SP Angel . Morning View . Tuesday 15 02 22
Expect volatile pricing in WOWO trade
MiFID II exempt information – see disclaimer below
PRIVATE – financing for advanced copper exploration in Zambia
We are raising funds for a copper exploration company with three advanced prospective license areas in Zambia - all near producing mines or active exploration programs by majors.
The company has a joint venture with one major mining company and is working in cooperation with another major copper miner.
Assays close to a historic copper mine show 15.8% copper and 0.57g/t gold in an artisanal pit. The company plan to IPO later this year
*SP Angel’s role is limited to making introductions and interested parties should be aware that investment in a private company can present certain risks not present in listed companies (e.g. limited or no liquidity and no rules compelling disclosure of information to investors). This offer is open to professional investors only and is not offered to retail investors.
Altus Strategies* (Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF)) – Lakanfla drilling results
Arc Minerals* (Arc Minerals Limited (AIM:ARCM)) – Arc agrees extension on Casa Mining transaction to allow Rackla Metals to raise >C$5m of funding on the TSX
BHP (ASX:BHP) – 77% recovery in underlying attributable profit to US$10.7bn and record interim dividend declared
Cornish Metals* (Cornish Metals Inc (AIM:CUSN, TSX-V:CUSN, OTC:SBWFF)) – CLICK FOR PDF - Additional land secured at South Crofty
Empire Metals* (Empire Metals Ltd (AIM:EEE)) – Flash Note - Eclipse-Gindalbie exploration represents exciting new chapter for Empire
Glencore (Glencore PLC (LSE:GLEN)) – Profits take off as higher as rising metals and energy prices drive profits
Orosur Mining* (Orosur Mining Inc (AIM:OMI, TSX-V:OMI)) – JV signed to earn-in to El Pantano Gold Project, Argentina
PolyMet Mining (NYSE:PLM) – Glencore injects another US$40m into Polymet
Power Metal Resources* (Power Metal Resources PLC (AIM:POW)) – Progress at Selta REE & uranium project
Serabi Gold (AIM:SRB, TSX:SBI)* (Serabi Gold (AIM:SRB, TSX:SBI)) – Airborne magnetic survey extends the zone of exploration interest at Sao Domingos
SolGold* (SolGold PLC (LSE:SOLG, TSX:SOLG, OTC:SLGGF)) – Pressing ahead with Ecuador-wide exploration in parallel with the pre-feasibility study for Alpala
W Resources (W Resources PLC (AIM:WRES)) – December rains hit La Parilla output and deplete cash triggering requirement for more funding
IGTV: Are commodities becoming weaponised? https://www.youtube.com/watch?v=jCoPpdNPMpQ
IG Outlook 2022, China new year, winter Olympics may see metals prices soften: (12/01/2022): https://youtu.be/vNqDh74zW5I
VOX Markets: 10/02/22: https://audioboom.com/posts/8028992-john-meyer-talks-about-copper-gold-plus-atlantic-lithium-bluejay-empire-metals-rainbow-rare
*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.
Gold takes on new volatility in WOWO Russia-Ukraine trade in inflationary environment
WOWO ‘War On War Off’ trade is driving new volatility in the gold market with US intelligence expecting an invasion to start tomorrow. (@PolemicTMM, WSJ)
An invasion would add further inflationary pressure through hiked energy costs with sanctions on Russia inevitable from the West.
Gold prices remain relatively strong through the volatility despite firming US 10-year Treasury yields.
Iron ore extends sell-off as Chinese regulators further crack down on rising prices
China’s NDRC plan to send inspectors to check ports and stockpiles to crack down on price speculation.
Iron ore prices have been rising as Beijing rolls out new infrastructure investment to compensate for lower activity in property construction.
Steel rebar prices are also 3.4% lower as speculators withdraw. HRC is also 3.5% lower while stainless steel prices have risen 2.5%.
Copper strengthens despite Russia-Ukraine tensions as inventories continue to shrink
Copper prices have closed in on the $9,900/t mark despite concerns of an imminent Russian invasion of Ukraine.
Analysts expected traders to reduce their exposure to copper considering its correlation to global economic health.
Shrinking stocks, with LME warehouse inventories at their lowest since 2005, falling 3100t to 72,225t have boosted the metal’s price.
Cash copper LME premiums are at their highest in 2-weeks suggesting a tight market.
Las Bambas protestors U-turn on mining road blockade
Reuters reports the community protesting Las Bambas’ key mining road does not intend to continue the blockade.
The two sides are set to meet again on Thursday. Las Bambas supplies 2% of global copper output.
Dow Jones Industrials -0.49% at 34,566
Nikkei 225 -0.79% at 26,865
HK Hang Seng -1.11% at 24,284
Shanghai Composite +0.50% at 3,446
Economics
Markets gain on a report of a pullback of some Russian forces after drills.
