Acacia Mining (LON:ACA) –Exceeds updated production guidance in 2016 for record gold output
Cornish Lithium – (private company) – secures rights to explore for lithium in Cornwall
Hummingbird Resources (LON:HUM) – Yanfolila progress report
Lithium Americas (TSX:LAC) – reports US$174m strategic investment by Ganfeng Lithium
Orosur Mining (LON:OMI) – Anza gold exploration project
Rambler Metals (LON:RMM) – Metallurgical results from Ming
Shanta Gold (LON:SHG) – New Luika Gold Mine operations beat guidance in 2016
Solgold* (LON:SOLG) – Investors anticipate further copper, gold discovery at Cascabel
What can Plato teach us about Dondad Trump?
• BBC Newsnight video – absolute brilliance
• https://www.youtube.com/watch?v=cnzo9qXLFUo
121 / SP Angel Mining Investment conference Cape Town, 6th-7th February 2016
Located in the beautiful and historic gardens of the Welgemeend farm house in Cape Town, close to the Mount Nelson Hotel
• Investors go for free. Please ask for conference brochure
Dow Jones Industrials -0.11% at 19,805
Nikkei 225 +0.94% at 19,072
HK Hang Seng -0.21% at 23,050
Shanghai Composite -0.38% at 3,101
FTSE 350 Mining +0.36% at 16,684
AIM Basic Resources -0.19% at 2,530
Economic News
US dollar stronger on Fed Chair, Janet Yellen comments that US economy can stand higher interest rates
ECB meeting later today – the ECB is likely to leave the pace of QE unchanged
UK - Teresa May reckons UK will lead the world on free trade, echoing sentiments made by President Xi of China
• The irony is that the world’s largest communist party is extoling the virtues of free trade and capitalism while the US is advocating a more insular form of protectionism
HSBC – plans to move 1/3rd of activities to Paris.
• But remember HSBC was threatening to move its entire HQ out of the UK last year and that didn’t happen either
• SP Angel has no plans to move any staff out of London and plans to continue to grow within the UK so if there is anyone really good left at HSBC then please feel free to apply
Currencies
US$1.0662/eur vs 1.0696/eur yesterday. Yen 114.58/$ vs 113.16/$. SAr 13.553/$ vs 13.538/$. $1.232/gbp vs $1.234/gbp.
0.755/aud vs 0.756/aud. CNY 6.868/$ vs 6.834/$.
Commodity News
Precious metals:
Gold US$1,203/oz vs US$1,214/oz yesterday
Gold ETFs 57.0moz vs US$57.0moz yesterday
Platinum US$963/oz vs US$975/oz yesterday
Palladium US$750/oz vs US$746/oz yesterday
Silver US$16.98/oz vs US$17.15/oz yesterday
Base metals:
Copper US$ 5,773/t vs US$5,782/t yesterday
Aluminium US$ 1,827/t vs US$1,802/t yesterday
Nickel US$ 10,090/t vs US$10,195/t yesterday
Zinc US$ 2,749/t vs US$2,755/t yesterday
Lead US$ 2,291/t vs US$2,310/t yesterday
Tin US$ 21,075/t vs US$21,140/t yesterday
Energy:
Oil US$54.5/bbl vs US$55.7/bbl yesterday - Brent is up this morning on the back of the news US crude stockpiles declined last week.
• Prices fell nearly 3% yesterday driven by the higher US$ index and reports that OPEC estimates point to more aggressive output cuts required to balance the market.
Natural Gas US$3.330/mmbtu vs US$3.384/mmbtu yesterday
Uranium US$22.75/lb vs US$22.90/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$79.8/t vs US$79.1/t - The HK stock exchange plans to launch a dollar-denominated, cash-settled iron ore futures contract
• The exchange is considering listing a hot-rolled coil steel contract on the LME and is keen to build on growing volumes in the LME's steel scrap and rebar contracts
Chinese steel rebar 25mm US$499.9/t vs US$502.7/t
Thermal coal (1st year forward cif ARA) US$68.7/t vs US$69.0/t yesterday – Colombian coal exports rise 9% to 88mt
• China giving permission for coal mines to raise production of coal till the end of the winter heating season
• The authorities are allowing coal mines to work for 330 days this year from the 276 day restriction previously put in place to enable greater coal generation and to help bring down thermal and coking coal prices.
