Today’s Market View – Bluejay Mining, Bushveld Minerals, Keliber and more…

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SP Angel . Morning View . Friday 18 06 21

Copper prices pull back as investors back off from China threat of SRB sales

 

Graphene producer funding – EIS scheme approval applied for

The company wishes to fund a ramp up in graphene production to get ahead of demand and to develop markets for a number of new, graphene products

The business is also able to upgrade graphite to a higher grade/specifications using its process – rolling out this process also requires funding

Please email if you wish to invest in the company

*SP Angel’s role is limited to making introductions and interested parties should be aware that investment in a private company can present certain risks not present in listed companies (e.g. limited or no liquidity and no rules compelling disclosure of information to investors). This offer is open to professional investors only and is not offered to retail investors.

 

Bluejay Mining* (LON:JAY) – Chinese ilmenite prices continue to rise

Bushveld Minerals* (LON:BMN) – Vanadium prices continue to rise in China to ~$37.7/kgV

Keliber – Environmental challenges rejected by Finnish Court

Zinnwald Lithium (LON:ZNWD) – Acquisition of additional exploration licences in Saxony

 

Copper – Zijin Mining is accelerating expansion of its Serbian copper unit to capitalise on higher commodity prices,

Serbia Zijin Copper that operated four mines and a smelter is bringing forward a capacity expansion completion by a year to 2024 eyeing to double production to 180ktpa (Bloomberg).

Zijin took a majority stake in the then government-owned RTB Bor in 2018 in return for a $350m equity investment and a commitment to spend $1.26bn on expansion and upgrade of mining and processing facilities.

The investment was part of the so-called Belt and Road Initiative designed to expand China’s influence in Europe.

The Company produced 70kt at the time of an investment.

Concentrate capacity is expanding at the Majdanpek, Veliki Krivelj, Jama and Novo Cerovo mines.

Additionally, the Company is investing $260m at the smelter in Bor, including environmental control systems upgrades.

 

Shipping crisis – Tonka tricks stranded in China due to lack of shipping containers

The toys have been boxed and ready for shipment for weeks and are reported to be piled high in empty office space.

The lack of plastic yellow equipment may hold up plans by some young entrepreneurs to move into early sand production

 

Airspeeder – Electric flying cars ready to race this year

Airspeeder and Alauda Aeronautics are looking to make flying race cars a reality this year (Techcrunch)

Australia’s Civil Aviation Safety Authority, has certified the ‘Alauda Mk3’ flying race car

The first three races planned for this year will use remote pilots with human pilots proposed for 2022.

The unpiloted Mk3, which can reach top speeds of 124mph, weighs just 130kg, accelerates from 0-62 mph in 2.8 seconds and can fly for 10-15 mins on a single battery pack making pits stops an essential manoeuvre for a 45-min race.

The Mk3 is flying under an experimental certification with Australia’s Civil Aviation Safety Authority making the regulatory burden is far less than for a passenger aircraft.

So if you consider your commute to the station in the morning to be a race then this could be the vehicle for you

 

Dow Jones Industrials -0.62% at 33,823

Nikkei 225 -0.19% at 28,964

HK Hang Seng +0.64% at 28,742

Shanghai Composite -0.01% at 3,525

 

Economics

US – Mortgage rates rise following comments from Fed chairman. The 30-year fixed mortgage rise to 3.25% from a 2.75% low in February

Bond spreads are reported to have collapsed as investors move to buy corporate debt

US Weekly jobless climes unexpectedly picked in the week to June 12, although, the less volatile four-week average continued to decline.

An increase also comes following six consecutive weekly declines.

Given the falling trend, it is may take another month for clims to reach the pre-pandemic level of just over 200k, while the labour market overall may take another 10 months to reclaim lost jobs, Bloomberg estimates.

Weekly Jobless Claims (‘000): 412 v 375 (revised from 376) in the previous week and 360 est.

Continuing Claims (‘000): 3,518 v 3,517 (revised from 3,499) in the previous week and 3,425 est.

