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Today's Market View - Arc Minerals, Strategic Minerals, Kenmare Resources and more...

Published: 11:59 14 Jul 2020 BST

Arc Minerals Limited - Today's Market View - Arc Minerals, Strategic Minerals, Kenmare Resources and more...

SP Angel . Morning View . Tuesday 14 07 20

Investors cut risk as California scales back reopening

  

Arc Minerals* (LON:ARCM) – Arc signs exclusivity with Anglo American as majors step into Zambia

Kenmare Resources (LON:KMR) – Ilmenite and rutile production fall heavily through first half

Power Metals Resources* (LON:POW) – Progress report and strategy

Phoenix Copper* (LON:PXC) – Reduced H1 losses and project review

Strategic Minerals* (LON:SML) –Cobre Q2 magnetite sales

Trans-Siberian Gold (LON:TSG) – V25N drilling returns high grade intersections along strike and at depth

 

Diamonds - 12ct. Blue Diamond Smashes Estimate at Christie’s (Rappaport)

A blue diamond ring was the top seller at Christie’s Hong Kong in the first live Magnificent Jewels auction since the Covid-19 pandemic began

Indian Gem and jewellery exports fell 55% in Q2

Exports of gems and jewellery fell a record 55% last quarter to $2.75bn compared to the same period a year ago.

India’s diamond exports fell 50% compared to a year ago to $1.8bn.

Factories have been operating at just 10-20% capacity as workers social distance due to the lockdown in India.

Demand has been recovering steadily in top consumers China and the US, however this is still much lower than pre-COVID.

 

Palladium – prices ready to push through $2,000/oz as Chinese auto manufacturers soak up South Africa mine output

Palladium prices look set to continue to push higher on strong demand from Chinese auto manufacturers and restocking in China

Risks remain to South African PGM production as the Coronavirus spreads through South African townships

South Africa’s PGM miners have done well to recover production rates towards normal levels but are at risk of this latest wave of infections.

The risk to the PGM and gold miners is that if the coronavirus spreads through the workforce and their families, the mines may be forced to lockdown again either voluntarily or by the state.

South Africa had done well in dealing with the Coronavirus using its existing HIV medical network but is experiencing a resurgence of infections

The South African government re-imposed a ban on the sale of alcohol yesterday. Alcohol is an immune suppressant while bars are seen presenting a particularly high risk of infection.

 

IG TV interviews on copper and gold

https://youtu.be/ItCFs7EqbWk

https://youtu.be/lszustZe7_U

VOX Markets podcast on mining

https://www.voxmarkets.co.uk/media/5f05abf49f98da001bbc4b10/?context=/listings/LON/SAV/multimedia/

 

Dow Jones Industrials +0.04% at 26,086

Nikkei 225 -0.87% at 22,587

HK Hang Seng -1.22% at 25,458

Shanghai Composite -0.83% at 3,415

 

Economics

WHO - warns that coronavirus crisis may get 'worse and worse and worse'

 

US – California peddled back on reopening measures after a pick up in new cases closing down indoor dining and bars.

The governor also ruled that indoor operations must be ceased at places of worship, fitness centres, zoos, wineries, hairdressers and barbers and shopping malls, FT reports.

The reversal sparks concerns over quick economic recovery following less extensive U-turns in Texas and Arizona as well as the reimposition of restrictions by local authorities in south Florida.

Fiscal support sees the US posting the worst-ever budget deficit in June with federal government spending more than tripling from a year earlier.

$600 per week benefits programme is expiring at the end of this month which may lead to a sharp drop in spending and delay the recovery.

US Monthly Budget Statement -864bn in June

 

China – Trade unexpectedly climbs in June in a sign local an external demand is recovering as nations reopen.

A welcome sign given weak performance so far this year with YTD exports and imports (both I US$ terms) remaining down 6.2% and 7.1%, respectively.

Exports (US$, %yoy): 0.5 v -3.3 in May and -2.0 est.

Imports (US$, %yoy): 2.7 v -16.7 in May and -9.0 est.

Yangtze river flooding close to the Three Gorges Dam as water level rises two meters about limits

 

Japan - Tertiary Industry Index fell 2.1% in May vs -7.7% in April

 

Germany – Economic outlook ticked lower compared to the previous month in July with expectations for a gradual recovery in GDP in H2/20.

