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Today's Market View - Orosur Mining, Condor Gold, BlueRock Diamonds and more...

Altus Strategies* (LON:ALS) – BUY, target 132p – Gold exploration licenses awarded in Egypt BlueRock Diamonds (LON:BRD) – BlueRock sells 14.8ct diamond for US$167,000 Condor Gold* (LON:CNR) – Ground investigation programme at La India

Altus Strategies - Today's Market View -

SP Angel . Morning View . Monday 25 01 21

Tin and other battery metals prices gain on rising EV battery demand

 

Altus Strategies* (LON:ALS) – BUY, target 132p – Gold exploration licenses awarded in Egypt

BlueRock Diamonds (LON:BRD) – BlueRock sells 14.8ct diamond for US$167,000

Condor Gold* (LON:CNR) – Ground investigation programme at La India

Kefi Gold and Copper* (LON:KEFI) – Q4 update: Tulu Kapi project funding completion targeted in H1/21 with drilling at Hawiah on course to grow and upgrade the resource

Orosur Mining* (LON:OMI) – Anza Project drilling update

Panthera Resources (LON:PAT) – Progress report on west African exploration

Pensana Rare Earths (LON:PRE) – Pensana submits planning application for proposed REE separation facility in Yorkshire

Shanta Gold (LON:SHG) – FY20 production and costs on target with FY21 focus on NLGM exploration and growth projects’ development works

 

Tin prices rise for twelfth straight week on positive demand outlook

Tin prices continued to rise last week, surging to its highest since 2014 on anticipated demand growth from the electronic sector, while supply remains tight in the market.

Along with increasing electronics demand, tin has a number of new applications in growing sectors including solar panels, EV batteries and as a catalyst in hydrogen fuel cells.

LME stockpiles of tin continue to decline, falling on Friday to just 1,020t- their lowest since May 2019 and close to their lowest since 1989.

Three-month tin prices have already risen 10.2% so far this year, rising 1.6% on Monday in Singapore (Bloomberg).

Base metals rose across the board on London on Monday morning, with the dollar weakening ahead of the Federal Reserve’s first policy meeting of the year.

 

Li-ion EV battery raw materials prices gain driven by rising Mega and Giga-factory demand

Data published in Benchmark's most recent price assessments show price increases for the mainstream battery raw materials of lithium, cobalt, nickel, and graphite, focused around and largely driven by the Chinese market.

The biggest movers from Benchmark's price assessments in December 2020 were:

Lithium carbonate EXW China up 12.9%

Cobalt sulphate EXW China increased 3.2%

Nickel sulphate EXW China rose by 6.4%

Graphite -100, 90-93% C, FOB China up 13.2%

Specialist commodity price rises in China are often followed elsewhere within 3 to 6 months later.”

Growing evidence that demand for battery raw materials is dragging prices higher

Oil & Gas companies are viewing Lithium as the new white-energy on which to build future income as oil and gas gives way to a new rival in electric vehicles

 

Katco JV Covid-19 outbreak a stark warning to miners

The Katco joint venture between Kazatomprom and Orano Mining has suspended non-core site operations after 128 people tested positive for Covid-19.

Katco has been placed under quarantine on orders of health authorities, although the JV will continue key operation and the Company expect that the outbreak will not impact on 2021 production volumes.

 

Recent Interviews:

VOX:    21/01/20 https://www.voxmarkets.co.uk/media/600a877b40dc224b8b88a983/?context=/listings/LON/SML/multimedia/

13/01/20 https://audioboom.com/posts/7770987-john-meyer-on-lithium-ironridge-res-savannah-res-kodal-mins-cornish-metals-bluerock-diamonds

IGTV:   Is 2021 the start of the new COVID-Supercycle or will Lockdowns delay the recovery? https://youtu.be/7LO0tDc-pNc

As traders continue to bid up Tesla, is the EV sector approaching a bubble? https://youtu.be/LaDWBpTZ7SQ

Copper price rise: https://youtu.be/mdPXTup15VY

iiTV:     The mining stock to own in 2021: https://www.youtube.com/watch?v=4x7SuSLQwCI&t=11s

Small Cap Mining Share tips for 2021 - https://www.youtube.com/watch?v=G_6RKAp91k4

Miners for a green industrial revolution - https://www.youtube.com/watch?v=rXlNS6JIDvg&t=3s

A Mining megatrend and three solid dividend stocks - https://www.youtube.com/watch?v=sH5r-QbTRwg

*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts.

