Today’s Market View – Sunstone Metals Limited, Polymet Mining, Adriatic Metals and more…

18237500 - businessman hand pointing to investment as concept

SP Angel . Morning View . Thursday 26 03 20

More stimulus pledged by governments and monetary authorities

MiFID II exempt information – see disclaimer below

Anglo Asian Mining* (LON:AAZ) – Production maintained amid escalating state COVID-19 containment measures

Adriatic Metals* (LON:ADT1) – Gravity data reveals additional targets

Ariana Resources* (LON:AAU) – Subsidiary pays Ariana GBP1.6m dividend

Aura Energy* (LON:AURA) – Postponement of EGM

Caledonia Mining (LON:CMCL) – Virus mitigation measures in place

Gem Diamonds (LON:GEMD) – Letseng placed on care and maintenance

Polymet Mining* (LON:PLM) – Minnesota Supreme Court will hear appeal on three PolyMet permits

Sunstone Metals Limited (ASX:STM) – Identification of high-grade gold-copper porphyry targets at Bramaderos

Serabi Gold* (LON:SRB) — Higher gold prices and falling Brazalian real

From our Healthcare team:

FDA approval guidelines for blood plasma treatment for COVID-19 patients.

Intelligent Ultrasound (LON:MED): Final results for 2019

Stimulus funding relating to the Coronavirus (Updates in bold, figures converted to US dollars)

$2tn US fiscal package approved by Congress

$1,000bn – IMF available

$963bn (EUR750bn) ECB scraps limits on sovereign bond purchases. + targeted loans to companies at an interest rate of -0.75%

ECB legal decision on the Pandemic Emergency Purchase Programme ‘PEPP’. The ECB may target shorter maturities in the hope that PEPP remains temporary.

The 33% issuer limit will not apply to emergency asset purchases.

No more limits to ECB QE!

$825bn (EUR756bn) Germany – Bundestag approved EUR156bn in extra borrowing and ~EUR600bn in emergency funds

$700bn – US + Fed rate cut to 0-0.25% last night. The $700bn QE program is to buy Treasuries and mortgage-backed securities. The program in two parts $500bn + $200bn

$78bn (C$107bn) – Canada

$17.4bn Japan + + Y300bn of inflation-linked bonds,

$400bn (GBP330bn) UK – Government-backed loan scheme. New business interruption loan scheme up to GBP5m with no interest. Will add whatever is required in COVID-bill + $242bn (GBP200bn) UK QE from Bank of England.

$39m – UK (GBP30bn) stimulus + $29bn (GBP20bn) – UK No business rates plus GBP25,000 cash grants for shops, pubs, clubs in hospitality sector inc. $5bn (GBP3.5bn)

$387bn (EUR304bn) – France – loan guarantees for French business inc. $50bn (EUR45bn) + EUR4bn for startups, + France to also pay half wages for employees in affected firms

$200bn (EUR200bn) – Spain

$127.2bn China – China stimulus was $586bn in 2009 to rescue itself and the global economy. This time it is simply lowering lending rates slightly and made $77bn of new loan capacity at banks,

$48bn Australia inc. fresh AU$66bn,

US$38.6bn – Singapore

$22.6bn – India

$15.4bn – Hong Kong relief package

$13.7bn South Korea, $12bn World Bank, $10bn Switzerland, $8.4bn Italy, $7bn NZ, $3.5bn Ireland, $2bn Taiwan, $0.75bn Indonesia,

The world was slow to recover from the 2008 GFC due to a lack of stimulus allowing China to get ahead

This time the US and UK are likely to stimulate their economies to a far greater extent than seen in the GFC

$8.02tr – TOTAL stimulus offered to-date vs G20 GFC stimulus of ~$2 trillion or 1.4% of global GDP (ILO, EU, IILS)

>10tr expected if using the $7.4tr estimated by The Economist

121 London Mining Investment Online Conference – 19-21 May 2020 – Lockdown special

The 121 Group are holding their London conference Online in may

Companies and investors will simply login from their place of ‘Self-isolation’ for online meetings managed by 121’s system

The event has the added benefit of broadening the field of participating investors and companies while reducing everyone’s travel costs

Companies can show slides online to investors within the system and present opportunities via video link

Company slots are limited to maintain quality levels and enable better management

Click here to register your interest if attending as a corporate

Click link to see how it works:

Dow Jones Industrials +2.39% at 21,201

Nikkei 225 -4.51% at 18,665

HK Hang Seng -0.74% at 23,352

Shanghai Composite -0.60% at 2,765


US Mortgage REITs in precarious predicament as risk of default rises

The economic impact of the Coronavirus may have a significant impact on mortgage payments in the US.

