SP Angel . Morning View . Tuesday 12 10 21
Metal premiums continue to rise in West as China Inc. secures metal stocks for China
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: How high energy prices are pushing up metals: https://youtu.be/em4zwo2i4Cs
VOX Markets: 07/10/21: https://audioboom.com/posts/7956216-john-meyer-on-chinese-energy-issues-and-news-from-altus-strategies-bushveld-minerals-scotsgold
Ariana Resources (LON:AAU) – Apliki copper mine development agreement
BlueRock Diamonds (LON:BRD) – Record production in Q3 ahead of expected step change in Q4
Chaarat Gold (LON:CGH) – Kyzyltash 2021 drilling programme completed with metallurgical testwork results expected in H1/22
Greatland Gold (LON:GGP) – Pre-feasibility study for South East Crescent zone at Havieron
Hummingbird Resources (LON:HUM) – Kouroussa project economics, funding and timeline update
Power Metal Resources* (LON:POW) – Drilling underway at Tati project, Botswana
Metal premiums continue to rise in West as China Inc. secures metal stocks for China
We are increasingly aware of China Inc. policy of securing metal supplies for its economy
Chinese acquisitions of lithium projects is following on from acquisitions in copper, cobalt and other metals in recent years.
Premiums for copper and other metals are seen rising in the West as availability in certain locations starts to run short
Codelco sells copper at $128/t premium to European buyers
The world’s largest copper mine is selling to European buyers at a premium of $128/t next year.
This marks a 20% increase from this year and is the highest premium since 2015.
Codelco’s premiums set a global benchmark.
The premiums follow a rapid rise in copper’s price to $10,747/t in May.
Demand has fallen on China’s slowing industrial activity, however a market deficit of 24,000t is expected this year.
European copper smelter Aurubis is offering a 2022 premium of $123/t.
Ganfeng to raise lithium metal prices by $15,500/t in October
China’s Ganfeng has announced a hike in metals prices of CNY100,000/t next month, citing increasing production costs.
Rising raw material costs for lithium carbonate and limited electricity supply has caused the ramp up in prices from Oct. 10 to Nov. 9.
Chinese lithium metal prices hit US$133,965/t on Friday.
Ganfeng produces both lithium chemicals for EVs batteries and lithium metal used in solid-state batteries.
Chinese lithium carbonate prices hit US$27,721/t yesterday, up 240% this year.
Nickel hits 2-week high as China energy crisis fuels supply concerns
3-month LME nickel prices rose 1.2% to $19,445/t.
Shanghai November nickel futures hit $22,821/t.
Power shortages in China and limited electricity supply in Europe has reduced production.
Newco Ferronikeli cited energy prices as the cause of a shutdown in production.
Aluminium prices hit 13-year high as energy shortage squeezes supply
Aluminium prices jumped to the highest levels since 2008 on fears that the deepening power crisis could reduce supply of the energy-intensive metal.
This year’s surge in aluminium prices would typically prompt producers to reopen old plants and existing producers to ramp up supply – however the huge jump in power costs means this is not feasible.
Each ton of aluminium takes about 14MWh of power to produce – enough to power the average UK home for more than three years.
As a result, aluminium was one of the first targets in China’s efforts to curb industrial energy usage.
Production cuts extend beyond China, with Dutch producer Aldel reporting that it will curtail production this week due to high electricity prices, among others.
According to Bloomberg, market participants are now watching for a possible fall in Chinese aluminium exports, with the world’s largest producer and consumer preferring to use its own supply to meet demand.
Evergrande default concerns and China energy crisis hit steel prices
Evergrande has missed its 3rd round of bond coupon payments.
Bondholders are yet to receive payments totalling $148mn on Evergrande’s April 2022,2023,2024 notes.
Contagion is evident as Modern Land and Sinic Holdings both delayed deadlines following Evergrande and Fantasia’s miss.
The prospect of a slowdown in Chinese construction growth is reflected in steel prices.
