Morning View - Bushveld Minerals; Pensana Metals;

SP Angel . Morning View . Monday 04 05 20 Markets pull back on US and China resurfacing tensions    Adriatic Metals* (ASD:ADT1 ) – Latest drilling at Rupice confirms extension of mineralisation to south and down dip. Bushveld Minerals* (LON:MBN) –– Strong vanadium sales and weaker rand offset impact of South African lockdown in Q1 Cora Gold* (AIM:CORA) – ESIA to be carried by Digby Wells Pensana Metals (ASX:PM8)  – Pensana awarded additional exploration licence close to Longonjo Phoenix Copper* (LON:PXC) – Empire oxide resources increase Rambler Metals* (AIM:RMM) – Q1 copper production stable as higher grade areas are developed   Dow Jones Industrials -2.55% at 23,724 Nikkei 225 -2.84% at 19,619 HK Hang Seng -3.96% at 23,667 Shanghai Composite closed       Economics US – Tensions escalate over the origin of the coronavirus with Mike Pompeo reiterated US government claims linking the outbreak to a laboratory in Wuhan, China, FT reports. China denied allegations. Payrolls numbers are to be released later this week with estimates for an unprecedented reading of around 20m jobs lost in April.   China - China reopens on Wednesday with lots of companies reopening for Labour day Scale of the economic disruption highlights how significant the services sectors are to economic activity   New York Governor Andrew Cuomo said schools will remain closed through the end of the academic year.   Japan – The government extended state of emergency until May 31.   Eurozone Manufacturing PMI fell to 33.4 in April marking a deterioration on the flash reading and hitting the lowest level on record beating the depths of the global financial crisis. France, Italy, Greece and Austria posted new lows while PMIs for Netherlands, Ireland, Germany and Spain were at the lowest since global financial crisis in 2008/09. On outlook, Spanish, German and Austrian manufacturers were the most pessimistic of all. Concerns over the pace of the recovery and the potential second wave of the pandemic are likely to weigh on consumer demand and business investment moving forwards making it for a challenging economic environment over coming months. Eurozone Manufacturing PMI: 33.4 v 33.6 Flash and 44.5 in March.   Manufacturing PMIs in Italy and Spain collapsed into low 30s on a slide in production and new orders. Services sector that was hit the worst by lockdown measures will see respective PMIs reported on Wednesday with estimates for measures expected to come in at around 10.0 mark. Italy Markit Manufacturing PMI: 31.1 v 40.3 in March and 30.0 est. Spain Markit Manufacturing PMI: 30.8 v 45.7 in March and 34.0 est.   South Korea – Manufacturing production is down at the fastest pace since January 2009. New orders are down significantly on the back of plant closures both domestically and overseas. Outlook gauge dropped to the lowest since the series began in 2012 with 42% against 24% of respondents expecting a decline in production over growth in the next 12 months. Markit Manufacturing PMI: 41.6 v 44.2 in March.   UK - Recent Bank of England statement that UK households paid back £3.84bn of consumer debt - largest repayment in history Mortgages dropped 24% in February to a 7-year low and in the last 12months   South Korea - exports fell 24.3% in April vs -0.7% in March Imports declined 15.9% vs (0.3%).   Australia - Q1 Australian PPI rose 0.2% in April vs 0.3% in March vs 1.3% in April 2019 and 1.4% in March 2019   Airbus to convert A330 and A350 aircraft economy passenger sections for cargo We suspect the new cargo holds will be more comfortable than the existing passenger seating As mining analysts we are used to travelling with the cargo on flights to mines and the webbing used is definitely an improvement on economy seating. Airbus is responding to a shortage of ‘belly-freight’ capacity for long-haul routes where airlines have grounded most aircraft May we suggest the airlines look to preserve some of the new open plan arrangements with more comfortable seating when they start to restore passenger services.   Cars being stored at sea on air-conditioned container ships as fall in car buying causes on-land storage to fill up. In truth, maybe a few auto-carrying ships may be delayed at port for a week before unloading as logistics chains make room for auto storage. The main point is that dealers and fleet operators are not taking delivery of new vehicles following a near total collapse in sales You wouldn’t want to buy a car that had been held at sea for too long just incase the sea air started to rot the vehicle.   