SP Angel . Morning View . Thursday 29 10 20
New lockdowns in Europe risk economic recovery
MiFID II exempt information – see disclaimer below
Arc Minerals* () – Caleb Mulenga appointed as a NED to Arc Minerals board
Greatland Gold () – Moving towards initial resource at Havieron as step-out drilling identifies a 4th potential target
Highland Gold () – Production to pick up in the final quarter with FY20 guidance reiterated
KAZ Minerals () – On track for full-year guidance
Panthera Resources () – Field exploration underway at the Bassala project
Vast Resources* () – Final results highlight progress in Romania and Zimbabwe
(:LON:AUY) – Encouraging drilling results from Canadian Malartic
China – new digital currency ‘DCEP’ designed to spread use of Renminbi and reverse dollarisation
China is looking to extend use of the Renminbi as the world’s next global reserve currency
The nation has already persuaded Iran to adopt the Renminbi as a reserve currency and is now pushing its new digital
The new electronic DCEP currency is also being pushed to promote digital payments and speed up transactions
APEX survey rankings for SP Angel commodity forecasts: 2nd in Gold, 2nd in Copper, 2nd in Nickel, 1st in Tin, 5th in Iron ore
Japan – The central bank cut its 2020 growth estimates while upgrading 2021 estimates as it kept the monetary policy unchanged.
The economy is expected to contract 5.5% in the fiscal year to Mar/21 versus -4.7% guided previously.
Growth is expected to rebound to 3.6% in the following year.
ECB – The € is down this morning ahead of the ECB meeting with expecting no change in the size of the stimulus.
Chances are Christine Lagarde will increase the stimulus package by €0.5tn from current €1.35tn in December to soften the blow to the economy of new lockdowns being reinstated in Europe.
The Governing Council may elect to wait and see the effect of new social restrictions, as well as US election and Brexit negotiations , with more than half the fund not deployed yet.
Eurozone Services confidence fell -11.8 in October
Eurozone Consumer confidence fell -15.5 in October
Eurozone Economic confidence 90.9 in October vs 90.9
Eurozone Industrial confidence -9.6 in October vs -11.4
China – GDP expected to break Rmb100tn this year according to China Communist Party meeting
Emphasis on reliance in Chinese technology in next 5-year plan (Xinhuanet)
Industrial profits fell 2.4% yoy in September vs a fall of -4.4% in August
US – Fauci reckons US may not return to normal till end 2021 or into 2022
Germany – Germany is expected to post another negative annual inflation reading in October as growth momentum wanes and reflecting lower oil prices.
Chancellor Angela Merkel announced to impose emergency lockdown including the closure of restaurants, gyms and theatres.
The number of people allowed to meet in public will also be limited while theatres, gyms and cosmetic studios to shut as well.
Supermarkets, stores, schools and day care centres will remain open.
“Within weeks we will reach the limits of our health system… it is completely clear we must act, and act now, to prevent a national health crisis,” Merkel said at a press conference after securing an agreement with Germany’s 16 governors for nationwide measures.
The government will cover small and medium sized businesses losses for up to 75% with financial aid to businesses estimated to come at ~€10bn.
France – President Macron reintroduced a national lockdown amid surging infection rate and concerns over the capacity of the healthcare system.
Most nonessential businesses including bars and restaurants will be closed while leaving home will be strictly limited and private and public gatherings will banned.
Universities will switch to online classes.
New restrictions will come into effect tonight and remain in place through to December 1 at least.
The nation reported 527 coronavirus related deaths on Tuesday, the nation’s highest since April.
Portugal – The government made it compulsory to wear masks outdoors wherever social distancing cannot be ensured.
South Korea – Q3 GDP rose 1.9% qoq vs a fall of 3.2% in Q2
GDP was still -1.3% lower yoy in Q3 but is an improvement on -2.7% yoy in Q2
Consumer confidence rose to 91.6 in October vs 79.4 in September
France – declares second national lockdown
Non-essential businesses, such as restaurants and bars, will close, but schools and factories will remain open.
