SP Angel . Morning View . Tuesday 30 11 21
China PMI recovers on power supply boost
Base metals pull back on Omicron virus reaction
Beowulf Mining* (Beowulf Mining PLC (AIM:BEM)) – SSAB board member to become Minister of Trade and Industry
Condor Gold* (Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)) – Geotechnical drilling at La India
Galan Lithium (Galan Lithium Ltd (ASX:GLN)) – Candelas PEA highlights the potential for a 14ktpa LCE over 25y brine operation
GoldStone Resources (AIM:GRL)* (GoldStone Resources (AIM:GRL)) - BUY – Maiden gold pour at the Homase mine
Hochschild Mining (Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF)) – C$135m acquisition of Posse gold project in Brazil
Mkango Resources* (Mkango Resources Ltd (AIM:MKA, TSX-V:MKA, OTC:MKNGF)) – Q3 update shows strong progress of mine, refine, recycle strategy
Ormonde Mining* (Ormonde Mining PLC (AIM:ORM)) – Appointment of CEO
Power Metal Resources* (Power Metal Resources PLC (AIM:POW)) – Exploration update for Nevada assets
Serabi Gold (AIM:SRB, TSX:SBI)* (Serabi Gold (AIM:SRB, TSX:SBI)) – September quarterly results show development accelerating at Coringa
URU Metals* (URU Metals Ltd (AIM:URU)) – URU Metals completes disposal of the Zebediela Nickel project to Zeb Nickel (TSX-V:ZBNI) Corp
IGTV: Rolls-Royce electric aero engine boosts battery metals: https://youtu.be/LpQPztCiQqA
VOX Markets: 20/11/21: https://audioboom.com/posts/7983106-john-meyer-discusses-inflation-covid-china-slowing-plus-afritin-cornish-metals-ironridge-ra
*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.
Base metals pull back on concerns over vaccine efficacy against Omicron variant
Copper retreated 1.2% to $9,467/t following the Moderna CEO’s warnings of existing vaccines’ protection vs Omicron.
Gold - $1,797/oz – gold climbs on concerns over new variant risks and Powell’s inflation warnings
Moderna’s management’s comments have seen gold edge higher to $1,793/oz as investors weigh up the risks of the new variant.
Analysts see a renewed Covid surge as a roadblock to central bankers’ plans to withdraw stimulus and hike rates as economies recover.
Increased travel restrictions are also expected to trigger inflation concerns as disrupted supply chains continue to see prices rise.
Dow Jones Industrials +0.68% at 35,136
Nikkei 225 -1.63% at 27,822
HK Hang Seng -1.51% at 23,492
Shanghai Composite +0.03% at 3,564
Economics
China - China factory activity bolstered by easing power shortages
China Nov. PMI hit 50.1, with a 7.4% increase in the manufacturing sector’s production.
Factory activity rose above 50, separating expansion and contraction.
The data is encouraging considering China’s slumping property sector and energy shortages.
Manufacturing has been boosted by Beijing’s coal price intervention in October.
The increase was driven by state-owned businesses, with small manufacturers continuing to contract.
Sub-indices for new orders, workers employed, and raw material stores all remain in contraction territory.
Chinese border cities restrict rail imports following Covid outbreak
Erenhot city, a key import hub for Mongolian goods, suspended non-containerised imports.
This will limit imports of coal, oil, copper ore, zinc, and iron ore. (SCMP)
Suifenhe city, on the Russian border, banned overseas non-container goods including coal and non-gold mineral ore. (Reuters)
Inner Mongolia has recorded 41 new cases since Friday.
Beijing has called for increased restrictions on borders, limiting port, flight, and rail imports.
US - Powell warns of impact of Omicron variant on inflation
Fed Chair J Powell warned of the new variant’s risk to the Fed’s targets of stable prices and max. employment.
He noted that the variant ‘increased uncertainty for inflation’ and posed ‘downside risks to employment and economic activity.’
Yellen, Biden’s Treasury Secretary, is confident that America’s ‘recovery remains strong’.
Yellen has requested Congress to raise the debt limit before Dec. 15th to avoid the Treasury running out of cash.
