Morning View – Arc Minerals; BlueRock Diamonds; Power Metal Resources;Shanta Gold


SP Angel . Morning View . Tuesday 13 10 20

Positive Chinese trade data highlight strong recovery momentum

First confirmed case of reinfection in the US (reinfection still incredibly rare)

SP Angel . Morning View . Tuesday 13 10 20

Positive Chinese trade data highlight strong recovery momentum

First confirmed case of reinfection in the US (reinfection still incredibly rare)

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MiFID II exempt information – see disclaimer below  

* () – BUY, Target 115p – 5,000m trenching programme launched at the Laboum Gold Project, Cameroon

Arc Minerals* () – Annual report describes transformational year for Arc as it focusses on Zambian copper prospects

BlueRock Diamonds () – Third quarter figures highlight substantial improvement in volume and grade

Keras Resources* () – Progress in Togo and Utah

* () – Launch of website galley

Shanta Gold () – West Kenya Scoping Study confirms attractive project economics

(AIM:AUY) () – Admission to London’s Official List

 

First confirmed case of reinfection in the US (The Lancet)

A man from Nevada was tested with COVID-19 developing moderate symptoms in April but suffered more severely two and a half months later, requiring emergency oxygen therapy.

Reinfection is still incredibly rare but has been expected by scientists. Reinfection could be due to new mutated strains of the virus or more simply down to immune response issues.

Other reinfection cases have occurred in HK, Belgium, The Netherlands and Ecuador.

 

China BANS Australian coal imports as political tensions rise

China has suspended purchases of Australian coal, as political relations between Canberra and Beijing continue to sour (Argus Media).

Chinese power stations have been told to immediately stop using Australian coal, while ports have been told not to offload.

China’s ban is expected to last until year-end, and given Australian miners’ heavy reliance on China, the boycott could raise the ratio of their coal production that’s loss making above 30% (Bloomberg).

The Australian government is seeking clarification from Beijing on the matter, with Trade Minister Simon Birmingham telling Sky News “We are making approaches to Chinese authorities in relation to that speculation. We take the reports seriously enough certainly to try and seek assurances from Chinese authorities that they are honouring the terms of the China-Australia Free Trade Agreement and their WTO obligations”.

Australia’s 70mt of coal exports to China during the first eight months made that country its second-largest thermal-coal export destination after Japan, with annual exports in the market projected to slide to A$15bn from A$20bn in FY19.

China is the top consumer of Australia’s metallurgical coal, accounting for almost 25% of exports- with exports of the material already forecast to fall to A$23bn in the 12 months to June 30 from A$35bn in the previous year.

 

China auto sales jump 13% in September

Automobile sales reached 2.57m last month, the sixth consecutive month of gain in the sector- as the world’s largest vehicle market continues to recover from the coronavirus lockdown.

Despite the uptick in sales over the past six months, sales are still down 6.9% for the first nine months of the year at 17.12m vehicles, according to the China Association of Automobile Manufacturers.

Elsewhere in the Auto space, NEV sales surged 67.7% September to 138,000 units, the third consecutive month of gain, as the Chinese government promote green initiatives to reduce air pollution (Reuters).

 

Electric cars to triple market share in Europe amid COVID-19 (electrek)

Electric vehicles made up 8% of car sales in Europe in the first half of 2020, putting them on track to triple their market share this year, according to analysis by the NGO Transport & Environment (T&E).

A battery charger sign for electric cars is painted on the ground of a parking ground near the soccer stadium in Wolfsburg, Germany, April 6, 2016.

While the novel coronavirus pandemic has seen overall car sales plummet, sales of electric cars – which T&E defined as both battery and plug-in hybrid models – have increased.

This saw electric cars more than triple their market share in the European Economic Area (EEA), compared with the first half of last year, T&E said.

Outright sales of such vehicles are expected to roughly double this year, to one million units, it said.

T&E attributed the sales increase to tougher European Union car emissions standards, which took effect this year, and post-pandemic purchase incentives in Germany and France.

The NGO expects carmakers to meet the 2020 emissions standards, which would see electric and plug-in hybrid vehicles triple their market share in 2020 to 10% of EEA car sales.

“It is because of the EU emissions standards, but it is also thanks to many investments carmakers made last year,” report co-author Julia Poliscanova said.

