Today’s Market View – Beowulf Mining, Jubilee Metals Group, Panther Metals and more…

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SP Angel . Morning View . Thursday 05 11 20

Metals rise as prospect for split Congress reduce potential for US tax hike

 

Beowulf Mining* (LON:BEM) – IP survey highlights anomalies for drill testing 

Jubilee Metals Group (LON:JLP) – Jubilee raises rights to copper tailings in Zambia

Panther Metals (LON:PALM) – Reconnaissance exploration at Dotted Lake, Ontario

Rockfire Resources (LON:ROCK) – Additional drilling results from Plateau project in northern Queensland

Tri-Star Resources* (LON:TSTR) – Results for 2019

URU Metals* (LON:URU) – Notice extended for convertible loan note

 

China – 30% rise in construction machinery sales year-to-date as China powers through COVID-19 crisis

Construction machinery statistics show a massive 30% increase in sales to ~270,000 machines in China so far this year.

We also hear that lead times for heavy trucks are over 40 days due to the surge in demand.

We expect the trend to continue and potentially rise further following China Communist Party Meeting last week where they agree to set the next 5-yeear plan.

The rise in sales in China has offset much of the setback seen around the rest of the world which has seen an overall fall of just 1.2% this year

Turkey has also seen a rise in construction machinery sales of 112% to 3,260, Brazil is up 43% to 16,640 and West African sales rose 13% to 2,470.

UK sales including Ireland fell by 34% to ~22,000 YTD and developers closed sites, slowed construction activity and failed to start new projects.

North American sales slowed by 11% to ~165,000 sales with Europe slowing 16% to ~112,000 sales highlighting the impact of the pandemic on construction activity and the impotence of policymakers to stimulate new construction projects despite grand pronouncements on massive stimulus spending.

China appears to be very much better at enabling the planning, financing and activation of construction, partly due to its ongoing desire to urbanise and lift several hundred million people out of subsistence farming and rural poverty.

 

Platinum and palladium prices look set to jump higher on news of AmPlats closing its ACP plant in South Africa

AmPlats says it is working to minimise disruption to contractual obligations with its customers but may struggle to find available palladium in an already tight market.

Amplats has lowered sales guidance for 2020 to c.2.5moz of PGMs vs 3.1-3.3m oz previously leaving a shortfall of 600,000-800,000oz on expectations.

To be fair AmPlats has warned of problems at its ACP convertor in its Q3 report in October when it warned of a problem with the unit which has suffered multiple water leaks but is now considered too dangerous to operate. Water leaks and hot PGM concentrates don’t mix well in a hot smelter!

AmPlats are looking to commission another unit to compensate for the loss of the ACP before the year end. This was originally scheduled for Q2 2021.

AmPlats use a proprietary process where they convert and pour the hot matte material into a nose-cone shaped crucible where the metals separate on cooling. The PGMs separate from the base metals and are broken away for further refinement in a PGM refinery.

Conclusion: The loss of AmPlat’s ACP converter will restrict Pgm supplies for 6-12 months even assuming a smoother commissioning of their new plant.

 

Zambia- Creditors set to reject payment deferral request 

Holders or Zambia’s Eurobonds plan to reject a government request to defer payments on its sovereign dollar debt, pushing the country closer to a hard default.  

In September, Zambia asked to delay interest payments until April but was forced to extend the deadline for creditors to vote on the payment deferral plan to the 13th of November.  

The 13th of November is also the end of the 30-day grace period for a $42.5m coupon payment, non-payment of which would push Zambia into default of its Eurobonds.  

The Zambia External Bondholder Committee, a large group of bondholders holding more than 40% of the country’s bonds, are reportedly likely to reject the government’s plan. 

 

Recent interviews:

EV revolution, gold and other ideas (Interactive Investor): https://www.youtube.com/watch?v=ja0IdjszfCc

Metals Markets: Are they totally dependent on stimulus? (IG TV): https://youtu.be/TOiSwRpgfKM

Tesla Battery Day (IG TV): https://youtu.be/8su0PtyZLIM

SolGold* interview: : https://youtu.be/wK3SDPKADgM

Stock ideas (VOX, 21/10/20): https://www.voxmarkets.co.uk/media/5f913cebb9f74a03c9dfcb4d/?context=/listings/LON/AAZ/multimedia/

(VOX, 14/10/20): https://audioboom.com/posts/7705483-john-meyer-talks-the-imf-anglo-asian-mining-orosur-mining-scotgold-resources

*SP Angel act as nomad or broker or nomad and broker to companies mentioned in the above videos.

