SP Angel . Morning View . Thursday 02 09 21
Weak China PMI and SRB sales softens advance in metal prices
Pre-IPO financing opportunity for new gold mine development in Ghana
We are raising funds for an advanced gold project in Ghana with good upside exploration potential
The project offers potential to fast-track gold production using a low-cost heap leach.
Management are experienced and are looking to IPO within 18 months.
Please contact us if you are interested in pre-IPO funding of the opportunity
IGTV: Chinese slowdown is ‘unlikely to be for long’: https://youtu.be/XuW2I6Z3-RU
VOX Markets: 02/09/21: https://audioboom.com/posts/7933954-john-meyer-on-china-bluerock-cornish-metals-ironridge-scotgold
Ariana Resources (LON:AAU) – Optimism that Kiziltepe mine life can be extended based on recent drilling results
Gem Diamonds (LON:GEMD) – Improving diamond prices lift H1 results as demand returns in US and China
GoldStone Resources (AIM:GRL)* (LON:GRL) – Extension of Gold Loan Interest Payment
IronRidge Resources* (LON:IRR) – Additional high-grade intersections at Ewoyaa
Premier African Minerals (LON:PREM) – Zulu lithium/tantalum project drilling
SolGold* (LON:SOLG) – Drilling underway at the Rio Amarillo prospect
Value of battery metals in EVs surpasses 2020 total, lithium leads the way
An EV Metal Index by Mining.com, which tracks global values of battery metals in new EVs, registered at $649.2m in June, up 237% from June 2020 and bringing 2021’s total to $2.68bn.
A report by Adamas Intelligence reveals EV battery capacity sold during June rose 160% yoy, hitting 26.3GWh. The report tracks over 100 countries’ demand for batteries across a range of metrics.
June 2021 saw more than 15,800t of lithium carbonate equivalent deployed on road-ready batteries, with average lithium per vehicle up from 14kg to 18kg June yoy.
Adamas’ data shows lithium hydroxide taking 53% of the market share with carbonate acquiring the other 47%.
The use of cobalt and nickel in EVs was up 110% ytd, with per vehicle nickel use up 9% and cobalt up 6%.
June 2021 saw 23,000t of synthetic and natural graphite used in newly-sold passenger EVs, up 170% vs June 2020. Global sales weight for graphite rose 36% yoy from 19kg to 26kg.
US Congress pressured by coalition to incentivise domestic rare earth magnet production
Lawmakers have been urged by several rare earth industry representatives to provide government incentives for domestic magnet production.
Lobbyists have called for a $20/kg production tax credit for domestically manufactured magnets, or $30/kg for magnets manufactured domestically with US-sourced rare earth materials.
Rare earth company NioCorp’s CEO believes a bipartisan legislation ‘could provide powerful incentives for investment across all areas of rare earth production in the US’.
The majority of EVs today use rare earth-driven powertrains.
Biden’s recent goal of 50% of all EVs sold in 2030 to be zero-carbon emitting has encouraged investors to seek domestically sourced rare magnets owing to China’s 90% dominance of the market share.
Biden’s recently passed $1.5tn infrastructure bill offers $5.75bn in incentives to replace transit vehicles with 0-emissions alternatives.
China slowdown unlikely to last
Issues impacting Chinese growth:.
High cost of shipping containers to the US and rest of the world
Increased transport times due to port congestion and Covid regulations – mainly in China
Reduction in available ships due to longer port waiting times and some backlog from Suez blockage
Flooding through August followed by extreme heat in many provinces
Power restrictions despite critical water levels at water reservoirs – possibly to regulate flooding below dams. China continues to build new coal-fired power stations.
Government measures to control and limit inflation:
China is struggling to limit inflation while maintaining SME margins and generating new jobs growth.
SRB ‘State Reserve Bureau’ stock releases of 150,000t of metal yesterday included 70,000t of aluminium, 50,000t zinc, 30,000t copper.
We note how cautious the SRB are in their release of copper indicating how important it is to hold onto strategic stocks of the metal.
We note, the state can allow aluminium smelters to ramp up more easily.
