SP Angel . Morning View . Monday 30 09 19
Saudi Arabia warns Oil prices could skyrocket due to tensions with Iran
Amur Minerals* (LON:AMC) – Interim results – shift from exploration drilling to design and economic studies at Kun Manie
Aura Energy Limited* (LON:AURA) – Annual Report
Beowulf Mining* (LON:BEM) – Targets defined at Mitrovica in Kosovo
Bluejay Mining* (LON:JAY) – Interims highlight progress made in shipping 42,000t bulk tonnage of high-grade ilmenite to Canada
Bushveld Minerals* (LON:BMN) BUY – Valuation 80p – Bushveld enjoys strong sales in first half despite pullback in vanadium prices
Cora Gold* (LON:CORA) – Extension of the Zone B mineralisation confirmed
KEFI Minerals* (LON:KEFI) – Drilling starts at Hawiah
IronRidge Resources* (LON:IRR) – Year-end results
Ormonde Mining* (LON:ORM) – Interim results and Progress report on Barruecopardo
Phoenix Copper* - formerly Phoenix Global Mining (LON:PXC) – Board appointment
Strategic Minerals* (LON:SML) – R&D Grant received for Leigh Creek
Vast Resources* (LON:VAST) – Annual results (Apr YE): focus on Romania and Zimbabwe as funding completion nears
Australia scales back mining and energy export revenue (Reuters)
Australia has scaled back its export revenue from the mining and energy sectors, blaming the US-China trade war for slowing global economic growth.
Australia forecast mining sector revenue at $282 billion, down $3 billion from its June forecast, however still ahead of a record $279 billion in 2018/19.
An increase in gold export earnings and a deprecation of the Australian dollar have countered the impact of the US-China trade war (Australianmining.com)
Gold earnings are set to surge by one third to $25 billion in the next year as investors flock to the safe haven commodity.
Resource and energy exports accounted for nearly 60% of Australia’s total export earnings last year.
Iron ore is expected to have the largest export value in the resources sector in 2019/20 with $55.1bn, followed by coal ($38.6bn) and LNG at ($35.2bn)
Dow Jones Industrials -0.26% at 26,820
Nikkei 225 -0.56% at 21,756
HK Hang Seng +0.48% at 26,081
Shanghai Composite -0.92% at 2,905
FTSE 350 Mining -0.14% at 18,287
AIM Basic Resources -0.81% at 2,139
US Fed injected another $72bn into financial markets on Friday
The financial injection of $72bn in repurchase agreements ‘repos’ is designed to calm financial markets and bring short term interbank interest rates back to more normal levels.
The latest offering was reported by the Fed to be undersubscribed indicating that the Fed has supplied sufficient short term capital to satisfy demand and presumably calm financial markets.
The total value of repurchase agreements offered now comes to $278bn for the week to 27 September.
The situation reminds us of the period leading up to the collapse of Lehman Bros when nobody knew which bank or trading house was going down, except maybe the board of Lehman.
Some US policy makers of the time now agree that allowing Lehman Bros to go to the wall was a bad idea and that the cost of this to financial markets and the world was far greater than the cost of action to deal with Lehman in other ways.
US$1.0936/eur vs 1.0918/eur yesterday. Yen 107.85/$ vs 107.84/$. SAr 15.188/$ vs 15.086/$. $1.230/gbp vs $1.228/gbp. 0.675/aud vs 0.676/aud. CNY 7.130/$ vs 7.123/$.
Gold US$1,490/oz vs US$1,499/oz yesterday Gold ETFs 81.1moz vs US$81.0oz yesterday
Platinum US$930/oz vs US$929/oz yesterday
Palladium US$1,694/oz vs US$1,660/oz yesterday
Silver US$17.33/oz vs US$17.56/oz yesterday
Copper US$ 5,788/t vs US$5,730/t yesterday
Aluminium US$ 1,735/t vs US$1,740/t yesterday
Nickel US$ 17,315/t vs US$17,375/t yesterday
Zinc US$ 2,321/t vs US$2,320/t yesterday
Lead US$ 2,096/t vs US$2,103/t yesterday
Tin US$ 16,150/t vs US$16,375/t yesterday
Oil US$61.6/bbl vs US$62.4/bbl yesterday - Oil prices fell sharply on Friday on easing tensions in the Middle East. Saudi Arabia is implementing a partial cease-fire in Yemen, and rumours surfaced that the U.S. is considering easing sanctions on Iran.
