SP Angel . Morning View . Tuesday 19 11 19

Higher China rebar prices indicate new economic growth

MiFID II exempt information – see disclaimer below      

Adriatic Metals* (ASX:ADT) A$1.31, Mkt cap A$226.1m – Vares scoping study

Arc Minerals* (LON:ARCM) 2.7p, Mkt Cap £20m – Arc agrees sale of Šturec as it focuses resources on development of Cheyeza East discovery in Zambia

Cora Gold* (LON:CORA) 5.4p, Mkt Cap £7m – 5,000m of drilling to test lateral and dip extensions at Sanankoro

Oriole Resources (LON:ORR) 0.39p, Mkt cap £2.7m – Financing for Thani Stratex Resources Djibouti

Pensana Metals (ASX:PM8)  A$0.20, Mkt cap A$30m – Pensana punchy on NdPr prices in new Feasibility Study

Tri-Star Resources* (LON:TSTR) 37p, Mkt Cap £35.2m – First production of commercial grade antimony metal


China’s domestic rebar prices increased yesterday amid lower inventories (FastmarketsMB)

  • In Shanghai, steel rebar was 3,940-3,970 ($562-566) – up 70-80 yuan/t.
  • In Beijing, steel rebar was 3,720-2,750 – up 20-30/t.
  • Low stock levels provided upward momentum for rebar prices, however some market participants think that prices are close to peaking and demand will soften.
  • According to Business Recorder, yesterday was steel rebar’s biggest gain in nine weeks.
  • Possible fresh output restrictions in the effort to curb air pollution could be a source of future supply uncertainty, and therefore also pushing up prices according to Reuters.

Conclusion: higher rebar prices are a good sign for new economic activity and construction of new infrastructure.

This combined with an upswing in ferro-vanadium, which is used to strengthen rebar is a good indicator for future economic expansion.


121 Mining Investment Conference Wednesday/Thursday this week, London

  • Our mining research team will be meeting investors and mining companies at the 121 Mining Investment Conference in London on Wednesday & Thursday this week.
  • All investors are free to attend. Come and find us, we will be in a dark corner somewhere – There will be no morning notes on these days.
  • https://www.weare121.com/121mininginvestment-london/


Dow Jones Industrials +0.11% at 28,036

Nikkei 225 -0.53% at 23,293

HK Hang Seng +1.55% at 27,094

Shanghai Composite +0.85% at 2,934

FTSE 350 Mining +1.11% at 18,318

AIM Basic Resources -0.25% at 2,097



US – President Trump again argued for lower rates during the unscheduled meeting with Fed Chairman Jerome Powell.

  • “I protested fact that our Fed Rate is set too high relative to the interest rates of other competitor countries… our rates should be lower… too strong a dollar hurting manufacturers & growth,” President prosted in his twitter later.


China – The central bank cut the seven day repo rate by 5bp to 2.5% injecting $26bn in the banking system.

  • The move has been interpreted as counter cyclical support from the government by markets with Chinese equity indices trading stronger this morning.


Japan – Parliament approved the trade deal with the US clearing the way for tariff cuts next year on items including US farm goods and Japanese machine tools.

  • Although, the major sticking point between two nations including existing tariffs on auto and auto parts imports that account for 30 of Japan’s total exports to the US has not been resolved and remains in place.


UK – The pound is trading close to its highest in a couple of weeks as opinion polls place Conservatives in the lead of coming general elections.

  • Support for the Conservatives climbed three points to 42% while the Labour party was up by one point at 32%, according to an opinion poll by ICM for Reuters from Monday.


Hong Kong – China’s parliament criticised the Hong Kong High Court ruling that overturned a mask ban implemented in early October as a standoff between protesters and authorities continues.

  • The National People’s Congress statement is the strongest one made by Beijing since last month when it said it would take stronger measures to restore order in the territory, FT reports.
  • Meanwhile, the siege of the Polytechnic University entered its third day.
  • 600 people are reported to have left the campus as of this morning with all adults (400) having been arrested, according to local authorities.


Hang Seng is up this morning with investors’ confidence helped by strong demand for Alibaba’s $13.4bn listing with reports saying the Company closed the book earlier than expected.

  • The placing comes through despite a weak market sentiment with the benchmark Hang Seng posting a 5 drop last week.
  • Some commentators highlight that completing the dual listing at such challenging times may be in China’s interests and serve to show that Hong Kong still functions as a financial centre.


