SP Angel . Morning View . Thursday 23 09 21
Lithium prices jump higher. Risk sentiment holds despite Fed taper message
Pre-IPO financing opportunity for new gold mine development in Ghana
We are raising funds for an advanced gold project in Ghana with good upside exploration potential
The project offers potential to fast-track gold production using a low-cost heap leach.
Management are experienced and are looking to IPO within 18 months.
Please contact us if you are interested in pre-IPO funding of the opportunity
IGTV: 02/09/21: Chinese slowdown is ‘unlikely to be for long’: https://youtu.be/SB32PEX0EWY
Anglo Asian Mining* (LON:AAZ) – BUY – H1 results show impact of reagent, consumables and diesel cost increases
Caledonia Mining* (LON:CMCL) – Acquisition of the Maligreen project
Cornish Metals* (LON:CUSN) – Stepping up drilling capacity at United Downs to investigate a new target
Kavango Resources (LON:KAV) – Personnel and exploration update
Mkango Resources* (LON:MKA) – Start of geotechnical drilling and pitting
Ormonde Mining* (LON:ORM) – Interim results reported ahead of reconvening of the AGM on 30th September
Phoenix Copper* (LON:PXC) – Operational progress report
China – Chinese cities ask developers to stop discount gimmicks as local governments seek to prevent a collapse in home prices
Chinese authorities are concerned that developers and their agents have been overly discounting property prices to shift unsold stock
City authorities are concerned that developers are competing to sell at discounted price levels
At least eight cities in China have put in place measures to prevent a collapse in prices where units have been seen offered at substantial discounts to previously sold properties causing significant potential for a ‘negative equity’ mortgage crisis.
China has some 3bn square meters of unsold housing inventory enough to house around 90m people though this is still insufficient for President Xi’s plans to move more people to towns from the rural environment.
460m rural Chinese people migrated from 1996 to 2019 inspiring a substantial boom in city construction and urban clusters.
The government plans to increase the urbanisation rate to 80% from 60% today with 40% of Chinese people still living in the rural environment.
3/4s of Chinese cities are seeing populations declines due to the falling birth rate as couples opt to delay having children due to the cost of living.
Gold price eases on hawkish Fed shift, tapering schedule remains ambiguous
Spot gold fell to $1,762/oz as the Fed’s Jerome Powell outlined the central bank’s plans to end asset purchases in 2022.
The dollar reacted well to the FOMC meeting, hitting a monthly high against a basket of currencies.
The FOMC meeting also signalled over half of the Fed policy makers were willing to raise interest rates next year, further limiting gold’s appeal as a non-yielding asset.
Powell remained ambiguous on the Fed’s taper timeline, stating that a November announcement would require September job growth to be ‘reasonably strong’.
The meeting was generally bearish for gold, with a 2022 taper conclusion coming in on the hawkish side of analyst expectations.
Strategists highlight the possibility of gold consolidating around the $1,700/oz mark.
On the other hand, the Fed released projections that inflation may run above its target until 2025 at least, providing some optimism for bullion-holders. Powell has retained the stance that inflation is ‘transitory’.
Vanadium Redox Flow Batteries offer part solution to UK power crisis
UK calling ageing Coal Fired power stations back into action as power crisis exposes weakness in dependence on Wind, Solar and interconnectors
Power prices in the UK have surged to extraordinary high levels driven by high global gas prices, a lack of North Sea capacity, a fire at an interconnector and a becalming of offshore wind power.
Experts are concerned that UK and European gas prices will remain high through the winter raising household heating bills and raising inflation (1973 all over again).
Worse still, there is significant potential for rolling power blackouts as the UK restarts ageing coal fired generators.
The UK is still way behind on grid-scale battery backup to balance wind and solar power fluctuations.
Testing of Grid-scale Vanadium Redox Flow Batteries in combination with Li-ion battery packs is ongoing with Pivot Power connecting a first 50MW battery system at Cowley as part of the Energy Superhub Oxford project in June this year.
Pivot Power plan to roll out 40 such battery plants in the UK.
