SP Angel – Morning View – Tuesday 20 08 19

Expectations for more fiscal monetary stimulus build up

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MiFID II exempt information – see disclaimer below

 

Arc Minerals* (ARCM LN) – STRONG BUY – Drilling indicates copper over 300 x 650m at Cheyeza East

Asiamet Resources (ARS LN) – Raising US$2.1m for further work at BKM and Beutong

Avesoro Resources (ASO LN) – Major shareholder expresses interest in acquiring the balance of the company

Beowulf Mining* (BEM LN) – Interim statement highlights Kallak permitting process

BHP (BHP LN) – Declares record final dividend of 78UScents/share

Highland Gold (HGM LN) – Death of a Director

IronRidge Resources* (IRR LN) – Cape Coast lithium metallurgical test work

Keras Resources* (KRS LN) – BUY, Valuation 1.08p – Calidus drill campaign to add value on potential Warrawoona gold resource expansion

Kodal Minerals* (KOD LN) – Positive lithium metallurgical test work results

Power Metal Resources* (POW LN) – Strategic and operational review

Premier African Minerals* (PREM LN) – Power supply plan for RHA tungsten

 

Dow Jones Industrials

 

+0.96%

at

26,136

Nikkei 225

 

+0.55%

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20,677

HK Hang Seng

 

-0.21%

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26,236

Shanghai Composite

 

-0.11%

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2,880

FTSE 350 Mining

 

-1.01%

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17,477

AIM Basic Resources

 

-0.37%

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2,082

 

Economics

US – US Vice President Mike Pence urged China on Monday to respect Hong Kong laws repeating President Trump that it would be hard for Washington to make a deal with China should Beijing use violence to put down protests in the former British territory.

  • The US$ index strengthened on Monday and continued to climb this morning trading close to the highest level since the start of the year despite President Trump again calling for the Fed to ease rates and restart QE.
  • “The Fed Rate, over a fairly short period of time, should be reduced by at least 100bp, with perhaps some QE as well… if that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone,” Trump tweeted.
  • The FOMC is currently expected to vote in favour of the 25bp cut in the September meeting with probably one more before the end of the year.
  • In this light, markets will be closely watching the FOMC Chairman speech at the Jackson Hole conference week on Friday.
  • Washington allowed US companies to continue selling equipment to Huawei for another three months as part of a temporary license for groups including Google.
  • The extension allows Google to continue updating its Android software on Huawei phones, for instance.
  • “As we continue to urge consumers to transition away from Huawei’s products, we recognise that more time is necessary to prevent any disruption,” US commerce secretary Wilbur Ross said in a statement.
  • The move has been welcomed by markets that treated the announcement as an attempt by the US administration to avoid further escalation in the trade conflict with China.

 

China – PboC Vice Governor Liu Guoqiang highlights there is room for cuts in both reserve requirement ratio and lending rates marking a dovish stance of monetary policy authorities.

  • Previously Bloomberg reported China is planning to increase its annual quota for so-called special bonds form the current level of 2.15tn yuan ($305bn) issued by provincial governments citing people familiar with the matter.
  • New funds are expected to be directed towards infrastructure investment providing support for the falling growth rate.

 

Japan – Exports continued to slide for an eighth consecutive month, although, the rate of declines slowed in July and came in better than market estimates.

  • Outbound shipments dropped 1.6%yoy v -6.7%yoy recorded in June and -2.2%yoy forecast by Reuters.
  • Exports to Asia were down -8.3%yoy with shipments to China off -9.3%yoy. Exports to the US were up 8.4%yoy.
  • Imports also eased 1.2%yoy marking the third consecutive month of declines.

 

Eurozone – Inflation came in below estimates and significantly below ECB 2% target in July.

  • Poor inflation readings serve to increase chances the ECB will be announcing a form of QE of further rate cuts during the coming policy meeting.
  • CPI (%mom/yoy): -0.5/+1.0 v -0.4/1.1 forecast and 0.2/1.3 in June.

