SP Angel . Morning View . Wednesday 14 04 21
US dollar fall on lower rates helps metal prices higher
B2Gold Corp (CVE:BTO) – commissions world’s largest off-grid solar plant
KEFI Gold and Copper (LON:KEFI) – Tulu Kapi project funding targeted for H2/21 and Hawiah Phase 4 drilling launched ahead of the MRE update
Nornickel (MCX:GMKN) – Nornickel to boost output of nickel products in Finland for EV battery market
Orosur Mining* (LON:OMI) – Q3 results highlight strong progress at Anzá
Resolute Mining (LON:RSG) – Mining lease restored at Bibiani
Strategic Minerals* (LON:SML) – Cobre Q1 magnetite sales
W Resources (LON:WRES) – La Parilla Q1 production hit by weather
Gold prices rise as March CPI data shows US inflation climbed most in nine years
Gold prices held on to Tuesday’s gains this morning, after prices rose as a result of a sharp rise in US inflation data which supported bullion’s appeal as an inflation hedge.
US CPI rose 0.6% in March, the biggest increase since August 2012 as the end of lockdowns released pent up consumer demand.
Spot gold jumped 0.7% on the news, bouncing off a 1-week low to trade above $1,740/oz.
Gold’s rise as a result of heightened inflation expectations was also supported by a weaker US dollar and retreating treasury yields.
The US dollar index fell 0.3% on Tuesday, making dollar-denominated gold cheaper for holders of other currencies.
Commodity imports rise into China
Copper: refined imports into China rose 25% yoy in March to 552,000t raising Q1 imports into China by 11.9% yoy to 1.44mt.
Copper concentrates also up 22% yoy to a record 2.17mt lifting Q1 concentrate imports by 7.4%to 5.96mt.
Iron ore imports rose 19% yoy to 102.1mt in March
Crude oil imports also increased 21% to 49.66mt in March equating to 11.69mbopd
China – China is getting serious about raising the quality of its output, cutting energy use from high power consumers and reducing emissions
High pollution levels in cities in winter months have been highlighted by the lack of pollution and clean air during last year’s lockdown.
The state now sees this as a priority to avoid public anger and potentially to move towards climate commitments on emissions.
Recent and frequent curbs to steel production in Tangshan due to pollution and to cut to the 2021 central government production target.
Steel mills in Tangshan Were ordered to cut production to meet a level 1 red alert for heavy pollution on 9 March.
China’s move to restrict primary aluminium production in Mongolia and Xinjiang province appears to be part of a similar central government policy.
China is said to be limiting buying of thermal coal by aluminium smelters and may be using this to partly control the price of thermal coal imports.
So China might not actually impose commodity price controls but the state can regulating buying by key industry groups to limit prices and inflation pressure.
While this might be effective in thermal coal, where they are also punishing key Australian coal exporting states it may be less easy to regulate the buying of copper and other metals.
China is more likely to raise margins to curb speculation than to impose price limits on commodities to hold back inflation
Raising margin required for trading Iron ore and other futures should curb excessive speculation much of which originates in China.
IGO Ltd – IGO sells Tropicana stake for A$903m to Regis Resources for 30% stake in Tropicana gold mine in Western Australia.
The A$903m (US$695m) acquisition
The mine has:
Resources: 43.5mt at 1.64g/t for 2.292moz (att 30%)
Reserves: 14.7mt at 1.71g/t for 808koz (att 30%)
Gold production: FY21 mid range guidance 380-430koz 405koz (100%) and 122koz (att 30%)
The deal values the mine at:
~US$300 per resource ounce
~US$860 per reserve ounce
~US$5,700 per ounce of production
IGTV: Improved global economic forecasts from the IMF provides trading opportunities: https://www.youtube.com/watch?v=_GXKPqzuCG0
VW expansion driving battery metals prices: https://youtu.be/7vqSrONBaWw
VOX Markets: 24/03/20: https://audioboom.com/posts/7829467-john-meyer-on-arc-minerals-cornish-metals-rainbow-rare-earths-altus-stategies
*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts.
We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.