Germany – Unemployment is continuing to pull back towards pre-pandemic levels in a sign of recovering labour markets.
Jobless rate came in at 5.3% in November, down on 5.4% in October and on course to reach 5.0% seen pre pandemic.
A separate report showed inflation in the largest Eurozone economy came in stronger than expected in November that along with improving employment put more pressure on the ECB to adjust the current loose monetary policy.
CPI (Eu Harmonised, %mom): 0.3 v 0.5 in Oct and -0.2 est.
CPI (Eu Harmonised, %yoy): 6.0 v 4.6 in Oct and 5.5 est.
France – Inflation hit the highest level in a decade amid a surge in energy and manufactured goods prices.
French authorities urged the central bank to look through a temporary pick up in inflation and avoid tightening the policy prematurely.
“This inflation for us today is temporary, it is linked to strong demand, itself linked to a recovery that is much stronger than we anticipated… what would harm growth is to change policy, to suddenly say this inflation is extremely high, we need to react immediately… so we have to limit monetary policy,” Finance Minister said.
CPI (Eu Harmonised, %mom): 0.4 v 0.4 in Oct and 0.2 est.
CPI (Eu Harmonised, %yoy): 3.4 v 3.2 in Oct and 3.2 est.
Japanese steelmaker to raise prices for carmakers
Nippon Steel Corp plans to seek ‘better terms’ for steel contract prices with automakers.
The company’s average price for products hit its highest since 2008 in 3Q21.
Currencies
US$1.1332/eur vs 1.1268/eur yesterday. Yen 113.11/$ vs 113.41/$. SAr 16.142/$ vs 16.143/$. $1.333/gbp vs $1.333/gbp. 0.712/aud vs 0.714/aud. CNY 6.372/$ vs 6.383/$.
Commodity News
Precious metals:
Gold US$1,793/oz vs US$1,794/oz yesterday
Gold ETFs 98.5moz vs US$98.4moz yesterday
Platinum US$956/oz vs US$970/oz yesterday
Palladium US$1,806/oz vs US$1,791/oz yesterday
Silver US$22.92/oz vs US$23.25/oz yesterday
Rhodium US$13,900/oz vs US$13,700/oz yesterday
Base metals:
Copper US$ 9,495/t vs US$9,570/t yesterday
Aluminium US$ 2,620/t vs US$2,636/t yesterday
Nickel US$ 19,990/t vs US$20,165/t yesterday
Zinc US$ 3,212/t vs US$3,194/t yesterday
Lead US$ 2,287/t vs US$2,329/t yesterday
Tin US$ 39,400/t vs US$38,920/t yesterday
Energy:
Oil US$71.9/bbl vs US$76.1/bbl yesterday
Oil prices fell over 3% in early trading today after Moderna's CEO cast doubt on the efficacy of COVID-19 vaccines against the Omicron coronavirus variant, adding to worries about oil demand
The head of Moderna stated that COVID-19 vaccines are unlikely to be as effective against the Omicron variant of the coronavirus as they have been against the Delta variant
Oil fell 12% on Friday along with other markets on fears the heavily mutated Omicron would spark fresh lockdowns and dent global oil demand
It is still unclear how severe the new variant is
With a weakening demand outlook, expectations are growing that OPEC+ will put on hold plans to add 400,000bopd to supply in January
Despite this, the US still intends to release oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain, to try to stem price increases (and therefore inflationary concerns) after OPEC+ producers repeatedly ignored calls for more crude
Yet it appears that OPEC+ is struggling to produce much more than current levels
Production by OPEC+ was 700,000bopd less than planned in both September and October, according to the International Energy Agency (IEA), raising the prospect of a tight market and high oil prices for longer
In the past, smaller OPEC producers in Africa and even some larger ones in the Gulf could be expected to exceed quotas set by OPEC when they needed the extra cash, usually when oil prices were low
But plunging investment in production caused by the pandemic and environmental pressure on oil majors, particularly in poorer OPEC states, means just three OPEC members - Saudi Arabia, the United Arab Emirates and Iraq - have the extra capacity in place to hike supplies relatively quickly
The discussions have come after the US government was unable to persuade OPEC+ to produce more oil with major producers arguing the world was not short of crude
The group agreed this month to stick to plans to raise oil output by 400,000bopd from December
Oil prices rose after Bloomberg News reported that OPEC+ may alter plans to keep boosting production, citing delegates. Reuters has not verified the report.
