to test processes for deposition and rehabilitation.
• Hydraulic mining is often more efficient than dry mining but requires additional infrastructure, time and capital to setup.
• Eg. the process requires pumps, wear-resistant piping and a sump of the pit from which to pump the loose slurry out of the pit onto screens for rutile and graphite separation.
• Fortunately, the loose, unconsolidated, sedimentary basin environment at Kasiya means no drilling or blasting appears to be required.
• Overflow slurry is settled to allow recovery of 34% of the water which can be reused by the high-pressure hydraulic monitor.
• Rehabilitation of the mined area should demonstrate the rapid return of the land for agriculture with hopefully increased crop yields for local farmers.
• The work will go towards optimisation of the September PFS results shown below:

• •  Operating costs US$8.74/t mined (Op costs are ~$4.3/t for hydro-mining at Kwale in Kenya)
  • Total operating costs including royalties US$404/t of concentrate – FoB Nacala port, Mozambique.
  • Assumptions – pricing:
    • Rutile price US$1,484/t – average over the life of mine.
    • Graphite – US$1,290/t – average over the life of mine
  • NPV (8%) post-tax US$1,605m ,NPV (10%) post-tax US$1,205m
  • IRR of 28% ungeared
• Ilmenite prices: Ilmenite concentrate prices have risen further to US$319-326/t for 46% Ex-VAT EXW China.
• Graphite: Flake graphite prices (-199 EXW China have fallen sharply since their May to July rally. Prices are not at US$737-765/t from US$708/t.
• Rio Tinto has also increased its investment to 19.9% through an additional A$0.7m investment into Sovereign.

Conclusion:  The team working on the Kasiya project may well opt for a simple dry mining process for the rapid opening up the mining area followed by the more capital-intensive hydraulic monitor mining in later years.

*SP Angel act as Nomad and broker to Sovereign Metals. The analyst has recently visited the Kasiya mine site. We highly recommend the Malawi coffee beans sold in Lilongwe airport.

Tertiary Minerals* (TYM LN) 0.08p, Mkt Cap £2.1m – £880k placing to support dual-pronged exploration strategy

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• Tertiary announces it has raised gross proceeds of £880k.
• The Company has placed 1,100m new shares at 0.08p.
• 55m broker warrants have also been issued.
• Proceeds from the placing will be used to conduct exploration programmes at Tertiary’s Zambian copper targets, Mushima North and Jacks.
• Jacks lies near the Chambishi, where CNMC announced a $400m investment last year in a bid to boost production to 110ktpa, alongside the Luanshya mine, where CNMC is investing $600m to reopen shafts to resume production.
• Previous drilling at Jacks showed highlights of 24m at 1.3% Cu, 13.8m at 1% Cu and 13.5m at 0.9% Cu.
• Jacks holds a 20km copper-in-soil anomaly which the Company will now look to drill with today’s funding.
• Mushima North lies near Kalengwa and holds a technical cooperation agreement with FQM.
• Previous drilling showed 33m of copper at 0.24%, with hole RKN800 intercepting the edge of a BHP-identified gravity anomaly that remains untested.
• Tertiary, alongside help from First Quantum, have identified six high priority targets at Mushima North.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

No.1 in Base Metals: SP Angel mining team awarded No 1. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q1 2024

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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

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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)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

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