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Morning View . Iron ore falls as China property cools

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Amur Minerals* (LON:AMC) – Kun Manie resources grows 50% to 1.6mt NiEq (1.0%)

BlueRock Diamonds* (LON:BRD)   – Placing raises £500,000 at 1.5p/s

redT energy plc (LON:RED) – redT selected as storage technology partner for large-scale tidal project

Rio Tinto (LON:RIO) – Rio Tinto sells Hail Creek and Valeria for $1.7bn

SolGold* (LON:SOLG) – New zone of high grade gold mineralisation identified north of Cascabel

Strategic Minerals* (LON:SML) – High grade resource at Redmoor doubled

 

Metals trade overtakes oil in big trend reversal (FT.com)

Rise in electric vehicle demand will have biggest effect on metals, not oil (FT)

  • The Financial Times today reports two stories on the impact of Electric Vehicles on metals and oil.
  • Saad Rahim comments in his Markets Insight column that ‘governments, car manufacturers and consumers are all seem to be pushing for all electric vehicles.
  • Oil: They are in danger of radically over-estimating the potential effects of EVs on oil demand and simultaneously under-estimating the wider implications for the commodities supply chain.’
  • He goes on to comment that if the EV fleet rises from 3m vehicles today to 40m by 2030 that this might curb oil consumption by just 1% of expected global demand.
  • Cobalt: but the implications for metals are far greater with demand for cobalt rising between four to five times by 2030.
  • Copper: an EV also needs four times the amount of copper than a traditional ICE vehicle and up to five times if you include traditional charging infrastructure. So another 10m EV sales will create demand for another 100,000tpa with number potentially rising two or three times at a time when the copper market is facing a growing deficit due to a lack of investment and falling grades at existing copper mines.
  • Nickel: is in a worse state as lithium-ion batteries use more nickel than they do lithium and battery-grade nickel sulphide suitable for battery is expected to see declining supply.
  • Oil: To be fair to oil, gasoline and diesel are highly concentrated and transportable, forms of energy and their longevity demonstrates how difficult they are to replace.
  • The rise of EV’s will create huge new demand for electrical power which may well drive gas prices higher. Gas prices are around 30% cheaper on a thermal equivalency basis. In the US this difference is much larger at 70% cheaper.
  • Glencore and Noble Group are increasingly focussed on the supply of metals for EVs with Noble Group focussing on speciality metals and REEs while Glencore is more orientated towards copper and cobalt.

 

Tesla to drive rare earth permanent magnet demand

  • Tesla’s Model 3 electric vehicle marks a shift towards incorporating a permanent magnet electric motor, in a move away from the previous AC induction motors in its Model S and Model X. The shift marks a technological upgrade toward lighter, stronger and more efficient motors.
  • Research group Imarc forecast demand having climbed at a compound annual growth rate of 8.5% (2010-2017), with the neodymium-iron-boron magnet market worth more than $11.3 billion.
  • Tesla’s Chief Motor Designer notes “it’s well known that permanent magnet machines have the benefit of pre-excitation from the magnets, and therefore you have some efficiency benefit for that.” Tesla’s Model 3 machine incorporate the updated motors “because for the specification of the performance and efficiency, the permanent magnet machine better solved our cost minimisation function, and it was optimal for the range and performance target”.
  • Tesla aim to provide the world’s first “mass-market electric vehicle”, which will create strong demand, particularly for ‘magnet-dominant’ rare earth element miners including Mkango Resources Ltd which hosts 26.6% Neodymium in the Songwe Hill project.

 

Dow Jones Industrials

 

-1.35%

at

24,611

Nikkei 225

 

-0.47%

at

21,381

HK Hang Seng

 

-0.08%

at

31,487

Shanghai Composite

 

+0.35%

at

3,291

FTSE 350 Mining

 

-3.60%

at

17,483

AIM Basic Resources

 

-1.99%

at

2,528

 

Economics

China property market cools

  • Fading China property data is sapping demand from base metals, as the number of Chinese cities reporting stronger house prices fell to the lowest level in five months in Feb. The weaker real-estate market data are “weighing on their prices” as nickel settles 1.1% lower at $13,480/t. Iron-ore prices also slump, with contracts in Dalian extending their fall to Nov. lows as traders fear demand slowdown.