Chinese authorities restricted liquidity some months ago as they moved to cool house/apartment prices.
The knock-on impact of these restrictions were felt through August
Local Lockdowns caused some logistical and other disruption in August due to spread of Covid Delta variant.
China now claims to have just 28 new cases of Covid today as it pursues its Zero-Covid strategy
Anti-pollution measures & environmental compliance:
Hydropower restrictions to smelters is already limiting production of aluminium.
Rare Earth Element (REE) pollution compliance may become more of an issue
Higher raw materials prices:
China is concerned at the inflationary impact of recent and ongoing price spikes in aluminium, nickel, tin, Rare Earths and copper.
Working hours and regulation of ‘996’ working schedules:
China’s move to restrict ‘996’ working practices will raise costs but also increase employment – desired by the authorities as they continue to move people out of villages
Officially China has a maximum 44-hour working week with employees entitled to overtime after that
Many workers may be entitled to compensation for being forced to work ‘996’ schedules – particularly if the government directs courts to allow claims
Working hours restrictions are more likely to enforced in tech companies than manufacturers
Dow Jones Industrials -0.14% at 35,313
Nikkei 225 +0.33% at 28,544
HK Hang Seng -0.03% at 26,021
Shanghai Composite +0.70% at 3,592
Economics
China’s weak PMI sees fall in commodity prices but may point to potential for resurgence of fiscal stimulus
August manufacturing data from China highlighted slowing growth momentum, triggering a further decline in iron ore prices and industrial metals as Chinese producers’ output slows.
A fall of China’s two Purchasing Manager’s Indexes (PMI) highlighted a slip from growth to contraction, recording data from both small-medium sized businesses and larger, state-controlled enterprises.
Copper fell more than 2% yesterday following weak factory data from China and a swathe of other Asian producing hubs.
Iron ore prices also came off considerably, with Shanghai futures down some 8%.
It is true that Beijing will be happy to see commodity prices soften following a number of efforts to dampen base metal prices, such as the sale of 420,000t of state metals.
China’s Premier Li has announced plans to support small-and-medium enterprises following a triple blow of hot commodity prices, Covid restrictions and recent flooding.
Analysts at Nomura believe ‘Keynesians are coming back in Beijing’, with expectations that ‘Beijing is inching towards stepping up policy support’.
To date there is little sign that Beijing will initiate a revival of its stimulus programmes that powered such rapid growth in 2020, however a continuation of falling metal prices key to China’s importing economy could pave the way to a boost in from China’s central bank.
US private payrolls weaker than expected according to ADP report
A report compiled by the ADP and Moody’s Analytics recorded private payrolls increased by 374,000 jobs last month following a 326,000 rise in July.
The figure is significantly lower than the Reuters poll of economists estimating 613,000 jobs.
It is expected that a resurgence in Covid-19 infections reduced employers’ appetite for increasing staff numbers.
It is important to note that the ADP report has a poor record in predicting the official Bureau of Labor Statistics’ official employment report due on Friday.
The report offers little substance when reading July’s report, which significantly underestimated the official figure of 703,000 additional private jobs.
Theses behind positive estimates for the Friday report include reports of persistent worker shortages and rising Delta cases.
The Paychex/IHS Markit employment watch showed small business jobs rising last month, hitting January 2018 highs.
However, data from Homebase, which tracks payroll data, showed a fall in working index.
Strong jobs reports are key for the Fed to advance its plans for a taper in asset purchasing, with the dollar weakening slightly on the ADP report before regaining ground.
NY and the state of New Jersey declare state of emergency after six die in record breaking rain storm
The storm, the remnant of Hurricane Ida which flooded parts of Louisiana brough flash flooding to NY and New Jersey.
Hurricane Larry is the next major weather event heading towards Bermuda.
The development of these hurricanes in the Atlantic shows no sign of slowing indicating another wet Autumn / Winter in the UK.
China – threatens ‘poor relations’ with the US could undermine progress on climate change
The threat indicates that China will hold back on recent restrictions on pollution if the US does not allow Chinese manufacturers unrestricted access to US markets.