Dow Jones Industrials -+1.00% at 34,258
Nikkei 225 CLOSED at 29,639
HK Hang Seng +0.93% at 24,446
Shanghai Composite +0.36% at 3,642
US – The Fed signalled tapering may be announced as early as next meeting while Fed rate dots plot showed a rate increase may come next year.
The Fed could “easily move ahead” with the announcement of the taper in November if the economy performs in line with Fed expectations, Jerome Powell said.
Nine of 18 US central bank policymakers project the first rate hike to be announced next year compared to seven members in June.
In 2023, median projections point to one more interest rate increase in 2023 compared with June predictions, bringing the total to at least three.
Estimates for tighter monetary policy reflect higher than initially expected inflation data as the central bank revised its forecasts higher.
Inflation is expected to average 3.7% in 2021 and 2.3% in 2022, up from 3.0% and 2.1% estimated in June.
GDP forecasts are for a 5.9% growth this year, down from 7.0% estimated in June, reflecting the supply constraints.
Unemployment was revised slightly higher to 4.8% in 2021.
Markets demonstrated relatively mute reaction to the announcement with S&P 500 paring some of its gains but closing up on the day with shorter term Treasury yields and US$ index climbing.
Inflation – Temporary inflation may be less temporary than policy makers first thought
Many elements creating higher inflation are already proving to be temporary though much depends on where prices settle.
We are also mindful that many input prices were ‘too low’ leading up to the pandemic in our view.
The pandemic created a higher-cost environment for most manufacturers and services and companies will not wisht to return to pre-pandemic wafer-thin margins.
Falling timber prices in the US is a good example of temporary inflation, though timber prices are still high on historical basis.
Lumber prices peaked at an extraordinary $1,645 in the US falling back to $625 today having started 2020 (pre-pandemic) at $391.
Second hand car prices which have risen through the pandemic and are a significant influence on inflation figures are also likely to collapse as consumers move to Electric Vehicles. We suspect used vehicle prices may remain elevated for two-three years pending a new line-up of electric vehicles.
Electric vehicles are also likely to remain more expensive than conventional combustion engine cars due to higher manufacturing costs, particularly for battery packs.
A spike in energy prices is also going to fuel, temporary, inflation but there is no guarantee that gas and power prices will revert to previous low levels.
We conclude the temporary inflation may still be temporary, but may not be as temporary as forecast and that we are unlikely to return to the low input prices previously enjoyed by many services and manufacturers pre-the-pandemic.
Norway – Raises base interest rates to 0.25% and signalled further hikes to 1.25% by end 2022
China – Asian equity markets are up this morning as the Fed announcement over the potential start of tapering did not see a broad flight from risk and as investors monitor developments at Evergrande that is due a key coupon payment on a dollar bond today.
Eurozone – Growth momentum continued to slowdown in both services and manufacturing sectors normalising from peak levels hit in summer.
A drop in the growth rate was more than expected taking composite business activity levels to a five month low.
“Slower production growth in manufacturing was primarily linked to supply chain constraints, which also affected some service providers,” the Markit PMI report read.
“The ongoing pandemic was meanwhile again also often widely blamed for subdued demand growth, notably in curbing service sector exports.”
Employment growth pulled back to a four month low on concerns over the resilience of future demand and supply, although, the pace continued among the highest recorded over the past two decades.
Cost inflation was passed onto final consumer with selling prices growth seen at the third-highest rate seen over the past two decades, only exceeded by increases in June and July.
Outlook moderated for a third consecutive month hitting the lowest since January over uncertainty regarding the course of the pandemic.
Markit Manufacturing PMI: 58.7 v 61.4 in August and 60.3 est.
Markit Services PMI: 56.3 v 59.0 in August and 58.5 est.
Markit Composite PMI: 56.1 v 59.0 in August and 58.5 est.
Markit Manufacturing PMI: 55.2 v 57.5 in August and 57.0 est.
Markit Services PMI: 56.0 v 56.3 in August and 56.1 est.
