SP Angel . Morning View . Wednesday 14 07 21
Accelerating inflation tests central banks' commitment to easy monetary policy
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.
Anglo Asian Mining* (LON:AAZ) - BUY – Q2 production update reports robust results
AngloGold – AngloGold seeks to expand its ore reserves through potential takeover of Corvus for C$4/s (~C$510m)
Ariana Resources (LON:AAU) – Chairman highlights readiness for challenges of the coming decade
Bushveld Minerals* (LON:BMN) – Garnet Commerce files claim against VRFB Holdings and Enerox Holdings alleging breach of joint venture agreement
Beowulf Mining* (LON:BEM) – Mining study to commence at Kallak
Cora Gold (LON:CORA) – High grade close to surface intersections improve confidence at Zone A of the Sanankoro Gold Project
Lucara Diamonds (CVE:LUC) – Karowe enters a ‘pink patch’ as mine yields a 62 carat pink diamond
Phoenix Copper* (LON:PXC) – Sulphide mineralisation in first deep hole at Empire mine
Vale to resume talks with striking Sudbury nickel miners next week
Vale and striking workers at its Sudbury operation in Ontario have agreed to return to the negotiating table next week, the company reports.
Vale halter its operations on June 1 after ~2,500 miners represented by the United Steelworkers went on strike.
Miners twice rejected a wage offer presented by the company, with disputes arising over changes to worker’s benefits.
Vale produced 12,000t of nickel and 19,400t of copper from Sudbury in Q2 2021.
China June copper imports fall for third straight month in June
China’s copper imports continued to slide last month, as high prices and slowing manufacturing growth weighed on demand.
Imports of unwrought copper and copper products was 428,438t in June down 3.9% from 445,725t in May and down 34.7% from 656,483t in June 2020, according to customs data.
Copper concentrate imports also fell 14.4% to 1.67mt in June
Growth in the manufacturing industry fell to a four-month low in June on higher costs of raw materials and a COVID-19 outbreak in the major export province of Guangdong.
In the first half of 2021, copper imports were 2.79mt, down 1.6% on the year.
Shipments were significantly lower YoY last month, given last year’s run of bumper shipments as Chinese demand rebounded strongly from the pandemic, with China taking advantage of lower prices as other countries manufacturing sectors were still operating well below usual levels.
Dow Jones Industrials -0.31% at 34,889
Nikkei 225 -0.38% at 28,608
HK Hang Seng -0.63% at 27,787
Shanghai Composite -1.07% at 3,529
Economics
China – China’s trade surplus rose to $51.53bn in June vs $44.2bn in May
Exports rose 32.2% yoy vs 27.9% yoy in May and 23.0% yoy est.
Imports 36.7% yoy vs 51.1% yoy in May and 29.5% yoy est.
However, shipments are expected to slow down through the second half as the shortage of semiconductors and containers combined with high shipping costs and other logistics issues hamper exports.
We suspect the situation will serve to accelerate the reshoring of manufacturing capacity to the west, though this is a slow process and largely confined to higher value products.
US – Consumer prices climbed the most since 2008 in June topping all forecasts and testing the Fed’s commitment to keeping the ultra-easy monetary policy in place.
Despite strong headline numbers, details of the report suggest inflation is being driven by reopening-sensitive categories, Bloomberg writes.
Around 55% of the higher than expected 0.9%mom increase came from six components including used cars, rental cars, vehicle insurance, lodging, airfares and food away from home.
Including energy prices, that share increases to 66%.
That in turn may suggest the Fed will look through that pick up deeming it transitory in nature.
Chairman Powell will be presenting the semi-annual monetary policy report to the Congress today/tomorrow.
CPI (%mom): 0.9 v 0.6 in May and 0.5 est.
CPI (%yoy): 5.4 v 5.0 in May and 4.9 est.
Core CPI (%yoy): 4.5 v 3.8 in May and 4.0 est.
