SP Angel . Morning View . Tuesday 25 10 22
Gold holds ground as traders weigh up Fed’s options before rate decision next week
MiFID II exempt information – see disclaimer below
Private Zambian copper exploration opportunity
- We are looking for investment into a private copper explorer with four highly prospective licences in Zambia, near major mines or significant exploration targets.
- One license is contiguous with First Quantum’s Sentinel copper and Enterprise nickel mines which whom they have a Technical Cooperation Agreement.
- Historic drilling on the licence includes 0.7% copper over 1m and 0.2% nickel over 3m. Geophysics in 2021 & 2022 advanced project toward identifying drill targets.
- A large licence with multiple copper targets. Samples from small artisanal mines assayed 15.8% copper, 0.57g/t gold and 4.87% copper, 18.3 g/t gold.
- A highly prospective licence acquired in 2022 on the Western Foreland trend which hosts the giant Kamoa-Kakula mine.
- IPO documentation has been prepared for listing when market conditions improve.
- All licences are 100% owned with Zambian partners significant shareholders in the company.
BlueJay Mining PLC (AIM:JAY, OTCQB:BLLYF)* – Rob Edwards takes over as Executive Chairman
Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF)* – Valuation 23p – Kiln 3 drives performance through the third quarter for Bushveld
Chaarat Gold Holdings Ltd (AIM:CGH) – Suspension on the back of a potential reverse takeover of Lydian gold assets in Armenia
Empire Metals Ltd (AIM:EEE)* – Large magnetic anomaly identified at Pitfield
Harmony Gold (NYSE:HMY) – Acquisition of Eva Copper project, Australia
Jubilee Metals Group PLC (AIM:JLP, JSE:JBL, OTC:JUBPF) – FY 2022 operational results highlight growing potential in S Africa and Zambia following expansion of operations
KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF)* – Q3 update covers development progress at precious and base metals assets in Ethiopia and Saudi Arabia
Omico Mining (Private) – Ingo Hofmaier named CEO
Petra Diamonds Limited (LSE:PDL, OTC:PDLMF) – Q1 2023 operational performance maintains existing production guidance
Power Metal Resources PLC (AIM:POW)* – Geophysics continues to identify drill targets at Molopo
SolGold PLC (LSE:SOLG, TSX:SOLG, OTC:SLGGF)* – Board appointments
Sunrise Resources PLC (AIM:SRES) – Trenching programme approved at the Pioche Sepiolite project, Nevada
Iron ore weakens to yearly lows as China’s demand issues intensify
- Iron ore fell 1% to $90/t and c.3% in Singapore to $88.20/t.
- Iron ore prices have now fallen over 50% from March peaks.
- Chinese demand continues to weigh on prices, with home prices falling for the 13th month in China.
- Steel inventories continue to expand, with major Chinese steel mills seeing stockpiles up 8.6% in mid-October mom (50% higher than in January).
Gold – Gold holds ground as traders weigh up Fed’s options before rate decision next week
- Gold has been flat over the last 24 hours, alongside a rangebound dollar index and UST yields.
- US Treasury yields have softened slightly following a face-ripping rally, sliding 300bp from their peak at 4.31%.
- Soaring treasury yields have been gold’s primary adversary this year, forcing bullion down 20% from March peaks whilst 10-year yields rallied 155%.
- The market currently expects the Fed to start cutting rates in May 2023, at 4.9% from the current 3.1%.
- A 75bp hike is fully priced in for next week, and another 75bp hike in December is likely, however the market is ramping up bets on a 50bp in Dec. instead.
- Some dovish comments have been made by Fed officials in recent weeks, however sentiment is still firmly in the hawkish camp, weighing on gold prices.
China looks to increase Russian copper purchases to ease anticipated premium hike impact, Reuters
- Chinese copper buyers are expected to boost purchases of Russian copper next year.
- This follows expectations of premiums in China hiking to $150/t-$210/t vs 2022’s $105/t and 2021’s $88/t.
- Codelco hiked their premium for 2023 by 83% to $234/t.
- Russia accounted for 11% of China’s copper imports last year, but this has jumped to 22% over the past few months.
- Chinese buyers paid $141/t less to Russian sellers than to Chile’s producers.
Lead / Zinc - Analysts forecast lead/zinc deficit for 2022/2023 on European production hit
- The International Lead and Zinc Study Group expect global demand for lead to exceed supply by 83kt this year.
