Today’s Market View – Caledonia Mining, Empire Metals, Impala Platinum and more…

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SP Angel . Morning View . Friday 04 09 20

Gold climbs ahead of US payroll data


Caledonia Mining* (LON:CMCL) – Funding of solar power plant at the Blanket mine

Empire Metals (LON:EEE) – Soil sampling starts at Eclipse gold project

Impala Platinum (JSE:IMP) – Over 100% gain in pre-tax profits as palladium and rhodium prices offset COVID disruption

Keras Resources* (LON:KRS) – Keras acquires 51% in near-production organic rock phosphate project in the US

Scotgold Resources* (LON:SGZ) – BUY, Target 141p CLICK FOR PDF – Cononish on course for first gold before end of November

SolGold* (LON:SOLG) – Further news on board and governance changes


US dollar extends gains on ECB worries and tech stock sell-off

The dollar continued to hold firm against the euro on Thursday, as the ECB warned that a strong euro will weigh on exports, drag down prices and make a case for further stimulus measures in the Eurozone.

The euro rose this week close to all-time highs against a trade-weighted basket of currencies, having gained 8% since February (FT).

The greenback has recovered in the middle-part of this week from the 28-month low it hit against a basket of currencies on Tuesday.

This is despite US Labour Dept data on Thursday which showed that the number of Americans filing new claims for unemployment benefits was 881,000 last week.

Although this was a drop from compared to the week prior with 1.01m, the figures still make for grim reading and raise questions over a quick economic recovery.

Thursday saw the Nasdaq fall by nearly 5% a day after posting record highs, further boosting demand for the dollar’s safe-haven status.

Friday saw the dollar consolidate this week’s gains with a weekly rise of 0.6%, the largest since mid-May (Refinitiv).

The euro fell 0.42% against the dollar on Thursday morning, retreating further from the $1.20 level hit earlier in the week.

Gold prices fell to a one-week on Thursday as a result of renewed dollar strength, falling 0.5% to $1,933/oz (Reuters).


EU adds lithium to critical raw materials list (

The EU has finally woken up to the need to secure lithium as a critical material for European battery manufacturing this week.

Every metal for EV and battery manufacturing is critical if China controls its mining and refining as it does with so many metals.

Problem is that strict environmental regulations have killed off most metals processing and refining within the EU with Umicore and Aurubis standing as two of the last European metal refiners.

Lithium is critical for Li-ion batteries but its processing and refining concentrated in Chile and in China.

European, mainly German, automotive manufacturers need some 60x more lithium for EV battery and energy storage by 2050 with demand for rare earths also expected to rise by 10 times.

The EU imports around 98% of rare earths from China while Chile meets 78% of Europe’s current lithium demand needs.

Problem is that Chilean production is running up against capacity constraints and the Chinese are also looking to control supplies out of the region.

Kodal Minerals* signed an MoU with Sinohydro, part of PowerChina, a Chinese state-owned company. Sinohydro is looking at financing and developing Kodal’s Bougouni lithium project in Mali.

The Chinese have also gained control of production from most other hard-rock spodumene (lithium) sources due to their dominance in hard-rock lithium processing.

There is much lithium in hard-rock pegmatites in Europe but economic deposits are few and far between and the spodumene concentrate still needs processing in China.

Europe needs to support one or more spodumene processing facilities, preferably close to new planned lithium mines in Portugal.

Savannah Resources* is developing the Mina do Barroso lithium project in Portugal. The project has unusually long and consistent intercepts of good quality spodumene of economic grade as defined in its 2019 mineral resource. A feasibility study is currently underway.


Dual circulation’ strategy to drive Chinese domestic demand reducing its reliance on exports to the US and the rest of the world

China has presented a number of messages and potentially options to Western leaders

President Xi has spoken of anti-isolationism, pluralateralism, pro-globalization, anti-protectionist and dual circulation

But China realises that continuing to grow exports will lead to further isolation as western nations restrict imports to protect local industries.

China’s Politburo has voted in a dual circulation strategy to reduce its dependence on exports as the US squares up for an escalation in the trade war.

