SP Angel . Morning View . Wednesday 06 10 21

Rising energy prices lift inflation and monetary tightening concerns


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Anglo American (LON:AAL) – De Beers commissions survey of ocean floor off the coast of Greenland

Ariana Resources (LON:AAU) – Drilling results from Kokkinoyia

Atalaya Mining (AIM:ATYM, TSX:AYM) (LON:ATYM) – Drilling success at Masa Valverde prompts extension of drilling campaign

Bushveld Minerals* (LON:BMN) – BUY – Valuation 33p – Vanchem kiln 3 to lead expansion of vanadium

Oriole Resources (LON:ORR) – Cameroon gold targets identified

Peak Resources (ASX:PEK) – Royalty repayment agreement completed

PureGold Mining (LON:PUR) – Anglogold Ashanti invest C4.45m into PureGold

Iron ore continues to fall as regulators ban use of bank loans and finance from futures speculation

Chinese regulators have banned the use of bank loans and finance from being used for speculation in key commodities pulling back on futures trading and causing overblown markets like iron ore to fall.

The speculative activity has probably cost China >US$100bn based on Chinese imports of 1.17bnt last year and assuming futures trading added around $100/t to the iron ore price.

Regulators also suggest that investment in related stocks, bonds and futures markets could also violate regulations.

European coal futures climb to 13-year high on soaring LNG prices and Asian demand

European 2022 futures contract hit $179.25/t, rising 6.7% to 2008 highs.

Coal-fired power generation in Europe has increased as natural gas prices skyrocket.

Australian coal cargoes settled at $230/t on Friday.

Chinese coal demand has soared after the combination of a cold 2020/21 winter and a hot 2021 summer alongside a ramp up in economic activity.

Gold $1,747/oz – Rising dollar and bond yields continue to limit appeal as US dollar and 10-year Treasury yields hit highest level since June.

Focus will be on ADP’s National Employment Report this afternoon following September’s disappointing non-farm payroll numbers.

Another weak employment report could reduce the Fed’s appetite for an early taper lifting gold prices.

India’s gold imports rise 658% as buyers snap up bargain prices before Diwali

Gold’s 6-month low saw India’s September imports rise 658% vs last years.

India imported 91t of gold in September vs 12t in Sept. 2020.

This saw a value increase from $601mn to $5.1bn a year ago.

Jewellers stocked up as the rupee appreciated and gold prices fell.

Jewellery stores have seen increasing footfall as the pandemic eases and retail demand has been strong during festival season.

An Indian bullion dealer expects October imports to rise above 100t from 45t in Oct. 2020.

US mining royalty bill criticised by Senators

The Senate Committee on Energy and Natural Resources (ENR) has blasted the Democrat’s attempt to alter America’s mining laws.

The Democrat bill proposal looks to gain royalties from copper, lithium and other minerals extracted from Fed land.

Nola, head of the National Mining Association, sees the mining of metals needing to ‘be incentivised, not stalled’ owing to their importance in the ‘electrification of the economy’.

The bill would add an 8% gross royalty bill on existing mines and 4% on new ones alongside a 7c fee for each rock moved.

Democrats claim the bill would raise $2bn in 10 years for Federal coffers.

The bill would damage Barrick and Newmont’s JV Nevada Gold Mines as most of Nevada is Fed-owned.

The Democratic committee also hinted at blocking Rio’s Resolution copper mine in Arizona on which the Company has already spent $2bn.

Copper – Global copper smelting activity recovers in September

Higher treatment charges encouraged smelters to ramp up output according to satellite surveillance.

A report from satellite services firm SAVANT and broker Marex shows that global copper processing rose despite top producers US and China reducing output.

SAVANT’s service tracks 100 smelters which represent 80-90% of production.

Chinese spot treatment and refining charges (TC/RCs) has risen 45% in 3Q 2021.

High sulphuric acid and soaring metal prices have also contributed to rising production.

Nickel smelting activity fell significantly on China’s power curbs and Philippines’ monsoon season is expected to further limit production.

US’ smelting operations are ‘proceeding cautiously’.

