Today’s Market View – Amur Minerals, Azure Minerals, Danakali, And More…

Gold extends gains on continued dollar and US Treasury yield weakness 

MiFID II exempt information – see disclaimer below 

Amur Minerals Corporation (AIM:AMC, OTC:AMMCF)* – Amur Minerals announces Russian Federation approval of the sale of its nickel copper sulphide project for $35m
Anglo American PLC (LSE:AAL) – Renewable energy partnership with EDF in S Africa
Azure Minerals Ltd (ASX:AZS) – Positive metallurgical testing results at Ridgeline nickel deposit
BlueBird Merchant Ventures Ltd (LSE:BMV)–Batangas licence extension
Danakali Ltd (ASX:DNK, LSE:DNK, OTC:SBMSF) – Term sheet signed for divestment of Colluli interest
Ormonde Mining PLC (AIM:ORM)*– Ormonde completes sale of La Zarza assets for €2.3 million
Sibanye-Stillwater* (JSE: SSW) – shareholding in Keliber increased to 84.96%

Private Equity / joint venture opportunity
We are looking for investors / jv partners for an exploration opportunity on a newly discovered copper / moly porphyry system with two adjacent non-porphyry gold and silver deposits over 6km in South-East Asia

• 2,000m in 8 holes already drilled with intersections of visible chalcopyrite and molybdenite both disseminated and in B-veins
• Positive indications of grade at shallow depths. Total funding $2.34m to date. Current implied valuation $4.4m. Best drill result:
  • 60m grading 0.4% copper, 0.2% gold plus molybdenum from 24m eg. below the leached cap
  • 3m grading 0.51% copper, 9.2g/t gold, and 49g/t silver from 64m down hole
  • 2m grading 0.3% copper, 6% zinc and 9g/t gold, 40 g/t silver from 33m down hole related to a massive pyrite-magnetite-sphalerite-chalcopyrite vein

*SP Angel’s role is limited to making introductions.  No due diligence or verification of information supplied by the company has been performed.  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.

 

Gold extends gains on continued dollar and US Treasury yield weakness

• Gold has rallied over 5% from its September lows to hover around $1,710/oz.
• The move tracks the dollar’s cooling from its September highs, now down 3.15% from those levels.
• Similarly, US 10-year Treasury yields are down 9%, further supporting gold’s upwards momentum.
• US Silver has jumped 15% over the same period following consecutive monthly declines.
• The dollar and UST yields have fallen following the weak ISM manufacturing gauge released yesterday, with the gauge’s new orders and employment components showing contraction.
• The Fed has vowed to continue raising rates whilst the US economy remains hot to tame inflation, however yesterday’s data may encourage them to ease their aggressive hike schedule.
• The UN has called on the Federal Reserve, among other Central Banks, to ease up on rate hikes to support the global economy and avoid wreaking further havoc on emerging debt markets.
• Treasury markets are also suffering from low liquidity, encouraging more volatile moves as we are seeing this week.
• Friday’s US September job figures will be a key indicator for traders betting on gold and the dollar.
• Russians have bought 225k oz of gold this year from Sberbank.

Dow Jones Industrials +2.66% at 29,491
Nikkei 225 +2.96% at 26,992
HK Hang Seng -0.83% at 17,080
Shanghai Composite CLOSED at 3,024

Economics

US – House prices are declining at the fastest monthly rates since 2009, according to mortgage data provider Black Knight.

• Median home prices fell 0.98%mom in August and 1.05% in July marking the largest monthly drops since Jan/09.
• Two months of significant pullbacks follow more than two years of record breaking growth and reflect tightening credit conditions.
• Prices are still up 12.1%yoy.

Japan – Capital inflation picked up further in September, although, the pace remained significantly behind levels recorded in other major economies.

• Tokyo CPI (%yoy): 2.8 September v 2.9 August and 2.8 est.
• Tokyo CPE ex Food and Energy (%yoy): 1.7 September v 1.4 August and 1.6 est.

UK – The pound is stronger this morning on reports that the Chancellor is considering publishing of his plan to cut debt in an attempt to reassure markets, FT reports.

Australia – The central bank hiked rates less than expected briefly sending the A$ lower.

• The RBA lifted the cash rate by 25bp to 2.60% compared to 2.85% expected becoming the first central bank to dial back outsized interest rate increases.
• Household sector is among the world’s most indebted as well as most exposed to rate hikes given the prevalence of variable mortgage rates suggesting hikes are particularly potent, Bloomberg writes.
• Headline inflation hit 6.1% in Q2/22, the highest since early 2000s, although, less than 8-10% recorded in the US and the Eurozone.