Shanghai futures for construction steel rebar fell 4.2%.
Hot-rolled coil fell 3.6%.
Stainless steel prices fell 1.9%.
The downward move comes despite a slowdown in steel output as China’s industry lacks vital coal supplies and Beijing increases crackdowns on carbon emissions in the sector.
Dow Jones Industrials -0.72% at 34,496
Nikkei 225 -0.94% at 28.231
HK Hang Seng -1.67% at 24,902
Shanghai Composite -1.28% at 3,546
Economics
The IMF Board decided to keep Kristalina Georgieva as Managing Director after reviewing allegations that she pressured staff to alter data to favour China, Reuters writes.
China – PBoC drained a CNY90bn out of markets to tighten liquidity
The move appears to be at odds with asking banks to extend credit to power companies to restock low coal inventories and raise power output
Vehicle sales continue collapse -19.6% yoy in September vs -17.8% yoy in August China Association of Automobile Manufacturers (CAAM)
Chinese sales at 2.07m vehicles in September
A shortage of semiconductors is said to be disrupting production.
New energy vehicle sales rose +148.4% yoy highlighting the rapid shift in China to EVs
Vehicle sales still rose +8.7% yoy from January to September while sales of new energy vehicles rose 185.3% yoy in the same period
UK – Payrolls regained pandemic related losses climbing above early 2020 levels following a record surge in September, according to Bloomberg.
Jobs increased by a record 207k in September while separate numbers for the ONS showed job vacancies climbed to 1.2m, also an all-time high.
Unemployment rate continued to trend lower coming in at 4.5% in three months to August, down 0.1pp from the previous period.
Wage inflation seen running strong at above pre-pandemic levels as well.
Strong employment numbers offer more evidence for hawks on the MPC to start tightening monetary policy before the end of the year.
South Korea – The central bank decided to hold rates unchanged at 0.75%, in line with estimates, with two of seven members calling for a back-to-back increase in the benchmark rate following an August hike.
Although, the board highlighted growing inflationary pressure amid robust recovery momentum suggesting another hike may come before the end of the year.
“We held the rate this month, but we will look into whether to raise the rate again next month while watching the situation… If the situation doesn’t deviate too much from the one the board is looking at, it’s the view of the majority today that it will be good to consider an additional hike, ” Chairman of the Monetary Policy Board said.
Currencies
US$1.1556/eur vs 1.1578/eur yesterday. Yen 113.21/$ vs 112.80/$. SAr 15.058/$ vs 14.916/$. $1.359/gbp vs $1.366/gbp. 0.735/aud vs 0.734/aud. CNY 6.456/$ vs 6.437/$.
Commodity News
New investment interest in metals as a hedge against inflation
Precious metals:
Gold US$1,759/oz vs US$1,755/oz yesterday
Gold ETFs 98.8moz vs US$98.8moz yesterday
Platinum US$1,014/oz vs US$1,032/oz yesterday
Palladium US$2,108/oz vs US$2,152/oz yesterday
Silver US$22.59/oz vs US$22.67/oz yesterday
Rhodium US$13,800/oz vs US$14,200/oz yesterday
Base metals:
Copper US$ 9,400/t vs US$9,442/t yesterday
Aluminium US$ 3,048/t vs US$3,008/t yesterday
Nickel US$ 19,155/t vs US$19,360/t yesterday
Zinc US$ 3,226/t vs US$3,172/t yesterday
Lead US$ 2,227/t vs US$2,236/t yesterday
Tin US$ 36,005/t vs US$36,490/t yesterday
Energy:
Oil US$83.4/bbl vs US$83.8/bbl yesterday
The US$80/bbl threshold may not be the limit for oil prices in the coming months as global demand recovery continues and record natural gas prices spur more demand for oil products for power generation and heating.
