SP Angel . Morning View . Wednesday 07 10 20
Copper prices rise as PM promises wind power for every house in the UK
Adriatic Metals* (LON:ADT1) – Acquisition of Tethyan Resources
Amur Minerals* (LON:AMC) – First quarterly coupon received from Nathan River Resources
Caledonia Mining* (LON:CMCL) – Appointment of contractor for solar power plant
Chaarat Gold* (LON:CGH) – $20.5m refinancing agreed
Edenville Energy* (LON:EDL) – Corporate update
Oriole Resources (LON:ORR) – Raising funds for drilling in Cameroon
Rainbow Rare Earths* (LON:RBW) – Update on trial mining at Gakara in Burundi
Shanta Gold (LON:SHG) – Singida project update
Tertiary Minerals* (LON:TYM) – Completion of drilling at Kaaresselkä in Finland
Vast Resources* (LON:VAST) – Baita Plai mining operations restart
SMMT data shows continued EV sales growth
Data from the Society of Motor Manufacturers for September shows BEV registration up 184% in September compared to the same time last year with PHEVs registrations up 138.6%.
Diesel and petrol registrations were down 38.4% and 20.9% respectively for the month. Overall vehicle registrations continued to fall, down 4.4% for the month.
YTD BEV and PHEV vehicles have seen their combined registrations market share increase to 8.8%, up from 2.5% in 2019. Both diesel and petrol vehicles have seen their market shares fall to 16.8% and 57.9% respectively, down from 25.7% and 64.7% in 2019.
Hybrid cars have also experienced an increase in popularity, the combined market share of hybrid and mild hybrid vehicles registrations YTD is 9.8% compared to 2.9% in 2019.
Electric and hybrid registrations overtook diesel for the first time. 60,647 BEV, PHEV and HEV vehicles were registered in September compared to 46,996 diesel vehicles.
The figures are positive for the EV market which continues to see positive data while the wider auto market continues to struggle.
The UK government recently committed to halting all sales of ICE vehicles by 2035, bring forward that date form 2040.
There has also been the suggestion that this is under review and the Boris Johnson may take an even more aggressive stance and bring this date forward to 2030. Such a move would put the UK ahead of France (2040), on par with Germany, Ireland and the Netherlands but still behind trail blazer Norway (2025).
Wind farms to power every home by 2030
Boris Johnson has promised that by 2030 wind farms will produce enough electricity to power every house in the UK. He announced £160m to improve ports and factories for the building of wind turbines.
This pledge will need approximately £50bn in investment and the equivalent of one turbine to be built every weekday until 2030.
The government aim to attract investment from the private sector through a large contract auction next spring. It is expected that this auction could secure more than £20bn of investment and generate 12,000 jobs.
Environmental analyst, Roger Harrabin comments that whilst this target is significant, it must be remembered that houses account for only a third of electricity demand, the rest is for factories and offices.
Dogger Bank offshore Wind Farm - World’s largest windfarm in construction likely to use nearly 10% of global Neodymium production
The UK has approved construction of the Dogger Bank Wind Farm with a planned capacity of 3.6GW due in 2023.
Joint project between Equinor and SSE Renewables, will be made up of three wind farm sites in the North Sea each generating ~1.2GW of power.
The most powerful wind turbine called the GE Renewable’s Haliade-X. it is 853ft tall and has three 351 ft blades.
Overall, the turbines from this offshore wind farm will create enough electricity generation to power over 4.5m houses a year – about 5% of the UK’s electricity demands.
Arq Ltd convert coal waste into energy
Arq Ltd recently installed eight 18ft 18 ft Eriez® CavTube flotation columns in its first commercial facility in Corbin, Kentucky.
The procedure converts fine coal waste in Arq Fuel™, a high value, microfine hydrocarbon with an average particle size of less than 5 microns and less that 1% mineral matter that can be blended into oil products. Arq Fuel™ acts like oil without the costs of the oil industry.
Eriez’ CavTube columns are a key part of Arq’s micro separation process. The cavitation tube sparging system features a design based on hydrodynamic cavitation.