REITs Real Estate Investment Trusts will be affected by rising levels of defaults and foreclosures despite lower interest rates and fiscal support.

These mortgage assets are more at risk in states where economic activity is shut down (SWFI)

Credit markets stalled last week causing requiring the Fed to inject liquidity to ease the system, collapsing value of REITs has potential to spark a further credit crisis.

Bank of England to make further decision on interest rates at noon today

Potential for rates to go negative perhaps?

ECB to scrap its bond buying limits allowing the central bank to expand purchases of struggling economies’ debt.

Previous constraints to sovereign bond-buying limiting purchases to a third of each of its member state’s debt, “should not apply” to its new emergency programme, Bloomberg reported this morning.

The EUR750bn bond buying programme is scheduled to continue until at least the end of 2020.

Eurozone sovereign bond prices rallied on the announcement driving yields lower.

Japan – Authorities report the weakest assessment of the economy in nearly seven years calling March conditions as “severe”.

In a monthly report released today the government cut its economic assessment laying the base for another stimulus package.

The fiscal aid package is forecast to come in around $137bn, according to several government and ruling party lawmakers with direct knowledge.

Germany – Bundestag cleared new expanded budget including EUR156bn in extra borrowing and ~EUR600bn in emergency funds to help the economy with a virus-induced shock.

The package is expected to be approved by the upper house of Parliament (Bundesrat) tomorrow.

Consumer confidence is accelerating towards GFC lows, according to the GfK data.

The index collapsed to 2.7 in April, down from 8.3 in March and compared to a low of 1.5 reached in Sep/08.

Germany closed its most non-grocery shops, cultural and entertainment venues as well as temporarily suspended school and large gatherings nationwide in the mid-March.

France – Business confidence dropped the most on record in March with the economy estimated to operate at 65% of normal capacity.

The index plunged 10 point s to 95 in March, Insee statistics office said.

As recorded in other countries, most of the decline was attributed to the services sector.

The institute warned that data is set to deteriorate further as most of the responses in surveys predated the closing of French schools on March 16 and the start of the quarantine.

It also estimates that a month of confinement would cost the French economy 12pp in quarterly GDP growth and 3pp in annual.

India – The government announced a INR1.7tn ($22.6bn) stimulus package.

The central bank is due to announce its rate decision this week with the benchmark repo rate currently standing at 5.15%, unchanged from the start of the year.

Hong Kong – Trade remained muted in February after a collapse in the previous month.

Exports (%yoy): 4.3 v -22.7 in January and -20.0 forecast.

Imports (%yoy): -0.1 v -16.4 in January and -15.0 forecast.

Singapore – The government announced a second stimulus package of S$48bn (US$33bn) to fight the pandemic.

This brings total government aid to almost S$55bn or 11% of GDP.

South Africa – offering relief to small businesses through 21-day Lockdown

Businesses must be 100% South African owned and 70% of their employees must be South African.

Dyson designs new ventilator in just days working 24/7

Let’s hope it ventilates as well as Dyson’s other products work


US$1.0928/eur vs 1.0825/eur yesterday. Yen 110.40/$ vs 111.48/$. SAr 17.496/$ vs 17.342/$. $1.191/gbp vs $1.187/gbp. 0.595/aud vs 0.605/aud. CNY 7.091/$ vs 7.099/$.

South African rand falls to 17.48 / US dollar and to 20.85 / GBP

All major economies are offering stimulus packages to sustain the negative economic impact of the Coronavirus.

The total level of stimulus funds spent will depend on the length and economic loss caused by each shutdown.

For some politicians this will be a chance to win votes, while other nations may be more austere (Germany)

Commodity News

Gold US$1,603/oz vs US$1,600/oz yesterday – WGC: Gold is more relevant than ever for asset managers and central banks

Gold is more attractive than ever to central banks and asset managers due to the metal’s safety and liquidity, and also the potential returns is can generate, according to the latest report by the World Gold Council.

