SP Angel . Morning View - Risk sentiment climbs; Japan unveils a 20pp of GDP stimulus package
Vox Markets
SP Angel . Morning View
10:23, 7th April 2020

SP Angel . Morning View . Tuesday 07 04 20

Risk sentiment climbs; Japan unveils a 20pp of GDP stimulus package

 

MiFID II exempt information – see disclaimer below

 

Anglo Asian Mining* (AAZ LN) – BUY – Gold dore shipments to MKS Finance

Anglo American (AAL LN) - taking Corporate humanitarianism to a new level in its support

Alba Minerals (ALBA LN) – Notice of exercise from Bergen

BlueRock Diamonds* (BRD LN) – Q1 production and carats sold rise substantially by 78% and 77%

Edenville Energy* (EDL LN) – COVID-19 and operations update

Kazatomprom (KAP LI) – Production estimates revision

Pensana Metals (PM8 AU) – Pensana reports more high-grade rare earth intersections at Longonjo

SolGold* (SOLG LN) – New mineral resource estimate for Alpala 

Strongbow Exploration* (SBW CN) - High-grade copper and tin intersected in drilling at United Downes in Cornwall

Tertiary Minerals* (TYM LN) – Pyramid Gold Project drilling plans

SP Angel Healthcare team - Vadim Alexandre, Liam Gascoigne-Cohen

GSK strikes collaboration agreement with Vir Biotechnology

ReNeuron Group (RENE.L): Research agreement with major pharma

EKF Diagnostics Holdings plc (EKF.L): Trading update 

 

Boris Johnson, UK PM – in intensive care as COVID-19 condition worsens

  • Our thought are with PM Johnson and his family.

 

Stocks extend gains amid optimism that the coronavirus may be slowing 

  • Stocks in Europe and Asia gained alongside US equity futures on Tuesday amid a wave of optimism that Covid-19 may be slowing in several major economies.
  • China have reported no new deaths since the pandemic emerged, whilst Italy, France, Germany and Spain have reported lower numbers of new cases.
  • The Stoxx Europe 600 Index increased 2.8% as every national gauge in the region advanced. Germany's DAX rose 3% and has now rebounded 20% from a recent low.
  • The S&P 500 Index closed at its highest since the 13th of March on Monday, up 7%, leading to futures for the three main American benchmarks also climbed.

 

Nations plan exit strategies as coronavirus mortality rates start to pull back

  • Economists and politicians know they need to plan for dramatic stimulus and to restore economic growth to avert recession/depression
  • Politicians in the UK have a ‘do whatever it takes’ mandate to reflate the economy, with many other nations likely to follow
  • Coronavirus lockdown is costing the British economy £2.4bn a day according to the Centre for Economics and Business Research.
  • This equates to a fall in economic output of ~31%
  • Economic recovery is best led by infrastructure development, though this will be insufficient on its own in this instance.
  • The optimum strategy may be to compensate all affected companies for loss of business while enabling new businesses to grow from the ashes of those that have been allowed to fail, such as airlines and other leisure companies.
  • Metals and other commodities are likely to be in significant demand as economies reflate and as mines and communities come back to life
  • It may be too late to save many airlines and some automotive companies but appropriate stimulus may create new national champions
  • Policymakers are likely to choose inflation over deflation as a preferred strategy with money printing seen as more acceptable by voters
  • This should continue to be good for gold, copper and the other listed metals  if sufficient new cash is pumped into economic development

 

Auto manufacturers shutdown as COVID-19 locks down economies and supply chains are disrupted

  • Renault-Nissan and PSA closed in Europe till May. Chinese plants have now reopened. (Source Rho Motion)
  • Government intervention will be required to restart in the form of incentives to shift unsold stock and for working capital
  • VW suspended production.
  • Toyota suspended production in Europe
  • Hyundai closed plants in Czech Republic
  • Kia closed in Slovakia.
  • Ford suspended European production
  • Daimler Benz suspended production in Europe but reopened in China
  • BMW closed in European and South Africa
  • Jaguar Land Rover closed but reopened in China. Brazil and India still operating
  • FCA stopped most European production
  • Volvo (Geely ) closed plants in EU and US. Reopened in China
  • Ferrari closed in Italy
  • Suppliers facing short-term liquidity issues

UK paying up to 80% of workers' wages of employees unable to work due to coronavirus.