Currencies

US$0.9881/eur vs 0.9793/eur yesterday. Yen 144.68/$ vs 144.96/$. SAr 17.736/$ vs 17.986/$.  $1.139/gbp vs $1.118/gbp. 0.653/aud vs 0.643/aud. CNY 7.116/$ vs 7.116/$.

Dollar Index        111.26 / -2.64% on week

Commodity News

Bolivia aims to build two Direct Lithium Extraction plants by 2025

• Bolivia’s Minister for Hydrocarbons and Energy, Molina, has announced plans to build two 25kt pa DLE plants by 2025.
• Bolivia’s lithium carbonate industrial plant is expected to begin production in 2023, with potential for 15kt pa.
• The Country is hoping to obtain DLE technology from foreign enterprises in exchange for lithium production.
• Bolivia currently bans international firms to produce lithium on its land, but this law is expected to change.

Copper strengthens on weaker dollar and falling inventory levels

• Copper is up 4% from its September low of $7,340/t to c. $7,650/t.
• The move, like gold’s, tracks the dollar’s recent weakness, with the currency’s strength and gloomy economic growth prospects weighing on copper this year.
• Copper inventories had rallied from near 2008 lows this last week but have fallen from those recent highs.
• Inventories are over 50% lower on a seasonal basis than the average for the last five years.
• Backwardation on the primary copper futures spread has halved, however, suggesting that short-term supply concerns have eased considerably.

Iron ore retains weakness as supply picture improves and demand prospects remain gloomy

• Iron ore futures fell over 20% in 3Q.
• Global mine production output has continued to ramp up, with Brazil, the world’s second largest producer, shipping 36.3mt in September, 9% up from same period 2021.
• Iron ore at Australia’s export hub Port Headland is up c.4% vs the 5-year seasonal average.
• Steel production has fallen 5% this year globally, with China hit by lockdowns and the slumping property sector and Europe hit by soaring energy costs.

Precious metals:         

Gold US$1,709/oz vs US$1,664/oz yesterday

Gold ETFs 97.0moz vs US$97.0moz yesterday

Platinum US$916/oz vs US$865/oz yesterday

Palladium US$2,312/oz vs US$2,166/oz yesterday

Silver US$20.96/oz vs US$19.30/oz yesterday

Rhodium US$14,000/oz vs US$14,000/oz yesterday

Base metals:   

Copper US$ 7,669/t vs US$7,450/t yesterday

Aluminium US$ 2,276/t vs US$2,141/t yesterday

Nickel US$ 21,740/t vs US$21,260/t yesterday

Zinc US$ 2,990/t vs US$2,938/t yesterday

Lead US$ 1,887/t vs US$1,875/t yesterday

Tin US$ 20,315/t vs US$20,305/t yesterday

Energy:

Oil US$89.4/bbl vs US$87.8/bbl yesterday

Crude oil prices edged higher following reports that the OPEC+ meeting today would discuss a potential 1mb/d cut to output to bolster oil prices.

Natural Gas US$6.492/mmbtu vs US$6.675/mmbtu yesterday

Uranium UXC US$49.20/lb vs US$49.00/lb yesterday

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$92.6/t vs US$93.9/t

Chinese steel rebar 25mm US$581.4/t vs US$581.4/t

Thermal coal (1st year forward cif ARA) US$278.0/t vs US$278.0/t

Thermal coal swap Australia FOB US$370.5/t vs US$406.0/t

Coking coal swap Australia FOB US$281.0/t vs US$281.0/t

Other:  

Cobalt LME 3m US$51,955/t vs US$51,955/t

NdPr Rare Earth Oxide (China) US$94,155/t vs US$94,155/t

Lithium carbonate 99% (China) US$69,492/t vs US$69,492/t

China Spodumene Li2O 5%min CIF US$5,590/t vs US$5,590/t

Ferro-Manganese European Mn78% min US$1,220/t vs US$1,209/t

China Tungsten APT 88.5% FOB US$32.3/kg vs US$32.3/kg

China Graphite Flake -194 FOB US$835/t vs US$835/t

Europe Vanadium Pentoxide 98% 7.2/lb vs US$7.2/lb

Europe Ferro-Vanadium 80% 30.75/kg vs US$30.75/kg

China Ilmenite Concentrate TiO2 US$320/t vs US$320/t

Spot CO2 Emissions EUA Price US$64.9/t vs  US$64.6/t

Brazil Potash CFR Granular Spot US$670.0/t vs US$670.0/t

Battery News

Company News

Amur Minerals Corporation (AIM:AMC, OTC:AMMCF)*  1.6p, Mkt Cap £22m – Amur Minerals announces Russian Federation approval of the sale of its nickel copper sulphide project for $35m

