Today's Market View -  Ariana Resources, Bushveld Minerals, Eurasia Mining, Greatland Gold and others

Today's Market View - Ariana Resources, Bushveld Minerals, Eurasia Mining, Greatland Gold and others

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Ariana Resources* (LON:AAU) – Partial disposal of Salinbas and Zenit Madencilik Bushveld Minerals* (LON:BMN) - MIT team look to chitin for large-scale flow batteries Eurasia Mining* (LON:EUA) Suspended – Launch formal sale process under UK Takeover code Greatland Gold (LON:GGP) – Additional licence acquired in the Paterson region KEFI Minerals * (LON:KEFI) – Tulu Kapi project finance update Metals Exploration (LON:MTL) – Update on operations and AIM Suspension Rambler Metals* (LON:RMM) – Progress report on financing Richland Resources (LON:RLD) – Suspension SolGold* (LON:SOLG) – Offer for Cornerstone Versarien* (LON:VRS) – Innovate fund extends £5m to Versarien   Shanghai copper hits five month high on potential rate cuts Copper prices on the Shanghai Futures Exchange hit their highest in more than five months this morning, as traders expect the Chinese Central Bank to cut interest rates on Wednesday. China’s Caixin manufacturing PMI grew at its fastest level since December last month, boosting consumer sentiment and the outlook for copper. The most traded copper contract on the SHFE closed at its highest since January at 48,350 yuan ($6,983)/t (Reuters). Three-month copper prices on the LME gained 0.7% at $6,079/t this morning (Fastmarkets MB).   Economics China’s military approves coronavirus vaccine for use on soldiers (Reuters) The Chinese military are to use a coronavirus vaccine developed by its research unit in combination with CanSino Biologics. The Central Military Commission has approved the use of the Ad5-nCoV vaccine candidate for one year. CanSino Biologics market capitalisation has been rising all year and is now at HK$47bn (US$6bn) ‘G4’ - pig flu not seen as a great concern as the virus has been circulating since 2016 Only 10% of people exposed to the ‘G4’ pig flu virus have antibodies to the strain with no reports of significant illness. There is also no evidence of human to human transmission The next batch of flu vaccines may be designed to provide protection if the virus becomes more of a threat. WHO - World Health Organisation sends second team to China to find source of the Coronavirus (South China Post) Experts are sceptical that the team will find definitive answers so long after the first outbreak. We suspect contamination of a frozen sample from Barcelona waste water which is reported in the Chinese press to have shown SARS-COVID contamination from last summer. US buys entire world supply of 500,000 doses of remdesivir for July and 90% of production till Oxtober UK - £5bn investment in UK construction We don’t want to downplay the significance of the government’s £5bn pledge but it does not sound particularly large when compared with £934bn so far pledged by the Treasury and the BoE. More significantly the government is offering 1/3rd off thousands of homes for first-time buyers. UK – House prices show first annual decline in eight years Nationwide’s house price index showed prices in June were down 0.1% YoY, after increasing 1.8% the previous month. Prices for homes in the UK fell by 1.4% month-on-month, and prices in June were 3.2% lower than in April (FT).   Eurozone – June Manufacturing PMI at 47.4 vs 39.4 last and 46.9 expected The manufacturing downturn in the eurozone was not as bad as initially thought last month after more economies eased restrictions. The future output index, which gauges optimism about the coming 12 months, moved into positive territory at 57.3 vs May’s 44.6 (Reuters).   Singapore – looing to reopen airtravel from 8th June   India – June Manufacturing PMI at 47.2 vs 30.8 last India’s manufacturing sector moved towards stabilisation in June, with both output and new orders contracting at much softer rates than seen in April and May.   China – June Manufacturing PMI at 51.2 vs 50.7 last Manufacturing activity in China continued to rebound in June, driven by rising domestic demand. The reading was the highest Caixin PMI since December 2019, and reflects the economic recovery in China as a result of easing restrictions and implementing a vast investment strategy.   