column Proactiveinvestors column RSS feed en Thu, 14 Dec 2017 09:48:27 +0000 Genera CMS (Proactiveinvestors) (Proactiveinvestors) Today's market view - Base metals rise as dollar pauses on FOMC announcement Base metals rise as dollar pauses on FOMC announcement

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Bacanora Minerals (LON:BCN) – Sonora Lithium feasibility study results.
Highland Gold (LON:HGM) – Dividend policy announced
Kodal Minerals* (LON:KOD) – Kodal secures 90% of Bougouni mineral licenses in Mali
Ortac Resources* (LON:OTC) – Update on CASA Mining offer
Pallinghurst – plans to relist Gemfields assets in London
Savannah Resources (LON:SAV) – Drilling report from Mina do Barroso includes discovery of new high grade zone
Stratex International (LON:STI) – Thani Stratex reports maiden Mineral Resource at Anbat project in Egypt

Battery breakthrough triples electric car range
• A new battery breakthrough using negative electrodes made of lithium is said to have the potential to drastically increase storage capacity of batteries.
• The implication is that this may result in cheaper, safer, longer lasting batteries boosting the range electric vehicles to ~600km from ~200km.
• Researchers are also adding chemical compounds of phosphorus and sulphur elements to the charge carrying electrolyte.

Dow Jones Industrials  +0.49% at 24,505
Nikkei 225   -0.47% at 22,758
HK Hang Seng   +1.56% at 29,243
Shanghai Composite    +0.68% at 3,303
FTSE 350 Mining   +0.13% at 16,818
AIM Basic Resources   +0.64% at 2,595

US – Wholesale prices inflation beats estimates climbing to the highest pace since 2012 on the back of stronger energy prices.
• Price pressures from producers is a welcome news to monetary policy authorities given some FOMC members previously starting to express concerns over hgeadling inflation running below the Fed target.
• Fed rate increase seems to be priced into the dollar with markets’ attention to be drawn to the accompanying statement and the subsequent press conference from Janet Yellen.
• US equity indices continued to power ahead with S&P 500 (2,664) and Dow (24,504) closing at fresh highes yesterday led by gains in telecoms and financials.
• PPI (%mom/yoy): 0.4/3.1 in November v 2.8/0.4 in October and 0.3/2.4 forecast.
• Core PPI (%mom/yoy): 0.3/2.4 v 0.4/2.4 in October and 0.2/2.4 forecast.

UK – Employment dropped more than forecast in October while core jobs earnings growth (excl bonus) inched up latest ONS numbers show.
• The number of people in work dropped by 56k in the three months to October, the most since mid-15 and marking the second consecutive decline.
• Labour earnings (excl bonuses) increased by an annual 2.3% in 3m to October compared with 2.2% in 3m to September.
• Nevertheless, wage growth came short of the latest 3.1% consumer inflation reading in November with the ONS reporting that real wages decline by an annual 0.2%.

DRC – BBC reports on humanitarian crisis in the DRC
• The UN estimate there are ~500,000 severely malnourished children at risk of starvation in the region of Kasai putting the situation on a par with the Yemen, Syria and Iraq.
• Re: mining, the government is also looking at raising taxes and government ownership of mining projects in the DRC in a move which is likely to dissuade investment.
• It is already hugely expensive to operate in the DRC due to the high cost of logistical support and problems associated with exporting metal and concentrates out of the region.
• Poor roads, lengthy boarder checks, corruption and theft are all raise the cost of exports out of the DRC meaning that only higher-grade mineral projects will work in the region.

US$1.1741/eur vs 1.1788/eur yesterday   Yen 113.43/$ vs 113.40/$   SAr 13.618/$ vs 13.676/$   $1.332/gbp vs $1.337/gbp   0.757/aud vs 0.753/aud   CNY 6.621/$ vs 6.617/$

Commodity News
Precious metals:         
Gold US$1,242/oz vs US$1,244/oz yesterday
• Gold prices inched higher after hitting an almost five-month low overnight while investors pause ahead of the conclusion of the US Federal Open Market Committee’s two-day meeting (closing today). The metal will remain under pressure as expectations for the meeting are to raise US interest rates before the end of the year.
• “The FOMC statement will be crucial this evening, setting the tone for the trajectory of US rates into 2018. Complacency in the last few months in this regard means that if the Fed holds its intention to hike at least three times next year, we could see an outsized reaction higher in both the dollar and yields. Neither would be good news for long gold positioning,” Senior Oanda market analyst.
• Despite news of a terrorist attack in New York on Monday, “investors seem to have no need of security just now” (Commerzbank AG analyst). A Bloomberg index of senior gold companies fell to their lowest level since July, as the price contracted c. 9% after hitting a one-year high in September.
   Gold ETFs 71.7moz vs US$71.7moz yesterday
Platinum US$878/oz vs US$886/oz yesterday
Palladium US$1,015/oz vs US$1,010/oz yesterday
Silver US$15.71/oz vs US$15.76/oz yesterday
Base metals:   
Copper US$ 6,703/t vs US$6,648/t yesterday
• Successful commissioning of the Kamoto Cu-Co whole ore leach plant at Katanga Mining will allow Glencore to double its copper production from the Democratic Republic of Congo over the course of the next two years. Production is expected to surge to 150Kt in 2018, and ramp up to 300Kt by 2019. The operation also represents a significant source of responsible cobalt supply, which is forecast to move into severe market deficit on the back of the electric vehicle story, with investors piling into the company to raise the share price 52% since Monday’s announcement.
• London copper moved higher as the dollar pulled back from one-month highs following expectations of a fifth interest rate hike since 2015.
• Copper jumped on supply concerns while analysts reassess their projections for Chile as the top-producing nation prepares for its busiest year of wage negotiations under the new labour code whilst higher prices inflate pay expectations. Chilean mines are expected to discuss contracts with 32 unions over the next year, representing one-fifth global supply. Barclays Plc estimate potential disruption to 40% worldwide copper supply triggered from future discussions.
• Unsuccessful negotiations earlier this year at BHP’s Escondida extended striking for the longest consecutive period in mining history, while Antofagasta Plc failed to reach an early agreement with workers at its Los Pelambres site after five weeks of talks.
• Chilean mines may be wise to take a leaf out of state-owned Codelco’s book, who avoided strikes in all of its wage negotiations when CEO Nelson Pizarro famously said it didn’t have “a single f---ing peso”.
• Despite signs of slowing Chinese demand, any disruption to supply could rapidly tighten market conditions and draw the metal above $7,000.
Aluminium US$ 2,018/t vs US$2,010/t yesterday
Nickel US$ 11,190/t vs US$11,130/t yesterday
Zinc US$ 3,160/t vs US$3,120/t yesterday - Glencore see fall in zinc production at 1mtpa through 2018 vs 1.1mtpa this year
• Glencore see a small fall in zinc production next year despite the restart of some of its own idled production.
• They also see production rising again to 1.16mt in 2019 as they restart more of their idled 500,000tpa.
• Glencore looks to reduce its zinc output into 2018 to 1.09 million tonnes in a move which was met by positive surge in the metal to settle +1% to $3,157/t yesterday. Further, the company looks to increase production by 195,000 tonnes over 2018-2020 to support prices with “Glencore wanting to see prices above $3,000 for some months to come”, Commerzbank analyst.
• Restarting production falls short of the 500,000 tonnes left idle in 2015 when commodity prices were crashing, and gives the company additional capacity to react to movements in the metal price.
Lead US$ 2,518/t vs US$2,496/t yesterday
Tin US$ 18,830/t vs US$19,405/t yesterday
Oil US$64.1/bbl vs US$65.4/bbl yesterday
Natural Gas US$2.716/mmbtu vs US$2.833/mmbtu yesterday
Uranium US$25.00/lb vs US$25.00/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$68.0/t vs US$67.8/t
Chinese steel rebar 25mm US$755.7/t vs US$758.0/t
• Rebar continued to slide for the second day as spot prices retreat in China on caution surrounding Thursday’s release of economic data. Investors are “extremely cautious” ahead of November figures which include commodities-sensitive data on industrial production and fixed-asset investment, drawing the price nearer to monthly lows as rebar for May on Shanghai Futures Exchange closes -1.4% to 3,831 yuan/ton.
Thermal coal (1st year forward cif ARA) US$90.0/t vs US$88.4/t
Premium hard coking coal Aus fob US$236.2/t vs US$236.1/t
Tungsten APT European US$293-300/mtu vs US$291-300/mtu last week
Cobalt LME 3m US$72750/t vs US$74700/t yesterday - Glencore to double cobalt production as it negotiates deal with tesla, Apple, VW
• Glencore is to double cobalt production in the next two years, tightening its grip on the market for key battery component
• The company aims to produce as much as 34,000t in 2019, vs 20,000t guidance gave in August. 
• The increase could raise Glencore share of global production to around 40% following the successful commissioning of Katanga Mining’s Cu-Co whole ore leach processing facility.
• The company is in discussions with Volkswagen AG, Tesla Inc, Apple Inc and other battery makers over future supply contracts
• Glencore also reckons the rise in Electric Vehicle production could require a further 390,000t of copper, 85,000t of nickel and 24,000t of cobalt by 2020
• EV’s may still only make 2% of new vehicle sales at this point, by 2030 EV’s are expected to have market share of <32%  
• LME’s ongoing probe into ethical mining practices in the DRC will only emphasize the importance of Katanga supply, as battery and automotive manufacturers (particularly Volkswagen) will look to secure responsible long-term supply of the battery chemical.

Company News:
Bacanora Minerals (LON:BCN) 94.5p, Mkt Cap £126m – Sonora Lithium feasibility study results.
• Bacanora Minerals reports the results of its feasibility study on the Sonora lithium project in Mexico. The study, based on the production of 35,000tpa of battery grade lithium carbonate, shows a pre-tax NPV8% of US$1.25bn and an IRR of 26.1%.
• After tax NPV8% is estimated at US$802m and IRR at 21.2%
• The study envisages an overall 19 years mine life with an initial four-year period at a production rate of 17,500tpa of lithium carbonate before a doubling of capacity to 35,000tpa for the remaining 15 years mine life.
• The capital cost for the initial stage Is estimated at approximately US$420m with the capital for the second stage expansion amounting to a further US$380m. The average life-of-mine operating costs are estimated at US$3910/tonne of lithium carbonate or US$3,418/t after credits for potassium sulphate  by-product.
• The largest element of the capital cost for both the Phase 1 and the Phase 2 projects are the lithium processing plant which represents 38% (US$158m) of the Phase 1 expenditure and 42% (US$18m) of the Phase 2 capital.
• Similarly, the processing costs represent the largest proportion of operating costs in both Phase 1 (US$3,093/t of product or 85% of the cost of lithium carbonate production) and Phase 2 (82% or US$3266/t of lithium carbonate).
• The company estimates that payback is achieved in 4 years.
• A 10% change in the assumed US$11,000/t selling price of the lithium carbonate product equates to a  24.5% change in the pre-tax NPV8%.
• The company makes the point that its preferred process route for the production of lithium carbonate is an established method involving a pre-concentration phase prior to roasting  ahead of a hydrometallurgical recovery  process to produce final battery grade product.
Conclusion: The detailed feasibility work is to be published on the Canadian SEDAR system within 45 days and we look forward to the opportunity to examine the Sonora project in greater detail.

Highland Gold (LON:HGM) 155p, Mkt Cap £504m – Dividend policy announced
• The board adopted a dividend policy to pay out 20% of Net Cash Flow from Operating Activities in each financial year.
• Additional cash dividend is subject to the cash generation of the business including profitability and planned capital expenditures as well as debt repayments.
Conclusion: The Company has doubled its dividend payments in 2016 (10.4p/$42m or 31% of NCFO v 4.5p/$22m or 21% of NCFO in 2015) on the back of strong performance. With 2017 shaping as another good year and interim dividends reiterated at 5p, we expected the Board to reiterate last year’s final dividend of 5.4p bringing total for the year to 10.4p or 6.7% dividend yield (35% of NCFO), the highest level among major London listed precious metals miners. Applying 20% of NCFO policy to H2/17 takes dividends to 3.3p in H2/17 and 8.3p for FY17 (5.4% yield). In 2018e the policy brings dividends to 6p (3.9% yield at $1,225/oz gold price and 265koz assumption), excluding special dividends. We think the dividend policy accounts for a capital intensive 2018-19 period on the back of Kekura development costs, Novo 1.3mtpa project expenses as well as an integration of the Blagodatnoye deposit and optimisation of the processing plant at the Khabarovsk hub with dividends expected to increase once major development projects ramp up raising NCFO.

Kodal Minerals* (LON:KOD) 0.19p, Mkt Cap £12.1m – Kodal secures 90% of Bougouni mineral licenses in Mali
• Kodal Minerals has accelerated payments to secure 90% of its Bougouni mineral licenses in Mali.
• The company has rights to explore and to develop minerals within the 250sqm Kolassokoro licence area which included Bougouni.
• Kodal has also reached agreement with a further company covering 100sqkm of high-priority ground within the Kolassokoro licence area where by Kodal will hold 90% and the Triumvirat Mining Company SARL, a local company will hold 10% of the assets. Triumvirat has the right to be free carried through to feasibility study after which it will have to pay its share of costs.  Kodal is also paying Triumvirat a fee of around £53,000.
• It is interesting to note that Triumvirat, a local Malian company, had managed to stake some ground overlapping Kodal’s mineral licenses in Mali due to an oversight by the registered license holder, EMAS Mining SA, in Mali.
• The ‘Malian National directorate of Geology and Mines’ (DNGM) has worked to resolve the matter so that Kodal has maintained its 90% holding in the ground.
• We also note, legislation in Mali requires the government to hold a 10% free carry on all mines in the region.
Conclusion: Kodal’s listed status has helped the company to resolve this license issue without any meaningful impediment to its holding.  More positively the effective issuance of new licenses on the ground gives the exploration license a longer life span than the older licenses with Triumvirat replacing the 10% stake formerly held by EMAS Mining SA.
*SP Angel act as Financial Advisor and broker to Kodal Minerals. A partner at SP Angel acts as Chairman to the company.

Ortac Resources* (LON:OTC) 2.9p, Mkt Cap £9.6m – Update on CASA Mining offer
(Ortac holds 70.09% of CASA Mining which holds 71.25% of the Misisi Gold project in South Kivu in the Eastern part of the DRC. This gives Ortac an effective 49.9% stake in the Akyanga project)
• Ortac reports that it has increased its holding in Casa Mining “from approximately 45% to 84.7% since the Offer was announced on 10 November 2017”
• “The Offer remains open until 10 May 2018 and acceptances continue to be received daily.”
• To date, Ortac has issued some 66.6m new shares to accepting shareholders of the Offer.
• CASA Mining holds 71.25% of the Misisi Gold project in South Kivu in the Eastern part of the DRC.  CASA’s licenses cover some 60km of the Misisi Corridor which include the Akyanga gold resource as well as the Lubitchako, Tulongwe, Kilombwe and Mutshobwe prospects.
• In June this year, the company published an initial inferred resource for Akyanga of 1moz of gold within 14.3m tonnes at an average grade of 2.27g/t. Subsequent drilling aimed at upgrading some of this to indicated status as well as establishing the geological controls and continuity of the mineralisation has encountered further mineralisation including what the company describes as the “highest ever grade and intersected thickness drilled at the Akyanga Deposit – 24.75m @ 8.04 g/y Au from 200.75m incl. 5m @22.63 g/t Au from 2017.10m” in hole MSDD0110”
Conclusion: Ortac Resources is increasing its interest in Casa Mining where further drilling of the 1m oz Akyanga deposit in the DRC continues to deliver meaningful results and opens up the possibility of further mineralisation towards the south.
*SP Angel acts as nomad and broker to Ortac Resources

Pallinghurst – plans to relist Gemfields assets in London
• Investors may be surprised to learn Brian Gilbertson is looking to relist the assets of Gemfields in London.
• Gilbertson who runs Pallinghurst, a SA based private equity firm may be equally surprised at potentially hostile reactions and opposition from investors who feel legged over by the London delisting process of Gemfields forced through by Pallinghurst.

Savannah Resources (LON:SAV) 5.6p, Mkt cap £35.8m – Drilling report from Mina do Barroso includes discovery of new high grade zone
• Savannah Resources has provided an update on its reverse-circulation drilling programme at Mina do Barroso in Portugal where 66 holes totalling 5558m have now been completed.
• The drilling has focussed on the previously known  Grandao, Reservatorio and NOA deposits but it has also discovered “a newly identified sub-vertical pegmatite body … identifying a new high-grade zone of mineralisation in hole 17GRARC20 which intersected 25m at an average grade of 1.49% Li2O from a depth of 32m, including 14m grading 2.1% Li2O.”
• Other results from this new zone include:
-9m averaging 0.86% Li2O from a depth of 22m also in hole 17GRARC20; and
-A further two mineralised intersections in hole 17GRARC18 where 17m averaging 0.45% Li2O was encountered from a depth of 9m and a further 17m averaging 0.37% Li2O from 40m depth; and
-A 13m wide intersection averaging 0.63% Li2O from 36m in hole 17GRARC14
-Thirty-six holes totalling 2809m have been completed on the flat-lying Grandao pegmatite and a further 16 holes have been added to the programme “to help outline the full potential of the Grandao deposit.”Among the results highlighted today from the Grandao drilling are:
-109m averaging 1.04% Li2O from surface in hole 17GRARC17 which includes a 52m wide section averaging 1.32% Li2O from  a depth of 4m; and
-71m averaging 1.06% Li2O from 88m, including 57m averaging 1.2% from 88m in hole 17GRARC19; and
-31m averaging 1.2% from surface in hole 17GRARC12; and
-25m averaging 1.15% from 36m in hole 17GRARC23
-At the Reservatorio deposit, where the company expects to produce a maiden mineral resource estimate by the end of 2017, “assay results confirm that the lithium mineralisation extends to over 400m, with good down dip extensions of at least 100m”. Among the results highlighted today are:
-32m averaging 1.05% Li2O from a depth of 78m in hole 17GRARC17; and
-15m averaging 1.19% Li2O from a depth of 79m in hole 17GRARC16
-At the NOA deposit, where “further drilling and results [are] pending; drilling of a further 6 holes has confirmed the presence of lithium mineralisation over a 200m strike length together with good down dip extensions of at least 50m and pegmatite widths up to 15m.”
-The company notes that further metallurgical testing is underway and that results from the Grandao, Reservatorio and NOA deposits are expected in early 2018.
-Commenting on the results which he described as “outstanding results that represent some of the best lithium spodumene intersections ever reported for a European deposit.” Chief Executive, David Archer said “The results from Grandao are particularly exciting as there are some exceptional widths and high grades and the geometry of what we are seeing suggests there is potential for a low stripping ratio, open-cut mine development.”
Conclusion: The latest drilling results from Mina do Barroso include high grades and wide intersections as well as the discovery of a previously identified body of mineralisation. We look forward to the forthcoming maiden resource estimate for the Reservatorio deposit later this year and to the metallurgical test results and further news of the extended drilling programme.
LON:STI) 1.1p, Mkt cap £5.0m – Thani Stratex reports maiden Mineral Resource at Anbat project in Egypt
• Thani Stratex Resources has re-reported its maiden mineral resource at its Anbat project in Egypt.
• The original report on 7 December was released prematurely without the permission of CSA consultants and without full disclosure with respect to JORC public reporting requirements.
• Strates states: “The material change to the original announcement and MRE report released by TSR relates to disclosure around the conceptual pit optimisation, as follows:”
• "Inferred Mineral Resources were reported for blocks above 0.5 g/t Au and within a conceptual pit optimisation scenario based on a gold price of $1,500/oz to underpin the JORC (2012) requirement of reasonable chances of eventual extraction.
• The conceptual pit optimisation does not represent an Economic Study, since no such study has been completed, and is based upon an Inferred Mineral Resource which is not suitable for detailed mine planning. Mineral Resources located within the conceptual pit do not have proven economic viability and are not Mineral Reserves."
• “The Inferred Mineral Resources of 5.9 million tonnes, at a grade of 1.11 g/t for a total of 209,000 ounces, remain unchanged.”
• We note that the optimisation shows a smaller resource of 2.9mt grading 1.08g/t assuming a gold price of $1,250/oz though we concede that this might overly constrain the model.
Conclusion:  We see this resource as a platform for future work. While the disclosure is embarrassing for Thani Stratex Resources we are not overly concerned as we see CSA’s work as of good quality with a world-class team of authors and reviewers having signed off on the document.
Click link for the CSA Mineral Resource Estimate and Conceptual Pit Optimisation:



Wed, 13 Dec 2017 10:54:00 +0000
Today's Oil and Gas Update - Curzon Energy, Europa Oil & Gas, Chariot Oil & Gas Headlines
• In Brief:
Curzon Energy (LON:CZN, – 8p) – $32.5mm (37p) – Pudding Ahead
Europa Oil & Gas (LON:EOG, – 6p) – Solid Update
Chariot Oil & Gas (LON:CHAR – 14p) – The Wait is Over

In Brief
Curzon (LON:CZN, – 8p) – $32.5mm (37p) – Pudding Ahead: Today’s announcement is a promising sign in the route towards narrowing down which of the Company’s type curves the is most representative of the performance of the Coos Bay assets. Once the wells are connected to the water and gas handling networks, we would expect the wells to undergo an intensive dewatering programme to elucidate not only the respective wells’ performance but the potential of the wider Coaledo formation, which is potentially productive over the significant majority (~75% - SPA estimates) of the Company’s acreage. This news does not affect our valuation estimate, which remains $32.5mm (37p).
Europa Oil & Gas (LON:EOG, – 6p) – Solid Update: Today’s update is solid reportage of the work that the Company has completed on its Licensing Option 16/20 in the Slyne basin, and is as informative an announcement as we have seen in a long time. While the quality of the announcement doesn’t in any way improve the risks associated with the prospect, what it does do is underline the fact that Management has completed the work and understand (as far as is possible ahead of drilling), the risks associated with the prospect inventory. This also provides some measure of comfort that the Company has been sanguine on its approach to the assessment of the risks. We believe that this approach will also ultimately mean Management is in the right frame of mind when it comes to farmins, which will inevitably be required to drill the prospects that have been identified.
Chariot Oil & Gas (LON:CHAR, – 14p) – The Wait is Over: after what will eventually be an 18 month (well flagged) hiatus, to our mind today’s announcement fires the starting pistol on what will be as an active 18 month forward period as the preceding 18 month period was quiet. We said over 12 months ago that save for sporadic corporate initiatives, that investors could deemphasise their monitoring of the Company until such times as the restart of the programme approaches, whereupon the interest and activity will naturally provide impetus to the share price. This time has arrived, and we believe that the pending work programme, which will include a number of high impact wells, while carrying risks, also has the potential to be transformational. In our opinion, the current valuation is undemanding, and doesn’t reflect the option value inherent with valuations of the exploration projects. We think now is the time to dust down the investment file on the Company and think about selective investment.

Wed, 13 Dec 2017 10:45:00 +0000
Today's market view - Copper holds despite China credit growth data and FOMC meeting Anglo American (LON:AAL) – De Beers diamond sales remain firm
Gem Diamonds (LON:GEMD) – Ghaghoo sale discussions ended – further negotiations underway
Premier African Minerals (LON:PREM) –Latest drilling from Zulu and RHA update
Rainbow Rare Earths Ltd (LON:RBW) – Raising £2.8m for growth plans at Gakara
Savannah Resources (LON:SAV) – Savannah commissions small 20tph pilot plant on Mutamba mineral sands project in Mozambique
W Resources (LON:WRES) – Potential US$30m term loan for La Parilla

Electric Vehicle sales may lose power as China scales back sUBSidies
• Even as long term confidence in role of electric cars grows a great deal of uncertainty remains for raw material producers as China scales back its car sUBSidies and technology that powers the vehicles evolves potentially slashing demand for some battery materials
• Carmakers are already planning to use less cobalt shifting ratios in favour of nickel due to supply chain risks and higher price levels

Dow Jones Industrials  +0.23% at 24,386
Nikkei 225   -0.32% at 22,866
HK Hang Seng   -0.63% at 28,782
Shanghai Composite    -1.25% at 3,281
FTSE 350 Mining   -0.25% at 16,808
AIM Basic Resources   +0.97% at 2,579

US – The US$ index and precious metals are little changed this morning as the FOMC are holding the last policy setting meeting for this year.
• Both Dow (24,386) and S&P500 (2,660) closed at record levels on Monday led by gains in energy stocks and tech sector.
• The US Treasury latest economic growth projections show that tax cuts may generate around $1.8bn of extra tax revenue over 10 year period.
• The review says the economy will grow at 2.9% per annum over 10 years which is 0.7pp stronger compared to previous predictions.
• The Treasury expects half of the pick up in growth rates to be attributable to a reduction in corporate tax rate (20% down from 35%) with the balance of gains coming from changes to individual and pass-through businesses taxation, regulatory reform, infrastructure development and welfare reform.

Germany – CDU representatives are meeting with the SPD for initial talks over the potential to from the “grand coalition” this Wednesday.
• SPD leaders will decide on Friday whether to launch the process of formal negotiations.

UK – Inflation continued to accelerate through November hitting the strongest level in more than five years.
• The data marginally exceeded market estimates and latest BOE projections for 3.0% in Q4/17.
• Inflation is expected to level off once the effect of the 18% depreciation in the sterling since late 2015 falls away with the BOE guiding for CPI at 2.4% in Q4/18 and 2.2% in Q4/19 and 2.1% in Q4/20.
• Additional pressure came from higher energy prices.
• Input prices are reported to have climbed 7.3%yoy with manufacturers absorbing some of the increase forced by industry competition passing through less than a half of the increase to consumers.
• Mark Carny will now need to write a letter to Chancellor of the Exchequer explaining why inflation is running more than 1pp above the target 2% rate.
CPI (%mom/yoy): 0.3/3.1 v 0.1/3.0 in October and 0.2/3.0 forecast.

South Africa – The National Prosecuting Agency (NPA) extended the deadline for President Zuma to make representations to prevent the corruption charges being brought against him to 31 January.
• The 783 charges against Zuma relate to a R30bn government arms deal arranged in the late 1990s which were then dropped by the NPA before Zuma ran for the presidency.
• The High Court reinstated charges last year with the Supreme Court upholding the decision in October, rejecting an appeal by Zuma and calling NPA decision to set aside the charges as “irrational”.
• Additionally, the High Court ruled that the appointment of the chief state prosecutor by Zuma in 2015 should be considered invalid and should be replaced immediately.
• The President filed an appeal with Abrahams, the chief prosecutor, to remain in office until the appeal is determined.

US$1.1788/eur vs 1.1746/eur yesterday.  Yen 113.40/$ vs 113.54/$.  SAr 13.676/$ vs 13.683/$.  $1.337/gbp vs $1.351/gbp.
0.753/aud vs 0.751/aud.   CNY 6.617/$ vs 6.617/$.

Commodity News
Industrial cuts boost Chinese metals
• Effective supply cuts linked to China’s environmental crackdown are leading to great import demand and boosting Shanghai base metal futures. The pollution action plan devised in 2013, which includes the 2+26 plan forcing the closure of aluminium, steel and other industries during the winter heating season from mid-November to March, aims to curtail concentrations of hazardous airborne particles (PM2.5) by 25%.
• UBS see China’s focus on reducing air, land and water pollution to be a major driver for commodities, boosting the importance of higher-quality product and enhanced imports.

Precious metals:         
Gold US$1,244/oz vs US$1,250/oz yesterday
• Gold price climbs from yesterday’s five-month intraday low of $1,240.81/oz, with market participants seeing the key $1,240 support level a short-cover position ahead of the Federal Reserve meeting. However, support for the metal maybe short lived as outgoing Chair Janet Yellen is set to signal that more interest rate increases are due in 2018 after raising the Fed’s benchmark by a quarter of a percentage point.
• Further interest rate increases would steadily grind gold lower, with hawkish comments drawing the metal down toward $1,205-$1,210 forecast INTL Fcstone analyst.
• Market analyst at Oanda linked yesterday’s decline in gold price to increased access to cryptocurrency trading as the CBOE Bitcoin futures went live, suggesting “it is no coincidence that the day that Bitcoin futures officially started trading, gold prices dropped in an otherwise sideways overnight session in most markets”.
   Gold ETFs 71.7moz vs US$71.7moz yesterday
Platinum US$886/oz vs US$892/oz yesterday
Palladium US$1,010/oz vs US$1,011/oz yesterday
Silver US$15.76/oz vs US$15.87/oz yesterday
Base metals:   
Copper US$ 6,648/t vs US$6,573/t yesterday
• Subdued investor digest banks’ view on outlook for 2018 draws metals lower. Nickel led the fall with 1.3%, while LME copper contracted 0.4% on subdued demand with an average $6,382/t in 2018.
Barclays and Goldman Sachs are outright bullish concerning supply volatility as labour negotiations could trigger disruptions at mines producing 40% of the world’s raw material. 7.8 million tonnes of annual production could be at risk as a swathe of labour contracts are due for renewal, with labour renegotiations surrounding the 20% rally in copper price this year. Copper surged to a three-year high in October on supply cuts, better-than-expected demand and waning long-term supply concerns. Elevated prices have already attracted strikes and widespread industrial action across Chile and Peru as unions focus on fairer wages.
• Planned winter closure of smelting operations to combat air emissions are ramping up imports of intermediate copper products as unwrought copper and copper-fabricated products were up 42.4% mom, or 24.7% yoy.
Aluminium US$ 2,010/t vs US$2,011/t yesterday
Nickel US$ 11,130/t vs US$10,900/t yesterday
Zinc US$ 3,120/t vs US$3,098/t yesterday - Zinc prices rising in China as top producing areas start environmental checks
• Zinc futures rose 0.8% to 24,910 yuan a tonne amid growing concerns about supplies of zinc concentrate after Huayuan county warned it will carry out more environmental inspections
• As much as 3,000 tonnes – 5,000 tonnes of zinc could be affected by the checks
Lead US$ 2,496/t vs US$2,458/t yesterday
Tin US$ 19,405/t vs US$19,360/t yesterday
Oil US$65.4/bbl vs US$63.3/bbl yesterday
• Britain’s largest oil pipeline could shut down for unscheduled repair work as routine inspection works revealed a small leak. The Forties Pipeline System, which carries 450,000 barrels per day of Forties crude from the North Sea to the Kinneil processing terminal in Scotland, has been operating at reduced capacity since December 7. sending the price of crude to new two-year highs.
• Hedge fund managers begin profit taking from strong rally in crude oil and refined product prices, with portfolio managers cutting their combined net long position in the five major futures and options contracts linked to petroleum prices by an equivalent of 34 million barrels last week.  
Natural Gas US$2.833/mmbtu vs US$2.830/mmbtu yesterday
Uranium US$25.00/lb vs US$25.00/lb yesterday
Lithium – new study links trace levels of lithium in drinking water to lower Altzheimer death rates

Iron ore 62% Fe spot (cfr Tianjin) US$67.8/t vs US$67.8/t
Chinese steel rebar 25mm US$758.0/t vs US$752.1/t
Thermal coal (1st year forward cif ARA) US$88.4/t vs US$87.4/t - China coal prices soar as gas shortages spur unexpected demand
• Coal futures jumped to record high on Monday as natural gas shortages across the north spurred an unexpected demand for the fuel from utilities
• State media reported Beijing would be forced to restart coal fired power plant to help ease the gas shortage
Premium hard coking coal Aus fob US$236.1/t vs US$236.1/t
Tungsten APT European US$293-300/mtu vs US$291-300/mtu last week
Cobalt LME 3m US$74750/t vs US$74500/t yesterday
• Revision of the mining code in the Democratic Republic of Congo could do lasting damage to investment in the globally leading cobalt and copper producer. The method of revising the 2002 mining code has been a laborious process extending for over five years, but on Friday the National Assembly approved a bill that would increase taxes and royalties. The measure is set to increase the state’s minimum unpaid share of new mining projects and require that Congolese investors hold at least 10% of shares in large-scale mines.
• The government argues that the proposed 3.5% royalties on precious and base metals are lower than in competitor nations such as Zambia, and revenues could boost the country’s annual budget of only around $5 billion.
• The bill could have devastating impacts on the nation’s economy, representing some 95% of the country’s export revenues, while hampering crucial supply for the developing electric economy, with copper and cobalt playing a fundamental role in electric vehicles and renewable technologies.
• LME’s probe into ethical sourcing of cobalt finds its first victim, as China’s Nanjing Hanrui said it was unable to ascertain that its products did not involve the use of child labour in Africa.
China’s Nanjing Hanrui can’t be sure cobalt didn’t use child labour
• China’s Nanjing Hanrui Cobalt, which sells the metal to a firm approved by the London Metal Exchange, said it was unable to ascertain that its products did not involve the use of child labour in Africa.
• Another LME supplier, Yantai Cash is unable to deliver against the LME cobalt contract as has yet to set up a supply chain verification system.

Company News
Anglo American (LON:AAL) 1376 pence, Mkt Cap £17.8bn –De Beers diamond sales remain firm
• Anglo American reports that De Beers achieved sales of US$450m for its 10th diamond sale of 2017. Equivalent sales in 2016 amounted to $422m.
• The sales represent a modest, 3% reduction on the $466m sales achieved during the previous sales cycle, which has been adjusted upwards from the provisionally reported $455m to $466m.
• Commenting on the sales, De Beers CEO, Bruce Cleaver, said that “the sales saw the continuation of good demand for De Beers rough diamonds as we head towards the end of 2017 … with sales slightly ahead of the equivalent period in 2016“.
Conclusion: The upgrading of the provisional value of the 9th sales cycle and the maintenance of this level of demand into the 10th cycle suggests a firming of the demand for rough diamonds in the run up to Christmas and the New Year.

Gem Diamonds (LON:GEMD) 76.3p, Mkt Cap £106m – Ghaghoo sale discussions ended – further negotiations underway
Gem Diamonds reports that the earlier proposal by a third party to acquire 100% of the mothballed Ghaghoo diamond mine has not resulted in agreement and that the offer has been withdrawn.
• The company does confirm, however, that it is “presently in discussions with other parties interested in acquiring 100% of the Ghaghoo asset and will update the market as and when appropriate.”

Premier African Minerals (LON:PREM) 0.4p, Mkt Cap £26m –Latest drilling from Zulu and RHA update
• Premier African Minerals has announced the assay results of the upper portion of its latest drillhole at the Zulu Lithium project near Fort Rixon, Zimbabwe.
• Hole ZDD-45, which is a step-out hole located approximately 220m south of the Main Zone where the company has a maiden resource estimate of 20.1m tonnes grading 1.06% Li2O, has encountered 68m of mineralised pegmatite from a depth of 101m down hole.
• “Assay results from the first 38.84m analysed contains an average of 1.55% Li2O in Multiple intersections including:
o 8.22m at 1.96% Li2O from 101.24m
o 3.53m at 1.06% Li2Ofrom 111.70m
o 1.20m at 2.08% Li2O from 124.40m
o 11.47m at 1.90% Li2O from 126.77m
 Including 0.95m at 4.24% Li2O from 138.96m
• 8.48m at 1.25% Li2O from 138.96m”
• Results from the rest of the hole are still pending.
• The drilling so far adds a further 24 holes (3683.54m) to the 2500m of drilling which was incorporated in the maiden resource estimate of June 2017. “The currents drilling programme is focussed on expanding as well as upgrading the resources in the Main Zone and to delineate further the Li mineralisation in the new south-eastern zone.”
• The company notes that all of the holes in the current programme have intersected mineralisation but that today’s results in Hole ZDD-45 are the best to date and are located at the junction of three zones and that the lithium mineralisation is spodumene rich with only scarce petalite and lepidolite.
• In a separate announcement, the company provides a progress report on its RHA tungsten project in Zimbabwe. A bulk sample of some 8,300 tonnes of open pit ore has been taken and of this around 7,250 tonnes have been processed in order to provide data which “will guide future open pit operations and cost effectiveness”. The remaining ore from the bulk sample will be processed “when the mining contractor has completed fragmentation of large boulders”, suggesting that the initial mining was perhaps not overly efficient.
• The company’s underground operations at RHS are reported to be progressing well although the monthly production remains below the 6000 tpm target projected for profitable operations though the company indicates that this target may have been overstated it expectes to achieve the 6000tpm target rate in December. Plant performance is “encouraging” with throughput at around 700tpd “and plant performance is primarily constrained because of high fine particle percentage in the open pit ore.” The company expects this problem to be alleviated by the blending of underground ore into the plant feed.
Conclusion: Drilling at Zulu appears to be extending the footprint of the mineralisation and offering the possibility of an upgrade to the existing 20mt resource. We await the assays from the lower portion of the current hole with interest. At RHA, it appears that there are continuing operational challenges. Despite a number of improvements relatively high levels of fine ore in the plant feed constricts plant throughput while the underground operation is only expected to reach its target production rate this month.

Rainbow Rare Earths Ltd (LON:RBW) – 15.1p, mkt cap £23.4m – Raising £2.8m for growth plans at Gakara
• Rainbow Rare Earths reports plans to raise between £2.6-2.8m in order to “bring forward its growth plans at its producing Gakara Rare Earth Project in Burundi … including an exploration campaign and the expansion of the mining fleet”.
• The company identifies the principal uses of the proceeds as:
o “Acceleration of the production ramp-up by fast-tracking the development of new mining areas at Gakara
o Purchase of additional mining fleet
o Drilling campaign to investigate recently identified anomalies at Gakara
o Strengthening balance sheet during ramp up.”
o The company confirms that the minimum price at which the funds are to raised is 14p/share.
o Conclusion: Rainbow Rare Earths is raising funds to accelerate the expansion of the Gakara Rare Earths project in Burundi.

Savannah Resources (LON:SAV) 5.4p, Mkt cap £34m – Savannah commissions small 20tph pilot plant on Mutamba mineral sands project in Mozambique
• Savannah Resources report the commissioning of a 20tph pilot plant on the Mutamba mineral sands project in Mozambique.
• The plant, which was opened by the Governor of the Inhambane district, was built by a local subsidiary of the Mutamba consortium is small by most standards but should be sufficient to provide samples for metallurgical work and for testing by potential consumers
• The consortium is made up of Savannah Resources, it’s local subsidiary and Rio Tinto plc with which Savannah has a consortium agreement.
• A scoping study by TZMI, experts in mineral sands, indicates a potential 30 year mine life based on a 451mt resource grading 6.0% Total Heavy Minerals.
• This is based on a very conceptual ‘dry mining’ mine plan utilising 33% indicated resource and 67% inferred resource.
• Production was modelled at 15mtpa with negligible waste to ore ratio for 456,000tpa of ilmenite and 118,000t of non-magnetic concentrate starting in 2020
• The plan shows base case sales of US$3.53bn forecast
• Capita cost, pre-production, are for US$152m + US$74m contingency for an EPCM contract +/-35%.
• Ilmenite prices are currently at around $173/t of 54% TiO2 concentrate FOB Australia according to the Metal Bulletin though this does not reflect premiums paid for better quality material.
• Ilmenite prices are said to have, unusually, continued to rise towards the year end. Anti-pollution action in China should reduce the amount of titanium produced from non-ilmenite sources at a time when demand is expected in the industry to rise.
Conclusion: The modelled project has an IRR of 19% on the base case ilmenite price of $185/t rising to 23% on $204/t and 27% pm $222/t. We do not consider these rates of return should be acceptable to Savannah or its consortium particularly given the +/-35% capital cost variability. We have to wonder why Savannah are spending time and money on the project although speculation indicates that Savannah are warehousing the project for Rio Tinto who are less than popular in Mozambique since the Riversdale disaster. The potential returns may not be good enough for Rio Tinto either.

W Resources (LON:WRES) 0.4p, Mkt Cap £20.4m – Potential US$30m term loan for La Parilla
• The Company reports that the investment committee of an un-named US based fund has granted preliminary approval to provide a US$30m loan to fund the La Parilla tungsten mine development in Extremadura, Spain. If the loan is forthcoming, it “fully funds the development of the 2 million tonnes per annum … La Parilla mine development”.
• The company confirms that development is progressing and that “Engineering is on schedule for completion in Q1 2018 and orders for all long lead items have been placed”.
• W Resources also comments that it “has submitted the environmental approval documentation to expand the mine from 2mtpa to 3.5mtpa”.
Conclusion: The possibility of loan finance for La Parilla should help the company deliver its plans to expand from 2mtpa to 3.5mtpa and comes at a time when the price of the benchmark intermediate product, ammonium paratungstate has recovered by around 50% this year to around $300 per metric tonne unit.

Tue, 12 Dec 2017 11:07:00 +0000
Today's market view -Mkango Resources, Patagonia Gold, Serabi Gold Price, Sula Iron & Gold, Strategic Minerals Mkango Resources* (LON:MKA) – TSXV grants conditional acceptance of Talaxis deal
Patagonia Gold (LON:PGD) - Proceeding with Calcatreu option
Serabi Gold Price (LON:SRB) – Mineral reserve/resource update
Sula Iron & Gold (LON:SULA) – Acquisition of cobalt licence in DRC and name change
Strategic Minerals* (LON:SML) – Redmoor phase 2 drilling results

Dow Jones Industrials  +0.49% at 24,329
Nikkei 225   +0.56% at 22,939
HK Hang Seng   +1.18% at 28,978
Shanghai Composite    +0.98% at 3,322
FTSE 350 Mining   +0.09% at 16,558
AIM Basic Resources   +1.01% at 2,554



US$1.1788/eur vs 1.1746/eur yesterday.           Yen 113.40/$ vs 113.54/$.         SAr 13.676/$ vs 13.683/$.            $1.337/gbp vs $1.351/gbp
            0.753/aud vs 0.751/aud.            CNY 6.617/$ vs 6.617/$.

Asian – Strong data positive for Asian shares
• Strong US payrolls data and better-than-expected Chinese trade figures boosted Asian shares as every single market bar one showed positive movement.
• The MSCI’s broadest index of Asia-Pacific shares outside of Japan climbed 0.5% to 552.38 above a recent two-month low. Japan’s Nikkei rose 0.6% with China’s blue-chip CSI 300 index up 1.2%.

Commodity News

Australian and Canadian miners benefit from EV boom

• EV and battery makers looking to lock future raw material supply have been investing in lithium and cobalt mines
• String of potential financing deals in Canada comes after handful of lithium miners in Australia secured investment from mainly Chinese automakers and battery makers this year

Beijing issues emergency order to relight coal generators
• Ordered power companies are required to immediately fire up backup coal burning generators in response to a natural shortage in North China during its critical winter heating period
• The city sent notices to the State Grid Corp. of China’s North China division, State Grid Beijing Electric Power Co. and Huaneng Beijing Thermal Power Co. Ltd. to begin emergency coal power generation to reduce the city’s reliance on natural gas

Precious metals:         
Gold US$1,250/oz vs US$1,248/oz last week
• Bearish sentiment toward the precious metal rises to its highest levels since 2015, as traders and analysts surveyed before this week’s meeting of the Federal Reserve (Dec. 12-13) foresee an increase in US interest rates for a third time this year. Money managers have tripled their short positions in gold, which is the fastest pace since record-keeping started in 2006. Rapidly changing sentiment follows a five-year low in short positions last week as North Korea-US tensions and uncertainty surrounding the Senate tax bill supported demand for the safe haven investment.
• Buoyant US payroll data signaled robust economic growth as November figures rise to 228,000, above the 195,000 median economist forecasts. The jobless rate held steady, while wages rose less than expected.
• Traditional investors in the safe haven asset may be drawn towards the rapid ascent of cryptocurrency values, as CBOE launches the debut bitcoin futures markets. The January contract opened at $15,460 in New York on Sunday and rose over 21% to above $18,500 as the exchange is expected to give Bitcoin extra legitimacy. With the rival Chicago Mercantile Exchange opening their derivative contract next week, the increased availability in the digital currency is forecast to draw more finance away from conventional investing.
   Gold ETFs 71.7moz vs US$71.7moz last week
Platinum US$892/oz vs US$896/oz last week
Palladium US$1,011/oz vs US$1,019/oz last week
Silver US$15.87/oz vs US$15.78/oz last week
Base metals: 
Copper US$ 6,573/t vs US$6,599/t last week
• Following last week’s significant decline across metals, recording the largest fall since 2016, market participants will be looking forward to the release of China’s industrial production data on Thursday to calm concerns over diminishing demand. The combined impact of capacity cuts to China’s second-largest smelter and data indicating surging imports have bitten into the demand-led rally that has lifted prices 19% year-to-date.
Aluminium US$ 2,011/t vs US$2,013/t last week
Nickel US$ 10,900/t vs US$11,020/t last week
Zinc US$ 3,098/t vs US$3,095/t last week
• Zinc leads the rebound of metal prices following last week’s biggest weekly decline since 2016, climbing 0.9% after falling 5.1% last week. Concerns over weakening Chinese demand had drawn LME index of six metals down 3.7%. Although the backdrop for metals over 2018 remains positive, analysts foresee “investors to be looking to lock in any gains and we’re still susceptible to weakness” (Australia & New Zealand Banking Group Ltd).
Lead US$ 2,458/t vs US$2,450/t last week
Tin US$ 19,360/t vs US$19,430/t last week
Oil US$63.3/bbl vs US$62.3/bbl last week
• OPEC and its partners have successfully eliminated more than half of excessive global supply this year, and forecast an effective market rebalance through 2018 through an extension of global supply cuts. However, the International Energy Agency foresee rising prices stimulating increased output from US shale drillers and non-OPEC producers, stalling the progress in reducing the remaining global glut.
• Worries over non-OPEC’s reaction to elevated prices has driven hedge funds and money managers to cut their bullish bets on US crude, as the speculator group removed 9,135 contracts in futures and options position in New York to 442,742.
Natural Gas US$2.830/mmbtu vs US$2.778/mmbtu last week
Uranium US$25.00/lb vs US$25.00/lb last week

Iron ore 62% Fe spot (cfr Tianjin) US$67.8/t vs US$66.1/t
Chinese steel rebar 25mm US$752.1/t vs US$745.2/t
Thermal coal (1st year forward cif ARA) US$87.4/t vs US$86.3/t
Premium hard coking coal Aus fob US$236.1/t vs US$231.2/t
Tungsten APT European US$293-300/mtu vs US$291-300/mtu last week
Cobalt LME 3m US$74500/t vs US$71000/t last week
• Tightening market conditions are driving concerns over supply as consumers rush to secure units to support the EV story. The surprise move by investment vehicle Cobalt 27 to acquire over 700 tonnes of physical metal prompted the price of high-grade cobalt to experience a dramatic 10% jump to the top end of $32.50-36.29/lb. The new of the recent purchase has since prompted several sellers to raise their offers and bids to secure deals.
• “There’s big tonnage changing hands in a tight market. Market investors have had a big impact on the whole community, and now with profit realization, we can see continued strength.”

Company News
Mkango Resources* (LON:MKA) 6.625p, Mkt Cap £6.5m – TSXV grants conditional acceptance of Talaxis deal
• Mkango Resources reports that the TSXV has conditionally accepted the Talaxis deal under which Mkango is set to receive £12m in three tranches for a 49% interest in the Songwe Hill Rare Earths Project. The transaction is subject to shareholder approval (excluding Talaxis) which is to be sought at a meeting to be held on 18th January 2018.
• “The first and second tranches, totaling £5 million (C$8.6 million), of the investment into the Project will be invested following receipt of Minority Approval, to be sought at a meeting ("Meeting") scheduled for January 18, 2018. The first tranche of £2 million (C$3.4 million) is being placed into escrow by Talaxis pending the Meeting.” In addition, there is an initial £1m investment into the new venture, Newco.
• The third tranche is subject to the completion of the formal documentation following the shareholder meeting. In addition, Talaxis has the option to “acquire a further 26% interest in the Project by arranging funding for Project development, following which Mkango would hold a 25% interest in the Project, free carried until commencement of production.”
• We also highlight the agreement between Mkango and Talaxis for cooperation on rare–earths projects worldwide and all other projects in Malawi, which singles Mkango out as the preferred partner for future rare earths projects as Talaxis owner, Noble Group develops its strategy in rare-earths.
• Commenting on the moves by the TSXV, Mkango’s Chief Executive, William Dawes, noted that “On shareholder approval and receipt of £6 million investment by Talaxis, the Company will commence the initial phase of the feasibility study, including mobilization for an extensive infill, geotechnical and exploration drilling programme starting in the second quarter of 2018, in parallel with ongoing processing flow sheet optimisation and work in relation to the Environmental, Social and Health Impact Assessment.”
Conclusion: We look forward to the shareholder vote in January which should clear the way for the funding needed to start the initial feasibility work at Songwe Hill and to the continuing flow of results from that work.
*SP Angel acts as Nomad and Broker to Mkango Resources
Patagonia Gold (PGD LN) 0.875p, mkt cap £20.7m - Proceeding with Calcatreu option
• Following its recent fundraising, Patagonia Gold is moving ahead with the formalities needed in order to exercise its option to acquire the Calcatreu silver/gold project in the Rio Negro Province of Argentina from Pan American Silver.
• The deposit contains an Ni-43-101 compliant indicated resource of 8mt at an average grade of 25.7 g/t silver and 2.63 g/t gold (6.6moz of silver and 675,000 oz of gold). 
• “The system has a known strike length of over 8 km” and the company intends to undertake detailed geophysical and geochemical surveys to provide insight into the potential scale of the opportunity.

Serabi Gold Price (LON:SRB) 3.25p, mkt cap £22.7m – Mineral reserve/resource update
• Serabi Gold reports its mineral reserves and resources effective 30th June 2017. The proven and probable reserves, in accordance with the CIM / NI-43-101 reporting standard, amount to a total of 182,000 oz of gold contained in 703,000 tonnes at a diluted grade of 8.05g/t gold. The company notes that this supports “in excess of 4 years production”.
• Over 90% of the reserve is contained within the Palito mine reserve inventory with the balance at the nearby Chico mine.
• The company notes that “The mineral resource and reserve estimates exclude previously announced gold discoveries made by Serabi including the Currutela, Copper Hill, Piaui and Palito South areas, where there is currently insufficient geological data to estimate a mineral resource for these discoveries. [However] … An infill drill programme is currently underway that will provide additional geological date on each of these project areas.”
• The company makes the point that, since its last resource estimation in June 2012, and the reopening of the Palito  mine in late 2013, the mine has extracted some 182,000oz of gold have been extracted and the overall measured/indicated resource of Palito has increased by 31percent to 271,000 oz (717,000t at a grade of 11.74g/t) with an additional inferred resource of 177,000oz (784,000t averaging 7.02g/t)
• We interpret this to mean that over the 4 year period since the mine re-opened, Serabi Gold has added an extra 182,000oz of gold to its measured/indicated resource base in addition to the gold produced.
• Similarly, we estimate that at Sao Chico, Serabi Gold has added some 39,000oz of resource in excess of the estimated 28,000oz of gold produced since the mine reached commercial production in January 2016.
Conclusion: Serabi Gold has boosted its overall mineral resources at both its operating mines at Palito and Sao Chico and is currently drilling a number of other prospects which may further add to resources if a sufficient density of drilling is achieved to support a resource estimate on these other properties. We look forward to continuing news as drilling proceeds.

Sula Iron & Gold (LON:SULA) 0.085p, Mkt Cap £2.8m – Acquisition of cobalt licence in DRC and name change
• Sula Iron & Gold has announced that it has acquired a controlling, 70% interest, in a cobalt licence in the DRC. The licence is located “close to a number of existing cobalt / copper mines …” and is underlain “by the type of rocks which hosts most of DRC’s cobalt and copper”.
• Grades reported on grab samples analysed in the field by a portable XRF analyser are reported to range up to 2.5% cobalt.
• The company has, conditionally,  raised £1.75m to progress the cobalt project and assess other similar opportunities in the DRC, via the placing of 3bn shares with new and existing shareholders and “a subscription  for 500,000,000 New Ordinary Shares with a single investor all at a price of 0.05 pence per share. The Fundraising, which has been arranged by SP Angel, is conditional, inter alia, upon Shareholders' approval of each of the Resolutions and Admission.”
• In order to reflect the shift in direction, “the Board has passed a resolution … to change the Company’s name to African Battery Metals plc”.
• A shareholder meeting has been called for 27th December.
• Commenting on the transaction, CEO, Roger Murphy, said “We are bullish on the outlook for cobalt and the other battery metals and believe that the creation of African Battery Metals plc will provide UK equity investors with exposure to cobalt, which some analysts see as the battery metal with the tightest supply/demand fundamentals.” Mr Murphy went on to add “The addition of cobalt to our existing gold assets in Sierra Leone, provides important diversification to our exploration activities. We remain committed to our Ferensola Gold Project and to maintaining and valorising it through a joint venture or farm-out, as previously announced."
Conclusion: The acquisition of a cobalt licence in DRC provides the London market with a new exploration exposure to the growing interest in cobalt as a battery metal. We look forward to developments as exploration proceeds.

Strategic Minerals* (LON:SML) 2.15p, Mkt Cap £28.4m – Redmoor phase 2 drilling results
• Strategic Minerals has released the results of the final 5 boreholes of its drilling programme at the Redmoor tin/tungsten project in Cornwall where it holds a 50% interest in Cornwall Resources with New Age Exploration.
• The results from the Phase 2 drilling show “Considerably higher-grade intercepts than previously reported”, and in our interpretation, show mineralisation within the sheeted vein system (SVS) extending over a vertical interval of up to 500m.
• The results of the full 20 hole, 7,045m programme, in conjunction with pre-existing drilling information, will be used for an update of the mineral resources estimate (currently an inferred resource of 13.3mt at an average grade of 0.21% tin and 0.16% tungsten trioxide) which is “targeted for release in Q1 2018.”
• The company also points out that the recent drilling “appears to indicate that the SVS grade may be increasing with depth.” Among the results reported today from the SVS are:
o An 8.5m wide intersection (7.83m estimated true width) at an average grade of 0.09% tin, 0.23% tungsten trioxide and 0.32% copper from a depth of 320.12m in hole CRD020, which also contained a 3m intersection averaging 1.55% tin, 0.06% tungsten trioxide and 2.45% copper from 301.13m and 4m averaging 0.57% tin, 0.15% tungsten trioxide and 0.75% copper from 354.76m; and
o Intersections of 6m averaging 0.03% tin, 1.29% tungsten trioxide and 0.28% copper from 465.10m and 7m averaging 0.01% tin, 1.79% tungsten trioxide and 0.17% copper from 507.05m in hole CRD019; and
o A 13m wide intersection (8.41m estimated true width) at an average grade of 0.08% tin, 0.43% tungsten trioxide and 1.24% copper from a depth of 357.17m in hole CRD018, which also contained a 2m wide intersection averaging 0.07% tin, 0.81% tungsten trioxide and 0.35% copper from 365.17m..
• We note that the recent drilling is showing potentially significant copper and tungsten trioxide grades while the tin grades, with the exception of those encountered in hole CRD020, are generally lower than those previously encountered.
• Commenting on the results, non-executive director, Peter Wale, highlighted that the “potential for the resource size and grade to improve at depth has opened a substantial opportunity for the projects, extending the depth of known mineralisation at Redmoor.”
• Mr Wale went on to comment that “These results have encouraged us to seriously examine fast-tracking the project to production and we look forward to updating the market after completing the resource update.”
Conclusion: The second phase of drilling at Redmoor has shown wide intersections of the SVS at depth and encouraged the company to examine fast track development opportunities for the project. We look forward to the updated mineral resource estimate during Q1 2018 and to further comment from the company on its view of the development possibilities at Redmoor.

*SP Angel act as Nomad and broker to Strategic Minerals

Mon, 11 Dec 2017 11:06:00 +0000
Today's Market View - Atalaya Mining, Galileo Resources and Metal Tiger Atalaya Mining (LON:ATYM) – Raising £31m in placing at 167p/share
Galileo Resources (LON:GLR) – Interim Results
Metal Tiger (LON:MTR) – T3 underground mine potential

Faltering China drags commodities lower
• Signs of slowing growth in China are limiting successes in the commodity markets as the Bloomberg Commodities Index fell 4.1% in the past month, putting it on course for its sixth year of losses out of seven. Expectations for the transition in economic phase of the Asian nation are concerning investors as metal demand and investment may fall in 2018 on environmental cleanup actions and a cooling property market.
• The nations fixed-asset investment in infrastructure will grow 12% next year, according to the median estimate in a Bloomberg survey, down from almost 20% year-to-date 2017. The recent poor performance of copper can be attributed to early market hesitation.

Dow Jones Industrials  +0.29% at 24,211
Nikkei 225   +1.39% at 22,811
HK Hang Seng   +1.24% at 28,653
Shanghai Composite    +0.55% at 3,290
FTSE 350 Mining   +0.58% at 16,403
AIM Basic Resources   -1.57% at 2,529


US$1.1746/eur vs 1.1790/eur yesterday           Yen 113.54/$ vs 112.66/$        SAr 13.683/$ vs 13.572/$            $1.351/gbp vs $1.338/gbp
            0.751/aud vs 0.753/aud            CNY 6.617/$ vs 6.616/$

Europe – Stocks rallied as Brexit negotiations make headway
• European stocks rose to weekly highs as Britain and the European Union announced a breakthrough in Brexit negotiations while supportive global banking regulations were seen as more beneficial to European banks.
• The early morning breakthrough in Brexit negotiations show a willingness for both parties to compromise with Bloomberg highlighting the main points of the deal:

o The U.K will contribute to EU budgets for the years 2019 and 2020 as if it had remained in the Union.
o The U.K will contribute its share of financing of EU budgetary commitments outstanding at 31 December 2020.
o The U.K. will contribute its share of the financing of the EU’s liabilities incurred before 31 December 2020.
o The citizens’ rights part of the final Withdrawal Agreement is to be interpreted in line with the case law of the Court of Justice of the European Union.
o In the context of the application or interpretation of those rights, U.K. courts shall have due regard to relevant decisions of the ECJ.
o There will be a mechanism enabling U.K. courts to ask the ECJ questions of interpretation and it will last eight years.
o The U.K. will either propose a solution for keeping the Irish border open that will be acceptable to the EU, or continue to by EU’s single market and customs union rules “which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement”.

Commodity News
Precious metals:         
Gold US$1,248/oz vs US$1,257/oz yesterday
• Gold continues its decline, as the precious metal fell to a four-month low of $1,244/oz, on firming dollar demand. Strong equities markets have continued to draw investment away from gold, with expectations for further growth building from economic stimulus with the passing of the US Republican tax plan. The release of the non-farm payroll data is expected to drive the short-term direction of the dollar, while the upcoming US Federal Open Market Committee meeting will confirm rising interest rates.
• The metal edged up in early Asian trading as bargain hunting investors look to secure growth in the metal, as geopolitical tensions with the Middle East have significant potential to rise. Pressure was building as President Donald Trump recognised Jerusalem as the capital of Israel.
   Gold ETFs 71.7moz vs US$71.9moz yesterday
Platinum US$896/oz vs US$900/oz yesterday
Palladium US$1,019/oz vs US$1,000/oz yesterday
Silver US$15.78/oz vs US$15.89/oz yesterday
Base metals:   
Copper US$ 6,599/t vs US$6,600/t yesterday
• China’s tightening controls on copper concentrate imports are forcing low-quality suppliers to find alternative offtake partners. Improving environmental limits are clamping down on foreign solid waste with the General Administration of Quality Supervision, Inspection and Quarantine allowing maximum lead content of 6%, while the threshold for arsenic set at 0.5%, fluorine 0.1%, cadmium 0.05% and mercury 0.01%.
• The cuts in “foreign garbage” are aimed at reducing the strain on toxic and harmful elements within Chinese facilities. New rules are being implemented immediately, with November’s record imports at 1.78 million tonnes expected to contract under the updated limits. In order to match the loss in supply, imports of unwrought copper to the world’s top copper consuming country show a strong rise. Arrivals of unwrought products, which includes anode, refined, and semi-refined, rose 42.3% from October (23.7% yoy) to their highest level since December 2016.
• China’s second largest copper smelter began halting capacity last week at its main production hub in Tongling after local government ordered curbs as part of national plan to ease pollution
• Halted 20-30% of smelting capacity from annual total of 800,000 metric tons – no timetable for how long will last
Aluminium US$ 2,013/t vs US$2,015/t yesterday
Nickel US$ 11,020/t vs US$10,815/t yesterday
Zinc US$ 3,095/t vs US$3,101/t yesterday
Lead US$ 2,450/t vs US$2,508/t yesterday
Tin US$ 19,430/t vs US$19,475/t yesterday
Oil US$62.3/bbl vs US$61.5/bbl yesterday
Natural Gas US$2.778/mmbtu vs US$2.856/mmbtu yesterday
Uranium US$25.00/lb vs US$25.50/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$66.1/t vs US$67.2/t
• Iron ore imports rebounded in November to highest levels on record with appetite in worlds top buyer remaining strong even as steel mills cut output
• Rose 18.9% to 94.54 million tonnes in November and were up 2.8% from a year ago
Chinese steel rebar 25mm US$745.2/t vs US$750.6/t
Thermal coal (1st year forward cif ARA) US$86.3/t vs US$85.9/t
Premium hard coking coal Aus fob US$231.2/t vs US$231.7/t
Tungsten APT European US$291-300/mtu vs US$275-285/mtu last week
Cobalt LME 3m US$71000/t vs US$69900/t yesterday

Company News
Atalaya Mining (LON:ATYM) 166.5 pence, Mkt Cap £194.3m – Raising £31m in placing at 167p/share
• Following the recent announcement of the decision to expand the operations at Proyecto Riotinto to 15mtpa capacity from its current 9.5mtpa throughput, Atalaya Mining has announced the completion of a placing of approximately 18.57m new shares at a price of 167p/share to raise £31m.
• The placing, which represents around 16% of the company’s current issued capital, was supported by Atalaya’s principal shareholders and leaves Trafigura with approximately 22.8% of the enlarged company, Yanggu Xiangguang Copper with 22.7%, Liberty Metals with 14.5% and Orion Mine Finance with 13.9%.
• Commenting on the transaction, CEO, Alberto Lavandiera said “The Company welcomes the support from existing shareholders and new institutional investors through the Placing. The funds raised will allow the Company to begin executing on its 15 Mtpa Expansion plan immediately."
• We note that the company’s original announcement on 4th December indicated a planned placing of £39m.
Conclusion: The availability of additional financial backing will allow Atalaya Mining to press ahead immediately with its expansion plans at Riotinto. As we commented in relation to the approval of the expansion plan, Atalaya Mining’s plan to increase the capacity of its Riotinto operation is a relatively low-risk incremental expansion of an existing operating mine where management has already delivered previous expansion projects smoothly and we envisage that they will be able to deliver a similar outcome with the latest expansion.

Galileo Resources (LON:GLR) 1.375 pence, Mkt Cap £3.5m – Interim Results
• The company has reported a loss of 0.1p/share for the six months ending 30th September 2017 (2016 interim loss of 0.3p/share).
• Galileo Resources reports a cash balance of £1.13m at 30th September and an operating outflow of cash of £366,000 for the six month period suggesting that, at present, the company is adequately financed for its current activities.
• Exploration activity at the Concordia copper project in S Africa, where the company is in joint venture with Shirley Hayes, has been discontinued and Galileo Resources’ “interest in Concordia will be diluted to 15% from 51%.”
• Pre-feasibility studies are continuing on the Glenover Phosphate project in S Africa where the approval of a Mining Right application from the Department of Mineral Resources is pending.
• In Zambia, an initial 1750m drilling programme is expected to start imminently at the Star Zinc project “and will target a mix of resource confirmation and resource enlargement.”
• In Nevada, following the withdrawal of its joint-venture partner, Orogen Gold from all its exploration activities and a review of the results obtained, Galileo Resources has “decided not to renew the licence for the Silverton project.”
Conclusion: Galileo Resources appears to be focussing on the Star Zinc project in Zambia and its Glenover Phosphate project in S Africa, withdrawing from its US exploration and diluting its interest in the S African Concordia Copper Project.