Units of the Western and Southern military districts on Tuesday will start returning to permanent bases after completing exercises, according to the Interfax news service citing the Defence Ministry in Moscow.
Reports previously pointed to as much as 130,000 Russian troops amassed at the border with Ukraine fuelling fears of a possible invasion.
Russia rejected the accusations while saying movements of forces on its own territory are an internal matter, Bloomberg writes.
China – The PBOC leaves rates unchanged as major central banks overseas are looking to accelerate monetary policy tightening.
The medium-term lending facility was kept unchanged at 2.85% while the central bank is reported to have injected a net CNY 100bn in fresh liquidity into the banking system.
Market commentators expect the central bank to ease further this year as the economy struggles with new Covid outbreak and respective social restrictions as well as a debt crisis in the real estate sector.
The central bank cut the rate by 10bp to 2.85% in January marking the first since early 2020 and lowered required reserve ratio by 50bp to 11.5% in December last year.
Chinese property developers see sales tumble in January
Chinese real-estate companies have seen sales fall between 10-80%.
Over the top 100 developers, sales fell 40% yoy in January. (CRIC)
Financially stronger developers such as China Vanke saw sales decline 50%, highlighting the considerably weak market conditions.
Fewer sales mean less cash to pay off mammoth debt liabilities and financial obligations that triggered Beijing’s crackdown in the first place.
The Hang Seng property index slid 5% yesterday.
The property sector is over 28% of China’s GDP and developers’ purchases are a major source of funding for local governments.
Germany – The government will start easing pandemic restrictions this week under a three-stage plan seeing most curbs gone by March 20, Bloomberg writes.
Among immediate initiatives, Germany is expected to lift requirement for people to be vaccinated ot recovered to enter non-essential stores and allowing private gatherings of as many as 20 people.
Seven-day incidence rate per 100,000 people started to edge down in recent days while the number of people in ICUs is around half December’s most recent peak.
UK – Employment registered a 14th consecutive month of gains in January reflecting strong labour market conditions, although, real wages pulled back late last year reflecting accelerating inflation.
The economy added 108k new jobs last month, down on 131k in December (revised from184k) and 133k est.
Labour earnings adjusted for inflation fell 1.2%yoy in December marking the largest decline since 2014.
Consumer is faced with increasing headwinds in the form of soaring energy bills, planned NI hike and forecast higher borrowing costs.
Currencies
US$1.1336/eur vs 1.1337/eur yesterday. Yen 115.58/$ vs 115.26/$. SAr 15.033/$ vs 15.174/$. $1.356/gbp vs $1.352/gbp. 0.714/aud vs 0.712/aud. CNY 6.350/$ vs 6.359/$.
Commodity News
Precious metals:
Gold US$1,870/oz vs US$1,855/oz yesterday
Gold ETFs 99.5moz vs US$99.6moz yesterday
Platinum US$1,032/oz vs US$1,034/oz yesterday
Palladium US$2,313/oz vs US$2,338/oz yesterday
Silver US$23.69/oz vs US$23.68/oz yesterday
Rhodium US$18,350/oz vs US$18,350/oz yesterday
Base metals:
Copper US$ 9,893/t vs US$9,829/t yesterday
Aluminium US$ 3,173/t vs US$3,170/t yesterday
Nickel US$ 23,050/t vs US$23,465/t yesterday
Zinc US$ 3,572/t vs US$3,612/t yesterday
Lead US$ 2,302/t vs US$2,268/t yesterday
Tin US$ 43,655/t vs US$43,650/t yesterday
Energy:
Oil US$95.6/bbl vs US$95.0/bbl yesterday
Oil prices have slipped from fresh highs on reports that some troops in Russia's military districts adjacent to Ukraine are returning to bases, a move that could de-escalate tension between the two countries
Russia's defence ministry has confirmed that while large-scale drills across the country continued, some units of the Southern and Western military districts have completed their exercises and started returning to base
In other developments, the latest weekly reports on US inventories are expected to show a drop in crude stocks, underlining a tight supply and demand balance
Elsewhere, the US and Iran are currently in discussions to revive a nuclear deal, which resumed this week after a 10-day break
A deal could see the lifting of sanctions on Iranian oil and ease global supply tightness
Tight supply was seen in US crude oil stockpiles which unexpectedly fell 4.8MMbbls in the week to 4 February to 410.4MMbbls as overall refined product demand reached an all-time record
This compares with a consensus forecast of a 369kbbl rise
OPEC has forecasted that world oil demand might rise even more steeply this year
The group has forecast an increase of 4.15MMbopd this year, as the global economy posts a strong recovery from the pandemic
Natural Gas US$4.367/mmbtu vs US$4.109/mmbtu yesterday