No smoke without fire – Fake news story on China cancelling its currency Peg with US dollar may be a very real intention If China cancelled renminbi : US dollar currency peg would the US dollar to weaken? China could pick its moment with the US at its economic weak point at the near-peak of its Coronavirus pandemic. China is reported to have discussed with Russia how to break the dominance of the US dollar in trading with the removal of the US dollar peg potentially a key step in this policy China has also launched its own e-currency the e-RMB, Lockdowns and the potential viral transmission using paper currency has made electronic payments the way to go with sovereign e-currencies likely to become more significant going forward. Some government employees and public servants will start to receive salaries and expenses in e-RMB this month.   Sherritt withdraws 2020 #nickel and #cobalt production guidance on Covid-19 uncertainty; warns of deteriorating liquidity   Scientists say new disinfectant protects surfaces from coronavirus for 90 days It is about time someone came up with this development It will be transformation for confidence in travelling on all forms of public transport.   Boeing complete 777X first flight The plane is planned for 384 passengers or and 777-9 for 426 passengers.   Currencies US$1.0933/eur vs 1.0960/eur last week.  Yen 106.77/$ vs 107.11/$.  SAr 18.879/$ vs 18.668/$.  $1.244/gbp vs $1.256/gbp.  0.639/aud vs 0.645/aud.  CNY 7.063/$ vs  7.063/$.   Commodity News Precious metals:          Gold US$1,705/oz vs US$1,676/oz last week - Gold bars lose plane cargo space to Covid-19 testing kits  Swiss refiner Valcambi tried for five days straight to move a shipment of gold out of Hong Kong in April, however twice the metal was offloaded and replaced with Covid-19 testing kits.  According to Valcambi's CEO, the gold suddenly arrived in Switzerland without warning, raising questions over the security of gold transportation whilst Covid-19 grips the world (Mining Weekly) The coronavirus pandemic has so far resulted in severe logistical issues for the physical gold market, as refiners shut down and commercial flights are grounded.     Gold ETFs 96.1moz vs US$95.7moz last week Platinum US$769/oz vs US$764/oz last week Palladium US$1,921/oz vs US$1,939/oz last week Silver US$14.98/oz vs US$14.87/oz last week             Base metals:    Copper US$ 5,072/t vs US$5,091/t last week - Refinitiv cut 2020 global copper mined 2.4% to 19.6mt Chilean March copper output rose 4.2% to 498kt up 0.6%yoy, as overall mine output was up 2.3%.  LME copper prices hit two-week low due to oversupply  Copper prices fell on Monday morning as producers look to resume operations, with many countries gradually easing restrictions on mining operations.  Peru announced yesterday that it plans to gradually ease restrictions on mining and construction in May, as the country is heavily dependent on the copper sector for economic growth and is the world's second largest producer (El Peruano).  According to the government, companies must implement rigorous health protocols to avoid infections if they are to restart activities.  The global copper market is head for a surplus of between 200,000-300,000 tonnes in 2020 as reported by Antofagasta in a statement on Saturday- putting further downward pressure on copper prices. Three-month copper on the LME fell as much as 1% this morning to $5,061/t - its lowest since the 22nd of April (Reuters). Aluminium US$ 1,477/t vs US$1,488/t last week Nickel US$ 11,900/t vs US$11,875/t last week - Eight protesters arrested at Indonesian nickel hub  Indonesian police have arrested eight people linked to a worker's demonstration at a nickel project run by French company Eramet and China's Tsingshan Holding Group, in the country's North Maluku province.  