Alien Metals (LON:UFO) – Employs Canadian broker in hunt for joint venture partner for Mexican project
Altus Strategies* (LON:ALS) – EIA approved at the JV ready Agdz silver/copper project, Morocco
Arc Minerals* (LON:ARCM) – Arc reports sale of Sturec gold project in Slovakia
Empire Metals (LON:EEE) – Empire signs option to acquire 75% of the Eclipse gold mining license near Kalgoorlie
Galileo Resources (LON:GLR) – Starting exploration on the Kalahari Copper Belt
Horizonte Minerals (LON:HZM) – Araguaia debt financing
Gold - $1,933/oz – Gold pulls back as investors buy hospitality stocks in US for recovery and value
Nobody is buying the Russian vaccine story just yet, that is unless they are ‘persuaded’ to by the Russian officials
But, investors sense there is value in many hospitality and other hard-hit stocks as lockdowns ease and heard immunity potentially allows life to return to normal. The new normal may continue to require face masks in shops etc.. and for other precautions but everything is gradually opening up again.
US stimulus expectations pushed US 10yr bonds 10bp higher to 0.65% prompting traders to sell gold.
Investors sold gold ETFs yesterday for the first time in as long as we can remember taking some of the hot money out of the metal.
Gold ETFs added 21% in 2020 with July inflows adding 166t of gold worth $9.7bnto ETFs in July bringing global holdings to a new all-time-high (WGC)
Renewed confidence in the US dollar may have served to halt gold’s bill run dragging prices down from a peak of $2,075/oz to $1,945/oz today.
Conclusion: Bull markets climb a wall of worry. Gold has set a new high level at $2,075/oz, while the precise conditions which helped gold to this high may not return there are many more investors who will want to hold gold and its proxies going forward and we expect support for gold at around US$1,875/oz.
COVID-19 – Yet more evidence on the importance of T cells is emerging. It's significant (Professor Karol Sikora).
This isn't just one rogue study now, it's being increasingly documented.
https://twitter.com/i/status/1281181037071085575
Peru – COVID-19 fuelled social unrest targets resources sector
Residents in Peru's Andean and Amazon regions have attacked three mining and oil sector firms in the last week amid rising economic tensions, Reuters reported on Tuesday.
Protestors are unhappy with the economic disparities between rich and poor in terms of accessing economic aid and healthcare support during the pandemic.
There were 162 social protests linked to COVID-19 in Peru in June and July, including 16 linked to mining operations in the country.
On Sunday, three indigenous people died in the Amazon whilst 17 further people were injured as protestors clashed with security forces at an oilfield owned by PetroTal.
A protest at Glencore's Antapaccay copper mine was resolved after the company agreed to issue local residents with $285 shopping cards for provisions.
Peru has the seventh highest tally of confirmed coronavirus cases in the world, with over 478,000 cases and more than 21,000 deaths.
China NEV production and sales increase for the first time in 2020
China's new energy vehicle production and sales increased for the first time on an annualised basis in July, as the domestic automotive market recovered amid government stimulus.
China produced 100,000 NEVs in July, up 15.6% YoY whilst sales increased 19.3% to 98,000 units over the same period- according to China Association of Automobile Manufacturers.
The country's NEV market began to recover on a monthly basis in April, supported by government stimulus and a campaign to promote the use of NEVs in rural areas.
Domestic NEV production during January-July totalled 496,000 units, down 31.7% compared to the same period last year, whilst sales down 32.8% to 486,000 units (Argus Media).
Google Earthquake - Google turns android phones into earthquake sensors
The Google earthquake early warning alert is based on ShakeAlert plus data from the phones themselves.
Looks like a great idea if you live in an earthquake prone region.
Earthquake – swarm of small earthquakes in California close to Mexican border
The earthquakes are being closely monitored in case they might trigger a slip within the San Andreas fault.
Dow Jones Industrials
-0.38%
at
27,687
Nikkei 225
+0.41%
at
22,844
HK Hang Seng
+1.17%
at
25,183
Shanghai Composite
-0.63%
at
3,319
Economics
China – New bank loans dropped more than expected in July, although, the broad measure of credit and liquidity accelerated to 12.9%, up from 12.8% in June.
