Today’s Market View – Vast Resources, URU Metals, Strategic Minerals and more…

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SP Angel . Morning View . Friday 01 10 21


Rising energy costs likely to raise short-term inflation beyond Fed expectations


China orders state-owned energy companies to buy energy whatever the cost


Albermarle buys China-based lithium processor for $200m




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




Arc Minerals* (LON:ARCM) – BUY – Assay results due soon from Cheyeza discovery. Annual results comment


Aura Energy* (LON:AURA) – Annual results and project review


Empire Metals* (LON:EEE) – Exploration update at Central Menzies


Eurasia Mining* (LON:EUA) – Well capitalised with strong asset base to help the team deliver on development strategy


Europa Metals Limited (LON:EUZ) – Updated resources estimate at the Toral zinc, lead, silver project in Spain


Ormonde Mining* (LON:ORM) – Resignation of executive management team


Rambler Metals and Mining* (LON:RMM) – Progress on loan finance


Strategic Minerals* (LON:SML) – Annual results and project updates


URU Metals* (LON:URU) – FY March 2021 results


Vast Resources (LON:VAST) – Manaila Polymetallic Mine update




Albermarle buys China-based lithium processor for $200m


The world’s largest lithium producer, Albermarle, has announced its plans to buy Guangxi Tianyuan New Energy Materials.


The deal is valued at $200m and enables Albermarle to expand its lithium conversion capacity.


Tianyuan operates a lithium processing plant at the port of Qinzhou with a 25,000t of LCE capacity with battery-grade carbonate and hydroxide processing facilities.


The Qinzhou plant is expected to begin commercial production in 1H 2022.


Albermarle mines lithium in Chile, the US and Australia.


The takeover marks a rare example of a Chinese firm selling a key battery metal facility to the US as Beijing has looked to consolidate its supply of vital EV components.




Tin flash crash leaves traders confused


Tin had its sharpest decline in a decade yesterday, falling c. 12%% to $31,305/t.


The metal’s price has since recovered to $33,690/t sparking concerns of an erroneous trade or a technical issue with the exchange.


The LME released a statement saying they ‘are looking into the circumstances of the trades in question and continue to undertake enhanced monitoring in respect of the tin market more broadly’.


Tin is the LME’s least liquid stock and thus such price swings are expected, however this was a uniquely volatile move.




Gold recovers 1.7% to US$1,757/oz on weak US jobs data and concern over debt default


Traders sensed a softening from the FOMC’s recent hawkish statements suggesting a delay to the raising of interest rates with 10-year Treasury notes falling to 1.499%.


Powell noted the potential for inflation to last longer than expected in his Congressional hearing yesterday, raising gold’s appeal.


Weekly jobless claims rose to 362,000 for last week, having been predicted around the 335,000 mark.


Added concern came from Yellen’s warnings of a ‘catastrophic’ disaster if Republicans continue to block Democrat attempts to raise the debt ceiling.


The S&P 500 has had its worst month since March 2020, falling 4.8% in September,


The US dollar continues to gain on Evergrande contagion fears and potential for early Fed tapering




China orders state-owned energy companies to buy energy whatever the cost (afr)


Chinese central government officials have ordered the country’s state-owned energy companies to secure supplies for this winter ‘at all costs’.


Vice Premier Han Zheng, who supervises the nation’s energy sector and industrial production, told energy companies at an emergency meeting earlier this week.


More than half of China’s mainland provinces are currently limiting electricity use in some way and many regions have imposed power restrictions to industry while preserving domestic supplies, though some provinces have been told to limit air conditioning.


In a complete shift in policy, the leadership has now told the country’s state owned miners to produce coal at full capacity for the rest of the year even if they exceed annual quota limits.


Authorities had capped coal production with quotas and were also clamping down on illegal mining and limiting production from certain sites in a bid to improve air quality.


Chinese coal futures surged to a new record yesterday before the weeklong holidays, with prices already more than doubling this year.


Conclusion: The Chinese government has done all it can this year to keep a lid on energy and metals prices with SRB stock releases to verbal interventions.


China appears to have realised that it is unable to control prices and is now competing to acquire more coal, gas and oil in global markets.


The move is bound to create greater inflation in energy prices than might normally be expected in such conditions.