US natural gas futures staged rebounded yesterday as one of the major weather models added a huge chunk of demand to the late-February forecast
The March gas futures contract settled on the higher end of its trading range at US$4.195/mmbtu, up 25.4 cents from Friday’s close
April increased 22.5 cents to US$4.160
UK Natural Gas prices have risen to 3.3% to £1.87/therm, after weeks of stagnation, while the Dutch TTF Futures benchmark has increased a similar 3% to €78.50/MwH
Prices spiked after data from German network operator Gascade showed that flows on the Yamal-Europe pipeline were suspended
Flows had moved eastwards towards Russia since 21 December, piling further pressure on European supplies
While flows have now stopped moving away from Europe, the pause has dashed last night’s hopes of more exports into the continent
Gazprom booked transit capacity for eight hours on Tuesday evening, and the pipeline even recorded an hour of western flows, before coming to a standstill in both directions
Uranium UXC US$44.00/lb vs $43.95/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$147.3/t vs US$150.1/t
Chinese steel rebar 25mm US$778.8/t vs US$782.6/t
Thermal coal (1st year forward cif ARA) US$118.3/t vs US$118.3/t
Thermal coal swap Australia FOB US$220.0/t vs US$220.0/t
Coking coal swap Australia FOB US$394.0/t vs US$394.0/t
Other:
Cobalt LME 3m US$71,000/t vs US$71,000/t
NdPr Rare Earth Oxide (China) US$171,662/t vs US$162,754/t
Lithium carbonate 99% (China) US$62,601/t vs US$61,721/t
China Spodumene Li2O 5%min CIF US$2,710/t vs US$2,710/t
Ferro-Manganese European Mn78% min US$1,808/t vs US$1,808/t
China Tungsten APT 88.5% FOB US$330/t vs US$330/t
China Graphite Flake -194 FOB US$805/t vs US$805/t
Europe Vanadium Pentoxide 98% 10.5/lb vs US$10.4/lb
Europe Ferro-Vanadium 80% 40.75/kg vs US$40.25/kg
China Ilmenite Concentrate TiO2 US$393/t vs US$391/t
Spot CO2 Emissions EUA Price US$104.6/t vs US$103.0/t
Brazil Potash CFR Granular Spot US$815/t vs US$815/t
Battery News
France to target 40GW of offshore wind capacity by 2050
French President Emmanuel Macron has announced that France will have around 40GW of offshore wind capacity in operation by 2050.
France currently has 2MW of offshore wind capacity in operation and is in the process of putting 8.75GW of offshore wind capacity out to tender by 2028.
Macron also announced that France will set aside €1bn to help the development of emerging technologies such as floating wind, with the calls for projects expected to come in the following days.
Offshore wind turbines currently require between 8-10t of copper per MW, and between 600-830kg of REO per MW.
Rolls-Royce keen to accelerate UK net zero plans with string of projects
Rolls-Royce (RR) are hoping to launch an all-electric passenger plane by 2025, a year earlier than planned, as it accelerates efforts to replace traditional jet engines.
The P-Volt project will be able to fly eight passengers up to 90 miles when it is first launched and distances up to 250 miles by 2030.
RR have also signed a deal to produce hydrogen engines for trains in the UK with train leasing company Porterbrook.
Currently, diesel-powered trains that are still used on the UK’s rail network are responsible for 1% of carbon emissions each year.
RR will look to develop new engines to run on hydrogen and convert old engines to run on synthetic fuels.
RR and Porterbrook recently collaborated to develop a new hybrid electric-diesel train that has just gone into service – the Chilern HybridFLEX claims to cut carbon emissions by 25%.
The government has targets to eliminate all diesel trains by 2040 and to have the rail network at net-zero carbon by 2050.
Trina Storage’s 50MW/56.2MWh BESS becomes operational
Trina Storage has supplied a 50MW/56.2MWh battery energy storage system (BESS) to utilities company, SMS plc.
The BESS has been designed to maximise system performance and increase the longevity of the lithium-ion batteries.
Trina began work on two BESS assets in February last year, the 50MW project in Burwell and a second 40MW BESS in Barnsley, entering the UK’s utility-scale storage market with 90MW of capacity.
House fire caused by lithium-ion battery storage raises safety concerns again
A fire caused by a lithium-ion home battery system in northern Adelaide serves as a reminder that the technology still has risks.
According to Professor Christensen’s research, there have been around 40 utility-scale lithium-ion battery fires around the world in the last three years.
Company News
Altus Strategies* (Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF)) 57p, Mkt Cap £67m – Lakanfla drilling results
BUY – 111p
The Company released results from the ongoing 3,500m RC programme at the wholly owned Lakanfla Project in western Mali.
Drilling intersected a significant gold mineralisation including:
1.23g/t over 127m from 21m including 2.53g/t over 14m from 46m.