New loans totalled CNY 993bn v 1.20tn in June.
While authorities are leaning more heavily to fiscal stimulus to weather the downturn including cutting taxes and issuing local government bonds to fund infrastructure projects, monetary policy is likely to remain loose for some time.
China Auto sales rose 16.4% in July
Japan – The economy will not recover pandemic losses until the year starting Apr/24, according to a gloomier-than-consensus analysis by a Japanese think tank.
Singapore - GDP fell 42.9% in Q2 vs -4.7% in Q1 yoy -13.2% (-0.7%),
India - Industrial production fell -16.6% yoy in June vs -16.7% yoy in May
Australia - NAB business confidence -14 in July vs 0 in June – due to further local Lockdown’s in Australia
UK – The economy dropped 20.4%qoq in Q2 marking the worst reading since records began in 1955 and the largest drop among any other major European economies.#
Consumer spending collapsed 23.1%qoq while business investment plunged 31.4% with government spending down 14%.
Services, the largest part of the economy, shrank 20%qoq and industrial production plunged 17%.
Concerns over the second wave of infections, planned winddown of the furlough scheme that covers around 10m jobs as well as no clarity on the Brexit plan are seen as risks to a quick economic recovery.
FT reported on Tuesday the government is weighing options to review the autumn Budget if Britain is hit by a big second wave of coronavirus.
UK Chancellor says June GDP was encouraging with promising signs, but recovery will not feel like a V-shape if you have lost your job.
EU - ZEW economic sentiment 64.0 in August vs 59.6 in July
Germany – Business outlook climbed to a record level in August after dipping in July and strongly beating market estimates, Zew survey results showed.
Although, assessments of the current situation remained low.
The survey showed that the country was recovering from a government-imposed lockdown at a quicker pace than other eurozone members.
The economy contracted 10.1%qoq in the second quarter marking the weakest reading since data began four decades earlier; however, it was less than a 13.8% drop in France and -18.5% in Spain.
Factory orders have also picked up strongly climbing 27.9%mom in June, the data from the Federal Statistics Office showed last week.
Zew Survey Expectations: 71.5 v 59.3 in July and 55.8 est.
Zew Survey Current Situation: -81.3 v -80.9 in July and -69.5 est.
Germany recorded the largest jump in new coronavirus daily cases in more than three months, data released today showed.
The number of confirmed cases rose by 1,226.
“We see that due to holidaymakers coming back, but also due to all sorts of parties and family gatherings, we now have smaller and larger outbreaks in many regions, in nearly all parts of the country,” Health Minister Jens Spahn said.
South Korea – The economy shed 277k jobs in July from a year earlier, a fifth consecutive month of falling employment.
“There’s a still a long way to go before pre-Covid-19 levels return… Recent torrential rains may also weigh heavily on the August jobs situation
Economists call IMF to help emerging economies recover from COVID-19 recession
Tony Addison, professor of economics at the University of Copenhagen, has called for the IMF to create a new pandemic support facility for the worst affected emerging market nations.
Some, like Argentina and Ecuador, have already restructured a portion of their national debt while others have yet to do so.
The pandemic further highlights the need for education and basic sanitisation eg. access clean running water, better healthcare and no more bat soup.
There is little doubt that building better services for sanitation, education and healthcare will be for the good of all.
Mining companies are at the forefront of providing services to poor communities often in remote regions and understand full well the importance and benefits of providing such services which are often over and above that required by government.
South Africa - Industrial production rose 30.4% in June vs 44.5% in May , yoy -32.4% (-49.4%),
Mexico - Industrial production rose 17.9% in July vs -1.2% in June yoy 16.7% (30.6%).
Beirut, Lebanon – who owned the ammonium nitrate which sat in Beirut harbour for so long
Reuters investigative journalists have been tracing the ownership of the ammonium nitrate which exploded in Beirut.
All cargoes have to have a clear owner, a fundamental part of shipping, insuring and settling disputes.
But, nobody can trace the owner of this valuable cargo.
The 2,750t of ammonium nitrate fertilizer was made in Georgia, was ordered by an African company that never paid for it and shipped in a Russian vessel.
