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SP Angel . Morning View . Strong US payrolls support rising metal prices

11:12, 4th February 2019
Paul Kettle Kettle
SP Angel
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SP Angel – Morning View – Monday 04 02 19

Strong US payrolls support rising metal prices

MiFID II exempt information – see disclaimer below

  

Altus Strategies* (ALS LN)FOLLOW – Drill targets identified at Diba gold project, Western Mali

ARC Minerals* (ARCM LN) FOLLOW– New target discoveries at Zamsort

IronRidge Resources* (IRR LN) FOLLOW– Côte d’Ivoire gold exploration update

Mkango Resources* (MKA LN) FOLLOW– 60% increase in Songwe Hill rare earth resource, including first Measured Resource

Thor Mining* (THR LN) FOLLOW– Extensive tungsten mineralisation confirmed at Bonya Samarkand deposit

 

Dow Jones Industrials

 

+0.26%

at

  25,064

Nikkei 225

 

+0.46%

at

  20,884

HK Hang Seng

 

+0.21%

at

  27,990

Shanghai Composite

 

+1.30%

at

   2,618

FTSE 350 Mining

 

-1.21%

at

  18,590

AIM Basic Resources

 

+0.30%

at

   2,216

 

Economics

Euro – Factory growth dries up in January, highlighting gloomy outlook

  • Growth in euro zone factory activity was minimal in January as new orders fell at the fastest rate in nearly six years, suggesting manufacturers are acting as a drag on the economy, a survey showed on Friday.
  • Some of that scant growth was from factories running down backlogs of orders for a fifth month while having to stockpile finished products at the fastest rate since the survey began in June 1997.
  • The slowdown comes just weeks after the European Central Bank shuttered its more than €2.6tr asset purchase programme and will fuel expectations a global economic slowdown is underway.
  • IHS Markit's January final manufacturing Purchasing Managers' Index fell for a sixth month, coming in at 50.5 from December's 51.4, matching a flash reading but barely above the 50 level separating growth from contraction.
  • That was its lowest reading since November 2014 and an index measuring output which feeds into a composite PMI due on Tuesday - seen as a good gauge of economic health - fell to a 5-1/2 year low of 50.5 from 51.0.

 

Currencies

US$1.1448/eur vs 1.1456/eur last week  Yen 109.83/$ vs 109.04/$  SAr 13.353/$ vs 13.318/$  $1.309/gbp vs $1.305/gbp  0.723/aud vs 0.726/aud  CNY 6.742/$ vs 6.736/$

 

Commodity News

Precious metals:         

Gold US$1,313/oz vs US$1,319/oz last week

   Gold ETFs 73.2moz vs US$73.3moz last week

Platinum US$821/oz vs US$825/oz last week

Palladium US$1,359/oz vs US$1,357/oz last week

Silver US$15.83/oz vs US$15.96/oz last week

           

Base metals:   

Copper US$ 6,134/t vs US$6,116/t last week

  • Miner and trader Glencore on Friday stuck to its 2019 production targets and said cobalt output last year soared 54% while copper rose 11% due to the restart of operations in the Democratic Republic of Congo.
  • Production of cobalt, used in batteries for electric vehicles, reached 42,200t in 2018 while copper hit 1.453mt. Zinc output was mostly flat year-on-year at 273,300t.
  • London-listed Glencore, which accounts for around a third of the global cobalt market, has benefited from its exposure to minerals needed for electric vehicles, including copper and cobalt.
  • But its shares, which fell 25% last year, have been weighed down by tougher mining laws in Congo, a subpoena for documents by the U.S. Department of Justice and its exposure to coal.
  • Glencore reiterated that its copper output in 2019 is projected to reach 1.54mt and cobalt 57,000t.

Aluminium US$ 1,882/t vs US$1,895/t last week

  • China Hongqiao Group, the world's top aluminium smelter, said on Friday it would gradually restart production from some of its pots after the shorter set of winter output curbs expired on Jan. 31.
  • Some of the restrictions on Hongqiao's winter output were to run for four months from mid-November to mid-March but others only applied to December and January.
  • In a statement to Reuters, the company said it would take around four months, until June, to fully resume production from the pots now being restarted. Around 100,000t of aluminium production had been affected by the winter cuts, it added.

