Anglo Asian Mining* (LON:AAZ) – Great potential for further discovery within easy reach of Anglo Asian’s Gedabek copper, gold mine
Phoenix Global Mining* (LON:PGM) – Drilling results at Empire return high grade intersections
Solgold* (LON:SOLG) – Drilling results point to expansion of the copper/gold mineralisation at Cascabel
Dow Jones Industrials +0.50% at 22,775
Nikkei 225 +0.30% at 20,691
HK Hang Seng +0.07% at 28,398
Shanghai Composite +0.28% at 3,349
FTSE 350 Mining -0.19% at 17,554
AIM Basic Resources +1.42% at 2,505
Economics
US – Equities closed at their sixth consecutive record high yesterday for the first time in more than 20 years.
• The string of gains came amid a protracted period of low volatility with the CBOE Vix index closing at the weakest level since 1990.
• Non farm payrolls are due late today with estimates for a modest 80k increase following a 156k gain in August highlighting adverse affects of a series of hurricanes that hit US south east coast earlier.
Germany – Industrial orders post the biggest increase of 2017 in August following a relatively mute Q2/17 with demand from outside the eurozone block coming in particularly strong.
• Orders climbed 3.6%mom with domestic orders up 2.7% and ones from outside the eurozone up 7.7%.
• Demand within the eurozone came in weak falling 1%.
UK – Property prices growth rebounded in September led by the shortage of new housing with sales on new homes hovering around an all time low, according to Halifax data.
• UK house prices climbed 4%yoy in the three months to September compared to the gain of 2.6%yoy recorded in August.
• The average house price came in at £225,109, the highest on record.
• Interestingly, Halifax measure deviates from other property market measures including Nationwide and Rightmove indices which reported nearly half growth rates during the same period and pointed to soft demand outlook.
• The pound is trading at a 4-week low dragged by concerns over the Conservative party leadership with FT reporting on growing discontent with Theresa May among Tory MPs; leadership change may in turn undermine Brexit talks adding uncertainty towards economic outllok.
Currencies
US$1.1687/eur vs1.1772/eur yesterday. Yen 113.03/$ vs112.70/$. SAr 13.699/$ vs13.603/$. $1.307/gbp vs$1.319/gbp.
0.777/aud vs0.783/aud. CNY 6.653/$ vs6.653/$.
Commodity News
Gold US$1,268/oz vsUS$1,275/oz yesterday
• Gold remained flat ahead of today’s key delivery of U.S. labour market data. Further indication of robust economic growth will only serve to boost the dollar which hangs around its seven-week peak, in turn weakening investor sentiment towards gold.
• Latest unemployment figures remain indistinct, with the number of Americans filing for benefits rising as a consequence of Hurricanes Harvey and Irma.
• U.S. tax reform discussions buoyed Wall Street shares to new highs, also reflected in a rise in Asian stock, as the Congressional Republicans moved ahead with the overhaul of the U.S. tax code. However all reactions weren’t positive, with Federal Reserve officials warning that President Donald Trump’s tax plan could damage U.S. economy with rapid inflation and unsustainable federal debt.
• The dollar was also assisted by a Federal Reserve rise in U.S. Treasury yields, driving the dollar index to its strongest level since August at 94.01.
Gold ETFs 69.0moz vsUS$69.1moz yesterday
Platinum US$916/oz vsUS$914/oz yesterday
Palladium US$941/oz vsUS$927/oz yesterday
Silver US$16.60/oz vsUS$16.62/oz yesterday
Base metals:
Copper US$ 6,693/t vsUS$6,566/t yesterday
• Base metals showed broad rallying as the closure of trading on the Shanghai Futures Exchange across the Chinese National Day Golden Week holiday came to a close.
• Copper shorts increased surrounding concerns over supply disruptions from assets in Chile following a 5.4 magnitude earthquake, although Codelco and Antofagasta have reported no damage to their operations.
• Plans to reopen one of the world’s largest copper mines, closed since 1989 following civil war on the Pacific Island of Bougainville, are impeded by operating rights conflicts. Revenue from the reopened mine would provide essential to the island ahead of its vote of independence from Papua New Guinea in 2019.
Aluminium US$ 2,161/t vsUS$2,164/t yesterday
Nickel US$ 10,605/t vsUS$10,675/t yesterday
• Nickel prices are expected to see support throughout the electric vehicle boom, despite near-term supply concerns deflating prices.
• Future supply uncertainties surround global production, with the outlook in the Philippines remaining ambiguous following the election of the new environmental minister. The government haven’t provided details on the potential reopening of environmentally polluting mines.
• Despite additional decisions to close nickel mines, including First Quantum Minerals’ Ravensthorpe nickel mine, BMI Research are forecasting growth to average 2.3% across 2017-2021.