The ship and its shipment was allegedly destined for an explosives manufacturer in Mozambique but was ordered to make an unscheduled stop in Beirut in November 2013. The cargo was put into a dockside warehouse.
The empty ship eventually sank where it was moored in 2018, according to Lebanese customs.
Speculation suggest the shipment was destined for Hezbollah for use in truck bombs. Many in Lebanon are also blaming Iran for supporting Hezbollah.
Questions remain as to how such a large and lethal shipment was allowed to sit in a dockside warehouse for six years.
https://uk.reuters.com/article/uk-lebanon-security-blast-ship-insight/who-owned-the-chemicals-that-blew-up-beirut-no-one-will-say-idUKKCN2571CD
Currencies
US$1.1744/eur vs 1.1736/eur yesterday. Yen 106.75/$ vs 106.20/$. SAr 17.488/$ vs 17.678/$. $1.305/gbp vs $1.307/gbp. 0.713/aud vs 0.717/aud. CNY 6.951/$ vs 6.957/$.
Commodity News
Precious metals:
Gold US$1,935/oz vs US$2,004/oz yesterday - Gold falls 5.7% yesterday as US stocks near record highs
The price of gold sank yesterday following the return of risk appetite as the S&P 500 hovered around its record close, aiming to emulate the Nasdaq which hit a record high on Friday.
The broad advance for equities led to gold falling 5.7%, its worst daily drop since 2013. Silver fell 15%, its worst one-day fall since the financial crisis in 2008 (FT).
US 10-year treasury bonds rose back above 0.60% after its biggest daily jump in two months, making non-yielding bullion less attractive (Market Watch).
Dollar strength also dented gold's allure, as the greenback climbed to fresh highs against most other major currencies yesterday (FX Street).
Spot gold fell 5.7% to $1,922/oz on Tuesday whilst US gold futures settled -4.6% at $1,946/oz, although spot gold rebounded 0.5% in early trading on Wednesday (Reuters).
Gold ETFs 108.7moz vs US$108.8moz yesterday
Platinum US$951/oz vs US$973/oz yesterday
Palladium US$2,158/oz vs US$2,219/oz yesterday
Silver US$25.84/oz vs US$28.22/oz yesterday
Base metals:
Copper US$ 6,345/t vs US$6,371/t yesterday - China – copper output fell 7.2% to 687,100t in July
Chile – copper concentrate exports rose 34% yoy to 1.11mt
Aluminium US$ 1,785/t vs US$1,782/t yesterday
Nickel US$ 14,160/t vs US$14,170/t yesterday
Zinc US$ 2,389/t vs US$2,387/t yesterday
Lead US$ 1,952/t vs US$1,914/t yesterday
Tin US$ 17,670/t vs US$17,700/t yesterday
Energy:
Oil US$44.9/bbl vs US$45.1/bbl yesterday
Oil prices continue to hold up with another large inventory draw reported by the API yesterday afternoon
The API estimate a 4.401MMbbl draw for the week ending 7 August
This has come in ahead of consensus for the third week in a row with analysts predicting a modest inventory draw of 2.875MMbbls
Last week the API reported a considerable draw in crude oil inventories of 8.587MMbbls, after analysts had predicted a draw less than half that size
Elsewhere, the API reported a draw of 1.310MMbbls of gasoline for the week ending 7 August, compared to last week’s 1.748MMbbl draw
This week’s draw compares to analyst expectations for a 674kbbl draw for the week
Distillate inventories were down by 2.949MMbbls for the week, compared to last week’s 3.824MMbbl build, while Cushing inventory was the only build this week, gaining 1.073MMbbl
Despite oil prices starting well in early trading yesterday, WTI was trading down in the afternoon before the API’s data release
Prices remain rangebound as OPEC’s cut delivers, but the demand picture remains shrouded with uncertainty, even as the number of new coronavirus cases in the US is now falling
Oil production in the US now appears to be levelling off after falling from 13.1MMbopd in March to 11MMbopd in July
Natural Gas US$2.155/mmbtu vs US$2.153/mmbtu yesterday
Natural gas futures trading higher yesterday afternoon but settled even in reaction to overnight forecasts calling for slightly more heat than originally expected
There were no major shifts in the weather outlook, but just enough to curtail some of the selling pressure left over from Monday’s rout
There is one disturbance in the Atlantic that has a 60% chance of becoming a tropical cyclone according to the NOAA hurricane centre
Hedge funds significantly reduced short-positions in futures and options in the latest week which likely led to the short-squeeze in prices
Uranium US$32.20/lb vs US$32.25/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$113.9/t vs US$115.3/t
Chinese steel rebar 25mm US$543.1/t vs US$543.8/t
China's steel body expects iron ore port congestion to ease by end of August
The China Iron and Steel Association announced yesterday that discharging difficulties and port congestion are likely to ease this month, as the weather improves, and coronavirus is brought under control.
