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Today’s Market View – Amur Minerals; Anglo Asian Mining; Condor Gold; IronRidge Resources

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SP Angel . Morning View . Thursday 14 01 21

Biden expected to announce a $2tn stimulus programme 

 

MiFID II exempt information – see disclaimer below 

Amur Minerals* (LON:AMC) – $165k coupon collected NRR convertible

Anglo Asian Mining* (AIM:AAZ) – Production at 69koz GEO and cash balance climbing to ~$40m in FY20

Atalaya Mining (AIM:ATYM) – Record copper production at Proyecto Rio tinto in 2020

Condor Gold* (AIM:CNR) – Directors exercise options

IronRidge Resources* (AIM:IRR) – 12,500m drill programme commenced at Ghana Lithium Project

Ormonde Mining* (AIM:ORM) – Ormonde announce deal for new high-grade copper, silver and zinc projects

Orosur Mining* (AIM:OMI) – FY Q2 2021 Results

Strategic Minerals* (LON:SML) – Cobre Q4 magnetite sales

URU Metals* (AIM:URU) – Possible disposal of Zebediela project

 

China – lockdowns in Hebei province to disrupt stimulus due to transport restrictions affecting steel supplies

Hubei’s three major cities are in lockdown Shijiazhuang, Xingtai and Langfang with steel mills reported to be having to find more space to store capacity due to the coronavirus transport restrictons (Reuters).

Hebei accounts for around a quarter of China’s steel capacity

 

China iron ore imports rise 9.4% in 2020 to all time high

China imported 1.17bnt of iron ore vs the previous record of 1.08bt in 2017 despite a 4.5% fall in imports in December.

China also imported 64% more steel yoy at 20.33mt

Chinese steel exports also fell 16.5% yoy to 53.67mt in 2020. December exports rose 3.6% yoy to 4.85mt.

Chinese steelmaking output is estimated to have increased by 5.4% last year to 1.05bt.

 

China rare earth exports slump to 5-year low

The world’s top exporter of rare earths saw its shipments slump to a five-year low as Covid-19 hit overseas demand and more supply was used domestically.

Shipments reached 35,448t, down 23% from 46,330t in 2019 and the lowest since 2015 (Reuters).

Rapid demand growth for REE is expected due to the elements currently being vital for the global energy transition, with Roskill forecasting a 10% increase in demand YoY in 2021.

China currently control ~90% of global supply, and many analysts believe they could further restrict supply of REEs due to political reasons, leading to investors searching for sustainable projects outside of China.

Mkango Resources* are developing their Songwe Hill rare earths project in Malawi, aiming to develop sustainable sources of NdPr and NdFeB and currently progressing its bankable feasibility study expected in the second half of this year.

Rainbow Rare Earths* is currently producing high-grade concentrate at its Gakara Project in Burundi, while also progressing its Phalaborwa tailings project and processing plant in South Africa.

*SP Angel acts as nomad and broker to companies mentioned in this comment

 

Lithium carbonate prices continue their meteoric recovery rising to US$8,658/t today from US$8,507/t yesterday

Lithium carbonate, the key ingredient for Li-ion cathodes, continues to rise in price driven by new demand from battery manufacturers.

The major producers in the Atacama in Chile are restricted in raising production due to concerns over their extraction of lithium brines from salars in the region.

Production from direct ‘osmosis’ extraction type technologies has failed to appear.

We have not heard of one of these projects making ‘commercial’ production as yet meaning its back to the drawing board for high-grade lithium brines and evaporation ponds for new lithium projects in the North West of Argentina.

While some Australian lithium hard-rock producers will ramp up production again many more will be needed to fulfil the demands of the >174 battery megafactories listed by Benchmark Mineral Intelligence.

Battery megafactory capacity is expected to rise to 2,000GWh in 2024 from around 500GWh in 2019.

The dramatic rise in popularity of Electric Vehicles seen in recent months is likely to accelerate new battery production and megafactory capacity.

This increase will raise demand for Li-ion NMC raw materials, namely Lithium, graphite (speherical), nickel (hydroxide) and cobalt and high-purity manganese.

