Today’s Market View – Empire Metals, Caledonia Mining, Central Asia Metals and more…

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SP Angel . Morning View . Monday 05 10 20

Trump recovery and fiscal deal optimism helps risk sentiment

Empire Metals* (LON:EEE) – New gold-in-soil geochemistry zones found at Eclipse gold project

Caledonia Mining* (LON:CMCL) – Strong production in September quarter lifts 2020 production guidance

Central Asia Metals (LON:CAML) – Sasa plant restarts with zinc/lead production guidance unaffected

Marvel Gold (ASX:MVL) / Altus Strategies (LON:ALS) – Drilling at the Lakanfla Gold Project commenced

Pensana Rare Earths (LON:PRE) – Successful development of MREC flow sheet

Wishbone Gold (LON:WSBN) – Option to acquire exploration ground in the Paterson Ranges

China EV companies report strong Q3 sales / deliveries

Xpeng reports it saw a 266% increase in deliveries year-on-year in Q3. The Company delivered 8,587 EV units during the period.

Nio also saw record monthly year-on-year growth with deliveries up 133% year-over-year.

Nio delivered 12,200 vehicles in Q3 a 154% increase year-on-year and exceeding higher end guidance.

Li Auto also delivered 3,504 vehicles in September, up 33% from August and Q3 deliveries were up 31% on Q2.

Tesla continues to perform strongly in China delivering 23,386 vehicles across July and August.

Tesla in talks with Vale to secure its nickel supply

Brazilian miner Vale is in talks with Tesla and other companies in the EV supply chain about securing nickel from its Canadian operations reports Reuters.

A nickel deficit has been of concern to the EV industry for some time, with demand forecast to outstrip supply within the next 5yrs. Elon Musk’s recently made public these concerns, asking nickel miners to produce more in order to prevent a bottleneck.

As battery manufacturers move to reduce the amount of cobalt in their batteries it is likely nickel will be used to fil the gap. The proportion of nickel used in batteries has been rising for some time with the most recent iteration the NCM 811 battery 80% nickel.

In September Tesla was reportedly in discussion with Canadian Miner, Giga Metals to develop a large mine to supply Tesla with nickel for its EVs batteries.

The nickel market was reported to be in an 84kt deficit in 2019 and forecast to been in a 40kt deficit this year. Demand for nickel for use in lithium-ion batteries is forecast to rise to 1.4-1.8m tons by 2030. This would represent around 30% of total nickel demand up from 6% this year.

The majority of nickel is sourced from Indonesia which instituted an export ban as of January 1 2020.

Dow Jones Industrials -0.48% at 27,683

Nikkei 225 +1.23% at 23,312

HK Hang Seng +1.47% at 23,804

Shanghai Composite closed 3,218


Armenia /Azerbaijan – Azerbaijan demanded on Sunday that Armenia set a timetable for withdrawing its forces from the enclave of Nagorno-Karabakh and surrounding Azeri territories as a condition of ceasing military action in the region.

The confrontations between two nations are at their worst since the 1990s with hundreds of people reported dead in the past week of fighting, Reuters said.

Azerbaijan said Armenian forces had fired rockets at its second city of Ganja killing one civilian and wounding 32; the leader of Nagorno-Karabakh said his forces had targeted a military airbase in Ganja but later stopped firing in order to avoid civilian casualties, Reuters said.

Nagorni-Karabakh said Azeri forces launched rocket strikes on its capital Stepanakert.

Azerbaijan and Armenia have imposed martial law and launched mobilisation efforts earlier.

US – President Trump may be discharged from the Walter Reed military hospital as early as Monday according to his medical team.

Meanwhile, Nancy Pelosi told the CBS television network that they are “making progress” in negotiations over the bipartisan coronavirus support programme, FT reports.

September payroll numbers came in weaker than forecast with labour participation rate pulling back as well as more American quit looking for work highlighting the need for fresh government aid.

Labour market dynamics are also closely watched in the light of the Trump election campaign with the relatively strong rebound in jobs in prior months having been a talking point for President Trump, Bloomberg reports.

NFPs (‘000): 661 v 1,371 in August and 859 est.

Unemployment Rate (%): 7.9 v 8.4 in August and 8.2 est.

Participation Rate (%): 61.4 v 61.7 in August and 61.9 est.

US – Dollar weakens again despite Services PMIs showing further recovery in September

Eurozone – Retail sales rise 4.4% mom through August and 3.7% yoy

Eurozone October Sentix investor confidence -8.3 but is better than the expected -9.3.