The demand by workers included rejecting lay-offs and getting a full salary during the proposed lockdown, as well as blocking a bill that calls for a steep cut in severance compensation (Reuters). Zinc US$ 1,897/t vs US$1,916/t last week Lead US$ 1,614/t vs US$1,614/t last week Tin US$ 14,950/t vs US$14,830/t last week             Energy:            Oil US$26.0/bbl vs US$26.6/bbl last week Oil prices have come off this morning, paring last week’s gains, on worries a global oil glut may persist amid slumping demand and US/China trade tensions that could restrict an economic recovery even as Covid-19 lockdowns start to ease WTI futures fell as low as US$18.10/bbl after the benchmark contract rose 17% last week Brent futures were down US$0.24/bbl, or 0.9%, at US$25.80/bbl, after touching a low of $US25.50/bbl. Brent rose 23% last week following three consecutive weeks of losses Part of the drop has come as a result of the US dollar firming this morning against a basket of currencies Major benchmark oil prices are priced in dollars, so a stronger greenback makes crude more expensive for buyers with other currencies Moody’s has today forecast a bounce in oil prices in the medium term, predicting they will end the year in the range of US$50 to US$70/bbl In the short term, Moody’s is less optimistic and sees the effects of CAPEX cuts trickling down from E&P companies to oilfield service companies   Natural Gas US$1.967/mmbtu vs US$1.941/mmbtu last week gas prices continue to hold up as figures released by Baker Hughes show the US natural gas rig count dropped by four to 81 during the week ended Friday 1 May The US EIA reported that domestic supplies of natural gas rose by 70Bcf for the week-ended 24 April in line with average expectations Total stocks now stand at 2.21Tcf, up 783Bcf from a year ago, and 360Bcf above the five-year average Uranium US$34.05/lb vs US$32.35/lb last week             Bulk:    Iron ore 62% Fe spot (cfr Tianjin) US$80.4/t vs US$80.4/t Chinese steel rebar 25mm US$527.0/t vs US$525.3/t - India becomes net steel exporter in March  Government of India data shows that the country became a net exporter of steel with an increase of 31.4% in March 2020. Steel imports were down 13.6% this fiscal year, attributed to a 22% fall in steel imports from China. India has exported 8.3MT in FY 2020 vs 6.3MT in FY 2019, while imports are down 6.7MT vs 7.8MT in the same period (Hellenic Shipping News). Thermal coal (1st year forward cif ARA) US$52.2/t vs US$53.0/t - Australian coal projects face financing vacuum  Australian thermal coal experienced another setback today, as Westpack Banking Corp said it would exit the sector by 2030, leaving Australia and New Zealand Bank as the last of the country's big four still in the sector.   Australia is the world's second-biggest thermal coal exporter- generating A$26bn in export revenue in the year to end-June 2019.  Financing coal projects has become increasingly difficult as financial institutions shun fossil fuel investment, due to pressure from shareholders and climate groups.  Other banks in the region include Commonwealth Bank and National Australia Bank, who plan to be out of thermal coal by 2030 and 2035 respectively.  Japanese Banks are among the world's biggest lenders to coal power developers; however, they are also eyeing a reduction in exposure from the sector (Bloomberg).  Coking coal futures Dalian Exchange US$106.0/t vs US$107.0/t             Other:   Cobalt LME 3m US$30,000/t vs US$30,000/t NdPr Rare Earth Oxide (China) US$37,306/t vs US$37,191/t Lithium carbonate 99% (China) US$5,309/t vs US$5,293/t Ferro Vanadium 80% FOB (China) US$27.5/kg vs US$27.5/kg Antimony Trioxide 99.5% EU (China) US$5./kg vs US$5./kg Tungsten APT European US$215-225/mtu vs US$240-245/mtu Graphite flake 94% C, -100 mesh, fob China US$520/t vs US$530/t Graphite spherical 99.95% C, 15 microns, fob China US$2,425/t vs US$2,450/t Diamonds - Lucapa restarts Lulo diamond mine operations with 50% workforce Lucapa has announced the restart of mining at its Lulo alluvial diamond mine in Angola. Production should ramp up to just over half nameplate capacity after operating on a reduced basis for four weeks Lucapa is also looking to restart of mining at the Mothae kimberlite diamond mine in Lesotho.   Battery News Tesla applies for licence to generate electricity in the UK Tesla has applied to UK energy regulator Ofgem for an electricity generation license. (Telegraph) The Californian EV maker has developed Autobidder, a system that enables autonomous monetization of battery assets. (Tesla) Autobidder is a real time trading and control platform hosted on Tesla’s secure cloud infrastructure which is capable of interfacing with market operators and network providers. The move provides evidence of Tesla moving into the utility market, building and operating its own batteries rather for other project developers. (Renew Economy) Tesla has previously built a lithium-ion battery for the Australian state grid, the Hornsdale Power Reserve in South Australia. (Yahoo News) The facility saw revenues increase 56% in Q4’19 as a result of an increase in the value of frequency and ancillary services.   