SP Angel . Morning View . Thursday 29 07 21
Fed dovish stance propels US dollar denominated commodities higher
Anglo American (LON:AAL) – Record H1 performance as stimulus measures spur recovery
BeMetals (CVE:BMET) – Technical report for Kato Gold project identifies multiple drill targets
Caerus Mineral Resources (LON:CMRS) – Disposal of Black Pine licences
Keras Resources* (LON:KRS) – Mining season commences at Diamond Creek
Kodal Minerals* (LON:KOD) – Nielle project shows intersections of wide gold mineralisation in drill results
Oriole Resources (LON:ORR) – Exploration progress at Senala, Senegal
Rainbow Rare Earths* (LON:RBW) – Rainbow investigates lower cost route to higher value NdPr, Tb and Dy products at Phalaborwa
Talga Group (ASX:TLG) – ISO 9001 quality control certification secured
US bipartisan $1tn infrastructure bill inches closer to completion
The new US infrastructure bill advanced in the US Senate yesterday, crossing a major milestone in legislative procedure. The Senate passed the bill 67-32 after months of negotiations, with 17 Republicans passing the first procedural vote.
The bill includes major funding for physical infrastructure including roads, bridges, and broadband.
$550bn will be injected into U.S. infrastructure investment.
$15n will be utilised for expanding the country’s EV charging network, marking ‘the first-ever national investment in EV charging infrastructure in the United States’.
A combination of $7.5bn in loans and $7.5bn in grants will be allocated to the EV charging network.
The Energy Secretary, Jennifer Granholm, announced $60mn would be invested in funding for 24 projects targeting reducing carbon emissions from cars and trucks.
Gold prices rise as real yields hit record low after Fed meeting
Gold prices climbed higher this morning after the Fed commented that its moving closer to reducing stimulus, although the central bank wants to see more progress towards its goals first.
Spot gold rose 0.6% earlier this morning following a 0.5% rise yesterday – and is looking to challenge the $1,820/oz level.
Treasury yields edged lower following the meeting, which has provided support to gold in recent months as falling yields reduces the opportunity cost of holding non-interest bearing bullion.
Real yields, which account for inflation, hit a record low of -1.1829%.
A weaker US dollar is also providing support for gold, with the dollar index down 0.55% since Tuesday morning.
A report from the World Gold Council shows that central bank gold buying surged in the first half of this year – 39% higher than the five-year average for the period.
Strong buying over the period included the central banks of Thailand, Hungary, Brazil, India and Uzbekistan.
World Gold Council says global demand for gold yet to recover from pandemic
The WGC has announced that gold use over the first half of 2021 was the lowest it’s been since 2008.
The shock of the pandemic caused jewellers’ demand to reduce as stores were shut and incomes were hit.
During the early stages of the pandemic investors seeking a safe haven for their capital offset reduced demand from both central banks and jewellers. Demand has now fallen owing to the recovery of major economies in Europe and the U.S.
April to June saw global demand of 955.1 tonnes, a reduction from 960.5 tonnes over the same period in 2020. The second quarter of 2019 saw demand of 1,132.1 tonnes.
Conversely, central banks bought more gold between April and June 2021 than any quarter for two years.
ETFs also added considerable amounts of gold to their stockpiles in the second quarter of this year.
Peru – New president vows to press extractive industries for a “social pact”
President Castillo has commented that mining electricity and oil and gas projects would have to contribute economically and socially, which he said meant "a new social pact with private investors, with the state intervening to reduce costs, facilitate processes and safeguard legal stability, and in exchange the local population and the country receive revenue for development and to create greater opportunities."
Castillo offered a new stimulus of $180 for poor families and pledged not to live or work in the presidential palace, turning it into a museum instead.
Dow Jones Industrials -0.36% at 34,931
Nikkei 225 +0.73% at 27,782
HK Hang Seng +2.69% at 26,160
Shanghai Composite +1.26% at 3,404
Economics
US – Fed acknowledged the progress towards its goals of full employment and 2% average inflation
Critically the Fed also suggested that the current pace of asset purchases ($120bn pm) to remain in place unchanged.
