On Monday, MetalNRG (NEX:MNRG) and Mkango Resources (LSE:MKA) announced they have entered into a non-binding heads of terms agreement regarding the Thambani Exclusive Prospecting Licence in Malawi. The deal would give MetalNRG the chance to earn up to a 75pc interest in the Thambani uranium licence by spending up to $2m on exploration over a period of three years.

The exploration campaign would be split into three tranches or ‘workplans’, each 12 months long. During the initial workplan, MetalNRG must spend $500k on exploration at Thambani which will include 1.500 metres of drilling. On completion, MetalNRG will earn a 25% interest in the uranium assets and operations. During the second workplan, MetalNRG could advance its interest in the project to 49pc following an additional investment of $700k on further development of the exploration area.  Finally, the third workplan would entitle MetalNRG to a 75pc economic interest in the project subject to a further spend of $800k.

In the first half of 2017, Mkango carried out sampling at Thambani which is located in southern Malawi. Assay results returned high-grade uranium, tantalum and niobium values and new areas of mineralisation were identified. 

Commenting on the news, Rolf Gerritsen CEO of MetalNRG said:

"The Heads of Terms Agreement entered into with Mkango enables us to position the Company as a focused uranium play with an exciting exploration opportunity in Thambani. The combination of the Thambani project along with our, close to production, uranium project in the Kyrgyz Republic will put MetalNRG in a strong position in the London market."

Alexander Lemon, President of Mkango Resources, said: "This transaction is another milestone for Mkango and for Malawi, and is further endorsement of the Company's strategy and potential. With MetalNRG funding the Thambani uranium project and the previously announced transaction with Talaxis funding Mkango's Songwe Hill rare earths project, Mkango shareholders can look forward to an exciting year of news flow and progress in two of the market's most strategic commodities at present. We are pleased to be working with MetalNRG, and look forward to a new drilling program being carried out at Thambani."

Author: Stuart Langelaan

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 performance

 

Armadale Capital (LSE:ACP) rose 2.13pc to 1.2p on Friday morning after announcing progress towards the completion of a definitive feasibility study (DFS) for its flagship Mahenge Liandu graphite project in Tanzania.

The firm said a final environmental and social impact assessment report for the project found that the potential impact of graphite mining and processing can be reduced, limited, and eliminated using ‘appropriate mitigation measures’. The report was informed by consultations with various local authorities and includes baseline environmental data that looked at ways to reduce the impact of mining at the site.

Armadale said it has also completed a decommission implementation plan that considers ways to use the Mahenge Liandu side after mining completes. As part of this, the firm has examined ways to reduce the long-term impact of mining.

Elsewhere, the firm said it has also received a relocation action plan (RAP) covering the proposed 9km2 mining licence at Mahenge Liandu. According to Armadale, the area affected by the project has limited areas of development and a low population density. As a result, the company anticipates a low compensation cost relative to the overall capital requirement of the project.

Finally, Armadale added that it is finalising its comments to both the ESIA report and the RAP and expects to submit both to the National Environment Management Council of Tanzania by the end of April.

The company’s director Nick Johansen said: ‘We are very pleased with the speed at which the DFS is advancing as we look to advance the world-class Mahenge Liandu Graphite Project in south-east Tanzania and establish a significant high-grade graphite mine. Both the ESIA Report and RAP are integral to this process, enabling us to apply for a mining licence, so we are delighted with the findings that appear favourable. We are now completing our in-house work on these documents and look forward to submitting both to the NEMC shortly. Other multiple workstreams are ongoing regarding the DFS and commercial discussions related to the Project; we anticipate updating the market with further progress in the near term.’

Mahenge Liandu is a high-grade coarse flake asset that Armadale expects to become a strategically-valuable ‘world-class’ supplier to the lithium-ion battery sector once it enters production. The 29.9km2 site is based in the Neoproterozoic system of high-grade metamorphic rocks with easy access to strong infrastructure and Tanzania’s most populous city, Dar es Salaam.

According to Armadale, Mahenge Liandu is one of the highest-grade, large flake deposits in the world, with a JORC-compliant, inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite. A scoping study completed in March last year gave the site a pre-tax NPV of $349m (£261.7m) and an internal rate of return (IRR) of 122pc; in comparison, Armadale’s market cap currently sits at just £4.61m. What’s more, these calculations are based on a conservative basket graphite price of $1,272/t.

The project has a payback period of just 1.2 years, based on low capex requirements of only $35m after tax and a mine life of 32 years at 400,000tpa (c.49,000tps of graphite concentrate). Armadale believes this life of mine could be increased significantly, with current figures representing just a quarter of Mahenge’s total resource.

To read our recent interview with the business, 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.

The Author has been paid to produce this piece by the company or companies mentioned above.

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

Catalyst Information Systems 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 Systems Ltd are not responsible for its content or accuracy. 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.

