logo-loader

Today's Market View - Adriatic Metals, Anglo American, Atalaya Mining and more...

Adriatic Metals* (LON:ADT) – Permitting update Anglo American (LON:AAL) – De Beers diamond sales Atalaya Mining (LON:ATYM) – Permitting update for Proyecto Touro Altus Strategies* (LON:ALS) 7.3p, Mkt Cap £16m – Start of drilling at Tabakorole Gold Project

AdEPT Technology Group PLC - Today's Market View - Adriatic Metals, Anglo American, Atalaya Mining and more...

SP Angel . Morning View . Wednesday 29 01 20

Copper prices marginally higher as risk sentiment remains fragile

MiFID II exempt information – see disclaimer below  

 

Adriatic Metals* (LON:ADT) – Permitting update

Anglo American (LON:AAL) – De Beers diamond sales

Atalaya Mining (LON:ATYM) – Permitting update for Proyecto Touro

Altus Strategies* (LON:ALS) 7.3p, Mkt Cap £16m – Start of drilling at Tabakorole Gold Project

Georgian Mining Corporation (LON:GEO) – Georgian Mining receives confirmation of tenure from the Georgian National Agency of Mines

Keras Resources* (LON:KRS) – Keras to place order for larger 25,000tpm plant at Nayega

Sovereign Metals (ASX:SOV) - Raising A$2m

Shanta Gold (LON:SHG) – Higher resource at Singida to yield better project economics

Trans-Siberian Gold (LON:TSG) – FY20 production guided at 38-42koz and dividend policy reiterated

 

Virus – 2019-nCoV virus successfully grown in Australian lab

Australian lab successfully grows version of Wuhan coronavirus (The Telegraph).

The breakthrough should allow the lab to come up with an antibody test to support early diagnosis of the virus before symptoms appear.

We believe a number of labs are working on the virus around the world though the development and testing of any vaccine is likely to take at least three of four months.

The virus is reported to have infected some 5,974 people and killed 132 people, mainly in Wuhan China.

A number of experts reckon the virus did not start in the live animal market in Wuhan and that the virus was inadvertently spread in the busy marketplace.

*Please refer to SP Angel’s healthcare analysts for further expert analysis on the impact of the virus and timelines for a vaccine.

 

Virus – 2019-nCoV virus delays Australian gold mine sale as buyer shows symptoms of coronavirus (Reuters)

The sale has been delayed after the Hong-Kong based buyer’s family showed symptoms of coronavirus, leading to the whole family being quarantined.

Australia’s Ausmex Mining Group said it had agreed to extend the settlement for the A$4 million sale of its Gilded Rose Gold project in Queensland to Jin Resources.

 

Replacing US cars with EVs would require huge increases in global mining (Global Energy metals Corp.):

1,000% for cobalt

500% for neodymium

370% for lithium

250% for copper.

REEs – Japan raises stockpiles of rare earths and other battery metals (Nikkei)

Japan is buying stocks of rare earths and other battery metals to counter the risk of Chinese restrictions on their availability.

The Nikkei report that Japan is buying stocks of lithium, cobalt and rare earths

Daimler-Benz has already cut target production of Electric Vehicles due to supply issues.

US government officials are also talking to Rare Earth miners with a view to supporting new REE production and attracting feedstock for a potential new refinery to be based in the US.

Similar initiatives also appear to be entrain in the UK (Teesside, proposed REE refinery) and Europe.

Tokyo currently keeps 60-day supplies of vital materials such as lithium, cobalt and rare earth metals.

The trade ministry is currently reviewing this policy, with the intent of revising regulations in order to raise stockpiles to undisclosed levels.

China provides nearly 60% of Japan’s imports of critical minerals and Japan is worried about outbound shipments from China becoming restricted.

