SP Angel . Morning View . Thursday 01 10 20

SP Angel . Morning View . Thursday 01 10 20

Copper gains on hopes for US stimulus and risks of strikes in Chile 

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MiFID II exempt information – see disclaimer below  

   

Aura Energy* - (AURA LN) – Preliminary results show impact of legal costs, litigation and multiple general meetings

Caledonia Mining* (CMCL LN) – Increases quarterly dividend again

Goldstone Resources (GRL LN) – Interim results highlight progress towards opening the Homase South pit with Q4 production target maintained 

Kavango Resources (KAV LN) – Interim results

Oriole Resources (ORR LN) – Drilling results from Djibouti

SolGold* (SOLG LN) – First hole hits over 500m of mineralisation at Cacharposa in southern Ecuador

 

COVID-19 - React survey reports significant decline in the R number to 1.1 from 1.7

• Professor Karol Sikor says ‘The triage data also lines up with this and continues to fall’.
• Is it possible that this is reflecting the impact of some element of herd immunity or are government warnings and policies creating the effect?
• These are multi-billion dollar questions.

 

Industrial minerals prices rise again as manufacturing activity recovers 

• Ferro-vanadium prices rose 1% yesterday top $24.48-25.31/kgV  yesterday
• Ferro-manganese prices also rose by 1.7% to 1,100-1,240/t in the US
• Ferro-titanium prices climbed 2.5% to $4.4.3/kg Ti
• The Ferro-titanium price has risen by 7.0% to $3.37-4.09/kg Ti for its monthly average
• Prices for Ferro-titanium are recovering back to last year’s levels following a significant pullback from May to August.
• The metal which is used for aircraft parts and other specialist applications is now recovering on new demand as manufacturers restock.
• Reports of aircraft deliveries to a Japanese airline indicate ongoing manufacturing and deliveries.

 

Dow Jones Industrials		+1.20%	at	27,782
Nikkei 225		-0.00%	at	23,185
HK Hang Seng		+0.79%	at	23,459
Shanghai Composite		-0.20%	at	3,218

 

Economics

US – Negotiations over a potential $1.5tn fiscal relief package are ongoing between House Democrats and the administration.

• Nancy Pelosi decided to hold off the vote on the Democrats’ $2.2tn package after saying she was looking for “further clarification” on a new $1.5tn offer by Steven Mnuchin.
• The vote was expected on Wednesday night but was delayed until Thursday so talks could continue, FT reports.
• Preliminary payroll data showed the economy added 749k non-farm jobs last month, beating estimates for 650k; monthly NFPs are due this Friday with estimates for 868k v 1,371k in August.

US unemployment set to rise as Disney cuts 28,000 workers ahead of election

• American Airlines and United Airlines also plan to furlough 32,000 workers
• Both airlines have offered to reverse their layoffs if policymakers bring in more payroll support for the airlines.
• This process is likely to be repeated across other industries and major employers.

US ruling on trade secrets case could de-rail SK Innovation’s (SKI) Georgia plant

• The US International Trade Commission (ITC) is to decide next whether or not to uphold the preliminary verdict that SK Innovation deliberately destroyed  documents showing it had illegally acquired sensitive technology from LG Chem.
• The Georgia facility is the largest single investment in the state’s history, with SKI pledging t $2.6bn to the project.
• If the ruling goes against SKI the Financial Times reports it could jeopardise their Georgia battery plant as the ITC can ban the import of goods related it deems related to trade secret theft. This could prevent SKI from importing materials required for production putting the sit at risk.
• This latest law suit is part of any ongoing feud between South Korea’s battery giants, with many of the grievances relating to employees moving between the firms and the alleged transfer of trade secrets.  

 

UK – The government may further tighten COVID-19 related restrictions soon as its chief scientific adviser admitted the virus was not “under control”.

• UK house prices rise in September
• Nationwide building society says house prices rose 0.9% between August and September. This would put them 5% higher than the same time last year.
• Average house prices rose over 225,000 for the first time whilst mortgage approvals for house purchase rose 28% from July to August with 85,000 in the latter. This is the highest rate since 2007.
• The Southwest saw the biggest rise with prices up 5.5% to an average of £260,316. Northern Ireland and Scotland propped the table up with 1.5% and 2.0% rises. Scotland saw growth decelerate from 4% in Q2.
• It is the first time since 2017 house price growth in Southern England has outpaced Northern England.

