Today’s Market View – Condor Gold, Bushveld Minerals, Antofagasta and more…

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SP Angel . Morning View . Wednesday 21 07 21


Gold prices steady as equities continue to recover ahead of the ECB meeting




Graphene producer funding – EIS scheme approval applied for


The company wishes to fund a ramp up in graphene 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


Please email 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 (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.




Antofagasta (LON:ANTO) – Q2 production and costs within guidance range


Ariana Resources (LON:AAU) – Kepez North resource nearly doubles


Bushveld Minerals* (LON:BMN) – Q2/21 production recovers with annual guidance reiterated


Condor Gold* (LON:CNR) – Latest drilling results and revised resource assessment from the La India Starter pits


Kavango Resources (LON:KAV) – Drilling commences at KSZ Hukuntsi


Petra Diamonds (LON:PDL) – Cullinan delivers record output as diamond market recovers


Petropavlovsk (LON:POG)- Production expected to pick up following weak H1/21 as Pioneer flotation plant ramps up


Rio Tinto (LON:RIO) – Furnace closure at Richards Bay amid lack of feedstock




China raises volumes of metal sales from state reserves in effort to cool prices


China is to increase the amount of base metals it sells from state reserves as it aims to keep a lid on surging commodity prices.


China will sell 30,000t of copper, 90,000t of aluminium and 50,000t of zinc from stockpiles on the 29th of June, according to the National Food and Strategic Reserves Administration.


Earlier this month, China released 20,000t of copper, 50,000t of aluminium and 30,000t of zinc.


More than 200 nonferrous fabricators attended the bidding at the last auction, with transaction prices 3-9% lower than market prices that day, according to Reuters.




China’s rare earth exports continue to rise, despite increasing trade frictions


January to June saw a 16.5% increase in China’s rare earth exports compared with the same period in 2019, smashing through pre-pandemic levels.


China’s customs agency has revealed that the first half of this year saw China export 51k tonnes of rare earths, 25.3% higher than last year.


The vital component for batteries and the EV industry is controlled 90% by China.


The surge in exports comes alongside news that nearly 50% of automakers are looking to limit their use of the minerals.


It is estimated that global consumption of rare earths for magnets is to climb 4x by 2030.


Conscious of China’s dominance, Western nations are looking to shore up their supply.


Biden’s administration is making efforts to encourage a domestic supply chain of rare earths, announcing a $30m initiative in March. The EU holds similar concerns, manifested in its 500-member European Battery Alliance.




Dow Jones Industrials +1.62% at 34,512


Nikkei 225 +0.58% at 27,548


HK Hang Seng -0.50% at 27,123


Shanghai Composite +0.73% at 3,563




Economics


Japan – The nation reported stronger than expected trade data for June.


Automotive exports to the US, chip-making equipment shipments to China and steel exports to Asia drove exports, Bloomberg reports.


A weaker yen and a surge in global commodity prices increased the value of imports.


Olympic Games are set to kick off this Friday, although, fan-free protocols are seeing hotels recording 1mln cancellations.


A fourth Covid emergency in Tokyo is hitting the hospitality industry hard as the sector spent US$14bn on renovations.


Exports (%yoy): 48.6 v 49.6 in May and 46.2 est.


Imports (%yoy): 32.7 v 27.9 in May and 28.2 est.




ECB – Central bank monetary policy announcement due tomorrow that is expected to reflect the latest change to inflation target announced mid this month.


Earlier in July, the ECB announced a shift in inflation targeting to 2% from “below but close to 2%” and accepted that the rate may temporarily overshoot.


The ECB is currently running a EUR1.85tn euro pandemic bond buying programme (PEPP) that is set to expire in March alongside Asset Purchase Programme (APP) that was in place before the pandemic and is going at EUR20bn per month.




South Korea – Early trade data for July point to another month of strong growth with demand in major trading partners continuing to recover, Bloomberg writes.


Exports climbed 32.8%yoy in the first 20 days of July following a 39.7%yoy increase for the full month of June.


Imports were up 46.1%yoy during the same period versus a 40.7%yoy rise in June.




Currencies


US$1.1763/eur vs 1.1788/eur yesterday. Yen 109.94/$ vs 109.63/$. SAr 14.695/$ vs 14.520/$. $1.361/gbp vs $1.365/gbp. 0.730/aud vs 0.733/aud. CNY 6.475/$ vs 6.483/$.