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
Dow Jones Industrials -0.20% at 33,677
Nikkei 225 -0.44% at 29,621
HK Hang Seng +1.20% at 28,839
Shanghai Composite +0.60% at 3,417
US – Consumer prices climbed in March at the strongest pace in nearly nine years (on %mom basis) predominantly led by fuel prices.
Excluding food and energy, CPI also picked up posting the strongest reading in seven months.
Markets shrugged off the price data largely focusing on news that US health officials called for a pause on the use of J&J vaccine due to blood clot risks, Bloomberg reports.
10y Treasury yields dropped after hitting 1.7% earlier on Tuesday pulling back to below 1.62%.
US officials called for an immediate suspension of J&J vaccine to study cases of severe blood clotting with six women aged 18-48 developing serious symptoms after the one-shot vaccine.
At least one woman died, and a second was in critical condition, out of almost 7m Americans who received the shot as of Monday, officials said.
The normal treatment for clots, the blood-thinner herapin, could make the disorder worse, or even kill a patient, authorities reported.
J&J delayed rollout of the immunization in Europe and paused all of its COVID-19 vaccine trials.
CPI (%yoy): 2.6 v 1.7 in February and 2.5 estю
Core CPI (%yoy): 1.6 v 1.3 in February and 1.5 est.
Fed’s Harker Sees Inflation Slightly Exceeding 2% Target In 2021.
Germany – wholesale prices rose 1.7% in March vs 1.4% in February and rise 4.4% yoy in March vs 2.3% in February
UK – Industrial production rose 1% in February vs -1.8% in January but fell -3.5% yoy in February vs -4.3% in January partly due to Brexit
Manufacturing output rose 1.3% in February vs -2.2% in January and fell -4.2% yoy in February vs -5% in January
Construction output fell -4.3% yoy in February vs -6.5% yoy in January reflecting slower economic activity largely due to lockdowns and caution within housebuilders
UK – Greensill risk to Credit Suisse is put at $2.3bn in funds tied to Greensill
Credit Suisse is liquidating $10bn in funds that it ran in partnership with Greensill (The Times)..
The bank has recovered $5.4bn of funds and has said it will make a second distribution to exposed investors.
While the collapse of Greensill is a long way off the scale of the failure of Lehman Bros and Enron we are concerned at the broader impact of the bankruptcy
Turkey – Industrial output rose 0.1% in February vs 0.9% in January but rose 8.8% yoy in February vs 11.3% yoy.
We suspect Turkey is about to head into a much more onerous lockdown as field hospitals fill as the pandemic ravages the nation.
Reports of younger Turkish people filling wards is particularly worrying and distressing for the families involved.
Mass gatherings at political rallies are seen as potentially part of the reason for the recent and rapid spread of the Coronavirus in Turkey
Baltic states to cut ties to Russian power grid
The move to connect to the Continental European power grid will sever some of the last ties with Russia and reduce Russian leverage and influence in the region.
The move is also a partly symbolic gesture cutting ties with the Former Soviet Union (Euractiv).
CEF, Connecting Europe Facility is committing €1.65bn to connecting the Blatic states.
Holland – Dutch PM Rutte announces extension of Covid-19 lockdown.
Poland – Central bank targets a fifth of reserves held in gold
Poland’s central bank governor Adam Glapinski has announced that the bank is targeting having a fifth of its foreign reserves in gold in the coming years.
The amount of precious metal in reserves has more than doubled to 229 tonnes, taking the share to around 8%.
Bitcoin hits fresh highs ahead of Coinbase $40bn IPO
Bitcoin powered to another record high on Wednesday, surpassing $64,000 ahead of the upcoming IPO of the US’ largest cryptocurrency exchange Coinbase.
Nasdaq on Tuesday set a reference price of $250 per share for Coinbase Global, projecting the company’s value at $49.2bn ahead of its landmark stock market debut on Wednesday.
Tanzania – Samia Suluhu Hassan, nation’s first female president, is planning to appoint a panel of scientific experts to advise on how best to curb the spread of the pandemic overturning Magufuli’s coronavirus denialism, FT writes.
New president also announced intentions t improve strained relations with investors and multinational companies.
