Today’s Market View – BlueRock Diamonds; Beowulf Mining; Castillo Copper; Cornish Metals; IronRidge

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18237500 - businessman hand pointing to investment as concept

SP Angel . Morning View . Tuesday 31 08 21


Metals prices take off on new demand and weakening US dollar


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MiFID II exempt information – see disclaimer below


BlueRock Diamonds (LON:BRD) – BlueRock raises $1.1m from sale of three large diamonds in Kimberley auction


Beowulf Mining* (LON:BEM) – Comments on Kallak submitted to Swedish Government


Castillo Copper (LON:CCZ) – Geophysics identifies multiple targets over 6km strike length at Luanshya


Cornish Metals* (LON:CUSN) – United Downs drilling extends known strike extent of the former ‘Lithium Lode’ to over 200m


IronRidge Resources* (LON:IRR) – Binding agreement satisfied for Piedmont to fully fund Ewoyaa to production


Mkango Resources* (LON:MKA) – Subject to Covid19, Songwe Hill Feasibility Study targeted for completion in Q1 2022


Orosur Mining* (LON:OMI) – Fully Year 2021 Results


Pensana Rare Earths (LON:PRE) – Pensana looking to raise $250m in senior secured bonds for Angolan mine and UK process facilities


Premier African Minerals* (LON:PREM) – Extension of loan to Otjozondu manganese mining project




Post pandemic recovery driving value of gold and diamonds as gold jewellery gains favour with Chinese millennials


Sales of gold jewellery have improved significantly over the past year among younger Chinese in their 20s and 30s driving doubling demand for gold jewellery in the first half.


Heritage jewellery is particularly popular drawing on traditional Chinese iconography of dragons and phoenixes, often with premiums of >20%.


The economic recovery from the pandemic-induced slump combined with the increasing popularity of ecommerce sites has caused a boom in gold demand.


China’s largest jeweller, Chow Tai Fook, saw heritage gold account for 40% of sales, up 29% from 2020.


Market consultancy Beijing Zhiyan Kexin Consulting believes the heritage gold market could rise to $15.43bn by 2024.




Dollar hits 3-week low as investors wait for US jobs figures to give tapering clue


The USD has continued to slide against several currencies as traders wait for clues from the U.S. jobs report out this week.


The Jackson Hole meeting failed to provide definitive clues as to a stimulus tapering timeline.


J Powell hinted that the ‘substantial further progress’ criteria was met for inflation but believes further improvement in employment data is required for a considerable shift in policy.


The dollar index hit its lowest level since August 6 to 92.456.




Covid-19 – the data on Covid-19 is not looking as positive as previously expected for the vaccinated UK population


The bad news is the Delta variant appears to have made existing vaccines less effective making booster vaccination very much more important


The WHO has described high transmission rates for Covid-19 across Europe as ‘deeply worrying’ with a 10% increase in deaths last week in 33 out of 53 nations in the EHO’s Europe region.


The good news is that Booster vaccines may be simply tweaked to be more effective. Israel is already rolling out booster vaccines which will give good data for other nations to follow.


We suspect we may be required to wear masks through the UK winter and it feels increasingly likely that new travel advice and restrictions may be required in the UK if hospitals fill through a combination of a bad Flu season and rising Covid fatality numbers.




DRC to review $6bn mining deal with Chinese investors


The DRC’s Finance Minister, Nicolas Kazadi, has announced his government’s plans to review its current ‘infrastructure-for-minerals’ deal with Chinese investors valued at $6bn.


The government has expressed concerns that current mining contracts are not benefitting the Congo to an appropriate extent.


The DRC is the largest producer of cobalt in the world and its Katanga reserves make it Africa’s leading copper miner.


A review is currently underway of Molybdenum’s Tenke Fugurume copper and cobalt mine, with plans to ‘fairly lay claim to (its) rights.’


The previous administration under Joseph Kabila allowed China’s exploitation of DRC resources in return for the construction of roads, hospitals, and other infrastructure projects.


Chinese firms have been criticised for their lack of transparency and the failure to construct promised infrastructure projects.


Kazadi stated that the review would take place ‘in close partnership with the Chinese’ and they were ‘not a matter of threatening any investors.’


The Congo mining sector is currently under 70% control by Chinese investors following a series of major takeovers in recent years.




