SP Angel . Morning View . Wednesday 27 04 22
Base metals recover on China stimulus talks and production issues
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Aura Energy Ltd (ASX:AEE, AIM:AURA)* – Quarterly report highlights new activity on Tiris project in Mauritania
Beowulf Mining PLC (AIM:BEM)* – Strategy evaluation at Kallak
Galantas Gold Corp (AIM:GAL, TSX-V:GAL, OTC:GALKF) – Production to recommence in June at Omagh
Libero Copper Corporation (TSX-V:LBC) – Final results from the 1,236m long hole at Mocoa – 1,229m at 0.58% CuEq
Predictive Discovery Ltd (ASX:PDI) – Drilling returns high grade intersections at depth at Bankan
Premier African Minerals Ltd (AIM:PREM) – Resignation of director
Dow Jones Industrials -2.38% at 33,240
Nikkei 225 -1.17% at 26,387
HK Hang Seng +0.16% at 19,967
Shanghai Composite +2.42% at 2,956
Economics
US – Equity indices sunk to the lowest in six weeks on stagflation concerns with the sentiment weighed down by supply-chain disruptions, war in Ukraine, fears of new lockdowns in China and prospects of further Fed tightening.
- Dow and S&P closed 2.4% and 2.8% down while tech heavy Nasdaq lost nearly 4%.
- While Treasuries and the US$ climbed as investors shun risk.
China – PBoC cut the reserve requirement ratio for banks foreign currency deposits to 8% from 9% starting 15th May in an attempt to slow outflowing funds to the US.
- The dramatic outflow of funds has caused the Yuan Renminbi to fall from 6.40863/USD to 6.57570/USD this week reversing a year’s worth of gains in the currency.
- China is sensitive to currency weakness at present as it battles to support its property market following the Evergrande debt crisis.
- A weaker currency effectively imports inflation into China raising raw materials input prices for manufacturers and mineral processors and reducing already-thin margins for SMEs.
Eurozone – The euro is trading at the weakest level since 2017 on worries that Russia may reduce gas supplies to Europe further adding to inflationary pressures in the region.
- Gazprom is reported to have halted gas flows to Poland and Bulgaria until both countries agree to pay for the fuel in rubles, Bloomberg writes.
- European gas prices surged more than 20% on the news.
Germany – Consumer confidence deteriorated rapidly in May as Russia’s war in Ukraine and soaring inflation weighed on sentiment.
- The GfK index dropped to an all time low, while French figures were at the weakest since 2018.
- GfK Consumer Confidence: -26.5 v -15.7 in April and -16.0 est.
Russia - Nornickel reports Q1 output rose 10% yoy to 52,000t as the Norilsk mines recovered from flooding last year.
- Some but not all of their material is LME deliverable.
- Nornickel guidance:
- Nickel: 205,000-215,000t of nickel sulphide representing around 12% of global nickel production
- Copper: 365/385kt
- Platinum & palladium 3-3.4moz
India – Metals producers cutting production as coal shortages threaten energy crisis (Bloomberg)
Australia – Inflation leaps to 5.1% beating estimates driven by higher fuel costs on a Russia/Ukraine war, food prices due to floods in key farming areas and omicron impact and stronger construction costs on elevated steel, lumber and copper prices, Bloomberg writes.
- CPI (%mom): 2.1 v 1.3 in Q4/21 and 1.7 est.
- CPI (%yoy): 5.1 v 3.5 in Q4/21 and 4.6 est.
Currencies
US$1.0621/eur vs 1.0696/eur yesterday. Yen 127.85/$ vs 127.83/$. SAr 15.813/$ vs 15.796/$. $1.257/gbp vs $1.272/gbp. 0.715/aud vs 0.719/aud. CNY 6.556/$ vs 6.551/$.