We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, one and all, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.

 

Dow Jones Industrials -0.57% at 30,997

Nikkei 225 +0.67% at 28,822

HK Hang Seng +2.49% at 30,183

Shanghai Composite +0.48% at 3,624

 

Economics

China failed to honor its side of Trump’s phase 1 trade deal despite massive purchases of food to replace crops lost in Yangtze floods

It is extraordinary that China has failed to meet its obligations to buy US goods and services under the Phase 1 trade deal.

China met just 58% of its agreed US$173.1bn target last year.

While some experts did not see the trade deal as realistic it was still agreed by the CPC.

China even failed to meet the 2020 target for Agricultural purchases despite a massive, quiet, buying program to replace crops lost in the Yangtze river flooding which .

The floods affected 6m ha farmland, with 1.1m ha of crop failure mainly in the middle and lower Yangtze River basin. affecting 23% of the planted area of summer crops and destroying some 4.3% of all Chinese crops.

 

US – Biden to push for ‘Buy America’ to drive demand from domestic manufacturing

The policy is said to risk the straining of relations with US allies according to ft.com.

US / China – tensions rise as US aircraft carrier enters the South China seas to promote ‘freedom of the seas’

The US is concerned over Beijing’s expansion into the South China seas and tension between Taiwan and China (Reuters).

Chinese bombers and fighter jets are also reported to have entered into Taiwan’s air defence identification zone highlighting further tension.

China has also authorised its coast guard to fire on foreign vessels if needed

China has passed a law that for the first time explicitly allows its coast guard to fire on foreign vessels, a move that could make the contested waters around China even more choppy (abc News)

It has sent its coast guard to chase away fishing vessels from other countries, sometimes resulting in the sinking of these vessels.

China's top legislative body, the National People's Congress standing committee, passed the Coast Guard Law on Friday, according to state media reports.

According to draft wording in the bill published earlier, the coast guard is allowed to use "all necessary means" to stop or prevent threats from foreign vessels..

 

US - existing home sales 0.7% to 6.76mill units (Nov -2.5% at 6.69mill units).

Trump eases sanctions on Dan Gertler in last days in Whitehouse

Gertler had been accused of arranging “opaque and corrupt mining and oil deals” in the DRC using his connections with Joseph Kabila.

The deals cost the citizens of the DRC more than $1bn in lost revenue.

Trump has effectively unblocked funds held by Gertler in Citibank, Deutsche Bank, Wells Fargo and Bank of New York Mellon.

Joe Biden may well reverse Trumps recent easing of sanctions so we suspect Gertler won’t be using those banks again.

 

EU to debate new sanctions on Russia following the arrest of Alexander Navalny

We wonder what sort of French cheese the EU will deny Russia next?

EU customs are playing dirty by turning 3-8% of HGV lorries away from crossing into Europe from the UK over minor issues related to paperwork

Some lorries are reported to be refused for marking UK instead of GB on their customs forms while others have been refused for incorrectly missing out the Latin names of the fish they are transporting.

Whatever the reasons there is strong suspicion that customs officials have been instructed to take an extraordinarily tough line on trucks leaving the UK for Europe.

There is significant danger that the situation could escalate with more trucks being turned back on both sides of the boarder.

Some lorries are justifiably being turned away because drivers do not have paperwork showing negative Covid-19 tests.

 

Japan – Prelim. PMI 49.7 for January vs 50.0 in December.

45.7 in January vs 47.2 in December

46.7 in January vs 48.5

COVID-19 estimated to reach herd immunity in October despite mass inoculation

The rollout of mass inoculation in Japan is already behind schedule despite buying 314m doses from Pfizer, Moderna Inc and AstraZeneca Plc.

