SP Angel . Morning View . Monday 16 11 20

SP Angel . Morning View . Monday 16 11 20

Copper prices take off on positive Chinese economic data

 

MiFID II exempt information – see disclaimer below 

 

Bluejay Mining* (JAY LN) – BUY, Valuation 27.4p – Hammaslahti copper-zinc-gold-silver project fieldwork and drilling program starts in Finland

Botswana Diamonds (BOD LN) – Sekaka acquisition

Castillo Copper (CCZ LN) – Copper observed in first holes at the Big One project in Queensland

Endeavour Mining (EDV CN) – Endeavour acquires Teranga and seeks FTSE 100 listing

IronRidge Resources* (IRR LN) – IronRidge appoints new CFO

Panther Metals (PALM LN) – Acquiring gold project near Laverton, WA

Phoenix Copper* (PXC LN) – Structural geological study highlights Red Star potential

Rambler Metals and Mining* (RMM LN) – US$13.25m fund raising and restructuring

Sunrise Resources (SRES LN) – Project summaries

KEFI Gold and Copper (KEFI LN) – Equity raise to progress drilling at Hawiah and funding discussions at Tulu Kapi

Vast Resources (VAST LN) – First Baita Plai copper concentrate sale to be completed with week

 

Copper prices hit two-year high on positive Chinese industrial data

• Copper prices rose as much as 2.8% on Monday morning to $7,179/t as China’s industrial output beat expectations in October.
• China’s industrial production grew by 6.9% in October YoY, as retail sales grew by 4.3% and fixed asset investment grew 1.8%.
• The Yuan rose to a one-week high against the dollar on Monday morning, underpinned by the solid economic data (Reuters).
• Deliverable copper stocks on the Shanghai Futures Exchange fell 13,372 tonnes, or -10.2%, to 117,949 tonnes compared to a week prior.

 

China - PBOC has added a further Rmb800bn ($121bn) in medium-term one-year lending offsetting the Rmb600bn coming due in the month 

• China left its lending rate unchanged on medium-term funds this month at 2.95% (Bloomberg)
• The PBOC has added a net Rmb1.05tn of funds since August.
• China is remains focused on manufacturing and improving the value and quality of its output.
• Government policies continue to promote construction of new urban and other infrastructure as policies continue to draw people out of rural villages.
• New urban / suburban centers are being planned and built further enriching the Communist party elite who are able to buy discounted development land. The nation pays for the infrastructure to these sites.
• Over 4,500 construction and infrastructure projects were approved in October
• Subsidies for EV charging infrastructure and vehicles should help clean up the urban environment though ongoing construction of coal fired power stations remains a major concern from a global warming perspective.

China stats: Infrastructure investment +1.8% yoy in October

• Retail growth saw +4.3% yoy in October

China - October crude steel output rises 12.7 YoY

• Chinese crude steel production rose +12.7% yoy to 92.2mt in October up +5.5% to 873.9mt for the year-to-date
• Steel products production also rose +14% yoy to 118.489mt in October and +6.5% to 1.08bnt so far this year
• Primary aluminium output rose 9.7% to 3.2mt. 
• Industrial production continued to grow at +7% yoy through October
• Output by private enterprises rose +8.2% yoy
• Mining & quarrying saw production rise +3.5% yoy

 

Trafigura executive detained by Chinese customs officials over ferrous trade – be careful out there!

 

Recent interviews:

VOX - 11/11/20: https://www.voxmarkets.co.uk/media/5fae36b5b9f74a03c9dfcc02/?context=/listings/LON/BMN/multimedia/

• US Election, China growth policies Solgold*, Mkango*, Rainbow Rare Earths*: https://youtu.be/YKk5-kVpVGE
• EV revolution, gold and other ideas (Interactive Investor): https://www.youtube.com/watch?v=ja0IdjszfCc
• Metals Markets: Are they totally dependent on stimulus? (IG TV): https://youtu.be/TOiSwRpgfKM

*SP Angel act as nomad or broker or nomad and broker to companies mentioned in the above videos. 

 

APEX survey rankings for SP Angel commodity forecasts: 2^nd in Gold, 2^nd in Copper, 2^nd in Nickel, 1^st in Tin, 5^th in Iron ore.

• The survey takes forecast from 21 analysts from commodity traders, banks, economics and specialist commodity forecasters

 

 

Dow Jones Industrials		+1.37%	at	29,480
Nikkei 225		+2.05%	at	25,907
HK Hang Seng		+0.86%	at	26,382
Shanghai Composite		+1.11%	at	3,347

 

Economics

US – Biden and Harris have started putting an administration-in-waiting together and they are expected to deliver a statement on Monday covering their plans for a post-pandemic economic recovery.