Flooding along the Yangtze is forcing China to buy American food despite China’s reluctance to appease the Whitehouse.

The US also continues to lobby nations to exclude Huawei from it’s telecoms systems and to ban Chinese Apps from circulation. India banned >100 Apps.

And the US is unlikely to support WTO anti protectionism making the WTO largely redundant from a US-China perspective

The value of Chinese exports to the world halved to just 18% of GDP in 2019 from around 36% 2006 according to the World Bank

The value of China’s exports needs to at least halve again for China to keep peace with its neighbours and restore relations with the US which has consumed much of China’s output.

A ‘Dual Circulation’ strategy to stimulate local demand in specific regions of China should help to placate dissent over corruption in the Politburo while preparing China for a trade and technology war with the US, India and potentially Europe.

The idea is to stimulate dual circulation in specific regions with domestic and international markets supporting each other.

China will use this to avoid an escalation of the trade war with the US, Europe and India while continuing to grow its value-added industries at home.

But China may continue to export more into other economic blocs such as Latin America, Africa and other parts of Asia which are not able to challenge China and where local officials are easily swayed.

But China must also stop stealing technology or at least stop getting caught. The regime’s reported use of threats against the families of scientists working in the West is just one of many ruthless strategies being used to acquire technology developing in the west.


Moon is rusting

The moon’s polar surfaces had iron-rich rocks with spectral signatures that matched that of hematite (

Solar winds which contain hydrogen normally remove any oxygen from the moon preventing oxidisation and rusting.

Scientists now think that trace amounts of oxygen from Earth’s atmosphere are reaching the moon and rusting the iron around its polar regions.

Terrestrial oxygen travels to the moon along an elongated extension of the planet’s magnetic field called a “magnetotail.”

Earth’s magnetotail can reach all the way to the near side of the moon, where more of the hematite was found, and at every full moon, the magnetotail blocks 99% of solar wind from blasting the  moon, drawing a temporary curtain over the lunar surface, allowing periods of time for rust to form.


Dow Jones Industrials -2.78% at 28,293

Nikkei 225 -1.11% at 23,205

HK Hang Seng -1.62% at 24,602

Shanghai Composite -0.87% at 3,355



US – Concerns over excessive valuations saw a correction in the tech-focused Nasdaq Composite that dropped 5% yesterday while S&P 500 closed 3.5% lower.

Apple shares were down 8% on the day while Amazon, Alphabet and Microsoft all ended down more than 4%.

US markets will be closed on Monday for Labour Day celebrations.

Non farm payrolls are out later today with estimates for the economy to have added 1,350k jobs in August helping to bring the unemployment rate below 10% amid a slight pick up in the participation rate.

The report follows on a more frequent weekly jobless data showing a contraction in unemployment benefit application rates.

Initial jobless claims report released yesterday showed 881k people applied for protection in the week ended August 29 versus 1.01m recorded in the previous week.

With new Covid-19 infections still running in the hundreds of thousands a week a drop to pre-pandemic unemployment levels is likely to be a long one.

NFP (‘000): +1,350 v 1,763 in July.

Unemployment Rate: 9.8% v 10.2% in July.

Av Hourly Earnings (%yoy): 4.5 v 4.8 in July.

US Debt rises to >100% of US GDP for first time wince WWII

US ISM non- manufacturing 62.4 in August vs 67.2 in July

US Markit services 55.0 in August vs 50.0 in July and composite PMI 54.6 in August vs 50.3 in July


JP Morgan global services PMI 51.9 in August vs 50.6 in July

Global composite PMI 52.4 in August vs 51.0 in July


Germany – Factory orders came in weaker than expected in July offering further evidence that the recent rebound may be losing momentum.

Manufacturing orders climbed 2.8%mom v 5.0%mom estimated with a rapid increase in intermediate goods orders weighed down by slower growth in capital and consumer goods.

Geographically, a sharp drop in domestic orders was offset by a strong increase in foreign orders.

Orders were down 7.3%yoy.

