SP Angel . Morning View . Monday 12 09 22
Gold holds ground ahead of the US inflation data
MiFID II exempt information – see disclaimer below
(Adriatic Metals PLC (LSE:ADT1, ASX:ADT, OTCQX:ADMLF)) – Interims highlight Vares construction progress
Antofagasta PLC (LSE:ANTO) – Sea swell delays construction of coastal desalination plant for Los Palabras copper mine
Beowulf Mining PLC (AIM:BEM) – Jokkmokk Iron CEO interviewed
Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF) – La India open-pit mine feasibility study
Greatland Gold PLC (AIM:GGP, OTC:GRLGF) – A$340m funding arrangements for Havieron and expansion of Greatland Gold management
Great Southern Copper PLC (LSE:GSCU) – Initial drilling completed at the San Lorenzo Project, Chile
Pure Gold Mining Inc (TSX-V:PGM, LSE:PUR, OTC:LRTNF) – Operational update reiterates Q3/22 guidance
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB) - NPV Valuation: 168p/s – Operational improvements and production expansion at the Ming mine stretch the balance sheet
Tesoro Gold Ltd (ASX:TSO, OTCQB:TSORF) – Sampling results at El Zorro define new drill targets
Tietto Minerals Ltd (ASX:TIE) – A$49m equity investment at a premium by Chifeng
Gold holds ground as traders brace for US inflation data tomorrow
- Gold has held gains made last week following its first weekly rise in four.
- The metal has settled around the $1,720/oz.
- Gold has been depressed by a soaring US dollar, with the dollar index up >18% over the past year.
- The dollar has been supported by a continuation of hawkish statements from the Fed and expectations of a 75bp hike in Sept.
- Gold outflows continue, with ETFs slashing holdings for a 10th straight day.
- 81,848oz of gold were sold from ETFs last session and 442,722 over the week but ETF holdings have risen 1.5% this year. (Bloomberg)
Copper hovers around $8,000/t on renewed China optimism and weakening dollar
- Copper prices rallied 2% from Friday lows, closing in on $8,000/t.
- Copper stocks on major global exchanges have fallen to January lows, down 40% from highs hit in May this year. A further drawdown of 20,000t would trigger 2006 inventory lows.
- The dollar’s sell off over the past week has provided a tailwind to copper prices, despite wider concerns of a global economic slowdown.
- Copper has flipped from contango to backwardation over the past month, with spot premium hitting $100/t on LME last week.
- The National Congress is anticipated to offer additional copper demand optimism whilst LATAM supply continues to face a range of challenges.
Dow Jones Industrials +1.19% at 32,152
Nikkei 225 +1.16% at 28,542
HK Hang Seng +2.69% at 19,362
Shanghai Composite +0.82% at 3,262
Economics
China - Upcoming China National Congress to provide commodity demand boost as officials look to stimulate economy
- Stimulus following the upcoming 20th National Congress Meeting is expected to add needed demand to the commodity sector.
- Commodities have fallen 13% since June on a global economic slowdown. (Bloomberg)
- Chinese steel demand has fallen 2.2% this year as its property sector slumps, however support from China’s leaders has potential to flip this to positive in 2023.
- Analysts expect officials to also extend support to the renewables sector, boosting demand for battery metals.
- Beijing is considering state-backed companies to inject liquidity via bond issuances to the renewable energy sector – Bloomberg estimate this may boost solar capacity by 306% and wind by 164%.
China Trade surplus fell to US$79.3bn in August vs US$101.3bn in July as
- Imports rose 0.3% in August vs 2.3% in July
- Export rose by 7.1% in August vs 18% in July
- CPI fell 0.1% in August vs 0.5% in July and rose 2.5% yoy in August vs 2.7% yoy in July
- Western demand slowed and manufacturing shifted to other sites outside China to escape the threat of persistent lockdowns.
Shanghai port braces for typhoon in renewed threat to supply chains
- Typhoon Muifa is approaching China’s east coast this week, following a shutdown of major container port Yangshan last week on Typhoon Hinnamnor.
