Bushveld Minerals (LON:BMN) BUY – Target Price 11.6p – Repayment of Barak Financing
Georgian Mining* (LON:GEO) – Strong Buy – Results confirm economic gold grades at Kvemo Bolnisi with copper directly underneath
Kefi Minerals* (LON:KEFI) – 2016 results and update for the Tulu Kapi Gold Project in Ethiopia
Ortac Resources* (LON:OTC) – BUY – Restructuring highlights new focus on project advancement and more news to come
Premier African Minerals (LON:PREM) – Maiden inferred resource for Zulu Lithium Project
Stratex International (LON:STI) –Thani Stratex completes initial drilling at Pandora
Gold prices inched higher as the US$ index continued to slide hitting the lowest level since November last year.
• 10y US bond yields are off 3bp at 2.15% coming in close to the weakest since US Presidential elections as investors grow concerned over implementation prospects of the pro-growth Trump policies.
• The FOMC is set to hold a meeting next week with a 0.25bp increase in rates seems to be mostly priced in with markets to be closely watching for any indications over chances of the Fed following through with all three hikes this year.
• ECB is holding its policy meeting this week with market estimates for rates to be left at 0.0% on Thursday.
• Traders will be also following any potential revelations that might come up during the former FBI director James Comey testimony in Washington on Thursday.
• The pound is level against the US dollar ahead of general elections on Thursday.
• Copper prices are at the lowest level since mid-May amid a broader retreat among base metals.
• Iron ore futures are down trading close at the weakest level since Q4/16 while rebar prices bounced off one month lows.
• Brent is off slightly with prices exhibiting increased volatility amid reports over political conflicts in the Middle East and concerns over market oversupply.
Cobalt – new cobalt catalysts cracks water into hydrogen and oxygen offering potential for cheap and clean fuel source (R and D Magazine)
• Scientists at the US Department of Energy Argonne National Laboratory and at Harvard University have identified, for the first time, a crucial step in splitting water molecules into two atoms of hydrogen and one of oxygen that may bring an abundant amount of solar energy using a cobalt catalyst..
• Problem is the scientists do not have a firm grasp of this process because the transfers and the formation of the bond happens in less than a billionth of a second.
• It gets complicated from here but needless to say it will be a while before these catalysts find their way to a local filling station near you.
Seabed mining – Rocks found on seamount in the Pacific off Eastern Japan contain cobalt and other rare elements
• The Japan Avency for Marine-Earth Science and Technology found a seamount in the Pacific some 350km off the Boso Peninsula in Chiba Prefecture in April.
• The rocks recovered contain cobalt and other minerals in crusts at depths ranging from 1,500-5,500m.
• Samples collected were from a depth of 3,200m. By comparison Nautilus Minerals are looking at mining at 1,500m depth and up to 2,000m depth.
• The challenges of mining at these depths are considerable and require some very smart proprietary technology which currently resides in the UK so we do not expect the Japanese to start commercial scale mining this any time soon.
*Two SP Angel mining analysts have visited Nautilus’ manufacturing facilities and one has visited the exploration site in PNG.
Dow Jones Industrials -0.10% at 21,184
Nikkei 225 -0.95% at 19,980
HK Hang Seng +0.49% at 25,990
Shanghai Composite +0.34% at 3,102
FTSE 350 Mining -0.73% at 14,474
AIM Basic Resources -0.54% at 2,654
Economic News
US – Factory goods orders (ex volatile autos segment), a proxy for capital investments in the economy, climbed 0.1%mom in Apr.
• This is compared to a 0.2%mom increase in Mar and makes a 13th consecutive monthly increase.
• The report comes in line with latest PMI reports showing manufacturing sector continued to expand, although the pace of growth has been slowing down lately.
• “Manufacturing output, order books and employment all grew at only modest rates (in May),” Markit wrote last week highlighting slowing demand and strengthening US dollar challenges faced by the sector.
• Given the latest drop in the US$ index, the negative effect of the currency on exporters is expected to abate moving forwards.
