Beowulf Mining* (LON:BEM) – Interim financial results and management update
Bushveld Minerals* (LON:BMN) – BUY, Target Price 87p – Bushveld Energy Q3 Operational Update
Hummingbird Resources (LON:HUM) – Operational update and 2019 update
KEFI Minerals* (LON:KEFI) – £4m convertible facility update
Talga Resources* (ASX:TLG) – Talga graphene boosts composite conductivity
Rio Tinto (LON:RIO) – Koodaideri gets the go ahead
URU Metals* (LON:URU) – Zebediela licence renewal
Tesla Customers Rack Up 1bn Miles Driven on Autopilot
• Tesla Inc. says owners of its electric vehicles have driven 1bn miles using the company’s Autopilot driver-assistance feature -- a significant milestone for the automaker, which uses the collected data to improve the software.
• That number represents 10% of all miles driven by Teslas since 2012, when the Model S sedan first appeared in the market.
• The company noted in a statement that Autopilot has been available only since 2015.
Ferro-vanadium prices pull-back 2.6% in Western Europe
• Ferro-vanadium prices have pulled back in Europe and China off the very high levels seen in recent weeks.
• Prices have fallen 2.6% to $121.5-126/kg in Western Europe according to Fastmarkets MB.
• Ferro-vanadium prices in China have also pulled back $1/kg to $129.5/kg yesterday and $134.5/at end last week according to Asiametals.com on Bloomberg
• Other minor metals appear steady with Antimony prices stable at $7,900-8,199/t in Rotterdam and Tungsten APT prices static at $275-295/mtu in Europe.
• Prices for Rebar sold in China are rising again on the back of higher steel billet prices. This is despite a fall in spot market inventory as traders wait for prices to fall further.
Dow Jones Industrials +2.50% at 25,366
Nikkei 225 +0.39% at 22,263
HK Hang Seng -0.94% at 26,431
Shanghai Composite -1.32% at 2,567
FTSE 350 Mining +2.18% at 16,490
AIM Basic Resources -0.51% at 2,121
US – Equities posted the strongest bounce back since March on the back of dovish comments from Fed Chairman.
• S&P 500, Dow and Nasdaq closed 2.30%, 2.50% and 2.95% up, respectively.
• Markets cut chances for stronger monetary policy tightening next year following comments from Jerome Powell that the policy rate is much closer to the neutral level now.
• Previously, the FOMC guided for three hikes next year while futures market is currently expecting only one.
Germany – Employment climbed in November with jobless rate hitting new low of 5.0% while inflation report due later is expected to show a slight slowdown in the rate of consumer prices growth.
• The report backs Germany’s central bank that the economy is rebounding from a summer contraction, and will support the ECB belief that wage pressures are mounting.
• Inflation is forecast to come in at 2.3% in November which is only 0.1pp lower on 2.4% recorded in October that marked the strongest rate of inflation since early 2012.
UK – The pound is off this morning on the back of the BoE report on potential effects of a no deal Brexit released late Wednesday.
• The central bank argued the UK faces the hardest economic contraction since at least WW II if it leaves without a deal.
• BoE is estimated GDP may fall 8% driving unemployment to 7.5% and a drop in house prices of 30% in case of a ‘disorderly’ scenario.
• On top of that, the currency can potentially fall 25% to below parity with the dollar driving inflation up to 6.5% and leading to the central bank hiking rates up to 5.5%.
• The BoE analysis completed in response from a committee of lawmakers is the latest to highlight dangers from having no new trade arrangement in place by the time UK leaves the EU on March 29.
US$1.1395/eur vs 1.1274/eur yesterday Yen 113.26/$ vs 113.85/$ SAr 13.642/$ vs 13.978/$ $1.283/gbp vs $1.274/gbp 0.733/aud vs 0.723/aud CNY 6.946/$ vs 6.956/$
Gold US$1,227/oz vs US$1,213/oz yesterday
• Gold advanced for the second day following Federal Reserve Chairman Jerome Powell hinting for a potential pullback in projected interest-rate hikes in 2019, hurting the dollar.
• Powell announced on Wednesday rates are ‘just below’ a range of estimates of the so-called neutral level. Comments fueled speculation the bank may pause its tightening cycle next year, with rising rates hurting demand for bullion.
• Policy makers penciled in three quarter-point increases next year, according to the median of forecasts in September’s so-called dot plot. That could fall to two when officials update forecasts at the Dec. 18-19 meeting, Wrightson ICAP LLC chief economist Lou Crandall said.
