SP Angel . Morning View . Friday 10 07 20
Copper traders wary as Chinese buy futures in London
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(CNR LN) – Non-executive director’s share purchase
(JAN LN) – Further drilling results from the Pitomberias vanadium property
(POG LN) – Court ruling remain pending and a new GM requisition
* (SOLG LN) – Magnetic survey confirms Rio Amarillo potential
(TSG LN) – Vein 25 East Zone development is well progressed
Nickel air filter can catch and kill Coronavirus
- Researchers have created a nickel foam filter which can catch and kill the Coronavirus and other Pathogens.
- The ‘catch and kill’ air filter traps the virus and kills it instantly with 99.8% of the novel SARS-CoV-2 virus killed in a single pass through a filter.
- The filter uses commercially available nickel foam heated to 200C (392F). It also kills 99.9% of anthrax spores in tests at the national University of Texas Medical Lab.
- The filters could help restore confidence in the purity of air in aircraft, airports, cruise ships and many other public spaces. (University of Houston)
Yangtze River flooding – described as the worst flood in living memory at Yangshou, China
- The video shows how a newly developed part of town was one of the worse affected areas highlighting how developers love to build on cheap, low lying and flood prone land the world over.
Copper – traders wary over Chinese buying of copper futures in London as Shanghai inventories rise 20% to 137,336t
- Some copper traders are wary over recent buying of copper futures in London despite ongoing falls in LME stocks
- Prices have been unexpectedly strong in this week lifted further in recent days through strong buying from China
- This may be partly driven by smelter supply issues caused by a lack of scrap copper in China.
- It may also be driven by the potential for strikes in Chile and flooding on the Yangtze river which has the potential to disrupt supplies
- China has been recovering faster than expected raising cathode production in June by 0.6% yoy to 699,000t (Antaike)
- Disruption to some major copper producers in China is a concern for Chinese smelters which depend on copper concentrates from these mines
- This is seen through the recent falls in smelter treatment charges to $53/t for copper though this may be due to larger Chinese smelters drawing concentrate feedstock away from smaller smelters and squeezing their margins.
Iron ore – record shipments of iron ore to China in June lift prices and Australian dollar
- Shipments from Port Hedland in Western Australia rose to 7% mom and 19% yoy to 46mt in June from 43mt in May.
- The strong performance is driven by supply issues in Brazil due to problems with Dams at a number of iron ore mines and other disruption caused by COVID-19.
- Disruption to Scrap supplies may have also driven smelters to produce more steel through blast furnaces.
- The port is the main export gateway for iron ore miners, and June’s outflow was higher than the previous record month set in 2019.
- Year-to-date shipments have risen more than 6% to 271mt (Bloomberg).
- China iron ore stockpiles rose 0.6% to 108.8mt this week, according Mysteel.
Ferro-vanadium – we expect Chinese ferro-vanadium prices to continue to rise on higher use of Australian iron ore
- High-grade Australian iron ores contain less vanadium than iron ores from many other parts of the world.
- This requires more ferro-vanadium to be fed into smelters to meet stricter regulations for structural rebar and other structural steels
- Major flooding along the Yangtze will be met with massive new work on flood defences.
Satellite sees 'Godzilla' Sahara dust plume sweep across the Atlantic Ocean (Space.com)
- This year’s dust plume rising off the Sahara Desert is much larger than normal.
- The dust storm is the largest of the 20 dust storms which scientists have record of with some 60-70% more dust than a typical plumes
- The Saharan Air Layer has also travelled further at around 5,000 miles to the West to the Caribbean southeastern US
- Typically, much of the dust in the plume ends up sinking in the Atlantic Ocean, where it feeds tiny microscopic organisms called plankton.
- The dust also fertilizes the Amazon and interferes with the formation of tropical storms and hurricanes. The dust is not good to breathe in.
IG TV interviews on copper and on gold
VOX Markets podcast on mining
Dow Jones Industrials
HK Hang Seng
US – Jobless claims come down by the most in one month but running at 1.3m people remain double the highest level during the last recession.
- Continuing claims run at around 10x the level since the start of the pandemic.
