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Today's Market View - Amur Minerals Corporation, Galantas Gold Corp, Georgian Mining Corporation, Perseus Mining, Wolf Minerals, FinnAust Mining

Today's Market View - Amur Minerals Corporation, Galantas Gold Corp, Georgian Mining Corporation, Perseus Mining, Wolf Minerals, FinnAust Mining

Amur Minerals* (LON:AMC) – Kun Manie resupply in progress using new winter ice road
FinnAust Mining* (LON:JAY – formerly FAM LN) – FinnAust confirms change of name
Galantas Gold (LON:GAL) – Start of underground development at Omagh mine
Georgian Mining* (LON:GEO) – Gold oxide resource potential defined in drilling at Kvemo Bolnisi East
Minera IRL – Reassessing finance options for Ollachea
Perseus Mining Limited  (ASX:PRU) – Debt funding for Sissingue and Edikan
Wolf Minerals (LON:WLFE) – Release of £10m of RCF Bridging Finance

FCA – we wish to thank the FCA for digging their heels in on MiFID II and insisting on granularity in what asset managers pay for with their research commissions.

We never mention the FCA as a rule in our work except in our legal disclaimers but we feel compelled in this case to congratulate the FCA for their evident determination in bringing in MiFID II. See link below:

www.fca.org.uk/news/news-stories/firms-continue-fail-meet-our-expectations-use-dealing-commission

We can only wish they had brought it in sooner.

Research commissions have been bound into trading commissions for too long confusing what is being paid for and to whom.

The direction of payments is also confused by the requirement for best execution when dealing which means that firms are only rewarded if their dealers are offering the best price in the market for a particular stock.  This often excludes many smaller firms and is essentially anti-competative.

The bundling of research, trading and maybe some other sorts of commissions has enabled many funds to escape paying anything much for research while ‘possibly’ enjoying other benefits, sometimes alcoholic, sometimes some other.

In conclusion, we agree with the FCA.  The existing system is chronically unfair, hugely favours the bigger banks and their mates and is open to suspicion of abuse.

We hope the application of MiFID II leads to research being paid for on a ‘pay-per-view’ basis and that many asset managers which have long avoided paying anyone other than their mates will be forced into rewarding analysts and teams who provide the best ideas for their trading.  We hope a transparent audit trail will accompany the process to show up the firms which fail to pay.

 

Elon Musk offers to fix Australian power network problems in 100 days

Tesla reckons it could install 100-300MW of battery storage in 100 days.

If the scintillation is not ready within 100 days of signature then the facility will be for free.

A tweet associated with the story quotes a price of $250/kWH for 100MWh+ systems

Tesla is moving to fixed and open pricing and terms for all products

Methinks Tesla must have some spare batteries lying around or at least a lot of idle battery manufacturing capacity.

 

Lithium – ban on lying lithium batteries likely to restrict sales

New rules on flying lithium batteries by air by the International Civil Aviation Organisation may limit some sales though given the strong growth forecast in lithium demand we suspect no one will much notice.

 

Lithium Nevada Corp – to mine deep clay material for lithium

David Deak, president of Lithium Nevada and chief technology office at Lithium Americas Corp, its subsidiary is working on the future development of lithium from deep clay material.

The company is currently mining overburden for the RheoMinerals plant in Fernley, mainly for drilling mud (Elkodaily).

“The Nevada Division of Minerals is behind a bill, AB 52, that would make it easier to explore for lithium in Nevada, but the bill targets exploration for lithium in brine so it involves water rights.”  The bill does not really apply to clay extraction.

The interesting part of this story is that the company is going for clay and not for lithium bearing brines.

 

Gold is up slightly this morning after slipping below the $1,200/oz level on Friday following good employment numbers released in the US.

Markets are currently pricing a 100% chance of a Fed rate hike on Wednesday.

Euro is flat against the US$ after rallying nearly one percent on Friday when ECB authorities were said to have considered a scenario of raising rates before ending a bond-buying programme.

