SP Angel . Morning View . Monday 27 06 22
Base Metals prices hold remarkably strong levels despite negative headlines
MiFID II exempt information – see disclaimer below
Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF)* – CEO presentation on the Ewoyaa project
BlueJay Mining PLC (AIM:JAY, OTCQB:BLLYF)* – Michael Hutchinson appointed as interim Chairman
Cora Gold Ltd (AIM:CORA) – Lionhead $25m funding facility update
Orosur Mining Inc (AIM:OMI, TSX-V:OMI)* – Drilling results from Anzá
Versarien PLC (AIM:VRS, OTC:VRSRF)* – Superparamagnetic material to support electronics, sustainability and biotechnology
Dow Jones Industrials +2.68% at 31,501
Nikkei 225 +1.43% at 26,871
HK Hang Seng +2.45% at 22,251
Shanghai Composite +0.88% at 3,379
Economics
China – Equities in mainland China and Hong Kong climbed this morning as Shanghai authorities declare victory over the Covid outbreak that led to serious disruptions over April-May.
- Despite restrictions remaining in certain areas, the city recorded no new community cases for the first time in months, FT reports.
- Several other Chinese cities have now scrapped or relaxed their COVID testing mandates as China emerged from a number of regional outbreaks.
- Officials have been told not to cause too much disruption to people's lives while staying vigilant about the virus.
- We suspect many cases are not being reported with self-isolation and local management.
- Some cases are thought to be denoted as ‘migraines’ and other minor ailments with mass lockdowns occurring when hospital admissions.
- China will likely play cat & mouse with Covid till either it improves the efficacy of its vaccines or the new variants become more mild.
Industrial earnings data in May showed the measure posting another YOY decline reflecting the effect of Covid related restrictions.
- The pace of a contraction slowed as some of restrictions were lifted, although, a 6.5%yoy drop highlights how severe the shock from zero covid measures is to the economy.
- Industrial Profits (%yoy): -6.5 v -8.5 in April.
G7 leaders met to discuss further steps to put pressure on Russia cutting reducing its export revenues including a potential “price cap” on its Russian oil.
- G7 leaders will be also joined by “partner” countries including India that has become a large buyer of discounted Russian oil as well as Argentina, South Africa, Senegal and Indonesia.
- It is unclear if China will take part in discussions.
- Russia became the top crude oil supplier to China, the largest importer, in May displacing Saudi Arabia.
- Earlier, the EU agreed to ban imports of 90% of Russian oil exports to the region as part of the sixth package of sanctions.
- Sanctions banned Russian seaborne oil by the end of the year that accounted for 2/3s of Russian oil deliveries with an exemption for pipeline oil.
The US, UK, Japan and Canada are planning to announce a ban on new gold imports from Russia during the G7 Summit.
Russia – The nation recoded the first foreign debt default since in over a century as the grace period for ~$100m interest payment due May 27 expired on Sunday.
- The 30-day window was triggered after investors failed to receive coupon payments due on US$ and € denominated bonds on May 27, Bloomberg writes.
- Authorities argue that Russia could not complete payment due to western sanctions while highlighting strong FX revenues from commodity exports.
Ukraine – The government is working with other nations to establish overland routes for the safe export of wheat as the route through Black Sea remains constrained.
- There were 26m tonnes of grain in storage around the Ukrainian port city of Odessa, according to the UK environment secretary.
- “To put that into context, at any one time we’ve got about 250m tonnes of wheat in store around the world… although (Ukrainian grain) is small proportion of the overall total, in the current context it’s quite significant,” he said.
Long covid – 225,000 more people in the UK are estimated to be economically inactive since early 2020 due to Long Covid (ONS)
- 450,000 people economically inactive overall
- 2m people said to be suffering from Long Covid.
- Symptoms of Long Covid, like ME, are difficult to measure with varying symptoms of fatigue, muscle aches etc..
- A cure for Long Covid and ME would go along way to solving UK employment issues as well as helping a significant portion of the population.
India – Monsoon floods kill >500 people
- Further heavy rains are forecast for this week in India exacerbating this year’s heavy monsoon.
Zinc – High premiums persist in unusually tight market
- High premiums for physical zinc metal should ease following the inflow of 2,650t of metal since Friday morning.
- Zinc is currently showing a $95-125 backwardation on cash to 3-month contracts
- LME zinc stocks now stand at 2,550t with 17,625t on warrant.
- Premiums hit a >25 year high on Friday as inventory continued to fall.
- Shanghai warehouse stocks fell a further 21,559t last week to 138,113t.
- The LME risks another price squeeze in the current environment as much European zinc production remains suspended due to high gas prices.
Currencies
US$1.0583/eur vs 1.0525/eur last week. Yen 134.99/$ vs 134.51/$. SAr 15.786/$ vs 15.932/$. $1.232/gbp vs $1.227/gbp. 0.694/aud vs 0.690/aud. CNY 6.685/$ vs 6.695/$.
Commodity News
Precious metals:
Gold US$1,836/oz vs US$1,831/oz last week
Gold ETFs 104.7moz vs US$104.7moz last week
Platinum US$917/oz vs US$923/oz last week
Palladium US$1,933/oz vs US$1,878/oz last week
Silver US$21.46/oz vs US$21.04/oz last week
Base metals:
Copper US$ 8,383/t vs US$8,225/t last week
Aluminium US$ 2,463/t vs US$2,424/t last week
Nickel US$ 22,745/t vs US$23,050/t last week
Zinc US$ 3,360/t vs US$3,404/t last week
Lead US$ 1,950/t vs US$1,918/t last week
Tin US$ 26,100/t vs US$24,380/t last week
Energy:
Oil US$113.8/bbl vs US$109.9/bbl last week
Natural Gas US$6.096/mmbtu vs US$6.050/mmbtu last week
Uranium UXC US$48.45/lb vs US$48.00/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$114.5/t vs US$117.8/t
Chinese steel rebar 25mm US$639.5/t vs US$629.8/t
Thermal coal (1st year forward cif ARA) US$255.0/t vs US$260.0/t
Thermal coal swap Australia FOB US$385.0/t vs US$395.0/t
Coking coal swap Australia FOB US$320.0/t vs US$385.0/t
Other:
Cobalt LME 3m US$72,400/t vs US$72,400/t
NdPr Rare Earth Oxide (China) US$139,863/t vs US$139,650/t
Lithium carbonate 99% (China) US$68,436/t vs US$68,332/t
China Spodumene Li2O 5%min CIF US$4,500/t vs US$4,500/t
Ferro-Manganese European Mn78% min US$1,762/t vs US$1,752/t
China Tungsten APT 88.5% FOB US$327/t vs US$327/t
China Graphite Flake -194 FOB US$815/t vs US$815/t
Europe Vanadium Pentoxide 98% 9.7/lb vs US$9.9/lb
Europe Ferro-Vanadium 80% 36.25/kg vs US$36.75/kg
China Ilmenite Concentrate TiO2 US$364/t vs US$364/t
Spot CO2 Emissions EUA Price US$88.4/t vs US$86.4/kg
Brazil Potash CFR Granular Spot US$1,100.0/t vs US$1,150.0/kg
Battery News
LG Electronics to move into EV charging market
- LG Electronics (LGE) has acquired AppleMango, a South Korean EV charging developer, as it seeks to establish further footholds in the growing EV market.
- The acquisition was made jointly with GS Energy, an EV charging station operator, and GS Neotek, an IT provider.
- LGE acquired a 60% stake while GS Energy and GS Neotek took over 34% and 6%, respectively – AppleMango, will become a subsidiary of LG Electronics following the deal.
- The companies did not disclose the financial terms of the deal, but according to a local media report, the acquisition size is estimated at $7.8m.
- LGE plans to set up an EV charger production line at LG Digital Park in South Korea by the end of this year, aiming to provide customized EV charging solutions for private residences, shopping centres, hotels, and public institutions.
Company News
Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF)* 40p, Mkt Cap £234m – CEO presentation on the Ewoyaa project
- Len Kolff gives update interview on drilling at the Ewoyaa lithium project in Ghana.
- https://www.youtube.com/watch?v=I_UslWgGiIY&ab_channel=Proactive
- Drill results from the first ~4,600m completed at the Grasscutter North target outside the current mineral resource
- The results confirm multiple sub-parallel spodumene pegmatite dykes occurring in close proximity to the Grasscutter West deposit.
- Intersections include:
- GRC0647: 22m at 1.25% Li2O from 104m
- GRC0646: 15m at 1.35% Li2O from 71m
- GRC0642: 13m at 1.26% Li2O from 185m
- GRC0636: 9m at 1.24% Li2O from 131m
- GRC0649: 9m at 1.09% Li2O from 182m
- The team continues to work on the PFS targeted for completion in Q3/22.
*SP Angel acts as nomad to Atlantic Lithium. An SP Angel mining analyst recently visited the Ewoyaa Lithium Project in Ghana
BlueJay Mining PLC (AIM:JAY, OTCQB:BLLYF)* 5.65p, Mkt cap £59m – Michael Hutchinson appointed as interim Chairman
(Bluejay holds 100% of the Kangerluarsuk Zinc-Lead-Copper-Silver project in Greenland)
- Michael Hutchinson has been appointed as interim Chairman of Bluejay Mining following the sudden resignation of Rod McIllree.
- Hutchinson was formerly Chairman at Bluejay Mining and had remained on the board as a non-executive director.
- McIllree, used his geological expertise to assemble a substantial and valuable portfolio of mineral licenses in Greenland within Bluejay.
- The company is now running three separate field programs in Greenland at Disko with Kobold Metals, at Kangerluarsuk and Dundas to support the development of the planned ilmenite mineral sands mine.
- The company is also involved with supporting exploration at Enonkoski alongside Rio Tinto.
- We note: AEX Gold recently raised £18m for an exploration SPV on a portfolio of licenses in Greenland.
Conclusion: Bluejay is in good hands with Mike Hutchinson till a new chairman is approved.
*SP Angel acts as nomad and broker to Bluejay Mining. The analyst holds shares in Bluejay Mining
Cora Gold Ltd (AIM:CORA) 6.4p, Mkt Cap £19m – Lionhead $25m funding facility update
- Lionhead Capital Advisors reiterated its commitment to the proposed $25m funding package of the Sanankoro Project despite a delay in the DFS completion.
- The investment firm said it will not be terminating the Term Sheet as Cora is now expecting Sanankoro DFS completion in Q3/22 compared to initial schedule for H1/22.
- Under the Sep/21 $25m Mandate and Term Sheet, funding is envisaged in the form of $12.5m equity commitment and $12.5m convertible financing.
- Minimum DFS economic criteria the Project will need to meet under the agreement is a minimum of 35% IRR (using $1,500/oz) and 8 year mine life at 40kozpa or equivalent amount of production over a different time period delivering a minimum IRR>
Orosur Mining Inc (AIM:OMI, TSX-V:OMI)* 8.25p, Mkt Cap £17m – Drilling results from Anzá
- Orosur reports results from a further five drillholes at its flagship Anzá project in Colombia where it exploration is being managed by its joint venture partner, Minera Monte Águila, a 50:50 partnership between Newmont and Agnico Eagle.
- The announcement says that the recent holes “reflect lower levels of gold anomalism compared to previously drilled holes, but show some high-grade base metal results, similar to intersections from previous drilling, adding support to the theory of hybrid volcanogenic massive sulphide (VMS)/intermediate-sulfidation epithermal system”.
- The company makes the point that the main purpose of the drilling was “to better define the geological and structural context of the APTA environment whilst the Company awaited mapping, sampling, geophysics and land access to be finalised on the northern prospects” and that in that context the assay results were not unexpected.
- Orosur Mining says that the results indicate a complex geological setting to the mineralisation with a “substantial depth extent that is beyond the capacity of the current drill rig fleet to test”.
- Among the results highlighted in today’s announcement are:
- An intersection of 4.85m from a depth of 243.05m in hole MAP-102 which “was drilled to test the northern extension of higher-grade mineralisation previously intersected in hole MAP-089 “ and averaged 0.51g/t gold, 1.24g/t silver, 0.16% zinc and 0.02% copper; and
- An intersection of 0.75m averaging 3.30g/t gold, 0.86g/t silver and 0.14% zinc from a depth of 214.95m in hole MAP-103. The hole was drilled “to test the continuity of mineralisation previously intersected in MAP-098, but also to push downward to test stratigraphy to the limit of the available rigs”.
- The intersection in hole MAP-103 occurs within a wider intersection of 10.45m which averaged 0.49g/t gold, 0.48g/t silver and 0.03% zinc from a depth of 205.90m. The hole also intersected 24.70m averaging 0.37g/t gold, 11.76g/t silver, 0.32% zinc and 0.03% copper from 258.95m depth with the lower intersection including higher grade zones of mineralisation; and
- A 5.35m wide intersection, from188.90m depth in hole MAP-104 which averaged 2.67g/t gold, 2.61g/t silver, 1.04% zinc and 0.04% copper with higher grade sections including 0.50m at an average grade of 22.80g/t gold, 13.95g/t silver, 0.52% zinc and 0.07% copper from 188.90m depth; and
- Hole MAP-104 was drilled “into a gap between the previously defined north and south sections of the APTA zone. This is a zone where the primary structures change direction and thus it was necessary to better define this section”; and
- Intersections of 2.50m averaging 3.30g/t gold, 1.61g/t silver and 0.06% zince from 278.70m depth; 9.25m averaging 1.77g/t gold, 4.63g/t silver, 5.33% zinc and 0.39% copper from 305.25m depth and of 9.70m averaging 0.17g/t gold, 2.59g/t silver, 13.88% zinc and 0.91% copper from 475.40m depth in hole MAP-105.
- Like MAP-103, Hole MAP-105 was also drilled to test the depth extent and continuity of the mineralisation encountered in the earlier hole MAP-089.
- Drilling has currently moved to the Pepas and Pupino prospects with results expected from Pupino, shortly.
Conclusion: Recent drilling at Anzá indicates depth potential to the mineralisation beyond the capacity of the current drilling equipment and drilling is now in progress at the Pupino and Pepas prospects
*SP Angel acts as Nomad and Broker to Orosur Mining
Versarien PLC (AIM:VRS, OTC:VRSRF)* 15.9p, Mkt cap £31m – Superparamagnetic material to support electronics, sustainability and biotechnology
- Versarien have launched a new superparamagnetic material which should enhance a range of applications from electronics, sustainability and biotechnology.
- The new hybrid nanomaterial has superparamagnetic properties which should work to improve a range of applications such as in defence and healthcare.
- Gnanomat, (62% owned by Versarien), has led the development and has pioneered the generation of a new family of versatile nanocomposites based on graphene and other forms of carbon, combined with metal or metal oxide nanoparticles typically intended for energy storage applications.
- The superparamagnetic material combines graphene with both iron oxide and manganese oxide nanoparticles that provide the material with magnetic properties.
- The graphene provides electrical conductivity to these electrically insulating metal oxides ensuring they can readily respond to external magnetic fields to allow the superparamagnetic to be manipulated.
- The nanomaterial can be used to treat wastewater whereby pollutants are adsorbed onto the graphene surface.
- Its should also find new application in biomedical and biotechnology applications.
- The material also enables the shielding of electromagnetic fields for medical, industrial and defence applications.
- Magnetic manipulation may also enable the recovery and recycling of the graphene.
- Versarien recently reported a rise in graphene sales of 170% to £1.9m.
- The company’s cash position was £3.1m at end 31 March.
- The company secured £1.93m worth of funding by GrapheneLab, a South Korean company, in April
Conclusion: Gnanomat has created a new generation of nanomaterials with its new superparamagnetic material offering significant opportunity to enhance a huge range of applications. The development of graphene combined with metal oxides offers significant opportunity for innovation when incorporated in electronics and other materials.
*SP Angel acts as Nomad and Broker to Versarien
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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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