- Outlook also remains bleak with further declines in question as states including Texas and Florida delay or review plans to reopen amid an increase in COVID-19 infections, according to Bloomberg.
- On a different note, Fed balance sheet came down for a fourth week taking the total size to below $7tn, as emergency loans to primary dealers and foreign central banks to improve dollar liquidity expired.
- Meanwhile, holdings of corporate loans under an emergency lending programme climbed to $10.7bn, up from $10bn in the previous week.
- Jobless Claims (‘000): 1,314 v 1,413 the previous week and 1,375 est.
- Continuing Claims (‘000): 18,062 v 18,760 the previous week and 18,800 est.
- Trump says the US is on track to launch a vaccine very soon
- Tropical storm warning for NY
Parts of New York may have reached 68% Coronavirus immunity (The Telegraph)
- Antibody rates are reported to be among the world’s highest in parts of NY with almost 7 out of every 10 people trested showing COVID-19 antibodies.
- Residents may be largely protected from a second wave and may return to more normal life and working relatively soon.
- Parts of London may also reach herd immunity (>70%) relatively soon.
- We note a small number of people who have previously had the coronavirus may contract COVID-19 a second time
- While the world may live with the COVID-19 coronavirus for many years the news gives hope that life for most people might return to a new normal faster than we previously expected.
- China, Shrimp imports test positive for Covid-19 (China Foreign Ministry)
China – Credit growth continued strong in June as authorities make sure businesses and consumers have access to liquidity amid the pandemic related slump.
- Previously, PBOC Governor Yi Gang indicated that aggregate social financing could increase by more than 30tn yuna this year, up from CNY 25.6tn recorded last year.
- Aggregate Financing (CNY bn): 3,430 v 3,191 in May and 3,050 est.
- New Yuan Loans (CNY bn): 1,810 v 1,482 in May and 1,800 est.
China - factory gate prices fell in June
- Slow economic recovery remains intact
China to TAX citizens global income for first time – sounds similar to US tax
- Capital Economics report the ‘Acceleration in credit growth has further to run’
- Credit growth in China hit a two year high in June.
- Chinese banks extended RMB1,810bn in net new local currency loans in June, up from RMB1,480bn in May.
UK – US trade representative is optimistic the US will reach a trade deal with the UK in due course (Reuters)
- Liam Fox may get support from US in bid to become head of the World Trade Organisation
Oil – IEA says fall in demand in Q2 was less than expected raising oil demand forecast by 400,000bpd to 92mbpd.
- The IEA have also lowered their demand forecast for 2021 to 5.3mbpd due to the improvement seen in 2020. Am sure there is logic in there somewhere.
- IF OPEC agreed production cuts hold this should reduce global supply by 7.1mbpd in 2020 rising by 1.7mbpd in 2021
- The IEA estimates US oil production may have fallen by 1.3mbpd in May and 0.5mbpd in June
France – Industrial production jumps in May recovering some of its losses recorded in the previous two months and beating market estimates.
- Auto industry posted a 559%mom increase after nearly drawing to a halt in March (-46.6%mom) and April (-89.9%mom).
- Industrial Production (%mom/yoy): +19.6/-23.4 v -20.6/-35.0 in May and +15.4/-24.0 est.
South Africa – Business lobby proposed a $59bn reform package focused on 12 key areas including ensuring affordable power supply, allocating digital spectrum and improvind port, rail road and water infrastructure, Bloomberg reports.
South Africa – Business Day refers on Floyd Shivambu’s comments on mass ‘custodial’ seizure of land is a real possibility (Business Day)
- Shivambu is deputy president of the EFF a rather more extreme opposition party to the ANC
- “Such a move was also contemplated in a draft of the Preservation and Development of Agricultural Land Framework Bill of 2015.” According to Business Day, South Africa’s leading business newspaper.
Chile – Miners at Zaldivar and Centinela copper mines owned by Antofagasta are voting on whether to accept a final wage offer or go on strike.
- “None of the demands of workers were met… so this vote means that a rejection of the company’s final offer will become a strike,” Zaldivar union representing 652 of around 900 employees at the mine.
