IronRidge Resources* (IRR LN) – Annual results and project update
Mkango Resources* (MKA LN) – Phase 2 testing with Metalysis
Strategic Minerals* (SML LN) – Interim results show $690,000 profit from Cobre
Dresden conference highlights EU drive to promote R&D in mineral processing and metallurgy
• An EU sponsored conference yesterday in Dresden highlighted the EU's drive to push for manufacturing growth supported by European raw materials supply.
• Dresden is close to Frryberg, a local metallurgical center and with a long history in smelting and refining.
• Speakers highlighted the demise of EU metallurgical industries as production moved to China.
• The EU is proving funds for R&D to encourage mining and new processing technologies particularly to support the growth of new industries such as EVs etc...
Lithium - Panasonic steps up lithium ion battery production
• Panasonic said on Friday it will start manufacturing lithium ion batteries for electric cars in fiscal 2019 at its plant in Himeji, expanding domestic production to meet growing demand for green vehicles across the globe
• Supplies batteries to Tesla at plant in Nevada and already has five other production plants in Japan
Nickel - CanAlaska Uranium diversifies and acquires two prospective nickel sulphide projects in Thompson belt
• Acquired two nickel projects in Thompson belt – one of Canada’s most prolific nickel camps
• Cover 63 square miles, are prospective for sulphide nickel and surround the 5.3mln tonnes ‘Mel’ nickel deposit
Iron ore - Investors hit on lower Chinese demand
• Futures in China sank to the lowest since June amid concern the market is getting caught between rising supply as miners crank up output and lower demand, with China enforcing mill closures to curb pollution
• Benchmark ore sank into a bear market last week amid speculation China’s planned winter clean-up campaign, at the same time, miners are adding shipments, bolstering supplies. Goldman Sachs Group Inc. has warned even though China’s demand for steel remains robust, prices may extend declines
Tungsten - Ormonde mining reports loss as work on Spanish project ramps up
• Reported a loss of €132,000 for the six months to the end of June 2017, which includes a €120,000 loss at its flagship tungsten project in Spain
• Announced that its Barruecopardo tungsten mine was being advanced into an accelerated construction and implementation phase, and it expects mine commissioning to commence in the third quarter of next year
Dow Jones Industrials +0.18% at 22,381
Nikkei 225 -0.03% at 20,356
HK Hang Seng +0.24% at 27,487
Shanghai Composite +0.28% at 3,349
FTSE 350 Mining +1.18% at 16,519
AIM Basic Resources -0.26% at 2,412
Economics
Currencies
US$1.1793/eur vs 1.1733/eur yesterday. Yen 112.54/$ vs 113.08/$. SAr 13.515/$ vs13.681/$.
$1.340/gbp vs $1.337/gbp. 0.784/aud vs 0.780/aud. CNY 6.669/$ vs 6.669/$.
Precious metals:
Gold US$1,287/oz vsUS$1,280/oz yesterday
• Gold price levelled despite being on course for the largest monthly decline in 2017, falling 2.7% in September.
• Greenback investor profit-taking is attributed to the drop in dollar strength, while the White House struggled to defend growing criticism on the proposed U.S. tax reforms. Concerns surround the potential to favour the rich at the expense of lower classes while adding trillions of dollars to the deficit.
• Stocks rose gradually on the back of strong economic data, with second quarter data recording its quickest rate of growth in more than two years.
Gold ETFs 69.3moz vsUS$69.3moz yesterday
Platinum US$925/oz vsUS$917/oz yesterday
Palladium US$938/oz vsUS$931/oz yesterday
Silver US$16.85/oz vsUS$16.72/oz yesterday
Base metals:
Copper US$ 6,550/t vsUS$6,439/t yesterday
• London copper rose for the third consecutive session, and is set to register its fifth successive quarterly gain. Robust manufacturing outlook in China is attributed to the growing gains for the metal, with Chinese factories ramping up activity for the 14th straight month.
• Despite the growth pace waning in August, 2017 building boom and higher prices have generated large profits for industrial companies.
• The metal is expected to see large demand growth from the electric vehicle revolution, with a new tough 2019 sales deadline in China for electric plug-in and hybrids.
• Despite positive performance at the end of this week, some analysts are reporting weakening demand from China. Bullish behaviour is built on previous robust macro data, but research from Oxford Economics believes the sentiment isn’t justified based on industrial economic trends.
• The extensive 44-day striking in the first quarter of 2017 has had significant impact on BHP’s profits at the Escondida copper mine in Chile, falling 91% in H1.