Commodity News


Iron ore futures slide as China increases efforts to roll back steel production


Iron ore futures slid 4% in China and 3% in Singapore earlier this morning as authorities in China re-affirmed efforts to cut steel production.


Steel companies in Jiangsu have received guidance to rein in output from last year’s level, according to Mysteel.


Total crude steel production in Jiangsu jumped in the first half of this year, with volumes only expected to fall slightly in July. The pressure to cut production is expected to center on Aug-Sept, Bloomberg reports.


Over the past month, Chinese authorities have reportedly been ramping up effort to clean up the steel sector, which accounts for about 15% of the country’s emissions.


Meanwhile, China’s top economic planner, the NDRC, has asked local governments to step up price monitoring and management of raw materials.




German flooding further complicates steel supply chains


Thyssenkrupp has declared a force majeure amid transport disruptions caused by flooding in the Rhine-Ruhr region.


Barges, railroads, and trucks have all had difficulty in accessing key sites for both pre-material delivery and steel deliveries to the company’s buyers.


Thyssenkrupp ships 2.7mt of hot and cold-rolled materials between January and March this year, making it Germany’s largest steelmaker.


The company has stated that barge shipments on the Rhine have not been affected.


ArcelorMittal, on the other hand, believes that production will be running ‘near normal’ levels.


It is expected that a combination of the current backlog in order books and shipping delays may further contribute to the tight market in the material.




Tesla supplier Piedmont Lithium in hot water with North Carolina officials


Lithium miner Piedmont has neglected to apply for the necessary state mining permit in Gaston County, NC


Piedmont has failed to provide the necessary information regarding quality control or dust, noise, and vibration pollution to the county’s board of commissioners. The company has told investors since 2019 that approval for the mine is imminent.


The CEO, Keith Phillips, has stated that they ‘didn’t really have the time or resources’ to keep the commissioners ‘in the loop constantly’.


The project is estimated to deliver 30,000t of lithium pa, which would enable the production of 3m EVs.


Phillips has offered the second half of 2023 as an initial date for commencing production.


The company has come under fire from locals as well as commissioners, with allegations of threats triggering a 1500 signature petition demanding officials block the mine.




Covid-induced shipping woes add further pressure to global supply chain


Over 100,000 shipping personnel are stranded at sea according to the International Chamber of Shipping.


The International Transport Worker’s Federation is warning of a potential labour crisis, with almost half of commercial seafarers considering quitting the industry. Labour conditions have diminished owing to Covid protocols which often force crews to spend extended periods of time onboard, breaking U.N. contract regulations.


With reduced labour availability, freight rates currently at record levels, could further increase, limiting capacity and driving up the price of goods.


With 2.5% of seafarers thought to be vaccinated, worries are mounting over the $14t maritime supply chain’s integral workforce.




Precious metals:


Gold US$1,811/oz vs US$1,816/oz yesterday


Gold ETFs 100.2moz vs US$100.3moz yesterday


Platinum US$1,076/oz vs US$1,083/oz yesterday


Palladium US$2,667/oz vs US$2,610/oz yesterday


Silver US$25.13/oz vs US$25.18/oz yesterday




Base metals:


Copper US$ 9,289/t vs US$9,283/t yesterday


Aluminium US$ 2,438/t vs US$2,439/t yesterday


Nickel US$ 18,365/t vs US$18,575/t yesterday


Zinc US$ 2,939/t vs US$2,983/t yesterday


Lead US$ 2,313/t vs US$2,298/t yesterday


Tin US$ 33,395/t vs US$33,380/t yesterday




Energy:


Oil US$69.1/bbl vs US$69.4/bbl yesterday


Saudi Arabia remained China’s single largest crude oil supplier in June, ahead of Russia, although Saudi shipments to the world’s top oil importer fell by c.20% last month amid lower overall imports


In June 2021, China imported 1.75MMbopd of Saudi crude


This volume was higher than the 1.62MMbopd oil imports from Russia, keeping the Kingdom ahead of Russia as China’s top oil supplier for the eighth month running


The customs data in China showed local refiners didn’t import any crude from either Iran or Venezuela, the two OPEC members under US sanctions that restrict their oil exports


Unofficially, however, China continues to import oil from Iran, often disguised as coming from other countries, including from the UAE, according to Reuters


China has put the brakes on overall crude oil imports in recent months, due to rising oil prices and a government crackdown on operations of some independent refiners


