Gold stocks recover as bond yield curve inverts

Altus Strategies* (LON:ALS) – Gold discovery on the Zager licence Atalaya Mining (LON:ATYM) – Q2 production helps maintain 2019 production guidance Europa Metals Limited (LON:EUZ) – Drilling results from Toral zinc, lead, silver project in Spain Gem Diamonds (LON:GEMD) – Letseng achieves 10% higher prices in H1 2019

Altus Strategies - Today's Market View - Gold stocks recover as bond yield curve inverts

SP Angel – Morning View – Thursday 15 08 19

Gold stocks recover on rising gold price and inverted bond yield curve


MiFID II exempt information – see disclaimer below

Altus Strategies* (LON:ALS) – Gold discovery on the Zager licence

Atalaya Mining (LON:ATYM) – Q2 production helps maintain 2019 production guidance

Europa Metals Limited (LON:EUZ) – Drilling results from Toral zinc, lead, silver project in Spain

Gem Diamonds (LON:GEMD) – Letseng achieves 10% higher prices in H1 2019

Keras Resources* (LON:KRS) – BUY, Valuation rises to 1.08p – Calidus raises A$9m from investors in Australia to fund drilling and DFS

Scotgold Resources* (LON:SGZ) – Appointment of director

Tirupati Graphite (private) – Operations update

Thor Mining (LON:THR) – Thor confirms it has sufficient funds to meet commitments over next six months


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US 30-year bond yield falls below 2% for first time for first time in 12 years

A sharp rally in government bonds set new records today, with the yield on the 30-year US government bonds falling below 2% for the first time (FT).

New lows reflect traders dumping riskier assets in favour of bonds, widely considered a “haven”.

An inversion in the yield curve yesterday has panicked markets, as the metric is often perceived as a strong indicator of a possible recession.

The global stock of negative-yielding debt climbed above $16tn yesterday for the first time, having exceeded the $15tn threshold just ten days ago.


China curbs gold imports

China, the world’s biggest importer of gold, has cut imports of gold by some 300-500t vs last year (Reuters).

China is looking to

The likely motive for the restrictions is to help limit the amount of money leaving the country via gold purchases amid a sharp drop in the value of the yuan.

The yuan has fallen by more than 10% against the dollar since early last year, recently falling below 7-per-dollar for the first time in more than a decade in the wake of escalation in the US-China trade war.

Gold prices in China could rise if domestic supplies fade before import restrictions are lifted.



US$1.1150/eur vs 1.1196/eur yesterday  Yen 106.20/$ vs 105.33/$  SAr 15.288/$ vs 15.341/$  $1.208/gbp vs $1.205/gbp  0.678/aud vs 0.676/aud  CNY 7.026/$ vs 7.065/$


Commodity News

Precious metals:         

Gold US$1,520/oz vs US$1,500/oz yesterday

Safe haven assets resumed their advance as closely watched parts of the Treasury yield curve inverted, raising speculations that a US recession looms as spot gold advanced as much as +0.5% to $1,524/oz (Bloomberg). The metal hit $1,535/oz on Tuesday, the highest since April 2013. Silver also rose 0.6% to $17.3/oz, near an 18-month high, as the Bloomberg Dollar Spot Index snapped three days of gains.

On Thursday, the yield on 30-year Treasuries fell below 2% for the first time, after the 10-year yield dipped below the two-year rate a day earlier in a pattern typically seen as a harbinger of U.S. recession.

Sustained growth in 2019 has been supported on mutually reinforced drivers including slowing growth, central banks cutting interest rates, and the high-risk stand-off of the trade war sapping appetite for risk assets.

As the precious metal surges, global miners’ stocks are tracking. In Sydney, Newcrest Mining Ltd., Australia’s top producer, is up 69% this year, while smaller rival Evolution Mining Ltd. has jumped 42%. Elsewhere, heavyweights Newmont Goldcorp Corp. and Barrick Gold Corp. have gained ground.

Rising geopolitical tensions are also supporting gold, with the flare-up in anti-government protests in Hong Kong have raised the specter of possible intervention by the Chinese military and, in the Middle East, fraught relations between Iran and the U.S. Investors are also tracking Brexit developments in Europe.

Investors are continuing to flood into exchange-traded funds backed by the precious metals, with gold holdings near the highest since March 2013, while inflows into silver ETFs have pushed assets to a record.