True widths are estimated at 75-100% of the intercept highlighted.
The team received assays from two holes so far with the second one returning no significant intersections.
~1,600m of planned 3,500m was completed so far.
Drilling is mostly focused on infill drilling of Lakanfla Central zone at depth and testing on strike extension potential as well as step out drilling at Zone 3 and Zone 4 where historical drilling returned high grade intersections.
Selected drilling results from historical programmes at satellite targets include 5.10g/t over 26m from 32m (Zone 3), 4.31g/t over 18m from 34m (Zone 3) and 5.20g/t over 16m from 36m (Zone 4).
The programme is part of a larger 10,000m programme across combined Diba and Lakanfla gold projects located 5km apart.
On completion of the programme, the team will update the Diba MRE and potentially prepare maiden MRE for DIba NW and Lakanfla Central prospects.
This will be followed by an update of the Diba PEA.
Conclusion: Drilling Lakanfla where the Company recently regained 100% interest returned wide higher-grade intersection from relatively shallow depths. Proving up a resource next to the Diba Project will offer significant development synergies. The programme is nearly halfway that may potentially generate a maiden Lakanfla MRE.
*SP Angel acts as nomad and broker to Altus Strategies
Arc Minerals* (Arc Minerals Limited (AIM:ARCM)) – 3.45p, Mkt cap £40m – Arc agrees extension on Casa Mining transaction to allow Rackla Metals to raise >C$5m of funding on the TSX
(Arc holds 72.5% of Zaco and 66% of Zamsort in Zambia. The Cheyeza license is 66% owned by Arc Minerals through its holding in Zamsort.)
Arc Minerals has agreed to an extension to 15 March on the transaction to sell its 73.5% interest in the Misisi gold project to Golden Square Equity Partners Limited.
Terms for the transaction are:
a) Arc to receive US$750k cash from Golden Mining on closing of the Transaction;
b) Arc to receive US$750k cash from Golden Mining within 90 days of closing as a post-closing payment (guaranteed by Rackla);
c) As a condition to closing, Arc will receive a US$3.5m loan note in favour of Arc, payable by Golden Square on or before December 31, 2021. As security, Arc shall receive 3.5 million Common Shares of Black Rock Petroleum Co, an oil and gas exploration-stage company registered in Nevada and which is listed on the OTC Market in the United States;
d) Within 24 months of closing, Golden Mining shall complete an independent resource evaluation in accordance with National Instrument 43-101 administered by the Canadian Securities Administrators (the "Technical Report") in respect of the Akyanga Gold Project, a key asset of Casa in the Democratic Republic of Congo. Golden Mining agrees to pay Arc within 60 days of completion of the Technical Report, payment in the amount of US$1/ounce of identified reserves of between 1m and 5m ounces;
e) Arc to receive US$1m in cash if Golden Mining produces 30,000 ounces of gold prior to the date that is 5 years from the closing date; and
f) When any portion of Casa comes into commercial production a net smelter royalty shall be calculated on a quarterly basis at 1% payable to Arc up to a maximum aggregate amount of US$25m.
The a), b), c) elements will be effected once Rackla gets approval from the Canadian exchange.
The offer by Rackla is conditional on Rackla’s reaching a minimum financing of C$5m
The deal should provide milestone payments of up to $10m potentially.
Golden Square Equity Partners Limited are due to sell Casa Mining’s stake in Misisi to Rackla Metals which is looking to raise >C$5m on the TSX in Canada.
Rackla Metals has filed an amended NI 43-101 compliant independent technical report on SEDAR to support the resource estimate with the TSXV conditionally approving the Misisi acquisition.
Trading in Rackla Metals (RAK.V) shares are expected to resume on completion of the transaction. Rackla shares were suspended in May 2021 ahead of the Misisi gold project acquisition.
*SP Angel acts as Nomad and broker. An SP Angel analyst has driven across the Zambian copper belt, flying the British flag, to visit Arc’s licenses West of Sloweizi.
BHP (ASX:BHP) £24.835, £53bn – 77% recovery in underlying attributable profit to US$10.7bn and record interim dividend declared
BHP reports a 77% increase in underlying attributable profit to US$10.7bn for the six months to 31st December 2021 (six months to end December 2020 – US$6.0bn).
Reporting what he described as a “strong first half”, Chief Executive, Mike Henry, said that BHP “mitigated the impacts of COVID-19 and significant adverse weather events to turn in a solid operational performance, particularly from our flagship Western Australian Iron Ore business”.
BHP “will pay a record interim dividend of US$1.50 per share or US$7.6 billion, including an additional amount of US$2.7 billion above the minimum payout policy”.
Underlying EBITDA rose by 33% to US$18.5bn (2020 – US$13.9bn) and net debt declined by 49% to US$6.1bn (2020 – US$11.8bn).
