SP Angel . Morning View . Wednesday 13 07 22
Copper imports into China jump despite ongoing city lockdowns
MiFID II exempt information – see disclaimer below
Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) – Blanket mine continues to break production records
Diamond Fields Resources Inc (CVE: DFR) – Moydow acquisition cleared by the TSX-V
Horizonte Minerals PLC (AIM:HZM, TSX:HZM, OTC:HZMMF) – Key contracts awarded for the Araguaia process plant
Jubilee Metals Group PLC (AIM:JLP, JSE:JBL, OTC:JUBPF) – Cobalt refining circuit commissioning for up to 1,200tpa in Zambia
KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF)* – Q2 update highlights a build-up in the project development momentum
Power Metal Resources PLC (AIM:POW)* – Canadian Lithium project earn-in progressed following neighbour’s success
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* - NPV Valuation: 168p/s – June hits 2% copper head grade target with new monthly and quarterly records for copper output.
Serabi Gold (AIM:SRB, TSX:SBI)* – Palito production recovers in Q2 as Coringa progresses and exploration identifies porphyry mineralisation near Sao Chico
China - Copper imports jump 15% month on month in June on restocking as lockdowns ease
- Chinese imports of copper jumped 15.5% in June to 537,698t from May marking a new seven-month high according to customs data (Reuters)
- Reports suggest that many Chinese manufacturers continued operating through the Covid lockdowns, albeit at reduced rates while logistics chains suffered some disruption.
- Lockdowns and ongoing uncertainty slowed imports with anecdotal reports of warehouses running low on physical inventory for certain industrial minerals.
- LME copper stocks fell 800t today to 131,775t today. SHFE stocks rose 4% last week to 69,353t of deliverable copper representing a relatively low level
- Shanghai recently emerged from a two-month lockdown within the month, giving new confidence to the Chinese market and a potential catalyst for copper demand.
- China’s manufacturing PMI recovered well to 50.2 in June vs 49.6 in May but may pull back again with new restrictions in cities in the Southeast of China
- Crude oil imports into China dipped to a four-year low in June possibly due to lower demand but also possibly due to a lack of available storage following the import of discounted crude from Russia by independent traders.
Dow Jones Industrials -0.62% at 30,981
Nikkei 225 +0.54% at 26,479
HK Hang Seng -0.02% at 20,840
Shanghai Composite +0.09% at 3,284
Economics
US – The IMF cut the US growth forecast to 2.3% form 2.9% estimated in late June as latest data showed weakening consumer spending, Reuters writes.
- 2023 GDP growth forecast was cut to 1.0% from 1.7% reflecting challenging outlook amid high inflation and steep Fed interest rate hikes.
- These suggest the fund is expecting the US to avoid recession.
- The IMF estimates fed tightening will bring inflation down to 1.9% by Q4/23 compared with a forecast of 6.6% for Q4/22.
The US Bureau of Labor Statistics was forced to publicly discredit a fake inflation data report that gained traction yesterday, a one day before the official data due to come out, FT writes.
- The fake data claimed annual inflation reached 10.2% in June, much higher than market estimates for a 8.8% reading, sending major equity indices down.
- The report sought to mirror the formatting of the monthly CPI data, although, the chart featured in the forged document did not march the text, which was one of several signs it was fabricated.
- “We’re aware of a fake CPI release image circulation on Twitter… It is a fake… Stay tuned for the real CPI release tomorrow at 8.30 AM ET”, the BLS wrote on Twitter.
China – Exports climbed more than forecast in June reflecting likely reflecting Shanghai’s reopening and a recovery in transport capacity, Bloomberg reports.
- However, outlook remains weak on the back of virus flare ups and authorities adhering to the zero covid policy raising risks of further lockdown related disruptions.
- Exports (%yoy): 17.9 v 16.9 in May and 12.5 est.
- Imports (%yoy): 1.0 v 4.1 in May and 4.0 est.
- Total Social Financing was CNY5,170bn in June vs CNY2,790bbn in May as the state increases liquidity.
- The funding is mainly directed at infrastructure projects and is also to help businesses recover from recent lockdowns
Japan - Japanese PPI rose 0.7% in June vs 0% in May and 9.2% yoy in June and 9.1%) yoy in May
South Korea – The central bank raised the benchmark rate by 0.5pp to 2.25% to tame inflation that hit a 24 year high last month.
- Consumer prices climbed 6%yoy in June on the back of rising wages, higher energy costs and depreciating currency.