 

Zimbabwe opens for business as new president sweeps away BEE indigenisation legislation

  • President Mnangagwa has changed Zimbabwe’s Indigenisation Act sweeping away the requirement for 51% of all business worth >$500,000 save diamond and platinum companies
  • The amendments are reported to have been made in the new Finance Act and are said to have been passed by Parliament with little debate.
  • The BEE regulations now only appear to apply to: a designated extractive business involved in the extraction of diamonds or platinum, and a business in one of the twelve reserved sectors of the economy.
  • Mnangagwa has also put more liberalisation initiatives in place, increasing the export incentive for gold in February, and plans for special economic zones around strategic areas offering better tax breaks, release from some labour code issues, etc.
  • Plus a range of other new initiatives are said to be coming in.

 

Chinese mining company siphoned >$340m out of Zimbabwe

  • The Zimbabwe Mail reports that Jilan siphoned >$340m out of Zimbabwe.
  • President Mnangagwa has given the company and others who are reported to have externalised >$1.3bn just over three months to return the funds.
  • China is reported to have been the most popular destination of externalised funds with 110 externalisers reported out of 157 followed by Botswana with 12.
  • Metallon, the gold miner owned by Mzi Khumalo was the second biggest externaliser with $25m externalised to South Africa and P13m sent to Botswana.
  • This morning there is more noise about companies that have ignored the offer of amnesty on returning illegally exported funds.
  • The move reinforces that Zimbabwe is serious about opening up the economy for foreign investment.

 

Currencies

US$1.2346/eur vs 1.2268/eur yesterday  Yen 106.47/$ vs 05.93/$  SAr 12.001/$ vs 12.040/$  $1.406/gbp vs $1.394/gbp  0.770/aud vs 0.770/aud  CNY 6.331/$ vs 6.332/$

 

Commodity News

 

Precious metals:         

Gold US$1,315/oz vs US$1,309/oz yesterday

  • Gold remains steady ahead of the Federal Reserve policy meeting, the first US rate decision under new chairman Jerome Powell, as investors await guidance on the pace of central bank’s tightening. Analyst at Fat Prophets note “we’ll probably see a 25 basis point rise, and then perhaps a little tighter outlook policy in terms of rate rises going forward, but still fairly relaxed because inflation is still not looking as though it’s going to surge”. They continue to say the dollar is likely to rise going into the meeting and then drop once the outlook is known, while gold will decline first then rebound.
  • Despite preparation for the fed to raise rates again, investors have accumulated the biggest holdings in gold-backed funds in almost five-years as US President Donald Trump rocks the boat on trade and the equity market wobbles. Worldwide holdings in exchange-traded investments jumped to 2,267tonnes, the highest since May 2013.
  • Senior commodities analyst at Australia and New Zealand Banking Group Ltd notes “the geopolitical risks that have emerged in recent months have certainly instigated some haven buying”, citing the threat of trade war after Trump imposed metals tariffs, risk from Robert Mueller’s probe, White House firings, as well as Monday’s stock market sell-off.

