Rockfire Resources (LSE:ROCK) sat at 1.9p on Thursday after revealing more positive signs from its Plateau gold deposit in Queensland, Australia, where a significant mineralised system was unveiled last month. The firm said further assay results from its recent drilling campaign on the project have extended the discovery’s confirmed length of mineralisation to more than 150m.

Particular highlights included a strong interval of 7m at 2.3g/t gold within a broader interval of 12m at 1.3g/t gold from hole BPL015. Meanwhile, BPL016 returned a substantial interval of 5m at 1.3g/t gold from 14m deep within a broader zone of 18m at 0.7g/t gold.

The latest assays come just weeks after Rockfire soared on the news that it had potentially discovered a ‘large-scale gold deposit’ at Plateau. The firm revealed that initial drilling results had returned broad, consistent gold assays with mineralisation occurring almost continuously throughout a 215m deep drill hole.  In particular, the firm believes that hole BPL025 – which intersected 177 at 0.5g/t gold – had intersected the upper levels of an extensive mineralised system.  Gold grades are now expected to increase continually alongside depth, as they do at a comparable 10-million-ounce gold project owned by Resolute Mining called Mt Wright.

On Thursday, Rockfire said it believes that the latest mineralised zone unearthed by its drilling at Plateau forms part of this proposed, large gold system. The firm added that gold mineralisation remains open at the central breccia in all directions. Meanwhile, it said the new mineralisation is not currently included in its 41,000oz gold resource estimate for the Plateau. It is now awaiting the results of nine additional shallow exploration/resource-infill/resource-extension drill holes over the next two weeks.

Rockfire’s chief executive David Price said: ‘It is extremely pleasing to have four holes drilled into a new target, with all four holes returning potentially economic gold grades and potentially mineable widths, so close to surface.

‘These results build on the recently discovered Central Breccia zone, which was identified by the Rockfire exploration team during mapping and sampling. The results from these holes demonstrate the strength of the near surface gold mineralisation, which is still open in all directions. The Central Breccia is a priority target for further exploration.

‘These holes are interpreted to represent the near-surface expression of what we believe to be a large gold system encountered at depth in hole BPL025. Importantly, the four exploration holes into the Central Breccia extends the mineralised target zone by another 150 m towards the east. The Central Breccia lies above a recently demonstrated geophysical resistivity and chargeable anomaly, providing Rockfire with a very large target for future gold exploration.’

Plateau is located around 50km southeast of the Australian gold mining centre of Charters Towers. It is also 17km east of the 3-million-ounce, operating Pajungo gold mine, and 47 southwest of the 10-million-ounce gold Ravenswood gold mining operations, including Mt Wright. The prospect is a breccia-hosted gold system where historic drilling undertaken by the likes of Esso Australia and Newcrest Mining has returned high-grade gold from a distinct circular magnetic feature.

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, does not a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article’s content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Last week saw West Africa-based exploration business Oriole Resources (LSE:ORR) announce that its executive directors had agreed to be paid in options in lieu of contractual salary payments for a limited time. Non-executive chairman John McGloin and independent non-executive David Pelham also followed suit, making Oriole one of the few companies on AIM whose board's financial interests are directly aligned with those of shareholders. We can think of a number of mining companies that would do well to learn from this example. 

The move – full details of which can be found here – forms part of wider efforts at Oriole to maximise cash available for ongoing exploration across the firm's assets in Cameroon and Senegal. However, the board's decision to be remunerated with skin in the game rather than cash – even if on a temporary basis – also sends out a great message to investors. Crucially, what it indicates is that Oriole's management team genuinely believes in the story the company is communicating to the market – something many of its peers on AIM could learn from.

Executive compensation, a hot topic in public markets

Executive compensation was a hot topic at the recent Mello event in London, with many private investors expressing dismay at the money being paid to the boards of many of their held stocks.

Many of you will remember Jeff Fairburn, who was awarded a £75 million bonus last year and was promptly ‘forced to leave’ (or left voluntarily, depending on which newspaper you read). We doubt he will have been too bothered, as £75 million should surely see him through to the end of his days.

The bonus was awarded for “outstanding performance” – which is at odds with the many complaints of “shoddy building work” from Persimmon house buyers. But executive pay is not only an issue at the very top of the market (Persimmon is a FTSE 100 company) but also at the junior end too.

Many small companies have small boards, sometimes just two or three directors. These directors then sit on the remuneration committee, which is in charge of what to pay the directors (themselves!). Unsurprisingly, remuneration committees rarely vote to decrease their salaries.

One issue is that many of the smaller companies are not owned by institutions, and instead the majority of shares are in retail hands. Most retail investors are one-man bands; they can’t muster up enough of a holding in order to force change. The shareholder register is littered with private investors, who have punted a few hundred pounds or a few grand, only to hold onto the stock (and rather than sell they hold onto it forever as it goes down).

