SP Angel . Morning View . Tuesday 14 09 21
Lithium prices rise to 3-year high on EV sales boom
Gold holds but base metals soften ahead of US inflation data
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
AEX Gold (LON:AEXG) – Further management changes at AEX to drive development of new plan
Altus Strategies* (LON:ALS) – Valuation 125p – First Caserones NSR royalty payment in respect of Q2/21 expected this month
Beowulf Mining* (LON:BEM) – CEO letter to Minister Baylan regarding Kallak
Bluejay Mining* (LON:JAY) – Valuation 37.7p – Interims highlight activity towards development of the Dundas ilmenite mine and other exploration
Caerus Mineral Resources (LON:CMRS) – Progress report on prospective joint-venture agreements
Castillo Copper (LON:CCZ) – Drilling plans for the Arya prospect
Cora Gold (LON:CORA) – Sanankoro drilling results
IronRidge Resources* (LON:IRR) – Additional high-grade intersections at Ewoyaa
Power Metal Resources* (LON:POW) – Gold-in-soil anomaly confirmed at Tati
Seafloor mining SPAC flops as investors withhold $500m in funding
Tertiary Minerals* (LON:TYM) – Appointment of Managing Director
URU Metals* (LON:URU) – Drilling to commence at Zebediela Project
China continues to tighten commodity output in environmental push
China is set to release its August production report tomorrow – analysts will focus on the extent to which China is cracking down on steel output and carbon emissions.
Citigroup believe Beijing have accelerated their crackdowns by reducing output to November 2020 levels, a month earlier than expected.
Energy efficiency measures have already been reflected in China’s declining aluminium output – a move reflected in its record price surge in recent weeks.
Copper - Concerns remain over potential for impact of Chilean striking threats
Copper mining unions at Codelco’s Adina mine and BHP’s Cerro Colorado mine were both resolved last week as major miners sought to avoid damaging strikes.
A series of potential strikes in Chile had added to copper’s rally as supply concerns were raised over the world’s largest copper producer.
The previous two weeks have seen several mining operations tackle difficulties with contract renewals amid soaring prices.
Chile accounts for ¼ of the world’s copper and concerns are rising that renewed contracts may add to the potential for inflated input from mining firms.
EV sales boom sends lithium prices to 3-year high
China spot prices for lithium carbonate hit $22,000/t, marking a 170% increase so far this year.
Spodumene prices hit $990/t, up 144%.
The Chinese EV lithium market is believed to have grown 19% y-o-y to 20,000 according to state-backed researcher Antaike.
Global EV sales rose to 3m vehicles, up 150% in the first 7m to July.
Benchmark Mineral Intelligence have predicted a global supply deficit of 10,000t following a forecast of a 26% increase in demand.
Concerns have been raised over the limited supply of the key battery-making ingredient.
Nickel and aluminium prices slide as investors wait for US data
Shanghai Aluminium October contract fell 4.3% following 8 consecutive rising sessions. Shanghai nickel fell 4.3%. LME 3m nickel fell 0.6%.
Analysts believe investors have reduced exposure in expectation of US inflation data due later today.
The data is expected to have a clear impact on the timeline of the Fed’s stimulus tightening policy which will impact market liquidity, economic recovery, and the price of the dollar.
Dow Jones Industrials +0.76% at 34,870
Nikkei 225 +0.73% at 30,670
HK Hang Seng -1.35% at 25,465
Shanghai Composite -1.42% at 3,663
China/Covid-19 – New Covid-19 cases in China’s Fujian province doubled to 59 on Tuesday, up from 22 recorded the previous day, FT writes.
The nation has kept cases extremely low imposing strict travel restrictions and rapidly enforcing lockdown in areas of outbreaks.
The total number of cases in the country of 1.4bn people is just 810 according to the health commission.
US - The House Natural Resources Committee moved to block the expansion of the Rio Tinto Resolution cu mine in Arizona by attaching it approval to other issues.
President Biden is also looks set to block the development of the Pebble cu mine in Alaska.
Japan - PPI 1.1% in August vs 1.1% in July and 5.5% yoy in August vs 5.6% yoy in July
Germany - Wholesale price index rose 0.5% in August vs 1.1% in July and 12.3% yoy in August and 11.3% yoy in July
India - CPI 5.3% yoy in August vs 5.6% yoy in July)
Turkey - Industrial production fell -4.2% in July vs 2.2% in June but was still 8.7% higher yoy in July and 24.1% yoy higher in June
UK – The economy added 241k jobs to 29.1m in August climbing for the ninth consecutive month and returning to pre-coronavirus pandemic.