   Gold ETFs 77.4moz vs US$77.1moz yesterday

Platinum US$844/oz vs US$849/oz yesterday

Palladium US$1,434/oz vs US$1,447/oz yesterday

Silver US$17.16/oz vs US$16.98/oz yesterday


Base metals:   

Copper US$ 5,774/t vs US$5,802/t yesterday

Aluminium US$ 1,779/t vs US$1,787/t yesterday

Nickel US$ 15,820/t vs US$15,900/t yesterday

Zinc US$ 2,283/t vs US$2,315/t yesterday

Lead US$ 2,046/t vs US$2,065/t yesterday

Tin US$ 17,000/t vs US$17,160/t yesterday



Oil US$59.4/bbl vs US$60.8/bbl yesterday

Natural Gas US$2.170/mmbtu vs US$2.163/mmbtu yesterday

Uranium US$25.30/lb vs US$25.30/lb yesterday



Iron ore 62% Fe spot (cfr Tianjin) US$88.4/t vs US$88.5/t

Chinese steel rebar 25mm US$562.2/t vs US$564.4/t

Thermal coal (1st year forward cif ARA) US$65.2/t vs US$65.7/t

Coking coal futures Dalian Exchange US$198.7/t vs US$209.1/t



Cobalt LME 3m US$30,500/t vs US$30,500/t

NdPr Rare Earth Oxide (China) US$43,057/t vs US$43,839/t

Lithium carbonate 99% (China) US$8,113/t vs US$8,269/t

Lithium shorts continue piling into the world’s largest lithium producer, Albemarle Corp, despite reports its halting future capacity expansion in efforts to reduce supply-glut worries.

The stock has fallen 15% year-to-date, while shorts have reached the highest in at least a year, according to data from financial analytics firm S3 Partners.

Albemarle bear’s highlight falling targets are the result of an “abrupt change in capacity plans away from higher-value” lithium hydroxide, which will leave the Company “significantly more levered to its spodumene mines in Australia”, according to Vertical Group’s James Bardowski. The market continues to trend towards higher value and higher demand hydroxide for enhanced energy density Li-ion battery iterations.

The short bets for the company were highest among North American listed lithium producers, at 16% of its free float. Livent Corp. and Lithium Americas Corp. were in second and third place with 15% and 7.7%, respectively.

Ferro Vanadium 80% FOB (China) US$39.5/kg vs US$39.7/kg

Antimony Trioxide 99.5% EU (China) US$5.4/kg vs US$5.4/kg


Battery News

Silicon wafer batteries promise lower cost, better stability

Last week, Washington-based XNRGI announced plans to bring new batteries based on its patented technology to market in 2020, in a new stationary storage battery, using plentiful, off-the shelf silicon wafers.

XNRGI claims its new silicon-wafer Power Chip cells have four times the energy density of conventional lithium-ion cells and cost half as much.

Lithium batteries already use silicon anodes. XNRGI's technology, which has been in development for 15 years, imprints a 20-by-20 micron honeycomb onto commodity cells, then coats them with lithium and other materials to form the cathodes of millions of "microbatteries." The company says the wafers can accommodate various lithium chemistries.

Using the silicon wafers solves several challenges, the company says. Each wafer structure, houses 36m of these microbatteries on each 12-inch chip. The tiny active batteries carry a small enough charge and has enough space between cells to avoid the dendrite growth that causes traditional batteries to lose capacity over time, and eventually cause shorts that can lead to fires. XNRGI expects its batteries should last three times as long as conventional lithium batteries.

The company says the chips can safely be stacked to store up to 100 kilowatt-hours of electricity.

XNRGI claims an energy density of 400watt-hours per kilogram (1,600 watt-hours per litre) for its batteries, more than twice as much energy per pound as the best batteries on the road today.

The other benefit XNRGI claims for its cells is reduced cost. The company says it can build the cells for $150/kWh, regardless of the application. It has already sold 600 of them for grid storage applications, but the company says they are just affordable for electronics.

Since the batteries can be made in existing silicon wafer plants, XNRGI claims the cost of a battery factory can be reduced by 95%.


Company News

Altus Strategies* (ALS LN) 4.75p, Mkt Cap £8.5m – Gold discovery on the Zager licence

Altus Strategies reports the discovery of numerous artisanal hard rock gold workings on its wholly owned Zager exploration licence on the Arabian-Nubian Shield in northern Ethiopia.

The workings, which “primarily target steeply dipping northeast trending quartz veins and veinlets hosted within slate and other highly foliated metasedimentary and graphitic units” coincide with geophysical anomalies which extend, in total, over a “27km long ophiolite belt which transects the licence”.