Services PMI 52.5 in August vs 55.6 in July)

Composite PMI 54.4 in August vs 55.3 in July


China – Services / non-manufacturing PMI 55.1 in August vs 54.2 in July

Caixin China 54.0 in August vs


India – Services PMI 41.8 in August vs 34.2 in July


France – Services PMI 51.5 in August vs 57.3 in July

Composite PMI 51.6 in August vs 57.3 in July


EU – Services PMI 50.5 in August vs 54.7 in July

Composite PMI 51.9 in August vs 54.9 in July


Brazil – Services PMI 49.5 in August vs 42.5 in July

Composite PMI 53.9 in August vs 47.3 in July


UK – Reservations at restaurants see a 2%yoy increase over the last several days compared to a surge of more than 90% over the last week of August helped by the state’s “Eat Out to Help Out” programme, OpenTable data shows.

Growth picked at 216% on Monday this week, which was a holiday in the UK.

The subsidy is reported to have far exceeded expectations helping to protect 1.8m jobs.


France – The government may extend the furlough programme for certina sectors beyond 2020, Finance Minister Le Maire said.

“We will keep the furlough for the most exposed sectors – hotels, cafes, events – until the ned of the year… if, after that, we still need to keep it, we will.”


South Korea – The government is planning a second round of cash handouts to people affected by the pandemic to be launched next week.

The virus flare up is feared will lead to a drop in consumption derailing early signs of an economic rebound, FT reports.


Shanghai copper stocks rise 4% this week

Copper stocks in Shanghai Futures Exchange approved warehouses rose by 6,800 tonnes to 177,000 tonnes this week.

Tin stocks rose 8.1% to 3,900 tonnes whilst lead stocks fell -5.3% to 26,000 tonnes.

All other metal stocks were largely unchanged this week, falling less than 1% (Refinitiv).


Shanghai container spot rate index hits 8 year high

The composite index of the Shanghai Containerised Freight Index rose to highest level since September 2012 this week and is up 54.4% since the 24th of April.

The index is based on the spot rates of the Shanghai export container transport market based on data compiled from 15 different shipping routes.

Shanghai to US coasts routes are largely responsible for the increase, up 143% to the highest level since at least 2010.

Freight rates to Europe have also risen, up 37% from April (Hellenic Shipping News).


Czech Republic baiting China with visit to Taiwan this week

Mainland China which has long sought to takeover Taiwan is not pleased and has described the state visit as ‘an act of international treachery’.

The Nationalist party escaped to Taiwan when the Communists led by Mao took over mainland China. They took much of the nation’s gold with them.

The Communist party has sought to takeover Taiwan ever since. Fortunately Taiwan enjoys support from the US and the West through state visits are incredibly rare due to threatened retaliation from mainland China.

US Health Service Secretary Alex Azar traveled to Taipei a week ago, the first high-ranking American official to do so, and a fortnight after US Secretary of State Mike Pompeo toured the Czech Republic.

The Chinese embassy in Prague warned that if he went ahead with his plan then Beijing would respond punitively.



US$1.1844/eur vs 1.1802/eur yesterday.  Yen 106.11/$ vs 106.23/$.  SAr 16.754/$ vs 16.840/$.  $1.328/gbp vs $1.329/gbp.  0.728/aud vs 0.731/aud.  CNY 6.841/$ vs 6.837/$.


Commodity News

Precious metals:         

Gold US$1,935/oz vs US$1,931/oz yesterday

Gold ETFs 109.4moz vs US$109.3moz yesterday

Platinum US$904/oz vs US$904/oz yesterday

Palladium US$2,295/oz vs US$2,248/oz yesterday – Palladium prices hit five-month high as car sales begin to recover

Prices of the autocatalyst metal rose as much as 6% on Thursday, the highest since the April as car sales rise and major producers forecast market tightness (Bloomberg).  

Impala platinum announced on Thursday that pandemic related disruptions had a 9%, or 290,000oz on production (Reuters).

Vehicle sales in Chinas have risen 11% last month compared to the same period last year, according to the China Association of Automobile Manufacturers.