The number of job vacancies in three months to August 2021 was 1,034,000 marking the first time vacancies increased over 1m since records began and 249,000 above pre-pandemic Jan-Mar/20 levels.
In three months to July, unemployment rate pulled back slightly to 4.6%, in line with estimates and down from post-pandemic high of 5.2% recorded in Dec/20.
Positive employment data will provide confidence for the government to gradually withdraw wage subsidies and other emergency income support.
Freight rates continue to soar as supply chain disruptions enhance economic concerns
The Drewry World Container index records a 21st consecutive week of rises.
The index rose 1% this week, having risen 309% since this time last year.
The index measures a composite of 40ft containers over 8 major trade routes, with the current rate at $10,083.84.
The Baltic index is nearing a 12-year peak having risen nearly 8% for larger capsize segments. This marks its largest jump in 3 months.
Companies have been rushing to revise their supply chain management in a sign that shipping disruptions are expected to last longer than expected.
UK retailer Made.com has emphasised the damage done to its profit margins, warning investors it expects the issues to carry on into 2022.
Shipping difficulties contributing to rising consumer prices have been pointed to by central bankers as temporary contribution to ‘transitory inflation’.
Mohamed el-Arian, Cambridge economist and adviser to Allianz and Gramercy, has raised the possibility of stagflation reminiscent of the 1970s as rising commodity prices meet weakening growth rates.
US$1.1826/eur vs 1.1785/eur yesterday. Yen 110.00/$ vs 109.97/$. SAr 14.146/$ vs 14.180/$. $1.387/gbp vs $1.381/gbp. 0.734/aud vs 0.736/aud. CNY 6.443/$ vs 6.455/$.
Gold US$1,793/oz vs US$1,790/oz yesterday
Gold ETFs 99.9moz vs US$99.8moz yesterday
Palladium US$2,068/oz vs US$2,213/oz yesterday
Silver US$23.73/oz vs US$23.69/oz yesterday
Copper US$ 9,488/t vs US$9,667/t yesterday
Aluminium US$ 2,848/t vs US$2,946/t yesterday
Nickel US$ 19,660/t vs US$19,845/t yesterday
Zinc US$ 3,051/t vs US$3,090/t yesterday
Lead US$ 2,275/t vs US$2,296/t yesterday
Tin US$ 33,4978/t vs US$33,305/t yesterday
Oil US$74.0/bbl vs US$73.2/bbl yesterday
Oil prices continue to track higher as US output remains slow to return two weeks after Hurricane Ida hit the Gulf Coast and worries another storm could affect output in Texas this week
The US National Hurricane Center projecting Tropical Storm Nicholas will impact the South Texas coast and make landfall near Corpus Christi later tonight
Shell (RDSB LN) has begun evacuating staff from a US Gulf of Mexico oil platform and other firms began preparing for hurricane-force winds
Those price gains came even though OPEC trimmed its world oil demand forecast for the last quarter of 2021 due to the Delta coronavirus variant
Even though OPEC said further oil demand recovery would be delayed until next year when consumption will exceed pre-pandemic rates, the group still intends to increase output by 400,000bopd on a monthly basis
In addition to the OPEC demand forecast, other bearish factors weighed on yesterday’s oil price gains, including rising US shale output, potential supply increases from planned releases of oil from strategic reserves in the US and China, and the possibility Iran could be closer to selling oil to the world again
US oil output from seven major shale formations is expected to rise by about 66,000bopd in October to 8.1MMbopd, the highest since April 2020, according to the Energy Information Administration's monthly drilling productivity report
Natural Gas US$5.215/mmbtu vs US$4.911/mmbtu yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$124.1/t vs US$129.3/t - BHP gains environmental approval for an increase in iron ore exports from Port Hedland
Western Australia’s Dept. of Water and Agriculture has approved BHP’s request for the ability to ramp up their iron ore exports.
The group can now export 330Mt as opposed to 290Mt from Port Hedland.
A company representative expects Western Australian exports to remain between 278Mt-288Mt in 2022.
Mike Henry emphasised on a call that the group is not planning a ramp up in production but preferred the option if required.
Chinese steel rebar 25mm US$857.7/t vs US$856.1/t
Thermal coal (1st year forward cif ARA) US$130.0/t vs US$126.2/t - Chinese coal futures collapse over regulatory crackdown concerns
China coking coal and coke futures fell over 6% this morning marking a 3rd straight session of losses.
