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Bulletin Board Heroes, Thursday 16th January 2019 @ZaksTradersCafe
Asiamet Resources #ARS Allied Minds #ALM Digitalbox #DBOX Emmerson #EML Elecosoft #ELCO Hemogenyx Pharm #HEMO Tremor International #TRMR Warpaint London #W7L
The existing mining operation at Otjozondu (located at ML145) was already producing 6,000 tonnes of manganese ore per month in Nov and plan to ramp up production to 29,500 tpm by Dec 2020. January will be the first revenue producing month since #PREM converted the loan to equity.
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Strategic Minerals* (SML LN) 0.575p, Mkt Cap £8.4m –Leigh Creek feasibility progress Strategic Minerals reports details of its updated mineral resource estimation and feasibility analysis for its Leigh Creek copper operation in South Australia where the company is working to restart production of a copper cement product containing a minimum 70% copper.
The plan envisages a three-phased development with an initial production of around 300tpm of copper in approximately 500 tonnes of product from the Mountain of Light plant fed, initially, with ore from the nearby Paltridge North and Rosmann East deposits before advancing to the second stage expansion of resources within the company’s 1,250km2 leases and moving to the phase 3 regional scale exploration and commercialisation of “copper in the wider North Flinders Ranges, including projects that are not currently owned by LCCM”.
The company reports that “Stage 3 is designed to extend the mine life to more than 15 years”.
As a result of recent drilling at 10m intervals along 30, spaced section lines the Paltridge North (9,223m) and Rosmann East (1,887m) deposits are relatively well understood despite a wastere ratio of 2.8:1, have been identified for the initial development because of their location close to the Mountain of Light plant.
The drilling shows an indicated resource totalling 1.22mt at an average grade of 0.77% copper plus an additional inferred resource of 0.6mt at an average grade of 0.66% copper. Approximately 75% (0.91mt at a grade of 0.8% copper) of the indicated resource is located at Paltridge North with the balance at Rosmann East (0.31mt at 0.67% copper).
Geological interpretation shows that at Paltridge North, the mineralisation “occurs as a broadly flat lying body of oxide copper mineralisation (malachite and azurite) from approximately 10-15m below the surface” extending over an area “of over 700m x 140m and an average thickness of around 15m”. At Rosmann East, mineralisation “occurs from a surface abutting a steeply dipping diapiric breccia. … Remnant oxide mineralisation (malachite and azurite) occurs below the existing pit floor and continues along strike, with a total strike continuity of almost 400m”. Both deposits are reported to grade into supergene sulphide mineralisation at depth.
The company’s mine development plan is based around owner operated mining, using a fleet of second-hand mining equipment to help contain costs. Based on start-up capital expenditure of US$1.75m, average production costs of US$1.50/lb of copper and a copper price of US$6,614/t (US$3/lb) and a mine life of almost 5 years, the company expects the development of the Paltridge North and Rosmann East deposits to generate an IRR of 105% from the sale of approximately 5,600t of copper product.
A similar analysis for the Lynda and Lorna Doone deposits which have a lower wastere ratio of 1.1:1 and more straightforward metallurgical characteristics and will be developed as part of Phase 2, suggests a lower production cost of US$1.23/lb and start-up capital of US$1.77m generating an IRR of 117% from the production of 13,549t of copper over a life of approximately 8 years. The second phase projects are still subject to permitting.
Sales of an initial 5 tonnes of copper cement product were announced in May this year and this, allied to the detailed resource planning and metallurgical testing and frugal approach to capital expenditure helps to de-risk the initial development of the Rosmann East and Paltridge North deposits. Experience gained during Phase 1 should also feed through to optimising the Phase 2 stages of the project and help to establish Strategic Minerals’ operating credentials as it advances to the Phase 3 of its plan to expand its presence in the North Flinders Ranges.
Conclusion: Strategic Minerals has evolved a detailed plan for its staged development of Leigh Creek at low capital cost to generate returns of more than 100% IRR for the first two phases. The decision to use second hand mining equipment is, we suspect, a significant contributor to the low capital cost and its success will hinge on the day-today operating expertise of the on-site and corporate management team.
