Adriatic Metals* (ASX:ADT) – Drilling confirms mineralisation open to north and south at Rupice
Savannah Resources* (LON:SAV) – Lusorecursos lithium mine and refinery projects attracts opposition in northern Portugal
Vast Resources* (LON:VAST) – Chiadzwa Diamond Concession agreement
Gold – US support of HK protests hold gold prices close to US$1,500/oz on risk of sympathy protests on Mainland China
• Gold prices rose overnight as the US signed bills in relation to HK
• President Trump signed the bill expressing support for Hong Kong protesters yesterday after the legislation has been nearly unanimously approved by the Congress.
• China was critical of the bill and reiterated a threat of retaliation without offering further details.
Solid state battery breakthrough could double the density of lithium-ion cells (New Atlas)
• Researchers at Deakin University claim to have managed to use common industrial polymers to create solid electrolytes, which could lead to double-density solid state lithium batteries.
• Solid polymer material is weakly bonded to the lithium-ion, which replaces the volatile liquid solvents typically used as electrolytes in current battery cells.
• Solid state lithium in polymers is seen as safer and potentially easier to manufacture and could accelerate the take up of electric transport.
• Before we all get overly excited the new polymer is only proven in coin cell batteries indicating significant more work and testing will be required before we know if the new cells meet commercial requirements (itwire.com)
• The current density of lithium batteries for common automotive use is around 250 Wh/kg,
• SP Angel are currently working with a manufacturer which is making batteries with a rated energy density of up to 450 Wh/kg albeit in relatively small scale production.
Dow Jones Industrials +0.15% at 28,164
Nikkei 225 -0.12% at 23,409
HK Hang Seng -0.22% at 26,894
Shanghai Composite -0.47% at 2,890
FTSE 350 Mining +0.05% at 18,472
AIM Basic Resources -0.68% at 2,064
Economics
US – Markets are closed on Thursday as the nation celebrates Thanksgiving.
China – Local government are being asked to accelerate lending to infrastructure projects as the government is looking to support dwindling economic outlook.
• All localities are required to allocate recently issued “special bond” quota of 1tn ($142bn) “as soon as possible” to specific projects, according to the Ministry of Finance.
• The made available proceeds are planned to be invested early in 2020.
Japan – Retail sales collapsed in October following an increase of the sales tax and on typhoon-related disruptions.
• Larger purchases like cars and appliances saw double digit declines with sales reported to have been also hurt by trade spat with South Korea.
• Consumer spending has been once of the growth drivers this year as global trade struggles amid US/China and Japan/South Korea disputes.
• The economy is expected to contract 2.7%qoq this quarter as the government is looking to soften the effect of protectionist policies, sales tax hike and extreme weather with tax breaks on car and home purchases.
• GDP growth is forecast to restart in Q1 next year.
• Retail Sales (%mom/yoy): -14.4/-7.1 v 7.2/9.2 in September and -10.4/-3.8 forecast.
UK – Auto production dropped 4%yoy in October marking the 16th negative reading out of the last 17 as demand from both domestic and overseas buyers softened.
• Domestic demand is reported to have dropped 11% while export orders that account for c.80% of production were down 2.6%yoy.
• The industry has had a challenging year with declining sales in China, US/China trade war worries, a drop in diesel sales in Europe, Brexit related concerns and the need to invest heavily in electrification, Reuters reports.
Zambia – Inflation accelerates for a consecutive eighth month in November hitting the strongest pace in three years amid a drought driven hike in food prices and increased cost of imports.
• Inflation coming in at 10.8% versus the central bank target range of 6-8% may se monetary authorities raising rates further.
• The benchmark lending rate was increased to 11.5% from 10.25% only last week.
• The kwacha is down 18% YTD on a decline in production and price of copper, the metal that accounts for around 70% of export earnings.
• The nation’s power utility has also been pushing for the energy regulator to allow for a more than double hike in power tariffs that if granted would further to inflation pressures.
• CPI (%yoy): 10.8 v 10.7 in October.
Currencies
US$1.1013/eur vs 1.1007/eur yesterday. Yen 109.43/$ vs 109.17/$. SAr 14.753/$ vs 14.748/$. $1.294/gbp vs $1.286/gbp. 0.677/aud vs 0.678/aud. CNY 7.033/$ vs 7.024/$.
Commodity News
Gold US$1,457/oz vs US$1,459/oz yesterday
Gold ETFs 81.2moz vs US$81.2moz yesterday
Platinum US$892/oz vs US$903/oz yesterday
Palladium US$1,832/oz vs US$1,804/oz yesterday
Silver US$16.98/oz vs US$17.04/oz yesterday
Base metals:
Copper US$ 5,896/t vs US$5,964/t yesterday - Copper nears three-week high on Wednesday (Reuters)
• Copper also rose for the fourth straight day after President Trump said Washington was in the “final throes” of work on a trade deal with China.
• LME Copper closed up 0.4% at $5945/t after reaching $5,968/t earlier in the session.
• The most traded copper contract on the ShFE was up 0.7% to $6,735, its highest since the 11th of November.