Peru deal avoids road blockades at Las Bambas mine as government reaches agreement with local community and operator MMG.

MMG has agreed to hire more Chumbivilcas residents at the mine which produces ~2% of global copper.

Las Bambas was forced to suspend production for 3 weeks as residents blocked a key mining corridor.

There is also a similar dispute ongoing in the nearby Cotambas community who also seek higher expenditure within their area.

Vale’s Salobo copper concentrate output halted on belt fire

Brazil’s mining giant Vale has suspended production of copper concentrate at the Salobo mine due to a fire on a conveyor.

Copper concentrate production is expected to resume by the end of October though mining and maintenance will continue.

Salobo produced half of Vale’s copper output in 2020 at 172,700t.

Dow Jones Industrials +0.92% at 34,315

Nikkei 225 -1.05% at 27,529

HK Hang Seng -0.30% at 24,031

Shanghai Composite CLOSED at 3,568


The IMF expects global growth to slightly underperform its July forecast for 6% on the back of risks associated with debt, inflation and a diverging growth momentum between developed and most emerging economies.

In a speech at Bocconi University in Italy, IMF chief Kristalina Georgieva said next week’s updated WEO would show the global economy is bouncing back but the pandemic continues to limit the recovery.

Advanced economies are expected to return to pre-pandemic levels of economic output by 2022 while most emerging and developing countries will need “many more years” to recover.

Germany – Industrial orders dropped sharply in August exceeding market estimates for a pullback and fuelling concerns that supply bottlenecks remain a drag on industrial activity, FT writes.

Foreign orders were down 9.5%mom with domestic orders down 5.2%mom.

Factory Orders (%mom): -7.7 v 4.9 (revised from 3.4) in July and -2.2 est.

Factory Orders (%yoy): 11.7 v 26.1 (revised from 24.4) in July and 16.4 est.

The Greens are planning to start exploratory talks with Social Democrats and the pro-business Fee Democrats on course to establish a three-way coalition.

The news comes after party’s co-leaders A Baerbock and R Habeck met with their counterparts in the Cristian Democrat-led bloc and differences prevailing in negotiations.

Parties are aiming to form a coalition as quickly as possible and elect next chancellor by Christmas avoiding protracted negotiations as seen in 2017 when it took nearly six months to form a government.

South Korea – Inflation ticked down in September, although, came in slightly ahead of market estimates following a decision by the central bank to increase rates in August.

Monetary authorities surprised markets lifting rates by 25bp to 0.75% in August.

The inflation has now topped the Bank of Korea’s 2% target for a sixth straight month suggesting the central bank may raise rates again at one of its two remaining meetings this year.

CPI (%mom): 0.5 v 0.6 in August and 0.4 est.

CPI (%yoy): 2.5 v 2.6 in August and 2.4 est.

New Zealand – The central bank hiked rates by 25bp to 0.5% in line with expectations becoming only the third developed country to increase rates since the start of the pandemic.

The decision follows dropped plans to raise rates in August when lockdowns were put in place to fight an outbreak of the Delta variant.

“Further removal of monetary policy stimulus is expected over time, with future moves contingent on the medium-term outlook for inflation and employment,” the RBNZ added.

Rates were increased despite Auckland remaining under lockdown and with the rest of the country under some level of Covid alert.

Although the RBNZ said that the current restriction had not “materially changed the medium-term outlook for inflation and employment”.

The NZ dollar traded lower this morning highlighting the decision was widely expected and as the risk sentiment pulled back on concerns for higher oil prices weighing on a recovery that is showing signs of slowing down.

Zimbabwe – Gold production rises 29% in the first nine months of 2021

Gold production rose to 18,900kg (667koz) in Jan-Sept, compared to 14,650kg a year earlier, according to the country’s central bank.

Zimbabwe generates most of its foreign exchange earnings from mining, with major contributions form gold, platinum and chrome.


US$1.1575/eur vs 1.1594/eur yesterday. Yen 111.71/$ vs 111.21/$. SAr 15.132/$ vs 15.079/$. $1.359/gbp vs $1.359/gbp. 0.724/aud vs 0.726/aud. CNY 6.445/$ vs 6.445/$.