Despite the still lingering concerns over the Delta variant in many countries, mobility in developed economies continues to narrow the gap with 2019 levels amid higher vaccination rates and strong economic recovery
Although developing economies in South and Southeast Asia are still imposing intermittent localised lockdowns, oil demand globally continues to grow and is set to reach pre-pandemic levels within a few months
Prices have risen as more vaccinated populations are brought out of coronavirus lockdowns, supporting a revival of economic activity, with Brent advancing for five weeks and WTI crude for seven
Coal and gas prices have also been surging as economies recover, making oil more attractive as a fuel for power generation, pushing crude markets higher
In India, some states are experiencing electricity blackouts because of coal shortages, while in China the government has ordered miners to ramp up coal production as power prices surge
The energy crisis sweeping the world is raising the prospect of a difficult northern winter as heating demand rises
Fund managers increased their net long positions in US crude futures and options in the week to 5 October, according to the Commodity Futures Trading Commission
The speculator group increased combined futures and options position in New York and London by 8,902 contracts to 325,578 during the period
US producers are taking advantage of the increase in prices and added five new oil wells last week, the fifth straight weekly increase in oil and gas rigs
Natural Gas US$5.321/mmbtu vs US$5.747/mmbtu yesterday
Surging energy costs are stoking inflationary pressures and fuelling concern that economic growth will slow, prompting a slump in European stocks
Global gas and coal markets have tightened just as the heating season starts in the northern hemisphere, with limited supply failing to catch up with recovering demand
Colder weather is forecast for Europe next week, with temperatures across the mainland set to drop below normal levels
Several European countries including France and Spain have called on the EU to take urgent action to cushion the blow of sky-high gas prices
The bloc’s energy chief, Kadri Simson, has pledged a revision to market rules by the end of the year to prevent surging costs from stifling the economic recovery
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
Japan plans to reduce LNG and coal in energy mix
The Government of Japan earlier this year announced plans to reduce the countries use of fossil fuels such as LNG and coal and reduce greenhouse emissions to net-zero.
Japan had been the leading importer of LNG for decades but have been superseded by China as they look towards more renewable sources.
Japan imports of LNG for 2021 are projected to reach 75.1 million tonnes, a slight reduction on previous years – China’s imports are projected to be 75.5 million tonnes for 2021.
Under the new plans, renewables should account for 36% to 38% of energy consumption by 2030, with coal reduced from 26% to 19% and LNG from 56% to 41%.
Dependency on imported fossil fuels reached 94% of energy supply in 2014, but the gradual restart of nuclear power, the expansion of renewables and a lower energy demand curbed this to around 88% in 2019.
5GW of offshore wind projects are in the pipeline, with the JWPA targeting 10GW by 2030.
Several projects are focusing on floating offshore wind to take advantage of Japan’s deep waters.
Nuclear:
33 operable reactors totalling 31.7GWe – many of these were shutdown after the Fukushima disaster.
2 new nuclear plants are under construction, totalling 2.8GWe.
1 planned, 1.4GWe
10 of the 33 reactors are currently operating and 15 are at different stages of the restart approval process.
Kashiwazaki-Kariwa 7 expected to restart October 2022, 1315MWe.
Takahama 1&2 expected to restart 2023, 780MWe each.
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$134.1/t vs US$127.7/t – Asian iron ore futures fall as impact of China steel output curbs felt
Singapore iron ore benchmark futures fell 7% to $125.40/t this morning following a 4-day rally.
China’s Dalian January contract erased its 4.3% gains to fall back to $119.27/t.
The sell-off comes as the likelihood of a ‘flat steel production growth this year’ in China increases.
China’s output curbs to reduce emissions from the steelmaking industry have been increased as the country struggles with an energy shortage.
Analysts forecast the need for a 10% contraction of steelmaking in annual terms during September and December to keep up with Beijing’s carbon goals.
The February 2022 Winter Olympics is expected to see tighter steel output curbs as Beijing looks to improve air quality.