China is the worlds largest emitter of greenhouse gases followed by the US (The Guardian)
China is the world’s largest coal consumer but appears to be working towards limiting coal .
Taiwan – has warned China could electronically ‘paralyze’ its defences in a conflict as it calls for more support from the US Administration (Bloomberg).
In reality, China can walk into Taiwan any time it likes without a great deal of opposition.
Heavy sanction against China could plunge the world into recession while a takeover of the island could create a Semiconductor chip crisis that would disrupt many of the world’s manufacturers.
Bond market points to potential for ECB stimulus taper
A rise in European bonds points to the potential for the ECB to start reducing its €1.85tn pandemic emergency purchase programme (PEPP).
Germany’s 10-year bond yield hit a month high of -0.36 yesterday.
However, unlike the US, the ECB is not expected to stop asset purchasing completely.
Economists at Allianz expect a ‘dovish tapering’ by Lagarde’s ECB next week, and that ‘policy will remain highly accommodative after PEPP ends next year’.
The ECB will be cautious of raising the cost of borrowing for its struggling economies such as Italy and Greece.
Lagarde outlined the ECB’s new strategy in July, which raised inflation targets and opened the possibility for a transitory rise in prices.
It is expected the bank will maintain the stance that inflation will fall below its 2% target in the next couple of years.
UK – Building materials costs surge to record high
Prices for construction materials jumped 4.5r% in July compared to the previous month and up 20% YoY, amid the supply chain chaos currently upending global manufacturing.
Soaring timber, steel and aluminium prices are threatening to cause big overruns and delays for Government projects.
The construction materials price index is at the highest point since records began in 1996.
A survey of small firms with van average turnover of £2m revealed that 58% were experiencing challenges with the lack of availability and cost of materials.
On the labour front, 44% of subcontractors say getting the staff they need is a major concern.
UK haulage driver 40% pay rise proves vast shortage of staff
UK HGV drivers are seeing huge pay rises, summing up the shortage of drivers currently plaguing the industry.
The BBC report that drivers in one company turned up to work one day to be told they were getting an extra £7 per hour, compared to around 20p extra in a normal year.
A survey by the Road Haulage Association estimates there is a shortage of about 100,000 drivers.
Haulage firms are desperate to keep hold of staff, but also work on tight margins, meaning that increasing costs would have to be passed on, further evidence of the extent to which inflation is currently running rampant.
Recent closures due to the haulage shortage include: Nandos, BP Garages, Iceland and McDonalds.
Australia – Trade surplus hits record high in July on strong resource exports
Australia’s trade surplus climbed to US$8.91bn in July as exports of iron ore, coal and LNG all rose strongly.
Exports jumped 5% on the back of Asian demand for LNG and thermal coal, combined with higher iron ore prices.
Exports to China hit a record of A$19.4bn, up 72% from July last year.
South Korea – CPI remains at 9-year high of 2.6% in August
Core CPI rose 1.3% from a year earlier.
Inflation is currently being driven by a spike in fresh food prices due to a heat wave and high cost of oil products, housing rental and other services.
Last week the Bank of Korea raised its policy rate for the first time in almost three years to 0.75%, the first major Asian central bank to do so.
Copper – Workers at Adina copper mine accept Codelco wage proposal
Union members have voted in favour of the latest wage offer, signalling the end of a strike that began nearly three weeks ago.
The mine produced 184,500t of copper last year.
Chile requires over $150bn in investment to bolster green copper output, according to minister
Energy and Mining Minister Juan Carlos Jobet announced plans for Chilean copper miners to reduce water use, increase copper traceability and improve diversity.
Chile aims to double its copper output by 2050, however, to achieve this in a sustainable manner, Jobet believes an injection of $150bn into the country’s copper infrastructure is required.
The minister believes Chile is on track to achieve this, estimating 7m t of copper production pa by 2030, boosted to 9m by 2050.
This ramp up in output relies on 49 projects currently under construction, with 70% needing completion by 2030 to achieve the outlined plan.
Foreign mining firms are currently cautious over investing in Chile following plans to rewrite the constitution and increase royalties on mining.
