Bluejay Mining* (LON:JAY) – Greenland operating company to focus on starting production in 2018
Solgold* (LON:SOLG) – Hole 21 extends known strike length by 20%
Strategic Minerals* (LON:SML) – Quarterly report highlights improved performance at Cobre.
Miners climb amid a jump in iron ore prices with prices for benchmark 62% Fe material trading at $67/t, up from low of $60.2/t recorded on Tuesday.
• The euro is range bound against the US$ with investors remaining on the side-lines ahead of the French vote this weekend.
• The pound is level against the US$ with earlier gains given up on the back of weaker than expected retail sales numbers for Mar.
• Both gold and base metals are also little changed with the precious metals trading around the $1,280/oz level and copper at $5,655/t.
• Iron ore futures post a 5.1% rebound on the DCE after hitting the weakest level on nearly six months earlier this week.
121 Mining Investment conference – sponsored by SP Angel - 10–11 May 2017
• The 121 team are running the London 121 Mining Investment conference at No 8 Fenchurch Street in The City on 10-11 May.
• The event is for registered investment professionals, mining and exploration companies and mining analysts and brings the industry together alongside a series of investor briefings.
• 65 quality producers, developers and explorers attending / presenting
• I’m talking at 3:00 on the Thursday on: ‘UK mining outlook - A new era of UK funded exploration and production’.
• Follow link for investor passes - http://www.weare121.com/121mininginvestment-london/registration/register-investor/
Dow Jones Industrials +0.85% at 20,579
Nikkei 225 +1.03% at 18,621
HK Hang Seng +0.13% at 24,087
Shanghai Composite +0.03% at 3,173
FTSE 350 Mining +1.99% at 15,308
AIM Basic Resources -0.32% at 2,687
Date Index Period Actual Est Previous
Monday New York Manufacturing Apr 5.2 15.0 16.4
Tuesday Housing Starts MoM Mar -6.8 -3.0 5.0
Building Permits MoM Mar 3.6 2.8 -6.0
Industrial Production MoM Mar 0.5 0.5 0.1
Capacity Utilization Mar 76.1 76.1 75.7
Wednesday Fed Beige Book
Thursday Weekly Jobless Claims 244k 240k 234k
Friday Markit Manufacturing PMI Apr (Prelim) 53.8 53.3
Markit Services PMI Apr (Prelim) 53.2 52.8
Existing Home Sales MoM Mar 2.2 -3.7
Japan - Strong overseas demand is driving strong manufacturing sector performance.
• New export orders hit the strongest level seen in the last three years.
• On the back of robust private sector activity, companies added to their workforce at rate that matched Jan’s 34-month peak.
• Inflation was reported to have picked up as well as evidenced by higher input and output prices.
• Markit Manufacturing PMI: 52.8 v 52.4 in Mar.
Germany – While weaker than forecast and down on the Mar numbers, Apr Composite PMI point to a continued growth in the private sector and a strong start to Q2/17.
• Employment remained robust with only a fractional easing from Mar six year high.
• Growth in new business orders slowed slightly but remained strong overall with export orders posting the second highest reading in six years.
• While final goods prices growth moderated for the first time since Aug/16, the pace remained strong overall as producers continued to pass through increasing input costs.
• “At 56.3, the Composite Output Index lost a little ground from Mar’s 57.1 but is nonetheless above the Q1 average of 56.0 which itself was the highest of any quarter since Q2/11,” Markit concluded.
• Markit Manufacturing PMI: 58.2 v 58.3 in Mar and 58.0 forecast.
• Markit Services PMI: 54.7 v 55.6 in Mar and 55.5 forecast.
• Markit Composite PMI: 56.3 v 57.1 in Mar and 56.8 forecast.
UK – Retail sales recorded the first quarterly decline since 2013 which “seems to be a consequence of price increases across a whole range of sectors”, the ONS said.
• Excluding auto fuel, sales were down 1.5%mom taking the yoy change to +2.6%, down from a 4.1%yoy increase in Feb.
• Total sales including fuels in the three months to Mar were down 1.4%yoy.
France – German and French 10y bond yields spread narrowed to the lowest in a little over a week as a terrorist attack in Paris threatened to disrupt the presidential race.
• Marine Le Pen is currently viewed as having just under a 25% chance in winning both rounds , while the leader in the race Emmanuel Macron is running at c.55%. according to UK betting agencies.
• France released a good set of manufacturing and services PMIs this morning beating market estimates.
• Positive report highlighted a 10th consecutive increase in new business orders in both sectors of the economy.
• Stronger client demand gave companies the confidence to raise employment.
• Inflation is reported to have continued to exert pressure on producers with some of that having been successfully transferred onto consumers.
• Selling prices climbed for the first time in five years driven by the manufacturing sector with output prices broadly unchanged in the service sector.
• “The number provide further evidence that the French private sector remains resilient to political uncertainty around the upcoming presidential election,” the report said.
• Markit Manufacturing PMI: 55.1 v 53.3 in Mar and 53.1 forecast.
• Markit Services PMI: 57.7 v 57.5 in Mar and 57.0 forecast.
