African Battery Metals* (LON:ABM) – Kisinka cobalt project in DRC
Dalradian Resources (LON:DALR) – Drilling results from a further 16 holes at Curraghinalt
Kodal Minerals* (LON:KOD) – Gold anomaly in auger drilling at Nielle
SolGold* (LON:SOLG) – Latest drilling results from Alpala
Sunstone Metals (ASKSTM) – Results show potential of Bramaderos copper/gold project in Ecuador
European equities rise FTSE 100 off slightly as weaker than expected HSBC results weighed on the financial sector performance.
- US indices futures are pointing to a weaker opening later today as markets reopen following a day off on Monday.
- The US$ climbed for a third day as markets await Fed meeting minutes due tomorrow.
- US sovereign bond yields are back on an increasing trend with the 10y benchmark trading above 2.9% ahead of a $258bn in government debt auction this week.
- Brent is holding onto its gains recorded since mid last week amid signs of continued cooperation between major oil producing regions to control output; UAE Energy Minister said OPEC, Russia and other producers are looking at ways to “institutionalise” their cooperation beyond the end of this year.
- Base and precious metals are lower on a stronger US$; despite a pull back by the LME index it continues to trade around highest levels in the last five years.
Lithium-ion batteries could be charged five times faster
- New way of measuring internal temperatures of lithium ion batteries have revealed that they could safely be charged up to five times faster than currently recommended limits
- Researchers at University of Warwick created a new sensor which works during battery’s normal operation without affecting its performance, previously have had to rely on unreliable external methods and have set very conservative limits as a result
- The sensor uses miniature reference electrodes and Fibre Bragg Gratings along with an outer skin of fluorinated ethylene propylene to protect the device from the corrosive electrolyte inside the battery
- The technology has been tested on commercially available vehicle batteries, but the researchers have said that more work would need to be done on battery management systems to take advantage of their findings
Lithium – The Lilium Jet, the world’s first electric vertical take-off and landing jet.
- German company Lilium recently won “Early Stage Company of the Year” at the Global Cleantech 100 awards.
- The team have developed a prototype electric plane that use turbo fans for Vertical Take Off and Landing (VTOL).
- The VTOL capability makes the plane ideal for operations in urban locations and, dare we say it, military applications.
- The team’s mission is to produce an affordable, clean, air taxi for 5 people.
- Post early trials of their two seater prototype, Lilium claim performance of 300km/hr and 1 hour of flight on a single battery charge.
- The aircraft, constructed using light weight composites, uses 12 flaps that are tilted to provide lift and direction.
- Each flap carries 3 electric jet engines (source: Lilium) – all 36 engines generate 320kw of power.
- LIlium raised $90m Series B funding in September 2017 to take it through regulatory approvals with the company aiming for manned test flights next year.
- See more at: https://lilium.com/
Capital flows out of gold mining into Cobalt, Steel and Lithium
- The gold sector may suffer as investment capital flows into other metals, according to a report from, accountants, Ernest & Young
- The report shows that value of merger and acquisitions in the mining sector increased 15% in 2017 though the number of transactions declined by 6% last year
- Specifically in the gold market, EY notes that M&A activity declined by 13% with the value of activity falling by 34% last year – whilst gold is suffering from lack of financing, EY said that with the growth in EV’s, demand is increasing for speciality metals like cobalt and lithium
- EY also noted that the source of funding for the mining sector appears to be shifting, for the last two years industry participants accounted for nearly 70% of the financing deals; however, last year financial investors accounted for 22.4% of the transactions made last year, its highest level since 2015
Dow Jones Industrials
-
Nikkei 225
-1.01%
at
21,925
HK Hang Seng
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Shanghai Composite
-
FTSE 350 Mining
-0.31%
at
18,755
AIM Basic Resources
-0.74%
at
2,573
Economics
Germany – Producer prices growth beat estimates in January led by higher oil and electricity prices.
- Annual price increase climbed 2.1%yoy last month beating analyst estimates for a 1.9%yoy reading but down on 2.7% recorded in FY17.
UK – PM May is considering to hold back UK contributions (£40bn) to the EU budget if EU officials refuse favourable trade deal terms.
- A potential course of actions is discussed as an option if negotiations go wrong, people familiar with the matter told Bloomberg.
- May is planning to announce details of a draft trade accord in a major speech next week with a draft ready by October and signed soon after Brexit in Mar/19.