Silver US$26.81/oz vs US$26.99/oz yesterday


Base metals:  

Copper US$ 6,650/t vs US$6,613/t yesterday – Chile July copper output at state-owned miner Codelco fell 4.4%yoy to 133,300t

Production rose 3.8% in July to 100,900t at BHP’s Escondida mine

Production rose 22.8% in July to 58,100t at Anglo American and Glencore’s Collahuasi mine.

Aluminium US$ 1,7888/t vs US$1,781/t yesterday

Nickel US$ 15,185/t vs US$15,190/t yesterday

Zinc US$ 2,509/t vs US$2,499/t yesterday

Lead US$ 1,952/t vs US$1,917/t yesterday

Tin US$ 18,190/t vs US$18,380/t yesterday           


Oil US$43.7/bbl vs US$44.2/bbl yesterday – Oil prices have recovered slightly in early trading this morning following a poor week for the commodity

Prices fell yesterday morning, extending losses from Wednesday’s close to the lowest levels in more than a month, after US data showed gasoline demand is faltering despite major inventory draws in recent weeks

Both Brent and WTI benchmarks were hit earlier in the week to their lowest levels since the end of July, after the market found the latest US data implied gasoline figures as bearish

On Wednesday, the EIA reported a crude oil inventory draw of 9.4MMbbls for the week to 28 August, driven by Hurricane Laura

However, the EIA report also showed that gasoline demand for the week ending 28 August was 8.786MMbopd, down from 9.161MMbopd for the prior week to 21 August

Gasoline demand had materially improved from the April lows until June, but after that it has been stuck at below 9MMbopd between end-June and end-August, with the week to 21 August the only exception of demand above 9MMbopd

Oil prices also fell later on Wednesday because of lower refinery runs and the upcoming refinery maintenance season which is expected to dent demand for crude oil

A sudden U.S. dollar strength on Wednesday also pushed oil prices lower which is also having a major impact on price volatility

Natural Gas US$2.470/mmbtu vs US$2.500/mmbtu yesterday

Natural gas prices nudged higher following the EIA’s weekly storage report

According to the EIA, working gas in storage was 3,455Bcf as of 28 August 28

This represents a net increase of 35Bcf from the previous week

Stocks were 538Bcf higher than last year at this time and 407Bcf above the five-year average of 3,048Bcf

At 3,455Bcf, total working gas is above the five-year historical range.

Traders were anticipating a relatively modest addition to underground gas stockpiles for this week with the consensus estimate calling for a build of 37Bcf

According to Natural Gas Intelligence, a Bloomberg survey found injection estimates ranging from 29Bcf to 43Bcf, with a median of 37Bcf, while at Reuters poll found estimates ranging from 25Bcf to 43Bcf and a median of 35Bcf.

NGI estimated an injection of 32Bcf, on par with Bespoke Weather Services prediction.

Cooling temperatures from the effect of Hurricane Laura are keeping demand and futures in check

The reaction to the EIA report suggests traders read the numbers as neutral. However, the 35Bcf build marks the second week that it was lower than the week before and this indicates that supply and demand is tightening

This could be enough to send prices higher into the close if traders decide to ignore warnings about LNG demand



Iron ore 62% Fe spot (cfr Tianjin) US$124.3/t vs US$122.0/t – Fortescue Metals Group wins approval to boost iron ore exports by 20%

The Company will now be able to export 210mt through Port Headland before 2025, after the government of W. Australia approved the increase in capacity from 175mt.

Fortescue shipped 178mt in the year to June 30th, suggesting the extra capacity has come just in time (Hellenic Shipping News)

Australian miners are scrambling to ramp up production to satisfy Chinese demand, as prices have doubled since 2018 and Brazil struggles to contain the coronavirus.