September 1-10th saw coke and coking coal prices rise 11.6% and 19% respectively, however the prospect of increasing controls from Beijing has stifled the rally.
Beijing has been sending an increasing number of environmental inspectors to evaluate future consumption controls and steelmaking cuts.
Yunnan province has been the most recent victim of production curbs, with output restrictions placed on steel and aluminium, among others.
Coking coal swap Australia FOB US$360.0/t vs US$360.0/t
China Ilmenite Concentrate TiO2 US$376.4/t vs US$375.7/t
Cobalt LME 3m US$51,500/t vs US$51,500/t
NdPr Rare Earth Oxide (China) US$92,968/t vs US$92,416/t
Lithium carbonate 99% (China) US$21,573/t vs US$21,226/t - Chilean regulators demanded to suspend SQM’s lithium mining permits by indigenous group
Indigenous communities local to the Atacama salt flat have requested authorities to remove SQM’s operating permits.
SQM is the world’s 2nd largest lithium producer.
The company has been called on to submit an environmental compliance plan.
A filing seen by Reuters stated that the ecosystem was in ‘constant danger’ and called for a ‘temporary suspension’ of operations.
SQM sees the opposition as a ‘normal part of the process’.
The opposition adds to a swathe of concerns raised regarding Chilean lithium mining’s production impact on local environment
Tianqi plans Hong Kong listing as lithium excitement continues to brew
Tianqi Lithium Corp’s board has approved a proposal to list on the Hong Kong stock exchange.
Tianqi’s shares have risen 6x this year while trading on the Shenzhen exchange.
Falling lithium prices in 2018 put a stop to Tianqi’s previous listing alongside liquidity problems.
Tianqi turned around 7Qs of losses with profits in the 3 months through June.
A listing will enable capital raising to expand production and replenish working capital.
The listing proposal needs approval from shareholders.
China Spodumene Li2O 5%min CIF US$990/t vs US$990/t
Ferro-Manganese European Mn78% min US$1,827/t vs US$1,821/t
China Tungsten APT 88.5% FOB US$303/t vs US$303/t
China Graphite Flake -194 FOB US$535/t vs US$535/t
Europe Vanadium Pentoxide 98% 8.9/lb vs US$9.0/lb
Europe Ferro-Vanadium 80% 35.75/kg vs US$36.25/kg
Spot CO2 Emissions EUA Price US$72.1/t vs US$73.5/kg
GE Renewable’s offshore turbine blade factory get green light
GE Renewable have received official planning approval for their planned turbine blade ‘mega-factory’.
The 830,000sqft factory, which will be built on Teesside, will manufacture the blades for the Haliade-X turbines.
Construction is expected to start later this year, upon finalisation of all contractual documents.
The new facility is expected to create 750 direct positions and an additional 1500 indirect jobs will be created to support the supply chain.
IER lay out plans for 2.7GW offshore wind project
The Brazilian energy company, Iternacional Energias Renovaveis (IER) have announced plans to develop a 2.7GW offshore wind complex, linked with green hydrogen production.
The proposed project would involve the installation of five wind farms with 207 turbines in total and could cost in the region of $3.4bn.
An MoU has been signed with local government and IER will now begin the process of obtaining all the necessary licenses.
BHP aims to have curbed emissions from steelmaking customers by 2050
BHP Group has set a goal of net zero emissions by 2050 from the operations of its customers by working them to cut carbon out of their processes.
The Australian mining giant has already committed to extinguishing emissions directly from its own operations as well as lowering indirect emissions by using power from renewable sources.
Steelmaking is one of the world’s most heavily polluting industries and the miner sees the aim as an ambitious ‘goal’ rather than a concrete target.
Steelmakers iron ore miners are working on the production of carbon-free steel from iron ore, potentially using hydrogen, but the process is not expected to become economic until late this decade at the earliest.
96% of BHP’s total reported emissions, which during last financial year stood at 418.7 million tonnes of carbon dioxide equivalent came from the processing of iron ore and metallurgical coal
LG Innotek plans development of magnet with potential to reduce heavy rare earth use by 60%
LG Innotek and Seonglim Advanced Industry are planning an eco-friendly magnet with a reduced reliance on heavy rare earths.
The product will offer a magnetic force of 14.8kG, higher than current commercialised averages of 14.2-14.3kG whilst using 60% less rare earth materials.
It aims to do this through a coating solution able to generate magnetic force at various temperatures.
The magnet will be targeted at a range of electrified devises from automobiles, cameras, and air conditioners to drones and generators.
