SP Angel – Morning View – Thursday 31 01 19
Iron ore surges 19 percent on Vale deadly disaster
MiFID II exempt information – see disclaimer below
IronRidge Resources* (LON:IRR) – Ghana lithium exploration update
Solgold* (LON:SOLG) - Proposal to consolidate Cascabel interest through offer for Cornerstone
Thor Mining (LON:THR) – Quarterly Report and project update
Seized Venezuelan gold project settles in $1.3bn deal
- Canadian junior Rusoro Mining, which in March scored a major victory in its international arbitration complaint against Venezuela, has accepted the almost $1.3bn offered by the country’s government as settlement for the seizure of the company’s gold projects.
- The deal gives Venezuela Rusoro’s mining data and forces it to fully release the arbitral award issued in favour of the miner in August 2016.
- A partnership has also formed which will assess the current status of Rusoro’s former gold projects and deliberate options to restart production across the two mines.
- The dispute between Rusoro and the South American nation goes back to 2011, when former president Hugo Chávez nationalized the gold industry and seized the company’s 95%-owned Choco 10 mine as well as its 50%-owned Isidora mine.
- Obligations under the Canada-Venezuela Bilateral Investment Treaty were breached, and the International Center for the Settlement of Investment Disputes Expropriation (ICSID) has also ordered the country’s government, in addition to pay compensation for damages, to contribute $3.3m towards Rusoro’s costs in the arbitration.
-70C weather forces Americans to take shelter
- ‘Don’t breathe or go outside’, Americans are warned as polar vortex hit parts of Northern America. Citizens are being told to limit their breathing and the amount of time they spend outside as temperatures in parts of the country are forecast to drop as low as -70C (-94F) in Minnesota, according to the local National Weather Service Office.
- "These are VERY DANGEROUS conditions and can lead to frostbite on exposed skin in as little as five minutes where wind chill values are below -50C (-58F). Best thing you can do is limit your time outside," the office said.
- The worst of the weather is expected across the Midwest, and especially Chicago, which forecasters say could be colder than parts of Antarctica.
- Authorities in Illinois, Michigan and Wisconsin put emergency measures in place to handle the severe cold.
- The frigid air heading across the US from west to east is driven by a brief visit by the polar vortex, a whirling mass of cold air circulating in the mid to upper levels of the atmosphere, present every winter.
- The conditions are expected to limit normal operations of mining projects including Polymet Mining’s NorthMet project in north-eastern Minnesota. Facilities will have to compensate for the extreme conditions when refurbished.
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Economics
Currencies
US$1.1497/eur vs 1.1432/eur yesterday Yen 108.72/$ vs 109.31/$ SAr 13.337/$ vs 13.608/$ $1.314/gbp vs $1.307/gbp 0.727/aud vs 0.719/aud CNY 6.707/$ vs 6.714/$
Commodity News
Precious metals:
Gold US$1,321/oz vs US$1,315/oz yesterday
Gold ETFs 73.1moz vs US$73.0moz yesterday
Platinum US$819/oz vs US$818/oz yesterday
Palladium US$1,364/oz vs US$1,341/oz yesterday
Silver US$16.04/oz vs US$15.96/oz yesterday
Base metals:
Copper US$ 6,168/t vs US$6,089/t yesterday
Aluminium US$ 1,915/t vs US$1,899/t yesterday
Nickel US$ 12,425/t vs US$12,280/t yesterday
Zinc US$ 2,718/t vs US$2,672/t yesterday
Lead US$ 2,095/t vs US$2,087/t yesterday
Tin US$ 20,855/t vs US$20,750/t yesterday
Energy:
Oil US$62.1/bbl vs US$61.2/bbl yesterday
Natural Gas US$2.907/mmbtu vs US$2.858/mmbtu yesterday
Uranium US$29.05/lb vs US$29.05/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$83.0/t vs US$82.1/t
- Iron ore futures in China extend gains to highest close since August 2017 as investors gauge the impact of Vale SA’s supply cuts following a deadly dam breach, with Australian & New Zealand Banking Group Ltd. warning that the global market will swing to a deficit.
- Global iron ore market seen moving to 10mt deficit this year, compared with previous forecast for surplus of 15mt, says ANZ, citing impact of Vale’s disruption, as well as revised forecasts for Chinese, Indian demand.
- Prices rocketed on Wednesday after Vale said it’ll decommission some dams in a move that will cut production by 40mt a year, a volume it can only partially offset by increasing output elsewhere. ANZ says it expects a total net loss of about 13mt in 2019.
- In short term, the uncertainty could well lead to a price spike, perhaps even toward $100, from just $73 before the accident, Capital Economics said.