- Queues at the major Shanghai port remain higher than the 50-day average.
- Typhoon activity in the Northwest Pacific remains 35% lower than average.
- Container rates have continued to slide, providing a necessary coolant to red-hot western inflation.
Mongolia completes decade-long rail line project to ramp up coal supply to China
- Mongolia has finished a rail line intended to boost coal exports to China by 50mt pa.
- Extreme weather and supply limitations has caused China to shore up its access to coal for energy and smelting.
- Analysts estimate transport costs will be reduced from $32/t to $8/t by the 145-mile line.
- Mongolia exported 28.6mt of coal in 2020 but this was slashed to 15.9mt last year amid Covid border restrictions.
Japan - Q2 GDP rose 0.9% vs 0.1% in Q1 and lifting GDP to an annualised rate of 3.5% vs 0.2% previously
US – Inflation reports is due Tuesday with estimates for headline measure pointing to a slowdown in the pace of consumer prices growth amid lower oil prices
- CPI es expected to cool to an 8% a year pace.
- Estimates are for the Fed to announce another 75bp hike later this month taking the benchmark rate to 3.00-3.25% range.
- Weekly jobless claims held broadly stable at 222,000 vs 228,000 previously
- Trade deficit fell to US$70.7bn in July vs US$79.6bn in June
Wolfspeed to build new billion-dollar US microchip factory
- U.S. power chip maker Wolfspeed will build a new multi-billion-dollar factory, in North Carolina, to make the raw materials used for chips used in EVs as demand surges.
- Wolfspeed uses a material called silicon carbide to make its chips and is considered a leader in this technology – the company says it produces more than 60% of the world's silicon carbide.
- Silicon carbide power chips are gaining traction with EV makers as they can handle high voltages and are more power efficient than traditional silicon chips.
- Industry analysts estimate these types of power chips will make up more than 20% of the power semiconductor market by 2027, up from only 5% today.
Mexico - CPI remained stable at 0.7% in August and was 8.7% higher yoy vs 8.1% higher yoy in July
UK – UK Exports to the EU outperforming UK exports to the rest of the world so far this year
GDP weakness primarily due to a slowdown in industry and construction
- The UK economy stagnated in the three months to July compared to the previous months as the cost of living crisis hit spending.
- Leading indicators for growth point to a bleak outlook with Composite PMI slipping into a contraction in August.
- Government plan to freeze energy costs from October should reduce peak inflation and may help the economy avoiding a recession this year, Bloomberg reports.
- Monthly GDP (3m/3m): 0.0% July v -0.1% June and 0.1% est.
- Monthly GDP (%mom): 0.2 July v -0.6 June and 0.3 est.
- Consumers also reduced power consumption, largely due to the warmer weather and lack of domestic air conditioning in the UK.
- The UK imported £11bn of fuel in July representing 21% of all goods imports.
Ukraine – Promising news from the front line in Ukraine suggests strong advance by Ukrainian troops
- Ukraine militaries are reported to have recaptured some 3,000 sq km of Ukrainian territory following a successful counteroffensive prompting an unusual admission by Russia’s defence ministry that its troops had to retreat, FT writes.
- The advance represents Ukraine’s biggest victory since pushing Russian troops away from Kyiv in March with Minister of Defence saying that the offensive had gone far “better than expected”.
- In response, Russia launched artillery and missile strikes from the Black Sea striking the country’s second largest thermal power plant in Kharkiv causing a total blackout in the city and Donetsk region.
- Months of preparation, training and re-equipment are paying off for Ukraine.
- HIMARS has knocked out Russian ammunition stores and supply chains and cut off Russian forces from further support.
- The Ukrainian advance is particularly swift and could turn into a complete rout, though we are wary of Russia’s ability to regroup to the south.
- Russian TV interview commentator says “it’s absolutely impossible to defeat Ukraine” “using colonial war methods”.
- This is the end of the road for Putin according to John Sweeney, ex BBC correspondent and author of “Killer in the Kremlin”
South Africa – Mine wall collapses in Jagersfontein killing one and injuring 40
- A tailings dam has collapsed at a former diamond mine at Jagersfontein, Free State, South Africa.
