SP Angel . Morning View . Wednesday 30 06 21
Battery metals continue to rise despite slower China PMIs
producer funding – EIS approved
The company wishes to fund a ramp up in graphene production to get ahead of demand and to develop markets for a number of new, graphene products
The business is also able to upgrade graphite to a higher grade/specifications using its process – rolling out this process also requires funding
Please email if you wish to invest in the company
*SP Angel’s role is limited to making introductions and interested parties should be aware that investment in a private company can present certain risks not present in listed companies (e.g. limited or no liquidity and no rules compelling disclosure of information to investors). This offer is open to professional investors only and is not offered to retail investors.
Amur Minerals* (LON:AMC) – New JORC report ups scale and resource confidence at Kun Manie & FY20 results
Ariana Resources (LON:AAU) – Drilling results from Kepez
Bluejay Mining* (LON:JAY) – Force majeure declared at Rio Tinto’s Richards Bay mineral sands operation will tighten market further
BlueRock Diamonds (LON:BRD) – Results reaffirm targets for 2021 and beyond
Bushveld Minerals* (LON:BMN) – Vanadium prices rise as Bushveld reports tough Covid-19 year
Glencore (LON:GLEN) – CEO Ivan Glasberg departs
Rainbow Rare Earths* (LON:RBW) – Rainbow continues negotiations in Burundi as government temporarily suspends trial mining and processing license
Rambler Metals and Mining* (LON:RMM) – US$50m financing and operations outlook for the Ming mine complex
Rio Tinto (LON:RIO) – Force majeure declared at Richards Bay
Dow Jones Industrials +0.03% at 34,292
Nikkei 225 -0.07% at 28,792
HK Hang Seng -0.45% at 28,864
Shanghai Composite +0.50% at 3,591
Economics
US – House price climbed the most in more than 30 years in April marking the 11th straight month that price gains accelerated, according to the property prices index.
“April’s performance was truly extraordinary… we have previously suggested that the strength in the US housing market is being driven in part by reaction to the Covid pandemic, as potential buyers move from Urban apartments to suburban homes… April’s data continue to be consistent with this hypothesis,” S&P Dow Jones Indices commented on the data.
Separate report showed consumer confidence climbed in June to a fresh pandemic high as the US became more upbeat about the economy and job market, Bloomberg reports.
“While short-term nflation expectations increased, this had little impact on consumers’ confidence or purchasing intentions… In fact, the proportion of consumers planning to purchase homes, automobiles, and major appliances all rose—a sign that consumer spending will continue to support economic growth in the short-term,“ Conference Board commented on the report.
S&P 20-City House Prices (%yoy): 14.9% v 13.4% in March and 14.7% est.
Conference Board Consumer Confidence: 127.3 v 120.0 in May and 119.0 est.
China – Latest official PMI numbers showed growth momentum slowed down in June.
Supply chain problems continued to weigh on manufacturing amid recent computer chip, coal and power supply shortage.
On a positive side, price pressured eased with both input and output prices of manufacturers falling significantly, suggesting the government’s measures to increase supply of some commodities and steady prices are starting to work, Bloomberg writes.
Regional Covid-19 outbreaks had a negative effect on the services sector, with indexes tracking air transport, hotels and catering sectors contracting in the month, the NBS said.
Manufacturing PMI: 50.9 v 51.0 in May and 50.8 est.
Services PMI: 53.5 v 55.2 in May and 55.3 est.
Composite PMI: 52.9 v 54.2 in May.
Consumer spending accounts for 54.3% of 2020 GDP vs 53.2% average between 2011/19 compared with advanced economies consumer spending at 70-80%.
Chinese Communist Party centenary on Thursday
The party will highlight the commissioning of the Baihetan Hydropower Station in south-west China with capacity of 62.4tWh.
More than 100 Chinese coal mines halt operations for centennial
Miners in China are haltering operations to commemorate the CCP’s 100th anniversary celebration later this week.
In the country’s biggest coal producing province, Shanxi, 128 coal mines accounting for 25% of the region’s capacity have suspended operations.
In Hubei, all of the province’s 17 coal mines are halted until the 5th of July, and the widespread halt in operations is expected to put further pressure on an already tight market.
Prior to this, coal futures in China have surged to record levels amid a ramp up in safety inspections and the banning on Australian imports.