AEX Gold (LON:AEXG) 28.55p, Mkt Cap £50.5m – Further management changes at AEX to drive development of new plan
AEX Gold report the appointment of four new geologists to the team as part of a strategy to better understand the Nalunaq gold mine.
James Gilbertson, who has been working with AEX as a consultant at SRK joins as vice president of exploration.
James is joined by three more new exploration geologists, Jane Lund Plesner, Jascha Wille and Aaju Simonsen all of whom have extensive experience in Greenland.
Aaju Simonsen, is a Greenlander, has >10 years of experience in arctic field geology.
Jascha Wille, has worked previously in open-pit production in Greenland and exploration in Canada.
Jane Lund Plesner, is also a Greenlander and was a multibeam operator at the Greenland Institute of Natural Resources.
AEX put the Nalunaq gold project on hold in February this year following the implementation of a temporary travel ban into Greenland.
Cost inflation: Rising costs relating to inflation in materials and logistics as well as the addition of a flotation circuit in the process plant and the likely cost of work to shore up unsafe bulkheads holding back tailings within the mine.
Cash: AEX reports a cash balance of ~US$39m alongside net of deposits on $6.0m of orders from the initial decision to develop the Nalunaq gold mine .
The development of the exploration team is part of the company’s revised strategy to expand the resource with the aim of developing greater value from the mine through the incorporation of additional veins into the mine plan.
The discovery of the Footwall Vein on the eastern flank of the Nalunaq Mountain is consistent with a footwall vein modelled from historic exploration drilling and runs 70-100m stratigraphically below the Main Vein on the north face of Nalunaq Mountain
Drilling has intersected a mineralised quartz vein in this area suggesting potential for further veins and a meaningful increase in the gold resource.
Altus Strategies* (LON:ALS) 73p, Mkt Cap £59m – First Caserones NSR royalty payment in respect of Q2/21 expected this month
BUY – 125p
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The Company expects to receive first royalty income payment this month in regards of the recently acquired 0.418% NSR royalty in the Caserones copper mine in Chile.
The payment is expected to be in excess of US$1m (before tax) and is reported to represent the highest quarterly royalty payment since the start of production in 2015.
The payment relates to the receivable royalty for Q2/21.
The team continues to review additional royalty transactions with a focus on gold and copper.
Conclusion: Caserones NSR royalty acquisition validates Altus’ business strategy bringing in the first revenue generating royalty in a long life asset in the portfolio and increasing exposure to copper. First payment is expected to come as early as this month in respect of Q2/21.
*SP Angel acts as Nomad and Broker to Altus Strategies
Beowulf Mining* (LON:BEM) 4.3p, Mkt cap £35.8m – CEO letter to Minister Baylan regarding Kallak
Beowulf CEO Kurt Budge has sent a letter to Sweden's Minister of Enterprise and Innovation, Ibrahim Baylan, concerning the status of Beowulf's Kallak application.
The letter reminds Minister Baylan that he wrote to Mr Budge 2 years ago explaining that his request for a meeting at that time "concerns a forthcoming Government decision - a dossier that is currently under preparation" and for those reasons the Government was unable to meet or comment with regard to its "ongoing review".
The letter makes the point that fossil-free steel making is on the rise in Sweden is in the ascendency, yet there is no visible understanding exhibited by authorities or the Government that steel plants need sustainably produced high quality iron ore, like Kallak's market-leading 71.5 per cent magnetite iron concentrate.
Moreover, it is nearly 10 months since The Constitutional Committee (KU) in its review of the Government's handling of the Company's application for an Exploitation Concession for Kallak, made the following statement: "KU has examined the application for a processing concession for Kallak. In the Government case, no visible administrative measures were implemented for almost three years. This means a delay that is not acceptable, according to KU. It also appears that the applicant has on several occasions asked the Ministry of Trade and Industry for a meeting. The Ministry has then stated that this is not possible because the issue concerns a forthcoming Government decision and is a matter under consideration. KU notes that the Ministry management's statement does not seem to be in line with what the Prime Minister has stated. The Government Offices thus seem to lack a common approach to the possibility for parties in administrative matters to have a meeting with the responsible ministry."
Kurt Budge, CEO of Beowulf, commented: “Jokkmokk desperately needs investment and jobs. Kallak will bring billions of SEK in investment and hundreds of jobs to the municipality that will keep people employed and support families for decades.” “The application you have on your desk is for Kallak North. Yet the Company has continued to invest, explore and assess the potential in the Kallak area, and, in May 2021, with our licences Kallak South and Parkijaure, we upgraded the global Mineral Resource Estimate showing the potential for up to 389 million tonnes of iron ore mineralisation that could support mining for 30-40 years. More than doubling the current estimated life of Kallak North.”