The European Automobile Manufacturers’ Association (ACEA) said electric vehicle sales have been boosted by national support schemes to foster economic recovery from the COVID-19 pandemic but that this trend was not necessarily a long-term one.

“It is difficult to make any predictions on future long-term shifts in consumer behaviour from such ‘artificial’ growth driven by subsidies,” ACEA said.

T&E urged the EU to set tougher future emissions targets to ensure electric vehicles keep edging out polluting models.

Fuel-guzzling SUVs also increased their market share, to 39%, in the first half of 2020.

The European Commission has already outlined plans to further tighten car CO2 limits as part of its proposal for a tougher 2030 EU climate goal.

ACEA said policymakers needed to strengthen charging infrastructure and schemes to make zero-emissions vehicles affordable before considering tighter CO2 standards..

 

ICL Boulby Mine Underground marathon – in support of Mental Health

A group of six runners from ICL’s Boulby potash mine in Yorkshire are preparing to run the world’s deepest underground race.

The team will run four laps of a circuit in the mine some 1,100m below the surface running along salt roadways.

They will need to cope with 40C heat, dust and the impact of running on salt

Four members of the mine are being joined by two army cadets for the run supported by two support vehicles, a paramedic and plenty of water.

Sky News interview

Just giving page:  https://uk.virginmoneygiving.com/beneaththesurfacemarathon

 

Dow Jones Industrials +0.88% at 28,838

Nikkei 225 +0.18% at 23,602

HK Hang Seng +2.20% at 24,650

Shanghai Composite +0.02% at 3,359

 

Economics

Maersk upgraded 2020 profit guidance on a stronger than expected recovery in demand for container shipping, a proxy for global trade, according to FT.

“Volumes have rebounded faster than expected, our costs have remained well under control, freight rates have increased due to strong demand and we are growing earnings rapidly in logistics and services,” the Company said.

“The outlook for the fourth quarter is solid for the same reasons, and we are therefore able to upgrade our expectations for the full year.”

 

China – Trade data reflect strong growth momentum driven by a pick up in imports pointing to growth in domestic demand as well as accelerating exports on the back of sustained external demand.

Both measures beat market estimates.

Imports (%yoy, US$): 13.2 v -2.1 in August and 0.4 est.

Exports (%yoy, US$): 9.9 v 9.5 in August and 10.0 est.

 

Passenger car sales increase 8%yoy in September in China in a further sign of strengthening economic recovery post the COVID-19 outbreak.

State subsidies as well as pent up demand supported stronger sales led by commercial vehicles, luxury cars and SUVs, FT reports.

Electric cars sales recorded a 60%yoy.

 

UK – Job losses climbed at a record pace in three months to August with unemployment rate climbing to 4.5% during the quarter, up on 4.1% in the previous three months.

The number of redundancies increased by 114k during the quarter.

The economy is reported to have lost 153k jobs compare to the previous quarter, up on a -30k reading expected.

People claiming out of work benefits rose to 2.7mn, more than double its pre-pandemic level in March.

August data point to a marked slowdown in the nation’s economic recovery with more restrictions planned as the number of new cases grows concerns are that coming months will be even worse.

 

North Korea – Kim Jong Un apologised to the people of North Korea for failing to improve their lives

We note Kim Jong Un did not offer to help improve the lives of North Korea’s citizens or dismantle the nations nuclear missile program or do anything else which might serve to lift sanctions against the nation.

 

Copper – Survey of copper smelters and refiners showed a 3% rise in output to 747,100t  in September vs 725,500t in August but this was 1.6% lower YTD vs last year to 6.26mt

 

Japan – PPI fell 0.2% in September vs 0.1% in August

Machine tool orders rose 0.2% in August vs 6.3% in July but still 15.2% yoy

 

Germany – Wholesale price index levelled at 0% in September vs -0.4% in August and -1.8% lower yoy

 

India – Industrial production fell 8% in August vs -10.4% in July

Manufacturing output also fell -8.6% vs -11.1% in July

CPI rose 7.34% in September vs 6.69% in August

 

Mexico – Industrial production rose 3.3% in August vs 7.1% in July but was -9% yoy

 

Currencies

US$1.1788/eur vs 1.1808/eur yesterday.  Yen 105.39/$ vs 105.51/$.  SAr 16.552/$ vs 16.509/$.  $1.304/gbp vs $1.305/gbp.  0.718/aud vs 0.723/aud.  CNY 6.744/$ vs 6.715/$.

