Today’s Market View – Bushveld Minerals; Greatland Gold; Power Metal Resources and more…

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SP Angel . Morning View . Tuesday 29 12 20

Gold prices rise ahead of further US fiscal stimulus

 

MiFID II exempt information – see disclaimer below 

Bushveld Minerals* (LON:BMN) – Ferro-vanadium prices jump another 10.9% in China

Greatland Gold (AIM:GGP) – Preparatory works approved at Havieron

Ironveld (AIM:IRON) – Results and placing

Power Metal Resources* (AIM:POW) – High-grade silver found at Silver Peak project

 

US – Equities rally as US House votes to boost stimulus measures

  • The US House of Representatives has voted in favour of increasing the aid sent to individuals under the new coronavirus stimulus package from $600 to $2,000.
  • The $900bn relief package is part of a $2.3tn bill that includes $1.4tn for normal federal government funding.
  • The S&P 500, Dow Jones and Nasdaq hit all-time highs after Trump approved the funding package.  

 

Gold prices rise ahead of further US fiscal stimulus

  • Gold prices continued to climb this morning, after rising 1.3% on Monday as President Trump approved a $2.3 trillion stimulus package, including nearly $900bn in Covid-19 aid.
  • The US house passed a bill to boost household stimulus checks from $600 to $2,000 in line with Trump’s surprise request last week.
  • Vaccine optimism has weighed on gold prices in recent months, however prices have risen over the past weeks on renewed inflationary woes, a resurgence in coronavirus cases and a weak US dollar.
  • The US dollar is down -0.3% this morning and -1.36% for the month, making gold cheaper for holders of other currencies.
  • Spot gold rose 0.6% to $1,882/oz earlier this morning, and has gained more than 23% so far this year (Reuters).

 

Australian Gold mine strikes over lack of Strawberry Ice Cream in canteen

  • An unnamed major gold mine is said to be striking over a lack of strawberry ice cream in the on-site canteen.
  • This is not the first time a major Australian mine has gone on strike over the lack of a favoured flavour of ice cream.
  • The Robe River iron ore mine also went on strike over the lack of Napolitana ice-cream in the canteen highlighting the excessive power of the unions at that time.
  • Australian unions have even held strikes over poor TV reception and a management at a construction site refusing to fly the Eureka flag.
  • The Eureka flag was first flown above a group of rebellious gold miners at the 1854 Eureka Stockade and became a symbol of democracy and defiance..

 

International bachelor: who will Australia choose

We can’t sum up the Australian situation between China and the US any better than the video below:

 

 

Economics

UK – Shares rise on first day trading after Brexit agreement

  • UK equities led a broader rally in Europe on Tuesday morning, with the FTSE 100 gaining 1.9% and the FTSE 250 up 1.4%.
  • Sterling rose 0.5% before pulling back slightly, indicating that the UK-EU trade deal was largely priced in although investors remain cautious that a deal has not yet been finalized over UK financial services.
  • EU officials must rule separately that British financial regulations and oversight are strong enough to create a level playing field.

 

Brexit – deal signed at the last minute as predicted

  • Sense prevailed in Brexit negotiations last week as Boris Johnson and Ursula von der Leyen compromised on their red-lines to get Brexit done.
  • The French had the satisfaction of holding up thousands of lorries heading for Dover to cross the channel as they closed the boarders on Coronavirus issues.
  • The importance of keeping automotive plants running smoothly in the current tough economic environment outweighed fishing rights to enforce a no-tariff treaty.
  • European and UK industry can breath easy till the next French blockade under the reassurance that industry can persuade politicians to do the right thing
  • Michael Barnier, the EU Chief negotiator appeared to be swept aside by the EU Commission President last week in a last ditch effort to get the treaty signed.

 

Currencies

US$1.2257/eur vs 1.2208/eur last week.  Yen 103.63/$ vs 103.60/$.  SAr 14.638/$ vs 14.582/$.  $1.351/gbp vs $1.358/gbp.  0.761/aud vs 0.760/aud.  CNY 6.530/$ vs 6.532/$.

 

Commodity News

Precious metals:  

Gold US$1,882/oz vs US$1,880/oz last week

   Gold ETFs 106.6moz vs US$106.5moz last week

Platinum US$1,043/oz vs US$1,029/oz last week

Palladium US$2,367/oz vs US$2,334/oz last week

Silver US$26.30/oz vs US$25.87/oz last week

Base metals:  

Copper US$ 7,843/t vs US$7,851/t last week

Aluminium US$ 1,989/t vs US$2,025/t last week

Nickel US$ 17,140/t vs US$17,070/t last week

Zinc US$ 2,786/t vs US$2,858/t last week

Lead US$ 1,970/t vs US$1,983/t last week

Tin US$ 20,190/t vs US$20,085/t last week

Energy:           

Oil US$51.5/bbl vs US$51.4/bbl last week

Natural Gas US$2.320/mmbtu vs US$2.557/mmbtu last week

Uranium US$30.35/lb vs US$30.35/lb last week

 

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$162.9/t vs US$160.4/t – Iron ore futures fall as Brazil supply worries ease

  • Iron ore futures declined on Tuesday as data showed that supply worries from Brazil were easing, with issues in the country part of the reason why prices have surged so high in the second half of this year.
  • Futures in Singapore have surged almost 70% this year to record highs crowning iron ore as the best performing commodity, as a result of insatiable demand from Chinese steel mills and supply worries in Australia and Brazil.
  • In Brazil, average exports totaled 1.48mt in the first 18 business days of December, up from November’s average and up from the 1.19mt last December.
  • Futures slid 0.4% to $161.60/t in Singapore today, whilst the most active contract on the Dalian Commodity Exchange closed 1.5% lower at 1,011 yuan/t (Bloomberg).

Chinese steel rebar 25mm US$662.4/t vs US$683.2/t

Thermal coal (1st year forward cif ARA) US$69.0/t vs US$69.0/t

Coking coal swap Australia FOB US$125.3/t vs US$125.3/t

           

Other: 

Cobalt LME 3m US$32,190/t vs US$32,190/t – Reports that China’s SRB might conduct a further round of cobalt stockpiling (FastmarketsMB)

NdPr Rare Earth Oxide (China) US$61,865/t vs US$61,389/t

Lithium carbonate 99% (China) US$7,350/t vs US$7,042/t

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

Ferro-Manganese high carbon 78% Mn US$1,330/t vs US$1,325/t

Tungsten APT European US$230-235/mtu vs US$220-225/mtu

Graphite flake 94% C, -100 mesh, fob China US$520/t vs US$510/t                

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

Spodumene 6% Li2O min, cif (China) US$380/t vs US$375/t

 

Battery News

Mobile Energy Global ‘MEG’ announces purchase agreement for 2,000 units of BYD’s D1 custom electric ride-hailing vehicle

  • The ride-hailing vehicles are intended for deployment in multiple cities within China, with deliveries expected to begin in H1 2021.

 

Price of EV batteries shows path to parity

  • The price of lithium-ion battery packs has fallen 89% in the last 10yrs to ~$137/kWh according to Car Scoops.
  • VW’s ID3 is now claimed to be cheaper than comparable ICE vehicles in Germany once government subsidies are taken into account.
  • It is expected that the price of a lithium-ion battery will reach price parity with ICE vehicles in the early 2020’s depending on the cost of electricity vs gasoline and diesel.
  • The running costs of an EV are already below that of a comparable ICE vehicle (EV: ~€160 per month vs ICE: ~€230 per month) (Electric Car Sport)

 

VW develop prototype mobile charging robot

  • The “Mobile charging Robot” (MCR) can be installed in any city parking garage, batteries are charged in stacks in the bay when not in use.
  • The MCR is directed via a smartphone app, bringing the trailers containing the battery stacks to the vehicle and plugging in the connector to the charging port.
  • VW’s MCR is undergoing testing in Germany, it is at the prototype stage and will be ready for launch in 2021.  
  • The robots are equipped with 25kWh battery packs, capable of charging a vehicle at 50kW via DC fast-charging, a level 2 charge.
  • Expected to be a solution to the need for charging infrastructure to fit current infrastructure, access to charging facilities is seen as a key hurdle to overcome in convincing consumers to transition to EVs.
  • The mobile system could also lower the costs of installing charging infrastructure.

 

LG Electronics agrees $1bn parts deal with Magna  

  • LG Electronics to spin off part of its EV components business in JV with Magna International.
  • South Korean electronics company LG will hold a 51% stake in the JV. The JV will produce e-motors, inverters and onboard chargers on LG factories.
  • LG continues to build out its presence in the auto business following $1.3bn deal for ZKW Group which produces auto-lighting and headlight systems in 2018.
  • The global EV market is projected to reach $802.81 by 2027 (Allied Market Research), battery materials producers and parts suppliers are likely to heavily benefit from this growth and provide opportunities to benefit from positive performance across the auto manufacturers.

 

EVs to account for 20% of BMW sales by 2023 as BMW aims to build additional 250,000 EVs from 2021 to 2023

  • BMW is targeting 20% of sales to be powered by an electric engine by 2023, up from 8% this year.
  • The Company plans to roll out e-drive geofenced zones in London, Birmingham and across Europe where compatible hybrids will switch to electric mode.
  • This year BMW has reiterated its commitment to EV through a €2bn battery supply deal with Northvolt and promising to offer electric versions of the 5 series, 7 series and X1.

 

Company News

Bushveld Minerals* (LON:BMN) 20.50p, Mkt cap £244m – Ferro-vanadium prices jump another  10.9% in China

  • Ferro-vanadium prices jumped 10.9% in China on Christmas Eve raising prices to $29.5-31.5/kgV (FastmarketsMB)
  • The rise in prices is likely to lead vanadium prices higher in the US and Europe as shipments are diverted to China looking for higher prices
  • China is importing increasing tonnages of ferro-vanadium for the alloying of structural rebar and other steel for new construction and infrastructure projects.
  • Other elements for the alloying of steel and other materials are also seen rising.
  • US Hot Rolled Coil steel prices have risen to a new high up 2.6% at $1,025/ton on Monday and up 3.3% on a week earlier.
  • VRFBs: Invinity Energy Systems shares continue to rise following the sale of an 0.8MWh flow battery for a Scottish Water site.
  • Bushveld a first right of refusal to supply vanadium electrolyte to Invinity in which it also has a 8.71% stake.

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

 

Greatland Gold (AIM:GGP) 36.88p, Mkt Cap £1,447m – Preparatory works approved at Havieron

Greatland Gold has announced that regulatory approval has been granted for preparatory work including surface facilities, explosives and fuel storage and an initial box-cut and decline at the Havieron project in the Paterson region of Western Australia.

The company comments that “Further approvals and permits are required to commence the development of any operating underground mine and associated infrastructure at the Havieron Project”.

The company also says that “the development of any underground mine at the Havieron Project will also be subject to further studies, Board approvals and a positive decision to mine” however, the approvals announced today help to ensure that the company, and its partner, Newcrest Mining, will be in a position to move ahead quickly once these key decisions have been taken.

 

Ironveld (AIM:IRON) 0.52p, Mkt cap £8.75m – Results and placing

Ironveld reports its FY results and the failure of its 8-month strategic review with the Inclusive Investment Group to secure financing for $3.2m.

The company reports it has raised £1.15m in December at 0.30p/s by way of a placing and broker option.

The company has a non-JORC resource of 56mt grading 1.12% V2O5 with 68.6% iron and 14.7%TiO2 The resource is SAMREC compliant.

A DFS published in April 2014 confirms the project’s viability to deliver a Vanadium slag product for which the company has an offtake agreement as well a High Purity Iron product which commands a premium in the market place and Titanium slag containing commercial grades of titanium.

The financial results show low admin costs and expenses the company still recorded a loss of £1m for the year to end-June 2020.

Conclusion: Sometimes a company should wake up and smell the coffee. Mining juniors need to park stalled projects till conditions improve while working on more viable projects. We are not saying their High Purity Iron project will never be developed as we expect vanadium prices to rise on strong demand for ferro-vanadium for steel and for vanadium for Vanadium Redox Flow Batteries but the project may need significantly better conditions for financing and development.

 

Power Metal Resources* (AIM:POW) 2.8p, Mkt cap £23.4m – High-grade silver found at Silver Peak project

Power Metal has conducted a man-portable drilling programme at its Silver Peak project, a system of high grade, intrusion related, polymetallic Ag-Pb-Zn-Cu veins, part of the historical Eureka-Victoria Silver Mine, at Silver Peak in southern British Columbia, Canada- in November 2020.

Severely challenging weather conditions caused the programme to be revised, which meant that the company could not gain the level of understanding of the silver mineralisation as planned- while other targets have been deferred until weather conditions improve.

Despite challenges, assay results from the revised programme have confirmed further high-grade silver in the Victoria Vein, including:

Drill hole SP2020-01 collared at the sub-vein west of the Lower Portal at an elevation of 1,634m intersected a rubbly vein zone between 1.52m to 1.83m which assayed 0.31m @ 5,270 g/t (169.5 troy oz/tonne) silver. 

This hole confirms high silver grades occur in the Victoria vein system over at least 150m of vertical extent.

Five other holes in close proximity to other branches of the vein system provided lower silver results of up to 7g/t Ag- however these holes were inconclusive due to poor core recovery due to the effects of near surface vein weathering.

Chip samples from surface vein material and oxidised facture zones around the Lower Portal also returned lower silver values up to 8.4g/t Ag.

The revised drill programme consisted of 6 short diamond drill holes which were collared in close proximity to the bifurcating vein system around the Lower Victoria portal.

Paul Johnson CEO commented: Whilst we will still need to complete the previously planned programme as explained above and undertake deep diamond drilling to establish continuities within the high-grade zones between the two sampling areas, these preliminary results are very encouraging.We are working with our partners to finalise the next stage ground operations, including the above diamond drilling, which we expect will commence following the Spring thaw around March/April.  We will communicate the updated exploration plan early in the new year.

Conclusion: We look forward to Power Metal releasing the results of the planned diamond drill programme at Silver Peak, which we expect to build upon these initial positive results.

 

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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