SP Angel . Morning View . Monday 16 12 19
Markets climb on a preliminary US China trade deal
MiFID II exempt information – see disclaimer below
Pure Gold Mining (LON:PUR) 42pence & Mkt Cap £151.8m – Drilling results from Madsden Red Lake
Sunrise Resources PLC (LON:SRES) 0.13 pence, Mkt Cap £4.0m – CS Project secures water rights
Scotgold Resources* (LON:SGZ) 63p, Mkt Cap £31m – Plant commissioning delayed to May/20
Shanta Gold (LON:SHG) 9.3p, Mkt Cap £73m – Exploration drilling returns high grade intersections at New Luika
Vast Resources* (LON:VAST) 0.29p, Mkt Cap £30m – Baita Plai cold commissioning
Sirius (LON:SXX) - Ding dong Sirius share are high – A Christmas Carol
Energy storage and solar will grow faster than electric vehicles for Tesla according to Musk (CNBC)
‘Musk said on the most recent earnings call there will be more focus on solar and the broader Tesla Energy business, which includes aligning intermittent solar power with battery storage.’
Question is, will Elon Musk stick with Li-ion for grid storage or will Tesla move to adopt Vanadium Redox Flow Battery technology.
We US energy storage market to grow significantly from its current scale of 430MW deployed in 2019.
Softbank, Bill Gates, Geoff Bezos, Michael Bloomberg, Richard Branson and Jack Ma are all reported to have invested in ESS for its iron-flow battery potential
Dow Jones Industrials +0.01% at 28,135
Nikkei 225 -0.29% at 23,932
HK Hang Seng -0.65% at 27,508
Shanghai Composite +0.56% at 2,984
FTSE 350 Mining +2.04% at 18,836
AIM Basic Resources +0.07% at 2,024
Economics
China’s foreign minister says the US has successively angered and suppressed China (China News Stories)
Senior Chinese diplomat Wang Yi said on Friday that the United States had seriously damaged the hard-won mutual trust between the countries by criticizing Beijing over issues such as Hong Kong and the treatment of Muslim Uighurs.
“Such behavior is almost paranoid, and is indeed rare in international exchanges, seriously damaging the hard-won foundation of mutual trust between China and the United States, and seriously weakening the United States’ international credibility,” said State Councillor Wang.
Wang, who is China’s foreign minister, said there were deep-seated issues that need to be addressed and resolved between both sides, issues that are bringing increasingly severe challenges to the future of the countries’ relationship.
Wang was speaking at an annual symposium in Beijing on international affairs and China’s diplomacy..
Germany – China threatens Germany auto sales in China over Huawei 5G
China is flexing its economic muscle yet again, this time with a veiled threat to Germany if the nation’s policy makers ban the use of Huawei 5G
The US is pushing NATO states to exclude Huawei 5G from its networks due to security concerns.
China’s ‘Ambassador said Huawei has no legal obligation to provide data to the Chinese government, then reminded the audience that German manufacturers account for a quarter of the 28m cars sold in China last year.’
‘Could we say one day that these German cars are no longer safe because we're in a position to manufacture our own cars?’ China Ambassador on Handelsblatt website video.
The statement highlights how China will use access to its markets as well as to raw materials to get what it wants.
German auto manufacturers are having a tough time following revelations that Volkswagen was cheating on its diesel emissions and have invested heavily in manufacturing and marketing in China.
The last the German auto manufacturers and the German economy needs now is to be effectively excluded from China.
ESKOM Christmas carol (by the Daily Maverick)
One the first day of Christmas ESCOM said to me:
Eleven rolling blackouts,
Ten traffic gridlocks,
Nine economics collapsing,
Eight tweets a-lying,
Seven batteries dying,
Six substations blazing,
Five stolen cables,
Four confusing load-shedding schedules,
Three broken conveyors,
Two piles of wet coal,
And a president who thinks it’s sabotage
*ESKOM is the South African power utility
Currencies
US$1.1130/eur vs 1.1172/eur last week. Yen 109.48/$ vs 109.65/$. SAr 14.471/$ vs 14.425/$. $1.336/gbp vs $1.337/gbp. 0.692/aud vs 0.687/aud. CNY 7.004/$ vs 6.982/$.