In total, the Zager licence covers an area of 285km2 within a geological unit known as the Nakfa terrane which “hosts a number of significant VMS base metal and gold deposits and mines. These include Bisha, a polymetallic mine operated by Zijin Mining Group Co. Ltd. 136km northwest of Zager, the Asmara project … 125km northeast of Zager and the Harvest and Adyabo projects … 10km south and east of Zager.”

Altus Strategies’ geologists have “also identified copper sulphide minerals in hand specimen, including chalcopyrite and bornite” within the licence area and are now in the process of follow-up exploration in what Steven Poulton, Chief Executive of Altus Strategies describes as “a highly prospective region for the discovery of gold-rich VMS deposits”.

Conclusion: The exploration potential of Arabian Nubian Shield is attracting increasing attention and, as with a number of other emerging areas of exploration interest, the combination of modern geophysical interpretation and the identification of lower-tech artisanal mining areas is proving fruitful within the Zager licence area.

*SP Angel acts as nomad and broker to Altus Strategies


Atalaya Mining (LON:ATYM) 208 pence, Mkt Cap £285.7m – Q2 production helps maintain 2019 production guidance

Lower received copper prices mean that despite increased Q2 and H1 copper concentrate and metal production and lower unit costs, Atalaya Mining reports reduced profit (Q2 €6.85m vs €15.70m in Q2 2018 and H1 €21.0 vs €24.5m H1 2018).

The reduction in metal prices to an average of US$2.80/lb (H1 2018 US$3.08/lb) was offset to a degree by stronger US$ exchange rates against the €.

Current 2019 production guidance of 45-46,500tonnes is maintained and with 21,108t of H1 production behind it appears realistic and achievable. “Copper head grade for 2019 is budgeted to average 0.47% Cu, with a recovery rate of approximately 85% to 87%. Cash operating costs for 2019 are expected to be in the range of $1.95/lb - $2.15/lb, and AISC is estimated to be in the range of $2.25/lb - $2.45/lb.”

Interestingly, while maintaining production guidance, the company says that “Given strong H1 cost performance, Atalaya will review its full year 2019 costs guidance during H2 2019”.

Lower operating cash flows (€14.97m vs €29.2m during H1 2018) and increased investment as the company presses ahead with the expansion of Proyecto RioTinto to 15mtpa capacity saw the company’s 30th June cash balance at €15.49m compared to €33.07m at 31st December 2018.

The company reports that the “15Mtpa expansion project is now close to full commissioning and waiting for electricity capacity to be granted by the electricity supplier for mechanical completion. The new SAG mill and primary crusher have started initial testing and commissioning, while new flotation and concentrate handling areas have been completed and are operational”.

Commenting on what he described as a “pleasing reduction in operating costs, combined with another robust quarterly production performance”, CEO, Alberto Lavandiera, explained that “The expansion at Proyecto Riotinto is another example of management delivering a low capex intensity project and as it comes on line, we expect to continue this improvement in operating efficiencies.”

Exploration around RioTinto “is progressing well” with a focus on identifying residual massive sulphide and stockwork mineralisation beneath the Atalaya pit as well as lateral extensions of similar types of mineralisation at Filon Sur. During the quarter, exploration expenditure at RioTinto amounted to €1.2m (2018 - €0.2m).

Conclusion: Although it is not insulated from lower metal prices, Atalaya continues to achieve cost reductions at Proyecto Riotinto and, with the expansion project close to commissioning the downward pressure on costs looks likely to continue.


Europa Metals Limited (LON:EUZ) 0.028 pence, Mkt Cap £3.4m – Drilling results from Toral zinc, lead, silver project in Spain

Europa Metals has announced the completion of hole TOD-023 at its Toral project in Spain. The hole was part of a programme intended “to target the high-grade zone of the Toral Project”.

The hole has “encountered a single significant intersection of 12 metres (down hole width) of visible mineralisation and two additional sub-ordinate hanging wall zones of mineralisation”.

Assays are awaited but clearly the company is sufficiently encouraged that it has already started to drill a “daughter” hole which “will potentially increase the amount of mineralised samples to be utilised in the planned metallurgical test work programme.”

Previous work by Pennaroya in the same area as TOD-023 reported in today’s announcement shows five historical drill-holes with intersections ranging up to 12m width and with assays of up to 24.68% zinc, 4.82% lead, and 66.21 g/t silver reported over an intersection of 3.1m in hole SJ10.