 

Germany – The government is readying fiscal stimulus measures that could be triggered should the economy slip into a deep recession, Bloomberg reports.

  • The central bank warned on Monday Germany is heading into recession as a slump in exports during the summer was likely to continue into the autumn.
  • A downturn in orders for cars and industrial equipment witnessed in Q2 is likely to continue in Q3 on the back of Brexit and US-China related concerns.
  • The economy contracted 0.1%qoq in Q2 with annual growth rate falling to 0.4% during the quarter, down from 0.9%yoy recorded in Q1.
  • “The overall economic performance could decline slightly once again… central to this is the ongoing downturn in industry,” Bundesbank said.
  • It is increasingly likely the bank will need to revise its 2019 growth forecasts down from previously guided 0.5% for this year.

 

Greenland – Trump tower joke indicates the US could do much for the economic development of Greenland

  • Trump’s tweet of a picture of a Trump Tower in Greenland along with a promise not to build this is an amusing gesture
  • We suspect the US would like to own Greenland but that its not in a hurry to do so, so long as China does not try to develop bases on the island.
  • While Greenlanders who only recently gained self rule and a level of autonomy from Denmark may like the taste of independence, the facts are that Greenlanders are not currently able to support a comfortable way of life without significant financial support.
  • Denmark currently struggles to provide some 50% of the Greenland national budget.
  • After the failure of much oil & gas exploration off the East coast of Greenland, some islanders are looking to mining as a way to diversify away from fishing and hunting for jobs and income .
  • The gradual retreat of the Greenland ice sheet has exposed a number of potential new discoveries with two Rare Earth Project being proposed for mining.
  • Greenland Minerals’ Kvanefjeld project is stalled due to its high uranium content while Tanbreez Mining may have a better chance of gaining a license due to only background values of thorium and uranium, though its plans for a simple REE refinery may be seen as .
  • Mine developers need to be conscious that the development of new projects can upset local communities if they take too many people of working age away from local settlements. Planning needs to be sensitive to relatively low labour availability and the need for training.
  • Bluejay Mining* is well advanced and is just one of a number of prospective new projects which is working with the government to ensure that it does not compete with the needs of the community at Qaanaaq while training sufficient numbers of Greenlanders and Danes to operate the project.
  • Bluejay is currently sending some 5,000t of material to Rio Tinto Iron & Titanium in Canada for a smelter test and is also exploring the Disko license area where there are indications for a potentially significant nickel sulphide mineral discovery.
  • While political autonomy is a great ideal, when the weather is -50 °C outside heating and having a job to do in a warm place may override thoughts of independence.
  • If Greenland were closer aligned with the US, capital availability should rise and the cost of finance should fall.  
  • While Trump’s tweet of Trump Tower is a joke, the message remains that the US could do much for the longer-term development of the Greenland economy.
  • We strongly advise any investor should visit Greenland. It is the most amazing island and place to visit.
  • The retreat of the ice sheet has left bare bedrock around the coast making geological fieldwork surprisingly simple through the summer months ensuring Greenland will be a land of opportunity for explorers and miners for years to come.

*SP Angel act as nomad and broker to Bluejay Mining

 

Currencies

US$1.1078/eur vs 1.1101/eur yesterday.  Yen 106.41/$ vs 106.38/$.  SAr 15.383/$ vs 15.270/$.  $1.209/gbp vs $1.214/gbp.  0.678/aud vs 0.678/aud.  CNY 7.060/$ vs  7.046/$.