Canadian cobalt developer Global Energy Metals (TSX-V:GEMC) revealed that it has made a payment that will allow it to begin exploration work at its two projects near Tesla’s Gigafactory in Nevada on Thursday. The firm, which has announced plans to co-list in London, said it made a payment to the Bureau of Land Management for the required reclamation bond fee to begin drilling at the sites, which are called Lovelock and Treasure Box.

The properties are located in Churchill County, around 150km east of Tesla’s major battery factory in Sparks. Lovelock covers around 1,400 acres and is said to have produced 500ts of cobalt and nickel mineralisation between 1883 and 1890 when it was last in operation. Global Energy believes exploration work and modern drilling techniques could unlock a large amount of potential value at the site.

Treasure Box, meanwhile, is adjacent to Lovelock and hosts mine workings from limited copper production, which occurred until early into the 20th century. A historical diamond drill hole at the asset reportedly intersected 1.52pc copper over 85ft, with mineralisation beginning at surface.

Global Energy’s chief executive Mitchell Smith said completing the bond payment would enable the business to move forward with a staged exploration programme at Lovelock. He added that this will allow for further definition of the character, size, and potential of the nickel-cobalt-copper system at the asset.

‘We are excited about this initial phase of exploration and are very optimistic that this strategically located asset will significantly further the growth of our company,’ said Smith.

The company said its exploration program will be informed by ground induced polarisation surveys that defined areas of anomalous subsurface chargeability. This work has generated a number of drill-ready targets. The business is now reviewing work program options and anticipated announcing details of the first-phase exploration in the ‘near future’.

Earlier this month, Global Energy raised $813,500 in an oversubscribed placing at $0.05 a share to support the funding of the programme. Meanwhile, it announced in March that it had made its first option payment towards acquiring an 85pc stake in both sites. To do this, it issued 384,627 of its shares to the projects’ current owner Nevada Sunrise and paid $20,000 to the underlying vendor.

Global Energy focuses on offering security of supply of cobalt, which is a critical material in the rapidly growing rechargeable battery market. It is building a diversified global portfolio of assets in the sector, including project stakes, projects and other supply sources.

The business’s flagship asset is the Millennium Project in the world-renowned Mt. Isa region of Queensland, Australia. It executed the final agreements to take a 100pc interest in the project in November. Millennium is a multi-zone, near-surface cobalt-copper sulphide system with several kilometres of potential strike length. It is located near established mining, transport, and processing infrastructure and offers easy access to a very skilled workforce.

The growth-stage site contains a defined zone of cobalt-copper mineralisation.  Here, a 2016 JORC Resource estimate identified 3.1MMts of inferred resources containing 0.14pc cobalt and 0.34pc copper with gold credits. Global Energy is now looking at ways to increase the size of its deposit. Results from a first phase exploration campaign at two zones called Millennium North and Millennium South exceeded grade and thickness expectations. The firm will now carry out a second phase of drilling to examine both areas further.

Alongside Millennium, Global Energy has acquired two further discovery sites called Mt. Dorothy and Cobalt Ridge.  These are collectively known as the ‘Mt. Isa projects’. The areas expand Global Energy’s Australian land position by nearly twenty times but have yet to be exploited. Exploration to date has returned high-grade cobalt intercepts at both, allowing Global Energy to line up numerous targets for further investigation and test work to define a resource.

Finally, the business currently owns 70pc of the Werner Lake cobalt mine in Ontario Canada. It joint venture partner Marquee Resources is enjoying much success in its ongoing exploration campaign at the asset.

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

Sirius Minerals (LSE:SXX) bounced 4.2pc to 21.9p on Thursday morning after securing a major European distribution deal for its flagship fertiliser.

The company has signed a ten-year supply and distribution agreement with agribusiness BayWa Agri Supply & Trade (BAST) for the sale of its POLY4 polyhalite product into Europe. BAST is a subsidiary of listed German entity BayWa AG, which distributes more than 30MMts of agricultural goods across Europe every year. This includes the sale of approximately 2MMtpa worth of fertiliser.

The deal provides for the exclusive distribution of guaranteed minimum tonnes of POLY4 across most of Europe for a 10-year term. This will begin from the first production from Sirius’s Woodsmith Mine in North Yorkshire and includes two five-year extension options. According to Sirius, Woodsmith contains the world’s largest and highest-grade deposit of polyhalite, a unique multi-nutrient fertiliser that can be used to increase balanced fertilisation around the globe.

The guaranteed minimum volumes of POLY4 for sale under the agreement increases to 2.5Mtpa in year five. This takes Sirius’s aggregate peak contracted sales volume to 10.7Mtpa. The deal also allows Sirius to elect for BAST to purchase and distribute additional quantities above the guaranteed amounts, allowing the organisation to shift uncontracted capacity if needed. However, BAST would receive a more significant share of obtained pricing if this option was exercised.

