SP Angel . Morning View . Thursday 24 12 20
Risk sentiment cautiously stronger on Brexit deal hopes and US stimulus prospects
Have a happy Christmas and a well-earned break
Rambler Metals and Mining* (LON:RMM) – LOI for sale of Nugget Pond gold plant
This is a year that many will prefer to forget but there are lessons to be learned and positives to take away
Brexit: rumours are the UK is going to get an Australia-type deal. Political experts always said the EU would never do a deal till the last minute. We are now at that last minute but thankfully both sides concede the need for a working arrangement / deal. Boris Johnson is to address the UK this morning on the deal following overnight talks, presumably without Michael Barnier.
Infrastructure: the West needs to improve its ageing infrastructure. Roads, rail, particularly suburban rail, housing, hospitals etc..
The needs of the people is driving the politicians towards greater state investment to restore economic growth and to maybe follow the China model to some degree.
China: is flexing its political and economic muscle in an increasingly aggressive and threatening manner. Banning specific imports from Australia and even targeting key Australian states is very worrying. China threatened to ban REEs into Japan over a fishing / territorial waters dispute. China is also increasingly influential in the WHO and other multilateral organisations.
Western auto-makers know they can not rely on China for critical raw materials and components with governments now encouraging the re-shoring of mining and mineral processing. We are working to help a number of companies which will be part of this process.
Dual Circulation: China is stimulating domestic demand for home appliances and consumer products starting in specific provinces.
New suburban rail and road links support ongoing urbanisation with new mini-hubs. Record sales of new apartments and ongoing construction programs are creating a new generation of aspirational consumers in China encouraged by new liquidity (mortgages) and other support.
FOREX (US$ vs Rmb): it is generally accepted that the US dollar will weaken over the next few years though currencies are notoriously difficult to forecast.
China is looks likely to slowly raise the value of its currency as it promotes the Renminbi as a ‘reserve currency’. So far it is only really used by Iran but as China exercises its economic muscle it promotes the use of the Renminbi it will likely allow its currency to appreciate.
Inflation: The Fed and other central banks are likely to continue to adjust policy to allow for inflation while keeping interest rates low to encourage economic growth. Central banks will be keen to inflate away a portion of the mounting national debt as raising taxes will damage the economic growth countries are trying to create.
Interest rates: to remain lower for longer with The Bank of England advising on the preparation for potentially negative interest rates.
Global warming: our tiny village of Cleveley in Oxfordshire flooded again last night with. A local farmer says he has never seen the like in all his 80 years. Thankfully the our pumps averted any damage but many others have been less fortunate. We have never seen an Autumn and Winter as wet as this one but are preparing for more.
Sadly we are seeing increasing numbers of extreme weather events from numbers of hurricanes in the Gulf of Mexico to fires in California and Eastern Australia and if these weather events become much worse then we will have many more crises to deal with.
Key investment concepts:
Stimulus – is driving commodity demand for almost all metals
US$ – dollar weakness tends to raise dollar-denominated metals prices
Inflation – metals are seen as a store of value and perform better in an inflationary environment.
Equities – investors are buying equities for yield and asset value appreciation.
The world is changing with massive move to Electric Vehicles, Renewable and Distributed Energy. This change will shape our future for decades to come.
EV batteries will improve significantly over the next 5-10 years.
Wind and solar farms will supply much more power and battery instillations will be required to help balance and manage the grid.
Local area distributed power and heat generation using fuel cells powered by hydrogen may become common if trials are successful
Commodities:
EV commodities: nickel, lithium, graphite, tin, palladium for hybrid autocatalysts
Stimulus metals: iron ore, vanadium, titanium (ilmenite)
Power distribution metals: copper, Rare Earths (REEs), Platinum
Inflation: gold, silver, platinum
Recommendations:
Altus Strategies* – gold discovery in Mali and a diversified portfolio of exploration assets in Africa
Amur Minerals* – strategic nickel project in Russia and iron ore mine in Australia
Anglo Asian Mining – gold mine in Azerbaijan
Arc Minerals* – copper – potential jv agreement with Anglo American on exploration in Zambia. Production planned for 2022.
Beowulf Mining* – iron ore, graphite, zinc and copper – awaiting mining license approval on Kallak iron ore
BlueJay Mining* – ilmenite project (recently announced mining license and offtake agreement)
BlueRock Diamonds – gem-quality diamond production, looks substantially undervalued.
Bushveld Minerals* – vanadium production, could transform into a technology play for Vanadium Redox Flow Batteries
Chaarat Gold* – operating polymetallic mine in Armenia and gold development projects in Kyrgyzstan
Condor Gold* – gold project working through feasibility in Nicaragua
Empire Metals* – gold discovery at Eclipse project in Kalgoolie, Western Australia
Eurasia Mining* – palladium rich PGM projects in Russia
IronRidge Resources* – Lithium project in Ghana. Gold prospects in Ivory Coast and Chad
Kefi Minerals* – gold project in Ethiopia and gold/polymetallic exploration in Saudi Arabia
Keras Resources* – manganese project in Togo awaiting mining license approval.
