SP Angel . Morning View . Tuesday 26 04 22
Copper climbs as PBOC pledges to increase support for the economy
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Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF)* – Drilling returns 4.9g/t over 14m at the Tabakorole Gold Project
Asante Gold Corp (CSE:ASE, OTC:ASGOF) – Acquisition of Chirano reaffirms healthy M&A in West African gold
BlueJay Mining PLC (AIM:JAY, OTCQB:BLLYF)* – Enonkoski exploration joint venture with Rio Tinto
Bushveld Minerals Ltd (AIM:BMN, OTC:BSHVF)s* – Operational update highlights production and inventory sales into recent high vanadium prices
Culpeo Minerals Ltd (ASX:CPO)* – 400m of copper sulphide intersected – assay pending
Keras Resources PLC (AIM:KRS)* – Keras places £1.2m worth of stock at 7% premium to First Uranium Resources
Renascor Resources Ltd (ASX:RNU) – A$65m placing for development of Siviour project
Shanta Gold Limited (AIM:SHG, OTC:SAAGF) – Weak Q1 driven by lower grades at Bauhinia Creek and cost inflation; FY22 guidance reiterated at $68-76m
Copper prices rise following Monday’s slump as China vows to support the economy
- Copper prices recouped some of Monday’s heavy losses this morning, as China pledged to help support its economy currently hampered by Covid-19 lockdowns.
- The PBOC vowed to increase monetary support the ‘real economy’ – especially for industry and small businesses hit hard by the pandemic.
- Strict lockdowns in China due to the country’s ‘zero covid’ strategy have reduced consumer spending and caused supply chain issues.
- Copper prices rose 1.2% to $9,890/t earlier this morning, following a 3.4% slump on Monday.
- Zinc, aluminium, iron ore and steel rebar also advanced in Asian markets on optimism following the central bank’s comments.
Dow Jones Industrials +0.70% at 34,049
Nikkei 225 +0.41% at 26,700
HK Hang Seng +0.37% at 19,942
Shanghai Composite -1.44% at 2,886
Currencies
US$1.0696/eur vs 1.0730/eur yesterday. Yen 127.83/$ vs 128.12/$. SAr 15.796/$ vs 15.693/$. $1.272/gbp vs $1.274/gbp. 0.719/aud vs 0.717/aud. CNY 6.551/$ vs 6.554/$.
Precious metals:
Gold US$1,900/oz vs US$1,919/oz yesterday
Gold ETFs 106.9moz vs US$107.0moz yesterday
Platinum US$921/oz vs US$928/oz yesterday
Palladium US$2,175/oz vs US$2,315/oz yesterday
Silver US$23.64/oz vs US$23.80/oz yesterday
Rhodium US$18,200/oz vs US$18,500/oz yesterday
Base metals:
Copper US$ 9,845/t vs US$9,962/t yesterday
Aluminium US$ 3,129/t vs US$3,377/t yesterday
Nickel US$ 32,665/t vs US$33,000/t yesterday
Zinc US$ 4,194/t vs US$4,308/t yesterday
Lead US$ 2,325/t vs US$2,358/t yesterday
Tin US$ 40,280/t vs US$40,900/t yesterday
Energy:
Oil US$102.9/bbl vs US$102.8/bbl yesterday
Natural Gas US$6.832/mmbtu vs US$6.406/mmbtu yesterday
Uranium UXC US$53.45/lb vs $56.60/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$136.6/t vs US$148.4/t
Chinese steel rebar 25mm US$765.6/t vs US$771.2/t
Thermal coal (1st year forward cif ARA) US$238.0/t vs US$245.0/t
Thermal coal swap Australia FOB US$336.5/t vs US$350.0/t
Coking coal swap Australia FOB US$465.0/t vs US$520.0/t
Other:
Cobalt LME 3m US$82,000/t vs US$82,000/t
NdPr Rare Earth Oxide (China) US$130,534/t vs US$127,407/t
Lithium carbonate 99% (China) US$67,099/t vs US$67,518/t
China Spodumene Li2O 5%min CIF US$3,490/t vs US$3,390/t
Ferro-Manganese European Mn78% $2,123/t vs US$2,131/t
China Tungsten APT 88.5% FOB US$340/t vs US$343/t
China Graphite Flake -194 FOB US$825/t vs US$825/t
Europe Vanadium Pentoxide 98% 11.4/lb vs US$11.4/lb
Europe Ferro-Vanadium 80% 46.25/kg vs US$48.75/kg
China Ilmenite Concentrate TiO2 US$382/t vs US$382/t
Spot CO2 Emissions EUA Price US$91.0/t vs US$94.7/t
Brazil Potash CFR Granular Spot US$1,250/t vs US$1,250/t
Battery News
LG develop flame-retardant plastic for EV batteries
- LG Chem has announced that it has developed a flame-retardant engineering plastic material designed to delay thermal runaway in lithium-ion batteries for EVs.