Dow Jones Industrials -1.59% at 33,844


Nikkei 225 -2.31% at 28,771


HK Hang Seng -0.36% at 24,576


Shanghai Composite CLOSED at 3,568




Economics


US – Biden’s $1.2tn infrastructure bill delayed amid Democrat infighting


A vote on Biden’s key manifesto bill has been postponed as divisions emerge between moderate and progressive Democrats.


Speaker of the House, Nancy Pelosi, had assured a vote on the bill.


Biden’s $1.2tn bipartisan infrastructure bill and the $3.5tn ‘social safety net’ bill have hit a roadblock amid tensions over a potential US debt default as Republicans attempt to avoid raising the federal borrowing limit


Treasury secretary Yellen has warned of the US government’s potential to run out of money by October 18 and has called to eliminate the ceiling completely.




Supply constraints stifle Asia’s factories


Persisting Covid-19 outbreaks in Malaysia and Vietnam saw limitations in factory activity in September.


Japan’s factory activity grew at its slowest rate in 7 months.


Manufacturers have been limited by chip shortages and supply disruptions alongside soaring raw material costs.


Indonesia and India, whose Delta variant cases have been falling, saw improving manufacturing activity.


China’s PMI was hit by power restrictions with the country’s pessimistic growth outlook having a contagious effect on neighbouring Asian countries.


A slowdown in the region’s manufacturing growth is expected to persist into next year as it recovers from Covid disruptions.




China – China orders bankers to support new homebuyers and property market


China is preparing for the collapse or restructuring of Evergrande and its indebted peers


The property developer debt crisis is symptomatic of companies which overleverage in a fast growth market


China is reigning companies which have grown through excessive borrowing and loose management control


The PBOC has asked 24 banks to provide support to avert a property market collapse.


Banks have been asked not to cut off funding to developers all at once as the PBOC wants to maintain a healthy property market (SCMP)


If Evergrande collapses then 1.5m buyers will be stuck with deposits and finance arrangements on 1.5m new homes causing major disruption to the market


The move should help avert a broader contagion if Evergrande is unable to meet its interest and debt obligations


President Xi is keen to promote a broader distribution of wealth within the Chinese economy and may see greater home ownership as a key part of this strategy


China has millions of uninhabited apartments held by property speculators.


The FT reckons there is enough unsold property to house 90m people in China with estimates suggesting unsold property of ~450m sqm


Beijing is reported to be technically 20% empty according to Forbes


One estimate reckons that around 20% of major Chinese cities still suffers a housing deficit highlighting the challenge of long-term urban planning for housing.


China’s banks have around $8tn of outstanding loans to developers and homebuyers with possibly 40% all Chinese bank assets associated with property.


A downward revaluation could therefore have a potentially disastrous impact on the banking system.


The PBOC recently reiterated that it will not use the property market as a tool to stimulate the economy for short-term growth and will stick to the long-standing government principle that “housing is for living, not for speculation.” (SCMP).


HSBC, Pimco and T Rowe reduce Evergrande exposure, Blackrock and UBS remain bullish


HSBC has offloaded its entire stake in Evergrande following Pimco, Barings, T. Rowe Price and TCW who have all cut their exposure.


HSBC are concerned over an extended debt restructuring recovery of their dollar-denominated bonds, expecting local investors to take priority.


However, the funds see long-term potential in China’s real estate sector, citing Beijing’s deleveraging efforts as a positive factor alongside continued high demand.


Pimco is looking to rotate into better financed property developers in Chinese urban and coastal housing markets.


Blackrock sees a likely takeover by a state-owned company and has consequently accumulated more Evergrande bonds this month.


Conclusion: Stabilising support for the property market may serve to avert the an outright collapse of Evergrande though we suspect the group will struggle to fiance new construction ensuring its eventual demise. Maybe this is what the distressed debt investors are buying up Evergrande bonds.




China – population could halve within 45 years


A new study indicates CCP policies may cause the Chinese population to halve over the next 45 years.


The projection is based on the official birth rate of 1.3 children per woman last year (SCMP)


The nation needs a birth rate of 2 children per woman for population stability at >1.4bn people


Researchers from the University of Washington estimated the China’s population may halve by 2100 in a study published in the Lancet.


China recognises it needs to improve working, living and financial conditions to persuade families to have more children


If the population halves, it will leave allot of surplus property.