EU - ZEW economic sentiment index fell to -53.8 in July vs -28 in June
Germany - Zew index -53.8 in June vs -28 in May
UK – The economy returned to growth in May following a contraction in April and beating estimates for nearly flat month.
- “The economy rebounded in May with growth across all main sectors,” the ONS commented on the data.
- Industrial production, construction and services all reported positive growth in May.
- The pound was little changed against the US$ trading around 1.19 this morning.
- Eight candidates for Conservatives’ party leadership qualified for the ballot ahead of the first round of voting today.
- Rishi Sunak remains the bookmakers’ favourite to win, with William Hill giving him odds of 13/8, followed by Penny Mordaunt, junior trade minister, on 2/1 and foreign secretary Liz Truss on 7/2, FT writes.
- Other candidates include former equalities minister Kemi Badenoch, attorney-general Suella Braverman, ex-health secretary Jeremy Hunt, foreign affairs select committee chair Tom Tugendhat and new chancellor Nadhim Zahawi.
- Candidates will need the support of at least 30 to proceed into the second stage on Thursday with the contest cut down to two candidates by July 21 and the next leader elected by September 5.
- GDP (%mom): 0.5 v -0.2 (revised from -0.3) in April and 0.1 est.
- GDP (%3m/3m): 0.4 v 0.3 (revised from 0.2) in April and 0.0 est.
Covid cases hit new record high as new Omricon variants raise infection rate
- Daily symptomatic infections hit 351,546 this week according to the ZOE Covid study app.
- The figures suggest an increase of 237,516 cases a day since the start of June.
- The Covid hospitalisation rate is reported at 14.6% per 100,000 people though intensive care and high dependency units admission rates remain low at 0.39% per 100,000 people.
- While the hospitalisation rate is rising the low rate of ICU and HDU rates are encouraging indicating that vaccination and previous exposure to Covid 19 is proving reasonably effective at reducing the severity of Covid infection.
UK – Met Office understatement
- “A hot spell is likely to develop from Sunday, likely peaking early next week, leading to widespread impacts on people and infrastructure.” Met Office.
- What they mean is; it’s going to be unbelievably hot, road bridges and rail lines will buckle, most transport will massively disrupted and it’s going to be worse than a general strike led by a bunch of old school commies trying to recreate the ‘one-out, all-out’ general strikes of the 1970s.
Google will be slowing pace of hiring for the rest of the year on weakening economic outlook, FT reports.
- The news follows moves by both Microsoft and Meta to slow hiring in some areas in recent weeks.
Currencies
US$1.0009/eur vs 1.0011/eur yesterday. Yen 137.13/$ vs 137.25/$. SAr 17.009/$ vs 17.149/$. $1.189/gbp vs $1.185/gbp. 0.677/aud vs 0.672/aud. CNY 6.720/$ vs 6.733/$.
Commodity News
Precious metals:
Gold US$1,725/oz vs US$1,736/oz yesterday
Gold ETFs 102.7moz vs US$102.9moz yesterday
Platinum US$847/oz vs US$859/oz yesterday
Palladium US$1,994/oz vs US$2,128/oz yesterday
Silver US$19.00/oz vs US$18.99/oz yesterday
Rhodium US$13,900/oz vs US$13,900/oz yesterday
Base metals:
Copper US$ 7,306/t vs US$7,442/t yesterday
Aluminium US$ 2,345/t vs US$2,356/t yesterday
Nickel US$ 21,300/t vs US$21,695/t yesterday
Zinc US$ 2,967/t vs US$3,034/t yesterday
Lead US$ 1,936/t vs US$1,935/t yesterday
Tin US$ 25,850/t vs US$25,660/t yesterday
Energy:
Oil US$100.3/bbl vs US$104.7/bbl yesterday
Crude oil prices closed below $100/bbl yesterday as recession fears overwhelmed markets and the American Petroleum Institute estimated a US crude stock build of 4.8mb last week.
European energy prices moved higher as Norwegian outages reduced natural gas flows through the Langeled pipeline yesterday by 60% to 8.4mcm/d.
