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Today's Market View -     Amur Mineral;Anglo Asian Mining; Bezant Resources; Cardinal Resources; Kodal Minerals

Iron ore prices lead major miners higher as strong cash flow generation offers prospect of bigger dividends Rio Tinto, BHP, Anglo American and Glencore are leading the mining sector higher on strong gains in iron ore

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SP Angel . Morning View . Wednesday 15 07 20

Iron China ore imports lead mining sector higher

 

MiFID II exempt information – see disclaimer within the PDF

   

Amur Minerals* (LON:AMC) – Response to price movement

Anglo Asian Mining* (AIM:AAZ) BUY – 209 (from 187p) – 14.3koz produced in Q2/20 with FY20 target of 75-80koz GEO reiterated

Atalaya Mining (AIM:ATYM) – Q2 delivers new production record

Beowulf Mining* (AIM:BEM) – Beowulf postpone drilling on Kallak super-high grade iron ore deposit till the Autumn

Bezant Resources (AIM:BZT) – Hope copper/gold project, Namibia

Cardinal Resources (ASX:CDV) – Nordgold ups its offer to A$0.66

Kodal Minerals* (LON:KOD) –Loan agreement secures funding to accelerate next phase of project development

Petropavlovsk (LON:POG) – Temporary directors are ruled to remain with GM planned to be called shortly

Premier African Minerals* (AIM:PREM) – Progress report

 

Iron ore prices lead major miners higher as strong cash flow generation offers prospect of bigger dividends

Rio Tinto, BHP, Anglo American and Glencore are leading the mining sector higher on strong gains in iron ore

Iron ore prices combined with strong import data from China is indicating rapid recovery from the Coronavirus crisis led by infrastructure stimulus

Strong Chinese iron ore imports are lifting prices higher as steel producers compete for cargos out of Australia

Iron ore imports showed strong gains rising 17% in June to 101.68mt vs 87.03mt in May up 35% yoy.

China’s trade surplus fell to US$46.2bn in June vs US$62.9bn in May

Iron ore prices rose to US$109.1/t this morning vs US$108.0/t yesterday while Chinese steel rebar prices have risen to US$535/t

Chinese hot-rolled coil steel imports rose 21% last week while imports of HRC steel, mainly used for cars and household appliances, rose 32,000t to 183,000t on last week.

Chinese exports rose 0.5% yoy in June vs -3.3% in May while imports also imports rose 2.7% yoy in June vs -16.7% in May

China unwrought copper imports jumped 50% mom to 656,483t more than double last year’s import level

First half imports rose 25% to 2.84mt due to restocking and investment at low price levels

Copper concentrate imports fell 6% mom in June to 1.59mt bit were still 8.4% higher yoy at

First half concentrate imports rose 3% yoy to 10.84mt

 

Numis Securities exits oil & gas and mining sectors

Numis Securities has elected to withdraw from the oil & gas and mining sectors according to a statement by Savannah Energy today.

The withdrawal may reflect a lack of critical mass and expertise in the sector, high business overheads and a lack of commitment to the natural resources space in a firm that was founded on the rescue and recapitalisation of  syndicates in the Lloyds insurance market and the media and retail sectors.

We suspect more firms will continue to cut costs in the oil & gas and mining sectors as increased regulation in recent years has effectively reduced commissions paid by investment funds to unsustainable levels in certain areas.

*the author formerly led Mining Research at Numis Securities

 

$6.3bn lawsuit claim against BHP begins next week

One of the largest claims in British legal history begins next week, as a group on behalf of 200,000 Brazilians goes up against BHP in Manchester.

The group has been brought on behalf of various associations including businesses and churches, who have filed a lawsuit over a 2015 dam failure that led to Brazil’s worst environmental disaster.

The collapse of the Fundao tailings dam killed 19 people and allowed 40m cubic meters to devastate downstream communities.

An initial eight-day hearing will establish whether the case can be heard in Britain, as BHP say that it duplicates proceedings held in Brazil (Reuters).

