SP Angel . Morning View . Thursday 25 06 20
Iron ore futures hold above $100 per t on Brazil disruption
MiFID II exempt information – see disclaimer below
Bluejay Mining* (LON:JAY) – Mining licence consultation process underway
Cora Gold* (LON:CORA) – Metallurgical tests confirm amenability of Sanankoro ore to gravity concentration
Savannah Resources* (LON:SAV) – Chairman’s message to AGM
SolGold* (LON:SOLG) –Key mining appointments
Iron ore futures hold above $100/t on Brazil disruption
Iron ore futures were steady this morning as Brazil continues struggling to contain the coronavirus outbreak, keeping the risk of mine disruptions elevated (Bloomberg).
Prices of iron ore are up 12% YTD according to Mysteel Global, however many view a price over the $100/t as unsustainable.
Base metals mostly weaker in London and Shanghai ahead of Chinese holiday
Non-ferrous metals on the SHFE closed lower on the last trading day ahead of the Dragon Boat Festival, except for copper and tin.
The exchange will be closed for the holiday on Wednesday night, Thursday and Friday.
Zinc fell 1%, aluminium 0.5%, nickel 0.3% and lead 0.2%, while tin gained 0.4% and copper advanced 0.5% (SMM News).
In London, three-month base metal prices were little changed this morning, with copper down by 0.2% at $5,878/t (Fastmarkets MB).
LME volume has been light with just 2,032 lots traded as of 5:55am London time due to the holiday.
IG TV interview on gold and gold companies
https://youtu.be/lszustZe7_U
VOX Markets podcast on mining
https://www.voxmarkets.co.uk/media/5ef46b3d9f98da001bbc4b0c/?context=/listings/LON/SML/multimedia/
Dow Jones Industrials -2.72% at 25,446
Nikkei 225 -1.22% at 22,260
HK Hang Seng -0.50% at 24,782
Shanghai Composite +0.30% at 2,980
Economics
Philippines - Central bank cuts key interest rate to 2.25%
The Philippine central bank cut its key interest rate by 50 basis points to a record low.
The bank has eased by a total of 175 basis points so far this year to combat the economic fallout as a result of the coronavirus outbreak.
Germany - ThyssenKrupp launches €4bn high-yield bond issue
The bond offering, denominated in euros and US dollars comes in addition to a proposed cross-border €3.05bn loan issued on Monday to finance the acquisition of the company's elevator unit.
UK - Royal Mail to cut 2,000 management jobs
Royal Mail plans to cut about a fifth of its managers, as the pandemic has heaped further pressure on the already struggling UK postal service.
The group's pre-tax profit fell by a quarter to £180m in the year ended 29th of March (FT).
Congo - Three workers die in attack at Coltan mine
Three people were killed and three others were injured in a grenade attack on SMB's coltan mine in eastern DRC on Tuesday.
Currencies
US$1.1237/eur vs 1.1319/eur yesterday Yen 107.17/$ vs 106.60/$. SAr 17.476/$ vs 17.235$. $1.242/gbp vs $1.251/gbp. 0.686/aud vs 0.694/aud. CNY 7.078/$ vs 7.066/$.
Commodity News
Precious metals:
Gold US$1,767/oz vs US$1,770/oz yesterday - Thailand gold exports up 735% in May YoY
Thailand saw its largest monthly drop in exports in more than 10 years, and more than the expected fall of -6.4% predicted in a recent Reuters poll.
However, gold shipments jumped 735% in May from a year earlier.
Thais are heavily invested in gold and will sell whenever prices go up, with the metal then exported (Reuters).
Gold ETFs 102.6moz vs US$102.2moz yesterday
Platinum US$807/oz vs US$831/oz yesterday - Zimbabwe Q1 Platinum output rises 3.7% YoY
Platinum production rose to 3,543.7kg in the first three months of this year, according to the Chamber of Mines (Bloomberg).
The country is forecasting a $4bn contribution from the mining sector this year up from $2.7bn YoY.
