SP Angel – Morning View – Friday 22 02 19 Asteroid sampling hopes to kickstart interstellar mining

SP Angel – Morning View – Friday 22 02 19

Asteroid sampling hopes to kickstart interstellar mining

MiFID II exempt information – see disclaimer below

   

Amur Minerals* (AMC LN) – Access road capital reduced to $382k/km

Ariana Resources (AAU LN) – Kizilcukur bulk sampling

BlueRock Diamonds* (BRD LN) – Sale of diamonds

KEFI Minerals* (KEFI LN) - £1m equity placing

Vast Resources (VAST LN) – Termination of a convertible loan

 

Asteroid sampling hopes to kickstart interstellar mining

• Japan’s audacious smash-and-grab sampling attempts to reignite the asteroid mining space race, with the Hayabusa 2 probe successfully touching down on the asteroid Ryugu at 11.30pm GMT yesterday.
• The completely autonomous operation fired a 5g tantalum pellet into the asteroid surface at more than 650mph to kick up surface dust with the aim to capture the samples in its underbelly Sampler Horn.
• Hayabusa 2 caught up with Ryugu in June last year after a three-and-a-half-year journey to intercept it. Mission controllers at the Japanese space agency had planned to touch down in October, but delayed the attempt after cameras revealed the surface to be far rockier than expected.
• “We made the ideal touchdown in the best conditions”, Yuichi Tsuda, Hayabusa 2 project manager reported. The probe is seeking to collect up to 10g of dislodged debris thrown up by the impact, before retreating to a safe distance.
• Asteroids form the most primitive building blocks of the solar system, with the mission targeting the source for earth’s water and precious minerals.
• Asteroids also carry organic material that may be important for the emergence of life, with pristine fragments uncontaminated by terrestrial interaction.
• It is believed Ryugu preserved material and gives a chance to study the structure from some 4.6bn years ago. The first of three planned firings on the mission is hoped to “lead to a leap, or new discoveries, in planetary science”.
• The mission with finalise with a surface detonation to reveal fresh internal samples, before returning to the landing site in Woomera, S. Australia – a journey of more than 3bn miles.
• Successful sampling is hoped to be the first small step towards asteroid mining of resources estimated total value of £522 quintillion according to NASA estimates.

 

Is tin the unloved new energy metal?

• Presentation at the Lithium and Battery Material conference held in Perth March 2018 by the head of Rio Tinto’s Venture group revealed tin as the surprising #1 metal impacting new technologies.
• Findings from a Massachusetts Institute of Technology (“MIT”) study indicate the steady, rising trend of tin consumption in electronics and strong new indications of use in emerging technologies. Coupled with a static supply curve, prices are expected to continue strengthening.
• Primary use of tin is in chemical and tinplating industries, with the metals application as an electrical contact material in the form of solder puts tin in centre stage as the world electrifies.
• For instance, tin use as a component in improving the productivity of lead-acid batteries has risen to the 4^th most significant application in the global market. Global consumption climbed to 26,000t annually in 2016 (China 12,000t) in an industry supplied with 280,000t.
• The wildcard battery metal is also yielding very positive properties for inclusion in solid-state batteries utilising ceramic electrolyte.
• The International Tin Association (“ITA”) go further to identify nine technology opportunities for tin in rechargeable batteries, mainly in high-capacity anode electrode materials and sodium-ion chemistries.
• Researchers at the University of Illinois at Urbana-Champaign recently announced a performance break-through for innovative 3D tin electrodes, which offer several times the energy of current commercial iterations.
• The new electrodes use a production-compatible electroplating process to coat a 20% tin layer onto a 3D nickel scaffold. Measured capacity by volume was 1,352 mAhc/m3, approaching ever closer the theoretical capacity for tin of 1,991 mAhc/m3, and 2.5x practical capacity of graphite anodes.
• Prices have steadily climbed, rising from $18,750/t in November 2018 to current levels of $21,275/t – a 13.5% rise.
• The climb appears to be stimulated by the return of instability in the world’s top exporter, Indonesia, as the state-owned PT Surveyor Indonesia is currently being investigated by the police for allegedly “accommodating utilising, processing and refining, transporting (and) selling" minerals from sources without permits. In turn, tin trading was suspended by the Indonesia Commodity and Derivatives Exchange (ICDX) of any material passed through Surveyor Indonesia's books.
• It's a throwback to the past, when the Indonesian government's attempts to tighten its grip on the country's independent tin sector regularly disrupted export flows.
• Indonesia’s shortfall coincided with a major downturn in tin raw material supply from Myanmar, which dominates feedstock for China’s tin smelters over the last five years. Imports of tin concentrates from Myanmar fell by 26% to 184,000t in the first 10 months of 2018.
• Global stockpile tracked lower, falling from 1.9mt in early July 2017 to around 400,000t in November 2018 – resulting from declining grades from newly mined material according to the ITA.
• The significant findings of MIT have a slow burning fuse and aren’t expected to make major structural deficit in the near term. Indeed the ITA aren’t foreseeing widespread adoption of tin-heavy lithium-ion products until 2025-2030 due to the long lead times with emerging technologies.
• Tin is recognised as a strategic mineral, with neither the US or Europe hosting significant mine production. Significant investment and exploration effort is required to avoid losing global control of such as major component of the electrifying economy.