- A smaller deficit of 42kt in 2023 is expected.
- Output for refined lead has been hit by conflict in Russia and Ukraine alongside Europe’s gas crisis.
- Zinc is forecast to be in a 297kt supply deficit in 2022 and a 150kt deficit in 2023. Production has been hit hard by smelter shutdowns across Europe.
Dow Jones Industrials +1.34% at 31,500
Nikkei 225 +1.02% at 27,250
HK Hang Seng -0.02% at 15,178
Shanghai Composite -0.04% at 2,976
Economics
China - Yuan hits 2007 lows on Xi-induced pessimism
- The Yuan / Renmimbi fell 0.6% against the dollar to CNY7.3084 vs the dollar.
- The currency has now fallen 13% this year and the recent sell-off followed a 7% decline in the major Hang Seng index.
- Traders are losing faith in China following Xi’s radical shake up at the National Congress. The leader used the meeting to fill the Politburo with loyal hardliners committed to Zero Covid and unfriendly market policies.
- The PBoC reacted by moving the upper limit for cross-border financing this morning, with the aim of boosting foreign capital inflows.
US – Flash PMI data point to a contraction in the first month of the quarter with inflationary pressures persisting, although, labour market starts to feel the pressure of weakening growth outlook.
- New orders are now falling again with both manufacturing and services sectors reporting declines.
- Final goods inflation eased to the lowest since Dec/20, although remained higher than the long run series average.
- Employment was largely unchanged as firm pared back hiring amid weaker demand.
- “The surveys… present a picture of the economy at increased risk of contracting in the fourth quarter at the same time that inflationary pressures remain stubbornly high… however, there are clearly signs that weakening demand is helping to moderate the overall rate of inflation, which should continue to fall in the coming months, especially if interest rates continue to rise”, Markit commented on the data.
- Manufacturing PMI: 49.9 v 52.0 September and 51.0 est.
- Services PMI: 46.6 v 49.3 September and 49.5 est.
- Composite PMI: 47.3 v 49.5 September and 49.2 est.
Germany – Business confidence remained subdued with the IFO headline index coming in unchanged at 84.3 in October matching the previous month’s reading, the weakest since depths of the pandemic.
- Both subindices of current assessment and expectations were equally depressed on the back of energy costs squeeze and higher interest rates.
- IFO Current Climate: 94.1 v 94.5 September and 92.5 est.
- IFO Expectations: 75.6 v 75.2 September and 75.0 est.
UK – Rishi Sunak, the new Conservative party leader, will be officially appointed as UK PM later this morning when he meets King Charles III.
Nicaragua – US sanctions target gold industry in move against President Ortega
- The US Government has signed an executive order enabling the US to target specific sectors of the Nicaraguan economy in response for the country repressing its own people.
- Initial actions are focusing on the gold mining sector, by blacklisting the state gold mining company.
- The order makes it illegal for Americans to do business with Nicaragua’s gold industry.
Currencies
US$0.9861/eur vs 0.9848/eur yesterday. Yen 148.94/$ vs 149.13/$. SAr 18.470/$ vs 18.235/$. $1.129/gbp vs $1.135/gbp. 0.633/aud vs 0.632/aud. CNY 7.306/$ vs 7.259/$
Dollar Index 112.09 / -0.03% on week
Commodity News
Nickel tycoon ‘Big Shot’ to add to short position, brokers cautious following unprecedented short squeeze
- Xiang Guangda, the protagonist of the record LME nickel short squeeze earlier this year, is in talks with brokers to add to his short positions on the metal.
- The tycoon is the world’s largest producer of nickel and stainless steel, and is aiming to hedge his own output of nickel. (Bloomberg)
- Trading volumes on the LME nickel contract have collapsed following the short squeeze, with Guangda’s firm Tsingshan mostly unable to resume trading activity.
- Tsingshan has cut its nickel short position from 150kt to 20kt but is now looking to increase short exposure.
- Brokers including JP Morgan are reportedly reluctant to involve themselves with Big Shot again following the chaos in March.
