SP Angel . Morning View . Thursday 08 09 22
Fall in US dollar lifts metals. Fall in oil price helps miners
MiFID II exempt information – see disclaimer below
Alien Metals Ltd (AIM:UFO, OTC:ASLRF) – Alien raises £1.5m through placing at 0.5p
Anglo American Platinum (JSE: AMS) – 2022 guidance lowered to 3.7m - 3.9m PGM oz
Beowulf Mining PLC (AIM:BEM)* – Exploration progress at Majdan Peak
Chaarat Gold Holdings Ltd (AIM:CGH) – Interim earnings slide on cost inflation with convertible loan refinancing discussions ongoing
Greatland Gold PLC (AIM:GGP, OTC:GRLGF) – Havieron drilling results continue to expand resource footprint and depth extent
ASX: IXR – UK-based subsidiary receives £1.7m in government funding
Phoenix Copper Ltd (AIM:PXC, OTCQX:PXCLF) – Operational and financing review
Resolute Mining Limited (ASX:RSG, LSE:RSG) – Meeting with management highlights progress in raising throughput and gold production at Syama
Sovereign Metals Ltd (ASX:SVM, AIM:SVML) – Aircore drilling hits deeper mineralisation at Kasiya, Malawi
Oil prices collapse as US / European price cap
- Brent oil collapsed 5% to $88.3/bbl.
- Chinese traders are reported to be buying up cheap cargoes of Russian LNG though Russia is also said to be running out of options for the sale of its gas.
- Indian and Chinese traders are busy shipping as much Russian crude and diesel as they can manage.
- We are not sure how a US / European price cap will impact these traders but a ban on the shipping of Russian oil sourced at higher prices could work.
- Opec and other oil producers plan to cut crude production by 100,000bpd in October. This compares with an approximate 100m bpd of daily production.
- Chinese lockdowns are spooking the market alongside lower consumption from slowing markets
Gold seesaws around $1,700/oz as dollar rally cools
- The gold price recovered from $1,699/oz to hit $1,722/oz as the dollar cooled from its 20-year highs.
- The bounce was aided by US 10-year yields sliding from 3.339% to 3.264%.
- Gold prices have been supressed by a soaring dollar amid the Fed’s concerted efforts to tame inflation with aggressive rate hikes.
- A 0.75% rate hike by the Fed is expected by the market, placing downward pressure on the gold price.
- An extended period of sticky inflation paralleled by an acceleration in the US economy’s slowdown may provide a needed catalyst for the gold price going forward.
Escondida copper miners agree union strike on ‘safety concerns’ as LATAM supply concerns persist
- BHP employees at Escondida will strike for 2 days next week with threats for an indefinite period of inaction in the case of no-deal.
- Chile’s President Boric is pushing for additional safety controls on mines.
- Escondida has described the strike as ‘unlawful.’
Vale anticipates 44% increase in nickel demand by 2030 and a 20% increase for copper demand
- Brazilian miner Vale is forecasting nickel demand to hit 6.2mt by the end of the decade, up 44% on energy transition demands.
- The company expects supply growth to stem primarily from Indonesia, Australia, and Canada.
- It anticipates a ‘structural deficit’ for copper in the medium term, with demand expected to jump 20% to 37mt.
Dow Jones Industrials +1.40% at 31,581
Nikkei 225 +2.31% at 28,065
HK Hang Seng -0.77% at 18,898
Shanghai Composite -0.33% at 3,236
Economics
UN and Kremlin authorities meet to increase global access to Russian grans and fertilizers
- The UN and Russia are meeting in Geneva to reduce logistical impacts on Russian foodstuffs and fertilizers currently limited from global markets by sanctions.
- Russia’s foreign minister has demanded the lifting of ‘logistic sanctions’ preventing Russian grains and fertilisers access to world markets.
US – Fed Beige Book reports dim economic outlook with “expectations for further softening of demand over the next six to twelve months”.
- Inflation “remained highly elevated”, although, a certain degree of moderation in the rate of increases was reported.
- Labour markets remained tight with labour shortages weighing on a number of sectors.
China - China to establish ‘price monitoring mechanism’ for key materials including lithium carbonate and rare earths
- China news outlet SMM reports that an official from the Ministry of Industry and Information Technology that prices of key strategic metals have fallen recently, and that the MIIT will continue to ensure supply and stabilise prices.