Philadelphia Fed manufacturing index pulled back to 30.7 in June vs 31.5 in May

The data indicates some slowing of activity despite the full vaccination of 44.6% of the population suggesting the Fed may not ease its recovery programs just yet

 

Japan – CPI excluding food prices came in at 0.1%yoy in May marking the first positive reading in 14 months on the back of higher commodity prices.

While the trend is welcome as monetary authorities try to accelerate consumer prices growth, price momentum is still far more subdued than in the US and other countries.

The Bank of Japan is expected to stay put on the current pace of asset purchases and negative interest rates later today.

CPI (%mom): -0.1 v -0.4 in April and -0.2 est.
CPI ex Fresh Food (%mom): 0.1 v -0.1 in April and 0.0 est.

CPI ex Fresh Food, Energy (%mom): -0.2 v -0.2 in April and -0.3 est.

Japan complains to WTO over Chinese stainless steel duties

Reuters Tankan business index rose to 22 in June vs 21 in May

BoJ keeps monetary policy steady maintaining 10-Year JGB yield target at around 0%

Short-term interest rate target maintained at -0.1% while extending pandemic relief programs by 6 months

 

UK – Retail sales disappoint sliding back in May, although, the decline is attributed to reopening of restaurants and bars prompting consumers to cut spending at supermarkets.

“Following a sharp increase last month coinciding with post-lockdown reopening, retail sales dipped slightly in May… however, they remain well above both their pre-pandemic levels and those seen in March before shops reopened,” the ONS commented on the data.

“There are really positive signs about the economic recovery ahead this year and next… the data clearly indicates that there is pent up demand and ambition across many sectors,” the BI, the nation’s biggest business lobby group, said.

Retail Sales (%mom): -1.4 v 9.2 in April and 1.5 est.

Retail Sales ex Fuel (%mom): -2.1 v 9.1 in April and 1.4 est.

BoE/TNS 12-month inflation outlook for 2.4% in May vs 2.7% previously

The government is considering plans to open up international travel for passengers who have been fully vaccinated against Covid-19 lifting quarantine requirements for passengers returning from amber list countries.

At the moment people travelling from amber list countries have to quarantine for 10 days and take at least two Covid-19 tests during the period.

PM office said yesterday that “absolutely no decisions” have been made so far.

 

China – House price index crawled higher to 4.9% yoy in May vs 4.8% in April

China Sees yuan fluctuation to be a good tool for stabilising foreign exchange markets

 

EU – CPI fell to 0.3% in May vs 0.6% in April but rose 2.0% yoy in may vs 1.6% yoy in April – hardly surprising given the lockdown situation a year ago

 

Core inflation rose to 1% yoy in May vs 0.7% inApril

New car registrations rose 53.4% yoy in May vs 218.6% yoy in April – crazy numbers as all motor dealers were locked down this time last year

Construction output 42.3% yoy in April vs 20.0% yoy in March

ECB Eurozone Current Account €22.8bn vs €17.8bn

 

Italy – Current Account Balance €6.6bn in April vs €3.1bn in March

 

Germany – Exceeded 50% Covid vaccination yesterday

German PPI rose 1.5% mom in May but fell -1.4% yo

 

South Africa – Retail sales fell -0.8% in May vs -4.5% in April and 95.8% yoy in May vs -2.3% yoy in April

The nation is in the grip of a third pandemic wave causing great concern with health and other ministers accused of corruption

 

Currencies

US$1.1900/eur vs 1.1954/eur yesterday.  Yen 110.10/$ vs 110.72/$.  SAr 14.064/$ vs 14.025/$.  $1.387/gbp vs $1.398/gbp.  0.753/aud vs 0.761/aud.  CNY 6.444/$ vs 6.430/$.

 

Commodity News

Precious metals:  

Gold US$1,786/oz vs US$1,809/oz yesterday

Gold ETFs 101.0moz vs US$101.0moz yesterday

Platinum US$1,075/oz vs US$1,121/oz yesterday

Palladium US$2,559/oz vs US$2,768/oz yesterday

Silver US$26.24/oz vs US$26.88/oz yesterday

           

Base metals:  

Copper US$ 9,238/t vs US$9,472/t yesterday

Aluminium US$ 2,388/t vs US$2,441/t yesterday

Nickel US$ 17,330/t vs US$17,410/t yesterday

Zinc US$ 2,887/t vs US$3,005/t yesterday

Lead US$ 2,124/t vs US$2,184/t yesterday

Tin US$ 30,280/t vs US$31,175/t yesterday

           

Energy:           

Oil US$72.6/bbl vs US$73.9/bbl yesterday

Oil prices have fallen nearly 2% from their highest level in years yesterday as the dollar strengthened after the US Federal Reserve signalled it might raise interest rates as soon as 2023

Oil demand worries have also resurfaced after new coronavirus cases jumped in the UK, while supply concerns over the return of Iranian barrels also weighed on the market

Elsewhere, today’s presidential elections in Iran could delay nuclear talks between Washington and Tehran and leave US sanctions on Iran’s oil exports in place

Indirect talks between Tehran and Washington on reviving the 2015 Iran nuclear deal have come closer than ever to an agreement, but essential issues remain to be negotiated

Iran is heading to presidential polls today, with hard-line judiciary chief Ebrahim Raisi among the front runners

It is very possible that nuclear talks could fall apart if a deal is not done by August when the current reform president Hassan Rouhani will leave the government

Washington has sanctioned Raisi for alleged involvement in executions of political prisoners

His election would make it tougher for the US and Iran to come to an agreement on Iran’s uranium enrichment that would allow US sanctions on Iran’s oil exports to be lifted

Iran could boost oil supplies by up to 2MMbopd in short order if sanctions are lifted

Another drag on crude prices has been the decline in the US 3-2-1 and gasoline crack spreads – a measure of refining profit margins – to their lowest since February on recent weakness in products markets

US gasoline stocks increased by an unexpected 2MMbbls last week, on a forecast consensus of a 600,000bbl decline

 

Natural Gas US$3.180/mmbtu vs US$3.244/mmbtu yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$210.1/t vs US$206.0/t

Chinese steel rebar 25mm US$786.3/t vs US$794.7/t

Thermal coal (1st year forward cif ARA) US$83.0/t vs US$82.3/t

Coking coal swap Australia FOB US$150.0/t vs US$150.0/t

           

Other: 

Cobalt LME 3m US$44,540/t vs US$42,535/t

NdPr Rare Earth Oxide (China) US$72,776/t vs US$72,936/t

Lithium carbonate 99% (China) US$12,569/t vs US$12,597/t

China Spodumene Li2O 5%min CIF US$680/t vs US$670/t

Ferro-Manganese European Mn78% min US$1,791/t vs US$1,798/t

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

China Graphite Flake -194 FOB US$515/t vs US$515/t

Europe Vanadium Pentoxide 98% 8.7/lb vs US$8.6/lb

Europe Ferro-Vanadium 80% 42.25/kg vs US$41.75/kg 

 

Battery News

 

DOE provides $200000 to EPRI for battery storage research 

The New York Power Authority has announced a project with the Electrical Power Research Institute to explore crushed rock thermal energy storage. 

The project will be led by EPRI and funded by a $200000 DOE grant and a further $50000 from the project participants. 

It will explore the feasibility of thermal energy storage technology to determine whether it provides effective and economical energy storage. 

“Integrating energy storage is key if we want to make the most of the increasing use of renewable energy resources such as solar and wind,” said Alan Ettlinger, NYPA’s senior director of Research. 

The new storage technology has the potential to help transition from fossil fuels to at least 70 percent renewable electricity by 2030 and help stabilise the grid as it integrates these new energy sources. 

 

Company News

Bluejay Mining* (LON:JAY) 10.41p, Mkt cap £102m – Chinese ilmenite prices continue to rise

BUY – Valuation 37.7p

Market prices for ilmenite, rutile and titanium slag continue to rise in China as stimulus projects move into fitting and painting stages

Chinese Titanium Oxide (Ilmenite) prices have risen to Rmb2450-2500 ($384/t) from 2400-2450 ($376/t) this week ago for TiO2 46%min; Fe2O3 8%max Ex-VAT EXW China RMB/mt

While transport costs may make up a significant portion of the difference between spot prices in China and the longer-term contract price we reckon strong gains are to be had by traders and companies who are able to sell spot material at present.

Ilmenite prices so far appear unaffected by Chinese threats to release SRB stockpiles into the market to reduce raw materials prices

China inc. may be more focussed on reducing copper and aluminium prices which it sees as more of a threat in terms of driving inflation

We currently assume a price of US$250/t for Bluejay ilmenite concentrate sales in our modelling with 70% of the concentrate shipped to Asia by bulk carrier.

If we add $10/t to our assumed ilmenite price this adds a further $54m or 5p/s of value to the Dundas project in our modelling..

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

 

Bushveld Minerals* (LON:BMN) 15.71p, Mkt cap £188m – Vanadium prices continue to rise in China to ~$37.7/kgV

(Bushveld Energy holds an indirect interest of 25.25 per cent in Enerox. Bushveld is invested in Enerox alongside a <3% in=”” invinity=”” energy=”” systems=”” i=””>)

Vanadium prices continue to rise in China with prices rising another 2% to $37.7/kgV according to prices on Asianmetal.com.

Vanadium prices so far appear unaffected by Chinese threats to release SRB stockpiles into the market to reduce raw materials prices

China inc. may be more focussed on reducing copper and aluminium prices which it sees as more of a threat in terms of driving inflation

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

 

Keliber (private) – Environmental challenges rejected by Finnish Court

The Finnish company, Keliber, expressed satisfaction that the Vaasa Administrative Court has largely rejected three appeals lodged in 2019 challenging the company’s environmental and water permits for its Syväjärvi mining area .

“Once the decision is legally valid, Keliber will start preparatory work for mining activities in compliance with the environmental permit. Preparatory work in the mining area includes, among others, activities such as removal of overburden, the construction of roads and sedimentation basins, as well as making a wetland for overland flow. Ore mining is scheduled to begin in 2024”.

The appeals challenged potential nitrogen emissions, monitoring, fees and compensation to the fisheries, as well as issues related to the planning, construction and sizing of the areas

 

Zinnwald Lithium (LON:ZNWD) 12p Mkt Cap £24.6m – Acquisition of additional exploration licences in Saxony

Zinnwald Lithium has reported that its 50% owned subsidiary, Deutsche Lithium has been granted a five-year exploration licence, the Sadisdorf Licence, over 225 hectares of the Erzgebirge Mountains in Saxony.

The company says that the licence area, which was mined historically for tin and copper, “has the potential to provide additional resource upside to the Company’s advanced Zinnwald Lithium Project”.

“Historical exploration work at the Sadisdorf Licence by previous licence holders resulted in a 2017 historic JORC compliant inferred mineral resource of 25 million tons with an average grade of 0.45% Li2O”.

Zinnwald Lithium confirms that its “key focus remains the development of its principal asset, the 50% owned, advanced Zinnwald Lithium Project in Germany, where it is advancing a defined development plan aimed at constructing and operating a mine and processing plant to become an important supplier to Europe’s fast-growing lithium sector”.

The company’s website shows a Measured and Indicated resource estimate of 35.5mt at an average grade of 0.35% lithium for its Zinnwald Lithium Project.

 

Recent Interviews:

 IGTV:  Stock picks in the small-cap mining space: https://youtu.be/TxtMf6B2t8Q

Evolution of Chinese construction and implications for commodity demand: https://youtu.be/jB2nURL8uPw

VOX Markets:  10/06/21: https://audioboom.com/posts/7884446-john-meyer-talks-about-cornish-metals-empire-metals-anglo-american-ncondezi-energy-mkango-r

BBC:  Catalytic converters  https://www.bbc.co.uk/sounds/play/p09jl6c9

*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

 

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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