Today's Market View - Base Resources, Bushveld Minerals, KEFI Minerals and more...

Base Resources (LON:BSE) – Site activity suspended at Toliara* Bushveld Minerals* (LON:BMN) Strong Buy - Valuation raised to 82p (from 80p) – Bushveld completes Vanchem acquisition as Vametco reports production of >300mtV in September KEFI Minerals* (LON:KEFI) – Government resolves administrative issues making way for development equity investment

KEFI Minerals PLC - Today's Market View - Base Resources, Bushveld Minerals, KEFI Minerals and more...

SP Angel . Morning View . Thursday 07 11 19

Gradual de-tariffing fuels risk-on sentiment

MiFID II exempt information – see disclaimer below   

Base Resources (LON:BSE) – Site activity suspended at Toliara*

Bushveld Minerals* (LON:BMN) Strong Buy - Valuation raised to 82p (from 80p) – Bushveld completes Vanchem acquisition as Vametco reports production of >300mtV in September

KEFI Minerals* (LON:KEFI) – Government resolves administrative issues making way for development equity investment

Orosur Mining* (LON:OMI) – Further Newmont funding for Anzá


Thirty-seven killed as gunmen ambush mining convoy in Burkina Faso (BBC)

Five buses carrying staff of Canadian gold miner Semafo were ambushed on Wednesday by Islamic extremists.

The military are struggling to contain Islamist violence in the area, and this attack is the third encountered by Semafo staff in 15 months.

According to the company, the Boungou mine is secure and operations are unaffected.

Semafo’s shares hit a nine-month low as a result of the news and were trading down 10%.


Dow Jones Industrials -0.00% at 27,493

Nikkei 225 +0.11% at 23,330

HK Hang Seng +0.57% at 27,847

Shanghai Composite +0.00% at 2,979

FTSE 350 Mining +1.02% at 19,159

AIM Basic Resources +0.31% at 2,152



US/China – The news over the US and China agreeing a plan to roll back tariffs in phases helps the market risk sentiment.

“In the past two weeks, top negotiators had serious, constructive discussions and agreed to remove the additional tariffs in phases as progress is made on the agreement,” Ministry of Commerce in China said.

“If China, US reach a phase-one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously…”

The yuan continued to strengthen against the US$ and traded at 6.9801 (-0.27%) this morning.

US futures and copper are trading higher while Treasuries with gold are off this morning.


Germany – Poor industrial production numbers played down latest signs of improvement in the euro area and its largest economy.

Output declined 0.6%mom in September compared to a 0.4%mom drop forecast.

Yesterday, investors cheered positive factory orders data that came in stronger than expected.

Weak industrial output data offer further evidence the economy is likely to have slipped into a technical recession in Q3 (GDP data is due next Thursday).

“The weakness in industry is not yet overcome… but the recent slight improvement in orders and business expectations brightened the outlook for the fourth quarter somewhat,” the Economy Ministry said.

The government has been reluctant to support ECB calls to accelerate fiscal stimulus to support the economy with the latest comment from the Ministry of Finance suggesting there was no immediate need for such measures.


UK – The Bank of England is expected to leave rates unchanged at 0.75% and cut its growth and inflation estimates amid Brexit outcome uncertainty.

No clarity on the whether the UK leaves the EU at all weighs on business investment that coupled with faltering global economy are seen as driving factors behind a potential downgrade.

A stronger pound compared with previous forecasts and weaker demand may also see the inflation outlook reduced.

In the August update, the central bank forecast GDP growth to slow down to 1.3% in 2019 and 2020, down from 1.5% and 1.6% estimated during the May review.


Free Money – Ray Dalio says the world has gone mad with so much free money (Bloomberg)

Problem is, with China muscling its way into the global economy in recent years and with the impact of the Global Financial Crisis (Subprime Crisis) the West appears to still need ‘free money’ to maintain financial stability.



US$1.1081/eur vs 1.1089/eur yesterday.  Yen 109.07/$ vs 108.98/$.  SAr 14.728/$ vs 14.835/$.  $1.287/gbp vs $1.288/gbp.  0.691/aud vs 0.690/aud.  CNY 6.977/$ vs  6.999/$.