Once a director is a plum position at a company, where he/she can pay himself/herself whatever they feel like, there is often very little to challenge them. This is why we see share prices decline year-on-year, only for director remuneration to steadily increase.

Some directors take home packages of over £250,000 – despite not having delivered a shred of value and only failing at their jobs. There are very few industries where one can achieve such a high salary for doing very little/nothing, but the UK listed small and micro-cap space is one of them.

It's also why many of these directors rarely leave the businesses. It’s a lifestyle, and a gravy train. It’s why everyone wants to become a non-executive director. Turn up to two meetings a year, earn a decent packet, smash the expenses card, and impress your mates down the pub. Turkeys never vote for Christmas, and so as long as this goes unchallenged – it will only be set to continue.

This is why it is so refreshing to see Oriole's board increase their holdings at a time when the company needs cash to fund its growth. By being paid in options, they actually need to deliver something operationally, reaping the rewards alongside investors in the process.

The move was clearly appreciated by investors, as well – with shares rising 14.1pc to 0.3p on the news. This strength has continued and, at writing on Tuesday, the stock was trading up a further 38.2pc at 0.47p following the release of another positive update. However, the directors' remuneration options are yet to be issued and will not be until between 1 November and 31 January 2020.

Perhaps the appreciation showed by Oriole's investors might catch the eye of some of the AIM executive teams whose pay would unlikely change until the day their company closed and they are forced to move on to the next lifestyle vehicle. More likely, this is wishful thinking!

Author: Ben Turney

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for its content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

 

 

In March 2019, Greatland Gold (LSE:GGP) signed a $65m farm-in deal with major international gold firm Newcrest Mining (ASX:NCM) for its Havieron project in the Paterson area of Australia.

Subsequent drilling has solidified Greatland’s belief that Havieron holds the potential to host an extensive mineralised system. If correct, then this project could become a large, multi-commodity, bulk tonnage, underground mining operation.

Newcrest’s work at Havieron to date has firmed up the asset’s depth of mineralisation as well as extending its strike length both from the north to the south and from the east to the west. What’s more, the potential for gold to continue into asyet-untested areas remains open, presenting the opportunity for yet more upside at the prospective project.

In this special report, we lay out the potentially significant, value-enhancing effect that Havieron could have on Greatland’s market valuation to the benefit of the company’s investors.

To read the report in full, please click here.

 

 

Guest article by David Price, CEO of Rockfire Resources

Evaluating a mining exploration stock requires some level of knowledge of the terminology used within the sector and the ability to review and understand assay results.

Assaying is the process of determining the quantity of each element within an individual sample, which is representative of a prospect or an ore body. Assaying is usually performed by independent, commercial laboratories, however, some active mine sites will have their own assaying laboratory at the mine to minimise on-going costs of many hundreds of thousands of assays.

The term “prospect” is generally used to describe mineral occurrences and early-stage exploration targets. The term “Project” normally refers to a prospect which has been defined to the point that it is justified for significant funds to be allocated to the prospect and the Prospect becomes a Project. An ore body is a specific term used only when the economic parameters of potential mining have been taken into account. In other words, an orebody has to demonstrate potential to become economic at some point in the future. Without the economic component, mineral accumulations should only be referred to as prospects or projects.

There are numerous factors that combine to determine whether a mineralisation discovery is worth developing. Generally, how easy it is to mine (mining method), the size of the find (tonnage), the ease of extraction (processing), and the concentration of the minerals (grade) are the main considerations. Proximity to existing processing facilities naturally increases the odds of a discovery becoming economic, and a site having such operations nearby is often referred to as having ‘nearology’.

 

Near-surface deposits are cheaper to extract via open pit mining, as long as the orebody is large enough to be mined in bulk. Generally, open pit mines are no more than 300 metres deep and are several hundred metres wide. Open pit mines can be used in hard rock mining for ores such as metal ores, copper, gold, iron, aluminium, as well as coal mining and many other minerals.

As you might expect, the costs associated with underground mining are considerably higher owing to many factors including additional safety requirements, potentially harder rock, necessity for ventilation, escapeways and water/power provision at depth. As a comparison, if the cost of mining ore at an open pit mine is approximately $10 per tonne, an underground mine may cost around $25-$50 per tonne. The actual cost will vary from one project to another and factors such as rainfall, labour rates, snow depth, ground conditions, terrain, weathering of the rock, altitude, accessibility and fracture density in the rock will all contribute to variation in mining costs.

Does it make the grade?

Once a discovery is made, its economic viability needs to be assessed. Assuming the depth and size of the deposit make it attractive for development, the next thing to consider is its mineralisation grade. This is the proportion of target minerals within the rock and is usually expressed either as grams of target minerals per tonne of rock to be mined (g/t) in the case of precious metals (gold and silver), or a percentage (%) of target minerals within the ore in most other cases.

Analysis of gold content is generally performed by Fire Assay (FA). Each sample submitted by the company is firstly dried, crushed (to -5mm), then pulverized (to -80 micrometers) to create an homogenous sample. A sub-sample is then taken by the laboratory (either 30g or 50g) and generally, the larger the sub-sample, the more statistically accurate the result is likely to be.