Netherlands are holding general elections later this week (Wednesday).

The BoJ and BoE are expected to keep monetary policies unchanged this week (both announcements are due this Thursday).

Weaker US$ and senior Chinese official comments over strong pace of economic growth in Jan-Feb/16 see base metals prices higher.

Iron ore futures prices are trading lower at the lowest level in over a month.

 

 

US – The economy added more jobs than forecast in Feb strengthening the case for a rate hike expected to by announced by the FOMC this Wednesday.

Industrial sector including mining, construction and manufacturing added 95k jobs last month, marking the highest since 2000.

Construction sector, in particular, recorded good month benefiting from warmer than normal weather conditions.

Unemployment rate fell 0.1pp to 4.7% while labour participation rate improved by the same amount to 63.0%.

In addition, earnings growth continued at a strong pace (+2.8%yoy).

 

 

China – Industrial production showed a strong start to the year, according to senior Chinese officials.

The sector grew more than 6% while the services sector expanded over 8%, head of the National Bureau of Statistics.

Power generation, electricity demand and rail freight all posted strong growth; whereas coal and steel industries recorded output declines amid a government drive to root out overcapacity.

 

UK – The pound is up this morning as the government prepares to launch Article 50 following the review in the House of Commons due later today.

Should the bill pass the lower house without amendments, PM is likely to secure the backing of the House of Lords and announce the start of the process to leave the EU during her address to MPs on Tuesday.

 

Iran – Union Capital Limited zinc mine in Iran sees new $1bn deal with IMIDRO

A consortium of Iranian companies have signed a $1bn deal with the Iranian Mines and Mining Industries Developmetn and Renovation Organisation.  It is not clear if Union Capital is a part of the deal to develop the Mehiabad zinc project in Iran.

 

Philippines – President Duterte blames miners for environmental issues at televised briefing in Manila.

“Look at what mining does to our country,” President said referring to denuded forests and water contamination in mining areas.

“Maybe its worth for Gina to impose the ban”.

 

Vietnam – tin tailings collapse spills 100m3 of mud and waste water into Nam Huong stream

A tailings dam collapse into the Nam Huong stream in Vietnam killing fish and polluting the environment.

The collapse demonstrates how mining companies need to adhere to stricter standards with respect to tailings impoundment.

 

Currencies

US$1.0674/eur vs 1.0617/eur last week.   Yen 114.59/$ vs 115.40/$.   SAr 13.134/$ vs 13.277/$.   $1.222/gbp vs $1.217/gbp.

0.758/aud vs 0.753/aud.   CNY 6.909/$ vs 6.918/$.

 

Commodity News

Precious metals:        

Gold US$1,210/oz vs US$1,197/oz last week

   Gold ETFs 58.1moz vs US$58.5moz last week

Platinum US$946/oz vs US$939/oz last week

Palladium US$752/oz vs US$746/oz last week

Silver US$17.13/oz vs US$16.88/oz last week

          

Base metals:  

Copper US$ 5,800/t vs US$5,708/t last week

Aluminium US$ 1,886/t vs US$1,892/t last week

Nickel US$ 10,060/t vs US$10,095/t last week

Zinc US$ 2,760/t vs US$2,693/t last week

Lead US$ 2,282/t vs US$2,253/t last week

Tin US$ 19,360/t vs US$19,315/t last week

          

Energy:          

Oil US$51.2/bbl vs US$52.5/bbl last week

Natural Gas US$3.056/mmbtu vs US$3.006/mmbtu last week

Uranium US$24.50/lb vs US$25.25/lb last week

          

Bulk:  

Iron ore 62% Fe spot (cfr Tianjin) US$79.5/t vs US$80.9/t

Chinese steel rebar 25mm US$564.3/t vs US$570.0/t

Thermal coal (1st year forward cif ARA) US$65.2/t vs US$64.5/t last week

Premium hard coking coal Aus fob US$159.4/t vs US$161.0/t

          

Other: 

Tunsgten APT European US$212-217/mtu (from the 10Mar week) v US$210-217/mtu (from the 03Mar week)

 

Company News

Amur Minerals* (LON:AMC) 7.2p, Mkt Cap £43m – Kun Manie resupply in progress using new winter ice road

The Company completed the construction of the winter ice road through 18-22 Feb with nearly 40% of supplies ahead of the 2017 field season having been delivered to the Kun Manie site.