China’s crude oil imports fell to around 9.77MMbopd in June, down by 2% on May and the lowest monthly level since the start of the year


Over the first half of the year, China imported 260.66m tons of crude, or 10.51MMbopd


This was a 3% drop compared to the first half of 2020


The first-half figure was boosted by increased imports by independent refiners


Natural Gas US$3.924/mmbtu vs US$3.754/mmbtu yesterday




Bulk:


Iron ore 62% Fe spot (cfr Tianjin) US$213.2/t vs US$211.3/t


Chinese steel rebar 25mm US$819.3/t vs US$816.9/t


Thermal coal (1st year forward cif ARA) US$92.3/t vs US$93.5/t


Coking coal swap Australia FOB US$207.0/t vs US$207.0/t


China Ilmenite Concentrate TiO2 46% US$366.81/t vs US$366.3/t




Other:


Cobalt LME 3m US$52,500/t vs US$52,500/t


NdPr Rare Earth Oxide (China) US$91,895/t vs US$91,006/t


Lithium carbonate 99% (China) US$12,356/t vs US$12,340/t


China Spodumene Li2O 5%min CIF US$700/t vs US$700/t


Ferro-Manganese European Mn78% min US$1,900/t vs US$1,950/t


China Tungsten APT 88.5% FOB US$292/t vs US$290/t


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


Europe Vanadium Pentoxide 98% US$9.3/lb vs US$9.2/lb


Europe Ferro-Vanadium 80% US$39.75/kg vs US$39.45/kg


Spot CO2 Emissions EUA $57.2/t vs $57.3/t




Battery News


Siemens joins German utility to develop giant Li-ion battery storage facility


The need to ensure renewable energy resources can meet baseload power demand is intensifying the race for giant battery storage systems across Europe.


Siemens Smart Infrastructure and German grid operator Zukunftsenergie Nordostbayern GmbH are the latest companies to join the race to improve battery storage, by planning to develop a 100MW lithium-ion battery storage facility.


The battery will be able to power 20,000 average German households once complete, providing them with electricity generated from renewable energy resources for use during peak demand periods.


The batteries for the project will provided by Fluence, a joint venture of Siemens and AES.




State-run giant to build India’s first green hydrogen plant


State-run Indian Oil Corporation (IOC) is set to build India’s first green hydrogen plant, in the state of Uttar Pradesh.


According to IOC chairman Shrikant Vaidya, the company intend to build hydrogen plant at its Mathura oil refinery, utilising a wind project in Rajasthan to provide electricity to the refinery and produce green hydrogen.


Vaidya stated that the green hydrogen produced will replace carbon emitting fuels that are currently used to process crude oil at the plant.


The move comes as IOC intends to increase its refining operations, with plans to add 25 million tonnes to its refining capacity by 2023-24, up from 80.5 million tonnes currently, according to Vaidya.


All the expansion projects would use power from the grid, preferably renewables, to meet their energy requirements, as opposed to using their own captive power plants.


IOC is also pushing ahead with research into carbon capture, utilisation, and storage technologies in a bid to further reduce emissions.




Equinor, RES and Green Giraffe form partnership for floating offshore wind


Equinor, RES and Green Giraffe have joined forces to form Oceole, a partnership dedicated to developing floating offshore wind power projects in France.


Oceole will evaluate and submit bids in the forthcoming floating offshore wind tender round to be held by the French government, which recently set a target of up to 6.8 GW of offshore wind capacity by 2028.


The three partners have a wide range of experience:


Equinor is the world’s leading floating offshore wind developer, operating the world’s first floating wind farm, Hywind Scotland.


RES has expertise in project development, operation, and maintenance in offshore wind energy, including the Bay of Saint-Brieuc project.


Green Giraffe is a specialist financial advisory firm focused on the renewable energy sector.


Jens Okland, Senior VP for Business Development in Renewables at Equinor said, “France has set an ambition of becoming among the top markets for floating offshore wind in the next decade… as Oceole, we have the industrial competence, technical and financial skills to develop projects where we can create value and capture the benefits of scale for this exciting technology.”


Company News


Antofagasta (LON:ANTO) 1,408p, Mkt Cap GBP13bn – Q2 production and costs within guidance range


Antofagasta’s Q2 copper production of 178,400t, although 2.5% lower than the preceding quarter brings year-to-date output to 361,500t and keeps the company on track to achieve its previously published 730-760,000t guidance for 2021.