   Gold ETFs 72.9moz vs US$72.4moz yesterday

Platinum US$953/oz vs US$944/oz yesterday

Palladium US$995/oz vs US$996/oz yesterday

Silver US$16.31/oz vs US$16.25/oz yesterday

           

Base metals:

Copper US$ 6,832/t vs US$6,826/t yesterday

Aluminium US$ 2,080/t vs US$2,073/t yesterday

  • While Aluminium prices are set to ease in the short-term due to continued oversupply, supply reforms in China combined with higher costs and stronger demand are poised to push prices higher into the second half of 2018. Last year’s strong-performing base metal dropped to three-month low amid concerns on stubbornly high supply in China even as the government drives to limits capacity growth and combat air pollution. Fallout from President Donald Trump’s planned tariff on imports has driven premiums in the US higher, creating further headwinds which have caused the “price (to fall) to a level that reflects this, and risks deterring necessary investment in new capacity ex-China”, according the Morgan Stanley.
  • Recovering demand focuses on growing infrastructure construction, including spending on the electricity grid.

Nickel US$ 13,540/t vs US$13,475/t yesterday

Zinc US$ 3,245/t vs US$3,234/t yesterday

Lead US$ 2,347/t vs US$2,368/t yesterday

Tin US$ 20,800/t vs US$20,945/t yesterday

           

Energy:           

Oil US$66.5/bbl vs US$65.9/bbl yesterday

Natural Gas US$2.659/mmbtu vs US$2.691/mmbtu yesterday

Uranium US$21.75/lb vs US$22.05/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$65.9/t vs US$68.0/t

  • Iron ore in Dalian extends tumble, falling 3% as stockpiles across port rise to record levels, extension of winter production curbs, fading demand from end-buyers and diminishing profitability in steel-making are applying significant downside pressure on prices, according to Huatai Futures analysis. The government’s “unforgiving stance against outdated, environmentally damaging forms of production” to spur preference for electric furnaces instead of blast furnaces, is expected to dent iron ore demand.

Chinese steel rebar 25mm US$647.9/t vs US$654.8/t - EU trade chief demands exemption from US steel tariffs

  • The European Union's top trade official says the 28-nation bloc should be excluded from Trump's new steel and aluminium tariffs, which enter force this week             
  • EU Trade Commissioner Cecilia Malmstrom said Monday that "the EU should be excluded as a whole" and that she would convey this message to US representatives in talks in Washington on Tuesday.
  • Malmstrom said the EU is willing to address the problem of steel overproduction, which she says is the real cause of pain for the U.S. and European industries, the EU has drawn up a list of "rebalancing" duties to slap on U.S. products if it is not exempted                                                                                                 

Thermal coal (1st year forward cif ARA) US$73.0/t vs US$74.6/t - Glencore to buy Rio Tinto mine for $1.7bn

  • Glencore has agreed to buy Rio Tinto’s 82% interest in the Hail Creek coal mine in Australia for $1.7bn, in 2017 the mine produced about 9.4m tonnes of coal for export from the Dalrymple Bay Coal Terminal
  • As part of the deal it will also buy the adjacent coal resources and Rio’s 71.2% interest in the Valeria coal resource in central Queensland, remaining 18% is owned by Nippon Steel Australia, Marubeni Coal and Sumisho Coal, each joint venture partner has the right to sell its share to Glencore which could result in additional consideration of up to $340m
  • Acquisition is expected to complete in the second half of this year, subject to regulatory approvals

Premium hard coking coal Aus fob US$216.9/t vs US$216.8/t

 

Other:  

Tungsten APT European US$325-334/mtu vs US$322-330/mtu

Cobalt LME 3m US$89,250.0/t vs US$89,000.0/t

Lithium prices to survive crash on new supply

  • Tianqi Lithium Corp. don’t expect a forecast price crash as new supply arrives into the markets amid firm demand growth, according to general manager of co.’s Australian unit. While a bearish outlook from Morgan Stanley foresee lithium prices tumbling, demand has the potential to grow faster than current forecasts, while the industry should also expect some bottlenecks on supply side as processing capacity catches up to the development of new raw material supply.
  • With a dominance of conversion potential in China, Tianqi Lithium are developing the world’s biggest lithium processing plant which operates with spodumene from the Greenbushes mines in Australia. The company fast-tracked investment in the 2nd stage of A$700m lithium hydroxide plant, which has the potential to produce 48,000tpa to match an imbalance in supply-demand over the next 2-3 years.