- Thermal runaway, the main cause of EV battery fires, occurs when the lithium-ion cell enters an uncontrollable, self-heating state and when the internal temperature of a battery rises above a certain level, a fire occurs.
- The new material developed by LG Chem is a high-functional engineering plastic material containing polyphenylene oxide (PPO), polyamide (PA) and polybutylene terephthalate (PBT).
- Tests showed that it can prevent the spread of a flame caused by thermal runaway for more than 400 seconds at the temperature of 1,000 degrees Celsius – about 45 times longer compared with other fire-retardant plastics, LG Chem said.
LG Chem confirms battery recycling partnership with Li-Cycle
- Li-Cycle has been selected as the preferred battery recycling partner to both LG Chem and LG Energy Solution for their North America operations.
- The companies’ partnership includes an agreement to off-take battery manufacturing scrap to be fed into Li-Cycle’s ‘Spoke’ facilities, which shred and then process used batteries and scrap into the black mass – which contains critical battery materials.
- Li-Cycle operates two types of recycling plant – the Spokes which create the black mass from batteries and scrap and the ‘Hubs’ which then turn that black mass into battery-grade materials for reuse.
Tesla make up 75% of US EV sales in Q122
- Tesla vehicle sales accounted for 75% of all EVs sold in the US between January and March 2022.
- Tesla’s Model 3 and Model Y vehicles made up 68% of sale, with the Model S and Model X vehicles making up 7% of Tesla’s vehicle sales in the last quarter.
Company News
Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF)* 53p, Mkt Cap £62m – Drilling returns 4.9g/t over 14m at the Tabakorole Gold Project
BUY – 111p
- The Company released RC drilling results from the Lone Wolf prospect at the Tabakorole gold project in Mali.
- The prospect lies a couple of kilometres southeast of the Tabakorole deposit with drilling designed to test potential extension to the mineralisation.
- Three out of five RC holes (total of 415m) intersected gold mineralisation with one returning particularly good results:
- 8.0m at 1.8g/t from 16.0m, 14.0m at 4.9g/t from 33.0m and 10.0m at 1.9g/t from 55.0m (22TBKRC021).
- Mineralisation at Lone Wolf is reported to remain open along strike and at depth.
- Additionally, a series of AC holes were completed along strike from artisanal workings at the Lone Wolf prospect returning anomalous gold grades ranging between 0.1-0.6g/t with one returning 5.2g/t over 2.0m.
- The plan is to conduct geophysics over the property ahead of further drilling to identify additional targets.
- Exploration works are being funded by Marvel Gold with Altus holding a 30% free-carried interest and a 2.5% NSR on the property.
Conclusion: Drilling at Tabakorole intersected gold mineralisation over 250m at the Lone Wolf prospect, an area of artisanal mining lying ~2km south east of the Tabakorole deposit, with one hole showing wide, close to surface and high grade intersections. Drilling is focused on growing the current Tabakorole MRE standing around 1.0moz at 1.20g/t.
