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Today's Market View - Graphite number one battery raw material

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SP Angel – Morning View –Wednesday 20 03 19

Graphite number one battery raw material

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MiFID II exempt information – see disclaimer below  

Asiamet Resources (LON:ARS) – Additional BFS drilling results strengthens BKM resource

Anglo American – Solar farm installed at tailings dam for los Bronces copper mine

Bluejay Mining* (LON:JAY) – Pre-feasibility study due end April. Discussions with potential offtakers ongoing

Tri-Star Resources* (LON:TSTR) – SPMP funding and operational update

Union Jack Oil PLC* (LON:UJO) Valuation 0.44p ($62.0m) – Funds raised. West Newton and Wresssle projects to add value

 

“Graphite is the number one raw material input into a Li-ion battery”

  • Reporting from the Prospectors and Developers Association of Canada (PDAC), Benchmark Minerals Intelligence Managing Director, Simon Moore, reiterates the importance of the battery metal as approximately 50% of Li-ion batteries by mass require graphite.
  • Currently, the global market offers 165kpta anode material for existing manufacturing capacity, which needs to rise to 1.6Mtpa by 2030.
  • Anode formation relies on synthetic and natural blending, however the higher cost of synthetic and difficulty scaling production will boost the significance of natural sources.
  • The industry will turn to advanced technology materials producers including Talga Resources who will be able to deliver premium materials to boost the performance of even the best existing commercial iterations. The vertically integrated graphite company will require sustained investment as they take the world’s highest-grade graphite deposit into production to support the accelerating global battery industries.
  • Simon Moore also emphasises capital market investment is one of the greatest risks to global electrification as sustained funding is falling short for the “biggest trend in the 21st century, which is energy storage”.
  • The rise of battery Megafactories is huge, with 71 currently under development and 45 operating at multi-GWh scales.
  • Scaling the supply chain presents huge challenges as speciality markets grow from niche 100ktpa industries to multi-million tonne scale.
  • The trends cumulatively indicate there is a major supply risk across the battery metal space, particularly across the US and Europe where the four metals (lithium, cobalt, nickel and graphite) are designated critical metals, requiring sustained and significant global investment to advance capacity.

 

International happiness day TODAY

  • The UN General Assembly adopted a resolution decreeing the International Day of Happiness would be observed annually on 20 March.
  • The move comes after the first ever UN conference on Happiness in 2012

 

South Africa – health minister to post results of research into major cause of cancer and stroke the Ministry website

 

Dow Jones Industrials

 

-0.10%

at

  25,887

Nikkei 225

 

+0.20%

at

  21,609

HK Hang Seng

 

-0.37%

at

  29,358

Shanghai Composite

 

-0.01%

at

   3,091

FTSE 350 Mining

 

+1.41%

at

  19,543

AIM Basic Resources

 

-1.13%

at

   2,143

 

Economics

Mozambique, Zimbabwe,  Malawi - Cyclone ‘Idai’ creates significant further damage and fatalities than first estimated

  • Cyclone Idai which started in Malawi before heading out to see and then turning back into Mozambique making landfall at Beira before heading into Zimbabwe.
  • The clyclone which created massive flooding, destroying houses and infrastructure may have affected millions of people and looks to be a humanitarian disaster of significant scale.

 

Europe - Green Taxes in Europe Killing European Investment

  • Sir Jim Ratcliffe has highlighted ‘foolish’ EU green taxes which push investment towards the US and China. (City AM)
  • Europe’s insistence on taxing emissions were like a well-intentioned "Charge of the Light Brigade" according to Ratcliffe.
  • “Europe remains with an industry built one or two generations ago with old environmental standards and has frightened away new investment for a generation with heavy green taxes,” Ratcliffe wrote in a letter to European Commission president Jean-Claude Juncker.
  • The Green Party has been said to be the most effective lobby group within the EU according to a Reuters journo who worked closely within the EU machine. Some suspect the Green Party lobbying has been ‘used’ by some to support certain big business agendas and restrict up and coming businesses. Dyson is a case in point.

 

Zambia – two killed at South Ore Body shaft, Mopani Copper Mines

  • Glencore suspended production at Mopani Copper Mines on Tuesday following an accident which killed two workers
  • Mopani produces some 100,000tpa of copper
  • Mopani also suspended operations at its Mindola North Shaft in Kitwe last month following three fatalities.