 

Commodity News

Precious metals:         

Gold US$1,916/oz vs US$1,925/oz yesterday

   Gold ETFs 111.1moz vs US$111.1moz yesterday

US$872/oz vs US$887/oz yesterday

Palladium US$2,413/oz vs US$2,449/oz yesterday

Silver US$24.87/oz vs US$25.17/oz yesterday

           

Base metals:  

Copper US$ 6,697/t vs US$6,757/t yesterday

Aluminium US$ 1,854/t vs US$1,844/t yesterday

Nickel US$ 15,150/t vs US$15,200/t yesterday – Trafigura builds 44% stake in Finnish nickel sulphate plant

Trafigura has been building its stake in Terrafame through equity-linked financing provided by its Galena Asset Management arm, as the company aims to resurrect in the formerly defunct , which is shaping up to be the world’s largest nickel sulphate plant.

Terrafame’s new battery chemical plant is expected to come online by the end of Q1 2021, with a nickel sulphate production capacity of 170,000tpa- effectively doubling the global supply of the battery grade material (Fastmarkets MB).

The plant will utilize a bioheap leaching process, which Terrafame says will result in the plant’s carbon footprint being 60% lower than industry standards.

Trafigura will have access to all of Terrafame’s nickel and cobalt output until the end of 2027, agreed through two-tranches of financing thought to be worth around €420m.

Zinc US$ 2,427/t vs US$2,450/t yesterday

Lead US$ 1,834/t vs US$1,818/t yesterday

Tin US$ 18,280/t vs US$18,210/t yesterday

           

Energy:           

Oil US$41.9/bbl vs US$42.4/bbl yesterday

Natural Gas US$2.831/mmbtu vs US$2.921/mmbtu yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$119.5/t vs US$119.5/t – Brazil’s Vale agrees deal with Chinese port to expand handling capacity

Vale has agreed a deal with Chinese state-owned port operator Ningbo Zhoushan Port to create additional capacity to handle iron ore shipments at Shulanghu Port, as Vale moves to increase its market share in China.

The project is worth $624m,and will allow for the handling of an additional 20mt of iron ore per annum, increasing the annual iron ore capacity at the port to 40mt.

The port will now be able to accommodate Vale’s giant Valemax iron ore carriers, able to carry 400,000 deadweight tonnes (dwt) of ore (South China Morning Post).

In July, China approved four new deepwater ports to host Valemax shipments, in a move to diversify its sources of iron ore- as many saw China as too reliant on Australia.

Chinese steel rebar 25mm US$561.9/t vs US$564.0/t

Thermal coal (1st year forward cif ARA) US$58.8/t vs US$59.8/t

Coking coal futures Dalian Exchange US$146.5/t vs US$146.5/t

           

Other: 

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

NdPr Rare Earth Oxide (China) US$47,749/t vs US$48,550/t

Lithium carbonate 99% (China) US$5,116/t vs US$5,138/t

Ferro Vanadium 80% FOB (China) US$29.8/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$212-220/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

Black phosphorus and graphite combination in electrode material

University of Science and Technology of China (UTSC) research shows a combination of black phosphorus and graphite in the electrode could be the key to a high energy, high charging rate and long life cycle battery.

Black phosphorus has previously been considered for use in electrodes due to its layered form providing natural channels through which lithium-ions can move.

The material was abandoned due to its tendency to deform during charge, forming chemical bonds between layers and closing off channels making the transfer of lithium -ion very inefficient. The theoretical specific capacity of the material falls significantly after the first cycle.

When black phosphorus was combined with graphite the team found the chemical bonds between the two stabilized and halted the deformation of the black phosphorus’ layered edges.  

The team also coated the electrode materials in a thin polymer gel and reinforced the lithium-ions path, halting the build-up of disintegrated electrolyte material on the surface of the electrode.

“The material restored 80 per cent of its full capacity in less than 10 minutes and shows a 2000-cycle operation life at room temperature, which was measured at conditions compatible with the industrial fabrication process” Professor Sen Xin said.