“We expect further progress, and we expect that if things go well then we will reach that goal… and when we reach it, and the committee is comfortable that we have reached it, then we’ll taper at that point,” Jerome Powell said yesterday.
Government bond yields pulled back on the announcement with 10y Treasuries hitting 1.2% while equity indices closed higher on the day.
The US$ index was down on the day helping commodities including oil, copper and gold higher.
Interest rates – Capital economics see inflation falling back towards central bank targets with policy tightening to be more limited and to come later than markets expect
“Even in the US, where inflation is a bigger threat, we do not expect interest rate hikes until the first half of 2023.”
Germany – Good labour data released today with the number of unemployed falling more than forecast.
“Unemployment and underemployment have continued to fall sharply since the start of the summer break… companies are increasingly looking to hire new staff,” Labour Office commented on the data.
Unemployment Change (‘000): -91 v -39 (revised from -38) in June and -29 est.
Unemployment Rate: 5.7% v 5.9% in June and 5.8% est.
UK – Great Britain will allow visitors arriving from “amber” list countries who were fully vaccinated in the US and much of Europe to avoid quarantine on arrival to England, Scotland and Wales.
The new rules come into effect from August 2 and apply to passengers coming from the US, EU member states, European Free Trade Association nations as well as Andorra, Monaco and Vatican City.
Visitors will still require to carry the pre-departure test before arrival and take a PCR test on day two of returning to England.
Separate rules will apply to France with travellers will be required to quarantine for 10 days and undergo virus testing on day two and eight.
Northern Ireland is yet to make an announcement.
Turkey – Central bank lifted its inflation forecasts for the end of the year amid high commodity prices and the local currency trading around record low levels driving import costs higher.
CPI growth is estimated to finish the year at 14.1%, up from 12.2% forecast previously, Governor Sahap Kavcioglu said in an inflation report released by the central bank.
The lira is up this morning with the Fed dovish comment helping risk sentiment.
Seafarer Workforce Report warns of potential for labour crisis in shipping industry
The International Chamber of Shipping and BIMCO have released a report encouraging a major increase in recruitment and training of seafarers.
The report highlights concern of a major shortage of officers by 2026 unless action is taken imminently.
The world merchant fleet will require an additional 89,510 officers by 2026 for operation at current capacity.
The report highlights a current shortfall of 26k certified officers, showing that 2021 seafarer demand has considerably outpaced supply.
The 5-year report follows concerns that tens of thousands of seafarers stranded at sea owing to pandemic restrictions on crew change could be set to quit the industry.
Currencies
US$1.1856/eur vs 1.1780/eur yesterday. Yen 109.88/$ vs 110.07/$. SAr 14.711/$ vs 14.907/$. $1.394/gbp vs $1.379/gbp. 0.739/aud vs 0.734/aud. CNY 6.472/$ vs 6.509/$.
Commodity News
Precious metals:
Gold US$1,818/oz vs US$1,805/oz yesterday
Gold ETFs 100.2moz vs US$100.2moz yesterday
Platinum (AIM:ZERO) US$1,078/oz vs US$1,061/oz yesterday
Palladium US$2,651/oz vs US$2,632/oz yesterday
Silver US$25.33/oz vs US$24.83/oz yesterday
Base metals:
Gold US$1,818/oz vs US$1,805/oz yesterday
Gold ETFs 100.2moz vs US$100.2moz yesterday
Platinum US$1,078/oz vs US$1,061/oz yesterday
Palladium US$2,651/oz vs US$2,632/oz yesterday
Silver US$25.33/oz vs US$24.83/oz yesterday
Energy:
Oil US$75.2/bbl vs US$74.8/bbl yesterday
Natural Gas US$3.950/mmbtu vs US$3.949/mmbtu yesterday
Uranium - Cameco CEO highlights rising uranium demand and uncertain supply
Tim Gitzel, Cameco’s CEO has warned of a ‘growing wedge of uncovered uranium requirements.’
1.6bn pounds of uranium have been consumed in reactors since 2011. Only half of that amount forms part of long-term utility contracts.