Germany – Inflation accelerated to the highest pace in nearly 30 years in September on high commodity prices and supply bottlenecks.


The Bundesbank said this week German inflation is likely to climb higher from already elevated levels and will stay above 2% through mid-2022.


High energy and power prices may see headline inflation numbers higher before year end.


Increasing numbers of German workers are demanding higher pay on increasing inflation, with some going on strike, Financial Times reports.


Separately, retail sales bounced in August from a weak reading in the previous month, although, the headline reading fell short of market estimates.


CPI (EU Harmonised, %mom): 0.3 v 0.1 in August and 0.2 est.


CPI (EU Harmonised, %yoy): 4.1 v 3.4 in August and 4.0 est.


Retail Sales (%mom): 1.1 v -4.5 (revised from -5.1%) in July and 1.5 est.


Retail Sales (%yoy): 0.4 v 0.4 (revised from -0.3) in July and 1.8 est.




Uzbekistan considers selling stake in Navoi mining giant


Uzbekistan deputy prime minister has announced the state is considering selling a 10-15% stake in Navoi Mining and Metallurgical Combine in 2024.


Navoi, a gold and uranium miner, is one of the Uzbekistan state’s largest industrial enterprises. The state owns 50% of Uzbekistan’s economy.


The president has been looking to reform Uzbekistan to a market-based economy and speed up privatisation of its state assets.


The state was considering listing the company in 2023 but met difficulties with its international rating and reporting standards.


Navoi owns Muruntau, the world’s largest gold mine by production and estimated reserves and signed a $1bn credit line with Russian lender VTB yesterday




Currencies


US$1.1588/eur vs 1.1592/eur yesterday. Yen 111.09/$ vs 112.04/$. SAr 15.064/$ vs 15.160/$. $1.344/gbp vs $1.342/gbp. 0.720/aud vs 0.719/aud. CNY 6.445/$ vs 6.467/$.




Commodity News


Precious metals:


Gold US$1,757/oz vs US$1,728/oz yesterday


Gold ETFs 99.2moz vs US$99.3moz yesterday


Platinum US$963/oz vs US$957/oz yesterday


Palladium US$1,877/oz vs US$1,883/oz yesterday


Silver US$22.17/oz vs US$21.57/oz yesterday




Base metals:


Copper US$ 8,930/t vs US$9,098/t yesterday


Aluminium US$ 2,863/t vs US$2,907/t yesterday


Nickel US$ 17,755/t vs US$18,310/t yesterday


Zinc US$ 3,004/t vs US$3,034/t yesterday


Lead US$ 2,089/t vs US$2,128/t yesterday


Tin US$ 33,690/t vs US$35,305/t yesterday




Energy:


Oil US$78.3/bbl vs US$78.5/bbl yesterday


Oil fell in early trading today on the prospect that OPEC+ producers might step up a planned increase in output to ease supply concerns


OPEC+ will meet again on Monday. With reports that adding more oil than planned was being looked at as a scenario


OPEC+ is unwinding its production curbs at a rate of 400,000bopd a month


Oil demand globally is recovering from the summer Delta variant spike faster than some observers had expected


Soaring prices of natural gas and coal in Europe and Asia are forcing more gas-to-oil switching at power generating units globally, further pushing up demand for oil


On the supply side, Hurricane Ida disrupted production in the US Gulf of Mexico, and some OPEC+ members are struggling to pump to the full capacity of their quotas


In addition, US shale producers have shown remarkable discipline in drilling activity despite the fact that WTI has been trading above US$60/bbl for nearly six months


Many analysts and oil companies see global oil demand returning to the pre-crisis levels of 2019 as early as the start of next year, if not earlier, by the end of 2021


Oil demand worldwide is expected to hit 100MMbopd by the end of this year or in early 2022, whilst demand next year is set to rise to 102MMbopd




Natural Gas US$5.908/mmbtu vs US$5.533/mmbtu yesterday – China orders state-owned energy companies to buy energy whatever the cost (afr)


US natural gas futures climbed more than 2% to a seven-year high earlier this week as record global gas prices keep demand for US LNG exports strong


However, prices remain volatile rising over 10% early in the session for a second day in a row, since volumes were thin with the front-month October contract expiring yesterday


Prices rose despite forecasts for milder weather and lower demand than previously expected over the next two week


Gas prices in Europe and Asia traded about four times over US gas due to demand in Asia and low stockpiles in Europe ahead of the winter heating season.


