SP Angel . Morning View . Nickel prices rise on Indonesian ban speculation
Paul Kettle
SP Angel Research Note -4 min read
10:11, 8th August 2019

SP Angel – Morning View – Thursday 08 08 19

Nickel prices rise on Indonesia ban speculation


MiFID II exempt information – see disclaimer below


Anglo Asian Mining* (AAZ LN) BUY – TP under review – H1/19 exploration update highlight mineral resource growth potential

Armadale Capital (ACP LN) – Armdale reports high-purity graphite flake concentrate from Mahenge Liandu graphite in Tanzania

Danakali (DNK AU) – Credit approval for $200m of senior dent finance

IronRidge Resources* (IRR LN) – Agrees drilling for equity plan

PolyMet Mining* (PLM US) – DNR rejects environmental group request to reconsider Northmet mine approval

Resolute Mining (RSG LN) – Additional gold hedging

Savannah Resources* (SAV LN) – Update on grant of permits in Oman

Vast Resources* (VAST LN) - £655k equity raise


Rare Earth Producers in China ready to pass on tariffs to US customers (South China Morning Post)

  • China’s rare earth producers say they are ready to weaponise their supply stranglehold, pass any tariff as cost to US customers
  • China’s Association of China Rare Earth Industry, representing nearly 300 miners, processors and manufacturers met on Monday
  • “US consumers must shoulder the cost from US-imposed tariffs,” according to the association.
  • We would not expect the association to ban exports to the US the association said they are ready to use their dominance of the industry as a weapon in the country’s trade war with US customers.
  • The passing on of tariff costs is perfectly understandable and the rest of the statement feels more like sabre rattling than firm industrial sabotage


Dow Jones Industrials





Nikkei 225





HK Hang Seng





Shanghai Composite





FTSE 350 Mining





AIM Basic Resources







US – US equity futures are flat this morning with the S&P500 index closing little changed (+0.08%) yesterday

  • A consolidation in equity markets saw US Treasury yields bouncing of multi year lows capping the latest rally in sovereign bond prices.
  • In Asia, the MSCIE Asia Pacific Index climbed for a second day while Shanghai Composite in China rebounded (+0.9%)  from the lowest level since February.
  • In Europe, equities are also stronger on Thursday (Stoxx Europe 600 +0.68%) led by tech and healthcare companies. Yields on 10y bunds are trading at -0.56% this morning, up from 0.61% hit on Wednesday.

US Treasury 30-year bond yields fall to near record low

Chinese Renminbi falls further in what may be a deliberate act by China to show strength against the US

  • The US Treasury sold $27bn worth of 10-year notes into the market yesterday as rate cuts in Asia push down yields and create demand for Treasury stock
  • Investors are looking to protect funds from slowing global growth and potential economic turbulence caused by the US-China trade war and a multitude of other risks.
  • We suspect China which is a major holder of US Treasury bills may not be a buyer in the current auction round given Trade War tensions.
  • German bond yields hit a record low, well into negative territory
  • Rate cuts in India, Thailand and New Zealand designed to help local manufacturers against an onslaught of Chinese goods displaced by the US and now made cheaper by a weaker Renminbi
  • The 10-year bond sale is part of $84bn of quarterly refunding to support $26.7bn of additional federal expenditure.


China – The central bank set the reference rate weaker than the 7.0 USDCNY mark for the first time since 2008.

  • The reference rate was set at the 7.0039 level, 0.06% weaker than the previous day.
  • Trade data released this morning beat market estimates in July, although the trade outlook remains weak with US administration implementing a 10% import tax on more imports from China since 1 September.
  • Some orders’ front loading this month is expected before new import tariffs come into force in September while weaker renminbi is also due to provide support to the nation’s exports.
  • Overseas shipments to the EU (+6.5%yoy) and Asia (+15.6%yoy) climbed noticeably offsetting the drop in exports to the US (-6.5%yoy following a -7.8%yoy drop in June).
  • Imports from North America, Japan and Korea posted significant drops with imports from the EU down modestly on lower inbound shipments from the UK and Germany. Imports from resource rich Brazil and Australia climbed strongly.
  • Exports (%yoy, US$): 3.3 v -1.3 in June and -1.0 forecast.
  • Imports (%yoy, US$): -5.6 v -7.4 (revised from -7.3) in June and -9.0 forecast.


