SP Angel . Morning View . Wednesday 26 01 22
Metals make unexpected gains ahead of China New Year
Amur Minerals* (Amur Minerals Corporation (AIM:AMC, OTC:AMMCF)) – Kun Manie potential sale discussions
Bushveld Minerals* (Bushveld Minerals Ltd (AIM:BMN, OTC:BSHVF)) – Vanchem to lead expansion in vanadium production
Empire Metals* (Empire Metals Ltd (AIM:EEE)) – Consolidation of Mineralised Footprint Around Eclipse Project
Europa Metals Limited (Europa Metals Ltd (AIM:EUZ, JSE:EUZ, OTC:EOPAF)) – H1 2022 work plan for Toral project
Power Metal Resources* (Power Metal Resources PLC (AIM:POW)) – Diamond drill programme commences at Haneti
Strategic Minerals* (Strategic Minerals PLC (AIM:SML)) – Cobre magnetite sales
IGTV: IG Outlook 2022, China new year, winter Olympics may see metals prices soften: (12/01/2022): https://youtu.be/vNqDh74zW5I
VOX Markets: 12/01/22: https://audioboom.com/posts/8011559-john-meyer-on-china-s-factory-shut-downs-plus-news-from-bluejay-beowulf-atlantic-lithium
interactive Investors: FTSE 100 favourite stock: https://youtu.be/BomNRQJt-YA. 2022 outlook: https://youtu.be/SxMPiPEc_Rg
Three small-cap mining share tips for 2022: https://www.youtube.com/watch?v=9xvA_3UXXYQ&ab_channel=interactiveinvestor
*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.
Metals prices are unexpectedly strong in the lead up to China’s Lunar new Year and the Winter Olympic games in and around Beijing
Gold is edging higher with yet more ETF investment and the Ukraine situation
Prices for copper and iron ore are stronger than most would have expected with copper at US$ 9,881/t and iron ore at US$136.7/t
Battery metals continue to post gains with llithium carbonate at an incredible US$55,750/t
EV sales are expected to hit 10m in 2022 depending on availability of semiconductors, lithium, graphite, cobalt, nickel, NdPr and a few other metals
Nickel prices also saw a strong rise overnight to US$ 22,470/t with tin following at US$ 41,945/t
Energy metals also doing well, prompted by the high level of gas prices in Europe combined with expected shutdowns in China
How will Germany buy Russian gas if the US has cut its ability to wire money to Gazprom in Russia to pay for its fuel?
China has also ordered cuts on steel and other smelters in Tangshan 200km from Beijing as air quality deteriorates.
Aluminium rose to US$ 3,113/t from US$3,051/t yesterday and zinc also rose to US$ 3,609/t from US$3,575/t yesterday
Even vanadoium prices are rising with European ferro-vanadium rising to 38.25/kg vs US$37.25/kg
Gold continues to strengthen on geopolitical tensions despite rising dollar
Gold hit $1,853/oz yesterday before settling around $1,845/oz.
The move comes despite the dollar index hitting a 2-week high.
Gold ETF inflows show investors are turning bullish on the metal following a stagnant period.
The metal is trading over its 2-month high as Russia-Ukraine tensions escalate further.
Russia has expressed ‘great concern’ that Biden is putting 8,500 troops on alert to be ready to deploy.
Britain has also encouraged its European neighbours to prepare sanction action if an invasion does take place.
Today’s Fed announcement should provide an additional catalyst to gold as Powell considers options to tackle soaring inflation.
Iron ore hits 3-1/2 month high as Brazil and Australia supply concerns mount
Singapore iron ore hit $136/t; Dalian iron ore climbed 3.2% to $122.5/t
Prices are trading at their highest since Sept. 7th.
Major miners including Fortescue Metals, BHP Group, Rio Tinto have all suggested supply may be disrupted by labour shortages.
Australia is currently struggling with an Omicron surge, exacerbating already limited labour pressures.
Analysts note shipments in Q1 are traditionally weaker than the yearly average.
Brazil has also been hit by severe flooding in main mining region Minas Gerais.