Chinese steel rebar 25mm US$555.9/t vs US$556.7/t

Thermal coal (1st year forward cif ARA) US$56.5/t vs US$56.4/t

Coking coal futures Dalian Exchange US$131.5/t vs US$129.5/t



Cobalt LME 3m US$33,200/t vs US$33,200/t

NdPr Rare Earth Oxide (China) US$49,700/t vs US$49,729/t

Lithium carbonate 99% (China) US$4,970/t vs US$4,973/t

Ferro Vanadium 80% FOB (China) US$30.3/kg vs US$30.3/kg

Antimony Trioxide 99.5% EU (China) US$5.2/kg vs US$5.2/kg

Tungsten APT European US$210-215mtu vs US$205-210/mtu

Graphite flake 94% C, -100 mesh, fob China US$430/t vs US$430/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,275/t vs US$2,275/t


Battery News

QuantumScape to raise $1bn in US IPO  

EV battery supplier QuantumScape has entered into a definitive merger agreement with special purpose acquisition company Kensington Capital Acquisition.

The Company is to list on the New York Stock Exchange and is expected to begin trading in Q4 under the ticker ‘QS’.  

QuantumScape will raise $700m through the business combination, the pro forma implied enterprise value of the combined company is approximately in $3.3bn.

The transaction should raise of $1bn in cash and funding commitments.  

CEO Jagdeep Singh has suggested use of funds will be scaling up cell production and the construction of a new factory.

QuantumScape is developing solid-state lithium-metal batteries for electric vehicles. The lithium-metal battery uses solid ceramic electrolyte which replaces the conventional graphite/silicon anode with a lithium-metal anode. Lithium-metal chemistry enables a 30-80% charge in 15 minutes and improves energy density.

The Company formed a partnership with VW in 2018 to accelerate the development of solid state batteries towards commercialisation. VW invested an initial $100m in 2018 and invested a further $200m in June 2020. The partners have plans to build a pilot plant for industrial-level production.


The UK needs to ramp charging investment to maintain its 2035 goal

Research from the Society of Manufacturers and Traders (SMMT) estimates that 1.7m public chargers will be required by 2030 and 2.8m by 2035.

Auto Express also reports that a similar study by the International Council on Clean Transport as found the UK has fewer than 5% of the required chargers would be installed by 2030.

Earlier this year the British Government brought forward plans to eliminate new sales of combustion vehicles to a 2035 deadline.

Department of transport figures show UK EV public charge points up 11% YTD to 18,265. The number of rapid chargers has increased 363% in the last 5yrs up to 3,399 devices.

The UK now average 27 public charge points per 100,000 population, with London leading the way with 57 per 100,000.

Zap Map figures show the UK now has more than 33,000 connectors nationwide (public and private) across 12,041 locations.  

According to Zap Map Polar network operates the most public charging devices in the UK with a 12% share of the market.

A reliable charging network of sufficient density is a key factor in widescale adoption of electric vehicles. A key hurdle for prospective EV drivers is access to charging points.


Tata Nexon EV top of the charts in India

The Tata Nexon EV remains the most popular EV in India, with 296 sales in August.

Electric car sales remain a very small market with only 1408 vehicles sold in 2020.

The Nexon has a 66% market share as of August 2020, followed by MG Motor’s ZS with 26%. Hynudai’s Kona, Tata’s Tigor and Mahindra’s eVerito make up the remaining brands publicly available but between them have sold just 173 vehicle YTD.

A lack of charging facilities and a hefty premium over ICE vehicles have been suggested as reasons for the slow take-up of electric vehicles in the country.


Company News

Caledonia Mining* (LON:CMCL) 1385p, Mkt Cap £155m – Funding of solar power plant at the Blanket mine

Caledonia Mining confirms that it has raised US$13m for the construction of a solar power plant at its Blanket gold mine in Zimbabwe.

The funding, which was completed through a previously announced “At the Market” or “ATM” sales agreement” results in the issue of around 598,00 additional shares representing approximately 5% of the enlarged capital of Caledonia Mining

Zimbabwe’s power supply is heavily reliant on the ageing Kariba dam which has historically experienced problems during periods of low rainfall and from the relatively old coal-fired plant at Hwange.

Plans for the joint development with Zambia of a new hydropower 2.4GW, $5.2bn hydropower plant on the Zambezi at Batoka Gorge approximately 54km downstream from Victoria Falls are believed to remain at the feasibility study stage though there have been press reports that construction would start in late 2020 with a six-years timetable for completion and initial power generation available in 2024

In its Q2 results announcement in August, CEO, Steve Curtis confirmed that “The Company has now resolved to construct a 12MW solar plant at a cost of approximately $12 million, which is expected to provide 100% of Blanket’s baseload electricity demand during daylight hours and approximately 27% of Blanket’s total daily electricity demand”.