 

US Markit – Prelim. PMI 59.1 (57.1),

57.5 in January vs 54.8 in December

58.0 in January vs 55.3

 

Germany – Prelim. PMI 57.0 for January vs (58.3),

46.8 in January vs 47.0 in December

50.8 in January vs 52.0

 

France – Prelim. PMI 51.5 for January vs (51.1),

46.5 in January vs 49.1 in December

47.0 in January vs 49.5

 

EU – Prelim. PMI 54.7 for January vs (55.2),

45.0 in January vs 46.4 in December

47.5 in January vs 49.1

 

UK - GfK consumer confidence -28 in January vs -26 in December

Retail sales rose 0.3% in December vs -4.1% in November up 2.9% yoy

Prelim. PMI 52.9 for January vs (57.5),

38.8 in January vs 49.4 in December

40.6 in January vs 50.4

 

Japan - CPI fell 0.3% in December vs -0.5% in November, yoy -1.2% (-0.9%),

 

Australia – Prelim. PMI manufacturing 57.2 (55.7),

services 55.8 (57.0)

composite 56.0 (55.6)

 

 

Currencies US$1.2172/eur vs 1.2155eur last week.  Yen 103.75/$ vs 103.62/$.  SAr 15.173/$ vs 15.077/$.  $1.370/gbp vs $1.366/gbp.  0.773/aud vs 0.773/aud.  CNY 6.477/$ vs 6.478/$.

 

Commodity News

Precious metals:  

Gold US$1,852/oz vs US$1,860/oz yesterday - Indian and Chinese soldiers brawl after Chinese patrol entered Indian territory in the Himalayas

The brawl left 20 Chinese troops four Indian soldiers injured. The boarder area marks a potential flashpoint for conflict between the two nations.

Gold ETFs 107.2moz vs US$107.2moz yesterday

Platinum US$1,103/oz vs US$1,108/oz yesterday

Palladium US$2,359/oz vs US$2,366/oz yesterday

Silver US$25.51/oz vs US$25.46/oz yesterday

 

Base metals:  

Copper US$ 8,007/t vs US$7,944/t yesterday

Aluminium US$ 1,998/t vs US$1,992/t yesterday

Nickel US$ 18,335/t vs US$18,045/t yesterday - China’s nickel sulphate imports rose 30% In 2020

China imported 5,566t of nickel sulphate last year, up 30% compared to the year prior, supported by rising demand from the EV industry.

Continued rapid development of China’s EV industry along with tightening a domestic supply of nickel sulphate is likely to lead to increasing interest in new projects outside of China in 2021 and beyond.

China has removed nickel-related products from a list of commodities that are prohibited from toll processing trade and cut the import tax on non-alloy nickel to 1% in 2021 from 2% last year (Argus Media).

In December, Chinese mining firm Ningbo Lygend resumed construction of its nickel-cobalt production project on Indonesia's Obi island and remains on track for the first-phase launch in the first quarter of 2021

 

Zinc US$ 2,730/t vs US$2,669/t yesterday

Lead US$ 2,068/t vs US$2,017/t yesterday

Tin US$ 22,380/t vs US$21,925/t yesterday -

 

Energy:           

Oil US$55.6/bbl vs US$55.7/bbl yesterday - See SP Angel’s Oil Market outlook for 2021: https://youtu.be/T222JHGzokI

Further highlighting the sector’s recovery, the largest oilfield services provider, Schlumberger, has reported better than expected earnings for Q4 2020 and, like its rivals Halliburton and Baker Hughes, expects spending and activity levels to gain momentum this year

Schlumberger’s EPS), excluding charges and credits, rose by 37% sequentially to US$0.22, beating consensus estimates of US$0.17

Schlumberger’s revenue also rose, by 5%, driven by strong activity and solid execution both in North America and in the international markets

Revenue in North America increased by 13% in Q4 compared to Q3 2020 

The three largest oilfield services providers in the world—Schlumberger, Halliburton, and Baker Hughes all reported losses in Q3 2020, yet those losses were significantly lower than Q2