Japan/South Korea – Japan approved export of high-tech products to South Korea for the first time since imposing restrictions last month, Reuters reports.

  • However, the clearance came together with a warning from authorities.
  • “If improper use of exports are found beyond three high-tech materials, we will implement through steps to prevent recurrence including expanding application examination,” Japan’s Industry Ministry said.


Saudi Arabia – Oil prices rebounded this morning on reports Saudi Arabia contacted other producers to discuss plans to stem the sell off amid worsening global growth outlook, according to an official from the kingdom who asked not to be identified.

  • Oil dropped around 10% this month on weaker demand expectations.
  • OPEC and its allies are meeting early next month.


Philippines – The central bank cut the benchmark rate by 25bp to 4.25% on the back of easing economic growth and inflation outlook.

  • Economic growth slowed to 5.5% in Q2 marking the slowest rate of expansion in more than four years (5.9% est.).
  • Inflation hit a two year low of 2.4% in July, down from 2.7% in June.
  • The move was broadly in line with market expectations and comes a day after other three banks (India, New Zealand and Thailand) reduced there rates.



US$1.1219/eur vs 1.1201/eur yesterday. Yen 106.09/$ vs 106.21/$. SAr 15.015/$ vs 14.899/$. $1.218/gbp vs $1.218/gbp. 0.677/aud vs 0.672/aud. CNY 7.044/$ vs 7.043/$.


Commodity News

Precious metals:         

Gold US$1,499/oz vs US$1,490/oz yesterday

   Gold ETFs 77.0moz vs US$76.5moz yesterday

Platinum US$860/oz vs US$856/oz yesterday

Palladium US$1,421/oz vs US$1,441/oz yesterday

Silver US$17.05/oz vs US$16.76/oz yesterday


Base metals:   

Copper US$ 5,753/t vs US$5,675/t yesterday

Aluminium US$ 1,768/t vs US$1,760/t yesterday

Nickel US$ 15,715/t vs US$14,760/t yesterday - Nickel price rises on talk of Indonesia export ban

  • Nickel prices are benefiting from speculation that Indonesia will impose tighter restrictions on ore exports (Fastmarkets).
  • Reports suggest that Indonesia will ban the export of unprocessed nickel ore in 2022.
  • The LME three-month nickel price rallied by 3% after the close of trading yesterday, reaching a year-to-date high of US$15,500/t.

Zinc US$ 2,273/t vs US$2,289/t yesterday

Lead US$ 2,029/t vs US$1,989/t yesterday

Tin US$ 16,830/t vs US$17,030/t yesterday



Oil US$57.5/bbl vs US$58.7/bbl yesterday

Natural Gas US$2.110/mmbtu vs US$2.094/mmbtu yesterday

Uranium US$25.30/lb vs US$25.30/lb yesterday



Iron ore 62% Fe spot (cfr Tianjin) US$89.3/t vs US$93.2/t

Chinese steel rebar 25mm US$571.7/t vs US$573.6/t

Thermal coal (1st year forward cif ARA) US$65.8/t vs US$65.8/t

Coking coal futures Dalian Exchange US$208.2/t vs US$208.4/t



Cobalt LME 3m US$28,300/t vs US$28,300/t

NdPr Rare Earth Oxide (China) US$44,507/t vs US$43,987/t

Lithium carbonate 99% (China) US$8,305/t vs US$8,314/t

Ferro Vanadium 80% FOB (China) US$40.0/kg vs US$40.0/kg

Antimony Trioxide 99.5% EU (China) US$5.4/kg vs US$5.4/kg

Tungsten APT European US$210-225/mtu vs US$210-225/mtu


Battery News


Company News

Anglo Asian Mining* (AAZ LN) FOLLOW 134p, Mkt Cap £154m – H1/19 exploration update highlight mineral resource growth potential

BUY – TP under review

  • The team completed the ranking of primary targets identified by the recently completed geophysics survey kick starting work on high priority prospects, continued both infill and step out drilling at producing assets as well as progressed with exploration work at Ordubad.
  • At Gedabek Contract Area, main objectives of the 2019 exploration programme focused on in-pit as well as near-mine drilling at Gedabek, exploration of the mineralisation potential at Gedbek underground, Gadir lateral and down-dip exploration potential and prospective work on ‘high-priority’ ZTEM targets.
  • Gedabek in-pit drilling returned good copper and gold grades with the data to be used in the Mineral Resource update. Selected intersections included:


