Today’s Market View – Ariana Resources, Altus Strategies, Power Metal Resources and others

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MiFID II exempt information – see disclaimer below 

We are raising funds for a private Graphene producer – EIS scheme approval applied for

The company is selling a number of graphene products to industrial and retail customers.

Sales of certain products have sold out unexpectedly quickly.

The company wishes to fund a ramp up in production to get ahead of demand and to develop markets for a number of new, graphene products

The business is also able to upgrade graphite to a higher grade/specifications using its process – rolling out this process also requires funding

The company has also applied for EIS scheme approval from HMRC

Please let me know if you wish to invest in the company

*SP Angel’s role is limited to making introductions and interested parties should be aware that investment in a private company can present certain risks not present in listed companies (LON:e.g. limited or no liquidity and no rules compelling disclosure of information to investors). This offer is open to professional investors only and is not offered to retail investors.

Altus Strategies* (LON:ALS)- BUY – CEO buys ~£70k worth of shares in the market

Ariana Resources (LON:AAU)– Exploration underway in Kosovo

Castillo Copper (LON:CCZ)– Announces 26-hole drilling programme for the Big One prospect

Condor Gold* (LON:CNR)– Award of Options

GoldStone Resources* (LON:GRL)– Warrant exercise provides £360k funding to company

IronRidge Resources* (LON:IRR)– Demerger of gold prospects from lithium project

Petropavlovsk (LON:POG)– Pioneer flotation plant commissioning

Power Metal Resources* (LON:POW)– Agreement allowing 100% earn-in of Golconda Summit Gold Property

Savannah Resources* (LON:SAV)– New strategic opportunities are being evaluated due to improved market conditions

Scotgold Resources* (LON:SGZ)– Operations update

Hedge funds seen booking profits across a range of commodities

Bloomberg reports hedge-fund holdings have reduced in 20 out of 23 commodities.

Mild weather in the US is raising the prospect for larger harvests across the US.

Rhetoric out of China on copper and other metals prices along with new regulations limiting the sale of futures to individual investors has taken some of the heat out of the metals.

The Chinese authorities have since stated they will allow markets to find their own levels.

Chinese regulators previously warned metal companies to ensure ‘normal market order’ and would act to manage ‘unreasonable’ price rises (Reuters).

Gold prices continue to lift as manufacturing inflation and CPI rises and the US dollar weakens on Biden’s stimulus plans

Eurozone factory input costs hit a record high last month despite semiconductor chip and other supply issues.

The Eurozone IHM Markit manufacturing PMI hit 63.1 in May from 62.9 in April its highest ever reading since the survey began in 1997.

German Markit manufacturing PMI gained to 64.4 in May vs 64.0 in April

UK Markit manufacturing PMI eased to 65.6 in May vs 66.1 in April

Eurozone CPI Core rose to 0.9% yoy in May vs 0.7% yoy in April

The input price index rose to a new record of 87.1 in May vs from 82.2 in April.

Much of the rise in input and transport costs is being passed onto customers with part of the increase absorbed by manufacturers.

Orderbooks are rising to new high levels as manufacturers struggle to meet demand and to import raw materials.

Spot gold rose 0.4% this morning to $1,915/oz – its highest level since early January 2021.

Bullion prices rallied last week as data showed US consumer prices surged in April, rising 4.2% over 12 months – overshooting the Fed’s 2% target.

The US dollar index fell 0.3% against its rivals, making gold less expensive for holders of other currency.

The index is threatening to fall to its lowest level since 2014 after a second monthly decline in May.

Iron ore futures rise above $200/t as China may ease steel output cuts

Iron ore futures rose on Tuesday, as China’s key steelmaking hub, Tangshan, signaled it is seeking to ease restriction around iron smelting and emission controls.

The Tangshan government held a meeting on Monday where it set out a plan to lower output curtailment for mills that had finished ultra-low emission upgrades, according to state media.

Tangshan urged local producers to cut capacity by 30-50% in March to improve air quality, with the city accounting for more than 13% of China’s total crude steel output.

