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Today's Market View - Phoenix Global Mining Ltd, Randgold Resources, SolGold plc

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Phoenix Global Mining* (LON:PGM) 4.125p, Mkt Cap £9.5m – Admission to AIM

Randgold Resources (LON:RRS) 6995 pence, Mkt Cap £5.98bn –Massawa feasibility timetable

SolGold* (LON:SOLG) 39.5p, Mkt Cap £597.6m – Assay results from hole 23R at Cascabel

 

 

Greece – government considering next bond issue as European outlook improves

• Argentina’s recent 100-year bond issue has given new momentum to the concept of new government bond issuance

• Some government officials reckon it would be better for Greece to wait till September to allow Greece to better judge market sentiment

• We wonder if a failed Greek bond raise might have much impact on the wider market?

 

US - Trump travel ban on refugees, migrants and some others from six countries comes into effect this evening.

• The ban is causing some organisations reorganise conference venues from the US to more open countries

 

South Africa -  ANC power struggle as Ramaphosa and Dlamini-Zuma contend for presidency

• Cyril Ramaphosa, the former NUM leader is a strong contender for the presidency against Nkosazana Dlamini-Zuma, former head of the African Union Commission

• Dlamini-Zuma is calling for “radical economic transformation” to increase the black majority’s share of wealth

• Ramaphosa is focussed on more inclusive growth and a clamp-down on corruption.

 

China – Investigating loans made to Anbang, Wanda, Fosun and HNA Group in relation to foreign acquisitions

• The move is reported to be part of a drive to clean up potentially bad loans to better protect bank loan books and protect China’s financial system

• We suspect, this is more to do with China’s Communist Party exercising control and keeping investment within China to support the Renminbi

• The four firms have reported >$60 billion of overseas acquisitions over the past three years and held assets of some 4.2tr Rmb ($618bn) last year.

 

US - Senate Defence Panel Approves $700bn Defence Policy Bill.  The proposed bill exceeds Trump budget caps by about $91bn

• The funding may effectively authorize 94 Lockheed Martin F-35 jets

• The bill would authorize: $1.6bn for 17 MC-130J aircraft built by Lockheed, $2.9bn to procure 17 KC-46A tankers made by Boeing

• $5.5bn for Arleigh Burke-class destroyers

• $3.1bn for advance deployment for the new Virginia-class submarine

 

Spain - headline inflation falls to 1.6% in June vs 2.0% in May

 

Vietnam – Q2 GDP rises by 6.17%

• Shipments gain >20% per month in Q2

• Manufacturing rose 12.1% Q2

• Trade deficit falls to $200m in June vs $2.7bn in H1

 

SEC charges Canadian oil and gas company Obsidian Energy Ltd (formerly Penn West Petroleum Ltd) with accounting fraud

• The SEC charges that three former top finance executives fraudulently moved hundreds of millions of dollars in expenses from operating expense accounts to capital expenditure accounts.

• The alleged fraud enabled Penn West to lower operating costs by as much as 20% in certain periods, which falsely improved reported metrics for oil extraction efficiency and profitability.

• Penn West was one of Canada's largest oil producers at the time.

• We have to wonder how many other resources companies may been tempted of trying something similar.

 

Currencies

US$1.1422/eur vs 1.1385/eur yesterday.  Yen 112.34/$ vs 112.12/$.  SAr 12.954/$ vs 13.034/$.  $1.299/gbp vs $1.283/gbp.  0.768/aud vs 0.759/aud.          CNY 6.777/$ vs 6.798/$.

 

Commodity News

Precious metals:

Gold US$1,250/oz vs US$1,252/oz yesterday

   Gold ETFs 60.3moz vs US$60.3moz yesterday

Platinum US$923/oz vs US$919/oz yesterday

Palladium US$863/oz vs US$860/oz yesterday

Silver US$16.86/oz vs US$16.78/oz yesterday

               

Base metals:      

Copper US$ 5,933/t vs US$5,859/t yesterday

Aluminium US$ 1,904/t vs US$1,889/t yesterday

Nickel US$ 9,325/t vs US$9,195/t yesterday

Zinc US$ 2,755/t vs US$2,752/t yesterday

Lead US$ 2,312/t vs US$2,290/t yesterday

Tin US$ 19,575/t vs US$19,355/t yesterday

                               

Energy:

Oil US$47.7/bbl vs US$46.4/bbl yesterday

Natural Gas US$3.093/mmbtu vs US$3.028/mmbtu yesterday

Uranium US$20.45/lb vs US$20.25/lb yesterday

               

Bulk:     

Iron ore 62% Fe spot (cfr Tianjin) US$61.8/t vs US$59.6/t

Chinese steel rebar 25mm US$575.0/t vs US$573.2/t

Thermal coal (1st year forward cif ARA) US$70.9/t vs US$70.0/t yesterday

Premium hard coking coal Aus fob US$147.4/t vs US$147.4/t

               

Other:  

Tungsten APT European US$214-224/mtu vs US$220-226/mtu

Quarterly hard coking coal US$285.0/t vs US$285.0/t

 

Company News

Phoenix Global Mining* (LON:PGM) 4.125p, Mkt Cap £9.5m – Admission to AIM

• Phoenix Global Mining, which is working to bring the historic Empire copper mine in Custer County Idaho back into production, has been admitted to the AIM Market.

