Zimbabwe – Gold producers are urging the government to review the current obligation of miners to sell their gold to the central bank as way to stimulate investment in the country and potential growth in gold output. Under current rules, miners are forced to sell their bullion to Fidelity Printers and Refiners that pays them 70% in dollars and the remainder in local currency.

GoldStone Resources - Tod

SP Angel . Morning View . Thursday 12 11 20

Weaker US dollar sees copper and gold prices higher

AfriTin (LON:ATM) – Uis tin mine in Namibia remains on track for 60tpm by end of 2020

Bushveld Minerals* (LON:BMN) – Ferro-vanadium prices post welcome gains as China continues to import metal

Caledonia Mining* (LON:CMCL) – Blanket remains largely on track despite the challenges of Covid19

Condor Gold* (LON:CNR) – Detailed geotechnical investigations underway at La India

Goldstone Resources (LON:GRL) – Mineable Resource at Homase South significantly extended

Rainbow Rare Earths* (LON:RBW) – Phalaborwa chemical carbonate offers potential to double rare earth payability

Chinese companies continue to club together to manipulate prices through buying syndicates

Minmetals has created the CZSPT ‘Chinese Zinc Smelter Purchasing Team’ to negotiate annual TcRcs with Western miners.

China represents some 47% of zn producton highlighting how powerful these buyers are.

The CSPT ‘Copper Smelter Purchasing Team’ represents 12 major Chinese smelters in TC/RC negotiation.

China represents some 52% of global copper production.

Chinese smelters have reduced TcRc margins as they muscled their way into negotiations and cut rates to attract material away from Japanese and other smelters.

Now the Chinese smelters have asserted a dominant position in the smelting of copper concentrates we may start to see TcRc rates rise through the use of buying syndicates to use their massive buying power to dominate and control price negotiations.

Five miners trapped in flooded coal mine in Shanxi province

China continues to report horrendous statistics for fatalities in coal mining.

Eight miners died last week in another mine in Shanxi in an underground accident.

16 coal miners died in September in Chongqing, Southwest China after being trapped underground.

MHI Vestas installs world’s most powerful floating offshore wind turbine

MHI Vestas have stated that a 9.5MW wind turbine will be transferred to the offshore floating Kincardine wind project, where it will float at water depths of up to 80m.

This week it was announced that they had successfully installed one of the project’s 9MW turbines on its floating foundation.

The turbine is to be the most powerful turbine ever used in a floating wind project and is to be anchored at the 50MW Kincardine floating wind farm in Aberdeen Bay in December.

it is the first of five turbines which will be installed at water depths of up to 80 metres at the floating wind project. one smaller 2MW unit will also be installed. These are being built 15km from the coast by Cobra Group.

As floating wind turbines are not built on the seabed, they can be placed further out at sea in deeper waters where the wind is often stronger, allowing more electricity generation.

Conclusion: Offshore wind farms use allot of REEs, steel, copper and other materials in their construction. Larger wind farms are transforming the economics of power generation and reducing our reliance on fossil fuels. We are going to see allot more of these large-scale turbines installed around our coastline in future years driving new demand for metals and for batteries to back up this and other forms of renewable power supply.

Recent interviews:

US Election, China growth policies Solgold*, Mkango*, Rainbow Rare Earths*: https://youtu.be/YKk5-kVpVGE

EV revolution, gold and other ideas (Interactive Investor): https://www.youtube.com/watch?v=ja0IdjszfCc

Metals Markets: Are they totally dependent on stimulus? (IG TV): https://youtu.be/TOiSwRpgfKM

Tesla Battery Day (IG TV): https://youtu.be/8su0PtyZLIM

SolGold* interview: : https://youtu.be/wK3SDPKADgM

Stock ideas (VOX, 21/10/20): https://www.voxmarkets.co.uk/media/5f913cebb9f74a03c9dfcb4d/?context=/listings/LON/AAZ/multimedia/

*SP Angel act as nomad or broker or nomad and broker to companies mentioned in the above videos.

APEX survey rankings for SP Angel commodity forecasts: 2nd in Gold, 2nd in Copper, 2nd in Nickel, 1st in Tin, 5th in Iron ore.