Net cash costs of US$1.13/lb for the quarter bring the year-to-date to US$1.14/lb and keeps the company on track to meet its full year guidance range of US$1.25/lb.


The company says that “Capital expenditure for the year is currently expected to be in line with original guidance at $1.6 billion, although as COVID-19 infection rates continue to fall, opportunities to accelerate the execution of selected capital expenditure will continue to be evaluated”.


A 0.6% decline in output at Los Pemabres to 84,400t for the quarter is attributed to “expected lower grades, partially offset by higher recoveries” and the 7.6% decline for H1 to 169,300t is “primarily due to the expected lower copper grade, partially offset by higher throughput”.


The company says that by the end of Q2, “The Los Pelambres Expansion project was 52.0% complete and is expected to be completed in H2 2022 in line with guidance”.


H1 production increased by 8.6% at Centinella to 132,100t as a result of improved copper grades and higher throughput and cash costs for the six months at US$1.80/lb were 2.2% lower than in 2020 “due to higher copper production, partially offset by the stronger Chilean peso, higher input prices and higher maintenance costs as a result of bringing forward some scheduled work”.


Production at Antocoya declined by 5% during the quarter bringing year-to-date output to 39,500t (2020 – 40,400t) “due to expected lower grades and consequentially lower recoveries, partly offset by a 7.7% increase in throughput”.


Cash costs at Antocoya were “$2.12/lb compared to $1.96/lb in Q1. For the first six months, cash costs were 17.9% higher than in H1 2020 at $2.04/lb due to lower production, the unfavourable local exchange rate and higher expenditure on maintenance services”.


Copper production of 9,600t at Zaldivar during Q2 was “3.5% lower than previous quarter due to lower grades and throughput, which was impacted by planned major maintenance in the quarter. Production for the year to date was 20,600 tonnes, 22.3% lower compared with the same period last year due to lower copper grades and throughput”.


The company comments that increased proportions of sulphide ore being treated this year has reduced recovery rates but that “completion of the Chloride Leach project in H1 2022 is designed to improve future recoveries from sulphide ore”.


Reflecting the lower production levels, “Cash costs during Q2 were $2.65/lb, 15.2% higher than in Q1 2021, and cash costs for the first six months of 2021 were $2.46/lb compared with $1.72/lb in the same period in 2020, mainly due to lower grades, higher maintenance costs and the stronger Chilean peso. This cost level seen in H1 is expected to continue in H2”.


Antofagasta comments on the proposed legislative changes in Chile’s mining industry saying that “Having moved from the lower house of Congress to the Senate, the proposed new mining royalty continues to be debated in the legislature. The Senate is not restricted to the specific terms of the proposal presented by the lower house and is currently receiving evidence from a much broader base of interested parties including academics and mining industry representatives”.


Conclusion: Antofagasta remains a core copper holding and continues on course to achieve its production and cost guidance for 2021.




Ariana Resources (LON:AAU) 5p, Mkt Cap GBP52.6m – Kepez North resource nearly doubles


Ariana Resources reports that recent drilling at the Kepez North area at its 23.5% owned Kiziltepe mine in Turkey has led to a 97% increase in the estimated mineral resources to approximately 36,400oz of contained gold and 329,400 oz of silver.


The company reports a measured and indicated resource of 158,200t at an average grade of 7.15g/t gold and 64.76g/t silver “based on 25 diamond drill holes and 22 rock-saw channels across the Kepez North deposit”. Approximately 86% of both the resource tonnage and gold content is classified within the high confidence ‘Measured’ category of the JORC (2012) compliant estimate.


The estimate was prepared internally using a gold price of US$1,735/oz and Ariana Resources says that “updated optimisation … [of the Kepez North pit shell] … indicates a stripping ratio of 2.7”.


Kepez North is located approximately 14km by haul road from the process plant at Kiziltepe which should facilitate its early processing and Managing Director, Dr. Kerim Sener, explained that “Based on the significant increase in the resource at Kepez and the potential for identifying further extensions of this high-grade mineralisation down plunge, the JV has taken the decision to bring the drill rig back to this area to complete further drilling. This work, in addition to further mining studies and associated permitting is being expedited in order to bring this area forward in the mining schedule. Importantly, the geometry of the mineralisation lends itself well to near complete resource extraction.”


Conclusion: The resource upgrade at Kepez North is being followed up with further drilling while additional mine design and permitting work is underway to accelerate inclusion of the low strip ratio mineralisation into Kixiltepe’s schedule.




