SP Angel – Morning View – Tuesday 12 03 19
US-China trade hopes and Brexit deal optimism lift metal prices
MiFID II exempt information – see disclaimer below
Ariana Resources (LON:AAU) - Kiziltepe guidance expects output to exceed feasibility study estimates
Bluebird Merchant Ventures* (LON:BMV) 2.9p, Mkt Cap £6.7m – Application filed to mine Kochang Mine. Gubong permit response due end March.
MOD Resources (LON:MOD) - Infill drilling results from T3 project
Japan Wants to Put a Toyota on the Moon
- The Japan Aerospace Exploration Agency is working with Toyota to build a vehicle capable of carrying two people over 10,000km in 2029.
- The vehicle will be powered by a Toyota fuel-cell and will also use solar power. The vehicle will also be self-driving so it can meet future moon landings.
- SP Angel has an alkaline fuel cell which evolved from the technology used in the Apollo 11 space mission in 1969. The fuel cell is available to view in SP Angel’s Mayfair office. We wonder if Elon Musk may meet the Toyota vehicle with his in-space roadster.
Dow Jones Industrials
HK Hang Seng
FTSE 350 Mining
AIM Basic Resources
US – US Trade Representative Lightizer and Treasury Secretary Mnuchin held a series of negotiations with Vice Premier Liu He over critical issues of the agreement over the phone on Monday morning, according to Xinhua News Agency.
- A pick up in retail sales in January following a dismal reading in the previous month was welcome news, although the recovery was not seen strong enough to alter the course of a US economy that was losing momentum in Q1.
- January retail sales were delayed by a 35-day partial shutdown of the federal government that ended on January 25 with February report which was originally scheduled for this Thursday to come out on April 1.
- Downward revisions to retail sales in December coupled with other reports showing deterioration in the trade deficit in December and weak construction spending are now expected to see the government revising downwards its Q4 GDP estimates from 2.6%qoq to 2.1%qoq. This compares to 3.4%qoq recorded in Q3/18.
- Retail Sales (%mom): 0.2 v -1.6 (revised from -1.2) in December and 0.0 forecast.
- Retail Sales Control Group (%mom): 1.1 v -2.3 in December and 0.6 forecast.
UK – The pound is up or a second day as PM May struck a last minute deal with the EU improving Brexit terms ahead of the Parliament vote due later today.
- On a separate note, the UK economy registered stronger growth than forecast in January with growth relatively broad-based among construction, manufacturing and services sector. January GDP climbed 0.5%mom but was up only 1.4%yoy.
- Trade struggled significantly amid a worsening global growth outlook with the trade deficit hitting a 19-month high in January.
- In three months to January was little changed from the previous three month period as the economy grew 0.2%qoq, in line with expectations.
US$1.1266/eur vs 1.1247/eur yesterday. Yen 111.35/$ vs 111.24/$. SAr 14.273/$ vs 14.358/$. $1.323/gbp vs $1.301/gbp. 0.707/aud vs 0.705/aud.
CNY 6.712/$ vs 6.725/$.
Gold US$1,296/oz vs US$1,297/oz yesterday – Prices are hovering a little below the $1,300/oz level supported by a weaker US$ index.
Gold ETFs 71.6moz vs US$71.5moz yesterday
Platinum US$832/oz vs US$815/oz yesterday
Palladium US$1,544/oz vs US$1,516/oz yesterday – Forget displacing palladium with platinum in gasoline fuelled engines anytime soon, CEO of North American Palladium says in an interview.
- “I do not expect any meaningful substitution to take place… technically, platinum does not perform as well as palladium in the temperature and chemical environment in a modern catalytic converter, “ Jim Gallagher said.
- Also, platinum producers do not have enough capacity to meet additional demand from car manufacturers that may switch away from palladium.
- Tight market fundamentals as well as strong demand supported by stricter emissions regulations saw palladium surging 22% YTD trading 1.9 times platinum prices, the highest level in more than two decades.
Silver US$15.41/oz vs US$15.32/oz yesterday
Copper US$ 6,481/t vs US$6,408/t yesterday – Base metals complex is trading higher today driven by fresh optimism on US growth, news over a continued dialogue between US/China regarding the potential trade agreement and PM May securing the last minute deal with the EU ahead of the Parliament vote later today.
Aluminium US$ 1,860/t vs US$1,872/t yesterday
Nickel US$ 13,115/t vs US$13,110/t yesterday
Zinc US$ 2,782/t vs US$2,752/t yesterday – Prices are supported by signs of tightening supply with LME inventories at the lowest level since 2007.
- Nyrstar, one of the world’s largest zinc smelting companies, said earlier it may be forced into administration if talks with its creditors do not make progress soon.