South Africa – Local sources tell us that the BBC reported 40% of tests in South African townships now show evidence of past COVID-19 infection
The implication and hope is that township pollutions may have reached a form of herd immunity.
Our source says the BBC reports the COVID-19 infection rate has dropped dramatically in the townships
The South African President is refusing to put the nation back into Lockdown due to the economic cost and damage done but has been forced into quarantine due to a dinner guest testing positive for the disease.
US$1.1731/eur vs 1.1765/eur yesterday. Yen 104.32/$ vs 104.22/$. SAr 16.380/$ vs 16.251/$. $1.300/gbp vs $1.303/gbp. 0.706/aud vs 0.713/aud. CNY 6.707/$ vs 6.714/$.
Gold US$1,878/oz vs US$1,907/oz yesterday – Gold retreats to one-month low on dollar strength and margin call selling
Gold prices hit a one-month low on Wednesday, as the dollar firmed to a weekly high and a sell-off in equity markets caused traders to sell bullion to cover losses elsewhere.
Spot gold fell 2% on Wednesday, as the US dollar index firmed over 0.5% against the basket of currencies, weighing on gold prices (FX Street)
Elsewhere in the gold space, the World Gold Council reported that central banks became gold sellers for the first time since 2010 in Q3, as nations exploited near-record prices to soften the economic blow of the coronavirus pandemic.
Net sales totalled 12.1 tonnes of gold in the quarter, compared with purchases of 141.9 tonnes a year earlier.
Selling was dominated by the central banks of Turkey and Uzbekistan, who sold 22.3t and 34.9t of gold respectively.
Gold ETFs 110.9moz vs US$111.2moz yesterday
US$871/oz vs US$887/oz yesterday
Palladium US$2,250/oz vs US$2,354/oz yesterday
Silver US$23.29/oz vs US$24.46/oz yesterday
Copper US$ 6,757/t vs US$6,818/t yesterday – Las Bambas (Peru) cut guidance to 305,000-315,000t from 350,000-370,000t previously
Aluminium US$ 1,810/t vs US$1,817/t yesterday – Trump removes tariffs on Canadian aluminium
President Trump has signed a proclamation ending the 10% duties on Canadian aluminium entering the country, providing imports do not surge in the coming months.
The decision to remove the 10% tariff was motivated by expectations that Canadian shipments of aluminium to the US will decline to 83,000t in September, 70,000t in October, 83,000t in November and 70,000t in December.
Six weeks after each month, the US will determine whether shipment have exceeded those forecast volumes, and if shipments exceed 105% then the US will impose the 10% tariff retroactively (Fastmarkets MB).
Canadian aluminium imports to the US averaged 154,000 tonnes per month in the first seven months of 2020.
Nickel US$ 15,675/t vs US$16,255/t yesterday – INSG sees a global refined surplus of 117,000t this year and for the surplus to continue into 2021
Zinc US$ 2,542/t vs US$2,586/t yesterday – Peru zinc exports fell 17.3% yoy to 88,000t.
Lead US$ 1,821/t vs US$1,794/t yesterday
Tin US$ 17,950/t vs US$18,180/t yesterday
Oil US$39.0/bbl vs US$40.2/bbl yesterday
Oil prices fell again in early trading on reports that the CEO of Aramco Trading stated that global demand currently is not supportive for OPEC+ easing the oil production cuts on January 2021
OPEC and its Russia-led partners will likely consider “a lot of demand issues” before tapering their cuts
OPEC+’s decision will depend on how economies recover, including the US economy from a potential stimulus
OPEC+ is set to relax the current collective cut of 7.7MMbopd to 5.8MMbopd beginning in January next year
However, the second COVID-19 wave in Europe and the US is threatening economic and demand recovery and has increased market talk and speculation that OPEC+ may not and/or should not increase oil supply at the start of next year
Currently, the only bright spot in demand is China, which is expected to sustain solid demand in the fourth quarter and into the start of 2021, Aramco Trading’s Al-Buainain told Gulf Intelligence.