In the conversation with Reuters, Jobet also highlighted Chile’s plans to offer attractive proposals to new lithium miners to the world’s no.2 battery metal lithium producer.
Jobet’s outline contains 78 goals in a blueprint contributed to by a variety of industries and political stakeholders.
Currencies
US$1.1842/eur vs 1.1809/eur yesterday. Yen 110.03/$ vs 110.26/$. SAr 14.377/$ vs 14.452/$. $1.378/gbp vs $1.375/gbp. 0.738/aud vs 0.733/aud. CNY 6.461/$ vs 6.464/$.
Commodity News
Precious metals:
Gold US$1,814/oz vs US$1,816/oz yesterday
Gold ETFs 99.8moz vs US$99.8moz yesterday
Platinum (AIM:ZERO) US$1,002/oz vs US$1,014/oz yesterday
Palladium US$2,443/oz vs US$2,478/oz yesterday
Silver US$24.17/oz vs US$23.85/oz yesterday
Base metals:
Copper US$ 9,389/t vs US$9,388/t yesterday
Aluminium US$ 2,732/t vs US$2,699/t yesterday
Nickel US$ 19,390/t vs US$19,520/t yesterday
Zinc US$ 2,995/t vs US$2,989/t yesterday
Lead US$ 2,275/t vs US$2,264/t yesterday
Tin US$ 33,700/t vs US$33,810/t yesterday
Energy:
Oil US$71.5/bbl vs US$72.1/bbl yesterday
Oil prices steadied yesterday after OPEC and its allies agreed to stick to their existing policy of gradual oil output increases
This means that the group will push on with phasing out record output cuts by adding 400,000bopd a month to the market
Still, the group revised up its 2022 demand outlook and faces US pressure to raise production more quickly
While the effects of the COVID-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened, and OECD stocks continue to fall as the recovery accelerates
OPEC+ has fulfilled a goal of removing excess oil from the global market and it is important to keep the market balanced
US gasoline stocks rose by 1.3MMbbls last week according to the Energy Information Administration
Analysts had expected a 1.6MMbbl drop
Rising coronavirus infections could curtail demand in the US in coming weeks, along with seasonal declines after summer driving season wanes
US crude inventories fell by 7.2MMbbls last week to 425.4MMbbls
Consensus forecasts had expected a 3.1MMbbl drop
US crude prices are expected to remain under pressure as offshore oil and gas production in the Gulf of Mexico gradually recovers
However, reviving Louisiana refineries shut by Hurricane Ida could take weeks
Natural Gas US$4.597/mmbtu vs US$4.422/mmbtu yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$142.4/t vs US$146.8/t
Chinese steel rebar 25mm US$812.8/t vs US$812.9/t - Mercedes-Benz joins forces with SSAB to utilise ‘green’ steel for cars
Swedish steelmaker SSAB announced yesterday plans to team up with Mercedes Benz to incorporate its fossil fuel-free steel in their cars.
SSAB is planning to fully commercialise its ‘green’ steel by 2026, however Mercedes Benz will utilise the steel next year.
SSAB is involved with the HYBRIT system alongside LKAB and Vattenfall. HYBRIT has proved successful at using electricity and hydrogen when processing iron ore.
The Swedish company also has a joint venture with Volvo for the development of fossil-free steel for use in the automotive industry.
Thermal coal (1st year forward cif ARA) US$116.3/t vs US$114.7/t
Coking coal swap Australia FOB US$254.5/t vs US$213.5/t
China Ilmenite Concentrate TiO2 US$372.21/t vs US$370.5/t
Other:
Cobalt LME 3m US$50,840/t vs US$50,430/t
NdPr Rare Earth Oxide (China) US$93,091/t vs US$93,438/t
Lithium carbonate 99% (China) US$18,262/t vs US$17,790/t
China Spodumene Li2O 5%min CIF US$930/t vs US$930/t
Ferro-Manganese European Mn78% min US$1,759/t vs US$1,754/t
China Tungsten APT 88.5% FOB US$305/t vs US$305/t
China Graphite Flake -194 FOB US$535/t vs US$535/t
Europe Vanadium Pentoxide 98% 9.2/lb vs US$9.3/lb
Europe Ferro-Vanadium 80% 38.75/kg vs US$38.75/kg
Spot CO2 Emissions EUA Price US$71.9/t vs US$71.6/t
Battery News
New legislation for Australia could see it become offshore wind powerhouse
The government of Australia has introduced legislation that will allow offshore wind projects to be built in Commonwealth waters.