Markit Composite PMI: 55.1 v 55.9 in August and 55.7 est.
Markit Manufacturing PMI: 58.5 v 62.6 in August and 61.4 est.
Markit Services PMI: 56.0 v 60.8 in August and 60.3 est.
Markit Composite PMI: 55.3 v 60.0 in August and 59.2 est.
UK – The central bank is expected to stay put this afternoon maintaining asset purchases pace unchanged.
While inflation picked up recently climbing to 3.2% in August, past 2% target, the move was broadly in line with BOE estimates that is expecting inflation to accelerate further through H2/21 as pandemic restrictions are lifted.
At the same time, BOE growth estimates may not come through with latest central bank’s forecasts released in August anticipating a 2.9% increase in Q3 and 2.0% in the final three months of the year.
This compares to the median Bloomberg estimate for 2.4% this quarter and 1.5% in Q4/21 reflecting supply disruptions and concerns over a resurgence of coronavirus cases.
Markit PMI numbers released this morning showed both manufacturing and services demonstrated weaker than expected growth with the pace of expansion down for a fourth month.
New orders growth slowed, inflation pressures remained while employment continued to grow as firms expanded their staffing levels, particularly in the service sector.
“While there are clear signs that demand is cooling since peaking in the second quarter, the survey also points to business activity being increasingly constrained by shortages of materials and labour, most notably in the manufacturing sector but also in some services firms,” Markit wrote.
“The September PMI data will add to worries that the UK economy is heading towards a bout of ‘stagflation’, with growth continuing to trend lower while prices surge ever higher.”
Markit Manufacturing PMI: 56.3 v 60.3 in August and 59.0 est.
Markit Services PMI: 54.6 v 55.0 in August and 55.0 est.
Markit Composite PMI: 54.1 v 54.8 in August and 54.6 est.
Malaysia threatens to limit recyclable metals imports in blow to scrap copper industry
The Malaysian government has suggested it may look to stop imports of lower-grade recyclable metals.
Malaysia has become a primary recycling hub of aluminium and copper.
The country processes the waste materials and upgrades them to a standard able to import into China.
China banned the import of unprocessed, complex scrap materials in 2019 and has discussed the possibility of banning all scrap imports this year – these plans have since been shelved.
Malaysia is China’s largest supplier of scrap metal however its new proposed guidelines would significantly limit output. It accounted for 1/5th of China’s total copper scrap imports last year.
The outlined guidelines call for a minimum metal content of 94.75% and zero impurities.
Demand for refined copper is expected to increase again on the back of a reduction in available scrap supply.
Shipping rates continue to rally as Baltic dry bulk index hits 12-year high
The main dry bulk sea freight index on the Baltic Exchange hit a 12-year high yesterday having rallied for 4 straight sessions.
The overall Baltic capsize index hit its highest level since 2009, having risen 6.1%.
The removal of an effective fleet supply triggered by a combination of Covid and geopolitical tensions have helped raise shipping rates.
A ramp up in iron ore production and shipments from Brazil alongside increasing coal demand from stock-depleted China and India before the winter months has caused rates to continue their record rally.
Semiconductors just part of the problem as report suggests automakers set to lose $210bn this year
Consulting firm Alixpartners has calculated that global auto manufacturers could lose up to $210bn in revenue this year.
The figure is almost double the firm’s predictions made earlier this year which suggested a $110bn hit to revenue.
Whilst a shortage in semiconductors has limited production, the industry has also been hit by inflated commodity prices and wider supply chain disruption.
Automakers are predicted to have tight inventories until early 2023, with US car dealer lots currently at half normal supply levels.
Firms are struggling to import key plastic resins and steel for manufacturing plants, with their desperation reflected in elongated supply contracts.
Malaysia’s Covid crisis has had severe implications to the semiconductor supply chain, with the country account for 13% of global chip assembly testing and packaging.
US$1.1720/eur vs 1.1726/eur yesterday. Yen 109.89/$ vs 109.57/$. SAr 14.737/$ vs 14.769/$. $1.365/gbp vs $1.365/gbp. 0.726/aud vs 0.725/aud. CNY 6.466/$ vs 6.466/$.