A flux and lead bead is then added to the pulverized sub-sample and the sample is put into a furnace to be smelted to a liquid. The gold preferentially adheres to the lead, so as cooling occurs, the lead and gold separate out from the rest of the sample. The lead is ultimately absorbed into the crucible, leaving a small gold ball (prill) in the bottom of the crucible. This gold prill is then analysed using either Inductively Coupled Plasma (ICP) or Atomic Absorption Spectrometry (AAS), which are both spectrometry techniques to determine absolute gold values. 

From the assay results, exploration companies generally calculate the average grade across a deposit and apply what’s called the ‘cut-off grade’ – a minimum grade determined from possible economic parameters for the deposit. Grades beneath the cut-off grade are usually excluded from the data when calculating average grades. Similarly, high-grade cuts are usually statistical high anomalies which are excluded from the data when calculating average grades, to ensure anomalously high grades are not likely to contribute to an over-estimation of the average grade.

When reviewing grades, it is important to note the sample size. The more drill holes intersecting the orebody, the more reliable the data. It is also most important to note the individual sample size which is submitted to the laboratory. Sample sizes will vary from a 50g split to a 5kg sample. The larger the sample contributing to the preparation for fire assay, the more statistically accurate the sample is likely to be. For example, Rockfire Resources instructs the laboratory to crush and pulverises an entire 5kg sample which has been submitted to the lab, prior to a 50g sub-sample being taken by the laboratory for fire assay. This larger, homogenous sample increases the cost of each individual assay, but ensures the most statistically accurate sample is analysed.

Grades can vary quite significantly, with the highest grades frequently grabbing the headlines, but larger tonnages and higher average grades are the best indicators of a potential resource. Assay results are often mapped out in order to pinpoint likely targets for future drilling campaigns.

Author: David Price

Many thanks to David for this guest article. David is Chief Executive Officer and Managing Director of Rockfire Resources plc. David is an experienced geologist and senior executive with +30 years of experience in the global mining industry and has over 20 years’ experience in securing funding for exploration projects. David holds the highest category of membership as a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM) and is a Competent Person for Mineral Exploration under the guidelines of the JORC Code. Rockfire Resources is advancing gold and copper projects in Queensland Australia, where historical drilling has already identified significant gold, copper and silver mineralization.

https://www.rockfireresources.com

Horizonte Minerals (LSE:HZM) sat at 4p on Monday morning after confirming the drawdown of $25m worth of funding towards its Araguaia ferronickel project in the Para state of Brazil.

As announced in August, Orion Mine Finance has provided an upfront $25m cash payment to Horizonte in exchange for a 2.25pc royalty on Araguaia. This royalty applies only to the first 426,429ts of contained nickel within the ferronickel produced and sold at the asset. This volume is equivalent to the nickel production estimated over Araguaia’s life of mine as per its stage one feasibility study (FS).

Orion is a significant player in the mining financing space, deploying around $1.5bn in royalties, streams, debt, and equity over the past three years alone. The non-dilutive funding it has provided to Horizonte will support the business in advancing pre-construction work streams at Araguaia.

Araguaia is a Tier 1 mining project with a high-grade scalable resource, located south of the Carajás Mining District in the Pará State of north-east Brazil.  The area boasts plenty of well -developed infrastructure such as roads, rail and hydroelectric power.

Horizonte’s stage one FS for the asset centres around an open-pit nickel laterite mining operation that delivers ore from several pits to a central processing facility. Here, a single line rotary kiln electric furnace (RKEF) extracts ferronickel, used in the stainless-steel industry, from Araguaia’s ore. After an initial ramp-up period, the project will reach full capacity of c.900,000ts of dry ore feed per year to produce 52,000ts of ferronickel containing 14,500ts of nickel annually. Over an initial 28-year mine life, the FS design generates free cash flows after taxation of $1.6bn returning an IRR of more 20pc against on an initial capital cost of $443m.

On top of this, Araguaia has been designed to allow for a second RKEF process plant, funding through operational cash flow. This stage two expansion would double Araguaia’s ferronickel output, providing for a 26-year mine life generating cash flows after taxation of $2.6bn with an estimated NPV of $741m and an IRR of 23.8pc. All of these figures were reached using a conservative base case nickel price forecast of $14,000/t, well below the $16,462/t at which the metal presently sits.

Monday’s news comes just days after Horizonte announced that a pre-feasibility study (PFS) confirmed its Vermelho project as a ‘large, high-grade resource, with a long mine life and low-cost source of nickel sulphate for the battery industry’.