The move is expected to curb surging steel prices, while benefitting iron ore prices.

Iron ore futures in Singapore rose as much as 5.3% on the news to $205.20/t, while prices on the Dalian Exchange closed 5.7% higher.

Dow Jones Industrials

+0.19%

at

34,529

Nikkei 225

-0.16%

at

28,814

HK Hang Seng

+0.90%

at

29,415

Shanghai Composite

+0.26% 

at

   3,625

Economics

China – Private Manufacturing PMI came in at 52.0 in May, marking its 13th consecutive month of expansion.

Both aggregate new orders and export demand hit new record highs.

The employment subindex came in just marginally above 50, the level between expansion and contraction.

As reported in the rest of the world, inflation pressures continued to grow with output prices reaching the joint highest point since November 2010.

Caixin Manufacturing PMI: 52.0 v 51.9 in April and 52.0 est.

Eurozone – Good manufacturing reports from Italy and Spain as well as upgrades to previous estimates in France and Germany see final May PMI data for the Eurozone revised upwards.

Italy Markit Manufacturing PMI: 62.3 v 60.7 in April and 62.1 est.

Spain Markit Manufacturing PMI: 59.4 v 57.7 in April and 59.3 est.

Final Eurozone Manufacturing PMI: 63.1 v 62.8 previously and 62.9 in April.

Eurozone unemployment eased to 8.0% in April from 8.1% previously

HK – retail sales value fell to 12.1% yoy in April vs 20.1% yoy in March

Germany – Unemployment dropped more than forecast in May adding to signs that the economy is pick up the slack as restrictions are being eased.

The drop of 15,000 takes the total number of unemployed to 2.74m, equivalent to a 6% jobless rate, Bloomberg reports.

Unemployment Change (‘000): -15.0 v 8.0 (revised from 9.0) and -9.0 est.

Peru – revises Covid-19 death toll – now worst in the world on a per capita basis

Peru now stands at >500 deaths per 100,000 people ranking it’s death toll higher than Hungary which is at ~300 / 100,000.

Peru’s Covid-19 death toll was around 207 / 100,000 before the nation revised its Covid-19 death toll figures higher.

Brazil has 216 / 100,000 by comparison, though the nation may also revise its figures.

Lithuania quits 17+1 trade mechanism with China due to inadequate trade benefits

The 17+1 trade accord was initiated by China in 2012 but is said to be not effective by Lithuania’s top diplomat to China (SCMP).

Lithuania’s foreign minister, Diana Mickeviciene, has also described the the mechanism as ‘divisive’ from a European perspective.

“We have had slight growth in exports to China, but imports from China are always growing much faster, so our trade balance remains negative.” According to Mickeviciene.

We expect other Baltic nations may follow Lithuania’s Lead.

Wobbly Shenzhen skyscraper to undergo further tests

The building is 350m tall with 70 floors housing a major electronics market (SCMP).

Guangdong Communist Party secretary Li Xi ordered a swift and ‘scientific’ investigation while investigators said the overall structure of the building ‘meets requirements’..

China’s fast-track building processes along with the use of cheaper and inferior materials may be to blame.

The SEG Plaza was built at a rate of 2.7 days per floor according to local media while similar fast track methods elsewhere take twice as long.

Vanadium – We have to hope the contractors used steel with sufficient vanadium content to withstand the vibration. Steel rebar which has been hardened using ‘Q&T’ quenching and tempering is brittle and is prone to sudden failure when stressed.

Currencies

US$1.2233/eur vs 1.2182/eur yesterday.  Yen 109.49/$ vs 109.90/$.  SAr 13.698/$ vs 13.862/$.  $1.424/gbp vs $1.418/gbp.  0.775/aud vs 0.772/aud.  CNY 6.376/$ vs 6.376/$.