  • ECB - Pandemic Emergency Purchase Programme
  • ECB - Monetary policy package
  • EIB - allow up to €40 billion of financing
  • EC - State aid which includes: direct grants, tax advantages, loans

 

Stimulus funding pledged

  • $2tn US fiscal package approved by Congress. US may add $0.6t state aid for mortgage markets and travel industries
  • $2tn US – Trump looking at $2tn infrastructure fund
  • $700bn – US + Fed rate cut to 0-0.25% last night. The $700bn QE to buy Treasuries and mortgage-backed securities.
  • $963bn (€750bn) ECB scraps limits on sovereign bond purchases. ECB PEPP buying running at around €250bn
  • $825bn (€756bn) Germany – Bundestag approved €156bn in extra borrowing and ~€600bn in emergency funds
  • $344bn - China stimulus + $127.2bn. China stimulus was $586bn in 2009
  • $544bn (¥60tn) – Japan fiscal stimulus package equiv. ~10% of GDP $17.4bn Japan + Y300bn of inflation-linked bonds,
  • $400bn (£330bn) UK + $242bn (£200bn) UK QE from BoE & no business rates plus £25,000 cash grants for hospitality sector
  • $387bn (€304bn), France, $200bn (€200bn), Spain, $214bn (A$320bn) Australia, $78bn (C$107bn) Canada, $32bn Saudi Arabia, US$43.7bn Singapore, $22.6bn India, $15.4bn HK, $13.7bn South Korea, $10bn Switzerland, $8.4bn Italy, $7bn NZ, $3.5bn Ireland, $2bn Taiwan, $0.75bn Indonesia,
  • Argentina to default on $10bn of dollar debt issued til the end of the year. Does no affect the $70bn that Argentina is currently in talks to restructure.
  • $1,000bn - IMF available + $12bn World Bank,
  • >11tr Total

 

121 London Mining Investment Online Conference - 19-21 May 2020 – Lockdown special

 

Economics

Eurozone stability under threat as COVID-19 undermines fragile European banks

  • The Eurozone was already under threat according to the French Finance Minister last year
  • The economic zone is now under further strain as COVID-19 causes nations to abandon ECB fiscal discipline to save their failing economies
  • Italy’s banks were struggling before the coronavirus lockdown.
  • Greek banks are still recovering from the banking crisis.
  • Spanish and Portuguese banks will surely also need support.
  • German banks are thought to have lost ground due to negative interest rates and tight fiscal monetary policies.
  • The coronavirus is likely to cause recession in Europe unless the ECB moves fast to compensate companies for lost business and stimulates local economies. It will be a miracle if the European Parliament universally agrees to sufficient support to avert recession in the Eurozone

 

Tariffs - Trump to suspend some tariffs for 90 days after Phase one deal

  • EU raises tariffs against the US
  • China tariffs – Viruses from Wuhan, no tariff.

 

Germany - DAX Index rebounds 20% from last month's low 

  • The export-heavy gauge fell as much as 40% in the sell-off that began in late February, however the index has rebounded in recent weeks on indications that infection rates in Europe may be nearing a peak.
  • The DAX has risen 20% from last month’s low, and advanced 3.4% this morning in Frankfurt.

 

UK - Country nears peak of coronavirus pandemic as Johnson moved to intensive care

  • Boris Johnson was admitted to hospital with 'persistent symptoms' on Sunday evening, and has now been moved to the intensive care ward as of Monday night.
  • Government officials insist that the Prime Minister has been moved as a precaution, and is not on a ventilator.
  • Foreign secretary Dominic Raab is designated to stand in for Johnson, and will later chair the government's daily Covid-19 meeting.
  • This news comes as the number of coronavirus hospital deaths in the UK reached 5,373 - an increase of 439 in a day and also 51,608 confirmed coronavirus cases.

 

Japan - State of emergency declared to fight coronavirus 

  • The Japanese Prime Minister Shinzo Abe announced a state of emergency for a month, targeting Tokyo and six other areas which account for 44% of Japan's population.
  • Abe also unveiled a stimulus package today he described as among the world's biggest to help soften the blow that the pandemic is having on the economy.
  • The package is thought to be worth 108 trillion yen ($990 billion) - equal to 20% of Japan's economic output.
  • That exceeds the 11% of US output laid out by President Trump and 5% of output for German's package.
  • As of Monday, Japan had over 4,000 cases with 93 deaths.

 

South Africa – Minister of Mines has allowed coal mines to remain open with social distancing to supply Eskom

 

Brazil - Indigenous community banishes miners to cut coronavirus risk 

  • As Covid-19 reaches into Brazil's indigenous communities for the first time, villages are forcing illegal gold miners to agree to leave indefinitely.
  • Leaders from the Turedjam village negotiated with more than 30 prospectors who all agreed to halt operations and remove their equipment.
  • Brazil's first case of coronavirus among its indigenous population was reported on the 1st of April, and community leaders feel it is vital to keep the spread of the virus under control due to past diseases decimating indigenous populations.