While demand in China is holding up and is back to nearly normal levels, demand in the developed economies in Europe and in the US is not bright, due to the spike in new cases
The second wave is a threat to demand and is delaying the recovery from the slump in the second quarter, oil industry executives and OPEC itself have warned recently
Natural Gas US$3.280/mmbtu vs US$2.990/mmbtu yesterday
Natural gas prices moved higher again as tropical storm Zeta makes its way into the Gulf of Mexico
The movement of the storm is expected to reduce production in the Gulf of Mexico by approximately 20%
The weather is expected to be moderate and then warmer than normal throughout most of the US which reduced heating demand
Stronger than expected Durable Goods Orders is likely to buoy manufacturing helping to generate more demand for natural gas
Hedge funds have now added to long position and reduced short position in futures and options according to the latest commitment of trader’s report
According to the CFTC, managed money increased long position in futures and options by 4.7K contracts while reducing short positions in futures and options by 11.5K contracts
Managed money open interest that is long futures and options outnumbers open interest that is short by 2.2 to 1
Iron ore 62% Fe spot (cfr Tianjin) US$114.6/t vs US$113.4/t
Chinese steel rebar 25mm US$566.9/t vs US$564.0/t
Thermal coal (1st year forward cif ARA) US$57.5/t vs US$58.6/t – Australian banks stop financing thermal coal
ANZ Bank has announced that it will stop financing thermal coal projects by 2030 so that it can reduce the carbon footprint of its loan book. It will stop funding new projects, boost lending to the renewables sector and introduce reduction goals for financing provided to its 100 largest customers straightaway.
ANZ Bank is the last of Australia’s Big Four banks to stop financing thermal coal projects. Recently, Australia’s three largest customers for thermal coal have announced plans to decarbonise their economies and achieve net zero emissions. South Korea and Japan want to do this by 2050 and China by 2060.
The Australian coal price has dropped by about a quarter since January due to Covid 19. Furthermore, the global efforts to reduce greenhouse gas emissions as outlined in the Paris climate accord poses a bigger challenge.
Australian banks have started by cutting their exposure to thermal coal. ANZ’s outstanding loans to the industry fell from $1.7bn in 2015 to A$500m in September. Because of this, Australian coal miners have looked for overseas funding whilst also receiving criticism from the government. Australia’s agricultural minister said that people should avoid banks that “impose crippling new carbon targets” on Australian farmers.
Australia are still to set a date for achieving zero emissions. Some believe that this action by banks is symbolic for the fossil fuels industry and shows how the government has become separated from its trading partners and businesses.
Coking coal futures Dalian Exchange US$138.0/t vs US$129.5/t
Cobalt LME 3m US$33,305/t vs US$33,305/t
NdPr Rare Earth Oxide (China) US$48,822/t vs US$48,784/t
Lithium carbonate 99% (China) US$5,292/t vs US$5,288/t
Ferro Vanadium 80% FOB (China) US$28.0/kg vs US$28.3/kg
Antimony Trioxide 99.5% EU (China) US$5.3/kg vs US$5.3/kg
Tungsten APT European US$220-225/mtu vs US$212-220/mtu
Graphite flake 94% C, -100 mesh, fob China US$440/t vs US$440/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,275/t vs US$2,275/t
South Korea to cut emissions to net zero by 2050
President Moon Jae-in has said that South Korea pledge to achieve carbon neutrality by 2050. This came two days after Japan announced their 2050 net zero target and a month after China.
Moon released plans for a $37 billion Green New Deal in July which is intended to boost green infrastructure, clean energy and electric vehicles by 2050. He announced a further $7 billion spending on carbon cutting measures.
By 2025, South Korea aims to have 1.13 million electric and 200,000 hydrogen vehicles on the roads.
In order to achieve this, a phase out of coal is necessary. The country has 3 GW of coal power capacity, which provides over 40% of the country’s electricity generation, and a further 7.2 GW is under construction. Currently, renewables make up only 6% of the country’s energy mix.