Precious metals:
Gold US$1,649/oz vs US$1,654/oz yesterday
Gold ETFs 95.5moz vs US$95.5moz yesterday
Platinum US$923/oz vs US$936/oz yesterday
Palladium US$1,993/oz vs US$2,044/oz yesterday
Silver US$19.20/oz vs US$19.20/oz yesterday
Rhodium US$14,100/oz vs US$14,100/oz yesterday
Base metals:
Copper US$ 7,523/t vs US$7,571/t yesterday
Aluminium US$ 2,176/t vs US$2,219/t yesterday
Nickel US$ 21,960/t vs US$22,475/t yesterday
Zinc US$ 2,950/t vs US$2,989/t yesterday
Lead US$ 1,881/t vs US$1,922/t yesterday
Tin US$ 18,340/t vs US$18,525/t yesterday
Energy:
Oil US$93.1/bbl vs US$92.8/bbl yesterday
- Crude oil prices continue to trade in a narrow range as market sentiment is pulled by the opposing global forces of falling demand growth forecasts and tightening supply.
- Near-term European energy prices fell below €100/MWh as strong gas storage numbers and continued mild weather across the continent reduces demand.
- China’s natural gas imports, via pipeline or LNG, during the January-September period were down 9.5% y/y to 81.2mt, according to the country’s customs department.
Natural Gas US$5.173/mmbtu vs US$4.830/mmbtu yesterday
Uranium UXC US$53.35/lb vs US$53.05/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$90.5/t vs US$91.4/t
Chinese steel rebar 25mm US$541.3/t vs US$548.8/t
Thermal coal (1st year forward cif ARA) US$270.0/t vs US$270.0/t
Thermal coal swap Australia FOB US$383.0/t vs US$394.0/t
Coking coal swap Australia FOB US$311.0/t vs US$311.0/t
Other:
Cobalt LME 3m US$51,955/t vs US$51,955/t
NdPr Rare Earth Oxide (China) US$91,377/t vs US$91,973/t
Lithium carbonate 99% (China) US$73,991/t vs US$74,474/t
China Spodumene Li2O 5%min CIF US$5,800/t vs US$5,800/t
Ferro-Manganese European Mn78% min US$1,218/t vs US$1,217/t
China Tungsten APT 88.5% FOB US$32.0/kg vs US$32.0/kg
China Graphite Flake -194 FOB US$860/t vs US$860/t
Europe Vanadium Pentoxide 98% 7.4/lb vs US$7.3/lb
Europe Ferro-Vanadium 80% 30.65/kg vs US$30.65/kg
China Ilmenite Concentrate TiO2 US$307/t vs US$309/t
Spot CO2 Emissions EUA Price US$67.9/t vs US$67.0/kg
Brazil Potash CFR Granular Spot US$620.0/t vs US$620.0/t
Battery News
China EV registrations rose 10.2% in September
- Battery electric vehicle registrations rose to 406k vs 368k the month prior.
- BEV made up 21.8% of all newly registered vehicles in September.
Company News
BlueJay Mining PLC (AIM:JAY, OTCQB:BLLYF)* 5.69p, Mkt cap £60m – Rob Edwards takes over as Executive Chairman
- Bluejay Mining reports the appointment of Rob Edwards as its new Executive Chairman.
- Edwards is a seasoned mining professional, formerly at Sierra Rutile, Norilsk Nickel.
- Rob Edwards was closely involved with the sale of Sierra Rutile to Iluka Resources for US$285m in 2016 and his expertise is directly relevant to the Dundas ilmenite project in Greenland as well as exploration for a Norilsk-style nickel discovery at Disco further to the south.
- Rob is also a non-executive director at ASX-listed Sandfire Resources and for Chaarat Gold on AIM.
Conclusion: Rob Edwards is a great fit for a leading executive role at Bluejay. There can be few if any other mining experts with direct experience of titanium mineral sands and Norilsk-style nickel projects in an industry where many are shaped by the nature of the projects they work on.
*SP Angel acts as nomad and broker to Bluejay Mining. The analyst holds shares in Bluejay Mining
Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF)* – 4.65p, Mkt cap £60m – Kiln 3 drives performance through the third quarter for Bushveld
Valuation 23p
- Bushveld report a 52% increase in Q3 production to 1,016mtV vs 668mtV in Q2 supported by improved performance at the newly refurbished Kiln 3 at Vanchem.
- Group Q3 production was slightly lower yoy due to Vametco which .
- Cash costs fell to $29.3/kgV for Q3 2022 vs Q2 2022 at $31.0/kgV on higher production but were $2.5/kgV 8.5% higher yoy for the quarter.