Commodity News
Gold US$1,476/oz vs US$1,472/oz last week - Gold inches up on Monday morning as investors seek clarity on ‘phase one’ trade deal (Reuters)
Spot gold rose 0.2% earlier this morning to $1,477.73/oz as investors wait for news regarding the US-China trade deal.
Some analysts have been critical of the deal, as officials are yet to decide a date to sign the agreement and many believe the phase one deal fell short of market expectations.
The dollar index fell 0.2% this morning against a basket of rivals, making gold cheaper for holders other other currencies.
24 dead after landslide at DRC gold mine (mining,com)
The landslide occurred at the Nyido gold mine, in the North-Eastern Ituri province.
The incident took place on Saturday afternoon as torrential rain softened the ground and caused slope failure.
Gold ETFs 80.9moz vs US$80.9moz last week
Platinum US$933/oz vs US$938/oz last week
Palladium US$1,959/oz vs US$1,976/oz last week
Silver US$16.99/oz vs US$16.96/oz last week - Scientists use silver for next generation of solar cells (mining.com)
Estonian researchers have partially substituted copper with silver in solar cells’ absorber material to improve the efficiency of devices.
The scientists aim to develop the next generation of thin-film solar cells, which consist of several thin layers of semiconductor materials.
The Estonian researchers created compound semiconductor materials named kesterites, however replaced 1% copper with silver, yielding an improved efficiency of between 6.6% to 8.7%.
Base metals:
Copper US$ 6,179/t vs US$6,173/t last week - Copper – LME stocks fall another 4,325t with another 4,525 copper warrants cancelled
The world realises it will need more copper for new infrastructure to power millions of new electric vehicles.
"will be really crazy growth for as far into the future as far as I can imagine".
Aluminium US$ 1,767/t vs US$1,776/t last week
Nickel US$ 14,180/t vs US$14,140/t last week
Zinc US$ 2,261/t vs US$2,284/t last week
Lead US$ 1,892/t vs US$1,956/t last week
Tin US$ 17,285/t vs US$17,085/t last week
Energy:
Oil & Gas - 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
See our take on 2020’s outlook at: https://www.proactiveinvestors.co.uk/companies/news/909122/sp-angel-s-sam-wahab-discusses-hurricane-energy-eco-atlantic-tullow-and-union-jack-oil-909122.html
*SP Angel acts as Nominated Advisor and Broker to Union Jack Oil
Oil US$65.3/bbl vs US$64.8/bbl last week
Brent and WTI closed at multi-month highs last week, helped by positive developments in trade negotiations between the US and China, and an easing of tensions over the UK’s plan to leave the European Union
Both events offset concerns over global demand growth after a warning from the International Energy Agency, and a surprise build in US supply
US President Donald Trump and Chinese officials have agreed to a “phase one” trade deal that included cutting American tariffs on Chinese goods
The two countries have reached an agreement where Washington would suspend tariffs on Chinese imports scheduled for Sunday, while Beijing would step up purchases of agricultural products.
But they offered no specific details on the amount of US agricultural goods Beijing had agreed to buy, a key sticking point of the lengthy deal negotiations.