We recommend reading the company’s submission to the Minister Baylan in full, found here: https://polaris.brighterir.com/public/beowulf_mining_plc/news/rns/story/rngdy2x
*SP Angel act as nomad and broker to Beowulf Mining
Bluejay Mining* (LON:JAY) 11.50p, Mkt cap £112m – Interims highlight activity towards development of the Dundas ilmenite mine and other exploration
BUY – Valuation 37.7p
Bluejay Mining report a busy six months to end June with significant progress being made in optimising the Dundas project alongside two new and significant exploration joint ventures.
Dundas (100%): project was awarded a 30-year Exploitation Licence by the Greenland government allowing construction to begin when the project optimisation is ready.
Management continue to progress the engineering optimisation and cost saving studies for Dundas which are now in the latter stages of completion.
The project has been largely derisked by the previous export of 44,000t of sieved ilmenite from the Dundas mine site to Canada.
The team also report an ongoing and positive dialogue with the Greenland government.
Letters of interest received from US EXIM Bank and from other Export Credit Agencies for the project financing.
Export Credit is low cost but comes with the condition of buying machinery and services from the lending nation. We expect the US EXIM Bank loan to be <2%. li="">
Bluejay are also close to finalising discussions with a focussed group of banks to create a strong consortium of partners suitable for the development.
Quality: Dundas’ ilmenite has been independently assessed as being the ‘highest-grade ilmenite sand project globally’.
Offtake: Management are confident offtake agreements will be reached for the full 440,000tpa planned. 70% of planned production is covered so far buy a large, long established Asian conglomerate.
Ilmenite prices: are 14% yoy higher at CNY2400-2450/t (US$375/t) in China having recovered from a dip in August. While prices vary according to quality and content we are encouraged by a recent strong rises in ferro-titanium concentrate prices in Europe +11% mom, Russia +11% mom and the US +6% mom.
Enonkoski (Rio Tinto jv): Drilling started at $20m Enonkoski joint venture with Rio Tinto on a 3,000m drill programme to test a number of geophysical targets.
Black Shales (Metals One jv): projects sold for cash and shares totalling £4m depending on the listing of Metals One.
Outokumpu project (100% owned): multiple copper, cobalt, gold and silver targets identified 1,500m to be drilled focussed on the Haapovaara target north of the historical Kylylahit mine and another 1,000m to be drilled across the broader Outokumpu area.
Thunderstone: First field season completed under Covid-19 protocols
Disko-Nuussuaq (KoBold Metals jv): project progressing in joint venture with KoBold Metals. KoBold are working through the extensive data collected in the region to prepare new targets
Interims: Bluejay’s increased exploration and Dundas project activity led to a 17% yoy rise in operating expenses to £1.4m for the six months to end June.
Currency translation differences wiped out the gain made a year ago and cost the company a further £1m raising the total comprehensive loss to £2.4m loss for the period.
Cash was ~£5.2m at the half year which will be bolstered when HMRC return the full £1m owing to the company they withdrew their appeal.
Conclusion: The team are closing in on completion of the optimisation of the engineering for the Dundas ilmenite project. The optimisation should offer significant future benefits and value and enable the full financing of the Dundas mine. There is also significant potential for further expansion at the Dundas mine.
Bluejay also have two fully financed exploration programmes with $35m pledged for exploration. Their work offers significant opportunity for further discovery at Thunderstone, Enonkoski, Hammaslahti, Outokumpu and Black Shale exploration prospects.
*SP Angel act Nomad and broker to Bluejay. The analyst has previously visited the Enonkoski mine site in Finland. The analyst holds shares in Bluejay Mining.
Caerus Mineral Resources (LON:CMRS) 26.75p, Mkt Cap £13.4m – Progress report on prospective joint-venture agreements
Caerus Minerals confirms that it successfully completed an on-site review of its Cypriot exploration properties with its Option Agreement partners Jubilee Metals and Bezant Resources during the week of 6th September.
As well as assessing “individual projects in terms of the geology, viability of progression and scalability of future operations and logistics” the company reports that a “thorough programme of metallurgical test work being undertaken by Jubilee under the terms of the Option Agreement … [and] …is progressing well and will continue to identify and optimise mineral processing options, leading to a blueprint for plant design”.