16 million pounds of uranium has been purchased through the end of June this year according to the mineral producer. Both junior uranium companies and investment funds are accountable for the purchases.
Owing to low prices, several uranium mines have been mothballed over the past decade.
The price of uranium peaked at $137lb in 2007.
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$198.4/t vs US$197.0/t
Chinese steel rebar 25mm US$835.1/t vs US$832.9/t - ArcelorMittal enjoys soaring profits amid rising steel demand
The world’s largest steelmaker has reported its highest profits since 2008.
Steel prices have been buoyed by the global economic recovery as pandemic induced lockdowns were lifted following vaccine rollouts.
ArcelorMittal’s profits rose 7x in the second quarter, netting the company $5.1bn and exceeding analysts’ predictions by some way.
Supply constraints have also contributed to elevated steel prices, with chief executive Aditya Mittal pointing to ‘a sustained lean inventory environment’ as a major contributing factor.
Alongside a $2.2bn share buyback programme, the company has upgraded its forecast steel consumption growth by 3%.
The company is expected to make considerable investments into decarbonising its steel production facilities, with expectations of net-zero emissions by 2050. They plan to inject $10bn in the next decade into technologies such as green hydrogen and electric arc furnaces.
ArcelorMittal has enjoyed a share price rise of 51% this year.
Thermal coal (1st year forward cif ARA) US$96.0/t vs US$94.8/t
Coking coal swap Australia FOB US$209.0/t vs US$209.0/t
China Illmenite Concentrate TiO2 US$359.25/kg vs US$357.4/t
Other:
Cobalt LME 3m US$52,500/t vs US$52,500/t
NdPr Rare Earth Oxide (China) US$93,095/t vs US$91,082/t
Lithium carbonate 99% (China) US$12,979/t vs US$12,759/t – Rio Tinto’s $2.4bn investment plan for Jadar is huge vot of confidence in longevity of Li-ion battery technology
China Spodumene Li2O 5%min CIF US$740/t vs US$730/t
Ferro-Manganese European Mn78% min US$1,844/t vs US$1,836/t
China Tungsten APT 88.5% FOB US$300/t vs US$295/t
China Graphite Flake -194 FOB US$515/t vs US$515/t
Europe Vanadium Pentoxide 98% 9.6/lb vs US$9.6/lb
Europe Ferro-Vanadium 80% 40.75/kg vs US$40.55/kg
Spot CO2 Emissions EUA Price US$57.8/t vs US$57.6/kg
Battery News
Rio Tinto to build solar-plus-storage project at Gudai-Darri mine
Rio Tinto have contracted civil contractor NRW Holdings to build a 34MW solar-plus-battery energy storage system at the Gudai-Darri iron ore mine.
The project will comprise an estimated 100,000 solar panels accompanied by a 12 MWh lithium-ion battery energy storage system that will provide reserve generating capacity to support a stable and reliable network.
Construction is expected to start August 2021 and conclude in 2022 – the solar plant is expected to supply all Gudai-Darri’s electricity demand during peak solar power generation times and approximately 65% of the mine’s average electricity demand.
The AU$60m solar-plus-storage contract will be effective as the Gudai-Darri mine ramps up production from early 2022 to reach an annual capacity of 43 million tonnes of iron ore.
Hyundai and LG to establish EV battery factory in Indonesia
Hyundai Motor Group and LG Energy Solution have announced a joint venture to build an EV battery cell factory in Indonesia, investing approx. $1.1bn with each owning half the business.
The joint venture will provide Hyundai, and sister company Kia, a secure and stable supply of EV batteries as they seek to increase their EV portfolios.
The news comes as global automakers move to secure EV batteries in anticipation of a rise in sales because of government subsidies and quotas worldwide seeking to cut carbon emissions.
A memorandum of understanding has been signed with the Indonesian government to build the plant in the country, with construction of the plant expected to start in the Q4 2021 and will be completed by the first half of 2023, the companies said.