Gold US$1,762/oz vs US$1,778/oz yesterday
Gold ETFs 99.7moz vs US$99.7moz yesterday
Platinum US$1,005/oz vs US$966/oz yesterday
Palladium US$2,044/oz vs US$1,952/oz yesterday
Silver US$22.62/oz vs US$22.79/oz yesterday
Copper US$ 9,235/t vs US$9,250/t yesterday
Aluminium US$ 2,945/t vs US$2,914/t yesterday
Nickel US$ 19,260/t vs US$19,115/t yesterday
Zinc US$ 3,042/t vs US$3,041/t yesterday
Lead US$ 2,126/t vs US$2,133/t yesterday
Tin US$ 35,250/t vs US$35,200/t yesterday
Oil US$76.3/bbl vs US$75.3/bbl yesterday
Oil prices extended gains in early trading today, moving higher on growing fuel demand and a larger than expected draw in US crude inventories as production remains hampered in the Gulf of Mexico after two hurricanes
The market was also supported by a return of appetite for risk assets as concerns eased over a potential default by property developer China Evergrande and its possible fallout on the world’s second-largest economy
Both Brent and WTI increased 2.5% yesterday after data from the US Energy Information Administration showed crude stocks fell by 3.5MMbbls to 414MMbbls in the week to 17 September, the lowest total since October 2018, in a bigger drawdown than the market had expected
Several OPEC+ countries including Nigeria, Angola and Kazakhstan have struggled in recent months to raise output due to years of under-investment or maintenance work delayed by the COVID-19 pandemic
In a sign of strong fuel demand as travel bans ease, East Coast refinery utilisation rates in the US rose to 93%, the highest since May 2019, EIA data showed
The rise in oil prices came even as the US dollar held near a one-month high after the Fed signalled rate hikes could come next year, more quickly than expected
US crude oil, gasoline and distillate inventories also fell last week, according to market sources, citing American Petroleum Institute figures yesterday, as numerous refineries and offshore drilling facilities remained shut following Hurricane Ida
Gasoline inventories fell by 432,000bbls and distillate stocks fell by 2.7MMbbls
Natural Gas US$4.776/mmbtu vs US$4.846/mmbtu yesterday
Gas prices have pulled back to under US$5/mmbtu however the ongoing fundamentals still skew the outlook to the upside – particularly in Europe
The steep rise in European gas prices has been driven by a combination of a strong recovery in demand and tighter-than-expected supply, as well as several weather-related factors.
These include a particularly cold and long heating season in Europe last winter, and lower than usual availability of wind energy in recent weeks
European prices also reflect broader global gas market dynamics
There were strong cold spells in East Asia and North America in the first quarter of 2021
They were followed by heatwaves in Asia and drought in various regions, including Brazil
All of these developments added to the upward trend in gas demand
In Asia, gas demand has remained strong throughout the year, primarily driven by China, but also by Japan and Korea
On the supply side, LNG production worldwide has been lower than expected due to a series of unplanned outages and delays across the globe and delayed maintenance from 2020
Iron ore 62% Fe spot (cfr Tianjin) US$110.6/t vs US$95.4/t – Iron ore prices rally from lows as market sentiment calms over Evergrande crisis
Iron ore prices have rallied to $110/t from yearly lows of $94/t.
Concerns over a potential slowdown in China’s economic growth on the back of a widespread real estate crisis added to iron ore’s recent downward pressures this week.
Iron ore has been hit by Beijing’s crackdown on the steelmaking industry over emissions concerns, with some provinces reducing steel output by 20%.
The People’s Bank of China’s decision to inject net RMB110bn of liquidity, its largest stimulus measure in 8 months, has reduced market participants over a potential credit crisis.
The agreement reached between Evergrande and yuan bondholders yesterday also boosted optimism over China’s growth outlook, with the property developer agreeing to pay $35.9m.