• Bering Minerals, the buyer of Amur Minerals’ Kun-Manie Russian subsidiary nickel copper sulphide project, has received approval from Russian Federation officials for the $35m asset purchase.
• Amur and Bering have entered the final stage of the Completion process including the final transfer of the AO Kun-Manie subsidiary from Amur to Bering.
• Completion is expected on the 1st of November 2022, with a one-time payment of $35m scheduled 5 days following.
• Robin Young, Amur’s CEO states: ‘it is our intent to advance to Completion as rapidly as possible given the ongoing geopolitical situation where sanctions by various nation states continue to be modified on an ongoing basis.’
• Amur will pay a special dividend of 1.8p within 90 days of receipt of the closing payment.
• The Company’s directors will aim to acquire another business via a ‘reverse takeover’, subject to shareholder approval.
• An acquisition or a reverse takeover under AIM Rule 14 is required to take place within 6 months from the completion of the sale. Amur will also have the option to be re-admitted to trading on AIM as an ‘investing company’ under Rule 8.

*SP Angel act as Nomad and Broker to Amur Minerals

Anglo American PLC (LSE:AAL) 2,860.5p, Mkt Cap £37.4bn – Renewable energy partnership with EDF in S Africa

• Anglo American reports that it is partnering with EDF Renewables in South Africa to develop renewable energy.
• The partnership, Envusa Energy, will initially comprise 600MW of solar and wind energy projects as “a major first step towards the development of an ecosystem that is expected to generate 3-5 GW of renewable energy by 2030”.
• “Envusa Energy is expected to supply Anglo American with a blend of renewable energy generated on Anglo American’s sites and renewable energy transmitted via the national grid”.
• Nolitha Fakude of Anglo American described the agreement on Envusa Energy as “a significant milestone in Anglo American’s global decarbonisation journey and another step forwards for South Africa’s clean energy future” as the company works towards its goal of carbon neutrality by 2040.
• Tristan de Drouas, CEO of EDF Renewables in S Africa said that the initial 600MW of projects “will be added to the almost 1 GW that EDF Renewables will be building or operating in the country by 2023”.
• He added that “Together, these projects further EDF Group’s CAP 2030 strategy, which aims to double our net renewable installed energy capacity worldwide (hydropower included) from 28 GW in 2015 to 60 GW by 2030”.

Azure Minerals Ltd (ASX:AZS)  A$0.18, Mkt Cap A$56m – Positive metallurgical testing results at Ridgeline nickel deposit

• Azure Minerals reports initial metallurgical testing results from the Ridgeline nickel deposit which is adjacent to the Andover Deposit.
• Azure has commissioned Strategic Metallurgy to complete a testing programme on nickel-copper-cobalt mineralisation, with data used to design a process flowsheet that will produce separate nickel and copper sulphide concentrates at the Project.
• The recovery process consists of primary crushing, coarse ore reclaim, grinding and classification, sequential flotation, concentrate thickening/filtration, and tailings thickening/filtration
• Testwork shows that separate nickel and copper concentrates can be produced, with nickel concentrate graded 13.0% at a recovery of 80% and the copper concentrate graded 25.5% at a recovery of 77%.
• The flowsheet at Ridgeline is the one used at Andover, meaning both deposits can be processed using the same methodology which allows for a processing hub to be deployed at the Project.
• Azure comments that a maiden MRE is currently underway for Ridgeline, while at Andover the scoping study continues to be progressed.

BlueBird Merchant Ventures Ltd (LSE:BMV) – 1.45p, Mkt cap £8m – Batangas licence extension

• Bluebird Merchant Ventures confirms that it has been awarded a two-year extension to its exploration licence on the Batangas gold project in the Philippines enabling it to complete the studies needed to make a development decision.
• The company also says that the licence extension gives it confidence that it will be able to conclude “discussions with a local partner for the development of the Project” and will enable it to complete “the remaining Exploration and Environmental Work Programmes to increase the resource and rework the plan for the underground mining potential at the high-grade Lobo area of the Project”.
• Lobo is described as an area hosting “multiple epithermal and high-grade targets already identified for resource expansion” and Bluebird Merchant Ventures highlights “testing of the footwall lode at the SWB extension … [which has] … produced results including 2.1m @14.4g/t Au and 3m @12.1g/t, and West Drift, already has an Indicated and Inferred resource of 350,000t @ 3 g/t Au and high-grade surface trench intersections yielded 8.35m @ 18.4 g/t Au), 2.6m @ 28.6 g/t Au and 3m @ 22.2 g/t Au”.
• The company explains that it has identified “Five key targets … within … [a] … 15km strike on 5 parallel epithermal lode structures” including Lobo and;
  • “Camo, where major flexure “look-a-like” target to South West Breccia (SWB) exist”;
  • “Signal where exceptionally high grade rock chip samples at surface lead into an area of preserved high silver-copper-gold in silica cap at an analogous position to SWB”;
  • “Pica the centre of the porphyry system at Lobo where previous high grade epithermal vein intersections above porphyry Cu-Au zone, are open in all directions”; and
  • “Ulupong where very strong soil anomalies and high-grade surface trenching results indicate gold zone exposed for 3km strike of structural corridor”.
• CEO, Colin Patterson, described the extension of the licence as de-risking “the development pathway to production significantly”.
• Confirming what he described as the “excellent potential” of the Batangas Project, he explained that “The Project was written off in the accounts due to the in-country situation, but now we have a high-grade project with excellent exploration and development upside, sunken exploration expenditure of c.$20m, a supportive mining code and local partners interested in the project”.
• Mr. Patterson also commented on continuing progress at the company’s South Korean projects where the historic Kochang Gold and Silver Mine and the Gubong Gold Mine, which were closed during the 1970s “offer … [an] …exceptional opportunity to bring … [the former mines] … back into production”.