The survey takes forecast from 21 analysts from commodity traders, banks, economics and specialist commodity forecasters

Dow Jones Industrials -0.08% at 29,398

Nikkei 225 +0.68% at 25,521

HK Hang Seng -0.33% at 26,140

Shanghai Composite -0.11% at 3,339

Economics

China – vehicle sales rose 12.5% yoy to 2.57m vehicles in October vs 12.8% in September

Passenger car sales rose 9%

Commercial vehicle sales rose 30%

EV sales climbed a massive 105% to 160,000 vehicles

Alibaba’s new online home sales platform takes off with >800,000 homes on offer in some 3,000 residential projects

This represents a staggering 40% of major new developments currently on the market

Many are being offered at significant sales prices at Alibaba’s massive ‘singles day’ discounting event

Discounts of up to a RMB1m ~US$150,000 are said to be offered on new homes

The massive sales drive should help China with its ongoing Urbanisation, raise economic activity and help fund further development.

When people move into new homes they automatically become buyers of white goods and other consumer goods (often Ikea).

Low ongoing interest rates should accelerate home buying and the rate of urbanisation in China fulfilling many of goals of the new 5-year strategy

Japan – total machine tool orders recovered to -5.9% yoy vs -15% yoy in September

UK – GDP grew 15.5%mom in Q3 following a 19.8%qoq the previous quarter, although, the economy is still nearly 10% smaller compared to pre-pandemic levels.

This compares to other economies like the US, Germany, France and Italy that are <5% down on pre-pandemic size.

Q4 results are expected to come in weak on the back of new restrictions, the view that was further supported by the BOE that increased its bond-buying programme recently while the government extended its furlough programme through March.

The central bank does not expect the economy to regain pre-pandemic levels until H1/22.

GDP (%qoq): 15.5 v -19.8 in Q2 and 15.8 est.

GDP (%yoy): -9.6 v -21.5 in Q2 and -9.4 est.

UK to get an extra bank holiday to mark 7—year reign of Queen Elizabeth

The bank holiday will be on Friday 3rd June. The late May bank holiday is being moved to 2nd June to enable a four-day break including the weekend.

ECB – Christine Lagarde suggested next stimulus will rely on emergency bond purchases and long-term loans ruling out interest rate cuts.

Expectations are for the central bank to increase and extend its €1.35tn pandemic bond-buying programme at the meeting in December (10th).

France – The economy is set to post a 4.7%qoq drop in Q4 and end the year at -9.4%, according to Bloomberg Economics estimates.

This compares better to the government’s estimate for a contraction of 11% this year but is closer to the French central bank latest projections.

A recovery is expected in 2021 given generous support remains in place and the introduction of vaccine enables the country to avoid further restrictions.

Italy – The government is scheduled to meet Friday to pass the nation’s next budget and consider a new provision worth as much as €20bn to fund pandemic relief programs, Bloomberg reports.

PM Conte’s cabinet approved €100bn in stimulus earlier this year to provide support during the first lockdown and added around €8bn in lockdown relief earlier this month.

Turkey – The lira climbed 4.6% yesterday and is on course for a the biggest weekly gain in more than a decade as President Erdogan pledged “bitter-pill policies” if required and offered support behind the new central bank governor.

Expectations are for the central bank to announce a rate hike next week.

Investors remain sceptical if Erdogan’s sudden change towards orthodox monetary policy is here to stay.

The lira was down ~30% YTD earlier in November before claiming back some losses and is currently trading -24%.

Zimbabwe – Gold producers are urging the government to review the current obligation of miners to sell their gold to the central bank as way to stimulate investment in the country and potential growth in gold output.

Under current rules, miners are forced to sell their bullion to Fidelity Printers and Refiners that pays them 70% in dollars and the remainder in local currency.

Delays in payments and rapid depreciation of the local currency negatively affects producers’ gold sales proceeds.

Exports of gold that the government relies on for most of its FX earnings dropped 23% in the first ten months of the year tracking a 30% decline in production, according to Bloomberg.

US – Hurricane Eta expected to hit Florida West coast

This is a category 1 hurricane and is the 28th named storm this year making it the busiest Atlantic hurricane season on record.

A number of these storms then bounce along the US East coast before barrelling their way across the Atlantic before slamming into the UK and making Ireland and Great Britain the lush green and rather wet place that know and love.