ZEW Survey Expectations: 59.3 v 63.4 in June and 60.0 est.

ZEW Survey Current Situation: -80.9 v -83.1 in June and -65.0 est.

Wholesale price index rose 0.6% in June vs -0.6% in May

 

Spain – Catalonia looks to place city of Lleida and surrounding area under lockdown

 

Italy  - Preparing €20bn stimulus to give families tax relief and to help furloughed workers, the auto sector and local authorities (Reuters)

 

UK – Economic growth bounced back weaker than expected in May despite lifting some of restrictions.

GDP was up 1.8%mom in May compared to a 5.5% increase forecast.

Taking into account a 20.4%mom plunge in April means the economy remains 24% smaller than in the same month last year.

Separately, retail sales climbed in June marking the first YoY increase since the lockdown began led by online shopping, according to the British Retail Consortium.

Meanwhile, consumer spending tracked by Barclaycard that processes nearly half of UK credit and debut card transactions posted a third YoY decline last month.

“Retailers won’t be picking up where they left off and months of reduced or no sales will threaten the survival of many… the pandemic has significantly changed consumer behaviours, it’s therefore vital that routes to market and ways of working are adapted,” KPMG that compiled the BRC data commented.

Face coverings will be compulsory in all shops in England from July 24 in an attempt to limit the spread of the virus.

Second coronavirus ‘winter wave’ could kill 120,000 and cripple the NHS, major report warns (The Sun)

 

South Korea – The government unveiled a $132bn (Won160tn) spending plan to create 1.9m jobs by 2025 as part of the New Deal programme.

The plan announced by President Moon marks a significant increase from the initial Won76tn programme unveiled in June.

The central government will dedicate Won114tn focusing on the digital technology and renewable energy sectors.

Local governments and the private sector will contribute Won25tn and Won21tn, respectively.

The package comes on top of the government announced Won277tn stimulus measures so far this year.

 

Colombia – people call for government to put Bogota into total lockdown

 

Currencies

US$1.1338/eur vs 1.1320/eur yesterday.  Yen 107.28/$ vs 106.96/$.  SAr 16.844/$ vs 16.726/$.  $1.252/gbp vs $1.263/gbp.  0.694/aud vs 0.697/aud.  CNY 7.013/$ vs 7.001/$.

 

Commodity News

Precious metals:         

Gold US$1,800/oz vs US$1,807/oz yesterday – South African gold mines at risk of surge of coronavirus infections in the townships

Reduced numbers of migrant workers due to coronavirus issues is also said to be an issue for the mines

Gold ETFs 104.5moz vs US$104.3moz yesterday

Platinum US$833/oz vs US$842/oz yesterday

Palladium US$1,991/oz vs US$1,993/oz yesterday

Silver US$19.02/oz vs US$19.06/oz yesterday

           

Base metals:  

Copper US$ 6,482/t vs US$6,571/t yesterday - Chile – Codelco reports 3,215 cases of COVID-19

The world’s largest copper producer has registered a total 3,215 cases and nine deaths due to the pandemic.

The company’s chairman says that 2,473 workers have recovered ,whilst 37 remain hospitalised.

Some unions have called on the miner to halt operations around Calama, as Chile has been hit hard by the virus with over 7,000 deaths so far.

Aluminium US$ 1,683/t vs US$1,689/t yesterday - Shanghai alumina prices hit four-month high

Alumina prices rose to 2,400-2,450 yuan ($343-350)/t last week- the highest since the 19th of March when it reached 2,450-2,550 yuan per tonne.

The price increase has been attributed to the sharp increase in the SHFE aluminium price, which hit a two year high of 14,815 yuan/t on the 10th of July (Fastmarkets MB).