Copper climbs as investors tread water before Fed announcement
Copper prices up 0.5% to $9,881/t, up for a second straight session.
Traders are showing caution before a key Fed announcement which they hope will give more clarity on this year’s rate hike programme.
Copper inventories fell another 3,452t on LME tightening the availability of the physical metal.
Aluminium prices gain as Russia supply concerns mount
LME aluminium up 1.8% to $3,113/t.
Investors are reminded of 2018 when Russia-Ukraine tensions mounted, and US sanctions placed on Rusal caused aluminium prices to hit 7-year highs.
Aluminium has also been boosted by soaring European energy prices, with analysts expecting 700kt of supply to have been curtailed.
Dow Jones Industrials -0.19% at 34,298
Nikkei 225 -0.44% at 27,011
HK Hang Seng -0.01% at 24,241
Shanghai Composite +0.66% at 3,456
Economics
China – Government spending climbed at the slowest pace in nearly two decades in 2021 suggesting limited fiscal support for an economy, Bloomberg reports.
Spending increased 0.3%yoy while revenues climbed 10.7%, albeit from a low Covid-19 hit 2020.
Control on spending helped to narrow the deficit that expanded to record high in 2020 to the lowest since 2018.
2021 revenues exceeded the projection for the year that the government said “will provide funding support to maintain the strength of spending this year (2022) and grant more financial help to governments at lower levels”.
Beijing unveils 5-year plan for construction industry
China has published its 5-year plan for the construction industry, aiming to retain its 6% share of GDP into 2025. (People’s Daily)
The plan emphasises the transition to a green and low-carbon productive economy and the modernization of the industrial chain.
The industry will also move to modernize and improve the quality of buildings, specifically prefabricated properties.
The plan notes the ‘mass application of construction robots’ by 2025.
Beijing is looking to further modernize its construction economy, which we expect to place increased demand pressures on key battery and electrification metals such as copper, tin, nickel, and lithium.
Evergrande to hold investor conference today as debt crisis mounts
China Evergrande will hold an investor conference at 1300 GMT today – the first since its offshore bond default last month. (Reuters)
$20bn of China’s offshore bonds are deemed to be in default.
Members of Evergrande’s risk management committee, dominated by state enterprise members, will be on the call.
Reports suggest China’s Henan province has reclaimed 12 plots of land from Evergrande without compensation.
US – Fed monetary policy announcement day with expectations for the central bank to leave rates unchanged and stick to its plans to taper asset purchases ending them in March.
First rate hike may also come as early as March.
Policy makers guided for three rate increases in 2022 in their December “dot plot” with a number of Fed officials supporting a March move.
S&P Case Shiller home price index yoy 18.3% in November vs 18.4% in October
Richmond Fed manufacturing index 8 in January vs 16 in December
Service sector index 4 in January vs 12 in December.
Federal Reserve debt close to $9tn
South Korea – Q5 GDP rose 1.1% qoq vs 0.3% in Q3 and 4.1% yoy
Turkey - Business confidence rose to 109.5 in January vs 106.1 in December
Germany - Ifo business climate index climbed to 95.7 in January vs 94.8 in December
El Salvador - IMF urges El Salvador to ditch Bitcoin as legal tender citing risks to financial stability, financial integrity, and consumer protection.
The fall in the value of Bitcoin might also serve to create substantial discontent
Chile constitutional committee passes mining halt on native land
A proposal to suspend mining concessions that infringe on indigenous territories has been approved in first instance by an environmental commission.
Members of the commission voted 13 in favour and four against on a plan to annual mineral exploration and production concessions without prior consent of indigenous communities.
The proposal still requires a final commission vote as well as a vote by all 155 members of the constitutional assembly.
The current draft of the proposal would allow concessions to be reinstated within two years after a consultation period and with community consent.
Other proposals include setting time limits on concessions, which the industry says is critical for long-term planning.
The document is yet to be ratified in a referendum, which investors will be watching closely, given Chile is the world’s largest copper producer.
