Today's Market View - Anglo Asian Mining, Chaarat Gold, Solgold and more...

SP Angel . Morning View . Tuesday 15 10 19China factory deflation worsens on slower domestic and overseas demandCLICK FOR PDFMiFID II exempt information – see disclaimer belowAnglo Asian Mining* (AAZ LN)

3M - Today's Market View - Anglo Asian Mining, Chaarat Gold, Solgold and more...

SP Angel . Morning View . Tuesday 15 10 19

China factory deflation worsens on slower domestic and overseas demand


MiFID II exempt information – see disclaimer below

Anglo Asian Mining* (LON:AAZ) – Robust Q3 update: net cash balance +$8.5m during the period

Chaarat Gold* (LON:CGH) – New drilling expands the scale of the Tulkubash gold project

Kavango Resources (LON:KAV) – Drilling starts on the Kalahari Suture Zone in Botswana

Solgold* (LON:SOLG) – Ecuador government reaches deal with indigenous groups to end violent protests and repeals law to end fuel subsidies

Syrah Resources (ASX:SYR) – AustralianSuper A$56m convertible notice issued

Talga Resources* (ASX:TLG) – Talga to develop a graphite-based battery anode for solid state batteries

Dow Jones Industrials -0.11% at 26,787

Nikkei 225 +1.87% at 22,207

HK Hang Seng -0.07% at 26,504

Shanghai Composite -0.56% at 2,991

FTSE 350 Mining -0.90% at17,558

AIM Basic Resources +0.39% at 2,127


US – Equity futures are trading higher as markets brace for the start of Q3 earnings season.

China – China’s factory deflation worsened in September amid slowing domestic as well as overseas demand.

  • The economy is facing rising downward pressures and economic difficulties are prominent, Premier Li Keqiang said during a meeting with local government leaders.
  • Premier called for the proper use of counter-cyclical tools to support growth.
  • Consumer inflation climbed 3%yoy last month driven mostly by a surge in food prices (+11.2%) which were in turn led by the more than 69% jump in pork prices on the back of a spreading African swine fever..
  • CPI excluding food and energy remained stable at 1.5%.
  • PPI (%yoy): -1.2 v -0.8 in August and -1.2 forecast.
  • CPI (%yoy): 3.0 v 2.8 in August and 2.9 forecast.

Germany – Economic sentiment remained dire in October, according to the latest ZEW Institute data.

  • ZEW Survey Current Situation: -25.3 v -19.9 in September and -23.6 forecast.
  • ZEW Survey Expectations: -22.8 v -22.5 in September and -26.4 forecast.

US/EU – The Trump administration import tariffs on $7.54bn worth of shipments from the EU will come into effect this Friday.

  • The WTO gave the US permission to go ahead with the trade sanctions on Monday after ruling that Airbus received illegal subsidies.
  • Tariffs are mostly directed to towards Britain, France, Germany and Spain, members of the consortium that makes Airbus airplanes, although other EU members are to be affected as well.
  • While the US is able to apply 100% tariffs on affected products, “at this time” the Trump administration said it is limiting duties to 10% on large civil aircraft and 25% on agricultural and other products.
  • EU counterparties warned the US over potential retaliation.

UK – The pound is strong this morning trading at 1.266 against the US$ on improved prospects of reaching a last minute deal.

  • Michel Barnier said a Brexit deal “is still possible this week”, with the UK Government claiming a “great deal” of progress has been achieved.
  • EU ministers are meeting in Luxembourg for the last preparatory meeting before the Thursday-Friday summit of the bloc’s leaders in Brussels.
  • The UK was due to make fresh proposals on Tuesday in an attempt to break the Brexit deadlock.

Turkey – The lira is trading close to its lowest since mid-2019 as Syrian government troops are moving closer to the Turkish border after striking a deal with Kurdish fighters.

  • Erdogan argued the offensive is necessary to push back Kurdish militants and resettle refugees.
  • Meanwhile, the US administration called for “an immediate cease-fire” in Syria on Monday while announcing new sanctions in response to the Turkish advancement in northern Syria.
  • However, the sanctions imposed late yesterday fell short of what was expected by US lawmakers of both parties.
  • Trump ordered to sanction three members of Turkey’s cabinet and increase tariffs on steel imports from the country.

Hong Kong – Carrie Lam is due to give her annual Policy Address on Wednesday with reports suggesting she may focus on land and housing reforms in an effort to calm protests down.