Chinese steel rebar 25mm US$600.3/t vs US$599.6/t
Thermal coal (1st year forward cif ARA) US$85.4/t vs US$86.0/t
Coking coal futures Dalian Exchange US$197.2/t vs US$199.1/t
Other:
Cobalt LME 3m US$36,000/t vs US$36,500/t
China NdPr Rare Earth Oxide US$46,444/t vs US$46,395/t
China Lithium carbonate 99% US$10,064/t vs US$10,053/t
China Ferro Vanadium 80% FOB US$70.8/kg vs US$70.8/kg
China Antimony Trioxide 99.5% EU US$7.1/kg vs US$7.0/kg
Tungsten APT European US$260-270/mtu unchanged from previous week
Battery News
Tesla reports 4Q 2018 sales and profits – revenue more than doubles
- Tesla Inc. has just reported sales above forecasts but a lower-than-expected fourth-quarter adjusted profit.
- Model 3 production is now expected to reach a "sustained rate" of 7,000 vehicles a week by the end of the year.
- During the period revenue than doubled rising to $7.23bn, compared with $3.29bn a year ago.
- The company noted that it had seen profit impacted on a couple of fronts including higher import duties on parts
from China as well as lower prices on the Model S and Model X in China and a lower-priced midrange version of the Model 3.
- Elon Musk stated that “Last year was definitely the most challenging year in Tesla history, but also the most successful,” in a conference
call with analysts.
- Tesla is targeting 360,000 – 400,000 vehicle deliveries in 2019 – this represents growth of 45% to 65% on 2018
- Tesla reported profits of $139m for 4Q18, impacted by a $54m non-cash charge.
- The Tesla share price closed 3.8% up.
Tanker powered by lithium-ion batteries being developed
- “e5” concept first vessel launching is set for 2020
- Asahi Tanker Co. Ltd, and Exeno-Yamamizu Corp. Tokyo, are developing new domestic shipping tanker design which the companies say incorporates zero emission electric propulsion.
- The ships’ core energy source will be electricity, achieved by way of adopting lithium-ion batteries.
Higher crystallinity results in better solid-state batteries
- Scientists at the Tokyo Institute of Technology have been working on solid-state batteries, which are theoretically safer, more stable, and have higher energy densities than conventional Li-ion batteries with liquid electrolytes.
- They have recently made progress towards overcoming a major limitation of solid-state batteries: high resistance at the interface between the electrodes and the electrolytes that limits fast charging/discharging.
- Crystallinity refers to the regularity of a solid’s structure. If the atoms that make up the solid are periodic and well-ordered, crystallinity is high. If the atoms are irregular and haphazard, crystallinity is low.
Scientists find way to help fuel cells work better
- The catalyst developed shows great potential to thoroughly guard the fuel cell during not only the continuous operation but also during frequent cold-start periods even under extremely cold conditions.
- Hydrogen is considered one of the most promising clean energy sources of the future.
- Currently, hydrogen is mainly derived from processes like steam reforming of hydrocarbons, such as methanol and natural gas, and water gas shift reaction.
- Earlier research has identified a method called preferential oxidation (PROX) as a promising way to remove trace amounts of CO from hydrogen by using catalysts. However, existing PROX catalysts can only work in high temperatures hindering practical applications such as fuel cell vehicles, which must be reliable even in winter months.
- Now, a USTC team led by Junling Lu, has designed a new structure of atomically dispersed iron hydroxide on platinum nanoparticles to purify hydrogen fuel over a broad temperature range of 198 to 380 degrees Kelvin. They also found that the material provided protection of fuel cells against CO poisoning during both frequent cold-starts and continuous operations in extremely cold temperatures.
Company News
IronRidge Resources* (LON:IRR) 22.8p, Mkt Cap 70.4m – Ghana lithium exploration update
- IronRidge report advancing exploration activities at the Cape Coast Lithium project in Ghana, as work continues towards the resource estimation and project studies.
- The second phase RC drilling programme was completed over the Ewoyaa and Abonko targets with a total of 4,684m for 44 holes completed.
- Drilling was designed to test the Abonko target as well as infill and step out resource drilling to test the northern extensions at Ewoyaa where mineralisation remained open. Multiple pegmatite intervals with visible coarse spodumene were intersected at both Abonko and Ewoyaa with assay results pending.
- A 1,000m metallurgical diamond drill core programme is currently underway at Ewoyaa where the metallurgical drill holes are being twinned with selected existing RC drill holes to meet several objectives including; RC drill hole twinning and density measurements for resource estimation, metallurgical test-work samples, and geotechnical measurements for future mining studies.
- Diamond drilling to date has visually confirmed crowded spodumene mineralisation at depth, providing confidence that spodumene is the dominant lithium phase with a simple process flow-sheet envisioned. Metallurgical test work will be completed in Western Australia during Q2 2019.
- A drone survey was completed by Sahara Natural Resources, Ghana over the Ewoyaa and Abonko deposits to generate a detailed DTM for resource estimation purposes and future mine studies (pit optimisations, mine infrastructure planning, waste and tailings design, etc).
- Multiple high-priority targets defined in the high-resolution helicopter magnetics and radiometrics geophysical survey completed over the Saltpond and Mankessim licenses.
