Today’s Market View – Amur Minerals; Arc Minerals; Condor Gold; Kodal Minerals; Metal Tiger and more
SP Angel . Morning View . Tuesday 16 02 21
China looking to restrict Rare Earth exports to the West
MiFID II exempt information – see disclaimer below
Amur Minerals* (LON:AMC) – Extension for TEO report submission secured
Arc Minerals* (AIM:ARCM) – Call reveals approach by large Chinese player, work on Anglo deal and study on Cheyeza copper mine
BHP (LON:BHP) – Half year results dominated by iron-ore
Condor Gold* (AIM:CNR) – £4m private placing
Cornish Metals* (AIM:CUSN) – First day of trading on AIM
Glencore (LON:GLEN) – Glencore 2020 results reflect Covid19 impact
Kodal Minerals* (LON:KOD) – Riverfort converts a further $169,385 worth of loan notes
Metal Tiger (AIM:MTR) – £85,200 investment in Millennial Silver Corp
Phoenix Copper* (LON:PXC) – Updated economic results for Empire
Rambler Metals and Mining* (AIM:RMM) – US$10.5m raised in oversubscribed placing
Tertiary Minerals* (AIM:TYM) – Exploration results from the Paymaster project
Rare Earths – China looking to hit back at US defence contractors through limiting rare earth exports
- China is flexing its strangle-hold on rare earths ‘REEs’ and potentially other commodities in news in the FT this morning.
- The nation is now exploring limiting rare earth mineral supplies to US Defense contractors, necessary for the production of F-35 fighter jets and other weaponry.
- The Ministry of Industry and Information Technology in January proposed a plan to control production and export of REEs to possibly disrupt US manufacturing, with industry executives saying that government officials have asked them how badly companies in the US and Europe would be affected if China restricted REEs during a bilateral dispute.
- China passed draft legislation to allow this three years ago reviewing the legislation in the CPC Central Committee plenum in October last year.
- The National People’s Congress reviewed the ‘draft’ legislation in October in preparation for the final decree and implementation in 2021.
- This allows China to take further action in the restriction of exports to punish foreign nations and companies through restrictions on the availability of REEs..
- Back in October China’s CPC also threatened to create a new REE black list for foreign companies.
- China then claimed the list would be similar to the US Department of Commerce “entity list” for foreign companies that trade with North Korea or Iran, or are accused of illegal acts such as money laundering or forced labour, etc (ATF)
- The legislation is a major and serious threat to Western manufacturers though China may have been carefully restricting the availability of key REEs for some time using export quotas and generally preferring companies with manufacturing bases located in China.
- Today’s news is hugely worrying for US and European manufacturers who depend on raw materials and components from China.
- Production lines in the West ground to a near halt last March as China locked down logistics cutting off the supply of LED/diodes to the west.
- This was in response to limiting the spread of the Coronavirus at the time bit it demonstrated the West’s reliance on LEDs and diodes which are almost entirely made in China.
- Major manufacturers which had forward planned for a potential China Export Lockdown were still caught out as their Western suppliers were found to be reliant on LED/diodes from China causing ‘just-in-time’ supply chains to collapse.
- The bigger danger to the west is probably in the form of soft-export restrictions where good quality metal and components are only available on a reliable and low-tariff basis to manufacturers with factories within China.
- Cold War: many believe the West may be about to enter into a new form of Cold War against China where China further restricts commodity exports towards its own political and manufacturing advantage.
- Australia is an example: China continued to restrict imports from key Australia states in order to punish politicians for their opposition to the instillation and rollout Huawei telecoms equipment.
Conclusion: The West is waking up to the danger of Chinese dominance in key raw materials and components from its subsidised mineral processing sector. The US EXIM bank offered a US$208m LoI to Bluejay Mining* yesterday for its titanium mineral sands project in Greenland.
US state funds are also being quietly distributed into the mining sector through other funds
We expect US and European funds to enable the financing and development of a number of new rare earth, nickel and other critical mineral projects across the mining sector to help counteract increasing Chinese aggression in these areas.