In an attempt to cool runaway commodity prices including coal, the government has implemented measures including raising trading fees on exchanges – however prices are still up 40% YoY.
Japan – May industrial output falls -5.9% on month prior vs -2.1% estimates
Germany – Better than expected June employment data released today reflect a robust recovery as ongoing vaccination helped shops and restaurants to reopen.
Unemployment fell by 38k nearly twice as high as expectation with unemployment rate down at 5.9%, matching the previous month that was revised lower.
Services sector is expected to add to growth momentum after manufacturers held up relatively well during the most recent round of restrictions.
“Unemployment and underemployment continued to fall sharply… companies are further reducing short-time work and are again looking for new staff,” labour agency chief said in a statement.
UK – Economy shrinks -1.6% in Q1 on three months prior amid lockdown restrictions
In the three months to March, UK GDP contracted 1.6% following a growth of 1.3% in Q4 2020.
On an annual basis, the UK economy shrank by 6.1% in Q1, in line with market estimates.
The largest contributors to the fall in activity were from the education, wholesale & retail trade, and accommodation & food services industries, in particular at the beginning of the quarter in response to the tightening of coronavirus restrictions.
In January, England entered into lockdown for a third time with only essential retailers allowed to operate.
France – Inflation rate picked up in June, although, price growth pressures remain less well pronounced than across the Atlantic.
CPI (%mom, EU Harmonised): 0.2 v 0.3 in May and 0.2 est.
CPI (%yoy, EU Harmonised): 1.9 v 1.8 in May and 1.9 est.
Currencies
US$1.1894/eur vs 1.1911/eur yesterday. Yen 110.49/$ vs 110.65/$. SAr 14.228$ vs 14.303/$. $1.383/gbp vs $1.386/gbp. 0.752/aud vs 0.755/aud. CNY 6.455/$ vs 6.456/$.
Commodity News
Precious metals:
Gold US$1,758/oz vs US$1,774/oz yesterday
Gold ETFs 100.8moz vs US$100.9moz yesterday
Platinum US$1,065/oz vs US$1,089/oz yesterday
Palladium US$2,686/oz vs US$2,674/oz yesterday
Silver US$25.81/oz vs US$26.02/oz yesterday
Base metals:
Copper US$ 9,392/t vs US$9,296/t yesterday
Aluminium US$ 2,554/t vs US$2,516/t yesterday
Nickel US$ 18,470/t vs US$18,225/t yesterday
Zinc US$ 2,954/t vs US$2,913/t yesterday
Lead US$ 2,332/t vs US$2,247/t yesterday
Tin US$ 31,610/t vs US$31,320/t yesterday
Energy:
Oil US$74.8/bbl vs US$74.5/bbl yesterday
Oil prices reversed earlier losses yesterday after OPEC+ expressed optimism that the market looks “significantly improved,” while major importer India called on the group once again to ease the cuts and stop the price rally, which threatens demand recovery from price-sensitive buyers
The market reacted today to the bullish outlook from OPEC+, which began its meetings this week with a review of the oil market and future growth prospects
On Monday and in Asian trade early on Tuesday, oil prices ticked down as health experts warned of the rapidly spreading Delta variant of COVID, which has already prompted several countries in Europe, which are popular holiday destinations for UK tourists, to impose quarantines for non-vaccinated UK residents
The potential economic and fuel demand impacts of a spreading Delta variant will likely be the key factors in oil price trends this week
The OPEC+ alliance is expected to decide tomorrow how to proceed with its collective production cuts
The group, which has been gradually easing those cuts in recent months, is estimated to keep as much as 5.7MMbopd off the market
But India, the world’s third-largest oil importer, called on OPEC+, again, to rein in the price of oil which, at US$75/bbl, threatens their oil demand recovery
Natural Gas US$3.702/mmbtu vs US$3.576/mmbtu yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$206.0/t vs US$211.5/t
Chinese steel rebar 25mm US$756.0/t vs US$757.9/t
Thermal coal (1st year forward cif ARA) US$85.3/t vs US$85.7/t
Coking coal swap Australia FOB US$172.0/t vs US$172.0/t
China’s ICBC scraps plans to fund $3bn coal plant in Zimbabwe
China’s biggest bank has walked away from plans to fund a $3bn coal-fired power plant in Zimbabwe.
