Ironveld (LON:IRON) – Interims highlight progress towards final debt financing and construction of
Metal Tiger (LON:MTR) – £4.29m of new financing to keep up with MOD Resources drill program in Botswana
Tertiary Minerals* (LON:TYM) – proposed subdivision of share capital
Vast Resources (LON:VAST) – Maiden JORC resource for Faneata tailings project at Baita Plai polymetallic mine in Romania
Colombian government overrules Cajamarca mining ban referendum (BBC)
• The government of Colombia have overruled the people, they wouldn’t dare do it here, would they?
• Locals in the Cajamarca of Colombia voted to ban a major gold project, La Colosa in Central Colombia owned by AngloGold Ashanti
• AngloGold Ashanti already have a license to start gold mining at La Colosa
• The problem is that if AngloGold Ashanti do not manage the mine then the region and its people may suffer from the development of illegal gold mining in the region as is seen in many other parts of Colombia.
• Illegal gold pits result in significant numbers of unreported fatalities in Colombia, pollution of rivers with mercury used by artisanal miners and funding of rebel groups by illegal mining activity
• While it is difficult for a government to overrule the will of the people we reckon the government is right to support AngloGold Ashanti in this respect for the benefit of the region and the nation as a whole
Tencent buys 5% stake in Tesla for UE$1.78bn
• Tesla says the stake is passive. Elon Musk retains a 21% stake in the company.
• The move indicates continuing confidence in the potential for Tesla to become one of the world’s larger automotive companies.
• Automotive giants, BMW, Mercedes and VW are keen to catch up but maybe wary of the impact a new range of electric vehicles might have on existing, conventional vehicle sales and production.
Brexit draws closer as UK moves to trigger Article 50
• At around 1.30pm today the British Ambassador in Brussels hands over Prime Minister Theresa May’s letter to trigger Article 50 – formal notification of withdrawal from the EU.
• Article 50 allows two years for negotiation, though if Canada is anything to go by it could take >6 years to complete. In the meantime we may simply revert to World Trade Organisation tariffs which might prove more expensive for European imports into the UK than the other way round.
• The number of laws that apply to the UK and influenced by the EU aren’t easy to determine.
• According to the UK Parliament’s House of Commons library – from 1993 to 2014 the UK Parliament passed 945 Acts of which 231 included EU obligations and 33,160 Statutes including 4,283 EU obligations.
• The UK population is 63.7m of which 31.4m are in work. Of the total population, 5.3m (8%) are non-British and of these 2.9m are from the EU (UK Office of National Statistics ONS).
• The proportion of UK trade with the EU has been falling since 1999.
• UK GDP was $2.9tr in 2015 versus the EU $16.3tr at (source: World Bank) with 44% of UK products and services exported to the EU. 53% of our imports came from the EU (ONS).
• 11% of UK goods went to Germany, the source of 15% of UK imports, and 17% to the US (the source of 9% of UK imports).
• Between 2012 to 2014 slightly more that 50% of UK exports went to EU.
• The EU 2017 total annual budget is £124.7bn. The UK’s 2017 total annual budget is £784.1bn. During 2014/2015 the UK net contribution to the EU (post receipts and rebates) was £10.8bn (source: House of Commons).
• It is interesting to note that many communities in the UK which received EU funding voted to leave often citing what they saw as misspent spending, increasing EU legislation and a lack of accountability with EU leaders.
Sterling has fallen >1.3% since yesterday evening following on the back Theresa May signing the historic Brexit letter to the EU authorities invoking Article 50
• The Article 50 trigger will start this afternoon in Brussels as Tim Barrow, Britain’s ambassador to the EU, will hand the letter to Donald Tusk, the European Council President.
• In Scotland, the Parliament voted in favour of starting another independence referendum, the decision the UK government has already refused to agree with.
• Fed Vice Chairman Stanley Fischer supported views of his colleagues saying two rate hikes this year “seems about right”.
• Gold prices are off slightly with the US$ index trading higher.
• Brent is up 1.7% this yesterday morning amid the news over the Lybian oil pipeline disruptions. The nation said its production is expected to fall to 560mmbbl per day, down from 700mmbbl, due tot the incident.
• Iron ore and steel futures in China jumped on the back of the news that Chinese authorities are probing producers into compliance with output cuts orders.
• Hebei authorities are taking a closer look at the progress of steel capacities cuts in Tangshan with the data pointing to a 6.8%yoy increase in steel production in the region in 2016 despite official targets to reduce capacities.
Dow Jones Industrials +0.73% at 20,702
Nikkei 225 +0.08% at 19,217
HK Hang Seng +0.16% at 24,384
Shanghai Composite +0.13% at 3,257
FTSE 350 Mining +1.97% at 15,555
AIM Basic Resources +1.28% at 2,606
Economics
US – Consumer confidence hit the highest level in more than 16 years in Mar with both sub-indices for the present conditions and future outlook improved, according to the Conference Board data.
• Consumers expect to increase spending on big ticket items such as automobiles and major appliances.