Palladium US$1,887/oz vs US$1,931/oz yesterday
Silver US$17.57/oz vs US$17.92/oz yesterday
Base metals:
Copper US$ 5,885/t vs US$5,913/t yesterday
Aluminium US$ 1,569/t vs US$1,592/t yesterday
Nickel US$ 12,515/t vs US$12,700/t yesterday
Zinc US$ 2,032/t vs US$2,041/t yesterday
Lead US$ 1,763/t vs US$1,756/t yesterday
Tin US$ 16,605/t vs US$16,900/t yesterday
Energy:
Oil US$39.9bbl vs US$42.8/bbl yesterday
Natural Gas US$1.575/mmbtu vs US$1.632/mmbtu yesterday
Uranium US$33.15/lb vs US$33.10/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$101.5/t vs US$99.4/t -
Chinese steel rebar 25mm US$525.1/t vs US$526.0/t
Thermal coal (1st year forward cif ARA) US$56.4/t vs US$56.4/t
Coking coal swap Australia FOB US$116.0/t vs US$114.5/t
Other:
Cobalt LME 3m US$28,500/t vs US$29,000/t - Ganfeng Lithium buys 6.9% stake in Chinese cobalt firm Tengyuan
China's Ganfeng announced yesterday that it would buy the stake in Chinese cobalt firm Ganzhou Tengyuan Cobalt New Material for 300 million yuan ($42m).
Ganfeng's investment in Tenguan is it's first in the cobalt space, and the company has an annual production capacity of 6,500 tonnes.
NdPr Rare Earth Oxide (China) US$40,971/t vs US$40,757/t
Lithium carbonate 99% (China) US$4,803/t vs US$4,812/t
Ferro Vanadium 80% FOB (China) US$30.0/kg vs US$30.0/kg
Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.0/kg
Tungsten APT European US$205-215/mtu vs US$215-225/mtu
Graphite flake 94% C, -100 mesh, fob China US$460/t vs US$460/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,350/t vs US$2,350/t
Battery News
Tencent increases stake in Nio
Nio’s 2nd largest shareholder by voting rights, Tencent Holdings has acquired a further 1.68m American Depositary Shares (ADS), increasing its stake in the Company to 15.1%. (Asian Review)
Tencent has invested a further $10m to increase its stake in the Chinese EV startup.
Nio founder Li Bin is the largest shareholder by votes with a 13.8% stake and 47% of voting rights.
Strong April sales has enabled Nio to offset a poor Q1 and emerge relatively well from the pandemic lockdowns. The Company’s sales for Jam-May were up 68% on the same time last year whilst the market was down 33%.
The news about Tencent comes after Nio raised $428.4m through 72m new ADSs earlier this month.
Electrify America completes cross country route
Electrify America has completed the installation of its first EV fast charging route from coast to coast. (Electrek)
The route covers 11 states and 2700 miles along interstates 15 and 70 from California to Washington DC. The network has taken two years to complete which is significantly faster than the roll out of Tesla’s Supercharger network.
The charging stations along the route are around 70 miles apart, well within the ranges of EVs on the market today. (Techspot)
A second cross country route is expected to be completed by September, from San Diego to Jacksonville, Florida.
A comprehensive charging network is a primary hurdle for EVs to overcome in the battle to win the hearts and minds of consumers. This project shows steps are being taken in the right direction.
Tesla signals intent to build batteries in house
City government documents show Tesla plans to expand its battery facility in Freemont under the title project Roadrunner. (Reuters)
The Freemont facility has a small-scale battery facility today which Tesla is looking to expand and staff round the clock.
Construction of the extended facility is estimated would take 3 months. It would be staffed by 470 workers in shifts team of 100 to enable work to continue round the clock.
Tesla has recently signed deals with Panasonic and CATL for battery cells so the move to build batteries in house could be a sign of their long-term plans rather than a short-term fix.
Tesla’s battery day and shareholder meeting is scheduled for September 15th when news is expected on the Company’s battery packs. Recent reports have suggested supplier CATL is primed to begin production of a 1m mile battery.
Company News
Bluejay Mining* (LON:JAY) – 6.16p, Mkt Cap £58.6m - Mining licence consultation process underway
Bluejay Mining reports that public consultation on its Dundas ilmenite project commenced on 24th June under the Ministry of Mineral Resources.
