SP Angel . Morning View . Tuesday 09 06 20

Markets drag miners lower despite higher metals prices

Spot iron ore rising over USD100/t

CLICK FOR PDF

 

MiFID II exempt information – see disclaimer below    

         

Chaarat Gold* (CGH LN) - BUY– Kyzyltash development roadmap

Dark Horse Resources Ltd (DHR AU) – Scandinavian exploration projects 

Ormonde Mining* (ORM LN) – Update on Spanish gold projects

Tietto Minerals (TIE AU) – Recent drilling extends footprint of Abujar Gold Project

Vast Resources* (VAST LN)  – Equipment arriving at Baita Plai ahead of the Jul/20 commissioning

 

China - Excavator sales surge 68% YoY

  • Excavator sales maintained solid growth in May, suggesting that stimulus aimed at boosting infrastructure projects is working. 
  • Excavator sales increased 68% YoY to 31,744 units in May, compared with April's 60% and market forecasts of 50% according to data from the China Construction Machinery Association. 
  • For the first five months of 2020, China's excavator sales stood at 145,800 units - up 19.4% from the same period last year (SMM News). 

 

Iron ore – Spot iron ore prices rise to US$102.3/t as disruption in Brazil continues to grow

  • Margins for Rio Tinto, BHP and Anglo American in iron ore continue to grow benefitting from:
    • High iron ore prices
    • Weak local currencies, the AUD and SA rand
    • Low oil prices, a major cost component for a commodity that is mainly moved by diesel-fuelled trucks, trains and ships (HFO)

 

Poland – JSW suspends production due to new COVID-19 cases (FastmarketsMB)

  • Coking coal prices may remain unaffected as European steel producers are either stopped or at minimal production levels

 

Stimulus plans for new EV charging infrastructure to drive demand for copper 

  • China recently committed to accelerated construction of charging capacity at its National People's Congress
  • Global new electric passenger sales forecast to fall by 18% to 1.7m vehicles this year (BNEF) (Reuters)
  • China commitment see EV sales at 25% of total passenger car sales by 2025.
  • This will require plenty of copper cabling
  • European EV sales at 4.3% of new registrations in Q1 (ACEA)
  • Germany €130bn (US$147bn) coronavirus stimulus plan doubles subsidies to €9,000/EV
  • EU €750bn ‘green stimulus’ includes €20bn to boost sales of ‘clean vehicles’ including 2m new electric and hydrogen charging stations by 2025

UK government likely to announce new vehicle scrappage scheme for diesel and petrol vehicles

  • July 6th is rumoured to be the day Boris Johnson will announce a new car scrappage scheme to boost EV’s and restart the economy. (Telegraph)
  • It is reported drivers will be given up to £6,000 to swap their combustion engine vehicles for electric ones.
  • The announcement is expected to be part of a raft of measures to stimulate the UK economy in the wake of the pandemic.
  • There are few details on the scheme, but it is a scrappage scheme so is likely to be more nuanced than the subsidy currently offered by the UK government. (The Next Web)
  • Currently the government offers a subsidy of up 35% or £3000 off the purchase price of a low carbon passenger vehicles. The vehicle must produce less than 50g/km of CO2 emissions and travel at least 70 miles without any emissions. (Gov.uk)
  • The current scheme also provides subsidies for motorbikes, mopeds, taxis and large vans and trucks.

 