This new demand combined with recent EU regulations on local content for Electric Vehicles sold within the EU is likely to create significant competition for suitable lithium, nickel and graphite projects.

Lithium projects are held by Savannah Resources* (Portugal), Ironridge* (Ghana) and Kodal Minerals* (Mali).

European graphite projects are held by Talga Resources and Beowulf mining.

*SP Angel act as Nomad and broker to these companies

 

 

Economics

US – may turn up the pressure on China’s Belt & Road infrastructure developments under Biden administration

The construction of massive new infrastructure has been criticised for its environmental impact (CNBC)

China has already said it will focus on cleaner projects under the initiative

As always we watch what China does and don’t pay much attention to what they say

US – House voted to impeach President Trump for a second time during his term on the back of “incitement to insurrection” for his role in stirring up a mob of supporters who stormed the Capital last week, FT reports.

The case is now ready to go to the Senate for a trial, although, it is currently adjourned until January 19 with the process unlikely to be completed before President Trump leaves the office.

“Even if the Senate process were to begin this week and move promptly, no final verdict would be reached until after President Trump had left office… this is not a decision I am making; it is a fact,” Mitch McConnell, the Senate’s senior Republican, said.

However, if President Trump is convicted by the Senate, lawmakers could hold another vote to block him from running for elected office again, according to BBC.

President-elect Joe Biden is expected to deliver the long-awaited stimulus plan later today.

US CPI rose 0.4% in December and 1.4% yoy vs rising 0.2% in November which was 1.2% higher yoy.

 

China – TSF ‘Total Social Financing’, the volume of financing provided by the financial system to the real economy, domestic non-financial enterprises and households, fell to CNY1.72tn in December below the expected CNY2.20tn and lower than the CNY2.13tn in November.

 

China – WHO led team arrived in Wuhan yesterday, more than six months after the probe was launched, with a goal to investigate origins of the coronavirus

The delegation was supposed to arrive last week but was delayed after Chinese authorities failed to grant entry in time.

The team will spend a month on the ground two weeks of which will be in quarantine.

 

Auto sales in China continued to recover climbing for a ninth consecutive month in December.

Sales were up 6.4%yoy last month coming in at 2.83m units, compared to a 12.6%yoy increase in November.

2021 sales are expected ot grow ~4% recovering from a 1.9%yoy drop recorded in 2020, according to the China Association of Automobile Manufacturers (CAAM).

Of 25.3m total sold last year, new energy vehicles segment (NEVs) including battery-powered electric vehicles, PHEVs and hydrogen fuel-cell vehicles posted a 11%yoy growth and increasing to 1.4m with a further ~30% increase expected for 2021.

Beijing wants NEVs to account for 20% of its overall auto sales by 2025, up from current ~5%.

 

UK – Vaccination is expected to be rolled out to 200 pharmacies over the next two weeks with independent firms as well as chains like Boots and Superdrug to offer jabs.

PM Johnson has also promised to open special centres that will operate 24-hours, seven days a week, “as soon as we can” in an attempt to accelerate the rate of vaccination required to reach its ambitious target of 14m by mid-February.

So far, 2.4m people received 2.8m coronavirus jabs after the first one was delivered in the beginning of December.

UK government delays tougher lockdown as hospital cases start to stabilise

Boots and Superdrug to start giving vaccines as pharmacies are brought in to hit 13.9m target by mid-February

 

Italy – Authorities will extend its national state of emergency until the end of April due to a “generalised worsening of the epidemic”.

 

India – Hundreds of thousands of pilgrims are expected to visit the holy city of Haridwar from March 11 to celebrate one of the most important Hindu festivals, the Kumbh Mela, despite the pandemic.

 

Portugal – The government will announce a national lockdown from midnight as hospitals are struggling to cope with a record level of virus infections.

 

Infection rates among people who received the first of a two-shot BioNTech/Pfizer vaccine dropped within days, according to Israel’s Ministry of Health data.

 

Zambia – $400m paid last year in VAT refunds to mining firms

Zambia’s VAT refunds last year were equal to about 3.5% of the external debt that the country is currently struggling to pay.

The VAT refunds to the mining sector represent 67% of the total refunds made.