 

Germany – Employees will have a legal option of working from home when possible under the draft law that is expected to be published in a few weeks’ time, the labour minister said.

 

Italy – Manufacturing sector growth accelerated in September to the strongest in 27 months.

• The survey highlighted improved demand both domestically and overseas with foreign new orders posting the first increase since April 2019.
• Italian Manufacturing PMI was above that of France and Spain and was only weaker than that of Germany, implying that the recovery is stronger in nations with lower numbers of new infections.
• Markit Manufacturing PMI: 53.2 v 53.1 in August and 53.5 est.

 

Spain – Manufacturing sector eked out growth in September, although, the pace remains subdued.

• Despite stronger production, Spanish goods producers reported falling orders, particularly from domestic clients, FT reports.
• Outlook remains uncertain with the nation reported the highest number of new infections in Europe in September.
• Markit Manufacturing PMI: 50.8 v 49.9 in August and 50.5 est.

 

South Korea – Exports climbed 7.7%yoy, marking the first annual increase since February and coming ahead of market expectations.

• Stronger overseas shipments point to a recovery in the external demand following months of double digit declines.
• Shipments of computer chips were particularly stronger supported by robust demand from data centres amid increased interconnectivity during the pandemic, as well as further supported by China’s economic recovery.

 

Turkey – Authorities admitted to excluding asymptomatic COVID-19 cases in daily tally since late July.

• The health ministry changed the way it reported cases this summer replacing the words “today’s number of cases” to “today’s number of patients”.
• “Not every case is a patient… because there are people who receive a positive test results but show no symptoms… these (cases) make up the vast majority,” the health minister explained.
• The announcement proves opposition politicians right who claimed for months that official national coronavirus statistics were under-reporting true number of cases.

 

Saudi Arabia – The government is cutting next year’s budget by 7% amid falling revenues from the impact of coronavirus and lower oil prices.

• The nation’s pre-budget statement for 2021 estimated expenditure at 990bn riyals, down from SAR1.1tn this year.

 

Currencies

US$1.1735/eur vs 1.1728/eur yesterday.  Yen 105.50/$ vs 105.63/$.  SAr 16.643/$ vs 16.954/$.  $1.293/gbp vs $1.281/gbp.  0.719/aud vs 0.711/aud.  CNY 6.791/$ vs 6.807/$.

 

Commodity News

Precious metals:          

Gold US$1,895/oz vs US$1,884/oz yesterday

   Gold ETFs 110.7moz vs US$110.6moz yesterday

Platinum US$904/oz vs US$873/oz yesterday

Palladium US$2,328/oz vs US$2,322/oz yesterday

Silver US$23.58/oz vs US$23.77/oz yesterday

            

Base metals:   

Copper US$ 6,677/t vs US$6,612/t yesterday - Escondida supervisors rejected the final wage offer and approved a strike yesterday.

• While the mine is likely to continue to operate during the stoppage by supervisors, production is likely to come down from the recent pace of 100ktpm.
• The BHP Group majority owned mine has requested 5 days of mediation under local laws in an attempt to avoid stoppage with talks potentially to extend for another five days if both parties agree.
• Earlier, supervisors at the Candelaria copper mine owned by Lundin in Chile also rejected a final offer.
• A series of wage negotiations are scheduled at other Chilean mines this year with Escondida and Candelaria developments being closely watched by respective labour unions as to the final outcome.

Aluminium US$ 1,759/t vs US$1,170/t yesterday

Nickel US$ 14,585/t vs US$14,335/t yesterday

Zinc US$ 2,392/t vs US$2,412/t yesterday

Lead US$ 1,813/t vs US$1,834/t yesterday

Tin US$ 17,475/t vs US$17,695/t yesterday

            

Energy:            

Oil US$42.2/bbl vs US$40.7/bbl yesterday - One of the largest state wealth funds in the UAE, Mubadala Investment Company, has forecasted that global oil demand has another decade to grow until peaking in 2030

