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Today's Market View - Arc Minerals, Bluejay Mining, Bushveld Minerals and more...

UK – May GDP numbers came in lower than expected showing a sharp deceleration in post pandemic economic rebound. The expansion was driven by the services sector amid reopening of indoor hospitality. Manufacturing was weighed down by a drop in the production of transport equipment on the back of supply chain challenges.

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SP Angel . Morning View . Friday 09 07 21

Metals prices rise as China considering monetary easing amid a slowing recovery

 

Graphene producer funding – EIS scheme approval applied for

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.

 

Arc Minerals* (LON:ARCM) – Arc Minerals to let exclusivity agreement with Anglo lapse

Bluejay Mining* (LON:JAY) – Targets defined for Outokumpu-type copper-cobalt- gold-silver deposits In Finland

BlueRock Diamonds (LON:BRD) – Q2 results show significant increase in tonnes processed

Bushveld Minerals* (LON:BMN) – Vanadium prices continue to rise in China

Keras Resources* (LON:KRS) – Commercial production commences at Diamond Creek

Power Metal Resources* (LON:POW) – Presentation covering Nevada projects

 

 IGTV:  How ‘green’ power is changing the investment potential: https://youtu.be/o6BEzu5boEM

 

Spike in Coronavirus cases looks likely on anecdotal evidence.

We are not following scientific evidence in this one but a number of young people we know have either recently contracted the Coronavirus or have friends who have recently contracted the virus.

This combined with crowds which have gathered for the European Football Championships may contribute to a surge of Coronavirus cases this month and through August.

We reckon the government may prefer to see a spike through July and August rather than see rising cases through the Winter months when hospitals are busier with a bad flu season predicted later this year.

Some scientists are hopeful that the combination of vaccination and the spread of mild covid cases may create long-term, if not life-time immunity from the virus.

The UK government has already said this wave of cases will peak at 100,000 per day in August but with far fewer fatalities expected than in previous waves, though that may, in part, be due to vulnerable cases having already passed away.

We note the vaccines mimic a single spike on the virus which helps the immune system recognise and neutralise the virus but that viruses contain many more spikes which still enable the virus to enter the system before being repelled. Hence the ability to contract and spread the coronavirus despite being vaccinated.

 

South Korean battery giants plan to catch China as battery industry leaders 

South Korea plans to invest $35bn in its EV battery industry by the end of the decade to compete with China and Japan as dominant players in the global battery market. 

Korea’s battery production has grown significantly in recent years, almost quadrupling to 217GWh in 2020 from 59GWh in 2016. 

LG Energy Solution, SK innovation and Samsung SDI will be key players, driving investment in research and development and battery production, the South Korean government said in a statement. 

LG Energy plans to invest $13bn by 2030, including $8bn in R&D. It will also build an institute in South Korea for training in battery technology, expected for completion in January 2023. The company said it has a backlog of EV battery orders worth over $156bn. 

President Moon Jae-in’s administration said it will support companies developing next generation products, including solid-state batteries. An $69m fund – funded by the government, financial institutions and the three battery makers – will help small- and medium-sized firms strengthen their ability to provide battery-making materials and components. 

 

Dow Jones Industrials -0.75% at 34,422

Nikkei 225 -0.63% at 27,940

HK Hang Seng +0.93% at 27,407

Shanghai Composite -0.04% at    3,524

 

Economics

Pfizer/BioNTech to start clinical trials of a version of their Covid-19 vaccine targeting the Delta variant next month amid reports the existing one is less effective against the new variant.

The companies are in discussions with the US medicine regulator to finalise their clinical trial plans.

Pfizer previously suggested that a third shot of its vaccine given six to 12 months after the second dose of its two-shot regiment would be needed in order to boost immunity against new variants.

Risks are vaccines unable to keep up with development of new variants with the Delta first detected in India in December and since then spreading rapidly and accounting for more than 90% of new Covid cases in the UK, for instance.

The new follows announcements from Israel’s health ministry this week showing the Pfizer/BioNTech jab was 64% effecting at protecting against from the variant; importantly, the data showed that the vaccine was still 93% effective at preventing severe illness and hospitalisation from Delta.