- Nine houses were swept away with 20 more destroyed by the flood of slimes.
- The Jagersfontein mine and tailings were sold to the Superkolong Consortium of black investors in 2010 having produced some of the world’s largest diamonds in operations between 1870 and 1971 when it produced some 9.6mcts of gem-quality diamonds.
- The mine produced the Excelsior diamond at 972cts alongside the Jubilee Diamond making up two of the world’s largest diamonds.
- The open pit at Jagersfontein is the world’s largest hand-excavated hole at 18.65ha making it larger than the Big Hole at Kimberley at 17ha..
Pakistan floodwaters threaten key power stations providing millions with electricity
- Pakistani authorities are building a dike in front of a vital power station to try and prevent damage from flooding.
- Rains are 190% higher than the 30-year average,
- Record monsoon rains and melting glaciers have caused an estimated $30bn worth of damage in Pakistan and affected 33m people.
- 1,400 people have died in the flooding, and we fear the ensuing refugee crisis from the disaster could destabilise the region alongside contributing to a severe food crisis in the developing world.
Currencies
US$1.0161/eur vs 1.0092/eur last week. Yen 142.86/$ vs 142.29/$. SAr 17.148/$ vs 17.361/$. $1.167/gbp vs $1.162/gbp. 0.688/aud vs 0.685/aud. CNY 6.927/$ vs 6.925/$.
US Dollar index – 108.52 / -0.78% on week
Commodity News
Precious metals:
Gold US$1,723/oz vs US$1,726/oz last week
Gold ETFs 99.3moz vs US$99.4moz last week
Platinum US$897/oz vs US$886/oz last week
Palladium US$2,184/oz vs US$2,147/oz last week
Silver US$19.15/oz vs US$18.85/oz last week
Rhodium US$15,200/oz vs US$15,200/oz last week
Base metals:
Copper US$ 7,954/t vs US$7,973/t last week
Aluminium US$ 2,307/t vs US$2,310/t last week - Japan port premium being negotiated at US$115 – 133/t in Q4. This is 10-20% lower than Q3
Nickel US$ 22,985/t vs US$22,835/t last week - Vale forecast a 44% rise in nickel demand by 2030
Zinc US$ 3,217/t vs US$3,216/t last week
Lead US$ 1,934/t vs US$1,904/t last week
Tin US$ 21,410/t vs US$21,650/t last week
Energy:
Oil US$92.3/bbl vs US$89.4/bbl last week
Natural Gas US$8.078/mmbtu vs US$8.069/mmbtu last week
Uranium UXC US$52.55/lb vs US$51.95/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$101.7/t vs US$99.8/t
Chinese steel rebar 25mm US$590.2/t vs US$590.3/t
Thermal coal (1st year forward cif ARA) US$312.0/t vs US$312.0/t
Thermal coal swap Australia FOB US$429.0/t vs US$432.5/t
Coking coal swap Australia FOB US$260.0/t vs US$265.0/t
Other:
Cobalt LME 3m US$51,955/t vs US$51,955/t
NdPr Rare Earth Oxide (China) US$86,263/t vs US$84,836/t
Lithium carbonate 99% (China) US$69,660/t vs US$69,674/t
China Spodumene Li2O 5%min CIF US$5,210/t vs US$5,210/t
Ferro-Manganese European Mn78% min US$1,255/t vs US$1,246/t
China Tungsten APT 88.5% FOB US$333/t vs US$333/t
China Graphite Flake -194 FOB US$820/t vs US$820/t
Europe Vanadium Pentoxide 98% 7.3/lb vs US$7.3/lb
Europe Ferro-Vanadium 80% 31.25/kg vs US$31.25/kg
China Ilmenite Concentrate TiO2 US$330/t vs US$330/t
Spot CO2 Emissions EUA Price US$68.3/t vs US$67.8/kg
Brazil Potash CFR Granular Spot US$800.0/t vs US$860.0/t
Battery News
NIO exceeds 1100 battery swap stations in China
- EV manufacturer NIO now has 1103 battery swap stations across China.