Date Index Period Actual Est Previous
Monday ISM Services PMI May 56.9 57.1 57.5
Factory Orders (%mom) Apr -0.2 -0.2 1.0 (revised from 0.2)
Factory Orders (ex Auto) Apr 0.1 0.2 (revised from -0.3)
Tuesday JOLTS Job Openings ('000) Apr 5,750 5,743
Thursday Weekly Jobless Claims ('000) Jun-03 240 248
Source: Bloomberg
Australia – The A$ was little changed against the US$ as the RBA kept benchmark rates unchanged at 1.5% on the back of a mixed bag of economic data including weaker exports growth and slowing house prices, but stronger jobs market.
Currencies
US$1.1248/eur vs 1.1220/eur yesterday. Yen 109.66/$ vs 111.53/$. SAr 12.761/$ vs 12.934/$. $1.293/gbp vs $1.286/gbp.
0.748/aud vs 0.738/aud. CNY 6.798/$ vs 6.817/$.
Commodity News
Precious metals:
Gold US$1,289/oz vs US$1,262/oz yesterday – Chinese gold demand outlook is strong, according to the Chinese Gold & Silver Exchange Society.
• The nation may boost imports of the precious metals from Hong Kong by more than 50% as an alternative to a challenging property market investments and volatile stocks.
• Mainland China is expected to import around 1,000t from Hong Kong compared to net purchases of 647t last year.
• Demand climbed 15%yoy in Q1/17 driven by a surge in investment related purchases with sales of gold bars up 60%; whereas, jewellery sector recorded a modest 1.4%yoy increase.
• Production is forecast to contract this year as resources in Fujian and Qinghai provinces are depleting and amid environmental related stoppages, the society said.
• Output stabilised at around 450t per annum over the past several years with production coming at 101t (-9.3%yoy) in Q1/17.
Gold ETFs 60.1moz vs US$59.9moz yesterday
Platinum US$959/oz vs US$930/oz yesterday
Palladium US$846/oz vs US$834/oz yesterday
Silver US$17.64/oz vs US$17.19/oz yesterday
Base metals:
Copper US$ 5,569/t vs US$5,627/t yesterday
Aluminium US$ 1,899/t vs US$1,922/t yesterday
Nickel US$ 8,880/t vs US$8,765/t yesterday
Zinc US$ 2,477/t vs US$2,525/t yesterday
Lead US$ 2,100/t vs US$2,088/t yesterday
Tin US$ 19,905/t vs US$20,300/t yesterday
Energy:
Oil US$49.4/bbl vs US$49.7/bbl yesterday
Natural Gas US$2.990/mmbtu vs US$3.030/mmbtu yesterday
Uranium US$19.15/lb vs US$19.50/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$54.4/t vs US$54.7/t – Benchmark iron ore price falls below $56/t CFR China as inventory levels at Chinese steel mills holds back market.
Chinese steel rebar 25mm US$568.0/t vs US$581.1/t
Thermal coal (1st year forward cif ARA) US$69.0/t vs US$66.7/t yesterday
Premium hard coking coal Aus fob US$149.5/t vs US$149.5/t
Other:
Tungsten - APT European prices $220-225/mtu vs $215-225/mtu
Company News
Bushveld Minerals (LON:BMN) 9.1p, £69.6m Mkt Cap – Repayment of Barak Financing
BUY – Target Price 11.6p
• Bushveld Minerals reports that it has repaid a total of US$10m of its bridging loan used to finance the acquisition of Vametco.
• The repayment leaves the company with a further US$1m plus fees and interest outstanding and repayable by 30th June 2017.
• CEO, Fortune Mojapelo, commented “We are delighted with the progress we have made in settling the Bridge Loan which formed an essential aspect of conducting the Vametco transaction and enabled us to avoid unnecessary dilution for our shareholders. … We are grateful to the Barak team for their support and flexibility in working with us on this important financing.”
• Conclusion: Settling the majority of the Bridge Loan leaves Bushveld Minerals in a position to implement its “strategy going forward for the Vametco asset and particularly its contribution to our ongoing efforts of building a deeply integrated vanadium platform.”
Georgian Mining* (LON:GEO) 21.3p, Mkt Cap £24m – Results confirm economic gold grades at Kvemo Bolnisi with copper directly underneath
Strong Buy - (Kvemo Bolnisi 50:50 jv with CMG)
• Georgian Mining are well on their way to developing what we believe will be a number of new copper, gold mines.