 

Commodity News

Precious metals:         

Gold US$1,506/oz vs US$1,508/oz yesterday

   Gold ETFs 77.6moz vs US$77.6moz yesterday

Platinum US$850/oz vs US$850/oz yesterday

Palladium US$1,458/oz vs US$1,460/oz yesterday

Silver US$16.99/oz vs US$17.03/oz yesterday

           

Base metals:   

Copper US$ 5,796/t vs US$5,775/t yesterday

Aluminium US$ 1,804/t vs US$1,803/t yesterday

Nickel US$ 16,070/t vs US$16,100/t yesterday

Zinc US$ 2,263/t vs US$2,259/t yesterday

Lead US$ 2,040/t vs US$2,035/t yesterday

Tin US$ 16,255/t vs US$16,385/t yesterday

           

Energy:           

Oil US$59.3/bbl vs US$59.6/bbl yesterday

Natural Gas US$2.185/mmbtu vs US$2.187/mmbtu yesterday

Uranium US$25.15/lb vs US$25.15/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$87.1/t vs US$87.1/t

Chinese steel rebar 25mm US$561.1/t vs US$561.4/t

Thermal coal (1st year forward cif ARA) US$63.6/t vs US$63.6/t

Coking coal futures Dalian Exchange US$200.2/t vs US$200.2/t

           

Other:  

Cobalt LME 3m US$32,600/t vs US$32,600/t

NdPr Rare Earth Oxide (China) US$42,929/t vs US$42,951/t

Lithium carbonate 99% (China) US$8,018/t vs US$8,022/t

Ferro Vanadium 80% FOB (China) US$39.2/kg vs US$39.2/kg

Antimony Trioxide 99.5% EU (China) US$5.3/kg vs US$5.3/kg

Tungsten APT European US$210-225/mtu vs US$210-225/mtu

 

Battery News

Minewater as geothermal energy

  • The Financial Times reports on using minewater in the UK as a source of energy. Two billion cubic meters of water run beneath abandoned coal mines that are heated by surrounding rocks. Minewater is high in pollutants, but it could be put to good use as a source of geothermal energy.
  • The publicly funded Coal Authority estimates that there is enough geothermal energy in coal mines to heat 180m homes. It could also be used in horticulture and leisure schemes. A quarter of all UK homes and businesses sit on former coalfields.
  • Lanchester Wines’ facility in Gateshead has by far the UK’s biggest commercial minewater heating scheme. It supplies all the warehouse’s needs, keeping millions of bottles of wine temperate, and also heats a neighbouring distribution depot.

 

Company News

Arc Minerals* (ARCM LN)   4.3p, Mkt Cap £31m – Drilling indicates copper over 300 x 650m at Cheyeza East

(The Cheyeza project is 66% owned by Arc Minerals through its holding in Zamsort)

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  • Arc Minerals continue to report copper mineralisation in drilling on the Cheyeza East prospect in Zambia close to First Quantum’s Trident mine complex
  • Drilling so far confirms mineralisation over 300m x 650m with copper in a relatively shallow formation seen from surface in most areas.
  • The team are also looking to drill at the West Lunga and Lumbeta prospects.
  • Drilling at Cheyeza East indicates >300m width to the orebody and some 650m of strike length
  • It is still too early to guess at the total tonnage that may be contained but this is looking to be a fairly substantial tonnage of contained copper mineralisation.
  • Drill result from holes 6, 7 and 9:
    • Hole 6:  19.70m grading 0.59% Cu from 15.30m depth
      • Inc. 5.80m at 1.00% Cu from 27.70m
    • Hole 7:  11m @ 0.75% Cu from 69.40m
      • Inc. 3.9m @ 1.42% Cu from 72.10m
    • Hole 9:  intersected 9.00m @ 0.63% Cu from 11.90m
      • Inc. 5.00m @ 0.92% Cu from 14.90m
  • Drill holes 8, 9, 10 & 12 show the discovery to be at least 650m long.
  • Mineralisation seen so far shows copper grades within 100m of surface indicating good open pit potential if the discovery measure up to be a new mine in time.
  • Further work at Lumbeta and West Lunga target indicate significant targets and potential for the land package to contain a number of discoveries which could potentially see a number of copper discoveries.
  • A third drill rig is heading for the Lumbeta target
  • Cheyeza East higher-grade mineralisation is hosted in an extremely weathered black saprolite host, with remnant tremolite crystals still evident from the weathered protolith. Deep oxidation and supergene processes have formed an apparent sub-surface, secondary oxide tabular shaped body, that appears to have been influenced meteoric waters. Most of the holes drilled to date have intersected the black saprolite although not all have remnanat tremolite crystals.
  • Kalaba: the Kalaba mine pilot process plant continues intermittently to batch process material resource needs to be refined to better enable the feed of ~1% copper ore for processing.
  • Previous drill results at Cheyeza East:
  • Hole 1: 3.94m, 0.72% copper from 35.8m down hole
  • Hole 2: 25m of 1.05% copper mineralisation from just 2m depth including:
  • Hole 3: hole lost due to problem in drilling.
  • Hole 4: 18.00m at 2.35% Copper from 30.60m down hole including:
  • Hole 5: 28.5m @ 1.32% copper inc.