Conclusion: There have been fewer reports of power disruption in Zimbabwe in recent months but as recently as December last year domestic supply was subject to up to 18hours of “load shedding” per day and although the Blanket mine has coped well with securing power and has back-up diesel generating capacity, the move to build significant solar generating capacity provides important security of power supply to the mine as it completes its long term development to access deeper level mineralisation and build gold output to 80,000oz pa by 2022.


Empire Metals (LON:EEE) – 1.7p, Mkt cap £3.3m – Soil sampling starts at Eclipse gold project

(Empire hold a 75% interest in the Eclipse gold license)

Empire Metals reports the start of soil sampling at the Eclipse gold project near Kalgoorlie in Western Australia.

The work program will take 490 samples next to existing geochemical anomalies.

Sampling should be complete by end-September with assay results due shortly after.

Ground magnetics and structural and geological interpretation should then lead to targets for drilling.

Reverse circulation drilling will be used to for quick and relatively inexpensive target testing and to see where best to follow up with later diamond drilling programs.

The former Eclipse mine produced some 954t of high-grade ore grading 24.6 g/t for 754.25oz of gold according to historic records.

Drilling in 2014 identified high grade mineralisation all within a 30-metre zone either side of the main Eclipse shaft including:

GD008: 7m @ 13.07 g/t Au from 34 metres

GD014: 12m @ 5.13 g/t Au from 39 metres

ERC03: 8m @ 3.11 g/t Au from 66 metres

ERC019: 6m @ 3.92 g/t Au from 87 metres

Mineralisation is open along strike in both directions and at depth and just 60km from the Kalgoorlie super pit and not far from the ‘Wild West Saloon’ Kalgoorlie’s favourite bar.

Gold mineralisation at Eclipse can be traced for around 2.5km on the licence with Jack’s Dream 230m from the Eclipse which produced 197t grading 23.8 g/t Au for 150.7oz of gold over four years.The Steinhobel shaft is another 100m further on though no records remain.

High-grade gold mineralisation occurs in a quartz-carbonate vein with an average width of 2.2m.

Recent geophysics and drilling gives a better and robust understanding of the mineralisation and potential for significant high-grade gold resource.

Conclusion: The Eclipse gold mine has sat around, largely unexplored, for an unusually long time. It offers the potential for further discovery in a well served gold mining area close to Kalgoorlie. Management continue to liaise with the Georgian government over approvals for the rest of its licenses in Georgia. The company recently received permission to continue to work on their two key prospects in the country but are keen to have this permission extended to all the licenses which need renewal.

*SP Angel act as Nomad and Broker to Empire Metals


Impala Platinum (JSE:IMP) R15,260, Mkt cap R122bn – Over 100% gain in pre-tax profits as palladium and rhodium prices offset COVID disruption

Impala Platinum sales rose 44% to R70bn ($4.2bn) for the year to end June 2020 from R49bn a year earlier.

While R21bn ($1.25bn) of the gain in sales was due to higher metals prices a further R5bn came from the fall in the Rand-US dollar exchange rate.

The group lost just under R5bn ($0.3bn) of sales through the COVID-19 lockdown and related disruption.

Impala produced 2.8moz of refined PGMs including 0.3moz of third-party concentrates. This was 8% down on last year largely due to the lockdown.

Unit costs rose by 12% in SA rand terms to R12,839/oz ($767/oz)

Forgone 6E PGM production amounted to 4% (30,000oz) of total production in the January-March quarter and then by 31% or 260,000oz in the April-June quarter.

This highlights the impact of COVID-19 on an already tight market and indicates why PGM prices continued to rise in an already tight market.

Gross profits rose >100% to R23m from R7m yoy highlighting the improved performance of the group.

Cash costs and abnormal production costs added R3bn to the cost of sales

Pre-tax profit rose >100% to R23bn from R3bn.