Nickel US$ 12,695/t vs US$12,540/t last week

  • Nickel climbed to the highest intraday level in more than three months as stockpiles declined and a better-than-expected U.S. jobs report signaled healthy economic expansion, boosting the demand outlook for industrial metals.
  • Holdings of nickel in Shanghai Futures Exchange warehouses fell for a fifth week to the lowest since June 2015, according to data from the bourse. Still, some concerns over supply from Brazil eased after Vale SA ruled out disruption to its nickel mining operations following last month’s iron ore dam disaster.
  • U.S. hiring jumped by the most in almost a year, topping all forecasts in a Bloomberg survey of economists, albeit after a downward revision to the prior month, a Labor Department report showed Friday
  • President Donald Trump is optimistic about the prospect of a trade deal with the Chinese after the “good vibe” of negotiations, White House National Economic Council director Larry Kudlow said Friday

Zinc US$ 2,787/t vs US$2,725/t last week

Lead US$ 2,129/t vs US$2,105/t last week

Tin US$ 20,860/t vs US$20,755/t last week

           

Energy:           

Oil US$63.3/bbl vs US$60.9/bbl last week

Natural Gas US$2.705/mmbtu vs US$2.797/mmbtu last week

Uranium US$28.95/lb vs US$28.90/lb last week

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$84.4/t vs US$82.6/t

Chinese steel rebar 25mm US$597.1/t vs US$597.7/t

Thermal coal (1st year forward cif ARA) US$81.6/t vs US$84.3/t

Coking coal futures Dalian Exchange US$196.2/t vs US$196.3/t

           

Other:  

Cobalt LME 3m US$34,000/t vs US$34,000/t

China NdPr Rare Earth Oxide US$46,202/t vs US$46,247/t

China Lithium carbonate 99% US$10,012/t vs US$10,022/t

China Ferro Vanadium 80% FOB US$70.9/kg vs US$70.9/kg

China Antimony Trioxide 99.5% EU US$7./kg vs US$7./kg

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

 

Battery News

 

Company News

Altus Strategies* (ALS LN) 2.9p, Mkt Cap £5.2m – Drill targets identified at Diba gold project, Western Mali

  • The team has identified a series of drilling targets at the 81km2 Diba Gold Project strategically located 13km south of the major multi-million ounce Sadiola operation in the world renowned ‘Kenieba Window’ gold belt.
  • Upon review of historical data, further drill targets have been selected along strike, down dip and two new zones.
  • One of the target zones lies within a 2.6km2 soil anomaly immediately along strike of and northwest of the current historic resource.
  • Additionally, a 2km2 at Diba East is located immediately to the east of the historic resource with past exploration works including completed geophysics and shallow augur drilling.
  • Historic resources at Diba (non NI 43-101, 2013) includes 6.3mt @ 1.35g/t for 275koz in the Indicated category and 0.7mt @ 1.40g/t for 33koz in the Inferred.
  • The team is in discussions with a number of potential JV partners with regards to funding future exploration and assessment works at Diba as well as other projects in western and southern Mali.

Conclusion: The Company is planning to follow up on promising historic results at Diba where previous exploration works tested close to surface gold oxide mineralisation and returned some high grade and wide intersections such as 20.8m @ 44.75g/t from 19.2m, 20m @ 5.49g/t from 24m and 26m @ 2.57g/t from 36m among selected results from the 2006-2014 drilling dataset. Subject to more drilling identified areas may see an increase in the current resource with the Company currently in negotiations with potential JV partners to take works further, in line with the project generator business model.

*SP Angel acts as Nomad and Broker to Altus Strategies plc

 