Premium hard coking coal Aus fob US$175.9/t vs US$180.0/t –
Other:
Tungsten - APT European prices $191-200/mtu vs $187-198/mtu
Company News
Acacia Mining (LON:ACA) 415 pence, Mkt Cap £1.7bn –Exceeds updated production guidance in 2016 for record gold output
Acacia Mining reports that fourth quarter gold production of 212,954 ounces has “resulted in record full year production of 829,705 ounces, almost 100,000 ounces ahead of 2015 and above already increased guidance.”
Preliminary estimates show a 14% reduction in all-in-sustaining costs during 2016 to US$958/ ounce sold. Cash costs for the are reported to be US$640/oz,17% lower than the US$772/oz in 2015.
Full year gold sales of 816,743 ounces represent a 13% increase on the 2015 results.
The company’s net cash position increased to US$219m.
Chief Executive, Brad Gordon, commented that “2016 was the fourth consecutive year of production growth at Acacia, which was driven by a record production year at North Mara and the highest production year at Bulyanhulu since 2006.”
The company has also announced that it will extend mining at its Buzwagi mine by a further six months until the end of 2017 and that it expects to continue processing operations for a further 2 years as it treats stockpiled material. The extension of mining is expected to “lead to an increase in production compared to 2016 [161,830 oz] at the operation.”
Cornish Lithium – (private company) – secures rights to explore for lithium brines in Cornwall
Jeremy Wrathall, a well known city analyst, has decided to follow Captain Poldark into mining in Cornwall.
Wrathall, ceo of Cornish Lithium, today reports the company has secured rights to explore for lithium brines and has entered into definitive mineral rights agreements with Strongbow Exploration which is exploring the potential redevelopment of the historic South Crofty tin mine.
Having worked in the Cornish tin industry we can confirm the presence of hot springs and brine solutions in the old Cornish mines and it’s interesting to hear of their lithium content.
The company’s PR tells us that lithium grades run at around 130ppm lithium which makes the prospect of Cornish lithium sound interesting though we are sure this is either an historic or a very preliminary estimate.
The British Geological Survey has previously published a lithium brine grade of 118ppm from brine tested at South Crofty in December 1977.
There are also lithium bearing micas in Cornwall which are reported to grade up to 2.5% (2500ppm) lithium though the extraction of lithium from micas is still seen as a difficult and probably uneconomic business.
We note that the lithium brine resource at the Salar de Olaroz in the new Orocobre project in Argentina run at 632mg/L (ppm) for their stated ‘measured resource’. The highest known lithium brine grades are seen in the Salar de Atacama which has a 6.3mt lithium resource in Chile grading an estimated 0.14% (1400ppm). Lithium x quotes a NI 32-101 lithium brine resource component of 195kt lithium grading 501mg/l (ppm)
The press release tells us that new technology now offers the potential to extract lithium from these hot spring brines and that high levels of lithium is due to the interaction between .
Very sensibly the company is also looking to utilise geothermal energy contained in the hot springs to generate power and reduce processing costs.
Wrathall’s budget contemplated a £5m spend in the exploration phase alongside a London listing.
Conclusion: While we wish Wrathall every success with the proving and extraction of lithium from brines in Cornwall and we look forward to the development of the ‘Salar de South Crofty’ though we have to wonder how rates of solar evaporation will compare with projects in the Atacama and hope the recovery of geothermal energy proves to be sufficient to make up for the Cornish climate.
Hummingbird Resources (LON:HUM) 23.5p, Mkt Cap £80.7m – Yanfolila progress report
The company reports that plant construction at its Yanfolila development project in Mali remains on course and that a number of key items of construction equipment, including a tower crane, and process plant equipment including pre-rolled CIL [carbon-in-leach] tanks have now arrived on site.
