Proactive Investors - Run By Investors For Investors

Today's Market View - Altus Strategies, Botswana Diamonds, Phoenix Global Mining Ltd, Petropavlovsk PLC

Today's Market View -   Altus Strategies, Botswana Diamonds, Phoenix Global Mining Ltd, Petropavlovsk PLC

Altus Strategies* (LON:ALS) – Agdz copper silver project reconnaissance trenching update

Petropavlovsk* (LON:POG) - Interims

Botswana Diamonds (LON:BOD) – Exploration update on S African joint-venture

Phoenix Global Mining* (LON:PGM) – Further drilling results from Empire

 

121 Mining Investment Conference 27-28 November 2017 – London

• SP Angel are sponsoring the 121 Mining Investment Conference in London on Monday 27 and Tuesday 28 November.  .

• The event works well from an investor meeting perspective and we advise investors and directors register quick to ensure they get a place in the 121 meeting planner

• Please contact me for further details. 

 

Miners are marginally stronger today on the back of higher iron ore and coking coal prices while base metals and precious metals trade lower today.

• Gold is retreating trading around $1,350/oz as geopolitical concerns subside and risk appetite increases with S&P 500 hitting new record high.

• The US$ index is holding up to its gains rebounding from a multi year low earlier this month.

• Brent is weaker today giving some of its gains reported through September when US refineries reported restarting operations post Hurricane Harvey related temporary closures.

• Irma is said to have left seven million Americans without power with the storm expected to drop 8-15 inches of rain in parts of northern Florida as it moves up the coast.

• Steel rebar futures in Shanghai are up for the first day in five as investors see support from demand through the rest of the year, Bloomberg reports.

 

China deliberately moving to refocus economy on new, more efficient growth and away from old heavy industrial model.

• Comments published by Damien Ma, a fellow and associate at the Paulson Institute indicate that China is looking to develop a more modern service-orientated, domestic consumption and more efficient economy.

• He comments that there is a deliberate effort to really slow down the Chinese economy as it moves away from the old, heavy industrial model..

• China is aiming for 6.5% GDP Growth through to 2020 and to make china a high-income country by 2049 according to Ma who was talking at the ISRI Commodities Roundtable Forum in Chicago.

• China observers will note that 6.5% is less than 8.4% seen in 2010-2015 and slightly slower than 6.8% from 2015 to today (YTD).  The lower GDP target still reflects amazing growth for the world’s second largest economy.

• The pattern of development effectively follows other now advanced developing nations.  Eg Japan, South Korea and others, the difference being the Centralist Communist Government and its clear focus on strategic planning.

• Pollution is a key and immediate driver given the horrendous damage done to the environment in China and the urgent need to improve air quality particularly through the winter months.

 

China restricting exports of key industrial commodities as it moves to better balance rising domestic demand with internal production

• The move is causing prices of many industrial commodities to rise.

• Tungsten prices are continue to rise as China seen enforcing export quotas.

• Vanadium prices have risen on new regulations requiring more ferro-vanadium in rebar.

• Rare Earth Element prices rising on rising demand and an end to the destocking seen in recent years since the end of a number of failed collective investment schemes.

• The EU asked the WTO to look into Chinese export restrictions on Antimony, ferrochrome, cobalt, indium, copper, ferro-nickel, graphite, lead, tantalum and tin.

• We believe all the above metals are also seeing supply disruption caused by the enforcement of new environmental regulation on furnaces and on polluting mines.

 

China considering banning production of combustion engine vehicles to force producers and consumers to go electric. 

• Adding up the potential rise in electrical power demand to run the new generation of electric vehicles indicates a marked increase in the consumption of copper.

• Increasing demand is expected for cables in new Electric Vehicles as well as in the instillation of new charging points and for cabling to ensure sufficient power capacity to feed millions of new charging stations.