- “We strongly reject their offer because the only thing that interests them is producing at low cost without giving any consideration to the workers,” said Celso Pardo, president of Centinela’s supervisors union which represents 396 of around 2,000 total workers at the operation.
- Voting will conclude Friday/Monday.
US$1.1264/eur vs 1.1334/eur yesterday. Yen 106.85/$ vs 107.30/$. SAr 16.914/$ vs 16.915/$. $1.258/gbp vs $1.264/gbp. 0.693/aud vs 0.698/aud. CNY 7.011/$ vs 6.949/$.
Gold US$1,800/oz vs US$1,812/oz yesterday - North Korean leader's sister says another summit unlikely but "a surprise thing may still happen" (Reuters)
Gold ETFs 104.3moz vs US$104.2moz yesterday
Platinum US$836/oz vs US$849/oz yesterday
Palladium US$1,943/oz vs US$1,955/oz yesterday
Silver US$18.60/oz vs US$18.79/oz yesterday
Copper US$ 6,294/t vs US$6,302/t yesterday
Aluminium US$ 1,659/t vs US$1,682/t yesterday - LME data shows 1mt of aluminium is off-warrant
- The LME has released off-warrant stock data in an effort to increase transparency of global metal availability.
- LME data showed over 1.2mt of metal was stored off-warrant at the end of May 2020.
- Over 1mt of aluminium was being stored off-warrant, on top of the 1.6mt already listed in LME sheds.
- The report also highlighted an extra 161,000 tonnes of copper- 114,000 tonnes of which is being stored in Europe.
- The data comes following new reporting rules which came into effect in Feburary, which means warehouse operators must report off-warrant stocks data to the LME.
- The LME will publish off-warrant stocks data on the 10th day of every month going forward (Fastmarkets MB).
Nickel US$ 13,085/t vs US$13,455/t yesterday
Zinc US$ 2,165/t vs US$2,141/t yesterday - Zinc set for best week since 2018
- Zinc is set for its biggest weekly advance since 2018 as it recovers from the slump caused by the pandemic.
- LME zinc rose as much as 0.8% this morning to $2,174/t- up for a fifth straight day.
- Prices on the Shanghai Futures Exchange have risen 6.8% so far this week to $2,163/t (Bloomberg).
Lead US$ 1,843/t vs US$1,832/t yesterday
Tin US$ 17,125/t vs US$17,100/t yesterday
Oil US$41.7.0/bbl vs US$43.2/bbl yesterday - In a surprising outcome, oil markets are showing a shortage of supply in certain grades of supply
- Last month, OPEC+ agreed to extend cuts through July in an effort to rebalance oversupplied markets in the face of pandemic-hit demand
- The cuts were supposed to take 10% off the markets with July's cut amounting to 9.6MMbopd
- But now there are signs that markets are undersupplied in key crude grades
- Reports suggest a lack of supply in Urals and Arab Light thanks to continuing deep production cuts as well as a rebound in demand by key customers such as China and Northern Asia
- The price of Urals, Russia's flagship grade, is now at record premiums to the Brent crude benchmark, briefly changing hands at US$2.40/bbl above Dated Brent last week to reflect the undersupply
- That marks a sharp turnaround compared to a discount of more than US$4.50/bbl recorded in April
- Urals for delivery to Rotterdam, the main oil refinery hub in northwest Europe, were selling at a premium of US$1.90/bbl by the end of June, matching a prior record high
- This, in effect, means that Rotterdam Urals were selling at c.US$45/bbl, some 3x the price in early April
- A similar pattern is being observed for other sour crude grades, which are commanding premium prices even with global oil demand still 10% below normal levels
- Under ordinary circumstances, medium-sour crude that Saudi Arabia and its OPEC partners pump is usually cheaper than light sweet crude with a lower sulphur content
- However, OPEC, which mostly pumps medium-sour crude, has dramatically cut output to its lowest level since 1991
- Further, Iran and Venezuela, which also supply medium and heavy sour crude, have both seen production severely curtailed due to US sanctions as well as a lack of investment
Natural Gas US$1.758/mmbtu vs US$1.848/mmbtu yesterday - Natural gas prices are off again following yesterday’s inventory report
- Inventories rose to 3,133Bcf as of 3 July, according to EIA estimates
- This represents a net increase of 56Bcf from the previous week
- Expectations were for a 57Bcf build in stockpiles according to survey provider Estimize
- Stocks were 685Bcf higher than this time last year, and 454Bcf above the five-year average of 2,679Bcf
- At 3,133Bcf, total working gas is within the five-year historical range.