The losses were lower between July and September also because of massive cuts in E&P CAPEX

Indeed, it has been estimated that there was a five year CAPEX cut in 2020

For Q4, all three oilfield services providers reported this week revenues rising from Q3, and expressed optimism that oil demand, as well as drilling activity, will pick up this year

Baker Hughes booked its first quarterly net profit since oil prices crashed in March, while Halliburton reported adjusted net income, with North America revenue rising by 26% sequentially to US$1.2bn  

Schlumberger expects oil demand to recover to 2019 levels no later than 2023 or earlier

In North America, spending and activity momentum is set to continue in the first half of 2021 towards maintenance levels, albeit moderated by capital discipline and industry consolidation

Internationally, following the seasonal effects of the first quarter of 2021, and as OPEC+ responds to strengthening oil demand, higher spending is expected from the second quarter of 2021 onwards

Accelerated activity will likely extend beyond the short-cycle markets and will be broad, including offshore, as witnessed during the fourth quarter

Natural Gas US$2.526/mmbtu vs US$2.498/mmbtu yesterday

Natural gas prices eased slightly on Friday, despite a larger than expected draw in natural gas inventories

The EIA reported that natural gas in storage was 3,009Bcf as of 15 January 202

This represents a net decrease of 187Bcf from the previous week

Expectations were for a 164Bcf draw according to survey provider Estimize

Stocks were 36Bcf higher than last year at this time and 198Bcf above the five-year average of 2,811Bcf

At 3,009Bcf, total working gas is within the five-year historical range

Warmer than normal weather is expected to cover most of the US mid-west for the next two weeks which is putting downward pressure on prices

The EIA estimates that natural gas consumption was down 2.5% year on year in 2020

The spot liquefied natural gas (LNG) prices in north Asia jumped to record highs last week, while the key price marker in Europe, the Dutch Title Transfer Facility (TTF), rallied to the highest in more than two years

The natural gas markets at the start of 2021 look completely different from the beginning of last year, when milder weather and the pandemic hit to demand had dragged natural gas prices down to historic lows

This winter season, a rebound in Asian natural gas demand, supply issues at major LNG exporters, logistics issues at the Panama Channel, soaring tanker rates, and last but not least, the cold snap from Madrid to Tokyo, are pushing gas prices higher

 

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$166.2/t vs US$167.6/t

Chinese steel rebar 25mm US$664.6/t vs US$664.5/t

Thermal coal (1st year forward cif ARA) US$68.0/t vs US$68.0/t

Coking coal swap Australia FOB US$149.0/t vs US$148.0/t

           

Other: 

Cobalt LME 3m US$39,625/t vs US$38,520/t

NdPr Rare Earth Oxide (China) US$70,474/t vs US$70,463/t

Lithium carbonate 99% (China) US$9,957/t vs US$9,724/t

Ferro Vanadium 80% FOB (China) US$30.5/kg vs US$30.2/kg

Ferro-Manganese high carbon 78% Mn US$1,490/t vs US$1,430/t

Tungsten APT European US$240-245/mtu vs US$235-240/mtu

Graphite flake 94% C, -100 mesh, fob China US$530/t vs US$530/t                

Graphite spherical 99.95% C, 15 microns, fob China US$2,475/t vs US$2,475/t

Spodumene 6% Li2O min, cif (China) US$395/t vs US$380/t

 

Battery News

EVs – Shell buys Ubitricity, the UK’s largest public EV charging network

Ubitricity has >2,700 charging points in the UK with 13% market share of the EV market.

Shell already has >1,000 fast and ultrafast charging points at 430 Shell retail stations.

The idea is to expand into the market for EV drivers who lack private driveways and wish to recharge overnight.

 

StoreDot – Launch 5-minute charge Li-ion battery

StoreDot has announced the availability of its first generation 5-minute charge battery engineering samples.  

The first-generation battery was used to demonstrate the full charge of a two wheeled EV in just five minutes for the first time and can offer ultra-fast charging to a number of other industries such as commercial drones and consumer electronics.  