As well as the advantages of the cavitation tube sparging technology, column flotation cells provide metallurgical performance because of the use of both wash water and a deep froth phase. This reduced entrainment of ultra-fine mineral matter into the froth product.
Dow Jones Industrials -1.34% at 27,773
Nikkei 225 -0.05% at 23,423
HK Hang Seng +0.90% at 24,197
Shanghai Composite closed 3,218
Economics
US – Trump’s decision to abandon stimulus talks triggers sell-off in US equity markets
President Trump signalled in via a series of tweets that he intends to abandon stimulus talks with Democrats until after the election.
After which, Trump promised “a major Stimulus Bill that focuses on hardworking Americans and Small Business,”.
The S&P index closed down 1.4% on Tuesday amid the selloff having earlier traded higher, whilst the Dow Jones closed down 1.3%.
Tuesday evening saw Trump backtrack somewhat, with the president appealing to lawmakers to provide additional funding for airlines, whilst calling for $1,200 “stimulus checks” to be made available immediately.
The President’s more accommodative approach to fiscal support saw S&P 500 and Nasdaq futures contracts rise by 0.6% on Wednesday morning.
Hurricane Delta likely to break records as it develops in the Gulf of Mexico
If the hurricane hits the US Gulf Coast then it sets the record for the most named storms to hit the US coast.
The storm looks like it will develop into a Category 4 hurricane this week with 130 mph wind speeds expected
Major storms have cost ~$9bn of insured losses so far this year, not a record by any means but the season is not over till the last fat hurricane sings
UK – Johnson announces 5% mortgage deposits for first-time buyers
The Prime minister has promised to create 2m more owner-occupiers by introducing 5% mortgage deposits for first-time buyers, transforming “generation rent” into “generation buy”.
Elsewhere in the property space, the HIS purchasing managers index for construction rose to 56.8 in September from 54.6 in the previous month- the fourth straight month of expansion.
Pent up demand and the stamp duty holiday have been cited as reasons for the uptick In the UK housing sector.
Bank of England's Haskel keeps door open to negative rates
Jonathan Haskel at the BoE sees possible benefits from negative interest rates from the current 0.1% set in March.
The advisor is now looking at whether it is technically feasible to cut its main interest rate below zero to join Japan and the Eurozone.
Many fund accountants are now busy preparing for this eventuality.
Some other BoE economists have expressed doubts over the effectiveness of negative interest rates indicating potential to hold rates just above zero.
China – Negative views of China and Xi Jinping at record levels
Disapproval of China in many developed countries has reached record highs according to a survey released by the Pew Research Centre on Tuesday.
Perceptions of China worsened the most in Australia, where 81% of respondents said they saw it unfavourably- up 24% from last year.
In Britain, negative views rose +19pp to 74%, whilst in the US negative views rose +13pp to 73%.
Japan had the smallest proportion of residents who said they liked China, with 86% holding unfavourable views.
One of the most influential factors affecting China’s reputation has been coronavirus, with 61% of respondents across 14 nations surveyed saying China had done a bad job of dealing with the outbreak.
The survey also found that disapproval internationally of President Jinping had reached historic levels because of the handling of the pandemic, with 78% of respondents having little or no confidence.
Germany – Industrial output falls 0.2% in August compared to month prior
German industrial output edged down in August following three months of increases, and 9.6% lower than the level of August 2019.
The drop is a stark one compared to a rise of 1.4% in July and 9.3% in June, according to the Federal Statistics Office.
Currencies
US$1.1754/eur vs 1.1791/eur yesterday. Yen 105.74/$ vs 105.67/$. SAr 16.630/$ vs 16.598/$. $1.290/gbp vs $1.300/gbp. 0.714/aud vs 0.716/aud. CNY 6.791/$ vs 6.791/$.
Commodity News
Precious metals:
Gold US$1,891/oz vs US$1,912/oz yesterday - Gold prices fall as US stimulus talks paused
Gold prices fell 2% on Tuesday as President trump called off further stimulus talks with Democrats until after the election.
Gold prices continued to slide in early trade on Wednesday, hitting its lowest since the 28th of September at $1,873/oz (Reuters).
Further weighing on bullion was the US dollar index climbing 0.2% yesterday as a result of trump’s announcement (Kitco).