Commodity News

Precious metals:

Gold US$1,749/oz vs US$1,756/oz yesterday

Gold ETFs 98.9moz vs US$98.9moz yesterday

Platinum US$952/oz vs US$961/oz yesterday

Palladium US$1,895/oz vs US$1,906/oz yesterday

Silver US$22.38/oz vs US$22.47/oz yesterday

Base metals:

Copper US$ 9,061/t vs US$9,165/t yesterday

Aluminium US$ 2,913/t vs US$2,907/t yesterday

Nickel US$ 18,080/t vs US$17,825/t yesterday

Zinc US$ 3,048/t vs US$3,017/t yesterday

Lead US$ 2,155/t vs US$2,144/t yesterday

Tin US$ 35,200/t vs US$34,250/t yesterday


Oil US$83.3/bbl vs US$81.6/bbl yesterday

Oil prices continue to tick up following news from OPEC+ that the group will stick to its current output policy

OPEC+ agreed in July to boost output by 400,000bopd each month until at least April 2022 to phase out 5.8MMbopd of existing production cuts

Demand for coal and natural gas has exceeded pre-pandemic highs with oil closely trailing, according to the EIA

OPEC+ has faced pressure from some countries to add back more barrels to the market as demand has recovered faster than expected in some parts of the world

Elsewhere, the American Petroleum Institute (API) reported another surprise build in crude oil inventories of 951,000bbls for the week ending 1 October

This compares to analyst expectations for a loss of 300,000bbls for the week

It is the second week in a row that estimates were on the wrong side of zero

On the supply side, Hurricane Ida disrupted production in the US Gulf of Mexico, and some OPEC+ members are struggling to pump to the full capacity of their quotas

In addition, US shale producers have shown remarkable discipline in drilling activity despite the fact that WTI has been trading above US$60/bbl for nearly six months

Many analysts and oil companies see global oil demand returning to the pre-crisis levels of 2019 as early as the start of next year, if not earlier, by the end of 2021

Oil demand worldwide is expected to hit 100MMbopd by the end of this year or in early 2022, whilst demand next year is set to rise to 102MMbopd

Natural Gas US$6.421/mmbtu vs US$5.884/mmbtu yesterday

Natural gas futures jumped to the highest settlement price in 12 years in New York as global gas supply shortages stoke concerns for US shortages

As the northern hemisphere heads into winter-heating season, low US auxiliary supplies have sparked concerns about potential shortages as demand for the furnace fuel ramps up

Gas futures rose 9.5% to close settle at $6.312/mmbtu units on the New York Mercantile Exchange, the highest close since December 2008

Gas prices in Europe and Asia are trading four times over US gas due to demand for the fuel in Asia and low stockpiles in Europe ahead of the winter heating season, when demand peaks

The UK’s NBP virtual trading hub for natural gas also hit a record-high price, with front-month contracts reaching an all-time high yesterday afternoon

The surge in natural gas prices is also due to a massive supply shortage in Europe, a situation that is quickly spilling over into other countries and other markets, including the coal and oil markets as demand for power exceeds supply

The natural gas crisis is set to intensify as winter heating season approaches, with supplies insufficient to keep up with current demand, let alone build stockpiles for what will be increased demand in the cold season

Europe’s natural gas crisis has prompted European fertilizer producers to curb output, which could send food prices soaring along with the natural gas prices

It has also sparked warnings of blackouts and factory shutdowns

If the winter is colder than normal, natural gas supplies could run even shorter, leaving Europeans and possibly other countries, especially those that can barely afford current energy prices, in the cold


