Today’s Market View – Beowulf Mining; Chaarat Gold; IronRidge Resources;Mkango Resources; Red Rock

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SP Angel . Morning View . Tuesday 25 05 21

Fed dovish comments lend support to risk sentiment 

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MiFID II exempt information – see disclaimer below 

Altus Strategies (AIM:ALS) – 17,500m drilling programme starts at Diba eyeing MRE expansion

Atalaya Mining (AIM:ATYM) – Proyecto Riotinto East and Masa Valverde exploration

Beowulf Mining* (AIM:BEM) – MRE upgrade results in 12.5% resource increase at Kallak

Bluejay Mining* (AIM:JAY) – Drilling starts at Enonkoski in jv with Rio Tinto

Chaarat Gold (AIM:CGH) – Updated Tulkubash BFS

IronRidge Resources* (AIM:IRR) – Additional high-grade intersections reported adjacent to ELP

Mkango Resources* (LON:MKA) – Mkango Q1 results announcement looks for completion of Songwe Hill feasibility study in Q4 

Phoenix Copper* (LON:PXC) – Agreement with First Cobalt to progress the Redcastle property

Red Rock Resources (AIM:RRR)– Drilling planned for Luanshimba, DRC

Shanta Gold (AIM:SHG) – Drilling at West Kenya returns exceptional high grade results

 

China’s Renminbi hits three-year high against dollar on China’s economic rebound and capital inflows

  • China’s currency hit its strongest level against the dollar in three years, gaining 0.2% this morning to reach Rmb6.4046/$ on Tuesday, its highest point since June 2018.
  • The renminbi has gained more than 10% over the past year, driven by China’s economic rebound from the Covid-19 pandemic and foreign capital inflows into the country.
  • The country’s SI 300 of Shanghai- and Shenzhen-listed shares enjoyed its best day since July, rising 3%.

 

DRC – President announces intention to renegotiate mining contracts

  • President Felix Tshisekedi has announced that he intends to renegotiate the DRC’s mining contracts, including those with China.
  • Tshisekedi commented: “It’s not normal that those with whom the country has signed mining contracts get richer while our population remains poor,” – commenting about deals signed by his predecessor. 
  • “It is also our fault. Some of our compatriots badly negotiated the mining contract. Worse, the little which returns to the state, they put in their own pockets,”
  • The President’s comments were made in the mining province of Katanga, where around 40 mining companies operate – around 30 of which are Chinese (The Citizen). 

 

Copper – Codelco claims 40% of its copper production may be put at risk by glacier bill in constitutional changes

  • The election of a significant number of new left-leaning senators in Chile with intent to change Chile’s constitution is causing some consternation.
  • Codelco, the world’s largest copper miner, which gives 10% of its export sales to the Chilean military has pointed out that the proposed glacier bill could hit around 40% of its copper produciton (El Mercurio).
  • Affected mines would be Andina, El Teniente and Salvador by the absolute prohibitions in the bill.

 

Iron ore – China talks down iron ore prices but price run demonstrates China’s struggle in managing commodity markets

  • The sky-high price of iron ore is unhelpful for inflation in the Chinese economy and is raising the cost of Stimulus project construction causing the government to slow and revaluate some projects.
  • China’s leadership is increasingly focussed on the systemic risk posed by inflation driven by higher raw materials prices, property and cryptocurrency speculation.
  • Smaller companies on thin margins are struggling to absorb higher costs as seen with producer prices rising 6.8% in April

    • Rising corporate bond defaults and local government financing vehicles funding problems are seen as raising bad debt levels.
    • The Financial Stability and Development Commission ‘FSDC’ said China must make a “full assessment” of financial threats and act firmly to prevent them affecting social stability in a much stronger than is normally released.
    • The cost of the iron ore in steel represented around 38% of the steel at $200/t and has accounted for much of the increase in steel prices in China over the past year with rebar steel prices rising to over $800/t from $660/t at the beginning of the year when iron ore prices were at $156/t
    • To put it into perspective, every tonne of steel produced consumes around 1.4-1.6t of iron ore so adding $100/t to the price of iron ore adds ~$150/t to the cost of the steel.

