Anglo American (LON:AAL) – Sale of Union Platinum
Beowulf Mining (LON:BEM) – Update on Kallak North Application
Birimian Limited (ASX:BGS) – Drilling shows high grade mineralisation at Bougouni lithium project
Georgian Mining* (LON:GEO) – STRONG BUY - Much greater copper resource to come from Kvemo Bolnisi
IronRidge Resources (LON:IRR) 14.75p, Mkt Cap £35.1m – Interim results show revised strategy to focus on prospective metals and lithium exploration
PBoC – The Peoples Bank of China is injecting Rmb393.5bn (US$57bn) liquidity
• Rmb150 for six months and Rmb242.5bn for a year of medium term lending to 22 financial institutions
• One has to ask why the PBoC are injecting so much new liquidity. Are they protecting against a trade war or some other forecast slowdown.
China – protest leads to suspension of construction of new aluminium plant
• 200 protestors are reported to have faced off police in the city of Daqing city, China
• The protest are against pollution from a the proposed construction of a new aluminium plant
• The plant is planned to create >30,000 jobs
• Air pollution is blamed for >1.4m premature deaths in China according to the Max Planck Institute
• Our advice to the protestors is to let the state build new plants but to insist on the closure of any older non-environmentally compliant facilities
Dow Jones Industrials +0.45% at 20,504
Nikkei 225 +1.03% at 19,438
HK Hang Seng +1.23% at 23,995
Shanghai Composite -0.15% at 3,213
FTSE 350 Mining +0.39% at 17,167
AIM Basic Resources +0.45% at 2,727
Economic News
China – twelve cities in China have economies greater than Rmb12tr last year
Japan – finance minister ‘its clear that China is in a bad position, its just a question of how and when it turns sour’
UK – unemployment hits lowest level in decade to 1.46m at 4.8%
Philippine environment secretary cancels 75 mining deals. The Chamber of mines expects this to wipe out nickel mines in the Philippines.
• We agree with the Philippines environment and mining ministers on this one. Digging up nickel laterite ores for export to China while causing unnecessary environment damage is not good a good thing.
Currencies
US$1.0558/eur vs 1.0620/eur yesterday. Yen 114.49/$ vs 113.47/$. SAr 13.016/$ vs 13.226/$. $1.246/gbp vs $1.252/gbp.
0.768/aud vs 0.768/aud. CNY 6.868/$ vs 6.867/$
Commodity News
Precious metals:
Gold US$1,226/oz vs US$1,229/oz yesterday
Gold ETFs 58.4moz vs US$58.4moz yesterday
Platinum US$999/oz vs US$1,000/oz yesterday
Palladium US$781/oz vs US$779/oz yesterday
Silver US$17.88/oz vs US$17.89/oz yesterday
Base metals:
Copper US$ 6,032/t vs US$6,140/t yesterday
Aluminium US$ 1,892/t vs US$1,894/t yesterday
Nickel US$ 10,800/t vs US$10,825/t yesterday
Zinc US$ 2,901/t vs US$2,945/t yesterday
Lead US$ 2,359/t vs US$2,431/t yesterday
Tin US$ 20,040/t vs US$19,870/t yesterday
Energy:
Oil US$55.7/bbl vs US$55.8/bbl yesterday
Natural Gas US$2.946/mmbtu vs US$2.920/mmbtu yesterday
Uranium US$25.90/lb vs US$26.75/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$87.7/t vs US$87.3/t
Chinese steel rebar 25mm US$535.9/t vs US$534.2/t
Thermal coal (1st year forward cif ARA) US$66.2/t vs US$64.6/t yesterday – China looking to reassert coal production restrictions in next six months
Premium hard coking coal Aus fob US$154.8/t vs US$162.4/t
Other:
Tungsten - APT European prices $196-205/mtu vs $194-200/mtu
Company News
Anglo American (LON:AAL) 1403.5 pence, Mkt Cap £18.1bn – Sale of Union Platinum
• Anglo American reports that Anglo American Platinum has agreed the sale of its 85% interest in the Union platinum mine in South Africa to Siyanda Resources.
• The sale, which also includes a 50.1% interest in the MASA Chrome Company, comprises an initial cash payment of R400m (approximately US$30m) followed by “a deferred consideration based on 35% of cumulative distributable free cash flow paid annually as an earn-out for a period of 10 years”
• “Anglo American Platinum will retain the Mortimer smelter operation … [and] Siyanda will sell concentrate produced by the Union Mine to Anglo American Platinum for a period of seven years from the completion date of the Transaction on pre-agreed commercial terms, thereafter Anglo American Platinum will toll treat concentrate for the remaining life of the Union mine.”
