SP Angel . Morning View . Monday 12 07 21
Base metals rise on Chinese cuts reserve requirement ratio from 15 July
MiFID II exempt information – see disclaimer below
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.
Aura Energy* - (AIM:AURA) – Resumption of field work at Tasiast South gold project
Bluejay Mining* (AIM:JAY) – BUY, Valuation 37.7p – Chinese ilmenite prices tick lower despite force majeure at Richards Bay
GoldStone Resources* (AIM:GRL) – Minerals Commission approval ensures 25,000oz guidance on track
Rambler Metals and Mining* (AIM:RMM) – Little Deer mineral resources increased
Chile – Santiago shut due to spike in Covid-19 cases despite vaccination of ~75% of population using Sinovac vaccine
Covid-19 cases rise 17% in Chile and 25% in metropolitan areas in Chile over the past two weeks.
Chile has plunged back into the Coronavirus crisis despite the administration of 23m mainly Sinovac vaccines amongst its 19m population
If real-world data is anything to go by then China’s Sinovac vaccine doesn’t appear to be working so well.
Will be interesting to see if Chile demands compensation
Well done to Italy for winning the European Cup last night demonstrating that age is no impediment to victory alongside the benefit of experience on the pitch
Well done to UEFA for creating a great environment for spreading the Covid-19 Delta variant with politicians already blaming the football for a rise in Covid infections.
The ONS estimated that 89.8% of the adult population in England tested positive for COVID-19 antibodies in the week beginning 14 June 2021.
The UK has administered some 46m first dose and 35m second dose vaccinations and is likely to reopen the economy on 19th July
While vaccination rates are slowing, new measures such as vaccine passports to enter pubs and for air travel are being considered to encourage higher take up rates.
Intel to invest $20bn in EU chip factories
US chipmaker Intel has said investment in its planned new European $20bn semiconductor factory could be spread across several EU member states.
Intel’s CEO Pat Gelsinger recently met French president Emmanuel Macron and Italian prime minister Mario Draghi to discuss the global chip shortage harming various industries including tech and autos.
His visit followed signals from the EU that substantial sums could be made available to help the bloc meet a new target to double semiconductor production to 20 per cent of the global market by 2030, including making the most advanced chips.
Intel believes there could “EU-wide benefits” if the Company’s requirements for a new European fabrication plant were met, raising the possibility of spreading the facilities and services to support chip production across multiple member states.
As well as financial support, Intel is looking for a site of roughly 1,000 acres with developed infrastructure, which would be capable of supporting up to eight chip fabrication facilities.
Intel has looked at countries including Germany, the Netherlands, France and Belgium to explore potential for a factory. A decision is expected by the end of the year.
State aid will be crucial to ensuring the factory’s competitiveness, with costs thought to be 20-40% lower in Asia.
Dow Jones Industrials +1.30% at 34,870
Nikkei 225 +2.25% at 28,569
HK Hang Seng +0.45% at 27,468
Shanghai Composite +0.67% at 3,548
Economics
The spread of Delta variant raises concerns over European economic recovery, FT reports.
On Friday, Germany and France warned their citizens against travelling to Spain where infection rates surpassed Portugal to become the highest in mainland Europe.
Netherlands on Friday said it will reintroduce restrictions on restaurants, bars, cafes, nightclubs and live events only two weeks after lifting those given a tenfold increase in daily virus rates.
Weekly rate of new cases in the EU and European Economic Area countries climbed to 51.6 per 100,000 people last week up from 38.6 the previous week, according to the European Centre for Disease Prevention and Control data.
Although the hospitalisations and death rates were stable.
The agency expects the infection rate to exceed 90 per 100,000 people in four weeks.
The EC increased its EU growth estimates to 4.8% for 2021 last week following a record contraction of 6.2% in 2020, however, these forecasts did not include risks of a new wave triggered by the Delta variant.
China – The central bank announced the reserve requirement ratio (RRR) cut on Friday with the RRR set to drop by 50bp to 12% from July 15.
The measure will release around CNY 1tn in long-term liquidity helping post-Covid economic recovery.
Japan – Tokyo goes into a fourth Covid-19 state of emergency on Monday to last through to August 22 and cover the duration of the Olympics.
The Games are scheduled for July 23 to August 8.
ECB – ECB President Christine Lagarde warned investors the coming monetary policy meeting (July 22) will include important announcements.
Speaking to Bloomberg Television Lagarde offered some pro stimulus comments speaking about policy outlook.