Natural Gas US$6.257/mmbtu vs US$6.504/mmbtu yesterday
Uranium UXC US$47.70/lb vs US$48.40/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$105.0/t vs US$107.1/t
Chinese steel rebar 25mm US$642.9/t vs US$641.5/t
Thermal coal (1st year forward cif ARA) US$251.0/t vs US$251.0/t
Coking coal swap Australia FOB US$260.0/t vs US$250.0/t
Other:
Cobalt LME 3m US$60,445/t vs US$60,445/t
NdPr Rare Earth Oxide (China) US$130,220/t vs US$131,799/t
Lithium carbonate 99% (China) US$67,789/t vs US$67,639/t
China Spodumene Li2O 5%min CIF US$4,720/t vs US$4,620/t
Ferro-Manganese European Mn78% min US$1,416/t vs US$1,446/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% 8.7/lb vs US$8.9/lb
Europe Ferro-Vanadium 80% 35.75/kg vs US$35.75/kg
China Ilmenite Concentrate TiO2 US$361/t vs US$360/t
Spot CO2 Emissions EUA Price US$83.8/t vs US$83.9/t
Brazil Potash CFR Granular Spot US$1,050.0/t vs US$1,050.0/t
Battery News
- BYD could reach monthly production of 300,000 vehicles by August
- BYD’s monthly production could reach 300,000 vehicles by August amid reports of plans to increase output.
- The plan to increase production comes as the company's order backlog continues to grow rapidly – as of early July, BYD's undelivered orders had reached 700,000 units, the report said, citing salespeople at the company.
- BYD’s sixth production facility in China saw its first vehicles roll of the production line on 30th June, with two more plants expected to begin production by the end of the year.
- BYD sold a record 134,036 NEVs in June, the fourth consecutive month of more than 100,000 units, according to data released by the company on July 3.
Volkswagen is latest automaker to partner Redwood Materials for EV battery recycling
- Volkswagen Group (XETRA:VOW) of America has announced it will with Redwood Materials to recycle batteries from Volkswagen and Audi EVs in North America.
- The goal of the partnership is to remanufacture battery materials in a domestic closed-loop supply chain, which could help reduce battery costs and the need to mine and ship raw materials.
- Toyota, Ford, Volvo and Tesla have already partnered with Redwood Materials in order to recycle the batteries from their respective EVs.
- VW said in a statement that the partnership “represents a crucial step in grown North America’s domestic EV industry”.
- The automaker is aiming for 55% of all US sales to be electric by 2030.
- Redwood Materials currently recycles more than 6GWh of lithium-ion batteries at each of its facilities in Nevada, which it says is equivalent to 60,000 EV batteries.
Company News
Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) 920p, Mkt Cap £134m – Blanket mine continues to break production records
- Caledonia Mining reports that production of 20,091oz of gold at the Blanket mine in Zimbabwe during the three months to 30th June 2022 is another quarterly record which brings H1 output to 38,606oz.
- Production represents a 20% increase on the 16,710oz produced during Q2 2021 and is “approximately 29 per cent more than the 29,907 ounces produced in the first half of 2021”.
- Commenting on what he described as the “excellent” performance over the first six months of 2022, Chief Operating Officer, Dana Roets, said that it “exceeded our expectations” and explained that it “excludes an estimate of approximately 1,500 ounces of recoverable gold included in an ore stockpile which will be processed after the commissioning of additional milling capacity in the next few weeks”.
- He also confirmed that the mine is “on track to hit our annual production target of between 73,000 - 80,000 ounces of gold”.
Conclusion: Record gold production during Q2 follows record Q1 production and demonstrates the wisdom of Caledonia Mining’s 5 year long, US$67minvestment in the Central Shaft project which has provided access to deeper level resources and secured the future of the Blanket mine into the 2030s.
*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe
Diamond Fields Resources Inc (CVE: DFR) C$0.185, Mkt Cap C$15m– Moydow acquisition cleared by the TSX-V
- In a release to the TSX on 11th July, Diamond Fields Resources confirmed that it had received the final approval of the TSX-V for its acquisition of Moydow Holdings, the owner of the the Labola gold project in Burkina Faso and a holding in the Kalaka project in Mali.
- The Labola project has an NI-43-101 compliant indicated resource of 5.4mt at an average grade of 1.52g/t gold (264,000oz) plus an inferred resource of a further 6.9mt at a grade of 1.67g/t (371,000oz).
- In an announcement on 29th June, CEO, John McGloin, described the acquisition of Moydow as “transformative” for the company and said that Diamond Fields was “particularly excited by the highly prospective Labola gold project in Burkina Faso, where we have already identified many opportunities for resource expansion and launched a drill program that is expected to deliver results in the third quarter of 2022”.