*SP Angel acts as nomad and broker to Altus Strategies
Asante Gold Corp (CSE:ASE, OTC:ASGOF) C$1.79, Mkt cap £562m – Acquisition of Chirano reaffirms healthy M&A in West African gold
- Asante Gold reported yesterday that it has entered into a share purchase agreement with Kinross Gold to acquire 90% of the Chirano Gold Mine for US$225m.
- The open-pit and underground mining operation produced 155koz AuEq in 2021, and has been in production since 2005.
- Kinross will receive $115m in cash and Asante shares with a value of $50m based on the 30-day average price of the buying company prior to closing.
- Kinross will also receive a total deferred payment of $60m with 50% payable on the first anniversary of closing and the other 50% payable on the second anniversary of closing.
- Asante acquired Bibiani from Resolute Mining in August 2021 and is also developing its Kubi project, both in Ghana.
- West Africa: The region has seen an uptick in corporate activity in over the last 2 years, with Ghana-focused Golden Star Resources bought out by Chinese investors for ~$470m and Endeavor Mining-Teranga merger with assets across Senegal, Côte d’Ivoire and Burkina Faso.
- GoldStone Resources (AIM:GRL)* is currently ramping up their operation at Homase, Ghana, following the identification and rectifying of mining and processing bottlenecks, with run rates planned to accelerate to 2ktpd.
- Read our latest update note on GoldStone here
Conclusion: Asante continues to consolidate its holding in Ghana through the acquisition of producing assets and bringing its existing assets into production. We view Ghana as an increasingly attractive jurisdiction reflected in its status as the No.1 gold producer in Africa.
*SP Angel acts as Broker to GoldStone Resources (AIM:GRL)
BlueJay Mining PLC (AIM:JAY, OTCQB:BLLYF)* 7.8p, Mkt cap £81m – Enonkoski exploration joint venture with Rio Tinto
(Bluejay has a staged $20m jv with Rio Tinto and holds 100% of Enonkoski Ni-Cu-Co, Hammaslahti Cu-Zn-Au-Ag and Outokumpu Cu-Co-Zn-Ni-Au-Ag projects)
- Bluejay Mining report the approval of exploration expenditure by the Enonkoski joint venture partner, Rio Tinto.
- Exploration will include
- Follow-up diamond drilling on targets which were defined last year with downhole electromagnetic surveys on selected drill holes.
- A top of bedrock drilling programme is to focus on a number of new targets with infill sampling on some of last year’s targets.
- More geological mapping and sampling.
- Focus is on near-mine areas northwest, west and southeast of the historic Laukunkangas Ni-Cu-Co mine.
- UAV 3-component magnetic surveys were conducted at several sub-areas on the belt.
- Field activities were supported by extensive reference logging and sampling of historic drill cores followed by analysis of the data by the jv partners.
- Preliminary plans include up-to 1,500m of diamond drilling with up-to 60 drill holes, downhole electromagnetic surveys, geological mapping and sampling in Q2 at several target areas on the belt.
- Diamond drilling should start in May targeting mineralisation at near-mine target areas.
- Some infill drilling will also cover additional parts of a large mafic intrusion in the central parts of the Enonkoski Belt looking to sample and map the bedrock.
- This process should confirm the presence of mafic-ultramafic intrusions as defined in the geophysics to give a better understanding of where metals may have accumulated within the intrusive structure.
*SP Angel acts as nomad and broker to Bluejay Mining
LON:BMN* – 9.98p, Mkt cap £132m – Operational update highlights production and inventory sales into recent high vanadium prices
BUY – Valuation 31p
- Bushveld Group sales rose 9% to 857mtV vs 788 mtV in Q4 2021 despite another 25mtV added to inventory
- Total cumulative vanadium in inventory now stands at 850mtV vs 825mtV in Q4 due to logistics issues including the flooding in the Durban port area delaying shipments.
- Q1 vanadium production rose 1% to 972mtV vs 962mtV in Q4 2021
- C1 costs fell 17% at Vametco to US$22.1/kgV on last quarter on greater throughput.
- C1 costs rose 26% at Vanchem to US$38.6/kgV due to maintenance and lower throughput. Costs are expected to normalise through the year with higher throughput expected as Kiln 3 comes on stream.