The government still owes around $1.6bn in VAT refunds to mining companies as of the end of 2020.

Zambia is still negotiating with creditors after defaulting on a $42.5m coupon in November.

 

Currencies US$1.2148/eur vs 1.2196eur yesterday.  Yen 104.02/$ vs 103.71/$.  SAr 15.184/$ vs 15.265/$.  $1.366/gbp vs $1.368/gbp.  0.775/aud vs 0.776/aud.  CNY 6.468/$ vs 6.465/$.

 

Commodity News

Precious metals:  

Gold US$1,841/oz vs US$1,857/oz yesterday

   Gold ETFs 107.1moz vs US$107.4moz yesterday

Platinum US$1,105/oz vs US$1,077/oz yesterday

Palladium US$2,382/oz vs US$2,394/oz yesterday

Silver US$25.21/oz vs US$25.48/oz yesterday

 

Base metals:  

Copper US$ 7,980/t vs US$7,978/t yesterday –

Jiangxi Copper agreed a long term contract for blister cu from Chambishi in Zambia at a refining charge of US$145/t vs US$128/t last year

Aluminium US$ 2,008/t vs US$2,021/t yesterday

Nickel US$ 17,785/t vs US$17,760/t yesterday – Eramet’ Société Le Nickel (SLN) nickel subsidiary in New Caledonia risks liquidation if protests continued to disrupt its operations.

Eramet has reorganised the SLN operations based on the production of ferronickel and low-grade ore exports

SLN has applied to mine an additional 2mtpa as part of the new plan though we suspect New Caledonia may be less happy with the idea of low-grade exports

Zinc US$ 2,726/t vs US$2,777/t yesterday

Lead US$ 2,036/t vs US$2,035/t yesterday

Tin US$ 21,000/t vs US$21,030/t yesterday

Energy:           

Oil US$56.3/bbl vs US$57.0/bbl yesterday

Saudi Aramco has sent a strong signal to the market with its February 2021 official selling prices, surpassing market expectations

All Asia-bound grades were materially increased by 20-70 cents/bbl, with steeper increases in the light range (Arab Light saw the biggest month-on-month move)

Combined with turnaround in Japan and China assumed to take place in February and Saudi Arabia’s unilateral commitment of cutting production by 1mbpd in February-March 2021, the assertiveness of Saudi Aramco might lead some refiners to rethink their regional purchases

In addition, contango seems to have disappeared from the markets so storing crude in hefty storage tank farms no longer makes commercial sense

Saudi Aramco reacting to Dubai backwardation extending to its widest since July 2020 was to be expected, boosted by robust demand from China and India throughout December, the Dubai M1-M3 increased as high as 92 cents/bbl on 16 December, though it has declined since

However, as the market moved closer towards the end of December 2020 the extent of the backwardation eased to 20-30 cents/bbl, meaning that all the while Middle Eastern NOCs were expected to increase their February OSPs

Elsewhere, we are now in the last of the annual five-day rebalancing of portfolios which could attract as much as US$9bn buying into crude oil contracts, putting upward pressure on oil prices

The rebalancing of indices to adjust the weighting of assets in portfolios is being done every year so that target allocations or risk levels are restored

However, the rebalancing this year could attract more than usual buyers into crude oil contracts because of the 20-percent decline of oil prices during 2020

The next five days could see a buying spree in oil futures that could be as high as US$9bn to adjust the weighting of the major commodity-linked indices

The market will likely see long positions into another 80 to 100MMbbls oil futures contracts, which could drive oil prices by US$2-US$3/bbl

It’s not a given that the market will see US$9bn of new buying into oil futures because some investors and traders may have already done it ahead of the rebalancing period

Even if the buying spree is not so high, the rebalancing will likely to continue to support oil prices

Natural Gas US$2.773/mmbtu vs US$2.767/mmbtu yesterday

Natural gas prices moved lower yesterday ahead of today’s Energy Department report on inventories

Warmer than average weather forecast to cover most of the US over the next two weeks On Thursday, the Energy Department will release its inventory report

Expectations are for a 131Bcf draw in stockpiles according to survey provider Estimize

US exports rose to a new record in December

 

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$166.8/t vs US$165.8/t

Chinese steel rebar 25mm US$664.7/t vs US$667.2/t

Thermal coal (1st year forward cif ARA) US$72.7/t vs US$73.5/t

Coking coal swap Australia FOB US$130.0/t vs US$132.0/t

           

Other

Cobalt LME 3m US$38,010/t vs US$37,010/t

NdPr Rare Earth Oxide (China) US$66,793/t vs US$65,966/t

Lithium carbonate 99% (China) US$8,658/t vs US$8,507/t

Ferro Vanadium 80% FOB (China) US$30.0/kg vs US$30.0/kg

Ferro-Manganese high carbon 78% Mn US$1,380/t vs US$1,370/t

Tungsten APT European US$235-240/mtu vs US$230-235/mtu

Graphite flake 94% C, -100 mesh, fob China US$520/t vs US$520/t                

Graphite spherical 99.95% C, 15 microns, fob China US$2,475/t vs US$2,475/t

Spodumene 6% Li2O min, cif (China) US$395/t vs US$380/t

 

Battery News

General Motors to launch all EV van  

General Motors plans to launch an all-electric van called the EV600 this year.  

It will be the first vehicle under a new commercial business unit in GM called BrightDrop. 

The van will be capable of up to 250 miles per charge. 

The first 500 vans will go to FedEx beginning this year and broader availability is expected in early 2022 

Van drivers love EVs due to their lower running cost and quieter and more comfortable running.

We see EV vans a big sellers and as taking over from diesel vans over the next five to 10 years

 

SGRE and Siemans Energy plan offshore wind powered hydrogen pilot  

Siemens Gamesa Renewable Energy and SGRE plan to install an array of electrolysers inside the manufacturer’s 14MW offshore wind turbine as part of a five year, €120-million pilot project. 

They plan to develop a full-scale demonstration of fully integrated offshore wind-powered green hydrogen solution by 2025 or 2026.  

SGRE aims to adapt its SG 14-222 DD model to accommodate the electrolyser, while Siemens Energy plans to develop a new electrolysis product suitable for operation at sea and working with the turbine.  

They will install an electrolyser array. And desalination machine at the base of the offshore wind turbine and use output from the turbine to split sea water to produce hydrogen.  

 

Chilli compounds boosts perovskite solar cell efficiency  

Researchers have found that solar cells treated with capsaicin – the compound that makes chilli peppers hot – have been found to be more efficient at converting solar energy.  

Capsaicin made the solar cells more efficient, yielding a power conversion of 21.88%, versus only 19.1% without it.  

Capsaicin led to a greater number of free electrons available to conduct current at the solar cell’s surface. This reduced energy leakage via heat.  

Capsaicin is low cost, natural, sustainable and Earth-abundant. Many other organic compounds are being tested to see if they have the same effect as the capsaicin.   

 

Company News

Amur Minerals* (AIM:AMC) 1.7p, Mkt Cap £24m – $165k coupon collected NRR convertible

The Company received $165k in Q4/20 quarterly coupon payment on its $4.67m convertible loan note in Nathan River Resources (NRR).

This is a second quarterly coupon received by the Company on the 14% three year note.

NRR restarted operations at the Roper Bay Iron Ore Project located in the Northern Territory of Australia in October 2020 with two vessels reported to have shipped to China as of YE20 and a third shipment anticipated to depart from the Bing Bong port facility on 14 January 2021.

Conclusion: The Company collects a second quarterly coupon on its $4.7m convertible loan note in Nathan River Resources that commenced shipment of Roper Bay iron ore at the time when prices for steel making material is trading around multi year highs.

*SP Angel act as Nomad and Broker to Amur Minerals

 

Anglo Asian Mining* (AIM::AAZ) 129p, Mkt Cap £148m – Production at 69koz GEO and cash balance climbing to ~$40m in FY20

BUY – Target Price Being Updated

Q4/20 production amounted to 16.8koz GEO (Q4/19: 21.3koz GEO) using budgeted metal prices.

Gold production was 13.5koz including 9.2koz from agitation leaching, 4.1koz from heap leaching and 0.2koz in concentrate (SART+flotation).

Copper production was 696t (Q4/19: 729t) including 500t at the flotation plant facility and 196t from SART.

Silver production was 33.0koz (Q4/19: 41.7koz).

Total FY20 production totalled 69.1koz GEO (FY19: 82.8koz GEO), in line with a revised guidance for 68-72koz GEO using budget metal prices; at actual metal prices production came in at 67.2koz (FY19: 81.4koz).

Gold production was 56.9koz (FY19: 70.1koz) reflecting lower processed grades at the agitation leaching plant as well as lower contribution from the flotation circuit;

Copper production was 2,591t (FY19: 2,210t);

Silver production was 123.0koz (FY19: 159.4koz).

Q4/20 gold sales amounted to 18.1koz at an average realised gold price of $1,884/oz (Q4/19: 12.5koz at $1,481/oz).

Copper concentrate sales totalled 4.2kt contributing $6.8m in net sales (Q4/19: 3.7kt for $6.8m).

FY20 revenues surged in excess of $100m with gold sales coming in at 48.7koz at $1,777/oz (FY/19: 54.0koz at $1,410/oz) accounting for >80% of net revenues while copper concentrate sales contributed $17.7m (FY19: $16.7m).

FY20 cash generation before tax payments and dividends reported at ~$39m with $38.8m held in cash as of Dec/20 and no bank debt on balance sheet.

The Company continues to de-risk its portfolio of properties in vicinity of processing facilities targeting to fast track mines into production as well as considering acquisition of new concessions in Azerbaijan.

The team applied for a five year extension of the Gedabek Contract Area permits that are expected to be renewed shortly and is planning to launch evaluation of recently restored licenses at Vejnaly, Soutely and Gyzilbulakh as soon as practically possible.

Conclusion: FY20 production amounted to 69koz GEO, in line with revised guidance, with the Company reaching debt-free position and the cash balance climbing to nearly $40m as of year end. First ore from the underground at Gedabek was processed during the quarter that should help the Company to add higher grade material into the agitation leaching plant in coming years. Operations continue to generate strong FCF (~$39m) more than covering the ongoing dividend programme (~$10m in FY20) and offering capital to fast track new targets identified in the vicinity of processing capacities into production as well as consider acquisition of new concessions. Good team, strong balance sheet, established processing capacities, low cost jurisdiction, prospective exploration ground and high gold/copper prices continue to support the Company’s investment case.

*SP Angel act as Nomad and broker to Anglo Asian Mining

 

Atalaya Mining (AAIM:TYM) 275p, Mkt Cap £381m – Record copper production at Proyecto Riotinto in 2020

Atalaya Mining reports record annual copper production of 55,890t during 2020 (2019 – 44,950t) following the second highest quarterly output (14,332t) during the final quarter.

The Q4 production exceeded budget and represents an 8.5% increase on Q4 2019 (13,211t).

The company clarifies that ”The increase in copper production, when compared with Q4 2019, is mainly attributable to higher ore milled and better metallurgical recoveries”.

Atalaya Mining confirms  that “Grade mined during 2021 is expected to be slightly lower than in 2020 owing to pit sequencing and lower cut-off grades resulting from higher copper prices” and that as a result its 2021 production is expected to lie in the range 52-54,000t of copper.

The company confirms that, following the successful completion of its expansion to 15mtpa capacity at Proyecto Riotinto, it is “implementing cost reduction programmes to reduce fresh water and lime consumption” and undertaking “  Initiatives to improve copper recoveries, by using some of the extra installed flotation capacity”.

Independent consultants are reported to be “finalising the Cerro Colorado open pit reserve and resources update taking into consideration the exploration results with current copper prices, operating costs and geotechnical parameters. … [while] … An independent evaluation of the historic polymetallic San Antonio/Planes deposit has begun”.

The shallow San Antonio/Planes deposit “is located East of the open pit Cerro Colorado, which is currently being mined, and would require underground mining methods.”

Atalaya Mining also says that “independent evaluation of the resources at San Dionisio, West of the Cerro Colorado pit, is ongoing. Current indications show there is good potential for it to be mined with a combination of open pit and underground methods. San Dionisio contains copper as well as polymetallic mineralisation”.

CEO, Alberto Lavandeira, said that achieving “a new annual production record of 55,890 tonnes of copper in 2020” in the face of the challenges of Covid 19 “was within our 2020 provided guidance and is testament to our growth and ability to deliver value for shareholders.”

He went on to highlight that “”The year ahead will see the progression of optimisation and exploration initiatives designed to drive our future growth.”

Conclusion: Record annual copper production in 2020 confirms the successful expansion of Proyecto Riotinto.  Plans to mine slightly lower grades in 2021 are driven both by mine planning cosiderations and lower cut-off grades resulting from the strength of copper prices and as a result output guidance for 2021 is slightly lower in the range 52-54,00t.  Further plant optimisations and updated mineral resources estimates bringing in nearby mineralisation are expected during 2021.

 

Condor Gold* (AIM:CNR) 51.5p, Mkt Cap £54.6m – Directors exercise options

Condor Gold reports that its Executive Chairman, Mark Child, and Chief Financial Officer, Jeffrey Karoly have exercised options over a total of 33,333 shares at a subscription price of 31p/share raising a total of £10,333.

Mr. Child exercised options over 20,833 shares taking his interest to “4,200,730 Ordinary Shares representing 3.5%” of the company.

Mr. Karoly exercised options over 12,500 shares taking his holding to 149,078 shares or 0.1% of Condor Gold.

Conclusion: We interpret the continuing exercising of options by directors as a positive indication of support and confidence as Condor Gold advances its of site preparation work at La India in the development of the mine planned to produce an average 120,000oz pa of gold over the first seven years of operations.

*SP Angel act as sole broker to Condor Gold

 

IronRidge Resources* (AIM:IRR) 14.8p, Mkt cap £61.4m – 12,500m drill programme commenced at Ghana Lithium Project

IronRidge has commenced its RC drill project at the Ewoyaa Lithium Project, with the first hole intersecting visible spodumene on a new pegmatite target within 500m of the current resource.

The company already has defined a JORC (2012) compliant mineral resource estimate of 14.5Mt at 1.31% Li2O in the inferred and indicated category, including 4.5Mt at 1.39% Li2O in the indicated category in Ghana, West Africa.

The 12,500m RC programme is designed to add resource tonnes within the immediate Ewoyaa area, with approximately 10,000m of drilling designed to rest seven new high-priority pegmatite targets, including outcropping spodumene pegmatite, in order to add potential resource tonnes.

Approximately 2,500m of drilling plans to test an additional three exploration targets- Ndasiman, Amoanda and Hweda within the Saltpond and Apam West licenses.

All new targets occur within 500m to 1.5km of the current Ewoyaa lithium project resource footprint, and give IronRidge potential to add significant resource tonnes within the immediate project area.

The Ewoyaa project is ideally located within 110km of the Takoradi deep-sea port, within 100km of Accra and serviced well by roads and power.

Vincent Mascolo, CEO of IronRidge commented: “Our first RC drill hole of the season has intersected 13m of visible spodumene mineralisation on a new pegmatite target within 500m of the current resource and from a depth of 34m down hole. “The approximate 12,500m RC programme is designed to rapidly test seven new high-priority pegmatite targets within the immediate Ewoyaa resource area u ncovered by the recently completed auger drilling programme, as well as test three exploration targets within the Saltpond and Apam West licenses.

“The single largest new pegmatite defined within the ELP corridor is 460m long and up to 30m apparent width with outcropping spodumene observed and the potential to add significant resource tonnes within the immediate project area.

*SP Angel acts as nomad to IronRidge Resources

 

Ormonde Mining* (AIM:ORM) 0.22p, Mkt Cap £9.4m – Ormonde announce deal for new high-grade copper, silver and zinc projects

Ormonde Mining report the company is finalising terms and conditions on the acquisition of up to 80% of two exploitation licenses in the Republic of Congo.

The two license areas contained multiple high grade copper and polymetallic projects.

The projects are relatively advanced at the development and exploration stage though the data will be verified as part of the deal.

A former press release from the Australian-American Mining Corporation (AusAmerican) highlights their offer in 2014 to acquire 77.58% of the licenses from Shenglong International Investment Limited. The licenses are held within Shenlong’s 100% owned subsidiary Societe Lulu De Mine which holds 90% of the two polymetallic exploit

ation permits.

AusAmerican Mining never completed the deal under the leadership of now-jailed Australian mining entrepreneur, Peter Landau sometimes known as Pirate Pete.

The projects:

Moubiri:

AusAmerican reported grades of 6% copper, 23% lead and 25% zinc which were shipped from a small-scale underground mine indicating high grade ore assuming no concentration has been done

Grades of 11.9% copper, 29.6% lead, 19.4% zinc and 159.2 g/t silver from 8.55m downhole. Ormonde intends to confirm these grades with check drilling.

AusAmerican has a former exploration target on the Moubiri project of 400-800,000t grading 4-6% copper and 30-50% combined lead zinc

See: https://www.asx.com.au/asxpdf/20140905/pdf/42s182592d0xxy.pdf

Mindouli:

A second target nearby at Mindouli copper shows a JORC Exploration Target of 15-30mt grading 3-5% copper in copper-silver mineralisation over a 1.2km strike length with significant potential indicated by AusAmerican Mining including. We note JORC exploration targets are allot less well defined than JORC resources.

See: https://www.asx.com.au/asxpdf/20141126/pdf/42v0rtt52vrlpv.pdf

The licenses contain a number of historical mine sites and exploration prospect areas in an area which has seen relatively little exploration.

Management: Ormonde are bringing in a team with significant expertise in exploration and mine development and who are able to work in the local environment.

The Deal: Ormonde are acquiring up to 80% of the licenses and as part of the deal while bringing in project partners to accelerate drilling and metallurgical programs for JORC resource definition and eventual project development.

The deal is conditional and may be done as an all-cash transaction though it is proposed that Ormonde may pay up to US$800,000 in shares on future milestones leaving more cash in the treasury for exploration and project development.

RoC Government support: Ormonde management are confident of further government support in a region which is keen to diversify its revenue sources.

Cash: Ormonde Mining have around €5m of cash available for funding exploration and project development. This should go along way given the relatively advanced nature of the two projects highlighted above.

Conclusion: We look forward to confirmation of the deal and on confirmatory drill results on the high-grades reported by AusAmerican Mining and its Chinese partner Shenlong Investments International Ltd. The former press releases by AusAmerican give detail on the projects which will need further verification.

*SP Angel acts as Broker to Ormonde Mining

 

Orosur Mining* (AIM:OMI) 22.9p, Mkt Cap £39.3m – FY Q2 2021 Results

Orosur has published its audited results for the quarter ended 30th of November 2020, whilst also providing a summary of its operations in Colombia and Uruguay.

Orosur reported a total comprehensive loss of $477k vs income of $41k over the same period last year.

Corporate and administrative expenses fell to $288k vs $358k in FYQ2 2021.

Cash and cash equivalents rose to $1.54m over the period compared to $782k at 31 May 2020.

As at 12th January 2021, the cash balance was $7.6m as a result of the private placing on the 7th of December 2020 consisting of the sale of 23,529,412 units at 17 pence per Unit for aggregate gross proceeds of £4 million ($5,372,000).

The quarter saw Orosur continuing to progress its Anza project in Columbia, while continuing to wind up its operations in Uruguay.

Columbia: Orosur received an additional cash payment of $500k in addition to the $500k received in March 2020, was received by the Company from Newmont Colombia as per the Exploration agreement.

The Monte Aguila joint venture between Newmont and Agnico Eagle must spend $10m over 4 years and make cash payments equalling $2m in the first two years in order to earn a 51% interest in the Anzá project.

Orosur’s position with respect to the Anza project remains unchanged, with the company’s holly owned subsidiary Minera Anzá remaining operator of the project and conducting exploration work on behalf of Monte Águila, until such time as Monte Águila assumes operatorship at its discretion.

Initial funding of approximately $650k was received by Minera Anzá on October 2, 2020 from Agnico to restart the exploration program, and a further $1.13m was received subsequent to the period end on the 11th of December 2020 in order to fund exploration for 12 months from the 7th of September 2020.

Upon receipt of funds, Minera Anza re-established its field camp and commenced drilling on the 15th of November 2020, with no assay results returned during the quarter.

Uruguay: Orosur has focused on implementing the creditors agreement during the quarter, and the sale of the assets of its Uruguayan subsidiary Loryser, along with the sales of Loryser’s assets including plant and equipment.

Loryser is continuing with the reclamation of the tailings dam which is progressing well.

*SP Angel act as Nomad and Broker to Orosur Mining

 

Strategic Minerals* (LON:SML) 0.43p, Mkt Cap £9.0m – Cobre Q4 magnetite sales

Strategic Minerals reports sales of magnetite during the final quarter of 2020 of 12,845 tons generating revenue of approximately US$0.75m at a stable unit price we calculate at approximately US$58/t.

Reporting robust sales which the company explains saw year-on-year growth of over 20% during the December quarter, Strategic Minerals explains that “Despite the continued suspension of mining activities at the adjacent copper mine due to the Covid-19 pandemic, activities at Cobre continue to operate under protocols established to ensure contactless sales and have been successful, safeguarding both Company employees and clients”.

The strong end to the year brings Cobre’s 2020 annual sales to 51,518t generating revenue of over US$3m for the year.

Strategic Minerals confirms that its’ wholly owned operating subsidiary at Cobre, “Southern Minerals Group (“SMG”), continues to remain in contact with the receiver appointed by the US Securities Exchange Commission in relation to the previously notified US$21.9m arbitration claim against CV Investments LLC and the Company will update the market with details as and when they are provided by the Receiver”.

The company confirms that it has a “non-restricted cash balance was US$0.833m” as of 31st December 2020 and that Cobre continues to trade profitably.

Reviewing its other operations, Strategic Minerals confirms that at Leigh Creek “planned copper mining at the Paltridge North deposit, continues to progress as expected … [and that following dialogue with South Australia’s regulatory authorities in late December] … the Company does not believe that any issues identified will prevent planned mining and processing occurring at Leigh Creek in 2021.”

At the Redmoor tin/tungsten project in Cornwall, Strategic Minerals, in conjunction with NRG Capital, is continuing to “promote the Redmoor tungsten and tin project … to a number of entities with a view to progressing Redmoor.” The process continues and “the Cornwall Resources team … [is] … still engaging with counterparties”.

Managing Director, John Peters, commented that “Continued strong sales at Cobre, combined with the December capital raise, have placed the Company in a solid position to move forward in 2021 with a goal of commencing a second income stream from copper production at Leigh Creek, subject to finance. Concurrently, we continue our endeavours to progress the Redmoor Project.”

Conclusion: Robust sales continue at Cobre with around 52,000t sold in 2020 at an average price of approximately US£59/t. The site is continuing to operate effectively while observing the restrictions implemented to control the Covid19 virus. The company confirms that, following discussions with regulators in South Australia, it expects to start processing at Leigh Creek Copper during 2021 and that it is continuing to promote the Redmoor tin/tungsten project to “a number of entities”.

*SP Angel acts as Nomad and Broker to Strategic Minerals

 

URU Metals* (AIM:URU) 240p, Mkt cap £3.7m – Possible disposal of Zebediela project

URU Metals announced yesterday that it has concluded a Letter of Intent with Canadian-listed Blue Rhino Capital (BRC) for the potential disposal of URU Metals’ Zebediela nickel project in South Africa for shares equivalent to “approximately 79.85% … of BRC”.

The project is on the northern limb of the Bushveld igneous complex and lies adjacent to and up-dip from Ivanplats Platreef mine and is approximately 15 km along strike from Anglo Platinum’s Mogalakwena Mining Complex.

The proposed transaction appears well advanced but remains subject to a number of conditions including shareholder and regulatory approvals and the completion of a C$2m financing by BRC as well as the satisfactory completion of technical due diligence and the necessary agreements.

BRC’s financing “will be used for the exploration and development of the Project”.

URU Metals’ announcement includes the usual warning that “There can be no assurance that the Transaction and Concurrent Financing will be completed as proposed or at all”.

*SP Angel acts 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

 

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

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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%

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