US dollar extends gains as rise in US consumer prices raises potential for earlier interest rate rise
The US dollar extended gains on the potential for the Federal Reserve to bring forward the prospect of its next interest rate hike which is currently expected in 2023.
Widespread anticipation of a reduction in the Fed’s policy of aggressive asset purchases by September is also contributing to the dollar’s rise.
The rise is paralleled by increasing consumer prices reported by the US Bureau of Labor Statistics, showing a rise 0.5% higher than was expected by a group of economists polled by Reuters.
A combination of factors including shortages triggered by ‘production bottlenecks’ in materials such as computer chips alongside data skewed by locked-down economies encourage economists to dismiss inflation concerns as ‘transitory’.
Although Tuesday’s consumer prices update saw a marginal rise in precious metal prices, the continuous rise of the dollar and bond yields has limited their upward trajectory.
A number of ‘temporary’ inflationary factors such as higher used vehicle prices may be offset by higher global and US oil and gas prices to persuade policymakers that higher inflation is more of an issue than previously perceived.
We suspect the Fed will continue to kick the interest rate can down the road for as long as it is able to stave off inflation concerns.
UK – Inflation came in stronger than expected climbing to the highest in three years in June.
The BoE has previously highlighted that inflation may climb above its 2% target but is expected to see price pressures subside with time.
In May, the central bank said that it expects inflation to peak at 2.5% towards the end of 2021, largely driven by energy prices, with the gauge to return towards its target in the medium term.
The pound climbed against the € this morning following the announcement and is currently trading up 0.2%.
CPI (%mom): 0.5 v 0.6 in May and 0.2 est.
CPI (%yoy): 2.5 v 2.1 in May and 2.2 est.
Core CPI (%yoy): 2.3 v 2.0 in May and 2.0 est.
Currencies
US$1.1786/eur vs 1.1862/eur yesterday. Yen 110.50/$ vs 110.38/$. SAr 14.7622$ vs 14.442/$. $1.384/gbp vs $1.388/gbp. 0.745/aud vs 0.749/aud. CNY 6.476/$ vs 6.464/$.
Commodity News
Precious metals:
Gold US$1,813/oz vs US$1,811/oz yesterday
Gold ETFs 100.6moz vs US$100.5moz yesterday
Platinum US$1,112/oz vs US$1,123/oz yesterday
Palladium US$2,833/oz vs US$2,852/oz yesterday
Silver US$26.04/oz vs US$26.31/oz yesterday
Base metals:
Copper US$ 9,399/t vs US$9,466/t yesterday
Aluminium US$ 2,528/t vs US$2,508/t yesterday
Nickel US$ 18,6885/t vs US$18,845/t yesterday
Zinc US$ 2,940/t vs US$2,946/t yesterday
Lead US$ 2,297/t vs US$2,317/t yesterday
Tin US$ 32,360/t vs US$32,265/t yesterday
Energy:
Oil US$76.4/bbl vs US$75.5/bbl yesterday
Oil prices have declined in early trading today after data showed a drop in China's half-year crude imports while expectations for a further tightening of US inventories offered support
This is a market that continues to be threatened by a two key issues, not the least of which will be the uncertainty around OPEC+ and all of the noise with that situation as far as coming together with some type of output quota
Furthermore, at the same time we have to worry about the global economy slowing down due to the Delta variant and threats of lockdowns in various economies yet again
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
Natural Gas US$3.694/mmbtu vs US$3.738/mmbtu yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$210.2/t vs US$208.5/t
Chinese steel rebar 25mm US$800.1/t vs US$801.0/t
Thermal coal (1st year forward cif ARA) US$90.3/t vs US$88.8/t
Coking coal swap Australia FOB US$203.0/t vs US$204.0/t
China Ilmenite Concentrate TiO2 46% US$374.5/t vs US$376.7
Other:
Cobalt LME 3m US$50,500/t vs US$50,500/t
NdPr Rare Earth Oxide (China) US$81,461/t vs US$82,829/t
Lithium carbonate 99% (China) US$12,354/t vs US$12,376/t
China Spodumene Li2O 5%min CIF US$700/t vs US$690/t
Ferro-Manganese European Mn78% min US$1,950/t vs US$1,963/t
China Tungsten APT 88.5% FOB US$289/t vs US$287/t
China Graphite Flake -194 FOB US$515/t vs US$515/t
Europe Vanadium Pentoxide 98% US$8.9/lb vs US$8.9/lb
Europe Ferro-Vanadium 80% US$39.25/kg vs US$39.75/kg
Spot CO2 Emissions EUA $57.4/t vs $57.8/t
Battery News
Robert Friedland’s Ivanhoe Capital Acquisition, a special acquisition corporation (SPAC), to assist EV battery supplier SES list on NYSE
“Partnership with Ivanhoe and Robert Friedland, both to debut as a public company and to build a long-term sustainable battery ecosystem for the auto industry,” Dr Qichao Hu, SES Founder and CEO announces, commented on the announcement.