Bushveld Minerals* (LON:BMN) 12.3p, Mkt Cap GBP146m – Q2/21 production recovers with annual guidance reiterated


BUY – Valuation 37.7p


Q2/21 production totalled 886 mtV (Q1/21: 688 mtV) after completing a 35-day planned maintenance shutdown at Vametco in the previous quarter.


Vanadium prices climbed during the quarter with the LMB FeV price averaging US$36.0/kg (Q1/21: US$30.9/kg) on the back of a recovering demand and tighter supply.


Growth momentum was maintained following the quarter end with prices reaching US$40.1/kg in mid-July.


Vametco contributed 593 mtV (Q1/21: 395 mtV) with production reaching 278 mtV and 261 mtV in May and June reflecting improved plan availability rates following maintenance works.


Stronger production towards the end of the quarter helped to compensate for the effect of unprotected industrial action in April.


C1 unit costs pulled slightly to US$25.8/kgV (Q1/21: US$26.5/kgV) reflecting higher output with more waste stripping reported in the mining operations.


Monthly run rate is guided at 240 mtV through the remainder of the year implying H2/21 production at 1,440 mtV (H1/21: 988 mtV) helping to bring unit costs lower and reaching annual guidance.


Vametco FY21 guidance reiterated at 2,300-2,400 mtV at US$23.7-24.2/kgV C1 unit costs.


Vanchem contributed 293 mtV (Q1/21: 293mtV), flat on the previous quarter and on course for guided annual range.


C1 unit costs were little changed on the previous at US$30.9/kgV (Q1/21: $30.7/kgV); H1/21 cost of US$29.5/kgV climbed significantly on the previous year reflecting higher input costs of concentrate from Vametco to supplement ore supply, increased maintenance and staff costs as well as stronger SA rand.


Vanchem ore stocks are expected to be depleted by the end of Q3/21 at which point the Company is expecting either to increase the share of 3rd party material or source feedstock from the Upper Seam at Vametco.


The Upper Seam zone at the Vametco deposit is estimated to host 0.9mt in reserves and 16mt in resources offering an opportunity to supply 34ktpm to Vanchem processing facilities at the end of Q3/21 preliminary for 18 months.


The Company is studying the potential to extend this supply beyond the initial 18 months.


The Upper Seam reserves grade 1.76% V2O5 with magnetite content of 65% which is reported to be superior to previous third-party suppliers.


Vanchem FY21 guidance reiterated at 1,100-1,200 mtV at US$30.3-31.1/kgV C1 unit costs.


PFS work on expanding production capacities continues with the team adjusting the scope considering Vametco mining operations as the single ore supply source for both Vametco and Vanchem in the medium term.


The study is expected to be completed in Q4/21.


The Company highlights an increase in new Covid-19 infections in South Africa with 54 active cases recorded at its facilities, although, no material impact on operations has been reported.


The Company launched the vaccination programme both for Vametco and Vanchem.


Commenting on latest incidents of unrest in the country, the Company reported no disruptions to production; logistics experienced delays in delivering the product to port that the Company is expecting to make up for in Q3/21.


*SP Angel acts as Nomad and broker to Bushveld Minerals.




Condor Gold* (LON:CNR) 44p, Mkt Cap GBP58m – Latest drilling results and revised resource assessment from the La India Starter pits


Condor Gold has reported results of recent drilling in and around the starter pits at La India and provided an internally derived mineral resources estimate at both a lower, 0.75g/t and higher, 2g/t cut-off.


The company confirms that “An updated mineral resource and mineral reserve estimation and revised mine plan will be produced at feasibility level of detail using these new results along with the recent 25 m-spaced infill drilling”.


Among the drilling results reported in today’s announcement are:


A downhole intersection of 60.60m, estimated at 54.5m true width, from a depth of 4.15m in hole LIDC452 which averages 1.98g/t gold and 5g/t silver and contains a section described as “Hangingwall stockwork” averaging 0.41g/t gold and 2g/t silver over the initial 38.4m (34.5m true width) underlain by a higher grade vein of 5.2m true width at an average grade of 16.88g/t gold and 29g/t silver and a footwall breccia zone over 14.8m true width at an average grade of 0.41g/t gold and 4g/t gold; and