Metal Tiger (LON:MTR) 1.95 pence, Mkt Cap £20.7m – T3 underground mine potential
• Metal Tiger plc draws attention to the announcement by its partner, MOD Resources on progress with evaluating the underground mining potential of the T3 copper discovery in Botswana (MOD Resources 70%, Metal Tiger 30%).
• The company has now drilled 45 holes since August in areas outside the proposed 10-year open pit mining area at T3 and is aiming to produce an underground mine scoping study during Q3 2018.
• Among the results highlighted from the latest 8 holes drilled are:
o A 7.2m wide intersection at an average grade of 1.9% copper and 39g/t silver from a depth of 218.8m in hole MO-G-82D and
o A 5.9m wide intersection at an average grade of 1.7% copper and 8g/t silver from a depth of 213.1m in hole MO-G-84D and
o A 9.m wide intersection at an average grade of 1.5% copper and 31g/t silver from a depth of 168.3m in hole MO-G-88D and
• “South African mining consultants have conducted a preliminary evaluation of these veins to explore the potential for an underground mine (T3 Underground Project) in addition to the planned open pit. The work done to date assumes good continuity between the mineralised veins, relatively low cost in ore development and room and pillar mining. There may be substantial benefits in developing T3 underground simultaneously with the open pit mine and using shared infrastructure, including the planned T3 processing plant.”
• The company reminds us that the plant capacity “was recently upgraded to 2.5Mtpa (a 25% increase on the scoping study plant capacity) with potential for expansion up to 4.0Mtpa”.
• The T3 open pit resource, published in September 2016, amounts to 13.236m indicated and inferred tonnes at an average grade of 1.84% copper and 24.6g/t silver. In August 2017, following further drilling and the inclusion of additional low grade resources within the proposed pit, the T3 resources was upgraded to 36mt at an average grade of 1.14% copper and 12.8g/t silver.
Conclusion: The recent drilling is indicating potential for underground mining of the deeper mineralisation at the T3 discovery within the Kalahari Copper Belt in conjunction with the planned open pit. We look forward to further news as the programme develops.

Fri, 08 Dec 2017 12:25:00 +0000
Today's Market View - Ariana Resources and Ironveld Ariana Resources (LON:AAU) – Increased ore resource estimate at Kiziltepe
Ironveld (LON:IRON) – Final results and update on Middleburg acquisition

SX-EX, LIARS AND LITHIUM DREAMS – is lithium the new oil?
• Investors are faced with a confusion of opportunities in the lithium space.  Below we offer some simple guidance on where to invest:
• Lithium demand looks set to outstrip supply with new supply not likely to catch up with expected demand growth for some years.
• Battery chemistries will change but we believe lithium should remain a core component battery metal due to its lightweight, conductivity and ability to store electrons.
• Tesla cars are already heavy at >2t mainly due to the nickel, steel, copper and other metals used so adding weight in not a popular option.
• Investors: many institutional investors appear reticent to buy into lithium projects in part based on potential changes in battery chemistry though this may partly be an excuse for avoiding the space.
• Bubbles: rapid growth in valuations for junior companies focussed on uranium and rare earths were short lived due to subsequent collapses in uranium and rare earth prices for very differing reasons.  Uranium prices collapsed on the Fukushima event and rare earth prices collapsed on the unwinding of a major REE-based Ponzi scheme in China.
• So why should lithium be different?
• Is lithium the new oil and how long will the supply deficit maintain elevated lithium prices?
• We think the uplift in lithium prices could last much longer than that seen for uranium and REEs as the major global economies drive new demand for battery powered EVs.
• Pollution is a hot political issue and new anti-pollution legislation may well be applied in the developing world as much as in developed nations.
• Investment: For investors the first thing to understand is where does lithium come from?
• Lithium sources:
• Brines – low operating cost for lithium extraction where grades are good, impurity levels are acceptable and where there is enough of a desert to enable sufficient solar evaporation, but long concentration times (12-18 months) limit supply reaction to evolving prices.
• Geothermal brines – are considered to be more environmentally friendly while a new chemical process is claimed can capture 91% of the initial lithium in the brine.
• Clays – largely unproven and don’t work well in the rain.
• Pegmatites – lower capital but higher operating costs. Consumers prefer low mica content and new regulations in China may make high mica concentrates hard to sell.
• Lithium producers:
• Chile (brines) – SQM and Albemarle are the big Chilean lithium miners.  Lithium was originally a by-product of potash production with relatively small demand but SQM and Albemarle are biggish companies and have invested heavily in billion dollar brine plants and evaporation ponds in the Atacama Desert. The evaporation ponds are expensive to construct but they harness the sun to increase lithium concentration in the brine.
• Argentina (brines) – a significant number of new junior lithium companies have set up camp in Argentina.  The problem with Argentina is that it rains allot more than in Chile, it is rarely mining friendly and when the government changes back to a Peronist-style regime the companies might just loose allot of their value. Many companies are proposing to use technology to extract lithium directly from lower grade brines but the economics of these processes are not yet well proven.
• Australia (pegmatites) – good for mining and for process technology.  Lithium contained in hard-rock pegmatites meaning that mining and process costs will be higher than for brines in Chile.  Australia is now the world’s largest producer of lithium proving that lithium extraction from pegmatites is a fair way to go even in a higher cost environment. Rapid production of direct shipping ore is boosting Australia output, however competition for limited Chinese conversion capacity may force operations down the pecking order. Pegmatite concentrates with higher levels of mica may struggle to find a home as the mica reduces energy efficiency and raises dust/pollution levels.
• Portugal / Spain (pegmatites) – a number of explorers are proving up lithium pegmatites in Portugal. Portugal has had a difficult mining history with labour and unions and suffers from the high price of the Euro but may prove to be a beneficial destination for lithium production from a European perspective. Close proximity to European automotive manufacturers will give desirable supply for product which has traditionally been sold for glass & ceramics. Savannah Resources and Plymouth Minerals are two lithium companies in Portugal and Spain.
• Mali (pegmatites) – well known for gold production, Mali offers a low cost destination and a sensible and stable political regime from a mining perspective.  A Chinese lithium processor has already offered to buy Birimian Limited in Mali and has subsequently invested in Kodal Minerals.
• Boliva (brines) – just don’t go there under any circumstances. It’s off the scale from a mining risk perspective and we understand Bolivian lithium brines contain awkward contaminants.
• Investment strategy:
• While it is possible for the major lithium brine producers in Chile to meet demand we believe they are slow in their production growth and are likely to fail to match the new growth in demand over the next 4/5 years. Focus on highest-quality brines to enhance production while minimising concentration period. (Brines can only be concentrated up to a precipitation point of around 6,000ppm so higher initial concentration will reduce evaporation times).
• New technology in the extraction of lithium directly from brines without the use of evaporation ponds is being trialled in Argentina and the US and offers potential for scaling up. The technology is not yet proven at a commercial scale and Argentina can be a difficult mining destination.  Production from Clays is some way off and is also untested from a commercial perspective.
• Hard rock, pegmatites: while lithium from pegmatites is seen as relatively high cost this is now the world’s largest source of lithium due to its relative simplicity and lower capital cost.
• Risks: The rising cost of reagents, chemicals, power and certain capital items is a risk as is the potential for changing battery chemistries. There is political as well as technology risk for the direct brine producers in Argentina and Chile. Government’s may choose to impose additional taxes on lithium producers as well as on EVs and there is always the problem of supplying sufficient electrical power for the new fleet of EVs on our streets. These are just a few of the risks ahead.
• Bank financing: so far banks have been reticent to finance lithium projects but with the LME poised to start trading in lithium futures contract in 2019 banks will have more reason to enter this market.
Conclusion: We advise investors to be careful in investing in the Lithium mining space but we feel there are good opportunities to be had with juniors which have the ability to push projects into production in the next few years.

China’s warm start to winter boosts steel mill profits
• Higher temperatures have allowed new construction projects to proceed that would normally have come to a halt,  pushing profits to highest since at least 2008
• Steady ongoing demand is exacerbating the supply shortfall caused by mills in 28 Chinese cities cutting output from polluting blast furnaces

Vale cuts nickel output but is positive on long term demand
• Brazilian miner, world’s top producer of the metal, pulled back it’s nickel output forecasts by 15% for the next five years
• Vale claims it is looking to preserve its nickel optionality ahead of expected boom in electric vehicles in the next decade
• This is an unusual statement for a mining company and suggests a new discipline coming into producers thinking
• It also indicates that Vale appreciates how difficult it is to find new sources of economically recoverable nickel as well as a realisation that nickel demand and prices are both expected to grow markedly over the longer term


US$1.1790/eur vs 1.1814/eur yesterday.   Yen 112.66/$ vs 112.20/$.  SAr 13.572/$ vs 13.489/$.  $1.338/gbp vs   $1.340/gbp.     
0.753/aud vs 0.758/aud.  CNY 6.616/$ vs 6.615/$.

Precious metals:          
Gold US$1,257/oz vs    US$1,268/oz yesterday
   Gold ETFs 71.9moz vs           US$71.9moz yesterday
Platinum US$900/oz vs US$915/oz yesterday
Palladium US$1,000/oz vs         US$991/oz yesterday
Silver US$15.89/oz vs   US$16.14/oz yesterday
Base metals:    
Copper US$ 6,600/t vs US$6,551/t yesterday
Aluminium US$ 2,015/t vs US$2,048/t yesterday
Nickel US$ 10,815/t vs US$10,850/t yesterday
Zinc US$ 3,101/t vs US$3,080/t yesterday
Lead US$ 2,508/t vs US$2,475/t yesterday
Tin US$ 19,475/t vs US$19,450/t yesterday
Oil US$61.5/bbl vs US$62.8/bbl yesterday
Natural Gas US$2.856/mmbtu vs US$2.936/mmbtu yesterday
Uranium US$25.50/lb vs US$25.40/lb yesterday
Lithium - New green source of lithium from geothermal power plant brine
• Brine produced by geothermal power plants is seen as an environmentally friendly source of lithium.
• The process works by passing through sorbent that catches ions before pumping back underground and collecting metal
• Researchers found that sorbent of aluminium hydroxide with lithium chloride captured 91% of initial lithium in brine

Iron ore 62% Fe spot (cfr Tianjin) US$67.2/t vs US$69.5/t
Chinese steel rebar 25mm US$750.6/t vs US$760.9/t
Thermal coal (1st year forward cif ARA) US$85.9/t vs US$85.8/t
Premium hard coking coal Aus fob US$231.7/t vs US$221.8/t
Iron ore 62% Fe spot (cfr Tianjin) US$69,900.0/t vs US$69,500.0/t - Vale threatens to flood iron ore market if prices surge
• Vale, the world’s largest iron ore producer says it is prepared to unleash as much as 50mt of spare capacity to balance market if prices got too high
• High prices would lure inefficient producers back into market and risk a repeat of past excess that led to $1tr in value destruction

Tungsten APT European US$000.0/mtu vs US$000.0/mtu
Quarterly hard coking coal US$170.0/t vs US$170.0/t

Company News
Ariana Resources (LON:AAU) 1.2p, Mkt Cap £12.6m – Increased ore resource estimate at Kiziltepe
• Ariana Resources has reported on its recent exploration work at the Salinbas project in north-east Turkey, located some 4km north of the 4m Hot Maden discovery. Ariana acquired the project in December 2016 from Eldorado Gold.
• In September 2017, the company re-reported an April 2015 JORC compliant resource estimate of 9.96m indicated and inferred tonnes  at an average grade of 2.03g/t gold  (648,900oz) and 10.2g/t silver (3.27m oz) at Salinbas.
• The recent work, including soil sampling and mapping has identified an anomalous zone of precious and base metals measuring approximately 550m x 150m at Salinbas North and has shown “Several precious and base-metal enriched extensions of the existing Salinbas resource [which]  demonstrate potential for further resource growth”.
• As a result of this preliminary work and revisions to the previously accepted geological interpretation, “The exploration team are currently working on plans for a drilling programme to be conducted on some of the areas referred to above, which is under consideration for 2018.”
Conclusion: The recent work by Ariana has shown possible extensions to the Salinbas mineralisation which may be followed up with drilling in 2018. The location near to the Hot Maden discovery, which was acquired by the US based royalty company, Sandstorm Gold, earlier this year in an all share deal worth a reported £167m, no doubt provides encouragement for the wider exploration potential to expand Salinbas. We look forward to further news when drilling gets underway.

Ironveld (LON:IRON) 2.375p, mkt cap £13.2m – Final results and update on Middleburg acquisition
• Ironveld reports a loss of £0.74m (0.2p/share) for the year ending June 2017 (2016 loss £0.59m or 0.18p).
• The company continues to pursue its acquisition of the smelting facilities at Middleburg where it remains in discussions “with Ironveld Middelburg, a subsidiary of the Company, to acquire the Smelting facility. … [and] … “Offtake agreements are in place for HPI [High Purity Iron], Vanadium and Titanium for the first five years of production”.
• Expressing confidence in a successful outcome to these discussions the company reports that “Considerable time has been spent by management on site at the Middelburg Smelting facility, preparing for the commencement of operations. However, no further work will be done until the funding for the acquisition has been concluded and the necessary upgrades have been made.”
• Negotiations are underway with local landowners for access and licences have been received for Air Emissions from the Department of Economic Development and Tourism. Licence applications for a Water Use Licence have been submitted to the Department of Water Affairs.
• Commenting on developments during the year, which included a strategic shift of direction, CEO, Peter Cox said “During the Period, we shifted our immediate focus from constructing a 15 MW smelter to securing the acquisition of the Middelburg Smelting facility, to enable early production and allow us to begin selling to offtake partners, generating revenue and cash flow for the Company. Although progress has been slower than we hoped, we remain confident in finalising funding arrangements that would allow for the necessary refurbishments to the Smelting Facility to be completed and for smelting and refining of our magnetite ore to commence.”
• Following two  fund-raisings, totaling £2.1m during the year, the company reports cash of £788,000 at 30th June. A subsequent funding round of £1.765m should see Ironveld with sufficient funds to continue its negotiations.
Conclusion: Ironveld is continuing its protracted negotiations to acquire Middleburg and while expressing optimism as to a successful outcome no estimate of the likely timing has been disclosed.

Thu, 07 Dec 2017 10:48:00 +0000
Today's Oil and Gas Update - Curzon Energy and Green Dragon Gas Curzon Energy* (LON:CZN– 8p) – $32.5mm (37p) – Getting on With It: Today’s news underlines the appetite with which the Company is tackling its appraisal programme, with the rig secured and turning so quickly after securing funds. While some commentators will point towards the fact that the wells being tackled are pre-existing wells, we believe that by focusing on the wells that will generate cash flow first, the Company is ensuring that shareholders achieve maximum value as quickly as possible. While the wells are pre-existing and will flow gas immediately, it must be remembered that due to the flow characteristics of CBM wells, the testing programme, albeit simpler, has a longer duration due to the need to dewater before the full productivity of the well is understood. Still, the gas produced will generate revenue which if sufficient, wil l be reinvested into new wells at ready identified drill locations, further increasing cash generation. If successful, the programme will see the ~270bcf of Contingent Resources quickly reclassified into Reserves, which will carry a higher than usual NPV (for the United States) due to the differentiated gas pricing in Oregon.

Green Dragon Gas (LON:GBG– 62p) – Listing Plans Ignore Underlying Reason for Weakness: Today’s news that the Company will be listing its producing businesses on the Hong Kong Exchange to raise enough funds to pay down the debt on its balance sheet, citing the fact that the London market doesn’t value the assets sufficiently, ignores the one single largest flaw in the plan. London doesn’t value the assets because Green Dragon Gas is laden with debt that has had no way of paying it off for a long time, that was run up by a management team that overlooked the fact that the majority of its assets have been developed by a third party without its knowledge. That’s why its poorly rated. So, what is going to remain in the London listing? Not much of anything. This management team have failed to deliver value on any basis for the shareholders, and are now seeking to take the value enhancing business away from those shareholders that have supported the Company thus far. Instead of fixing the problem and addressing the issues that the market is telling them are there, management are taking their brand of failure to a new location. Given this, it is unlikely they have learned their lessons and will fail again. We believe that this is a wasteful exercise based on the management team’s vanity, but given the fact that the majority of shares are owned by a concert party to management, this resolution will likely be passed. Best thing to do is to stay with the shares, get the new shares on dividend and then work with the new investors that come in through the HK listing to change the management team for one that can deliver. After the split, what’s left in London will not be worth anything.

Wed, 06 Dec 2017 09:06:00 +0000
Today's Market View - Atalaya Mining, Bacanora Minerals and Galileo Resources Atalaya Mining (LON:ATYM) – Expansion to 15mtpa approved - £39m placing proposed
Bacanora Minerals (LON:BCN) – President and director resigns
Galileo Resources (LON:GLR) – Drilling at Star Zinc Project


China’s ‘New Economy’ threatens commodity bull run
• Encouraging demand is expected to sustain buoyant commodities into 2019, lifted by growth across emerging markets as well as advanced economies. Interest in the commodity sector has flourished this year, as the Bloomberg Commodity Index surged almost 10% since June on improving market conditions, while raw material assets under management in the second half of 2017 were boosted by almost 20% to $417 billion through end-October, representing the highest level since 2014 (Citigroup).
• Tightening balances are expected to support the level of investment in the sector, however with significant risk from the slowing Chinese economy. Uncertainties surround the levels of sustained demand as the largest consumer of commodities transition from ‘Old Economy’ to ‘New Economy’. Growth in China is contracting as President Xi Jinping focuses on the quality of expansion rather than the pace of it.
• Incentives like the ‘One Road One Belt’ will continue to sustain commodity demand as the world’s second largest economy looks to increase its global footprint.

China’s 2018 steel output seen rising even after mill closures
• Crude steel output set to rise 3% to 832mt this year and a further 0.7% in 2018 as major mills ramp up operations offsetting impact of shutdown of outdated plants
• Growth comes after crackdown on illegal low grade steel products which were never included in statistics, supplies now filled in by legal steel mills
China complains about steel glut as nation continues to build capacity
• It’s amazing that the nation that has increased steel production and capacity far beyond any other is now complaining that the rest of the world is not doing its bit to cut capacity.
• The Global Steel Forum, a group of G20 and 13 other nations declared last week in Berlin an ambitious package of policy solutions to tackle global overcapacity.
• Press reports indicate that the US is not happy with the proposals as the forum does not tackle the root causes of excess capacity.
• China is not happy either and does not want to be the one going through the painful process of capacity reduction while the rest of the world just watches, which is faintly amusing since China is principally responsible for the overcapacity.

Electric car push drives premiums for greener metals
• Companies such as VW and BMW are reported to be starting to pay a premium for sustainable and traceable metals.
• Higher prices may also be paid for low carbon products as well as highly processed forms of metals for electric batteries as sustainability issues look set to play increasing focus in raw material procurement

Rio Tinto to develop ‘intelligent’ Australian iron ore mine
• Next year managers at Rio Tinto will seek board approval to develop their first intelligent iron ore mine at a cost of $2.2bn.
• The plan is to fully incorporate technologies such as robotics, driverless trains and trucks on a single site at the new Koodaideri iron ore mine in the Pilbara, Western Australia
• The iron ore mine is planned to produce 40mtpa by 2021 but this may eventually rise to 70mtpa
• The cost of employing and managing staff in this hot and remote region is the principal driver for Rio Tinto with truck drivers thought to be earning >A$100,000pa, supervisors on up to A$230,000 and train drivers on A$250,000 plus.

Dow Jones Industrials  -0.17% at 24,232
Nikkei 225   -0.49% at 22,707
HK Hang Seng   +0.36% at 29,179
Shanghai Composite    -0.24% at 3,310
FTSE 350 Mining   +0.27% at 16,576
AIM Basic Resources   -1.06% at 2,607

US – US Senate narrowly voted through a tax overhaul on Saturday (51-49) with negotiations between the Senate and the House to begin this week with a view to agree the final version of the bill to go to President
• It is a non-farm payrolls week marking the last jobs report before the December monetary policy meeting.
• The report will provide a mostly clean gauge of labour activity following two months of hurricane distortions.
• Estimates are for the number of new jobs to come in at 199k compared to 261k in October or an average of 140k over two months of October/September.
• Economists are not unanimous on potential effects of tax cuts and infrastructure spending on the economy, according to the latest survey.
• Around half of economists see policy changes adding 0.2-0.4pp to growth in 2018, while 20% forecast a larger gaina dn 20% see no benefit to growth, according to the National Association for Business Economics.
• Despite a modest pick up in growth in 2018, a slight majority still forecasts a recession starting before the end of 2019 versus 48% seeing the expansion running through at least 2020.

UK – PM Theresa May is meeting Jean-Claude Juncker, the EC president, to iron out last disagreements ahead of the EU summit on Dec 14-15 in an effort to progress Brexit discussions further to trade terms.
• Two of the most important discussion points would be Norther Ireland border and the future of European courts in Britain, FT reports.

Turkey – Inflation hit the highest level in 14 years putting more pressure on the central bank to raise from current 12.25%.
• Consumer prices climbed 13.0%yoy in November compared with a 11.9%yoy increase recorded in the previous month.
• Turkish lira continued to weaken against the US$ currently trading close to the lowest level on record.

US$1.1861/eur vs 1.1927/eur yesterday.   Yen 112.96/$ vs 112.59/$.  SAr 13.775/$ vs 13.668/$.  $1.344/gbp vs $1.352/gbp
0.759/aud vs 0.758/aud.   CNY 6.619/$ vs 6.607/$.

Commodity News
Precious metals:         
Gold US$1,273/oz vs US$1,276/oz last week
• Spot gold price fell under pressure from an improving dollar as the US Senate passed its tax reform bill over the weekend. The House-Senate conference committee will now be responsible for resolving the difference between the proposed House and Senate tax bills, with expectations for the bill to assist with sustaining corporate capital investment and [merger and acquisition] activities as both bill call for a reduction in the corporate tax rate to 20%.
• The dollar rebounded to a two-week high after falling on the news that Michael Flynn, former national security adviser to Trump, pleaded guilty to lying to the US Federal Bureau of Investigations about alleged contact with Russia.
• A potentially higher yield trajectory on US Federal Reserve’s interest rates across 2018 have renewed market interest in the dollar, harming precious metal prices.
• Geopolitical tensions could be on the rise as a week-long joint US and South Korea air exercise, called Vigilant Ace, has received condemnation from the North who state the US are “begging for nuclear war”. The drill is expected to involve some 230 aircraft, including two dozen stealth jets and tens of thousands of military personnel which could be at threat from North Korea as it would “seriously consider” counter-measures.
   Gold ETFs 71.9moz vs US$71.5moz last week
Platinum US$934/oz vs US$943/oz last week
Palladium US$1,023/oz vs US$1,015/oz last week
Silver US$16.33/oz vs US$16.44/oz last week
Base metals:   
Copper US$ 6,834/t vs US$6,789/t last week
• Base metal prices have been broadly supported by Chinese Purchasing Managers’ Index (PMI) readings, which continued to show expanding activity to rise to 51.8. Higher than expected data maintains a positive short-term outlook, while strike concerns at Southern Peru Copper Corp and Teck’s Quebrada Blanca copper mine give underlying supply doubt as unions attempt to renegotiate higher wages on elevated metal prices. Copper stocks dropped 4.1% in November to 460,000 tonnes across Shanghai-bonded warehouses.
Aluminium US$ 2,072/t vs US$2,056/t last week
Nickel US$ 11,400/t vs US$11,135/t last week
Zinc US$ 3,224/t vs US$3,170/t last week
Lead US$ 2,541/t vs US$2,488/t last week
Tin US$ 19,510/t vs US$19,520/t last week
Oil US$63.4/bbl vs US$63.1/bbl last week
• Despite hedge funds hiking bullish bets on US production, US shale oil producers appear to have followed suit with OPEC’s decision to extend the global output cuts until the end of 2018. Money managers boosted bullish wagers on US crude last week to the highest on record since 2009, raising its combined futures and options position by 51,853 contracts to 451,877.
Natural Gas US$3.110/mmbtu vs US$3.092/mmbtu last week
Uranium US$23.00/lb vs US$23.25/lb last week

Iron ore 62% Fe spot (cfr Tianjin) US$70.5/t vs US$68.2/t
• Spot iron ore surged up almost 20% from late October lows to climb beyond the $70/t level, as China’s crackdown on steel output over the winter emission period runs down inventories and builds demand for high-grade ore supply. The initiative to reduce harmful levels of pollutants across key producing provinces has effectively diminished inventories, with “the rally expected to be driven by a further tightening of the Chinese steel market, Chinese steel mills’ active restocking of high-grade iron ore, seasonally weak seaborne supply, and a recognition that iron ore supply growth passes its peak during the first quarter of 2018”, according to Citi analysis.
• The push toward improved environmental conditions has also prompted an increased demand for higher-grade ore which causes less pollution and more efficient energy, boosting the premium on higher-quality ore.
Chinese steel rebar 25mm US$755.4/t vs US$742.4/t
• Despite extensive mill closures, China’s steel output is expected to continue rising, increasing a further 3% to 832 million tonnes this year. The impact of closures of outdated plants and winter capacity cuts are being offset by major mills ramping up operations, with output growth extending 0.7% into 2018.
Thermal coal (1st year forward cif ARA) US$85.6/t vs US$85.2/t
Premium hard coking coal Aus fob US$215.7/t vs US$211.3/t
Tungsten APT European US$291-300/mtu vs US$275-285/mtu last week
Cobalt LME 3m US$66250/t vs US$66750/t last week

Company News
Atalaya Mining (LON:ATYM) 174 pence, Mkt Cap £203m – Expansion to 15mtpa approved - £39m placing proposed
• Atalaya Mining has announced that it intends to proceed with a previously announced proposal to increase throughput at its Proyecto Riotinto from the current 9.5mtpa to 15mtpa increasing average copper output by around 40% or 15,000 tpa to 55-55,000 tpa of copper in concentrate.
• Subject to financing and permitting issues, the company plans to start construction work during Q1 2018 with commissioning of the expansion expected to take place during the second half of 2019 and a ramp up to full production during H1 2020.
• The project, which is forecast to cost €80.4m, is expected to reduce “cash costs and all-in sustaining costs by approximately 7% … based on maintenance and processing efficiencies”.
• “Management expects that the expansion project will result in an incremental post-tax net present value (NPV) of approximately US$113 million (assuming an 8% discount rate) and a post-tax internal rate of return (IRR) of approximately 43%, when assuming a US$3.00/lb copper price, US$18.00/oz silver price, and USD:EUR of 1.15.”
• Major elements of the expansion programme are a new primary crushing system and SAG mill, and additional flotation cells and concentrate handling capacity.
• In order to finance the expansion, Atalaya Mining proposes to raise £39m by the issue of approximately 23.3m new shares at £1.67/share. Based on the current issued share capital  disclosed on the company’s website we estimate that, if issued in full, the new shares represent around 17% of the enlarged company.
• We note that “The four largest existing shareholders ("Key Shareholders") have already committed to participate in the Placing, in accordance with their pre-existing contractual entitlement rights”. Trafigura, (22%), Yanggu Xiangguang Copper (21.9%) and Liberty Metals & Mining Holdings (13.98%) have all agreed to maintain their current stakes and Orion Mine Finance (14.56%) has agreed to take a further 1.8m shares or 8% of the proposed placing.
• Atalaya Mining’s team achieved commercial production at Proyecto Riotinto on 1st February 2016 at an initial 5mtpa capacity and leapfrogged the planned incremental expansion to 7.5mtpa moving straight to the current 9.5mtpa rate by July 2016. We interpret this as a demonstration of the technical and operational proficiency of the management which bodes well for the efficient delivery of the new expansion to 15mtpa.
Conclusion: Atalaya Mining’s plan to increase the capacity of its Riotinto operation is a relatively low-risk incremental expansion of an existing operating mine where management has already delivered previous expansion projects smoothly. The company’s economic case focuses on reduction of unit costs and sustaining capital requirements to deliver an attractive incremental post-tax IRR of 43% for the expansion. The proposed £39m financing has received the backing of the main shareholders representing over 70% of the current share capital.

Bacanora Minerals (LON:BCN) 95.5p, Mkt Cap £127m – President and director resigns
• Bacanora Minerals report the resignation of the Martin Vidal, President and director of the company as of 30 November.
• No explanation has been given as to the resignation though we note that Mr Vidal is to remain with the company in an advisory / consultancy capacity.
• We wonder if Mr Vidal has disagreed with the board’s filing of a statement of claim with the Court of Queen's Bench in Alberta striking out the 3% over-riding royalty held by the Estate of Colin Orr-Ewing.
• We also wonder why Bacanora did not announce the news of Mr Vidal’s departure on Friday?
• Last week Bacanora reported its first quarter financial results:
• Expenses were C$1.26m for the quarter but this rises to C$2.2m when including stock-based compensation.  Adding in other adjustments takes the total loss to C$2.7m which adds up to an annualized C$10.8m for a full year though much will change if the company moves into the construction phase.
• Bacanora reports it is fully financed with approximately US$24m in the bank and is fully funded through to the initial development of Sonora and the start of the construction stages.
• The company expects to report on its new Feasibility Study this year and appears to be updating its lithium carbonate pricing assumptions in the feasibility study based on prices published on
Conclusion: we conclude that all is not well with the board of Bacanora Minerals. We expect Bacanora will look to finance the construction of the Sonora project shortly after publication of the Feasibility Study.
*SP Angel is completely independent of Bacanora Minerals and the Orr-Ewing Family estate. The above text represents the author’s independent and personal views as a mining analyst and an observer of the company over many years. Note, we are not advising investors to buy or sell this stock.

Galileo Resources (LON:GLR) 1.375 pence, Mkt Cap £3.5m – Drilling at Star Zinc Project
• The company reports plans to start drilling an initial 1750m this week at the recently acquired Star Zinc Project in Zambia where Galileo Resources holds a 51% interest and may earn up to 85% via the completion of a preliminary economic assessment.
• Galileo Resources has engaged the consultants, CSA Global to prepare a JORC (2012) compliant mineral resource estimate along with the Zambian based GeoQuest who will manage the drilling programme and provide geological support.
• Commenting on the fast-tracking of the drilling, and the soil sampling programme which is expected to be reported shortly, CEO, Colin Bird, said “This imminent drilling programme is designed to confirm a regulatory JORC code resource and to test the potential of other nearby areas considered to be prospective.  On completion of this drilling programme, we intend to commence a preliminary economic assessment.”
Conclusion: Previous reports and non-JORC compliant mineral resource estimates have indicated that the Star deposit is a small but high grade deposit with zinc grades of around 20% zinc at a cut-off grade, higher than the resource grade of many deposits,  of 14% zinc. With its long history in mining, we consider Zambia to be a relatively attractive area for mining and exploration and look forward to the results of the drilling and the subsequent resource estimate and preliminary economics and to any indications of expansion potential for the Star deposit.

Mon, 04 Dec 2017 10:24:00 +0000
Today's Market View - BlueRock Diamonds, Firestone Diamonds Tesla 129MWh mega-battery gets its first commercial test
• The world’s largest lithium-ion battery was officially activated to support crippling electricity problems in Southern Australia, as Tesla fulfilled the ambitious promise of delivering power within a 100-day window. The 100-megawatt battery is three-times more powerful than the world’s next biggest battery to help avoid the notorious incident where the entire state lost power following intense weather.
• The battery hopes to be used to support and stabilize existing electricity supply and provide power for up to 30,000 home, relying on the same battery technology as the tesla electromobility.
• Commercial scale energy storage systems are driving innovate demand for battery raw materials, with consumption of lithium expected to grow 68% CAGR through to 2025 (SP Angel Commodity Research Book – Battery raw materials)
• The new battery is sited 190km north of Adelaide and should bring stability to power supplies in Southern Australia through better integration of low cost solar and wind power for the national grid.
• Neoen Australia, the owner of the battery, believes this is the signal of the end for coal as prices for lithium batteries fall and renewable energy becomes cheaper 
• It will be interesting to see how well the new lithium-ion battery plant manages to cope with the heat in the Southern Australian Summer and if any of the battery cells will suffer from the degradation and thermal runaway which can occur in one in a million Li-ion battery cells
• Temperatures are cool today in the region at 20c but can hit 41.5c in the area.  The combination of power drawdown
• BHP lost $105m in a day when the Olympic Mine was shut by a power blackout in the state last year.  The new Tesla battery is costing up to $95m by contrast indicating that the battery cost as well as some political ambitions could be covered by saving the state from just one power blackout.

Lithium – recycling to reach 9% of total battery supply in 2025
• A new report by Creation Inn predicts that 5,800t of lithium and 22,500t of cobalt from recycled batteries will reach global markets in 2025
• China will lead recycling activities for both metals with 66% of lithium ion batteries or 191,000t expected to be recycled 
• Cobalt can be drawn from faulty batteries, and could meet 10% of industries need

Dow Jones Industrials  +1.39% at 24,272
Nikkei 225   +0.41% at 22,819
HK Hang Seng   -0.33% at 29,082
Shanghai Composite    +0.01% at 3,318
FTSE 350 Mining   +0.28% at 16,579
AIM Basic Resources   -0.78% at 2,635

US – The Senate postponed the vote on the US tax reform to today as further changes had been negotiated.
• The US$ index lost around 0.7% yesterday on the back of the news and is being steady this morning ahead of the Senate vote results.

China – Latest PMI numbers point to a divergence in state controlled and private companies’ recorded performance in November.
• The gauge of private manufacturers in China marked a slowdown in the sector’s growth to the weakest pace in five months.
• Companies referred to stricter environmental policies as drivers behind slower expansion.
• This contrasts with official manufacturing PMI which focused primarily on large, state-owned enterprises and recorded a pick-up in activity this month.
• Caixin Markit Manufacturing PMI: 50.8 v 51.0 in October and 50.9 forecast.

Eurozone – Single currency zone manufacturing sector grew to near-record high with strong readings of output and new orders metrics.
• Employment levels increased in all of the nations covered by the survey “with almost all seeing a faster pace of increase (the sole exception being Italy)”.
• Inflation has also been on an increasing trend with input costs climbing at the fastest pace in six-and-a-half years while output charges increased to the greatest extent since Jun/11.
• Stronger economic growth as well as accelerating inflation would be welcome news in the ECB which is looking at gradually reducing the amount of monetary easing.
• “Companies are clearly expanding rapidly… employment growth has hit an all-time high and business investment on machinery is trending sharply upwards, suggesting manufacturers are looking forward to the upturn persisting well into 2018,” Markit said.
• Markit Eurozone Manufacturing PMI: 60.1 (revised from 60.0) v 58.5 in October.

Germany – Chancellor Angela Merkel is due to meet former centre-left partners to discuss a potential coalition today.
• Negotiations with Social Democrats may potentially lead to formation of another grand coalition in the Bundestag.

Spain – More news on the buoyant state of the Spanish recovery.
• Manufacturing sector climbed the most on almost 11 years in November led by strong production and marked increase in new orders, according to Markit PMI.
• Overseas demand was particularly strong with an increase in the rate of expansion in new export orders among the highest since the survey began in Feb/98.
• Positive business outlook led further gains in employment figures.
• Final goods inflation accelerated to a four-month high on the back of rising input costs (commodities especially).
• “The sector is clearly in good shape as 2017 draws to a close, with hopes of continuing strong performance in 2018,” the report said.

Greece – The government is planning to issue a seven-year bond early next year raising at least €6bn with more offerings to come should the deal record good demand.
• The bond together with another €9bn from unused bailout funds should help cover interest payments and principal due next year on the €319bn debt due next year.
• Two more issues of three and 10 year bonds might follow in July, according to people involved in preparing the nation’s borrowing strategy for next year.
• The government has completed a €30bn voluntary bond swap this week exchanging 20 sovereign bonds issued after a debt restructuring in 2012 for five new ones with maturities ranging from six to 25 years.

US$1.1927/eur vs 1.1845/eur yesterday.  Yen 112.59/$ vs 112.42/$.  SAr 13.668/$ vs 13.682/$.  $1.352/gbp vs $1.346/gbp
0.758/aud vs 0.757/aud.   CNY 6.607/$ vs 6.611/$.

Commodity News
Precious metals:         
Gold US$1,276/oz vs US$1,281/oz yesterday
• The support from US Senate John McCain toward the Senate tax bill helped draw confidence in the progress and passage of bill and encouraged strength in the dollar index. The index rose to 93.51 on the back of buoyant economic data with “excellent US consumption and preliminary GDP data seeing the US 10-year bond yield rise to 2.435% overnight” (ANZ Research). Comments from Janet Yellen indicated a brightening picture for the US economy, which downplayed the risk of financial instability.
• Despite new support from Senate candidates, the Republican tax overhaul stalled yesterday on a procedural issue, forcing lawmakers to assess new options to an amendment sought by a leading fiscal hawk to address the bill’s projected large expansion of the federal deficit.
• After initial geopolitical tension at the beginning of the week, gold price has contracted further from its 200-day moving average at $1286/t.
• US President Trump is pushing pressure on Chinese diplomatic efforts to rein in North Korea’s weapons program, with Secretary of State Rex Tillerson suggested the nation could do more to limit oil supplies to Pyongyang.
   Gold ETFs 71.5moz vs US$71.6moz yesterday
Platinum US$943/oz vs US$943/oz yesterday
Palladium US$1,015/oz vs US$1,017/oz yesterday
Silver US$16.44/oz vs US$16.50/oz yesterday
Base metals:   
Copper US$ 6,789/t vs US$6,762/t yesterday
• Tightening copper conditions are causing prolonged negotiations between China’s smelters and international mining companies over the terms for next year’s treatment and refining charges (TC/RC). The majority of participants see the fees falling from current level of $92.50/t and 9.2c/lb because expanding smelter capacity will cause more competition for materials as mine supply growth is set to stall next year. The TC/RC’s set can have a significant impact on the profitability of the miners and smelters, with negotiations with the largest consumer of copper setting the global industry benchmark.
• For 2018, trading sources and miners have offered $72-78/t, while Chinese smelters are pushing for unchanged prices because of abundant mine output. There remains confusion over the balance of concentrate on the market, with Standard Chartered analyst identifying a 200Kt surplus this year which is expected to move into deficit of the same amount in 2018.
• Deals are often struck during next weeks’ Asia Copper conference that is held this week, although with offers standing so far apart the progress is expected to be slow into the new year. Market consensus suggests a common ground around $85/t will be found, with the vast majority of world’s smelters making a profit at that level.
• The stalemate highlights the industry’s uncertainty about striking action across Chile and Peru, with striking action at Southern Copper Corp. extending into day ten. Ongoing supply disruptions concerning wage negotiations have negatively impacted output, which fell 2% yoy in October, as volumes decreased to 214Kt from Cero Verde, Las Bambas, Antamina and Antapaccay mines.
• Industrial metals are expected to receive robust demand as Asia’s major manufacturing economies saw their fastest expansion in factory activity in November, with strong consumption for electronics driving the rise.
Copper set to fall as China’s output rises and property market slows
• Rising copper output and concerns of slow down in real estate market may threaten coppers electric vehicle fuelled rally
• Expected to see pressure in first half of 2018 because of weakening of real estate market and the 300,000 tonnes of new metal coming into supply
Aluminium US$ 2,056/t vs US$2,056/t yesterday
Nickel US$ 11,135/t vs US$11,295/t yesterday
Zinc US$ 3,170/t vs US$3,139/t yesterday
Lead US$ 2,488/t vs US$2,450/t yesterday
Tin US$ 19,520/t vs US$19,475/t yesterday
Oil US$63.1/bbl vs US$63.6/bbl yesterday
• Asian refiners wasted no time to react to the extension of OPEC and Russia’s decision on their agreed production cuts, by boosting orders for more oil from the Caribbean and Gulf of Mexico in a move which removes market share from the global oil cartel.
Natural Gas US$3.092/mmbtu vs US$3.113/mmbtu yesterday
Uranium US$23.25/lb vs US$23.90/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$68.2/t vs US$67.2/t
Chinese steel rebar 25mm US$742.4/t vs US$729.4/t - G20 agrees steel deal to tackle global over capacity
• Ministers agreed deal aimed at removing excess steel production capacity
• European steel makers unable to compete with cheaper steel from China, which produces and consumes half the world’s steel 
• The new deal is intended to stop unfair subsidiaries which skew the steel market
• China’s domestic stainless steel market narrows downward on pressure from declining nickel prices. The three-month nickel LME contract ended $375/t down this week, matched by a fall to 880 yuan per nickel unit for East China’s Zhangjiagang Pohang Stainless Steel purchasing price (down from 900-910 yuan last week).
Thermal coal (1st year forward cif ARA) US$85.2/t vs US$86.0/t
Premium hard coking coal Aus fob US$211.3/t vs US$209.9/t
Tungsten APT European US$275-285/mtu vs US$271-285/mtu last week
Cobalt LME 3m US$66750/t vs US$68250/t yesterday

Company News
BlueRock Diamonds* (LON:BRD) 2.1p, Mkt Cap £3m – BlueRock appoints new finance director
• BlueRock Diamonds has appointed David Facey as finance director.
• David is a Fellow of the Institute of Chartered Accountants of England and Wales and has over 20 years’ experience in Corporate Finance and Equity Capital Markets.
• After working at PwC, David spent 10 years at HSBC Investment Bank, where he specialised in raising funds in the UK for companies all over the world, particularly in the EMEA region.
• Throughout his career David has advised governments, large corporates and smaller enterprises on public fund raising, private fund raising and mergers and acquisitions.
• David was also founding partner in SP Angel advising SMEs on raising funds in the London market, both public and private.
• David Facey is also a director of Intoware Limited and PLS Nominees Limited.
• BlueRock is ramping up mining to produce some 25,000t per month as its moves into fresh kimberlite ore.
• The company has been beset with problems through the year recently appointing Adam Waugh as ceo to take over management of the company.
• Waugh has replaced the mining contractor with in-house kit and has improved the process plant for greater throughput and better recovery rates.
• Throughput and sales have risen since the reorganisation and grades have improved towards the 4.5cpht (carats per hundred tonnes) estimated in the CPR.
• Sales rose to US$226,400 for the October tender vs US$175,621 in September with the average value per carat also rising to US$371.25/ct vs US$337/ct seen in the first nine months of the year.  The per carat value remains well ahead of the assumed CRP value of $232/ct.
• Rain in October caused mine production to pull back to just 17,000t from 22,010t reported in September though the grade recorded an effective 2.64cpht in the October tender though this is lower than the 3.01cpht seen in the September sale.
• We look forward to throughput rates rising to 25,000tpm and to the mining of higher grades from fresh kimberlite.
Conclusion: We look forward to further detail on costs and grades as the company moves into mining the fresh kimberlite.  We hope the operations will settle into more consistent production and plant throughput and will show diamond grades closer to the CPR estimates going forward.  Achievement of target throughput, grades and per carat values should imply a significant uplift in the company’s valuation so long as costs are controlled.
*SP Angel acts as Nomad & Broker to BlueRock Diamonds

Firestone Diamonds (LON:FDI) 13.5 pence, Mkt Cap £43.2m – Annual results and potential fundraising
• Firestone Diamonds has reported a pre-tax loss of US$130m (US$151.7m after tax) for the year ending 30th June 2017. The loss includes a non-cash impairment charge of US$122.6m arising from a review of the carrying value of the flagship Liqhobong diamond mine in Lesotho which was commissioned during the year and which declared formal commercial production on 30th June.
• The company held a cash balance of US$17.3m at 30th June 2017.
• The mine was developed within the US$185.4m budget for a total cost of US$183.3m and produced a total of 365,891 carats of diamonds during the year as it ramped up towards the revised 2017/2018 production target of 800-850,000 carats.
• “The ramp-up was not without its challenges, with recovered grade being an initial issue … together with other commissioning issues which are normal in the ramp-up phase of a new plant” compounded by weakness in the market for the smaller sizes of rough diamonds triggered, in part, by India’s demonetisation programme announced in November 2016.
• The operational issues were largely resolved by the end of March, however “which enabled the plant to run at full production levels for a sustained three-month period, achieving commercial production by the end of the financial year”.
• On a quarter –by-quarter basis, production built steadily through the year  to 926,000 tonnes of ore and 550,000 tonnes of waste during the final quarter, with grades improving steadily from 15.15 carats per hundred tonnes (cpht) in Q2 to 22.1cpht in Q4 for an average of 18.61cpht for the three production quarters. The grade improvements, in particular may well be attributable to “access to more areas of the pit, in particular the higher grade K5 ore, increased as mining operations advanced during Q4, also contributing to the increase in grade”.
• Eighty percent of ore production during the year derived from “the lower grade K2 material in the pit which included some dilution, 8% from K5, 7% from K4 and the remaining 5% from historic low grade stockpiles”.
• “The current year has started well with 199,007 carats recovered during the first quarter, including the largest diamond recovered to date, a 133 carat light yellow stone, as well as 45 specials (larger than 10.8 carats).  Mining is proceeding to plan and Firestone is gradually extending operations to additional areas in the pit and, as more detailed knowledge of the pit is acquired over the coming months”.
• The company notes that the rough diamond market during the financial year was “mixed … prices for higher value, better quality goods have been robust with modest growth during the year, while prices for the smaller "Indian market" run of mine production have been more difficult.” The company sees “a modest recovery in the lower priced category goods in the short to medium term. Supply of these category goods will remain robust in the short term but in the medium term, Firestone believes supply will diminish and demand will continue to grow”.
• In addition to the results, Firestone Diamonds has also announced, today, plans for a potential fundraising of up to £18.5m (US$25m) at a price of 10p/share in order to ease pressure on the balance sheet and help to restructure debt which currently stands at US$85.7m (net) or around 80% of capital employed.
• The proposed “Issue Price represents a discount of 49.4 per cent to the Closing Price on 30 November 2017.”
• The revised mine plan reduces the planned life of the Liqhobong mine to 9 years from the previously planned 14 years lowering the total life of mine diamond production from 13.9m carats to 7.7m carats and reducing the volumes of waste removal required 29mt from the previously estimated 105mt.
• The revised mine plan generates an “indicative NPV” at the US$90/carat average price received during the financial year to June 30th 2017 of US$195m. Liqhobong does, however, appear to be strongly geared to diamond prices and at the US$100/carat price level the NPV increases to US$240m.
• The company stresses that the revised mine plan is sufficiently flexible that the longer life operation could be reinstated if the quality of the recovered diamonds improves and the rough diamond market picks up.
Conclusion: The revised mine plan for the Liqhobong mine is aimed at shortening the overall life in order to deliver significant improvements to NPV. The new fundraising is taking place at a significant discount but should help to repair the overstretched balance sheet.

Fri, 01 Dec 2017 10:51:00 +0000
Today's Market View - Altus Strategies, Asiamet Resources, Bushveld Minerals, Kibo Mining and others Altus Strategies* (LON:ALS) BUY – Target price 12.2p – Tigray-Afar exploration update
Asiamet Resources (LON:ARS) – Metallurgical Drilling at BKM
Bushveld Minerals (LON:BMN) BUY – Target price raised to 14.3p from 11p – Bushveld adds value as it consolidates control over Vametco
Click here for research note
Golden Star Resources (TSE:GSC) – Peer recognition as Mining Company of the year in Ghana.
Kibo Mining (LON:KIBO) –Acquisition of an advanced coal to power project in Botswana
SolGold* (LON:SOLG) – SolGold raises £45m
Vast Resources (LON:VAST) – Carlibaba drilling update

Dow Jones Industrials  +0.44% at   23,941
Nikkei 225   +0.57% at   22,725
HK Hang Seng   -1.51% at   29,177
Shanghai Composite    -0.62% at    3,317
FTSE 350 Mining   -0.22% at   16,623
AIM Basic Resources   -0.30% at    2,656

US – Q3 GDP has been revised up to 3.3% from 3.0%, beating estimates for 3.2%; although, a third of the upgrade attributed to trade and inventories.
• Business investments picked up while consumer spending was brought down showing little signs of improvement.

China – While both manufacturing and services sectors growth picked up in November on the latest official numbers, a separate Markit survey showed business outlook remained close to a record low in October.
• “Latest data signals subdued levels of confidence across both the manufacturing and service sectors towards future business activity, new orders and business revenues… at the same time, companies revised down their hiring plans, while forecasting stronger cost pressures,” Markit wrote.
• “Projected squeeze on margins fed through to weaker expected profits growth, with optimism towards profitability at its lowest since June 2016.”
• Manufacturing PMI: 51.8 v 51.6 in October and 51.4 forecast.
• Services PMI: 54.8 v 54.3 in October.

Germany – The number of people out of job fell for a fifth consecutive month beating market estimates in November.
• Unemployment rate held at record low of 5.6% amid strong economic growth and positive business outlook.
• German numbers come ahead of Eurozone wide numbers expected to show the jobless rate held at an eight-year low of 8.9%.

UK – House prices growth held steady at 2.5%yoy in November coming slightly below a 2.7%yoy market forecast, according to Nationwide.
• Demand is said to be driven by low mortgage rates and employment growth; although, “this is being partly offset by pressure on household incomes”.
• Initiatives announced by Philip Hammond earlier this month are expected to have only a “modest” effect on demand for properties.
• Consumer confidence fell to a four-month low in November with all five measures used by GfK posting declines and the willingness of consumers to make major purchases recording the biggest decline.
• “Household jitters following the recent interest-rate hike, squeezed incomes, higher inflation and economic uncertainty have dampened the consumer mood across the UK,” GfK said in the commentary.

Italy – Unemployment rate came in line with estimates holding up at 11.1% in November.
• A positive detail in the report is that youth unemployment dropped to 34.7%, the lowest since March this year, down from 35.4%.

US$1.1845/eur vs 1.1868/eur yesterday.   Yen 112.42/$ vs 111.42/$.   SAr 13.682/$ vs 13.635/$.   $1.346/gbp vs $1.342/gbp.  
0.757/aud vs 0.759/aud.   CNY 6.611/$ vs 6.598/$.

Commodity News
Precious metals:         
Gold US$1,281/oz vs US$1,296/oz yesterday
• Gold prices edged back as positive US economic data was supported by comments from US Federal Reserve chairwoman Janet Yellen that economic growth was broad based, which saw investors become more convinced that rates would go higher.
• Third-quarter gross domestic product was revised upward to 3.3% from 3.0%, and home sales also improved, recording -0.6% yoy compared with a previous quarter at -3.9%.
• However, underlying geopolitical tensions surrounding North Korea’s insistence to develop its nuclear weapons programme and “continued acts of aggression” give support to the safe haven asset.
• A lack of clear drivers has kept gold between $1,265 and $1,300 an ounce throughout November, its narrowest monthly range in 12 years.
   Gold ETFs 71.6moz vs US$69.4moz yesterday
Platinum US$943/oz vs US$952/oz yesterday
Palladium US$1,017/oz vs US$1,028/oz yesterday
Silver US$16.50/oz vs US$16.90/oz yesterday
Base metals:   
Copper US$ 6,762/t vs US$6,805/t yesterday
• Despite encouraging manufacturing reports from key Asian nations, base metals drifted lower as investors locked in profits before the close of year. The downward trend is expected to continue as “There is higher risk aversion among market participants, with the oil price down as well, and there are lingering concerns about China…and rising (U.S.) interest rates” said Commerzbank analyst.
• China’s growth across its manufacturing sector unexpectedly rose, despite a cooling property market and the stringent winter air quality emissions measures cutting output. The official Purchasing Managers’ Index (PMI) for November recorded an increase to 51.8, compared to 51.6 in October, and sits comfortably above the 50-point mark which signifies sector growth. Manufacturing has been boosted by encouraging government infrastructure spending, a resilient property market and unexpected strength in exports, which have ultimately sustained the economy’s forecast-beating growth of 6.9%.
• Japan’s industrial output is expected to rise strongly in November and December as robust overseas demand continues to support factory activity and broader economic growth.
• Despite ongoing divestment issues, Freeport-McMoRan is aiming to increase exports to 1.1 million tonnes concentrate. Global production is, however, being hampered by continued striking in one of the world’s largest copper suppliers. Workers at Southern Copper Corp have completed the ninth day of an indefinite strike following failed wage negotiation attempts.
EV’s to drive long term copper demand
• Electric vehicles bullish driver for global copper demand as copper content higher in electric vehicles,  also require expanded charging infrastructure
• Hybrid vehicle uses 40kg of copper compared to plug-in hybrid electric vehicles and battery electric vehicles, at 60 kg and 83 kg, respectively

Aluminium US$ 2,056/t vs US$2,092/t yesterday
• Emission-related production cuts across China’s polluting provinces are proving to be less stringent, causing Shanghai Futures Exchange (ShFE) aluminium to fall more than 11% this month as supply concerns fade.
Nickel US$ 11,295/t vs US$11,365/t yesterday
• Nickel prices have contracted 8% in November as market participants recognise that despite compelling and rapid demand growth from the electric economy, consumption by end use for battery technology still only represents 2-3% of the global total.
Zinc US$ 3,139/t vs US$3,147/t yesterday
Lead US$ 2,450/t vs US$2,439/t yesterday
Tin US$ 19,475/t vs US$19,485/t yesterday
Oil US$63.6/bbl vs US$63.3/bbl yesterday
• The prolonged oil supply cuts of 1.8 million barrels per day agreed by OPEC and Russia will come under review when the committee meet again in June, as concerns rise over sustained oil prices encouraging a spike in U.S. production.
Natural Gas US$3.113/mmbtu vs US$3.182/mmbtu yesterday
Uranium US$23.90/lb vs US$23.50/lb yesterday
Lithium - PotashCorp CEO confirms Chinese interest in lithium producer SQM
• Chief executive Joel Tilk told Reuters there was a ‘broad interest from potential bidders and actual bidders coming from those interested in lithium and many in China’
• Last week was mentioned that Chinese private equity firm GSR capital and Canada’s wealth minerals are latest firms to be weighing an investment in SQM
MGX Minerals targets geothermal market for extraction of lithium and gold
• Partner PurLucid has developed high temperature filtration method to purify geothermal brines – similar to oil field brines
• The brines contain concentrated amounts of metals and dissolved salts including lithium and gold.

Iron ore 62% Fe spot (cfr Tianjin) US$67.2/t vs US$66.6/t
Chinese steel rebar 25mm US$729.4/t vs US$706.1/t
Thermal coal (1st year forward cif ARA) US$86.0/t vs US$84.6/t
Premium hard coking coal Aus fob US$209.9/t vs US$202.0/t
Tungsten APT European US$275-285/mtu vs US$271-285/mtu last week
Cobalt LME 3m US$68250/t vs US$61750/t last week - Car makers join forces to drive sustainability in Cobalt mining
• Volkswagen, Toyota, BMW, Jaguar Land Rover and Volvo have joined forces to identify and address the risks posed by crucial materials like cobalt
• Set to unveil action plan by beginning of next year

Company News
Altus Strategies* (LON:ALS) 8.3p, Mkt Cap £8.9m – Tigray-Afar exploration update
BUY – Target price 12.2p
• Prospecting works completed during Q3/17 at the Tigray-Afar license in northern Ethiopia focused on the Asagara copper oxide target.
• Groups of up to 50 artisanal miners have been reported at site working on outcropping oxide copper mineralisation.
• Geological mapping at the site identified semi-continuous mineralisation over a 2.0km strike with recorded widths of up to 20m and a parallel structure of 0.6km strike length and up to 15m wide.
• Channel sampling of outcrops returned 8m at 0.56% Cu and 5m at 0.77% Cu (starting and ending in mineralisation).
• Rock chip sample from located artisanal workings returned grades up to 5.58% Cu.
• The plan is to continue with channel sampling programme in the area ahead of trenching scheduled for Q1/18.
• The Company is also planning to do more work at the Cu-Ag-AU Agamat target (8km away from Asagara) where previously grab samples returned grades of 8.7% Cu, 99g/t Ag and 13.5g/t Au while best drilling intersections came back with 0.70% Cu at 28.2m.
• The plan is to map mineralised structures and progress to channel sampling.
Conclusion: The Company is planning to follow on interesting early stage prospecting results at the Asagara copper target. Further channel sampling and trenching works should help to understand continuity, widths and grades of the mineralisation as well as identify future drilling targets. The team is also looking to do more work at the Agamat Cu-Ag-Au target planning extension of shear zones mapping ahead of systematic channel sampling programme.
*SP Angel acts as Nomad and Broker to Altus Strategies

Asiamet Resources (LON:ARS) 9p, Mkt Cap £77m – Metallurgical Drilling at BKM
• Asiamet Resources reports that it now has results from eight of the nine holes (764m) metallurgical drilling programme at the BKM property in Indonesia.
• The drilling was designed to obtain material for testing the 4 principal zones of copper mineralisation identified at the property and to establish the recovery parameters for heap leaching the different mineralogical domains identified which “vary laterally and vertically across the deposit, [but] however form broad and substantial spatially consistent zones”. These zones are identified as:
o A chalcocite zone
o A mixed chalcocite covellite zone
o A zone of covellite, bornite and chalcopyrite and
o A zone dominated by the primary copper mineral, chalcopyrite.
o Of these, the “most prevalent copper mineral species is chalcocite – covellite dominant which occurs in both the BK44 and BK58 Zones.” Without pre-judging the outcome of the test work, we expect that this should be beneficial as the minerals covellite and chalcocite, in their pure form,  contain approximately 66.5% and 79.9% copper while the other species, bornite (63.3%) and chalcopyrite (34.6%) are not as copper rich.
o Insight into the metallurgical characteristics in terms of recovery under the proposed heap leaching for BKM will be established as a result of the testing.
o Among the assay results reported today are:
 A 115.5m wide intersection at an average grade of 1.01% copper from a depth of 2m in hole BKM32230-01 which terminated in mineralisation grading 2.56% copper and included higher grade sections, for example 13m averaging 1.81% copper and 17m averaging 1.24% copper;
 An intersection of 24.3m averaging 0.82% copper from a depth of 1.7m in hole BKM32425-02 which included 9m averaging 1.42% copper from 9m; and
 An intersection of 41.5m averaging 0.74% copper from a depth of 25m in hole BKM32485-01 which included 9.5m averaging 1.84% copper from a depth of 46m.
 Initial results from the testing are expected in early December with further results from the longer duration tests expected in early January.
Conclusion: Metallurgical results from Asiamet’s shallow copper resource at the BKM project are expected shortly and are expected to enable the company to identify the most favourable metallurgical treatment route for the proposed heap-leaching of copper and to locate the initial mining operation in a position to generate the strongest early cash-flows. We look forward to the results of the test work as it becomes available.

Bushveld Minerals (LON:BMN) 8.8p, mkt cap £70.7m – Bushveld adds value as it consolidates control over Vametco
BUY – Target price raised to 14.3p from 11p
(Bushveld Minerals now holds 59.1% of Vametco)
Click here for research note
• Bushveld Minerals is consolidating its control over Bushveld Vametco and the Vametco vanadium mine and process plant in South Africa.
• The acquisition of the remaining 55% of Bushveld Vametco which Bushveld did not own is value accretive on our modelling and raises Bushveld’s effective stake in Vametco to 59.1% from 26.6%.
• We are upgrading our target price to 14.3p from 11p based on Bushveld’s increased share of the cash flow from Vametco..
• Bushveld Minerals are to acquire a further 55% of Bushveld Vametco raising its stake to an effective 59.1% of the Vametco vanadium mine and process plant.
• The deal is being funded $4.5m in cash with the remainder being paid for on the issuance of new shares. There are also two deferred payments of US$600,000 and a further payment to be calculated by reference to the EBITDA of Vametco which on our modelling costs another US$9.61 in 2020.
• $6.6m worth of new shares are being issued raising the number of shares to around 863m.  The deal appears highly value accretive as we value Vametco more highly than the indicated acquisition price on our vanadium assumptions.
• Vametco produces around 3.5-4% of the world’s vanadium with global demand growth set to take off on the application of new regulations in China causing steel producers to now add regulatory quantities of vanadium to rebar and other types of structural steel.
• Vanadium production is also being curtailed in China where a ban on the processing of slag material is restricting the production of vanadium and other metals from this source as part of the drive to improve air quality standards.
• Bushveld Vametco managed to repay the acquisition costs and associated debt within an impressive four months of the acquisition of their first 26.6% of Vametco. We hope this second deal will result in a similarly quick repayment of the debt associated with the deal.
• The team are looking to expand market share to >10% of global vanadium supply over the next 3-5 years in a move which could add significantly to production expanding nameplate capacity to 5,000tpa of FeV from 3,000 tpa currently.
Conclusion:  We are excited to see vanadium prices take off but cautious in our revised valuation. We see Bushveld as offering unusually good value for investors in its cash flow generation and upside cash flow potential.  Our revised earnings table is for 100% of the Vametco vanadium operations of which Bushveld now has an effective stake 59.1%. The ongoing rise in vanadium prices should have a substantial impact on Vametco’s profit through the fourth quarter as indicated in our revised numbers.
Vametco plant assuming 100%     2017 2018 2019 2020 2021
Price V2O5 $/lb  6.40  7.37  6.01  6.01  6.01
Vanadium flake price US$/kg  30.80  33.00  27.50  27.50  27.50
Vanadium sales kg  2,750  3,390  3,390  4,823  4,823
Sales US$m  80.46  106.28  88.57  125.99  125.99
Operating costs US$m  62.02  72.79  69.39  96.08  96.08
Operating costs US$/kg 22.55 21.47 20.47 19.92 19.92
Operating profit US$m  18.44  33.49  19.18  29.91  29.91
Pre-tax profit US$m  18.20  33.02  17.76  27.60  27.73
tax US$m  5.19  9.41  5.06  7.87  7.90
Post-tax profit US$m  13.01  23.61  12.70  19.74  19.83
EPS US$c/s  1.51  2.74  1.47  2.29  2.30
PE x  6.7  3.7  6.9  4.4  4.4
EV/EBITDA x  4.8  2.6  4.6  2.9  2.9
Figures based on 100% of Vametco plant. Bushveld now hold an effective 59.1% of the Vametco plant
*An SP Angel Mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

Golden Star Resources (TSE:GSC) C$1.1, Mkt Cap C$426m – Peer recognition as Mining Company of the year in Ghana.
• Golden Star Resources’ Bogoso and Prestea operations have been recognised with the local operating subsidiary, Golden Star Bogoso/Prestea Limited receiving the award as Mining Company of the Year in the industry awards judged “by a panel of industry professionals” in Ghana.
• In addition to the corporate recognition, the company’s Chief Operating Officer, Daniel Owiredu, received the inaugural Mining Personality of the Year award while the company also received awards for its breast cancer awareness programme in the Best Performer in Social Investment category and the award for Best Graduate Research was bestowed on the Process Manager from the Prestea mine, Ahmed Salim Adam who was .
• “A student of the Golden Star School in Bogoso village, Winifred Korankye Amoah, was also awarded first prize in the essay-writing competition, which was open to school children across Ghana.”
• Commenting on the company’s success in the awards and highlighting the individual and corporate achievements, Golden Star’s Chief Executive, Sam Coetzer, pointed out the underlying teamwork saying “It is only through working together that we are able to win these awards and more importantly, deliver long term, sustainable benefits for all our stakeholders”.
Conclusion: As in other industries, peer group recognition by other professionals in the mining industry puts a spotlight on the achievements of the entire operating team; we congratulate the Golden Star team and the recipients of the individual awards on their achievements.

Kibo Mining (LON:KIBO) 4.6 pence, Mkt Cap £18.3m –Acquisition of an advanced coal to power project in Botswana
• Kibo Mining reports that it has concluded an agreement to acquire 85% of the Mabesekwa Coal Independent Power Project from Sechaba Natural Resources (a subsidiary of Shumba Energy), for 153.7m shares.
• The project, which builds on the expertise Kibo Mining has developed on its 250-350MW Mbeya Coal to Power project in Tanzania, is located approximately 50km southeast of Francistown, currently has an overall measured/indicated/inferred resource of 777m tonnes defined under the South African SAMREC code.
• “The power plant fuel source is envisaged to be drawn from the MCIPP Resource.  As earlier stated, the Project will consist of a 300Mt subset of this current 777Mt coal Mineral Resource, with the precise subset comprising the MCIPP Resource to be defined during the detailed due diligence”.
• At this stage, it does not appear that the scale of the power generation plant has been disclosed, however, “Certain aspects of the Projects have been advanced previously by Sechaba, including water and land use permits and environmental certification which are now in place.”
o At Kibo Mining’s current share price, the transaction is valued at approximately £7.1m. Among the conditions of the transaction are Sechaba’s right to a US$0.50 per tonne royalty “from …coal sold from the area covered by the MCIPP Resource; and •    US 0.225 cents from revenue received per kilowatt hour produced and sold by any power plant owned by NewCo in Botswana or using coal procured from the area covered by the MCIPP Resource”.
o Kibo Mining is also to “use reasonable commercial endeavours … to free-carry Sechaba for the reasonable funding requirements of the MCIPP until financial close of a project financing, after which Sechaba may be diluted”.
Conclusion: The acquisition of the Mabesekwa project has clear synergies with the company’s flagship Mbeya coal to power project in Tanzania and the expertise gained at Mbeya should benefit Mabesekwa. Despite these obvious benefits, we believe that Kibo Mining will need to make sure that its focus on delivering the  Mbeya project is not impaired by its efforts in Botswana.