Consensus forecasts suggest that the US could release anywhere from 45-60MMbbls from its reserves that would bring forward about 20MMbbls in already approved sales
Worries about demand have been fed by the prospect of national lockdowns in Europe, which has pressured prices
Austria entered its fourth national lockdown on Monday as Europe again becomes the epicentre of the coronavirus pandemic
Natural Gas US$4.672/mmbtu vs US$5.081/mmbtu yesterday
US natural gas futures were off sharply this week, erasing gains recorded alongside front-month expiration late last week on news of warming forecasts and weaker fundamentals
Outside of modest increases in LNG feed gas demand, the sharp move higher Friday occurred despite notable further deterioration in the fundamental picture for natural gas
European prices continue to hold up on last week’s news that Germany's energy regulator has suspended the approval process for the Nord Stream 2 pipeline last week
Vladimir Putin continues to exert pressure on Europe with declining gas flows amid the onset of the Northern Hemisphere winter
Uranium UXC US$47.25/lb vs $48.05/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$102.1/t vs US$97.3/t - Iron ore settles above $100/t on promising China data and Vale production guidance
Iron ore rallied above $100 on Vale’s reduced production guidance and lower-than-expected update for 2022.
Vale expects to produce 315-320mt this year vs 315-335mt previously anticipated.
The miner expects production of less than 335mt vs expected 346mt in 2022.
China’s official PMI rising above 50 also boosted sentiment, in a mark of expanding production (first time in 3 months).
Chinese steel rebar 25mm US$748.0/t vs US$748.1/t
Thermal coal (1st year forward cif ARA) US$121.0/t vs US$121.0/t
Thermal coal swap Australia FOB US$158.0/t vs US$175.0/t
Coking coal swap Australia FOB US$291.0/t vs US$291.0/t
Other:
Cobalt LME 3m US$63,155/t vs US$63,155/t
NdPr Rare Earth Oxide (China) US$134,181/t vs US$133,947/t
Lithium carbonate 99% (China) US$29,112/t vs US$29,061/t
China Spodumene Li2O 5%min CIF US$2,260/t vs US$2,260/t
Ferro-Manganese European Mn78% min US$1,898/t vs US$1,887/t
China Tungsten APT 88.5% FOB US$313/t vs US$313/t
China Graphite Flake -194 FOB US$665/t vs US$665/t
Europe Vanadium Pentoxide 98% 8.1/lb vs US$8.1/lb
Europe Ferro-Vanadium 80% 32.55/kg vs US$32.55/kg
China Ilmenite Concentrate TiO2 US$385/t vs US$385/t
Spot CO2 Emissions EUA Price US$84.0/t vs US$83.9/t
Company News
Beowulf Mining* (Beowulf Mining PLC (AIM:BEM)) 5.2p, Mkt cap £42.8m – SSAB board member to become Minister of Trade and Industry
The new Minister of Trade and Industry has been named as Karl-Petter Thorwaldsson, replacing Ibrahim Baylan.
Mr Thorwaldsson is widely viewed in Sweden as pro-mining, having pressed the explosive button which restarted the Kaunisvaara in July 2018.
Mr Thorwaldsson was recruited to the board of SSAB in February 2021, the largest steel sheet manufacturer in Scandinavia and a key figure in the green-steel transition.
Conclusion: Beowulf shareholders should look on today’s appointment with great optimism, given Mr Thorwaldsson’s previous affinity with mining and steel production in Sweden. We hope that this appointment leads to a greater appreciation in government for high-quality resource assets in-country which can contribute to fossil-free steelmaking.
*SP Angel acts as nomad and broker to Beowulf Mining
Condor Gold* (Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)) 31.75p, Mkt Cap £45m – Geotechnical drilling at La India
Click here for Initiation note pdf
Condor Gold has confirmed the completion of 2,551.50m of geotechnical drilling to assist in the slope stability evaluation and pit design for the forthcoming Feasibility Study at the La India gold mine development project in Nicaragua.