Germany – Latest figure take Q2 job losses to 678,000 Unemployment surged in June, taking the total to just below 3m. The Labour Office said an additional 69,000 people were out of work in seasonally adjusted terms.     Chile - manufacturing output fell 13.3% in May   Australia forecasts a 7.4% increase of iron ore exports in 2021-2022 Australia expects its iron ore exports to grow from 852mt in the 2019-2020 to 915mt by 2021-2022. The country’s Department of Industry, Science, Energy & Resources expect the increased output due to the commencement of new mines in the Pilbara region of Western Australia. Australia expects its iron ore exports to hold up due to robust demand in China, which increased by 5.8% in the first four months of 2020 (Fastmarkets MB).   Currencies US$1.1224/eur vs 1.1210/eur yesterday Yen 107.64/$ vs 107.70/$.  SAr 17.314/$ vs 17.353$.  $1.239/gbp vs $1.227/gbp.  0.691/aud vs 0.686/aud.  CNY 7.067/$ vs 7.071/$.   Commodity News Precious metals:          Gold US$1,788/oz vs US$1,773/oz yesterday - Gold Prices hold film at eight-year peak The price of gold further strengthened on Wednesday morning, as COVID-19 worries persist and inflation expectations pick up. Spot gold was up 0.2% at $1,784/oz whilst US gold futures rose 0.1% to $1,802/oz earlier this morning (Reuters). A spike in US coronavirus cases in recent days has cast doubt over a quick rebound in the country’s economy which has been severely hampered by the lockdown. Traders and investors are speculating that the massive stimulus offered by central banks will lead to inflationary pressures in the future- and gold is a historic hedge against inflation (Kitco). Gold has had its best quarter since Q1 2016, up 12% in the quarter just gone and 16% year-to-date. Gold ETFs 102.9moz vs US$102.8moz yesterday Platinum US$837/oz vs US$818/oz yesterday Palladium US$1,936/oz vs US$1,918/oz yesterday Silver US$18.32/oz vs US$17.87/oz yesterday             Base metals:   Copper US$ 6,073/t vs US$6,015/t yesterday – Chile copper production rose 0.6% to 495,604t in May (national statistics agency) Aluminium US$ 1,622/t vs US$1,614/t yesterday Nickel US$ 12,720/t vs US$12,855/t yesterday Zinc US$ 2,026/t vs US$2,072/t yesterday Lead US$ 1,767/t vs US$1,804/t yesterday Tin US$ 16,770/t vs US$16,865/t yesterday             Energy:            Oil US$41.9bbl vs US$41.4/bbl yesterday Natural Gas US$1.708/mmbtu vs US$1.693/mmbtu yesterday Uranium US$31.40/lb vs US$32.90/lb yesterday             Bulk:    Iron ore 62% Fe spot (cfr Tianjin) US$95.6/t vs US$97.6/t Chinese steel rebar 25mm US$521.6/t vs US$521.7/t - China stainless steel exports shrank 19% in May China exports of stainless steel continued to fall in May compared to the month prior, down 19.3% to 252,600t and down 21% compared to May 2019. Overseas demand fell as other markets were under lockdown to contain the spread of the virus from which China has already emerged from (SMM News). Thermal coal (1st year forward cif ARA) US$58.0/t vs US$58.1/t Coking coal swap Australia FOB US$118.5/t vs US$117.5/t             Other:  Cobalt LME 3m US$28,500/t vs US$28,500/t NdPr Rare Earth Oxide (China) US$41,320/t vs US$40,297/t Lithium carbonate 99% (China) US$4,811/t vs US$4,809/t Ferro Vanadium 80% FOB (China) US$30.0/kg vs US$30.0/kg Antimony Trioxide 99.5% EU (China) US$4.9/kg vs US$4.9/kg Tungsten APT European US$205-215/mtu vs US$215-225/mtu Graphite flake 94% C, -100 mesh, fob China US$460/t vs US$460/t Graphite spherical 99.95% C, 15 microns, fob China US$2,350/t vs US$2,350/t   Battery News Byton halts operations Chinese luxury EV maker Byton has halted production amid financial woes. (Reuters) Byton has suspended production for “at least” 6 months, from today, due to financial struggles exacerbated by the coronavirus pandemic. The majority of workers will be furloughed. (Yahoo) The Company is working to address issues related to unpaid salaries, actively raising funds to pay employees from July. Byton is hoping the closure will enable them to lower employment costs and begin a strategic reorganization. The Company furloughed employees at its Santa Clara facility in California in April. Byton is backed by CATL and FAW Group. All of its vehicles are produced at its facility in Nanjing.   