Huge influxes of government stimulus have supported the gold price throughout the pandemic, as bullion is viewed as a hedge against inflation and currency debasement.
Gold ETFs 111.0moz vs US$111.0moz yesterday
Platinum US$869/oz vs US$899/oz yesterday
Palladium US$2,357/oz vs US$2,318/oz yesterday
Silver US$23.61/oz vs US$24.02/oz yesterday
Base metals:
LME metal trading volumes hit lowest in almost 10 years
Average daily trading volumes on the LME have hit the lowest level since December 2010 driven by a decline in the LME’s interoffice market, whilst the open-outcry trading floor has been closed since March.
Trading volumes slumped 20% YoY to 500,223 contracts ins September, a sharp fall compared to the initial surge in the early stages of the pandemic (Bloomberg).
Copper US$ 6,521/t vs US$6,354/t yesterday
Aluminium US$ 1,768/t vs US$1,7333/t yesterday
Nickel US$ 14,550/t vs US$14,160/t yesterday - Tesla continues on the nickel offensive but still might fall short
Tesla is reportedly in talks with BHP Group over a nickel supply deal. Talks are reportedly stalling on price and no final agreement has been reached.
The Californian EV powerhouse is also apparently in talks with the Indonesian government to secure some of the country’s nickel supply. News of these talks and those with BHP come following news Tesla is in talks with Vale and Giga Metals for their nickel.
These moves come after Elon Musk announced that Tesla needs nickel, and he is willing to offer lucrative contracts to any miner that can do so responsibly.
Tesla’s has ambitious battery production targets, hoping to reach 3000GWh of capacity by 2030, with Benchmark Mineral Intelligence suggesting up to 1350GWh of this demand could be nickel-based battery cells.
Benchmark suggest it might not be feasible for Tesla to reach their production targets given raw material availability and forecasted market demand.
Whether Tesla can reach their targets or not too not enough supply to reach demand can only be positive for nickel miners.
Zinc US$ 2,350/t vs US$2,301/t yesterday
Lead US$ 1,780/t vs US$1,780/t yesterday
Tin US$ 18,105/t vs US$17,260/t yesterday
Energy:
Oil US$42.4/bbl vs US$41.5/bbl yesterday
Natural Gas US$2.533/mmbtu vs US$2.635/mmbtu yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$117.4/t vs US$116.4/t
Chinese steel rebar 25mm US$546.9/t vs US$546.9/t
Thermal coal (1st year forward cif ARA) US$59.7/t vs US$59.5/t -
Shanxi province to merge coal miners to create country’s second largest producer
The government-led merger will merge five coal companies into a single entity called Jinneng Holding Group, with the individual companies jointly producing 420mt of coal last year.
The move is aimed at increasing efficiency of state-owned enterprises, which the government consider the backbone of the economy.
The new company will have an annual output nearly matching that of Australia, have trillions of yuan in assets and employ thousands of people.
China’s largest coal market, the Taiyuan Coal Exchanger Centre, will also become part of the new entity (South China Morning Post).
Coking coal futures Dalian Exchange US$154.0/t vs US$155.0/t
Other:
Cobalt LME 3m US$33,780/t vs US$34,200/t
NdPr Rare Earth Oxide (China) US$48,005/t vs US$48,005/t
Lithium carbonate 99% (China) US$5,080/t vs US$5,080/t
Ferro Vanadium 80% FOB (China) US$30./kg vs US$30./kg
Antimony Trioxide 99.5% EU (China) US$5.2/kg vs US$5.2/kg
Tungsten APT European US$220-225/mtu vs US$220-225/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
Nanotech Energy to mass produce li-ion batteries Q1 2021
Nanotech Energy has begun taking pre-orders for non-flammable, efficient and fast charging li-ion 18650 batteries that the Company announced it will begin mass producing from Q1 2021.
These batteries have applications which include laptops, cordless power tools, safer EVs, telecommunications, aerospace and military.
Nanotech produces graphene and graphene powered products for a variety of applications which includes the graphene anode li-ion battery.
The Company has previously suggested their current iteration of their graphene battery can charge 18x faster that anything currently available on the market and is able to withstand 800-2000 charging cycles.