The work estimated that the property, also based in Para, would have a 38-year mine life generating total cash flows after tax of $7.3bn. Elsewhere, the PFS gave Vermelho – which produces nickel suitable for use in electric vehicle batteries- an IRR of 26pc and an estimated base case post-tax NPV of $1.7bn against an initial capital cost estimate of $642m. Finally, the work put Vermelho’s estimated annual production at 25,000ts of nickel and 1,250ts of cobalt when operating at full capacity. This translates into a cash cost of $8,020/t of nickel, defining the project as a low-cost producer.

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven Ltd is not responsible for its content or accuracy and does not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Energy metal companies received another boost earlier this month when the UK government announced up to £1bn in additional funding to develop and embed the next generation of electric vehicles (EVs). The money will be used to develop UK supply chains for the large-scale production of EVs, and will also fund further research and development into the technology supporting the vehicles.

‘[The funding] will accelerate mass production of key technologies in the UK through major investments in the manufacturing of batteries, electric motors, power electronics, and hydrogen fuel cells, along with their component and materials supply chains,’ the government said in a statement.

The news marks yet another sign of growing global support for the move away from conventional vehicles and towards EVs, which require significant amounts of energy metals like cobalt, nickel, and copper.

For example, earlier this year, US Senator Lisa Murkowski proposed the introduction of a Minerals Security Act at a Washington-based conference. This would aim to streamline domestic regulation and permitting requirements in the energy metals sector and forms part of growing efforts to curb China’s increasing dominance in the EV space.

Also in attendance at the conference was Tesla, which highlighted its concerns around a global shortage of nickel, copper, and other EV battery minerals in the future due to underinvestment. Likewise, France and Germany both asked the European Commission to support a €1.7bn battery cell consortium earlier this year.

Elsewhere, more than a dozen countries and around 20 cities globally have proposed banning the future sale of passenger vehicles powered by fossil fuels. For example, a ban on the cars will commence in 2040 across much of the UK, and France, 2030 in the Netherlands, Israel, and Sweden, and as soon as 2025 in Norway.

The positive demand outlook this creates for metals used in the EV industry is also reflected in the latest global commodity demand figures from CRU. The research group expects demand for cobalt, lithium, and nickel to grow by 14.3pc, 12pc, and 5pc, respectively, from 2019 to 2023 in China. Likewise, demand for the three metals is expected to grow by 9.5pc, 10.9pc, and 5.4pc, respectively, across the rest of the world over the same period. On both accounts, they are the three metals expected to enjoy the highest growth rate.

Many energy metals are still sourced heavily from politically unstable countries – creating potential supply volatility. For example, more than 50pc of cobalt demand current stems from the DRC, an area known for human rights issues and political disruption. With this in mind, the figures and government initiatives mentioned above create a bright picture for firms in the sector with projects in more stable countries.

A potential beneficiary that we have previously covered on Mining Maven is Global Energy Metals (TSX.V: GEMC). The firm owns 100pc of the Millennium Cobalt Project and two neighbouring discovery stage exploration-stage cobalt assets in the famed Mount Isa region of Australia. The company is also developing two battery mineral assets in Nevada, US, called the Lovelock Cobalt Mine and Treasure Box Project. These neighbour the world’s largest lithium-ion battery production plant – Tesla and Panasonic’s Gigafactory One. Finally, it has also teamed with Australian business Marquee Resources to advance the past-producing Werner Lake mine in Canada.

Another potential beneficiary is Forum Energy Metals (TSX.V: FMC), which is developing the Janice Lake sedimentary copper project in the Saskatchewan region of Canada alongside Rio Tinto. The business also recently staked ownership of the nearby Love Lake project, which is prospective for copper as well as nickel, palladium, and platinum, and owns a portfolio of uranium assets.

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Shefa Gems (LSE:SEFA) is currently moving towards trial mining and revenue generation at its Kishon Mid-Reach project in the Mount Carmel region of Northern Israel. Alongside regulatory and operational efforts to reach production, the firm is developing a clear marketing strategy – notably launching a jewellery collection alongside an internationally acclaimed designer.

Investor Andy Morrison visited Shefa’s project to discuss, among other areas, the firm’s marketing efforts and its progress towards securing a mining licence. Here, he updates us on what he learned from the precious stones business.

Practical project

To recap, Shefa – formerly known as Shefa Yamim - is a multi-commodity explorer of precious stones that operates in Israel. The Kishon Mid-Reach, Shefa’s primary asset, contains a 4.5km-long and 150m-wide strike with gravel layers of variable thickness. The organisation has delineated this area into three zones, each at different stages of exploration and development.

The most advanced of these is currently Zone 1, where enough geological and sampling work has been completed to allow progress to trial mining. Following a successful sampling campaign last year, Shefa completed an independent technical economic evaluation on Zone 1 in February 2019. This is the basis of the company’s trial mining programme.  The work found that the first mine in the zone should be able to process 1.5Mts of gravel over 11 years. This processing capacity can potentially be doubled, halving unit operating costs to $10.15/t and life of mine to four years.

