SP Angel . Morning View . Wednesday 03 06 20
Markets continue ascent on lockdown easing optimism
Major Miners continue to rise on higher iron ore and other metals prices
MiFID II exempt information – see disclaimer below
BlueRock Diamonds* () – Robust restart to operations at Kareevlei
Hummingbird Resources () – Annual results and exploration update
Kavango Resources () – Kalahari Copper Belt Prospecting Licences Granted
Power Metals Resources* () – Joint Venture partner applies for further gold licenses around Ballarat in Australia
Major Miners continue to rise on higher iron ore and other metals prices
Mining equities continue to gain lifted by iron ore, base metals and other industrial metals prices
Hedge funds are seen reducing their risk exposure to commodity and equity markets driven by a degree of uncertainty
A weakening of the US dollar is good for US dollar-denominated metals prices
Increasing demand for metals in China is also seen as tightening metals markets as analysts try to figure out new supply/demand balances for 2020
High unemployment and economic conditions indicate weaker demand for autos and other goods
BUT, online sales figures for domestic appliances are strong in China and probably elsewhere as consumers buy bigger fridges etc..
Government Stimulus is expected to drive new demand for steel and many other metals across the world with some US$15tn of stimulus pledged in differing forms to generate new growth.
Flow of funds: we expect funds to continue to flow into equities as low interest rates render bonds less attractive. Equities are expected to recover though there will be volatility through Q1 and H1 reporting as the impact of the Coronavirus becomes more financially apparent.
Conclusion: yes markets may be volatile but mining equities offer exposure to stimulus growth and look surprisingly well set relative to many other troubled industries.
$140bn – ChinaPBOC buying CNY1tn of bank loans issued by local lenders to small firms this week in an effort to ease the flow of credit.
We have previously assumed China at $909m $344bn of China stimulus + $565bn in special bonds for infrastructure by local authorities
$1.1tr – Japan – further stimulus to combat pandemic including significant direct spending to stop the coronavirus pandemic pushing the country’s economy deeper into recession. The 117tn-yen stimulus, funded partly by a second extra budget, will be on top of another 117tn package already rolled out last month – and takes total spending in Japan at 234tn yen ($2.18tr) – 40% of Japans GDP. To fund the costs, Japan will issue an additional 31.9 tn yen in government bonds under the second supplementary budget for the current fiscal year ending in March 2021.
$825bn (€750bn) EU – European Commission aid package yesterday aimed at supporting EU nations hit by the pandemic.
This is an expansion on the previous $543bn (€500bn ) EU Crisis Recovery fund backed France and Germany + $963bn (€750bn) ECB scraps limits on sovereign bond purchases. ECB PEPP buying running at around €250bn
US$260bn – India representing 10% of GDP.
$62bn – South Korea – The government unveiled a 76tn won ($62bn) “New Deal” aimed at supporting the economy amid the pandemic focused on creating jobs and new industries through 2025.
$13.3bn – Saudi Arabia central bank will inject 50bn riyals ($13.3bn) into the banking system on top of US$43.7bn already pledged
$56bn – The PBOC also announced a Rmb400bn ($56bn) purchase loan program to boost available credit by supporting bank loans to small businesses.
$1.55tn – China – Bloomberg estimates a ‘fiscal impulse of more than 11% of nominal GDP’ which was estimated at US$14.14tn
$2tn – US fiscal package approved by Congress. US may add $0.6t state aid for mortgage markets and travel industries
The House passed a $484bn aid package to rescue small small businesses, hospitals ($75bn) and coronavirus testing ($25bn).
$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.
US Fed may soon start buying in up to $750 billion of corporate debt and ETFs
EU Finance Ministers have so far failed to agree on a strategy to mitigate the economic impact of the pandemic.
The pandemic emergency purchase programme (PEPP) and asset purchase programme (APP) have been reiterated with a cap of €750bn and €120bn, respectively.
The bank is reported to have used €100bn of the PEPP so far.