The company also reports that it has started to drill a de-watering borehole in preparation for pre-mining dewatering of the pit.
Hummingbird has also announced that its civil engineering contractor, IMAGARI-SARL, has also been awarded the contract for structural, mechanical, piping and plate work during construction.
Conclusion: Hummingbird continues to progress the Yanfolila development. The appointment of the same civil engineering contractor to undertake additional key structural and mechanical engineering tasks should help streamline project management on site.
Lithium Americas (TSX:LAC) – reports US$174m strategic investment by Ganfeng Lithium
Lithium Americas Corp. has signed an investment agreement with Ganfeng Lithium (GFL International Co., Ltd.) for funding to advance the construction of the Cauchari-Olaroz lithium project in Jujuy, Argentina.
Ganfeng has agreed to finance US$174m and the right to buy a fixed portion of the lithium carbonate production from the Cauchari-Olaroz project as well as a US$125m project debt facility.
Ganfeng is buying 75,000,000 new shares at C$0.85/s for C$64m (US$49m) for 19.9% of the Company.
The Project Debt Facility has a term of six years, with an interest rate of 8.0% for the first three years that increases to 8.5% in year four, 9.0% in year five and 9.5% in year six;
Offtake: Ganfeng has agreed to purchase of up to 70% of Lithium Americas' share of Cauchari-Olaroz Stage 1 lithium carbonate production at market prices.
Ganfeng group is the largest integrated lithium producer in in China, with a total capacity of around 30,000 tonnes per annum of LCE.
Ganfeng also owns a 43.1% interest in the Mount Marion lithium spodumene project with Mineral Resources Ltd. (43.1%) and Neometals Ltd. (13.8%).
Orosur Mining (LON:OMI) 17.1 pence, Mkt Cap £17.1m – Anza gold exploration project
The company reports that a review of approximately 17,400m of drilling in 53 holes completed historically at its Anza gold project in the mid-Cauca gold belt of Colombia has outlined a potential exploration target estimated at between 1.6 to 2.3m tonnes at grades between 3.2 to 3.7g/t gold. We calculate that this target would represent between 165,000-275,000oz of contained gold.
The company, which has been assisted by the Reno-based consulting firm, Mine Development Associates, points out that this target covers a 2km strike length of a target, which is known to extend laterally both to the north and south and at depth, within a larger project of approximately 105 sq km. “The APTA [Aragon-Pastorera Trend Area] deposit is up to 200m wide and at least 2.5km long, with soil geochem showing gold content along the entire 7km Aragon fault. The Deposit is open on strike, at surface and down-dip”.
The Cauca Belt is host to a number of significant gold deposits, including Continental Gold’s Burtica deposit (4.7m oz), Red Eagle’s San Ramon deposit, located 70km from Anza (479 koz) and Metminco’s Miraflores deposit (840,000 oz).
Orosur plans to undertake a further 15-30,000 metres of drilling during 2017 with a view to establishing a maiden NI-43-101 compliant resource at Anza and also to test possible extensions and “nearby untested and highly prospective targets”.
“The site has environmental permits enabling both underground and open-pit mining operations.” The project contains two small scale gypsum mines, historically operated by a third party contractor. The company is currently assuming operatorship with a view to expanding the operations and fast-tracking the permitting for future gold mining.
Conclusion: The planned drilling should enable Orosur to establish a formal resource estimate for the Anza project in Colombia later this year. With the possibility of fast-tracking the permitting process as a result of the existing permits for industrial minerals production within the licence area, a successful resource drilling campaign could well see Orosur move rapidly towards establishing gold production.
Rambler Metals (LON:RMM) 9 pence, Mkt Cap £37.7m – Metallurgical results from Ming
Rambler Metals reports results of metallurgical testing to establish the use of dense-media-separation (DMS) technology as a pre-concentration step prior to milling at its Ming copper/gold mine in Canada.
Tests on approximately 2200 tonnes of low grade ore averaging approximately 0.8% copper was successfully upgraded to 1457 tonnes averaging 1.14% copper while recovering 93.6% of the contained copper.