Kodal Minerals* – lithium project in Mali being examined by potential Chinese partner
Mkango Resources* – rare earth project in Malawi
Phoenix Copper* – copper and silver projects in the US
Power Metals* – copper and nickel, PGM exploration in Botswana
Rainbow Rare Earths* – Rare Earth mining in Burundi plus new tailings project in South Africa
Rambler Metals & Mining – recently restructured copper mine in Canada
Talga Resources* – Graphite mining project in Sweden and accredited anode product for EVs
SolGold plc* – Alpala mine planning in Ecuador. Very interesting copper assays in recent exploration on new projects
Strategic Minerals* – copper production to start in Southern Australia soon to compliment tin and tungsten project in the UK
Savannah Resources* – Lithium project in Portugal, working through feasibility studies
Scotgold Resources* – ramping up production at the high grade mine in Scotland
*SP Angel act as either nomad and or broker and or financial advisor
Recent TV interviews
ii TV: – Small Cap Mining Share tips for 2021 – https://www.youtube.com/watch?v=G_6RKAp91k4
ii TV: – Miners for a green industrial revolution – https://www.youtube.com/watch?v=rXlNS6JIDvg&t=3s
ii TV: – A Mining megatrend and three solid dividend stocks – https://www.youtube.com/watch?v=sH5r-QbTRwg
IGTV: – As traders continue to bid up Tesla, is the EV sector approaching a bubble? https://youtu.be/LaDWBpTZ7SQ
IGTV: – Copper price rise: https://youtu.be/mdPXTup15VY
VOX – 22/12/20:https://www.voxmarkets.co.uk/media/5fe45db8afab1e2b28278e44/?context=/listings/LON/JAY/multimedia/
10/12/20: https://www.voxmarkets.co.uk/media/5fd228d9bc74c922485f501e/?context=/listings/LON/ARCM/multimedia/
US Election, China growth policies Solgold*, Mkango*, Rainbow Rare Earths*: https://youtu.be/YKk5-kVpVGE
EV revolution, gold and other ideas (Interactive Investor): https://www.youtube.com/watch?v=ja0IdjszfCc
Metals Markets: Are they totally dependent on stimulus? (IG TV): https://youtu.be/TOiSwRpgfKM
*SP Angel act as nomad or broker or nomad and broker to companies mentioned in the above videos.
Dow Jones Industrials +0.38% at 30,130
Nikkei 225 +0.54% at 26,668
HK Hang Seng +0.16% at 26,387
Shanghai Composite -0.57% at 3,363
Economics
US – US Congress continues to negotiate a possible expansion of the financial aid package after President Trump refused to sign the latest bill demanding larger payments to individuals.
Vaccination is progressing slower than expected according to an official in charge of the programme, even with the number of shots delivered to date reaching 1m, Bloomberg reports.
More than 9m doses have been sent around the US so far, according to the US CDC (Centers for Disease Control and Prevention) with nearly 4.7m new shots (2m from Moderna and 2.7m from Pfizer) expected to be shipped next week.
China’s Sinovac COVID vaccine was found to be more than 50% effective in a Brazilian clinical trial, although, researchers delayed the release of more information on request from the Company, according to Bloomberg.
The vaccine thus meets a 50% minimum efficacy requirement set by US regulators for emergency authorization.
This compares to other vaccines developed by western companies demonstrating +90% efficacy in clinical trials.
China would pause flights to and from the UK on the back of reports of new strain of the virus.
Meanwhile, Singapore, Ireland and Israel are among latest countries to have detected cases of the B117 strain with Israel approving a third national lockdown of as long as four weeks.
The Centre for Mathematical Modelling of Infectious Diseases at the London School of Hygiene and Tropical Medicine found that the strain is 56% more transmissible and is likely to lead to higher levels of hospitalisations and deaths next year.
Additionally, the study showed that new restrictions are unlikely to bring the reproduction rate below 1 unless schools and universities are also closed.
Rollout of vaccines may need to be accelerated to 2m people a week from the current pace of 200,000 to contain its spread.
Robinhood Financial, a provider of brokerage services to retail investors, is facing a proposed class action for failing to inform clients it was selling their stock orders to trading firms.
While the service offered “commission free” trading on its platform, it did not disclose that it relied extensively on “payment for order flow”, collecting payment from market makers in exchange for executing trades, Bloomberg cites suit details.
“The principal trading firms/electronic market makers in turn passed theses costs along to Robinhood’s clients on each trade through inferior execution quality – the price at which the requested market orders were executed,” according to the complaint.
The news follows the Company’s $65m settlement last week with the US SEC over similar allegations.
UK – The pound is climbing on the back of the news of a potential post-Brexit trade deal following the historic 2016 referendum envisaging tariff and quota-free trade in good and cooperation in areas from security to aviation.
The outline of the deal was agreed on Wednesday and an announcement is expected today.
Significant delays continued at the transport link between the UK and continental Europe as truck drivers waited to get COVID test before crossing the border.