Chinese steel rebar 25mm US$920.1/t vs US$929.3/t
Thermal coal (1st year forward cif ARA) US$144.0/t vs US$146.0/t
Coking coal swap Australia FOB US$368.0/t vs US$368.0/t
Uranium UXC $41.25 /lb 4 October – Trading Economics $38.8/lb – Business Insider $19.0/lb 6 October – S&P Global Platts $48/lb
Hedge funds bet on uranium as nuclear offers potential solution to energy crisis
Funds including Light Sky Macro, Anchorage Capital and Tribeca Investment Partners have all turned bullish on uranium as its price rallies 37%.
Sprott’s accumulation of physical uranium in September triggered a rally in yellowcake prices.
Global X Uranium ETF has risen 58% this year, tracking uranium mining equities.
Investors see the energy crisis in Europe and China as placing ‘uranium back in the spotlight’ as it offers a low-carbon source of power.
Fund managers see ‘the current uranium cycle as better than the last on every fundamental metric’ owing to a deficit of supply relative demand.
French nuclear output is up 33.4% in September, with total nuclear generation up 11.2% vs 2020.
Other:
Cobalt LME 3m US$53,380/t vs US$53,380/t
NdPr Rare Earth Oxide (China) US$93,480/t vs US$93,057/t
Lithium carbonate 99% (China) US$26,797/t vs US$26,876/t – Rock Tech Lithium plan $544mn Brandenburg plant
Canadian company Rock Tech is looking to build a converter to make battery-grade lithium hydroxide suitable for EVs.
The Brandenburg plant is 90 minutes from Tesla’s new Gigafactory with a cell manufacturing site offering 50Gwh of capacity.
Annual production of lithium hydroxide for the Brandenburg plant is forecast at 24,000t of lithium hydroxide, supplying 500,000 cars.
China Spodumene Li2O 5%min CIF US$1,150/t vs US$1,130/t – Zijin Mining / Neo Lithium deal shows China’s big bet on lithium
Ferro-Manganese European Mn78% min US$1,843/t v US$1,824/t
China Tungsten APT 88.5% FOB US$310/t vs US$310/t
China Graphite Flake -194 FOB US$555/t vs US$555/t
Europe Vanadium Pentoxide 98% 7.9/lb vs US$7.9/lb
Europe Ferro-Vanadium 80% 31.25/kg vs US$31.75/kg
China Ilmenite Concentrate TiO2 US$378.72/t vs US$379.9/t
Spot CO2 Emissions EUA Price US$68.2/t vs US$68.3/t
Battery News
CATL to build $5bn battery recycling facility in China
Chinese EV battery maker CATL is planning to build a battery material recycling facility with a $4.96n investment.
CATL with form a JV with Hubei Yihua Chemical industry for recycling used EV batteries.
The unit will look to remove key chemicals such as cobalt and lithium from spent batteries.
China to review strategy to meet carbon emissions target
Chinese premier Li Keqiang has stated Beijing’s need for a timetable and road map to meet its peak carbon emissions target of 2030.
2021-2025 will see a major review of the country’s energy system planning according to the minister.
Li sees the urgent need to reconfigure the ‘one-size-fits-all’ power cut strategy currently in place as China’s energy crisis intensifies.
Company News
Ariana Resources (LON:AAU) 4.1p, Mkt Cap GBP45m – Apliki copper mine development agreement
Ariana Resources reports that Venus Minerals, where Ariana currently owns a 37.5% interest and expects to reach 50% ownership early in Q4 2021, has reached agreement with a Cypriot mining company for a 50:50 joint venture to develop the Apliki Copper mine.
Ariana says that a definitive agreement is expected in November and that Venus Minerals will be the operator.
“Venus Minerals to pursue a stock exchange listing in London prior to the end of 2021”.
Managing Director, Dr. Kerim Sener, explained that “the fully-permitted Apliki Copper Mine, which contains mineral resources of 10.4Mt @ 0.34% Cu, ensures Venus can fast-track the project to the mining stage within 18 months following its proposed stock exchange listing”.