• According to its CIO, the coronavirus-inflicted disruption in global oil demand this year will continue into next year, as part of the ADIPEC Energy Dialogue series on Monday
• However, the investment firm of OPEC’s third-largest producer currently sees another decade in which oil demand will continue to grow, after recovering from the pandemic 
• “Predicting the oil market is very challenging. COVID-19 has created major disruption to demand and we expect to see the continuation of that disruption in 2021. But if you project the horizon to 2030, we will go back to an acceptable level of growth, potentially peaking in 2030,” the Company reported 
• Global oil demand has recovered from the lows in the second quarter to levels last seen in the 1990s, but it will continue to rise in the next 12 months
• While Big Oil faces major challenges with calls to contribute to the fight against climate change and pressure from investors over Environmental, Social, and Governance (ESG) investing, national oil companies – such as those in the Middle East – will have room to invest in the upstream sector
• Mubadala’s view of global oil demand radically differs from BP’s new assumptions in its 2020 outlook which says that global oil demand may have already peaked last year as oil consumption may never recover to the pre-pandemic levels.
• ConocoPhillips however, believes that global oil demand will not only return to the pre-crisis levels of 100MMbopd, but it will grow from there

Shell to cut 7000-9000 jobs 

• Shell has announced its intention to cut 7000-9000 jobs by 2022 as part of its cost cutting in preparation for shifting the business towards ow-carbon energy.
• The redundancies represent close to 10% of the Company’s 83,000 strong workforce.
• CEO Ben van Beurden revealed the Company plans to be a predominantly low carbon electricity and low carbo biofuel company with some oil and gas. Shell plans to be net zero emissions by 2050.
• The Company revealed in an operations update on Monday that it saw a 46% fall in Q1 net income to $2.9bn, and an 82% fall in Q2 income. The Company also said its oil and gas production is set to drop to 3,050 barrels in Q3.

 

Natural Gas US$2.565/mmbtu vs US$2.509/mmbtu yesterday

• Natural gas prices nudged further after a subdued start to the week as the weather forecast turns milder and traders add support
• Demand increased in the latest week as colder weather buoyed consumption in both residential and commercial buildings
• The weather is now expected to be warmer than normal throughout the west which should weigh on natural gas prices
• There are no tropical cyclones expected to form in the Atlantic Ocean or Gulf of Mexico over the next 48-hours according to NOAA

            

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$117.2/t vs US$116.9/t

Chinese steel rebar 25mm US$546.9/t vs US$545.6/t

Thermal coal (1st year forward cif ARA) US$60.5/t vs US$60.2/t

Coking coal swap Australia FOB US$146.0/t vs US$149.0/t

            

Other:  

Cobalt LME 3m US$34,200/t vs US$34,200/t - Cobalt absent in Tesla Model 3

• Tesla is in position to begin selling Model 3 vehicles equipped with LFP batteries in China reports Reuters.
• It is understood the battery change announcement could happen as early as later today but this was not confirmed by Company sources.
• The Model 3 is currently makes use of NMC (nickel-manganese-cobalt) batteries. The lithium iron phosphate (LFP) battery the Company is reported to be switching to has a zero cobalt content.
• The Californian EV maker requested permission from the Chinese government to manufacture vehicles equipped with LFP batteries back in May. At the time it was reported that it seemed likely Tesla would work with partner CATL to produce cobalt free batteries as the latter had been developing LFP batteries with an absence of cobalt.
• The removal of cobalt from the battery is one of the steps towards making EVs competitive on price vs ICE vehicles. Due to the methods used to source it and the area of the world it is sourced from cobalt is a very expensive component of the battery. It is also associated with unethical working conditions. 
• The Model 3 sedan today starts from $39,900 so it will be interesting to compare the price of the vehicle with the LFP battery.  
• The advantages of LFP batteries include: a more stable chemistry, lower cost, cyclability and their robust nature.

NdPr Rare Earth Oxide (China) US$48,005/t vs US$47,886/t

Lithium carbonate 99% (China) US$5,080/t vs US$5,068/t

Ferro Vanadium 80% FOB (China) US$30.0/kg vs US$30.0/kg

Antimony Trioxide 99.5% EU (China) US$5.2/kg vs US$5.2/kg

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

Graphite flake 94% C, -100 mesh, fob China US$430/t vs US$430/t

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

 