Elsewhere, US-China trade tensions and the outlook for Fed policy remain the single largest drivers of oil prices in our view
Natural Gas US$2.380/mmbtu vs US$2.422/mmbtu yesterday
Uranium US$25.55/lb vs US$25.70/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$89.7/t vs US$88.9/t - Rio Tinto scraps sale of Canadian iron-ore unit (MarketWatch)
Rio Tinto has cancelled plans for the sale or IPO of it’s Canadian iron ore business as it is unable to find a buyer.
The firm owns a 59% in iron Ore Co. of Canada which it has been trying to offload, however is unable to agree a price with potential buyers.
Global miners have been selling off less profitable to try and reduce debt and maximise shareholder returns, however CEO Jacques said “I want to clean up the portfolio as quickly as I can but, at the same time, there will not be a fire sale,”
Chinese steel rebar 25mm US$560.8/t vs US$561.4/t
Thermal coal (1st year forward cif ARA) US$66.5/t vs US$66.1/t
Coking coal futures Dalian Exchange US$182.2/t vs US$182.4/t
Cobalt LME 3m US$37,000/t vs US$37,500/t
NdPr Rare Earth Oxide (China) US$44,528/t vs US$44,993/t
Lithium carbonate 99% (China) US$6,942/t vs US$6,949/t
Ferro Vanadium 80% FOB (China) US$38.3/kg vs US$38.3/kg
Antimony Trioxide 99.5% EU (China) US$5.1/kg vs US$5.0/kg
Amazon orders 100,000 EV delivery vans (greentechmedia.com)
Amazon placed the largest ever order of electric vehicles last week from Michigan based EV manufacturer Rivian.
All vans are expected to be on the road by 2024, with the first vans rolled out by 2021.
The $440m investment by amazon is expected to save 4 million metric tons of carbon per year by 2030.
Rivian has raised massive funds this year from already established companies within the automotive industry- a $500m investment from Ford and $350m from Cox Automotive.
Amur Minerals* (LON:AMC) 1.9p, Mkt Cap £14.2m – Interim results – shift from exploration drilling to design and economic studies at Kun Manie
The report offers operational and financial highlights for the period.
The Company welcomed Tom Bowens to the Board who brings considerable experience in the mining sector and in Russia, in particular, having previously developed and sold the Malmyzh copper gold project for $200m in 2018.
PFS released in Feb/19 highlighted attractive economics of the project including NPV10% and IRR of $615-987m and 29%-35% for toll smelting and low grade matte production scenarios, respectively (at $17,640/t Ni price).
The team is planning to build upon the internally completed PFS for preparation of the Permanent Conditions TEO that is expected to be completed before Dec/20 allowing the Company to proceed to the next stage of development.
The Company is working on updating the existing Kun Manie mineral resource (155mt at 1.02% NiEq) that would include the highly successful 2018 field season exploration results allowing the further increase the scale of the project and respective life of mine.
The team engaged a well-respected Gipronickel for metallurgical testwork and subsequent flowsheet design with a 10t bulk sample shipped to laboratory facilities; the Company is studying the potential for production of a separate copper concentrate allowing to improve on payability terms for both copper and nickel streams.
Financially, the Company recorded a -$1.3m loss (H1/18: -$1.6m) most of which was attributed to administrative costs of $1.2m incurred during the period (H1/18: $1.1m).
Investing cash flow amounted to -$0.2m (H1/18: -$1.3m) as the management is moving away from exploration drilling to project planning and design work (capitalised exploration costs came down to $0.2m in H1/19 v $1.3m in H1/18).
Cash stood at $0.7m, down from $1.2m at the start of 2019, with the management currently assessing a number of strategic options and partnerships with a view of funding requirements in respect of the TEO work and the development of DFS.