 

Dow Jones Industrials

 

+7.73%

at

22,680

Nikkei 225

 

+2.01%

at

18,950

HK Hang Seng

 

+1.85%

at

24,189

Shanghai Composite

 

+2.05%

at

2,821

 

Currencies

US$1.0871/eur vs 1.0818/eur yesterday.  Yen 108.84/$ vs 109.34/$.  SAr 18.422/$ vs 18.999/$.  $1.233/gbp vs $1.229/gbp.  0.618/aud vs 0.605/aud.  CNY 7.061/$ vs 7.092/$.

 

Commodity News

Gold US$1,653/oz vs US$1,628/oz yesterday - Gold prices rise this week on expectations of further stimulus

  • The price of gold rose 2.8% to more than three-week highs yesterday, as markets anticipated further stimulus to counter the economic damage that the coronavirus is currently causing.
  • Spot gold was up 2.3% yesterday afternoon, hitting $1,656/oz earlier in the session, its highest level since the 11th of March (Reuters).
  • Spot gold eased 0.2% to $1,658/oz this morning, as the US dollar and global equities strengthened as data indicated a slowdown in coronavirus-related deaths.
  • Equities rebounded to a greater extent than gold yesterday, up 7% on the day. Although the rebound is a greater percentage than gold, gold is the only asset class trading above pre-pandemic levels (Kitco).

   Gold ETFs 91.5moz vs US$91.2moz yesterday

Platinum US$747/oz vs US$737/oz yesterday

Palladium US$2,230/oz vs US$2,184/oz yesterday

Silver US$15.30/oz vs US$14.55/oz yesterday

            

Base metals:    

Copper US$ 5,043/t vs US$4,904/t yesterday - Copper - Changing market dynamics cause funds to cut both short and long futures positions in copper

  • Material uncertainty in the supply/demand dynamics of the copper market have caused major hedge and CTA funds to cut both long and short positions in the copper market.
  • The Coronavirus is expected to reduce consumption of copper in the West in the short term
  • Chinese consumption is ramping up again with stock drawdowns seen out of Shanghai Metal Exchange warehouses .
  • But copper mines are suspending operations in Chile, Peru and elsewhere as the Coronavirus sweeps through disruption supply chains and causing nations to close all but essential business.

Aluminium US$ 1,487/t vs US$1,478/t yesterday

Nickel US$ 11,460/t vs US$11,260/t yesterday

Zinc US$ 1,938/t vs US$1,892/t yesterday

Lead US$ 1,703/t vs US$1,671/t yesterday

Tin US$ 14,810/t vs US$14,290/t yesterday

            

Energy:            

Oil US$34.1/bbl vs US$33.6/bbl yesterday

Natural Gas US$1.781/mmbtu vs US$1.690/mmbtu yesterday

Uranium US$27.60/lb vs US$27.45/lb yesterday

            

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$79.9/t vs US$79.6/t - 

Chinese iron ore imports gained 22% last week 

  • Iron ore arrivals at Chinese ports rose 22.1% last week to 13.43mt compared to the week before.
  • For the same week, iron ore deliveries leaving Australian ports rose 7% to 17.41mt and deliveries leaving Brazilian ports rose 22% to 5.62mt (SMM).

Chinese steel rebar 25mm US$522.8/t vs US$519.8/t - Chinese steel exports hit 8-year low

  • Chinese steel exports totalled 7.8mt in the first two months of 2020, down 27% compared to the same period in 2019.
  • Despite the General Administration of Customs combining January and February data, it is believed that exports in the month of February were the weakest since 2012.
  • South Korea, the largest single destination for Chinese steel, saw exports fall 36% year-on-year to 957,000 tonnes.
  • Europe and North America saw the largest percentage declines, falling 56% to 306,000 tonnes and 42% to 176,000 tonnes respectively.
  • Despite this drop, Chinese steel imports remained high over this period. China imported 3.25mt of steel, up 50.6% year-on-year (Kallanish).

Thermal coal (1st year forward cif ARA) US$55.5/t vs US$54.2/t

Coking coal swap Australia FOB US$142.0/t vs US$142.0/t

            

Other:   

Cobalt LME 3m US$30,000/t vs US$30,000/t

NdPr Rare Earth Oxide (China) US$37,320/t vs US$37,157/t

Lithium carbonate 99% (China) US$5,594/t vs US$5,570/t - Lifespan of lithium battery predicted by AI algorithm

  • Researches from the Universities of Cambridge and Newcastle have developed a machine learning method that can better predict the health and lifespan of lithium batteries. (Electronics 360)
  • Lithium-ion battery performance degrades over time, a result of the chemical processes occurring inside the battery.
  • Current performance monitoring methods track the battery’s current and voltage during charging/discharging.
  • The new algorithms can track more subtle performance signals as batteries charge/discharge. The accuracy of prediction is suggested to be 10x greater than the current industry standard. (The Pioneer)
  • Electrical pulses measure the battery’s response and the algorithms pick up on signals in the response that indicate the battery is ageing. The process is non-invasive. (Eurekalert)
  • The model was trained using 20,000 experimental measurements, the largest such data set.
  • The new method could allow researchers to design more specific experiments to test how and why different batteries degrade.
  • The findings were published in Nature Communications.