Battery News

Borate solid electrolyte interphase (SEI) tested in calcium batteries

• Researchers from the Institute of Materials Science of Barcelona in partnership with several other organisation has observed electrolyte containing Ca(BF₄)₂ producing a SEI containing borate species.
• The team found the presence of boron moieties to be crucial for Ca²+ transport. The control electrolyte with an absence of boron produced a blocking SEI layer.
• The team believe identification of borate species as the agent responsible for calcium ion transport is a crucial step towards the development of calcium metal batteries.
• The researchers provided a proof-of-concept showing that borate rich passivation layers guarantee electrochemical response in different electrolyte media.
• Calcium is already used in lead acid batteries, but there have been issues identifying a suitable electrolyte resulting in poor reversibility and the short lifespan of the calcium metal anode.
• Calcium-metal batteries have been suggested to have the potential to offer a high energy and cost effective energy storage alternative to lithium-ion batteries.

 

First zero-emissions inter-city bus service set to launch

• On Thursday morning the UK’s first zero-emissions inter-city bus service is set for its inaugural trip from Dundee to Edinburgh. The new service is branded ‘Ember’.
• The route is 60 miles from Dundee to Edinburgh and the vehicles are fast charged multiple times a day. The service will start by offering 8 trips per day in each direction.
• The cost trade-off is the vehicle is about 1/3^rd more expensive than a comparative diesel engine coach but a single 200 mile trip will have an average fuel cost of £40, a reported 25% of the cost of the same trip using diesel fuel.
• For the consumer the coach costs £7.50 one way cheaper than alternative transportation on Scotrail or the Citylink bus.
• The new route is another incremental step in the shift towards clean energy. A reliable bus service showing off fast charging and providing a cheaper service than traditional fuel counterparts is important for convincing the consumer of the efficacy of electrified transport.

 

Tesla mulling stake in LG Energy Solution 

• Tesla is reported to be showing interest in LG Energy Solutions, the battery division LG Chem is transferring to an independent company in December.  
• Reports suggest Tesla’s interest varies from wanting to explore an opportunity to buy a stake to planning to take up to a 10% stake.
• If Tesla did take such a stake it would be in line with their recent moves to secure their supply chain with greater vertical integration and more sources of supply of both raw materials and batteries.
• Elon Musk has made public his concerns about the battery bottleneck forming in the industry with not enough batteries being produced to fulfil demand and not enough metal being mined to make the batteries.
• Recent moves to secure a 10,000 acre lithium clay deposit in Nevada and announcement this week of Tesla’s plans build a spodumene conversion facility alongside their Austin Gigafactory are confirmation of this.

 

UK’s first hydrogen train  

• On Wednesday 30^th September a hydrogen train travelled for the first time on UK tracks.  
• According to the Department for Transport, this technology will be available to add into current trains by 2023. This will help to decarbonise trains and reach the goal of removing diesel- only vehicles from the passenger network by 2040. 
• The train is a Class 319 dual voltage train which has been converted and fitted with a hydrogen fuel cell that enables it to run on just hydrogen and non-electric routes. It uses hydrogen and oxygen to produce electricity, water and heat rather than emitting harmful gas.  
• DfT hope that this will encourage other transport modes to change to more environmentally friendly fuel. It is part of DfT’s £23 million “hydrogen for transport” programme. £6.3 million will go towards a green hydrogen refuelling station and 19 hydrogen powered refuse vehicles in Glasgow.  
• The next stages of development are underway and Birmingham University are developing a hydrogen and battery powered module that can be fitted under the train.

 

Company News

Aura Energy* - (AURA LN) 0.35p, Mkt Cap £8.8m – Preliminary results show impact of legal costs, litigation and multiple general meetings

• In a release to the ASX of its unaudited preliminary results for the year to 30^th June 2020 yesterday Aura Energy reported a net after-tax loss of A$3.22m (2019 – net loss A$2.90m).
• The company attributes the increased loss to factors including accounting for the cost of “the accelerated conversion of convertible notes in fully paid ordinary shares, higher consulting costs (particularly legal arising from shareholder meetings and litigation against Pre-emptive Trading Pty Ltd and share registry and listing costs associated with five general meetings of shareholders (including three requisitioned by shareholders and a director)”.
• The increased charges were partly offset by “lower share-based payments … , lower employee costs and lower impairment costs”.
• The company reports a 30^th June 2020 cash balance of A$0.23m after the receipt of an additional A$1.42m of financing, including share issues totalling A$1m during the year.
• The company confirms that the audited annual report will be submitted before 31^st October 2020.