IHS Markit’s final composite PMI fell to 50.4 in September from 51.9 in August

The Services PMI collapsed to 48.0 from 50.5 in August – this represents around two thirds of GDP

The Eurozone contracted 11.8% in Q2

The ECB plans to make EUR1.35m of asset purchases

The Eu has announced a EUR759bn euro recovery fund to start next year.

France – Paris will be shutting all its bars from Tuesday this week amid a rise in COVDI-19 infections.

Italy – Services sector had another weak month in September with firms highlighting further drops in new business and more cuts to staff numbers

“The Italian services sector remained in contraction territory in September, with business activity declining for the second month in a row whilst new orders fell moderately again… international demand remained a key source of weakness, as the latest data pointed to a further marked reduction in new export orders,” Markit wrote.

Composite PMI picked up in September posting marginal growth in total business activity helped by the manufacturing sector.

Markit Manufacturing PMI (released last Thursday): 53.2 v 53.1 in August and 53.5 est.

Markit Services PMI: 48.8 v 47.1 in August and 46.6 est.

Markit Composite PMI: 50.4 v 49.5 in August and 49.2 est.

Spain – Composite PMI dropped to 44.3 in September from 48.4 in the previous month dragged down by a pullback in the services sector that recorded sharper than expected contraction.

“September’s services data highlights how the recovery from the most severe impacts of COVID-19 earlier in the year is faltering… with infection numbers rising, demand is again turning downwards, both from domestic and international clients, and weighing heavily on those services industries that are so crucial to Spain’s economy,” Markit commented on the Services PMI reading.

Markit Manufacturing PMI (released last Thursday): 50.8 v 49.9 in August and 50.5 est.

Markit Services PMI: 42.4 v 47.7 in August and 46.4 est.

Markit Composite PMI: 44.3 v 48.4 in August and 47.7 est.

UK – September car sales fall 4% YoY

New car registrations fell to 328,041 cars- the smallest figure for the month of September since 1999, according to the society of Motor Manufacturers and Traders.

Composite PMI 56.5 through September vs 55.7 in August

Services 56.1 in September vs 55.0 previously – services show ongoing resilience

After accounting for seasonal factors, the IHS Markit/CIPS UK Services PMI(R) Business Activity Index fell to a level of 56.1 in September from August’s 58.8, which was the strongest reading since April 2015.

UK – More than 1,000 pub owners asked the Chancellor to provide urgent financial support including cutting VAT to no more than 5%, grants to cover costs, a business rates holiday extension and rent reviews.

Separately, more than half of UK directors are planning to reduce office space as working from home becomes a default option for staff, according to a business group survey.

The backlog of more than 15,000 positive COVID-19 test results left out from daily figures for the week ended 2 October in the UK were included in weekend numbers.

Weekend data was skewed upwards to rectify the previous underreporting due to a technical issue with new Saturday and Sunday cases coming in at 12,872 and 22,961, respectively.

Cineworld is set to close 90% of its screens in the UK and US following further delays to movie premieres such including James Bond movie.

The Company asked its lenders to show leniency over its debt.

Cineworld recorded a $1.6n in PBT and had $8.2bn in net debt v $0.3bn in market capitalisation (following this morning’s 34% sell off).


US$1.1724/eur vs 1.1740/eur last week. Yen 105.58/$ vs 105.68/$. SAr 16.460/$ vs 16.664/$. $1.291/gbp vs $1.289/gbp. 0.717/aud vs 0.718/aud. CNY 6.791/$ vs 6.791/$.

Commodity News

Precious metals:

Gold US$1,889/oz vs US$1,906/oz last week

Gold ETFs 111.0moz vs US$110.7moz last week

Platinum US$876/oz vs US$900/oz last week

Palladium US$2,303/oz vs US$2,337/oz last week

Silver US$23.72/oz vs US$23.65/oz last week

Base metals:

Copper US$ 6,519/t vs US$6,354/t last week – Chilean copper output falls 6% in August as prices fall on Monday

Copper production from Chile fell 6.2% YoY in August to 481,700 tonnes, as a result of lower volumes from Escondida and Anglo American Sur- according to data from the state copper commission Cochilco.

Despite the drop, Codelco produced 154,800 tonnes in August, a slight 0.1% increase year-on-year- as the Chuquicamata, Radomiro Tomic and Ministro Hales division produced 78,000 tonnes, up by 2.9%.