• The results shown indicate better than expected grades, generally between 1-2g/t with two great results at 4.78g/t and 2.55g/t.
• Most of the results shown are from surface and there are also much higher individual peak gold assays to help.
o TGD-046: 30m @ 1.0g/t Au from 0.0m
o TGD-048: 25m @ 2.09g/t Au from 1.0m
o TGD-051: 16m @ 1.60g/t Au from 0.0m
o TGD-052: 16m @ 1.43g/t Au from 0.0m
o TGD-054: 28m @ 1.95g/t Au from 43.0m
o TGD-056; 22m@1.22g/t Au from 85m
o TGD-057: 9m@4.78g/t Au from 13m
o TGD-060: 25m @ 2.55g/t Au from 5.0m
o TGD-061: 21m @ 1.1g/t Au from 0.0m
o Peak individual gold assays in intersections down to 60m from surface show:
30.6g/t, 21.4g/t, 20.6g/t, 14.4g/t, 10.2g/t, 7.63g/t and 5.94g/t Au
• Drilling also confirms the presence of copper sulphide mineralisation immediately beneath of the gold oxide.
Conclusion: Georgian Mining should start feeding gold oxide ore to the Madneuli joint venture plant within months. The mining will expose the copper sulphide orebody directly underneath in preparation for mining and processing again at Madneuli which is just 7km away.
The copper mine should, in time, be much larger than the gold and the recent discovery of high-grade ‘chalcocite’ copper mineralisation supports our expectation for a significantly scale copper mine at the site. Management are targeting a 50mt of ore within a large epithermal copper, gold resource and we expect to see further evidence of the resource in drilling in the near term.
*SP Angel acts as Nomad and Broker to Georgian Mining.
Kefi Minerals* (LON:KEFI) 5.5p, Mkt Cap £18.3m – 2016 results and update for the Tulu Kapi Gold Project in Ethiopia
• Kefi Minerals reports a loss of £1.2m for calendar year 2016 (2015 - £3.2m). Operating losses were reduced to £0.97m (2015 (£2.8m loss).
• The principal focus of activity during 2016 was progressing the Tulu Kapi gold project in Ethiopia where the company is “targeting to commence development of Tulu Kapi in 2017 and open-pit gold production in 2019.” The company notes that at an estimated all-in-sustaining cost of US$777/oz for Tulu Kapi places the project in the “bottom cost quartile of existing gold producers.”
• The company’s latest economic assessment suggests that Tulu Kapi should produce around 115,000oz pa of gold for a period of approximately 8.5 years to produce a total of 980,000 oz of gold. The company comments, however, that “Significant value [is] also expected from the contemplated underground mine beneath the Tulu Kapi open pit within extensions of the same orebody.”
• The company’s preliminary view of the underground mining potential suggests “initial potential to increase production to >150,000pa over four years whilst drilling to expand underground resources which are open in several directions.”
• The company also highlights the previously announced decision by the Ethiopian Government to invest US$20m equity into the Tulu Kapi project and discloses that “post period, signed the Shareholder Agreement and other requisite documentation.”
• The company confirms that it is assessing financing proposals from “financiers familiar with Africa, especially Ethiopia, and particularly on propsals designed around African-experienced gold project contractors.”
• Conclusion: Kefi Minerals is moving towards the start of development at Tulu Kapi later this year and targets initial gold production in 2019.
• *SP Angel act as Nomad and broker to Kefi Minerals
Ortac Resources* (LON:OTC) 2.9p, mkt cap £4.3m – Restructuring highlights new focus on project advancement and more news to come
BUY
• Ortac is restructuring its board to create greater focus, energy and momentum within the group.
• Zamsort (Zambia): The team are exercising their convertible note in Zambian copper miner, Zamsort to raise Ortac’s stake to 19.35% at no additional cost.
• Nick von Schirnding, is taking over as Chairman and is also stepping onto the board of Zamsort to better align the two companies.
• Zamsort has a small but copper mining operation in Zambia with a larger copper resource at the mine site and a valuable license area located near First Quantum’s valuable Trident project.
• CASA Mining (DRC): Ortac is also taking up a 45% equity interest in CASA. CASA is now funded to drill a further 15-hole, 2,700m drilling program over the next two to three months.