$825bn (€756bn) Germany – Bundestag approved €156bn in extra borrowing and ~€600bn in emergency funds
$996bn (108.2tn yen) – Japan + BoJ pledge for unlimited quantitative easing
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 Australia – RBA ready to buy bonds again.
$78bn (C$107bn) Canada, $32bn, Singapore, $22.6bn India, $19.3bn 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 not affect the $70bn that Argentina is currently in talks to restructure.
$1,000bn – IMF available + $12bn World Bank,
>15tn from 14.8tn
An outbreak of COVID-19 at a logistics centre of one of South Korea’s largest online retailers has raised concerns over whether the virus can be transmitted by package deliveries (Reuters).
The warehouse appears to have enabled the virus to spread to 117 people
No cases are thought to have been related to deliveries as yet.
While infection from touching surfaces of boxes or bubble wraps couriered by an infected logistics centre worker would be concerning, the Korea Centers for Disease Control and Prevention said transmission in this manner was unlikely.
The World Health Organization (WHO) has cited laboratory research that found the coronavirus that causes COVID-19 could persist for up to 24 hours on cardboard and 72 hours on plastic and stainless steel.
We recommend customers opt for slower deliveries to reduce risk, open packages with gloves and wash hands after to be extra safe.
Dow Jones Industrials
HK Hang Seng
Final Eurozone PMI readings show the pace of declines in economic output slowed in May as a number of governments relaxed some of restrictions.
Nevertheless, a low sub-50 reading still signals severe contraction.
Composite Eurozone PMI came in at 31.9 last month, higher than the flash reading of 30.5 and up on April’s 13.6.
“We therefore remain cautious with respect to the recovery… our forecasters expect GDP to slump by almost 9% in 2020 and for a recovery to prepandemic levels of output to take several years,” Markit wrote.
Germany – -The ruling coalition to reconvene on discussions of another stimulus package worth as much as €100bn after talks on Wednesday failed to lead to an agreement.
Unemployment rate increased to the highest level since 2015 with 238k people reported to have lost job in May.
This compares to 372k recorded in April.
Expectations are for unemployment to rise above 3m in the course of the year, up from 2.875m reported in May.
More than 7m people are receiving emergency support under the latest state support programme.
Jobless rate increased to 6.3% v 5.8% in April and 6.2% est.
Italy – People will be allowed to travel around the country without restrictions from today.
Additionally, the nation will let other travellers from the EU state in without undergoing quarantines.
Australia – The economy is on course for the first recession in nearly three decades with Q1 posting a 0.3%qoq drop.
This was the first quarterly drop since 2011 driven by a 1.1%qoq drop in private spending and a 0.8%qoq fall private investments.
Q2 GDP expected to fall 8.4qoq.
The government is considering a fresh round of fiscal stimulus to support residential construction, Bloomberg reports.
Switzerland – The economy fell the most in four decades beating the a drop recorded during the financial crisis as private consumption and business investment pulled back.
Q1 GDP dropped 2.6%qoq, worse than 2.1%qoq expected by markets.
The hotel and restaurant sector posted a 23.4%qoq drop in output.
The worst is yet to come with estimates for a 10.3%qoq to be posted in Q2.
UK – Ofgem unveils £350m scheme to support struggling energy suppliers
The scheme is a response to the rise in defaults of the payment of energy bills as a result of the coronavirus crisis- which has heaped pressure on energy suppliers.
Ofgem’s CEO has said the scheme was aimed at protecting those firms which could not access government support such as the ‘s commercial paper programme.
Those firms eligible for the programme will be able to defer payments to the operators of the UK’s electricity and gas networks until March 2021 (City AM).
UK’s biggest travel and hospitality firms warn they will lay off up to 60% of staff if government imposes Quarantine on travellers into the UK
71% of firms surveyed plan to make three fifth of staff redundant.
Unfortunately when it comes to examining mortality rates ‘theconversation.com’ reckons >287,000 people would die from COVID-19 if UK were to return to normal working and the health system was overloaded.
The mortality rate falls under their second scenario of 60% herd immunity to 141,000 deaths and to 27,000 deaths under a total eradication scenario.