Chinese aluminium smelters meet to tackle ‘irrational surge’ in prices


The China Nonferrous Metals Industry Association (CNIA) has met to address aluminium prices currently sitting at a 13-year high.


Aluminium futures on the Shanghai exchange rose some 4.2% on Monday to $3,332, marking their highest since August 2008.


Supply concerns have been raised as smelting regions suffered from production curbs amid power grid strains.


Both state-owned smelters and private firms for part of the 10-company CNIA.


A statement from the meeting said that ‘companies will continue to ensure supply and stabilise market expectations’, with the group agreeing there was ‘no obvious gap’ between supply and demand.


The group agreed to cope with rising costs by ‘increasing efficiency’ and to ‘take the lead in maintaining the order of commodity market prices and creating a good industry ecology’.


China’s release of decades-old state reserves has had little impact on reducing prices currently up more than 36% y-t-d.




Dow Jones Industrials –0.16% at 35,400


Nikkei 225 +1.08% at 28,090


HK Hang Seng +0.66% at 25,709


Shanghai Composite -+0.23% at 3,536




Economics


Factory data shows China’s economy under pressure whilst services contract


Two PMI surveys show China’s business activity and economy slowing in August with factory output slowing.


China’s economic recovery has been hit by a combination of raw material prices, slowing exports, Covid-19 outbreaks and the government’s crackdown on both hot property prices and carbon emissions.


Both the Purchasing Manager’s Index and the National Bureau of Statistics show a contraction in the economy.


The PMI fell to 50.1 in August, with Reuters-polled economists predicting 50.2.


Nomura economists described the potential impact of the slowdown as potentially ‘quite notable’.


Factories have been laying off workers at the same pace as July


The slowdown has increased expectations of a change to near-term fiscal policy to support growth.


Nomura believe ‘Beijing to maintain its policy combination of ‘targeted tightening”, complimented by ‘universal easing’ for the rest of the economy’.


Analysts believe China’s central bank to cut the required cash reserves banks must hold to lift growth following a cut last month releasing $6.47tn in long-term liquidity.


The Chinese services sector has also fallen considerably, marking its first contraction since Feb2020.


The non-manufacturing PMI fell from 53.3 to 47.5, a considerable reduction.


Analysts expect tight credit conditions and weak foreign demand to continue to negatively impact China’s economy.


Earnings at China’s industrial firms have slowed for the 5th straight month.




UK – British companies set to boost wages and prices as business confidence rises to four-year high, according to Lloyds


More than a third of firms anticipate increasing wages by at least 2%, reflecting labour shortages which are reportedly at 14 times the normal level.


The renewed confidence is driven by the success of the vaccine rollout, the removal of lockdown restrictions and adjustments to self-isolation rules.


Service-sector confidence rose to the highest level since early 2018, according to Lloyds Bank.


44% of firms expect to increase prices for goods and services, while only 7% plan to lower them.


Business confidence is at its highest in the North West, North East and London.




Germany – Unemployment falls to lowest level since virus outbreak


German unemployment fell for a fourth straight month as businesses continued to hire workers amid the recovery from Covid-19 lockdowns.


Joblessness declined by 53,000 in August to a rate of 5.5%, the lowest since March last year.




France – Inflation hits highest level in almost three years


France’s CPI rose 2.4% YoY in August as food and energy costs accelerated and manufactured goods prices rebounded with the end of the sales season.


Data also showed that consumer spending fell 2.2% in July from June.




Japan – July industrial output falls -1.5% on month prior as Covid-19 hits car production


A Delta variant spike forced governments in Asia to impose fresh lockdowns and curbs, which are causing disruptions in parts supply across the region


Factory output dropped 1.5% in July from the previous month, hit by a decline in the production of autos, including passenger cars and small buses.


The fall offset growing output of production machinery items, such as those used for manufacturing semiconductors, and electronic parts and devices.




Russia’s Polymetal expresses concern over chip shortage’s impact on mining sector


A global shortage of semiconductor chips is set to hit the natural resources sector, Polymetal’s Vitaly Nesis has warned.


The Russian mining giant’s chief executive stated the shortage in chips will add to current inflationary pressures impacting the industry.


Nesis has described the chip shortage as a ‘major risk’, describing the shortage as ‘very real’.


Costs are expected to increase this year amid ‘ongoing inflationary pressures’, however costs for vehicles and machinery are expected to be exacerbated by the chip shortage.