The company explains that “The final details of a JV will be determined by the tonnage, grade and origin of feedstock to be delivered by Caerus to a Jubilee-designed processing plant” and that “Bezant has completed a high-level review of all projects in the Caerus portfolio and the parties have agreed on work programme priorities”.
Chief Executive, Martyn Churchouse said that “The visit and subsequent discussions have achieved a number of results. Firstly, the support of our JV partners regarding the overall strategy and way forward has meant we are confident as we launch the next phase of resource development, and a contract has been signed for a diamond drill rig to be delivered to site by the beginning of October”.
He also confirmed that “Secondly, shareholders will be pleased to know that the emphasis remains on rapid development and the generation of cash flow, with Jubilee guiding the optimisation of the mineral processing pathways. Thirdly, the clarity achieved in terms of the overall objectives and priorities means Caerus can refine the resource development plan and shorten the lead time to project development”.
Castillo Copper (LON:CCZ) 1.83p, Mkt Cap £17.8m – Drilling plans for the Arya prospect
Castillo Copper has announced that it will be mobilising a drill crew to its Arya prospect in Queensland during the final week of September with drilling commencing shortly thereafter.
The main target is the sulphide mineral potential of the EG01 geophysical anomaly which is “interpreted to be approximately 130m thick, 1,500m long & 450m wide and ~100-200m below surface”.
Secondary targets of the campaign are the EG02 and EG10 anomalies which “are ~25m below surface and are interpreted to be approximately 25m thick, with dimensions of 160m by 50m and 270m by 280m respectively”.
The company also reports that it expects “the assays for the Big One Deposit … [also in Queensland] … coupled with their interpretations, to be available next week”.
Conclusion: Forthcoming drilling of the Arya prospect will test the significance of geophysical anomalies thought to represent sulphide mineralisation. We await the results with interest.
Cora Gold (LON:CORA) 15.8p, Mkt Cap £39m – Sanankoro drilling results
The Company reports results from its latest and the largest so far +40,000m drilling programme at the Sanankoro Gold Project in Southern Mali.
The programme is targeting both resource growth as well as infill drilling to update current Dec/19 MRE (5mt at 1.65g/t for 265koz all Inferred category) and collect data for DFS that is expected to be completed before the end of H1/22.
Selected results include:
103m @ 2.1 g/t Au from 46m in Diamond Drilling (‘DD’) vertical metallurgy hole SD0023 including 11.5m @ 7.45 g/t Au and 11.5m @ 7.12 g/t Au;
33m @ 1.48 g/t Au from 191m in resource hole SD0021 including 9m @ 3.95 g/t Au;
7m @ 6.60 g/t Au from 65m in hole SC1018;
37m @ 2.39 g/t Au from 81m in hole SC0531
25m @ 2.12 g/t Au from 51m in hole SC0511
At Selin, SD0021 intersected mineralisation below existing pit shells offering potential to grow the resource down dip.
A number of holes intersected mineralisation in areas that due to limited drilling were not included in the resource suggesting there is an opportunity to fill in gaps and consolidate a single +3km pit at Selin.
At Zone A, drilling returned high grade intersections within the original pit limits providing more information for the coming MRE update.
The Company has now completed RC drilling with a single Capital Diamond Drill rig completing metallurgical and geotechnical work.
IronRidge Resources* (LON:IRR) 20.7p, Mkt cap £120.5m – 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.
The latest round of drill results yielded the highest metal content intersection to date in the resource expansion programme of 53m at 1.34% Li2O from 80m in hole GRC0392.
Additional RC drilling results at the Ewoyaa North target adjacent to the ELP, including highlights at a 0.4% Li2O cut-off and maximum 4m of internal dilution of:
GRC0393: 32m at 1.34% Li2O from 87m
GRC0393: 19m at 1.17% Li2O from 56m
GRC0392: 13m at 0.93% Li2O from 25m
GRC0391: 12m at 0.93% Li2O from 84m
GRC0390: 11m at 1.01% Li2O from 66m
Additional RC drilling results at the Grasscutter target adjacent to the ELP, including highlights at a 0.4% Li2O cut-off and maximum 4m of internal dilution of:
GRC0374: 28m at 1.35% Li2O from 97m
GRC0377: 19m at 1.37% Li2O from 76m
GRC0397: 15m at 1.6% Li2O from 136m
GRC0369: 12m at 1.44% Li2O from 70m
GRC0372: 11m at 1.29% Li2O from 105m
GRC0398: 11m at 1.29% Li2O from 78m
IronRidge has completed the final 5,443m of drilling which is part of the total 25,612m resource expansion programme, with infill resource drilling and metallurgical diamond core drilling now underway with five drill rigs on site.