• The consensus is building up that President Trump is coming to grips with his re-election defeat, Bloomberg reports.

 

China – Economic data paints the picture of a strengthening recovery following the pandemic hit first half of the year.

• Industrial production came in stronger than forecast with output adding 0.6pp during October taking growth up to 1.8% YTD.
• Retail sales growth accelerated in October narrowing down the YTD drop to 5.9% from 7.2% in nine months to September.
• Investments continued strong supported by government stimulus with FAI up 1.8% YTD.
• Growth is expected to stay robust through year-end and into the first few months of 2021 with the recovery in consumption and exports continuing, Bloomberg Economics wrote.
• Industrial Production (%yoy): 6.9 v 6.9 in September and 6.7 est.
• Retail Sales (%yoy): 4.3 v 3.3 in September and 5.0 est.
• FAI (YTD %yoy): 1.8 v 0.8 in September and 1.6 est.

 

Japan – GDP posted a positive reading in Q3 beating market estimates following a deep drop in the previous quarter, although, the economy remained 5.8% down on last year.

• An increase was driven by stronger exports and private spending that was in turn boosted by fiscal support programmes.
• Given the resurgence in virus cases both at home and abroad, the sustainability of a rebound is in question.
• GDP (%qoq): 5.0 v -7.9 in Q2 and 4.4 est.

 

UK – The government said the sudden departure of two senior figures from the Leave campaign will not change its stance in negotiations with the EU.

• On Sunday, the UK hinted that negotiations could stretch beyond the current weak with the EU saying it is prepared to take discussion into December if necessary.
• December 31 marks the end of Brexit transition period which unless two sides sign a trade deal will see the UK defaulting to trading with the EU on WTO terms.

Volumes of property sales currently in progress are up >67%yoy with more expensive southern regions seeing the biggest increase as buyers are aiming to take advantage of a stamp duty reduction, Rightmove data shows.

• Nationwide advertised asking price dropped 0.5%mom in November to £322k, although, it is still up 6.3%yoy, marking the largest increase in over four years.
• Rightmove estimates prices to post a 7% growth this year.

UK to roll out vaccine in December through close cooperation with Pfizer

• The Health Secretary says the UK will be ready to roll out the vaccine as soon as it becomes available.
• This could be from 1^st December
• The vaccine is currently estimated to be 90% effective and could help the nation reach a level of herd immunity sooner than expected

 

Australia - China threatens to ban imports of copper concentrates and sugar while refusing to cut tariffs on barley

• Australia represents around 4% of Chinese copper concentrate imports and any ban will inevitably force concentrate prices higher

 

Peru – government thrown into turmoil as interim leader resigns following protest fatalities

• The protests could threaten copper and other metal production

 

Zambia – Country to miss overdue Eurobond payment

• Zambia will not pay an overdue Eurobond coupon before a 30-day grace period expires at the end of the day, according to the country’s finance minister.
• Zambia missed a $42.5m coupon payment on one of its dollar-denominated sovereign bonds last month, and has requested that bondholders defer interest payments until April.

 

Swiss government to ban deducting bribes, proceeds of financial crimes from taxes starting in 2022

• At long last the Swiss are going to ban the deduction of bribes from taxes starting in 2022.
• The long-awaited move brings Switzerland into compliance with the OECD.
• Switzerland only changed its riles for bribes to public officials in 2001 and made it s criminal offense for a company to bribe a private individual in 2015.
• The Swiss are also going to stop companies from deducting foreign fines from their taxes.

 

Currencies

US$1.1862/eur vs 1.1814/eur last week.  Yen 104.37/$ vs 105.09/$.  SAr 15.404/$ vs 15.632/$.  $1.321/gbp vs $1.316/gbp.  0.730/aud vs 0.724/aud.  CNY 6.572/$ vs 6.617/$.

 

Commodity News

Precious metals:         

Gold US$1,894/oz vs US$1,878/oz last week

   Gold ETFs 110.3moz vs US$110.5moz last week

Platinum US$906/oz vs US$888/oz last week

Palladium US$2,349/oz vs US$2,349/oz last week

Silver US$24.93/oz vs US$24.22/oz last week

            

Base metals:   

Copper US$ 7,137/t vs US$6,956/t last week - Copper stocks fell 10% in Shanghai to 118kt

• Chinese miner defaults putting future of Yongcheng Coal and Electricity Holdings in doubt. Will this be the first of many more?

