SP Angel . Morning View . Thursday 08 10 20

SP Angel . Morning View . Thursday 08 10 20

Copper prices rise on demand expectations and Chile strike potential

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MiFID II exempt information – see disclaimer below  

Alba Mineral Resources (ALBA LN) – Thule Black Sands Project update

Asiamet Resources (ARS LN) – Non-binding agreement with Aeturnum Energy

Bezant Resources (BZT LN) - Xstract and Bezant subject to Contempt of Court proceedings

Central Asia Metals (CAML LN) – Q3 update: 2020 guidance upgraded slightly at Kounrad and reiterated at Sasa

Chaarat Gold* (CGH LN) – Kyrgyz Republic update

Hummingbird Resources (HUM LN) – Positive 2020 Yanfolila drilling results

Impala Platinum (IMP SJ) – Impala offered stake in Zimbabwe platinum project

Oriole Resources (ORR LN) – Licence renewals in Cameroon

Rainbow Rare Earths* (RBW LN) – New JORC Exploration Target for Gakara Rare Earth Project in Burundi highlights strategy for 10,000-20,000tpa REE concentrate

SolGold* (SOLG LN) – Plans for drilling possible Alpala “look-alike” at Rio Amarillo in northern Ecuador

 

IG TV / SP Angel interview

• Metals Markets: Are they totally dependent on stimulus:? https://youtu.be/TOiSwRpgfKM

• Tesla Battery Day: https://youtu.be/8su0PtyZLIM           
• Mining Sector: https://youtu.be/1YVne_cOtbE

VOX Markets / SP Angel podcast

• https://www.voxmarkets.co.uk/media/5f7ed24c428be456473f299e/?context=/listings/LON/AMC/multimedia/

• https://audioboom.com/posts/7689312-john-meyer-discusses-battery-day-carbon-zero-targets-and-resource-companies

Dow Jones Industrials		+1.91%	at	28,303
Nikkei 225		+0.96%	at	23,647
HK Hang Seng		-0.48%	at	24,125
Shanghai Composite		closed		3,218

 

Economics

 UK – House price growth hits 18-year high 

• The RICS house price index rose to +61 in September from +44 in August, the highest reading since June 2002 and significantly higher than a Reuters poll of economists that suggested a reading of +40. 
• A post-lockdown boom has been attributed to the sharp rise, driven by pent-up demand , people seeking bigger homes and the stamp duty cut.

British miners receive £5m in research and development tax credits

• HMRC report that British mining and quarrying firms received £5m in tax credits for R&D projects last year.
• The funds are targeted towards new technological innovation.
• Figures show UK mine production fell to 2.6mt from 11.6mt between 2014 and 2018 with the value of this production falling to £160m from £390m.
• The UK government is keen to encourage further R&D and development in the mining space and sound keen to support miners in their efforts to reopen and start new mines.

 

 

Japan – Current account surplus falls 1.5% to $19.8bn

• Japan’s current account surplus for August fell from a year earlier for a sixth straight month, according to the Finance Ministry.
• Despite the fall, the monthly drop was the slowest since the pandemic began, indicating a gradual resumption of economic activity.
• The goods trade balance was positive for the second consecutive month at ¥413bn, due partly to improved exports of cars.
• Exports fell 15.5% to ¥5.12 trillion, with the pace of decline easing following a 19.6% decline in July and 25.1% fall in June.
•  Imports fell 22% to ¥4.71 trillion mainly due to lower prices of energy resources.

 

Peru – August mining exports fall 39%

• The Value of Peru’s mining exports fell to $1.46bn in August.

 

Currencies

US$1.1773/eur vs 1.1754/eur yesterday.  Yen 105.99/$ vs 105.74/$.  SAr 16.594/$ vs 16.630/$.  $1.295/gbp vs $1.290/gbp.  0.716/aud vs 0.714/aud.  CNY 6.791/$ vs 6.791/$.