Stimulus tally

  • $140bn - ChinaPBOC buying CNY1tn of bank loans issued by local lenders to small firms this week in an effort to ease the flow of credit. 
    • We have previously assumed China at $909m $344bn of China stimulus + $565bn in special bonds for infrastructure by local authorities
    • $1.1tr - Japan - further stimulus to combat pandemic including significant direct spending to stop the coronavirus pandemic pushing the country's economy deeper into recession. The 117tn-yen stimulus, funded partly by a second extra budget, will be on top of another 117tn package already rolled out last month - and takes total spending in Japan at 234tn yen ($2.18tr) - 40% of Japans GDP. To fund the costs, Japan will issue an additional 31.9 tn yen in government bonds under the second supplementary budget for the current fiscal year ending in March 2021. 
    • $825bn (€750bn) EU - European Commission aid package yesterday aimed at supporting EU nations hit by the pandemic.
    • This is an expansion on the previous $543bn (€500bn ) EU Crisis Recovery fund backed France and Germany + $963bn (€750bn) ECB scraps limits on sovereign bond purchases. ECB PEPP buying running at around €250bn
    • US$260bn - India representing 10% of GDP. 
    • $62bn - South Korea – The government unveiled a 76tn won ($62bn) “New Deal” aimed at supporting the economy amid the pandemic focused on creating jobs and new industries through 2025.
    • $13.3bn - Saudi Arabia central bank will inject 50bn riyals ($13.3bn) into the banking system on top of US$43.7bn already pledged
    • South African reserve bank buys ZAR10.2bn (US$119m) South African government bonds in May
  • $56bn - The PBOC also announced a Rmb400bn ($56bn) purchase loan program to boost available credit by supporting bank loans to small businesses.
  • $1.55tn – China - Bloomberg estimates a ‘fiscal impulse of more than 11% of nominal GDP’ which was estimated at US$14.14tn 
  • $2tn - US fiscal package approved by Congress. US may add $0.6t state aid for mortgage markets and travel industries
    • The House passed a $484bn aid package to rescue small small businesses, hospitals ($75bn) and coronavirus testing ($25bn).
    • $2tn US – Trump looking at $2tn infrastructure fund
    • $700bn – US + Fed rate cut to 0-0.25% last night. The $700bn QE to buy Treasuries and mortgage-backed securities.
    • US Fed may soon start buying in up to $750 billion of corporate debt and ETFs
    • US Fed has flooded all markets with dollar liquidity through repo and swap lines.
  • EU Finance Ministers have so far failed to agree on a strategy to mitigate the economic impact of the pandemic.
    • The pandemic emergency purchase programme (PEPP) and asset purchase programme (APP) have been reiterated with a cap of €750bn and €120bn, respectively.
    • The bank is reported to have used €100bn of the PEPP so far.
  • $825bn (€756bn) Germany – Bundestag approved €156bn in extra borrowing and ~€600bn in emergency funds
  • $996bn (108.2tn yen) – Japan +  BoJ pledge for unlimited quantitative easing
  • 400bn (£330bn) UK + $242bn (£200bn) UK QE from BoE & no business rates plus £25,000 cash grants for hospitality sector
  • $387bn (€304bn) France, $200bn (€200bn) Spain, $214bn (A$320bn) Australia Australia - RBA ready to buy bonds again.
  • $78bn (C$107bn) Canada, $32bn, Singapore, $22.6bn India, $19.3bn HK, $13.7bn South Korea, $10bn Switzerland, $8.4bn Italy, $7bn NZ, $3.5bn Ireland, $2bn Taiwan, $0.75bn Indonesia,
  • India - increased fiscal support by 2.7 per cent of GDP with funds for lower-income households.
  • Philippines - proposing an additional $26bn stimulus.
  • Indonesia - adding $43bn to soften the impact on SMEs.
  • South Korea - New Deal will create jobs and foster industries such as 5G and artificial intelligence.
  • Bank of Thailand creating a corporate bond fund.
  • Argentina to default on $10bn of dollar debt issued til the end of the year. Does not affect the $70bn that Argentina is currently in talks to restructure.
  • $1,000bn - IMF available + $12bn World Bank, 

>15tn from 14.8tn

 

Dow Jones Industrials

 

+1.70%

at

27,572

Nikkei 225

 

-0.38%

at

23,091

HK Hang Seng

 

+1.85%

at

25,235

Shanghai Composite

 

+0.62%

at

2,956

 

Economics

 World Bank estimates emerging economies to post the first GDP drop since 1960.

  • Global GDP is expected to record a 5.2% drop this year with EM falling 2.5%.
  • This will see 70-100m people pushed into extreme poverty.
  • Advanced economies will contract 7%, led by a 9.1% decline in the eurozone.
  • Among other selected growth projections are one for the US (-6.1%), China (1.0%) and India (-3.2%).
  • “This is the first recession since 1870 triggered solely by a pandemic, and it continues to manifest itself… given this uncertainty, further downgrades to the outlook are very likely,” World Bank said.
  • Growth is due for a rebound in 2021 growing 4.2%.

 

US – The Fed expanded the Main Street Lending Programme to include more eligible lenders with the programme to be launched “soon”.