As a result of the restrictions on public meetings as a result of measures to control the Covid19 infection, ʺthe Government of Greenland has extended the Consultation Period from eight to ten weeks.ʺ
Bluejay Mining is also progressing work on the ‘Impact Benefit Agreement’
Commenting on start of the consultation process, CEO, Roderick McIllree, said ʺI am extremely pleased that we now have an accepted Exploitation Licence application and that the Public Consultation has commenced. I would like to thank both the Greenlandic Authorities and the Bluejay team for their hard work in finding a solution in these COVID-19 challenged times. The unprecedented global situation has put a lot of pressure on the society and the authorities in Greenland, but I'm happy that the Company can now say it is reaching the final components of the decision making process regarding the Mining Licence award for Dundasʺ.
Hans Jensen, Managing Director of the subsidiary, Dundas Titanium, said that ʺWe very much look forward to continuing the good working relations with the Greenlandic Government, local stakeholders, suppliers and the Avannaata Kommunia; the municipality of North-West Greenland, in the continuing effort to create a sustainable, low impact, long duration mining operation for the benefit of Greenland and all stakeholdersʺ.
Greenland’s Minister for Industry and Natural Resources said ʺWe are pleased to have found an appropriate solution with Bluejay and Dundas Titanium in proceeding safely and securely with the Public Consultation Process during these unprecedented times. We see the Dundas Ilmenite Project as an important opportunity for North-West Greenland and the country as a whole, which will be demonstrated in the consultation meetingsʺ.
Conclusion: Despite the additional challenges on public meetings arising from Covid19 containment measures, formal public consultation on the planned development of the Dundas ilmenite project is now underway.
*SP Angel act as Nomad to Bluejay Mining. The SP Angel analyst holds shares in Bluejay Mining
Cora Gold* (LON:CORA) 9.08p, Mkt Cap £17.3m – Metallurgical tests confirm amenability of Sanankoro ore to gravity concentration
Cora Gold reports that metallurgical testing of bulk samples of oxide ore conducted in conjunction with Hummingbird Resource has confirmed that ore from its flagship Sanankoro gold deposit in southern Mali is amenable to upgrading ʺby gravity separation to a level that would be viable to transport distances more than 100km which could support a lower capex and faster route to cash flow for the Companyʺ.
The tests show that:
ʺApproximately 57% of gold recovered from the -1.7mm size fraction to a concentrate representing less than 1% of the feed massʺ; and that
It is possible to produce a concentrate grading in excess of +70 g/t Au; and that
The remaining gold contained in the coarse fraction delivered recovery rates of 75% using cyanidation in bottle roll-testing.
The company says that ʺThe programme focused on just a single pass through a centrifugal concentrator and it is expected that further work could optimise the crush size and result in further improved recovery to the concentrate and potentially higher grades.ʺ
CEO, Bert Monro, said that ʺThese results suggest that a streamlined process flow sheet incorporating gravity extraction and trucking of a high grade concentrate to an existing mine in the region could be run in parallel with a smaller on-site heap leach project treating the residual coarser size fraction. These initial results suggest this could be a viable alternative route for us, potentially providing a lower capex and faster route to cash flowʺ.
Conclusion: Initial testing of bulk samples from Sananakoro show the potential for gravity upgrading of the oxide ore and trucking of a high grade concentrate to existing processing facilities with a resulting cost saving from a smaller on-site heap leach operation.
*SP Angel acts as Nomad and Broker to Cora Gold
Savannah Resources* (LON:SAV) 2.15p, Mkt Cap £28.6m – Chairman’s message to AGM
Savannah Resources’ Chairman, Matthew King, highlights the submission, on 30th May, of the completed Environmental Impact Assessment (EIA) for the Mina do Barroso lithium project as a major milestone.
The study shows the low-impact nature of the proposed development and the economic and social benefits to both the local communities and to Portugal as a whole arising from the development.