 

Commodity News

Precious metals:          

Gold US$1,893/oz vs US$1,891/oz yesterday - Uzbekistani sell-off causes central banks to be “net sellers” of gold in August

• Central banks became net sellers of gold in August for the first time in a year-and-a-half- as Uzbekistan sold 31.7 tonnes of gold worth $5.8bn, according to the World Gold Council.
• Global central banks sold a net 12.3t of gold over the month, making all other central banks net buyers of 16.5t.
• Activity has slowed down in August as previous months showed banks aggressively buying gold, and the WGC expect banks to remain net purchasers for the year, as they have already accumulated 200-300 tonnes in 2020.
• According to the council, central banks hold around 35,000 tonnes of gold worth $2tr.
• In 2018, central banks purchased 651.5t of gold, the most since 1971, as countries including Russia attempted to move their reserves away from the dollar.

   Gold ETFs 111.0moz vs US$111.0moz yesterday

Platinum US$868/oz vs US$869/oz yesterday - The hydrogen revolution to greatly benefit Platinum 

• The World Platinum Investment Council has said that a string of spending commitments and investments are “pointing to a future where hydrogen will be a mainstream source of sustainable fuel.”
• According to the Hydrogen Council, 18 countries have now formed roadmaps or strategy documents which lay out their intentions for hydrogen in the future.
• The EU aims for renewable hydrogen technologies to reach maturity and be used at a large scale from 2030 to 2050.
• Hydrogen contained no carbon and produces zero emissions, only water. This makes it the most abundant element.
• Despite this, it is only “truly sustainable” when it is green hydrogen. Hydrogen is produced through the electrolysis of water and, during this process, an electric current is used to separate water into its component elements – hydrogen and oxygen. It is green hydrogen when the electrolysis is derived from a renewable source. Platinum is also important in this process as it is a catalyst to provide the performance and durability needed for commercial scale systems.
• Currently, less than 1% of hydrogen is green. The rest is produced by stripping hydrogen from fossil fuels. Any carbon dioxide emitted from this is buried underground to mitigate some of the harmful effects. This hydrogen is called blue hydrogen.
• The International Renewable Energy Agency estimates that by 2050, the world will require 19 exajoules of green hydrogen for it to replace the current use of fossil fuels in these sectors.
• Demand for Platinum is growing as it is used in fuel cells for fuel cell electric vehicles. By 2050, the global hydrogen economy is estimated to be worth $2.5 trillion, this will be a huge benefit for Platinum.

Palladium US$2,359/oz vs US$2,357/oz yesterday

Silver US$24.06/oz vs US$23.61/oz yesterday

            

Base metals:   

Copper US$ 6,641/t vs US$6,521/t yesterday - Copper Investors eye labour market uncertainty in Chile

• Strike concerns in Chile are said to be supporting copper prices, as two of five unions at the Candelaria copper mine rejected a contract offer from Canada’s Lundin Mining.
• Candelaria is the first of six mines in Chile due to have labour talks in the coming months, with the mines accounting for annual production of 2.7mt (Refinitiv).
• Last week saw supervisors at Chile’s Escondida mine reject the company’s final wage offer, moving them a step closer to a strike (Bloomberg).

Aluminium US$ 1,791/t vs US$1,768/t yesterday

Nickel US$ 14,625/t vs US$14,550/t yesterday - Indonesian state miner purchases 20% of Vale domestic nickel unit

• State miner, Mining Industry Indonesia, has completed its purchase of a 20% stake in nickel miner PT Vale Indonesia for $375m. 
• Brazil's Vale Group controls 44% of PT Vale Indonesia , while Japan's Sumimoto Metal Mining holds 16% of shares.
• According to the state-owned Enterprises Minister, the deal shows the Indonesian government further increasing its exposure to the battery metals space, as the country aims to build a holistic onshore EV industry (Mining Weekly).

 

Zinc US$ 2,368/t vs US$2,350/t yesterday

Lead US$ 1,789/t vs US$1,780/t yesterday

Tin US$ 18,085/t vs US$18,105/t yesterday

            

Energy:            

Oil US$42.3/bbl vs US$42.4/bbl yesterday

• A Reuters poll suggests that the oil market has already priced in the slowing global demand recovery and the growing uncertainties about the economy amid resurging coronavirus cases in many parts of the world  
• Current consensus is that oil prices are not expected to move much higher than current levels of around US$40-US$45/bbl for the rest of the year, because of still high excess global inventories and the stalled recovery in oil demand with the end of the US driving season and the continued trend of rising COVID-19 cases, especially in major European economies, which have started to re-impose some restrictions to curb the spread
• Yet, despite the bearish fundamentals and the headwinds coming from the so-called second wave of infections, oil prices are unlikely to crash again as they did in April when oil demand collapsed by 20%
• At the same time, even if we don’t see oil prices in the teens again this year, the risks and uncertainties on the markets continue to be skewed to the downside, leaving little room for price gains for the remainder of 2020
• Oil prices are in for a range-bound trade in the coming months, with volatility expected around the US election in early November
• Nevertheless, as we move into the second half of 2021, many economies have predicted a significant upturn in activities which should act as a major boost to pricing