Lithium giants Albemarle and Tianqi in ‘ATO’ probe

  • Some of the biggest winners in the lithium boom are under investigation by the Australian Tax Office over the price at which they bought Australian lithium products from a local subsidiary
  • Albemarle and Tianqi may have to pay for more lithium than they purchased from the Greenbushes mine in Western Australia in 2015 and 2016 if the ATO audit goes against them
  • Greenbushes is the world's biggest and highest-grade producer of lithium-rich spodumene rock, and surging demand for lithium has driven a doubling of revenues and profits over the past three years for the private company that owns the mine, Windfield Holdings, which is jointly owned by the two companies
  • The two shareholders are also the biggest buyers of Windfield's spodumene concentrate and it is these sales to Windfield's owners that are the focus of the ATO's probe

 

 

Vanadium market research note - Initiation

CLICK FOR PDF

Key themes

  • Chinese environmental legislation restricts available vanadium supply
  • Geological scarcity of economic primary mine vanadium
  • Chinese tensile strength standards drive vanadium-steel rebar demand
  • Emerging energy storage system technology trend accelerates consumption

 

Price Outlook

The combined impact of recent Chinese vanadium steel standards and environmental policy change, focusing on improving air emission standards and waste import bans (fundamental supply of vanadium slags), has triggered significant positive price momentum with ferrovanadium and V2O5 climbing 37% and 44% respectively year-to-date (March 2018).

We forecast a sustained global deficit resulting from a tightening supply base coupled with robust consumption from traditional metallurgical applications and inchoate energy-storage solutions has drawn broad vanadium prices from the multi-year lows of late 2015-early 2016. After bottoming out two years ago, the price of Chinese FOB ferrovanadium and vanadium pentoxide have swelled 406% and 596% respectively to 2018 highs.

V2O5 represents the most common intermediate product of purities ranging from steel-grade at least 86% up to 99.8% via the treatment of magnetite iron ores, vanadium-bearing slags, and secondary materials. Additional processing via aluminothermic reactions of the V2O5 red cake yields ferrovanadium products. The three major ferrovanadium grades include 40%V, 60%V, and 80%V.

Vanadium-containing products are centralized around commercially-traded ferrovanadium (FeV) and vanadium pentoxide concentrate (V2O5). While there are no benchmark exchange-based prices for vanadium, indicative prices are published by a number of commodities market intelligence organisations including Metal Bulletin and Metal Pages, based on buy/sell contracts negotiated directly between suppliers, consumers and traders.

 

 

Source: Bloomberg

 

Company News

Amur Minerals* (LON:AMC) 5.5p, Mkt Cap £35m – Kun Manie resources grows 50% to 1.6mt NiEq (1.0%)

  • RPM Global completed the mineral resaource estimate update on the Kun Manie sulphide nickel/copper project incorporating the latest series of drilling completed on the project.
  • The Kun Manie resource now stands at 155mt at 1.02% NiEq for 1,582kt NiEq (COG 0.4%Ni), up 53% and 51% on the previous estimate in terms of ore tonnage and contained metal.
  • NiEq includes1,157kt Ni, 319kt Cu, 24kt Co, 1,640koz PGM (50/50 Pt/Pd).

 

Deposit

Resource

Ore, mt

Ni %

Cu %

NiEq %

NiEq kt

MKF

MII

61

0.78

0.22

1.06

643

IKEN

MII

52

0.75

0.20

1.03

534

KUB

MII

38

0.69

0.19

0.93

350

VOD

MII

5

0.83

0.21

1.13

54

Total

 

155

0.75

0.21

1.02

1,582

 