 

Currencies

US$1.1347/eur vs 1.1353/eur yesterday  Yen 111.57/$ vs 111.30/$  SAr 14.482/$ vs 14.426/$  $1.324/gbp vs $1.327/gbp  0.709/aud vs 0.710/aud  CNY 6.704/$ vs 6.716/$

 

Commodity News

Precious metals:         

Gold US$1,303/oz vs US$1,305/oz yesterday

   Gold ETFs 72.0moz vs US$72.0moz yesterday

Platinum US$857/oz vs US$838/oz yesterday

Palladium US$1,595/oz vs US$1,587/oz yesterday

Silver US$15.29/oz vs US$15.35/oz yesterday

  • Rural Indian silver demand is expected to surge, spending cash handouts from the government designed to aid local economies ahead of the general election, according to Metals Focus Ltd.
  • Purchases are set to rise to about 6,590t, beating the 6,442t bought in 2018 and marking the best year since record consumption in 2015, according to Metal Focus analyst Chirag Sheth. The demand recovery will continue over the next few years “because of economic growth, higher income, and relatively low silver prices and penetration of sterling silver,” he said.
  • Across India last month the first installment of 2,000 rupees ($29) was distributed to smallholders, under a program that proposes to spend 750 billion rupees in the year beginning April. The cash handouts are likely to disproportionately support silver more than gold as many recipients only have purchasing power for the cheaper precious metal.
  • Silver prices in India have been relatively stable for the last two years, and are about half their 2011 peak. At around 38,000 rupees/kg, the metal is about eighty times cheaper than gold and a far more affordable investment or gift for the average citizen.
  • Inflows of silver rose 36% in 2018 to 6,958 tons, just shy of the all-time high of 7,579 tons seen in 2015, according to India’s trade ministry.

           

Base metals:   

Copper US$ 6,449/t vs US$6,466/t yesterday

Aluminium US$ 1,945/t vs US$1,932/t yesterday

Nickel US$ 13,195/t vs US$13,165/t yesterday

Zinc US$ 2,836/t vs US$2,787/t yesterday

Lead US$ 2,045/t vs US$2,037/t yesterday

Tin US$ 21,300/t vs US$21,130/t yesterday

           

Energy:           

Oil US$67.8/bbl vs US$67.8/bbl yesterday

Natural Gas US$2.854/mmbtu vs US$2.871/mmbtu yesterday

Uranium US$26.70/lb vs US$27.05/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$85.4/t vs US$85.0/t

  • Iron ore futures tumbled in Asia as a Brazilian court ruled that Vale SA, the world’s biggest iron ore miner, should be allowed to restart a major mine ordered shut in the aftermath of January’s deadly dam disaster. The company has been authorised by a regional court to resume operations at the 30mt Brucutu operation.
  • Iron ore in Dalian slumped as much as 5.5%, near its daily limit, while Singapore futures fell as much as 4.6% to the lowest levels since Jan 29, as the industry recognise the supply disruption could prove to be less severe than expected.
  • Brucutu accounts for a significant portion of the more than 80mt of capacity shuttered in the aftermath of a catastrophic dam burst at another Vale mine that left 300 people dead or missing.
  • Operations at the mine will remain halted until Vale get appropriate authorisation from the Minas Gerais environmental secretariat.
  • The exception focuses on the different structure of the Laranjeiras dam at Brucutu, which is considered safer than the structure that burst.

Chinese steel rebar 25mm US$622.3/t vs US$621.2/t

Thermal coal (1st year forward cif ARA) US$72.8/t vs US$74.6/t

Coking coal futures Dalian Exchange US$188.4/t vs US$188.1/t

           

Other:  

Cobalt LME 3m US$31,000/t vs US$30,000/t

NdPr Rare Earth Oxide (China) US$42,886/t vs US$42,808/t

Lithium carbonate 99% (China) US$9,771/t vs US$9,753/t

Ferro Vanadium 80% FOB (China) US$69.5/kg vs US$70.0/kg

Antimony Trioxide 99.5% EU (China) US$6.9/kg vs US$6.9/kg

Tungsten APT European US$271-282/mtu vs US$271-282/mtu

 