Politicians are between a rock and a hard palace though we sense the need to raise economic activity in an increasingly competitive world will rapidly outweigh the advice of expert healthcare professionals who signed up to protect patients but not the economy.
Chinese car sales rose 11.7% in May yoy
Auto sales in China rose 11.7% to 2.14 million units in May compared to the same period a year ago, according to the China Association of Automobile Manufacturers (CAAM).
Sales have risen 3.2% from April, when sales came in at 2.07 million units.
China heavy truck sales jumped 62% yoy in May, with 175,000 heavy trucks estimated to have been sold in China last month.
Heavy truck sales in the first five months of this year exceeded 640,000 units, up 16% from the same period last year.
Sweden – Sweden’s state epidemiologist has admitted the nation did get it wrong on their refusal to Lockdown for the coronavirus
Anders Tegnell has admitted too many people have died and believes Sweden should have taken harsher measures
But he would not have gone as far as other European countries.
US$1.1224/eur vs 1.1130/eur yesterday. Yen 108.68/$ vs 107.77/$. SAr 17.082/$ vs 17.401/$. $1.260/gbp vs $1.254/gbp. 0.694/aud vs 0.680/aud. CNY 7.106/$ vs 7.121/$.
Gold US$1,721/oz vs US$1,737/oz yesterday – Gold eases as global stocks jump to three-month high
The price of gold fell on Wednesday as equity markets gained on economic optimism, hopes of more stimulus and further easing of social restrictions which outweighed worries including coronavirus and US civil unrest.
Spot gold was down 0.2% at $1,723/oz on Wednesday, whilst US gold futures fell 0.3% to $1,730/oz (Reuters).
On Tuesday, stocks in the US, Europe and emerging markets hit their highest levels since early March as traders anticipate additional stimulus from the European Central Bank to the amount of around 500 billion euros when it meets in Thursday.
The falling gold price was capped by market uncertainty driven by the coronavirus and demonstrations against police brutality, whilst the dollar index fell 0.2% which supported gold further.
World’s largest jeweller to only use recycled silver and gold
Pandora has become the first big jeweller to target using all recycled gold and silver in its products by 2025.
The company already uses mostly recycled silver and gold in the products it makes itself, but is now seeking to get all its suppliers to reach 100% recycled according to the company’s CEO.
Pandora is aiming to become carbon neutral by 2025 and currently 71% of the silver and gold it uses is recycled.
Silver and gold account for about three-quarters of Pandora’s metal use, with other metals not covered by the recycling target. The company uses 340 tonnes of silver and 300kg of gold a year (FT).
Gold ETFs 100.5moz vs US$100.4moz yesterday
US$841/oz vs US$852/oz yesterday
Palladium US$1,980/oz vs US$1,959/oz yesterday
Silver US$17.85/oz vs US$18.20/oz yesterday
Copper US$ 5,510/t vs US$5,462/t yesterday – Copper prices continue to regain lost ground as the price starts its long and probably slow recovery
LME stocks fell a further 1,900t today to 254,275t today
Tight scrap supplies caused by the lockdown, logistical disruption and import restrictions. Scrap recycling requires an element of manual labour.
Manufacturer restocking combined with caution by smelters on concentrate supply may serve to tighten official stock levels
Many expect the US dollar to weaken and traders may also be taking a more risk-off approach to the market as the strong dollar turns.
Aluminium US$ 1,549/t vs US$1,535/t yesterday
Nickel US$ 12,815/t vs US$12,625/t yesterday
Zinc US$ 2,001/t vs US$2,011/t yesterday
Lead US$ 1,708/t vs US$1,678/t yesterday – Lead price rises to highest level since April 2014
Lead prices are rising as demand for lead for construction and new automotive batteries recovers.
Factory restocking to supply batteries for new and used cars is expected to be a major driver.
Lead and zinc smelters in China are struggling to buy in concentrates as seen with falling Treatment and Refining charges
Disruption to concentrate supplies from mines in Peru and Brazil have caused a shortage of feedstock material.
Some Peruvian mines are restarting but their lockdown has deferred shipments that will take weeks to come through causing smelters to scramble to secure feedstock for their restart.