 

Mineral processing – breakthrough allows a cellulose-based compound to replace oil-based frothers in froth flotation cells

  • Researchers at Aalto University in Finland have developed a new mechanism to process minerals in an environmentally friendlier way compared to current froth flotation mechanisms. (Mining.com)
  • The scientists have created a cellulose-based compound that is not only renewable, biodegradable and non-toxic but also more effective in separating metals than the oil-based commercial frothers commonly used.
  • The compound is an aqueous polymer-surfactant mixture consisting of a nonionic amphiphilic polymer and a nonionic surfactant pair to be used as a flotation frother.
  • The compound is said to accelerate the flotation while working efficiently in a wider range of pH conditions, making it less sensitive to the changes in process conditions. With zinc the compound also appears to reduce the need for other chemicals.
  • The compound has been tested in continuous operation at a mini-plant with copper ores containing copper including copper from tailings and refinery slag.
  • Testing is ongoing on gold ores using the ‘CellFroth’ compound.

 

 

Economics

UK – Looking at potential tariff-free trade with the US 

  • The UK has started a public consultation of tariffs which were imposed by the EU in retaliation for ‘Section 232’ duties on aluminium and steel imposed by the US. The UK currently applies tariffs on US whiskey, motorcycles and tobacco.

 

Covid-19 – Fully vaccinated people to be forced to self-isolate for 10 days if they come into contact with someone infected with Covid after 21 June

  • The forced isolation may deter people from going to crowded places if they face the threat of enforced isolation (The Telegraph).
  • Workplaces may also be reluctant to mix vaccinated and unvaccinated staff if a case of Covid could cause dozens of people to be forced into quarantine. The Indian variant is seen as spreading fastest pressuring the government into adopting further measures to control the pandemic.

 

Belarus – EU agrees sanctions against Belarus for forcing down flight

  • Brussels agreed to ramp up sanctions against Belarus and ban its state airline from EU airports after the Minsk Regime intercepted a Ryanair flight carrying an opposition activist.
  • At a meeting in Brussels last night, the bloc called for the immediate release of Roman Protasevich, the leading opposition activist, and his partner, Sofia Sapega.
  • European leaders agreed to “targeted” economic measures that are expected to be aimed at companies and oligarchs accused of financing the 27-year rule of President Alexander Lukashenko, the FT reports.

 

Mali – Attempted coup threatens to derail February 2022 presidential elections

  • Mali’s President and Prime Minister have been taken to military barracks outside of the capital Bamako on Monday, following a government reshuffle. 
  • The move comes after an initial coup on the 18th of August which saw former President Ibrahim Keita ousted. 
  • Both men along with other leaders were detained after the cabinet changes left out two members of the junta – including Defense Minister Colonel Sadio Camara.
  • Mali produced 66.5 tonnes of gold in 2020, making it the third-largest producer in Africa.
  • The actions of the military in Mali are not overly unusual and often serve to restore order and stability.

 

Currencies 

US$1.2259/eur vs 1.2196/eur yesterday.  Yen 108.62/$ vs 108.71/$.  SAr 13.857/$ vs 13.920/$.  $1.421/gbp vs $1.416/gbp.  0.777/aud vs 0.774/aud.  CNY 6.403/$ vs 6.432/$.

 

Commodity News

Precious metals:  

Gold US$1,885/oz vs US$1,882/oz yesterday

   Gold ETFs 100.9moz vs US$100.8moz yesterday

Platinum US$1,183/oz vs US$1,170/oz yesterday

Palladium US$2,763/oz vs US$2,783/oz yesterday

Silver US$27.72/oz vs US$27.73/oz yesterday

            

Base metals:   

Copper US$ 9,950/t vs US$9,884/t yesterday

Aluminium US$ 2,371/t vs US$2,339/t yesterday

Nickel US$ 17,050/t vs US$16,815/t yesterday

Zinc US$ 2,938/t vs US$2,925/t yesterday

Lead US$ 2,120/t vs US$2,169/t yesterday

Tin US$ 29,500/t vs US$29,200/t yesterday

            

Energy:            

