SP Angel . Morning View . Wednesday 25 08 21
Gold trades around $1,800/oz ahead of US Fed Powell speech on Friday
MiFID II exempt information – see disclaimer below
Altus Strategies* (AIM:ALS) – Geophysical survey launched at Agdz polymetallic project in Morocco
BHP (LON:BHP) – S&P warns that oil and gas exit threaten credit rating
Empire Metals* (AIM:EEE) – Eclipse update
Oriole Resources (LON:ORR) – Interim report highlights progress in Cameroon and Senegal
Petra Diamonds (LSE:PDL) (LON:PDL) – Sale of 342 carat white diamond from Cullinan
Rambler Metals and Mining* (LON:RMM) – Progress of drilling at the Ming mine with 2021 programme around 60% complete
Dow Jones Industrials +0.09% at 35,366
Nikkei 225 -0.03% at 27,725
HK Hang Seng -0.45% at 25,611
Shanghai Composite +0.74% at 3,540
Chip shortage has kept lid on runaway lithium demand, according to Orocobre CEO
The global shortage of semiconductors has taken some heat out of EV manufacturers demand for lithium, according to Orocobre CEO Martin Perez de Solay.
The shortage of semiconductors has temporarily slowed car making and therefore lithium demand.
Despite this, lithium markets remain tight and mining companies are seeing strong demand for spodumene concentrate and lithium carbonate.
Perez commented: “everything we can produce is being sold, if we had more battery grade or technical grade, we could sell it”
Orocobre’s average received price for lithium carbonate in the first half of fiscal 2021 was just below US$3,500/t, before improving to US$7,042/t in the six months to June 30th.
According to Benchmark Mineral intelligence, in the first two weeks of August, “technical grade” lithium carbonate averaged $13,775/t while “battery grade” lithium carbonate averaged $14,250/t.
Orocobre reports battery grade lithium carbonate and hydroxide spot prices in China trading above $16,000/t, +20% over the past two months amid tight supplies.
Spodumene from Orocobre’s Mt Cattlin mine was selling for US$480/t in Jan, $800/t in June and $1,000/t in July.
Earlier this month Pilbara Minerals reported that it has sold a cargo of spodumene concentrate for $1,250/t.
Orocobre’s president of international business, Simon Hay, commented: “Indications we’ve seen from other players in the market are that sentiment remains very positive and that the spodumene market is quite tight”
Orocobre and fellow Aussie lithium miner Galaxy Resources have completed their $4bn merger, establishing the group as a top five global producer.
The merger requires shareholder approval but plans to rename as Allkem and will have lithium resources in Argentina, Canada and Japan.
Economics
US – Equities rangebound ahead of the annual Fed Chairman speech at the economic symposium at the end of the week that will be held remotely as opposed to traditional place at Jackson Hole, Wyoming.
Markets grew concerned lately Jerome Powell may hint at the potential timetable for tapering stimulus measures amid hawkish comments from different Federal Reserve Presidents.
China – A terminal at the Ningbo-Zhoushan port, the world’s third busiest, is being reopened after a two-week closure to ease pressures on the supply chain.
The Meishan terminal accounted for 4m of the 27m 20-foot equivalent units that were processed at the port in pre-pandemic 2019, FT reports.
Restrictions were removed after employees all tested negative in a final series of Covid-19 tests.
Japan – Authorities are planning to expand its state of emergency to almost 80% of the economy amid rising number of infections, Bloomberg reports.
Eight more prefectures will be put on the list taking total number of affected areas to 21 with restrictions planned to remain in place until September 12.
There is a chance some provinces may delay the restart of the school year.
The number of new cases peaked at >20k daily rate the highest since the start of the pandemic.
The nation vaccinated 41% of population, lagging behind other developed nations, although, the pace has been accelerating lately.
Germany – Business outlook pulls back in August more than expected in August on the back of a global supply chain challenges and increasing infections.
IFO Business Climate: 99.4 v 100.7 (revised from 100.8) in July and 100.4 est.
IFO Current Assessment: 101.4 v 100.4 in July and 100.8 est.
IFO Expectations: 97.5 v 101.0 (revised from 101.2) in July and 100.0 est.