The recent drilling, which comprised a further 21 oriented core-holes, supplements the results of 11 holes (1,836.25m) drilled at the pre-feasibility stage and provides a total of 32 geotechnical holes to inform the pit design work being conducted as part of the feasibility study by the consultants SRK.
The announcement clarifies that “Following a review of the results by SRK the programme was extended with an additional five drill holes to further refine the dataset and provide better coverage of key areas of the pit wall”.
Laboratory testing of the recovered core is underway to establish the “mechanical characteristics of the rock mass” which will be required for detailed pit-slope engineering design.
The company explains that the “La India open pit represents the largest proportion of open-pit production for the La India Project … which combines an Indicated Mineral Resource and Inferred Mineral Resource, consists of approximately 8.34 million tonnes of ore grading 2.56 g/t with 79.62 million tonnes of waste for a strip ratio of 9.5 to 1”.
Chairman and CEO, Mark Child, explained that “The geotechnical analysis will establish the design parameters for the ultimate pit design and the intermediate phases, which in turn will govern the detailed production schedule that underlies the Feasibility Study due in the first quarter of 2022”.
Condor Gold has previously indicated that it expected to complete the La India Feasibility Study in Q1 next year and hence today’s announcement provides helpful confirmation that the process remains on schedule
Conclusion: Completion of additional geotechnical drilling provides the data to upgrade the existing pre-feasibility level geotechnical assessment to feasibility study standards and keeps Condor Gold on track to complete the La India Feasibility Study during Q1 2022.
*SP Angel act as a broker to Condor Gold
Galan Lithium (Galan Lithium Ltd (ASX:GLN)) A$1.7, Mkt Cap A$486m – Candelas PEA highlights the potential for a 14ktpa LCE over 25y brine operation
The Company released PEA on its 100% owned Candelas Project in Catamarca, Argentina.
The study envisages a 25 year life of mine for production of 14ktpa Li2CO3 at $4,277/t operating cost using a series of evaporation ponds and a conventional lithium carbonate processing plant.
Alongside the flagship high grade HMW lithium project, this PEA highlights the potential for Galan to run at 34ktpa LCE.
Development capex is estimated at $408m.
The project expected to generate $188mpa in EBITDA using $19,392/t ($18,594/t first 15 years) lithium carbonate price.
The project generates $660m and 20.9% in NPV8% (after tax) and IRR (after tax), respectively.
The team is planning to study an alternative development option for production of lithium chloride, a precursor of lithium carbonate and hydroxide, that should significantly reduce development capital cost and project timeline.
The Company is planning to infill drill the existing resource and perform pumping tests next to prepare a hydrogeological model and carry metallurgical tests as part of the PFS/FS.
The Candelas project currently hosts 196mln m3 at 672mg/l Li for ~700kt LCE in total mineral resource (all Indicated).
GoldStone Resources* (GoldStone Resources (AIM:GRL)) 13.25p, Mkt Cap £56.2m – Maiden gold pour at the Homase mine
BUY
GoldStone reports that it has successfully completed its first commercial gold pour at the Homase Mine in the Ashanti Gold Belt in Ghana.
The Company’s first smelt and gold pour produced gold bars weighing in total 14.46kg (464.90 Troy ounces).
This production now enables the Company to meet the interest payment demands for the US$3m secured gold loan announced on the 22nd of June 2020 with Asian Investment Management Services, subject to the company receiving its Export Permit.
The Company expects to receive the required Export Permit within this 15-business day period and will update the market in due course.
The total interest payments in respect of October and November 2021 comprise 11kg of gold, which is due to be paid today, although AIMS has agreed that the Company will not be in default under the Gold Loan agreement, subject to the Company settling the October and November interest payments in gold within 15 business days, or longer if agreed with AIMS.
Following the pause of operations announced 17 September 2021, the Company will now be recommencing mining operations and is currently formulating a revised production schedule.