Nickel US$ 13,575/t vs US$13,580/t yesterday

Zinc US$ 2,214/t vs US$2,208/t yesterday

Lead US$ 1,862/t vs US$1,866/t yesterday

Tin US$ 17,300/t vs US$17,360/t yesterday

           

Energy:           

Oil US$42.1/bbl vs US$42.9/bbl yesterday

OPEC+ will hold a committee meeting this week to assess the status of the oil market and decide on its next steps

For now, the group appears ready to begin unwinding the current production cuts, which could test the recent price rally

The historic cuts of 9.7MMbopd that OPEC+ implemented after the pandemic-related crash was always intended to be temporary

Initially, the cuts were set to expire at the end of June and begin tapering at the start of July; the group agreed to extend that first phase by a month

As of now, the cuts are slated to expire at the end of July, reducing the cuts from 9.7MMbopd to 7.7MMbopd

Various press reports have suggested that the group is ready to let those cuts taper as scheduled, rather than push for another extension

Russia intends to rachet up production in August, and OPEC+ delegates are “leaning towards” relaxing the cuts, according to a report from Bloomberg

The WSJ has reported a similar angle, adding that OPEC+ producers are reluctant to continue to shoulder the burden of propping up prices while non-OPEC producers around the world bring their own production back online

Natural Gas US$1.722/mmbtu vs US$1.800/mmbtu yesterday

Natural gas prices moved lower yesterday, as concerns of a prolonged closure of the US economy will reduce electricity demand

The weather is expected to be warmer than normal over the next two weeks helping to buoy cooling demand

There is no tropical cyclone activity in the Atlantic or the Gulf of Mexico according to NOAA

Hedge funds reduced short positions in futures and options according to the latest commitment of the trader’s report

The number of active rigs declined by 4 last week, with natural gas account for 2 and oil accounting for a decline of 2

Uranium US$32.90/lb vs US$32.95/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$108.0/t vs US$103.6/t - China iron ore imports rose 17% in June

Imports of iron ore and concentrates rose 17% to 101.68mt in June compared to a month prior, according to customs data.

The first half of this year saw China import 546.91mt of iron ore- up 9.6% compared to the same period last year.

June’s imports of iron ore were 35.3% higher than the same month last year, and the largest monthly inflow since October 2017 (SMM News).

Chinese steel rebar 25mm US$535.7/t vs US$535.5/t

Thermal coal (1st year forward cif ARA) US$58.4/t vs US$58.8/t - China coal imports fall 6.7% YoY in June

Coal imports fell last month, as stringent imports restrictions at ports encouraged domestic purchases at the expense of imports.

China imported 25.29mt of fuel last month, compared to 27.1mt in June last year and 22.06 in May 2020.

Officials are urging miners to boost domestic coal output to ensure market supplies whilst encouraging energy firms to buy Chinese coal.

For the first half of 2020, China imported 173.99mt of coal, up 12.7% compared to the same period last year (Reuters).

Coking coal swap Australia FOB US$121.5/t vs US$121.5/t

           

Other: 

Cobalt LME 3m US$28,500/t vs US$28,500/t

NdPr Rare Earth Oxide (China) US$41,853/t vs US$41,850/t

Lithium carbonate 99% (China) US$4,848/t vs US$4,856/t

Ferro Vanadium 80% FOB (China) US$29.5/kg vs US$29.5/kg

Antimony Trioxide 99.5% EU (China) US$4.9/kg vs US$4.9/kg

Tungsten APT European US$205-215/mtu vs US$205-215/mtu

Graphite flake 94% C, -100 mesh, fob China US$430/t vs US$460/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,275/t vs US$2,275/t

 

Battery News

EVs - The market for cathodes, the most common element in EV batteries, is expected to reach $58.5bn in scale by 2024 from $7bn in 2018 (UN report).

 

BYD launches new EV/hybrid

BYD has launched the Han EV series with a PHEV and 3 pure electric vehicle versions.  

The PHEV is the cheapest model starting at CNY219,800 with pure electric extended range, premium and 4WD high performance the other more expensive options. (Just Auto)

It is the first model to use BYD’s blade battery. It is reported this battery is capable of 3,000 charge cycles and 750,000 miles.

The battery is a lithium-iron-phosphate chemistry with a reported 50% higher volumetric density than a conventional LFP pack and stellar performance in safety tests.  

BYD has claimed the pure electric long range model has a maximum range of 376 miles (605km) on a single charge.

The PHEV model has a pure electric range of 50 miles (81km) but is capable of up to 800km of integrated range.

 

Fisker goes public at $2.9bn valuation

EV maker Fisker is to go public through a reverse merger with shell corporation Spartan Energy Acquisition backed by Apollo Global Management.

Fisker is valued at $2.9bn and will debut on the New York Stock Exchange.

Use of funds is expected to be bringing the Fisker Ocean to market for late 2022.

The IPO share price will be $10.