Commodity News

Precious metals:  

Gold US$1,913/oz vs US$1,890/oz yesterday

   Gold ETFs 101.0moz vs US$101.1moz yesterday

Platinum US$1,193/oz vs US$1,178/oz yesterday

Palladium US$2,870/oz vs US$2,816/oz yesterday

Silver US$28.31/oz vs US$27.64/oz yesterday

           

Base metals:  

Copper US$ 10,305/t vs US$10,190/t yesterday

Aluminium US$ 2,503/t vs US$2,466/t yesterday

Nickel US$ 18,360/t vs US$18,045/t yesterday

Zinc US$ 3,084/t vs US$3,072/t yesterday

Lead US$ 2,204/t vs US$2,209/t yesterday

Tin US$ 30,560/t vs US$30,700/t yesterday

           

Energy:           

Oil US$70.3/bbl vs US$69.3/bbl yesterday

Oil prices continue to rise, breaching the US$70/bbl Brent level following reports of strong US economic data that offset investors’ concerns about the potential for a rise in Iranian supplies

The number of Americans filing new claims for unemployment benefits dropped more than expected last week, according to data from the US Labour Department

The US economy, which in the first quarter notched its second-fastest growth pace since the third quarter of 2003, is gathering momentum, with other data yesterday showing business spending on equipment accelerated in April

The prospect of Iranian supplies re-entering the market has pressured prices

Iran and global powers have been negotiating since April about Washington lifting sanctions on Iran, including its energy sector, in return for Iranian compliance with restrictions on its nuclear work

Oil also advanced ahead of today’s OPEC+ policy meeting as traders expect rising demand to absorb a planned production increase from the group as well as any additional crude from Iran

Futures in New York climbed past US$67/bbl yesterday, putting crude on track for a second straight monthly gain

OPEC and its allies are expected to stick with a decision to boost output in July when the group gathers Tuesday, according to a Bloomberg survey last week

While rebounding demand is driving prices higher, the possibility of more barrels from Iran should a nuclear deal be revived is clouding the outlook

Any increase in supply from Iran would be gradual, potentially adding 500,000bopd by the end of this year and a further 500,000bopd by August 2022

Natural Gas US$3.086/mmbtu vs US$2.959/mmbtu yesterday

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$178.6/t vs US$183.4/t

Chinese steel rebar 25mm US$812.3/t vs US$776.3/t

Thermal coal (1st year forward cif ARA) US$80.6/t vs US$80.4/t

Coking coal swap Australia FOB US$125.3/t vs US$155.0/t

           

Other: 

Cobalt LME 3m US$43,650/t vs US$43,650/t

NdPr Rare Earth Oxide (China) US$76,460/t vs US$76,465/t

Lithium carbonate 99% (China) US$12,704/t vs US$12,705/t

China Spodumene Li2O 5%min CIF US$640/t vs US$640/t

Ferro-Manganese European Mn78% min US$1,804/t vs US$1,785/t

China Tungsten APT 88.5% FOB US$270/t vs US$270/t

China Graphite Flake -194 FOB US$515/t vs US$515/t

Europe Vanadium Pentoxide 98% $8.3/lb vs $8.2/lb

Europe Ferro-Vanadium 80% $38.75/kg vs $37.25/kg

Battery News

Australia – battery investments grow as renewable investments decline

Queensland’s worst power outage in decades is the latest incident which has seen calls for more utility-scale batteries to provide security for the state electricity network across Australia.

The Clean Energy Council has revealed that investors are now shying away from large renewable projects in Australia due, in part, to the risks with the grid.

Utility-scale battery projects have seen a year-on-year increase of 300% in Q1 2021, while investments in large scale renewable projects are at a 5-year low.

Europe’s largest shipbuilder in plans to set up Li-ion battery production

Italy’s Fincantieri has announced a joint venture with Faist Electronics to begin the manufacturing of lithium-ion storage systems.

The new venture, Power4Future, will target a capacity of 2GWh within the next 5 years, with batteries produced from the plant expected to be used for automotive, marine and land-based storage applications.

Company News

Altus Strategies* (LON:ALS)62.0p, Mkt Cap £50m – CEO buys ~£70k worth of shares in the market

BUY

Steven Poulton, CEO, bought ~113k shares at an average price of 61.9p on 28 May.