Conclusion: The latest drill results are very encouraging for the development of a simple spodumene facility in West Africa. We look forward to understanding the scale of pegmatite deposits in the ongoing resource estimation work, particularly with expansion work focused on ongoing drilling and geophysical surveying.
*SP Angel act as nomad and broker to IronRidge Resources
Solgold* (LON:SOLG) 36.8p, Mkt Cap £679.4m - Proposal to consolidate Cascabel interest through offer for Cornerstone
- Solgold has announced its intention to make an all-share offer to acquire Cornerstone Capital Resources, the owner of the 15% of the Cascabel project in Ecuador not already owned by Solgold itself.
- The proposed transaction, under which Cornerstone shareholders would receive 0.55 Solgold shares for every Cornerstone share "represents a premium of approximately 20% over the closing price of Cornerstone Shares on the TSX Venture Exchange on 30 January 2019".
- Solgold says that "Provided SolGold does not identify information suggesting that the business, affairs, prospects or assets of Cornerstone have been materially impaired, SolGold intends to mail a takeover bid circular to the holders of Cornerstone Shares (as required under applicable Canadian securities laws) in late February or early March 2019"
- While it highlights the benefits of consolidating the ownership of the Cascabel project under a unified corporate structure and management team, Solgold also points out that acceptance of the offer would provide Cornerstone's shareholders exposure to Solgold's other, wholly owned exploration projects in Ecuador which are, in our view, showing considerable promise and provide Solgold with a pipeline of projects as it moves the Alpala project at Cascabel through feasibility work and towards a formal development decision.
- The company announcement also discloses that previous approaches to Cornerstone have been rebuffed saying that "SolGold approached Cornerstone in 2017 and 2018 in an effort to commence the negotiation of a business combination transaction between the two corporations. Despite SolGold's good faith attempt, Cornerstone's management indicated that they would not engage in any negotiations towards a business combination unless (i) 50% of the seats on the board of directors of the combined entity were allocated to Cornerstone, (ii) the Chief Executive Officer of SolGold was replaced, and (iii) the Chairman of the board of directors of SolGold was replaced. The board of directors of SolGold view each of these demands as being highly unrealistic based on the relative size of the two companies and their respective ownership interests in Cascabel by the two entities."
- Solgold also points out that acceptance of its offer would obviate the need for Cornerstone to directly fund its share of future financing requirements at Cascabel.
Conclusion: Although Solgold is careful to caution that it has yet to make a formal offer to Cornerstone's shareholders it seems in our view, it would appear likely that having reached this point it will not proceed, if only to appeal directly to Cornerstone's shareholders having previously been kept at arm's length by management. On the practical level, simplification of the ownership and management of the project seems eminently sensible and exposure to the wider pipeline of projects in Solgold's portfolio may prove an added attraction to Cornerstone shareholders. We look forward to the formal offer and accompanying documentation to provide greater detail on the proposed transaction.
*SP Angel acts as broker and advisor to Solgold. SP Angel have raised funds for SolGold on eight previous occasions.
Thor Mining (LON:THR) 1.50p, Mkt Cap £10.8m – Quarterly Report and project update
- Thor Mining reports progress on each of its main projects including the tungsten projects at Molyhil in Australia and Pilot Mountain in Nevada as well as the Kapunda in-situ leach copper project in S Australia.
- At Molyhil, where a feasibility study completed during August 2018 envisaged a seven-year life open pit mine producing around 120,000 mtu per year of tungsten trioxide in concentrate to generate an NPV5% of A$101m from an initial capital investment of A$69m, the company has appointed advisors to optimise “outcomes from financing the Molyhil project”. The company is optimistic that “an acceptable arrangement can be finalised in the near term.”
- During the September quarter, the company acquired an interest in the nearby Bonya copper/vanadium project, and during the December quarter announced an initial inferred resource of 230,000t at an average grade of 2% copper. An initial drilling programme “is expected to commence during the March 2019 quarter”.
- During the quarter, the company updated its resource estimate for the Pilot Mountain tungsten project in Nevada. The current estimate is 12.5mt at an average grade of 0.27% tungsten trioxide. Approximately 70% of the resource is classed as indicated.
- Metallurgical test-work on material from Pilot Mountain “demonstrated the successful production of saleable concentrates … Further testwork is required to advance this to pre-feasibility study standard, and this next stage of metallurgical testwork is in progress.”
- The company’s investment in the private Australian company, Environmental Copper Recovery (ECR), exposes Thor Mining to the right to earn a 75% interest in the Kapunda project. “During the quarter, ECR advised that proof of concept for ISR [in-situ-recovery] had been established improving the level of confidence in technical aspects of the proposed development from both an environmental and a copper production perspective.”
- The company also comments that warrants exercised during the quarter raised £581,000. The “Cash position remains sound with forecast activities fully financed until late 2019”.
Conclusion: Thor Mining has advanced each of its major projects and remains funded to continue throughout 2019. We look forward to further news of the tungsten projects and developments at Kapunda.