A total of 360t of fuel and 220t of supplies, spares and food are expected to be transported from the BAM Ulak station to the project.

“We are on schedule and anticipate the successful completion of the full resupply of the site… (with) the current -4 to -7 C temperatures work in our favour,” the Company said.

New equipment including a Caterpillar dozer and an excavator as well as a water well drill rig are at the Ulak rail siding and are getting prepared to be delivered to the site.

The team is planning to complete a minimum of 15,000m this season focusing on infill drilling at Kubuk and completing a set of step out drill holes at both Kubuk and Ikenskoye.

Kubuk currently hosts 10.9mt at 0.74% Ni and 0.20% Cu for 81kt nickel and 22kt copper in-situ in Inferred Mineral Resource category, accounting for nearly a half of Kun Manie Inferred Resources.

*SP Angel act as Nomad and broker to Amur Minerals

 

FinnAust Mining* (LON:JAY – formerly LON:FAM) 8p, Mkt Cap £49.88m – FinnAust confirms change of name

BUY Target Price 15p

FinnAust Mining has confirmed the previously announced change of name to Bluejay Mining plc takes effect from today.

The original Bluejay Mining held the license for the Pituffik ilmenite project in Greenland which has since driven the value of FinnAust shares with relatively little activity ongoing on FinnAust’s Finnish licenses due to slow progress in Finland and the relatively low nickel price seen in recent years.

*SP Angel act as nomad and broker to Bluejay Mining / FinnAust

 

Galantas Gold (LON:GAL) 7.625 pence, Market Cap £11.0m – Start of underground development at Omagh mine

Galantas Gold has announced the start of underground development at its Omagh gold mine in Northern Ireland where “The initial works are for the formation of a portal (initial tunnel entry area) in the western side wall at the base of the Kearney open pit.”

This will enable tunnelling to access ore beneath the base of the open pit mine and the company expects that it will reach the ore “within 6 months” though we would expect it to take somewhat longer before ore can be delivered for treatment as the underground development will need to prepare operating stopes for ore extraction.

Commenting on the start of the underground mining development at the mine, Roland Phelps, President and CEO of the company said “This is an important milestone in the development of the Omagh underground gold mine. We are pressing ahead with mine development, in accordance with our planning permission. We await a judgement on the judicial review of that permission, for which no date has yet been advised to us. So far, we have boosted our local workforce to 17, including some former colleagues, who were previously laid off during planning delays."

Conclusion: As work progresses to access underground ore at Omagh, the resolution of the judicial review concerning planning permission must assume a high priority and we await news of the legal timetable

 

Georgian Mining* (LON:GEO) 11.5p, Mkt Cap £9.2m – Gold oxide resource potential defined in drilling at Kvemo Bolnisi East

STRONG BUY

Recent gold assays from drilling and trenching at Kvemo Bolnisi East shows potential to define new gold resources.