Commodity News

Gold US$1,486/oz vs US$1,487/oz yesterday

Gold ETFs 82.2moz vs US$82.3moz yesterday

Platinum US$934/oz vs US$928/oz yesterday

Palladium US$1,801/oz vs US$1,781/oz yesterday

Silver US$17.59/oz vs US$17.56/oz yesterday


Base metals:   

Copper US$ 5,955/t vs US$5,926/t yesterday - Chilean copper production largely unaffected by weeks of rioting (Reuters)

Despite weeks of severe unrest in the country which has left 19 dead, industry insiders say that copper operations are running relatively normally, according to Reuters.

The protests show little sign of letting up despite President Pinera making concessions.

Protests have been concentrated in cities such as Santiago, and less so in the remote areas where copper mines are situated. 

Miners are reportedly worried that escalation of violence or organisation of a general strike could occur, which could then result in copper production cut.

Some miners have experienced attacks, such as Antofagasta at their Pelambres Copper mine.

Antofagasta forecast a production cut from Chile of about 10,000t due to protests. Last year’s total production was 725,000t.  

Aluminium US$ 1,808/t vs US$1,814/t yesterday

Nickel US$ 16,330/t vs US$16,350/t yesterday - Indonesia may decide to resume nickel exports today (Reuters)

The government may resume nickel exports after they were suspended on the 28th of October due to export rule violations.

The Maritime Investment Affairs Coordinating Ministry, responsible for mining activities, are meeting today to discuss the outcomes of the investigation.

Exports have surged this year as an export ban was brought forward to next year, however this led to high-grade nickel ore being exported.

The Indonesian government only allows exports of ore with less than 1.7% nickel content.

A government minister told reporters on Wednesday that the government would launch legal action against those who violated ore export rules in the future.

Zinc US$ 2,487/t vs US$2,481/t yesterday

Lead US$ 2,108/t vs US$2,143/t yesterday

Tin US$ 16,550/t vs US$16,380/t yesterday



Oil US$62.6/bbl vs US$62.5/bbl yesterday

Natural Gas US$2.784/mmbtu vs US$2.867/mmbtu yesterday

Uranium US$24.45/lb vs US$24.30/lb yesterday



Iron ore 62% Fe spot (cfr Tianjin) US$81.0/t vs US$80.4/t

Chinese steel rebar 25mm US$573.8/t vs US$570.7/t - China’s Jingye Group are favourites to buy British Steel (BBC)

British steel has been kept afloat by the government since May, hoping to find a buyer for the business.

A possible deal with Turkish company Ataer fell through at the end of last month.

Jingye Group, which also makes steel, is reportedly looking to reach an agreement in principle by next Monday.

5,000 people are employed at British Steel’s plant in Scunthrope, and another 20,000 employed along the supply chain.

Thermal coal (1st year forward cif ARA) US$63.8/t vs US$64.4/t

Coking coal futures Dalian Exchange US$180.7/t vs US$185.2/t



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

NdPr Rare Earth Oxide (China) US$41,085/t vs US$41,078/t

Lithium carbonate 99% (China) US$6,955/t vs US$6,930/t

Ferro Vanadium 80% FOB (China) US$29.0/kg vs US$29.5/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 -

Consumers of graphite are reported to be building stockpiles in advance of anticipated price rises in the graphite space despite Syrah Resources struggling to place new supply into the market

Syrah appears to be suffering from some specific issues according to reports to us which have caused the company to dramatically slow production.

China appears to be going easy on environmental restrictions this year as it adjusts the levers on its economy to offset the impact of the US/China Trade War and may be trying to protect a number of its graphite producers while putting the worst environmental offenders out of business.

Chinese production costs have risen due to environmental restrictions and high raw material prices though no restrictions have been placed on production in Shandong province for environmental reasons so far this year.

Consumers expect environmental officers to continue to close Chinese mines and processors which fail inspections following the confirmation of new environmental inspections in October.

Graphite spherical 99.95% C, 15 microns, fob China US$2,550/t vs US$2,550/t


Battery News

Electric Vehicle production uncompetitive till battery costs fall below US$100/kwh at pack level (Roskill)

While we have the greatest respect for Roskill’s expert forecasting there is much more to this statement with the devil is in the detail as always.

The competitive equation depends on how many miles you drive, your cost of electricity vs cost of gasoline/diesel and the cost of the Electric Vehicle you buy etc…..

Eg comparing a luxury Tesla with a mini seems a bit unfair, particularly as the mini is such a great little car.

The battery cost also depends on whether this is just cell costs or whole battery pack costs.