Iron ore 62% Fe spot (cfr Tianjin) US$117.3/t vs US$117.0/t

Chinese steel rebar 25mm US$899.2/t vs US$899.2/t

Thermal coal (1st year forward cif ARA) US$190.0/t vs US$179.3/t

Australia Newcastle thermal coal spot FOB US$196/t

China Qinhuangdao thermal coal spot FOB US$146/t

Coking coal swap Australia FOB US$361.0/t vs US$361.0/t

China Ilmenite Concentrate TiO2 US$379.38/t vs US$379.4/t


Cobalt LME 3m US$53,380/t vs US$53,380/t

NdPr Rare Earth Oxide (China) US$92,943/t vs US$92,943/t

Lithium carbonate 99% (China) US$26,533/t vs US$26,533/t

China Spodumene Li2O 5%min CIF US$1,110/t vs US$1,110/t

Ferro-Manganese European Mn78% min US$1,800/t vs US$1,803/t

China Tungsten APT 88.5% FOB US$305/t vs US$305/t

China Graphite Flake -194 FOB US$555/t vs US$555/t

Europe Vanadium Pentoxide 98% 8.1/lb vs US$8.1/lb

Europe Ferro-Vanadium 80% 31.75/kg vs US$31.75/kg

Spot CO2 Emissions EUA Price US$72.9/t vs US$73.1/t

Battery News

Vanadium redox flow battery start-up raises $3mn in initial funding round

Singapore energy storage start-up VFlowTech has raised $3mn in pre-Series A funding.

Investors include VC firms Seeds Capital and Sing Fuels.

The firm is also backed by Temasek and Enterprise Singapore.

The funding will help the firm provide industrial-scale vanadium redox flow technology.

VRBs are lower cost and offer longer energy storage durations.

It is targeting EV charging stations and has partnerships with Seoul University and CompanyWe.

Shell makes maiden entry into UK solar market

Shell has unveiled its first ventures into UK solar development, announcing two partnerships that will see it develop more than 800MW of capacity.

The first of these projects, in partnership with developer Island Green Power, is for an initial 700MW of capacity with potential for battery storage on site.

The second project, for 100MW of capacity and potential storage, will be developed with Clearstone Energy.

Shell’s UK solar foray comes as Prime Minister Boris Johnson confirmed plans to switch British power generation to an overwhelmingly renewable and nuclear base by 2035 – a task that would require huge additions of new wind and solar, alongside storage and a revamped grid.

Large-scale solar projects will later this year be eligible to compete in UK government renewable energy auctions after five years of being excluded from the process.

Haliade-X prototype operates at 14 MW for first time

GE Renewable Energy announced that its Haliade-X prototype in Rotterdam has started operating at 14 MW.

By reaching this milestone, GE becomes the first industry player to operate a turbine at this power output.

The Haliade-X 14 MW is an uprated version of the Haliade-X 13 MW, which received its type certification in January 2021 – GE has now officially started certification measurements on the Haliade-X 14 MW.

One of the new turbines can generate up to 74GWh of annual energy production.

The first Haliade-X prototype was commissioned in November 2019 at 12MW and in the last two years GE have worked on optimising the performance to reach the 14MW rating of the latest prototype.

The Haliade-X 14 MW will be first used commercially at the Dogger Bank C offshore wind farm, off the north-east coast of England – with Dogger Bank A and Dogger Bank B, the project is due to become the largest offshore wind farm in the world upon completion.

GE Renewable Energy will provide 87 units of the Haliade-X 14 MW for Dogger Bank C.

SB Energy reach major agreement for flow battery technology

A subsidiary of Japanese SoftBank Group, SB Energy, has reached an 5-year agreement to purchase 2GWh of iron flow energy storage from US-based manufacturer ESS.

ESS produces flow batteries of various sizes that can provide up to 12 hours of output – the company has also developed a large-scale battery system starting at 3MW with durations of between 6 and 16 hours for use by power providers and large manufacturers.

As part of the deal, SB Energy will deploy iron flow battery systems to complement solar power projects in Texas and California – the first system has already been delivered to a solar generation site in California and will be installed this month.

Mining giants pledge net zero carbon emissions by 2050

The International Council on Mining and Metals (ICCM) has announced 2050 as the target for net zero direct and indirect carbon emissions.

28 chief executives of the world’s largest mining companies have signed the agreement.

Rio, Anglo American and BHP had all already committed to the 2050 net zero target.

The ICCM spans 650 sites and 50 countries and has agreed to submit annual reports on their decarbonisation progress.

Removing diesel trucks and utilising renewable energy on site are two of the initial steps the ICCM plans to take.

Members including Barrick Gold and Alcoa (NYSE:AA) have collectively cut emisisons by 6% between 2016-18.

Company News

Anglo American (LON:AAL) 2,525p, Mkt Cap GBP34bn – De Beers commissions survey of ocean floor off the coast of Greenland

De Beers has commissioned an eight-day survey of around 800km of seabed off Greenland’s west coast, ending Thursday last week in the first step to determine whether it could hold diamond deposits.

The survey was carried out by the Geological Survey of Denmark and Greenland (GEUS) on behalf of De Beers.

De Beers said the preliminary survey was carried out at a water depth of between 50 and 200 meters in order to determine “whether the offshore environment is conducive to the formation of secondary diamond deposits”

Deposits of diamonds are known to be present onshore in West Greenland, and offshore diamonds are generally of higher quality and command a higher price because any gems with flaws tend not to survive the journey out to sea.

Ariana Resources (LON:AAU) 4.3p, Mkt Cap GBP46m – Drilling results from Kokkinoyia

Ariana Resources has reported results from its drilling at the Kokkinoyia prospect in Cyprus which forms part of its wholly owned Venus Minerals’ Magellan project.

Venus Minerals currently holds a 37.5% interest and is expecting to earn 50% by early Q4 2021 as a result of its exploration expenditures.

The company says that a total of nine drillholes (1,579m) “were successfully drilled at Kokkinoyia between March and June 2021 … to test the eastern and western flanks of the historic Kokkinoyia open-pit, where the holes aimed to test mineralisation beneath and around existing workings, and generally outside the existing mineral resource”.

A previous announcement from Ariana Resources in July this year disclosed “the Kokkinoyia JORC Resource Estimate (c.5Mt @ 0.7% Cu for 36,000t Cu (JORC Inferred)”.

The drilling is reported to have identified “Three new mineralisation zones”.

Four of the holes (VMD001,002, 005 and 010) all encountered old underground workings but Ariana Resources says that “All nine drill holes completed for this drilling programme returned anomalous gold values ranging from 0.1g/t to 6.24g/t Au”.

Among the results highlighted in today’s announcement are:

An 18.9m wide intersection from 128m depth in hole VMD-002 which averaged 0.86% copper, 1.54g/t gold and 0.55% zinc and included 3m from 138m depth at an average grade of 4.40% copper, 6.24g/t gold and 0.82% zinc; and

42.2m at an average grade of 0.55g/t gold and 0.27% zinc from 90m depth in hole VMD-004; and

15m averaging 0.54% copper and 0.16g/t gold from 77m in hole VMD-002; and

9m averaging 0.72% copper, 0.43g/t gold and 0.29% zinc from 55m depth in hole VMD-010 and including 1.44% copper, 0.72g/t gold (incorrectly reported, we believe, as 0.72% gold) and 0.38% zinc over an interval of 3m from 58m depth.

Managing Director, Dr. Kerim Sener, noted “the extension of moderate to high-grade mineralisation outside of the envelope which defines the current mineral resource” and said that “These results place Venus in a strong position to update its Mineral Resource Estimate and to consider further resource development work at this site. In addition, mineralised material derived from the programme will be used for metallurgical testwork as part of a broader study of the economic viability of the project.”

Conclusion: Drilling at Kokkinoyia has extended the envelope of mineralisation which may be reflected in future revisions to the mineral resources estimate. We await further news as the exploration and resources estimation proceeds.

Atalaya Mining (AIM:ATYM, TSX:AYM) (LON;ATYM) 325p, Mkt Cap GBP442m – Drilling success at Masa Valverde prompts extension of drilling campaign

Atalaya Mining (AIM:ATYM, TSX:AYM) reports that its drilling campaign at Masa Valverde is to be extended beyond the 8,000m originally planned in order to help improve confidence in the historic NI43-101 compliant resource of 66mt at an average grade of 0.67% copper, 1.92% zinc, 0.9% lead, 34g/t silver and 0.63g/t gold.

The company acquired the project, including Masa Valverde polymetallic project located around 28km south of the 15mtpa mill at Riotinto, the Majadales prospect, approximately 1km east of Masa Valverde, and the Campanario-Descamisada area, in October last year.

The company confirms that so far it has completed 8 drill holes (5,874m) of the original programme and that two holes are currently underway

Drilling results highlighted in today’s announcement include:

A 169m long intersection at an average grade of 0.52% copper, 2.0% zinc, 0.94% lead, 26g/t silver and 0.47g/t gold (reported as 1.55% copper equivalent) from a depth of 421m in hole MJ-38 at Masa Valverde and including several higher grade sections with copper equivalent (CuEq) grades ranging as high as 3.63% over a 6m section from 580m depth; and

A 152m long intersection at an average grade of 0.39% copper, 1.77% zinc, 0.44% lead and 28g/t silver (reported as 1.24% CuEq) from a depth of 460m in hole MJ-40 also at Masa Valverde: and

An 18.2m long intersection at an average grade of 0.87% copper, 3.58% zinc, 2.03% lead, 54g/t silver and 0.21g/t gold (reported as 2.83% CuEq) from a depth of 351.8m in hole MJ-39 at Majadales

We observe that the highlighted results are relatively deep and speculate that they may be more appropriately mined as underground operations as for example at the nearby Sotiel mine which formed part of Sandfire Resources’ recently announced US$1.9bn acquisition of MATSA operations at Aguas Tenidas, Sotiel and Magdalena.

The company says that in addition to historical results the “new drilling data will be incorporated into the NI 43-101 compliant report for Proyecto Masa Valverde that is currently being prepared by CSA Global and expected by early Q1 2022”.

Four step-out holes have been completed at Majadales with three extending the “known mineralization to the east, up dip and down dip 70, 30 and 15 meters respectively … Additional drilling at Majadales will be focused on testing those zones that remain open”.

The Campanario Descamisada prospect “is a 5 km long NW trending mineralized corridor located approximately 1.5 km NE of Masa Valverde and Majadales and defined by numerous small, old workings with Au-rich gossans and occasionally relicts of massive sulphides. Limited historical drilling had returned promising results at shallow depths: for example, 8.25 meters at 1.27% Cu from 86.25 meters depth”.

CEO, Alberto Lavandeira, said that the results so far “confirm our belief that the historical resource at Masa Valverde, which excluded Majadales, can be improved and also expanded. The definition of higher grade Cu and Zn zones inside the larger mineralized intervals will be one of the keys for moving this project to production”.

He added that the extended drilling programme will “include the first systematic drilling program at the promising Campanario-Descamisada target zone. We believe that Proyecto Masa Valverde is an important growth project for Atalaya and has the potential to become a source of high grade ore to supplement mill feed at Proyecto Riotinto, which continues to operate above nameplate capacity”.

Conclusion: Encouraging results from the drilling of almost 6,000m so far at Masa Valverde/Majadales is encouraging Atalaya Mining (AIM:ATYM, TSX:AYM) to extend the programme with a view to updating the existing 66mt mineral resource estimate by early 2022. We endorse management’s focus on establishing additional high grade ore sources of mill-feed for the recently expanded 15mtpa mill at Riotinto

Bushveld Minerals* (LON:BMN) – 9.69p, Mkt cap GBP115m – Vanchem kiln 3 to lead expansion of vanadium

BUY – Valuation 33p (from 37p)

(Bushveld Energy holds an indirect interest of 25.25 per cent in Enerox. Bushveld is invested in Enerox alongside a <3% in Invinity Energy Systems.)


Bushveld Minerals plan to expand vanadium production at Vanchem ahead of previous plans for expansion at Vametco.

Kiln 3 at Vanchem is being prepared for commissioning in H1 2022 with full production expected through H2 2022. Management have secured $18m for the refurbishment of Kiln 3 which expect is expected to commission in H1 2022. Vanchem should produce 2,600mtVpa from 2023..

Feasibility work is due by the year end on further expansion plans to raise vanadium production to 6,000-6,400mtVpa in the medium term, eg from 2023.

We are running with our more cautious group production of 5,141t in 2023 pending the publication of further details on the revised production.

Higher production of ferrovanadium should enable unit costs to revert to previously seen lower levels depending on the prevailing South African rand and local inflation.

Bushveld Energy continued to develop its VRFB electrolyte plant in South Africa with demand said to be rising as government accelerate the energy transition to a low-carbon energy future. New demand in this area could make a significant difference to the supply/demand balance and prices.

Valuation: The impact of lower production and higher unit costs in the first half is largely offset by a meaningful recovery in ferrovanadium production along with lower unit costs. Our valuation adjusts to 33p from 37.7p previously.

We expect to re-rate our valuation on conformation of feasibility study work which is expected to take production in the medium term to 6,000-6400tpa in 2023.


Vanadium price: We have reduced our vanadium price assumption for this year to $35/mtV but have maintained our price assumption for 2022 onwards at $40/mtV.

We see vanadium prices as being driven by new demand for construction in the US, India and Europe where new infrastructure and housing programs should require increased production of rebar and structural steel bearing higher vanadium content.

We also expect the construction of a number of Vanadium Redox Flow Batteries to add to demand with two new VRFBs being built in China following on from earlier tests and a new test VRFB is also planned in the UK to work alongside a Li-ion battery. The VRFBs serve to store and stabilise power from inconsistent renewable energy sources.

Demand for primary vanadium was suppressed in the year by high iron ore prices which encouraged traders to blend magnetite ores bearing vanadium with hematite ores. Bushveld expects this practice to slow as iron ore prices continue to fall. Iron ore prices have fallen from >$200/t to $117/t today in China for high grade 62% iron ore making the use of lower grade magnetite and iron ores which fetch a significant discount to the 62% grade price less attractive to use.

Production: We forecast production and sales of 3,416mtV of ferrovanadium for the year vs guidance of 3,400-3,600mtV.

Production should rise to around 4,455mtV next year driven by the commissioning of Kiln 3 at Vanchem in the second half.

The addition of Kiln 3 should further raise production to 5,320mtV in 2023.

Feasibility Studies due around the year end indicate potential to raise production to 6,400-6,800mtV in the medium term (2023). We will look at adding this production into our model on further definition of these studies.

Longer term the group continues to target steady state production of 8,400mtV.

Forex: We have adjusted our assumption on the South African rand to ZAR15/USD. The rand strengthened from May 2020 last year driven by strengthening commodity exports and higher prices as China increased imports.

While we expect the rand to weaken from here convention and difficulty of forecasting currency rates compels us to use a stable rand rate in our modelling.

Total sustaining costs TSC: We note the effect of the stronger rand added $4.8/kgV to total sustaining costs at Vametco in the first half vs H1 2020. This was second only to the impact of lower production volumes which raised TSCs by $6.5/kgV.

Lower production led to a ~US$9.4/kgV cost increase which will unwind as the production rate recovers. We see the H1 cost of $38.3/kgV falling to $33.5/kgV for the full year at Vametco and to $29/kgV in 2022 depending on the rand, local inflation and production volumes. Vametco ‘Cash Costs’ are guided to fall to $23.7-24.2/mtV for 2021.

We note Vamchem also saw a similar $4.8/kgV impact from the rand as well as $8.6/kgV of other costs as well as $5.6/kgV of sustaining capex raising costs to $38.2/kgV for the first half. We expect TSC costs at Vanchem to fall to around $30/kgV next year. Vanchem Cash Costs are guided to fall to $30.3-31.1/kgV for 2021.

Oriole Resources (LON:ORR) – 0.43p, Mkt cap GBP8.2m – Cameroon gold targets identified

Oriole Resources reports that mapping and steam sediment sampling over its 90% owned ‘Central Licence Package’ covering 3,592km2 in central Cameroon has identified 18 prospective gold targets associated with “the northeast-trending Tchollire-Banyo shear zone (‘TBSZ’)”.

Results in today’s announcement relate to the eastern part of the land package “across the Pokor, Ndom and Mbe licences” with stream sediment samples reporting up to 291ppb for gold and 26 of the 503 samples recovered assaying in excess of 10ppb.