 

Natural Gas US$2.590/mmbtu vs US$2.533/mmbtu yesterday

• The highly volatile US natural gas benchmark prices are set to trend higher in the coming months amid lower domestic production, higher demand in the winter, and recovering global gas prices in Europe and Asia—America’s key export destinations for LNG 
• The coming winter season and the end of the hurricane season that has disrupted LNG operations and exports along the US Gulf Coast, coupled with recovering gas demand for industrial activities in Asia and Europe, are likely to send natural gas prices to above US$3/mmbtu in the winter months, the natural gas futures curve and EIA estimates show
• The impending winter heating season, however, is about to change the fundamentals
• Demand is expected to rise with the fall in temperatures in the northern hemisphere, supporting US and global natural gas prices
• Higher prices at the key European and Asian hubs will make LNG exports to those destinations viable and profitable again
• This week’s volatile natural gas prices were indicative of a demand/supply picture in a ‘shoulder season’ when power demand for air conditioning begins to wane, but demand for heating is not there yet
• So prices reacted to the immediate drivers—storage, feed supply for LNG, and storm-induced shut-ins

            

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$117.3/t vs US$117.4/t

Chinese steel rebar 25mm US$546.9/t vs US$546.9/t - - Japan’s steel output to slump to 51-year low

• Output is expected to fall 17% this year to 82.2mt to the lowest level since 19699, according to the Ministry of Economy, Industry and Trade.
• The Covid-19 pandemic has been a further blow to Japanese steelmakers already struggling due to rising costs and intensifying competition.
• Steel output is expected to fall 11% from a year earlier in Q4, less of a decline than the 17% projected fall for the year, compared to 2019’s output figure of 99.3mt (Bloomberg).
• This year’s figures would mean that Japan now produces less steel in a year than China does in a month.

Thermal coal (1st year forward cif ARA) US$59.6/t vs US$59.7/t

Coking coal futures Dalian Exchange US$154.0/t vs US$154.0/t

            

Other:  

Cobalt LME 3m US$33,780/t vs US$33,780/t

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

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

Ferro Vanadium 80% FOB (China) US$30./kg vs US$30./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

Dogger Bank offshore Wind Farm - World’s largest windfarm in construction likely to use nearly 10% of global Neodymium production

• The UK has approved construction of the Dogger Bank Wind Farm with a planned capacity of 3.6GW.
• Joint project between Equinor and SSE Renewables, will be made up of three wind farm sites in the North Sea each generating ~1.2GW of power.
• The most powerful wind turbine called the GE Renewable’s Haliade-X. it is 853ft tall and has three 351 ft blades.
• Overall, the turbines from this offshore wind farm will create enough electricity generation to power over 4.5m houses a year – about 5% of the UK’s electricity demands.
• The project is expected to be completed in 2023.

Wind Turbines: 

• More than 2,500MW of new offshore wind capacity was built around the world in the first half of 2020.
• WFO’s Global Offshore Wind Report HY1 2020 found that global installed offshore wind capacity had almost reached 30GW by the end of June with another 50GW expected between 2020-2024.
• More than 8GW of offshore wind capacity under is construction worldwide, with 57% of this in China.
• UK is still the world’s biggest offshore wind market with more than 10GW of installed capacity of which 714MW was added during the first half of 2020.
• Germany has the second biggest offshore wind market with more than 10GW of installed capacity of which 714MW was added during the first half of 2020.
• The report estimates that China has a total capacity of 4.6GW under construction.
• The US is targeting off-shore wind capacity at 27GW in the North East according to S&P Global.

Permanent magnets: 

• Wind turbines currently represent ~70% of current NdfeB magnet market according to Rosskill
• In wind turbines – instead of needing electricity to emit magnetic field, large neodymium magnetics are used to produce their own. This has removed the need  for parts used in pervious generators, while decreasing the wind speed required to produce energy.