We reckon cell costs may already be at or below US$100/kwh but when other battery pack costs are still some way ahead of this.

We also note that average battery pack sizes rose to 57kWh in October vs 45kWh for September sales according to rhomotion.


Tesla battery expert joins tech start up Sila Technologies (International Business Times)

Kurt Kelty, who spent more than eleven years as director of battery technology at Tesla, has just taken on the role of vice president of automotive at Sila.

Kelty was previously on Sila’s advisory board, and witnessed what he said was “breakthrough battery chemistry” – something he wants to develop further.

The California-based company manufactures a silicon-based battery anode that will replace graphite in lithium-ion batteries, which they claim can improve the performance of the batteries by 20% and reach 40% improvement against the li-ion.

The company also received an additional $45m in funding from Canada Pension Plan Investment Board, bringing its total funding to $340m (Tech Crunch).


Company News

Base Resources (LON:BSE) 10.5p, Mkt Cap £123.0m – Site activity suspended at Toliara*

Base Resources, reports that the Government of Madagascar has ordered that activity on-site at the Toliara mineral sands project is to be suspended “whilst discussions on fiscal terms applying to the project are progressed”.

The company stresses that, as all the necessary work on site has been completed, the Definitive Feasibility Study (DFS) is continuing on track for release in December 2019.

“Unfortunately, however, this suspension will impact the community development programs currently underway and the several hundred local Malagasy people who are presently undertaking training programs with the Toliara Project.  This is clearly regrettable”.

Base Resources confirms that there is broad community support for the project and that it “will continue to engage in a transparent and respectful dialogue with Government to deepen its understanding of the significant benefits of the project to Madagascar and secure agreement on mutually beneficial fiscal terms that represent a sound and sustainable basis on which the Toliara Project may proceed to development”.

The company does, however, cite “recent localised events have represented illegal actions by a small minority that were dealt with by the Malagasy legal system.  It is therefore disappointing that the Malagasy government has now stated this as a justification for requiring a suspension.”

Conclusion:  There is no indication as to how long the suspension is likely to prevail at Toliara, however, we are encouraged that the DFS, which should provide insight into the proposed project development, remains on course. We expect that the suspension and its impact on the local communities and disruption to the training of future employees will add a level of urgency to reach an agreement between the Government and the company which recognises the objectives and aspirations of both.

*An SP Angel analyst has visited the Toliara mineral sands project in Madagascar


Bushveld Minerals* (LON:BMN) 23.3p, Mkt Cap £268m – Bushveld completes Vanchem acquisition as Vametco reports production of >300mtV in September

(Bushveld Minerals owns 74% of Vametco, 100% of Vanchem, 84% of Bushveld Energy in South Africa, 100% of Lemur Holdings, 9.5% of Afritin)

Valuation raised to 82p (from 80p)


Bushveld Minerals report a substantial increase in Nitrovan, vanadium-magnetite concentrate in September following significant improvement at Vametco.

Production of Nitrovan rose to >300mtV in September a new record from the processing of vanadium-in- magnetite concentrate feedstock on its own.

The increase in production means that Bushveld is on track to meet its target of 2,800-2,900mtV for the year.

Costs: of US$18.90-19.50/KgV for the year also remain on track and are below our estimates.

Q3 production fell 24% to 561mtV of Nitrovan from 742mtV in Q2 due to planned maintenance which completed 2 days ahead of schedule.

Environmental: Kiln off-gas project initiated at Vametco to achieve better environmental performance and improve kiln feed throughput, due for completion in H1 2020.

Further works at Vametco completed:

Improving crusher and mill availability, and throughput rates

increase kiln availability and hourly feed rate

better recovery rates

improvement in leach recoveries

Vanchem acquisition completed for US$53.5m vs US$68m along with approval for the Mokopane mining right application.

Bushveld Energy: have committed US$5m to the takeover of redT Energy Plc by Avalon Battery Corp.

Avalon manufacturers VRFB batteries and is looking for US$30m to roll out its strategy for European VRFB development.

Supporting Avalon gives Bushveld exposure to the VRFB battery market in the UK, Europe and North America.

Electrolyte Plant: capacity for 200MWh pa for a capital cost of US$10m to be financed by Bushveld and the Industrial Development Corporation of South Africa.

Planning passed the 20-day appeal period and EIA now authorised.

Lease finance for vanadium in VRFB batteries: rental contract agreed with Avalon and its customer, Sandbar, in the US.