- The weather is expected to be warmer than normal for most of the US over the next two weeks which should increase cooling demand
- That will likely be offset by the slowing of the reopening of the US economy due to the rise in the spread of COVID
- There is one disturbance in the Atlantic near North Carolina that has a 90% chance of becoming a tropical cyclone
Uranium US$32.95/lb vs US$32.95/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$103.1/t vs US$102.8/t
Chinese steel rebar 25mm US$533.5/t vs US$529.1/t
Thermal coal (1st year forward cif ARA) US$57.9/t vs US$58.4/t
Coking coal swap Australia FOB US$121.0/t vs US$121.0/t
Cobalt LME 3m US$28,500/t vs US$28,500/t
NdPr Rare Earth Oxide (China) US$41,807/t vs US$41,608/t
Lithium carbonate 99% (China) US$4,851/t vs US$4,790/t
Ferro Vanadium 80% FOB (China) US$29.5/kg vs US$29.5/kg
Antimony Trioxide 99.5% EU (China) US$4.9/kg vs US$4.9/kg
Tungsten APT European US$205-215/mtu vs US$215-225/mtu
Graphite flake 94% C, -100 mesh, fob China US$430/t vs US$460/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,275/t vs US$2,350/t
Fisker to land $50m investment and looks to go public
- EV maker Fisker, launched by Henrik Fisker has received a $50m investment from hedge fund manager Louis Bacon. (Autonews)
- Use of funds will be engineering for the SUV due to be rolled out in 2022 at a starting price of $37,500.
- Post deal valuation is $1.6bn according to those familiar with the matter.
- Henrik Fisker previously founded Fisker Automotive which filed for bankruptcy in 2013 after burning through $1.4bn in private investment and tax-payer loans. (Reuters)
- Fisker is now in talks to go public through a sale to a blank check acquisition company.
Polymer coating for lithium-ion cathode improves operating voltage
- Argonne National Lab and HK University of Science and Technology team has found conducting polymer PEDOT both protects the cathode and allows transfer of lithium ions and electrons. (New Atlas)
- The team found that the polymer applied from a gas, using an oxidative vapor deposition technique covered the entire surface of the cathode, a far more comprehensive coating.
- The polymer coating boosted operating voltage from 4.2V to 4.6V in lithium-ion batteries. This would reduce the cost of battery packs and extend battery life.
- The study is published in two articles in Advanced Energy Materials and Nature.
Californian start-up raises $35m Series D funding in pursuit sodium-ion batteries
- Natron Energy which is building a battery using Prussian blue analogue electrodes and a sodium ion electrolyte has raised $35m in Series D funding. (PV magazine)
- The funding round was headed by ABB Technology Ventures, NanoDimension Capital and Volta Energy Technologies.
- Natron has received $50m in venture funding and $5m from the US Department of Energy.
- Prussian blue provides a modest energy density but is a very abundant material and inexpensive so might provide a more cost effective and sustainable energy storage medium.
- Natron is developing batteries for data center UPS, electric forklifts, smart grids and renewables support.
Condor Gold* (CNR LN) 41.25p, Mkt Cap £48.0m – Non-executive director’s share purchase
Click here for Initiation note pdf
- Condor Gold reports that a non-executive director, Jim Mellon, has purchased an additional 400,000 shares in the company for a total of £152,000 or an average price of 38p/share.
- The purchase brings Mr. Mellon’s holding to approximately 18.4m shares or 15.7% of the company.