The group managed to lower its PGMs (6E) in ‘work in progress’ by 115,000oz despite the buiildup of 135,000oz build-up at smelter through the destocking of some 250,000oz.

EBITDA rose to R29bn from R11bn yoy

Headline earnings rose to R16bn from R3bn yoy

Conclusion: Impala is one of the world’s key platinum, palladium and rhodium miners and refiners. It’s strong results indicate how the group has managed the South African lockdown and has gained from the impact of higher prices driven by lower industry production levels.

Sadly Impala suffered 19 in-service COVID-19 fatalities to end-August after the identification of 1961 cases of COVID-19 indicating a good 98% recovery rate across its businesses.

The methodical testing of staff, early treatment and management of the Covid crisis bears testament to the experience and thoughtful consideration of Impala’s management team.


Keras Resources* (LON:KRS) 0.13p, Mkt cap £5.3m (diluted) – Keras acquires 51% in near-production organic rock phosphate project in the US

(Keras also hold an 85% interest in Societé General des Mines which holds the Nayega manganese project license in Togo. Keras now holds 30% of Falcon with an option to raise its stake to )

Keras Resources reports the dispatch of its first production from the Diamond Creek organic phosphate mine in Utah, US.

Management have also elected to raise production by 50% to 7,500 tons to build stock for processing through the winter.

The team have also ordered new crushing, milling and screening plant with targeted capacity of 48,000tpa to be commissioned in Q4.

Keras have also paid the second, US$600,000 tranche, of their loan agreement to their jv partner, Falcon Isle raising Keras’ interest to 30%.

Keras agreed to lend $2.5m in total to Falcon Isle over seven months in a series of tranches to earn a 51% stake in the project.

The loan is to be re-paid from the cash flow generated

The first tranche of US$700,000 was paid by Dave Reeves and Russell Lamming to accelerate the funding of the construction of access roads, the bulk sample and metallurgical testwork.

The Loan will be repaid in two phases:

Phase 1 Repayment: 70% of distributable cashflow from the  Project will be repaid to Keras for the first $1.1m of the Loan.

Phase 2 Repayment: 51% of distributable cashflow from the Project will be repaid to Keras for the remaining $1.4m of the Loan.

During Phase 1 and 2, Falcon Isle Resources will be repaid a total of $1.82m from the Project, being a repayment of loans attributable to the shareholders of Falcon Isle Resources.

Post Phase 2 Repayment, distributable cashflow will be paid out pro rata to shareholders, so that Keras will be entitled to 51%.

The team are delivering into their first order of 770tons which represents ~15% of projected sales for the year ahead..

Operating costs are estimated at $229/ton in at 5,000tpa in the first year falling to US$92/ton at peak production in Year 5

Margins: An independent study estimates an average sales price of $362.8/ton for organic fertilizers in North America indicating potential for a significant margin on the $229/ton operating cost.

Volumes: the organic fertilizer market is estimated to have taken some 260,000t of product last year with forecasts predicting demand rising to 545,000t by 2030.

Market share: Diamond Creek aims to gain around 14% of the 3mtpa North American organic fertilizers market in the next five years with growth forecast to 6.3mtpa by 2030. The market is said to be worth $1.17bnpa growing to US$2.5bnpa by 2030 giving 7% CAGR

Phosphate fertilisers make up 22% of the total organic fertiliser market and 20% of phosphate fertilisers are sourced form rock phosphate. 

Nayéga Manganese mine (Togo):  Management are off to Togo next week to restart exploration at the Ogaro prospect at Nayéga.

The team will also travel to the capital, Lomé to meet key government officials to agree a way forward to production at Nayéga as they wait for final signoff on the mining license.

Production capacity 6,500tpm

Planned capacity for 25,000tpm (300,000tpa)

JORC resource: 13.5Mt @ 11.1% Mn and an Ore Reserve of 8.44Mt @ 14.0% Mn

Conclusion: It is good to see the first dispatch of organic phosphate from Diamond Creek demonstrating that the mine and process works. We await news on further orders for more phosphate material and its pricing.