She said ECB’s current €1.85tn bond buying programme is expected to run “at least” until March 2022.
Lagarde also dismissed the need to discuss when emergency stimulus might be wound down saying she is only “guardedly optimistic” about the recovery given the fast spread of the delta variant.
“We need to be very flexible and not start creating the anticipation that the exit is in the next few weeks, months”, Lagarde said.
China – PBoC cut 0.5% off its reserve requirement ratio ‘RRR’ from 15th July
bringing the requirement in the finance industry to meeting an average of 8.9%,
while the larger financial ratios will be unaffected at those institutions with an RRR of 5% are exempt.
CPI fell 0.4% in June vs -0.2% in May and 1.1% yoy in June vs -1.3% in May
PPI pulled back to 8.8% yoy vs 9% yoy in May
Auto sales fell 12.4% yoy in June to 2.02m vehicles but were still 25.6% higher for the year to date at 12.89m vheicles
EVs show room sales rose 139% yoy to 256k vehicles. Tesla accounted for 33,000 vehicles representing 13% of the total EV market in China
EV sales represent 12.7% Of total vehicle sales in China.
US - Wholesale inventories rose 1.3% in May as supply chains struggle to keep pace with demand
California drought said to be worst ever seen by scientists who reckon the drought conditions may soon be a permanent state of being for the American West.
UK - Industrial production rose 0.8% in May vs a fall of -1% in April.
Industrial production rose 20.6% in May
Manufacturing output pulled back 0.1% in May and was 27.7% higher yoy
Construction output rose 56.6% yoy despite higher prices for building material and significantly longer lead times
We note timber prices have pulled back significantly from crazy high levels
South Africa - GDP growth raised to 4% from 3.5% for this year as third Covid-19 wave sweeps through nation
India – Vaccination rates almost half over the last two weeks amid a shortage of supplies, according to FT.
Average daily vaccinations dropped for two consecutive weeks to 3.5m compared to a peak of 6.2m two weeks ago.
Jabs remain available at private hospitals but prices put them out of reach for many ordinary Indians.
The nation administered 376m doses so far with only 5% fully inoculated and around 22% having received at least one shot.
Australia – The nation reported the highest number of new Covid-19 cases in more than a year on Monday with just 10% of the country’s adult population fully vaccinated.
South Africa – Restrictions on gatherings and movement are extended for two weeks as the country battles with a third wave of infections.
The country consistently recorded an average of ~20,000 daily new cases over the past two weeks.
All social, political, religious and other gatherings are prohibited until July 25 and a curfew between 9pm and 4am to remain in place.
Russia – Government is considering changes to mineral extraction tax (MRET) to raise taxes on mining companies after a temporary export tax expires at the end of the year.
Authorities last month announced duties of at least 15% on steel, nickel, aluminium and copper exports from August 1.
Officials are now looking at linking the MRET to commodity prices, according to the people familiar with the matter.
The government has already increase the tax for this year for most metals and fertilizers, although, coal, gold and silver were excluded from the changes.
The new tax initiative is expected to come into play from 2022, with a final decision taken after parliamentary elections in September.
The new tax could raise 100bn rubles ($1.35bn) a year, with taxes said to include precious metals producers.
The government has already more than tripled the tax this year for most metals and fertilizers to help shrink the budget deficit, although coal, gold and silver were excluded from the changes.
Currencies
US$1.1878/eur vs 1.1829/eur last week. Yen 110.06/$ vs 110.04/$. SAr 14.324$ vs 14.321/$. $1.388/gbp vs $1.377/gbp. 0.747/aud vs 0.743/aud. CNY 6.473/$ vs 6.489/$.
