SP Angel . Morning View . Friday 09 04 21
Gold leads PGMs, iron ore and rare earths higher
Arc Minerals* (LON:ARCM) – Arc extends date for $5m payment from Golden Square by 120 days.
Alba Mineral Resources (LON:ALBA) – Structural review of Limerick Basin licence
IronRidge Resources* (LON:IRR) – Financial Controller appointed
Power Metal Resources* (LON:POW) – Drilling of potential magmatic feeder zone at the Molopo Farms Complex, Botswana
Pure Gold Mining (LON:PUR) – C$15m bought deal financing
Tirupati Graphite (LON:TGR) – Record Q1 sales support expansion of further capacities
Versarien* (LON:VRS) – Graphene lab makes £1.93m strategic investment in Company
Gold climbs to five-week high as dollar weakens following Fed’s comments
Gold prices climbed steadily towards five-week highs on Thursday afternoon, helped by a weakening US$ after the Federal Reserve signaled its commitment to support monetary policy.
The US dollar fell to a two-week low against its rivals after the number of Americans filing new unemployment claims increased for the second straight week (Reuters).
The US central bank reaffirmed its ultra-easy stance despite improving sentiment in US markets – with the Fed’s comments weighing further on the dollar and causing Treasury yields to pull back.
Rising yields have hampered non-yielding bullion so far this year- outcompeting the metal somewhat as a safe haven asset.
Spot gold climbed over 1% on Thursday to $1,756/oz before pulling back on Friday, although still on course to gain over 1% for the week.
Base Metals under some pressure as German health official indicate a lockdown should last 2-4 weeks and substantially limit movement
Inflation pressures loom on higher oil and commodity prices
Semiconductor chip shortage seen reducing Chinese auto output in second quarter indicating a worsening of the semiconductor crisis
Zinc - Teck settles Treatment Charges at $159/t vs $300/t in 2020 for its Red Dog mine with Glencore and Korea Zinc
Chinese Treatment Charges are at $75/t vs $300/t yoy highlighting the scramble for zinc concentrates in China as demand rises and concentrate supply tightens.
The $300/t charge was close to an 11-year high as demand was lower in March last year.
Recent Interviews:
IGTV: Improved global economic forecasts from the IMF provides trading opportunities: https://www.youtube.com/watch?v=_GXKPqzuCG0
VW expansion driving battery metals prices: https://youtu.be/7vqSrONBaWw
VOX Markets: 24/03/20: https://audioboom.com/posts/7829467-john-meyer-on-arc-minerals-cornish-metals-rainbow-rare-earths-altus-stategies
12/03/20: https://www.ig.com/uk/market-insight-articles/volkswagen_s-electric-vehicle-expansion-plans-drive-a-record-hig-210317
*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.
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 +0.17% at 33,504
Nikkei 225 +0.20% at 29,768
HK Hang Seng -1.11% at 28,687
Shanghai Composite -0.92% at 3,451
Economics
Germany and France both see unexpected declines in industrial production in February
German output dropped 1.6% compared to the month prior vs an expected +1.5% gain.
Industrial output in France dropped 4.7%, driven by an 11.4% decline in the automotive sector.
Earlier this week, France cut its economic growth forecast for the year to 5% from 6% due to the strict one-month lockdown implemented.
Chancellor Angela Merkel has signaled she would be in favor of another short lockdown to contain the pandemic.
UK – Ministers announce Covid testing plan to reopen foreign travel from May 17th
Transport Secretary Grant Shapps is expected to confirm plans on Friday that will pave the way for travellers from England to holiday abroad from the 17th of May to a small number of countries.
Holidaymakers will have to pay about £100 on their return for a Covid-19 test.
The PCR tests will try to track new variants of the virus entering the country.
China – Factory gate prices jump most in almost three years in March as producers pass on rising costs
China’s official producer price index (PPI) rose to +4.4% in March from a year earlier, compared to 1.7% in Feb.
