SP Angel – Morning View – High tech economy transition will be underpinned by copper
Paul Kettle
SP Angel Research Note -4 min read
09:41, 11th April 2019

SP Angel – Morning View –Thursday 11 04 19

High tech economy transition will be underpinned by copper

MiFID II exempt information – see dsclaimer below 

Avesoro Resources (ASO LN) – 2019 production guidance maintained despite lower plant throughput in Q1

Gulf Mining Group – looking to triple ferrochrome smelter capacity in the Sohar freezone

Keras Resources* (KRS LN) – BUY, Target price 1.04p – Calidus Resources confirms wide outcrop of gold mineralisation in centre of 1.25moz resource

Phoenix Global Mining* (PGM LN) – Consultant geologist highlights the potential of the Empire mine

Strategic Minerals* (SML LN) – Initial copper production from Leigh Creek and Cobre quarterly sales

Vast Resources* (VAST LN) – Financing update

Walkabout Resources* (WKT AU) – Binding global sale, purchase and marketing agreement

 

China – government agency proposes full ban on bitcoin mining

  • China’s National Development and Reform Commission is also proposing the banning or restriction of some 450 other activities.
  • The agency is looking to ban or restrict activities that infringe laws, waste resources, are unsafe or pollute the environment.
  • On that basis we would expect the agency to further restrict many other small-scale and environmentally harmful mines and smelters in China.
  • Rare Earth Element mining and processing is particularly toxic as are many other metal processing facilities in China.

 

Dow Jones Industrials

 

+0.03%

at

  26,157

Nikkei 225

 

+0.11%

at

  21,711

HK Hang Seng

 

-0.78%

at

  29,886

Shanghai Composite

 

-1.60%

at

   3,190

FTSE 350 Mining

 

-0.78%

at

  20,971

AIM Basic Resources

 

-0.67%

at

   2,165

 

Economics

S&P 500 companies are expected to post the first yoy quarterly earnings decline in Q1/19 since H1/16, according to data provider FactSet.

  • Earnings are expected to be dragged down by a fading effect of the fiscal stimulus introduced in 2018 as well lengthy government shutdown and poor weather.
  • Profit margins are expected to post their first drop in four years in 2019 led by currency translations, wage inflation and rising transportation and raw materials costs.

 

US – Equities closed stronger in the US yesterday as the US and China talks cleared another hurdle while FOMC meeting minutes highlighted dovish bias of the Fed.

  • The US and China agreed to establish “enforcement offices” in both countries to monitor the implementation of the deal offering a solution to one of sticking points in negotiations.
  • The March FOMC meeting minutes showed that a “majority of participants” expect the economic data to warrant leaving rates unchanged for the rest of the year.
  • In a supporting piece of economic news, inflation numbers showed that the core measure slowed slightly during March (+2.0%yoy v +2.1%yoy in February).

 

China – Producer and consumer inflation picks up in March while core measures continued to be held back by an underlying economic weakness,

  • Producer prices were up 0.4%yoy, in line with Reuters estimates, driven by higher fuel prices.
  • Consumer prices climbed 2.3%yoy, up from the 1.5%yoy increase in February, marking the strongest gain since October last year. Good prices were up 4.1%yoy.
  • “Looking ahead, we expect oil prices to fall back in the coming months… meanwhile,  continued economic weakness is likely to keep a lid on broader price pressures,” Capital Economics commented on numbers.

 

ECB – The central bank struck a dovish tone on the back of weakening economic outlook reiterating its pledge to hold its rates steady until at least the end of 2019.

  • “The risks surrounding the euro area growth outlook remain tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of preotectionism and vulenrabilities in emerging markets,” Mario Draghi said during the press conference.
  • Monetary authorities highlighted that a period of slowdown has been “somewhat longer lasting” than expected, especially in the manufacturing sector, driven largely by a weakening external demand.
  • Domestically, the central bank is confident falling unemployment and rising wages should support the local demand and gradually increase inflation pressures.
  • The ECB left its rates unchanged at 0.0% (refinancing rate), 0.25% (lending facility), -0.4% (deposit facility).