Conclusion: Encouraging visual interpretation of mineralisation from the latest drilling at Toral will need assay confirmation; we await the results with interest.


Gem Diamonds (LON:GEMD) 72.6p, Mkt Cap £100.9m –Letseng achieves 10% higher prices in H1 2019

Gem Diamonds reports that, despite a 13% reduction in  diamond recovery during the six months ending 30th June to 56,668 carats (H2 2018 – 65,279 carats) the average price received on sales rose by 10% to US$1,697/carat.

The company sold a total of 55,714 carats of diamonds (H2 2018 63,414 carats) and comments that “During the Period, the highest price achieved for a 70.69 carat D-colour Type IIa diamond was US$ 48 225 per carat while the 13.32 carat pink diamond achieved US$ 656 934 per carat, the highest US$ per carat ever achieved for a Letšeng diamond”.

Despite the increased average prices achieved, which no doubt benefitted from the sales of these special, high value, diamonds  the company hints that it is experiencing similar pressures to those reported by other producers saying that “Prices for the smaller and commercial goods have been under pressure for some time with the larger goods having been less affected, although showing recent signs of weakness”.

Commenting on the results, CEO, Clifford Elphick, highlighted the company’s success in implementing its “business transformation programme” which has already delivered “US$ 42 million net of fees, and is on track to deliver the planned US$ 100 million in cost savings and efficiencies by 2021. The contract with the external consultant was closed out during the Period and management is now rigorously implementing its internal continuous improvement plan”.

Conclusion: The consistent ability of the Letseng mine to deliver high value diamonds combined with the continuing programme of cost reduction should help to insulate Gem Diamonds from the worst of the current weakness in the rough diamond market.


Keras Resources* (LON:KRS) 0.49p, Mkt Cap £11.2m – Calidus raises A$9m from investors in Australia to fund drilling and DFS

(Keras holds 723m shares representing 33.8% of Calidus (CAI AU) t at a value of A$25m (£14m).

BUY, Valuation rises to 1.08p from (1.04p last published on 30.07.19)

Click for our last full note on Keras

Calidus has placed A$9m worth of stock with institutional investors in Australia to support work on its flagship Warrawoona gold project.

Keras which held 39.1% of Calidus prior to the placement did not participate due to the scale of its holding.

Keras’ holding falls to 33.8% as a result of the additional dilution.

The placement means that Calidus are now fully funded to continue drilling and complete a Definitive Feasibility Study.

Calidus have done well with the Warrowoona gold project with particularly good grades reported from the Klondyke section of the deposit in recent weeks

Grades include:13m grading 11.1g/t gold form from 30m, including:

1m @ 107.16g/t Au from 36m

13m @ 5.58g/t Au from 46m

10m @ 6.81g/t Au from 47m, including:

1m @ 50.77g/t Au from 49m

22m @ 2.13g/t Au from 19m

5m @ 3.16g/t Au from 126m

The recently published PFS at Warrawoona shows:

IRR - 47% post-tax

NPV - US$118m at an 8% discount rate assuming a US$1,400/oz gold price

CAPEX - US$66.5m

AISC costs - US$811/oz LOM

JORC Probable Ore Reserve - 8.9Mt grading 1.5g/t for 418koz gold at Klondyke.

Gold production estimated at 97,000ozpa

Throughput 2mtpa mining rate and conventional CIL processing.

LOM – 6 years

Valuation: our valuation rises to 1.08p from 1.04p based on the rise in value of Calidus Resources shares to A$0.035c/s. Calidus represents some 58% of the value of Keras Resources at present. The remaining value in Keras is calculated on the value of the cash flows expected from the Nageya manganese mine in Togo.

Keras recently completed a bulk shipment to an unnamed manganese alloy producer which showed the Nageya ore was best suited for silico manganese alloy production.

The company is now waiting on the Togo government for issue of a full-scale mining license before ramping up production to a rate of around 6,000t a month in accordance with the existing mine plan and machinery. (Current plant capacity is for 75,000t per month).

Conclusion:  A$9m is a decent amount of funding for drilling and completion of a DFS on a relatively well defined orebody. The level of funding and support indicates new investor appetite for gold stocks and sets up Calidus well for its future gold mine development.

*SP Angel act as Nomad and broker to Keras Resources


Scotgold Resources* (LON:SGZ) 36.5p, Mkt Cap £16.7m – Appointment of director

Scotgold report the immediate appointment of Mr. Ian Proctor as Non-Executive Director, who is a Chartered Accountant and currently Chief Executive Office of Sky Betting and Gaming (“SBG”) and had previously held the position of Chief Financial Officer of SBG for over 10 years.  During this period, he played a key role in SBG's buy out from BskyB, the preparation of the listing of the Company and its ultimate sale prior to listing.