Nanotech raised $27.5m in a funding round in May which gave the Company a $227.5m post-money valuation.
Graphene is highly conductive and has a large surface area. Its properties make it suitable for use in the anode of li-ion batteries and the cathodes of LFP batteries. In both cases graphene can reduce the weight of the battery, improve the charging time and provide greater energy density and capacity.
GAC announced last May that it has developed a graphene-enhanced battery for EVs which could move into mass production by the end of 2020 while Skeleton Technologies is working n a graphene ‘SuperBattery’ that can charge in just 15 seconds.
Xiaomi’s Mi 10 Ultra smartphone is reported to have the first mass produced 120W graphene battery. No details were provided on the graphene specs.
Electrovaya posts strong Q4 revenues
Lithium-ion battery manufacturer Electrovaya has reported strong revenues for its Q4 ending September 30th 2020. The Company produces ceramic lithium-ion battery for use in forklift trucks and energy storage systems.
Preliminary unaudited revenue for Q4 FY2020 was $6.9m, a 40% sequential increase on Q3. The Company said in the press release that this was due to strong demand for their lithium-ion batteries from customers in the forklift market.
Preliminary unaudited FY2020 revenue was $14.5m, up 3x on fiscal 2019 revenue.
Blackstone secures funding in pursuit of battery technology
Blackstone Resources has signed a 3yr equity commitment with GEM Global Yield which will give the Company access to CHF30m available for use at its discretion.
The funds are expected to be used for accelerating the commercialisation of Blackstone’s 3D printed battery, rolling out mass production and acquisition of plant and equipment.
Blackstone is focused on becoming a vertically integrated developer and producer of battery metals and lithium-ion batteries. The Company has built a commodity portfolio though acquisitions and strategic stakes that it hopes to leverage for development of batteries.
The Company invested €200m to set up Blackstone Research GmbH in Erfurt, Germany at the start of 2019 with the intention of building out a battery production-facility in Germany. The location chosen for its proximity to German auto manufacturers.
Blackstone plan to use their 3D-printing technology to manufacture lithium-ion solid-state batteries, hoping to optimise production line efficiency to reduce costs and enable mass production.
The Company announced in September that the first solid-state battery prototypes have been tested and the Company is now focusing on developing the 3D printing technology required to print the batteries for mass production. It expects to begin testing of the first printed solid state cells in Q1 2021.
Ford puts F-150 hybrid battery through its paces
Ford has devised a new ‘torture test’ for the battery in its F-150 hybrid. The vehicle has been put through a number of tests, some of which are automated as they are too extreme for any human to endure.
The 1.5kWh lithium-ion battery in the F-150 is strapped to a hydraulic rig that violently shakes the powertrain for 82hrs straight to simulate the equivalent of 10yrs of real world wear and tear.
Company News
Adriatic Metals* (LON:ADT1) 130p, Mkt cap £236m – Acquisition of Tethyan Resources
Adriatic Metals reports the completion of its acquisition of Tethyan Resources through the issue of approximately 13.3m shares, 4.1m warrants and 0.5m options.
The new shares represent approximately of the enlarged company.
Tethyan Resources holds brownfield exploration projects at Kizevac and Sastavci in Serbia and a large prospective exploration holding across the Tethyan mineral Belt
*An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia
Amur Minerals* (LON:AMC) 1.9p, Mkt Cao £26m – First quarterly coupon received from Nathan River Resources
The Company received the first quarterly interest payment on the convertible loan note issued to Nathan River Resources developing the Roper Bar iron ore project in the Northern Territory in Australia.
The Company subscribed for $4.67m worth of three year convertible loan notes carrying a 14% coupon.
*SP Angel act as Nomad and Broker to Amur Minerals
Caledonia Mining* (LON:CMCL) 1375p, Mkt Cap £168m – Appointment of contractor for solar power plant
Caledonia Mining reports that it has appointed an established renewable energy provider, Voltalia, as the contractor for its previously announced solar power project at the Blanket gold mine in Zimbabwe.