Commodity News
Precious metals:
Gold US$1,898/oz vs US$1,900/oz yesterday
Gold ETFs 106.8moz vs US$106.9moz yesterday
Platinum US$918/oz vs US$921/oz yesterday
Palladium US$2,236/oz vs US$2,175/oz yesterday
Silver US$23.50/oz vs US$23.64/oz yesterday
Rhodium US$18,200/oz vs US$18,200/oz yesterday
Base metals:
Copper US$ 9,890/t vs US$9,845/t yesterday
Aluminium US$ 3,104/t vs US$3,129/t yesterday
Nickel US$ 33,125/t vs US$32,665/t yesterday
Zinc US$ 4,217/t vs US$4,194/t yesterday
Lead US$ 2,347/t vs US$2,3225/t yesterday
Tin US$ 40,970/t vs US$40,280/t yesterday
Energy:
Oil US$106.1/bbl vs US$102.9/bbl yesterday
Natural Gas US$6.930/mmbtu vs US$6.832/mmbtu yesterday
Uranium UXC US$54.20/lb vs $53.45/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$139./t vs US$136.6/t
Chinese steel rebar 25mm US$770.1/t vs US$765.5/t
Thermal coal (1st year forward cif ARA) US$238.0/t vs US$238.0/t
Thermal coal swap Australia FOB US$318.5/t vs US$3336.5/t
Coking coal swap Australia FOB US$465.0/t vs US$465.0/t
Other:
Cobalt LME 3m US$82,000/t vs US$82,000/t
NdPr Rare Earth Oxide (China) US$130,389/t vs US$130,534/t
Lithium carbonate 99% (China) US$66,415/t vs US$67,099/t
China Spodumene Li2O 5%min CIF US$3,490/t vs US$3,490/t
Ferro-Manganese European Mn78% $2,108/t vs US$2,123/t
China Tungsten APT 88.5% FOB US$340/t vs US$340/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$46.25/kg
China Ilmenite Concentrate TiO2 US$382/t vs US$382/t
Spot CO2 Emissions EUA Price US$88.6/t vs US$91.0/t
Brazil Potash CFR Granular Spot US$1,250/t vs US$1,250/t
Battery News
LG Energy to double battery capacity to 520GWh/year
- South Korean battery maker LG Energy Solution (LGES) aims to have a global production capacity of 520GWh a year by 2025, a more than two and a half times current production.
- In the announcement, the company said 41% of the output would be based in North America.
- To support the expansion, LGES will invest $5.54 billion for 2022.
- LGES has six plants in the US, of which two are currently operational – by 2025 LGES expect all plants to be operational with an output capacity of 215GWh a year, 16 times the current 13GWh a year.
- The company will also expand operations in APAC - in South Korea, LGES will raise the capacity of its Ochang plant to 33GWh/year by 2025 from a current 21GWh/year. In China, it will boost the output of its Nanjing and Binjiang plants to 145GWh/year, a 55.9% hike from 93GWh/year in 2022.
DOE weighing up $500m investment in US hydrogen plant
- The U.S. Department of Energy’s Loan Programs Office has issued a conditional commitment to provide $504.4m in financing for The Advanced Clean Energy Storage hydrogen hub, located in Delta, Utah.
- The hub, announced in 2019, will initially be designed to produce up to 100 metric tons of green hydrogen per day through 220MW of electrolysers – this will then be stored in two salt caverns each capable of storing 150GWh of energy.
- With support from the DOE loan guarantee, the facility will supply hydrogen feedstock to the Intermountain Power Agency’s (IPA) IPP Renewed Project – an 840-MW hydrogen capable gas turbine combined cycle power plant.
- The power plant will initially run on a blend of 30% green hydrogen and 70% natural gas by volume starting in 2025 and will increase to 100% green hydrogen by 2045.
Company News
Aura Energy Ltd (ASX:AEE, AIM:AURA)* 13.5p, Mkt Cap £120m – Quarterly report highlights new activity on Tiris project in Mauritania
- Aura Energy have issued their quarterly report for the three months to end 31 March 2022.
- The company raised A$8.8m by way of a placing announced on 14th March.
- Funds are to be used to fast-track Aura’s 800,000lb uranium project at Tiris Uranium in Mauritania.
- The team are drilling a further 10,000m of to upgrade additional material into the Measured and Indicated categories for future expansion.
- The Tiris global resource stands at 102mt grading 253ppm (0.0253%) for 57mlb of uranium and 18mlb vanadium (V2O5)
- Proven and probable resources stand at 10.9mt grading 336ppm (0.0336%) for 8.1mlbs uranium.
- Dr Will Goodall was appointed at acting CEO to advance the Tiris Uranium development.
- Aura report progress on the start of EPCM ‘Engineering, Procurement and Construction Management’ on Tiris with two companies shortlisted to bid for the FEED ‘Front End Engineering Design’.
- The team has started a Bulk test work programme with ANSTO Minerals to optimise the uranium processing circuit and to look at options for potential by-product vanadium production. Tiris has a JORC Resource of 18.4mlbs of vanadium (V2O5) defined within Aura's low capex, low operating cost Tiris Uranium Project in Mauritania [1]
- The company is also appointing an engineering manager to fast track the project.
- Management are working on the regulatory approvals required for the export of uranium oxide concentrate from Mauritania.
- The statement contains a summary of the DFS as completed in 2019.
- Tiris DFS summary:
- Ore throughput: 1.25mtpa
- Grade: 364ppm (0.0364%)
- Process plant throughput: 0.16mtpa
- Recovery: 86.1%.