Globally, central banks and supernational organisations hold almost 34,000 tonnes of gold – 17% of total above-ground stocks.

Despite many holding gold in times of uncertainty (such as a global pandemic), returns are also important – gold has provided an average annual return of nearly 10% in US dollars since 1971.

One reason gold is especially effective during times of economic uncertainty is its historically low correlation with most financial assets, making it a very effective asset for portfolio diversification.

According to the WGC, the primary reasons for recent gold buying are: heightened economic and political risks, low and negative interest rares and allocation re-balancing.

Gold ETFs 88.9moz vs US$88.4moz yesterday

Platinum US$726/oz vs US$718/oz yesterday – South Africa to continue processing PGMs during lockdown

Processing of PGMs will continue, and therefore to be exempt from the country’s 21-day coronavirus lockdown, according to the minister of mines and energy (Mining Weekly).

The minister told a news conference on Wednesday ‘Production in gold, chrome, manganese and other sectors will be scaled down, while processing of surface materials in the PGM sectors will continue’.

The announcement came as a result of South Africa’s Minerals Council lobbied the government to allow smelters and refineries to continue operating during the lockdown.

The prospect of a lockdown saw platinum prices surge 10% on Tuesday, and Palladium nearly 25% yesterday, before pulling back (Reuters).

Palladium US$2,268/oz vs US$2,006/oz yesterday

Silver US$14.32/oz vs US$14.29/oz yesterday

Base metals:

Copper US$ 4,782/t vs US$4,847/t yesterday – Codelco to temporarily suspend construction on some projects

The world’s largest copper miner announced yesterday that it would temporarily suspend construction on some projects in an attempt to slow the spread of the virus through the country.

The 15-day suspension applies remaining work being carried out at multiple projects such as the Chuquicamata underground mine.

The announcement follows pressure from mining trade unions in Chile, demanding that Codelco consider a full, preventative quarantine, including halting all operations at its mines (Reuters).

Mines across Chile are facing increasing pressure to halt the spread of the virus, as yesterday the country surpassed 1,000 cases.

Aluminium US$ 1,534/t vs US$1,554/t yesterday

Nickel US$ 11,195/t vs US$11,200/t yesterday

Zinc US$ 1,822/t vs US$1,821/t yesterday

Lead US$ 1,643/t vs US$1,605/t yesterday

Tin US$ 13,855/t vs US$13,750/t yesterday


Oil US$26.6/bbl vs US$27.7/bbl yesterday

Natural Gas US$1.672/mmbtu vs US$1.706/mmbtu yesterday

Uranium US$25.90/lb vs US$25.90/lb yesterday


Iron ore 62% Fe spot (cfr Tianjin) US$84.8/t vs US$82.6/t – Iron ore prices rise on supply deficit fears

Iron ore futures rose today on supply concerns as coronavirus-containment measures across the world intensify.

The most-traded May iron ore contract on the Dalian Commodity Exchange was up 0.7% this morning to 662 yuan ($93.40)/t (Reuters).

Supply disruptions in India, South Africa and Canada alone will temporarily impact as much as 120mtpa of iron ore supply, which equates to 8% of seaborne supply (S&P Global).

India’s 21-day lockdown has forced many of its iron ore exporters to declare force majeure as a result of port closures, logistical restrictions and a shortage of workers (Argus Media).

Chinese steel rebar 25mm US$528.4/t vs US$526.5/t

Thermal coal (1st year forward cif ARA) US$58.1/t vs US$58.3/t – South African coal stocks healthy ahead of lockdown

Utility provider Eskom announced yesterday that coal stocks at it has at least 20 days worth of supplies at all stations (CNBC Africa).

All of Eskom’s activities are considered ‘essential services’, making them exempt from the 21-day lockdown.

Coking coal swap Australia FOB US$149.0/t vs US$149.0/t


Cobalt LME 3m US$30,000/t vs US$30,000/t

NdPr Rare Earth Oxide (China) US$38,355/t vs US$38,318/t

Lithium carbonate 99% (China) US$5,640/t vs US$5,635/t – Pilbara Minerals sign 5yr supply agreement with Yibin Tianyi

Australia lithium miner Pilbara Minerals has signed a 5yr deal to supply spodumene concentrate to Chinese firm Yibin Tianyi. Spodumene concentrate is mined for it lithium content. (Reuters)

The five year offtake agreement will see Pilbara Minerals deliver 75k metric tons/yr of spodumene concentrate to Yibin Tianyi. (Stockhead)

Deliveries of the concentrate from Pilbara’s Pilgangoora project will increase to 75k metric tons/yr from 2021, up from 60k metric tons in 2020. (Seeking Alpha)

Spodumene concentrate prices fell to US$463 in February a 46% drop on the same time last year. A result of Chinese stockpiling. (Stockhead)

Yibin Tianyi is to become a key part of CATL’s supply chain. CATL are the largest lithium-ion battery maker globally and a major shareholder in Pilbara Minerals.