StoreDot XFC batteries are designed to be produced on existing Li-ion production lines at EVE Energy taking XFC from the lab to a potentially commercially-viable product.

We note StoreDot is fast charging a battery for a two-wheeled EV indicating to is that this is a relatively small battery

The fact remains that if you want to pump 50kWh of power into a battery you had better stand well away from the charging cable.

Slow charging of EV batteries of 35-50kWh is likely to remain the only practical regular charging option available.

Fast Charging to extend range is practical but also likely to lead to some degradation of the batteries being fast charged.

 

Renewables overtook fossil fuels in EU electricity mix in 2020 

Renewables overtook fossil fuels as the EU’s main source of electricity for the first time in 2020 as new projects came online and coal power shrank.  

Renewable sources such as wind and solar generated 38% of the 27-member state bloc’s electricity in 2020, with fossil fuels such as coal and gas contributing 37%.  

Denmark achieved the highest proportion of wind and solar power, which contributed 61% of its electricity needs in 2020. Ireland achieved 35% and Germany 33%. 

Countries with the lowest share of renewables, below 5%, were Slovakia and Czech Republic.  

Coronavirus restrictions led to a 4% fall in overall electricity demand last year, and coal-fired power generation fell 20%.  

 

Company News

Altus Strategies* (LON:ALS) 84p, Mkt Cap £55m – Gold exploration licenses awarded in Egypt

BUY – 132p

Altus reports that the Egyptian Mineral Resource Authority (EMRA) has confirmed that the Company’s 100% owned subsidiary Akh gold, will be awarded a number of gold exploration licenses located in the Eastern Desert of Egypt.

The licenses are to be awarded as part of Egypt's inaugural competitive international exploration licence bid round, which commenced in 2020. Altus is now working with EMRA in order to enter into the definitive exploration licence agreements and will provide an update on this process in due course.

Steven Poulton, Chief Executive of Altus, commented: "We are delighted and honoured that our subsidiary Akh Gold, will be awarded a number of gold exploration licences in the Eastern Desert of Egypt. The gold prospectivity of Egypt and that of the wider Arabian-Nubian shield is world-renowned; from the Pharaonic era to the modern multi-million ounce gold mine at Sukari, operated by London and Toronto listed Centamin plc.

"The award of the Licences follows a competitive international bidding process, in which a number of major gold mining groups participated. The Licences were selected following a systematic in-house target generation programme, incorporating satellite and historic exploration data. This work identified numerous priority targets, including areas with apparent significant historic artisanal gold workings.

"Our decision to expand our activities into Egypt follows the strategic investment by Egyptian-owned La Mancha, which acquired a 35% interest in Altus in February 2020, and follows favourable amendments to the Egyptian Mineral Resources Act. It also reflects our belief in the substantial investment opportunity present in the country and is in line with our strategy to continue to grow our diversified portfolio of projects and royalties.

*SP Angel acts as Nomad and Broker to Altus Strategies plc

 

BlueRock Diamonds (LON:BRD) 59.8p, Mkt cap £5.4m – BlueRock sells 14.8ct diamond for US$167,000

BlueRock diamonds reports the sale of a 14.8ct diamond which was recovered in December for $167,000 or $11,300/ct.

A second large stone weighting in at 8.7ct and also announced alongside the larger diamond was also sold for $37,000 or $4,300/ct.

The Kareevlei Diamond mine is ramping up production towards a run rate of 1mtpa in 2022.

Recovered grades ran at 4.24cpht in the fourth quarter nearly matching that seen in 2019 as the mine completed its expansion.

Prices: Diamond prices are improving globally, though local prices in Kimberley, South Africa are still lower than pre-Covid levels.

DeBeers recently raised rough diamond prices by 5% with Alrosa, the Russian diamond miner lifting prices by 7% according to Rapaport

Rapaport also mentions that diamond cutters are increasing production after buying high volumes of rough diamonds.

