Today's Market View - US dollar gains on likely Trade War resolution hit precious metals

SP Angel . Morning View . Tuesday 01 10 19

US dollar gains on likely Trade War resolution hit precious metals

Arc Minerals* (LON:ARCM) STRONG BUY  – Financial results to end March 2019

Bushveld Minerals* (LON:BMN) BUY – Valuation 80p – Tanya Chikanza appointed as Finance Director of Bushveld Minerals

Caledonia Mining (LON:CMCL) – Quarterly dividend

MOD Resources (LON:MOD) – Overwhelming shareholder approval for Scheme of Arrangement

Peak Resources (ASX:PEK) – Ngualla transaction “not fair but reasonable”

Strategic Minerals* (LON:SML) – Interim results

Orosur Mining* (LON:OMI) – Continental Gold expect mechanical completion of the giant Buriticá gold project for Q1 2020

Shanta Gold (LON:SHG) – Drilling potentially to add new ounces to the NLGM MRE

URU Metals* (LON:URU) – Results to March 2019 highlights enthusiasm for the Zebediela pgm project in South Africa

Precious metals fall on stronger dollar driven by potential for US / China trade deal

Metals hit in thin trading as Jewish new year combines with Chinese holiday and month-end profit taking

Platinum prices fell over 5% yesterday to US $878.86/oz- its lowest level since august.

Silver fell 2.9% to just above $17.00/oz, falling 8.7% compared to last Tuesday.

Platinum and silver are up on the quarter by 5.4% and 11.4% respectively despite the yesterday’s correction.

Gold also fell 2% continuing its decline breaking below $1,200/oz mark, a weekly drop of 2.9% and nearly a two month low.

Palladium prices fell by less than $0.5/oz to 1,690.6/oz

EUR/ USD fell to 1.0884, as the dollar continued to strengthen against the euro, slumping to its lowest since May 2017 (fxstreet.com).

GBP/USD also fell, settling just below the 1.2300 level.

Trade talk optimism also caused commodity prices to fall, as White House trade advisor Peter Navarro dismissed reports that Chinese companies could be de-listed on the US stock exchange as ‘fake news’ (CNBC.com).

Talks between the two nations is still due to take place next week in Washington.

Dow Jones Industrials +0.36% at 26,917

Nikkei 225 +0.59% at 21,885

HK Hang Seng CLOSED

Shanghai Composite CLOSED

FTSE 350 Mining -0.34% at 18,073

AIM Basic Resources +0.81% at 2,144

Economics

China – Markets are closed today as the nation celebrates 70 years of Communist rule.

China’s official manufacturing PMI was 49.8 for September, while the private Caixin/Markit survey was 51.4 — both exceeded expectations.

Japan – Sales tax hiked to 10% while business outlook for large and small companies dropped to the lowest in years.

The increase was delayed twice amid fears the economy may not withstand the slowdown with the most recent one being an election in 2016.

The latest hike in 2014 dragged down consumption and prices, shrank the economy by more than 7% and forced the BoJ to expand the stimulus.

Eurozone – Final manufacturing PMIs point to a continued weakness in the sector with a contraction accelerating in Germany, Italy and Spain (growth in France slowed nearly to nil) last month.

Germany: 41.7 ( up from 41.4 preliminary) v 43.5 in August and 41.4 forecast.

Italy: 47.8 v 48.7 in August and 48.1 forecast.

Spain: 47.7 v 48.8 in August and 48.2 forecast.

France: 50.1 (down from 50.3 preliminary) v 51.1 in August and 50.3 forecast.

South Korea – The series of dire trade data extended into September.

Exports and imports contracted in September amid continuing slowdown in global growth outlook.

Outbound shipments, a bellwether for world trade especially in the tech sector, racked up another double-digit drop to fall for the 10th straight month.

Exports dropped 11.7%yoy last month which includes a 32%yoy drop in semiconductor shipments and a 22% decline in exports to China.

Imports were down 5.6%yoy.

In a separate report, inflation recorded the first negative reading highlighting risks of a deflation and putting pressure on the central bank to further ease the policy.

The bank lowered its interest rate in July for the first time in three years, to 1.5%, which is just 25bp above a record low, while the BoK decided to hold in August.

