SP Angel . Morning View . Wednesday 06 11 19
Risk on sentiment pauses on uncertainty for trade deal timing
MiFID II exempt information – see disclaimer below
Beowulf Mining* (LON:BEM) – Bewulf raises stake in Vadar in Kosovo
Keras Resources* (LON:KRS) – Nayega Manganese project update
Thor Mining (LON:THR) – Stream sediment results from W Australia
One in ten electric cars sold in the UK was electric or a hybrid (FT)
- Alternatively fuelled vehicles accounted for 9.9% of the UK market in October, up from 6.9% a month earlier.
- Sales of hybrid vehicles climbed by a third to 7,950 vehicles- a 5.5% market share.
- Fully electric vehicles saw sales triple to 3,162- a 2.3% market share.
- However, diesel sales fell for the 31st consecutive month to 35,000- 1/4 of all sales.
- 140,000 electrified cars have been registered this year, of which 55% are hybrids (The Times).
- Despite the growth in EV uptake, data from the Society of Motor Manufacturers and Traders show that new car registrations fell by 6.7% last month.
- A total 143,000 vehicles were sold last month, down from 154,000 last October (Reuters)
- Elsewhere in Europe, Chancellor Merkel announced yesterday to increase the number of charging stations and also agreed to expand subsidies. Models costing up to €40,000 will see a one-off payment by the government raised from €4,000 to €6,000 (Electrek).
Russian woman detained for attempting to smuggling gold in her shoes to China (BBC)
- The Russian national attempted to smuggle eight gold disks weighing 4.1lb across the border.
- Suspicion was roused when the lady “unnaturally placed one foot in front of the other”.
- The recent strengthening of the gold price this year must have been too appealing for the woman.
- The 4.1lb (65.6oz) of gold would have been worth just over US$80,000 this time last year, compared to US$98,662 today.
SoftBank reports a $6.5bn quarterly operating loss, the first one in 14 years, reflecting $5bn in write-downs including a $4.6bn charge on WeWork investment.
SoftBank valued the co-working group at $7.8bn during the last round of investment in September, down from $47bn estimated in January.
Dow Jones Industrials +0.11% at 27,493
Nikkei 225 +0.22% at 23,304
HK Hang Seng +0.02% at 27,689
Shanghai Composite -0.43% at 2,979
FTSE 350 Mining -0.54% at 18,910
AIM Basic Resources -1.57% at 2,146
US – Markets are struggling for direction this morning as investors are looking forward to more news on the expected time for signing the Phase 1 agreement.
- The S&P 500 index closed slightly lower on Tuesday after hitting an all-time high during trading hours.
US formally withdraws from the Paris Agreement (BBC)
- The US government began the process of withdrawing from the Paris Agreement, due to the “unfair economic burden” the deal puts on Americans.
- President Trump made the decision to withdraw in 2017, making the US the world’s sole non-signatory.
- The UN stipulated that no country that entered the agreement could exit for at least three years, however this week the US was able to begin the process.
Japan – The economy contracted at a faster pace than previously estimated in October reflecting weak trade environment, typhoon related disruptions as well as a hike in sales tax weighing on domestic consumption.
- Services sector, in particular, recorded the first decline in over three years last month.
- Markit PMI Composite: 49.1 v 51.5 in September and 49.8 estimated previously.
Germany – Positive news from the manufacturing sector that has been badly hit lately on the back of a weak global growth background.
- Factory orders climbed 1.3%mom in September following two consecutive months of declines suggesting the worst of recent challenges may have passed.
- The euro climbed on the back of the announcement trading at 1.1087 (+0.17%) against the US%.
- Factory Orders (%mom/yoy): +1.3/-5.4 v -0.4./-6.5 (revised from -0.6/-6.7) in August and 0.1/-6.3 forecast.
Italy – Economic growth remains weak amid a contraction in the manufacturing sector in October.
- Services industry favoured better last month with new business orders at seven month high and stronger gains in employment.
- “Nonetheless, the October surveys remain consistent with GDP growing at a slight pace of around 0.1% as we head into the final months of 2019, albeit with a little momentum picking up from the slump seen in the first half of the year,” Markit wrote.
- Markit PMI Services: 52.2 v 51.4 in September and 51.0 forecast.
- Markit PMI Composite: 50.8 v 50.6 in September and 50.2 forecast.
Spain – Growth in the services industry slowed to the weakest in over a year in October amid political and economic uncertainties, both domestic and abroad.
- Economy in general is estimate to grow at its slowest pace in around six years.
- The evidence is the slowdown in the manufacturing sector is spilling over into the service sector now.
- Markit PMI Services: 52.7 v 53.3 in September and 52.8 forecast.
- Markit PMI Composite: 51.2 v 51.7 in September and 51.4 forecast.