ARC Minerals* (ARCM LN) 3.0p, Mkt Cap £19.4m – New target discoveries at Zamsort

  • Initial results from the airborne geophysical and soil sampling programme at the Zamsort Copper-Cobalt project in Zambia identified significant new target areas, focusing on Cheyeza West and Lumbeta.
  • The company note the Cheyeza West target is the most significant with a core 3km x 3km anomaly outlined by very high Cu values in the soils enclosed by the wider 10km x 8km Cheyeza anomaly. In addition, the co-incident electromagnetic anomaly over this 3km core, indicates conductivity within the host rock, has moved Cheyeza West to the top of the company's internal ranking of its exploration targets.
  • The second highest ranking target, Lumbeta, stretches for 11km and is associated with the crest of the fold. These hinge points in a folded environment can act as mineralisation traps and form high grade deposits.
  • Historical drilling at Cheyeza East has intersected zones of copper mineralisation averaging 0.6%. Similarly, at Fwiji and Nyambwezu, grades averaging 0.5% copper have been reported.
  • The Company conducted a comprehensive high-resolution airborne geophysical survey over its Zamsort project. The Zamsort project licenses cover in excess of 850 km² and host a large number of targets in addition to the Kalaba Copper-Cobalt Prospect. The company is currently delineating a Resource for the Commercial Scale Demonstration plant as well as a Maiden JORC-Code Mineral Resource for the deposit based on drilling to date.
  • The airborne geophysical survey which collected magnetic data and measured radiometric emissions, was conducted by Xcalibur Airborne Geophysics. The survey covered the entire license areas and comprised 5,218 line-kilometres. The survey was conducted using a 200m line spacing and flying along NW-SE flight lines.
  • The company has extended the soil sampling programme comprising 28,000 soil samples, collected using a 1km line spacing with soil samples taken every 50m.

*SP Angel acts as nomad and broker to Arc Minerals.

 

IronRidge Resources* (IRR LN) 23p, Mkt Cap £71.2m – Côte d’Ivoire gold exploration update

  • IronRidge Resources report preliminary 40km extension of strike anomalies into the Vavoua portfolio from a major Shear Zone which hosts 700koz JORC compliant Abujar project. Xcalibur successfully completed airborne magnetics at 100m line spacing and 35-40m ground clearance.
  • Southern Geoscience Consultants has processed the raw geophysical data to generate the various magnetics, radiometrics and topography deliverables for structural and lithological interpretation.  The Company will interpret regolith and high-priority structural targets ahead of a planned regional soils and auger programme.
  • At Marahui regional soil sampling on a 400m x 50m grid was completed with 3 main gold anomalous trends defined in the soils over 1.5km to 3km strike lengths at average 30ppb to 120ppb gold levels. Prior to the next phase, the mobilised field team is completing infill soil sampling on a 200m x 50m grid.
  • The company will also commence a 1,000m trenching programme over the main soil anomaly of the Kineta licence. In addition to the trenching, regional mapping, soil sampling and stream sediments have been planned to cover the remainder of the license area to assess for any additional target areas outside of the highest priority target corridor
  • Broad trenching intervals include 47m @ 0.16g/t (including 14m @ 0.23g/t Au), 7m @ 0.18g/t and 4m @ 0.21g/t at the Ketesso target and 11m @ 0.7g/t, 9m @ 0.16g/t, 1m @ 1.1g/t, 3m @ 0.14g/t and 1m @ 0.42g/t at the Yaw target.
  • IronRidge recognise trench results aren’t sampled from deep enough, with the broad and continuous low-grade gold anomalous zones defined in trenching coupled with the deep tropical weathering limiting surface mineralisation. Accordingly, a deep mechanised auger programme of 150 holes to an average planned depth of 7m has commenced to test the coincident soil and trench anomalies at greater depth
  • A total of 1,169m auger drill holes on a 50m x 200/400/800m grid compiled is planned at Bodite to form the first phase soil sampling.

*SP Angel act as nomad and broker to IronRidge Resources

 

Mkango Resources* (MKA LN) 9.4p, Mkt Cap £10.6m – 60% increase in Songwe Hill rare earth resource, including first Measured Resource