Ferro Vanadium 80% FOB (China) US$27.5/kg vs US$27.7/kg –

Ferro-vanadium basis 78%,-2.3% 22.4 – 24 Western Europe

Antimony Trioxide 99.5% EU (China) US$5.1/kg vs US$5.0/kg

Tungsten APT European US$240-245/mtu vs US$240-245/mtu

Graphite flake 94% C, -100 mesh, fob China US$540/t vs US$540/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,550/t vs US$2,550/t

Battery News

interest rates and allocation re-balancing.

Faster charging Li-ion batteries potentially a step closer (Green Car Congress)

Scientists led by the US Department of Energy (DOE) have captured in real time how lithium ions move in lithium titanate (LTO).

Lithium titanate is a fast-charging battery electrode material composed of lithium, titanium and oxygen.

The team reported observing distorted arrangements of lithium and surrounding atoms in LTO intermediaries providing an ‘express lane’ for the transport of lithium ions.

The discovery could provide insights for the improved design of battery materials for faster charging of EVs and electrical devices. LTO could become an alternative to graphite for faster charging applications.

LTO can accommodate lithium ions rapidly without suffering from lithium plating.

The findings were reported in Science

Bacanora Lithium soldiers on in the face of coronavirus (Proactive Investors)

CEO Peter Secker stated in an interview with Proactive Investors that the Company continues to make progress on all its work streams despite the global disruption caused by the virus outbreak.

A focus remains completion of mining project work which has been impacted by delays in Asia and North America a result of government restrictions.

Bacanora’s share price fell 65% from GBP46.4 to GBP16.44 at the low. The share price has begun to recover a little to GBP20.38.

Company News

Anglo Asian Mining* (LON:AAZ) 102p, Mkt Cap GBP116m – Production maintained amid escalating state COVID-19 containment measures

The government introduced a series of measures to curtail the spread of the virus including suspension of domestic travel of people, limiting air travel and closing most of its land borders (including Georgia and Iran).

Restrictions do not apply to freight shipments with the Company continuing to procure necessary supplies from outside Azerbaijan including cyanide.

Operations at Gedabek and Gosha have not been included in the Government restrictions and continue to run normally.

Given air travel constraints, the Company is currently unable to ship its gold dore to refiners in Switzerland that had also to suspend their operations as part of the Swiss government efforts to contain the coronavirus.

Nevertheless, the Company reports that dore production through early March has been shipped and the sale proceeds received and the management is exploring other logistical, refining and sale options for gold dore should the suspension be prolonged.

Copper concentrate continues to be shipped by road.

The Company is in strong financial position with US$25m in cash and no debt while also in discussions with its banks in Azerbaijan regarding a potential stand-by credit facility of up to US$20m to secure additional financial flexibility at the time of global economic uncertainty.

Production guidance reiterated at 75-80koz GE with Q1 production update due in mid-April.

Conclusion: Operations continue as normal for the time being with the team reiterating annual production guidance of 75-80koz while taking all necessary precautionary measures to safeguard the health of its staff. The Company is in a strong financial position with debt free balance sheet and $25m in the bank allowing it to weather challenging economic conditions as governments escalate measures to contain the coronavirus pandemic.

*SP Angel acts as nomad and broker to Anglo Asian Mining

Adriatic Metals* (LON:ADT1) 48p, Mkt Cap GBP85m – Gravity data reveals additional targets

Adriatic Metals reports that reprocessing of gravity data derived from a geophysical survey it conducted in 2018 has revealed several previously unrecognised geophysical anomalies between Rupice and Jurasevac-Brestic.