The company says that it will be ranking the priority of the targets for follow-up exploration while “the remainder of the stream sediment sampling programme is due to recommence over the three westernmost licences, held by Reservoir Minerals Cameroon SARL, in Q4 2021”.

CEO, Tim Livesey, explained that “We were initially attracted to the area in 2019 due it being crossed by the dominant TBSZ structural corridor, related to the globally significant Pan-Africa/Brazilliano fold belt that is known to be associated with orogenic-style gold mineralisation across central and eastern Africa and into Brazil” and said that the early results “endorse our early targeting work and support our view that Cameroon is a new frontier for gold exploration”.

The announcement also says that “Elsewhere in Cameroon, a planned 1,650 metre (‘m’) Phase 2 diamond drilling programme has recently commenced at the Company’s 90%-owned Bibemi gold project in the north of the country … [in order to test] … a c.1 kilometre-long zone at the southern end of Bakassi Zone 1, one of four targets at the licence, where the maiden drilling programme in H1-2021 returned multiple mineralised intersections, including 2.45m grading 2.96 grammes per tonne (‘g/t’) Au, 3.60m grading 1.75 g/t Au and 12.40m grading 0.71 g/t Au”.

The company says that it expects to complete the drilling at Bibemi the end of November.

Conclusion: Early-stage mapping and geochemical stream sediment sampling has identified prospective gold targets in central Cameroon. We await news of the company’s plans to move the exploration forward.

Peak Resources (ASX:PEK) A$0.08, Mkt Cap A$151m – Royalty repayment agreement completed

Peak reports the Royalty Repayment and Release Agreement, announced by the company on the 6th of August 2021, has been completed.

Repayment of the financing facility made available by ANRF Royalty Company Limited was approved by Peak shareholders at a General Meeting held on 28 September 2021.

Details of the transaction are as follows:

the total of the principal sum and accrued interest (US$9,978,755.42) was paid by Peak to ANRF;

the Royalty Agreement, and the 2% gross life-of-mine revenue royalty granted to ANRF pursuant to the Royalty Agreement, was terminated

ANRF discharged and released all security arrangements in connection with the ANRF Royalty Facility, including a fixed and floating debenture over the assets and undertakings by PR NG Minerals Limited, the Company’s subsidiary that currently holds the Ngualla Project.

Repayment of the Royalty Facility and the release of the related security arrangements enables the company to fulfil its commitment to the Tanzanian government to transfer the Ngualla Project Special Mining Licence into a newly registered Tanzanian company that will be jointly owned by Peak (84%) and the Government (16%).

This should allow the Special Mining License to be granted once the Economic Framework Agreement, Shareholders’ Agreement and other related documentation has been agreed with the Government

PureGold Mining (LON:PUR) 51p, Mkt Cap GBP206m – Anglogold Ashanti invest C4.45m into PureGold

PureGold reports that is has agreed to issue 3,307,619 units of the Company at a price of C$1.05 per Unit for gross proceeds of approximately C$3,473,000 on a non-brokered basis to Anglogold Ashanti Limited.

Each Unit is comprised of one common share and one-half Common Share purchase warrant, where each warrant will entitle the holder thereof to purchase one Common Share at a price of C$1.36 for 18 months from the closing of the Transaction.

The company intends to use funds to aid the ramp up of operations at its Red Lake Mine in Ontario including underground drilling and development of the high-grade 8 zone, and for general corporate purposes.

Anglogold currently owns approximately 14.3% of the issued share capital of Pure Gold.

Last month, PureGold raised C$23m through bought deal financing, with net proceeds also used to fund the continued ramp up of operations at Red Lake.


John Meyer – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy [email protected] – 0203 470 0474

Joe Rowbottom – [email protected] – 0203 470 0486


Richard Parlons [email protected] – 0203 470 0472

Abigail Wayne – [email protected] – 0203 470 0534

Rob Rees – [email protected] – 0203 470 0535

Grant Barker – [email protected] – 0203 470 0471

SP Angel

Prince Frederick House

35-39 Maddox Street London


*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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