 

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

+2.13%

at

26,643

Nikkei 225

+1.59%

at

22,946

HK Hang Seng

-0.26%

at

25,412

Shanghai Composite

-1.56%

at

3,361

 

Economics

US - Inflation rose 0.6% in June vs -0.1% in May, yoy +0.6% (0.1%)

core inflation rose 0.2% in June vs -0.1% in May , yoy steady at 1.2%.  .

US considering imposition of further sanctions in response to Chinese claims in the South China Seas

 

UK - GDP rose 1.8% in May vs -20.3% in Apr but fell 19.1% for the three month average to May

Construction output was -39.7% in May vs -44.3% in April

Industrial production rose 6% in May vs -20.2% in April but was still down 20% yoy

Manufacturing output rose 8.4% in May vs -24.4% in April but was styoy -22.8% (-28.2%). As we have said this global recovery will be unlike any other and not fit with conventional patterns.

 

Japan - industrial production fell 8.9% in June vs -9.8% in May but still down -26.3% yoy

Capacity utilisation fell -11.6% vs -13.6% in May

 

Singapore - GDP fell 41% in Q2 on Q4 ’19 vs a fall of -3.3% in Q1), yoy -12.6% (-0.3%) and

 

Australia - NAB business confidence rose to +1 in June vs -28 in May. A good recovery.

 

EU - ZEW economic sentiment reached 59.6 in June vs 58.6 in May  

industrial production rose 12.4% in May vs -18.7% in April, but was still -20.9% lower yoy in May vs -28% lower yoy in April

 

India – Lockdown for 375m people as coronavirus cases spike to 29,429 new cases (Mail online)

India’s haphazard stop start approach to the coronavirus has led to a new spike in coronavirus cases

The new spike raises India’s total number of cases to 936,181

Coronavirus fatalities have jumped 582 to 24,309 with nearly half of all fatalities recorded in the state of Maharashtra which includes Mumbai

 

UK – Capital Gains Tax review looks like an easy way for HMRC to raise revenue while risking housing sales

UK Office workers will not have to wear masks

Offices are expected to protect workers with appropriate distancing, sanitation and desk screens.

Ministers are clearly concerned over the potential for a second wave in the Autumn when many offices plan to reopen to staff.

Many offices will reopen on a gradual, voluntary and teams-based strategy.

It would be a tragedy for the ‘R’ rate to rise through non-compliance with government advice with so many vaccines coming through.

 

Currencies

US$1.1405/eur vs 1.1338/eur yesterday.  Yen 107.09/$ vs 107.28/$.  SAr 16.672/$ vs 16.844/$.  $1.259/gbp vs $1.252/gbp.  0.700/aud vs 0.694/aud.  CNY 7.000/$ vs 7.013/$.

 

Commodity News

Precious metals:         

Gold US$1,808/oz vs US$1,800/oz yesterday - Gold prices maintain $1,800/oz as US-China tensions escalate

Continued concerns over rising cases of COVID-19 in hotspots worldwide remain, along with the latest flaring up of US-China tensions has underpinned demand for gold.

The US added over 58,000 new cases yesterday, as the situation also worsens in many South American countries (Kitco).

Trade negotiations have been put on hold between the US and China, and hopes of an economic pact between the two countries has been dashed as Trump signs an executive order ending preferential treatment of Hong Kong.

Spot gold rose 0.1% to $1,809/oz earlier this morning, whilst US gold futures eased 0.2% to $1,809/oz (Reuters).

   Gold ETFs 104.7moz vs US$104.5moz yesterday

Platinum US$830/oz vs US$833/oz yesterday

Palladium US$1,973/oz vs US$1,991/oz yesterday

Silver US$19.28/oz vs US$19.02/oz yesterday

           

Base metals:  

Copper US$ 6,480/t vs US$6,482/t yesterday - Peru copper mines back to capacity by end of July

Peru’s head of the mining engineers institute has announced that copper mines in the country should be back to full production by the end of the month.

Two-thirds of mine workers in Peru are already back at work, reflecting that normality is close to resuming after a two-month shutdown (Bloomberg).

