SP Angel . Morning View . Monday 15 03 21
Copper breaks back over $9,000/t again as China shows strong yoy growth
Altus Strategies* (LON:ALS) – New copper/silver projects double land holding in Morocco
Ariana Resources (LON:AAU) – Production guidance for Kiziltepe
Bluejay Mining*+ (LON:JAY) – Appointment of Johannus Egholm Hansen as a Non-Executive Director to the Board.
Condor Gold* (LON:CNR) – Acquisition of SAG mill for La India
Ferro Alloy Resources (LON:FAR) – Impact on sales and earnings expected due to production interruptions
Power Metal Resources* (LON:POW) – Intention to seek IPO for Silver Peak project
Rainbow Rare Earths* (LON:RBW) – ANSTO Minerals appointed to advance Phalaborwa rare earths project process flow sheet
Zamare Minerals* (Private) – announces US$3m earn in joint venture with Rio Tinto Mining and Exploration
China – Economic data show double digit growth rates in IP, FAIs and retail sales in the first two months of the year vs 2020 as the nation went into a lockdown.
Headline numbers came in stronger than market forecast causing copper and other metals to continue to rise higher.
China Industrial production rose 35.1% in Jan-Feb from a year earlier, while retail sales climbed 33.8% in the period.
Fixed-asset investment rose 35% over the period, while the jobless rate was 5.5% at the end of February vs 5.2% at the end of September.
Crude steel output rose 12.9% over the period to 175mt, while finished steel output rose 23.6% to 210mt (Fastmarkets MB).
Industrial Production (%yoy YTD): 35.1 v 32.2 est.
Fixed Assed Investments ex Rural (%yoy YTD): 35.0 v 40.9 est.
Retail Sales (%yoy YTD): 33.8 v 32.0 est.
Foreign direct investment jumped 31.5% yoy for January and February from 4.6% in December
Copper $ 9,115/t - Copper gains on better-than-expected Chinese data for January/February
Copper prices continued to rise 1.3% this morning to $9,199/t following the release of official figures showing high yoy growth rates for many key economic indicators.
While Chinese data released this morning is promising for base metals, it is worth noting that the YoY data is skewed somewhat due to lockdowns in China over the period last year.
Copper imports into China rose 4.65% yoy to 844,009t for January and February
This was possibly due to the shortened Lunar New Year break in China
But more probably the strong rise is due to the impact of stimulus programs on new housing construction, infrastructure projects and the sale of domestic appliances.
January and February’s figures last year may have seen some impact from the lockdown in Wuhan and transport restrictions across state boarders and China moved to contain the spreading Coronavirus.
Copper prices were also supported by the threat of supply disruptions in Chile, with many mines including Los Pelambres currently unable to reach wage agreements with workers.
Iron ore futures fall as Tangshan doubles down on pollution cuts
Chinese iron ore futures fell as much as 6.3% on Monday after top steelmaking city Tangshan pledged to cut emissions by 50% during the heavy pollution period.
City officials also re-echoed warnings that it will launch widespread checks of steel mills to improve the level of environmental protection, following last weeks violations.
The most-active contract on the Dalian Commodity Exchange for May delivery slumped as much as 6.3% to 1,005 yuan/t, while futures in Singapore fell as much as 4.6% to $153/t.
Recent Interviews:
VOX Markets: 12/03/20: https://audioboom.com/posts/7820173-john-meyer-bluerock-kodal-minerals-orosur-mining-bluejay-mining
03/03/20: https://www.voxmarkets.co.uk/media/603f8a764ed39457176158df/?context=/listings/LON/BMN/multimedia/
*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, 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.
IGTV: Are we in a new commodity supercycle, or is one coming? https://youtu.be/sw6gLNnM1s0
Is this a new Supercycle for commodities: https://youtu.be/BIWb-wqoLpM
Metals expected to continue the last-year gains into 2021 https://youtu.be/afrB9cJe8L0
Is 2021 the start of the new COVID-Supercycle or will Lockdowns delay the recovery? https://youtu.be/7LO0tDc-pNc
No.1 in Copper: “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”
No1. In Gold: “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”
The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
Dow Jones Industrials +0.90% at 32,779
Nikkei 225 +0.17% at 29,767
HK Hang Seng +0.33% at 28,834
Shanghai Composite -0.96% at 3,420
Economics
US – US stock futures edged higher with government bond yields pulling back this morning on the back of the stimulus programme signed into law last week and the rollout of COVID-19 vaccine brightening growth outlook.