 

US – Initial jobless claims picked up slightly last week but held near pandemic low as the labour market recovers.

The strength of the recovery in the labour market is being tested as more states are ending enhanced federal unemployment benefit programme.

Weekly Jobless Claims (‘000): 373 v 371 (revised from 364) and 350 est.

 

US will add at least 10 Chinese firms to its economic blacklist today over alleged human rights abuses and high tech surveillance in Jinjiang, Reuters wrote.

Listed firms will be prohibited from doing businesses with American firms without first securing a US official clearance.

 

China – Inflation cooled down in June easing inflation pressures as policymakers grow concerned over slowing pace of an economic recovery.

Weaker price pressures offers the necessary move for a potential monetary policy easing measures.

The State Council, an equivalent of a cabinet in China, suggested the central bank may reduce the reserve ratio requirement to boost lending yesterday.

The announcement came amid more data suggesting a recovery is starting to ease.

CPI (%yoy): 1.1 v 1.3 in May and 1.2 est.

PPI (%yoy): 8.8 v 9.0 in May and 8.8 est.

 

ECB – The central bank made a dovish comment saying that monetary authorities will allow inflation to overshoot its inflation target of 2% temporarily if needed to help the recovery.

Announcing results of a long-running strategy review on Thursday, officials said their new approach “may also imply a transitory period in which inflation is moderately above target”.

 

UK – May GDP numbers came in lower than expected showing a sharp deceleration in post pandemic economic rebound.

The expansion was driven by the services sector amid reopening of indoor hospitality.

Manufacturing was weighed down by a drop in the production of transport equipment on the back of supply chain challenges.

The construction sector also contracted slightly, but remained above pre-pandemic levels.

The government is expected to allow fully vaccinated travellers to return to England from amber list countries without the need to quarantine from July 19.

The rule will only apply to people vaccinated in the UK.

Transport secretary said that extending rules to non-UK residents is complicated given administrative issues since it is harder to verify the status.

Secretary said authorities are “actively working” on to accept vaccinations from other countries.

Monthly GDP (%mom): 0.8 v 2.0 (revised from 2.3) in April and 1.5 est.

Industrial Production (%mom): 0.8 v -1.0 (revised from -1.3) in April and 1.4 est.

Construction (%mom): -0.8 v -0.7 (revised from -2.0) in April and 1.0 est.

Index of Services (%mom): 0.9 v 2.8 (revised from 3.4) in April and 1.6 est.

 

Australia – Sydney is tightening its pandemic restrictions amid a rise in new cases with the most populous city being two-third of the way through a three-week lockdown.

Tighter rules include outdoor gatherings to be limited to two people, people staying within 10km of home for exercise or outdoor recreation, prohibited shopping browsing and attendance of funerals limited to 10 people.

 

Mexico – New cases are climbing in a third wave of infections driven by the contagious Gamma and Delta variants in the country.

New infections were reported at ~9,450 on Thursday following ~7,990 recorded on Tuesday and ~8,510 on Wednesday.

In the capital, the health ministry estimates gamma and delta accounting for 22% and 20% of all new cases.

Mexico has so far vaccinated around 38% of its adult population.

 

Four African finance ministers urged the G-20 nations to increase IMFS lending facilities to African nations, Bloomberg reports.

“Timely, stable and sufficient long-term financing on fair terms for an inclusive and sustainable post-Covid recovery remains out of reach for many developing countries,” Nigerian Finance Minister Zainab Ahmed and her counterparts Ken Ofori-Atta of Ghana, Nicolas Kazadi of the Democratic Republic of Congo and Adama Coulibaly from Ivory Coast Wrote.

The call follows the IMF’s board decision to increase its reserves by $650bn with only $33bn earmarked for Africa.

“The urgency now is to accelerate the disbursement of these SDRs to forestall the current emerging market liquidity crisis devolving into an insolvency crisis,” African finance chiefs said.

 

Currencies

US$1.1829/eur vs 1.1805/eur yesterday.  Yen 110.04/$ vs 110.01/$.  SAr 14.321$ vs 14.416/$.  $1.377/gbp vs $1.378/gbp.  0.743/aud vs 0.744/aud.  CNY 6.489/$ vs 6.482/$.