The combination will imply a $3.6bn pro forma equity value (including a $300m earn-out), with the company listing on the NYSE under the ticker SES. The goal is to offer SES’s advanced Li-Metal batteries increased opportunity for widespread commercialisation.
Singapore-based SES, that develops hybrid lithium-metal rechargeable batteries for EVs, will get as much as $476m in gross proceeds including $276m from Ivanhoe as well as $200m in fully committed private investment in public equity (PIPE) with contributors including Koch Strategic Platforms, Hyundai, Geely, Kia and General Motors.
Development agreements have been confirmed this year with both Hyundai and Kia as well as General Motors who have taken an interest in the technology since 2015.
Manufacturing agreements confirmed with General Motors in Boston, Massachusetts, and SES plans to have the technology commercially available on mass scale by c.2025.
Li-Metal batteries are leading the technological charge in the EV industry, delivering energy density of 400 Wh/kg with a fast charge capacity up to 80% in less than 15 minutes.
Safety and performance measures and requirements have been verified by two independent third-party testing facilities. Ivanhoe have commissioned industry leading battery advisors to better understand SES’s utilisation of Li-Metal technology. Their conclusion is that the product is leading the race for maximum performance and efficiency in the field.
LG Chem to increase investment to boost battery business
Petrochemical producer, LG Chem, will invest 10 trillion won by 2025 to accelerate the “sustainable growth” of its battery materials operations, in a shift towards greener practices.
6 trillion won of the investment will go into expanding production lines of its battery materials and 3 trillion won will go into producing eco-friendly petrochemical products.
The private sector in South Korea has been rushing to announce massive investment plans to reduce their carbon footprint and foster sustainable growth.
SK Innovation Co. earlier this month said it will invest 30 trillion won through 2025 to strengthen its green business portfolio, mainly in battery and recycling plastic waste.
On Tuesday, Lotte Chemical Corp. said it will spend 4.4 trillion won through 2030 to increase hydrogen output.
LG’s investment in its battery materials operations comes amid surging demand for electric vehicles. The company predicts the materials market will grow to about 100 trillion won in 2026, from 39 trillion won in 2021.
With increased demand, LG Chem will start building a cathode materials production facility in Gumi from December with an annual capacity of 60,000 tons, it said. LG expects its cathode output capacity to rise to 260,000 tons in 2026, from 40,000 tons in 2020.
LG and Samsung reportedly produce samples of Tesla’s 4680 battery cell
LG Energy Solutions and Samsung SDI have both reportedly completed the first sample cells of Tesla’s 4680 battery cell as they eye a big contract from the automaker.
The 4680 battery cell – a new tabless battery cell in a bigger format with a new chemistry – was announced by Tesla last year.