Rates on German 10 year bunds were down to -0.32%, yields on 10y UK gilts were down at 0.813% and 10y US Treasury yields were down at 1.625% from 1.634% on Friday.
The Fed will hold its FOMC meeting this week with markets awaiting indication of any changes to the current monetary policy after the ECB decided to step up debt purchases last week.
Separately, the White House is expected to propose a suite of tax increases, mostly mirroring Biden’s 2020 campaign proposals paying for the stimulus and funding key initiatives like infrastructure and climate change, Bloomberg reports.
Discussions include the following proposals:
Raising the corporate tax rate to 28% from 21%;
Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships;
Raising the income tax rate on individuals earing more than $400k;
Expanding the estate tax’s reach;
A high capital gains tax rate for individuals earning at least $1m per annum.
UK – National medicines regulator argued people should still get Oxford-AstraZeneca jab saying that evidence “does not suggest” the vaccine causes blood clots.
Earlier, a number of countries paused the use of the vaccine including the Republic of Ireland, Bulgaria, Denmark, Norway, Iceland, Italy and Austria.
AstraZeneca said that the number of cases of blood clots reported is lower than the hundreds of cases that would be expected among the general population, BBC reports.
Industrial production fell 1.5% in February vs 0.2% in January, The figures are substantially lower yoy at -4.9% in February and -3.3% in January
Manufacturing output came in at 2.3% in February vs 0.3% in January vs -5.2% and -2.5% yoy.
OECD - US growth forecast raised to 6.5% from 3.2% in December
Global growth forecast raised to 5.6% following a fall of 3.2% last year.
Currencies US$1.1933/eur vs 1.1931eur last week. Yen 109.13/$ vs 109.14/$. SAr 14.908/$ vs 14.988/$. $1.393/gbp vs $1.394/gbp. 0.775/aud vs 0.775/aud. CNY 6.505/$ vs 6.502/$.
Commodity News
Precious metals:
Gold US$1,726/oz vs US$1,707/oz last week
Gold ETFs 101.6moz vs US$101.7moz last week
Platinum US$1,216/oz vs US$1,179/oz last week
Palladium US$2,361oz vs US$2,338/oz last week
Silver US$25.96/oz vs US$25.66/oz last week
Base metals:
Copper US$ 9,115/t vs US$8,979/t last week
Aluminium US$ 2,184/t vs US$2,156/t last week
Nickel US$ 16,190/t vs US$16,040/t last week
Zinc US$ 2,820/t vs US$2,807/t last week
Lead US$ 1,962/t vs US$1,955/t last week
Tin US$ 25,375/t vs US$26,295/t last week
Energy:
Oil US$69.9/bbl vs US$69.4/bbl last week
China appears to be becoming a major importer of Iranian oil, as Iran’s production levels look set to soar thanks to better relations with the US
Over the last year, China imported an average of 306kbopd from Iran
Most of these imports came indirectly via Malaysia, Oman, or the UAE
As demand increases, this March, Chinese imports of Iranian oil are expected to increase 129% on February
The sudden influx of Iranian oil is reported to have caused congestion in ports as tankers are offloaded.