  • The programme that was first announced March 23 covers three facilities for a total of up to $600bn.
  • The minimum loan size has been reduced to $250k from $500k while borrowers will now be able to defer principal payments on their loans for two years, up from previously announced one year (interest payments will still be deferred for one year).
  • Loan recipients are still limited to 15,000 employees or fewer and an annual revenue cap of $5bn.
  • “Supporting small and mid-sized businesses so they are ready to reopen and rehire workers will help foster a broad-based economic recovery,” Fed Chair Jerome Powell said in a statemen yesterday.
  • S&P index rally from March lows recovers all this year’s losses.

 

UK – Consumer spending contracted 27%yoy last month led by a 36.9%yoy decline in non-essential goods, Barclaycard data showed.

  • Spending on essential items was almost flat on the previous year (0.9%yoy).
  • Personal debt has also climbed during the pandemic as households added around £6bn of debt as government measures to keep people away from work weighed on people’s earnings.

 

Japan – Labour earnings dropped for the first time in four months in April amid a nationwide state of emergency over the coronavirus.

  • Cash earnings dropped 0.6%yoy with part time employees hit the hardest with their overtime compensation falling by almost a quarter.
  • Declining incomes will weigh on consumer spending that accounts for more than half of the economy and recorded a decline in the first quarter.
  • Markets expected a 1.0%yoy drop.
  • Separately, machine tool orders halved (-52.8%yoy) compared to the previous year as businesses paused investment amid the pandemic.
  • Japan - Eco Watchers outlook index recovered to 36.5 in May vs 16.6

 

Germany – Pandemic affected economic data from April continued to paint a dire picture of economic activity as the government kept the lockdown in place.

  • Declines in exports and imports accelerated in April to -24.0%mom and -16.5%mom, respectively.
  • These followed decreases of -11.7%mom and -5.0%mom in the previous month.
  • German industrial production fell to 17.9% in April vs -8.9% in March

 

France – The economy is estimated to post a 10% drop this year and will take two years to recover to pre-crisis levels, the central bank said.

  • The Bank of France projects that even with robust growth in the next two years unemployment will continue increasing to reach a record high close to 12% in H1/21 before declining to 9.7% by the end of 2022.
  • Unemployment was around 8.5% on entering into 2020.
  • If the pandemic was to intensify again and the state maintained restriction, the recovery would be delayed and production would be down 16% this year.

 

China - US-China trade surplus rose to US$27.9bn in May vs US$22.8bn in April but is still down 12.7% for the year

  • China exports to the US fell 14.3% to 137bn
  • China imports from the US fell 7% to US$46bn
  • Trade surplus of US$62.93bn surplus in May vs US$45.33bn in April due to ongoing collapse in imports
  • Imports fell 16.7% in US$ terms vs 14.2% in April –
  • Exports fell 3.3% in May vs +3.5% in April
  • May imports include a record 11.3mbbls/d of oil imports as the Chinese roads filled with lorries, busses and vehicles returning to work.
  • China – air passenger volume rises to >1m per day representing some 60% of pre-COVID-19 levels

 

Taiwan - Surplus US$4.7bn in May vs US$2.2bn

  • Imports fell 3.5% in May vs 0.5% in April
  • Exports fell 2% vs -1.3%

 

Hong Kong - government to bail out Cathay Pacific with HK$30billion in loan, direct stake

  • The Airline plans a HK40bn (US$5.2bn) recapitalisation backed by the government’s HK$30bn bailout
  • The government will buy HK$19.2bn in preferential shares and warrants for another HK$1.9bn at a later date + a HK$7.8bn bridging loan
  • Existing shareholders Swire Pacific, Air China and Qatar Airways will also subscribe to a HK$11.7 billion rights issue (South China Morning Post)

 

Iran – says it will execute a CIA agent involved with the killing of Qassem Soleimani

  • Iran believes Mahmoud Mousavi-Majd worked for the CIA and Mossad and gave Soleimani location to the US.

 

Currencies

US$1.1265/eur vs 1.1287/eur yesterday.  Yen 107.93/$ vs 109.53/$.  SAr 16.835/$ vs 16.807/$.  $1.268/gbp vs $1.268/gbp.  0.694/aud vs 0.697/aud.  CNY 7.082/$ vs 7.078/$.

