Sula Iron & Gold (LON:SULA) – Equity Drilling Limited drilling for more Sula shares
Just SIX EVs charging in your street can short out the local grid according to the Green Alliance
Toshiba - big charging stations will be required for new battery technology - titanium niobium oxide ‘TNO’ anodes
• Toshiba recently announced a ‘game changing advance’ in Japanese tech major Toshiba’s next generation SCiB battery which is set to transform the range and performance of current electric vehicles.
• The Super Charge-ion Batteries rely on a proprietary titanium niobium oxide ‘TNO’ ceramic nanoporous anodes to provide transformative performance compared to existing lithium-ion batteries, which rely on graphite based anodes.
• The new batteries are expected to provide over double the lithium storage capacity by volume, translating into a three-times improvement to electric vehicle range, up to 320km, from a 6-minute charge.
• Toshiba has cited a 32kWh battery capable of delivering 320km. To charge that in 6 minutes would require a 320Kw charger.
• Tesla: In comparison with the proposed Toshiba solution, today’s Tesla fast chargers operate at 480v producing circa 120kw providing an additional 170 miles of range for a 30 minute charge. This requires a 250 amp current - UK houses by comparison on average have a 60amp main fuse. UK domestic meters are rated to 100amp capacity.
• Current: A 320kw charger running at the 480v used by Tesla would generate 667 amps! As with the Tesla super charger, grid voltage would have to be stepped down, DC converted and the high current fed into a bank of lower amp rated super charger units to distribute the charge.
• Titanium: Toshiba plans to put the technology into practical application in just two years, which coincides with the expected first production of titanium products Bluejay Mining Plc’s Pituffik high-grade mineral sand ilmenite project.
• Power capacity: A typical charging station with 10 chargers could draw 3.2MW requiring a around 3.2 tonnes of copper per filling station for conventional power generation. If wind or solar power are used to supply the charging station then the amount of copper to be used in the instillation rises to 12.8 tonnes taking the amount of copper required to supply all UK filling stations for EV power to 115,200t of copper not including associated cabling which we suspect could double the amount.
• The US by comparison have around 115,000 filling stations closely followed by China at 95,000 and Japan at around 40,000.
• Copper: If the US, China and Japan all go electric then powering all these filling stations with renewable power would requiring a further 3.2mt of copper as well as a range of other minerals.
• Other metals: Nickel, zinc, manganese, molybdenum, neodymium, dysprosium, praseodymium, terbium are all likely to see significant increase in demand for wind turbines with a range of other speciality metals to be used in the electric vehicles being fuelled.
Lithium gets power boost from China
• China’s plans to ban new vehicles powered by gasoline is raising predicted demand for alternatively fuelled vehicles to 6m vehicles a year by 2025
• Roskill estimates some 785,000tpa of lithium carbonate equivalent will be required which is around 26,000tpa short of current supply estimate’s
• Despite compelling positivity surrounding global electric vehicle policies and mandates, there are mounting apprehensions over the distribution of electricity to power the electric vehicle boom. The drastic rise in electric and hybrid-electric vehicles will need to be met with a substantial rise in base-load power from the gird systems.
Cobalt sulphate chemical compound contracts are set for LME listing
• London Metal Exchange’s Chief Executive Matt Chamberlain confirmed the likely introduction of the new cobalt contract.
• The move brings clear price mechanisms for chemical compounds, previously valued via refined metal contracts, for a vital component in the manufacture of electric vehicle batteries.
Diamond Investment Exchange opens in Singapore
• The Singapore Diamond Investment Exchange ‘SDIX’ has launched a new market using standardised diamonds as a safe-haven alternative to cash.
• The unique and non-standard characteristics of diamonds have made diamond ETFs and futures products difficult to manage in the past though the exchange reckons it has solved this problem.
• The exchange reckons their new “Diamond Bullion” to be produced by the Singapore Diamond Mint, is a collection of investment grade diamonds whose value can be verified.