SolGold* (LON:SOLG) 27p, Mkt Cap £409m – SolGold raises £45m
• SolGold has raised £45m by way of a fully underwritten placement.
• The company is issuing 180,000,000 new shares which will trade on the London Stock Exchange Standard List.
• The placing price is 25 pence per share.
*SP Angel act as UK broker to SolGold and have acted as placing agent in relation to the SolGold issue

Vast Resources (LON:VAST) 0.5p, Mkt Cap £26.1m – Carlibaba drilling update
• The Company has released further results from its 2,150m drilling programme at the Carlibaba target, which is under consideration as a second open pit mine and the site of a new processing plant at the company’s Manaila polymetallic mine in Romania.
• The results, in combination with the existing database of historic drilling and sampling data, will be used to update the geological model and produce a revised JORC compliant resource estimate during H1 2018.
• The results of the 18 surface, cored, drill holes are reported to validate the existing data on Carlibaba, particularly “on the portion of the mineral resource which was previously identified as having possible open pit mining potential.”
• “The drilling programme appears to support the development of a second open pit operation at Manaila with the construction of a metallurgical processing facility on site, thereby significantly reducing the cost of ore transport incurred at the current operation.”
• Vast Resources’ Chief Executive, Roy Pitchford, commented that “The development of these twin objectives, which we are looking to fund through off-take debt finance, is expected to increase throughput volumes at Manaila considerably and also materially reduce operating costs - which should significantly enhance profitability in Romania moving forwards."
• Among the drilling results highlighted in today’s announcement are:
o A 12.4m long intersection averaging 0.44g/t gold, 14.6g/t silver, 1.11% copper, 0.18% lead and 0.43% zinc from a depth of 114.6m in hole F005;
o A 4.5m long intersection averaging 0.18g/t gold, 9.98g/t silver, 1.17% copper, 0.08% lead and 0.21% zinc from a depth of 109.2m in hole F004; and
o Three separate mineralised intersections encountered in hole F013; 1.5m averaging 0.13g/t gold, 18.3g/t silver, 0.43% copper, 0.45% lead and 14.34% zinc from a depth of 61.3m and  2.7m averaging 0.33g/t gold, 62.4g/t silver, 0.94% copper, 1.18% lead and 11.99% zinc from a depth of 92m and 4.5m averaging 0.26g/t gold, 16.2g/t silver, 0.39% copper, 0.27% lead and 4.37% zinc from a depth of 100.5m.
Conclusion: The drilling at Carlibaba will be used to develop an updated mineral resource estimate which should help the company to make a decision on whether to proceed with plans to develop a second open pit mine and a new processing plant within its Manaila licence in order to reduce operating costs. We look forward to the new resource estimate during H1 2018.

Thu, 30 Nov 2017 11:43:00 +0000
Bushveld adds value as it consolidates control over Vametco Bushveld Minerals (LON:BMN) 8.8p, mkt cap £70.7m – Bushveld adds value as it consolidates control over Vametco
BUY – Target price raised to 14.3p from 11p
(Bushveld Minerals now holds 59.1% of Vametco)

• Bushveld Minerals is consolidating its control over Bushveld Vametco and the Vametco vanadium mine and process plant in South Africa.
• The acquisition of the remaining 55% of Bushveld Vametco which Bushveld did not own is value accretive on our modelling and raises Bushveld’s effective stake in Vametco to 59.1% from 26.6%.
• We are upgrading our target price to 14.3p from 11p based on Bushveld’s increased share of the cash flow from Vametco..
• Bushveld Minerals are to acquire a further 55% of Bushveld Vametco raising its stake to an effective 59.1% of the Vametco vanadium mine and process plant.
• The deal is being funded $4.5m in cash with the remainder being paid for on the issuance of new shares. There are also two deferred payments of US$600,000 and a further payment to be calculated by reference to the EBITDA of Vametco which on our modelling costs another US$9.61 in 2020.
• $6.6m worth of new shares are being issued raising the number of shares to around 863m.  The deal appears highly value accretive as we value Vametco more highly than the indicated acquisition price on our vanadium assumptions.
• Vametco produces around 3.5-4% of the world’s vanadium with global demand growth set to take off on the application of new regulations in China causing steel producers to now add regulatory quantities of vanadium to rebar and other types of structural steel.
• Vanadium production is also being curtailed in China where a ban on the processing of slag material is restricting the production of vanadium and other metals from this source as part of the drive to improve air quality standards.
• Bushveld Vametco managed to repay the acquisition costs and associated debt within an impressive four months of the acquisition of their first 26.6% of Vametco. We hope this second deal will result in a similarly quick repayment of the debt associated with the deal.
• The team are looking to expand market share to >10% of global vanadium supply over the next 3-5 years in a move which could add significantly to production expanding nameplate capacity to 5,000tpa of FeV from 3,000 tpa currently.
Conclusion:  We are excited to see vanadium prices take off but cautious in our revised valuation. We see Bushveld as offering unusually good value for investors in its cash flow generation and upside cash flow potential.  Our revised earnings table is for 100% of the Vametco vanadium operations of which Bushveld now has an effective stake 59.1%. The ongoing rise in vanadium prices should have a substantial impact on Vametco’s profit through the fourth quarter as indicated in our revised numbers.

Thu, 30 Nov 2017 11:42:00 +0000
Today's Market View - Ormonde Mining, Ortac Resources, SolGold and others Mkango Resources* (LON:MKA) – Securing nickel/cobalt exploration licence in Malawi
Ormonde Mining* (LON:ORM) – Progress report from Barruecopardo
Ortac Resources* (LON:OTC) – CASA Mining
SolGold* (LON:SOLG) – New discoveries in Southern Ecuador highlight move into extensive new exploration
Tertiary Minerals* (LON:TYM) – Securing fluorspar offtake agreements
Tri-Star Resources* (LON:TSTR) – US$6m mezzanine loan to SPMP

China’s focus on rental housing weighs on metal prices
• Plans to expand rental market coupled with oversupply of empty housing in China threaten to reduce demand for materials used in houses such as steel, copper and nickel
• Analysts say reform could cannibalise about 3bn square meters of future housing demand and will crimp demand for iron ore by 4.3% and copper by 2.1%                             

Dow Jones Industrials  +1.09% at 23,837
Nikkei 225   +0.49% at 22,597
HK Hang Seng   -0.19% at 29,624
Shanghai Composite    +0.13% at 3,338
FTSE 350 Mining   -0.46% at 16,995
AIM Basic Resources   -0.12% at 2,664

US – Consumer confidence unexpectedly climbed to the highest level in 17 years with both expectations and present conditions measures posting strong performance this month.
• A greater share of respondents suggested they are planning to increase purchases of appliances and big-ticket items, as well as more intentions of taking vacations, signalling strong confidence in future incomes.
• Positive consumer sentiment bodes well for the largest economic growth driving segment amid the start of the holidays shopping season.
• US stocks finished higher despite the latest ballistic missile tests news from North Korea with markets focusing on positive consumer confidence numbers and improving prospects for tax the Senate budget committee advanced the Republican tax bill.
• CF Consumer Confidence: 129.5 v 126.2 in October and 124.0 forecast.
• CF Present Situation: 153.9, highest since Jun/01, v 152.0 in October.
• CF Expectations: 113.3, highest since Sep/00, v 109.0 in October.

Japan – Retail sales disappointed in October following poor Q3 numbers amid negative labour real cash earnings through H2/17.
• Weak monthly numbers as well as Q3 data were blamed on bad weather as typhoons and heavy rain kept people away from shops.

Germany – First inflation readings coming from Saxony pointed to an acceleration in inflation in November while broader data for remaining regions will be available the afternoon.
• Inflation disappointed in October slowing to 1.6% from 1.8% recorded in September with estimates pointing to a slight recovery in consumer prices this month (1.7%).

UK – Britain is expected to up their proposal for the EU divorce bill to €100bn aiming to break the deadlock in negotiations and in return for a good trade agreement.
• Although, it is argued when receipts and other deductions are taken into account the amount is expected to come down to €40-50bn, FT reports.
• That marks a revision on the PM’s original offer voiced in Florence in September for €20bn in net payment.
• The pound is up 0.6% against the US$ on the back of the news.
• Consumers are reported to have continued adding consumer debt in October with the BoE asking lenders to set aside another £6bn to their capital covering macroeconomic risks.
• Consumer credit climbed £1.5bn last month, in line with the average of the past six months despite prospects for higher borrowing costs, the BoE said today.
• Other “material” risks highlighted by the central bank as a potential risk source included epxnasion of consumer credit, global debt levels, asset valuations and misconduct costs.

Spain – Inflation growth remained level in November despite expectations for an expected pick up on the back of higher oil prices.
CPI (%yoy, EU-harmonised): 1.7 v 1.7 in October and 1.9 forecast.

North Korea – The government is reported to have successfully carried a test of a new type of intercontinental ballistic missile today.
• The missile reached the highest altitude ever recorded by a North Korean missile travelling 950km before landing in waters off the coast of Japan.
• Kim Jong Un said the government completed its nuclear programme having tested the missile that put the US in range.

US$1.1868/eur vs 1.1847/eur yesterday.   Yen 111.42/$ vs 111.38/$.  SAr 13.635/$ vs 13.945/$.  $1.342/gbp vs $1.332/gbp
0.759/aud vs 0.761/aud.    CNY 6.598/$ vs 6.606/$.

Commodity News
Precious metals:         
Gold US$1,296/oz vs US$1,291/oz last week
• International sanctions imposed over North Korea’s nuclear weapons program were defied as the state successfully completed tests of a new type of intercontinental ballistic missile that has potential to strike the whole of continental United States. The Hwasong-15 missile, described as its “most powerful”, landed in Japanese waters after testing new heights for missile launches to reach an altitude of 4,475km.
• The upgraded missile launch was accompanied with the announcement that “as a responsible nuclear power and a peace-loving state (North Korea) would make every possible effort to serve the noble purpose of defending peace and stability of the world”, adding that the weapons represent a defense against the “US imperialists’ nuclear blackmail policy”.
• US Secretary General Antonio Guterres said the launch has shown “complete disregard for the united view of the international community”, while Japanese Prime Minister Shinzo Abe called reckless behavior an intolerable, violent act.
• Gold price increased as market participants reacted with caution with growing tensions favouring the safe-haven asset as investors focus on the US response to the test. However the traditional non-correlated asset has been heavily replaced by investors choosing significant gains within the cryptocurrency space, with bitcoin alone breaking through $10,000 with the total value surpassing $167 billion. With a fixed number of coins and ever-increasing scarcity as mining difficulty rises, the alternative virtual currency hopes to provide a substitute globalized storage of value during riskier financial periods.
• Geopolitical tensions hamper a strengthening dollar as US consumer confidence surges to a near 17-year high in November, boosted by a robust labour market and rising house prices which are expected to underpin consumer spending and boost US economic growth.
• Confidence in Trump’s tax cut bill grew as US Senate Republicans pushed forward with an abrupt, partisan committee vote that sets up a full vote by the Senate as soon as Thursday.
   Gold ETFs 69.4moz vs US$69.5moz last week
Platinum US$952/oz vs US$938/oz last week
Palladium US$1,028/oz vs US$1,011/oz last week
Silver US$16.90/oz vs US$17.14/oz last week
Base metals:   
Copper US$ 6,805/t vs US$6,995/t last week - US environmentalists file lawsuit to overturn approval of Canadian copper mine
• Groups have filed lawsuit against the $1.5bn Rosemont project in southern Arizona, expected to be the third largest copper mine in the United States accounting for 10% of production
• Lawsuit alleges that the mine would violate nearly a dozen state and federal laws, threaten water resources and destroy forest land
Aluminium US$ 2,092/t vs US$2,120/t last week
• Aluminium prices faltered as Goldman forecast the global balance of the metal to move into surpluses over the next 2-3 years. The updated balance is expected as new capacities are ramping up in less-polluted regions of China, which will only support suspended production from the winter output cuts. The gradual restarting of smelters outside of China has caused the bank to see a surplus of 526,000 tonnes material in 2019, increasing to 936,000 tonnes by 2020. Near-term prices are expected to receive support on continuing winter supply restrictions, but changes in the seasonal supply will lower average forecasts to $1,950/t and $1,900/t (2019 & 2020).
Nickel US$ 11,365/t vs US$12,030/t last week
Zinc US$ 3,147/t vs US$3,242/t last week
Lead US$ 2,439/t vs US$2,477/t last week
Tin US$ 19,485/t vs US$19,450/t last week
Oil US$63.3/bbl vs US$63.6/bbl last week
• OPEC and Russia move to prolong the oil supply cuts for the whole of 2018 with the caveat to review the deal in June. The option was included to allow an assessment of the market balance to avoid global market overheating.
Natural Gas US$3.182/mmbtu vs US$2.910/mmbtu last week
Uranium US$23.50/lb vs US$24.50/lb last week
Lithium –
Tesla switching on largest lithium-ion battery Friday
• System began energising on Saturday reaching a third of potential 100-megawatt charge, meeting requirements for Australian governments requirement for operation, has been providing energy grid support to South Australia 
• Battery will help support South Australia during upcoming summer season and reduce its reliance on other states for additional energy
Samsung battery can fully charge phones in just 12 minutes
• Technology made using the ‘miracle material’ graphene which can slash lithium ion battery charging time and make them safer
• Firm hopes the invention will one day help to create long life car batteries which can charge significantly faster
Samsung develops graphene ball to speed up battery charging
• Samsung Advanced Institute of Technology (SAIT) has successfully synthesised a ‘graphene ball’ that can be used to make lithium ion batteries charge five times faster and increase capacity by 45%
• Will only take 12 minutes to fully charge and can maintain temperature of 60 degrees Celsius which is required for use in electric cars
• Batteries use silica to synthesise graphene which is then used as material for anode and cathode on lithium ion batteries
Chinese battery manufacturers invest in battery recycling
• Jiangxi Ganfeng Lithium and GEM share prices rise as they invest in battery recycling facilities of their own as way of dealing with lithium ion battery waste, expected to be around 170,000 tonnes next year
• However, high operating costs associated with recycling means that to be economical lithium in batteries must be transformed back to lithium carbonate at maximum $7,000 a tonne
China focuses on metal recycling to deal with battery challenge
• Technology minister recently said that China will establish an extended producer responsibility regime which will make manufactures responsible for recycling
• As production and sales expected to reach 5 million by 2020 and with the average lifespan being 5 to 8 years amount of redundant batteries expected to hit 250,000 tonnes in 2020
• Raw materials such as cobalt can be reused, predicted that recycling will be main source of cobalt in the future

Iron ore 62% Fe spot (cfr Tianjin) US$66.6/t vs US$64.8/t
Chinese steel rebar 25mm US$706.1/t vs US$676.6/t
Thermal coal (1st year forward cif ARA) US$84.6/t vs US$84.3/t
Premium hard coking coal Aus fob US$202.0/t vs US$199.6/t

Tungsten APT European US$275-285/mtu vs      US$271-285/mtu last week
Cobalt LME 3m US$68250/t vs US$61750/t last week
• Major oil companies join the green energy revolution as Royal Dutch Shell announce a partnership with leading automotive companies to install super-fast charging points on European highways to accelerate the convenience and mass adoption of the electric vehicle story.
• Concerns over sourcing of socially responsible battery-raw materials is intensifying as the incorporation of cobalt within lithium-ion batteries relies on majority supply from the Democratic Republic of Congo, a country racked by political instability, legal opacity and child labour in the mines.
• Official data identifies cobalt supply from the nation to represent 54% of 123,000 tonnes global mined cobalt production, although growing unofficial artisanal production is strongly maintained by insurgent militias and relies extensively on child labour.
• The issue of ethical sourcing has been moved to the top of the LME’s agenda after complaints that one of its registered brands, produced by China’s Yantai Cash Industrial, could include metal sourced from the dark side of the DRC cobalt sector.
• Despite 48% global reserves in the DRC, concerns are causing the likes of Tesla and Apple to attempt to source material outside of the DRC, working with future producers in Canada and the United States to create their own cobalt supply chains. However, nine out of the top 10 producing assets will be located within the controversial nation by 2022.
• Further, with demand from the electric vehicle story expecting to surge and automotive companies like VW failing to secure enough units to deliver on its electrification promise, companies may remain exposed to unethical global supply.
Volkswagen struggles to reach long term cobalt supply deals
• Met with top cobalt producers last week in another failed effort to ensure long term supply deals
• Suppliers have suggested that the reason they have not secured supply is that they are looking for a fixed price – suggested that car companies are trying to shop in seller’s market which is more favourable towards producers rather than the car companies
Dispute at Congo cobalt mine heads to court and halts supply
• Attempt by Congo’s state miner Gecamines to block its 16 year partner GTL’s access to cobalt site to make way for new investor has backfired in both parties taking legal action for breach of contract
•  Court schedule means no more cobalt likely to be produced at site until at least 2020 if there isn’t a settlement, site accounts for 4% of global supply

Company News
Mkango Resources* (MKA LN) 7.25p, Mkt Cap £7.2m – Securing nickel/cobalt exploration licence in Malawi
• Mkango Resources has announced that it has been granted an exploration licence over the Chimimbe Hill nickel/cobalt area in the Mchinji district of central Malawi.
• The licence, valid for an initial three-year term, covers almost 99 square kilometres containing historically reported and previously explored  nickel and cobalt laterite deposits.
• There has been previous drilling, pitting and metallurgical testing work, dating back as far as the 1960s, which Mkango will now re-evaluate as well as a more recent, World Bank funded, airborne geophysical survey which shows a potentially significant magnetic anomaly.
• “Chimimbe Hill is a prominent northerly trending elongate feature, measuring 1200 metres by 500 metres and rising 140 metres above the surrounding plain. Located in Mchiniji district, approximately 80km west of Lilongwe, Malawi's capital city, Chimimbe Hill is underlain by a deformed and metamorphosed ultramafic body associated with high grade metamorphic rocks of the Mozambique mobile belt.”
• Commenting on the acquisition of the licence, Mkango’s President, Alexander Lemon highlighted that “Both nickel and cobalt are increasingly in demand as cathode materials for batteries in electric vehicles. This new licence, when combined with the Songwe Hill rare earths project and our collaboration with Metalysis on neodymium alloys for permanent magnets, positions Mkango as a potential future supplier of the critical raw materials used in both batteries and permanent magnet motors in electric vehicles.” We note that the recent agreement with Noble Group’s Talaxis, included provision for Mkango to act as Talaxis’s sole partner “for all activities of any sort in Malawi.”  and securing this new licence may be one of the first products of this collaboration.
Conclusion: The new licence in exploration central Malawi underlines Mkango’s local knowledge and extends the company’s activities while remaining consistent with its focus on battery and magnet raw materials.
*SP Angel acts as Nomad and Broker to Mkango Resources

Ormonde Mining* (LON:ORM) 2.1p, Mkt Cap £10m – Progress report from Barruecopardo
• Ormonde Mining reports on progress of the preliminary civil engineering work at Barruecopardo with the earthworks for the water dams recently completed, and the concrete footings for crushing and screening plant underway.
• Preliminary mining of waste from the open pit area has already started and the first of the process plant equipment has been delivered to site with continuing plant shipments expected.
• The company notes that there are now approximately 100 people deployed on site, of which 32 are from Barruecopardo and the surrounding communities.
• Plant erection and construction is expected to start in early 2018.
Conclusion: The completion of the preliminary civil engineering works at Barruecopardo ahead of the winter should ease the task of the plant construction team early in the new year. The inclusion of a significant local component in the workforce is an important part of the long term integration of the project into the area and its economy and is likely to have been welcomed both by the communities themselves as well as their civic and political leaders.
*SP Angel acts as Broker to Ormonde Mining

Ortac Resources* (LON:OTC) 2.5p, Mkt Cap £8.3m – CASA Mining
(Ortac holds 70.09% of CASA Mining which holds 71.25% of the Misisi Gold project in South Kivu in the Eastern part of the DRC. This gives Ortac an effective 49.9% stake in the Akyanga project)
• Ortac report further higher grade gold intersections from their 2,200m drill program at their Akyanga gold project in the DRC.
• Akyanga is now consolidated within Ortac following their recent deal with CASA Mining.
• The two results reported today show:
o 8.70m grading 3.90 g/t gold from a down hole depth of 98.40m (including 2.80m grading 10.62 g/t gold from 100.20m)
o 27.50m grading 2.86 g/t gold from 110.60m.
o The current round of drilling is designed to infill gaps in the current resource and could lead to an upgrading of the grade and tonnage of ore estimated within the resource model.
o A second phase of program covering a further 2,800m of drilling is now underway.
o The two drill holes were drilled in the central part of the deposit with the first designed to test the down dip extent of the mineralisation at depth and the second testing the up-dip extent of the mineralisation along strike and approximately 100m to the north of previous drilling.
o Both holes show continuing gold occurrence with the second hold highlighting some significant high grade mineralisation.
o We expect to see further interesting gold results from the Akyanga project
*SP Angel acts as nomad and broker to Ortac Resources

SolGold* (LON:SOLG) 27p, Mkt Cap £409m – New discoveries in Southern Ecuador highlight move into extensive new exploration
• SolGold report a number of new prospect discoveries in Southern Ecuador.  The prospects are all held in wholly-owned subsidiaries and are the result of extensive regional exploration programs based on information and expertise gained by the SolGold team at the Cascabel project in Central Ecuador.
• The geologists have identified outcropping porphyry style copper mineralisation Timbara and Porvenir with rocks of similar ages to that seen at the giant Fruta del Norte, Mirador and Santa Barbara deposits.
• Timbara and Porvenir are held within SolGold’s wholly-owned Green Rock Resources subsidiary
• Porvenir: rock chip samples include 1.58%, 4.27% and 1.3% copper.  This is a good start for any exploration project and warrants drilling to see if the mineralisation extends to depth from the surface discoveries.
• Timbara: rock-chips show 2.44%, 1.59%, 1.64%, 1.23%, 1.00% copper in surface sampling. While the project is still considered to be at a very early stage the rock chips indicate copper mineralisation to continue over a potential 4.5km corridor which is some 1.2km wide.
• SolGold have gathered some 77 mineral licenses into four wholly owned subsidiaries covering an a total area of 3,198sqkm.
• The team have already identified five new geochemical targets covering 2.6sqkm with rock-chip values of up to 13.86% copper.
• Samples show veins of up to 3% chalcopyrite, 2% bornite, 1% chalcocite with traces of malachite and native copper as is seen in streams in the region.
• SolGold is adding further technical personnel to its exploration teams to better evaluate its new discoveries and licenses.
• La Hueca: management report the discovery of mineralised outcrops at the new La Hueca copper project in southern Ecuador.
• The La Hueca project is held within the Cruz del Sol subsidiary which is wholly owned by SolGold.
• SolGold is on track to complete its maiden mineral resource estimate on the giant Alpala project in late December.  We expect the company may choose to announce the resource early in the new year.
Conclusion: SolGold is ramping up its exploration activity in Ecuador with new drill rigs arriving at Alpala and the Cascabel project and geological teams identifying a number of potential new copper projects in Southern Ecuador. The creation of a number of new wholly-owned subsidiaries means the new discoveries can be simply separated from the parent company should an offer be made for the Alpala project at Cascabel.  We expect to see news on the new resource calculation at Alpala early on in the new year.
*SP Angel act as UK broker to SolGold

Tertiary Minerals* (LON:TYM) 0.7p, Mkt Cap £2.2m – Securing fluorspar offtake agreements
• Tertiary Minerals reports that it has secured a Memorandum of Understanding with a “leading global commodities trading group, Possehl Erzkontor GmbH” for them to “purchase up to a minimum of 70% of commercial grade acid-spar to be produced at Tertiary’s three fluorspar projects.”
• Possehl,  “Founded in 1915 with headquarters in Lubeck” is described as “… a wholly owned subsidiary of CREMER, a global specialist for trade, processing and transport of agricultural, raw, basic materials and oleochemical products, including fluorspar.”
• The agreement allows for Possehl to provide funds “to Tertiary to assist the Company in meeting its working capital needs and/or its capital investment needs for the development of its fluorspar projects.”
• Possehl will also “provide invaluable commercial and logistical support and advice to Tertiary during the development of its fluorspar projects as the Company works towards its production goals and the ultimate signing of the Offtake Agreement”.
• “The MoU will be effective from the date of execution to a date which is one year from the commencement of first commercial production at any of the Company’s three fluorspar projects.”
Conclusion: The MoU and offtake agreement and its link to financing is an important milestone for Tertiary as it provides a route to market for potential future fluorspar production as well as access to finance to help put the projects into production.
*SP Angel act as Nomad and broker to Tertiary Minerals

Tri-Star Resources* (LON:TSTR) 0.18p, mkt cap £25.5m – US$6m mezzanine loan to SPMP
• TriStar Resources reports a US$6m mezzanine loan to its 40% owned Strategic & Precious Metals Processing (SPMP) which is building the new antimony roaster in Oman.
• The funds, which are subordinated to the existing $40m senior debt facility, are for a period of five years and attract an interest rate of 15%pa.
• “The investment in SPMP has been financed through the issuance of short-dated secured loan notes (“Loan Notes”) to Odey European Inc and OEI MAC Inc”..
• Commenting on the financing, Crispin Odey of Odey Asset Management, which owns a 53.8% interest in TriStar Resources, said, "We are delighted to continue to support the OAR project through this interim loan structure with Tri-Star.  We have built up an excellent relationship with our partners in Oman and Dubai and continue to see positive signs for this business as we complete the project and bed down agreements on the feedstock and offtake side."
• The company has also announced a redeployment of its senior management with the current CEO of SPMP, Emin Eyi, standing down from that role in favour of Jason Peers, who represents the 20% owner of SPMP, Dubai Natural Resources Limited. Emin Eyi, however, continues as a director and non-executive deputy Chairman of TriStar Resources and hence SPMP retains his services and expertise as an advisor.
• The company has also announced that, with the OAR project remaining on budget and on schedule to commence the cold commissioning in January, it has received “Commitments to supply concentrates … from a number of suppliers to enable the facility to ramp-up to design capacity by the end of 2018.”
Conclusion: The additional financial support of Odey Asset Management underpins the completion of the OAR project, which is reported to continue on track for cold commissioning in January ahead of targeted full production by the end of 2018. The securing of a concentrate supply to feed the facility represents an important milestone and we interpret the management changes as a redeployment of the available skills as the needs of the project evolve to a more operational requirement.
*SP Angel acts as Nomad and Broker to Tri-Star Resources

Wed, 29 Nov 2017 10:48:00 +0000
Today's Oil and Gas Update - Ascent Resources, Touchstone Exploration and Frontera Resources • Ascent Resources (LON:AST– 1.65p) – Common Sense Reigns: Today's news that the latest appeal in relation to the IPPC Permit has been dismissed is positive news for the Company, as it now allows serious progress to be made in the monetisation of Petišovci. While there is always a place for the rigorous examination of any development plans, not only in terms of physical impact on the environment, but this must be balanced against the beneficial impact that such development brings to the social and economic fabric of the wider community too. In this instance, as has been evidenced from the manner of the appeal’s dismissal, this line has been overstepped, and the courts have seen th rough the ruse of repeated appeals to block development, halting what is tantamount to an abuse of process. We believe that today’s news should rightly buoy the shares.

Touchstone Exploration (LON:TXP – 14p/C$0.23) – Moving Ahead Nicely: While there will be some that will be disappointed with today’s news, that the production growth is not accelerating, we believe that what is more important here is that management have disclosed their plans ahead of time and are being measured against those plans. To be blunt, this what a shareholder can ask of its management team, that it set goals and allows themse lves to be measured against them. If the management team aren’t setting ambitious enough targets, then those concerns should be voiced. Irrespective of that, the next 12 months should see an acceleration of the programme.

• Frontera Resources (LON:FRR– 0.72p) – Why, Why, Why?: Today's update reads positively, not just for the UD-2 well, but the entire operation in Georgia. The questions that investors should be asking is: Why? Why has it taken so long to get to this stage? Why does the one single well, over all the others, unlock the basin, and precipitating the need to design a 14km pipeline? Why has it been so expensive to get to this stage, after what is only a re-entry? Why, if the composition is being disclosed, aren't the remainder of the well results, such as flow rates, being disclosed? Why aren't management's expectations for the wider play following this well being disclosed as a 14km pipeline is being planned? Why isn't the basis for the design of that 14km pipeline, such as flow rates, additional infrastructure (separators and pump stations, etc. – if required) being disclosed? We believe that after all the shareholder money that has been squandered getting to this point, it’s the very least the management team could do. We do not believe one well, over all of the previous work, makes such a difference so quickly. Additionally, we would urge investors and get comfortable with the makeup of the management team, especially as we are repeatedly told how complex the geology is, and set that fact against the fact that the CEO has a medical degree and whose only experience of oil and gas prior to establishing the Company was physical product movement and export. In our opinion, if the geology is as demanding as we are told, the management team should be led by a suitably trained and experienced individual.

Tue, 28 Nov 2017 09:10:00 +0000
Today's Oil and Gas Update - Curzon Energy and Tower Resources • Curzon Energy* (LON:CZN– 8p) – $32.5mm (37p) – On Track: Today’s news from the Company that the rig and equipment for the appraisal programme have been secured fires the starting gun; if the programme is successful the Company will be able to seamlessly transition to development. One of the most significant risks with traditional CBM wells is that low gas flows are observed until such times as the coal measures have been principally dewatered. At Coos Bay, however, sufficient gas flows to produce in to the gas grid are produced upon the start of the dewatering programme, thereby significantly derisking the project. While there is still significant testing to complete, that management has secured the necessary equipment to undertake the programme and is on track to meet its deadlines, bodes well for the Company's owners. We are reiterating or valuation.

• Tower Resources*** (LON:TRP– 0.83p) – Tullow Underlines Namibian Wisdom: Today’s news from industry sources that Tullow is developing a Namibian exploration programme should serve to remind all observers of the potential size of the prize in the country's offshore. While the Namibian programme is a significantly reduced focus for Tower, it does at least provide some comfort that the acreage continues to have merit. What is more important for the Company is that anything and everything that can be done to get the Company in to a position where it can resume the exploration programme in Namibia under its own resources, which will only be achieved by generating cash flow. This is where it's Cameroonian acreage is critical and the immediate forward programme essential. The Company must now be savage in its focus on costs while progressing the apprais al programme to its go/no go stage, at which point the Company’s forward objectives must be clear and concise. Given the available cash resources this will be a fine line, but with Dave Thomas assuming an NED role, the chances that the Company will complete the programme quickly and within budget have been provided a significant boost.

Mon, 27 Nov 2017 09:12:00 +0000
Today's Market View - IronRidge Resources, Mkango Resources, SolGold IronRidge Resources (LON:IRR) – Update on Australian exploration
Mkango Resources* (LON:MKA) – Exercise of Warrants
SolGold* (LON:SOLG) – Progress report on Cascabel exploration

Royalties - Brazil’s hike in Iron ore and Gold Royalties could hurt high cost mines
• Congress passed bill that would increase royalty rates on iron ore by 75% and gold by 50% - if becomes law would make iron ore producers pay a 3.5% royalty instead of current 2% and would be calculated off gross revenue not net revenue
Vale, world’s largest iron ore miner said that the new rate likely to compromise ability to maintain high cost mines and ability to remain profitable 

Black Friday today – when people can buy hugely inflated products at discounted prices
• The good thing about Black Friday is that retailers are able to destock unwanted goods ahead of Christmas so they can restock with more unwanted goods in preparation for the new year sales.
• In essence, this is what drives the global economy. Just remember the happiest peoples in the world do appear to live in some of the richer countries according to Time Magazine.  So perhaps access to consumer goods does, after all, make for happy people.

Dow Jones Industrials  -0.27% at 23,526
Nikkei 225   +0.12% at 22,551
HK Hang Seng   +0.51% at 29,859
Shanghai Composite    +0.06% at 3,354
FTSE 350 Mining   +0.03% at 17,513
AIM Basic Resources   -0.56% at 2,664

US – Markets to re-open today following Thanksgiving.
• Markit is due to release November PMIs with estimates for a marginal acceleration in an already strong growth rate.

Germany – Merkel CDU/CSU and Social Democrats may form grand coalition again after the Free Democratic Party withdrew from coalition talks last week.
• Although, it is yet unclear if the SPD would rather offer support to CDU/CSU for a minority government led by the veteran chancellor.
• The SPD said they are open to negotiations which may see a solution to a current political deadlock in Germany which could potentially lead to new general elections.
• The euro climbed 0.15% against the US$ on the news as well as positive business confidence data released earlier this morning.
• Ifo Expectations: 111.0 v 109.2 in October and 108.8 forecast.
• Ifo Current Assessment: 124.4 v 124.8 in October and 125.0 forecast.

UK – Consumer confidence declined to the lowest level since the aftermath of the Brexit vote, according to YouGov and the Centre for Economics and Business Research data.
• Household financial situation gauge over the last 30 days as well as outlook deteriorated through the month amid a BoE decision to raise rates.
• “Households are understandably worried… the first interest-rate hike in over a decade triggered fears that higher borrowing costs will compound the inflation-induced squeeze on housedhold incomes,” the CEBR commented on numbers.

South Africa – The central bank left rates unchanged at 6.75% in November, in line with market estimates and ahead of sovereign bonds’ rating revision by Moody’s and S&P.
• The bank cut rates for the first time in five years in July to support the economy which fell into a recession for a second time in nearly a decade in Q1/17.
• On Thursday, Fitch left credit rating of both domestic and foreign currency debt unchanged at BB+, one notch below the investment grade, with a stable outlook.
• Moody’s and S&P are due to release their reviews today with a possible downgrade from current Baa3 (investment grade) and BB+ (non-investment) potentially leading to a sell off in bonds and the rand.
• While inflation has been within the 3-6% since the beginning of the year, a depreciation in the rand may see a change in dynamics.
• The MPC now projects more tightening in the monetary policy with three rate hikes guided through 2019. Compared with one increase previously.

US$1.1847/eur vs 1.1837/eur yesterday.           Yen 111.38/$ vs 111.20/$.         SAr 13.945/$ vs 13.866/$.            $1.332/gbp vs $1.331/gbp
            0.761/aud vs 0.762/aud.            CNY 6.606/$ vs 6.584/$.

Commodity News
Chilean mining sector to shrug off negative reserve law
• In spite of the upcoming Chilean presidential winning election, primary candidates have vowed to overturn the redundant Copper Reserve Law (Ley N° 13.196) which forces Codelco to provide 10% of annual profits from export sales to the country’s armed forces. “This tax affects Codelco’s competitiveness and the availability of resources for financing its operations and strategic investments” commented candidate Alejandro Guillier, with 2016 royalty totaling $900 million.

Precious metals:         
Gold US$1,291/oz vs US$1,290/oz yesterday
• Gold remained steady on falling dollar, as the index retreats for its third weekly drop. Minutes released Wednesday indicate Federal officials meeting earlier this month saw an interest-rate increase in the near term even as tepid inflation drove divisions over the frequency and rate rise.
• Investors are cautious on the impact of the scheduled December rate hike on the inflation outlook, with many fed policymakers emphasising the need to look at upcoming economic data before deciding the timing of future rate rises.
• Fed cautious surrounding inflation could support longer periods of low interest rates, undermining dollar strength and provide a “solid platform for gold investment”, according to GFMS consulting analyst.
   Gold ETFs 69.5moz vs US$69.5moz yesterday
Platinum US$938/oz vs US$934/oz yesterday
Palladium US$1,011/oz vs US$1,003/oz yesterday
Silver US$17.14/oz vs US$17.09/oz yesterday
Base metals:   
Copper US$ 6,995/t vs US$6,917/t yesterday
• BHP Billiton’s decision to remove 120 people from its workforce across Chile have been met with immediate union striking as labour relations worsen. The world’s biggest copper mine, Escondida, is no stranger to tensions with the union, with the longest 44-day strike happening earlier this year. The removal of 3% of the workforce falls under BHP’s rationalization plan, although the union sees the cutbacks as retaliation for the protracted and ultimately unsuccessful wage negotiation at the beginning of 2017. “This decision, lacking real and legitimate reasons, is adopted by the company in a post-negotiation scenario and a little over seven months ahead of starting a new negotiation, which allows [one] to attribute to it a character of retaliation and intimidation towards the workers”, comments from the union.
• While the union said operations were halted by the strike, Escondida claim digging and processing continued at a reduced rate, leading to supply concerns from a mine which typically provides 5% of global copper production.
• As prices for the metal rise to near three-year highs, so too do payment expectations for workers across global operations. Strikes by Southern Copper Corp. in Peru only highlight the desire by unions to negotiate more competitive rates.
Aluminium US$ 2,120/t vs US$2,102/t yesterday
Nickel US$ 12,030/t vs US$11,685/t yesterday
Zinc US$ 3,242/t vs US$3,214/t yesterday
Lead US$ 2,477/t vs US$2,430/t yesterday
Tin US$ 19,450/t vs US$19,375/t yesterday
Oil US$63.6/bbl vs US$62.9/bbl yesterday
Natural Gas US$2.910/mmbtu vs US$2.952/mmbtu yesterday
Uranium US$24.50/lb vs US$24.50/lb yesterday
Lithium – Lithium - China’s EV industry increasingly looking for lithium, cobalt and nickel
• Prices of battery-grade lithium has made the economics of production in Australian hard rock spodumene sufficiently attractive to attract new investment from China despite high local operating costs
• Great wall motors, a Chinese car manufacturer, has bought a stake in Pilbara Minerals and also agreed to take large stake in Altura new mine with much of the production earmarked for China
Tesla rises to the challenge to finalise the world’s largest battery
• In July this year, Tesla won the bid to construct the 129 megawatt hour lithium-ion battery for South Australia, with the special caveat from chief executive Elon Musk to install it within 100-days of signing a grid connection agreement or give it to the state for free. The wind-power dependent state had been plagued by a string of blackouts over the past 18 months following the closure of one of the market’s biggest coal-fired power plants in March. With construction completed Tesla remains on track to meet the deadline, as testing at the Neoen wind farm is set to begin to provide grid security services.
• The system falls within the state’s budget A$510m energy plan, but the final cost remains unclear.
• “While others are just talking, we are delivering our energy plan, making South Australia more self-sufficient, and providing back up power and more affordable energy for South Australians this summer”

Iron ore 62% Fe spot (cfr Tianjin) US$64.8/t vs US$64.8/t
Chinese steel rebar 25mm US$676.6/t vs US$678.9/t
Thermal coal (1st year forward cif ARA) US$84.3/t vs US$82.5/t - European Investors to fund $53 million bio-coal plant
• Baltania OÜ, a 100% owned subsidiary of Momentum Capital, announced that it has made a conditional investment decision to commission an industrial-scale bio-coal plant in Estonia
• European Union will also provide grant of about $30m, with idea of supplying clean energy to utility companies in Nordic countries and Central Europe
• Goal is to produce and process approximately 160,00 tonnes of torrefied bio-coal per annum
Premium hard coking coal Aus fob US$199.6/t vs US$197.3/t
Tungsten APT European US$271-285/mtu vs      US$275-285/mtu last week
Cobalt LME 3m US$61750/t vs US$61000/t yesterday

Company News
IronRidge Resources (LON:IRR) 30p, mkt cap £82.4p – Update on Australian exploration
• IronRidge Resources reports that it has identified high grade bauxite mineralisation in rock chip samples at its Koko target located approximately 25km NW of its 24.9mt inferred resource at Monogorilby which grades 37.5% total alumina.
• Two new bauxite targets have been located at Koko extending over strike lengths of 1.2 and 1.8km of strike and with widths of 200m and 300m respectively.
• Also in Australia, the company’s reconnaissance exploration and review of historical data on the May Queen gold prospect in Queensland has “highlighted the Bat Cave target and workings approximately 1km south-east of May Queen with historic reported peak rock chip values of 3.16g/t and 22.2g/t gold. The work appears to be at a relatively early stage of exploration resulting for “Reconnaissance field traverses … over the magnetic anomalies directly south and south-east of May Queen”.
• Further news is promised as it becomes available and the company notes that “additional untested magnetic anomalies occur directly south-east of the May Queen projects”.
Conclusion: Early stage exploration has identified additional targets for further exploration for both bauxite and gold in Australia.
*SP Angel act as Nomad and Broker to IronRidge Resources

Mkango Resources* (LON:MKA) 8.25p, Mkt Cap £8.2m – Exercise of Warrants
• Mkango reports that 3.86m warrants have been exercised leading to the inflow of approximately £242,000.
• A total of 3.445m warrants were exercised at a price of 6.6pence and an additional approximately 418,000 at a price of 3.5pence each.
Conclusion: The recent investment by Talaxis has changed the outlook for Mkango, providing cash to progress the Songwe Hill rare earth project, a route to market for production from the uture mine and seeing Mkango emerge as the preferred partner for Talaxis, and its parent, Noble Group for future rare earths projects.
*SP Angel acts as Nomad and Broker to Mkango Resources

SolGold* (LON:SOLG) 27.25p, Mkt Cap £413.2m – Progress report on Cascabel exploration
• SolGold has provided a report on progress at the Cascabel project in Ecuador where, following the arrival of two track mounted rigs with a further two having arrived in country, the drill fleet is increasing to a total of 11 machines.
• Drilling completed to date at Alpala now exceeds 56,800m and a further 120,000m are planned for 2018.
• On the Alpala Central area, holes CSD-17-030 and its daughter hole CSD-17-030-D1 “extend the Alpala Central deposit approximately 100m southeast of Hole 28.” Hole 33, which has “intersected over 700m of visible mineralisation thus far from 791m to current depth of 1491m as drilling continues. Hole 33 extends mineralisation approximately 120m above holes 9 and 5, where the upper extents of the deposit along its western margin remain open towards the surface.”
• The detailed results at Alpala Central include:
o A 542m long intersection from a depth of 532m in hole CSD-17-030-D1 which averaged 0.37% copper and 0.22g/t gold and included a higher grade portion over 160m from a depth of 622m which averaged 0.53% copper and 0.3g/t gold.
o At Alpala East, Hole CSD-17-029-D1, “the first daughter hole off Hole 29, confirmed the presence of porphyry style Cu-Au mineralisation … returning an open-ended 348m @ 0.47% CuEq and extending mineralisation approximately 200m east of Hole 23R-D1”. The result of hole 29-D1 in detail shows:
 A 430.4m long intersection from a depth of 738m at an average grade of 0.32% copper and 0.15g/t gold.
 A higher grade section within the hole intersected 158.4m at an average grade of 0.49% copper and 0.27g/t gold from a depth of 1010m.
 Assay results are pending for hole CSD-17-029-D2 which reported “over 420m of visible copper mineralisation from 900m 1564m, extending mineralisation approximately 200m below Hole 29-D1”.
 Drilling continues at Alpala East in hole CSD-17-029-D3 which has “thus far intersected over 239mof visible mineralisation from 949m to current depth of 1188m”. The company comments that “Holes 29-D1, and 29-D2 have grown the width of the Alpala deposit by approximately 20% from 390m to 470m , at the 0.7% CuEq cut-off”.
 At Alpala Northwest, hole CSD-17-26-D3 is currently at a depth of 1588m and remains in visible mineralisation which it entered at a depth of 964m.
 Drilling is also underway at Hematite Hill and Alpala Southeast where holes 31, 31D and 32 have all intersected visible mineralisation. Hole 31-D1 infills “mineralisation between Hematite Hill and Alpala Southeast”. Hole 31 extends “mineralisation approximately 150m southeast of Hole 27”.
 At Alpala West, “Hole 34 continues at a current depth of 1170m, testing for extensions to the high-grade panel intersected in Hole 25 which returned 238m @ 1.31% CuEq.”
 To date, Solgold has drill tested 4 of the 15 targets identified so far at Cascabel and is working towards a maiden mineral resource estimate for the Alpala deposit. In the meantime “The Alpala deposit is open in multiple directions and the mineralised corridor marked for drill testing of the greater Alpala cluster occurs over a 2.2km strike length from Trivinio in the northwest to Cristal in the southeast”. The mineralised corridor is estimated to be around 700m wide.
Conclusion: As the drilling fleet expands at Casacabel ahead of the planned 120,000m campaign next year, results continue to expand the scale and extent of the mineralised bodies. We look forward to the initial resource estimate for Alpala and to news of exploration at the 11 identified targets which are so far untested by drilling.
*SP Angel act as UK broker to SolGold

Fri, 24 Nov 2017 10:23:00 +0000
Today's Market View - Bushveld Minerals, Altus Strategies, Georgian Mining, Gem Diamonds, IronRidge Resources and others Altus Strategies* (LON:ALS) BUY – Target price 12.2p – JOGMEC terminates MOA at Tigray-Afar
Bushveld Minerals (LON:BMN) - BUY – Target price maintained at 11p – Bushveld subsidiary, Lemur Holdings signs purchase agreement for power project in Madagascar
Georgian Mining* (LON:GEO) STRONG BUY – Drilling continues to show greater copper and gold potential at Kvemo Bolnisi
Gem Diamonds (LON:GEMD) – Another large diamond recovered at Letseng
IronRidge Resources (LON:IRR) – Field exploration restarts in Chad
Rainbow Rare Earths Ltd (LON:RBW) – Geophysics identifies exploration targets for future drilling

Glencore to capitalise on rising zinc prices
• Glencore Plc is expected to restart or ramp-up production across its zinc operations as growing market deficit will support buoyant metal prices above $3,000/t. The commodity powerhouse foresee the capacity restarting “at the right point in the cycle”, with tightening metal market in 2018 giving upside risk to prices. Since Chief Executive Officer Ivan Glasenberg suspended supply in late 2015, market fundamentals have significantly improved with zinc extending its rally into 2017 as demand improved and the deficit widened.
• Some investor concerns surrounding the outlook for 2018 have arisen around whether Glencore will restart its mine, however Australia & New Zealand Banking group analysts “expect the market to easily take up any additional supply”.
• Three-month futures trade around $3,200 a ton on the London Metal Exchange, showing a 21% increase over the past 12 months.

Copper - Copper pulls back from a four-day rally as low seasonal demand and high refinery output weakens the Chinese spot market. Chinese consumption slowed as reliance on stocks fell, with SHFE copper inventories swelling on arbitrage trades from LME warehouses. LME copper stockpiles continued to fall for the 6th day to their lowest levels since September.

Dow Jones Industrials  -0.27% at 23,526
Nikkei 225   +0.48% at 22,523
HK Hang Seng   -0.93% at 29,723
Shanghai Composite    -2.29% at 3,352
FTSE 350 Mining   -0.68% at 17,300
AIM Basic Resources   +1.08% at 2,679

US – Weak October durable goods orders numbers and Fed meeting minutes saw the US$ index losing 0.7% on Wednesday.
• Fed meeting minutes showed members’ concern with low inflation; although, participants remained convinced that tightness in the labour market should lead to acceleration in inflation rates.
• The tone of the minutes suggested the pace of tightening is unlikely to accelerate post a December hike, Bloomberg reported.
• Durable Goods Orders (%mom): -1.2 v 2.2 (revised from 2.0) in September and 0.3 forecast.
• Core Durable Goods (%mom): 0.4 v 1.1 in September and 0.5 forecast.
• Capital Goods Orders (%mom): -0.5 v 2.1 in September and 0.5 forecast.

China – Equities post the worst daily performance in 17 months amid a selloff in the bonds market.
• The CSI 300 Index was down 3% as yields on sovereign and top-rated corporate debt climbed to the highest level in three years.
• The yield on 10-year sovereign bonds climbed above 4% yesterday while yields on five year top rated local corporate notes were up at a three-year high of 5.3%.

Germany – Business activity boosted by surging manufacturing sector in November, according to the latest Markit PMI data.
• Economic growth picked up with growth in new orders (overseas, in particular) posting the strongest increase in over six-an-a-half years.
• Employment gains followed robust economic conditions climbing at one of the fastest rates in the 20-year history.
• Manufacturing posted to strongest increase in production volumes since Apr/11 while services sector climbed at a slightly faster rate than in October.
• Higher input costs have been passed on to consumers with the report pointing to inflation accelerating to the fastest reading in years.
• “The German economy is going great guns, with manufacturing enjoying one of the best growth spurts seen over the past two decades… businesses are inundated with new orders, including sharp growth in manufacturing export sales, which is powering a strong and sustained spell of employment growth,” Markit said in the report.
• Markit Manufacturing PMI: 62.5 v 60.6 in October and 60.4 forecast.
• Markit Services PMI: 54.9 v 54.7 in October and 55.0 forecast.
• Markit Composite PMI: 57.6 v 56.6 in October and 56.7 forecast.

UK – Productivity growth rate has been almost halved over the next five years compared to previous estimates prepared in March.
• Weaker productivity is expected to weigh on growth forecasts with the OBR estimating the economy to expand 1.4% next year, down from 1.6% forecast previously.
• While borrowing forecasts have been reduced for 2017, the level is set to increase through 2019-21 amid estimates for a weaker economic growth.
• The pound finished higher against the US$ yesterday largely driven by a weakness in the dollar as Fed minutes highlighted officials’ concern over soft inflation.
• The second GDP reading showed growth of 0.4%qoq/1.5%yoy has been mostly driven by consumers with business investments growth rates falling and a negative contribution from trade.

France – Business confidence at the highest in nearly 10 years in November with respondents ranking current conditions on par to pre-crisis levels.
• The Insee business climate index climbed two points to 111 this month, well above the long-term average of 100.
• Markit production indices have also came in strong  with business executives reporting overall confidence at a six-and-a-half year high.
• Stronger output came amid a further increase in new orders extending gains in employment to 13 months with more jobs recorded in both the services and manufacturing sectors.
• Positive demand and output numbers saw further increases in input costs as well as final product prices.
• “Taken together, the latest numbers suggest the night is still young with regard to the French private sector’s economic recovery,” Markit commented on numbers.
• Markit Manufacturing PMI: 57.5 v 56.1 in October and 55.9 forecast.
• Markit Services PMI: 60.2 v 57.3 in October and 57.0 forecast.
• Markit Composite PMI: 60.1 v 57.4 in October and 57.2 forecast.

US$1.1837/eur vs 1.1765/eur yesterday.   Yen 111.20/$ vs 112.04/$.  SAr 13.866/$ vs 13.898/$.  $1.331/gbp vs $1.325/gbp
0.762/aud vs 0.757/aud.   CNY 6.584/$ vs 6.617/$.

Commodity News
Data falsifying scandal unveils new culprit
• The latest Japanese manufacturer involved in the series of quality assurance scandals shows a Mitsubishi Materials Corp. unit falsified product data for years according to Nikkei financial daily reporting. Despite discovering no immediate safety problems, Mitsubishi Cable Industries have falsified data on its O-rings, a sealing product supplied “to the critical areas of aircraft and aerospace and nuclear use”.
• The news follows an investigation launched on the back of the scandal which rocked Kobe Steel, which has shaken up global supply chains and forced global automakers, aircraft manufacturers and other companies to check on the safety or performance of their products.

Precious metals:         
Gold US$1,290/oz vs US$1,283/oz yesterday
• The dollar index fell to its lowest level in more than a month at 93.21 as minutes from the US Federal Reserve meeting highlighted concerns over persistent low inflation. According the ANZ Research, “Investors pushed aside signs that a [US interest] rate hike is imminent in the short term; instead viewing comments about low inflation as reducing the number of anticipated rate hikes in 2018”. The minutes also showed officials were reluctant to vote for additional rate increases until confidence in rising inflation was sustained, with the near-term target range depending on positive upcoming economic data.
• Uncertainty was reflected in Fed Chair Janet Yellen who offered a prediction that US inflation will soon rebound, but was open to the possibility that prices could remain low for years to come.
• However, a buoyant gold price was halted with investors taking profits after gains of nearly 1% in the previous session over the policymaker concerns.
• Prominent industry bull, Rob McEwen, foresees gold at the base of a safe-haven surge with forecast prices surpassing $5,000/oz in five years. Lower-for-longer interest rates have fueled bubbles in the stock, real-estate and even art markets as investors seek higher returns, with the metal as a haven from inevitable geopolitical and financial risk.
   Gold ETFs 69.5moz vs US$69.5moz yesterday
Platinum US$934/oz vs US$936/oz yesterday
Palladium US$1,003/oz vs US$1,005/oz yesterday
Silver US$17.09/oz vs US$17.01/oz yesterday
Base metals:   
Copper US$ 6,917/t vs US$6,938/t yesterday - Chile state copper giant to get boost from election
• World’s largest copper miner, Codelco may see a boost in investment cash regardless of who wins next month’s presidential runoff in Chile as both candidates have vowed to end state run firm’s funding of the military.
• Currently dictatorship era law that transfers military 10% of export sales worth at least $866m last year.
• Will see what the Chilean Generals has to say about that!
• Copper pulls back from a four-day rally as low seasonal demand and high refinery output weakens the Chinese spot market. Chinese consumption slowed as reliance on stocks fell, with SHFE copper inventories swelling on arbitrage trades from LME warehouses. LME copper stockpiles continued to fall for the 6th day to their lowest levels since September.
Aluminium US$ 2,102/t vs US$2,099/t yesterday
Nickel US$ 11,685/t vs US$11,780/t yesterday
• Nickel prices are expected to rise, finding support from a growing supply side deficit of 54,300 tonnes in the first three quarters of 2017. The International Nickel Study Group report envisages a deficit of almost 100,000 tonnes for the full year, implying a huge shortfall in supply in the fourth quarter.
• The support for the deficit comes as Philippine President Rodrigo Duterte, leader for the world’s largest nickel supplier, maintains his ban of new open-cast mines.
Zinc US$ 3,214/t vs US$3,228/t yesterday
Lead US$ 2,430/t vs US$2,481/t yesterday
Tin US$ 19,375/t vs US$19,375/t yesterday
Oil US$62.9/bbl vs US$63.3/bbl yesterday
Natural Gas US$2.952/mmbtu vs US$3.008/mmbtu yesterday
Uranium US$24.50/lb vs US$26.00/lb yesterday
Lithium - Tesla builds world’s largest lithium ion battery in South Australia
• Construction completed with testing expected ahead of December 1st operation deadline
• Battery will bring much needed security to South Australian power grid and theoretically has enough energy to power 30,000 homes for eight hours or 60,000 for 4
• Unlike regular system loads battery will be recharged with power from nearby Hornsdal windfarm
• Given that one in every million lithium batteries seems to explode we hope this new power plant will have sufficient fire breaks installed

Iron ore 62% Fe spot (cfr Tianjin) US$64.8/t vs US$63.6/t
• Iron ore futures for delivery following the Chinese winter capacity cuts surged 19% in November as the “supply of high-quality ore in the main port of Shandong is tight, and traders are optimistic about the outlook”.
Chinese steel rebar 25mm US$678.9/t vs US$663.6/t
• Global steel manufacturing surges to record 145.3 million metric tonnes in October, building 5.9% y/y. The World Steel Association data showed that despite Chinese policy makers environmental closures, the nation was responsible for approx. half the output with 72.4 million tonnes. The green push is tightening market conditions to support steel prices, while Chinese export limitations are creating encouraging conditions for steel mills around the world.
Thermal coal (1st year forward cif ARA) US$82.5/t vs US$83.8/t
Premium hard coking coal Aus fob US$197.3/t vs US$193.7/t
Tungsten APT European US$271-285/mtu vs US$275-285/mtu last week - Bosch’s new tungsten coated brakes help reduce dust, wear and pollution
• Bosch’s iDisc's goal is to greatly reduce brake dust-related emissions which damage environment
• A tungsten-carbide coating is baked into a traditional cast iron brake disc, which can allegedly reduce brake dust by up to 90 percent compared to standard iron units
Cobalt LME 3m US$61000/t vs US$61250/t yesterday - LME probes cobalt supplies after complaints over child labour links
• Members raised concerns when exchange allowed Chinese group to trade untraceable metal in London which may have come from mines using child labour in the Democratic Republic of Congo
• Earlier this month LME sent directive to all suppliers asking to detail how they guarantee responsible sourcing of commodities- If tainted cobalt found in network of warehouses could trigger backlash against exchange

Company News
Altus Strategies* (ALS LN) 8.0p, Mkt Cap 8.6m – JOGMEC terminates MOA at Tigray-Afar
BUY – Target price 12.2p
• Japan Oil, Gas and Metals National Corporation or JOGMEC decided to end a JV with Altau Resources, a wholly owned Altus subsidiary, with regards to the 322km2 Tigray-Afar and 144km2 Negash licenses, northern Ethiopia, on 19 Dec/17.
• The agreement (MOA) with was signed in 16 Sep/14 allowed JOGMEC to acquire an initial interest to 51% in the project by funding $2.5m in expenditures through 31 Mar/16.
• Additionally, Altau had an option to either co-fund the 49% interest in the project or have JOGMEC raising interest to 70% by spending a further $7.0m by Mar/19.
• As of this date, JOGMEC spent more than $3.0m since 2014 covering three drilling programmes.
• Following the termination of the agreement, Altus retains 100% ownership of the project as well as all the data generated in the course of the MOA.
• Exploration programme has previously identified four copper-silver targets including a 13km long Slater prospect with grab samples returning grades up to 22% Cu and 102g/t Ag and 1.2km long Agamat prospect with grab sample grades up to 8.7% Cu, 99g/t Ag and 13.5g/t Au.
• While a number of drill holes showed modest grades, some selected drilling results came back with good looking close to surface intersections including 18m at 0.90% Cu from 27m at Agamat (ADD001) and 16m at 1.14% Cu from 25.1m, 13m at 1.24% Cu from 50m (SDD002) and 12m at 1.22% Cu (SDD015) at Slater.
• The team is currently reviewing technical data ahead of an exploration update due shortly.
Conclusion: The Company is planning a review of technical data assessing where next for Ethiopian licenses. As the potential for the termination of the agreement has been flagged previously, we used costs incurred basis to value Ethiopian assets assigning $3.4m to Altus’ share of licenses which leaves our NAVPS unchanged at 12.2p.
*SP Angel acts as Nomad and Broker to Altus Strategies

Bushveld Minerals (LON:BMN) 8.8p, mkt cap £70.7m – Bushveld subsidiary, Lemur Holdings signs purchase agreement for power project in Madagascar
BUY – Target price maintained at 11p
(Bushveld Minerals holds 100% of Lemur Holdings)
• Bushveld Mineral’s subsidiary Lemur Holdings has signed a power purchase agreement with the Madagascar State Power Utility.
• The agreement relates to a proposal to build a new 60MW capacity independent and integrated coal mine and power plant.
• The agreement runs for 30 years starting in 2021 and is for an initial and modest 10MW of power capacity.
• The power is forecast to help bring >US$1bn of economic benefits to the region and to assist with direct investments of >$300m over its lifetime.
• The project will add to an existing 15MW of existing power capacity in the town of Tulear, which will demand an additional 30MW of generation capacity.
• Off-take agreements are ongoing for this.
• Madagascar has total installed power capacity of just 504MW.
Conclusion: We have no value within our valuation for the Lemur Holdings subsidiary. We expect this project will add to value when there is sufficient detail available to calculate its potential net worth to Bushveld.
*An SP Angel Mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

Georgian Mining* (LON:GEO) 17.4p, Mkt Cap £19.9m – Drilling continues to show greater copper and gold potential at Kvemo Bolnisi
(Georgian’s assets in Georgia are held in a 50:50 joint venture)
• Georgian Mining report results from drilling at Kvemo Bolnisi as they progress towards defining a >50mt copper, gold resource. This target should grow on new identified targets.
• The Kvemo Bolnisi site looks like three large joined hills. Geologic activity has broken much of the rock to leave a soft and friable mineralisation with historic brecciation around which much of the mineralisation sits. The site indicates very simple, low cost, mining with little blasting required and with a virtual waste to ore ratio.
• A new discovery at Gold Zone 3 'GZ3' 150m to the west of GZ2 should add meaningfully to the resource tonnage when it is better defined.
• Previously drilling produced 144m grading 0.65g/t gold from 117m including: 1.2m at 35g/t gold from 67m, 75m at 0.46g/t from 117m and 56m at 1.03g/t from 205m
• Visual inspection shows two new holes to intersect the same mineralisation indicating an increase in strike while other data indicates the mineralisation should connect at depth
• Further work also suggests that mineralisation also extends to the south of the JORC resource which currently stands at:
o 3.154mt at 0.82% Cu & 0.14g/t gold
o 2.29Mt @ 0.85g/t gold – for the overlying gold oxide resource (metallurgical work continues ahead of heap leaching this gold material)
• JV negotiations: negotiations continue over the proposal to process the gold oxide at the JV partner’s heap leach site which is within site of the new mine.
• Resource potential:  new drilling scheduled to start next year at Tamarisi and Dambludka indicate potential to increase the targeted 50mt resource
• Sampling of adits shows grades of up to 775g/t gold in previous work
• Exponential tonnage growth potential: a different mineralisation style to the west in Gold Zone 3 suggests potential for much larger resource as seen in carbonate base metal low sulphidation epithermal deposits.
• Drilling at GZ3 already shows an intersection of around 143m grading an average 0.64g/t gold.  Two further step-out drill holes have been completed and are awaiting analysis.
• Resource update: a further update on the mineral resource is underway.
• See full press release for maps and further details:
Conclusion: It is good news to see the project continue to expand in terms of its potential copper and gold JORC resources. Less good are delays in the assaying of drill cores and in the signing of agreements to start processing Georgian Mining gold oxide material at the Madneuli heap leach. We feel reassured at the growing scale of the copper and gold resources and look forward to further updates.
*SP Angel acts as Nomad and Broker to Georgian Mining. An SP Angel mining analyst recently visited the Kvemo Bolnisi site in Georgia.

Gem Diamonds (LON:GEMD) 78p, Mkt Cap £108m – Another large diamond recovered at Letseng
• Gem Diamonds reports that its 70% owned Letseng mine in Lesotho has yielded another large diamond.
• The latest discovery is described as “a high quality 202 carat, D colour Type IIa diamond” and is the seventh stone larger than 100 carats recovered so far in 2017 and appears to be the largest stone recovered this year.
• The recovery of a 115 carat D colour Type IIa diamond was reported in September; a 126 carat stone in July; a 105 carat and 152 carat stone were reported in June; and a 114 carat diamond in April.
• The company’s website discloses that a sale of large diamonds is scheduled to take place between 29th November and 7th December. It is unclear whether the recent discovery will be offered for sale in this forum or at another time, however, the forthcoming sale will provide a useful indication of the market’s current appetite for the large, high value diamonds which are coming from Letseng.
• The Letseng mine has built a reputation for the recovery of large, high value and quality diamonds, including the 123 carat "Star of Lesotho", the 603 carat, Lesotho Promise and the 357 carat Letseng Dynasty diamond which was recovered in July 2015 and subsequently sold for US$19.3m.
Conclusion: The latest large diamond recovered from Letseng underlines the success of the company’s moves to minimize breakage and optimise the recovery of larger diamonds.