The results are said to be consistent with similar test work during 2015 and also with smaller scale tests conducted previously by external experts including Lakefield Research.
The company “is now focussing its efforts on determining the economics of installing and operating a commercially sized DMS plant at the Ming Mine site in order to further optimise the economics of its mining and milling complex … DMS and shaft rehabilitation could further enhance project economics over the short and long term.”
The results of the company’s deliberations are expected in “a full analysis during the fall of 2017.”
Conclusion: Rambler Metals is implementing a series of innovations at its Ming mine in order to increase production through mining the Lower Footwall Zone. The shaft rehabilitation is aimed at increasing production to 2000tpd in the longer term and the DMS results provide encouragement that pre-milling concentration of lower grade ore is technically viable. We look forward to the results of the economic analysis on the benefits of these technical innovations.
Shanta Gold (LON:SHG) 10.5p, Mkt Cap £61m – New Luika Gold Mine operations beat guidance in 2016
Gold production totalled 18.9koz (Q3/16: 20.6koz; Q4/15: 29.1koz) reflecting the processing of lower grade material from stockpiles amid progressing underground development works at Bauhinia Creek.
The NLGM plant processed 152kt of ore (in line with its capacity) at 4.3g/t (Q3/16: 145kt at 4.9g/t; Q4/15: 156kt at 6.5g/t).
Q1 gold sales were 15.3koz at $1,187/oz (Q3/16: 23.4koz at $1,301/oz; Q4/15: 29.2koz at 1,087/oz).
Quarterly C1 and AISC came in at $486/oz and $747/oz, respectively (Q3/16: $387/oz and $621/oz).
Annual production was 87.7koz coming closer to the upper end of the guidance 82.0-87.0koz.
Annual average C1 and AISC costs came in at $433/oz and $661/oz (2015: $595/oz and $845/oz), beating guidance for $690-740/oz.
Net Debt reduced to $42.9m (Q3/16: $38.4m; 2015:$41.0m) with the closing cash balance of $15m (Q3/16: $25.8m).
Bauhinia Creek underground development works remain on target for the start of commercial production in Q2/17.
Feasibility Study works on the Ilunga deposit as well as an update of the mining plan is due for completion this quarter.
Annual guidance for 2017 released: 80-85koz in production at $800-850/oz AISC.
2017 production is expected to be weighed towards the H2/17 as the contribution from the high grade underground ore increases.
21koz in forward gold sales is outstanding from Jan to Aug at an average price of $1,318/oz.
Conclusion: Q4 rounded up a good year with the NLGM operations beating production and costs management guidance. Underground development operations continue on schedule with the management highlighting that the position and orientation of the ore matches design works. 2017 grades are likely to come down slightly as higher grade material from Bauhinia Creek is to start come in Q2/17 accelerating through H2/17. As such H2/17 should come in better than an average for the year in production and costs terms. An updated NLGM mining plan is due in Q1/17 which is due to extend the NLGM LoM with the addition of the Ilunga and new Elizabeth Hill reserves. Post the peak capex year in 2016, 2017 is expected to post a reduction in net debt given stable production levels and below average operating costs.
Solgold* (LON:SOLG) 30.5p, Mkt Cap £436m – Investors anticipate further copper, gold discovery at Cascabel
SolGold shares are seeing increasing investor interest based on the Cascabel discovery at Cascabel in Ecuador.
Investors are buying stock based on expectations for further kilometre-long intersections of mineralisation at the Alpala prospect, Cascabel.
While these huge intersections generally run from around 400-600m down hole they run for >1km and may join with a much larger mineralised body at greater depth.
Geophysical analysis of other targets within the Cascabel license area suggests that Alpala is not on its own and that further mineralised bodies should lie within easy reach of initial Alpala discovery.
Trenching and sampling of surface mineralisation offers tantalising clues of what might lie below these targets but only drilling can reveal their true scale.
Drilling of these targets should hopefully prove the hypothesis for a number of very large mineralised masses extending toward the surface from a much larger feeder zone at around 2km depth.