• Denominations range between $100,000 and $200,000 though the denominations available may develop as the exchange develops this product.
• A mark on the Diamond Bullion should provide further guarantee of its value.
Christmas lights are going up in Bond Street
• We are hoping Christmas may come early for investors in Georgian Mining (GEO LN).
Dow Jones Industrials +0.31% at 22,831
Nikkei 225 +0.28% at 20,881
HK Hang Seng -0.36% at 28,390
Shanghai Composite +0.16% at 3,388
FTSE 350 Mining -0.15% at 17,435
AIM Basic Resources +0.35% at 2,529
US$1.1824/eur vs 1.1781/eur yesterday. Yen 112.23/$ vs 112.40/$. SAr 13.583/$ vs 13.737/$.
$1.320/gbp vs $1.319/gbp. 0.779/aud vs0.778/aud. CNY 6.594/$ vs 6.585/$.
Gold US$1,290/oz vsUS$1,289/oz yesterday
• The dollar index retreated further from its recent 10-week peak, on strengthening conditions for global currencies and concerns surrounding domestic tax policies. The ambitious tax overhaul proposes an array of reductions for individuals and businesses which represents the most comprehensive transformation to the federal tax code in decades. Confidence in U.S. President Donald Trump’s ability to pass the bill is waning with speculations that the overhaul will sit alongside the defeat of his efforts to dismantle the Affordable Care Act.
• Europe’s largest economy, Germany, revised its 2017 growth forecast up to 2 percent on robust economic outlook. The rise represents the strongest rate since 2011.
• Recent unrest surrounding Catalonia’s move to independence from Spain appear to be transitioning into a phase of passive discussion, alleviating fears of further violent. Euro-zone stability floated the currency value to near 10-day highs.
• Gold buoyed on rising geopolitical tension on the news that North Korean hackers have stolen large amounts of crucial classified joint South Korean-U.S. wartime operational plans. The plan claims to incorporate a detailed strategy for the ‘decapitation’ of the North Korean leadership, discovery of which is only likely to intensify elevated hostility in Pyongyang.
• Speculations on the proposed FOMC December rate rise between 1.25% and 1.5% have risen to nearly 92% of market participants.
Gold ETFs 69.3moz vsUS$69.3moz yesterday
Platinum US$931/oz vsUS$925/oz yesterday
Palladium US$936/oz vsUS$939/oz yesterday - Palladium overtakes platinum
• Price of palladium overtaken platinum for third time since 1931 and 2001, used in auto catalysts for petrol fuelled engines
• However, advances in electric vehicles will have devastating impact on palladium in the future
Silver US$17.15/oz vsUS$17.10/oz yesterday
Copper US$ 6,731/t vsUS$6,684/t yesterday
• The International Monetary Fund forecast sustained broad global economic growth into 2018, supporting demand across base metals, despite lethargic outlooks for the United States, Britain and India.
• Bolstered by strong trade, investment and consumer confidence, the IMF raised expectations for global growth to 3.6% in 2017, and 3.7% in 2018.
• In particular Chinese demand for copper elevated premiums to their highest since August, rising to $70 per tonne cost, insurance and freight basis.
Aluminium US$ 2,142/t vsUS$2,160/t yesterday - Data fabrication concerns deepen as Kobe Steel shares plummet
• Scandalous data falsification arising from Kobe Steel Ltd has spread to iron powder products, further to previous announcements of aluminium and copper product, amid concerns of more widespread issues.
• Japan’s No.3 steelmakers revealed fabricating data to meet customer specifications, with extensive damaging implications for materials used across the automotive, aerospace and defence sectors
• The industrial player is compelled to utilize its real estate business to balance its unsteady finances, as shares plummeted a further 16-percent yesterday.
