Bluebird Merchant Ventures (LON:BMV) – Gubong update and historic drilling data
Bushveld Minerals* (LON:BMN) – Demerger of tin assets
Georgian Mining* (LON:GEO) – STRONG BUY – Site visit confirms copper gold mineralisation in drilling
Solgold* (LON:SOLG) – Admission to the Main Market and cancellation of trading on AIM
Hurricane economic impact apprehensions eased following encouraging manufacturing activity data and improved US construction spending
• The impact of Hurricane Harvey and Irma achieved little in impeding construction spending data in the US, as manufacturing factory activity surged to 13-year highs in September. Strong gains in new orders and boosted raw material prices help underpin the robust economy.
• The index of national factory activity rose 2.0 points in August to 60.8 highlighted the Institute for Supply Management.
• Successive hurricane damage undercut consumer spending, industrial production, homebuilding and home sales.
• The Commerce Department also identified a 0.5 percent increase in construction spending to $1.21 trillion in August, representing a 2.5 percent increase year-on-year.
• Construction focussed on non-residential structures, which rose 0.5 percent, compared to residential increasing 0.4 percent.
Dow Jones Industrials +0.68% at 22,558
Nikkei 225 +1.05% at 20,614
HK Hang Seng +2.25% at 28,173
Shanghai Composite +0.28% at 3,349
FTSE 350 Mining +1.05% at 17,044
AIM Basic Resources +0.38% at 2,447
Economics
Currencies
US$1.1736/eur vs 1.1750/eur yesterday. Yen 113.08/$ vs 112.80/$. SAr 13.679/$ vs 13.630/$. $1.325/gbp vs $1.331/gbp.
0.781/aud vs 0.781/aud. CNY 6.653/$ vs 6.653/$.
Commodity News
Precious metals:
Gold US$1,271/oz vsUS$1,274/oz yesterday
• Gold dipped to its lowest since mid-August at $1,272.50 per ounce on the back of continued swelling performance of the dollar against the basket of major currencies.
• The dollar remained high on positive economic data, particularly following the 13 ½ year high in US manufacturing activity in September. Elevated raw material prices followed supply chain disruptions caused by Hurricanes Harvey and Irma.
• Tensions in North Korea remain subdued despite the White House ruling out discussions with Pyongyang on its nuclear and missile program.
• A Federal policymaker argued against the US central bank’s decision on the December rate rise, instead favouring to wait until inflation hit its 2-percent goal.
Gold ETFs 69.2moz vsUS$69.4moz yesterday
Platinum US$913/oz vsUS$914/oz yesterday
Palladium US$915/oz vsUS$937/oz yesterday
Silver US$16.60/oz vsUS$16.61/oz yesterday
Base metals:
Copper US$ 6,505/t vsUS$6,498/t yesterday
• Copper on the London Metal Exchange declined following investor profit-taking during the lull in global trading throughout the Chinese National Day break.
Aluminium US$ 2,118/t vsUS$2,090/t yesterday
Nickel US$ 10,675/t vsUS$10,410/t yesterday
Zinc US$ 3,249/t vsUS$3,174/t yesterday
• LME zinc continued its robust performance, rising to $3,248 per tonne to its highest price since August 2007.
• LME stocks shrunk by a further 16,950 tonnes yesterday to bring the total 2017 decline to 64%.
Lead US$ 2,526/t vsUS$2,509/t yesterday
• Lead prices are expected to remain elevated towards the end of the year on considerable supply shortfall, with analysts forecasting average $2,370-2,600 per tonne ($1.08-1.18 per lb) throughout October (INTL FCStone).
• Throughout September China’s Ministry of Environmental Protection completed its fourth round of inspections across eight provinces. The lockdown has caused approximately 80% of ‘illegal’ secondary (scrap feedstock) smelters to close, while 60% of local lead-zinc mines in the Sichuan province alone have been forced to shut for necessary upgrades and maintenance.
• Supply concerns intensify with ongoing trade sanctions against North Korea, the second-largest supplier of concentrate by volume to China.
• Global inventories have dwindling supplies, with Shanghai Future Exchange lead stocks dropping 80% since May; their lowest in 18 months. The International Lead and Zinc Study Group estimate the global market in a 109,000-ton deficit.
Tin US$ 20,700/t vsUS$20,735/t yesterday
Energy:
Oil US$56.2/bbl vsUS$56.7/bbl yesterday
Natural Gas US$2.914/mmbtu vsUS$3.006/mmbtu yesterday
Uranium US$20.25/lb vsUS$20.25/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$61.6/t vsUS$61.6/t
Chinese steel rebar 25mm US$621.2/t vsUS$621.2/t
• Future uncertainties surrounding the state of the market for steel rebar following the week-long Chinese national holiday is causing price pressures in Singapore with buyers reluctant to take on the semi-finished steel.
• Chinese mills continued to reduce offers in the range $545-550 per tonne cfr Singapore in the build up to the holiday last week, having a knock-on effect on steel futures in China.
• Demand across south-east Asia is at a lull, with Philippine buyers not wanting to hold any inventory with safe price expectations of a $15-20 per tonne cfr drop.
Thermal coal (1st year forward cif ARA) US$80.0/t vsUS$77.9/t
Premium hard coking coal Aus fob US$188.0/t vsUS$190.9/t
Other:
Tungsten APT European US$310-335/mtu vs US$310-335/mtu
Company News
Bluebird Merchant Ventures (LON:BMV) 2.6p, Mkt Cap £4.9m – Gubong update and historic drilling data
• The Company continues to collect data on the dormant Gubong mine where historic drill holes returned narrow high grade intersections.
• The plan is to carry civil works to re-establish permanent access to the mine followed by mapping and sampling of underground workings to locate mineralised areas.