 

Lithium - Lithium ETF prices surged to new 6-year high on expected demand growth for lithium batteries after China announced commitment to EV only future

• Demand for lithium is expected to surge more than 30x 2030 as world shifts towards EV and industry standardizes on lithium-ion batteries

• Fears of shortage has already caused lithium carbonate prices to triple in China requiring more mines to support production

 

Tanzania - authorities block parcel of diamonds worth $29.5m claiming that Petra has under declared its value

Petra Diamonds may be left with no choice but to close the Williamson Diamond mine following a move to block the export of diamonds from the mine.

• Problem is that the provisional valuation of the diamonds is performed by the government’s own diamond and gemstone valuation agency.

• There is no reasonable way a diamond mining company can operate if its sales are impeded in this way and Petra’s Williamson diamond mine may not have sufficient funds to pay local staff and suppliers.

• While Acacia has alternative sources of income, Petra has no such fall back leading to potential mass redundancies.

• The move presents a worrying escalation in the aggressive approach the president is taking in relation to mining companies.

• Tanzania would do well to note the collapse of the Zambian copper industry which was caused by it’s nationalisation by President Kaunda

 

America First – Hurricanes Second

• Gun owners in the US have been advised not to shoot the storms.

• Graphics show bullets fired into Hurricane Irma being carried high by the storm winds before falling back to earth with potentially fatal consequences.

• It would be interesting to know the odds of being hit by your own bullet if you fired it directly into a storm cell, though it is probably allot less than shooting an Armadillo, another US pastime.

 

Dow Jones Industrials  +1.19% at   22,057

Nikkei 225   +1.18% at   19,777

HK Hang Seng   +0.05% at   27,968

Shanghai Composite    +0.09% at    3,379

FTSE 350 Mining   +0.12% at   17,718

AIM Basic Resources   -0.46% at    2,568

 

Economics

Currencies

US$1.1975/eur vs 1.2006/eur yesterday.   Yen 109.56/$ vs 108.50/$.   SAr 12.909/$ vs 12.938/$.   $1.321/gbp vs $1.319/gbp.     

0.805/aud vs 0.804/aud.   CNY 6.529/$ vs 6.519/$.

 

Commodity News

Precious metals:

Gold US$1,327/oz vs US$1,337/oz yesterday - Scientists have created a new wonder material that changes between mirror and window using gold nanoparticles

   Gold ETFs 68.6moz vs US$68.5moz yesterday

Platinum US$991/oz vs US$1,004/oz yesterday - Enzymes compete with platinum in new fuel cell

• Researchers succeeded in making an enzymatic fuel cell that is as good as fuel cells that work using platinum catalysts – make cheaper alternatives to fuel cells that require rare and expensive metals

Palladium US$944/oz vs US$949/oz yesterday - Palladium thought to be benefiting from strong Chinese car sales data due to its use in catalytic converters, though forecasts are for sales to fall

Silver US$17.79/oz vs US$17.85/oz yesterday

           

Base metals:   

Copper US$ 6,729/t vs US$6,735/t yesterday - Copper Prices bounce back from correction

• Three month copper price fell by over $200 at the end of last week but trading back at above $6,700/t this morning as inventories continue to fall.

• Rising electric vehicle production and renewable energy systems are expected to keep demand for copper at elevated levels.

Aluminium US$ 2,127/t vs US$2,128/t yesterday

Nickel US$ 11,720/t vs US$11,635/t yesterday - Sherrit International considers Nickel for Battery market

• One of worlds largest producers of Nickel looking to build plant to produce nickel sulphate a substance that can be used in batteries – main component of lithium ion batteries nickel

• BHP Billiton, world’s largest mining house planned to spend $43 million on repositioning its nickel business around batteries

Zinc US$ 3,090/t vs US$3,097/t yesterday

Lead US$ 2,277/t vs US$2,283/t yesterday

Tin US$ 20,705/t vs US$20,630/t yesterday

           

Energy:           

