Bushveld Minerals* (BMN LN) 8.2p, Mkt Cap £60m – Uis Tin, lithium update in Namibia and MoU on power project with Chinese in Madagascar
SP Angel Mining Sector AIM-listed ‘house’ stocks outperform AIM Basic Resources index by 43% in Q1
We wish to thank our clients for their blood, sweat and persistence in the creation of so much by so few for so many
• SP Angel are pleased to report good performance in its portfolio of 18 mining sector AIM-listed franchise stocks.
• Our list of AIM listed mining sector house stocks has shown average performance of +55% in Q1 (+16% in Q4 ’16, +22% in Q1 ’16)
• The SP Angel AIM resources list has outperformed the AIM Basic Resources Index by 43% in relative terms
• Star performers for Q1 this year include Bushveld Minerals +306%, Strategic Minerals +206%, IronRidge Resources +192%
• Star performers over the past 12 months are: SolGold +1,137%, Strategic Minerals +983%, IronRidge +759%, BlueJay Mining +345%, Bushveld Minerals +256%
SP Angel AIM share performance calculated on an equal weighting basis. AIM Basic Resources index weighted by market capitalisation
FTSE 350 Mining Index is up 1.3% this morning on the back of a rebound in base and bulk commodities prices.
• Gold is holding onto its gains trading at a one-month high amid range bound US$ index.
• Zinc prices are up more than 2% as the aftermath of floods in Peru, the world’s second largest producer, affect shipment routes from local mines to smelting plants.
• Votorantim’s Cajamarquilla smelter is reported to be running at only 50% of its 330ktpa zinc capacity on the back of a shortage of delivered concentrates.
• Iron ore futures for Sep/17 delivery were up 1.6% this morning with rebar prices up 2.3% as trading resumes on mainland China after a two-day break.
• Brent prices are up 1.2% following the API report showing the US stockpiles fell by 1.8mmbbl last week; government data is due later today with estimates for a weekly decline.
The New Scientist reports that Physics suggests that information is more fundamental than matter, energy, space and time
• We agree, when it comes to the mining sector good information on mineral projects is fundamental.
• At SP Angel, we analyse the information so you can trade the shares and then pay for more matter, energy, space and time.
Dow Jones Industrials +0.19% at 20,689
Nikkei 225 +0.27% at 18,861
HK Hang Seng +0.08% at 24,281
Shanghai Composite +1.48% at 3,270
FTSE 350 Mining +1.90% at 16,158
AIM Basic Resources -0.41% at 2,632
US – Factory orders registered a third consecutive month of growth painting a different picture to 2015 and 2016 when factory output remained in the contraction territory for the most of periods reflecting greater optimism over promised business friendly Trump’s legislation changes.
• Although, should the progress over delivering initiatives stall industrial production growth momentum is likely to reverse amid the prospect of rising borrowing costs and strong US$.
China – The government announced plans to create the Xiongan New Economic Zone bear Beijing with markets back from two day holidays lifting prices for construction related commodities.
• News about the Xiongan zone, an equivalent to the Shenzhen special economic zone, which were announced on Saturday saw a surge in investor interest for real estate in the area.
• In a move to cool down speculation, the government placed a ban on all property sales in the zone on Sunday.
Eurozone – Composite production in manufacturing and services sectors confirmed at the strongest level in almost in six years in Mar, according to the latest Markit data.
• Among highlights of the report:
• “A rise in the survey’s employment index to its highest for almost a decade.”
• “All of the nations covered saw levels of both new orders received and outstanding business rise during the latest survey month.”
• “Price pressures remain elevated, and look likely to feed through to higher consumer prices in coming months, but it seems likely that the ECB will hold its accommodative policy stance until at least later this year.”
UK – Car registrations post record reading in Mar (562k +8.4%yoy) marking the “biggest month since records began” as buyers accelerated purchases ahead the new vehicle excise duty rates coming into force in Apr 1.
• “Looking ahead to the rest of the year, we still expect the market to cool only slightly given broader political uncertainties as there are still attractive deals on offer,” the Society of Motor Manufacturers and Traders (SMMT) responsible for the data said.
• Composite production PMI climbed more than forecast in Mar as a rebound in the services sector growth helped to more than offset a slight slowdown in the manufacturing.
• While business activity picked up in Mar from a five month low hit in the previous month, “the upturn fails to change the picture of an economy that slowed in the first quarter”.
• “The relative weakness of the PMI survey data compared wot that seen at the turn of the year suggests the economy will have grown by 0.4% in the first quarter, markedly lower than the 0.7% expansion seen in the fourth quarter of last year,” the report said.
• Markit Manufacturing PMI (released on Monday): 54.2 v 54.5 in Feb and 55.0 forecast.
• Markit Services PMI: 55.0 v 53.3 in Feb and 53.4 forecast.
• Markit Composite: 54.9 v 53.8 in Feb and 53.8 forecast.
MPs called for an end to bankers bonuses after the Global Financial Crisis
• MPs then asked for investment banks to put longer term incentive structures in place which many banks did
• Now MPs are asking for banks to scrap long-term incentive bonus schemes known as LTIPS because they reckon they encourage short-term decision making
• What next? Perhaps they will ask to scrap all pay and rations and then wonder why they won’t have much of a banking industry anymore
• The calling purely serves to highlight self-serving rank stupidity of many politicians
North Korea posts online advertisement offering to sell 22lbs of highly pure lithium every six months
• The ad is interesting because highly pure lithium 6 is used to turn ordinary atom bombs into hydrogen bombs.