 

APEX survey rankings for SP Angel commodity forecasts: 2nd in Gold, 2nd in Copper, 2nd in Nickel, 1st in Tin, 5th in Iron ore

 

Dow Jones Industrials +1.34% at 27,848

Nikkei 225 +1.73% at 24,105

HK Hang Seng +3.25% at 25,696

Shanghai Composite +1.30% at 3,320

 

Economics

US – Democrat Joe Biden moved closer to victory on Thursday after flipping Wisconsin and Michigan as Trump campaign demanded a recount in one of the states and launched lawsuits designed to delay vote counts in Pennsylvania, FT reports.

The former VP currently runs at 264 electoral college votes versus 214 for Trump.

Biden had a small lead in Nevada this morning that if won could take him to the 270 electoral votes needed for victory.

In Pennsylvania, the state with 20 electoral college votes, results may not be announced until Friday as it accepts absentee ballots up to three days after election day.

President Trump is leading in Pennsylvania, but Democrats argue that more than 1m mail-in votes are yet to be counted and are from heavily Democratic areas.

The Republican party is likely to maintain control of the US Senate winning key states.

Prospects of a divided Congress reduced concerns for potential significant tax increases and stricter regulation improving risk sentiment and seeing equity markets higher.

US bond yields continued to pull back this morning as expectations for a Democratic sweep faded suggesting the a big stimulus package from Democrats resulting in more government debt and inflation is less likely.

 

China – The leadership is close to agreeing a target for average annual economic growth of around 5% for the next five years, Reuters cited unidentified policy sources.

Previously, the Communist Party published a broad summary of its five-year plant last week highlighting quality growth over speed.

The economic planning agency said it will propose numerical targets for the economy through 2025, although those are unlikely to be released before the annual parliament meeting in March, according to Bloomberg.

 

UK – Parliament approved a four-week national lockdown in England despite resistance from more than 30 Conservative MPs who opposed new restrictions, according to FT.

New lockdown comes into effect from today and will last for four weeks until at least December 2.

Residents in England will be banned from mixing between households and encouraged to work from home if possible.

The rest of the UK including Scotland, Wales and Northern Ireland have their own lockdown policies and placed tougher health restrictions last month.

The Bank of England voted unanimously to increase its bond buying programme by £150bn to £895bn to soften the blow from the second wave of COVID infections.

New purchases will start in January, and the BOE says it can increase the pace if required.

Expectations were for a £100bn increase.

Rates were left unchanged at 0.1%.

The central bank also revised down its growth estimates expecting a 11% contraction this year, down from -9.5% estimated previously, and +7.25% in 2021, down from +9%.

The economy is likely to contract in Q4 and is not expected to recover to pre-pandemic levels until Q1/22 compared to previous estimates for the end of 2021.

Separately, Chancellor is expected to extend the furlough programme beyond December 2 in areas that were hit the hardest by the latest round of restrictions, Bloomberg cites the Sun newspaper.

The pound is down versus the € this morning.

 

Currencies

US$1.1756/eur vs 1.1669/eur yesterday.  Yen 104.34/$ vs 105.00/$.  SAr 15.835/$ vs 16.302/$.  $1.302/gbp vs $1.293/gbp.  0.720/aud vs 0.708/aud.  CNY 6.642/$ vs 6.714/$.

 

Commodity News

Precious metals:         

Gold US$1,915/oz vs US$1,892/oz yesterday – Gold hits two-week high on prospect of Biden win 

Gold prices rose on Thursday while the US dollar went the opposite way, as investors gauge the economic impact of a Joe Biden win in the US election.  

It is widely perceived that a Democrat win would lead to larger economic support measures, which fuelled a weaker dollar, making gold cheaper for holders of other currencies. 

The US dollar index fell 0.2% to 93.30 on Thursday morning, the lowest level in a week (FX Street). 

Furthermore, vast swathes of stimulus would also see investors piling into gold, as bullion is a hedge against inflation.  