More recently, Shefa completed a bulk sampling programme from target gravel horizons at Zone 2, with early analysis showing strong prospectivity. The samples are currently undergoing treatment and examination at the firm’s operational site. Once this has completed, Shefa plans to apply for a prospecting licence at Zone 2, effectively bringing it to the same development level as Zone 1.

Speaking to MiningMaven, Morrison says he was impressed by the progress Shefa is making at both of the zones in development at the Kishon Mid-Reach during his recent trip.

‘We went into the exploration areas where Shefa has been doing bulk sampling, and we could see that it is an efficient project. All that needs to be done, generally speaking, is the removal, sifting, and sorting of gravel so that gems can be extracted. The gravel can then be returned. This can be done without any chemicals and with the equipment that is currently on-site, so the Kishon Mid-Reach is very environmentally sound,’ he said. ‘This is the first gemstone project in Israel, and there is a lot of exciting opportunity to be had here. As it stands, there is every indication to suggest that Shefa will be able to make the most of this opportunity. Indeed, we visited the processing plant, where the incidence of gems is concentrated into smaller quantities and picked through. The business believes that it will be able to recover 90pc of the gems through this process.’

Marketing efforts

Alongside its mining efforts, Shefa’s time – and part of the proceeds of a £1m placing completed in May - are being focused towards its marketing efforts. In March, the firm received an independent valuation of its ‘Gem Box’ from Dr Gavrielov Gila, a gemmologist with decades of expertise in the appraisal and purchase of precious stones for use in jewellery. The full results of this work, which included valuations of $10,000 and $7,000 per carat for Moissanite and Carmel Sapphire respectively, can be seen in the table below.

With this in mind, the company is working to increase the global reach of its brand by promoting jewellery collections made up of stones from its ‘Gem Box’ worldwide. Collections will be marketed online, through franchises with large marketing chains, and local showrooms with a licenced brand name of gemstones from the soil of the Holy Land. Ultimately, Shefa intends to create a fully-integrated ‘Mine to Market’ model, which will see it control every aspect of the jewellery development chain. This will ensure that the full value of its gems is captured.

The business’s efforts in this area took a significant step forward in February when it announced the launch of its ‘Heaven on Earth’ jewellery collection alongside world-renowned designer Yossi Harari. The collection, which features 31 pieces in total – ranging in value from $4,000 to $85,000 - incorporates a wide range of Shefa’s ‘Gem Box’ including Moissanite and Carmel Sapphire. Morrison tells us that the firm is now looking to accelerate these marketing efforts by building several new workstreams:

‘With stones already acquired, the company are looking at accelerating the marketing process sooner rather than later. Getting people to buy gemstones in quantities is not something that happens overnight, so it wants to create awareness and market for its products before it begins mining.’

Critical milestone

Finally, an upcoming critical milestone for Shefa to pass is being awarded a mining licence for Kishon Mid-Reach Zone 1. This will enable the company to begin trial mining next year and, critically, start generating revenues, subject to funding. In its recent H1 results, Shefa said it was making ‘good progress’ towards the completion of a mine planning, engineering, and environmental report, supported by the proceeds of a recent £1m fundraise. The statement forms part of its mining licence submission to the Ministry of Energy Natural Resources Administration Israel for Zone 1.

Shefa received another critical vote of confidence in its licencing arena in August when its prospecting licence was renewed for Zone 1. As well as demonstrating the Israeli government’s confidence in Shefa’s operations, the development allows the firm to apply for a ‘Certificate of Discovery’ in the area.  If granted, this would give it exclusive rights over a mining licence.

Following his recent visit, Morrison said regulatory progress is continuing apace:

‘We were able to discuss plans with management and have a conversation with the consultant company leading the permitting and licencing efforts. Being granted the mining licences will be an important step for Shefa. But, before this happens, there needs to be a certificate of discovery. Alongside all of the environmental processes, management believes this is imminent, and all of the work towards being granted this certificate has been completed. Importantly, this regulatory milestone could provide a trigger point for investors to join us.’

Indeed, if Shefa can obtain its mining licence and advance towards production while continuing to develop its marketing efforts, then the company will likely enter a busy period for newsflow. If this can trigger an increase in trading volumes, then it will be interesting to monitor where Shefa’s share price goes from its current 5.6p.

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

 

Following a £1m placing in May, Shefa Gems (LSE:SEFA) is moving towards beginning trial mining and revenue generation at its Kishon Mid-Reach project in the Mount Carmel region of Northern Israel. Alongside regulatory and operational efforts to reach production, the precious stones firm is developing a clear marketing strategy – notably launching a jewellery collection earlier this year alongside an internationally acclaimed designer. With Shefa’s shares falling from 6p to 4.7p this year, giving the firm a £7.8m market cap, we look at the key milestones that could create value for shareholders over the coming months.

Looking for gems in Israel

Shefa Gems – formerly known as Shefa Yamim - is a multi-commodity explorer of precious stones operating in Israel. Gemstones have enjoyed renewed levels of popularity in recent years, with prices increasing by 100pc in the last decade alone. This valued the global market at nearly $22bn in 2018. Expansion is expected to continue, as well, with the sector’s compound growth rate expected to reach 5pc annually from 2019 to 2026.

