SP Angel . Morning View . Monday 21 02 22
Growth rebounds in Europe while inflation pressures persist
MiFID II exempt information – see disclaimer below
Altus Strategies* (Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF)) - BUY – 111p – CEO bought ~£44k worth of shares in the market
Arc Minerals* (Arc Minerals Limited (AIM:ARCM)) – BUY - Arc now free to agree deal with major mining company following settlement with entities involved with former Zambian director
Anglo American (Anglo American PLC (LSE:AAL)) – Production resumes at Grosvenor
Conroy Gold & Natural Resources (Conroy Gold and Natural Resources PLC (AIM:CGNR, OTC:CGDNF)) – Drilling results from Clontibret
Oriole Resources (Oriole Resources PLC (AIM:ORR)) – Iamgold exercises option at Senala
Premier African Minerals (Premier African Minerals Ltd (AIM:PREM)) – Zulu lithium/tantalum drilling
Rambler Metals & Mining* (Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)) – NPV Valuation: 168p/s – Drilling hits additional mineralisation along strike from the recently discovered LP East Zone at the Ming Mine
Savannah Resources* (Savannah Resources PLC (AIM:SAV, ETR:SAV, OTC:SAVNF)) - BUY – 17.9p – Metallurgical testwork results
Serabi Gold (AIM:SRB, TSX:SBI)* (Serabi Gold (AIM:SRB, TSX:SBI)) – Airborne magnetic survey extends the zone of exploration interest at Sao Domingos
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 pares gains on prospect of Biden-Putin summit having hit $1,908/oz
Gold has retreated from an 8-month high of $1,908/oz to $1,891/oz.
The metal lost momentum on talks of the US and Russian presidents holding a summit to avert a crisis in Ukraine.
Concerns of a more aggressive rate hike program from next month are also weighing on gold.
Despite this short-term setback we still expect gold to claw its way higher this year driven by persistent inflation and geopolitical concerns
Copper ticks up on Russia optimism and weaker dollar
Copper edged up 0.3% in early trading to $9,987/t but remains below the $10,000/t mark touched last week.
Traders remain cautious on copper, but sentiment has improved on the prospect of a summit between the US and Russia.
The metal is also supported by a falling dollar price, down 0.3% on risk-on sentiment.
Tin hits further record highs on continued supply disruptions and rising demand
Tin prices have risen 11% this year to $44,100/t driven by export delays in Indonesia, which produces 29% of global tin output and strong consumer electronics demand.
Indonesia exported 70% less tin in Jan 2022 than Jan 2021 as delays to private export licenses have hit available supply.
Long-term supply is not forecast to be sufficient, with the ITA expecting 11 new projects by 2030 contributing 35kt into the concentrate market.
Demand growth rates have doubled from 1-2% to 3-4%, with analysts forecasting a continuation of current tight markets. (ITA)
Semiconductor demand has been a primary growth factor, forecast to grow an additional 9% this year. (Platts)
Nickel prices hit 10-year high as demand jumps for EV batteries
Nickel prices continue to rise on concerns over global shortages as gigafactories ramp up production drawn by growth in EV sales.
Global EV sales climbed 83% yoy in 2021. (Adamas)
54% of new battery capacity deployed was through high-nickel cathode chemistries with no-nickel cells contributing 20% mainly sold in China in LFP batteries.
High-nickel cells continue to dominate in Europe due to the higher energy capacity of NCM 622 and increasing NCM 811 production.
Adamas reports a rise of 110% to 173,641 tonnes of LCE batteries were sold in EVs last year.
45% of all new LCE ‘Lithium Carbonate Equivalent’ units were in the form of lithium carbonate vs 55% in lithium hydroxide.
Nickel inventories on the LME have fallen to their lowest level since 2019 at 83328t, with cash prices currently much higher than futures – meaning immediate supply is particularly thin.
Sanctions on Russia could disrupt nickel supplies, though we expect Norilsk Nickel and other Russian sales to go into China, simply changing supply routes.
Dow Jones Industrials -0.68% at 34,079
Nikkei 225 -0.78% at 26,911
HK Hang Seng -0.73% at 24,151
Shanghai Composite -0.00% at 3,491
Economics
China – China - China bans unauthorised lockdowns by regional authorities
The NDRC has instructed all regional authorities not to impose any unauthorised citywide or district-wide lockdowns as the government moves to help the services sector..
