Today’s Market View – Power Metal Resources, Beowulf Mining, Arc Minerals and others

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AEX Gold (LON:AEXG) – Q2 update outlines progress at Nalunaq


Arc Minerals* (LON:ARCM) – NED appointment


Aura Energy* – (LON:AURA) – Resource upgrade at the Tiris Uranium Project


Beowulf Mining* (LON:BEM) – Interim results


Power Metal Resources* (LON:POW) – Phase-2 geophyiscal programme commences at Tati


Rambler Metals and Mining* (LON:RMM) – Little Deer technical report


Shanta Gold (LON:SHG) – Earnings pull back on lower production in H1/21




China plans additional state reserves auction of 150,000t of metal from state reserves, Sept. 1st


China’s reserves body has agreed to a 3rd round of metals auctions.


The reserves will auction off 70,000t of aluminium, 50,000t zinc and 30,000t copper.


The auction will involve public bidding and aims to cool record high prices denting infrastructure project budgets.


The news has been confirmed by the National Food and Strategic Reserves Administration.


China’s previous state reserve auctions this year have seen a total sale of 270,000t of the 3 metals.


July 29th’s auction saw 170,000t of metal sold, most of which was aluminium.


Some Chinese consultancies have anticipated Beijing to hold monthly auctions if prices remain elevated. An auction in August was postponed due to rising Covid cases.


Beijing has pointed to the damaging impact such high prices are having on small and medium-sized enterprises.


Only metal processors and manufacturers are able to take part in the auctions.


Copper prices are down some 12% from record highs in May, with Zinc down 5.1% from May highs.


Tight supply concerns have caused aluminium prices to skyrocket to 13-year highs.


China’s state reserves contain aluminium stocks dating back to the 1970s.




Economics


US – Fed Chairman Jay Powell will speak at the virtual Jackson Hole gathering at 10am ET today with market to wait for hints over the course of the bond purchasing programme.


Previously, the Fed committed to $120bn in monthly purchases until the central bank sees “substantial further progress” towards its goals of average 2% inflation and maximum employment.


Although, a number of Fed Presidents have been arguing for an early wind down of the stimulus in light of strengthening economic recovery.


US weekly jobless claims rise as expiration date for boosted unemployment looms


The week ending August 21st saw the number of newly filed unemployment claims rise for the first time in weeks.


New jobless claims totalled 353k, up from 349k the week before.


Economists are not too concerned by the rise however, with predictions estimating 350k claims last week.


The impact of rising Delta variant cases is pointed to as the reason for the small rise, with economists reassured by the marginal impact had by the surging cases.


Continuing claims that have been trending lower since pandemic affected heights also picked up slightly to ~2.9m people, compared to ~23.1m in May/20 and ~1.7m pre-pandemic.


The nationwide expiry of augmented unemployment benefits in the week ending Sept. 4 will be a critical test to the labour market, Bloomberg writes.


Weekly Jobless Claims (‘000): 353 v 349 (revised from 348) the previous week and 350 est.


Continuing Claims (‘000): 2,862 v 2,865 (revised from 2,820) the previous week and 2,772 est.




New Zealand – Authorities are expected to extend lookdown measures until the end of August arguing it is currently “the most effective tool” available to combat the spread of the highly infectious Delta variant.


Under the restrictions, residents must remain in household bubbles and are allowed to leave home only for essential reasons, FT writes.




Covid patients are reported to suffer almost 200 times more excess incidents of blood clotting than those who had received the first dose of the Oxford/AstraZeneca vaccine, a peer-reviewed study from the British Medical Journal showed.


The study based on more than 29m people in the UK who got their first jab of the AstraZeneca vaccine between December and April and 1.7m Covid patients, FT reports.


For every 10m people vaccinated with AstraZeneca there were 66 excess cases of blood clotting compared to a control population.


In the infected group, that number was mode than 12,000.




Russia – The nation recorded 820 Covid-19 related deaths on Thursday marking the highest total since the pandemic began as vaccination rates start to slowdown nationwide.