 

Dow Jones Industrials		-0.40%	at	25,851
Nikkei 225		-0.18%	at	21,426
HK Hang Seng		+0.54%	at	28,784
Shanghai Composite		+1.91%	at	2,804
FTSE 350 Mining		-1.91%	at	19,234
AIM Basic Resources		+0.67%	at	2,194

 

Economics

US – President Trump is set to meet Chinese Vice Premier Liu He in Washington today rounding off a week of negotiations between two top level delegations this week.

• The two also met at the end of talks during Liu’s last visit to Washington in late January.
• If the two sides fail to reach an agreement by March 1, US tariffs on $200bn worth of Chinese imports are set to increase to 25% from 10%.
• Sources familiar with negotiations said that among things discussed during the meeting were forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.
• Expectations of a positive outcome for the latest round of negotiations improved following Trump tweet regarding the Huawei crisis which provided a more dovish tone compared to the previous administration stance.
• “I want the United States to win through competition, not by blocking currently more advanced technologies.”
• The US has been previously lobbying its allies no to use Huawei technology in their own telecom networks on cyber security concerns.
• Services industry growth accelerates in February offsetting a  slowdown in the manufacturing sector.
• Composite performance measure climbed to eight month high with respondents highlighting improved domestic economic conditions with new orders up at the strongest pace in four months.
• Private payrolls are climbing at the fastest pace since last September.
• “Historical comparisons suggest the latest survey data are indicative of an underlying economic growth rate of around 2.% annualised, although PMIS is designed to monitor private sector companies so the impact of the government shutdown may not be fully captured,” Markit commented on numbers.
• Markit Manufacturing PMI: 53.7 v 54.9 in January and 54.8 forecast.
• Markit Services PMI: 56.2 v 54.2 in January and 54.3 forecast.
• Markit Composite PMI: 55.8 v 54.4 in January.

 

China – New home prices growth slowed down for a third straight month in January marking the slowest pace in nine months.

• Slowing rates of new home price growth is also bad news for builders, many of which are struggling under huge debt loads, Bloomberg reports.
• Pre-sales proceeds are the industry’s biggest source of funding.
• Prices in so-called Tier 3 and 4 cities climbed 0.65%mom while those in Beijing, Shanghai and other Tier 1 cities were up 0.38%mom.
• Second hand home prices declined in the largest four cities for a fifth straight month.
• New Home Prices (%mom): 0.61 v 0.77 in December.

 

Germany – Q4 economic growth confirmed at 0.0% while on a forward looking front business expectations reflect the weakest sentiment in four year.

• German economy stagnated in the final quarter of 2018 as a drop in inventories wiped out positive contributions from private consumption and business investment with stricter emissions rules.
• On the sentiment note, companies’ assessment of the current situation as well as expectations dropped, Ifo Institute data showed.
• GDP (%qoq): 0.0 v -0.2 in Q3/18.
• Ifo Business Climate: 98.5 v 99.3 in January and 98.9 forecast.

 

UK – The pound is rangebound this morning as the EU chief Brexit negotiator said he does not rule out a delay to the date Britain leaves the bloc.

 

Currencies

US$1.1345/eur vs 1.1352/eur yesterday  Yen 110.75/$ vs 110.76/$  SAr 13.983/$ vs 13.918/$  $1.304/gbp vs $1.307/gbp  0.711/aud vs 0.711/aud  CNY 6.723/$ vs 6.713/$

 

Commodity News

Precious metals:         

Gold US$1,327/oz vs US$1,336/oz yesterday

   Gold ETFs 72.5moz vs US$72.7moz yesterday

Platinum US$831/oz vs US$824/oz yesterday

Palladium US$1,483/oz vs US$1,479/oz yesterday

Silver US$15.91/oz vs US$15.92/oz yesterday

           

Base metals:   

Copper US$ 6,400/t vs US$6,384/t yesterday

Aluminium US$ 1,914/t vs US$1,874/t yesterday

Nickel US$ 13,010/t vs US$12,865/t yesterday

Zinc US$ 2,686/t vs US$2,679/t yesterday

• Zinc held steady as global supply concerns ease on expectations for a rebound in Chinese production. Output for the metal consumed in galvanizing steel is forecast to rise 6mt this year, the highest in two years, as Chinese companies upgrade their facilities, according to Goldman.
• Investors are also trading on expectations for rising Chinese output, lured by strong margins, according to Huatai Futures Co.
• These trends go against other market commentary suggesting environmental curbs will prevent China from raising its output.