The UK’s NBP virtual trading hub for natural gas also hit a record-high price, with front-month contracts reaching an all-time high yesterday afternoon


The surge in natural gas prices is also due to a massive supply shortage in Europe, a situation that is quickly spilling over into other countries and other markets, including the coal and oil markets as demand for power exceeds supply


The natural gas crisis is set to intensify as winter heating season approaches, with supplies insufficient to keep up with current demand, let alone build stockpiles for what will be increased demand in the cold season


Europe’s natural gas crisis has prompted European fertilizer producers to curb output, which could send food prices soaring along with the natural gas prices


It has also sparked warnings of blackouts and factory shutdowns


If the winter is colder than normal, natural gas supplies could run even shorter, leaving Europeans and possibly other countries, especially those that can barely afford current energy prices, in the cold




Bulk:


Iron ore 62% Fe spot (cfr Tianjin) US$115.9/t vs US$120.1/t


Chinese steel rebar 25mm US$899.2/t vs US$896.2/t


Thermal coal (1st year forward cif ARA) US$155.0/t vs US$149.3/t


Coking coal swap Australia FOB US$356.0/t vs US$366.0/t


China Ilmenite Concentrate TiO2 US$379.38/t vs US$378.1/t




Other:


Cobalt LME 3m US$53,380/t vs US$53,380/t


NdPr Rare Earth Oxide (China) US$92,943/t vs US$92,167/t – China raises rare earth quotas to record highs


China has increased its 2021 rare earth output quotas by 20% y-o-y.


The Ministry of Industry and Information Technology raised rare earth mining output quotas at 168,000 from 140,000 last year.


The quota for smelting and separation has been raised 20% to 162,000t.


The move comes in a bid to increase supply for manufacturers.


China’s rare earth supply has been limited following Covid-related bottleneck – especially the closure of its primary supplier Myanmar’s key border.


The quotas are given to 6 state run companies, although Beijing is looking into the possibility of restructuring them with the Ganzhou government.




Lithium carbonate 99% (China) US$26,533/t vs US$26,444/t


China Spodumene Li2O 5%min CIF US$1,110/t vs US$1,110/t


Ferro-Manganese European Mn78% min US$1,802/t vs US$1,803/t


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


China Graphite Flake -194 FOB US$555/t vs US$555/t


Europe Vanadium Pentoxide 98% 8.1/lb vs US$8.1/lb


Europe Ferro-Vanadium 80% 31.75/kg vs US$31.75/kg


Spot CO2 Emissions EUA Price US$72.8/t vs US$73.0/t




Battery News


BHP delivers first nickel sulphate crystals from Kwinana for EV battery use


BHP’s new Kwinana nickel sulphate plant has produced its first delivery of nickel sulphate crystals.


The Company hopes the plant will produce 100,000t pa of nickel sulphate, providing the 700,000 EVs annually.


Nickel sulphate production is far more economical than nickel metal.


BHP signed a nickel supply agreement with Tesla this year as the US carmaker looks to develop a cleaner supply chain for its battery materials.




Company News


Arc Minerals* (LON:ARCM) – 3.67p, Mkt cap GBP41m – Assay results due soon from Cheyeza discovery. Annual results comment


(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.)


BUY – CLICK FOR PDF


Arc Minerals have reported results to end December 2020.


Admin expenses were GBP1.5m to end December 2020 vs GBP2.3m for the year to end-March 2020


The operating loss fell to GBP1.7m from GBP2.9m as covid-19 restricted slowed on-the-ground activities.


Currency translation differences widened to GBP3m from GBP2.2m in 2019.


The Zambian Kwacha lost 15% of its value to end-2020 at ZMK 21,178 vs the US dollar, having ended March 2020 at ZMK 17,930. The Kwacha has since regained substantial value rising to ZMK 16,815 per US dollar or ZMK 22,598 per GBP.


Renewed strength of the Zambian Kwacha driven by the election of a new President Hakainde Hichilema who is viewed as popular with miners and other companies looking to invest in Zambia.


The Kwacha is now back to where it was in July 2020 with the potential to strengthen further if copper prices remain relatively high and the new President acts to encourage further investment into Zambia.