Major terminal at China’s Ningbo port resumes operations
The Meishan terminal at one of China’s largest ports resumed operations following a 2-week shutdown over a single Covid-19 case.
It is expected the shutdown has significantly exacerbated supply chain issues, with logjams across coastal regions and mass-rerouting to Shanghai.
The terminal accounts for 1/5th of one of China’s top two container ports.
The port required 4 rounds of mass testing in the Meishan district before recommencing operations, highlighting the stringent measures involved with the country’s Zero Covid tolerance policy.
The closure saw 68 container vessels queuing at one point, the most in 3 years.
Currencies
US$1.1738/eur vs 1.1741/eur yesterday. Yen 109.77/$ vs 109.77/$. SAr 14.966/$ vs 15.115/$. $1.372/gbp vs $1.373/gbp. 0.725/aud vs 0.723/aud. CNY 6.477/$ vs 6.479/$.
Commodity News
Japan to allocate $1.8bn for hydrogen-based steelmaking
Japan plans to allocate 193.5bn yen over 10 years from its 2 trillion-yen green fund for the development of hydrogen-based steelmaking.
Lack of Covid-19 cases in China improves economic sentiment and lifts iron ore prices
Iron ore prices rose 8% this morning as speculators expect improved demand from China on the back of minimal August infections.
Concerns over the spread of the Delta variant coincided with expectations of production curbs to limit emissions from Chinese steelmakers, causing an iron ore to endure its worst price drop since 2008.
Iron ore prices are still down c. 35% from the record high of $233/t in May.
Analysts have described ‘the clear success that the Chinese authorities are having in combating the spread of the Delta variant’ on reducing concern over Chinese iron ore demand.
Goldman Sachs (NYSE:GS) had last week described the steelmaking ingredient as ‘oversold’.
Fortescue and Tsingshan plan major investment into Borneo hydropower metal smelter
An Indonesian minister has said that Australia’s Fortescue Metals Group (ASX:FMG) and China’s Tsingshan Holding Group are planning to build a metal smelting plant on Borneo.
The minister believes smelting of iron, nickel and copper ores could start as early as 2023.
The presentation revealed a potential $12bn investment from Fortescue and a $30bn injection from Tsingshan.
Groundbreaking for the dam is expected to begin in October.
Indonesia has plans to ramp up processing capacity of its world-leading supply of nickel laterite ore, a main component in lithium batteries, with ambitions to also become a global producer and exporter of EVs.
The move from Tsingshan reflects the company’s ambitions to diversify from its domestic Chinese smelters currently under scrutiny from officials over emissions.
Precious metals:
Gold US$1,793/oz vs US$1,804/oz yesterday
Gold ETFs 99.9moz vs US$99.9moz yesterday
Platinum (AIM:ZERO) US$996/oz vs US$1,015/oz yesterday
Palladium US$2,430/oz vs US$2,411/oz yesterday
Silver US$23.70/oz vs US$23.61/oz yesterday
Base metals:
Copper US$ 9,374/t vs US$9,223/t yesterday
Aluminium US$ 2,619/t vs US$2,599/t yesterday
Nickel US$ 19,210/t vs US$18,990/t yesterday
Zinc US$ 3,020/t vs US$2,951/t yesterday
Lead US$ 2,299/t vs US$2,282/t yesterday
Tin US$ 32,555/t vs US$32,435/t yesterday
Energy:
Oil US$71.1/bbl vs US$69.2/bbl yesterday
Natural Gas US$3.888/mmbtu vs US$3.948/mmbtu yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$148.8/t vs US$135.8/t
Chinese steel rebar 25mm US$809.9/t vs US$808.3/t
Thermal coal (1st year forward cif ARA) US$107.0/t vs US$103.5/t
Coking coal swap Australia FOB US$211.0/t vs US$208.0/t
China Ilmenite Concentrate TiO2 US$366.7/t vs US$366.6/t
Other:
Cobalt LME 3m US$51,500/t vs US$51,500/t
NdPr Rare Earth Oxide (China) US$94,734/t vs US$94,691/t
Lithium carbonate 99% (China) US$16,368/t vs US$16,052/t
China Spodumene Li2O 5%min CIF US$900/t vs US$900/t
Ferro-Manganese European Mn78% min US$1,744/t vs US$1,744/t
China Tungsten APT 88.5% FOB US$305/t vs US$305/t
China Graphite Flake -194 FOB US$525/t vs US$520/t
Europe Vanadium Pentoxide 98% 9.6/lb vs US$9.6/lb
Europe Ferro-Vanadium 80% 39.75/kg vs US$39.75/kg
Spot CO2 Emissions EUA Price US$64.8/t vs US$65.0/t
Battery News
California seeks to boost solar and wind capacity, with an additional 2.5GW of battery storage planned
The California Independent System Operator (CAISO) region aims to ramp up solar and wind capacity this year to meet 50% renewable energy target by 2025, according to the US Energy Information Administration.