Vulcan Resources commence lithium processing test work

  • Management confirmed commencement of test work at Vulcan’s Zero Carbon LithiumTM Project in the Upper Rhine region, Germany.
  • Following positive results from a completed Scoping Study the Company is moving ahead with its test work program to advance its Zero Carbon LithiumTM flowsheet.
  • The Scoping Study showed evidence that the project could produce battery-quality lithium hydroxide monohydrate products.
  • These products could be produced with a net zero carbon footprint.
  • The test work program will use geothermal brine for Direct Lithium Extraction (DLE) test work. Well-developed DLE extractions methods will be demonstrated with a focus on process routes to Zero Carbon LithiumTM.

Ferro Vanadium 80% FOB (China) US$26.5/kg vs US$26.5/kg

Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.0/kg

Tungsten APT European US$240-245/mtu vs US$240-245/mtu

Graphite flake 94% C, -100 mesh, fob China US$540/t vs US$540/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,550/t vs US$2,550/t

 

Battery News

Mercedes optimistic about organic batteries

  • Senior Manager of battery research at Mercedes Andreas Hintennach was optimistic about the potential of organic batteries in an interview with Autoweek. (Autoweek).
  • The technology was previewed in Mercedes-Benz Vision AVTR concept.
  • Organic batteries are produced using graphene-based organic-cell chemistry with a water-based electrolyte. (Autocar)
  • Early testing has shown they offer high energy density and fast charging capabilities, but the technology remains 15-20yrs away from production according to Hintennach.
  • Mercedes aims to be carbon neutral by 2039 and as such is investigating a number of technologies to reduce the environmental impact of battery production.
  • Solid state batteries are likely to be the next innovation with expectations the technology will be commercially viable in the second half of the decade.

 

High court rules against VW in the diesel gate emissions scandal

  • The high court has said VW installed unlawful ‘defeat devices’ in millions of vehicles. The judge argued the devices ‘cheated’ European emissions standards designed to save lives. (Telegraph)
  • The ruling is an interim finding and the court is bound by a decision by Germany’s transport authority. (Autonews Europe)
  • VW is disappointed with the decision and may appeal it. (BBC)
  • VW programmed the offending devices to reduce harmful nitrogen oxide emissions when they sensed they were being tested by regulators. The rest of the time the vehicles emitted 40x the legal limit of nitrogen oxide.
  • The ruling has been seen as the first step toward consumers receiving compensation which could run into the hundreds of millions from VW.
  • 11 million vehicles worldwide including 1.2m in the UK were fitted with the software. The ruling also applies to those vehicles manufactured by Audi, Seat and Skoda.
  • 91,000 consumers in England and Wales  are seeking litigation for the loss in value of the cars as a result of the software manipulation. 
  • The scandal which has been running since US regulators exposed the scandal in 2015 has already cost VW $32.6bn and legal proceedings could continue for the foreseeable future.

 

Company News

Anglo Asian Mining* (AAZ LN) 109p, Mkt Cap £124m – Gold dore shipments to MKS Finance

BUY

  • The Company made a further shipment of gold dore containing 4.7koz of gold to MKS Finance in Switzerland by air-charter.
  • Advance sale proceeds for ~90% of the Company’s share received.
  • Swiss gold refiners that temporarily suspended operations amid official virus containment measures are expected to resume limited operations shortly.
  • “The Swiss refiners have recently announced that they expect to shortly resume limited working and we are currently ascertaining when we can commence further shipments,” the Company said.
  • As a contingency plan, the Company has already commenced discussions with two alternative refiners.
  • Copper sales remained unaffected as shipments are carried by road.
  • Quarterly operations update is due mid-April.

Conclusion: While scheduled flights from Azerbaijan remain suspended, the Company was able to charter an aircraft and ship 4.7koz of gold dore to MKS refiners in Switzerland. The Company is currently in discussions with two other refiners that may potentially take dore shipments in case sales to MKS prove challenging. Operations as well as copper concentrate shipments continue as normal.

*SP Angel acts as nomad and broker to Anglo Asian Mining

 

Anglo American  (AAL LN)- taking Corporate humanitarianism to a new level in its support

  • Anglo’s support for employees, host communities, contractors, suppliers, hospitals, water authorities is hearting to see.
  • The company is even producing educational videos on Covid-19 for 70 local clinics to help educate healthcare professionals.
  • The company is still spending $125m a week on buying goods and services from suppliers and on wages, while still generating export earnings.
  • It’s support of small- and medium-sized businesses includes:
    • a payment holiday until the end of June on any loans;
    • communication around any government support available to them; and
    • working closely with its supply chain to ensure that there is adequate contractual support and inclusive procurement..