• The global permanent magnet market was valued at US$20.74bn last year with expected growth of ~5.9% till 2027.
• Increasing production in the electronics sector was the major driver of the market until the emergence of the COVID 19 pandemic.
• Demand from Medical devices is growing significantly for ventilators and MRI rising significantly.
• Automotive is expected to become a major growth area with permanent magnet motors driving most new electric vehicles.
• The market for Magnet Rare Earth oxides, mainly Nd and Pr is expected to increase by five times by 2030.
• Total magnet rare earth oxide demand is forecast to increase at a CAGR of 9.7% according to Adamas Intelligence REE demand
• A 5-megawatt direct-drive wind turbine with a permanent-magnet generator will use around three tonnes of permanent magnets of which one tonne is rare earth oxide alloy or another rare earth compound according to Adamas.
• Plug-in EVs use 1-2 kg of permanent magnets while Hybrids like the Prius use ~2-2.5kg
• Each wind turbine uses around 0.15kg of Neodynium (Nd) per MW of power capacity suggesting the Dogger wind farm will use some 540t of Nd alone..
• Typical permanent magnet content of turbine generators (Wind Power Monthly / Science Direct)
  • Low-speed direct-drive: around 650kg/MW
  • Medium-speed geared drivetrain: around 160kg/MW
  • High-speed geared drivetrain: around 80kg/MW
• Of which 
  • Neodymium (Nd): 29%
  • Dysprosium (Dy): 2-4%
  • Praseodymium (Pr): less than 1%
  • Iron (Fe), Boron (B) and other metals: 66-68%
• Adamas estimate a shortage of 48,000tpa of NdFeB expected by 2030 equating to some 25-30m EV traction motors.
• Adamas also estimate a deficit of 16,000tpa of NdPr Oxide by 2030. See Adamas Intelligence Rare Earth Magnet Market Outlook to 2030.

Storage capacity / Batteries: 

• The UK National Grid is going to need to install battery new storage capacity to mange fluctuations from increasing wind and solar power generation. Coal and gas fired power stations are not able to react fast enough to smooth out the fluctuations in wind and solar supply with a major power outage caused last year stranding hundreds of thousands of commuters as circuit breakers paralysed the network after a gas turbine failed to kick as wind farms were switched off in high winds. The network took hours and days to recover.
• The solution is to bring in grid-scale Li-ion and VRFB battery instillations with Li-ion working well for very fast power delivery and VRFB batteries standing buy for longer-term power supply as a more robust solution.

 

Company News

 

Alba Mineral Resources (ALBA LN) – 0.42p, Mkt cap £24m – Thule Black Sands Project update

• Alba Resources have updated the market on their Thule Mineral Sands project in Greenland.
• The project is located to the south of Bluejay Mining’s* Dundas license area.
• Alba report the appointment of IHC Robbins to carry out comprehensive metallurgical process development and test work on a bulk sample taken from the Thule Black Sands project.
• We suspect these mineral sands will be of very similar quality to that of Dundas. Bluejay has shown the Dundas ilmenite sands to be of particularly good quality and suitable for most if not all pigment processors.
• We note Alba report a higher in-situ ilmenite grade of 8.9% which supports our view that Bluejay’s ilmenite grade may have been conservatively underestimated by SRK through the inclusion of some lower grade areas and the exclusion of seemingly high-grade material from the Iterlak Delta area.
• Rio Tinto Iron and Titanium are scheduled to run a smelter test on a 5,000t bulk sample on Bluejay’s Dundas material next year to confirm the suitability of the feedstock in its furnaces.
• While this is all well and good, Alba’s smaller resource at 19mt appears insufficient to support the expected capital cost of processing mineral sands in Greenland.
• A feasibility study commissioned by Bluejay for Dundas shows a $280m capital cost for the mine and process plant.
• Alba also appears some way behind Bluejay in terms of the extensive work required for mine permitting in Greenland indicating to us that it may be some years before Alba is ready to submit the required documentation for mining license approval.

Conclusion: Alba is a classic case of a company with a multitude of mining and oil and gas project which lack focus. The company is involved in Ireland and Wales and two oil & gas projects in England and in at least four projects in Greenland.  While this gives good diversification, we feel mine development requires focus to realise value.