- Management reckon Bushveld are on track to meet 2022 production and cash cost guidance of 4,200-4,400mtV with production weighted towards the second half boosted by the commissioning of Kiln 3 at Vanchem.
- Kiln 3 should more than double Vanchem's production run rate to bring Group production to 5,000-5,400mtVpa by end 2022.
- Ferro-Vanadium prices averaged US$46.1/kgV in Q1 2022 vs US$30.9/kgV yoy with the year-to-date average increasing to US$47.4/kgV.
- The London Metal Bulletin FeV price rose US$62.0/kgV in mid-March but has since settled to US$49.0/kgV as at 22 April 2022.
- The vanadium market appears to be tight in terms of market balance helping to drive prices higher in recent months though prices have softened recently in China
- Co-producers of vanadium have been running at high utilisation levels indicating they are limited in adding further production into the market.
- Bushveld typically see a one-to-two-month lag in realised prices enabling Bushveld to sell inventory into some particularly high vanadium prices as seen in mid-March.
- Inventories of around 600mtV look to be a more normal inventory level as production levels rise.
- Cash and cash equivalents pulled back to US$12.7m vs US$15m at end December, largely due to the build-up of inventory.
- Russia’s invasion of Ukraine disrupted the market for vanadium supply. Russia accounts for around 17% of global supply and while Evraz is not directly sanctioned disruption to trade finance has disrupted trade flows.
- VRFBs: Sumitomo Electric brought a 17MW/51MWh flow battery online in northern Japan in April adding to confidence in further developments of VRFB projects.
Conclusion: Bushveld looks set for a good year as the high level of built-up inventory are sold into higher prices in the market and as Kiln 3 is commissioned in the second half.
*SP Angel act as nomad and broker to Bushveld
Culpeo Minerals Ltd (ASX:CPO)* A$0.21, Mkt cap A$9m – 400m of copper sulphide intersected – assay pending
- Culpeo Minerals reports that diamond drillhole CMLCD002 has intersected visible copper sulphide mineralisation over 400m at the Lana Corina Copper Project in Chile.
- The hole was drilled to a depth of 534m and has visible copper mineralisation from 80m.
- The first hole of the programme CMLCD001 was completed to a depth of 456m and intersected visual copper sulphide mineralisation over a downhole length of 300m, with assay results expected in three weeks.
- The current drill programme is comprised of a 9-hole program totalling 4,000m.
- A ground-based magnetic survey covering 3.8km² over the Lana Corina Project is scheduled to begin this week, with results to aid mapping of the alteration zone peripheral to the known mineralisation at Lana Corina with the aim of improving drillhole planning for its exploration program at the Project.
*An analyst at SP Angel holds shares in Culpeo Minerals
Keras Resources PLC (AIM:KRS)* 0.11p, Mkt cap £7m – Keras places £1.2m worth of stock at 7% premium to First Uranium Resources
(Keras holds 100% of the Diamond Creek phosphate mine in Utah, USA. Keras also holds an 85% interest in Societé General des Mines for the Nayéga manganese project in Togo)
- Keras Resources has placed £1.2m worth of stock at a 0.12p representing a 7% premium to its 5-day VWAP share price.
- First Uranium Resources is taking £960,000 worth of stock (800m shares)
- First Uranium recently raised C$10m towards the future development of a phosphate and rare earths project in Arkansas and is developing a portfolio of North American phosphate and rare earth deposits to take advantage of strong demand for fertilizers and rare earth prices and higher prices in both areas.
- Keras is also issuing 625m new shares worth (£750,000) via a broker option to allow existing and new shareholders to participate in the fund raising at the 0.12p share price.
- Keras directors are co-investing in the fund raising with Brian Moritz, Russell Lamming and Dave Reeves subscribing for £240,000 worth of stock at the premium price.
Conclusion: We view the involvement of First Uranium Resources as transformational in the project, not only for the injection of new funds but for the ongoing support, energy and enthusiasm which is likely to accompany the investment.