- EU officials argued that a full trade agreement would be impossible to finish before Brexit with October draft likely to only outline main principles rather than represent a legally binding contract.
Australia – The A$ is little changed against the US$ this morning amid the release of this month’s RBA policy meeting.
- The RBA expects inflation to “only gradually” accelerate as the economy strengthens and labour market tightens.
- Low interest rates have so far been supportive of reducing unemployment and bringing inflation closer to target levels.
- Inflation has been stubbornly running at the 1.8%yoy rate, below the 2-3% target corridor.
- The central bank remained cautious over the strength of the consumer demand growth in the wake of high household indebtedness highlighting that “consumption might be particularly sensitive to adverse developments in household income or wealth”.
- On the other hand, business conditions remained at high levels with non-mining related investments prospects seen “more positive than they had been for some time”.
- The bank held rates steady for the last 16 meetings with markets assigning a more than 50% chance to a rate hike only in November.
South Korea threatens WTO action if US hikes steel tariffs
- South Korea will consider filing a complaint with the World Trade Organisation if President Donald Trump imposes high steel tariffs in line with recommendation made by the US Commerce Department
- Whilst China does export a lot of steel and aluminium to the US, other countries import a lot more steel than China does
- The recommendations call for tariffs on multiple countries, although Trump could determine that specific nations should be exempt, based on the economic or security interests of the United States
- South Korea's trade ministry said in a statement that it had met with executives from steelmakers, and agreed to make outreach efforts until Washington reaches a final decision, Reuters reported
- We find the news interesting given that South Korea may need to call on the US for its defence against North Korea at any moment
Currencies
US$1.2362/eur vs 1.2410/eur yesterday. Yen 107.09/$ vs 106.56/$. SAr 11.716/$ vs 11.671/$. $1.396/gbp vs $1.401/gbp. 0.792/aud vs 0.793/aud. CNY 6.342/$ vs 6.342/$.
Commodity News
Precious metals:
Gold US$1,338/oz vs US$1,348/oz yesterday
Gold ETFs 72.1moz vs US$72.1moz yesterday
Platinum US$1,002/oz vs US$1,013/oz yesterday
Palladium US$1,029/oz vs US$1,049/oz yesterday
Silver US$16.50/oz vs US$16.69/oz yesterday
Base metals:
Copper US$ 7,089/t vs US$7,182/t yesterday - BHP forecasts a finely balanced market for copper over the next few years with supply shocks potentially exposing it to shortages, particularly in the concentrate segment.
- Peru is planning to launch an auction for the $2bn Michiquillay copper project which has been returned by Anglo American to the government amid an optimization of its capex programs in 2014.
- The project is estimated to host 1.2bn tonnes of copper in mineral resources and to potentially produce 200kt of copper per annum; although, the ore reported to contain elevated levels of arsenic.
- The government is reporting that 10 companies including ones from China, UK and the US expressed interest and presented pre-registration documents to take part.
- This would mark the first major mining project auction in Peru in at least a decade.
Aluminium US$ 2,213/t vs US$2,193/t yesterday
Nickel US$ 13,535/t vs US$13,765/t yesterday
Zinc US$ 3,547/t vs US$3,559/t yesterday – Vedanta is considering accelerating expansion of its African zinc operations to take advantage of prices that have climbed to the highest level in a decade, according to the zinc business head.
Lead US$ 2,574/t vs US$2,609/t yesterday
Tin US$ 21,400/t vs US$21,850/t yesterday
Energy:
Oil US$65.4/bbl vs US$65.2/bbl yesterday
Natural Gas US$2.637/mmbtu vs US$2.611/mmbtu yesterday
Uranium US$21.75/lb unch
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$77.4/t vs US$77.2/t - BHP Billiton report firm demand for high quality iron ore in six months’ through Dec/17 in its interims.
- Demand has been driven by “high steel margins, which benefited from Chinese steel supply-side reforms and winter production restrictions”.
- The miner forecasts premiums for high grade ore to persist in the medium to long term on “ongoing Chinese supply-side reforms, the shift of steel capacity to coastal regions and more stringent environmental policies”.
- Same logic has been expressed regarding main drivers for robust demand for higher quality metallurgical coal.