Oil US$53.7/bbl vs US$53.8/bbl yesterday

Natural Gas US$2.961/mmbtu vs US$2.923/mmbtu yesterday

Uranium US$20.65/lb vs US$20.75/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$72.3/t vs US$71.9/t

Chinese steel rebar 25mm US$664.4/t vs US$664.5/t

Thermal coal (1st year forward cif ARA) US$80.9/t vs US$80.5/t

Premium hard coking coal Aus fob US$209.4/t vs US$209.4/t

 

Other:  

Tungsten APT European US$310-335/mtu vs US$285-300/mtu

 

Company News

Altus Strategies* (LON:ALS) 10.1p, Mkt Cap £10.9m – Agdz copper silver project reconnaissance trenching update

• Exploration team completed a series of trenches at the Agdz Cu-Ag project located in central Anti-Atlas of Morocco and 14km south west from the newly opened Bouskou Cu-Ag operated by Group Managem.

• 275m trenching programme was done over two targets – Amzwaro and Makarn, – with a combined strike length of c.4km and widths up to 0.5km.

• Completed to an average depth of 0.5m, trenches targeted bedrock below a weathered material and guided by previously ddone ground magnetics and high grade surface samples.

• Trenches confirmed the presence of multiple alteration and breccia zones as well as oxide and sulphide copper mineralisation.

• One of the trenches at Makarn showed disseminated and vein-hosted copper oxide and copper sulphides over 14.8m with channel samples completed over 1m intervals returning grades of 0.2% Cu.

• At Amzwaro 237m have been completed with one done over 192m demonstrating “a series of weathered, highly altered, brecciated and fractured zones in packages over widths of up to 33m” with copper oxides and sulphides recorded having been near absent at surface.

• The Company is planning to continue with reconnaissance trenching through Q4/17 in the area combined with detailed structural and alteration mapping to identify most prospective drill targets.

Conclusion: Exploration works continue at the two most advanced targets across the Agdz copper silver project in Morocco where the exploration team is trench testing previously identified structures and alteration zones.

*SP Angel act as Nomad and Joint Broker to Altus Strategies

 

Petropavlovsk* (LON:POG) 7.2p, Mkt Cap £235m - Interims

• Revenues up 20% at $304m (H1/16: $254m) on the back of higher gold sales (231.8koz v 195.4koz in H1/16) and stronger realised gold price ($1,255/oz v $1,194/oz in H1/16).

• H1/17 gold sales benefited from the release of gold in circuit which amounted to 50.8koz across four operations.

• Forward gold contracts covering 100koz that matured in H1/17 contributed $2.8m (H1/16: -$5.5m) to cash revenues with another 500koz at an average price of $1,252/oz outstanding as of 30 Jun/17.

• TCC and AISC came in at $675/oz and $965/oz (H1/16: $663/oz and 762/oz) driven by an appreciation in the rouble against the US$, local inflation and weaker recoveries at Pioneer and Malomir.

• AISC totalled $965/oz (H1/16: $762/oz) including higher sustaining capex ($21.3m (incl sustaining exploration costs) v $3.9m in H1/16) due to Pioneer and Malomir underground projects and expansion of tailings dams at Pioneer and Albyn as well as increased central admin costs ($23.1m v $13.1m in H1.16).

• Higher admin costs were primarily “attributed to a $5.2m increase in staff costs, mainly as a result of the proposed key management bonus accrual, an increase in Russian staff costs due to the appreciation of RUB against US dollar and general increase in Russian salaries, and $4m professional fees incurred in relation to corporate projects”.

• EBITDA climbed to $114.1m (H1/16: $88.0m) and EBIT was at $64.9m ($34.2m).

• Capex (including exploration) increased to $41.9m (H1/16: $11.9m) as the Company restarted POX development project and continued exploration and development works to support the underground mining at Pioneer and Malomir.

• FCF (post interest) improved to $32.7m (H1/16: $18.0m (excluding sale proceeds for the disposal of Verkhnetisskaya and Visokoe assets)).