This announcement puts pressure on other countries with large emissions such as Australia and the US. Four of Australia’s top trading partners – UK, Japan, China and South Korea – have set net zero targets, this could reduce demand for coal exports.
Panasonic Q2 earnings report an 11% increase in Q2 operating profit at Y92.8bn ($886.34m)
The Company maintained its profit forecasts for the year at 150bn yen, down 48.9% on last year but revised sales downwards.
A significant portion of sales in automotive batteries came from Tesla.
Sales of prismatic batteries increased with expansion of the Dalian factory, while cylindrical sales improved with production expansion at the North American facility.
Profit from automotive batteries improved with increased sales in both prismatic and cylindrical batteries which offset lower sales of cylindrical batteries from its Japanese factory.
Chinese EV start-up recalls vehicles due to battery fires
Chinese EV start-up WM Motor has recalled 1282 vehicles in China due to 4 fires in the last month in the EX5 sport utility model.
The cars have been recalled due to concerns about impurities in the electric core. Thermal heat caused by impurities in the batteries is thought have led to 3 of the 4 incidents while the last remains under investigation.
WM Motors battery suppliers include CATL but the supplier involved in the recall was not named. The recall affects vehicles equipped with ZNP3914895A-75A batteries which will be replaced from other suppliers free of charge.
WM Motor is backed by Baidu and Tencent. The Company sells its vehicles under the brand name Weltmeister. WM Motor has a factory in Wenzhou with a production capacity of 100,000 units.
The Weltmeister EX5-Z model uses a lithium-ion battery with a 160kW motor, enabling a driving range of 300-460km depending on the specifications. The battery capacity is 48.08kWh to 56.94kWh.
Infrastructure and investment fails to keep up with demand in Europe
The European Automobile Manufacturers’ Association (ACEA) industry group warned yesterday that funding for charging infrastructure is not sufficient to keep up with demand in Europe.
The Group highlighted sales of BEV and PHEVs reached 458,915 vehicles in 2019 up 110% from 2017 while during the same period EV charge points only grew 58% to around 200,000.
The ACEA has urged the European Commission to expedite a planned review of the EU rules and to set binding targets for countries to hasten the deployment of chargers.
An EU clean transport strategy is expected later this year and is anticipated to use EU funds to build 1m public charging and refuelling stations to service the 13m NEVs expected on European roads in 2025.
The majority if infrastructure is clustered around the London where the government has pledged to install a further 5232 EV chargers by the end of 2021.
Similarly, in the UK less than 50% of 400 local councils received government funding for EV charging infrastructure in the past year and less than a 1/3rd of councils have a plan for the installation of public charging stations according to DevicePilot.
Arc Minerals* () – 3.59p, Mkt cap £35m – Caleb Mulenga appointed as a NED to Arc Minerals board
(Arc holds 72.5% of Zaco and 66% of Zamsort in Zambia)
Arc Minerals reports the appointment of Mr Caleb Mulenga as a non-executive director to the board.
Mr Mulenga was previously at the Development Bank of Zambia.
He subsequently established Superior Milling Limited where he is Executive Chairman.
Mr Mulenga also holds a bachelor’s degree in Business and Economics from the University of Zambia and an MBA from Webster University.
His current directorships include: Access Bank Zambia Ltd, MTN (Zambia) Limited, Pan Africa Soleil Holdings (PASH), Superior Milling Company Ltd, Phoenix of Zambia Assurance Company (2009) Limited, Drakensberg Limited, Chilibwe Mining Ltd, Shearzone Resources Ltd, CAM Ltd, Townhouse Lodge.
Previous directorships include: C&A Finance Services, Woolworths Zambia Ltd, Bright Horizon Limited, High Street Connect Ltd, Sanlam Life Insurance Zambia
Conclusion: It is good to see Arc Minerals strengthening its board with an experienced and highly regarded Zambian director.
We are currently waiting on assay results from the nine drill holes reported on 21 September. Laboratory assays have been delayed due to COVID-19 restrictions in Lusaka.
