BlueJay Mining* (LON:JAY) STRONG BUY - Target Price raised to 24p – Sonic drilling expected to raise scale of high-grade titanium mineral sands at Pituffik
Birimian Limited (ASX:BGS) Suspended – New presentation issued following findings of corporate review by new board
Horizonte Minerals (LON:HZM) – Araguaia feasibility study 60% complete and on schedule
Kefi Minerals* (LON:KEFI) – Progress report on Tulu Kapi
Kibo Mining (LON:KIBO) –Transmission arrangements for Mbeya Coal to Power Project (MCPP)
SolGold* (LON:SOLG) – Securing additional exploration licences in Ecuador
Gold climbs to the highest level YTD trading around $1,325/oz on the back of the news that North Korea fired a ballistic missile over Japan today.
• The missile is reported to have passed over Japan and landed around 1,200km off Hokkaido in the Pacific Ocean with no damages reported, according to Japan.
• Prime Mininster Shinzo Abe held a 40-minute phone call with Donald Trump early today and called the United Nations Security Council to hold an emergency meeting following the incident.
• In addition, North Korea fired three short-range missiles on Saturday.
• Copper continues to post new gains climbing more than $100/t today and trading around $6,780/t with investors growing bullish towards the metal outlook with US Comex net long speculative positions to have doubled since June.
• LME Index tracking performance of six base metals posted seven consecutive weekly gains marking the strongest run since 2006.
• January iron ore futures are off today (-1.1%) having earlier reached CNY 554/t, the lowest since August 16; steel rebar prices were up only marginally stronger claiming back earlier losses today.
• Crude is virtually flat this morning while reports of suspended refining capacities in the Storm Harvey affected areas near Houston emerge with companies waiting for floods to recede before bringing plants back online.
• 10 of the Texas’ 25 refineries are shut down, accounting for about half the 6mmbbl per day capacity, Bloomberg reports.
• The US$ index is down this morning trading at weakest levels since Jan/15 amid worries over the Hurricane Harvey’s impact on the economy and rising tensions in Asia.
• Both euro and Japanese yen rallied
UK insurers / funds may sell equities to cover losses in the Gulf of Mexico
• UK insurers and reinsurers may sell some equities in preparation for losses to come from Hurricane Harvey.
• Direct losses are currently estimated at >$20bn with economic losses expected at >$40bn.
• While the inconvenience caused by the Hurricane is huge the economic benefits of the reconstruction and refurbishment of damaged property will benefit the US economy.
• Economic losses will continue to rack up till the flood water subsides.
Lithium batteries – blending lithium with nanosized diamonds offers way to increase battery capacity and power
• Blending lithium with graphene makes batteries safer and more robust but lowers battery capacity.
• More lithium in the cathode = more power capacity but increases dendrite formation which effectively short circuits the battery reducing its life and capacity.
• Nanosized diamonds help to inhibit the formation of dendrites and therefore enable the lithium loading to be increased adding to capacity.
• Nanodiamonds are already used in electroplating to make coatings more uniform.
Dow Jones Industrials -0.02% at 21,808
Nikkei 225 -0.45% at 19,363
HK Hang Seng -0.35% at 27,765
Shanghai Composite +0.08% at 3,365
FTSE 350 Mining -1.00% at 17,232 (from last week)
AIM Basic Resources +1.06% at 2,546 (from last week)
Economic News
US – Houston is battling with results of a post Tropical Storm Harvey flooding which is estimated to be the costliest US natural disaster since Hurricane Sandy in 2012.
• Both Draghi and Yellen decided to avoid discussion over potential changes in the monetary policy amid a dip in the US inflation numbers and strengthening growth in the Eurozone during the meeting of central bankers in Jackson Hole last week.
• Instead the ECB head went on to discuss benefits of free trade while Janet Yellen defended the progress made on financial regulation lately warning about the dangers of excessive de-regulation, FT reports.
Germany – Consumer confidence continued to trend higher helped by robust labour market and strong economic growth, according to the latest GfK report.
UK – House prices growth slowed in August and reached May readings marking the weakest pace since H2/13.
• “The slowdown in house price growth to the 2-3% range in recent months from the 4-5% prevailing in 2016is consistent with signs of cooling in the housing market and the wider economy,” Nationwide said.
• “Housing market activity will remain subdued.”
• Nationwide continues to forecast prices to average 2% growth this year with a shortage of properties providing support to the market.
• The stock of houses on estate agents’ books is close to 30-year lows while a lack of new properties is adding to housing supply pressures.