Aluminium US$ 1,686/t vs US$1,683/t yesterday - Chinese aluminium exports fall 30% YoY

China exported 354,000 tonnes of aluminium last month, down from 506,000 tonnes compared to the same period last year.

Total exports in the first half of 2020 fell 21% to 2.37mt compared to H1 2019 (Fastmarkets MB).

Nickel US$ 13,520/t vs US$13,575/t yesterday

Zinc US$ 2,203/t vs US$2,214/t yesterday

Lead US$ 1,851/t vs US$1,862/t yesterday

Tin US$ 17,340/t vs US$17,300/t yesterday

           

Energy:           

Oil US$43.1/bbl vs US$42.1/bbl yesterday

Oil prices have ramped up following reports from the API of a huge draw in crude oil inventories of 8.322MMbbls for the week ending 10 July

Consensus had predicted an inventory much smaller inventory draw of 2.275MMbbls

In the previous week, the API reported an increase in crude oil inventories of 2.048MMbbls after analysts had predicted a larger build

WTI was trading down on Tuesday afternoon prior to the API’s data release with prices responding to the likelihood that OPEC+ would decide to decrease its level of production cuts as of 1 August, and potentially slowing the inventory drawdown

Oil production in the US has now fallen from 13.1MMbopd in March to 11MMbopd bpd today, according to the EIA, for the third week in a row

Production has rebounded somewhat from week ending 12 June, which saw an average of 10.5MMbopd produced

Natural Gas US$1.759/mmbtu vs US$1.722/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 remain warmer than normal over the next 8-14 days according to the National Oceanic Atmospheric Administration

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

Production in the US decreased in April by the most in 8 years

Uranium US$32.80/lb vs US$32.90/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$109.1/t vs US$108.0/t

Chinese steel rebar 25mm US$535.2/t vs US$535.7/t - Chinese hot-rolled coil steel imports rose 21% last week

Deliveries of HRC steel, used for cars and household appliances, rose 32,000t compared to the week prior to 183,000 tonnes (SMM News).

Thermal coal (1st year forward cif ARA) US$60.0/t vs US$58.4/t

Coking coal swap Australia FOB US$113.0/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$41,996/t vs US$41,853/t

Lithium carbonate 99% (China) US$4,920/t vs US$4,848/t

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

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

LG Chem strong order pipeline

LG Chem suggests it has $125bn worth of orders driven by tightening environmental regulations in Europe and China. (Financial Times)

The South Korean battery maker has overtaken CATL to become the industry leader.

LG Chem’s EV battery sales have increased 70% as sales of Tesla’s Model 3, the Renault Zoe and Audi’s e-Tron have surged.

The Company’s market share has skyrocketed from 10.7% last year to 24.2% this year, whilst its share price has doubled.

LG Chem plans to spend a record Won1.3trn on R&D this year, 40% of this on EV batteries. This comes after the company cut capex by 9% as a result of the pandemic.

LG Chem supplies batteries to Tesla, GM, Renault and Daimler. (Greentechmedia)

 

Generous EV subsidies mean free vehicles!

German subsides are enabling an auto dealership chain to advertise a lease for the Renault Zoe entirely covered by subsides. (Bloomberg Green)

Demand for the offer has been strong with 3,000 inquiries and 300 sales in 3 weeks.

EV subsidies in German cover as much as €9,000 per EV whilst France has raised subsidies to €7,000 per vehicle.

Germany’s generous subsidies are part of a continent wide push towards support for and transition towards EVs.

Amsterdam has committed to banning the sale of no-electric cars by 2030 whilst the UK will do the same by 2035.

Stricter rules on emissions standards are driving automakers to focus on producing hybrid and pure-electric vehicles.

 

Company News

Amur Minerals* (LON:AMC) 2.1p, Mkt Cap £20m – Response to price movement

In response to the recent share price move, the Company reported yesterday that it is currently considering an investment in the mining sector.

The investment is subject to completion of the due diligence and funding with the team to make a further announcement as discussions progress.