Chinese steel rebar 25mm US$638.3/t unch
Thermal coal (1st year forward cif ARA) US$83.5/t vs US$80.2/t
Premium hard coking coal Aus fob US$233.1/t unch
Other:
Tungsten APT European US$319-325/mtu unchanged
Cobalt LME 3m US$81,250.0/t v US$81,500.0/t - The voracious appetite for electric cars is driving a boom in small scale cobalt production in the Democratic Republic of Congo, where some artisanal and other private-run mines have found to be dangerous and employ child labour.
- Production from artisanal mines probably rose by at least 50% last year, according to the estimates of officials at three of the biggest international suppliers of the metal, who asked not to be named because they’re not authorized to speak on the matter with production estimates accounting for as much as a quarter of the DRC’s production last year.
Company News
African Battery Metals* (ABM LN) 0.06p, Mkt Cap £3.5m – Kisinka cobalt project in DRC
- Exploration is now underway at the Kisinka cobalt/copper project in the DRC.
- Field exploration and mapping is being combined with other remote sensing data to help direct on-the-ground exploration.
- ABM start augur drilling this week in areas of stunted vegetation within the license. Augur drilling can cover as much as 100m per day in holes up to 20m deep.
- The team are looking to test mineralisation in the ‘Grand Conglomerate’ which also hosts Kamoa-Kakula, the world’s largest undeveloped copper project run in jv by Ivanhoe Mines.
- Kamoa-Kakula is scheduled to produce some 284,000tpa of copper from 6.4% copper ore over its first 10 years of operation.
- Management are also conducting due-diligence on copper/cobalt licenses introduced by two further groups in the DRC.
- The company is operating in a relatively safe part of the DRC, well away from the troubles in the East of the country.
- Sierra Leone: a third party is undertaking due dilligence on the Ferensola Gold project in Sierra Leone with a second interested group looking for access to project data.
- The DRC government has proposed raising the royalty on cobalt to 5% from 2% currently and on base metals to 3.5%.
- Given the price rise in cobalt and other battery related metals over the past year it is unsurprising to see the royalty rates rise. The DRC parliament passed the new royalty rates though the President has yet to pass the new royalties into law. The Upper House in the DRC government has raised rates for strategic substances to 10%.
- For further information and maps on Kisinka and Sakania see: www.abmplc.com
Conclusion: African Battery Metals is an exploration play with the potential for significant discovery. Cobalt and copper mineralisation is present on the licenses in artisanal workings with verification of this through X-ray Niton-gun analysis indicating a good start to the exploration program. We look forward to seeing the drill results in the next few weeks as the team works to better delineate and define the scale, grade and potential of the project.
*SP Angel act as broker to African Battery Metals
Dalradian Resources (LON:DALR) 61p, Mkt Cap £217m – Drilling results from a further 16 holes at Curraghinalt
- Dalradian Resources has reported the results of a further 16 drillholes (6,798m) from its infill programme at Curraghinalt. Thirteen of the holes were drilled from the underground workings.
- The results “support delivery of a positive resource update in Q2 2018, which will then feed into an updated feasibility study planned for Q3 2018.”
- The results are reported to “correlate with and improve the current geological model with respect to the continuity and smoothness of the individual wireframes.”
- Among the results reported today are:
- intersections of four individual veins in hole 17-CT-445 including 00.62m intersection of the T17 vein averaging 34.35g/t gold from a depth of 100m; a 0.32m wide section of the Slap Shot Vein averaging 69.7g/t from 232.62m; a0.72m wide section of the V75 Vein averaging 24.32g/t and a double intersection of the Bend Vein with 318g/t gold over 0.44m from a depth of 314.16m and 0.32m averaging 48.9g/t from 343.46m;
- a 0.34m wide intersection of the No.1 Vein averaging 216g/t gold from a depth of 59.95m in hole 17-CT-452;
- Intersections of eight individual veins in hole 17-CT-459, including a 1.14m wide intersection of the T17 Vein which averaged 45.54g/t gold from a depth of 132.49m, 0.73m of the V55 Vein which averaged 49.8g/t from a depth of 182.31m and 0.86m of the 106-16 Vein which averaged 41.85g/t gold. We note that with the exception of the T17 Vein all the mineralised structures in this hole are less than 1m wide
- A 1.05m wide intersection of the Mullan-S Vein at an average grade of 53.64g/t from a depth of 465.63m in hole 17-CT-470 which also intersected the Road Vein 0.27m at 46.3g/t) and the Mullan Vein (0.4m averaging 29.6g/t) and
- A 0.7m wide intersection of the Crow Vein which averaged 73.89g/t gold from a depth of 455.75m in hole 17-CT-471. This hole also intersected the No.1Vein (0.40m averaging 31.1g/t gold) and the Slap Shot-S Vein (0.27maveraging 61.3g/t gold).