Chairman Nat Le Roux adds, “His wealth of experience as a finance professional not only enhances the breadth of experience available to the board, but being Stirling, Scotland based, his proximity to the operations means that our executive accounting function can also benefit."

*SP Angel acts as Nomad and Broker to Scotgold Resources


Tirupati Graphite (private) – Operations update

Flake graphite production from the primary mining and processing projects in Madagascar continues ramping, achieving production at 3,000tpa for the Sahamamy Project, the first of six planned flake-graphite production plant modules.

Tirupati Graphite report highlights in Madagascar including:

Achieved production rate of c.75% of capacity since commissioning in March 2019 while remaining on target to achieve full capacity in Q4 2019

Achieved target grade of up to >95% C and recovery of 85%

First shipments of flake graphite made in early May 2019 progressing to total shipments of c.340MT with up to 95% C to European, US and Indian markets

Revenues of c. US$338,000 generated with basket price of US$991.50/MT, exceeding the Company’s initial forecast

Sales revenues estimated to reach the target US$3m annualised from 2020

Downstream processing projects are also under development across India, with the Company completing commissioning of Patalganga Flame Retardant graphite plant. Highlights of the development also include:

Commissioned 1,200 tpa flame retardant expandable graphite, and 1,500 tpa flake graphite finishing facilities

Flame-retardant flake graphite product under brand name ‘CarboflameX’ launched in European and Indian markets

First shipments manufactured during trial runs was made in June 2019 with c. US$60,000 revenues achieved to date

Product qualification achieved with 100% target customers approached to date

Sales revenues estimated to reach annualised US$3-4m from 2020

Tirupati also suggest they are on target to commission the 6,000tpa module at the Vatomina primary flake graphite project in Madagascar during Q4 2019, while continue advancing integrated downstream products and the Technology and Graphene centre in India.

Conclusion – SP Angel continue to be impressed with the advancing integrated operation across Madagascar and India, yielding fundamental flake graphite into important end-use markets, including rapidly accelerating flame retardants. We look forward to understanding the scale of ramp-up and supportive downstream productions.


Thor Mining (LON:THR) 0.70p, Mkt Cap £5.8m – Thor confirms it has sufficient funds to meet commitments over next six months

Thor Mining has released an initial mineral resource estimate of 66.1mt, classified as inferred, at an average grade of 0.17% copper for its Moonta in-situ recovery copper project in South Australia.

The resource estimate is quoted at a cut-off-grade of 0.05% copper while at the higher 0.1% cut-off, the inferred resource is 35.4mt at an average grade of 0.26% copper.

“The resource estimate is considered preliminary, with an additional 308 drill holes over Wombat, Bruce, and Larwood deposits to be included in the resource modelling once scheduled quality assurance processes are complete”.

Thor Mining is “acquiring up to a 30% interest in EnviroCopper, which in turn is earning from Andromeda Metals Limited (ASX: ADN) up to a 75% interest in the mineral rights and claims over the northern portion of the Moonta exploration licence area”.

Combined with Thor mining’s interest, via EnviroCopper, in the Kapunda copper project, also in South Australia, “Subject to full earn in Thor would … hold an effective 22.5% interest in each of the Moonta and Kapunda copper projects.”

The company has explianed that the proposed in-situ recovery of copper is “not burdened by the normally high capital and operating cost activities of mining, crushing, grinding, and often flotation associated with conventional mining and processing operations” and does not involve the scale of the environmental footprint of conventional mining.

Commenting on the resource for Moonta, Executive Chairman, Mick Billing, said that “The advancements in ISR and lixiviant technologies offer new methods to extract copper. The ISR method is considered to be a viable method of extracting the copper in this location with minimal disturbance to the existing surface profile.”

Conclusion: The development of the initial mineral resource estimate at Moonta is an important milestone, however, at this stage the resource is still only inferred and will require additional work to support a detailed mine design. The in-situ recovery technology is not widely used, however, it is working at Taseko’s Florence operation in Arizona and another in-situ leach project at Excelsior Mines’ Gunnison project, also in Arizona is expected to deliver initial copper production in Q4 2019.




John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

James Mills -0203 470 0486



Richard Parlons – 0203 470 0472

Abigail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535


SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London



*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.


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