 

Dow Jones Industrials +0.66% at 28,723

Nikkei 225 +0.71% at 23,379

HK Hang Seng -2.82% at 27,161

Shanghai Composite CLOSED at 2,977

FTSE 350 Mining +0.67% at 18,349

AIM Basic Resources -0.56% at 2,121

 

Economics

US – Risk sentiment remains fragile as investors closely watch the situation with the virus outbreak in China.

A series of mixed economic data was released in the US yesterday ahead of the Q4 GDP report due Thursday (2.1%qoq, in line with Q3) and the FOMC monetary policy announcement later today (no change forecast)

Durable goods came in better than expected in December (although November numbers were revised significantly lower) supported by defence capital goods orders.

A drop in civilian aircraft orders has been driven by the ongoing impact of the Boeing 737 Max case.

Poor core orders highlights weak state of business investment that recorded declines in the middle of the year and is expected to show no growth in Q4/19.

Consumer confidence survey showed an improvement in sentiment this month amid improvement in US-China trade relations; although, is it too early to see any impact of the coronavirus outbreak in collected data (cut-off date was January 15), Bloomberg reports.

Headline Durable Goods Orders (%mom): 2.4 v -3.1 (revised from -2.1) in November and 0.3 forecast.

Core Capital Goods Orders (%mom): -0.9 v 0.1 (revised from 0.2) in November and 0.2 forecast.

Conference Board Consumer Confidence: 131.6 v 128.2 (revised from 126.5) in January and 128.0 forecast.

 

UK – Another survey shows a recovery in property prices following a conclusive win of Conservatives in December general elections.

Values climbed 1.9%yoy in January marking the strongest increase since Nov/18, according to Nationwide Building Society.

“Looking ahead, economic developments will remain the key driver of housing market trends and house prices… we expect the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next 12 months,” Nationwide commented on numbers.

On a separate note, the UK allowed Huawei to help build 5G infrastructure with some restrictions despite US pressure.

Mobile operators in the UK will be able to use Huawei equipment in their 5G networks but the Chinese company will be excluded from “security critical” core areas.

 

Currencies

US$1.1005/eur vs 1.1021/eur yesterday.  Yen 109.04/$ vs 108.82/$.  SAr 14.600/$ vs 14.670/$.  $1.302/gbp vs $1.302/gbp.  0.676/aud vs 0.674/aud.  CNY 6.911/$ vs  6.911/$.

 

Commodity News

Gold US$1,570/oz vs US$1,580/oz yesterday - Gold edges higher after falling 1% in previous session (Reuters)

Elevated concerns over the economic impact of coronavirus has caused panic in the markets as 6,000 become infected.

Investors are also eagerly awaiting a policy decision by the US Federal Reserve due later today, as lower interest rates reduce the opportunity cost of holding bullion.  

Gold ETFs 82.3moz vs US$82.1moz yesterday

Platinum US$994/oz vs US$988/oz yesterday

Palladium US$2,314/oz vs US$2,282/oz yesterday

Silver US$17.50/oz vs US$18.08/oz yesterday

           

Base metals:   

Copper US$ 5,717/t vs US$5,717/t yesterday - Chilean copper output to rise by 20% until 2030 (Fastmarkets MB)

Chilean copper output from mine production is estimated to reach 7.04mt in 2030, up 19.7% from the 5.88mt expected in 2019 – according to the country’s copper commission.

The copper commission (Cochilco) used the current project pipeline as a basis for calculating production trends.

A bullish scenario would see production at 8.08mt in 2030, whereas a bearish output would see output at 5.91mt.

Of the estimated total of 7.04mt, 1.63mt is expected to come from entirely new projects.

Aluminium US$ 1,750/t vs US$1,760/t yesterday

Nickel US$ 12,595/t vs US$12,690/t yesterday - LME nickel hits seven-month low due to risk-off selling (Fastmarkets MB)

The LME 3m nickel price hit a seven month low of $12,550/t yesterday as uncertainty in Asian markets mounts due to China’s growing virus epidemic.