Conclusion: Anglo has long been a leader in terms of corporate social responsibility with its HIV and community support programs.

Anglo provides the very best example of a socially responsible company working with and within the communities where it operates

 

Alba Minerals (ALBA LN) 0.054p, Mkt cap £1.9m – Notice of exercise from Bergen

  • Alba Minerals report receipt of notice by Bergen to exercise 200m shares as part of their agreed convertible note at a price of 0.1p.
  • Alba are also issuing a further 30m new shares to Bergen by way of their fee.
  • The company will have some 3.8bn shares following the exercise of the 50m new shares

 

BlueRock Diamonds* (BRD LN) 57.7p, Mkt cap £3.03m – Q1 production and carats sold rise substantially by 78% and 77%

  • BlueRock Diamonds report a very significant increase in production and sales in Q1 ahead of the COVID-19 lockdown in South Africa
  • Tonnes sorted rose by 78% in Q1 to 74,011t from 41,667t a year earlier.
  • Diamonds produced rise 76% to 2,503cts from 1,422 in Q1 2019
  • Carats sold rise 77% to 3,267 from 1,847 yoy.
  • Average price per carat fell 12% to $327/ct from $371/ct partly reflecting the pull back in the diamond market seen last year and maybe better recoveries of smaller stones.
  • Revenue rose to $1.07m from $0.69m yoy
  • The mine is now on care and maintenance till the COVID-19 restrictions are lifted and as the Coronavirus works its way through South Africa.
  • Diamond auctions are suspended as international buyers are not travelling to Kimberley for its regular auctions.
  • Management have put in place measures to minimise cost while enabling a rapid return to work and ended guidance till further notice.
  • Work on the planned expansion has been suspended till the mine is able to work on a cash flow positive basis again.

Conclusion:  The company is relatively well funded following the raising of £1.9m at 89p/s in February and the receipt of $1.07m in Q1. We look forward to a rapid return to normal operations once the COVID-19 restrictions are lifted

*SP Angel acts as nomad and broker to BlueRock Diamonds

 

Edenville Energy* (EDL LN) 0.03p, Mkt Cap £1.9m – COVID-19 and operations update

  • In the wake of the government guidelines and safety measures to limit the spread of the coronavirus, the Company temporarily suspended mining and processing at the Rukwa operations with immediate effect.
  • With the rainy season expected to finish later this month and on withdrawal of government suspension order placed on non-essential businesses, the management is expecting to resume operations at the Northern Area at short notice.
  • The Company had around £60k in cash (including an upcoming VAT return) as of 31 March with $25k owed by its customers.
  • Lind Partners that are owed $580k under the loan facility agreed to a three repayment deferral starting with the April 2020 payment due at the end of the current month.
  • Additionally, Lind agreed to the Company seeking an unsecured loan from a third party of up to £300k, although the Company has not entered into one as at the date of the announcement.
  • In return, Lind will be issued 270m warrants with an exercise price of 0.03p with a maturity of five years from today’s date;
  • The Company remains in discussions with a potential strategic partner for the Project including a potential asset-level loan, a potential coal mining agreement and a potential coal marketing agreement.
  • The management expects the deal to be concluded in Q2/20.
  • The Company has also temporarily paused its search for a new Non-Executive Director due to the virus pandemic with Rufus Short agreeing to remain on the Board until new appointment is made.

*SP Angel acts as Nomad and Broker to Edenville Energy

 

Kazatomprom (KAP LI) $12.7, Mkt Cap $3.3bn – Production estimates revision

  • The Company estimates COVD-19 related health and safety measures will potentially see a 4,000tU reduction in Kazakhstan’s 2020 annual production.
  • This compares to 22,750-22,800 tU (100% basis) annual production estimated previously and marks an up to 18% downward revision.
  • All non-essential staff at Company’s operations has been asked to return home with full pay while those remaining on site are asked to follow social distancing guidelines and hygiene practices.
  • The Company will provide updated 2020 guidance for attributable production, revenue, CAPEX, C1 cash costs and All-in sustaining costs in its Q1/20 operations and trading update on 4 May, following completion of an updated macroeconomic assessment and the stabilisation of the Tenge to US$ exchange rate.
  • Weaker production is not expected to affect Kazatomprom’s 2020 sales commitments.
  • The Company highlights its strong balance sheet and a commitment to its dividend policy including the minimum $200m payment expected in 2020.