LME stocks fell 200t this morning to 75,800t
Tin US$ 16,065/t vs US$15,715/t yesterday
Oil US$40.2/bbl vs US$38.7/bbl yesterday
Oil prices have touched US$40/bbl for the first time since March on reports that OPEC+ is set to bring forward its meeting to this Thursday
Whilst US/China tensions continue to weigh on prices, an extension to the cartel’s production cuts will provide short term support
Market consensus suggests the group will extend the current output restrictions for one to three months
As it stands, without an extension the extraordinary cuts agreed upon in April – 9.7MMbopd will expire at the end of June
However, nothing has been agreed yet and there are conflicting signals over how unified the OPEC+ parties are on an extension
Saudi Arabia reportedly wants to extend the cuts until the end of the year, while Russia has characteristically shown reluctance
Russia may not want to extend beyond another month or two, which raises questions about what will occur later this year. At some point, there will be pressure to begin unwinding the production cuts
Natural Gas US$1.793/mmbtu vs US$1.783/mmbtu yesterday
Natural gas prices edged higher consolidating its recent decline after hitting a contract low on Monday
Demand was flat last week and despite a decline in the number of active rigs, prices continued to decline
The weather is expected to remain warmer than normal in the US mid-west and east coast for the next two weeks driving up cooling demand
A weaker than expected GDPNow growth forecast could put additional downward pressure on prices in our view
Uranium US$33.55/lb vs US$33.70/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$98.2/t vs US$97.3/t
Chinese steel rebar 25mm US$531.8/t vs US$545.9/t
Thermal coal (1st year forward cif ARA) US$54.6/t vs US$53.0/t
Coking coal swap Australia FOB US$105.5/t vs US$104.5/t
Cobalt LME 3m US$30,000/t vs US$30,000/t
NdPr Rare Earth Oxide (China) US$38,418/t vs US$38,057/t
Lithium carbonate 99% (China) US$4,925/t vs US$4,915/t
Ferro Vanadium 80% FOB (China) US$28.5/kg vs US$28.0/kg – US begins investigation on vanadium imports
The US Department of Commerce has initiated a Section 232 tariff investigation into whether imports of vanadium impair national security.
US-based AMG Vanadium and US Vanadium filed a petition in November requesting an investigation of such imports, as they believe they are hurt by unfairly priced imports and tax regimes in other vanadium-producing countries (S&P).
The Department of Commerce have said that vanadium is designated a strategic and critical mineral due to its use as a metal alloy in national defence and critical infrastructure end-uses.
Vanadium prices jumped on news of new Chinese regulations increasing its content in structural steels and effectively banning Quench and Tempered steel for most structural applications.
Vanadium prices drifted lower as the authorities failed to effectively enforce the new regulations amid high vanadium price levels.
China is producing less secondary vanadium due to Green Shield policies and also lower prices and a move away from processing titanomagnetite ores so we don’t see China flooding the market in a hurry
Tariffs might benefit one or two new mines in the US or Canada but it won’t change the world and these mines are unlikely to compare with primary producers in South Africa and Brazil, eg Glencore, Bushveld Minerals* and Largo.
*SP Angel acts as nomad and broker to Bushveld Minerals
Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.0/kg
Tungsten APT European US$215-225/mtu vs US$215-225/mtu
Graphite flake 94% C, -100 mesh, fob China US$485/t vs US$485/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,350/t vs US$2,350/t
Sodium-ion battery design to compete with li-ion
Washington State University (WSU) and Pacific Northwest National Laboratory (PNNL) team have designed a sodium-ion battery capable of maintaining more than 80% charge after 1000 cycles. (Engineering and Technology)
Sodium-ion batteries are cheaper than li-ion batteries given their primary constituent is abundant in the earth’s crust.
A key issue for sodium-ions batteries has been the buildup of inactive sodium crystal on the surface of the negatively charged electrode which kills the battery. (New Atlas)
The team created a layered metal oxide cathode and a liquid electrolyte with added sodium ions which interacted far better with the cathode.