• Chinese President Xi Jinping said the global economy is at a turning point as he prepares for a critical meeting with Donald Trump this weekend at the Group of 20 summit in Buenos Aires
Gold ETFs 68.9moz vs US$68.9moz yesterday
Platinum US$828/oz vs US$834/oz yesterday
Palladium US$1,181/oz vs US$1,156/oz yesterday
• Spot palladium touched fresh highs on signals of diminishing supplies, climbing as much as +2.8%.
• Prices have been supported by projections for supply deficits amid strong, and growing demand for its use in automobile pollution-controlling catalytic converters. This became most apparent as holdings of exchange-traded products backed by palladium fell 1.4% Tuesday to the lowest since Feb. 2009 as users of the metal lease material from ETF holders to meet their needs
• Macquarie Group analysts see the growth as surprising when auto sales have been weak, particularly in China, as indicated by recent October sales data.
Silver US$14.38/oz vs US$14.14/oz yesterday
Copper US$ 6,250/t vs US$6,130/t yesterday
Aluminium US$ 1,939/t vs US$1,924/t yesterday
Nickel US$ 10,870/t vs US$10,815/t yesterday
Zinc US$ 2,460/t vs US$2,396/t yesterday
Lead US$ 1,946/t vs US$1,912/t yesterday
Tin US$ 18,475/t vs US$18,375/t yesterday
Oil US$58.8/bbl vs US$61.0/bbl yesterday - Saudi Arabia says it will not cut oil output alone
• Saudi Arabia’s energy minister said the kingdom would not cut its oil output alone, as ministers from producer countries prepare to gather in Vienna next week to discuss curbs.
• Khalid al-Falih said Opec countries and their allies outside of the cartel led by Russia would do “whatever is necessary, but only if we act together”.
• Mr Falih was speaking in Abuja after a meeting with his Nigerian counterpart Emmanuel Kachikwu, who said it was still too early to say whether the African nation would participate.
Natural Gas US$4.616/mmbtu vs US$4.190/mmbtu yesterday
Uranium US$28.80/lb vs US$28.80/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$64.7/t vs US$63.8/t
Chinese steel rebar 25mm US$585.1/t vs US$585.7/t
Thermal coal (1st year forward cif ARA) US$85.6/t vs US$85.6/t
Coking coal futures Dalian Exchange US$198.7/t vs US$193.1/t
Cobalt LME 3M US$55,000/t vs US$55,000/t
China NdPr Rare Earth Oxide US$45,927/t vs US$45,575/t
China Lithium carbonate 99% US$10,078/t vs US$10,064/t
Tungsten APT European US$275-295/mtu vs US$275-295/mtu
UK's first carbon capture and storage project 'operational by mid 2020s'
• The UK's first carbon capture and storage project should be operational by the mid-2020s, according to ministers.
• Research funding has also been announced for a carbon capture scheme in Aberdeenshire and will see carbon dioxide piped to storage sites under the North Sea.
• The Acorn Project will capture about 200,000 tonnes of CO2 from the St Fergus Gas Terminal near Peterhead and transport it for storage to one of three depleted gas fields using existing pipelines.
• It is to receive £175,000 from the UK government, with match funding from the Scottish government and additional European funding.
Car manufacturers found to transmit data to governments
• More than 200 manufacturers, including Tesla, Volkswagen, BMW, Daimler, Ford, General Motors, Nissan, Mitsubishi and NIO, have been found to transmit position information and dozens of other data points to government-backed monitoring centres in China.
• The automakers say they are merely complying with local laws, which apply only to alternative energy vehicles but, generally, it happens without car owners' knowledge.
• Chinese officials say the data is used for analytics to improve public safety, facilitate industrial development and infrastructure planning, and to prevent fraud in subsidy programs, but the revelation has called into question the precedent these practices set.
Beowulf Mining* (LON:BEM) 4.8p, Mkt Cap £27.2m – Interim financial results and management update
• Beowulf Mining advance Nordic focused projects with the announcement of the Mineral Resource Estimate for its Aitolampi graphite deposit, a global JORC Indicated and Inferred Resource of 19.3mt at 4.5% Total Graphitic Carbon ("TGC") for 878,000t of contained graphite, comprising eastern and western lenses above a 3.0% TGC cut-off grade.
• A higher grade Western Zone with an Indicated and Inferred Resource of 9.8mt at 5.0% TGC for 490,000t of contained graphite.
• Post-period the company have also published the Copenhagen Economics study of the Kallak magnetite ore project’s potential economic benefit, completed in Sept. 2017. The study outlined the potential to create 550 jobs over 25 years, while generating SEK1bn in tax revenues which would help to develop and sustain public services and infrastructure in Jokkmokk.