Development of viable sodium ion battery WSU and PNNL have developed a sodium-ion battery with a similar capacity and cycle life as commercial lithium-ion batteries. (Chemical Engineering) The team created a multi-layered metal oxide cathode and liquid electrolyte with additional sodium ions present. This design enabled the continued movement of sodium ions, preventing inactive surface crystal build up. The formation of a non-reactive layer of sodium salt crystals on the cathode surface stops the flow of sodium ions after a number of charge cycles. (Science Daily) The new electrolyte can deliver a specific capacity of 196mAH/g with greater than 80% capacity over 1,000 charge cycles. The team is now investigating the interaction between the electrolyte and the cathode.   Company News Ariana Resources* (AAU LN) 4.25p, Mkt Cap £41.3m – Partial disposal of Salinbas and Zenit Madencilik Ariana Resources reports that, in conjunction with its 50:50 partner, Proccea Construction,  it has reached agreement with the Turkish conglomerate, Ozaltin holding for it to acquire a 53% interest in the Zenit Madencilik property for US$50m ʺas well as an initial 17% of the Salinbas Project for US$5 millionʺ. Ozaltin has also undertaken to inject ʺa further US$8m into the Salinbas Project in order to acquire 53%of the project.ʺ ʺIt is envisaged Özaltin will ultimately hold 53% of Zenit, with Ariana and Proccea each holding 23.5% and that the Salinbas Project ultimately will be acquired by Zenit, such that the respective shareholdings do not changeʺ. Managing Director, Dr. Kerim Sener, explained that ʺThis transaction will crystallise significant value for the Company and substantially de-risks the deliverability of the Salinbas Project, at an important time in its development.  Accordingly, we fully expect shareholders to support the transaction, definitive agreements for which are expected to be concluded by the end of August 2020." Ozaltin is described as ʺa conglomerate active in Turkey and several other countries, in the construction, transportation, energy, tourism and agriculture sectors.  The company was initially established as Özaltın Construction in 1965 by Nuri Özaltın, who originated from Artvin Province in Turkey.  Recent large scale construction projects include hydroelectric dams, with installed annual power production capacity of 5.5 billion KWh and the Gebze-Orhangazi-İzmir Motorway Build-Operate-Transfer Project of which it is a 22 year consortium partner.ʺ  Conclusion: The introduction of a major Turkish industrial entity at Salinbas and Zenit Madencilik should maintain the momentum of exploration and provide the backing to develop any exploration success. *An SP Angel mining analyst has visited Ariana’s licenses in Turkey   Bushveld Minerals* (BMN LN) 14.25p, Mkt cap £164m - MIT team look to chitin for large-scale flow batteries The search for more sustainable solutions and better performance had led MIT researchers to using chitin in electrodes of vanadium redox flow batteries (VRFB). (New Atlas) Chitin is a cellulose-like polysaccharide used for a wide range of applications. It is an abundant material present in animal bodies like shrimp shells. The team has discovered chitin coated electrodes enable a ~100mWcm-2 improvement in peak power density in a VRFB. Not only does this solution improve performance but it is also a low cost material that is re-used waste. The study is published in ACS Sustainable Chemistry & Engineering. The work goes to highlight developing interest in vanadium flow batteries where small enhancements to the battery electrodes offer potential for significant improvement in the overall battery performance. *SP Angel act as nomad and broker to Bushveld Minerals   Eurasia Mining* (EUA LN) Suspended – Launch formal sale process under UK Takeover code Annual report highlights structural deficit in palladium market Eurasia Mining report the company has appointed UBS to run a formal sale process under the UK Takeover Code in order to maximise value to its shareholders. Eurasia Mining also report strong fundamentals in the palladium market supported by a worsening structural deficit. This is supported by mine closures at the major South African underground mines due to the Coronavirus. While demand for autocatalysts will have temporarily fallen the early opening of auto manufacturers and new demand particularly in China for gasoline vehicles appears to be driving palladium prices yet higher. The South African miners are now said to be seeing increasing demand from China for palladium at pre-pandemic levels. Palladium