Contributing US$11.2bn (60%) (2020 – US$10.2bn or 74%) to the underlying EBITDA, the group’s iron-ore business remained dominant ahead of the copper business with a 23% contribution of US$4.3bn (2020 – US$3.7bn or 27%).
The main driver of the US$0.9bn increased contribution of the iron-ore business was an increase in iron ore prices which contributed an additional US$1.3bn offset by lower volumes and a 12% increase in unit costs.
Iron ore production and cost guidance is maintained in the range 249-259mt for the full year with costs in the range US$17.50-18.50/t for the full year to 30th June 2022.
The US$0.5bn increase in the contribution of the copper business reflects a US$1.3bn increase from improved copper prices also offset by lower volumes and increased costs, including a 43% rise in unit costs at Escondida to US$1.29/lb “associated with mitigating the impacts of COVID-19”.
Copper production for the full year is expected to fall towards the lower end of the current 1.59-1.76mt guidance.
BHP’s “expenditure on minerals exploration in the December 2021 half year increased 28 per cent to US$110 million … [with] … Greenfield minerals exploration is being undertaken on advancing copper targets in Chile, Ecuador, Mexico, Peru, Canada, Australia and the south-west United States. Nickel targets are also being advanced in Canada and Australia. Specifically in copper, we are testing targets with drilling in Chile, Ecuador, the United States and Australia”.
Commenting on the outlook, BHP says that it remains “positive in our outlook for long-term global economic growth and commodity demand. Population growth, the infrastructure of decarbonisation and rising living standards are all expected to drive demand for energy, metals and fertilisers for decades to come”.
Warning that it expects a continuing volatility in its operating environment, BHP says that “Momentum towards recovery remains intact across most key regions, although China slowed over the second half of the 2021 calendar year, and vigilance around COVID-19 risks is still a constant for all. We anticipate that the headwinds that buffeted China will diminish as the 2022 calendar proceeds”.
Cornish Metals* (Cornish Metals Inc (AIM:CUSN, TSX-V:CUSN, OTC:SBWFF)) – 23.25p, Mkt cap £65.5m – Additional land secured at South Crofty
Cornish Metals reports that it has secured a 25 year lease over an additional 222 hectares of minerals rights within the South Crofty Underground Permission Area.
The rights are being leased from the Vyvyan family whose association with mining in the area extends back to the 16th century and will cover exploration and mining “within all the mineral right areas owned by the Vyvyan family inside the South Crofty Underground Permission Area, and explore certain other mineral right areas adjacent to the South Crofty property”.
The details of the leasing arrangement are not disclosed but they involve “an annual rent, plus a tin price-based sliding scale net smelter return royalty on production of any minerals recovered from the leased area”.
CEO, Richard Williams, described the agreement as “another important step for the Company, consolidating further ground within the South Crofty Underground Permission Area” while Sir Ferrers Vyvyan confirmed that the family “have been involved with mining in the Camborne area since the 16th century and we hope this project creates many new jobs in the County”.
* SP Angel acts as broker and financial advisor to Cornish Metals. One of our Analysts holds shares in Cornish Metals.
Empire Metals* (Empire Metals Ltd (AIM:EEE)) 1.25p, Mkt Cap £4m – Flash Note - Eclipse-Gindalbie exploration represents exciting new chapter for Empire
Empire Metals, the Western-Australian-focused gold exploration Company, has agreed Heads of Terms to enter into a Tribute Agreement with Maher Mining, giving Empire the right to explore, develop and mine the highly prospective Gindalbie Mining Gold Project.
The license is adjacent to Empire’s Eclipse project where the Company has already enjoyed success through three-phased drill programmes.
Gindalbie has been subject to significant exploration in the past including multiple drill programmes which has yielded positive results.
The project gives additional scope for the discovery of high-grade gold targets in an area where the company has significant expertise, shown by the success of previous drill programmes at Eclipse.
Previous exploration undertaken by Empire at Eclipse will be analysed in addition to historic sampling at Gindalbie to develop a wider understanding of gold mineralisation across both licenses and define drill targets for follow-up sampling.
*SP Angel acts as Nomad and Broker to Empire Metals
Glencore (Glencore PLC (LSE:GLEN)) 435.95p, Mkt cap £58bn – Profits take off as higher as rising metals and energy prices drive profits
Glencore report a rise in net income to $4,974m for 2021 from a loss of $1,903m last year.
EBITDA rose 84% to $21,323m from $11,560m
EBIT rose 228% to $4,416m from $14,495m
Cash generated by operating activities rose to $16,725m from $8,568m a year earlier.
Sales rose 43% to 203,751m from $142,338m as metals prices and trade volumes rose.