However, Evergrande’s woes are far from over, and iron ore speculators will focus on Evergrande’s overseas interest payment of $83.5m due today.
Chinese steel rebar 25mm US$881.3/t vs US$858.3/t
Thermal coal (1st year forward cif ARA) US$128.5/t vs US$123.6/t
Coking coal swap Australia FOB US$390.0/t vs US$390.0/t
China Ilmenite Concentrate TiO2 US$375.00/t vs US$375.0/t
Cobalt LME 3m US$53,380/t vs US$53,380/t
NdPr Rare Earth Oxide (China) US$92,321/t vs US$92,329/t – Automakers look to Australian rare earth suppliers over concerns of Chinese-dominated supply
Arafura Resources has revealed it is under ongoing discussions with European car manufacturers for a non-Chinese supply of rare earths integral to the EV supply chain.
The Company’s $728m Nolans project in the Northern Territory has the potential rare earth supply for 10% of EV permanent magnet demand.
Arafura’s CFO, Peter Sherrington, expects to announce deals with automakers by the end of the year.
China currently controls 66% of rare earth mining and 85% of the refining market.
Rare earth miners who refine on site will be particularly attractive to European automakers looking for high environmental and ethical standards to their critical supply chains.
German regulation expected for 2023 rules that companies will be scrutinized over social standards across their supplier networks.
Lithium carbonate 99% (China) US$24,279/t vs US$23,817/t
China Spodumene Li2O 5%min CIF US$1,010/t vs US$990/t
Ferro-Manganese European Mn78% min US$1,811/t vs US$1,813/t
China Tungsten APT 88.5% FOB US$303/t vs US$303/t
China Graphite Flake -194 FOB US$535/t vs US$535/t
Europe Vanadium Pentoxide 98% 8.5/lb vs US$8.7/lb
Europe Ferro-Vanadium 80% 33.75/kg vs US$34.25/kg
Spot CO2 Emissions EUA Price US$69.4/t vs US$69.5/t
Volkswagen building new EV battery system factory in China
Volkswagen has said that is building a new EV battery system factory as part of a joint venture with JAC Motors, in Hefei, eastern China, with production expected to start in 2023.
VW have a stake in EV battery maker Gotion which is also based in Hefei.
The company has said it will invest more than $164m in the battery plant by 2025.
Initial capacity will be 150,000 to 180,000 battery systems a year for local EV production.
Five ID. series electric models were rolled out in China this year – 7000 models were sold in August and VW are aiming to deliver 80,000 to 100,000 units in total this year.
As reported by Reuters last week, Volkswagen is in talks to tighten its grip on the Hefei venture, sparking tensions with its other Chinese partners who fear they could be side-lined.
Anglo Asian Mining* (LON:AAZ) 117.5p, Mkt Cap GBP142m – H1 results show impact of reagent, consumables and diesel cost increases
Anglo Asian Mining has reported a pre-tax profit of 45.9m for the six months to 30th June 2021 (2020 – $11.8m) and declared a dividend of USc4.5/share.
The company also reports a 30th June cash balance of $36.6m and is debt-free.
The profit is derived from the sale of 19,582oz of gold, 7,716oz of silver in dore (2020 – 23,979oz of gold and 5,883oz of silver) as well as “8,408 dry metric tonnes (H1 2020: 5,544 dry metric tonnes) of copper and precious metal concentrate”.
Metal sales generated $35.0m in revenue (2020 – $39.6m) but the cash cost of sales rose by $5m to $27.8m (2020 – $22.8m) “largely due to higher reagent, spare part and consumable costs”.
“All-in sustaining cost (“AISC”) of gold production in H1 2021 of $848 per ounce (H1 2020: $743 per ounce) due to the fixed cost impact of lower production and increased consumption and prices of certain consumables including diesel and reagents”.
“The price of diesel fuel in Azerbaijan also increased in January 2021 by 33.3 per cent. to US 47 cents per litre, adding approximately $0.5 million to the costs for H1 2021. The cyanide consumption of the agitation leaching plant also increased significantly due to the change in production profile, processing only sulphide ores containing copper”.