Brent futures were up 44 cents to $65.1/bbl, whilst WTI futures were up 0.7% to US$60.9/bbl
Natural Gas US$2.296/mmbtu vs US$2.264/mmbtu last week
Natural gas finished lower last week as traders continued to be confounded by unreliable weather forecasts that led to mostly two-sided price action
Natural gas futures were posting a solid rebound as weather models started to converge on prospects for late-December cold
Natural gas futures for January delivery rose 3.8% to US$2.33/mmbtu, which is 44% down from the same time last year and still the lowest mid-December level in four years
Uranium US$25.55/lb vs US$25.75/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$92.6/t vs US$92.4/t
Chinese steel rebar 25mm US$586.4/t vs US$584.1/t
Thermal coal (1st year forward cif ARA) US$60.0/t vs US$59.5/t
Coking coal futures Dalian Exchange US$186.8/t vs US$183.9/t
Other:
Cobalt LME 3m US$34,750/t vs US$34,750/t
NdPr Rare Earth Oxide (China) US$41,617/t vs US$41,751/t
Lithium carbonate 99% (China) US$5,996/t vs US$6,016/t
Ferro Vanadium 80% FOB (China) US$28.7/kg vs US$28.7/kg - Ferro-vanadium prices turn lower in China falling 3.4% to $27-29/kgV
Ferro-vanadium fell 2.5% to $10.45-11.75/lb in Pittsburgh, US
Ferro-vanadium fell 6.9% to $22.01-22.87/kg in Western Europe
Ferro-vanadium fell10.2% to $4.7-5.56/kg in Rotterdam
Antimony Trioxide 99.5% EU (China) US$5.1/kg vs US$5.1/kg
Tungsten APT European US$235-245/mtu vs US$230-245/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
Lithium-ion batteries seen as possible cause of dive boat fire
Li-ion battery charging may be to blame for the fire on the dive boat, Conception which killed 34 people (LA Times)
Divers use numerous Li-ion batteries for powering underwater kit many of which were being recharged overnight from sockets often located under benches with foam filled cushions.
We are not trained in fire safety but the thought of so many USB-style chargers running overnight and loosely stuffed into sockets in unsuitable places sounds like a potential fire hazard in any situation.
USB chargers are permanently charging when left in a socket and overcharging Li-ion batteries is not a great idea.
Most laptops have an internal circuit to stop charging when at full charge but we suspect some other devices might not.
Lead and nickel-based batteries can also meltdown and cause fires if improperly handled.
The failure rate on Lithium ion batteries is seen as less than 1 in 1m while the failure rate on quality Li-ion cells is better than 1 in 10m (batteryuniversity.com)
UK city to ban diesel cars
The city of Bristol is to ban private diesel cars from its centre from 7am to 3pm in a bid to cut dangerous NO2 levels.
The ban is despite the council recently spending millions on new diesel vehicles.
Private vehicles will be completely banned while commercial vehicles will face a charge, though we re.
Congress considers EV tax credit revamp (MarketWatch)
Automakers are pressing the US government to renew expiring tax cuts and subsidies.
Tesla, General Motors and other companies are lobbying around a possible EV credit scheme.
The potential for EV credit has been included by Democrats in a proposed GREEN Act, that aims to deliver a wide range of energy-related tax incentives.
The act would raise the sales level at which the credit starts to get phased out. The current $7,500 EV tax credit, allows taxpayers to deduct part of the cost of buying an EV, phases out once an automaker hits 200,000 sales.
If the extension gets the green light, there would be a $7,000 credit until a manufacturer hits 600,000 vehicles sold.
However, There is still opposition to EV subsidies in Washington, as Republican John Barrasso of Wyoming was argued that subsides for EVs should end in what he calls the “Fairness for Every Driver Act.”
The GREEN Act would also see a new credit of up to $2,500 for used-EVs, providing the EV is sold for less than $25,000; along with other criteria.
Company News
Pure Gold Mining (LON:PUR) 42pence & Mkt Cap £151.8m – Drilling results from Madsden Red Lake
Pure Gold Mining reports high grade drill intersections from its 1m oz Madsden Red Lake deposit in Ontario where the company is currently developing a mine based on a probable reserve of 3.5mt at an average grade of 9.0g/t gold.
The latest drilling “has intersected high-grade gold mineralization from a second drill hole targeting the widespread gap between the Company's 8 zone at depth and the Russet South zone, which outcrops at surface.1 This latest drill hole confirms the discovery potential of this new target area and supports continuity of the gold system between Russet South and 8 zone”.
The company says that “In addition, ongoing drilling along the Madsen Red Lake Mine Trend continues to rapidly expand the footprint of the Wedge zone with multiple drill holes returning drill intercepts anticipated to upgrade the current mineral resource and also likely to expand the resource footprint including the deepest Wedge intercept to date” Among the results highlighted today are:
A 1.1m wide intersection at an average grade of 167.0g/t gold from a depth of 346.9m in hole PG19-693; and
A 1.5m wide intersection at an average grade of 51.5g/t gold from a depth of 412.6m in hole PG19-713; and
A 1.0m wide intersection at an average grade of 9.0g/t gold from a depth of 267.8m in hole PG19-691 and which forms the upper part of a 2.5m wide intersection averaging 4.3g/t gold; and
A 1.7m wide intersection at an average grade of 8.7g/t gold from a depth of 253.7m in hole PG19-700; and
A 2.0m wide intersection at an average grade of 6.9g/t gold from a depth of 223.0m in hole PG19-696.