 

Commodity News

Precious metals:  

Gold US$1,802/oz vs US$1,800/oz yesterday

Gold ETFs 100.4moz vs US$100.5moz yesterday

Platinum US$1,078/oz vs US$1,079/oz yesterday

Palladium US$2,818/oz vs US$2,838/oz yesterday

Silver US$25.87/oz vs US$25.92/oz yesterday

           

Base metals:  

Copper US$ 9,381/t vs US$9,365/t yesterday

Aluminium US$ 2,463/t vs US$2,462/t yesterday

Nickel US$ 18,615/t vs US$18,295/t yesterday

Zinc US$ 2,945/t vs US$2,925/t yesterday

Lead US$ 2,293/t vs US$2,274/t yesterday

Tin US$ 31,700/t vs US$31,570/t yesterday

           

Energy:           

Oil US$74.5/bbl vs US$73.1/bbl yesterday

Natural Gas US$3.660/mmbtu vs US$3.583/mmbtu yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$205.4/t vs US$207.1/t

Chinese steel rebar 25mm US$778.6/t vs US$770.7/t

Thermal coal (1st year forward cif ARA) US$85.6/t vs US$86.8/t

Coking coal swap Australia FOB US$201.6/t vs US$200.0/t - Chinese coal mines restore output following shutdowns

Chinese coal output has returned to June’s normal level as 95% if mines in Shanxi, Shaanxi, Inner Mongolia and Shandong provinces have resumed production.

Production was halted or scaled back at many operations for safety checks, according to the National Coal Exchange.

China Ilmenite Concentrate TiO2 46% US$375.3/t vs US$375.7

           

Other: 

Cobalt LME 3m US$50,500/t vs US$50,500/t

NdPr Rare Earth Oxide (China) US$83,992/t vs US$82,159/t

Lithium carbonate 99% (China) US$12,329/t vs US$12,343/t - VW-backed group begins study into environmental impact of lithium mining in Chile

A group backed by German carmakers VW and Daimler has started a study into the environmental impact of lithium mining in Chile, with the project expected to last over 2 years.

The Responsible Lithium Partnership is being funded by VW, Daimler, BASF SE and Fairphone BV.

GIZ, the German development agency running the initiative, is looking into how pumping up brine from beneath the Atacama is impacting local water supplies and communities.

Miners including Albemarle and SQM are currently ramping up output in response to the surging global demand for lithium, with many industry experts worried about how this will affect the fragile ecosystem in Chile.

The salt flat is one of the driest places on earth, with local communities, tourism and mining all competing for water.

SQM welcomed the initiative, saying it aligned with its sustainability mission.

The study is getting underway at a time of heightened scrutiny for mining companies in Chile, where a new constitution is being drafted that could lead to stricter environmental standards.

China Spodumene Li2O 5%min CIF US$690/t vs US$690/t

Ferro-Manganese European Mn78% min US$1,946/t vs US$1,942/t

China Tungsten APT 88.5% FOB US$283/t vs US$280/t

China Graphite Flake -194 FOB US$515/t vs US$515/t

Europe Vanadium Pentoxide 98% US$8.8/lb vs US$8.8/lb

Europe Ferro-Vanadium 80% US$40.25/kg vs US$40.25/kg

Spot CO2 Emissions EUA $57.7/t vs $60.0/t

 

Battery News

Stellantis to invest over €30bn in electrifying vehicle line-up 

Stellantis, the world’s No. 4 automaker, said it is planning to invest more than €30bn euros between now and 2025 on electrifying its vehicle line-up. 

The company formed in January, from the merger of Fiat Chrysler and PSA, is targeting 70% of its European sales and 40% of its US sales to be low-emission vehicles – battery or hybrid electric – by 2030. 

The strategy will be supported by five planned battery plants in Europe and North America as it gears up to compete with other automakers globally. 

 

Storegga Geotechnologies partners with INEOS for carbon capture project 

Storegga, a UK company pioneering carbon reduction and removal, and lead developer of the Acorn Carbon Capture and Storage (CCS) and Hydrogen Project, has signed an MOU with INEOS and Petroineos, to develop Scotland’s first CSS system at their Grangemouth site. 