Spot gold was up 0.7% to $1,916/oz earlier this morning, whilst US gold futures rose 1.1% to $1,917/oz (Reuters).  

Gold ETFs 110.7moz vs US$110.9moz yesterday

Platinum US$885/oz vs US$857/oz yesterday –

Palladium US$2,336/oz vs US$2,254/oz yesterday

Silver US$24.43/oz vs US$23.59/oz yesterday

           

Base metals:   

Copper US$ 6,799/t vs US$6,714/t yesterday

Aluminium US$ 1,891/t vs US$1,858/t yesterday

Nickel US$ 15,380/t vs US$15,115/t yesterday

Zinc US$ 2,579/t vs US$2,526/t yesterday

Lead US$ 1,834/t vs US$1,805/t yesterday

Tin US$ 18,180/t vs US$17,970/t yesterday

           

Energy:           

Oil US$41.0/bbl vs US$39.8/bbl yesterday

Natural Gas US$3.040/mmbtu vs US$3.046/mmbtu yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$113.0/t vs US$113.0/t

Chinese steel rebar 25mm US$584.5/t vs US$569.5/t

Thermal coal (1st year forward cif ARA) US$53.9/t vs US$54.6/t

Coking coal swap Australia FOB US$119.3/t vs US$120.3/t

           

Other:  

Cobalt LME 3m US$32,835/t vs US$32,835/t

NdPr Rare Earth Oxide (China) US$50,894/t vs US$50,044/t – China’s September rare earth exports fall 44% YoY 

Rare earth exports sharply declined in September, totalling 2,003t- the value of which amounted to 130m yuan.  

Exports from January to September declined 27.5% YoY to 26,381 yuan.  

China’s rare earth metal ore imports from the US rose 51% YoY to 49,040t from January to September, whilst exports from the US in September fell 64% YoY to 2,240t (SMM News).  

Lithium carbonate 99% (China) US$5,496/t vs US$5,362/t

Ferro Vanadium 80% FOB (China) US$27.2/kg vs US$27.5/kg

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

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

Graphite flake 94% C, -100 mesh, fob China US$440/t vs US$440/t

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

 

Battery News

Battery storage facility to aid grid stabilisation in Victoria, Australia 

One of the largest lithium-ion batteries in the world is to be built in Victoria, with an expected power capacity of 300MW and a storage capacity of 450MWh.  

The facility would be more than twice the size of the battery build at Hornsdale, South Australia- which was the biggest in the world when it began operating in 2017.  

The battery will store enough energy to run about 500,000 homes for half an hour, and will improve the reliability of the power grid as ageing coal-fired power stations become less reliable as a result of the state’s increased reliance on wind and solar (The Guardian). 

 

Company News

Beowulf Mining* (LON:BEM) 5.5p, Mkt cap £33.1m – IP survey highlights anomalies for drill testing 

(Beowulf holds 46.1% of Vadar. Beowulf also holds 100% Kallak iron ore in Sweden, 100% of Aitolampi graphite in Finland and 40% of the Mitrovica and Viti projects in Kosovo)

Beowulf has completed an Induced Polarization and resistivity survey across its Madjan Peak target at Vadar Mineral’s Mitrovica license in Northern Kosovo.  

IP and resistivity data was collected across the area using a combination of offset pole-dipole lines combined with Iris instrument Fullwavers which were distributed along adjacent lines. This allowed for the creation of 3D chargeability and resistivity volumes.  

Recently completed high resolution drone magnetic data maps out a zone of demagnetisation, which correlates with mapped intense alteration. Meanwhile, IP chargeability anomalies have been delineated across the Majdan Peak and Madjan Peak South targets.  

Chargeability sources correlate well with gold in soil and rock samples, with evidence of a gently dipping underlying source, which represents the primary target for drill testing. 

The IP anomalies are located at the base resistive units which correlate well with mapped silicification, in line with the typical orebody geometry of high-sulphidation gold deposits. Anomalies shown by IP are bounded by the zone of demagnetisation defined in the magnetic data and appear to follow structural controls at shallower depth.  

Kurt Budge, CEO of Beowulf, commented: “It’s a good time to have a gold target in the portfolio and Vardar’s geophysics programme has again delivered an exciting set of results for Majdan Peak, indicating a potentially large source of gold mineralisation below the anomaly defined at surface through gold in soils and alteration intensity.” 