 

Germany – Consumer prices growth eased in March led by a slowdown in food-price inflation.

  • Energy prices inflation accelerated in March (+4.2%yoy) but the headline number was dragged down by weaker gains in food prices (+0.7%yoy v +1.4% in February).
  • Annual inflation came in at 1.4% v 1.7% in February while core measure (ex energy and food) averaged 1.1%, nearly half of the ECB target of 2% for the single currency zone.

 

UK – PM is set to address parliament after the government agreed to the article 50 extension to 31 October from previously set 12 April.

  • The extension of the Brexit deadline to Halloween has done little to disturb sterling which was little changed this morning around 1.31 and 1.128 levels against the US$ and €.
  • While the agreement sees a potential no-deal Brexit delayed by further six months, the uncertainty is likely to weigh on businesses in the meantime.

 

Sudan – Protests across the country calling for the 30-year regime of Omar el-Bashir to end are reported to have been joined by the military.

  • Previously, security services and militia loyal to Mr Bashir had attacked demonstrators but been repelled by soldiers, FT reports.
  • Recently, a number of low-ranking officers have openly called for the end of the Bashir regime.
  • Demonstrations started in December after a sharp increase in the price of bread, but rapidly escalated aimed at ousting the regime with rallies spreading to 35 cities nationwide.

 

Currencies

US$1.1283/eur vs 1.1269/eur yesterday  Yen 111.15/$ vs 111.16/

nbsp; SAr 13.885/$ vs 14.025/
nbsp; $1.309/gbp vs $1.307/gbp  0.716/aud vs 0.715/aud  CNY 6.715/$ vs 6.714/$

 

Commodity News

Precious metals:         

Gold US$1,306/oz vs US$1,305/oz yesterday

   Gold ETFs 71.8moz vs US$71.9moz yesterday

Platinum US$909/oz vs US$893/oz yesterday

Palladium US$1,393/oz vs US$1,391/oz yesterday

Silver US$15.21/oz vs US$15.24/oz yesterday

           

Base metals:   

Copper US$ 6,450/t vs US$6,497/t yesterday

  • As rising concerns point to falling grades and productivity across Chile, top producer Codelco highlights they have sufficient funding through to 2020 to develop the multibillion dollar mine upgrades to maintain current production levels.
  • Chairman Juan Benavides report Codelco is well financed, with no need for more debt this year, adding conversations with government over an additional funding package for 2021 and beyond will need to happen next year, as well as the possibility to increase debt levels.
  • The company responsible for over 8% of world copper production has warned it will see a slump in output if it doesn’t invest more than $20bn in the next decade. Ore grades at Codelco’s mines -- some over a century old -- are declining, and it needs to process more material to produce the same amount of copper.
  • Codelco expects production will remain flat at around 1.8mt of copper this year. The $5.5bn Chuquicamata underground project is almost completed and will enter into production within one to two months, Benavides said.
  • Structural projects also include a $1.3bn expansion at the Andina mine, a $5.5bn expansion at Teniente, a $1bn expansion at Salvador and the expansion of Radomiro Tomic.
  • Last month, Codelco Chief Executive Officer Nelson Pizarro said a lack of government funding will affect the company’s expansion plans for its main mines in Chile, and might result on debt soaring to $21bn.
  • If market conditions improve, Codelco might need less government funds, according to Benavides.
  • The transition into a ‘high-tech’ economy is expected to draw significant demand for copper, with growing requirement for smart thermostats, wind turbine and electric vehicles – offsetting rising use of aluminium as a cheaper alternative to conduct electricity.
  • Copper is central to the green revolution while improving global connectivity, with smart-home systems including Alphabet Inc's Nest thermostat and Amazon.com Inc's Alexa personal assistant consuming an additional 1.5mt copper by 2030 from 38,000t today according to BSRIA.
  • Electric vehicles, which use twice as much copper as internal combustion engines, are also projecting exponential growth with the price parity closing and mass adoption looming. Copper forms a crucial component of the battery anode, with attempts to replace with cheaper aluminium failing as the metal reacts with lithium and corrodes.
  • Solar panels and wind turbines are also seen as key areas of copper demand growth, with more than 55% of copper consumption to come from energy transmission and distribution through 2040, according to the International Energy Administration.
  • Sustained copper demand is sparking a massive industry scramble for higher grades, expansion and greenfield exploration.
  • Of 300 exploration concessions in Chile, just 22 are active. While big global miners own 89% of those concessions, juniors own just 4.5% - one-eighth of the global average. Chile needs a solution for effective exploration of concessions which has sat idle for decades.