It is not clear yet if scalable production can be achieved but if it can be Professor Xin has suggested a lithium-ion battery with a 350-watts-hour per kg could be possible. Such a battery would enable a vehicle to travel 600 miles on single charge.

 

LG Chem announces record quarterly operating income

South Korean EV battery producer LG Chem yesterday announced that it achieved record operating profit in the 3rd quarter. Company earnings guidance estimates 902bn won (US$785m) of operating profit in Q3, up 158.7% for the same period in 2019.

Q3 operating income beat consensus estimates of 732.8bn won. Sales also set a new quarterly record at 7.5trn won. Robust petrochemical and EV battery sales are suggested as the source of the positive figures.

The Company is expected to release detailed earnings later this month.

The news is positive for LG Chem but the Company remains under a cloud as a result of ongoing issues with battery fires in vehicles equipped with its batteries.

Hyundai is pondering the recall of 25,564 Kona EVs in Korea following 13 incidents of battery fires in models built between Sept ’17 and March’20. The National Forensic Service in Korea has concluded on investigation that “electrical problems in the battery pack assembly” are the likely cause of the fires and it is anticipated Hyundai will expect LG chem to indemnify losses suffered as a result of the recall

Tesla also recently announced that they will begin production of their own batteries, leading investors to become nervous for their suppliers which include LG Chem, CATL and Panasonic. Tesla did state that they would continue to use batteries from their suppliers and the internally manufactured cells will be supplemental to this supply.

 

Europe rushes to meet EU emissions standards

In 2021 EU emissions standard will mandate that automakers reduce their average emissions to 95g of CO2 per km or face heavy fines.

The green policy group Transport & Environment (T&E) projects that the share of EVs and hybrids will rise to 15% next year based on H1 2020 sales data.

The T&E reports shows electric cars (BEV and PHEV) reached an 8% market share in the European Economic Area (EEA), more than triple the H1’2019 share.  

New Car CO2 emissions dropped from 122g/km in 2019 to 111g/km in H1’2020, the largest fall since standards came into effect in 2008. PSA Group, Volvo, FCA-Tesla and BMW Group are compliant with the standards based on H1 performance.

, Jaguar-Land Rover and Volkswagen Groups are the laggards according to the report with 9% and 10% gaps to compliance respectively.

The report does suggest that without further revision of the regulations EV share growth may slow, reaching just 20% in 2025.

2020 has already seen Europe making great strides, passenger EV sales surpassed those of China in H1, 380,000 (BEV and PHEV) vehicles were sold across European markets. In July European sales passed 500,000, ahead of China where 486,000 such vehicles had been sold.

12 of the 17 largest government offered EV grants come from Europe states and the EU has set a goal of reaching 1m charging point by 2025. Whilst a number of European countries have committed to eliminating the sale of ICE vehicles, France by 2040, the UK by 2035, Germany, Ireland and the Netherlands by 2030 and Norway by 2025.

As part of the standards Companies can generate credits by selling electric or a select number of hybrid vehicles. These credits can be used to meet emission rules or can be sold to other automakers to help them to comply.

 

Improving CIGS Solar Cells

Researchers have pinpointed potential for improving CIGS solar cells. Theoretically, CIGS thin film solar cells have an efficiency of about 33%, but the real-world efficiency has only reached about 23%.

Researchers from the Centre for Solar Energy and Hydrogen Research Baden-Wurttemberg, Martin Luther University Halle-Wittenberg and the Helmholtz Zentrum Berlin have identified a method to convert more sunlight into electricity in the CIGs cells.

The scientists say that some of the losses “occur at the boundaries between the individual CIGS crystals in the solar cell. Positive and negative electrical charges can neutralise each other at these grain boundaries, some of which are electrically active… this reduces the cell’s performance.” (Witte)

Researchers identified this type of loss mechanism by combining experimental measurement methods with computer simulations. The HZB analysed a highly efficient CIGS solar cell with various electron microscopy techniques and optoelectric measuring methods such a photoluminescence to provide realistic values to the two-dimensional simulation developed at the MLU.

The ZSW manufactured the CIGS cell in a co-evaporation process that deposits copper, indium, gallium and selenium simultaneously in a vacuum. Without an additional anti-reflective later the cells efficiency was 21%.