• Net debt came down 5% to $570m (HY16: $599m).

• 2017 annual target reiterated at 420-460koz with TCC expected to come in at the upper end of the original guidance for $600-700/oz; net debt is forecast to close at $560m by year end assuming current USDRUB rate and $1,265/oz average gold price through the remainder of the year.

Conclusion: Interim results show improved cash generation driven by stronger gold sales and prices while pressures from the USDRUB rate appreciation has been partially mitigated by a boost in production from the release of the gold in circuit in H1/17.

 

Botswana Diamonds (LON:BOD) 1.6 pence, Mkt Cap £7.1m – Exploration update on S African joint-venture

• Botswana Diamonds reports that it has now completed 17 reverse-circulation drill holes on the Zebediela kimberlite within its diamond exploration joint-venture project with Vutomi Mining, near Frishgewaagt in the Limpopo Province of S Africa.

• Details of the depth and location of these holes, which are described as “pilot holes for a Large Diameter Drilling programme which is scheduled to commence next month” have not been disclosed, however they “have been drilled to further delineate the extensive kimberlite pipe/fissure system” and will, presumably aid the detailed planning for the forthcoming large diameter programme which is probably mainly intended to provide a sufficiently large sample for the company to establish an initial view of the distribution of any diamonds within the system.

• The wider programme is aimed at the generation of an inferred mineral resource estimate for Zebediela by the end of the year. “Zebediela is located in close proximity to the … Marsfontein Mine, which had an average grade of 172cpht and diamond value of US$128/ct”; and no doubt Botswana Diamonds is hoping for a similar deposit on this ground.

• Elsewhere, detailed ground geophysical surveying at the company’s newly discovered Ontevreden kimberlite in the North West Province has identified an anomalous area measuring approximately 100m x 70m.

• Samples taken at Ontevreden are currently being assessed for kimberlite indicator minerals in conjunction with the University of Johannesburg. The discovery “is close to Petra's Helam Mine which has grades running as high as 500 cpht and diamond value of US$255/ct” and even at this early stage, we presume that the company is hoping for a similar outcome.

Conclusion: The exploration programmes in S Africa remain at an early stage with no assay data specific to the company’s properties yet disclosed. The licence areas are, however, in relatively close proximity to other known mineable diamond pipes. The large diameter drilling scheduled to start at Zebediela in the coming weeks is intended to help generate an initial, inferred, resource by the end of this year. We look forward to the results at both Zedediela and Ontevreden as they become available and to the initial resource estimates which should give the first tangible indication of the economic potential.

 

Phoenix Global Mining* (LON:PGM) 4.1p, Mkt Cap £9.5m – Further drilling results from Empire

• Phoenix Global Mining, which is working to re-open the historic Empire copper mine in Custer County, Idaho, reports that its 28 hole drilling programme comprising 21 reverse-circulation (1595m) and 7 large diameter diamond drill holes (537m) at the AP oxide pit has been completed.

• Assay results from the first 14 holes have been received and results from the remaining holes are expected “in forthcoming weeks”. Among the highlights reported today are:

o 21.3m at an average grade of 0.86% copper, 1.22% zinc, 13.03g/t silver and 0.14g/t gold from a depth of 41.2m in hole KX17-3;

o Including 4.6m at an average grade of 1.65% copper, 2.30% zinc, 3.37g/t silver and 0.04g/t gold from a depth of 56.4m also in hole KX17-3;

o 35.1m at an average grade of 0.29% copper, 0.70% zinc, 12.56g/t silver and 0.0.70/t gold from surface in hole KX17-7;

o 70.1m at an average grade of 0.34% copper, 5.85g/t silver and 0.38g/t gold from surface in hole KX17-9;

o 51.8m at an average grade of 0.42% copper, 9.16g/t silver and 0.24g/t gold from a depth of 13.7m in hole KX17-6; and

o 51.8m at an average grade of 0.51% copper, 0.11% zinc, 16.09g/t silver and 0.07g/t gold from a depth of 12.2m in hole KX17-11;

• The wider intersections reported above contain higher grade sections with grades as high as 2.06% copper over a 4.6m wide section within hole KX17-3 and a 16.8m wide section within hole KX17-11 from 12.2m depth which averaged 1.02% copper and 33.99g/t silver.