The Company drew on $4.5m of the $10m convertible loan facility with some $3.2m in principal and accrued interest settled through the issue of new shares (78.1m shares) as of 30 June 2019; $1.4m remains outstanding as at reporting date.
*SP Angel act as Nomad and Broker to Amur Minerals
Aura Energy Limited* (LON:AURA) 0.475p, Mkt Cap £6.2m – Annual Report
Aura Energy’s Annual Report shows an after tax loss of A$2.9m for the year ended 30th June 2019 (2018 – loss of A$2.0m). The company explains that the loss was “primarily due to higher employee benefits, financing costs (Convertible Security Funding Agreement) and consulting and government and public relations costs. The impairment of exploration expenditure previously capitalised on Swedish tenements also negatively impacted on the result”.
The permitted Tiris uranium project in Mauritania is targeted for financing during the current year “and subject to a receptive uranium environment, a move towards development of the project”. The project, which already has a definitive feasibility study, is also being optimised and these efforts could well improve the DFS estimate that an initial capex of US$62.9m could deliver a mine producing an average 823,000lbs pa of U3O8 per year over a 15 years mine life.
Using a US$60/lb uranium price, the DFS expects the project to deliver an after-tax NPV8% of US$89.9m and an IRR of 26% with a payback of the initial capital over 3.25 years. Among the optimisation strategies under consideration are the recovery of vanadium as a by-product.
The company reports that all the major work is completed and that it expects to release its project study on the Haggan vanadium project in Sweden “in early October 2019 … and in conjunction, Aura will pursue battery manufacturing initiatives with that project”.
Despite the progress made on advancing its projects, “the response on the equity market for Aura was poor and at year end the lack of recognition of Aura's business activity resulted in a low share price” Among other factors, the company identifies delays in completing its studies, the uranium price and “the general market tone around the US/China Trade War”.
Conclusion: Aura Energy is not alone in suffering a lack of recognition by the markets at the moment the tangible progress on advancing its projects should, however, place it in a strong position to benefit from a change in sentiment when it comes.
*SP Angel act as Nomad & Broker to Aura Energy
Beowulf Mining* (LON:BEM) 6.3p, Mkt Cap £37m – Targets defined at Mitrovica in Kosovo
(Beowulf holds some 37.55% of Vadar with an option to invest a further £115,000, which would increase its ownership to 40.1%)
Beowulf Mining report the definition of base and precious metal exploration targets in the southern part of its Mitrovica license in Kosovo.
Mitrovica South is less than 3km from the Stan Terg lead, zinc, silver mine which is estimated to have produced 34mt of ore grading 3.45% lead, 2.3% zinc and 80 g/t silver.
Madjan Peak shows anomalous gold and silver assays along with historic gold pits and anomalous rock chip samples of up to 7.2g/t gold.
Madjan Peak Lower Slopes show elevated copper, zinc and gold in soil results possibly correlating with structurally controlled mineralisation.
Beowulf’s partner and operator, Vardar, is now due to run a DC - Induced Polarisation survey, eg an electric current over the property. The results will be combined with detailed magnetic data to further refine the drill target locations.
*SP Angel acts as nomad and broker to Beowulf Mining
Bluejay Mining* (LON:JAY) 8.9p, Mkt cap £76m – Interims highlight progress made in shipping 42,000t bulk tonnage of high-grade ilmenite to Canada
BUY - Target price 21.3p (Dundas Ilmenite project, Greenland, 100% owned)
(Dundas Ilmenite project, Greenland, 100% owned)
Bluejay Mining results for the six months to end June 2019.
The results show a loss of £203k for the period vs £868k yoy.
The figures are supported by other gains of £773k mainly supported by a profit of £451k from the disposal of other financial assets.
Administration expenses rose to £982k vs £872k yoy due to an increase in exploration and feasibility study activity on the Dundas ilmenite project in Greenland.
Currency gains of £39k vs a currency loss of £25k a year earlier also helped.
Net cash: Bluejay net cash £6.5m at end June vs £13m at end December. Bluejay has funded the cost of the PFS as well as work to prepare and export the 42,000t bulk sample to Canada resulting in significant expenses for the company.