Polymetal expect capex to increase a further 25% as it pre-orders equipment.


Nesis told analysts that he did not expect ‘any relief’ from current price pressures caused by inflation and chip shortages in the near future.


Conclusion: We are not entirely sure where the semiconduction chip shortage might hit mining companies.


We do not see CAT or other major machinery manufacturers holding up $1m machine sales though there may be some impact from the availability of less expensive process plant sensors and related equipment.




Currencies


US$1.1827/eur vs 1.1767/eur last week. Yen 109.85/$ vs 110.01/$. SAr 14.616/$ vs 14.901/$. $1.379/gbp vs $1.371/gbp. 0.734/aud vs 0.725/aud. CNY 6.460/$ vs 6.483/$.




Commodity News


Precious metals:


Gold US$1,816/oz vs US$1,804/oz last week


Gold ETFs 99.7moz vs US$99.8moz last week


Platinum (AIM:ZERO) US$1,015/oz vs US$994/oz last week


Palladium US$2,499/oz vs US$2,435/oz last week


Silver US$24.17/oz vs US$23.75/oz last week




Base metals:


Copper US$ 9,519/t vs US$9,320/t last week


Aluminium US$ 2,711/t vs US$2,652/t last week


Nickel US$ 19,655/t vs US$18,825/t last week


Zinc US$ 2,994/t vs US$2,990/t last week


Lead US$ 2,266/t vs US$2,296/t last week


Tin US$ 33,800/t vs US$33,305/t last week




Energy:


Oil US$73.3/bbl vs US$72.2/bbl last week


Oil prices could be set of another rally if OPEC+ stops adding barrels to global supply, which is a possibility after the group’s next meeting, according to the Kuwaiti oil minister


Since COVID-19 has begun its fourth wave in some areas, the minister believes the group must be careful and reconsider its next increase


OPEC+ had agreed to boost oil production by 400,000bopd every month beginning August until its combined output reached pre-agreement levels towards the end of next year


However now that demand concerns are once again coming to the fore, OPEC+ is signalling that it is always ready to change tack


It’s worth noting that the Kuwaiti minister’s comments come soon after US President Joe Biden called on OPEC+ to boost production by more than 400,000bopd to offset strongly rising fuel demand in the world’s top consumer that led to a sharp rise of prices at the pump


Different opinions about how to respond to this call, however, are understandable


President Biden has prioritised emissions-cutting and a switch from gasoline-powered to electric cars that would diminish the demand for oil


In the context of his administration’s quest against the fossil fuel industry, a call for more oil is confusing


Yet if OPEC does indeed reconsider its cuts at its meeting on Wednesday, there will likely be more calls




Natural Gas US$4.333/mmbtu vs US$4.223/mmbtu last week




Bulk:


Iron ore 62% Fe spot (cfr Tianjin) US$156.4/t vs US$154.4/t – Fortescue highlights ambitions of becoming world’s first green iron ore supplier


Australian-listed Fortescue Metals has announced plans to be the first major supplier of green iron ore.


The company’s Fortescue Future Industries (FFI) unit marks the miner’s hopes of diversifying its portfolio with environmentally friendly projects.


Fortescue’s founder and chair, Andrew Forrest, highlighted the company’s hopes ‘for the creation of steel delivered to customers’ that is ‘decarbonised’, with Fortescue unveiling its targets next month.


FFI has spent $122m in 2020 and aims to ramp this up to $400-$600m between now and June 2022.


The company is developing green transportation technology as well as decarbonisation technologies.


Fortescue aims to reach net zero emissions by 2030 whilst also supplying 15mt/y of green hydrogen.


Both Rio Tinto and BHP have set their net zero emissions targets to 2050.


Fortescue is not the only iron ore company to claim to be relatively green. SSAB in Sweden now claims to produce the world’s first fossil-free steel from LKAB iron.