Depth, m

Interval, m

g/t Au

g/t Ag

% Cu

























  • Additionally, some 63 RC holes were completed in H1/19 in adjacent to the open pit for grade control and mineral resource expansion purposes.
  • At Gadir, 101 core holes were completed with roughly a third dedicated to test lateral and dip extension of the orebody and 2/3s of infill drilling with selected results including:


Depth, m

Interval, m

g/t Au

g/t Ag





















  • Field mapping and outcrop sampling is in progress on ‘high priority’ ZTEM targets including Korogly, Zehmet and Gyzyljadag/Yagublu.
  • Samples are being assayed for gold, silver, copper and zinc.
  • At Korogly and Zehmet, the team is referring to excellent results with one sample showing strong limonitic alteration with a grade of 95.4g/t.
  • At Zehmet, trenching returned gold grades of up to 3.44g/t and 2.09% Cu.
  • At Gosha Contract Area, prospective work focused on step out drilling testing dip extensions of the Gosha orebody as well surface sampling at adjacent targets.
  • 6 core drill holes have been completed and 2 more are in progress at the Gosha mine for a total of 1,896m with assays showing very narrow but high grade intersections including:


Depth, m

Interval, m

g/t Au













  • Outcrop samples at Asrikchay returned high contained grades of gold/silver/copper in one of the areas labelled QS including:


g/t Au

g/t Ag

% Cu

















  • Given high grades recorded in samples, the Company is planning to follow up QS with drilling H2/19.
  • Surface sampling at Khatinca, another target located 4km away from the Gosha mine that was selected due favourable geology, did not return notable grades with further work planned at the site.
  • At Ordubad Contract Area, drilling was conducted at the Dirnis copper/silver prospect (18 drillholes for 3,642m) and Keleki (10 drillholes for 1,765m) as well as a small geochemical programme at Destabashi.
  • At Dirnis selected drill results included narrow high in copper intersections including:


Depth, m

Interval, m

g/t Ag

% Cu
















  • Remaining results are to be reported once available.
  • At Keleki, drillholes are being assayed with results expected in Q3/19.
  • The plan is to spend $1.8m in H2/19 on remote sensing, mapping, geochemical and drilling data interpretation at Ordubad assessing the region’s potential for hosting copper/gold deposits including porphyry type systems.

Conclusion: Exploration work continues across the Company’s properties in Azerbaijan. Drilling at operating mines point to a potential for mineral resource expansion while exploration work at greenfield target areas returns exciting early results (areas at Asrikchay, Zehmet and Korogly, in particular) to be followed up with more groundwork including drilling. With the Gedabek running smoothly, the team is working on building the pipeline of projects across its permit areas to ultimately extend the life of its operations.

*SP Angel act as Nomad and broker to Anglo Asian Mining


Armadale Capital (ACP LN) FOLLOW 1.4p, Mkt Cap £5.1m – Armdale reports high-purity graphite flake concentrate from Mahenge Liandu graphite in Tanzania

  • Armadale Capital report the production of exceptionally high purity graphite flake concentrate from the Mahenge Liandu Graphite Project in Tanzania.
  • Testwork on material from 7 drill holes produced 97% average purity in test concentrates for jumbo, large and medium graphite flake material.
  • Test-work on a high-grade composite aims to maximising the proportion of larger flake sizes to increase sales prices when the mine comes into production
  • So far the results indicate a premium quality, high-value graphite concentrate may be produced at Mahenge Liandu
  • A DFS is expected by the year end.
  • Scoping study:
  • 400,000tpa - Throughput
  • 32 year - LOM
  • 49,000tpa av production
  • 1:1 strip ratio
  • US$408/t - operating cost
  • 12.5% average grade (Total Graphitic Content)
  • 122% - pre-tax IRR of
  • US$349m - and NPV of
  • US$35m - capex
  • 1.2 year payback
  • 51.1mt JORC resource grading 9.3% TGC
    • including 38.7mt Indicated grading 9.3% and 12.4mt Inferred grading 9.1% TGC

Conclusion: Armadale is making good progress at Mahenge Liandu in Tanzania. We look forward to the results of the DFS to confirm and potentially enhance the economics of the project.