Local governments are also ordered not to shut down or extend the closure of restaurants, supermarkets, scenic spots and cinemas without investigation or a policy basis.
Policymakers expected bring in pro-growth policies after March meetings
China has already cut the reserve requirement ratio and by expanded access to credit for small businesses
The PBoC has so far kept benchmark lending rates unchanged
China delays peak carbon emissions for steelmakers
China has delayed its ambitious push for its steel industry to reach max carbon emissions by 2025, pushing the deadline back five years.
The steel sector, which is the country's second-largest industrial carbon emitter, will now have until 2030 to reach peak emissions, in line with China's broader national target.
A draft released of the guidelines, over a year ago, said the sector would aim to "reach its carbon peak as early as 2025."
The China Iron and Steel Association (CISA) also said in March the sector was going to reach peak carbon emissions by 2025 and cut them by almost one-third by 2030.
Wang Guoqing, director at information provider Lange Steel Information Research Center, which serves clients in the steel industry, has said the new guidelines are more practical than the previous draft and give clearer directions on how steelmakers can meet the green target.
China’s coal reliance to continue with approval of three new mines
China’s top planning agency has approved three different billion-dollar coal mine projects on Monday, in a sign that the country is not yet ready to end its reliance on coal.
The NDRC give the go ahead for two mines in Shaanxi and another in Mongolia, which will require a total investment of 21bn yuan ($3.8n) and produce a combined total of 19mt.
The approval follows a massive surge in mine activity late last year as China boosted production to record levels over fears of an energy shortage.
Eurozone – Recovering growth in the services sector pushed Markit Composite PMI higher in February beating market estimates.
Growth hits five month high as Covid-19 containment measures were relaxed.
Future expectations, new orders and jobs growth all improved.
On the less positive side, inflation in consumer prices increased to the highest level in the PMI history amid persistent cost pressures from rising wages and energy bills.
“The strength of the rebound in business activity signalled by the PMI provides welcome evidence that the economy has so far shown encouraging resilience in the face of the Omicron wave, but the intensification of inflationary pressures will add to speculation of an increasing hawkish stance at the ECB,” the Markit report read.
Markit Manufacturing PMI: 58.4 v 58.7 in January and 58.7 est.
Markit Services PMI: 55.8 v 51.1 in January and 52.1 est.
Markit Composite PMI: 55.8 v 52.3 in January and 52.9 est.
Energy sanctions against Russia ‘on the table’, President says
The European Commission has warned that energy sanctions are a possibility if Russia invades Ukraine.
Ursula Von Leyen told CNBC that Europe’s dependency on Russian gas was “not sustainable” and reached out to alternative suppliers to replace any potential drop in gas supplies from Russia.
Germany
Markit Manufacturing PMI: 58.5 v 59.8 in January and 59.8 est.
Markit Services PMI: 56.6 v 52.2 in January and 53.1 est.
Markit Composite PMI: 56.2 v 53.8 in January and 54.5 est.
France
Markit Manufacturing PMI: 57.6 v 55.5 in January and 55.5 est.
Markit Services PMI: 57.9 v 53.1 in January and 54.0 est.
Markit Composite PMI: 57.4 v 52.7 in January and 53.0 est.
UK – Private sector activity accelerated to the highest in eight months led by a strong recovery in consumer spending on travel, leisure and entertainment.
Growth in the services sector climbed to the highest in eight months and outpaced the one in manufacturing by a good margin.
Business orders picked up strongly on improving confidence in the UK economic outlook as well as a rollback in pandemic restrictions.
Employment picked during the month with the survey showing the fastest growth since October 2021 largely driven by stronger job creation in the service economy.
Although, inflation also picked up again with the growth rate coming in close to the survey-record high seen last November.
High cost inflation, rising energy costs and tight labour market point to further monetary tightening with a third back-to-back rate hike looking increasingly likely in March, HIS Markit said.
Markit Manufacturing PMI: 57.3 v 57.3 in January and 57.0 est.