- The MIIT will promote stable production and supply in key industries and also establish a linkage monitoring mechanism for key raw material prices to guide the price stabilisation of key products such as lithium carbonate and rare earth.
- In a separate announcement, China imported 7,184t of rare earth in August and 76,676t from Jan-Aug – down 6.2% YoY.
- China exported 3,673t of rare earth in August and 33,539t from Jan – Aug – up 5.7% YoY.
- Chengdu increases lockdown restrictions ‘indefinitely’ on Covid-19 infection concerns
- The Sichuan capital Chengdu has extended a lockdown on its 21 million residents today. 16m people are currently locked-down.
- The region has been hit with heatwaves and droughts, earthquakes, and power cuts in addition to consistent additional Covid cases.
- Nomura estimate over 290m people contributing 24.5% of GDP are currently affected by lockdown controls.
- Analysts expect a shift in zero-covid policy following the anticipated and unprecedented achievement of a third term for Xi Jinping in October.
- China’s zero-covid policy has been a major contributing factor to inflation in the West and a slowdown in economic growth for China.
ECB – The central bank will announce its monetary policy decision later today with expectations for the ECB to favour a 75bp hike.
- Markets are estimating a more than 80% chance of a 75bp move as compared to a less aggressive 50bp increase, Reuters reports.
- The decision would follow a 50bp increase announced in July earlier this year.
- Headline Eurozone inflation is currently running at ~9% with the underlying Core CPI was estimated at 4.3% in August, more than twice the ECB 2% target.
- The debate is to what extent the onset of widely expected recession in the Eurozone will be able to cool down inflationary pressures and if tighter policy will exacerbate the economic contraction.
Germany promises assistance to businesses facing closure amid energy crisis
- The German Economic Minister Habeck has offered a ‘wide rescue umbrella’ to companies hit by soaring electricity costs.
- He stated the assistance umbrella would be opened so ‘widely that small and medium enterprises can come under it.’ (Bloomberg)
- The move comes as Liz Truss vows to support UK energy consumers with £150bn over two winters, helping push the pound to 1985 lows. (FT)
- Investors withdrawals from EU equity ETFs hit their highest since Brexit as energy woes intensify.
UK – Job vacancies increased in August at the slowest pace in 18 months suggesting the labour market is starting ease, according to Bloomberg.
- The report prepared by the KPMG and Recruitment & Employment Confederation also showed the softest increase in starting salaries since June 2021.
- Coupled with accelerating inflation, the data points to a further squeeze on real earnings expected to continue weighing on consumer spending.
- UK government adds risk to collapse of sterling with potential £100bn energy support plan
- We are sure the Treasury has worked out that for every £1 spent on supporting prices that some of this will flow back to the Treasury through increasing tax take but surely the best way to tackle a shortage of energy is to reduce consumption rather than to chase prices higher.
- The downside to this strategy is that poorer nations of Eastern Europe may struggle to compete with the UK, Holland and Germany to buy fuel this winter.
- Surely it would be better to spend the £100bn on energy saving measures to cut the use of energy this winter rather than chasing energy prices higher, though many energy stocks in the FTSE will benefit from higher energy prices.
Australia – The Senate approved the first major climate law in more than a decade with the bill now heading to the House of Representatives.
- The legislation that was passed 37 votes to 30 envisages a 43% reduction in emissions from 2005 levels by 2030 and target for net zero emissions by 2050.
- That brings Australia broadly in line with such countries as Canada and Japan but lags the US, UK and EU that are targeting >50% reduction.
- Australia lagged other G20 countries and is currently #2 on the amount of carbon-dioxide emissions in the group.
- The nation is the world’s largest exporter of metallurgical coal, the second largest thermal coal shipper and a key supplier of natural gas, Bloomberg writes.
Cryptocurrencies fall to below $1tn in value following collapse of Bitcoin and Ethereum
- Bitcoin mining accounts for around 0.42% of global electricity usage.
- Anyone mining Bitcoin in Europe this winter should be taken out and frozen though we suspect high energy prices will put a stop to Bitcoin mining fairly fast.
Currencies
US$0.9986/eur vs 0.9905/eur yesterday. Yen 143.85/$ vs 144.06/$. SAr 17.322/$ vs 17.360/$. $1.149/gbp vs $1.150/gbp. 0.674/aud vs 0.672/aud. CNY 6.964/$ vs 6.972/$.