Korean Institute develops flexible battery Researchers at the Korea Institute of Science and Technology have developed a lithium-ion battery with an accordion like micro-structure enabling flexibility in non-stretchable materials. (Mining) The honeycomb like framework is made of graphene and carbon nanotubes created through a radial compression process. The electrodes were combined with a gel electrolyte and stretchable packing materials to create a functioning lithium-ion battery. (PV Magazine) The stretchable battery has a high areal capacity of 5.05mAh/cm2, superior electrochemical performance and long-term stability, up to 95.7% after 100 cycles. The technology could be used in applications including wearable technology and body implant devices. The study was published in ACS Nano.   Hanwha Corp signs battery formation equipment supply deal with Tesla (Korean Times) Hanwha Corp, subsidiary of Hanwha Group has signed a deal to supply battery formation equipment to Tesla. Battery formation is the stage at which cells are initially charged and discharged. It is part of the final phase of battery manufacture before installation. The process requires a high voltage and precise output current to ensure cells last their prescribed lifetime. Hanwha will initially supply Tesla’s Freemont factory before their equipment is rolled out across Tesla’s factories in Nevada, Germany and China.     Company News Adriatic Metals* (ADT1 LN) 60.5p, Mkt Cap £108.7m – Latest drilling at Rupice confirms extension of mineralisation to south and down dip. Adriatic Metals reports that its latest drilling at Rupice in Bosnia has intersected the deepest mineralisation encountered so-far in hole BR-02-20 which encountered 8.9m at an average grade of 2.40g/t gold, 398g/t silver, 1.79% zinc, 0.35% copper and 45% barite from a depth of 368.5m. The intersection extends known mineralisation in the southern part of Rupice a further 20m down dip and ʺconfirms continuity of mineralisation both down-dip and southwardʺ. A cross section included in the announcement shows the intersection in Hole BR-02-20 intersecting the structure down-dip of an intersection in hole BR-44-19 which assayed 1.34g/t gold, 223.33 g/t silver, 2.10% zinc, 2.44% lead, 0.34% copper and 41.17% barite. The company also says that infill drilling confirms the ʺcontinuity of the high-grade mineralisation in the central part of the Rupice depositʺ including results from: Hole BR-06-20 which intersected 26.7m at an average grade of 3.95g/t gold, 502g/t silver, 6.75% zinc, 3.76% lead, 0.35% copper and 72% barite from a depth of 275.5m as well as a deeper intersection of 10.2m averaging 5.81g/t gold, 876g/t silver, 8.65% zinc, 5.94% lead, 0.50% copper and 69% barite from a depth of 323m; and Hole BR-07-20 which intersected 9.3m at an average grade of 3.49g/t gold, 393g/t silver, 3.13% zinc, 3.86% lead, 0.36% copper and 59% barite from a depth of 181.7m as well as a deeper intersection of 22.9m averaging 3.18g/t gold, 259g/t silver, 10.71% zinc, 6.48% lead, 0.63% copper and 45% barite from a depth of 199m; and Hole BR-09-20 which intersected 31m at an average grade of 3.85g/t gold, 335g/t silver, 9.50% zinc, 8.12% lead, 0.76% copper and 36% barite from a depth of 198m. In a detailed description of the infill drilling results, Adriatic Minerals comments that ʺThe Rupice deposit is structurally complex, and the results from these infill drill holes have confirmed that there is good understanding of the geological and structural complexities of the deposit, with a good grade correlation to the existing neighbouring drill holesʺ. Paul Cronin, Managing Director said that ʺThe latest drill results show that the mineralisation at Rupice continues down-dip to the south of the deposit, and remains open to the South, North, East and at depth. The infill confirmation drilling completed in the central part of the deposit confirms continuity of grade and supports our understanding of the geological and structural complexities of the depositʺ. He went on to outline the immediate plan for the further exploration of the deposit saying ʺWith the winter months behind us, we will now look to expand our mineralisation in the northern plunge, whilst continuing to test the southern and depth extents”. Mr. Cronin also confirmed that ʺDrilling and exploration works continue as per normal despite the current limitations due to the COVID-19 pandemic, with little interruption to daily activities.ʺ Conclusion: Further drilling at Rupice has delivered the deepest mineralised intersection reported to date and helped to demonstrate the continuity of mineralisation in a polymetallic deposit described as ʺstructurally complexʺ. We look forward to further results as they become available. *An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia   Bushveld Minerals* (MBN LN) – 12.5p, Mkt cap £145m – Strong vanadium sales and weaker rand offset impact of South African lockdown in Q1 (Bushveld Minerals owns 74% of Vametco, 100% of Vanchem, 84% of Bushveld Energy in South Africa, 100% of Lemur Holdings, 9.5% of Afritin) Buy - (Valuation 54p) CLICK FOR PDF Bushveld Minerals report strong sales of ferro-vanadium in the first quarter from their Vametco subsidiary Vametco Vametco Production: Nitrovan production was slightly higher at 652mtV in Q1 from 649mtV yoy and 880mtV in Q4 2019. This was due to the impact of the sudden COVID-19 lockdown which lasted 35 days in South Africa and heavy rain. Bushveld had previously stated that production volumes were to be skewed to the second half of this year. Sales: 898mtV of ferrovanadium was sold in Q1 2020 vs 508mtV yoy and 673t in Q4 2019 supported by 246mtV of unsold Nitrovan produced last year. There is an 8-12 week lag in the pricing of vanadium sales indicating to us that this material may have been sold at around $24.5mtV in the first weeks of this year. Costs: unit production costs were 8% lower yoy at US$18.9/mtV in Q1. The weaker rand and lower fuel prices will benefit costs further this year. Note, Q4 production costs fell to US$14.6/kgV from US$15.2/kgV post audit review, excluding depreciation, royalties and selling, general & administrative expenses. Vanchem Vanchem: produced some 219mtV despite 10 days of power rationing and the coronavirus lockdown. This looks like a relatively good result with Vanchem selling 182mtV in the first three months of the year. Vanchem already accounts for 31% of Bushveld’s attributable vanadium production. Vanchem has now restarted following 35 days of lockdown. Production: 219mtV in Q1 2020 of vanadium contained in chemicals 19mtV, flake 130.5mtV and ferro-vanadium 69.4mtV. We expect Vanchem to produce 936mtV of vanadium products this year. Sales: 182mtV of vanadium sold in Q1 if which 75.1mtV was as flake, 9.7mtV as chemicals, and 97.6mtV as Ferro-vanadium. Costs at Vanchem were similar to Vametco at US$18.5/kgV despite expectations for higher costs which feels like a good result for a recent acquisition. Costs are higher due to inventory build as production ramps up under the new ownership of Bushveld Minerals. Capex (Vanchem): The team have completed a scoping study on the Vanchem refurbishment and prioritised ~R85m ($4.5m) as critical capital spend for 2020. This expenditure is mainly in H2 giving management time to adjust expenditure if the group needs to conserve cash beyond expectations. Vametco and Vanchem are now ramping up production back to normal levels Mokopane mine Mokopane mine: DFS timing under review as this is non-critical  and does not impact on Vanchem’s feedstock for a year. Bushveld can direct magnetite concentrates to Vametco from Vanchem if production from the Mokopane mine is delayed. While this option is not optimal it has almost no capital cost and simply adds transport costs, though it may serve to limit future expansion at Vametco in future years if Mokopane is significantly delayed. FOREX: South African rand weakened to ZAR19/USD from around ZAR15/USDhelping the sector Energy: Oil prices have fallen to around $20/bbl reducing the cost of fuel in the opencast mine Coal prices should have also fallen reducing the cost of coal for heat and reduction in the kiln. Group Capex: All non-essential capital expenditure has been deferred. The team have also reduced capital spending and brought forward maintenance schedules to take advantage of the lockdown. Debt: Bushveld drew down the full R375m ($22m) bank debt facilities giving the company greater firepower and flexibility. Bushveld could conceivably use to this to gain some commercial advantage through the crisis. Cash: Bushveld report healthy cash and cash equivalent at $34m at end-December and $34.4m at the end of March. Our own analysis indicates the company could withstand a full lockdown through most of the year. Continued production: fortunately, management have managed to keep processing stockpiled material through the lockdown with revised lockdown regulations allowing Bushveld to ramp up production back to more normal levels in accordance with government guidelines. Forex: The further collapse