Drilling started at end June with an initial 8,000m of drilling budgeted with holes planned from 100m – 250m below surface indicating a program of around 40 drill holes depending on structure and the depth being drilled.
Analysis of the pXRF results on the carbonaceous shale unit at Fwiji shows sulphide copper mineralisation.
*SP Angel act as nomad and broker to Arc Minerals. The analyst holds shares in Arc Minerals
Greatland Gold () 24.5p, Mkt Cap £899m – Moving towards initial resource at Havieron as step-out drilling identifies a 4th potential target
Greatland Gold draws attention to Newcrest Mining’s Quarterly Exploration Report released to the ASX which includes recent drilling results from the company’s Havieron project in Western Australia where Newcrest is earning an interest of up to 70% by spending up to US$65m on exploration.
Much of the recent drilling has focussed on infill drilling to establish an initial inferred mineral resource for the South East Crescent Zone and the adjacent breccia. The resource announcement is expected during the current quarter.
The infill drilling includes what is described as the “best intercept to date” with hole HAD-065W2in the South East Crescent Zone intersecting 120.7m at an average grade of 0.93g/t gold and 0.18% copper from a depth of 1349.3m, including a higher grade section of 26.6m at an average grade of 34g/t gold and 0.23% copper from 1384.4m depth.
Additional results from the infill drilling reported today include:
A 212m long intersection of the SE Crescent and Breccia Zone at an average grade of 2.0g/t gold and 0.11% copper from a depth of 981m in hole HAD-057W5 which includes a 30.2m long portion averaging 5.6g/t gold and 0.17% copper from 1115m depth; and
A 183.7m long intersection of the Northern Breccia Zone at an average grade of 1.8g/t gold and 0.18% copper from a depth of 1098m in hole HAD-083 which includes a 17.2m long section averaging 8.8g/t gold and 0.47% copper from 1165.2m depth; and also intersections of the Eastern Breccia Zone the same hole of 134m at an average grade of 1.4g/t gold and 0.04% copper from a depth of 1529m and 98.2m averaging 1.9g/t gold and 0.14% copper from 1677m depth including 41.1m averaging 3.7g/t gold and 0.1% copper from 1723.9m; and
A 342.2m long intersection of the Eastern Breccia Zone at an average grade of 2.0g/t gold and 0.11% copper from a depth of 1536.8m in hole HAD-084 which includes a 14m long zone averaging 0.19g/t gold and 0.2% copper from 1572m depth; and
A 91m long intersection of the Northern Breccia Zone at an average grade of 1.6g/t gold and 0.21% copper from a depth of 697m in hole HAD-089 and
A 116m long intersection of the NW Crescent Zone at an average grade of 2.9g/t gold and 0.07% copper from a depth of 1136m also in hole HAD-089 which includes a 13m long section averaging 13g/t gold and 0.17% copper from 1136m depth.
Greatland Gold also, however, highlights the discovery of a potential new 4th target area known as the Eastern Breccia which has been identified in two drill-holes.
Hole HAD-084 intersected 342.2m of Eastern Breccia Zone mineralisation averaging 2.0g/t gold and 0.11% copper from a depth of 1536.8m and the company comments that “the new Eastern Breccia highlights the potential for a new region of breccia development not previously recognised and extends mineralisation externally to the ovoid-shaped Crescent sulphide zone”.
To date, exploration of Havieron has now identified four zones of mineralisation at:
The South East Crescent and Breccia Zone;
The North West Breccia Zone;
The Northern Breccia Zone; and now
The Eastern Breccia Zone.
Describing the geological setting, today’s announcement explains that “Mineralisation at the Havieron deposit remains open to the north-west and north east, has been observed to over 1,100m below post mineral cover, and remains open at depth. The extents of the Havieron system are still to be defined”. The mineralisation is “hosted by metasedimentary (meta-sandstones, meta-siltstones and meta-carbonate) and intrusive rocks. Gold and copper mineralisation is hosted in breccia, vein and massive sulphide replacement styles, typical of intrusion-related and skarn types of mineralisation”.