INEOS and Petroineos own and operate one of Scotland’s largest manufacturing sites at Grangemouth and the project will enable the capture and storage of approximately one million tonnes a year of CO2 by 2027, with the scope to capture further significant volumes beyond this date.  

The Acorn project is currently in the detailed engineering and design phase of development and is planned to be operational by the mid 2020’s, with the potential of achieving more than half of the 10Mt/yr of CO2 storage targeted by the UK Government’s Ten Point Plan for a green Industrial Revolution by 2030. 

“As one of Scotland’s largest manufacturer and employers, we acknowledge that we are operating a CO2 intensive industry and we have a significant role to play in helping Scotland reach its Net Carbon Zero target by 2045” said Andrew Gardner, Chairman INEOS Grangemouth 

 

Company News

Arc Minerals* (LON:ARCM) – 4.45p, Mkt cap £49m – Arc Minerals to let exclusivity agreement with Anglo lapse

(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 have announced the the Exclusivity Agreement with Anglo Exploration Zambia Ltd lapses today.

The company has received other expressions of interest which may or may not progress while discussions with Anglo American continue.

Arc continues to drill to define copper resources and to work on the development of a new process plant at Cheyeza East where they are looking to develop a plan to fund further drilling and exploration work from the production of around 10,000tpa of copper in concentrate.

Arc have so far done three batches of test work on the ore at Cheyeza to design the optimum process route as part of the Scoping study.

Management’s desktop study at Cheyeza indicates the generation of $45-50m pa of sales and Free cash flow of $25m pa at around $8,500/t copper.

Conclusion: Arc’s exploration portfolio and targets offer significant opportunity for discovery, with much exploration being done to discover the next generation of future copper mines. We are aware that Rio Tinto, BHP, First Quantum Minerals and others are interested in the region and have built expert teams to find licenses to best focus their efforts.

There are many reasons why junior companies often find the best new projects and Arc’s best option may well be to empower its in-house team led by Vassilios ‘Sid’ Carellas for future discovery and value creation.

*SP Angel acts as Nomad and broker

 

Bluejay Mining* (LON:JAY) 10.32p, Mkt cap £100m – Targets defined for Outokumpu-type copper-cobalt- gold-silver deposits In Finland

BUY - Valuation 37.7p

Bluejay mining report the definition of multiple targets for Outokumpu-type copper-cobalt- gold-silver deposits in Finland, where Bluejay is the largest license holder on the Outokumpu belt.

The team have identified five initial drill targets on the Outokumpu Belt which is famous for the historic, high-grade Outokumpu mine.

Drilling is planned to start at:

Haapovaara target, just north of the historical Kylylahti mine with 1,500m of drilling planned

Haaponiemi, where 2,500m will test a deep geophysical target

Exploration has tested upper tracts of the belt leaving many untested prospective targets at depth.

The prospectivity of the exploration portfolio has attracted a number of companies to the portfolio with early stage discussions in process focussing on the potential for copper, nickel and cobalt to meet new demand for battery metals.

Bluejay already have a $20m joint venture in progress with Rio Tinto on licenses around the Enonkoski nickel-copper project.

“The Outokumpu Belt is one of the most prolific metallogenic belts globally, hosting multiple high-grade mines including the world famous Outokumpu mine.

Three former mines, Outokumpu, Vuonos and Kylylahti, produced a total of approximately 39mt of ore grading 3.3% copper, 1.1% zinc, 0.22% cobalt, 0.14% nickel and 0.71g/t of gold between 1914 and 2020.”

*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) 45.5p, Mkt cap £6.4m – Q2 results show significant increase in tonnes processed

BlueRock Diamonds report strong progress through the second quarter as management prepare for a significant increase in production through the second half.

The team processed a record 134,510t though the quarter.

Grades recovered to a respectable 4.05cpht. The grade recovered last year is not comparable due to waste rock being moved amid Covid restrictions.

BlueRock produced 5,442 carats in the quarter building on the 3,507cts in Q1 highlighting the progress being made.

The company sold 5,106cts through tenders at an average price of $427.8/ct vs $289.9/ct yoy and $446/ct in Q1 suggesting that diamond prices are higher than our $400/ct estimate.