The design enabled continued circulation of sodium ions which halted the buildup of inactive surface crystals.
The battery was able to maintain 80% of its charge after 1000 cycles.
The research was published in ACS Energy Letters.
Nio hits 500,000 battery swap
Nio has completed its 500,000th battery swap as part of their battery swapping scheme launched in 2017 called Power Swap. (Electrek)
The Chinese EV startup has a fully automated system which enables batteries to be swapped out in 3 minutes. The swap is enabled by 500 patented technologies. (Greencarcongress)
Operations are concentrated in the Beijing-Tianjin-Hebei region, the Yangtze River Delta and Pearl River Delta. The Company is expanding the service across 131 stations in 58 cities nationwide.
New energy vehicles capable of battery swap technology will continue to receive subsides from 2020-2022 as the Chinese government leans on the technology.
Power swap is a mobile internet-based charging solution with an extensive charging and power swap network. (NIO)
The station is small, occupying a footprint about the size of 3 car parking spaces with modularity that enables it to scale.
Amara Raja Batteries reports 37% profit growth YoY
Indian conglomerate Amara Raja Batteries has registered a net profit of Rs661 crore a 37% increase on the previous year. (Yahoo News)
The automotive division managed to weather the storm in the auto original equipment segment. Volume growth in the domestic replacement market and exports were key contributors.
The industrial batteries business showed improved performance on 2019 despite the pandemic related slowdown.
The division showed strong growth in the Middle East and Africa but sales in South East Asia were lower.
The Company claims it Quanta HWS series batteries are the preferred battery for major UPS OEMs. (Autocarpro)
Amara Raja announced yesterday that they have collaborated with Gridtential Energy on the Silicon Joule bipolar technology, an advanced lead battery with a silicon core. (Express Drives)
The battery is 40% lighter and remains fully recyclable.
BYD to supply EV batteries to Ford
Ministry of Industry and Information Technology document shows BYD will supply US auto maker Ford with EV batteries. (Reuters)
It is BYD’s first publicized deal to supply batteries to a global automaker.
The document also showed that Ford is seeking government approval to build a plug-in hybrid model with BYD’s batteries.
Ford recently cancelled its deal with Rivian. The US auto maker invested $500m into the start-up in 2019 and participated in a further $1.3bn fundraising. (Cleantechnica)
A rapidly changing environment, a result of the pandemic and a product review were cited as reasons for this move.
The deal with BYD shows Ford still maintains an interest in the EV market and is looking to follow through on its plans to launch vehicles in China.
US shows a similar trend to Europe as Plug-In sales increase their share
Data from the US shows plug-in electric passenger car sales hit 5.5% share in January-April 2020. (Financial Times)
This is an increase from 4.2% during the same period last year. The trend is similar to Europe where market share has increased to 7.7% from 3.5%.
The improvement is however likely to be a function of the market for clean energy vehicles suffering less badly than traditional cars rather than increasing sales.
US vehicle sales fell 53% YoY in April to 625,000 and sales for the year are down 22% YoY.
Europe has become the front runner in the EV market. The continent saw EV registrations rise 57.4% in Q1 as auto sales fell 52.9%. (Reuters)
The US remains behind European and Chinese markets in the EV take up. In 2019 sales fell 12%. (EV Volumes)
Northvolt and Norsk Hydro team up to recycle batteries
Swedish battery maker Northvolt and Norwegian aluminum company Norsk Hydro are to open a $10m recycling hub in Frederikstad, Norway in 2021. (Financial Times)
Northvolt CEO Emma Nehrenheim highlighted that with an expanding battery market will come an extensive market for recycling.
The JV called Hydro Volt will process 8,000 tonnes of batteries per year, equivalent to 16,000 batteries at the Frederikstad site.
Northvolt plans to open a Gigafactory in Sweden next year and targets acquiring 50% of its raw materials from recycled batteries by 2030.
Norway is the leading the transition to EVs. The country has a 29% share of global EV sales.