- In the same statement, the company announced that customers had used the swap service more than 12m times since it became available – this works out at around 30,000 battery swaps per day on average.
- NIO aims to have more than 1,300 battery swap stations in China by the end of this year, and plans to have 4,000 stations worldwide by 2025.
China’s August installed battery power up to 27.8GWh
- China’s installed battery base for August was 27.8GWh, up 121% yoy and 14.7% from July.
- 10.5GWh were ternary lithium batteries (NCM/NCA batteries)
- 17.2GWh were LFP batteries.
Company News
(Adriatic Metals PLC (LSE:ADT1, ASX:ADT, OTCQX:ADMLF)) 125p, Mkt cap £333m – Interims highlight Vares construction progress
- Adriatic has released its financial results for the six months to 30th June 2022.
- The company reported an operating loss of US$4.9m over the period, vs $6.3m over the same period in 2021.
- G&A costs were $4.2m vs $3.2m last year.
- Cash held at the end of the period was $83m.
- Adriatic continued to make progress on the construction of the Vares project in Bosnia & Herzegovina, with the completion of the upper decline portal and the commencing of the lower decline development.
- The Company has appointed Ausenco as the engineering and procurement contractor, retaining the company following the Project Pre-Feasibility Study and the Definitive Feasibility Study.
- Access roads at the project are 65% complete, while foundations are currently being constructed at the Vares processing plant.
- The Company has agreed heads of terms with four offtakers for the purchase of concentrate, with 82% of the planned production over the first 24 months allocated.
- Long lead items delivery times have generally come in longer than those provided for within the 2021 DFS, although this is an industry wide issue and production timelines remain.
*An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia
(Antofagasta PLC (LSE:ANTO)) 1,224p, Mkt cap £12bn – Sea swell delays construction of coastal desalination plant for Los Palabras copper mine
- Antofagasta report the loss of equipment off a marine construction platform working on the Los Pelambres desalination plant.
- The works have been put on hold pending the recovery of sunk equipment carrying fuel / lubricants.
- The company reports no significant environmental impact but works have been put on hold by the Chilean environmental authority as a precaution.
- Management do not expect the incident to have a material impact on the completion date of the desalination plant.
- Production at Los Pelambres fell by 18% in Q2 44,300t (bringing year-to-date output to 98,400t) due to a leak in the copper concentrate pipeline on 31st May. The pipeline was reopened on 26th June.
- The $2.2bn Los Pelambres Expansion project should add 60,000tpa of copper in concentrates increasing the plant’s throughput to 190,000tpd from 175,000tpd. The expansion was 82% complete by the end of the first half.
- Drought: Chile is gripped in an unprecedented 13-year drought with more than half the 19m population now living in areas of severe water scarcity with many rural communities in the centre and north of Chile are forced to rely on emergency tankers to deliver drinking water. (The Guardian)
- The Los Pelambres area has been in drought for around 10 years with the mine accelerating plans to move to desalinated seawater in Q4 this year from its original 2025 target.
- Antofagasta expect to produce some 640-660,000t of copper this year indicating production will rise to around 381,400t through the second half.
- Group net cash costs are expected to rise to $1.65/lb in H2 due to higher fuel and other input costs and lower by-product prices.
- Net debt rose to $491m from $701m of net cash a year earlier due to heavy ongoing capital investment of $831m in the first half. Capex is estimated at ~$1.9bn for the full year.
*The SP Angel mining analyst has previously visited a number of Antofagasta’s copper mines
(Beowulf Mining PLC (AIM:BEM)) 4.75p, Mkt Cap £55.5m – Jokkmokk Iron CEO interviewed
- Beowulf has released an interview with Ulla Sandborgh, CEO of Jokkmokk Iron Mines AB – the subsidiary responsible for the Kallak Iron Ore Project.