US Dollar index – 109.72 / -0.11% on week
Commodity News
Precious metals:
Gold US$1,718/oz vs US$1,699/oz yesterday
Gold ETFs 99.5moz vs US$99.5moz yesterday
Platinum US$877/oz vs US$859/oz yesterday
Palladium US$2,057/oz vs US$2,002/oz yesterday
Silver US$18.52/oz vs US$18.05/oz yesterday
Rhodium US$14,300/oz vs US$14,200/oz yesterday
Base metals:
Copper US$7,681/t vs US$7,7584/t yesterday
Aluminium US$ 2,274/t vs US$2,245 yesterday
Nickel US$ 21,580/t vs US$21,250/t yesterday
Zinc US$ 3,155/t vs US$3,110/t yesterday
Lead US$ 1,912/t vs US$1,878/t yesterday
Tin US$ 21,250/t vs US$20,875/t yesterday
Energy:
Oil US$88.5/bbl vs US$91.5/bbl yesterday
Natural Gas US$7.808/mmbtu vs US$8.017/mmbtu yesterday
Uranium UXC US$51.95/lb vs US$51.80/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$96.8/t vs US$97.0/t
Chinese steel rebar 25mm US$586.6/t vs US$581.3/t
Thermal coal (1st year forward cif A RA) US$312.0/t vs US$312.0/t
Coking coal swap Australia FOB US$270.0/t vs US$270.0/t
Other:
Cobalt LME 3m US$51,955/t vs US$51,955/t
NdPr Rare Earth Oxide (China) US$83,649/t vs US$83,547/t
Lithium carbonate 99% (China) US$69,289/t vs US$69,204/t
China Spodumene Li2O 5%min CIF US$5,110/t vs US$5,110/t
Ferro-Manganese European Mn78% min US$1,234/t vs US$1,233/t
China Tungsten APT 88.5% FOB US$333/t vs US$333/t
China Graphite Flake -194 FOB US$815/t vs US$815/t
Europe Vanadium Pentoxide 98% 7.3/lb vs US$7.3/lb
Europe Ferro-Vanadium 80% 31.75/kg vs US$31.75/kg
China Ilmenite Concentrate TiO2 US$328/t vs US$328/t
Spot CO2 Emissions EUA Price US$69.7/t vs US$72.1/t
Brazil Potash CFR Granular Spot US$860.0/t vs US$860.0/t
Battery News
BYD to build EV plant in Thailand
- Chinese battery and EV maker, BYD, will build an EV manufacturing facility in Thailand to build 150,000 EVs a year.
- BYD are aiming to complete construction in two years, producing 10,000 EVs per year in Thailand and export the rest to Southeast Asia and Europe.
- Thailand has recently offered incentives including tax breaks and subsidies to attract EV manufacturers.
- The Thai government plans that by 2030, EV production will account for 30% of total vehicle production.
- The company will spend approx. $500m on the project.
China NEV sales could exceed 10m in 2023
- It is thought that China could see sales of NEVs exceed 10m units in 2023.
- Analysts at Essence Securities, one of the leading securities firms in China, believe that sales of NEVs will reach 6.62m this year.
- They also predict that sales of EVs will reach ~7m units in 2023, up 37% yoy, and the sale of hybrid vehicles will be ~3.4m units, up 120% yoy.
Company News
Alien Metals Ltd (AIM:UFO, OTC:ASLRF) – 0.52p, Mkt cap £30m – Alien raises £1.5m through placing at 0.5p
- Alien Metals reports the raising of £1.5m of funds through the placing of 300,000,000 new shares at 0.5p/s.
- Proceeds are to accelerate drilling for metallurgical samples at Munni Munni the pgm project in Western Australia.
- Funds will also be used to for further drilling at the Brockman iron ore project and for a new drilling program at Sirius Ext Target Hancock
- Rod McIllree, Alien’s newly appointed, Executive Chairman subscribed for 50m new shares.
- McIllree’s appointment to the board is a significant step forward for the company in terms of leadership and geological expertise.
Anglo American Platinum (JSE: AMS) ZAR114,836, Mkt cap ZAR305bn – 2022 guidance lowered to 3.7m - 3.9m PGM oz
- Amplats has lowered its 202 refined production guidance from 4.0m - 4.4m PGM ounces.