Brazil – Deforestation in Brazilian Amazon is highest in a decade (mining.com)

  • President Jair Bolsonaro’s is pushing to open the huge rainforest to businesses such as mining and logging.
  • According to the National Institute for Space Research, areas where trees have been removed increased 29.5% to 9,762km in the year to July 2019.
  • The clearance rate equates to two football pitches a minute, and is the fastest since 2008.



US$1.1069/eur vs 1.1064/eur yesterday.  Yen 108.78/$ vs 108.94/$.  SAr 14.751/$ vs 14.743/$.  $1.296/gbp vs $1.295/gbp.  0.681/aud vs 0.682/aud.  CNY 7.024/$ vs  7.013/$.


Commodity News

Gold US$1,468/oz vs US$1,460/oz yesterday

Gold ETFs 80.9moz vs US$80.9moz yesterday

Platinum US$896/oz vs US$882/oz yesterday

Palladium US$1,720/oz vs US$1,715/oz yesterday

Silver US$17.07/oz vs US$16.83/oz yesterday


Base metals:   

Copper US$ 5,838/t vs US$5,861/t yesterday

Aluminium US$ 1,738/t vs US$1,749/t yesterday

Nickel US$ 14,570/t vs US$14,870/t yesterday – Environmental studies for Indonesian nickel plants expected by end of the year (Reuters)

  • Indonesia’s coordinating mining minister said on Monday that environmental impact studies for factories producing battery-grade nickel chemicals would be completed by the end of the year.
  • The studies known as AMDAL need to be completed and approved by the environment ministry before investors can proceed.
  • One investor waiting for feedback is Chinese steelmaker Tsingshan Group which wants to build a high-pressure acid leaching (HPAL) plant.
  • According to a mining minister, investment plans for plants producing chemicals from nickel laterite were worth $3.2bn.

Zinc US$ 2,342/t vs US$2,368/t yesterday

Lead US$ 1,968/t vs US$2,000/t yesterday

Tin US$ 16,000/t vs US$16,215/t yesterday



Oil US$62.5/bbl vs US$63.2/bbl yesterday

Natural Gas US$2.550/mmbtu vs US$2.603/mmbtu yesterday

Uranium US$25.40/lb vs US$25.05/lb yesterday



Iron ore 62% Fe spot (cfr Tianjin) US$83.3/t vs US$83.2/t

Chinese steel rebar 25mm US$578.6/t vs US$589.2/t

Thermal coal (1st year forward cif ARA) US$62.5/t vs US$63.0/t

Coking coal futures Dalian Exchange US$183.0/t vs US$183.3/t



Cobalt LME 3m US$36,000/t vs US$36,000/t

NdPr Rare Earth Oxide (China) US$40,078/t vs US$40,143/t – Australia and US sign critical minerals research agreement (Reuters)

  • GeoScience Australia and the USGS signed the agreement which will look at better quantifying of the global supply potential of rare earths.
  • U.S. and European governments are trying to broaden the supply chain of critical minerals including rare earths, currently dominated by China.
  • The two institutions are also looking at ways to extract critical minerals without causing profound environmental destruction, something which has allowed China to dominate supply (ABC).
  • Whilst the announcement did not mention funding, there are expectations that the US may finance some critical minerals projects after President Trump authorised funding for resources or technology “essential to the national defence”.

*SP Angel act as nomad and broker for Mkango Resources and broker and financial advisor to Rainbow Rare Earths

Lithium carbonate 99% (China) US$6,763/t vs US$6,774/t

Ferro Vanadium 80% FOB (China) US$29.5/kg vs US$29.0/kg

Antimony Trioxide 99.5% EU (China) US$5.3/kg vs US$5.3/kg

Tungsten APT European US$225-245/mtu vs US$225-245/mtu

Graphite flake 94% C, -100 mesh, fob China US$540/t vs US$540/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,550/t vs US$2,550/t


Battery News

Tesla set to make world’s largest lithium-ion battery 50% bigger (FT)

  • French Renewables company Neoen have contracted Tesla to expand capacity at its Hornsdale Power Reserve in S. Australia by 50% to 150MW.
  • The S. Australian government will also support the project with up to A$58m in funding through the Clean Energy Finance Corporation and the Australian Renewable Energy Agency (Reuters).
  • The capacity of the battery is increasing in a bid to stabilise the nation’s fragile energy grid.
  • The country’s renewable energy capacity is expanding rapidly, and this can destabilise the grid. In 2016, a state-wide blackout in S. Australia was caused by a storm.