• Vassillios Carellas and Nick von Schirnding will go on the board of CASA to help direct the work programs.
• Šturec (Slovakia): Ortac is working towards making new progress in Slovakia through the introduction of a joint venture partner. The team are keen to restart underground mining activity by mid-July this year in the existing gold mine.
o Andiamo (Eritrea): Ortac hold 18.48%. Andiamo have been drilling in Eritrea with 16 holes completed for 1,266m of drilling in the northern former joint venture license, a further seven holes at Yacob Dewar and another three holes for 194m at Bergebey. Results should come through in the next six weeks.
o Management restructuring: Nick von Schirnding is stepping up as Chairman to replace Anthony Balme who is stepping down and has led the company for many years. Paul Heber is also stepping down to focus on his investment management business at European Wealth. Vassillios Carellas, Ortac’s ceo, will focus on the development of Casa’s Misisi gold project and the first phase of the new major drill program.
Conclusion: Ortac is at long last accelerating its pace with action due on all fronts renewed new focus on the addition of resources and value through drilling in copper and gold projects.
*SP Angel acts as broker to Ortac Resources
Premier African Minerals (LON:PREM) 0.55 pence, Mkt Cap £24.2m – Maiden inferred resource for Zulu Lithium Project
• Premier African Minerals reports a maiden resources estimate for its Zulu Lithium project located approximately 80km east of Bulawayo.
• The resource, which was prepared by the company’s Resource Geologist under South Africa’s SAMREC reporting code, totals 20.1m tonnes at an average grade of 1.06% Li2O and 51ppm tantalum pentoxide using a cut-off-grade of 0.5% Li2O.
• The estimate is based on “assay results of 20 diamond drill holes totalling 2,511 metres drilled between September 2016 and February 2017, as well as the results of 3 deeper diamond drill holes drilled in 2011.”
• The estimate covers a 1.2km section in the southern part of the 3.5km long mapped extent of the Zulu mineralisation. The company reports that mineralisation “remains open at depth and along strike” though it is not apparent the depth extent of the estimate reported today though the company does disclose that “Earlier, relatively deep inclined drilling to depths of up to 524 metres confirmed the presence of spodumene bearing pegmatites down to vertical depths of more than 200 metres”.
• The company is planning a further 8-10,000m of follow up drilling; “In the coming months, diamond drilling will continue to be carried out in the southern zone where the outcropping mineralisation and trenches from the 1950s justify further drilling. … Deep drilling is not planned at this stage, as the initial target is an open pit mining operation.”
• Conclusion: The initial resource from Zulu shows sufficient encouragement for the company to commit to a further 8-10,000 m drilling programme.
Stratex International (LON:STI) 1.6p, Mkt cap £7.4m –Thani Stratex completes initial drilling at Pandora
• Stratex International reports that its 30.1% owned associate, Thani Stratex Resources, has completed a maiden 15 hole drilling programme comprising 2159m of diamond drilling along a 1.2km long strike length of the overall 10km long Pandora epithermal vein system in Djibouti.
• Drilling, which focussed on the Pandora South and Central zones, correlated with mapped surface intersections and confirmed continuity of mineralisation to a vertical depth of 150 metres.
• Among the highlights reported today are:
o a 3.95m wide intersection averaging 4.49 g/t gold from a depth of 87.2m in borehole OK-D-10;
o an 8.68m intersection averaging 1.36g/t gold from a depth of 19.27m and a further 3.84m wide section averaging 5.19 g/t gold both in hole OK-D-11;
o a 6.87m wide intersection averaging 4.45 g/t gold from a depth of 51.1m in borehole OK-D-112; and
o a 4.70m wide intersection averaging 3.41 g/t gold from a depth of 78m in borehole OK-D-13
o Each of the intersections reported above contained higher grade segments within the overall reported length. The company estimates that the true width of the mineralised sections “are estimated to be between 42% and 71% of the reported (downhole) intersection length.”
o Conclusion: The initial drilling results from Pandora show a number of promising intersections which are likely to be worthy of follow up as well as extension drilling to assess the balance of the 10km long mapped extent of veining. At this stage there is no indication of the follow up plan however, in due course, we will be interested to see how Thani Stratex Resources proposes to advance the project.