Four of the world’s biggest battery suppliers, Panasonic, LG Energy Solutions, CATL, and Samsung SDI, have all announced plans to build the 4680 cells for Tesla – a report from The Korea Herald suggests that both LG and Samsung have completed the first sample cells.
The planned 4680 cells have the potential to be cheaper, more efficient, and, therefore, enable a longer range or smaller battery packs.
Company News
Anglo Asian Mining (LON:AAZ) 136p, Mkt Cap £155m – Q2 production update reports robust results
BUY
Production totalled 16.7koz GEOs (Q2/20: 14.3koz) including:
Gold production of 12.3koz (Q2/20: 12.0koz)
Copper production of 695t (Q2/20: 648t)
Silver production of 43.6koz (Q2/20: 24.0koz)
In terms of gold production, agitation leaching plant contributed 6.8koz (Q1/21: 7.2koz) as higher throughput compensated some slight drop in processed grades while heap leaching operations accounted for 5.0koz (Q1/21: 4.3koz).
Flotation and SART circuits accounted for 394t and 301t of copper production, respectively (Q1/21: 362t and 276t).
Gedabek underground mining rates are picking up with 60kt mined in Q2/21 at 1.73g/t compared to 40.8kt at 1.41g/t in the previous quarter offering an increasing share of higher grade feed into the processing plant.
COVID-19 restrictions within Azerbaijan continued to ease during Q2 2021 with the vast majority now lifted
Gold bullion sales were 13.9koz (excluding PSA) at an average $1,808/oz (Q1/21: 5.6koz at $1,697/oz).
Copper concentrate sales amounted to 3.5kt generating $9m in revenues (excluding PSA; Q1/21: no sales of concentrate recorded).
The Company had $36.6m in cash as of Q2/21 as well as $7.8m worth of unsold inventory including $3.3m of gold and $4.5m of copper concentrate accounting for no sales in Q1/21.
H1/21 production totalled 32.2koz GEO including 24koz gold and 1.3kt copper.
The Company reiterated the 2021 production guidance for 64-72koz GEO including 48-54koz gold and 2.5-2.8kt copper.
The team is planning to release maiden MRE on the recently discovered Zafer deposit by early August with preliminary estimates for 8mt at 0.6% Cu and 0.3g/t gold.
Conclusion: Quarterly update reports stable production in Q2/21 with the Company remaining on course to reach reiterated 2021 guidance for 48-54koz gold and 2.5-2.8kt copper. Zafer maiden MRE is due to be released shortly (early August) that is likely to warrant a flotation circuit expansion and production potentially commencing as early as H1/23.
AngloGold (ZAR29,715, Mkt cap ZAR126bn – AngloGold seeks to expand its ore reserves through potential takeover of Corvus for C$4/s (~C$510m)
AngloGold Ashanti aims to consolidate their already considerable stake in Corvus Gold to bolster their ore reserves and focus on assets in North and South America after shedding most of their South African assets in recent years.
Of primary concern to AngloGold is a land package in Nevada, bordering Corvus’s Beatty District in Nevada.
The land package borders AngloGold’s Silicon, Transvaal and Rhyolite exploration assets in the region.
Corvus holds 100% of the North Bullfrog Project covering 90.5sqkm of tenements in southern Nevada and 445 federal unpatented mining claims on the Mother Lode project covering 36.5sqkm.
AngloGold has been making continued efforts to reduce their exposure to South African mining ventures owing to a combination of rising costs, power disruptions and increasing concern over labour relations in the region.
The proposed takeover values the Toronto listed Corvus at $370m, with AngloGold seeking to increase their stake of 19.5% in the company with an all-cash deal at a premium of 55%.
Ariana Resources (LON:AAU) 4.9p, Mkt Cap £55.9m – Chairman highlights readiness for challenges of the coming decade
Ariana Resources reports a profit of £5.09m for 2020 (2019 - £6.98m profit) with the reduction ascribed to “the decline in profitability of our Joint Venture company, Zenit Madencilik San. ve Tic. A.S. ("Zenit"), where our share of their profit for the year reduced by £1.4 million” from £7.89m to £6.48m.