UK – Boris Johnson will offer the Brexit deal blueprint this week with people familiar with the matter suggesting the administration will know “by the weekend” whether the EU will be ready to discuss details of the proposal.

The pound is slightly up against the € this morning (+0.15%).

On a different note, UK house prices growth slowed last month to the lowest since January amid Brexit jitters, on Nationwide numbers.

Prices climbed 0.2%yoy in September marking the 10th month of gains below 1%o and down from 0.6% in August.

London was the worst performing region in Q3 while Northern Ireland posted the strongest increase, according to the report.

UK Chancellor announces Infrastructure Revolution

The Chancellor Sajid Javid MP, made a number of key pledges including:

Roads investment strategy £25bn over next five years

Busses, £220m national bus strategy.

£5bn for full fiber rollout to connect rural communities to the internet

Mission to get a home, get a job and get ahead

£500m youth centre program

National living wage  in five years to match 2/3rds of earners worth around £10.50 per hour to end UK to end low pay altogether.

UK – Labour Party agrees that Brexit must be resolved before they agree to an election.

i.e. some other party needs to sort out the political mess before Labour makes its bid to take control.

Australia – The central bank cut rates by 25bp to a record-low 0.75% and said it may ease even further as growth slows to the weakest in a decade amid fragile global outlook, a housing market downturn and US-China trade tensions.

RBA governor Philip Lowe said the decision to cut interest rates further had been made in order “to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target”.

An “extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target”.

The economy has been faced with slowing consumer demand amid a downturn in the property market.

This marks the third cut this year.

The A$ is off >0.6% against the US4 this morning.

Switzerland to sell 25 luxury cars seized from the son of the president of Equatorial Guinea

The proceeds are due to go to a charity to benefit the people of Equatorial Guinea.

We wonder how many more similar auctions will be held in Switzerland this year given that Switzerland has held bank accounts for virtually every dictator the world has known over the past 100 years.

HK – riots maybe more about housing than democracy

Problem is that the rich and powerful in HK and in China want to maintain high property values and rents making it difficult for the administration to reduce housing values and rents.

While HK residents might also call for democracy solving the housing crisis in HK would go along way to resolving the rioting.

Currencies

US$1.0892/eur vs 1.0936/eur yesterday.  Yen 108.38/$ vs 107.85/$.  SAr 15.218/$ vs 15.188/$.  $1.227/gbp vs $1.230/gbp.  0.670/aud vs 0.675/aud.  CNY 7.148/$ vs  7.130/$.

Commodity News

Gold US$1,461/oz vs US$1,490/oz yesterday

Gold ETFs 81.1moz vs US$81.1oz yesterday

Platinum US$880/oz vs US$930/oz yesterday

Palladium US$1,666/oz vs US$1,694/oz yesterday – Palladium hits record high of US $1,700.71/oz before pulling back as US dollar gains and potential Trade War resolution reverse precious metals

Palladium briefly climbed over the $1,700 mark yesterday, a record price for the metal (FT.com)

The precious metals is used in catalytic converters, which convert as much as 90% of harmful gases form automobile exhausts.

Despite global auto sales slowing, demand for palladium has increased due to tightening emission standards in China that require more of the metal in car catalysts.

A lack of supply is also keeping prices high, along with investors who expect the price to rise further and don’t want to sell at the current price (Reuters).

Palladium has risen nearly 32 per cent since the beginning of this year and over 8 per cent in the third quarter.

Silver US$17.00/oz vs US$17.33/oz yesterday

           

Base metals:   

Copper US$ 5,654/t vs US$5,788/t yesterday

Aluminium US$ 1,718/t vs US$1,735/t yesterday

Nickel US$ 17,010/t vs US$17,315/t yesterday

Zinc US$ 2,343/t vs US$2,321/t yesterday

Lead US$ 2,121/t vs US$2,096/t yesterday

Tin US$ 16,110/t vs US$16,150/t yesterday

           

Energy:           

Oil US$59.8/bbl vs US$61.6/bbl yesterday

Natural Gas US$2.303/mmbtu vs US$2.380/mmbtu yesterday

Uranium US$25.55/lb vs US$25.55/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$88.8/t vs US$89.7/t