Oil US$68.4/bbl vs US$67.2/bbl yesterday

  • Oil prices rose by 2% yesterday, buoyed by market expectations that fuel demand globally is rising with the re-opening of major economies in Europe and higher travel numbers in the US
  • Further bullish supply sentiment was boosted over the weekend with an announcement that Iran’s three-month agreement with the International Atomic Energy Agency (IAEA) for monitoring nuclear activities had ended and the agency would not have access to data collected from cameras inside Iranian nuclear facilities
  • This appears to have narrowed the window for the global powers to reach an agreement for the return of Iran and the United States to the nuclear deal
  • Later yesterday, however, the IAEA issued a press release that its Director General Rafael Mariano Grossi had agreed with Iran to extend by one month to 24 June the necessary verification and monitoring activities carried out by the agency in the Islamic Republic
  • Meanwhile, the US Transportation Security Administration (TSA) reported c.1.9m traveller throughput at airports on 23 May, the highest number since the pandemic started grounding flights in March last year

 

Natural Gas US$2.885/mmbtu vs US$2.849/mmbtu yesterday

 

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$182.4/t vs US$191.4/t

Chinese steel rebar 25mm US$799.3/t vs US$804.0/t

Thermal coal (1st year forward cif ARA) US$80.8/t vs US$78.7/t

Coking coal swap Australia FOB US$151.0/t vs US$151.0/t

            

Other:  

Cobalt LME 3m US$43,650/t vs US$43,650/t

NdPr Rare Earth Oxide (China) US$75,506/t vs US$75,018/t

Lithium carbonate 99% (China) US$12,649/t vs US$12,594/t

China Spodumene Li2O 5%min CIF US$640/t vs US$640/t

Ferro-Manganese European Mn78% min US$1,759/t vs US$1,750/t

China Tungsten APT 88.5% FOB US$270/t vs US$270/t

China Graphite Flake -194 FOB US$505/t vs US$505/t

Europe Vanadium Pentoxide 98% $8.1/lb vs $8.05/lb

Europe Ferro-Vanadium 80% $36.75/kg vs $35.75/kg

 

Battery News

Plans to diversify sources of UK wind power include 10GW wind farm off Iceland

  • The £21b HIP Atlantic Project would see 10GW of fixed and floating turbines in the North Atlantic connected exclusively to the UK grid via long-length HVDC cables.
  • HIP has lodged four applications with the National Grid Company for 4GW of connections across four sites, each in a different North Atlantic location and consisting of 1GW of capacity.
  • The initial 2GW of generation capacity is expected to be commissioned in early 2025 and will result in approximately 15,000 new jobs within the UK.
  • According to HIP, the specialised cables will be manufactured at a £200m cable plant to be built in the northeast of England. HIP chairman, Sir Tony Baldry says the project will be “pushing the boundaries of existing cable technology to generate over 1,000km [of cabling] from our grid landfall points throughout England.”

 

LG to collaborate with Indonesia over $1.2bn battery plant

  • LG Corp and state-owned Indonesia Battery Corporation (IBC) have collaborated to build a new $1.2bn battery plant with 10GWh capacity.
  • The plant is part of a $9.8bn EV deal signed last year between LG and Indonesia, as Indonesia looks to capitalise on their high nickel production, used in lithium-ion batteries, to become a global hub of producing and exporting EVs.

 

Shell wins $2.5bn Australian power contract

  • New South Wales has awarded a $2.5bn, 10-year power supply contract to Royal Dutch Shell PLC, which includes supplying battery back-up power for wind and solar energy.
  • A 100MW two-hour battery to be built and run by privately owned Edify Energy is expected to cost AU$100m and will be switched on by early 2023. Shell have a deal with Edify to take 60% of the battery’s power.

 

Company News

  • Altus Strategies (AIM:ALS) 60.5p, Mkt Cap £49m – 17,500m drilling programme starts at Diba eyeing MRE expansion
  • The Company starts 17,500m RC/AC drilling programme at the wholly owned Diba Gold Project in western Mali.
  • The drilling will focus on growth of the Diba MRE as well as the northern strike of the Diba NW discovery (800m fom Diba) and evaluate artisanal workings at the Diba Far East Prospect (7km from Diba).
  • Additionally, the team is planning to drill test a series of structural targets defined by the recently completed 48km2 ground magnetic survey.
  • The Company is planning to release an updated MRE and PEA for the Diba project following the drilling programme later in the year.
  • The Diba MRE prepared in Jul/20 stands at 4.8mt at 1.39g/t for 217koz in the Indicated category and 5.5mt at 1.06g/t for 187koz in the Inferred resource.
  • On Nov/20 PEA, Diba generated an NPV10% (after-tax) of $140m at $1,800/oz with a heap leaching operation running at 1.5mtpa and 57kozpa for 3.25 years.