Emma Priestley, CEO, commented: "Now that we have managed to successfully complete the transition into a gold producer, we will focus our efforts on ramping up the project to full operations as efficiently as possible, by continuing ramp-up of stacking to the Heap Leach and optimisation of the processing plant."
Conclusion: The maiden gold pour represents a notable milestone for the company, transitioning from a developer to a producer. The gold pour is a proof-of-concept that the plant works effectively, and as a result is provides a certain level of de-risking for the project. We look forward to the company’s release of an updated mining schedule and expect gold pours to increase over the coming months.
*SP Angel acts as broker to GoldStone Resources
Hochschild Mining (Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF)) 127p, Mkt Cap £654m – C$135m acquisition of Posse gold project in Brazil
The Company agreed to acquire Amarillo Gold at C$0.40/sh (cash) in a C$135m deal diversifying its portfolio of precious metals operations in Peru and Argentina.
Under the agreement, Hochschild will acquire a 100% of the Posse Gold Project located in the municipality of Mara Rosa in the state of Goias, Brazil.
Amarillo is spinning out its stake in the Lavras do Sul project into a separate entity, Lavras Gold, by distributing the interest to its shareholders along with a C$10m in cash and a 2.0% NSR royalty on certain exploration properties owned by Amarillo outside the current Posse resource.
The Cash Offer represents a premium of approximately 66% to the 20-day volume weighted average price of Amarillo's common shares on the TSX Venture Exchange on 29 November 2021.
Amarillo Board of Directors has unanimously recommended the transaction.
A number of shareholders including Baccarat Trade Investments, Eric Sprott and the directors and officers of Amarillo representing ~46% of outstanding shares support the offer.
Posse is a brownfield, Feasibility Study stage, open pit old project with 23.8mt at 1.18g/t for ~900koz in reserves and 32.1mt at 1.16g/t for ~1,200koz in mineral resources (FS Aug/20).
Hochschild revised the FS Aug/20 Posse mine plan with the project estimated to have an initial life of mine of 10 years running at 80kozpa (~100kozpa in the first four years) at $750-850/oz AISC and generating $150-160m NPV5% (after tax) and 18-20% IRR (after tax) using $1,600/oz gold price.
Development capex is estimated at $180-200m.
Hochschild has also identified compelling near-mine and regional exploration potential at Posse and the Mara Rosa property.
Mkango Resources* (Mkango Resources Ltd (AIM:MKA, TSX-V:MKA, OTC:MKNGF)) 31.5p, Mkt Cap £48.5m – Q3 update shows strong progress of mine, refine, recycle strategy
Mkango provides a summary of its activities and results for the three months to 30th September 2021, with progress being made at Songwe Hill and REE recycler HyProMag.
Mkango reports a loss of $2.52m in Q3 21 vs $767k in Q3 20.
Mineral project expenditures for the three months increased by $1.14m compared to the three months ended September 30, 2020 as work on the Feasibility Study continues.
General and administrative expenses rose to $536k in Q3 21 vs $330k in Q3 20.
Cash held at the end of the period was $6.48m vs $5.78m in Q3 20.
During the period, Mkango announced the restructuring of Talaxis’ interests in both the Songwe Hill Rare Earths Project and Maginito which resulted in Mkango increasing ownership of both to 100% in a £13m ($18m) share transaction with Talaxis, while retaining all offtake rights relating to Songwe Hill, Maginito and the 100% owned Pulawy Separation Plant project in Poland.
Mkango also raised £5.52m during the period at a price of 0.24 per share (2.9% premium to 5-day VWAP), including a £700,000 investment by Non-Executive Chairman Derek Linfield.
The fundraise ensured that Mkango is fully funded to complete the Feasibility Study for the Songwe Hill Rare Earths Project, targeted for completion in Q1 2022.
Post period, the company increased its interest in HyProMag from 25.0% to 41.6% following the exercise of HyProMag’s right to convert a loan of £200,000 into shares of HyProMag.
HyProMag is pioneering the commercialisation of short loop magnet recycling via HPMS technology – a patented process for extracting and demagnetising neodymium iron boron (NdFeB) alloy powders from magnets embedded in scrap and redundant equipment.