China is drawn to Iranian oil thanks to its low costs, often priced at between $3 to $5 below the Brent benchmark
Imports from Iran have decreased substantially across Asia, particularly to China, India, Japan and South Korea, since 2018 following the sanctions imposed on the country under the Trump Administration
However, China’s uptake of Iranian oil over the last few months suggests this trend is likely to change under the new Biden Administration
Elsewhere OPEC’s latest Monthly Oil Market Report (MOMR) outlines more bullish sentiment, estimating that global oil demand is set to benefit from stronger economic recovery and vaccinations in the second half of this year, adjusting higher its outlook for the second half of 2021 and raising slightly its full-year oil demand forecast
The group however, revised down its estimates for global oil demand for the first half of the year due to extended lockdowns in major economies in Europe and high unemployment rates in the United States slowing the recovery
In hindsight, the OPEC+ group’s decision from last week not to lift collective crude oil production from April, leaving only small exemptions to Russia and Kazakhstan, seems not so surprising after all, as it sees now oil demand in the first and second quarters of 2021 lower than in last month’s assessment
In this month’s report, OPEC cut its oil demand estimate for Q1 by 180,000bopd, and for Q2 by 310,000bopd compared to the February outlook
In the third quarter, OPEC now sees demand at 97.43MMbopd, up by 400,000bopd compared to last month’s assessment
For the fourth quarter, global oil demand is expected at 98.91MMbopd, up by 970,000bopd compared to the estimate in February
Elsewhere, the rising premium of North Sea’s benchmark Brent over Dubai crude is making shipment of Brent-linked oil to Asia more expensive and likely to reduce in the coming months
The Brent premium over Dubai jumped to the highest since December 2019 at over US$3/bbl according to data from PVM Oil Associates and Bloomberg
The key reason for this is the upcoming heavy maintenance on a number of oilfields in the North Sea, which will reduce the availability of North Sea oil to the market
Dated Brent is also much higher than Dubai crude in recent months because of the lower production of US light sweet oil out of the American shale patch that would have otherwise competed with the North Sea oil
Therefore, the highest premium of Brent over Dubai in nearly 15 months will likely be closing the arbitrage for some Atlantic basin crudes to be shipped to Asia, the region which is showing relative resilience in crude oil demand these days
Other crudes priced off Brent, such as Russia’s Urals and crudes from West Africa, could also find it more difficult to attract buyers in Asia, in view of the rising premium of Brent over Dubai, off which the Middle Eastern oil producers price their oil to Asia
Sales of Russia’s Urals are currently slow, while Nigeria struggles to place its barrels that would typically sell in Europe given the still low European demand due to the COVID-19 lockdowns
Natural Gas US$2.538/mmbtu vs US$2.642mmbtu last week
Natural gas futures started the week with a gap to the downside as new weather forecasts revealed the warming trend will continue to weigh on demand
The early price action also suggests that traders are anticipating another anaemic storage report from the US government
Natural gas in storage was 1,793Bcf as of Friday 5 March 2021, according to the EIA
This represents a net decrease of 52Bcf from the previous week
Expectations were for an 85Bcf draw according to survey provider Estimize
Stocks were 257Bcf less than last year at this time and 141Bcf below the five-year average of 1,934Bcf
At 1,793Bcf, total working gas is within the five-year historical range
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$155.3/t vs US$163.7/t
Chinese steel rebar 25mm US$725.1/t vs US$726.2/t
Thermal coal (1st year forward cif ARA) US$69.2/t vs US$68.8/t
Coking coal swap Australia FOB US$132.0/t vs US$133.0/t
Other:
Cobalt LME 3m US$52,610/t vs US$52,610/t
NdPr Rare Earth Oxide (China) US$87,814/t vs US$87,779/t
Lithium carbonate 99% (China) US$12,303/t vs US$12,298/t
Spodumene 6% Li2O min, cif (China) US$510/t vs US$455/t
Ferro Vanadium 80% FOB (China) US$35.0/kg vs US$34.5/kg
Ferro-Manganese high carbon 78% Mn US$1,625/t vs US$1,625/t
Tungsten APT European US$268-275/mtu vs US$263-268/mtu
Graphite flake 94% C, -100 mesh, fob China US$560/t vs US$560/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,625/t vs US$2,625/t
Battery News
Indonesia improves tax perks for electric cars
Indonesia is aiming to boost sales of EVs with new regulations that will cut tax breaks for hybrid cars.
Battery-powered EVs will retain their 0% luxury tax rate, while plug-in hybrid vehicles will see their tariff increase to 5% from 0%.
Full and mild hybrid types will be taxed at a rate of 6-12%, compared with a previous range of 2%-12%.
Indonesia’s finance minister commented: “Investors who will build electric cars in Indonesia feel that they are not competitive enough because the tax rate is not differentiated from plug-in hybrids.
Start-up uses solar power to charge up cars
German start-up Sono Motors aims to use solar energy to power cars. They revealed its latest prototype solar electric vehicle called Sion at this years Consumer Electric Show.
Sion is made up of hundreds of solar cells moulded into polymer. These convert sunlight into energy which is stored into the vehicle’s battery.
Based on average weather in Munich, the solar cells can generate up to 1.2 kilowatts a day, which translates into 21 miles of driving range, that is enough for most commuters in Europe, who on average drive 11 miles a day.
Yet, it’s still not quite a fully solar-power car. Combined with its built-in lithium-ion battery, a Sion can last for 155 miles on a single charge at a maximum speed of 140 km.
In January, Sono struck a deal to license its solar technology to EasyMile, a French electric autonomous shuttle bus company and they are in talks with several US. Automakers.
Company News
Altus Strategies* (LON:ALS) 80p, Mkt Cap 56m – New copper/silver projects double land holding in Morocco
BUY
The Company secured three new copper/silver projects in Morocco doubling Company’s land holding and taking regional portfolio to seven base/precious metals properties.