*SP Angel act as nomad and broker to Bluejay Mining. The analyst holds shares in Bluejay Mining

 

Asiamet Resources (ARS LN) 3.8p, Mkt Cap £37.0m – Non-binding agreement with Aeturnum Energy 

• Asiamet Resources reports that it has reached a non-binding agreement with its 19.9% strategic shareholder, Aeturnum Energy, for a staged disposal of its central Kalimantan KSK Contract of Work, including its BKM Copper Project for US$163.4m.
• Initial discussions with Aeturnum were previously announced in May, 2020.
• The total consideration is expected to comprise both cash and equity in the currently private Indonesian company PT Wasesa Indo Nusa (PT WIN) which is expected “to undertake an Initial Public Offering ("IPO") on the Indonesian Stock Exchange ("IDX") in early 2021”.
• The consideration is expected to comprise:
  • A non-refundable cash payment of US$10m on the execution of a binding agreement; and
  • A US$40m cash payment upon the successful Indonesian listing; and
  • “A 22.5% shareholding in IDX listed PT WIN is payable to Asiamet in two tranches; the first upon listing, the second upon PT WIN releasing its 2020 Mineral Resources and Exploration Target statements to the IDX. Aeturnum's independent valuers estimate PT WIN to have an equity value of circa $500 million on a 100% basis on IPO”
• Asiamet is to continue to manage the project for up to 12 months
• As described in its June 2019 feasibility study, BKM is expected to support “an initial 9 year life of mine producing up to 25,000 tonnes of copper cathode per annum from a Ore Reserves of 51.5Mt @ 0.6% Cu, for 303k contained tonnes of copper in the Proved and Probable category”.
• We comment that, on the basis of the announced US$163.4m acquisition price, the US$163.4m acquisition price, the 303,000t of contained copper in the BKM reserve is apparently being acquired for an average of around US$540/t of contained copper.
• Executive Chairman, Tony Manini, expressed the support of Asiamet’s Board and commented that “While it is recognised that there are still a number of steps to completion, the proposed transaction has the potential to unlock very significant unrecognised value for Asiamet shareholders and most importantly secures a clear road map for the funding and development of the BKM copper project and the further advancement of the wider KSK CoW for the benefit of all stakeholders. Asiamet will retain a very meaningful exposure to the upside at BKM and KSK and continue to manage all the value enhancement and development related activities currently in progress”.

 

Bezant Resources (BZT LN) 0.19p, Mkt cap £5.5m - Xstract and Bezant subject to Contempt of Court proceedings and High Court Order of Injunction in relation to licenses in Zambia occupied by KPZ

Xstract (XTR LN) – 1.32p, Mkt cap £6m

• Newspaper articles in Zambia allege that Bezant Resources, Xstract Resources and certain related parties are facing charges for contempt of court in relation to dealings with KPZ International Limited ‘Kalengwa Processing Zone Ltd in Zambia’.
• KPZ International Limited is reported to be mining and occupying land around the Kalengwa mine site that is owned by Euroafrica Kalengwa Mines Limited and one other private UK company.
• We have seen papers stamped on the 1^st October in the High Court of Zambia against Bezant, Xtract, Shawaki Fawaz, KPZ, Lunga Resources and others in relation to their alleged activities at Kalengwa.
• The Zambian Supreme Court are reported to have repeatedly ruled in favour of the owners of Kalengwa as the rightful owners of the licence
• The case claims the alleged Contemnors have wilfully acted in contempt disregard of the Zambia High Court’s Injunctive Orders dated 26^th July 2019 and 28 September 2020.
• The court injunction carries a penal notice which cautions that if the defendants fail or neglect to comply with the terms of the order, they shall be liable for contempt of court and be committed to prison for breach of the order.
• KPZ is reported in the Zambian press to be associated with Shawiq Fawaz who is also reported to allegedly have a string of serious convictions according to more than one Zambian-focussed news website.
• Bezant Resources have a jv agreement with KPZ International Ltd in which they hold a 30% interest in KPZ Intl.
• Xtract Resources also have a have an agreement with KPZ to act as a contractor on the Lakengwa Mine.
• Shawiq Fawaz’s organisation are alleged to have used violence, force and equipment to illegally occupy the mine.
• Shawiq Fawaz is reported in the Zambian press to have been sentenced to 20 years for murder in 1994 but was acquitted when the only eyewitness changed his testimony before the Supreme Court hearing.
• It is reported that a warrant was also issued for Shawiq Fawaz’s arrest in 1998 for drug dealing, that he was also arrested and charged with aggravated robbery in 2006 and was arrested and charged with aggravated robbery and conspiracy to murder in 2007.
• It is alleged in the Zambian press that Shawiq Fawaz is a partner in KPZ ‘Kalengwa Processing Zone’ which is in the joint venture with Bezant Resources.