*SP Angel act as Nomad and Broker to Beowulf Mining

 

Jubilee Metals Group (LON:JLP) – 6.5p, Mkt cap £132m – Jubilee raises rights to copper tailings in Zambia

Jubilee Metals reports it has secured rights to an additional ~115mt of copper/cobalt tailings in Zambia.

This raises Jubilee’s tailings, supply and process development rights to ~270,000t of copper tailings in total.

The company reports the pipeline places the company on track to deliver 25,000tpa of copper equivalent

The close proximity of the projects offers the potential to integrate components of the processing facilities potentially offering significant capital savings.

The tailings have been previously drilled and sampled to confirm both content and size containing on average 0.3% copper and 0.05% cobalt

Jubilee has previously estimated capital expenditure at US$15m over the next year.

We expect Jubilee’s costs and capital requirements to rise as a result of the latest acquisition of tailings.

*An SP Angel mining analyst has visited Jubilee Metals Group assets in Zambia in 2018

 

Panther Metals (LON:PALM) 12p, Mkt Cap £6.0m – Reconnaissance exploration at Dotted Lake, Ontario

Panther Metals reports that results of reconnaissance exploration sampling at its wholly owned Dotted Lake property in Ontario have identified gold mineralisation related to narrow shear zones located on the northern limb of Schreiber-Hemlo Greenstone Belt where Panther Metals is planning a high-resolution airborne magnetic and electro-magnetic survey to investigate the contact between the greenstones and the Dotted Lake batholith intrusion.

Outcrop samples retrieved by Panther Metals during its reconnaissance work returned assay results of  “18.9g/t Au & 0.94 g/t Ag and 9.37g/t & 1.73 g/t Ag, with three of the remaining samples … [of seven] …returning low level anomalous gold within the immediate stripped area”.

Previous channel sampling of trenches excavated in 2010 to follow up gold in soil geochemical anomalies showed channel sample results from trench TR-10-4 “returned two mineralised intervals; 1.14 g/t Au over 1.00 m; and 9.02 g/t Au & 859 ppm Zn over 0.40 m with a further 2010 prospecting sample returning  Au 16.95 g/t Au & 7.7 g/t Ag  from nearby”.

Conclusion –  Initial promising early stage reconnaissance results at Dotted Lake are being followed up with airborne geophysical surveys which may shed light on the scale and structure of future targets.

 

Rockfire Resources (LON:ROCK) 0.93p, Mkt Cap £9.4m – Additional drilling results from Plateau project in northern Queensland

Rockfire Resources reports that it is continuing to intersect gold mineralisation in its drilling at the wholly owned Plateau project in northern Queensland and that results have been obtained from depths of up to 600m below surface.

Results from four holes reported today include:

A 0.74m long intersection averaging 16.9g/t gold from a depth of 380.26m in hole BPL-026. The intersection is contained within a wider zone of 4.5m averaging 3.0g/t and “lies to the south and outside of the initial gold target zone. BPL026 also extended gold mineralisation in the previously reported BPL026 pre-collar to a total mineralised zone of 162.92 m @ 0.2 g/t Au”; and

An 18.86m long intersection averaging 29.7g/t silver – described as the “highest-grade silver ever recorded at Plateau” from a depth of 67.74m in hole BPL-041 and including 1.26m averaging 408g/t silver. This hole also intersected 17m at an average grade of 1.2g/t gold from 409m depth; and

“Hole BPL033 was drilled in the opposite direction to all other holes (from south to north), to confirm the dip of the mineralised contact and was not expected to return any gold values. This hole did, however, intersect 0.52 m @ 3.5 g/t Au at 542.13 m depth. This is within a wider interval of 6.45 m @ 0.5 g/t Au, which is interpreted to be splaying off the main gold zone at depth. Such intersections potentially add further ounces to the global JORC resource at Plateau… [as well as] … high-grade silver, with an interval of 5.39 m @ 31.02 g/t Ag, including 1.35 m @ 70.9 g/t Ag”; and

Hole BPL-040 returned “elevated” levels of copper with 7.98m averaging 0.25% copper, 18g/t silver and 0.3g/t gold from a depth of 622m as well as “multiple gold intervals, including 3.03 m @ 1.2 g/t Au, intersected more than 600 m below surface. Additional individual intervals include 0.62 m @ 2.25 g/t Au, from 629.36 m and 0.41 m @ 2.50 g/t Au from 639.25 m deep. These intervals are located within a zone of 44.44 m @ 0.2 g/t Au from 609.00 m deep. A second mineralised zone higher in the hole returned 38.00 m @ 0.2 g/t Au from 465.00 m depth”.