The Kishon Mid-Reach, Shefa’s primary asset, contains a 4.5km-long and 150m-wide strike with gravel layers of variable thickness. The organisation has delineated this area into three zones that sit at different stages of exploration and development.

Currently, the most advanced of these areas is Zone 1, where geological and sampling work is sufficient to progress the project to trial mining.  Work in Zone 2 will be concluded early next year and this will be added to the package of ground which will be trial mined. The trial mining will not only generate cash flow, but will also enable the company to define its maiden resource in the Kishon Mid-Reach project. Following a successful sampling campaign last year, Shefa completed an independent technical economic evaluation on Zone 1 in February 2019. This study forms the basis of the trial mining programme.

The technical work found that the first mine in the zone should be able to process 1.5Mts of gravel over 11 years. What’s more, through a small machinery upgrade, this processing capacity can potentially be doubled, halving unit operating costs to $10.15/t and life of mine to four years. This places the mine at the lower end of the global cost curve for comparable projects.

Elsewhere, Shefa is working to progress Zone 2 at the Kishon Mid-Reach to the same stage as Zone 1, while work at Zone 3 will be left until a later date.

In total, nine different types of gemstones have been retrieved by Shefa at the Kishon Mid-Reach, and these form what the company has termed its ‘Gem Box’. Notably, Shefa is currently the only company in the world to find large quantities of natural Moissanite – a hard, deep-blue gem – and recently discovered an entirely new mineral called Carmeltazite which has been found in the trademarked Carmel Sapphire. This mineral, which was previously only thought to exist in outer space, has now been recognised by the International Mineralogical Association.

In March, Shefa received an independent valuation of its ‘Gem Box’ from Dr Gavrielov Gila, a gemmologist with decades of expertise in the appraisal and purchase of precious stones for use in jewellery. The full results of this work, which included valuations of $10,000 and $7,000 per carat for Moissanite and Carmel Sapphire respectively, can be seen in the table below.

Shefa Yamim Gemstone

Cut & Polished price per carat

(US$)

Natural Moissanite™

(crystals till <4mm and rough only)

10,000

Blue Carmel Sapphire™ (Cabochon cut)

7,000

Black Carmel Sapphire™ (Cabochon cut)

5,000

Hibonite

1000

Sapphire

500

Ruby

500

Spinel

150

Ilmenite

105

Garnet

50

Zircon

100

CPX

45

Mix KIM's (Garnet, ilmenite, spinel, CPX)

30

Rutile

25

 

Funding progress

Shefa’s efforts to unlock the full potential of its assets at the Kishon Mid-Reach took a significant step forward in May when it raised £1m in a placing. It issued shares at 4p each to a mixture of specialist institutional investors and high net worths with two-year warrants exercisable at 8p. Since then, the business has been putting this cash injection to use in several key areas.

Firstly, and arguably most importantly, Shefa is completing all of the necessary work towards securing a mining licence for Kishon Mid-Reach Zone 1. This will enable the company to begin trial mining next year and, critically, start generating revenues, subject to funding. Shefa’s non-executive director James Campbell told us that beginning with trial mining is a typical approach when developing a gem deposit:

‘As opposed to going straight to full-scale mining, we are going to trial mining. This is very usual for deposits of this nature. By starting small - on something classified as a deposit rather than a resource- you then begin to start selling production through different channels developed over time in a way that is well-thought-through from a marketing perspective.

‘So, on the conclusion of trial mining, you will not only make money, you will also arrive at a point where you can classify a deposit as either an inferred or indicated resource. Once you get to this point, you can compile a feasibility study that even allows you to work towards raising bank finance if you want to expand even further.’

In its recent H1 results, Shefa said it was making ‘good progress’ towards the completion of a mine planning, engineering, and environmental report. The statement forms part of its mining licence submission to the Ministry of Energy Natural Resources Administration Israel for Zone 1.

Shefa received another critical vote of confidence in the licencing arena in August when its prospecting licence was renewed for Zone 1. As well as demonstrating the Israeli government’s confidence in Shefa’s operations, the development allows the firm to apply for a ‘Certificate of Discovery’ in the area. If granted, this would give it exclusive rights over a mining licence.

Beyond Zone 1, Shefa has also been using the proceeds from May’s placing to advance chiefly Zone 2 and Zone 3 at the Kishon Mid-Reach. Notably, the business completed a bulk sampling programme from target gravel horizons at Zone 2 in June, with early analysis showing strong prospectivity for Moissanite. The samples are currently undergoing treatment and examination at Shefa’s operational site. Once this has completed, the company plans to apply for a prospecting licence at Zone 2, effectively bringing it to the same development level as Zone 1. This will enlarge the Kishon Mid-Reach’s overall deposit base.