The CAISO plans to add a further 1.6GW of utility-scale solar capacity alongside 0.4GW of onshore wind turbine capacity by 2022.
The region also aims to build 2.5GW of additional battery storage capacity, with the batteries charged using renewable power generation.
The state is currently struggling to use purely renewables as an energy source with scorching heatwaves causing air conditioning units to require the utilisation of fossil fuels
China’s MingYang Smart Energy announces 16MW offshore turbine
MingYang Smart Energy has announced a 16MW turbine which would be the largest turbine available for offshore wind.
The MySE 16.0-242 will stand at 264m tall, with a rotor diameter of 242m and 118m long blades that will sweep a 46,000sqm area.
Currently, GE’s Haliade-X turbine, with a configurable capacity of 12, 13 or 14MW, is the largest in production with a tip-height of 260m, a 220m rotor diameter and 107m long blades.
Each of the MySE 16.0-242 turbines would produce 80GWh of electricity annually, a 45% increase in power generation on the company’s MySE 11.0-203, from a 19% increase in diameter.
MingYang is one of several companies attempting to scale-up the size of their turbines – Vestas has revealed plans for a 15MW turbine, while Siemens Gamesa are developing a 14MW turbine that can be boosted to 15MW.
Company News
Altus Strategies* (AIM:ALS) 72p, Mkt Cap £58m – Geophysical survey launched at Agdz polymetallic project in Morocco
BUY – 125p
The team is launching a high-resolution IP geophysical survey on the wholly owned Agdz copper-silver project in the Eastern Anti-Atlas of Morocco.
The study will test four key prospects discovered to date (Makarn, Amzwaro, Miniere and Daoud) testing mapped structures and areas of historical high grade rock chip and soil samples for follow up trenching and drilling programmes.
The 2.80km long Makarn prospect with historical rock chip results up to 8.00 % Cu and 448 g/t Ag;
The 2.00km long Amzwaro prospect with results up to 4.82 % Cu and 189 g/t Ag;
The 0.15km long Miniere prospect with results up to 13.05 % Cu and 12 g/t Ag;
The 0.70km long Daoud prospect with results up to 2.71 % Cu, 152 g/t Ag.
The study carried by specialist contractor is expected to be completed in Sep/21.
The project is well located in a highly prospective mining district with Bou Skour copper-silver development project (9mt at 1.61% Cu) and Imiter silver operating mine found 14km and 80km away from the project, respectively.
BHP (LON:BHP) 2,257p, Mkt cap £118bn – S&P warns that oil and gas exit threaten credit rating
Credit rating agency S&P global has warned BHP that the miner’s decision to sell its oil and has business could threaten its credit rating, as it leaves the group even more reliant on iron ore.
The rating agency said it could lower its rating on BHP by up too two notches in the coming months as the loss of the petroleum unit would result in a “less diversified portfolio”.
S&P also commented that BHP’s expansion into potash as increased focus on nickel and copper were “likely to have a modest impact in the short to medium term”
S&P’s views contrast Moody’s, which commented last week that the sale would be “credit positive” from an ESG perspective.
Empire Metals* (AIM:EEE) 1.65p, Mkt cap £6.7m – Eclipse update
Empire provides a progress update on exploration and development activities currently being undertaken at the Eclipse Gold Project in Western Australia.