 *SP Angel act as nomad and broker to BlueRock Diamonds

 

Condor Gold* (LON:CNR) 54p, Mkt Cap £64.4m – Ground investigation programme at La India

Condor Gold reports the completion of a programme of ground investigation, including the drilling of 23 geotechnical drill-holes and 58 test pits, at its La India project in Nicaragua

The programme generates data on the subsurface foundation conditions and geology underlying the tailings storage facility and the water reservoir at La India as part of the programme to accelerate the project “from a Pre-Feasibility level of design to Final Engineering Designs on key infrastructure in preparation for construction on the fully-permitted La India gold mine project”.

The company has drilled 16 holes and excavated 29 test pits in the tailings storage facility as well as seven holes and 17 pits on the site of the “La Simona dam and water retention/attenuation reservoir”.  The remaining 12 test pits have been used to investigate the ground conditions underlying the plant site.

Chairman and CEO, Mark Child explained that the site-investigation work “demonstrates Condor’s commitment to de-risk and advance La India Project to construction”.

Referring to the previously completed pre-feasibility level design work for the tailings storage facility, Mr. Child also confirmed that “it has been decided to accelerate the project and that “a Feasibility Level design on the TSF and water retention/attenuation reservoir is 64% completed and is due to be finalised in June 2021. Condor's objective is to fast track the La India Project to operational status”.

The company confirms that “The Ministry of Environment and Natural Resources ("MARENA") requested Final Designs as a condition of granting the key environmental permit to develop, construct and operate a new mine at La India”.

Conclusion: The geotechnical drilling and test-pitting programme at La India should provide the detailed design information for the reservoir and tailings storage areas required for the on-site construction and, in our view, taken together with the recently announced infill drilling campaign to upgrade the resources estimates for the initial production at La India moves the overall project further towards production.

*SP Angel act as sole broker to Condor Gold

 

Kefi Gold and Copper* (LON:KEFI) 1.8p, Mkt Cap £38m – Q4 update: Tulu Kapi project funding completion targeted in H1/21 with drilling at Hawiah on course to grow and upgrade the resource

At Tulu Kapi, the team is planning to complete project funding in March 2021 leading to the proposed start of gold production in Q4/22.

Due diligence has been completed for the funding consortium including senior lenders.

The $221m development capex for the project is expected to be funded using 60% debt and 40% equity-risk capital (including subordinated debt).

Senior loan drawdowns are expected to follow receipt of project equity/subordinated debt subscriptions in H2/21.

Potential sources of ~$80m of equity=-development capital include:

Ethiopian Federal and Regional Governments contribution to the tune of $20m;

Ethiopian private sector organisations that can invest on same terms as government entities;

KEFI contribution of $60m that would include subordinated debt from the Ethiopian subsidiary of a multinational industrial group and product offtake-linked subordinated finance from a prominent international metals trader.

The structure allows KEFI to retain ~75% interest in the project (assuming no participation from Ethiopian private sector organisations), although the Company is conservatively assuming 65% ownership for now.

The project remains ready to commence development and resettlement works once funding is agreed.

The Company estimates the project to run at 190kozpa generating $264m in NPV8% attributable to KEFI using $1,700/oz.

In Saudi Arabia, the Company is in the middle of the 13,000m drilling programme with two drill rigs on site at the VMS project Hawiah.

The team completed over 6,000m in 14 diamond drill holes as of YE20 with sulphide mineralisation intersected in 11 of those extending the higher grade Camp Lode by 470m to a vertical depth of 570m.

The Company is planning to grow and upgrade the maiden Hawiah resource of 19.3mt at 0.9% copper, 0.8% zinc, 0.6g/t gold and 10.3g/t silver on course for maiden PFS targeted for 2021.

KEFI remains in close engagement with the Ministry of Industry and Mineral Resources following the release of the new Saudi mining regulations in January this year to update existing exploration licenses as well as applying for new ground with its local partner.