The PPI reflects the prices that factories charge wholesalers for their products.
Last months PPI rise of 3.6% was the highest since July 2018.
Within PPI, the price of ferrous metal smelting and rolling processing industry increased by 21.3% YoY.
The chemical raw materials and chemical product manufacturing industry rose 11.4% YoY.
China’s CPI rose to +0.4% in March from a year earlier, compared to -0.2% in February.
Food prices fell -0.7% in March vs -0.2% in February.
Germany – Health Minister to begin preliminary negotiations with Russia over procurement of Sputnik V vaccine
Germany is about to start bilateral negotiations with Russia to obtain its Sputnik V vaccine, various news outlets reported on Thursday.
The country’s health minister, Jens Spahn, told reporters that he would have no hesitation acting independently of the EU.
The move indicates is frustration over the EU’s refusal to engage with Russian jab manufacturers while the Bloc’s current vaccine procurement effort continues to worsen.
Mr Spahn stressed that the vaccine would only be used if it was approved by the European Medicines Agency.
US – Weekly jobless claims rose 744k vs 728k a week ago
EU - ECB’s Stournaras says the central bank must not repeat the past mistake of tightening too soon
HK - Manufacturing PMI 50.5 in March vs 50.2 in February
Japan - Eco Watchers outlook index 49.8 in March vs 51.3 in February
Consumer confidence rose slightly to 36.1 in March vs 36.0
France – Vineyards hit by frost likely to get government financial assistance
Peru – February mining exports 14.6% YoY to $2.58bn
Currencies US$1.1895/eur vs 1.1882eur yesterday. Yen 109.47$ vs 109.56/$. SAr 14.575/$ vs 14.475/$. $1.370/gbp vs $1.377/gbp. 0.760/aud vs 0.764/aud. CNY 6.559/$ vs 6.550/$.
Commodity News
Precious metals:
Gold US$1,747/oz vs US$1,744/oz yesterday
Gold ETFs 99.4moz vs US$99.5moz yesterday
Platinum US$1,218/oz vs US$1,233/oz yesterday
Palladium US$2,636oz vs US$2,635/oz yesterday
Silver US$25.23/oz vs US$25.29/oz yesterday
Base metals:
Copper US$ 8,944/t vs US$8,982/t yesterday
Aluminium US$ 2,273/t vs US$2,269/t yesterday
Nickel US$ 16,625/t vs US$16,755/t yesterday
Zinc US$ 2,828/t vs US$2,844/t yesterday
Lead US$ 1,981/t vs US$1,986/t yesterday
Tin US$ 25,685/t vs US$25,810/t yesterday
Energy:
Oil US$63.0/bbl vs US$62.9/bbl yesterday
Natural Gas US$2.510/mmbtu vs US$2.494mmbtu yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$165.9/t vs US$164.5/t
Chinese steel rebar 25mm US$778.8/t vs US$779.6/t
Thermal coal (1st year forward cif ARA) US$71.0/t vs US$71.8/t
Coking coal swap Australia FOB US$148.5/t vs US$148.5/t
Other:
Cobalt LME 3m US$49,750/t vs US$49,750/t
NdPr Rare Earth Oxide (China) US$87,595/t vs US$87,713/t
Lithium carbonate 99% (China) US$12,655/t vs US$12,672/t
Spodumene 6% Li2O min, cif (China) US$660/t vs US$510/t
Ferro Vanadium 80% FOB (China) US$36.0/kg vs US$36.0/kg
Ferro-Manganese high carbon 78% Mn US$1,665/t vs US$1,665/t
Tungsten APT European US$270-278/mtu vs US$270-275/mtu
Graphite flake 94% C, -100 mesh, fob China US$520/t vs US$550/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,575/t vs US$2,525/t
Battery News
Chinese battery maker CNGR to build $243m nickel matte smelter
Chinese battery material maker CNGR Advanced Material Co reported yesterday that it would set up a joint venture in Indonesia to produce nickel matte for EV batteries.