Key Rare Earths Element companies are: Rainbow Rare Earths* and Mkango Resources*
Three-month tin prices close up 3% at 8-year high
- Tin prices continued to rally on Monday, with prices rising by $1,000/t in just one hour as a result of a short squeeze driven by tight supply and strong semiconductor demand.
- Spot tin contracts traded at the biggest premium to three-month futures in over thirty years, with some market participants questioning if the squeeze has been exacerbated by the suspension of the LME’s open-outcry trading floor.
- The official spread between spot tin and three-month futures swelled to $4,748/t on Monday, with many believing that the ring would have done a better job than electronic pricing.
- Cash prices for tin closed 17% higher at $24,385/t, the biggest daily gain on record while three-month prices rose 3.1% to $24,385/t- the highest in eight years (Bloomberg)
- Tin soared despite a 550 tonne delivery into the Port Klang warehouse on Friday which nearly doubled the total amount of stock to 1,340 tonnes (Fastmarkets MB).
Metals price forecasting through 2020 – 2020 was probably the most difficult year for forecasting anything
- No.1 in Copper: “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”
- No1. In Gold: “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”
- The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
US – Corporate revenues and earnings growth turned positive in Q4/20 following three quarters of contraction, according to Refinitiv data.
- A pick up in results came sooner than many analysts had expected supported by stimulus and looser monetary policy from the Fed.
Japan – The central bank pushed its inflation target of 2% further out arguing the set level will not be reached until 2024.
- Hence, monetary support will remain in place past the current governor five year term date in 2023.
- In latest report last month, the bank expected price growth of 0.7% in the year ending in March 2023.
France – Unemployment dropped to 8.0% in Q4/20, down 1.1pp on the previous quarter.
- While welcome news, the number is likely to be skewed down as a six-week COVID-19 lockdown during the quarter meant than jobseekers were unable to register as unemployed, the INSEE statistics office said.
- Unemployment (%): 8.0 v 9.1 in Q3/20 and 9.1 est.
Australia – The government of Victoria is planning to extend a hard lockdown planned to end this Wednesday.
- Premier will take a decision in the next 24 hours while the resumption of aviation this week has already been ruled out.
- Authorities said the new variants of COVID-19 that had emerged this year had dramatically increased the risk of a wider outbreak, FT reports.
North Korea – Pfizer is reported to have been hacked by North Korea for information on its COVID-19 vaccine and treatments Bloomberg reports citing South Korean lawmakers.
Currencies US$1.2138/eur vs 1.2137eur yesterday. Yen 105.52/$ vs 105.17/$. SAr 14.471/$ vs 14.442/$. $1.392/gbp vs $1.390/gbp. 0.778/aud vs 0.779/aud. CNY 6.458/$ vs 6.458/$.
Gold US$1,820/oz vs US$1,819/oz yesterday
Gold ETFs 106.2moz vs US$106.2moz yesterday
Platinum US$1,300/oz vs US$1,287/oz yesterday
Palladium US$2,383/oz vs US$2,396/oz yesterday
Silver US$27.58/oz vs US$27.53/oz yesterday
Copper US$ 8,372/t vs US$8,378/t yesterday
Aluminium US$ 2,077/t vs US$2,091/t yesterday
Nickel US$ 18,570/t vs US$18,725/t yesterday
Zinc US$ 2,837/t vs US$2,825/t yesterday
Lead US$ 2,112/t vs US$2,133/t yesterday
Tin US$ 24,500/t vs US$23,945/t yesterday
Oil US$63.3/bbl vs US$63.4/bbl yesterday
- Oil prices have slipped slightly as caution has given way to the overly optimistic sentiment of late 2020, with most energy agencies cutting their estimates of 2021 crude demand
- According to an industry consensus, global crude demand will increase by 5.5-6MMbopd, implying that a full return to pre-COVID demand levels will require several years to take place
- The underlying question whether crude output levels can actually follow this demand growth this year has been growing in importance, steep backwardation on the Brent curve might suggest has serious qualms about it
