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Today's Market View - Kodal Minerals Strategic Minerals Plc SolGold plc Xpediator Plc

Published: 10:44 11 Aug 2017 BST

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Xpediator Plc (LON:XPD) – IPO – Xpediator, which offers freight management solutions lists on AIM today

Kodal Minerals* (LON:KOD) – Core-drilling at Bougouni

Strategic Minerals* (LON:SML) – Q2 update includes report of record sales from Cobre in July

SolGold* (LON:SOLG) – Issue of equity to Newcrest

 

Metals prices to rise on North Korea tensions

• Metals prices should benefit from the brinkmanship being played out between North Korea, China and the US.

• We include China as we see North Korea as a form of proxy for the Chinese military and its strategy to control the South China seas and parts of the Pacific.

• Consumers are likely to stock up on base and speciality metals as shipping may be diverted by potential military activity in the Asian region causing metals prices to rise in anticipation.

• Industry and traders were already buying ahead of forecast smelter closures in China due to the anti-pollution crackdown and this gives further reason for industry to add to stock.

• Gold is rising on geopolitical tensions as is typical in these sorts of markets.

 

North Korea threatens Guam but Jeremy Corbyn still seen as higher risk to UK economy

• The potential and increasingly likely election of Jeremy Corbyn appears to present a greater risk to the UK economy than North Korea or Brexit according to recent discussions.

• North Korea might spark a war in the South China Seas and Brexit will no doubt impede UK exports to Europe but the socialist policies of Jeremy Corbyn and his shadow chancellor John McDonnel who is best known for lobbing a copy of Mao’s little red book across the Dispatch Box are still seen in financial circles as a greater financial threat to the UK than any other single issue.

 

Cuba – The US is investigating the high incidence of deafness in US diplomatic staff (FT)

• The US reckons a covert sonic device was used to target a group of US diplomatic officials in Cuba who worked in Cuba in late 2016

• The incident occurred at a time when the US was forging closer ties with Cuba

 

Dow Jones Industrials                -0.93%  at  21,844

Nikkei 225                                     -0.05%  at  19,730

HK Hang Seng                             -2.04%  at  26,884

Shanghai Composite                  -1.63%  at    3,209

FTSE 350 Mining                         -3.35%  at  16,035

AIM Basic Resources                 -0.05%  at    2,471

 

Economic News

 

Currencies

US$1.1758/eur vs 1.1716/eur yesterday.  Yen 108.99/$ vs 109.90/$.  SAr 13.481/$ vs 13.361/$.  $1.297/gbp vs   $1.298/gbp.     

0.786/aud vs 0.788/aud.  CNY 6.667/$ vs 6.660/$.

 

Commodity News

Precious metals:

Gold US$1,289/oz vs US$1,279/oz yesterday

   Gold ETFs 66.3moz vs US$66.2moz yesterday

Platinum US$984/oz vs US$976/oz yesterday

Palladium US$901/oz vs US$897/oz yesterday

Silver US$17.16/oz vs US$17.07/oz yesterday

 

Base metals:   

Copper US$ 6,363/t vs US$6,448/t yesterday

Aluminium US$ 2,030/t vs US$2,031/t yesterday

Nickel US$ 10,680/t vs US$10,815/t yesterday

Zinc US$ 2,918/t vs US$2,937/t yesterday

Lead US$ 2,348/t vs US$2,371/t yesterday

Tin US$ 20,250/t vs US$20,250/t yesterday

 

Energy:           

Oil US$51.4/bbl vs US$52.9/bbl yesterday

Natural Gas US$2.982/mmbtu vs US$2.891/mmbtu yesterday

Uranium US$20.80/lb vs US$20.65/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$71.9/t vs US$75.4/t

Chinese steel rebar 25mm US$648.1/t vs US$648.8/t

Thermal coal (1st year forward cif ARA) US$75.8/t vs US$76.0/t yesterday

Premium hard coking coal Aus fob US$198.0/t vs US$193.6/t

 

Other:

Tungsten APT European US$240-248/mtu vs US$230-235/mtu

 

Company News

Kodal Minerals* (LON:KOD) 0.28p, mkt cap £18m – Core-drilling at Bougouni

• Kodal Minerals has reported promising results from 5 diamond core drillholes recently completed within its Bougouni Lithium project in Mali.

• The drilling, comprising a total of 362.1m was undertaken at the Ngoualana prospect and each of the five holes intersected lithium mineralisation grading in excess of 1% Li2O.

• The Ngoualana prospect area has now demonstrated lithium mineralisation over a strike length of 650 metres and to depths in excess of 250m with the mineralised bodies remaining open both laterally and at depth.

• Among the results reported today are:

o 41.50m at an average grade of 1.71% L12O from a depth of 45.89m in hole KLDH001 which also contains a 1.25m wide intersection averaging 1.72% Li2O from 87,50m and

o 26.25m at an average grade of 1.51% Li2O from 30.46m in hole KLDH002 and

o 17.00m averaging 1.69% Li2O from a depth of 25.55m in hole KLDH003 and

o 26.25m at 1.22% from a depth of 14.20m in hole KLDH004 and

o 27.25m at an average grade of 1.61% Li2O from 28.65m in hole KLDH005.

• The Ngoualana prospect area contains a single main vein structure "that is continuous throughout the prospect and multiple parallel and subsidiary pegmatite veins."

• CEO, Bernard Aylward noted that the results from the core-drilling programme improved the company's confidence in the results of the earlier reverse-circulation drilling work and that "We anticipate being able to extend this prospect when we recommence drilling following the rainy season."