CNGR is looking to produce mate in a $243m smelting project in Tsingshan, Sulawesi.
The project partnered with Singapore-based Rigueza will produce 30,000t of nickel matte per year (Reuters).
Electric trucks can compete with diesel ones
The view that battery-powered heavy goods lorries can’t compete with diesel is being challenged by new research. It was thought that extra batteries needed for freight would make EVs too expensive.
However, a new study says that if fast charging networks are built for trucks, then they can beat diesel in terms of cost.
The study from the Stockholm Environment Institute says that fast charging and not bigger batteries is the key to commercial competition for large-scale electric lorries.
In the study, the authors developed a model where an electric lorry operated for 4.5 hours and then charged for 40 minutes on a high-powered device. With heavy goods transportation focused on main roads, ports and terminals, it’s likely that a smaller number of chargers would be required than is needed for electric cars.
Japan, UAE to collaborate on hydrogen technology, supply chain
Japan and the United Arab Emirates have agreed to work together on technology to produce hydrogen and create an international supply chain.
The collaboration reflects mounting enthusiasm for investment in hydrogen, which offers potential to help fight climate change.
Japan set a goal in December to boost its annual hydrogen demand to 3 million tonnes by 2030, from about 2 million tonnes now, and to 20million tonnes by 2059, as part of a green growth strategy to reach net zero carbon emissions by 2050.
The aim of the agreement is that Japan should be able to import hydrogen produced in the UAE, which may be produced from fossil fuel but whose emissions are captured and used in the industry.
The two countries will also cooperate to boost hydrogen demand in the UAE.
Company News
Arc Minerals* (LON:ARCM) – 6.25p, Mkt cap £67m – Arc extends date for $5m payment from Golden Square by 120 days.
(Arc holds 72.5% of Zaco and 66% of Zamsort in Zambia. The Cheyeza license is 66% owned by Arc Minerals through its holding in Zamsort.)
Arc Minerals reports that it has extended the date of the $5m loan note that was due on 19 March from Golden Square by a further 120 days..
Arc also reports it has been informed by Golden Square of an approach to acquire the Casa Mining gold resources in the DRC.
Arc entered into a binding sale and purchase agreement with Golden Square on 18 March 2020 following the .
Under the agreement the loan note may be paid out in shares if the Casa assets are acquired by a listed entity.
The purchaser also assumed all existing liabilities in relation to the Casa licenses and any deal will also include a 3% royalty on the assets for Arc up to $45m.
Arc signed the deal with Golden Square following the mutual termination of a deal to sell Casa to Century Capital as announced on 23 January 2020.
*SP Angel acts as Nomad and broker. The analyst holds shares in Arc Minerals..
Alba Mineral Resources (LON:ALBA) 0.34p, Mkt cap £21.2m – Structural review of Limerick Basin licence
Alba Minerals reports that, following a review of the structural geology underlying its base metals licence in the Limerick Basin, it has decided to renew the licence and resume exploration.
The study, undertaken by Murphy Geological Services which has conducted similar evaluations in the Limerick Basin including of the Rathkeale project of Adventus Mining, the 5.1mt Stonepark project of Group Eleven and Arkle Resources*, as well as Group Eleven’s Pallas Green West project, incorporated aeromagnetic, gravity and satellite imagery “to help emphasize subtle topographic features in the poorly exposed terrain of the Limerick Basin which may represent the surface expression of major or second order structures as well as domal features which are commonly related to intrusive plugs or volcanic necks”.
Based on criteria including the “presence of major extensional faults, prominent … aeromagnetic and EM lineaments, the proximity to mafic intrusions, the presence of suitable stratigraphy and the presence of anomalous Zinc (Zn) and/or Lead (Pb) values in soil samples” the review has identified three promising targets for the continuing exploration.
The first target is “located in the hanging-wall of a WNW-ESE trending major extensional fault i… which is cross-cut by a NW-SE trending structure … ]providing] … potential for base metal mineralization within the fault wedge bounded by the WNW-ESE and NW-SE trending faults due to the migration of mineralizing fluids along the WNW-ESE trending structure”.