*SP Angel acts as Nomad and Broker to Strategic Minerals
SP Angel posted on #SML https://www.voxmarkets.co.uk/activity/160134
Some reasonale sinking rates achieved by SBR in Belarus - see end:
Sinking of Two Freeze Shafts by Using the Mechanized Shaft Boring Roadheader (SBR) Technology for the Slavkaliy Nezhinsky Potash Mine in Belarus Jochen Greinacher, CEO, Redpath Deilmann GmbH In 2017, Deilmann-Haniel signed a contract with IOO Slavkaliy to sink two 750 m deep freeze shafts for the Potash mine Nezhinsky in Belarus. This is the second shaft project where this technology was employed after two >1000 m deep shafts were sunk for a potash project in Saskatchewan, Canada, by application of the Herrenknecht Shaft Boring Roadheader (SBR) technology. Developed to sink shafts for greenfield projects in soft to medium hard rock in frozen or unfrozen geology, the technology uses a roadheader type cutterhead on a telescopic boom to mechanically excavate the rock and a pneumatic mucking system to convey the muck from the face into the buckets. This leads to a manless face during the sinking cycle and thus a significant improvement in terms of work place safety. For the Nezhinsky project, the SBR design was significantly modified in close cooperation between Deilmann-Haniel and Herrenknecht, based on the available experience and special requirements of the project. The modifications included adapting the Pneumatic Mucking System to cope with wet material (as well as dry material as originally planned) or moving the shaft lining from shotcrete application to jump for and tubbing installation for which a step-change hands-off tubbing erector for the placement of segments was designed. Further modifications to optimize the machine technology for the requirements during shaft sinking were applied on the two machines for the Slavkaliy project as well as several revisions to match the special project requirements. The SBR is suitable for soft and medium hard rock up to 100 MPa UCS. The main design limits are the maximum weight of the machine (400 tons) and length or height (50 m) due to SHAFT2019.CIM.ORG | #SDC2019 29 the depth of the pre-sink. The Pneumatic Mucking System was changed in all components, sheaves and rope arrangements were redesigned, and the concept of the hoist system was also re-engineered. The SBR in Belarus is configured for a daily sinking rate of 3 m and all systems behind the cutting boom are not the bottle neck of the whole system. The work on site began in November 2017, including freeze hole drilling, construction, site setup, and installation of hoist winches, permanent headgears and other components required for sinking. The SBRs arrived onsite in June/July 2018 and were preassembled on surface and then lowered in the 50 m pre-sink. SBR #1 started full face sinking in mid-December 2018, and SBR #2 in late January 2019. By the end of February 2019, SBR #1 and SBR #2 were at 150 and 100 m depth, respectively, and achieved up to 3.6 m/day concrete lined shaft.
Sirius Minerals (SXX LN) 3.0p, Mkt cap £211m – Sirius relegated to the SmallCap index as it falls out of FTSE 250 • Sirius Minerals continues its fall from grace as the FTSE chucks it out of the FTSE 250 index with the stock relegated to the SmallCap index.
• Press reports in the Daily Mail saying the CEO would take the company private are apparently a misquote according to ‘The Motley Fool’ this morning
• The company’s plans to build the Woodsmith mine into a 10mtpa Poly 4 (polyhalite) producer collapsed when the company failed to raise $500m in the bond market.
• A further $400m of convertible funding was also dependent on the $500m to be raised.
• Even if the $500m + $400m had been secured the funds appear to be well short of the original estimated BFS capital cost bill and were even further short of revised BFS capital cost estimate of >$5bn
• The Bond market may have refused to take the $500m high-yield Junk bond issue offered for a number of reasons. One issue appears to be the lack of offtake commitments for the Poly 4 product to be produced by the mine.
• We understand the current market size for this product is around 2.5mtpa so expanding this to 10mtpa is a tall order by any metric. Although slide 9 in Sirius’s AGM presentation shows total peak aggregate supply agreements of 11.7mtpa and a footnote indicating 13.4mtpa including customer options which leaves us wondering how the company fell short on its offtake.
• Furthermore the company shows a slide illustrating its EBITDA sensitivity at a production volume of 13mtpa, a wholesome ~10mtpa over the current estimated market size for this type of fertilizer product.
• Sirius also shows slide 16 on their indicative financing and capex funding in the June AGM presentation highlighting its cumulative capital cost of over $5bn based on the SRK CPR with the exception that prices and costs are nominal, inflated at 2% and highlighting that the expansion to 13mtpa will cost a further $367m.
• The funding plan included $50m from Hancock equity to be received upon entry into definitive documentation for the Stage 2 Financing
• The killer footnote for us is that the funding slide, proposal is ‘Based on the expectation ofUS$2,500m facility being available with US$1,000m in further liquidity provided after all high yield bond issuances.’
Conclusion: While we have some admiration for anyone who has the balls to present this sort of financing proposal at an AGM to investors we are of the view that the prospect of raising of this level of funding for a single project company with no production is pure ‘fantasy’ and is something that is best left to the likes of Rio Tinto or BHP Billiton which have the requisite cash flow and more importantly the technical ability to construct this type of mine.
SP Angel posted on #SXX https://www.voxmarkets.co.uk/activity/158786
Central Asia Metals (CAML LN)# Central Asia Metals (CAML LN) has delivered another quarter of strong production with QoQ increases in copper, lead and zinc production of 11%, 3% and 5% respectively and annual increases of 3% and 8% for copper and zinc while lead production was marginally lower YoY by -3%. With Q3 2019 production of 4kt of copper, 6.2kt of zinc and 7.4kt of lead CAML is well on track to meet the initial guidance and our production estimates for the full year 2019.