Chinese steel rebar 25mm US$559.4/t vs US$560.8/t

Thermal coal (1st year forward cif ARA) US$65.5/t vs US$66.5/t

Coking coal futures Dalian Exchange US$181.8/t vs US$182.2/t

           

Other:  

Cobalt LME 3m US$36,000/t vs US$37,000/t

NdPr Rare Earth Oxide (China) US$44,416/t vs US$44,528/t

Lithium carbonate 99% (China) US$6,925/t vs US$6,942/t

Ferro Vanadium 80% FOB (China) US$38.3/kg vs US$38.3/kg

Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.1/kg

Battery News

Amazon order of 100,000 EV delivery vans worth at least $4bn to Rivian (Forbes)

The huge order comes as the company invests $440m in Rivian.

Rivian have announced that they will only build delivery vans for Amazon at this time in order to deliver the 10,000 vans by 2021 out of a total order for 100,000 vans by 2024.

Ford has invested $500m in Rivan while Cox Automotive has also invested $350m indicating that Rivan is a preferred battery van manufacturer within the US automotive community.

UK proposes ‘World first EV charger mandate for new homes and offices.

Would be good if they could also form a charging standard so all new EVs can plug into all chargers.

Company News

Arc Minerals* (LON:ARCM) 2.8p, Mkt Cap £20m – Financial results to end March 2019

(The Cheyeza project is 66% owned by Arc Minerals through its holding in Zamsort)

Arc resources reported its annual report yesterday.

http://www.arcminerals.com/news/rns/default.aspx

Arc minerals reported a much reduced operating loss for the year to end March 2019.

The operating loss of £2.9m compared well with a loss of £7.2m a year earlier.

A further non-cash loss of £2.8m related to the expensing of goodwill on the Zamsort acquisition.

This resulted in a group loss of £6.3m vs £2.5m yoy.

The company reminds us of the £4.5m aggregate cost to acquire a 66% interest in Zamsort in cash and shares.

Arc also advanced US$3.4m Zamsort to finance US$1.25m of drilling and assay work along with US$1.25m for work on the process plant at the Kalaba mine along with their 34% equity partner.

Arc also acquired a 42.5% interest in Zaco Limited which owns the 448km2 license adjacent to Zamsort for US$425,000. Arc now holds a 47.5% interest.

Arc now has 13 major copper and copper, cobalt targets to examine as a result of the Zamsort and Zarco deals and almost certainly has more than one meaningful new discovery on its hands in our view.

Casa; The company also holds 99.43% of Casa Mining with a book cost of £4.9m. Casa holds a 3moz gold resource in the DRC following US$1.9m of further drilling and exploration.

Arc’s 18.48% interest in Andiamo Exploration was for US$0.25m realizing a loss of £0.2m.

Group total assets increased 28% to £35.2m from £27.4m

Recommendation: we recommend Arc Minerals as a STRONG BUY due to it growing potential for a major copper discovery at the Cheyeza project in Zambia. The potential value of a significant copper discovery is likely to be a multiple of the current market capitalisation with the market recognising the value of the discovery on further drill results and resource estimation.

Other significant discoveries in Zambia in recent years include Sentinel in 2014 with 939mt grading 0.49% copper just 40km away from Kalaba and is producing >190,000tpa of copper. Lumwana which is 100km to the east also has a reserve of 758mt grading 0.51% copper and is producing >116,000tpa of copper.

Conclusion: While the financials in Arc’s annual report are only to March this year the document also contain unusually comprehensive detail on the group progress, its assets and work being done.

While much of this mirrors on previous press releases the document give a professional view on the company’s progress and highlights where new value is most likely to be created.

We expect Arc will be a much larger company by the time of it’s next annual report.

Arc Minerals also holds a 47.5% interest in Zaco Limited which holds copper, cobalt licenses next to Zamsort’s license blocks. Arc Minerals also owns 100% of CASA Mining, which has a 3moz inferred gold resource in the DRC at Akyanga.  Arc also holds 100% of the Kremnica Mining project in Slovakia which holds 1.3moz of gold equivalent.