The Ocean model is an SUV priced at $29,999 after tax credits. The Monday announcement confirmed production delays for the vehicle, which will now begin production in H2 2022.

The Ocean will be equipped with an 80kWh battery capable of 250-300 miles on a single charge.

 

VW ID3 will hit the market on July 20

The ID3 is now available for sale, until now it has only been available to First Edition reservation holders. (Electrek)

The ID3 is eligible for the maximum environmental bonus subsidy in Germany of €9,480.  

The ID3 is available with 3 different battery packs, the cheapest starting at just under €30,000.

The battery is available in 48, 58 and 77kWh sizes with an expected range of 340 miles.

Deliveries are expected to start in September.

 

Company News

Arc Minerals* (LON:ARCM) – 2.85p, Mkt cap £28m - Arc signs exclusivity with Anglo American as majors step into Zambia

(Arc holds 72.5% of Zaco and 71.34% of Zamsort in Zambia)

Arc Minerals reports it has signed a confidentiality and exclusivity agreement with a subsidiary of Anglo American on their Zaco and Zamsort subsidiaries.

The exclusivity is for six months and permits Anglo American ‘to conduct a technical review which, if satisfactory, may result in an extension of the exclusivity and the negotiation of a commercial transaction.’ 

The Anglo deal does not tie Arc into an premature deals and leaves potential for other majors to come into the project.

There is no earn-in agreement at present meaning the field will be open for other majors to come in once the period of exclusivity is ended.

This marks Anglo’s first return to Zambia since it left in the late 1990s when the group was streamlining in preparation for its London listing.

The Zamsort licenses were formerly held by Anglo American with potential for some date within Anglo’s extensive archives.

Anglo American are keen to workover the drilling and other work done on the licenses in the West of Zambia.

We also expect Anglo geologists to do look to do further exploratory work on the properties

Arc will continue with its existing drilling programme during the period of the agreement..

Arc’s CEO, Nick von Schirnding, was formerly an executive at Anglo American and we wouldn’t be surprised if Nick was able to promoted the prospect to his former employer.

We also suspect Nick’s presence at Arc was able to create the confidence required to bring Anglo back into Zambia and that the Zamsort licenses are well managed and in good standing.

Drilling: Arc Minerals restarted drilling in Zambia a few weeks ago following the end of the rainy season within its license area

The team plan to drill 8,000m this year starting with the Fwiji target following promising exploration work

Follow up work at Cheyeza East and Muswema is also ongoing where we expect the better definition of the scale and extent of the resource.

Drilling will extend to 100m – 250m below surface to test deeper structures and follow mineralisation in the down-plunge hinge component to the anticline.

COVID-19: Zambia has suffered relatively little in terms of COVID-19 fatalities with just 42 fatalities recorded to date.

This may be down to Zambia’s BCG vaccination programs have may have helped boost immunity levels in the population.

Conclusion: The deal with Anglo validates the attractiveness of the Zamsort licenses to the mining majors. We are hopeful that a more meaningful deal may come out of the work being done and we look forward to a degree of competitive tension as Rio Tinto, Glencore and BHP take a closer look at the potential for further discovery in Zambia.

Rio Tinto chose to sign a US$51m earn-in agreement with Midnight Sun in April which gives Rio Tinto the right to earn into 75% of their Solweizi licenses in Zambia. The move marked a new era of interest by the majors in discovering copper in Zambia.

We also understand a number of Chinese companies have been keen to tie up properties and prospects in Zambia this year.

*SP Angel acts as Nomad and broker to Arc Minerals. The analyst holds stock in Arc Minerals.

 

Kenmare Resources (LON:KMR) – 194p, Mkt cap £213m – Ilmenite and rutile production fall heavily through first half

Kenmare Resources report significant falls in ilmenite and rutile production through the first half.

Ilmenite production fell 19% in H1

Rutile production fell 34% in H1

Zircon production fell 8% in H1 despite a 5% improvement on the first quarter.

Kenmare now expects to produce 700,000-800,000t of ilmenite in 2020 vs guidance of 800,000-900,000t issued on 9 January.

Kenmare has net debt of net debt of US$52.7m with cash of US$100m end-June and debt at US$151.3m.

excavated ore volumes increased by 27%.

Ilmenite prices rose to $220/t at end February and have held this level despite concerns that a fall in GDP might hit demand

Lockdowns at some key major producers appears to have exacerbated an already tight titanium dioxide and ilmenite feedstock market.