Mr. King also stressed ʺThe significance of Mina do Barroso to Europe's new lithium battery value chain was also reinforced by the agreement secured with EIT InnoEnergy at the end of May 2020. Completion of the feasibility study for the Project, now expected in H1 2021 which will help synchronise Mina do Barroso with anticipated lithium hydroxide refinery developments in Europeʺ.
The Chairman discusses the ʺexcellent progressʺ Savannah Resources is making in ʺsecuring a long-term offtake for its spodumene concentrate. The Company is intent not only on building a sustainable, low carbon footprint project but also in forging strong European partnerships and alignments to support the development of Mina do Barroso.ʺ
Discussing the company’s other projects and reaffirming the priority of Mina do Barroso, ʺwork is continuing on the development of our world class Mutamba mineral sands project in Mozambique with our Joint Venture partner Rio Tinto. We also continue to explore opportunities to realise value from our copper projects in Oman.ʺ
In a wider context, and recognising the concerns on the short to medium term outlook for the world’s economies, Mr. King finds a silver-lining to the economic cloud pointing out that ʺNonetheless, there are good reasons for believing the coronavirus pandemic will give a boost to the prospects for sustainable energy sources from which suppliers of lithium should benefit. At the same time, potential for dislocation to inter-continental supply chains has demonstrated the importance for Europe in developing a regional lithium battery value chain.ʺ
Conclusion: Savannah Resources is pressing ahead with Mina do Barroso where the EIA was submitted at the end of May. We look forward to news of further progress.
*SP Angel acts as Nomad to Savannah Resources
SolGold* (LON:SOLG) – 20p, Mkt cap £431m – Key mining appointments
SolGold reports two key technical mining appointments today as it builds its team for the development of its Alpala copper/gold project in Ecuador.
Peter Holmes, an experienced mining engineer, is appointed as Director of Studies ʺand brings to SolGold extensive experience in large scale mining projects with a focus on project execution, which includes tailings management and above ground infrastructureʺ.
Mr. Holmes’ previous experience includes similar roles with a number of large mining companies, including Placer Dome, Normandy Poseidon and 10 years with Barrick Gold where he was responsible for the successful delivery of the US$3.6bn Pueblo Viejo mine in the Dominican Republic.
Over a 30-years long career, Peter Holmes has worked in a variety of jurisdictions including Australia, North and South America and the Middle East and specific assignments in Brazil, Argentina, Chile and Peru indicate that he has a background that will fit comfortably in Ecuador.
Also today, Solgold has announced the appointment of Steven Belohlawek as General Manager – Underground Development & Mining. ʺHis career is built upon large scale underground mine design, scheduling, project development, mine commissioning and ramp-up. His experience includes 10 years at the Freeport underground block cave Grasberg mine expansions during which existing underground mines were expanded and two new super block caves were developed. The depth of these mines and their scale have few precedentsʺ and suggest that he will bring important direct expertise to the development of the 50mtpa underground development of Alpala described in the company’s 2019 preliminary economic assessment.
Welcoming the appointments which he described as ʺstrategically importantʺ, CEO, Nick Mather said that both Peter Holmes and Steven Belohlawek ʺbring a fine-tuned skill set to SolGold that complements the forward-thinking dynamic and country changing projects that the Company will developʺ.
Mr. Mather confirmed that ʺWe are committed to developing the strength of the SolGold team as we enter the next stage of the Company's lifecycle. SolGold's PFS programme continues with a September 30, 2020 objectiveʺ.
Conclusion: As Solgold’s exploration success at Alpala evolves into mine development, the appointment of two key mining engineers is an important step on the road to delivering a successful mine. Making the appointments ahead of the planned completion of the PFS and transition to DFS level work should give the engineers responsible for delivering the mine the opportunity to contribute at the design and planning stage and aid the project execution. We look forward to the PFS in September.
*SP Angel act as financial advisor and broker to SolGold
Analysts
John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk - 0203 470 0474
Sales
Richard Parlons –Richard.Parlons@spangel.co.uk - 0203 470 0472
Abigail Wayne – Abigail.Wayne@spangel.co.uk - 0203 470 0534
Rob Rees – Rob.Rees@spangel.co.uk - 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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