*SP Angel acts as nomad and broker to Arc Minerals.

Bushveld Minerals* (LON:BMN) 20.6p, Mkt Cap £231m – Tanya Chikanza appointed as Finance Director of Bushveld Minerals

(Bushveld Minerals owns 74% of Vametco, 84% of Bushveld Energy in South Africa, 100% of Lemur Holdings, 9.5% of Afritin)

BUY – Valuation 80p

Click here for Bushveld flash note pdf on Interim results  

Bushveld Minerals report the appointment of Tanya ‘Tanyaradzwa’ Chikanza as finance director to the board of Bushveld Minerals.

Tanya is a qualified Chartered Accountant and joins from Lonmin where she spent nine years and was Executive Vide President of Investor Relations & Corporate Communications. Lonmin was recently been acquired by Sibanye-Stillwater.

While at Lonmin Tanya was a key member of the Lonmin Executive Committee, where she led and participated in the raising of circa US$1.4bn in equity, and arrangement of significant debt facilities as well as overseeing the Lonmin’s acquisition by Sibanye-Stillwater.

Previously Tanya was Executive Director at Smith’s Corporate Advisory in London and Vice-President Corporate Finance at JP Morgan Cazenove, in London.

Tanya started her professional career as an auditor with Coopers and Lybrand in Harare and is a member of the Institute of Chartered Accountants of Zimbabwe.

Valuation: our valuation for Bushveld is based on our Net Present Value of our forecast cash flows for Vametco, Vanchem and Bushveld Energy plus more modest valuations on Bushveld’s stakes in AfriTin, Lemur Resources, P-Q Iron & Titanium.

Our valuation pulls back to 80p from 92p previously principally on our reduction our assumption of the price for ferrovanadium to $45/kgV from $50/kgV plus some adjustments for costs and currency rates.

Conclusion: Tanya Chikanza looks like a good fit as finance director for Bushveld as it grows in terms of production and business activities. Bushveld will acquire Vanchem at the end of this month and is also looking to develop its Vanadium Redox Flow Battery business. The Vanchem deal will spur the development of a new vanadium mine at Mokopane and will restart idled furnaces at Vanchem to raise group production towards the 8,400mtVpa target.

*SP Angel acts as Financial Advisor & Broker to Bushveld Minerals.

Caledonia Mining (LON:CMCL) 560p, Mkt Cap £60.2m – Quarterly dividend

Caledonia Mining has announced a 6.875 cents per share dividend maintaining its strategy, initially adopted in 2014, of declaring a quarterly dividend.

Reporting a 30th June cash balance of US$7.9m the company also reiterates the progress at its 49% owned Blanket gold mine in Zimbabwe where equipping of the new Central Shaft is now underway as a key element in “plans to increase production from 54,511 ounces of gold in 2018 to approximately 75,000 ounces in 2021 and approximately 80,000 ounces in 2022; Blanket Mine’s target production for 2019 is between 50,000 and 53,000 ounces.”

Further details on progress are likely to be included in the quarterly results announcement for the period to 30th September which are expected “on or around November 14, 2019”.

Conclusion: Caledonia Mining is among a small minority of the more than 100 AIM-listed mining companies which consistently delivers dividends.

MOD Resources (LON:MOD) 22.75p, Mkt cap £77.4m –  Overwhelming shareholder approval for Scheme of Arrangement

MOD Resources’ shareholders have approved the Scheme of Arrangement under which Sandfire Resources will acquire MOD . Over 98% of the votes cast were in favour.

Final approval to the acquisition remains subject to conditions including the recommendation of an independent expert that the proposal is in shareholders best interests and the approval of Western Australia’s Supreme Court.

The company expects the conclusion of the transaction under which Sandfire will acquire the development-stage T3 copper deposit and other, less advanced, copper exploration properties in the Kalahari Copper Belt of Botswana “towards the end of October”.

Peak Resources (ASX:PEK) A$0.037, Mkt Cap A$34.0m – Ngualla transaction “not fair but reasonable”

Peak Resources has published the independent Expert’s Report https://wcsecure.weblink.com.au/pdf/PEK/02152691.pdf  into its proposed acquisition of Appian Natural Resources Fund’s 20% interest in its Ngualla rare earths project in Tanzania.