BlueRock Diamonds* () – 59.5p, Mkt cap £2.6m – Robust restart to operations at Kareevlei
BlueRock Diamonds reports that, following the resumption of mining at its Kareevlei diamond mine in South Africa after the Covid19 induced lock-down on 11th May, it has produced 41,500t of ore averaging almost 2,000tpd.
The company points out that this is ʺ65% higher than the average daily production in the prior record quarter of Q4 2019, which saw total production of 110,000 tonsʺ.
Executive Chairman, Mike Houston, attributed the increased production rate to ʺmodifications made to the primary crushing circuit and the introduction of the third pan together with the processing of softer near surface material … [which has] … allowed us to increase production at minimal cost whilst also reducing operating costsʺ.
Providing details of progress at the mine, the company explains that the amalgamation of the KV1 and KV2 pits is now almost complete and that ʺWhilst the amalgamation is ongoing, we are necessarily processing a higher percentage of lower grade near surface material and as a consequence the average grade for the diamonds in stock is currently 3.14cpht. We expect to be mining in higher grade areas towards the end of June and we are confident that grades will return to 2019 levels in excess of 4cphtʺ.
The 31st May diamond stock is reported to be around 2,400 carats.
We imagine that once mining progresses through the softer, lower grade near surface material into the harder underlying ore, it will be more difficult to maintain these levels of output but the significantly higher grades within the deeper ore should more than offset any impact on throughput and that consequently the recent cost savings should be maintained or possibly improved further.
Conclusion: The plant modifications at Kareevlei have facilitated a 65% improvement in production rates as the mine restarts following the lock-down to curb the corona virus. As mining accesses deeper ore following the amalgamation of the two pits, grades are expected to improve helping to maintain the cost benefits bestowed by the plant upgrade.
*SP Angel act as Nomad and Broker to BlueRock Diamonds
Hummingbird Resources () 29p, Mkt Cap £103m – Annual results and exploration update
2019 Yanfolila gold production totalled 115.6koz at $986/oz (2018: 91.6koz at $1,087/oz).
Sales amounted to 112.7koz at an average realised price of $1,377/oz generating $157m in sales (2018: $117m).
EBITDA totalled $54.5m (2018: $12.7m).
FCF (post interest|) came in at $21m (2018: -$14m) after accounting for $20m in capital expenditures (2018: -$26m).
PAT was $7.8m (2018: -$12.8m) marking the first Company’s profitable year.
Net Debt stood at $31m (excluding $12.6m in lease liabilities) with the Company targeting to reach net cash positive status this year.
2020 production target of 110-125koz.
Commenting on COVID-19, the Company highlighted cost pressures related to labour and logistics expenses as well as a potential to re-sequence the mine plan and move more material later in the year to take advantage of higher gold prices which may add extra $100/oz to AISC.
The Company has also reported good post-reporting period exploration results with drilling recommenced in early March.
Selected Komana East underground deposit intersections included
4.3m @ 6.51 g/t from 300.7m depth (KEUGDD001)
2.55m @ 6.16 g/t from 254.9m depth (KEUGDD003)
3.13m @ 4.21 g/t from 285m depth (KEUGDD003)
4.82m @ 10.56 g/t from 289m depth (KEUGDD004)
Selected Bolobi Coura (greenfield target) intersections included:
4m @ 5.81 g/t from 16m depth (KBCRC0003)
4m @ 16.90 g/t from 57m depth (KBCRC0003)
The majority of the programme will be focused on infill drilling at the existing deposits to add new ounces into the mine plan including Komana Est underground, Sanioumale East, Kabaya South etc.
Additionally, the team is drilling a series of holes in the newly identified greenfield targets located in vicinity of those deposits and the processing facility.
Kavango Resources () – 1.2p, Mkt cap £2.26m – Kalahari Copper Belt Prospecting Licences Granted
Kavango Resources reports the granting of two more Prospecting Licences the Kalahari Copper Belt in Botswana.
The licenses are to the southwest of Sandfire Resource’s T3 and A4 Dome copper-silver discoveries.
They are contiguous licences over 1,294sqkm of ground just south of Ghanzi with an initial 3-year term extendible to 7 years.