• Metallurgical testing of the drill core is continuing "to improve our understanding of the characteristics of the mineralisation".

Conclusion: Core drilling at Ngoualana is supporting the results of earlier reverse-circulation drilling while also providing material for metallurgical testing. The limits of the structure have yet to be defined and will no doubt be one of the priorities when drilling resumes after the wet season.

*SP Angel act as Nomad and broker to Kodal Minerals

 

Strategic Minerals* (LON:SML) 2p, Mkt Cap £24.3m – Q2 update includes report of record sales from Cobre in July

• Strategic Minerals has announced that its Cobre magnetite tailings operation in New Mexico achieved record monthly sales of 7206 tons ($486,560) during July.

• The record month comes after issues with delayed road transport at both the major customers led to a  reduction in quarterly sales which declined to 10,446 tonnes ($602,000) from the record quarterly sales of 14,264 tonnes ($1.32m) achieved during the quarter ending 31st March 2017.

• The company confirms that the earlier transport problems have been resolved, that margins are being maintained at “around 50% for the six months to June 2017”, and that “Cobre’s newest customer has a minimum monthly sales requirement, the customer [has] made a prepayment for sales not transported which helped to bolster cash balances but was not reflected in the June quarter sales. Currently, it is expected that the tonnage associated with this prepayment will be fully absorbed within the September quarter.”

• A further boost to the company’s cash position, $1.359m at 30th June, was provided by the receipt of the final, $175,000, payment under the rail settlement agreement at Cobre.

• Elsewhere, Strategic Minerals reports that drilling of the phase 1 programme at Redmoor is well underway and that, as previously announced an additional two holes have been added to the programme. The initial assay results from this work are expected to become available during the current quarter and “Full results from Phase 1 are expected to be released in the December quarter during which Phase 2 drilling may be undertaken.”

• The company has previously reported the completion of its acquisition of the balance of the Central Australian Rare Earths (CARE) project where the company “is currently making good progress with plans to undertake a substantial number of air core holes, drilling some 2,000 metres” at Hanns Camp. This programme is primarily aimed at identifying the cobalt mineralisation potential of the tenement, though it should also provide important progress in understanding its nickel laterite potential and “will provide insight into a second stage drilling programme to drill deeper in search of Nickel Sulphide.”

• A strategic review by the company’s board of its growth opportunities noted that it is likely to pursue “further acquisitions” and “adopted a target of achieving a £100m market capitalisation within this five-year timeframe.”

Conclusion: Strategic Minerals’ ability to generate cashflow from its Cobre operation enables the company to pursue exploration drilling at CARE and Redmoor without recourse to shareholders for funding. The company hints that it may be considering further acquisitions as part of a strategy to deliver a £100m market capitalisation within five years.

*SP Angel act as Nomad and broker to Strategic Minerals

 

SolGold* (LON:SOLG) 38p, Mkt Cap £576m – Issue of equity to Newcrest

• Solgold report they have issued a further 690,000 shares to Newcrest Mining Ltd.

• The shares are issued due to ‘top-up rights’ due to an anti-dilutionary right to hold Newcrest at 14.54% of Solgold.

• The shares are paid for and were priced at 38.16p based on the 10-day VWAP as set out in the subscription agreement.

• The allotment takes Newcrest’s stake to 220,462,271 shares which represents 14.54% of Solgold stock.

• Solgold now have a total of 1,516,245,686 shares.

• The company continue to drill the Cascabel project in Ecuador with a sixth drill rig to arrive on site in August and up to nine rigs due to be at the site in September.

• Management recently reported massive intersections of mineralisation with the last hole 23R-D1 now at a depth of 1351.6m at Alpala Central where it is investigating eastward extensions of the mineralisation encountered in its “parent” hole, 23R, which intersected 770m of mineralisation grading 0.71% copper and 1.16g/t gold from a depth of 540m.

• Hole 24-D1R, shows 286m at average grades of 0.27% copper and 0.25g/t gold from a depth of 636m down to 1044.8m with a further 320m+ to be drilled.

• Drilling continues at Alpala Northwest where hole 26 has now reached a depth of 1876m with Visible copper sulphide mineralisation encountered in the upper portion of the hole extending the prospect by a further 120m northeast of hole 15R2 which returned 830m @ 0.93% copper equivalent (0.63% Cu, 0.46 g/t Au).

*SP Angel acts as broker to SolGold.  The mining team at SP Angel have raised funds for SolGold on at least eight occasions over the past 10 years.

 

Xpediator Plc (LON:XPD) 25.25p, mkt cap £25.5m – IPO - Xpediator, which offers freight management solutions lists on AIM today

• Xpediator listed at 24p this morning

• Xpediator Plc provides freight management solutions in the UK and across Europe.

• The company is said to be poised to deliver strong organic growth across their three divisions, freight forwarding, logistics and transport services.

• Freight forwarding services, trading under the Delamode brand, and specialising in connecting CEE countries and the UK.

• Logistics and warehousing which comprises: distribution hubs in the UK and southern Europe providing over 39,000 sqm of shared user space; pallet distribution services, where the Group is the master franchisee of a fast growing pallet distribution network in Romania which trades under the Pall-Ex brand; and the recently acquired EMT business which is based in London and specialises in fashion logistics.

• Transport services, trading under the Affinity brand, providing bundled fuel and toll cards, financial and support services for hauliers in southern Europe.

• M&A: The team have identified a number of earnings enhancing acquisitions which they plan to make in the coming months funded in part by the funds raised on listing.

• Dividends: the group is expected to deliver dividends as well as capital growth

*SP Angel act as Nomad and joint broker to Xpediator

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