The company reports a 31st December 2020 cash balance of £2.98m (2019 - £0.45m) and, we estimate that free cash flow before financing improved to a positive £2.30m in 2020 compared to a net outflow of approximately £0.36m in 2019.
Looking to the future, in his Statement to shareholders, Chairman, Michael de Villiers, said that “Since our IPO in 2005, we have transformed the Company from a junior gold explorer to one which is sustainably self-financing, holding a diverse portfolio of mineral exploration, development and mining project investments” and highlighted the company as one with “industry-leading discovery cost per ounce of gold and our operational cash-costs which are in the lower quartile”. internationally”.
Describing the Kiziltepe mine as continuing to “perform well above feasibility rates” Mr. de Villiers described this as “testament to the determination and professionalism of the operating team” and said that the planned commissioning of a plant expansion during the second half of 2021 would double plant throughput and “enable a lower unit cost, as lower grade ore is brought on stream. Excellent exploration and development work has identified extensive additional mineral resources in the immediate vicinity of the plant, which have the potential to extend the life of mine significantly”.
He explained that “the successful completion of the Özaltin JV transaction, will allow Ariana to pursue more ambitious exploration programmes.” He noted the expansion of Ariana’s exploration efforts into “Australia, Cyprus, Kosovo, Turkey and the UK”.
Referring to other projects, “the Tavşan Project is awaiting its Environmental Impact Assessment approvals and various provisional permitting applications are in process. At the present rate of progress, we are expecting production at Tavşan to be achieved from late 2022. Meanwhile, further work is ongoing at the Salinbaş Project, with a new drilling programme scheduled to commence later in 2021”.
Describing what he called the “herd of elephants” in the mining sector’s room, Mr. de Villiers described the magnitude of the Covid19 pandemic as having “probably taken most of us by surprise and left many of us considering what are the most important things to us in our working and private lives” and he singled out the growing significance of Environmental Social and Governance issues to the industry; the important issues raised by climate change; and the increasing importance of “Asia, in particular China” as the destination for products of the mining industry as individual elephants of note.
In an historical allusion, he looks “forward to the new "Roaring 20s". As it was 100 years ago, with the world having emerged from a catastrophic pandemic, so will it be today. While the 1920s were marked by the development of technologies which enabled commercial flight, liquid-fuelled rockets, energy distribution and television, the 2020s will be marked by the development of commercial space-flight, renewable energy, artificial intelligence and virtual reality, amongst other technological advances … [and says that Ariana Resources] … finds itself at the dawn of this new age with the capability and financial resources to meet these demands head on”.
Conclusion: Chairman’s review highlights Ariana’s solid production base as a platform for expanded exploration and its preparedness for the wider mining industry challenges of the coming decade.
Bushveld Minerals* (LON:BMN) 12.58p, Mkt cap £150m – Garnet Commerce files claim against VRFB Holdings and Enerox Holdings alleging breach of joint venture agreement
(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="">)
It is interesting that legal action often serves to slows the pace of economic progress and development.
Garnet Commerce Limited has filed a claim against VRFB Holdings and Enerox Holdings alleging breach of their joint venture agreement in relation to Enerox Holdings Limited ‘EHL’.
Garnet Commerce Limited is an Alberta listed company which has “Liable For Dissolution” listed as its Status as of December 2019
See: https://albertacorporations.com/garnet-commerce-ltd
“Garnet's claim form seeks declarations against VRFB Holdings concerning an alleged breach of the joint venture agreement in relation to EHL, in respect of the indirect investment into EHL through VRFB-H by Mustang Energy PLC, as announced on 27 April 2021. VRFB intends to robustly defend the claims.”