Markit Services PMI: 60.8 v 54.1 in January and 55.5 est.
Markit Composite PMI: 60.2 v 54.2 in January and 55.3 est.
Chile - Court allows BHP’s Cerro Colorado copper mine to restart under strict water volume limits
The mine produced 68,900t in 2020. The mines environmental allowance expires at end 2023.
Currencies
US$1.1381/eur vs 1.1371/eur last week. Yen 114.94/$ vs 115.12/$. SAr 15.108/$ vs 14.972/$. $1.363/gbp vs $1.363/gbp. 0.722/aud vs 0.722/aud. CNY 6.332/$ vs 6.327/$.
Commodity News
Precious metals:
Gold US$1,892/oz vs US$1,893/oz last week
Gold ETFs 100.0moz vs US$99.8moz last week
Platinum US$1,078/oz vs US$1,092/oz last week
Palladium US$2,326/oz vs US$2,329/oz last week
Silver US$23.81/oz vs US$23.93/oz last week
Rhodium US$18,300/oz vs US$18,200/oz last week
Base metals:
Copper US$ 9,987/t vs US$10,010/t last week
Aluminium US$ 3,271/t vs US$3,265/t last week
Nickel US$ 24,530/t vs US$24,075/t last week
Zinc US$ 3,578/t vs US$3,644/t last week
Lead US$ 2,325/t vs US$2,344/t last week
Tin US$ 44,100/t vs US$44,250/t last week
Energy:
Oil US$93.0/bbl vs US$92.4/bbl last week
Oil prices are trending lower in early trading this morning, reversing course from strong initial gains, as news of fresh diplomatic efforts to resolve the Ukraine crisis provided some relief from concerns about crude supply
Brent crude futures and US WTI rose more than US$1/bbl at the start of Asian trade as the Ukraine crisis threatened to disrupt Russian energy exports to Europe
But prices subsequently swung to a loss after the office of French President Emmanuel Macron said in a statement on Monday that US President Joe Biden and Russian President Vladimir Putin have agreed in principle to a summit over Ukraine
European Commission President Ursula von der Leyen said Russia would be cut off from international financial markets and denied access to major exports needed to modernise its economy if it invaded Ukraine
Ministers of Arab oil-producing countries announced yesterday that OPEC+ should stick to its current agreement to add 400,000bopd each month to output, rejecting calls to pump more to ease pressure on prices
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$4.630/mmbtu vs US$4.462/mmbtu last week
Friday’s downtick in prices of US natural gas futures was accompanied by shrinking open interest and volume, indicative that further decline appears not favoured and opening the door at the same time to a near-term rebound
Nevertheless, the next target emerges of a potential peak around the US$4.80/mmbtu mark
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
Uranium UXC US$44.05/lb vs $44.05/lb last week - China’s Second Hualong One Nuclear Reactor Reaches Full Power.
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$128.8/t vs US$131.9/t
Chinese steel rebar 25mm US$771.1/t vs US$774.3/t
Thermal coal (1st year forward cif ARA) US$111.0/t vs US$110.5/t
Thermal coal swap Australia FOB US$206.0/t vs US$206.0/t
Coking coal swap Australia FOB US$390.0/t vs US$388.0/t - China coking coal futures rise on demand optimism and tight supply
Chinese coking coal up 5% - highest since Oct. 27th.
Analysts expect a ramp up in steelmaking following a slow period induced by the Winter Olympics and the Lunar New Year.
Met-coal inventories across 247 steel mills fell 4% from last week.
Coke prices up 3.6%.
Iron ore prices climbed 4.7% following a downbeat week last week on Beijing’s price control interventions.
Steel rebar up 2.4%, HRC up 2%, Stainless steel up 0.4%.