Conclusion:  Results from holes 6, 7 and 9 are not as high grade as seen in 2, 4 and 5 but are supportive for a potential economic discovery given the relatively shallow depth of the copper mineralisation.

*SP Angel acts as nomad and broker to Arc Minerals.

 

Asiamet Resources (ARS LN)   3.65p, Mkt Cap £38.2m – Raising US$2.1m for further work at BKM and Beutong

  • Asiamet Resources reports that it has raised approximately US$2.1m (£1.75m) through the placing of 50m shares at price of 3.5p/share. The new shares represent approximately 4.5% of the enlarged issued capital of the company.
  • The additional funds will help to develop “a number of value enhancement initiatives outlined in the recently completed BKM Feasibility Study” as well as a number of permitting, Government and stakeholder engagement tasks and “initial metallurgical test-work on mineralisation from upper parts of the Beutong deposit”.
  • Outlining these tasks, CEO, Peter Bird, also confirmed that “Progressing the permitting and funding options for BKM and Beutong continues to be a key focus of the management team”.

 

Avesoro Resources (ASO LN)   86.5p, Mkt Cap £70.6m – Major shareholder expresses interest in acquiring the balance of the company

  • Avesoro Resources has announced that its major shareholder, Avesoro Jersey Limited (AJL), which currently owns 72.9% of the company has expressed a (non-binding) interest in acquiring “all of the issued and outstanding shares of the Company not already owned by AJL.”
  • The company says that AJL’s proposal, at an indicated acquisition price of £1 per share, “is supported by holders of an additional 12.9% of the common shares”.
  • The proposal is to be considered by a special committee comprising the independent directors  to consider the proposal, take independent legal advice and commission an independent valuation.
  • The company also takes the opportunity to issue a progress report on recent developments at the Youga mine in Burkina Faso where mining and milling has now resumed following the previous suspension arising from an influx of armed artisanal miners and the insertion of military units to secure the property.
  • Avesoro Resources reports that “no damage was sustained to the process plant or its associated facilities with the mining equipment being the focus of the incident”.
  • Ore dilution has been significant “at the Gassore pit at Youga, and following recent events, the Company is currently assessing the longer-term viability of ongoing mining operations at Youga and will make a further announcement in this regard in due course”.
  • At the New Liberty mine in Liberia, earlier heavy rainfall led to a suspension of ore mining for an initial period of ten days. “As a result of further substantial rainfall and a reassessment of the situation, it is now anticipated that there could be no access to ore until early September depending on the amount of rainfall in the meantime. The mining fleet is continuing to focus on waste stripping operations during this time. Additionally, due to limited mill stockpiles, it is expected that gold shipments in August will be less than 1,000 ounces.”
  • As a result of the disruption at both Youga and New Liberty, “Gold production and cost guidance for the full year is currently under review. Previous guidance is suspended pending that review. Gold production for July and August is expected to be c.16,000 oz and it is therefore anticipated that full year guidance will be materially reduced from 180,000 - 200,000 koz range announced on June 10, 2019.”

Conclusion: The operating problems at Youga and New Liberty, linked with the declared support of 12.9% of the shareholders for a proposal for the major shareholder to acquire the balance of the company may encourage other shareholders to support the plan.