Arc’s presentational currency is in British pounds but it’s Zambian subsidiaries operate in Zambian Kwacha resulting in gains or losses according to the movement of Sterling Kwacha rate. The monetary assets and liabilities for the Zambian subsidiary balance sheets are translated at the closing rate with income and expenses converted at average exchange rates during the accounting year; and all resulting exchange differences are recognised in other comprehensive income where material.


The total comprehensive loss fell to GBP3.7m vs a loss of GBP23.6m for the year ending end-March 2020 as when a foreign operation is sold, cumulative exchange differences are reclassified into the income statement as part of the gain or loss on sale.


We note; Arc Minerals recorded a substantial GBP20.6m loss on the disposal of assets in the accounts for the year to end March 2020 relating to the sale of the Sturec and Misisi (Casa Mining) assets. The disposal of Sturec generated a loss of GBP5.6m while the sale of Misisi led to a loss of GBP15m after proceeds of GBP4m in the accounts.


Conclusion: The publication of results to end December 2020 reminds us of a year dominated by Covid-19 that many of us would prefer to forget. While the results are historical, they do highlight the reduction in activity in 2020. Arc is now drilling again in Zambia with two new ‘discoveries’ announced at Cheyeza and Fwiji and assay results expected very soon.


Cheyeza East: The identification of massive sulphide mineralisation seen in the drill core at Cheyeza East bears some similarity with the giant Kamoa discovery made in the DRC by Ivanhoe Mining. The discovery is around 30km from the Sentinel mine and around 200km south of the giant Kamoa copper mine.


Fwiji: Mineralisation and quartz veining visible in the core at Fwiji may be similar to veining at First Quantum’s Kansanshi mine in Zambia


*SP Angel acts as Nomad and broker




Aura Energy* (LON:AURA) 11p, Mkt Cap GBP43.5m – Annual results and project review


In its annual report for the year to 30th June 2021, which was released yesterday, Aura Energy reports a loss of $3.0m (2020 – loss of $5.9m) and a year-end cash balance of $3.2m.


The company explains that during the year it “deferred most technical activities and focused on stabilisation of the Group following actions by a group of shareholders and completed a number of technical activities near the end of the year”.


Describing progress at its Tiris uranium project in Mauritania, Aura Energy describes the previously released mineral resources update which incorporated results from the drilling at Sadi not included in previous estimates and says that “Assaying for vanadium content was undertaken to calculate a vanadium resource with the target of delivering a by-product credit for the Tiris cash cost, potentially lowering the overall operating costs”.


The new resource estimate, released in August, shows 100.3mt at an average grade of 254g/t U3O8 for a total content of 56m lbs of U3O8. using a 100g/t cut off.


Aura Energy also describes its review of the capital cost estimate for Tiris which sees the 2019 estimate increased by 19% to a still comparatively modest US$74.8m (partially as a result of currency movements) and its continuing optimisation review which aims to deliver “capital and operating cost reductions”.


“Activities at the Haggan Battery Metals project remained on care-and-maintenance” and the company confirms its resolve to pursue its compensation claim against the Swedish Government in relation to the Government’s August 2018 decision to ban uranium mining.


At Tasiast South, also in Mauritania, the Group continued to progress a corporate transaction for the Group’s gold assets and activities were largely on care and maintenance although we note that, in August, the company announced the completion of a gravity survey over the licence and in September started an induced polarisation geophysical survey.


Trading of the company’s shares on the ASX resumed on 23rd September.


The annual report also says that “The Group has been made aware of a potential claim against it for approximately $330,000. The Group maintains that the claim has been settled in full previously and will defend vigorously against the claim” although the nature of the claim is not apparent.


Conclusion: After a year when operational matters were largely in abeyance, Aura Energy is resuming work on the ground in Mauritania with water studies underway for the Titis uranium project and early stage exploration, including geophysics, being conducted at Tasiast South.


*SP Angel are Nomad and Broker to Aura Energy




Empire Metals* (LON:EEE) 1.75p, Mkt cap GBP5.9m – Exploration update at Central Menzies


Empire Metals reports that it has completed a soil sampling programme and RC drill programme at its Central Menzies project in Western Australia.


The soil programme consisted of 688 sites tested on each of the four licenses, with a sample grid of 160m x 40m and samples collected 10-30cm from below surface.