Aluminium US$ 1,943/t vs US$1,938/t last week

Nickel US$ 16,110/t vs US$15,890/t last week

Zinc US$ 2,661/t vs US$2,629/t last week

Lead US$ 1,901/t vs US$1,910/t last week

Tin US$ 18,655/t vs US$18,305/t last week

            

Energy:            

Oil US$43.7/bbl vs US$42.9/bbl yesterday

Natural Gas US$2.873/mmbtu vs US$2.980/mmbtu last week

Uranium - Nuclear Reactors by Rolls Royce consortia ready to roll on UK Government say so

• Rolls Royce is ready to start building 16 mini nuclear power plants to replace ageing UK fossil fueled infrastructure according to The Times.
• The plants will massively cut carbon emissions, restore better balance and capacity to the grid and help the UK meet its net Zero pledge.
• Better still the mini power plants will cut our dependence on Russian gas, French Nuclear power and will still work when the wind blows and the sun isn’t shining, which lets face it, is most of the time.
• Big nuclear is ridiculously expensive by all accounts, subject to massive spending and completion overruns and spends UK taxpayer money overseas.
• Not to mention the political fallout from anti-nuclear campaigners.
• And while Greenpeace did go pro-nuclear for a brief moment in time when they realised how destructive their anti-nuclear policies had been from a Greenhouse gas perspective the organization quickly switched back to its anti-nuclear stance when they realised that pro-nuclear campaigning doesn’t bring in the funds to maintain the cost of organization.
• Rolls already makes nukes for submarines and each reactor will provide 440MW of electricity capable of powering 450,000 homes for 60 years.
• The £2bn commitment for the RR Nuclear production line sounds like allot but compared with the escalating bills for other options is small beer but operating cost estimates by Atkins estimates are higher than Hinkley Point.
• This brings us straight back to Wind, solar, wave and other renewable power sources where costs continue to fall.
• Problem is that any form of intermittent power needs a suitable back-up power supply or the economy grinds to a rapid and very expensive halt.
• The solution is Grid-scale battery power with Lithium-ion battery banks to infill very quick power interruptions for short durations and VRFB batteries for filling in for longer periods. 

            

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$119.2/t vs US$119.9/t

Chinese steel rebar 25mm US$619.7/t vs US$617.5/t

Thermal coal (1st year forward cif ARA) US$57.3/t vs US$57.1/t

Coking coal swap Australia FOB US$114.3/t vs US$114.3/t

            

Other:  

Cobalt LME 3m US$32,835/t vs US$32,835/t

NdPr Rare Earth Oxide (China) US$52,492/t vs US$52,140/t

Lithium carbonate 99% (China) US$5,630/t vs US$5,592/t

Ferro Vanadium 80% FOB (China) US$27.0/kg vs US$27.0/kg

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

Tungsten APT European US$220-225/mtu vs US$220-225/mtu

Graphite flake 94% C, -100 mesh, fob China US$440/t vs US$440/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,300/t vs US$2,275/t

Spodumene 6% Li2O min, cif (China) US$375/t vs US$385/t

 

Battery News

UK government accelerates shift to EV - Boris Johnson to ban sale of new petrol and diesel cars from 2030 

• Boris Johnson will announce the sale of new petrol and diesel cars will be banned from 2030 as part of a broad package of green initiatives.  
• However, ministers are expected to keep the date 2035 for an end to the sale of hybrid cars that are powered by electric batteries as well as traditional motors.  
• Electric cars remain below 7% of all new vehicles brought across the UK last month and the car industry states that more funding is needed for infrastructure to encourage people to buy electric cars.  
• The government will give £500m of funding next year, this will help build facilities like charging points.  
• The car industry wants the sale of hybrid cars to be phased out at a later date as they encourage consumers to switch. Currently, 1 in 4 cars sold in the UK are a type of hybrid technology. 
• Johnson wants to burnish our green achievements before the UN Cop26 international climate summit in Glasgow next year.   

• 2035 expected to remain the cut-off date for the sale of hybrid cars.
• So far 221,029 EVs have been sold in the UK this year representing some 16% of total vehicles sales

 

Volkswagen to spend €46bn on EVs

• Volkswagen (VW) has announced it plans to spend €46bn on developing BEVs (€35bn) and hybrid vehicles (€11bn) over the next 5yrs.
• The investment is part of a wider spend of €73bn on new technologies, nearly 50% of €150bn of planned spending.
• VW is seeking to repair its reputation following the 2015 diesel gate scandal, resulting in €30bn (£26.7bn) of regulatory fines and vehicle refits.
• By 2025 VW targets reducing its vehicle fleets CO₂ footprint by 30% by 2025, with 40% of the fleet electric by 2030.
• VW plans to launch 70 electric models by 2028 and targets carbon neutrality by 2050. The Company plans to build 22m EVs over the next decade.