Currencies
US$1.1293/eur vs 1.1310/eur yesterday. Yen 114.03/$ vs 113.87/$. SAr 15.184/$ vs 15.311/$. $1.351/gbp vs $1.348/gbp. 0.716/aud vs 0.714/aud. CNY 6.323/$ vs 6.327/$.
Commodity News
Precious metals:
Gold US$1,845/oz vs US$1,841/oz yesterday
Gold ETFs 99.1moz vs US$99.0moz yesterday
Platinum US$1,040/oz vs US$1,020/oz yesterday
Palladium US$2,212/oz vs US$2,160/oz yesterday
Silver US$23.79/oz vs US$23.79/oz yesterday
Rhodium US$16,800/oz vs US$16,700/oz yesterday
Base metals:
Copper US$ 9,881/t vs US$9,667/t yesterday
Aluminium US$ 3,113/t vs US$3,051/t yesterday
Nickel US$ 22,470/t vs US$22,280/t yesterday
Zinc US$ 3,609/t vs US$3,575/t yesterday
Lead US$ 2,338/t vs US$2,348/t yesterday
Tin US$ 41,945/t vs US$41,400/t yesterday
Energy:
Oil US$88.7/bbl vs US$86.7/bbl yesterday
Oil prices remain steady despite concerns over the possibility of quicker than expected interest-rate hikes by the US Federal Reserve that took down risk markets such as equities while the dollar rallied
Stocks in the US fell while the dollar rose to a two-week high on Monday against a basket of currencies, lifted by the tension between Russia and the West over Ukraine and the possibility of a more subdued stance from the Fed this week
Concerns of supply disruption in Eastern Europe, the New York Times reported late on Sunday that President Joe Biden was considering deploying several thousand US troops to NATO allies in Eastern Europe and the Baltics
Russia will face severe economic sanctions if it installs a puppet regime in Ukraine, a senior UK government minister (Dominic Raab) confirmed yesterday, after the UK accused the Kremlin of seeking to place a pro-Russian leader in power there
US petroleum inventories have continued to slide over the last month, while energy firms cut oil rigs this week for the first time in 13 weeks
Natural Gas US$4.225/mmbtu vs US$3.978/mmbtu yesterday
European natural gas prices have rebounded again as the supply concerns that have plagued the market this winter are deepening amid ongoing tensions between Russia and Ukraine
The trading arm of Sinopec is selling spot LNG cargoes this year, according to traders with knowledge of the matter
The move indicates China is well stocked and more gas could come to Europe, helping to ease pressure from its abnormally low inventories and curtailed supplies from Russia
Uranium UXC US$45.05/lb vs $45.05/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$136.7/t vs US$132.5/t
Chinese steel rebar 25mm US$755.7/t vs US$755.0/t
Thermal coal (1st year forward cif ARA) US$114.0/t vs US$113.5/t
Thermal coal swap Australia FOB US$223.5/t vs US$217.0/t
Coking coal swap Australia FOB US$437.0/t vs US$441.0/t
Other:
Cobalt LME 3m US$71,000/t vs US$71,000/t
NdPr Rare Earth Oxide (China) US$149,457/t vs US$145,799/t
Lithium carbonate 99% (China) US$55,750/t vs US$55,712/t
China Spodumene Li2O 5%min CIF US$2,710/t vs US$2,690/t
Ferro-Manganese European Mn78% min US$1,801/t vs US$1,804/t
China Tungsten APT 88.5% FOB US$320/t vs US$320/t
China Graphite Flake -194 FOB US$805/t vs US$805/t
Europe Vanadium Pentoxide 98% 9.6/lb vs US$9.5/lb
Europe Ferro-Vanadium 80% 38.25/kg vs US$37.25/kg
China Ilmenite Concentrate TiO2 US$393/t vs US$391/t
Spot CO2 Emissions EUA Price US$94.5/t vs US$95.9/t
Brazil Potash CFR Granular Spot US$810/t vs US$810/t
Battery News
China connected 16.9GW off offshore wind capacity in 2021
The latest data from China’s National Energy Administration has shown, the country connected 16.9GW of offshore wind capacity to the grid in 2021.