- Commenting on the revision, Natascha Viljoen, CEO: “As we undergo our first full rebuild of the Polokwane smelter in twelve years, our quality assurance processes identified a defective consignment of materials required to complete the rebuild.”
- Sales guidance is expected to be in line with refined production, while unit cost guidance remains at 14,000 – 15,000 rand per PGM ounce.
Beowulf Mining PLC (AIM:BEM)* 4.75p, Mkt Cap £50m – Exploration progress at Majdan Peak
(Beowulf holds an approximate 59.5% interest in Vadar Minerals)
- Beowulf reports that Vadar has received results form exploration activities in and around the Majdan Peak South (MPS) target within the Mitrovica licence in Kosovo.
- The MPS target is one of several base and precious metal targets on the periphery of the large polymetallic epithermal system at Majdan Peak, and has now been drilled following IP and sampling.
- All three drillholes into the MPS target intersected base and precious metal mineralisation, with highlights:
- Hole MP002 – 8.8m at 0.34g/t Au including 0.9m at 1.52 g/t Au and 20 g/t Ag;
- Hole MP003 - 36.4m at 19 g/t Ag, 0.5% Pb and 0.2% Zn including:
- 1.5m at 128 g/t Ag, 0.35% Cu, 1.5% Pb and 0.3% Zn
- 1.1m at 71 g/t Ag, 0.1% Cu, 0.7% Pb and 0.3% Zn
- 1.0m at 50 g/t Ag, 0.2% Cu, 0.5% Pb and 0.3% Zn;
- The target remains open to the west and east with surface mapping data indicating a strike length of over 600m.
- Whilst MPS remains a priority for Vadar, the company is also evaluating other drill targets in the area, including Gold Ridge - defined by a 300m IP anomaly here rock chip grab samples have returned Au results of up to 7.2 g/t and Red Lead - defined by significant Zn and Au rock sample anomalies.
- Kurt Budge, Chief Executive Officer of Beowulf, commented: "The highlighted MPS intersections demonstrate the significant exploration potential of this district. At this stage in the programme, the amount of metal being seen in the system is extraordinary and is providing us with numerous exploration targets on the doorstep of the adjacent Stan Terg deposit.”
*SP Angel acts as nomad and broker to Beowulf Mining
Chaarat Gold Holdings Ltd (AIM:CGH) 9.5p, Mkt Cap £65m – Interim earnings slide on cost inflation with convertible loan refinancing discussions ongoing
- Production totalled 30.6koz GE (-8.2%yoy) including 23.9koz from own ore and 6.7koz from third party material reflecting lower processed grades.
- Sales amounted to 25.1koz GE at an average realised price of $1,858/oz (H1/21: 22.9koz GE at $1,783/oz).
- Revenue climbed to $50.4m (H1/21: $48.1m) stronger prices and sales volumes.
- AISC (own ore) jumped to $1,420/oz (H1/21: $1,063/oz) reflecting lower production, inflation in input costs and strengthening in the Armenian Dram (+10%yoy).
- Group wide EBITDA dropped to $7.1m (H1/21: $10.5m) with margins sliding to 14% (H1/21: 22%).
- PAT came in at -$2.7m (H1/21: $1.4m) taking EPS to -0.39c (H1/21: 0.21c).
- FCF totalled $2.0m (H1/21: -$5.6m) reflecting positive working capital contribution and lower capital spend during the period.
- Capital expenditure totalled $5.7m (H1/21: $8.6m) including $3.5m spent at Kapan and remaining relating to capitalised exploration and development in the Kyrgyz Republic.
- Net debt position increased to $44.4m (YE21: $39.6m) with $6.2m available in cash at the end of the period (YE21: $11.1m).
- The Company continues discussions with various parties and convertible loan owners regarding a potential refinancing of the $28.8m facility (37p conversion price) due on 31 October this year.
- 2022 production guidance reiterated at 56-62koz including 50-53koz own ore and 6-9koz third party material.
Greatland Gold PLC (AIM:GGP, OTC:GRLGF) 8p, Mkt Cap £359m – Havieron drilling results continue to expand resource footprint and depth extent
- Greatland Gold has announced further drilling results from its 30% owned Havieron project in the Paterson province, Western Australia where it operates in joint-venture with Newcrest Mining.