 

GM to recall 69,000 vehicles following fires in blow to LG Chem

• GM announced on Friday its intention to recall 68,677 EV following 5 reported fires in Chevy Bolt vehicles.
• The recall affects models from 2017-2019 equipped with batteries produced by LG Chem.  
• The vehicles posed a fire risk when fully changed. In the interim GM has installed software to limit charging to 90% capacity until a solution is found.
• Another blow to LG Chem following the recall of 77,000 Kona EVs by Hyundai. Like the Chevy Bolt the Kona EV is equipped with LG Chem cells.
• Both the Chevy Bolt and Hyundai Kona are equipped with lithium-ion NCM 622 or NCM 712 batteries depending on the model.  
• For comparison there are 200,000 gasoline vehicles fires annually in the US alone (Electrek).

 

Lilium to launch first US Vertiport In Florida  

• “Flying cars” or eVTOLs are seen to be the future of public transportation in cities. However, building vertiports, airports for vertical take-off and landing, is more challenging.  
• Lilium, a German start-up, has been working on developing its own eVTOL and vertiport and should be ready by 2025. The vertiports would be adjustable for all types of terrain. 
• Lilium has announced that the first hub location for a high-speed electric air mobility network for the US will be in Lake Nona, Orlando, Florida and will be launched in 2025. It will be a joint effort between Lilium and the City of Orlando.  
• It will connect people living in Florida within a 186-mile radius, and greatly boost tourism by providing emissions-free, fast connecting flights to anywhere in the state, without the hassle associated with commercial flying.  
• The Lilium jet will have five seats and will be powered by 36 electric engines, with an estimated range of 186 miles on one single charge, and top speeds of 185mph. Lilium says it can make a 2000 miles network with only 15 to 20 vertiports and has development contracts in Europe, though partnerships with Dusseldorf and Cologne/Bonn airports.  

 

Company News

Bluejay Mining* (JAY LN) 10.32p, Mkt cap £100m – Hammaslahti copper-zinc-gold-silver project fieldwork and drilling program starts in Finland

BUY - Valuation 27.4p (from 24.7p)

• Bluejay Mining report the start of the Hammaslahti copper-zinc-gold-silver field work and drilling program in Finland.
• The company also hold licenses over the old Enonkoski mine where Rio Tinto recently signed an option with potential for a joint venture on the Enonkoski license area.
• Bluejay also holds some 5,000ha of licenses around and along strike from the historic Outokumpu copper-cobalt-gold-silver mine.
• The three historic mines produced significant value from polymetallic ores. Outokumpu was known for high grade copper and cobalt and nickel ores.
• Enonkoski was nickel, copper, cobalt and PGMs and Hammaslahti was more copper and zinc. All the projects come with gold and silver by-products.
• The team have planned >4,000m of drilling at Hammaslahti targeting areas close to the mine to find potential repeating structures.
• Two of the targets are following sulphide intersections from previous drilling.
• Bluejay have already identified a area 1km to the East of the Hammaslahti with potential ore zones in the contact between hydrothermally altered rocks and sulphidic black schists intersected in two drill holes. This looks similar to the ore-bearing structure in the old mine.
• Another similar potential structure also exists 200m east of the old mine in a sulphide-rich contact between black schist and hydrothermally altered rock.
• Valuation: We value Bluejay at 27.4p including $35m for the exploration licenses in Finland and 24.7p/s based purely on our risked value for the Dundas ilmenite mining project.
• Dundas: We expect Bluejay to announce a larger offtake commitment for the Dundas ilmenite mine by end November

Conclusion: Rio Tinto’s interest and option to acquire up to a 75% of Enonkoski through $20m of expenditure on the property has spurred the exploration team into action in Finland. Other parties have also shown interest in the licenses last year indicating the prospectively of the license package which was put together by experts from Western Areas and FinnAust when looking for high-grade nickel and copper in the region.

The deal indicates that Bluejay has cleared the exacting standards to become a trusted partner of Rio Tinto with potential for further partnership.

There is very strong potential for discovery around the old Enonkoski, Hammaslahti and Outokumpu mines in our view and the proximity to these mine sites and infrastructure could serve to accelerate any discovery into development on a relatively short time scale.

*SP Angel act Nomad and broker to Bluejay. The analyst has previously visited the Hammaslahti, Enonkoski and Outukumpu mines in Finland.

