SP Angel . Morning View . Wednesday 23 10 19
Gold climbs ahead of Diwali festival as tension builds on Iran and Israel
MiFID II exempt information – see disclaimer below
Bushveld Minerals* (LON:BMN) BUY – Valuation 80p – Renegotiation of Vanchem acquisition cuts $14.5m off purchase price and defers $23.5m through issuance of convertible loan notes
Centamin (LON:CEY) – Q3 Production and exploration update
Firestone Diamonds (LON:FDI) –Q1 production, operational and market update
KEFI Minerals* (LON:KEFI) – Massive sulphide mineralisation intersected at Hawiah, Saudi Arabia
Vast Resources* (LON:VAST) – Update
Sirius Minerals (LON:SXX) – Sirius relegated to the SmallCap index as it falls out of FTSE 250
Solgold* (LON:SOLG) – Exploration identifies large copper gold target at Celen
US - Elon Musk sends tweet via his Starlink satellite-internet
- Starlink has lunched 60 Starlink satellites into orbit with approval to send another 12,000 Starlink satellites to follow.
- Musk has also applied for permission to send another 30,000 Starlink satellites into orbit to expand coverage of his planned global Starlink-internet service.
- Musk’s tweet via the first active Starlink satellite proves the orbiting network works.
- The development of a truly global internet service is economically equivalent to building a significant amount of transport infrastructure.
- While remote regions often have mobile phone access many do not have internet coverage.
- Musk’s system could truly transform global commerce and add significantly to future global growth
- It may be one small step for man, but it’s going to be one giant paycheque for Musk!
Dow Jones Industrials -0.15% at 26,788
Nikkei 225 +0.34% at 22,625
HK Hang Seng -0.82% at 26,567
Shanghai Composite -0.43% at 2,942
FTSE 350 Mining +1.39% at 17,739
AIM Basic Resources -0.30% at 2,132
Economics
US – The US$ is broadly unchanged ahead of the Federal Reserve policy meeting next week when policymakers are expected to take rates down by another 25bp.
UK – Lawmakers approved the second reading of the Brexit deal agreement (329 to 299) but refused to the accelerated implementation schedule (322 to 308).
- The latter means PM needs to seek extension to the 31 October deadline.
- The length of the delay will suggest the next likely course of action with a longer one leaving time for a potential election and for opponents of the Brexit for another referendum while a shorter one would increase pressure on parliament to approve the deal, Reuters reports.
- The government is now waiting for the EU to respond to a request to delay the October 31 Brexit date that PM reluctantly sent to brussels on Saturday.
- Earlier, Irish PM Leo Varadkar welcomed the vote in favour of the Johnson’s legislation.
- The pound is little changed against the € this morning trading at 1.1562 holding onto gains recorded in the run up to the legislation vote.
- UK redundancies rise to highest level since Dec 2016 at 115,000 in 3 months to August.
Hong Kong – The planned extradition legislation was officially withdrawn.
- This marks the start of the process of calming down the streets, but is unlikely to end protests altogether.
- Demonstrators argued the move meets just one of five demands of pro-democracy protesters.
- Other four demands included protests not to be characterised as a “riot”, amnesty for arrested protesters, an independent inquiry into alleged police brutality and complete universal suffrage.
- Meanwhile, China is considering to replace Hong Kong leader Carrie Lam with an “interim” chief executive, according to FT.
- Should Chinese President Xi decide to go ahead and replace her, new chief executive will be appointed by March and cover the remainder of the term that ends in 2022.
South Africa – Rand is off 0.65% this morning as inflation slowed in to 4.1%yoy in September giving the central bank more room to ease.
- Inflation remained at or below the 4.5% midpoint of the central bank’s target band of 3-6% every month since December.
Chief security officer shot dead at DRD gold mine in South Africa (businesslive)
- Bart Coetzee was fatally wounded as an armed gang gained entry to DRDGold’s Ergo plant at Brakpan, 50km east of Johannesburg on Monday night.
- The gang escaped with a quantity of calcite concentrate, estimated to contain up to 17kg of gold (mining journal).
Chile – Codelco workers join general strike despite President Piñera announcing welfare package (Reuters)
- Codelco workers will join the general strike planned for Wednesday along with other sectors including teachers and public employees.
- The Copper Workers Federation said various unions would meet at the end of the week to analyse the situation again and consider future action.
- Piñera vowed to increase the basic pension by 20% and proposed a state paid medical treatment law (BBC).