The investment is reported to be in accordance with the Company’s intention to secure interest in financial instruments within the mining sector to provide the Company with a reliable source of income going forward, or where the Company will be able to add short to medium-term value and does not constitute a reverse takeover.

*SP Angel act as Nomad and Broker to Amur Minerals

 

Anglo Asian Mining* (AIM:AAZ) 144p, Mkt Cap £164m – 14.3koz produced in Q2/20 with FY20 target of 75-80koz GEO reiterated

BUY – 209 (from 187p)

Q2 production amounted to 14.3koz GEOs (Q2/19: 19.6koz) comprised of:

12.0koz of gold (Q2/19: 17.1koz);

648t of copper (Q2/19: 448t);

23.9koz silver (Q2/19: 33.1koz).

Lower production is attributed to weaker processed grades and lower recoveries of the ore delivered at the agitation leaching plant with some impact on efficiency from COVID-19 related restrictions.

Virus containment measures resulted in staff working without rotation continuously at Gedabek since March compared to pre-pandemic 4-6 weeks schedule while constraints placed on obtaining supplies, maintaining equipment and shipping gold have also required extra effort.

While the team is addressing the issues, Gedabek is not yet operating as efficiently as prior to the pandemic.

H1/20 production was 32.5koz GEOs (H1/19: 39.9koz).

Annual production guidance reiterated at 75-80koz GEOs with output to be weighed towards the second half of the year.

Initiatives to ramp up production in H2/20 include:

High grade ore from underground at Gedabek starting in Q4/20 with new portal established and a 500m decline currently being constructed.

Reprocessing of higher grade material from old heaps (~100kt of >2g/t) that was previously crushed and, hence, add low cost ounces to total production. Expansion of the tailings dam earthworks are now almost complete with the equipment planned to be transferred to loading and trucking of old heaps to the agitation leaching plant.

Q2 gold bullion sales totalled 12.7koz at an average gold price of $1,713/oz (Q2/19: 13.5koz at $1,332/oz).

Copper concentrate shipments to the customer were 3.5kt generating net sales proceeds (post PSA) of $4.8m (Q2/19: 4.0kt and $6.7m).

New JORC mineral resources and reserves statement is expected to be released by the end of Q3/20 with H1/20 exploration report to come out around the end of July.

Cash balance stood at $29.2m and no debt as of quarter end marking an increase of $3.2m in net cash in Q2 after accounting for advance tax payments of $2.9m.

Conclusion: The Company delivered 14.3koz GEOs during the quarter continuing to build up the net cash position. Production came in weaker than expected driven by lower grade feed from the Gedabek open pit and less ore mined from the Gadir underground mine with the team confident production will pick up through the remainder of the year and reiterating the 75-80koz GEO target for 2020.

In line with management guidance, we expect the Company to ramp up production through H2/20 driven by higher grade feed that should also help agitation leaching recoveries pick up during the period. As such, the quarterly production update was largely neutral with regards to our target valuation with us reiterating our BUY recommendation. We have, however, revised our gold and copper price assumptions higher (see table below) driving our Anglo Asian earnings up and translating into a revised price target of 209p (up from 187p) highlighting high earnings margins, strong FCF generation, debt free balance sheet and attractive dividend yield. Additionally, the team progresses with extensive exploration programme with a H1/20 update due at the end of July and new mineral resources/reserves statement later in the quarter.

*SP Angel acts as nomad and broker to Anglo Asian Mining

 

Atalaya Mining (AIM:ATYM) 172.5p, Mkt Cap £226.6m – Q2 delivers new production record

Atalaya Mining reports record quarterly copper production from its Proyecto Riotinto operation in southern Spain with 13,635t of production “representing a 25% increase over the equivalent quarter in 2019 and above Q1 2020”. Production increased by 3% during the quarter.

Processing of 3.6mt of ore represents an increase of 39% over the equivalent Q2 2019 levels and reflect the successful expansion to 15mtpa capacity achieved in late 2019.