 

Botswana Diamonds (BOD LN) 0.78p, Mkt Cap £5.4m – Sekaka acquisition

• Botswana Diamonds reports that all the required conditions, including Botswana Government approval, have now been fulfilled and that it expects to complete its previously announced acquisition of Sekaka Diamonds by about 20^th November.
• Sekaka, the former exploration vehicle of Petra Diamonds in Botswana, includes the 3.5hectare XX36 kimberlite pipe which has an “historic SAMREC compliant Indicated Resource of 17.9 million tonnes at 35 cpht, and an Inferred Resource of 6.7 million tonnes at 36 cpht [carats per hundred tonnes], estimated for the pipe by Z-Star in 2016” located around 70km from Gem Diamonds Ghaghoo project and 260km north-west of the capital, Gabarone.
• Sekaka also owns a bulk sampling plant on the site at XX36 as well as an “extensive diamond exploration database contains the results of work undertaken since 2005.  The data include data in respect of airborne (including the Falcon survey) and ground magnetics (including gravity and Electromagnetics), in addition to heavy mineral sampling.  BOD believes that the information contained in the database will provide substantial support to its future kimberlite exploration activities in Botswana”.
• Botswana Diamonds will make its “first deferred consideration cash payment of US$150,000 … on or about 20^th November 2021, being the first anniversary of completion of the acquisition”.
• Chairman, John Teeling expressed appreciation to the Botswana authorities “for the quick approval of our acquisition of the KX36 discovery, the extension of the licence and the award of two surrounding licences … [and commented that] … We are convinced that a review and reworking of the existing database on KX36 will identify areas where the grade and volume can be improved. We have significant work done on this and are ready to go when exploration restrictions are lifted”.

Conclusion: The acquisition of Sekaka Diamonds adds an advanced project with an existing historic resource, an on-site bulk sampling plant and extensive historic exploration records to the Botswana Diamonds portfolio. We look forward to news of the continuing exploration.

 

Castillo Copper (CCZ LN) 2.85p, Mkt Cap £26.8m – Copper observed in first holes at the Big One project in Queensland

• Castillo Copper reports that it has observed visible copper mineralisation at relatively shallow depths in drill samples from the first seven holes of its drilling campaign at the Big One project in Queensland.
• Assay results from the drilling are being expedited but the company reports that it has observed the copper minerals malachite and chalcocite, indicative of supergene zone mineralisation, over widths ranging between 9 to 13m including:
  • 13m within metasediments and quartzite between 55-68m in hole RC 211; and
  • 12m within “altered trachyte” between 53-65m depth in hole RC 206; and
  • 9m within “altered metasediment / trachyte” between 78-87m depth in hole RC 207; and
  • 13m within “Metasediments / quartzite, ferruginous zone and haematite” between 64-77m depth in hole RC213; and
  • 9m within “Metasediments, ferruginous with pyrite; and 10m from 78-88m ferruginous zone within quartzite” between 48-57m in hole RC 203.
• The company says that “The presence of haematite / quartz alteration is significant as large regional deposits of the Mt Isa Block are known to have haematisation / silicification linked with copper mineralisation”.
• There are a further 28 holes to complete in the planned initial programme at Big One and Managing Director, Simon Paull described the initial results as “exceptional” and  explained that the company was encouraged by the “indicative size of the intercepts at Big One Deposit which range from 9m to 13m”.

Conclusion: Visible copper mineralisation over widths of up to 13m in the early stages of the drilling at Big One is encouraging but grades have yet to be confirmed with assays

 

Endeavour Mining (EDV CN) C$30.9, Mkt Cap C$5.05bn – Endeavour acquires Teranga and seeks FTSE 100 listing

• West African gold miners Endeavour Mining and Teranga Gold have agreed an all-stock deal which aims to create a top 10 gold producer, the companies announced this morning. 
• Endeavour will acquire all of Teranga’s shares and existing shareholders will end up with 66% of the combined entity, with Teranga shareholders holding the remaining 34%.
• The deal was priced at a premium of 5.1% over the closing price of Endeavour and Teranga shares on Friday, which values Teranga’s equity at C$2.44bn.

 

IronRidge Resources* (IRR LN) 16p, Mkt cap £66m – IronRidge appoints new CFO

• IronRidge has appointed Ms.Amanda Harsas as CFO with immediate effect following the sudden departure of Mr Priy Jayasuriya who resigned by mutual agreement last week.
• Amanda is a Chartered Accountant previously working for Haelius Limited, one of Austtralia’s leading healthcare companies and was the financial controller for the Law Society of New South Wales.
• Ms Harsas was Financial Controller for AP Surety / Suncorp and was previously a Senior manager at PwC in London for seven years.
• Amanda has broad experience across a number of sectors and is experienced in strategic finance, business transformation, commercial finance, customer and supplier negotiations and capital management.
• IronRidge recently reported final Phase-2 RC & AC drilling results at its Ebilassokro and Ehuasso targets within the Zaranou Gold Project area in the Ivory Coast, West Africa.
• Ehuasso grades show 1.7km of continuous mineralisation and up to 70m of apparent thickness:
  • 5m at 33.63g/t from 138m in hole ZARC0013
  • 14m at 4.67g/t from 46m in hole ZARC0022
  • 9m at 4.16g/t from 81m in hole ZARC0019
• Ebilassokro grades:
  • 3m at 5.02g/t from 21m in hole ZAAC0491
  • 4m at 2.06g/t from 44m in hole ZAAC0477
  • 21m at 0.39g/t from 17m in hole ZAAC0543
• IronRidge continue to work on their Ewoyaa lithium (spodumene) project in Ghana and are testing the mineralogy to see how well the spodumene concentrate might convert into lithium hydroxide for direct input into Li-ion battery cells. The work is beind done by ANSTO  the Australian Nuclear Science and Technology Organisation which alongside CSIRO help Australian companies develop and optimise mineral processes.