• The current drilling work is part of a programme to revise and update the existing resource estimate which is expected to be available during Q4 2017 to be followed by a preliminary feasibility study (PFS) early in Q2 2018.

• Phoenix Global Mining has appointed key consultants for the PFS. The PFS team will be led by M3 Engineering and Technology which is well known for its work in the design and commissioning of SX-EW copper plants in the US, supported by Hard Rock Consulting for the reserve and mining studies, Minerals Technology on the metallurgical testing and Cascade Earth Sciences to complete the environmental and permitting work.

• Among other developments at the Empire mine site, the company reports that it has engaged a mining contractor to regain access to the old workings in order to undertake a programme of sampling and appraisal of the deeper sulphide mineral potential beneath the AP pit area.

• Commenting on the wider potential, CEO, Dennis Thomas, pointed out that “Whilst the oxide resource offers the near term development opportunity, the deeper sulphide resource is of potentially significant value to us given the historic grades of up to 11.4% copper plus gold, silver and tungsten that have been recovered”. Once safe access to the extensive historic underground workings is established, the company plans to “commence a programme to assess the deeper sulphide potential beneath the AP pit oxides.”

Conclusion: Since its admission to the AIM market in June, Phoenix Global Mining has completed its initial drilling appraisal of the AP pit area at the Empire mine and is targeting an update of the existing resource, of 7.26mt at an average grade of 0.55% copper with an additional inferred resource of 5.55mt at an average grade of 0.51% copper, before the end of the year with a preliminary feasibility study expected during Q2 2016. We look forward to the remaining drilling results and the completion of the resource and pre-feasibility studies.

*SP Angel acts as Nomad to Phoenix Global Mining

DISCLAIMER

This note has been issued by SP Angel Corporate Finance LLP (“SP Angel”) in order to promote its investment services.

This information is a marketing communication for the purpose of the European Markets in Financial Instruments Directive (MiFID) and FCA’s Rules. It has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research.

This document is not based upon detailed analysis by SP Angel of any market; issuer or security named herein and does not constitute a formal research recommendation, either expressly or otherwise.

The value of investments contained herein may go up or down. Where investment is made in currencies other than the base currency of the investment, movements in exchange rates will have an effect on the value, either favourable or unfavourable. Securities issued in emerging markets are typically subject to greater volatility and risk of loss.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. This information is for the sole use of Eligible Counterparties and Professional Customers only and is not intended for Retail Clients, as defined by the rules of the Financial Conduct Authority (“FCA”) and  subject to SP Angel’s Terms of Business as published or communicated to clients from time to time.

It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. This document should not to be relied upon as authoritative or taken in substitution for the exercise of you own commercial judgment. SP Angel is not responsible for any errors, omissions or for the results obtained from the use of the information in this document.

This document has been prepared on the basis of economic data, trading patterns, actual market news and events, and is only valid on the date of publication. SP Angel does not make any guarantee, representation or warranty, (either expressly or implied), as to the factual accuracy, completeness, or sufficiency of information contained herein. This document has been prepared by the author based upon information sources believed to be reliable and prepared in good faith.

SP Angel, its partners, officers and or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SP Angel Corporate Finance LLP is a company registered in England and Wales with company number OC317049 and whose registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SP Angel Corporate Finance LLP  is authorised and regulated by the Financial Conduct Authority whose address is 25, The North Colonnade, Canary Wharf, London E14 5HS and is a Member of the London Stock Exchange plc.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use