Conclusion: The Company is aiming to close Tulu Kapi project funding in H1/21 paving the way for the start of development and resettlement works eyeing first production in Q4/22. Tulu Kapi is a significantly de-risked open pit gold project hosting 1.0moz at 2.12g/t in mineral reserves and targeted to run at 190kozpa generating $264m in NPV8% attributable to KEFI using $1,700/oz. In Saudi Arabia, the team is advancing the 13,000m drilling programme to grow and upgrade the VMS Hawiah project targeting maiden PFS in 2021.

*SP Angel act as Nomad and Broker to KEFI Gold and Copper

 

Orosur Mining* (LON:OMI) 28p, Mkt Cap £48.7m – Anza Project drilling update

Orosur has made progress at its Anza project in Colombia, with drill results confirming encouraging results previously found on-site.

Diamond drill hole MAP-072 was commenced in mid-November in order to verify previous results at Anza, with samples from the hole submitted for assay gradually over November and December to the ALS laboratory in Peru.

Assay results have previously been delayed due to Covid-19 related issues at the lab, something which Orosur expect to continue for the foreseeable future- though it is not expected to materially impact operations.

Hole Map-072 targeted the APTA deposit, which has previously returned positive results, including hole MAP-060 which returned an intersection of 25m @ 4.85 g/t Au.

Map-072 intersected two distinct gold bearing horizons, the first of which returned a weighted average intersection of 4.1m @ 6.52g/t Au, 29.73g/t Ag and 0.28% Zn from 108m.

The second and more significant horizon was the main breccia zone target, with drill results indicating a thickness of 110m, with the entire breccia zone mineralised, demonstrating multiple stacked veins, substantial silicification and the presence of metallic sulphides, often massive.

Gold mineralisation across the width of the breccia zone varies from multiple narrow, high grade veins, interspersed with lower grade mineralised zones, with the average weighted intersections across the breccia are reported as:

5.90m @ 4.55g/t Au, 2.74g/t Ag and 0.30% Zn from 171.1m, and

70.50m @ 3.53g/t Au, 9.33g/t Ag and 1.62% Zn from 184.80m

Four additional drill holes have been completed at Anza and have all been submitted for analysis, however assay results are likely to continue to be delayed for the foreseeable future. All four holes recorded wide intersections of the breccia zone target, with stacked veins, pervasive silicification and development of sulphide mineralisation.

Orosur report that over 1,600m of drilling has been completed to date, of the original drilling plan for a small program of roughly 2,300m over eight holes in order to provide a preliminary assessment of the potential of the APTA deposit. However, due to the nature of mineralisation and delayed assay results, the decision has been taken to expand and accelerate the current drill campaign.

A third rig has been mobilised to site with a view to commencing work in late January and the company is to begin the process of expanding its local infrastructure and operating capacity to allow for the introduction of additional rigs at short notice, should this be deemed beneficial to the project.

CEO Brad George commented: "Clearly the assays from MAP-072 are very positive, and a resounding verification of previous excellent work.  Delays in assay results are unfortunately beyond the Company's control and may be a factor for some time yet, however in the meantime, visual indications are positive and provide the team sufficient confidence to ramp up our drilling efforts in order to move APTA forward as quickly as possible."

*SP Angel act as Nomad and Broker to Orosur Mining

 

Panthera Resources (LON:PAT) 23p, Mkt Cap £21.2m – Progress report on west African exploration

Panthera Resources reports that field exploration at its west African exploration projects continued over the holiday season and that it has now completed first-pass drilling at its Paimasa project in Nigeria with initial assay results expected during the current quarter.

The Paimasa drilling comprised 2 diamond drill holes totaling 294.4m and an additional 1,396m of reverse-circulation drilling amounting to a further 1,369m.

Paimasa is held under a joint-venture agreement with Moydow Holdings which currently has a 20% interest and “an earn-in right to increase this to 65%”.

In addition, the company says that preliminary work at the Bassala project in Mali, where the structural targets identified by ground magnetic work shows a correlation with the results of gold-in-soil geochemical work, suggests “a large exploration project with over 8km strike potential”.

At this stage, with some of the geochemical samples still on site and remaining to be assayed and final reporting of the magnetic survey still awaited, the conclusions are preliminary in nature, but if the initial impressions are confirmed, they “will be very useful for aiding drill site selection once all results are to hand”.