The agreement with Voltalia, which “is already active notably in Burundi, Malawi and South Africa” where it builds, operates and maintains solar power plants, envisages “commissioning for the 12MW solar plant in the last quarter of 2021”.
The solar power plant is expected to deliver approximately 27% of the mine’s electricity requirements and “is primarily intended to protect the Blanket Mine from any further deterioration in the electricity supply situation” although the company also points out that it will also reduce the mine’s environmental footprint and ”yield a modest return to shareholders after taking account of the dilutive effect of the equity issued to fund it”.
Zimbabwe’s power supply is heavily reliant on the ageing Kariba dam which has historically experienced problems during periods of low rainfall and from the relatively old coal-fired plant at Hwange.
Plans for the joint development with Zambia of a new 2.4GW, $5.2bn hydropower plant on the Zambezi at Batoka Gorge approximately 54km downstream from Victoria Falls are believed to remain at the feasibility study stage though there have been press reports that construction would start in late 2020 with a six-years timetable for completion and initial power generation available in 2024
Conclusion: The construction of the solar power plant is expected to mitigate the impact of potential disruption to Zimbabwe’s ageing power supply network on the operations of the Blanket mine and provide around 27% of the mine’s needs.
*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe
Chaarat Gold* (LON:CGH) 33p, MKt Cap £172m – $20.5m refinancing agreed
BUY – 57p
The Company agreed extension and refinancing of the $19.4m principal and $1.1m in accrued interest under the outstanding Investor Loan.
Under signed legally binding agreements, $13.5m of the total amount will be assumed and extended to 31 December 2024 at 9.5% interest by Labro Investments, the Company’s major shareholder, via a new facility.
The remaining $7.0m will remain under the Investor Loan with the Company agreeing an option to extend the repayment date by a year at Chaarat’s discretion to 31 December 2021.
The new $13.5m loan will carry a 9.5% interest (v 13% paid previously) with loan maturity extended to 31 December 2024 allowing time for Tulkubash gold project to come online and ramp up to full capacity.
Labro Investments will be issued 7.5m new shares as part of the refinancing agreement.
Chaarat will be issuing 8.9m warrants (26p exercise price, three years exercise period) as a consideration for the secured option to extend repayment of the $7.0m principal by a year.
Additionally, should Chaarat agree to extend interest rate will be increased to 14% (up from 13%), principal amount will go up to $7.5m (from $7.0m) and the deal will incur a $0.25m fee.
Although, the Company is expecting to refinance the $7.0m by year end with the team reported to be in discussions with financing parties regarding potential options.
Under previous agreement, Labro Investments will also be issued 8m new shares as a guarantee consideration should the Investor Loan not be repaid by 31 October 2020.
Conclusion: The refinancing agreement offers the team financial flexibility with most of the $20.5m loan assumed by the major backer of the Company and maturity extended through to the end of 2024 when Tulkubash is expected to be up and running at full capacity while the option to extend the remaining $7m will serve as a fall back plan should the Company not refinance it before the end of the year.
*SP Angel acts as Broker to Chaarat Gold
Edenville Energy* (LON:EDL) 0.04p, Mkt Cap £3m – Corporate update
The Rukwa thermal coal mine is operating since production restarted on 3 August 2020 meeting its pre-purchase orders.
The handover of mining operations to the Company’s strategic partner Infrastructure and Logistics Tanzania (ILTL) is in progress and expected to be completed this month ahead of the 1 November 2020.
The team aimed at earlier transition, however, administrative issues encountered relating to delays in securing local work permits for ILTL staff amid a backlog caused by COVID-19 mean the process will need to be carried in line in with initial mobilisation timeline of 60 days.
ILTL and the team continued to work closely to finalise transition and identify options to improve operation efficiencies and potentially increase production at Rukwa.
Separately, the Company announced that Lind Partners which holds $580k in outstanding debt demanded repayment of the full amount by 30 November 2020.
Edenville rejected the proposed repayment date arguing that under the terms of the funding agreement the loan expires in Jun/21.
The Company is holding further discussions with Lind over the outstanding loan with further announcement to be made as soon as practicable.