Aluminium US$ 1,865/t vs US$1,875/t yesterday

Nickel US$ 13,160/t vs US$13,225/t yesterday

Zinc US$ 2,875/t vs US$2,853/t yesterday

Lead US$ 1,949/t vs US$1,979/t yesterday

Tin US$ 20,800/t vs US$20,900/t yesterday

           

Energy:           

Oil US$71.4/bbl vs US$70.8/bbl yesterday

Natural Gas US$2.705/mmbtu vs US$2.702/mmbtu yesterday

Uranium US$25.85/lb vs US$25.85/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$91.5/t vs US$91.4/t

Chinese steel rebar 25mm US$643.3/t vs US$643.5/t

Thermal coal (1st year forward cif ARA) US$73.3/t vs US$76.5/t

Coking coal futures Dalian Exchange US$187.4/t vs US$187.5/t

           

Other:  

Cobalt LME 3m US$33,000/t vs US$33,000/t

NdPr Rare Earth Oxide (China) US$40,579/t vs US$41,111/t

  • Lynas Corp has rejected a A$1.5bn takeover proposal from Australian retail and industrial conglomerate Wesfarmers. One of a handful of rare earth miners outside of China, Lynas reported the offer undervalued the company’s ‘intellectual property’ while offering the miner could deliver better shareholder value than under Wesfarmers’ control.
  • The Wesfarmers’ unsolicited bid was highly opportunistic, making the most of ongoing environmental issues at the Lynas Advance Material Plant in Malaysia.
  • In response to regulatory changes in Malaysia and rising concerns over waste storage at the $800m plant, Lynas are reportedly considering initial ore processing in W. Australia at the Mt Weld mine site. The plan has long been considered as part of expanding capacity and offered risk reduction from further regulatory changes in Malaysia.
  • Demonstrating environmental activists reiterated worries around the radioactive waste produced, while Lynas workers asked authorities to base any decisions on “scientific fact and evidence,” highlighting the plant’s importance for employment in the region.
  • Lynas could have its licence revoked if it is unable to remove 450,000t radioactive waste stockpiles at the plant by Sept. 2., but the project forms a crucial ex-China supply offering 10% global production, with China delivering nearly 90%.

Lithium carbonate 99% (China) US$9,605/t vs US$9,608/t

Ferro Vanadium 80% FOB (China) US$50.0/kg vs US$51.5/kg

Antimony Trioxide 99.5% EU (China) US$6.4/kg vs US$6.4/kg

Tungsten APT European US$270-282/mtu vs US$271-282/mtu

 

EV News

Fuel cells – new hydrogen storage structures may help fuel cells find a better place in the new vehicle revolution

  • Fuel cells appear to be developing to a stage where reliable and safe fuel cells may become a viable alternative to batteries and hybrid energy solutions in vehicles and other power hungry instillations.
  • The biggest problem now for vehicles is the efficient and safe storage of hydrogen.
  • New types of canister’s have been proposed for some years with metal organic frameworks offering a porous tank where hydrogen may be compacted and efficiently stored. The frameworks use metal ions coupled with organic molecules.
  • A review by some Researchers at the University of Michigan of organic framework material has identified three materials which rank best as mediums for hydrogen storage. It will be interesting to see how well the new storage tanks work?