The company explains that Plateau has been subject to “multiple mineralising pulses” and that it considers that its drilling “has not yet intersected the main zone and is all within the margins of the gold system. Strong potential remains for high-grade gold to be encountered with further drilling”.

Future exploration is planned to investigate “high-grade gold which lies outside our initial gold target” as well as developing its mineralisation model as a prelude to a JORC resource estimate and a “gravity survey to determine potential for deep-seated anomalies”.

 

Tri-Star Resources* (LON:TSTR) SUSPENDED – Results for 2019

Tri-Star Resources reports a pre-tax loss of £6.4m for 2019 (2018 loss –  £1.5m) with the overall result driven to a large extent by an increased level of charges resulting from adverse movements in of £5.4m (2018 – £0.3m positive movement) in the fair value of the financial asset represented by loans to SPMP despite reduced administrative costs of £0.5m (2018 – £0.8m) and lower levels of shares-based payments (£0.2m compared to £0.6m in 2018).

The company reports a 31st December 2019 cash balance of £0.3m and “As at 31 October 2020, the Company had £12,000 in cash, with funds of USD$600,000 due from SPMP by 15 November 2020 under the Settlement Agreement signed on 1 November 2020”.

Earlier this week, Tri-Star Resources announced that it had Resources reached a settlement agreement with Oman Investment Authority (IAC) and DNR Industries (DNR), its joint-venture partners in the SPMP roasting plant in Oman which leaves the company with a 16.3% interest and provide sufficient further funding in order to bring the plant into production without further equity dilution to TSTR.

The plant, in Sohar, is the world’s largest antimony roaster outside China with leading environmental standards and the design capacity  equivalent to 12-15% of world antimony production as well as the capacity to produce over 50,000oz per year of gold from complex gold ores which present challenges to more conventional gold recovery technology.

Reporting on progress at the plant, the company confirms that “SPMP produced and sold its first batches of antimony metal and of gold dore and has been operating individual parts of the plant for short periods at 50% of capacity … but efforts to ramp up production have been hampered in part by the continued lack of funding for SPMP”.

Tri-Star also confirms that “As a result of the Settlement Agreement, TSTR will become a passive investor in SPMP.  Accordingly, the Board is of the view that the costs involved in keeping TSTR admitted to AIM are not warranted.  Accordingly, a shareholder circular will be sent shortly to all shareholders recommending that TSTR’s admission to AIM is cancelled”.

Although acknowledging that the last 18 months had been “very frustrating” and that “this may not be the outcome that some shareholders had envisaged” Chairman, Adrian Collins, explained that the agreement with IAC and DNR “provides for the ongoing funding of SPMP, it is the Board’s view that the risk of the guarantee [provided by the company in relation to SPMP’s loans] being called has been significantly reduced.  The current expected date of completion of the plant is in H1 2021 at which point the guarantee should be expunged.”

*SP Angel acts as Nomad to Tri-Star Resources. David Facey, a former partner at SP Angel is the CEO & CFO at Tri-Star Resources.

 

URU Metals* (LON:URU) 260p, Mkt cap £3.9m – Notice extended for convertible loan note

URU has agreed to extend the notice period relating to the Convertible Loan Note, as previously announced on the 6th of May 2020 and extended on the 6th of August 2020, for a further 90 days with effect from the 4th of November.  

All other terms related to the Loan Note remain the same.  

 *SP Angel act as Nomad and Broker to URU Metals

 

Analysts

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

 

Sales

Richard Parlons –[email protected] – 0203 470 0472

Abigail Wayne – [email protected] – 0203 470 0534

Rob Rees – [email protected] – 0203 470 0535

Grant Barker – [email protected] – 0203 470 0471

 

 

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

 

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