EBIT from the marketing division rose 11% to $3.7bn
Net earnings also increased to $473m from $211m from the Viterra (TSX:VT) agricultural business.
EBITDA from the Industrial division rose 118% to $17.1bn.
EBITDA for metals rose 65% to $12.0bn
EBITDA for energy rose 439% to $5.5bn
The group also cut unit costs significantly in its copper and zinc mines though costs rose in its nickel and coal businesses.
Glencore is also supporting Britishvolt with $40m in funding and cobalt supply
Britishvolt has completed a $200mn funding round including $40mn from Glencore
The Britishvolt plant hopes to produce cells for 300k EV batteries pa in a £3.8bn project.
Conclusion: Glencore is well placed to continue to benefit from strong demand for industrial metals and trading in raw materials. High prices for oil, nickel, copper and coal are likely to continue to drive earnings higher through 2021 with a particularly strong first half.
Orosur Mining* (Orosur Mining Inc (AIM:OMI, TSX-V:OMI)) 11.5p, Mkt Cap £21m – JV signed to earn-in to El Pantano Gold Project, Argentina
Orosur reports this morning that it has signed an exploration & joint venture agreement with private Argentinean company DESEADO DORADO in relation to the Pantano Gold Project in the Province of Santa Cruz, Argentina.
The agreement covers nine licenses for a combined total area of 607km2 in the Deseado Massif region of Santa Cruz Province in southern Argentina.
The terms of the earn in agreement are as follows:
Phase 1 - earn 51% by investing US$1m over an initial 3-year period
Phase 2 - move to 100% ownership by investing an additional US$2m over a subsequent 2-year period and granting Deseado a residual 2% NSR.
The project area is highly prospective, with the underlying geology dominated by Jurassic volcanic rocks that are known to be the primary host of gold and silver mineralisation across the Massif.
Orosur’s geological team and directors have already made several visits to the Project while desk top targeting work has already begun in order to define targets for follow up exploration which is expected to commence once the ownership structure between the two parties is finalised.
Preliminary field inspections undertaken by the Company’s geological team have noted large erosional windows within the basalt cover that have exposed extensive areas of prospective volcanics, swarms of gold bearing quartz veins and areas of pervasive silicification all within a major SE-NW regional structure.
Previous soil and rock sampling programs across the project area have identified areas of gold anomalism.
Conclusion: Orosur has made solid progress picking up highly-prospective, promising projects in South America following the handover of the Anza project to Monte Aguilla – a JV vehicle run by Newmont and Agnico Eagle. In addition to El Pantano, Orosur can earn into the Ariquemes tin project in Brazil through a phased investment of US$3m over four years. The two investments provide Orosur with a more diversified approach to exploration in South America and allow the board to add value to both projects while maintaining a stake in Anza.
*SP Angel acts as Nomad and Broker to Orosur Mining
PolyMet Mining (NYSE:PLM) 3.22p, Mkt Cap £325m – Glencore injects another US$40m into Polymet
Glencore has agreed to put another USD$40m into Polymet Mining which holds the NorthMet mine and Lake Erie taconite process plant in Minnesota, USA.
The $40m is by way of unsecured convertible debentures paying 4%pa with a 5% facilitation fee. The notes convert at US$2.57/s . The first US$26m tranche was issued yesterday with a further $18m maturing on 28th February.
Polymet management expect to transition from litigation to project finance and preparation for construction with the funds used to support the move towards the development of the mine and refurbishment of the process plant.
Management recently won the re-instatement of the air permit by the Minnesota Pollution Control Agency.
The ruling also affirming key aspects of the water discharge permit for the NorthMet Project by the Minnesota Court of Appeals including a finding that water quality standards of the State of Minnesota will not be violated as a result of the permitted project.
Located in the Mesabi Iron Range, the project will provide economic diversity while leveraging the region's established supplier network and skilled workforce and generate a level of activity that will have a significant effect in the local economy. For more information: www.polymetmining.com.
Polymet reported cash of $1.5m at end September with a nine-month loss of $12.6m
Northmet stats:
The Northmet mine has a M&I resource of 795mt.
The current mine plan uses just 225mt of the M&I resource
The mine should employ some 360 personnel directly and could create a further 1,000 new employment opportunities in the region and add $515
Northmet 2018 mine plans includes
526,168t of copper,
77,111t of nickel
2,812t of cobalt
1.56moz of PGMs and gold
Permit status:
A pre-hearing conference for the Permit to Mine contested case was held November 1. The case relates to the use of bentonite clay capping for eventual closure of the tailings basin at the completion of mining and will continue into 2022.
The federal wetlands permit remains under review pending US Army Corps of Engineers review of water quality effects. The MPCA has already certified that the project will not adversely affect in-state water quality.