- With divergent trends abounding, Middle Eastern national oil companies have opted for nuance after the January-February price increases
- As usual, Saudi Arabia has led the way, rolling over all of its February 2021 OSPs into March completely unchanged
- Overall, the reports pointed to a still-fragile energy market that is highly susceptible to the course of Covid-19
- The robustness of Asian demand remains a key gauge for Middle Eastern NOCs
- China and India have been leading the continent with fuel consumption almost returning to pre-COVID levels in both
- On the other hand, insular economies such as the Philippines, Indonesia or Taiwan have been running their refineries below maximum capacity or temporarily halting several units amidst poor margins
- At the same time, turnaround season is just around the corner and Japan’s month-on-month import drop in February is the first of many to come
- Albeit smaller in terms of overall output, refinery maintenance in Thailand, Taiwan and Sri Lanka will also tighten the markets a bit
- February turnaround will blaze the path for next month’s large-scale works, China alone will have at least 0.9MMbopd of refinery capacity going offline in March 2021
- Currently, the oil market is in backwardation, which occurs when spot prices are higher than further-dated contracts
- Backwardation does suggest however a near-term bullish market structure with tightening inventory levels
- This may encourage refiners to tap deeper into storage as they ramp up production to take advantage of higher prices
- Natural Gas US$3.075/mmbtu vs US$3.026/mmbtu yesterday
US gas prices remain above US$3/mmbtu on news that the EIA has substantially increased its forecast for natural gas production in 2021 and 2022 amid expectations of more associated gas production in the Permian Basin, and trimmed its gas price forecasts for the current year
In the agency’s February Short-Term Energy Outlook, its raised output by 3.60Bcf/d to 98.68Bcf/d its total gas marketed production estimate for the US in the first quarter, and pushed up its Q2 forecast as well by 2.74Bcf/d to 97.95Bcf/d
Estimates for the total marketed natural gas production over the next two years also rose, by 2.42Bcf/d, to average 98.34Bcf/d in 2021, and by 1.31Bcf/d to 98.93Bcf/d on average in 2022
In the latest inventory report announced yesterday, stocks were marginally higher than anticipated
Natural gas in storage was 2,518Bcf as of 5 February according to the EIA
This represents a net decrease of 171Bcf from the previous week
Expectations were for a 183Bcf draw according to survey provider Estimize
Stocks were 9Bcf less than last year at this time and 152Bcf above the five-year average of 2,366Bcf
At 2,518Bcf, total working gas is within the five-year historical range
Iron ore 62% Fe spot (cfr Tianjin) US$160.5/t vs US$160.5/t
Chinese steel rebar 25mm US$668.0/t vs US$668.0/t
Thermal coal (1st year forward cif ARA) US$64.5/t vs US$66.1/t
Coking coal swap Australia FOB US$157.0/t vs US$157.0/t
Cobalt LME 3m US$47,000/t vs US$47,000/t
NdPr Rare Earth Oxide (China) US$72,543/t vs US$72,543/t
Lithium carbonate 99% (China) US$10,607/t vs US$10,607/t
Spodumene 6% Li2O min, cif (China) US$455/t vs US$395/t
Ferro Vanadium 80% FOB (China) US$30.5/kg vs US$30.5/kg
Ferro-Manganese high carbon 78% Mn US$1,610/t vs US$1,575/t
Tungsten APT European US$250-255/mtu vs US$250-255/mtu
Graphite flake 94% C, -100 mesh, fob China US$560/t vs US$560/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,625/t vs US$2,625/t
Jaguar to be an all-electric automaker by 2025
Jaguar announced yesterday that its new global strategy involves a serious acceleration of the electrification of all its brands, including Jaguar going all-electric by 2025 and Land Rover following with mostly EVs after that (Electrek).
All new Jaguar vehicles will be all-electric by 2025 and by 2030, the automaker expects 100% of sales from the brand to be all-electric vehicles.
Land Rover’s first EV will be in 2024 and by 2030 the company aims for 60% of all sales coming from all-electric vehicles.