  • Protests over a now-withdrawn extradition bill have evolved into calls for greater democracy and more housing in one of the world’s most expensive property markets.


US$1.1027/eur vs 1.1030/eur last week.  Yen 108.37/$ vs 108.26/$.  SAr 14.797/$ vs 14.808/$.  $1.266/gbp vs $1.257/gbp.  0.677/aud vs 0.677/aud.  CNY 7.079/$ vs 7.060/$.

Commodity News

Gold US$1,493/oz vs US$1,490/oz last week

 Gold ETFs 81.9moz vs US$81.9moz last week

Platinum US$893/oz vs US$892/oz last week

Palladium US$1,723/oz vs US$1,703/oz last week - Palladium hits record high once again (Reuters)

  • The auto-catalyst metal still in short-supply hit a record high of $1,720.97 earlier yesterday.

Silver US$17.65/oz vs US$17.58/oz last week


Base metals:   

Copper US$ 5,791/t vs US$5,782/t last week

Aluminium US$ 1,717/t vs US$1,722/t last week

Nickel US$ 16,850/t vs US$17,195/t last week

Zinc US$ 2,428/t vs US$2,402/t last week

Lead US$ 2,148/t vs US$2,137/t last week

Tin US$ 16,600/t vs US$16,580/t last week



Oil US$59.2/bbl vs US$60.0/bbl last week

Natural Gas US$2.284/mmbtu vs US$2.278/mmbtu last week

Uranium US$24.95/lb vs US$24.90/lb last week



Iron ore 62% Fe spot (cfr Tianjin) US$86.4/t vs US$87.8/t - Vale iron ore production jumps compared to last quarter (Reuters)

  • Vale reported a 35.4% increase in output compared to last quarter, with total output for the quarter reaching 86.7mt.
  • Operations resumed at Brucutu, and part of its Vargem Grande complex.
  • Chinese iron ore futures hit a two-week low as a result of increased production figures- the most traded iron ore contract was down 1.2% at US$91.05/t after falling as much as 3.3% earlier in the session.
  •  Despite the jump compared to last quarter, output was still down 17.4% from a year ago (mining.com).
  • Vale have slowly began resuming production following the deadly dam burst in January.


Chinese steel rebar 25mm US$563.1/t vs US$566.5/t

Thermal coal (1st year forward cif ARA) US$70.0/t vs US$69.0/t

Coking coal futures Dalian Exchange US$183.6/t vs US$183.9/t



Cobalt LME 3m US$36,000/t vs US$36,000/t

NdPr Rare Earth Oxide (China) US$44,430/t vs US$44,942/t

Lithium carbonate 99% (China) US$6,993/t vs US$7,007/t

Ferro Vanadium 80% FOB (China) US$37.3/kg vs US$37.5/kg

Antimony Trioxide 99.5% EU (China) US$5.1/kg vs US$5.1/kg

Tungsten APT European US$225-245/mtu vs US$205-215/mtu


Battery News

Renewable energy generates more electricity than fossil fuels for first time in UK (Guardian)

  • The third quarter of 2019 saw UK wind, solar, biomass and hydro generate more electricity combined than from power stations powered by fossil fuels.
  • Renewables generated an estimated total of 29.5TWh compared with just 29.1TWh from fossil fuels (CarbonBrief).
  • Ten times more electricity was generated by renewables in the last quarter compared to the start of this decade in the first quarter of 2010.
  • The steep fall in the cost of wind and solar power technologies over recent years has encouraged the development of renewables.
  • Out of the 29.5TWh from renewable sources of energy last quarter:
  1. 14.6TWh came from wind
  2. 8.8TWh came from biomass
  3. 4.7TWh came from solar
  4. 1.4TWh came from hydropower

 British car manufacturer Morris Commercial to unveil new J-type electric van

  • The battery electric vehicle is a 21st century re-imagining of the iconic Morris J-type van.
  • According to the company, the JE  will have a “state-of-the-art” electric powertrain that uses a lithium-ion battery pack.
  • A fully operational and road-tested engineering prototype is to be unveiled later in the autumn.