• Markit Composite PMI: 57.4 v 56.8 in Mar and 56.2 forecast.
US$1.0733/eur vs 1.0742/eur yesterday. Yen 109.24/$ vs 108.97/$. SAr 13.156/$ vs 13.237/$. $1.282/gbp vs $1.283/gbp.
0.754/aud vs 0.752/aud. CNY 6.883/$ vs 6.885/$.
Gold US$1,280/oz vs US$1,280/oz yesterday
Gold ETFs 59.9moz vs US$59.7moz yesterday
Platinum US$976/oz vs US$970/oz yesterday
Palladium US$802/oz vs US$785/oz yesterday
Silver US$17.97/oz vs US$18.17/oz yesterday
Copper US$ 5,660/t vs US$5,605/t yesterday – Grasberg is reported to be in final stages to secure the permit allowing concentrate exports to be ramped up to full capacity, Bloomberg reports.
• It remains unclear what is the status of negotiations between the government and Freeport on the ownership of the local subsidiary owning mining rights going forward.
• Bloomberg also says that it is hard to say if the proposed labour strike by 9,000 unionised workers will go through as planned in May.
• Previously, miners threatened to down tools for the entire month of May protesting over layoffs and employees being place on leave.
Aluminium US$ 1,949/t vs US$1,929/t yesterday
Nickel US$ 9,480/t vs US$9,465/t yesterday
Zinc US$ 2,631/t vs US$2,602/t yesterday
Lead US$ 2,156/t vs US$2,162/t yesterday
Tin US$ 19,860/t vs US$19,870/t yesterday
Oil US$53.1/bbl vs US$53.2/bbl yesterday
Natural Gas US$3.176/mmbtu vs US$3.191/mmbtu yesterday
Uranium US$23.00/lb vs US$23.00/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$66.9/t vs US$62.9/t
Chinese steel rebar 25mm US$504.1/t vs US$504.0/t
Thermal coal (1st year forward cif ARA) US$67.0/t vs US$66.8/t yesterday
Premium hard coking coal Aus fob US$289.5/t vs US$302.0/t
Tungsten - APT European prices $205-215/mtu vs $205-215/mtu
Bluejay Mining* (LON:JAY) 14p, Mkt Cap £103m – Greenland operating company to focus on starting production in 2018
(formerly FinnAust Mining)
BUY Target Price 22p
• BlueJay Mining report the creation of a new local operating subsidiary company in Greenland to hold the Pituffik project license.
• The report restates that the company is focussed on commencing production in 2018 and that the team are focussed on the production of a bulk sample “proof of concept” from the Pituffik project this year.
• The target for starting production so soon feels ambitious for any normal mining concern but may be helped by the ability to dredge mine the mineral sands.
• Royal IHC, the Dutch dredging company, is supporting work on the dredging of shallow and near shore marine mineral sands at Pituffik. The support of such a major dredging company is an important positive for the company and may enable management to meet their target to start production in 2018.
• Royal IHC are focussed on technological innovation in dredging and offer dredging solutions for harsh environments and claim there is no more waiting for good weather. The statements on the Royal IHC website offer an interesting insight into the ambitions of the company and determination to operate in challenging conditions.
• Dredging shallow marine and beech sands should be relatively straightforward for Royal IHC though there questions remain over how many months in the year a dredge may be able to operate for in the north of Greenland.
• It will be interesting to see if it proves to be better to campaign mine the ilmenite mineral sands using a larger dredge through the better weather of the summer months or if the dredging company might prefer to operate a smaller dredge for a longer period.
• The unusually high grade and relatively clean nature of the in-situ mineral sands at Pituffik should make mineral concentration very much easier effectively reducing the size of dredge and supporting infrastructure.
• For example they should be able to remove 20% of the oversize material through simple screening at the point of mining potentially improving grades by 30% before concentration enabling grades of >20% ilmenite to be mined pre-concentration. This will enable the use of a smaller and cheaper plant to manage the same tonnage of material, reducing operating costs and potentially enabling Bluejay to extend the operating field season.
• Management recently declared a JORC inferred resource of 23.6mt bearing 8.8% ilmenite in-situ with a high-grade zone of 7.9mt grading 14.2% ilmenite at Moriusaq bay.
• Feasibility and production studies are ongoing.
Conclusion: It’s good to see BlueJay preparing the way to start production next year. We look forward to more details on its plan to start mining and confirmation of the economic parameters around the project.
*SP Angel act as nomad and broker to Bluejay Mining
Solgold* (LON:SOLG) 45p, Mkt Cap £601m – Hole 21 extends known strike length by 20%
(SolGold holds an 85% interest in ENSA which holds 100% of Cascabel)
• SolGold report results from hole CSD-17-021 extending the known strike length of the mineralised deposit by some 150m to 900m. The assay results which come from the lower portion of the hole between 650m and the end of the hole at 1619.2m.
• The results reported today using a 0.3% copper equivalent cut-off show an 844m long down hole intersection at an average grade of 0.73% copper and 0.43g/t gold from a depth of 688m. The company notes that “The outstanding Hole 21 assay results from 0m to 650m are not expected to produce significant intersections.”