Bushveld Energy Limited has an indirect interest in Enerox of 25.25% through VRFB-H, which owns a 50% interest in EHL.
Garnet owns an interest in Enerox through its holding in EHL.
*SP Angel acts as Nomad and broker to Bushveld Minerals.
Beowulf Mining* (LON:BEM) 3.7p, Mkt cap £30.8m – Mining study to commence at Kallak
Beowulf reports that it has awarded a contract to Carci Mining Consultants to conduct a mining study at Kallak, with the study due to be completed by the end of August 2021.
The purpose of the Study is to develop an open pit design and mining schedule based on the upgraded Mineral Resource Estimate for a 25-year life-of-mine operation at Kallak.
The output from the Mining Study will provide better definition for mining equipment selection, product types and production volumes & specifications.
The study will also support project development discussions with The Swedish Transport Agency, the Inland Railway and emerging fossil-free steel producers in Norrbotten.
With respect to the Exploitation Concession application at Kallak, Minister Baylan has said that a decision on Kallak will be made once UNESCO comments are received.
Translated from Swedish, Mr Baylan commented: "we are forwarding this matter to UNESCO so that we can receive their views and then take a decision. Then it is ready, and then my assessment is that the decision made by the government is legal"
We also note that Copperstone Resources has been granted an exploitation concession for its Viscaria operation in Northern Sweden.
The exploitation concession Viscaria k no 7. will be valid for 25 years from the time of award by the Mining Inspector, with the mine operating within Norbotten – placing it in close proximity to Beowulf’s Kallak license.
*SP Angel act as nomad and broker to Beowulf Resources
Cora Gold (LON:CORA) 13.5p, Mkt Cap £33m – High grade close to surface intersections improve confidence at Zone A of the Sanankoro Gold Project
The Company released results from the latest 24 holes representing the remainder of Phase 1 drilling at Zone A at the Sanankoro Gold Project in southern Mali.
Selected results include:
19m at 3.03 g/t Au from 26m in hole SC0410
15m @ 5.43 g/t Au from 46m in hole SC0413
13m @ 4.03 g/t Au from 41m in hole SC0411
16m @ 3.25 g/t Au from 20m in hole SC0419
10m @ 5.22 g/t Au from 63m in hole SC0425
15m @ 5.56 g/t Au from 123m in hole SC0427
20m @ 3.20 g/t Au from 110m in hole SC0428
17m @ 5.54 g/t Au from 117m in hole SC0422
Following completion of Phase 2 deeper drilling at Selin rigs were brought back to Zone A and Zone C to follow up better than expected higher grade areas from Phase 1.
Follow up Phase 2 will test strike and down plunge extensions at both Zone A and C.
The Company completed ~26,400m of its planned 35,000m programme that will be followed by an update of the existing mineral resource estimate (MRE).
The Sanankoro MRE currently stands at 5.0mt at 1.65g/t for 265koz in the Inferred resource category.
Lucara Diamonds (CVE:LUC) C$0.75, Mkt Cap C$298m – Karowe enters a ‘pink patch’ as mine yields a 62 carat pink diamond
Lucara Diamonds reports that it has recovered a 62.7 carat pink diamond from its wholly owned Karowe diamond mine in Botswana.
The newly discovered diamond, which “was recovered from direct milling of ore sourced from the EM/PK(S) unit of the South Lobe” at Karowe has been given the Setswana name for ‘joy’ - Boitumelo.
The company says that as well as the Boitumelo diamond, which it says “represents the largest fancy pink gem to be recovered in Botswana and one of the world's largest rough pink diamonds on record … A superb, 22.21 carat fancy pink gem of similar quality was also recovered during the same production period along with two additional pink gems of similar colour and purity weighing 11.17, and 5.05 carats “.