IronRidge Resources (LON:IRR) 29.3p, mkt cap £80.3p – Field exploration restarts in Chad
• IronRidge Resources is restarting exploration at its Dorothe project in Chad with the mobilisation of an excavator to resume trenching for the 2017/2018 field season.
• Trenching is intended to test the strike continuity of the target zones located during the previous work, including the potential southward extension of the Dorothe Main Vein,  and to test “for possible extensions concealed below recent cover sediments.”
• Additional work planned for the coming exploration programme also includes regional soil sampling at Dorothe and infill soil sampling at the Echbara prospect.
• The company comments that during the wet season since its last phase of work, “artisanal miners have identified new zones within the Dorothe prospect, and opened new workings over 25m strike and up to 10m vertical depth. The new workings coincide with reported intersections in previous trenching”.
Conclusion: The resumption of exploration following the wet season allows IronRidge to follow up on previous targets with further early stage exploration which should lead to the identification of targets for an initial drilling programme. We look forward to further news on the most promising targets as work proceeds.
*SP Angel act as Nomad and Broker to IronRidge Resources

Rainbow Rare Earths Ltd (LON:RBW) – 16.3p, mkt cap £25m – Geophysics identifies exploration targets for future drilling
• Rainbow Rare Earths reports that a helicopter mounted aero-magnetic and radiometric survey conducted over the Gakara licence in Burundi has identified “four conspicuous magnetic anomalies … although this figure may increase as the data is analysed further”.
• The company comments that “these anomalies  present the targets for the Company’s first ever drill programme when cashflows from operations allow.”
• The geophysical anomalies are interpreted to represent carbonatite intrusions which may be related to the emplacement of the rare earth bearing veins comprising the Gakara deposit.
• Chief Executive, Martin Eales, also confirms that “the first shipment of Gakara concentrate [is] imminent” and went on to comment that “We have believed for some time that the high-grade Gakara veins must have emanated from a substantial carbonatite source and through our recent work we have established some extremely positive indicators for the locations of what may be multiple carbonatites within our licence area that will be a key focus for our near-term exploration campaign.”
Conclusion: The geophysical survey points to a potential source for the mineralised veins at Gakara. We await news of the follow up exploration and of the initial concentrate shipments.

Thu, 23 Nov 2017 10:27:00 +0000
Today's Market View - Bacanora Minerals, Premier African Minerals and Savannah Resources Bacanora Minerals (LON:BCN) – Questions on Orr-Ewing 3% lithium royalty issue
Premier African Minerals (LON:PREM) – Zulu Scoping Study
Savannah Resources (LON:SAV) – Further drilling results from Mina do Barroso


Rio Tinto and Chinese private equity firm GSR Capital are preparing to bid for a stake in Chilean lithium producer SQM
• Rio Tinto and GSR Capital considering bid for 32% stake in SQM, approximated to be valued at around $4.8bn
• However, size of stake would not provide operational control, which some analysts said undermined the logic of any deal for Rio Tinto

South Africa’s parliament delays passing key mining law
• Parliament will miss December target to pass changes to mineral resource laws seen as key for greater investor certainty
• MPRDA bill passed back in 2014 but sent back over concerns over its constitutionality due to elevating the countries mining charter to status of legislation

Zimbabwe – Robert Mugabe resigned as president ending a 37-year long rule following a vote by lawmakers to impeach the head of state.
• The move comes days after his party ZANU-PF fired him as its leader and demanded him to step down.
• Previously ousted Emmerson Mnangagwa will take over as an interim leader and is set to become ZANU-PF presidential candidate in elections scheduled for next year.
• Events conclude a battle for control between two factions including a military-backed former vice president Mnangagwa and the one called Generation-40 supporting Mugabe’s wife Grace.

Dow Jones Industrials  +0.69% at 23,591
Nikkei 225   +0.48% at 22,523
HK Hang Seng   +0.64% at 30,008
Shanghai Composite    +0.59% at 3,430
FTSE 350 Mining   +0.62% at 17,365
AIM Basic Resources   -0.40% at 2,650

US – The S&P500 briefly broke the 2,600 level yesterday marking an all-time intraday high supported by the technology and healthcare sectors.
• The US$ index is down slightly today on stronger euro which shrugged off latest German political turmoil.
• Fed meeting minutes are due later today (19:00 GMT) with one thing to watch closely is the current assessment of the weak inflation numbers amid strong growth and falling unemployment.
• December rate hike remains largely priced in with a 97% chance of that happening as seen by markets with the next one expected in Mar/18 (61%).

China – Private survey of more than 2,000 companies in China showed business sentiment worsened in Q3/17.
• The headline index came in at 47 dragged by weak run in the private companies sector while state enterprises recorded an increase.
• Firms mentioned overcapacity and rising raw material costs as factors driving poor business outlook.
• Companies reporting oversupply in the domestic market came in at 64% of respondents with 52% characterising it as severe excess capacity.
• Investments, a barometer for business confidence, came in particularly weak with only 1% of firms surveyed suggesting it is good time to invest and only 10% of companies made investments during the period.

UK – Philip Hammond is due to deliver the budget today as self-imposed fiscal rules to cut fiscal deficit to below 2% of GDP in 2020-21 are being challenged by estimates for falling productivity and slowing economic growth.
• Four voting members of the MPC backed current forward guidance strategy subject to the economy evolving as the BoE expects.
• Members told Parliament yesterday that providing definite path on borrowing costs would be offering “false precision”.
• “Its tempting to think the bank could promise where rates will be in future, but this would create more uncertainty… Monetary policy responds to what the economy does. Its not possible to forecast the economy with perfect certainty,” Michael Saunders, an MPC member said.

US$1.1765/eur vs 1.1748/eur yesterday.  Yen 112.04/$ vs 112.54/$.  SAr 13.898/$ vs 14.118/$.  $1.325/gbp vs $1.325/gbp
0.757/aud vs 0.754/aud.  CNY 6.617/$ vs 6.634/$.

Commodity News
Precious metals:         
Gold US$1,283/oz vs US$1,280/oz yesterday
• Gold price traded in a narrow range as investors await the release of minutes from the US Federal Open Market Committee’s (FOMC) November meeting. The release is expected to provide an insight into the US central bank’s outlook for monetary policy, with investor caution surrounding the aggressiveness of future rate increases from the FOMC.
• CME FedWatch Tool identifies a 91.5% chance of December’s target rate rising to 125-150 basis points (bps) and 8.5% chance of increase to 150-175 bps.
• Exiting Fed Chair Janet Yellen said the Fed is “reasonably” close to its targets and should keep gradually raising US interest rates to avoid the dual pitfalls of letting inflation drift below target for too long, and of driving unemployment down too far.
• US economic data showed strengthening as easing hurricane-related disruptions drive higher than expected US home sales. However, an enduring shortage of housing is elevating prices beyond first-time buyers, highlighting the need for broad US housing investment.
• The dollar index slipped as increased investor risk appetite fails to translate into rising US Treasury yields.
• In a bid to resolve nuclear tensions with North Korea, the US unveils fresh sanctions against the nation designed to stop its funding of nuclear and ballistic missile programmes.
   Gold ETFs 69.5moz vs US$69.5moz yesterday
Platinum US$936/oz vs US$929/oz yesterday - Platinum industry expects supply deficit in 2018
• Predicted deficit of 275koz of precious metal for 2018 caused largely by industrial demand from petroleum and glass sectors
• Whilst demand for EV’s expected to lead to decrease in demand for the metal, this isn’t expected for many years and tighter regulations on petrol cars will mean more of the metal will be needed.
Palladium US$1,005/oz vs US$991/oz yesterday
Silver US$17.01/oz vs US$16.96/oz yesterday
Base metals:   
Copper US$ 6,938/t vs US$6,836/t yesterday
Aluminium US$ 2,099/t vs US$2,075/t yesterday
Nickel US$ 11,780/t vs US$11,620/t yesterday
• Rising nickel prices are translating into increased Chinese nickel pig iron (NPI) production as operators look to capitalize on positive price movements. The NPI output rose for the fifth consecutive month in October to the highest levels since 2014, increasing 8.9% y/y to 39,554 tonnes.
• NPI provides a lower-grade alternative to refined nickel for use in stainless-steel, but global supply disruptions have hit output this year, particularly by the Philippine environmental open-pit mining ban and Indonesian unprocessed ore export limitations.
• The world’s largest supplier of nickel is under threat from Maoist rebels waging a protracted guerilla war to overthrow Philippine President Rodrigo Duterte. The nation has been attempting to find closure and peace with the National Democratic Front (NDF) and the armed wing of the communist party, the New People’s Army since 1986. Duterte has said attacks from the rebels have been rising, with some mines paying “revolutionary taxes” in exchange for allowing rebel operations in remote areas, and has threatened prosecution and closure of supportive companies. With a nation hosting an estimated $840 billion of untapped mineral wealth (Mines and Geoscience Bureau), and 43 operating mines the closures could have a distinct impact on nickel, gold, copper, chromite and coal exports.
Zinc US$ 3,228/t vs US$3,157/t yesterday
• Despite weak demand for the metal, mine supply is weaker as tightening market conditions boost Shanghai zinc as much as 2.7%.
Lead US$ 2,481/t vs US$2,460/t yesterday
Tin US$ 19,375/t vs US$19,430/t yesterday
Oil US$63.3/bbl vs US$62.5/bbl yesterday
Natural Gas US$3.008/mmbtu vs US$3.027/mmbtu yesterday
Uranium US$26.00/lb vs US$25.50/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$63.6/t vs US$63.1/t
Chinese steel rebar 25mm US$663.6/t vs US$661.9/t
• Chinese steel futures continue to rise on support from tightening raw material supply and strong recovery in consumption in the world’s top user following the end of winter production cuts in March. The most-active rebar contact for May delivery increased 1.7%, with stocks of rebar among Chinese traders having fallen to the lowest levels in a year to 3.61 million tonnes.
• Elevated steel prices have translated into higher raw material costs, with coking coal rising to a two-month peak and iron ore contracts rising 0.7% to touch a two-week high of 498.5 yuan.
Thermal coal (1st year forward cif ARA) US$83.8/t vs US$83.6/t
Premium hard coking coal Aus fob US$193.7/t vs US$189.4/t
• Australian coking coal operations, the largest supplier to the Chinese market, have been strongly impacted by Beijing’s efforts to restrict pollution and meet tough air quality targets. As the nation broadly closes excess capacity during the winter heating period, exports from Australia fall 21% in October as cleaner domestic supply is favoured.
Tungsten APT European US$271-285/mtu vs      US$275-285/mtu last week
Cobalt LME 3m US$61250/t vs US$60750/t yesterday

Company News
Bacanora Minerals (BCN) 99p, Mkt Cap £131.5m – Questions on Orr-Ewing 3% lithium royalty issue
• Why are Bacanora taking action to strike out a royalty to “void ab initio, a 3% gross over-riding royalty held by the Estate of Colin Orr-Ewing over certain of the Company's lithium assets in Sonora, Mexico” which they claim does not exist?
• Surely, if the royalty does not exist then there should be no doubt as to its claim on the cash flow of lithium projects in the company and not need to treat the royalty as invalid from the outset?
• And if the royalty does not exist then why has the company been negotiating for so long over the buying of the royalty and why has the royalty been so often mentioned in so many financial reports and presentations?
• We are told by the company, that shareholders, Blackrock, Capital Group, M&G and Igneous Capital are all backing the company in their action to remove the royalty.  But why are they backing an action to remove a royalty that has for so long been considered to be a feature of the company?
• If the royalty is stuck out what does this mean for other royalties registered in Canada and what does this mean for royalty companies with royalties based in the region?
• And if this royalty is declared “void ab initio” or ‘invalid from the outset’ then how can we invest in companies buy royalties?
• How too can companies then sell royalties and streaming agreements to help fund projects going forward?
• Should we only be concerned about royalties and other agreements for companies incorporated in Alberta, which is considered to be a bit like the Wild West at the best of times, or should we be concerned about agreements set in other jurisdictions?
• Why is all this important today?
• Is it because Bacanora Minerals may seek to finance the construction of a larger scale pilot plant to better prove the production process?
• Is it so that the company can more easily finance a full-scale (phase 1) mine and production plant?
• Is it that the company needs to get rid of the royalty before it can sell itself? Maybe to a Chinese buyer?
• “The basis of the Company's claim is that the Royalty was originally granted based on the misrepresentation of Colin Orr-Ewing that he held a pre-existing royalty granted prior to the acquisition of the lithium properties by the Company.”
• I personally recall directors of the company referring to the Orr-Ewing lithium royalty, though as an analyst I never saw the paperwork.
• So why does Bacanora’s AIM admission document make the following royalty references?
• From the 2014 AIM Admission document
• Page 18
• “Royalty Agreements
• In return for Mr. Colin Orr-Ewing, a Director of the Company, providing financial support to the Company and its subsidiaries in its earliest stages of development, in 2008 and 2010, the Company (or wholly-owned subsidiaries thereof) entered into royalty agreements with Mr. Orr-Ewing. As a result, sales of products from the Company’s lithium and borate assets are subject to a 3 per cent. gross overriding royalty payable to Mr. Orr-Ewing. In addition, sales of products from the Company’s San Francisco concessions in the Magdalena basin are also subject to a 3 per cent. gross overriding royalty payment to MSM, a subsidiary of Rio Tinto. Further information on the Company’s royalty agreements is set out in paragraph 14.2 of Part V of this Document.”
• Page 68
• “1.4 Sonora Lithium Project
• The Sonora Lithium Project consists of ten contiguous mineral concessions. Bacanora through its wholly-owned Mexican subsidiary, MSB, has a 100% interest in two of these concessions: La Ventana and La Ventana 1, covering 1,820 hectares. Of the remaining concessions, five will be owned 100% by Mexilit S.A. de C.V. (“Mexilit”). The Mexilit concessions consist of: El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 and cover, in total 6,333 hectares. Mexilit is owned, on a 70:30 basis, by Bacanora and Rare Earth Minerals PLC (“REM”) respectively under the terms of REM  agreement 1. The remaining three concessions: Buenavista, Megalit and San Gabriel cover 89,235 hectares and will be owned 100% by Minera Megalit S.A. de C.V. (“Megalit”). Under the terms of REM Agreement 2 between Bacanora, MSB and REM, REM has earned a 10% interest in Megalit and will earn a further 20% in Megalit by providing funding of $US1 million on or before November 23, 201 4. Under the terms of REM Agreement 1 and REM Agreement 2, REM has the conditional right to negotiate to acquire up to 49.9% of Mexilit and Megalit. There is a 3% royalty in favor of Colin Orr-Ewing on all of the concessions.”
• Page 81
• “The concessions making up the Sonora Lithium Project are subject to a 3% gross overriding royalty (“GOR”) to Colin Orr-Ewing. There are no other royalties payable or back-in rights, payments or other agreements or encumbrances to which the concessions are subject - with the exception of the previously mentioned first rights of refusal.”
• Page 102
• “Preliminary economic analysis of the project is based on an annual production rate of 35,000 tonnes of lithium carbonate, with a mine life of 20 years and run-of-mine feed to the processing plant averaging 0.3% Li. The project is subjected to an annual royalty of 3% of net profits and a government taxation rate of 34%.”.
• The table on Page 102 in the AIM prospectus states that the Royalty value at US$7,000/t is projected to be worth some US$147m in Cash Flow on a total project NPV of US$1,064m and an IRR of 170%. So with lithium at US$15,000m the royalty
• Page 166
• “Table 38. La Ventana: Cash Flow and Net Present Value Analysis Projected Over Life of Mine”
• The table shows a Lithium Carbonate Price Senario of $US7,000/t and an estimated Royalty Cash Flow US$147m. 
• Lithium Carbonate prices have risen since then to around $15,000/t and if Bacanora produces good quality concentrate then it may receive a premium to this base case price level.
• The NPV of the project was calculated to be US$1,064m in the 2014 Admission document assuming the US$7,000/t lithium prices and an 8% discount rate.  While we might expect the value of Bacanora to be significantly higher than this today margins are likely to be constrained by significantly higher operating costs.
• Page 197
• “Sonora Lithium property
• During the year ended 30 June 2011, the Company, through its subsidiary MSB, acquired all rights, title and interests in certain lithium claims from a related party who is an officer of the Company. As consideration for the assets, the Company issued 600,000 common shares at C$0.25 per share. In addition, the Company paid cash payments of US$40,000 to reimburse the vendors for acquisition and preliminary assessment costs. The property consists of four exploration licenses, covering approximately 4,050 Ha in the Sonora State of Mexico. The Lithium property is subject to a 3 per cent. gross overriding royalty payable to a director of the Company on sales of products produced from this property.”
o This statement is also repeated on page 213
o The Company’s Sonora Lithium Project concessions are owned by the Company’s subsidiary undertakings Mexilit, Megalit and ‘MSB’ (Minera Sonora Borax S.A. de C.V., a company incorporated in Mexico).
o There are numerous further references to the Orr-Ewing royalty on the Sonora Lithium project in relation to ‘MSB’ on Pages 213, 237 as well as many other royalty references to other assets within the Bacanora portfolio.
Conclusion: The 2014 AIM Admission document which has been verified by teams of lawyers and the company’s NOMAD firm would have conducted due diligence on all the company’s material assets and liabilities for the purposes of the AIM Admission document. If this is wrong then can we believe the legal advice and words of these documents going forward?
If Bacanora succeeds in invalidating the Orr-Ewing royalty then shareholders of royalty companies, Anglo Pacific and others should perhaps reconsider the strength and validity of the royalties on which their valuations rely.
*SP Angel is completely independent of Bacanora Minerals and the Orr-Ewing Family estate. The above text represents the author’s independent and personal views as a mining analyst and an observer of the company over many years. Note, we are not advising investors to buy or sell this stock.

Premier African Minerals (PREM) 0.48p, Mkt Cap £29.7m –Zulu Scoping Study
• Premier African Minerals has announced highlights of its scoping study on its Zulu Lithium and Tantalum project in Zimbabwe.
• The published plan envisages producing 1mtpa of ore at an overall waste:ore ratio of 5.55:1 at an overall grade of 0.9% Li2O for a period of 15 years. C1 costs over the mine life are estimated at US$485.54/t of concentrate production.
• Based on producing an estimated 84,000tpa of spodumene concentrate and 32,500tpa of petalite concentrate over a 15 years mine life, the company estimates that an initial capital investment of US$64m generates a pre-tax NPV10% of US$127m and an IRR of 85.9%.
• At the after-tax level, the NPV10% is 92m with a 65% IRR on the assumption that spodumene concentrate commands a price of US$800/t and petalite concentrate is sold at US$400/t. We note that in a recent presentation, Galaxy Resources, the operator of the Mt Cattlin mine, reported a Q3 2017 selling price of US$843/t for its spodumene product.
• Sensitivity analysis published in the company’s announcement suggests that at a spodumene concentrate price of US$600/t the after tax NPV10% fall to US$5.7m, suggesting the project is sensitive to future pricing of spodumene concentrate.
• The company also evaluated the possibility of producing a lithium carbonate product at a plant in Bulawayo, in preference to saleable concentrate. Based on a higher capital cost of US$238m and a product sales price of US$15,000/t of LiCO3, the Zulu project is estimated to generate a pre-tax NPV10% of US$719m (post-tax US$524m) and an IRR of 80% (post tax 63%).
• Commenting on the results of the scoping study, CEO, George Roach, said “The Company considers the Scoping Study economics for both the concentrate sales option as well as the lithium carbonate plant option are attractive and is firmly of the view that additional detailed study work and exploration in and around the existing Resource base will further enhance the value of the project.”
Conclusion: The Zulu project has been advanced rapidly to the scoping study stage and, although more detailed work will be required to firm up the development plan, it provides encouraging economic indicators at this early relatively stage, though it appears sensitive to commodity pricing.

Savannah Resources (SAV) 5.5p, Mkt cap £35m – Further drilling results from Mina do Barroso
• Savannah Resources reports that it has completed 27 holes totalling 2566m of its current drilling programme at its Mina do Barroso lithium project in Portugal. Assay results from the first 11 holes are reported to confirm extensions to the existing mineralisation.
• At the Reservatorio deposit a further 12 holes have been completed of which assays have been returned for six holes. The drilling “significantly extends lithium mineralisation over 400m strike length, with good down dip extensions of at least 150m.” Previous announcements by the company in September this year indicated mineralisation extending over 200m of strike length at Reservatorio.
• Among the results highlighted for Reservatorio in today’s announcement are:
o A 29m long intersection at an average grade of 1.07% Li2O from a depth of 43m in hole 17RESRC10 and
o A 35m long intersection at an average grade of 1.06% Li2O from a depth of 56m in hole 17RESRC11
• Further infill drilling is planned in the eastern part of the Reservatorio deposit where faulting and shearing has resulted in weathering and near surface depletion  of the mineralised body.
• At the NOA deposit, initial drilling has identified lithium bearing pegmatite in 10-15m wide zones extending over a strike length of around 100m and down dip to a depth of around 50m. “A further 5 RC hole are planned to test a further 200m of the strike of the NOA prospect focussing on areas where surface outcrop suggests widths of pegmatite over 20m may be present.” Among the results highlighted today are:
o A 13m long intersection at an average grade of 1.19% Li2O from a depth of 7m in hole 17NOARC03 and
o An 11m long intersection at an average grade of 1.23% Li2O from a depth of 46m in hole 17NOARC04
• At the Grandao prospect, where drilling is targeted at a flat lying pegmatite body, assay results have yet to be received from the 10 holes completed so far.
Conclusion: Since acquiring its interest in the Mina do Barroso project in May and undertaking its initial drilling programme in July, Savannah Resources has pressed ahead to evaluate and extend the known lithium mineralisation where it has been able to report a number of intersections in excess of 1% Li2O. We look forward to the remaining results of this second drilling campaign as they become available.

Wed, 22 Nov 2017 10:29:00 +0000
Today's Market View -Altus Strategies, Bacanora Minerals,Ferrum Crescent, Bushveld, Shnta Gold and others Altus Strategies* (LON:ALS) BUY – Target price 12.2p – Agreement to acquire Legend Gold completed
Bacanora Minerals (LON:BCN) – Founder’s family estate serves legal action against Bacanora Minerals
BHP Billiton (LON:BLT) - Establishing process for Samarco claims
Bushveld Minerals (LON:BMN) - BUY – Target price maintained at 11p – First vanadium Redox battery deployed at Eskom
Ferrum Crescent (LON:FCR) – Director comes aboard AIM company at reasonable salary level
Patagonia Gold (LON:PGD) - Raising £7.76m to proceed with Calcatreu option
Shanta Gold (LON:SHG) Hold – Target 5.2p– Valuation update

Lithium - China winning electric cars arms race
• As demand increases, Chinese companies have been doing deals around the world to secure supplies of lithium – currently top market for EV’s accounting for about half of global sales
• Many state owned companies have been hunting down lithium resources outside of China and it is predicted that over the next few years will wield increasing influence over supply of lithium
• Chinese companies currently have stakes in miners such as Pilbara Minerals, SQM and Kodal Minerals
• While there are many new wannabe lithium explorers and project companies on the market we caution that many will not have the assets, technical ability, support or determination to see their projects through to production.

Advances in Boston Dynamics’ humanoid bring new metal demand
• The latest invention from the former-Alphabet lab showcases their unassisted Atlas humanoid robot performing ever-growing dexterous tasks including a backflip. The latest successful trial for the pioneering robotics company only serves to highlight the importance and integration of technological iterations into everyday life, developing revolutionary demand for metals including aluminium, steel, copper, and specialty commodities such as rare earths.

Glencore’s Head of Copper steps down from Congo unit amid probe
• Directors of traders copper and cobalt unit, Katanga Mining Ltd, after internal review found material weaknesses in financial reporting controls across operation
• Questions about ‘appropriateness’ of some of accounting practices arose during investigation by Ontario Securities Commission leading to internal review after which billionaire Aristotelis Mistakidis and 2 executives stepped down

Dow Jones Industrials  +0.31% at 23,430
Nikkei 225   +0.70% at 22,416
HK Hang Seng   +1.91% at 29,818
Shanghai Composite    +0.53% at 3,410
FTSE 350 Mining   -0.15% at 17,076
AIM Basic Resources   +0.22% at 2,661

UK – The pound is flat this morning amid the news Theresa May secured ministerial backing for her improved Brexit offer on Monday.
• Authorities are planning to announce the offer on 8 December which is expected to narrow the gap between the previously voiced €20bn by the PM and €60bn demanded by the EU.
• The issue is reported to have been discussed on Monday in Downing Street by the 10-member cabinet subcommittee on Brexit negotiations.
• British side hopes that improved offer will allow both parties to move onto negotiations of a transition deal and talks on a trade agreement following the European Council meeting in Brussels on 14-15 December.

Germany – Angela Merkel said she prefers new round of general elections to a minority government following failed talks to formal a coalition.
• The euro is back in red against the US$ (-0.12%) extending losses recorded on Monday.

Australia – Western Australia government revised gold sector regulations slightly including an increase in the gold price cut-off for higher royalties as well as assistance for marginal miners.
• The reference gold price used to set higher royalty rates has been increased to A$1,400/oz ($1,060/oz) from A$1,200 ($910/oz).
• At gold prices above/below the threshold gold royalties charged are 3.75%/2.5%.
• Additionally, the government proposed an assistance package for miners with AISC above 85% of the gold price involving a refund of the increased royalty rate.

US$1.1748/eur vs 1.1760/eur yesterday.           Yen 112.54/$ vs 112.07/$.         SAr 14.118/$ vs 14.063/$.            $1.325/gbp vs $1.325/gbp
            0.754/aud vs 0.757/aud.            CNY 6.634/$ vs 6.633/$.

Commodity News
Precious metals:         
Gold US$1,280/oz vs US$1,291/oz yesterday
• Traders will keep a close watch on escalating global tensions and safe-haven trading as US President Donald Trump put North Korea back on the list of state sponsors of terrorism.
Gold becomes shoppers’ new digital way to pay after app launch
• Launched by Fintech firm glint and allows users to link their cards to app which lets them buy physical gold bullion stored in a Swiss vault
• Once linked to card customers can buy anything from a coffee to a car and whilst the app was originally aimed at wealthy people looking outside of the banking system has been interest across the financial spectrum
   Gold ETFs 69.5moz vs US$69.4moz yesterday
Platinum US$929/oz vs US$942/oz yesterday
• Resurgent demand from the jewelry and industrial sectors are expected to push the market into sharp deficit, with the shortfall rising from 15,000oz this year to 275,000oz in 2018. The World Platinum Investment Council notes the sixth consecutive annual deficit, with cut above-ground stocks contracting to 1.605 million ounces by the end of the year.
• Platinum demand is expected to rise 2% to 8.030 million ounces next year, with double-digit growth in India and Chinese jewelry usage up 3% for the first time since 2014.
• Output is forecast to drop 1% across 2017 and 2018, and with low mining capital investment the production levels will take significant time to increase.
Palladium US$991/oz vs US$997/oz yesterday
Silver US$16.96/oz vs US$17.15/oz yesterday
Base metals:   
Copper US$ 6,836/t vs US$6,769/t yesterday
• The red metal price climbed on expected supply disruptions due to industrial action at Southern Copper Corp’s Peruvian mine. Production from the 870Ktpa operation is forecast to be hit by striking from midnight on November 21st with workers at Peru’s Mining Federation set to meet early next week to discuss broad striking action.
• The International Copper Study Group note the global refined copper market recorded a 50kt deficit through August on weak supply growth from major producing nations. Despite China, India and European Union nations increasing refined output, a 10% decline in Chilean supply led to an overall global reduction.
• The deficit is expected to deepen, with the ICSG forecasting a 105,000 tonnes shortfall in 2018, as world mine production falling 2.2% in the first eight months of 2017. The latest figures show 5% decline from Chile consequent of the Escondida strike, while low ore grades impacted Argentina, Canada and Mongolia concentration production which fell 50%, 19% and 18% respectively.
• Ore material declines are impacting annual contract talks for 2018, with negotiations for benchmark copper treatment and refining charges continuing. Miners will be hopeful for the low $70/t range while smelters will try to maintain the 2017 $92.5/t level.
Aluminium US$ 2,075/t vs US$2,085/t yesterday
• Ex-China aluminium production made gains against the giant nations output, as global production for October outside of China rose to 2.179 million tonnes according to International Aluminium Institute data. During the same period, Chinese daily average production fell 5.5% to 82,100 tonnes. The most traded aluminium contract on the Shanghai Futures Exchange SAFcv1 contracted to its lowest since early August.
Nickel US$ 11,620/t vs US$11,605/t yesterday
• Nickel rose steadily on positive growth from ShFE steel rebar futures SRBcv1, which closed 2.7% higher on strong sentiment for a robust demand rebound following the winter capacity restrictions. The metal, which has seen significant market interest off the back of the electric vehicle story, remains principally influenced by steel price movements, with 68% nickel consumption in the alloy compared to 3% battery usage.
• Nickel ore output from the world’s top supplier fell 11% year-to-September as the Philippine President Rodrigo Duterte maintains the open-pit mining suspension under environmental legislation. The closure followed recommendations of former environment minister Regina Lopez, which has strongly impacted near-surface nickel laterite mining operations.
Zinc US$ 3,157/t vs US$3,155/t yesterday
Lead US$ 2,460/t vs US$2,437/t yesterday
Tin US$ 19,430/t vs US$19,500/t yesterday
Oil US$62.5/bbl vs US$62.5/bbl yesterday
Natural Gas US$3.027/mmbtu vs US$3.059/mmbtu yesterday
Uranium US$25.50/lb vs US$25.00/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$63.1/t vs US$61.7/t
Chinese steel rebar 25mm US$661.9/t vs US$656.5/t
Thermal coal (1st year forward cif ARA) US$83.6/t vs US$81.9/t
Premium hard coking coal Aus fob US$189.4/t vs US$188.9/t
Tungsten APT European US$271-285/mtu vs      US$275-285/mtu last week
Cobalt LME 3m US$60750/t vs US$61500/t yesterday

Company News
Altus Strategies* (ALS LN) 8.3p, Mkt Cap £8.9m – Agreement to acquire Legend Gold completed
BUY – Target price 12.2p
• The Company signed a definitive binding agreement to acquire all Legend Gold outstanding shares in all-shares deal.
• Under the terms of the agreement Legend Gold shareholders will receive three shares in Altus Strategies for each share held in Legend.
• As a result, Altus will need to issue 41.1m shares representing 27.6% of the enlarged share capital.
• The deal is subject to regulatory, court, third-party and shareholder approvals as well as provisions for no material adverse changes in the financial condition, assets or liabilities at Altus or Legend.
• Both Altus and Legend officers and directors have already expressed their support for the transaction representing 40% and 53% of issued share capital, respectively; companies are planning to seek other shareholders’ approval shortly with the deal closure expected around Jan/18.
Conclusion: The deal provides Altus with an access to a prospective exploration assets in western and southern Mali as well as an opportunity to potentially list on the Canadian market with an established shareholder base familiar with the project generation business approach.
*SP Angel acts as Nomad and Broker to Altus Strategies

Bacanora Minerals (BCN LN) 100p, Mkt Cap £133m – Founder’s family estate serves legal action against Bacanora Minerals
• We rarely like to see legal action amongst miners but in this case we take exception.
• We knew Colin Orr-Ewing, the founder of Bacanora Minerals, and we knew of the effort he put into the company and the reasoning behind the 3% gross overriding royalty which he left to his family.
• Sadly, the late Colin Orr-Ewing seems to have entrusted Bacanora Minerals to a board with less honourable motives.  The board led by Mark Honen is applying to the courts in Alberta “to void … a 3% gross over-riding royalty held by the estate of Colin Orr-Ewing over certain of the Company’s lithium assets in Sonora, Mexico.”
• The move comes after “The Board of Directors of Bacanora has completed a review of the historical background and concluded that no such pre-existing royalty existed and accordingly there was no basis for the grant of the royalty by the Company”.
• We find the application by the board to remove the 3% royalty quite extraordinary as we believe the royalty was put in early on in the company’s history as a method of preserving some value for the Orr-Ewing family in return for Colin’s very considerable and largely unrewarded effort in developing value within the lithium bearing clay assets.
• The royalty has been in place for as long as we can remember and any shareholder or any person who subsequently joined the company in recent years such as Mr Honen should have been aware of the potential value and impact of the royalty at their time of joining as part of their due-diligence and review of the company.
• Bacanora has never appeared to hide the 3% royalty and a quick google search confirms many references to the presence of the 3% GOR royalty in company press releases and financial statements issued by the company over many years.
• The statement is even more interesting given that we believe the company has previously entered into discussions with the Orr-Ewing estate with regard to the royalty.
• Pilot plant: while we understand the pilot plant has worked well in campaigns over the past two years we have further technical questions in relation to the cost and recovery of lithium from clay material and the impact of rain on planned production.  We hope the company will update us on in due course.
• Lithium market: also, while demand for lithium batteries should continue to increase to drive demand for good quality lithium carbonate and hydroxide concentrates some commentators are concerned that proposals to ramp up of production at the major suppliers may depress prices when this production comes through. The risk being that the high cost of chemicals used to extract lithium might squeeze margins as production levels rise and lithium prices pull back.
• It is equally possible that a proportion of proposed new production may be delayed or simply not materialise and that lithium prices may remain stronger for longer.
Conclusion:  Personally I find it surprising that directors who have previously acknowledged the royalty agreement are now claiming that “no such pre-existing royalty existed”.  Colin Orr-Ewing entrusted Mr Mark Honen to the board at a time when he almost certainly knew he was dying of cancer.  This simply does not look right to us and we look forward to a more gentlemanly settlement of this issue without recourse to further legal action which shareholders will inevitably pay for.

BHP Billiton (BLT LN) 1367p, mkt cap £78.9bn Price & Mkt Value - Establishing process for Samarco claims
• BHP Billiton reports that a timetable has now been agreed for settlement of the claims, which exceed US$50bn, arising from the failure of the tailings dam at the Samarco iron ore operation in Brazil.
• "Samarco, Vale, BHP Brasil and the Federal Prosecutors have also jointly requested, and the 12th Federal Court has approved, an additional 150 days, ending on 20 April 2018, for the parties to continue negotiations for the settlement of the Public Civil Claims."
The claims include US$6.1bn arising from "Public Civil Claims" where the timetable has been extended by a further 180 days until 20th April 2018.
• The agreements are subject to ratification by the 12th Federal Court in Brazil.
• "The Amendment Agreement provides for the State Prosecutors to become a party to the Preliminary Agreement. It also provides for additional community consultation. The Amendment Agreement includes a process for seeking to agree new socioeconomic experts to advise the Federal Prosecutors, and contains some further requirements as to how those experts would conduct their work."
• Conclusion: The repurcussions, both legal and social, of the Samarco incident are likely to continue for a very long time, however, the parties appear tp be establishing a practical framework within which they can address the issues.

Bushveld Minerals (BMN) 8.8p, mkt cap £70.6m – First vanadium Redox battery deployed at Eskom
BUY – Target price maintained at 11p
(Bushveld Minerals holds 84% of Bushveld Energy)
• Bushveld Energy has deployed its first Vanadium Redox battery ‘VRFB’ with Eskom, the South African power utility.
• The battery is designed to have a peak power capacity of 120kW and peak energy storage of 450kWh.
• “According to the International Renewable Energy Association (IRENA), VRFBs already offer some of the lowest system costs among battery technologies and are expected to decrease in cost by 66% through to 2030, which is faster than any other technology in energy storage.”
Navigant Research expects the energy storage market to exceed US$25bn in annual revenues by 2025.
*An SP Angel Mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

Ferrum Crescent (FCR LN) 0.07 pence, Mkt Cap £2.2m – Director comes aboard AIM company at reasonable salary level
• Ferrum Crescent reports today that it has agreed a formal employment contract with Myles Campion who is the new Technical Director of the company.
• Myles Campion, a former mining analyst and fund manager has agreed a base salary of £52,000pa excluding statutory contributions to National Insurance and Pension required under UK Law.
• “Mr Campion will be eligible to participate in employee incentive schemes operated by the Company from time to time on such terms as the Board may decide.
• In addition, the Company announces that the Board has taken the decision to defer all executive and non-executive director fees/salaries until further notice, in order to conserve the Company's cash resources.”
• Ferrum Crescent has recently revised its exploration strategy and has cut its fixed costs while looking to produce a maiden JORC resource by the year end for the Toral project in Spain.
Conclusion:  we see Myles Campion as a significant hire for Ferrum Crescent and the potential for better company performance from here.

Patagonia Gold (PGD LN) 1.1p, mkt cap £17.1m - Raising £7.76m to proceed with Calcatreu option
• Patagonia Gold is raising £7.76m though the issues of new shares at 1p/share in order to exercise its option to acquire the Calcatreu silver/gold project in the Rio Negro Province of Argentina from Pan American Silver.
• The deposit contains an Ni-43-101 compliant indicated resource of 8mt at an average grade of 25.7 g/t silver and 2.63 g/t gold (6.6moz of silver and 675,000 oz of gold).
• In addition, the deposit hosts an inferred resource of a further 3.4mt at an average grade of 16.6g/t silver and 2.0gg/t gold (1.8m oz of silver and 225,000 oz of gold).
• Commenting on the transaction, Chief Executive, Christopher van Tienhoven said "We are pleased to have conditionally secured the funding for the exercise of the Calcatreu Option which represents an excellent opportunity to acquire a high grade, > 1 million ounce deposit with significant exploration upside potential in a low sulphidation mineralized system within a large and under explored exploration package of tenements."

Shanta Gold (SHG LN) 3.5p, Mkt Cap £26.9m – Valuation update
Hold – 5.2p
• Following operations update announced yesterday we have updated our valuation and earnings numbers.
• Singida project contribution to Shanta NAVPS has been slightly reduced (1.8p v 2.0p) reflecting a lower mineral inventory as per the latest mineral resource estimate.
• We cut underground operating costs reflecting a substitution of the cut and fill mining method with a cheaper open stoping at the Luika underground operation; although, improved economics may be coming at a cost of increased operational risk as the choice of the former mining method envisaged in the feasibility study we understand might have accounted for more challenging ground conditions compared to the Bauhinia Creek deposit.
• Metallurgical recoveries were raised 1.5pp over NLGM LoM from H2/18 onwards based on an installation of an additional pre-leach tank at a $0.5m cost.
(Dec year end)     2013A 2014A 2015A 2016A 2017E 2018E
Gold price (incl hedge)  US$/oz 1,413 1,289 1,163 1,222 1,264 1,204
Gold sales  koz 61.9 87.8 80.6 86.3 81.7 86.8
AISC  US$/oz 1,049 941 845 661 888 737
Revenue  US$m 66.0 114.9 98.0 103.1 104.4 106.6
EBITDA  US$m 1.6 33.8 32.0 50.2 29.7 45.1
PAT  US$m 0.8 8.9 -17.3 -8.0 -2.2 10.2
Basic EPS  USc 0.2 1.9 -3.7 -1.5 -0.4 1.3
FCF  US$m -4.9 11.7 1.1 -13.6 -11.8 19.1
EV/EBITDA  x 66.1 2.9 2.8 2.1 2.7 1.8
PER  x 140.2 11.0 - - - 3.6
Source: SP Angel, Company

Tue, 21 Nov 2017 10:48:00 +0000
Today's Market View - Bacanora Minerals, Bushveld Minerals, Glencore, Highland Gold, Stratex and others Bacanora Minerals (LON:BCN) – Seeking to set aside 3% royalty
Bushveld Minerals (LON:BMN) BUY – Target price maintained at 11p – Vametco ramps up Nitrovan production as costs rise
Glencore (LON:GLEN) –Nominating 3 directors to Katanga Mining
Highland Gold (LON:HGM) – Novo JORC reserves and resources statement released
Kodal Minerals* (LON:KOD) – Lithium expert appointed as non-executive director
Savannah Resources (LON:SAV) – Pilot plant commissioning underway at Mutamba
Shanta Gold (LON:SHG) – New Sinigida resource + operations update
Stratex (LON:STI) / Crusader (ASX:CAS) - Crusader appoints Marcus Engelbrecht, formerly at Stratex as ceo

Dow Jones Industrials  -0.43% at 23,358
Nikkei 225   -0.60% at 22,262
HK Hang Seng   +0.25% at 29,273
Shanghai Composite    +0.28% at 3,392
FTSE 350 Mining   +0.14% at 16,985
AIM Basic Resources   +0.32% at 2,655

US$1.1760/eur vs 1.1793/eur yesterday.           Yen 112.07/$ vs 112.56/$.         SAr 14.063/$ vs 14.182/$.            $1.325/gbp vs $1.325/gbp
            0.757/aud vs 0.755/aud.            CNY 6.633/$ vs 6.634/$

Commodity News
Tesla truck to fuel battery metal demand
• Surging demand for battery metals are driven by a rapidly expanding global fleet of electric vehicles. Elon Musk’s latest Tesla truck is only expected to exacerbate consumption of fundamental metals for battery technologies including lithium, nickel, cobalt, and copper.
• The “game changing” usage in the all-electric “Beast” big rig is forecast to follow a smoother path to acceptance as adoption for electric commercial vehicles could be incredibly fast as a consequence of reduced costs in an industry where margins are incredibly tight.
• Banks including Goldman Sachs Group, UBS Group and Bank of America are rapidly updating market forecasts to accommodate the additional booming projections, with the price of nickel reacting positively to the announcement with a 1.5% rise.
• The transition from conventional fossil fuel vehicles is bad news to the supply of some raw materials, with demand for palladium forecast to drop by 90% by 2040 as electric vehicle sales climb according to ABN Amro Bank.

Precious metals:         
Gold US$1,291/oz vs US$1,283/oz last week
• Uncertainty surrounding the proposed tax cuts in the US saw safe haven asset demand rising as the spot gold price rose to one-month high of $1,297.20/oz during Friday’s trading. US President Donald Trump looks to delay corporate cuts to 2019, and will not include a repeal of Obamacare’s individual mandate.
• ANZ reported that “Buying was also encouraged by reports that [former US Federal Bureau of Investigation director Robert Mueller] had subpoenaed the Trump Campaign for more documents regarding Russia involvement during the US presidential elections”.
   Gold ETFs 69.4moz vs US$69.4moz last week
Platinum US$942/oz vs US$935/oz last week
Palladium US$997/oz vs US$996/oz last week
Silver US$17.15/oz vs US$17.10/oz last week
Base metals:   
Copper US$ 6,769/t vs US$6,774/t last week
• Resilient Chinese property data, indicating new house prices rising at a slightly faster pace in October, support manufacturing metals. Despite falling sales and a tighter liquidity environment, the underlying fundamentals in the property sector remain robust, maintaining strong consumption for copper beyond the weak winter season.
Aluminium US$ 2,085/t vs US$2,104/t last week
Nickel US$ 11,605/t vs US$11,490/t last week
• Philippine President Rodrigo Duterte favoured to maintain the ban on open pit mining across the world’s top nickel ore exporter. The former environmental minister Regina Lopez moved to ban the practice during her 10 months in office as environmental degradation had the potential to ruin economic potential of mining regions. Despite recommendations from the newly elected Environment and natural Resources Secretary Roy Cimatu and the Mining Industry Coordinating Council (MICC), President Rodrigo’s final say maintained the restrictions.
• The nickel market is forecast to undergo significant tightening as elevated LME and SHFE stockpiles are rapidly consumed to support the stainless steel industry, while budding demand for nickel sulphates in battery technologies are expected to drive strong future consumption.
Zinc US$ 3,155/t vs US$3,158/t last week
Lead US$ 2,437/t vs US$2,420/t last week
Tin US$ 19,500/t vs US$19,430/t last week
Oil US$62.5/bbl vs US$61.7/bbl last week
• The world’s largest $1 trillion Norwegian sovereign wealth fund’s proposal to remove its oil and gas shares marked a symbolic shift towards a clean, renewable future. Although unlikely to be replicated by major investors in the short term, the move presents one of the biggest threats to companies such as Royal Dutch Shell, Exxon Mobil and BP as the world sentiment alters to sustainable energy.
Natural Gas US$3.059/mmbtu vs US$3.097/mmbtu last week
Uranium US$25.00/lb vs US$24.40/lb last week

Iron ore 62% Fe spot (cfr Tianjin) US$61.7/t vs US$62.2/t - Hong Kong taking on Singapore for iron ore trading dominance
• Hong Kong Exchanges and Clearing started trading iron ore futures, challenging Singapore's leading position as futures trader for the commodity used in steelmaking
• Dollar-denominated futures contracts will go head to head with those offered by SGX, which started its first swap contracts in 2009 and is now the world's largest clearer of the derivatives
• As an incentive, all fees will be waived for the next six months
Chinese steel rebar 25mm US$656.5/t vs US$654.6/t
Thermal coal (1st year forward cif ARA) US$81.9/t vs US$82.0/t - Replacing Liddell coal plant with clean energy $1.3bn cheaper
• Governments plan to keep the Australian’s oldest coal fired plant open beyond its use by date would cost upwards of $1.3bn more than replacing it with mix of renewables and energy management systems
• Reports found that combination of wind power, demand management and energy efficiency would cost $2.2 billion over five years, compared to a cost of $3.6 billion to keep Liddell open for five years beyond its retirement age
Premium hard coking coal Aus fob US$188.9/t vs US$188.0/t
Lithium - UK based Hiab introduces electric truck and lithium ion forklift
• First electric powered skip loader truck – operates silently and with no emissions
• Said to be ideal for businesses that use urban deliveries or out of hour operations – forklift used by Pets at Home to make delivery’s
Tungsten APT European US$271-285/mtu vs      US$275-285/mtu last week
Cobalt LME 3m US$61500/t vs US$61000/t last week
• Growing demand for the key ingredient of electric-car batteries is generating a competitive supply market as Volkswagen continues to hunt to secure long-term supplies of cobalt. The world’s largest automaker had requested producers to submit tender proposals on supplying cobalt for up to ten years from 2019 by the end of September, although the procurement issue remains unresolved.
• VW, who aim to manufacture up to three million EVs a year by 2025, plans to invest more than 20 billion euros ($23.5 billion) in its bid to challenge Tesla in creating a mass market.

Company News
Bacanora Minerals (BCN) 98p, Mkt Cap £130.1m – Seeking to set aside 3% royalty
• Bacanora Minerals reports that it is applying to the courts in Alberta “to void … a 3% gross over-riding royalty held by the estate of Colin Orr-Ewing over certain of the Company’s lithium assets in Sonora, Mexico.”
• The move comes after “The Board of Directors of Bacanora has completed a review of the historical background and concluded that no such pre-existing royalty existed and accordingly there was no basis for the grant of the royalty by the Company”. At this stage, there is no indication as to the expected timing of any adjudication by the Canadian court.
• Bacanora Minerals expects to complete the feasibility study for its Sonora lithium project during the current quarter and has restructured a number of the terms of employment of members of its senior executive team.
• Chief Executive, Peter Secker’s existing Canadian law contract is being terminated in favour of a new contract under English law which removes both a performance bonus of up to  £250,000 and a £250,000 change of control payment and increases Mr. Secker’s salary by £50,000pa as well as addressing new pension arrangements and a number of other issues.
• Mr. Secker and Bacanora’s Executive Chairman, Mark Hohnen, are to receive cash payments relating to accelerated “unvested options in the event of a change of control of the Company at an acquisition price of at least 130p per Bacanora share. Such cash payment will be calculated on the basis of the difference between the acquisition price per Bacanora Share and 102p (being the middle market price of a Bacanora share at close of business in London on 17 November 2017)”.
Conclusion: Bacanora is updating its executive compensation arrangements ahead of the imminent completion of the feasibility study for the Sonora Lithium Project. The decision to apply to set aside the royalty held by the late Colin Orr-Ewing will await the adjudication of the courts, however, we comment that it was Orr-Ewing’s vision and persistence over many years which laid the foundation for the project which is now close to being mapped out in detail in the forthcoming feasibility study.

Bushveld Minerals (BMN) 8.8p, mkt cap £70.6m – Vametco ramps up Nitrovan production as costs rise
BUY – Target price maintained at 11p
(Bushveld Minerals holds 26.6% of Vametco)
• Vametco, the ferro-vanadium producer in which Bushveld Minerals holds a 26.6% stake has reported key third quarter operational and financial figures.
• Production ramped up to a new higher run rate of 3,035tpa of ferro-vanadium in September vs our model of 2750tpa.
• Production is forecast to rise further to 3,750tpa by June 2018 indicating production of 3,392.5t through 2018 which is 23% ahead of our previous expectations for the year and represents a larger and faster ramp up of ferro-vanadium production both this year and next year.  Production is scheduled to rise to 5,000tpa of ferro-vanadium production by end-2019 as in our existing forecasts.
• Costs: rose by 23% yoy in Q3 due to an unplanned refractory repair to the kiln in the treatment plant in September and a further two weeks of planned maintenance is scheduled for the December quarter.  Maintenance is often carried out at end December in South Africa as the country largely shuts down for Christmas and Southern hemisphere summer holiday.
• Costs also rose through the year-to-date by 15.8% yoy.  This is partly due to the Q3 refractory repair but must also reflect some underlying inflationary pressure.  We will review our future cost assumptions with the company and feel that the ramp up in throughput and production should help to offset much of the cost inflation seen this year.  In general we expect a weakening in the South African rand to also offset local inflationary pressures.
• EBITDA: while the unexpected rise in costs of 15.8% for the year to date has a negative impact on our EBITDA forecast this is largely compensated for by the increase in the production run rate through the fourth quarter despite the two week maintenance shutdown in December.
Conclusion:  We have reduced our profit numbers on cost inflation and on the impact of the kiln repairs.  Our valuation is maintained though the faster than expected ramp up in ferro-vanadium (Nitrovan) production.
*An SP Angel Mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

Vametco plant assuming 100%     2017 2018 2019 2020 2021
Price V2O5 $/lb  6.40  7.37  6.01  6.01  6.01
Vanadium flake price US$/kg  30.80  33.00  27.50  27.50  27.50
Vanadium sales kg  2,750  3,390  3,234  4,823  4,823
Sales US$m  80.46  106.28  84.49  125.99  125.99
Operating costs US$m  57.34  67.59  61.76  89.81  89.81
Operating costs US$/kg 20.85 19.94 19.10 18.62 18.62
Operating profit US$m  23.13  38.69  22.73  36.17  36.17
Pre-tax profit US$m  22.89  38.24  21.39  33.99  34.12
tax inc royalty US$m  7.60  12.32  8.73  14.92  14.92
Post-tax profit US$m  15.29  25.92  12.66  19.08  19.20
EPS US$c/s  1.89  3.21  1.57  2.36  2.38
PE x  6.2  3.7  7.5  5.0  5.0
EV/EBITDA x  4.1  2.5  4.2  2.6  2.6
Figures based on 100% of Vametco plant. Bushveld currently equity account for 26.6% of the Vametco plant

Crusader (CAS) A$0.08, mkt cap A$23.5m - Crusader appoints Marcus Engelbrecht, formerly at Stratex as ceo
Stratex (STI)
• Crusader must love something about London’s AIM market.
• Not only have they
• Mr Engelbrecht is to receive a salary package of US$360,000 inclusive of base salary, superannuation contributions, taxes and non-cash benefits.
• Short term incentive bonuses are payable in addition of US$360,000 at any time during 12 months the share price on a 10-day VWAP is at or above A$0.20/s.
• Performance rights are granted over 5% of shares in issue if the market cap of Crusader gets to A$150m
• Lets hope Crusader is quick to repay the loans Mr Engelbrecht and the board of Stratex paid out to Crusader following its failed takeover bid which was effectively voted down by Stratex shareholders.

Glencore (GLEN) 350.4 pence, Mkt Cap £50.4bn –Nominating 3 directors to Katanga Mining
• Glencore reports that it is nominating 3 directors to the board of 56% owned Katanga Mining following the resignation of three Katanga directors in the aftermath of an “internal review of certain of Katanga's historic accounting practices (the "Review") and the restatement of Katanga's financial statements. The Review was undertaken at the direction of the independent directors of Katanga, who engaged Canadian legal counsel, and an international accounting firm, to assist them in conducting the Review”.
• The new Glencore nominees include its CFO, Steven Kalmin and two un-named others “to work with the independent directors of Katanga to implement the required remediation measures to strengthen Katanga's corporate governance, compliance and control processes.”
• Glencore states that “The adjustments arising from the Review do not have a material adverse effect on the consolidated income, financial position or cash flows of Glencore.” The company also emphasises that “Glencore does not expect any change in the anticipated timing for the commissioning of the Whole Ore Leach project at Katanga.”
• The announcement also discloses that Katanga Mining is under investigation by the Ontario Securities Commission in a number of respects including the alleged filing of “periodic public disclosures contain statements that are misleading in a material respect and the adequacy of Katanga's corporate governance practices and compliance with those practices and the related conduct of certain directors and officers of Katanga. Katanga has also been advised that OSC enforcement staff are reviewing Katanga's risk disclosure in connection with applicable requirements under certain international bribery, government payment and anti-corruption laws.”
Conclusion: Glencore is strengthening its management control of Katanga Mining following the revelations of a number of shortcomings and continuing investigations into regulatory breaches and possible corruption allegations.

Highland Gold (HGM) 151p, Mkt Cap £490m – Novo JORC reserves and resources statement released
• Wardell Armstrong International (WAI) completed the update of the JORC-compliant reserves/resources following a 2014 re-evaluation of GKZ reserves.
• Proven and probable reserves are provided below including previous JORC-compliant estimates (2011) adjusted for mining dilution through 2011-16:
• Conclusion: Updated JORC reserves/resources come broadly in line with previous 2014 GKZ estimates (16,690kt at 3.59g/t AuEq) driving modelled grades in line with ROM grades. Previous JORC grades were inflated through mining dilution adjustments as mining operations delivered lower than modelled grades.
• Currently in development 1.3mtpa processing plant and mining operations expansion programme scheduled for commissioning in 2019 will accommodate higher ore tonnages helping to maintain production at 120koz on our estimates.
Ore Au Ag Pb Zn AuEq Au Ag Pb Zn AuEq
Novo PP reserves kt g/t g/t % % g/t koz koz kt kt koz
PP (2017) 17,991 1.81 35.73 0.96 0.53 3.3 1,047 20,667 173 95 1,909
PP (2011) 3,392 4.67 94.14 1.34 1.33 9.8 509 10,266 45 45 1,069
Prices used for conversion   1,279 20 2,008 2,001           
Source: Company          
• Updated Resources are provided below:
Ore Au Ag Pb Zn PbEq Au Ag Pb Zn
Novo PP resources kt g/t g/t % % % koz koz kt kt
Measured and Indicated 19,684 2.32 47.74 1.32 0.71 7.32 1,468 30,212 260 140
Inferred 4,462 1.09 34.46 1.01 0.69 4.34 156 4,944 45 31
Total 24,146 2.09 45.29 1.26 0.71 6.77 1,625 35,156 305 171
Source: Company         
New reserves/resources are calculated at a lower cut-off grade (1.6% PbEq).

Kodal Minerals* (KOD) 0.213p, Mkt Cap £13.9m – Lithium expert appointed as non-executive director
• Following the announcement earlier this month that Suay Chin International had completed its subscription for 20% of Kodal Minerals the company now reports the appointment of Dr. Qingtao Zeng as a non-executive director representing the interest of Suay Chin which, under the agreements between the companies, has the right to appoint a director while its holding exceeds 12% of Kodal Minerals.
• Dr. Zeng, holds a doctorate in geology from the University of Western Australia and is currently working as a consulting geologist with the international consulting group, CSA Global based in Perth.
• He seems particularly suited for the role with Kodal Minerals given that “Since 2015, Dr. Zeng has been extensively involved in the lithium exploration and development sector and through his strong network of contacts throughout China has helped clients complete a range of contracts relating to the supply or purchase of lithium in the form of concentrate or direct shipping ores”.
• Dr. Zeng has been granted options, exercisable at 0.38p per share for a period of 5 years, over 10m Kodal Minerals shares.
Conclusion: The appointment of an experienced technical consultant with extensive experience in lithium and a network of industry contacts in China as Suay Chin’s representative to Kodal’s board should bring important additional expertise to Kodal and help to cement its relations with its major shareholder.
*SP Angel act as Financial Advisor and broker to Kodal Minerals. A partner at SP Angel acts as Chairman to the company.

Savannah Resources (SAV LN) 5.25p, Mkt cap £33.4m – Pilot plant commissioning underway at Mutamba
• Savannah Resources reports that it has completed construction and stared commissioning of its 20tph pilot plant at the Mutamba mineral sands project in Mozambique.
• The principal purpose of the pilot plant, which is expected to be fully commissioned by the end of 2017, is to produce bulk samples of mineral sand “concentrate for metallurgical and product test work.”
• The testing is “to act as proof-of-concept for future development model - currently targeting first production in 2020 with estimated average annual production of 456,000t of ilmenite and 118,000t of non-magnetic concentrate over a 30-year life of mine”.
• Commenting on the successful construction being achieved within both time and budget, CEO, David Archer, highlighted that “the completion of the plant is another key milestone for the Mutamba Consortium as we move the Project towards a development decision”.
• Mr. Archer went on to comment that “the overall market setting for TiO₂ feedstocks continues to improve and new supply of TiO₂ feedstocks will be required to meet forecast demand and to ease anticipated market tightness."
Conclusion: The pilot plant at Mutamba is expected to be fully operational before the end of the year and will help to provide detailed information to inform a production decision at a time when there is reported to be a supply deficit for mineral sands concentrates.

Shanta Gold (SHG) 3.5p, Mkt Cap £27m – New Sinigida resource + operations update
• Updated Singida JORC compliant resources statement prepared by independent consultants (Sphynx Consulting CC based in South Africa) have been released this morning.
• Measured and Indicated resources totalled 5.11mt at 2.09g/t for 345koz of gold.
• Inferred resources category amounted to 7.17mt at 1.66g/t for 383koz.
• The majority of the measured and indicated resources are close to surface (less than 120m).
• Current resource estimate includes three mining licenses and seven mineralised zones with a combined strike length of 4.9km, widths ranging from 5-15m and traced for around 500m below surface.
• The mineralisation is reported to remain open at depth and along strike with numerous parallel structures.
• The team is expecting to shortly launch new exploration programme targeting further resources and infill drilling of the inferred resources at Jem, Gold Tree and Corn Patch deposits.
• On operations update, the Company reported significant progress on the cost saving programme as well as improvements to the processing plant expected to yield better gold recoveries at the NLGM operations.
• The management achieved $5.1m in annualised cost reductions with full benefit expected in Q1/18 on the back of review of contracts with suppliers, a reduction in the headcount and further cuts in non-essential G&A.
• The team is planning to substitute cut and fill underground mining method at Luika to long hole open stoping which is estimated to save $3.6m in 2018.
• Additionally, the Company is expecting to put in an additional pre-leach tank for $0.5m to increase the residence time of processed gold in the circuit allowing to improve gold recoveries by 1.5-2.0pp from current 91-92%; the management expects a four month payback period.
Conclusion: Updated resources constitute a downgrade to previous JORC resources estimates with grades and gold contained down 35% and 15%, respectively. Singida remains an early stage project with the management planning to continue exploration works infill drilling previously delineated targets to increase confidence in the resource ahead of reserves update.
On a positive side, side the management is doing well identifying further cost cutting opportunities. Although, we hope changes to underground operations do not risk sustainability of the mine.

Mon, 20 Nov 2017 10:50:00 +0000
Today's Oil and Gas Update - Union Jack Oil & Zenith Energy • Union Jack Oil*** (LON:UJO– 0.15p) – Bulking Up: Today’s news that the Company has completed its acquisition of the 20% interest in Fiskerton airfield underlines the Company's commitment to the aim of increasing its exposure to relatively low risk appraisal and redevelopment opportunities. With this acquisition, the underlying portfolio starts to move away from higher risk exploration and build towards a position at which it becomes self-sustaining. Ahead of more details on Fiskerton's prospectivity, we are reiterating our valuation, which remains $6.9mm/0.13p (Core) to $38.1mm/0.73p (Full).

Zenith Energy (LON:ZEN– 10p/C$0.16) – Context Required: Today's announcement is positive on the one hand, that the management team are learning from its experiences, but “learning about the well as we go along” does not fill us with confidence. It does, however, underline our repeated assertion that the Company needs to set the outline of the programme it is working towards; maybe this is part of a wider programme, we just don’t know. In undertaking a successful field rehabilitation, there must be a clear understanding of the field and how the actions that you undertake impact the reservoir. Traditionally, this is done by having a relatively small section of the field that you identify as being representative of the wider field, and executing a pilot project. In so doing, you understand the reservoir and, more importantly, you understand how your actions will precipitate a response in the reservoir. This may be what is happening here, but, and this is the point, we don't know because the Company hasn't provided a route map with deliverables against which it can be measured. We have said it before, and we repeat it again, the Company needs to set out what it’s going to do and how it is going to do it. Just blindly approaching the field on a well by well basis is, in our opinion, a sure-fire way to create a problem further down the line.

Mon, 20 Nov 2017 10:17:00 +0000
Today's Market View - Avesoro Resources, Botswana Diamonds, Bushveld Minerals Avesoro Resources  (LON:ASO) – Infill drilling at New Liberty
Botswana Diamonds (LON:BOD) – Exploration update on Free State exploration
Bushveld Minerals* (LON:BMN) BUY – Target price Reduced to 11p from 13p – Revised mineral resource statement shaves value on lower magnetite grade

Rio Tinto – Mick the motivator in running as potential Chairman of Rio Tinto
• We have followed the career of Mick Davis, from Billiton to BHP and Xstrata to its sale to Glencore
• We have sat in many analyst meetings with Davis leading the Xstrata board and have dissected the performance of the business and its divisions through numerous sets of accounts.
• Davis’ management style evolved rapidly after Billiton into a lean and highly efficient model which many miners could do well to emulate.  This may have partly come about through the connection with Glencore but Davis took the strategy, ran with the ball and beat the league in terms of management effectiveness.
• Xstrata was a mixed bag of unloved mining assets in its early days when Sir Mick took the helm.  The portfolio struggled to gain traction with little outside interest but Davis leveraged the value through the acquisition and further development of new assets.
• Big Mick, as he was then known, transformed the group through a series of bold acquisitions at surprisingly low cost.  Many of these assets were seen as second tier and has been passed over by the majors who were only interested in expensive, world-class assets.  Davis recognised the potential and the way in which to best develop their value.
• The trick was to devolve responsibility to the mines, fund efficiency gains and expand where appropriate, transforming profitability in each part of business.  Davis achieved all this with a minute head office of just five key personnel.  Unshackled from heavy corporate overheads and motivated by Mick, the mines excelled along with Xstrata’s margins, profitability and value.
• Some of the credit should also go to Marc Gonsalves, Davis’ former head of corporate affairs who helped the city to recognise the value of the Xstrata model and developing asset base.
• Many investors will welcome Davis as Chairman into Rio Tinto though transforming Rio into the new Xstrata may involve breaking Rio’s institutional mold.

Tesla’s ‘beast’ to contribute to downfall of Platinum and Palladium markets
• Tesla’s new ‘all electric’ semi-trailer truck that drives like a sports car and is powered by 2 electric motors is another step towards all electric auto future
• Sales of new trucks will almost certainly have negative consequences on platinum and palladium used in auto catalytic converters with estimates that demand will drop by 65% by 2040.
• Delivery schedules are often well suited to electric vehicles with and previous trials have shown drivers to absolutely love them

Lithium Power shares rise as Chinese show interest
• Lithium Power has entered into discussions with Fulin Group over its Maricunga lithium brine project in Chile in which Lithium Power holds 50% interest
• The project is regarded as one of the highest quality pre-production lithium project in Chile

Japanese institute trying to extract precious metal from nuclear waste
• One of largest research institutes in Japan, Riken, kicking of trial in 2018 to confirm the theoretical possibility that radioactive materials can be changed by shooting beam into them
• Whether and when applications can be developed based on findings remains unclear, goal is to find a way to reduce nuclear waste by converting it into palladium

Japanese rail company apologises after train departs 20 seconds early
• “We sincerely apologise for the inconvenience caused,” the company said.
• The rail company has assured customers that staff had been given additional training to ensure it doesn’t happen again.

Dow Jones Industrials  +0.80% at 23,458
Nikkei 225   +0.20% at 22,397
HK Hang Seng   +0.62% at 29,199
Shanghai Composite    -0.48% at 3,383
FTSE 350 Mining   -0.88% at 16,812
AIM Basic Resources   -0.07% at 2,646

US$1.1793/eur vs 1.1781/eur yesterday.  Yen 112.56/$ vs 113.18/$.  SAr 14.182/$ vs 14.371/$.  $1.325/gbp vs  $1.316/gbp. 
0.755/aud vs 0.759/aud.  CNY 6.634/$ vs 6.634/$.