Currencies


US$1.1767/eur vs 1.1765/eur yesterday. Yen 110.01/$ vs 110.15/$. SAr 14.901/$ vs 15.004/$. $1.371/gbp vs $1.374/gbp. 0.725/aud vs 0.725/aud. CNY 6.483/$ vs 6.484/$.


Commodity News


Precious metals:


Gold US$1,804/oz vs US$1,785/oz yesterday – Jackson Hole presents major test for gold as holders fear an early taper of Fed stimulus


Three Fed officials, Robert Kaplan, James Bullard and Esther George have all called for a pullback in fiscal stimulus from the Fed, as J Powell’s speech today looms.


Powell’s speech is expected at 2:00 GMT, with analysts predicting a somewhat dovish tone.


Eyes will turn to gold following the Fed chair’s speech, with the metal currently hovering around the $1790-1805 band.


Metals strategist David Song has noted that gold ‘lack(s) momentum to hold above the moving average’.


It is expected that a significant shift in the Fed’s monetary guidance going forward ‘may undermine the recovery in bullion’, with a ‘lack of momentum’ causing ‘a bearish outlook for the price of gold as a ‘death cross’ takes shape in August’.


Credit Suisse (NYSE:CS.) analysts have pointed to the ‘near-term risks’ being ‘on the downside but longer-term to fairly neutral/side lined’.


The Swiss banking group also noted a potential for the precious metal to begin to test ‘$1670’ which would cause gold to begin to target ‘the 2018-2021 uptrend at $1587’.


Gold ETFs 99.8moz vs US$99.8moz yesterday


Platinum (AIM:ZERO) US$994/oz vs US$991/oz yesterday


Palladium US$2,435/oz vs US$2,405/oz yesterday


Silver US$23.75/oz vs US$23.66/oz yesterday




Base metals:


Copper US$ 9,320/t vs US$9,270/t yesterday – London copper slides as investors continue to hold fast before Jackson Hole meeting and Powell’s speech


Copper prices continue to fall as investors limit commitment before gauging economic sentiment from the Jackson Hole conference.


A major cut in stimulus would cause the dollar to rise and greenback-priced metals such as copper to lose attraction to holders of other currencies.


3M LME contract dipper 0.1% to $9,292/t.


Prices have also been limited by July profit growth among China’s industrial firms, with data suggesting the slowest growth this year.


Chinese factories have been hit by high raw material prices and supply chain constraints combined with Delta variant cases and extreme weather conditions.


Aurubis AG drops Artic copper supply deal


Europe’s largest copper producer, Aurubis AG, has scrapped plans for copper concentrate supplies from Nussir ASA’s Artic mine, with both parties in mutual agreement over the decision.


The Nussir site is currently under occupation from environmentalists who aim to prevent what Nussir describes as the world’s first fully electrically powered copper mine.


Indigenous Sami reindeer herders and fisherman are concerned that the site will destroy grazing pastures and spawning grounds for coastal cod.


Aurubis agreed that ‘certain social aspects of the project need to be given even greater consideration’, stating that both companies ‘have therefore made the decision to now terminate the memorandum of understanding’.


The project had been granted permits by Norwegian state bodies and Nussir’s CEO believed ‘the environmental and social impact studies confirm that the project will meet all the international ESG standards.’


Aluminium US$ 2,652/t vs US$2,595/t yesterday – Chinese officials order Xinjiang aluminium smelters to cut output


A Xinjiang prefecture has placed limits on 5 aluminium smelters’ output, starting this month.


The move is an attempt to limit illegal production of the metal.


The announcement has sent Shanghai aluminium prices to a 13-year high.


The limit imposed will result in a 10% reduction in production from 1H21 output levels, Reuters analysts estimate.


Xinjiang accounts for 20% of China’s aluminium supply.


An order for smelter East Hope to limit production to 54,000t marks a reduction of 28% in output from average output of 75,000t from Jan-Jul. East Hope has a maximum capacity of 80,000t.


Shanghai Futures prices rose 1.1% last night, reaching $3,201/t – the highest since Aug. 22.