• In the interest of advancing the project, the company will seek to establish a ‘Task Force’ with Jokkmokks Kommun and local employment agencies to develop a focused employment and local benefit plan.
• The company have also subsequently acquired an initial 14% interest in Vardar Minerals limited, a private exploration company, with interests in Kosovo, for the consideration of £250,000 satisfied in cash. The investment gives Beowulf exposure to a number of porphyry-related copper, gold and base metal targets in the prospective Tethys Arc. The region is rapidly becoming a focus for major exploration investment following significant discoveries in the last decade.
• Beowulf have an option to make a further investment to increase ownership of four wholly owned exploration licences in Kosovo and two more under a purchase agreement whereby Vardar will own 85% of the licences. The combined coverage is a total 333.2km².
• Loss after taxation attributable to the owners of the parent company for the period ending 30 September 2018 is £849,525 (2017: loss of £682,647). The increase in the loss for the period is predominately due to the impairment of the Viistola asset of £150,421.
• Cash and cash equivalents at 30 September 2018 at £2,071,748, are £171,951 above the corresponding period last year (Sept 2017: £1,899,797) and £481,851 above the level at 31 December 2017.
Conclusion: The post-period acquisition of interest in the Balkans gives strong diversification of geography and commodity, and we look forward to understanding the prospective potential of combined portfolio. The company have a positive cash balance for advancing exploration efforts, particularly of the battery-focused Aitolampi graphite deposit.
*SP Angel acts as nomad and broker
Bushveld Minerals* (LON:BMN) 43.5p, Mkt Cap £487m – Bushveld Energy Q3 Operational Update
BUY - Target Price 87p
(Bushveld Minerals now hold 74% of Vametco and 84% of Bushveld Energy it’s vanadium redox battery unit)
See link for last Bushveld Minerals PDF note
• Bushveld Minerals are working towards the completion of the Eskom vanadium redox flow battery (“VRFB”) project ahead of the start of commissioning expected in December.
• The joint venture was awarded a grant by the US Trade and Development Agency, in support of the Eskom project and energy storage industry in South Africa.
• The EIA for the new electrolyte production facility in East London is due in H1 2019.
• Bushveld Energy expects to supply samples to potential electrolyte customers in the coming months.
• The market for battery storage in both South Africa and Africa overall is seen as ‘significant and immediate’, especially for long-duration and high-volume daily utilisation applications that are ideal for vanadium flow batteries.
• The Bushveld Energy team are gaining significant knowledge and experience in the design and implementation of vanadium redox battery instillation and this should give the team a distinct competitive advantage in this relatively new technology and market.
• We expect the expansion and rollout to be financed out of cash flow for the relatively modest $10m capital cost of the Electrolyte plant and for the vanadium redox batteries to be financed through the use of funds from the US Trade and Development Agency, the IDC (South Africa), ESKOM and possibly the World Bank. We also expect other banking facilities to become available to support vanadium electrolyte production and sales through bank finance and leasing facilities.
• The first Eskom VRFB project is due for completion in December. It sounds as if commissioning is in the new year post the South African holiday shutdown.
• ‘Test work on the Electrolyte project has been performed by two external parties in the conversion of vanadium feedstock from Bushveld Vametco into vanadium electrolyte, yielding positive results for both single and mixed-acid electrolytes. The results are preliminary; however, Bushveld Energy expects to be able to start supplying electrolyte samples to potential customers in the coming months.’
• ‘In October 2018, the World Bank Group announced a $1 billion programme to support the deployment of energy storage in low to middle income countries. The programme is expected to mobilise a further $4bn in donor funding and private sector investment to deliver 17,500 MWh of energy storage in these countries by 2025. This announcement is not only an excellent development for energy storage globally, but for Bushveld Energy and its market focus on Africa. With typically over 1/3 of World Bank Group funding directed to sub-Saharan Africa, the programme will likely aim to deliver 5,000-6,000 MWh of storage in Africa alone, or an average of 1,000 MWh per year. Similarly, most of the storage deployed for future projects under the programme will be to ensure greater integration of renewable energy, applications that require long duration, daily storage, which fits into the technical and commercial superiority of the VRFB technology;’
• ESKOM is looking at a number of programs including the potential to potentially replace some 9,000MW of natural gas capacity for peak-time generation with alternative energy storage.
Conclusion: Bushveld Energy has a distinct first mover advantage in the supply of vanadium redox batteries into the South African market. We expect this ‘technology’ element to add significant value to the ground and to enhance the overall rating of the business as the roll out of vanadium redox batteries gains recognition and sales momentum.
*An SP Angel mining analyst and nomad have visited the Vametco in South Africa.