Demand may have been supported by Western consumers stripping shelves of paint in the days before lockdown as they prepared to use the time off productively. Sadly I wasn’t able to co-opt any furloughed youngsters into painting my house.

Major producers are currently seen battling to make up for lost production in what we presume remains a relatively tight market.

Kenmare “expect the market to be more subdued in the second half of the year, as the pandemic impacts both demand and supply of titanium feedstocks, but the long-term fundamentals for all of our products remain strong.”

“Strong ilmenite market conditions continued in Q2 2020 and Kenmare has secured offtake agreements for the majority of its ilmenite production in H2 2020”

Unemployed people in the West generally get out there and pain their houses so don’t be surprised if demand for pigments remains stronger than expected.

Kenmare raised production of heavy mineral concentrate by 13% yoy to 310,300t in Q2 2020

Ilmenite production fell 5% to 209,900t in Q2 due to the retreatment of spillage from the prior period.

Zircon production rose 5% to 11,600t

Shipments fell 29% yoy to 219,100t in Q2 but rose 13% on Q1

Coronavirus restrictions caused delays to the relocation of Wet Concentrator Plant B with this expected to restart in in Q4.

Mozambique now authorising work visas for contractors to site.

Mozambique remains in a state of emergency despite only nine official coronavirus fatalities. The nation is now in its third 30-day state of emergency which constitutionally can only last for 90 days. In contrast significant casualties are seen in fighting against al-Shabab jihadists in the north where some 700 people have been killed and thousands displaced since the insurgency began two years ago.

Conclusion: Kenmare’s production report and guidance highlights how the Coronavirus lockdowns can impact mining companies and the market. Prevailing high prices for ilmenite and rutile feedstock are symptomatic of an industry which is struggling to meet demand in the face of low inventory levels.

 

Power Metals Resources* (LON:POW) 0.63p, Mkt cap £3.6m – Progress report and strategy

(Power Metals holds a  49.9% interest in Red Rock Australasia Pty Ltd)

Following its recent £1m financing, Power Metal Resources has provided a progress report on its exploration operations and a review of its strategy to establish a geographically and commodity diverse project portfolio.

CEO, Paul Johnson describes the underlying view the company should be ʺbold and adventurous with reward weighted risk taking, but with solid underlying principles of risk management covering geopolitical, commodity, operational and financial considerations. In other words, combining boldness with risk management means diversification, which is what we have achieved.ʺ

While stressing that ʺProjects will only remain in the Company's portfolio while they demonstrate the ongoing potential, through exploration findings, to deliver a discovery, and only where the work programmes needed are comfortably within the available financial resources of the Companyʺ today’s announcement explains that, although its’ portfolio includes other projects,  during the remainder of 2020 the principal focus will be on advancing the Molopo Farms nickel/copper/PGMs project in Botswana; the Haneti Nickel project in Tanzania; and the gold exploration of its Australian licences in Victoria.

At Molopo Farms, where the company currently holds an 18.26% interest, it can earn an additional 40% direct interest by funding US$0.5m of exploration. Drilling is planned to start ʺin the coming months however this is subject to receipt of EMP approval, drill contractor finalisation and mobilisation arrangements.ʺ

At Haneti,, where Power Metals holds a 25% interest, it is working with Katoro Gold to evaluate an 80km long belt of ultramafic rocks wheer surface sampling has shown grades of ʺup to 13.6% nickel and 2.33g/t combined platinum and palladiumʺ. The main target within the belt is considered to be Mihanza Hill ʺwhere 2015 geophysical work identified significant extensions to nickel sulphide prospective target rock formations and geochemical interpretation has identified prospectivity for chonolith type nickel-copper-PGM mineralisationʺ.

In Victoria, where it works in joint-venture with Red Rock Resources (Power Metals 49.9%), and has applied for licences covering 1839km2, work is underway to establish a database of the extensive historical production data and geological information ʺto develop a 'Geological Review and Development of Exploration Strategy' report to further enhance and target expeditious exploration plans in readiness for licence grantsʺ.

The company hopes to move to early drilling of priority targets in Victoria “where high grade gold has been identified and there is evidence of historic production”.