- Vaemtco kiln recoveries fell to 70.3% in Q3 from 77% in Q2 and 72,9% for the year-to-date accounting for the rise in costs.
- Vanchem kiln recoveries dipped to 71.4% in Q3 vs 72.8% in Q2
- Sales: Bushveld saw a significant 24% increase in sales to 1,034mtV in Q3 vs 787mtV in Q2 and 857mtV in Q1.
- Sales generally lag production by around four to six weeks indicating that around half Q4s increased production will be sold in Q1 2023.
- Guidance: for the full year has been maintained at 3,900-4,100mtV requiring the group to do 1,243-1,443mtv in the fourth quarter.
- Management state the group remains “On track to achieve an annualised steady state production run rate of 5,000 mtVp.a. - 5,400 mtVp.a. by the end of 2022.”
- Loadshedding: Fortune Mojapelo, Bushveld’s CEO, highlights the severity of the loadshedding in South Africa through the third quarter with 75 events totalling 218 hours.
- The loss of power limited Vanchem more than Vametco due to the nature if its connection to the grid with September proving to be the worst month for losing grid power.
- “The near-term prognosis from Eskom does not indicate significant improvement and at Vanchem, where we are primarily affected, we will continue to use diesel generators during loadshedding periods.”
- “Despite these challenges, we remain on track to achieve our annualised steady state production target by the end of 2022, as well as our cost guidance for each asset.".
- Forex: Q3 saw a significant fall in the rand to 17/USD from 15.5 in Q1. The South African rand continues to depreciate to 18.45/USD today.
- The weaker rand is able to offset much of the rise in energy and other raw material costs and we expect the ongoing depreciation of the rand to have a positive impact on earnings going forward.
- Vanadium prices:
- US ferro-vanadium prices have risen recently to US$39.75 for 80% V.
- Chinese ferro vanadium prices rose by 29% to CNY185,500/kgV ($254/kgV) since the start of August.
- European Ferro-Vanadium (80%) are 9% lower at 30.65/kg since the first of August
- Valuation: Our NPV valuation on our forecast Bushveld cash flows values the group at 23p. This includes ~10p/s for the electrolyte plant being built by Bushveld Energy. We see the future rollout of VRFB ‘Vanadium Redox Flow Batteries’ in South Africa for the storage of renewable energy in as a significant driver for vanadium pentoxide demand for the business going forward.
- Vametco’s solar PV mini grid, should provide an important demonstration site for other South African businesses to follow.
Conclusion: Bushveld management are working toward the production of 5,000-5,400mtVpa next year. The team have also worked out a route to 8,000mtVpa in a previously published four stage plan.
Rising production alongside the long-awaited collapse of the South African rand is offsetting rising power and material costs while rising vanadium prices in the US and China offer the prospect for stronger earnings to come.
(Dec year end) US$ 2019 2020 2021 2022E 2023E 2024E
Vanadium price $/kg 55 25 37.6 40 38 40
Vanadium Production mtV 1,859 2,685 3,592 3,942 5,082 5,194
Vanadium Sales mtV 2,392 3,842 3,314 3,942 5,260 5,194
Sales+ $m 116.5 90.0 106.9 161.0 204.1 212.1
Cost of Sales $m -45.8 -73.4 -83.4 -108.5 -129.2 -131.6
Admin costs $m -38.1 -31.5 -20.9 -18.4 -17.7 -17.8
-
Other costs $m -4.2 -5.5 -12.5 -15.7 -20.6 -20.8
Depreciation $m -10.4 -17.9 -19.4 -18.5 -20.0 -20.0
Operating profit $m 22.3 -32.8 -29.3 15.5 37.2 42.7
Finance & other $m 1.9 -4.7 -11.3 -10.7 -9.9 -5.4
Pre-tax profit $m 83.3 -37.5 -46.8 4.7 27.3 37.3
Tax $m -14.0 0.5 4.7 -1.9 -1.9 -4.7
Post-tax profit $m 69.2 -37.0 -42.1 2.9 25.4 32.6
EPS $c/s 5.51 -4.22 -0.66 0.55 1.10
PE x 6.4 - - - 8.4 4.2
EV/EBITDA x 13.6 - - 4.4 2.6 2.3
EBITDA $m 28.4 -20.4 -7.5 18.3 36.6 42.0
Chaarat Gold Holdings Ltd (AIM:CGH) SUSPENDED – Suspension on the back of a potential reverse takeover of Lydian gold assets in Armenia
- The Company announced yesterday it was in discussions with Lydian Canada Ventures Corporation regarding the potential acquisition of Lydian Armenia CJSC.