 Company News

Anglo Asian Mining* (LON:AAZ) 134p, Mkt Cap £153m – Robust Q3 update: net cash balance +$8.5m during the period

  • Q3/19 production totalled 20.2koz GEO (Q2/19: 19.6koz; Q3/18: 24.4koz).
  • Gold production breakdown:
  • 16.6koz in gold dore comprised of 12.8koz from the agitation leaching plant (Q2/19: 12.8koz; Q3/18: 13.9koz) and 3.8koz from the heap leaching circuit (Q2/19: 3.3koz; Q3/18: 5.0koz).
  • 1.2koz contained in flotation copper concentrate (Q2/19: 1.1koz; Q3/18: 2.4koz).
  • Q3/19 copper production came in at 521t (Q2/19: 447t; Q3/18: 470t) most of which or 450t came from the flotation circuit with the balance supplied by the SART circuit.
  • YTD GEO production amounted to 60.1koz (YTD Q3/18: 61.8koz) including 52.2koz gold (YTD Q3/18: 54.6koz) and 1.5kt copper (YTD Q3/18: 1.1kt).
  • The Company forecasts for the lower end of the previously guided 82-86koz GEO range for the annual production target reflecting lower copper to gold conversion ratios on the back of strong performance in gold relative to copper prices.
  • FY19 interim dividend of $0.035 per share or ~$4.0m will be paid to shareholders on 31 October 2019 (shares went ex-dividend on 3 October).
  • Net cash balance climbed to $19.1m as Q3/19 end, up $3.9m on the previous quarter and after accounting for a $4.6m dividend payment (in regards of FY18).
  • This includes $22.5m in cash and $3.4m in outstanding debt.

Conclusion: Another strong quarter with production on target for the 82-86koz GEO in FY19, although, on the lower end of the range given lower Cu/Au conversion factor following strong run in gold prices.

Net cash balance climbed +$8.5m (before $4.6m paid in dividends) or +$3.9m (post dividends) during the quarter.

With gold price continuing to be well supported by increased nervousness regarding the strength of future economic outlook and geopolitical tensions, Anglo Asian revenues continuing to be >85% exposed to the precious metal’s prices and low operating costs status bodes all well for the Company’s future free cash flow generation.

*SP Angel act as Nomad and broker to Anglo Asian Mining


Chaarat Gold* (LON:CGH) 37p, Mkt Cap £165m – New drilling expands the scale of the Tulkubash gold project

  • 8,100m of drilling completed since the last exploration update in the end of August.
  • Assays from most drilling remain pending, but results received to date returned wide intersections of close to surface gold mineralisation including:
  • DH19T528: 15.0 metres @ 1.00 g/t Au starting from 19.5 metres
  • DH19T535: 28.5 metres @ 0.99 g/t Au starting from 6.0 metres
  • DH19T536: 7.5 metres @ 1.75 g/t Au starting from 16.5 metres
  • DH19T544: 6.0 metres @ 1.59 g/t Au starting from 7.5 metres and 4.5 metres @ 3.23 g/t Au starting from 37.5 metres
  • Drilling since the last August update focused on northeast strike extension at Shir Canyon area where road cut sampling previously identified anomalous gold at surface.
  • Drilling and surface mapping in Shir Canyon have now identified four distinct gold lodes extending the strike of drilled Tulkubash mineralisation by around 960m with all four lodes remaining open to the northeast.
  • The focus of the current programme is to extend the life of mine at Tulkubash to at least 15 years through a multi-year drilling programme proving up shallow mineralisation running along strike to the northeast.
  • Updated MRE is expected before YE19 followed by updated mineral reserves and economic model in Q1/20.
  • The Company is on course to finish five remaining holes for the 2019 season bringing the total drilling for the year to 125 holes and ~20,000m at Tulkubash.
  • The team has also included an initial 1,000m drilling programme at Karator and Ishakuldy areas, potential northeast extensions of the current resource area and located 1.5km and 5km along strike, respectively.

Conclusion: Drilling at Tulkubash continues to return wide intersection of close to surface gold mineralisation pointing to the potential to expand the current mineral resource along strike.

The current Tulkubash resource (1,657koz at 1.16g/t) is located within ~4km while mapping and surface exploration data indicate that the zone of favourable geology associated with Tulkubash gold mineralisation extends northeast for at least 15km.

As such, the potential to grow the resource base towards the team’s target of at least 15y mine life is substantial.