- The interview can be viewed in English following the link: https://www.brrmedia.co.uk/broadcasts-embed/6318876ded0d7b2328d851b1/beowulf-interview-with-ulla-sandborgh/?popup=true
- Ms Sandborgh was appointed in June 2022, having formerly held senior positions in private enterprise and public institutions, in sectors including infrastructure, electricity and water.
- Ulla’s most recent role was a Director General, Ministry of Enterprise, The Government of Sweden, in which role she was responsible for issues affecting the limestone and cement industries.
*SP Angel acts as nomad and broker to Beowulf Mining
(Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)) 26.5p, Mkt Cap £40.9m – La India open-pit mine feasibility study
- Condor Gold has announced the results of its feasibility study into the development of the La India open-pit development within its wider La India project in Nicaragua.
- The feasibility study, which does not include the development of the nearby satellite operations at America, Mestiza and Central Breccia or the emerging Cacao deposit, illustrates that the La India open-pit is expected to deliver an after-tax NPV5% of US$86.9m and IRR of 23% (at a gold price of US$1,600/oz) from the investment of US$105.5m to mine a probable ore-reserve of 602,000oz of gold and 1.25moz of silver over an 8.4 years mine life at La India.
- Sensitivity analysis disclosed in the announcement indicates that at a higher gold price of US$2,000/oz, post-tax NPV5% increases by around 2.4x, to US$205.2m generating an IRR of 43%.
- The open-pit is expected to mine a total of 7.3 mt of ore grading 2.56 g/t Au and associated 96.7 mt of waste at an average waste:ore ratio of 13.2:1 at an average ore production rate of 1.3mtpa producing gold at an average US$1,039/oz on an all-in-sustaining cost basis. Conventional truck-an-shovel mining will use contractors.
- “Mine plans include 4.86 Mt of pre-stripping of waste material in the 12 months preceding commercial production”.
- Ore will be treated at a nominal rate of 0.89mtpa over 9 years to produce an average of 81,545oz of gold for the first five years of production with higher grades treated in the earlier years and lower grade material stockpiled for later processing.
- Chairman and CEO, Mark Child, explained that permits are already in-place for the 2-stage development of La India which will use the new SAG mill which has already been purchased. He also confirmed that “In reality, two permitted high grade feeder pits will be added during the early years of production thus increasing production ounces of gold. Early production is targeted at 100,000 oz gold p.a.”
- As well as the resources mineable by open-pit methods at La India, America, Mestiza, Central Breccia and Cacao, which contribute an additional 289,000oz of indicated and inferred resources, “there is an aggregate underground Mineral Resource (La India, America, Mestiza, Central Breccia San Lucas, Cristalito-Tatescame, and Cacao) of … 194,000 oz gold in the indicated Mineral Resource category and… 898,000 oz gold in the inferred Mineral Resource category.”
Conclusion: The production of a feasibility level study for the open pit at La India provides a solid economic and technical base for the wider development of the satellite open-pits and the longer-term underground mining opportunities within the La India district where continuing exploration may be expected to add to the development pipeline. We look forward to the opportunity to study the feasibility study in detail and appreciate the project more fully.
*SP Angel act as a broker to Condor Gold
(Greatland Gold PLC (AIM:GGP, OTC:GRLGF)) 9.4p, Mkt Cap £380m – A$340m funding arrangements for Havieron and expansion of Greatland Gold management
- Greatland Gold has announced that it has secured debt and equity funding agreements for up to A$340m to fund its expected 30% share of the development cost of the Havieron project in W Australia.
- The company confirms that it has signed an agreement with three leading banks (ANZ, HSBC and ING Australia) for an A$220m, seven-year, debt facility to aid the development of the project “based upon the October 2021 2Mtpa Pre-Feasibility Study; and well positioned to be fully funded in respect of the Feasibility Study targeting an expansion to around 3Mtpa due in the December 2022 quarter”.
- The debt will pay what is described as a “Highly competitive term debt interest rate at 3.50% p.a. margin plus BBSY benchmark reducing to a margin of 3.25% p.a. post project completion with early repayment flexibility”.