Welcoming the discovery, CEO, Eira Thomas, said that these discoveries “demonstrate the continued potential for large, coloured diamonds from the South Lobe production. These remarkable pink diamonds join a collection of significant diamond recoveries in 2021 produced from the EM/PK(S) which forms a key economic driver for the proposed underground mine at Karowe”.
Phoenix Copper* (LON:PXC) 46p, Mkt Cap £59.4m – Sulphide mineralisation in first deep hole at Empire mine
(Phoenix holds 80% of the Empire mining property in Idaho)
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Phoenix Copper reports that the first hole of its deep drilling programme for sulphide mineralisation at the historic Empire mine site in Idaho has intersected a 12.6m wide zone of sulphide mineralisation beneath the oxide-open pit deposit.
Although assays are not yet available, Hole KXD-21-02 “intercepted 12.6 metres of sulphide-rich mineralisation” which showed an estimated 25% sulphide mineral content over 7.9m from a depth of 173m and more intense mineralisation, estimated at “up to 75% sulphide minerals from a depth of 181 metres over 4.7 metres”.
The company confirms that the mineralisation encountered “comprises copper bearing sulphide ores, including chalcopyrite, chalcocite and bornite, as well as other metallic sulphides, including galena, argentiferous galena, sphalerite and molybdenite visually identified”.
Phoenix Copper says that this initial sulphide intersection “sits just below and to the east of the historical 1100-level underground workings. The true thickness of the intercept has not been defined by the single drillhole but will become more defined with additional drilling”.
CEO, Ryan McDermott, confirmed that “Our geologists have visually identified a mix of sulphides that include, but are not limited to, chalcopyrite, chalcocite, galena, argentiferous galena, bornite, sphalerite, and molybdenite occurring in hole number KXD21-02 at concentrations up to 25% sulphide minerals from a depth of 173 metres over 7.9 metres. The mineralisation then becomes more intense at 181 metres over a 4.7 metre interval and increases to approximately 75% total sulphides … [and also that] … Samples of the core are currently being logged and prepared for shipping to ALS Laboratories in Nevada, USA.”
He also said that ”It is worth mentioning that core hole KXD21-01, the first hole of the 2021 Deep Sulphide programme, encountered an underground working at approximately 68 metres and will be completed in due course when the required equipment arrives”.
Photographs available on the company’s website www.phoeniccopperliited/com/photo-gallery show sections of show intensely mineralised drill core in their storage boxes and we echo Mr. McDermott’s sentiment that “We look forward to receiving the assays from KXD21-02, as well as the assays from all of the 2021 drilling, and sharing those results with shareholders as they become available.” it will be interesting to compare these photographs with the assay results when they become available.
He also confirmed that these results reinforce “our geological model that the deeper Empire underground deposit represents a major ore system, which we are only just beginning to evaluate and understand”.
The hole is the first of a 20-hole programme of 4,500m of core drilling planned during 2021 to investigate the underlying mineralisation which underpinned historical mining “until the early 1940s at head grades of up to 8% copper.” Other drilling priorities for 2021 include “2,300 metres of reverse-circulation drilling at the Navarre Creek gold zone, 3,000 metres of diamond core at the high grade silver-lead Red Star and Horseshoe/White Knob targets, and 3,000 metres of dual-rotary drilling for hydrological characterisation as part of the development of the Empire Mine open pit deposit”.
Conclusion: In view of the historic Empire mine’s long history of sulphide copper production dating from the turn of the 19th/20th century until the 1940s, intersecting sulphide mineralisation at depth beneath the planned oxide open pit is not necessarily too unexpected, however, the high sulphide content seen in the drill core is a robust vindication of Phoenix Copper’s geological model for the underlying ore system and we await the assay results from the current drilling and results from the continuing programme with considerable interest.
*SP Angel act as Nomad for Phoenix Copper
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
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
DISCLAIMER
This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.
This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.
This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.
This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.
Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.
Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.
SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).
SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.
MiFID II - Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.
A full analysis is available on our website here https://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).
SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%
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