Battery News

Canada announces new $5,000 incentive for electric cars, Tesla vehicles excluded

  • The Canadian federal government has announced a new $5,000 incentive for electric cars that cost less than $45,000, however, it excludes Tesla vehicles.
  • Some Canadian provinces already have EV incentive programs but unlike the US, there has never been a federal program to reduce the cost of electric vehicles.
  • The $45,000 cut off point covers vehicles like the Nissan Leaf, Chevy Bolt EV, and Hyundai Ioniq Electric, but all of Tesla’s vehicles are excluded since the base Model 3 starts at $47,000 in Canada.

 

Toyota is Selling a Hydrogen Fuel Cell Car for $50,000

  • Toyota is taking an unconventional approach to reducing vehicle emissions, manufacturing a hydrogen fuel cell-powered car that the company is calling the Mirai, according to NPR — and with $20,000 worth of government subsidies, it costs just $50,000.
  • Currently Toyota builds only 10 of the zero-emission vehicles per day, but they could be a good fit for Japan, where densely-populated cities leave people without the space to plug in electric cars.

 

Data-driven modelling and estimation of lithium-ion battery properties

  • Electric vehicles are powered by lithium-ion batteries, a rechargeable battery that's still not fully understood or perfected.
  • Two Columbia professors are developing a machine-learning model that can more accurately estimate a Li-Ion battery's charge level. Current estimates of a battery's state of charge have error rates of five%, whereas this team's model aims for an error rate of one%.
  • Battery Management Systems are trained to capture a battery's state of health and to predict its remaining life time. These two concepts help owners of electric vehicles know when to stop the car to recharge its battery as well as when to schedule battery replacements.
  • A high-estimation accuracy model translates into a lifetime extension of battery packs, since it allows for a Battery Management System that can identify and protect weak cells.

 

Company News

Asiamet Resources (LON:ARS) 6.7p, Mkt Cap £67.2m – Additional BFS drilling results strengthens BKM resource

  • Asiamet Resources report additional assay results confirm expectations and expand resource confidence for infill and geotechnical drilling as part of the Bankable Feasibility Study on Beruang Kanan Main copper deposit located in Central Kalimantan, Indonesia.
  • A total of 37 Resource evaluation holes and four geotechnical holes for 5,665m of diamond core drilling have been completed with assays from 32 drill holes received to date, with highlights including:
    • BKM31550-06 19.00m at 1.16% Cu from 72.5m depth; including 5.00m at 1.43% Cu from 82.5m depth and 2.0m at 2.61% Cu from 89.5m depth.
    • BKM32490-02 3.00m at 0.68% Cu from 8.00m depth;
    • 38.50m at 1.01% Cu from 22.00m depth; including 9.00m at 2.86% Cu from 33.00m depth
    • 33.00m at 0.63% Cu from 69.5m depth; including 8.00m at 1.14% Cu from 89.50m depth
    • 16.00m at 0.63% Cu from 144.0m depth; including 4.00m at 1.32% Cu from 156.00m depth
  • Resource infill holes drilled in the southern area of the current proposed open pit continued to intersect zones of covellite/bornite mineralisation associated with quartz and pyrite veining.
  • Resource infill holes drilled at the northern area of the current proposed open pit continued to intersect broad intervals of near-surface high-grade mineralisation.
  • CEO Peter Bird adds “upside potential in and around the BKM deposit remains very high and an external geological consultant with extensive experience in Indonesia has recently been engaged to further strengthen our understanding of the BKM geological system and develop a suite of additional high potential near mine Resource targets for testing in the next round of drilling.”

 

Anglo American – Solar farm installed at tailings dam for los Bronces copper mine

  • Anglo American has installed some 256 solar panels floating on its tailings pond.
  • The panels are expected to generate some 150MWh/year despite snow, rain and high winds.
  • The panes should slow water evaporation by 80%, though there are many other ways to reduce evaporation in a country where water is a premium strategic resource.