Conclusion: Glencore must feel confident of a successful outcome for the confirmation of the permit to mine to add $40m to the project. Polymet is on the right side of the watershed from an environmental perspective and plans to mine close to a number of historic taconite (low-grade iron ore) mines. The massive Lake Erie taconite process plant provides substantial infrastructure probably worth well over $1bn for the new mine plant, offices and maintenance and storage depos. Polymet plan to utilise existing tailings facilities and we believe the second use of the Lake Erie site will be beneficial to both the economy and the environment.
Power Metal Resources* (Power Metal Resources PLC (AIM:POW)) 1.35p, Mkt cap £21m – Progress at Selta REE & uranium project
(Selta is held within URE Metals Pty Limited, an Australian private company and wholly owned subsidiary of First Development Resources Limited (FDR) which is planning to list on the London capital markets in Q2 2022. Power Metal currently holds a 96.15% interest in FDR.)
Power Metal provides an update for the Selta project in the Northern Territory, Australia – prospective for Rare Earth Element and uranium mineralisation.
URE reports that it has received notification from the Delegate of the Minister for Mining and Industry to grant Mineral Exploration Licences EL 32737, EL 32738 and EL32755 which together make up the Selta Project.
The company has commenced an in-depth review of all historical geological, geophysical and geochemical data associated with the Selta Project in order to identify targets for follow-up investigation.
The Northern Territory hosts some of Australia's best known and high-grade uranium deposits and has a long history of uranium mining.
The project is less than 70km from the Nolans Bore REE-phosphate-uranium-thorium deposit – one of the largest deposits of its kind in the world.
Selta’s southern claim borders the Canadian-listed Megawatt Lithium’s project – where promising surface samples have been collected within a known radiometric trend.
MegaWatt recently announced exploration for REEs and uranium was set to commence at their adjacent Arctic Fox Project, located immediately south of Selta.
*SP Angel acts as Nomad and Broker to Power Metal
Serabi Gold (AIM:SRB, TSX:SBI)* (Serabi Gold (AIM:SRB, TSX:SBI)) 58p, Mkt Cap £42.4m – Airborne magnetic survey extends the zone of exploration interest at Sao Domingos
Serabi Gold reports that additional aeromagnetic surveying of the Sao Domingos property, located west of its operations at Sao Chico, has extended the strong Mata Cobra magnetic anomaly extends into Sao Domingos and coincides with a copper/gold soil geochemical anomaly.
The anomalous area of the Mata Cobra signature has now been extended “from 25km to over 40km” and now includes “significant artisanal mining activity on its periphery”.
The company comments that the “Toucano trend is one such area of artisanal mining, now identified as situated on the edge of the magnetic high. Initial drilling into the Toucano prospect at Sao Domingos recorded some very high intersections including visible gold in hole 21-SD-010 which returned a number of intersections including 7.15 metres at 258.24 grammes per tonne (“g/t”) of gold”.
CEO, Mike Hodgson, welcomed the results, which he said would help focus future exploration. He explained that the area, which includes the Calico, Juca, Ganso and Forquilha prospects has a “prolific past and present artisanal gold production, multiple gold occurrences but little systematic exploration”.
· Mr. Hodgson also highlighted “the Toucano trend which we have drilled with great success, and the very exciting Matilda geochemical anomaly that lies between Sao Domingos and Sao Chico. This new survey highlights potential beyond these targets and demonstrates the extension of the Mata Cobra magnetic anomaly to over 40km.”
The company says that “analysis of the survey data is continuing with new targets being delineated for follow-up mapping and soil sampling later this year”.
Conclusion: Airborne geophysical results have extended the known area of exploration potential at Sao Domingos and identified additional targets for follow up exploration mapping and sampling later in the year.
*An Angel analyst has visited Serabi’s gold mining operations in Brazil
SolGold* (SolGold PLC (LSE:SOLG, TSX:SOLG, OTC:SLGGF)) 26.1p, Mkt Cap £592m – Pressing ahead with Ecuador-wide exploration in parallel with the pre-feasibility study for Alpala
(The Cacharposa porphyry copper-gold deposit at the Porvenir project is held by a 100% owned subsidiary of SolGold.)
In its interim report for the six months ending 31st December 2021, Solgold reports an operating loss of US$12.1m (2020 – loss of US$4.3m) and an overall after-tax loss of US$17.8m (2020 – loss of US$8.8m) as it progresses its 85% owned Cascabel project towards a pre-feasibility study for the development of the Alpala deposit and advances its Ecuador-wide portfolio of exploration projects.
Technical work at Alpala included the completion of geotechnical, hydrogeological and metallurgical drilling during early August 2021 to aid geological modelling and to provide material for additional metallurgical and geotechnical testing and facilitate hydrological testing.
Solgold has previously indicated that it expects to complete the Aplala pre-feasibility study during Q2 2022.