Conclusion:  Power Metals is adopting a disciplined approach to the exploration of its portfolio of precious and base metals projects across Africa and Australia with a focus during the balance of 2020 on nickel and PGMs in Botswana, nickel in Tanzania and gold in eastern Australia.

*SP Angel acts as Nomad and broker to Power Metals Resources

 

Phoenix Copper* (LON:PXC) 28.5p, Mkt Cap £17.5m – Reduced H1 losses and project review

Phoenix holds 80% of the Empire mining property in Idaho

Phoenix Copper reports a reduced H1 loss of approximately US$0.57m for the six months to 30th June 2020 (2019 loss – US$0.67m) and a reduction in administrative expenses for the period to US$0.54m (2019 – US$0.66m).

The company raised an additional US$3.79m during the six months period leaving a 30th June cash balance of US$2.05m ( 2019 – US$0.32m

Describing the highlights of the half-year, CEO, Ryan McDermott highlighted the progress at the historic Empire mine site in Idaho where an updated mineral resource estimate, released in May, showed a ʺ56% increase in gold ounces [to 217,500oz classed as Measured & Indicated and a further 125,000 inferred ounce] and a 13% increase in silver ounces [to 6.8m Measured & Indicated and a further 2.7m inferred ounces]ʺ

In addition, recent metallurgical test work which has shown that 97% recovery rates are achievable using an environmentally benign reagent (ammonium thiosulphate) at competitive cost, offers the possibility of accelerating environmental approval for the planned oxide open-pit. T

Mr. McDermott also confirmed that ʺwe have … initiated a diamond drilling programme at the Red Star silver deposit and began a comprehensive mapping and sampling programme at the Navarre Creek gold propertyʺ.

At Red Star, where an initial resource estimate of 103,500 tons at an average grade of 173g/t silver and 3.85% lead was announced in May 2019, diamond core drilling aimed at investigating the strike and depth extensions of the mineralisation ʺis now well underway with excellent core recoveries in excess of 94% and 300 metres of the 1,500-metre programme completed.ʺ

In addition to the focus on the Empire mine and Red Star projects, Phoenix Copper has extended its land holdings at Navarre Creek, located to the north and west of Empire where exploration has identified ʺa four-mile long zone of felsic volcanic and intrusive rocks with alteration and mineralisation characteristics typical of epithermal, hot spring-type gold deposits. A comprehensive mapping and sampling programme is now underway.ʺ

The company reiterates the previously announced opinion of its consulting geologist ʺthat less than 1% of the Empire ore system has been exploited and explored to dateʺ.

Commenting on the wider industry context of its exploration and development projects, Chairman, Marcus Edwards-Jones, draws attention to the ʺrecovery in commodity prices, particularly a strong rise in the gold priceʺ since the onset of the Covid19 pandemic.

The Chairman goes on to express optimism for the future saying that ʺWe expect the remainder of 2020 to be very positive on many fronts, full of activity, and we look forward to updating all our stakeholders as we continue to understand and develop what is without doubt the prolific Empire ore system.ʺ

Conclusion: Phoenix Copper has made progress on a number of fronts with additional funds raised and reductions to its administrative expenses. Against a background of recovering precious and base metals prices since the onset of the Covid19 pandemic, the company has expanded its mineral resource inventory at the Empire mine site, commenced drilling to help establish the extent of the Red Star mineralisation and initiated exploration of the Navarre Creek licences. We look forward to news on the progress.  

*SP Angel acts as Nomad to Phoenix Copper

 

Strategic Minerals* (LON:SML) 0.43p, Mkt Cap £7.4m –Cobre Q2 magnetite sales

Strategic Minerals reports sales of magnetite during the 2nd  quarter of 2020 of 14,733 tons generating revenue of US$0.88m.

This brings sales, excluding the disputed sales to CV Investments Inc which were the subject of a recent arbitration decision in favour of Strategic Minerals’ wholly owned Southern Minerals Group, for the 6 months ending 30th June 2020 to 27,686 tons and revenues of US$1.65m compared to sales tonnage of 167,611 tons and revenues of US$1.4m during the first half of 2019.

The June quarterly sales tonnage is over 80% above those for the equivalent quarter in 2019 while revenues are 89% above those achieved in 2019.

The company confirms the previously announced arbitration decision ʺthat CV Investments had an obligation to pay US $21.9m plus interest under its contractʺ, however with SEC administrators appointed at CV Investments today’s announcement cautions that ʺthe amount of payment, if any, is highly uncertain at this timeʺ.