 

Bluejay Mining* (LON:JAY) 9.9p, Mkt Cap £81m – Pre-feasibility study due end April. Discussions with potential offtakers ongoing

STRONG BUY - included in MSCI index

Target Price suspended pending update on pre-feasibility study figures

  • Bluejay Mining report today that the company has no current intention to undertake an equity capital raising.
  • The statement is in response to ill-informed market speculation indicating a placing was taking place.
  • Bluejay reports it has sufficient funds to conduct its budgeted activities into Spring 2020. Eg through the 2019 summer field season and beyond.
  • ‘Bluejay remains in detailed discussions with multiple parties, including the discussion announced  on 27th February 2019. The Board remains confident that these discussions will achieve an attractive outcome for its shareholders.’
  • Bluejay previously reported that ‘the company is in discussions with Rio Tinto Iron and Titanium Canada in connection with an agreement to assess the commercial potential of Bluejay’s Dundas ilmenite project.’ Management are optimistic that an agreement will be concluded with Rio Tinto in due course.
  • Jon Russill of SRK said, "We have been working with Bluejay and its other consultants on the PFS for the Dundas Ilmenite Project since 2017 and can confirm that it is now very close to its conclusion and publication (which we now anticipate to be within the next six weeks)."
  • Target price: we are suspending our target price pending further detail to come from the PFS study. We look forward to updating our assumptions based on the work by SRK and other experts.
  •  Ilmenite prices: Ilmenite prices have risen since last summer ($175/t) and are currently $189/t in China for 50% TiO2 and 30% Fe in port.
  • Titanium pigment – Ineos to become second largest producer of titanium dioxide in North America
  • Ineos, run by Sir Jim Ratcliffe, the UK’s most successful businessman, has agreed to buy the National Titanium Dioxide Company Limited from Tronox for $700m.
  • The deal which is subject to regulatory approval should then allow Tronox to buy Cristal’s global titanium dioxide business assuming the US Federal Trade Commission have no further objections to the deal.

Conclusion:  

*The SP Angel mining analyst has visited the Dundas, Itelak ilmenite sands project in Greenland.

*SP Angel act as nomad and broker to BlueJay Mining. 

 

Tri-Star Resources* (LON:TSTR) 48.5p, Mkt Cap £45.6m – SPMP funding and operational update

  • Tri-Star announce funding update of Strategic & Precious Metals Processing LLC, owner of an antimony-gold processing facility in Oman in which the company holds a 40% shareholding. Significant funding solution has been agreed to initially cover short term working capital and capital expenditure requirements as the SPMP facility nears first revenue.
  • A short-term mezzanine loan of US$35m has been agreed on terms substantially similar to the current loan, entered into between SPMP and Tri-Star together with the Oman Investment Fund Holding Company LLC (“OIF”) and DNR Industries Ltd.
  • No new equity will be issued as part of the New Mezzanine Loan arrangements and the shareholders’ equity interests in SPMP will remain OIF 40%, Tri-Star 40% and DNR 20%.
  • As part of the Agreement, it is intended that approximately US$52m of the existing Mezzanine Loan (including accrued interest) will be converted into an interest free shareholder loan and/or equity on a pro-rata basis to OIF’s, Tri-Star’s and DNR’s current shareholdings. The US$15m balance of the existing Mezzanine Loan will remain on existing terms.
  • In an operational update, unrefined antimony metal has been produced from intermediate products (crude antimony trioxide and impure antimony trioxide) in the pilot furnace which is proof of the process chemistry. It was noted that the chemical composition of the antimony metal had a 97.3% purity in its unrefined form.
  • CEO of SPMP, Steven Din, however adds “during the commissioning of the antimony production plant in Sohar, several engineering design issues have been identified. SPMP is working with the project manager, Worley Parsons, to remediate these.”

*SP Angel acts as Nomad to Tri-Star Resources

 

Union Jack Oil plc* (LON:UJO) 0.08p, Mkt cap £7.4m – Funds raised. West Newton and Wresssle projects to add value

Valuation 0.44p ($62.0m)

  • Union Jack Oil plc has conditionally raised £1.75m at 0.075p.
  • The new funds provides optionality for management and is a vindication of their approach to its portfolio
  • With West Newton and Wresssle yet to make an impact, our oil analyst sees the funding as providing the Company with optionality.
  • As a result of the placing, our valuation is $62.0mm (0.44p)..

 

*SP Angel act as nomad and broker to Union Jack Oil plc

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