• While the sentiment has been driven by increasing stocks and solid labour market, confidence may start to tail off should the administration find it hard to get its pro-business agenda through the Congress.
• A separate report showed property prices growth strengthened in Jan bringing the pace to the highest level since 2014 driven by low borrowing costs and low inventories.
• The increase was broad based with all 20 cities included in the S&PCS index posting YoY growth.
Japan – Retail sales growth slowed down in Feb highlighting weak domestic demand.
• Outlook remains bleak given results of preliminary annual spring wage talks which point only to a modest increase in base pay this year.
• Retail Sales (%mom/yoy): 0.2/0.1 v 0.2/1.0 in Jan and 0.3/0.7 forecast.
France – French consumer confidence holds at the highest level in nearly a decade despite previous concerns over a potential adverse effect of political uncertainty brought by presidential elections weighing on the sentiment.
Currencies
US$1.0799/eur vs 1.0861/eur yesterday. Yen 111.22/$ vs 110.57/$. SAr 13.071/$ vs 12.986/$. $1.239/gbp vs $1.258/gbp.
0.764/aud vs 0.760/aud. CNY 6.892/$ vs 6.884/$.
Commodity News
Precious metals:
Gold US$1,250/oz vs US$1,254/oz yesterday
Gold ETFs 58.9moz vs US$58.9moz yesterday
Platinum US$954/oz vs US$966/oz yesterday
Palladium US$791/oz vs US$788/oz yesterday
Silver US$18.08/oz vs US$18.06/oz yesterday
Base metals:
Copper US$ 5,880/t vs US$5,791/t yesterday – Cochilco, a Chilean state owned agency, is expecting the market to post a 200-250kt deficit this year on the back of production disruptions.
• The agency sees copper prices averaging $2.50-2.55/lb (c.$5,500-5,600/t) up from $2.40 expected in Jan.
• Prices averaged $5,854/t so far this year and climbed as far as $6,100/t on the back of the news of strikes at Escondida and limited shipments from Grasberg.
• The metal currently trades at $2.68/lb.
Aluminium US$ 1,946/t vs US$1,924/t yesterday
Nickel US$ 9,975/t vs US$9,790/t yesterday
Zinc US$ 2,841/t vs US$2,760/t yesterday
Lead US$ 2,330/t vs US$2,285/t yesterday
Tin US$ 20,055/t vs US$19,845/t yesterday
Energy:
Oil US$51.6/bbl vs US$51.0/bbl yesterday
Natural Gas US$3.090/mmbtu vs US$3.031/mmbtu yesterday
Uranium US$24.50/lb vs US$24.65/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$78.4/t vs US$79.4/t
Chinese steel rebar 25mm US$554.3/t vs US$554.9/t
Thermal coal (1st year forward cif ARA) US$64.5/t vs US$62.9/t yesterday
Premium hard coking coal Aus fob US$150.2/t vs US$150.2/t
Other:
Tunsgten APT European US$206-216/mtu (from the 24Mar week) v US$208-216/mtu (from the 17Mar week)
Company News
Ironveld (LON:IRON) 3.89, mkt cap £14.5m – Interims highlight progress towards final debt financing and construction of
• Ironveld report interim results today. The statement updates us on the company’s High Purity Iron ‘HPI’ project in the Bushveld region of South Africa
• We are reminded that Ironveld has offtake agreements in place for their HPI product containing iron, vanadium and titanium for the first five years of production. This is crucial as it demonstrates that sufficient testwork has been done to attract an offtake partner into the project.
• The offtake is with Oreport, who will take all Ironveld’s HPI powder production for five years at 42,000tpa as per the DFS as well as all the titanium slag production.
• The idea is to build a 15Mw DC arc furnace smelter to melt the concentrate and produce a titanium slag product. The vanadium alloy is then converted with the addition of oxygen to produce a vanadium slag product and liquid high purity iron.
• The process should produce 381t of vanadium in slag grading 36%C and 8,269t of titanium again in slag grading 65% TiO2.
• Management expect land lease agreements for Harriets Wish, Cracouw and Aurora farms to be in place in early Q2, eg within weeks.
• Ironveld raise £1.8m to support the company through the issue of 40m new shares at 4.5p/s.
• The Industrial Development Corporation ‘IDC’ of South Africa has approved a funding package of SAR244m (~£18.7m).
• This should support the completion of the debt raising to fund the construction of the HPI project which had an estimated capital cost of $63m according to a DFS in 2014.
Metal Tiger (LON:MTR) 2.45 pence, Mkt Cap £27m – £4.29m of new financing to keep up with MOD Resources drill program in Botswana
• Metal Tiger has signed a £4.29m financing with a wealth management company based in Canada.
• The proceeds are to be used to fund Metal Tiger’s commitment to the T3 copper resource in Botswana which is being drilled by its jv partner MOD Resources.
• MOD Resources recently raised A$14.6m in what is described as a heavily oversubscribed placement in Australia done at A$0.062/s, the shares are now trading at A$0.084/s.