*SP Angel act as Nomad for IronRidge Resources

 

Panther Metals (PALM LN) 12.25p, Mkt Cap £6.4m – Acquiring gold project near Laverton, WA

• Panther Metals reports that it is acquiring 100% of the Merolia gold project near Laverton WA from ASX- listed White Cliff Minerals for A$112,500 on completion of due-diligence, plus 734,470 shares. An additional payment to the vendor of A$1.25/oz is payable when/if a JORC compliant resource is defined.
• The acquisition comprises three contiguous exploration licences in the Eastern Goldfields of Western Australia. The company describes that “Within the eastern part of Merolia are a series of gold prospects, notably Burtville East, Comet Well and Ironstone.  Regional magnetic data over this part of the project identifies several NW-SE trending shear systems which have potential to host substantial gold mineralisation.  This potential has been confirmed by surface geochemical sampling along the Comet Well gold trend, which has identified significant coherent linear soil gold anomalies at Comet South, Comet North, Comet West and at Ironstone”.
• The Comet Well trend is reported to extend over a strike length off 15km and in conjunction with associated sub-parallel structures is said to extend to at least 30km.
• “The western part of Merolia contains the Red Flag gold prospect.  Previous exploration in the area around Red Flag identified a WNW-trending gold anomalous zone coinciding with a distinct magnetic low.  The geology of the area is dominated by mafic volcanic rocks intruded by dolerite dykes, displaying sheared gold mineralised margins in places.  This area was drilled, yielding a best near surface intercept of 2m at 9.20 g/t Au”.
• Panther Metals says that it is ”currently reviewing other licences in the district and intends to build its project portfolio in this region, which will continue to be referred to collectively as the Merolia Gold Project”.
• CEO, Darren Hazelwood explained that “Our proposed entry into the Western Australian goldfields, and specifically this highly prolific gold producing Archean Greenstone belt near Laverton represents a major step forward for the Company.  The Project represents a post-discovery opportunity and our plans will now focus on building a resource in this area, which could ultimately be fed in to one of many processing plants in the vicinity”.

Conclusion -  Panther Metals is expanding its exploration activities from its Dotted Lake and Big Bear projects in Canada and Annaburroo in Australia’s Northern Territory to the Eastern Goldfields of WA. We await results of exploration with interest.

 

Phoenix Copper* (PXC LN) 41.5p, Mkt Cap £25.3m – Structural geological study highlights Red Star potential

Phoenix holds 80% of the Empire mining property in Idaho

• Phoenix Copper reports an independent structural geological study prepared by Dr. David Rodgers, currently the Associate Vice-President for Research at Idaho State University and an authority on the rocks and structural geology of central Idaho.
• The study, recognises the similarity between “between Red Star and the historically mined Horseshoe and White Knob claim blocks … where historical mining averaged grades of 204g/t silver, 19% lead, 6.5% zinc and 0.73% copper … , and the potential of an extension between the two”.
• Dr. Rodgers mapped the main Red Star area and northwards in the direction of White Knob and Horseshoe mine workings and southwards towards the Empire mine and concluded that “higher grade silver and lead mineralisation occurs primarily in the contact region between the Mackay Granite formation and the White Knob limestone formation”.
• Ryan McDermott, CEO, explained that “This is important in that mineralisation does not occur between these two formations elsewhere in the main Empire Mine area” suggesting that Dr. Rodgers’ work has widened the potential scope of future exploration.
• The company explains that there is little rock outcrop in the Red Star area, which is located 330m NNW of the Empire open pit resource, and that “Dr. Rodgers has recommended the use of ground magnetic surveying, coupled with geologic mapping, to better define future drilling targets”. Phoenix Copper is therefore planning a ”ground magnetics survey as soon as weather and ground conditions permit, in order to optimise the next phase of the drilling programme”.
• The company reminds us that “Red Star is located approximately 330 metres north-northwest of the Empire open pit resource area within the Empire patented claim boundary” and that it published, in May 2019, a maiden inferred mineral resources estimate for the Red Star zone of 103,000t at an average grade of “173.4 g/t silver, 0.85 g/t gold, and 3.85% lead, with minor copper and zinc”.
• Subsequent drilling,  in 2020, of ten additional holes included “assays of 116.9 g/tonne (3.76 oz/t) to 359.8 g/tonne (11.57 oz/t) silver and lead values from 1.17% to 7.79%” from holes “holes RSD20-01 through RSD20-04, and RSD20-06”.
• Mr. Mc Dermott summarised the importance of Dr. Rodgers findings saying that “the lack of discernible outcrop at Red Star makes it difficult to determine the underlying geology” and confirmed that the company will be implementing the recommended ground magnetic survey as soon as conditions permit.