of the SA rand means that Bushveld’s US dollar receipts go further in terms of local services and debt repayment Force majeure: Bushveld has not had to declare force majeure and continued to meet orders through stocks CSR: Bushveld has continued to pay employees and serve local communities including hospitals, care homes, police stations with sanitisers and water to help the community prepare for the coronavirus. Management will update the market on revised capital expenditure plans in the main results report. Guidance: The South African lockdown ran from 27 March to 30 April with Bushveld now allowed to resume full production subject to guidelines. Mining operations were allowed to re-open and operate at a reduced capacity of 50% from 16 April Bushveld is reviewing its guidance and will update the market when there is greater certainty. Maintenance: “No further maintenance shutdowns are expected for the remainder of 2020.” This is great news and should enable the group to make up for much of its lost production in the Lockdown. The kiln off-gas project has been placed on hold due to Coronavirus restrictions with discussions ongoing with the relevant authorities from an environmental compliance perspective. Bushveld Energy Bushveld Energy received approvals for equity and debt from the IDC, ‘Industrial Development Corporation’ of South Africa for the construction of Electrolyte plant (Equity split: 55% Bushveld, 45% IDC). The jv with the IDC has elected to spend R68m to end 2022 on the electrolyte plant, its working capital and ramp-up support EPC contractor selected VIP – Vanadium Redox Flow Battery Investment Program Bushveld now holds 8.71% in Invinity, formed from the merger of Avalon and redT energy (RedT LN). Invinity also secured >£10m in new equity to support its business Bushveld also completed due diligence to acquire a 24.9% stake in Enerox as part of an investment consortium, watch this space. Bushveld reminds us that the outlook for energy storage ‘remains strong, with cumulative installations of grid-connected battery energy storage predicted to reach 64.3 GW / 179 GWh in 2025.’ Though delays of several months are likely for our projects in South Africa. Lemur Lemur coal mine-power project DFC started with completion due by end of Q3 for the Imaloto coal mine design in Madagascar.  SEIA studies are ongoing and due for submission in Q2. The EPC and power line contract negotiations with Sinohydro and others are ongoing.  Discussions for project finance are also targeting financial close in 12 months. Vanadium Prices Ferro-vanadium Prices: Chinese production of secondary vanadium have been hit by the impact of the Coronavirys. This has supported prices in China and in Europe as Chinese exports reduced with China probably now consuming all its domestic production. Prices in China remain at around $27.5-29/kgV with Europe catching up at $25.5-26.65/kgV on figures from FastmarketsMB. In the US, Ferro-vanadium prices rose to end-February to ~$30/kgV before pulling back to ~$23.5 whereas European prices have remained remarkably steady probably due to the lack of Chinese sales into the region. Price outlook: We expect to see firm recovery in ferro-vanadium prices on new demand for construction steel. Many major economies will use major construction projects and accelerated building programs to restart economic growth as Lockdowns are eased. We are cautiously pulling our forecasts for ferro-vanadium to $29/mtV from $40/mtV for thus year as we still expect ferro-vanadium prices to rise significantly from here. We have also reduced our longer term Ferro-vanadium price to $40/mtV from $45.mtV. Valuation: Valuation: We are revising our valuation to 54p/s based on our revised expectation for ferro-vanadium prices. See table below for key assumptions. We have adjusted our production to account for some Coronavirus disruption in Q1 and Q2 though this may be made up in the second half with planned maintenance brought forward. We have reduced our vanadium sales and production forecast for 2020 to 3,668mtV vs 4,114mtV previously published on 30 January. Conclusion:  Bushveld appears to be weathering the Coronavirus Lockdown in South Africa remarkably well through the processing of stockpiles and use of social distancing and anti-viral hygiene.  