The reprocessing, which remodels the data ?utilising the latest detailed Lidar topographic data acquired by the Company in late 2019? has shown additional anomalies related to ?the massive sulphide and barite mineralisation seen at the Rupice deposit, which has very high densities relative to surrounding barren sedimentary shales, limestones and marls, and shows as an intense gravity anomaly?.

?From this reprocessing, immediate, additional high-priority drill targets are apparent at the Jurasevac-Brestic prospect, and drilling will re-commence there shortly.?

The company confirms that it has ?five rigs operating and hope to have a 6th rig operating once the Bosnian border re-opens to our foreign based drill crews.?

Although many governments and companies are scaling back their operations in response to the Covid19 emergency, Adriatic Metals says that ?The Bosnian government response to the COVID-19 issue has required us to conduct some contingency planning for potential logistical issues, but to date is not having a major impact on the drill program, the pre-feasibility work or permitting, which are our 3 predominant work streams for the first half of 2020. We will continue to monitor the situation for potential impacts and implement contingency plans if needed”.

The authorities have approved drilling at 29 new locations within the licence area which should facilitate the testing of the additional targets located ?primarily to the east of the Jurasevac adit and east of Adriatic’s drilling at the prospect to date.?

Conclusion: The reprocessing of earlier geophysical data has shown a number of additional targets for drilling at the Rupice prospect area in Bosnia.

*An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia

Ariana Resources* (LON:AAU) 2.72p, Mkt Cap GBP30m – Subsidiary pays Ariana GBP1.6m dividend

Ariana Resources has announced the receipt of a GBP1.6m maiden dividend payment from its Turkish subsidiary, Galata Madencilik.

The dividend represents ?the culmination of many years of effort by the Company and mark the moment that its subsidiary became the cash-generative engine of growth for the Group?.

Galata holds Ariana Resources’ interest in Zenit Madencilik which owns the Kiziltepe mine and Dr. Kerim Sener, Managing Director of Ariana Resources explained that ?Since early 2018, Galata has received a total of US$7.3 million from Zenit to repay intercompany loans and as partial dividend payments, as a result of its profitable gold mining operations at Kiziltepe. Ahead of the March 2020 AGM of Zenit, all outstanding dividend payments declared by Zenit were paid to Galata. This has enabled Galata to repatriate profits to its parent company in the form of dividends.”

Now that the intercompany loans have been settled, the profits of Kiziltepe are distributed between the partners giving Ariana Resources 51% to its partner, Proccea’s 49%.

Conclusion: The initial dividend from Kiziltepe provides Ariana Resources with a future cash flow to underpin its continuing exploration programmes at Salinbas in north-eastern Turkey, Tavsan in western Turkey and in Cyprus.

*An SP Angel mining analyst has visited Ariana’s licenses in Turkey

Aura Energy* (LON:AURA) 0.20p, Mkt Cap GBP2.6m – Postponement of EGM

Aura Energy has announced that it has indefinitely postponed the EGM scheduled to be held on 14th April as it implements the Australian Government’s measures to assist in the containment of the Covid19 virus.

The meeting was to consider the election of a number of additional directors proposed by Mr. John Bennett and others.

Conclusion: The postponement of the EGM comes as no surprise as anti-virus measures take effect across the world.

*SP Angel act as Nomad & Broker to Aura Energy

Caledonia Mining* (LON:CMCL) 740p, Mkt Cap GBP85m – Virus mitigation measures in place

Caledonia Mining reports that it has increased the levels of consumable stores required to maintain operations at the Blanket mine in Zimbabwe over recent weeks in anticipation of supply chain disruptions.

As a result, ?Blanket has adequate critical spares and mining consumables in its inventory to sustain uninterrupted gold production well past the expected duration of the supply interruption including allowing for a period of supply chain and inventory restocking after the end of the South African lockdown on 16th April. Accordingly, management does not expect that Blanket will be forced to suspend gold production as a result of the disruption in the South African supply chain.?

The company also explains that it is in a strong financial position to withstand ?an outbreak of COVID-19 infections at Blanket affecting a significant number of employees and necessitating a mine shut down, Caledonia would enter this unprecedented situation with a strong balance sheet with cash on hand at March 25, 2020 of approximately $12.5 million?.

As a result, and with the benefits of a strong performance during Q1, the Blanket mine is ?in a strong position to withstand an extended period of production interruption if it were to materialise.?