Aluminium US$ 2,135/t vsUS$2,120/t yesterday
Nickel US$ 10,445/t vsUS$10,285/t yesterday
Zinc US$ 3,156/t vsUS$3,112/t yesterday
• Zinc prices continued to rise on the presence of a large open LME position and diminishing inventories. The premium on cash zinc to the three month future has fallen from Monday highs but still hints at a shortage of near-term metal.
Lead US$ 2,502/t vsUS$2,461/t yesterday
Tin US$ 20,720/t vsUS$20,670/t yesterday
Energy:
Oil US$57.4/bbl vsUS$57.5/bbl yesterday
• Oil price remains flat despite growing threats from Turkish trade restrictions with Iraqi Kurds. Rising worries surrounding renewed conflict in the region follow the majority nine-to-one secession endorsement by Iraq’s Kurds, enraging the Turkish central government in Baghdad. Potential trade limitations hope to dispel the separatist insurgency from its own Kurdish minority.
• Major US oil producer, Hess Corp, identified the need for renewed investment in offshore oil production to avoid a critically tight supply market by 2020. Rebounding prices will help persuade majors to increase investment necessary to fill the supply gap unmatched by expanding shale output.
Natural Gas US$3.014/mmbtu vsUS$3.062/mmbtu yesterday
Uranium US$20.55/lb vsUS$20.60/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$62.4/t vsUS$64.1/t
Chinese steel rebar 25mm US$619.7/t vsUS$621.3/t
Thermal coal (1st year forward cif ARA) US$79.4/t vsUS$81.6/t
Premium hard coking coal Aus fob US$190.9/t vsUS$197.9/t
Other:
Tungsten APT European US$310-335/mtu vs US$310-335/mtu
Company News
IronRidge Resources* (LON:IRR) 34p, Mkt Cap £92m – Annual results and project update
• IronRidge Resources, which is exploring a range of gold and lithium projects in Chad, the Ivory Coast and Ghana and bauxite and gold projects in Australia, reports a loss of A$5.2m (2016 – loss of A$2.3m) for the year ending 30th June 2017.
• Following operating cash outflows of A$3.6m, the A$2.9m cash portion of the acquisition of the Chad gold exploration company, Tekton, and A$1.7m of exploration and evaluation activity, the company reports a 30th June cash balance of A$2.4m.
• The acquisition of Tekton brings in an experienced exploration team and five exploration permits covering approximately 100 square kilometres of “under explored yet highly prospective” gold exploration licence within the Saharan Metacraton of Central Africa.
• The current focus in Chad is on the Dorothe, Echbara and Am Ouchar licence areas where mapping and trenching at Dorothe, in an area of widespread artisanal gold workings, at Dorothe has shown extensive mineralised quartz veining over a 200m wide zone confirmed over at least 1 km of strike length with indication of up to 3km strike extent.
• Additional prospects at Echbara, 25 km west of Dorothe, Am Ouchar, 70km southeast of Dorothe and Nabagay, 25 km north all show similar geological environments and artisanal working areas for further follow up as the exploration effort builds up during the coming exploration season.
• The company’s lithium exploration efforts in Ghana and Ivory Coast comprise an area of over 300 square kilometres overlying the Cape Coast Batholith in Ghana where previous studies have outlined a non-JORC compliant resource of 1.48m tonnes at an average grade of 1.66% Li2O at Egyasimanku Hill and “a highly prospective ‘hard rock’ lithium pegmatite package with associated lithium potential, … over 1,177km2 in Ivory Coast.”
• Trenching and sampling has encountered wide and extensive mineralisation including, 100m at an average grade of 1.57% Li2O, 40m averaging 1.93% which included a 15m averaging 2.18%. The company notes that “additional multiple mapped pegmatites remain untested with significant exploration upside”.
• In the Ivory Coast, the company is targeting gold along structures associated with the Sassandra Shear Zone which lies between the Archaen age cratonic rocks of the Leo Shield and the younger intrusive and metamorphic rocks of Birimian age. The company comments that similar structures “host the world-class Syama (7Moz) and Tongon (5Moz) gold mines to the north”.
Conclusion: IronRidge is assembling an extensive portfolio of gold and lithium exploration projects in west Africa and the recent Tekton acquisition adds a sizeable position in a prospective and relatively underexplored gold area in Chad.