The Industrial and Commercial Bank of China told environmental activists that it wouldn’t fund the 2,800MW Sengwa coal project in Northern Zimbabwe.
Last year, the ICBC signed a formal notice of interest in funding the plant, that would be constructed by China Gezhouba Group.
The Chinese lender is under increasing scrutiny over the environmental impact of funding coal projects, and has previously commented its looking to formulate “a clear road map to stop funding coal”
The project’s owner, Rio Energy, is reportedly now seeking alternative financers for the project.
Other:
Cobalt LME 3m US$48,580/t vs US$44,555/t
NdPr Rare Earth Oxide (China) US$73,507/t vs US$72,955/t
Lithium carbonate 99% (China) US$12,393/t vs US$12,392/t
China Spodumene Li2O 5%min CIF US$690/t vs US$690/t
Ferro-Manganese European Mn78% min US$1,945/t vs US$1,948/t
China Tungsten APT 88.5% FOB US$273/t vs US$272/t
China Graphite Flake -194 FOB US$515/t vs US$515/t
Europe Vanadium Pentoxide 98% 8.9/lb vs US$8.9/lb
Europe Ferro-Vanadium 80% 42.25/kg vs US$42.25/kg
Spot CO2 Emissions EUA €54.20/t vs €54.20/t
Battery News
Lithium Australia gains European patent for processing technology
Lithium Australia has extended its patent for unique lithium processing technology through Europe as it seeks to build on commercialisation agreement with Deutsche Rohstoff.
The company is also looking to step up talks with spodumene concentrate suppliers and lithium chemical manufacturers regarding the potential use of the technology.
The LieNA processing technology can significantly improve the metallurgical recovery of lithium from fine and low-grade spodumene which otherwise would be discarded as waste. The technology can recover lithium without roasting and produce direct feed for production of lithium-ferro-phosphate (LFP) batteries.
Lithium Australia Managing Director Adrian Griffin said, “Lithium Australia continues to focus on developing novel solutions to lithium processing problems. Commercialisation of the LieNA process will be an opportunity to improve the sustainability of the lithium-ion battery industry, which drastically needs to reduce its environmental footprint.”
The patent for the LieNA lithium processing technology has been granted for 20 years
Canada – temperature records broken for third consecutive day
Temperatures reached 49.5C as unprecedented heatwave continues.
Before Sunday, temperatures had never reached above 45C in Canada, with experts warning that climate change will continue to increase the frequency of extreme weather.
UK – new UK law to replace EU state aid rules
New legislation, set to replace EU rules, will grant the government and councils greater freedom to support businesses.
The Subsidary Control Bill will replace the EU-wide state aid rules which require member states to seek approval to provide government assistance to firms.
The bill will remove much of the ‘red-tape’ that businesses came up against, when applying for government support, when the UK was still part of the EU.
Company News
Amur Minerals* (LON:AMC) 1.6p, Mkt Cap £23m – New JORC report ups scale and resource confidence at Kun Manie & FY20 results
The Company released updated JORC Kun Manie MRE as well as FY20 results this morning.
New MRE expanded total mineral inventory by 14% with little change in grades translating into a 14% and 15% increase in contained nickel and copper compared to the previous 2018 RPM estimate.
Additionally, updated MRE is a higher confidence estimate with Measured and Indicated category accounting for ~85% of the total, up from ~75% in 2018.
Updated MRE includes:
148mt at 0.75% Ni and 0.21% Cu for 1,114kt Ni and 310kt Cu contained in the Measured and Indicated category;
29mt at 0.69% Ni and 0.20% Cu for 204kt Ni and 58kt Cu contained in the Inferred category;
178mt at 0.74% Ni and 0.21% Cu for 1,318kt Ni and 368kt Cu contained in total mineral resource (+14% on tonnage and +14%/15% on contained Ni/Cu from 2018 RPM estimate).
Update estimate is based on a 0.3% NiEq cutoff grade, down from 0.4% NiEq used before, reflecting higher US$/t ore values as the current flowsheet incorporates a separate copper concentrate production stream whereas previous resource estimates were based on a single nickel only payable concentrate being produced with zero revenue contribution being derived from the copper.
Interestingly, applying lower COG has not translated into a drop in total MRE grade suggesting the resource should be including higher grade zones supported by new drilling data that should help overall economics of the project.