The world’s largest copper mine Escondida, operated by BHP, produced 92,200 tonnes of copper in August- an 11.1% drop year-on-year (Fastmarkets MB).

Copper prices fell on Monday amid the lack of participation from top consumer China during a national holiday.

Three-month copper on the LME declined 0.6% to $6,512/t earlier this morning, as prices hit a seven-week low on Friday at $6,269/t (Reuters).

Chile – $74bn to be invested in 49 mining projects during 2020-29

The country’s mining ministry and the copper commission Cochilco increased its figure of expected investment over the period by $1.54bn from $72.5bn in last year’s report.

Approximately 89.4% of the new projects will be to develop copper assets and Cochilco expects copper production to grow by 3.27mt with new projects.

The list for 2020-29 includes eight state-run projects, mostly from Codelco, involving $23.68bn in capex whilst large and medium-sized copper miners had 27 projects, accounting for $42.49bn.

Six gold-silver assets are expected to receive $2.75bn, with the remainder representing iron ore, lithium and industrial minerals (Fastmarkets MB).

Aluminium US$ 1,763/t vs US$1,743/t last week

Nickel US$ 14,350/t vs US$14,385/t last week – New Caledonia – Population vote against full independence from France

A “no” vote to independence won 53.26% of votes cast, a narrower margin of victory than in the 2018 poll.

The island chain already has a large degree of autonomy, although depends heavily on Paris for matters such as defence and education.

The country’s economy is underpinned by French subsidies amounting to EUR1.3bn along with its expensive nickel deposits thought to represent 25% of the world’s total.

New Caledonia is significant from a global nickel perspective due to its extensive Laterite and Limonite deposits.

The islands hosts > 7,100,000t of nickel representing around 10% of known global nickel reserves.

The nation is the world’s fifth largest producer at just over 100,000tpa.

Vale which aims to raise nickel production said last year it would walk away from its Goro project in New Caledonia due to problems running the HPAL plant.

Goro produced just 23,700t last year well short of its 58,000tpa nameplate capacity.

Zinc US$ 2,308/t vs US$2,368/t last week

Lead US$ 1,771/t vs US$1,793/t last week

Tin US$ 17,790/t vs US$17,340/t last week


Oil US$39.9/bbl vs US$39.8/bbl last week

Natural Gas US$2.526/mmbtu vs US$2.496/mmbtu last week


Iron ore 62% Fe spot (cfr Tianjin) US$116.2/t vs US$117.2/t

Chinese steel rebar 25mm US$546.9/t vs US$546.9/t – US to maintain tariff quota on certain steel imports

A report from the US Secretary of State for International Trade said last week that a tariff rate quota will apply to 19 steel product categories in including hot-rolled and cold-rolled steel following the conclusion of the Brexit transition period.

In order to protect domestic steel producers, the UK will adopt a broadly similar Tariff rate Quota (TRQ) system to the one currently in operation within the EU.

Under the system implemented by the UK government, major countries and regions supplying steel products into the United Kingdom will receive specific TRQ volumes, allocated to importers on a first-come-first-serve basis.

If the relevant tariff rate quota is exhausted, then an additional 25% duty will apply (Hellenic Shipping News).

Thermal coal (1st year forward cif ARA) US$58.6/t vs US$60.5/t

Coking coal futures Dalian Exchange US$155.0/t vs US$152.5/t


Cobalt LME 3m US$34,200/t vs US$34,200/t

NdPr Rare Earth Oxide (China) US$48,005/t vs US$48,005/t

Lithium carbonate 99% (China) US$5,080/t vs US$5,080/t

Ferro Vanadium 80% FOB (China) US$30./kg vs US$30./kg

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

Tungsten APT European US$220-225/mtu vs US$220-225/mtu

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

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

Battery News

Tesla continues vertical integration by acquiring assembly line manufacturer

Reports in Germany suggest that Tesla has acquired ATW Assembly & Test, a specialist in building assembly lines for battery and transmission manufacturing.

Musk hopes to make Tesla the foremost manufacturer on earth highlighting the Company’s focus on manufacturing on ‘Battery Day’, declaring it to be the key differentiator between those companies that will succeed and those that won’t in the new energy revolution.

ATW was reported to be in financial trouble, with parent ATS confirming last month that they had a conditional agreement to sell the company.

ATW’s location in Neuwied, South of Cologne and Essen is conveniently located just an hour’s drive from Tesla Grohmann Automation in Prum where Tesla manufactures most of its battery manufacturing equipment.