At Kounrad, nine-month production of 10.6kt is broadly unchanged YoY while sales of 10.1kt were lower due to a delay in the timing of sales in Q3. We expect this to be resolved over the balance of 2019. Our forecast of 13.4kt for the full year now appears conservative given that CAML has now produced 79% of our estimate, however, company guidance remains unchanged at 13-13.5kt of copper and there is typically a seasonal impact in Q4 due to the winter and therefore we maintain our forecast. We also note that CAML completed preparations increasing flow capacity at Kounrad with increased pipeline diameter on certain sections as well improvements to the collector trenches around the dumps.
At Sasa ore mined of 207kt was up 2.3% QoQ and 0.3% YoY while plant feed was also up 3% QoQ and 2% YoY to 210.2kt. As we have forecast, the initial changes to operating practices which are already being implemented due to the life of mine review which is currently underway. Zinc grades of 3.37 % were up in the quarter having averaged 3.31% YTD while recoveries further improved to 87.3% having averaged 86.9% YTD. This is also likely a result of the life of mine review improvements to the flow sheet and the successful integration of a stirred media detritor into the circuit. Lead grades were marginally lower at 3.71% compared to 3.74% YTD while lead recoveries were maintained through Q3 at 94.4%. CAML has now produced 77% of our zinc forecast of 22.9kt and 75% of our lead forecast of 28.9kt and we therefore leave our estimates unchanged.
Having delivered a further period of robust operating performance we continue to expect CAML to deliver strong earnings performance through the balance of 2018 while trading on a dividend yield of 7% and on a one yr forward EV/EBITDA multiple of 4.6x we continue to believe there is significant upside potential in the shares.
We reiterate our Buy recommendation and 292p target price which implies 44% upside and 51% on a total return basis.
VSA Capital posted on #CAML https://www.voxmarkets.co.uk/activity/157823
Vast Resources* (VAST LN) 0.22p, Mkt Cap £21m – Vast to agree agreement between Katanga and ZCDC next week at Chiadzwa in the Marange diamond fields Heritage Diamond Concession (Block T1A, 75% profit sharing agreement)
• Vast Resources which has the ‘Katanga’ joint venture with Chiadzwa Mineral Resources which represents the Chiadzwa Community interests is to agree to work with ZMDC (Zimbabwe Consolidated Diamond Company).
• The agreement also settles historic claims by mutual consent.
• Vast will update the market on the financing mechanism for the joint venture in due course
• The deal should enable Vast to fast track the Heritage Diamond Concession alluvial diamond concession using a simple XRT sorting circuit.
• The Marange Diamond Fields are still seen as highly prospective having supplied some 60mcts to date.
• The Chiadzwa local community secured the mining license with the Company and will expect trial mining to start following agreement with ZMDC.
• An independent geological assessment previously indicated highlighted the prospectivity of the concession with proximal placers draining the Marange Diamond Fields showing grades of 50-500cpht attracting average prices of $80/ct. Grades are estimated more typically to be 100-200cpht.
• There is potential for discovery of some remnants of the basal Umkondo (conglomerate) unit in the concession, which runs at grades from 100-3,000cpht elsewhere in the Marange Diamond Fields.
• Vast’s own projections are based on 50cpht and $60/ct suggesting the site may potentially generate $15m in revenue on expenditure of $6m per quarter in six months and cost $10m in capex..
• The Marange diamond fields are known for their rich diamonds and have previously subjected to targeted EU Sanctions on ZMDC, the Zimbabwe state mining company. Vast is looking to mine an area at Marange that has not been previously mined by the Zimbabwe state or a Chinese military group which was said to have taken over an area of the Marange diamond fields at one stage.
• The government evicted all diamond mining companies in 2016 including two Chinese joint venture companies from Marange after they refused to merge with ZMDC. The move may have been part of a broader purge of Chinese companies which were seen to be exploiting Zimbabwe.
• The Heritage concession is owned by the Marange-Zimunya Community Share Ownership Trust which has kept the concession free of exploitation and has received an undertaking from the Government of Zimbabwe for a licence to mine on the Heritage Concession.
• The Marange diamond fields have been the subject of a Global Witness investigation uncovering evidence linking Zimbabwe’s state and partisan security forces to a decade of disappearing diamond wealth.
• Chinese and other mining companies have been accused of syphoning value out of Marange and while much of the easy-to-mine alluvial diamonds have been mined western mining knowhow is needed for the development of more sophisticated mines.
• Local community groups are also keen to regain control over rights to mine the Marange licenses and have invited Vast to exercise their former rights to mine certain licenses. There is no suggestion of any improper links with the military.