Solar and wind met 30% of Britain’s electricity needs in 2020
Solar and wind generated 30% of Britain’s electricity in 2020 according to Drax’s latest Electric Insights report.
This was an increase of a sixth on 2019 with solar and wind supplying over 100TWh of electricity.
Solar generation hit a high in April with 9.68GW and wind output reached a peak of over 17.4GW.
Emissions fell 16% year-on-year, however this was largely due to reduced demand caused by COVID-19.
GE to supply one of Europe’s largest windfarms
GE Renewable Energy will supply 137 of its Cypress 5.5-158 turbines to the 753MW Önusberget (Markbygden) project in Sweden, which is due to be one of Europe’s largest wind farms.
Turbine installation is scheduled to start in July, with first energy production in the second half of the year.
Önusberget is part of the 4GW Markbygden complex – Europe’s largest onshore wind cluster.
Asset manager Luxcara owns the Önusberget wind farm, which it claims will be capable of powering 200,000 Swedish households for a full year.
Amur Minerals* (LON:AMC) 1.6p, Mkt Cap £21m – Extension for TEO report submission secured
The Company has successfully agreed amendments for the Kun Manie license (DEMP, Detailed Exploration and Mine Production License) including:
The final date for submission of Permanent Conditions TEO, a Russian system equivalent of a Feasibility Study, and the final Reserves Estimate Report to GKZ has been extended by a year to 1 December 2021.
A mined plan based on the GKZ registered reserves and put together post-delivery of the TEO to be approved by June 2022, extended by a year from June 2023.
Meanwhile, work on the TEO continued with a number of optimisation opportunities identified on course for completion.
The team engaged a third party to verify TEO results compiled by Oreall.
Additionally, the Company is working with RPM Global to update the March 2018 JORC MRE (155mt at 0.75% Ni and 0.21% Cu) for followed up drilling.
Conclusion: The Company agreed an extension to submission date of the Kun Manie TEO to December 2021 following delays induced by the COVID-19 pandemic allowing the team to complete optimisation studies and refine mining/processing schedule. Update MRE is in the process of being prepared to account for additional drilling completed since the last Mar/18 MRE (155mt at 0.75% Ni and 0.21% Cu). The project benefits from exposure to prices for nickel (+42% LTM) and copper (+47% LTM) that performed well on the back of a recovery in post-pandemic growth outlook as well as strong tailwinds from climate change focused policy commitments including sustainable power generation, storage and transport electrification.
*SP Angel act as Nomad and Broker to Amur Minerals
Arc Minerals* (LON:ARCM) – 6.45p, Mkt cap £64m – Call reveals approach by large Chinese player, work on Anglo deal and study on Cheyeza copper mine
(Arc holds 72.5% of Zaco and 66% of Zamsort in Zambia. Zamsort has a portfolio of copper-cobalt prospects close to FQM’s new Trident mine on the Copperbelt in Zambia. The Cheyeza project is 66% owned by Arc Minerals through its holding in Zamsort.)
Arc Minerals held a management call yesterday: http://www.arcminerals.com/news/media-and-press/default.aspx
The management call was held to update investors with the company’s drilling, progress in negotiations with Anglo American and new news and developments on the proposed plant at Cheyeza East.
The company remains in exclusivity in discussions with Anglo American for a further 180 days from 12 January this year.
Exciting results from 3,000m of drilling Fwiji and Muswema hitting significant sulphide mineralisation
The team will be drilling deeper holes when work restarts at the end of the rainy season.
Covid-19 did delay some assay results but the operations have largely been unaffected.
Zambia has been relatively unaffected by Covid-19 with just 959 fatalities from the disease recorded out of 70,248 cases and >1m tests according to Worldometers.info
Arc Management are in daily contact with Anglo American in relation to the due diligence being done on the company and its underlying licenses.
The team are ploughing through technical due diligence for Zamsort and Zaco with the report on Zamsort alone amounts to over 400 pages.