Ford unveils all-electric Mustang Mach E (BBC)

  • The top-range version of the car can travel up to 370 miles on a full charge and recharge 57 miles (92km) of range in 10 minutes on a high-power charge.
  • The various models can accelerate from 0-60mph in about eight seconds.


Company News

Adriatic Metals* (ASX:ADT) A$1.31, Mkt cap A$226.1m – Vares scoping study

  • Adriatic Metals reports the results of a scoping study on the wholly-owned Vares project comprising the development of an underground mine at Rupice and an open-pit operation at Veovaca to feed a new, centrally located, plant at Veovaca to produce three concentrate products – lead/copper; zinc; and barite.
  • The underground operation is expected to produce an average of 715,000tpa of ore over 10 years while “Veovača will then be mined at an annual average rate of 679,000 t per annum for 7 years”.
  • Using a zinc price of US$2,500/t, lead at US$2,000/t and copper at US$6,500/t as well as US$1440/oz for gold, US$17.2/oz for silver and US$6,500/t for antimony, and expected capex of US$178m the company expects the project to generate a post-tax NPV8% of US$916.6m and an IRR 107.4%.
  • The scoping study has identified a number of areas requiring more detailed assessment at the Pre-Feasibility or Feasibility study stage of the project including:
  • Further resource definition drilling test-work and geological analysis to “increase confidence in resource and allow subsequent reserve declaration”; and
  • “Better definition of deleterious material distribution in the mineral resource estimates and evaluated against proposed mine development”; and
  • Further geotechnical and hydrological work as well as various infrastructure studies to assess power supply, ventilation and transport options.
  • Paul Cronin, Managing Director, expressing pleasure at the outcome of the study affirmed that “, we will continue to expand our resource and increase our footprint in this exciting, and yet under-explored region of Europe”.

Conclusion: The scoping study shows impressive returns for the Vares project – we look forward to further information as the more detailed feasibility work progresses.

*An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia


Arc Minerals* (LON:ARCM) 2.7p, Mkt Cap £20m – Arc agrees sale of Šturec as it focuses resources on development of Cheyeza East discovery in Zambia

Arc Minerals holds an effective 71.34% interest in Zamsort Limited (“Zamsort”), a private company focused on a prospective copper licence in the Zambia Copperbelt, together with a convertible loan to Zamsort which converts into approximately a 5% additional equity interest in Zamsort. A 47.5% equity interest in Zaco Limited (“Zaco”), a private company focussed on a prospective copper and cobalt license adjacent to Zamsort.

  • Arc Minerals reports on the sale of an option to sell it’s Šturec gold project in Slovakia
  • MetalsTech Limited (MTC AU) an Australian Listed Junior miner is buying a 45 day option to acquire the Šturec gold project for A$30,000.
  • The option gives MTC the right to acquire Šturec for A$750,000 (US$500,000).
  • If the Šturec project is shown to have a JORC Measured & Indicated Resource >1.5m oz of gold then at >2.5g/t gold equivalent then MTC wil pay Arc an additional A$2/oz royalty capped at 7moz.
  • The royalty with is applicable for two years can be paid in cash or MTC shares or some other instrument.
  • While the Šturec gold project has value, local opposition to an open cast mine and to the use of cyanide for gold extraction in the region stalled the project.
  • The sale of Šturec combined with the recently agreed sale of Casa Minerals should bring in around US$2.3m in the short term.
  • The two disposals should also reduce Arc’s running costs by around US$0.6m a year.
  • Further assays are due from recent drilling at Cheyeza East were we are looking for the drilling to show further expansion of the high-grade, near surface copper oxide zone.
  • While more drilling will be required at Cheyeza East to delineate its ultimate scale we can already see potential for several million tonnes of higher-grade copper which can be trucked down to the plant at Kalaba for processing.
  • New Cash Flow: The Kalaba plant could produce some 150-250t/month on our estimates for around $10-18m pa of sales covering a significant ramp up in exploration expenditure.