This is an enormous increase on the 3.06GW that the country installed in 2020 – reaching a total capacity of 9.89GW by the end of that year.
China now has around 26.8GW of connected offshore wind capacity as of the end of 2021.
With current figures, there is 52.2GW of connected offshore wind capacity globally, meaning more than half of this capacity is installed in China – the figure is expected to change as installed capacity in other markets is disclosed.
China is now firmly the world leader in terms of both installed and connected capacity and has more than doubled the gap between the second-placed UK which had 10.2GW of installed offshore wind capacity at the end 2020.
Offshore wind growth is expected to slow significantly in China from 2021 rates, as developers had raced to connect this new capacity to the grid to meet China’s Feed-in-Tariff deadline which expired on 31 December.
GM moves to double EV pickup production with $6bn investment
General Motors is planning to spend $4bn converting its Orion Assembly factory to produce plug-in trucks.
GM will also spend $2.6bn on a battery factory in partnership with LG Energy Solution. (WSJ)
The company hopes to invest $35bn in EV production through 2025, with an intended factory capacity of 1m EVs.
Bentley to invest £2.5bn to realise ‘green dream’
Luxury car manufacturer, Bentley, will invest £2.5bn into their Crewe manufacturing plant as it plans to become a fully electric brand by 2030.
Bentley, which is owned by Volkswagen, announced its electrification target in 2020:
its entire range will offer an electrified hybrid option by 2024, and the first fully electric car to be launched in 2025.
exclusively plug-in hybrid or BEVs by 2026.
and only BEVs by 2030, when the government bans new petrol and diesel vehicle sales.
“It's an ambitious and credible roadmap to carbon neutrality of our total business system, including the shift to 100 per cent BEV in just eight years” said Bentley CEO, Adrian Hallmark.
Company News
Amur Minerals* (Amur Minerals Corporation (AIM:AMC, OTC:AMMCF)) 3.2p, Mkt Cap £45m – Kun Manie potential sale discussions
The Company announced yesterday it is in discussions with a potential buyer for the Kun Manie nickel/copper sulphide project located in Amur region, Russia.
The announcement followed press speculation that an interested party valued the asset at an indicative price of up to £100m.
The asset is held by Amur’s wholly owned subsidiary Irostra Trading Ltd.
Conclusion: Nickel projects are attracting a significant amount of attention amid an accelerating growth in EV sales and strong outlook for metal use in batteries. In Dec/21, Wyloo Metals controlled by former Fortescue CEO Andrew Forrest won the bidding war with BHP for an acquisition of Noront Resources, a Canadian based developer with a 100% interest in a high grade nickel/copper/PGE Eagle’s Nest project in Ontario, valuing the Company at ~C$620m. Same month, IGO agreed to acquire nickel producer Western Areas for US$785m as part of a consolidation of the nickel sector in Western Australia. Horizonte Minerals announced a ~$630m funding package including equity/bank loans and convertible notes in Dec/21 to fund development of its Araguaia ferro-nickel project in Brazil. In Jan/22, BHP announced an up to $100m investment in the Kabanga Nickel project in Tanzania.
The Company has no debt on the balance sheet with ~$8.9m held in cash (as of Aug/21) after the sale of Nathan River convertible notes in July last year. A potential sale of the asset for up to £100m translates into an up to 7p contribution to the Company’s net asset value should the deal come through.
*SP Angel act as Nomad and Broker to Amur Minerals
Bushveld Minerals* (Bushveld Minerals Ltd (AIM:BMN, OTC:BSHVF)) – 9.40p, Mkt cap £119m – Vanchem to lead expansion in vanadium production
BUY
(Bushveld Energy holds an indirect interest of 25.25 per cent in Enerox. Bushveld is invested in Enerox. Bushveld Minerals holds 74% of Bushveld Energy. Bushveld Energy holds a 50.5% interest in VRFB-H)
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Production of vanadium and ferrovanadium rose by 28% in the second half to 2,018 mtV to make 3,592mtV for the full year
Sales were 14% lower yoy at 3,314 mtV due to logistics issues with December shipments which cut Q4 sales by 30% yoy.