Empire has completed three exploratory drilling programmes at Eclipse, consisting of 111 RC drill holes for a total of 9,121m and three diamond drill holes for a total of 201m over the past 12 months.
Drilling to date has shown evidence of several near surface sub-parallel veins and structures coalescing at the Eclipse Shaft, and the stockwork system identified at Jack's Dream remains open along strike and at depth.
Empire also comment that there remains significant areas that require further drilling, such as between Jack's Dream and Eclipse and along strike of the new discovery at Twin Shaft, to test how these may be linked to the Eclipse lode.
Of the 111 RC drilled, 40 intercepted significant gold intercepts above a cut-off grade of 1.3 g/t Au, however only eight holes reported significant gold intercepts within the completely oxidised zone, lying within 30m of surface.
Drilling intersected high-grade gold mineralisation associated with strongly altered Eclipse shear zone associated with strong pyrite-arsenopyrite mineralisation in thin quartz veins and altered wallrock. Such sulphide-rich zones are known to be highly susceptible to gold leaching in the weathered zone.
The gold depletion within the highly oxidised zone has meant that much of the near-surface extensional drilling along strike of the Eclipse lode has not added substantially to the mineralisation previously identified.
Drilling at depth at Eclipse has demonstrated continuation of the high-grade veins, and further drilling at depth is warranted to confirm and grow the extent of the primary mineralisation and to test for further signs of supergene gold enrichment near the base of weathering.
Multiple deep artisanal mine shafts in the vicinity of Eclipse supports the conclusion that mineralisation lodes will most likely be found within the transitional and fresh rock domains.
During the May 2021 drill campaign, samples collected showed very low levels of all deleterious elements and all were highly amenable to gravity/cyanidation recovery.
Empire will now look to build a resource base of scale by continuing to drill the higher-grade targets below the base of oxidation and test the links between Jack's Dream and the main Eclipse ore lode, rather than the initial plan of fast tracking a small-scale open pit centred on only the Eclipse Shaft area- given the depletion seen near surface.
The company also expect to drill around the new discovery at Twin Shaft.
Shaun Bunn, Managing Director, said: "The results from the Company's drilling campaign has provided confidence in the potential of the Eclipse Gold Project whilst continuing to add to our understanding of the nature of the mineralised lodes. Equipped with these results, we believe that the main gold mineralisation at Eclipse is more prevalent at depth, and is perhaps orders of magnitude larger than originally anticipated.”
“We will continue to build a resource base around the existing high grade targets, both at depth and along strike, and focus on the wider potential that is offered by combinations of the Eclipse lode with the Jack's Dream extension and the Twin Shaft lode"
*SP Angel act as Nomad and Broker to Empire Metals
Oriole Resources (LON:ORR) – 0.5p, Mkt cap £7.9m – Interim report highlights progress in Cameroon and Senegal
(IAMGOLD has the option to spend up to US$8m to earn a 70% interest in Senala)
In its interim report for the six months to 30th June 2021 Oriole Resources reports a pre-tax loss of £0.87m (2020 – profit of £0.17m) and a 30th June 2021 cash balance of £0.87m.
The company reports the capitalisation of “Exploration expenditure of £0.97 million, mainly comprising the costs of the maiden drilling programme in Cameroon and the initiation of the stream sediment sampling programmes over the Central Licence Package” and increased administrative expenses of £0.52m (2020 - £0.42m) “as the Company returned to full-time salaries, and exploration activities increased, after the cost-saving measures introduced in early 2020 in response to the COVID-19 pandemic”.
Among the operational highlights of the half year, Oriole Resources says that the maiden drilling programme at its Bibemi project in Cameroon has “confirmed sub-surface gold mineralisation at all four prospects … [with the] … widest intersections … returned from the Bakassi Zone 1 prospect”.
CEO, Tim Livesey, explained that the company already has a drilling rig on site at Bibemi and hopes to start the next phase of drilling by the end of Q3 “as soon as the rains allow”.