Chinese steel rebar 25mm US$815.1/t vs US$802.1/t


Thermal coal (1st year forward cif ARA) US$109.0/t vs US$106.5/t


Coking coal swap Australia FOB US$213.5/t vs US$205.0/t


China Ilmenite Concentrate TiO2 US$370.77/t vs US$366.4/t




Other:


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


NdPr Rare Earth Oxide (China) US$93,506/t vs US$93,939/t


Lithium carbonate 99% (China) US$17,339/t vs US$16,659/t


China Spodumene Li2O 5%min CIF US$930/t vs US$910/t


Ferro-Manganese European Mn78% min US$1,757/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$530/t vs US$525/t


Europe Vanadium Pentoxide 98% 9.5/lb vs US$9.6/lb


Europe Ferro-Vanadium 80% 38.75/kg vs 39,25


Spot CO2 Emissions EUA Price US$67.2/t vs US$66.8/t




Battery News


China’s Sinopec to spend $4.6bn on hydrogen energy by 2025


Sinopec Corp has revealed plans to spend 30bn yuan ($4.6bn) on hydrogen energy by 2025 as part of its efforts to become a carbon-neutral energy provider by 2050.


The oil refiner has said it plans to become China’s largest producer of hydrogen for use as a transportation fuel, targeting an annual capacity of 200,000 tonnes by 2025.


Sinopec has so far built 20 hydrogen refuelling stations with another 60 under construction or in the planning and approval stage.




Ofgem launches GBP450m grid innovation fund


British energy regulator Ofgem has made GBP450m in funding available over the next five years to promote green innovation across gas and electricity networks and keep energy bills low.


The money will be available to network companies, system operators, businesses, and researchers to drive “big, bold and ambitious” ideas that accelerate the transition to a zero-emission energy system and position Britain as a world leader in energy innovation, Ofgem said.




Company News


BlueRock Diamonds (LON:BRD) 56.44p, Mkt cap GBP8m – BlueRock raises $1.1m from sale of three large diamonds in Kimberley auction


BlueRock Diamonds report the raising of $1.1m from the sale of its three recently recovered large diamonds.


The company also raised a further $1m from the sale of its smaller run-of-mine diamonds in the August auction.


Sales:


58.6ct – $585,000 = $9,982/ct


21.6ct – 268,000 = $12,407/ct


14.3ct – 236,000 = $16,503/ct


Management also report Commissioning of new plant is proceeding to plan. The new plant should commission in October.


Valuations: The sales value of the 14.3ct stone was significantly higher than our $5,000-10,000/ct guestimate and for Q3 sales to be around the upper end of our $2.5-3m estimate.


Management expect to produce some 24,000-28,000cts this year grading rising to 40,000-43,000cts in 2022.


Grades are expected to be in the range 4.0-4.5cpht this year and 4.0-4.3cpht for 2022.


Management report an average value for the BlueRock sale of $800/ct including the smaller stones.


The next auction for the third quarter is due in September.


Conclusion: The August auction sales have exceeded our expectations particularly for the two smaller special diamonds indicating new-found strength is diamond pricing and the quality of BlueRock’s production. The success of these sales may raise the current $400-440/ct guidance for the year.


*SP Angel act as nomad and broker to BlueRock Diamonds




Beowulf Mining* (LON:BEM) 3.8p, Mkt cap GBP31.2m – Comments on Kallak submitted to Swedish Government


Beowulf reports that the Company has submitted concluding comments to the Ministry of Enterprise and Innovation on UNESCO’s letter, dated 2 June 2021, regarding the Kallak Iron Ore project.


The letter reiterates that the Company’s application is comprehensive for this stage of permitting, and the assessment of it by relevant authorities is complete.


The letter also makes the point that there are no direct effects of Kallak on the Laponian Area, and that there are operating mines situated closer to Laponia than Kallak, proving that it is possible to conduct mining operations outside Laponia without harming the world heritage sites.


Furthermore, the fact that UNESCO has not, at any time, indicated the requirement for a ‘buffer zone’ around the boundary of Laponia proves that a ‘buffer zone’ has not been deemed necessary.


Kurt Budge, CEO of Beowulf, commented: “The case (for Kallak) has been further strengthened by investments in Norrbotten’s burgeoning fossil-free steel making sector, and the essential need for sustainable primary iron ore to feed the supply chain and de-risk projects.”