Chief Executive, Gervaise Heddle, commented that “We are delighted by the latest set of excellent drilling results at Havieron, including the best intercept at the project to date, which further reinforce the potential for a bulk tonnage mining operation at Havieron. Exploration at Havieron has now identified four key target regions, including the new Eastern Breccia, which was identified by two of the step-out drill holes reported today. Importantly, the footprint of Havieron continues to expand and breccia mineralisation has now been identified outside of the ovoid-shaped Crescent sulphide zone to the east, north-west and south-east”.
Conclusion: As drilling proceeds towards an initial mineral resources estimate for the South East Crescent Zone and the associated breccia at Havieron later this year, exploration continues to identify new targets including the announcement today of a potential new mineralised Eastern Breccia system. We look forward to publication of the initial mineral resource later this year.
Highland Gold () 300p, Mkt Cap £1.1bn – Production to pick up in the final quarter with FY20 guidance reiterated
Q3 production totalled 75.6koz GE including:
36.5koz (Q3/19: 29.0koz) at MNV reflecting good grades and recoveries that compensated for a drop in throughput rates as one of the mills went through scheduled maintenance. Open pit mining moved to Intermediate and Deer ore bodies supplying higher grade material to the mill.
11.2koz (Q3/19: 9.1koz) at Belaya Gora, where the team is completing processing plant upgrade installing a CIP circuit planned to raise gold recoveries to 90% from just over 75%. Works are on track for completion in Q4/20.
14.2koz (Q3/19: 30.0koz) at Novo on the back of lower grades and recoveries. Ore mining volumes pulled back 36%yoy on the back of a planned refurbishment of the mine’s skip hoist system with the plant throughput little affected as the operation processed stockpiled material. Novo expansion project to 1.3mtpa from current 800ktpa is expected to be completed in Q1/21, a slight revision on Q4/20.
11.5koz (Q3/19: 7.0koz) at Valunisty on better processing rates, grades and recoveries. Plant expansion project (from 250ktpa to 350ktpa) construction is expected to start in 2021.
2.3koz (Q3/19: – ) at Kekura from the pilot processing plant (120ktpa capacity) with project development works ongoing ahead of the first commercial production scheduled for 2023.
YTD production amounted to 200.4koz (9M19: 217.3koz) largely reflecting lower production at Novo ahead of commissioning of 1.3mtpa project.
Tailings reprocessing Baley Zif-1 project is expected to come online in H2/21 adding ~15kozpa to total production.
The Company reports little impact to mining and processing facilities, supply chains and sales from COVID-19 pandemic highlighting the effectiveness of established health and safety protocols.
FY20 guidance reiterated at 290-300koz.
The Company is subject to the unconditional takeover (at 300p) by Fortiana Holdings after ~80% of shareholders approved the deal earlier this month with application for the cancellation of trading in shares on AIM to follow shortly.
KAZ Minerals () 630p, Mkt Cap £2.97bn – On track for full-year guidance
Kaz Minerals’ Q3 production report for the nine months and third quarter ended 30 September 2020 show that all metals are on track to achieve or exceed its full year production guidance, assuming no new material Covid-19 impact.
Copper production totalled 76.2kt in Q3 vs 78.9kt in Q2 and 82.9kt in Q3 2019.
The first nine months of this year saw copper production total 230.0kt vs 230.5kt over the same period last year, suggesting that Kaz hasn’t been materially affected by the Covid-19 pandemic over the course of the nine months.
Gold production amounted to 50.7Koz in Q3 vs 54.3Koz in Q2 and 58.5Koz in Q3 2019 – with 9m 2020 of 160.4koz vs 146.2 in 9m 2019.
Silver production totalled 901koz in Q3 vs 948koz in Q2 and 944koz in Q3 2019.
Zinc production totalled 15.7kt in Q3 vs 14.8kt in Q2 and 10.5kt in Q3 2019.