He also commented that “Additional exploration upside has also been secured across Venus’ portfolio of copper-gold bearing Volcanogenic Massive Sulphide (“VMS”) systems”.
BlueRock Diamonds (LON:BRD) – 49p, Mkt cap GBP6.9m – Record production in Q3 ahead of expected step change in Q4
BlueRock Diamonds report another record quarter of production at 7,682cts produced.
The quarter included the sale of four larger stones raising the per carat value to $554/ct overall vs $330/ct a year earlier.
Our current modelling assumes $420/ct, eg not including the impact of larger stone sales where recovery is variable.
Grades rose 7% to 4.81cpht in the quarter from 4.51cpht a year earlier probably due to better grade control in the expanded pit.
The number of carats sold rose to 6,887cts vs 3,803cts a year earlier.
Sales rose to $3.8m vs $1.3m a year earlier.
Expansion: BlueRock are commissioning their new four-pan process plant this month with capacity to process 1mpta of kimberlite ore.
The mine continues to strip waste material in preparation for higher mining and throughput rates next year.
The removal of waste material will continue through Q4 to ensure access to kimberlite throughout the wet season which very approximately runs through December to February
The contractor had built up 90,000t of kimberlite material representing just over one month of run-of-mine production to keep the process plant working when the mines are too wet to work in.
“The Mining, Processing and Engineering teams have been strengthened to meet the demands of the increased volumes and higher tech processing plant.”
Management guidance remains unchanged for production of 40,000-43,000cts for next year at $400/ct indicating sales of $16.0-17.2m.
The recovery of more larger stones should raise the overall value per carat and could add $20-30/ct at a guess.
Conclusion: BlueRock management are proving their ability to consistently raise production and the new expansion being commissioned this month is encouraging.
The average Q3 per carat value of $554/ct is impressive though future sales values will vary according to the recovery, quality and sales of larger stones.
We see BlueRock as substantially undervalued on the assumption that the commissioning of the new process plant goes to plan and the mining operations are able to ramp up to a rate of 1mtpa next year.
*SP Angel act as nomad and broker to BlueRock Diamonds
Chaarat Gold (LON:CGH) 24p, Mkt Cap GBP166m – Kyzyltash 2021 drilling programme completed with metallurgical testwork results expected in H1/22
The Company completed the 2021 drilling programme at the Kyzyltash Gold Project in Kyrgyzstan.
The programme was focused on collecting metallurgical sampling material and consisted of 16 twin holes for ~3,500m of drilling.
All 16 drill holes successfully intersected expected mineralization returning similar results as the original drill holes.
Sample will be shipped to SGS Lakefiled in Canada to test the most appropriate treatment route for the Kyzyltash ore including pressure oxidation (“POX”), bio-oxidation (“BIOX”) and Albion processes.
Results are expected in H1/22.
Greatland Gold (LON:GGP) 18.85p, Mkt Cap GBP747m – Pre-feasibility study for South East Crescent zone at Havieron
Greatland Gold has issued pre-feasibility study results for the Stage 1 development of its Havieron deposit in the Paterson Province, WA which it is progressing in association with Newcrest Mining whose Telfer mine is located 45km west of Havieron.
The stage 1 development envisages the extraction of a 14mt probable reserve grading 3.7g/t gold and 0.54% copper over an initial mine life of 9 years using sub-level open stoping and paste backfill.
At an initial maximum 2.1mtpa mining rate, the company expects to average production of 160,000oz pa of gold and 6,900tpa of copper with total production of 1.4moz of gold and 62,000t of copper at an average all-in sustaining cost of US$643/oz.
Greatland Gold estimates that at a gold price of US$1,750/oz the stage 1 project generates an after tax, real, NPV4.5% of US$508m and IRR of 27% from a capital expenditure of US$381m.
Newcrest Mining uses a more cautious gold price estimate of US$1,500/oz to generate an estimated NPV of US$228m and IRR of 16%.
Greatland Gold says that it expects to complete more detailed feasibility study assessments during the December quarter of 2022, produce initial ore during the first half of FY2024 and the first metal in H2 of the same year.