- Due to the size of the potential acquisition and the likely share consideration of the deal, the proposed acquisition would constitute a reverse takeover.
- Lydian
- The Amulsar Project is a gold open pit heap leaching development asset located in the southeastern Armenia, ~10km away from the town of Jermuk.
- Project construction works started in late 2016 but development was suspended in mid-2018 following local protests on the back of a potential environmental damage.
- The latest FS on the project envisaged a 205kozpa operation with a 12-year life of mine.
- The project hosts 119mt at 0.74g/t for 2.8moz in reserves and 248mt at 0.63g/t for 5.0moz in resources (inclusive of reserves).
- The capex was estimated at ~$530m with ~$360m of that already spent and $170m remaining to complete construction.
Empire Metals Ltd (AIM:EEE)* 0.975p, Mkt Cap £4.2m – Large magnetic anomaly identified at Pitfield
- Empire reports that following an expert review on the Pitfield Copper Project, the project has the potential to host a “giant” copper mineralised system, potentially containing multiple sediment-hosted stratabound copper (SSC) deposits.
- The project lies within the Yandanooka Basin, which is known to host widespread copper, silver, nickel and zinc anomalism.
- According to the review, a large, oxidised fluid event has occurred, extending over 40km N-S, which upon contact with reductants within the upper siltstones/sandstones resulted in the copper precipitating and depositing along the reduced stratigraphic layers.
- The project remains early stage and requires further surface exploration work to define the geochemical and geophysical anomalies.
*SP Angel acts as nomad and broker to Empire Metals
Harmony Gold (NYSE:HMY) ZAR 4,879, Mkt Cap ZAR30,156m – Acquisition of Eva Copper project, Australia
- Harmony has purchased the Eva Copper Project and surrounding exploration tenements for an upfront $170m plus a maximum of $60m in add-ons later.
- The project is thought to have a capex of ~$600m, with commissioning expected to take 2 to 3 years.
- The project is expected to yield ~45,000tpa of copper and 14,000oz of gold per year over an expected mine life of 15 years.
- The acquisition is Harmony’s first investment into Australia, with other operations in South Africa and PNG.
Jubilee Metals Group PLC (AIM:JLP, JSE:JBL, OTC:JUBPF) – 11.65p, Mkt cap £329m – FY 2022 operational results highlight growing potential in S Africa and Zambia following expansion of operations
- Jubilee Metals reports an after-tax profit of £18.4m for the year to 30th June 2022 (2021 – profit £40.2m) and EBITDA for the year of £37m (2021 - £45m).
- The results are dominated by the £18.8m contribution of the group’s platinum group metals/ chrome operations which “delivered on its targeted production for PGM (41,586 ounces), chrome (1,222,452 tonnes)” following the expansion of the Inyoni operation which was completed in March 2022.
- In Zambia, “construction of the new Roan copper concentrator … [was completed in July] … and commissioning and ramp-up … [started] … in July 2022 reaching nameplate throughput rates during September 2022”.
- Describing the past year as “transformative” for Jubilee, incoming Chairman, Ollie Oliveira, said that “The Group has built a very strong track record in South Africa and has started rapidly expanding in both South Africa and now Zambia … [and that] … a strong growth platform has been created, with exciting projects in both countries for us to pursue” .
- CEO, Leon Coetzer explained that “The Inyoni processing facility refurbishment benefited from the scale of operations as best reflected in our second half of FY2022 with earnings per PGM ounce increasing by 20% to US$1,316 from the first half of FY2022”.
- Describing the completion of the Roan Concentrator in Zambia Mr. Coetzer said that it was a significant step in implementing the “Southern Copper Refining Strategy” and that the results to date are “a mere demonstration of the potential for a much greater footprint in the country in the years ahead”.
KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF)* 0.6p, Mkt Cap £23m – Q3 update covers development progress at precious and base metals assets in Ethiopia and Saudi Arabia
- The Company provided a quarterly operations update on its portfolio of development and exploration assets in Ethiopia and Saudi Arabia.