The pricing mechanism in the agreement is linked to the downstream pricing received by BAST on the sale of POLY4 in Europe. Indeed, the price received by Sirius under the deal is determined by the amount received by BAST with reference to benchmark prices and the nature of BAST’s customer.

According to Sirius, this approach incentivises BAST to sell POLY4 further down the value chain and optimise the best FOB netback price. The firm said the deal also gives it greater exposure to pricing in the downstream market and expects to deliver it the highest rates across its current supply agreement portfolio.

Finally, Wednesday’s agreement provides for the establishment of a joint venture vehicle for the management of sales and marketing of POLY4 into Europe.

Chris Fraser, managing director and chief executive of Sirius, said: ‘The European fertiliser market is highly advanced and the second largest in the world behind China. We are delighted to be partnering with a leading agribusiness to distribute our POLY4 product into this key market. Our exclusive partnership with BAST will enable us to reach downstream customers through the groups' well-established and extensive logistics network and long-term, trusted relationships with farmers. Our exclusive partnership is structured to enable us to achieve maximum value for our POLY4 product.’

Meanwhile, BAST chief executive Daan Vriens added: ‘We are excited to be partnering with Sirius to bring a high performing, multi-nutrient fertiliser like POLY4 to customers across Europe through Cefetra. We believe in long term partnerships and we feel confident that this will be a successful new endeavour. POLY4 fits with our sustainability and farmer services strategies across our markets. This will provide farmers, via our extensive networks, a fertiliser product that promotes sustainable agricultural practice in our home market, Europe.’

Author: Daniel Flynn

Valuethemarkets.com and Dynamic Investor Relations Ltd are not responsible for the content or accuracy of this article.  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.

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

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

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

Armadale Capital (LSE:ACP) has enjoyed a strong start to the year, with its shares rising from 0.85p to their current 1.16p. Aside from favourable macro conditions, the business - which is currently focused mainly on the graphite market – has been boosted by the progress made at its flagship Mahenge Liandu project in Tanzania. Here, with completion of the project’s definitive feasibility study and decision to mine imminent, Armadale’s management explains why the company’s current £4.6m market cap could represent a great value opportunity.

Graphite opportunity

As it stands, Armadale’s primary operational focus is graphite, which it expects to offer significant commercial value over the coming years. One of the lesser represented commodities on AIM, graphite occurs in metamorphic rocks and boasts numerous, highly practical properties. These include high electrical conductivity, the ability to form extremely-strong cohesive bonds, and resistance to heat (up to 3,000ºC) as well as solvents, dilute acids, and fused alkalis.

Thanks to its attractive characteristics, several exciting and growing markets have arisen for the material. Its most traditional application is in the industrial sector, where graphite is put to use in areas like steelmaking and brake lining. It is also being used increasingly in the creation of so-called ‘graphite foil’, an essential component in the production of electronic products like smartphones and tablets.

Critically, recent years have also seen graphite become widely used in the production of lithium-ion (Li-ion) batteries - applied in emerging renewable energy technologies and, most importantly, electric vehicles (EVs). This final market, in particular, is of most interest to Armadale, with the firm expecting demand for EVs market to deliver a paradigm shift in demand for the material. Based on industry forecasts, this looks within reach.

Indeed, according to the International Energy Agency (IEA), the number of EVs on roads globally will hit 125m by 2030 – this compares to just 3.1m in 2017. Alongside falling prices for the next generation of cars – which had previously limited green vehicle access to only the wealthy - this increased uptake is expected to stem from a rise in environmentally friendly policies among governments around the world. Should this growth explosion play out, demand for all of the commodities required in the creation of EVs - most notably their batteries - will also rise. Indeed, forecasts such as the IEA’s have already seen the prices of popular ‘battery metals’ like nickel, cobalt, lithium, and even copper, fly at various points over recent years.

Armadale’s technical manager Matt Bull says graphite is a lesser-known beneficiary of EV’s rise, adding that few in the market are aware that Li-ion batteries, in fact, contain more of the material than they do lithium. Indeed, as the company notes, numerous ‘gigafactories’ have arisen around the world to rush out unprecedented amounts of Li-ion batteries ahead of the EV boom. Notably, it says, Tesla has built a new $5bn battery factory that could drive a 37pc increase in demand for natural graphite by 2020. The forecast output for the factory is 35GWph/y in Li-ion batteries, requiring the consumption of 28,000tpa of spherical graphite - double the size of the graphite market in 2017 alone.

As Bull notes, Tesla’s Gigafactory is just one of many such gigafactories either being constructed or planned globally. As such, batteries now account for a strong 25pc of total graphite demand, a figure that is expected to grow by around 15pc annually over coming years. ‘These are multi-billion-dollar plants, so you can be sure that they are going to want that security of supply,’ he adds.