Lead US$ 2,093/t vs US$2,114/t yesterday
Tin US$ 21,080/t vs US$21,335/t yesterday
Oil US$66.8/bbl vs US$66.2/bbl yesterday
Natural Gas US$2.777/mmbtu vs US$2.805/mmbtu yesterday
Uranium US$27.95/lb vs US$28.00/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$81.4/t vs US$82.2/t – Prices climb amid the Vale announcement that it has been ordered to suspend port activities at the iron ore Guiaba Island Terminal.
- Iron ore producer from Brazil argued it had all necessary licenses for regular operations of the terminal and will take all appropriate measures to re-establish activities.
- Iron ore was up 1.5% in Singapore trading at $82.12/t after closing at lowest since January 29 on Monday.
Chinese steel rebar 25mm US$612.6/t vs US$610.1/t
Thermal coal (1st year forward cif ARA) US$75.6/t vs US$76.0/t
Coking coal futures Dalian Exchange US$196.8/t vs US$196.4/t
Cobalt LME 3m US$32,000/t vs US$33,000/t
China NdPr Rare Earth Oxide US$44,322/t vs US$44,835/t
China Lithium carbonate 99% US$9,758/t vs US$9,889/t
China Ferro Vanadium 80% FOB US$74.2/kg vs US$74.5/kg
China Antimony Trioxide 99.5% EU US$6.9/kg vs US$6.9/kg
Tungsten APT European US$271-282/mtu vs US$270-280/mtu
Novel technology aims to improve lithium metal battery life, safety
- A new solid-electrolyte interphase may increase energy density, performance and safety in Li-ion batteries according to Penn State researchers.
- The interphase layer is important but does not perform so well in liquid form due to the formation of dendrites which can short circuit the battery degrading their life and sometimes causing fires. Penn State is using a polymer composite in an attempt to solve this problem.
Silent Yachts – launches worlds first and only solar-powered electric yacht
- The Silent 80 Yacht uses 70 solar panel, Tesla-type lithium-ion batteries and electric motors.
- $5m gets you a quiet five cabin 80-foot yacht without the need to raise a sail. There is also room for an amphibious car and a gyrocopter.
- There is no mention of effective range though it does say the boat can do 18 knots (20mph) but runs silently at under 7 knots.
- We suspect the batteries will not last long at 18 knots and the solar panels will need to be kept clean of seagull shit.
- It’s a great idea for near harbour or quiet Mediterranean waters but is probably not recommended for heavy seas.
- ‘The best two days of boat ownership are the day you buy it and the day you sell it’
Ariana Resources (LON:AAU) 1.9p, Mkt cap £20m - Kiziltepe guidance expects output to exceed feasibility study estimates
- Ariana Resources has announced its 2019 production guidance for its 50% owned Kiziltepe mine in Turkey which it expects to produce 25,000oz of gold. The company comments that this is "21% above feasibility plan for the third year of operations."
- The mine is expected to treat approximately 195,000t of ore during the year "which represents a 30% increase over the feasibility plan" at an average grade of around 5g/t gold and recovery rates are expected to exceed 90%.
- Mine tonnages are expected to peak during the final quarter of the year.
- The improved production guidance in comparison to the feasibility study's projection reflects "a further increase in expected grades as we mine deeper into the Arzu South pit and the maintenance of high monthly mill throughputs."
- Th company also advises that "Although ore output from Arzu South will be variable through the year due to the pushbacks required to accommodate the final stage of mining, current stockpiles are expected to provide for any shortfalls in output such that mill throughput can be maintained at the highest levels through the year."
Bluebird Merchant Ventures* (LON:BMV) 2.9p, Mkt Cap £6.7m – Application filed to mine Kochang Mine. Gubong permit response due end March.
(Bluebird is earning into a 50:50 jv with Southern Gold Ltd at Gubong and Kochang)
- Bluebird Merchant Ventures report the team have filed their application and technical details for the reopening of the Kochang gold mine in South Korea.
- The team are also waiting on a response from the South Korean authorities on the Gubong gold mine reopening application permit which is due around 23rd March following its submission on 23rd January.
- The application and technical documents are publicly available for 40 working days with clarification and questions expected.
- Kochang was previously mined to just 150m depth though mineralisation is expected to extend much deeper.
- The Korean Resources Corporation ‘KORES’ estimates total indicated and inferred resources of 113,280 oz Au in Korean resource terms vs Bluebird’s initial estimates of 116,880 oz gold.
- KORES’ grade estimate of 6.55g/t gold and 35.97g/t silver compares with Bluebird’s own estimates of 5.94g/t gold and 31.54g/t silver. The results are reported to cover “a very small area of the mine, which itself operated on only a small part of the identified gold and silver system”.