- The company reports that there are currently six drilling rigs in operation to test the Eastern Breccia, South-East Crescent Zone and the Northern Breccia zone as well as deployed on regional exploration within the lease.
- A total of 14,642m of new drilling, in 15 holes, has been completed since July bringing the total drilled so far on the project to 263,882 in 321 holes.
- Among the results from the Eastern Breccia Zone highlighted in today’s announcement are:
- Intersections of 27m at an average grade of 1.9g/t gold and 0.19% copper from a depth of 1,170m in hole HAD-098W2 which also contained deeper intersections of 39.3m averaging 2.1g/t gold and 0.12% copper from 1,335.7m depth and of 20.7m averaging 3.6g/t gold and 0.43% copper from 1,387.3m depth; and
- An intersection of 15.4m at an average grade of 12.0g/t gold and 0.27% copper from 1,379.6m depth in hole HAD-098W3; and
- An intersection of 120m at an average grade of 2.1g/t gold and 0.17% copper from 1,724m depth in hole HAD-152W2, including 20.3m averaging 3.1g/t gold and 0.68% copper from a depth of 1,781.7m; and
- Intersection of 82m at an average grade of 2.7g/t gold and 0.21% copper from 1,695m depth in hole HAD-152W3, and deeper intersections of 64.5m at an average grade of 2.8g/t gold and 1.1% copper from 1,798m and of 76.2m averaging 1.1g/t gold and 0.08% copper from 2,054m.
- The company says that the recent results from the Eastern Breccia highlight “the geological continuity of higher-grade mineralisation … [and] … reinforce the potential for the Eastern Breccia corridor to host Crescent style high grade mineralisation”.
- Drilling at the South-East Crescent Zone “continues to confirm and extend mineralisation at depth” with highlighted results including:
- An intersection of 20m at an average grade of 7.6g/t gold and 0.14% copper from 1,453m depth in hole HAD-152W2, including 16m, from 1,455m, which averaged 9.4g/t gold and 0.17% copper; and
- An intersection of 21.5m at an average grade of 3.0g/t gold and 0.22% copper from 1,663.5m depth in hole HAD-153W2; and
- An intersection of 62m at an average grade of 3.0g/t gold and 0.12% copper from 1,566m depth in hole HAD-104W3, including a section of 26.7m, from 1,593m, which averaged 6.4g/t gold and 0.16% copper; and
- An intersection of 41.9m at an average grade of 1.7g/t gold and 0.11% copper from 1,491.8m depth in hole HAD-086W5, including 16.1m, from 1,512m depth which averaged 3.9g/t gold and 0.12% copper.
- Great land Gold says that the drilling at the Northern Breccia Zone shows “the potential for high grade extension outside the South-East Crescent Zone” with highlighted results including:
- An intersection of 39.9m at an average grade of 4.6g/t gold and 0.1% copper from 1,401.1m depth in hole HAD-086-W5, including a section of 20.6m, from 1,403m, which averaged 8.7g/t gold and 0.13% copper
- As well as the new drilling results, today’s announcement confirms that the Feasibility Study “remains on track for completion during the December 2022 quarter” and that the exploration decline had advanced to 685m by the end of August with ground conditions improving and “record advance rates”.
- Managing Director, Shaun Day, explained that the “Eastern Breccia and South East Crescent growth drilling continues to expand and define the mineralised footprint and extensions of these zones. The high-grade mineralised intercepts identified between the South East Crescent and the Eastern Breccia increases the potential for a continuous high grade mineralised zone linking these two previously separate areas”.
Conclusion: Greatland Gold, in partnership with Newcrest Mining continues drilling and expanding the resource footprint at Havieron where a feasibility study remains on course for completion in the December Quarter. We look forward to the Feasibility Study for more insight into the potential at Havieron where mineralisation is still being encountered at depths of around 2,000m.
ASX: IXR .043p, Mkt Cap £166m – UK-based subsidiary receives £1.7m in government funding
- Ionic Rare Earths reports that its 100% owned subsidiary, Seren Technologies, has received a grant of £1.72m from the UK Government Advanced Propulsion Centre.
- Seren Tech intend to use funds to develop a demonstration scale magnet recycling plant and received funds from the Innovate UK Automotive Transformation Fund Scale up Readiness Validation (SuRV).