Conclusion:  Xstract and Bezant have become involved with assets which are not owned by KPZ according to the press reports and papers in the High Court of Zambia.

We look forward to further clarification from both companies and their directors.

*The analyst is a shareholder in Moxico Resources and has previously visited Moxico mining assets in Zambia

 

Central Asia Metals (CAML LN) 164p, Mkt Cap £290m – Q3 update: 2020 guidance upgraded slightly at Kounrad and reiterated at Sasa

• Copper production at Kounrad was 3.9kt taking the 9m output to 10.5kt (9m/19: 10.6kt).
• Zinc production at Sasa totalled 5.8kt with 9m output at 18.0kt (9m/19: 17.7kt).
• Lead production at Sasa was 7.2kt with 9m output at 22.3kt (9m/19: 21.8kt).
• 2020 copper production guidance increased to 13.5-14.0kt from 12.5-13.5kt reflecting better than expected processed grades.
• 2020 zinc and lead output guidance remained unchanged despite the tailings dam leak recorded in September that led to the processing plant suspending operations for eight days.
• The Sasa processing plant resumed operations on 2 October 2020 and will be running at 50% capacity for a week as the technical team confirms the safe operation of the facility before ramping up to full production.
• The Company is planning to update on the market on the interim dividend that was deferred in the light of the TSF4 incident during the coming weeks.

Conclusion: The Company reported robust quarterly production with Kounrad 2020 guidance upgraded slightly on better than expected grades and Sasa zinc/lead 2020 zinc/lead guidance maintained at original levels for 23-25kt Zn and 30-32kt Pb despite a TSF4 incident recorded in September.

 

Chaarat Gold* (CGH LN) 32p, Mkt Cap £165m – Kyrgyz Republic update

BUY – 57p

• The Company announced this morning that recent political disruptions in the Kyrgyz Republic have not materially affected its operations at Tulkubash and Kyzyltash gold projects.
• The Company said that it has taken precautionary measures to ensure safety of its personnel and operations.
• Previously, results of parliamentary elections held last Sunday were annulled following a series of protests with the prime minister forced to resign and opposing sides are now in discussions over the way forward and potentially having new elections.

*SP Angel acts as Broker to Chaarat Gold

 

Hummingbird Resources (HUM LN) 39p, Mkt Cap £138m – Positive 2020 Yanfolila drilling results

• At the Komana East Underground (KEUG) deposit, drilling returned high grade intersections confirming the continuity of mineralisation plungning northwards below the current operating pit.
• Selected intersections included 3.5m at 5.41g/t from 196m in the northern end of the open pit as well as 2.5m at 6.16g/t from 293m.
• At the Sanioumale West (SW) deposit, located 16km north of the plant, 13,000m of drilling was completed both in infill and resource expansion programme.
• Positive results improved confidence in the resource grade as well as pointed to mineralisation extension potential below the current shallow pit design with selected drilling results including: 
  • 15 m at 18.25g/t from 16m depth (SNWRC0433) 
  • 7 m at 9.75g/t from 68m depth (SNWRC0393) 
  • 21 m at 3.16g/t from 24 m depth (SNWRC0396) 
  • 8 m at 7.04g/t from 23m depth (SNWRC0364) 
  • 4 m at 13.24g/t from 25m depth (SNWRC0342) 
  • At Sanioumale East (SE) deposit, infill drilling as well as testing of the mineralisation continuity into the fresh rock at depth is ongoing and is expected to be completed by the end of October.
  • Drilling at the greenfield Diaban target remains on hold with current focus on KEUG, SW and SE.
  • The $5m programme is now 95% completed having drilled over 21,509m.

Conclusion: Good drilling results reflect Yanfolila exploration potential with the 2020 drilling programme returning positive infill and step out results. The team is planning to release updated Yanfolila resources statement following the completion of the programme.