Meanwhile, on the supply side, nearly all of the world’s natural spherical graphite is currently sourced and processed in China, where output and prices have been growing since 2016 thanks to forecast demand. In spite of this leading position, many think the global superpower will struggle to keep up with demand as the EV boom plays out. Alongside possible supply limitations, increasingly strict environmental regulations and an absence of the ‘high-quality’ graphene required by these new customers are likely to place pressure on the country. Indeed, one estimate suggests that 360,000t is already needed to supply the battery market.

 

Naturally, many expect both China and its EV customers will look increasingly to other geographies as potential sources of supply that can subsequently be processed. Armadale believes an obvious candidate here will be East Africa, where a growing number of projects are reaching production and offering unprecedented graphite grades.

‘A lot of Chinese operators are being closed out because of environmental issues, so the market responsible for 97pc of production is slowly being cut. Meanwhile, a lot of these Chinese suppliers simply cannot produce graphite of the quality required. These factors are creating a gap between supply and demand, and China is now looking very seriously at external supply,’ says director Steve Mahede. ‘There are quite a few potential producers capable of achieving high grades in East Africa, but very few have yet entered production. We are looking to get exposure to this potential upside.’

Mahenge Liandu progress

Specifically, Armadale plans to enter the market through its 100pc-owned Mahenge Liandu graphite project in Tanzania. Mahenge is a high-grade coarse flake asset that the company expects to become a strategically-valuable ‘world-class’ supplier to the lithium-ion battery sector once it enters production. The 29.9km2 site is based in the Neoproterozoic system of high-grade metamorphic rocks with easy access to strong infrastructure and Tanzania’s most populous city, Dar es Salaam.

According to Armadale, Mahenge is one of the highest-grade, large flake deposits in the world, with a JORC-compliant, inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite. A scoping study completed in March last year gave the site a pre-tax NPV of $349m (£261.7m) and an internal rate of return (IRR) of 122pc; in comparison, Armadale’s market cap currently sits at just £4.61m. What’s more, these calculations are based on a conservative basket graphite price of $1,272/t.

The project has a payback period of just 1.2 years, based on low capex requirements of only $35m after tax and a mine life of 32 years at 400,000tpa (c.49,000tps of graphite concentrate). Armadale believes this life of mine could be increased significantly, with current figures representing just a quarter of Mahenge’s total resource.

Aside from the project’s long mine life and abundant resource, Bull tells us the Mahenge province is known for its mineralisation, from which high purity concentrates can be produced that are market-leading in the graphite sector. As he explains, this quality enables Mahenge’s product to be used in many areas, widening Armadale’s potential customer-base considerably.

Graphite prices are largely a function of flake size and purity. So, a significant factor for us was that the graphite from Mahenge is the highest purity in the market with an excellent flake size. People want to buy the highest purity because it makes it easier to process. There are more applications for high purity graphite than there is for lower purity graphite – indeed, Mahenge’s graphite can be used in any area of the market, all the way from EVs to steelmaking.’

The past year has seen Armadale step up the pace at Mahenge as it works to confirm the project’s viability through the completion of a definitive feasibility study (DFS). In an update earlier this month, the organisation said this DFS work is well advanced, with completion expected in the final quarter of the year.

To date, Armadale has completed drilling to achieve ten years of planned production in the measured JORC-compliant category and updated its mine planning process accordingly. It has also sent 1.6ts of diamond core to Perth, where it will undergo metallurgical testing to enable the completion of final plant design. Elsewhere, the company has finalised its Environmental Social Impact Assessment and Relocation Action Plan for Mahenge and expects to submit this to the National Environment Management Council later this month. It also plans to submit an application for a mining lease in August.

Outside of the project, Armadale said it has also made steady progress on the offtake front. It has begun a test work programme aimed at progressing the MoU for the offtake of 30,000tpa of graphite concentrate into a binding agreement. This MoU, signed with a Chinese partner called the Matrass Group, was announced in February several months after Armadale hired a Beijing-based marketing consultant to assist it in offloading its product. Meanwhile, the business said discussions are progressing with other offtake partners for the remaining 19,000tpa of graphite production.

To complete the DFS, Armadale must now carry out product marketing, update Mahenge’s resource, and develop transport and logistics pathways at the project. It raised £795,275 in February by placing shares at 1.1p each to support it in doing this. Critically, the results of the DFS will contribute to the company’s ultimate decision on whether to mine the project, which it expects to make later this year.

Mahede says investors can expect plenty of newsflow throughout the remainder of the year as this work completes. Both Armadale and investors alike will be hoping that this can help the firm sustain the strong market performance it has enjoyed over recent months. Indeed, the company has managed to mostly shake the sector-wide bear market towards the end of last year that has continued to leave many of its mining peers on their knees. Shares have risen from 0.85p to their current 1.16p so far this year, peaking at 1.7p.

‘There is plenty of positive news flow to come. Particularly if we can advance the off-take agreements, secure permitting, and if we can get project development funding, something we have begun to look into. Those are probably the most important things looking forward,’ says Mahede. ‘Aside from progress at Mahenge, I think one of the drivers will be conditions in the EV market. Usage of the vehicles is rising, and ongoing policy developments around the world – particularly in China – are really pushing the area forward.’