Computer simulations showed that increased recombination at electrically active grain boundaries within the CIGS layer constitutes a significant loss mechanism. This decreased the open circuit voltage and fill factor, which reduced the cell’s efficiency. Witte says that next, the efficiency of CIGS thin film solar cells can be improved further by reducing the density of the electrically active grain boundaries and produce CIGS layers with larger grains.

 

Company News

Altus Strategies* () 56.5p, Mkt Cap £40m – 5,000m trenching programme launched at the Laboum Gold Project, Cameroon

BUY – 115p

The Company commenced a 5,0000m trenching programme at the Laboum Gold Project in Cameroon.

The work will test the hard rock potential of several key prospects ahead of the maiden drilling programme planned for 2021.

The project comprises a 17km long gold-bearing zone within Birimian age metavolcanics and metasedimentary formations that hosts a number of hard-rock and alluvial artisanal gold workings.

Altus has previously carried high density stream, soil and geophysical surveys identifying four priority gold areas (Landou, Kalardje, Tapare and Rey), of around 1.6km and 7.0km in length.

Previous sampling of quartz veins returned rock chip samples of up to 24.50g/t and 36.20g/t at Landou and Tapare prospects, respectively.

Trenches will oriented perpendicular to the general NE trending Laboum shear zone and associated gold-in-soil anomalies.

Conclusion: The Company started the trenching programme to narrow down prospective targets ahead of the maiden drilling programme at the Laboum Gold Project in Cameroon.

*SP Angel acts as Nomad and Broker to Altus Strategies

 

Arc Minerals* () – 4.03p, Mkt cap £40m – Annual report describes transformational year for Arc as it focusses on Zambian copper prospects

(Arc holds 72.5% of Zaco and 66% of Zamsort in Zambia)

Arc Minerals is courting interest from a number of majors with a number of promising geological targets in Zambia.

Management signed a deal with Anglo American giving the major an exclusive look at the company’s projects and prospects for six months back in July.

The Anglo team are busy working though and checking data available on the prospects with a view to a potential COMMERCIAL TRANSACTION

Laboratory reports in relation to the 2,500 soil samples from the Zamsort and Zaco license areas are expected imminently and that an update will follow shortly.

Arc sold Ṧturec gold to MetalsTech Limited for an initial option payment of A$30,000 followed by two cash payments aggregating ~$500,000 plus a A$2/oz royalty capped at 7moz A$11m.

The company also sold the Misisi gold project and Casa Mining liabilities for a $5m loan note to Golden Square plus a 3% royalty of up to US$45m based on future gold production.

Arc invested USD 2.58m into Zamsort for exploration and other costs.

Arc also acquired a further 20% of Zaco Investments Limited .

Arc report an operating loss of £3l23m vs £2.92m yoy

Management spent £2.23m of admin expenses vs £2.34m a year earlier. DOESNT ADD MUCH CAN WE REMOVE

The company reports a loss of the disposal of assets held for sale of £20.67m relating to the sale of the Ṧturec and Casa (Misi) assets.

A further loss of £2.25m was recorded for currency translation differences  DOESN’T ADD MUCH CAN WE REMOVE

Arc report £0.17m in cash and cash equivalents to end March vs £1.23m a year earlier highlighting how the company is able to run on a relatively small cash balance due to the skilful handling of expenses and income by management.

http://www.arcminerals.com/files/doc_financials/annual/Annual-Report-2020.pdf

Conclusion:  Arc’s licenses host a number of copper occurrences which may prove to be of further interest to Anglo or some other copper producer. While Anglo, Rio Tinto and BHP will be looking for signs of large scale mineralised structures the prospects may also host a number of smaller structures which may prove economic for smaller scale producers.