Conclusion: The potential continuity of mineralisation between Red Star and the historically mined Horseshoe and Whit Knob area as well as the possibility of mineralisation in the contact zone between the Mackay Granite and the White Knob limestone should help focus future exploration. A ground magnetic survey is planned to help refine possible drilling targets in an area with little surface outcrop.

*SP Angel acts as Nomad to Phoenix Copper

 

Rambler Metals and Mining* (RMM LN) 0.24p, Mkt Cap £3.1m – US$13.25m fund raising and restructuring

(Rambler owns 100% of the Ming Copper-Gold Mine)

CLICK FOR PDF

• On Friday afternoon, Rambler Metals and Mining announced that it had conditionally raised a total of US$13.25m in order to re-establish full production at the Ming copper mine and implement plans to expand the mine’s throughput and continue mine-site exploration at depth where the deposit remains open and grades are seen to be increasing.
• The funding consists of an equity raising of £6.25m (approximately US$8.25m) through the issue of 3,125m additional shares at a price of 0.2p/share and the previously announced “US$ 5million secured loan from institutional investor West Face Capital Inc”.
• In addition to the new shares, conversion of exiting loan notes and bridging loan facilities results in the issue of approximately 3,710m additional shares and as a results, we estimate that the new shares, including those issued to convert the loan notes and bridging facilities, represent approximately 84% of the enlarged capital of the company.
• As it is not permitted to issue shares below their nominal value, “it is proposed that the share capital of the Company be sub-divided by each existing ordinary share of 1 pence each ("Existing Ordinary Shares") being divided into one new ordinary share of 0.01 pence each ("New Ordinary Share") and one deferred share of 0.99 pence each ("Deferred Share") (altogether "Share Capital Reorganisation"). The Deferred Shares will have limited rights and will effectively carry no value”.
• A shareholder meeting to approve the financial reorganisation is to be held on 2^nd December.
• The company explains its operational plans comprise building up to “the full current mill capacity of 1,350 tonnes per day throughput at 2% copper grade by 2022”.
• “From 2022 onward, the Company intends to introduce ore sorting technology at the mine which is expected to remove approximately 30% of waste material from the Run of Mine production of 2,000 tonnes per day at 2% copper grade. The post-ore sorting mill head grade will be upgraded from 2% copper to be >2.5% copper. Annual copper production is projected to be in excess of 11,500 tonnes per annum from 2022 onward and average 13,265 tonnes for the life of mine”.
• The company estimates that this will produce a pre-tax NPV_8% of “c.US$182m while projected operating margins range from US$31-52 per tonne mined. Projected cashflow over the life of mine is c.US$513m. C1 cash costs per pound of saleable copper average US$1.93 over the life of mine; the equivalent C3 cost is $2.27” over a projected 20+ years mine life.
• Rambler has also announced longer term that it has “has secured an agreement in principle … to acquire all of the assets of Teck Resources Limited's closed Duck Pond mine plant located near Millertown, Newfoundland, including the building, plant equipment with certain exceptions, and related spare parts. A non-refundable deposit has been paid to secure the transaction while final documentation is concluded.”
• “The target closing date for the purchase transaction is June 30, 2021 and dismantling of the assets by Rambler is expected to start promptly thereafter. The purchase and re-location of this plant is part of a plan to support the long life potential of the Ming Mine while increasing production capacity as well as achieving operating cost reductions”.
• The Duck Pond mill is expected to increase production from the mine and the mill to “2,400 tpd at 2% copper grade. This mill will be located next to the Ming Mine site and requires the construction of a tailings facility to support production which has to be applied for and permitted” from 2025.
• As a result of access to a mine-site mill, the existing 40km haulage of ore to the Nugget Pond mill will be eliminated, “Annual copper production is projected to be in excess of 15,300 tonnes per annum from 2022 onward and average 16,789 tonnes over the life of mine, subject to a positive definitive feasibility study” and using a copper price forecast of US$3/lb, gold price of US$1700/oz and silver price of US$25/oz the company estimates a “pre-tax Project NPV of the expansion option over the projected 20+ year life of mine is c.US$280m while projected operating margins range from US$56-68 per tonne mined from 2025 onward. Projected cashflow over the life of mine is c.US$825m. C1 cash costs per pound of saleable copper average US$1.63 over the life of mine; the equivalent C3 cost is $1.93”.