Commodity News
Precious metals:
Gold US$1,804/oz vs US$1,802/oz last week
Gold ETFs 100.5moz vs US$100.4moz last week
Platinum US$1,098/oz vs US$1,078/oz last week
Palladium US$2,810/oz vs US$2,818/oz last week
Silver US$26.03/oz vs US$25.87/oz last week
Base metals:
Copper US$ 9,440/t vs US$9,381/t last week
Aluminium US$ 2,480/t vs US$2,463/t last week
Nickel US$ 18,580/t vs US$18,615/t last week
Zinc US$ 2,952/t vs US$2,945/t last week
Lead US$ 2,318/t vs US$2,293/t last week
Tin US$ 31,815/t vs US$31,700/t last week
Energy:
Oil US$74.9/bbl vs US$74.5/bbl last week
Crude oil futures slipped during early trading today as concerns over slowing global growth outweighed the prospect of tightening supply after talks among key producers to raise output in coming months stalled
The spread of coronavirus variants and unequal access to vaccines threaten the global economic recovery, finance chiefs of the G20 large economies warned on Saturday
The world's top oil exporter Saudi Arabia met full contractual demand for crude oil from five buyers in August, but turned down at least two requests for additional volumes
Front-month WTI crude futures posted their sixth weekly gain last week after a bullish report from the US Energy Information Administration showed US crude and gasoline stocks fell while gasoline demand reached its highest since 2019
In response to higher oil prices, US energy firms added oil and natural gas rigs for a second week in a row, data from Baker Hughes confirmed
The market appears to be looking beyond the oil supply deficit in August and expecting the OPEC+ agreement to fall apart well before April 2022 when the agreement expires as other member countries will ask for further concessions to secure more market share
The group is maintaining nearly 6MMbopd of output cuts and was expected to add to supply, but three days of meetings failed to close divisions between the Saudis and the UAE
Russia is trying to mediate between Saudi Arabia and the UAE to help strike a deal to raise oil output
However, prices found some support from a large drop in oil inventories in the US
US inventories fell by 8MMbbls for the week ended 2 July according to the API
This compares to an estimate of a 4MMbbl draw
US oil production declines this year are expected to lessen with the EIA reporting yesterday that output will be 11.10MMbopd in 2021, down by 210,000bopd from 2020, versus its previous forecast for a drop of 230,000bopd
Natural Gas US$3.643/mmbtu vs US$3.660/mmbtu last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$207.1/t vs US$205.4/t
Chinese steel rebar 25mm US$803.8/t vs US$778.6/t
Thermal coal (1st year forward cif ARA) US$88.2/t vs US$85.6/t
Coking coal swap Australia FOB US$204.0/t vs US$201.6/t
China Ilmenite Concentrate TiO2 46% US$376.6/t vs US$375.3
Other:
Cobalt LME 3m US$50,500/t vs US$50,500/t
NdPr Rare Earth Oxide (China) US$82,262/t vs US$83,992/t
Lithium carbonate 99% (China) US$12,359/t vs US$12,329/t
China Spodumene Li2O 5%min CIF US$690/t vs US$690/t
Ferro-Manganese European Mn78% min US$1,954/t vs US$1,946/t
China Tungsten APT 88.5% FOB US$285/t vs US$283/t
China Graphite Flake -194 FOB US$515/t vs US$515/t
Europe Vanadium Pentoxide 98% US$8.9/lb vs US$8.8/lb
Europe Ferro-Vanadium 80% US$39.75/kg vs US$40.25/kg
Spot CO2 Emissions EUA $57.9/t vs $57.7/t
Battery News
Global carbon emissions fell >5% per cent in 2020 mainly due to a collapse in air travel and a decline in oil consumption.
Ørsted enters contest for Scottish floating wind farms
Danish energy company, Ørsted, has formed a consortium with Falck Renewables and BlueFloat Energy to bid for licences to deploy floating wind farms, off the Scottish coast.
ScotWind, the first round of seabed leasing for offshore windfarms in Scotland for a decade, is a key part of Scottish governments plans to deliver up to 11GW capacity by 2030.
The initial application deadline, of the end of March, was pushed to 16th June following a review of lease prices around England and Wales – companies may pay up to £9bn in revenue for English and Welsh seabeds resulting in concerns the Scottish project was undervalued.
Ørsted has successfully secured a 1.8 GW grid connection in Scotland from National Grid ESO for use should it secure seabed rights following the leasing round.
Hydrogen could save Europe €2 trillion by 2050
The role of hydrogen in making Europe climate neutral was central to an event which presented the findings of the Hydrogen4EU report.
The report advised policymakers to keep all options open regarding hydrogen, as a versatile and technologically diverse model would reduce the costs of building a hydrogen value chain by €2tn.
At more than 100mtpa, the report projects that hydrogen demand by 2050 will be massive, mostly driven by transport and heavy industries like steelmaking, cement and chemicals.
To fulfil Europe’s 2050 hydrogen demand, “1,000-1,700 GW of dedicated solar photovoltaics, a similar amount of wind power and 680 to 1500 GW of electrolysers” would be required, Johannes Trüby, one of the report’s authors said.
Currently the EU has 120 GW of photovoltaics and 170 GW of wind power – enough to meet only 10% of 2050 hydrogen.