  • All changes involved resource expansion at two deposits – IKEN and KUB – within the Kun Manie project.
  • IKEN resource increased to 51.9mt at 1.03% NiEq (0.75% Ni and 0.20% Cu) for 534kt NiEq with 24.2mt at 0.94% NiEq (0.68% Ni and 0.18% Cu) for 227kt NiEq in Measured and Indicated category.
  • KUB resource increased to 37.6mt at 0.93% NiEq (0.69% Ni and 0.19% Cu) for 350kt NiEq with 32.9mt at 0.93% NiEq (0.69% Ni and 0.19% Cu) for 306kt NiEq in Measured and Indicated category.
  • Below we provide a comparison with previous MRE (Feb/17), adjusted for new prices used in calculating nickel equivalents:

 

Deposit

 

Change in Ore, mt

Change in Ni % (pp)

Change in Cu % (pp)

Change in NiEq % (pp)

Change in NiEq kt

IKEN

 

146%

0.05

0.03

0.07

164%

KUB

 

159%

-0.08

-0.02

-0.11

131%

Source: Company

 

 

 

 

 

 

 

  • As a result, both IKEN and KUB resource base more than doubled in tonnage and contained metal terms with a little variation in the final grade (measured in percentage points in the table).
  • Together IKEN and KUB now forms the largest deposit within the Kun Manie property.
  • Kun Manie in turn now ranks third largest greenfield sulphide nickel among 23 western listed companies which report resource inventories for 20 greenfield projects, the Company reports.
  • Kun Manie operating costs are estimated at $8,175/t v current $13,450/t spot price.
  • The latest MRE is based on a total of 74,614m drilled on the project with 816kt of nickel discovered taking a discovery cost pr tonne of nickel to $32/t or less than half a percentage point f current price.
  • “Drilling for resource expansion is no longer required and can be delayed to early production years when resources begin to be mined,” the Company noted.
  • 2018 field programme will focus on resource conversion as well as metallurgical drill sample collection to optimise the planned processing flowsheet and study final product options.

Conclusion: The report sums up successful drilling programme focused on expansion and infill drilling at IKEN and KUB with the team more than doubling the resource base at two deposits both in terms of tonnage and contained metal. The management is now focused on resource conversion and metallurgical sampling to refine mining schedule, flowsheet technical parameters and project economics. The Kun Manie project is set to benefit from a robust demand for nickel products as well as its exposure to metals extensively used in power infrastructure and battery technologies.

*SP Angel act as Nomad and Broker to Amur Minerals

 

BlueRock Diamonds* (LON:BRD)  1.7p, Mkt Cap £2.4m – Placing raises £500,000 at 1.5p/s

  • BlueRock Diamonds report the raising of £500,000 through the issuance of 33.333333m new shares at 1.5p/s plus warrants to subscribe for a further 333,333333 new shares at 3p/s.
  • Management plan to expand their mining activities to include a second diamond-bearing kimberlite pipe at Kareevlei, known as ‘KV01’ which will be worked in addition to the current mine at ‘KV02’.
  • ‘KV01’ is said to have a very similar geology to the existing mining area and is just 40m away at its closest point.
  • The new mining area is a similar sized pipe but with a higher inferred grade of 6.3cpht making it potentially 40% richer than the first pipe mined which had an originally estimated inferred grade of 4.5cpht. While the first pipe mined has yet to realise its estimated 4.5cpht grade it has exceeded expectations in the value of stones recovered.
  • Further work will be done to upgrade the crushing and process plant to increase efficiency and reliability.
  • This should hopefully raise the performance of the diamond plant to enable the recovery of the estimated 4.5cpht
  • Production is targeted at 275,000t through 2018 which is reported to be at the ‘bottom end of the company’s range of expectations’.
  • The fund raising has the effect of reducing the conversion price of £925,000 worth of convertible notes held by Mark Poole to 2.70p/s and then to 2.66p/s share on the issuance on the second tranche of shares in the funding.