  • Mkango Resources report a significant 60% increase in total Measured and Indicated Resource to 21Mt @ 1.41% Total Rare Earth Oxide (TREO) from the major 2018 drilling programme, which includes the first Measures Resource estimate for Songwe Hill. The Measured Resource comprises 42% indicating a substantial increase in geological confidence to support the completion of the Feasibility Study.
  • The updated resource includes a 48% increase in the Inferred Resource tonnage versus the base case 2012 estimate, which formed the basis for the 2015 pre-feasibility study.
  • The mineral resource has been drilled to a maximum depth of 355 m below the surface of Songwe Hill and is based on three phases of diamond drilling completed by Mkango in 2011, 2012 and 2018 totaling approximately 17,800 m in 125 drill holes.
  • The updated resource forms the basis of the updated mine plan for the ongoing feasibility study, which will evaluate a bulk tonnage, open pit mining operation focused on broad zones of near surface and outcropping rare earths mineralisation.
  • The updated resource supersedes the 2012 Mineral Resource Estimate, and therefore renders the mining and economic information in 2015 pre-feasibility study obsolete.
  • Approximately 95% of the Measured and Indicated Mineral Resource Blocks are at a depth of less than 160m below the surface of the hill indicating that the majority will be accessible by open pit mining.
  • The company now focus on 60t bulk samples for pilot metallurgical test work, selected from areas within the Measured and Indicated Mineral Resource Estimates. Mkango also are also undergoing a public awareness campaign to communicate progress of the project and explain the bulk sampling programme is underway in Malawi.
  • The NI 43-101 compliant technical report in respect of the mineral resource estimates described herein will be filed on SEDAR within the next 45 days. Publication of the NI 43-101 Technical Report in relation to the resource update will trigger the next £7m milestone investment from Talaxis to fund completion of the feasibility study.

Conclusion: The resource update indicates a significant increase in rare earth resource, and underpins the company strategy to become a long-term sustainable producer of neodymium, praseodymium, dysprosium and terbium used in permanent magnet motors for electric vehicles, wind turbines and other clean technologies. We look forward to understanding the development and technical strategy for Songwe Hill as the company work towards unlocking the next £7m Talaxis milestone investment.

*SP Angel act as Nomad and broker to Mkango Resources. The analyst has visited the Songwe Hill exploration site.

 

Thor Mining* (THR LN) 1.4p, Mkt Cap £9.9m – Extensive tungsten mineralisation confirmed at Bonya Samarkand deposit

  • Thor Mining announce extensive tungsten mineralisation from the initial phase of exploration at the Samarkand deposit, one of thirteen known tungsten deposits within the Bonya project. The Bonya tenement is held jointly (THR; 40%) with Arafura Resources Limited (ASX: ARU; 60%) adjacent to the Molyhil mine project in the Northern Territory of Australia.
  • Samples collected via systematic sampling program, in December 2018, from trenches excavated across the deposit more than 40 years ago. Intercepts include;
    • Trench 1: 7m at 6,670ppm (0.667%) WO3 and 3m at 3,073ppm (0.307%) WO3
    • Trench 2; 3m at 2,711ppm (0.271%) WO3
    • Trench 3; 3m at 2,039ppm (0.203%) WO3
  • The next proposed drill programme is expected to test extensions of outcrops extending more than 500m, with the company aiming to be licensed to commence drilling within the month.

*SP Angel act as joint broker to Thor Mining

 

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

 

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.

 

DISCLAIMER

This note has been issued by SP Angel Corporate Finance LLP (“SP Angel”) in order to promote its investment services.

This information is a marketing communication for the purpose of the European Markets in Financial Instruments Directive (MiFID) and FCA’s Rules. It has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research.

This document is not based upon detailed analysis by SP Angel of any market; issuer or security named herein and does not constitute a formal research recommendation, either expressly or otherwise.

The value of investments contained herein may go up or down. Where investment is made in currencies other than the base currency of the investment, movements in exchange rates will have an effect on the value, either favourable or unfavourable. Securities issued in emerging markets are typically subject to greater volatility and risk of loss.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

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. This information is for the sole use of Eligible Counterparties and Professional Customers only and is not intended for Retail Clients, as defined by the rules of the Financial Conduct Authority (“FCA”) and  subject to SP Angel’s Terms of Business as published or communicated to clients from time to time.

It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. This document should not to be relied upon as authoritative or taken in substitution for the exercise of you own commercial judgment. SP Angel is not responsible for any errors, omissions or for the results obtained from the use of the information in this document.

This document has been prepared on the basis of economic data, trading patterns, actual market news and events, and is only valid on the date of publication. SP Angel does not make any guarantee, representation or warranty, (either expressly or implied), as to the factual accuracy, completeness, or sufficiency of information contained herein. This document has been prepared by the author based upon information sources believed to be reliable and prepared in good faith.

SP Angel, 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).

SP Angel Corporate Finance LLP is a company registered in England and Wales with company number OC317049 and whose registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SP Angel Corporate Finance LLP  is authorised and regulated by the Financial Conduct Authority whose address is 25, The North Colonnade, Canary Wharf, London E14 5HS and is a Member of the London Stock Exchange plc. 

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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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