*SP Angel act as Nomad and Broker to IronRidge Resources
Mkango Resources* (LON:MKA) 3.3p, Mkt Cap £2.7m – Phase 2 testing with Metalysis
• Mkango Resources has announced that, following the successful production of a neodymium-iron-boron alloy powder during its Phase 1 research and development collaboration with the specialist metals and alloys company, Metalysis, they will be moving to a 12 month, Phase 2 programme of further development.
• The Phase 2 work will scale up the earlier work and include optimisation of the process as well as additional analysis to determine the morphology, chemical composition and physical and magnetic properties of the alloy powder.
• The new work will also “incorporate customer appraisal of the product and further investigation of opportunities in relation to 3D printing of magnets.”
• Mkango has also announced that it has agreed with Talaxis Ltd, which is a wholly owned subsidiary of the Noble Group for Talaxis to invest £0.5m in Mkango at a price of 3.5p/share. The funds will give Talaxis a 14.5% interest in Mkango and will facilitate the start of the Phase 2 work with Metalysis.
• The additional funding will also facilitate the continuing development of Mkango’s Songwe Hill rare earths project in Malawi. The project feasibility study for Songwe Hill was updated in November 2015 and showed a project generating an after tax IRR of 37% and an NPV of US$345m from an initial capital investment of US$216m (including US$20m contingency).
Conclusion: Mkango Resources, in collaboration with Metalysis, has successfully produced a neodymium-iron-boron alloy powder at an R&D scale and is now moving to a further, Phase 2 stage where the partners will investigate the possibility of £D printing of magnets for possible use in electric vehicles, wind turbines and other environmentally benign technologies, as well as assessing customer reaction to the product.
*SP Angel acts as Nomad and Broker to Mkango Resources
Strategic Minerals* (LON:SML) 2.3p, Mkt Cap £28.6m – Interim results show $690,000 profit from Cobre
• Strategic Minerals reports a profit of $158,000 (2016 – loss of $322,000) for the six months ending 30th June. The result includes a “tenfold increase” in the profits from the Cobre magnetite tailings operation in New Mexico which contributed a “Profit of $690,000 (H1 2016: $62,000) … prior to intercompany management charges … [and] continues to underpin corporate cash flow and is expected to accelerate in the second half of 2017 in line with the commencement of the new and substantial contract in June .”
• The major increase in the contribution from Cobre reflects the recent records in monthly sales arising from the addition of significant new customers, and the contract to supply 4,000tpm to a single customer which is expected to help underpin the company’s expectation of accelerating growth during the second half of the year.
• The balance sheet for 30th June shows cash of $1.26m partly offset by debt of $60,000.
• As previously announced, the company completed its acquisition of a 50% interest in Cornwall Resources where drilling of the Redmoor tin/tungsten project is underway with initial results, already reported, indicating a shift in exploration priorities from the high grade veins formerly targeted towards the sheeted vein systems which may provide a more robust, lower cost, bulk mining opportunity.
• The company also secured the balance of Central Australian Rare Earths (CARE) where the start of exploration drilling primarily for cobalt and nickel was announced in late August to follow up targets identified from a re-examination of previously completed drilling information. This initial phase of drilling has now been completed and the company reports that it is awaiting the assay results.
• Strategic Minerals has previously outlined an ambitious aspiration for growth “to further expand shareholder wealth through corporate activities in its goal to take the Company’s market capitalisation to £100m+.” The company has now expanded upon the three-pronged strategy to help it deliver this goal
o “Coal and Bulk Materials- potential projects in this sector that are tied to current contracts and further offtake arrangements at attractive prices.
o Advanced Materials- considering project opportunities in materials where it expects demand to increase over the coming years (such as Rare Earths, Lithium and Graphite).
o Metals- identify those projects exposed to metals that it expects to have price improvements over the next three to five years such as Cobalt, Nickel, Gold, Copper and Tin/Tungsten.”
• Commenting on the results of an eventful six months, Managing Director, John Peters, highlighted the importance of the increasing sales and profitability at Cobre in transforming “the Company and provided it the luxury of being able to self-fund value adding exploration programmes, without diluting shareholders”. He also underlined that “The Board and Management considers prospects from our Cornwall Resources and CARE investments to be very encouraging” in furthering the company’s longer term growth.
Conclusion: Strategic Minerals is using an expanding base of cash generation at Cobre to advance exploration for tin/tungsten in the UK and for nickel/cobalt in Western Australia. Opportunities for further expansion through corporate activity are currently directed at coal and bulk materials, advanced materials and metals which are expected to experience significant price appreciation over the next three years.
*SP Angel act as Nomad and broker to Strategic Minerals