Production at Vametco beat our forecast but was 7.5% lower than last year causing unit cost to rise by 31.1% yoy.
Production at Vanchem rose 15% yoy while changing the mix of products combined with a kiln shutdown raised costs by 36.5%
Inventory: Unsold inventory of 278 mtV (worth ~$9.1m) due to Covid and other disruption to logistics, though there is always some unsold inventory at the year end.
Guidance for 2022 production and costs
Production of 4,200- 4,400 mtV in 2022
Vametco: 2,450- 2,550 mtV with costs of $22.7-23.5/kgV
Vanchem: 1,750- 1,850 mtV, with cost $27.7-28.4/kgV
Target : Production run rate of 5,000-5,400mtV by the year-end
Vametco run rate to maintain stable and consistent output at 1,800mtV
Vametco to hit a run rate of 2,600mtV by end 2022
Vametco: the Vametco mine had a good Q4 mining 22% more ore and a grade that was 58% higher yoy
Concentrate grade improved by 4.9% yoy in the plant helping recovery rates to to improve 1.7% to 72.7%
Somehow Nitrovan FeV production fell 0.4% to 700mtV in Q4 despite the better performance indicating some material may still be in the system
Production for the year fell 7.5% yoy to 2,453mtV but was higher than our 2,308 mtV forecast. Production should pick up slightly in 2022 to the guidance above.
Vametco cut C1 costs in Q4 to $22.9/KgV resulting in an average $24.0/kgV for the year representing a 31% yoy increase.
C1 Costs should fall in 2022 though much will depend on operational stability.
Vanchem: FY vanadium production rose 15% to 1,138mtV and better than our 1,108mtV forecast for the year
Q4 Total vanadium production came in at 262mtV vs 261mtV a year earlier.
Vanadium production was stable though the mix changed to increase production of ferrovanadium to 204mtv vs 148mtV yoy
Vanchem C1 costs rose 36.5% yoy to US$30.6/kgV.
Q4 C1 costs also rose by 43.1% due to clay and silica in the ore coating the kiln and requiring shutdown and cleaning.
This was due to the mining of ores from the Upper Seam at Vametco with rain affecting the quality of the ore extracted.
Cash and cash equivalents $15m at the year end vs US$25m at end December
Capex: Bushveld expects to spend around $17m this year versus $29m in 2021 which included $10.1m invested in Enerox Holdings
Vametco capex ZAR78m ~$5.1m
Vanchem capex ZAR127m ~ $8.3m
Mokopane ZAR3m ~$0.2m
BELCO ‘Bushveld Electrolyte Company’ ZAR37m ~$2.4m
Bushveld Energy ZAR10m ~$0.7m
Vanadium prices: vanadium prices have recovered from a low of $24.5/KgV in September to ~$33/KgV today in China with reports on strong demand for stainless steel in the region.
Prices posted $35/mtV in Q4 according to the Metal Bulletin and remain at $33/kgV according to Asian Metals
European ferrovanadium prices have risen this week to 38.25/kg from US$37.25/kg a week earlier in China though Asian Metals report that Chinese metals inquiries have calmed down this week ahead of China’s Lunar New Year holiday.
Conclusion: Bushveld posted strong gains in the second half after a challenging start to the year. Production guidance is weighted towards the second half 2022 offering another 608-808mtV of mainly ferrovanadium production. We expect unit costs to fall materially this year as management focus on stability and more efficient production though the relative strength of the South African rand remains an issue.
*SP Angel act as nomad and broker to Bushveld
Empire Metals* (Empire Metals Ltd (AIM:EEE)) 1.3p, Mkt Cap £4.4m – Consolidation of Mineralised Footprint Around Eclipse Project
Empire Metals reports that it has agreed Heads of Terms to enter into a Tribute Agreement with Maher Mining Contractors, giving Empire the right to explore, develop and mine within a granted area on Maher Mining's 100% owned mining lease M27/158 – known as the Gindalbie Gold Project.
