Altus Strategies (LON:ALS) 8.5p, Mkt Cap £9.2m – Liberia exploration update
SolGold* (LON:SOLG) 25p, Mkt Cap £424.1m – New copper mineralisation discovered at Timbara
Strategic Minerals* (LON:SML) 2.017p, Mkt Cap £26.7m – Exploration results from Hanns Camp
Tri-Star Resources* (LON:TSTR) 0.0375p, mkt cap £23.9m – Additional investment in SPMP
Bushveld Minerals* (BMN) BUY – Target price rises to 18.28 from 14p – Vanadium price rise more than offsets SA rand strength (correction)
SP Angel rank No 1 in Copper price forecasting in the Q4 2017 MB APEX report
SP Angel analysts ranked:
- 1st for copper, 1st = for gold, 2nd for Palladium, 3rd for Coking Coal, 5th for Zinc
Overall SP Angel ranked:
- 3rd in Q4 Precious Metals forecasts in Q4, 4th in Base Metals forecasting in Q4
We are immensely proud of our team’s price forecasting performance against the world’s major investment banks and broking institutions
See MB APEX report link for further details
China expected to ramp up its battle against pollution
- Beijing acting mayor expects its battle against air pollution to take time and will be very tough to win despite recent improvements. The nation has been combatting emissions and cleaning its notoriously smoggy air through steps such as pushing households and factories to switch away from coal to cleaner fuels like natural gas, while across mills industrial and base metal output has been curbed across hazardous regions during the winter heating period.
- Beijing has experience short-term success, reducing annual average level of breathable particulate matter (PM2.5) to 58 micrograms per cubic metre in 2017 and beating its target set by the State Council in 2012. However, the nation will be required to strengthen its controls on emissions to reach its official PM2.5 standard of 35 micrograms and the recommended level of no more than 10 micrograms set by the World Health Organisation.
121 Conference, Cape Town – 5-6 February 2018
SP Angel Mining Analysts will be at the 121 Mining Investment Conference in Cape Town on 5th & 6th February
- We look forward to meeting investors and companies at the 121 event or by appointment thereafter.
SP Angel ranked No 1 for research by ‘Research Tree’ according to investor demand
- https://www.research-tree.com/blogs/research-tree/the-annual-research-tree-analyst-rankings-2017
- ‘Research Tree’ see top demand in SP Angel ‘Resource Sector’ research notes according to investor downloads
Dow Jones Industrials
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at
26,211
Nikkei 225
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at
23,941
HK Hang Seng
+0.14%
at
32,977
Shanghai Composite
+0.37%
at
3,559
FTSE 350 Mining
+0.31%
at
19,015
AIM Basic Resources
-0.73%
at
2,728
Economics
US – The US$ index is below the 90.0 level for the first time since the end of 2014 on the back of concerns over US politics and protectionist trade policies enacted by the Trump administration.
Japan – The nation posted the strongest year in terms of exported goods since the financial crisis with robust growth recorded in December on the back of a recovery in the global growth momentum.
- The value of exports climbed 9.3%yoy in December and 11.8%yoy for the full year, the most since 2010, to the highest level since 2008.
- Volume wise exports were up 4.5%yoy in December and 5.2%yoy in 2017.
- The PMI survey showed the economic growth accelerated at the start of the year as new orders continued to grow with jobs seen growing at a faster pace.
- The report also pointed out higher inflation rates saying that “with a low rate of unemployment and sustained growth in official GDP data, inflationary pressures should continue to mount”.
Germany – Business sentiment at its highest since the start of the series in 2012, according to the latest set of PMI data.
- The composite PMI came in close to last month’s six-and-a-half year high in January matching strong economic sentiment reading released yesterday.
- The “economy maintained strong growth momentum at the start of 2018 thanks to the fastest rise in service sector business activity for nearly seven years... growth in the manufacturing sector was meanwhile below the record level seen at the end of 2017 but still among the highest seen over the past two decades,” the report read.
- New orders continued to flow in with employment growth gathering pace reaching the strongest since early 2011.
- Consumer prices growth has also picked up with selling prices for goods and services reported to have increased at the fastest rate in seven years.
- Manufacturing PMI: 61.2 v 63.3 in December and 63.0 forecast.
- Services PMI: 57.0 v 55.8 in December and 55.5 forecast.
- Composite PMI: 58.8 v 58.9 in December and 58.5 forecast.
UK – The pound climbs above the 1.40 level against the US$ placing the currency among the strongest performers in 2018 amid a continuing donward trend in the US$ and expectations for a special deal for the UK leaving the EU.
- Net long positions were at their highest level since 2014, according to the latest positioning data from the CFTC.
- Employment unexpectedly jumped in the tree months to November with wages climbing at their fastest rate in nearly a year.