The Chinese government announced yesterday that post new year operations will be suspended until the 9th of February, however the Shanghai Futures Exchange announced its intention to resume trading on the 3rd of February.

Zinc US$ 2,242/t vs US$2,221/t yesterday

Lead US$ 1,886/t vs US$1,885/t yesterday

Tin US$ 16,265/t vs US$16,245/t yesterday

           

Energy:           

Oil US$60.1/bbl vs US$58.7/bbl yesterday

Oil prices slightly reversed recent downward trends with the API reporting a surprise large crude oil inventory draw of 4.27MMbbls for the week ending 24 January, compared to analyst expectations of a 482k build in inventory

The rise ends a five-day price slide as fears of diminished oil demand following the recent Coronavirus outbreak

Nevertheless, the spread of the virus and its corresponding impact on oil demand growth is the biggest factor weighing on prices

Pre-virus Chinese oil demand has been growing at an annual rate of 5.5%, while comparatively, US oil demand has been growing by 0.5%

The Chinese government has tried to quarantine Wuhan and other cities, affecting tens of millions of people.

Multinational businesses in China are also implementing lockdown procedures.

Brent futures are up 0.3% to $60.3/bbl, whilst WTI futures are up 0.4% to US$54.1/bbl

Natural Gas US$1.920/mmbtu vs US$1.898/mmbtu yesterday

Natural gas futures are trading higher as the market continues to consolidate following last week’s plunge to the multi-year low of US$1.862

The market is being supported by mixed trends in the latest weather forecasts

However, absent from the guidance are forecasts calling for colder temperatures during the second week of February

In its Short-Term Energy Outlook, the EIA forecasts that US natural gas exports will exceed natural gas imports by an average of 7.3Bcf/d

Supply rose in the latest week with the average total supply of natural gas rose by 1% compared with the previous report week.

Uranium US$24.40/lb vs US$24.40/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$83.3/t vs US$85.0/t

Chinese steel rebar 25mm US$570.4/t vs US$570.4/t

Thermal coal (1st year forward cif ARA) US$62.2/t vs US$61.8/t - Coal India receives environmental approvals for 17 projects (Mining Weekly)

The Indian government has given environmental clearances to the state-run miner, in the hope the miner can achieve production of 1btpa.

According to the countries coal minister, these clearances will add 150mtpa to Coal India’s production, enabling the company to produce 1btpa by 2023/24.

Coal India aims to produce 750mt during 2020/21, up from the targeted 660mt which is estimated to account for 82% of total domestic dry fuel production.

The miner reported in its annual statement that as many as 54 projects were facing delays.

Coking coal futures Dalian Exchange US$184.2/t vs US$184.2/t

           

Other:  

Cobalt LME 3m US$33,000/t vs US$32,500/t

NdPr Rare Earth Oxide (China) US$40,371/t vs US$40,371/t

Lithium carbonate 99% (China) US$5,571t vs US$5,571/t

Ferro Vanadium 80% FOB (China) US$28.5/kg vs US$28.5/kg

Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.0/kg

Tungsten APT European US$235-245/mtu vs US$235-245/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

American Electric Power (NYSE:AEP) and Nissan Motor bid to use old EV batteries to cut power storage costs (Japan Times)

AEP and Nissan are using expired Nissan Leaf batteries to test new technology that could lower systems costs by 50% and extend the life of Li-ion batteries by up to 33%.

The battery management technology is developed by Melbourne based start-up Relectrify. The technology monitors individual cells and controls to the power to and from each cell. It identifies which battery cells are weak and draws less energy from them, drawing power from the stronger cells. If a dud cell is discovered the system can disengage it.