Conclusion: Arc has cleaned up a number of legacy assets cutting costs so it can focus management time and resources on the development and further exploration of its key targets in Zambia.

Funds from the two sales should enable Arc to continue to define a larger resource at Cheyeza and to confirm the viability of trucking higher-grade copper ore from Cheyeza to Kalaba starting next year.

Takeover target: The disposals complete the corporate clean up and should make the business attractive as a pure play copper company and a takeover target for an acquisitive major.

*SP Angel acts as nomad and broker to Arc Minerals


Cora Gold* (LON:CORA) 5.4p, Mkt Cap £7m – 5,000m of drilling to test lateral and dip extensions at Sanankoro

  • The Company re-mobilised the exploration team to the Sanankoro Project over the last month following the wet season.
  • The team is starting a 5,000m drilling programme at the Sanankoro Gold Discovery for completion in Q4/19.
  • The Company is planning 3,000m of drilling to test the sulphide and deep oxide potential at known mineralised zones including Selin, Zone A and Zone B (including Zone B North).
  • Additionally, 2,000m will be drilled along the northern end of the Sanankoro structure and other identified strcutures focusing on shallow oxide mineralisation.

Conclusion: The team is accelerating drilling activities at Sanankoro testing both lateral and down dip potential to grow the scope of the project. Drilling to date focused mostly on oxides within 100m from surface with less than 20% of the potential mineralised structures located on the permit area.

*SP Angel acts as Nomad and Broker to Cora Gold


Oriole Resources (LON:ORR) 0.39p, Mkt cap £2.7m – Financing for Thani Stratex Resources Djibouti

  • Oriole Resources reports that financing has been secured for accelerated exploration, including 42,000m of drilling, of Thani Stratex Djibouti’s (TSD) properties over the next three years. Oriole Resources holds a 26.1% interest in Thani Stratex Resources which owns 50% of TSD.
  • The funding, which will be available in tranches, “is being underwritten by African Minerals Exploration & Development Fund III (‘AMED Fund III’)”.
  • Work will aim to advance the Pandora, Hesdaba and Assaleyta projects, which following early promising results, have experienced “an extended period of inactivity since early 2018”.
  • The company reports that the best “drilling results to date at Pandora include 35.07 metres at 1.28 grammes per tonne gold (‘Au’) and 8.30 metres at 7.21 grammes per tonne Au”.
  • The initial “US$2.5 million tranche of the Funding will be used to undertake an initial 6,500 metres of drilling (of a total planned 42,000 metres programme), focused initially at the Pandora prospect (Oklila Licence), as well as the newly-aquired Hesdaba project, 10 kilometres northwest of Pandora, and a further project (Assaleyta”.
  • In addition, Thani Stratex Resources has “advised the Company that it has completed a Restructuring in order to spin-out TSD, which is now a standalone private company that will be managed and funded independently of TSR”. As a result Oriole Resources holds 13.05% of TSD.

Conclusion: Oriole Resources has intensified its attention on its West African exploration and the new AMED backed funding allows the exploration in Djibouti to progress independently.


Pensana Metals (ASX:PM8)  A$0.20, Mkt cap A$30m – Pensana punchy on NdPr prices in new Feasibility Study