We see good quality spherical graphite as fetching significant premiums in the market. Flake graphite is generally used in industrial applications but can also be sphericalised and sold for use in Li-ion battery anodes.

Syrah Resources, the world’s largest graphite mine at around 104,000t last year is currently seen as disrupting the market due to the sheer scale of its new production which should sell for two to three times the price of its normal run-of-mine production.

Syrah sold Q1 production at around US$469/t vs a production cost target of $400/t and is looking to ramp up production to >350,000tpa of graphite TGC.


Danakali (DNK AU) A$0.74/s, Mkt cap A$194m – Credit approval for $200m of senior dent finance

  • Danakali report the approval of $200m of senior debt finance from the Africa Finance Corporation (AFC) and African Export Import Bank (Afreximbank).
  • The Mandated Lead Arrangers now have formal credit approval to provide US$200m of senior debt finance for the Colluli project in Eritrea.
  • The deal includes formal approval of export credit support from the Export Credit Insurance Corporation of South Africa SOC Limited (ECIC) which is the first time ECIC has provided export credit support to a non-South African bank.
  • This is described as a ground-breaking project financing for Danakali, CMSC and Eritrea and is a further step forward for the project.
  • Danakali capex for the first stage is US$322m plus a further US$202m in year six when the mine ramps up production to 944,000tpa of SOP from 472,000tpa


IronRidge Resources* (IRR LN) FOLLOW 12.75p, Mkt Cap £39.7m – Agrees drilling for equity plan

  • IronRidge Resources has announced that it has secured an agreement with the African focussed drilling company, Geodrill, covering the drilling of up to 40,000m ($4m) in exchange for equity.
  • The agreement, which takes the form of a binding Memorandum of Understanding (MoU), “provides for the issue of ordinary shares in IronRidge for 50% of the drilling cost up to a value of US$4m in two US$2m stages”. The MoU is valid for 24 months and “can be terminated by either party within 14 days of formal notification”.
  • “The agreed payment mechanism comprises a share valuation of 90% of the 15-day volume weighted average price (VWAP) against the value of each monthly invoice”.
  • “The MoU also allows for the equity component to be in the form of a 6-month convertible loan at IronRidge's election. The agreed pricing mechanism and payment terms for the convertible loan will be 95% of the 5-day VWAP prior the commencement of the agreed drilling program. The term of the loan will be for 6 months with an accrued annual interest rate of 8%. At completion of the 6-month term, GeoDrill may elect to be paid in shares and/or cash.”
  • Shares issued to Geodrill will be the subject of a 3-month lock-up period, although shares issued under the convertible loan will be exempt from the lock-up terms.
  • Geodrill is a Canadian-listed company and is well established in west Africa with 67 rigs deployed on exploration and development projects across Ghana, Burkina Faso, Cote d’Ivoire, Mali and Zambia. Geodrill is able to provide aircore, reverse-circulation and diamond core-drilling services as well as a water well drilling capability and its scope of activities and operational areas of activity appears to match IronRidge’s requirements well.
  • Today’s announcement says that IronRidge “has utilised GeoDrill's expertise on its West African portfolios including its Ghana lithium project having completed in excess of 12,000m of RC and 1,000m of DD over the first two drill phases, and in excess of 3,900m of AC in Côte d'Ivoire.”
  •  Commenting on the “access to expert drilling capabilities” the MoU provides to IronRidge, CEO, Vincent Mascolo, said that “GeoDrill's support endorses the IronRidge exploration business model, our commodity and jurisdictional portfolios and the team. We look forward to working closely with GeoDrill as we progress our portfolios.”
  • Geodrill is already engaged on a 13,200m drilling programme on IronRidge’s Cape Coast Lithium project and its CEO, David Harper said that “Having previously worked with IronRidge on their Cape Coast Lithium project and Côte d'Ivoire Gold projects, we understand their exploration business model and it was an easy decision for us to partner with IronRidge in this drilling for equity program”.
  • Mr. Harper went on to say that “We see significant upside in IronRidge's asset portfolio, we understand Ghana and Côte d'Ivoire well, and we believe that IronRidge has the right commodity and jurisdiction diversification, with Gold and Lithium being well positioned at this time”.

Conclusion: Building on previous work together on the Cape Coast Lithium Project in Ghana, the link with Geodrill provides IronRidge with access to drilling capacity as it progresses its exploration programmes in west Africa and should help to simplify exploration management.