*SP Angel acts as Broker to Vast Resources
SP Angel posted on #VAST https://www.voxmarkets.co.uk/activity/157346
Anglo Pacific Group PLC (“Anglo Pacific”, the “Company”) (LSE: APF, TSX: APY) is pleased to announce that it has entered into an agreement with a subsidiary of Mantos Copper (“Mantos”), to acquire a 1.525% Net Smelter Return royalty (“NSR”) over all copper produced at the Mantos Blancos copper mine (the “Mantos Blancos Mine”) in exchange for an upfront cash consideration of US$50.25 million.
Anglo Pacific Group PLC Acquisition of a producing copper royalty @AngloPacificPLC https://www.voxmarkets.co.uk/rns/announcement/f9934bbe-76f5-4a47-8175-7078e1c9aa73
#ARS #MOD #MTR #SOLG #VAST
UK Oil & Gas PLC (LON:UKOG), the operator, announced that the Oil and Gas Authority has granted a two-year extension to the initial term of the PEDL143 (UKOG 67.5%, northern Weald, "A24" prospect) licence. The initial term will now end on 30 September 2022.
PEDL143 is located to the west of UKOG’s Horse Hill licences and contains the significant "A24" Portland and Kimmeridge oil prospect. Multiple potential drilling sites outside the nearby Area of Outstanding Natural Beauty are under evaluation and a drilling program will commence is due course, subject to the granting of the necessary regulatory approvals.
We reiterate our Buy recommendation and 39p target price.
Oliver O'Donnell, CFA, Natural Resources & China | T: +44 (0)20 3617 5180 | E: email@example.com
Samuel Green, Equity Analyst | T: +44 (0)20 3005 5010 | E: firstname.lastname@example.org
#Indicates VSA house stock.
All disclosures and supporting charts can be found in the PDF version.
VSA Capital Research | T: +44 (0)20 3005 5000 | E: email@example.com
Turner Pope Research NoteToday 12:17
W Resources (WRES) is currently focused on near-term production from its wholly-owned La Parrilla tungsten and tin mine located in southwest Spain.
The Company is in the final construction stage of the new large-scale concentrator plant and has already commissioned the new crusher and jig plants. The newly commissioned crusher and jig plants are now operating at near design capacity. As such, we expect the Company will be able to ramp-up production during Q3 2019.
@WResourcesPlc (LON #WRES) Turner & Pope Investments PDF link & Video
https://www.share-talk.com/w-resour...o/?utm_source=twitter&utm_medium&utm_campaign … via @share_talk
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We value the La Parrilla project on a DCF basis given its near-term production and provide a relative valuation based on our selected tungsten explorers for the Régua project. Assuming a discount rate of 10%, a flat long-term tungsten price of US$300/mtu and inputs from the FID, we calculate an NPV of £85.1m or 1.41p per share. To this we then add an implied EV of £3.9m or 0.07p per share, based on our average EV/resource multiple of US$3.2/mtu to the Régua project. Taken together, we calculate an indicative enterprise value of £89.0 which translates into an equity value of £64.8m or 1.07p per share, representing a 155% upside to WRES’ current share price.
Wolf Minerals (WLFE LN) SUSPENDED – Liquidators selling spirals from Drakelands • The announcement today by W Resources included the information that the liquidators of Wolf Minerals had sold 72 spirals from the mothballed Drakelands mine in Devon.
• It is unclear whether all of the spirals from Drakelands have been sold or whether some remain on site but their disposal suggests that efforts to reopen the mine under new ownership are proving difficult.
• In our opinion, as long as the principal items of the crushing and grinding circuit remain on site, the re-opening of Drakelands remains relatively achievable as spirals should be comparatively inexpensive and straightforward to replace. However, with the current price of the benchmark ammonium paratungstate price languishing at levels last seen in early 2017, potential purchasers may be few and far between – or may simply be taking a hard-headed view of the acquisition price.
• In addition to the continuing difficulties at Drakelands, yesterday’s news of the setback to funding the Sirius Minerals project in Yorkshire casts a further shadow over hopes of a resurgence in the UK mining industry.
SP Angel posted on #WLFE https://www.voxmarkets.co.uk/activity/154694
“Panorama Project - commenced aeromagnetic ground surveys on July 15th. Results due!
Firetower project - drilling commenced June 19th. News due!
Stage One of Havieron’s JV drilling campaign in its later stages. Will #Newcrest commit another $10m expenses and move to stage 2? Any more strikes like these and they’d be mad not to. Stay tuned for more core results this month!
Patterson Range East - Comprehensive ground gravity and surface geochemistry is expected to commence in August.
Black Hills - 4 weeks of drilling completed. News due soon!”
It would seem that we are due updates 2-3 of these either this week or next?