Managing Director, Mark Bolton, also confirmed that “At Labola, … [in Burkina Faso] … Moydow's team is currently preparing detailed plans and processes for the drilling programme expected to commence in this quarter.   Several further additional targets at various stages of exploration have also been identified”.

 

Pensana Rare Earths (LON:PRE) 100p, Mkt Cap £204m – Pensana submits planning application for proposed REE separation facility in Yorkshire

Pensana, which is looking to develop a REE mine in Angola, has submitted a planning application for a proposed Rare Earth Oxide separation facility in Saltend, Yorkshire.

Optimisation of the plan for the REE refinery has reduced the estimated capital cost to US$125m at the site which is said to provide ‘plug and play’ services.

Conclusion:  Pensana have been exploring a partnership with State-owned, China Great Wall Industry Corporation on its Longonjo REE mine in Angola which may potentially finance the initial $160m required to build the Longonjo mine. While the financing and technical support will be welcome planning officials in Yorkshire should ensure that any new refinery is not solely reliant on feed from a single REE mine to ensure better security of feedstock supply and the flexibility to switch to alternative REE feedstock if raw material supply from Angola is interrupted.

 

Shanta Gold (LON:SHG) 17.8p, Mkt Cap £185m – FY20 production and costs on target with FY21 focus on NLGM exploration and growth projects’ development works

Q4/20 production totalled 20.6koz (Q3/20: 20.0koz) highlighting stable production at the New Luika Gold Mine.

Gold sales amounted to 19.0koz at an average realised gold price of $1,376/oz (Q3/20: 20.2koz at $1,524/oz) against the average spot price of $1,876 reflecting the settlement of 15.0koz of forward gold sales.

Gold forward sales have now been all settled with Shanta regaining 100% exposure to strong gold prices.

VAT receivables account increased by $2.1m during the quarter to $27.7m.

FY20 production totalled 83.0koz, in line with 2020 guidance of 80-85koz.

C1 and AISC averaged $579/oz and $841/oz during the year, at the lower end of 2020 guidance of $830-880/oz.

National grid contributed 11% of NLGM energy consumption during the year and is expected to increase to 37% by H2/21 translating into further cost savings.

2021 guidance is for 80koz at $900-950/oz ($1,050-1,100/oz when underground development costs are included).

Higher unit costs are attributed to higher royalties driven by stronger prices, lower processed grades on the feed from the Elizabeth Hill open pit and increased on-mine exploration budgets (+50% on 2020 to $8.0m)

Production is expected to be weighed towards H2/21 as the third mill with 10tph (~80ktpa) capacity comes on line.

At Singida, mine construction now started and being funded from free cash flows with contracts for long-lead items awarded including a 150tph crushing circuit (~1.3mtpa).

The project is expected to operated at 32kozpa at $869/oz AISC over an initial 7 year mine life.

At West Kenya, infill drilling started with the aim to upgrade mineral resources to reserves.

Unrestricted cash balance as of YE20 stood at $41.6m (net cash $37.3m) including a $40.1m equity placing completed in Q4/20 to fund West Kenya to a construction decision.

Conclusion: The Company delivered good performance in FY20 meeting production and costs guidelines while completely unwinding forward sales commitments and regaining 100% exposure to strong gold prices. The latter is expected to deliver growth in revenues and earnings this year assuming strong gold price environment remains. More exploration work at the NLGM operating mine is expected to grow the mineral inventory and deliver new low cost ounces into the mine plan. Additionally, the Company remains well capitalised to continue with a portfolio of development projects including Singida, currently in construction, and newly acquired high grade West Kenya.

 

Analysts

John Meyer –  – 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

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

 

 

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

 

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

 

Sources of commodity prices

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel

Bloomberg

Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt

LME

Oil Brent

ICE

Natural Gas, Uranium, Iron Ore

NYMEX

Thermal Coal

Bloomberg OTC Composite

Coking Coal

SSY

RRE

Steelhome

Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal

Tungsten

Metal Bulletin

 

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