SP Angel . Morning View . Thursday 05 12 19
Global auto sales fall on slower income growth
MiFID II exempt information – see disclaimer below
Adriatic Metals* (ASX:ADT) – Latest drilling intercects deepest mineralisation so far at Rupice
Arc Minerals* (LON:ARCM) – High-grade copper assays in step-out drilling extends scale of Chezeya East discovery
Cora Gold* (LON:CORA) – Maiden Sanankoro resource lays the base for further upgrades
Europa Metals Limited (LON:EUZ) – Completion of first drillhole of campaign at Toral zinc, lead, silver project in Spain
Wolf Minerals (LON:WLFE) – LIQUIDATION
Resolute Mining (LON:RSG) – Drilling results from Mako, Senegal
Global auto sales are falling faster than at the height of the financial crisis with a drop of 4m vehicles in total sales expected in 2019, according to the lobby group for the German auto industry (VDA).
A separate study is not expecting sales to recover to the 2017 peak when 84.4m vehicles were sold for at least another four years (Center for Automotive Research).
Both VDA and Car highlighted the continued uncertainty caused by the US-China trade war, and to a lesser extent Brexit were weighing on European car sales.
India keeps interest rates unchanged as the Monetary Policy Committee pauses in its interest rate cutting cycle
India’s MPC cut growth forecasts to 5% from 6.1% while raising inflation expectations to 4.7-5.1%.
US$1.1090/eur vs 1.1072/eur yesterday. Yen 108.96/$ vs 108.71/$. SAr 14.652/$ vs 14.572/$. $1.313/gbp vs $1.305/gbp. 0.683/aud vs 0.683/aud. CNY 7.041/$ vs 7.054/$.
Gold US$1,474/oz vs US$1,475/oz yesterday
Gold ETFs 81.0moz vs US$81.0moz yesterday
Platinum US$892/oz vs US$908/oz yesterday
Palladium US$1,861/oz vs US$1,859/oz yesterday
Silver US$16.83/oz vs US$17.15/oz yesterday
Copper US$ 5,895/t vs US$5,854/t yesterday
Aluminium US$ 1,753/t vs US$1,767/t yesterday
Nickel US$ 13,105/t vs US$13,290/t yesterday
Zinc US$ 2,230/t vs US$2,242/t yesterday
Lead US$ 1,907/t vs US$1,913/t yesterday
Tin US$ 16,820/t vs US$16,750/t yesterday
M&A activity builds momentum across the sector
UK oil and gas continues to thrive this quarter, demonstrated by the recent £5m Union Jack* (UJO LN) placing which follows Reabold Resources’ (RBD LN) £24m fundraise announced in October, primarily for the same West Newton conventional field onshore UK
Further institutional support has been demonstrated by the £10m raise and IPO of Longboat Energy, or Faroe Petroleum mark II, to build a new full-cycle North Sea E&P
The past 12 months has seen the acquisition of Faroe Petroleum (FPM LN) by DNO (DNO ASA); a £380m bid for Eland Oil & Gas (ELA LN) by Seplat Petroleum (SEPL LN); and a £242m bid for Amerisur Resources (AMER LN) by Geopark.