On FY20 financial results, the Company recorded a $2.7m loss (FY19: -$2.3m) on the back of $3.1m administrating costs (FY19: -$2.0m).
Higher administration costs reflect increased employee salary increases ($1.4m v $1.1m in 2019), professional fees attributed to TEO work ($0.9m v $0.4m in 2019) as well as additional costs driven by the hiring of a new Officer and Adviser.
The Company remained debt free with $2.8m in the bank as of Dec/20 (Dec/19: $0.4m).
Earlier this year the Company secured a one year extension to the delivery date of the Kun Manie TEO to 1 December 2021 as works were delayed by the onset of the pandemic.
The TEO is a mandatory Russian feasibility study, independently compiled, addressing the physical and operating project considerations and paving the way for registration of a project's mineral reserve by the State Committee on Reserves.
The majority of TEO related work has already been accomplished including hydrological assessment, rock mechanics study, metallurgical tests confirming the viability of two separate concentrates (nickel and copper) production, process flowsheet and operating costs refinement as well as base line environmental assessment.
In Aug/20, the Company invested $4.7m in a Convertible Loan Note on Nathan River Resources that is developing the Roper Bar Iron Ore Project at the time of record high iron ore prices.
Three year notes are paying a 14% coupon (ie ~$0.7m pa) and are convertible into 17% of the issued share capital of NRR.
In FY21, the Company is focused on finalising and submitting the Kun Manie TEO while advancing financing discussion with potential offtake partners to advance Feasibility Study programme.
The BFS provides the necessary technical, environmental and economic detail for institutional investors to advance funding for construction and into production.
Conclusion: Updated mineral resource estimate grows the scale of Kun Manie (+14%) as well as significantly improves confidence in the estimate with nearly 85% of the resource attributed to the Measured and Indicated category to be used in the derivation of mineral reserves. The Company is continuing to progress Russian TEO as well as discussions with potential offtakers regarding funding for FS stage works.
*SP Angel act as Nomad and Broker to Amur Minerals
Ariana Resources (LON:AAU) 5p, Mkt Cap £52.1m – Drilling results from Kepez
Ariana Resources has reported results from recent infill resource drilling at the Kepez North area around 6.5km northeast of its 23.5% owned Kiziltepe mine in Turkey.
The “Kepez North vein was previously defined from historic drilling to be shallowly dipping to the west at approximately 40 degrees” and the recent programme comprised five shallow, vertical drillholes totalling approximately 300m with a maximum individual hole depth of 83.2m
Among the results highlighted in today’s announcement, are:
A 2.7m wide intersection from a depth of 23m in hole KPZ-D02-21 with average grades of 15.26g/t gold and 90.7g/t silver; and
A 2.6m wide intersection from a depth of 28.5m, also in hole KPZ-D02-21 with average grades of 5.75g/t gold and 9.2g/t silver; and
A 6.05m wide intersection from a depth of 28.85m in hole KPZ-D03-21 with average grades of 2.34g/t gold and 22.5g/t silver; and
A Single metre intersection from a depth of 40.6m in hole KPZ-D04-21 at an average grade of 2.16g/t gold and 1.0g/t silver.
The company confirms that a “revised resource update is well underway, and an upgrade to the resource classification (confidence) and increase to overall ounces of the current JORC resource (c. 220,000t @ 2.08g/t Au + 14.7g/t Ag for 15,000 oz Au + 104,000 oz Ag, Indicated and Inferred) is expected”.
Ariana Resources also reports that “In addition to the latest drilling intercepts of in-situ vein material, the new drilling has also intercepted a body of highly mineralised scree, located above the western flank (hanging wall) of the Kepez Main vein.”
Results from this area include:
An intersection 4.5m from surface in hole KPZ-D03-21 at an average grade of 10.21g/t gold and 133.8g/t silver; and
Another intersection 4.5m from surface in hole KPZ-D02-21 at an average grade of 8.26g/t gold and 107.3g/t silver; as well as
An intersection of 1.5m from surface in hole KPZ-D01-21 at an average grade of 5.02g/t gold and 51.0g/t silver
Managing Director, Dr. Kerim Sener, explained that the “Kepez area has always been an enigmatic jewel in the portfolio. Our earliest work at the site undertaken in 2005, confirmed the presence of very high gold grades in mineralised surface scree. However, follow-up drilling in 2006 along strike and down dip of the structure, while encountering vein mineralisation, did not provide many significant intercepts. Despite this, further work over the years, concentrating in a limited area of 150m by 150m, continued to confirm the presence of very high-grade precious metal mineralisation. The latest drilling was the first to be conducted in the central part of this unique area and demonstrates, for the first time, the potential for a northwest trending high-grade mineralised shoot, cutting across the main vein structure, and which dips at about 40 degrees to the west”
He says that “his new data will lead to a revised resource estimate for Kepez, which now shows the potential for a significant grade boost”.