Mine to Market strategy

Finally, alongside its exploration and permitting activities, Shefa is putting some of May’s proceeds towards its marketing efforts. The company is working to increase the global reach of its brand by promoting jewellery collections made up of stones from its ‘Gem Box’ worldwide.

Collections will be marketed online, through franchises with large marketing chains, and local showrooms with a licenced brand name of gemstones from the soil of the Holy Land. Campbell tells us that emphasising the origin of Shefa’s gems is critical to maximising their value:

‘In today’s world, the origin has been almost essential to jewellery purchasers. For example, Canadian consumers favour Canadian diamonds considerably. This means that if you can ascribe locality and origin back to what you are producing, it does give it extra value. In Shefa’s case, we recognise that the proximity of our gems to the Holy Land in Israel will command a premium among certain areas of the market.’

Ultimately, Shefa intends to create a fully-integrated ‘Mine to Market’ model, which will see it control every aspect of the jewellery development chain. This will ensure that the complete value of Shefa’s gems will be captured by the company.

The business’s efforts in this area took a significant step forward in February when it announced the launch of its ‘Heaven on Earth’ jewellery collection alongside world-renowned designer Yossi Harari. The collection, which features 31 pieces in total – ranging in value from $4,000 to $85,000 - and incorporates a wide range of Shefa’s ‘Gem Box’ suite including Moissanite and Carmel Sapphire.

Campbell adds that Shefa has begun to build on this launch by developing numerous marketing channels: ‘These are embryonic at the moment but will be a major part of our upcoming news flow. We are working to find that balance between rarity – after all the Kishon Mid-Reach and its associated gems are unique in the world – the right kind of designs, the right combinations of minerals, and the right ways of communicating to potential consumers to maximise the value of our products.’

For Shefa the focus over the coming months will be twofold. As the company advances its plans to commence trial mining, it will also dedicate its energy to building its vitally important marketing partnerships. Success in the precious gems business is predicated on securing reliable resale partners, who it is hoped will be able to sell stones at a premium. Given that the company has already secured one marketing partnership with Harari, the firm seems well positioned to secure further deals. When you consider the potential allure of buying gemstones mined from the Holy Land, Shefa’s pitch looks relatively straightforward.

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

Kavango Resources (LSE:KAV) was sitting at 1.74p on Monday after revealing ‘mounting evidence’ that its Ditau project in Botswana could host carbonatites – the primary source of rare earth elements (REEs) globally. If the company’s view bears fruit then this could be highly significant for the project. The fact that the firm has entered into non-disclosure agreements with “several major and mid-tier firms” about a possible Joint Venture here suggests this is being taken seriously. The next steps could prove to be extremely revealing.

In its update, Kavango said that further analysis of assay and geochemical results from its core drilling at the 1,386km2 site in February has suggested the presence of ‘fenitization’. This is a type of extensive alteration associated with what are known as carbonatites, geological bodies mined around the world for economic deposits of REEs such as neodymium and praseodymium.

Such elements have become highly sought after in recent years due to the use in the manufacture of the new generation of electric vehicles as well as in magnetics and other types of technology. Historically, carbonatites have also been mined for their phosphate content – primarily used in fertilisers – and their copper and uranium.

About one out of nine carbonatites worldwide have been mined commercially and one of the world's most productive carbonatites, Palabora, has been in production continuously since 1953. It remains to this day South Africa's principal source of copper.

Kavango also revealed that, after releasing drill results in August, it learned that a Canadian miner called Falconbridge previously drilled into three carbonatites fewer than 25km from Ditau in an area hosted by similar rocks. Although the business was looking for kimberlites – the world’s primary source of diamonds – Kavango said that carbonatites possess ‘similar-looking magnetic and gravity signatures’.

The carbonatites that Falconbridge intersected lie just below sand cover, making them amenable to lower-cost open-pit mining. Due to geological similarities between Ditau and the area drilled by Falconbridge, Kavango believes that any carbonatites discovered on its licence area are also likely to be relatively close to the surface.

With these similarities in mind, Kavango now plans to assess the geophysical and geochemical characteristics of the Falconbridge carbonatites to assist its exploration for the formations at Ditau.

Kavango’s analysis of existing airborne magnetic data at Ditau has also identified ten ‘ring structures’ that it claims to be typical of a type of magmatism that is often accompanied by the intrusion of carbonatite. Using existing funds, it will survey ‘some or all’ of these ring structures in a bid to identify carbonatite targets. It added it could then test these targets using relatively shallow and cheap percussion drilling.

‘The objective is to demonstrate over the coming months the existence of carbonatite within Kavango's Ditau licences,’ the business added.

Elsewhere, Kavango said that it had signed non-disclosure agreements with ‘several major and mid-tier companies’ concern possible future joint ventures at Ditau. It expects its work towards identifying carbonatites at the project to support these discussions.

The organisation’s chief executive Michael Foster added that there is ‘mounting evidence’ that Ditau is at the centre of a previously unrecognised alkali magmatic complex.