Conclusion: Mkango made strong progress at both Songwe Hill and in Europe over the quarter, while the transaction with Talaxis provides a simplification of ownership structure that enhances optionality for Songwe Hill development funding, including the potential introduction of additional strategic investors and development partners. The backdrop for rare earths is more positive than ever, reflected by prices of NdPr that continue to rally.
*SP Angel acts as nomad and broker to Mkango Resources
Ormonde Mining* (Ormonde Mining PLC (AIM:ORM)) 0.9p, Mkt Cap £4.3m – Appointment of CEO
Ormonde Mining has confirmed the appointment of non-executive director, Mr. Brendan McMorrow, as its new Chief Executive.
Mr. McMorrow, who was appointed to the board on 30th September “will continue to act as Company Secretary, and Chair of the Audit Committee and will sit on the Remuneration, Technical, and ESG Committees” in addition to his new role as CEO.
He is described as “a senior executive and director of publicly listed natural resources companies … [who]…will assist the Company in the identification of new opportunities within the natural resources sector”.
Commenting on the appointment, non-executive Chairman, Brian Timmons, said that the “new Board is acutely aware that shareholders have been waiting a long time for the Company to deliver a return to shareholders and, more recently, to utilise its balance sheet and deliver a strategy creating meaningful shareholder value. Working with Brendan, our priority is to evaluate and execute an opportunity or opportunities whereby Ormonde can leverage its listing and balance sheet to generate shareholder value”.
Ormonde thanked the former CEO, Jonathon Henry “for his diligent and committed service to the Company over the past two years”.
Conclusion: The appointment of a CEO provides Ormonde Mining an opportunity to clarify its future direction following the recent realignment of the company’s board.
*SP Angel acts as Broker to Ormonde Mining
Power Metal Resources* (Power Metal Resources PLC (AIM:POW)) 1.58p, Mkt Cap £21.6m – Exploration update for Nevada assets
Power Metal’s wholly owned subsidiary, Golden Metal Resources, has provided an update for its exploration assets in Nevada, USA.
Pilot Mountain: this asset currently holds a JORC-compliant resource of 12.53Mt at 0.27% W03 with significant Cu-Ag-Zn credits.
Since acquiring Pilot Mountain, Golden Metal has evaluated an exploration strategy for the asset, which will involve targeting underexplored blue-sky exploration opportunities across the license area.
Exploration will target multiple untested chargeability and gravity highs identified during a 2013 induced polarisation and gravity survey, along with additional geophysical surveys.
Golden Metal also aim to target copper rich zones originally identified during the 2012 and 2017 drilling campaigns, along with several tier 1 and tier 2 exploration targets located primarily between the four main deposit areas (Desert Scheelite, Garnet, Gunmetal, and Good Hope).
Golconda Summit: previous work at this site has been focused on surface anomalies, with trenching carried out in 1989 including results of 7.6m @ 24.0g/t Au and 15.2m @ 8.6g/t Au, as well as shallow drilling results of 10.7m @ 3.9g/t Au.
Golden Metal has obtained trenching permits for the asset and is currently revieing historic data files.
The company intends to complete trenching at the highly prospective Havallah Sequence, conduct soil sampling and ground-based geophysical work in order to refine drill targets for the 2022 campaign.
Garfield: Initial sampling at the Garfield Cu-Ag-Au project returned rock results up to 6% Cu, 3.5g/t Au, and 124g/t Ag, while trenching returned an interval of 22m of 0.33% copper, including a 2m sub-interval grading 2.18% copper and a separate 2m sub-interval grading 1.2g/t Au.
Golden Metal has already undertaken remote sensing on the area, and the company intends on completing a geochemical soil survey and various geophysical surveys in due course.
Stonewall: The focus of the Stonewall gold-silver Project is a >1.2km long Au/Ag-bearing low sulphidation epithermal vein & stockwork system, which has been underexplored by the previous project operators.
Golden Metal has contracted an experienced epithermal geologist to undertake geological mapping and surface sampling in order to refine future drill targets.