Peak Resources currently holds a 75% interest in the Mauritian company, Peak African Minerals (PAM), which owns and operated the project. Appian holds a 20% interest and the IFC the remaining 5%.

The proposed acquisition of Appian’s interest, for shares would increase Appian’s interest in Peak Resources from the current 12.22% to 33.55%. In an eye-catching conclusion, the independent expert, RSM, concludes that “In our opinion, and for the reasons set out in Sections 11 and 12 of this Report, the Proposed Transaction is not fair but reasonable to the Non-Associated Shareholders of PEK”

The expert explains that the transaction is “not fair to the Non-Associated Shareholders of PEK as the assessed values of a PEK Share post the Proposed Transaction are less than the values of a PEK Share prior to the Proposed Transaction” However, in the expert’s opinion, “the position of the Non-Associated Shareholders if the Proposed Transaction is approved is more advantageous than the position if it is not approved. Therefore, in the absence of any other relevant information and/or a superior offer, we consider that the Proposed Transaction is reasonable for the Non-Associated Shareholders.”

The consolidation of project  ownership makes sense to us with Appian increasing its ownership at the parent level and Peak Resources consolidating its control of the project.

Strategic Minerals* (LON:SML) 0.75p, Mkt Cap £9.5m – Interim results

Strategic Minerals reported an after-tax accounting loss of $1.18m for the six months to 30th June 2019 (2018 profit  US$2.41m) yesterday. Results included a non-cash impairment of US$0.76m in respect of the Western Australian exploration assets.

Corporate administration costs were reduced by approximately 13% to $1.21m.

Pre-tax profits from the Cobre magnetite sands operation in New Mexico declined to $0.66m (2018 – $1.25m) reflecting “the impact of the major Cobre client suspending shipments and maintenance works conducted at other client operations.  While sales from other clients have begun to rebound, it is not anticipated that the major client will resume taking shipments and the Company has initiated legal proceedings … In line with anticipated lower sales levels, cost reduction measures have been implemented in the second half of 2019”.

It is encouraging to see that, despite the issues with its main client, Cobre remains profitable and that client sales to Cobre’s other customers have recovered and “now appear to have been restored to previous levels”. It is also encouraging, that, as reported in January, “Access to the Cobre magnetite stockpile was rolled over in mid-January ahead of the normal roll over at the end of February”.

At the Redmoor tin/tungsten project in Cornwall, where the 2018 drilling programme resulted in a “substantial increase in the inferred resource base”, the move to acquire the 50% of the joint venture company, Cornwall Resources, held by its partner New Age Exploration, “places the Company in an ideal position to direct the timing and funding of the Redmoor Tin-Tungsten project.”

The increased mineral resource estimate, announced in February, amounted to 11.7mt at an average grade of 1.17% tin equivalent (0.17% tin, 0.56% tungsten trioxide and 0.50% copper) using a 0.45% tin equivalent cut-off grade compared to the previous estimate, also inferred, of 4.5mt at an average grade of 1% tin equivalent (0.25% tin, 0.37% tungsten trioxide and 0.57% copper).

The company expresses confidence that full scale production at the Leigh Creek copper mine will commence in 2020 and although the initial restart of the heaps did not provide “the flow of copper hoped for, [it] was a strategically important occurrence. It demonstrated the ability of the existing plant to treat the planned production from the Paltridge North Deposit with the Company seeking to develop this project in 2020.”

The company also reports that following a review of the Western Australian exploration assets  at CARE and Hann’s Camp, “the Company is considering exiting its involvement and, in anticipation of this, an impairment of US$760,000 has been included in the six month period to 30 June 2019”.

Summing up what he described as “a particularly challenging period”, Chairman, Alan Broome, expressed confidence “in the ability of the Board and management team to deliver the Company’s strategy.  In 2020, the Company expects cash flow and profitability to improve dramatically, as full scale production commences at Leigh Creek Copper Mine”.

Mr. Broome’s confidence, and also that of Managing Director, John Peters, was evidenced in February by their exercising of options with Mr. Broome acquiring a further 1m shares increasing his holding by 32% to 0.44% of Strategic Minerals and Mr. Peters increasing his holding by 16m shares leaving him with a 3.6% interest.