US$1.1089/eur vs 1.1128/eur yesterday. Yen 108.98/$ vs 108.85/$. SAr 14.835/$ vs 14.709/$. $1.288/gbp vs $1.290/gbp. 0.690/aud vs 0.693/aud. CNY 6.999/$ vs 6.991/$.
Gold US$1,487/oz vs US$1,505/oz yesterday
Gold ETFs 82.3moz vs US$82.2moz yesterday
Platinum US$928/oz vs US$935/oz yesterday
Palladium US$1,781/oz vs US$1,785/oz yesterday
Silver US$17.56/oz vs US$18.06/oz yesterday
Copper US$ 5,926/t vs US$5,920/t yesterday
Aluminium US$ 1,814/t vs US$1,814/t yesterday
Nickel US$ 16,350/t vs US$16,320/t yesterday
Zinc US$ 2,481/t vs US$2,543/t yesterday
Lead US$ 2,143/t vs US$2,164/t yesterday
Tin US$ 16,380/t vs US$16,575/t yesterday
Oil US$62.5/bbl vs US$62.7/bbl yesterday
Natural Gas US$2.867/mmbtu vs US$2.895/mmbtu yesterday
Uranium US$24.30/lb vs US$24.20/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$80.4/t vs US$80.3/t
Chinese steel rebar 25mm US$570.7/t vs US$568.3/t
Thermal coal (1st year forward cif ARA) US$64.4/t vs US$65.1/t
Coking coal futures Dalian Exchange US$185.2/t vs US$185.4/t
Cobalt LME 3m US$36,000/t vs US$36,000/t
NdPr Rare Earth Oxide (China) US$41,078/t vs US$41,411/t
Lithium carbonate 99% (China) US$6,930/t vs US$6,938/t
Ferro Vanadium 80% FOB (China) US$29.5/kg vs US$30.2/kg
Antimony Trioxide 99.5% EU (China) US$5.3/kg vs US$5.3/kg
Tungsten APT European US$225-245/mtu vs US$205-215/mtu
Graphite flake 94% C, -100 mesh, fob China US$540/t vs US$540/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,550/t vs US$2,550/t
Lithium Australia to supply recycled battery metals to South Korean firm (Reuters)
- Envirostream, operating under battery maker Lithium Australia will be supplying recycled materials to Korean company SungEel Hitech.
- The company will supply a mix of cobalt, nickel and lithium extracted from recycled lithium-ion batteries.
- The scrap metals produced from Envriostream’s shredding and recycling are known as mixed metal dust (MMD) and will be exclusively supplied to SungEel.
- Shares in Lithium Australia surged 11.8% as a result of the news (The Market Herald).
Beowulf Mining* (LON:BEM) 6.25p, Mkt Cap £37m – Beowulf raises stake in Vadar in Kosovo
- (Beowulf holds 41.5% of Vadar. Beowulf also holds 100% Kallak iron ore in Sweden, 100% of Aitolampi graphite in Finland and 40% of the Mitrovica and Viti projects in Kosovo)
- Beowulf have increased their ownership of the Vadar mineral prospect to 41.5% from 40.1% through the investment of a further £100,000 in Vardar Minerals Limited.
- ‘The funds will enable Vardar to conclude its 2019 exploration programme and to ready itself for starting DC-IP geophysical surveys in 2020.’
- Vadar recently reported on the the identification of extensive lead-zinc-silver mineralisation at Vadar’s Wolf Mountain prospect in Kosovo.
- The mineralisation is said to have significant potential for high-grade feeder structures.
- Drilling and trenching confirms mineralisation over an area of 800x400m.
- Drill results:
- 1.2% Pb, 0.37% Zn, 10g/t Ag over 14.1m;
- 1.4% Zn over 4.15m;
- 1.27% Pb, 0.91% Zn, 8 g/t Ag over 8.9m; and 1.4% Zn over 20.9m;
- 1.38% Zn over 19.3m;
- 2.69% Pb, 0.4% Zn, 16 g/t Ag, over 4.3m;
- 1.29% lead over 3.0m;
- 2.45% Zn over 2.0m;
- 2.14% Zn over 1.0m;
- Trench results:
- Trench 1 - 3.6% lead and 1.87% zinc plus 11g/t silver over 51m.
- Trench 2 - 2.7% Pb, 0.55% Zn and 10 g/t Ag 18.0 m.
- Wolf Mountain is reported by the company to look similar to:
- Crnac lead / zinc deposit which has a non-JORC 3.5mt of 8.1% Pb, 3.2% Zn, 120 g/t Ag)
- Zijaca Pb-Zn deposit again non-JORC 5.2mt containing 2.83% Pb, 2.83% Zn and 16 g/t Ag. Zijaca is just 3.3 km along trend from Wolf Mountain.