• The Union mine contributed approximately 8.4% (R3.96bn) of the Anglo American Platinum net revenue of R46.93bn in 2016 and contributed approximately 151,000 oz of platinum production – a 7% increase on the 2015 output which the company attributes to “higher stoping efficiencies and an increase in low grade surface ore, despite a significant reduction in labour after restructuring that was completed in June 2016 … and improved its cash on-mine costs per platinum ounce by 14% year-on-year”.
• In addition to the sale of the Union mine, which is expected to be completed during 2017, Anglo American has reported 2016 results for Anglo American Platinum in which it holds an interest of approximately 78%.
• Anglo American Platinum has reported headline earnings of R1,867m (R7.13/share) compared to a headline loss of R126m (R0.48/share) in 2015.
• The “average US dollar basket price per platinum ounce sold decreased by 8% in 2016 to US$1,753 from US$1,905 in 2015. This was driven by the decrease in prices for all metals other than gold and iridium. The average US dollar sales price achieved on most metals declined, with platinum down 6% to US$993 per ounce, palladium down 13%, rhodium down 29%, nickel down 18% and copper down 8%.”
Conclusion: Anglo American’s platinum business is being significantly restructured within the context of a wider restructuring which has seen Anglo American dispose of coal assets in Australia and its Brazilian phosphates and niobium business. The disposal of the Rustenburg platinum operations was completed on 1st November 2016 and now the group has reported the disposal of the Union platinum mine.
Beowulf Mining (LON:BEM) 10.5 pence, Mkt Cap £25.8m – Update on Kallak North Application
• Beowulf Mining reports that it has written to the Swedish Mining Inspectorate concerning comments made by the Norrbotten Couunty Administative Board in respect of the company’s application for an exploitation permit at Kallak North.
• The Mining Inspectorate is adjudicating on the application and the company is expressing concern over the specific causes of objections and evident frustration over the time the process is taking.
• Company CEO, Kurt Budge, commented that “It is now almost four years since we submitted our application, and in the absence of the Norra Kärr judgement, we believe, because our application has met the requirements of the prescribed process, and can deliver jobs and economic benefits to Jokkmokk and the County of Norrbotten, we should have been awarded the Concession in early 2016.”
• Mr Budge also said "We trust the Mining Inspectorate, as adjudicators of the review process, to ensure that our application is dealt with fairly and in accordance with the prescribed process.”
• We note that the company announcement also states “we do not understand the legal basis for any process involving United Nations Educational, Scientific and Cultural Organisation ("UNESCO"), when considering the Company's application for an Exploitation Concession.” which suggests that additional objections may have been raised to the planned development.
Conclusion: The lengthy delays in permitting Kallak North reveal that there is still a political risk to mining even in stable and secure jurisdictions with established legal systems and such risks are not, as sometimes portrayed, confined to more frontier areas of the developing world.
Birimian Limited (ASX:BGS) A$0.30, mkt cap A$57.5m – Drilling shows high grade mineralisation at Bougouni lithium project
• Birimian Limited continue to press ahead with work on the Bougouni lithium project in Mali.
• Drill results show:
o 80m @ 1.48%Li2O from 43m
o 44m @ 1.75 % Li2O from 82m, and
o 23m @ 1.97 % Li2O from 129m
o 45m @ 1.72 % Li2O from 57m
o 22m @ 1.89% Li2O from 14m.
o These look like good results to us and supports the idea of a greater JORC-compliant resource at around or even above the current JORC resource grade of 1.48% lithium ‘Li2O’.
o The company is currently working on a pre-feasibility study following the recent publication of results of a fairly comprehensive scoping study.
o Birimian’ s Bougouni project currently ranks as the world’s fourth highest grade lithium hard rock project and this may well be the fourth highest grade overall given that all the brine and clay deposits we have seen appear to carry significantly lower lithium grades.
o The Birimian team are now directing the two drill rigs on site to do additional drilling in selected priority areas.
o Birimian’s maiden JORC resource was at 15.5mt @1.48% ranking it near the top ten in terms of lithium content. We would expect the Bougouni project to expand to well within the top ten and for this to drive increasing interest in the potential development of a lithium mining and concentrate processing complex within the region.
o The discovery of other potential high-grade lithium resources within the region by Kodal Minerals may further support this view indicating that companies might be able to club together to jointly develop centralised mining and processing facilities.
o While the recent A$107.5m offer for Birimian by Shandong Mingrui has so far failed to complete we believe there may be ongoing interest in the area by parties interested in securing lithium supply for battery manufacture. One reason for this is the attractive and stable fiscal environment and regulatory regime in Mali for mining which has helped support the development of many mines in the region over the years.