- Production: 823,000lb Uranium (U3O8)
- Capex: $74.8m including $4.7m
- C1 Cash costs: 25.43c/lb
- AISC Op costs: 29.81c/lb.
- Uranium price assumption: $60/lb (current spot ~54.2-56.7/lb)
- NPV: $79.9m .
- IRR: 22%.
- Cash flow: $214m.
- Payback: 4 years.
- The economics of the project are likely to see some adjustment in accordance with local diesel and gas prices.
Conclusion: Western economies and China are increasingly reverting to nuclear power generation to fulfil growing electricity needs and to reduce dependence on Russia for oil and gas. The addition of millions of new Electric Vehicles will also cause electrical power demand to grow substantially over the next decade drawing increasing power off grid networks as gasoline and diesel fleets are replaced.
*SP Angel acts as Nomad and Broker to Aura Energy
Beowulf Mining PLC (AIM:BEM)* 6.45p, Mkt Cap £51m – Strategy evaluation at Kallak
- Beowulf reports that it is reviewing workstreams and timelines for the next stage of Kallak's development, following the granting of an Exploitation Concession on the 22nd of March.
- The company is currently evaluating how to shorten the time bringing Kallak into production, which was initially estimated to be a 4–5-year timeline.
- Beowulf is currently communicating with engineering consultants, who will support the completion of a Scoping Study and roadmap to Pre-feasibility, infrastructure operators (rail and power), technical experts, regarding the Kallak resource and ore processing, potential customers, strategic partners and investors.
- The awarding of the Exploitation Concession enables Beowulf to have more substantive discussions with consultants and stakeholders over making progress at Kallak.
- The awarding of the concession at Kallak follows the appointment of Karl-Petter Thorwaldsson as Minister of Trade and Industry, who is widely viewed as pro-mining and someone who sees value in developing domestic, word class natural resources for the benefit of the Swedish people.
- Kallak’s particularly clean magnetite concentrate should enable steel makers to reduce carbon emissions further, improve energy efficiency and reduce waste leading to cleaner and greener steel production.
- The Kallak North area concession is also designated as an Area of National Interest for minerals and is located just 80km southwest of the major iron ore mining centre of Malmberget.
- The project is also ~120km southwest of the giant Kiruna iron ore mine which LKAB claims to be the first source of green iron in the Europe.
*SP Angel acts as nomad and broker to Beowulf Mining
Galantas Gold Corp (AIM:GAL, TSX-V:GAL, OTC:GALKF) 37.5p, Mkt Cap £31m – Production to recommence in June at Omagh
- Galantas provides an update for its Omagh underground project in Northern Ireland.
- The company has made progress over recent weeks procuring equipment necessary for the resumption of mining activities, as well as rehabilitating the underground workings and installation of electrical, water and ventilation systems.
- Where possible, the company has hired local people and provided them with skilled training.
- Galantas has also been granted a Visa Licence, which will allow the Company to recruit eligible people who satisfy the labour entry requirements from outside the UK and Ireland.
- The Company has delayed completion of the secondary egress and installation of the manway, which is a prerequisite for the start of production, to mid-May 2022 to enable safe rehabilitation of the ramp access and ore headings at the 1048 level.
- Geotechnical experts have been consulted and an experienced contract driller has been hired to assist with the start-up of production, and expects to recommence development drilling and blasting in the first half of May.
- The Company now expects to begin production stoping mid to late June, while initial production forecasts are between 4,500oz and 5,500oz for the remainder of the year.
- The first stopes will be open on the Kearney vein, which has a measured and indicated endowment of over 100,000oz gold.
- The Company is working with experienced mining contractor QME to develop engineering plans to accelerate development to the Joshua Vein by 12 months which will enable Galantas to mine from multiple headings.
- Separately, Galantas Gold’s Chief Geologst Sarah Coulter and advisory board member John Arthurs gave an insightful video presentation this week, detailing the geology and district-scale potential of the Omagh Gold Project, which can be viewed here.
Conclusion: Galantas has made strong progress on two fronts in recent months, preparing to resume production at Omagh as well as exploratory drilling that demonstrates the project’s considerable upside. The acceleration of development at the Joshua Vein is positive, as it allows Galantas to mine from multiple headings and veins to provide greater operational flexibility, which is expected to have a positive impact on 2023 production. We look forward to news flow detailing the resuming of production as well as delineation of the wider Cavanacaw exploration area.