prices have recovered to $1,936/oz and are higher than the US$1,920/oz price seen at end December 2019. Eurasia is moving to build platinum group metal production ‘PGM’ with through direct employment of operators using its own machinery. Management are also working on accelerating the permitting of the mine areas in Russia and look forward to receiving additional licenses as production expands. Eurasia Mining report sales of £1.13m to end December 2019 vs £2.57m for 2018 Costs fell to £1.08m resulting in a modest £0.047m gross profit. Administrative costs reduced to £1m40m from £1.61m a year earlier. A net foreign exchange gain of £0.56m reduced the net loss to £0.85m for the year vs a loss of £3.2m a year earlier. Eurasia has hard rock and alluvial PGM deposits in the Urals. The group is looking to expand its modest production of pgm feedstock. *SP Angel act as Nomad and broker to Eurasia Mining   Greatland Gold (GGP LN) 12.15p, Mkt Cap £196m – Additional licence acquired in the Paterson region Greatland Gold announced yesterday that it had acquired a fourth exploration licence in the Paterson Region of W Australia. The new, Rudall licence covers an area of approximately 65km2 and is located 20km SSE of the company’s Havieron copper gold licences where Newcrest Mining is earning an interest of up to 70% through the expenditure of up to US$65m. Initial exploration of the new licence is expected to entail the completion of ʺdetailed aeromagnetics, ground gravity and surface geochemistry [data] to enhance preliminary targets already outlined within the Rudall licenceʺ The additional licence brings the company’s total land holding in the region to 450km2 in what the company describes as ʺcurrently one of the most active exploration areas in Australia. [where] Recent discoveries by Greatland (Havieron) and Rio Tinto (Winu) demonstrate the potential of the region and highlight the lack of historical exploration, particularly over the extensive areas under cover.ʺ   KEFI Minerals * (KEFI LN) 0.91p, Mkt Cap £16.2m – Tulu Kapi project finance update Kefi Minerals has provided a progress report on the funding of its Tulu Kapi gold project (TKGM) in Ethiopia where the most recent estimates indicate total project funding requirements of US$221m compared with the previous estimate of US$242m. The company expects that approximately half of the funding (US$110m) will be senior debt with the remaining US$111m provided as project level equity. ʺNow that the 2020 Tulu Kapi Plan is completed, TKGM will proceed to finalise, with its shareholders and senior secured lenders, the specifics of remaining funding sourcesʺ. Equity funding is expected to come from a variety of sources including Kefi itself, the Ethiopian Government, private sector investors from Ethiopia and ʺone or more specialist mining financiers that provide financing facilities under subordinated debt.ʺ The Ethiopian private sector funding is still hoped to include ANS Mining however, as it ʺhas not met the published deadline of 30 June 2020 for making its initial investment … TKGM has now served notice that it may replace ANS Mining either in part or in full with other Ethiopian and non-Ethiopian investors, including the potential for an expanded role for the Specialist Mining Financiers.ʺ Discussions with potential financiers are reported to be advanced ʺto ensure the required Project equity is secured well in advance of the closure of the full financing package in October 2020ʺ. Kefi Minerals expresses the aspiration that subject to the specific outcome of the financing discussions it may be able to ensure that its beneficial interest in TKGM may exceed ʺthe planned base case level of 45%.ʺ Commenting on the role of ANS Mining, Executive Chairman, Harry Anagnostaras-Adams, said that ʺwhilst we continue to welcome ANS Mining and offer them the opportunity to invest, this can no longer be on an exclusive basis.  