Commodity News
Precious metals:         
Gold US$1,283/oz vs US$1,277/oz yesterday
   Gold ETFs 69.4moz vs US$69.5moz yesterday
Platinum US$935/oz vs US$932/oz yesterday
Palladium US$996/oz vs US$988/oz yesterday
Silver US$17.10/oz vs US$17.00/oz yesterday
Base metals:   
Copper US$ 6,774/t vs US$6,748/t yesterday - Chinese traders race to become growing force in global copper trading markets
• Traders on Shanghai Futures Exchange are increasingly influencing price of copper rather than on London metal exchange, with centre of gravity in metals pricing shifting 
• Accounts for nearly half worlds copper consumption and whilst traders have looked at Chinese data as an indicator on future copper demand, pricing typically followed trading in copper futures contracts from the London Metal Exchange
Aluminium US$ 2,104/t vs US$2,114/t yesterday
Nickel US$ 11,490/t vs US$11,610/t yesterday
Zinc US$ 3,158/t vs US$3,128/t yesterday
Lead US$ 2,420/t vs US$2,418/t yesterday
Tin US$ 19,430/t vs US$19,500/t yesterday
Oil US$61.7/bbl vs US$62.0/bbl yesterday
Natural Gas US$3.097/mmbtu vs US$3.075/mmbtu yesterday
Uranium US$24.40/lb vs US$23.90/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$62.2/t vs US$61.1/t
Chinese steel rebar 25mm US$654.6/t vs US$654.6/t
Thermal coal (1st year forward cif ARA) US$82.0/t vs US$84.6/t
Premium hard coking coal Aus fob US$188.0/t vs US$187.6/t
Company News
Avesoro Resources  (LON:ASO) 1.95pence, Mkt Cap £103.8m – Infill drilling at New Liberty
• Avesoro Resources reports that it is deploying 4 diamond drill rigs to undertake a 46 hole, 14,000m, infill drilling programme within and below the designed pit at the New Liberty mine in Liberia.
• The drilling is particularly aimed at the inferred portion of the current resource which stands at “some 3.5Mt with a mean grade of 2.8g/t Au and containing 315koz of gold.” Currently the programme is expected to be completed in Q1 2018 and will provide additional information for a revision of the recently an updated mineral resource estimate for New Liberty which classed 9.6mt at an average grade of 3.2g/t gold as measured and indicated with an additional 6.4mt at 3g/t gold (620,000oz) classified as inferred.
• If the programme is successful in upgrading the inferred resource to indicated or better, the material can be included as ore in the pit model rather than as waste as is the current situation.
• The “in-pit” inferred resource to be targeted in the current drilling campaign represents, therefore, approximately half of the total inferred resource at the mine and should represent a relatively achievable, low risk route to increasing the mineral inventory at the mine.
• We find the company’s comment that “The Drilling Contract has a value of approximately US$1 million, which will be paid in cash, with a HQ drilling cost of between US$59 and US$69 per metre” provides an interesting insight into current drilling costs in the area, though the selected contractor, Zwedru Mining Inc, is a wholly owned subsidiary of Avesoro Mining’s majority shareholder and hence a related company which might be able to offer particularly competitive rates for the programme.
Conclusion: The drilling programme at New Liberty may well expand the mineable mineral inventory at New Liberty. Since the Turkish group, MNG Gold, took control of the New Liberty mine in June 2016, it has implemented improvements and remedial action to improve the plant operations and tailings disposal arrangements. The infill drilling campaign may now give them the opportunity to define the deeper level resources beneath the pit more precisely and to identify potential for modifications to the pit design. We look forward to results as they become available.

Botswana Diamonds (LON:BOD) 2 pence, Mkt Cap £9.2m – Exploration update on Free State exploration
• Botswana Diamonds has provided a progress report on its kimberlite exploration programme in the Free State of S Africa.
• A combination of magnetic, electro-magnetic and gravity geophysics has identified eight kimberlite bodies ranging up to 1.15 hectares in area at the surface along a northwest trending “kimberlite feeder system along which the diamond mines of Jagersfontein, Koffiefontein and Kimberley are located.”
• Study of the whole-rock geochemistry “shows similar compositions in the kimberlites to the surrounding mines.”
• The next phase of work, during early 2018, is expected to focus on the “indicator mineral chemistry for each of the pipes to determine an economic interest rating which will prioritise further work.”
• Commenting on the identification of the kimberlites, Botswana Diamonds Chairman, John Teeling, noted that “We now know the sizes of each pipe/dyke and we believe that each could contain diamonds.  The next step is to evaluate the diamond indicator minerals in each pipe to decide priorities for drilling."
Conclusion: Although exploration is at a relatively early stage, the identification of eight, potentially diamond bearing kimberlite bodies along a trend hosting existing and historic producing diamond mines close to the birthplace of the South African diamond industry, provides Botswana Diamonds with promising targets for its 2018 exploration programmes.

Bushveld Minerals (LON:BMN) 9p, mkt cap £72.6m – Revised mineral resource statement shaves value on lower magnetite grade
BUY – Target price Reduced to 11p from 13p
• Bushveld Minerals reported an operational update on the Vametco mine in which it revised its Mineral Resource Estimate statement yesterday.
• Grade: The good news within the statement is that the vanadium grade verified in the magnetite mineral within the Indicated Mineral Resource is 2.01% which is the same as the average feedstock grade into the plant and the same as that used in our financial modelling.
• Resource adjustment: the less good news is that the magnetite grade in the Indicated Mineral Resource magnetite grade is seen as 27.23% from 29.64%. This is also lower than our assumed magnetite grade of 28.14%. The adjustment reduces our valuation for the Vametco business accounting for much of the reduction in our valuation.
• AfriTin:  We have further adjusted our valuation for AfriTin within Bushveld to account for AfriTin’s revised market capitalisation following its flotation.  We have also removed value for the shares which have been distributed directly to investors.
• Ferro vanadium prices: have bounced and risen sharply in the last week to $38.5/kg from around $34/kg driven by ongoing growth in China for higher vanadium content in steel rebar at a time when production from vanadium-rich slag has been cut back due to anti-pollution measures relating to air quality regulations.
• Vanadium prices look as if they may move substantially higher in the short term and may also settle higher in the longer term.
• Price assumptions: we have elected to simply assume the current price runs for another quarter into the new year before we pull back our price assumption to $27.5/kg for the longer term.
• If we were to assume today’s ferro vanadium price over the long term then this would nearly double our valuation for Vametco and for Bushveld Minerals.
• Production:  we assume Bushveld Minerals will raise annual production capacity to 5,000tpa in 2020 from around 2,750tpa this year.  Demand growth in China should be more than sufficient to take up the new production particularly while certain sources of supply are so constrained.
• Resource scale:  There is more than enough ‘Indicated’ resource grading 2.01% vanadium in magnetite.  The 61.5mt Indicated resource is sufficient to feed production at our expanded rate till 2043 which is beyond the end point for our valuation.
• Inferred resource: the 47.4mt inferred resource figure is interesting in that while it is estimated to have a slightly lower grade at 1.99% vanadium in magnetite it has a higher magnetite grade at 29.75% which combined gives a higher overall vanadium content and may indicate some better, though less well defined areas to work in.  The inferred resources also indicates good potential for another 20 years of additional operation taking the mine and process plant to 2063, far beyond the time horizon of most investors.
Conclusion:  Our revised valuation reflects a number of adjustments.  First is the adjustment to lower magnetite grades though the vanadium grade within the magnetite remains the same as our modelling.  Second related to the removal of value due to the AfriTin listing.  There is some compensation from higher vanadium prices and we retain value for the P-Q Iron & Titanium project in South Africa.
*An SP Angel Mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

Fri, 17 Nov 2017 10:49:00 +0000
Today's Market View - BlueJay, Phoenix Global Mining, Spinnaker Opportunities and others BlueJay Mining* (LON:JAY) STRONG BUY  (Target Price raised to 37p from 24p) – Valuation upgrade to NPV >$400m on future expansion and higher ilmenite pricing
BlueJay included in MSCI index today Click here for full note
Mkango Resources* (LON:MKA) - BUY – Talaxis investment implies a value of £24.5m for Songwe Hill Click here for full note
Phoenix Global Mining* (LON:PGM) – New corporate presentation
Spinnaker Opportunities* (LON:SOP) – Corporate update
121 Mining Investment Conference London – 27 th - 28th November, 8 Fenchurch Place
• The 121 event is SOLD OUT with 70 mining companies and investors from >300 institutions attending and presenting
• Commodities of the future panel: Metals driving new energy systems, cleaner fuels, and renewables growth - 11:50am Monday 27th
o From grid to battery – what metals will form the energy value chains of the future?
o EVs and new technologies impacting supply and demand dynamics
o What are the key considerations when committing capital to projects?
o Costs versus traditional electricity generation

Buoyant outlook once again draws investors to commodities
• Total commodity investor assets under management (AUM) continue their steady upward trend, with Barclays showing an excess of $300 billion for the first time since 2013.

Dow Jones Industrials  -0.59% at 23,271
Nikkei 225   +1.47% at 22,351
HK Hang Seng   +0.74% at 29,064
Shanghai Composite    -0.10% at 3,399
FTSE 350 Mining   +0.50% at 17,058
AIM Basic Resources   +0.49% at 2,648

US – US data hints at rising underlying inflation
• Latest figures from the Labour Department show US Consumer Price Index edging up 0.1%, lowering the YoY gain to 2.0% from 2.2% in September.
• However, the Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index (which excludes food and energy), has persistently undershot central bank targets for 2% for more than five years.
• Underlying inflation showed gradual development as the costs of rents and healthcare rose. October figures show the cost of rental accommodation increased 0.3% while hospital services costs also rose 0.5% from previous levels.

Zimbabwe – BBC reveals Chinese military joint venture with Zimbabwe generals over Marange diamond fields
• The BBC revealed on the news last night Chinese military involvement in the mining of the Marange diamond fields in Zimbabwe.
• We hope the British government might move discover the killers of RAB, an SAS officer living in the region who was found hanged in 2016.
• RAB had been running a gold mine in the region but was also thought to have been keeping an eye on activities at Marange.

Canada – December’s tax sell-off season offers potential for cheap stock as investors deleverage mining investments
• Somethings in life are wonderfully predictable, the migration of the Wildebeest across the Serengeti, .

US$1.1781/eur vs 1.1819/eur yesterday.           Yen 113.18/$ vs 112.90/$.         SAr 14.371/$ vs 14.375/$.            $1.316/gbp vs $1.318/gbp
            0.759/aud vs 0.759/aud.            CNY 6.634/$ vs 6.633/$.

Commodity News
Precious metals:
Gold US$1,277/oz vs US$1,283/oz yesterday
• Market expectations that the US Federal Reserve will raise interest rates in December increased on the release of positive underlying economic data, bolstering the dollar index. The US consumer prices increased in October on the back of buoyant rental and healthcare costs, while a rise in weekly wages is encouraging broad consumer spending. Developing signs of economic recovery boosts the opportunity for a Fed rate rise in December, despite concerns over low inflation.
• A veteran Fed policymaker continued, stating “falling unemployment and sustained growth mean the US economy has accelerated beyond a sustainable level so the Fed should continue to raise interest rates, including next month”.
• Uncertainty mounted as the proposed Senate Republican tax plan came under fire from two Republican lawmakers as the plan repealed the Obamacare mandate and selectively gave permanent tax cuts to US corporations.
   Gold ETFs 69.5moz vs US$69.4moz yesterday
Platinum US$932/oz vs US$929/oz yesterday
Palladium US$988/oz vs US$987/oz yesterday
Silver US$17.00/oz vs US$17.08/oz yesterday
Base metals:   
Copper US$ 6,748/t vs US$6,725/t yesterday
Aluminium US$ 2,114/t vs US$2,078/t yesterday
• Idle aluminium capacity, the victim of President Xi Jinping’s flagship supply-side reforms and ongoing winter war on smog, could once again produce the abundant metal. Chief Executive Officer Zhang Bo of the nation’s top producer of the metal, China Hongqiao Group Ltd. announced considerations to physically relocate shuttered plants to other countries. The world’s biggest smelter has been forced to cut annual capacity as part of Xi’s drive to curb oversupply and minimise harmful pollution, with cuts extending an additional to 30% across the winter heating period covering Nov. 15th – Mar. 15th.
• The preference would be to relocate idled facilities to Indonesia, which already represents a significant supplier of raw materials to China. The move would also be favourable to the new hosting nation, who are eager to extract more wealth from its abundant resources by processing them in country, while domestic demand remains positive.
• The relocation matches growing Chinese sentiment to halt unrestricted expansion as the nation transitions into slower, mature economic growth with a less tolerance stance on pollution, and aligns with the ‘government’s push on overseas expansion’.
• The firm, based in the coastal province of Shandong, arranged to close nearly a third of its capacity, accounting for 2.68 million tonnes after the construction of plants without proper approval.
Nickel US$ 11,610/t vs US$11,600/t yesterday
• Cooling Chinese economic data in October encouraged broad profit-taking as London nickel edged back towards multi-weeks lows. Weakening industrial demand sparked concerns on the outlook for stainless steel, and therefore nickel, as investors locked in gains following the recent 20% price rally.
• CRU’s Peter Peng noted “the stainless steel market is weak as (there has been) too much supply since Q3, (so) nickel prices should fall back to in line with real demand from stainless steel”.
Zinc US$ 3,128/t vs US$3,118/t yesterday
Lead US$ 2,418/t vs US$2,446/t yesterday
Tin US$ 19,500/t vs US$19,420/t yesterday
Oil US$62.0/bbl vs US$61.6/bbl yesterday
Natural Gas US$3.075/mmbtu vs US$3.089/mmbtu yesterday
Uranium US$23.90/lb vs US$23.40/lb yesterday
Lithium - Extremely fast charge battery technology to push lithium demand higher
• News from a lithium-ion (Li-ion) battery technology company of a new HD-Energy® Technology for Electric Vehicles (EVs) which features extreme fast charging in only 5 minutes, could add yet another layer to the massive demand for lithium.
• New Technology developed for EV’s by Enovate features 5 minute charging with high driving range of 240 miles
• Charging time has long been barrier to EV’s and the new charge time breaks down this factor – adding to the demand for lithium
Cobalt - Manufacturers rush to North American Cobalt
• Currently only accounts for 6% of supply but consumers being led away from DRC due to scrutiny
• Projects in Ontario’s cobalt belt have large deposits at high grade of 22%, with exploration to identify more targets on-going 
Iron ore 62% Fe spot (cfr Tianjin) US$61.1/t vs US$60.9/t
Chinese steel rebar 25mm US$654.6/t vs US$654.7/t
Thermal coal (1st year forward cif ARA) US$84.6/t vs US$84.5/t - $20bn of assets shifted away from coal
• Allianz, Aviva, AXA and SCOR have divested from providing insurance coverage and investments to new coal projects, which are required to fund, build and operate projects and without will shut down.
• Companies represent 13% of all global insurance assets
Premium hard coking coal Aus fob US$187.6/t vs US$187.6/t

Tungsten APT European US$270-280/mtu vs US$275-285/mtu last week

Company News
BlueJay Mining* (LON:JAY) 24.5p, Mkt Cap £189m – Valuation upgrade to NPV >$400m on future expansion and higher ilmenite pricing
BlueJay included in MSCI index today
(Target Price raised to 37p from 24p)
Click here for full note
• BlueJay are making good progress towards the start of production next year.
• Valuation: we are raising our NPV valuation to 37p/s today in response to the high grade and purity levels of BlueJay’s ilmenite concentrate product.
• Production: While BlueJay plans to start production next year we assume sales  start in 2020.  We escalate the mining rate from 1mtpa in 2020 to 2mt in 2021,  3mt in 2022.  We then see a further jump in production to 5.5mtpa from 2026.
• Capex: we assume a $60m capital cost to start followed by a further $100m for the second phase expansion.  We assume a 10% discount rate by way of standardisation. The project gives a 43% IRR on these metrics.
• Pricing: We assume BlueJay could receive $200/t for its product, up from $180/t previously though management reckon they will get higher price levels.
• Upgrading: we have also assumed the upgrading of material at the first sieve to 18.5%.  This has the double benefit of raising the input feedstock grade reducing costs and improving throughput rates.
• Feasibility Study: A number of consultants are working on more detailed plans for the process plant and related infrastructure.
• Costs: we assume relatively high mining, processing and loading costs for a dredging operation given its location in the north of Greenland.  These costs should come down as the operation proves itself.  We assume $3.25/t for mining, $5.0/t for processing and $4.5/t for loading. The loading cost is particularly high given that it should simply require a longish conveyor belt to reach a ship parked in the Fjord, though it should cover the use of a tug boat to manage passing ice bergs.
• Offtake: management are in Hong Kong presenting at the ‘TZMI’ Titanium and Zircon Congress for mineral sands producers. We expect discussions to continue on offtake with Chinese producers and assume 60% of BlueJay’s Ilmenite concentrate may be sold in China with the rest to be sold in the West.
• TZMI conference: BlueJay presented at the major Titanium industry ‘TZMI’ conference in Hong Kong yesterday.
• Price view: Feedback from the conference is that titanium feedstock supply is much tighter than previously thought indicating that prices are expected to rise strongly over the next three years with a major supply constraint 18 months out.
• MSCI Index:  BlueJay are to be included in the MSCI World Micro Caps, effective 30 November 2017.
Conclusion: BlueJay is fortunate to have discovered the World’s largest, known, high-grade, ilmenite mineral resource. The sheer scale and consistency of the high-grade mineralisation is extraordinary and while the location in Greenland presents some challenges these appear relatively easy to overcome from an engineering and production perspective.
*SP Angel act as nomad and broker to BlueJay Mining.  An SP Angel Mining analyst has visited the Dundas (formerly Pituffik) ilmenite sands project in Greenland.

Mkango Resources* (LON:MKA) 6.8p, Mkt Cap £5.8m – Talaxis investment implies a value of £24.5m for Songwe Hill
Click here for full note
• Mkango reports that Noble Group’s Talaxis has agreed to invest £12m directly in Mkango’s Songwe Hill rare earth project in Malawi for a 49% interest implying a value of £24.5m for the project.
• The funds will be used to fund a bankable feasibility study and will be delivered in three tranches, with the initial £2m due on receipt of regulatory approval providing an 8% interest.  A further £3m, for an additional 12% interest, is due 45 days after receipt of regulatory approvals by the TSXV and the third tranche of £7m, for a further 29% interest, is subject to a number of conditions including the publication of an updated NI-43-101 compliant resource estimate.
• Upon completion of the bankable feasibility study, Talaxis has the option to increase its stake further, to 75% of Songwe Hill and securing rights to 100% of the production, for the cost of implementing the BFS and funding the project through to production.
• “Under the terms of the Agreement, Talaxis will be Mkango’s preferred partner for all rare earths’ projects worldwide and for all activities of any sort in Malawi.”
• In addition to the investment in the Malawi rare-earths project, Talaxis is also to make an investment into the Mkango joint venture with Metalysis Limited where collaborative research is underway to harness Metalysis’ solid state powder technology for the development and commercialization of 3D printed rare earth magnets.
• Iniitially Talaxis plans to invest £1m to acquire 24.5% of Mkango’s 85% interest in the joint venture (20.8%) interest in the joint venture and valuing it at £4.8m.
• Tallaxis has an option to invest a further £1m to acquire a further 20.8% interest leaving Mkango with a 43.4% interest in the joint venture, with Talaxis holding 41.6% and Metalysis with 15%.  Based on the initial Talaxis Investment, Mkango’s 64.2% of the Joint Venture would be worth £3.1m.
Conclusion: Talaxis’s investment secures the completion of the bankable feasibility study for Songwe Hill and provides a pathway for funding and developing the project through to production. This important endorsement of Mkango Resources provides Talaxis with up to 75% of the project and access to the future production as well as building for a wider partnership in the developing global rare earths industry. A separate investment in the joint venture with Metalysis provides Talaxis with an entry into the down-stream use of rare-earths.
*SP Angel acts as Nomad and Broker to Mkango Resources

Phoenix Global Mining* (LON:PGM) 4.8p, Mkt Cap £10.9m – New corporate presentation
• Phoenix Global Mining have published a new corporate presentation.
• The company recently announced an increase of more than 50% in overall oxide resource tonnage at the historic Empire mine in Idaho.
• Phoenix’s contained copper within the new JORC resource increased by 33% to 90,547t grading 0.47% copper.
• Measured & Indicated resources also increased by >40% to 10.4mt grading 0.52% copper, 0.13% zinc, 0.23g/t gold and 10.62g/t silver.
*SP Angel acts as Nomad to Phoenix Global Mining

Spinnaker Opportunities* (LON:SOP) 3.9p, mkt cap £1m – Corporate update
• Spinnaker opportunities, looking for opportunities in the Oil & Gas, energy and wider resources sector.
• Spinnaker Opportunities, a cash shell, reports it is still looking for a suitable opportunity.
• “The Company has been introduced to numerous potential opportunities, of which it has reviewed a small number in greater detail.  This has included desktop analysis, meetings with management of potential target companies, initial due diligence and consultation with brokers as to market appetite.
• None has so far met the Company's stringent acquisition criteria which, as stated at the time of its IPO, are - in an industry with long term profit potential, opportunity for the Spinnaker team to add value, excellent management, market appetite, and valued at between £5 million and £30 million.
• The Company continues to see a number of good quality businesses and is confident that its strategy of being focused on sectors where the board and its advisers have experience, together with a highly disciplined selection process, will deliver an excellent return for the Company's shareholders.
• Of the £1.3 million that the Company raised at IPO, the Board and its close associates invested over £500,000, including £310,000 directly by the Board, who own in aggregate 27.7 per cent. of the Company's issued share capital.
• The Company's overheads are minimal, principally because the Company's directors took the decision not to take any salaries, and all due diligence to date has been undertaken internally at no cost to the Company.  Accordingly, as at 31 October 2017, the Company had cash of £1.1 million, with no debt, and its net asset value per share was 4.23p.”
* SP Angel act as broker and advisors to Spinnaker Opportunities

Thu, 16 Nov 2017 10:54:00 +0000
Today's Market View - Savannah Resources, Altus Strategies, Altus Strategies and others Altus Strategies (LON:ALS) BUY – Target price 12.2p – Legend deal deadline extended
Noble Group (SGX:CGP) – report the restructuring of its maturing ‘green tech’ and speciality metals supply chains
Phoenix Global Mining* (LON:PGM) – Increased resource at the Empire mine
Savannah Resources (LON:SAV) – Environmental permits issued in Oman
SolGold* (LON:SOLG) – Quarterly shows further progress towards the initial resources estimate at Alpala

121 Mining Investment Conference London – 27 th - 28th November, 8 Fenchurch Place
• The 121 event is SOLD OUT with 70 mining companies and investors from >300 institutions attending and presenting
• Commodities of the future panel: Metals driving new energy systems, cleaner fuels, and renewables growth - 11:50am Monday 27th
o From grid to battery – what metals will form the energy value chains of the future?
o EVs and new technologies impacting supply and demand dynamics
o What are the key considerations when committing capital to projects?
o Costs versus traditional electricity generation

Zimbabwe – The army takes control of Harare, national broadcaster, airport and the personal residence of the head of state.
• Military actions are seen as a pre-emptive measure to stop Grace Mugabe, the president’s 53-year-old wife, and her allies to succeed the President.
• Developments are believed to have been sparked by a sudden dismissal of Emmerson Mnangagwa, the vice-president, veteran of Zimbabwe’s liberation war and the expected successor to Robert Mugabe.
• Mnangagwa, a former Minister of State Security and Minister of Defence, has close ties with military forces with separate reports saying former Vice President has already flown back to Zimbabwe to potentially take control of the government.
• Maj Gen Sibusiso Moyo has stated that this is not a coup and that the president and family are safe and sound and their security is guaranteed while actions are targeted at removing “criminals” around Robert Mugabe.
• The army has taken over the state ZBC TV station and announced that it is seizing power to target "criminals" around President Robert Mugabe, people who have caused ‘social and economic suffering’.
• Zanu-PF had accused Gen Chiwenga of "treasonable conduct" following comments that the army was prepared to end the recent political purges within Zanu-PF.
• The Army have arrested the Deputy Director of the Central Intelligence Organisation and the President of ZanuPF National Youth League who is a known supporter of Grace Mugabe.
• The military and the people are reported not to be keen to see the empowerment of Grace Mugabe and the empowerment of a Mugabe dynasty.  They are also unhappy at the purging of a number of former war veterans from the liberation of Zimbabwe in the 1970s including Mr Mnangagwa.
• While the military action has been described as a ‘bloodless correction’ it is possible that the political transition may be used as an opportunity to settle a number of old scores.
• In 1980 Robert Mugabe signed an agreement with North Korea to train and equip the Fifth Brigade for the Zimbabwe National Army.
• The Fifth Brigade brutally crushed ZAPU resistance in Matabeleland with atrocities committed in which >10,000 civilians were reputedly buried in mass graves.  The Matabele may well seek revenge against the Shona for the ‘Gukurahundi’ meaning, ‘the rain which washes away the chaff before the spring rains’.

Dow Jones Industrials  -0.13% at   23,409
Nikkei 225   -1.57% at   22,028
HK Hang Seng   -0.83% at   28,910
Shanghai Composite    -0.79% at    3,403
FTSE 350 Mining   -1.50% at   16,884
AIM Basic Resources   +0.02% at    2,636

US – Chris Evans, a Chicago Fed head and a voting member on the FOMC, shared his frustration with low inflation expectations in the US despite solid gains in the economic growth.
• “With each low monthly reading (of PCE, a preferred Fed’s inflation measure) it gets harder and harder tfor me to feel comfortable with the idea that the step-down last spring was simply transitory,” Evans said.
• Evans did not say if he is going to support a rate hike in December.

Japan – Q3 GDP came marginally above market estimates buoyed by strong exports and a drop in imports.
• External demand contributed 0.5pp to the headline growth.
• On the downside, personal consumption contracted 0.2%qoq while business investment posted a 0.2%qoq growth compared to expectations of a 0.3%qoq increase.
• Annualised quarterly growth came in at 1.4% in Q3, down from a revised pace of 2.6% in Q2 (upped from 2.5%) and beating market forecasts for a 1.3% reading.

UK –Unemployment rate held at the lowest level since 1975 in three months to September while the jobs report showed a pick up in productivity during the quarter marking the first positive reading since Q4/16.
• Despite positive productivity numbers the Office of National Statitstics (ONS) said “the medium-term picture continues to be one of productivity growing but at a much slower rate than seen before the financial crisis”.
• Sadly real wasges continued to shrink as earnings growth failed to keep up with inflation.

Australia – Wage growth remained subdued in Q3, the latest numbers showed.
• Labour earnings increased 0.5%qoq underperforming market estimates for a 0.7% reading.
• Additionally, the data includes the effect of a larger than normal increase in the minimum wage during the quarter suggesting the underlying growth is even weaker.
• The currency fell 0.6% against the US$ on the news.

US$1.1819/eur vs 1.1685/eur yesterday.           Yen 112.90/$ vs 113.84/$.         SAr 14.375/$ vs 14.477/$.            $1.318/gbp vs $1.310/gbp
            0.759/aud vs 0.762/aud.            CNY 6.633/$ vs 6.642/$.

Commodity News
Precious metals:
Gold US$1,283/oz vs US$1,272/oz yesterday
• Gold remained within a tight trading range as investors await October’s consumer inflation data to provide potential hints on the expected monetary tightening policy next month by the Federal Reserve. Positive inflation data could dictate sentiment for the forecast interest rate hike, with an expected increase by 25 bps in December and unusually weak physical market putting downside pressure on near term gold prices.
• However, St. Louis Fed President James Bullard noted the Federal Reserve should keep its benchmark interest rate at current levels until there is an upswing in inflation.
• Lack of progression of US tax reforms, with growing political risk linked to the U.S. Senate Republicans repealing a key component of Obamacare to their ambitious tax-cut plan, have seen investors favour the precious metal.
• Overseas, geopolitical tensions with North Korea rise as a regime-run state media has criticized Donald Trump for insulting leader Kim Jong-Un, adding that “He should know that he is just a hideous criminal sentenced to death by the Korean people”. The editorial in the ruling party newspaper Rodong Sinmum continued to insult the U.S. President, calling him a coward for failure to tour the demilitarized zone dividing the two Koreas. The editorial follows an escalating war of words with the latest trading of personal insults against the ‘short and fat’ supreme leader.
   Gold ETFs 69.4moz vs US$69.3moz yesterday
Platinum US$929/oz vs US$930/oz yesterday
Palladium US$987/oz vs US$996/oz yesterday
Silver US$17.08/oz vs US$16.92/oz yesterday
Base metals:   
Copper US$ 6,725/t vs US$6,867/t yesterday
Aluminium US$ 2,078/t vs US$2,108/t yesterday
• China’s winter war on smog moves into its official period of production capacity cuts, expected to run through till March in a move to combat air pollution as nation-wide peak coal-fire heating swells. Chinalco, the biggest state-run aluminium producer, has moved to cut its alumina capacity by 2 million tonnes to comply with the restrictions on heavy industry. Chinalco’s overall refining capacity for alumina, is approx. 7 million tonnes, indicating a 27% cap on winter production.
• A range of industrial plants have been ordered to curb output as Beijing actions against pollution, with aluminium and alumina producers in 28 northern cities must reduce their capacity by at least 30% for environmental reasons.
Nickel US$ 11,600/t vs US$12,330/t yesterday
• Broad selling of base metals follows concerns over the slowing growth in the Chinese economy, with industrial production reducing to 6.2% in October and fixed asset investment dropping to 7.3%. Nickel lead the contraction, falling 5% on the Shanghai Futures Exchange.
Zinc US$ 3,118/t vs US$3,201/t yesterday
Lead US$ 2,446/t vs US$2,488/t yesterday
Tin US$ 19,420/t vs US$19,470/t yesterday
Oil US$61.6/bbl vs US$62.9/bbl yesterday – oil falls on IEA report that fracking might recover quicker than previously anticipated.  Warmer weather also expected to dent oil demand.
• Warming global temperatures are expected to cut global consumption, with the Paris-based IEA reducing its oil demand forecast by 100,000 barrels per day; equivalent to 1.5 million bpd and 1.3 million bpd in 2017 and 2018 respectively. A steadily rebalancing market is also under threat as non-OPEC output is set to rise.
Natural Gas US$3.089/mmbtu vs US$3.110/mmbtu yesterday
Uranium US$23.40/lb vs US$23.15/lb yesterday
Lithium - Lithium battery recycling subsidiary established by Narada
• China headquartered battery maker of lead and lithium batteries invested $15m in setting up lithium recycling
• Said was important for corporate social responsibility and to create sustainable long term supply chain
Cobalt - Amnesty warns on use of child labour in cobalt mining
• Announced that world’s largest EV and electronics companies are not doing enough to ensure supply not mined by children in Democratic Republic of Congo
• Said that almost half of 28 largest companies including Microsoft, Renault, Huawei were not doing enough to demonstrate even minimal compliance with due diligence standards
Apple and BMW best performers whilst Daimler and Renault scored worst

Iron ore 62% Fe spot (cfr Tianjin) US$60.9/t vs US$62.5/t
Chinese steel rebar 25mm US$654.7/t vs US$650.4/t - Kobe Steel plant loses remaining industrial quality badge
• Japan’s third-largest steelmaker, Kobe Steel, is set to lose all of its Japan Industrial Standards (JIS) certifications at its Hatano plant resulting from the broad data falsification scandal. The certification loss follows discovery of the sale of products with falsified specifications to over 500 customers across the automotive, aerospace and other large engineering manufacture sectors
• The fallout from one of Japan’s biggest industrial scandals also extends to the stripping of the government-sanctioned seal on insulated copper tubing and its ISO 9001 quality certificate from the International Standards Organization
• JIS-certified products comprise 40% of Hatano’s sales by weight, forcing a big blow to the company’s revenues and its extensive role in global supply chains
• Japan manufacturing prowess has taken a hit in recent weeks from Kobe scandal and improper Nissan inspection procedures
Thermal coal (1st year forward cif ARA) US$84.5/t vs US$86.4/t - European insurers pull out of coal investments
• Insurers pulled $20bn out of coal investments but most are European and none of top 9 US has taken meaningful action according to unfriend coal
• Many companies such as Lloyd’s of London, AXA and Swiss Re are planning to out of bonds and stock invested in coal
Premium hard coking coal Aus fob US$187.6/t vs US$187.6/t

Tungsten APT European US$270-280/mtu vs US$275-285/mtu last week

Company News
Altus Strategies (LON:ALS) 7.8p, Mkt Cap £8.5m – Legend deal deadline extended
BUY – Target price 12.2p
• The deadline for completion of definitive documentation regarding the acquisition of TSX-V listed Legend Gold under the non-binding LOI has been extended to 20 November 2017, from 14 November.
• 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.

Noble Group (SGX:NOBL) 0.19SGD, Mkt cap SGD261.2m – report the restructuring of its maturing ‘green tech’ and speciality metals supply chains
• To capture opportunities from these new markets, Noble is developing two wholly owned subsidiaries, Kalon and Talaxis.
• Kalon is focussing on special ores and metals upstream and downstream operations, while Talaxis is to dedicated to developing the cobalt, lithium and rare earth business.
• The rare earths and special ores & metals groups have positioned themselves to emerge as significant participants in managing those flows that will benefit from trends such as the grid decarbonization and the new opportunities offered by the growing EV market.
• Noble’s rare earths and special ores & metals businesses operate long-term flows and are active in upstream origination in Jamaica, Malawi, Mongolia, Russia, Rwanda and South Africa. Their downstream distribution network extends to Canada, China, Malaysia, Thailand, USA and Europe, and our teams now cover all the major industrial players across those sectors.
• Consumers of specialty metals and rare earth elements globally are often dependent today on the supply chains that have low resiliency. Noble Group entities are building on a track record of successfully creation of new industrial supply streams to support consumers who are seeking alternative and more diverse sourcing solutions as a pre-requisite for their future development.
Conclusion: We see this restructuring as an important move in the orientation of Noble’s business towards supplying metals for the new generation of electric vehicles.

Phoenix Global Mining* (LON:PGM) 5p, Mkt Cap £11.5m – Increased resource at the Empire mine
• Following its recent infill drilling programme, Phoenix Global Mining has announced an increase of more than 50% in overall oxide resource tonnage  at the historic Empire mine in Idaho. Compared with the April 2017 estimate, contained copper within the resource has increased by 33% to 90,547 tonnes at an average grade of 0.47% copper.
• The Measured & Indicated portion of the resource tonnage has increased by more than 40% to 10.4m tonnes at an average grade of 0.52% copper, 0.13% zinc, 0.23g/t gold and 10.62g/t silver.
• The new estimate was prepared, in accordance with the JORC Code by Hard Rock Consulting incorporating date from the recently completed 28 hole drilling programme and used a cut-off grade of 0.184% copper.
• Commenting on the revised resource, CEO, Dennis Thomas, said “We have made rapid progress this year with this latest milestone adding considerably more value to the Empire Mine.  …  Importantly, we have now begun to report the zinc (51,925t), silver (6.412 million ounces) and gold (165,686 ounces) contained within the copper resource.”
• Mr Thomas went on to remark that “We believe we have a valuable copper project, at a time when the demand fundamentals are very strong, in a safe, supportive and politically stable jurisdiction, and that we will be able to rapidly advance and crystallise its inherent value."
• Drilling is continuing on the deeper sulphide mineralisation potential with initial results expected in December.
• The company estimates that “only 5% of the potential ore system has been explored to date and accordingly there is significant opportunity to increase the resource through phased exploration; the current resource relates to the oxide resource only, which remains open along strike and does not include the deeper, higher grade sulphides.”
Conclusion: Since the company’s Admission to the AIM Market in June, Phoenix Global Mining has delivered a substantial increase in oxide ore resources at the Empire mine site in Idaho. Deeper drilling, where initial results are expected next month, should indicate the potential of the underlying sulphide mineralisation. Work is underway to gain access to the historic underground mine workings which will enable sampling and mapping to confirm the details within an extensive archive of historic data and build the geological model for further targeted exploration.
*SP Angel acts as Nomad to Phoenix Global Mining

Savannah Resources (LON:SAV) 5.25p, Mkt cap £33.4m – Environmental permits issued in Oman
• Savannah Resources has announced that environmental operating permits have been issued for the Mahab4 and Maqail South licence areas within the Block 5 exploration areas in Oman.
o The Mahab4 and Maqail South licence areas are “the first two of a planned series of high grade copper mine developments in Oman”.
o The environmental permits are an important milestone in the process of obtaining the mining permits where six of the eight Ministries required to accede to mining have formally confirmed that they have no objections to the proposals.
o The Ministry of Housing and the Ministry of Regional Municipalities and Water Resource retain the application under review, however, "Positive discussions are continuing for the remaining Ministries for both projects, with final approvals expected to all be received in Q4 2017.  … [and] … Final Ministerial approvals expected to be received before the end of 2017 and the Mining Licences in early 2018 by Public Authority for Mining”.
Conclusion: The “Preliminary Economic Assessment” for mining has still to be submitted to The Public Authority for Mining, however Savannah Resources is looking increasingly well placed to have all the required permits for the start of development next year.

SolGold* (LON:SOLG) 26p, Mkt Cap £394.2m – Quarterly shows further progress towards the initial resources estimate at Alpala
• SolGold have announced a loss of A$5.8m (Acents 0.4/share) for the three months ending 30th September (2016 – loss A$805,000).
• The result leaves Solgold with a healthy cash balance of A$78.5m following an outflow of cash totaling A$10.5m during the quarter with A$2.1m of the outflow arising from operations and A$8.4m from exploration and investment.
• The quarter has continued to be very active with approximately 7500m of drilling completed in hole 26-31 at Alpala and preparatory modelling work completed “in preparation for upcoming Mineral Resource Estimate.”
• Providing an update on the work on the wholly owned project areas elsewhere in Ecuador, Solgold reports that “During the September quarter all four subsidiary companies have had technical teams working on the ground.  By the end of September 2017, seven project areas will have had initial evaluation completed or nearing completion.  Security and social teams have been in the field ahead of the technical staff ensuring access to all project areas and maintaining good relationships with local landowners.”
• Looking to the future, “The focus of the Company during the financial year ending 30 June 2018 will be to continue exploration on its Cascabel project in Ecuador and continue carrying out reconnaissance filed mapping and rock chip sampling programs as well as evaluating several mineralised outcropping targets over the 59 new tenements granted to SolGold’s four Ecuadorian subsidiaries.”
Conclusion: Solgold continues with a very active exploration programme in Ecuador. The company remains well funded for its ambitious programme at Alpala and on the wholly owned projects elsewhere in Ecuador. We look forward to the Alpala resources estimate in due course.
*SP Angel act as UK broker to SolGold

Wed, 15 Nov 2017 11:34:00 +0000
Today's Market View - Anglo American, BlueJay Mining, IronRidge Resources, Orosur Mining and Serabi Gold Anglo American (LON:AAL) –De Beers diamond sales picking up ahead of Christmas
BlueJay Mining* (LON:JAY) – Permit consultation received strong stakeholder and government support
BlueJay included in MSCI index today - STRONG BUY - Target Price ( to be revised, currently at 24p)
IronRidge Resources (LON:IRR) – Joint Venture signed with Gail Exploration for a further nine exploration licenses in the Ivory Coast
Orosur Mining (LON:OMI) – Exploration drilling results from APTA project in Colombia
Serabi Gold Price (LON:SRB) – Q3 results, production update and acquisition

We see that the former head of Xstrata and director of BHP Billiton, Mick Davis, is being tipped to succeed Jan du Plessis in the Chairman’s role at Rio Tinto.
• We understand that the company has declined to comment though clearly his CV would appear eminently suitable -  we await further news over time.

Canadian investor lose 83% of value on restart of trading in West High Yield (W.H.Y.) Resources Ltd.
• West High Yield (W.H.Y.) Resources Ltd. had reported that it had a deal for “the sale of its main magnesium assets to an obscure buyer, Gryphon Enterprises LLC.” (Bloomberg)
• The “Canadian penny stock plunged 83 percent in the first day of trading after its $750-million mining deal collapsed, bringing an end to a wild ride that saw its shares surge almost 1,000 per cent in a single day.”
• “The deal fell through after Gryphon failed to come up with a deposit of less than 1 percent of the transaction value, or $500,000, by a Nov. 6 deadline.”
• It was reported that Gryphon Enterprises LLC. Run by ceo, Stephen Cummins had offered to buy W.H.Y’s magnesium deposit for $750m representing around 46 times the company’s entire market value. “In 2010, while Cummins was CEO of Green Processing Technologies Inc., a Salt Lake City-based company, he was accused of soliciting and selling securities to investors without a licence by the Colorado Securities Commissioner. The Commissioner issued a cease-and-desist order and Cummins agreed to pay investors back in cash. He neither admitted nor denied the allegations.” According to the Financial Post
• “According to a West High Yield filing to regulators, the Toronto office of law firm Baker McKenzie represents Gryphon Enterprises. Greg McNab, global head of mining at Baker when contacted on Thursday said “I’m not aware that we act for them,”. “We’re not aware of any role in it.”.
• West High Yield’s CEO Frank Marasco said in an interview Thursday that the financial backer of the deal wanted to stay anonymous. He said he got the price he deserved for the asset on 7,891 acres near Trail, British Columbia, just north of the Washington state border. He didn’t return a call seeking comment Friday.
• “It wasn't clear why Gryphon, which doesn't have a website, was prepared to pay $750-million for West High Yield's assets in British Columbia, when the whole company was worth only $16 million. According to the purchase and sale agreement, Gryphon's chief executive officer used an AOL email address and the firm was based at a residential house built in 1992 in Swanton, Md.” (Bloomberg)
• “West High Yield had continued to trade on Oct. 5 as more red flags appeared and volume soared. That sparked criticism from some that the regulators should have stepped in earlier to take control of the situation. Trading was halted on Oct. 6.”
• The Investment Industry Regulatory Organization of Canada has said it won't reverse trades from that day because the announcement "did not contain information which was either misstated or inaccurate." The Alberta Securities Commission has declined to comment on whether it's still reviewing the company and the deal..
• There may be more to this story to come out but for now it looks like it’s open season in Canada for share ramping.

Chinese EV makers buying lithium in the ground
• Concerns over producer’s abilities to fill downline supply has led to Chinese EV companies buying lithium that has yet to be mined
• Larger companies such as Galaxy resources and Lithium X Energy Corp are using the sale of in ground lithium to bolster development

Dow Jones Industrials  +0.07% at 23,440
Nikkei 225   -0.00% at 22,380
HK Hang Seng   -0.09% at 29,155
Shanghai Composite    -0.53% at 3,430
FTSE 350 Mining   +0.22% at 17,567
AIM Basic Resources   +0.34% at 2,635

China – Growth in retail sales, industrial production and investments slowed in October amid government crackdown on polluting industries and a slowdown in credit expansion.
• As growth ebbs the trade off between stimulus to support growth and financial deleveraging will become stronger, Bloomberg Economics argues.
• Interestingly, investments in infrastructure, a gauge of the government stimulus, climbed 19.6% in the first ten months of the year with its share in total investment running at the highest rate in nearly a decade.
• Retail Sales (%YTD): 10.3 v 10.4 in September and 10.4 forecast.
• Industrial Production (%YTD): 6.7 v 6.7 in September and 6.7 forecast.
• Fixed Assets Investment (%YTD): 7.3 v 7.5 in September and 7.3 forecast.

Germany – Economic growth accelerated in Q3 past market estimates putting Germany on course for best year since 2011.
• Growth is reported to have been driven by strong exports and business investment.
• Private consumption, the most significant growth contributor in previous quarters, “remained rather stable at the previous quarter’s level” highlighting good performance from other categories of the nation’s GDP.
• Given weak borrowing costs and low unemployment levels consumer spending outlook remains positive.
• Median Bloomberg estimates for 2017 GDP real growth stand at 2.2% v 1.9% in 2016; although, forecasts incorporate lower Q3/17 numbers suggesting estimates are likely to be revised upwards following the today’s release.
• GDP (SA %qoq): 0.8 v 0.6 in Q2/17 and 0.6 forecast.
• GDP (WDA %yoy): 2.8 v 2.3 in Q2/17 and 2.3 forecast.

UK – Inflation held steady at the highest rate in more than five years in October coming in slightly weaker than forecast which in turn saw the pound sliding against the US$.
• Further pressure on the pound is exercised by growing uncertainty over the final version of the Brexit deal.
• Brexit Secretary David Davis said to a 50/50 chance in achieving a breathrough in negotiations before year end, Bloomberg reported.
CPI (%mom): 0.1 v 0.3 in September and 0.2 forecast.
• CPI (%yoy): 3.0 v 3.0 in September and 3.1 forecast.

Italy – The economy grew at a faster pace in Q3/17 driven by both domestic consumption and exports.
• Growth numbers came in line with market estimates with the European Commission earlier forecasting the economy to grow 1.5% in 2017 before slowing down in 2018/19 as the ECB winds down its stimulus programme.
• The EC report said that the nation’s debt to GDP ratio is in fact set to increase slightly in 2017 and sty above 130% through 2019.
• GDP (WDA %qoq): 0.5 v 0.3 in Q2 and 0.5 forecast.
• GDP (WDA %yoy): 1.8 v 1.5 in Q2 and 1.7 forecast.

Australia – Businesses conditions improved to the highest on record in October; however, outlook remains mixed.
• “Results from the survey indicate that the business sector in Australia is very strong at present, which is having positive spill-overs into the labour market and, to some extent, investment,” th Nationaly Australia Bank said in a report.
• “However, fairly restrained levels of business confidence could be telling us something about how firms see the outlook.”
• The sentiment index climbed seven points to 21 last month driven by increases in sales and profitability measures.

Venezuela – S&P cut sovereign credit rating of Venezuela into a default category (SD/D) after the government missed two interest payments worth $200m of its bonds.
• Coupon payments were supposed to be paid on bonds due 2019 ($2.5bn 7.75%) and 2024 ($2.5bn 8.25%) following the end of the 30 day grace period over the weekend.
• Separately, the ISDA is meeting today to define if a week-long delay on bond payments from the state oil company will trigger default event for CDS contracts.

US$1.1685/eur vs 1.1639/eur yesterday.           Yen 113.84/$ vs 113.50/$.         SAr 14.477/$ vs 14.428/$.            $1.310/gbp vs $1.310/gbp.
            0.762/aud vs 0.765/aud.            CNY 6.642/$ vs6.645/$.

Commodity News

Precious metals:
Gold US$1,272/oz vs US$1,276/oz yesterday
• Speculators raise their net long positions in COMEX gold 4% for the first time in eight weeks amid concerns over the outlook for tax reforms in the United States. Troubling major Congressional Republican intraparty disputes highlighted risks over the proposed U.S tax code overhaul is drawing interest in the safe haven investment.
• Gains on the metal came under pressure as U.S Treasury two-year note yields hit fresh nine-year highs, and investors priced in a 25-basis-point interest rate hike by the Federal Reserve in December.
• Looking forward, market participants will monitor the European Central Bank-hosted conference in Frankfurt as all major economic powers convene including  ECB chief Mario Draghi, U.S. Federal Reserve Chair Janet Yellen, Bank of Japan Governor Haruhiko Kuroda and Bank of England head Mark Carney.
   Gold ETFs 69.3moz vs US$69.3moz yesterday
Platinum US$930/oz vs US$931/oz yesterday
Palladium US$996/oz vs US$999/oz yesterday
Silver US$16.92/oz vs US$16.89/oz yesterday
Base metals:   
Copper US$ 6,867/t vs US$6,826/t yesterday
Aluminium US$ 2,108/t vs US$2,106/t yesterday
• China’s electrolytic aluminium production dropped for the fourth consecutive month, falling 2.3% from September output of 2.6 million tonnes, equivalent to 7.5% YoY. The National Bureau of Statistics identified cumulative output for the first ten months of 2017 recording 27.32 million tonnes, an increase of 3.7% on an annual basis; highlighting the scale of the closures of illegal capacity and premature winter production cuts.
• In the war against air pollution, the Ministry of Environmental Protection introduced winter capacity cuts, ranging 30-50%, officially starting from 15th November. The pullback in production in October gives evidence for the early ‘blue sky’ closures ahead of the 19th National Congress of the Communist Party of China.
• Binzhou city in the primary aluminium producing Shandong province announced it will halt a further 1.6 million tonnes per annum of capacity, while pulling back alumina capacity by at least 3 million tpy. However, the real extent of the winter adjustments is unclear, as the metal price contracts from the five-year high of $2,215/t hit early November over concerns of the scale of the cuts and higher output in unaffected parts of the country.
Nickel US$ 12,330/t vs US$12,355/t yesterday
• London market participants boosted nickel interest as the most-traded nickel contract on the Shanghai Futures Exchange rose over 2% in early trading. Despite demand domination from stainless steel, the metal has seen significant investor interest surrounding the electric vehicle boom, rising 23% this year on increased consumption in lithium-ion battery technologies.
• Nickel prices gain from Chinese steel cuts
• Output cuts in major Chinese cities tightened supply causing nickel to bounce back from recent losses
• Although set to boost from growth of EV’s currently mainly used in stainless steel
Zinc US$ 3,201/t vs US$3,217/t yesterday
Lead US$ 2,488/t vs US$2,517/t yesterday
Tin US$ 19,470/t vs US$19,510/t yesterday
Oil US$62.9/bbl vs US$63.5/bbl yesterday
• Stronger than expected world economy is driving OPEC to raise demand forecasts, pointing to a larger 2018 oil supply deficit. The agreed cuts among producers has efficiently diminished the significant global oil glut with a large reduction in excess oil in storage.
• Tightening market balance has efficiently stabilized crude prices, with oil climbing to the highest levels in over two years. Speculators raised their bullish expectations on U.S. crude features and options positions, raising their net long positions almost 10% to 381,666 according to the U.S Commodity Futures Trading Commission.
Natural Gas US$3.110/mmbtu vs US$3.169/mmbtu yesterday
Uranium US$23.15/lb vs US$22.90/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$62.5/t vs US$62.1/t
Chinese steel rebar 25mm US$650.4/t vs US$645.6/t
Thermal coal (1st year forward cif ARA) US$86.4/t vs US$86.5/t
• Falling Chinese coal output, previously at the lowest levels in over a year, rose 1.5 percent YoY in October to 283.54 million tonnes as The Global Carbon Project report CO2 in 2017 rising for the first time in four years. Peak emissions are required before 2020 to limit dangerous global warming and achieve the 2°C Paris Agreement target.
Premium hard coking coal Aus fob US$187.6/t vs US$187.6/t

Tungsten APT European US$270-280/mtu vs US$275-285/mtu last week

Company News

Anglo American (LON:AAL) 1495 pence, Mkt Cap £19.3bn –De Beers diamond sales picking up ahead of Christmas
• Anglo American reports that De Beers achieved sales of US$455m for its 9th diamond sale of 2017. Equivalent sales in 2016 realised US$476m.
• The sales represent a 21% increase on the previous sale which realised US$376m but remain approximately 6% lower on a year to date basis at US$4.845bn compared to US$5.156bn.
• Commenting on the sales, De Beers CEO, Bruce Cleaver, said “Following a seasonally quieter period for rough diamond sales, Cycle 9 saw an uptick in demand from our customers as retail orders increase ahead of the Christmas season."
Conclusion: Diamond sales have started to pick up strongly ahead of the Christmas period, however, they are still running behind 2016’s cycle 9 and year to date levels.

BlueJay Mining* (LON:JAY) 24.5p, Mkt Cap £189m – Permit consultation received strong stakeholder and government support
BlueJay included in MSCI index today
Target Price 24p
• BlueJay Mining report strong support from stakeholders through the process of public consultation and engagement.
• The Environmental Impact Assessment ‘EIA’ and Social Impact Assessment ‘SIA’ are now marked for completion in Q1 2018 ahead of the start of commercial production.
• TZMI conference: BlueJay are presenting at a major Titanium industry ‘TZMI’ conference in Hong Kong this week.
• Price view: Feedback from the conference is that titanium feedstock supply is much tighter than previously thought indicating that prices are expected to rise strongly over the next three years with a major supply constraint 18 months out.
Conclusion:  Confidence in BlueJay’s Dundas titanium project (formerly called Pituffik) continues to grow as the company works through the details of its feasibility study with particular focus on the engineering challenges of working in north of Greenland within the Artic Circle.
Fortunately nature appears to have been kind to BlueJay in the deposition of exceptionally high grade ilmenite mineral sands with relatively simple processing required and good points for ship loading.
*SP Angel act as nomad and broker to BlueJay Mining.  An SP Angel Mining analyst has visited the Dundas (formerly Pituffik) ilmenite sands project in Greenland.

IronRidge Resources (LON:IRR) 31p, mkt cap £84.6p – Joint Venture signed with Gail Exploration for a further nine exploration licenses in the Ivory Coast
• IronRidge Resources has signed a heads of terms joint venture agreement with Gail Exploration.
• The agreement gives IronRidge an exclusive right over nine licenses and applications covering around 3,475sqkm in the Ivory Coast as well as access rights to a 385sqkm license at ‘Kineta’.
• See link further detail, license map and plan of major gold bearing structures:
• The new license portfolio covers a major structural corridor with a major shear zone and associated second and third order structures.
• The major shear runs through a number of multi-million ounce gold projects in Burkina Faso continuing through the Ivory Coast.
• IronRidge are targeting four principal gold bearing structures within this:
o Two are splay structures off the Sassandra Shear Zone. Similar splay‐off structures host the world‐class Syama (7Moz) and Tongon (5Moz) gold mines to the north.
o Another is at the southern extension of the prolific shear hosing Ahafo (23Moz) – Bibiani (7Moz) – Chirano (5Moz) structure into Côte d’Ivoire (Bianouan Project).
• The team are also targeting the southern extension of the north‐south striking Wa (2.2Moz) – Konkera (3.3Moz) gold bearing structure (Bouna, Kineta North, Kineta and Marahui Projects).
• IronRidge have completed technical and legal due diligence and field programs including rock chip sampling and the inspection of artisanal workings.
• “Multiple rock chip samples collected from within artisanal pits and from underground workings returned high-grade gold results including 46.4g/t gold, 32.4g/t gold and 15g/t gold from underground workings.”. The team have identified “a high-priority, 12km strike length target corridor across the Kineta North license and Kineta license application.  Within this zone, a high-priority, high-grade gold 1.2km long rock chipping and artisanal mining target has been identified for follow-up.”
• “IronRidge can acquire up to 100% of the projects through staged earn-in arrangements and staged expenditure to Feasibility Study, subject to Gail retaining a Net Smelter Royalty, ("NSR") of 2.5%, of which 40% may be acquired for US$2million at any time.  IronRidge shall be responsible for maintaining the properties during this agreement and up to the completion of the Feasibility Study.”
Conclusion: IronRidge continues to build its exploration license area along the major shear which runs down

Orosur Mining (LON:OMI) 14.5 pence, Mkt Cap £17.1m – Exploration drilling results from APTA project in Colombia
• Orosur Mining reports initial results from its drilling programme at the APTA project in Colombia where it has completed 3 holes (962.5m) of its planned 15,000m drilling campaign.
• Assay results, including a number of high grade gold intersections are available from Hole MAP-54 and “The limited assays returned to date from Hole MAP-55 show interesting gold anomalies up to 0.26 g/t Au, which matches up with the gold bearing units identified in the area)”
• Among the assays reported from Hole MAP-54 highlighted today are:
o A 4.63m wide intersection averaging 5.47g/t gold from a depth of 97.1m, and
o A 5.32m wide intersection averaging 17.76/t gold and 0.5% copper and 4.84% zinc from a depth of 144.5m, and
o A 9.28m wide intersection averaging 1.84g/t gold, 0.2% copper and 2.26% zinc from a depth of 149.82m
• Within the broader intersections, the company reports higher grade sections which range up to 38g/t gold, 2% copper and 17.5% zinc over single metre long sample lengths.
• Commenting on the results, CEO, Ignacio Salazar noted that ““These initial results are extremely encouraging, supporting the presence of high gold mineralization over significant intervals and increasing confidence in the mineral body beyond the 17,000m of previous drilling prior to the acquisition of the project by OMI. …[and] …These results are merely the beginning of Orosur’s first drilling campaign at APTA. APTA mineralization remains open at depth and along strike.”
Conclusion: The initial drilling results from Colombia are encouraging and we look forward to further news as the exploration progresses along strike and at depth.

Serabi Gold Price (LON:SRB) 4.1p, mkt cap £28.8m – Q3 results, production update and acquisition
• Serabi Gold reports a post-tax profit of US$235,000 for the three months ending 30th September (2016 – US$465,000) bringing the year to date loss to US$770,000 (2016 Profit of US$1.47m).
• The quarterly result reflects the production of 9,861 oz of gold which brings the year to date production to 27,666oz at a cash cost of US$795/oz and an all-in-sustaining-cost of US$1,058/oz. Comparative year to date performance was 29,900oz of production at a cash cost of US$772/oz and an AISC of US4951/oz.
• Guidance for 2017 production is for 38,000oz of gold at an AISC of US$1000-1025/oz. We believe that earlier guidance was marginally higher at 40,000oz of production and we note that if Serabi is to achieve its cost guidance range it will need to deliver around 10,000 oz of gold at an all-in cost of around $845-935/oz during Q4.
• Mike Hodgson, CEO of Serabi commented that “Whilst a little below the production for the same period in 2016, the shortfall was simply due to a short term operational problem at Sao Chico during April and May, when we lost remote scoop capability and therefore had to rely on lower grade development ore for this period.  By June the problem was over, and we have seen strong monthly productions figures since.”
• The company reports a cash balance of US$9.75m for 30th September with secured loans totaling US$4.4m.
• Serabi Gold also reports a conditional agreement to acquire the Coringa gold project of Chapleau Resources in Brazil for a total of US$22m in cash. The initial US$5m is payable on the closing of the transaction with a further US$5m payable within 3 months. The final US$12m cash payment “will be due upon the earlier of either the first gold being produced or 24 months from the date of Closing”.
• The Coringa resource hosts a total of 376,000oz of gold of which around 52% (195,000 oz) is classified as “indicated” at an average grade of 8.36g/t with the balance of 181,000oz at an average grade of 4.32g/t classed as “inferred”.
• Coringa is located some 200km from Serabi’s existing Palito mine which is expected to provide operational and management synergies, particularly as Serabi describes the Coringa deposit as “a near 'carbon-copy' of Serabi's current operation, which has been in production since 2014.  The similarities mean Serabi is very well placed to expedite the successful development and future production potential of the project.”
• “A feasibility report on Coringa issued … in September 2017 (the "Coringa Feasibility Study"), prepared in accordance with the reporting requirements of the standards  of NI 43-101, estimated:
o an average production rate of 32,000 ounces per annum and a total mineable reserve of approximately 160,000 ounces of gold;
o average all-in sustaining costs of US$783 per oz; and
o a post-tax IRR of 30.8 per cent.”
• Serabi Gold has expressed a view “that scope exists to reduce capital and operating costs at Coringa by utilising Serabi's existing gold processing facilities at Palito.” Current estimates of the outstanding capital costs are US$28.8m and the post-tax NPV, at a discount rate of 5% is reported to be US$31m.
• The transaction remains conditional on a number of issues, including the successful conclusion of technical and legal due diligence, the approval of shareholders in Chapleau Resources@ owner, Anfield Resources and the approval of Derabi’s secured lender, Sprott.
Conclusion: After resolving the operational issues encountered earlier this year, Serabi is looking for a strong performance during the final quarter of the year. The proposed acquisition of the relatively nearby Coringa deposit, which is being acquired for around US$60/oz of indicated and inferred resources offers potential synergy with the Palito operation, particularly if Serabi can improve on the previously announced economic projections for Coringa.

Tue, 14 Nov 2017 10:27:00 +0000
Today's Market View - Avesoro Resources, Caledonia Mining and Scotgold Resources MiFID II - This note will move to FULL MiFID II compliant format come 3 January 2018
If you wish your company to be compliant so we can continue to write lovely things about you then please contact me
If you don’t like what we write about your company, don’t worry, we will continue to write but it will be in a new MIFID 2 compliant format which is designed to make institutional investors pay for the insightful analysis which we provide.

Avesoro Resources  (LON:ASO) – New Liberty Q3 performance update
Caledonia Mining (LON:CMCL) – Increased gold production lifts earnings
Scotgold Resources (LON:SGZ) – Scotgold Chairman underwrites 2 for 3 Rights Issue at 25p/s to raise £2.65m in new funds

Canadian investor anger as stock halted on concerns over collapse of announced deal (Bloomberg)
• The collapse of a $750m Canadian mining deal has sparked criticism of Canada’s light-touch regulation.
• “Canada’s investment regulator won’t be reversing the trades on West High Yield (W.H.Y.) Resources Ltd. from Oct. 5, when the Calgary-based penny stock surged almost 1,000 percent on a deal to sell its main assets to an unknown buyer. The announcement “did not contain information which was either misstated or inaccurate,” according to a letter obtained by Bloomberg News that the Investment Industry Regulatory Organization of Canada sent to an investor in the company.” According to Bloomberg.
• “West High Yield had continued to trade on Oct. 5 as more red flags appeared. Its filing stated Gryphon’s legal representative was Baker McKenzie, yet the law firm said later it had no knowledge of the deal. Google searches showed that Gryphon operates from a modest two-story, beige clapboard apartment in Janesville, Wisconsin and that CEO Stephen Cummins had a previous run in with the Colorado Securities Commissioner for operating without a license.” (Bloomberg)

Elliott Management founder Paul Singer warns ‘ingredients for a market crash are all in place’
• Elliott manages some £34bn. The fund is warning clients:
o "ominously overpriced assets financed by too much debt;
o "a tightly wound matrix of highly leveraged trading positions;
o "technical or situational accelerants (in 1987, 'portfolio insurance; today, all kinds of negative gamma strategies, the false liquidity of ETFs, volatility selling, massive leveraged bond ownership at the highest price for duration in history, financial institution balance sheets that remain completely opaque and highly leveraged).".

Dow Jones Industrials  -0.17% at 23,422
Nikkei 225   -1.32% at 22,381
HK Hang Seng   +0.34% at 29,219
Shanghai Composite    +0.44% at 3,448
FTSE 350 Mining   -0.05% at 17,529
AIM Basic Resources   +0.59% at 2,626

A number of central banks’ governors are due to speak this week at the ECB panel featuring Fed Janet Yellen, Mario Draghi, BoJ Kuroda and BoE Carney tomorrow.
• Additionally, the week features two FOMC voting members including Chicago Fed head Charles Evans and Fed board member Lael Brainard.

Junk rated emerging market sovereigns are raising debt at record pace so far this year, Dealogic reports.
• YTD bond issues by non-investment grade sovereigns totalled $75bn in sundicated bonds, up 50%yoy.
• Latest deals included Bahrain $3bn and Tajikistan $500m deals, both issued in September.
• The government of Iraq raised $1bn this summer while Ukraine raised $3bn.
• Offered yields are also low compared to historical standards with Tajikistan 10y bonds yielding 7.125% and Ukraine 15y debt priced at 7.375%.

US – Equities posted the first weekly drop following an eight-week winning streak, the longest since 2013, as Senate Republicans argued a delay in corporate tax cut until 2019.

China – Authorities slowed money supply growth substantially in October a sign that government policy of financial deleveraging may be gaining traction.
• New yuan loans almost halved from September while aggregate financing measures also fell significantly coming in below market estimates.
• New Yuan Loans (CNY bn): 663 v 1,270 in September and 783 forecast.
• Aggregate Financing (CNY bn): 1,040 v 1,820 in September and 1,100 forecast.
• M2 Growth (%yoy): 8.8 v 9.2 in September and 9.2 forecast.

UK – The pound is down 0.8% this morning following the report in the Sunday Times that 40 MPs had agreed to sign the letter of no-confidence over Mrs May’s handling of the Brexit process.

US$1.1639/eur vs 1.1629/eur yesterday.  Yen 113.50/$ vs 113.57/$.  SAr 14.428/$ vs 14.273/$.  $1.310/gbp vs $1.314/gbp.
0.765/aud vs 0.767/aud.   CNY 6.645/$ vs 6.642/$.

Commodity News

Rebel violence closure escalates tightening copper supply
• Diminishing global copper market supply is further hampered as fresh rebel violence forces $21 billion Freeport McMoRan to close the main route to its Papua site. Threatening violence at the world’s second largest producer is building to highest level in years as longtime disputes surround labour problems and an ongoing mine right dispute with the Indonesian government triggered 15 weeks of disruptions this year as exports were blocked.
• The closure only serves to highlight the fragility of mine supply in a market forecast significant demand growth linked with the transition to the electric economy, boosting usage in electric cars, renewable energy and infrastructure.