- At Tulu Kapi, the team continued to prepare for project launch with updated project funding expected to be agreed mid-November 2022 allowing to launch development works later in 2022.
- Project capex has been revised up 7% to $320m (excluding mining fleet costs covered by the contractor) accommodating for inflationary pressures in the industry.
- Higher capital cost is planned to be covered within the planned syndicate.
- The Company highlighted that the Ministry of Mines is regularly being advised on the project progress and the tasks outstanding to ensure compliance with the license.
- The team held a three-day workshop with various local government agencies and community representatives in September agreeing on project action plans including the implementation of the first phase of the community resettlement and upgrading of security protection as the movement of people increases.
- At Hawiah, the Company continues to progress the PFS with targeted completion in Q4/22.
- Having secured new exploration license over the Jibal Qutman project area, the Company is planning to launch onsite works collecting data for the ongoing FS managed by Lycopodium (ASX:LYL).
- The field programme will include the construction of the pioneer’s camp, environmental baseline studies, as well as geotechnical and metallurgical diamond drilling.
- The team is studying the potential to start up a conventional open pit/CIL operation that is targeted to deliver +500koz over 10 year life of mine.
- The plan is to proceed with Mining License application and funding in early 2023 with a potential commissioning of the operation in late 2024.
- The team will hold a presentation and live webinar tomorrow at 16.30 London time via the Investor meet company.
*SP Angel act as Nomad to KEFI Gold and Copper
Omico Mining (Private) – Ingo Hofmaier named CEO
- Ingo Hofmaier has been named CEO of Omico Mining Corp, currently developing the Omitiomire Copper Project in Namibia.
- Ingo was most recently CFO of London-listed SolGold, and he is also an independent board member of First Tin.
- The Omitiomire project has a M&I Resource of 95.8mt at 0.59% Cu for 563,300t contained copper, at a 0.25% Cu cut-off grade.
- Omico’s earn-in partner, Greenstone Resources, is committed to investing $5m to take the study to BFS level for 51% of the project, expected to be completed by H2 2023.
- Once operational, the company is targeting 30ktpa of copper cathode for at least 15 years, with capex of ~$250m.
Petra Diamonds Limited (LSE:PDL, OTC:PDLMF) 110p, Mkt Cap £223m – Q1 2023 operational performance maintains existing production guidance
- Petra Diamonds reports that it produced 763,222 carats of diamonds during the 3 months to 30th September and that it is maintaining its existing production guidance range of 3.3-3.6m carats for FY 2023 although it is now expected to be delivered at the lower end of the range.
- The Cullinan mine produced 368,796 carats during the quarter with an additional 26,790 carats recovered from tailings with the Finsch mine contributing 260,277 carats plus 3,160 carats from tailings.
- The Williamson mine in Tanzania produced 100,750 carats with Koffiefontein in S Africa producing 3,253 carats from the mine and 255 carats from tailings.
- The company has previously indicated that it expects the 3.3-3.6m carats production level to be maintained into FY 2024 before increasing to 3.6-3.9m carats in FY 2025.
- Petra Diamonds explains that quarterly “Production was down 13% YoY … due to lower grades at Cullinan Mine and Finsch but 2% higher than Q4 FY 2022”.
- Operations at both the Cullinan and Finsch mines are now expected to perform at the lower end of the current guidance range this year.
- The company’s FY2022 results investor presentation contains guidance for the Cullinan mine of 1.61-1.785m carats of production this year with Finsch producing between 1.276-1.395m carats.
- Williamson mine “production guidance … [remains] … unchanged” in the range 319-358,000 carats.
- The company explains that it “has been exploring options for a responsible exit at Koffiefontein, as the mine approaches the end of its mine plan”. Reporting that it has yet to identify a suitable buyer, it says that it is “exploring alternative options in close consultation with its stakeholders” and will update its production guidance “once a decision on the way forward has been reached”.
- Commenting on the background to the diamond market, “and the impact of sanctions on Russian producers as well as the ongoing implications of COVID-19 on demand in China” Petra Diamonds explains that “the supply and demand fundamentals in the diamond market remains unchanged and we anticipate it to remain supportive going forward, although we expect some short-term volatility driven largely by the ongoing lockdowns in China”.
- Reflecting on the company’s gross debt, Petra Diamonds says that it “reduced by US$143.6 million during the quarter, with a further US$1.0 million shortly after period end through the successful tender offer to repurchase second lien notes”.