Ørsted seek to increase size of delayed US offshore wind project
Despite continuing delays for a proposed wind farm in the US, Ørsted has submitted a bid to increase the size of that wind farm sixfold.
Ørsted has submitted a bid to the Maryland Public Service Commission to develop Skipjack Wind 2, a proposed project of up to 760MW. The company’s Skipjack Wind 1, expected to produce 120MW, is currently in the development phase.
The recent bid is in response to the commission’s call for proposals for Round 2 offshore wind projects – the commission can award at least 1,200MW of Offshore Wind Renewable Energy Credits.
Battery recycling start-up Redwood Materials raises $700m
Founded by Tesla co-founder JB Straubel, the battery recycling start-up has completed a funding raise of more than $700m.
The raise provides more capital than the company’s first six equity rounds combined.
Now supposedly valued at $3.7bn, the start-up aims to reduce the U.S. EV industry’s reliance on the mining of new raw ingredients.
Straubel, in an interview with the FT, stated that recycling is ‘pivotal to the future of batteries and keeping the supply chain thriving domestically’.
The US Department of Energy estimates that less than 5% of lithium-ion batteries are recycled.
EV charging company Allego to list via Apollo special purpose acquisition company (SPAC)
The Dutch EV charging company has agreed a merger with private equity firm Apollo’s Spartan Acquisition Corp III, valuing the company at around $3.14bn.
The news follows decisions by US charging station providers ChargePoint and EVgo to go public last year.
The merger highlights the attraction of the expanding European EV industry. The region overtook China in terms of sales last year.
Company News
Anglo American (LON:AAL) 3,253.5p, Mkt Cap £42.6bn – Record H1 performance as stimulus measures spur recovery
Anglo American has reported a strong performance during the first six-months of 2021 with an increase of 262% in underlying EBITDA to US$12.1bn and of 1,001% in attributable profit to US$5.2bn.
Chief Executive, Mark Cutifani, attributed the performance to a strong recovery in demand “spurred by stimulus measures across the major economies”
He also emphasised the role of “platinum group metals and copper - essential to the global decarbonisation imperative as we electrify transport and harness clean, renewable energy - and premium quality iron ore for greener steelmaking, supported by an improving market for diamonds, all contributed to a record half year financial performance”.
Anglo American is proposing an interim dividend of $1.71/share, equivalent to US$2.1bn “In line with the Group's established dividend policy to pay out 40% of underlying earnings”.
In addition, in a move to return cash to shareholders, “the Board also approved a special dividend of $0.80 per share, equivalent to $1.0 billion, as well as the establishment of a $1.0 billion on-market share buyback programme”
The US$ 4.9bn contribution of iron ore to the underlying EBITDA (2020 – US$1.8bn) was almost matched by the US$4.4bn produced by the PGMs business (2020 -US$0,6bn).
Copper generated US$1.9bn of EBITDA (2020 – US$0.7bn) while De Beers bounced back to generate US$0.6bn (2020 -US$2m).
Operating cash flows increased to US$10.7bn from US$1.5bn “reflecting an increase in underlying EBITDA from subsidiaries and joint operations, partly offset by a price-driven build-up in working capital of $0.8 billion”.
Increases in capital spending including US$2.3bn in response to Covid19, sustaining capital of US$1.4bn and growth capital of US$0.8bn all contributed to an increase in attributable free cash flow to US$5.4bn reversing the US$1.3bn outflow during the first half of 2021.
Anglo American lists expansion to its copper operations at Quellaveco and Collahuasi, the Woodsmith polyhalite development in Yorkshire and expansion of PGM production at Mogalakwena amongst it growth projects.
Anglo American also confirms the previously announced proposal to divest its interest in the Cerrejon coal operation in Colombia as well as its exit from the thermal coal operations in S Africa.
The company has also announced a “ special contribution of $100 million to the Anglo American Foundation” to support the United Nations' Sustainable Development Goals “placing a particular importance on programmes that empower women, youth and vulnerable groups in Anglo American's host communities and countries of operation”.