The number of vessels stuck at ports has increased recently, and the disruption has been a factor in iron ore futures on the Dalian Commodity Exchange surging 22.7% since July (Reuters).
Iron ore prices fell as a result of the announcement, with the most-traded January iron-ore contract on the Dalian Commodity Exchange falling 2.7% to 817 yuan/t earlier this morning (Bloomberg).
Thermal coal (1st year forward cif ARA) US$57.6/t vs US$58.9/t
Coking coal swap Australia FOB US$119.0/t vs US$119.0/t
Other:
Cobalt LME 3m US$33,200/t vs US$33,200/t
NdPr Rare Earth Oxide (China) US$46,255/t vs US$45,997/t
Lithium carbonate 99% (China) US$4,992/t vs US$4,988/t
Ferro Vanadium 80% FOB (China) US$30.2/kg vs US$30.2/kg
Antimony Trioxide 99.5% EU (China) US$5.1/kg vs US$5.1/kg
Tungsten APT European US$205-210/mtu vs US$205-210/mtu
Graphite flake 94% C, -100 mesh, fob China US$430/t vs US$430/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,275/t vs US$2,275/t
Battery News
Nissan and EON join forces for V2G trial
Nissan and EON have installed 20 bidirectional chargers at Nissan’s European Technical Centre in Bedfordshire as part of a vehicle to grid trial.
The project is being co-funded by Innovate UK a government backed innovation agency working to grow the UK economy.
The project aims to demonstrate “a profitable and sustainable solution for business fleets”. Nissan’s CHAdeMO connector is being used as part of the project but this will have to be switched to CCS in the future.
Participants in the trial can sign in with CHAdeMO compatible EVs, deploy a V2G charger and receive £308 back for sharing battery capacity.
V2G trial schemes are becoming more popular with a number of small ventures across the UK and Europe.
Audi recently began testing bi-directional charging in a V2G system alongside Hager Group. The German car company tested the system using their e-tron model.
Electric Nation also ran a similar trial in the UK in partnership with CrowdCharge. The scheme has 100 participants, all of them Nissan owners, again due to compatibility limitations of the CHAdeMO connector being used.
Honda and Moixa installed 5 bi-directional CCS charging points outside Islington townhall in January.
The concept is the EVs can be an alternative battery store, estimated to have a potential capacity of 220.5GW based upon the number of cars in the UK. This is 15x the size of the current battery storage available in the UK. It is also estimated to be cheaper than large stationary battery stores with EV batteries cheaper than their stationary compatriots.
Lucid announces new vehicle will be capable of 500 miles on a single charge
Lucid has claimed its new Air electric sedan will have a ranged of 517 miles on a single charge, that is a 100 miles further than the current leader the Tesla Model S with a 402 mile range.
The Air was tested by FEV North America using the EPA’s current test cycle with the standard adjustment factor.
Lucid first teased the Air in 2016 and the EV is due for release in 2021.
The vehicle battery has a capacity of 110kWh with a fast charge time of 41 minutes.
Lucid uses lithium-ion battery cells supplied by Samsung SDI and LG Chem.
EVs and electric infrastructure continues to gain ground
European EV registrations rose 65% in June while petrol and diesel registrations fell 32% and 31% respectively. Total EV registrations increased from 111,300 units to 183,300.