- Vadar and Zijaca have similar geological settings to the nearby Trepča Stan Terg lead-zinc-silver mine, situated approximately 6 km to the southeast of Wolf Mountain which produced 34mt grading 3.45% lead, 2.3% zinc and 80 g/t silver.
- Wolf Mountain is a hydrothermal breccia zone with stockworks which runs for 4km with widths varying from 20-300m. The mineralisation outcrop as a gossan, with iron-manganese oxides and hydroxides and intense silicification in peripheral areas with fold structures. Mineralisation is likely vein/replacement-type related to Oligocene magmatic activity responsible for the hydrothermal systems mapped in the southern portion of the licence area.
Conclusion: The trench results are encouraging and look mineable on the basis of the results of the two tranches shown. The Drill results are interesting but appear insufficient to support mining at this stage. We hope a higher grade zone may be identified on further drilling to support sufficient tonnage for a development decision.
*SP Angel acts as nomad and broker to Beowulf Mining.
Keras Resources* (LON:KRS) 0.475p, Mkt Cap £12m – Nayega Manganese project update
(Keras now hold an 76.5% interest in Societé General des Mines which holds the Nayega manganese project license in Togo; following the agreement to issue 10% to the Togo Government. Keras also holds a 33.71% interest in Calidus Resources)
BUY, Valuation 1.08p
Click for our last full note on Keras
- Keras Resources now expect commercial production to start at the Nayega Manganese project in Northern Togo in Q1 2020.
- Documentation to complete the Exploitation Permit is expected to be finished by the year end.
- The mine will start shipping ore to smelters in early 2020 for initial cash flow.
- Management may then move to add further value through the production of manganese sulphate for fertilisers and the battery market.
- Keras has appointed Simulus Engineers, based in Perth to look at a Scoping Study for a potential manganese refinery based on leach results from Nayega ore samples. The study is due in nine weeks.
- The Nayega mine has capacity of 6,500t per month of saleable manganese ore in Q1 2020. The mine will construct an additional 70tph
- The team plan to start the scrubbing and screening plant in Q2 2020
- Expansion to steady state production of 17,200tpm is planned for Q3 2020 subject to securing expansion capital
- Funding: mangement plan to fund the expansion through offtake agreements
- Refinery Scoping Study: sample leach results gave >90% recoveries on oxide ores with minimal impurities. This may enable the production of manganese as an eventual replacement for cobalt in lithium-ion batteries.
- Nayega hosts JORC Resource of 13.5Mt grading @ 11.1%Mn and an Ore Reserve of 8.48Mt grading 14.0% Mn.
- Keras Resources is to host a joint investor event with the management of Calidus Resources in London this evening which is open to shareholders and other investors.
- The event is to be held at The Vintry, Off Abchurch Yard, Abchurch Lane, London EC4N 5AX.
Conclusion: Keras reports today on a new expansion of the Nayega project to 17,200tpm. While this should make a difference to our valuation we will need further details on the expansion before we are able to update the market.
*SP Angel act as Nomad and broker to Keras Resources
Thor Mining (LON:THR) 0.27p, Mkt Cap £2.5m – Stream sediment results from W Australia
- Thor Mining has announced initial stream sediment results from a programme of 44 samples taken over recently acquired exploration tenements in the Pilbara Goldfield of Western Australia.
- Although “assay work is yet to be completed” 13 of the samples yielded panned concentrates containing visible gold which at first sight appears to be an encouraging rate of success.
- Location data published in today’s announcement suggests that the gold bearing samples are widely spaced over an area we estimate to be around 75km2 suggesting that source mineralisation may be widespread but perhaps elusive.
- The company indicates that “Subject to final assays, follow-up field work may comprise detailed stream sediment sampling, soil sampling and geological mapping”.
- Thor Mining has a diverse portfolio of assets including its Molyhil tungsten project in Australia’s Northern Territory and another tungsten project at Pilot Mountain in Nevada as well as a 25% interest (with rights to increase to 75%) in EnviroCopper’s project to extract copper by in-situ leaching at the historic Kapunda copper mine in South Australia.
- In 2017, the company divested its Spring Hill gold project in the Northern Territory and withdrew from the Dundas gold exploration project in Western Australia following disappointing drilling results. The company’s return to gold exploration in an area not apparently close to any of its existing areas of activity suggests a new-found enthusiasm for gold.
Conclusion: The stream sediment results from Western Australia, although very early stage, are encouraging and merit follow-up work if the assay results support the initial visual interpretation. We hope, however, that the company is able to maintain the focus and momentum required to advance the existing tungsten and copper projects which are likely to be the mainstay of current investor interest.
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
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
Natural Gas, Uranium, Iron Ore
Bloomberg OTC Composite
Lithium Carbonate, Ferro Vanadium, Antimony