- Seren Tech are progressing test work and flowsheet development evaluation and modelling for IonicRE’s standalone REE separation and refinery.
- The company was founded in 2015 and spun-out form Queens University Belfast, and focused on separation of REEs from mining ore concentrates and waste permanent magnets.
Phoenix Copper Ltd (AIM:PXC, OTCQX:PXCLF)* 23.5p, Mkt Cap £28.7m – Operational and financing review
(Phoenix holds 80% of the Empire mining property in Idaho)
- Phoenix Copper has issued a review of its recent progress at the Empire mine project in Idaho and its plans for further work.
- Drilling at the site of the planned copper open-pit started in June to retrieve sample material for metallurgical testing of the environmentally benign ATS (ammonium thiosulphate) treatment process for the recovery of precious metals and to assist in determining “whether the production of precious metals can be moved from the secondary phase of the operation to the primary phase”.
- The company says that confirmation that this is possible would “potentially enhance Empire's projected economics in the early years of production”.
- Phoenix Copper explains that although there is “no statutory timeframe for approval of the Plan of Operations … [it] … is positioning itself to commence construction of the mine and processing facilities, immediately followed by initial production, as soon as the Empire Plan is approved”.
- Further progress is expected at the nearby Red Star prospect following the arrival of a second drill rig in mid-September for a month-long drilling programme to “improve the Company's understanding of mineralization in the area”.
- Early this year, Phoenix Copper reported the results of a seven-hole, 876m, programme of reverse-circulation (RC) drilling at Red Star which confirmed the “continuity of magnetite related mineralization along northerly trending structures” identified by the 2021 ground magnetic survey over an area “east-southeast of the Red Star discovery outcrop”.
- All seven holes encountered mineralisation with intersection widths ranging up to almost 37m and grades of up to 0.7% copper and 24g/t silver reported.
- Phoenix Copper confirms that, on 30th August, it received regulatory approval from the US Forest Service for “an initial drilling program comprised of up to 60 reverse-circulation ("RC") drill holes from 30 drill pads located on various targets on the Navarre Creek claim block” and that it has secured the services of a RC drilling rig “that is scheduled to arrive in June 2023”.
- The drilling at Navarre Creek aims to “follow up on the encouraging surface geochemistry and geophysics completed at Navarre Creek over the last few years”. In the past, Phoenix Copper has alluded to geological similarities between Navarre Creek and the geological setting of the Carlin belt in the neighbouring state of Nevada.
- CEO, Ryan McDermott, said that “The work carried out this summer is moving the Company closer to its goal of bringing Empire into production in the most economical and environmentally sustainable way possible. We are making progress across all fronts, though are not immune to the same supply chain and contractor staffing challenges that companies throughout the industry are experiencing”.
- In addition to operational progress, Mr. McDermott also confirms that “the corporate copper bond issue launched in June has attracted considerable interest from potential investors, given the positive long-term outlook for copper demand”.
- He says that “Despite a difficult market, an initial tranche is expected to complete in the next few weeks, which will enable us to accelerate the ongoing development of Empire and the surrounding mineralized district, including placing orders for long lead-time items of equipment, and appropriate preparatory work”.
Conclusion: Phoenix Copper is drilling to recover samples for metallurgical testing of material from the open pit copper site at the old Empire mine and will be drilling at its Red Star prospect by the middle of this month. Longer term, drilling is planned for the Navarre Creek prospect in June nest year. The company expects that an initial tranche of funds from its corporate copper bond over the next few weeks will accelerate project development and facilitate the placing of orders for long-lead time equipment.
*SP Angel acts as nomad to Phoenix Copper
Resolute Mining Limited (ASX:RSG, LSE:RSG) 15.45p, Mkt Cap £155m – Meeting with management highlights progress in raising throughput and gold production at Syama
- We met with Terry Holohan, MD and CEO at Resolute Mining.
- Terry is one of the industry’s leading hands-on metallurgical engineers and has been busy fixing up processing and mining issues at the Syama gold mine in Mali.
- In reality, Terry is an expert trouble-shooter who understands how to get things done in Africa.