• The metal has fallen 20% since the trade war began in summer 2018, however momentum in trade talks and a slight improvement in global factory data has lifted prices.
Aluminium US$ 1,762/t vs US$1,760/t yesterday
Nickel US$ 13,985/t vs US$14,430/t yesterday
Zinc US$ 2,290/t vs US$2,299/t yesterday
Lead US$ 1,931/t vs US$1,953/t yesterday
Tin US$ 16,375/t vs US$16,365/t yesterday
Energy:
Oil US$63.6/bbl vs US$64.3/bbl yesterday
Natural Gas US$2.506/mmbtu vs US$2.550/mmbtu yesterday
Uranium US$25.95/lb vs US$25.90/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$85.0/t vs US$86.5/t
Chinese steel rebar 25mm US$610.3/t vs US$613.6/t - Tata Steel expected to cut 1,000 UK jobs (BBC)
• The company expects to cut 3,000 jobs globally, with 1,600 positions in the Netherlands also set to go.
• Two thirds of the job losses will be management and office based roles.
• Tata have not yet specified which UK locations will suffer cuts. Nearly half of Tata’s UK workforce are based at Port Talbot which as 4,000 workers.
• The CEO of Tata Europe said this month that the company would aim to reduce employment costs by about £150m and that there would be no plant closures (FT).
Plentiful supplies to restrict molybdenum price increases (Reuters)
• Prices began falling in September, as a producer began selling at a discount rate in the spot market.
• The price of molybdenum fell towards $8/lb two weeks ago, before a move towards $10/lb caused traders to sell, causing the price to pull back to $9/lb.
• Moly is used to make stainless steel, of which demand has been weak this year. Furthermore, Q3 production was better than expected as Chilean production rose by 3Mlbs compared to Q2 (CRU).
• Expectations for the Moly market, estimated at 580Mlbs is to be balanced or see a small deficit this year.
Thermal coal (1st year forward cif ARA) US$63.7/t vs US$64.0/t
Coking coal futures Dalian Exchange US$189.1/t vs US$186.6/t
Other:
Cobalt LME 3m US$36,000/t vs US$36,000/t
NdPr Rare Earth Oxide (China) US$40,455/t vs US$40,573/t
Lithium carbonate 99% (China) US$6,612/t vs US$6,620/t
Ferro Vanadium 80% FOB (China) US$29.0/kg vs US$29.5/kg
Antimony Trioxide 99.5% EU (China) US$5.2/kg vs US$5.2/kg
Tungsten APT European US$225-245/mtu vs US$225-245/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
Battery News
Korean battery dispute risks disrupting EV production (Auto News Europe)
• Two South Korean battery producers, SK Innovation and LG Chem, have sued one another in the US courts for battery patent infringements. LGC also took SKI to court in April, accusing them of misappropriating trade secrets.
• Many thought that this was a response to SKI winning a multibillion dollar deal in 2018 to supply VW with EV batteries in the US which saw them commit to a $1.7bn factory in Georgia.
• The US court filings show that both companies are trying to prevent the other from importing EV batteries for the SUVs that VW are building in Tennessee, along with various other automaker’s vehicles (Reuters).
• The companies are scrambling to lock in supplies with lucrative contracts ahead of an expected surge in demand, according to industry experts.
• VW has said it is worried there will not be enough batteries for all the EVs it plans to launch in the next five years, due to a lack of skilled workers in Europe.
• If the US courts rule in favour of LGC in June this could jeopardise SKI’s plans to supply VW in the US, however the commission’s investigative staff recommended a motion in favour of LGC (Reuters).
Company News
Adriatic Metals* (ASX:ADT) A$1.25, Mkt cap A$222.0m – Drilling confirms mineralisation open to north and south at Rupice
• Adriatic Metals reports that recent drilling on its Rupice licence has confirmed that mineralisation extends north into its extended licence area at Rupice and also southwards towards the company’s Jurasevac-Brestic prospect.
• The mineralisation remains open along strike but has now been demonstrated over a strike length of 500m.
• The company explains that, as a result of delays arising from administrative changes to the permitting process for drilling it has taken some time to gain access to parts of the licence area “with the result that the Company has been restricted in stepping out its drill coverage to the north and south, with the majority of drilling confined to existing drill pads”.
• Step-out drilling towards the south intersected mineralisation in two holes:
o Hole BR-41-19 intersected two zones of mineralisation with an upper zone of 10m averaging 3.5% zinc, 3.6% lead, 0.6% copper, 0.51g/t gold and 58g/t silver from a depth of 248m including 4m averaging 6.4% zinc, 5.9% lead, 0.7% copper, 0.7g/t gold and 86g/t silver from 248m as well as;
o A lower mineralised zone from 262m depth averaging 3.0% zinc, 1.8% lead, 0.5% copper, 1.15g/t gold, 253g/t silver and 56% barite over an interval of 12m.
o Hole BR-27-19 located 50m further north indicates that these two zones of mineralisation merge into a single horizon 48m wide averaging 2.3% zinc, 2.0% lead, 0.6% copper, 0.72g/t gold, 70g/t silver and 58% barite from a depth of 240m.