 

Impala Platinum (IMP SJ) – Impala offered stake in Zimbabwe platinum project

• Great Dyke Investments, a Russian-backed holding company have held talks to sell a stake of at least 20% of a project to build Zimbabwe’s biggest platinum mine. 
• The company hope to secure about $500m in initial capital by the end of the year, with the mine expected to be commissioned in 2023, according to CEO Aleksandr Ivanov. 
• Zimbabwe has the world’s third largest PGM reserves after South Africa and Russia, and the new mine could produce over 860,000oz of PGMs a year according to the company (Bloomberg).

 

Oriole Resources (ORR LN) – 0.4p, Mkt cap £3.7m – Licence renewals in Cameroon

• Oriole Resources reports it has been awarded a third, two-year term, renewal of the Bibemi licence covering 177km² in Cameroon.
• Drilling equipment is currently mobilising to Bibemi where “17 drill holes already identified and pegged within the high-grade Bakassi area ('Bakassi') for a planned 1,940 m … [and] … further targeting … [of additional drilling locations is] … currently underway at the northern end of Bakassi, which remains open along strike”.
• CEO, Tim Livesey explained that “We have worked up these targets, with encouraging results from the very beginning, and we are eager to test the vertical extent of the mineralisation identified to date”.
• The company also confirms the renewal of its Wapouzé licences in Cameroon for a second two-year term where “Oriole intends to work-up this target to drill-ready status, alongside the programme at Bibemi”.
• Oriole announced earlier this week it had raised funds for a maiden drilling programme at Bibemi.

 

 Rainbow Rare Earths* (RBW LN) 3.8p, Mkt Cap £16m – New JORC Exploration Target for Gakara Rare Earth Project in Burundi highlights strategy for 10,000-20,000tpa REE concentrate

• Rainbow Rare Earths  reports a new and updated JORC compliant Exploration Target for their Gakara Project in Burundi
• The new JORC target gives more detail on management’s plan to raise production at Gakara to 10,000–20,000tpa of REE concentrate.
• Rainbow reported yesterday that it is raising production to 100tpm of concentrate production from its current 59.9tpm.
• Management have improved the mining process and have brought in new equipment to resolve equipment availability and reliability issues.
• The JORC work covers nine high-grade vein-hosted areas of mineralisation with an estimated 262,000-375,000t grading 7.0-12.0% TREO ‘Total Rare Earth Oxides’.
• The work shows, even with additional dilution, Gakara still hosts probably the world’s highest rare earth grades.
• Further drilling and analysis will upgrade the new targets to a JORC compliant resource while further exploration should raise the tonnage available for mining.
• Completion of the Feasibility Study based on the new resource estimate is expected to be completed next year at a cost of around $3.2m
• The new mine will support initial expansion to 5,000tpa of REE concentrate grading around 54% TREO.
• Further expansion to 10,000-20,000tpa should follow thereafter.
• The JORC Exploration Target on the 9 targets is based on work from 10 of the 32 targeted mineralised areas with many other mineralised areas also identified within the license area.
• A further 252,000-342,000t of low grade 1.0-1.5% REE material could also be developed in parallel low-grade processing.
• The Geological consultants have confirmed three large carbonatite bodies representing the regional source rock for the REE material at Gakara

JORC target details:

	Lower	estimate	Upper	estimate
	Tonnes	TREO %	Tonnes	TREO %
Vein Hosted Mineralisation
Murambi South	36,000	7.00%	52,000	12.00%
Gasagwe	27,000	7.00%	39,000	12.00%
Rusutama	23,000	7.00%	33,000	12.00%
Gakara	61,000	7.00%	87,000	12.00%
Gomvyi Central	15,000	7.00%	22,000	12.00%
Gashirwe West and East	45,000	7.00%	64,000	12.00%
Bigugo	8,000	7.00%	11,000	12.00%
Gasenyi	47,000	7.00%	67,000	12.00%
Vein Hosted Exploration Target	262,000	7.00%	3,750,000	12.00%
Breccia Hosted Mineralisation
Kiyenzi grade tonnage model	98,000	1.00%	132,000	1.50%
Kiyenzi depth extension	60,000	1.00%	82,000	1.50%
Kiyenzi lateral extension	94,000	1.00%	128,000	1.50%
Breccia Hosted Exploration Target	252,000	1.00%	342,000	1.50%

 

• Gakara mineralisation is structurally complex requiring more drilling for the definition of a JORC Mineral Resource
• Drilling will now be done to better define and upgrade the vein hosted areas.
• The team will continue trial mining and processing to confirm the mining methodology and processing requirements. 