EV market share in Europe is now 16.2%, with hybrids accounting for 50% of registrations.
New care registrations fell 24% from the same time last year down from 1.49m units to 1.13m for June. The UK saw some of the worst performance with new registrations down 49% from June 2019.
The UK has also seen the number of public EV charging stations increase 363% in the last 5yrs according to data from the Department of Transport. There are 3206 public rapid chargers across the country with public chargers up 11% this year to 18,265.
Company News
Alien Metals (LON:UFO) – 0.29p, Mkt cap £7.3m – Employs Canadian broker in hunt for joint venture partner for Mexican project
Alien Metals reports it has employed a Canadian broker to help it complete its hunt for a joint venture partner for its Donovan 2 copper-gold project in Mexico.
Donovan is at a relatively early stage in its definition hence the need for a jv partner to come in for a fuller evaluation.
Management state the company has been in discussions with several mining companies who have declared an interest in a jv partnership for the Donovan project.
The situation highlights renewed interest in exploration with higher gold, silver and PGM prices as well as anticipated demand growth for copper and other base and industrial metals.
Recent news that Rio Tinto and Anglo American are interested in exploration in Zambia serves to highlight the need for miners to discover the next generation of larger-scale copper projects while Newcrest and BHP’s interests in SolGold also serve to show how supportive the majors can be.
We note, Alien Metals already has three UK brokers as well as a separate nomad and a PR advisor. Guess there is always room for one more?
Altus Strategies* (LON:ALS) 59p, Mkt Cap £41m – EIA approved at the JV ready Agdz silver/copper project, Morocco
The Environmental Impact Assessment at the Agdz silver and copper project in Morocco was approved by government authorities.
Securing the approval is a key milestone in the process of converting the current exploration license into a mining license.
Separately, the Company identified a 1km long, NE striking priority target next to the Makam Prospect that has previously returned multiple high grade silver/copper rock and grab samples including 448 g/t Ag and 4.56 % Cu as well as 287 g/t Ag and 2.01 % Cu.
The area was delineated using a predictive mapping technique carried in partnership with the University of Orléans and the BRGM (Bureau de Recherches Géologiques et Minières) incorporating all surface data compiled by Altus to date, including surface rock and trench results, mapping data and gamma spectrometry and ground magnetic survey results.
The target will be the next priority for the field programme along with the Miniere Prospect, a 150m long and 90m wide area of historical underground artisanal mining, where sampling of spoil from historic mine shafts, adits and exploratory pits has returned of up to 13.0% Cu.
Conclusion: The Company secured the EIA approval for the Agdz project located in the highly prospective for silver and copper deposits area and just 14km away from a hard rock silver/copper mine operated by the Moroccan state mining group Managem. The team is planning to carry a mapping and geophysics programme over identified prospects as well as a new delineated priority target in due course collecting data to assess the mineral potential of the area and attract a JV partner for further exploration works.
*SP Angel acts as nomad and broker to Altus Strategies
Arc Minerals* (LON:ARCM) – 3.99p, Mkt cap £39m - Arc reports sale of Sturec gold project in Slovakia
(Arc holds 72.5% of Zaco and 71.34% of Zamsort in Zambia)
Arc Minerals reports the receipt of the second tranch of A$300,000 in cash for the sale of the Sturec gold project in Slovakia.
Arc has now received A$750,000 to date with the remaining consideration dependent on the delineation of a JORC resource.
If the Sturec JORC resource exceeds 1.5moz within two years of the sale then Arc could receive a further US$7.25m
Arc has restructured its portfolio to focus on its Zambian licenses with management focussed on drilling at Chezaya and at the new Fwiji target .
Anglo American: Arc has signed a confidentiality and exclusivity agreement with Anglo American for six months in respect of its copper exploration licenses in Zambia.
The company will continue to report drill results to the market as required and we are looking forward to more promising copper intersections at Chezaya and at Fwiji.
Arc also has a small open cast mine at Kabala with a demonstration scale plant where it is considering its options
Rio Tinto recently has negotiated to earn up to 75% of Midnight Sun’s licenses in the nearby town of Solweizi in Zambia. Rio will spend $3m, of which $2m is a firm commitment, within the next two field seasons as part of its commitment and has the right to pay $51m for the 75% interest. Rio Tinto agreed to pay $700,000 in an up front cash payment.