BeMetals (CVE:BMET) – C$0.35, Mkt cap C$62.1m – Technical report for Kato Gold project identifies multiple drill targets
BeMetals reports that it has compiled a technical report for its Kato Project in Japan, based on geological work conducted by the Metals and Mining Agency of Japan (MMAJ) in the 1990s, and subsequent drilling between 2018-2020 by Kazan Resources prior to being acquired in April 2021 by BeMetals.
Notable historic drill intersections at the Kato Project include:
Hole 5MAHB-2 17.5m @ 8.15 g/t from 314.8m
Hole 7MAHB-1 @ 18.7m @ 5.01 g/t from 258.9m
Hole KT19-02A @ 56.6m @ 0.8 g/t from 120.5m
Including 27.6m @ 1.4 g/t from 137.0m
Hole KT20-010 Interval 1 - 58.9m @ -.76 g/t from 165.3m
Including 7.4m @ 2.99 g/t from 167.7m
Hole KT20-010 Interval 2 - 2.8m @ 3.1 g/t from 229.8m
The Kato mineralization is considered an example of a low-sulphidation epithermal system in Japan, with BeMetals commenting that this style of gold mineralization is similar to the Hishikari Gold Mine in Kyushu, the largest in Japan.
The 1990s MMAJ drilling at Kato identified a zone of higher-grade gold mineralization over approximately 170 metres of strike with an additional kilometre of potentially-favorable geology largely untested by drilling to the southeast.
John Wilton, President and CEO of BeMetals commented: “This month we are pleased to have completed the first formal technical report for our Kato Gold Project in Japan which has included field validations and related drill core review. The field inspections were conducted this year. The four high priority drill targets generated from this work are very exciting and include strong geological motivation for confirmation and extensions to the high-grade, main zone, intersected by MMAJ’s historical drilling.”
“The historical drilling also indicates broader lower-grade gold intercepts with alteration zones surrounding the high-grade veins. Table 1 above indicates selected intersections of both styles of gold mineralization.”
We also note that BeMetals is hosting an investor webinar this evening at 7pm U.K time, link to register: https://bemetalscorp.us19.list-manage.com/track/click?u=c186a85e369b442509550a27e&id=de473ce4f6&e=953e644d8a
Caerus Mineral Resources (LON:CMRS) 26p, Mkt Cap £12.4m – Disposal of Black Pine licences
Caerus Minerals reports the disposal of its Black Pine nickel/cobalt project in Cyprus to the unlisted Australian company, Aeramentum Resources for a total of £500,000 in cash and shares.
The Black Pine project covers 4 existing licences over a 15km strike length of Ni-Co-Cu massive sulphide mineralisation in southern Cyprus.
The licence area “will extend to 45km upon issue of two additional 25km2 Reconnaissance Licence now under application. Upon completion, Aeramentum will have 100% ownership of licences that encompass all known Ni-Co-Cu mineralisation and prospective geology”.
The “£300,000 cash element of the transaction is payable in two tranches, GBP£30,000 immediately in the form of a non-refundable deposit, and the balance of GBP£270,000 on or by 31 August 2021”, while the equity “is payable to the Company in the form of shares in Aeramentum, valued at GBP£200,000 and issued to the Company at the IPO price when Aeramentum becomes a public listed company on the ASX”.
Explaining the background to the disposal of the ‘non-core’ Black Pine project, where Caerus Minerals does not have an allocated exploration budget, the company says that a licence renewal is due this year and that it sought to preserve the value of the project.
CEO, Martyn Churchouse, explained that “The cash component covers the full cost of the recent acquisition of the highly prospective suite of copper-gold licences that make up Cyprus Gold Mines, the financially neutral transaction neatly offloads non-core assets whilst bolstering our Cu-Au portfolio and finally, we are making available exploration licences that has immediately resulted in further investment in the Exploration Sector in Cyprus”.
Keras Resources* (LON:KRS) 0.09p, Mkt cap £5.81m – Mining season 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 mining is underway at Diamond Creek, and will continue through to October 2021 with 10,000 run of mine tons to be produced this year.
The increased tonnage from 2020 (7,620t) is as per the Company’s forecast increase for the year and the material will be processed and sold throughout the annual campaign.