Bushveld is also providing significant community support and employment. *SP Angel acts as Nomad & Broker to Bushveld Minerals. Cora Gold* (CORA LN) 5.2p, Mkt Cap £9.9m – ESIA to be carried by Digby Wells The Company appointed Digby Wells Environmental to carry the Environmental and Social Impact Assessment at the Sanankoro Gold Project. The collection of the data for the ESIA has already started. The team is focused on growing the resource base at the Sanankoro with the DFS targeted before the end of 2021. Additionally, the Company is looking forward to the renewal of the Sanankoro exploration license with an application for the award of a new permit submitted earlier. *SP Angel acts as Nomad and Broker to Cora Gold   Pensana Metals (PM8 AU)  A$0.205, Mkt cap A$33.7m – Pensana awarded additional exploration licence close to Longonjo Pensana Metals has released an announcement to the ASX confirming that it has been granted a new exploration licence for rare-earths covering 7,456km2 adjacent to its Longonjo licence in Angola. The new area, Coola, is located approximately 16km from Longonjo and is reported to contain two rare-earth bearing carbonatite intrusions as well as ʺfive additional alkaline intrusive complexes which collectively represent an immediate and wide range of very well defined ‘walk-up’ exploration targets prospective for NdPr and other rare earths.ʺ The new licence area, in which Pensana holds a 90% interest, has been granted for an initial two-years period and is renewable for seven years. Pre-existing academic work on the Coola and Monte Verde carbonatite intrusions has confirmed that they are enriched ʺin elements and minerals associated with rare earth mineralisation such as fluorite, barite, phosphorous and niobium. [and that] They are also the same Cretaceous age (135 million years ago) as Longonjo and part of the same regional geological event.ʺ The Coola and Monte Verde targets, as well as the other five intrusive systems and a further five geophysical anomalies are understood to lie below shallow superficial cover and to have not previously been the subject of commercial exploration. Maps published in the ASX release show the Coola licence area located to the north of the Huango to Lobito railway line (Longonjo is situated to the south of the railway) and to the west of the same N/S power line from the Gove hydro-power dam as serves Longonjo. Chief Operating Officer, Dave Hammond, explained that ʺHaving received the Mining Licence for Longonjo our plan is to capture and test the high potential bronfield opportunities within trucking distance of the proposed treatment plant which have the potential to increase overall productionʺ. Conclusion: The additional Coola licence area contains similar geology to the company’s Longonjo licence area to the south and academic geological research has confirmed the presence of rare-earths mineralisation. The licence area is served by the same transport and hydropower infrastructure as Longonjo and successful exploration could potentially feed the same processing infrastructure as that to be constructed for the Longonjo development.   Phoenix Copper* (PXC LN) 22p, Mkt Cap £10.8m – Empire oxide resources increase Phoenix holds 80% of the Empire mining property in Idaho Phoenix Copper has reported an updated mineral resources estimate for its copper oxide project at the historic Empire copper mine in Idaho. Using a higher cut off grade of 0.36% equivalent copper (CuEq), the new estimate shows a 27% increase in the measured and indicated tonnage from the 15.2mt reported in May 2019 (at the lower cut off of 0.184% CuEq) to a May 2020 total of 19.3mt. Inferred resources totalling a further 10.5mt show a substantial increase over the 4.3mt previously reported implying that the exploration programme in 2019 has expanded the overall mineral resource footprint. The copper grade of the latest estimate at 0.42% is consistent with the 0.49% previously reported while the silver grade of 11g/t is approximately 1.4g/t lower that the 2109 estimate. The company explains that the latest estimate ʺutilised the same assay data to tabulate the current resource estimate that was used for the May 2019 resource” but that as the geological understanding of the mineralisation has evolved ʺit was noted that much of the gold and silver in the deposit was not being included as part of the oxide copper resource because the gold and silver mineralisation was not always spatially  associated with copper grades meeting the cut-off criteria.  