- He also promised to increase the minimum wage and introduce a new higher tax bracket, along with cutting electricity rates.
- At least 15 people have died in protests that started over a hike in public transport costs.
Currencies
US$1.1120/eur vs 1.1135/eur yesterday. Yen 108.37/$ vs 108.51/$. SAr 14.681/$ vs 14.736/$. $1.285/gbp vs $1.293/gbp. 0.684/aud vs 0.686/aud. CNY 7.075/$ vs 7.083/$.
Commodity News
Gold US$1,495/oz vs US$1,489/oz yesterday – Gold prices could rise further if reports on Iran preparing for war with Israel are confirmed
Diwali festival gold demand expected to be lower than previous years (ndtv.com)
- The sharp rise in gold prices may weaken Indian gold demand, with the Diwali festival beginning on Friday.
- Gold sales usually hit 40t on the first day of the festival every year, however Indian bullion experts believe that sales could decrease 50% this year.
- Gold imports in the country have already fallen due to the increased prices and increase in the import duty.
- India imported 26t of gold in September, down from 82t a year ago.
- Gold was around $1,500oz at the beginning of this month, compared to $1,242oz at the beginning of October 2018.
- Gold ETFs 82.0moz vs US$82.2moz yesterday
Platinum US$895/oz vs US$888/oz yesterday
Palladium US$1,752/oz vs US$1,763/oz yesterday
Silver US$17.60/oz vs US$17.65/oz yesterday
Base metals:
Copper US$ 5,813/t vs US$5,837/t yesterday
Aluminium US$ 1,719/t vs US$1,725/t yesterday
Nickel US$ 16,305/t vs US$16,095/t yesterday
Zinc US$ 2,483/t vs US$2,483/t yesterday
Lead US$ 2,218/t vs US$2,220/t yesterday
Tin US$ 16,845/t vs US$16,820/t yesterday
Energy:
M&A activity builds momentum across energy sector
- Given the depressed economic environment, we are seeing a number of listed companies coming to the conclusion that it is cheaper to purchase reserves through the stock market rather than adding through the drill-bit.
- The past 12 months has seen the acquisition of Faroe Petroleum (FPM.L) by DNO (DNO ASA); a £380m bid for Eland Oil & Gas (ELA.L) by Seplat Petroleum (SEPL.L); and Amerisur Resources (AMER.L) currently engaged in a competitive bid.
- Elsewhere, we note the announcement that Singapore’s Temasek Holdings plans to take control of Keppel Corp. for c.US$3bn and undertake a review of the oil-rig builder’s business
- The state-backed investor, which currently owns 20% of Keppel, offered to buy an additional 30.6% stake at S$7.35 a share, a 26% premium to the market’s valuation of the company.
- Aramco’s proposed IPO is another good barometer for sector sentiment in our view. Days before a widely expected official approval for what would be the world’s largest IPO ever, Saudi Arabia has yet again delayed the much-hyped listing by at least several weeks, with international investors seemingly not buying the Saudi insistence that the biggest oil company in the world is worth US$2tn.
Oil US$59.5/bbl vs US$58.9/bbl yesterday - The U.S. oil rig count fell once again in the latest reporting week, according to Baker Hughes data
- The total oil and gas rig count now stands at 851, or 216 down from this time last year
- The total number of active oil rigs in the United States increased by 1 last week, reaching 713—this is down by 160 rigs yoy
- U.S. crude futures nudge up 0.2% at $54.1/bbl on the New York Mercantile Exchange, underlining uncertainties in the global economy, and tracking current trading trends
- Longer term, US-China trade tensions and the outlook for Fed policy remain the single largest drivers of oil prices in our view
Natural Gas US$2.263/mmbtu vs US$2.251/mmbtu yesterday - Natural gas futures are inching higher early Tuesday after tumbling the previous session.
- There are currently no storms in the Gulf of Mexico, and nothing is shown as a tropical disturbance in the Atlantic
- Yesterday, NatGasWeather reported that natural gas production hit an all-time high of 95Bcf/d over the weekend,
- In addition, the EIA reported a 104Bcf injection into natural gas storage inventories for the week-ending October 11, marking the third time in four weeks that stocks have risen by at least 100Bcf.
Uranium US$24.60/lb vs US$24.70/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$84.3/t vs US$82.7/t
Chinese steel rebar 25mm US$555.2/t vs US$553.6/t
Thermal coal (1st year forward cif ARA) US$66.6/t vs US$67.5/t
Coking coal futures Dalian Exchange US$183.2/t vs US$180.4/t
Other:
Cobalt LME 3m US$36,000/t vs US$36,000/t - Cobalt Q3 market update – closing of world’s largest mine causes price rebound (investingnews.com)
- In August, Glencore announced that it would shut the Mutanda mine in the DRC as it is no longer economically viable.