IronRidge CEO Vincent Mascolo commented: "The board remains confident the additional exploration targets will increase resource scale and improve project economics, where we have defined Ghana's first lithium JORC compliant resource of 14.5Mt at 1.31% Li2O, within 110km of an operating deep-sea port.
*SP Angel act as broker to IronRidge Resources
Petra Diamonds (LON:PDL) 1.74p, Mkt Cap £168m – Resilient diamond market and capital restructuring delivers reduced losses and lower debt levels
Reporting on what Chief Executive, Richard Duffy, describes as “a watershed year” Petra Diamonds has reported an adjusted net after-tax loss of US$16.1m for the year to 30th June 2021 (2020 loss – US$54.7m).
The company also reports that its capital restructuring programme, in conjunction with “the sale of a number of exceptional blue and white diamonds from the Cullinan mine, served to reduce consolidated net debt by around two thirds to US$228.2 million”
The results reflect a 2% reduction in mine production to approximately 3.24m carats “notwithstanding record annual production from Cullinan of 1.94 Mcts.”
Company production guidance for FY 2022 is for “production to increase to between 3.3 and 3.6 Mcts, with the South African operations estimated to contribute 3.1 to 3.4 Mcts and Williamson estimated to contribute 0.22 to 0.27 Mcts”.
The company says that as well as delivering a 16% increase in ROM tonnage as a result of its “Project 2022 business improvement throughput initiatives” the Cullinan mine “affirmed its place as a producer of world-class diamonds, with the recovery of a number of spectacular stones, namely:
September 2020: The Letlapa Tala collection of five high quality blue diamonds totalling 85.6ct were recovered all in the space of one week’s production at the mine. The collection was sold as a suite of stones to a partnership between De Beers and Diacore for US$40.36 million in November 2020
January 2021: A 299ct high quality white diamond was recovered and subsequently sold to Stargems DMCC for US$12.18 million in March 2021.
February 2021: A 11.82ct high quality blue diamond was recovered and subsequently sold for US$9.53 million in April 2021.”
Commenting on the health of the wider diamond market, Petra Diamonds says that despite the continuing challenges of the Covid19 pandemic “the market has remained remarkably resilient” as a result of a combination of “control discipline by De Beers and Alrosa … the significant contraction of production supply in 2021, including the winding down of the Argyle mine” which has reduced inventory levels and helped “restore a better balance between supply and demand” and a return of capacity to the midstream manufacturing segment in India”
The beneficial supply factors are aided by “strong consumer demand … in the key retail markets, notably the US and China”.
Helping to put the market into context, Petra Diamonds says that “In 2020, the global diamond market experienced one of the most severe contractions in supply on record, falling 22% by volume to 107.1 Mcts (2019: 138.2 Mcts). Material reductions in supply came from Australia (due to the closure of the Argyle mine), Russia, Botswana, Canada, the Democratic Republic of Congo and Namibia, due to a combination of production being slowed due to COVID-19, pending exhaustion of resources, mine closures, operations transitioning from open pit to underground and falling alluvial output. Increased volume of output was recorded in South Africa and Zimbabwe”.
Summarising its positive expectations for the diamond market in 2021, the company says that “the severe supply contraction of CY 2020 expected to continue in CY 2021, while consumer demand is expected to remain robust in the second half of CY 2021, with retailers anticipating continued strong consumer demand moving into the key festive retail period, underpinned by shortages in the polished market”.
Power Metal Resources* (LON:POW) 1.98p, Mkt cap £24.3m – Gold-in-soil anomaly confirmed at Tati
Power Metal reports that it has confirmed the presence of a large-scale gold-in-soil anomaly at the Tati project located in the Tati Greenstone Belt near Francistown, Botswana.
The anomaly was confirmed following lab assay testing of rock and soil samples collected during the Company’s Phase I exploration programme.
A total of 1,107 soil samples and 49 rock samples were collected across five select areas as part of the Phase I, with high-grade rock assay results up to 26.5g/t gold.
Soil sample assay results returned up to 1,614 parts per billion gold including 10 soil samples that returned >75ppb gold.
The Phase II geophysics programme is underway at Tati, with Power Metal conducting ground-based magnetometer and radiometric geophysical surveys over selected soil anomalies over 25 line-km split across three survey grids.