Anglo held the Zamsort and Zaco licenses in the 1990s before withdrawing from the region due to low copper prices and rising operating costs.
Nick von Schirnding, Arc’s ceo revealed the company had been approached by a large Chinese player which was duly informed that Arc was in an exclusive arrangement with Anglo.
Management are fast tracking the scoping study for the process plant at Cheyeza East which is due in Q2.
The approximate $5m capital cost is likely to be funded through an offtake agreement or local level debt financing with production due to start in early 2022.
Cash: Management stressed the company is now fully funded through to late 2022 covering two drilling seasons in Zambia.
The plant should then generate cash flow to fund further exploration and development.
Mineralisation at Cheyeza is hosted in a weathered unit of rock down to 60-80m as a soil in a clay. This does not require any drilling and blasting but will need different processing for treatment and separation.
The team have so far done three batches of test work on the ore to design the optimum process route as part of the Scoping study.
The company’s desktop study at Cheyeza indicates the generation of $45-50m pa of sales and Free cash flow of $25m pa at current copper prices
Casa Minerals asset sale: payments are due in March but several approaches to Golden Square which will require approval from Arc and my accelerate payments on the assets.
Conclusion: Zambia is seeing a resurgence of new interest in copper and cobalt exploration. The nation is significantly easier to work in than the DRC, has good infrastructure for mining and remains relatively unexplored in large areas. If Anglo does not offer a deal to Arc we expect the company may have other offers to turn to.
*SP Angel acts as Nomad and broker. Our intrepid mining analyst and co-driver drove to Arc’s license and pilot process plant at Kalaba from Lusaka and back again.
BHP (LON:BHP) 2,247p, £47.1bn – Half year results dominated by iron-ore
BHP reports a 7% increase in underlying operating profit for the six months ending 31st December 2020 to US$9.8bn (2019 – US$8.3bn) and underling EBITDA of US$14.7bn (2019 – US$12.1bn) at a margin of 59% (2019 – 56%).
The company delivered a 16% increase in attributable profit to US$6.0bn after accounting for exceptional losses of US$2.2bn related to impairments of New South Wales Energy Coal.
The company has declared an interim dividend of US$1.01/share amounting to a total of US$5.1bn “equivalent to an 85% payout ratio on an underlying basis”.
Strong free-cash flow of US$5.2bn over the period helped reduce net debt to US$11.8bn from US$12.0bn leabing BHP with 18.1% gearing
Commenting on what he described as “a strong set of results for the first half of the 2021 financial year”, CEO, Mike Henry, highlighted “Our continued delivery of reliable operational performance during the half supported record production at Western Australia Iron Ore and record concentrator throughput at Escondida”.
He said that BHP’s “outlook for global economic growth and commodity demand remains positive, with policymakers in key economies signalling a durable commitment to growth and signalling ambitions to tackle climate change” with population growth and improving living standards expected to “drive continuing growth in demand for energy, metals and fertilisers”.
EBITDA is dominated by the contribution of BHP’s Western Australian iron ore business which contributed US$10.2bn (approximately 70%) to the total (2019 – US$7.1bn or approximately 60%) to the total.
The company reports that iron ore trading conditions “were particularly tight in the second half of the 2020 calendar year. The combined impact of very strong Chinese pig iron production and Brazilian exports being unable to lift materially from depressed levels in the 2019 calendar year outweighed record shipments from Australia. Our analysis indicates that before prices can correct meaningfully from their current high levels, one or both of the Chinese demand/Brazilian supply factors will need to change materially”.
Copper operations (US$3.7bn), dominated by Escondida (US$3.0bn), contributed approximately 25% of EBITDA (2019 – US$2.4bn – approximately 20%).
Operations have benefitted from recent copper price strength as Chinese demand strength continues and demand from the rest of the world recovers. The company also comments that there are “near term risks from the escalation of COVID-19 cases in Chile, and the fact that a number of wage negotiations at Chilean mines are scheduled for the current calendar year, spread across both halves. Longer term, end-use demand is expected to be solid, while broad exposure to the electrification mega-trend offers attractive upside.”