- Mutanda is the world’s largest cobalt mine, with production at 27,000t last year – a fifth of global supply.
- Glencore is under investigation by the US Department of Justice over its business practices in the DRC (FT).
- Fastmarkets raised it’s forecast from US$12.10/lb to US$14.60/lb following Glencore’s news.
- According to Benchmark Mineral Intelligence, the price of cobalt hydroxide rose nearly 40% between August and September.
- Earlier this month, Glencore extended an agreement with Chinese company GEM in which it will sell a minimum of 61,000t between 2020 and 2024 (miningmx.com).
NdPr Rare Earth Oxide (China) US$43,607/t vs US$43,557/t
Lithium carbonate 99% (China) US$6,997/t vs US$6,989/t
Ferro Vanadium 80% FOB (China) US$36.3/kg vs US$36.5/kg
Antimony Trioxide 99.5% EU (China) US$5.3/kg vs US$5.2/kg
Tungsten APT European US$225-245/mtu vs US$205-215/mtu
Battery News
Rio Tinto to begin lithium mining study at its California Boron mine (mining.com)
- Rio claim they have found a potentially large source of lithium while looking for gold in piles of waste rock.
- If the company can process large amounts of the rock, it could become the largest producer of lithium in the US.
- The company has set aside US$10m to build a pilot plant to process the lithium into a suitable form for batteries.
- If the project is deemed viable, $50m will be invested on a new plant capable of producing 5,000t of lithium carbonate per year – enough for 15,000 Tesla Model S batteries (FT)
UK neighbourhood will be the first entirely powered by solar energy (electrek)
- Ssassy Property and Greencore are building 25 houses in Abingdon, Oxfordshire which will be entirely powered by solar energy.
- Water will be heated in the houses by a low carbon heat pump, and the building has an environmentally friendly timber frame.
- The houses also have facilities for future installation of an EV charging point.
Company News
Bushveld Minerals* (LON:BMN) 27p, Mkt Cap £300m – Renegotiation of Vanchem acquisition cuts $14.5m off purchase price and defers $23.5m through issuance of convertible loan notes
(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 reports it has cut the cost of buying the Vanchem process plant to US$53.5m from US$68m previously.
- In the revised deal just $30m is paid up front in cash with the $23.5m balance paid through the issue of unsecured convertible loan notes at 5% interest in Bushveld Minerals.
- The new terms take account of the decline in vanadium prices since the Vanchem deal was first negotiated while allowing the seller to maintain an element of upside potential through the convertible note.
- We note the seller could also enjoy the benefits of upside revaluation from Bushveld Energy if the use of Vanadium Redox Flow Batteries for grid power support takes off in South Africa.
- Bushveld reaffirm their long-term production target of >8,400tpa of vanadium which we see as simpler and cheaper to attain with the Vanchem acquisition.
- Vanchem gives Bushveld lower-capital cost options for expansion to 8,400tpa along with much greater flexibility and good reason to bring in the Mokopane vanadium, magnetite mine which again spreads risk and reduces its dependence on the Vametco mine.
- Furthermore, Vametco will provide ore to Vanchem to start which combined with Vanchem stockpiles will enable better operation of Vanchem to start. This also highlights how the Vametco mine can feed Vanchem if the Mokopane has any issues as well as visa-versa.
- If demand for vanadium continues to rise then Bushveld could also expand Vametco further to go beyond its long-term 8,400tpa vanadium target.
- This could become important if demand for VRFB capacity takes off and Bushveld needs to commit to greater production for the longer term.
- Convertible conditions:
- The convertible is Repayable in cash after the second anniversary of Transaction Closure, plus any accrued interest if not converted into Bushveld shares.
- Conversion of convertible at the holder's option in two tranches of up to US$11.5m each, on the 1st and 2nd anniversaries at a 5% discount to the 10-day VWAP for BMN shares.
- Scope for acceleration of redemption of up to US$5m of the Loan Notes 12 months after Transaction Closure if an average ferrovanadium price of $40/kgV is realised during any nine-month period during the12 month period after Transaction Closure;
- Obligation to repay an amount equal to 40% of any cash received on a new share issue which raises more than US$30m, provided no more than 50% of the Loan Notes have already been paid, redeemed or converted;
- Obligation to repay an amount equal to 50% of any debt raised over US$15 million, provided no more than 50% of the Loan Notes have been repaid, redeemed or converted;
- Obligation to repay on a substantial sale of assets or change of control;
- The holder will not be able to divest any Bushveld Minerals shares received for six months following conversion and be subject to an orderly market arrangement for the following six months.