Libero Copper Corporation (TSX-V:LBC) C$0.69, Mkt Cap C$44m – Final results from the 1,236m long hole at Mocoa – 1,229m at 0.58% CuEq
Anglo Asian Mining* (AAZ LN) holds a 19.8% stake in LBC (12.6m shares + 6.3m C$0.75 warrants)
- The Company released assay results from the remainder of the MD-043 diamond drill hole driven to a depth of 1,236m at the Mocoa copper/molybdenum project in Colombia.
- Results include:
- 1,229m at 0.58% CuEq (0.42% Cu and 0.047% Mo) from 7m including higher grade zone of
- 251m at 1.12% CuEq (0.74% Cu and 0.114% Mo) form 139m and
- 180m at 1.00% CuEq (0.74% and 0.078% Mo) from 485m.
- Last week, the Company reported on results from the first 450m that showed 443m at 0.74% CuEq (0.48% Cu and 0.078% Mo) including higher grade intersection of 251m at 1.13% CuEq (0.75% Cu and 0.115% Mo) from 139m.
- Mocoa is the largest copper resource in Colombia and one of the world’s largest undeveloped molybdenum deposits with a pit constrained NI43-101 compliant Inferred Resource estimated at 636mt at 0.45% CuEq comprised of 0.33% Cu and 0.036% Mo.
- The deposit is found in the Eastern Cordillera of Colombia, a 30-kilometre-wide tectonic belt that hosts other copper porphyry deposits across the border in Ecuador including Mirador (438mt Measured and Indicated at 0.61% Cu and 235mt Inferred at 0.52% Cu), San Carlos (600mt Inferred at 0.59% Cu), Panantza (463mt Inferred at 0.66% Cu) and Solaris’ Waritza (579mt Indicated at 0.59% CuEq and 887mt at 0.47% CuEq Inferred).
Conclusion: Results from the first hole of the planned 5,000m drilling programme returned +1,200m hole of copper/molybdenum mineralisation with higher grade intervals conveniently located close to surface including ~560m at 0.89% CuEq from 108m. These are good results strengthening the case for a potential open pit development scenario and we are looking forward to further exploration drilling results as the team continues to unlock the potential of the Mocoa deposit.
*SP Angel acts as nomad and broker to Anglo Asian Mining
Predictive Discovery Ltd (ASX:PDI) A$0.21, Mkt Cap A$282m – Drilling returns high grade intersections at depth at Bankan
- The Company reported drilling results from the ongoing programme to extend and infill the high grade gold zone at depth at the NE Bankan gold deposit in Guinea.
- Results included assays from seven diamond drill holes (~4,700m) with two drill rigs active on site.
- Selected intersections included:
- 41.5m @ 5.2g/t Au from 598m, incl. 8.7m @ 14.9g/t Au from 605m (BNERD0105)
- 14.2m @ 6.8g/t Au from 627m, incl. 7.8m @ 10.7g/t Au from 631m (BNERD0106B)
- Both holes are among deepest intercepts encountered from NE Bankan extending mineralisation envelope past the bottom of the open pit shell.
- Intercepts suggest the deposit hosts mineralisation to a vertical depth of more than 500m below surface
- The team is planning to ramp up drilling to grow the resource ahead of the Q3/22 MRE update with a new contract awarded to Capital Drilling for a minimum of four diamond drill rigs expected to be arriving to site shortly.
- The Bankan project currently hosts 72.8mt at 1.56g/t for 3.65moz in Inferred resource based on over 53,000m of RC and diamond drilling.
Premier African Minerals Ltd (AIM:PREM) 0.29p, Mkt Cap £66m – Resignation of director
- Premier African Minerals reports the resignation of Neil Herbert from its board.
- Neil is Chairman at Atlantic Lithium where the sudden passing of Vince Mascolo has led Neil to step into the void and take over much of the corporate work done by Mascolo.
- Investors should not be concerned over the resignation Premier African Minerals recently signed a binding JV agreement with Li3 Resources, where Li3 Resources will acquire a 50% interest in Premier's hard-rock lithium assets located in the Mutare Greenstone Belt in Zimbabwe.
- The agreement allows the project to be funded independently of Premier's Zulu lithium operations.
- Li3 Resources can acquire 50% interest in the Li3 Project through US$250,000 of exploration expenditure.
- Premier’s Zulu Lithium DFS is being funded by Suzhou TA&A Ultra Clean Technology (NASDAQ:UCTT) for £12m through the issue of shares in Premier at 0.4p.
- Suzhou TA&A should now hold a 13.4% interest in the company.
Conclusion: Premier Africa Minerals look well placed with activity on two lithium projects in Zimbabwe. We look forward to seeing the results of the Zulu DFS and the potential for an offtake financing or outright acquisition by a lithium processor (probably Chinese).
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The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
Analysts
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Sales
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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)
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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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