• Metal Tiger holds a 30% interest in the project (MOD Resources 70%) though Metal Tiger also hold stock in MOD Resources.
• The T3 copper project looks interesting for its long intersections and relatively good copper grades.
• Mineralisation appears to repeat in multiple intervals of disseminated, laminated, cleavage and vein hosted copper sulphides including bornite, chalcocite, covellite and chalcopyrite
• An in-hole intersection of 72.6m grading 1.5% copper and 27 g/t silver from a depth of 250m, with a higher grade section of 18m grading 2.7% copper and 52g/t silver from a depth of 280m.
• The two companies have agreed to accelerate resource drilling of the new mineralised zone with four drill rigs are now on site and to incorporate this into the ongoing Pre Feasibility Study.
• So far the T3 resource is reported to be 28.36mt grading 1.24% copper and 15.7 g/t silver though this is expected to get much larger with the discovery of repeating intervals of copper mineralisation.
• MOD’s recent T3 scoping study shows an open pit mine feeding a 2mtpa process plant and production of ~21,800tpa of copper and 665,000tpa of silver.
Conclusion: T3 resource should continue to grow and could make for a value added PFS depending on the geometry of the mineralisation. However, we are conscious of previous copper mines in Botswana which have come unstuck on lower than expected process recovery rates through the processing of transitional mineralisation. Eg ore which is a blend of oxide and sulphide material.
Alecto Minerals recently reopened the Mowana Copper mine in Botswana with test production underway to produce a saleable concentrate.
There are also plans to reopen the Boseto copper mine in Botswana which was formerly owned by Discovery Metals by Khoemacau Copper Mining following its liquidation.
Tertiary Minerals* (LON:TYM) 0.725p, Mkt £1.9m – proposed subdivision of share capital
• Tertiary Minerals is to hold a general meeting on 13 April 2017 to propose the subdivision of its shares and accompanying proposed amendments to its Articles of Association.
• The Company is not permitted by law to issue Ordinary Shares at an issue price which is below their nominal value, currently 1 pence per Ordinary Share. In order to enable the Company to issue shares in the future at an issue price which exceeds their nominal value the Company is proposing to complete a subdivision of the ordinary share capital of the Company. Each of the Existing Ordinary Shares will be subdivided into 1 New Ordinary Share of 0.01 pence each and 1 Deferred Share of 0.99 pence each.
• The Division of Capital will not of itself affect the value of the shares held by shareholders. After the Division of Capital, there will be the same number of New Ordinary Shares in issue as there are Existing Ordinary Shares in issue and therefore shareholders will not be diluted unless a further equity fundraising is completed by the Company.
• The New Ordinary Shares will have the same rights as those currently accruing to the Existing Ordinary Shares in issue under the Articles of Association of the Company, including those relating to voting and entitlement to dividends. New share certificates for New Ordinary Shares will not be issued and the existing certificates will remain valid.
• The Deferred Shares will have no significant rights attached to them and carry no right to vote or participate in distribution of surplus assets and will not be admitted to trading on the AIM market of the London Stock Exchange plc. The Deferred Shares will effectively carry no value.
• The company has made significant progress at its MB Flourspar project in Nevada and has disposed of a number of gold projects. It is now looking for new ideas which might further generate value and attention.
• Tertiary reported late last year that its application for a mining permit at the Storuman fluorspar deposit in Sweden has been referred for review by the Swedish Mining Inspectorate.
*SP Angel act as Nomad and broker to Tertiary Minerals
Vast Resources (LON:VAST) 0.57 pence, Mkt Cap £26.3m – Maiden JORC resource for Faneata tailings project at Baita Plai polymetallic mine in Romania
• Vast Resources reports a total mineral resource from the Faneata tailings dam at the Baita Plai polymetallic project in Romania.
• The tailings dam is estimated to hold some 3.0mt of total resource with 2.4mt of this attributable to Vast Resources.
• The tailings grade at a 0.0g/t and a 0.0% cut-off grade:
o 0.05g/t gold,
o 8.65g/t silver,
o 0.092% copper,
o 0.101% lead,
o 0.171% zinc,
o 0.013% bismuth,
o 0.006% molybdenum
o 0.017% tungsten
o The company plans on utilising the Baita Plai process plant 6.5km away
o A Preliminary Economic Assessment, which is some way off the details of a feasibility study suggests the project could breakeven at a 25% recovery
o The company reckon they can recover 36% of the metal and that this may yield a 44% margin over a 16-20 month period.
o Metallurgical work is underway to determine the amenability if the Faneata resource to pre-concentration and flotation and a more detailed feasibility study is due in Q2.
Conclusion: The metallurgical results will be crucial for the project and will most likely determine the viability of the process. It will also be useful to know what the payability of the metals in the concentrate will be given the wide range of metals to be produced. Extracting gold from copper and zinc can be difficult and may be best left to a smelter which will charge for the privilege assuming other impurity levels are sufficiently low to allow its smelting.