- Jobs climbed by 102k during the period taking total employment to a record 32.2m against estimates for a drop of 13k.
- Earnings increased by an annual 2.4%, the highest increase since Dec/16 and compared to a 2.3% in the three months to October; total pay including bonuses was up at 2.5% unchanged from the rate recorded in the previous three months.
- “With the employment rate returning to a joint-record high and the number of vacancies setting a new record, demand for workers clearly remained strong… nevertheless inflation remains higher than pay growth and so the real value of earnings continues to declines,” ONS commented on numbers.
France – Business activity growth notched up in January coming a little chy of the six and a half year high recorded in November last year.
- New orders advanced at their fastest pace since Apr/11 with growth especially strong in the service sector.
- Like in Germany, businesses reported the fastest inflation rate since Aug/11 as firms passed on higher input costs onto consumers.
- “The French private sector economy started 2018 where it left off last year, with the headline flash composite output PMI figure remaining among the highest recorded in the survey’s near 20-year history.
- Services PMI: 59.3 v 59.1 in December and 58.9 forecast.
- Composite PMI: 59.7 v 59.6 in December and 59.2 forecast.
Currencies
US$1.2322/eur vs 1.2236/eur yesterday Yen 109.88/$ vs 110.94/$ SAr 12.027/$ vs 12.106/$ $1.405/gbp vs $1.395/gbp 0.803/aud vs 0.796/aud CNY 6.388/$ vs 6.405/$
Commodity News
Precious metals:
Gold US$1,346/oz vs US$1,337/oz yesterday
- Gold extends its rally for the fifth consecutive session as investors add purchases through exchange-traded funds and support the biggest annual surge in seven years. The precious metal is up almost 3% in the spot market this year, sustaining the surge throughout 2017 as the dollar continues to slide. The total known holdings in bullion-backed ETF’s rose to 2,254 tonnes as of Tuesday, the highest since May 2013.
- The dollar touched a four-month low against the yen on simmering concerns that the US currency’s yield advantage will start to erode as major central banks head towards unwinding excessive stimulus. Further Trump’s decision to slap import tariffs on washing machines and solar panels is marring global trade outlook, when its recent revival has fueled hopes for stronger global economy. “Global investors are also concerned about potential trade wars…which is stirring up some risk-aversion trade, so that, in turn, is supporting gold”, according to HuaAn Gold fund manager.
Gold ETFs 72.5moz vs US$72.3moz yesterday
Platinum US$1,008/oz vs US$994/oz yesterday
Palladium US$1,099/oz vs US$1,094/oz yesterday
Silver US$17.13/oz vs US$17.05/oz yesterday
Base metals:
Copper US$ 6,953/t vs US$7,042/t yesterday
- Copper slumps to a one-month low on the London Metal Exchange as inventories jump by the most in more than 10 months, continuing the trend of oscillating LME stocks throughout 2017. Prices fell as much as 2.6% to $6,885/t as manufacturers in China are also preparing to halt output during the week-long Lunar New Year next month, adding to the evidence that copper demand is hitting seasonal lows during the early part of the year.
- Seasonal shuttering of production is expected to continue throughout the winter heating period as futures for March delivery dropped 2.7% to 3.1/lb, the lowest since December. Bloomberg Intelligence analysis understand copper “may see more sideways-to-downward movement in the short run, while a weakening US dollar has helped, a relief rally or stabilization in the interim may remove a tailwind the red metal’s enjoyed”.
Aluminium US$ 2,211/t vs US$2,232/t yesterday
Nickel US$ 12,820/t vs US$12,800/t yesterday
Zinc US$ 3,392/t vs US$3,418/t yesterday
Lead US$ 2,603/t vs US$2,614/t yesterday
Tin US$ 20,710/t vs US$20,685/t yesterday
Energy:
Oil US$69.8/bbl vs US$69.3/bbl yesterday
Natural Gas US$3.592/mmbtu vs US$3.278/mmbtu yesterday
Uranium US$23.15/lb vs US$23.15/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$72.1/t vs US$74.5/t
- Iron ore futures in China fell for the second session as surging supply will swell already record stockpiles across ports in the world’s largest consumer. Stocks of imported ore reach an all-time high of 154.4 million tonnes last week as additional tonnage from major miners could find its way into Chinese ports. Top iron ore producer Vale is forecasting output to rise to 6.8% to 390 million tonnes as the company ramps-up production at its S11D project.
- Australian exports have surged almost 40% as shipments climbed to 13.15 million tonnes last week following severe disruptions to operations hit by the latest cyclone. Global Ports data in Noon Iron will only serve to elevate stock levels across Chinese ports brimming with ore.