 

Company News

Avesoro Resources (ASO LN) FOLLOW 117p, Mkt Cap £95.4m – 2019 production guidance maintained despite lower plant throughput in Q1

  • Avesoro Resource has reported production of 45,098oz of gold during the quarter ended 31st March 2019. The New Liberty mine in Liberia contributed 25,855oz with the remaining 19,243oz produced at the Youga mine in Burkina Faso.
  • The company is maintaining its 2019 production guidance of 210-230,000oz of gold production although “performance at both mines was slightly behind our targeted production levels for the Quarter with the shortfall in gold production vs. our target predominantly due to lower plant throughput at both operations”.
  • At New Liberty, priority was given to waste removal during the quarter at the expense of ore production with the quarterly waste:ore ratio rising to 25.6:1 (Q4 2018 18.6:1), however, this imbalance is reported to have now been resolved “and we expect to maintain availability of ore for the remainder of the year.”
  • The company is “in advanced discussions” with a mining contractor at New Liberty which, “If concluded successfully, the engagement of the contractor is expected to reduce our mining costs below the already very attractive internal cost per tonne that we achieve, provide access to additional mining equipment to increase material movement and outperform the original production guidance at the mine.”
  • The issues at Youga were that “additional lower grade ore blocks were mined which together with unexpected ore dilution impacted the average grade of mined ore at the Gassore pit. In response to this, smaller excavators are now being used to reduce dilution whilst the haulage capacity of our existing haul trucks has been increased to ensure required ore volumes are transported to the ROM pad”.

Conclusion: Avesoro has taken steps to address the reduced plant throughput at its New Liberty and Youga mines during Q1 and is maintaining its full year production guidance.

 

Gulf Mining Group – private company – looking to triple ferrochrome smelter capacity in the Sohar freezone

  • Gulf Mining have resolved environmental issues surrounding the mountain of ferrochrome slag at its Sohar furnaces.
  • The removal of the slag material will take some 3-4 months and should now allow the company to triple smelting capacity.
  • Production will initially double to 100,000tpa by late 2020 or early 2021 and then onto 150,000tpa by 2022-2023.
  • Oman exported some 460,000t of lump ferrochrome last year and is now the world’s largest exporter of lump material overtaking South Africa which has long led the export market. All ferrochrome exports went to China.

 

Keras Resources* (KRS LN) FOLLOW 0.36p, Mkt Cap £8.1m – Calidus Resources confirms wide outcrop of gold mineralisation in centre of 1.25moz resource

BUY, Target price 1.04p

Click for our last full note on Keras

(Keras currently has 458m shares in Calidus Resources Limited, representing approximately 32.3% of the current issued share capital of Calidus.  On successful completion of the PFS, an additional 265m performance shares of Calidus ('Performance Shares') owned by Keras will be converted into ordinary shares of Calidus.)

Keras’s stake in Calidus is currently worth around £11m assuming the additional PFS shares are issued.