- A deferral of US$0.5 million plus an amount equal to the working capital adjustment payable in cash after two years.
- All other terms remain substantially the same as per the original agreement announced on 1 May 2019.
- Bushveld deal rationale includes:
- Robust and growing demand from steel manufacturers and energy storage
- A structural supply deficit due to concentrated and constrained primary production
- Limited new global vanadium production on the horizon
- By sustainably reducing costs, Vanchem will generate healthy margins throughout the commodity cycle
- Provides diversification to Bushveld Minerals through the addition of another processing facility:
- Following the refurbishment and ramp-up programme, Vanchem is expected to support steady state production of 4,200 mtVp.a.
- Diversification of Bushveld Minerals' mining and processing footprint within South Africa
- The Vanchem Plant has the potential to expedite the development of Mokopane:
- The two assets will together create a fully integrated business in a shorter timeline, with reduced costs and risks than developing Mokopane on a standalone basis
- Three kilns provide optionality and increased availability during planned and unplanned kiln maintenance programme
- Provides optimal product diversification:
- The Vanchem Business is capable of producing various vanadium oxides, ferrovanadium and vanadium chemicals, complementing Vametco's existing NitrovanTM offering
- Enhances Bushveld Minerals' ambitions in the global energy storage and vanadium redox flow battery space:
- Provides further capacity for electrolyte manufacturing through the existing chemical plant and vanadium oxide production
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 80p valuation is based on a ferrovanadium price of $45/kgV and assumed 9.15p/s of value for Bushveld Energy.
Conclusion: The renegotiation of the Vanchem acquisition is a masterstroke for Bushveld and is a text-book deal from a management perspective.
The revised payment terms enables Bushveld to retain an additional US$38m of cash which would have been used for the acquisition within its balance sheet.
This cash can be used as equity to support further debt funding to build the Mokopane vanadium mine (~$20m) and recondition parts of the Vanchem process plant.
*SP Angel acts as Financial Advisor & Broker to Bushveld Minerals.
Centamin (LON:CEY) 111p, Mkt Cap £1,283.1m – Q3 Production and exploration update
- Centamin reports gold production of 98,045oz for the quarter ending 30th June bringing YTD gold output to 332,141oz at the Sukari mine. “October production (to date) is in line with plan and on track to be the strongest monthly performance for the year to date; The bottom end of full year production guidance, 490,000 ounces, remains the target for the year”
- Cash costs rose by 14% during the quarter to US$860 bringing the year-to-date average to US$742/oz – close to the range of the full-year guidance of US$675-725/oz and the company is indicating that it currently expects to achieve the upper end of the guidance range.
- Centamin’s exploration at Sukari included the drilling of some 20,000m during the quarter from surface and underground collars and “Systematic drilling of the underground remains the exploration focus with regional drilling and seismic programmes carried out in parallel.”
- Drilling at the Horus Deeps, “intersected a thin, flat-lying sulphide-bearing shear zone (0.3m @ 140g/t) confirming the interpretation that the gold mineralised structure extends to the North, below the Ptah. Further 2,000m of drilling is budgeted in Q4 to better understand the kinematics and strike extent of the shear.” The company expresses confidence that its underground drilling programme at Sukari, and in particular of the Amun Ptah zone which includes Horus Deeps, “show significant upside potential for reserve growth”.
- At the Doropo project in Cote d’Ivoire, unusually heavy rainfall during the quarter led to the suspension of drilling in August and operations are expected to resume at the end of Q4, however, “An updated Mineral Resource estimate based on the available data as at 18 August 2019, showing a 23% increase in the measured and indicated ("M&I") tonnes and a 15% increase in gold metal content, over the last nine months.”
- The PEA study for Doropo is “currently targeted for completion in H1 2020”.
Firestone Diamonds (LON:FDI) 0.525 pence, Mkt Cap £3.0m –Q1 production, operational and market update
- Firestone Diamonds reports the production of 201,094 carats of diamonds from its 75% owned Liqhobong mine in Lesotho during the three months ending 30th September – the first quarter of its financial year. The production included “a 98 carat light yellow makeable stone which was sold in October”.