Conclusion: Rambler Metals has secured financing to increase its mill throughput to 1,350tpd and improve grade to over 2.5% copper with ore-sorting. Longer term, the acquisition and relocation of a mill to the Ming mine site eliminates ore haulage, and  subject to permitting of the tailings disposal capacity, increases treatment capacity to 2,400tpd and increases annual copper production to over 15,300tpa from 2025.

*SP Angel act as Nomad and broker to Rambler Metals & Mining              

 

Sunrise Resources (SRES LN) 0.27p Mkt Cap £9.6m – Project summaries

• Sunrise Resources has provided progress reports on its CS Pozzolan-Perlite project in Nevada and on the Clayton precious metals project also in Nevada.
• At the CS project, the company has successfully completed a 100t bulk sample of perlite and the material is being sent to potential customers for testing of its expansion properties.
• Larger scale grinding tests for pozzolan and trial concrete tests are being planned.
• At the Clayton project, the company reports that core logging has shown a massive quartz and quartz-breccia zone between 83.52-91.44m downhole depth. Based on a single hole intersection, the true width of the intersection is unclear but logging has shown “fine grained disseminated sulphides including mineral logged as the silver sulphide mineral acanthite”. Assay results are not yet available.

 

KEFI Gold and Copper (KEFI LN) 1.7p, Mkt Cap £32m – Equity raise to progress drilling at Hawiah and funding discussions at Tulu Kapi

• The Company raised £3.0m through a placing of 186m shares at 1.6p to fund the ongoing exploration programme at the Hawiah polymetallic project in Saudi Arabia and general working capital at the Tulu Kapi gold project in Ethiopia.
• Additionally, KEFI announced a conditional subscription for 76.4m shares at the same price including:
• 17.4m shares for further direct cash subscription of £278k by certain existing shareholders including RAB Capital that will retain >10% in the Company;
• 28.3m shares (£452k) to cover third parties’ invoices and debts;
• 30.7m shares (£492k) to reimburse accrued cash fees and salaries of certain directors and management.
• Separately, the Company will issue 3.4m new shares as well as 11.2m warrants (1.6exercise price) in lieu of broker commissions and placing fees.
• Shares additional to the £3.0m placing will need shareholders’ approval at a General Meeting to be scheduled for mid-December 2020.
• Following the issuance, the Company will not have any material outstanding debt to third party creditors.
• At Hawiah, the Company launched another drilling programme targeting 13,000m and aiming to grow and upgrade the maiden resource with a view to prepare maiden PFS in 2021.
• In Tulu Kapi, additional funds will be directed towards general working capital purposes as the Company is putting together a $221m funding consortium for the start of development works paving the way for the first gold in Q4/22.

Conclusion: Raised funds will allow the Company to continue with the drilling programme at the Hawiah polymetallic project maintaining its 34% interest in the asset as well as continue with assembling the funding package for the Tulu Kapi gold project.

*SP Angel act as Nomad and Broker to KEFI Gold and Copper

 

Vast Resources (VAST LN) 0.18p, Mkt Cap £26m – First Baita Plai copper concentrate sale to be completed with week

• First Baita Plai copper concentrate produced following the restart of the underground operation is awaiting delivery to the Port of Constanta in Romania.
• The Company is awaiting confirmation of the vessel arrival with formal completion of the sale expected this week.
• The team reiterated its production and cashflow forecasts released in early September.

*SP Angel acts as Broker to Vast Resources

 

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk - 0203 470 0474

Joe Rowbottom – Joe.Rowbottom@spangel.co.uk - 0203 470 0486

 

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk - 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk - 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk - 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 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.

 





Sources of commodity prices
Gold, Platinum, Palladium, Silver	BGNL (Bloomberg Generic Composite rate, London)
Gold ETFs, Steel	Bloomberg
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt	LME
Oil Brent	ICE
Natural Gas, Uranium, Iron Ore	NYMEX
Thermal Coal	Bloomberg OTC Composite
Coking Coal	SSY
RRE	Steelhome
Lithium Carbonate, Ferro Vanadium, Antimony	Asian Metal
Tungsten	Metal Bulletin

 

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

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.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. 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. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

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%