Projects cover 252km2 in the western Anti-Atlas of Morocco and target sedimentary copper/silver mineralisation
Secured properties include:
Izougza Copper-Silver Project (24km2) is prospective for vein hosted silver/copper mineralisation and located 20km away from the Zgounder silver mine (1.2moz targeted 2021 production, 990kt at 315g/t Ag for 10moz in M&I Resource), operated by TSX listed Aya Gold and Silver.
Azrar Copper Project (85km2) and Tata Copper Project (143km2) host several mapped historical copper/gold occurrences and are located 45km east and 50km southeast of the Tizert copper mine, operated by the Managem Group.
Exploration works are expected to commence shortly following up on targets identified from remote sensing.
Further license applications have been submitted and await approval.
Conclusion: The team doubles its land holding in Morocco with three new prospective in copper/silver properties secured. Properties are located next to operating/development projects with exploration work to start shortly following up on identified priority targets.
*SP Angel acts as Nomad and Broker to Altus Strategies plc
Ariana Resources (LON:AAU) 4.55p, Mkt Cap £48.1m – Production guidance for Kiziltepe
Ariana Resources has published 2021 production guidance for its 23.5% owned Kiziltepe joint-venture mine in Turkey.
The company expects the mine to produce around 19,000oz of gold during the year based on the treatment of some 325,000t of ore “once operating capacity is increased as planned, which represents a 115% increase over the feasibility plan”. The company adds that its guidance does not include silver as it is treated as a by-product credit.
During 2020, the Kiziltepe mine produced 18,645oz of gold and 244,000oz of silver, beating the company’s guidance of 18,000oz of gold.
In the longer term, the “Kiziltepe gold-silver mine is expected to deliver an average of approximately 20,000 oz gold equivalent per annum over eight years of initial mine life, for a total of up to 160,000 oz gold equivalent based on current resources”.
The bulk of production is expected to come from the Arzu North pit with grades of around 2.1g/t gold and recovery rates of over 90%.
Ariana Resources reports that its planned plant expansion to 500,000tpa is “well underway and scheduled for completion in early Q3 2021”.
Managing Director, Dr. Kerim Sener, explained that the production guidance “follows on from the completion of our arrangements with Ozaltin Holding A.S. and Proccea Construction Co. With the enhanced JV now formally underway, we are pleased to report on JV plans to increase the operational capacity at Kiziltepe. This will see a marked positive impact on production output and will continue to ensure the lowest possible unit costs”.
Dr. Sener confirmed that, “With the wider JV now in place, we intend to advance our collective interests in Turkey, continue with exploration and development on behalf of the JV, progress with Ariana's earn-in and the exploration programmes planned in Cyprus, as well as pursuing separate opportunities elsewhere in Eastern Europe”.
Conclusion: The expansion of the Kiziltepe plant, which should be completed early in Q3, is expected to deliver 19,000oz of gold production in 2021, largely from the Arzu North pit where recent announcements say that drilling is set to investigate possible extensions to mineralisation towards the northwest beneath overlying cover rocks.
Bluejay Mining*+ (LON:JAY) 11.44p, Mkt cap £111m – Appointment of Johannus Egholm Hansen as a Non-Executive Director to the Board.
BUY - Valuation 40p
Bluejay Mining report the appointment of Mr Johannus Hansen as a Non-Executive Director to the Board.
Hansen is a Faroese/Danish national with over 30 years' experience in large construction projects, airport construction and operations, engineering, banking and equipment supply.
Mr Hansen's is involved in the planning and development of the three airports project in Greenland, where Mr Hansen managed both political and regulatory stakeholders, managed tri-party negotiations with the Governments of Greenland and Denmark and secured project financing and regulatory permits, including environmental permits.
He has worked ass as Senior Vice President of the FLSmidth Group, and as CEO and Country Head of FLSmidth Indonesia, working mainly with mining projects.
Hansen was also responsible for three biomass power investments plants in the UK for Copenhagen Infrastructure Partners where he monitored the construction and commissioning of the plants.
Conclusion: It is good to see Bluejay attracting individuals of such strong calibre to the board.
*SP Angel act Nomad and broker to Bluejay. The analyst has previously visited the Dundas mine site in Greenland and the Enonkoski and Hammaslahti mine sites in Finland. The analyst holds shares in Bluejay.