Andrew Southam, Chief Executive Officer, said: “KAZ Minerals has delivered strong production in Q3 and the nine months to September 2020, despite the challenges posed by Covid-19. Whilst maintenance is scheduled for Q4, we are on track to achieve the upper end of our copper and gold guidance ranges and have increased production guidance for silver and zinc.”
Kaz’ Q3 production report follows yesterday’s news that the Company has agreed to be acquired led by its Chairman Oleg Novachuk and Director Vladimir Kim. Novachuk and Kim, who already own stakes if 7.8% and 31.6% in Kaz respectively, have offered to buy the remaining 60.6% of the Kazakh copper miner in a deal which sees them paying 640 pence per Kaz share.
Panthera Resources () 12.25p, Mkt Cap £9.6m – Field exploration underway at the Bassala project
Panthera Resources reports that it has started field exploration at the Bassala gold exploration project located in south west Mali approximately 200km south of the capital, Bamako in order to assist in the identification of drilling targets to be followed up during H1 2021..
The company says that a ground magnetic survey has already started and that an extension of the existing soil geochemical sampling is to get underway in early November.
The magnetic survey is intended to “obtain good quality litho-structural data as there is very little surface outcrop in this area and the previous magnetic survey data is very broad spaced” while the soil sampling aims to “extend high order anomalies on the edge of the survey and to sample most of the remaining untested parts of the tenement so that anomalies can be ranked based on soil anomalism, regolith type, litho-structural setting, and previous drill intercepts”.
The company has previously alluded to widespread artisanal gold mining activity in the area and published historic drill results from RAB work undertaken by Anglogold Ashanti in 2010-11 including
“21m @ 1.15g/t Au from 15m including 3m @ 4.52g/t Au from 33m
15m @ 0.56g/t Au from 3m to the end of the hole
3m @ 0.78g/t Au from 21m to the end of the hole
6m @ 0.49g/t Au from 39m to the end of the hole
3m @ 1.55g/t Au from 9m
3m @ 1.16g/t Au from surface”
Managing Director, Mark Bolton, said that “After an extended period of inactivity in West Africa, the recommencement of fieldwork at Bassala today is enormously important for the Company. Together with its partner, Moydow, we have an extensive activity programme planned across multiple projects through 2021”.
Conclusion: Early stage geophysical and geochemical exploration work is starting at Bassala with a view to identify drilling targets to be followed up in H1 2021.
Vast Resources* () 0.17p, Mkt Cap £22.7m – Final results highlight progress in Romania and Zimbabwe
The Company has released its annual results for 12 months through to April 2020.
The period saw the company focusing on bringing its Baita Plai Polymetallic Mine (BPPM) in Romania into production, along with the Group’s expected diamond concession in Zimbabwe, whilst continuing to hold the Manaila Polymetallic Mine (MPM) on care and maintenance.
Vast continued rehabilitating BPPM in preparation for production and invested in new capital equipment and an accelerated drilling program, whilst Metallurgical tests met the Company’s internal expectations by confirming high recoveries and high grade copper and zinc concentrates.
Vast concluded a JV with Chiadzwa Mining Resources in the period in respect to the company’s diamond operations in Zimbabwe, and is currently discussing finalising a JV agreement with the Zimbabwe Consolidated Diamond Company in order to procure a special grant for the mining of diamonds.
Other operational highlights in the period include the transition of resources from MPM to BPPM in order to advance the particular asset further, whilst also commencing a drilling programme at BPPM to establish a JORC compliant resource.
In terms of debt, January 2020 saw the Company draw down on its first tranche of the Atlas Facility, amounting to $7.1m of a $15m bond facility, enabling the company to advance its BPPM project in Romania.
The Group’s year end cash position was US$0.48m vs US$0.57m as of April 2019.
During the year, cash used in operations were -$5.23m vs cash inflows of $5.35m in last year’s period. A significant portion of these outflows are as a result of the company developing, maintaining and supporting its assets in a time of transition- meaning Vast is now well placed to start production and generate revenue at BPPM and Zimbabwe in the future.
Cash outflows from investing activities amounted to -$3.64m vs -$13.33m last year.