Conclusion: The identification of an area of high-grade mineralisation close to the Kiziltepe mine, albeit in aa enigmatic geological setting, provides scope for blending higher grade material into the mill feed over the longer term. In the interim, we look forward to the outcome of resource estimation revisions currently underway.
Bluejay Mining* (LON:JAY) 11p, Mkt cap £107m – Force majeure declared at Rio Tinto’s Richards Bay mineral sands operation will tighten market further
BUY - Valuation 37.7p
Rio Tinto’s declared force majeure at Richards Bay mineral sands will tighten the market for ilmenite concentrates and titanium dioxide further.
The suspension of operations due to an escalating security situation at Richards Bay is bad news for consumers of material out of Richards Bay and is likely to raise ilmenite concentrate and titanium dioxide prices in an already tight market.
*SP Angel act Nomad and broker to Bluejay. The analyst has previously visited the Enonkoski mine site in Finland. The analyst holds shares in Bluejay Mining.
BlueRock Diamonds (LON:BRD) 41.3p, Mkt cap £6m – Results reaffirm targets for 2021 and beyond
BlueRock report results for 2020 when 46 days were lost to the Covid pandemic as well as disruption to diamond sales combined with lower than expected pricing.
Mining restarted on 11 May 2020 following the South African lockdown and with the benefit of modifications to the plant, improving throughput and a 24% increase in processing.
BlueRock are recovering from a difficult year when DeBeers and Alrosa closed diamond mines and the closure of diamond markets, cutting centers and retail outlets caused significant disruption within the diamond sector.
BlueRock were fortunate as a private buyer from HK continued to buy their production through the second half albeit at reduced prices from the Kimberley sales in South Africa.
The recovery of a number of larger, gem-quality stones also helped to boost sales.
These sales ensured continuing cash flow through much of 2020 enabling management to optimise the 2021 expansion plan.
Management are targeting production of 30,000cts this year rising to 40,000cts next year
The company raised £1.7m in equity in 2020 and a further £1.61m by way of a convertible loan this year to fund the mine and plant expansion and cover losses incurred through the lockdown.
Commissioning of the new plant is expected shortly with processing capacity for 1mpta of kimberlite material.
Diamond prices have now recovered to realise $424/ct through the first five months of the year, including the sale of some higher value stones.
Sales fell to $3.6m in 2020 vs $4.1m in 2019 largely due to lower diamond prices despite improved performance in the second half.
Operating expenses increased to $5.7m from $4.4m due to work on the mines and plant as well as an increase in throughput despite the lockdown.
BlueRock report a total comprehensive loss of $2.6m for 2020 vs a loss of $0.7m in 2019 largely due to Covid-19 lockdowns and lower diamond prices.
Conclusion: BlueRock management worked hard to ensure the ongoing survival of the business through the Covid-19 lockdown. The commissioning of the new plant will be a significant event for the group and should enable a step change in diamond production and sales.
While South Africa continues to suffer ongoing disruption from a further wave of Covid-19 infections we feel confident that BlueRock will perform better from here.
*SP Angel act as nomad and broker to BlueRock Diamonds
Bushveld Minerals* (LON:BMN) 14.33p, Mkt cap £170m – Vanadium prices rise as Bushveld reports tough Covid-19 year
(Bushveld Energy holds an indirect interest of 25.25 per cent in Enerox. Bushveld is invested in Enerox alongside a <3% in Invinity Energy Systems.)
Bushveld Minerals reported revenue of $90m for 2020 vs $117m in 2019 reflecting lower sales due to the Covid-19 lockdown and lower vanadium prices as customers deferred purchases causing vanadium prices to pull back,
Cost of sales rose to $91m vs $56m a year earlier as Vametco and Vanchem continued to maintain and improve their operations,
Other operating income rose to $2.3m in 2020 from $0.9m in 2019.