Diversification

Although Mahenge is Armadale’s primary asset, it is worth noting that the firm was not set up solely to get exposure to the graphite market. Indeed, the outfit’s overall aim is to give investors exposure to any high-quality resource projects in Africa. With this in mind, the company has several additional interests.

One of these is the Mpokoto gold project in the Democratic Republic of Congo, which was sold to Arrow Mining in January. The project has a current total mineral resource of 678,000oz gold from 14.58MMts at 1.45g/t gold and is expected to produce c.25,000oz a year over a nine-year mine life. With Armadale retaining a 1.5pc royalty on all future gold sales at Mpokoto, the Arrow deal provided the company with ongoing exposure to the gold market alongside an increased focus on Mahenge’s development.

Meanwhile, Armadale also maintains a small portfolio of quoted investments to diversify its exposure away from graphite and Mahenge. It invests primarily into gold production organisations where it sees an opportunity for capital gain and reviews these allocations regularly. Elsewhere, Armadale says it is open to entering additional projects in the future. However, Bull says that Mahenge will remain its primary focus for the time being.

Supporting Armadale in its efforts to generate value across its portfolio is a highly experienced management comprising decades of sector-specific experience. For example, Mahede is an experienced mining CEO in Tanzania, having been born in the country and remaining a patron to the Tanzanian Community in Western Australia inc. Meanwhile, fellow non-executive director Nicholas Johansen has spent his career as a senior legal practitioner in the Australian mining sector.

Elsewhere, Bull has senior experience at numerous related businesses such as Volt Resources, International Graphite, and Linden Resources. He also owns around 8.4pc of Armadale, which, when put alongside the ‘skin-in-the-game’ offered by other employees and consultants, helps to align management with shareholders.

Finally, and most recently, Armadale added AIM veteran Paul Johnson to its board as a non-executive director. Johnson is an experienced public company director who currently serves as chief executive of African Battery Metals. He has previously served as chief executive of Metal Tiger, Metal NRG, and China Africa Resources. He has also been chairman of ECR Minerals and non-executive director of Greatland Gold, Papua Mining, and Thor Mining.

Where to next?

Armadale has a clear work schedule for the remainder of the year that will culminate in an all-important decision on whether to mine. This is likely to create a lot of newsflow, which could be highly value-generative if it goes the way the business plans.

At the same time, Armadale is flattered by its exposure to the popular ‘EV boom’ investment strategy within a sector where a severe supply deficit looks to be forthcoming. Indeed, such a firm footing in a top-quality project in East Africa could serve Armadale particularly well when the likes of Tesla step up their search for graphite. With the backing of an experienced management team, it will be interesting to see what Armadale makes of the attractive opportunity in its possession.

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

Catalyst Information Systems 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 Systems Ltd are not responsible for its content or accuracy. 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.

Metals Exploration (LSE:MTL) sank by more than a fifth to 0.84p on Wednesday morning after revealing that funding constraints have prevented progress at its flagship gold project in the Philippines. In its update for Q1 2019, the business said that although it has been unable to begin key maintenance programmes at the Runruno project, it has placed orders to undertake mobile equipment rebuilds in Q2 2019.

The organisation revealed that it has also encountered problems on the processing side at Runruno, with both overall plant availability and gold recoveries coming in well below original feasibility studies. Indeed, gold recoveries averaged 66pc over the three months against the feasibility forecast of 90pc. As a result, total poured gold was below budget at 14,892ozs. Meanwhile, average mine gold grades came in at 1.54g/t against a budget of 1.70g/t. Metals Exploration said it expects this deficit to continue and – as such - has accounted for it in its internal forecasts to ensure plant feed grades and forward production can be budgeted more accurately moving forward.

Runruno is found 200 miles north of Manila in a mineral-rich province called Nueva Viscaya. In 2010, a feasibility study confirmed the project’s viability, projecting average production of 96,700oz gold p.a over a mine life of 10.4 years at an average forecast operating cost $477/oz gold before molybdenum credits.  Work to date has defined a resource of 1.42Moz gold, and 25.6Mlb of molybdenum with 900,000oz gold in the measured and indicated categories and 780,000oz in the proven & probable reserve category.

On Wednesday, Metals Exploration added that maintenance issues were also a key detractor on production throughputs. The company said more than two weeks were lost at the hands of ruptures in Runruno’s tailings pipeline and low water availability. It has now identified critical areas in its pipeline for immediate repair or rotation and has arranged for access to alternative suitable process water sources.

Elsewhere, the business revealed that it sold 15,293oz of gold over the quarter at an average realised gold price of $1,309/oz. This left it with cash in the bank of $3.34m as of 31 March. The group added that discussions with its lenders are ongoing to restructure its overall debt position, with a standstill from making principal and interest payments remaining in place until 2 May.