The company notes that “Copper prices decreased during Q2 2020 compared with Q1 2020, with an average realised price per pound of copper payable”.

Recognising the contribution of the operational team, CEO, Alberto Lavandeira, explained that “"Our operations set a new production record thanks to the professionalism and dedication of our team which successfully commissioned the expansion at Proyecto Riotinto. Plant recoveries have returned to normal pre-commissioned levels and the Company will now continue focusing on delivering new efficiencies to make our business even more competitive."

Conclusion: The achievement of a production record during Q2, against a background of the additional challenges of the Covid19 virus underlines the successful expansion of throughput to 15mtpa at Proyecto Riotinto.

 

Beowulf Mining* (AIM:BEM) 4.35p, Mkt cap £26m – Beowulf postpone drilling on Kallak super-high grade iron ore deposit till the Autumn

Beowulf Mining have delayed planned drilling at Kallak till the Autumn.

The reason given is due to safety issues relating to COVID-19.

Kallak resource:

Indicated Resource:  118.5mt grading 27.5% iron content

Inferred Resource:  33.8mt grading 26.2%

Exploration target:  90-100mt grading 22-30% iron

Conclusion: We believe there is significant exploration upside to the Kallak iron ore deposit.

This combined with it’s ability to produce super-high grade iron ore feedstock should make the resource attractive to the larger miners.

LKAB or Boliden who are well respected and operate within Sweden are likely to be interested.

LKAB would benefit from diversifying its operations following a recent earthquake at its Kiruna mine and other resource issues.

Beowulf continues to press ahead with its graphite projects in Finland and is enjoying exploration success with its investment in Valar in Kosovo

*SP Angel act as nomad and broker to Beowulf Mining.

 

Bezant Resources (AIM:BZT)  0.11p, Mkt Cap £2.1m – Hope copper/gold project, Namibia

Bezant Resources has issued an announcement describing the progress of its due-diligence studies on the Hope copper/gold project located in the historic Matchless Copper Belt of Namibia.

The project has an overall JORC (2012) compliant mineral resource estimate of 10.2mt at an average grade of 1.9% copper and 0.3g/t gold (at a cut-off grade of 0.7% copper) and the company says that “Approximately 30% of the mineral resource in the 'Indicated' Mineral Resource category and the balance in the 'Inferred' Mineral Resource category.”

Within this total resource, the company says that the Hope deposit has an estimated resource of 3.09mt at an average grade of 2.53% copper and 0.84g/t gold (also at a 0.7% cut-off). In addition to the Hope deposit, which includes the Hope Extension, are the Gorob-Vendome and Anomaly deposits.

Bezant Resources says that “many of the historic drill holes were not assayed for gold, the overall gold grade in the current mineral resources (0.3g/t Au) is interpreted to be a significant underestimate”.

Reporting “significant historic drill intersections” the company highlights:

An intersection of 7.1m at an average grade of 9.18% copper from a depth of 186m in hole HDD42; and

An intersection of 7.65m at an average grade of 5.32% copper and 1.37g/t gold from a depth of 147.66m in hole HDD63; and

An intersection of 12.09m at an average grade of 1.47% copper and 0.21g/t gold from a depth of 280.7m in hole HDD66, including 5.01m averaging 3.15% copper and 0.37g/t gold from 287.32m depth; and

An intersection of 4.4m at an average grade of 7.79% copper and 1.73g/t gold from a depth of 365m in hole HDD71; and

An intersection of 23.31m at an average grade of 1.59% copper and 0.23g/t gold from a depth of 464.09m in hole HDD82, including 9.68m averaging 3.18% copper and 0.42g/t gold from 477.17m depth; and

An intersection of 10.12m at an average grade of 5.72% copper and 0.56g/t gold from a depth of 525.57m in hole HDD91; and

An intersection of 7.11m at an average grade of 5.26% copper and 1.14g/t gold from a depth of 528.89m in hole HDD99

Executive Chairman, Colin Bird, said that “This is an exciting potential project for the Company and the more we dig into the archives, it becomes evident that resources quoted were the subject of extensive drilling programmes which gives us added confidence. It is also evident that the contribution of gold has been neglected which in today's times could in our view be quite significant”.