 *SP Angel acts as Nomad & Broker to BlueRock Diamonds

 

redT energy plc (RED LN) 6.7p, Mkt Cap £43.5m – redT selected as storage technology partner for large-scale tidal project

  • redT energy is selected by a consortium of European companies to be the primary energy storage technology provider for a large-scale tidal regeneration project in the UK. The project calls upon a 0.6MW, 3MWh redT flow machine system, which remains subject to finance and formal contract awards.
  • The company will contribute research, analysis and optimization of tidal and flow machine technology, with the EU project demonstrating the technical and financial feasibility of using tidal energy plus energy storage to provide reliable, renewable baseload energy.
  • The project favoured VRFB technology given the nature of the 6 hour tidal flow giving a heavy cycle and the non-degrading energy storage asset. The tidal project is planned to be fulfilled by redT’s 3rd Generation product, to be delivered in 2018.
  • This is an affirmation of the business case for use of flow energy storage alongside tidal generation. The achievement will provide a key signal that tidal power coupled energy storage projects are a suitable technology match. It is also consistent with redT’s corporate strategy of expanding into large projects during 2019.

 

Rio Tinto (LON:RIO) 3640.5p, Mkt cap £65.4bn – Rio Tinto sells Hail Creek and Valeria for $1.7bn

  • Rio Tinto has announced the sale of its 82% interest in the Hail Creek coal mine and its 71.2% interest in the Valeria coal project, both located in the Bowen Basin in Queensland, to Glencore for $1.7bn.
  • The transaction is subject to a number of regulatory approvals, including that of Australia’s Foreign Investment Review Board, and the Queensland Government.
  • “Rio Tinto anticipates that Australian income tax will be payable on sale proceeds which are in excess of the cost base of the assets at completion. The currently estimated tax payable is in the order of $300 million” amongst other factors including working capital adjustments.
  • The company also points out that it is proceeding with efforts to sell Rio Tinto’s remaining Australian coal assets.
  • The Hail Creek operation produced 9.4m tonnes of saleable coal in 2017, comprising 5.25m tonnes of hard coking coal and 4.13m tonnes of thermal coal. Hail Creek is reported to have a marketable reserve of 142m tonnes and a resource base of 601m tonnes while the Elphinstone and Mount Robert deposits, also included within the sale cover resources of a further 193m tonnes.
  • Hail Creek operations generated an attributable pre-tax profit of US$357m in 2017.
  • The undeveloped Valeria deposit in the central part of the Bowen Basin is reported to contain a resource of 762m tonnes of coal which is “expected to produce high energy, low ash thermal and coking coal products.”
  • Commenting on the transaction, Chief Executive of Rio Tinto, J-S Jacques said “The sale of Hail Creek and Valeria delivers compelling value to our shareholders and continues our strategy of strengthening our portfolio, focusing  on highest returns, maintaining a strong balance sheet and allocating capital to the highest value opportunities.”

Conclusion: The sale of the Queensland coal assets is consistent with Rio Tinto’s stated strategy and provides the new owner, Glencore, with an established operation in one of Australia’s principal coal producing regions and where it already has 5 operating coal mines and access to export facilities.

 

SolGold* (LON:SOLG) 22.7p, Mkt Cap £385m – New zone of high grade gold mineralisation identified north of Cascabel

(SolGold owns 85% of Cascabel in Ecuador)

  • SolGold has announced that it has identified high grade epithermal style gold mineralisation in a 10km long, north-west trending structural  zone located immediately north of its Cascabel project in Ecuador.
  • The Blanca and Nieves licence areas which host the new mineralisation are wholly owned by Solgold through its Ecuadorean subsidiary, Carnegie Ridge Resources.
  • Reconnaissance mapping, stream sediment sampling and rock-chip sampling is continuing within the licence areas to establish the extent of the epithermal system.
  • Within the more easterly, Nieves concession, sampling of the exposed portion of the Main Vein has yielded gold assays of up to 79.2g/t gold along with copper assays of 0.98% and zinc grades in excess of 1%.
  • Sampling of the Blanca concession, contiguous with the Nieves concession, has produced gold results from the Cielito Vein including 72.3g/t, 18.75g/t and 17.05g/t “hosted in volcanics and volcanic breccias …”.
  • The work programme is continuing with follow-up mapping, soil-sampling, trenching and rock-chip sampling testing the extent of the mineralised zone.