Drilling of the Tandayama-America deposit, located around 3km north of Alpala at Cascabel, led to an initial mineral resource estimate of 233.0Mt at an average grade of 0.33% copper equivalent (CuEq) for 0.53Mt Cu, and 1.20Moz Au classed as Indicated plus an additional 197.0Mt of inferred mineralisation at a grade of 0.39% CuEq for 0.52Mt Cu, and 1.24Moz Au.
Exploration drilling continues at Tandayama-America with 3 rigs deployed an a total of 17,307m completed during the six months ending 31st December 2021.
Solgold also released an initial mineral resources estimate for its Cacharposa project within its Porvenir licence block in southern Ecuador of 396.8Mt at an average grade of 0.44% CuEq totalling 1.40 mt of contained copper, and 1.80 moz Au classed as Indicated and 96.9 m inferred tonnes grading 0.37% CuEq containing 0.28 Mt Cu, and 0.38 Moz Au using a cut-off grade of 0.16% CuEq.
The company says that Cacharposa has “strong grades exposed at surface over a 650m long strike length, which is naturally presented for the early years of mining” and that “this near-surface zone approximately equates to a potential starter pit of 44.0Mt grading 0.64% CuEq (0.44% Cu, 0.34g/t Au) with a low strip (waste to ore) ratio of 0.61”.
Pit optimisation of Cacharposa also identified “an internal, higher-grade, potentially open-pittable zone, containing 181.3Mt grading 0.52% CuEq (0.37% Cu, 0.23g/t Au) with a strip (waste to ore) ratio of 1.30”.
In northern Ecuador, drilling of the Varela prospect in Solgold’s Rio Amarillo block started in August but progress has been relatively slow as a result of Covid19 containment measures which have interrupted operations.
Rio Amarillo is located around 30km southeast of Alpala and currently has prospective porphyry targets at Varela, Florida, Palomar and Chalanes with “surface mineralisation and alteration covering a vertical extent of up to 1,800m over a 12km-long by 3km-wide northeast-trending, highly magnetic, porphyry belt”.
Solgold’s exploration portfolio also includes the Helipuerto project in southern Ecuador where its Tinkimints project is located adjacent to Solaris’s Warintza copper deposit and where Solgold has identified “highly anomalous copper and copper/zinc in soil over a 1.5km by 1km area. High values of copper in soil are observed at Tinkimints, including 0.71% Cu and 0.16% Cu in soils”.
Conclusion: As Solgold moves ahead with its pre-feasibility study for Alpala it has also produced initial mineral resources estimates for Cacharposa and Tandayama-America and continued exploration of its Ecuador wide portfolio of projects providing the company with a pipeline of potential development projects within the Andean Copper Belt. We await the PFS for Alpala with interest as well as further news on the earlier stage exploration projects.
W Resources (W Resources PLC (AIM:WRES)) 2.65p, Mkt Cap £6.0m – December rains hit La Parilla output and deplete cash triggering requirement for more funding
In early January, W Resources announced that heavy rainfall during December caused production delays and limited access to higher ore grades at its La Parilla tungsten mine in Extremadura, Spain.
Q4 results announced today show that, as a result of the poor weather and limited access to medium and higher grade ore, quarterly tungsten concentrate output fell to 89.7t (Q3 2021 – 168.3t) and recovery rates dropped to 31% (Q3 2021 – 58%) and concentrate grades declined to 64.8% tungsten trioxide (Q3 2021 – 66.7%).
The company says that blasting delays and delays in “accessing medium and higher-grade ore as the open-pit was drained of water” are now resolved and that it “now has access to higher-grade portions of the La Parrilla ore bodies, the open-pit has been drained of water, an area has been cleared for the crushed ore stockpile and improving preventative maintenance is helping reduce processing challenges”.
W Resources confirms that during January it produced 42.7t of tungsten concentrate and shipped 49t even though “a fault with the electromagnetic separator reduced the amount of completed concentrate that could be produced. This problem was corrected towards the end of the month with a number of bags of work in progress being reprocessed during early February”.
Adding to the woes of La Parilla, however “In January 2022, the Company was notified by its supplier of liquified natural gas ("LNG") that prices have increased by 425%. Whilst the Company is taking steps to reduce its reliance on LNG generated power by drawing more power from the existing electricity power line which serves the mine and looking to reduce its power consumption In addition, the Company is seeking to have second power line connected to the mine and believes this and possible access to solar energy will reduce its reliance on LNG”.
W Resources says that following “a poor Q4 2021 the Company's cash position was lower than expected and the significant increase in the price of LNG has added an additional complication. As a result, the Company will need to raise funds in the very short term. The Company has been exploring additional sources of finance to strengthen its Balance Sheet and expects to complete this fund raise, which is expected to be in the form of debt, later this week”.
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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.
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