• The company comments that “Significantly, this interval is many times thicker and higher grade than the nearby BR-18-19 which intersected 6m of mineralisation, and may represent another substantial thickening of the Rupice mineralisation as it extends to the south into untested ground towards the Jurasevac-Brestic prospect some 600m to the southeast.”
• Step-out drilling towards the north also intersected mineralisation in two holes:
o Hole BR-22-19 intersected two zones of mineralisation with an upper high grade gold and silver zone of 6m averaging 11.27g/t gold and 1,091g/t silver with 13.1% zinc, 12.5% lead, and 1.3% copper, from a depth of 238m as well as;
o A lower mineralised zone from 260m depth averaging 0.15g/t gold, 22g/t silver 1.1% zinc, 0.6% lead, 0.1% copper over an interval of 18m; and
o Hole BR25-19, which is the most northerly hole drilled so far, “confirmed further and open extensions of the Rupice mineralisation intersecting two thick zones of mineralisation” and returned:
o A 14m wide zone averaging 0.33g/t gold and 130g/t silver with 1.6% zinc, 1.4% lead, and 0.2% copper, from a depth of 246m depth as well as;
o A lower, 26m wide, horizon averaging 0.11g/t gold and 18g/t silver with 0.7% zinc, 0.6% lead, and 0.3% copper, from a depth of 302m.
• Other holes “were drilled from existing pads to give better definition to the central part of the Rupice deposit … variously tested the extensions of mineralisation intersected in earlier holes in areas of structural complexity with geological logging confirming the presence of a number of late stage brittle faults which strongly control the mineralisation”.
• Drilling is continuing at both the Rupice and Jurasevac-Brestic prospects.
• Commenting on the delays to accessing wider drilling locations CEO, Paul Cronin said the they had “given us the opportunity to improve our drill coverage to provide a better understanding of the geotechnical and structural characteristics of our deposit which has greatly assisted our mining studies and the Scoping Study”.
• Results from the scoping study released earlier this month envisaged the development of an underground mine at Rupice and an open-pit operation at Veovaca to feed a new, centrally located, plant at Veovaca to produce three concentrate products – lead/copper; zinc; and barite.
• Using a zinc price of US$2,500/t, lead at US$2,000/t and copper at US$6,500/t as well as US$1440/oz for gold, US$17.2/oz for silver and US$6,500/t for antimony, and expected capex of US$178m the company’s scoping study expects the project to generate a post-tax NPV8% of US$916.6m and an IRR 107.4%.
Conclusion: Recent drilling has demonstrated high grade mineralisation remains open to both north and south. We look forward to further news once access for drilling the wider exploration area is granted by the Ministry of Forestry, Agriculture and Water Management.
*An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia
Savannah Resources* (lLON:SAV) 2.2p, Mkt Cap £28.5m – Lusorecursos lithium mine and refinery projects attracts opposition in northern Portugal
• Reuters reports that Lusorecursos in talks to fund €400m for a new lithium mine and refinery in Portugal starting in 2023.
• Lusorecursos is looking to fund a new mine allowing the award of a concession to explore a property in in Montalegre, in the north of Portugal
• Mine approval will depend on the results and approval of an environmental impact study which normally requires two year’s worth of environmental monitoring and analysis.
• Lusorecursos is keen to build a €300m refinery at Montalegre to capture more of the value chain through the production of lithium hydroxide.
• Funding discussions are reported to involve companies from the Far East, Europe and the Middle East.
• Portugal is also reported to be finalising plans for an international licensing tender for lithium exploration to start this year, despite environmental objections.
• An environmental group in Montalegre, known as the Association Montalegre with Life, filed a lawsuit seeking to cancel the concession with Lusorecursos.
• Quercus, another Non-Governmental Organisation also opposes large-scale lithium exploration on carbon-neutrality goals.
Conclusion: Savannah is well ahead in terms of its lithium resource, environmental testwork and metallurgical results at Mina do Barroso in Portugal with it’s DFS due in Q2 2020.
Savannah is also not currently looking to develop a lithium refinery in Portugal which may present more of a problem with environmental opposition.
*SP Angel acts as Nomad to Savannah Resources
Vast Resources* (VLON:AST) 0.34p, Mkt Cap £35m – Chiadzwa Diamond Concession agreement
Botswana Diamonds (LON:BOD) 0.90p, Mkt Cap £5.6m
• Vast set up an SPV that would hold interests of the Company in Katanga Mining, a JV with Chiadzwa Mineral Resources representing local community.
• The Company will be granting Botswana Diamonds a 2.5% interest in the SPV with Vast to hold the remaining 97.5% in return for consultancy services over a five year period (a minimum of 40 hours per month) in relation to exploration, mining, processing and marketing at Chiadzwa Community Diamond Concession.
• Vast to fund the SPV in the form of debt for up to $10m.
Conclusion: The agreement with Botswana Diamonds retains a team with a considerable experience in exploration for and operation of diamond deposits as Vast is looking to set up alluvial diamonds production in Marange.
*SP Angel acts as Broker to Vast Resources