The goal of the above Phase II work programme is to further refine high-priority targets identified by the Phase I programme geochemical results which will then be targeted by Power Metal's inaugural drill programme at Tati – expected to start mid-September.
*SP Angel act as nomad and broker to Power Metal Resources
Seafloor mining SPAC flops as investors withhold $500m in funding
The Metals Company (TMC), formerly known as DeepGreen, went publish via SPAC last week with the company aiming to extract battery metals on the Pacific Ocean floor between Hawaii and Mexico.
Despite having no revenues and around 25 employees, the start-up was initially valued at $2bn by its blank check partner.
However, the SPAC merger only delivered $137m of cash as investors either asked for their money back or failed to deliver promised funding.
TMC estimates that $7bn is needed for large scale commercial production.
The company intends to mine polymetallic nodules of metal high in nickel, copper manganese and cobalt, however environmentalists claim that these activities will damage the ocean’s sensitive ecosystems.
In the case of TMC, two unidentified investors failed to provide funds comprising two-thirds of TMC’s $330m PIPE (private investment in public equity) – a supplementary pot of cash raised in conjunction with the SPAC merger.
TMC says it “will seek to enforce the funding obligations of the two non-performing investors”.
Since the SPAC deal was announced in March, more than 500 scientists have signed a letter calling for a moratorium on deep-sea mining until the environmental risks are better understood.
Meanwhile, Greenpeace claims that the company’s disclosures to investors significantly underplayed the environmental risks – in response to TMC’s petition to the SEC commission.
Tertiary Minerals* (LON:TYM) – 0.27p, Mkt cap £3.2m – Appointment of Managing Director
Tertiary Minerals has announced the appointment of Mr. Patrick Cullen as Managing Director.
Mr. Cullen is described as “an experienced mineral exploration executive… with a degree in Geology from the University of Portsmouth … [and] … a strong technical background in geology, geophysics and mining and a proven track record leading multi-disciplinary teams across Southern Africa and Europe”.
He was formerly Chief Executive of the Irish exploration company, Arkle Resources, and prior to that “he was Technical Director at Kodal Norway (UK) Limited and he has also held senior positions at Montero Mining & Exploration Ltd and African Energy Resources Ltd (ASX:AFR), exploring for phosphate and uranium in Africa. Prior to this, he held technical roles with AngloGold Ashanti (ASX:AGG) and Schlumberger”.
Commenting on the appointment, Executive Chairman, Patrick Cheetham, said that Mr. Cullen joins the company at “an interesting time in the development of our exploration projects in the USA and his experience in Zambia will be a valuable asset as we seek to progress our recent initiatives there”.
*SP Angel act as Nomad and Broker to Tertiary Minerals
URU Metals* (LON:URU) 320p, Mkt cap £5.6m – Drilling to commence at Zebediela Project
URU reports that ZEB Nickel Corp has confirmed it will shortly be commencing exploration drilling at Zebediela Project, targeting high grade nickel-sulphide mineralisation to the east of the existing Zebediela historical nickel-sulphide resource.
The Zebediela has a total Resource of 1,600mt at 0.250% Ni. With 485mt at 0.256% Ni in the inferred category.
ZEB has outlined plans for a 3,600m diamond drill exploration programme aiming to target higher grade nickel sulphide mineralisation recently discovered in the footwall of the historical estimate, enabling the company to estimate the amount of infill drilling required to classify the historical resource as a current mineral resource.
The footwall target is estimated to be approximately 5,000 metres in strike length and varies in thickness between 1.8 and 10m, from depths of 30 m below the surface down to depths of greater than 400 m below surface.
URU comment that this footwall target is thought to be a similar geological horizon to that being developed at the adjacent Ivanhoe Mines Platreef Project.
The Zebediela Project is located on the Northern Limb of the Bushveld Complex, and is immediately adjacent to, and up-dip from, Ivanhoe Mines $1.5 billion Platreef Project, and about 15 km along strike from Anglo Platinum's flagship Mogalakwena Mining Complex.
A 2011 Preliminary Economic Assessment by MSA Geoservices demonstrated that the Project has the ability to produce over 500,000 tons of nickel using an open-pit mining method.
*SP Angel act as nomad and broker to URU Metals
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.
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The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
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
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
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*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
Sources of commodity prices
Gold, Platinum, Palladium, Silver
BGNL (Bloomberg Generic Composite rate, London)
Gold ETFs, Steel
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt
Natural Gas, Uranium, Iron Ore
Bloomberg OTC Composite
Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite