SP Angel . Morning View . Wednesday 29 06 22
Copper prices pull back as US consumer confidence sinks to 16-month low
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We are going to Henley Regatta, there will be no note tomorrow
Ariana Resources PLC (AIM:AAU) – Annual results 20 years on
Asiamet Resources Ltd (AIM:ARS, OTC:KMGLF) – Completion of Phase 1 due diligence on the BKM copper project, Kalimantan
Eurasia Mining PLC (AIM:EUA)* – Annual report highlights strong performance at West Kyltim PGM mine in Russia
GoldStone Resources (AIM:GRL)* – Restoration of trading
Tertiary Minerals PLC (AIM:TYM)* – Drilling results from the Jacks copper project, Zambia
Copper prices pull back as US consumer confidence sinks to 16-month low
- Copper prices fell following Tuesday’s rally after a report showed US consumer confidence dropped to a 16-month low in June because of higher inflation.
- The Conference Board’s index decreased to 98.7 from 103.2 in May, with data showing Americans were more downbeat about the outlook for the economy, labour market and incomes.
- The drop follows yesterday morning’s rise in base metals prices after China relaxed quarantine requirements for inbound travellers, a signal the nation may be moving away from its Zero Covid policy.
- China cut the quarantine period to ten days from three weeks previously.
- Whilst the reduction in quarantine times is unlikely to directly spur demand for industrial metals, it has provided renewed optimism that China is moving towards less stringent Covid protocols.
Dow Jones Industrials -1.56% at 30,947
Nikkei 225 -0.91% at 26,805
HK Hang Seng -2.13% at 21,942
Shanghai Composite -1.40% at 3,362
Economics
China – Covid Zero policy most “economic and effective” for China, according to President Xi
- President Xi commented that the country is capable of achieving the goal of stamping out infection, meaning China isn’t going to back away from its policy of lockdowns and mass testing which has hampered growth over recent months.
- The comments are likely to dash hopes that China is embarking on an exit plan from zero covid, following the easing of travel curbs yesterday.
Hungary - Central bank raised rates 1.85% to 7.75%
Germany - GfK consumer confidence fell further to -27.4 for July vs -26.2
US - Trade deficit pulled back to US$104.3bn in May vs $106.7bn
- Exports rose 1.2%
- Imports fell 0.1%
- Wholesale inventories rose 2% in May vs 2.3%
- S&P Case Schiller house price index up 2.3% in April vs 3.1%
- US Richmond Fed manufacturing index minus 17.7 in June vs -9 in May
Spain – Inflation hits 10% in June vs 8.7% expected
- Spanish inflation unexpectedly surged to a level not seen since 1985, putting more pressure on the ECB to raise rates for the first time in over 10 years.
- This week, President Christine Lagarde reiterated plans for a 25bp rate hike in July, however latest inflation figures will have market participants wondering whether this is enough to have affect meaningful change on price increases.
- Germany is set to report inflation figures later today and France on Thursday.
Currencies
US$1.0501/eur vs 1.0588/eur yesterday. Yen 136.08/$ vs 135.79/$. SAr 16.083/$ vs 15.850/$. $1.218/gbp vs $1.226/gbp. 0.689/aud vs 0.694/aud. CNY 6.705/$ vs 6.686/$.
Commodity News
Precious metals:
Gold US$1,819/oz vs US$1,827/oz yesterday
Gold ETFs 104.6moz vs US$104.5moz yesterday
Platinum US$930/oz vs US$916/oz yesterday
Palladium US$1,912/oz vs US$1,897/oz yesterday
Silver US$20.82/oz vs US$21.27/oz yesterday
Rhodium US$14,000/oz vs US$14,000/oz yesterday
Base metals:
Copper US$ 8,366/t vs US$8,418/t yesterday
Aluminium US$ 2,491/t vs US$2,496/t yesterday
Nickel US$ 23,158/t vs US$22,882/t yesterday
Zinc US$ 3,333/t vs US$3,318/t yesterday
Lead US$ 1,971/t vs US$2,004/t yesterday
Tin US$ 26,800/t vs US$26,991/t yesterday
Energy:
Oil US$117.3/bbl vs US$116.7/bbl yesterday
Natural Gas US$6.788/mmbtu vs US$6.500/mmbtu yesterday
Uranium UXC US$50.10/lb vs US$49.35/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$123.6/t vs US$118.8/t
Chinese steel rebar 25mm US$647.1/t vs US$642.3/t
Thermal coal (1st year forward cif ARA) US$248.0/t vs US$252.0/t
Thermal coal swap Australia FOB US$376.5/t vs US$374.0/t
Coking coal swap Australia FOB US$315.0/t vs US$320.0/t
Other:
Cobalt LME 3m US$70,460/t vs US$71,460/t
NdPr Rare Earth Oxide (China) US$139,073/t vs US$139,855/t
Lithium carbonate 99% (China) US$67,933/t vs US$68,432/t
China Spodumene Li2O 5%min CIF US$4,500/t vs US$4,500/t
Ferro-Manganese European Mn78% min US$1,748/t vs US$1,763/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% 9.4/lb vs US$9.7/lb
Europe Ferro-Vanadium 80% 36.25/kg vs US$36.25/kg
China Ilmenite Concentrate TiO2 US$362/t vs US$364/t
Spot CO2 Emissions EUA Price US$88.2/t vs US$89.0/kg
Brazil Potash CFR Granular Spot US$1,100.0/t vs US$1,100.0/kg
Battery News
Liontown Resources (ASX:LTR) sign lithium supply deal with Ford
- Liontown reported this morning that it will supply Ford with 150,000 dry metric tonnes of lithium spodumene concentrate each year for five years from its flagship Kathleen Valley project in Western Australia.
Company News
Ariana Resources PLC (AIM:AAU) 3.3p, Mkt Cap £39.7m – Annual results 20 years on
- In its annual results for 2021, Ariana Resources reports a pre-tax profit of £7.7m (2020 - £5.1m), an after tax profit of £3.9m (2021 - £4.8m) and a year-end cash balance of £16.4m.
- The results reflect “the partial disposal of our interests in Turkey in February 2021 as we reduced our 50% interest in the Kiziltepe mine and 100% interest in the Salinbaş project to a collective 23.5% interest in both, for net proceeds of £27m giving rise to profit of £6.4m”.
- Ariana Resources also comments on the decline of the Turkish Lira relative to sterling which occurred “towards the end of the year … [and] … has given rise to a translation loss on the revaluation of our foreign entity opening balances of £2.9m”.
- Noting that it is “20 years since the foundation of the original Ariana Resources in Australia”, the company highlights its moves into exploration in south-eastern Europe, Cyprus, Kazakhstan and Australia as well as its investments in “high-impact early-stage exploration opportunities via the Asgard Metals Fund”.
- Since the start of 2022, Ariana Resources has extended its exploration investment into Laos and benefitted from “a strategic investment by Newmont Corporation into our business, with the intention of developing the exploration opportunities we had created through the establishment of Western Tethyan Resources last year”.
- Chairman, Michael de Villiers explained that “Newmont's investment in Ariana also demonstrates their alignment with our view that it is within the under-explored Tethyan Metallogenic Belt that the next Tier One Assets will be discovered”.
Conclusion: The partial disposal of its Turkish assets has repositioned Ariana Resources to pursue exploration opportunities in some of the most prospective parts of the world and attracted the support of the leading mining company, Newmont Mining for its expertise in the Tethyan metallogenic belt.
Asiamet Resources Ltd (AIM:ARS, OTC:KMGLF) – 1.58p, mkt cap £32m – Completion of Phase 1 due diligence on the BKM copper project, Kalimantan
- Asiamet Resources reports that its largest shareholder, PT Delta Dunia Makmur Tbk. (DOID) has now completed the first phase of its due diligence assessment of the BKM copper project and that the independent technical experts (ITEs) have not identified any “red flags or fatal flaws of a technical nature”.
- Asiamet says that the “key findings of the ITE's review of the 2019 study are being addressed as part of the updated 2022 FS being undertaken by NewPro Engineering, including updating capital and operating costs and key economic assumptions”.
- The company comments that “While this extensive diligence process has taken considerable time, a key benefit is the progress that has been made towards project financing … [which puts it] … in a strong position, confirming all work to be finalised before commencing the debt financing process”.
- Asiamet’s Executive Chairman, Tony Manini, confirmed that “We maintain a strong working relationship with DOID in respect of the key inputs into the feasibility study, project financing and development strategy for BKM … [and that] … we are currently in discussions … [to ensure the development of the BKM project] … in the fastest timeframe possible”.
- He also explained that “This extended diligence process has also allowed us to incorporate the recommendations of the proposed ITE into the feasibility update currently being undertaken … and hence fast track a key component of the financing process”
Conclusion: The due-diligence process has identified improvements which can be incorporated into the updated feasibility study currently in progress and facilitate the project financing.
Eurasia Mining PLC (AIM:EUA)* 6.03p, Mkt Cap £172m – Annual report highlights strong performance at West Kyltim PGM mine in Russia
- Eurasia Mining have published their 2021 annual results statement today. The AGM will be held on 28 July at Etc Venues, 8 Eastcheap, London
- Management are busy working on its geographic and commodity diversification.
- Strategy: The team have added additional battery metals into the Eurasia portfolio as part of their future strategy post the potential sale of their Russian PGM assets.
- West Kytlim doubled mine production to 3,643oz from 1,525 oz last year while laying plans to connect to grid supplied hydropower to ensure 100% renewable power at site in the H2 this year.
- James Nieuwenhuys, CEO, comments that "Operationally the West Kytlim asset is performing well following a successful winter stripping programme and a subsequent increase in stripping capacity.”
- A third wash plant was added last August to treat ores from Bolshaya Sosnovka and Kluchiki and a further five new ore haulage trucks, six Caterpillar excavators, a Cat D8 bulldozer and two Komatsu D275 bulldozers have been delivered
- The mine collects nuggets of PGM which are gravity separated and upgraded in an onsite laboratory to make a ‘black sand' concentrate which is refined at the Ekaterinburg precious metals refinery.
- Dragline 1 components now at site for assembly and commissioning with the new powerline and substation construction due for shortly.
- Hydropower: The mine should make the switch to hydropower later this season using electric draglines for the sustainable production of PGMs and gold from the mine as part of its target to become the world’s lowest carbon open cast PGM mine.
- Exploration (West Kytlim): Typil and West Kytlim Flanks are being explored with 12 samples showing platinum and gold in the Typilez Creek area.
- Drilling in the area around the inflow of the Typil River and the adjoining part of the Kosva River valley in March intersected alluvial sediments of the Kosva and Typil terraces of 6-7m and pre-Quaternary sediments up to 5 m thick. The sediments are currently assessed washed in a field laboratory.
- Monchetundra: The team added further resources to the large Monchetundra PGM project in Kola which ties in with the relaunch plan of the NKT mine project.
- Monchetundra: Definitive Feasibility study on schedule for submission in 2022.
- Wardell Armstrong International are engaged for a number of studies on Eurasia and its projects including Rosgeo jv properties with a view to the creation of JORC standard mineral resource estimation and NPV valuation.
- The group is also recalculation the mineral resource at Monchetundra and its Flanks to reflect the significant rise in PGM and nickel prices seen since the last feasibility study in 2016.
- NKT is now seen as a Nickel dominant mine which may work as a a standalone project or integrated with Monchetundra.
- The project hosts significant nickel sulphide ores and is being integrated in terms of its development with Eurasia’s nearby nickel and PGM reserves. The Eurasia and Wardell Armstrong technical teams are currently working through detailed assessment of the project.
- NKT currently shows a JORC resource containing: 305Kt Nickel, 143Kt Copper, and 57 tonnes PGM and Gold (11.2Moz Pt eq) with nickel comprising half of the value in the metal basket on a Net Smelter Royalty basis.
- Rosgeo jv: We expect concentrates from these projects to supply into the refinery city of Monchegorsk alongside potential production from Eurasia’s joint venture with Rosgeo which holds additional interests in the region.
- Monchegorsk hosts the world’s largest nickel and PGM processing facility at Norilsk's Severonickel.
- M&A: “Active discussions with interested parties continue” and management “remain confident of a positive outcome from these discussions”.
- Funding: Eurasia raised US$35m last year strengthening the balance sheet and enabling greater scope for diversification into other minerals outside Russia.
- Management: Eurasia added Tamerlan Abdikeev and Kotaro Kosaka as directors as part of their hydrogen strategy. The recent appointment of Artem Matyushok who is experienced in hydrogen industry M&A further boosts strength in this team.
- Metallurgy: Alexander Sushchev, metallurgist and advisor to the Board is retiring this month but will continue to provide occasional advice.
- Results:
- Sales rose to $2.3m in 2021 vs $0.9m in 2020.
- Costs rise to $2.6m vs $1.1m
- Admin costs rose to $2.7m vs $1.9m
- Other losses were contained to just $0.06m vs $1.5m in 2020.
- The total loss for the year was $3.1m vs $3.7m a year earlier
- Cash and cash equivalents were $22m at the year end
Conclusion: Eurasia continues to work through feasibility study and resource info along with drill assays and other geological information in its assessment and development of the NKT and Monchetundra and West Kytlim projects. There appears to be significant ongoing potential for M&A in the region and we look forward to further updates on the diversification into hydrogen and other projects outside Russia.
*SP Angel act as Nomad and Broker to Eurasia Mining
GoldStone Resources (AIM:GRL)* 7p, Mkt Cap £33m – Restoration of trading
TP – Under Review
- GoldStone reports the lifting of the temporary suspension and the restoration of trading in its ordinary shares on the AIM market.
- The company comments that that an armed robbery took place at its Homase site, resulting in the loss of gold with a value of approximately US$350k.
- The company is reviewing and improving its security operations and have appointed new security company to enhance protection for the Company's operations, assets and personnel moving forward
- Short term disruption to operations are expected to continue into Q3 2022, but the Company expects to maintain regular production of gold doré throughout Q3 and Q4 2022.
Conclusion: Crucially, the Company maintains that production is ongoing providing the company with cash flow from its Homase operation while the investigation into the incident is ongoing. In oz terms US$350k translates to around 200oz which is not expected to have a material impact on the financial performance of the business. Commissioning and teething issues are reported to be resolved with gold recoveries from the heap leach operation rising to >65% (reported March 2022) with indications from in situ test work of a potential 82% recovery over 12-months. We look forward to GoldStone updating us in due course on further production progress.
*SP Angel acts as broker to GoldStone Resources (AIM:GRL). An SP Angel analyst as visited GoldStone’s operations in Ghana.
Tertiary Minerals PLC (AIM:TYM)* – 0.17p, Mkt cap £2.3m – Drilling results from the Jacks copper project, Zambia
- Tertiary Minerals reports that it has intersected copper mineralisation in each of the four diamond-drill holes recently completed at the Jacks project which is located 85km south of Luanshya.
- The drilling, totalling 746m on “two separate traverses spaced approximately 150m apart” within “a 16km long soil geochemical anomaly … [demonstrates] … continuity of copper mineralisation over an open-ended 350m strike length”.
- The Jacks project “is one of five licences areas in Zambia where Tertiary has the right to earn a 90% interest from” its joint-venture partner, Mwashia Resources.
- Tertiary Minerals “has now earned a 51% interest in the Jacks Project licence, and has duly exercised its option to continue earning up to a 90% joint venture interest”.
- Among the results highlighted in today’s announcement are:
- A 13.5m long intersection averaging 0.9% copper from a depth of 77.5m in hole 22JKDD-01 which included higher grade sections of 3m averaging 1.7% copper from 79.5m depth and 3.5m at an average grade of 1.2% copper from 87m depth; and
- A 7.0m long intersection at an average grade of 0.6% copper from a depth in hole 22JKDD-02 which also intersected a deeper zone of mineralisation of 3m at an avergge grade of 0.8% copper from 191m depth; and
- A 6.0m long intersection averaging 1.8% copper from 54.0m depth in hole 22JKDD-03, including a higher grade section of 4.0m averaging 2.4% copper from 106.0m depth; and
- A 14.0m long intersection averaging 0.8% copper from a depth of 27.0m in hole 22JKDD-04 which included higher grade sections of 2m at the top of the mineralised intersection averaging 1.7% copper from 27.0m depth and 5.0m at an average grade of 1.0% copper from 35m depth.
- Describing the results of the individual hole, Tertiary Minerals says that:
- Hole 22JKDD-01, which was drilled to 164.2m depth “to intersect the north dipping South Zone mineralisation where historical drillhole KJ12 … intersected 9.0m grading 0.9% copper.”
- Hole 22JKDD-02 was drilled approximately 110m north of the first hole with the upper, 7m wide mineralised intersection encountering mineralisation “significantly higher in the hole than expected … [and the company comments that] … no copper was observed visually or via pXRF where the North Zone had been predicted. The South Zone mineralisation was, however, intersected with 3m grading 0.8% copper from 191.0m downhole in a position that which correlates with the historic drilling”.
- “Hole 22JKDD03 was a step-out hole and was drilled approximately 150m east of 22JKDD02 to a depth of 260.2m … [and that] … 22JKDD04 was another step-out hole, drilled approximately 160m east of 22JKDD01 and 170m south of 22JKDD03 … [which intersected a] … broad mineralised zone … with 14.0m grading 0.8% copper from 27m downhole”.
- In summary, Tertiary Minerals “considers that the presence of copper mineralisation has now been demonstrated at Jacks over a 350m strike length and to depths up to 230m vertically below surface, and is open in all directions … [and says that it] … is currently undertaking a more in-depth review of the drill date with a view to commencing additional fieldwork and drill planning”.
- We imagine that the detailed review will include the unexpected position of mineralisation on hole 22JKDD-02 as well as the mineralogy of the copper results in the same hole which challenged the visual inspection and pXRF analysis.
Conclusion: Initial, limited, diamond drilling at the Jacks copper project has shown continuity of copper mineralisation over a 350m section of a 16km long soil geochemical anomaly. The company is reviewing the results in order to plan follow-up exploration.
*SP Angel act as Nomad and Broker to Tertiary Minerals
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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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Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk - 0203 470 0474
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Sales
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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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