- A tabulation in today’s announcement and a map and cross section available on the company’s website and referenced in the announcement shows up to 13 individual mineralised structures which underlines the complexity of the geological setting and highlights the task facing the resource estimators assigned to the update of estimates for these multiple, high grade structures.
Conclusion: Drilling at Currghinalt continues to encounter multiple high grade gold veins. We look forward to the updated resource estimnate due during Q2 and the subsequent updated feasibility study in Q3.
Kodal Minerals* (LON:KOD) 0.19p, mkt cap £12.1m – Gold anomaly in auger drilling at Nielle
- Kodal Minerals reports that auger drilling at the Nielle prospect located approximately 50km north of Randgold Resources’ Tongon mine in Cote d’Ivoire has identified a new area of gold anomalism.
- The anomaly was discovered by Resolute Mining as a result of a 542 hole programme of auger drilling to sample material below the base of transported cover and forms part of Kodal Minerals’ joint-venture where Resolute is earning a 75% interest through the expenditure of $3m.
- Follow up reconnaissance work involving the completion of 7000m of aircore drilling has shown the mineralisation remains open along strike to both the north and south.
- Among the results of the aircore programme highlighted in today’s announcement are:
- 16m at an average grade of 1.14g/t gold from the surface;
- 4m at an average grade of 3.4g/t from a depth of 12m;
- 8m at an average grade of 1.53g/t from a depth of 16m;
- 12m at an average grade of 2.39g/t from surface and
- 4m at an average grade of 1.76g/t from a depth of 20m.
- Further results are pending and a “programme of reverse circulation drilling is proposed to further test this area of new gold anomalism”.
- We note that in its most recent quarterly report, Australian listed Resolute Mining emphasised its commitment to focussed growth through exploration and issued guidance that it proposed to spend A$28m on exploration in 2018. Although much of the budget is likely to be spent on Resolute’s own projects and expanding its existing resources in Ghana and Mali, it would appear that it has funds available and an aspiration to advance other projects such as Nielle.
- Kodal Minerals has also announced that Newcrest Mining has withdrawn from its exploration joint venture on the Dabakala licence, also in Cote d’Ivoire, and that the licence has reverted to Kodal Minerals.
- During its exploration programme at Dabakala, Newcrest “completed a regional stream sediment, rock chip and laterite sampling programme” and recovered 315 auger drilling samples which were analysed for “low level gold mineralisation(max 309ppb gold) and multi-element association (31 additional elements analysed)” and “also completed updated geological interpretation and interpretation of geophysical data for regional structural framework”.
- The basic early stage exploration work completed by Newcrest at Dabakala should provide a solid database to help Kodal assess its future plans for the project or to aid other potential joint venture partners assess their level of interest.
Conclusion: Initial reconnaissance drilling at Nielle has shown relatively shallow gold mineralisation which remains open along strike in both directions. Exploration is currently being funded by Resolute Mining and we look forward to the remaining results of the aircore work and of the follow-up reverse circulation drilling when they become available.
*SP Angel act as Financial Advisor and broker to Kodal Minerals. A partner at SP Angel acts as Chairman to the company.
SolGold* (LON:SOLG) 22.7 p, Mkt Cap £385m – Latest drilling results from Alpala
The following text is a repeat of yesterday’s comment with minor amendment
(SolGold own 85% of Cascabel in Ecuador)
- SolGold reports the latest drilling and assaying results from holes 26-D3 to 35 on the Alpala project at Cascabel in Ecuador. In addition to the results reported today, results from a number of other holes are pending and the company expects to incorporate this additional information to update the maiden mineral resource estimate within the next two months.