• Initially, the company will focus on a pre-feasibility study to develop the development of an oxide ore resource over a 10 year mine life with production targeted at 7000tpa of copper cathode by 2020.

• The deposit, which is a polymetallic skarn, has an initial JORC compliant measured and indicated resource of 7.26mt at an average grade of 0.55% copper with an additional inferred resource of 5.55mt at an average grade of 0.51% copper estimated for the AP Pit area.

• The Empire mine was discovered during the 1880s and worked extensively until the 1940s. Subsequent work by various companies included the drilling of 287 exploration holes at a cost of around US$7m and extensive metallurgical testing which confirmed recovery rates of 80-90% copper oxide.

• In the longer term, development of the deeper, sulphide mineralisation provides an attractive longer term exploration target “where intercepts up to 11.4% copper (‘Cu’) and additional metal credits including gold (drill results inc. 1.5m @ 26.4g/t), silver (drill results inc. 9m @ 126.6 g/t) and tungsten (grab samples as high as 4.3% WO3) have been recovered.”

• Phoenix Global Mining “has raised £4.6million and on Admission, the Company will issue 115,000,000 of nil par value.”

Conclusion: The reopening of an historic copper mine with a long production history and relatively short time to production in a mining friendly, stable, jurisdiction provides an relatively low-risk opportunity for those looking for copper investment opportunities.

*SP Angel acts as Nomad to Phoenix Global Mining

 

Randgold Resources (LON:RRS) 6995 pence, Mkt Cap £5.98bn –Massawa feasibility timetable

• Randgold Resources that it expects to complete a feasibility study and make a development decision on its Massawa gold project in Senegal by the middle of next year.

• Randgold’s Chief Executive, Mark Bristow, pointed out that “the recent discovery of the nearby Sofia deposit, which has been incorporated in the project, had significantly increased Massawa’s viability, as its low-cost, high-recovery ore would enhance the overall economics.”

• Bristow cited Massawa as an example of Randgold’s long term approach and financial commitment to exploration and mine development reminding attendees to a media briefing in Dakar that the company had started exploration in Senegal in 1995 and discovered Massawa in 2004. Subsequent exploration expenditure and ancillary work such as metallurgical investigation has cost $85m.

• The company is “expanding our exploration portfolio and continuing our search for additional discoveries and development opportunities in Senegal.”

Conclusion: Randgold Resources’ leadership position in the African gold mining industry, where Massawa could become its sixth major mine development, has a long and successful pedigree, but the company’s timely reminder that success requires long term commitment, energy and significant exploration expenditure is well made.

 

SolGold* (LON:SOLG) 39.5p, Mkt Cap £597.6m – Assay results from hole 23R at Cascabel

• SolGold has announced assay results from hole 23R in the Alpala Central area which again show long mineralised intersections of up to 1030m at an average grade of 0.59% copper and 0.9g/t gold from a depth of 490m using a 0.1% copper equivalent cut-off grade.

• Hole 23R “tested eastern and depth extensions of the Alpala deposit to the east and northeast of drill hole 16, which returned 894m grading 1.41% copper equivalent (0.78% Cu, 0.99 g/t Au).”

• Within wider intersection, at higher cut-off grades, higher grade sections are evident, particularly at lower levels of the hole. For example, at a 0.5% copper-equivalent cut off, the hole intersected a 474m wide zone at an average grade of 0.89% copper and 1.57g/t gold between 830m and 1304m, while a 1.5% cut-off shows an intersection of 216m grading 1.29% copper and 2.84 g/t gold between 970m and 1186m.

• Solgold’s geologists interpret structures within the drill core and observations from hole 20R, which was drilled to the north, to “strongly suggest extension to  Alpala to the north-east.”

• The exploration team also reiterate that they “believe a number of the targets at Alpala may coalesce. The long high grade intersection achieved in Hole 23R lies open to the east and northeast. This may coalesce deeper extensions … intersected last month in Hole 25, which is interpreted to represent the cupola of a previously unknown high-grade quartz diorite apophysis that lies immediately east of the Alpala deposit.”

• The company also points out that the mineralisation “occurs in a strongly veined quartz diorite … believed to represent the causative mineralised porphyry at Alpala”.  We interpret this to be the host porphyry generating the mineralisation.

• Drilling is continuing at a number of sites within the Alpala area; a daughter hole of Hole 23R designated 23R-D1 is testing extensions of the mineralisation at depth and towards the northeast while holes 24-D1, 26 and 27 are currently underway “with all holes intersecting increasingly mineralised diorite porphyry.”

Conclusion: As exploration progresses and the exploration team’s understanding of the geological context of Alpala increases, the company appears to be seeing the possibility that mineralised zones previously interpreted as discrete structures may coalesce at depth. It may also be significant that they believe that drilling is now intersecting “the causative mineralised porphyry” at depth.

*SP Angel acts as broker to SolGold

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