Brits vanadium resource: to be published along with the Q4 operational update.

Mokopane mine: A DFS on the Main Magnetite Layer and a resource / reserve assessment for feedstock to Vanchem is due H2 2020.

Vametco based Solar Mini-Grid: completed a grid connection and geotechnical studies. Procurement for the project has commenced.

Lemur: DFS to progress following preliminary findings and coal mine optimisation study. Negotiations for the construction of the power station with Sinohydro (PowerChina) are advanced due completion by the year end.

Debt: Bushveld recently secured ~US$25m in facilities through Vametco with Nedbank in the form of a R250m loan and a R125m revolving credit facility. This is carved out from the obligation to repay 50% of any debt raised over US$15m, provided no more than 50 per cent of the Vanchem loan notes have been repaid.

Valuation: We have recently reviewed our modelling on Bushveld on the Q3 operating performance and on the acquisition of Vanchem and the impact of the renegotiated price and debt facilities.

Our valuation raises to 82p from 80p due to better performance at Vametco and improved terms on the Vanchem deal.

Assumptions: our key assumptions are in the table below. We expect the price for ferro-vanadium to recover over the next few months with buying activity expected to return to the market supporting a price of US$45/kg next year.

Conclusion: Bushveld have worked hard in recent months to achieve a significant improvement in the performance at Vametco. The group now appears well set to repeat this success at Vanchem following confirmation of its acquisition today.

We are looking forward to new demand for vanadium from new VRFB instillations and for Bushveld Energy’s strategic positioning within this new technology sector to enable the Bushveld to grow with the sector as it develops.

(Dec year end)


KEFI Minerals* (LON:KEFI) 0.92p, Mkt Cap £7.8m – Government resolves administrative issues making way for development equity investment

The government is reported to have resolved all outstanding internal administrative arrangements with respect to the Tulu Kapi Gold Project.

This allows partners of the project to sign final documentation relating to the shareholders’ agreement and trigger the release of the equity capital.

The community, contractors and other stakeholders will now be asked to prepare for the start of development works.

Conclusion: Positive news for KEFI suggest the release of the first tranche of equity investment ($11.4m) is due shortly allowing for the start of development works for the 140kozpa project. Company estimates TKGM NPV at $1,500/oz and applying a 8% discount rate at $212m at start of construction with the management expecting first gold in mid-2021. KEFI holds 45% interest in the project.

*SP Angel act as Nomad and Broker to KEFI Minerals


Orosur Mining* (LON:OMI) 3.2p, Mkt Cap £4.8m – Further Newmont funding for Anzá

Orosur Mining reports the receipt of US$690,000 from Newmont Mining’s Colombian subsidiary to maintain its earn-in rights in the Anzá project where Newmont has already funded US$310,000 of exploration during the first year of its option up to 7th September.

Under the agreement, Newmont can earn an initial 51% interest in the project by spending US$10m over four years and cash payments of US$2m during the first 2 years.

Newmont can acquire an additional 14% interest through the sole funding of a further US$20m within 4 years, completing an NI-43-101 level pre-feasibility study and paying a further US$2m cash to Orosur.

Completion of a NI-43-101 feasibility study within a third phase of 4 years gives a further 10% interest bringing Newmont to a 75% interest in the project which is located in the mid-Cauca gold belt approximately 50km west of Medellin and where gold mineralisation has been encountered along 450m of strike length at the APTA zone “immediately north of previous drilling”.

Upon completion of the three-phase earn in, Orosur’s October 2019 Corporate Presentation describes how “Orosur may elect for Newmont to fund all expenditures until commencement of commercial production. If so, Newmont’s interest shall increase by 5% to 80% and Orosur must pay back post-FS expenses from its share of production”.

The same presentation describes how “over 35% of holes drilled have intercepts grading over 10g/t Au” and that of the 6,314m drilled in 71 diamond core holes, 50.7% of the holes have one or more intersections grading in excess of 5g/t gold.

In addition to its funding at the project level, Newmont Mining owns 19.4% of Orosur Mining.

Conclusion:  Orosur’s joint venture with Newmont Mining in Colombia has encountered high grade gold intercepts at Anzá during its 2017/18 drilling campaign and clearly provided sufficient encouragement for Newmont to maintain its Phase 1 earn-in rights.

*SP Angel act as Nomad and broker to Orosur Mining




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

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