- As previously reported, a power disruption at the mine on 1st October has suspended operations and the “Company anticipates that production at the mine will recommence in early November, once the rented diesel generators are on site and connected to the mine's electrical infrastructure.”
- “The power interruption that affected operations since 1 October is expected to result in the loss of just over one month's production, as plans are currently underway to resume operations during early November. In addition to the loss of revenue, the Company has continued to incur fixed operating costs of approximately US$1.8 million during October. The Company is working with its insurance broker to assess the extent to which the interruption is covered by its business interruption policy.”
- Commenting on the impact of the power disruption, which he described as “an unexpected setback for the company”, Chief Executive, Paul Bosma, said “we are doing our utmost to limit the negative impact on production by renting generators to get operations up and running again until the grid power is back online and stable. We will advise on any adjustments to guidance in future quarterly updates."
- We believe that prior to the power supply problem the company’s guidance for 2019/20 was in the range 820-870,000 carats
- Firestone Diamonds sold 168,612 carats of diamonds during the quarter at an average price of US$63/carta for a total of US$10.6m, however “The December tender has been cancelled due to fewer carats being recovered as a result of the power outage, and consequently the Company's next tender will take place in January 2020.”
- Commenting on the sales, the company says that “Average diamond values were lower than the previous quarter despite the sale of several notable stones which included a 37 carat fancy pink stone and a 55 carat fancy yellow stone, due mainly to the sale of fewer high value stones and a slightly higher proportion of smaller goods.”
- The company also says that prices “realised for the smaller goods that make up the bulk of our production by volume, remain subdued, impacted by a build-up of rough and polished inventory in the midstream. Prices are expected to increase towards the end of 2020 as rough supply decreases as a result of continued reduced sales volumes by De Beers and Alrosa and the anticipated closure of the Argyle mine in Australia.”
Conclusion: The loss of at least one month’s production will clearly have a knock on effect on the Q2 production from Liqhobong. The company’s assessment of the impacts of diamond inventory build up across the industry and subdued market conditions as a result confirms the reports being issued by other diamond producers and Firestone Diamonds is taking the view that prices may not recover until the end of 2020.
*SP Angel acts as Nomad & Broker to BlueRock Diamonds
KEFI Minerals* (LON:KEFI) 0.72p, Mkt Cap £6m – Massive sulphide mineralisation intersected at Hawiah, Saudi Arabia
- The first drill hole completed at Hawiah returned a 15.8m interval (true width estimated at 8m) of massive sulphide at a vertical depth of 125m.
- The mineralisation comes in the form of pyrite and chalcopyrite as well as minor bornite, with associated alteration and lithology consistent with that of a Volcanic Massive Sulphide system.
- Assay results are currently being prepared that would tell encountered grades.
- The current exploration programme for 2,500m commenced in September and is designed to test the geological model and geometry of both close to surface oxide gold mineralisation and massive sulphide copper target at depth.
- Previous geophysical work identified a strong and continuous anomaly under the gossanous ridgeline indicating the presence of a potential sulphide mineralisation at 50-300m depths.
- The team is planning to test 1,500m of the anomaly during the programme.
Conclusion: While final assays are to be released in due course, initial results confirm the presence of the sulphide mineralisation at deeper levels adding strength to the geological model developed by the Company. The Hawiah Ridge line is believed to be an oxidised surface expression of an extensive VMS system hosting enriched gold mineralisation at surface (up to 25-30m) and copper bearing massive sulphide mineralisation at depth.
*SP Angel act as Nomad and Broker to KEFI Minerals
Vast Resources* (LON:VAST) 0.36p, Mkt Cap £38m – Update
- The team reported yesterday that the finalisation of the JV agreement between Katanga Mining (Vast and a local community JV) and ZCDC as well as the closure of $13.5m funding have been delayed.
- The delay in completion of the diamond agreement is said to be driven purely by international travel commitments and logistical issues of all relevant stakeholders.
- The Company is planning to update the market on status of the above in due course.
*SP Angel acts as Broker to Vast Resources
Sirius Minerals (LON:SXX) 3.0p, Mkt cap £211m – Sirius relegated to the SmallCap index as it falls out of FTSE 250
- Sirius Minerals continues its fall from grace as the FTSE chucks it out of the FTSE 250 index with the stock relegated to the SmallCap index.
- Press reports in the Daily Mail saying the CEO would take the company private are apparently a misquote according to ‘The Motley Fool’ this morning
- The company’s plans to build the Woodsmith mine into a 10mtpa Poly 4 (polyhalite) producer collapsed when the company failed to raise $500m in the bond market.