Nickel US$ 10,940/t vsUS$10,950/t yesterday
Zinc US$ 3,234/t vsUS$3,224/t yesterday - New Century secures $45m to reopen old zinc mine
• Base metals developer New Century Resources has secured s $45m debt facility to fund restart of its Century zinc mine in Queensland – was third largest zinc mine in the world prior to its closure in 2016
• Estimated to contain 2.38 million tonnes of zinc, 360,00 t of lead and 31.5million ounces of silver, restart on track and targeted for completion by November.
Lead US$ 2,508/t vsUS$2,491/t yesterday
Tin US$ 20,710/t vsUS$20,905/t yesterday
Oil US$56.8/bbl vsUS$55.9/bbl yesterday
Natural Gas US$2.926/mmbtu vsUS$2.845/mmbtu yesterday
Uranium US$20.35/lb vsUS$20.15/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$58.6/t vsUS$59.6/t yesterday - Chinese steel rebar 25mm US$640.7/t vsUS$640.6/t yesterday
• China’s Ministry of Environmental Protection action plan to combat Beijing’s persistent smog problem is having the dual benefit of minimising harmful air particulates and boosting steel off two-month lows. Steel futures are showing recovery as market participants are seeking to secure supply ahead of the winter production cuts.
• Substantial rebar inventory stocking brought levels to 4.36 million tonnes following last week’s national holiday.
• Downstream demand is yet to match flourishing production, although effective market rebalancing is expected as industrial companies across China are implementing mandatory production cuts well ahead of the mid-November deadline.
• Despite Chinese production cuts, removing approximately 100 million tonnes of legal steel capacity and 120 million tonnes of illegal low-grade capacity, analysis indicates marginal declines in global capacity. Chinese efforts in reducing supply glut in the effort to recover steel prices are diminished as domestic capacity loss is matched by new facilities under development across Asia and the Middle East.
Iron Ore price falls below $60 a tonne as China fights pollution
• Fallen on concern demand will suffer from an environmental crackdown in China – ordered that heavily polluting industries curb emissions over winter heating season
• Mills started to cut steel production curbing demand for iron ore and at same time supplies from Australia have increased further pressuring prices
Thermal coal (1st year forward cif ARA) US$81.5/t vsUS$79.0/t yesterday
Premium hard coking coal Aus fob US$182.8/t vsUS$185.0/t yesterday
Tungsten APT European US$280-295/mtu vs US$290-305/mtu
Altus Strategies* (LON:ALS) 8.4p, Mkt Cap £9.0m – Proposed acquisition of Legend Gold with exploration assets in Mali
BUY - Target price 12.2p (from 13.7p)
• Altus signed a non-binding Letter of Intent (LOI) with TSX-V listed Legend Gold for all share 100% interest acquisition of the latter.
• Legend assets include a portfolio of prospective gold exploration projects in Mali most of which are located within 10-20km radius of the operating 4.9mtpa 170kozpa Sadiola mine:
• The Korali Sud License (83km2) hosts the Diba gold project in southwestern Mali and 20km south of the 13moz Sadiola gold deposit; gold mineralisation is found in shallow dipping lenses with a NI43-101 resource statement (AMEC, 2013) estimating 6.3mt at 1.35g/t for 275koz in Indicated and 0.7mt at 1.40g/t for 33koz in Inferred categories (0.5g/t COG, $1,200/oz gold price).
• The Lakanfla License (24km2) located 10km southeast of Sadiola which is “considered to have the potential to host a karst style gold project that would be geologically analogous to the Yatella deposit (a 4.5moz deposit mined in 2001-2015”; while dilling has not resulted in economic resource yet, Legend exploration works identified six high priority drill ready targets.
• Djelimangara License (55km2) located 15km southeast to the Diba project and prior to Apr/16 was subject to JV with Randgold; follow up work in 2017 identified new artisanal workings planned to be mapped and sampled.