The acquisition is timely with Tesla in the process of building a Gigafactory in Germany. Musk made mention of the importance of geographical locality of manufacturing facilities on ‘Battery Day’. Having a factories in Asia, the US and Germany will enable to Tesla to efficiently deliver vehicles to customers across the 3 continents.

Tesla has previously bought Hibar Systems and Compass Automation, both companies that specialize in building and manufacturing of the machines that put together the vehicles.

Company News

Empire Metals* (LON:EEE) – 3.2p, Mkt cap GBP8.1m – New gold-in-soil geochemistry zones found at Eclipse gold project

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

Empire Metals have identified two new zones of gold in soil geochemistry at the Eclipse gold project 55km north-east of Kalgoorlie in Western Australia.

The new zones are highlighted on maps in the press release

Management also report a delay to drilling on the project due to ‘extremely high levels of activity in the Kalgoorlie gold fields’ and travel restrictions currently in place between states in Australia as a result of COVID-19′.

A drill rig is currently on standby with work expected to start shortly.

One of the new soils anomalies is around 200x75m and aligns with a distinct magnetic offset while the other represents a small high-grade body at the western edge of the licence, with visible quartz breccia in a sandstone.

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

Previous drilling done in 2014 shows high grade mineralisation all within a 30-metre zone either side of the main Eclipse shaft including:

7m @ 13.07 g/t Au from 34m

12m @ 5.13 g/t Au from 39m

8m @ 3.11 g/t Au from 66m

6m @ 3.92 g/t Au from 87m

Mineralisation remains open along strike in both directions and at depth and is seen for around 2.5km on the licence.

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

*SP Angel act as Nomad and Broker to Empire Metals

Caledonia Mining* (LON:CMCL) 1395p, Mkt Cap GBP161m – Strong production in September quarter lifts 2020 production guidance

Caledonia Mining has increased the 2020 gold production guidance for its Blanket mine in Zimbabwe by 2,000oz to the range of 55-58,000oz following a strong September quarter.

Production in the quarter of 15,164oz is 11% higher than that achieved in Q3 2019 and the highest quarterly production achieved this year and brings the total year-to-date output to 42,8960z (2019 – 38,306oz)

The new target implies final quarter output in the range of approximately 12-15,000oz and Caledonia Mining confirms today that it “remains on track to achieve its production target of 80,000 ounces by 2022”.

The news follows the announcement, last week, of the third consecutive increase in the quarterly dividend to 10US$c/share.

Chief Executive, Steve Curtis, welcomed the news of increased production and said that “Along with the increased dividend, this really demonstrates the strength of our business and I would like to thank the team for this result.”

Conclusion: Despite the additional challenges posed by the Covid19 pandemic, the imminent conclusion of the Blanket mine’s six-year long capital development programme is delivering the increased production levels which now prompt management to increase its 2020 production guidance and to reaffirm that the long-term target of an 80,000oz pa production by 2022 remains intact. Equally as significant, in our opinion, is that the capital programme increases the mine’s life into the 2030s.

*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe

Central Asia Metals (LON:CAML) 161p, Mkt Cap GBP284m – Sasa plant restarts with zinc/lead production guidance unaffected

The Company secured approval from the North Macedonian authorities to restart TSF4 operations last Friday with processing resumed that day.

The plan is to start treatment at around 50% of total capacity for a trial period (~one week) before ramping up to full production.

The Company revised its 2020 production guidance with a temporary suspension in operations following a tailings dam leak affecting processed tonnages (800-825kt new estimate v 825-850kt forecast previously), but leaving zinc and lead concentrates production unaffected within the original guidance of 23-25kt and 30-32kt, respectively.

TSF4 repairs were completed during the previous weekend while all necessary engineering improvements to ensure long term operation safety of the facility have now also been completed.

The team prepared the river clean-up plan with a help of both Wardell Armstrong and in country consultants and is expecting to receive the official permission to start the clean-up work within a week; the clean-up of a high priority 350m section of the river has already been completed.

Marvel Gold (ASX:MVL) A$0.06, Mkt Cap A$27m – Drilling at the Lakanfla Gold Project commenced

Altus Strategies (LON:ALS) 59p, Mkt Cap GBP41m

3,800m drilling programme (18 holes) launched at at the Lakanfla Gold Project in western Mali with a multi-purpose RC/DD drill rig having been mobilised to the sire.