Trüby concluded that so-called “blue” hydrogen, made from natural gas with subsequent carbon capture and storage (CCS) must be promoted at European level, to contribute to the low-carbon hydrogen mix – the European Commission is still cautious about backing blue hydrogen.
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.
Company News
Aura Energy* - (AIM:AURA) 6.25p, Mkt Cap £21.8m – Resumption of field work at Tasiast South gold project
Aura Energy reports that it has resumed field work at its Tasiast South gold project in Mauritania with gravity and induced polarisation (IP) geophysical surveys with crews mobilised from S Africa.
The gravity work is expected to “allow better definition of geology and the identification of structures likely to be of relevance to gold deposition” within the company’s licences including “the Nomads Farmin tenement, located 35 km directly along strike from …the…Kinross … Tasiast Gold Mine” which produced around 400,000oz pa of gold in 2020 and is looking to increase to around 560,000oz by 2022 as it implements its 24k project to increase throughput to 24,000tpd by mid-2023.
Aura Energy “will also be undertaking an extensive IP survey planned around mineralised zones located by aircore and RC drilling. Before committing to a large program, test lines of dipole-dipole IP surveying will shortly commence to test near surface electrical properties to ascertain the effectiveness of IP”.
The company says that “As previously announced … the ASX advised that upon the Company undertaking sufficient exploration on its projects in line its proposed expenditure commitments and following the completion and results of those exploration programs being released to the market, ASX would be in a position to reinstate AEE's securities to trading on the Official List”.
Managing Director, Peter Reeve said that “we look forward to delivering the results of the gravity survey and IP surveying, to further advance this high potential project, and progress towards relisting on the ASX.”
*SP Angel are Nomad and Broker to Aura Energy
Bluejay Mining* (AIM:JAY) 10.09p, Mkt cap £98m – Chinese ilmenite prices tick lower despite force majeure at Richards Bay
BUY - Valuation 37.7p
Ilmenite prices tick back despite ongoing suspension of operations at Richard’s Bay Minerals.
Rio Tinto declared force majeure on shipments from Richard’s Bay on 30 June following the assignation of its General Manager Nico Swart who was shot dead by a hitman.
The incident follows protests, violence and arson in the area over jobs, the alleged desecration of graves and pollution concerns.
https://www.youtube.com/watch?v=kofJNBqD-28&ab_channel=DWNews
Market prices for ilmenite ticked back to CNY2410-2460/t ($376/t) in China from CNY2450-2500 ($384/t) a month ago for TiO2 46%min; Fe2O3 8%max Ex-VAT EXW China RMB/mt
The ongoing suspension of mining at Richard’s Bay Minerals is likely to tighten an already taught ilmenite supply chain with few new mines being planned to replace forthcoming mine closures.
We currently assume a price of US$250/t for Bluejay ilmenite concentrate sales in our modelling with 70% of the concentrate shipped to Asia by bulk carrier.
If we add $10/t to our assumed ilmenite price this adds a further $54m or 5p/s of value to the Dundas project in our modelling..
*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.
GoldStone Resources* (AIM:GRL) 12p, Mkt Cap £46m – Minerals Commission approval ensures 25,000oz guidance on track
GoldStone reports that it has received approval from the Minerals Commission to start irrigation and leaching of ore placed on the heap leach pad at the Homase Mine.
The Company remains on track to achieve the target production of 25,000oz of gold for the first eight months of production, with first gold pour expected to occur in Q3 2021.
The Company has reached agreement for settlement of its twenty outstanding unsecured bonds of US$50,000 each, with all holders aggreging to full and final settlement of the Bonds in exchange for the issue of, in aggregate, 12,000,000 new ordinary shares of 1 penny each in the capital of the Company.
A verbal agreement has been received from BCM Investments which will be allotted its 3,600,000 Bond Settlement Shares immediately following signature of a written Bond Settlement Agreement.
Settlement of the Bonds on the terms of the Bond Settlement Agreement is deemed to be in the best interests of the Company and all shareholders, as it avoids the issue of, in aggregate, 20,000,000 new warrants to subscribe for Ordinary Shares at an exercise price of 3 pence per share, as well as the payment of interest at a rate of 14% on the principal amounts outstanding.
The Company also reports at Asia Investments Management Services s agreed a further extension to the timing of payment of interest on the US$3 million secured gold loan announced on 22 June 2020 in relation to which an extension to 30 June 2021 was agreed on 1 March 2021 due to delays experienced in respect of requisite operational permits being issued.