- In addition, privately owned Wyloo Metals is, subject to shareholder approval, will make an initial A$60m equity investment “with an additional future potential equity contribution of A$60m, providing a total of A$120m”.
- The initial tranche of the investment is priced at 8.2p/share and will result in “Wyloo becoming Greatland's largest shareholder with approximately 8.6 per cent of shares on issue”.
- The subsequent investment by Wyloo “is through the issue of warrants to subscribe for additional equity as ordinary shares at an exercise price of 10.0 pence per share”.
- Recognising the securing of funds to finance Greatland Gold’s share of the Havieron development as a milestone, Managing Director, Shaun Day, explained that the “significant size of each bank's commitment together with the strategic support from Wyloo highlights the long-term confidence in the Havieron gold-copper project and the strength of this world class asset”.
- He confirmed that “Completing the debt facilities and Wyloo investment will enable Greatland to be fully funded for its share of costs in developing the Havieron project into first production and potential free cash flow which will provide long-term financial stability and create significant value for Greatland and its shareholders”.
- CEO of Wyloo Metals, Luca Giacovazzi, described Havieron as “one of the most exciting discoveries in Western Australia's emerging Paterson Range that continues to grow in scale and quality as the understanding of this tier-one system evolves”.
- In a separate announcement today, Greatland Gold has announced key appointments to its Board, including that of Mark Barnaba, deputy Chair of Fortescue Metals as non-executive Chairman and former Fortescue CEO and Managing Director, Elizabeth Gaines, as a non-executive director and Deputy Chair.
- Former President of BHP’s Iron Ore Division, James Wilson, joins as an executive director effective today.
- The company confirms that the “Current Non-Executive Chairman Alex Borrelli will assume a senior Non-Executive Director role as Lead UK Director following the new Board appointments on or before 1 January 2023”.
- Greatland Gold says that the new appointments “of mining industry leaders with substantial corporate and operational experience will assist Greatland to fulfill its ambition to be a world class mining company”.
Conclusion: Securing finance to fund its share of the development of Havieron and the appointment of experienced additional directors to strengthen its team positions Greatland Gold to move ahead following the completion of the Feasibility Study which is expected during the December quarter this year
(Great Southern Copper PLC (LSE:GSCU)) 4.35p, Mkt Cap £9m – Initial drilling completed at the San Lorenzo Project, Chile
- Great Southern Copper has announced the completion of an initial, 5-holes, 1,667.5m scout diamond-drilling programme at its San Lorenzo copper/gold exploration project in Chile.
- The drilling, at the Chincillon and Central prospects, has confirmed a “Sheeted fracture-hosted mineralised system … with veinlet and locally disseminated sulphides, including pyrite, chalcopyrite and molybdenite observed in all holes”.
- An initial 167 samples have been sent for analysis and drilling has now moved to testing a “monzonite-hosted sheeted fracture-vein swarm mineralisation … at … [the] … Las Hermanas prospect”.
- The company explains that its geological mapping “suggests that the sheeted fracture-veins defines a large (>15 km2) alteration system”.
- CEO, Sam Garrett, explained that the “scout drilling program at San Lorenzo has confirmed the occurrence of sulphide copper hosted in sheeted vein systems which validates our strategy to focus our efforts here. This is a significant milestone for GSC and the project and I congratulate the team on their work thus far … [and said that] …. the alteration system which hosts the copper at San Lorenzo is very large”.
- He confirmed that the “next phase of this scout drilling programme has started and is currently testing areas of monzonite-hosted mineralisation”.
(Pure Gold Mining Inc (TSX-V:PGM, LSE:PUR, OTC:LRTNF)) 7.6p, Mkt Cap £55m – Operational update reiterates Q3/22 guidance
- The Company reports record gold production in August driven improved grades.
- Production in August climbed to 4.6koz, up from 2.2koz in July, as mining accessed higher grade stopes.
- Throughput improved to an average of 794tpd compared to Q2 average of 500tpd driven by improved mining execution and increased mill availability.
- The Company’s near term target is to increase ore throughput towards 1,000tpd.