• Pitiangoma Est License (106km2) located in southern Mali and 40km south of the operating 200kozpa Syama mine and is currently under the JV with Resolute which has the right to earn up to 70% in the license by spending $3m and completing a feasibility study; Resolute spent $384k since Mar/15 to date and completed 4,700m of drilling with “the results sufficiently encouraging that Resolute has advcised Legend it is planning additional drilling”.
• Tabakorole License (100km2) located in Southern Mali with a NI 43-101 resource estimate (2007) of 2.0mt at 1.07g/t for 69koz (oxide) and 16.4mt at 0.99g/t for 525koz (sulphide) in both Indicated and Inferred categories.
• Regarding the consideration, Altus will give up three of its own shares for each outstanding shares in Legend.
• This implies issuance of 41,060,256 new Altus shares to Legend shareholders representing 27.6% of the enlarged issued capital.
• The consideration represents a premium of 130% to the Legend close price yesterday.
• In addition, Altus will assume all outstanding Legend options and warrants with most of those remaining deeply out of the money apart from 650,000 warrants (or 1,950,000 warrants to be in Altus) which had an exercise price of C$0.25 and were issued as part of the latest Legend refinancing.
• Michael Winn, CEO and Chairman of Legend as well as c.45% shareholder, will be joining Altus Board non-executive director.
• Dr Demetrius Pohl, Company’s Qualified Person and VP Exploration, and Ambogo Guindo, VP Business Development with more than 25 years in gold exploration in Mali and having served with BHP for 12 years, will be joining as advisers.
• Demetrius worked for >40 years for major mining companies including Esso Minerals and BHP Billiton in Africa leading project generation which saw the discovery of several operating projects including Essakan, Sadiola, Morila, Syama, Kabanga and Golden Pride.
• Legend officers and directors representing c.53% interest in the Company agreed to support the transaction.
• Altus officers and directors who hold c.40% of the outstanding shre capital agreed to vote in favour with the Company to seek shareholder authority for the issue of the new Altus Shares.
• Additionally, the transaction is conditional on a number of points including no material changes to the financial condition, assets/liabilities of either Altus or Legend and results of further due diligence.
• Legend had C$113k in the bank as of June this year with outstanding payables and debt covered in the latest private placement.
Conclusion: Potential acquisition provides Altus with access to a portfolio of prospective exploration assets in Mali with a number of licenses adjacent to existing operating mines. Additionally, the transaction allows Altus to seek dual listing on the TSX-V tapping into a North American shareholder base.
Should the acquisition be completed, Altus will need to adjust their spending budgets to accommodate for exploration works at Mali licenses with little cash left in Legend.
Our updated target price includes the value of Legend assets planned to be brought in Altus and adjusts the number of outstanding shares for a potential dilution.
*SP Angel acts as Nomad and Broker to Altus Strategies
Asiamet Resources (LON:ARS) 5.65p, Mkt Cap £48m – Drilling intersections from BKZ
• Asiamet Resources reports additional results from its scout drilling programme at the BKZ property located approximately 800m north of its BKM copper project where feasibility study work is well advanced.
• The results include a 30m wide intersection averaging 12.0% zinc, 2.2% lead, 46g/t silver and 0.37g/t gold from a depth of 43m in hole BKZ33650-01.
• This results from this hole follow the earlier announcement of a 39m wide intersection averaging 7.3% zinc, 2.3% lead, 33g/t silver and 0.33g/t gold from 41m in hole BKZ33700-02 which was located on a section line 50m to the north.
• The scout drilling, which so far comprises 705m of drilling in seven boreholes, is following up quartz sulphide mineralisation which outcrops approximately 50m east of the drilling. The mineralisation is described as “quartz-sulphide veins to massive sphalerite (zinc), galena (lead), chalcopyrite (copper) and pyrite”.
• Commenting on the results from the scout drilling Asiamet’s CEO, Peter Bird, said that the company “views the recent results from drilling at BKZ, the first pipeline target to be tested in the current programme, as a clear illustration of the substantial upside remaining on the very underexplored KSK COW.”