“Investors in both mines and steel plants in Sweden need transparency and predictability in permitting processes; that’s a basic requirement if its assumed capital will be available for both and secure the transition to a Green Economy based on ‘green infrastructure’ and ‘green steel”


“Minister Baylan’s has said that a decision on Kallak will be made once UNESCO comments are received; with the acceleration of fossil-free steel making developments in Sweden and the continued need for investment and new jobs in the north of the Country, the timing for that decision is now”


We recommend reading the company’s submission to the Swedish government in full, found here: https://polaris.brighterir.com/public/beowulf_mining_plc/news/rns/story/w3zjg3r


*SP Angel act as Nomad and Broker to Beowulf Mining




Castillo Copper (LON:CCZ) 1.88p, Mkt Cap GBP19.3m – Geophysics identifies multiple targets over 6km strike length at Luanshya


Castillo Copper has announced that an induced polarisation (IP) geophysical survey has identified multiple potential drilling targets covering around 6km strike length at its Luanshya project in the Zambian Copper Belt.


The IP survey, which follows up earlier geochemical soil sampling, shows high-chargeability targets which may indicate sulphide mineralisation.


Anomalies have been identified on three survey lines and “as these chargeability anomalies are directly coincident with soil geochemistry results, they make compelling targets to test-drill”, possibly during Q4 2021 and the company says that it “will soon finish up at Luanshya then progress to the Mkushi Project”.


Castillo Copper explains that the “Luanshya Project is located in Zambia’s traditional copper-belt, a globally known region that houses numerous copper deposits and operating mines” and that it is located around 6-10km south of, and “on the same NW-SE trendline” which hosts China Non Ferrous Mining’s three operating mines in the area.


Conclusion: Induced polarisation results from Luanshya in the Zambian Copper Belt show potential targets underlying geochemical anomalies which may be drilled during Q4




Cornish Metals* (LON:CUSN) – 13.75p, Mkt cap GBP36.5m – United Downs drilling extends known strike extent of the former ‘Lithium Lode’ to over 200m


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Cornish Metals reports that its continuing drilling programme at the United Downs property has now extended the known strike length of the mineralisation formerly known as the ‘Lithium Lode’ and now designated the ‘UD Lode’ to more than 200m and the mineralisation remains open laterally.


As well as the intersections on the UD Lode, which is now seen to dip at an angle of 800 to the south contrary to the “predominant trends in the area”, the drilling has also identified “new zones of copper – tin – silver mineralisation adjacent to Lithium Lode.” Further drilling is required “to fully determine the lateral and vertical extent of these zones of mineralisation”.


The intersections of the UD Lode, which was encountered in 4 of the 5 new holes reported in today’s announcement include:


An intersection of 2.6m at an average grade of 5.2% copper, 1.3% tin and 77g/t silver from a depth of 227.1m in hole UD-21-001; and


1.03m at an average grade of 0.82% copper, 0.02% tin and 22g/t silver from a depth of 405.31 in hole UD-21-002; and


0.21m averaging 1.98% copper, 0.13% tin and 21g/t silver from a depth of 217.78m in hole UD-21-003; and


2.20m averaging 2.63% copper, 0.11% tin and 10g/t silver from a depth of 145.44m in hole UD-21-004 including 0.76m from 146.44m depth which averages 6.38% copper, 0.28% tin and 23g/t silver; and


1.56m averaging 1.62% copper, 0.26% tin and 11g/t silver from a depth of 143.69m in hole UD-21-005 including 0.44m from 144.81m depth which averages 3.83% copper, 0.04% tin and 27g/t silver.


In addition, the new zones of mineralisation include:


A 1.04m wide intersection of tin mineralisation at an average grade of 7.9% tin from a depth of 47.57m in hole UD-21-001; and


A 1.68m wide intersection averaging 2.75% copper, 0.05% tin and 8g/t silver from 115.85m depth in hole UD-21-002; and


1.59m averaging 0.04% copper, 1.14% tin and 2g/t silver from 278.33m depth in hole UD-21-003 and including 0.74m from 278.33m which averaged 0.05% copper, 1.74% tin and 1g/t silver; and


Two new copper-rich zones in hole UD-21-007 – an upper zone of 1.52m from 150.37m averaging 0.94% copper, 0.07% tin and 33g/t silver including 0.37m from 150.37m which averaged 3.30% copper, 0.27% tin and 122g/t silver and a lower zone of 2.14m from 203.82m which averaged 0.93% copper, 0.01% tin and 28g/t silver and included a higher grade section of 1.06m from 204.88m depth which averages 1.59% copper, 0.01% tin and 12g/t silver


The continuing drilling is part of a plan aimed at producing an initial mineral resources estimate for United Downs within 18 months of the AIM debut of Cornish Metals in February as a basis for a mine development plan.