Gindalbie is adjacent to Empire’s Eclipse Gold Project, and the agreement would increase Empire's mineralised footprint around Eclipse by over 200% to a total of 943ha.
Gindalbie sits adjacent to the eastern border of the Eclipse licence area and will extend the current area for exploration targets a further 2km along the Eclipse lodes trend, plus 1km to the north and 3km to the south.
A number of historical mines are situated within the license area, which align on the main trend containing the Eclipse and Jack's Dream deposits.
Three other, sub-parallel north-west - south-east striking trends have been identified which combined with the Eclipse trend provides an exploration target extending over a strike length of 8km.
The cost to enter into the Tribute Agreement is A$250k for an initial 6-month exploration term. An additional A$250k is payable if Empire elects to extend the exploration period by a further 18 months. Minimum expenditure commitments during the two stages of exploration are A$250k for each period.
If Empire elects to commence mining operations and subject to all statutory approvals being met, then Empire will:
Pay Maher Mining A$500k within 90 days
Grant Maher Mining a 2% NSR on all gold and other commodities produced, rising with respect to a rising gold price
Guarantee to spend not less than A$250k on exploration per annum on the Granted Area over the subsequent four years
Empire will be the manager of the granted area and will have the sole right to undertake exploration, development and mining activities.
Previous exploration on the site includes aerial photography, bulk sampling, geophysics and RAB (approximately 20,000m) and RC drilling (approximately 1150m).
Significant drill results undertaken by previous explorers include:
BPB72 8m from 0m @ 3.72 g/t Au
BPB74 8m from 8m @ 8.48 g/t Au
BPB76 4m from 72m @ 7.44 g/t Au
BPB86 12m from 48m @ 9.20 g/t Au
GDP011 5m from 27m @ 14.46 g/t Au
GDC011 1m from 15m @ 17.10 g/t Au
Bulk samples include results with a gold grade as high as 23.05g/t .
An aeromagnetic survey was flown, although the data was never fully interpreted. A preliminary investigation showed there was a major linear feature crossing the tenement with a north-westerly strike.
Conclusion: A deal with Maher Mining would consolidate Empire’s land package at Eclipse, giving the company more exposure to a highly prospective area of gold mineralisation. Further exploration offers the potential to develop a significant increase in the scale of mineralisation at the site, and the company remains well funded to commence this given the recent sale of its Georgian assets.
*SP Angel acts as Nomad and Broker to Empire Metals
Europa Metals Limited (Europa Metals Ltd (AIM:EUZ, JSE:EUZ, OTC:EOPAF)) 4.6p, Mkt Cap £3.5m – H1 2022 work plan for Toral project
Europa Metals has provided information on plans for advancing its Toral lead/zinc/silver project in the Castilla y Leon region of Spain during H1 2022.
The company confirms that it is conducting tests on ore-sorting using drill-core sourced material from the upper zone of mineralisation at Toral under the supervision of its consultants, Wardell Armstrong International.
The testing is being undertaken by the German based ore-sorting equipment supplier, TOMRA, and aims to “assess and determine the maximum efficiencies for recovery and concentrate processing in the early years of the future Toral production profile”.
Additional testing of waste material is planned to “investigate the suitability of potentially implementing a low water, dry stack tailings model that can backfill into the future mined areas of Toral and utilise surrounding, disused quarry sites, as part of a reclamation strategy being developed with local stakeholders”.
Europa Metals also plans a “limited geotechnical and resource drilling programme … to commence during the current quarter. Geotechnical drilling and studies will initially serve to determine ground conditions at several potential plant sites, whilst ground assessment work has begun at a disused quarry site identified for potential reclamation.”
Further “Resource drilling will then seek to incrementally expand the Company's pre-existing 5.9 million tonne Indicated resource estimate.” The resource estimate averages 4.2% zinc, 3.3% lead and 27g/t silver (7.1% zinc equivalent). Toral also has an additional inferred resource of of 14mt at an average grade of 3.8% zinc, 2.5% lead and 20g/t silver.