 

Commodity News

Precious metals:          

Gold US$1,699/oz vs US$1,694/oz yesterday - Gold prices rise as US funds move risk-off on reports of build-up of large short positions in the market

   Gold ETFs 100.3moz vs US$100.4moz yesterday

Platinum US$834/oz vs US$831/oz yesterday

Palladium US$1,981/oz vs US$1,968/oz yesterday

Silver US$17.60/oz vs US$17.62/oz yesterday

            

Base metals:   

Copper US$ 5,709/t vs US$5,658/t yesterday – China May unwrought cu imports fell 5.5% mom to 436kt, but are 20.8% higher yoy.

  • Copper concentrate imports representing about 20/30% of Chinese usage fell 16.7%mom to 1.69mt, falling 8.1% yoy.

 

Panama - Union pressures authorities to reopen Cobre Panama mine 

  • The main workers union representing employees of the largest copper mine in Central America is pressuring authorities to reopen the mine as soon as possible, due to suspension of labour contracts in late April. 
  • The country's federal government split all businesses across six blocks as part of a gradual reopening, and placed the Cobre Panama mine in the sixth block alongside concerts and carnivals. 
  • The mine owned by First Quantum has been under care and maintenance since the 7th of April, and around 1,800 people from the unit's 7,000 workforce have had their wages frozen (Fastmarkets MB). 
  • First Quantum cut its full-year 2020 copper guidance by 75,000 tonnes to 755,000-805,000 tonnes, while expecting Cobre Panama to produce 210,000-235,000 tonnes of copper this year. 

 

Copper output rises at top Chilean mines despite coronavirus 

  • Copper production in Chile's top mines rose in April despite the government introducing measures aimed at halting the spread of coronavirus. 
  • State miner Codelco saw production rise 2.8% YoY in April to 133,300 tonnes, whilst production in the four months of 2020 was 3.8% higher than the same period in 2019.
  • The world's largest mine, BHP's Escondida, produced 102,600 tonnes of copper in April- 11.4% higher than the same period last year, and an increase of 9% so far in 2020. 
  • Chile's total copper production rose 2.6% year-on-year 470,600 tonnes in April, and has increased 3.8% this year so far to 1.87mt.  
  • The country's top mines have maintained operational capacity by minimising workers commuting from large cities, and the country's mining minister credited both public and private measures aimed at protecting workers. 
  • Despite mines continuing to produce copper, the value of exports has been hit by the plummeting global copper price and sharp drop in demand from China (Reuters). 

Aluminium US$ 1,597/t vs US$1,594/t yesterday

Nickel US$ 12,950/t vs US$12,875/t yesterday

Zinc US$ 2,025/t vs US$2,008/t yesterday - Survey of 49 zinc smelters shows zinc and zinc alloy output fell 6.3% to 401kt in May

  • Smelters are reported to be struggling to secure concentrates (Antaike, China Nonferrous Metals Industry Association)

Lead US$ 1,753/t vs US$1,740/t yesterday

Tin US$ 16,785/t vs US$16,620/t yesterday

            

Energy:            

Oil US$40.9/bbl vs US$42.8/bbl yesterday

Natural Gas US$1.817/mmbtu vs US$1.767/mmbtu yesterday

Uranium US$33.15/lb vs US$33.15/lb yesterday

            

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$102.3/t vs US$97.5/t - Iron arrivals at Chinese ports increased last week 

  • A total of 94 vessels carrying 15.38mt arrived at major Chinese ports last week- up 440,000t from the week before and 1.13mt from the same period last year (SMM News). 
  • Iron ore deliveries leaving Australian ports increased 2.43mt last week to 19.06mt- up 3.37mt compared to last year. 
  • Shipments departing Brazil expanded 1.26mt to 7.32mt- about 340,000t higher than the same period; however, uncertainty over how Covid-19 will affect output and shipment in the near term remain.