*SP Angel acts as Nomad to Edenville Energy
Oriole Resources (LON:ORR) – 0.39p, Mkt cap £3.7m – Raising funds for drilling in Cameroon
Oriole Resources reports that it has, conditionally, raised approximately £1.55m to advance its exploration in Cameroon with a 3,000m maiden drilling programme at its Bibemi project.
The funds are to be raised via the pacing of around 463.4m additional shares at a price of 0.34p/share.
Chairman, John McGloin, explained that “With early rock chip sampling at Bibemi returning grades up to 135.40 grammes per tonne gold and extensive trenching work having returned encouraging results, including 9 metres grading 3.14 grammes per tonne, the next logical step is to undertake a systematic drilling programme to test the vertical depth extension of the mineralisation”.
Oriole Resources explains that it “has met its initial commitment of US$1.56 million to secure an option for 51% ownership of these licences … [at Bibemi and Wapouze and that] … Subject to ongoing results, the Company expects to spend a further US$1.56 million by June 2022 to earn-in to a 90% interest in the projects”.
Rainbow Rare Earths* (LON:RBW) 4.05p, Mkt Cap £17.1m – Update on trial mining at Gakara in Burundi
Rainbow Rare Earths has announced that its trial mining operation at Gakara has increased rare-earths concentrate production to an average of 59.9tpm between June-September 2020 compared to the 31.7tpm during the period October 2019-May 2020.
The company expects that further planned increases in its mining fleet should deliver a further increase in concentrate production to 100tpm and ensure better use of the existing pilot plant’s capacity.
Rainbow Rare Earths explains that “Concentrate shipments expected to grow, with 100t of concentrate shipped Monday 5th October 2020 and a further 210t of concentrate in stock at 30 September 2020 being prepared for shipment”.
The company also explains that the increasing volumes of concentrate are “being delivered into an improving RE pricing environment, with NdPr oxide strengthening 30% from US$36,850/t in April 2020 to US$48,050/t on 30 September 2020”.
During Q2 and Q3 2020, a total of 3,108t of ore has been processed producing 313t of rare-earths concentrate at average production rates of 45.0tpm during Q2 and 59.5tpm during Q3 “compared to an average of 30.0t per month concentrate produced in Q4 2019/Q1 2020”.
“On 5th October 2020 Rainbow shipped a further 100t of concentrate, with a further 210t being prepared for export at 30 September 2020. Shipments are expected to be delivered into a rising price environment for both Neodymium (Nd) oxide and Praseodymium (Pr) oxide, with NdPr oxide strengthening 30% from US$36,850/t in April 2020 to US$48,050/t on 30 September 2020, reversing price weakness seen since July 2019”.
Better mechanical reliability and the addition of five more trucks has increased waste removal to an average 68,000tpm between May to September 2020 compared with an average of 26,000tpm between October 2019 and April 2020.
“In October 2020 Rainbow intends to further increase the mining fleet to increase capacity of the trial mining operations, allowing the full 5t per hour capacity of the current pilot processing plant to be utilised. A new 34t excavator has been ordered to supplement the existing 20t excavator used for waste and smaller TLB excavators used for selective mechanical mining of ore. Two further trucks will also be sourced to fully utilise the new excavator capacity once financing is available”.
The company explains that the increased mining capacity will allow it to extend the trial mining area “initially to the Gasenyi area to the north of the Murambi site, generating an improved detailed geological knowledge across a wider area of the mining licence. This is expected to allow 100t per month of high-grade rare earth concentrate to be produced from the current pilot plant”.
We expect demand for permanent magnets using NdPR rare earths to continue to rise driven by new investment in large-scale offshore wind farms in Europe, China, and the US.
Rising electric vehicle production should also increase demand for permanent magnets as manufacturers prefer the longer range and added performance of permanent magnet motors.
CEO, George Bennett, confirmed that the continuing “strengthening of the trial mining and processing operations at Gakara is an important element of Rainbow's long-term strategy to develop a large-scale commercial mine. The expanded trial mining fleet will allow us to open new areas, increasing our understanding of the mineralisation in parallel with our planned exploration activities”.