A traditional battery management system stops drawing power when the first battery cell is depleted. The researchers are using old or second life batteries to test the system which could reduce the costs for energy storage systems. (Popular Mechanics)

Cheaper energy storage in batteries could provide an alternative to adding more capacity at electricity substations or building more transformers. End users remain cautious, with concerns about the life-span and costs of reused Li-ion batteries. (CleanTechnica)

Similarly in Hamburg, Germany Volkswagen (VW) have installed former 9.9kWh Passat GTE batteries at a VHH bus terminal in Bergedorf. The experiment is also part of a wider movement to explore the use of second use batteries in the electrification of mobility.

 

SK Innovation to boost investment in EV batteries and materials business (The Korean Herald)

CEO and President Kim Jun providing comments in an interview to company employees via an in-house channel that SK would look to boost investment into their EV batteries and materials business.

No further detail was provided on the plan in the interview. To date the Company has invested US$1.6b into a car battery plant in the US state of Georgia. The plant has a capacity of 9.8 gigawatt hours per year. Construction is 30% complete.

In recent weeks SK announced plans to build a second factory in Georgia, US which could have capacity of up to 10GWh  whilst also suggesting consideration has be given expanding its second plant in Hungary which is currently under construction. The expansion would increase capacity from 10GWh to 16GWh. (Reuters)

 

Company News

Adriatic Metals* (LON:ADT) 90p, Mkt Cap £160m – Permitting update

Adriatic Metals reports that it has secured agreement with the Ministry of Economy for the Zenica-Dobroj Canton which aligns the agreements at the local level with the Federal Mining Code in relation to its Veovaca and Rupice concessions in Bosnia.

The new agreement confirms the company’s right over gold, silver and copper which have emerged as an important component of the mineralisation since the Concession Agreement of 2013.

The changes also remove a “potential requirement to commence Exploitation by May 2020” and adjust royalty rates from “the current level BAM 1.50 (€ 0.77) to BAM 3.90 (€1.99) per tonne Run of Mine (ore into plant), increasing the payment from the date exploitation is granted but prior to commencement of production, to €199,325 per annum from the current level of €76,663 per annum”

*An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia

 

Anglo American (LON:AAL) 2058.5 pence, Mkt Cap £25.8bn – De Beers diamond sales

Diamond sales at De Beers for the 1st sales cycle of the year amounted to a provisional US$545m approximately 9% higher than the US$500m recorded at the equivalent stage last year and US$119m (28%) higher than the revised US$426m for the preceding, final sale of 2019.

Commenting on the sales, De Beers’ CEO, Bruce Cleaver, said that “Demand for rough diamonds increased during the first Sight of 2020 following the end of year selling season and subsequent inventory restocking”.

The De Beers results and comments echo reports from other diamond producers, including Petra Diamonds comments earlier this week suggesting that signs of a modest recovery in rough diamond pricing may be underway.

 

Altus Strategies* (LON:ALS) 7.3p, Mkt Cap £16m – Start of drilling at Tabakorole Gold Project

The Company launched a 2,000m AC drilling programme at the Tabakorole gold project funded by Glomin under the JV agreement.

The programme will be focused on adjacent to the historic resource areas that was previously estimated at 590koz at 0.99g/t.

Historic drilling returned wide and close to surface mineralised intersections including 16m at 1.85g/t from 1m and 10m at 1.41g/t from 26m.

The Tabakorole project is located on the Massagui Belt in southern Mali that hosts the Morila gold mine (100k to the north).

Conclusion: The drilling programme fully funded by the JV partner is kick starting at Tabakorole in southern Mali where Altus identified a series of shallow prospective targets.

*SP Angel acts as Nomad and Broker to Altus Strategies

 

Atalaya Mining (LON:ATYM) 187.5 pence, Mkt Cap £257.5m – Permitting update for Proyecto Touro

Atalaya Mining has reported local press coverage of an announcement by the regional government of Galicia “that a negative Environmental Impact Statement for Proyecto Touro (Declaración de Impacto Ambiental) had been signed and will be formally communicated to the Mines, Energy and Industry Department of the Xunta de Galicia.”