• The management is confident there is a potential to delineate a substantial resource at the Gubong historic mine and increase its life of mine.
• “The drill results show some exceptionally high grade intersects…(and) the fact that the mine was closed in a day without any systematic salvage plan suggests that there is significant ore left behind,” the Company highlighted.
• Available drilling data completed at Gubong includes 57 historic drill holes for 17,715m covering the 1968-2015 period (5 holes were completed in 2014-15 by ASX listed Southern Gold, a current owner of licenses).
• Eighteen drill holes are reported to have shown greater than 1g/t Au intersections with selected ones highlighted below:
• 1.6m at 27.9g/t Au from 845m
• 1.5m at .9g/t from 347m
• 3.0m at 15.2g/t from 442m
• 0.9m at 8.4g/t from 111m
Conclusion: After establishing access to Gubong underground workings Bluebird team nears the start of sampling programme to identify mineralised zones with a view to potentially restart the mine and take advantage of ample infrastructure left from historic mining operation.
*SP Angel act as broker to Bluebird Merchant Ventures
Bushveld Minerals* (LON:BMN) 9.5p, Mkt Cap £77m – Demerger of tin assets
Target price 14p
• The Company is planning to spin out a portfolio of its tin assets in South Africa and Namibia held by Greenhills Resources, a wholly owned subsidiary, into a separate vehicle AfriTin Mining Limited.
• Bushveld shareholders will hold the same number of shares in the Company as held before the demerger date and additionally will be issued an equal amount of shares in AfriTin.
• Bushveld will retain 15% interest in AfriTin in lieu of intercompany loans outstanding with Greenhills.
• In addition, Bushveld holds £720,000 worth of the loan notes covering admission and associated transactions costs which would be converted into AfriTin shares upon completion of the demerger.; the remaining £280,000 of notes are held by private investors covering working capital requirements.
• AfriTin shares are expected to be admitted and start trading on AIM in Nov/17.
• The demerger is subject to shareholder approval with the General Meeting scheduled for 20 Oct/17.
• Following the demerger, AfriTin is expected to focus on development of Mokopane Tin Project and Zaaiplaat Tin Tailings Project in South Africa and the recently acquired interest in the Uis Tin Project in Namibia.
• In particular, AfriTin is planning to consolidate its interest in the Uis Tin Project through an acquisition of the a remaining 50.5% interest in Dawnmin which indirectly owns 85% in the project.
• The consideration will be satisfied by the issue of new AfriTin shares at the placing price to Naminco, an owner of Dawnmin.
• Anthony Viljoen, a founding and current executive director of Bushveld, will become CEO of AfroTin; he will be joined by three non-executive directors on the Board of AfriTin.
• Directors recommend the deal and intend to vote in favour of the demerger with their own beneficial holdings amounting to 1.66% of the existing share capital.
• Commenting on the deal, Bushveld CEO Frotune Mojapelo noted that “having built a critical mass of in-situ tin resources in South Africa and Namibia, with near term production profile initially focused on the flagship Namibian Uis Tin Project, the time is opportune for Bushveld to launch a new standalone AIM listed dedicated tin platform”.
Conclusion: The demerger creates a pure tin play on AIM allowing shareholders to gain exposure to a portfolio of prospective tin assets in Namibia and South Africa. Public vehicle will also put a market based valuation on the Bushveld interest in the AfriTin portfolio. At the same time, the deal would allow Bushveld to focus all its resources on development of vanadium operations and its coal and power project.
*An SP Angel mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.
Georgian Mining* (LON:GEO) 24.4p, Mkt Cap £28m - STRONG BUY - Site visit confirms copper gold mineralisation in drilling
(Georgian’s assets in Georgia are held in a 50:50 joint venture)
STRONG BUY
• Examination of cores, maps and inspection of the Kvemo Bolnisi site in Georgia confirms resource expectations.
• Management look to be ahead of their 3-5mt resource target with drilling ongoing at the site.
• Standing on the Kvemo Bolnisi hill highlights its proximity to the Madneuli mining operations.
• The resource shows a substantial tonnage of brecciated and broken rock with assays confirming relatively good grades of copper in Chalcocyte, chalcite and sulphides.
• A weathered layer of relatively soft oxide material appears to host economic gold grades which can be simply processed at the Madneuli heap leach.
• Mining the hills at Kvemo Bolnisi should result in a near zero strip ratio and low crushing costs as the rock is so highly weathered and brecciated.
• Gold recoveries should run at >90%
• Inspection of the gold heap leach operation at Madneuly confirmed the functionality of the mine's gold process plant while the large copper flotation plant looked like it could use some TLC.
• Mineralogy shows the copper and gold to be free of detrimental impurities. Blasting and crushing should enable simple liberation of the copper.
• Evaluation of existing drill results shows how the concentrated copper hypogene runs directly under the gold oxide cap.
• Copper has leached into the lower layers elevating copper grades.
• JV production & processing agreement: we surmise management may be close to signing their joint venture agreement with their partners and owners of the Madneuli mine and process plant.
• While we don't know when mining of the gold oxide will start we can see how this could start simply and quickly when the JV terms are signed and the haulage route to Madneuli is confirmed.
Conclusion: Georgian is making great progress with the resource at Kvemo Bolnisi. The team appear close to finalisation of the joint venture agreement. Mining of the gold oxide could start soon with processing at the Madneuli site.
*SP Angel acts as Nomad and Broker to Georgian Mining.
Solgold* (LON:SOLG) 36p, Mkt Cap £538m – Admission to the Main Market and cancellation of trading on AIM
• Solgold shares have been admitted to trading on the Main Market with dealings expected to start on October 6.
• A prospectus in connection with the admission to the Main Market can be found on the Company’s website: www.solgold.com.au/prospectuslisting.
*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.