Conclusion: Drilling to date has extended the known strike extent of the UD Lode to over 200m and also identified previously unrecognised mineralised structures in an area with a long history of previous mining activity. The identification of previously unknown mineralised structures at United Downs, an area which has been mined intermittently since the 1700s underlines the untapped mineral potential but also hints at a geological complexity which the current drilling should help to unravel. We await further results from the drilling with interest.


* SP Angel acts as broker and financial advisor to Cornish Metals.




IronRidge Resources* (LON:IRR) 23.3p, Mkt cap GBP120m – Binding agreement satisfied for Piedmont to fully fund Ewoyaa to production


IronRidge reports that further to the announcement of 1 July 2021, the conditions precedent to the execution of the binding agreement have now been satisfied to fully fund and fast track the Company’s Ewoyaa Lithium Project through to production.


Piedmont to earn-in to up to 50% of IronRidge’s Cape Coast Lithium Portfolio in Ghana through the following stages:


Stage 1 – Piedmont has subscribed for 54,000,000 new ordinary shares in the Company at a price of 20p per share (GBP10.8m). Piedmont has committed a further GBP720,000 increasing its stake to 9.91% via placing of a further 2.88m shares at 25p.


Stage 2 – Regional Exploration and DFS Funding to earn in up to an initial 22.5%. US$5m towards an accelerated regional exploration programme to enhance the current Ewoyaa resource; and US$12m towards completing the DFS for the project. The minimum “DFS criteria” is to deliver a 1.5 mtpa to 2mtpa run-of-mine operation for a 10-year to 8-year life of mine respectively.


Stage 3 – CAPEX funding of $70m to earn a further 27.5% of CCLP.


Piedmont is entitled to appoint one director to the IronRidge board on completion while maintaining an equity interest above or equal to 9% in IronRidge


Piedmont and IronRidge have entered into a binding offtake agreement for 50% of the Cape Coast Lithium Portfolio’s life of mine spodumene concentrate.


Conclusion: This is good news for IronRidge as the deal offers to cover the capital cost of the Ewoyaa Lithium Project through to production.




Mkango Resources* (LON:MKA) 26.5p, Mkt cap GBP42m – Subject to Covid19, Songwe Hill Feasibility Study targeted for completion in Q1 2022


Mkango Resources reports an attributable loss of US$3.53m for the six months to 30th June 2021 (2020 loss of US$2.44m) as it advances its Songwe Hill rare-earths project in Malawi and on progressing its wider strategy within the downstream supply chain for rare earths.


While cautioning that the continuing impact of the Covid19 pandemic remains uncertain, Mkango Resources confirms that it is continuing work on the Songwe Hill Feasibility Study in Australia, South Africa and the UK as well as in Malawi and “is targeting completion of the Feasibility Study in the first quarter of 2022”.


Hydrometallurgical test work is currently underway in Australia following significantly improved flotation test results announced in May.


The company also highlights its agreement with the Polish Grupa Azoty Zaklady Azotowe to collaborate on the development of a separation plant for rare-earths in Poland “which.will process the high grade, purified mixed rare earth carbonate produced at Songwe Hill into separated rare earth oxides”.


Mkango Resources also reiterates the simplified ownership structure for the project, announced in August 2021, which increases Mkango’s ownership of Songwe Hill to 100% “as part of a GBP13 million ($18 million) share transaction with Talaxis”.


The company also announced the award of 3.75m stock options, priced at C$0.48/share and vesting “in 4 equal instalments over the next 2 years” to members of its board, employees and consultants.


Members of the Board receive 2.3m of the options with non-executive Chairman, Mr. Derek Linfield receiving 1m options, Co-founders, Chief Executive, William Dawes and President Alexander Lemon each receiving 0.4m options and non-executive directors, Shaun Treacy and Susan Muir each awarded 0.25m options.


*SP Angel acts as nomad and broker to Mkango




Orosur Mining* (LON:OMI) 17.4p, Mkt Cap GBP32.5m – Fully Year 2021 Results


Orosur has released its audited results for the fiscal year ended May 31 2021, whilst also providing a summary of its operations in Colombia and Uruguay.


Orosur reported a total comprehensive loss for the year of $1.69m vs loss of $146k in FY20. Last year’s year loss was reduced by $1.89m income from discontinued operations.