A 13.8m wide intersection (12.4m true width) from a depth of 34.85m in hole LIDC 454 which averages 5.92g/t gold and 11g/t silver. The hole initially crossed a hangingwall stockwork and vein averaging 9.94g/t gold and 12g/t silver before entering a zone of previous mining with a mined cavity, a brecciated mine ppillar and another cavity before passing into a footwall zone of vein material and brecciation averaging 0.82g/t gold and 5g/t solver over a true width of 6.4m.; and


A 9m wide (8.5m true width) intersection from a depth of 55.05m in hole LIDC456 at an average grade of 4.98g/t gold and 11g/t silver in similar zone comprising hangingwall mineralisation, historic mined voids and pillar material and mineralised footwall breccia. The drilling also intersected both hangingwall and footwall veins of 1.3m true width averaging 0.71g/t gold and 2g/t silver and of 2.3m true width averaging 5.59g/tgold and 5g/t silver respectively.


The company says that it “is very encouraged by these high-grade, high width drilling intercepts and will assess whether the starter pits can be extended along strike and to depth, and possibly amalgamated into one larger starter pit”.


Chairman and CEO, Mark Child, explained that the mine plan for the starter pits would be re-examined to “determine whether the two Starter Pits can be amalgamated into one Starter Pit and thus provide additional high grade mill feed from surface”.


Mr. Child also said that “the broad zone of mineralization is likely to reduce the overall strip ratio for the main La India open pit, as there is more mineralized gold tonnage verses waste rock, thus potentially improving the Project’s economics”.


As well as the drilling results, Condor Gold has released internal resources estimates for the starter pits showing that, at a 0.75g/t cut-off grade, the starter pits represent “635 Kt at 3.32 g/t gold for 67,800 oz gold with a 4.5 to 1 strip ratio” while using a higher 2g/t cut-off, there are “445 Kt at 4.17 g/t gold for 59,700 oz gold with a 6.8 to 1 strip ratio”.


Mr. Child also commented that “The drill results strengthen the case for expanding the Starter Pits, which are within 35 m of the surface and contain approximately 455Kt at 4.17g/t gold for 59,674 oz gold using a 2.00g/t cut off grade. The intention is to mine the Starter Pits early to quicken the payback period. The Starter Pits sit within the main fully permitted La India open pit, which has a Mineral Reserve Estimate of 6.9Mt at 3.1 g/t gold for 675,000 oz gold”.


Conclusion: The larger than expected footprint of shallow mineralisation within the area designated for the La India starter pits provides scope to expand or possibly merge the planned starter pits while the higher grades encountered offer scope to provide higher grade material to the plant in the early years of the mine’s operation. The presence of historic mining and voids within the area has been established for some time and though they may add to the complexity of mining operations, access to shallow, higher grade mineralisation with relatively low waste removal requirements offers opportunities to enhance the project’s economics. We look forward to updated mine schedules as optimisation of the plan evolves.


*SP Angel act as a broker to Condor Gold




Kavango Resources (LON:KAV) 5.95p, Mkt cap GBP21.4m – Drilling commences at KSZ Hukuntsi


Kavango reports that drilling has commenced on Target A2 in the northern section of the Kalahari Suture Zone.


The Company is aiming to retrieve core samples from the bottom of the “Norilsk style keel” at A2, hoping that assay results will result in a proof-of-concept that the Karoo-age gabbros in the KSZ have the potential to host magmatic sulphide ore bodies, in accordance with the company’s Magnetic 3D Model.


Kavango estimates that A2 is 1km long and open along strike, extending between 250m and 700m below surface.


A decay constant of approximately 340msec and conductance of approximately 3000 Siemens, readings which Kavango management considers are consistent with nickel sulphide deposits elsewhere in the world.


On completion of drilling operations at A2, Kavango’s drill partners will immediately mobilise the rig to Target C1, where the company believes that A2 and C1 are on the same geological corridor.


Ben Turney, Chief Executive Officer of Kavango Resources, commented: With the drill bit now turning at A2, we should soon hopefully become the first company ever to retrieve core samples from the bottom of a Karoo-age gabbro in the region.




Petra Diamonds (LON:PDL) 1.73p, Mkt Cap GBP155.4m – Cullinan delivers record output as diamond market recovers


Petra Diamonds reports that it produced 3.24m carats of diamonds during the year to 30th June 2021 (2020 – 3.59m carats) with record output of 1.94m Crats from the Cullinan mine offset by lower output at the Finsch and Koffiefontein mine and the continued suspension of operations at the Williamson mine in Tanzania.