Administrative and overhead expenses for the 12-month period decreased 5.4% to $4.1m vs $4.3m in the 13-month period ended 30 April 2019.
Cash inflows from funding activities were $8.79 million, comprising loans and borrowings of $6.52 million and the net of the proceeds from the issuance of shares of $4.63m less repayment of loans and borrowings of US$ 2.36m.
The Group’s strategy beyond the period reported is to attract appropriate funding along with appropriate JV partners in order to grow into a mid-tier mining company.
*SP Angel act as Broker to Vast Resources
Yamana Gold (LON:AUY) 422.5p Mkt Cap £4,025m – Encouraging drilling results from Canadian Malartic
Yamana Gold has provided a progress report on its C$24m drilling programme at the Canadian Malartic mine in Quebec where mineralisation has now been defined over 1.4km of strike length and over 1200m vertically from 700-1900m depth while remaining open at depth below that.
The company explains that the results “confirmed expected grades and widths of East Gouldie mineral inventories, while also confirming that the zone is open at depth, providing confidence to proceed with an exploration ramp that will allow tighter definition drilling on the Odyssey, East Malartic, and East Gouldie zones from underground drill platforms, and eventually be used to mine and haul mineralization from the upper zones. The results are expected to significantly increase inferred mineral resources at the higher-grade East Gouldie zone at year end, which will improve the economics of the Canadian Malartic underground project and represent another significant step towards defining the project as a multimillion ounce deposit that would support a future decades long life underground mine with a multi-hundred thousand ounce per year production platform”.
Yamana Gold explains that the East Gouldie zone was discovered during Q4 2018 and says that the results of recent drilling are expected to upgrade and add to the December 2019 inferred mineral resource estimate of 12.76mt at an average grade of 2.45g/t gold which represents approximately 29% (1.37moz) of the total inferred resource of the Canadian Malartic mine and around 26% of the mine’s full 2019 mineral resources inventory.
The company highlights a number of the drilling results obtained, including “the following uncapped values over estimated true widths: MEX19-151WC with 6.90 g/t of gold over 39.30 metres, including 10.50 g/t of gold over 13.10 metres; MEX20-163AW 9.50 g/t of gold over 27.40 metres, including 16.00 g/t of gold over 9.90 metres; MEX19-159A 7.61 g/t of gold over 23.95 metres, including 12.00 g/t of gold over 12.16 metres; MEX19-160 6.90 g/t of gold over 21.30 metres, including 13.20 g/t of gold over 4.50 metres”.
The company says that “The results of this drilling are clearly defining a large mineralized zone with two closely-spaced sheet-like mineralized bodies with exceptional grade continuity and width. Significant intercepts extend from 700 metres below surface to 1,900 metres below surface and along a strike length of roughly 1,400 metres, defining a continuous mineralized body. The mineralization remains open at depth and, given that the East Malartic and East Gouldie zones dip towards each other, these zones are expected to converge at depth”.
Wider exploration around the mine is concentrating on the former producing East Amphi mine and the Rand Project. Encouraging results from East Amphi include the discovery of a new zone located “80 metres south of the Nessie zone located at 450 metres depth north of the main porphyry. Drilling in this zone intercepted a downhole interval of 3.55 g/t of gold (uncut) over a core length of 19.50 metres”.
“Drilling on the Rand property returned anomalous values at two new occurrences in the northern half of the property. Exploration in the fourth quarter and in 2021 will add drilling to the new Mount Rand targets and test porphyry-related targets at Rand and East Amphi in an effort to add further mineral resources for a future underground operation”.
Conclusion: A substantial drilling campaign in and around the Canadian Malartic mine is encountering additional mineralisation likely to add to the 2019 mineral resources estimate of 4.8moz in all categories and to the current 0.415moz measured and indicated resource.
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
Richard Parlons –[email protected] – 0203 470 0472
Abigail Wayne – [email protected] – 0203 470 0534
Rob Rees – [email protected] – 0203 470 0535
Grant Barker – [email protected] – 0203 470 0471
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
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.
This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.
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).
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%