Conclusion: The re-evaluation of the historic Hope copper/gold deposit in Namibia is uncovering previously unrecognised gold potential as well as potentially significant copper grades. We look forward to further news as Bezant Resources continues its due-diligence.

 

Cardinal Resources (ASX:CDV) A$0.69, Mkt Cap A$363m – Nordgold ups its offer to A$0.66

The Nordgold unsolicited on-market bid comes at a revised offer price of A$0.66/share, up from A$0.46/share offered in March.

Nordgold is currently the Company’s largest shareholder with a voting power of 18.7% and aims to outbid the recommended all-cash A$0.60 offer from Shandong Gold.

Nordgold is an international gold miner with a diverse portfolio of ten mines in Burkina Faso, Guinea, Russia and Kazakhstan and a recorded production of 1,041koz at $722/oz in TCC in 2019.

Cardinal Resources is a West African focused gold Company focused on development of the flagship Namdini Project located in northern Ghana.

On the Feasibility Study completed in late 2019, the project hosts 5.1moz at 1.13g/t in mineral reserves and 7.0moz at 1.14 in total resources.

The US$390m project envisages a 9.5mtpa operation involving grinding/flotation/re-grinding up to 9μm fraction for production of ~290kozpa at US$895/oz in AISCs over 15 years and generating NPV5% (post tax) of US$958m and IRR (post tax) 46% (at $1,550/oz).

The offer values the Company at US$243m or $50/oz in reserves and $36/oz in resources.

Cardinal urged shareholders to take no action as the Company considers the offer in detail and will provide an update to shareholders in due course.

The Company highlighted obligations under the bid from Shandong Gold that contain “amongst other matters, matching rights in favour of Shandong Gold”.

 

Kodal Minerals* (LON:KOD) – 4.9p, Mkt cap £5.4m – Loan agreement secures funding to accelerate next phase of project development

(Kodal holds 100% of Nangalasso and Dabakala. Kodal currently holds 90% of the Bougouni Lithium project, this will adjust to 81% when the Mali government 10% free carry is applied)

Kodal Minerals has signed a US$1.5m loan agreement with Riverfort with an initial advance of US$750,000.

The loan has a 15-month term with an interest rate of 9.85%pa payable monthly;

The funds will be used to continued development of the Bougouni Lithium Project in Mali.

Recent metallurgical results from the Bougouni bulk sample show 83% recovery on material shipped to China

We expect lithium prices to rise from their current lows to levels which are required to bring in new production to feed the expected expansion in Li-ion battery manufacturing.

Electric vehicle sales have remained resilient through the coronavirus crisis and continue to grow.

The proportion of EVs to combustion engine vehicles sold is also expected to increase significantly over the next few years as battery range and life improves and new EV models are rolled out.

Further drilling and other exploration work will be done at the Nangalasso gold project in Mali

Geochemical sampling and geological mapping at the Dabakala project in Cote d'Ivoire.

Nangalasso has a 5,500m strike length and covers three concessions covering 310sqkm with:

21m at 1.25g/t gold, including 3m at 7.1g/t gold

3m at 7.84g/t gold including 1m at 13.5g/t gold (eoh)

1m at 7.8g/t gold.

Dabakala is at an earlier stage with a new gold anomalous zone discovered extending over 8km within a 300skqm concession.

*SP Angel acts as broker and financial advisor to Kodal Minerals

 

Petropavlovsk (LON:POG) 29p, Mkt Cap £966m – Temporary directors are ruled to remain with GM planned to be called shortly

The court confirmed that Temporary Directors (Peter Hambro, Alya Samokhvalova, Angelica Phillips and Johnny Martin Smith) will remain as directors of the Company with a series of conditions.

Among terms mentioned were the need to give at least five days' notice to Everest, the shareholder who challenged the appointment of Temporary Directors, in respect of certain proposed actions, including the appointment of any new directors, the entry into or amendment of certain contracts or the issue of new shares (other than in connection with any conversion of the US$125 million notes due 2024 guaranteed by the Company).