 

Beowulf Mining* (BEM LN)   6.6p, Mkt Cap £39m – Interim statement highlights Kallak permitting process

  • Beowulf Mining report interim statement indicates that Swedish government acknowledges Beowulf has been waiting an excessive period of time for a permitting decision on the Kallak iron ore mine.
  • Management plan to complete a scoping study after the license is awarded and the formation of a development taskforce with the Jokkmokks Kommun to plan for the resurgence of Jokkmokk along with provisions to support Sami, reindeer herder, entrepreneurs.  
  • Graphite: Beowulf’s Fennoscandian exploration team is investigating graphite prospects
  • Beowulf posted a loss of £434,626 in H1 vs £442,238 yoy mainly down to a lower share-based payment chargeoffset by an increase in director fee costs, lower overall overheads and an increase in the share of loss from associate.
  • Cash: £1,177,823 and end June vs £2,140,369 yoy
  • Vadar: Beowulf increased its investment into Vadar, in Kosovo, run by Luke Bryan, to 37.55% for £750,000. A further £115,000 with take its ownership to 40.1%.
  • On the Mitrovica licence, Vadar has porphyry-related mineralisation including a high-sulphidation epithermal gold target and a low-sulphidation lead-zinc-silver target and primary porphyry copper mineralisation in the southern part of the licence area.

Conclusion:  The mining industry is unimpressed by the Swedish Government’s opaque and lengthy review process for the Kallak iron ore mine, despite the Mining Inspectorate in Sweden recommending to the Government that a permit be awarded nearly four years ago in October 2015 and Beowulf’s approximate £7.1m investment in Kallak.  Beowulf has been forced to wait, showing great patience, but the ongoing situation is causing significant damage to Sweden’s reputation as an attractive destination for mining investors.

*SP Angel acts as nomad and broker to Beowulf Mining

 

BHP (BHP LN)   1,680p, £97.2bn – Declares record final dividend of 78UScents/share

  • BHP reports that with a 124% rise in attributable profit for the year ending 30th June 2019 to US$8.3bn (2018 – US$3.7bn) it has declared a record final dividend of US$0.78/share bringing the total for the year to US$1.33/share.
  • Chief Executive, Andrew Mackenzie explained that the final dividend came “on top of a record US$17 billion already returned to shareholders in the 2019 financial year.” He went on to say that the company had benefitted from higher prices and record production levels in some of its operations resulting in strong operating cash flows and that  “We enter the 2020 financial year with positive momentum and a strong outlook for both volume and cost”
  • Analysis of the distribution of the underlying EBITDA contribution of the principal product groups included in the announcement shows that the iron-ore operations contributed US$11.13bn (48%) of the total US$23.16bn compared to 39% (US$8.93bn) in 2018.
  • Copper operations represented approximately 20% (US$4.55bn) of EBITDA in 2019 (28% or 6.52bn) in 2018 while the UD$4.07bn (18%) contribution of coal was a similar proportion (19% or US$4.40bn) to that in 2018.
  • Commenting on the outlook for the outlook for the global economy, BHP said that it expected “global growth to register near the lower end of a range of 3¼ per cent to 3¾ per cent for the 2019 calendar year. Any further escalation in trade protection or loss of business confidence is a downside risk for consensus views of the world economy, commodity demand and energy and metals prices in the 2020 financial year.”
  • The company also said that it continued “to expect China's economic growth to slow modestly in the 2019 calendar year to around 6¼ per cent … [and that] … Over the longer term, we expect China's economic growth rate to decelerate as the working age population falls and the capital stock matures.”
  • The company’s website also points to weakening commodity prices and volatility in financial markets in recent weeks and says that “We revised our near–term world growth mid–case downwards twelve months ago to reflect the negative impact of rising trade protection, partially offset by more expansionary domestic policy settings. While we retain that forecast in this update, we acknowledge emerging downside risks based on recent policy signposts. While end–use demand has been somewhat stronger than expected in the calendar year to date, and monetary policy settings in many economies have been eased, the continuing uncertainty with respect to trade remains a stark negative offset.”
  • The company also says that “While we stress that an increase in trade protection is not, on its own, a recessionary level shock for the global economy, it is an exceedingly unhelpful starting point for the pursuit of broad based growth across regions, expenditure drivers and industries …  we encourage policymakers to prioritise structural reforms at home as the surest route to sustainable productivity growth, and ultimately, prosperity … [and that] … In this environment, it is important to emphasize that many advanced and emerging economies are still seeking to open up further and increase their exposure to international trade and cross–border investment”