*SP Angel act as nomad and broker to Arc Minerals. The analyst holds shares in Arc Minerals

 

BlueRock Diamonds () 60p, Mkt cap £5.45p – Third quarter figures highlight substantial improvement in volume and grade

BlueRock Diamonds report a very substantial improvement in tonnage and grade at the Kareevlei Diamond Mine in the Kimberley region of South Africa

Management have worked hard to reorganise the open pit design to open access to a significantly larger mineable resource than was previously envisaged

This work is now feeding through into faster and more efficient mining of the orebody

Better management and work done on the diamond recovery and process plant is also seeing better recovered grades and the recovery of more larger stones

The benefits are coming through in the third quarter results as below

Q3 results:

Record tonnes sorted in the process plant +34% in Q3 to 123,727 vs 92,483 yoy

Diamond production +40% to 5,577cts vs 3,973cts yoy

Grade recovered +5% 4.51cpht in Q3 vs 4.3cpht yoy

Q3 sales:

Diamond sales fell 8% to 3,803cts vs 4,139cts yoy due to the timing of sales and prevailing low local prices due to Coronavirus travel restrictions

Diamond price achieved in Q3 was 28% lower at $330/ct vs $432/ct yoy

 

The team sold one larger stone in the quarter for $104,000 with another estimated at $75.000 after the quarter end.

Diamond pricing:

Rapaport report significant and continuing recovery in diamond prices in their October TradeWire on the diamond sector.

0.3ct diamonds rose by 3.73% mom in October and +16.5% yoy,

0.5ct stones rose 5.8% and 19.9% yoy

1.0ct stones up 1.96% and 1.8% yoy.  1ct stones rose 2.3% in September

The 1ct RAPI three-month diamond index is around 8% higher since the beginning of July

3.0ct stones fell 3.1% in September and remain 3.7% lower yoy

Conclusion: The mining team at BlueRock are demonstrating that proper management and mine planning give consistently improved results.

We expect sales to continue to rise substantially through the second half and for sales prices to rise through the fourth quarter.

The recent deal with a leading diamond trader in Antwerp should also give the company access to significantly higher prices for the mines coloured and gem quality stones.

*SP Angel act as Nomad and Broker to BlueRock Diamonds

 

Keras Resources* () 0.14p, Mkt cap £6.8m – Progress in Togo and Utah

(Keras also hold an 85% interest in Societé General des Mines which holds the Nayega manganese project license in Togo. Keras now holds 40% of Falcon which holds 100% of the Diamond Creek phosphate mine which is operating in Utah, USA)

Keras Resources has provided a progress report on its Nayega manganese project in Togo and its Diamond Creek direct-shipping phosphate operation in Utah.

Nayega: exploration of the Ogaro prospect, located approximately 5km ESE of the main Nayega deposit, was resumed on 7th September. Twenty-five of the planned fifty pits have been completed with the remainder to be completed by the end of October with the resulting channel samples to be submitted for analysis in Ghana.

The company says that “Previous test-pitting in the area to test the core area of mineralisation have returned positive results, with best intercepts including 1.76m @ 18.6% Mn from 0m, 2.05m @ 15.8% Mn from 0m and 2.00m @ 16.2% Mn from 0m.”

Dry testing of the 5,500tpm bulk sampling plant at Nayega during September “underpinned the project’s production-ready status”

Meetings with government officials and local service providers in Togo during September are expected to be followed up with similar meetings during early November.

Management are impressed with the new progressive government in Togo and the new minister of mines who is a qualified engineer.

CEO, Russell Lamming, confirmed that “Graham Stacey and I spent three weeks in September meeting key government officials, government advisors and various contractors and service providers to ensure that as we progress towards the conclusion of the project permitting process we are production ready.  The Nayéga site visit undertaken during the trip, where both the processing plant and ancillary services were successfully dry-tested, is testament to the quality and drive of our in-country team, which has achieved this despite the severe restrictions necessitated by the COVID-19 pandemic”.

Diamond Creek, (Organic Phosphate mine, Utah, US).  The Diamond Creek mine achieved commercial production in late July and “the first beneficiated -10 mesh organic product, part of a 770-ton order, was dispatched in early September”.

The company says that it has now completed its 2020 mining campaign at Diamond Creek and that “As of 09 October, 2,487 tons of ROM have been toll-processed with total sales to date of 1,012 tons averaging $260/t.  This represents 20% of the forecast sales for Year 1, which the Board believe to be highly encouraging based on the first two months of production”.

Management also confirm their previously announced decision “to increase Year 1 of the phased ROM production by 50% from 5,000 tons to 7,500 tons to ensure sufficient material over the winter while maintaining the Year 5 target of 48,000 tons of commercial production”.