The company is maintaining its full year production guidance for 2021 “of between 64,000 to 72,000 GEOs … [Gold Equivalent Ounces]”.
Chief Executive, Reza Vaziri, confirmed that “This year has seen the easing of most COVID-19 restrictions that had placed constraints on our business both in Azerbaijan and elsewhere, and the Gedabek site now operates normally.”
Mr. Vazirii also commented that the “financial performance in H1 2021 was in line with expectations with revenues of $43.5 million compared to $45.8 million in H1 2020, as lower sales of gold bullion were partially offset by higher sales of copper concentrate”.
*SP Angel act as Nomad and broker to Anglo Asian Mining
Caledonia Mining* (LON:CMCL) 900p, Mkt Cap GBP109m – Acquisition of the Maligreen project
Caledonia Mining reports that it has agreed to acquire the Maligreen project in the Gweru district of Zimbabwe fot a cash consideration of US$4m.
The brownfield site “is estimated to contain a NI 43-101 compliant inferred mineral resource of approximately 940,000 ounces of gold” in an estimated 15.6mt at an average grade of 1.88g/t gold and has been subject to significant exploration, including around 60,000m of diamond core and percussion drilling over the last 30 years.
The company says that “76% of the inferred mineral resource (approximately 712,000 ounces) is shallower than 220m indicating the potential for an open pit mining operation”.
Historically, “two historic open pit mining operations … produced approximately 20,000 oz of gold mined from oxides between 2000 and 2002” when the operation closed.
“Caledonia expects to drill an initial 4,800 meters at an estimated cost of US$1.6 million over a period of 18 to 24 months to improve its understanding of the existing resource and assess the potential for a mining operation. Further exploration opportunities exist within the claims area and a subsequent exploration programme is under consideration to explore for continuations of the existing inferred mineral resource at depth to the north-west and the strike extension in the northern part of the property”.
Welcoming the acquisition, CEO, Steve Curtis, said that “he property has significant potential and has benefitted from many years of exploration activity … We believe the property also offers significant upside exploration potential at the north-west extensions to the existing inferred mineral resource and at additional exploration targets in the northern part of the property”.
Conclusion: The acquisition of the historic Maligreen property builds on Caledonia Mining’s established Zimbabwean operating expertise and comes with an exiting 0.7m oz inferred resource. A planned $1.6m, 4,800m drilling programme and exploration potential identified to the northwest may firm up and expand the current estimate.
*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe
Cornish Metals* (LON:CUSN) – 11.1p, Mkt cap GBP30m – Stepping up drilling capacity at United Downs to investigate a new target
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Cornish Metals reports the addition of a second drill rig to its campaign at United Downs in order to explore a new target, known as the Trenares Lode, located around 900m south of the UD Lode where drilling is continuing.
The polymetallic Trenares Lode is situated 300m south of the former Mount Wellington mine and was “discovered in the 1970s by Cornwall Tin & Mining Ltd. The lode was first identified through surface drilling and subsequently an exploration drift was extended towards the lode from Mount Wellington 4 Level, however no further exploration work was conducted after Mount Wellington Mine closed in 1977”.
Drilling is already underway at Trenares and the company is planning an initial campaign of “up to 12 holes from four locations over the next three months”.
CEO, Richard Williams said that the continuing “United Downs drilling programme focused on the UD Lode has successfully demonstrated the existence and the continuity of mineralisation in the holes returned to date. The addition of a second drill rig allows us to test additional targets that have been identified.”
In addition to the operational developments at United Downs, Cornish Metals has issued its interim report for the six months to 31st July reporting a loss of C$1.1m (2020 – loss of C$0.8m) and a 31st July cash balance of C$10.1m.