  • Calidus Resources report the identification of a wide outcrop of gold mineralisation in the middle of their 1.25moz JORC resource at the Warrawoona, Klondyke Shear Prospect in the Pilbara in West Australia.
  • Results include:
    • 25m @ 1.76 g/t Au incl 1m @ 9.77g/t Au
    • 32m@ 1.15g/t Au, 12m@ 2.24 g/t Au, 15m @ 1.37g/t Au, 16m @ 1.19 g/t Au, 13m @ 1.29 g/t Au, 8m @ 1.48g/t Au
  • Selective channel and rock chip sampling following this programme produced high-grade assays including:
  • 130 g/t Au, 64 g/t Au, 44 g/t Au, 41 g/t Au, 10 g/t Au, 9.2 g/t Au
  • JORC 2012 Mineral Resource for the Warrawoona gold project is estimated at: 21.2Mt at 1.83 g/t Au for 1.25Moz, including a higher-grade area of 14.6Mt @ 2.37g/t Au for 1.1Moz.
  • Re-processing of the historic Conzinc Riotinto of Australia 'CRA' datasets across the resource area demonstrates the presence of wide and consistent gold mineralisation at surface.
  • Regional Air Core ('AC') drilling programme continues at Warrawoona to test greenfields anomalies and induced polarisation 'IP' is being used to refine drill locations along the remaining ~7km strike length of the outcropping Klondyke Shear package that remains untested by Calidus.
  • The resource remains open at depth and along strike.
  • The PFS is reported to remain on schedule for delivery by end Q3 2019.
  • Valuation: We value Keras’ stake in Calidus at the market value of its 32.3% stake plus 50% of the value of its 265m performance shares which are to be granted on completion of a PFS at Calidus’. While it  is not easy to know if the shares may eventually realise the value on the screen, we are optimistic that the 1.25moz JORC resource at the Klondyke Shear Prospect should eventually realise a significantly greater valuation as the Calidus team add further value to the gold mining project.

Conclusion: Meaningful gold outcrop at surface is almost always good from a mining perspective and usually adds significant value to a project. The identification of this material looks positive for the project and could enable a quick and lower cost start to production if the mine is developed. We are waiting on further news from Keras on its manganese offtake and a move to larger scale manganese ore mining in Togo, West Africa which should add to Keras’ value.

Manganese prices look set to potentially move higher with the low end of the price range moving higher in February despite weakness in other commodities. Reduced freight rates should also help if Keras gears up to sell more manganese ore..

*SP Angel act as Nomad and broker to Keras Resources

 

Phoenix Global Mining* (PGM LN)FOLLOW  15.5p, Mkt Cap £6.0m – Consultant geologist highlights the potential of the Empire mine

  • Phoenix Global Mining has released details of a report by its Consultant Economic Geologist, Nigel Maund, which highlights the mineral potential of its licences in and around the site of the historic Empire mine in Custer County, Idaho.
  • Mr. Maund, who has previously advised Phoenix Global Mining on the Empire mine geology, visited the property in March 2019 in order to review the results of the drilling conducted during 2017 and 2018 has confirmed that “the Empire Mine comprises a world class polymetallic ore system containing tungsten and molybdenum as well as copper, gold, silver and zinc.”
  • He also highlights the geological setting of the mineralisation “on a major north south structure with some 5 km of geologic strike” and points out that this “compares with 1 km referred to in the PEA (Preliminary Economic Assessment) on the heap leach SX-EW copper project published by the Company in 2018” as well as pointing to geological similarities between the mineralisation at the Empire mine site and that at the world’s largest porphyry endoskarn deposit at Antamina in Peru..
  • The company’s work at Empire has concentrated on developing the near-term cash generating potential of the near-surface oxide mineralisation, however, setting this in a broader context, Mr. Maund’s report expresses a view that “perhaps only 1% to 2% of the ore system has been tested to date [and that]  Exploration has so far ignored the potential much larger copper/precious metal and base metal sulphide beneath and along strike from the open pit.  The potential of this sulphide ore system is of the order of tens of millions of tonnes, and it is almost certainly amenable to underground trackless bulk mining techniques.”
  • Phoenix Global Mining’s Chief Executive, Dennis Thomas, confirmed that the company is “preparing an updated measured, indicated and inferred NI 43-101 compliant resource, incorporating all previous drilling results as well as those from the 29,228 feet (8,909 metres) 2018 drilling campaign, the results of which we intend to announce by the end of April."
  • Mr Thomas also commented that the consultant’s report endorses “our expansion of the property to the north by staking additional claims over the past 18 months. This has given us a fivefold increase in the strike length of the mineralised zones and the property now covers 8.9 square miles.”