While no deal is ever without risk the low restart and operating cost should enable an unusually fast return to positive cash flow..

*SP Angel act as nomad and broker to Keras Resources



Scotgold Resources* (LON:SGZ) 98p, Mkt Cap £50m – Cononish on course for first gold before end of November

BUY – 141p

Cononish construction works are progressing well with critical earthworks, concrete works and placement of major equipment items completed.

Processing plant building structure is being assembled to be followed by the installation and connections of pumps, drives, piping and electrics.

The team took a delivery of a standby scooptram with the first of the two new T1D drill rigs currently in transit.

The high grade Cononish Gold and Silver Project is expected to pour first gold by 30 November 2020.

Separately, the Company expanded the Geoscience team appointing Dr Simon Dominy and Mr David Catterall as Group Manager Resources and Reserves and Exploration Consultant, respectively.

Dr Dominy is a mining geologist-engineer having worked over 25 years in the industry and with an experience in underground narrow-vein gold mining relevant to the Cononish mine, with skills across orebody knowledge; strategic and tactical geometallurgy; resource development; ore control and reconciliation; mine design; mineral processing and management.

Simon is also a Competent Person for Mineral Resources and Ore Reserves as defined in The JORC Code 2012.

Mr Catterall is a geologist with over 30 years’ experience in the resource sector with an emphasis on structural mapping and interpretation, geochemistry and geophysics.

David has specific experience of gold exploration in the Dalradian Belt with Scotgold and others and will be advising the Company on the Grampian Project.

Conclusion: The team is nearing completion of development works at the high grade and high margin Cononish Gold and Silver project while carefully maintaining Covid-19 safety protocols with first gold pour targeted before 30 November 2020. The Company has also expanded its geoscience team as Scotgold is aiming to unlock value of its significant land holding in the highly prospective Grampian Terrane.

*SP Angel acts as Nomad and Broker to Scotgold Resources


SolGold* (LON:SOLG) – 25.65p, Mkt cap £531.5m – Further news on board and governance changes

Solgold has added more details of its previously announced restructuring and enhanced corporate governance practices as it moves towards its goal of “full compliance with the provisions of the UK Corporate Governance Code”.

The company clarifies that non-executive directors “Mr Liam Twigger, Mr Brian Moller and Mr James Clare have agreed to the cancellation of their Company options” and that options held  nonexecutive director, Dr Robert Weinberg, who has announced his intention to relinquish his position at the AGM, “will expire after 90 days” unless they are exercised before that date.

Recently appointed non-executive director, Mrs. Eloise Grant Goodie “was not offered Company options on her appointment, and it remains the Company’s intention that options will not form part of the terms of appointment for future Non-Executive Directors”.

Existing and continuing directors, Nicholas Mather and Jason Ward will “retain their option holdings.”

The company clarifies that as a result of his assumption of the Chairmanship of Solgold, Liam Twigger has stepped down from chairing the Audit and Risk Committee and that in view of  “Dr Weinberg’s pending retirement, Mr Brian Moller has agreed to act as Committee Chair on an interim basis.  It is the Board’s intention to reconstitute the membership of the Audit & Risk Committee upon the appointment of further independent Non-Executive Directors“.

Solgold confirms that it “is committed to a process against which its Board composition, succession pipeline and performance effectiveness will be measured, and where regular evaluation of the performance and function of Board and the Board Committees will take place” and that the process is already underway.

The company also confirms that it is “currently in dialogue with a number of potential independent Non-Executive Director candidates“.

Conclusion: Solgold’s management restructuring and evolving corporate governance regime is aimed at achieving full compliance with accepted UK practice as Solgold  builds on its successful exploration roots and starts mine development at Alpala. The company is actively engaged in broadening its base of non-executive directors and we look forward to learning the identity of the successful candidates as the company embarks on the next phase of its transition from explorer to mine developer.

*SP Angel act as financial advisor and broker to SolGold



John Meyer – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474



Richard Parlons –[email protected] – 0203 470 0472

Abigail Wayne – [email protected] – 0203 470 0534

Rob Rees – [email protected] – 0203 470 0535


SP Angel                                                            

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.


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