US$1.1967/eur vs 1.1893/eur yesterday. Yen 108.98/$ vs 109.59/$. SAr 14.503/$ vs 14.575/$. $1.380/gbp vs $1.375/gbp. 0.768/aud vs 0.761/aud. CNY 6.536/$ vs 6.549/$.
Gold US$1,745/oz vs US$1,725/oz yesterday
Gold ETFs 99.4moz vs US$99.4moz yesterday
Platinum US$1,175/oz vs US$1,171/oz yesterday
Palladium US$2,691/oz vs US$2,704/oz yesterday
Silver US$25.45/oz vs US$24.85/oz yesterday
Copper US$ 8,945/t vs US$8,861/t yesterday
Aluminium US$ 2,314/t vs US$2,277/t yesterday
Nickel US$ 16,165/t vs US$16,125/t yesterday
Zinc US$ 2,799/t vs US$2,757/t yesterday
Lead US$ 1,992/t vs US$1,973/t yesterday
Tin US$ 25,650/t vs US$25,650/t yesterday
Oil US$64.4/bbl vs US$63.8/bbl yesterday
Oil prices have seen a welcome boost as OPEC has revised its 2021 oil demand upward to stand 190,000bopd higher than last month’s estimates, on the back of an economic rebound that surpasses last month’s outlook
Global 2021 oil demand is now expected to average 96.46MMbopd for the full year, according to OPEC’s latest projects included in its April Oil Monthly Report
That figure is up from 96.27MMbopd in last month’s report, and up from the newly estimated 2020 oil demand figure of 90.51MMbopd
In last month’s report, OPEC had estimated 2020 global oil demand at 90.39 million bpd.
This upward revision comes after the group’s de facto leader, Saudi Arabia, told the group at the last OPEC meeting that the oil demand figures they were using were too low and that actual global oil demand would be higher
As the only true swing producer in the group, Saudi Arabia still has enormous sway within OPEC
The group ultimately decided to gradually lift oil production starting in May 2021 based on these figures, which it did not disclose at the time
Whatever spark, an optimistic oil demand projection by OPEC is bound to have a positive effect on prices
For its April MOMR, OPEC cited a “stronger economic rebound than assumed last month.”
Supporting this economic rebound, OPEC said, were stimulus programs, easing of Covid-19 lockdown measures, and accelerated vaccine rollout, particularly in the OECD region
On the vaccine front, which OPEC cites as cause for oil demand optimism, an estimated 20% of the US population has been fully vaccinated
In Israel, 57% of the population has been fully vaccinated
But overall, less than 10% of the world has received a single dose
Some countries are not expected to reach the 20% threshold by the end of 2021
Natural Gas US$2.619/mmbtu vs US$2.556/mmbtu yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$166.1/t vs US$166.0/t
Chinese steel rebar 25mm US$776.7/t vs US$773.2/t
Thermal coal (1st year forward cif ARA) US$72.1/t vs US$71.0/t
Coking coal swap Australia FOB US$148.5/t vs US$149.0/t
Cobalt LME 3m US$49,750/t vs US$49,750/t
NdPr Rare Earth Oxide (China) US$87,903/t vs US$87,718/t
Lithium carbonate 99% (China) US$12,547/t vs US$12,673/t
China Spodumene Li2O 5%min CIF US$620/t vs US$610/t
Ferro-Manganese European Mn78% min US$1,585/t vs US$1,576/t
China Tungsten APT 88.5% FOB US$267/t vs US$267/t
China Graphite Flake -194 FOB US$515/t vs US$515/t
US energy secretary says state incentives could boost clean energy standard
Clean energy standard is included in Joe Biden’s $2.3tn infrastructure plan.
Key part of Biden’s plans to decarbonise the power sector by 2035.
Nuclear and carbon capture and storage technology all part of the policy.
The proposed standard needs to be passed through the Senate.
Chevron invests in offshore wind energy for first time
Chevron Corp. agree to invest in Ocergy Inc.’s development of offshore wind turbines.
First investment by Chevron Technology Ventures in offshore wind
Part of a $300m-a-year plan to invest in energy transition technologies.
Silicon for lithium-ion batteries moves to commercial production
Group 14 Technologies have brought its first commercial-scale factory online.