*SP Angel act as Nomad and broker to Bushveld Minerals.
Hummingbird Resources (LON:HUM) 18p, Mkt Cap £62m – Operational update and 2019 update
• The Company updated the market on the effects of pit stability issues recorded on the western wall at the Komana East (25 October) on Yanfolila production targets.
• The team completed a comprehensive analysis on the scope of remediation works.
• Works have now commenced and are expected to be completed in January 2019.
• 2018 guidance has been reduced to 87-92koz, down from 105-115koz expected previously.
• This implies Q4 production at c.13-18koz (Q3: 22.2koz) with Hummingbird expecting AISC to come in at $1,800/oz during the quarter reflecting remediation costs, higher transportation costs associated with restricted bridge access and weaker production.
• The majority of remediation works to be incurred in Q4/18 with some expenses to be recorded in Q1/19.
• 2019 production is forecast at 110-125koz at AISC $800/oz.
• The Company mobilised a Malian Military barge to help with transportation of heavy equipment to the site across the river as the government is building a new bridge upstream after the Yanoflila bridge has been damaged
• The Yanfolila bridge, the only road access to the site, has been impacted by the floods and issued a 10t weight limit which restricted access for heavy duty equipment and complicated mobilisation of machinery for remediation works.
• The Company is looking to agree a new $9.5m working capital facility with Coris (9% interest, repayment in two years) that would provide financial flexibility during the remediation works as well as partially finance the $13m investment in the second ball mill.
Conclusion: The Company has competed the assessment of remediation works required which have now started and should be completed in Q1/19. Operations are due to reach full capacity in 2019 at which point operating costs are guided to normalise averaging $800/oz for the year.
KEFI Minerals* (LON:KEFI) 1.5p, Mkt Cap £8.0m – £4m convertible facility update
CLICK FOR PDF (121 conference KEFI snapshot)
• The Company has entered into a £4m secured convertible loan facility with Sanderson Capital Partners which is set to provide working capital to KEFI ahead of the start of construction works at Tulu Kapi and finalising development project financing package.
• The loan is composed of one initial facility (£2m) and two optional ones (£1m each).
• The Company may draw down on the loans under the facility for a period of 12 months with an option to extend the period by a further six months subject to an agreement between the KEFI and Sanderson.
• Sanderson can convert any outstanding amount of the Loan at any time at 2p.
• The loan may be repaid at any time with Sanderson having an option to convert half of any repayment into new shares at 2p.
• The loan is secured by the Company’s shareholding in Kefi Minerals (Ethiopia) Limited holding.
• In terms of costs, KEFI will issue 16.5m of shares to Sanderson for the £2m loan commitment (£330k worth at 2p including a commitment fee of 7.5% of the first facility, a voluntary prepayment option fee of 2% of the total £4m facility and an option fee of 5%) of the second and third facilities for £2m in total).
• Additionally, KEFI agreed a drawdown fee equal to 5% of each drawdown paid in shares at the higher of 2p of the preceding 5d VWAP.
• Terms for the second (£1m) facility includes £250k charge in commitment and arrangement fees (equivalent to 25% on the £1m drawdown) as well as 5% on each drawdown.
• KEFI and Sanderson are yet to agree if the third tranche (£1m) will be available for a draw down.
• Additionally, the Company agreed that KEFI will not pay more than £50k in respect of legal fees and due diligence charges incurred with the execution of the loan facility.
• The loan is expected to be repaid upon closure of the full equity and then debt funding of the Project, expected from Q2/19.
• The Company will be seeking shareholders’ approval for the potential issuance of shares under the facility as well as payments in shares to third party service providers during the general meeting on 17 December 2018.
• The Company is preparing for the start of resettlement programme due to start in Q1/19 following a drawdown on the first $9m tranche from ANS in December.
• The finance plan remains subject to completion of all government approvals and processes, due diligence and documentation – all of which is progressing well.
Conclusion: The Company secured a £4m convertible loan facility as the team is looking to launch the resettlement programme early next year followed by completion of the project financing deal paving the way to the start of construction works at Tulu Kapi. The first £2m tranche comes at a high cost of 21.5% to be paid in shares (30% on the second £1m tranche if KEFI exercises its option to drawdown) but provides KEFI with much needed working capital to see Tulu Kapi through to the start of development works.
*SP Angel act as Nomad and Broker to KEFI Minerals
Rio Tinto (RIO LN) 3633p, Mkt cap £64.0bn – Koodaideri gets the go ahead
• Rio Tinto reports that it has approved the US$2.6bn development of the Koodaideri iron ore mine, located approximately 35km north-west of the company’s existing Yandicoogina mine in Western Australia, which is expected to produce at the rate of 43mtpa from late 2021.