• Month on month, prices were down 0.1% with an averaged of £211k.
• Nationwide Property Prices (%yoy): 2.1 v 2.9 in Jul and 2.5 forecast.
France – The economy expanded at 0.5%qoq in Q2/17 the second reading showed coming in line with previous estimates and market expectations.
• Trade saw the largest contribution to the final GDP with net exports accounting for 0.8pp, while the drop in inventories was the largest drag on growth (-0.6pp).
• Private consumption (+0.2pp) and government spending (+0.1pp) saw only modest contributions.
• GDP (%qoq): 0.5 v 0.5 in Q1/17 and 0.5 forecast.
Currencies
US$1.2061/eur vs 1.1784/eur last week. Yen 108.46/$ vs 109.64/$. SAr 13.054/$ vs 13.162/$. $1.296/gbp vs $1.280/gbp.
0.796/aud vs 0.791/aud. CNY 6.596/$ vs 6.664/$.
Euro rises to >$1.1986, highest level since January 2015
Commodity News
Precious metals:
Gold US$1,325/oz vs US$1,287/oz last week
Gold ETFs 67.5moz vs US$67.0moz last week
Platinum US$1,000/oz vs US$978/oz last week
Palladium US$945/oz vs US$935/oz last week
Silver US$17.57/oz vs US$16.99/oz last week
Base metals:
Copper US$ 6,798/t vs US$6,718/t last week – Freeport McMoRan agreed to sell a majority stake in its Indonesia unit to the government in exchange for mining licenses extended through to 2041.
• As part of the deal, Grasberg is expected to see as much as $20bn investment through 2031 to develop underground operations as well as construct copper smelter.
• As of now the government owns 9.4% with the remainder owned by Freeport.
• The situation is further complicated by the JV agreement with Rio Tinto which is entitled to a 40% interest in output above specific levels before 2021 and 40% of all production after that.
• Rio did not comment on the story, Bloomberg reports.
• Both Freeport and government are planning to negotiate the price of the stake in a way that “compensates market value”, the Company said.
Aluminium US$ 2,088/t vs US$2,105/t last week
Nickel US$ 11,770/t vs US$11,705/t last week
Zinc US$ 3,119/t vs US$3,119/t last week
Lead US$ 2,372/t vs US$2,365/t last week
Tin US$ 20,530/t vs US$20,380/t last week
Energy:
Oil US$52.0/bbl vs US$52.5/bbl last week
Natural Gas US$2.924/mmbtu vs US$2.944/mmbtu last week
Uranium US$20.00/lb vs US$20.25/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$75.1/t vs US$75.9/t
Chinese steel rebar 25mm US$650.1/t vs US$643.8/t
Thermal coal (1st year forward cif ARA) US$79.5/t vs US$78.3/t
Premium hard coking coal Aus fob US$207.5/t vs US$202.6/t
Other:
Tungsten APT European US$269-275/mtu vs US$250-256/mtu
Ferrochrome – Both Tsingshan Group and Baosteel raised bid prices for high carbon FeCr for September amid strong local stainless steel demand and significantly lower imports of the material from South Africa.
• Tsingshan bumped up prices CNY 1,496/t to CNY 8,496/t for September tender while Baoshan announced a CNY 1,500/t increase to CNY 8,500/t equivalent to 99c/lb Cr (50% Cr).
• Imports of high-carbon ferrochrome from South Africa totalled 170kt in July, down 50%oy and 10%mom.
Company News
BlueJay Mining* (LON:JAY) 19.3p, Mkt Cap £148m – Sonic drilling expected to raise scale of high-grade titanium mineral sands at Pituffik
STRONG BUY
Target Price raised to 24p
• BlueJay Mining expect to increase the size of the current mineral sands resource from the current 23.6mt grading 8.8& ilmenite.
• The team report they have completed all the planned sonic drill holes outside of the existing resource area.
• The sonic drill rig back is now working on a further 50 drill holes within the Pituffik resources area indicating a very good field season from a drilling perspective
• The rig has been working for around 28 days now indicating a very good run rate for the rig which operates off the back of a large tractor.
• Interlak: we expect drilling at the Interlak Delta to reveal very substantial intersections of unusually high-grade ilmenite material when announced.
• Bulk Samples: 250t of ilmenite rich material has been screened and shipped with a further 250t of material now being prepared for shipment.
• Another 250t of material is also being prepared for further customer work. The speed and ease of preparing these bulk samples has exceeded expectations. Stockpiling of run of mine ore will continue till end-September.