• We suspect the CIA will be bidding up the metal and we have to hope that ISIS and other terrorist organisations don’t get hold of the metal.
• The seller has been identified as the third secretary of the North Korean Embassy. Let’s hope his boss approves of this activity?
• It is possible that the US might bomb N Korea sooner rather than later if China refuses to intervene.
Economic News
Currencies
US$1.0687/eur vs 1.0654/eur yesterday. Yen 110.67/$ vs 110.53/$. SAr 13.491/$ vs 13.846/$. $1.245/gbp vs $1.243/gbp.
0.758/aud vs 0.757/aud. CNY 6.892/$ vs 6.887/$.
Commodity News
Precious metals:
Gold US$1,257/oz vs US$1,258/oz yesterday
Gold ETFs 59.0moz vs US$59.0moz yesterday
Platinum US$969/oz vs US$958/oz yesterday
Palladium US$809/oz vs US$807/oz yesterday
Silver US$18.31/oz vs US$18.34/oz yesterday
Base metals:
Copper US$ 5,855/t vs US$5,739/t yesterday
Aluminium US$ 1,964/t vs US$1,950/t yesterday
Nickel US$ 10,180/t vs US$9,775/t yesterday
Zinc US$ 2,795/t vs US$2,705/t yesterday
Lead US$ 2,337/t vs US$2,278/t yesterday
Tin US$ 20,050/t vs US$20,050/t yesterday
Energy:
Oil US$54.6/bbl vs US$53.0/bbl yesterday
Natural Gas US$3.279/mmbtu vs US$3.138/mmbtu yesterday
Uranium US$23.50/lb vs US$23.50/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$77.1/t vs US$75.9/t - oil prices rising on unplanned production outage in the North Sea and lower US oil inventories
Chinese steel rebar 25mm US$558.2/t vs US$557.3/t
Thermal coal (1st year forward cif ARA) US$66.5/t vs US$67.7/t yesterday
Premium hard coking coal Aus fob US$176.8/t vs US$175.7/t
Other:
Tungsten - APT European prices $208-216/mtu vs $187-198/mtu
Company News
Bushveld Minerals* (LON:BMN) 8.2p, Mkt Cap £60m – Uis Tin, lithium update in Namibia and MoU on power project with Chinese in Madagascar
• Bushveld Minerals are exceptionally busy people. Not only are they consummating their deal with Vametco, the vanadium producer this week but they also report an update on the Uis Tin / lithium project in Namibia as well as the signing of an MoU between subsidiary Lemur and Sinohydro a subsidiary of PowerChina.
• Each one of these deals is transformational in that they should take Bushveld into production and positive cash flow.
• Completion of the deal with Vametco this week is the keystone in Bushveld’s strategy while yesterday’s update on the Uis tin project offers relatively potential for tin and associated lithium production.
• Uis: The key to the Uis tin project is in its higher-grade tin zones. The project also carries some unusually high lithium grades as seen in grab samples and on the old Uis tin tailings dumps which are currently in the hands of Tawana.
• Tawana, which is transforming its self into a lithium producer paid $3m to acquire the rights to the Uis tin and lithium tailings last September.
• They report 21mt of tailings with augur drill results showing 0.43-0.95%.
• They comment that “the most common lithium minerals reported from the unzoned albite rich Uis pegmatites are:
o Amblygonite (Li,Na)AlPO4(F,OH), contains 7.3-10.0% Li2O;
o Petalite LiAlSi4O10, contains 3.4-4.9% Li2O; and
o Spodumene LiAl (SiO3)2, contains 8% Li2O.”
o Bushveld’s Greenhills subsidiary completed their agreement to acquire 49% of the Uis tin project announced in December yesterday with the issuance of £650,000 worth of shares as agreed back then with Greenhills Resources. The agreement offered 41m new shares to Greenhills who are locked up for 6 months.
o Erongo Tin Ltd are to spend A$2m towards a scoping study and on processing equipment on the Uis tin project. See yesterday’s press release for further details on the complexity of the agreements.
o Bushveld’s due diligence confirms a large pegmatite orebody grading an average of 0.3% tin containing some 20,000t of tin. Historic work also shows 70mt grading 0.14% tin for 90,000t of contained tin.
o Elevated tin grades in parts of the orebody should enable Bushveld to start smaller scale mining relatively quickly.
o Lithium in the pegmatites could also be transformational for the future economics of the project.
o Madagascar power project:
o MoU signed between Bushveld’s subsidiary Lemur Holdings and Sinohydro Corporation (PowerChina) to work on an initial 60MW Independent Power Producer ‘IPP’ coal power plant and associated 200km transmission line.
o The coal for the power station should come from Lemur’s coal mining permit area in Madagascar.
o Sinohydro is paying for a BFS on the project within the next 12 months and should have EPC and M&M contracts for the IPP plant and transmission lines within 18 months.
o Lemur (Bushveld) and Sinohydro are to work together to secure debt and equity funding for the project.
o A new joint venture company may be set up to take equity from PowerChina.
o Lemur will continue to develop its coal mine plan for the supply of coal to the IPP project.
o The IPP project should be transformational for the southern part of Madagascar as there is no power grid currently in this part of the island. The project should support existing mining and industrial works at this end of the island.
Conclusion: Bushveld is going through a transformational period with the consummation of Vimetco, the signing of the MoU with Lemur and the completion of the Uis tin, lithium deal in Namibia. It’s good to see a company where management are so active and are taking full advantage of opportunities in the mining and power sectors.
*An SP Angel mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.