The areas selected for sampling represented areas of the greatest prospectivity based on the location of historical workings as well as a low density of prior drilling.


The resulting geochemical mapping found the main Au anomalism coincides with the Teglio trend and matches the recently completed Empire interpretation based on existing workings, geology in outcrop and historical RC holes, and gold in historic drilling.


The Teglio is open for some 800m to the north-west from the last RC traverse, and for 300m to the southeast for a total length of approx. 1.8km, and may continue even further.


Geochemical mapping also indicated of gold anomalism in the residual area to the NE of Teglio, the best being in the northern tip of the Project area.


Empire also completed a programme of 27 RC holes for a total of 2,379m at target priority prospects P29/2361 and P29/2363.


14 RC holes for 1,189m were drilled at Teglio, testing a strike length of 520m while at Nugget Patch a further 13 holes were drilled for 1,190m.


The Nugget Patch prospect has been characterised by a broad low grade (0.1 – 0.5 g/t Au) mineralised zone intercepted by RAB drilling with the occasional moderate to high grade drill intercept.


*SP Angel acts as Nomad and Broker to Empire metals




Eurasia Mining* (LON:EUA) 26p, Mkt Cap GBP728m – Well capitalised with strong asset base to help the team deliver on development strategy


The Company released interim results and highlighted main developments at its portfolio of PGM assets during the period.


In March, the Company signed a JV agreement with Rosgeo over nine PGM and battery metals assets (four of which are post Russian Feasibility Study with state approved reserves) with a total of 104.6Moz of Platinum equivalent Russian Code reserves and resources in the immediate vicinity of the Company’s Monchetundra Project in the Kola Peninsula.


Under the terms of the JV, Eurasia can earn up to 75% in respective projects with Rosgeo holding the remaining 25%.


Rosgeo is a Russian government multidisciplinary geological holding company which provides a full range of geological exploration services from regional surveys to stratigraphic drilling and subsoil monitoring.


In April, the Company engaged Wardell Armstrong International to carry a comprehensive task on JV assets including JORC resource audits that are almost complete and will be announced shortly.


In May, the Company was approached by the potential buyer with regards to an acquisition of most of its assets with additional interest registered from other parties since then.


The Company continued to work with its advisers to assist with a potential corporate transaction.


At West Kytlim alluvial PGM mine, three wash plants are currently up and running since August significantly improving flexibility of operations.


With one plant in operation at Kluchiki, the plant processed 170,000m3 of PGM bearing gravels during the 20 April to 31 July period.


Waste stripping operations started at two operational sites of the Bolshaya Sosnovka area.


Additionally, the team is on course to connect operations to the grid helping unit costs as well as improving the ESG profile of the asset.


Separately, the Company reports it established an office in Japan.


Revenues totalled GBP0.4m (H1/20: GBP0.0m) reflecting higher production volumes.


Operating loss came in at GBP1.4m (H1/20: -GBP0.8m)


EBITDA totalled -GBP1.2m (H1/20: -GBP0.8m).


Net loss amounted to GBP1.5m (H1/20: -GBP1.3m).


Closing cash balance stood at GBP16.1 (FY20: GBP5.4m) following a GBP14.1m placing closed in May this year with only a limited amount of debt (including leases) to the tune of GBP0.6m (FY20: GBP0.7m).


The Company closed a $15m placing in September taking the total cash position to $35m.


The proceeds will be used to progress Rosgeo JV related work over PGM and battery related assets in the Kola Peninsula with a respective JORC resource estimate by Wardell Armstrong is planned to be announced shortly.


*SP Angel act as Nomad and Broker to Eurasia Mining




Europa Metals Limited (LON:EUZ) 9p, Mkt Cap GBP3.8m – Updated resources estimate at the Toral zinc, lead, silver project in Spain


Europa Metals has published a revised mineral resources estimate for its Toral lead/zinc/silver project in Spain.


The new, JORC compliant, estimate was prepared by Addison Mining Services based on almost 60,000m of drilling from 172 diamond drill holes and 4 reverse-circulation holes, including historical data “from six drilling campaigns” dating back as far as a programme in 1972 by Penarroya.