This brings CEO’s position to 5.87m shares representing a 7.3% interest in the Company.

Additionally, Mrs Anna Grainger, the spouse of Matthew Grainger (LON:Executive Director) purchased a total of 10k shares at an average price of 63.5p.

*SP Angel acts as Nomad and Broker to Altus Strategies plc

Ariana Resources (LON:AAU)5.15p, Mkt Cap £55.3m – Exploration underway in Kosovo

Ariana Resources reports that, as part of its commitment to 75% owned West Tethyan Resources to spend at least €100,000 on exploration over the balance of 2021 it has already started analysis of remote sensing information across Kosovo and North Macedonia.

The company confirms that applications have already been submitted covering the Terpeza, Hertica and Cecelia prospects (LON:approximately 151km2) within the prospective Vardar Bet and Lecce Magmatic Complex and that the applications are “currently under final review by the mining agency in Kosovo”.

All the applications are located within 25km of West Tethyan Resources’ local base at Pristina.

The Terpeza project is “located on the flanks of the Lecce Magmatic Complex” and “is characterised by a gold-rich gossan structure, striking NW-SE for about 2km and extending towards the Hertica project” which “is located immediately north of, and partially surrounds, the Terpeza licence”.

Limited historical exploration at Terpeza covered only around 25% of the gossan although limited trenching “returned 51m @ 1.25 g/t Au whilst the best drill intersections returned 17m @ 1.32 g/t Au (LON:from 14-31m – gossan) and 24m @ 1.65 g/t Au, 2% Pb + Zn (LON:from 88-112m – sulphide)”.

The Herteca area, covering 60km2 is “positioned along the flanks of Lecce Magmatic Complex and in contact with the Vardar sedimentary rocks, an area well explored area in Serbia, yet under-explored in Kosovo.  The license is highly prospective for epithermal-porphyry deposits”.

The 90km2 Cecelia application area “is located along the Trepca Belt of Vardar trend, 15km SE of Stan Terg Mine (LON:31Mt @ 7% Pb + Zn 76g/t Ag).  The project is positioned near a regionally significant NW-trending structural contact, juxtaposing sedimentary rocks against prospective Oligocene to Miocene aged magmatic rocks of the Trepca mineral belt.  Several significant gold anomalies have been identified from a stream sampling programme within a 15km radius, ranging between 0.2-2.2 ppm gold”.

Ariana Resources confirms that “Assessments of other projects throughout Eastern Europe underway, with a focus on the discovery of major copper-gold systems”.

Conclusion: Ariana Resources is operating with an experienced local team in progressing its exploration programme across Bosnia and Herzegovina, Bulgaria, Kosovo, North Macedonia and Serbia with initial applications submitted for three areas in Kosovo.

Castillo Copper (LON:CCZ)2.5p, Mkt Cap £25.5m – Announces 26-hole drilling programme for the Big One prospect

Castillo Copper has announced that it has planned a 26 hole drilling programme of 2,828m to investigate the potential to extend the known area of mineralization at its Big One prospect in north west Queensland.

The company says that it has established the necessary logistics for the planned campaign and that “the drilling crew is slated to arrive and commence work within the next one-to-two weeks”.

Recently reported geophysical interpretations have outlined “a large, interpreted anomaly north-west of the line of lode that suggests extensive underlying copper mineralisation is potentially located along fault structures rather than constrained within the trachyte dyke”.

The initial drilling of the new programme will follow up previous results which included a 40m wide intersection, from surface at an average grade of 1.64% copper and a 44m wide intersection, also from surface at an average grade of 1.19% copper before moving on to the Arya and Sansa prospects.

Managing Director, Simon Paull, explained that “Reconciling geophysics findings with legacy drilling and geochemical data should enable Castillo’s geology team to design effective drilling campaigns for the Big One Deposit, Arya and Sansa Prospects with a high degree of confidence”.