 

Highland Gold (HGM LN)   213p, Mkt Cap £775m – Death of a Director

  • Senior Independent Director Terry Robinson passed away on 16 August 2019 following a brief illness.
  • Mr Robinson, a qualified chartered accountant, joined the Board of the Company in 2008 following a long and distinguished career in mining and international business including roles with Lonrho, Raspadskaya and Katanga Mining.
  • Terry acted as a member of Audit, HSE and Remuneration & Nomination Committees.
  • “On behalf of the Board and everyone at Highland Gold, I would like to offer our deepest, sincerest condolences to Terry’s wife and family,” the Company said in the announcement yesterday.
  • The Company will seek a new independent director in due course.

 

IronRidge Resources* (IRR LN)   13.75p, Mkt Cap £42.8m – Cape Coast lithium metallurgical test work

  • West-Africa explorer deliver results from 54kg compositive of diamond drill core from across the Ewoyaa deposit footprint used to generate P1-type coarse pegmatite bulk sample at 1.68% Li2O head grade.
  • Metallurgical work yielded 9.96kg high-grade spodumene concentrate at 6.29% Li2O with low level contaminants (1.07% Fe2O3, combined 1.48 % Na2O plus K2O) from simple crushing and screening for feed material into the Dense Media separation.
  • The work focuses on the next phase in ‘upscaling’ the process flow-sheet using industry standard technology, with scope for optimisation to incorporate magnetic separation to lower and iron content and enhance recoveries above 75%.
  • The concentrate produced was sent to ANSTO for preliminary tests to determine the amenability to the production of lithium hydroxide. This work is well advanced and will be reported in the near future.

Conclusion – Premium +6% spodumene grades are fundamental for differentiating projects against a global market in oversupply. The early result is significant for IronRidge, particularly with the use of cost effective industry standard equipment.

*SP Angel act as nomad and broker to IronRidge Resources

 

Keras Resources* (KRS LN)   0.49p, Mkt Cap £11.2m – Calidus drill campaign to add value on potential Warrawoona gold resource expansion

(Keras holds 723m shares representing 33.8% of Calidus (CAI AU) t at a value of A$25m (£14m).

BUY, Valuation rises to 1.08p from (1.04p last published on 30.07.19)