The company says that a “short release stated that the decision is based on two reports which form part of a wider evaluation consisting of fifteen reports produced by different departments of the Xunta de Galicia. These two reports challenge the ability of the Company to guarantee that there will be no environmental impact of the Project on the Ulla River and related protected ecosystems which are located downstream”.

Atalaya Mining says that it is still awaiting formal notification of the decision and that “In the meantime the Company, along with its advisers, will evaluate potential next steps for the Project, which could include an appeal of the decision made by the Xunta de Galicia, and/or the clarification of the questions raised by the reports.”

Expressing surprise at these statements from representatives of the regional Government, CEO, Alberto Lavandeira, explained that “Proyecto Touro has been designed with a fully lined tailings storage facility, constructed downstream using compacted rocks and with a guaranteed zero discharge policy following international standards and best practice”.

He went on to confirm that “We will continue to explore all possible avenues to develop the Proyecto Touro and shall build on the excellent work performed by a very large team of world class specialists, including all the Universities of Galicia,  for over 2 years and containing over 15,000 pages of reports, all of which have been questioned without the Company being further consulted”.

Conclusion: There is a long-standing and well established mineral permitting process in Spain which includes appeals processes. We are sure that Atalaya Mining will exhaust all the available avenues and deploy its considerable expertise to secure the permitting of the Touro project. Atalaya is a leader in the renaissance of Spain’s mining industry and was able to deliver the successful redevelopment and subsequent expansion of the Proyecto Rio Tinto operation in southern Spain after prolonged permitting and other delays experienced by an earlier management team.

 

Keras Resources* (LON:KRS) 0.16p, Mkt Cap £4.2m – Keras to place order for larger 25,000tpm plant at Nayega

Recommendation and Valuation under review

(Keras hold an 85% interest in Societé General des Mines which holds the Nayega manganese project license in Togo)

Keras Resources plans to place an order for a larger 25,000t per month plant for its Nayega manganese mine in Togo.

The current plant at Nayega has capacity of 6,500tpm and presumably will run alongside a new plant to create further capacity.

Mine and process costs are likely to fall on the operation of the larger plant while shipping should also become more cost effective.

Management are also working on hydrological studies to increase the water supply needed to run production at Nayega

They are also looking to ‘Secure storage facilities near Port Lomé to ensure efficient export of beneficiated Mn ore’.

Russell Lamming comments that the company is focussing on delivering first production during the current quarter and explained that “it is important that the long-lead items underpinning the expansion to 25,000tpm are ordered to ensure that we reach nameplate capacity by year end”.

Lamming also states “We continue to work closely with all parties associated with the Nayega permitting process as we look to start production in the near future”.

The company has also confirmed that it is continuing “discussions with third party off-takers with a view to securing pre-payment and stockpile financing to minimise dilution as Nayega is developed”.

Keras Resources also reports it has raised £310,000 through placing approximately 207m additional shares at a price of 0.15p/share.

*SP Angel act as Nomad and broker to Keras Resources

 

Sovereign Metals SOV AU A$0.11, Mkt Cap A$40m - Raising A$2m

Sovereign Metals reports that it has raised A$2m though the placing of approximately 22.2m additional shares at A$0.09/share.

The funds are to be used to finance “exploration and development activities on the Company’s rutile project in Malawi where work continues to unlock a potentially significant strategic rutile province”.

Welcoming the new shareholders, including the Sprott Group described as “a leading North American-based asset management firm with an enviable track record of identifying and funding successful early stage exploration projects”, Managing Director, Dr. Julian Stephens, said “We are extremely pleased to bring these high calibre investors, including Sprott, onto the Company’s register. This is a strong testament to the quality of Sovereign’s emerging rutile assets in Malawi.”

 

Georgian Mining Corporation (LON:GEO) 1.175p, Mkt Cap £1.6m – Georgian Mining receives confirmation of tenure from the Georgian National Agency of Mines

Georgian Mining Corporation have received confirmation of tenure from the Georgian National Agency of Mines for the two key deposits in the Bolnisi project license area.