Condor Gold* (LON:CNR) 50p, Mkt Cap £60.0m – Acquisition of SAG mill for La India
Condor Gold has announced that it has purchased a new 2,300tpd 24ft diameter SAG mill (semiautogenous mill) for its La India mine development in Nicaragua.
The mill, which has been acquired from First Majestic Silver, gives La India phase 1 production capacity of 800,000tpa “with capacity to be expanded materially after 2 to years of production”.
The mill, including the associated motor and equipment as well as manufacturer’s warranties, became surplus to First Majestic’s requirements and is being acquired for US$6.5m, including US$3m in Condor Gold shares. A first cash installment of approximately US$1.45m is payable on completion of the acquisition agreement with a further US$2.05m payable “upon certain milestones including shipment and delivery of the SAG Mill and associated equipment. … [Condor Gold says that] … Payment is expected to be made over the next 3-4 months”.
Based on the company’s Rule 26 disclosure of approximately 130.5m shares currently in issue, we estimate that the 4.3m shares (approximately) shares to be issued to First Majestic would represent around 3% of the enlarged issued share capital of Condor Gold.
The cash component of the payment is being funded from existing funds following the £4m fund-raising in February.
Chairman and CEO, Mark Child, explained that purchase of the mill, described as “a state of the art complete new SAG mill package” from First Majestic had shortened the expected delivery time by around a year and he characterised First Majestic’s acceptance of Condor Gold shares in part-payment as a “vote of confidence” by First Majestic in Condor Gold’s team.
The La India development currently includes 3 permitted open-pits, at La India and the nearby high-grade Mestiza and La America pits, with initial production expected to be in the range 80-100,000oz of gold annually.
Conclusion: Securing a new SAG mill with its ancillary equipment and warranties provides important certainty for the development timetable at La India and shortens the delivery time for the mill by about one year. With infill drilling currently underway on the high-grade starter pits we look forward to further news on the development schedule as results become available.
*SP Angel act as sole broker to Condor Gold
Ferro Alloy Resources (LON:FAR) 12.05p, Mkt cap £34.7m – Impact on sales and earnings expected due to production interruptions
Kaxakhstan-based Ferro Alloy Resources reports a 56% increase in 2020 vanadium pentoxide production to 237 tonnes.
The company says that the installation and commissioning of additional capacity during 2020 is expected to increase production capacity to 80tpm of vanadium pentoxide and that a connection to high voltage power is currently around 80% complete and is expected to be completed by May 2021.
A breakdown of quarterly production statistics shown in today’s announcement shows that despite interruptions due to Covid19, which particularly affected the hydrometallurgical part of the process, and power supply disruption issues, production of 89.8t of vanadium pentoxide was achieved during Q3 2020.
The adverse impact of Covid19, particularly in relation to the material supply chain “continued into January and February 2021” although “Looking further ahead, the Company is planning to procure an electric arc furnace which can double production capacity again. This furnace has been designed, contracts agreed and will take some six months to build once the order is placed”.
Chief Executive, Nick Bridgen, drew attention to the contribution of the company’s technical team saying that “Our technical team made great progress during the year. The speed at which we developed the technology to produce calcium molybdate was particularly encouraging. This addition to the Existing Operation will prove an important revenue stream and at little extra cost. In addition, the development of a technology to produce electrolyte for vanadium flow batteries directly from ammonium metavanadate was impressive and will allow the Company to take part in the ever-growing renewables market”.
In a separate announcement today, the company has announced the appointment of former Xstrata CEO, Sir Mick Davis, as Chairman following the completion of an initial investment of US$12.6m by Sir Mick’s Vision Blue Resources “and a limited number of co-investors” into Ferro Alloy Resources.
The additional investment will be used to complete the existing expansion and to “Complete the Bankable Feasibility Study ("FS") on the Company's large scale, low cost Balasausqandiq Vanadium Project”.
The new investment, to be completed in a series of stages, equates to “to a final investment shareholding of 21.29% of FAR's enlarged total issued share capital”.
Conclusion: Vanadium pentoxide production increases by over 50% in 2020 as expansion programme progresses towards completion in May 2021. The appointment of Sir Mick Davis as Chairman and his and associated investors investment in the company hints at additional future expansion ambitions.
Power Metal Resources* (LON:POW) 2.14p, Mkt cap £24.4m – Intention to seek IPO for Silver Peak project
Power Metal reports that it has accelerated its earn-in to the Silver Peak project in British Columbia, Canada; with the company now holding a 30% interest in the project.