Nickel US$ 18,825/t vs US$18,810/t yesterday


Zinc US$ 2,990/t vs US$2,992/t yesterday


Lead US$ 2,296/t vs US$2,273/t yesterday


Tin US$ 33,305/t vs US$32,885/t yesterday




Energy:


Oil US$72.2/bbl vs US$72.0/bbl yesterday


Natural Gas US$4.223/mmbtu vs US$3.922/mmbtu yesterday




Bulk:


Iron ore 62% Fe spot (cfr Tianjin) US$154.4/t vs US$153.4/t


Chinese steel rebar 25mm US$802.1/t vs US$808.3/t


Thermal coal (1st year forward cif ARA) US$106.5/t vs US$106.5/t


Coking coal swap Australia FOB US$205.0/t vs US$199.5/t


China Ilmenite Concentrate TiO2 US$366.4/t vs US$366.3/t




Other:


Cobalt LME 3m US$50,430/t vs US$50,430/t


NdPr Rare Earth Oxide (China) US$93,939/t vs US$94,228/t


Lithium carbonate 99% (China) US$16,659/t vs US$16,501/t – Rio Tinto suffers growing opposition to Serbian lithium mine


Local residents and NGOS have continued to air concerns over Rio Tinto’s Jadar lithium project in Serbia.


The project will provide Rio with the opportunity to become a top 10 global lithium producer.


Rio is keen to position itself to benefit from the growing demand of lithium from EVs.


July saw Rio commit $2.4bn to the Jadar project.


Rio representatives have emphasised the company’s desire for the mining project to benefit the local community.


Protestors have been ramping up demonstrations against the project, with concerns over the potential for environmental damage.


A lithium mine near Loznica caused thousands to protest in Belgrade.


A petition demanding a ban on the project in Jadar Valley had received 110,400 signatures by June 10th.


The Serbian government will execute a study on the project before giving the Serbian population the opportunity to reject the project in a referendum.


China Spodumene Li2O 5%min CIF US$910/t vs US$910/t


Ferro-Manganese European Mn78% min US$1,747/t vs US$1,747/t


China Tungsten APT 88.5% FOB US$305/t vs US$305/t


China Graphite Flake -194 FOB US$525/t vs US$525/t


Europe Vanadium Pentoxide 98% 9.6/lb vs US$9.6/lb


Europe Ferro-Vanadium 80% 39.25/kg vs US$39.75/kg


Spot CO2 Emissions EUA Price US$66.8/t vs US$64.9/t




Battery News


Tesla applies to become an electricity provider in Texas


Tesla has submitted an application to the Texas Public Utility Commission with plans to sell electricity to state residents.


The company is currently building a ‘big battery’ project in Angleton, Texas, which it hopes will connect a 100MW energy system to the Texas grid.


Texas’ electricity vulnerabilities were highlighted in Feb this year when millions went without power for multiple days. Its grid is unable to receive energy relief from other states as it stands on its on grid.


This would mark Tesla’s first venture into retail electricity provision on a major scale. The company has been building utility-scale battery storage systems in LA, Monterey, Victoria, and South Australia.


Tesla has been subsidising earnings through the sale of green credits for years, with regulatory credit sales in 2Q2020 amounting to 4x Tesla’s net profit for that quarter




Company News


AEX Gold (LON:AEXG) 28.5p, Mkt Cap GBP50.5m – Q2 update outlines progress at Nalunaq


AEX reports that, having put the Nalunaq project on hold in February in response to “the impacts of the COVID-19 global pandemic” it has focussed on four elements of the project to “continue advancing and de-risking the …Project”.


A third party engineering study is looking to optimise “the Project costs and de-risk the Project schedule”.


Work is underway to expand the project’s mineral resource through a 20-30,000m exploration programme and to advance the early stage infrastructure requirements of the project.


Work is also continuing on the environmental and social impact assessments and permitting issues and regional exploration is targeting both gold and strategic minerals “through technical research, sampling and geophysical surveys”.


The company reports a 30th June cash balance of almost C$50m and confirms that it has “Capital asset purchase commitments, net of deposits on order as at June 30, 2021 … [of]…$6.0 million”.