Additionally, calling a general meeting (GM) will require the approval of at least two of four directors re-elected at the AGM on 30 June 2020 including Maxim Kharin, James Cameron, Katia Ray and Charlotte Philipps.

The Board is planning to call a GM “without delay” after reiving requisitions from major shareholders including Prosperity Capital Management as well as Everest.

Separately, the Company reports it received a requisition from Everest to include a special resolution for the coming GM to commission an independent forensic investigation to review all transactions and arrangements entered into in the last three years between the Company or any its subsidiaries/affiliates and IRC and current or former directors/senior managers of the Company/IRC or connected persons.

The purpose of the forensic investigation is to determine if each such transaction or arrangement was carried out in the best interests of the Company and to the benefit of its shareholders or otherwise.

 

Premier African Minerals* (AIM:PREM) 0.08p, Mkt Cap £9.3m – Progress report

Premier African Minerals has issued a progress report on its Zimbabwean operations and the Namibian operations of 19% owned MN Holdings which operates the Otjozondu manganese mine.

In Zimbabwe, where the company plans to produces 6,000tpm from the underground RHA tungsten mine, it reports that its off-take partner is advising that “the recent softening tungsten price has resulted in mine closures and delays elsewhere in the world and our offtake partner views this as an opportunity for RHA that they are prepared to support as they believe that shortages of tungsten may occur into 2021.”

The company confirms that at the planned output rate RHA “does not require the X-Ray Transmission ore sorter … and we are actively looking for a suitable alternative use for the XRT in Zimbabwe.”

The company reports that it is nearing an agreement with the National Indigenisation and Economic Empowerment Fund (NIEEF) and Ministry of Industry, Commerce and Enterprise Development in relation to NIEEF funding of “the development of a new decline shaft at RHA and the cost to bring the mine back into production.”

Discussions with the off-take partner at RHA to review the technical route to profitable operation at the 6,000tpm rate from underground, if concluded successfully, could lead to the off-taker “fully funding the return to production (estimated to require funding of cUS$1.7 million), subject to resolution of the present impasse with NIEEF”.

Elsewhere in Zimbabwe, the company reports that recent communications with the Ministry of Mines and Mining Development lead it to conclude that resolution of the protracted delay in issuing the Exclusive Prospecting Order over the Zulu lithium/tantalum project may be resolved “in the near future”.

At Otjozundu, although there are no reported Covid19 cases, mitigation measures to control the virus “new mine operating procedures to limit the potential spread of Covid19” continue to affect operations. Limited availability of shipping containers “has limited the actual gross export tonnages of Manganese lump from Otjozondu over the past two months to approximately 4,200 tonnes per month, whilst at the same time mine production of Dressed Ore for export has been in excess of 5,250 tons per month, resulting in a stock pile developing both at the mine gate and at the Okahandja siding”.

Noting that management at Otjozundu is “taking advantage of the improved manganese prices, on the development of Borand Pit B and Pit C … [and is] … ramping-up of waste mining in anticipation of the higher grade sections of the Borand Pit B and Pit C”

Reports from operating management at Otjozundu, although unverified, suggest that “new operating requirement and issues associated with Covid-19 have increased the all-in-cost per metric ton unit inclusive of all shipping costs and selling commissions to US$2.95 per dry metric ton unit "dmtu" while the average selling price for the last two months of shipments has been US$4.60 per dmtu.”

Conclusion: Reports of progress towards resumption of operations at the RHA tungsten mine, if achieved, could place the mine in a position to benefit from expected emerging supply shortages. The company is also optimistic of resolving permitting issues at its Zulu lithium/tantalum project in Zimbabwe.

*SP Angel have an agreement with Premier African Minerals as a result of the acquisition of Northland Capital Partners

 

Analysts

John Meyer – [email protected] – 0203 470 0490 / 07943031001

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] - 0203 470 0474

 

*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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