He also confirmed that the trial mining continues “to demonstrate the amenability of ore sourced from across the mining licence area to a simple gravity process to deliver a high-grade concentrate with low levels of radioactive elements, suitable for export. No reagents are used to produce Rainbow's concentrate, delivering both a low environmental impact and a low processing cost, compared to more complex rare earth processing requirements”.
Conclusion: Expansion of the mining fleet at Gakara allows increased mine production and more efficient use of the pilot processing plant to deliver increasing volumes of rare-earths concentrates into a market which has seen a 30% rise in the price of NdPr oxide between April and September 2020.
*SP Angel act as broker and financial advisor to Rainbow Rare Earths
Shanta Gold (LON:SHG) 18p, Mkt Cap £156m – Singida project update
The Company released Singida economic study details envisaging a 24 month construction period with first gold targeted for Q4/22 taking total Group production to +100kozpa.
Singida processing plant is expected to run at 365ktpa treating 3.0g/t material at 91% gold recoveries.
The project is expected to produce 32kozpa at $885/oz in AISC (at $1,900/oz gold price) over an initial seven year mine life through at least 2029.
NPV8% (post-tax) estimated at $73.3m and IRR (post-tax) of 59% with an average $32.8m in annual EBITDA using close to spot $1,900/oz gold price.
At $1,700/oz, the project generates NPV8% (post-tax) and IRR (post-tax) of $56.3m and 49%, respectively, with an average of $27.0m in annual EBITDA.
Development capex is estimated at $36.8m with funding discussions reported to be well advanced.
Singida exploration will target expansion of the reserve base and will be funded by cash flows generated from production.
664koz at 2.11g/t that are currently outside of the 243koz at 3.0g/t in reserves will be explored after the start of production in 2022.
91% of contained ounces in reserve are within 120m from surface with high grade mineralisation encountered below the open pit point to future underground mine potential.
Front end engineering design commenced in early Q3/20 with vendors selected and construction work underway.
Tertiary Minerals* (LON:TYM) – 0.26p, Mkt cap £2.1m – Completion of drilling at Kaaresselkä in Finland
Yesterday, Tertiary Minerals drew attention to the announcement by Canadian-listed Aurion Resources that it had completed its initial 12 holes (2,400m) drilling programme at Kaaresselkä in Finland where Tertiary Minerals retains royalty interests, including a US$1/oz pre-production royalty on inferred resources identified on the property, US$2/oz on indicated resources and US$3/oz on measured resources as well as a 2% NSR on any future production
The company says that “Drill core is being processed and submitted for assay”.
The project area is located 4km south of Aurion’s Aamurusko Main discovery ”which consists of gold-bearing quartz veins occurring near the sheared contact between sedimentary rocks and a gabbro intrusion, located on the south side of a steep, prominent ridge glacially up-ice from high-grade boulders” and has generated high grade drilling intersections including a 2.9m intersection averaging 789g/t gold from a depth of 116m in hole AM18042 and 4m averaging 44g/t gold from 40m depth in hole AM19082 [Source: Aurion Resources website https://www.aurionresources.com/projects/risti/]
*SP Angel act as Nomad and Broker to Tertiary Minerals
Vast Resources* (LON:VAST) 0.16p, Mkt Cap £22m – Baita Plai mining operations restart
Underground mining operations recommenced at the Baita Plai polymetallic mine in Romania.
Mining is currently carried between levels 17 and 18 with blasted ore transportation from underground workings to the flotation plant resumed ahead of the hot commissioning of the plant expected to follow shortly.
Additionally, the team commenced development of the incline from level 18 down to level 19 designed to follow the Antonio skarn at depth and provide production base for the next four years.
The Company reiterated its production plans for October following a short suspension of operations for refurbishment works of the transport link between the mine and the plant.
In September, the Company forecast the processing plant to process 14kt of ore and deliver 281t of payable CuEq in Q4.
Conclusion: Positive news from the team highlight the restart of mining operations at the Baita Plai polymetallic mine ahead of the hot commissioning of the plant to follow shortly with the Company reiterating its previous guidance for Q4/20.
*SP Angel acts as Broker to Vast Resources
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
Joe Rowbottom – Joe.Rowbottom@spangel.co.uk - 0203 470 0486
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
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*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
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
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