Conclusion: Strategic Minerals’ Cobre operation remains profitable despite the continuing issues with its major customer. The restart of the Leigh Creek copper mine in South Australia in 2020 remains a key objective while the review of the future of the earlier stage Western Australian exploration projects demonstrates management’s continuing focus on ensuring the priority of near cash generative assets.

*SP Angel acts as Nomad and Broker to Strategic Minerals

Orosur Mining* (LON:OMI) 4.4p, Mkt Cap £7m – Continental Gold expect mechanical completion of the giant Buriticá gold project for Q1 2020

Continental Gold report good progress at their Buriticá gold project in Colombia which lies along trend from Orosur’s Anza gold project.

Both projects are in joint venture with Newmont Mining..

Continental report mechanical completion of the Buriticá project should complete in Q1 next year rather than in H1 2020.

Buriticá hosts a reserve of 3.71moz of gold grading 8.4g/t and 10.7moz of silver grading 24.3g/t

The project also reports a mineral resource of 5.32moz of gold grading 10.32g/t gold and 21.0moz of silver grading 40.8g/t.

Orosur’s Anza project lies just 60km from Buriticá.

Conclusion:  .

*SP Angel act as Nomad and broker to Orosur Mining

Shanta Gold (LON:SHG) 8.5p, Mkt Cap £67m – Drilling potentially to add new ounces to the NLGM MRE

The team completed a detailed review of the exploration portfolio over the last 12 months identifying new targets within the existing mining license and in proximity to the operating NLGM processing plant.

Drilling at two such high-potential targets including Bauhinia Creek (BC) North and Elizabeth Hill (EH) North returned high grade intersections.

2,762m over 19 drill holes have been completed at BC North, located 300m to the north of the currently underground mined BC deposit and 3km west of the NLGM plant.

Selected results included:

4m at 8.38g/t from 86m including 1m at 23.10g/t;

6m at 8.62g/t from 93m including 1m at 25.50g/t;

4m at 8.94g/t from 111m including 1m at 27.50g/t;

10m at 3.43g/t from 45m.

2,316m over 24 infill drill holes have been completed at EH North, located 4km to the east of the NLGM plant.

Selected results included:

9m at 6.62g/t from 80m including 4m at 11.00g/t;

9m at 5.56g/t from 62m including 2m at 15.50g/t;

8m at 3.29g/t from 53m.

Drilling is expected to continue through Q4 targeting down dip and lateral extensions of mineralised structures that are to be included in the updated Mineral Resource Estimate over the next few months.

Conclusion: Drilling at adjacent mineralised targets returns good grades with the team planning to continue with drilling through Q4 with a view of incorporating latest results in the updated MRE statement potentially bringing an extension to the existing life of mine at the NLGM.

URU Metals* (LON:URU) 260p, Mkt Cap £2m – Results to March 2019 highlights enthusiasm for the Zebediela pgm project in South Africa

URU Metals results to March 2019 highlights progress on the company’s flagship Zebediela Project.

The company recorded administrative expenses of just £0.74m in the year to March 2019 vs £0.86m a year earlier

The net loss rose to £2.3m vs £0.86m a year earlier due to a $0.7m impairment in the value of MRS shares and full impairment of $0.87m in the groups’ 50% interest in the Burgersfort project.

URU’s ‘technical team are confident in their ability to prove up the strike length of the recently discovered Ni-Cu-PGE mineralisation at Zebediela, and develop the project into a world class Ni-PGE project.’

The company claims ‘Major advances have been made in the past twelve months in the understanding of the geology of the Zebediela Project in a regional context.

The Zebediela Project is located on the Northern Limb of the Bushveld Complex, one of the most exciting and profitable nickel, copper and platinum group elements, (Ni-Cu-PGE) mining and exploration areas globally.

The project shares similar geology to Anglo American Platinum’s Mogalakwena Mine, the world’s best PGE mine, as well as the adjacent Ivanhoe Mines‘ Platreef Project, where shaft sinking on two shafts is progressing to a depth of in excess of 980m.’