CEO, Eldur Olafsson, said that “We believe that the current efforts to expand the Nalunaq resource, in addition to the focus on our exploration portfolio presents a unique opportunity to investors”


He also said that “in addition to the considerable progress made in the de-risking and development of the Nalunaq project, we are very excited to report on the wider scale exploration efforts that are ongoing alongside the work on our gold targets, targeting green and strategic minerals”.




Arc Minerals* (LON:ARCM) – 3.55p, Mkt cap GBP39.5m – NED appointment


(Arc holds 72.5% of Zaco and 66% of Zamsort in Zambia. The Cheyeza license is 66% owned by Arc Minerals through its holding in Zamsort.)


Arc Minerals has announced the appointment of Valentine Chitalu as a Non-Executive Director.


Mr. Chitalu, who is an accountant with a Masters degree in Economics from Cambridge University is described as “an entrepreneur in Zambia and southern Africa specialising in private equity and local private sector development”.


He previously worked for the “CDC Group in London and Lusaka, focusing on identifying investment opportunities and portfolio management”.


Welcoming Mr. Chitalu to the Board, Executive Chairman, Nick von Schirnding said that the appointment strengthened the Board and “brings a wealth of experience as a successful entrepreneur with an extensive international and Zambian network both within the mining sector and beyond”.


*SP Angel acts as Nomad and broker




Aura Energy* (LON:AURA) 5.63p, Mkt Cap GBP20.8m – Resource upgrade at the Tiris Uranium Project


Aura Energy has issued a revised mineral resources estimate for its 85%-owned Tiris uranium project in Mauritania which shows a 10% increase in the contained content of U3O8 to 56m lbs.


The new estimate incorporates drilling results from the Sadi South Zone of the deposit which were not included in the previous resource as a result of what the company has previously described as “timing issues”.


Applying a 100g/t U3O8 cut-off grade, the new resource contains 100.3mt at an average grade of 254g/t U3O8 for a total content of 56m lbls of U3O8.


The Tiris East deposit, where Aura Energy has been awarded two 30 years duration exploitation permits and is focussing its effort, contains 83.9mt (84% of the tonnage) at an average grade of 240g/t U3O8 or 44.3m lbs (almost 80% of the contained U3O8).of which 39.2mt containing 19.5m lbs is within the Measured & Indicated category with the balance classified as Inferred.


“The resources at Tiris East lie in 3 zones: Hippolyte, Lazare and Sadi, all of which will be served by a central processing plant. The 5 Mlb U3O8 resource extension is at the southern end of the Sadi zone”.


The Tiris West deposit “is sufficiently far apart … [from Tiris East] … to be regarded as … [as a] … separate” operation.


Aura Energy explains that at Tiris East “Parts of the mineralised zones have substantially higher grades than the global average”. The company also details individual mineralised zones within the Tiris East deposit at Hippolyte, Hippolyte South, Lazare North and South, Sadi and Hipployte West with grades ranging between 176g/t in the inferred part of the resource at Hippolyte South and up to 300g/t within the inferred resources at Hippolyte West. Tonnages of the individual deposits range from less than 5mt to 14.9mt of inferred resources at Sadi.


Managing Director, Peter Reeve, said that the increased resources estimate “confirms our belief that the Resource will continue to increase in size as further exploration work is undertaken … [and that] … With Stage 2 exploration initiatives now underway, including an opportunity review to lower operating costs and capital expenditure, Aura is also exploring the potential positive impact on Tiris operating cost from vanadium by-product recovery”. At this stage, it appears that the new resources estimate is not reporting the vanadium content however.


Aura Energy’s DFS describes a simple shallow open pit mining operation without the need for drilling and blasting as both the ore and waste are unconsolidated. Processing is planned to use well established technology involving “conventional beneficiation (by rotary scrubbing plus screening) followed by heated alkaline uranium leach and ion exchange.”.