Lead US$ 2,071/t vs US$2,038/t yesterday

Tin US$ 21,275/t vs US$21,260/t yesterday

           

Energy:           

Oil US$67.1/bbl vs US$67.0/bbl yesterday

Natural Gas US$2.687/mmbtu vs US$2.681/mmbtu yesterday

Uranium US$28.70/lb vs US$28.70/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$83.1/t vs US$85.2/t

Chinese steel rebar 25mm US$603.2/t vs US$603.1/t

Thermal coal (1st year forward cif ARA) US$79.0/t vs US$79.9/t

Coking coal futures Dalian Exchange US$196.5/t vs US$197.0/t

           

Other:  

Cobalt LME 3m US$31,000/t vs US$31,000/t

China NdPr Rare Earth Oxide US$46,110/t vs US$46,176/t

• Global registration of Hybrid Electric Vehicles (HEVs) rose 7.2% to 2.194m units with 60% of battery capacity deployed as NiMH, 39% as Li-ion and less than 1% lead acid, according to Adamas Intelligence’s “EV Battery Capacity and Battery Metals Tracker”.
• Taking the distribution into account, the research house estimate the mass of rare earth metals increased 8% versus the year prior, giving a robust growth outlook for rare earths.
• This is a positive signal for Mkango Resources who look to build on the 41% upgraded resource statement with the advanced stage Songwe Hill project technical report.

China Lithium carbonate 99% US$10,189/t vs US$10,203/t

• The world’s top lithium producer, Albemarle Corp., calmed market fears of oversupply and slower Chinese demand as it projects 21% annual global growth as the market remains tight for years as manufacturing of electric cars and large-scale batteries soars. Lithium stocks reacted positively, with the company’s shares rising the most in three years.
• The outlook comes little over a week after shares across the industry sold off as producer Livent Corp. reported disappointing results and said customers in China were delaying purchases. Albemarle said it sees no evidence of a slowdown, with sales of new-energy vehicles doubling in China last year and indications that demand for electric cars will continue to benefit from government incentive programs in the Asian nation.
• The growth forecast arrives as Wisdom Intelligence and Technology report production capacity in lithium compounds to outpace demand through 2019, dragging down prices. Lithium carbonate price in China likely to fall to about $10-$12/kg this year, lithium hydroxide to decline to $13-$15/kg; import prices in 2018 were $14.76/kg for lithium carbonate, $15.39/kg for lithium hydroxide.
• Global sales of electric vehicles soared 98% during the fourth quarter, Albemarle Chief Financial Officer Scott Tozier reported during a conference call. The number of available plug-in hybrids and battery-electric models announced by automakers for 2021 has grown by almost 40% since mid-2017. As a result, demand for lithium carbonate equivalent will be about 475,000t by 2021 and 1mt by 2025, he said.
• “The momentum around electric vehicles has continued to accelerate,” Tozier said. “The demand curve has shifted higher and steepened.”

China Ferro Vanadium 80% FOB US$71.3/kg vs US$71.3/kg

China Antimony Trioxide 99.5% EU US$6.9/kg vs US$6.9/kg

Tungsten APT European US$260-270/mtu unchanged from previous week

 

Battery News

More flexible nanomaterials can make fuel cell cars cheaper

• A new method of increasing the reactivity of ultrathin nanosheets, just a few atoms thick, can someday make fuel cells for hydrogen cars cheaper, finds a new Johns Hopkins study.
• A report of the findings offers promise towards faster, cheaper production of electrical power using fuel cells, but also of bulk chemicals and materials such as hydrogen.
• Researchers estimate that their new method can increase catalyst activity by 10 – 20x, using 90% less of precious metals than what is currently required to power a fuel cell.

 

Electric car batteries inspire safer, cheaper way to make compounds used in medicines

• Inspired by the refined electrochemistry of electric car batteries, scientists have developed a battery-like system that allows them to make potential advancements for the manufacturing of medicines.
• Their new method avoids safety risks associated with a type of chemical reaction known as dissolving metal reduction. 
• Their method would offer significant advantages over current methods of chemical manufacturing, but until now, has largely been sidelined due to safety considerations.