The Project must and will keep moving forward given that the other shareholders of TKGM are already actively deploying funds and because of its prominence and importance in the burgeoning Ethiopian mining sectorʺ. He also confirmed that ʺWe will not allow any distractions from achieving our target to close project financing in October this yearʺ. Conclusion: Kefi Minerals has revised its capital cost assumptions downwards by around 10% to US$221m and confirmed its intention to complete the financing negotiations for Tulu Kapi during October. *SP Angel act as Nomad and Broker to KEFI Minerals   Metals Exploration (MTL LN) – Suspendes – Update on operations and AIM Suspension Metals Exploration confirms that its RunRuno mine in the Philippines remains in production producing and selling doré. Restrictions implemented by the Government, including curbs on travel and on the supply chain for materials ʺhave resulted in a number of senior personnel being unable to return to site; notably key maintenance and process managers.ʺ The company expresses concern that it has experienced ʺa significant increase in power outages at the mine site. Increased power outages, combined with some back-up system failures and the inability to move specialist maintenance personnel to site continues to negatively impact production and in particular the performance of the BIOX process, which has not operated in a stable manner for much of the June quarter.ʺ Overall the company indicates that it expects the cumulative effect of the Covid19 related pressures will result in ʺan approximate 10% drop in gold production compared to the March quarterʺ. Travel restriction related to the containment of Covid19 have also ʺgiven rise to delays to the Group's audit timetable. In addition, the Company remains in negotiations with its lenders with the aim to secure a debt restructure that provides a stable financial platform for the Group., This has given rise to extended discussions surrounding the accounting treatment of the Company's debt position, which has caused further delaysʺ and prevented the publication of the 2019 Annual Report before the required 30th June deadline. The company also ʺconfirms that the suspension in the trading of its Ordinary Shares on AIM remains in place and is expected to do so until the Company, inter alia, completes a debt restructuring that removes its current financial uncertainty and allows the Company to resume trading.  The delay in release of the 2019 Annual Report and Accounts would ordinarily lead to a suspension of trading in itself and therefore the publication of the 2019 Annual Report and Accounts will also be required before trading is resumed.ʺ Conclusion: The virus related containment measures, interruptions to supply chains and protracted debt restructuring negotiations have combined to delay the publication of the company’s 2109 Annual Report. As a result, the shares remain suspended   Rambler Metals* (RMM LN) 1.35p, Mkt Cap £19.5m – Progress report on financing CLICK FOR PDF Rambler Metals confirms that it expects to complete its continuing fundraising efforts by the end of July rather than by the end of Q2 2020 as originally intended. The fundraising is primarily intended to expand production and treatment capacity to a rate of 1500tpd, from the current 1350tpd rate, mining and processing ore grading around 2% copper by the end of 2020. Although cautioning that ʺthere can be no guarantee that a binding fundraising agreement will be completedʺ, the company confirms that ʺDiscussions with investors remain at an advanced stageʺ. Conclusion: The conclusion of the company’s expansion funding is now expected by the end of July placing Rambler Metals on track to increase throughput from 1350 tpd to 1500tpd by the end of 2020. *SP Angel act as Nomad and broker to Rambler Metals & Mining   Richland Resources (RLD LN) Suspended – Suspension Richland Resources confirms that, following the disposal of its Capricorn Sapphire Project it has been unable to complete a transaction which would qualify the company for re-admission to AIM and that as a result shares have, today, been suspended. The company also says that ʺAdmission to trading on AIM of the Company's common shares will be cancelled pursuant to AIM Rule 41 if a Re-admission Transaction is not completed within a further six month period from today, being the suspension date, to rectify the reason for the suspensionʺ. Richland Resources’ announcement says, however, that ʺThe Board has now identified a suitable opportunity and is currently in late-stage discussions with respect to a potential reverse takeover transaction in the mining sector, in line with its stated strategy, and anticipates being able to enter into such a transaction in the short termʺ. The company says that this opportunity ʺinvolves the acquisition of majority interests in, and operatorship of, four gold exploration projects in North and South Carolina in the United States located within the wider Carolina Super Terrane (formerly the 'Carolina Slate Belt'), which i) also hosts the producing Haile Gold Mine owned by OceanaGold Corporation … who acquired the Haile Gold Mine be acquiring Romarco Minerals Inc. in 2015 for C$856M; and ii) was the site of the first documented gold discovery in the USA in 1799, with North Carolina being the biggest gold producing state until discovery of the Californian gold depositsʺ.   