Earlier this week the company confirmed that it had resumed its water drilling at Tiris and expressed confidence that the new drilling “will continue the previous results from Water Drilling undertaken by Aura in 2019” which located “Substantial water located within the Oued el Foule Depression”,


Conclusion: Aura Energy has increased the resource base of its Tiris uranium project by around 10% and hints that there may be scope for further increases in the future. The Tiris East part of the project is already permitted for exploitation using simple mining techniques and conventional processing technology


*SP Angel are Nomad and Broker to Aura Energy




Beowulf Mining* (LON:BEM) 3.9p, Mkt cap GBP32.4m – Interim results


Beowulf provides a summary of its activities and unaudited results for the six months to 30th June 2021.


Beowulf reported a H1 21 loss of GBP394k vs GBP715k in H1 20.


Administration costs rose to GBP718k vs GBP403k same period last year.


Cash held at the period end was GBP4.4m vs GBP621k.


Sweden: Beowulf made progress at Kallak over the period, announcing results of an upgraded Mineral Resource Estimate.


An additional 19Mt of iron ore mineralisation, a 12.5% resource increase, was identified, with a Measured and Indicated Resource of 132Mt grading 27.8% Fe and an Inferred Mineral Resource of 39Mt grading 27.1% Fe.


Three distinct areas of elevated copper and gold mineralisation have also been identified in drilling, running the length of the Kallak Project area, with elevated assay intersections predominantly lying on the boundaries of the iron mineralisation.


Beowulf CEO Kurt Budge was also in correspondence with Swedish Minister Baylan regarding the UNESCO letter detailing Beowulf’s application for an Exploitation Concession for Kallak. Mr Budge reiterated the vast and substantial economic and social benefits that Kallak would bring to the rural community in Jokkmokk.


Post-period, Beowulf announced the award of a Mining Study contract to Carci Mining Consultants for Kallak, to develop an open pit design and mining schedule based on the upgraded MRE.


The Mining Study will provide better definition for mining equipment selection, and product types, production volumes and specifications, which will support project development, discussions with The Swedish Transport Agency, the Inland Railway and emerging fossil-free steel producers in Norrbotten.


Beowulf announced that on the 18th of June 2021 the Ministry of Enterprise and Innovation invited the Company to submit any further comments regarding the UNESCO letter to the Ministry by 6 September 2021.


Finland: Beowulf’s wholly owned Finnish Subsidiary, Fennoscandian, was granted EUR791,000 by Business Finland, the equivalent of 50% of a three-year EUR1.6m budget for Fennoscandian’s ‘Spheronisation and Purification of Natural Graphite for the European Lithium-Ion Battery Market’ project.


This work is part of the BATCircle 2.0 (Finland-based Circular Ecosystem of Battery Metals) consortium which has been granted EUR10.8m by Business Finland as part of a total funding budget of EUR19.3m


The overall objectives of the project are to develop a chemical free technological solution, utilising renewable energy, to spheronise and purify graphite within a Finnish industrial ecosystem, for use in manufacturing lithium-ion battery anodes.


*SP Angel act as Nomad and Broker to Beowulf Mining




Power Metal Resources* (LON:POW) 1.89p, Mkt cap GBP23m – Phase-2 geophyiscal programme commences at Tati


Power Metal reports that it has commenced its Phase-2 work programme on its gold-nickel properties in the Tati Greenstone Belt, Botswana.


Following the completion and interpretation of the recent Phase-I soil geochemical survey, Power Metal is planning ground-based magnetometer and radiometric geophysical surveys over selected soil anomalies, the planned survey will consist over 125 line-km split across three survey grids.


The programme will be focused within license area PL127/2019, comprising of close spaced (100m line-spacing) combined ground magnetic and radiometric geophysics surveys over three priority survey grids (grid 3, 4 and 5) containing high priority soil anomalies.


The anomalies are described as follows:


Grid 3: 37.5 line-km of combined geophysics over a circa 3,000m long high-tenor (>100 ppm As) arsenic-in-soil anomaly.


Grid 4: 37.5 line-km of combined geophysics centred over a roughly 1,000m by 400m wide north-south trending arsenic-in-soil anomaly which is coincident with a mapped contact between the Last Hope Formation, and the Eastern successful Volcanics.


Grid 5: 50 line-km of combined geophysics centred over a roughly 1,500m long by 300m wide northeast-southwest trending high-tenor (>250ppm Ni) nickel-in-soil anomaly.