Copper mines in near geological proximity to Arc’s licenses:
Arc’s licenses are within 40km of First Quantum Minerals’ Sentinel mining complex.
First Quantum Minerals acquired the Sentinel (Kalumbila) project from Kiwara in 2010 for US$260m. Kiwara had an estimated resource at Kalumbila of 1.38bt grading 0.78% copper. The resources was later adjusted by FQM to 1.027bt grading 0.51% copper. Last year the mine reported an new resource of 0.88bnt grading 0.53% copper following production of 223,656t of copper in 2018.
Lumwana: Lumwana is 100km to the east and had reserves of around 678mt grading 0.49% copper and is producing >116,000tpa of copper.
Barrick Gold bought Equinox, for its Lumwana assets in 2011 for $7.8bn post construction with 322mt of copper ore grading 0.73% copper.
Kanshanshi: 200km to the east hosting 1.4bnt grading 0.64% copper resource, developed by First Quantum Minerals.
China interest: Chinese companies are highly active in Zambia in copper, cobalt and hydropower. We understand from independent sources that Chinese companies are keen to acquire more copper licenses and production in the region.
Kamoa-Kakula: part of the reason for so much interest in the West of Zambia is the relatively recent Kamoa-Kakula copper/cobalt discovery to the north and across the border in the DRC. Kamoa-Kakula is the world's largest, undeveloped, high-grade copper discovery and was discovered by Ivanhoe Mines geologists. The project is now a jv between Ivanhoe Mines (39.6%), Zijin Mining Group (39.6%) and the DRC (20%).
*SP Angel acts as Nomad and broker to Arc Minerals. The analyst holds stock in Arc Minerals.
Empire Metals (LON:EEE) – 1.7p, Mkt cap £3.3m – Empire signs option to acquire 75% of the Eclipse gold mining license near Kalgoorlie
Empire Metals have signed an option agreement to acquire a 75% interest in the Eclipse gold mining licence near Kalgoorlie, Western Australia.
The Empire mine was worked till 1910 with the Jack’s Dream shaft mined from 1907-1911.
The option costs A$100,000 in cash and A$300,000 worth of Empire shares plus warrants exercisable at a price of 3p with a 2 year expiry
Empire has agreed to spend AUD$300,000 on exploration within 6-months and can exercise the Option at a cost of AUD$1m in cash and AUD$1m in shares and warrants at a 30 day VWAP.
The deal with PEX Exploration gives Empire exclusive exploration rights over the old Eclipse mine which was operated till 1910 through the option period and beyond if the option is exercised.
The mine produced 954t of high-grade ore grading 24.6 g/t for 754.25oz of gold
‘This mining licence has been held by one private individual for the past 30 years and has had only cursory modern exploration applied to a very small part of the area.
Recent drilling (2014) has identified high grade mineralisation all within a 30-metre zone either side of the main Eclipse shaft.
Highlights include:
GD008: 7m @ 13.07 g/t Au from 34 metres
GD014: 12m @ 5.13 g/t Au from 39 metres
ERC03: 8m @ 3.11 g/t Au from 66 metres
ERC019: 6m @ 3.92 g/t Au from 87 metres
Mineralisation is open along strike in both directions and at depth and just 60km from the Kalgoorlie super pit and not far from the ‘Wild West Saloon’ Kalgoorlie’s favourite bar.
Gold mineralisation at Eclipse can be traced for around 2.5km on the licence with Jack’s Dream 230m from the Eclipse which produced 197t grading 23.8 g/t Au for 150.7oz of gold over four years.The Steinhobel shaft is another 100m further on though no records remain.
High-grade gold mineralisation occurs in a quartz-carbonate vein with an average width of 2.2m.
Recent geophysics and drilling gives a better and robust understanding of the mineralisation and potential for significant high-grade gold resource.
Conclusion: Historic mine plans and drilling data show high-grade gold veins in quartz-carbonate lodes running parallel to a main shear zone.