Danakali Ltd (ASX:DNK, LSE:DNK, OTC:SBMSF)  A$0.32, Mkt Cap A$118m – Term sheet signed for divestment of Colluli interest

• The Company signed a term sheet for the sale of its 50% interest in the Colluli Potash Project in Eritrea with Sichuan Road and Bridge Group.
• The consideration is for US$166m (pre-tax) including $135m for its equity stake as well as $31m (subject to adjustment for deferred payment) for outstanding debt.
• The Company expects to receive US$121m (net of all government taxes).
• The term sheet is non-binding and remains subject to the acquirer completing satisfactory due diligence.
• The deal is also contingent on the Company’s shareholder approval, ENAMCO (Eritrean National Mining Co) and Eritrean Government Ministry approval and Chinese regulatory sign offs.
• The transaction is expected to be completed between 31 March 2023 and 31 May 2023.
• The Company is planning to distribute 90% of the net proceeds to its shareholders and remain as a listed cash shell aiming to identify new projects and growth opportunities.
• SRBG is listed on the Shanghai Stock Exchange (Mkt Cap ~US$6.9bn and EV ~US$14.5bn) and is active in transportation infrastructure design and construction.
• The FS stage Colluli Potash Project is the shallowest known evaporite deposit hosting 1,100mt at 16.7% KCl in reserves located on the border with Ethiopia and 230km from port of Massawa and 87km from proposed future port Anfile Bay.
• Under the latest economic study (Front End Engineering Design Jan/18), the Project was planned to be developed in two stages to optimise development funding with Phase 1 running at ~470ktpa SOP and costing ~$300m in capex before ramping up to ~940ktpa in year six at an incremental cost of ~$200m.
• Phase1 and Phase 1&2 delivered post tax NPV10% and IRR of $505m/28.1% and $902m/29.9%, respectively (using ~$570/SOP fob price vs]
• SOP or sulphate of potash is a chloride free premium fertilizer that is used for cultivation of chloride-intolerant crops like fruits, vegetables, tobacco and others accounting for ~5-10% of global potassium based fertilizer sales.
• SOP historically traded at $100-300/t premium to MOP prices.

Ormonde Mining PLC (AIM:ORM)* 0.66p, Mkt Cap £3.1m – Ormonde completes sale of La Zarza assets for €2.3 million

• Ormonde Mining announced the sale of its La Zarza land, data and drillcore assets yesterday.
• The assets were bought by a unit of Tharsis Mining S.L for a cash consideration of €2.3 million.
• The Company has received €800,000, with the remaining €1.5m to be paid in three equal payments of €0.5m.
• Following the asset sale, Aim Rule 15 will require Ormonde to make an acquisition or form a reverse takeover within 12 months of completion, under Aim Rule 14.

*SP Angel acts as Broker to Ormonde Mining

Sibanye-Stillwater* (JSE: SSW)  ZAR 4,364, Mkt cap ZAR 124bn – shareholding in Keliber increased to 84.96%

• Sibanye has increased its shareholding in Keliber to an effective 84.96% through a series of transactions, following a voluntary cash offer to minority shareholders of Keliber,
• In July 2022, the company increased its stake in Keliber from 30.29% to 50% plus 1 share for a cash consideration of approximately €146m.
• The second stage of the financing arrangement will involve a capital raise, which will be fully underwritten by Sibanye-Stillwater.
• Keliber aims to start the production of lithium hydroxide in 2024 at its Kokkola project.

*An SP Angel mining analyst has visited Sibanye’s Montana operations.

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 – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Joe Rowbottom – Joe.Rowbottom@spangel.co.uk – 0203 470 0486

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 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

www.proactiveinvestors.co.uk