- His focus is to raise gold output and contain unit costs as far as possible given the rise in the cost of heavy fuel oil to ~90c/ltr from ~75c/ltr. Though this is better than the rise in diesel prices to ~135c/ltr from 75c/ltr for many other mines
- Syama (Southern Mali): Terry’s first job at Syama was to find a mine geologist to fix grade and production issues.
- Guidance is for 220oz og gold this year
- Second up was to fix the roaster which was leaning to one side causing the refractory lining to shift creating holes in the outer shell. None of this is good.
- Management were previously focussed on exploration for oxide gold while bypassing the more challenging but often higher grade sulphide mineralisation.
- Holohan has been focussing on raising the efficiency of the roaster and reckons he can raise Roasting efficiency and reckons he can take this to 3.2mtpa assuming 91% availability.
- He also reckons he can add 0.6mtpa in processing plant capacity in the short term
- The team also hoping to increase the oxide plant to 1.8mtpa in processing capacity from 1.5 currently.
- Terry is working on restoring grades to 2.6g/t from the 2.4g/t the Syama mine has been producing and hoping that by altering the angle of mining that grades can be increased.
- The sulphide plant is officially targeting 2.4mtpa and is running at around 2.1mtpa for now.
- Total process plant capacity is around 2.4mtpa but this could rise to 2.8tpa with further improvement.
- The roaster could get to 3.8mt capacity with instillation of an oxygen plant
- Hydromet: resolute are also considering hydromet plant as an alternative to roasting and the team are looking for a limestone deposit to potentially feed this plant.
- Exploration: Discovering more high-grade ore sounds relatively straight forward with plenty of sulphide mineralisation sitting below the mined-out oxides in numerous open pits as well as along strike underground at Syama.
- The group are aiming to mine additional sulphides by widening the existing open pits where they see around 3g/t in 30m widths
- Other exploration is being done with a helimag survey along some 85km of strike.
- Logistics: The team have been struggling with delays for development equipment due to shipping bottlenecks etc. with 4-16 month lead times on capital equipment.
- Group guidance for 2022 is for 345koz at AISC of $1,425/oz
- Gold in circuit: Syama released some 14,000oz from the circuit and the gold in circuit could go negative .
- Stocks: they have some 17g/t material with low sulphide content .
- Tomboronkoto project – 42km from Syama - development pushed back to 2024
- Bibiani is effectively sold
- Mako mine running well in Senegal - targeting 125koz this year
Conclusion: Management are working hard to realise the potential of the Syama gold mine and to access more of the higher-grade resource. Improvements at the mine and in the process plant should start to produce better news next year.
Sovereign Metals Ltd (ASX:SVM, AIM:SVML) 25p, Mkt Cap £105m – Aircore drilling hits deeper mineralisation at Kasiya, Malawi
- Sovereign Metals reports that recent aircore drilling has shown rutile mineralisation extends beyond the current pit-shells and beneath the current mineral resources at its Kasiya rutile and graphite project in Malawi.
- The company says that the previous pit shells extended to an average of 15m depth but that the drilling had demonstrated mineralisation extending “to between 20m and 30m depth”.
- Among the drilling results highlighted in today’s announcement are:
- An intersection of 28.0m at an average grade of 1.05% rutile from a depth of 2m in hole KYAC-0006; and
- An intersection of 25.0m at an average grade of 1.06% rutile from surface in hole KYAC-0018; and
- An intersection of 20.0m at an average grade of 1.26% rutile from surface in hole KYAC-0022; and
- An intersection of 22.0m at an average grade of 1.15% rutile from surface in hole KYAC-0026; and
- An intersection of 20.0m at an average grade of 1.29% rutile from surface in hole KYAC-0030; and
- An intersection of 26.0m at an average grade of 1.18% rutile from surface in hole KYAC-0031;
- The current resource estimate for Kasiya shows an indicated resource of 662mt at an average grade of 1.05% rutile with an additional inferred resource of 1,113mt at an average grade of 0.99% rutile.
- Pre-feasibility and associated environmental studies for the Kasiya project are expected to be completed in Q2 2023.
- Managing Director, Dr. Julian Stephens, said that the early results of the deeper drilling “re-asserts the truly remarkable Tier 1 nature of Kasiya in terms of size, grade and mineralisation consistency”.
- He also said that “Kasiya continues to grow and will likely become a multi generational project capable of supplying a reliable and sustainable source of high-purity titanium as natural rutile”.
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%