• Metallurgical testing: samples are also being shipped for metallurgical testwork at the company’s pilot plant in Queensland.
• Shipping: nearshore survey work shows potential to bring bulk carriers close enough to shore to reach ship loading facilities. This should result in a significant cost saving as mineral sands could be loaded directly using a conveyor system on a short pier. The system should be relatively inexpensive to emplace and to run and should remove expensive double handling and transhipment costs which are an additional cost at many other ilmenite producers.
• EIA: the environmental impact assessment is scheduled for completion sometime in the fourth quarter. Recent work has been focussed marine sampling for future offshore work. The company is able to effectively mine in the on-shore environments under its current licenses.
• Disko project (near Ilulissat): Bluejay are also planning to run an Electro Magnetic survey on the Disco license in early Q4 using equipment which has been demobalised from Pituffik..
• Weather: The weather at Pituffik Airport, the closest major weather station is for rain today with a high of 7C and a low of 3C with wind speeds of around 6mph. Some snow is expected at the weekend with wind speeds picking up to 8mph.
Conclusion: this update indicates good progress made at Pituffik particularly with the Sonic drill rig as recommended by SRK consultants. It is good to see the outlying Sonic drill holes completed quickly outside the resource area with the rig returning to the resource for further infill drilling. We look forward to seeing the assay results from the Interlak Delta area and to see the average depth extent of the raised beeches within the resource.
*SP Angel act as nomad and broker to BlueJay Mining. An SP Angel mining analyst has visited the Pituffik ilmenite sands project in Greenland
Birimian Limited (ASX:BGS) Suspended – New presentation issued following findings of corporate review by new board
• Birimian Limited have issued a revised presentation on their Goulamina Lithium project and scoping study near Bougouni in Mali
https://birimian.com/pdfs/ShareholderInformationSessionsPresentation29Aug17.pdf
• The Goulamina project has a defined JORC resource of 32.9mt grading 1.37% Li2O containing some 451,000t at a 0.4% cut off grade. This reduces to an indicated resource of 25.3mt containing some 347,000t of lithium oxide material.
• The scoping study works on a 1mtpa throughput to produce some 190,000t of spodumene concentrate material with a capex of US$42.7m in phase 1 plus US$40.7m in phase 2.
• The study works on a concentrate sales price of US$537/t and an operating cash cost of US$326/t. Further details were released on 31 January. The company has since moved to commission a Preliminary Feasibility Study which is due by end September. From there it should move to develop a Definitive Feasibility Study on a 1-2mtpa mining operation.
• The corporate review reported on 16 August that the board has identified A$1.8m in tax related liabilities in Australia and in Mali plus a further A$386k of non-tax liabilities (Founders Fee payable to the State of Mali). The resignations of the CFO and company secretary were accepted in the same statement.
• The board reckons that a total of 1,975,000 performance rights held by former directors have lapsed though the statement notes that lawyers for these directors have reserved their rights against the company in this respect.
Horizonte Minerals (LON:HZM) 2.825 pence, Mkt Cap £33.1m –Araguaia feasibility study 60% complete and on schedule
• The company reports that its feasibility study work for the development of a ferro-nickel mine at Araguaia in Brazil is around 60% complete and on schedule for “completion [in] Q4 2017 into Q1 2018.”
• Work is progressing on a number of areas including the mining and geology, process design and engineering and social and environmental studies.
• The mine –planning and design is “at an advanced stage” with geotechnical sampling and testing already completed in order to “support engineering design in the process plant araes and appropriate pit design.”
• Site layout work is now complete for the process plant and the company has solicited capital cost estimates for the major items of equipment from the market. The route of the power transmission line linking to the national grid has been selected and the company has finalised the organisational structure and staffing structure for future nickel operations.
• During Q3 2017, the company submitted environmental control plans to the State Environmental Agency and work is progressing toward the finalisation of water pipeline and energy transmission line installation licences.
• Commenting on the progress achieved, CEO, Jeremy Martin, noted that the study remains on schedule and budget for completion by the end of 2017, with a view to publishing early in 2018. He went on to point out that the company planned to submit its applications in to the Environment Agency in Q3 2017 and emphasised it as “The next major milestone and de-risking step for the Project will be the award of the Installation Licence, which allows construction to start. … with a view to the award of the licence in Q1 2018”
Conclusion: Feasibility study work for the development of Araguaia is reported to be on schedule and within budget with the company hopeful of receiving the necessary permits to start work in Q1 2018. We look forward to the outcome of the feasibility work early in 2018.