Commenting on the longer term outlook for copper prices, BHP says that they “are expected to also reflect grade decline, resource depletion, water constraints, the increased depth and complexity of known development options and a scarcity of high quality future development opportunities after a poor decade for industry-wide exploration in the 2010s”.
The company reports that the impact of the Covid19 pandemic during the half year amounted to US$436m (pre-tax) comprising US$138m as a result of reduced volumes, US$298m from additional direct costs such as demurrage and standby charges as well as social distancing and related measures.
While the company cautions that its guidance is subject to further potential impacts from the Covid19 pandemic, it reaffirms its guidance for the full financial year as 245-255mt of iron ore with a narrowed range of copper output expected for Escondida (0.97-1.03mt) contributing to overall copper guidance for the group in the range 1.510-1,645mt as previously reported.
BHP has previously reported that it spent US$86m on mineral exploration during the half-year and confirms today that its efforts were “predominantly focused on advancing copper targets within Chile, Ecuador, Mexico, Peru, Canada and the south-west United States”.
Conclusion: BHP has benefitted from strong commodity price pressures as China bounces back from the worst effects of Covid19. The company retains a low level of financial gearing and has declared an interim dividend totalling US$5.1bn. Copper remains an important exploration target following industry-wide cut-backs during the 2010s.
Condor Gold* (AIM:CNR) 46p, Mkt Cap £56.9m – £4m private placing
Condor Gold reports the raising of £4m through the placing of additional shares representing 7.9% of the company’s capital at a price of 42p/share.
*SP Angel act as sole broker to Condor Gold
Cornish Metals* (AIM:CUSN) – First day of trading on AIM
Cornish Metals* (TSX-V:CUSN) – C$0.24, Mkt cap C$34m
Cornish Metals shares started trading on AIM this morning.
The company raised £8.2m through the issue of 117,226,572 new shares.
Procceds will be used for further drilling at the new United Downs copper-tin project to determine the resource potential of a 1,000m strike section of the target area
Funds will also be used for field work, including soil sampling and geophysics and possible drill testing on other high priority exploration targets within trucking distance of the South Crofty Mine in Cornwall, and for general working capital purposes.
Drilling at United Downs should restart in late March or early April.
* SP Angel acts as broker and financial advisor to Cornish Metals
Glencore (LON:GLEN LN) 291p, Mkt cap £37.6bn – Glencore 2020 results reflect Covid19 impact
Glencore has reported an attributable loss of US$1.9bn for 2020 (2019 – loss of US$0.4bn) although EBITDA is broadly steady at US$11.6bn for the year.
CEO, Ivan Gasenberg, commented that “the Covid-19 pandemic is an extraordinary challenge that continues to impact many aspects of day-to-day life. Against this backdrop, the strength of our 2020 underlying performance is a credit to our highly skilled and dedicated employees, and also reflects our unique business model and ability to quickly adapt to changing market conditions and customer needs.”
The company says that the EBITDA reflects stronger contributions from its marketing and industrial metals operations offset by the impact of weaker coal prices.
Marketing EBITDA increased by 41% to US$3.34bn (2019 – US$2.37bn) with the contribution from metals and minerals of US$1.77bn (2019 – US$1.17bn)) outweighed by that from energy products at US$2.05bn (2019 – US$1.52bn).
Industrial activities in metals and minerals contributed US$7.29bn of EBITDA (2019 – US$5.56bn) while energy products generated US$1.04bn (2019 – US$3.85bn).
Year-end net debt reduced by 10% to US$15.84bn (2019 – US$17.56bn) within the company’s stated target range of US$10-16bn and Glencore says that its is aiming to be below the mid-point of this range by the end of 2021.
Kodal Minerals* (LON:KOD) – 0.10p, Mkt cap £12.3m – Riverfort converts a further $169,385 worth of loan notes
Kodal Minerals reports the further conversion of $169,384.70 loan notes int eh company by Riverfort Global Opportunities PCC Limited and YA II PN Ltd.