The company reports a 30th June 2020 cash balance of US$0.53m following the raising of an additional US$ 1.42m during the quarter the repayment of the outstanding NAE loan for the purchase of the balance of Cornwall Resources and the investment of US$0.18m into the company’s projects.

As well as the Cobre operations, Strategic Minerals submitted its draft environmental protection and rehabilitation plan for the Leigh Creek Copper development to the South Australian Government. The company explains that although measures related to the containment of Covid19 may delay the overall approval process no major concerns regarding the plans have been raised at this stage.

During the quarter, work at Redmoor has continued the analysis of historic information ʺto strengthen our understanding of the resource and further develop the conclusions of the last Scoping Study to improve the robustness of the expected project economics to be used at the corporate level in discussions with potential joint venture partnersʺ.

Strategic Minerals’ Managing Director, John Peters, confirms, and the sales performance verifies, that despite measures taken to alleviate the Covid19 pandemic, the Cobre operation’s performance is ʺencouragingʺ and that Cobre ʺhas underwritten both operations and minimised funding required to repay the loan associated with taking full ownership of Redmoorʺ.

Mr. Peters also emphasised that ʺ The Company’s key focus is on moving both the Leigh Creek and Redmoor projects forward in a manner that avoids dilution at the parent levelʺ.

Conclusion: Sales from Cobre have built on the robust performance during the first quarter of 2010 and are over 80% higher in tonnage and 89% higher in revenue terms than during Q2 2019. The site remains in operation while observing the restrictions implemented to control the Covid19 virus. Environmental permitting is progressing at Leigh Creek and although some delay may arise from virus protection measures no significant isues to delay the process are expected. The move to full control of Cornwall Resources and the Redmoor tin/tungsten project was com[pleted during the quarter and work continues in order to gain an improved understanding of the deposit and optimise the scoping study.

*SP Angel acts as Nomad and Broker to Strategic Minerals

 

Trans-Siberian Gold (LON:TSG) 94p, Mkt Cap £82m – V25N drilling returns high grade intersections along strike and at depth

The Company announced a series of drilling results of the Ven 25 North area discovered in Sep/19 within the East Zone of the operating Asacha Gold Mine.

High grade gold and silver intersections were returned from drilling tracking the mineralisation over 600m north and over 300m in depth including:

101.5 g/t Au and 1070 g/t Ag over 2.1 m      Hole ID C2083 (one of the deepest holes)

89.2 g/t Au and 214 g/t Ag over 0.8 m          Hole ID C2080 (farthest north hole)

31.4 g/t Au and 98 g/t Ag over 1.7 m            Hole ID C2071

27.4 g/t Au and 51 g/t Ag over 0.7 m            Hole ID C2079

21.6 g/t Au and 20 g/t Ag over 1.3 m            Hole ID C2087 

20.0 g/t Au and 28 g/t Ag over 1.6 m            Hole ID C2089 

17.3 g/t Au and 136 g/t Ag over 3.1 m          Hole ID C2076

14.8 g/t Au and 39g/t Ag over 1.3 m             Hole ID C2085

13.5 g/t Au and 8 g/t Ag over 0.9 m              Hole ID C2084 

12.8 g/t Au and 27 g/t Ag over 1.2 m            Hole ID C2065

12.4 g/t Auand 154 g/t Ag over 1.5 m           Hole ID C2059

The auriferous zone that extends just north of Vein 25 South underground workings remains open to the north and at depth.

25,000m were completed since October last year with 19,100m drilled on V25N with next phase of drilling in the area to comprise of 11,600m this year.

The latest mineral resource included data from the drilling completed up to 30 April with the V25N area estimated to host 173koz of gold in the Indicated category and 19koz in the Inferred resource with average gold grades of 18g/t and 13g/t, respectively.

This translated into a discovery costs of ~$12/oz .

Since then the Company completed 16 new drill holes for 4,100m at V25N with results pointing to a potential extension of the mineral resource both along strike and at depth.

Conclusion: Good drilling results at V25N, a norther extension of the Vein 25, show potential to grow the mineral resource both along strike and at depth with the team planning another 11,600m of drilling in the area this year.

 

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

 

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

SSY

RRE

Steelhome

Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal

Tungsten

Metal Bulletin

 

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