A comparison of the grades and basket prices of recent drilling by URU with that of Anglo Platinum and Ivanplats, as well as that of the operational Nkomati Nickel Mine, also located in South Africa on the Bushveld Complex, indicates that the target Ni-Cu-PGE is of a higher Nickel grade than that being mined at both Mogalakwena and Nkomati mines, and, although it is lower than Ivanplat’s Platreef Project grade, it is near surface as opposed to being in excess of 800 m deep at the Platreef Project.

The figure below shows the location of known drillholes that intersect Platreef (Critical Zone rocks), and from this image, it becomes clear that the potential exists for Platreef material to be found to the west of the historically mapped outcrop of the Platreef, shown by the red dashed line in the image below.

When these drill results listed in the table above are taken into a regional context, it is evident that the potential for over 5 km of strike length of Platreef on the Zebediela Project exists, at grades with a superior basket price to that being mined at Mogalakwena mine, as well as Nkomati Nickel mine.’

Licenses: The Department of Mineral Resources (now the Department of Minerals and Energy) (DMRE) in December 2018 issued the renewal for Prospecting Right LP148PR over Uitloop 3 KS, which forms the core license of the Zebediela Project. An application in terms of Section 102 of the Mineral and Petroleum Resources Development Act of 2002 (the MPRDA) has been made to append licenses LP1074PR and LP1787 to LP148PR.

An application to the DMRE for a mining right over the Zebediela Project was made and accepted in August 2019. The mining right application will secure the tenure of the project for 30 years once it is granted. The basis of the Mine Works Program which accompanies the application was made on the existing NI43-101 compliant resource, which contains an Indicated Resource of 485.4 million tonnes at 0.245% Ni and an Inferred Resource of 1,115.1 million tonnes at 0.248% Ni. The Company, however, has the right to amend the Mine Works Program via Section 102 of the MPRDA, to incorporate a mine plan to exploit any Ni-Cu-PGE resource that may be defined by further planned exploration drilling.

As part of the Mining Right application process, the Company has submitted an application for Environmental Authorisation for the Zebediela Project and commenced with environmental impact assessment studies and a public consultation process.

Based on recent discoveries in other geological terrains that host similar ultramafic rocks to those found on the Zebediela Project, the potential exists for the area to host massive sulphides nickel deposits.

The high nickel and palladium to platinum ratio in the Platreef mineralisation, found at shallow depths, coupled with the increase in nickel and palladium prices over the past 12 months, make the Zebediela Project an exciting Ni-PGE targets. The close proximity to existing road, rail, power and mining infrastructure bode well for the potential to develop the project into a world-class Ni-Cu-PGE mine and URU remains committed to the responsible development of the project.

Zebediela Nickel project: Based on the improved understanding of the geology of the Zebediela Project, the company will continue to focus its efforts on understanding and defining the Platreef Ni-Cu-PGE mineralisation, and apply modern sound geological principles to developing an exploration strategy to explore for massive sulphide nickel associated with the ultramafic rocks found on the project area.

The Group remains committed to its strategy of acquiring mineral assets, through:-

direct investments in companies with prospects with medium to long term production potential;

partnership with other industry participants to develop projects with production forecast in the near to medium term; and

Investment of 100% equity in earlier stage projects with the potential to develop world class sized mineral resources that could be brought to market over the long term.

The Group would not rule out investing in longer term, 100% equity projects, or in other prospective junior companies should the right opportunity arise. However, this would be dependent on investor appetite at the time.

Conclusion: URU Metals reports on its enthusiasm for the Zebediela pgm project in South Africa. New focus will hopefully lead to further work by management and reports to investors over the course of the next year.

*SP Angel acts as Nomad and broker to URU Metals

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

Sales

Richard Parlons – 0203 470 0472

Abigail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535

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

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Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt

LME

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Thermal Coal

Bloomberg OTC Composite

Coking Coal

DCE

RRE

Steelhome

Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal

Tungsten

Metal Bulletin

Story by ProactiveInvestors

Source: https://www.proactiveinvestors.com/companies/news/903876/today-s-market-view---us-dollar-gains-on-likely-trade-war-resolution-hit-precious-metals-903876.html