*SP Angel acts as Broker to Chaarat Gold


Kavango Resources (LON:KAV) 2.35p, Mkt Cap £3.8m – Drilling starts on the Kalahari Suture Zone in Botswana

  • Kavango report the start of drilling on its newly defined targets on the Kalahari Suture Zone in Botwsana.
  • The company are looking for a massive Norilsk-style magmatic sulphide ore body beneath the Kalahari sand which makes exploration and drilling more difficult than in many other settings.
  • The three-hole ~1,000m drill program is looking for sulphide mineralization associated with gabbroic sills intruded into the Karoo sediments about 180 million years ago.
  • The theory is that these may contain copper and nickel sulphide mineralisation similar to that discovered at Norilsk in Russia and Voisey Bay in Canada.
  • The first target is a 10km x 6km magnetic anomaly, which is interpreted as a potential magma chamber.
  • The other two targets relate to significant linear magnetic and conductive structures.
  • Drilling is to be done by Reverse Circulation to drill through the relatively unconsolidated Karoo cover for up to the first 200m and then by Diamond Drilling thereafter. Water will be trucked in from a local town.

Conclusion: We look forward to early indications of sulphide mineralisation relatively soon.


Solgold* (LON:SOLG) 18.68p, Mkt cap £245m – Ecuador government reaches deal with indigenous groups to end violent protests and repeals law to end fuel subsidies

  • Solgold report the Government or Ecuador has reached agreement with indigenous groups for an immediate end to the recent protests in Ecuador in a deal brokered by the UN and the Catholic Church.
  • The government has agreed to restore fuel subsidies and has committed to create a commission with indigenous groups to look at cutting government costs and end the abuse of fuel subsidies to cut the nation’s financial deficit.
  • Solgold reports its’ operations remain unaffected by the protests.
  • Management are due to report an updated Mineral Resource Estimate for the Alpala Deposit in Q4 and a Pre-Feasibility Study in Q1 2020.
  • SolGold currently employs around 786 Ecuadorean nationals on its exploration projects.

Conclusion:  The Ecuadorean government is looking for new ways to balance its budget deficit. The ending of fuel subsidies sparked violent protests forcing the government to vacate its parliament and move to another city.

While the restoration of fuel subsidies may end the violence, the introduction of other cost cuts may spark further protest.

Ecuador is struggling to reform under the ruling ‘PAIS Alliance’ party which describes itself as a center-left social democratic party, or to put another way a form of ‘socialist workers’ party run by President Lenín Moreno.

The nation and the PAIS Alliance were heavily influenced by Chavez in Venezuela with the previous President of the PAIS Alliance party, Rafael Correa, seen as Venezuela’s most radical leftist ally.

Given the Socialist leaning of the PAIS Alliance and the recent violence we suspect the Ecuador government is not going to fight hard to cut costs and subsidies.

Ecuador’s next course of action may therefore be to generate further income from the export of oil and other commodities.

*SP Angel act as Financial Advisor and broker to Solgold


Syrah Resources (ASX:SYR) - A$0.455, Mkt cap A$188m – AustralianSuper A$56m convertible notice issued

  • Syrah Resources reports it has delivered the issue notice for a convertible note to AustralianSuper Pty Ltd for the full face value of A$55.8m (~US$37.8m).
  • Proceeds from the convertible note are expected to be received on 28 October 2019.
  • Cash forecast were forecast in mid-September to be around US$60m.
  • The company recently reported a decisive production cut for the fourth quarter along with cost cutting at the Balma graphite mine in Mozambique.
  • Production: Syrah now plans to limit sales to 45,000t in Q3. The Balma mine can produce ~240ktpa at full tilt.
  • Costs: Management are pro-actively seeking further structural cost cutting and are to conduct a strategic and operational review for 2020.
  • China imports: China imported 105,000t of graphite in the first six months of 2019 with 75% coming from Syrah’s Balma mine mainly for battery manufacturing..
  • Prices: Spot natural flake graphite prices fell suddenly and materially in China across all flake sizes impacting existing contract price re-negotiations and contract renewal discussions.
  • Syrah’s Q3 average weighted average price was expected to come in at US$400/t versus US$457/t in Q2.
  • Graphite prices for 95% flake -100 mesh fob China rest at $540/t having fallen from $610/t in May largely due to the influx of new material from Syrah (FastmarketsMB).
  • Higher quality graphite which is 99.95%, C. 15 microns fob China trades at ~$2,550/t vs $2,850/t in June (FastmarketsMB).
  • Impairments: Syrah estimated a non-cash post tax impairment of property, plant and equipment and mining assets of approximately US$60-US$70m along with an inventory write down of approximately US$5m.
  • The company may still have around 90,000t of inventory to work through indicating that the mine could go to care & maintenance for some time.