- The announcement in June explained that “Three mineralized zones have been outlined at Labola from the various drilling programs and each zone is open in all directions”.
- The Kalaka project, where Diamond Fields holds a 40% interest, is located in southern Mali approximately 80km south of the Morila gold mine.
- “Previous exploration work … [at Kalaka] … indicates a large, low-grade zone of mineralization with multiple drill intersections exceeding 150m at the 0.5 g/t Au level at the K1A prospect. Kalaka benefits from extensive undrilled potential, including higher-grade zones identified by artisanal workings and induced polarization (“IP”) anomalies”.
Horizonte Minerals PLC (AIM:HZM, TSX:HZM, OTC:HZMMF) 99.1p, Mkt Cap £189m – Key contracts awarded for the Araguaia process plant
- Horizonte Minerals reports that it has now placed contracts for all the principal items of process plant equipment and long-lead-time items required for its Araguaia ferronickel project in Brazil.
- The award of the individual contracts followed competitive tendering and detailed negotiation with “leading global suppliers”.
- Contract recipients include:
- FLSmidth which is described as “a market-leading supplier of engineering, equipment, and service solutions, particularly to the ferronickel industry” for the “rotary kiln, rotary dryer and associated dust handling equipment”; and
- Metso Outotec for the supply of “primary, secondary and tertiary crushing, as well as the apron feeder that feeds the dryer” and dust control systems; and
- Uvån Hagfors Teknologi AB (UHT) “for the supply of metal granulation equipment”; and
- Inteco Melting and Casting Technologies GMBH ("Inteco") for refinery equipment to “transform the crude ferronickel produced by the electric arc furnace to high grade ferronickel for sale to customers”.
- Explaining that the contracts represent “around US$135 million of capital expenditure on the Project”, CEO, Jeremy Martin, said that they bring the total value of contracts placed so far for Araguaia to US$293m.
- He said that the first items are “expected on site during Q4 of this year, in line with the overall project schedule”. In May, at the ‘ground-breaking ceremony’ the company described a 24 month construction schedule for completion of the Phase 1 project which targets the production of 14,500tpa of nickel in ferronickel.
Jubilee Metals Group PLC (AIM:JLP, JSE:JBL, OTC:JUBPF) – 14.17p, Mkt cap £377m – Cobalt refining circuit commissioning for up to 1,200tpa in Zambia
- Jubilee Metals reports their expectation to start commercial production of the cobalt refining circuit at Sable for up to 1,200tpa of cobalt depending on the feed grade available.
- Commissioning and first cobalt test production started in June.
- The Project Roan concentrator commissioning is also at 65% of design capacity and will send copper concentrate for refining at Jubilee’s Sable refinery.
- The concentrator is expected to reach full capacity by the end of the month, targeting:
- 830t of copper per month for refining at Sable contributing around 10,000tpa to the group’s target of 12,000tpa
- The other 2,000tpa is planned to come from certain other cobalt containing feed streams.
- Jubilee is targeting the construction of two further copper concentrating facilities as part of its Northern Zambian refining strategy, which aims to deliver in excess of 25,000tpa of copper by end CY 2023.
- Inyoni: Jubilee has also delivered a new and upgraded Inyoni PGM facility to reach 45,000oz of PGMs in South Africa including a new 80,000tpa chrome beneficiation circuit including Jubilee's ultra-fine chrome circuit.
- The team broke ground for the new concentrator in June last year highlighting the effectiveness of the team at managing the construction and logistics with completion in just 11 months despite Covid disruption.
- Jubilee completed the US$21m construction and commissioning at Inyoni in November 2021 enhancing the plant’s processing capability by providing the flexibility to process a wide variety of third party PGM feed.
- Inyoni is targeting 50,000oz of PGM this year and has the capability to process up to 75 000tpm of chrome and PGM rich material.
- Cobalt: The timing of the cobalt refinery also looks good. We expect already high cobalt prices at $60,445/t to rise further due to strong ongoing demand from battery manufacturers and potential disruption of cobalt mining in the DRC.
- The DRC administrator is reported to have recently ordered CMOC of China to stop exports from Tenke Fungrume, the world’s largest cobalt producing mine in a dispute over royalties. If CMOC stop production, today’s cobalt price could look really quite cheap.
Conclusion: It is great news to see Jubilee commissioning its cobalt refinery and copper/cobalt concentrator in Zambia. The speed of construction is impressive, highlighting the benefits of Zambia as an operating environment for miners and smelters.
KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF)* 0.63p, Mkt Cap £25m – Q2 update highlights a build up in the project development momentum
- The Company updates on Q2/22 operational highlights and relative status of its three projects in Ethiopia and Saudi Arabia.
- In Ethiopia, the team stressed significantly improved security situation on the ground following the lifting of the national state of emergency in February and the agreed ceasefire in March.
- Political rivals are seen to be willing to adhere to peaceful negotiations.
- At Tulu Kapi, field activities continued to gain pace ahead of full project launch, focusing both on the site and its transport and supply routes.
- Main activities focused on project launch preparations ahead of targeted conduction start date post dry season in October, subject to satisfactory security situation on the ground and the few remaining regulatory administrative terms.
- In Saudi Arabia, G&M, the operating JV between KEFI and local partner ARTAR, assembled the largest exploration team in the country as the team advances two major projects to the FS stage for development.
- At Jibal Qutman Gold Project, the team is in discussions with authorities regarding the Mining License.
- G&M engaged Lycopodium (ASX:LYL), one of the major contractors for the Tulu Kapi project, to complete a FS for Jibal Qutman by Dec/22.
- At Hawiah Copper Gold Project, works continued focused on the delivery of the PFS by YE22 with four drill rigs on site for both infill and step out drilling.
- Assay results for the ongoing programme are expected to be reported during the current quarter with an upgraded JORC MRE planned to be released later this year.
Conclusion: The Company continues to advance its portfolio of assets along the development curve with a closure of funding and start of construction works targeted at Tulu Kapi in Q4/22, a completion of DFS by Dec/22 at Jibal Qutman and a release of PFS results at larger Hawiah polymetallic project in the last quarter of the year.
*SP Angel act as Nomad to KEFI Gold and Copper
Power Metal Resources PLC (AIM:POW)* 0.875p, Mkt Cap £13m – Canadian Lithium project earn-in progressed following neighbour’s success
- Power Metal reports that it will progress into the 2nd year of the Authier North and Duval East lithium properties Lithium Earn-In, given the success of their neighbour Sayona Mining.
- Power Metal can earn up to 100% in the project.
- Sayona as a JORC-compliant resource of 17mt @ 1.01% Li2O for 174kt Li2O, in the Measured and Indicated category.
- Sayona have progressed their project to DFS level and intend to produce 114,000t of SC6 for total net revenue of C$1,412m.
- Sayona recently updated their Authier Project Resource model that includes the further downdip extension of their main lithium-bearing pegmatite dyke towards Power Metal's Authier North Property.
- Terms: Power Metal will pay C$25k to Eagle Ridge Mining as well as a share-based payment of C$50,000.
- Once issued, the Company has satisfied all requirements outlined in order to proceed to year 2 of the Earn-In.
Conclusion: Power Metal have increased their holding in a highly prospective lithium project with neighbours who have enjoyed considerable success. We look forward to Power progressing exploration at Authier North.
*SP Angel acts as nomad and broker to Power Metal
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* 18.84p, Mkt Cap £30m – June hits 2% copper head grade target with new monthly and quarterly records for copper output.
NPV Valuation: 168p/s
- Rambler Metals has drawn our attention to a limited number of typographic errors and inconsistencies within our comment yesterday on its monthly and half year operational performance. We welcome the opportunity to amend yesterday’s comments and apologise for any confusion which may have arisen.
- In its report of monthly performance for June, included in the H1 2022 operating results released yesterday afternoon, Rambler Metals & Mining reports an average copper feed grade of 2.02% achieving the 2% level which the company has previously discussed as a target for 2022.
- During the quarter to 30th June, copper feed grades have been rising steadily from 1.46% in April to 1.58% in May and reaching 2% in June as higher grades became available from the Upper Footwall and Ming North zones and with gold grades also improving from 0.29g/t in April to 0.41g/t in June.
- Copper concentrate production from the Nugget Pond plant has been increasing steadily from 1,341t in February to reach 2,347t in June bringing the total for the quarter to 5,890t (Q1 2022 – 4,191t and Q2 2021 – 2,502t) with saleable copper output reaching 624t in June to bring the quarterly total to 1,569t (Q1 2022 – 1,066t and Q2 2022 – 673t).
- Commenting on the results, President and CEO, Toby Bradbury, said that “June as a month and Q2 2022 as a quarter have set new records for the Ming Mine in terms of copper production”.