The new estimate of 5.9mt of indicated mineralisation at an average grade of 4.2% zinc, 3.3% lead and 27g/t silver (7.1% zinc equivalent) represents a 55% increase in previous tonnage estimates (dated August 2020) and increases of 39% in contained zinc, 30% in contained lead and 40% in contained silver.


In addition, the estimate reports an inferred resource of 14mt at an average grade of 3.8% zinc, 2.5% lead and 20g/t silver.


Europa Metals says that it “expects to integrate the updated resource estimate, with the substantially increased indicated resource and grade increase within the upper zones, with its ongoing engineering analysis in order to assess the positive influence on the proposed future mining and processing route for the Toral project”.


The company hints at further potential to expand the resources at Toral saying that “no copper has been brought into the resource as only limited intersections have occurred. Equally, the resource expansion is predominantly occurring within the upper boundaries of the pre-existing resource with no further exploration yet being made below the resource cut-off at the base or to the East”.


Executive Chairman, Myles Campion, said that “The deposit continues to deliver positive news and this boost to the Indicated resource provides further certainty on tonnes and grade profiles to assist with the assessment of mine life and future production profile in further studies”.




Ormonde Mining* (LON:ORM) 0.98p, Mkt Cap GBP4.6m – Resignation of executive management team


Ormonde Mining confirms that following shareholders declining to support the re-election of the Senior Independent Director, Tim Livesey, at the AGM, the executive management team comprising Executive Chairman, Jonathon Henry, the CFO and Company Secretary, Paul Carroll and the Chief Operating Officer, Fraser Gardiner have resigned although the executives have agreed to “work through their notice periods in order to manage the essential Company functions while a new management team is identified”.


In addition to the executives “the remaining independent director … [Mr Brown] … has also decided to resign from the Board of the Company with immediate effect.”


Mr. Brendan McMorrow and Mr Keith O’Donnell have joined the Board with immediate effect and “the Board intends to engage the required management resource for the continuation of” its strategy to “acquire, explore and develop mining projects in which it would have a controlling interest”.


Conclusion: The company’s executive management has resigned following the AGM’s failure to support the re-election of its senior independent director. The future direction and management team should emerge over the coming weeks.


*SP Angel acts as Broker to Ormonde Mining




Rambler Metals and Mining* (LON:RMM) 21.25p, Mkt cap GBP27.4m – Progress on loan finance


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


CLICK FOR PDF


Rambler Metals has issued an announcement on the progress of its plans for a US$20m senior secured loan with Newgen Resource Lending.


The company confirms that it “has been working with Newgen Resource Lending Inc. (“NewGen”) to reach an intercreditor agreement with a third party to obtain the security required for the loan”.


Rambler Metals also says that it is working with both Newgen and West Face Capital and the third party “to close the financing as soon as possible”.


The company reaffirms its target of regaining “its production profile at 1,350 metric tonnes per day at 2% copper in the course of 2021 and evaluate expansion opportunities from that base”.


In August, the company reported that its continuing drilling campaign at the Ming Mine was improving confidence in the quality of the mine’s resources and particularly in the near-term ore feed for processing. At the time we commented that the drilling results offered potential to simplify mining methods and improve costs as well as providing emerging evidence of improving grades at depth.


Conclusion: It appears that discussions on the senior loan are more protracted than expected, we look forward to a timely resolution of the outstanding issues. Meanwhile the company is continuing to concentrate on the restoration of its 1,350tpd target rate.


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




Strategic Minerals* (LON:SML) 0.48p, Mkt Cap GBP9.1m – Annual results and project updates


Yesterday afternoon Strategic Minerals reported improvements in both pre-tax and after-tax profits for the six months to 30th June 2021 with pre-tax profit increasing to US$388,000 (2020 (US$261,000) and after-tax profit also rising to US$207,000 (2020- US$77,000).


The company also reported a 30th June cash balance of US$734,000 following operating cashflows of US$318,000 (2020 – US$100,000) offset by investment of US$333,000.


The company confirms that activities at Cobre in New Mexico were unaffected by Covid19 and that a government grant of US$50,000 “was used to partially offset direct payroll costs”.


“Discussions on financing the Leigh Creek Copper Mine project continue” and the company highlights the previously announced news that it has received a conditional approval of its Programme for Environmental Protection and Rehabilitation (PEPR) at the Paltridge North section of Leigh Creeek although the authorities “have required a more “in depth” description of the planned mine which has, due to the increased copper price, slightly increased the planned mine area, providing for economic recovery of an additional 600 tonnes of metal. This has pushed planned production into the first quarter of 2022″.