The team is testing the major karst type deposit potential and targeting the 7km strike of the gravity lows surrounding the granite instrusion.

None of the priority gravity lows targets have been systematically drill tested as historical holes did no go deeper than 75m vertical depth.

“In comparison with the nearby large scale Yatela deposit, which is a direct exploration analogue, mineralisation was encountered at depths up to 220m below surface and as such, the Company believes that a valid exploration target of this style exists at Lakanfla,” Marvel reported.

Drilling results are expected towards the end of November and into December.

Marvel is earning an initial 33% interest in the project that is together with the Tabakorole Gold Project is operated under the JV with Altus Strategies.

Pensana Rare Earths (LON:PRE) 66p, Mkt Cap GBP133.2m – Successful development of MREC flow sheet

Pensana have developed a NdPr rich mixed rare earth carbonate (MREC) from test work currently underway on mineralisation from its Longonjo rare earth project.

Work performed at metallurgical laboratories in Perth, Western Australia has allowed Wood Group and Nagrom to develop a flowsheet which enables the production of a particularly high grade MREC with NdPr comprising 33.5% of the total rare earths content.

MREC is a much higher purity, higher value and has a much broader range of applications than the concentrate product contemplated in Pensana’s PFS.

The pilot plant and metallurgical test work are currently ongoing with a view to finalising process routes and providing data for engineering along with cost estimations for the Bankable Feasibility Study, of which a comprehensive update by the Company will be reported towards the end of the month.

The BFS is the next major step which will enable Longonjo to be brought online as the first major rare earth mine in over a decade.

Chief Executive Officer, Tim George commented: “this is an important milestone for the project as it confirms the potential to produce a marketable higher value NdPr rich mixed rare earth carbonate. The market for this carbonate is substantially larger than that of a concentrate and is potentially not limited to China.”

Wishbone Gold (LON:WSBN) – 4p, Mkt Cap GBP4.2m – Option to acquire exploration ground in the Paterson Ranges

Wishbone Gold has announced that it has a 45-day option to acquire 3 exploration licences covering 67km2 in the Paterson Range area of Western Australia which is currently attracting considerable exploration interest from major companies such as Rio Tinto, at Winiu and Newcrest at Havieron as well a number of explorers such as Greatland Gold at Havieron Black Hills and other projects and Antipa Minerals at the Citadel joint-venture with Rio Tinto and the Wilki joint-venture with Newcrest.

Important discoveries at Havieron and Winu and elsewhere in the region underline the exploration potential, however, while some of the deposits located so far are located beneath relatively shallow cover, others lie beneath significant thicknesses of cover rock at considerable depths on the flanks of a buried up-faulted ridge. As a relatively small player, Wishbone Gold may find itself better resourced to explore shallower potential.

The licences are located south of Newcrest Mining’s Telfer mine with the largest, 45/5297 covering 57.4km2 “located only 13 km south-west of the Telfer Gold Mine, which is operated by Newcrest Mining” and the two smaller licences 45/5408 and 45/5409, totalling around 8.5km2 are “only about 25 km south-west of the new Havieron gold discovery operated by Greatland Gold PLC and Newcrest Mining” where much of the mineralisation identified to date is present at depths in excess of 500m below surface.

The agreed option payment of GBP50,000 allows Wishbone Gold the right to conduct a programme of due diligence which is already underway and “Assuming that Wishbone proceeds to acquire the projects, Wishbone will issue the vendors (being Peter Romeo Gianni, Geonomics Australia Pty Ltd and David Anthony Lenigas) an additional GBP183,333 in cash, issue 11,111,111 new ordinary shares (Acquisition Shares) at a deemed issue price of 3.3p equating to GBP366,667 in aggregate and 5,555,555 warrants (Acquisition Warrants) to subscribe for one new ordinary share in the capital of the Company”.

Conclusion: We await the outcome of the due-diligence to discover whether Wishbone Gold will add exploration in the Paterson region to its portfolio which includes a joint-venture gold processing plant in Honduras in association with local artisanal miners.


John Meyer – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474

Joe Rowbottom – [email protected] – 0203 470 0486


Richard Parlons –[email protected] – 0203 470 0472

Abigail Wayne – [email protected] – 0203 470 0534

Rob Rees – [email protected] – 0203 470 0535

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.

Sources of commodity prices

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel


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


Oil Brent


Natural Gas, Uranium, Iron Ore


Thermal Coal

Bloomberg OTC Composite

Coking Coal




Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal


Metal Bulletin

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