The Offshore Electricity Infrastructure Bill 2021 will allow the government to designate Offshore Electricity Areas in Commonwealth waters more than three miles offshore.
A licensing regime to permit exploration, construction, and operation of offshore renewable energy and transmission projects in these areas, has also been introduced with the new legislation.
Australia has a vast untapped offshore wind potential – estimated to be over 2000GW of accessible wind power – that until now has been limited by government prohibition.
Star of the South, Australia’s first proposed wind farm, with 2.2GW capacity demonstrates how strong an economic opportunity offshore wind presents for Australia – the project would provide an estimated 3000 jobs and more than AUD $10bn in wider economic benefits.
”This legalisation is a key step to realising Australia’s offshore wind potential and unlocking the associated economic benefits, including providing opportunities for the nation’s strong resources and maritime sectors,” Star of the South CEO, Casper Frost Thorhauge, said.
South Korea to get 1.4GW floating wind farm
Shell Overseas Investment and CoensHexicon have established a joint venture to fund, develop, and operate MunmuBaram, a 1.4-gigawatt floating offshore wind farm for South Korea.
The floating offshore wind farm will be located off the southeast Korean coast, between 65 and 80 km from the city of Ulsan. It will cover an area of approximately 240sqkm
The project, which is expected to cost around $4.9bn, is currently at a feasibility assessment stage, and will be developed in phases. A final investment decision is expected in the mid-2020s.
MunmuBaram is expected to generate 4.65TWh of electricity annually, powering over 1m homes.
The project will also create over 35,000 jobs in South Korea.
Company News
Ariana Resources (LON:AAU) 4.65p, Mkt Cap £50m – Optimism that Kiziltepe mine life can be extended based on recent drilling results
Ariana Resources reports that its 23.5% owned Kiziltepe mine in Turkey generated US$16.2m revenue during the first six months of 2021 from the sale of 7,941oz of gold.
Operating costs are reported to have been US$591/oz “in line with the processing of lower grade ore derived largely from Arzu North through the period”.
Managing Director, Dr. Kerim Sener, also confirmed the “completion of the processing plant expansion at Kiziltepe, with automation testing now underway. Since the end of last week, the SAG mill has been supplied with ore and during September we are expecting that the full impact of the plant expansion will begin to be seen.”
In addition, he said that “gold production from Kiziltepe has remained very much on track through July and August, while the plant expansion was being completed.”
The company explains that the most recent mineral resource estimate at Kiziltepe is based on “on recent drilling and geological interpretation in April 2020. Detailed technical and economic assessments are underway on several satellite vein systems which are not currently in the mining plan, in anticipation of these being developed in future years”.
“The Kiziltepe operation is currently targeting an increase in mine life and an enhanced processing rate of 400,000 tonnes of ore per annum, with operations currently expected to conclude during 2025. The joint venture is confident that an increase in mine life can be achieved following the success of recent exploration and assuming the conversion of existing resources to reserves”.
Referring to the Tavsan project, the company has completed the formal public consultations on the Environmental Impact Assessment which “has now been returned to the Ministry of the Environment and Urbanisation for final approval. Once this approval is received, we are looking forward to commencing further development work at Tavsan, which will also include an infill and extension resource drilling programme, to complement the Feasibility Study”.
Gem Diamonds (LON:GEMD) 65p, Mkt Cap £91m – Improving diamond prices lift H1 results as demand returns in US and China
Gem Diamonds has reported improvements to EBITDA of US$34.7m for H1 2021 (2020 – US$11.3m) and a pre-tax profit of US$28.3m (H1 2020 – US$2.5m).
After taxes of US$10.0m (2020 – US$0.7m), the company reports a tenfold increase in profit to US$18.3m (H1 2020 – US$1.8m).
The company reports improved average diamond sales prices of US$1,886/carat on sales of 55,123 carats generating revenue of US$104m during H1 2021 compared to an average received price of US$1,707/carat during H1 2020 on sales of 43,384 carats which generated US$74.1m revenue.
The company says that the highest individual price received was for a 3.35 carat pink diamond which sold for US$119,886/carat while the “highest price achieved for a white diamond was for a 254 carat diamond that sold for US$40 139 per carat”.
Gem Diamonds also confirms that during the six months to 30th June 2021 it sold 10 diamonds for in excess of US$1m each “generating revenue of US$36.1 million (H1 2020: 16 diamonds sold for more than US$1.0 million each, generating revenue of US$29.4 million)”.
Commenting on the wider diamond market, the company says that the global market “has continued to improve significantly since late 2020 - especially for the high-quality white diamonds produced at the Letšeng mine”.
The company attributes the recovering market to “supply shortages and renewed consumer demand, especially in the US and China”.
GoldStone Resources* (LON:GRL) 12.6p, Mkt Cap £58.9m – Extension of Gold Loan Interest Payment
GoldStone reports that it has agreed with Asia Investment Management Services to a further extension to the timing of payment of interest on the Gold Loan, to 19 September 2021.
Interest will continue to accrue at the default rate of 17%, and the Company is currently in discussion with AIMS to reschedule and restructure the terms of the Gold Loan and interest payments, to seek to assure that the Gold Loan can be repaid from the proceeds of gold production.
*SP Angel act as Broker to GoldStone Resources
IronRidge Resources* (LON:IRR) 23.4p, Mkt cap £116m – Additional high-grade intersections at Ewoyaa
IronRidge reports additional lithium pegmatite drill intersections at new targets adjacent to the Ewoyaa Lithium Project (ELP), where the company as defined a JORC compliant mineral resource estimate of 14.5Mt at 1.31% Li2O.
The programme was designed to test multiple new spodumene-bearing pegmatites identified through the Company's recent and ongoing auger drill programme and to add resource tonnes in the immediate ELP area.
RC drilling results at the Grasscutter target include highlights at a 0.4% Li2O cut-off and maximum 4m of internal dilution of:
GRC0368: 49m at 1.21% Li2O from 122m
GRC0362: 29m at 1.49% Li2O from 71m
GRC0364: 26m at 1.57% Li2O from 126m
GRC0365: 23m at 1.55% Li2O from 73m
GRC0363: 23m at 1.41% Li2O from 62m
GRC0366: 21m at 1.36% Li2O from 150m
RC drilling results at the Ewoyaa North and Anokyi Main targets include highlights at a 0.4% Li2O cut-off and maximum 4m of internal dilution of:
GRC0351: 30m at 1.53% Li2O from 109m
GRC0348: 30m at 1.3% Li2O from 81m
GRC0356: 14m at 1.1% Li2O from 83m
GRC0349: 14m at 0.88% Li2O from 77m
IronRidge has now completed a total of 25,612m of RC resource extension drilling in 205 holes, with the latest assay results accounting for 6,921m.
Vincent Mascolo, CEO of IronRidge commented: "We are highly encouraged by the ongoing results received from new targets adjacent to Ewoyaa, which continue to confirm high grades in new exploration targets tested within the ELP area.”
"We have defined a new mineralised structure at the Grasscutter target, where broad pegmatite intersections, including 49m at 1.21% Li2O, have been reported within 620m of the resource footprint. The board is confident the additional exploration targets will increase resource scale and improve project economics, where we have defined Ghana's first lithium resource of 14.5Mt at 1.31% Li2O, within 110km of an operating deep-sea port.”
*SP Angel act as Broker to IronRidge Resources
Premier African Minerals (LON:PREM) 0.2p, Mkt Cap £36m – Zulu lithium/tantalum project drilling
Premier African Minerals has provided a progress report on its 25,000m drilling programme to increase the mineral resource at its Zulu lithium/tantalum project in Zimbabwe.
The company says that it has now completed 1,000m of the programme with two drilling rigs on site and that it has encountered what it describes as “Good intersections of visible spodumene mineralisation” including a 20.68m long intersection in hole ZDD52.
A third drilling rig is expected to arrive on site in October and that during September it will dedicate one of the rigs to recovering large diameter core “for metallurgical, mineralogical, and geotechnical test work”.
The company expects to receive the first assay results from the drilling during September.
CEO, George Roach, commented “I am pleased with the progress to date both at Zulu and in the Exclusive Prospecting Order ("EPO") extended area of over 200 square kilometres. As much as I have expectations for this EPO and results from resource drilling, our focus must be fixed on the Definitive Feasibility Study ("DFS") requirements”.
Today’s announcement also comments that “The Company believes that the Deep Purple Pegmatite in the overview of the EPO should be of particular interest due to its relationship to the main Zulu ore bodies which are only 8 kilometres away. Historically, this has been associated with abundantly occurring deeply purple coloured lepidolite but has also been worked for spodumene and is reportedly a source for pollucite”.
Conclusion: Drilling aimed at providing samples for metallurgical testing and for possible resource extension in underway at Zulu with initial assay results expected during September. Despite the possibilities for resource expansion, the company is, however, focused on the needs of the DFS.
SolGold* (LON:SOLG) 29.1p, Mkt Cap £668m – Drilling underway at the Rio Amarillo prospect
Solgold has started drilling at its wholly-owned Rio Amarillo prospect located approximately 30km southeast of the company’s flagship Alpala project in northern Ecuador.
Hole RDH-21-001 is currently at a depth of 90m, of a planned 1,500m, on the Varela target where it is testing beneath “outcropping porphyry style vein stockworks which returned … surface rock-saw channel sample results of 99m @ 0.34% CuEq including 25.1m @ 0.58% CuEq”.
The company explains that Varela is part of a cluster of “preserved porphyry lithocap zones discovered at the Rio Amarillo project” and that it exhibits “strong similarities with the lithocap footprint and geochemical signature of the Alpala deposit”.
Technical Services Manager, Ben Whistler, said that “The regional geological setting and gross geological architecture at Rio Amarillo is very impressive. The large-scale porphyry targets at Varela, Chalanes and Palomar are three of the Company's highest priority targets and have similarities to those discovered at the Company's Cascabel project… [which includes Alpala] … some 30km to the northwest”.
He explained that the “lithocap area covers 1,200m x 800m and contains porphyry style quartz-chalcopyrite vein stockworks … [and that it] … occurs within coincident copper-molybdenum-gold geochemical highs within highly altered host rocks”
A sectional view of the geochemical modelling of Varella presented in the PDF version of today’s announcement 4836K_1-2021-9-2.pdf (londonstockexchange.com) illustrates “a vertically extensive target zone … seated directly beneath the lithocap area” and “indicates potential for a porphyry copper deposit at depth”.
Conclusion: Initial drilling at Varela is testing a target similar to the 2.6bn tonne Alpala mineralisation which is located only 30km to the northwest. Drilling of the first hole, which is planned to reach 1,500m depth has currently reached 90m and is targeting deep porphyry copper mineralisation. We await further news as the drilling proceeds.
*SP Angel act as Financial Advisor to SolGold.
Recent Interviews:
IGTV: Chinese slowdown is ‘unlikely to be for long’: https://youtu.be/XuW2I6Z3-RU
Mining sector: where now as Gates & Bezos move in?: https://youtu.be/3is7kRMb7yk
China fearing failure in metals pricing tactic: https://youtu.be/RK4HQPrs60s
Evolution of Chinese construction and implications for commodity demand: https://youtu.be/jB2nURL8uPw
VOX Markets: 02/09/21: https://audioboom.com/posts/7933954-john-meyer-on-china-bluerock-cornish-metals-ironridge-scotgold
18/08/21: https://audioboom.com/posts/7926110-john-meyer-on-diamonds-gold-including-bluerock-petra-cora
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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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