*SP Angel acts as nomad and broker to Keras Resources
Renascor Resources Ltd (ASX:RNU) A$0.31, Mkt Cap A$591m – A$65m placing for development of Siviour project
- Renascor reports that it has raised A$65m at $0.27 per share, representing a 12.9% discount to the last close and an 11.9% discount to the 5-day VWAP.
- Renascor will also offer a Share Purchase Plan to existing shareholders on the same terms as the Placement to raise additional funds up to $10m.
- Funds will be used to expand and accelerate the Siviour Battery Anode Material Project, allocated:
- Front-end engineering and detailed design (including expansion of Stage 1) – A$15m
- Long lead-time procurement and acquisitions – A$18m
- Reserve and Resource expansion – A$5m
- Expanded pre-production pilot – A$5m
- Early project works – A$15m
- Working Capital – A$7m
- In February, the company reported that the Australian Government, through Export finance Australia, has conditionally approved an A$185m loan facility to support the development of the Siviour Graphite Project in South Australia.
- The loan was approved under the Australian Government’s $2bn critical minerals facility, established in September 2021 to assist the development of Australian critical minerals projects.
Shanta Gold Limited (AIM:SHG, OTC:SAAGF) 10.3p, Mkt Cap £107m – Weak Q1 driven by lower grades at Bauhinia Creek and cost inflation; FY22 guidance reiterated at $68-76m
- Q1/22 production amounted to 11.4koz gold (Q4/21: 12.2koz) as mining operations delivered lower grade material from the underground operation at Bauhinia Creek.
- Mining operations delivered 174kt at 2.46g/t (Q4/21: 177kt at 2.5g/t) from the underground with a further 41kt at 1.17g/t (Q4/21: 33kt at 1.3g/t) mined from open pits.
- Open pit mining operations underperformed expectations due to delays in spares leading to lower equipment availability at the contractor.
- The high grade Bauhinia Creek Crown Pillar was successfully accessed mid-April, one month ahead of schedule, with initial material being mined at c.8g/t, in line with the mine plan.
- Plant processing volumes were little changed at 214kt treating 1.90g/t material representing a blend of underground, open pit and stockpiles feed (Q4/21: 219kt at 2.0g/t).
- Gold sales totalled 10.5koz at an average realised price of $1,883/oz (Q4/21: 13.5koz at $1,796/oz) benefiting from hedge free status of operations.
- AISC averaged $1,760/oz (Q4/21: $1,624/oz) reflecting lower production as well as cost inflation covering consumables, spares, imported equipment as well as tightening market for mining-related labour.
- Operations are 75% powered by heavy fuel oil with the balance covered by state power grid and solar leaving the Company exposed to oil price increases.
- Prices for ammonium nitrate used in explosives more than doubled of the last year from $560/t in March last year to $1,225/t.
- The Company reiterated FY22 guidance for 68-76koz.
- At Singida, construction continued with the operation on target for first production in Q1/23 taking the Group to a +100kozpa producer status.
- Crushing circuit was delivered in Dec/21, while the mill manufacturing was completed during the quarter with delivery from South Africa due in late Apr/22; permits for the tailings dam secured and construction to start this month.
- VAT receivable balance stood US$25.1m (Q4/21: $26.8m) with some $4.4m offset against the corporate tax during the quarter.
- Closing cash balance with dore available for sale stood at $13m (Q4/21: $16m) and gross debt of $7m (Q4/21: $2m) reflecting higher costs at the NLGM and ongoing construction at Singida with drilling at West Kenya.
Conclusion: Weak quarterly production numbers reflect previously flagged period of low grade feed from the Bauhinia Creek underground that in turn is expected to improve through the year as the team accesses high grade crown pillar material. On the latter front the Company reports that mining of high grade ore started a month ahead of schedule that should help the team to ramp up operations towards reiterated 68-76koz guidance. Lower production and high inflation led to an increase in AISC with the team looking to secure more debt funding capacity improving its financial flexibility during the Singida construction period.
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
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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
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