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BHP 'motivated' to come back for SolGold - broker

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Drilling down into the mining sector.


Atalaya Mining  (ATYM LN) 89 pence, Mkt Cap £104m – Copper output doubles in Q3 as ramp up proceeds

Atalaya Mining reports that Q3 copper production rose by 97% to 8752 tonnes of copper in concentrate from the 4442 tonnes achieved during Q2. The company is maintaining its 2016 production guidance of 23,500-27,000 tonnes.
The company reports that recovery rates improved to 83.6% from the 79.8% achieved during Q2 and reached an average of 84.72% during September.
We infer that head grades also improved somewhat as it appears that even with the higher throughput and recovery rates the grade of ore treated would have been higher than Q2 to produce the full increase in copper content of the concentrate achieved.
The company expresses optimism that it will be running at the full nameplate capacity by the end of this year as it ramps up to the full 9.5mtpa planned processing rate.
Conclusion: The ramp up of production at Atalaya appears to be proceeding smoothly with much effort directed at eliminating bottlenecks in the plant


Berkeley Energia (BKY LN) 53.5 pence, Mkt Cap £107m – Infrastructure development update

Berkeley Energia has updated the market on progress with the initial infrastructure development for its Salamanca Uranium Project in western Spain.
The 5.2km long road diversion scheme is underway and expected to take 3 months to complete while a contract has now been awarded to the Spanish power provider, Iberdrola, for the diversion of the main powerline.
The project has a considerable measure of community support and the company reports that it has received over 20,000 applications for the first 200 jobs available and has commenced training of the first 100 employees.
Community development initiatives include the provision of a wifi network as well as the provision of footpaths and cattle trails “to improve infrastructure for the local community”.
Berkeley Energia again highlights the scale of the US$100m project which “has the potential to be Europe’s only major uranium mine and one of the biggest producers in the world once in production supplying over four million pounds of uranium concentrate per annum, equivalent to approximately 10% of the continent’s total requirement.”
The project is expected to start shipments in 2018.
Conclusion: The Salamanca Uranium Project is proceeding with the initial works to divert road and power infrastructure and is receiving considerable interest in the employment opportunities in area of high unemployment where high paid, skilled jobs are much sought after.

Ironveld (IRON LN) 5.8p, mkt cap £18.9m - IDC to invest R244m ($18m) in Ironveld iron vanadium project

Ironveld reported on 6th October that the IDC, the South African development agency would invest some R244m ($18m) into its iron, vanadium and titanium project in the northern limb of Bushveld Igneous Complex.

The funds are part of a R841m financing package for project development and are to support what is described as a Broad-Based Black Economic Empowerment’s ‘BBBEE’ capital contribution in Ironveld Smelting (Pty) in support with the BEE 26% stake in the project.
The funds are split as follows:
R100.80 million Preference Shares (BBBEE Shareholding)
R101.1 million Senior Loan to Ironveld Smelting (Pty) Ltd
R18.1 million Senior Loan to Ironveld Mining (Pty) Ltd
R24.08 million capitalized interest
Offtake:  Oreport to take all HPI powder production for five years at 42,000tpa as per the DFS as well as all the titanium slag production
The company is due to announce a complete funding package shortly.

SolGold* (SOLG LN) 20p, Mkt Cap £245m – Further thoughts on BHP offer

SolGold shareholders will get a chance to voice their opinions on Thursday 13th October at the company’s EGM.

Yesterday’s statement on BHP’s offer of $30m for 10% of the company’s equity at around US$22c/s and the potential for a further $275m of funding for the project to earn into 70% of SolGold’s 85% interest in the Cascabel project in Ecuador.
The offer mark a rare move by BHP to earn into a project held by an exploration company and highlights the competition between majors to acquire stakes in up and coming copper projects.
While the BHP offer lacks sufficient certainty for board approval at this stage we would not be surprised if BHP were to return with an improved offer at some stage.
What we do know for sure is that BHP is sufficiently motivated to emerge from the shadows to show its interest with a public offer.
*SP Angel acts as Nomad and Broker to SolGold. An SP Angel analyst visited the Cascabel project. 

Savannah Resources (SAV LN) 4.3 pence, Mkt Cap £18.0m – Mutamba / Jangamo mineral sands project consortium agreement

Savannah Resources reports that “following consultation with the Ministry of Mineral Resources and Energy of Mozambique” it has reached a new consortium agreement with Rio Tinto for the exploration of the Jangamo (Savannah Resources) and Chilubane and Mutamba  (Rio Tinto) projects in Mozambique.
The three project areas “which are part of the same, continuous mineralisation trend. Mutamba/Jangamo includes an established 65Mt at 4.2% THM resource and significant expansion potential and an exploration target of between seven and 12 billion tonnes at a grade ranging from 3% to 4.5% THM”.
Savannah will operate the project exploration and hold an initial 10% interest in the combined project with the opportunity to increase its beneficial interest to 51% on the achievement of certain milestones.
Rio Tinto has agreed to enter into offtake agreements for 100% of any future heavy mineral concentrate production on commercial terms. Rio Tinto has retained a right to acquire the project on an agreed multiple of the incurred costs prior to the delivery of a formal pre-feasibility study. In the event that Rio Tinto elects to acquire the project at a later date, the price “will be based on an independent valuation of Savannah’s participating interest.”
Conclusion: The revised agreement suggests that in addition to its relatively advanced copper project in Oman and its early stage lithium exploration in Finland, Savannah Resources will soon be exploring the Mozambique mineral sands project.

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