- The US$143.6m debt reduction is expected to “save Petra some US$14m in annual interest payments”.
Power Metal Resources PLC (AIM:POW)* 1.35p, Mkt Cap £22m – Geophysics continues to identify drill targets at Molopo
- Power Metal reports that the latest geophysics work undertaken at the Molopo Farms Complex in Botswana has identified a geophysical electromagnetic ‘superconductor’ at target area T1-14.
- The company notes that conductance readings from this latest survey are akin to that of massive sulphides, and as a result, the target has been upgraded to priority status and will be subject to diamond drilling in the coming weeks.
- The reading is the strongest moving loop electromagnetic (MLEM) conductor identified on the Project to date.
- Ground MLEM and airborne EM data is interpreted to show a geological contact zone between mafic/ultramafic magmatic intrusive rocks and potentially sulphur rich sedimentary rocks
- The target will be drilled following the completion of diamond drillholes DDH1-6B and DDH1-6B(2), both targeting the conductor identified within target area T1-6.
*SP Angel acts as nomad and broker to Power Metal
SolGold PLC (LSE:SOLG, TSX:SOLG, OTC:SLGGF)* 15.7p, Mkt Cap £360m – Board appointments
- Solgold has announced the appointment of two independent non-executive directors nominated by Cornerstone Capital following the agreed merger with Cornerstone announced earlier this month.
- Mining engineer and former CEO of “both Guyana Goldfields Inc. (TSX:GUY) and Allied Nevada Gold Corp., as well as Chief Operating Officer at Kinross Gold”, Scott Caldwell, brings over 40 years of international operating experience which includes the “design and operation of several open cut and block cave copper-gold mines around the world including at Freeport-McMoRan's Grasberg project in Indonesia and the Collahuasi copper operation in Chile”.
- This experience appears to align well with the planned block-caving mining method envisaged by Solgold at Alpala in northern Ecuador.
- In addition, former investment banker, Dan Vijcic, who will also join Solgold’s Audit & Risk Committee, joins the Board from Metals Acquisition Corp, described as “an NYSE listed Special Purpose Acquisition Vehicle … which is currently finalising the acquisition of the CSA Copper Mine from Glencore”.
- Mr Vijcic, who is an Arthur Anderson trained CA, “was instrumental in leading First Quantum Minerals (TSX:FQM) Ltd.'s C$5 billion acquisition of Inmet Mining (TSX:IMN) Corporation, which held the Cobre Panama porphyry copper-gold project in Panama, central America”.
- Welcoming the appointments, Liam Twigger, Chair of Solgold, said that the “appointments will contribute to the SolGold Board's significant experience and diverse skillset adding further executive leadership, block cave mining and broader investment and finance expertise”.
Conclusion: The latest appointments bring additional, relevant expertise to Solgold following the recently announced friendly merger with Cornerstone Capital as the company focuses on the development of Cascabel and the other Ecuadorian projects and progressing Alpala towards production.
*SP Angel acts as Financial Advisor to SolGold
Sunrise Resources PLC (AIM:SRES) 0.13p Mkt Cap £4.6m – Trenching programme approved at the Pioche Sepiolite project, Nevada
- Sunrise Resources reports that the US Bureau of Land Management has issued the required approvals to allow its trenching programme at the Pioche Sepiolite project to start this week.
- The programme of up to 2km of excavator trenching is intended to “better expose and sample the mapped sepiolite deposits”.
- Work will be undertaken by Tolsa, the “world's largest producer of sepiolite” as part of its June 2022 option agreement with Sunrise Resources which grants Tolsa “a 6-month option to purchase the Pioche Project for $1.25 million and an ongoing payment to Sunrise of a 3% royalty”. The option agreement “may be extended for a further 12 months on payment of $50,000 to Sunrise within the option period” which expires in late December.
- Sepiolite is a specialised magnesium silicate clay mineral, also sometimes known as meerschaum, and its uses include products for the absorption of industrial spillages and in waste treatment and for pet litter
- While he confirmed that Sunrise Resources’ “focus remains on the CS and Hazen pozzolan projects” Executive Chairman, Patrick Cheetham said that “We are pleased that the Pioche Project continues to advance at a fast pace and we look forward to the results from this next stage of evaluation”.
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The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
Analysts
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
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+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
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