- A further $400m of convertible funding was also dependent on the $500m to be raised.
- Even if the $500m + $400m had been secured the funds appear to be well short of the original estimated BFS capital cost bill and were even further short of revised BFS capital cost estimate of >$5bn
- The Bond market may have refused to take the $500m high-yield Junk bond issue offered for a number of reasons. One issue appears to be the lack of offtake commitments for the Poly 4 product to be produced by the mine.
- We understand the current market size for this product is around 2.5mtpa so expanding this to 10mtpa is a tall order by any metric. Although slide 9 in Sirius’s AGM presentation shows total peak aggregate supply agreements of 11.7mtpa and a footnote indicating 13.4mtpa including customer options which leaves us wondering how the company fell short on its offtake.
- Furthermore the company shows a slide illustrating its EBITDA sensitivity at a production volume of 13mtpa, a wholesome ~10mtpa over the current estimated market size for this type of fertilizer product.
- Sirius also shows slide 16 on their indicative financing and capex funding in the June AGM presentation highlighting its cumulative capital cost of over $5bn based on the SRK CPR with the exception that prices and costs are nominal, inflated at 2% and highlighting that the expansion to 13mtpa will cost a further $367m.
- The funding plan included $50m from Hancock equity to be received upon entry into definitive documentation for the Stage 2 Financing
- The killer footnote for us is that the funding slide, proposal is ‘Based on the expectation ofUS$2,500m facility being available with US$1,000m in further liquidity provided after all high yield bond issuances.’
Conclusion: While we have some admiration for anyone who has the balls to present this sort of financing proposal at an AGM to investors we are of the view that the prospect of raising of this level of funding for a single project company with no production is pure ‘fantasy’ and is something that is best left to the likes of Rio Tinto or BHP Billiton which have the requisite cash flow and more importantly the technical ability to construct this type of mine.
Solgold* (LON:SOLG) 20.65p, Mkt cap £381.3m – Exploration identifies large copper gold target at Celen
- Solgold reports the discovery of a large copper/gold porphyry target at Celen within its wholly owned Cisne Loja project area in southern Ecuador.
- The company describes an area of “Consistently rich copper, gold, silver and molybdenum mineralisation” over an area measuring approximately 2km x 1km located 7km south of Solgold’s Cuenca Loma gold/silver epithermal exploration target.
- Results from 72 rock chip samples include 60 assaying in excess of 0.6% copper equivalent grades including:
- 4.32% copper, 4.51g/t gold, 20.8g/t silver and 9.99ppm molybdenum in sample RO3001325;
- 0.90% copper, 2.21g/t gold, and 76.1ppm molybdenum in sample RO3001342;
- 2.54% copper, 3.04g/t gold, 15.4g/t silver and 185.5ppm molybdenum in sample RO3001304;
- 2.52% copper, 3.11g/t gold, 12.5g/t silver and 13.4ppm molybdenum in sample RO3001347; and
- 2.46% copper, 0.10g/t gold, 54.5g/t silver and 54.9ppm molybdenum in sample RO3001303
- Copper mineralisation is “best developed within magnetite-chalcopyrite porphyry veins in quartz diorite and microdiorite units with associated disseminated chalcopyrite mineralisation” and is characterised by anomalous magnetism which is identified as showing similarities to “additional target areas west of Cuenca Loja and between Celen and Cueca Loja [which] are still to be sampled”.
- The company confirms that “Initial gridded soil anomalies confirm the extensive mineralised area identified by mapping and rock chip sampling. Large coherent copper and gold soil anomalies show a positive correlation to identified mineralisation and delineate additional areas for follow up exploration”.
- Solgold also reports that the “Soil anomalies remain open to the north and south and the gridded soil program will be extended to define the surface limits of the Celen porphyry target”.
Conclusion: Building on its success at Alpala, Solgold has developed expertise in mineral exploration in Ecuador which is being deployed with evident success elsewhere in the country. The initial mapping rock-chip sampling, geochemical and geophysical work at Celen has identified a large target area of porphyry mineralisation and is being extended to define the surface limits of the mineralisation. We look forward to further news and the possible identification of initial drilling targets as the programme proceeds.
*SP Angel act as Financial Advisor and broker to Solgold
Analysts
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Simon Beardsmore – 0203 470 0484
Sergey Raevskiy – 0203 470 0474
Sales
Richard Parlons – 0203 470 0472
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Rob Rees – 0203 470 0535
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*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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