  • Further examination of Pensana’s feasibility study issued on Friday is interesting.
  • Pensana are planning a pretty large 2mtpa plant for to process 2.8% REO grade material to get to a 37% concentrate with a 35% recovery rate.
  • Mixed conc value: The study produced some unusually high valuations based on a mixed rare earth concentrate value of US$3,821/t.
  • This is more than 2x the sales price of a similar mixed ree concentrate currently sold into the market
  • Implied NdPr price: The implied price of the NdPr ‘Neodymium and Praseodymium’ part of the concentrate would appear to be US$3,477/t implying a price of some US$46,000/t.
  • The report does not mention an assumed discount rate against published prices.
  • Discount rates: Pensana appears to be taking REE prices from Roskill’s base case forecasts of around US$80,000/t implying a discount factor of around 42.5%.
  • This may or may not be reasonable for future years but we understand that discount rates are somewhat higher than this at present.
  • Pensana may be assuming a value added concentrate with an additional stage of processing to achieve the lower discount rate
  • We are told that Chinese smelters pay 10% of the spot price for NdPr Oxide for a 70% concentrate in a Baestnasite concentrate which is seen as more valuable than a monazite concentrate as Baestnasite is typically less radioactive and easier to process.
  • Inferred resource: used in the mine plan rather than a more defined measured resource
  • Recovery rates: are relatively low with an overall TREO ‘Total Rare Earth Oxide’ recovery of 35% and an overall NdPr recovery rate of 39%
  • Monazite concentrate: there is no mention of the mineral characterisation, radionuclides, thorium or uranium content which is critical from a shipping perspective or radioactivity levels in the concentrate.
  • Radioactivity levels need to be declared for the IAEA ‘International Atomic Energy Agency. Sampling tested for thorium and uranium but the results are not shown.
  • Tailings: the study identifies mine tailings as potential raw material for brickmaking which may not be the best of ideas depending on radioactivity levels in the Thorite, a nesosilicate of thorium.
  • Pilot plant: for bulk sample, metallurgical testing has yet to be completed.
  • Logistics: The reopening of the historic Caminho de Ferro de Benguela railway following US$1.8m of investment connects Pensana’s Longonjo project to the project with the port of Lobito.
  • While the restored line had its final handover to the Angolan government in a formal ceremony on 3rd October the line is said to have some issues. The Benguela Railway was first built by Sir Robert Williams a Scottish engineer.
  • Offtake: there appears to be no offtake partner as yet with the company planning to produce concentrate product for assessment by potential offtake customers from the proposed pilot plant.
  • Complex flow sheet: yet to be tested.

Conclusion:  This is an ambitious and possibly aggressive feasibility study which is based on Pensana’s current production expectations and uses some interesting metrics for NdPr metal and concentrate pricing.

While we feel equally bullish on the outlook for NdPr pricing due to growing demand for wind power and electric vehicles NdPr prices are currently closer to US$40,000/t and by our reckoning this indicates Pensana are working on a near 100% price increase in this study.


Tri-Star Resources* (LON:TSTR) 37p, Mkt Cap £35.2m – First production of commercial grade antimony metal

(Tri-Star holds 40% in ‘SPMP’(Strategic & Precious Metals Processing LLC) which owns the antimony-gold processing facility in the Port of Sohar Free Zone, Oman)

World’s first Clean Plant designed to EU Environmental standards.

Target gold capacity 50,000ozpa, antimony 20,000tpa

  • Tri-Star resources reports that its’ 40% owned SPMP antimony and gold treatment plant has now produced antimony metal at the industry standard grade of 99.65% and that it is now focussing on moving to full scale commercial production.
  • The company says that “subject to the successful completion of the current financing round” it expects to reach 50% of design capacity “by mid-2020 and 100% of capacity by the end of 2020”.
  • Tri-Star Resources also reports that it “has received expressions of interest from potential customers equal to almost double the annual output of 20,000 tonnes of antimony metal or its antimony trioxide” which has confirmed its confidence “that there will be high demand for its antimony output as customers wish to diversify away from their reliance on the currently dominant Chinese suppliers of antimony and antimony trioxide”.
  • The company has now secured, subject to contract, agreement “for the supply of approximately one third of the feedstock required for 2020 and is in discussions with other suppliers for the balance”.
  • As well as the achievement of production of commercial grade antimony, Tri-Star Resources also reports that it has made its first gold sales from doré containing over 25% gold content.
  • Chairman, Adrian Collins confirmed that, with a focus on commercial production, “we are advancing offtake agreements with potential buyers keen to diversify away from their reliance on the current dominant Chinese suppliers; expressions of interest have been received equal to almost double our anticipated annual output of 20,000 tonnes of antimony metal”.
  • Mr. Collins also explained that “Given the robust market fundamentals for our products including high-grade antimony ingots, antimony trioxide and gold dore together with the planned ramp up of production, SPMP is at a tipping point”.

Conclusion:  Tri-Star Resources has reached a milestone with the production of commercial grade antimony from its environmentally advanced plant in Oman. The focus is now on building up production to 50% of the planned 20,000tpa capacity by mid-2020 and to full production by the end of 2020 although the company reports enthusiasm from potential customers to double these levels of output.

*SP Angel acts as Nomad to Tri-Star Resources. David Facey, a former partner at SP Angel is the CEO & CFO at Tri-Star Resources.



John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474



Richard Parlons – 0203 470 0472

Abigail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535


SP Angel                                                            

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35-39 Maddox Street London



*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.


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