• The development of what the company describes as “its most technologically advanced mine … will help sustain Rio Tinto’s existing production capacity by replacing depletion elsewhere in the system” and “deliver an internal rate of return of 20 per cent and capital intensity of around $60 per tonne of annual capacity”.
• The mine, which includes a processing facility and a 166 km long rail link to the existing Pilbara rail network, is planned to be highly automated in order to enhance productivity and safety in a development described by Rio Tinto’s Chief Executive, J-S Jacques as setting “a new benchmark for the industry”.
• The new mine will develop an ore body extending over an area of extending more than 20km long and 3km wide containing a reserve of 598m tonnes at an average grade of 61.9% iron. Forty-five percent of the reserves (269mt) are classed as proven with the remaining 329mt as probable.
• In addition to the approval of the 43mtpa Phase 1 development, Rio Tinto is also committing $44m to a pre-feasibility study to examine a Phase 2 expansion to 70mtpa or more.
• The new mine “will feature technology already in use across Rio Tinto, such as autonomous trucks, trains and drills, and implement systems connecting all components of the mining value chain for the first time. The development will consolidate everything Rio Tinto has learned from its studies into finding advanced ways to extract minerals while reducing environmental impacts and improving safety” with features including a “fully integrated mine automation and simulation systems [and] advanced automation including an automated workshop, and; numerous data analytics capabilities and control loops to optimise production and reduce downtime”
Conclusion: The new mine at Koodaideri is planned using the latest technology and will no doubt be scrutinised carefully by the industry at large for an insight into the future of large scale mining.
Talga Resources* (ASX:TLG) A$0.45, Mkt Cap A$98.0m – Talga graphene boosts composite conductivity
• Talphene®-enhanced epoxy composite trials undertaken at TWI demonstrate the potential to serve as an alternative to copper in composite aircraft and wind turbine applications.
• Carbon reinforced polymer panels (‘CFRP’), constructed using a dispersion of Talga graphene, provided similar lightening strike protection as copper mesh panels currently used in composite aircraft but saved 75% of the weight of the copper. The program assessed epoxies from Hexcel, 3M, Bitrez and Huntsman with which to disperse the Talphene® and construct the CFRP samples to be tested.
• Further results indicated a 500% increase in dielectric constant, 100% increase in resin thermal conductivity as well as spot temperatures well over 100°C in anti-icing trials.
• The global composite market is worth over US$82bn/annum, and is rapidly growing across sectors in aerospace, renewable energy and automotive markets driven by increased demand for lower weight, higher strength and multi-functionality.
• By 2024, the total volume of the CFRP composite material market is forecast to exceed 290,000t. Talga graphene-enhanced composite tests will underpin ongoing business efforts to initiate joint venture development and commercial agreements with global end users including Toray, Toho Tenax, Mitsubishi, Hyosung, Cytec, Plasan, Hexcel Corp, SGL (Germany), Gurit (Switzerland) and Formosa Plastics Corporation.
Conclusion: The ability to improve the weight, electrical and thermal conductivity of CFRP composites has significant benefits for applications including lightening strike protection and wing anti-icing on aircraft, that require expensive manual or chemical de-icing in winter. The improvements in performance of Talga-enhanced composites position the company to capture a rapidly growing global market.
*SP Angel acts as UK broker to Talga Resources. SP Angel analysts have visited the leading battery R&D institution WMG partnering with Talga.
URU Metals* (LON:URU) 0.205p, Mkt Cap £1.6m – Zebediela licence renewal
• URU announces that it expects to hold meetings with South Africa’s Department of Mineral Resources in relation to the formal approval of renewal of its prospecting rights over the ground hosting its Zebediela Nickel project.
• The Department has already completed a site visit, as required, and “granted the renewal in principle for prospecting right 148PR which forms the primary prospecting right over all known mineralisation”. The application covers additional licences 1074PR and 11921PR. Renewal is for an additional two to three years.
• URU Metals points out that it has “received an indication from the DMR that the Rights will be renewed for a further period of two to three years, so the Company continues to hold the Rights until the renewal process is completed and, in the meantime, work on the ground continues to progress at the Zebediela project”
• The company also reports that once approval has been formalised, it is looking to consolidate all the licences which “will provide operational efficiencies to the Company going forward.”
Conclusion: URU Metals confirms that renewal of the principal prospecting licence at its Zebediela Nickel project has been approved in principle by the South African Department of Mineral Resources and the company indicates that it will hold formal meetings with the Department to complete the process. Meanwhile work on the ground is continuing.
*SP Angel acts as Nomad and broker to URU Metals