*SP Angel acts as nomad and broker to Power Metal Resources
Serabi Gold* (Serabi Gold (AIM:SRB, TSX:SBI)) 73.5p, Mkt Cap £56.4m – September quarterly results show development accelerating at Coringa
After tax profit of US$1.31m (unaudited) US$15.00m (2020 – US$ during the three months to 30th September 2021 brings year-to-date profit to US$7.66m (2020- US$7.42m) and EBITDA to US$15.00m (2020 - US$15.66m).
The results reflect year-to-date gold sales of 25,434oz from production of 26,190oz at an average cash cost of US$976/oz and an all-in-sustaining cost (AISC) of US$1,307/oz (2020 ytd production of 24,748oz at a cash cost of US$1,013/oz and AISC of US$1,298/oz).
Net cash generation from operations of US$8.1m after mine development capital expenditure of US$3.8m (2020 – US$11.4m after capital investment of US$2.0m) left Serabi Gold with net cash of US$15.2m at 30th September (31st December 2020 cash balance – US$6.6m).
· Providing background to the financial performance, CFO, Clive Line, said that “Operating costs have increased year on year by US$2.3 million, following the return of contractors to undertake underground drilling activities. US$1.0 million has been incurred in underground drilling year to date to improve short term and long term mine planning. Labour costs have also increased by US$0.76 million compared with 2020 reflecting the return to normal working routines compared with the lower staffing levels experienced during 2020 when at the peak of the pandemic it was necessary to reduce staff headcount at the mine sites”.
· He also said that “Whilst the AISC for the year to date of US$1,307 per ounce is slightly higher than that for the equivalent period in 2020, this is reflective of the increased level of mine development”.
Mr. Line also explained that “Expenditure on purchases of new plant and equipment, exploration activities and the development of Coringa has totalled US$8.7 million for the year to date which has been met by the cash flow being generated by the current production operations”.
Expenditure on the Coringa project during the quarter “has increased significantly following the start of the initial mine development including the establishment of the mine portal for the Serra deposit. The ramp has now achieved approximately 90 metres of development. Expenditure on the project in the nine months to the end of September was US$3.0 million with US$1.7 million incurred in the third quarter”.
Conclusion: Serabi Gold’s results for the first 9 months of 2021 continue to benefit from solid gold production and robust prices as well as favourable exchange rates for the Brazilian Real. The Coringa mine development is accelerating following the establishment of underground access towards the Serra deposit with almost 60% of the US$3m spent on the project this year incurred during the September quarter.
*An SP Angel analyst has visited Serabi’s gold mining operations in Brazil
URU Metals* (URU Metals Ltd (AIM:URU)) 200p, Mkt cap £3.3m – URU Metals completes disposal of the Zebediela Nickel project to Zeb Nickel Corp.
(URU Holds a 74.82% stake in Zeb Nickel Corp which holds the Zebediela Nickel project in South Africa)
URU Metals report the disposal of the Zebediela Nickel project to TSX listed Zeb Nickel Corp.
URU Metals now hold a 74.82% stake in Zeb Nickel Corp effectively retaining control and substantial upside potential in the asset.
John Zorbas, ceo of URU was also appointed a director of Zeb Nickel Corp yesterday.
Jay Vieira, Non-executive Chairman of URU, is also a director of Zeb Nickel Corp.
URU announced in October it is to begin a 3,600m diamond exploration drilling program in H2 2021, aiming to improve the confidence in the historical NI43-101 compliant resource at Zebedela as well as explore for higher grade nickel sulphide mineralisation.
The team continue to advance the relevant mining and environmental applications with the South African Department of Mineral Resources.
*SP Angel acts as Nomad and Broker to URU metals
No.1 in Copper: “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”
No1. In Gold: “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”
The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
Analysts
John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk - 0203 470 0474
Joe Rowbottom – Joe.Rowbottom@spangel.co.uk - 0203 470 0486
Sales
Richard Parlons –Richard.Parlons@spangel.co.uk - 0203 470 0472
Abigail Wayne – Abigail.Wayne@spangel.co.uk - 0203 470 0534
Rob Rees – Rob.Rees@spangel.co.uk - 0203 470 0535
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
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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