The results “highlight the down plunge continuity of the zone, reinforcing the Wedge as a high priority for resource growth. Importantly, in addition to the 500 metre strike extension identified in the October 1, 2019 news release, two additional new gold mineralized shoots appear to be taking shape adjacent to current resources.”
Darin Labrenz, President and CEO of Pure Gold commented that the drilling results were “pushing well beyond the boundaries of our previous feasibility study … successfully pushing the envelope downward at Wedge and a second test of the 8 zone gap returning high grade gold. Importantly, all of this sits within reach of a mine and milling complex expected to be in production in Q4 2020, providing clear support for the opportunity for a phased approach to growth of the Madsen Red Lake Mine into a major regional producer”.
Mr. Labrenz also explained that “Today's exploration results include a new gold-bearing pierce-point in the gap between Russet South at surface and the deeper 8 zone, confirming the new mineralized corridor described in the October 9, 2019 news release and establishing geologic continuity between these two high grade zones.”
Conclusion: Drilling at Madsden Red Lake is opening up potential to expand the existing 1m oz gold reserve and showing geological continuity between near surface and deeper mineralisation as well as extending its known lateral extent. We look forward to further news as the drilling continues.
Sunrise Resources Plc (LON:SRES) 0.13 pence, Mkt Cap £4.0m – CS Project secures water rights
Sunrise Resources has announced that it has signed an agreement with Liberty Moly LLC to lease water rights for the CS Pozzolan Perlite Project for an initial five years term.
The lease is renewable for “a further five one-year periods and covers enough water for the Project’s annual projected requirements at full production rates.”
The water is sourced from “the past-producing Liberty molybdenum mine some 18 miles west of, and in the same water basin as, the Project.”
Sunrise Resources will “with assistance from Liberty Moly … now apply to the Nevada Division of Warter Resources for permits to enable extraction of water at the Company’s designated well-site”.
Executive Chairman, Patrick Cheetham, said “This is another tick in the box for the project development, We need this water for dust control ad so are delighted to have secured this water lease.”
Scotgold Resources* (LON:SGZ) 63p, Mkt Cap £31m – Plant commissioning delayed to May/20
BUY
The Company updated the development schedule of the high grade Cononish gold operation extending the commissioning date by 12 weeks with first production now expected in May/20.
The delay is attributed to the sensitive nature of the local environment requiring careful handling of the surface peat layer.
“The Company has encountered schedule delays relating to the management of excavated materials necessary to construct the process plant building and to establish the site wide drainage required for the establishment of the "dry stack" tailings storage facility. The area of these sites is overlain by peat to varying depths, for which the company is utilising all good practice to manage and preserve this environmentally sensitive material by minimising storage. This includes avoiding the handling of the peat during and after periods of particularly wet weather, as this can cause undue degradation,” the Company said.
“In certain key areas, greater depths of peat have been encountered than planned for, with a result that the minimised planned temporary storage areas available were insufficient and alternative locations have been sought in consultation with the planning authority. The identification, assessment and design of these alternative areas has proved to be time consuming and created delays to the critical path process plant platform construction.”
The Company reiterated that despite a three month delay it remains funded through to gold production and revenue generation.
Conclusion: An unfortunate delay to commissioning that pushes first production out slightly (May/20 v previously expected Feb/20), although, the Company remains funded through to first gold pour and revenue generation.
*SP Angel acts as Nomad and Broker to Scotgold Resources
Shanta Gold (LON:SHG) 9.3p, Mkt Cap £73m – Exploration drilling returns high grade intersections at New Luika
At BC North, a total of 16 holes for 2,551m was completed testing down-plunge extensions of the orebody.