Environmental swing sees Rio Tinto going coal free
• Rio Tinto Group, the world’s second-largest miner, looks to completely exit from the harmful fuel with the sale of its remaining coal mines in Australia. Mining companies are increasing considering the environmental impact of their operations, while “The big diversified miners are all trying to work out which commodities are going to be most disadvantaged in the future, and the low-carbon transition is one of the big uncertainties that they and other companies are facing” according to Helen Wildsmith, head of climate change at CCLA Investment Management.
• However, CEO Jean-Sebastien Jacques claims the sale focuses managerial talent and money on more productive assets, allowing the proceeds of the coal mines to provide cash to be returned to shareholders.
• Indicative bids are expected by early December as the London-based miner aims to shed the last of its energy division assets. The move represents a stark contrast to its rivals, with Glencore increasing its exposure to the world’s dirtiest fuel by agreeing to pay $1.1-billion plus royalties for a large stake in Australian assets sold by Rio, while BHP Billiton and Anglo American keep coal as one of their main strategies.

Precious metals:
Gold US$1,276/oz vs US$1,283/oz last week
• A subdued metal price pauses ahead of US October inflation data due on Wednesday. According to the National Australia Bank, “Anything less than the expected 1.7% year-on-year reading on the core measure will prompt some renewed doubts on a December Fed rate rise and hurt the US dollar.”
• Steadily rising US Treasury yields hampered gold’s advance despite market hesitation following delays to the US Senate Republican tax cut plan into 2019.
   Gold ETFs 69.3moz vs US$69.1moz last week
Platinum US$931/oz vs US$936/oz last week
Palladium US$999/oz vs US$1,011/oz last week
Silver US$16.89/oz vs US$17.00/oz last week
Base metals:   
Copper US$ 6,826/t vs US$6,837/t last week - India’s only copper miner plans to triple production at largest mine
• Hindustan copper plans to invest around $700m in 6 expansion projects, increasing production at its largest mine from 2m tonnes to 5.2m
•  Mine contains almost 70% of India’s copper reserves
Nzuri Copper – Cobalt drill campaign kicks off in DRC
• Nzuri Copper has begun drilling out number of satellite copper-cobalt prospects – fast tracked development that could generate cash just 12 months after development approval
• Project based on high grade deposit that would support an initial 7 year life mine
Aluminium US$ 2,106/t vs US$2,085/t last week
• Despite partially regaining losses on Friday’s session, Aluminium recorded its worst week since May 2016 as the scale of Chinese capacity cuts weighs in on investor commitment. The price retreat follows a lack of actual policy translation as smelters fail to cut as much capacity as initially expected.
• The cautious investor sentiment follows positive price movement to push the metal to five-year highs last month, as stocks in LME-approved warehouses fell to their lowest since September 2008, down 3,600 tonnes to 1.2 million tonnes.
Nickel US$ 12,355/t vs US$12,340/t last week
Zinc US$ 3,217/t vs US$3,195/t last week
Lead US$ 2,517/t vs US$2,538/t last week
• LME stocks fell to their lowest in almost two years at less than 150,000 tonnes, for a metal which is expecting global demand for refined lead to exceed supply by 125,000 tonnes this year. Weekly prices swelled 3% as the International Lead and Zinc Study Group expect the deficit to extend to 45,000 tonnes in 2018.
Tin US$ 19,510/t vs US$19,505/t last week
Oil US$63.5/bbl vs US$63.8/bbl last week
Natural Gas US$3.169/mmbtu vs US$3.215/mmbtu last week
Uranium US$22.90/lb vs US$22.75/lb last week
Lithium - Altura lithium plans to double capacity
• Announced plans for immediate feasibility study to double capacity to 440,00 tonnes at its Pilgangoora lithium project following positive scoping results
• Recent estimates indicated 34.2 million tonnes of ore in total and 357,000 of lithium oxide

Iron ore 62% Fe spot (cfr Tianjin) US$62.1/t vs US$62.0/t
Chinese steel rebar 25mm US$645.6/t vs US$638.6/t
Thermal coal (1st year forward cif ARA) US$86.5/t vs US$85.1/t
Premium hard coking coal Aus fob US$187.6/t vs US$180.5/t

Tungsten APT European US$270-280/mtu vs US$275-285/mtu last week

Company News
Avesoro Resources  (LON:ASO) 1.95pence, Mkt Cap £104m – New Liberty Q3 performance update
• Avesoro Resources reports gold production of 19,885 oz during the quarter ended 30th September 2017 which, we estimate, brings year-to-date gold output to 50,615oz. The company is maintaining is (revised) 2017 production guidance of 70-80,000oz, implying that output in Q4 should at least match the performance of Q3.
• The improved output reflects an improvement in plant feed grades, which rose by 30% during the quarter to 2.59g/t as well as an improvement in recovery rates to 91% compared to the 88% achieved in the previous quarter. The company highlights that it achieved recovery rates “in excess of 92% … throughout September 2017”.
• “Operating cash costs of US$877 per ounce, an improvement of 15% compared to the prior quarter mainly due to higher mined ore grades, improved gold recoveries and the realisation of operational efficiencies implemented earlier in the year;” and “All-In Sustaining Costs ("AISC") of US$1,447 per ounce sold, a 10% improvement from Q2 2017, but a slightly lower rate of improvement than achieved for operating cash costs due to the continued focus on waste stripping.”
• The company notes that the reduction in cash costs achieved during the quarter delivered “the third consecutive quarter of positive EBITDA” of US$5.5m. Borrowings syttand at US$107.9m at the end of the quarter with cash facilities of US$18.2m.
• The company notes that the quantity of ore processed during the quarter declined by 15% compared to Q2 “due to a lack of run of mine ore feed for a short period of time caused by pit flooding as a result of heavy rain which disrupted mining operations” and that “Total material movement of 3.2 million tonnes, a decrease of 15% on the prior quarter, due to the impact of heavy rain towards the end of the wet season that caused periods of in-pit flooding”.
• Commenting on the improving overall performance at the New Liberty mine which delivered a “further improvement in EBITDA margin to give us our third consecutive quarter of positive EBITDA and quarter on quarter increase in production levels.”, Chief Executive, Serhan Umurhan, noted that “We expect Q4 2017 to deliver further improvements across all these metrics, including a continued reduction in unit mining costs which were inflated this Quarter due to stoppages and inefficiencies arising from heavy rains during the tail end of the wet season. We expect to end the year with a strong final quarter and to deliver against our production guidance which is maintained at 70,000 - 80,000 ounces of gold.”
• Reiterating the previously announced revised life-of-mine plan the company highlights the “updated LOM schedule reflects the existing and planned further increase in process plant throughput rate of 140ktm by the end of the year. As a consequence, the future mining rates at New Liberty will also increase to provide this extra plant feed, reducing New Liberty's current LOM to 4.5 years based on existing Reserves.”
Conclusion: Despite setbacks arising from flooding during the wet season, production at New Liberty is on an upward trend and EBITDA is improving, although with all-in-sustaining costs of $1447/oz of gold sold, there remains a significant amount of work still to be done. The revised life of mine plan reduces mine life but is expected to deliver a positive NPV from the production of an average 149,000oz of gold per year to 2021.

Caledonia Mining (LON:CMCL) 420p, Mkt Cap £44.4m – Increased gold production lifts earnings
• Caledonia Mining’s Q3 results show a 7% increase in quarterly gold production (14,396oz  - Q3 2016 - 13,428oz) lifting year to date output by 8% to 39,710oz (2016 – 36,760oz). The quarterly production, which represents a record for the mine, is attributed to “higher grades, which was due to the improved mine flexibility as a result of the measures taken in previous quarters.”
• As a result, reported earnings per share rose by 85% during the quarter to 40.8 cents (Q3 2016 – 22.1 cents) and year to date earnings increased by 34% to 87.3 cents (2016 – 65.4 cents).
• A reduction in administrative expenses to $1.6m for the quarter (Q3 2016 - $2m) and $4.5m year to date (2016 – $5.2 export)  incentive credits contributed a 23% quarterly decline in all – in  sustaining costs (AISC) to $773/oz (Q3 2016  $1,004/oz) and a 15% reduction in year- to- date AISC to $827/oz (2016- $971/oz).
• The company reports a cash balance at 30th September of $11.8m (30th June 2017 - $10.8m) following the payment of a quarterly dividend totalling $964,000 and capex of approximately $8.1m during the quarter.
• Despite the positive operating and financial performance, the quarter was, however, marred by a fatality at the Blanket mine during July.
• The company maintains its production guidance of 80,000 oz pa of gold production from the Blanket mine by 2021.
Conclusion: The increased gold output and reducing cost profile at the Blanket mine underlines the success of the long term strategic plan to access deeper level mineralisation through the new  Central Shaft development and associated underground infrastructure. Last week the company announced that it was targeting a deeper Central Shaft than previously planned as a means to add at least a further  4 years to the mine’s life.

Scotgold Resources (LON:SGZ) 27p, Mkt Cap £4.3m (£7.2m fully diluted) – Scotgold Chairman underwrites 2 for 3 Rights Issue at 25p/s to raise £2.65m in new funds
• Scotgold Resources Chairman, Nat le Roux has fully underwritten a two for three non-renounceable rights issue at 25 pence per share.
• The offer also included a free option exercisable at 40 pence per share on or before 31 December 2019 for every five shares subscribed in the offer.
• The funding brings in around 30% of the total funds to be raised to bring Phase 1 of the Cononish Project into production.
• It is a shame the rights issue is non-renounceable as this does not give investors the option to sell their rights to other investors at the lower price of the issue.
• The issue is being done at an approximate 7.4% discount to the company’s closing share price on Friday.
• Scotgold updated its feasibility study on 15 March this year highlighting an improvement in the pre-tax NPV at a 10% discount rate to £43m from an earlier figure of £23m as a result of an increase in the assumed gold price to $1150/oz from $1100/oz and modifications to the TSF (tailings storage facility) from valley fill to a dry stack disposal plan.
• The exchange rate assumption also changed from $1.60/£ in the earlier study to $1.25/£ in the update, though we note the $:£ rate is now $1.314/£.
• The company’s revised plan phases the build-up of throughput to an interim rate of 3,000tpm in Phase 1 before it moves to the full 6,000tpm planned rate in phase 2.
• The total capital cost of the processing plant increased to £10.3m from £7.2m in the phased approach due to the installation of an interim reduced capacity plant for Phase 1.
• A recent presentation highlights a peak funding requirement of £7.4m
• The presentation gives a Post-tax NPV@10% of £36m and a post-tax IRR of 75% assuming a gold price of £920/oz ($1,200/oz)
• Scotgold Resources is currently preparing a planning application which the company states has been received and validated.  The company hopes the determination can be validated by end December.
Conclusion: The Cononish project is heading slowly towards production.  It will be interesting to see how much of the underwriting the Chairman will end up with.

Mon, 13 Nov 2017 10:58:00 +0000
Today's Oil and Gas Update - Cabot Energy, Canadian Overseas and Trinity Headlines
•  Published:
o Cabot Energy (LON:CAB) - Factsheet
• In Brief:
o Canadian Overseas (LON:COPL)– 0.95p/C$0.02) – LB-13 Change of Heart & Financing Folly
o Trinity (LON:TRIN) – 18p) – What a Difference a Year Makes
Published Today
Cabot Energy*** (LON:CAB) - Factsheet: Cabot Energy (“CAB” or the “Company”) has interests in a number of asset areas, the principal of which is its Canadian production operations in Alberta. Current Gross production stands at ~800bpd (600bpd net to CAB’s 75% Working Interest). The Canadian operations provide the company with further growth opportunities, both in the form of appraisal and development of known productive formations, and as a consolidator of regional production and infrastructure. While SPA has yet to complete a detailed DCF valuation on each asset and publish an Initiation Research Report, Recommendation and Target Price.
In Brief
• Canadian Overseas– LB-13 Change of Heart & Financing Folly: Today’s announcement is anodyne in its content, save for the fact that the Company has had a change of heart with respect to its participation in the LB-13 exploration permit (Liberia) and the financing plans for the ShoreCan JV, which holds its interest in the OPL229 licence in Nigeria. On the former, it isn’t that they have exited LB-13, it’s the timing, as to our mind it raises questions as to what the Management team is actually thinking about its asset base. This is further exacerbated by the fact that the Company is seeking structured finance to fund its appraisal programme. We believe that the Company is better served to drill the first appraisal well using equity, hopefully delivering sufficient cash flow from the test to cover the well costs, and go some way to meeting the costs of the 3 other appraisal wells that are mooted as part of this plan. Once that is complete, it is at that point that the JV should seek development funding, which will include structured credit. While this could arguably be a statement of Management’s confidence in the asset, to raise any credit against the first appraisal well arguably exposes shareholders to excessive risk, as if it fails to deliver as anticipated, the funds would be withdrawn and the asset being taken as security.
• Trinity  – What a Difference a Year Makes: Today’s update from the Company has underlined the change in fortunes that TRIN has experienced, from the edge of bankruptcy to what now appears to be a future more within its control, than not. Make no doubt that the Company has been saved by what was then a current liability to the tax authorities (they come top in any liquidation), but Management have seized on the circumstances to put themselves in what is an increasingly strong position. While there is a long way to go, these initial steps are highly encouraging.

Mon, 13 Nov 2017 09:38:00 +0000
Today's Oil and Gas Update - Cabot Energy Cabot Energy LON:CAB ("CAB” or the “Company”) has interests in a number of asset areas, the principal of which is its Canadian production operations in Alberta. Current Gross production stands at ~800bpd (600bpd net to CAB’s 75% Working Interest).
The Canadian operations provide the company with further growth opportunities, both in the form of appraisal and development of known productive formations, and as a consolidator of regional production and infrastructure.
While SPA has yet to complete a detailed DCF valuation on each asset and publish an Initiation Research Report, Recommendation and Target Price.

Mon, 13 Nov 2017 08:25:00 +0000
Today's Oil and Gas Update - Tower Resources Headlines
• In Brief:
o Tower Resources*** (LON::TRP– 1.05p) – Cameroon Refocus

In Brief
• Tower Resources***

– Cameroon Refocus: Today’s funding provides the Company with the resources to progress its Cameroonian Thali appraisal asset to a drill ready position. The management now need to focus on getting it to that position in the best possible financial shape, which means focusing on driving down costs and achieving best value for shareholders. The next update from the Company must be a clearly articulated forward plan, attendant with milestones on how it will achieve that goal.

Thu, 09 Nov 2017 08:34:00 +0000
Today's Market View - Bushveld Minerals, Petropavlovsk, Shanta Gold and Stratex International Bushveld Minerals (BMN) BUY – Target price 14p – AfriTin to start trading on Thursday following demerger of tin assets from Bushveld
Petropavlovsk (POG LN) – 5-year 8.125% $500m notes to be issued
Shanta Gold (SHG LN) Hold – Target price 4.8p (from 4.6p) – GoT partially refunds outstanding VAT
Stratex International (STI LN) – Bob Foster returns

Dow Jones Industrials  +0.04% at 23,557
Nikkei 225   -0.10% at 22,914
HK Hang Seng   -0.30% at 28,906
Shanghai Composite    +0.06% at 3,415
FTSE 350 Mining   +0.36% at 17,809
AIM Basic Resources   -0.24% at 2,594


US$1.1607/eur vs 1.1584/eur yesterday.           Yen 113.81/$ vs 114.19/$.         SAr 14.181/$ vs 14.195/$.            $1.314/gbp vs $1.316/gbp.
            0.767/aud vs 0.766/aud.            CNY 6.633/$ vs 6.631/$.

Commodity News

Chinese winter cuts dull commodities buying
• China’s winter combat against smog is efficiently curbing raw material purchases in October from record-breaking imports in the months prior, as factories continue to clear inventories during ongoing production limits. Imports across a range of commodities including crude oil, gas, iron ore, coal and copper pulled back from September highs as demand from the world’s largest consumer diminished against environmental protectionism.
• The seasonal environmental constraints enforced by the Ministry of Environmental Protection were enhanced by more advanced closures ahead of the week-long national holiday and the Communist Party Congress, serving only to further weaken demand for raw material imports.
• The fight on air quality preservation is making positive advances as the northern province of Hebei announces fulfilment of 2013-2017 targets, in a region which hosts six of the top ten smoggiest cities in China. The vice-head of Hebei’s environmental protection bureau confirmed a cut of PM2.5 to 64 micrograms per cubic metre year to date, representing a 38.5% decline (25% target) since 2013.
• Imports of iron ore sank to their lowest levels in 1.5 years in September as steel mills across the key production provinces dropped output by 30-50% and favored working off inventory.
• Output cuts on coal consumption have hit imports hard as domestic sources remain more competitive. Coal has fallen out of favour as air quality improvements focus on the elimination of 44,000 coal-fired industrial boilers and the replacement of coal-fueled household heating with gas or electricity across millions of residences.

Precious metals:
Gold US$1,279/oz vs US$1,278/oz yesterday
• The dollar wavered following reporting from the Washington Post concerning delays in the Senate Republican leader implementation of the proposed corporate tax cut. The one-year delay aims to comply with Senate rules but serves to lay doubt in the ability of US Donald Trump to pass the tax reform plan.
• While reshaping the legislation aims to provide further business stimulus, a top credit-ratings agency has said the bill would balloon the budget deficit and give only a temporary boost to the economy.
• Donald Trump reiterated his warning to North Korea he was prepared to use the full range of U.S. military power to prevent any nuclear attack but tactfully urged Pyongyang to “make a deal” to end the standoff as he closes his tour of South Korea.
• Weakening interest for gold in India brought concerns about physical demand, as data from India’s Finance Ministry indicated a 31% drop in imports in October, equivalent to 96.7 tonnes.
   Gold ETFs 69.2moz vs US$69.2moz yesterday
Platinum US$929/oz vs US$928/oz yesterday
Palladium US$1,001/oz vs US$1,000/oz yesterday
Silver US$17.05/oz vs US$17.11/oz yesterday
Base metals:   
Copper US$ 6,800/t vs US$6,942/t yesterday
• Broad Chinese profit-taking selling across base metals leads to copper price contracting 2.1%.
• Booming demand from the transition into the electric economy is driving Chinese refined copper production as year to date output rises to 6.6 million tonnes, representing a 6.3% yoy gain.
Aluminium US$ 2,134/t vs US$2,159/t yesterday
Nickel US$ 12,585/t vs US$12,845/t yesterday
• Broad Chinese profit-taking selling across base metals encourage investors to secure close-20% gains in nickel over October, with the metal falling over 2.1%.
• Elevated metal prices built on fundamental growing EV demand has lead the Indonesia’s Energy and Mineral Resources Ministry to issue an export quota recommendations for 20.4 million tonnes of ore.
Zinc US$ 3,173/t vs US$3,218/t yesterday
Lead US$ 2,487/t vs US$2,486/t yesterday
Tin US$ 19,425/t vs US$19,425/t yesterday
Oil US$63.5/bbl vs US$64.4/bbl yesterday
• The Organization of the Petroleum Exporting Countries looks to extend the broad oil output production limitation of 1.8 million barrels per day until March 2018 in an effort to maintain buoyant prices. The global pact looks to eradicate the supply glut, with a Nov. 30th meeting set to finalise the remaining length of the accord.
• Producers will be keen to return to higher output levels following the latest OPEC report, proposing peak oil in the second half of the 2030s resultant the rapid adoption of electric vehicles.
Natural Gas US$3.128/mmbtu vs US$3.135/mmbtu yesterday
Uranium US$20.40/lb vs US$20.25/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$61.7/t vs US$63.5/t
Chinese steel rebar 25mm US$634.9/t vs US$631.2/t
Thermal coal (1st year forward cif ARA) US$86.1/t vs US$87.4/t
Premium hard coking coal Aus fob US$180.5/t vs US$179.8/t

Tungsten APT European US$275-285/mtu vs US$275-285/mtu last week

Company News
Bushveld Minerals (LON:BMN) 9.8p, mkt cap £79m – AfriTin to start trading on Thursday following demerger of tin assets from Bushveld
BUY – Target price 14p
• Bushveld Minerals is to list its AfriTin business with trading due to start on Thursday on AIM.
• AfriTin is being demerged by way of a sub-division of ordinary shares into ordinary shares and redeemable shares representing 85% of the value of the deemed value of Greenhills Resources.
• Bushveld is to retain 15% of the company and may exchange this for AfriTin shares on admission to AIM.
• Shareholders will receive 0.0899 AfriTin shares for each share in Bushveld Minerals rather than the 1 share envisaged in the circular to reduce the number of AfriTin shares in issue.
• Bushveld Minerals shareholders will therefore hold the same interest in AfriTin Mining as they do in Bushveld Minerals, though their stake will be diluted by the placing of new AfriTin shares.
• Management now expect the placing to reduce Bushveld shareholder’s stake to a combined interest of 41.9% in AfriTin Mining.
• Uis tin project: AfriTin is focusing on the Uis tin project in Namibia which it reckons may be the world’s largest open cast hard-rock tin deposit.
• Iscor, the South African steel group, ran the Uis tin mine from the 1970s to 1990 when the tin price crashed.
• A non-JORC compliant resource shows 73mt grading 0.136% tin plus a further 2.7mt grading 0.015% tin.
• The project is part of a central pegmatite field containing around 120 pegmatites over a strike length of around 120km.
• The mineralogy shows coarse grained tin-bearing cassiterite crystals of up to 25mm allowing for simple gravity separation for much of the tin.
• This could enable the upgrading of the tin to be carried out simply and for relatively little cost and much may depend on the effectiveness of this concentration process.
• Two of the three projects which make up the 73mt resource also contain around 0.015% tantalum.
• Heavy Liquid Separation tests show tin recoveries of >74% at concentrate grades of >67% with niobium, lithium, beryllium and muscovite also recoverable.
• The world’s largest tin mine in Brazil at Pitinga is of similar size with similar grades.
• Phase 1: The plan is to upgrade the existing pilot plant at the Uis mine to 10mtpa of tin concentrate to complete the pilot plant campaign and to reconfirm and upgrade the Uis tin resource
• This should then lead into a Pre-Feasibility Study ‘PFS’ and then a Bankable Feasibility Study ‘BFS’
• Phase 2: should see the construction of a much larger 3mtpa tin mine to produce 5,000tpa of a 60% tin concentrate
• Capex is estimated at around £21m for this not including feasibility study work.
• AfriTin also holds the Mokopane tin project in South Africa which has a scoping study done in 2014  with base case production of around 700tpa of tin metal showing an IRR of 34.6%.
Conclusion:  We look forward to the listing and trading of AfriTin on the market on Thursday
*SP Angel act as Nomad and broker to Bushveld Minerals.  An SP Angel Mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

Petropavlovsk (LON:POG) 8p, Mkt Cap £264m – 5-year 8.125% $500m notes to be issued
• The Company agreed the price on its $500m guaranteed notes offering.
• Bonds are priced at 8.125% yield, to be issued at 100 nominal and due for repayment on 14 Nov/22.
• Net proceeds from the bond issue will be directed towards repayment most of outstanding bank borrowings with Sberbank and VTB which stood at $518m as of H1/17.
• Notes are expected to be issued on or about 14 November 2017.
• Bonds have been assigned credit rating of B- by both Fitch and S&P.
Conclusion: The refinancing of the bank allows the Company to shift debt repayment profile forwards alleviating pressure on cash flows as the team is launching flotation plant at Malomir and continues development of the POX plant.

Shanta Gold (LON:SHG) 3.3p, Mkt Cap £25m – GoT partially refunds outstanding VAT
Hold – Target price 4.8p (from 4.6p)
• Government of Tanzania released $3.4m in a VAT refund to Shanta made up of a $1.9m offset against payable corporate tax in 2016 and 2017 and a cash payment of $1.5m.
• Outstanding owed VAT receivable came down to $13.4m.
Conclusion: Positive news for the Company which marks the first release of owed VAT by the government since H1/16.
We have decreased payable taxes and included a $1.5m reduction in accounts receivable to account for the news which lifted our NAV per share to 4.8p (up from 4.6p).
As previously highlighted, our valuation and price target are subject to a successful Investec debt refinancing with a recommendation “Hold” unchanged until such deal is completed.
We assumed no further release of outstanding VAT; hence, further improvements in the outstanding VAT account should reduce the risk of a potential cash gap in 2019 amid a $15m convertible note repayment (Apr/19).

(Dec year end)     2013A 2014A 2015A 2016A 2017E 2018E
Gold price (incl hedge)  US$/oz 1,413 1,289 1,163 1,222 1,264 1,204
Gold sales  Koz 61.9 87.8 80.6 86.3 81.7 86.1
AISC  US$/oz 1,049 941 845 661 888 760
Revenue  US$m 66.0 114.9 98.0 103.1 104.4 105.8
EBITDA  US$m 1.6 33.8 32.0 50.2 29.7 42.9
PAT  US$m 0.8 8.9 -17.3 -8.0 -2.3 8.0
Basic EPS  USc 0.2 1.9 -3.7 -1.5 -0.4 1.0
FCF  US$m -4.9 11.7 1.1 -13.6 -11.8 17.7
EV/EBITDA  X 66.1 2.9 2.8 2.1 2.6 1.8
PER  X 140.2 11.0 - - - 4.2
Source: SP Angel, Company               

Stratex International (LON:STI) 1.3p, Mkt cap £6.1m – Bob Foster returns
• Stratex International have reappointed legendary geologist Bob Foster as CEO.
• Bob’s appointment as a director will be confirmed following the usual regulatory due diligence by the company’s Nomad.
• Foster is being charged to review the company’s position and strategy and to consider the way forward.
• Bob has 39 years of experience as a geologist and was a co-founded Stratex in 2006.
• He is known for his expertise in the genesis and exploration for gold deposits.
• Foster has more letters after his name than name than a bowl of alphabet soup; B.Sc, Ph.D., FIMM, C.Eng, FGS, C.Geol.
• It is interesting to note that Stratex has discovered more than 2.2moz of gold and 7.09moz of silver, as well as 186,000 tonnes of copper over the past 10 years.
• Stratex continues to hold a number of gold and copper projects in Turkey along including a 15% stake in a copper-gold project at feasibility stage.
• Stratex holds 30.5% of Thani Stratex Resources Ltd (Djibouti and Egypt) and a stake in Tembo Gold Corp (Tanzania) and an interesting gold exploration project in Senegal.
• It’s a shame that Stratex let its stake in Goldstone Resources go when it was advancing funds to Crusader Resources.
• Goldstone stock is doing rather better since the hurried Stratex sale at 1.9p/s.  Stratex sold its 13.7% stake in Goldstone Resources at a price of 1.6p/s for a total cash consideration of £0.55m.
• Goldstone has a JORC resource of 602,000oz of gold grading 1.77g/t at its Homase/Akrokerri project in Ghana just next to the old Obuasi gold mine.
Conclusion:  Shareholders should be relieved to see Bob Foster restored as CEO though questions remain over the actions of other members of the board, in particular the apparent inaction of the non-executive directors who appear to have supported the proposed acquisition of Crusader Resources.

Wed, 08 Nov 2017 11:58:00 +0000
Today's Oil and Gas Update - Cabot Energy In Brief
Cabot Energy*** (LON:CAB– 5p) – Reserves Update: Today’s Reserves update, detailing a 53% increase in Gross Reserevs to 2.9mm bbl, underlines the progress that management has made in the period of low oil prices to evaluate and assess its asset base. With oil prices strengthening, and two supportive shareholders (H2P and Cavendish), there continues to be significant scope for further improvement in the underlying asset base. While the review programme is still underway, we believe that given the focus that Management has on the asset base, further Reserves upgrades are likely.
We may provide a further update on one, or all, of the stories above later today. However, if there is anything that you would like to discuss, please feel free to contact us.

Wed, 08 Nov 2017 09:53:00 +0000
Market Briefing - Altus Strategies, Horizonte Minerals, IronRidge Resources, Stratex International and Tertiary Minerals Altus Strategies* (LON:ALS) BUY - Target price 12.2p – Gold exploration license secured in Liberia
Horizonte Minerals (LON:HZM) – Araguaia mine plan submitted for approval
IronRidge Resources* (LON:IRR) – 2017 Results
Stratex International* (LON:STI) – Stratex drops Crusader transaction and seeks to recover cash loans
Tertiary Minerals* (LON:TYM) – MB Fluorspar project recognised in NMA awards

Glencore loaned funds to Dan Gertler to negotiate mining rights in DRC (Paradise Papers) BBC

China’s iron ore imports remain strong despite steel cuts
• China imported 88.2mt through its ports in October up from 86.3mt in September despite steel cut to steel production capacity in the recent anti-pollution drive
• Iron ore usage looks likely to pull back as utilisation rates for blast furnaces have fallen to 71% with major steel providence of Hebei set to limit output by 50%.

Lithium - Enevate develops fast charge silicon anode technology for use in Li-ion batteries with greater charge capacity
• Silicon has greater charge capacity than graphite it undergoes greater volumetric expansion (300% vs 10% for graphite) and contraction leading to anode cracking and reduced battery operating life.
• Enevate’s patented HD-Energy technology—a silicon-composite anode film with More than 70% silicon—delivers more than four times the energy density of conventional Li-ion battery anodes.
• The company recently announced that its HD-Energy® Technology for Electric Vehicles (EVs) which features extreme fast charging in only 5 minutes with high energy density and long driving range that adds up to 240 miles (390 km)—or up to 50 miles (80 km) range with a 60-second charge.
• It is difficult to find out any information on how Enevate’s technology manages silicon based anode reliability issues or the type of equipment required for 5 minute charging
• The statement is short on answers and long on potential.
• We suspect improvements in lithium battery technology combined with the natural weight benefit of lithium will combine to render lithium as offering a better anode solution in the long term.
• Nexeon are also working on silicon-anode based technology backed by £30m in equity funding.  See:

Oil market looking for $70/bbl by year-end as Saudi Arabia leads tightening of OPEC supply ahead of Saudi ARAMCO listing
• Much is going in in the Kingdom of Saudi Arabia.
• An anti-corruption purge has led to the arrest of Prince Alwaleed bin Talal alongside the detention of a number of princes
• A helicopter crash has led to the death of another potential rival for the crown.
• Oil prices are creeping higher as Saudi ministers are expected to extend cuts of 1.8mbbls per day through next year to reduce inventories and raise prices.
• Traders are concerned over oil supply as the anti-corruption purge incarcerates more of Saudi Arabia’s leading businessmen.
• Ironically, higher prices should serve to raise Saudi Aramco margins despite production cuts ahead of its potential flotation.

Dow Jones Industrials  +0.04% at 23,548
Nikkei 225   +1.73% at 22,938
HK Hang Seng   +1.39% at 28,994
Shanghai Composite    +0.75% at 3,414
FTSE 350 Mining   +0.37% at 18,046
AIM Basic Resources   +1.21% at 2,600

Germany – Industrial production came off in September following a strong August month.
• Nevertheless, robust September factory orders released yesterday point to a positive outlook for the manufacturing sector.
• Forecast strong growth momentum is also supported by latest high Manufacturing PMI numbers.
• Industrial Production (%mom/yoy): -1.6/+3.6 v 2.6/4.6 in August and -0.9/+4.5 forecast.

UK – Retail sales slump in October the latest British Retail Consortium report showed while Halifax data showed property prices growth accelerated in three months to October driven by a shortage of new housing.
• “It was a meagre month in October for retail sales… consumers appear to have opted for outdoor experiences and excursions during half term, over visits to the shops,” the BRC said.
• Non-food sales dropped 2.1%yoy over the past year marking the worst performance since the BRC started compiling the data in Jan/12 with unseasonably warm weather weighing on clothing sales.
• Online sales growth came in less than half the pace of the three- and 12-month averages.
• Retail Sales (%yoy): -1.0 v 1.9 in September and 0.8 forecast.
• Halifax survey showed half of respondents remain bullish on property prices while the number who expect a fall have double to 20%.
• Short term outlook remains buoyant according to Halifax as “the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate continues to support house prices and is likely to do so over the coming months”.
• Halifax Property Prices (%mom/yoy): 0.3/4.5 v 0.8/4.0 in September and 0.2/4.5 forecast.

Australia – The central bank kept rates unchanged at record low of 1.5% for 15th month as inflation continued to lag RBA target range despite a continuing tightening in the labour market.
• Inflation came in at 1.8% in Q3/17, short of estimates for 2.0% and below the 2-3% RBA target.
• Unemployment fell to 5.5% from 5.9% in Q1/17; although, the central bank said “a sizeable degree of spare capacity” remains in labour market.

US$1.1584/eur vs 1.1608/eur yesterday.           Yen 114.19/$ vs 114.29/$.         SAr 14.195/$ vs 14.225/$.            $1.316/gbp vs $1.308/gbp.
            0.766/aud vs 0.765/aud.            CNY 6.631/$ vs 6.635/$.

Commodity News
Precious metals:
Gold US$1,278/oz vs US$1,269/oz yesterday
• Concerns over ongoing corruption charges and arrests of Saudi royal family members and ministers encouraged Asian sales in the metal as investors locked in profits from yesterday’s bullish session, after climbing nearly 1 percent to close above its 100-day moving average. The session was golds biggest single-day percentage gain in over five weeks as safe-haven investing followed the announcement of Saudi Arabia’s future king, Crown Prince Mohammed bin Salman, tightening his grip on power through a widespread anti-corruption purge. The metal continued its growth as the campaign of mass arrests expanded to internationally recognized billionaire businessman Price Alwaleed bin Talal.
• The next leg of Donald Trump’s Asian tour brings the presidential party to the frontline of the ongoing nuclear standoff with North Korea. Discussions within South Korea concerning the global security threat are expected to increase geopolitical tensions with the united military alliance rhetoric and continued support for the metal.
   Gold ETFs 69.2moz vs US$69.2moz yesterday
Platinum US$928/oz vs US$922/oz yesterday
Palladium US$1,000/oz vs US$1,002/oz yesterday
Silver US$17.11/oz vs US$16.88/oz yesterday
Base metals:   
Copper US$ 6,942/t vs US$6,951/t yesterday
Aluminium US$ 2,159/t vs US$2,177/t yesterday
• The winter capacity regulations are likely to take a more permanent hold on some aluminium smelters as Chinese government policies will shut off the furnaces. Escalating costs of production in the country and strong environmental momentum driven by the Ministry of Environmental Protection is forecast to permanently close excess domestic capacity.
• The drive against excessive air pollution has led to the reduction of 30% of capacity across 31 cities (equivalent to 3.6 million tonnes), while China’s National Development and Reform Commission has identified a further 5.1 million tonnes of illegal capacity operating without licenses.
• Escalating inflation in the price of raw materials is also driving operations to smaller margins, as the price for anodes increases to $700/t and alumina at $480/t.
Nickel US$ 12,845/t vs US$12,890/t yesterday
• Nickel prices contracted following broad profit-taking from the recent value surge on the back of positive sentiment in future demand for nickel sulphates fundamental to the electric vehicle story. Capital Economics warns that recent expectations in the metal, which briefly broke through the $13,000/t level last week and posted a nearly 10% weekly gain last week, from growing battery manufacturer demand was excessive. “It needs to be remembered that EV batteries account for just one to two percent of nickel output currently, whereas the stainless steel sector accounts for around 65%”.
Zinc US$ 3,218/t vs US$3,237/t yesterday
Lead US$ 2,486/t vs US$2,482/t yesterday
Tin US$ 19,425/t vs US$19,490/t yesterday
Oil US$64.4/bbl vs US$62.5/bbl yesterday
Natural Gas US$3.135/mmbtu vs US$3.059/mmbtu yesterday
Uranium US$20.25/lb vs US$20.30/lb yesterday

Cobalt – China too reliant on the DRC for Cobalt (Reuters)
• The Chairman of Guangdong Jiana Energy Technology Co, a supplier of cobalt salts and other materials for EV battery cathodes has publically stated that China is over-reliant on the DRC for its cobalt supply.  The comment is from the China International Nickel and Cobalt Industry Forum in Guangzhou.
Battery technology energises cobalt market
• Cobalt emerged as star performing metal for investors this year due to an uncertain supply situation and strong demand drivers
• China is the major driver behind consumption due to aggressive battery production growth and plans in terms of Electric Vehicle sales

Iron ore 62% Fe spot (cfr Tianjin) US$63.5/t vs US$59.7/t
• Despite vastly decreasing Chinese winter steel capacity as the war on air pollution heightens, imports of iron ore continued to swell as shipments in October grew a further 2.2% to 88.2Mt. Imports from the top three suppliers to China, Australia, Brazil and South Africa represent the second-highest shipments of 2017. Chinese customs data indicates a steady annual rise in the raw material imports, reaching a record 102.8 million tonnes in September, equivalent to a year-to-date increase of 7.1%.
• Shipments arrive as utilization rates across blast furnaces drop to 71% in the week to Nov. 3, representing the lowest since 2012. The major steel-making province of Hebei acts to cut capacity ahead of its annual target in the fight against winter smog, beating objectives to remove 25.55 million tonnes excess capacity.
• Unrelenting trader interest in the essential raw material appear to focus on increasing stockpiles ahead of the significant pent-up demand for steel at the close of the winter measures.
Chinese steel rebar 25mm US$631.2/t vs US$630.9/t - Toyota supports Kobe Steel as it clears products
• Toyota says it has found no defects in cars using metal parts from Kobe steel materials including copper tube, aluminium extrusions and steel powder
• More than 80% of clients that received falsified products have been cleared of safety concerns
Thermal coal (1st year forward cif ARA) US$87.4/t vs US$85.6/t - HSBC pledges to deliver $100bn of green finance through to 2025
• Company said would reduce its exposure to thermal coal through discontinuing financing of new coal fired power plants in developed markets and thermal coal mines worldwide
• Stopped short of imposing moratorium on all coal related investments due to bank’s strong presence in Asia
Premium hard coking coal Aus fob US$179.8/t vs US$179.7/t

Tungsten APT European US$275-285/mtu vs US$275-285/mtu last week

Company News
Altus Strategies* (LON:ALS) 8.8p, Mkt Cap £9.4m – Gold exploration license secured in Liberia
BUY - Target price 12.2p
• The 732km2 exploration license is located in the Lofa County of the NW Liberia, 25km NE of the Bella Yella license and 190km NE of the capital, Morovia.
• The Zolowo area covers 33km of Archean greenstone gold belt and is found along the regional NE-SW geological trend which also hosts New Liberty gold mine owned and operated by Avesoro Resources.
• Altus has access to a series of historical data over the area including geological maps, remote sensing data and satellite imagery.
• The Company identified 24 area of alluvial gold workings within the license boundaries pointing to the prospectivity of the area.
• Exploration team is planning to launch reconnaissance work later this quarter starting with mapping and sampling of high priority targets.
• Afterwards, the Company is expecting to follow up with a license-wide stream sediment survey to identify further sources of alluvial gold.
Conclusion: In line with the project generation business model, the Company has just added a land package in NW Liberia, in close proximity to its existing Bella Yella gold license. A number of alluvial gold mining sites found in the area with the Company planning early exploration works in an attempt to identify hard rock sources of gold.
*SP Angel acts as Nomad and Broker to Altus Strategies

Horizonte Minerals (LON:HZM) 4.9 pence, Mkt Cap £57.1m – Araguaia mine plan submitted for approval
• Horizonte Minerals reports that it has submitted its mine plan for development of the Araguaia ferronickel project for approval by Brazil’s National Mining Agency.
• Approval of the “Mine Plan together with approval of the Mine Construction Licence ”, which was submitted during October, … “will grant Horizonte the principal mining and environmental permits to commence construction of Araguaia”.
• The company plans to construct a plant capable of producing “around 14,500 tonnes of contained nickel in approximately 50,000 tonnes of ferronickel per year from processing 0.9 million tonnes of ore via the proven and widely utilised Rotary Kiln Electric Furnace (RKEF) process route.” The project is reported to have a 28 year mine life.
• Although the company announcement provides no specific guidance on the expected timetable for receiving the relevant approvals, Horizonte’s CEO, Jeremy Martin commented that “The Mine Plan submission … marks an important shift taking the Project from the exploration stage into the mining development phase and therefore further de-risking the Project.”
• The company’s pre-feasibility study, published about a year ago, indicated that, at an assumed nickel price of US$12,000/tonne, capital expenditure of US$354m was expected to generate an after tax NPV of US$328m, discounted at 8% and an IRR of 19.3%. Work on the more detailed feasibility study is continuing.
Conclusion: The company has now submitted applications for the principal permits required to develop its Araguaia ferronickel project in the Para State of north-east Brazil. We await further news on the progress of the applications and the outcome of the feasibility study.

IronRidge Resources* (LON:IRR) 30.5p, Mkt Cap £83.2m – 2017 Results
• IronRidge Resources has published an after tax loss of A$5.23m (2.2Acents/share) for the year ending 30th June 2017. The result compares with a loss of A$2.31m (1cent/share) in the year to 30th June 2016.
• The company attributes the increased loss to the recognition of A$1.4m of project generation expenses “relating to Chad, Ghana and Ivory Coast, an increase in employee benefits expenses including cash bonuses of A$160,000 and approximately A$1.1m of share based payments “representing the Black-Scholes value of 19,000,000 options granted to Directors and staff and the expense recognised on the bonus shares issued to staff in December.”
• During the year, the company continued its multi-commodity exploration strategy in Africa and Australia, culminating in the acquisition of Tekton Minerals and its’ extensive portfolio of over 1000 square kilometres of exploration acreage and its established exploration team in Chad which was approved by IronRidge’s shareholders in early July and completed on 5th September.
• Highlighting the significance of the Tekton Minerals acquisition, Executive Chairman, Nicholas Mather, pointed out that “These projects have the potential for multi-million ounce gold discoveries, and I look forward to sharing the results of our work as it progresses over the next few months.”
• In addition to the largely gold-focussed exploration in Chad, the company is progressing early stage exploration of lithium bearing pegmatite projects in Ghana and Cote d’Ivoire, gold exploration in Cote d’Ivoire and bauxite, titanium and gold projects in Australia.
Conclusion: IronRidge Resources has assembled a diverse portfolio of exploration assets in Africa and Australia. The recently acquired gold exploration portfolio in Chad is thought to have multi-million ounce potential while the lithium projects in Cote d’Ivoire and Ghana provide exposure to the increasing investment appetite for lithium projects.

Stratex International* (LON:STI) 1.25p, Mkt cap £5.8m – Stratex drops Crusader transaction and seeks to recover cash loans
• The board of Stratex International has elected to terminate the proposed acquisition of Crusader Resources and will take all appropriate steps to recover the secured loans made to Crusader when these amounts become due.
• We like to think that these amounts might become due immediately when the deal is terminated and will read the next annual report with great interest to see what actually transpires.
• The Stratex board has also terminated the employment of the CEO who had championed the Crusader deal and led the board to vote for the deal and related loans into Crusader.
• We look forward to confirmation of the timing of the recovery of the loans and to announcements on a new strategic direction for the company.
• Shareholders should feel relieved that that the Stratex board has voted to terminate the Crusader deal.
• There are more than enough resource opportunities in parts of Africa where Stratex has significant experience.
*SP Angel remain wholly independent with respect to Stratex.

Tertiary Minerals* (LON:TYM) 0.58p, Mkt £1.8m – MB Fluorspar project recognised in NMA awards
• Tertiary Minerals reports that The National Mining Association (NMA) and the US Department of the Interior have recognised the “outstanding and innovative reclamation and sustainable mineral development work on the Company’s MB Fluorspar Project in Nevada.”
• The company was one of two companies recognised for the award in the “2017 Hardrock Small Operator Award – one of five categories of awards under the BLM’s [Bureau of Land Management] Reclamation and Sustainable Minerals Development Awards Programme”.
• Welcoming the recognition the project had received, Managing Director, Richard Clemmey, said “We are delighted to receive this prestigious award which is a testament to the operational and environmental excellence the Company strives for and to the quality of the carefully selected contractors employed on our operations.” Mr Clemmey went on to pay tribute to the company’s consulting geologists and earthmoving contractors for their contribution.
Conclusion: The recognition of the work done on the MB Project should stand the company in good stead when it seeks to advance the project through the permitting process in Nevada.
*SP Angel act as Nomad and broker to Tertiary Minerals

Tue, 07 Nov 2017 11:37:00 +0000
Market Briefing - Ortac Resources, Galileo Resources, Australian Mines and others Clean energy tax credit axe undermines US’s fight against climate change
• America’s changing stance towards combating climate change looks to increase pollution and weaken the country’s leadership in energy innovation, as the proposed Republican Tax Plan cuts electric vehicle and clean energy tax credits.
• The draft bill released by the U.S. House Ways and Means Committee would eliminate the electric vehicle tax credit ($7,500 per EV), reduce the Production Tax Credit for wind power by more than a third, and axe the permanent 10 percent Investment Tax Credit for solar and geothermal power.
• Removal of these incentives are expected to weaken the growth of the clean technology revolution in the US, hampering efforts to reduce the global impact on harmful pollution, negatively impact one of the fastest growing employment sectors in the country and reduce demand for crucial battery raw materials.
• The impact of the bill on the electric economy growth is unclear given that the US is a single country in the global EV market, however sales of electric vehicles in Hong Kong plummeted to zero when subsidies were cut by 20 percent. The move is likely to heighten the importance of producing economically competitive vehicles, with cost reducing batteries looking to lessen the amount of cobalt and replacing it with cheaper nickel.

Batteries - Enevate promises 5 minute charge time for lithium ion battery
• Uses silicon dominant lithium ion technology to make 5 minute charging possible
• Says electric car with one of its batteries can add 240 miles of range in just 5 minutes

Iron ore prices continue to rise as production cuts may not be as severe as expected
• China’s winter war on smog is lifting steel prices as the nation’s top steel producing province surpasses its capacity reduction targets, slashing 25.55 million tonnes. Steel’s gains helped push up the prices of raw materials, with iron ore futures surging more than 6 percent to their highest levels in two weeks.
• In an effort to curb pollution during winter, encompassing the heating months of November to March, Hebei province looks to limit steel and iron ore output by 50 percent in major producing cities including Tangshan, Handan, and Shijiazhuang. The air quality measures are helping to tighten supply of iron ore, while bullish market demand outlook in 2018 is expected to drive prices to new highs.
• China’s biggest steel producing city Tangshan has ordered various levels of capacity cuts though there is speculation that output may not be curtailed as much as expected
• There is little financial incentive to shut capacity with profit margins >Rmb1,000/t

Saudi purge orders detention of 11 princes, four ministers and many more
• The purge led by an anti-corruption body in the Kingdom of Saudi Arabia is seen as consolidating the power of the new Crown Prince Mohammed bin Salman.
• In separate news Prince Mansour bin Muqrin, the son of a former crown prince was killed in a Helicopter crash close to the Yemen border.
• There is no speculation of foul play.

Dow Jones Industrials  +0.10% at 23,539
Nikkei 225   +0.04% at 22,548
HK Hang Seng   +0.02% at 28,610
Shanghai Composite    +0.49% at 3,388
FTSE 350 Mining   +1.39% at 18,059
AIM Basic Resources   +0.12% at 2,569

US – Employment figures came in strong on Friday on the back of a rebound in hiring post hurricane-affected months.
• Strong upward revisions to previous months suggested adverse effects of weather on the labour market were less severe.
• In particular, categories most impacted by storms including leisure and hospitality recorded complete recoveries.
• Unemployment rate continued to grind lower; although, participation rate has also came down slightly in October (62.7% v 63.1% in September).
• Continuing tightening in the labour market provides confidence to the Fed to hike rates in December with markets putting chances of a rate increase at 92%.
• US bond yields were little changed on the back of the news swingin a couple of basis points mid-day on Friday while gold settled around $10/oz lower as expectations for a rate hike in December remained on the cards.
• NFPs: 261k v 18k (revised from -33k) in September and 313k forecast.
• Unemployment Rate (%): 4.1 v 4.2 in September and 4.2 forecast.
• Earnings (%yoy): 2.4 v 2.8 (revised from 2.9) in September and 2.7 forecast.

China – The PBOC will target the policy of financial deleveraging as the central bank governor reiterated his concerns over the nation’s escalating debt levels.
• Zhou Xiaochuan who nears retirement and may be replaced as early as next month published an article over the weekend warning of “hidden, complex, sudden, contagious and hazardous” financial risks in the economy.

Japan – Abe general election win lifts business confidence.
• “The level of positive sentiment strengthened to the join-highest since May, on a par with June,” the latest Markit Servcies PMI report showed.
• Strong inflow of new business orders saw composite production index climbing to the joint-highest level in almost four years “indicating a marked improvement in private sector business conditions”.
• Manufacturing PMI (released last week): 52.8 v 52.9 in September.
• Services PMI (released today): 53.4 v 51.0 in September.

Germany – Factory orders growth unexpectedly accelerated in September pointing to a strong finish to Q3.
• “Order activity increased further from an already high level,” the Economy Ministry said commenting on numbers.
• Manufacturing remains a “pillar” of a continuing robust economic growth amid “vigorous” export demand and an “excellent” level of orders, Bundesbank said.
• Factory Orders (%yoy): 9.5 v 8.3 in August and 7.1 forecast.

UK – Car registrations fell 12.2%yoy in October amid “declining business and consumer confidence”, the Society of Motor Manufacturers and Traders (SMMT) report showed.
• Declines reported across all consumer groups including private buyers (-10.1%yoy) and business demand (-26.8%yoy).

Italy – Economic data points to a bifurcation of growth dynamics in manufacturing and services industries.
• The latest services PMI showed growth in the sector eased to a one year low on the back of weak new business orders which climbed at the slowest pace since last October.
• On the other hand, manufacturing PMI report has previously showed “a strong upturn in external demand for capital goods”, Markit wrote.
• “Growth in the services economy – which is naturally pivoted to domestic demand developments – is lagging that of industry.”
• Manufacturing PMI (released last Thursday): 57.8 v 56.3 in September and 56.5 forecast.
• Services PMI (released today): 52.1 v 53.2 in September and 52.9 forecast.

Spain – Carles Puigdemont has been released on bail as the Belgian court is reviewing whether to execute the European arrest warrant issued by Spain over the next 15 days.
• Puigdemont is facing charges of misuse of public funds, disobedience and breach of trust relating to the secessionist.
• Last Friday, the Spanish government has issued European arrest warrants against Puigdemont, Antoni Comin, Clara Ponsati, Meritxell Serret and Lluis Puig for trying to “illegally change the organisation of the state through a secessionist process that ignores the constitution”.
• Latest PMI showed business outlook has been slowing down reflecting uncertainty around Catalonia.
• “Events in Catalonia acted to dampen growth, with the impact on service providers greater than was seen for manufacturers in the sister PMI survey last week…there were reports of clients delaying spending decision amid uncertainty, while business sentiment dropped to the lowest in over a year,” Markit wrote.
• Manufacturing PMI (released last Thursday): 55.8 v 54.3 in September and 54.8 forecast.
• Services PMI (released today): 54.6 v 56.7 in September and 55.6 forecast.

US$1.1608/eur vs 1.1644/eur yesterday.           Yen 114.29/$ vs 114.09/$.         SAr 14.225/$ vs 14.083/$.            $1.308/gbp vs $1.304/gbp
          0.765/aud vs 0.768/aud.            CNY 6.635/$ vs 6.629/$.

Commodity News
Precious metals:
Gold US$1,269/oz vs US$1,276/oz last week
• Strong US data helped boost the dollar index in range with a high of more than three-months, as the labour market sustained acceleration and the services sector grew to its strongest rate since August 2005. Despite falling 16% short of expectations, US non-farm employment grew 261,000 in October, the largest increase since July 2016, while non-manufacturing purchasing managers’ index boosted services sentiment to climb to 60.1 points.
• Gold dropped further as market confidence grew in a US Fed interest rate rise between 1.25% and 1.5% in December, as 96.7% market participants favour the rise (CME Group’s FedWatch).
• The metal may find support as President Donald Trump starts his 12-day Asian tour. The trip looks to present a united front with Japan, as a military deal with the ally aims to “qualitatively and quantitatively” enhance its defense capabilities with American military equipment given the “very tough” North Korea situation.
   Gold ETFs 69.2moz vs US$69.2moz last week
Platinum US$922/oz vs US$922/oz last week
Palladium US$1,002/oz vs US$998/oz last week
Silver US$16.88/oz vs US$17.10/oz last week
Base metals:   
Copper US$ 6,951/t vs US$6,945/t last week
• Hedge funds and money managers reduced net long positions in COMEX copper contracts despite positive electric vehicle sentiment helping the metal climb 6.7 percent this quarter to record its sixth consecutive growth quarter.
Aluminium US$ 2,177/t vs US$2,177/t last week
Nickel US$ 12,890/t vs US$12,690/t last week
Zinc US$ 3,237/t vs US$3,232/t last week - New Century Resources (NCZ AU) raises A$52.9m to bring massive zinc mine back into production
• During operation was one of biggest zinc mines in the world, producing and processing 475,000 tonnes of zinc concentrate
• The mine the world’s third largest zinc mine and was closed last year due to its low grade.
• The inferred mineral resource in the silver king deposit which lies 1.5km from the original century pit contains 2.7mt grading 6.9% zinc, 12.5% lead and 120g/t silver.
• The bulk of the resource appears to be contained in the tailings.
Lead US$ 2,482/t vs US$2,456/t last week
Tin US$ 19,490/t vs US$19,570/t last week
Oil US$62.5/bbl vs US$60.9/bbl last week
Natural Gas US$3.059/mmbtu vs US$2.946/mmbtu last week
Uranium US$20.30/lb vs US$20.30/lb last week
Iron ore 62% Fe spot (cfr Tianjin) US$59.7/t vs US$59.6/t
Chinese steel rebar 25mm US$630.9/t vs US$627.1/t
• China’s winter war on smog lifts steel prices as the nation’s top steel producing province surpasses its capacity reduction targets, slashing 25.55 million tonnes. Steel’s gains helped push up the prices of raw materials, with iron ore futures surging more than 6 percent to their highest levels in two weeks.
• In an effort to curb pollution during winter, encompassing the heating months of November to March, Hebei province looks to limit steel and iron ore output by 50 percent in major producing cities including Tangshan, Handan, and Shijiazhuang. The air quality measures are helping to tighten supply of iron ore, while bullish market demand outlook in 2018 is expected to drive prices to new highs.
Thermal coal (1st year forward cif ARA) US$85.6/t vs US$86.3/t
Premium hard coking coal Aus fob US$179.7/t vs US$177.3/t
• Unexpected physical demand for coking coal and iron ore has initiated strong buying of futures as investors forecast the gap between physical and future prices to close on higher consumption.

Tungsten APT European US$275-285/mtu vs US$275-285/mtu last week

Company News
Australian mines (ASX:AUZ) – raises A$20m to accelerate cobalt, nickel projects
• The, Perth-based, company is currently undertaking a Bankable Feasibility Study ‘BFS’ on its Sconi Cobalt-Nickel-Scandium Project in Queensland.
• Management are continuing trial mining and and are building a demonstration-scale process plant to produce commercial-grade samples of cobalt sulphate, nickel sulphate and scandium oxide.
• Samples will be used to progress negotiations with potential off-take partners and financiers.
• Further funding will be required to build a commercial scale mine and plant if sufficient offtake partners are secured.
• This placement ensures Australian Mines is fully-funded to complete the BFS, increase its trial mining activities, finalise construction the demonstration plant and produce commercial-grade samples.

Condor Gold (LON:CNR) 41p, Mkt Cap £25.2m – Results from final six holes at Mestiza
• Condor Gold has announced results from the final six holes of its recently completed 43 hole drilling programme testing the Mestiza Vein Set on the La India property in Nicaragua.
• The objective of drilling four veins comprising the Mestiza Vein Set (the Tatiana, Buenos Aires, Jicaro and Mestiza veins) “was to convert the upper part of a Historic Soviet mineral resource (2,392,000 tonnes at 10.2 grams per tonne gold for 785,694 ounces of gold ) to Canadian NI 43-101 standard however this has now also developed into allowing Condor to better understand the extent of the mineralisation and further resource potential at Mestiza, which is open along strike beyond the Soviet resource.”
• The current drilling, which extends to a maximum of 200m below surface, has demonstrated “excellent continuity of the structures, high grade ore from surface and open pit potential.”
• Among the results highlighted today are
o A 0.5m intersection at an average grade of 17.4g/t gold and 3g/t silver from a depth of 77.30m in hole LIDC378 on the Buenos Aires Vein and
o A 1.4m wide intersection averaging 18.5g/t gold and 22.1 g/t silver from a depth of 19.6m in hole LIDC383 on the Tatiana Vein.
o Analysis of the structural geology indicates that “correlates high grade gold mineralisation with bends in the vein … [where] … bends created more open space, allowing more hydrothermal fluid circulation, resulting in higher grade.”
o The company also comments that “The deepest drill holes, about 200m below surface, intersected lower grades and/or narrower veins. [which] … may reflect pinching of the vein or the base of the oxide zone and supergene enrichment.” We also wonder whether, with the higher grade portions of the veins said to be pitching steeply towards the west, drilling may have missed the higher grade portions at depth.
o In addition to the drilling on the Mestiza veins, known to extend over a strike length of “at least 3.5km”,recent mapping has identified a parallel vein, the Tortuga Vein which will no doubt be a candidate for future drilling.
Conclusion: The La India project already hosts a 1.3m oz gold resource on the main La India Vein Set. Drilling at the Mestiza veins and a recently identified parallel vein at Tortuga point to the scope for substantial increases to the overall resource as exploration develops.

Galileo Resources (LON:GLR) 1.6 pence, Mkt Cap £4m – Star Zinc Project
• The company has outlined the characteristics of the Star Zinc Project in Zambia where it recently acquired a 51% interest and may earn up to 85% through the completion of a preliminary economic assessment.
• The project hosts “An independently verified non-JORC compliant hard rock resource” of 275,166 tonnes at an average grade of 20.2% zinc, using a 14% zinc cut-off grade. The company comments that reducing the cut-off to 12% zinc increases the tonnage by 18% to 325,941 tonnes at an average grade of 19.1% zinc.
• The project operated intermittently during the 1950s and 1960s and the “mineralisation is interpreted to form two shallowly dipping lenses east and west of the open pit, mineralisation of which is around 40m deep, based on the independent model used for the resource calculation.”
• Initial works, including soil sampling “on a 400m x 200m grid pattern covering the accessible and exploitable areas of the licence” and updating environmental work is expected to take around six weeks.
• Galileo has committed to spend US$250,00 over an 18 months period to complete the preliminary studies which are expected to include drilling in order to upgrade the current resource to the JORC (2012) Code and to test the potential for resource expansion.
• Expansion potential has been identified both to the east and west and in “new ground to the south”.
Conclusion: At this stage, the Star Zinc Project appears to be relatively small but high grade zinc deposit. Further work is to be undertaken to establish the potential for resource expansion and to investigate additional geological environments for mineralisation in sub vertical structures identified within the old pit. We await news of the exploration results in due course.

Ortac Resources* (LON:OTC) 2.8p, £6.4m Mkt Cap – Acquisition of CASA Mining
• Ortac Resources has announced its intention to acquire CASA Mining.
• Management are converting their US$2m loan note and simultaneously acquire a further 33.82% of CASA Mining to take their stake in CASA to  70.09%.
• Ortac will then offer to acquire remaining CASA shares from its minority shareholders.
• Ortac are offering CASA shareholders a total of 100m new Ortac shares with shares being locked in for six months following the admission of the new shares issued to them to ensure an orderly market.
• The new shares will represent around 30.43% of the enlarged group.
• The deal marks a ramp up in activity at Ortac with a new determination to drive the business forward.
• CASA Mining holds 71.25% of the Misisi Gold project in South Kivu in the Eastern part of the DRC.  CASA’s licenses cover some 60km of the Misisi Corridor which include the Akyanga gold resource as well as the Lubitchako, Tulongwe, Kilombwe and Mutshobwe prospects.
• US$30m has been spent drilling and exploring these Misisi targets, much of this was formerly funded by expert PE mining investor, Denham Capital before the fund consolidated its funding and attention onto the super-high grade open pit Alphamin tin project which has a resource of 3.6mt grading 4.52% tin.  Denham Capital holds 44% of Alphamin (AFM CN)
• CASA recently reported a series of high-grade gold intersections from the Akyanga project including:
o 24.75m grading 8.04 g/y gold from 200.75m.
o 7.15m at 1.1g/t from a depth of 100.15m
o 5.8m grading 3.49g/t from a depth of 118.4m.
o 8m grading 1.14 g/t gold from a depth of 129m
o The latest results join with other higher-grade gold intersections to indicate better potential at Akyanga where the calculated gold resource is currently at 5.5mt grading 1.5g/t gold.
o The apparent nature of what looks like coarse grained gold in the results indicates to us that process costs could be relatively low with much of the gold easily recovered by gravity.
Conclusion:  Ortac is now pushing ahead in the consolidation of CASA Mining.  The new strategy to drive the business forward should lead to new value generation from Ortac’s current asset base.
*SP Angel acts as nomad and broker to Ortac Resources

Mon, 06 Nov 2017 10:44:00 +0000
Today's Oil and Gas Update - Union Jack Oil and Aminex Headlines

• In Brief:
o Union Jack Oil*** (LON:UJO– 0.14p) – Fiskerton Takes UJO Forwards
o Aminex (LON:AEX– 3.5p) – Dented, Not Damaged, But Forward Plan is Needed
In Brief
• Union Jack Oil*** ((LON:UJO – 0.14p) – Fiskerton Takes Company Forwards: Today’s acquisition of 20% interest in Fiskerton Airfield continues the Company’s deliberate march up the E&P value chain, which by focusing on nearer-term cash generation, brings the Company closer to the point of sustainability. We will wait for the results of the reinterpretation of the seismic before fully valuing the acquisition’s contribution to the Company’s value. However, post the completion of the workovers, the estimated gross production of 40bpd from the field adds $0.3mm net to the Company’s interest, based on a per daily flowing barrel basis. Our valuation stands at $6.9mm (0.13p – Core) to $38.1mm (0.73p – Full).

• Aminex (LON:AEX– 3.5p) – Dented, Not Damaged, But Forward Plan is Needed: Today’s news that the production rate at Kiliwani North has fallen away so dramatically, so early in its flow lifecycle will be embarrassment for the petroleum engineering team at Aminex. However, it must be stressed that production rarely proceeds exactly according to one single planned outcome, but within a “production envelope.” What is required moving forwards is a revision and a reconciliation as to why this has happened and, more importantly, what needs to be done going forwards to ensure that this is not repeated. Currently, this is a dent to the management’s credibility, but it is solvable, as long as the reasons are disclosed and reconciled with the data/thinking that existed before the plant was commissioned.

Mon, 06 Nov 2017 09:32:00 +0000
Market Briefing - Ortac Resources, Patagonia Gold, Stratex International, Kodal Minerals and Strategic Minerals Toyota’s game changer EV battery spells good things for Lithium market
• Moves towards solid state battery technology replacing liquid electrolyte with solid conductive material to offer more safety and better capacity
• Toyota appears to have developed know-how to produce the battery but don’t yet have a way to mass produce the battery for Electric Vehicles

Copper China 2018 copper demand to raise to 11.15mt
• Predicted growth of 3.6% from this year and to remain world’s key copper driver with domestic power largest consumer
• Future demand to come from investment in clean energy and new energy vehicles

iPhone X goes on sale in Apple stores today while the Company Q4FY17 beats market estimates propelling the stock to a new all-time high.
• Sales and EBITDA came in at $52.6bn and $15.6bn during the quarter beating market estimates by 3.7% and 3.3%.
• The Company sold 46.7m iPhones during the quarter, up 3%yoy and just ahead of market expectations.
• Despite previously voiced concerns over potential supply disruptions to iPhone X ahead of the holiday sales season, the Company said that production is ramping up every week and clients who pre-ordered the phone might receive devices sooner than expected.
• Apple forecasts Q1/FY18 to be the biggest quarter in the Company’s history with revenues expected to range between $84bn and $87bn, implying a year-on-year increase of as much as 11% compared to $78.4bn recorded last year.