Finally, the business highlighted the numerous changes made to its board over the period. Notably, this saw it appoint Darren Bowden as chief executive and executive director on 3 January. The outfit also appointed Guy Walker as interim chairman and Mike Langoulant as interim chief financial officer, as well as adding new managers in its processing plant division.

Author: Daniel Flynn

The Author does not hold a 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 performance.

 

Since listing in London last July, Kavango Resources (LSE:KV) has been making progress in its quest to locate magmatic, massive sulphide orebodies in Botswana. In particular, the company is focused on a 450km-long magnetic anomaly called the Kalahari Suture Zone (KSZ), where it hopes to discover deposits of copper, nickel, and platinum group elements. In this piece, Kavango co-founder and seasoned geologist Mike Moles explains how the magmatic sulphide orebodies Kavango is searching for are formed, what they could contain, and how they can be developed into a marketable product.

Until Kavango started work on the KSZ, the mineral potential of the area had not been investigated using modern exploration techniques. Kavango believes that the KSZ represents a similar geological setting to the giant Norilsk copper/nickel/PGE deposits in Siberia. The firm has now begun an initial 1,000m drill program at its nearby Ditau prospect.  Meanwhile, the company is continuing to line up further drilling targets through the combination of an extensive airborne EM survey and a pioneering, high-resolution soil sampling technique that detects ultra-fine metal particles.

What are magmatic sulphide orebodies?

Magmatic ore deposits are formed in association with the intrusion of mafic/ultra-mafic magma into (or sometimes on top of) the rocks forming the earth’s crust. This magma contains more dark minerals like olivine and pyroxene than light-coloured minerals like silica-rich feldspars and quartz.

Examples of mafic/ultra-mafic rock include gabbro, peridotite and dunite. Most of the minerals making up these rocks are still silicates but they tend to contain relatively higher proportions of base and precious metals in their crystal lattices than felsic minerals. The diagram below shows this dynamic in action. When these metals are concentrated at high enough grades and in large enough quantities to be economically mined, they are called ‘magmatic ore deposits’.

 

This diagram shows examples of both mafic and felsic rocks (Credit: W.W. Norton & Company)

It is worth noting that magmatic ore deposits are not the same as volcanogenic massive sulphide (VMS) deposits. These are formed from the interaction of seawater with submarine volcanism. The extrusive volcanism represents a ‘heat engine’ that drives the hydrothermal alteration of both the lavas and the country rock. The metals that are ‘dissolved’ by the alteration then combine with sulphur in the seawater. This leads to the deposition of metal sulfide deposits on the seafloor or within the country rocks.

How are they formed?

Mafic/ultra-mafic magma is the product of the partial melting of ultra-mafic rock and sub-ducted crust. The magmas rise into the solid crust partly due to thermal convection (hot spots), partly due to the melting of sediments containing water, and partly due to density, temperature & pressure differentials.

In some cases, the magmas intrude into areas of structural weakness like deep-seated faults or ancient craton edges or suture zones. Here, the magma can reside for varying periods in what are known as ‘magma chambers’ where it interacts with the enclosing rock.

During this period, the magma may partly crystalize and alter the chemical composition of the residual magma. Further pressure from below may then force this ‘evolved’ magma into shallower depths.  In some cases, it may eventually reach the surface, where rapid decompression may result in the extrusion of lava (e.g. basalt). Extrusive lavas cool rapidly, but the magma in the magma chambers may take several million years to cool and crystalize to form solid rock. 

Following this, the concentration of the critical ‘ore’ minerals occurs through a number of different primary and secondary processes.

Primary concentrations

The mafic/ultra-mafic magmas vary in chemical composition depending upon their source rocks and the degree of partial melting that occurred during their formation. The molten magma may end up containing quantities of sulphur and water.

As the magma in the magma chamber begins to cool it starts to crystalise, with some minerals crystalising before others. This changes the chemical composition of the residual magma, leading it to be enriched in certain elements through a process known as ‘fractional crystallisation’.

The chemistry of the residual magma may also be changed by the incorporation of volumes of ‘country’ rock from the walls of the chamber. It is particularly advantageous for the magma to incorporate volumes of coal or coal shale that contains both sulphur and carbon. This appears to be the case with the gabbros on Kavango’s KSZ project. If the residual magma becomes enriched with sulphur, most of the metals will prefer to bond with the sulphur rather than form oxides or take up sites within the silicate lattices. The metal sulphide liquid is late to crystallize and forms an ‘immiscible’ liquid, which is heavy relative to the recently formed silicate minerals. This metal-rich sulphide liquid tends to crystallize on the cool walls of the intrusion or gravitates to the floor where it forms a concentrate - the massive sulphide. 

Concentration and crystallization of this immiscible liquid can also occur at other localities due to a sudden drop in pressure or introduction of new magma into the chamber. This type of mineral concentration is usually dependent upon large quantities of magma passing through the magma chamber, constantly enriching the residual magma in metal sulphide liquid.