The second target is also located in the hanging wall of another WNW trending extensional fault at a point where the “structure undergoes a NW-SE trending strike swing to the southeast” in proximity to a geophysical magnetic ‘high’ thought to be a deeply buried mafic intrusion which “could have acted as thermal drivers for the migration of mineralizing fluids”.
A final target of interest has been identified in the hanging wall of the Coonagh Castle Fault which cuts across the Limerick Basin on an ESE trend and runs through a number of know mineral deposits “at Pallas Green and further east and north through the Lisheen and Galmoy deposits”.
Previous drilling at these targets has identified favourable lithologies although mineralisation of substance appears to remain elusive so far.
“Alba's technical team will now further assimilate the results of this structural review and move thereafter to the detailed planning of a field programme encompassing the three exploration targets”.
Conclusion: An early stage geological review has identified promising base metals targets within the Limerick Basin leading Alba Minerals Resources to renew its exploration licence. We await news of further progress once field exploration resumes.
*SP Angel are Nomad and broker to Arkle Resources
IronRidge Resources* (LON:IRR) 21.9p, Mkt Cap £99.2m – Financial Controller appointed
IronRidge reports that it has appointed Mr Mark Schild as full-time Group Financial Controller.
Mark is a Chartered Accountant with over 20 years' experience working at a senior finance level mainly in financial institutions and fast paced technology businesses.
Vincent Mascolo, Chief Executive Officer of IronRidge, said: "We are delighted to welcome Mark Schild to our management team here at IronRidge, it is testament to the reputation of the Company that we have been able to attract senior Finance Managers of his calibre.”
*SP Angel act as Nomad for IronRidge Resources
Power Metal Resources* (LON:POW) 2.35p, Mkt cap £25m – Drilling of potential magmatic feeder zone at the Molopo Farms Complex, Botswana
Power Metal Resources reported yesterday that, following the completion of three exploratory drill-holes at the Molopo Farms Complex in south-western Botswana inspection of the core and limited mineralogical analysis conducted by the University of Witwatersrand has detected the presence of nickel sulphide minerals and “demonstrated the geological model for the presence of a magmatic feeder zone prospective for the accumulation of Ni/PGE sulphides in the intrusive system”.
The company explains that as, at this stage, the analysis is limited to selective sections of the core, “the reported mineralised intervals are considered to be open”.
The results reported, however, include a section in hole KKME 1-6 of 4.1m length averaging 0.49% nickel from a depth of 309m and including a 1.6m long section averaging 0.72% nickel from 309.6m.
Additional mineralised sections are reported both above and below this depth from the hole and augment the results, reported on 30th March, from holes IMK-05139 of a 0.44m intersection averaging 0.7% nickel from 310m depth, a 0.58m long zone averaging 0.66% nickel from 295m depth in hole IMK-05149 and a 0.54m long intersection averaging 0.22% nickel from 297m down-hole in IMK05153.
The company also reports that “The third drill hole at the MFC Project, KKME 1-11a (into Target 1-11a), has been completed to a downhole depth of 502.4m. The 60-degree inclined hole was drilled to intersect a conductive body, associated with a prominent magnetic response, modelled from geophysical survey data. KKME 1-11a is located in the Project's Chipo (Gift) Northern Target Area, and 1,250m west of the programme's first drill hole KKME 1-14 and still within the shear zone interpreted as the Molopo Farms Complex Feeder Zone”. Logging and sample selection for analysis will follow.
Commenting on what he described as these early stage results from reconnaissance drilling, CEO, Paul Johnson, said that “it is extremely positive to identify nickel mineralisation as confirmed today …[and that] … these results corroborate the earlier identification of Pentlandite, the primary nickel sulphide mineral, in the mineralogical samples previously submitted to Witwatersrand University”.