Today’s announcement highlights that the stage 1 development relates to the Southeast Crescent zone excludes the expansion possibilities of “37Mt of the current Inferred Mineral Resource or any potential new resources that may be defined in Northern Breccia and Eastern Breccia”.
CEO, Shaun Day pointed out that Greatland Gold’s share of the initial capex, US$73m represents “a very modest capex hurdle for Greatland and thereafter the generation of cash flow. This provides the opportunity for Greatland to reinvest this cash flow into Havieron such that the Company can self-fund the full potential of Havieron”
In our view, the opportunity to use the “existing Telfer processing facility for majority of plant infrastructure … to process and treat Havieron ore” should contribute both to containing the required capital expenditure and to minimising the lead-time to production.
Mr. Day also explained that the low AISC of US$643/oz “will propel Greatland to the second lowest cost producer globally, with this low cost structure driving a high-margin, high IRR and fast pay-back development”.
Today’s announcement stresses the staged nature of the Havieron development, which currently only addresses the indicated resources in the Southeast Crescent zone and underlines the potential depth and lateral extension of the South East Crescent zone as well as additional targets within the “north west corridor” at the Northern Breccia and the North West Crescent and the “Potential for additional north west trending corridors including the Eastern Breccia” and “additional mineralisation centres (at Havieron North, Zipa and Meco)”.
Underlining the confidence in the untapped exploration potential, today’s announcement says that an additional 90,000m of growth drilling is planned up to June 2022 and the company takes the opportunity to release recent drilling results including:
An 85m wide intersection of the South East Crescent zone at an average grade of 11g/t gold and 0.29% copper from a depth of 1,345m in hole HAD133; and
A !33m wide intersection, also of the South East Crescent Zone, at an average grade of 7g/t gold and 0.05% copper from a depth of 1,446m in hole HAD133W1; and
A further 99.7m wide intersection of the South East Crescent Zone averaging 2.5g/t gold and 0.85% copper from a depth of 1,308m in hole HAD086W1; and
An intersection of 309m in the Northern Breccia Zone averaging 0.99g/t gold and 0.07% copper from 915m in hole HAD047; and
90.6m, also in the Northern Breccia Zone averaging 2.3g/t gold and 0.18% copper from 776.4m depth in hole HAD103; and
Intersections of the North West Crescent zone including a 74.2m wide intersection averaging 2g/t gold and 0.09% copper from a depth of 568.8m in hole HAD085 and of the Eastern Breccia including 342.2m averaging g/t gold and 0.11% copper from 1,536.8m in hole HAD084.
Mr. Day said that the “growth drilling creates the opportunity to potentially apply bulk mining methods to the balance of the Havieron breccia system to complement the mining of the South East Crescent”. In our opinion, evaluation of these mining methods may help to address the somewhat lower grades apparent in the areas beyond the South East Crescent Zone.
Conclusion: The publication of pre-feasibility results from Havieron is a milestone for the project as it works towards a more detailed feasibility study and initial production in FY2024. Continuing exploration is directed towards expanding resources to drive phased expansion possibilities while the use of partner, Newcrest Mining’s Telfer facilities, should help to minimise the lead times to production. We look forward to continuing news.
Hummingbird Resources (LON:HUM) 21p, Mkt Cap GBP83m – Kouroussa project economics, funding and timeline update
The Company released an update on the development of the high-grade Kouroussa Gold Mine in Guinea.
The project is expected to produce 120-140kozpa in the first three years with an average 100kozpa annual output rate over seven year mine life.
The project is estimated to run at competitive $900-1,000/oz AISC generating $210m and 71% in post tax NPV10% and IRR, respectively (at $1,750/oz gold price).
Capex is estimated at $115m including $10m in pre-production mining costs and $7.5m in contingencies for a 1mtpa CIL processing plant.
