Today’s Market View – BlueRock Diamonds, Beowulf Mining, Bushveld Minerals and more…

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SP Angel . Morning View . Monday 08 02 21

Markets climb on Senate approval of $1.9tn US stimulus

 

BlueRock Diamonds (LON:BRD) – BlueRock reports 49% resource upgrade

Beowulf Mining* (LON:BEM) – £200k investment in Vadar Minerals

Bushveld Minerals* (LON:BMN) – Bushveld restates intercompany sales figures indicating greater tonnage of ferro-vanadium sold in Q4 and the full year

Sunrise Resources (LON:SRES) – Progress report on assays from Clayton silver project

 

Copper prices rise above $8,000/t on Monday as US stimulus prospects drive base metals optimism

Copper prices bounced above $8,000/t on Monday morning, rising 1.2% before sitting just below the threshold, as US Treasury Secretary Janet Yellen continued to push a generous relief package in comments made on Sunday.

Yellen commented that the US can return to full employment in 2022 as long as the relief package implemented by the US government is strong enough.

Copper prices rallied above the $8,000/t mark last month for the first time since 2013, driven by a worldwide recovery from the pandemic as a result of key vaccine breakthroughs, along with a weaker US dollar.

Inventories of copper slid in January on both the London and Shanghai exchanges, with LME stocks declining 31% compared to the month prior, while Shanghai stocks declined 28% to a record low over the same period.

Base metals optimism helped the European miners this morning, with the Stoxx Europe Basic Resources Index climbing for a fourth consecutive day, up 1.6% this morning (Bloomberg).

 

Tin – Lenovo record sales quarter brings tin market into focus

Lenovo, the world’s biggest maker of personal computers, posted record profit and revenue in Q3 last week, driven by robust demand as a result of people from working from home amid the pandemic.

Net profit jumped 53% to a record $395m in the Oct-Dec quarter, while revenue reached $17.25bn- its highest ever.

The pandemic has resulted in an uptick in sales of laptops and personal gadgets, with worldwide shipments of personal computers rising 11% in the December quarter.

The sales surge has helped drive tin market optimism as electronic solder accounted for 49% of tin demand in 2019, with many market participants seeing opportunities for this to increase further in future 5G related markets.

Robust demand from the electronic sector has propelled tin prices to levels not seen since 2014, with prices on the LME rising over 17% so far this year.

Alongside electronic solder, sectors with long-term demand growth potential include solar panels and batteries and as a catalyst in hydrogen fuel cells, according to the ITA.

Indonesia’s January tin exports fell 4,145t in January, down 35% from the month prior according to the country’s trade ministry.

 

BYD EV sales rise 183% YoY in December

Chinese automaker BYD sold 20,178 NEVs in December, up 183% compared to the same month last year but down 30% from the month prior.

BYD’s production for power and energy storage batteries totaled 1.75HWh in January, up 379% compared to January 2020.

The company’s main competitor in China, Nio, sold 7.225 EVs in January, up 352% YoY (Argus Media).

 

Rare Earth demand to rise as South Korea elects to build the world’s largest offshore windfarm 

South Korea unveiled a $43bn (48.5 tn won) plan to build a 8.2 GW, offshore windfarm by 2030.  

Korea Electric Power Corp, SK E&S, Hanwha Engineering & Construction Corp, Doosan Heavy Industries & Construction Co., CS Wind Corp and Samkang M&T Co will provide 47.6 tn won of the funding with the government the remaining 0.9 tn. 

The envisaged 8.2GW amounts to the energy produced by 6 nuclear reactors, or the effects of planting 71 million pine trees.  

Each turbine is likely to be around 10MW with around 0.5t of NdPr contained in their permanent magnets.

This equates to 410t of additional  demand for NdPr out of global production of around 20,000tpa NdPr estimated by the US Geological Survey

  

DRC – Ebola resurfaces in Butembo, North Kivu province, DRC

The infected woman is the wife of an Ebola survivor and is from one of the epicenters of the outbreak Bloomberg)

‘It is not unusual for sporadic cases to occur following a major outbreak,’ according to the World Health Organization spokesperson.