SolGold* (SOLG LN) – 21.2p, Mkt cap £435m – Offer for Cornerstone SolGold has launched an all-share offer to acquire Cornerstone Capital which holds the 15% of the Alpala copper/gold discovery in Ecuador not already held by Solgold. Solgold is offering 11 of its shares for for each Cornerstone share which ʺrepresents a premium of approximately 22% over Cornerstone's closing price on the TSX Venture Exchange on 29 June 2020 and a premium of 56% based on the volume weighted average trading price over the last 12 monthsʺ. CEO, Nick Mather, explained that ʺThis is an exciting value enhancing opportunity, providing Cornerstone shareholders with a premium over the current market price for their Cornerstone investment and continued participation in a consolidated and much more attractive ownership structure for the world-class copper-gold porphyry Alpala Project in northern Ecuadorʺ. Mr Mather also highlighted that the offer provides the Cornerstone shareholders with exposure to Solgold’s portfolio of exploration throughout Ecuador. Enumerating the benefits to Cornerstone’s shareholders of accepting the offer, Solgold lists: ʺContinued participation in the Alpala Project through a simplified, 100% consolidated vehicle Elimination of disadvantages arising from a minority position in Alpala Exposure to the upside of SolGold's highly prospective additional concessions throughout Ecuador Increased trading liquidity and capital markets exposure An opportunity to benefit from a strong, experienced and invested management team with a track-record of value creationʺ Solgold indicated , in January 2019, its intention to make an offer for Cornerstone Capital however, at that time efforts to negotiate a deal proved fruitless. Conclusion: The consolidation of ownership of the Alpala project seems an eminently sensible and pragmatic move which should simplify operational management as Alpala moves toeards development. *SP Angel act as financial advisor and broker to SolGold   Versarien* (VRS LN) 43p, Mkt cap £73m – Innovate fund extends £5m to Versarien The UK government has agreed to loan £5m to Versarien through the Innovate fund. This is the first £5m Innovate award with loans normally up to £1m. The funds are specifically for the G SCALE ‘Graphene-Seat, Concrete, Arch, Leisure, Elastomer’ project. The arches are designed to work on the railways to enable better signalling between trains, particularly in tunnels. Versarien is working on graphene enhanced arches which are able to fit in narrow London underground and other tunnels while carrying sensors for signalling. Aecom is able to 3D print the arches: https://www.graphene-info.com/aecom-uses-graphene-versarien-3d-print-arch-may-modernize-transport-networks Graphene is also corrosion resistant and should help extend the lifespan of each arch in corrosive underground conditions. Versarien will use the funds to significantly increase the manufacture of ‘quality assured’ graphene and to ‘enable market supply of commercial quantities of the graphene-enhanced materials’. Versarien will start to repay the loan 45 months after drawdown. The loan carries a 7.4%pa interest rate with half the interest deferred to the first repayment. Conclusion: The Innovate fund does not give up its government money easily and has done significant due diligence on Versarien and its G SCALE project for the provision of the loan. The funds should allow Versarien to make significant progress in the development and commercialisation of graphene for the benefit of millions of tax-paying commuters. *SP Angel act as Nomad and broker to Versarien     Analysts John Meyer – John.Meyer@spangel.co.uk – 07943031001 Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484 Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk - 0203 470 0474

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