The company also confirms that it has now spent a total of US$3.12m on its prospects in Cameroon which fulfils its “earn-in commitment under the terms of its agreement with Bureau d'Etudes et d'Investigations Géologico-minières, Géotechniques et Géophysiques SARL … which provides the option to take a further 39% interest, for a total 90% interest, in the projects”.
In Senegal, Oriole recently announced a maiden mineral resources estimate for the Faré South part of the Senala project and confirmed that “Both the maiden Resource and the Exploration Target remain open along strike to the northeast and southwest and are also open at depth”.
The most southerly prospect within the Senala licence, Madina Bafé, is situated within 10 km of IAMGOLD's large Boto mine development project.
IAMGOLD is now in the fourth year of its earn-in agreement at Senala “with a planned expenditure of US$1.8 million before the end of February 2022 … [and] … Subject to completion of the Year 4 expenditure, IAMGOLD will earn a 51% interest in Senala and will have the option to spend a further US$4 million on exploration by 28 February 2024, for a total US$8 million, to earn a 70% interest in the project”.
Conclusion: Oriole Resources’ interim report highlights the initial mineral resources estimates for the Faré South prospect at Senala in Senegal showing 155,000oz of inferred gold content and also the confirmation of gold mineralisation in the initial drilling at Bibemi in Cameroon where it has now spent the exploration funds required to increase its interest by a further 39% to 90%.
Petra Diamonds (LON:PDL) 1.74p, Mkt Cap £163.5m – Sale of 342 carat white diamond from Cullinan
Petra Diamonds reports the sale of the 342.92 carat Type IIa white diamond from its Cullinan mine whose discovery was reported on 28th July.
In addition, Petra has sold an 18.3 carat Type IIb blue diamond also from Cullinan.
The company says that it “will receive an upfront payment of US$10.0 million for the 342.92 carat stone and US$3.5 million for the 18.30 carat stone, as well as retaining a 50% interest in the profit uplift of the polished proceeds of both diamonds, after costs”.
Chief Executive, Richard Duffy, commented that “These two diamonds are wonderful examples of the very high quality and rare white and blue diamonds that are so well known from the Cullinan Diamond Mine”.
Shailesh Javeri, Chairman of the purchaser, Stargems Group, said “it is with great honour that we have entered into a partnership arrangement with Petra on these two diamonds from the world-renowned Cullinan Diamond Mine. The stones will be beneficiated in South Africa at our Stargems cutting factory in Johannesburg and we look forward to working closely with Petra during the manufacturing process to reveal the eventual polished gems”.
Rambler Metals and Mining* (LON:RMM) 23.25p, Mkt cap £28m – Progress of drilling at the Ming mine with 2021 programme around 60% complete
(Rambler owns 100% of the Ming Copper-Gold Mine)
Rambler Metals and Mining has issued a report on the progress of its drilling programme at the Ming mine in Newfoundland where more than half, 9,068m, of its planned 15,200m for 2021 has now been completed.
The drilling programme aims to improve the confidence in resources to be mined over the next 18 months and has the following four main targets:
The Lower Footwall Zone (LFZ) on the 510-535 levels of the mine; and
Deeper LFZ mineralisation on the 735-760 levels; and
The Ming North Zone (MNZ) on the 785 level; and
The Upper Footwall Zone (UFZ) below the 790 level.
Describing the rationale for drilling these targets, President and CEO, Toby Bradbury, explained that “These four target zones were scheduled for mining in the next 18 months based on Indicated level of confidence; with the intercept results to date, we anticipate not only that the targets will be upgraded to Measured confidence in new block models to inform final stope designs, but that size and possibly average copper grades will improve. Our confidence in the resource we will be mining in the near term is growing, and associated geotechnical data being obtained by the drilling will help us optimise the mining method while reducing operational risks”.