- We note that the purchase price exceeds that of the recent £6.6m fund-raising priced at 36.5p per unit of one ordinary share and one half of one unlisted share purchase warrant in which Mr. Mellon also participated.
- The fund-raising was primarily used to advance the La India Project in Nicaragua towards production. The project contains an open-pittable mineral resource of 1.1moz of gold from 3 permitted open –pit sites in close proximity to the permitted processing plant site.
Conclusion: We interpret today’s announcement of further support for Condor Gold by a high-profile non-executive director with a meaningful stake in the business as a positive demonstration of confidence in the future of Condor Gold’s plan to develop La India.
*SP Angel act as sole broker to Condor Gold
Jangada Mines (JAN LN) 2.65 pence, Mkt Cap £5.9m – Further drilling results from the Pitomberias vanadium property
- Jangada Mines reports further results from its 19 holes drilling programme at their Pitomberias vanadium prospect in Brazil where the company has now completed a total of 1,058.85m drilling following on from the five holes completed in 2019.
- The results include:
- An intersection in hole DD20Pl21 of 25.25m at an average grade of 0.56% vanadium pentoxide (V2O5), 10.81% titanium dioxide (TiO2) and 54.01% ferric oxide (Fe2O3), including 7.00m averaging 0.73% V2O5, 14.14% TiO2and 68.91% Fe2O3 at the Pitomberias North property; and
- The first intersection from the Goela target,in hole DD20Pl22, of 13.50m at an average grade of 0.60% V2O5, 12.05% TiO2 and 58.97% Fe2O3, including 3.30m averaging 0.74% V2O5, 14.40% TiO2 and 64.53% Fe2O3
- Chairman, Brian McMaster, said that ʺ "We have received the last drill results from the Pitombeiras North target, which at 0.56% V2O5 is above the 0.539% V2O5average grade to date. This concludes a successful drilling campaign at this target, which has confirmed consistent grades, widths and continuity, marking a great achievement from our exploration team. The first drill result from the Goela Target has also shown grade consistency and we are now awaiting the last five remaining results, which should be reported in the next couple of weeks. We will then be able to begin calculating our initial JORC Resource estimate and preparing the accompanying technical report."
- The company says that once the drilling at Goela is completed and all assay results are received, it has sufficient financial resources to ʺto define a JORC compliant Mineral Resource estimate and subsequent Preliminary Economic Assessment prepared by an independent engineering company to be selectedʺ.
Petropavlovsk (POG LN) 27p, Mkt Cap £886m – Court ruling remain pending and a new GM requisition
- “The Judge, Mr Justice Mann, found that Everest's complaints regarding the appointment of the Temporary Directors are arguable but declined to determine its application summarily and a full hearing of Everest's application will now be required,” the announcement read.
- “As a result, pending the outcome of a further hearing on the application, the date of which will be set in due course, the Temporary Directors will remain as temporary directors of the Company, subject to the terms of a revised order by the court which is expected to be delivered later today.”
- Separately, Everest, a 5% shareholder in the Company, sent the Company a requisition to hold a general meeting and proposed number of resolutions including:
- The appointment of two new directors Mr Paul Adrian Bushell and Mr Ivan Kulakov;
- The appointment of Mr James W. Cameron Jr, Ms Charlotte Phillipps, Mrs Katia Ray and Mr Maxim Kharin as Directors (current Directors of the Company) in the event that they have been removed as Directors prior to the Date of the General Meeting;
- The removal of Mr Peter Hambro, Dr Alya Samokhvalova, Mr Johnny Martin Smith, Mr Martin Smith and Ms Angelica Phillips as Directors of the Company (the 'Temporary Directors'); and
- To remove any Director that may have been appointed since 9 July 2020 until the conclusion of the General Meeting requisitioned by Everest.
SolGold* (SOLG LN) – 20.4p, Mkt cap £423m – Magnetic survey confirms Rio Amarillo potential
- SolGold has announced that high quality magnetic data from its Rio Amarillo project in northern Ecuador indicates a 12km long NE/SW trending corridor up to 3km wide and extending to a vertical depth of up to 1500m coincides with porphyry style mineralisation at surface.