Conclusion: During the recent drilling and field exploration work, there have been hints of a wider mineralised footprint as the exploration extended from the original core area around the old Empire mine into the Red Star, Horseshoe and the recently acquired Windy Devil and Navarre Creek claim blocks, however, the new report, which is available on the company’s website at www.pgmining.com/research provides a more structured and in depth analysis of the emerging potential of the area. The conclusion that perhaps only 1-2% of the overall mineralised system has been tested and that there are possible similarities with Antamina should be of particular interest as the exploration proceeds. We look forward to the updated mineral resource estimate later this month.

*SP Angel acts as Nomad and broker to Phoenix Global Mining

 

Strategic Minerals* (SML LN)FOLLOW  1.625p, Mkt Cap £22.8m - Initial copper production from Leigh Creek and Cobre quarterly sales

  • Strategic Minerals reports that it has completed the refurbishment of the Mountain of Light processing plant and produced the first tonne of cement copper product (approximately 70% copper content) from its Leigh Creek Copper Mine which last produced, under the management of a previous owner in 2012.
  • The company also announces that recent drilling work at the Paltridge North deposit at Leigh Creek has led to an increased mineral resource estimate of approximately 1.42mt at an average grade of 0.76% copper. Around 64% (909,000t) of the new tonnage estimate is classified as "Indicated" in terms of the JORC (2012) Code and that "Almost all of the increase is in the Inferred category … is a result of improved geological understanding of the mineralisation and judicious use of older (1970’s) drilling data to refine and extend the resource boundaries into areas not tested by more recent drilling."
  • In addition, recently completed diamond drill-holes at Leigh Creek's Rosmann East deposit are expected to be incorporated in a " new, JORC 2012 compatible, resource estimation".  The Rosmann East drilling comprised a total of 675.2m in 7 drill holes designed to test "extensions to existing copper oxide and chalcocite mineralisation zones beneath the existing open pit" and the company reports that all the holes  "intersected broad zones of low-grade chalcocite mineralisation (with pyrite, chalcopyrite and bornite) to 30m below the previously defined mineralisation at Rosmann East and 60m below the existing pit floor".
  • Among the results reported from the Rosmann East drilling programme are:
    • An intersection of 69m at an average grade of 0.37% copper from a depth of 11m in hole RED18-01 which included a number of shorter, higher grade, sections ranging up to 17.2m width averaging 0.42% copper from 53m depth; and
    • Intersections of 11m averaging 0.39% copper from 8m depth and 52.95m averaging 0.18% copper from 25m depth in hole RED18-02; and
    • An intersection of 35.6m averaging 0.23% copper from a depth of 37.5m in hole RED19-03; and
    • Intersections of 24.8m averaging 0.30% copper from 39.2m depth and 16m averaging 0.23% copper from 71m depth in hole RED19-04; and
    • An intersection of 38.8m averaging 0.36% copper from a depth of 49.2m in hole RED19-05 which included higher grade section averaging 0.44% copper between 55-63m depth and 0.47% copper between 69-88m; and
    • An intersection of 50m averaging 0.16% copper from 64m depth in hole RED19-06 and including an 8m wide zone averaging 0.26% from a depth of 104m
    • The seventh hole of the programme is "being retained intact to provide reference material for mining and geotechnical studies."
  • The company confirms that "The feasibility study for the commencement of full-scale production from Paltridge North and Rosmann East, and submissions associated with government approvals for mining these areas, are well advanced and scheduled to be completed in Q3 2019."
  • Commenting on the milestone production of initial copper cement at Leigh Creek, Managing Director, John Peters, said that " The restart of production in 13 months from acquisition has reinforced the Board’s confidence that the acquisition of LCCM will prove to be a major value added asset for the Company and will provide significant on-going after tax cash flows from 2020."
  • In addition to the news from Leigh Creek, Strategic Minerals has also published the quarterly results from its Cobre magnetite operations in New Mexico.  During the quarter ended March 2019, the company sold 9,472 tons generating  revenue of US$554,000 and cash of US$206,000.
  • This compares with sales of 10,931 tons in the previous quarter and 21,636 (US$1.42m) in the equivalent period last year.  Strategic Minerals attributes the lower sales levels during the quarter to "clients undertaking plant maintenance during the US winter and continue to reflect the suspension of minimum monthly sales associated with a major client’s contract, as announced on 7 June 2018."
  • "During the quarter, a drone survey of the existing stockpile [at Cobre] was undertaken and indicated that   711,000 short wet tons of material remains.  This ensures that, subject to the mine owner’s expected continuation of arrangements, operations at Cobre will continue for a minimum of 7 years".
  • The company reports a 31st March 2019 cash balance of US$1.24m and that it invested US$535,000 in its projects during the quarter.  Mr. Peters commented that "it is anticipated that … the June quarter will se a resumption of normal sales volumes to these clients".
  • The June quarter is expected to be another pivotal time for the Company, with the expected resumption of copper production from the existing heaps at Leigh Creek and the acquisition of the other half of the Redmoor Tin/Tungsten project. 