Click for our last full note on Keras

  • Keras Resources reports the start of a new drill campaign by Calidus Resources in Australia where it owns 33.8% of Calidus stock
  • Calidus is running a 15,000m drill campaign for infill drilling, to extend the existing resource Calidus’ 1.25Moz Warrawoona Gold Project
  • The idea is to extend the scale of the existing Pre-Feasibility Study and to deliver a Definitive Feasibility Study in Q3 next year
  • The campaign will, sensibly, also look for some new greenfield mineralisation around the Warrawoona project area.
  • Drilling includes:
    • 6,500m of RC and diamond core drilling infilling proposed underground resources at Klondyke within the Warrawoona Gold Project
    • 3,900m of RC drilling at Klondyke aiming to convert Indicated to Measured Resources during initial years of production (as per PFS)
    • 1,600m of shallow RC drilling at Klondyke East aimed at expanding pit limits
    • 3,000m of RC drilling at Klondyke West testing a number of high-priority regional exploration targets
  • Calidus recently placed A$9m worth of stock with ASX gold miner, Alkane Resources (ALK AU) and a number of institutional investors in Australia to pay for the drill program and work up the DFS.
  • PFS - Warrawoona highlights:
    • IRR - 47% post-tax
    • NPV - US$118m at an 8% discount rate assuming a US$1,400/oz gold price
    • CAPEX - US$66.5m
    • AISC costs - US$811/oz LOM
    • JORC Probable Ore Reserve - 8.9Mt grading 1.5g/t for 418koz gold at Klondyke.
    • Gold production estimated at 97,000ozpa
    • Throughput 2mtpa mining rate and conventional CIL processing.
    • LOM – 6 years
  • Warrowoona gold project grades include (recent drilling):
    • 13m grading 11.1g/t gold form from 30m, including:
      • 1m @ 107.16g/t Au from 36m
    • 13m @ 5.58g/t Au from 46m
    • 10m @ 6.81g/t Au from 47m, including:
      • 1m @ 50.77g/t Au from 49m
    • 22m @ 2.13g/t Au from 19m
    • 5m @ 3.16g/t Au from 126m
  • Valuation: our valuation on Keras is 1.08p based on the  value of Calidus Resources shares to A$0.035c/s.
  • Calidus currently represents around 58% of value for Keras Resources with the remaining value based on the NPV of forecast cash flow from the Nageya manganese mine in Togo.  
  • Keras recently completed a bulk shipment to an unnamed manganese alloy producer which showed the Nageya ore was best suited for silico manganese alloy production.
  • The company is now waiting on the Togo government for issue of a full-scale mining license before ramping up production to a rate of around 6,000t a month in accordance with the existing mine plan and machinery. (Current plant capacity is for 75,000t per month).

Conclusion: Calidus shares should continue to drive value for investors in Keras while the company awaits the results of its manganese mine permit in Togo, West Africa. 

Alkane Resources’ support in the recent Calidus funding round is interesting as it is confirms their ongoing interest in the Warrawoona Gold Project.

We believe Alkane may be looking to add to its gold resources / projects and with a market cap of around A$200m it has the paper for a potentially easy acquisition should it wish to approach the other major shareholders.

*SP Angel act as Nomad and broker to Keras Resources

 

Kodal Minerals* (KOD LN)   0.07p, Mkt Cap £6.5m – Positive lithium metallurgical test work results

  • Southern Mali mineral exploration and development company report metallurgical test programmes undertaken as part of the Company’s feasibility assessment to be utilised for design the proposed process flowsheet. The Company commissioned Independent Metallurgical Operations in Perth to carry out the Feasibility Study DMS HLS test work programme. The programme was supervised by the Feasibility Study plant engineering consultant, DRA Global in Perth.
  • The test work demonstrates initial processing via a Dense Media Separation plant, returning primary concentrate grades of 6.0% Li2O at recoveries up to 70% for Ngoualana Prospect mineralisation, with a flotation circuit to be added to improve overall recoveries.
  • A master composite comprising 70% Sogola-Baoulé and 30% Ngoualana (replicating the Indicated JORC Resource estimate distributions) tested, with the assay producing a head grade of 1.27% Li2O, and low Fe2O3 grade of 0.57%. Initially processing focused on the DMS circuit was followed by downstream flotation test work which improved overall recovery to 75%, producing a 6.0% grade Li2O concentrate.
  • The work demonstrates success via three stages of flotation (roughing and two stages of cleaning), once the ore has been effectively prepared by: rejection of slime particles (-20 micron), magnetic particles removal (via magnetic separation) and mica removal.
  • Kodal reiterate the design concept for the Bougouni Lithium project will be to defer installation of the flotation circuit to reduce upfront capital costs, given the Ngoualana material is amenable to DMS only processing.

*SP Angel act as Financial Advisor and broker to Kodal Minerals. A partner at SP Angel acts as Chairman to the company.