Europa Metals also discusses a cost saving strategy involving directors Read, Campion and Kirby deferring “50 per cent. of their director remuneration (comprising consulting fees and/or salaries) in respect of the 2022 calendar year, with such accrued remuneration to then be settled via the issue of new ordinary shares”.
CEO, Laurence Read, confirmed that Europa Minerals priority “is on delivering shareholder value by continuing to advance Toral in a cost-effective manner and delivering on a work programme designed to further de-risk the project and maximise the efficiency of the proposed early years' production profile”.
Mr. Read also confirmed that the cost-cutting initiative “aims to ensure that our resources are directed as far as possible on project related expenditure and existing operations, as well as the evaluation of potential new complimentary projects and opportunities”.
Power Metal Resources* (Power Metal Resources PLC (AIM:POW)) 1.4p, Mkt cap £20m – Diamond drill programme commences at Haneti
(Katoro Gold holds 65% of the Haneti nickel project alongside Power Metal Resources which holds 35%)
Power Metal reports that drilling has commenced at the nickel-copper-cobalt-PGM Haneti Project in central Tanzania.
The planned 1,000m drill programme consists of three deep diamond holes, designed to provide a full intersection through the various ultramafic sequences in order to produce fresh rock samples for detailed geochemical and petrographic analysis.
Two holes at the Mwaka Target hare designed to test two discrete high-priority conductors which were identified during the 2012 EM survey.
A single deep hole is planned at the Mihanza Target, which was subject to a shallow Rotary Air Blast ("RAB") drill programme that was completed in early 2021; the programme confirmed the presence of near-surface Ni-Cu-PGE sulphide mineralisation.
The hole is designed to sample a large plug shaped magnetic anomaly identified by magnetic data sampling in 2014.
*SP Angel acts as Nomad and Broker to Power Metals
Strategic Minerals* (Strategic Minerals PLC (AIM:SML)) 0.28p, Mkt Cap £6.1m – Cobre magnetite sales
Strategic Minerals has reported its’ magnetite sales from Cobre, New Mexico for the 3 months and year ending 31st December 2021.
Sales of 7,245t during the quarter realised US$US$0.49m and brought sales for the full year to 42,637t generating US$US$2.61m.or approximately US$61/t.
The company reports a 30th September 2021 cash balance of US$0.61m and Strategic Minerals explains that “2021 saw a gentle decline in sales over the first three quarters and a significant fall in the December quarter of 2021. While initial declines had been thought to reflect increased demand in 2020 associated with the wall between the USA and Mexico, the last quarter has seen a significant drop in demand from the Company’s largest client”.
Elaborating, Strategic Minerals explains that the “major client has indicated that they wish to rundown a significant magnetite stockpile, established at their plant. As this point, it is not clear when previous demand levels will be restored. To some degree, this fall in demand has been mitigated by the change in the associated sales price mix and additional demand from existing clients” and that “Despite the reduction in sales at Cobre, it is expected that, subject to audit, the Company will report an after-tax profit in 2021”.
Strategic Minerals also confirms that “Subject to receipt of required project funding, Leigh Creek is expected to shift into production, and generate revenue, this year and the Board believes this will materially impact expected future cash balances” and that it expects to commence operations “late in the first quarter/early in the second quarter 2022” subject to obtaining the necessary environmental approvals and finance.
Managing Director, John Peters, explained that “While Cobre sales have reduced over 2021, the expectation of revenue from Leigh Creek in 2022 subject to receipt of project funding, places the Company in a strong position to realise its promise to develop a second income stream and significantly improve after-tax operational profits”.
Conclusion: Strategic Minerals’ sales at Cobre declined during the final quarter of 2021 as a result of a major client running down magnetite stocks. However, the company expects to remain profitable in 2021 and to start operations at Leigh Creek in Australia late in the current quarter or early in Q2, subject to permitting and funding.
*SP Angel acts as Nomad and Broker to Strategic Minerals
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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
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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*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