Corporate and administration expenses fell to $1.2m vs $1.45m last year.


Cash and cash equivalents rose to $6.9m vs $782k last year.


The year saw Newmont enter into a JV with Agnico Eagle whereby the two companies jointly assumed and will advance Newmont’s prior rights and obligations with respect to the Anza Project in Colombia on a 50:50 basis.


Following the receipt of funds from the JV, the company began the process of re-establishing its field camp at the Anza project in readiness for commencement of field operations.


Drilling operations commenced on the 15th of November 2020 and a total of some 10,000m have been drilled to date, with highlights including:


MAP-072 70.50m @ 3.53g/t Au, 9.33g/t Ag and 1.62% Zn from 184.80m


MAP-073 21.60m @ 6.02g/t Au, 6.02g/t Ag and 3.23 %Zn from 271.75m


MAP-076 12.25m @ 5.39g/t Au, 1.65 g/t Ag and 0.18 % Zn from 228.65m


MAP-079 23.75m @17.40g/t Au, 1.89g/t Ag, 0.19% Zn


MAP- 089 59.55m @9.61g/t Au, 6.23g/t Ag, 3.75% Zn


In Uruguay, good progress is being made on the sale of Loryser’s other assets including plant and equipment.


Brad George, CEO of Orosur said: “Operationally and financially it has been a good year, albeit a somewhat challenging one in light of the Covid-19 pandemic that has impacted every facet of our business. Uruguay continues to be wound down in an orderly fashion as per our plans and is near the end”


“Colombia has been a major success story with tremendous results from our drilling and sampling programs, all undertaken while the pandemic raged around us; and our balance sheet was brought back to life with a well-supported capital raising. With work accelerating at Anza and with potential new projects coming on line, this coming year looks to be even better”


*SP Angel act as Nomad and Broker to Orosur Mining




Pensana Rare Earths (LON:PRE) 90.60p, Mkt Cap GBP202m – Pensana looking to raise $250m in senior secured bonds for Angolan mine and UK process facilities.


Pensana have appointed a Nordic investment bank specialising in high-yield debt to raise US$250m in senior secured debt bond issue.


The company also report progress on the front-end engineering design for their $125m REE separation plant planned for Saltend, Humber, UK.


Management have also signed a 25-year lease for a nine-hectare site at Saltend with geotechnical already drilling underway.


Work also continues at Pensana’s Longonjo site in Angola including Lidar and geotechnical surveys where are recent Bankable Feasibility Study update confirmed the $130m capital cost estimate for the mine.


Conclusion: The bond issue, if successful, should approximately cover the cost of the two projects at $255m but may still require further funding to cover all front-end inventory, commissioning and contingency costs particularly if the Saltend site is to become a hub for the processing of material from other rare earth mines.


We see this as a better prospect than the larger, failed Sirius Minerals debt proposal.




Premier African Minerals* (LON:PREM) 0.19p, Mkt Cap GBP36m – Extension of loan to Otjozondu manganese mining project


Premier African Minerals has announced that it has agreed to extend its existing US$260,000 loan to Otjozondu Mining by a further US$180,000 taking the total loan to the Otjozondu Manganese Mining Project in Namibia to US$440,000.


The additional US$180,000 is being made available to Premier African Minerals in the form of a secured loan from its Chairman, Mr. Neil Herbert. The loan which carries an “interest rate of 20% per annum is repayable in US$25,000 instalments on each shipment of Manganese commencing from the beginning of September 2021”.


The company confirms that “Mr Neil Herbert has a formal engagement with MN Holding Limited (“MNH”), the operator of Otjozondu, to act as consultant under which he is entitled to a 10% fee on any overall purchase of MNH, payable by MNH”.


The company has also confirmed that Otjozondu has “issued their existing off-take partner with the required 90-days’ notice” to terminate the offtake contract and is now in discussions with off-taker and other potential parties “on improved commercial terms including the required expansion capital to assist with existing mining operations” in order to secure “the best possible financial terms from its future off-take partner”.


*SP Angel have an agreement with Premier African Minerals as a result of the acquisition of Northland Capital Partners




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




DISCLAIMER


This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.


This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.


This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.


This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.


Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.


Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.


SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).


SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.


MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.


A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins ([email protected]).


SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%


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