Financing discussions for Leigh Creek are continuing and Chairman, Alan Broome, explains that the “strong performance of the copper price in recent times has improved the project’s potential profitability and the Board feels confident that 2022 will see full scale production re-commence at Leigh Creek”.


The recently announced exploration work to the west of the currently defined mineral resource at Redmoor in Cornwall offers potential to expand resources into a more tin-rich area and Mr. Broome confirms that “During the first 6 months of 2021, the Company has continued to work with … [its advisors] … NRG Capital and those parties that have expressed interest in the Redmoor project to achieve a way forward, which will see the market value the size and potential of the Redmoor resource”.


Managing Director, John Peters, welcomed the company’s achievement in maintaining and improving its operations through “prudent management” through a period he described as “globally trying”.


Conclusion: Strategic Minerals has delivered improved first half results despite the difficult global operating conditions. The company expects news on the financing of the Leigh Creek copper project in South Australia soon and confirms that it expects production during Q1 2021.


*SP Angel acts as Nomad and Broker to Strategic Minerals




URU Metals* (LON:URU) 300p, Mkt cap GBP5m – FY March 2021 results


URU made a loss of $651k in the 12-months to 31 March 2021 vs $732k over the same period last year.


Cash held at the end of the period was $99k vs $66k last year.


Post-period, in August 2021 the Company successfully completed the disposal of the Zebediela Nickel Project to Zeb Nickel Corp, with URU holding a 64.8% interest in Zeb Nickel Corp.


URU is to begin a 3,600m diamond exploration drilling program in H2 2021, aiming to improve the confidence in the historical NI43-101 compliant resource, as well as explore for higher grade nickel sulphide mineralisation.


The Company also comments that it will continue to advance the relevant mining and environmental applications with the South African Department of Mineral Resources.


*SP Angel acts as Nomad and Broker to URU metals




Vast Resources (LON:VAST) 6.3p, Mkt Cap GBP15m – Manaila Polymetallic Mine update


The Company studies a option to install a concentrator next to the Manaila open pit to optimise the operation’s production profile.


The team engaged TOMRA Test Centre in Wedel, Germany, to assess the installation of X-Ray Sorting Technology next to the pit.


The XRT facility will pre concentrate ROM material reducing volumes to be transported to the flotation plant and increasing grades of the plant feed.


Samples sent from both massive sulphides and disseminated sulphides demonstrated the following results:


Disseminated sulphide – 65% mass reduction and recoveries of 84.2% Cu, 67.2% Pb and 94.4% Zn.


Massive sulphide – 29% mass reduction and recoveries of 95.4% Cu, 93.6% Pb and 95.2% Zn.


Taking into account a typical historical ratio of 3:1 between disseminated and massive sulphides mined, the combined result is for a 55% mass reduction and 93.1% Cu, 82.2% Pb and 92.4% Zn metallurgical recoveries.


“These results clearly underpin our view that Manaila is economically viable, and the management team are considering various mine plan scenarios of bringing Manaila back into production,” the Company commented on the announcement.




Recent Interviews:


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


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


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


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


*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts.


We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.




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


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


The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020




Analysts


John Meyer – [email protected] – 0203 470 0490


Simon Beardsmore – [email protected] – 0203 470 0484


Sergey Raevskiy [email protected] – 0203 470 0474


Joe Rowbottom – [email protected] – 0203 470 0486




Sales


Richard Parlons [email protected] – 0203 470 0472


Abigail Wayne – [email protected] – 0203 470 0534


Rob Rees – [email protected] – 0203 470 0535


Grant Barker – [email protected] – 0203 470 0471






SP Angel


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35-39 Maddox Street London


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*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)


+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.




Sources of commodity prices


Gold, Platinum, Palladium, Silver


BGNL (Bloomberg Generic Composite rate, London)


Gold ETFs, Steel


Bloomberg


Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt


LME


Oil Brent


ICE


Natural Gas, Uranium, Iron Ore


NYMEX


Thermal Coal


Bloomberg OTC Composite


Coking Coal


SSY


RRE


Steelhome


Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite


Asian Metal


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