The rate of cash expenditure should fall significantly as the company now moves to process and distribute high-grade concentrate samples for smelter tests from Canada.
The statement reminds us that Bluejay’s Dundas project which has probably is the highest grade of ilmenite project in the world also has a very substantial resource.
The team upgraded the resource to 117mt grading 6.1% ilmenite with a new offshore Exploration Target of between 330mt and 530mt grading 0.4-4.8% as determined by assaying ilmenite core samples.
Personal experience tells us that the grade in the near-shore environment appears to be very high grade, though it is less easy to see the grade in the submarine environment.
Critically, the Bluejay team have successfully exported a 42,000t bulk sample to Canada for further processing and testing at Rio Tinto’s RTIT Sorel-Tracey ilmenite smelter in Quebec.
Other processed samples will also be shipped to other ilmenite smelters following further concentration in Canada.
It is worth noting that the Dundas project lies within direct line of site of the US military airbase at Thule in Greenland. The Thule airbase is well placed logistically for Bluejay and may make the beaches near the airbase a sensitive location from a security perspective.
PFS: The new PFS was based on a the initial 67.1mt JORC resource grading 3.45% TiO2 (7.3% in-situ ilmenite) reporting:
440,000tpa production of ilmenite concentrate
32.8% IRR on base case pricing assumption
US$83.1m post-tax and post-finance NPV
US$153.1m of undiscounted net profit over an initial 9-year life of mine
IRR rises to to 34% on inclusion of the two years of indicated resources
NPV5 of US$130.7m post-tax, post-finance on the upside case
US$247.2m undiscounted net profit on upside case
Disko-Nuussuaq – the team continue to explore the Disko license area looking for a massive sulphide Nickel-Copper-Cobalt-Platinum Group Metals discovery.
The team are driven by the similarity of the geology with that seen in Norilsk Nickel District in Siberia though such a discovery remains elusive for now.
Ilmenite prices: remain stable at higher levels following a summer of gains rising to $200/t from $175/t in early May for 47-49% TiO2 cif China (MBFastmarkets).
Spot Ilmenite TiO2 50% Fe in China ports is quoted at $210/t rising from around $185/t last month (AsiaMetals via Bloomberg)
Higher prices appear to reflect no major new supply of feedstock or pigment coming on-line in an environment of static demand.
Prices moved higher in Q3 in the US on tighter supply and higher costs at ilmenite producers and processors. Q4 is typically soft in the northern hemisphere for demand for paint containing TiO2.
Conclusion: Bluejay continues to knock down obstacles to the development at Dundas. Loading the bulk sample in just a few days demonstrated how easy it is to ship from Dundas in the summer.
The next feasibility study should also show significant financial gain on a larger and probably higher grade ilmenite resource. Ilmenite prices are holding at higher levels and a successful smelter test at RTIT could result in a significant contract to supply the smelters at RTIT or an outright takeover of the mine.
*SP Angel acts as nomad and broker to Bluejay Mining
Bushveld Minerals* (LON:BMN) 21p, Mkt Cap £235m – Bushveld enjoys strong sales in first half despite pullback in vanadium prices
(Bushveld Minerals owns 74% of Vametco, 84% of Bushveld Energy in South Africa, 100% of Lemur Holdings, 9.5% of Afritin)
BUY – Valuation 80p (from 92p)
Bushveld Minerals report for the first half is significantly ahead of our expectations.
Revenue pulled back to $78m vs $83.7m yoy as vanadium prices collapsed in H1 vs the first half in 2018.
Sales were supported by premium prices for its ‘Nitrovan’ brand and a short lag in prices received.
Operating profit also pulled back to $37.5m vs $42.2m yoy on higher sales and distribution costs, admin expenses and other mine operating costs, eg better geological control.
EBITDA came in at $41m vs $42.8m yoy as Bushveld implemented plans to improve on costs
Post-tax-profit came in at $30.8m vs $28.5m yoy principally driven by a $5.9m ‘movement in earnout estimate’, a non-cash item relating to a deferred consideration to Yellow Dragon for the acquisition of Vametco which is based on the company’s estimated EBITDA in 2020 which is payable in 2021.