CEO, Steve Curtis, confirmed the resilience of the Blanket mine but stressed that ?Our first priority remains the safety and health of all of our employees and their families. Management has taken active measures to help minimise the risk of infection and to safeguard the continuity of day to day business operations at Blanket. These plans are reviewed and, if necessary, updated daily in response to this highly fluid situation.?

Conclusion: Active management intervention to secure operating supplies and a strong financial position put Caledonia in a resilient position to withstand the disruption of Covid19. To date we believe from news reports that Zimbabwe has 3 recorded cases of the virus but so far the mine is unaffected.

*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe

Gem Diamonds (LON:GEMD) 30p, Mkt Cap GBP42m – Letseng placed on care and maintenance

Gem Diamonds reports that its Leteng mine has been placed on care and maintenance for three weeks in response to Covid19.

During this period, only essential maintenance and mine security will be undertaken.

The company confirms that its priority is to ensure the wellbeing of its personnel, contractors and customers and, encouragingly, reports that ?To date, there have been no reported instances of any Covid19 positive cases in Lesotho or at the Letseng mine or at any of the Company’s international operations.?

Polymet Mining* (LON:PLM) US$0.21c, Mkt cap $206m – Minnesota Supreme Court will hear appeal on three PolyMet permits

The Minnesota Supreme Court today granted review of a Minnesota Court of Appeals’ ruling on the NorthMet Permit to Mine and dam safety permits, according to Poly Met Mining.

PolyMet and the Department of Natural Resources had petitioned the Supreme Court in February to overturn the lower court’s 13 January ruling, which remanded the three permits to the DNR for a contested case hearing.

The lower court ruling has potentially far-reaching effects on any permits issued by the state making this a case of potential national importance.

Conclusion: The significance of this case in relation to permit approvals in Minnesota and the US should not be underestimated. We suspect Polymet will win its appeal and we are very pleased to see Glencore continuing to support the business. We believe Polymet will become an asset of strategic national significance due to the suite of metals produced. The Northmet mine will produce Platinum Group Metals, nickel, copper, cobalt and gold in concentrate.

*An SP Angel analyst has visited the Northmet site in Minessota

Sunstone Metals Limited (LON:STM) A$0.006, Mkt cap A$8.3m – Identification of high-grade gold-copper porphyry targets at Bramaderos

Sunstone Metals has released an announcement to the ASX describing that a review of its recent drilling results, combined with the integration of new magnetic geophysical data from its Bramaderos project in Ecuador has provided evidence that ?the porphyry systems exhibit pipe-like geometry similar to many other porphyry deposits, such as Northparkes in Australia, and others globally?.

This interpretation has superceded the company’s previous ?belief that the porphyries at Bramaderos have broad, widely disseminated geometries, which are common elsewhere such as in Chile?.

The new interpretation explains ?why we have intersected very wide zones of lower-grade mineralisation and other focussed areas with economic grades. We now have a much greater understanding of where the higher-grade mineralisation is likely to sit and as a result, we have identified multiple compelling targets for drill testing.”

Although there are now new targets for drilling, ?Exploration activities at the Bramaderos Project have been temporarily suspended in line with the directives of the Ecuadorian government decree declaring a nationwide emergency to manage the risks associated with coronavirus. Sunstone takes the welfare of its employees very seriously and will review plans frequently to make sure that we are managing this risk appropriately. Desktop activities, primarily in Australia, are ongoing as we interpret data to move target areas towards being drill ready when the suspensions are lifted.?

Conclusion: The new interpretation provides a framework for future exploration at Bramaderos once the current restrictions on site operations ease.

Serabi Gold* (LON:SRB) – 53.1p, Mkt cap GBP31.3m – Higher gold prices and falling Brazalian real

Serabi Gold will be understandably late in filing its accounts and management statement for the year and for the first quarter.

Serabi has also agreed with Greenstone Resources II LP to extend the period for the satisfaction of all the conditions necessary for the completion of the subscription for and issue to Greenstone of it’s US$12m Convertible Loan announced on 22 January and approved by shareholders of the Company on 26 February.

Greenstone and the Company fully expect that the subscription for and issue of the Loan Notes will be completed at a later date and at that time the Company will be in a position to complete the payment of the final acquisition payment of US$12m for the purchase of Chapleau Resources Ltd and its Coringa Gold project.

Serabi was also going to settle the outstanding US$4.65m owed to Sprott of which US$1.16m was to be paid on 31 March. The Greenstone funds are intended to settle the Sprott loan.