• Demand for the metal is forecast to improve dramatically, particularly from electric vehicle batteries. The dramatic rally in cobalt prices is leading to a shift in the quantities of metals incorporated in the nickel-manganese-cobalt (NMC) lithium-ion batteries. Current iterations comprise 1:1:1 mix across the metals but in the future could focus on 8:1:1 mix of nickel, manganese and cobalt.
Zinc US$ 3,284/t vsUS$3,292/t yesterday
• China’s mined zinc output weakened 7.4% year on year in the first half of 2017 following stringent regulations and pollution restrictions from the country’s Ministry of Environmental Protection. Over 1,000 mines across the country received orders for production limitations and mandatory upgrades as China’s crackdown on air pollution has stopped producers benefitting on buoyant metal prices.
• Available stocks across LME warehouses hover around 35% of 2017 peak levels of 317,000 tonnes. Amid the tight market, there are two large short positions holding around 40-59% of the October date open interest.
• The dramatic price upsurge is creating issues for buyers of zinc, with prices remaining at unsustainable levels for galvanizers, alloy producers and smelters to break even.
• Following substantial global closures, supply from Vedanta in the first half of 2018 will be warmly welcome. After a six- to nine- month ramp-up, the Gamsberg mine in South Africa is expected to ease the global shortage with delivery of 250,000t metal in concentrate.
Lead US$ 2,573/t vsUS$2,560/t yesterday
Tin US$ 20,975/t vsUS$20,800/t yesterday
Energy:
Oil US$56.8/bbl vsUS$56.0/bbl yesterday – Oil companies began evacuating non-essential personnel from platforms and rigs in the Gulf of Mexico as Tropical Storm is expected to hit the US coast over the weekend.
• Following in the footsteps of Russia’s decision to extend the global oil production pact, Saudi Arabia remained ‘flexible’ to the suggestion as an aid to elevating and stabilizing oil prices.
• Vitol CEO Ian Taylor forecast peak oil demand around 2028-2030 on the back of rising pressure away from fossil fuels and into clean electric vehicles.
Uranium – Japanese opposition party is proposing to phase out nuclear energy by 2030 as part of its programme ahead of the upcoming snap election.
• Most of the nation’s nuclear generation capacity remains idle after 50 nuclear reactors were shut down on the back of Fukushima events in 2011.
Natural Gas US$2.910/mmbtu vsUS$2.947/mmbtu yesterday
Uranium US$20.45/lb vsUS$20.45/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$62.2/t vsUS$61.9/t
Chinese steel rebar 25mm US$621.2/t vsUS$621.2/t
Thermal coal (1st year forward cif ARA) US$79.8/t vsUS$81.6/t
Premium hard coking coal Aus fob US$187.0/t vsUS$188.0/t
Other:
Tungsten APT European US$290-305/mtu vs US$310-335/mtu
Company News
Anglo Asian Mining* (LON:AAZ) 31p, Mkt Cap £35m – Great potential for further discovery within easy reach of Anglo Asian’s Gedabek copper, gold mine
• Having just returned from travelling through Georgia and Azerbaijan it is interesting to note some geological observations connecting the regions.
• Georgian Mining’s Kvemo Bolnisi and RMG’s Madneuli copper gold mine are around 230km apart by road and a bit less as the crow flies making them near neighbors in geological terms.
• The three mines/projects are epithermal copper, gold deposits within the Alpine-Tethian Belt though altitude levels are relatively low.
• Anglo Asian’s Gedabek mine is a low-sulfidation deposit and is part of the Gedabek volcano-plutonic structure which starts to describe how the Gedabek deposits were formed.
• A second open cast mine was recently discovered just a few miles from Anglo Asian’s Gedabek main pit at Gadir and other discoveries are sure to follow as the company better understands the geology of the region.
• Structural Geologist, Stephen Westhead, is leading the exploration effort with near-immediate results through the very fast development of the new Gadir open pit and the identification of other promising targets within easy reach of the Gedabek mine infrastructure.
• Very little previous exploration has been done within the area as the company has focused on developing the Gedabek mine, its process plant and associated infrastructure.
• Each of the mines/projects lie within areas of historic volcanism caused by the Anatolian and Arabian plates pushing up against the Eurasian plate.
• These Plate tectonics led to the compression and lifting of the Tethyan Eurasian Metallogenic belt enabling the formation of ancient volcanoes and porphyry structures which act as heat sources driving concentrations of mineralisation at various points along the Tethyan range.
• The geological trend runs from the West of China through Iran, Azerbaijan and Georgia and on into Turkey before turning north into Eastern Europe where it runs through Northern Greece and Bulgaria, to Serbian and Southern Hungary.
• Local politics have held back exploration within the Tethyan Belt from Iran through to Georgia with relatively little new work done since the demise of the Former Soviet Union.