 

Power Metal Resources* (POW LN)   0.45p, Mkt Cap £1.7m – Strategic and operational review

  • The completed strategic and operational review indicates the company remain focused on large scale metal discoveries to feed into the swelling battery industry, focusing on nickel, copper and cobalt. Power Metals will concentrate on the application of innovative and cost effective exploration techniques to control costs while maximising the chance of a discovery.
  • The Company will also seek to maintain an external dialogue with larger organisations with a view to project farm-in, joint venture or disposal, where such steps could materially improve the value of a project in the interest of shareholders.
  • Since the original review in February 2019, the company have successfully relaunched active exploration operations in Cameroon and the DRC.
  • In Cameroon the Company has confirmed its 100% owned project licenses share a similar geology to the nearby substantial Nkamouna cobalt deposit.
  • In the DRC the Company has identified a 6.8km copper anomaly running through the heart of its 70% owed Kisinka copper-cobalt license.
  • The Company remains in discussions with the vendors of the Lizetta II chrome-nickel-cobalt project in the Ivory Coast and is reviewing the potential development options for that project.
  • Since February 2019 the Company has also acquired two additional project interests in Botswana and Tanzania and taken an option for due diligence over an additional cobalt license in the DRC;
  • In Botswana the Company has an 18.26% stake in Kalahari Key Mineral Exploration Pty Ltd ("KKME"), which owns outright a single project, the Molopo Farms Complex ("MFC") nickel-copper-PGM project, in South West Botswana (POW can by 31.12.19 elect to earn-in to a 40% direct MFC project interest by spending US$500,000 on the project by 31.12.20 - upon earn-in POW will hold a 50.96% effective economic interest in the MFC Project).
  • The KKME team in Botswana have completed the helicopter airborne electromagnetic work defining 17 sub-surface targets and very recently the ground geophysics over the top 10 targets, with interpretation and drill targets to follow shortly.
  • In Tanzania POW has acquired a 25% holding in the Haneti nickel project held in joint venture with Katoro Gold plc (LON:KAT) with a right to increase to 35% through a payment of £25,000 by 15 May 2020.
  • A drill programme is to be undertaken over the two principal drill targets at Haneti at the heart of what is considered to be an 80 km potential mineralised strike, and supplementing this, work has identified the presence of lithium pegmatites.
  • Power Metal Resources reiterate following restructuring and refinancing the company has no material debt and a secure working capital position.

*SP Angel act as broker to Power Metals Resources (formerly African Battery Metals)

 

Premier African Minerals* (PREM LN)   0.035p, Mkt Cap £3.2m – Power supply plan for RHA tungsten

  • Premier African Minerals reports that, the Zimbabwe Electricity Supply Authority (ZESA) has notified that it expects to complete the electrification of Premier African Minerals’ 49% owned THA Tungsten Mine by the end of November 2019.
  • The previously announced investment in the mine by Zimbabwe’s National Indigenusation and Economic Empowerment Fund (NIEEF) “has provided RHA with the funding to commence with the electrification of RHA”.
  • CEO, George Roach said that “ZESA has now set out that the complete infrastructure that is needed at the mine site will be completed towards the end of November 2019. With this known, work for bringing the underground operations back on stream can commence.”
  • The work is planned to be completed in two phases. The first phase will entail the commissioning of 1.5MVA supply plus the supply of the required materials. The second phase of the work includes the commissioning of a proposed 400m long 33kV overhead line “and 500kVa 33/0/0.4kv pad mounted soft start up to high voltage of the transformer.”

Conclusion: The electricity supply agreement is a trigger for the company to re-start work to restore underground mining at the RHA mine.

*SP Angel have an agreement with Premier African Minerals as a result of the acquisition of Northland Capital Partners

 

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

James Mills -0203 470 0486

 

Sales

Richard Parlons – 0203 470 0472

Jonathan Williams – 0203 470 0471

Abigail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535

 

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

 

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

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

 

Sources of commodity prices

 

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel

Bloomberg

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

LME

Oil Brent

ICE

Natural Gas, Uranium, Iron Ore

NYMEX

Thermal Coal

Bloomberg OTC Composite

Coking Coal

DCE

RRE

Steelhome

Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal

Tungsten

Metal Bulletin

 

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