Investors should note that Bushveld completed its acquisition of Vametco from Evraz on 21 December 2017 for $11.1m consisting of $5.7m cash payments and consideration shares representing 6.25% of the enlarged issued share capital including a deferred payment to Yellow Dragon and a payment of following publication of 2020 Accounts calculated as 4.5 EBITDA x 5.91%. Yellow Dragon represents a local investor.
Net Cash generated from operating activities rise to $34.7m vs $21.4m yoy boosted by higher pre-tax profits and positive adjustments of $3.5m for depreciation and a $4.8m change in working capital.
Net cash was $66.1m at end June vs $42.1m at end-December.
EPS rose to $1.92/S from $1.57/s yoy
Currency translation differences resulted in a $3.7m gain vs a loss of $10.8m yoy
Vanchem acquisition: The net cash position indicates to us that Bushveld will be able to cover the Vanchem deal out of its cash reserves without the need to recourse to debt facilities. The deal is due to complete at end October.
Bushveld will complete the Vanchem acquisition from internal cash flow and facilities at end-October and will complete the acquisition without recourse to equity capital markets.
Ferrovanadium prices averaged $56.3/kg in H1 vs $65.5/kg a year earlier.
Prices now average $48.2/kg for the year to date indicating that earnings are likely to be just under half that seen in H1.
Production was 1,393mtV in H1 vs 1,360mtV yoy highlighting a return to more normal working and an end to the disruption seen in H2 last year.
Metal Sales: Vametco sold some 1,115mtV of Nitrovan indicating a price of $66.6mtV which is substantially higher than average price through the first half.
This is due in part to a lag in pricing which saw some H1 Nitrovan sales sold at higher prices seen at end 2018. Nitrovan is also a premium product which sells for a premium to other standard vanadium products due to its nitrogen content.
The AMCU union has now signed a three-year wage and benefit deal running to end-June 2022.
2,800-2,900mtV - for 2019 (Vametco only) We note the full year should include some production from Vanchem assuming the acquisition completes on time.
3,400mtV – 2020 including Vanchem
4,200mtV – run rate sometime in 2022.
Target for 8,400mtVpa with nameplate capacity of 10,000mtVpa as Vanchem restarts idled furnaces
Improvements in the mine and its scheduling, grade control into the kiln particularly in the reduction of silica creates better overall recoveries and costs and improves the operation in general.
Cash cost guidance $18.90-19.50kgV for 2019. First half costs have been revised to $19.20/mtV from $17.40/mtV. This is due to changes in the way the cost figures are being calculated.
The result of the increase in costs is to reduce the H1 EBITDA to $42.3m from $48.6m arising from intercompany costs which were incorrectly capitalized to inventory costs.
China rebar standards: better enforcement of the new standards is expected following a nationwide inspection of steel mills from July to September. This should significantly raise vanadium consumption. Niobium substitution is not expected to take much demand from vanadium at current prices.
Earnings revision: We are adjusting our assumed price for ferro-vanadium to $45/mtV from $50/mtV for the year. This causes our full-year forecasts for Sales to pull back to $133m from 147.8m and for our EBITDA forecast to reduce to $51.7m from $77.3m.
Valuation: our valuation for Bushveld is based on our Net Present Value of our forecast cash flows for Vametco, Vanchem and Bushveld Energy plus more modest valuations on Bushveld’s stakes in AfriTin, Lemur Resources, P-Q Iron & Titanium.
Our valuation pulls back to 80p from 92p previously principally on our reduction our assumption of the price for ferrovanadium to $45/kgV from $50/kgV plus some adjustments for costs and currency rates.
Bushveld Energy: Bushveld report the Vanadium Redox Flow Battery ‘VRFB’ installed at ESKOM, the South Africa state power utility is operating fully and the company is pushing ahead with planning for its own Solar Mini-Grid project at Vametco. Bushveld Energy is building a new vanadium electrolyte plant to supply VRFB batteries and is also looking to work on plans for the construction of VRFB batteries to support growing solar and wind projects in the region.