Other:
Cobalt LME 3m US$72,780/t vs US$71,000/t
NdPr Rare Earth Oxide (China) US$173,060/t vs US$173,060/t
Lithium carbonate 99% (China) US$68,355/t vs US$66,774/t
China Spodumene Li2O 5%min CIF US$2,710/t vs US$2,710/t
Ferro-Manganese European Mn78% min US$1,815/t vs US$1,814/t
China Tungsten APT 88.5% FOB US$333/t vs US$333/t
China Graphite Flake -194 FOB US$805/t vs US$805/t
Europe Vanadium Pentoxide 98% 10.6/lb vs US$10.6/lb
Europe Ferro-Vanadium 80% 42.75/kg vs US$42.25/kg
China Ilmenite Concentrate TiO2 US$396/t vs US$394/t
Spot CO2 Emissions EUA Price US$97.7/t vs US$101.6/t
Brazil Potash CFR Granular Spot US$815/t vs US$815/t
Battery News
Li-ion batteries from EVs keeping fire going on board The Felicity Ace
Firefighters are continuing to battle a fire that broke out on a vessel carrying thousands of luxury cars off the coast of Portugal.
The Felicity Ace ship, carrying around 4,000 vehicles including Porsches, Audis, and Bentleys, some EVs with li-ion batteries, caught fire in the middle of the Atlantic Ocean on Wednesday.
João Mendes Cabeças, captain of the nearest port in the Azorean island of Faial, told Reuters on Saturday, “It will take a while [to put the fire out].”
The li-ion batteries on board are said to be making tackling the blaze more difficult – fire teams cannot use water because adding weight to the ship could make it more unstable, and traditional water extinguishers do not stop li-ion batteries from burning.
It is currently unknown as to whether it was a li-ion battery that was the cause of the fire.
RWE (ETR:RWE) enters India’s offshore wind market
RWE Renewables and Indian power company Tata Power have entered into a partnership to explore the potential the development of offshore wind projects in India.
Tata Power Renewable Energy Limited, a wholly-owned subsidiary of Tata Power, and RWE Renewables signed a Memorandum of Understanding (MoU), in light of the Government of India’s announcement of targeting 30GW of installed offshore wind capacity by 2030.
India has caused a stir with its offshore wind plans over the past several years, however, it has been slow in reaching the development stage, even though it had set an offshore wind target of 5GW by 2022 and 30GW by 2030.
Company News
Altus Strategies* (Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF)) 59p, Mkt Cap £69m – CEO bought ~£44k worth of shares in the market
BUY – 111p
Steven Poulton, CEO, acquired ~76k shares at 57.9p a share for a total consideration of ~£44k.
The Company is in the middle of the 10,000m drilling campaign at the Diba Project and Lakanfla in western Mali with the team planning update the Diba MRE/PEA as well as potentially release maiden MRE for Diba NW and Lakanfla Central Prospects.
Separately, the team is assessing a number of new royalties to add to the exisiting portfolio of paying (Caserones and Newcrest) and exploration level royalties.
*SP Angel acts as nomad and broker to Altus Strategies
Arc Minerals* (Arc Minerals Limited (AIM:ARCM)) – 3.8p, Mkt cap £44m – Arc now free to agree deal with major mining company following settlement with entities involved with former Zambian director
(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.)
BUY - CLICK FOR PDF
Arc Minerals have agreed a settlement with Terra Metals Limited, Zambia Mineral Exchange Corporation Limited and certain of their directors including Mumena Mushinge, Brian Chisala and Katambi Bulawayo, relinquishing all claims against Zamsort Limited or any other company in the Arc group.
The full and final settlement is conditional upon consent orders being issued by the relevant courts in Zambia and the UK. The granting of consent orders is a formality in Zambian law and will mark the formal conclusion of legal matters.
Arc will transfer its 66% share of Zamsort which holds the pilot plant at Kabala and will allow the claimants to apply for the 8sq km mining and exploration license area that were held by Zamsort prior to Arc’s involvement.
Arc’s share of the book value of the pilot plant was approximately $1.98m at 31 Dec 2020 with the majority of the expenditure occurring before Arc acquired control of Zamsort. The plant has been maintained on care and maintenance basis for the past two years due to operational and recovery rate issues and a lack of sufficient high-grade ore.
The settlement also includes share options worth US$200,000 (~2.8m options) and cash of £73,000 payable within 14 days of execution of the consent orders and £48,000 payable nine months later.
Recommendation: We continue to recommend Arc Minerals based on the settlement of Arc’s legal challenges and on the potential for a deal with one or more major miners on its exploration licenses in the west of Zambia.
Conclusion: The settlement of the legal cases appears to be a small price to pay for the more valuable development of future projects within Arc’s license area.