Kavango will reinitiate field exploration as soon as possible and will revisit the Kalahari Suture Zone where they are looking for nickel-copper and platinum group metal deposits in similar style to the Norilsk deposits in Russia.
The Kalahari Copper Belt, which runs from the West of Zambia where Arc Minerals* has made recent discoveries, through Botswana and into Namibia.
The belt has seen a number of meaningful copper discoveries in recent years including:
Cupric Canyon’s Zone 5 deposit (“Zone 5”), which hosts a mineral resource of 91.7 million tonnes (“Mt”) grading at 2.1% copper and 14 grams a tonne (“g/t”) of silver.
MOD Resources’ and Metal Tiger’s (LSE:MTR) commercial discovery at T3, which was subsequently acquired by Sandfire Resources () (”Sandfire”) in October 2019.
The T3 Project currently hosts a mineral resource of 60.2Mt grading at 1.0% copper and 14.0g/t silver and an Ore Reserve of 342,700 tonnes of contained copper and 14.6 million ounces (“Moz”) of silver.
Sandfire’s A4 Dome satellite discovery, which is located directly to the west of T3 and is subject to an ongoing resource drilling campaign, due to recommence in June.
Conclusion: Kavango’s team of expert and well respected geologists have assembled a meaningful package of exploration licenses which are prospective for copper and also for Norilsk-type mineralisation. The company may be fortunate enough to make a meaningful discovery as have others in the area or may interest a major mining company to joint venture in its exploration.
*SP Angel act as nomad and broker to Arc Minerals
Power Metals Resources* () 0.37p, Mkt cap £2.35m – Joint Venture partner applies for further gold licenses around Ballarat in Australia
(Power Metals holds a 49.9% interest in Red Rock Australasia Pty Ltd)
reports on its Australian joint venture with Red Rock Australasia ‘RRAL’.
RRAL has applied for four additional gold exploration license areas totalling 916sqkm in the Central Victoria Goldfields of Australia.
The combined licenses applications cover a 100km North-South stretch of contiguous tenements centred on the town of Ballarat.
The applications also cover ground to the West along the structural boundary between the Bendigo Zone and the Stawell Zone further West, including ground near another old mining centre, Avoca.
The applications cover a conceptual target area along the structural boundary between the Bendigo Zone and the Melbourne Zone to its East where RRAL has as its near neighbour on both sides the recently listed Canadian explorer Fosterville South Exploration Limited (TSX-V:FSX).
The Ballarat gold mine owned by LionGold mined some 273,072t grading 5.7g/t last year for around 50,000oz pre recovery. The gold at Ballarat is very coarse (nuggety) making resource estimation difficult. This along with some difficult ground conditions posed significant issues when the mine was previously operated by Ballarat Goldfields.
Ballarat Goldfields was acquired by Lihir Gold for A$350m in 2007 on the expectation of firming up on further gold resources in the ‘Blue Whale Zone’ within the Ballarat Goldmine. Lihir dumped the Ballarat goldmine for just A$4.5m plus a 2.5% royalty in 2010 after putting the mine on care and maintenance having invested a further A$63m into the mine.
Conclusion: Much gold was mined around the town of Ballarat in the Victorian era and are sure more gold will be found in the region.
*SP Angel acts as Nomad and broker to Power Metals Resources
John Meyer – 07943031001 / 0203 470 0490
Simon Beardsmore – 0203 470 0484
Sergey Raevskiy – 0203 470 0474
Richard Parlons – 0203 470 0472
Abigail Wayne – 0203 470 0534
Rob Rees – 0203 470 0535
Prince Frederick House
35-39 Maddox Street London
*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
Sources of commodity prices
Gold, Platinum, Palladium, Silver
BGNL (Bloomberg Generic Composite rate, London)
Gold ETFs, Steel
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt
Natural Gas, Uranium, Iron Ore
Bloomberg OTC Composite
Lithium Carbonate, Ferro Vanadium, Antimony
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Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.
Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.
SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).
SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.
MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.
A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins ([email protected]).
SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%