The company signed a $1.5m loan note agreement with Riverfort last July..
Today’s conversion notice brings the expanded total number of shares to 12,344,541,143
*SP Angel acts as Financial Advisor and Broker to Kodal Minerals
Metal Tiger (AIM:MTR) 22p, Mkt Cap £33.7m – £85,200 investment in Millennial Silver Corp
Metal Tiger reports that it has invested C$150,000 (approximately £85,200) in Canadian-listed Millennial Silver Corp as part of Millennial’s C$24 million equity financing in connection with the proposed business combination with 1246768 B.C. LTD (“768”) to form Millennial Precious Metals Corp, which was announced as having closed on 11 February 2021
Millennial is an acquisition company that will be looking to complete a series of transactions among 768 Millennial and Clover Nevada LLC that will among other things result in 768 indirectly acquiring Clover Nevada LLC’s interest in each of the Wildcat Property, the Mountain View Property, the Marr Property, the Ocelot Property, the Eden Property and the Dune Property located in Nevada and a lease and option to purchase the Red Canyon Property also located in Nevada.
The Transactions are conditional on the TSX approving the listing of the post-consolidation common shares of 768.
Phoenix Copper* (LON:PXC) 42p, Mkt Cap £27.2m – Updated economic results for Empire
(Phoenix holds 80% of the Empire mining property in Idaho)
Phoenix Copper has announced the results of a new economic model for its Empire mine open-pit project located near Mackay, Idaho.
The new study reflects the recovery of gold and silver made possible by the use of the environmentally benign reagent, ammonium thiosulphate as well as zinc and the copper as envisaged in the earlier studies.
The company’s revised plan envisages a 10 years production life extracting a total of 14.3mt of mineralised material currently within the measured and indicated resources in order to produce an average of 8,550tpa of copper, 1,970tpa of zinc, 17,235oz pa of gold and 680,050oz pa of silver at a life-of mine copper equivalent cash cost of US$1.83/lb or US$1,190/oz of equivalent gold.
The project is to be developed in two phases;
A seven year phase 1 during which 2.1mtpa of ore is treated to produce copper and zinc via heap-leaching: and
A second, overlapping phase 2 between years 4-10 which reprocesses ore from phase 1 using ammonium thiosulphate to produce precious metals.
The company has previously disclosed metallurgical test results indicating that ATS achieves comparable gold recovery rates, in excess of 95%, to those achievable by conventional cyanide leaching.
Phoenix Copper estimates that, using estimated commodity prices of US$3.60/lb for copper, US$1.20/lb for zinc, US$1,825/oz for gold and US$27/oz for silver, pre-production capital investment of US$52.6m generates a pre-tax NPV7.5% of US$105m and IRR of 57%. The company’s analysis shows an after-tax NPV7.5% of US$88m and IRR of 47%.
As a guide to the project’s sensitivity to commodity prices, Phoenix Copper says that a 10% increase in prices lifts the NPV7.5% to US$157m at the pre-tax level (IRR77%) and to US$140m after tax (IRR 68%).
CEO, Ryan McDermott explained that further optimization and refining of the plan was continuing “project in order to submit our Plan of Operations for the Phase 1 project as soon as possible in order to commence the final stages of the production permitting process”.
Mr. McDermott expressed optimism for the project in the light of the current metals prices and the incoming Federal Administrations commitment to “the development of metals for electrification projects” which he said fitted well with the company’s plans at Empire as does the proposed implementation of the environmentally benign ATS process.
He also looked forward to “a rewarding exploration season” which could include planned geophysical surveys as well as “at both the Red Star high grade silver-lead zone at Empire and our Navarre Creek gold property … [and where] … we hope to be drilling on both properties this summer.”
Conclusion: A revised economic study, incorporating precious metals recovery from the Empire open-pit project indicates a pre-tax NPV7.5% of US$105m (IRR57%) is generated from a pre-production capital expenditure of approximately US$53m to treat some 14mt of ore over a ten year’s period, The project plans to use environmentally friendly processing to recover the precious metals which, in our view, should facilitate the project permitting.