The company is now unincumbered from a legal perspective and free to complete a significant deal on its exploration licenses with Anglo American or one of the other companies which have expressed an interest in the licenses and targets held withing the portfolio.
Legal cases have held back a deal with Anglo and other major mining entities effectively slowing the development of exploration of Arc’s licenses in the West of Zambia.
We believe Arc holds one of the most prospective set of mineral licenses in Western Zambia with recent drilling showing vein formations of massive copper mineralisation at surface and at depth.
Anglo, Rio Tinto, First Quantum Minerals (TSX:FQM), Zamare and BE Metals are known to be actively looking for copper in this area.
*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.
Anglo American (Anglo American PLC (LSE:AAL)) 3,541.5p, Mkt Cap £47.2bn – Production resumes at Grosvenor
Anglo American reports that it has restarted metallurgical coal production at its Grosvenor mine in Queensland “following a gas incident in May 2020”.
Emphasising the pr-eminent priority of mine safety, Tyler Mitchelson, CEO of Anglo American's Metallurgical Coal business, said: "We have been working towards a safe restart at Grosvenor for several months and today we are up and running having received our regulator's approval last week. Over the past 18 months, we have worked with leading industry experts and invested significantly in automation technology, remote operations, gas management and data analytics, introducing a number of advancements in the way underground coal mines can operate”.
Anglo American says that following the restart of longwall operations at the mine “export metallurgical coal production guidance for 2022 is unchanged at 20-22 Mt, due to the impact of Covid-19 in early 2022 and a later than expected restart of operations at Grosvenor, production is expected to be towards the lower end of the guidance range. As a result, unit cost guidance for 2022 is revised to c.$85/tonne (previously c.$80/tonne and compared to 2021 unit costs of c.$105/tonne)”.
Conroy Gold & Natural Resources (Conroy Gold and Natural Resources PLC (AIM:CGNR, OTC:CGDNF)) 26p, Mkt Cap £9.2m – Drilling results from Clontibret
Conroy Gold has released results from two holes drilled at Clontibret by Demir Export as part of its due diligence for the recently concluded joint venture agreement.
The company says that hole “TW001 was designed as validation of a Conroy Gold drillhole and corroborated not only the known lode mineralisation but also targeted the deeper stockwork zone mineralisation that had not yet been tested at depth in this area of the deposit”.
Three deeper structures in TW001 assayed at 4.0g/t gold over a width of 1.55m, 1.9g/t over a width of 2.55m and 3.5g/t over a width of 0.95m and the company says that “the new discovery of stockwork mineralisation in TW001 is of great significance as it represents the widest gold intersection drilled to date at Clontibret. The 94.5m wide intercept in the stockwork zone graded 1.0 g/t Au with a higher-grade intercept of 45.0m grading 1.5 g/t Au in the centre of the wider zone. Gold grade is continuous and relatively uniform throughout these intercepts”.
A second hole, TW005, “tested the stockwork in an undrilled area and intercepted 19.7m grading 0.3 g/t Au. This confirms the potential to expand the existing resource towards the southwest of the deposit”.
Chairman, Prof. Richard Conroy, said that “The Board believes that the confirmation of the gold grades encountered in the lode zone and the discovery of the widest gold intercept yet at Clontibret in the stockwork zone indicates there is the potential to increase the overall gold content of the deposit”.
Oriole Resources (Oriole Resources PLC (AIM:ORR)) – 0.37p, Mkt cap £7.0m – Iamgold exercises option at Senala
Oriole Resources reports that following exploration expenditures of US$4m on the company’s Senala property in Senegal, Iamgold has exercised its option to acquire a 51% interest.
The company also reports that Iamgold has “confirmed that it intends to proceed with the Second Option of the Agreement whereby it has an option, at its election, to complete a further US$4 million of expenditure within a further two year period to earn an additional 19% interest in Senala for an aggregate 70% interest in the Project”.
CEO, Time Livesey said that Iamgold’s decision reflects “the excellent results we have seen coming out of the Year 4 exploration programme at the Project” and he confirmed that “We will be engaging with IAMGOLD to move through the process of formalising the new ownership arrangements and discussing the future exploration plans”.