Sales and distribution costs reduced to $4.8m from $7.6m on reduced sales and low vanadium pricing.
Other mine operating costs rose to $4.7m vs $3.9m yoy
Idle plant costs rose to $4.2m vs $2.9m due to the lockdown and other maintenance.
Administration expenses fell to $19.8m vs $24.7m yoy..
Operating losses rose to $32.8m versus an operating profit of $22.2m a year earlier.
Post tax losses rose to $37.2m in 2020 vs a profit of $69.3m in 2019.
Bushveld recorded a $13.5m gain as a result of fair value movements including gains to investments in AfriTin, Invinity Energy Systems and Enerox Holdings..
Currency translation differences resulted in the reclassification of a further $10.4m loss vs a gain of $6.4m in 2019.
Bushveld report a total comprehensive loss of $34m for 2020 vs a profit of $75m in 2019
Management report record vanadium production of 3,631mtV in 2020 vs 2,931mtV in 2019 with a solid performance from the new Vanchem acquisition despite the lockdown and its impact.
Unit costs fell to $29/kgV vs $37/kgV reflecting higher production.
EBITDA losses came to $14.9m from an EBITDA profit of $32.6m a year earlier due to lower vanadium prices.
Cash and cash equivalents of rose to $50.5m to the year-end from $34.0m due to $65m of funding from Orion Mine Finance. Cash and cash eq now stand at $31m as at 27 June.
The funds should enable production to increase to 5,400mtVpa from 5,000mtVpa by end-2022.
Bushveld signed its first electrolyte rental agreement in a jv with Invinity and Pivot Power (EDF)
Debt: Bushveld holds a ZAR125m Revolving Credit Facility and has a $11.5m convertible with Duferco with $5m payable in November and the $6.5m convertible in to Bushveld equity..
Electrolyte plant: started construction in June for 200MWh of vanadium electrolyte capacity
Guidance: Bushveld has revised group production guidance to 3,400-3,600mtV for 2021 due to a slower restart to production after the 35-day maintenance in Q1 and unforeseen mechanical breakdowns.
A further six-days of unprotected industrial action in April didn’t help either.
Vametco guidance:
Production guidance is revised lower to 2,300-2,400mtV vs 2,700- 2,850mtV vs 2,700-2,850mtV previously.
Cash cost revised to $23.7-24.20/kgV vs $20.0-21.30/kgV previously.
Vanchem guidance:
Vanchem's guidance revised to 1,100-1,200mtV vs 1,400- 1,500mtV previously due to delays in steel deliveries.
Cash costs revised to $30.3-31.1/kgV vs $26.20-26.70/kgV previously.
Vamchem's capex revised lower to $11.3m vs $15.7m presumably due to delays to the work being done.
Bushveld is keen to grow group production to a run rate of 5,000-5,400mtVpa by end-2022 with Vanchem production rising to 2,600mtVpa.
Group production may rise further to 6,400-6,800mtVpa in the medium-term and to 8,400mtVpa in the longer term depending on the availability on capital and the outcome of ongoing feasibility work.
A cost savings programme of $2.5-4mps is to start from 2020.
Capital expenditure is forecast at $26.8m for this year of which $8.6m has already been spent including $6.0m at Vametco, $11.3m at Vanchem and $9.5m at Bushveld Energy.
Cellcube has been selected to supply a 4 MWh VRFB for the Vametco mini-grid project to demonstrate the business case of self generation solutions using PVsolar and VRFB systems.
Vanadium prices are holding at CNY196,000-199,000/kgV ($39.7/kgV) in China according to Asianmetal.com.
*SP Angel acts as Nomad and broker to Bushveld Minerals.
Glencore (LON:GLEN) 307p, Mkt cap £40.9bn – CEO Ivan Glasberg departs
Glencore have confirmed that their group CEO has retired today.
Gary Nagle will succeed him as CEO and Director with effect from tomorrow, 1 July 2021
Rainbow Rare Earths* (LON:RBW) 14.4p, Mkt Cap £68m – Rainbow continues negotiations in Burundi as government temporarily suspends trial mining and processing license
(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 report the temporary suspension of their trial mining and processing license in Burundi.
Management continue to negotiate with the Burundi government .over the operation of the Gakara rare earth mine.