• Mr Bird when on to point out that “Work undertaken by the Company and its predecessor partners to date suggests that the greater BK area represents a polymetallic mineral district covering approximately 10-15 square kilometres, the potential of which is only beginning to see daylight.”
Conclusion: As Asiamet advances the feasibility work on the BKM copper project it is now turning its attention to the wider opportunities within the area. Early stage scout drilling of the first of these new target areas at BKZ has yielded wide intersections of high grade polymetallic mineralisation which will no doubt be followed up with enthusiasm, however, in our view the delivery of the BKM Feasibility Study remains the priority. We look forward to further news on both the exploration and feasibility work.
Avesoro Resources (LON:ASO) 2.15pence, Mkt Cap £114.5m – New Liberty resource/reserve update and new mine plan
• Avesoro Resources reports an updated mineral resource/reserve estimate, a revised 2017 production estimate as well as September 2017 quarterly production results and a revised annual production profile to 2021.
• The resource and reserve report, which was produced by the consulting group SRK and follows Canadian CIM Standards, updates the previous, October 2012 estimate to reflect mining depletion as well as “the use of an open pit depth constraint … which limits the depth to which open pit material is now reported”.
• Overall, the measured and indicated resource of 9.6mt at an average grade of 3.2g/t gold represents a “14% reduction in metal content within the Measured and Indicated categories from 1,143 koz to 985koz.” The latest estimate reports an additional 6.4mt at 3g/t gold (620,000oz) classified as inferred.
• In reporting the updated Proven and Probable reserve estimate of 7.4mt at an average grade of 3.03g/t (717,000oz) at a cut-off grade of 0.85g/t, the company states that “Since the commencement of mining operations at New Liberty in Q4 2014 to the end of July 2017, some 1.8Mt of ore has been mined and processed at an average grade of 2.5 g/t and containing 145koz of gold.”
• Production from New Liberty during the September quarter amounted to 19,885oz of gold “representing a 26% increase on the previous quarter, bringing year to date production to 50,615 ounces of gold.”
• The company has revised its production guidance for 2017 to 70-80,000 oz at an operating cash cost of US$900-950 per oz, implying that it expects to more than match the Q3 production performance during the final quarter of the year. The company attributes the reduction in 2017 production guidance from the previous 90-100,000oz to “a lack of grade continuity in the mineralisation within the Marvoe pit, which resulted in a shortfall in mining production of approximately 10,000 ounces when compared to the original mine plan for 2017, which the Company will not be able to recover before the end of the year.”
• The company reviews the remedial measures it has implemented since the change of management a year ago.
o Process plant throughput has been increased by 42% to 200tph and recovery levels of 91-93% have been achieved
o Crushing capacity has been increased to 280tph through modifications including the addition of a tertiary cone-crusher
o Measures, including improved mill liner life and reduced consumables usage have improved rushing circuit availability
o Additional plant upgrades including increased oxygen capacity have improved “pre-oxidation, leaching and detox performance”
o Plans are underway to add a second gravity concentrator “to increase gravity gold recovery levels towards the 60% planned in the original plant design”
o The increased throughput rates have reduced the life of the New Liberty mine to 4.5 years and Avesoro has provided a revised annual production profile to 2021 providing details of a planned average 149,000oz annual production over the remaining mine life.
o According to company estimates using a gold price of US$1300/oz, at a 5% discount rate, the revised plan generates a post-tax NPV of US$179m after debt repayment and associated finance charges, through the production of 642,000oz of gold at an operating cash cost of US$659/oz (All-in-sustaining cost of US$749/oz).
Conclusion: Avesoro’s new mine plan reduces the life of the New Liberty Mine but ensures a positive NPV and the repayment of debt. The lower production guidance for 2017 implies that production is picking up and that production rates are expected to improve during the remaining life of the mine.