Georgian Mining* (LON:GEO) 9p, Mkt Cap £7.2m – Much greater copper resource to come from Kvemo Bolnisi
Click here for flash note
STRONG BUY
• Yesterday we crafted a ‘flash note’ on Georgian Mining which we feel should do well based on recent higher-grade intersections of copper at its Kvemo Bolnisi project in Georgia.
• Management should be able to put the project into production within months through the utilisation of processing facilities at the near-by Madneuli mine which is run by Georgian’s joint venture partner.
• The intersections which have piqued our attention are:
o 113.7m at 1.70% Cu from 18.4m (KED011)
o 28.6m at 1.60% Cu and 0.80g/t Au from 47.4m (KED008)
• These intersections combined with previous drill results and an initial resource calculation of 702,000t grading 0.99% copper and 0.17g/t gold suggests there is much more material to find at the Kvemo Bolnisi site.
• While the resource shown is relatively small containing just 6,950t of contained copper worth around $42m if fully recovered we feel Georgian are at the start of a much larger discovery process.
Conclusion: It is rare to see drill results of >100m of 1.7% copper so close to surface with the result indicating much more copper is to be found in the area.
Georgian’s arrangement to use the Madneuli plant should enable the company to move to production and cash flow unusually quickly with very little capital outflow.
*SP Angel acts as Nomad and Broker to Georgian Mining.
IronRidge Resources (LON:IRR) 14.75p, Mkt Cap £35.1m – Interim results show revised strategy to focus on prospective metals and lithium exploration
• IronRidge progressively revised its strategy through 2016 to focus on prospective precious metals and lithium exploration projects while slowing works on iron ore assets in Gabon till “prices return to a sustained level which would underpin further development”.
• During the period the Company secured gold exploration assets in Chad, gold and lithium prospective tenements in Ivory Coast, lithium exploration project in Ghana as well as reviewed historic gold targets at its bauxite tenements in Queensland, Australia.
• In Chad, the team agreed to earn in up to 60% in Tekton Minerals that owns a portfolio of gold exploration projects as part of the 1,400km2 land package.
• Among selected targets (all within the 70km radius) are:
o Dorothe license with two mineralisation zones returning high grade channel and trenching samples including 4m at 14.2g/t, 2m at 34.1g/t, 2m at 31.1g/t and 1m at 63.2g/t.
o Echbara license with historical work locating a 2km long soil anomaly and trenching results showing 58m at 1.9g/t, 28m at 1.29g/t and more recent data yielding 25m at 0.61g/t and 25m at 0.8g/t.
o Am Ouchar license showing mineralisation contained in shallow dipping NE trending quartz veins with trenching intersections including 20m at 6.8g/t, 16m at 4.7g/t and 12m at 5.7g/t. Follow up trenching by Tekton returned several intersections of 2m at 9.9-18.2g/t.
o In Ivory Coast, exploration assets portfolio includes:
An earn in agreement over 3,510km2 of licenses covering “major shear zones and associated second and third order structures along proven, god bearing shears”.
An earn in agreement over 1,338km2 land package prospective in hard rock lithium mineralisation.
In Ghana, the Company secured rights to acquire the historic Eqyasimanu Hill resource estimated at 1.48mt at 1.66% Li20 (1967) with earn in agreements over adjacent areas prospective for lithium rich pegmatites.
In Australia, an 567m RC drilling programme was completed during the period testing historical targets that returned intersections of 4m at 38.8g/t (at end of hole), 3m at 18.9g/t, 2m at 73.4g/t and 1m at 145g/t at the May Queen Prospect.
Drilling results showed short high grade gold intersections along the contact zone and in close proximity to the porphyry dykes. Copper-gold was intersected in the NE of the target (1m at 1.3% Cu and 0.62g/t).
The contact zone remains open at depth and along strike which has been traced for 100m. The Company is planning to do more work at the prospect including field mapping and sampling to identify next drilling targets.
Additionally, the Company released a maiden JORC compliant resource on its bauxite project at its onogoribly license package which also includes the May Queen Prospect.
The project is estimated to host 54.9mt at 37.5% alumina and 8.5% total silica in inferred resources with preliminary scoping metallurgical tests showing potential for a production of a good to premium quality DSO bauxite at 44-52% alumina and 2-5% silica (>2% reactive silica).
The Company expanded its exploration license area with a view to potentially expand the available resource.
On financials, the Company recorded A$1.6m in operating cash flow and A$1.7m in capital spend most of which (A$1.4m) was an investment in Tekton Minerals.
Closing cash balance stood at A$7.6m as of Dec/16 and no debt.