The geological and drilling teams are clearly excited by the prospects of pulling out such long sections of mineralised material and the implications of the potential to repeat the Alpala discovery on other targets. Their enthusiasm comes across in the company’s latest explanatory video.
The team have identified a total of 14 targets within the licence area and the crews should start drilling some more prospective sites as new rigs arrive.
The deployment of additional drilling equipment is set to ramp up through the year with a fourth rig working on Alpala from next month and a fifth rig to be assigned to the Alpala South area, approximately 1km southeast of the current area in March.
Newcrest have bought into SolGold for the discovery at Cascabel and as experts in block caving are interested in the economic potential the discovery presents.
BHP were also sufficiently interested in Cascabel’s Alpala discovery to submit an offer though Newcrest gained a first mover advantage in their funding.
Codelco, the giant Chilean copper miner, are also back in Ecuador with a joint venture with Enami EP to explore an estimated $200bn worth of untapped copper reserve at the Llurimagua deposit just 70km south of Cascabel.
Ecuador, once seen as a difficult state in Latin America now joins the ranks of reforming nations in Latin America after the slow realisation that Socialism/Communism only seems to enrich the ruling elite and that Capitalism, for its many flaws seems to lead to a better outcome for all.
The President and Minister of Mines have been working on significant improvement to the current mining legislation through tax reforms and incentives. The state recently agreed an investment protection agreement with Lundin Gold which will pay advance royalties of $65m to the government of Ecuador. Key areas are capital depreciation, tax shields and deferrals, import duties, VAT recover and most importantly windfall taxes which are now only paid after a full return of capital and only applies to copper prices of >$4/lb.
SolGold have a form of first mover advantage in its discovery at Cascabel with its activities closely followed by Lundin Mining who acquired the multi-million ounce Fruta del Norte gold project from Kinross when they sold out in 2014. But, the team has more work to do to produce a JORC compliant resource at Alpala and may continue to evaluate the prospect for some time before working through the economic parameters required by the new JORC code for a detailed resource estimate.
Geologically fractures in the Andean plate has enabled the creation of large scale porphry mineralisation at points from Patagonia through to Panama and Mexico. A disproportionate number of the world’s largest copper mines lie on these structures many more yet to be discovered. The geologies of Chile and Peru are well known but the politics of Ecuador, Colombia and Panama mean that much remains to be discovered in these regions.
The Alpala discovery is interesting from a bulk-scale block caving perspective with its huge column of higher-grade copper, gold mineralisation. The mineralisation could be accessed via a long adit using the topography of the land to drive into a point close to the base of the current drilling. Alternatively a shaft could be sunk for access. Both methods have the advantage of minimising the footprint of the mine and limiting its environmental impact.
Newcrest are developing the $2.3bn Wafi-Golpu project in PNG in joint venture with Harmony Gold Mining. Wafi-Golpu has a large mineral resource of 8.6mt copper and 18.6moz of gold with planned peak production of 150,000tpa of copper and 320,000ozpa gold in 2025. Newcrest reported a year ago an NPV for stage one of the Wafi-Golpu project at US$1.1bn and an IRR of 15%.
Some investors reckon Cascabel could become another Grasberg based on the scale of the mineralisation. Grasberg is the world’s tenth largest copper mine according to a list on ‘Mining Technology’. A resource of sufficient scale to rank close to the world’s top ten copper mines would be of great interest to the major mining companies and could lead to a bidding war for the asset among the major players.
See 2017 corporate video for a good representation of the Cascabel project https://www.solgold.com.au/videos/
A new company presentation is also available:
https://static1.squarespace.com/static/560a5feee4b0a63bf47c76f5/t/58765899e6f2e1ab23aab391/1484150944798/SOLGOLD_January_2017.pdf
Conclusion: For now investors are looking for Cascabel to become the next big copper discovery in Latin America. SolGold is well funded with $43m of cash to advance its discovery at Alpala and to test other targets within the Cascabel license area. The team are excited about the potential to make further Alpala-like discoveries and for the potential for these to connect at depth. There is also potential for some near-surface copper, gold mineralisation to provide for a near-term development proposal.