Although, authorities are aiming to reduce the backlog as fast as possible with testing capacity expanded to 300 tests per hour.
Some 10,000 truck drivers were seeking to return to the EU from the UK over the holiday season, EU transport commissioner said.
More areas in England are expected to be placed under Tier 4 restrictions as the UK registered an all time high in new COVID cases on Wednesday (+39k).
Areas moving to tier four are: Sussex, Oxfordshire, Suffolk, Norfolk, Cambridgeshire, Hampshire, with the exception of the New Forest, and the parts of Essex and Surrey not already in the toughest restrictions, BBC reported.
Currencies
US$1.2208/eur vs 1.2174/eur yesterday. Yen 103.60/$ vs 103.49/$. SAr 14.582/$ vs 14.601/$. $1.358/gbp vs $1.341/gbp. 0.760/aud vs 0.756/aud. CNY 6.532/$ vs 6.537/$.
Commodity News
Precious metals:
Gold US$1,880/oz vs US$1,867/oz yesterday
Gold ETFs 106.5moz vs US$106.5moz yesterday
Platinum US$1,029/oz vs US$1,014/oz yesterday
Palladium US$2,334/oz vs US$2,330/oz yesterday
Silver US$25.87/oz vs US$25.51/oz yesterday
Base metals:
Copper US$ 7,851/t vs US$7,803/t yesterday
Aluminium US$ 2,025/t vs US$1,993/t yesterday
Nickel US$ 17,070/t vs US$16,655/t yesterday
Zinc US$ 2,858/t vs US$2,788/t yesterday
Lead US$ 1,983/t vs US$1,974/t yesterday
Tin US$ 20,085/t vs US$19,935/t yesterday
Energy:
Oil US$51.4/bbl vs US$49.7/bbl yesterday
Natural Gas US$2.557/mmbtu vs US$2.759/mmbtu yesterday
Uranium US$30.35/lb vs US$30.30/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$160.4/t vs US$163.7/t
Chinese steel rebar 25mm US$683.2/t vs US$682.7/t
Thermal coal (1st year forward cif ARA) US$69.0/t vs US$69.1/t
Coking coal swap Australia FOB US$125.3/t vs US$125.3/t
Other:
Cobalt LME 3m US$32,190/t vs US$32,200/t
NdPr Rare Earth Oxide (China) US$61,389/t vs US$61,341/t
Lithium carbonate 99% (China) US$7,042/t vs US$6,960/t
Ferro Vanadium 80% FOB (China) US$30.0/kg vs US$29.5/kg
Ferro-Manganese high carbon 78% Mn US$1,330/t vs US$1,325/t
Tungsten APT European US$230-235/mtu vs US$220-225/mtu
Graphite flake 94% C, -100 mesh, fob China US$520/t vs US$510/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,475/t vs US$2,475/t
Spodumene 6% Li2O min, cif (China) US$380/t vs US$375/t
Company News
Rambler Metals and Mining* (LON:RMM) 0.39p, Mkt Cap GBP28.9m – LOI for sale of Nugget Pond gold plant
(Rambler owns 100% of the Ming Copper-Gold Mine)
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Rambler Metals and Mining reported yesterday that it had signed a non-binding Letter of Intent to sell its Nugget Pond gold circuit and a number of exploration properties and royalty interests located in Quebec to Maritime Resources.
Under the terms of the agreement, which is expected to be completed during Q1 2021, Maritime will pay US$2m in cash and C$0.5m in shares.
The Nugget Pond gold circuit was last operated in 2012 to treat ore from the Hammerdown mine and is located within Rambler’s copper concentrator facility so that “Maritime will complete a feasibility study to determine the optimal configuration to operate both the Nugget Pond gold circuit and copper concentrator concurrently and independently without any impact on Rambler’s current operations”.
President, Toby Bradbury, said “We are pleased to announce this potential transaction with Maritime to sell the idle gold processing circuit at Nugget Pond and the non-core gold assets picked up during the amalgamation with Thundermin Resources in 2016. Our focus remains on our plans to re-build production to full capacity at the Ming Mine as contemplated during our recent successful fund-raising”.
Conclusion: The planned sale of the gold plant and some non-core assets realises cash from an asset which was last used in 2012. Maritime Resources will need to ensure that operation of the gold plant does not limit Rambler’s ability to continue its existing copper treatment operation at Nugget Pond without disruption.
*SP Angel act as Nomad and broker to Rambler Metals & Mining
Analysts
John Meyer – [email protected] – 0203 470 0490
Simon Beardsmore – [email protected] – 0203 470 0484
Sergey Raevskiy –[email protected] – 0203 470 0474
Joe Rowbottom – [email protected] – 0203 470 0486
Sales
Richard Parlons –[email protected] – 0203 470 0472
Abigail Wayne – [email protected] – 0203 470 0534
Rob Rees – [email protected] – 0203 470 0535
Grant Barker – [email protected] – 0203 470 0471
SP Angel
Prince Frederick House
35-39 Maddox Street London
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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.
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, Antimony
Asian Metal
Tungsten
Metal Bulletin