In Q1/20 the plan is to continue step out drilling focusing on the down-plunge and lateral extensions of the structure aiming to grow the resource.
BC North is located ~300m from the operating Bauhinia Creek mine and hosts 21koz at 2.90g/t in Indicated resources as well as 4koz at 3.04g/t in the Inferred category.
Selected intersections include:
11m at 8.55g/t from 93m (BNRC029):
10m at 10.93g/t from 49m (BNRC031);
10m at 9.18g/t from 94m (BNRC028);
4m at 10.29g/t from 75m including 1m at 22.10g/t (BNRC023)
At BC East (~400m away from the BC mine), a total of 19 shallow RC drill holes for 990m was completed with drilling to restart in Q2/20 post the rainy season and focus on down-dip and plunge of the mineralised structures.
Selected intersections include:
7m at 6.86g/t from 14m including narrow 1m intervals of 10-28g/t (CSR538);
4m at 4.86g/t from 8m including 1m at 24.70g/t (CSR545).
At Elizabeth Hill (4km away from the NLGM processing plant), a total of 20holes for 2,186m was completed as part of an infill drilling programme aimed at converting the available inferred mineral resource into a higher confidence category.
The Elizabeth Hill Main and North zones are estimated to host 115koz at 2.25g/t in the Indicated category and 31koz at 1.52g/t in Inferred resources.
Selected intersections included:
2m at 2.46g/t from 0m (CSR531);
9m at 2.31g/t from 116m (CSR528);
2m at 2.16g/t from 94m (CSR534).
At the operating underground BC mine, drilling tested the continuity of the BC westerly plunging shoot between levels 530mRL and 640mRL.
Phase 2 drilling at the BC Deep West is ongoing and is expected to involve 750m drilling targeting the BC westerly plnging shoot between levels 525mRL and 580mRL.
Selected results include:
4.0m at 2.41g/t from 213m (CSD130);
7.3m at 4.52g.t from 239m including 0.7m at 30.10g/t (CSD131).
True widths are estimated to range between 80% and 90% of reported intersections.
Recent drilling results will be included in a Mineral Reserve and Resource Update to be released in early 2020.
Conclusion: Positive exploration results point to high grade intersections hit over good intervals in a combination of step out and infill drilling boding well for future expansion of the life of mine at the NLGM operation.
Vast Resources* (LON:VAST) 0.29p, Mkt Cap £30m – Baita Plai cold commissioning
The team announced cold commissioning of the Baita Plai polymetallic flotation plant.
Power line, tailings pipe, crushers, mills, flotation cells and other equipment have been refurbished or replaced.
Current capacity is for 7ktpm of ore with a plan to ramp it up to 14ktpm once new equipment from China arrives on site in January.
Conclusion: Plant cold commissioning brings the Baita Plai polymetallic brownfield operation one step closer to the restart of production. The operation is set to benefit from the available underground mine infrastructure accommodating Vast plans to expand throughput to 14ktpm. Concurrently the Company is in the middle of the drilling programme with a view to release a JORC compliant resource/reserve statement in H2/20.
*SP Angel acts as Broker to Vast Resources
Sirius (LON:SXX) - Ding dong Sirius share are high
In Whitby the bells are ringing:
Ding dong! Sirius shares are in the sky
Driven by Directors singing
Glorious stock promotion in excelsis!
Glorious stock promotion in excelsis!
E'en so here Sirius shares are not low,
Let Sirius shares be swungen,
And "Io, io, io!"
By IFAs and Bulletin Boards a’ sungen
Glorious stock promotion in excelsis!
Glorious stock promotion in excelsis!
Pray your shares dutifully rise
Your matin stock’s a ringer,
May you beautifully rhyme
Your Sirius song run by ringers
Glorious stock promotion in excelsis!
Glorious stock promotion in excelsis!
Sirius no excelsis!!!!
*SP Angel does not act for Sirius Minerals
Analysts
John Meyer – 0203 470 0490
Simon Beardsmore – 0203 470 0484
Sergey Raevskiy – 0203 470 0474
Sales
Richard Parlons – 0203 470 0472
Abigail Wayne – 0203 470 0534
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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