Kefi Minerals* (LON:KEFI) 5.25p, Mkt Cap £17.5m – Progress report on Tulu Kapi
• Kefi Minerals reports that, in order to maintain the schedule needed for initial production in late 2019, it expects to start preliminary field work, including geotechnical drilling of the pant and dam site areas at Tulu Kapi following the end of the wet season in September.
• The company also reports that it has now received VAT refunds totalling approximately £2.5m and also that it has agreed with its project finance partner, Oryx management a “finance execution plan [and is] assembling documentation across all the fronts for finance closing later in 2017.”
• Kefi comments that “Based on current estimates of capital spending and capital contributions, respective shareholdings will be 75-80% KEFI and 20-25% Government.” The interests will be held in a “new company to hold the Project, Tulu Kapi Gold Mines Share Company Limited (“TKGM”).”
• Expressing his satisfaction with the progress achieved at Tulu Kapi, Chief Executive, Harry Anagnostaras-Adams remarked that “The launch of project company TKGM has cemented our relationship with the Government and everyone is pushing to complete the financing and get into development and production.”
Conclusion: Kefi Minerals has now established a formal project company in association with the Ethiopian Government which, in tandem with the progress on project financing provides a firm platform for the delivery of the Tulu Kapi gold mine. Initial geotechnical site investigation drilling is scheduled to start in September after the end of the wet season.
*SP Angel act as Nomad and broker to Kefi Minerals
Kibo Mining (LON:KIBO) 5.625 pence, Mkt Cap £20.5m –Transmission arrangements for Mbeya Coal to Power Project (MCPP)
• Kibo Mining reports that it has concluded the final bid clarification for the construction of the power transmission line for distribution of electricity from the proposed MCPP 250-300MW mine-mouth power plant at Rukwa in south west Tanzania.
• The power transmission contract will supplement the Power Station EPC contract which was conditionally awarded to SEPCO III during December 2016.
• The “Power Line Construction EPC contract which is to be awarded to SEPCO III as an integral part of the Power Station EPC contract, subject to final technical, financial and operational benchmarking that will be conducted by Tractebel Engineering over the course of the next month.”
• The relationship with the Chinese company, SEPCO III, stems from an agreement in August 2016 which granted SEPC “the right to become the sole bidder for the EPC contract to build the power plant component of the MCPP in exchange for SEPCO III refunding 50% of the development costs incurred by Kibo to date on the project. Kibo has already received the first tranche of this funding in the amount of US$1.8million on the 5th September 2016 and signed an EPC contract with SEPCO III on the 19th December 2016.”
• Commenting on the progress with the transmission line bide, CEO, Louis Coetzee said “Finalisation of the transmission line bid concludes all technical development work on the MCPP prior to financial close.”
Conclusion: The completion of the technical work on the transmission line should facilitate the delivery of financial close on the MCPP project which has the potential to help address a significant shortfall in power generation capacity in Tanzania. The impact on the project of recent legislative changes affecting the mining industry in Tanzania remains unclear, however.
SolGold* (LON:SOLG) 36p, Mkt Cap £545.8m – Securing additional exploration licences in Ecuador
• SolGold reports that it has continued to capitalise on the geological and operational expertise it has developed in Ecuador and that it now been granted an additional 21 exploration licences in Ecuador bring the total to 59 licences, excluding its core Cascabel project where the company is expanding its exploration effort with the deployment of additional drilling rigs.
• The award of the new licences brings Solgold’s exploration holding, excluding the Cascabel licences, to a total of 2,496km2. The new licences are to be held in the four previously announced wholly owned subsidiary companies Carnegie Ridge Resources, Green Rock Resources, Valle Rico Resources and Cruz de Sol with the Cascabel block of licences held by Exploraciones Novomining SA.
• The initial exploration results from mapping and sampling are described as “very encouraging with widespread areas of hydrothermal alteration identified which are considered highly prospective for porphyry and epithermal style mineralisation.”
• The company notes that, while many of its samples have yet to be returned from the laboratory but that “initial rock chip samples taken of altered outcrops have returned values as high as 12% Cu.”
• The initial reconnaissance exploration is being followed up with systematic stream sediment sampling over the most prospective areas in order to focus on areas for gridded soil sampling in order to identify future drilling targets.
Conclusion: Solgold is building on the expertise it has built up during the continuing exploration of Cascabel and is expanding its exploration portfolio in Ecuador. Early stage results are promising and the company is moving systematically towards the identification of drilling targets.
*SP Angel acts as Nomad and broker to SolGold. The mining team at SP Angel have raised funds for SolGold on at least eight occasions over the past 10 years.