- The company explains that copper and gold mineralisation discovered at surface at Rio Amarillo, which is located 30km south-east of the company’s 3bn tonnes Alpala project, is ʺtypical of the surface expression of large fertile porphyry copper and copper-gold systems.ʺ
- The company adds that ʺA cluster of preserved porphyry targets at the Rio Amarillo Project is geologically consistent with regional distribution of porphyry deposits. The giant Alpala (~14Mt CuEq) and Llurimagua [owned jointly by the Ecuadorian State mining company Enami and Chile’s state-owned copper producer, Codelco] (~11Mt CuEq) deposits occur some 30km and 60km away respectively.ʺ
- At this stage, Solgold identifies four main targets at Rio Amarillo, the Varela, Florida, Palomar and Chalanes areas which ʺshow porphyry style surface mineralisation covering a vertical extent of up to 1500m over a 12km long, by 3km wide, northeast trending porphyry belt that has never been explored or drilled before SolGold acquired the ground in 2017ʺ. These four targets are the highest priority of some 15 potential locations identified by ʺmagnetic signatures consistent with porphyry copper and copper-gold deposits over a 12km by 10km areaʺ.
- Solgold explains that ʺThe major northeast trending magnetic belt is intersected by a secondary northwest magnetic feature, likely to represent the intersection of two deep seated crustal fractures, later filled by intrusive bodies with magnetic characteristics indicative of strongly differentiated and mineralised systems. The structural regime has strong similarities to that encountered at the Alpala Deposit some 30km to the northwest.ʺ
- Solgold’s Technical Services Manager, Ben Whistler, explained that ʺdrill testing at Rio Amarillo is expected to commence this year when drill targets are finalised, and permits are received.ʺ
- Further preliminary geological work, including additional rock-saw channel sampling, soil grid sampling and mapping of hydrothermal alteration patterns is planned ahead of the drilling to aid drill site targeting.
Conclusion: The exploration know-how developed at Alpala is being deployed elsewhere in Ecuador and the identification of a large scale target area, with similar characteristics, at Rio Amarillo, only 30km from Alpala is evidence of the successful roll-out of Solgold’s exploration model. We look forward to further news as specific drill targets are identified and drilling gets underway later this year.
*SP Angel act as financial advisor and broker to SolGold
Trans-Siberian Gold (TSG LN) 95p, Mkt Cap £83m – Vein 25 East Zone development is well progressed
- Development works at the Vein 25 East Zone orebody of the Asacha Gold Mine remain on track for the start of commercial production.
- The Company mined ~9.5kt of development ore at 19.8g/t during since April this year that was processed and yielded 6.0koz in gold production.
- Metallurgy is similar to the Main Zone ore demonstrating +94% gold recoveries in the existing plant.
- Total volume of mine development on V25 completed to date amounts to 15,400m3.
- Exploration development enabled to channel sampling that returned high grade results including 1.6m at 56.2g/t (Level 200) and 1.4m at 51.4g/t (Level 170).
- Additionally, exploration works have discovered mineralisation in secondary veinlet of V25 that was not previously known with channel samples returning an average of 12-28g/t over 0.5-0.7m.
- The Company expects the contribution from the V25 East Zone to increase during the year as mining transition from the Main Zone maintaining gold production at the Asacha Gold Mine.
- Q2/20 production results are said to be released in mid-July.
Conclusion: Development of the higher grade East Zone orebody is progressing well with the Company expecting to ramp up plant feed contribution from the area as mining transitions from the Main Zone helping to maintain gold production at the Asacha Gold Mine while exploration from underground workings returns high grade results pointing to the potential to add new ounces to the Asacha resource.
John Meyer – 0203 470 0490 / 07943031001
Simon Beardsmore – 0203 470 0484
Sergey Raevskiy – 0203 470 0474
Richard Parlons – 0203 470 0472
Abigail Wayne – 0203 470 0534
Rob Rees – 0203 470 0535
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
Natural Gas, Uranium, Iron Ore
Bloomberg OTC Composite
Lithium Carbonate, Ferro Vanadium, Antimony
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