Conclusion: Bushveld performed well through the first half despite the pullback in the price of ferrovanadium. The business now looks well set to complete the Vanchem acquisition and to continue to grow production. We look forward to further news following the Vanchem acquisition. We also look forward to further news on the rollout of VRFB to the market.
Cora Gold* (LON:CORA) 7.6p, Mkt Cap £9.9m – Extension of the Zone B mineralisation confirmed
771m of AC and RC drilling completed at Zone B North, an extension of the 1,500m long Zone B prospect, confirmed continuity of gold oxide mineralisation.
Mineralisation has been traced over 1,060m strike length at Zone B North.
Surface exploration results along with artisanal workings point to a potential to extend the area by an additional 2,500m.
The programme tested for the presence of shallow oxide mineralisation (drill holes’ depth for up to 70m) and returned the following selected results:
21m at 3.13g/t from 27m including 1m at 38.94g/t.
24m at 1.8g/t from 51m including 8m at 3.53g/t.
22m at 1.48g/t from 9m including 1m at 11.67g/t.
Conclusion: The results represent the last series of data from the Q1/Q2 2019 drilling programme that confirm the extension of the Zone B mineralisation to a total length of 3,500m with a potential to increase to more than 5,000m.
The exploration programme grows the drill tested Sanankoro gold structure with the team planning to exploration works including drilling once the wet season is over.
*SP Angel acts as Nomad and Broker to Cora Gold
KEFI Minerals* (LON:KEFI) 0.9p, Mkt Cap £7.2m – Drilling starts at Hawiah
Drilling rig and team have been mobilised to the Hawiah project in Saudi Arabia.
Drilling will be carried to test the potential for gold mineralisation in the upper oxidised zone as well as base metal rich sulphide mineralisation in areas of strongest IP/Rho geophysical anomalies.
2,500m of scout drilling is planned for the initial stage focused on what is believed to be the most prospective part of the gossanous ridgeline at Hawiah.
Previous work showed the area is prospective in gold with abundant secondary copper showings while geophysics identified a strong and continuous anomaly under the ridge potentially indicating the presence of base-metal rich VMS mineralisation at 50-300m depths.
*SP Angel act as Nomad and Broker to KEFI Minerals
IronRidge Resources* (LON:IRR) 14.3p, Mkt cap £44 – Year-end results
SEE LINK FOR IRONRIDGE RESOURCES PDF NOTE
Ironridge report year end results to end June 2019.
The company report exploration and evaluation expenditure of A$24.7m an increase of A$8.3m yoy as the company continues to work on exploration in Ghana, Ivory Coast, Chad and Australia.
Cash; A$6.7m at end June
Share options; 29.75m new share options awarded
Performance rights as incentives; 12.15m awarded to Directors and management
Ghana: Ironridge continues to make progress at its Ewoyaa Lithium Project in Ghana where it is working up a new JORC resource
Ivory Coast: the acquisition of the Zaranou Gold Project in the Ivory Coast just 200km from Abidjan gives IronRidge some 400sqkm of highly prospective Birimian geology. The license is close to some large gold mines in Ghana.
Chad: IronRidge continue trenching and large-scale, high priority gold anomaly identification within the Dorothe Gold Project area.
Drilling for equity: IronRidge entered into a US$4m (50%) agreement with Geodrill to help share the cost of drilling its new targets, this is good news for cash-constrained miners and could potentially be very good for Geodrill.
The P&L statement reports: admin and consulting expenses of $3.0m for the year vs $2.8m yoy.
The company made $0.56m in unrealised of FOREX gains though this was largely offset by $0.45m of employee benefits.
The P&L also records a further $3.6m of share based payments to bring the total comprehensive loss for the year to $7.2m.
*SP Angel act as Nomad and broker to IronRidge Resources
Ormonde Mining* (LON:ORM) 3.2p, Mkt Cap £15.1m – Interim results and Progress report on Barruecopardo
Ormonde Mining reports an after-tax loss of €1.08m for the six months ending 30th June 2019 (2018 – loss on a restated basis €0.41m -previously €1.65m). The company explains that the increased loss reflects increased costs at its operating associate, Saloro, as a result of the ramp-up at the Barruecopardo tungsten mine.
The company reports a 30th June cash balance of €0.31m
Chairman, Mike Donoghue, said that “The first half of 2019 was a pivotal period for Ormonde and its 30% interest in the new Barruecopardo Tungsten Mine, as construction was completed and Saloro began to ramp-up mining operations. We expect Saloro to build further on this initial operational progress as mining advances, with access to the main orebody expected to be achieved during the early part of Q4.”
The company reports that at Barruecopardo it has achieved design throughput rates at the process plant and that mined ore grades are picking up after lower than expected levels initially.
The mining schedule has been adjusted to accelerate the removal of waste from the east wall cut-back in order to allow earlier access to the main, high-grade orebody which is now “expected in the early part of Q4 2019”.
“A €10m loan facility is being finalised between Saloro and Oaktree Capital Management to provide Saloro with additional liquidity support as it establishes mining operations on the main orebody”.
Ormonde Mining considers that recent upward movements in the price of the intermediate tungsten product, ammonium paratungstate (APT), are positive for the commodity as, following the auction of stocks from the Fanya Exchange in China there is “scarcity of available material in the spot market”.
Conclusion: The achievement of design throughput on the plant and news that an initial shipment of tungsten concentrates is expected “within the next weeks” underlines the progress at Barruecopardo where ore from the higher grade main orebody is expected to be accessible in the early part of Q4 2019.
*SP Angel acts as Broker to Ormonde Mining
Phoenix Copper* - formerly Phoenix Global Mining (PXC LN) 17.5p, Mkt Cap £7.5m – Board appointment
Phoenix Copper reports the appointment of its Chief Operating Officer, Ryan McDermott as a director with immediate effect.
He will continue in the COO role and is CEO of the company’s two Idaho registered subsidiary companies.
Ryan McDermott is a graduate in geology from the University of Idaho and his personal connections with the State and strong links with the local community in and around Mackay.
Welcoming the appointment, Chief Executive, Dennis Thomas explained that “Ryan has been instrumental in driving our Empire Mine copper - zinc - gold - silver project forward, and in establishing excellent relationships with the local people and regulatory authorities in Idaho”.
Conclusion: The appointment of a key leadership figure in the Empire project with strong community and professional connections within Idaho to Phoenix Copper’s board is welcome and well-deserved.
*SP Angel acts as Nomad and broker to Phoenix Copper
Strategic Minerals* (LON:SML) 0.85p, Mkt Cap £12.5m – R&D Grant received for Leigh Creek
Strategic Minerals reports the receipt of a previously announced A$575,000 Research & Development grant from the Australian Tax Office in relation to work at its Leigh Creek copper project in S Australia.
The company is building up to production at Leigh Creek in 2020 and has previously announced the sale of an initial consignment of copper cement product from the mine as it presses ahead to restart full scale operations.
Managing Director, John Peters confirmed that “The receipt confirms our expectation of cash flow from the Australian Taxation Office.”
*SP Angel act as Nomad and Broker to Strategic Minerals
TriStar Resources reports an interim pre-tax profit of £0.42m for the six months to 30th June 2019 (2018 – loss £1.16m).
Administration costs have been halved to £0.33m (2018 - £0.69m) and the company says that “In H2 2019 admin costs should fall further as H1 2019 benefitted from three months only of the reduced cost base.”
As previously reported, the 40% owned Oman antimony and gold production plant has now produced its first antimony metal, which at a grade of 99.11% is “approaching commercial grades of 99.65%” and has also produced its first dore gold bars.
The company reports that the plant has now been commissioned and that production is ramping up to achieve 50% of the planned annual capacity of 50,000oz of gold and 20,000tpa of antimony in the form of both metal and antimony trioxide, during Q1 2020 and with an expectation of full capacity for Q3 2020.
The planned production ramp-up is, however, subject to further debt financing required as a result of the protracted construction and commissioning phase and the need to resolve technical performance issues. “A number of interested parties have been identified and due diligence is currently ongoing. The primary aim of the fund raising is to ensure that SPMP will be fully funded through to being cash flow positive”.
The company also explains that “The conversion of the mezzanine debt, owned by Tri-Star, which was initially announced on 20 March 2019, has been agreed but not yet formally approved by the SPMP shareholders. It is expected to be finalised prior to, or at the same time as, the completion of the current funding round.”
“The amount owing to Tri-Star of $22,800,000 plus accrued interest at 1 January 2019 of $2,014,322, will be converted to a non-interest bearing equity loan, along with proportional conversions by our co-shareholders. The remaining mezzanine debt owned by Tri-Star of $2,000,000 plus accrued interest will remain payable on the original terms.”
Looking towards the future, the company says that “The market outlook for both gold and antimony remain positive, despite the currently depressed price of antimony, and with the optimisation of the SPMP project continuing, progress on supply and offtake agreements and financing, we are confident that our investment will generate significant future value for shareholders”.
Conclusion: TriStar’s 40% owned antimony/gold plant in Oman is now beginning to ramp up production following commissioning and aims, subject to securing debt funding, to reach 50% of its designed capacity during Q1 2020 with full capacity in Q3.
*SP Angel acts as Nomad to Tri-Star Resources. David Facey, a former partner at SP Angel is the CEO & CFO at Tri-Star Resources.
Vast Resources* (LON:VAST) 0.24p, Mkt Cap £23m – Annual results (Apr YE): focus on Romania and Zimbabwe as funding completion nears
The Company released annual results for 13 months through to April 2019.
The period marked the repositioning of the Group in favour of base metal operations in Romania and alluvial diamonds mining business in Zimbabwe.
The Group divested its 25.01% interest in Zimbabwean gold operations allowing Vast to deconsolidate assets and liabilities relating to producing Pickstone Peerless Gold Mine and associated assets (principally the Eureka Gold Mine).
Following the transaction, the Company reduced borrowings by $21.4m to $5.5m as of reporting period that includes $4.0m owed to Mercuria under the drawn upon Tranche A funding facility as well as $1.0m owed to Sub-Sahara Goldia Investments.
The team is working towards closing the re-financing package after Mercuria decided to pull back on its commitment to provide Tranche B funding to the tune of $5.5m; new facility should cover repayment of Mercuria loan as well as provide development capital for its operations in Romania and Zimbabwe.
The Company had $0.6m in cash as of Apr/19, but has since then raised $1.9m in equity.
Reporting on continuing operations, the Company recorded $3.4m in revenues reflecting Manaila polymetallic mine (MPM) copper and zinc concentrate sales proceeds.
MPM produced 1.7kt and 0.2kt of copper and zinc concentrate from April 2018 and December 2018 before operations were placed on care and maintenance pending the optimisation programme expected to be implemented once a second funding round is completed at a later stage.
PAT from continuing operations totalled -$10.0m.
Operating cash flow (excluding discontinued activities) came in at -$7.9m reflecting loss making Manaila operations’ contribution as well as a significant portion of expenses related to developing and supporting other mining assets allowing the Group to quickly start production once funding is secured.
Investing cash flow (excluding discontinued activities) amounted to -$1.3m during the period mainly relating to mining assets in Romania.
At Baita, the team is progressing with preparatory works ahead of the reopening of the mine including installation of new pumps, securing the power supply, preparing the flotation circuit and restoration of underground workings among other things; the team highlighted that the finalisation of works is dependent on completion of funding with the Company expecting to reach future profitable production during the current financial year.
In Zimbabwe, Vast completed due diligence on the Heritage diamond concession where it expects to get full right to mine shortly kickstarting the development programme.
Conclusion: Released accounts highlight the new focus of the Group following the divestment of the interest in gold assets in Zimbabwe. The team is readying for the reopening of the brownfield Baita Plai polymetallic mine while in final stages of securing the mining license and agreeing the ownership structure for the Heritage diamond concessions in Zimbabwe. The Company is planning to close the funding package shortly releasing the capital that would allow the management to deliver on the guided production plans.
*SP Angel acts as Broker to Vast Resources