*SP Angel acts as Nominated Advisor and Broker to Union Jack Oil
Oil US$63.2/bbl vs US$61.6/bbl yesterday - Oil prices surged yesterday ahead of today’s OPEC+ meeting in Vienna in anticipation of some type of extension of cuts, or perhaps even more of a cut coming down the road
However, the global economy continues to falter, so it’s not surprising that the market will see resistance at these levels
U.S. crude futures were up 1.2% at $63.1/bbl on the New York Mercantile Exchange
US-China trade tensions and the outlook for Fed policy remain the single largest drivers of oil prices in our view
Natural Gas US$2.423/mmbtu vs US$2.396/mmbtu yesterday - Natural gas prices also ramped up yesterday ahead of today’s inventory report scheduled to be released by the Department of Energy
Expectations are for a 40Bcf draw in natural gas inventories according to survey provider Estimize. Inventories declined by 28Bcf last week as slowing demand buoyed stockpiles
Supply during the latest week was flat according to the EIA
Uranium US$25.95/lb vs US$25.95/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$86.8/t vs US$86.0/t
Chinese steel rebar 25mm US$594.9/t vs US$598.5/t
Thermal coal (1st year forward cif ARA) US$62.0/t vs US$62.0/t
Coking coal futures Dalian Exchange US$188.2/t vs US$187.8/t
Cobalt LME 3m US$35,750/t vs US$35,750/t
NdPr Rare Earth Oxide (China) US$40,973/t vs US$40,756/t
Lithium carbonate 99% (China) US$6,249/t vs US$6,308/t
Ferro Vanadium 80% FOB (China) US$29.0/kg vs US$29.0/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$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
NASA $1.5bn Parker Solar Probe reports findings as it barrels into the solar corona
NASA’s Parker Solar Probe reveals flipping magnetic field accelerate plasma jets (solar wind) from the sun.
A key question is how is the solar wind heated to >2m degrees farenheight within the corona.
The Parker probe is flying closer to the sun that any previous man-made spacecraft and is using.
The probe is using a 4.5-inch-thick carbon-composite shield to protect it’s instruments from the sun as it passes within just 15m miles of the sun’s surface.
Adriatic Metals* (ASX:ADT) A$1.625, Mkt cap A$288.8m – Latest drilling intercects deepest mineralisation so far at Rupice
Adriatic Metals reports that hole BR43-19 has intersected the deepest mineralisation encountered so far at its Rupice project in Bosnia.
The hole was drilled “approximately 20m east of the interpreted eastern fault and 60m east of the closest intercept in BR-27-19” and intersected 16m at an average grade of 1.96g/t gold, 350g/t silver, 5.3% zinc, 3.4% lead, 0.5% copper and 43% barite from a depth of 330m. The intersection includes a higher grade zone of 10m width from 330m depth at an average grade of 2.83g/t gold, 536g/t silver, 7.4% zinc. 4.8% lead, 0.5% copper and 60% barite.
Results from holes BR-27-19, BR-37-19 and BR-43-19 “extends the mineralisation some 200m down-dip and outside of the current ore block model (OBM). The mineralisation remains open down dip and to the south.”
The company explains that the “Two southern most drill holes, BR-41-19 and BR-43-19 confirm extensions of the high-grade mineralisation which is now continuous over 550m, and remains open along strike in the south as drill coverage extends towards the Jurasevac-Brestic prospect”, which is located around 5-600m to the southeast.
Managing Director, Paul Cronin, said that the depth and location of the latest drilling intersections at Rupice “opens the deposit to re-interpretation of the structural controls that have led to the thickest and highest grade results on the down dip extent”
Conclusion: The recent drilling has encountered high grade mineralisation at depth on the south-eastern part of the Rupice deposit in the direction of the Jurasevac-Brestic prospect opening up the opportunity for a reinterpretation of the geological and structural controls of mineralisation to guide the continuing exploration.
*An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia
Altus Strategies* (LON:ALS) 4.8p, Mkt Cap £8.5m – La Mancha strategic investment draws closer
The Company signed a Strategic Investment Agreement with La Mancha regarding a C$11.2 ($8.4m) equity investment in Altus.
Additionally, the Company is proposing a C$5.3m non-brokered private placement for institutional and accredited investors at C$0.09 price, same as for La Mancha.
La Mancha will own 34.5% of the enlarged issued share capital following the strategic investment should the private placement be fully subscribed.
As such La Mancha investment will require a waiver by the UK Panel on Takeovers and Mergers as well as approval of the issuance of the La Mancha shares by Altus shareholders.
The placement is expected to be launched during Dec/19 and close shortly after while La Mancha investment timing is contingent on meeting aforementioned conditions.
The deal is expected to yield a number of strong synergies for Altus from a long term strategic relationship with La Mancha.
The investment will fast track project and royalty generation activities .
La Mancha is a privately owned investment company with stakes in Endeavour Mining, Golden Star Resources and Evolution Mining that operate in West Africa (Mali, Burkina Faso and Cote d’Ivoire, Ghana) and Australia.
Conclusion: The strategic investment is an endorsement of the Altus team by an Africa-focused fund with ~$1bn worth of projects in the gold mining space. Additionally, the deal offers exploration/development capital to advance existing assets as well as add new projects to the portfolio.
*SP Angel acts as nomad and broker to Altus Strategies
Arc Minerals* (LON:ARCM) 2.5p, Mkt Cap £18.4m – High-grade copper assays in step-out drilling extends scale of Chezeya East discovery
Arc Minerals holds an effective 71.34% interest in Zamsort Limited ("Zamsort"), a private company focused on a prospective copper licence in the Zambia Copperbelt, together with a convertible loan to Zamsort which converts into approximately a 5% additional equity interest in Zamsort. A 52.5% equity interest in Zaco Limited (“Zaco”), a private company focussed on a prospective copper and cobalt license adjacent to Zamsort.
Arc Minerals reports further high-grade copper intercepts from drilling at the Chezeya East project in Zambia.
These high-grade copper intersections speak for themselves with:
1.47% Cu over 39m from 13m down hole in hole 60 including:
2.25% Cu over 10m from 41m down hole
1.78% Cu over 21.50m from 29m down hole in hole 57 including:
2.84% Cu over 11m from 34m
0.76% Cu over 24m from 15m down hole in hole 59 including:
1.70% Cu over 7.50m from 23m
Six drill holes are reported in today’s statement with the three best holes reported above
Most of the mineralisation is reported in oxide mineralisation with Hole 56 in sulphide mineralisation from 97.50 down hole.
Hole 55 intersects both oxide and sulphide mineralisation with sulphides seen from 115m down hole.
The location of the drill results indicates a significantly larger copper orebody than previously seen though there is still more drilling to do before Cheyeza East becomes a target which looks suitable for a major.
Hole 56 was drilled some 400m to the North West and is off our map. While Hole 56 contains 1.65% copper the intersection is a bit skinny at just 2.65m down hole intersection.
Arc Minerals also reports the issuance of 5.5m warrants at an exercise price of 4.5p to a historic creditor. Arc has some 737,927,497 shares outstanding.
Conclusion: The three holes presented show exceptional grades across good lengths of intersection. While the scale of the discovery is still relatively modest, the prospect does offer significant potential for further expansion.
Chezeya East and surrounding targets within Arc’s licenses are of significant interest to larger copper miners with many geologists now looking more seriously at the prospects.
Chezeya East is shaping up to be a small-scale, high-grade, copper mine on drilling seen to date with significant potential for a greater-scale discovery.
*SP Angel acts as nomad and broker to Arc Minerals
Cora Gold* (LON:CORA) 5.8p, Mkt Cap £7.5m – Maiden Sanankoro resource lays the base for further upgrades
The Company released maiden Mineral Resource at the flagship Sanankoro gold project in southern Mali prepared by SRK (JORC-compliant).
The MRE is comprised of 5.0mt at 1.6g/t for 265koz in the Inferred category (COG 0.4g/t for oxide and 0.5g/t for sulphide, $1,700/oz gold price).
This includes 233koz at 1.6g/t in oxide material equivalent to ~90% of the mineral inventory and 32koz at 1.8g/t in sulphide mineralisation.
Broken down between prospects, Selin and Zone B show highest grades including 1.8g/t and 2.0g/t, respectively, accounting for ~60% of ounces in total mineral resource.
The resource marks the initial step in determining the overall scale of Sanankoro with the MRE covering only 25% of the total 40km long prospective structural corridor.
SRK reconfirmed the Sanankoro Exploration Target based on +40km in potential mineralised zones for 1-2moz initially estimated in 2108.
The Scoping Study is due to be released later this month.
Conclusion: The MRE is a first step in identifying the full potential of the Sanankoro gold project with the exploration target pointing to 1-2moz in oxides. Additionally, the sulphide mineralisation intersected in the previous drilling programme offer further potential to grow the sulphide resource expanding the scale of the project. The Company is currently in the middle of the 5,000m drilling programme at Sanankoro targeting extensions to existing and new prospects aiming to add more ounces in the resource which we believe the Company has good potential to deliver on.