The license appears prospective for gold discovery given the historical records and drill results.
*SP Angel act as Nomad and Broker to Empire Metals
Galileo Resources (LON:GLR) 0.82 pence, Mkt Cap £6.2m – Starting exploration on the Kalahari Copper Belt
Galileo Resources reports that it is starting exploration on its wholly owned licences in the Kalahari Copper Belt of Botswana.
The licences are located 25km east of Cupric Canyon’s 500mt Khoemacau/Boseto copper/silver project and 140km along strike from the 60mt, feasibility stage, T3 project which was acquired by Sandfire Resources in October 2019 for approximately A$170m.
Initial work is expected to include helicopter based electromagnetic (EM) geophysical surveys which have proved effective tools in the exploration of the nearby deposits as well as a reconnaissance soil sampling survey to establish geochemical vectors to mineralisation.
Galileo Resources says that the “regional synclinal settings of [its licences] and Cupric's Zone 5 and Zone 5N deposits are separated by a large-scale horst/anticlinal zone. The original basin bounding extension faults that are interpreted to be situated on the margins of the horst/anticline zone are believed to have been the conduits for metal-enriched, hydrothermal fluids. Typically, when these fluids reach D'kar Fm/Ngwako Pan Formation REDOX boundary, copper-silver sulphides are precipitated”.
Colin Bird, Chairman and CEO of Galileo Resources confirmed that “Initial exploration will include Heli-EM and soil sampling surveys, which are routine exploration techniques within the KCB and have been responsible for the identification of multiple prospects that have become copper-silver mineral deposits for companies such as Discovery Metals, Cupric Canyon and MOD Resources”.
Conclusion: The metallogenic and structural setting of the Kalahari Copper Belt mineralisation is relatively well understood following work by Discovery Metals at Boseto and subsequently by Cupric Canyon, MOD Resources, Sandfire Resources and other explorers. Galileo Resources’ initial exploration needs to establish that its ground contains a similar setting and economic accumulations of mineralisation. We look forward to results of the early stage geophysics and geochemistry to identify the prospectivity of particular targets for more detailed evaluation.
Horizonte Minerals (LON:HZM) 4.33p, Mkt Cap £49.2m – Araguaia debt financing
Horizonte Minerals reports that it has mandated a group of five financial institutions to arrange a project financing of up to US$325m for the development of its Araguaia ferro-nickel project in Brazil.
The group consisting of BNP Paribas ('BNPP'), ING Capital LLC ('ING'), Mizuho Bank, Ltd. ('Mizuho'), Natixis, New York Branch ('Natixis'), and Société Générale “have extensive experience in providing project financing to greenfield mining projects and were chosen as Mandated Lead Arrangers due to their extensive Latin American project finance experience and the strength of their mining teams”.
The completion of the financing facility, including the “completion of due diligence in form and substance satisfactory to the MLAs, final credit approvals and execution of definitive Facility documentation” is expected by the end of the year.
The feasibility study for the Araguaia project describes an initial production phase where approximately 900,000tpa of ore is treated in a Rotary Kiln Electric Furnace (RKEF) to produce approximately 14,500tpa of nickel contained in 52,000tpa of ferronickel. A subsequent, second phase of the project includes the flexibility to double production to 29,000tpa of contained nickel by the addition of a second rotary kiln electric furnace in the third year of the project
Capital investment of US$443m for the initial phase of the project is expected to generate an after tax NPV8% of US$401m and an IRR of 20.1% with cash costs equivalent to US$3.08/lb of contained nickel
Chief Executive, Jeremy Martin, explained that “This debt facility will cover a significant portion of the pre-production capex required to complete the Stage 1 construction for Araguaia. We are targeting completion of the project financing package for the Project by the end of 2020, provided that restrictions related to the Covid-19 pandemic do not cause further delays. We aim to start construction in early 2021”
Mr. Martin also said that Araguaia “will be the first of our two 100% owned nickel projects to move to the construction phase. This major milestone moves us closer to our goal of becoming a nickel producer”.
Conclusion: The US$325m project financing represents around 70% of the expected phase 1 capital expenditure to develop Araguaia. We look forward to further news later in the year.