- Mining is reported to have “progressed in all four of the main production areas … [of the Ming mine] … with emphasis for the month on backfilling mined out stopes as part of the mine plan”.
- The total of ore and waste mined during the month increased by around 7% during June to 53,870t (May 2022 – 50,388t).
- The company explains that it placed 21,520t of backfill in the three lower mining zones of the mine during June (May – 16,296t and that “This necessary step in the mining sequence also benefits the operation by reducing or eliminating haulage of waste rock to surface and is one of the reasons why ore tonnes were lower for the month”.
- Rambler Metals also explains that a programme of ground support, which “was introduced to the cycle to assist with reducing dilution and achievement of improved grades from the mine” is being aligned to fit in with the mining sequencing.
- Mr. Bradbury expressed confidence in Rambler’s ability to “continue the improvement in performance though further optimisation of our mining execution. Maintaining a mining balance with backfilling to ensure at least 2 stopes are available for ore production at any one time necessitated a large proportion of waste backfilling in June to achieve this state”.
- He also confirmed that, in future, “Rambler will provide quarterly operational updates to the market which is now more appropriate given the condition that the operations have achieved”.
- Based on the operating statistics tabulated in today’s announcement H1 copper production amounts to 2,634t, implying that further improvements will be required during H2 to reach the previously issued production guidance of 7,000t of copper in 2022, however in our opinion, the encouraging improvements in copper head grades, if sustained, will be an important element in delivering the guidance.
Conclusion: Copper feed grade reached 2% during June and helped deliver record monthly and quarterly copper production for Q2 2022. Increased levels of backfill will aid in containing mine dilution improving operational resilience and flexibility and delivering continued grade stability at around 2% copper.
*SP Angel act as Nomad and Broker to Rambler Metals & Mining
Serabi Gold (AIM:SRB, TSX:SBI)* 39.8p, Mkt Cap £30m – Palito production recovers in Q2 as Coringa progresses and exploration identifies porphyry mineralisation near Sao Chico
- Serabi Gold (AIM:SRB, TSX:SBI) reports a 19% increase in gold production from its Palito mine in Brazil during the 3 months to 30th June 2022 to 8,418oz (Q1-2022 7,062oz) as a result of a 12% grade improvement to 6.26g/t.
- Management is maintaining its annual production guidance of 30,000oz following H1 production totalling 15,480oz. at Palito
- CEO, Mike Hodgson, recognised the “hard work of the operational team” and confirmed that “We continue to optimise the Palito operation and with the increased production this should improve our unit costs”.
- The company also confirmed that it has mined “further high grade ore mined from the underground development … [at its Coringa development where Serabi Gold says work is progressing very well] … with ore-sorter test work returning very positive results and metallurgical recoveries of 96% achieved through the Palito processing plant”.
- Mr. Hodgson explained that the installation of a crushing plant and ore-sorter at Coringa is under consideration “to generate a higher-grade product to truck to Palito”.
- He clarified that “Both the crushing plant and ore sorter are required as part of the full processing plant but installation now, as an interim step, will allow us to increase our short-term production and revenue, and therefore provide the opportunity to fund more of the development from cash flow thereby reduce the level of future debt capital required for the full plant construction”.
- Mr. Hodgson also highlighted the previously announced discovery of porphyry style mineralisation at the Matilda prospect, located around 5km WNW of its Sao Chico mine.
- He explained that Serabi Gold is working with “external porphyry experts to plan the next phase of exploration” at Matilda and also that “we have received interest from a number of major mining companies for further information. We will therefore evaluate the best options for the Company to move the Matilda Prospect and other regional targets forward over the coming months”.
- The company has previously described the Matilda target as one of five targets it has identified based on multi-element geochemical anomalies “along the margins of a 40km magnetic high” and said that its follow-up work will “initially focus on higher definition of magnetics and soil geochemistry to help target the next drilling programme”.
Conclusion: Recovering production at Palito keeps Serabi on course to meet its 2022 production guidance of 30,000oz. Development at Coringa is proceeding well with investigations underway to establish the viability of bringing forward production and revenue through installing crushing and ore-sorting to upgrade the material currently to Palito for processing. The exploration discovery of porphyry mineralisation at Matilda is reported to be attracting 3rd party interest.
*An SP Angel analyst has visited the 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
W1S 2PP
*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
DISCLAIMER
This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.
This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.
This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.
This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.
Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.
Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.
SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).
SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.
MiFID II - Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.
A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).
SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%