Highland Gold (LON:HGM) 150p, Mkt Cap £488m – Q3 operations update
• Q3 production climbed 14.6%yoy to 71.8koz on stronger output at all three operating mines.
• YTD output came in at 203.6koz, up 6.6%yoy, led by stronger production at MNV and Novo with Belaya Gora posting a slight reduction in gold poured.
• At MNV, production totalled 27.4koz (Q3/16: 24.9koz) with the processing plant treating a blend of ores from underground, open pit and historical waste dumps.
• The Company launched an extensive exploration programme at MNV to help identify extensions to existing ore bodies as well as new mineralised targets.
• The management is planning to make $3m pa over the next 3-5 years available to their exploration team at MNV targeting further extension of the life of mine past current 2022.
• Results to date show that an additional 2t of gold in-situ (448kt at 4.45g/t) are expected to be added to GKZ reserves this year; geochemical surveys are being conducted at two new greenfield licenses adjacent to MNV, Kulibinskaya and Zamanchiavaya.
• At Novo, gold equivalent production totalled 32.1koz (Q3/16: 28.1koz) reflecting higher throughput rates on the back of the optimisation of technological processes and slightly better grades.
• Novo, a high margin operation accounting for somewhat 50-60% of the Group EBITDA, on track to kick start development works for the 1.3mtpa Project in 2018 ahead of commissioning in 2019.
• Design documentation is in final stages with grinding equipment for higher milling throughput reported to have arrived on site.
• At Belaya Gora, production was 12.3koz (Q3/16: 9.6koz) with the plant processing lower grade ore (c.1.1g/t) as the team is finalising PFS on upgrading the processing plant to tank leaching and studying the potential of processing nearby Blagodatnoye ores at its treatment facilities.
• The Company has completed 18,000m of exploration drilling at Blagodatnoye in 2016 and another 2,400m this year in order to increase confidence in reserves as well as avoid mistakes previously made at Belaya Gora where the orebody turned out to be more complicated than previously thought and grade reconciliation significantly underperformed the model; maiden reserves at Blagodatnoye are expected to be released together with BG PFS.
• Kekura DFS is in final stages which together with updated mineral reserves statement are expected to be released in Q4/17.
• FY17 gold production is expected to come in near the upper end of the 255-265koz range.
Conclusion: Production update reflects robust quarterly performance with operations expected to hit the upper end of the management guidance. The Company is progressing well on all fronts including preparation for the Novo 1.3mtpa expansion project, increased focus on exploration at MNV, studies looking at optimising the BG plant and bringing Blagodatnoye deposit as well as continuing Kekura development. Q4 is going to be a busy quarter with a number of studies due on Company’s portfolio of assets.
Sula Iron & Gold (LON:SULA) 0.1p, Mkt Cap £3.0m – Equity Drilling Limited drilling for more Sula shares
• Sula Iron & Gold have elected to issue a further 153m new shares to Equity Drilling Limited in accordance with its agreement to settle 50% of its Phase 3 bill in shares.
• The new shares represent around 4.9% of the company’s enlarged share capital.
• Equity Drilling drilled 5,184m at the Ferensola gold project, though we cannot blame the lack of meaningful results on the drilling contractor.
• We hope the recent appointment of a new geological consultant will help the company to better direct the next phase of the drilling program and that the drillers will continue to accept payment in stock from Sula’s AIM ATM.
• We look forward to Sula showing the market the reasoning behind the targeting of its next round of drilling and to better success next time.
• We suspect the maiden resource at Sanama Hill which is part of the Ferensola gold project as mentioned in the August press release announcing the last funding will have to wait for assays from the next round of drilling.
• Sula raised £900,000 of funds in August via Riverfort Global Capital which is run by Brian Kinane who use to run Yorkville Global Advisors in the UK
Conclusion: If Sula do manage to prove up an economic deposit at Ferensola we wonder if it would be better to hold shares in Sula or in its drilling contractor.