George Bennett, Rainbow’s ceo is due to arrive in Burundi on Monday to continue negotiations with the ministry on exports and mining.
Rainbow currently hold ~420t of rare earth concentrate ready for export.
Conclusion: The real value in Rainbow is in the Phalaborwa project which offers low cost extraction of Nd, Pr, Tb and Dy in value-added form. While there is value at Gakara in Burundi, the company needs to invest in the mechanisation of the mine and further refinement of concentrates to realise a reasonable return from the operation.
We see 4-5 times more value in Phalaborwa than in Gakara in our modelling depending on management’s decision to move to extract Tb/Dy in addition to the basic Nd/Pr extraction plant.
*SP Angel act as broker and financial advisor to Rainbow Rare Earths
Rambler Metals and Mining* (LON:RMM) 0.33p, Mkt Cap £31m – US$50m financing and operations outlook for the Ming mine complex
(Rambler owns 100% of the Ming Copper-Gold Mine)
Rambler Metals & Mining has announced a US$50m financing package as it moves ahead with the development of deeper mineralisation and the post-Covid19 restoration and subsequent expansion of mining rates at its Ming mine in Newfoundland.
The financing comprises a 3 year senior debt agreement for US$20m and a convertible note component of up to US$30m.
Rambler has a binding agreement with “Newgen Resource Lending Inc. ("NewGen"), an institutional investor based in Toronto, Canada” for a US$20m senior secured loan which will provide an initial US$15m on closing (expected to be by 31st August 2021) and a further US$5m “towards the end of this year after certain conditions are met”.
The loan, which is secured by the company’s assets, attracts interest at the greater of the US$ 3 month Libor plus 8% or 9.75% and interest is payable monthly. Principal repayments “will commence the month following the first anniversary of the closing date and be paid monthly thereafter”.
Rambler will issue warrants over 1.5m new shares to Newgen. The warrants are valid for a period of 4 years from the date they are granted and have “an exercise price equal to a 30% premium to the lesser of 20-day VWAP prior to the closing date and the closing price on 29 June 2021”.
Newgen will also receive a “gold equivalent payment in total of 300 ounces over three years”.
In addition, the unsecured note, with Riverfort Global, comprises an initial US$2m tranche, followed by 2 further tranches each also of US$2m available at the company’s request before the end of 2021 followed by further advances of up to US$24m “subject to the Company and noteholders mutual consent and is conditional on necessary shareholder approval to increase the authority to issue shares”.
. The notes, which are non-interest-bearing, are convertible into shares at “at a price of the lower of:
a 40% premium to the average of five-day VWAP (“Fixed Conversion Price”) immediately prior to the drawdown of each advance; and
the average of the five lowest daily VWAPs of ordinary shares of Rambler during the 20 trading days immediately preceding the date of any conversion notice”.
CEO, Toby Bradbury explained that the “funds will enable us to continue the underground development in the Lower Footwall Zone that provides the necessary flexibility in mine production sources going forward …[and he explained that the additional funds support] … a strategy to provide sustainable underground mine production over the medium and long term from an asset that has been under-capitalised and run down in recent years”.
He explained that “This is not an instant turn around and our focus is to achieve a developed state that will enable full utilisation of the mill at 1,350 tonnes per day by the end of 2021”.
He stressed the quality of the Ming mine’s resource base, where, in May, the company announced an increased reserve estimate which we estimate provides reserves equivalent to over 15 years production and the planned 1,350tpd mining rate. We also estimate that during the three years between 1st April 2018 and 31st March 2021 the Ming Mine treated just over 1mt of ore at an average grade of 1.44% copper while over the same period around 1.7mt at an average of over 2% copper were added to its Measured & Indicated resource inventory.
He also confirmed that the “diamond drilling that has been completed is visually encouraging and is also returning mineralised intersections in zones previously not identified. A full drilling update will be provided once the assays are returned from the laboratory” and that drilling is expected to continue throughout 2021.