*SP Angel act as Nomad for Phoenix Copper
Rambler Metals and Mining* (AIM:RMM) 0.31p, Mkt Cap £29.7m – US$10.5m raised in oversubscribed placing
(Rambler owns 100% of the Ming Copper-Gold Mine)
Rambler Metals and Mining reports that it has raised US$10.5m (approximately £7.6m) through the issue of approximately 2,545m additional shares at a price of 0.3p/share.
Directors, Toby Bradbury, Brad Mills and Eason Cong Chen all participated in the oversubscribed placing which we estimate represents approximately 24% of the enlarged capital of the company.
In addition, “Tim Sanford, Vice President and Company Secretary of the Company, has also agreed to acquire 1,500,000 Placing Shares at the Placing Price pursuant to the Placing”.
The additional funds will enable Rambler Metals to progress several key initiatives aimed at expanding the production to a rate of the Ming mine to 2,400tpd. These include:
Securing additional equipment to “further support operations as they return to the optimized mill production capacity of 1,350 tonnes per day (tpd) … [and the initiation of] … engineering and planning to support the re-location of the Duck Pond 2,400 tpd flotation plant to the mine site”.
Upgrading of the mine’s power supply; and to
“Commence the design of, construct and commission a crushing & ore sorting plant at the mine site”.
In addition, the company is upgrading its resource planning and financial systems as well as undertaking studies “in support of future strategies such as materials handling including hoisting in the existing vertical shaft”.
CEO, Toby Bradbury, explained that the oversubscribed placing “will enable us to accelerate key elements of our strategy at a time of strength in the copper market”.
He also commented that 2021, described as a “transformational year for Rambler” had already seen “good progress with our turn-around plan” over the last two months with the resumption of “development in the lowest levels of the mine with a mining fleet that continues to improve in availability”.
Dr. Bradbury also highlighted the infill drilling underway to and the accelerating exploration programme “picking up on our exciting prospectivity and resource conversion potential” as well as the strengthening of the mining team.
In a separate announcement the company has announced the appointment of former Anglo Asian Mining non-executive director, Richard Round as a non-executive director with immediate effect. Mr. Round will chair Rambler’s Audit Committee and become a member of the Cororate Compensation, Governance and Nominating Committee.
Conclusion: The additional financing provides Rambler Metals with the capacity to build production at the Ming mine and progress the relocation of the Duck Pond mill which will increase capacity to 2,400tpd. Infill drilling to develop and expand the mineral reserve and resources inventory is underway while ore sorting to upgrade feed continues.
*SP Angel act as Nomad and broker to Rambler Metals & Mining
Tertiary Minerals* (AIM:TYM) – 0.5p, Mkt cap £5.9m – Exploration results from the Paymaster project
Tertiary Minerals has announced results from its Paymaster polymetallic exploration project in Nevada.
A programme of infill soil sampling over the East Slope prospect has identified zinc/silver geochemical anomalies over 450m and remaining open towards the east and the company confirms that geophysical modelling has defined “magnetic bodies associated with East Slope and Valley Prospects and additional targets for exploration.”
Tertiary Minerals says that field mapping and trenching is planned over the area during the spring and summer.
Executive Chairman, Patrick Cheetham, expressed satisfaction with the results and said that the results had “better defined” the existing targets as well as generating new targets for follow-up work.
He confirmed that “We hope to be able to advance the project to the drill stage in the next few months alongside a number of our other projects in Nevada where the results of our autumn exploration programmes are expected soon”.
Conclusion: Early stage geochemical and geophysical exploration results from the Paymaster project have improved understanding of the existing target areas and identified additional areas of potential interest to follow-up with mapping and trenching later this year.
*SP Angel act as Nomad and Broker to Tertiary Minerals
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
Grant Barker – [email protected] – 0203 470 0471
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
Natural Gas, Uranium, Iron Ore
Bloomberg OTC Composite
Lithium Carbonate, Ferro Vanadium, Antimony
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 ([email protected]).
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%