Chinese steel rebar 25mm US$532.9/t vs US$532.6/t - 

European steel industry calls on EU to cut import quotas - 

  • European steel producers have urged the EU to slash import quotas, criticising recently proposed adjustments to safeguard measures put in place in 2018. 
  • The measures sought to guard against shipments redirected to Europe after the US imposed a tariff of 25% on steel products to protect its domestic market. 
  • The quotas are damaging for the European Steel industry as the review proposal does not consider the sharp collapse in demand which has occurred as a result of the Covid-19 pandemic. 
  • Steel demand has fallen by 50% since March and 40% of the EU steel workforce have been laid off or are working part-time (Reuters). 
  • Producers including ArcelorMittal, Tata Steel and ThyssenKrupp have issued a joint statement, calling for import quotas to be reduced considerably (Bloomberg).

Thermal coal (1st year forward cif ARA) US$55.0/t vs US$55.8/t

Coking coal swap Australia FOB US$110.0/t vs US$110.0/t – Jastrzebska Spólka Weglowa (JSW) suspends coking coal production in Poland

  • The closure follows a steep increase in Covid-19 cases workers despite special precautions and screening (FastmarketsMB)
  • As of June 9, 2020, there were 2,990 cases of coronavirus confirmed in the mines of JSW 
  • JSW produced 14.8mt of coal and 3.1mt of coking coal last year supplying AreclorMittal and ThyssenKrupp
  • The stoppage ‘will not result in a coking coal or blast furnace (BF) coke shortage in the European market’ as European steelmakers have either stopped blast furnaces or are at minimal production due to lower demand for steel

 

Other:  

Cobalt LME 3m US$30,000/t vs US$30,000/t

NdPr Rare Earth Oxide (China) US$38,973/t vs US$38,780/t

Lithium carbonate 99% (China) US$4,872/t vs US$4,874/t

Ferro Vanadium 80% FOB (China) US$29.5/kg vs US$29.5/kg

Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.1/kg

Tungsten APT European US$215-225/mtu vs US$215-225/mtu 

Graphite flake 94% C, -100 mesh, fob China US$460/t vs US$485/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,350/t vs US$2,350/t

 

Battery News

CATL’s million-mile battery

  • CATL have suggested they have a 1.24 million-mile battery in the works. The reference to a million miles is the lifetime of the battery not the distance on a single charge.
  • The longevity of the battery will be ~16yrs, so 1.24m miles assume 75,000 miles driven per year. (Electronics weekly)
  • Such a battery would be able to charge/discharge several thousand times. (The Driven)
  • The driving range will depend on the battery used. It has been suggested the battery will be used in the Tesla Model 3 which today has a range of 254-348 miles depending on specification.
  • CATL currently produces nickel-cobalt-manganese batteries for passenger vehicles and lithium ion phosphate batteries for buses and trucks. (CATL)
  • Tesla signed a deal with CATL in February to provide batteries for the Model 3 for 2yrs from July 2020.  
  • CATL found Zeng Yuqun has said his company is ready to produce the battery as soon as an order comes in.
  • A typical battery pack has a 150,000 mile/8yr warranty. (Car and Driver)
  • The batteries are expected to cost an additional 10% over batteries CATL is selling to its customers today.

 

Tesla’s China sales rebound

  • Californian EV juggernaut Tesla sold 11,095 Model 3 vehicles in China in May. In April Tesla sold 3,635 vehicles and 10,160 in March. (Reuters)
  • The CPCA reported Tesla sales rebounding 205% from April. NIO also reported a 9% sales increase to 3,436 vehicles in May. (Investors daily)
  • Tesla was the top selling EV brand in China in May. 
  • Chinese auto sales rose for the first time since June 2019.

 