- The iron ore for delivery to port on the Dalian Commodity Exchange slid 3% to the weakest level since Dec. 2, as analysis at CMC Markets note that “it’s more a case of markets looking at the potential for increased supply and also the possibility that demand might slow down seasonally”. Profit markets at Chinese steel mills are also expected to narrow as supply normalises after production curbs in the Asian nation are lifted in March, potentially limiting the buying appetite for the raw material.
Chinese steel rebar 25mm US$654.8/t vs US$656.8/t
- Asian exports were dealt a blow as the Trump administration’s decision to slap tariffs and quotas on solar-panel imports gives hope to US steel executives and workers in future intensions to insulate the domestic industry. “Now that President Trump has taken action in these high profile cases (solar panels and washing-machine imports), we hope that he will also keep his promise to defend American-made steel and aluminium”, Scott Paul, president of the Alliance for American Manufacturing.
Thermal coal (1st year forward cif ARA) US$85.6/t vs US$85.9/t
Premium hard coking coal Aus fob US$217.8/t vs US$224.1/t
Other:
Tungsten APT European US$310-318/mtu vs US$310-318/mtu last week
Cobalt LME 3m US$79,750.0/t vs US$75,250.0/t
Company News
Altus Strategies (LON:ALS) 8.5p, Mkt Cap £9.2m – Liberia exploration update
- The Company provided an update over the first phase of an exploration programme at the 100%-owned 466km2 Zolowo license in NW Liberia.
- Initial reconnaissance identified over 50 alluvial gold mining sites with 35 of those being active and the largest of sites extending for 250m.
- The work followed upon an inhouse analysis of geological maps and satellite imagery.
- The licence is located within a prolific regional geological trend hosting Bella Yella exploration license and New Liberty operating gold mine.
- A number of rock samples have been collected for assays and the team is planning to carry out a systematic stream sediment sampling programme tracking the hard rock source of alluvial gold.
SolGold* (LON:SOLG) 25p, Mkt Cap £424.1m – New copper mineralisation discovered at Timbara
(SolGold own 85% of Cascabel in Ecuador)
- Solgold reports that it has discovered two outcrops of porphyry copper style mineralisation at its wholly owned Timbara exploration project in southern Ecuador.
- Timbara is located in the “eastern Jurassic Belt [of Ecuador] which contains the Fruta del Norte epithermal gold deposit (14 million ounces Au), the Mirador copper porphyry deposit (3 million tonnes copper) and the Saint Barbara gold (copper) porphyry deposit (8 million ounces Au).”
- Assay results from rock chip sampling at Timbara highlighted in today’s announcement include:
- A sample grading 28.89% copper and more than 100g/t silver taken from a northeast trending bornite /chalcopyrite vein; and
- A further sample grading 4% copper and over 100 g/t silver.
- A number of other samples reporting grades in excess of 1% copper
- Solgold is planning to follow up these initial results with “systematic mapping and rock chip sampling of anomalous streams and outcrops to gain a better understanding of the geological controls, hydrothermal alteration and style of copper mineralisation at Timbara. An aeromagnetic survey will also be carried out over the Timbara Project.”
- Solgold has gained considerable technical and operational expertise in Ecuadorean exploration through the development of its Cascabel project where the company recently published a maiden resource estimate of over 1bn tonnes at an average grade of approximately 0.7% copper equivalent.
- The company has deployed this expertise on a number of other exploration projects in Ecuador and the results reported from Timbara follow other encouraging results reported in December from the La Hueca project.
Conclusion: Solgold has identified high grade copper mineralisation at surface in the Timbara prospect in southern Ecuador. We look forward to further news as the company starts systematic exploration mapping and sampling.
*SP Angel act as UK broker to SolGold and have acted as placing agent in relation to the recent £45m new share issue
Strategic Minerals* (LON:SML) 2.017p, Mkt Cap £26.7m – Exploration results from Hanns Camp
- Strategic Minerals has released results from its aircore drilling programme at the Hanns Camp nickel/cobalt project near Laverton, W Australia.
- The results, from 49 drill holes, of which 23 encountered mineralisation, have confirmed a zone of mineralisation extending over an area of some 1000m x 500m.
- Today’s announcement describes the results of samples taken over single metre long intervals and refines the results from 4m long samples which were reported in early November.
- Among the results reported today are:
- A 1 metre long intersection averaging 1.66% nickel and 0.09% cobalt from a depth of 29m in hole HCA024; and
- A 3m long intersection averaging 1.04% nickel and 0.07% cobalt from a depth of 34m in hole HCA025; and
- A 17m long intersection averaging 1.20% nickel and 0.07% cobalt from a depth of 31m in hole HCA028; and
- A 12m long intersection averaging 1.04% nickel and 0.06% cobalt from a depth of 29m in hole HCA048
- The company also reports that work by the renowned expert on ultramafic hosted nickel sulphide mineralisation, Dr. Martin Gole, has “identified the existence of komatiite lava channel facies rocks within the Hanns Camp ultramafic which is one of the key requirements for the potential accumulation of nickel sulphides.”