Conclusion: The next phase of drilling at the Big One prospect is expected to start within the next two weeks. We look forward to results when they become available.

Condor Gold* (LON:CNR)48p, Mkt Cap £64.7m – Award of Options

Condor reports that under its Share Option Scheme it has granted a total of 4.2m options representing 3.1% of the company’s issued capital to its directors, staff and consultants.

The options are exercisable at a price of 48p/share and are valid for a period of five years.

Restrictions are in place so that “no options can be exercised within 12 months of the Grant Date, only up to 50% of the said options can be exercised in the following 12 months and thereafter, 100% of the said options can be exercisable, provided that the grantee remains with the Company”.

Following the award of these options, “the total share options outstanding will represent 11.5% of the 134,824,179 ordinary shares in issue”.

*SP Angel act as sole broker to Condor Gold

GoldStone Resources* (LON:GRL)13p, Mkt Cap £41.5m – Warrant exercise provides £360k funding to company

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GoldStone report that Paracale Gold has exercised warrants to subscribe for 32,352,377 new ordinary shares of 1 penny each in the capital of the Company, comprising 20,352,377 new Ordinary Shares at a price of 1.2 pence per Ordinary Share and 12,000,000 new Ordinary Shares at a price of 3 pence per Ordinary Share.

The Warrant Conversion Exercise relates to the warrants priced at 1.2p, and will be set against the related USD1,224,000 loan provided to the Company by Paracale on 28 December 2018, which accrues interest at a daily compound rate of 6%. The amount in due in respect of the Warrant Conversion Exercise is GBP244,229 (c.USD344,362) will satisfy reducing the total amount of principal and interest outstanding under the Loan to USD1,036,558.

The Cash Warrant Exercise relates to warrants priced at 3p, and will be satisfied in cash and provides £360,000 of additional funding to the Company.

GoldStone also report that the company remains on track to achieve the production schedule announced 13 May 2021, and the proceeds of the Warrant Exercise will be used to meet ongoing costs associated with the ramp up of operations at the Homase Mine. 

*SP Angel act as Broker to GoldStone Resources

IronRidge Resources* (LON:IRR)18.25p, Mkt Cap £94m – Demerger of gold prospects from lithium project

IronRidge Resources reports it is to demerge its portfolio of gold prospects from its lithium project in Ghana.

The Ewoyaa lithium project and associated prospects which currently represent the bulk of the perceived value of the business will remain within IronRidge.

The new gold company will house the gold prospects, mainly in the Ivory Coast and Chad as the geological team work to demonstrate value on the prospects.

Recent drill intersections show promising results at Zaranou as highlighted on 30th March with some high-grade intercepts identified relatively close to surface.

IronRidge recently raised £12m mainly to advance the lithium project but also to develop a mineral resource estimate on the Zaranou Gold Project in the Ivory Coast as well as for other corporate purposes.

Principal shareholders are Assore at 23.39%, DRG Global at 14.17%, Sumitomo Corp at 6.17% and Vince Mascolo at 3.08%.

*SP Angel acts as Nomad for IronRidge Resources

Petropavlovsk (LON:POG) 26p, Mkt Cap £1,021m – Pioneer flotation plant commissioning

The Company commissioned the Pioneer flotation plant doubling refractory ore processing capacity of the Group to 7.2mtpa.

The new flotation plant brought online slightly ahead of the mid-year target has the capacity to process 3.6mtpa and is expected to deliver more than 100ktpa of refractory gold concentrate.

The plant is expected to become fully operational by July and to produce c.60kt of concentrate in 2021

The plant will allow to process more of in-house generated higher margin refractory gold concentrate utilising existing Pokrovka POX capacities.

Power Metal Resources* (LON:LON:POW) 2.3p, Mkt cap £26.4m – Agreement allowing 100% earn-in of Golconda Summit Gold Property

Power Metal reports the execution of an Assignment and Assumption Agreement between its wholly-owned subsidiary Golden Metal Resources Ltd and GR Silver Mining.