Can produce up to 120 tonnes per year of the silicon-carbon material.
The material has around 10 times the energy density of graphite anode currently used.
European Hydrogen Backbone grows to 40,000km covering 11 new countries
12 European gas TSOs are now part of the EHB.
A proposed hydrogen network of 39,000km across 21 countries by 2040.
69% of the proposed network will repurpose existing natural gas grids.
Lower investment cost per kilometer compared to previous estimate (June 2020).
EHB would be a cost-effective option for long-distance hydrogen transportation.
Atalaya Mining (LON:ATYM) 316.5p, Mkt Cap £446m – Improved recovery and throughput at Proyecto Riotinto delivers increased Q1 copper production
Atalaya Mining reports copper production of 13,979t during Q1 2021 (2020 – 13,229t) representing a 5.7% year-on-year increase although the company explains that output was slightly lower than Q4 2020 due to lower copper grades and recoveries “
Production resulted from the processing of 4mt of ore at an average grade of 0.41% copper (Q1 2020 – 3.0mt at a grade of 0.47%).
The company explains that “As a result of the robust copper price environment and strong mill performance, the Company continues to supplement mill feed with some stockpiled lower grade ore in order to maximise the long-term value of the orebody”.
Atalaya Mining comments that “The increase in copper production, when compared with the company’s expectations, is mainly attributable to better metallurgical recoveries and higher mill throughput”.
Although the costs are to be published as part of the Q1 Financial Report in May, Atalaya Mining says that “Cash operating costs for the Period are expected to be below full year 2021 cost guidance owing mainly to the Euro/U.S. dollar exchange rate of 1.20 compared with 1.22 budgeted by the Company in its 2021 guidance as well as higher copper production”.
The company’s 2020 financial statements report that “Cash operating costs for 2021 are expected to be in the range of $2.25/lb – $2.35/lb. AISC for 2021 is expected to be in the range of $2.50/lb – $2.65 /lb copper payable”.
Work continues to optimize the Proyecto Riotinto operation with cost reduction initiatives including the reduction of fresh water and lime consumption, power consumption reduction initiatives and moves to further improve recovery rates.
CEO, Alberto Lavandeira, confirmed that “The anticipated commissioning of our new solar power plant, once the permitting is completed, will bring both cost savings and significant reductions in the Company’s carbon footprint”.
An independent mineral resources estimate for the Cerro Colorado open pit is expected shortly and initiatives are also underway to assess the historic San Antonio/Planes polymetallic orebody as well as the remaining mineral resources at the San Dionisio zone west of Cerro Colorado.
“Geophysical assessments have commenced at the Proyecto Masa Valverde” which was acquired in October 2020.
Conclusion: Atalaya Mining’s cost reduction and optimisation initiatives at Proyecto Rio Tinto continue to deliver production increases from the expanded plant while the benefits of strong copper prices allow the processing of some lower grade material held in stockpiles. The evaluation of mineral resource potential at historic mining sites within the mining area may provide additional ore sources over time.
B2Gold Corp (CVE:BTO) C$6.02, Mkt cap C$6.35bn – commissions world’s largest off-grid solar plant
B2 Gold are commissioning the world’s largest solar-battery hybrid system for the mining industry at the Fekola mine in Mali, on course for completion in June 2021.
The 30MW solar plant allows three of six heavy fuel generators to be shut down.
The 15.4MWh of battery storage should allowa up to 75% of daily electricity demand to be covered by renewable power sources.
The facility will save 13.1m litres of HFO a year and reduce CO2 emissions from power generation by roughly 20%.
B2Gold expect to produce between 530,000-560,000ozpa of gold at Fekola.
KEFI Gold and Copper (LON:KEFI) 1.8p, Mkt Cap £38m – Tulu Kapi project funding targeted for H2/21 and Hawiah Phase 4 drilling launched ahead of the MRE update
The Company released a quarterly update on developments at the Tulu Kapi gold project in Ethiopia as well as Hawiah polymetallic project in Saudi Arabia.
In Ethiopia, the team is working on arranging project funding including
Approval and execution of funding documentation in Q2/21;
Project equity and subordinated debt to be completed post AGM in Jun/21 with senior debt drawdown to follow in H2/21;
Production start reiterated for Q4/22.
$221m development capital is proposed to be funded via $100m in equity and subordinated debt including Ethiopian Government Project equity, local private sector organisations and KEFI (funded by subordainted debt from the Ethiopian subsidiary of likely more than one multinational industrial and commodity trading groups) as well as ~$140 in senior debt.
In Saudi Arabia, the Company launched PFS work following an encouraging ~14,000m Phase 3 drilling programme at polymetallic Hawiah project that extended the mineralisation envelope down plunge and down dip.
13,500m Phase 4 programme is currently in progress focused on infill drilling ahead of the MRE update.
Additionally, drilling will test the high grade copper “transition zone” that lies between the oxide and fresh sulphide domains across Hawiah deposit that returned grades in excess of 5% in the past.
The latest Hawiah MRE stands at 19.3mt at 0.9% Cu, 0.8% Zn, 0.6g/t Au and 10.3g/t Ag (all Inferred).
The Company will be holding a live quarterly webinar to answer investors’ questions at 0930am BST, Tuesday 27 April (refer to the announcement for the access link).
Conclusion: The Company continues to work on closing the funding package for the flagship Tulu Kapi gold project (1.1moz at 2.1g/t in Reserves) with the team expecting to have the full financing in place and the first drawdown on the senior debt facility in H2/21 reiterating first production for Q4/22. In Saudi Arabia, the team is ramping up its drilling programme having just completed ~14,000m Phase 3 with encouraging results pointing to extension of the Hawiah polymetallic mineralisation on strike and down dip. Phase 4 is in progress that will see current MRE updated and preliminary works for PFS launched.
*SP Angel act as Nomad and Broker to KEFI Gold and Copper
Nornickel (MCX:GMKN) – Nornickel to boost output of nickel products in Finland for EV battery market
Nornickel is looking to increase nickel outputs at its plant in Finland in response to predictions regarding the expanding market for battery materials.
The company plans to produce 75,000tpa by 2023 and 100,000 tonnes by 2026 from current production of 65,000tpa of nickel product.
The expansion should be sufficient for 1m EVs based on current ‘nickel per car’ usage.
Orosur Mining* (LON:OMI) 19.4p, Mkt Cap £37.9m – Q3 results highlight strong progress at Anzá
Orosur has announced its results for the third quarter ended February 2021, whilst also providing a summary of its operations in Colombia and Uruguay.
Orosur report a total comprehensive loss for the period of -$1.26m vs -$542k over the period last year, mainly due to share-based payments of 859k over the quarter.
As of February 28 2021, the company had a cash balance of $7m, which includes the proceeds from a private placement completed in December 2020, and the exercise of options.
The company report a cash balance of $7.6m on April 13 2021.
Corporate and administrative expenses rose to $377k vs $319k in Q320. Over the nine months to February 28 2021, corporate and admin expenses fell to 910k vs $1.04m the year prior.
Orosur has made strong progress at its Anza project in Colombia, and began the process of re-establishing its field camp in readiness for commencement of field operations, alongside recruiting a substantial team of geoscientists and support staff.
The company reported two strong sets of assay results in the quarter, including the intersections:
MAP-072 4.1m @ 6.52g/t Au, 29.73g/t Ag and 0.28% Zn from 108m, 5.90m @ 4.55g/t Au, 2.74g/t Ag and 0.30% Zn from 171.1m, and 70.50m @ 3.53g/t Au, 9.33g/t Ag and 1.62% Zn from 184.80m
MAP-073 21.60m @ 6.02g/t Au, 6.02g/t Ag and 3.23 %Zn from 271.75m
MAP-074 5.20m @ 1.17g/t Au 4.97g/t Ag and 3.02% Zn from 195.40m
MAP-075 19.85m @ 0.90g/t Au 2.17 g/t Ag and 6.46% Zn from 226.15m
MAP-076 12.25m @ 5.39g/t Au, 1.65 g/t Ag and 0.18 % Zn from 228.65m
A considerable volume of samples remain at the ALS lab in Peru, which has experienced delays as a result of Covid-19, with delays expected to be reduced in the next quarter.
In Uruguay, the Company has focused its activities on the implementation of the Creditors Agreement and the sale of the assets of its Uruguayan subsidiary Loryser. Orosur issued in December 2019,10,000,000 Orosur common shares to a trust for the benefit of Loryser’s creditors as contemplated in the court-approved Creditors Agreement.
Orosur signed a Settlement Agreement with DINAMA (Uruguay environmental agency) in order to recover the $1,326k from an environmental guarantee it had executed previously, the first and second payments of which have been received by the company.
The company also sold its mining and exploration permits in the San Gregorio Project area of Uruguay to Kiwanda Group for 550k, and continues to make good progress on the sale of Loryser’s other assets including plant and equipment.
*SP Angel act as Nomad and Broker to Orosur Mining
Phoenix Copper* (LON:PXC) 38p, Mkt Cap £43m – Additional land secured at Empire with production targeted for late 2022
(Phoenix holds 80% of the Empire mining property in Idaho)
Phoenix Copper reports that it has recently secured an additional 1,160 acres (approximately 470 hectares) of claims at its Empire mine project in Idaho bringing its total holding to 6,877 acres (2,780 hectares approx).
The company explains that extra land “will allow us to make adjustments in the size and position of the haulage routes and ancillary processing areas” at the Empire oxide mine project which is expected to produce an average of 8,550tpa of copper, 1,970tpa of zinc, 17,235oz pa of gold and 680,050oz pa of silver over a ten-year mine life at a life-of mine copper equivalent cash cost of US$1.83/lb or US$1,190/oz of equivalent gold.
The company’s economic study, published in March 2021, envisages pre-production capital for the first phase of the mine’s development of US$52.6m
Phoenix Copper, which has also recently outlined its planned 2021 exploration programmes including drilling of the underlying sulphide mineralisation beneath the planned oxide pit at Empire, confirms that it “is making progress with the feasibility and permitting of the polymetallic resource, most recently completing three years of environmental studies directly applicable to the permitting and mine planning. Discussions are underway with potential debt financiers to construct the project, with a production target for late 2022”.
Additional exploration is also planned to follow up the potential of the Red Star, Horseshoe Creek and Navarre Creek licence areas close to Empire with drilling during 2021.
Conclusion: The acquisition of additional land should allow greater flexibility in planning the layouts at the Empire pit. Phoenix Copper has an ambitious exploration programme to investigate the potential of the Navarre Creek licence as well as following up the previous exploration at Red Star, Horseshoe Creek and at depth beneath the historic Empire mine. The exploration is taking place alongside the development of the Empire oxide pit which aims to produce an average of around 8,500tpa of copper over a 10 years mine life. We look forward to the exploration results as the drilling and geophysics get underway.
*SP Angel act as Nomad for Phoenix Copper
Resolute Mining (LON:RSG) 32p, Mkt Cap £353m – Mining lease restored at Bibiani
Resolute report that the Ghanaian Minister for Lands and Natural Resources has notified the Company that the mining lease for the Bibiani Gold Mine has been restored.
The ministry have restored the lease subject to the following:
The Company and the holder of the Mining Lease, Mensin Gold Bibiani Limited (a subsidiary of the company), acknowledge and accept that the Mining Lease was terminated
The Ghanaian Government does not recognise the purported sale or transfer of the Bibiani Gold Mine to Chifeng Jilong Gold Mining
Resolute and MGBL must, within 7 days, submit to the Ghanaian Minerals Commission a report detailing the full state of affairs at the mine including the environment, health and safety conditions, in accordance with the Ghanaian Minerals and Mining Act 2006 and adetailed plan for the redevelopment of the mine with timelines and investment requirements.
Any purported sale, assignment or transfer of a right in the mine to a third party requires the prior approval of the Ghanaian Government in accordance with the Ghanaian Mining Act.
The Ghanaian Government states that the purported sale or transfer to Chifeng and the creation of any interest in the mine to Chifeng or any third party will be deemed invalid without the express prior approval of the Government.
The company reports that it intends to comply with the conditions imposed by the Ministry in relation to the restoration of the Mining Lease.
Strategic Minerals* (LON:SML) 0.45p, Mkt Cap £8.6m – Cobre Q1 magnetite sales
Strategic Minerals reports sales of magnetite during the first quarter of 2021 of 13,002 tons generating revenue of approximately US$0.77m at a unit price we calculate at approximately US$59/t.
Reporting continuing sales growth from Cobre, the company explains that the quarter ending 31st March 2021saw year-on-year growth of over 12% and that “the positive annual growth highlights both the strong underlying demand and the Southern Minerals Group (“SMG”) team’s ability to maintain “contactless” operations, therein protecting both our personnel and clients”.
The company reports a cash balance of US$0.69m as of 31st March and comments that “cash flows have been consistent with budgets and the Company continues discussions relating to the funding of both Leigh Creek Copper Mine (“Leigh Creek”) and the Redmoor Tin and Tungsten project”.
At Leigh Creek, Strategic Minerals says that interest in the project has been positive as a result of prevailing increases in the copper prices and confirms that, subject to “funding, finalisation of arrangements to recommence production are anticipated in conjunction with the issuance of the approval of the Paltridge North Programme for Environmental Protection and Rehabilitation”.
At Redmoor, discussions with interested parties are continuing but Strategic Minerals “considers that the proposals it has received do not adequately reflect the project’s value; particularly given project enhancements and the supportive commodity price environment” and discussions are continuing.
Work at Redmoor is focused on the previously announced exploration towards the west and on the ‘Deep Digital’ programme of Camborne School of Mines to assess geochemical and geophysical data with Redmoor designated as one of the field laboratory sites.
Welcoming Cobre’s continuing income stream in funding the wider activities of Strategic Minerals and the positive impacts of the continuing copper price strength, Managing Director, John Peters, confirmed that the company “is confident that 2021 will begin to unlock the substantial value inherent in the Leigh Creek Copper Mine project and provide a valuable, significant second income stream before the end of the year”.
Conclusion: Continuing sales growth at Cobre with around 13,000t sold in during Q1 2021 at an average price of approximately US£59/t confirms the capacity of Southern Minerals to operate effectively in compliance with restrictions implemented to control the Covid19 virus. The company confirms that it expects to restart processing at Leigh Creek Copper during 2021 and that it is continuing to advance exploration to the west of the current resources area at its Redmoor tin/tungsten project in Cornwall.
*SP Angel acts as Nomad and Broker to Strategic Minerals
W Resources (LON:WRES) 0.8.5p, Mkt Cap £8m – La Parilla Q1 production hit by weather
W Resources reports that production of both tungsten trioxide and tin concentrates from its La Parilla mine in Extremadura in Spain were adversely affected by heavy rainfall which required plant shut-downs in addition to those planned in order to implement plant improvements.
Overall, the plant was “closed for a total of three weeks”.
Water levels in the pit restricted access to higher grade ore Chairman, Michael Masterman, explained that “the ore that we used was of lower grade, less fresh and with high levels of ultrafines through much of March. This has clearly impacted production, such that whilst production picked up towards the end of March, we did not achieve the record production we were anticipating for the quarter”.
Ore feed declined by 13% during the quarter to 196kt (Q4 2020 262kt) while tungsten trioxide feed grades declined by 21% to 744ppm (Q4 2020 – 943ppm) while recovery rates were 32% (Q4 2020 31%).
La Parilla produced 63.5t of tungsten trioxide concentrate at an average grade of 61.6% WO3 (Q4 2020 100t at an average grade of 67%).
Tin grades also declined, by 29% to 228ppm (Q4 2020 – 321ppm) although recovery rates improved to 44% (Q4 2020 – 26%). Tin concentrate production declined by 13% to 28.9t although grades were maintained at 56.6% (Q4 2020 – 33.4t at 56.3%).
Conclusion: La Parilla had a difficult quarter to March 2021 and continues to struggle with recovery rates. The adverse weather has clearly set back efforts to ramp up at La Parilla and we hope to see signs of an improvement during the current quarter.
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, Tungsten, Spodumene, Ferro-Manganese, Graphite