*SP Angel act as nomad and broker to IronRidge Resources


PolyMet Mining* (PLM US) US$0.37, Mkt Cap US$369m – DNR rejects environmental group request to reconsider Northmet mine approval

BUY – Target under review (was US$1.56/s)

  • The Department of Natural Resources has rejected an application by an environmental group to reconsider its approval of the newly approved Northmet mine in Minnesota.
  • Further drilling at the mine could show better than expected grades and we look forward to Polymet potentially expanding to process some 200,000t per day of ore from Northmet.
  • The plant may be able to help Antofagasta develop its Twin Metals project in Minessota which lies on the Mississippi side of the watershed in the Boundary waters area.
  • The plant is also very well located along the railroad from Talon Metals’ Tamarack nickel-copper project.

Conclusion: This is great news for Polymet which we hope will go on to reopen the Lake Erie process plant and to develop the new Northmet mine.

*SP Angel were formerly retained by Polymet Mining as UK broker and an SP Angel analyst has previously visited the mine site and process plant


Resolute Mining (RSG LN)  FOLLOW115.05 pence, Mkt Cap £1022.3m– Additional gold hedging

  • Resolute Mining reports that it has added a further 30,000oz of gold forward sales at a an average price of US$1519/oz in order to take advantage of the current gold price strength.
  • The total gold hedge book, including the sales announced today, now amounts to “190,000 ounces in monthly deliveries out to June 2020 representing less than 3% of Resolute's Ore Reserves”. This excludes “24,400 ounces forward sold by [the recently acquired] Toro Gold at an average price of US$1,356 in monthly deliveries to January 2020.” 
  • Resolute’s website includes the company’s presentation to the 6th August “Diggers & Dealers” conference in Australia which contains revised annualised production guidance, post the Toro Gold acquisition, of 490,000oz of gold.


Savannah Resources* (SAV LN)FOLLOW  4.05p, Mkt Cap £42.4m –Update on grant of permits in Oman

  • Savannah Resources has announced that it has received notice from the Public Authority for Mining (PAM) in Oman of PAM’s intention to grant mining licences over the Mahab 4 and Maqail South copper deposits.
  • The licences, are to be awarded once the scale of fees applicable under Oman’s new Mining Law, which came into force in March this year, have been set and the relevant payments made.
  • “Savannah is a 65% shareholder in the Omani company Al Fairuz Mining LLC, the holder of the Block 5 Exploration Licence which includes these two high-grade deposits”.
  • Savannah Resources’ CEO, David Archer, welcomed the news and explained that the “Mahab 4 and Maqail South are examples of the type of high-grade copper deposits that are characteristic of the Oman Ophiolite Belt and will be in the vanguard of new copper mine developments in Oman.  Block 5 remains highly prospective for the discovery of further high-grade deposits that could further augment the planned hub-and-spoke mine development based around Mahab and Maqail South.  We look forward to announcing the final award of the Mining Licences in due course.”

Conclusion: Oman has a history of copper mining and the news of PAM’s intention to award licences at Mahab 4  and Maqail South indicates that Savannah Resources is well placed to develop the next generation of mines.

*SP Angel acts as Nomad to Savannah Resources


Vast Resources* (VAST LN) FOLLOW 0.12p, Mkt Cap £11m - £655k equity raise

  • The Company raised £655k through a placing of 595m shares at 0.11p.
  • The issue was taken up by a new institutional investor.
  • The Company granted 34m warrants to the investor with half of those exercisable at 0.13p and the remaining half at 0.15p. All warrants expire on 8 Aug/22.
  • The cash raised will be directed towards immediate strategic operational requirements in Zimbabwe.
  • The Company reiterated its guidance to launch production at Baita Plai by the end of the year with funding discussions to replace the outstanding $4m Mearcuria loan facility as well as development capital for Romanian and Zimbabwean assets.

*SP Angel acts as Broker to Vast Resources




John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

James Mills -0203 470 0486



Richard Parlons – 0203 470 0472

Abigail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535


SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London



*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.


Sources of commodity prices


Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel


Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt


Oil Brent


Natural Gas, Uranium, Iron Ore


Thermal Coal

Bloomberg OTC Composite

Coking Coal




Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal


Metal Bulletin



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