Keras expect annual production to rise to 48,000t in the next five years.
Russell Lamming, CEO of Keras Resources, commented, "It is great to be back on the mountain and have this year's mining underway. Our processing plant is operating at nameplate capacity, and we continue to secure sales for our range of premium products with both new and existing customers."
*SP Angel act as Nomad and Broker to Keras Resources
Kodal Minerals* (LON:KOD) – 0.41p, Mkt cap £63m – Drilling shows intersections of wide gold mineralisation from Nielle, Cote d’Ivoire
Kodal Minerals report a number of wide intersections of gold mineralisation in drilling at the Nielle project in the Ivory Coast.
12 reverse circulation drill holes covering 1,285m confirm gold zones and target extensions >1,000m with mineralisation open at depth and along strike.
Infill drilling will be required to work up a JORC resource on the property as drill sections with drill collars 50m apart and drill sections currently up to 100m.
The results also include a number of high-grade gold zones with grades of:
Further drilling has confirmed drill intersections to north and south along strike of the previously defined gold mineralised zone with a new western zone intersected.
Lithium: Firefinch (ASX:FFX) which holds the Goulamina lithium project next to Bougouni reports it is working on satisfying the conditions required for the new Ganfeng joint venture.
Ganfeng will invest $130m of equity and will provide up to $64m of debt funding. Firefinch now plans to demerge the lithium project into a separate ASX listed company.
Lithium prices continue to rise with carbonate rising to US$12,979/t today vs US$12,759/t yesterday and spodumene prices rising to US$740/t from US$730/t yesterday in China.
Bougouni lithium project key stats:
220,000tpa of 6% spodumene concentrate over an initial 8.5 years
71% recovery rate of contained lithium based on laboratory metallurgical recoveries of 75%;
>USD$1.4bn of total revenue at $680/t starting H2 2021 and rising 2%pa
2mtpa throughput with DMS and conventional flotation circuit. Recoveries are acceptable with the DMS on its own.
USD$431/t C1 cash costs or USD$466/t inc. royalties and sustaining capital.
US$117m Capex est. plus contingency:
1.7 year payback est.
LoM production of 1.94mt of concentrate. Sales >$1.4bn assuming spodumene concentrate sales price of $680/t increasing 2% year-on-year;
58% IRR pre-tax
51% IRR post tax
US$300m NPV7% pre-tax
US$200m NPV7% post-tax
33m grading 2.33g/t gold from 3m depth
including 6m at 7.99g/t gold from 6m
12m grading 5.96g/t gold from 6m
including 6m at 11.45g/t gold from 6m
6m at 6.51g/t gold from 87m
including 9m at 3.02g/t gold from 24m; and
9m at 3.76g/t gold from 99m
The team have identified a wide hydrothermal alteration zone consisting of quartz-carbonate veining, sulphide mineralisation, iron-oxide staining and chlorite minerals.
Management are to undertake a detailed review of these results along with a new round of rapid aircore drilling before planning the next RC drill campaign.
Conclusion: Early drilling results at Nielle have produced wide intersections of gold mineralisation including higher grade sections and some from relatively shallow depths. The company is expecting to analyse the potential for high grade ore-shoots and a detailed review of the results ahead of a further phase of drilling.
*SP Angel acts as Financial Advisor and Broker to Kodal Minerals. The analyst holds shares in Kodal Minerals.
Oriole Resources (LON:ORR) – 0.55p, Mkt cap £8.7m – Exploration progress at Senala, Senegal
Oriole Resources reports that Iamgold, which is earning an initial 51% interest in the Senala project, with an opportunity to extend this to 70% through the expenditure of a further US$4m, has completed Phase 1 exploration at the northern, Faré project tand is now working on Phase 2 of the Madina Bafé project located within 10km of its Boto gold development project.
At Faré, 689.5m of core drilling has been completed in two holes with a further 4,845m of reverse-circulation drilling completed “to test the depth extension of the main mineralised zone at Faré South” and to test previously defined aircore anomalies.
“Samples have been sent to the laboratory for analysis and results are anticipated during Q3 2021.”