‘The current orientation exercise is designed to confirm the existence of carbonatite associated with the ten ring structures identified to date,’ he said. ‘A number of mining companies have shown interest in this project and we look forward to working with an industry partner to realise fully its potential.’

If Kavango is able to demonstrate more evidence that its Ditau licenses contain carbonatites that potentially host commercial deposits of mineralisation then it is entirely possible the business will secure a Joint Venture with a much larger firm. Even though the company has a portfolio of projects, further advancement alone at Ditau could be transformational.

To read our recent Q&A session about August’s Ditau drill results with Kavango’s director and chief geologist Mike Moles, please click here.

 

 

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

 

Arc Minerals (LSE:ARCM) sat at 3.85p with a £27.5m market cap on Tuesday after revealing an extension to the mineralised zone at its Cheyeza East copper target area in Zambia. This is a positive step forward for the company and the question now is can it build on this development?

In Tuesday's update, the business revealed that its maiden drilling programme at the site has extended the width of its open-ended mineralised zone to more than 300m. Meanwhile, the prospect's strike length in the north has extended to at least 650m and also remains open-ended. Among the intersections encountered by Arc were 19.7m at 0.59pc copper from 15.3m at drill hole six, 11m at 0.75pc copper from 69.40 at drill hole seven and 9m at 0.92pc copper from 14.9m from drill hole nine.

Cheyeza was one of several areas identified by geophysics and geochemistry work completed by Arc at its 66pc-owned Zamsort asset last year. Arc is particularly interested in a 3km by 0.8km area at Cheyeza East where up to 2,792 ppm copper has been identified in soil. This is where it has drilled all of its holes to date.

The company's executive chairman Nick von Schirnding, called Tuesday's results 'encouraging'', adding: 'Drill holes six and seven, which were drilled either side of drill holes four and five, have demonstrated that the width of the mineralised zone along this drill profile is now in excess of 300m and still open ended. Drill holes eight, nine, ten and twelve, drilled along strike and to the north east have confirmed that the strike length to the mineralised zone in the north of this target area is at least 650m long.'

Elsewhere in Tuesday's update, Arc said it has completed infill soil sampling at its Lubeta target area. Lumbeta was also identified by the company last year and stretches for 11km in associated with the crest of a fold. According to Arc, these formations can act as mineralisation traps and form high-grade deposits. The business said that its sampling has further refined the 11km long anomalous feature into three target areas, the longest stretching for 4km. 

Finally, Arc said it has also begun access and initial drill pad preparation at its West Lunga target, where the definition of drill targets and drilling plans are already well advanced. West Lunga is located in the western part of the Zamsort & Zaco licences and targets the same horizon that hosts the world-class Kamoa deposit. 

On the progress at Lumbeta and West Lunga, von Schirnding said the following: 'While we await the results of several new holes at Cheyeza East, investors should also look forward to maiden drilling at Lumbeta and West Lunga - two significant new targets which we are extremely excited by.

'A third drill rig is now mobilising to the Lumbeta target area where over 3,700 infill soil samples have been collected and where soil geochemistry provides encouragement that the target area may be copper bearing. The largest of these zones is the western zone where the soil analysis can be traced for circa 4km and appears to represent the limbs of an interpreted anticline in this part of the license. We look forward to releasing further updates shortly.' 

Elsewhere, Arc is continuing to develop its more advanced Kalaba prospect at Zamsort. Kalaba is a copper-cobalt licence covering nine of 30 high priority targets ranked by a previous JV operated by Anglo American. It is found near First Quantum’s Sentinel and Kansanshi and Barrick’s Lumwana mines. The project has an existing near-surface estimated copper-cobalt oxide resource of 16.59Mt at 0.94pc copper and a historical exploration target of 150Mt. This makes it one of the most significant projects of its type in Zambia.

 

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

The Author has not been paid to produce this piece by the company or companies mentioned above.

Catalyst Information Services Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future

  1. Q&A with Kavango Resources' Mike Moles on how it's all to play for at Ditau (KAV)
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  5. Chesterfield Resources jumps after revealing new drilling target in Cyprus (CHF)
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  10. Kavango receives Ditau assay results as it positions for asset farm-out (KAV)
  11. ‘The opportunity value is huge’ – Cobra Resources’ Craig Moulton on his plans to create value as firm prepares development of maiden assets
  12. Kazera spikes as Namibia resource estimates exceed expectations (KZG)
  13. Arc Minerals up 38pc week-on-week after identifying a large new target at Zamsort (ARCM)
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  15. ‘We are in a strong strategic position’: Heddle and Baxter on their plans and outlook for Greatland Gold (GGP)
  16. The MiningMaven Q&A: Kavango Resources’ Chief Geologist, Mike Moles (June 2019)
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  18. View From The City: Will Asiamet be an obvious take-out target if the copper market turns? (ARS)
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  20. The MiningMaven Q&A: Kavango Resources’ Chief Geologist, Mike Moles (June 2019)

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