14 quick drill holes to a depth of just 20m show:

20m @ 2.2g/t Au from 0.0m to 20.0m

14.2m @ 2.00g/t Au from 5.0m to 19.2m

12m @ 1.29g/t Au from 8.0m to 20.0m

20m @ 0.74g/t Au from 0.0m to 20.0m

Within this peak grades from individual drill samples include

82.1g/t Au (0.25m sample),

7.31g/t Au (1.0m sample),

7.12g/t Au (1.5m sample), and

6.61g/t Au (1.0m sample)

These indicate the presence of high-grade gold- bearing structures as part of the overall gold mineralized zone

Former channel rock sampling results returned peak intervals including:

23.95m @ 3.19g/t Au

98.75m @ 1.19g/t Au

96.8m @ 0.80g/t Au

114m @ 0.49g/t Au

52m @ 1.04g/t Au

22m @ 1.50g/t Au

4m @ 15.63g/t Au

 

Conclusion:  Drilling shows potential for a near-surface gold resource at Kvemo Bolnisi East which could be simply processed at the near-by Madneuli heap leach operation.  We look forward to Georgian Mining publishing further information on details of the joint venture arrangement for processing copper and gold ores.

*SP Angel acts as Nomad and Broker to Georgian Mining.

 

Minera IRL – Reassessing finance options for Ollachea

Minera IRL is to reassess its options for the debt financing of its proposed 100,000oz pa Ollachea gold project in Peru following a change in strategy by the preferred lender, Cofide, to focus on small and mediuam scale industry.

Cofide “has advised that it has revoked the mandate to exclusively structure the senior debt to a maximum of US$240 million for the development of the Ollachea gold project in Puno, Peru.”

Minera IRL Director, Diego Benavides is quoted saying "We are confident of being able to obtain the necessary investment to develop Ollachea on shareholder-friendly terms. We anticipate being able to bring news of further developments to the market in the near future."

A 2014 study reported on the company’s website indicated that the proposed development of Ollachea generates a US$277m real NPV of US$277m a nd a real IRR of 37.1% with a project payback within 2.4 years.

Conclusion: The strategic change at Cofide has led them to withdraw, however the project economics of Ollachea appear sufficiently robust that alternative sources of finance should be available

 

Perseus Mining Limited  (ASX:PRU) – A$0.345 Mkt Cap A$356.6m - Debt funding for Sissingue and Edikan

Perseus Mining has announced that it has secured a total of US$60m of debt funding from Macquarie Bank.

Macquarie is to provide US$40m of project finance to the US464m development of the Sissingue gold mine in Cote d’Ivoire with the balance of the funding sources from Perseus Mining’s internal cash resources. Sissinngue is expected to start production in early 2018.

The company’s Edikan gold mine in Ghana is also to receive a US$60m debt facility from Macquarie in order to ramp up production to around 250-290,000 oz pa following the completion of plant upgrades in October 2016.

The company is also working to complete a definitive feasibility study on the development of the Yaoure gold mine during the September quarter, 2017. Yaoure formed part of the suite of assets acquired with Amara Mining in April 2016.

Conclusion: We look forward to further news on the progress at Sissingue and on the feasibility work for Yaoure.

 

Wolf Minerals (LON:WLFE) 4.75p, Mkt Cap £51.5m – Release of £10m of RCF Bridging Finance

Wolf Minerals has announced that it has received confirmation from Resource Capital Funds (RCF) “that the release of a further £10 million from the secured bridge loan facility … up to a maximum £30 million, has been approved on the same terms as previously announced.”

As the company continues to work on improving process recovery at the Drakelands tungsten mine, it has requested the additional financial support from its principal shareholder  in order to “support short term working capital, whilst additional funding requirements are developed for long term self-sustainable operations at Drakelands.”

The benchmark ammonium paratungstate (APT) price has shown some recovery in recent weeks with the European APT price reaching US$212/217 per metric tonne unit on Friday. Although this is still well below the prices of over $400/mtu enjoyed during the period 2011-2013, it is, as Wolf’s Managing Director, Russell  Clark, points out an improvement of “some 40% in the last 12 months.”

Conclusion: We expect that as mining moves deeper at Drakelands the process plant feed will contain progressively lower proportions of the weathered ore which appears to be impairing recovery rates and we therefore expect a gradual improvement in operating performance. A continuing improvement in APT prices would benefit revenues and in the meantime, the continuing support of its major shareholder gives Drakelands the breathing space to implement remedial measures.

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