Conclusion: The production of first product at the Mountain of Light plant, the upgraded mineral resource at Paltridge North and the positive drilling results from Rosmann East show the progress being achieved at Leigh Creek.  The confirmation of an expected resumption of normal sales levels and a seven years resource life at Cobre suggests that performance will strengthen during the current quarter.

*SP Angel act as Nomad and broker to Strategic Minerals

 

Vast Resources* (VAST LN) FOLLOW 0.16p, Mkt Cap £11.6m – Financing update

  • The Company is reporting it is due to receive loan term sheets in respect of Baita Plai development and working capital.
  • Additionally, Vast is in advanced discussions with a potential cornerstone equity investor who is said to have expressed a definite interest to proceed in principle.
  • The loan and investment by a potential cornerstone investor are conditional on the passing of the resolution to approve the restructuring as well as completion of due diligence and the signing of definitive legal agreeements.
  • In Zimbabwe, dicussions with the Chiadzwa Community Development Trust regarding a JV agreement on the Heritage Concession are advancing with an advanced draft completed.

*SP Angel acts as Broker to Vast Resources

 

Walkabout Resources* (WKT AU) A$0.22, Mkt Cap A$65.4m – Binding global sale, purchase and marketing agreement

  • Walkabout Resources announce the complementary signing of a binding Global Sales, Purchase and Marketing Agreement with Wogen Pacific Limited, with an initial contract to buy and market a minimum of 10,000tpa up to a maximum of 30,000tpa of concentrate for a period of 5 years.
  • Wogen is a leading international trader and long-established marketer of off-exchange speciality-metals and minerals with a strong presence in Asia, Europe and the US; including logistics infrastructure, buying networks and industry relationships.
  • Supporting the Lindi Jumbo project, Wogen shall carry out market discovery and development work to identify target customers during the pre-production phase, including volumes consumed and the nature and timing of relevant tenders.
  • Wogen will continuously develop graphite markets for Lindi Jumbo branded graphite products across their global network.
  • Within the agreement, an advanced payment based on 80% of the value for each consignment of concentrate contracted by Wogen as working capital financing. The outstanding 20% less Wogen commission less agreed on-costs will be remitted to the Company upon receipt of payment in full by Wogen.
  • Executive Chairman, Trevor Benson adds “the agreement is a key element in de-risking the Lindi Jumbo Graphite Project and attracting development capital leading up to construction and the first period of production.”

Conclusion: Walkabout Resources’ strong market growth, climbing 140% since early 2019, is a robust reflection of company efforts to de-risk the Lindi Jumbo project and secure binding off-take agreements for up to 100% of the proposed 40,000tpa plant. The partnership will significantly support the project, enhancing the pre-marketing, sales, financing and transactional side of graphite.

*SP Angel acts as UK Broker to Walkabout Resources Ltd

 

 

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

James Mills -0203 470 0496

 

Sales

Richard Parlons – 0203 470 0472

Jonathan Williams – 0203 470 0471

Abagail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535

 

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.

 

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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%

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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