We believe this is perhaps due to a gold and silver mineralising event that occurred later than the primary copper mineralising event and occurred on a trend with a different orientation than the primary copper mineralisation”. As a consequence of the improved understanding the latest assessment models the different ʺmineralised trends separately so that substantial gold and silver grades could stand on their own and not be subjected solely to the surrounding copper values.  This has resulted in a larger overall pit shell that is inclusive of significantly more metalʺ. Future work on the Empire open pit project is to undertake further metallurgical work to optimise flowsheet design with the aim of ʺmaximising the recovery of copper, zinc, gold and silver, versus the processing of oxide-copper ore and taking the other metals simply as by-products from the oxide copper processing.ʺ Conclusion: Re-estimation of the mineral resources at the Empire oxide pit to take account of the different mineral distributions applicable to the separate elements has increased the overall measured and indicated resource tonnage  by approximately 27% despite the application of a materially increased cut-off grade. We look forward to the publication of the detailed estimation report expected within the next 45 days. *SP Angel acts as Nomad and broker to Phoenix Copper   Rambler Metals* (RMM LN) 1.75p, Mkt Cap £22.7m – Q1 copper production stable as higher grade areas are developed Click here for full research note PDF Rambler Metals reported on Friday that its copper production for the 3 months to 31st March 2020 (1,210t of copper in concentrate) remained broadly unchanged compared to that achieved during Q1 2019 (1,207t of copper in concentrate) with a 14% decline in mill throughput offset by a combination of higher feed grades (1.53% compared to Q1 2019 1.33%) and recovery rates remaining stable at 96.2% Despite a 5% improvement in recovery rates to 72.9%, the gold content of the concentrate declined by 18% to 929oz as a result of the reduced volume of ore treated and lower feed grades. The lower throughput results from a combination of the effect of measures taken to help manage the risk of Covid19 infection and the temporary knock on effects of increased development mining aimed at increasing the accessibility of high grade ores from the Lower Footwall, Upper Footwall and Ming North Down-Plunge ore zones in preparation for a planned expansion to produce 1,500tpd at grades of around 2% copper from the 740 level. The company reports that ʺThe decision to begin developing the mine into high-grade resources on the 740L, taken in mid-2019, has begun to deliver the expected grades in March of 2020 (1.73% copper and 0.78 g/t gold)ʺ. Despite the temporary reduction in mining flexibility as a result of developing these new areas, the company described each of these zones as capable of delivering copper grades of 2% or higher and says that results from the first quarter have demonstrated that, despite the added difficulties of safe working in compliance with physical distancing rules: The Ming Mine has maintained ʺConsistent ore production rate in Q1 2020 vs Q4 2019 (933 dry tonnes per day vs 961 dry tonnes per day)ʺ; ʺQ1 2020 realized a 5% and 1% respective increase in Copper and Gold recoveries over Q4 2019ʺ; and ʺQ1 2020 realized a 16% increase in Copper head grades compared to the same period in 2019” As copper prices improve, the operation is, therefore well placed to deliver ʺthe target of sustainable production at 1,500 mtpd and 2% copper grade by the end of 2020.ʺ President & CEO, Andre Booyzen, explained that discussions with investors to fund the expansion to 1500tpd are ʺat an advanced stage and we anticipate finalization of  funding by the end of Q2 2020. Funds raised will be used to accelerate our capital development underground, upgrade sections of the Nugget Pond concentrator plant, and clean up some debt on the balance sheet.” He went on to explain that ʺAll this will take place whilst we are producing at limited capacity, thereby enabling us to get set up to almost immediately produce at the 1,500 mtpd rate when the copper price recovers sufficientlyʺ although he cautioned that ʺit is dependent on the success of our fundraising effortsʺ. Conclusion: Rambler Metals is putting in the mine and technical development to enable it to move rapidly to an increased 1500tpd production rate once the financing is secured. In the meantime increased ore grades and recovery rates have ensured that copper production is being maintained despite lower mill throughput. *SP Angel act as Nomad and broker to Rambler Metals & Mining   Analysts John Meyer – 0203 470 0490 Simon Beardsmore – 0203 470 0484 Sergey Raevskiy – 0203 470 0474