At Madina Bafé, 493m of core drilling (3 holes) and 3,111m of a planned 5,000m reverse-circulation drilling programme have been completed to test “a northeast-trending mineralised shear corridor that has recently been subject to artisanal mining”.
Drilling at Madina Bafé is expected “to be completed in Q4 2021, after the seasonal rains”.
Explaining the importance of an understanding of “the geological and resource potential at both the Faré and Madina Bafé targets”, CEO, Tim Livesey, explained that “Positive results at Faré would offer the potential to take us closer to delivering a maiden resource, whilst positive results at Madina Bafé may mean the prospect consolidates as a satellite target for the neighbouring Boto mine development project”.
Rainbow Rare Earths* (LON:RBW) 12.35p, Mkt Cap £59m – Rainbow investigates lower cost route to higher value NdPr, Tb and Dy products at Phalaborwa
(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)
(Neodymium Nd, Praesidium Pr, Terbium Tb, Dysprosium Dy)
Rainbow Rare Earths report good progress on testwork for the extraction of key rare earths from gypsum tailings at Phalaborwa in South Africa.
The tailings retreatment project which is not subject to Black Economic Empowerment regulations is showing promising results.
Phalaborwa’s phosphorgypsum is amenable to direct leaching using conventional sulphuric acid, removing the need to use stronger and more expensive acids from the treatment process.
This is a big advantage for the project from a capital and operating cost perspective.
The pregnant leach solution can then be used to create a conventional mixed rare earth carbonate
Rainbow’s metallurgical team, led by Dave Dodd are also looking at an alternative flow sheet to produce higher value NdPr, Tb oxide and Dy oxide products directly.
Production of a traditional mixed REE carbonate would realist around 60-65% of the contained metal oxide value versus close to 100% of the metal oxide value on production of individual metal oxides
Rainbow would also retain the REE residue for further process if prices for other contained REEs rise to interesting levels.
The work being done will feed into a trade-off study to assess the viability of the additional cost of producing the NdPr TbDy REE oxides directly
NdPr Rare Earth Oxide prices continue to rise in China reaching US$93,095/t from US$70,226/t in January.
Demand from offshore wind farms: Announcements on a number of new offshore wind farm projects are expected to drive new demand for NdPr.
South Korea recently announced it would go ahead with plans to build a new 8.2GW offshore wind farm.
There are now 162 offshore wind farms in operation with a further 26 under construction and many more planned around the world.
Offshore wind turbines using permanent magnets use 230kg/MW in each direct drive turbine and a further 60-70kg if a gearbox is used.
With another 60GW of offshore wind capacity planned by 2030 and assuming all instillations use direct drive permanent magnet synchronous generators this could require some 13,800t of NdPr, TbDy content. Officially China produces ~26,000t of NdPr oxide a year representing around 80% of global production.
Valuation: we have modelled a number of scenarios at Phalaborwa using more conservative estimates for the payable value on the REE carbonate and REE oxides presented today.
REE Carbonate: Assuming a 50% playability for a REE carbonate product at current NdPr price levels and a $60m capex we get a value of 26p/s on the project.
NdPr TbDy Oxide: . Assuming a 75% playability for a REE carbonate product at current NdPr price levels and a $90m capex we get a value of 37p/s on the project
Conclusion: Confirmation of the use of sulphuric acid in the processing of the Phalaborwa phosphorgypsum is great news as is the work on the potential production of higher value NdPr, TbDy Oxides.
*SP Angel act as broker and financial advisor to Rainbow Rare Earths
Talga Group (ASX:TLG) A$1.3, Mkt Cap A$405m – ISO 9001 quality control certification secured
The ISO 9001:2015 certification verifies and assures the Company’s quality management systems for the current stage production and distribution of graphite and graphene products.
The certification is required by most automotive, electronic, appliance, and coating customers as part of their procurement processes for new suppliers.
The Company is on schedule for planned Talnode-C sample production to start in Q1/22.
Recent Interviews:
IGTV: Stock picks in the small-cap mining space:
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
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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