- Among the results highlighted today, which unfortunately are reported only in terms of copper equivalent grades (CuEq) and from unspecified depths within the drillholes which consequently obscures the underlying tenor and location of the copper and gold assays are:
- A 1,100m long intersection in Hole 26-D3, from an undisclosed depth, averaging 0.54% copper equivalent and including 164m averaging 0.76% and 224m averaging 0.75%, also reported in copper equivalent terms; and
- A 178m long intersection in Hole 29-D1 averaging 0.62% CuEq including 48m averaging 0.82% CuEq; and
- An 824m long intersection in Hole 33 averaging 0.82% CuEq which includes 576m averaging 0.93% CuEq and a 262m long section averaging 1.15% CuEq though, in the absence of depth information, it is unclear whether the 262m portion in included within the wider 576m long portion or additional to it, though we assume that the former is the case; and
- A 604m long intersection in Hole 33-D1 averaging 0.73% CuEq which includes 146m averaging 1.71% CuEq and 106m averaging 2.13% CuEq; and
- A 302m long section of Hole 35 which averages 0.60% CuEq and includes 160m averaging 0.76% CuEq.
- In addition to the results reported today, partial results from Hole 36 “indicate very high grades at Alpala Northwest, returning an open ended 82m @ 1.57% CuEq (1494‐1576m). Assays beyond 1576m are pending”.
- Assays are also awaited from a number of other holes including Hole 36 which intersected visual copper sulphide mineralisation over 568m between 1432m and 2000m; Hole 37, still in progress where visual copper sulphide mineralisation was encountered between 1620m and the current depth of 1842m; Hole 39 which intersected 205m of visual copper sulphide mineralisation between 665-870m; Hole 42 with 602m of mineralisation, open at depth was found from a depth of 309m; and approximately 205m of visual mineralisation, also open at depth from 665m.
- The company particularly highlights the significance of Hole 37 at Alpala as it implies “major system extensions northwest towards the Trivinio prospect”, the bornite-chalcopyrite-magnetite mineral assemblage is “characteristic of the high‐grade centres of many porphyry copper‐gold systems”.
- Taken in conjunction with recent geophysical interpretation which “has demonstrated that mineralisation from Alpala North and Northwest may be continuous with the Trivinio and Moran Targets, which would extend the Alpala System northwards by approximately 1km” the company appears to be building evidence for a broader model linking some of the prospects previously interpreted as discrete individual occurrences into a larger, linked entity.
- Drilling of the Trivinio prospect is scheduled “following the completion of Holes 34 and 37 at Alpala”.
- Commenting on the progress of the 120,000m planned 2018 drilling programme at Alpala, the company emphasises that it is directed at “northwest and southeast extensions”. The addition of further drilling capacity, and particularly the track mounted rigs at Alpala, which are now “delivering up to 100m core per day” and the use of directional drilling is delivering significant cost savings reported to “have more than halved from USD1,100 per metre to USD500 per metre”. Simplistically this implies potential savings on the 2018 Alpala work programme of up to around US$70m.
- The geological team in charge of and directing the exploration programme in Ecuador is made up of Solgold employees including Jason Ward, Chief Geologist and Nick Mather, the SolGold ceo. Newcrest are a 14.54% shareholder of Solgold and Craig Jones, a Mechanical Engineer, joined the board of Solgold on 03 March 2017 as a nominee of Newcrest. Their presence on the register is a testament to the success and opportunity at Cascabel.
Conclusion: We look forward to the forthcoming assay results and subsequent update to the mineral resource estimate for Alpala and further evidence of the possible extension towards Trivinio once drilling there commences.
*SP Angel act as UK broker to SolGold
Sunstone Metals (ASX:STM) A$0.03p, Mkt Cap £33m – Results show potential of Bramaderos copper/gold project in Ecuador
- Malcolm Norris reports the identification of a number of mineralised porphyry and epithermal targets at Bramaderos in Ecuador.
- The team have so far discovered 10 gold-copper and another 10 gold-silver targets .
- The Limon gold-copper target now measures some 2km x 1km.
- Targets are so far defined by soil and chip sampling supported by magnetic and radiometric data.
- Sunstone is keen to get drilling permits for further target testing particularly at the Limon target where surface outcrops, rock chips, and geophysical signatures make the prospect look promising.
- Sunstone has much of the renown team which discovered and advanced the Tujuh Bukit deposit for Intrepid Mining.
- Previous trench assays at Bramaderos show: 74.3m grading 0.69g/t gold and 0.15% copper, including 51.1m at 0.81g/t gold and 0.18% copper.
- Plus 248.1m grading 0.56g/t gold and 0.14% copper to the end of hole starting at just 9.14m depth with mineralisation at the end of the hole returned 0.93g/t gold and 0.22% copper over 2.2m.
Conclusion: Sunstone appear to be making good progress in their early-stage exploration at Bramaderos. We suspect Ecuador has much to offer which has yet to be discovered.