- Gubong was mined to 500m and mineralisation is again expected to extend much deeper with local tales suggesting of thicker and higher grade veins in the bottom of the pit.
- Gubong tailings results test work indicate a >90% recovery rate on a grade of 1.1g/t with vat leaching of ore showing 90% recoveries with gold recovery rates of up to 97%.
- An independent report on the Gubong Mine published on 26 January 2018 states potential for >1moz of gold is still to be mined at Gubong.
- Management are targeting gold production of 100,000ozpa within five years in South Korea with first gold production expected in Q4 2019..
Conclusion: We await news of the approval for drilling at Gubong with interest.
*SP Angel act as broker to Bluebird Merchant Ventures
Keras Resources* (LON:KRS) 0.36p, Mkt Cap £8.1m – Results mark transformation to manganese production
BUY, Target price 1.04p
- Keras Resources published its annual report today.
- The Chairman’s statement reports that $1.5m has now been received for the bulk sample.
- A temporary £300,000 shortfall was met by directors, Russell Lamming and Dave Reeves advanced the funds to the company on an interest free, unsecured basis till March indicating their commitment and dedication to the company.
- The results, historical, by their very nature, show Admin expenses of just £411k down from £938k a year earlier as management exercised stringent cost control.
- There were no finance costs last year down from £309k a year earlier, another good sign for a business.
- The 2018 and 2017 financial years are not really comparable due to the transfer of Kera’s share in Calidus. We value Keras’s stake in Calidus at around A$16m today.
- A small £173k loss was reported on discontinued operations vs a gain of £5.1m in 2017 due to the transfer of Keras' Australian gold assets to Calidus.
- ‘The remaining subsidiaries in Australia and South Africa have been disposed of for nominal consideration, having been fully impaired in prior periods. As well as removing cost, this simplification allows Keras to concentrate on realising the potential of it’s manganese assets.’
- A non-cash change in the fair value of available-for-sale financial assets of £8.85m drives the Total comprehensive loss to £9.4m for the year.
- The value of the available-for-sale financial assets was £13.9m in 2017 which combined with a £3.9m profit from discontinued operations drove profit to £17.7m in 2017.
Conclusion: Keras looks poised to start larger-scale mining of manganese ore in Togo. It’s shares in Calidus are also gaining value. We are looking forward to a good year for Keras.
*SP Angel act as Nomad and broker to Keras Resources
MOD Resources (LON:MOD) 19p, Mkt Cap £58m - Infill drilling results from T3 project
- MOD Resources has published results from a number of the 25 infill holes completed so far of the 60 holes programme at its T3 copper project in Botswana which was announced in January.
- The results highlighted by the company "continue to support and validate the accuracy of the resource model while also identifying significant new copper intercepts within the early stages of the planned open pit.".
Among the results highlighted today are:
- A 31.5m wide intersection in hole MO-G-188D which averaged 2.0% copper and 36g/t silver from a depth of 85.6m, including a 10m section from 105m which averaged 4.7% copper and 98g/t silver; and
- A 47m wide intersection in hole MO-G-191D which averaged 0.9% copper and 7g/t silver from a depth of 89m, including a 15.3m section from 104m depth which averaged 1.6% copper and 15g/t silver; and
- A 13.7m wide intersection in hole MO-G-192D which averaged 1.6% copper and 6g/t silver from a depth of 52.8m, and a second 33m wide intersection from a depth of 88m which averaged 2.0% copper and 14g/t silver and included a 16m section from 99m which averaged 3.3% copper and 20g/t silver; and
- A 17.7m wide intersection in hole MO-G-193D which averaged 1.4% copper and 21g/t silver from a depth of 97.8m, including a 6.5m section from 108,1m which averaged 2.5% copper and 36g/t silver; and
- A 22m wide intersection in hole MO-G-197D which averaged 1.1% copper and 10g/t silver from a depth of 95m.
- The remainder of the infill drilling programme "will be completed after the upcoming T3 open pit Ore Reserve and the Feasibility Study, both of which remain on track for completion by the end of March 2019".
- The current resource estimate, dated July 2018, amounts to a total of approximately 60.2mt at an average grade of 0.98% copper and 14g/t silver, using a 0.4% copper cut-off grade. Approximately 60% of the resource tonnage is currently classified as indicated and the balance as inferred.
- Commenting on the results of the recent drilling, Managing Director, Julian Hanna, said that "These wide, high-grade intersections are increasing our confidence in the quality and continuity of the resource. In addition they provide encouragement of the potential to increase the current open pit resource."
- Conclusion: The infill drilling results may not all ve available for inclusion in the latest reserve update and feasibility work due later this month, however the results reported today underline the robust, high grade nature of the T3 resource, We look forward to the reserve and feasibility update for T3 later in March.