Premier African Minerals (Premier African Minerals Ltd (AIM:PREM)) 0.42p, Mkt Cap £86m – Zulu lithium/tantalum drilling
Premier African Minerals has issued drilling results from the Zulu lithium/tantalum project within the Fort Rixon greenstone belt in Zimbabwe where the company is seeking “to secure direct trade investment into Zulu from a potential leading industry partner”.
The company reports results from two drillholes:
Hole ZDD035R intersected 21.1m at an average grade of 1.23% Li2O and 56ppm tantalum from a depth of 37.1m; and
Hole ZDD036 intersected 36.52m at an average grade of 0.86% Li2O and 287ppm tantalum from a depth of 5.86m including a higher grade section of lithium mineralisation 20.72m averaging 1.44% Li2O and 163ppm Ta from 21.66m depth.
Both holes were drilled at an angle of 60⁰ with hole ZDD035R drilled “towards southwest along the southern extension of the inferred mineral resource, completing at a final depth of 152.9 m … [while hole ZDD036 was drilled] … towards the northeast along the southern extension of the inferred mineral resource, completing at a final depth of 156.06 m”.
CEO, George Roach, said “I am pleased to see that drill results are now starting to come in, and particularly that these results announced today are from an area not included in our initial resource estimates. They do support our expectations of further discoveries and a probable increase in the mineral resource at Zulu”.
Rambler Metals & Mining* (Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)) – 34.5p, Mkt cap £48.5m – Drilling hits additional mineralisation along strike from the recently discovered LP East Zone at the Ming Mine
We recently published an updated research note on Rambler Metals & Mining. Please CLICK FOR PDF
NPV Valuation: 168p/s
Rambler Metals & Mining reports that recent underground drilling at the Ming mine in Newfoundland has intersected a new zone of high-grade copper mineralisation along strike from the LP East Zone whose discovery was announced in January.
The new zone, the Jennings Zone, is reported to be “open in all directions and is worthy of near-term drilling to further define the zone up-dip, potentially providing near-term production sources close to existing development … near the current 510L mining area” .
The Jennings Zone mineralisation “currently has a vertical height of approximately 50 metres ("m") and a horizontal width of approximately 200 m” and the company says that it “has good potential to be a third mining horizon near the current 510L mining area”.
Among the drilling results from the Jennings Zone highlighted in today’s announcement are:
A 15m wide intersection averaging 1.74% copper in hole R22-535-02 which also encountered 17.28m of the Lower Footwall Zone (LFZ) averaging 1.79% copper; and
A 3.50m wide intersection at an average grade of 2.12% copper in hole R22-535-03 which also reported a 15.39m wide intersection of the LFZ at an average grade of 3.03% copper; and
A 5.70m wide intersection averaging 2.64% copper in hole R22-535-04 which also intersected 7.86m of the LFZ at an average grade of 1.85% copper.
In addition to Jennings Zone mineralisation, today’s announcement reports additional intersections of the LP East Zone (LPEZ) and of the LFZ, including:
A 9.00m wide intersection of the LPEZ at an average grade of 2.26% copper in hole R22-535-01 which also hit 15.77m of the LFZ at an average grade of 2.03% copper; and
A 14.00m wide intersection of the LPEZ averaging 3.27% copper in hole R22-535-05 which also drilled 14.25m of the LFZ at an average grade of 1.99% copper; and
A 3.10m wide intersection of the LFZ at an average grade of 1.99% copper in hole R22-535-06.
President and CEO, Toby Bradbury, welcomed “the second newly discovered mineralized zone already this year” and confirmed that “on ore production, we are now busy with production drilling in the LFZ on the 735-760L, with first production from there on schedule for February 2022. Production drilling will shortly commence in the high-grade Upper Footwall Zone between 770-790L with initial production scheduled for March 2022”.
He said that “Our focus on probing the mineralization beyond the known high-grade boundaries, while doing our in-fill drilling, is yielding strongly favourable results … [and said that the Jennings Zone] … Along with the LFZ and LPEZ, … gives us the potential to have three high-grade mining zones operating in the upper part of the mine … in addition to the three zones that we currently operate at the lower part of the mine”.