*SP Angel are Nomad and broker to Aura Energy

 

Caledonia Mining* (CMCL LN) 1375p, Mkt Cap £164m – Increases quarterly dividend again

• Caledonia Mining confirms that it has again increased its quarterly dividend with an 18% rise over the 8.5USȼ/share paid in July to 10US$ȼ/share.
• The July dividend was itself 13% above the preceding quarterly distribution of 7.5USȼ/share and brings the cumulative increase isnce the 6.875USȼ/share paid in October 2019 to 45%.
• The company confirms that work to equip the new Central Shaft at its Blanket gold mine in Zimbabwe remains on course and is expected to be completed during Q4 and that commissioning of the new shaft, which provides access to deeper level reserves in the mine and underpins future production at around 80,000oz pa into the 2030s, is expected to be completed by the end of Q1 2021.
• Expressing satisfaction at being able to increase quarterly dividends for the third consecutive time, Chief Executive, Steve Curtis, explained that the “decision by the Board to increase the dividend reflects our continued and increasing confidence in the outlook for our business.  As we reported in our Q2 2020 results, the business continues to perform well, supported by strong production and a firm gold price”.
• Mr. Curtis also said that “As we approach the end of the six-year investment programme at Blanket Mine, we anticipate that the rate of capital expenditure will begin to reduce in 2021. We expect the combination of rising production and declining capital investment to give us greater flexibility to consider further increases in the dividend in addition to possible investment in new projects”.

Conclusion: The stronger gold price of recent months is coming at a time when Caledonia Mining’s six-year long capital development programme to increase gold output at the Blanket mine is declining providing the opportunity to reward shareholders with a quarterly dividend which has risen in each of the last three quarters and is now 45% higher than the October 2109 distribution

 

Goldstone Resources (GRL LN) 8.1p, Mkt Cap £20m – Interim results highlight progress towards opening the Homase South pit with Q4 production target maintained 

• ​ In its interim results released yesterday, Goldstone Resources reports a pre- and post-tax loss of US$0.29m vs US$0.29m loss yoy.

• The cash balance was US$0.51m as at 30^th June with net assets increasing to US$9.9m vs US$6.9m as of the 31st of December 2019.  
• Goldstone raised US$4.3m during H1, of which US$2.4m has been drawn down to fund the purchase of equipment along with general capital, resulting in cash and cash equivalents of US$0.5m as at 30 June 2020.  
• Following the period end, GoldStone has drawn down a further US$1.725m to purchase plant and equipment ahead of commencing mining operations- with cash levels of US$0.9m as at 25 September 2020 and a further US$0.225m available to be drawn down under the gold loan.  
• Utilisation of these funds means that GoldStone has now invested in the necessary plant and equipment required to commence operations immediately, whilst providing land and crop compensation, identifying mining contractors and preparing to manage and implement the construction of a heap leach facility- which will be built by the Company itself by drawing on the Board's relevant experience. 
• GoldStone has also received formal approval from the Ghanaian Ministry of Mines for the transfer of the Homase prospecting license from Cherry Hill Mining Limited to GoldStone Akrokeri Limited, the Company’s wholly owned Ghanaian subsidiary. 
• Formal approval has been given by the Ghanaian authorities for a 10-year mining lease, which initially only relates to the Homase South Pit, although this can be renewed and/or extended to include additional pits along the Homase Trend.  
• The Company is awaiting the issue of certain permits which are in the process of being finalised, and the board maintain a productive working relationship with both the Ghanaian Minerals Commission and the Environmental Protection Authority to finalise the necessary permits. 
• Goldstone Resources also confirms that it “continues to work closely with the Ghanaian Minerals Commission and the Environmental Protection Authority to finalise the necessary permits, including the environmental permit”.
• Assuming timely issuance of the relevant permits, the Board continues to believe that it will be able to achieve first gold production before the year end.
• The Company’s current financial model using data from the DEP and a gold price of $1,800/oz and initial CAPEX gives an estimated project NPV of US$34.5m and IRR of 382% (at a 10% discount rate and excluding finance costs).  
• Further drilling is also being considered within the historic Homase trend, extending approximately 2,000m from the Homase Main Pit to encompass both the Homase Central and North Pits- extending the mineable resource down to 60m for all three proposed pits.  
• In a review of the first six months of 2020, Chief Executive, Emma Priestley, confirmed that the company’s “immediate target for mining is the Homase South Pit, the first of the three open pits planned to be brought into production …[the] … Homase South Pit extends 1,500 metres southwards from the historic Homase Main Pit, … which produced 52,500 oz gold at an average grade of 2.5g/t Au in 2002/03 by AngloGold Ashanti”.
• Further updates include a completed resource expansion which to extend the resource down-dip at Homase South to a vertical depth of approximately 60m, with the Company's latest DEP currently targeting the oxide down to a depth of 30m.  
• To increase the mineable resource, an RC drilling programme was completed in August 2020 with 22 holes for 2,443m. Assay results are expected from the laboratory imminently, although operations have been delayed due to Covid-19 restrictions in Ghana.  
• Additional drilling to extend coverage approximately 2km northwards along the Homase trend from the historically mined Homase Main Pit and including the old Homase Central and North pits is also being considered “to further increase the mineable resource”.
• Work is also continuing to re-evaluate the old Akrokeri mine “and the company intends to commence a drilling programme to start to define a resource associated with the Akrokeri mineralisation with the intention of bringing the Akrokeri mine back into production”.
• In March 2020, the company announced that the work in Ghana is being financed with a US$4.3m gold loan. Yesterday’s announcement confirms that US$2.4m of the loan has “been drawn down to fund the purchase of equipment and general working capital … [and that]  … Following the period end, the Company has drawn down a further US$1.725 million and following the purchase of plant and equipment ahead of commencing mining operations, … [it has] … a further US$0.225 million still available to be draw down under the Gold Loan”.

Conclusion: The Company has positioned itself to be able to commence operations immediately upon the award of the necessary permitting, by purchasing plant and machinery along with negotiating with contractors. Goldstone has drawn >90% of its US$4.3m gold loan. Looking to the future, the Company is growing the mineable resource at Homase which in turn should improve the fundamentals of the DEP.  

 

Kavango Resources (KAV LN) 2.7p, Mkt cap £5.2m – Interim results

• Kavango Resources’ interim report for the six months to 30^th June 2020 highlights the exploration potential of the Hukintsi section of the Kalahari Suture Zone (KSZ) in Botswana as well as the Strategic Joint Venture with Power Metals Resources which “will see the formation of a new, jointly owned, privately held company that is focuses on large-scale mineral exploration projects in Botswana”.
• Technical work continuues to demonstrate the geological similarities between the KSZ and the major deposits of the Norilsk area in Siberia and, drawing on this analogy, Kavango “increasingly believes that Hukuntsi has the potential to host very significant copper, nickel and platinum group metal deposits”.
• Alluding to the benefits of the Strategic J-V with Power Metals, Kavango’s Chairman, D J Wright, confirms that “Given the likely number and scale of these "Norilsk style" targets, the Company is readying itself to prepare for a drill campaign to test the large regional structures it has identified on the KSZ. With such a large planned operational commitment, the board felt the Company would benefit from introducing a new development partner to two licences on the KCB, and at Ditau”.
• The company’s exploration of the Kalahari Copper Belt in Botswana can also be accelerated as a result of the additional resources resulting from the joint-venture.
• The company also confirms that “Botswana has dealt admirably with COVID-19 and has already started to ease travel restrictions in the country. Whilst this has been helpful the company has still been somewhat restricted in the field, although this situation is now improving. In the meantime, planned extensive desktop research work has most certainly paid off especially on the Kalahari Suture Zone”.
• Kavango recently reported the resumption of some field exploration in Botswana.

Conclusion: Kavango Resources has been fortunate in that restrictions on field activity coincided to an extent with planned office-based reviews of pre-existing geological data and that these have been concluded as restrictions on field operations are easing. With the strategic joint-venture with Power Metals behind it and the easing of restrictions in Botswana  exploration of both the KSZ and KCB targets looks set to accelerate.

 

Northvolt (Private) raises $600m in private placement

• Swedish battery developer Northvolt has raised a further $600m in equity through a private placement.
• The funding round was led by Ballie Gifford, Goldman Sachs Merchant Banking Division and Volkswagen AG.
• The Company is expected to use the funds to increase production capacity in Europe to 150GWh by 2030, expand the Northvolt Labs Campus and establish a giga-scale lithium-ion battery recycling facility adjacent to the Northvolt Ett Gigafactory. The Gigafactory is currently under construction with a potential annual output of 40GWh.
• Northvolt signed a deal to supply batteries to BMW from 2024 worth $2.3bn. The batteries for this deal are set to be produced from the Northvolt Ett Gigafactory. Northvolt is also working with BMW to source raw materials for cell production.

• But where is Northvolt going to get its raw materials from?
• Maybe; Lithium from Savannah Resources* in Portugal and Kodal Minerals* in Mali
• Cobalt from Phoenix Copper* in Idaho and Arc Minerals* in Zambia
• Graphite from Talga in Sweden and Beowulf* in Finland.
• Rare Earths for magnets from Mkango* in Malawi and Rainbow Rare Earths* in Burundi
• Graphene from Versarien*

• The Company also signed a deal with VW to build a Gigafactory in Lower Saxony to supply batteries from 2024.
• Northvolt is focused on lithium-ion battery manufacture.

*SP Angel acts as Nomad and broker to Arc Minerals, Beowulf, Mkango, Rainbow Rare Earths, and Versarien and as broker to Kodal Minerals 

 

Oriole Resources (ORR LN) – 0.41p, Mkt cap £3.8m – Drilling results from Djibouti

• Oriole Resources reports that it has now received results from the Hesdaba epithermal gold prospect in Djibouti which is being explored by Oriole’s 11.8% owned Thani Stratex Djibouti Limited.
• The Hesbada epithermal gold prospect is located approximately 10km northwest of Thani Stratex’s more advanced Pandora project and today’s announcement reports highlights of the initial 1,931m of core-drilling and 1,529m of reverse-circulation drilling from the Phase 1 drilling programme. Among the results from Hesbada highlighted in the announcement are-
  • A 15m long intersection at an average grade of 4.08g/t gold from a depth of 53m in diamond-core hole Hd-D-08  at the Red Horns site. The intersection includes a 5m long section averaging 11.11g/t gold from 54m depth as well as a shallower, wider and lower grade gold intersections of 14.67 long intersection at an average grade of 0.99g/t gold from a depth of 10.68m; and
  • A 2.38m long intersection at an average grade of 2.55g/t gold from a depth of 91.62m in diamond-core hole Hd-D-05  at the Maranzana site; and
  • A 3m long intersection at an average grade of 1.66g/t gold from a depth of 42m in diamond-core hole Hd-D-07 also at the Red Horns site.
• In addition, the reverse-circulation programme encountered –
  • A 12m long intersection at an average grade of 1.99g/t gold from a depth of 14m in hole Hd-R-04 at the Red Horns site and including 6m averaging 2.17g/t gold from 14m and 3m averaging 3.12g/t gold from 23m depth; and
  • An 8m long intersection at an average grade of 1.34g/t gold from a depth of 55m in hole Hd-R-01 at Maranzana and including a single metre averaging 8.47g/t from 59m as well as a shallower 4m long intersection at an average grade of 1.02g/t gold from a depth of 35m; and
  • A 2m intersection at an average grade of 3.41g/t gold from 61m in hole Hd-R-05 at Red Horns; and
  • A 4m long intersection at an average grade of 2.41g/t from 64m in hole Hd-R-06 at Red Horns.
• The announcement says that all “boreholes intersected classic epithermal structures … [and that] … Results from the Red Horns prospect are particularly encouraging, and include a best diamond drilling intersection of 15.00 m grading 4.08 g/t Au from 53.00 m, including 5.00 m grading 11.11 g/t Au (Hd-D-08) and a best RC intersection of 12.00 m grading 1.99 g/t Au from 14.00 m, including 6.00 m grading 2.17 g/t Au and 3.00 m grading 3.12 g/t Au (Hd-R-04) (see Tables 1 and 2).”
• Oriole Resources says that “The presence of these wide, moderate-grade and near-surface intersections, highlight a potential for the definition of an open-pittable, bulk tonnage resource at Hesdaba”.
•  CEO, Tim Livesey, commented that the results “confirm the original mineralisation model and give further confidence that the systems on the property have the potential to host a scalable resource”.

Conclusion: Initial drilling results from Hesdaba have given Oriole Resources confidence that ultimately its 11.8% owned Thani Stratex Djibouti may identify an open-pittable resource however clearly further drilling will be needed to reach that stage.