• Mines have largely been based on historic workings and discoveries made before the Soviet occupation. Soviet geologists were assigned to work on projects but with little apparent success.
• Modern exploration methods are now enabling the reinterpretation of past work leading to a new understanding of the geology of the region and a number of new discoveries of which the most recent are Gadir at Anglo Asian, Kvemo Bolnisi for Georgian Mining and another new gold deposit by RMG near Madneuli.
• Jim Royall is the chief Geologist at Georgian who alongside Martyn Churchouse are leading exploration to discover new mines within Georgian side of the Tethyan belt.
Conclusion: There is much more to be discovered using new exploration techniques between Gedabek and Bolnisi along the Tethyan Metallogenic belt. Anglo Asian is well placed to expand its copper and gold production and is demonstrating a rare ability to move unusually fast in the low cost development of new mines. We recommend investors watch Anglo Asian and Georgian Mining closely for further discoveries within this geologically promising region.
*SP Angel acts as nomad and broker to Anglo Asian Mining
Phoenix Global Mining* (LON:PGM) 3.6p, Mkt Cap £8.3m – Drilling results at Empire return high grade intersections
• The Company released another series of assay results from the recently completed 28 drill hole RC and DD programme testing oxide mineralisation at the Empire Copper Mine, Idaho.
• Selected intersections from holes 13 to 17 include:
o KXd17-3 for 7.6m at 1.15% CuEq from 18.3m and 32.0m at 2.68% CuEq from 38.1m (including 12.2m at 3.14% CuEq and 9.2m at 3.88% CuEq);
o KX17-16 for 9.1m at 0.68% CuEq from 16.8m;
o KX17-17 for 6.1m at 2.25% CuEq from surface and 12.2m at 1.12% CuEq from 10.7m;
o KX17-18 for 6.1m at 0.94% CuEq from surface including 1.6m at 1.91% CuEq from 3.1m.
• Assays form remaining six drill holes are due later this month
• Updated JORC resource statement remains on track for completion in Q4/17 ahead of the PFS targeted for Q2/18.
• Contractors are due to restart drilling with the first of the two diamond drill holes to be driven from surface targeting deeper horizons and testing sulphide mineralisation below the old workings.
• Results from the sulphide mineralisation drilling are expected by end of November.
Conclusion: Latest assay results return high grade copper/silver/gold intersections in wide and close to surface intervals with an updated resource due shortly.
*SP Angel acts as Nomad to Phoenix Global Mining
Solgold* (LON:SOLG) 38.5p, Mkt Cap £583m – Drilling results point to expansion of the copper/gold mineralisation at Cascabel
• Assay results have been received for 23R-D1 (Alpala Central) and 24-D1R (Alpala Southeast) drill holes:
• 23R-D1 results returned 695.1m at 1.37% CuEq (0.72% Cu and 1.02g/t Au) from 694.9m including high grade interval of 458.0m at 1.68% CuEq (0.88% Cu and 1.26g/t Au) from 838.0m;
• The drill hole is a “daughter” hole driven off hole 23R from 694.9m with results showing a 90m eastward extension to the known mineralisation at Alpala Central.
• 24-D1R results returned 512.9m at 0.53% CuEq (0.34% Cu and 0.30g/t Au) from 755.2m including higher grade interval of 262.8m at 0.86% CuEq (0.52% Cu and 0.53g/t Au).
• The drill hole is a “daughter” hole driven drilled off Hole 24 from 735.0m depth extending the mineralisation at Alpala Southeast 130m down dip.
• Mobilization of additional drill rigs is ongoing with two man-portable ones (Rigs 6 and 7) delivered to site and expected to start drilling in coming weeks.
• Two large track-mounted Sandvik drill rigs (Rigs 8 and 9) are in transit and are expected to arrive on site in early November.
• Another two track mounted pieces (Rigs 10 and 11) are due by mid-November and Rig12 should be delivered in January 2018.
• The Company has completed over 50,000m of drilling so far with expanded drilling capacity the team scheduled 126,000m of drilling in 2018.
• Currently, drilling is in progress along the greater Alpala trend including Alpala Northwest, Alpala Central and Alpala Southeast with drill testing of adjacent priority targets (Carmen, Trivio, Aguinaga, Cristal, Moran and Tandayama-America) planned following the publication of the maiden resource statement due in December.
• Follow up resource udates are expected through 2018 as drilling at Alpala progresses.
• Results from 11 drill holes targeting lateral and down dip extensions of the Alpala deposit as well as infill mineralisation required for resource estimation are pending (26-D1, 26-D2, 28, 29, 29-D1, 29-D2, 30, 30-D1, 31, 31-D1 and 32).
Conclusion: Drilling at Alpala extends boundaries of the mineralisation with exploration works set to further accelerate as the Company mobilises more drill rigs at Cascabel.
*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.