He explained that “While still early days, we will continue to drill on this horizon and evaluate our opportunities from there”.
A plan presented with today’s announcement shows the Jennings Zone located to the north of the LPEZ and the company says that “There remains significant potential to continue expanding the zones both up and down plunge”.
Rambler Metals confirms that it plans to drill up to 25,000m during 2022 with 6,000m of infill and exploration drilling on the LPEZ, JZ and LFZ during Q1 and with the full programme including 2,000m of exploration drilling planned for the final quarter to investigate geophysical targets beneath the LFZ and the remaining 17,000m deployed through the year as infill and exploration of the LFZ, Upper Footwall Zone and Ming North and Ming South targets.
The company says that it is still awaiting gold assay results from its 2021 drilling of the high grade massive sulphide mineralisation “in which gold grades are traditionally elevated” and Rambler Metals says that it “will update the resource statement to include the gold shortly” after it receives the gold assays.
The company also takes the opportunity of today’s announcement to confirm the “completion of the 2021 copper hedge program inside the first half of February 2022. With copper prices now hovering around the US$4.50 per pound mark, the Company is well situated to take advantage of this higher price”.
Conclusion: The announcement of a second, previously undiscovered, zone of high grade copper mineralisation close to existing mine workings emphasises the relatively underexplored nature of the Ming mine. A 25,000m drilling programme for 2022 should yield much improved understanding of the potential scale of the opportunity to expand the resource base and we look forward to continuing news as the programme proceeds.
*SP Angel act as Nomad and Broker to Rambler Metals & Mining
Savannah Resources* (Savannah Resources PLC (AIM:SAV, ETR:SAV, OTC:SAVNF)) 4.6p, Mkt Cap £77m – Metallurgical testwork results
BUY – 17.9p
The Company finalised the process flowsheet for the 100% owned Barroso Lithium Project in Portugal.
The process involves conventional DMS circuit, pre-concentration, followed by magnetic separation and flotation for production of ≥ 5.5% Li2O spodumene concentrate.
The flowsheet was carried on Grandao fresh ore sample (the deposit accounts for ~90% of Barroso M&I Resource) grading 1.31% Li2O with milling to 106 microns yielding Li2O recoveries in the range of 72-75%.
Additionally, the team is completing ore variability programme testing composites representing major resource zone and lithology to be processed in the first 10 years with grades ranging between 0.76-1.76% Li2O and assay received to date showing recoveries of 70-79.5% and average of 75.3% (in line with our modelled number).
The Company is looking to finalise ore variability testing (nearly complete with just two of the ten samples still to be finalised), by-product test work as well as pilot plant testing scheduled for H1/22.
Additionally, the Company will produce a 20-30kg concentrate sample for downstream testing by Savannah’s potential offtake parties.
Conclusion: Positive metallurgical testwork confirms viability to produce ≥ 5.5% Li2O spodumene concentrate as the team continues to assemble data for the ongoing DFS. A concentrate sample based on the latest flowsheet design to be produced and sent to potential offtake clients shortly.
*SP Angel act as Nomad to Savannah Resources
Serabi Gold* (Serabi Gold (AIM:SRB, TSX:SBI)) 59p, Mkt Cap £44.7m – Airborne magnetic survey extends the zone of exploration interest at Sao Domingos
Serabi Gold has provided a link to an interview in which the company discusses the recent geophysical survey results from Sao Domingos https://www.brrmedia.co.uk/broadcasts/620e141526d01a4c0553ef6e/serabi-gold-update-on-sao-domingos/
The survey covers the extension of the prospective Mata Cobra magnetic anomaly west from its Sao Chico operation into the Sao Domingos property and shows coincidence between the geophysical anomalies and anomalous geochemical soil anomalies for copper and gold.
Serabi Gold also confirms that the extension of the magnetic anomaly “is coincident with many of the significant mineral occurrences and artisanal mining activity past and present”.
The company says that “analysis of the survey data is continuing, with multiple new targets now delineated for follow up exploration, as the survey brings much greater clarity and focus to the exploration effort going forward”.
*An Angel analyst has visited Serabi’s gold mining operations in Brazil
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
SP Angel
Prince Frederick House
35-39 Maddox Street London
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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