Dow Jones Industrials  +0.35% at 23,516
Nikkei 225   +0.53% at 22,539
HK Hang Seng   +0.30% at 28,604
Shanghai Composite    -0.34% at 3,372
FTSE 350 Mining   +0.19% at 17,978
AIM Basic Resources   +0.66% at 2,566

US – Trump has nominated Jay Powell as the next Chairman of the Fed with the candidature now subject to the approval by the Senate.
• Expectations are for Mr Powell to continue with gradual tightening of the policy with unlikely departures from the strategy followed by the FOMC to date.
• December hike is considered to be a done deal with markets currently pricing in a 87.5% chance of that happening.
• Non farm payrolls are due later today with market estimates for a 313k reading, up from -33k, reflecting a volatile series of data on the back of hurricane related disruptions in states of Texas and Florida.

China – Services sector growth slightly increased in October with a modest pick up in new orders, little changed from the previous month.
• Overall business activity increased at a slower pace in October on the back of a further weakening in manufacturing production growth.
• October PMIs “showed that the economy had a relatively weak start to the fourth quarter…however, monetary policy is unlikely to be loosened unless major downside risks emerges”, Markit/Caixin wrote.
• Markit/Caixin Services PMI (released today): 51.2 v 50.6 in September.
• Markit/Caixin Manufacturing PMI (released on Wednesday): 51.0 v 51.0 in September and 51.0 forecast.
• Markit/Caixin Composite PMI: 51.0 v 51.4 in September.

UK – In line with expectations, the BoE hiked the benchmark rate by 25bp to 0.50% yesterday marking the first increase in a decade.
• The MPC voted 7-2 in favour of the hike.
• The Bank has also slightly adjusted its growth and inflation projections with GDP marginally downgraded for this year with no changes onwards while CPI was brought up for 2017 and cut for 2018.
• GDP projections (%): 1.6 in 2017 (1.7 in August); 1.6 in 2018 (1.6); 1.7 in 2019 (unchanged from August estimates).
• CPI inflation projections (%): 3.0 in 2017 (2.8); 2.4 in 2018 (2.5); 2.2 in 2019 (unchanged from previous estimates).
• Markets treated the announcement as a “dovish hike” with the pound dropping 1.6% on the announcement against the US$ and 10y UK gilts yields falling 10bp.
• “Future increases in the bank rate would be at a gradual pace and to a limited extent,” Carney said during the meeting yesterday.
• The Governor suggested that the MPC is currently comfortable with the market pricing of future rate rises which imply rates to hit 1% by the end of 2020.
• On a different note, services PMI released this morning showed the sector expanded at the fastest pace in six month in October; however, business outlook remained subdued which weighed on the labour market as businesses grow concerned over little clarity on the Brexit deal.
• On inflation, “selling prices rose at an increased rate, but cost pressures eased, the latter suggesting selling future price inflation may cool, taking pressure off any need for further rate hikes any time soon,” Markit said.
• Markit Services PMI (released today): 55.6 v 53.6 in September and 53.3 forecast.
• Markit Manufacturing PMI (released on Wednesday): 56.3 v 56.0 in September and 55.9 forecast.
• Markit Composite PMI: 55.8 v 54.1 in September and 53.8 forecast.

US$1.1644/eur vs 1.1638/eur yesterday.           Yen 114.09/$ vs 114.09/$.         SAr 14.083/$ vs 13.976/$.            $1.304/gbp vs $1.326/gbp.       
0.768/aud vs 0.771/aud.            CNY 6.629/$ vs 6.605/$.

Commodity News
Precious metals:
Gold US$1,276/oz vs US$1,276/oz yesterday
• Gold prices initially swelled as Republicans in the U.S. House of Representatives unveiled legislation to overhaul the tax system. U.S. Treasury yields and the dollar index contracted to two-week lows after House Republicans announced the new 20 percent corporate tax rate, dropped from 35 percent, while reducing the number of tax brackets for individuals.
• Market expectations for the December interest rate rise increases to 97 percent (CME Group’s Fedwatch tool), while the Republican tax proposal could increase the pace of further 2018 rises if effective in developing U.S. economic growth.
• The nomination of the dovish Federal Reserve Governor Jerome Powell signaled a continuation of cautious monetary policies.
• Recovery in the gold price may be reversed as market expectations grow for a significant increase of 315,000 by the US non-farm payroll data later today which would see a dollar strengthening.
   Gold ETFs 69.2moz vs US$69.3moz yesterday
Platinum US$922/oz vs US$931/oz yesterday
Palladium US$998/oz vs US$997/oz yesterday
Silver US$17.10/oz vs US$17.08/oz yesterday
Base metals:   
Copper US$ 6,945/t vs US$6,917/t yesterday
Aluminium US$ 2,177/t vs US$2,170/t yesterday
• Strong demand from the EV boom is extending beyond crucial battery raw materials, as carmakers seek to broaden vehicle range via weight saving measures.
• Emilio Braghi, senior vice president and Europe president at Novelis, the world’s largest maker of rolled aluminium products, noted automotive sheet shipments were up 16 percent in the first quarter of 2018 fiscal year. The delivery of 785,000 tonnes of rolled product represents a global rise of 4 percent, highlighting the automotive industry growth significantly outstripping other sectors.
• In order to match the swelling automotive demand, Novelis boosted European production with an additional 240,000 tonnes aluminium sheet production line in Germany to enhance the existing 400Kt facility. With the advent of the first electric model of Jaguar Land Rover, the I-PACE, the supplementary capacity from the German site is expected to support developing vehicle production goals.
• Despite strong demand for value-added products, a leap in raw material costs has clipped aluminium producers’ robust margins. Head of Sales Steve Hodgson of aluminium giant Rusal identified large gains in alumina, caustic soda and carbon electrodes offsetting the 25 percent rise in benchmark aluminium prices.
Nickel US$ 12,690/t vs US$12,645/t yesterday
Zinc US$ 3,232/t vs US$3,248/t yesterday
Lead US$ 2,456/t vs US$2,465/t yesterday
Tin US$ 19,570/t vs US$19,460/t yesterday
Oil US$60.9/bbl vs US$60.2/bbl yesterday
Natural Gas US$2.946/mmbtu vs US$2.915/mmbtu yesterday
Uranium US$20.30/lb vs US$20.20/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$59.6/t vs US$58.5/t
• The Chinese winter war on smog may not live up to expectation as production levels in the country’s biggest steel producing city of Tangshan do not match proposed air pollution reduction targets. The unexpected physical demand for coking coal and iron ore has initiated strong buying of futures as investors forecast the gap between physical and future prices to close on higher consumption.
Chinese steel rebar 25mm US$627.1/t vs US$629.0/t - China steel cuts fail to meet expectations
• China’s biggest steel producing city Tangshan has ordered various levels of capacity cuts though there is speculation that output may not be curtailed as much as expected
• There is little financial incentive to shut capacity with profit margins >Rmb1,000/t
Thermal coal (1st year forward cif ARA) US$86.3/t vs US$87.0/t
Premium hard coking coal Aus fob US$177.3/t vs US$177.3/t

Tungsten APT European US$275-285/mtu vs US$280-285/mtu last week

Company News
Kodal Minerals* (LON:KOD) 0.23p, mkt cap £14.8m – Chinese lithium processor completes equity subscription
• Kodal Minerals reports the completion of the Suay Chin International subscription agreement.
• Suay Chin have now completed the full £4.825m subscription and now hold some 20% of the company’s enlarged issued share capital.
• The subscription is a significant event for Kodal as it brings a valuable and expert offtake partner into the business.
• Management expect Suay Chin to help with the delineation and potential development of the Bougouni lithium project in Mali.
Conclusion: Results from ongoing drilling should continue to keep us entertained as the directors prepare to put together a JORC resource sometime next year.
*SP Angel act as Financial Advisor and broker to Kodal Minerals. A partner at SP Angel acts as Chairman to the company.

Ortac Resources* (LON:OTC) 2.8p, £6.4m Mkt Cap – Akyanga drilling results
• Ortac Resources has announced results from the current expansion and infill drilling programme at Casa Mining’s Akyanga gold prospect in the DRC. Ortac holds an effective 45% economic interest in Casa Mining.
• The company reports that these results include the “highest ever grade and intersected thickness drilled at the Akyanga Deposit – 24.75m @ 8.04 g/y Au from 200.75m incl. 5m @22.63 g/t Au from 2017.10m” in hole MSDD0110, which also includes a second intersection of 3.30m at an average grade of 2.27 g/t gold higher in the hole from a depth of 142m.
• Hole MSDD0110 which was “drilled approximately 100m down dip of hole MSDD0076 (which reported 10m at 4.20 g/t Au from 126.55m) has reported deeper than expected mineralisation and supports the down dip potential to the east.”
• A second hole, MSDD0112 also reports a twin intersection of 7.15m averaging 1.1g/t from a depth of 100.15m and a second mineralised horizon averaging 5.8 g/t averaging 3.49g/t from a depth of 118.4m. This hole was drilled “approximately 100m down dip of hole MSDD0069 (which reported 16.9m at 2.35 g/t Au from 100m down the hole) confirms the down dip continuity of >2g/t mineralisation in this southern part of the deposit”
• A third hole reported today, MSDD0111 intersected 8m at an average grade of 1.14 g/t gold from a depth of 129m and “the mineralisation intersected … confirms that the southern extents are still open.”
• The results come from a programme of 8 diamond drill holes totalling over 1920m. “Results are pending for completed holes MSDD0114 and MSDD0115 and are expected within 2 to 3 weeks. Drill holes MSDD0116 and MSDD0117are in progress testing northern extensions to and continuity of grade within, the current open pittable resource, with visible gold logged in diamond drill hole MSDD0117.”
Conclusion: The results reported today suggest that mineralisation at Akyanga remains open both at depth and to some extent laterally at least towards the east and the south. The high grades intersected in in hole MSDD0110 and the visible gold logged in MSDD0117, yet to report assays, suggests that a portion of the gold mineralisation may be relatively coarse which could potentially be amenable to gravity recovery.
*SP Angel acts as nomad and broker to Ortac Resources

Patagonia Gold (LON:PGD) 1p, Mkt Cap £15.9m –Cap Oeste Este resource estimate and revised 2017 production guidance
• Patagonia Gold reports an updated mineral resource estimate for its Cap –Oeste deposit, prepared by the independent consulting company, Cube Consulting. The new estimate amounts to an attributable measured and indicated resource of 9.5mt at an average grade 2.07g/t gold (908koz of contained gold).
• The attributable measured/indicated resource contains approximately 87,000 oz of oxide ore at an average grade of 1.06g/t gold and a further 265,000 oz of free milling, cyanide recoverable ore at an average grade of 12.6g/t. The remaining “Fresh refractory sulphide” ore comprises 7.3mt at an average grade of 1.7g/t gold.
• In addition, the company has updated it production guidance for 2017 to reflect “a series of significant setbacks” arising from what appear to be delays in commissioning the agglomeration plant at Cap Oeste which have “materially impacted” production. Although the issues are now reported to have been resolved and the “leach pad is now producing from a fully commissioned agglomeration plant, with recovery issues having been resolved”, the company now expects to produce “24,850 oz AuEq for 2017 full year, with 10,000oz AuEq for the final quarter of 2017” at Cap Oeste.
• The revised production estimate of 30,950 oz Au Eq, which includes 6,100 oz from the Lomada operation, compares with actual production of 25,800 oz in 2016 and 21,521 oz in 2015 but still falls well short of the 68,500 oz guidance confirmed in May this year.
Conclusion: The commissioning delays for the Cap Oeste agglomeration plant have had a significant impact on the build up of production, and although 2017 output is still expected to exceed that in 2016 it falls well short of the original guidance. The issues are now reported to be resolved and almost one-third of the revised 2017 production guidance is now expected to be delivered in the final quarter.

Strategic Minerals* (LON:SML) 2.3p, Mkt Cap £29.8m – Hanns Camp drilling results
• Strategic Minerals has reported the initial results from its recently completed aircore drilling programme at its wholly owned Hanns Camp nickel/cobalt project eat of Laverton, Western Australia.
• The assay results from 4m long composite samples taken from the 1915 metres of drilling show laterite-hosted nickel cobalt mineralisation in 23 of the 49 shallow holes drilled to an average depth of 39m.  A second phase of assaying will be undertaken using the individual 1m samples within the higher grade areas.
• The drilling has identified a “substantial zone of anomalous Co-Ni mineralisation extends approximately 1,000m x 500m.”Among the results highlighted by the company are:
o 24m at an average grade of 0.75% nickel and 0.069% cobalt from a depth of 40m in hole HCA049
o 24m at an average grade of 0.72% nickel including a 4m wide section averaging 0.104% cobalt from a depth of 28m in hole HCA048
o 21m at an average grade of 0.97% nickel and 0.059% cobalt from a depth of 28m in hole HCA028 and
o 12m at an average grade of 0.77% nickel and 0.142% cobalt from a depth of 28m in hole HCA039
o “SML has commenced the Phase 2 of its exploration programme with a review of the historic nickel sulphide potential”. This will focus on targets generated by electro-magnetic geophysical work “but will initially review the extensive database of geological information that was acquired from the previous owners.”
o In order to support this evaluation and a review of the broader Laverton project area, the company has secured the services of “Dr Martin Gole, an internationally recognised nickel sulphide expert”.
Conclusion: Initial drilling at Hanns Camp has confirmed the area’s potential for nickel and cobalt mineralisation within the near surface laterite layer. We look forward to the more detailed sampling results from analysis of 1m samples within the higher grade laterite areas as well as indications of the underlying sulphide mineral potential following the review of historical data.
*SP Angel act as Nomad and broker to Strategic Minerals

Stratex International* (LON:STI) 1.1p, Mkt cap £5m – Stratex CEO removed from board by shareholder vote but remains as an employee as CEO
Crusader (CAS AU) Suspended at A$0.092, Mkt cap A$27.7m
(Stratex’s offer: 6.6 new Stratex shares for each Crusader share giving Crusader shareholders ‘81%’ of the enlarged company and valuing Crusader at A$0.127/s)
(Thani Stratex merger proposal gives Stratex shareholders ‘56%’ of the new group, see Thani Stratex presentation for more details)
• Stratex shareholders voted for the resolution to remove the current CEO from the board which is now done.
• We note that the CEO remains as an employee of the company despite his insistence to push through the, now discredited, Crusader acquisition proposal.
• Shareholders also voted against the proposed Crusader acquisition, However, we note the following statement by Stratex:
• “The board will consider the outcome of the meeting including the proposed acquisition of Crusader Resources Ltd and will make further announcements in due course..”
• A majority of voting Shareholders have clearly indicated their opposition to the board’s proposal for the acquisition of Crusader and we would be shocked if the board then chose to disregard the vote and continue with the proposed acquisition.
• Given that the proposal involved the giving of a majority of new Stratex shares to Crusader shareholders then we see this as an expensive potential ‘Reverse Takeover’ offering little benefit for Stratex shareholders.
• We suggest that a better course of action would be to enact shareholders’ wishes, abandon the Crusader deal and demand the immediate repayment of loans made to the company.
• While this might cause Crusader to fall into Administration, we feel this is the appropriate action to be taken given the Stratex shareholder vote against the deal.
• We hope the Stratex board might then use the US$8m of cash from the sale of their stake in the Altintepe Gold mine for more worthwhile and appropriate exploration and asset development in Africa where there is ample opportunity for new discoveries and asset development.
• We hope the non-executive directors will now have the backbone to vote down any attempt to recast the Crusader acquisition and that the Company’s AIM Nomad will ensure the board continues to act in the interests of the majority of voting shareholders.
*SP Angel are completely independent with regard to Stratex, Thani Stratex, Crusader Resource or any of their directors, staff and advisors.

Fri, 03 Nov 2017 10:45:00 +0000
Market Briefing - Caledonia Mining, Stratex, IronRidge Resources, Randgold Resources and others Caledonia Mining (LON:CMCL) – Blanket mine resource increases 6% to 714,000oz
Golden Star Resources (TSE:GSC) – Q3 results report increased production and lower costs
IronRidge Resources* (LON:IRR) – Results from trenching and sampling at Echbara in Chad
Randgold Resources (LON:RRS) – Remains on track to achieve 2017 production guidance
SolGold (LON:SOLG) - BHP wants to buy more copper
Stratex International* (LON:STI) / Crusader (ASX:CAS) – Rebels force sacking of CEO and rejection of Crusader deal

LME week positivity highlights budding bull market
• The electric revolution yields booming metal prices as Goldman Sachs forecast copper to bust through another significant margin to reach $8,000 per tonne by 2022. The rapidly growing technological sector is boosting demand across battery raw materials with nickel and lithium at multi-year highs and prices for cobalt metal tripling to nine-year peaks above $30/lb from below $10/lb at the close of 2015.
• Equipment manufacturer, Caterpillar, has reported surging ordering activity from mining customers in its third quarter, and higher demand for spares, as the intensity of operations ramps-up.
• Operational efficiencies developed during the bust cycle are returning greater payouts as Rio Tinto revealed its largest interim dividend in August thanks to cost cutting, improved productivity and the divestment of poor assets.

Bullish commodities as China hopes to revive the Silk Road
• Investment in president Xi Jinping “project of the century” has risen to $1.3 trillion as 68 countries and international organisations sign up for the mammoth infrastructure initiative. The single largest enterprise since China opened up to foreign investment with the “One Belt, One Road” plan in 2013 hopes to invest and construct infrastructure in participant countries in the form of rail networks, roads, transportation, port, power, etc., in an effort to boost trading opportunities and globalization.
• Development along the OBOR will generate huge demand for commodities, resources, energy, service and technology, with BHP Billiton Ltd. forecasting an additional 150 million tonnes of global steel demand. In turn, steel requirements will boost iron ore, energy and coal, with electricity infrastructure requiring increased consumption of copper.
• However, the decision to cement the initiative within the Communist Party constitution following the 19th Congress Party meeting increases project risk, as political decisions will drive the OBOR forward in spite of underlying economic viability.

Dow Jones Industrials  +0.25% at 23,435
Nikkei 225   +0.53% at 22,539
HK Hang Seng   -0.16% at 28,548
Shanghai Composite    -0.37% at 3,383
FTSE 350 Mining   -0.22% at 17,639
AIM Basic Resources   +1.08% at 2,549

US – In line with expectations, the Fed kept rates unchanged during the latest monetary policy meeting as US President is set to name the next Chairman later today.
• The FOMC highlighted sold gains in economic activity as indicated by a back-to-back increase in GDP of voer 3% in Q2 and Q3 as well as robust labour market with unemployment rate currently at 4.2% compared to the long-run target of 4.6%.
• Although, the central bank noted that core inflation “remained soft”.
• The reaction in bond markets was relatively muted with 10 year bond yields climbing 2bp following the announcement.
• The futures markets indicated expectations for the December rate hike remained high coming off only marginally to 85%, down from 88% as before the announcement.
• Expectations are for Trump to name Jay Powell as the next chair of the Fed, according to White House officials who suggested that President preferred him over more hawkish contestants for the post.
• Mr Powell has been a member of the Fed Board since May/12 and has expressed his support for gradual monetary policy adjustment advocated by Yellen.
• He previously agreed that the Fed is unlikely to lift rates aggressively given a weaker growth potential and low inflation.

Germany – Unemployment levels fell further in October with jobless rate holding at record low levels.
• The economy is on course to post the best growth performance in six years.
• Unemployment Change: -11k v -22k in September and -10k forecast.
• Unemployment Rate: 5.6% v 5.6% in September and 5.6% forecast.

UK – The BoE is set to announce its rate decision as well as updated economic forecasts at 12:00 GMT today with market expectations for a 25bp rate hike.
• Market commentators are suggesting the Bank is likely to hike its inflation forecasts for the year.
• Inflation averaged 2.8% in Q3/17 coming in 0.1pp higher than August MPC estimates.
• Mark Carney has earlier indicated that he will probably have to write a letter to the Chancellor of the Exchequer later this year explaining why inflation exceeded the 2% target by more than a percentage point.

Spain – Manufacturing PMI picked up strongly in October taking the index to the joint-highest in over a decade.
• Growth was driven by increases in output, new orders and employment recorded.
• Export orders have also picked up driven by demand from other European countries.
• Strong production translated into further gains in employment.
• Inflation pressures were recorded at both producers’ and consumers’ ends with output charges rising at the fastest pace in three months.
• Catalonia political crisis did not appear to affect last month production numbers but weakened business outlook.
• “There was no discernible impact from the political situation in Catalonia on manufacturers’ operations in October, but a drop off in sentiment regarding the 12-month outlook was partly attributed to uncertainty surrounding the current political environment,” the report said.
• Manufacturing PMI: 55.8 v 54.3 in September and 54.8 forecast.

Finnair checking the weight of passengers and hand luggage to better calculate total weight for fuel and safety calculations
• Samoa Air was the first airline to weigh passengers so they could better distribute the weight around the aircraft.  The airline also charged by the kilo.

Tesla – pushes back Model 3 production target
• Tesla will now produce 5,000 cars a week by the end of next year rather than by December.
• The company reported a net loss of $619m in Q3 as it ramped up production.
• So far Tesla has produced 260 Model 3 cars versus its 1,500 target and is working on fixing Model 3 bottlenecks
• Tesla invested around $1bn in Q3 with another $1bn of investment to be spent in the fourth quarter

US$1.1638/eur vs 1.1647/eur yesterday.           Yen 114.09/$ vs 113.91/$.         SAr 13.976/$ vs 14.130/$.            $1.326/gbp vs $1.330/gbp.       
0.771/aud vs 0.768/aud.            CNY 6.605/$ vs 6.616/$.

Commodity News
Precious metals:
Gold US$1,276/oz vs US$1,275/oz yesterday
China increases gold consumption
• China’s consumption risen 15.49% year on year in 2017, mainly due to increased demand for gold bars
• Increased wealth and growth of consumption in second and third tier cities as well as cooling housing market and volatile securities market has been attributed to growth

• The US Federal Reserve’s decision to keep interest rates unchanged allowed gold to advance against the dollar. The index fell 0.2 percent as robust U.S. economic growth and a strengthening labour market hinted at the prospects of increased borrowing costs by the year end. Hurricane-related slowdown in consumer spending and declining construction were offset by unexpected growth in the third quarter of inventory investment and a diminishing trade deficit to point at strong growth of the US economy.
• The imminent nomination of the next chair of the U.S. central bank has quelled U.S. Treasury yields and dollar strength, as building expectations point towards a more dovish Fed Governor Jerome Powell.
• Investors pause as the anticipated Trump tax cut plan is due to be announced today.
   Gold ETFs 69.3moz vs US$69.3moz yesterday
Platinum US$931/oz vs US$926/oz yesterday
Palladium US$997/oz vs US$995/oz yesterday
Silver US$17.08/oz vs US$16.87/oz yesterday
Base metals:   
Copper US$ 6,917/t vs US$6,959/t yesterday - BHP Billiton looks for next big copper project
• The world’s largest miner is looking to add more copper to its portfolio through exploration, open to forming alliances with junior mining companies 
• Looking at discoveries in Ecuador, Chile, Peru, Southwest US and Australia
Aluminium US$ 2,170/t vs US$2,171/t yesterday
Nickel US$ 12,645/t vs US$12,650/t yesterday - Nickel prices extend run on supply concerns
• Nickel prices rallied to highest levels in 2 years as growing supply shortfall and stronger demand for stainless steel in China expected
• China accounts for half worlds stainless steel production, nickel consumption this tear 1.1m tonnes a 3.8% increase
• Bickel built on its 6% price surge yesterday breaking briefly through the $13,000/t level ($13,030/t) before settling to two-year highs. Shanghai nickel matched the earlier rise from London to rally a further 5.4% at $15,374.94/t as battery manufacturers forecast increase usage to power the growing electric economy.
• SHFE nickel contracts swelled as the number of net long positions in for delivery in January grew by almost 20,000 lots.
Zinc US$ 3,248/t vs US$3,276/t yesterday
Lead US$ 2,465/t vs US$2,453/t yesterday
Tin US$ 19,460/t vs US$19,525/t yesterday
Oil US$60.2/bbl vs US$61.3/bbl yesterday
Natural Gas US$2.915/mmbtu vs US$2.915/mmbtu yesterday
Uranium US$20.20/lb vs US$20.05/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$58.5/t vs US$58.4/t
Chinese steel rebar 25mm US$629.0/t vs US$627.6/t
• The data fabrication scandal at Japan’s third-biggest steelmaker, Kobe Steel Ltd, couldn’t have come at a worse time, as rising steel prices generate the best market conditions ahead of the 2020 Tokyo Olympics. The boost in construction has elevated prices to three year highs, as Kobe continues to lose contracts after a seal of industry quality was revoked last week.
Thermal coal (1st year forward cif ARA) US$87.0/t vs US$86.9/t
Premium hard coking coal Aus fob US$177.3/t vs US$178.0/t

Tungsten APT European US$275-285/mtu vs US$280-285/mtu last week

Company News

Caledonia Mining (LON:CMCI) 420p, Mkt Cap £44.4m – Blanket mine resource increases 6% to 714,000oz
• Caledonia Mining has announced a 6% increase in measured and indicated resources at its 49% owned Blanket gold mine in Zimbabwe to 5.62mt at an average grade of 3.95g/t for 714,000oz (December 2016 – 4.94mt averaging 4.23g/t or 671,000oz)
• In addition, Inferred resources have increased by 47% to 5.53mt at an average grade of 4.99g/t or 887,000oz (December 2016 – 3.76mt averaging 4.99g/t or 604,000oz).
• The company comments that “The resource update announced today marks the sixth successive year of sustained resource growth at Blanket. Blanket’s resources have grown by approximately 69% since 2011 despite mining over 250,000 ounces over this period.”
• The resource replenishment at the Blanket mine, particularly the increase in the inferred resources, which we would expect to be able to be upgraded, at least in part, through additional drilling, augurs well for the potential to extend the mine’s longer term life and we note that the Chief Executive, Steve Curtis, is quoted commenting “We are currently engaged in an investigation into the economic potential of modifying the current life of mine plan and the current investment plan at Blanket … to include additional ounces where possible with a view to extending the life of Blanket.”
Conclusion: The resource upgrade at the Blanket mine continues a six year trend of increases in the mineral resource inventory and gives the company the opportunity to consider an extension of mine life while it proceeds with the major investment plan aimed at accessing deeper mineralisation below the 750m level and works to lift production to 80,000oz of gold pa by 2021.

Golden Star Resources (TSE:GSC) C$1.00, Mkt Cap C$381m – Q3 results report increased production and lower costs
• In its Q3 results Golden Star Resources reports a 64% increase in gold production to 73,827oz (Q3 2016 – 44,974 oz) and a 30% decline in cash operating costs to $671/oz (Q3 2016 $964/oz) which is “the lowest cash operating cost per ounce reported since second quarter 2010”.
• The company goes on to report that the 26% decline in all-in sustaining costs to $848/oz represents the “lowest AISC since Golden Star began reporting AISC four years ago in the first quarter of 2013.”
• During the quarter, the company started underground stoping at its Prestea gold mine and expects to achieve full commercial production there during the current quarter.
• At its Wassa mine, the company has “decided to delay the next pushback of Wassa Main Pit, Cut 3, until a time when the gold price is higher and the open pit will deliver higher margin ore. From early 2018 Wassa will become solely an underground operation as the Company focusses on producing higher margin ounces that will generate the strongest cash flow.”
• The company repots a cash balance of $30m and remains “fully funded to deliver its capital programme”.
• The company is maintaining its production guidance for 2017 at 225-280,000oz of gold production.
Conclusion: The increased gold production and lower costs underline the success of the company’s strategic decision to move to higher grade underground mining.

IronRidge Resources* (LON:IRR) 31.25p, Mkt Cap £85.3m – Results from trenching and sampling at Echbara in Chad
• IronRidge Resources reports the results from trenching and soil sampling work on its Echbara exploration area in Chad and outlines its programme of exploration for the forthcoming dry season.
• The “first pass trenching results over significant widths within the Echbara target demonstrate good continuity over a 1.2km strike length with a higher grade core over 500m strike and up to 2.7 g/t gold.”
• The trenching work comprised a total of 5,448m in nine trenches excavated into bedrock using a 30 tonne excavator and “was primarily designed to assess the extent and surface grade of the 2km long … soil anomaly as well as to understand potential controls of mineralisation therein.”
• Among the results from the trenching the company highlights are 12m at an average grade of 2.71 g/t fold, a further 12m averaging 0.94 g/t, 22m averaging 0.74 g/t and 52m averaging 0.35g/t.
• The company has also identified “multiple gold-in-soil  sampling anomalies … including a 4km x 2 km gold anomalous zone along strike from Echbara”.
• IronRidge Resources has mobilised its field exploration teams for the forthcoming dry season. “Field programmes will focus on infill and extensional trenching at the Dorothe prospect, detailed structural mapping at the Dorothe and Am Ouchar prospects and soil sampling and mapping over the Dorothe and Echbara licences.”
Conclusion: Early stage exploration by geochemical sampling and trenching has identified large anomalous areas and a continuing programme of early stage exploration including more trenching, geochemical soil sampling and structural mapping which may lead to a closer definition of the target areas.
*SP Angel act as Nomad and Broker to IronRidge Resources

Randgold Resources (LON:RRS) 7100 pence, Mkt Cap £6.7bn – Remains on track to achieve 2017 production guidance
• Randgold Resources reports that it remains on track to meet its 2017 production guidance of 1.25-1.3m oz of gold production, despite a forecast dip during Q3.
• The pushback of the pit at the Gounkoto mine in Mali combined with a planned decrease in grade at the mine, coupled with a mill upgrade at the Tongon mine in Cote d’Ivoire led to a 9% decline in gold production during the quarter to 310,618 oz. Costs on a cash basis increased by 17% during the quarter to $667/oz.
• On a year-to date basis, gold production is reported to be 11% higher than in 2016  and cash costs are down 9%.
• The company reiterates its objective “to define three new projects over the next four years. In Senegal, our focus is on delivering a Massawa feasibility study with a +3 million ounce reserve … In Cote d’Ivoire Randgold has concluded a joint venture with Endeavour Mining which will give it access to the ground immediately north of its Mankono permit where the promising Gbongogo target is located”

SolGold (LON:SOLG) 32.8p, Mkt Cap £497m - BHP wants to buy more copper
• Daniel Malchuk, head of BHP’s Minerals Americas division, said “We want more copper resources in our portfolio,” in a speech at an LME Week Forum yesterday.
• BHP previously offered $30m for a 10% stake in SolGold with a proposal to potentially take their stake to 70% on a further $275m investment.
• The offer was trumped by Newcrest which has continued to invest in SolGold and its giant Alpala project in Central Ecuador.
• SolGold with Newcrest are evaluating the multibillion-dollar project for its potential to become giant block caving operation.
• SolGold is not resting on its laurels with the Alpala project but is also making good progress on other licenses with a new discovery declared at La Hueca in Southern Ecuador.
• SolGold is the largest tenement holder in Ecuador and holds 100% of the La Hueca prospect.
• The new discovery hosts five porphyry systems along 25km of strike and shows high grade copper in chip samples at surface grading 13.82%, 8.37%, 4.08%, 2.5%, 1.8%
• Ecuador is planning a referendum in which it will ask the population to vote on changes to the constitution which could prevent the previous president from seeking re-election as well as on measures to limit mining and oil & gas production in environmentally sensitive areas. We believe, Ecuador is also looking to repeal its onerous windfall profits tax on large scale miners which has severely limited exploration and mining.

Stratex International* (LON:STI) 1.2p, Mkt cap £5.7m – Rebels force sacking of CEO and rejection of Crusader deal
Crusader (CAS AU) Suspended at A$0.092, Mkt cap A$27.7m
(Stratex’s offer: 6.6 new Stratex shares for each Crusader share giving Crusader shareholders ‘81%’ of the enlarged company and valuing Crusader at A$0.127/s)
(Thani Stratex merger proposal gives Stratex shareholders ‘56%’ of the new group, see Thani Stratex presentation for more details)
• Shareholders have voted to sack the Stratex CEO and to reject his proposed deal with Crusader Resources.  The CEO has now left the company with immediate effect.
• Reports from attendees of the Stratex General meeting indicate that the Chairman survived by the narrowest of margins with a majority of just a few thousand shares out of the 145m votes thought to be cast.
• Votes to appoint David Hall and Paul Foord were not counted as they were conditional on the Chairman and CEO being sacked.
• The good bit is that the shares have started trading again, though we wonder why they were actually suspended.
AngloGold Ashanti offloaded all their 11.40% stake in Stratex just two days ahead of the vote like rats leaving a listing ship.  Worse still they signed an irrevocable undertaking to vote against the proposed resolutions to sack the CEO and cancel the Crusader deal.  The shares went to a group called ‘Preston Road Limited’.  We wonder who is behind this company and why it suddenly acquired the shareholding.
• We do not believe AngloGold Ashanti acted in the best interests of itself in their last minute sale voting of Stratex shares.  We hope their CEO, Srinivasan Venkatakrishnan, will seek to find out why their shares were so suddenly sold and voted in this way.
• Our sources indicate that when the major institutions holding Stratex shares looked more closely at the Crusader assets that they were wholly unconvinced by the quality of the assets alongside the merits of the deal providing further damming indictment of the deal.
• We saw the deal with Crusader as, expensive, inappropriate and not offering the value to loyal Stratex shareholders which we expect to see from a listed company board.
• Reports indicate that the rest of the board were not overly keen on the deal but were led by the forceful action of the CEO.
• We believe the majority of voting Stratex shareholders should wish for the company to pursue asset opportunities in Africa and we hope what is left of the board will now seriously consider a potential merger with it’s most valuable subsidiary, Thani Stratex.
• Thani Stratex’s proposal makes more sense to us as it consolidates Stratex’s shareholding while being proposed at more reasonable value than the Crusader deal.
• We also see the Thani Stratex assets as at a more appropriate stage for Stratex.  While the assets are at an earlier stage of development and we believe they should continue to add to their value before development decisions are to be taken.  This should enable the board to minimise dilution for shareholders and allow time to consider the many alternative financing routes available in the market today.
• Details of the ‘draft’ Thani Stratex proposal are contained on the link below.  We expect to see some improvement to the proposed terms in favor of Stratex shareholders before terms are agreed:
• - we recommend you click down to the third presentation for the Thani Stratex proposal.
• There were no ‘dirty tricks’ evident at the meeting and we congratulate the Chairman for his integrity in swiftly implementing the shareholder decisions.
Conclusion: Shareholders won an important victory yesterday in voting out a deal that was not in their best interests.  The board now needs to call in loans advanced to Crusader Resources.  While this may lead to the liquidation of Crusader we expect the loans to have been secured on the underlying assets and for the potential sale of Crusader assets to be sufficient to repay the cash advanced by Stratex.  We believe cancelling the Crusader deal will recuperate valuable cash and preserve funds for more appropriate investment as well as avoiding onerous fees which we believe would have run to an estimated $3-4m.
*SP Angel are completely independent with regard to Stratex, Thani Stratex, Crusader Resource or any of their directors, staff and advisors.

Thu, 02 Nov 2017 10:30:00 +0000
Market Briefing - BlueRock Diamonds, Kefi Minerals, Phoenix Global Mining, SolGold and Stratex International BlueRock Diamonds* (LON:BRD) – Sales rise in BlueRock October diamond tender
Kefi Minerals* (LON:KEFI) – Gold production plan rises to 144,000ozpa from 116,000ozpa in first three years of operation
Phoenix Global Mining* (LON:PGM) – Final batch of results from Empire mine drilling
SolGold (LON:SOLG) – Latest drilling extends limits at Alpala
Stratex International* (LON:STI) / Crusader (ASX:CAS) – Stratex suspends shares ahead of General Meeting

More than 10 firms in running for Codelco lithium assets
• World’s biggest copper producer, companies keen to partner to develop its massive lithium assets in Chile
• Lithium possessions are two salt lakes in initial stages of exploration and development

‘Tired Mountain Syndrome’
• North Korea’s Mount Mantap may be suffering from ‘Tired Mountain Syndrome’ following a series of underground nuclear explosions.
• The last nuclear blast recorded a magnitude of around 6.3. A second earthquake of magnitude of 3.1 which is said to be indicative of a collapse.
• The initial collapse is thought to have killed around 100 workers with potentially another 100 killed and or trapped by a further tunnel collapse.
• Our thoughts are with the families of those lost in the disaster.

Dow Jones Industrials  +0.12% at 23,377
Nikkei 225   +1.86% at 22,420
HK Hang Seng   +1.26% at 28,603
Shanghai Composite    +0.08% at 3,396
FTSE 350 Mining   -0.95% at 17,151
AIM Basic Resources   -0.33% at 2,522

CME Group, the world’s largest exchange operator, is planning to create futures trading in cryptocurrency by year end.
• The launch is conditional on receiving approval from US regulators.
• Bitcoin, the largest by market capitalisation cryptocurrency, jumped $300 yesterday on the news driving October gains to 49%.

US – Consumer sentiment gained in October reaching the highest level in nearly 17 years dirven by confidence in the economy and labour market.
• Confident consumers is good news to the economy that has been driven by robust private consumption lately.
• The Conference Board gauge is consistent with other measures of the consumer sentiment.
• The University of Michigan has previously reported that sentiment index increased in October to the highest level since the start of 2004.
• CB Consumer Confidence: 125.9 in October v 120.6 in September (up from 119.8) and 121.5 forecast.

China – Private measures of the manufacturing sector performance showed the marginal improvement in operating conditions in China led by a slightly quicker increase in new orders.
• Amid pressures to optimise production and raise efficiencies companies continued to cut staff.
• “Manufacturing sector expanded steadily in October…but the stringent production curbs imposed by the government to reduce pollution and relatively low inventory levels have added to cost pressures on companies in midstream and downstream industries, which could have a negative impact on production in the coming months,” the report read.
• The private reading pointing to stable growth in the sector comes on the heels of the official PMI manufacturing data which dropped to 51.6 from 52.4 last month underperforming expectations for 52.0.
• Caixin Manufacturing PMI: 51.0 v 51.0 in September and 51.0 forecast.

UK – House prices are reported to have grown 2.5%yoy at the start of the final quarter which marks about half the growth rate since 2016, according to the Nationwide data.
• Expectations for rates to go up drive demand for fixed rate mortgage refinancing deals.
• Interest for five-year fixed mortgage deals hit record high, property services firm LMS reports.
• Markit Manufacturing PMI came in strong in October with the respondents pointing to robust domestic demand while orders from overseas have also continued to increase for the 18th consecutive month.
• Companies increased hiring in response to higher orders intake.
• Price pressures continued to build up with producers passing higher costs onto consumers; “input costs rose at the fastest pace in seven months, leading to the steepest rate of selling price inflation since April,” the report said.
• Strong manufacturing numbers together with signs of accelerating inflation should help the MPC to advocate in favour of higher rates during this week’s coming monetary policy meeting.
• Markit Manufacturing PMI: 56.3 in October v 56.0 in September and 55.9 forecast.

South Africa – Foreign investors sold $813m of South African sovereign bonds in five days following the announcement of the mid-term budget statement last week.
• Markets reacted to updated forecasts of a weaker economic growth and wider deficits over the next few years.
• Last Wednesday, the Treasury cut its forecasts for GDP growth to 0.7% in 2017, down from 1.3% forecast previously, and increased government debt to GDP estimates to 4.3%, up from 3.1%.
• Moody’s is currently considering to cut SA sovereign credit rating to junk citing the latest official estimates representing “a marked credit-negative departure from earlier fiscal consolidation efforts”.
• Both Fitch and S&P are already rating SA sovereign debt at BB+, one notch below the investment grade category, while Moody’s rates debt at Baa3.
• The Rand is down 3% against the US$ while 10y bond yields climbed 20bp from mid last week.

US$1.1647/eur vs 1.1646/eur yesterday.           Yen 113.91/$ vs 113.06/$.         SAr 14.130/$ vs 14.049/$.            $1.330/gbp vs $1.322/gbp.       
0.768/aud vs 0.768/aud.            CNY 6.616/$ vs 6.629/$.

Commodity News
China hopes to drive a sustained bull run for its Belt and Road Initiative (BRI)
• China’s ambitious “One Belt, One Road” concept, heavily promoted by Chinese President Xi Jinping, looks to develop infrastructure and other ventures along maritime and land corridors linking Asia to Africa and Europe. Despite encouraging billions to be spent on ports, roads, railways, power plants and other infrastructure, there has been little financial stimulation across the various economic indicators to suggest strong uptake by investors.
• China’s outbound, non-financial investment (ODI) fell 41.8 percent January to August. Of the total $68.72 billion, the commerce ministry notes only 13.4 percent of the investment in BRI-related spending, which is focused on buying stakes in existing companies and ventures, rather than on actual construction and infrastructure projects.
• Muted BRI stimulus is having a knock-on impact on exports for commodities ranging iron ore, coal, copper, crude oil and a host of minor metals with industrial applications, particularly with steel exports falling 29.8 percent to 59.6 million tonnes in the first nine months of the year (although impacted by the imposition of trade measures against Chinese steel exports by the European Union, the United States and India).
• In countries along the proposed BRI trail, steel exports performed particularly poorly during the first half of the year, with shipments to Pakistan and Vietnam weakening by 35 and 32 percent respectively.
• Ultimately commodity stimulus from BRI development will be substantial and help industrial metals extend the bull run, however the project is proving to be slow off the mark.

Precious metals:
Gold US$1,275/oz vs US$1,277/oz yesterday
• Gold and dollar index held steady as investors pause ahead of conclusions of the Central Bank’s two-day meeting on the US Federal Reserve’s monetary policy stance. Conclusions are expected to indicate potential changes to the benchmark interest rate to between 1.25% and 1.5% in December, which 98.2% of market participants are forecasting will happen (CME Group’s FedWatch).
• Investor sentiment in gold remains muted as reports surrounding the Trump tax cut show positive advances towards an announcement, strengthening the dollar.
Alaska gold mega project on track
• 39 million ounces of gold worth $49 billion on spot market, owned 50/50 by NOVAGOLD Inc and Barrick Gold Corp
• Project embroiled in exhaustive permitting process but agency review by U.S. Army Corps of Engineers, the lead permitting agency, has finished review of the Environmental Impact Statement – filing scheduled for 2018
   Gold ETFs 69.3moz vs US$69.3moz yesterday
Platinum US$926/oz vs US$922/oz yesterday
Palladium US$995/oz vs US$974/oz yesterday
Silver US$16.87/oz vs US$16.88/oz yesterday

Base metals:   
Copper US$ 6,959/t vs US$6,877/t yesterday
• Base metals prices broadly increased on announced Chinese Caixin manufacturing purchasing managers’ index (PMI) for October of 51 points and maintaining expectations for domestic manufacturing demand.
• LME week forecast copper price growth into 2018, as the Chilean Minister of Mining, Aurora Williams, sees prices averaging $2.95 per lb for Chilean metal. The positive outlook aims to build upon strong year to date performance of 24 percent growth helped by sustained Chinese growth which accounts for 40% of the approximate 23 million tonnes of annual copper consumption.
Aluminium US$ 2,171/t vs US$2,165/t yesterday
Nickel US$ 12,650/t vs US$11,870/t yesterday - Nickel surges to best since 2015 on electric car boom
• Nickel rocketed to a two year high in London to $12,780 a metric ton on London Metal Exchange and is up 26% this year
• Investors are betting on long term boost to demand from electric cars as it is predicted batteries likely to use more nickel and less cobalt in future
• Nickel’s rally continues driven by overwhelming expectations for a substantial global supply gap. 
• The metal price was boosted by 6.48 percent in overnight LME trading as demand from the rapidly growing new energy vehicle industry for lithium and hydrogen-powered cells increases.
• Chief economist at Trafigura, Saad Rahim, acknowledged nickel sulphate should expect 50 percent demand increase to 3 million metric tonnes by 2030. Despite representing a key ingredient in lithium-ion batteries, the metal price has shown lackluster performance compared to cobalt and lithium prices (which have more than doubled), as large stock inventories continue to be relied upon.
• Rahim continued by forecasting elevated substitution of cobalt due to high prices and contentious Democratic Republic of Congo supply, further boosting the demand for nickel. The metal price has risen 18 percent year to date, but still falls a long way short of the 2007 peak of $51,600 per tonne.
• Wood Mackenzie forecast nickel consumption in EV batteries to show sustained growth from 40 Ktpa in 2016, to 220 Ktpa by 2025 (20.8 % CAGR).
Zinc US$ 3,276/t vs US$3,244/t yesterday
Lead US$ 2,453/t vs US$2,432/t yesterday
Tin US$ 19,525/t vs US$19,550/t yesterday
Oil US$61.3/bbl vs US$60.8/bbl yesterday
Natural Gas US$2.915/mmbtu vs US$2.993/mmbtu yesterday
Uranium US$20.05/lb vs US$20.00/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$58.4/t vs US$57.8/t
Chinese steel rebar 25mm US$627.6/t vs US$625.2/t
Thermal coal (1st year forward cif ARA) US$86.9/t vs US$85.3/t
Premium hard coking coal Aus fob US$178.0/t vs US$178.0/t

Tungsten APT European US$275-285/mtu vs US$280-285/mtu last week
Titanium – Chinese domestic titanium prices fell by Rmb50 this week for 46% conc material

Company News
BlueRock Diamonds* (LON:BRD) 1.87p, Mkt Cap £2.6m – Sales rise in BlueRock October diamond tender
• BlueRock Diamonds report a significant increase in the value of diamond sales in their regular monthly tender.
• Grades have also risen, possibly from improved operation from the diamond recovery plant.
• Sales rose to US$226,400 in the October tender vs US$175,621 in September.
• The average value per carat also rose to US$371.25/ct vs the last reported sale value of US$323/ct and the US$337/ct seen in the first nine months of the year.  This remains well ahead of the assumed CRP value of $232/ct.
• Rain lost around  caused mine production to fall to 17,000t from 22,010t reported in September and is still off from the throughput level of 25,000t per month being targeted.
• Recovered grades rose to an effective 2.64 carats per hundred tonnes ‘cpht’ in the October tender, this is higher than the Q3 grade of 2.49cpht and the disastrous 1.59cpht recovered in the first half but is somewhat off from the 3.01cpht reported on 18 September on the back of their  September sale.
• It is interesting that grades continue to rise from the harder calcrete kimberlite ore which is almost certainly due to better plant performance and higher recoveries making it to the diamond sales.
• We look forward to throughput rates rising to 25,000tpm and to the mining of the softer and higher grade kimberlite material below the calcrete layer.
• This should contain grades of around 4.5cpht as estimated in the CPR and should be transformational from a sales and cash flow perspective.  It will be interesting to see if the quality and per carat sales price of recovered stones rises from mining below the calcrete layer.
*SP Angel acts as Nomad & Broker to BlueRock Diamonds

Kefi Minerals* (LON:KEFI) 4.2p, Mkt Cap £14m – Gold production plan rises to 144,000ozpa from 116,000ozpa in first three years of operation
• Kefi Minerals report the further optimisation of the Tulu Kapi gold mine in Ethiopia.
• The increase in gold production in the first few years enables the more rapid payback of capital to within three years assuming a gold price of just US$1,250/oz.
• The revised proposal builds greater process plant capacity from the start thus improving the viability of the mine and financial model.
• We often find that incremental increases in plant capacity are relatively inexpensive when compared with the cash flow gained from the increased throughput.
• Plant capacity expands to 1.9-2.1mtpa from 1.5-1.7Mtpa with the range depending on the actual hardness of the ore when mined.
• An additional $12m of funding for plant and infrastructure expansion should be offset by expected savings on capital expenditure and increased financial headroom.
• There is also an offer to expand Kefi’s Tulu Kapi financial facility to US$140m to US$135m by the supplier consortium and associated finance provider.
• Mine scheduling has been improved to allow for faster mining and intensified in-fill drilling and flexibility to switch between bulk mining and selective mining.
• Cash Operating Cost projections rise very slightly to US$685/oz from US$684/oz while AiSC costs fall to US$773/oz from US$777/oz.
• All in Costs rise to US$1,051/oz including debt service charges
• All in Costs excluding debt service charges rising to US$948/oz from US$933/oz indicating the cost of servicing debt is some US$103/oz.
• IRR rises dramatically to 60% from 22% shown in the last unleveraged 2017 DFS update and 28% in the 2015 DFS.
Conclusion: It is interesting to note the dramatic impact of producing more gold more quickly on the financial model.  The dramatic increase in IRR to 60% highlights the improvement in returns by bringing forward gold production through the better utilisation of capacity in the plant and mining faster in the early years.
*SP Angel act as Nomad and broker to Kefi Minerals

Phoenix Global Mining* (LON:PGM) 4.1p, Mkt Cap £9.5m – Final batch of results from Empire mine drilling
• The company has released the final batch of drilling results from its recently completed 28 hole drilling programme at the historic Empire mine in Idaho. The programme comprised 21 reverse circulation and 7 diamond core holes.
• Among the results highlighted in today’s announcement are:
o A 6.1m intersection at an average grade of 2.08% copper, 79.18 g/t silver and 2.48 g/t gold from a depth of 9.1m in hole KXd17-7, which includes a higher grade section of 1.5m at an average grade of 4.19% copper, 195g/t silver and 6.04g/t gold from 10.7m
o A 24.4m long intersection at an average grade of 1.06% copper, 34.82 g/t silver and 0.17 g/t gold from a depth of 7.6m in hole KXd17-2 and
o A 29.0m long intersection at an average grade of 0.88% copper, 46.84 g/t silver and 0.29 g/t gold from the surface in hole KXd17-5
o The company points out that these grades compare with an average grade in the current resource estimate of 0.53% copper, implying the possibility that when the current drilling results are incorporated in an updated estimate there is scope for improvements in the grade.
o The results from the programme, in conjunction with historic drilling information, are to form the basis of a revised oxide resource estimate for the AP Pit area as part of the Preliminary Feasibility Study (PFS). The resource update is expected this month and the company confirms that the PFS remains on track for completion during Q2 2018.
o The PFS is expected to address the technical issues of mine design and the metallurgical characteristics of the mineralisation as well as environmental and cost issues as well as providing a financial analysis of the project and its sensitivity to key commercial and operating assumptions.
o Phoenix Global Mining also reports that it has started a programme to explore for the deeper sulphide mineral potential beneath the historic workings. “The first of two diamond drill holes targeting the the sulphide zone below the old workings has been completed from surface to a depth of 314 metres. A second deep sulphide hole has been started. All assays from these holes will be received in December.”
o In addition, work is continuing to access the old mine workings which will provide an opportunity for detailed sampling and mapping as well as sites for additional drilling.
Conclusion: The company is pressing ahead with its plans to rejuvenate the old Empire mine and we look forward to the revised oxide resource estimate later this month and to the results of the deeper sulphide drilling in December as Phoenix Global Mining moves towards completing the pre-feasibility study for oxide mining in the AP Pit area.
*SP Angel acts as Nomad to Phoenix Global Mining

SolGold (LON:SOLG) 34p, Mkt Cap £515m – Latest drilling extends limits at Alpala
• SolGold reports that recent drill results have extended the known mineralisation at Alpala by approximately 100m both to the northeast and towards the south with the two holes reported today both finishing in mineralisation.
• Hole 26-D1, which is a daughter hole of the original hole 26 diverting from its parent at a depth of 788.4m, was completed at a depth of 1662.7m within “strongly mineralised diorite porphyry” having encountered drilling difficulties. The hole intersected a 748.7m at an average grade of 0.58% copper and 0.43 g/t gold from a depth of 914m. The broader intersection contains a higher grade portion averaging 0.7% copper and 0.55g/t gold over a 517.2m long intersection from 1150m to the end of the hole.
• The company interprets the Hole 26-D1 mineralisation as extending “approximately 100m northeast of the previous boundary of the deposit”.
• Hole 28, drilled towards the west at Alpala Central from the same collar as holes 21,25 and 27 was completed a depth of 1568.2m and intersected 938.2m at an average grade of 0.59% copper an 0.36g/t gold from a depth of 630m and also finished in mineralisation.
• SolGold considers that the intersection in Hole 28 “extended mineralisation approximately 100m south of Hole 16 which previously returned 936m @1.35% cuEq (0.75% Cu, 0.95 G/t Au).”
• The company currently has seven rigs operating on site and is expecting a further 4 rigs to be deployed this month and the fleet to further expand to 12 rigs next year when it plans to drill 120,000m. SolGold plans to drill additional targets at “Carmen, Trevinio, Parambas, Moran, and Cristal as well as the exciting Aguinaga target” next year.
• Mineral Resource Estimate: SolGold further report on their recent site visit by SRK as part of their geological audit which is now advanced to the detailed hand contoured geological interpretations in level plan and cross section in ‘Leapfrog’ and 3D modelling.
Conclusion: SolGold continue to advance the scale and detail of understanding of the Alpala project at Cascabel in Ecuador.  The commitment of capital and working of so many rigs makes this one of the world’s busier exploration sites.  We look forward to the release of a very substantial Mineral Resource Estimate before the year end.

Stratex International* (LON:STI) SUSPENDED at 1.1p, mkt cap £5.5m – Stratex suspends shares ahead of General Meeting
Crusader (ASX:CAS) A$0.092, Mkt cap A$27.7m
(Stratex’s offer: 6.6 new Stratex shares for each Crusader share giving Crusader shareholders ‘81%’ of the enlarged company and valuing Crusader at A$0.127/s)
(Thani Stratex merger proposal gives Stratex shareholders ‘56%’ of the new group, see Thani Stratex presentation for more details)
• Stratex have taken the unusual step of suspending its shares ahead of today’s General Meeting which started at 9:30am today.
• We expect the incumbent Stratex board to pull every trick possible in an effort to save their proposed deal with Crusader.
• Their advisors will also be working to preserve the opportunity to charge exorbitant fees in relation to the Crusader deal which will not only hand the majority of new Stratex shares to Crusader shareholders but may also had the majority of Stratex’s remaining cash to its advisors in the form of fees as well as to Crusader.
• Shareholders can expect to see further significant dilution as a direct result of the Crusader deal and the outflow of cash relating to the transaction.
• It is our view that a ‘draft’ deal by Thani Stratex is a better and more appropriate proposal from an investor perspective.
• Details of the ‘draft’ Thai Stratex proposal are contained on the link below:
• - we recommend you click down to the third presentation for the Thani Stratex proposal.
Conclusion:  We hope the Stratex board will act on the representations being made by shareholders and will gracefully hand over the company to the newly elected directors in a gentlemanly manner according to the votes passed.  Somehow we suspect we may see a few corporate dirty tricks before the day is out.
The Stratex General Meeting will be held at the offices Grant Thornton UK LLP, 30 Finsbury Square, London EC2P 2YU at 9.30 a.m. on 1 November 2017.
Latest time and date for receipt of Forms of Proxy for the General Meeting is 9.30 a.m. on 30 October 2017
*SP Angel are completely independent with regard to Stratex, Thani Stratex, Crusader Resource or any of their directors, staff and advisors.

Wed, 01 Nov 2017 10:36:00 +0000
Market Briefing - SolGold, Wolf Minerals, Strategic Minerals and others MiFID II - This note will move to FULL MiFID II compliant format come 3 January 2018
If you wish your company to be compliant so we can continue to write lovely things about you then please contact me
If you don’t like what we write about your company, don’t worry, we will continue to write but it will be in a new MIFID 2 compliant format which is designed to make institutional investors pay for the insightful analysis which we provide.

BHP Billiton (BLT LN) – Preliminary Agreement on Samarco
Gem Diamonds (GEMD LN) – Improved diamond output and prices for Letseng
Solgold (SOLG LN) – Solgold makes new discovery at La Hueca project in Southern Ecuador
Strategic Minerals* (SML LN) – Redmoor drilling results
Wolf Minerals (WLFE LN) – Process plant improvements

121 Mining Investment Conference London – 27 th - 28th November, 8 Fenchurch Place
The 121 event is SOLD OUT with 70 mining companies attending and presenting
> 277 institutional investors are already registered
If you are an FCA registered institutional investor and would like to join then please register for a free pass and conference agenda:

Australian mines rockets 44pc after confirming cobalt credentials.
Cobalt and nickel project revealed to be part of same deposit as Clean TeQ’s world class Syerston project – one of biggest undeveloped nickel and cobalt resources outside of Africa.
Resource measured at 2.7 million tonnes cobalt but believed could be bigger.

Cobalt and tungsten key to cheaper, cleaner hydrogen.
Researchers designed a new catalyst that reduces cost of electrolytic hydrogen production – uses tungsten and cobalt.
Needs low voltages to work and avoids use of precious metals like iridium.

Dow Jones Industrials
Nikkei 225

HK Hang Seng

Shanghai Composite

FTSE 350 Mining

AIM Basic Resources


US – Consumer spending jumped in September on rebuilding of damaged properties drive.
Despite the latest subdued readings in the core inflation measure, the Fed is likely to take some comfort in strong GDP growth numbers released recently allowing for another planned rate hike in December.
The FOMC meeting is due later this week with expectations for the Fed stay put on rates this time.
Personal Spending (%mom): 1.0 v 0.1 in August and 0.9 forecast.
Personal Income (%mom): 0.4 v 0.2 in August and 0.4 forecast.
Core PCE (%yoy): 1.3 v 1.3 in August and 1.3 forecast.

China – Business activity measures point to a slowdown in growth rates in October as measured by official PMI numbers.
In particular, PMIs for high energy consuming and highly pollution sectors dropped below 50, the growth/contraction threshold level, as “some regions intensified their efforts to clean up the environment”, the National Bureau of Statistics said in a statement.
New orders came in weak posting one of the strongest declines in a number of years.
Manufacturing PMI: 51.6 v 52.4 in September and 52.0 forecast.
Services PMI: 54.3 v 55.4 in September.

Japan – The BoJ kept the monetary policy unchanged while cutting its inflation forecasts raising the divide between other central banks focused on gradually reducing the stimulus.
The nine-member board voted 8-1 to leave rates at record lows and continue with asset purchases.
The Bank reiterated its estimates for inflation to hit the target 2% in FY19 while reducing forecast inflation rates in the medium term (FY17: 0.8% down from 1.1%; FY18: 1.4% down from 1.5%; 2019: 1.8% unchanged).
The economy was forecast to expand at 1.9% (up from 1.8%) in FY17, 1.4% (unchanged) in FY18 and 0.7% (unchanged) in FY19.

UK – Subdued consumer confidence reading for October released this morning, in line with the worsening trend recorded in the run up and post Brexit vote.
Surprisingly, the major purchase index which measures consumers’ willingness to buy larger ticket items such as white goods and furniture climbed for a third month in a row amid an increase credit card borrowing in the UK.
GfK Consumer Confidence: -10 in October v -9 in September and -10 forecast.

Eurozone – GDP growth accelerates to 2.5% in Q3 helping unemployment to reduce further; although, inflation disappointed in October as the gap between recorded prices growth and target rate of 2% remains wide.
GDP (%yoy): 2.5 in Q3 v 2.3 in Q2 and 2.4 forecast.
Unemployment: 8.9 in September v 9.0 (revised down from 9.1) in August and 9.0 forecast.
Core CPI (%yoy): 0.9 in October v 1.1 in September and 1.1 forecast.

Italy – Unemployment declined to the lowest level this year coming on the back of generally positive economic data in the Eurozone.
The S&P hiked Italy’s sovereign credit rating one notch on Friday to BBB on Friday amid “more robust economic growth” and increasing private investment and employment.
Jobless rate came in at 11.1% in September with previous month’s reading cut 0.1pp to 11.1%.
Despite obvious improvements in the labour market youth unemployment remains high with 35.7% of those in the labour force and aged <25 years="" out="" of="" job="" this="" compares="" to="" nearly="" 44="" hit="" at="" the="" peak="" unemployment="" in="" 2014="" li="">

Spain – Pro-seperatist parties agreed to participate in regional elections called by the central government in December.
This includes the Puigdemont party PdeCat.
President Puigdemont is reported to have travelled to Brussels with five other members of sacked administration.
The euro was up slightly against the US$ recovering slowly post hitting multi month lows hit on Friday with latest polls showing Catalan separatist parties come in behind pro Spanish unity candidates.

US$1.1646/eur vs 1.1626/eur yesterday.   Yen 113.06/$ vs 113.69/$.   SAr 14.049/$ vs 14.088/$.   $1.322/gbp vs $1.316/gbp. 
0.768/aud vs 0.768/aud.   CNY 6.629/$ vs 6.648/$.+

Commodity News
Precious metals:
Gold US$1,277/oz vs US$1,270/oz yesterday
Investors remain vigilant and the dollar flat at 94.56 ahead of potentially turbulent market movement as the two-day US Federal Reserve meeting starting today, the announcement of the next Fed chair of Thursday and US payrolls data to round off the week.
Initial signals suggest US President Donald Trump supports the dovish Fed governor Jerome Powell as the next head of the US central bank, favouring more accommodating monetary policy against his counterpart Sanford university economist John Taylor.
Early warnings of political uncertainty supported safe-haven purchasing as the first charges come to light from the probe into the alleged Russian intrusion in the 2016 presidential election campaign. Special counsel Robert Mueller is beginning the investigation into whether Trump’s campaign official conspired with Russian efforts to hamper Democratic candidate Hillary Clinton’s program.
   Gold ETFs 69.3moz vs US$69.4moz yesterday
Platinum US$922/oz vs US$916/oz yesterday
Palladium US$974/oz vs US$974/oz yesterday
Silver US$16.88/oz vs US$16.76/oz yesterday
Base metals:  
Copper US$ 6,877/t vs US$6,854/t yesterday
A hesitant dollar index allowed copper to make gains against the previous session’s two-week low. The base metal, which is fundamental to growth in the manufacturing and construction sectors, will be negatively impacted by reductions in Chinese official manufacturing PMI which indicated a slowing outlook as 0.8 points were lost in October to bring the index to 51.6 points.
The Kobe Steel data fabrication scandal investigation broadens as the Japanese Industrial Standards (JIS) certification for its copper tube products is revoked due to falsified product specifications. The ongoing independent investigation committee will be required to examine data regarding the improper conduct, and establish the causes of the forged shipments, while determining considerable measures to prevent recurrence. Current loss of the JIS certification related to 25 tonnes of copper and copper alloy seamless tubes, 19,300 tonnes of flat-rolled and extruded aluminium products, 19,400 units of aluminium castings and forgings, and 2,200 tonnes of copper strips and tubes; accounting for 4% of Kobe Steel’s total sales.
Russia’s Norilsk launches copper mine near Chinese boarder
Project 400km by rail from border in Siberian region, plans to export production to China due to strong demand
Scheduled to produce 28,000 to 30,000 tonnes of copper
Aluminium US$ 2,165/t vs US$2,164/t yesterday
Tensions between the world’s two largest economies are growing after the U.S. government raised “strongly dissatisfying” penalties on Chinese aluminium foil imports. The rule to impose antidumping duties is claimed to be a “serious distortion of reality” and breaking world trades rules, and a blatant “discriminatory” move to block imports of undercutting Chinese manufacturers flooding the US market with underpriced aluminium products. The US Commerce Department plans to impose fresh duties of 96.81 to 162.24 percent on the aluminium foil imports.
Nickel US$ 11,870/t vs US$11,560/t yesterday
Zinc US$ 3,244/t vs US$3,195/t yesterday
Lead US$ 2,432/t vs US$2,418/t yesterday
Tin US$ 19,550/t vs US$19,855/t yesterday
Oil US$60.8/bbl vs US$60.8/bbl yesterday
Hedge funds and other money managers are piling into the bullish market movement, accumulating a total long position of 1.189 billion barrels of crude, gasoline and heat oil by Oct. 24.
Natural Gas US$2.993/mmbtu vs US$2.970/mmbtu yesterday
Uranium US$20.00/lb vs US$19.95/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$57.8/t vs US$58.7/t
Chinese steel rebar 25mm US$625.2/t vs US$625.0/t
China’s official manufacturing PMI showed contraction of 0.8 points in October to 51.6 points (National Bureau of Statistics) as production and market demand for steel falters.
The country’s steel purchasing managers’ index reflected market sentiment as data released by the China Federation of Logistics & Purchasing dropped 1.4 points to 52.3 points, the lowest value since May this year. The sub-index for new orders had significant drop of 4.7 points to 55.9 while production dipped 1.5 points to 58.3 pointing to slowing growth in downstream demand in China’s domestic market. 
Despite domestic woes, new export orders from 6.7 points to 47.2 as international buyers increased interest in Chinese steel mills.
Thermal coal (1st year forward cif ARA) US$85.3/t vs US$84.9/t
Premium hard coking coal Aus fob US$178.0/t vs US$178.4/t

Tungsten APT European US$275-285/mtu vs US$280-285/mtu last week

Company News
BHP Billiton (LON:BLT) 1371p, Mkt Cap £78.4bn – Preliminary Agreement on Samarco
BHP Billiton reports that the company and Vale have reached a preliminary agreement with the Federal Prosecutors’ Office in Brazil over the Samarco dam failure.
The agreement establishes a process and timetable “for negotiation of a settlement of the BRL 155 billion (approximately US$48.6 billion) and BRL 20 billion (approximately US$6.3 billion) Public Civil Claims relating to the dam failure.”
Under the agreement experts will be appointed to advise the Prosecutors’ Office on environmental and socioeconomic aspects of the claims.
“The Preliminary Agreement suspends a BRL 1.2 billion (approximately US$0.4 billion) injunction order under the BRL 20 billion Public Civil Claim and requests suspension of that claim”.
Conclusion: The Preliminary Agreement provides a framework for what will probably be a protracted negotiation to resolve the complex issues arising from the failure of the Samarco dam in November 2015

Gem Diamonds (LON:GEMD) 79p, Mkt Cap £110m – Improved diamond output and prices for Letseng
Gem Diamonds reports that its Letseng mine produced 30,774 carats of diamonds during the quarter to 30th September representing a 23% increase on the 24,999 carats produced during the previous quarter.
Average diamond prices received during the quarter also improved by 4% to an average US$1858/carat and the sales during the July diamond tender achieved the highest level since September 2015 at US$2397/carat. Year to date sales in 2017 amount to 75,839 carats at an average price of US$1806/carat for a revenue of US$137m.
The company notes that during the first 9 months of 2017 Letseng has yielded six diamonds larger than 100 carats in size and that it sold 24 individual diamonds for prices in excess of US$1m each generating a total revenue of US$56.9m.
The company has revised its mine plan with slightly reduced volumes of waste removal and lower volumes of ore treated. Overall, however, the company is maintaining its production guidance of 110-114,000 carats and its sales guidance of 108-112,000 carats. Guidance suggests therefore that production is expected to rise further during Q4 to around 36,000 carats.
Commenting on the progress of Gem Diamonds’ cost reduction strategy, Chief Executive, Clifford Elphick, said that “The group-wide efficiency and cost reduction review is progressing well and has already identified annual and once off cost savings of US$20 million, which is an increase of US$5 million over the figure announced at the time of our interim results.”
Conclusion: Production at the Letseng mine is building up and yielding a number of large, high value diamonds while cost reduction efforts are generating significant savings which should generate improved profitability.