 

Pensana Metals (PM8 AU)  A$0.127, Mkt cap A$19.3m – Pensana reports more high-grade rare earth intersections at Longonjo

  • Pensana Metals has reported the results of a further 18 drill-holes from its recently completed  7000m drilling programme at Longonjo in Angola where the company has identified a new mineralised zone located approximately 600m west of the area proposed for open pit mining outlined in the company’s pre-feasibility study (PFS).
  • Along the ʺsouthern marginʺ, the new drilling has extended the known neodymium/praseodymium (NdPr) mineralisation ʺassociated with sub vertical mineralised carbonatite dykes up to 25 metres wide within the contact zone of the Longonjo Carbonatite ʺ, while along the ʺNorth east margin … results have defined a 400 metre zone of strong weathering up to 200 metres wide and 80 metres deep containing rare earth mineralisation with elevated NdPr content. Mineralisation remains open along strike to the north and southʺ.
  • Pensana Metals explains that it expects the new drilling to enable it to upgrade inferred resources, which were largely excluded from the mine-plan included in the PFS, to the indicated level ʺallowing its inclusion into the mine plan on completion of the Definitive Feasibility Study work programmes.ʺ
  • Among the results highlighted from the southern area are:
    • An 8m intersection averaging 4.94% rare earth oxides (REO), including 1.05% NdPr from a depth of 24 metres and a second 12m wide intersection averaging 4.16% REO including 0.79% NdPr from a depth of 36m  in hole LRC231; and
    • An 8m intersection averaging 3.23% REO, including 0.59% NdPr from surface and a second 12m wide intersection averaging 3.33% REO including 0.58% NdPr from a depth of 16m  and a third intersection 0f 14m averaging 5.63% REO with 0.96% NdPr from a depth of 56m in hole LRC232; and
    • An 8m intersection averaging 7.73% REO, including 1.32% NdPr from a depth of 10 metres and a second 30m wide intersection averaging 3.25% REO including 0.57% NdPr from a depth of 36m  in hole LRC231
  • The results from the northeast zone include:
    • A 34m intersection averaging 2.57% REO, including 0.79% NdPr from surface, a second 14m wide intersection averaging 1.63% REO including 0.48% NdPr from a depth of 40m and a third intersection averaging 6m width at a grade of 2.00% REO including 0.62% NdPr from a depth of 64m all in hole LRC234; and
    • A 26m intersection averaging 1.88% REO, including 0.53% NdPr from surface, a second 4m wide intersection averaging 1.92% REO including 0.50% NdPr from a depth of 40m and a third intersection averaging 6m width at a grade of 2.06% REO including 0.65% NdPr from a depth of 62m all in hole LRC235; and
    • A 30m intersection averaging 2.12% REO, including 0.57% NdPr from 4m depth, a second 28m wide intersection averaging 1.92% REO including 0.47% NdPr from a depth of 44m and a third intersection averaging 12m width at a grade of 1.56% REO including 0.48% NdPr from a depth of 80m all in hole LRC237.
  • Results from a further 120 holes remain outstanding, the majority of which are described as ʺinfill holes within the high-grade area of the PFS pit design and include several deeper holes which are testing an area immediately below the PFS pit design where previous drilling had intersected high grades in fresh rockʺ.
  • COO, Dave, Hammond, said that ʺThese latest results demonstrate the continuity of large areas of Inferred resources outside the PFS pit design which along with the previous results we are expecting will significantly extend the mine life in the Definitive Feasibility Study.ʺ

Conclusion: Further drilling at Longonjo is extending the known footprint of mineralisation and increasing confidence in the resource continuity. The company is expecting to upgrade some areas formerly classed as inferred resources into indicated resources and include them in the forthcoming Definitive Feasibility Study. We look forward to further results as they become available.

 

SolGold* (SOLG LN) 19.5p, Mkt cap £354m – New mineral resource estimate for Alpala