Conclusion:  Syrah has drawn in its cash resources as it prepares to batten down the hatches for a substantial cut in production.

Thing is, other graphite producers tell us that demand remains relatively good for graphite material from Madagascar and elsewhere.

While comparing graphite flake material from Madagascar with that from Balma in Mozambique is a bit like comparing apples with pears, we are wary that Syrah may have also strained relations with its customers due to oversupply and potentially product quality.  

Syrah’s $400/t expected price for the Q3 just past suggests to us significant discounting of the 95% flake price or problems with product quality or both.

*SP Angel act for graphite manufacturer Talga Resources and graphite project company, Walkabout Resources


Talga Resources* (ASX:TLG) A$0.545, Mkt Cap A$121m – Talga to develop a graphite-based battery anode for solid state batteries

Valuation: A$1.80

  • Talga Resources reports a maiden JORC Mineral Resource Estimate for the Niska graphite deposits, part of it’s Vittangi Graphite Project in the north of Sweden.
  • Niska North and South deposits are some 1-2km northeast and along strike of the current Nunasvaara graphite deposit.
  • Niska:  Maiden JORC indicated resource is 4.6Mt grading 25.8% Cg (graphitic carbon)  using a 10% cut-off grade
  • Graphite mineralisation starts within 4m of surface with the deposits open at depth and along strike
  • Nunasvaara JORC resource of 12.3Mt grading 25.5% graphite, previously reported.
  • The new resource brings Talga’s total JORC resource inventory in Sweden to 52.7mt containing 9.3mt graphite
  • Talga will start a PEA (preliminary economic study) at Niska in  November to start the permitting process
  • The host lithology contains sub-vertical continuous units of very fine-grained dark grey to black graphite rock containing between 10-50% graphitic carbon.
  • Valuation: Our A$1.80/share valuation incorporates a 40% risked valuation of the Vittangi Graphite project to account for its early-phase of development and potentially protracted market growth.
  • We previously estimated the value of the Vittangi Graphite project at a post-tax NPV8 of US$767m with strong 51.0% IRR based on the previous resource.
  • See link for further info: http://www.talgaresources.com/irm/content/asx-announcements.aspx?RID=8&RedirectCount=1
  • Talga previously reported a PFS pre-tax IRR 55% on a valuation of US$1,056m pre-tax NPV8 of for the Vittangi Graphite project.
  • This was based on an early Ore Reserve estimate of 1.9mt @ 23.5% Cg (18% resource) from an indicated mineral resource of 10.7mt grading 25.7% Cg.
  • Stage 1:  CAPEX est. US$27m for starting 2020 for sales of ~5ktpa of Talnode-C over two years, based on the trail mining of approx. 25ktpa ore processed via toll-processing and early stage refining.
  • Stage 2:  dependent on obtaining the exploitation concession, intends to expand to full-scale production of approx. 19ktpa Talnode-C, with commissioning proposed for 2023.
  • Annual estimated revenue targets US$210m from Stage 2 steady-state production of 19,000tpa Talnode-C via integrated concentrator and refinery in north Sweden.

Conclusion – Today’s JORC resource at Niska is 2.4 times the size of the 1.9mt ore reserve estimate used for the valuation indicating greater value to be gained from an upgraded PFS.

Better still the 25.8% grade is higher than previous grades. Vittangi is a world-class graphite deposit in our view with probably the highest known grades for this scale of deposit in the world.

Talga is working closely with battery manufacturers on the preparation and sale of its proprietary Talnode® graphite anode products for the battery manufacture.

The combination of very simple mining (quarrying) process along with the sale of a very special quality anode product could give Talga a commanding lead over many other graphite producers and lend the company a premium rating for its patented anode technology.

*SP Angel acts as UK broker to Talga Resources. An SP Angel analyst has visited the leading battery R&D institution WMG partnering with Talga.



John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474



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.


Sources of commodity prices

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel


Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt


Oil Brent


Natural Gas, Uranium, Iron Ore


Thermal Coal

Bloomberg OTC Composite

Coking Coal




Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal


Metal Bulletin


Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...


Litigation Capital Management reports 'tremendous growth in overall...

Litigation Capital Management Limited’s (LON:LIT) Patrick Moloney and Nick Rowles-Davies talk to Proactive London about their 'overall good results in a disruptive year'. Some of the operational highlights include the launch of the asset management division following close of US$150m Global...

5 hours, 23 minutes ago

17 min read