Power Metal has agreed with its partners who hold the remaining 70% interest in the project to list the project holding company on a recognised stock exchange, with Power Metal retaining a 30% interest in the Project through the new company.
Power Metal has agreed to pay the CAD$108,952 remaining under the exploration earn-in commitment of CAD$250,000 into the new Canadian company to extinguish that earn-in requirement- with the payment made from existing cash resources.
Power Metal has also elected to satisfy the final earn-in payment to secure its 30% Project interest through the issue of 5,139,281 new ordinary shares of 0.1p in the Company at a price of 2.225p and the issue of 2,569,641 warrants to subscribe for new Ordinary Shares at an exercise price of 2.89p, with a three year life to expiry from today’s date.
Paul Johnson, CEO of Power Metal Resources commented: "Alongside its extensive exploration activities Power Metal is intent on generating material organic value from corporate work in respect of its portfolio of interests. In just seven months since we engaged with Silver Peak we are now, with our partners, planning to move this project interest into its own independent listing. he level of interest in quality silver projects is considerable and we believe that material value can be generated for Power Metal through the listing of Silver Peak.”
*SP Angel act as Nomad and Broker to Power Metal Resources
Rainbow Rare Earths* (LON:RBW) 18.95p, Mkt Cap £90m – ANSTO Minerals appointed to advance Phalaborwa rare earths project process flow sheet
(Rainbow hold 70% of Phalaborwa with 30% to be held by Bosveld Phosphates. There is currently no BEE requirement as this is a retreatment processing operation)
Rainbow Rare Earths have appointed ANSTO Minerals to advance the process flow sheet for the Phalaborwa project in South Africa.
ANSTO is to work on leach testing drill samples to check the metallurgical variability of the rare earths minerals in the gypsum tailings stacks.
The work will be used to optimise the process flow sheet for the development of a PEA ‘Preliminary Economics Assessment’ / Scoping Study.
The study will refine the process method trialled by SASOL, the South African chemicals giant, which formerly ran the Phalaborwa project till it was forced to divest the project under anticompetition rules.
SASOL’s pilot plant produced three tonnes of material which was sold to an Asian buyer.
Rainbow’s expert metallurgical team, Dave Dodd and Chris Le Roux formerly worked on rare earths processing at Lofdal and Peak Resources and latterly worked with George Bennet at MDM Engineering.
Bringing this expert metallurgical expertise together should accelerate project development and hopefully lead to better process optimisation for the rapid development of a larger scale plant.
The original REE pilot plant remains at site at Phalaborwa and may help with the development of a second pilot process plant
The team are looking at the potential to process some 2mtpa of gypsum tailings for the production of ~10,000tpa of rare earths mineral including ~3,100tpa of NdPr at Phalaborwa.
The average grade of NdPr in the gypsum tailings stacks runs at 0.15% Neodymium and Praseodymium representing ~29.7% in the rare earth mineralisation.
Prices for NdPr continue to rise to US$87,814/t today up from US$38,579/t a year ago, indicating potential sales of over $136-190m to Rainbow.
Gakara: Rainbow are also working on the feasibility for a 10,000tpa plant to produce an enriched mixed rare earth carbonate from the Gakara mine in Burundi.
The feasibility study is being done by METC for a high-grade cerium-depleted mixed rare earth carbonate of 39% NdPr..
METC estimate capex of US$35.2m for a 10,000tpa plant ($3,522/t capacity) with an Operating cost est. of $1,279/t potentially helped by the use of hydropower
Conclusion: The work being done at Phalaborwa combined with work at Gakara has the potential to propel Rainbow into the major league of rare earth producers within the next five years.
*SP Angel act as broker and financial advisor to Rainbow Rare Earths
Zamare Minerals* (Private) – announces US$3m earn in joint venture with Rio Tinto Mining and Exploration
Zamare Minerals report the signing of an earn-in agreement with Rio Tinto Mining and Exploration Ltd on its Murundi exploration license in Zambia
Rio Tinto are earning the right for a potential 75% interest in the Murundi licence through funding US$3m expenditure over three years.
The Murundi license is next to other licenses where Rio Tinto are active and are keen to continue to follow this exploration into Zamare’s licence area.
Zamare will also receive a cash payment from Rio Tinto once legal and geological due diligence is completed.
Zamare recently received its first 3-year extension on the Murundi license which lies next to the Mufulira copper mine, close to the boarder with the DRC.
*SP Angel are acting for Zamare Minerals Limited
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
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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SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%