  • Solgold has released details of its new mineral resources estimate for its Alpala project in Ecuador which show, for the first time, a portion of the around 45% of the resource now classified as Measured in terms of the NI-43-101 Reporting Code and an overall increase of approximately 30% in the overall resource tonnage classified as measured and indicated compared to the indicated resource announced in November 2018.
  • The resource estimate released today shows a measured and indicated resource of 2.663bn tonnes at an average grade of 0.53% copper equivalent (CuEq) containing 0.37% copper, 0.25g/t gold and 1.08 g/t silver at a cut-off grade of 0.21% CuEq plus an additional 544mt classed as inferred at an average grade of 0.31% CuEq. The silver contents of the resource are reported for the first time.
  • The inferred resources have decreased from the 900mt  reported in November 2018 providing confirmation of the successful conversion of inferred resource to indicated or measured levels as a result of the extensive infill and step-out drilling which Solgold has undertaken over the last eighteen months.
  • The new estimate is based on information from 188 diamond drill holes representing a total of 217,225m of drilling and the company clarifies that ʺA total of 227,961m of drilling has been completed on the Cascabel Project to date, with several holes completed outside the Alpala Resource area.ʺ
  • Taking a slightly longer perspective, we note that Solgold has significantly expanded the known resources of Alpala since it published its initial mineral resource estimate in January 2018 outlining 430mt of indicated resources at an average grade of 0.5% copper and 0.4g/t gold with an additional 650mt classed as inferred at a similar copper grade and 0.3g/t gold.
  • Mr. Mather also welcomed the continuing commitment of the Ecuador Government to the development of the mining sector and referred, in particular, to the ʺrecent comments made by Fernando Benalcázar, Vice Minister of Mines of Ecuador and his continued commitment to the mining sector. The re-opening of the cadastre will provide a huge platform for SolGold to further develop its ultimate goal of becoming a copper-gold major in Ecuador.”
  • The company confirms that ʺthe Alpala Deposit remains open at depth to the north and northwest where a large tonnage of unclassified material could be grown further as exploratory drilling progresses towards the Moran target.ʺ
  • Solgold expects that further exploration ʺat Cascabel will be from deep exploration drilling from 2-3km depthʺ.
  • Solgold also explains that the new resources estimate is more conservative than its predecessor ʺas it has been carefully constrained within an Underground Optimised Shape or UOS, which effectively ensures the resource has reasonable prospects for eventual economic extraction by underground mass mining methods at the specified cut-off grade of 0.21% copper equivalent. This in conjunction with the high drill hole density achieved throughout the bulk of the deposit, means it is highly reasonable to expect a large percentage of the Mineral Resource may be converted to Mineral Reserves following completion of the PFS.ʺ
  • The high grade core of the deposit, where drilling density is highest at less than 60m separation, is reported at a 0.8% CuEq cut-off-grade to contain 442mt at an average grade of  1.40% CuEq (0.87% copper, 0.86g/t gold and 2.34g/t silver) within the Measured and Indicated classifications. This represents a tonnage increase of approximately 10% on the previously reported 400mt at a higher average grade of 1.49% CuEq.
  • Commenting on the resources update, CEO, Nick Mather, said that it ʺsignificantly increases our confidence that the economics identified in the PEA are achievable and are based on a bankable porphyry orebody.ʺ
  • Despite the impacts of the Covid19 containment restrictions, Solgold reports that it expects the results of this new resource estimate to be incorporated in a Pre-Feasibility Study (PFS) by Q3 2020 and in a Definitive Feasibility Study (DFS) in 2021.

Conclusion: Solgold has delivered a further substantial increase in the overall resource base of Alpala, more that trebling the overall tonnage since it announced the initial resource in January 2018 and increasing the previously published estimate of November 2018 by around 30%. More importantly, the confidence levels of the estimate have been substantially enhanced with some 45% of the measured and indicated resources now classed as measured providing a solid platform for the forthcoming PFS expected later this year and the subsequent DFS. We look forward to the detailed information on the resource estimate which is to be released on the Canadian SEDAR depository within the next 45 days.

*SP Angel act as Financial Advisor and broker to Solgold

 

Strongbow Exploration* (SBW CN)  C$0.035, Mkt cap C$4.7m - High-grade copper and tin intersected in drilling at United Downes in Cornwall

  • Strongbow report 14.69m of high grade copper and tin mineralisation from drilling on their United Downes exploration project in Cornwall.
  • The mineralisation is found between the historic United Mine and the Gwennap copper tin mining district.
  • Mineralisation is similar to that mined at the Wheal Jane and Mount Wellington mines.
  • Three samples retried grades of >20% copper delaying the reporting of these overlimit assays.
  • The section of semi-massive sulphide mineralisation assayed was from 90.60m- 105.29m downhole.
  • The 14.69m section grades:
    • 7.46% - Copper
    • 1.19% - Tin
    • 15% - Zinc
    • Mineralisation looks like it runs very close to the decline at the old Wheal Maid mine which could make accessing the mineralised lode underground quicker and simpler depending on the conditions of the decline today.
    • Processing of ore from the newly discovered lode could be done at South Crofty which is fully permitted for mineral processing and is about 7 miles from the United Downs site
    • The drilling was done by Cornish Lithium which is looking to identify lithium brines in deep drilling in the area.
    • The surprise discovery of high-grade copper and tin mineralisation is in a previously unmined area between the United Downes and Wheal Maid mines.
    • Both mines were considered rich in their day.

Conclusion: Strongbow have a new copper, tin discovery on their hands in Cornwall. A further hole is to be assayed and another 6-8 holes will be drilled averaging around 200m down hole with a drill rig already at site. Drilling will restart as soon as COVID-19 restrictions allow.