The Phase-2 work programme aims to further refine high-priority targets identified by the Phase I programme geochemical results which will then be targeted by a drill campaign expected to start mid-September.


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




Rambler Metals and Mining* (LON:RMM) 21.25p, Mkt cap GBP28.4m – Little Deer technical report


(Rambler owns 100% of the Ming Copper-Gold Mine)


Yesterday, Rambler Metals and Mining confirmed that it had filed its NI43-101 technical report on its Little Deer project and that the report is available on the company’s website.


In July, the company reported an increased mineral resources estimate for the project, which is located approximately 150km south of its operating Ming mine on the Baie Verte peninsula, Newfoundland


Using a 1% copper cut-off grade, the new estimate reported an indicated resource of 2.9mt at an average grade of 2.13% copper which represents a 6.5% increase in tonnage and a 4.8% improvement in the contained metal content compared to the previous estimate prepared in 2012 on behalf of the previous owners, Thundermin Resources (TSX:THR).


In addition, an inferred resource of 6.2mt at an average grade of 1.79% copper, also using a 1% cut-off, represents a 47% increase in tonnage and a 27.5% increase in contained metal compared to the historical estimate.


Approximately 70% of the indicated resources tonnage (2.03mt at an average grade of 2.33% copper with 4.12g/t silver) and 95% of the inferred tonnage (5.88mt at an average grade of 1.78% copper and 2.16g/t silver) is within the Little Deer deposit with the balance at Whalesback.


The deposits comprising the Little Deer Complex were first discovered in the early 1950s and mined by British Newfoundland Exploration between “1970 to 1972, with access via a 1,144 m drift on the 244 m level from the Whalesback mine to the north, and by Green Bay Mining Company from 1973 to 1974, with access via a 329 m decline”


In a separate announcement, the company reports that it has issued 763,561 shares at a price of 19.0764p/share on conversion of unsecured, subordinated convertible notes held by Riverfort Global Opportunities and by YA II PN, Ltd.


Conclusion: The release of the technical report on Little Deer provides an opportunity to gain an improved understanding of the project. We will read with interest.


*SP Angel act as Nomad and broker to Rambler Metals & Mining




Shanta Gold (SHG LN) 13p, Mkt Cap GBP136m – Earnings pull back on lower production in H1/21


Revenues amounted to $57.8m (H1/20: $73.0m) reflecting lower production during the period.


Production totalled 28.8koz (H1/20: 42.4koz) on the back of lower than anticipated grades from underground operations at Bauhinia Creek and Ilunga.


Realised gold price averaged $1,807/oz (H1/20: $1,533/oz) partly compensating for a drop in gold sales.


AISC averaged $1,338/oz (H1/20: $817/oz) amid weaker production during the period.


Administrative costs climbed to $4.5m (H1/20: $3.6m) on the back of additional West Kenya related expenses.


Expensed exploration costs increased to $4.6m (H1/20: $1.4m) as the Company stepped up exploration programme and budgets to extend the life of mine of existing operations as well as additional West Kenya related exploration costs ($1.7m).


EBITDA totalled $17.4m (H1/20: $27.5m).


PBT and PAT amounted to $8.6m and $3.1m (H1/20: $15.3m and $1.0m).


FCF amounted to -$3.4m (H1/20: $19.7) with $11.5m recorded in capital expenditures including $5.1 in capitalised underground development costs and $3.8m for Singida development spend.


Net Cash (post leases) stood at $19.5m with convertible loan note and Exim Bank debt facility repaid in full.


VAT receivable stood at $27.4m (FY20: $27.6m) as the Company received $2.1m cash refund during the period.


FY21 production and cash costs guidance reiterated at 60-65koz and US$1,325-1,375/oz.


The Board proposed a 0.10p interim dividend (H1/20: nil), equivalent to annualised 1.6% dividend yield.


Conclusion: Interims highlight lower than anticipated production on the back of negative grade reconciliation in underground operations. On a positive side, the government reimbursed part of the outstanding VAT receivable and the Board recommended a 0.1p dividend for H1/21.

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