A variation of this model occurs in very large mafic/ultra-mafic (layered) intrusive bodies such as Bushveldt, Duluth, and Stillwater. These are closed or partly-closed systems where magma replenishment is less important. In these bodies, sulphur is also less important. After the first phase of crystallization, the residual liquid becomes enriched in certain elements. This may lead to the crystallization of another mineral species until the residual liquid becomes depleted in the elements needed for that phase. This leads to cyclical fractionation producing alternation layers of mineral species. At some point in this very slow process, bands of chromite might form as the concentration of chrome in the residual melt combines with oxygen in the system. As the silicate crystals form, gaps occur between them. These gaps may be filled with the immiscible sulphide liquid, which is rich in copper, nickel and PGEs. In some cases, these sulphide-rich layers are rich enough to be economic.

Another variation are Komatiites, which seem to be restricted to very ancient ‘Archean’ terrains formed at a time when there was no free oxygen in the air. They are essentially ultra-mafic lavas that once flowed over the surface of the earth and were enriched in sulphur.  As the lavas cooled, the metals combined with the sulphur and the resulting immiscible liquid sank to the paleo-surface, where it accumulated in depressions and hollows forming sulphide concentrations. An example of this is Kambalda.

A magnetic image of the Kalahari Suture Zone, where Kavango is searching for massive sulphide orebodies 

Secondary concentrations

Secondary concentrations occur at some point in time after the intrusive has solidified (crystallised). The majority of these deposits are formed by hydrothermal alteration. Essentially, this is the activity of very hot water (or brines) circulating through the intrusive and concentrating the metals further, either within the intrusive itself or transported some distance away, where the precipitation of the minerals is favourable.  These secondary deposits come in the form of re-crystallised sulphides or as oxides/carbonates and can be very high grade.

What do they look like?

On the surface, weathered massive or disseminated sulphide orebodies will form ‘gossan’. These are generally rusty coloured rocks with a rough, crinkly texture. Gossans can be very high grade, although metallurgically these metal oxide ores can be difficult to process. Massive sulphide ore is generally very heavy, formed of a mass of shiny suphide crystals, and will smell of suphur when hit with a hammer. Disseminated sulphide ore will have large numbers of shiny sulphide crystals within a matrix of the host rock (usually gabbro or altered mafic rock).

An example of the various layers of a sulphide mineral vein, with gossan at the top (Credit: Bastian Asmus, Archaeometallurgy) 

How are they found?

The metal particles within the sulphide crystals are too small to find with the naked eye in streams or soils.

Most of the oldest mines are sited where outcrops of gossan were discovered. Typically, the gossans were assayed for metal values. When these proved to be positive, drilling was conducted beneath the gossans to identify sulphide mineralisation below the level of oxidation. Usually, the oxides were not mined, due to the difficulty of extracting the metal.

Although there have been some discoveries in very remote areas in recent times by finding the gossans, most exploration for magmatic sulphide ore bodies is now conducted by remote sensing for hidden orebodies.

Before starting the search, geologists will select areas where a discovery is likely. These will be in areas where mafic/ultra-mafic intrusives are known to occur. Preferably this will be in association with a major structural fault along which intrusives from below the crust can migrate. 

Soil sampling can identify metals coming to surface, whilst geophysical techniques can identify massive sulphide bodies at depth by testing the electro-magnetic signals of the ground being explored. This can be done by airborne EM surveys, which can cover hundreds of kms of survey per day and will typically identify conductors to 200 - 300m depth.

EM conductors identified from the airborne surveys are then followed up by ground-based geophysical techniques to identify drilling targets. Depths to targets can be calculated and drilling can be conducted to investigate the anomalies. 

How are they extracted? 

Once a metal sulphide deposit has been identified, drilled out and a resource calculated; a feasibility study will be carried out to determine whether it can be mined economically. It will be decided how the deposit is to be mined; open cast or underground mining.

During the mining operation, only the ore of a certain grade will be processed. The ore will then be crushed and milled to liberate the sulphides from the host rock (gangue). The resulting product will then undergo floatation which will separate the sulphides from the guague. The sulphides are then smelted to burn off the sulphur (usually captured), leaving a metal matte, which is then sent to a refinery where the economic metals are separated and extracted. The product is either sold at the matte stage or as a metallic product after refining.

Author: Mike Moles

Mike is the co-founder of Kavango Resources (LSE:KAV), where he is currently a non-executive director and responsible for exploration strategy in Botswana. He has 30 years of experience in mineral exploration in southern Africa and has formerly held senior roles at Delta Gold, Reunion Mining, and Lonmin.