*SP Angel acts as Nomad and Broker to Altus Strategies plc

 

Atalaya Mining (AIM:ATYM) 354p, Mkt Cap £489m – Proyecto Riotinto East and Masa Valverde exploration

  • Atalaya Mining has provided further information on its exploration plans for the Peñas Blancas, Cerro Negro and Herreros investigation permits, collectively known as Proyecto Riotinto East, where it has a Memorandum of Understanding with a local Spanish company to acquire a 100% interest.
  • The Peñas Blancas and Cerro Negro licences, covering 12,368 hectares located immediately to the east of the company’s Proyecto Riotinto mine, “share a similar stratigraphic and structural setting. Several airborne magnetic anomalies have already been delineated and a number of small mines and mineral occurrences (pyrite and manganese mainly) are known to occur in direct relationship with favorable volcanic and volcano-sedimentary rocks that are expected to occur at Proyecto Riotinto East. The Admirable Mine, with historic production of 3Mt @ 1% copper, is situated very close to the northern limit of the Cerro Negro permit”.
  • “The Herreros permit is located 10 km northeast of Las Cruces copper mine in a similar geological setting. Previous exploration work carried out by RTZ in the 1990s had defined a strong gravity anomaly associated with a TEM conductor underneath a tertiary cover” and the company plans further drilling to investigate the significance of the anomaly.
  • Atalaya Mining also says that exploration is underway at the Masa Valverde satellite project, which it acquired in October 2020, with ground based geophysics aimed at refining targets for a proposed 8,000m drilling programme aimed at generating a compliant mineral resources estimate and identifying possible extensions to the known mineralisation.
  • CEO, Alberto Lavandeira, explained that “We continue to work on expanding our footprint in the highly prospective Iberian Pyrite Belt, where four new deposits have been found within the last six years, including world-class Magdalena …[and that] … With the MoU for Proyecto Riotinto East, Atalaya expands its access to one of the most prospective areas of the Iberian Pyrite Belt”.

Conclusion: The near-mine exploration opportunities close to Proyecto Riotinto offer Atalaya Mining an opportunity to expand its mineral resource inventory following the successful expansion of Proyecto Riotinto to 15mtpa capacity.  Although exploration success cannot be taken for granted, we consider that the discovery of additional sources of feed to an established processing plant, located in a proven geological setting close to existing and historic mines, is a lower risk route to resource expansion than green field exploration in a new area. We await news as the exploration gets underway.

 

Beowulf Mining* (AIM:BEM) 4.6p, Mkt cap £31m – MRE upgrade results in 12.5% resource increase at Kallak

  • Beowulf has announced results of a Mineral Resource Estimate Upgrade for its Kallak Iron Ore Project in Sweden, along with a significant upgrade to the Exploration Area for the project.
  • Baker Geological Services (BGS) have prepared a technical report, serving as an independent report and acting as Competent Persons as defined by the Pan-European Reserves and Resources Reporting Committee Standard for Reporting of Exploration Results, Mineral Resources and Mineral Reserves.
  • BGS reported an a combined Measured and Indicated Mineral Resource of 132Mt at 27.8% Fe and an Inferred Mineral Resource of 39Mt at 27.1% Fe. This is a notable increase from the previous Geovista 2014 MRE reported an Indicated Mineral Resource of 118 Mt at 27.5% Fe and an Inferred Mineral Resource of 33.8 Mt at 26.2% Fe.
  • The upgraded MRE equates to an increase of 19mt reported herein for approximately the same Fe grade, with the quantity of the Inferred Resource being approximately the same and the upgraded resource including a portion of the resource declared in the measured capacity – the most geologically certain category available under the given metrics.
  • Geovista also undertook a pit optimisation exercise to report the final Mineral Resource Statement for Kallak and it is likely that the difference in assumptions may account for the overall tonnage difference between the 2014 and 2021 MREs. 
  • Further to the increasing iron ore resource, three distinct areas of elevated copper and gold mineralisation have been identified in drilling, running the length of the Project area, with elevated assay intersections predominantly lying on the boundaries of the iron mineralisation.
  • Copper grades reached up to 1.6% – the maximum possible Cu value using the assay method employed at the time, meaning further testing is required to determine the extent of grade where the maximum values were recorded.
  • Gold grades reach up to 0.75 g/t from testwork completed in April 2021 on those pulp samples where the Cu assay was more than 0.1%, with only five out of thirty samples below the detection limit.
  • In addition to the MRE, BGS has updated the Exploration Target for the Project with inclusion of the Parkijaure permit area.
  • At Kallak North, material has been modelled below the currently classified resource. This material is unclassified at present but represents a valid target for future exploration. BGS report an Exploration Target of between 3 Mt and 7.5 Mt grading between 20% Fe to 30% Fe.
  • In the Kallak Permit area, a ‘Gap’ exists between Kallak South North and Kallak South South and represents a prospective untested mineralisation target. Two drillholes exist in the area; both are shallow and did not intercept any mineralisation of material width or grade, although the southern drillhole, KAL10044, within the gap, did encounter some of reported Cu / Au mineralisation. Given the geophysical signature within the gap and the overall synform structure proposed, it is possible that the iron bearing lithologies lie below the two drillhole completed within this area.
  • Based on a wireframe generated to allow for an approximate volume of mineralised material to be estimated, BGS reported an Exploration Target of between 25 Mt and 75 Mt grading between 20% Fe to 30% Fe. The potential quantity and grade are conceptual in nature as there has been insufficient exploration to estimate a Mineral Resource.
  • BGS assembled all data available on the Parkijaure Permit and created simple trace lines along the magnetic anomalies considered strong enough to be related to significant iron mineralisation within the Parkijaure Permit. BGS reported an Exploration Target of between 45 Mt and 135 Mt grading between 20% Fe to 30% Fe.
  • In total, BGS has reported an Exploration Target of between 73 Mt and 218 Mt grading between 20% Fe to 30% Fe.
  • Kallak is ideally positioned to the proposed H2 Green Steel production facility to be located in the Boden-Luleå region of Norrbotten, along with HYBRIT to be sited in Gällivare – a project undertaken by SSAB, LKAB and Vattenfall  industrialization of the technology being developed through HYBRIT to be sited in Gällivare, where the world’s first production plant for fossil-free sponge iron – from feedstock to steel – is being planned by LKAB.
  • Kurt Budge, Chief Executive Officer of Beowulf, commented: “I am delighted with the results of this upgraded Mineral Resource Estimate and the doubling of the Exploration Target, which clearly demonstrate the potential for a mine at Kallak to supply high-quality iron ore over several decades for fossil-free steel production in Sweden. While we wait for UNESCO to return its comments to the Government, there have been significant developments in Norrbotten.”
  • “With the recent arrival of a new Governor in Norrbotten, the Company believes that the County Administrative Board (“CAB”) has an obligation to review its November 2017 position on Kallak. Beowulf maintains that the CAB’s 2017 statement is invalid and is further discredited given the fundamental shift in understanding about the Climate Emergency, and the need for more mines to produce the metal required for the transition to a Green Economy. Kallak will bring billions of SEK in investment and hundreds of jobs to Jokkmokk.  All stakeholders will benefit and all interests will be safeguarded.”
  • “The Company continues to engage with politicians in Norrbotten and Stockholm and last week’s webinar ‘Hållbar Gruvnäring’ (Sustainable Mining) brought together politicians from across the political spectrum and key stakeholders to discuss the need for more mines in Sweden.”

*SP Angel act as Nomad and Broker for Beowulf Mining

 

Bluejay Mining* (AIM:JAY) 8.8p, Mkt cap £85m – Drilling starts at Enonkoski in jv with Rio Tinto

BUY – Valuation 37.7p

  • Bluejay Mining report the start of drilling at their Enonkoski JV with Rio Tinto in Finland.
  • The 3,000m drilling program and further exploration of the Enonkoski license area will run through the summer and autumn and is looking for Ni-Cu-Co mineralsiation.
  • The historic Enonkoski mine is a remobilised VMS deposit producing nickel, copper and cobalt.
  • Geological interpretation indicates further deposits of remobilised metals along strike from Enonkoski with the potential for repeating structures across the region

*SP Angel act Nomad and broker to Bluejay. The analyst has previously visited the Enonkoski mine site in Finland. The analyst recently bought shares in Bluejay Mining.

 

Chaarat Gold (AIM:CGH) 22.4p, Mkt Cap £154m – Updated Tulkubash BFS

  • The Company released an updated BFS for its Tulkubash Oxide Project in Kyrgyzstan.
  • Updated Mineral Resource Estimate includes: 
  • 28.5mt at 0.86g/t for 789koz in the Measured&Indicated category (from 23.3mt at 1.22g/t for 918koz)
  • 21.4mt at 0.56g/t for 388koz in the Inferred category (from 0.9 at 0.90g/t for 26koz))
  • A reduction in the Measured and Indicated mineral resource is attributed to reclassification of a share of the material at deeper levels from Indicated to Inferred.
  • Updated Mineral Reserve currently stands at: 
  • 20.9mt at 0.85g/t for 571koz (from 24.6mt at 0.95g/t for 749koz)
  • A reduction in Reserves reflects a drop in the Measured and Indicated category while a reduction in grade is a reflection of application of lower cut off grade under new higher gold price assumption.
  • Mine life reduced slightly to 4.8y compared to 5.3y in the 2019 BFS.
  • Average annual production unchanged at 95kozpa as a reduction in processed grades (0.85g/t v 0.92g/t) is expected to be compensated by better gold recoveries (73.6% v 68.9%).
  • NPV5% (post-tax) estimated at $85m using $1,450/oz gold price versus $70m in the 2019 BFS using $1,300/oz.
  • IRR is estimated at 25% v 20% in 2019 BFS.
  • Capex remained largely unchanged at $115m versus $110m previously.
  • Recent events in the mining sector in the Kyrgyz Republic involving a dispute between authorities and Centerra over the largest gold operation in the country may defer the closing of the Tulkubash bank funding post previously targeted H1/21.
  • Additionally, the team is considering a comprehensive refinancing of its current debt outstanding including $20m (excluding rolled in interest) in convertible notes (37p conversion price) due in Oct/21.
  • A revision to the expected financing timeline is expected to see projected first gold at Tulkubash moved to H2/23 from previously planned Q4/22.

 

IronRidge Resources* (AI:IRR) 18.25p, Mkt Cap £94m – Additional high-grade intersections reported adjacent to ELP

  • Ironridge reports additional broad and high-grade lithium pegmatite drill targets adjacent to its Ewoyaa Lithium Project, where the company has a defined JORC 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.
  • Additional high-grade lithium pegmatite intersections from new targets tested adjacent to the ELP, including highlights at a 0.4% Li2O cut-off and maximum 4m of internal dilution of: 
    • GRC0300: 50m at 1.36% Li2O from 77m incl. 23m at 1.68% Li2O from 104m
    • GRC0288: 24m at 1.3% Li2O from 55m incl. 11m at 1.7% Li2O from 63m
    • GRC0301A: 21m at 1.29% Li2O from 99m incl. 11m at 1.6% Li2O from 101m
    • GRC0299: 17m at 1.48% Li2O from 69mGRC0289: 26m at 0.91% Li2O from 90m incl. 10m at 1.25% Li2O from 99m
    • GRC0302: 17m at 1.36% Li2O from 39m incl. 10m at 1.5% Li2O from 40m
  • New mineralised pegmatite intersections confirmed mineralisation remains open to the north and the south, with further drilling planned to evaluate the extent of mineralisation and add resource tonnes within the immediate ELP resource area and test new exploration targets within the adjacent Saltpond license.
  • Additional drilling results for 3,081m in 22 holes have been received for the ongoing drill programme, which has been designed to test multiple new spodumene-bearing pegmatites identified through the Company’s recent and ongoing auger drill programme. The original planned 12,500m RC drilling programme was increased to 16,500m to test strike extensions of recently drilled pegmatites where mineralisation remains open and to test new targets with drilling ongoing.

*SP Angel act as Nomad for IronRidge Resources

 

Mkango Resources* (LON:MKA) 29p, Mkt cap £42.3m – Mkango Q1 results announcement looks for completion of Songwe Hill feasibility study in Q4 

(Mkango’s 75.5% subsidiary, Maginto Ltd holds a 25% stake in HyProMag which is a partner in the ‘Rare–Earth Recycling for E-Machines’ RaRE project)

  • Mkango Resources has announced a loss of US$1.49m for the three months ending 31st March 2021 (2020 – loss US$1.52m and reports a 31st March cash balance of US$3.66m (31st December 2020 – US$4.92m).
  • The company has provided details on the progress of the continuing work on the feasibility study for the Songwe Hill rare-earths project in Malawi and confirms that work is underway “in Malawi, Australia, South Africa and the United Kingdom”.
  • Mkango Resources cautions that the Covid19 pandemic may yet have an impact on the timetable of some aspects of the outstanding work but says that at this stage “The Company is targeting completion of the Feasibility Study in the fourth quarter of 2021”.
  • Among the highlights of the work completed during the quarter, Mkango Resources confirms the completion of the flotation plant pilot testing programme on Australia and the commencement of hydrometallurgical pilot scale testing and progress on the engineering design work .
  • Mkango re-iterates the previously announced results of the flotation test-work which have shown the process to be “robust and straightforward … [and able to support] … a significant increase in both flotation recoveries and concentrate grade for the Feasibility Study versus the design criteria for the 2015 pre-feasibility study for Songwe Hill”.
  • Recovery of total rare-earth oxides (TREO) has increased to 74% from the previous level of 67% and the flotation concentrate grade has shown a three-fold increase to 15% TREO from the 4.7% shown in the earlier work which is expected to have a “Positive impact on downstream integrated hydrometallurgical operations”.
  • The company confirms the continuation of discussions on the siting of a rare-earth separation plant which “will process the high grade, purified mixed rare earth carbonate produced at Songwe Hill, enriched in high value neodymium, praseodymium, dysprosium and terbium”.

Conclusion: Subject to any delays as a result of the Covid19 pandemic, Mkango Resources expects to complete the Songwe Hill feasibility study during q4 this year. Recent test work has identified metallurgical improvements which should enhance the economic and technical aspects of the project and we look forward to the details when the feasibility study work is released.

*SP Angel act as Nomad and Broker to Mkango Resources

 

Phoenix Copper* (LON:PXC) 43p, Mkt Cap £49.4m – Agreement with First Cobalt to progress the Redcastle property

(Phoenix holds 80% of the Empire mining property in Idaho)

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  • Phoenix Copper announced yesterday that it had reached agreement with First Cobalt Idaho, whose Iron Creek mine borders Phoenix Copper’s Redcastle cobalt project in Lemhi County, for First Cobalt to earn an initial 51% interest in Redcastle.
  • Under the terms announced, First Cobalt will pay an initial US$50,000 in cash plus 200,000 of its shares and spend US$1.5m on exploration over a three-year period in order to earn a 51% interest. A further US$100,000 payment is due on the 3rdanniversary of the agreement.
  • Subsequently, First Cobalt may earn a further 24% through the expenditure of an additional US$1.5m over the next two years “and by paying a further US$150,000 to Phoenix in cash or the equivalent in unrestricted First Cobalt shares, at Phoenix’s option, on the fifth anniversary of the Agreement, and by providing Phoenix with a NI 43-101 compliant Preliminary Economic Assessment (“PEA”) for the Redcastle property”.
  • Thereafter, the two companies “will enter into a joint venture agreement (the “JV”), with First Cobalt as managers, and will share in the capital expenditures for the ongoing development of Redcastle in accordance with their respective ownership interests (First Cobalt 75%, Phoenix 25%)” or dilute their interests in the project.
  • Phoenix Copper confirms that its other cobalt project on the Bighorn property is not part of the agreement with First Cobalt.
  • Describing the benefits of the agreement with an existing, neighbouring, cobalt company, CEO, Ryan McDermott, explained that it would “will enable development of the Redcastle property to progress, at no cost to Phoenix, while we concentrate our efforts on our flagship Empire Mine in Custer County”.
  • He also commented that the “capital cost savings to Phoenix are likely to be considerable, given that the Redcastle ore will be mined and processed as an extension to First Cobalt’s Iron Creek mine. In addition to this local infrastructure, First Cobalt also owns the only cobalt refinery in North America, located in Ontario, Canada. This refinery will receive cobalt from the Idaho operations, saving Phoenix additional costs which would be incurred in developing or sourcing refining capacity”.

Conclusion: Advancing Redcastle in association with First Cobalt provides Phoenix Copper the opportunity to focus its attention on its Empire Mine project while progressing Redcastle and accessing First Cobalt’s expertise and infrastructure.

*SP Angel act as Nomad for Phoenix Copper

 

Red Rock Resources (AIM:RRR) 0.95p, Mkt cap £11m– Drilling planned for  Luanshimba, DRC

  • Red Rock Resources has announced that, following geophysical exploration at its 80% owned Luanshimba copper/cobalt project located around 65km south-east of Lunumbashi in the DRC, work is underway to establish a camp and access for a planned follow-up drilling programme.
  • The initial drilling campaign is expected to comprise 2,000m of reverse-circulation drilling in 20 holes with an option to expand the programme to 3,000m.
  • The project area lies within the well-known Congolese Copper Belt and “Red Rock identified in the southern part of the licence, a 2km long anomaly up to 500m wide striking ENE, with anomalous metal assays with peak values of 519ppm Cu and 425ppm Co, corroborating earlier XRF values and partly coincident with above average contents of pathfinder elements Bi and V. Given the regionally low background, these results are considered indicative of likely Cu-Co mineralisation at depth”.
  • In the northern part of the licence, exploration has identified “a SE- striking copper-cobalt anomaly some 1,400m by 300m wide, while more subdued, is still significant as it clearly mimics the regional metalliferous stratigraphic and structural trend”.

Conclusion: Early stage geophysical exploration at Luanshiba is to be followed up with a limited drilling programme in an established copper province in the DRC. We await results when drilling gets underway.

 

Shanta Gold (AIM:SHG) 16.2p, Mkt Cap £170m – Drilling at West Kenya returns exceptional high grade results

  • The Company released assay results for 11 holes completed at the Isulu deposit of the West Kenya Project in Kenya.
  • Selected intersections include: 
    • 6.0m at 219.5g/t in oxides (Hole 237);
    • 3.5m at 71.9g/t from 160m (Hole 238);
    • 3.0m at 62.5g/t from 109m (Hole 239):
    • 10.5m at 18.8gt/t from 129m (Hole 240);
    • 6.0m at 13.7g/t in oxides (Hole 241);
    • 9.7m at 10.4g/t from 479m (Hole 238);
    • 3.0m at 14.9g/t from 129m (Hole 247);
    • 3.0m at 12.6g/t in oxides (Hole 241);
    • 2.7m at 13.3g/t from 214m (Hole 244).
  • “The intersection of 219.5 g/t over 6 metres in hole 237 has a grade x width of over 1,300 g/t Au, the highest to date on this metric at the West Kenya Project,“ the Company reports.
  • Drilling verified the current model as well as indicated that high grade shoots may be present not only below the 400m depth, as previously thought, but at shallower levels.
  • Results have also discovered an up-dip extension of the additional parallel zone that was previously modelled only at deeper level.s
  • Results are from the Phase 1 drilling seeking to infill the West Kenya resource between 0-200m in depth representing ~10% of the 1.2moz MRE.
  • The Company is planning to complete Phase 1 at the end of Jun/21 and transition to Phase 2 as well as expand exploration drilling to regional high priority targets across 1,162km2 licenses at West Kenya.
  • The team is planning to complete 40% of total planned drilling at West Kenya by the end of 2021 with two drill rigs currently active on site with a a third one expected to be mobilised by the middle of the year.

 

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

 

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, Tungsten, Spodumene, Ferro-Manganese, Graphite – Asian Metal

 

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