Mr. Johnson also commented that “The nickel mineralisation encountered in this drill hole includes sections at grades that have been found to be economic in similar geologies and given the scale of the inferred feeder zone being investigated there is a good prospect of further positive results as exploration continues”.
*SP Angel act as Nomad and Broker to Power Metal Resources
Pure Gold Mining (LON:PUR) 86.5p, Mkt Cap £346.7m – C$15m bought deal financing
Pure Gold Mining reported on Thursday that it has raised C$10,001,600 through an agreement with Clarus Securities. The company reports this morning that, due to strong demand, it has agreed to increase the size of the offering to 9,868,400 flow-through common shares for aggregate gross proceeds of C$14,999,968.
The offering is expected to close on the 5th of May 2021, subject to conditions and regulatory approvals.
The company plans to use the proceeds from the offering to fund “Canadian development expenditures”, as defined in the Income Tax Act in Canada.
Tirupati Graphite (LON:TGR) 102p Mkt Cap £76.3m – Record Q1 sales support expansion of further capacities
Tirupati reports that is achieved record production and sales in Q1 2021 from its Sahamamy 3,000tpa primary graphite mining and processing operations in Madagascar.
At Sahamamy, the company achieved record sales of 97% nameplate capacity of high-quality flake graphite concentrate with up to 96% purity during Q1 2021 which was shipped to customers.
Tirupati is currently working to increase production capacity to 84,000tpa by 2024 in several phases.
The company’s Vatomina asset remains on track to be commissioned in Q2 2021, with shipments expected to commence this quarter- taking total capacity in Madagascar to 12,000tpa.
Exploration activity is continuing across both projects in order to expand the existing mineral resource inventory, the company reports.
Shishir Poddar, CEO of Tirupati Graphite, commented: “The increase in capacity in Madagascar to 12,000tpa is an important near-term milestone, being the current key revenue source for the Company, and positive step in our existing plan to increase capacity to 84,000tpa by 2024.”
"We are growing at a particularly opportunistic time. In particular, the key role of flake graphite graphene in the green economy is being recognised across the globe with the likes of UBS, The World Bank and many others releasing reports suggesting increasing demand for this critical material could cause the market to grow in double digit CAGR.”
Versarien* (LON:VRS) 42.3p, Mkt cap £80.3m – Graphene lab makes £1.93m strategic investment in Company
Versarien reports that it has entered into a wide-ranging series of agreements with Graphene Lab - a South Korean based company.
The investment of £1.93m is through a subscription for 4,280,000 new Ordinary Shares at an issue price of 45 pence per Ordinary Share.
Graphene Lab specialise in chemical vapor deposition graphene, including: sensors, OLEDs, and flexible transparent touch panels.
The investment aims to advance both Versarien's and Graphene Lab's proposed activities in South Korea, following Versarien’s acquisition of certain graphene production related assets and intellectual property from South Korea based Hanwha Aerospace in December 2020.
The Agreement provides a licence to Graphene Lab to utilise, exclusively in South Korea, 14 of the patents acquired through the Acquisition for a 5% royalty on sales payable to Versarien.
Graphene lab has the right to use certain Versarien trademarks on payment of a 2% royalty on sales to Versarien.
Neill Ricketts, CEO of Versarien, commented: "We are delighted to have secured this agreement with Graphene Lab, which will enable us to advance our plans in South Korea, following the Acquisition in December. I am also pleased that our partnership with Graphene Lab has been further reinforced by the stake they have taken in Versarien. We are excited by the opportunities for Versarien in South Korea, including for new product developments, and we look forward to providing updates in due course."
*SP Angel acts as nomad and Broker for Versarien. An SP Angel analyst has visited Versarien graphene manufacturing facilities.
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
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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
NYMEX
Thermal Coal
Bloomberg OTC Composite
Coking Coal
SSY
RRE
Steelhome
Lithium Carbonate, Ferro Vanadium, Antimony
Asian Metal
Tungsten
Metal Bulletin