- Q3/22 production reiterated at 8.7-12.3koz based on 775-875tpd at 4.0-5.0g/t feed.
- Projections are well supported by drilled out inventory with definition drilling and planning currently focused on production for November and December.
- Updated PFS and LOM plan remain on track for release in Q4/22
- Operations continue to struggle cash generation wise with site-level operating plus sustaining capital costs expected to come in at $9.5-10.5m per month in Q3/22.
- Cash position is reported at $6m, stable from late July.
Rambler Metals and Mining* (Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)) 10.25p, Mkt Cap £18m – Operational improvements and production expansion at the Ming mine stretch the balance sheet
NPV Valuation: 168p/s
- On Friday afternoon, Rambler Metals and Mining issued an announcement describing its current financial position in the context of “the recent decline and volatility in copper prices and ongoing inflationary pressures”.
- The company explained that its financial modelling indicates the requirement for additional working capital “as production has increased in an inflationary environment”.
- Rambler Metals highlights the main short-term issues it needs to confront as “the repayment of legacy commitments made during the intense Covid period; reduction of current operational accounts payable balances back to current terms; rescheduling the repayment of longer term debt to better match Rambler's operational cash flow generation; and further capital expenditures to further reduce operating costs”.
- The company confirms that “At this stage, it is not certain whether the capital will be in the form of equity, a restructure of debt, or a combination of the two”.
- We point out that, as previously reported, Rambler Metals is targeting a doubling of its 2022 copper output to 7,000t (2021 -3,417t) which has required opening of additional mining areas in order to maintain the three principal mining areas and deliver the consistent copper grades of around 2% required to deliver its copper production objectives.
- In addition, infill and extension drilling, to better define the ore-body geometry and improve mine planning, has identified three new mineralised zones close to existing mine infrastructure so far this year.
- Underlining the operational improvements that it has achieved, Rambler Metals emphasises that “the current stress on the business is from balance sheet weakness rather than operational viability” and says that the “capital to be sought is intended to consolidate the Company's operational gains and commence the process of strengthening the balance sheet in a more permanent way”.
Conclusion: Rambler Metals continuing operational improvements, increased production outlook and expansion of its resource base comes at a time of volatile copper prices and inflationary pressures on costs requiring additional capital resources to strengthen its balance sheet.
*SP Angel act as Nomad and Broker to Rambler Metals & Mining. An SP Angel analyst holds shares in Rambler Metals & Mining.
(Tesoro Gold Ltd (ASX:TSO, OTCQB:TSORF)) A$0.037, Mkt cap A$32m – Sampling results at El Zorro define new drill targets
- Tesoro reports positive soil sampling results from its new Calderillas target, which the company says has defined a 2.5km by 0.5km gold trend to the north of the company’s Ternera Gold Deposit.
- Sampling was completed via continuous trenches, with outcropping rock also being sampled.
- Channel sampling highlights include:
- EZTR003153 – 6m @ 5.95g/t Au
- EZTR003162 – 6m @ 2.10g/t AuEZTR003164 – 12m @ 3.13g/t Au
- EZTR003166 – 6m @ 4.37g/t Au
- EZTR003171 – 6m @ 3.16g/t Au
- EZTR003173 – 21m @ 2.33g/t Au
- Tesoro comments that it intends to drill at Calderillas in the coming days.
(Tietto Minerals Ltd (ASX:TIE)) A$0.51, Mkt Cap A$ 507m – A$49m equity investment at a premium by Chifeng
- The Company raised A$49m issuing 85m shares at a price of A$0.58/sh to Shanghai listed Chifeng Jilong Gold Mining/
- The issue price represents a ~12% premium to the closing price on Friday last week.
- Chinfeng will hold a 7.9% interest in the Company on completion of the equity investment.
- Funds will be used to take the Abujar Gold Project in Cote d’Ivoire into production with first gold pour guided for Q4/CY22.
- The project hosts 98.7mt at 1.1g/t for 3.45moz in total resource and is targeting 260koz in production in 2023 and ~200kozpa at $804/oz AISC over the first years of production.
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.
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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.
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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%