• Rainbow shipped a further 100t of concentrate on this week with a further 210t being prepared for export.
• Prices: Neodymium (Nd) oxide and Praseodymium (Pr) oxide prices (NdPr oxide) prices strengthening 30% to to US$48,050/t at end September from US$36,850/t in April.

• We expect prices to continue to rise principally due to greater demand for NdPr oxides in permanent magnets used in offshore windfarms and in the drive motors for Electric Vehicles.
• (See comment on wind farms in our Battery News section)

Conclusion:  Management are methodically working their way through the processes required to fully commercialise the Gakara mine and orebodies within the license area.

The mine is significant and important for the economy of Burundi through employment and taxes and is also significant for supply into rising global REE demand.

*SP Angel act as broker and financial advisor to Rainbow Rare Earths

 

SolGold* (SOLG LN) 38.8p, Mkt Cap £793m – Plans for drilling possible Alpala “look-alike” at Rio Amarillo in northern Ecuador

• Solgold provides further news on its wide-ranging multi-project exploration campaign in Ecuador with news this morning that, following regulatory approvals and the establishment of an exploration camp, it is mobilising a drilling rig for an initial 8,000m programme at its wholly owned Amarillo project in northern Ecuador.
• The company explains that its geophysical work “reveals a highly magnetic NE/SW trending corridor, spatially coincident with porphyry style surface mineralisation covering a vertical extent of up to 1500m over a 12km long and 3km wide northeast trending porphyry belt” which it will investigate further with this initial drilling programme.
• The first drilling target, at Varela, “exhibits a well-preserved metalliferous lithocap and hydrothermal alteration system with a full complement of porphyry plume chemical elements, the classic signature of a large scale strongly mineralised Porphyry Copper-Gold(-Molybdenum) system … [and the drilling will] … test underneath outcropping porphyry style vein stockworks which returned surface rock-saw channel sample results of 99m @ 0.34% CuEq including 25.1m @ 0.58% CuEq”.
• Describing the Varela target as “highly visible from the air, as are a number of large porphyry deposits along the Andean Copper Belt which have now been developed into mines”, Regional Exploration Manager, Chris Connell, said that the “Varela metalliferous lithocap is the most classical example of a fully preserved, whole column porphyry system that we have encountered in our exploration activities in Ecuador to date”.
• Discussing the wider potential of the Amarillo licence area, Technical Services Manager, Benn Whistler, described “SolGold's 'Sleeping Giant' at Rio Amarillo including its two high-quality large-scale porphyry targets at Varela and Palomar … [as] … two of the Company's highest priority targets”, while CEO, Nick Mather, said that the “gross geological architecture of Ecuador endorses the presence of very large mineralised systems where the Andean Copper belt bends. We can see that in both southern Ecuador where the Porvenir project is revealing a large copper porphyry in the first drill hole. Similarly, northern Ecuador shows the same characteristics and we're confident that the tier 1 Alpala project at Cascabel will be followed by Rio Amarillo in this highly prospective emerging province.”
• Maps accompanying today’s announcement https://www.rns-pdf.londonstockexchange.com/rns/4889B_1-2020-10-8.pdf show Rio Amarillo located around 25-30km SSE of Solgold’s Alpala project with Varela towards the south-eastern part of the licence area.
• The intersection of a major, north-east trending magnetic high by “a secondary northwesterly-trending magnetic feature, likely to represent the intersection of deep-seated crustal-scale fracture zones filled by intrusive bodies. This structural regime has strong similarities to that encountered at the Alpala Project, some 30km to the northwest”

Conclusion: In the scale of the major crustal forces responsible for the mineralisation of Alpala, Rio Amarillo, at only around 30km away, is likely to be subject to the same macro-geological influences. Similarities in the scale, local geology, alteration suites, geophysical and geochemical signatures to those observed at Alpala reinforce the rationale to give Rio Amarillo a high priority for exploration and, while recognising that it is still at an early stage of exploration,  we await the first results of the drilling 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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