Company News

Chaarat Gold* (CGH LN) 31p, Mkt Cap £162m – Kyzyltash development roadmap

BUY

  • The Kyzyltash deposit is a sulphide-rich, unoxidized refractory project with an estimated 5.4moz at 3.8g/t in total resources.
  • The project represents the second development phase of the Tulkubash/Kyzyltash flagship gold complex, accounts for more than half of the Chaarat resource base and may potentially add up to 300kozpa in gold production.
  • The 2016 feasibility study completed by NERIN (China) valued the project at $309m NPV8% using $1,250/oz gold price.
  • The Company completed a preliminary metallurgical assessment prepared by John Marsden of Metallurgium over potential Kyzyltash ore processing options.
  • The study concluded that oxidation of the sulphide material will be required prior to conventional cyanide leaching with a number of technologies highlighted for further testing and development including:
    • Flotation followed by pressure oxidation-cyanide leaching of the concentrates,
    • Flotation followed by biological oxidation-cyanide leaching of the concentrates,
    • Flotation followed by Albion oxidation-cyanide leaching of the concentrates, and
    • Whole ore Albion oxidation-cyanide leaching.
  • Gold recoveries are anticipated to range between 83% and 90% depending on the choice of technology.
  • The Company is planning to carry a 3,300m drilling programme from 16 PQ drill holes to collect representative metallurgical samples with results expected to be available in 2021.
  • Key milestones for the Kyzyltash development include:
    • Updated feasibility study according to Western standards in 2022
    • Project financing in 2023
    • Construction in 2024 and 2025
    • Production of up to 300koz p.a. is targeted to commence in 2026.
  • Project development is expected to benefit from the technical expertise of the team that was previously involved in development of the Copler project in Turkey that produces 400kozpa both from heap leach and POX plants.

Conclusion: The Company laid out the Kyzyltash deposit development timeline with the team aiming to gradually de-risk the project picking the optimal processing flowsheet to unlock the value in the project that accounts for more than half of the Chaarat resource base and may potentially add up to 300kozpa in gold production.

*SP Angel acts as Broker to Chaarat Gold

 

Dark Horse Resources Ltd (DHR AU) A$0.002c, A$5.0m – Scandinavian exploration projects 

  • Dark Horse Resources reports in an announcement to the ASX that it has reached a ʺpartially binding term sheetʺ for the acquisition of seven gold exploration permits in Finland (the Tampere Gold Project) and also seven exploration permits for tungsten projects (the Bergslagen Tungsten Project) in Sweden. 
  • The total consideration is reported to be €150,000, in cash, plus transaction costs estimated at around €20,000..
  • Previous exploration work on the Finnish gold projects by both the Finnish Geological Survey and by Sotkamo Silver included surface mapping, moraine geochemistry and ground geophysics as well as some diamond drilling.
  • The company reports that 54 shallow diamond drill holes (3,341m) of diamond drilling were completed to a maximum depth of 75-100m below surface at the most advanced project, Hopeavouri, with results including:
    • An intersection of 11.5m averaging 19.4g/t gold from a depth of 30.6m in hole R305; and
    • 10.7m averaging 14.4g/t gold from a depth of 22.0m in hole R313; and
    • 3.0m averaging 106.7g/t gold from a depth of 22.0m in hole R330’
    • Metallurgical testing, at a bench scale,  showed 93% gold recovery using sulphide flotation.
    • Highlighting that tungsten is classed as a critical raw material by the EU, the company explains that the Swedish tungsten permits include the former ʺformer Yxsjöberg Mine which accounted for more than 90% of the Tungsten previously produced in Swedenʺ.
    • Managing Director, David Mason, explained that the diversification into Scandinavian exploration was part of Dark Horse Resources’ ʺnew strategic business plan in complementing the highly prospective Argentina Gold properties, whilst diversifying into alternative, world class Gold mining jurisdictions. Gold opportunities in other favourable mining jurisdictions are also being considered for acquisition by the Company.ʺ

Conclusion: Dark Horse Resources is acquiring a promising portfolio of gold projects in Finland where previous work has shown shallow, high-grade gold intersections as well as a tungsten project which previously hosted Sweden’s principal tungsten mine. We look forward to further news as exploration progresses.

 

Ormonde Mining* (ORM LN) 0.8p, Mkt Cap £3.3m – Update on Spanish gold projects

  • Ormonde Mining reports that as a result of a review of the previous work undertaken on its Spanish gold exploration projects it has identified opportunities to follow up high-grade drilling intersections encountered in previous drilling work by the Spanish Government, Ormonde Mining, and in association with its joint- venture partner, Shearwater Group.
  • The earlier phases of drilling produced ʺnumerous high grade intersections … ranging between 11.4 grams per tonne ("g/t") to 65.8 g/t gold over widths of 1-2 metresʺ and Executive Chairman, Jonathon Henry said that the review had ʺidentified several targets within the project portfolio which can be advanced, to the benefit of shareholders in a positive gold market environment, with low cost work programmesʺ.
  • Mr Henry also underlined that the focus remains on assessing other projects and that after reviewing around 100 opportunities saying that ʺOrmonde's management team has several very interesting options under consideration. Gold projects have been a key focus of these efforts, together with opportunities across a range of commodities, global jurisdictions and risk profiles. The priority remains on concluding a resource sector transaction which would add substantial value for Ormonde's shareholders."
  • The company also says that it ʺconcurs with the view of shareholders that a physical AGM is more beneficial to shareholders than a virtual one. Accordingly, considering the Irish Government's phased approach to reopening the country for business and the health and safety of shareholders and employees, the Ormonde AGM is being arranged for 16 September 2020 in Dublinʺ.