Guidance for the year to June 2022 is 3.3-3.6m carats “with the South African operations estimated to contribute ca. 3.1 to 3.4 Mcts and Williamson, where plans are currently being refined to allow operations to restart during Q1 FY 2022, estimated to add between 0.22 to 0.27 Mcts for the Year”. Capital spending during FY 2022 is expected within the range US$78-92m.


The company says that “Although the number of COVID cases have increased as a result of a third wave of infections in South Africa, there has been a limited impact on our SA operations … [and also that] … recent unrest and rioting in SA has to date not impacted our SA operations nor the supplies to the operations and will continue to be closely monitored “.


Commenting on the state of the diamond market, Petra Diamonds says that there was positive demand for rough diamonds during the last quarter “driven by strong consumer demand in the key retail markets, notably the US and China, coupled with low inventories and the return of capacity in the midstream in India. Demand was also supported by upstream supply discipline and shortages in some areas”.


The company looks forward saying that “Demand for rough diamonds is expected to remain robust in the second half of CY2021, with retailers anticipating continued strong consumer demand”.


Petra Diamonds “managed to make use of improving market conditions towards the end of the Period to dispose of low value stock built up in previous periods; this resulted in additional sales of US$3.1m, releasing ca. 141,000 carats, which caused some dilution in average prices achieved in Q4 FY 2021”. These sales include low-value diamonds sold at US$12/carat from Cullinan, US$32/carat from Finsch and US$25/carat from Koffiefontein which dilute the average US$111/carat received by Cullinan, US$77/carat from Finsch and US$419./carat from Koffiefontein over the year as a whole.




Petropavlovsk (LON:POG) 21.4p, Mkt Cap GBP847m – Production expected to pick up following weak H1/21 as Pioneer flotation plant ramps up


Q2/21 production amounted to 99.4koz (Q1/21: 95.6koz) with own mine operations contributing 75.9koz (Q1/21: 82.4koz).


H1/21 output totalled 195.0koz (H1/20: 320.6koz) largely driven by declines at Pioneer and Albyn as well as lower volumes of processed 3rd party refractory concentrate.


H1/21 own mine production was 158.3koz (H1/20: 213.7koz) including


46.0koz (H1/20: 60.3koz) at Pioneer reflecting a transition to processing of refractory ores following a commissioning of the flotation plant in May.


42.3koz (H1/20: 71.8koz) at Albyn following a switch to processing of Elginskoye ores that are harder to treat given the uneven distribution of non-refractory and refractory material.


70.1koz (H1/20: 81.6koz) at Malomir.


H1/21 3rd party refractory concentrate processing contributed 36.7koz (H1/20: 106.9koz) on the back of a drop of availability of the concentrate (volumes down 30%) as well as a significantly lower grades of processed concentrates (grade down ~50%).


FY21 production guidance reiterated at 430-470koz including 370-390koz from own mines and 60-80koz from 3rd party concentrates reflecting a ramp up in refractory gold circuit at Pioneer.


H1/21 gold sales totalled 187.1koz (H1/20: 312.4koz) at an average gold price of US$1,795/oz (H1/20: US$1,640/oz) with not gains/losses recorded on the outstanding hedging (the Company is running zero cost collars on gold price effectively setting the floor and a cap of US$1,600.oz and US$1,832/oz for its sales with contracts maturing in Dec/21).


Following the quarter end, the Company announced an offer to purchase up to US$200m of outstanding US$500m 8.125% guaranteed notes maturing in 2022 replacing it with a lower interest term loan.




Rio Tinto (LON:RIO) – 5,930p, Mkt cap GBP72.8bn – Furnace closure at Richards Bay amid lack of feedstock


Rio Tinto reports that it will shut once of its four furnaces due to the depletion of available feedstock at the plant.


Feedstock has been depleted since the halting of mining operations following an escalation in the security situation at Richards Bay.


All other operations remain halted until further notice, and Rios have declared force majeure on contracts as a result of the unrest.






Recent Interviews:


IGTV: Stock picks in the small-cap mining space:


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


VOX Markets: 10/06/21: https://audioboom.com/posts/7884446-john-meyer-talks-about-cornish-metals-empire-metals-anglo-american-ncondezi-energy-mkango-r


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


*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.




No.1 in Copper: “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”


No1. In Gold: “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”


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 – [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


W1S 2PP




*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, Tungsten, Spodumene, Ferro-Manganese, Graphite


Asian Metal

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