The share price of Hummingbird Resources (LSE:HUM) fell 17pc to 16.75p on Tuesday after the company released production figures for the first quarter of 2019.  Gold poured from the Yanfolila mine in the quarter totaled, 23,807 ounces, an increase on the previous two quarters, while ore mined was slightly under the quarterly average over the past 12 months. What appears to have upset the market is the large increase in costs.  Problems in both the Komana East and West pits required remediation work and restricted access. The additional expenditure required ramped up the All-In Sustaining Costs (AISC) to $1,297 per ounce of gold extracted. This is the second successive quarter whereby the AISC has been higher than the average price received for gold sold. However, the costs were markedly lower in Q1 2019 than the previous quarter when the AISC peaked at $1,677 per ounce.

Another factor weighing on the share price is that the artisanal mining depletion in the Komana West pit is deeper and more extensive than Hummingbird previously estimated in the reserve model. However, in Tuesday’s update, the firm stated that as they progress deeper into the pits ‘the impact of this is expected to reduce significantly in the near term’.

Despite these issues, Hummingbird says it maintains its production guidance of 110,000 to 125,000 ounces of gold for 2019.  The company goes on to warn that the AISC for the year may exceed the previous estimates of $800 to $850 per ounce.

On a more positive front, the construction of a second ball mill at Yanfolila is progressing to plan, with the installation team due to arrive on site during April. Once operational, the second ball mill will increase throughput capacity from 1Mtpa to 1.24Mtpa.

Dan Betts, CEO of Hummingbird, commented: 

"The period under review has seen the Company resume mining to plan, following a period of remediation work on the pit wall, with a quarter on quarter increase in production of 33%.  In the period, production was impacted by ore depletion from the Komana West pit from historical artisanal workings, which was greater than forecast in the reserve model.  We are taking immediate steps to reverse the impact of this dilution through working closely with the mine contractor and as we progress deeper in the pits the impact of this is expected to reduce significantly in the near term as we access areas of expected higher-grade ore." 

"We look forward to receiving the updated reserve/resources report in Q2, which will allow us to publish a new Life of Mine plan for Yanfolila.  It is also pleasing to note the strong progress we have made on the second ball mill project and we look forward to the positive impact that will bring to our process plant capacity once completed."

Author: Stuart Langelaan

The Author holds a 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 performance.

Today’s podcast guest is Matt Bull, Technical Director at Armadale Capital (LSE:ACP). Armadale owns the Mahenge Liandu project in Tanzania and released a comprehensive update on the project this week. Matt gives an overview of progress at the project and discusses the next stages required to move it a step closer to production.

This interview was recorded on 16th April 2019.

All opinions expressed are those of MiningMaven and the respective guests unless otherwise stated and should not be construed as investment advice or a recommendation to buy shares in any featured Company. From time to time MiningMaven principals may take equity positions in companies featured. Listeners are advised to do their own extensive research before buying shares which, as with all small-cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of a qualified investment adviser or stockbroker as they deem appropriate. MiningMaven.com is a trading division of Catalyst Information Services Limited. Registered in England no. 06537074 (Registered Office Address 3rd Floor Ivy Mill, Crown Street, Manchester, M35 9BG) #gold #mining #investing

Author: Stuart Langelaan

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

Catalyst Information Systems 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 Systems Ltd are not responsible for its content or accuracy. 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.

On Tuesday, Thor Mining (LSE:THR) announced it has started drilling at the Bonya tungsten deposits near Molyhil in Australia. Thor holds a 40pc interest in the deposit via a joint venture with ASX-listed Arafura Resources (ASX:ARU).

The programme will consist of 2,500 metres of Reverse Circulation (RC) drilling of a number of targets including Samarkand, Jericho, White Violet, and Tashkent deposits. Drilling is expected to take around two weeks and Thor expects to update on progress shortly, as well as updating on preliminary on-site XRF analysis. Each of the deposits has outcropping tungsten at surface, and the The Jericho deposit, in particular, has been mined historically, with a surface stockpile estimated at several hundred tonnes of scheelite ore at surface adjacent the deposit. In addition to Tungsten, there are also deposits of copper and vanadium at Bonya.

30km west of Bonya is the 100pc owned Molyhil tungsten project which Thor is developing towards commercial production. The firm completed an updated Definitive Feasibility Study for the project back in August and is now focused on securing project finance to bring Molyhil into production.

Mick Billing, Executive Chairman, commented: "We are very hopeful of positive results from our first drilling and costeaning program on the Bonya tungsten deposits."

"The 13 outcropping tungsten deposits at Bonya, several of which have historical mine workings, have the potential to add considerably to the life, scale, and economic outcomes of the Company's flagship Molyhil project nearby."

"We hope to be able to provide regular updates of progress, including provisional XRF analysis, during the program."

"Despite the licence area being part of a known tungsten "province", it has had no tungsten drilling since the 1970's, and we are very excited at the commencement of this program, and the potential it brings.

Earlier this month, Mick Billing spoke with MiningMaven to discuss Bonya and Thor Mining’s other assets including Kapunda and the more recently acquired Pilbara Goldfields and Hammersley Metals. You can listen to the interview below.

Author: Stuart Langelaan

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, 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 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. 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.

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