 

SolGold* (SOLG LN) 30.6p, Mkt Cap £576.1m – First hole hits over 500m of mineralisation at Cacharposa in southern Ecuador

• Solgold reports that its first drill-hole of its initial 8,000m programme at Cacharposa, previously known as Target 15, within its Porvenir licence in southern Ecuador has so far encountered in excess of 500m of visible copper mineralisation mainly as the sulphide mineral chalcopyrite.
• Borehole PDH20-001 encountered mineralisation from a depth of 15.9m to the current depth of 525.3m and is continuing to a planned target depth of at least 700m.
• The company explains that “Detailed core logging, to a depth of 491.0m, shows chalcopyrite percentages of up to an estimated 6.0 % by volume with associated porphyry style total quartz vein abundance of up to a measured 11.7 % by volume … [and that geological features noted in the core suggest that] … more intense mineralisation can be reasonably expected deeper in the system”.
• Although assays are not yet available, photographs of sections of the drill core included in the announcement https://www.rns-pdf.londonstockexchange.com/rns/7732A_1-2020-10-1.pdfconfirm the chalcopyrite dominance in the mineralisation. We observe that chalcopyrite contents of up to 6% appear to imply that assays of up to 2% copper may be achieved in parts of the mineralised intersection.
• This first hole aims to test the ground below a surface outcrop of mineralisation “that returned a highly prospective open-ended rock-saw channel assay result in Cacharposa Creek.  The assay results (announced 7 May 2019) exhibit an approximate 1:1 copper (%) to gold (g/t) ratio as 147.8m @ 0.69% CuEq (0.43 g/t Au, 0.37% Cu) including, 82.63m @ 1.08% CuEq (0.71 g/t Au, 0.55% Cu). An approximate 1:1 copper to gold ratio is also expected from drill core assays”.
• The company explains that the mineralisation it is testing at Carcharposa Creek forms part of a 1.7km long north-trending zone up to 1km wide “with scope for depth continuation of more than 600m … [and that] … The mineralisation styles, size and geometry at Cacharposa are consistent with the surface exposure of a vertically extensive, well-preserved porphyry copper-gold system hosted in potassium-rich intrusions”.
• Solgold describes “The exposed mineralisation in Cacharposa Creek … [as] … porphyry-style sheeted and stockwork B-type quartz-chalcopyrite-magnetite veining which occurs as three steeply dipping vein sets orientated northwest, east-northeast, and west-northwest”.
• Ben Whistler, Solgold’s Technical SerVices Manager, said that “The first hole at Cacharposa has been very promising so far, with intersection of highly visible chalcopyrite mineralisation which shows that the open-ended surface rock-saw results achieved on surface in Cacharposa Creek, will likely continue to be encountered at depth … [and commented that] … We are very encouraged by the visible mineralisation and are busy scaling up the drilling fleet to six rigs as quickly as COVID19 restrictions allow”.
• Solgold’s Chief Technical advisor, Dr. Steve Garwin, explained that “This porphyry system is characterized by a robust geological setting, geochemical expression and magnetic signature that compares favourably to large, economic and gold-rich porphyry copper systems elsewhere. The initial mineralisation observed in the first drill hole, to date, illustrates the downward continuation of chalcopyrite mineralisation discovered in Cacharposa Creek and highlights the potential for higher copper and gold grades at depth”.
• Chief Executive, Nick Mather, confirmed that Solgold’s exploration objective is the discovery of major deposits within its portfolio of 13 wholly owned licence areas in Ecuador and said that “Clearly our blueprint of targeting and applying the Alpala geological, exploration and operational blueprint on a string of these targets is working”.

Conclusion: Solgold is harnessing the expertise gained in the exploration of the 2.6bn tonnes (measured and indicated resource at an average grade of 0.53% copper equivalent) at Alpala to identify large scale targets elsewhere in Ecuador. Although exploration at Cacharposa Creek is still in its early stages, finding over 500m of copper sulphide mineralisation from near-surface in the first hole at is a powerful endorsement of this disciplined approach to exploration. The decision to scale up the exploration effort to six rigs hints at the enthusiasm of the geological team to accelerate their efforts at Porvenir as quickly as possible. We await the assays with interest.

*SP Angel act as financial advisor and broker to SolGold

 

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

 

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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