- Commenting on these developments and the improved insight into the mineralisation at Hanns Camp, Strategic Minerals’ Chairman, Alan Broome, commented “In the light of this recent review of nickel potential, the Board feels justified in undertaking further significant exploration at Hanns Camp over the course of 2018 and expects to be able to fully fund these activities internally.”
- Hanns Camp is located within the East Yilgarn nickel sulphide province of W Australia where the Mt Windarra and South Windarra deposits, approximately 12km west of the Hanns Camp site, have “together produced 8.1m metric tonnes (Mt) at 1.5% nickel (Ni) between 1974 and 1992.”
Conclusion: The improved understanding of the mineralisation at Hanns Camp as a result of the recent drilling and Dr. Gole’s insight will guide the 2018 exploration programme. We look forward to further news as the campaign, within an established nickel producing region, proceeds.
*SP Angel act as Nomad and broker to Strategic Minerals
Tri-Star Resources* (LON:TSTR) 0.0375p, mkt cap £23.9m – Additional investment in SPMP
- TriStar Resources reports that it has invested a further US$2.8m as a mezzanine loan into its 40% owned Strategic Precious Metals Processing (SPMP) which is constructing the new antimony roasting facility in Sohar, Oman.
- The additional funds are available from the recent £4.4m fundraising and represent TriStar’s share of the additional capital required to complete the roaster where the most recent estimates indicate an overall capital cost of US$109m compared to a previous estimate of $96m.
- We note, however, that at the time of the fundraising in December 2017, the total estimated capital was US$110m. TriStar ascribes part of the increased capital estimate “to the impact of movements in exchange rates.”
- The company reports that “Of the $109 million, $74 million has been committed and SPMP expects all items of major equipment will be on site by the end of this month”.
- At the Oman site, “the first batch of antimony concentrate has been delivered to the OAR’s warehouse in Sohar” and discussions are continuing with multiple providers to source future offtake agreements.
- There appears to have been minor delays relating to the late delivery of necessary switchgear and associated regulatory and compliance issues relating to the switch-over to medium voltage power which may result in minor delays to commissioning.
Conclusion: We look forward to the impending delivery of the Oman Antimony Roaster.
*SP Angel acts as Nomad and Broker to Tri-Star Resources
We repeat the following comment from yesterday where we have corrected our 2018 vanadium price assumption in our text to US$36.25/kgV from US$38.75/kgv as used in our modelling and published table, sorry.
Bushveld Minerals* (BMN) 8.6p, mkt cap £75m – Vanadium price rise more than offsets SA rand strength
BUY – Target price rises to 18.28 from 14p - (Bushveld Minerals now holds 59.1% of Vametco)
- Previously we commented on the impact of lower vanadium production in Q4 ’17 caused by repairs and upgrades to the kiln at the Vametco plant in South Africa.
- Today we focus on the impact of higher FerroVanadium prices and the impact of the markedly stronger South African rand.
- FerroVanadium prices: The FerroVanadium price has more than doubled over the past six months to US$60/kGV and while Bushveld Vametco does not receive these prices till three-months after we see them, due to delayed pricing formulae, they do feed through.
- We know the FerroVanadium price has averaged US$42.1/kgV over the past three months and we could fairly safely assume around US$50/kgV for the next three months followed by a fairly conservative US$25/kgV for the rest of the year. US$25/kgV is still markedly higher than 2016 so while its half the current price it still feels cautiously realistic given where prices have come from.
- This gives a price assumption of US$36.25/kgV which is 17% higher than our previous US$33/kgV forecast.
- We then raise our longer term forecast by 9% to US$30/kgV from US$27.5/kgV previously which may again feel conservative in time and will hopefully give room for further upgrade in time.
- Forex: The election of Cyril Ramaphosa to the head of the ANC has caused the ZAR:USD rate to strengthen significantly with the rand strengthening by a whopping 20% since its low in November. It’s a big move for a major currency.
- We had previously assumed a ZAR:USD rate of 13.6 which we have cut to 13.0. While this is not the spot rate of around 12.1 it does reflect the view that SA growth forecasts may take some time to recover and the ANC still has much to do to clean up corruption.
- Production forecasts: Following discussion with Bushveld Minerals we have raised our production forecasts to match the guidance given by the company.
- Valuation: The net effect is to strengthen our valuation to 18.28 pence per share though we would caution that with the South African rand and vanadium prices both showing unusually large movements that the company’s cash flows and valuation are also liable to unusually large changes depending on the spot prices used or assumptions being made.
Figures based on 100% of Vametco plant. Bushveld now hold an effective 59.1% of the Vametco plant
*An SP Angel mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.