 

Recent Interviews:

VOX:    03/02/20 https://www.voxmarkets.co.uk/media/601c12cc40dc224b8b88a9ec/?context=/listings/LON/IKA/multimedia/

28/01/20 https://www.voxmarkets.co.uk/articles/john-meyer-covers-news-from-bluerock-rambler-altus-anglo-asian-mining-85f68e3

 

121 Africa Mining Conference panel:  Investment Leader’s Discussion: Van Eck, Qora Capital, Nedbank, SP Angel

Africa set to gain from Covid stimulus as East and West compete for metals in the new COVID-Supercycle:  https://www.theassay.com/the-assay-africa-edition-2021/

 

IGTV:   Metals expected to continue the last-year gains into 2021 https://youtu.be/afrB9cJe8L0

Is 2021 the start of the new COVID-Supercycle or will Lockdowns delay the recovery? https://youtu.be/7LO0tDc-pNc

As traders continue to bid up Tesla, is the EV sector approaching a bubble? https://youtu.be/LaDWBpTZ7SQ

 

iiTV:     The mining stock to own in 2021: https://www.youtube.com/watch?v=4x7SuSLQwCI&t=11s

Small Cap Mining Share tips for 2021 – https://www.youtube.com/watch?v=G_6RKAp91k4

*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.

 

Metals price forecasting through 2020 – 2020 was probably the most difficult year for forecasting anything

No.1 in Copper:  “The winner of the 2020Fastmarkets 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

2020 was probably the most difficult year for forecasting anything so we are very pleased to have ranked so well in the two key metals

Please contact us directly for our updated metals price forecasts for 2021 and beyond

 

Dow Jones Industrials +0.30% at 31,148

Nikkei 225 +2.12% at 29,389

HK Hang Seng +0.11% at 29,319

Shanghai Composite +1.03% at 3,532

 

Economics

US – Equities are powering ahead driven by expectations for new stimulus and hopes for a success of accelerating vaccination programme.

US Senate backed Biden’s $1.9 trillion aid plan in a pre-dawn vote but rejects federal minimum wage of $15/hour.

The resolution now goes to the House, where Democrats do not require Republican support to approve the package.

Democrats plan to fast track the $1.9tn “American Rescue Plan” through a so-called budget reconciliation process.

Such bills that can be brought only once a year may pass the Senate by 51 votes instead of the 60 normally required.

The House passed the budget plan by 219-209, also with no Republican votes, later in the day.

Nancy Pelosi expects the final relief bill to be passed by mid-March.

Ms Yellen is expecting the economy to reach full employment next year with the help of the latest stimulus package.

Oil prices climbed to their highest since near the start of the pandemic on the back of production cuts and recovering demand.

Brent crossed the $60/bbl mark while WTI is approaching $58/bbl making energy stocks the best performers in the S&P500 this year.

Despite the ongoing vaccination, President Biden said the US is unlikely to reach herd immunity before the end of the summer.

Labour numbers came significantly below estimates in January while December was revised down heavily.

Unemployment rate pulled back on the back of an increase in the number of employed as well as more people leaving workforce seen in the falling labour participation rate.

NFPs (000): 49 v -227 (revised from -140) in December and 105 est.

Unemployment Rate: 6.3% v 6.7% in December and 6.7% est.

US manufacturing PMI ISM falls to 58.7 in January vs 60.5 in December

US Markit PMI rise to 59.2 in January vs 57.1 in December

 

JP Morgan global composite manufacturing fell to 53.5 in January vs 53.8 in December

nonmanufacturing/service composite US ISM 59.9 (59.4),

HIS Markit US Services PMI Business Activity Index rose to 58.3 in January vs 54.8 in December

IHS Markit Composite PMI Output Index* posted 58.7 up from 55.3 in December

 

ECB – Central bank president Christine Lagarde is expecting the euro-zone recovery to pick up in the summer while highlighting difficulties in withdrawing monetary and fiscal support.

“We remain convinced that 2021 will be a recovery year… the economic recovery has been delayed, but not derailed… people are obviously waiting impatiently for it,” Lagarde told French press on Sunday.

The forecast is for the single currency region to post an expansion of close to 4% following a contraction of nearly 7% in 2020, with the pace of a recovery remaining contingent on the rate of the vaccination.

On potential scaling down of stimulus, Lagarde noted that “economies will then have to learn how to function again without the help of any of the exceptional measures that had to be introduced as a result of the crisis… I am not worried about this, because the capacity for recovery is strong.”

EU president sees the US as a speedboat is able to act faster in securing Covid vaccines while the EU is like trying to steer a tanker

Unfortunately the EU appears to act slower than most other nations when it comes to crises with stimulus action often running around nine months after the US.

 

Germany – Industrial production was flat in December as the sector continued to operate despite lockdown measures in the rest of the economy.

Gains in manufacturing were offset by weaker construction.

Nevertheless, the outlook remains weak as suggested by “weaker orders and damped sentiment among businesses”, according to the Economy Ministry.

While all non-essential businesses were planned to be reopened in the middle of February, authorities are considering to extend the lockdown by a couple of weeks.

 

UK – could face tougher Covid-19 restrictions if South African variant continues to spread

Experts reckon the Oxford AstraZeneca vaccine should still protect against severe illness and death from the new South African strain.

 

Mongolia – The government is seeking an agreement with Rio Tinto to terminate and replace the Oyu Tolgoi $6.75bn underground development project, according to FT.

The ruling Mongolian People’s party with a new PM Luvsannamsrain Oyun-Erdene is facing pressure from parliament to replace the current plan.

Authorities asked Rio whether two parties can mutually agree to revise the agreement in order to avoid a unilateral decision that might risk future foreign investment projects in the country.

The administration has already threatened last month to halt development saying the delays had eroded the economic benefits the country had hoped for.

 

Currencies US$1.2030/eur vs 1.1977eur last week.  Yen 105.58/$ vs 105.45/$.  SAr 14.906/$ vs 14.921/$.  $1.370/gbp vs $1.371/gbp.  0.767/aud vs 0.762/aud.  CNY 6.458/$ vs 6.473/$.

 

Commodity News

Precious metals:  

Gold US$1,812/oz vs US$1,806/oz last week

   Gold ETFs 106.9moz vs US$107.0moz last week

Platinum US$1,149/oz vs US$1,114/oz last week

Palladium US$2,337/oz vs US$2,305/oz last week

Silver US$27.04/oz vs US$26.66/oz last week

 

Base metals:  

Copper US$ 7,988/t vs US$7,915/t last week – Freeport and Tsingshan to build $2.8bn copper smelter in Indonesia

US miner Freeport-McMoRan and world’s largest stainless steel producer are teaming up to build a $2.8bn smelter in Indonesia, Fastmarkets reports.

Freeport’s Indonesian unit, PT-FI, are reportedly finalising the agreement which would see a smelter belt in Weda Bay.

PT-FI has committed to constructing a new smelter in Indonesia by December 2023 as part of a package to extend its mining rights form 2031 to 2041, with the smelter scheduled to have a capacity of over 2mtpa of copper concentrate.

Aluminium US$ 2,030/t vs US$2,000/t last week

Nickel US$ 18,065/t vs US$17,925/t last week

Zinc US$ 2,672/t vs US$2,659/t last week

Lead US$ 2,050/t vs US$2,048/t last week

Tin US$ 23,200/t vs US$22,945/t last week

 

Energy:           

Oil US$60.0/bbl vs US$59.4/bbl last week

Oil prices continue to strengthen with Brent breaking through the US$60/bbl threshold and are now at pre-pandemic levels

Last week’s US$5/bbl gain is due to a combination of factors, including a large crude oil inventory decrease in the US, continuing OPEC+ production restraint, Aramco’s price hike to crude for Europe, and whispers of an overall tightening oil market

When a US stimulus deal is finalised, oil prices are expected to rise even further

But on the bearish side, oil demand is still lagging and lockdowns in Europe continue to weigh on prices

This is the main argument of the EIA, who does not see US energy consumption rebounding fully for another eight years

Russia is still pushing to ramp up its oil production, to put the brakes on US shale producers

For now, Saudi Arabia is happy to take one for the team, resigned to curb production so others in the group will continue with at least some of the cuts – for now, OPEC’s actions remain bullish

Goldman Sachs has taken the opportunity to upgrade its outlook, estimating US$65/bbl Brent by mid-year, with WTI in the low US$60s

Natural Gas US$2.926/mmbtu vs US$3.036/mmbtu last week

Natural gas prices dropped 2.6% on Friday after hitting fresh two-month highs

December and January saw a surge in natural gas prices in Asia as a cold spell caused a boom in electricity and heating demand

Now US gas prices are also enjoying an improvement, albeit a lot more moderate than the US$30/ mmBtu the Asian spot market saw last month

The front-month Henry Hub contract for natural gas topped US$3 last week on very cold weather in the US

Indeed, most parts of the UK awoke to a blanket of snow this morning

According to the EIA, natural gas in storage was 2,689Bcf as of 29 January 2021

This represents a net decrease of 192Bcf from the previous week

Expectations were for a 172 Bcf draw in stockpiles according to survey provider Estimize Stocks were 41Bcf higher than last year at this time and 198Bcf above the five-year average of 2,491Bcf

At 2,689Bcf, total working gas is within the five-year historical range

 

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$150.9/t vs US$152.4/t

Chinese steel rebar 25mm US$668.2/t vs US$666.5/t

Thermal coal (1st year forward cif ARA) US$66.3/t vs US$66.0/t

Coking coal swap Australia FOB US$157.0/t vs US$158.0/t

           

Other: 

Cobalt LME 3m US$45,700/t vs US$44,225/t

NdPr Rare Earth Oxide (China) US$71,477/t vs US$70,911/t

Lithium carbonate 99% (China) US$10,609/t vs US$10,583/t

Ferro Vanadium 80% FOB (China) US$30.5/kg vs US$30.5/kg

Ferro-Manganese high carbon 78% Mn US$1,575/t vs US$1,560/t

Tungsten APT European US$250-255/mtu vs US$244-250/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

Spodumene 6% Li2O min, cif (China) US$455/t vs US$395/t

 

Battery News

Energy group Total and Macquarie unit win offshore wind project deal 

French energy group Total and Macquarie’s Green Investment Group have won a new UK windpower project deal located off the East Anglian coast.  

Total and GIG said the project could deliver up to 1.5 GW of renewable electricity and represents a significant early stage investment in the offshore wind sector for both companies.  

 

UK hills could be used as energy ‘batteries’ 

Hills across the UK could be transformed into renewable energy “batteries” through a pioneering hydropower system embedded underground.  

The company behind the plans, RheEnergise, said the project would pump a dense fluid up a hill with a height of 200 metres, at times of low electricity demand. It would be held in an underground storage tank larger than an Olympic-size swimming pool. 

When extra electricity is required, the fluid flow back down the hill, over generating turbines, to effectively return the electricity used by its pumps earlier in the day back to the grid. 

RheEnergise say this plan could allow around 700 sites across the country to play host to their high-intensity hydro projects, which in theory could create a total of 7GW of energy storage to help the UK use more renewable electricity. 

It will be interesting to see how this will compare with battery storage in terms of up-front capital cost.

We suspect environmental permits for the pipes and hydropower stations may slow down development of the UK goes for this type of energy storage,
 

Company News

BlueRock Diamonds (LON:BRD) 59.8p, Mkt cap £5.4m – BlueRock reports 49% resource upgrade

BlueRock Diamonds reports a 49% increase in the estimated resource at its Kareevlei Diamond Mine in South Africa

The company reports

49% increase in net tonnes to 10,368,300

53% increase in net carats to 516,200

19% of resource upgraded to Indicated Resources

The resource supports the company’s increase in production to 1mtpa

The team expect a further increase in their kimberlite and diamond resources from further evaluation of KV3 the largest kimberlite pipe in the Kareevlei Diamond pipe cluster.

Just 40% of KV3 is currently included in the resource.

Conclusion: The reclassification of a significant tonnage into the Indicated category from Inferred by the ‘Competent Person’ is good news reducing the perceived risk of raising the mining rate to 1mpta over the longer term.

 *SP Angel act as nomad and broker to BlueRock Diamonds

 

Beowulf Mining* (LON:BEM) 4.6p, Mkt cap £38.6m – £200k investment in Vadar Minerals

(Beowulf holds 48.4% of Vadar. Beowulf also holds 100% Kallak iron ore in Sweden, 100% of Aitolampi graphite in Finland and 40% of the Mitrovica and Viti projects in Kosovo)

Beowulf reports that it has invested £200k in Vadar Minerals, increasing the Company’s ownership in Vadar from 46.1% to 48.4%.

The funds will be used for preparatory works, including building access roads and drilling platforms across the Mitrovica license in northern Kosovo, lead-zinc targets at Wolf Mountain and gold targets at Madjan Peak.

This further investment in Vadar from Beowulf reaffirms the company’s belief that its licenses on the Tethyan Belt can produce a major gold or base metals discovery. Soil samples at Wolf Mountain have shown up to 1% Zn & 0.5% Pb, and rock samples show 3.5% Zn, 1.8% Pb and 93 g/t Ag on the Mitrovica license.

Kurt Budge, CEO of Beowulf commented: “With the Capital Raising complete, we have been working with Vardar on the results from last year’s ‘state of the art’ geophysics programme, which produced an exceptionally high-quality dataset for analysis and interpretation. We will soon finalise the exploration plan for this year, initially focusing on the Mitrovica licence, the lead-zinc targets at Wolf Mountain and gold targets at Majdan Peak. This investment will enable Vardar to ‘hit the ground running’ with drilling.”

“It remains a good time to have a gold target in the portfolio and last year’s geophysics results for Majdan Peak, indicate a potentially large source of gold mineralisation below the anomaly defined at surface through gold in soils and alteration intensity. Similar to Wolf Mountain, we have significant anomalies, which again are connected to surface mineralisation that has been sampled; these present excellent drill targets.”

*SP Angel act as nomad and broker for Beowulf Mining.

 

Bushveld Minerals* (LON:BMN) 19.23p, Mkt cap £229m – Bushveld restates intercompany sales figures indicating greater tonnage of ferro-vanadium sold in Q4 and the full year

(Bushveld Energy holds 65.1% Enerox Holdings Limited along with 5.66% in Invinity)

Bushveld Minerals has restated a number of ‘intercompany’ sales figures as presented in last week’s Q4 and FY production and sales update.

12M 2020 Group Sales of 4,264 mtV includes intercompany sales of 422 mtV , rather than sales of 4,264 mtV includes intercompany sales of 1,255 mtV as previously stated.

Eg. Bushveld sold 3,842 mtV of vanadium for the full year vs 3,009 mtV than previously implied

Q4 2020 Group Sales of 1,268 includes intercompany sales of 15 mtV, rather than sales of 1,268 includes intercompany sales of 520 mtV as previously stated.

Eg. Bushveld sold 1,253 mtV in the fourth quarter vs 748 mtV than previously implied

12M 2020 Vametco Sales of 3,333 mtV includes sales to customers of 2,911 mtV and intercompany sales of 422 mtV, rather than sales of 3,333 mtV includes sales to customers of 2,078 mtV and intercompany sales of 1,255 mtV as previously stated.  

Q4 2020 Vametco Sold 907 mtV in Q4 2020, of which 892 mtV were final sales to customers. The sales volume includes intercompany sales of 15 mtV, rather than Sold 907 mtV in Q4 2020, of which 388 mtV were final sales to customers. The sales volume includes intercompany sales of 520 mtV as previously stated.

Conclusion:  It is good to see that Bushveld sold more material than previously stated. Intercompany sales are deducted from the headline sales figures to give the actual sales to external customers.

We will update our revised estimates and valuation shortly

*SP Angel acts as Nomad and broker to broker to Bushveld Minerals.

 

Sunrise Resources (LON:SRES) 0.28p Mkt Cap £10.3m – Progress report on assays from Clayton silver project

Sunrise Resources has responded to shareholder enquiries concerning the timing of an announcement of assay results for drill core samples from its Clayton silver project in Nevada by clarifying that the assay results have not yet been received and that the laboratory is working through a backlog of samples.

The company explains that the delay in assaying has been the result of a combination of high demand for assays and staff shortages at the laboratory as a result of the Covid19 pandemic and that consequently the “laboratory has indicated that results may not be available to the Company before the end of this month.” 

The company reported the completion of a drill-hole on the project in November 2020 which, despite encountering what were described as difficult drilling conditions, terminated at a depth of 104.7m having “passed through the target zone” which had previously been partially intersected in an historic hole, CL-15 “which intersected 7.6m grading 165 grams/tonne silver (4.8ounces/ton) and 0.4g/t gold from 82.3m depth to the base of the hole at 89.9m depth”.

 

Analysts

John Meyer – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474

Joe Rowbottom – [email protected] – 0203 470 0486

 

Sales

Richard Parlons –[email protected] – 0203 470 0472

Abigail Wayne – [email protected] – 0203 470 0534

Rob Rees – [email protected] – 0203 470 0535

Grant Barker – [email protected] – 0203 470 0471

 

 

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

 

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

 

Sources of commodity prices

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel

Bloomberg

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

LME

Oil Brent

ICE

Natural Gas, Uranium, Iron Ore

NYMEX

Thermal Coal

Bloomberg OTC Composite

Coking Coal

SSY

RRE

Steelhome

Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal

Tungsten

Metal Bulletin

 

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