Solgold (LON:SOLG) 31.3p, Mkt Cap £474m – Solgold makes new discovery at La Hueca project in Southern Ecuador
SolGold reports very high grade copper mineralisation in rock chip samples from its new Hueca Project in Southern Ecuador.
The Hueca project is an outcropping porphyry showing copper gold mineralisation at surface.
Mineralisation is seen over an extensive 5km x 1km area, part of a much longer 25km porphyry trend, with the following grades seen in rock chip sampling:
The structure is Jurassic in age which makes it similar to Lundin Mining’s Fruta del Norte gold project and Glencore’s giant La Alumbrera copper mine in Argentina.
SolGold have used the Alpala copper, gold discovery at Cascabel in central Ecuador to formulate a blueprint for the further discovery of other copper, gold porphyry systems in the region. 
SolGold is the largest tenement holder in Ecuador and management are confident that the Hueca discovery will serve to differentiate SolGold from its competitors over the coming years.
SolGold hold 100% of the La Hueca prospect covering a strike length of some 25km.  Five porphyry systems have been identified along strike, named as Mathis, Florida Santa Cruz, Porvenir, Timbarra and Sharug.
The new discovery in southern Ecuador is wholly owned by by Solgold and, unlike the deeper mineralisation currently being evaluated at Cascabel is a near surface discovery which may be easier and less expensive to explore.
Conclusion: SolGold has the team, the expertise and the systems in place to make further discoveries in Ecuador.  The country remains largely unexplored from a mining perspective due to a tough fiscal regimen and environmental legislation. 
The Ecuador government is to hold a referendum shortly in which the population will vote on seven questions ranging from new anti-corruption measures to issues on mining and oil production in environmentally sensitive areas.  Five of the questions relate to direct reforms to the constitution. The question on mining may propose to repeal the windfall tax on large-scale mines which has held back mine development in Ecuador.  The referendum is likely to prevent former President Correa from seeking further re-election and to roll back onerous mining regulation.
*SP Angel acts as Nomad and broker to SolGold.  The mining team at SP Angel have raised funds for SolGold on at least eight occasions over the past 10 years.

Strategic Minerals* (LON:SML) 2.4p, Mkt Cap £30.1m – Redmoor drilling results
Strategic Minerals has reported the latest results from its continuing drilling programme at the jointly owned Redmoor tin/tungsten project in Cornwall, where it holds a 50% interest in Cornwall Resources with New Age Exploration.
The results from holes 11-15 include three holes drilled to target the higher grade portions of the sheeted vein system (SVS) with a further hole targeting the high grade Kelly Bray Lode at depth beneath known historic mine workings.
The results, in conjunction with historic work and the earlier, previously reported, results of the current programme are expected to form the basis of a revision to the existing inferred resource estimate which currently amounts to 13.3m tonnes at an average grade of 0.21% tin, 0.32% copper and 0.16% WO3. The resource update is expected in Q1 2018.
Among the results reported today are:
An intersection of 15.03m averaging 0.41% tin, 0.36%  tungsten trioxide and 0.19% copper in the sheeted vein system from a depth of 311.99m in hole CRD015 which also intersected a second 6.63m wide  mineralised horizon averaging 0.44% tin, 0.57% tungsten trioxide and 0.48% copper from a depth of 343.74m.
An intersection of 7.41m averaging 1.15% tin, 0.43%  tungsten trioxide and 0.88% copper also in the sheeted vein system from a depth of 298.74m in hole CRD013, and
An intersection of the SVS of 3.32m averaging 0.19% tin, 0.67% tungsten trioxide and 0.40% copper from a depth of 144.46m in hole CRD014 which also intersected a second 7.83m wide  mineralised horizon averaging 0.06% tin, 0.93% tungsten trioxide and 0.32% copper from a depth of 156.15m.
Hole CRD011 encountered a 0.75m wide intersection of the Kelly Bray Lode averaging 0.69% tin, 0.01% tungsten trioxide and 8.70% copper from a depth of 367.25m below known historic mine workings.
“Hole CRD012 also targeted the eastern edge of the mineralisation, close to surface. Anomalous but non-significant mineralisation was intersected … including 0.53m @ 1.68% SnEq from 50.11m and 2.00m @ 0.96% SnEq from 122.07m, locating the eastern extreme of the SVS mineralisation, where mineralisation is less well developed.” On this basis, it appears that the company believes that it is unlikely to extend the exploration much further towards the east.
The results to date are reported to indicate that the “multiple high-grade zones within the SVS … are interpreted to plunge to the west at around 25⁰”.
Currently 19 of the planned 20 holes have been completed and drilling “is expected to be finished imminently”.
Commenting on the latest drilling results, Peter Wale, a director of Cornwall Resources, said, “It is pleasing that the results from the latest 5 holes at Redmoor have continued to build our confidence in the calibre of the resource potential for this project.”
Conclusion: Further encouraging results from Redmoor keep the expected resource update on track for Q1 2018. The continuing intersections of substantial mineralised widths within the SVS may offer potential for relatively low cost bulk underground mining while the high copper grade encountered in the Kelly Bray Lode intersection reported today, if it ultimately proves to be part of an extensive body of copper mineralisation, could benefit the overall economic viability of the Redmoor project.
*SP Angel act as Nomad and broker to Strategic Minerals

Wolf Minerals (LON:WLFE) 5p, Mkt Cap £54.4m – Process plant improvements
Wolf Minerals reports that, as a result of improvements made to the Drakelands processing plant, it has increases tungsten concentrate production and sales by 15% during the quarter ending 30th September 2017.
Plant throughput of 474,170 tonnes (June quarter – 490,297 tonnes) increased tungsten in concentrate output to 36,501 mtus from the 30,996mtus in the previous quarter. Tin in concentrate output rose to 49 tonnes from 41 tonnes.
Mined ore grades for the quarter averaged 0.21% tungsten trioxide and 0.03% tin. We believe that these grades are somewhat higher than reserve grades which we understand are 0.18% tungsten trioxide and we note that the company comments that “The improvement in the processing plant performance continues to inform the blending strategy on optimal ore feed quality for throughput and recovery.”  We also note that recovery rates have yet to be disclosed.
Despite the improvements, which represent important progress in the remedial measures at Drakelands, “The net cash used in operating activities for the Quarter was A$17.5 million, including A$1.9m on development, A$17.3 million on production and A$1.7 million on finance costs with revenue of A$7.8 million.”
The company reports net cash at the end of the quarter at A$4.7m and notes that the previously announced additional financial support from RCF  makes an additional A$16.9m (£10m) “in available loan facilities to support revenue, on a forecast gross cash outflow of A$31 million for the coming quarter.”
Prices of the benchmark intermediate product, ammonium paratungstate have improved over recent months and currently stand at around US$280 per metric tonne unit compared to around US$200/mtu at the beginning of 2017.
Conclusion: Wolf Minerals’ programme of remedial work at Drakelands is making progress, however, the operation is still consuming cash at present and relying on the continuing financial support of its major shareholder, Resource Capital which owns approximately 56% of the company while it seeks to improve the operation.

Tue, 31 Oct 2017 13:04:00 +0000
Market Briefing - Chaarat Gold, Metminco, Thor Mining, Ortac Resources and others Beowulf Mining (LON:BEM) – Beowulf appoints a Swede as Chairman
Chaarat Gold (LON:lCGH) – Dekel Golan steps down as CEO of Chaarat Gold
Chatham Rock Phosphate (CRP NZ) – Chatham Rock planning to mine ultra-low cadmium phosphate
Metminco* (LON:MNC) – Miraflores Feasibility study and maiden ore reserve
Ortac Resources* (LON:OTC) – Additional funding and board restructuring
RedT (LON:RED) – Vanadium battery storage update
Strategic Minerals* (LON:SML) – Oversubscribed placing raises £1.05m alongside placing of new shares from employee options exercise
Thor Mining (LON:THR) – Positive ore-sorting trials at Molyhil

Weatherly International (LON:WTI) – Rescheduling of repayments to Orion

121 Mining Investment Conference London – 27 th - 28th November, 8 Fenchurch Place
• The 121 event is SOLD OUT with 70 mining companies attending and presenting
• > 277 institutional investors are already registered
• If you are an FCA registered institutional investor and would like to join then please register for a free pass and conference agenda:

Dow Jones Industrials  +0.14% at 23,434
Nikkei 225   +0.01% at 22,012
HK Hang Seng   -0.21% at 28,378
Shanghai Composite    -0.77% at 3,390
FTSE 350 Mining   -1.08% at 17,031
AIM Basic Resources   -0.46% at 2,503

US – Friday GDP numbers came ahead of expectations providing further positive momentum to local equity markets and the US$.Numbers suggest a smaller negative effect of hurricane related damages in parts of Texas and Florida than initially expected.
• At the same time, one of the major drivers of a pick up in headline growth rates was a stronger built up in inventories which was likely hurricane related.
• Consumer spending growth slowed, although, was quick to recover by the end of the quarter on the back of replacement for damaged goods demand.
• The economy need to post a 2.2% advance in the final quarter of the year to take FY17 GDP growth rate to the Fed’s target of 2.4%, Bloomberg estimates.
• Inflation measures showed little pressure on consumer prices with core PCE index at 1.4% over the last four quarters compared to the 1.5% recorded in the previous quarter and marking the slowest pace since Q4/15.
• Trump said to name the next Fed Chairman by Friday.
• GDP: 3.0%qoq (annualised) in Q3/17 v 3.1% in Q2/17 and 2.6% forecast.
• Personal Consumption: 2.4%qoq in Q3/17 v 3.3% in Q2/17 and 2.1% forecast.

Germany – Retail sales are coming in strong in September on the back of low borrowing costs and record low unemployment rates.
• Retail sales (%yoy): 4.1 v 3.0 in August and 3.0 forecast.

UK – The BoE is expected to lift rates this week for the first time in a decade, according to a survey by Thomson Reuters.
• The Bank is also due to release its economic growth and inflation forecasts.
• The pound is up 0.4% against the US$ this morning ahead of the Thursday decision.

Spain – The central government displaced Catalan President Carles Puigdemont and his government and called for regional elections for 21 December.
• On Sunday, hundreds of thousands of supporters of a united Spain are reported to have come out on streets of Barcelona with estimates ranging from 300,000 to 1mln quoted by municipal police and the central government representatives, respectively.
• The Interior Ministry named new chief of the Catalan reginal police force, while Spanish prosecutors are planning to press charges of rebellion against Puigdemont.
• Pro-independence supporters called for civil servants to ignore instructions by the central government raising chances of a potential local government staff strike.
• Local newspaper La Vanguardia reported on Sunday that the Catalan cabinet had left their offices which were taken under control of the central government.
• On a positive note, national GDP held up well in Q3/17 running at a robust 3.1%yoy pace, in line with the previous quarter in Q2/17.
• Nevertheless, the conflict in the region accounting for roughly 20% of the nation’s output is expected to cost 0.3pp in growth next year with central government GDP estimating the economy to grow at 2.3%, down from 2.6% previously estimated.
• The euro is little changed this morning hovering around 1.164, the lowest level since mid-July, as Catalan independence standoff coincided with positive economic and earnings data in the US.

US$1.1626/eur vs 1.1618/eur yesterday.           Yen 113.69/$ vs 114.26/$.         SAr 14.088/$ vs 14.333/$.        
$1.316/gbp vs $1.311/gbp.        0.768/aud vs 0.764/aud.            CNY 6.648/$ vs 6.656/$.

Commodity News
LME to develop metal contracts to support battery materials markets
• The London Metal Exchange aims to build a new battery metals consortium, recognizing leading index providers to develop a futures market for battery materials. The expansion into the battery metals offering looks to deliver new contracts on lithium and chemical contracts for cobalt and nickel sulphate, in addition to current copper, nickel, aluminium and cobalt contracts. LME CEO Matthew Chamberlain hopes that the delivery plan for 2018 will ‘bring price risk management’ for participants in the rapidly growing battery and electric vehicle industries.
• The move follows expansion of contracts in more traditional sectors, with development plans to introduce regional cash-settled aluminium premium contracts, regional hot-rolled coil (HRC) contracts in the ferrous space, and broad precious metals via gold and silver options, platinum and palladium futures.

Precious metals:
Gold US$1,270/oz vs US$1,265/oz last week
• Euro posted its worst week of 2017 as developing civil unrest in Spain’s Catalonia and dovish European Central Bank announcements boosted dollar index value, maintaining gold prices under pressure.
• A cautious Bank of Canada held its key overnight lending rate steady at 1% was swiftly followed by impressive third-quarter US gross domestic product growth figures. Data released on Friday highlighted stronger-than-expected annualised rate of 3.0% compared to the forecast 2.6% for the three months ended September. The accelerating economic growth only serves to support and remains consistent with the highly anticipated Fed rate hike in December, with results of CME Group’s FedWatch tool indicate 97.2% of market participants expect a rate rise to between 1.25% and 1.5%.
• US economic growth support may be strongly emphasized this week as many tier 1 central bank decisions, purchasing managers’ indices and other data cumulating non-farm payroll releases are expected.
• Hedge funds and money managers cut their net long positions in COMEX gold contracts for the sixth consecutive week, while the physical gold market remained quiet as the key festival season demand in India cooled in the world’s second largest consumer.
   Gold ETFs 69.4moz vs US$69.5moz last week
Platinum US$916/oz vs US$914/oz last week
Palladium US$974/oz vsUS$965/oz last week
Silver US$16.76/oz vs US$16.70/oz last week
Base metals:   
Copper US$ 6,854/t vs US$6,895/t last week
• Buoyant dollar provides strong resistance to copper prices, as the metal contracts further from recently breaking through the $7,000 per tonne level. Despite elevated volumes of metal sales at the end of last week, hedge funds and money managers are raising their net long positions in copper to six-week highs by increasing 1,026 contracts to a total 108,739.
• Annual copper demand is forecast to increase a further 232,000 tonnes by 2025 as China identifies the need for industrial sector upgrading to “smart” factories, green manufacturing and transport.
• Positive LME sentiment for copper improves on the metals fundamental story as investors appreciate its crucial role in the electrical economy will not be matched by waning global production. Ivan Arriagada, CEO of Chilean miner Antofagasta, highlights the additional requirement for up to 1-1.2 million tonnes copper to match the growth in hybrid and electrical cars by 2025. Declining grades across projects has required elevated levels of sustaining capital to compensate, which are only being met after three to four years of stringent capital allocation.
Aluminium US$ 2,164/t vs US$2,160/t last week
Nickel US$ 11,560/t vs US$11,495/t last week
• “Supportive macroeconomic backdrop and market tightening driven by Chinese nickel pig iron (NPI) cuts in Shandong province during the winter heating season” have driven Goldman Sachs to significantly raise its forecast for the metal to $12,500 per tonne in three months and $12,000 in six months, from $9,000 for both forecasts. These elevated forecasts reflect positivity in the medium-term price as the bank identifies sufficient inventory to cover demand from electric vehicles till 2020, but a requirement to improve supply moving forward.
Zinc US$ 3,195/t vs US$3,170/t last week - Peel mining shares surge on high grade zinc discovery
• Results included a hit of 21m at 31% zinc and 12% lead, stocks gained as much as 60% to hit a high of 48c
• Told investors that mineralisation at site ranked best the company had encountered to date
Lead US$ 2,418/t vs US$2,447/t last week
Tin US$ 19,855/t vs US$19,770/t last week
Oil US$60.8/bbl vs US$59.3/bbl last week
• Crown Prince Mohammad bin Salman reiterated Saudi Arabia’s support for the proposed extension on the oil production cut agreement aimed at rebalancing global supply and demand. Since 4Q 2016, the oil output cut has been effective in reducing the global glut and maintaining price above $45 per barrel levels.
• Hedge funds and other money managers have boosted bullish bets on U.S. crude futures and options as the number of long positions raised 5% to 280,634 last week.
Natural Gas US$2.970/mmbtu vs US$2.879/mmbtu last week
Uranium US$19.95/lb vs US$20.20/lb last week
Lithium - Piedmont Lithium raises $16m to accelerate lithium project
• Proceeds accelerate development of project located in world class Carolina Tin-Spodumene belt in US – worlds primary source for lithium from 1950’s – 80’s
• Land holdings less than 25km away from 2 large lithium processing facilities making it one of best located in the world
Iron ore 62% Fe spot (cfr Tianjin) US$58.7/t vs US$59.2/t - China Iron Ore imports breach 100m tonnes boosting prices
• September imported 103 million tonnes due to increase in demand as Chinese authorities come down heavily on low grade polluting mills
• Increased demand for ore from Australia and Brazil and widening of differential between benchmark iron ore and sub 62%
• Iron ore futures dropped more than 2 percent to a four-month low over rising apprehensions over faltering steel mill demand during the winter war on smog.
Chinese steel rebar 25mm US$625.0/t vs US$626.8/t - Kobe Steel to withdraw full year earnings forecast
• Withdrew forecast for current fiscal year as it struggles to quantify the impact of data falsification scandal
• Decided not to pay dividend for 6 months through September
Thermal coal (1st year forward cif ARA) US$84.9/t vs US$84.3/t
Premium hard coking coal Aus fob US$178.4/t vs US$177.9/t

Tungsten APT European US$275-285/mtu vs US$280-285/mtu last week

Company News
Beowulf Mining (LON:BEM) 7.4p, Mkt Cap £39m – Beowulf appoints a Swede as Chairman
• Beowulf have appointed a Swedish national, Mr. Per Göran Färm, as a non-executive Chairman.
• Per Göran was formerly Head of the Swedish Trade Union Confederation's unit for economic policy and investigation and a MEP of the Committee of Industry, Research, and Energy of the European Parliament.
• As a former journalist Göran has extensive experience in communications and public affairs advisor.
• Göran is also Chairman of Kommuninvest, a public development bank owned by Swedish municipalities, cities, and regions.
• As a former MEP we wonder if Göran might be able to unlock some European development funds for Beowulf.
• As a Swedish national we also wonder if Göran might be instrumental in breaking the deadlock over Beowulf’s Kallak North magnetite project exploitation permits in Sweden.
• Beowulf is following a tried and tested route in Europe for the issuance of mining licenses.
Atalaya Mining appointed Alberto Lavandeira as COO of EMED and CEO in March 2014.  The move broke the deadlock between the company and the local Junta which subsequently issued the required permits to mine.
Conclusion:  We hope Per Göran will break the deadlock in Sweden and appease the Reindeer herders and other interest groups.

Chaarat Gold (LON:CGH) 19.8p, mkt cap £69.5m – Dekel Golan steps down as CEO of Chaarat Gold
• Dekel Golan has driven the development of the Chaarat Gold since the company’s inception
• Given past challenges of holding onto assets in Kyrgyzstan we wonder how the company will manage going forward.
• Feasibility Study work on the Tulkubash project in Kyrgyzstan published in April showed an IRR of 25% and NPV of $615m which would struggle to compensate for the risk of working down in Kyrgyzstan.

Chatham Rock Phosphate (CRP NZ) Price C$0.42, Mkt cap C$6.3m – Chatham Rock planning to mine ultra-low cadmium phosphate
• The demand for RPR will continue to grow in parallel with the demand for organic products. CRP rock is also ultra-low in cadmium (< 10 mg/Kg P2O5)
• The EU will set a 60mg/Kg P2O5 Ca limit in 2019, reducing to 20 mg/Kg in 2030
• This will eliminate all rock sourced from Egypt, Israel, Bou craa & Youssoufia (Morocco),Senegal, Togo, Tunisia, Nauru & Christmas Island
• Analysts consider that this will result in increasing price premiums over time
• Chatham won’t be in production until 2022

Metminco* (LON:MNC) 3.4p, Mkt Cap £4.3m – Miraflores Feasibility study and maiden ore reserve
• Metminco has amplified its comments earlier this month on the results of its recently completed Feasibility Study for its Miraflores underground gold mine project in Colombia.
• Based upon a treatment rate of 1300tpd (474,500tpa) and a mine life of 9.5 years, the company expects to produce an average of around 45,000oz per year of gold and to generate an after-tax NPV of US$72.3m at a discount rate of 8%. Assuming a gold price of US$1300/oz, an initial  capital investment of US$71.8m generates an IRR of 25% with a 3.6 year payback following an 18 months construction period.
• Recovery rates are expected to be 92% for gold an 60% for silver using a combination of gravity recovery methods and cyanide leaching of a flotation concentrate of the gravity tailings.
• In September this year, Miraflores received approval for up to 2000m of underground development.
• Construction is expected to start in March 2018 with detailed engineering work and equipment specification. The company comments that “Commencement of site works is subject to EIA approval.”
• Commenting on the feasibility study, Managing Director, ILLIAM Howe, paid testament to the dedication and professionalism of the project team and pointed out that “The extensive experience of the individuals is demonstrated by the innovative thinking that has culminated in a low cost, fit for purpose mining and processing project.”
Conclusion: The evolution of a viable low cost underground gold mining operation at Miraflores contrasts with the large scale open-pit plans developed by previous owners of the project. The underground option should significantly reduce the environmental impact of mine development and help to smooth the way to the key EIA Approval.
*SP Angel act as broker to Metminco. SP Angel analysts have previously visited Los Calatos in Peru and the Miraflores project in Colombia.

Ortac Resources* (LON:OTC) 2.3p, £3.3m Mkt Cap – Additional funding and board restructuring
• Ortac Resources reports that it has raised £1.7m through the issue of 85m new shares at a price of 2p/share. The proceeds of the issue, which was oversubscribed with existing and new shareholders and a number of Board members participating, will be used to funds “further investments in Ortac’s core African assets.”
• Nick von Schirnding, who will assume the role of Executive Chairman, has subscribed for 2m new shares taking his interest in the company to 1.11%. Independent non-executive director, Brian McMaster also purchased 2m shares bringing his holding to 0.86% while former Chairman, Anthony Balme, who steps down from the Board today purchased 1m new share bringing his interest in the company to 4.61%.
• A new non-executive director is to be appointed shortly.
• The company also announces that the company’s CEO, Vassilios Carellas is to relinquish his role on the Board in order to assume the position of Chief Operating Officer “focussing on the Group’s promising African exploration assets.” Mr Carellas’ previous service and experience with the company in his former role should provide valuable continuity to the newly restructured Board.
Conclusion: The additional funding and the restructuring of Senior management roles positions Ortac Resources to pursue a new strategy under the executive leadership of its Chairman.
*SP Angel acts as nomad and broker to Ortac Resources

RedT (LON:RED) 11.5p, Mkt Cap £75.2m – Vanadium battery storage update
• RedT released on Friday details of their presentation to investors.
• Recent achievements include:
• a 14 Unit Order from Botswana based customer
• 1st Vanadium-Lithium Hybrid 1MWh System sold into Australian Market
• Expansion into new markets through strategic distribution partners 12 Units and 300 unit pipeline – engaging competitor’s pipelines
• Multiple unit orders within the UK and EU
• Team Expansion +97% y-o-y inc. Senior Hires from key competitors
• Diversified manufacturing – small and large volume production
• Launched Centrica – Cornwall 1MWh flagship project
• Commercial Update.
• 16 units produced and deployed vs 9 units in April.
• 16 units ordered + 12 distributor committed
• Pipeline €323m in active customer pipeline.
Conclusion:  The presentation highlights the benefits of vanadium REDOX batteries and forthcoming growth in RedT’s vanadium battery business.  RedT now have 4MWh of machines installed across the UK, EU, Australia and Africa.  Technology costs are falling with costs now quoted at <US$500/kWh.

Strategic Minerals* (LON:SML) 2.5p, Mkt Cap £31.1m – Oversubscribed placing raises £1.05m alongside placing of new shares from employee options exercise
• Strategic Minerals report the completion of a placing at 2.25p/s which is more than five times the price of the last placing on 2 November 2016.
• The fundraising is for the acquisition and development of the new ‘Leigh Creek’ (LCCM) Copper project in South Australia.
• The placing also allows Strategic Minerals to bring in a new institutional investor onto the share register and removes a potential stock overhang.
• The Leigh Creek Copper project has a JORC resource of 3.6mt grading 0.69% copper
• The plan is to treat copper oxide material to produce a 70-75% copper product over the first three years.
• Capex: A$1.8m with processing due to start within 3-4 months of the completion of SML’s due dilligence.
• Production 6,400t
• Ore processing: 1.1mt grading 0.77% copper
• Strip ratio: 1:1
• A 2012 feasibility study focussed on two open pits treating the ore via a heap leach process to recover the copper into a copper sulphate solution
• On completion of the due diligence, to SML's sole satisfaction, RMA and SML will enter the SPOA for the purchase of all shares in LCCM.  Under the first phase, SML is required to provide LCCM a AUD 500,000, six-month, nil interest loan primarily to fund work aimed at recommissioning production from Leigh Creek, including the development of a detailed mine plan, reactivating one of the ore heaps and auger drilling of the existing ore heaps “to identify high grade material.
• After the initial work is completed, SML will pay a further A$1m to RMA comprising A$250,000 in cash and the balance in shares and a further cash injection of A$1m directly into LCCM for project funding. RMA retains a royalty of 20% on sales to a maximum of A$3.65m.
Conclusion:  The placing alongside cash flow from SML’s profitable Cobre mine should allow the company to move into production at Leigh Creek early next year.

Thor Mining (LON:THR) 1.1 pence, Mkt Cap £4.8m – Positive ore-sorting trials at Molyhil
• Thor Mining reports that recent testing of ore sorting at its Molyhil tungsten deposit in the Northern Territory, Australia has improved on previous results and delivered “An improvement in rejecting waste material to 41% of total sample mass from ore sorting with the latest trials on ore averaging 0.23% WO3”.
• These results compare with previous testing which achieved “waste rejection of between 15% and 25% of the total sample mass, on ore grading between 0.35% WO3 and 0.56% WO3.”
• Previous financial modelling contained in the Company’s Definitive Feasibility Study announced in January 2015 estimated a project NPV of A$67m for the Molyhil project. Although the announcement today does not provide an update of this estimate, the improved waste rejection ratio should provide opportunities to enhance the project economics through potential to reduce the overall size of downstream processing facilities and/or increasing the overall size of the economic ore reserve with implications for a longer life or larger scale operation.
• The company also point out that it has “previously signalled that we have identified cost reductions in both operating and capital cost estimates and these will be incorporated, with these sorting results, in a review of the Open Cut Ore Reserves for Molyhil, the results of which we expect shortly”
Conclusion: We look forward to the results of the revised ore reserve for Molyhil which arise from the new ore sorting data. It appears that the company may have scope to expand the resource base and capture operating and capital cost  savings which could transform the project economics at a time when the price of the benchmark ammonium paratungstate is recovering.

Weatherly International (LON:WTI) 0.8 pence, Mkt Cap £8.5m – Rescheduling of repayments to Orion
• Weatherly International reports that it has reached agreement on the rescheduling of loan repayments due to Orion Mine Finance.
• The first repayment of “Facility B” which was originally due on 31st October 2017 has been deferred and “is now due on 31 December 2017 and the second payment previously due on 30 November 2017 is now due on 31 January 2018. Subsequent payments are unchanged, payable quarterly from 28 February 2018 until 28 February 2020.”
• The Facility B repayments are for “11 equal repayments of US$9.7m each.”
• “The repayment of US$10.3 million including capital and interest up until 31 August 2017 under Facilities C and D of the Amended Facility has been deferred until 31 December 2017.”
Conclusion: The two months delay in the first two payments under Facility B may provide a breathing space to Weatherly International, however, with subsequent repayments remaining due on a quarterly basis as from 28 February 2018, the company remains under pressure.

Mon, 30 Oct 2017 10:30:00 +0000
Market Briefing - Kibo Mining and Karelian Diamonds MiFID II - This note will move to FULL MiFID II compliant format come 3 January 2018
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If you don’t like what we write about your company, don’t worry, we will continue to write but it will be in a new MIFID 2 compliant format which is designed to make institutional investors pay for the insightful analysis which we provide.

Ecuador – may look to cut windfall taxes
• Ecuador’s new president Lenin Moreno is proposing to include a question about mining in a referendum to voters in Ecuador
• Part of the idea is to seek permission from community groups for mining aa well as the removal the windfall tax which is not used due it its onerous conditions.
• The Ecuadorean government claims that >$800m in new investment over the next four years is coming from the granting of 250 new concessions following 900 requests for licenses.
• SolGold and Lundin Mining are leading the charge into Ecuador with SolGold’s Cascabel discovery and Lundin taking on Fuerte del Norte from Kinross Gold

Phosphate and potash fertiliser supply to be affected as EU MEPs back stricter limits on Cadmium
• The European Parliament voted this week to a European Commission proposal to cut the level of cadmium allowed in fertilisers to 20mg/kg.
• The EU executive proposed that the new limits should be set at 60mg/kg, 40mg after three years and 20mg after 12 years for fertiliser products carrying the CE mark.
• As a concession to farmer, probably mainly French farmers, MEPs agreed producers need a longer transition before the introduction of the lower limits.
• Cadmium is carcinogenic, is linked to osteoporosis as well as kidney failure, heart disease and fertility issues
• Many EU nationals exceed recommended cadmium limits due to the use of fertilisers containing cadmium which may also be part of why EU fertility rates are falling
• Fertilisers are not subject to the same level of regulation s other mineral compounds – wonder why that is? And it is proposed that one lobby group that it should be subject to similar regulatory controls.
• It has taken time for the politicians to master support for these cadmium limits, due to aggressive opposition from the farmers who want cheaper fertilisers despite the dangers and health impact of elevated cadmium levels.
• While the move may not really change the major supply patterns it should lead to price differentials which better reflect the purity of products sold and should then encourage the development of purer fertilizer products.
• Apatite concentrates with a high level of Cd will have to pass a SX or similar step to extract the Cd, adding cost while Apatite concentrates with low Cd will not need such to go through this extra step reducing relative processing costs.
• Many older plants may not choose to invest in SX facilities, and instead source apatite from low-Cd areas sufficiently to come under the limit.
• The net cost of SX treatment adjusted for waste disposal and the possible sale of the more valuable recovered metals, may result in a 20-50 $/t price differentiation/cost when reducing cadmium down to the 40 mg level.
• The move is likely to favor imports from Russia while reducing the price of from North African products.

China’s Tianqi expands Australian lithium plant by $300m
• Investment will increase outlay in WA to more than $680 million making group one of states biggest mining related investors outside of iron ore
• Plant still under construction, expansion will double production of battery grade lithium to 48,000 tonnes a year

IEA says Southeast Asia will keep coal demand high
• International Energy Agency (IEA) says the need for cheap electricity will drive global demand for coal power generation through 2040 even as many countries retire coal projects
• Cheaper than natural gas and in many countries easier to pursue as they do not require capital intensive infrastructure associated with gas

Nickel falls as China cuts steel capacity
• Chinese nickel futures dropped on Friday in line with steel prices as steps up efforts to cut industrial production to combat smog hitting demand for nickel – country is worlds biggest consumer of nickel
• Government said it had met its target for cutting capacity this year, with further curbs expected in winter

Dow Jones Industrials  +0.31% at 23,401
Nikkei 225   +1.24% at 22,008
HK Hang Seng   +0.67% at 28,391
Shanghai Composite    +0.27% at 3,417
FTSE 350 Mining   -1.86% at 17,142
AIM Basic Resources   -0.71% at 2,515

US – US equities finished higher yesterday on the back of better than expected results from top tech companies including Alphabet, Microsoft and Intel.
• Amazon has also beat analyst estimates as well as delivering positive holiday sales outlook seeing shares climbing more than 6% in after hours trading on Thursday.
• The US$ surged more than 1% yesterday and continued to gain further this morning as the US House Republicans passed a budget resolution bringing tax cuts regulation a step closer.
• Higher US$ led losses in the commodities markets as well as saw emerging market currencies lower since July.

China – Industrial profits climb at the strongest pace since 2011 on the back of faster growth in producer prices, improving output and sales.
• Industrial Profits: 27.7%yoy v 24.0%yoy in August.

ECB – The majority of Governing Council voted to cut QE in half to a €30bn per month rate, down from €60bn, starting from January and extending the programme to include first nine months of next year.
• The programme is conditional on the pace of Eurozone inflation with a potential further extension to purchases pas Sep/18 should growth in consumer prices disappoint.
• Proceeds from maturing debt will be reinvested for an “extended period of time after the end of its net asset purchases
• The ECB said interest rates will be left “at the present levels for an extended period of time, and well past the horizon of our net asset purchases”.
• The euro is down 1.5% against the US$ over the last two days as the US strengthened over tax regulation related news and as Draghi announced extension to the QE programme.

Japan – Inflation held steady in September highlighting challenges the BoJ is faced with trying to accelerate consumer prices growth.
• Recently the BoJ has been considering to cut its inflation forecasts again.
• Headline CPI: 0.7%yoy v 0.7%yoy in August and 0.7%yoy forecast.
• CPI ex food and energy: 0.2%yoy v 0.2% in August and 0.2%yoy forecast.

Spain – The central government is preparing to impose direct rule in Catalonia on Friday with the upper house of parliament currently considering the government’s application of Article 155 oft eh constitution.
• A vote on the proposal is expected by 1200 GMT.
• Earlier Catalan President Puigdemont ruled out a snap regional election.

Australia – The high court ruled that Deputy PM Barnaby Joyce can not hold his seat in the parliament as he held a dual citizenship with New Zealand at the time of elections violating constitutional law.
• That in turn led the Liberal-National coalition government to lose its one-seat majority in the lower house of parliament.
• The A$ fell 0.5% against the US$ on the news this morning.

Commodity News
Precious metals:
Gold US$1,265/oz vs US$1,280/oz yesterday
• Euro strength faded as the European Central Bank extended its bond purchases while subsequently reducing the likelihood of potential interest rate hike in the new year, as the currency sank to a three-month low. The Euro lost 1% against the dollar on the back of the announcement, while across the Atlantic the U.S. House of Representatives voiced positive developments in the proposed Trump deep tax-cuts.
• Strong forecasts for growing interest rates throughout 2018, enhanced with the growing prospect of a hawkish John Taylor as the next Fed chair, has investor sentiment for the metal flatlining as a consequence of potential dollar support. The Reuter poll of 34 analysts and traders suggested greenback buoyancy and unwavering equity growth could test gold at $1,260 per oz., while silver forecasts were cut again on poor outlook for the dual investment vehicle and electrical industrial metal, falling expectations by $0.40 to $17.90 an ounce.
   Gold ETFs 69.5moz vs US$69.6moz yesterday
Platinum US$914/oz vs US$923/oz yesterday
Palladium US$965/oz vs US$968/oz yesterday
• After surging 43 percent this year, with little indication of a slowing rally, the precious metal value is attracting more than investor interest in Chicago. A police locale released a bulletin this week alerting residents of growing catalytic converter thefts, as swelling prices are attracting commodity thieves to plunder cars for the valuable metal.
Silver US$16.70/oz vs US$16.98/oz yesterday
Base metals:   
Copper US$ 6,895/t vs US$6,995/t yesterday
Aluminium US$ 2,160/t vs US$2,203/t yesterday
• Support for the metal diminished after three-month LME aluminium prices peaked for a five-year-plus record overnight, falling 0.5 percent. Investors forecast a tightening market as Chinese producers restrict output heading into winter, while inventories continue to tumble with London warehouses falling to nine-year lows. Total stocks of aluminium across LME-registered warehouses dropped an additional 3,975 tonnes to 1.2 million tonnes which represents the lowest levels since September 2008.
Nickel US$ 11,495/t vs US$11,875/t yesterday
• Nickel futures contracted in line with falling steel prices as Chinese efforts to significantly improve air quality through sweeping production cuts eat into industrial demand for the metal. The world’s biggest consumer of nickel, which can make up 35 percent of stainless steel, is expecting to restrict steel output between 30-50 percent during the winter ‘heating’ period associated with the heaviest smog levels. Efforts to combat the smog have been effective, with China’s government announcing it had met its target for cutting steel capacity over 2017, ahead of the imminent additional winter limitations.
Zinc US$ 3,170/t vs US$3,217/t yesterday
Lead US$ 2,447/t vs US$2,486/t yesterday
Tin US$ 19,770/t vs US$19,825/t yesterday
Oil US$59.3/bbl vs US$58.3/bbl yesterday
• Valued at more than US$2 trillion, the national oil giant Saudi Aramco’s initial public offering remains on track for 2018. The public sale of approximately 5 percent of Aramco focuses on Crown Prince Mohammad bin Salman’s reformation plan to diversify the Saudi economy beyond oil.
Natural Gas US$2.879/mmbtu vs US$2.924/mmbtu yesterday
Uranium US$20.20/lb vs US$20.20/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$59.2/t vs US$62.1/t
Chinese steel rebar 25mm US$626.8/t vs US$632.8/t
• The world’s biggest steel producing country reined in its steel capacity throughout 2017, meeting the targeted 50 million tonnes. Despite the industrial successes, the Ministry of Industry and Information Technology (MIIT) will need to commit further efforts to curb production to meet air quality objectives, reducing annual crude steel capacity by supplementary 100-150 million tonnes over the next three to five years.
• Despite elevated nickel contract on the London Metal Exchange and domestic nickel pig iron prices, stainless steel prices experienced lackluster growth. Instead higher supply and muted demand had a stronger influence on price, with steel mills capitalizing on generous profit margins ahead of winter production restrictions to maintain steady supply to the spot market.
Thermal coal (1st year forward cif ARA) US$84.3/t vs US$85.2/t
Premium hard coking coal Aus fob US$177.9/t vs US$177.9/t

Tungsten APT European US$280-285/mtu vs US$280-285/mtu last week

Company News
Bushveld Minerals (LON:BMN) 9.5p, mkt cap £77m – Restatement of JORC tin resources in CPR for AfriTin listing
BUY – Target price 14p
• Bushveld Minerals report today restated JORC resource figures for the Groenfontein and Zaaiplaats tin deposits in South Africa.
• The cut-off grade for the new JORC mineral resource estimate at the Zaaiplaats deposit has been revised to 0.1% tin from 0.07% Sn.  This has been done to align the cut-off grade with the 0.1% cut-off at Groenfontein.
• The new inferred JORC resource at Zaaiplaats is 6.216mt grading 0.124% with the indicated resource now 0.017mt grading 0.136%  giving a total new mineral resources estimate of 6.233mt grading 0.124% tin, with a total tin content of 7,753t.
• The ‘JORC 2012’ reported total tonnage of contained tin at the Zaaiplaats is revised lower to 7,753t from 12,452t as a result of the higher cut-off grade though none of the other parameters of the JORC resource.
• Geology:  According to an abstract by Luke Longridge, Exploration Programme Manager, at the VM Investment Company, The granite-hosted Groenfontein and Zaaiplaats Tin Deposits are found towards the upper contact of late-stage, fractionated and hydrothermally altered granite pluton associated with the 2056 Ma Bushveld Complex, South Africa.
• They are suggested to have been formed as the result of fractional crystallisation of crustally-derived granites. Cassiterite mineralisation in pipe-like bodies, sub-horizontal lenticular bodies and as a sub-horizontal disseminated lower-grade bodies within both granites.
• Historical mining focused on high-grade (>1% Sn) mineralisation associated with pipe-like bodies and horizontal lenticular bodies, but recent exploration has focused on lower-grade (but still economically viable) disseminated cassiterite mineralisation.
• According to the fractional crystallisation model, disseminated mineralisation is the result of in-situ crystallisation of evolved, tin-rich fluids that were unable to separate from the solid crystals and escape, whilst higher-grade pipes formed from escaped, trapped, tin-rich fluids.
• Recent exploration has focused on lower-grade (0.1-0.5% Sn) disseminated mineralisation within the granites.
• The existence and grade of this disseminated mineralisation is controlled by the degree of separation of fractionated fluids from the crystal mush. Disseminated tin mineralisation is known from granite-hosted tin deposits elsewhere in the world (e.g. the Banke Complex, Nigeria and in late G4 granites, Rwanda).
• However, the vast majority of tin deposits are hosted in narrow, rich veins. Here we suggest that larger, lower-grade tin deposits in the roof zones of plutons may be present in many more plutons, and that these deposits could be easily targeted through systematic exploration and geochemical sampling, as demonstrated by case studies at Zaaiplaats and Groenfontein.
Conclusion:  The restatement of the JORC resource for Groenfontein and Zaaiplaats in relation to the raising of the cut-off grade does not lower our valuation for Bushveld.
*An SP Angel Mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

Kibo Mining (LON:KIBO) 5.3p, Mkt cap £21m - ESIA Certificates Awarded in Tanzania
• Kibo Mining has announced that the Tanzanian Government has awarded Environmental and Social Impact Assessment (ESIA) certificates to both the Mbeya Coal Project and to the Mbeya Power Generation Project in south west Tanzania.
• The award of the certificates, described by the company as the "latest milestone in the MCPP's development cycle" follows the submission of the formal 1000 page application document in February.
• The company points out that it has "already successfully completed a Power Pre-Feasibility Study, a Mining Pre-Feasibility Study, a Definitive Power Feasibility Study, a Definitive Mining Feasibility Study, an Independent Integrated Financial Model and an Integrated Bankable Feasibility Study."
• Welcoming what he described as "terrific news" for the project, CEO, Louis Coetzee, noted that "we have had several very productive meetings with the newly established Ministry of Energy over the past two weeks which confirmed our view that the Memorandum of Understanding ("MOU") on the Power Purchase Agreement ("PPA") is progressing well and will be finalised shortly."
• Mr Coetzee points to a 36-months lead time to production following the receipt of the PPA.
• Conclusion: Despite the widely publicised issues within the gold mining sector in Tanzania, Kibo Mining continues to buid a constructive relationship with the Government and to progress its Mbeya project, which is aimed at delivering a significant increase in power supply to this electricity deprived region.

Karelian Diamonds (KDR LN) 0.5p, £2.9m - Additional exploration licence in Finland
• Karelian Diamonds reports that the Finnish Mining Authority has granted it a further exploration license covering more than 600 hectares in the Kuhmo region.
• The license, which is valid for a period of four years, "may contain the source" of the green diamond whose discovery was announced in January this year.
Conclusion: The additional licence area provides the company with further scope to identify the hard-rock source of the earlier diamond discovery and we look forward to news of progress on the subsequent exploration as the programme proceeds.

Fri, 27 Oct 2017 10:42:00 +0100
Market Briefing - Rio Tinto, Phoenix Global Mining, Stratex International and Crusader MiFID II - This note will move to FULL MiFID II compliant format come 3 January 2018
If you wish your company to be compliant so we can continue to write lovely things about you then please contact me
If you don’t like what we write about your company, don’t worry, we will continue to write but it will be in a new MIFID 2 compliant format which is designed to make institutional investors pay for the insightful analysis which we provide. 

Rio Tinto (LON:RIO) – 3540p, Mkt Cap  £65.1bn – SEC goes after Rio Tinto in relation to Riversdale
Phoenix Global Mining* (LON:PGM) 4.1p, Mkt Cap £9.5m – Cobalt-copper exploration licenses secured
Stratex International* (LON:STI) 1.1p, Mkt cap £5.3m – Stratex board taking desperate steps in attempt to stave off sacking over Crusader merger proposal
Crusader (ASX:CAS) A$0.09, Mkt cap A$27.1m

Nickel price rebound gathers on electric car boom
• Nickel broke above $12,000 a tonne on Tuesday on outlook for deepening deficits, falling warehouse stocks and ultimately rising prices
• The boom in battery powered vehicle production is predicted to aggravate structural shortage as demand rises to 220,000t in 2025  

Philippines - Open pit mining to restart in the Philippines
• Recommendations have been presented to lift the ban on open pit mining across the Philippines, receiving strong support from both the newly elected environmental minister, Roy Cimatu, and President Rodrigo Duterte.
• Despite closing the mines on the grounds of environmental degradation spoiling economic potential, the statement following the Mining Industry Coordinating Council recommending lifting the ban on open pit mining “provided that mining laws, rules and regulations are strictly enforced”.
• The biggest winner from the move would be the development of the $5.9 billion Tampakan copper-gold project in South Cotabato province on the island of Mindanao, which lost its operator Glencore Plc in 2015 to the mining ban.

Graphene – tattoo to monitor health
• The University of Texas has developed a wearable tattoo made out of graphene which is able to monitor your health.
• Graphene is more conductive than gold and can be made much thinner allowing it to wrinkle naturally with skin.
• Its yet another application for a material which seems to add meaningfully in so many applications.
• The challenge for manufacturers is to produce sufficient graphene to meet growing demand.
• Graphene is currently produced from large flake graphite and while some graphene may be produced by exfoliation of graphite material we remain to be convinced that this process will be the way forward for mass graphene manufacture due to cost and quality issues.

Dow Jones Industrials  +0.72% at 23,442
Nikkei 225   -0.45% at 21,708
HK Hang Seng   +0.41% at 28,271
Shanghai Composite    +0.24% at 3,396
FTSE 350 Mining   +0.72% at 17,695
AIM Basic Resources   +0.13% at 2,551

US – Private sector growth accelerated to nine month high in October on the back of robust services sector performance and a pick up in activity in the manufacturing segment post hurricane related disruptions.
• Employment recorded another month of solid gains on the back of the strongest increase in payroll numbers at manufacturing companies since Jun/15.
• On a less positive front, input inflation moderated from September’s three-year peak which contributed to the weakest inflation in final goods prices in the last six months.
• PMI Manufacturing: 54.5 v 53.1 in September and 53.4 forecast.
• PMI Services: 55.9 v 55.3 in September and 55.2 forecast.

China – The Party unveiled the composition of the top leadership group called Standing Committee today.
• Both General Secretary Xi jinping and Premier Li Keqiang remain on the Committee with five new men joining nation’s top rank.
• Commentators highlight new composition of the Committee shows little signs of clear successor to the current General Secretary offering greater mandate to Xi to continue with his policies.

Germany – Business confidence continued strong in October hitting a record high pointing to a strong growth momentum remaining in place in the largest European economy, according to the latest numbers for the Ifo Institute.
• The central bank forecasts the economy to see robust upswing in economic growth continuing led by strong demand for industrial goods and strong consumer spending supported by strengthening labour market.
• Ifo Expectations: 109.1 v 107.5 in Sep and 107.3 forecast.
• Ifo Current Assessment: 124.8 v 123.7 in Sep and 123.5 forecast.

UK – The pound climbs following the release of broadly in line economic growth numbers for Q3.
• Both services and industrial production sectors climbed in Q3 while construction contracted for a second consecutive quarter.
• Preliminary numbers are based on 44% of the data that is ultimately incorporated in final estimates.
• GDP (%qoq/yoy): 0.4/1.5 in Q3/17 v 0.3/1.5 in Q2 and 0.3/1.5 forecast.

Australia – Weaker than expected inflation in Q3/17 saw the currency falling to the lowest level since mid-July.
• With two meetings left this year, expectations are for the RBA to leave the benchmark rate at 1.5%, unchanged from mide-16.
• Turning of the monetary policy trajectory to tightening in major economies (US, Eurozone and China) may see a dampening effect on growth momentum in Australia next year which further adds support to the RBA to leave low rates in place, Bloomberg Intelligence reports.
CPI (%yoy): 1.8 v 1.9 in Q2/17 and 2.0 forecast.

Saudi Arabia – Crown prince Mohammed unveiled plans for development of a more than 25,000km2 city in the NW of the country on banks of Red Sea.
• The project called Neom is expected to cost $500bn funded by the state sovereign wealth fund as well as private investors.
• “Its easy to dream… making it a reality is difficult,” Prince Mohammed said highlighting ambitious scale of the project.
• Plans for a futuristic technology focused city project have been presented during a panel discussion at a conference that intended to represent Saudi Arabia as a target for rather than as a source of investment capital.
• The city is the latest case in a series of ambitious initiatives suggested by an economic plan called Saudi Vision 2030 to diversify the economy away from the resourced focused model.

US$1.1766/eur vs 1.1749/eur yesterday.           Yen 113.83/$ vs 113.65/$.         SAr 13.746/$ vs 13.721/$.        
$1.312/gbp vs $1.320/gbp.        0.772/aud vs 0.779/aud.            CNY 6.641/$ vs 6.635/$.

Commodity News
Precious metals:
Gold US$1,274/oz vs US$1,280/oz yesterday
• The dollar inched higher amid growing speculations over the next U.S. Federal Reserve chief selection of Stanford University economist John Taylor. U.S. President Donald Trump used a lunching opportunity to assess Senate Republicans opinions of the hawkish favoured candidate Taylor or current Fed Governor Jerome Powell. The market reacted favorably to the news, with Taylor supporting higher interest rates which would boost the dollar, equities and bond yields (rising to their highest in more than five months yesterday). The news also fuels the ongoing possibility of a third interest rate hike at the end of the year.
• Improving market appetite also rose off stronger-than-expected corporate earnings results, driving gold prices toward October lows of US$1,260.16.
   Gold ETFs 69.5moz vs US$69.5moz yesterday
Platinum US$918/oz vs US$924/oz yesterday
Palladium US$958/oz vs US$966/oz yesterday
Silver US$16.89/oz vs US$17.07/oz yesterday
Base metals:   
Copper US$ 6,992/t vs US$7,082/t yesterday
• Copper price faced resistance against a strengthening dollar index boosted by speculations of a hawkish Fed Reserve chief election John Taylor, who would favour higher interest rates.
• The International Copper Study Group identified diminishing market deficit moving into 2018, with current 151,000 tonnes this year contracting by 45% to 104,000 tonnes.
• A remarkable increase in bullish bets in Chinese copper futures is orchestrated by a single private coal mining industry investor in Shanxi province who are betting on strengthening global copper demand on the back of carbon-reducing technologies.
Aluminium US$ 2,153/t vs US$2,144/t yesterday
• China’s ongoing war on smog is expected to cut 30 percent coal power plant production of aluminium in an effort to promote “blue skies”. Aluminium demand is rapidly matching the electric vehicle growth as automotive manufacturers look to reduce weight in a bid to extend range. The impact of the winter output limitations across the world’s largest producer and exporter of semi-manufactured aluminium products are unclear, with potentially significant disruptions to global supply chains as up to 1 million tonnes of production is at potential risk.
Nickel US$ 11,865/t vs US$11,985/t yesterday
• Global nickel market balance is expected to remain in deficit for the third consecutive year, as demand from the stainless steel industry and nickel-hosting batteries expands. The International Nickel Study Group noted a 5% rise in demand moving into 2018, increasing to 2.259 million tonnes. Despite rising 7.5%, supply still falls behind the forecast demand with a market deficit of 53,000 tonnes next year. INSG identify the rapidly accelerating emerging market for electric vehicle batteries responsible for the tightening global market.
• The removal of a three-year ban on raw material exports in Indonesia has allowed state-controlled PT Aneka Tambang Tbk (Antam) to receive a recommendation for supplementary 1.25 million tonnes of nickel ore exports over the next 12 months, in addition to the awarded 2.7 million tonne allocation from April. Chief Executive Arie Prabowo Ariotedjo reported “demand is good and prices are high”, with the additional ore having already found buyers in China.
Zinc US$ 3,153/t vs US$3,157/t yesterday
Lead US$ 2,459/t vs US$2,499/t yesterday
Tin US$ 19,750/t vs US$19,735/t yesterday
Oil US$58.5/bbl vs US$57.4/bbl yesterday
Natural Gas US$2.984/mmbtu vs US$2.990/mmbtu yesterday
Uranium US$20.20/lb vs US$20.15/lb yesterday
Lithium - AVZ Minerals to start drilling world class lithium project in Africa
• Entered into contract to complete initial 20,000m of drilling at Manono Lithium Project in Democratic Republic of Congo – expected to take 3 months to complete
• Initial drill results indicate could be one of largest hard rock surfaces of lithium in the world

Iron ore 62% Fe spot (cfr Tianjin) US$62.9/t vs US$61.7/t - China’s iron ore imports from North Kora sink after U.N. Sanctions
• Imports of iron ore and lead concentrate plunged to lowest in 6 years after penalties came into force banning Pyongyang from selling iron ore, coal and lead ore abroad
• Iron ore shipments plunged 98% and lead ore 84%
Chinese steel rebar 25mm US$634.1/t vs US$634.1/t
Thermal coal (1st year forward cif ARA) US$85.0/t vs US$82.8/t - Ukraine plans to raise coal imports from US as shortages loom
•  Winter coal stocks have dropped to lowest in 3 years after main coal producing regions now controlled by pro – Russian separatist groups had shut down trade with rest of country
• DTEK, largest private power producer said would import 150,000 mt of US thermal coal
Premium hard coking coal Aus fob US$177.9/t vs US$177.9/t

Tungsten APT European US$280-285/mtu vs US$280-285/mtu last week

Company News
Rio Tinto (LON:RIO) – 3540p, Mkt Cap  £65.1bn – SEC goes after Rio Tinto in relation to Riversdale
• Court papers issued by the Southern District of New York court show details of the SEC vs Rio Tinto, its former CEO and CFO.
• The papers concern “a course of deceptive conduct, a fraud, by Rio Tinto” and the rapid and dramatic decline in value of the Riversdale coal business.
• The papers describe much of what we already know about the reasoning for buying the business and the reasons for its sale as an embarrassing failure.
• The SEC suggests that Albanese and Elliott bypassed a number of internal controls to buy the business and that they had been “reckless and profligate” with shareholder capital.
• The papers go on “Defendants engaged in a series of misrepresentations, misleading omissions and deceptive acts to conceal from the market RTCM’s devastating loss in value” and their own terrible decision to acquire RTCM for more than $3bn.
• While we agree the decision to buy RTCM was a bit of a disaster we believe Albanese was under pressure to show he could do a deal which might look better than the Alcan acquisition.
• We recall, at the time, Rio’s business was recovering from the ‘Sub-Prime’ crisis caused by the miss-selling of US mortgages and near collapse of the US and global banking systems.
• Albanese is alleged to have been convinced that Riversdale could produce and ship some 30mtpa of coal by 2020 rising to 45mtpa by 2030 and that much of this would be high-quality coking coal which is now selling for a significantly higher price than thermal coals.
• The plan was to barge the coal down the Zambezi and trans-ship from there which sounds simple but was always going to be fraught with issues.
• The plan failed on two major points:
o First, the coal reserves were not such good quality or as consistent as first thought which makes us question what representations were made by the Riversdale board.
o In fact the whole Moatize coal belt is characterised by difficult and poor quality geology, and low grade coal. Far from being the great repository of coking coal claimed, barely 5% of the coal in resource had coking properties, albeit at high strip ratios, and then the washing yield on that to a saleable (sub10% ash air dried) quality typically ranged around 20-25% - extremely low and sub economic. Even then, for the high selling index, the product was not a particularly good coking coal.
o Second, the proposal to barge quantities of coal down the Zambezi met with a number of fairly obvious objections.  The zambezi has never been easily navigable from our simple perspective and we believe there are a number of studies which share this view.
• We are only simple mining analysts at SP Angel but we recall our bemusement at the news of Rio’s purchase of Riversdale and the colossal sum paid for the assets which makes us wonder why Rios never went after the Riversdale board and their consultants in relation to representations made in relation to the sale.
• The implications of this are many and troubling:
o There are issues relating to the extent and quality of the coal with potentially helpful “independent” geologists signing off geological models that, we wonder why others have not questioned the several independent geological experts and their reports. We understand that a number of executives who raised issues may have been ignored and subsequently left Rios and that at least one Sydney based analyst who spotted that the narrative was not accurate, may have been subject to a complaint by Riversdale demanding his retraction or dismissal which is employer to their credit refused to do.
o Riversdale management, board and shareholders nevertheless made off with substantial money – and we wonder why no authority has launched an investigation into what some may conceivably describe as potentially fraudulent actions. Not quite on the scale of Bre-X but certainly worthy of some investigation.
• The extraordinary thing is that the same team have a new coal company based on coking coal assets a long way from the port in Alberta, Canada. Almost unbelievably the company is called, you guessed it “Riversdale Resources” which proves that hubris is alive and well.
• We note that set against the billions being in other parts of the group that the Riversdale deal was a relatively small issue, though it was a massive embarrassment from start to finish.
• While we see the timing of the Riversdale collapse as unfortunate in relation to the bond fund raising mentioned by the SEC we feel this is particularly unfair as the Riversdale writedown was a relatively minor issue when compared with the billions in cash flow at stake in relation to capital investment in other parts of the business and movements in iron ore, copper, aluminum and coking coal prices.
• It is interesting that the SEC, is an organisation with oversight of the Sub-prime and Global Financial crisis as well as the collapse of Lehman Bros, all of which wiped billions off the market capitalisation of Rio Tinto causing it to refinance at the expense of its shareholders.  That the SEC is now coming after the company in relation to what we see as a relatively minor issue by comparison is an interesting turn of events.
• We look forward to seeing Rio Tinto’s robust repost to the SEC if it is ever published and if the SEC might also look further into the representations made by Riversdale to Rio Tinto at the time.

Phoenix Global Mining* (LON:PGM) 4.1p, Mkt Cap £9.5m – Cobalt-copper exploration licenses secured
• The Company secured two copper cobalt licenses along the Idaho Cobalt Belt in close proximity to historical operations and current development projects.
• Bighorn license (2.3km2) includes 29 lode unpatented claims and is located 22 miles NW of the local town called Cobalt which is 130m north of the Empire Mine.
• The asset is adjacent to the previously producing Salmon Canyon copper cobalt mine, while Cobalt Solutions, a TSX listed explorer/developer, is currently working on the ICP project in the area with having just completed the FS and targeting production in 2020.
• Redcastle license (2.4km2) consist of 30 lode unpatented claims and is located 11 miles NE of Cobalt.
• The property is located next to the Iron Creek Mine project currently held TSXV listed US Cobalt.
• Both licenses are reported to have good road access and are found on a single NW/SE trending cobalt rich part of the Idaho Copper Belt.
• Licenses are held by the wholly owned subsidiary Borah Resources with the management having set early exploration budgets in 2018 to identify drilling targets.
• “The geological team based at the Empire Mine identified these properties following their previous experience of working on the Cobalt Belt north of the Empire Mine and were aware of highly prospective areas that had not yet been claimed by the Canadian juniors who currently dominate this historic copper-cobalt belt,” the Company commented on the announcement.
Conclusion: Acquisition of licenses secures claims to copper-cobalt properties along the prolific trend of cobalt mineralisation of the Idaho Cobalt Belt and provides exposure to the commodity supplied in the rapidly developing market for electric vehicles’ batteries.
*SP Angel acts as Nomad to Phoenix Global Mining

Stratex International* (LON:STI) 1.1p, Mkt cap £5.3m – Stratex board taking desperate steps in attempt to stave off sacking
Crusader (CAS AU) A$0.09, Mkt cap A$27.1m
(Stratex’s offer: 6.6 new Stratex shares for each Crusader share giving Crusader shareholders 81% of the enlarged company and valuing Crusader at A$0.127/s)
(Thani Stratex merger proposal gives Stratex shareholders 56% of the new group, see Thani Stratex presentation for more details)
• The Rebel leaders/shareholders against Stratex have published details of what looks to us like a better proposal for Stratex Shareholders.  See presentation in link below:
• - we recommend you click down to the third presentation for the Thani Stratex proposal.
• The Rebels are proposing to merge Stratex in with Thani Stratex in which Stratex already holds a significant stake.
• Merging Thani Stratex with Stratex makes great sense from a shareholder perspective to us as it consolidates the group and gives Stratex shareholders 56% of the enlarged group structure.
• There is no premium to be paid as the proposal is priced at the same valuation at which other major investors put money in earlier this year.
• If anything this now represents a discount as value has been added through work done on the properties though much cash remains within Thani Stratex.
• Crusader shares are currently trading on the ASX at a significant discount to the Stratex offer indicating that Crusader shareholders are desperate to get out of the stock before the deal even goes through or goes sour as looks likely to us.
• The new merger proposal with Thani Stratex is as fair as you are going to get from our perspective and it looks a whole lot better than paying a 63% premium on Crusader shares and suffering 81% dilution for a low grade gold asset in Brazil and an unproven exploration project in a country where Stratex has had no previous infrastructure.
• Better still, the assets in Thani Stratex are developing well and their cash demands should not overstretch Stratex’s cash resources as they stand.
• Thani Stratex also has cash and unlike Crusader does not need loans from Stratex to enable its auditors to sign off on the company as a going concern.
• Crusader appears to be on the verge of insolvency with its auditors only able to sign off on the company as a going concern with the support of loans from Stratex or some other lender/funder.
• Thani Stratex has a small but good quality management team of well-respected directors including Graham Brown, a former group head of Exploration at Anglo American.
• The Thani Stratex assets look promising and offer good value from our perspective as well as a route to future mine development.
• Curiously we are told that no director of Stratex has bothered to visit the assets despite Stratex’s 30% stake in the business.
• Thani Stratex’s Egypt and Djibouti projects have been more recently visited by executives from mid-tier and major companies who continue to support the projects due to their future potential.
• These are seen as relatively low risk and low capex assets include former mines with the added potential for tailings retreatment which can be simply processed using modular plant
• The board of Stratex are apparently offering to pay the proxy fees for shareholders offering to vote against Resolutions proposed by the rebel shareholders according to a posting on the advfn bulletin board.
• We repeat, “for shareholders voting against the resolutions”.  No one we know can ever remember this sort of targeted inducement in relation to a listed company and we question the appropriateness of this sort of behaviour.
• At the very least this must surely contravenes some form of corporate governance practice?
Conclusion: We conclude that Thani Stratex are offering a fairer, better priced and more appropriate deal for shareholders which should lead to the lower risk generation of shareholder value with lesser dilution and potentially greater upside potential.
The Stratex General Meeting will be held at the offices Grant Thornton UK LLP, 30 Finsbury Square, London EC2P 2YU at 9.30 a.m. on 1 November 2017.
Latest time and date for receipt of Forms of Proxy for the General Meeting is 9.30 a.m. on 30 October 2017
*SP Angel are completely independent with regard to Stratex, Thani Stratex, Crusader Resource or any of their directors, staff and advisors.

Wed, 25 Oct 2017 10:56:00 +0100