• Using a higher, 0.7% Cu equivalent cut-off, shows 3 discrete mineralised zones within this broader intersection:-
o 304m averaging 0.99% copper and 0.63g/t gold between 962m and 1266m down hole;
o 98m averaging 0.57% copper and 0.46g/t gold between 1278m and 1376m down hole and
o 100m averaging 0.69% copper and 0.46g/t gold between 1396m and 1496m down hole
o Solgold also discloses that “holes 23R, 24 and 25 are in progress at current depths of 844.3m, 1170.7m, and 1203.7m respectively. Further updates on the progress of these holes, testing both depth and further strike extensions to the southeast of Hole 21 at Alpala, will be provided when drilling of these holes nears completion.”
o In a wider summary of progress so far on its exploration at Cascabel Solgold reiterates that it has now drilled at 3 of the 15 identified exploration targets within a 2.2km long mineralised corridor up to 700m wide which extends from the Trivinio prospect in the north-west to the Cristal target in the south-east.
o A total of 35,000 metres of drilling has been completed so far with exploration costs to date totalling US$43m. The rate of exploration is now being accelerated following the investments by Newcrest, Guyana Goldfields and Maxit Capital with the deployment of 7 drill rigs by October this year increasing to 10 rigs next year when it is planned to increase exploration to 90,000 metres of core drilling in 2018 with the objective of delineating “the system limits along the greater Alpala trend prior to a maiden resource statement, and to test the other multiple targets within the concession.”
o The company “is currently planning further metallurgical testing and completion of an independent Pre-Feasibility Study at Cascabel.” Mining scenarios currently under consideration include “both high tonnage open cut and underground block caving operations, as well as a high grade / low tonnage initial underground development …”.
o Solgold also discloses that it has “applied for additional exploration licences in Ecuador over a number of promising porphyry copper gold targets throughout the Country. Solgold is negotiating external funding options which will provide the Company with the ability to have some of these projects fully funded by a third party while focussing on Cascabel.”
Conclusion: Solgold is accelerating its exploration at Cascabel as it works towards a Pre-Feasibility Study and considers appropriate mining development options. In addition, it is building upon its in-country expertise to acquire additional exploration licences though, prudently in our view, exploring third party funding options in order to focus its efforts on the advancement of Cascabel.
*SP Angel acts as Nomad and Broker to SolGold; An SP Angel analyst has previously visited the Cascabel project.
Strategic Minerals* (LON:SML) 2p, Mkt Cap £24.5m – Quarterly report highlights improved performance at Cobre.
• Strategic Minerals’ quarterly report for the 3 months ending 301st March shows magnetite sales of 14,264 tonnes generating revenues of US$834,000 compared with 3,427 tonnes (US$227,00) a year earlier. We also note that the March 2017 quarterly sales are some 4,800 tonnes and US$300,000 higher than the quarterly sales achieved during the December 2016 quarter.
• The company recently announced that it had secured a new client for its Cobre magnetite sale operation with an agreed minimum offtake of 4,000 tonnes per month from 1st June which “indicates that the remainder of 2017 may provide further strong sales figures which would positively impact Strategic Minerals’ bottom line.”
• Cobre’s “pre-tax profit margin for the March quarter 2017 exceeded 50%” which, given the outstanding tax losses available at Cobre, would imply that if the prices achieved during Q1 are maintained, the new client business alone could potentially generate an additional $820,000 in 2017 while at the current sales rates and margins existing client business could represent approximately $1.6m pa.
• “Over the period, the Company continued to maintain a tight control on overheads which continue to remain under US$1 million … on an annualised basis”. On this basis, in addition to the 31st March cash balance of US$695,014, it is clear that the Cobre operation alone is more than sufficient to meet corporate costs as well as providing cashflow to help fund exploration.
• Elsewhere, the first phase of drilling at 50% owned Cornwall Resources Redmoor tin tungsten project in Cornwall is now underway with the aim of confirming and extending the existing inferred resource base of 13.3m tonnes at an average grade of 0.21% tin, 0.32% copper and 0.16% WO3. The first phase of drilling comprises 13 drill-holes with a further 10 reserved for phase 2 later in the year when the proposed locations of the holes can be refined in the light of the earlier results.
• At the 75% owned Central Australian Rare Earths (CARE) project at Hanns Camp in Western Australia, a programme of re-assaying of samples from the 2016 drilling programme “identified the potential for a significant cobalt deposit” and as a result “it was decided by the Board of CARE to concentrate the next exploration phase on the potential Cobalt deposit”.
• The financial stability afforded by the Cobre operations is also, we surmise, behind the company’s comment that it “is in a cash generative phase, utilising its cash reserves for self funded exploration at both Redmoor and Hanns Camp, as well as actively considering new projects.”
Conclusion: The company has made significant progress both in advancing its exploration projects in the UK and in Australia as well as reinforcing its financial base through the expansion of its Cobre magnetite business. We look forward to the drilling results from Redmoor, more details of the cobalt potential of Nanns Camp and, in due course to the outcome of the company’s efforts to identify new projects.
*SP Angel act as Nomad and joint broker to Strategic Minerals