 

Company News

Amur Minerals* (AMC LN) FOLLOW3.0p, Mkt Cap £21.0m – Access road capital reduced to $382k/km

• The Company released an updated capital cost for access road linking 338km between the BAM rail line and the Kun Manie nickel/copper project.
• The updated estimate based on a one lane design prepared by Dalgeoproekt, an experienced local road construction company in Khabarovsk region, amounted to $382,000/km.
• This takes total road capex estimate to $129m, down from previous estimated range of $169-338m for a two-lane road.
• The downsized design accounts for appropriate turnouts for passing while maintaining the required transport capacity for planned 400kt of concentrate per annum from the site to the rail side and 100kt of supplies back to the mine site.
• Dalgeproekt estimate has been reviewed by an independent Qualified Person and has now been included into the PFS update.
• “Confirmation of the ability to shift to the lower cost, one lane option is a significant change in the operating configuration planned for Kun Manie,” the Company commented on the news.

Conclusion: A reduction in the capex estimate for one of the capital intensive items is a major positive for Kun Manie and is expected to translate into improved economics of the project. The reduction is mainly driven by switching from a two lane to a single lane option, while the new estimate also appears to account for local inflation since the previous estimate was released (from $440k at 25RUB/USD to $382k at an assumed current 65RUB/USD).

*SP Angel act as Nomad and Broker to Amur Minerals

 

Ariana Resources (AAU LN) FOLLOW1.975p, mkt cap £20.9m – Kizilcukur bulk sampling

• Ariana Resources reports that the Kiziltepe mine, 50% owned by Ariana as part of the Red Rabbit joint-venture, produced a total of 7,517oz of gold during the three months ending 31^stDecember 2018 at an estimated cash cost of US$349/oz based on the contribution of a “significant by-product silver credit” arising from the production of almost 91,000oz of silver during the quarter.
• The quarterly production resulted from the processing of 49,717t of ore at an average head grade of 5.23g/t gold.
• The mine produced a total of 27,110oz of gold during the full year generating US$37.8m in gross revenue. Reported recovery rates for gold “remain high at c92% at the end of the quarter”.
• Commenting on the consequences of what he described as “the excellent performance of the Kiziltepe Mine achieved during the prior two quarters”, Managing Director, Dr. Kerim Sener, explained that “at the end of the quarter, 50% of the JV construction capital loan of US$33 million has been repaid, with the remaining balance to be repaid largely during 2019. Monthly intercompany loan repayments from the JV to our wholly owned subsidiary, Galata Madencilik San. ve Tic. Ltd., reached approximately US$2.1 million by the end of 2018."

 

BlueRock Diamonds* (BRD LN) FOLLOW0.285p, Mkt Cap £1.8m – Sale of diamonds

• BlueRock Diamonds reports the sale of two “D” colour diamonds recovered from its Kareevlei mine earlier this month.
• An 8.97 carat  diamond was sold for $74,513 or $8,306/carat while a larger, 16.28 carat stone realised $78,947 or $4,849/carat.
• CEO, Adam Waugh, characterised the sale as “further strengthening our confidence in the potential of the Mine and the quality of diamonds it produces.”
• During January, the company reported that the Kareevlei mine sold a total of 5,805 carats of diamonds during FY 2018 at an average price of $332/carat. The recovery of even relatively few larger, higher value stones, though probably a relatively unpredictable event, has the potential to enhance revenues.
• Conclusion: The sale of the two larger diamonds from Kareevlei demonstrates the potential to enhance the mine’s revenues through the recovery of similar stones.

*SP Angel acts as Nomad & Broker to BlueRock Diamonds

 

KEFI Minerals* (KEFI LN) FOLLOW1.7p, Mkt Cap £9.9m - £1m equity placing

• The Company raised £969k issuing 57m new shares at 1.7p to fund working capital needs of both KEFI and the Project.
• The team highlighted strong intention of all parties involved in the project to trigger the project development schedule at the end of the current quarter including KEFI, Ethiopian government, ANS and three principal project contractors (AMS, Lycopodium, MKS/PAMP).
• As previously announced, Ethiopian authorities launched project-engineering works for the $20m equity share of offsite infrastructure including power supply and road access.
• Local project partner ANS increased its total commitment from $30m to $38m taking future equity stake in the Tulu Kapi project further reducing its financing risk.

Conclusion: The raise provides liquidity for the Company to continue advancing the project towards the start of development works. Start of relocation is expected in Q1/19 that should also coincide with the release of $9m ANS equity investment in the Tulu Kapi.

*SP Angel act as Nomad and Broker to KEFI Minerals

 

Vast Resources (VAST LN) FOLLOW0.19p, Mkt Cap £11.3m – Termination of a convertible loan

• The Company has terminated the Bergen convertible loan facility as of 21 February.
• No further funding will be provided to the Company under the terminated agreement.

  

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

Phil Smith (Technology) – 0203 470 0475

Zac Phillips (Oil & Gas) – 0203 470 0481

 

Sales

Richard Parlons – 0203 470 0472

Jonathan Williams – 0203 470 0471

 

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*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.

 

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