As well as the announcement of the financing Rambler has taken the opportunity to explain its operational objectives for 2021 and 2022 to build on the work completed so far which includes:
The completion of dewatering the lower levels of the mine, which was achieved in February and installation of an upgraded pumping system; and
Progress on developing the ventilation system in order to support increased mine development rates and multiple working areas in the lower parts of the mine; and
Upgrading of the mine’s underground power supply distribution and a continuing programme of maintenance and repairs to mining and milling equipment
In its Q1 report issued in May, the company also reported on
The completion of metallurgical test-work on ore-sorting which supports “the target estimate of 30% removal of ROM Feed as waste rock”. The company confirms that “ore sorting plant design work has been initiated with independent engineers with a view to start plant construction in 2021”; and
Increased underground mine development rates including a 56% increase in capital development to 579m during the quarter.
Expanding upon the progress in these areas, today’s announcement lays out operational plans and objectives on a six-monthly basis, for the period until the end of 2022.
These plans, which “includes the use of contractors for mine development” will increase ore production rates from 800tpd by the end of 2021 so that “By the end of 2021, there will be 6-7 active stoping fronts in the mine and 80% of 2022 production will be fully developed”.
In 2022, the company expects to “see steady production rates of ~1,500 tpd through H1, with rates climbing through H2 to reach 2,000 tpd by end of Q4”. The use of contractors “is expected to finish in Q1 2022 following which company crews will maintain development at ~5,200 meters for the remainder of the year”.
As a result of these measures, mining rates are expected to more than double during the second half of 2021 to deliver a total 315,725 tonnes of ore for the year with further increase of 28% in tonnage during both the first and second half of 2022 for a total of approximately 583,000t for the year.
The improvements in tonnage are driven by a more than doubling of total underground development during H2 2021 to 2,897m bringing the total to 4,310m for the full year as contractors deliver an additional 1,547m of planned development during the second half. Development rates are maintained at approximately the same level through 2022 which should assist in delivering 6-7 active stoping fronts by the end of 2021 and ensuring that greater certainty of the mine’s planned production profile can be delivered with “80% of 2022 production … fully developed”.
The revised production profile is expected to more than double saleable copper production with 3,572t of contained metal during H2 bringing the total for the full year to 5,249t with a further near-doubling to 10,229t for calendar 2022.
Commenting that the mine “has been under-capitalised and run down in recent years” Dr. Bradbury explained that “The financing secured provides a contingency to ensure that if production is delayed for any reason, the essential development and remedial work can continue. This provides resilience to the plan”.
The company’s decision to shelve “the anticipated purchase of the Duck Pond Mill… after the consideration of our financial resources and balance sheet” underlines the focus on the mine development as a priority given that the use of the additional mill and its relocation to the mine site was already planned for several years in the future.
In our view, the financing which was alluded to in the company’s Q1 results announcement in May, provides the necessary financial resilience for the company to implement a turn-around plan which it is expecting to show a doubling of copper output in H2 2021 compared with H1 and almost doubling output again in 2022. Equally significant however is that the measures being implemented lay the basis for the mine’s long-term sustainable future with the continuing drilling programme showing support for the geological interpretation of increasing mineralised widths and grades at depth.
Conclusion: Rambler Metals & Mining has secured finance for the implementation of its operational turn-around strategy at the Ming Mine to restore processing rates to 1,350tpd during 2021 and to position the mine for an increase to 2,000tpd by the end of 2022. The planned use of contractors to assist development rates in the short term is expected to see a doubling of the H1 copper output during H2 2021 and importantly to establish the developed ore reserves and multiple operating ore sources for production stability and further growth in 2022.
*SP Angel act as Nomad and broker to Rambler Metals & Mining
Rio Tinto (LON:RIO) – 5,977p, Mkt cap £100bn – Force majeure declared at Richards Bay
Rio Tinto has declared force majeure at its Richards Bay mineral sands project in South Africa, due to an escalation in the security situation at the operations.
All mining and smelting operations at RBM have been halted until further notice, with the company commenting that they will review the safety and security of operations and will look to restart once the situation improves.
Recent Interviews:
IGTV: Stock picks in the small-cap mining space: https://youtu.be/TxtMf6B2t8Q
Evolution of Chinese construction and implications for commodity demand: https://youtu.be/jB2nURL8uPw
VOX Markets: 10/06/21: https://audioboom.com/posts/7884446-john-meyer-talks-about-cornish-metals-empire-metals-anglo-american-ncondezi-energy-mkango-r
BBC: Catalytic converters https://www.bbc.co.uk/sounds/play/p09jl6c9
*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.
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The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
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
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Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
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+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
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