The two licenses are for the Kvemo Bolnisi East and Dambludi which have been the focus of exploration and discovery to date.

The National Agency of Mines also seeks the return of the remainder of the Bolnisi Project license area including three further deposits identified by the company to the state.

Management are going to contest return of these licenses as the company has previously received ministerial endorsements and written confirmation that the company had met all of the license requirements for all five named deposits in the license area.

Conclusion:  The approval of tenure of the key licenses is great news for Georgian Mining following 18 months of uncertainty and government indecision. The company now needs to complete the additional bureaucratic steps with the Georgian Government to enable fieldwork to restart while pressing ahead with their appeal to maintain all other licenses.

Georgia has parliamentary elections in October and it will be interesting to see if the Government efficiently completes the remaining steps for the two confirmed deposits so the company can resume project development.

We note, no company is going to want to commit funds to any licenses in Georgia without firm assurances that the government is going to play fair with regard to future permitting.

The government is at risk of causing Georgia to fall dramatically in its ranking as a destination for international investment if companies like Georgian Mining are not able to gain confidence in the licensing process.

*SP Angel acts as Nomad and Broker to Georgian Mining. 

 

Shanta Gold (LON:SHG) 10.9p, Mkt Cap £86m – Higher resource at Singida to yield better project economics

The Company released an updated Singida mineral resource with a 27% increase in contained resource mostly attributed to a 22% improvement in grades.

Mineral resource estimated at 12.7mt at 2.25g/t for 919koz including:

Measured and Indicated of 4.9mt at 2.63g/t for 412koz;

Inferred of 7.8mt at 2.01g/t for 507koz,

This compares to 12.3mt at 1.84g/t for 725koz in total resources estimated in May/18.

The resource is based on seven shear-zone related gold deposits with a combined strike length of 4.9km.

Higher grades are attributed to reassessing historically modelled mineral resource and remodelling of geological structures across individual shear zones, in line with the approach elsewhere, as opposed to extrapolating grade assays across a single ore body.

Mineral reserve update including a reviewed NPV estimate is expected in Mar/20.

Conclusion: The update highlights the resource increase was largely driven by an increase in grades implying a significant increase to the previous £31m NPV estimate released in Dec/18.

 

Trans-Siberian Gold (LON:TSG) 49.5p, Mkt Cap £55m – FY20 production guided at 38-42koz and dividend policy reiterated

Guided 2020 production is 38-42koz (FY19: 43koz).

Forecast unit costs of $780-860/oz TCC and $900-1,000/oz AISC (including $1.4m in sustaining capex).

Growth capex projected at $10.7m.

Capital investment to be focused on resource expansion, discovery drilling at the high grade Asacha Gold Mine and progressing evaluation works at the Rodnikova gold deposit.

The Company reiterated its commitment to pay a base level of $3m in dividends with an option for a special pay-out should generated cash flows come in excess of debt repayment, exploration and development capital needs.

 

 

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

 

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

 

*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

Bloomberg

Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt

LME

Oil Brent

ICE

Natural Gas, Uranium, Iron Ore

NYMEX

Thermal Coal

Bloomberg OTC Composite

Coking Coal

DCE

RRE

Steelhome

Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal

Tungsten

Metal Bulletin

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of AdEPT Technology Group PLC named herein, including the promotion by the Company of AdEPT Technology Group PLC in any Content on the Site, the...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

planarTECH looking to raise upwards of £500k to meet 'great deal of demand'...

planarTECH chairman Ray Gibbs speaks to Proactive London's Andrew Scott ahead of a crowdfunding campaign on Seedrs to raise around £500k as it looks to expand its current business and meet the demand it's experiencing for its graphene systems. The company was formed in 2014 and makes the...

2 hours, 2 minutes ago

20 min read