The diamond price achieved reflects a smaller number of high value diamonds recovered through the quarter with one 6.3ct stone recovered in May vs four larger stones recovered in Q1.

Management are busy preparing for significantly larger tonnage production through the second half to coincide with the commissioning of the new diamond recovery plant.

Conclusion:  This was a solid quarter for BlueRock with $2.33m in Q2 of sales vs $1,56m in Q1. Management expect production to rise to around 40,000cts pa raising revenues to over $16mpa assuming a sales price of $400/ct.

*SP Angel act as nomad and broker to BlueRock Diamonds

 

Bushveld Minerals* (LON:BMN) 12.87p, Mkt cap £153m – Vanadium prices continue to rise in China

(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="" i="">)

Vanadium prices have risen to CNY199,000-202,000/kgV in China ($40/kgV) in China vs CNY196,000-199,000/kgV ($39.7/kgV) a week ago according to Asianmetal.com.

*SP Angel acts as Nomad and broker to Bushveld Minerals.

 

Keras Resources* (LON:KRS) 0.1p, Mkt cap £5.8m – Commercial production commences at Diamond Creek

(Keras also hold an 85% interest in Societé General des Mines which holds the Nayéga manganese project license in Togo. Keras also holds 51% of Falcon Isle Holdings which holds 100% of the Diamond Creek phosphate mine which is operating in Utah, USA)

Keras reports that it has commenced commercial production at the high-grade organic phosphate mine, Diamond Creek in Utah, USA

Commissioning is complete and the milling plant is now at steady-state operational capacity.

Diamond Creek has one of the highest in-situ grade phosphate projects in the US, with 14% available phosphorous compared to average of 3% of competitors.

The mine has an expected peak production rate of 48ktpa, with the opencast resource alone representing in excess of 60 years of production.

Stockpiled material from the 2020 mining season is now being crushed and processed, producing a range of premium products to be sold directly into the US organic fertiliser market and marketing discussions are being held with a number of existing clients and a wide range of new interested parties.

Work is also continuing at the mine site to ensure everything is production ready to commence the 2021 mining season later this month.

Russell Lamming, CEO of Keras Resources, commented, "Having our milling plant up and running within a year of acquiring our initial interest in Diamond Creek is another key achievement for the Company. Over the past 11 months we have secured a controlling stake in, and developed, a high-grade phosphate mine, completed our first mining season and installed our own beneficiation capacity on site. We are delighted that the plant is now fully operational and it is great to see a range of products being bagged up directly for customers. 

“A key component of our organic fertilizer business model in the US is the construction of a granulating plant adjacent to the now operational milling plant which adds a valuable stream to our product mix, this is expected to be commissioned in the last quarter of 2021. We look forward to this year's mining starting in the coming weeks and providing further updates in due course."

*SP Angel act as Nomad and Broker to Keras Resources

 

Power Metal Resources* (LON:POW) 2.2p, Mkt cap £25.5m – Presentation covering Nevada projects

Power Metal has prepared an information presentation covering the recently acquired Golconda Summit, Garfield, and Stonewall Projects located in Nevada, USA.

The Nevada Projects are held by Golden Metal Resources, a wholly owned subsidiary of Power Metal and include the Golconda Summit carlin-type gold Project, Stonewall epithermal-type Au-Ag Project, and the Garfield skarn-type Cu-Au Project.

This information presentation may be viewed through the following link: https://www.powermetalresources.com/presentation/golden-metal-resources-presentation/

*SP Angel act as Nomad and Broker to Power Metal Resources

 

Recent Interviews:

 IGTV:  How ‘green’ power is changing the investment potential: https://youtu.be/o6BEzu5boEM

Stock picks in the small-cap mining space:  https://youtu.be/UNFfjLeDZ6I   

Commodities: is China’s dominance nearing its end?    https://youtu.be/TxtMf6B2t8Q

Copper in the limelight amid Chinese clampdown: https://www.ig.com/uk/market-insight-articles/copper-attempts-to-regain-ground-after-chinese-led-selloff-210624

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.

 

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

 

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, Tungsten, Spodumene, Ferro-Manganese, Graphite

Asian Metal

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