The Company continues with the exploration programme aimed at infill drilling to convert existing resources of 1.2moz at 3.08g/t into reserves as well as step out drilling to grow the life of mine.
16,000m of a 24,000 infill drilling programme has been completed with the remaining meters to be completed on schedule before YE21.
A maiden mineral reserve on the Koekoe deposit (>70% of total Kouroussa MRE) is targeted for Q4/21 while project wide updated MRE and reserves based on 2021 drilling is targeted for H1/22.
First gold production is scheduled for the end of Q2/23 with ramp up to full capacity to follow over the six months’ period.
Importantly, the team signed a binging term sheet for $100m in project funding with Coris Bank that together with internally generated FCF covers Kouroussa development capex.
The loan comes at an 8.5% fixed interest rate with a four year term and is split in three tranches including $40m to be drawn imminently ahead of construction scheduled to start soon after, $30m to be drawn further into a construction phase (est. 2022) and $30m covering final capex requirements.
The loan will be interest only for the first 18 months on each debt tranche improving cashflow flexibility during the construction and ramp up stage.
Power Metal Resources* (LON:POW) 1.87p, Mkt Cap GBP24m – Drilling underway at Tati project, Botswana
Power Metal reports that its RC drill programme is now underway at the Tati Project located in the Tati Greenstone Belt near Francistown, Botswana.
The company exercised its option to acquire the project in July 2021, with exploration to date focusing on geochemical sampling and ground-based geophysical surveys which has identified multiple kilometre-scale arsenic, gold and nickel, as well as magnetic anomalies.
Approximately 1,000m of RC drilling is planned across multiple target zones, undertaken by Power Metal’s drill partners Equity Drilling Ltd and Mindea Exploration and Drilling Services.
All holes are planned for depths between 50-100m, with chip samples collected and sent to Intertek Group Plc (LSE:ITRK)’s laboratory located in Perth, Australia, for Fire Assay and multi-element analysis.
The goal of drilling is to test for the presence of the geological formations which host many of nearby historic and currently operating gold and nickel mines within the Tati Greenstone Belt.
Paul Johnson, Chief Executive Officer of Power Metal Resources PLC (AIM:POW) commented: “The launch of this inaugural drill programme at the Tati Project in Botswana is a great step forward for the Company. The stunning pace of ground exploration at the Project has been matched by the positive findings to date and notably several multi-kilometre geochemical anomalies.”
“Drilling at such an early stage demonstrates our confidence in the Project and our sense of urgency to better understand the geology of several high-priority target areas. With successful exploration, Tati Project could become one of the leading projects in our portfolio.”
*SP Angel acts as Nomad and Broker to Power Metal Resources
Zijin Mining / Neo Lithium deal shows China’s big bet on lithium
Yesterday’s announcement that Chinese gold & copper producer Zijin Mining acquired Neo Lithium is the latest in a spate of acquisitions from China into the lithium market.
The deal is worth US$737m and the C$6.50 per share cash deal marks a premium of 18% to Neo’s closing price on Friday.
The acquisition is particularly bullish on lithium given that the project is some years away from production, with a PFS completed in May 2019.
Chinese companies are clearly not deterred by soaring lithium prices, which have been on an upward trajectory for 18-months, and clearly anticipate shortages of the battery metal down the line.
Lithium carbonate prices in China are at record highs after rising nearly 5 times so far this year, meaning this flurry of M&A activity will be at significantly higher valuations compared to a year ago.
Last month, two Chinese companies entered a bidding war with battery-marker CATL outbidding Ganfeng lithium for Canada’s Millennial Lithium (TSX-V:ML), which has lithium brine assets in Argentina.
Conclusion: Neo and Millennial are examples of South American brine deposits, while Ganfeng recently purchased both Mexico’s Bacanora Lithium which is a clay deposit, and Firefinch’s Goulamina hard-rock deposit in Mali. It shows that the big Chinese companies are relatively agnostic about the type of deposit and recognise that all types will be required to make up required projected supply figures as a result of global EV uptake.
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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*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