*SP Angel acts as Nomad and Broker to Cora Gold
Europa Metals Limited (LON:EUZ) 0.029 pence, Mkt Cap £3.5m – Completion of first drillhole of campaign at Toral zinc, lead, silver project in Spain
Europa Metals has announced the completion of the first hole of its current drilling campaign at the Toral zinc/lead/silver project in Spain.
Hole TOD024 was completed at a depth of 302.4m as part of a programme designed to investigate an area to the west of the current indicated resource area in a part of the deposit currently only classified as inferred.
The drilling is intended “to increase confidence levels in the resource within the central proposed future mining area of the Toral project”.
Although assays from hole TOD024 are not yet reported, the company says that the hole encountered “visible sulphide mineralisation” without further specifying the metals or mineralogical nature of the sulphides.
Drilling has moved on to the next hole, TOD025 which is sited on the same drill pad; “It is expected that the sequence of drill holes targeted for this drilling campaign will largely utilise the same drill pad” which should help reduce the moving and set-up time between holes but may limit the area which can be covered.
Conclusion: We a wait the assay results from the first, and subsequent, holes from the Toral programme with interest.
Hargreaves Services (LON:HSP) 306p, mkt cap £98m – Liquidators sell Hemerdon tungsten mine in Devon to Tungsten West Ltd £2.8m
Wolf Minerals (LON:WLFE) – LIQUIDATION
The Liquidators of Wolf Minerals has sold the Hemerdon tungsten mine in Devon to Tungsten West Ltd for £2.8m
Tungsten West is now taking control of the mine and will pay Hargreaves Services £1mpa to continue to work at the mine for the next 8 years.
Hargreaves’ subsidiary Drakelands Restoration Ltd has maintained the site preserving value while the liquidators found an acceptable buyer.
The sale should enable the mine to restart unencumbered by debt from the heavy capital cost of the project.
The deal creates the opportunity to restart the mine restoring jobs and creating earnings potential in the medium term
At least two of the directors of Tungsten West Ltd are involved with Baker Steel Capital Managers, a specialist mining fund manager, based in London
Tungsten prices are still relatively low, though we expect prices to recover as automotive manufacturers retool car plants for new ranges of Electric Vehicles and as governments commission significant new infrastructure projects as a method to restore economic growth.
Resolute Mining (LON:RSG) 65.64 pence, Mkt Cap £592.8m– Drilling results from Mako, Senegal
Resolute Mining reports that drilling in 15 holes to explore underneath the Mako pit in Senegal, which was acquired as part of the Toro Gold acquisition in July, has shown potential to expand the mineral resource inventory and extend the mine’s life.
Among the results reported today are:
A 6m wide intersection averaging 14.9g/t gold from a depth of 224.7m in hole PWD 423; and
A 6m wide intersection averaging 11.7g/t gold also from a depth of 224.7m in hole PWD 424; and
A 10.5m wide intersection averaging 5.9g/t gold from a depth of 229.7m in hole PWD 425; and
A 6m wide intersection averaging 8.3g/t gold from a depth of 58.2m in hole PWD 435; and
A 27m wide intersection averaging 13.6g/t gold from a depth of 29.7m in hole PWD 436 which also encountered a second mineralised zone of 8.5m width averaging 11.7g/t gold from 74.7m depth; and
A 15m wide intersection averaging 4.1g/t gold from a depth of 10.5m in hole PWD 441; and
A 25.5m wide intersection averaging 3.16g/t gold from a depth of 171.0m in hole PWD 444
Resolute Mining says that the drilling confirms “the potential of a coherent high-grade lode at the north-eastern end of the Mako open pit” and says that this opportunity will be followed up by further drilling in 2020.
As well as “the immediate opportunities for mine life extension at Mako, Resolute has identified significant additional opportunities to source oxide mill feed for Mako within trucking distance of the existing processing plant. We are investigating possible joint ventures and acquisitions of highly prospective ground in eastern Senegal.”
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.
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