The Agreement gives Golden Metal an option to earn-in to 100% of the Golconda Summit Gold Property located in central Nevada, USA.

The Property is located approximately 15km east of to the town of Winnemucca, at the confluence of the  Battle Mountain-Eureka Trend and Getchell Trends and within Nevada’s Great Basin metallogenic province which is one of only six global gold belts hosting gold endowments of +200Moz.

The property is approximately 35km southwest of the Nevada Gold Mines LLC Turquoise Ridge Complex underground and open-pit mines which have Total 43-101 compliant Resources of 130Mt @ 4.30g/t Au in the measured and indicated category.

Previous exploration work on the Property by Nerco Mineral Company in 1989 encountered significant gold mineralisation located within upper plate Havallah Sequence rocks including trench assay results of 7.6m @ 24.0g/t Au and 15.2m @ 8.6g/t Au, as well as shallow drilling results of 10.7m @ 3.9g/t Au.

The Agreement signing fee is to be satisfied through a cash payment of US$60,000 to GR Silver, to be paid by Power Metal from existing cash resources.

*SP Angel act as nomad and Broker to Power Metal Resources

Savannah Resources* (LON:SAV)3.5p, Mkt Cap £60m – New strategic opportunities are being evaluated due to improved market conditions

BUY

The team is reporting an increasing corporate interest from other groups considering a potential strategic project or Savannah level investment.

A potential deal may or may not involve a spodumene concentrate offtake agreement.

Increased corporate interest reflects a strong recovery in spodumene concentrate and lithium chemical prices off multi year lows hit in H2/20.

In particular, China Spodumene Li2O 5% CIF prices hit $640/t at the end of May, up from ~$400/t at the start of the year, Asian Metals data show.

The agreement with Galp announced earlier in the year regarding a project level $6.4m investment for 10% in Mina do Barroso and 100ktpa concentrate offtake has now expired.

Although, the Company reports that discussions in relation to strategic investment and offtake will continue with Galp outside of the exclusive terms of the previous agreement.

The Mina do Barroso Lithium Project, the largest European hard rock deposit, is estimated to produce 175ktpa spodumene concentrate at 1.3mtpa processing capacity and generate NPV8%/IRR (LON:both post-tax) of $241m/49% using $685/t spodumene price assumption, according to the Jun/18 Scoping Study.

Conclusion: The agreement with Galp is allowed to lapse as the team is reporting increased corporate interest from other groups amid a rerating in the lithium sector outlook on a strong recovery in spodumene concentrate and lithium chemical prices. The Company is expecting to improve on terms previously agreed with Galp and secure an updated strategic investment agreement potentially this year.

*SP Angel act as Nomad to Savannah Resources

Scotgold Resources* (LON:SGZ)59.0p, Mkt Cap £33m – Operations update

The Company reports the Cononish mine and plant has been producing gold concentrate and gravity separated dore through April/May.

Both mining and processing operations have reached near design rates of production on separate days, although, performance remained intermittent to date.

The team is working on ramping up mining capacity and underground development to open multiple faces in the mine and improve mining operations flexibility.

A second haulage DUX truck is arriving at site.

The team also reports the first shipment of concentrate completed on the 11th May 2021 including 25t at 182.4g/t (LON:~150oz), exceeding the target for 150g/t and achieving maximum price within the agreed terms within the offtake agreement.

The Company is planning to release regular monthly updates regarding the progress at ramping up the Cononish high grade underground operation.

*SP Angel act as Nomad and broker to Scotgold Resources. A number of SP Angel analysts have visited the Cononish gold mine

Recent Interviews:

BBC:  Catalytic converters  https://www.bbc.co.uk/sounds/play/p09jl6c9

IGTV:  Evolution of Chinese construction and implications for commodity demand: https://youtu.be/jB2nURL8uPw

Improved global economic forecasts from the IMF provides trading opportunities:  https://www.youtube.com/watch?v=_GXKPqzuCG0

VW expansion driving battery metals prices: https://youtu.be/7vqSrONBaWw

*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.

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