Reporting on what Mr. Williams described as “a busy period for the Company after the successful listing on AIM earlier in the year”, the company highlights progress including:
The start of a “phased exploration program at the United Downs exploration project in April 2021 with results from first 3,042 meters of drilling reported to date, with a further 5,000 to 6,000 meters of drilling planned under the program “; and
“Increases in Indicated Resource and Inferred JORC (2012) Compliant Resource of contained tin / tin equivalent by 10.2% and 129.8%, respectively, for the Lower Mine in an updated Mineral Resource Estimate for South Crofty Mine”; and
Simplification of the Osisko Loan Note through a conversion “into two royalty agreements over mineral properties in Cornwall with an accompanying simplified and reduced security package”. Under the new structure South Crofty is subject to a 1.5% NSR while the other Cornish properties attract a 0.5% NSR.
The company also confirms its future programme will, as previously stated, include:
The continuation of the 9,100m initial drilling programme at United Downs leading to the delineation of an initial JORC compliant inferred mineral resources estimate. A total of 4,040m of the programme has been completed so far; and
Plans to “Test three lodes with a 1,000 meter of strike length to a depth of 500 meters in the initial phase. Management believes there are up to seven further mineralized lode structures with a total resource potential of between four million tonnes and ten million tonnes”; and
Contingent upon the results of the initial drilling, Cornish Metals plans an “in-fill drilling program at United Downs to advance the project to a feasibility study within three years”.
Conclusion: The deployment of a second drill rig to investigate the new Trenares Lode target at United Downs should provide additional resource development opportunities at United Downs over the coming weeks and we look forward to the initial results from Trenares as well as further data from the continuing drilling of the UD Lode.
* SP Angel acts as broker and financial advisor to Cornish Metals.
Kavango Resources (LON:KAV) 5.75p, Mkt cap GBP23m – Personnel and exploration update
Kavango reports that it has recruited new senior commercial and exploration personnel to help develop its projects in Botswana.
Tiyapo (Tipps) Ngwisanyi is the former and founding CEO of the Government owned Botswana Geoscience Institute. Tipps has joined the Company as Managing Director of Kavango Minerals.
John Lauderdale is a Chartered Geologist and seasoned exploration professional, who has run large-scale exploration programmes across Africa. John has joined Kavango as Senior Consulting Geologist.
Jeremy S. Brett is an internationally recognised Professional Geoscientist who has worked previously in the Kalahari Suture Zone (“KSZ”). Jeremy is now working with Kavango as a Senior Consulting Geophysicist.
The company has updated the geological model for Target Area B, where the “Great Red Spot” magnetic anomaly continues to be evaluated. Target B1 is a 475m by 550m conductive anomaly, with a conductance reading of 8,200 Siemens and a decay constant estimated to be in excess of 350ms.
Kavango are also drilling at site, with hole TA2DD002 currently being drilled to a target depth of 1,000m at Target Area A, after which it will move to Target Area B.
Kavango will then drill one geological hole into the Great Red Spot and one borehole to intersect the conductor of Target B1.
CEO Ben Turney commented: “I am delighted to welcome Tipps, John and Jeremy on board. Each brings valuable skills, expertise and experience to Kavango. These senior appointments are the culmination of months of hard work and reflect the significant progress we have made as a business over the course of 2021
Mkango Resources* (LON:MKA) 27p, Mkt Cap GBP42m – Start of geotechnical drilling and pitting
The Company launches geotechnical drilling and pitting programme at the Songwe Hill Rare Earths development project in Malawi.
The programme to be carried by Geoconsult Limited, a leading Malawian geotechnical engineering firm, and Zutari Limited, a geotechnical firm from South Africa.
Collected geotechnical samples will be tested in Lilongwe, Malawi, providing data to finalise detailed mining engineering design plans as part of the DFS work.
DFS is expected to be completed in Q1/22.
*SP Angel acts as nomad and broker to Mkango
Ormonde Mining* (LON:ORM) 0.85p, Mkt Cap GBP4m – Interim results reported ahead of reconvening of the AGM on 30th September
Ormonde Mining, has reported a post-tax loss of EUR0.63m for the six months to 30th June 2021 (2020 – Profit of EUR1.16m including a gain of EUR1.6m from the disposal of the company’s residual interest in the Barruecopardo tungsten mine).