The LFZ drilling on the 510/535 level has been completed and the results reported previously in the Q1 announcement on 7thMay with results including:
An intersection of 23m at an average grade of 1.67% copper from a depth of 193m in underground drill-hole R21-411-04; and
An intersection of 12.7m at an average grade of 2.36% copper from a depth of 92m in underground drill-hole R21-411-05 which also contains further mineralised intersection including 4.48m at an average grade of 2.68% copper from a depth of 134.52m; and
An intersection of 30m at an average grade of 1.87% copper from a depth of 155m in underground drill-hole R21-411-09; and
Intersections of 9m at an average grade of 1.71% copper from 148m depth and of 4m averaging 2.43% copper from171m in underground hole R21-411-10
The deeper LFZ drilling has now been completed with a total of 5,518m completed and assay results available for 6 of the 18 holes drilled including those announced on 2nd August as well as those highlighted today which include:
An intersection of 35.71m at an average grade of 1.65% copper from a depth of 187m in hole R21-620-08 includes a higher grade section of 12m averaging 3.00% copper from 187m depth as well as other mineralised zones including 2m averaging 2.43% copper from 170m depth and 5m averaging 2.04% copper from 263m depth; and
A 14m wide intersection of the LFZ averaging 2.23% copper from 101m depth in hole R21-620-09 and including a 6m wide zone averaging 3.12% copper from 109m depth; and
A 24m wide intersection averaging 2.44% copper from a depth of 249m in hole R21-620-09B which was a re-drill of hole R21-620-09 which “deviated from planned target”.
The company explains that it is still awaiting assays for gold on these holes and also points out that “True Width of reported intervals are between 70 and 85% of listed composite” as drilling intersects the mineralisation obliquely.
Rambler Metals also reminds readers that the current Measured & Indicated mineral resources of the LFZ “averages 1.56% Cu, 0.62 g/t Au, and 3.61 g/t Ag” and that the current drilling confirms “the mineral resource estimate for the area … [and that] … Better than expected assay values have been encountered in some areas”.
Drilling of the MNZ massive sulphides, which currently has resource grades of “2.72% Cu, 1.26 g/t Au, and 7.40 g/t Ag”commenced in early August with 1,559m of a planned 4,000m completed so far. Among the results released today are:
Intersections of the MNZ of 1.78m at an average grade of 1.18% copper from 5m depth, 25.44m averaging 2.06% from 111m depth and 8.44m averaging 2.26% copper from 128m depth in hole R21-785-01; and
Intersections of 1m at an average grade of 1.25% copper from 80m, 15.75m averaging 4.97% copper from 111m depth including 10.75m averaging 6.51% copper from 116m depth in hole R21-785-02; and
An intersection of 22.68m averaging 4.34% copper from 74m depth in hole R21-785-03 and including a 9.68m wide section from 87m depth which averaged 6.01% copper.
Rambler Metals says that it expects to start the drilling of the UFZ during Q4 this year in order to “follow up on several high-grade intercepts reported on 4 November 2019, including:
R19-695-03 – 10.9 m (downhole) of 5.92% copper with 0.60 g/t gold and 8.56 g/t silver; and
R19-695-11 – 9.07 m (downhole) of 4.14% copper with 0.45 g/t gold and 4.99 g/t silver”
The company also says that “Once the infill drilling of near-term mining areas is completed, the diamond drill program will be expanded to test extensions of LFZ and high-grade VMS … [volcanogenic massive sulphide] … mineralization at depth”.
Dr. Bradbury also confirmed that “Drilling is proceeding ahead of plan and we may be able to exceed the goal of drilling a total of 15,200 metres by the end of the year”.
In our opinion, the intersection of wide, above current resources grade zones within the mineralisation to be mined over the next 18 months is likely to be reflected in enhanced mineral resources in the forthcoming estimate and improved levels of confidence in the future ore feed. In particular, the width of the mineralisation encountered may simplify mining with a potentially beneficial impact on mining costs. It is also encouraging that drilling results appear to support the view that grades at the Ming Mine are improving at depth although we await the revised resources estimate for confirmation.
Conclusion: The planned drilling programme at the Ming Mine is now around 60% complete and running ahead of schedule. The results are verifying the existing mineral resources estimates and improving the confidence in the ore to be mined over the next 18 months which should enhance mine-planning as the Ming Mine presses ahead to its initial goal of a sustainable, long-term 1,350tpd processing rate. The drilling results will underpin an updated resources estimate which is expected towards the end of his year and a revised mine plan in H1 next year.
*SP Angel act as Nomad and broker to Rambler Metals & Mining
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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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