The Company estimates it should have ~$8.5m at end-March after payment of the next instalment to Sprott.

Coronavirus: No Company staff member has yet reported that they have contracted or are displaying potential symptoms of the Coronavirus.

Management are evaluating a number of operational scenarios with no interruption to gold production as yet.

The mine is remote and well isolated and should enable good social-distancing practices if needed.

‘Capital investment and exploration programmes and all other non-essential expenditures have been temporarily suspended to conserve cash resources.’

Q1 update: The Company experienced a mechanical failure of one of the three ball mills in February resulting in a lower than anticipated level of gold production for that month.

Repairs have been completed and the plant is currently again running at capacity.

Commissioning of the ore sorter has been completed and it is now operating in line with specifications and the Company’s expectations.

Management had expected that with the successful commissioning of the ore sorter, the shortfall in production from the first quarter could be recovered over the remaining three quarters of the year.

Potential restrictions that may arise from the Coronavirus may not allow the company to meet its production target.

Q1 gold production est. 8,500- 9,000oz. Serabi is understandably suspending its production guidance for 2020 till it is in a better position to assess the impact of the Coronavirus

Cash should be in line with internal forecasts due to the weaker currency and higher gold prices.

Conclusion: Serabi sounds ok for now and should do well from higher gold prices and a weaker Brazalian real so long as the government does not shut down production for any length of time.

*An SP Angel analyst has visited the Serabi’s gold mining operations in Brazil

SP Angel Healthcare team – Vadim Alexandre, Liam Gascoigne-Cohen

FDA approval guidelines for blood plasma treatment

The US FDA has provided a route for clinicians to administer a potential therapy, known as convalescent plasma, to COVID-19 patients.

Convalescent plasma, consists of a component of blood collected from patients who have recently recovered from COVID-19.

The rationale is that recovered patients have antibodies against the SARS-CoV-2 virus in their blood system which may be beneficial to patients suffering from the virus.

The guidance enables clinicians to administer convalescent plasma to patients on a case-by-case approval basis from the FDA.

Given the time sensitive nature of the outbreak, the FDA is adapting to necessity, rather than following its conventional regulatory approval timelines. Although the use of convalescent plasma has been studied in other viral outbreaks, the FDA notes that clinical trials are required prior to the routine use of this potential therapy for COVID-19. Convalescent plasma is a passive antibody therapy, as the patient does not generate their own immune response to the virus, as is the case in a vaccine. However, if this technique proves beneficial, the therapy could be a helpful stopgap whilst efforts to develop a vaccine continue.

Company Update

Intelligent Ultrasound (LON:MED): Final results for 2019

Share price: 8.5p; Market Capitalisation: GBP18.7m

Intelligent Ultrasound, the ultrasound artificial intelligence (AI) software and simulation company, announced results for the year-ended 31 December 2019.

Revenue, solely from the Simulation Division, increased 11% to GBP5.9m (FY18: GBP5.3m).

Gross margin increased to 58% (FY18: 53%) driven by growth in direct sales (FY19: 56% vs FY18: 50%).

Admin costs were GBP8.0m (FY18: GBP6.4m) with Pre-tax losses of GBP4.6m (FY18: GBP3.5m).

Cash and short-term deposits at period end were GBP7.3m (FY18: GBP5.6m cash).

The Group came within the top revenue range of its guidance given in January 2020 (FY19: GBP5.7-GBP5.9m) however, we note a slow-down in revenue growth in H219 (H119 revenues: GBP3.1m vs H118: GBP2.5m). Currently, Group revenues come from the Simulations division, however, it is the Group’ AI division where we see the most growth in the future. An OEM licencing agreement was struck in July 2019, representing a significant milestone for the Group. Although the Group iis implementing cost savings measures in response to the COVID-19 outbreak, the Group remains well capitalised and indicated that it has sufficient funds to continue its business activities for the next twelve months, when revenues from its first AI software licence agreement are expected.


John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474


Richard Parlons – 0203 470 0472

Abigail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535

SP Angel

Prince Frederick House

35-39 Maddox Street London


*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


Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt


Oil Brent


Natural Gas, Uranium, Iron Ore


Thermal Coal

Bloomberg OTC Composite

Coking Coal




Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal


Metal Bulletin


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