While current beneficiation of the product is being undertaken at plant in Filmore, Utah, Keras Resources confirms that “A new plant, to be owned and operated by Falcon Isle, which has the capacity to process the five-year 48,000-ton production target, is anticipated to be shipped from Shanghai in November 2020.  This is expected to be commissioned in Q1 2021 and will increase both the available capacity and flexibility to produce different sized beneficiated material”.

The new plant will be installed at the new site a50km from the Spanish Fork mine site giving easier access to West Coast markets. The new site also gives significantly longer term mine life potential beyond the company’s current 5-year target.

Mr. Lamming confirmed that Diamond Creek had “achieved 20% of our Year 1 sales forecast in only two months, having sold a total of 1,012 tons at an average price of US$260/t in August and September, highlighting the significant demand for our high quality product”.

Conclusion: Keras Resources has progressed both its Utah direct-shipping phosphate mine into commercial production and advanced exploration and bulk sampling at the Togo manganese project where it has confirmed the “production-ready status” of the bulk-sampling plant at Nayega.

*SP Angel act as nomad and broker to Keras Resources

 

Power Metal Resources () 1.4p, mkt cap £11m – Launch of website galley

Power Metal have announced the launch of a website galley, providing images and videos of the Molopo Farms Complex project in south-west Botswana.

The launch of the gallery allows investors to view progress following the announcement on the 7th of October, when the company provided a drilling update for the project in question.

The gallery currently hosts images of the preparation of the site for drilling commencement, viewed through the following link on the Company’s website: https://www.powermetalresources.com/gallery/7/molopo-farms-complex-botswana

*SP Angel acts as Nomad and Broker to Power Metal Resources

 

Shanta Gold () 20.3p, Mkt Cap £172m – West Kenya Scoping Study confirms attractive project economics

The Company released independent Scoping Study results on the high grade West Kenya Project in western Kenya.

Project economics include:

105kozpa open pit (for two years) followed by underground mining operation with a nine year life of mine.

Conventional CIL plant to run at 480ktpa treating 9.3g/t and yielding 92% gold recoveries.

C1 and AISC costs are estimated at $463/oz and $681/oz, respectively.

EBITDA estimated at ~$118mpa, implying ~66% EBITDA margins.

Development capex budgeted at $161m.

NPV8% (post-tax) at $340m and IRR (post-tax) of 110% using $1,700/oz gold price.

The project is estimated to host 1,182koz at 12.6g/t in the NI 43-101 compliant Inferred Mineral Resource contained within two greenfield deposits, the Isulu and Bushiangala Prospects, both of which remain open at depth.

The Company is planning a comprehensive infill drilling and technical evaluation work over the next 2-36 months to confirm Scoping Study assumptions and reach a construction decision.

Conclusion: West Kenya Project independent Scoping Study delivers attractive economics yielding $340m and 110% NPV8% (post-tax) and IRR (post-tax) at $1,700/oz and offers a for high margin production growth potential for the Company.

 

Yamana Gold (AIM:AUY) () 467.5p Mkt Cap £4.45m – Admission to London’s Official List

The London market gains a new, dividend-paying, 1mozpa gold-equivalent producer today with the admission of the Canadian based company, Yamana Gold, to the Official List.

Yamana Gold operates 5 producing mines at El Penon and Minera Florida in Chile, Cerro Morro in Argentina, Jacobina in Brazil, and the Canadian Malartic mine in Quebec (50% owned).

The company’s website shows 2019 production of 1.02moz of gold equivalent at an all-in sustaining cost of US$978/gold equivalent oz and a total reserve base of 7.4moz of gold and 64moz of silver as well as an extensive exploration programme throughout the Americas.

Conclusion: Following Randgold Resources merger with Barrick Gold in December 2018, Yamana Gold gives the London market a large focussed, dividend paying gold producer.

 

Analysts

John Meyer – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474

Joe Rowbottom – [email protected] – 0203 470 0486

 

 

 

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

 

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

 

Sources of commodity prices

 

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel

Bloomberg

Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt

LME

Oil Brent

ICE

Natural Gas, Uranium, Iron Ore

NYMEX

Thermal Coal

Bloomberg OTC Composite

Coking Coal

SSY

RRE

Steelhome

Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal

Tungsten

Metal Bulletin

 

DISCLAIMER

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

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

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This note has been issued by (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

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

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

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

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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%



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