Conclusion: Ormonde Mining has identified opportunities to build on the drilling results from its Spanish gold exploration projects which took something of a back seat while the company’s focus moved on to the development of the Barruecopardo tungsten mine where Ormonde Mining completed the sale of its residual share earlier this year. The company also continues to assess a number of acquisition opportunities. We look forward to further news on the acquisitions and also of the additional drilling on the existing properties.

*SP Angel acts as Broker to Ormonde Mining

 

Tietto Minerals (TIE AU) A$0.38p, Mkt Cap A$135m – Recent drilling extends footprint of Abujar Gold Project

  • In a release to the ASX, Tietto Minerals reports that recent drilling at its 2.2moz Abujar gold project in Cote d’Ivoire has extended the zone of high grade mineralisation to over 600m along strike and to up to 460m below surface with the zone remaining open both laterally and at depth.
  • In November 2019, Tietto Minerals reported a JORC compliant measured and indicated resource estimate of 34.3mt at an average grade of 1.6g/t gold (1.8moz) plus an inferred resource of 11.2mt at an average grade of 1.0g/t (0.4moz) using a 0.4g/t cut-off grade.
  • The results reported today are part of a 50,000m programme of step-out drilling and relate to eight drill holes including: 
    • Hole ZDD232 which intersected 13.0m averaging 1.56g/t gold from a depth of 305m and a lower intersection of 12.0m averaging 7.54g/t gold from a depth of 370m, including 5m averaging 17.22g/t gold; and
    • Hole ZDD224 which intersected 1.0m averaging 15.32g/t gold from a depth of 357m; and
    • Hole ZDD222 which intersected 3.0m averaging 4.42g/t gold from a depth of 299m
    • Managing Director, Dr. Caigen Wang, said that ʺWe are pushing the envelope and haven’t been able to find the limits yet as the high-grade core keeps expanding.ʺ
    • He also commented that ʺ We have a very simple strategy to systematically test the limits of this large high-grade gold system and grow the high-grade core at AG. Our drilling rigs will continue to drill deeper and along strike testing the depth and strike potential of these high-grade shoots.”
    • The company confirms that ʺTietto’s exploration activities continue at site and there have been no cases of COVID-19 infection reported by any of the Company's employeesʺ.

Conclusion: Drilling at Abujar continues to encounter high-grade intersections and to expand the overall resource envelope. The variability in intersection widths and in grade may be challenging from a resource estimation standpoint, however, the current drilling is likely to expand the existing 2.2moz resource in due course. We look forward to further results as the programme develops.

 

Vast Resources* (VAST LN) 0.21p, Mkt Cap £24m – Equipment arriving at Baita Plai ahead of the Jul/20 commissioning

  • The Company provided shipping updates yesterday confirming the arrival of underground rock loader and mining jackhammer to Baita Plai.
  • The team also confirmed schedules for remaining equipment deliveries including:
    • 13th July 2020 – Fourth & Fifth Shipments – includes the remaining underground loaders, pneumatic loaders, ceramic filters & hydro cyclones.
    • 17th July 2020 – Sixth Shipment – includes the slurry pumps.
  • The team reiterated plans to commission the underground polymetallic operation in July 2020.

Conclusion: The update over the timely arrival of equipment to the Baita Plai site is a welcome news with the team reiterating the start of production next month. Risk sentiment seems to be also recovering as major economies reopen driving demand for base metals.

*SP Angel acts as Broker to Vast Resources

 

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

 

Sales

Richard Parlons – 0203 470 0472

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

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.

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 SP Angel Corporate Finance LLP (‘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 (tim.jenkins@spangel.co.uk).

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%