AIMS has now agreed with the Company that all unpaid and accrued interest associated with the Gold Loan to 30 June 2021 must be repaid by 31 August 2021, while interest will continue to accrue on the outstanding interest payment at the default rate of 17% until payment is made.
The application for the 8,400,000 Bond Settlement shares is to be made immediately to be admitted and trading on AIM.
Emma Priestley, CEO of GoldStone, commented: "I am delighted that the Bond Holders and AIMS have been supportive to the Company to avoid impacting the Company's operational progress, allowing us to continue to focus on moving towards our target of near-term gold production."
*SP Angel act as broker to GoldStone Resources
Rambler Metals and Mining* (AIM:RMM) 30.25p, Mkt Cap £32.9m – Little Deer mineral resources increased.
(Rambler owns 100% of the Ming Copper-Gold Mine)
Rambler Metals & Mining has reported the results of an independently reviewed and updated mineral resources estimate for its wholly owned Little Deer Complex, comprising the Little Deer and Whalesback deposits which are located approximately 150km south of its operating Ming mine on the Baie Verte peninsula, Newfoundland. The review was conducted by P&E Mining Consultants.
Using a 1% copper cut-off grade, the new estimate reports an indicated resource of 2.9mt at an average grade of 2.13% copper which represents a 6.5% increase in tonnage and a 4.8% improvement in the contained metal content compared to the previous estimate prepared in 2012 on behalf of the previous owners, Thundermin Resources.
In addition, an inferred resource of 6.2mt at an average grade of 1.79% copper, also using a 1% cut-off, represents a 47% increase in tonnage and a 27.5% increase in contained metal compared to the historical estimate.
Approximately 70% of the indicated resources tonnage (2.03mt at an average grade of 2.33% copper with 4.12g/t silver) and 95% of the inferred tonnage (5.88mt at an average grade of 1.78% copper and 2.16g/t silver) is within the Little Deer deposit with the balance at Whalesback.
The deposits comprising the Little Deer Complex were first discovered in the early 1950s and mined by British Newfoundland Exploration between “1970 to 1972, with access via a 1,144 m drift on the 244 m level from the Whalesback mine to the north, and by Green Bay Mining Company from 1973 to 1974, with access via a 329 m decline”.
Rambler Metals says that the two deposits are connected at depth on the 240 level and that they are eight similar volcanogenic massive-suphide copper deposits (VMS) known within the host lithological unit known as the Lush’s Bight Group. Characteristically, VMS deposits of this type are known to occur in clusters, so while news of the additional occurrences in the area is perhaps unsurprising it clearly enhances the overall exploration attractions available in and around the Little Deer Complex.
CEO, Dr. Toby Bradbury, explained that the new estimate, “includes drill data from 2014 that were completed subsequent to the earlier Mineral Resource Estimates. The scale, further exploration potential and the steeply dipping nature of the orebodies makes the Little Deer Complex an exciting prospect for Rambler”.
The update includes results from 3,800m of drilling undertaken in 2014 comprising “Four holes from surface and two wedge holes … detailed review of the grade shell boundaries, reducing the horizontal … block size from 5 m to 2.5 m to improve the capture of vein thickness, and overall smoother wireframe modelling”.
The company says that its near-term plans for Little Deer “are to continue the conversion of Inferred to Indicated Mineral Resources, the continued step-out program to identify close-proximity targets relative to the mine footprint, and to further define the down-dip extensions of the mineralized zones”.
Rambler Metals confirms that it “has received a number of unsolicited offers of interest in its Little Deer Complex and is actively seeking arrangements that can advance these projects while retaining a significant interest”.
The company does confirm, however, that its “focus is to regain its process plant production profile at 1,350 tonnes per day at 2% Cu … [at the Ming Mine] … during 2021 and evaluate expansion opportunities from that base.”
Dr. Bradbury underlines that “2021 is a transformational year for the Company, setting up the Ming Mine to reliably and consistently produce through 2022 and for many years ahead. Cash generated from the Ming Mine will enable us to invest in our other assets and provide for future growth and creation of shareholder value”.
Conclusion: Increased mineral resources at the wholly-owned Little Deer Complex and the known presence of additional deposits suggests important exploration potential around 150km from Rambler’s operating Ming Mine where the company’s priority remains the sustainable restoration of its 1,350tpd treatment rate as a platform for potential further growth.
*SP Angel act as Nomad and broker to Rambler Metals & Mining
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
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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, Tungsten, Spodumene, Ferro-Manganese, Graphite - Asian Metal
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