The company reports a 30th June cash balance of EUR4.3m.
Ormonde Mining confirms that, as previously disclosed, “progress in relation to the identification and evaluation of new opportunities slowed, and ultimately stalled, for reasons including the absence of agreement with the largest shareholder in relation to proposals the Board believed to be transformative for the Company and its shareholders”.
The company will reconvene its adjourned AGM on 30th September at which stage these issues will be re-addressed and maybe resolution and/or greater clarity on the underlying issues between the incumbent management and the principal shareholder may be achieved.
The company has also provided a brief review of its existing properties.
Applications for the renewal of the gold exploration permits in Salamanca and Zamora in Spain have been submitted to the authorities and while they are being processed, “No field activities will be carried out”.
Ormonde Mining cautions that “This process can take some time to be completed with no guarantee in relation to the renewal of the permits”.
At the La Zarza copper/gold property in the Pyrite Belt of southern Spain discussions continue “with interested parties with a view to disposing of its data and land assets”.
La Zarza is reported in Ormonde’s balance sheet “at a value of EUR2.4 million”.
Conclusion: The reconvened AGM on 30th September looks like it will be turbulent as differing views on the future direction and leadership of the company collide. It will, however, provide shareholders with an opportunity to draw a line under the recent uncertainty and allow their company to move ahead.
*SP Angel acts as Broker to Ormonde Mining
Phoenix Copper* (LON:PXC) 55p, Mkt Cap GBP64m – Operational progress report
(Phoenix holds 80% of the Empire mining property in Idaho)
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Phoenix Copper has issued a progress report on its operational activities in and around the historic Empire mine in Idaho where the company is working on a feasibility study for an oxide copper open-pit mine based on an initial NI43-101 compliant measured and indicated resources estimate of 22.9mt at an average grade of 0.38% copper, 0.19% zinc, 10.3g/t silver and 0.324g/t gold.
The company confirms that it has now completed six holes totalling 1,099m of its deep sulphide drilling programme to investigate the underground sulphide mineralisation which lies beneath the oxides and which sustained the historic Empire mine’s production during the first half of the twentieth century.
“Four of these holes targeted the zone intercepted in KXD21-02, which included 0.5 metres of 8.38% copper, 120 grams per ton silver, and 1.31 grams per ton gold. Assay results are awaited for these four holes” and “Drilling continues on a further 3,650 metres”.
Phoenix Copper also confirms that the planned geophysical surveys at the neighbouring Red Star/Horseshoe and Navarre Creek properties have been completed and reports detailing the interpretation are awaited.
Results from the ground magnetic work at Red Star/Horseshoe will aid the detailed planning of a 3,000m drilling programme which is expected to start shortly while interpretation of the EM (electro-magnetic) programme at Navarre Creek “will be used to define a 2,300-metre drilling programme, expected to commence as soon as the drill site permitting is approved”.
The company says that the permitting process for the Empire oxide pit is proceeding “as planned, with the hydrological drilling programme nearly completed. The related feasibility study is also ongoing in accordance with the anticipated timetable, with final engineering and process designs on schedule”.
CEO, Ryan McDermott, also confirmed that, in addition to the “construction of a permanent office in Mackay … The Company has also begun to purchase staff housing and warehouse facilities in and near Mackay as part of executing our plans for long-term metals production from our properties”
Conclusion: The first completed hole of Phoenix Copper’s programme to investigate the deep level sulphide mineralisation at Empire intersected high grade copper and verified key elements of the underlying exploration model which envisages deeper level porphyry mineralisation. Results of a further six holes including some close to the high grade zone intersected in the first hole are awaited. Meanwhile results from geophysical work at both Red Star/ Horseshoe and at Navarre Creek will assist in the planned drilling at both sites. We await further news as the exploration programme and the continuing feasibility study proceeds.
*SP Angel act as Nomad for Phoenix Copper
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.
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The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
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
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
Prince Frederick House
35-39 Maddox Street London
*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
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt
Natural Gas, Uranium, Iron Ore
Bloomberg OTC Composite
Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite