Today’s Market View – Condor Gold and more…

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SP Angel . Morning View . Tuesday 09 03 21

Battery Metals continue as base metals steady

 

MiFID II exempt information – see disclaimer below

Condor Gold* (AIM:CNR) – Infill drilling at La India

Cornish Metals* (AIM:CUSN) –  CLICK FOR PDF – Agreements on South Crofty

Mount Burgess Mining (ASX:MTB) – A$0.009, mkt cap A$5.9m – Copper mineralisation at Kihabe Polymetallic Deposit, Botswana

Rio Tinto (LON:RIO) – Rio Tinto to build tellurium recovery plant at Utah copper mine

 

China approves $10bn coal project on same day Beijing releases green five-year plan

A Chinese energy company has been given the go-ahead to build a $10bn coal-to-chemicals plant on the same day that Beijing released its 14th five-year plan focused on promoting renewable energy.

The company Ningxia Baofeng Energy Group plan to invest 67.3bn yuan in the coal-to-olefins plant in Inner Mongolia, set to be completed by 2023.

The plant will produce 11mt of methanol a year that will then be converted into 4mt of olefins, used in the production of plastics.

The coal-to-chemicals project has already been approved by city and regional governments and promotes the innovative use and efficient use of coal, the company said in a statement.

 

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

 

Economics

US – The central bank will allow three emergency liquidity provision facilities to expire as scheduled at the end of the month as the economic recovery is gathering momentum.

The Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, and the Primary Dealer Credit Facility were launched in March last year to stabilise financial system.

Low interest rates and regular bond purchases are separate and will continue with unemployment rates remaining elevated.

US reimposes sanctions on Dan Gertler (FT)

Joe Biden has overturned Donald Trumps revocation of sanctions against Dan Gertler, the Israeli entrepreneur involved in mining in the DRC

“The license previously granted to Mr Gertler is inconsistent with America’s strong foreign policy interests in combating corruption around the world, specifically including US efforts to counter corruption and promote stability in the Democratic Republic of Congo,” according to the state department.

We suspect Mr Gertler will be wanting his money back!

 

China – Mainland benchmark CSI 300 posted another day of heavy losses closing around 2.2% lower today extending losses to 5.5% this week.

A sell off continued despite evidence that state-backed funds had intervened to shore up the market, Bloomberg writes.

 

Germany – Exports unexpectedly climbed in January led by robust trade with China beating market expectations for a decline.

The data highlights the situation of a two-speed economy where export oriented manufacturers are doing well while domestically driven services are suffering under lockdown measures enacted in early November and tightened in mid-December, according to Reuters.

Exports (%mom): 1.4 v 0.4 in December and -1.8 est.

Imports (%mom): -4.7 v 0.0 in December and -1.9 est.

 

Continental, a German car parts manufacturer, is expecting global auto production to grow 9-12%yoy this yar recovering from a 16% drop in 2020, FT reports.

The Company recorded a €718m loss for the year with sales down 15%yoy.

Continental highlighted challenges regarding the chips shortages that caused largest automakers to halt or taper production, with the situation not expecting to recover fully until H2/21.

 

Taiwan exports climbed 9.7%yoy in February marking the eighth consecutive increase benefiting from strong demand from chips as more people work remotely, Reuters writes.

5G and auto chip demand also helped drive February exports.

Overseas shipments growth may increase to 15-20% in March with February numbers having been affected by the eek-long Lunar New Yea holidays.

 

UK – Retail sales growth accelerated in February as authorities laid out plans to reopen the economy.

“February saw a return to growth after a disappointing start to the year…the Prime Minister’s roadmap to reopening prompted a burst in spending on non-food items, such as school uniforms,” the British Retail Consortium (BRC) commented on the data.

Money managers are reported to be the most bullish on the pound in three years amid rapid vaccination programme boosting chances for a more sustainable easing of restrictions.

BRC Sales (%yoy): 9.5 v 7.1 in January.

 

South Africa – The economy expanded 6.3%qoq (annualised) in the final quarter of the year narrowing the drop for the year to 7%, compared to a 0.2% growth in 2019.

GDP (annualised, %qoq): 6.3 in Q4 v 67.3 in Q3 and 5.6 est.

GDP (%yoy): -6.0 in Q4 v -6.2 in Q3 and -4.6 est.

 

Currencies US$1.1880/eur vs 1.1889eur yesterday.  Yen 108.94/$ vs 108.43/$.  SAr 15.389/$ vs 15.484/$.  $1.386/gbp vs $1.383/gbp.  0.768/aud vs 0.766/aud.  CNY 6.519/$ vs 6.526/$.

 

Commodity News

Precious metals:  

Gold US$1,697/oz vs US$1,696/oz yesterday

   Gold ETFs 102.2moz vs US$102.5moz yesterday

Platinum US$1,162/oz vs US$1,136/oz yesterday

Palladium US$2,324oz vs US$2,348/oz yesterday

Silver US$25.53/oz vs US$25.35/oz yesterday

 

Base metals:  

Copper US$ 8,837/t vs US$8,868/t yesterday

Aluminium US$ 2,131/t vs US$2,171/t yesterday

Nickel US$ 15,730/t vs US$16,130/t yesterday

Zinc US$ 2,758/t vs US$2,768/t yesterday

Lead US$ 1,976/t vs US$1,992/t yesterday

Tin US$ 24,235/t vs US$24,300/t yesterday

 

Energy:

Oil US$68.1/bbl vs US$70.0/bbl yesterday

Crude oil prices extended higher yesterday after Saudi Arabia said a storage tank in the Ras Tanura export terminal was attacked by a drone

WTI jumped 1.6% to US$67.36/bbl, and Brent surged above the US$70.00/bbl threshold for the first time since January 2020

Although the attack exposed the vulnerability of Saudi Arabia’s most important oil facility, output appeared to be unaffected after the drones and missiles were intercepted

The knee-jerk reaction has somewhat abated today, bringing focus back to energy demand recovery and supply restraint

Oil prices were also boosted by the surprising move by the OPEC+ coalition to keep the current output level unchanged at a meeting last week, while many traders anticipated a production hike

Saudi Arabia, the de-facto leader, decided to extend its unilateral 1MMbopd production cut into April

The market and analysts were surprised by the OPEC+ decision last week, with experts saying that the coalition is looking to tighten the market, betting that US shale will not respond with surging production to elevated oil prices

Elsewhere the Senate approval of President Joe Biden’s large fiscal stimulus package further fuelled oil bulls, with more household spending and a faster pace of vaccine distribution potentially brightening the energy demand outlook

 

Natural Gas US$2.651/mmbtu vs US$2.715mmbtu yesterday

Natural gas futures fell during the trading session yesterday after initially trying to rally, on forecasts of warmer temperatures in the US

This will of course drive down demand and therefore it makes quite a bit of sense that we would see prices drop

After all, we had seen a significant amount of supply destruction recently, but now that the warmer temperatures have returned to the central part of the US, more supply of natural gas comes into play

Perhaps underpinning prices, at least over the short-term, was optimism over export demand

The calendar is now moving into the end of the withdrawal season, and prices will likely remain rangebound unless there is another disruption or a cold spell

 

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$166.9/t vs US$167.4/t – Iron ore futures hit three-week low as seaborne supply improves

Iron ore futures fell on Tuesday, slumping to three-week lows as ore shipments increased week-on-week while Chinese brokers reported a slight drop in blast furnace utilization rates.

Chinese port stockpiles jumped to a four-month high last week, while the key steelmaking hub of Tangshan tightened curbs on air pollution.

In Singapore, iron ore sank as much as 6.7% to $162.1/t on Tuesday, while the most-active contract on the Dalian Commodity Exchange slid 2.6% (Bloomberg).

The Stoxx Europe 600 Basic Resources- Index fell as much as 2.1% on Tuesday, largely as a result of iron ore’s dip.

Chinese steel rebar 25mm US$727.1/t vs US$727.7/t

Thermal coal (1st year forward cif ARA) US$67.5/t vs US$68.5/t

Coking coal swap Australia FOB US$136.0/t vs US$136.0/t

           

Other: 

Cobalt LME 3m US$52,610/t vs US$52,610/t

NdPr Rare Earth Oxide (China) US$91,270/t vs US$91,175/t

Lithium carbonate 99% (China) US$12,272/t vs US$12,259/t

Spodumene 6% Li2O min, cif (China) US$510/t vs US$455/t

Ferro Vanadium 80% FOB (China) US$34.5/kg vs US$34.5/kg

Ferro-Manganese high carbon 78% Mn US$1,625/t vs US$1,625/t

Tungsten APT European US$263-268/mtu vs US$260-265/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

 

Battery News

Siemens Gamesa secures 5.X wind turbine supply contract in UK 

Siemens Gamesa has secured a contract to supply 5.X turbines for Energiekontor UK’s Longhill Burn wind farm near Edinburgh.  

Under the contract, the company will supply and install its SG 5.8-155 turbines at the subsidy-free 50MW wind farm. Siemens Gamesa’s order has a 25-year full-scope service agreement.  

A Siemens Gamesa statement describes its 5.X platform as offering one of the highest power ratings in onshore wind, the turbines would have a rotor diameter of 155m and a flexible rating capability to 6.6MW.  

 

Singapore combats climate change with solar farm at sea 

A massive 13,000 solar panels have been laid out at sea, with the ability to produce up to five megawatts of electricity, in order to tackle the city-state’s greenhouse gas emissions. 

This could power around 1,400 residential flats all year round.  

Singapore is one of the biggest per capita carbon dioxide emitters in Asia. It does not have rivers or strong enough wind for hydroelectric or wind generated power, so solar energy is the best renewable option.  

 

Company News

Condor Gold* (AIM:CNR) 46.5p, Mkt Cap £58.7m – Infill drilling at La India

Condor Gold reports that it has completed a 25-holes infill shallow drilling programme on the northern-most of its starter pits at La India and has now started a similar programme at the southern pit.

The company says that it expects to drill around 800m more to complete the infill programme and that “Following completion of the drilling in the Southern Starter Pit, the next stage in the infill drilling programme is to twin drill an additional 17 RC drill holes (1392 m of drilling) that are located near to the starter pits. A decision to proceed with this stage will be made after analysing the variability in assay results between the RC and twin diamond core drill holes, and a review of the confidence in the geological model in these zones to decide if the twin drilling is required”.

To date, the company has completed 26 holes up to 35m deep for a total of 1,296m.  In our opinion, the drilling, at 25m centres, will be an important element in planning the initial mining and provides mitigation of potential risks of unexpected ore characteristics or distribution from the initial production.

In an illustration of the value of this detailed pre-production assessment in providing confidence in the early stages of mining, the drilling of the northern starter pit has resulted in the “Discovery of an additional vein of 2.9 m true width at 2.27 g/t gold from 24.15 m drill depth in the footwall … [of] … drill hole, LIDC404 is an exciting development and will be rapidly evaluated as potentially mineralised material available for inclusion in the mine schedule”.

The company explains that “The footwall vein appears to be an extension of a vein previously drilled some 50 m along strike to the southwest and was classified as inferred mineral resource in the 2019 Mineral Resource Estimate”.

Assay results received from the first two holes of the programme include an intersection of 9m (true width) averaging 3.98 g/t gold from surface in hole LIDC404  which has “an amalgamated drill intercept from 1.20 m to 27.15 m drill depth of 24.15m (23.6 m true width) at 2.05 g/t gold, which includes a 1.8 m mine cavity”, including the new footwall structure.

CEO, Mark Child, said that the drilling “confirms the geological model of a wide zone of high grade ore in the La India Starter pit, which is within the fully permitted main La India open pit mineral reserve. The discovery of an additional vein of 2.9 m true width at 2.27 g/t gold from 24.15 m drill depth in the same drill hole is an added bonus and is likely to add mineralised material to the mine plan”.

Condor Gold confirms the January 2019 mineral resource estimate for the La India project of 9.85mt classed as indicated at an average grade of 3.6g/t gold (1.14m contained oz) plus an additional 8.48mt classed as inferred at an average grade of 4.3g/t (1.179m oz) and says that “The starter pits within La India open pit contain a diluted tonnage of 387Kt at 4.29g/t gold for 53,000 oz gold”.

The company describes two different development scenarios for the starter pits. One uses a cut-off grade of 0.75g/t gold generates 635,000t at an average grade of 3.32g/t (67,800 oz) and a waste:ore ratio of 4.5:1 while the second, at a 2g/t cut-off, generates 445,000t at a grade of 4.17g/t (59,700oz) and a waste:ore ratio of 6.8:1.  We observe that, the additional mineralisation encountered in the footwall is likely to be currently included as waste in the pit design and now could ultimately become reclassified as ore potentially reducing the overall stripping ratio, which might further be lowered if, in due course, material currently classed as inferred is also redesignated.

Conclusion: The infill drilling on the starter pits at La India will assist with detailed mine planning and has already picked up additional mineralised intercepts which could ultimately add to the mineral inventory.  We look forward to the remaining assay results from the programme as they become available.

*SP Angel act as sole broker to Condor Gold

 

Cornish Metals* (AIM:CUSN) – 8.5p, Mkt cap £22.6m – Agreements on South Crofty

 CLICK FOR PDF

Cornish Metals has announced agreements to lease a 1.2 hectare site surrounding the South Crofty mine’s New Roskear Shaft and for mineral rights within the permitted area at South Crofty.

The agreements, with Roskear Minerals, cover periods of 23 years for the site around the shaft and for 25 years in the case of the mineral rights.

In addition, the company has announced an agreement of binding heads of terms with Wheal Jane Limited “for the disposal of waste material derived from the treatment of mine water from South Crofty Mine into the Wheal Jane tailings dam located 12 kilometres east of South Crofty. The agreement will become effective when dewatering of South Crofty commences”.

CEO, Richard Williams, explained that the “agreement with Roskear Minerals enables Cornish Metals to explore and develop the mineral resources that are contained in the Roskear section of South Crofty. During the 1980s and 1990s, much of the ore mined from South Crofty came from this part of the mine, and it is considered by the Company to be a key area for delineation of additional mineral resources”.

He also confirmed that the agreement with Wheal Jane “for the disposal of waste material derived from the dewatering of South Crofty will enable dewatering of the mine”.

Cornish Metals made its AIM Market debut on 16th February and, in addition to its plans for South Crofty, has previously announced that it expects to restart drilling on its United Downs property in Cornwall in late March or early April.

Previous drilling, by Cornish Lithium,  in the United Downs licence area included an intersection of 15m at an average grade of 8.45% copper and 1.2% tin in an area with a prolific history of historic mining which will be investigated further in the planned drilling campaign.

* SP Angel acts as broker and financial advisor to Cornish Metals

 

Mount Burgess Mining (ASX:MTB) – A$0.009, mkt cap A$5.9m – Copper mineralisation at Kihabe Polymetallic Deposit, Botswana

Mount Burgess Mining reports that it has conducted an in-depth assessment of the NE sector of the Kihabe Deposit, where copper occurs in association with Zn/Pb/Ag/Ge/V mineralisation.

This recent assessment has taken into account results from five additional diamond core holes drilled into the area of Cu mineralisation, which has shown that the zone of Cu mineralisation now extends from 11,200mE to 12,000mE, covering a potential strike length of 800m.

The 17 drill holes now taken into account show that the average width of Cu mineralisation per drill hole amounts to 18.4m, with an average grade of 0.27% Cu/t.

Results from the five additional diamond core holes will enable the Company to better understand the continuity of the Cu mineralised zones, and enable the company to more precisely plan future in-fill drilling programmes.

 

Rio Tinto (LON:RIO) 5938p, Mkt cap £74bn – Rio Tinto to build tellurium recovery plant at Utah copper mine

Rio has announced plans to build the plant to recovery tellurium as a by-product of copper refining at the Kennecott mine, near Salt Lake City.

The company intends to invest an initial $2.9m in the 20tpa plant, with tellurium recovered likely to be used in domestic solar panel manufacturing.

The largest tellurium consumer in North America is Arizona-based First Solar, commenting: “We welcome the decision to construct the new plant in Utah. This facility creates a new domestic source of a critical mineral that is essential in the fight against climate change. We are in early stage talks with Rio Tinto but cannot release any further details yet,”

Tellurium is a semiconductor used in a variety of applications but the largest is cadmium-telluride thin-film solar, which accounts for as much as 40% of global demand (Argus Media).

 

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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