Conclusion: The discovery of what appears to be an extensive mineralised corridor containing high grades in rock chip samples  on wholly owned licence areas to the north of Cascabel is very positive. Both the Blanca and Nieves prospects are still at an early stage of exploration however, with the experience of bringing Cascabel through from this early stage of exploration to an initial resource estimate, the Solgold team are well placed to advance the new project rapidly. We look forward to further news as work proceeds.

*SP Angel act as UK broker to SolGold

 

Strategic Minerals* (LON:SML) 1.95p, Mkt Cap £26.1m – High grade resource at Redmoor doubled

  • Strategic Minerals has reported a revised mineral resource estimate for the high grade section of its Redmoor project in Cornwall.
  • The estimate covers the high grade zones within the Sheeted Vein System (SVS) previously identified at Redmoor and reports an inferred tonnage of 4.5m tonnes at an average grade of 0.37% tungsten trioxide, 0.25% tin and 0.57% copper which the company equates to a tin equivalent grade of 1%.
  • The estimate compares with the 2015 resource estimate of 2.3mt at an average grade of 1.19% tin equivalent (0.34% tungsten trioxide, 0.52% tin and 0.48% copper) within the high grade sections of the Johnson’s Lode and Great South Lode and “a low grade SVS resource of 11 Mt @ 0.42% SnEq.”
  • The new estimate, which incorporates the results of the 2017 drilling campaign and of recent analysis of the historical data on the project, was produced by the company’s independent consultant, SRK Consulting (UK) and is reported in accordance with the JORC (2012) Code.
  • The updated mineral resource at Redmoor doubles the previously published high grade resource and , we observe, at 4.5m tonnes is now larger than the published indicated and inferred resource tonnage estimate for the Upper and Lower mines at Strongbow Exploration’s South Crofty project, also in Cornwall, which stand at an overall  3.1mt at the higher average grade of approximately 1.6% tin.
  • The company explains that its “decision to focus its exploration on the discrete high-grade zones within the SVS, rather than the lower grade but more extensive SVS mineralisation previously targeted, has resulted in the definition of a significantly increased high-grade resource, contained within the SVS rather than in lode style mineralisation.”
  • The drilling and resource estimation has now confirmed the continuity of the SVS over a strike length of 1km and for around 450m down-dip and the modelling shows “the potential for significantly thicker mineralisation (approximately 10 m thick) than the historic lodes that formed the basis of the 2015 high-grade inferred mineral resource estimate, and thus is likely to be more amenable to modern underground mining.”
  • Strategic Minerals reports that this thicker block of mineralisation “is presently the subject of a scoping-level study by consultants Mining One.”
  • Based on the assumption that the high grade SVS zone extends between 180m to 250m below the base of the current inferred resource envelope, the company has a conceptual target for its 2018 exploration programme of a further 4-6m tonnes at a grade of between 0.8-1.2% tin equivalent.
  • Strategic Minerals has also identified further potential, beyond this formal exploration target to the west of the current resource area. The company is to investigate this target further with two holes of the planned 2018 drilling campaign which also includes “6 or more close-spaced holes drilling into the existing Inferred Mineral Resource high-grade zones, aimed at verifying the continuity of these at a mining scale”.

Conclusion: The 2017 drilling campaign has doubled the high-grade resource at Redmoor and with additional targets identified to the west and at depth for the 2018 drilling, there may be further scope to increase the resource base further. The metallurgical and mining studies currently underway should help the company to establish a view on the potential economic viability of Redmoor and we look forward to news of this work when it becomes available.

 

*SP Angel act as Nomad and broker to Strategic Minerals

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