*Our analyst formerly worked in the South Crofty tin mine in Cornwall

 

Tertiary Minerals* (TYM LN) 0.28p, Mkt Cap £1.7m – Pyramid Gold Project drilling plans

  • Tertiary Minerals reports that it intends to mobilise a drilling rig to its Pyramid gold project in Nevada during the week commencing 20th April in order to follow up its primary epithermal gold vein target where a previous hole, PYR9 intersected visible gold and reported a 1.52m intersection at an average grade of 17.8g/t gold from a depth of 94.5m down-hole and ended in a second zone of  mineralisation assaying 2.6g/t gold over an intersection width of 1.52m to 115.8m depth.
  • The company has secured the services of a ʺNevada based consulting geologist with a background in the evaluation of epithermal gold deposits has been contracted to manage the drilling and to log and sample the drill coreʺ.
  • The work is to be carried out in  accordance with the restrictions imposed by the State of Nevada to control the Covid19 virus but will proceed as ʺ Mining (including drilling operations) falls into the essential business categoryʺ.

Conclusion:  We look forward to the results of the drilling at the Pyramid Gold Project when they become available.

*SP Angel act as Nomad and broker to Tertiary Minerals

 

 

SP Angel Healthcare team - Vadim Alexandre, Liam Gascoigne-Cohen

GSK strikes collaboration agreement with Vir Biotechnology

  • GSK struck a collaboration agreement with immunology specialist, Vir Biotechnology (VIR.NQ), to develop treatments against coronaviruses, including SARS-CoV-2, the virus that causes COVID-19.
  • The partners will initially focus on further developing antibody therapy candidates identified by Vir to have binding affinity and a neutralising effect against the SARS-CoV-2 virus.
  • GSK intends to invest $250m into Vir at $37.7/share, a 10% premium to the previous day’s closing share price.

Coronaviruses, including SARS-CoV-2, have a single glycoprotein on their surface called the spike protein. The virus uses the spike protein to bind to the host cell and is required for infectivity. The collaboration will initially focus on two candidates, VIR-7831 and VIR-7832, which have shown high affinity for the spike protein and demonstrated activity in neutralising SARS-CoV-2 in lab studies. The partners plan to initate a phase 2 trial within the next three to five months, pending regulatory approval. Vir also has an agreement with Alnylam Pharma to evaluate RNAi (gene silencing) therapies against SARS CoV-2. 

 

ReNeuron Group (RENE.L): Research agreement with major pharma

Share price: 109p; Market Capitalisation: £34.7m

  • Cell therapy developer, ReNeuron, struck a research agreement with an unnamed major pharmaceutical company regarding its exosome platform.
  • The collaboration aims to focus on using the Group’s exosomes for the delivery of gene silencing sequences generated by the unnamed pharma.
  • ReNeuron is responsible for manufacturing and loading the exosomes with the gene silencing sequences which the unnamed pharma will subsequently evaluate.
  • ReNeuron will be reimbursed for manufacturing and loading the exosomes in the initial phase of the collaboration.

Exosomes represent a novel treatment methodology based on a cellular communication system. Cells can be modified to produce exosomes which encapsulate therapeutic doses and deliver them to a target site. ReNeuron's exosomes are derived from its CTX neural stem cell line and have the ability to cross the blood brain barrier and to be manufactured at scale.

 

EKF Diagnostics Holdings plc (EKF.L): Trading update 

Share price: 29.8p; Market Capitalisation: £135m

  • EKF Diagnostics, provided a trading update for the year ended December 31 2019 (FY19).
  • Revenue grew 6% to £44.9m (FY18: £42.5m) and gross profits grew 4% to £23.7m (FY18: £22.7m)
  • Profit before tax was £5.5m (FY18: £5.8m excluding exceptional gain from Renalytix AI spinout).
  • Cash at period end was £12.1m (FY18: £10.3m).
  • A contract manufacturing opportunity with Longhorn Vaccines and Diagnostics LLC, a US molecular testing group, generated initial orders of c. $1m. Longhorn is the inventor of PrimeStore MTM specimen collection tubes for COVID-19 testing.
  • The Group reached a Preferred Partnership Agreement with Mount Sinai Innovation Partners. 

With trading in 2020 to date in-line with management expectations, EKF remains well capitalised for the current period of uncertainty driven by the coronavirus pandemic. The Company has implemented operational measures and received German state approval to keep its Barleben manufacturing facility open. EKF notes it has seen limited disruption to its customer and supply chains and there remains a demand for the Group’s diabetes and haemoglobin tests, with these patient groups being in a higher risk category for COVID-19. The Preferred Partnership Agreement with Mount Sinai should provide EKF early access to potential commercial opportunities from Mount Sinai. The Group previously had success in spinning out Renalytix AI plc (RENX.L), the developer of artificial intelligence-enabled diagnostics for kidney disease.

 

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

 

Sales

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

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

 

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