Belarus – Concerns grow after incident at Astravyets nuclear plant just five days after the reactor was

Peru – Volume of exported mining products fell -40.4% in September YoY

Shipments of copper fell -47.5%, gold -16%, zinc -43.2% and iron ore -99.9%.

Shipments of tin and silver both increased by 19.2%.

Peru’s agricultural exports volume decreased by -16.3% due to lower coffee sales which fell -13.8%.

Moderna is expecting to release results of phase three trials of the vaccine’s efficacy by the end of the month, the Company said yesterday.

Moderna is conducting a clinical trial of 30,000 participants and is preparing data to send to the trial’s independent panel of experts.

Anthony Fauci who heads the National Institute of Allergy and Infectious Diseases who is working with Moderna to develop its vaccine and is contributing funding to the phase three trial expressed optimism over the coming update.

Dr Fauci said he would “be surprised if we didn’t see a similar degree of efficacy” to the positive results released by Pfizer/BioNTech earlier on Monday.

Currencies

US$1.1786/eur vs 1.1807/eur yesterday.  Yen 105.29/$ vs 105.37/$.  SAr 15.667/$ vs 15.613/$.  $1.319/gbp vs $1.329/gbp.  0.726/aud vs 0.729/aud.  CNY 6.628/$ vs 6.608/$.

Commodity News

Precious metals:

Gold US$1,865/oz vs US$1,877/oz yesterday – LBMA threatens to blacklist UAE from dealing gold

The world’s most influential gold market authority is threatening to stop bullion from countries including the UAE entering the mainstream market if they fail to meet regulatory standards.

The LBMA has laid out standards which countries must meet on issues such as money laundering and where they source their gold, or face being blacklisted.

The LBMA letter did not target any centre in particular, but four people involved in drafting it told Reuters the gold industry in Dubai in the UAE was the main focus.

Gold ETFs 111.0moz vs US$110.9moz yesterday

Platinum US$867/oz vs US$887/oz yesterday

Palladium US$2,343/oz vs US$2,462/oz yesterday

Silver US$24.08/oz vs US$24.24/oz yesterday

Base metals:

Copper US$ 6,918/t vs US$6,953/t yesterday

Aluminium US$ 1,927/t vs US$1,921/t yesterday

Nickel US$ 15,965/t vs US$15,840/t yesterday

Zinc US$ 2,617/t vs US$2,646/t yesterday

Lead US$ 1,873/t vs US$1,872/t yesterday

Tin US$ 18,265/t vs US$18,260/t yesterday

Energy:

Oil US$44.0/bbl vs US$44.7/bbl yesterday

In another blow to oil oversupply, Iran reported yesterday that its oil exports have averaged between 600,000bopd and 700,000bopd since the start of the Iranian year in March, yet analysts estimate that Iran’s oil exports have been lower

Iran continues to export oil despite the maximum pressure campaign of the US and its efforts to bring Iranian oil exports down to zero

Iran doesn’t officially report exports or production and resorts to various inventive ways to hide the true origin of the oil it exports

Since the US imposed sanctions on Iran’s oil industry and exports in May 2018, the Islamic Republic has been using various tactics to ship crude abroad without being detected, including by tankers switching off transponders or documents stating the oil does not originate from Iran

It has also been reported that Iran is forging oil export documents so it can pass its oil on the market as non-Iranian crude, thus skirting the US sanctions

Last month, the Wall Street Journal reported, citing documents and US officials, that Iranian tankers are hiding in Iraqi waters to do their ship-to-ship transfers of crude oil to avoid US sanctions

While no one outside Iran seems to really know how much oil Iran pushes on the market currently, the country could return legitimately to the oil market in a year or so, if Joe Biden follows through with his intention to offer Iran a path back to diplomacy

Natural Gas US$3.022/mmbtu vs US$2.957/mmbtu yesterday

Natural gas prices rallied yesterday ahead of today’s inventory report from the Department of Energy

Expectations are for a 14Bcf build in natural gas stockpiles according to survey provider Estimize

There are two storms active near the Gulf of Mexico

Hurricane ETA is moving near the west coast of Florida

There is a second storm in the Caribbean that has a 30% chance of forming a tropical cyclone according to the National Oceanic Atmospheric Administration

The weather is expected to be warmer than normal for the next two weeks according to the most recent forecast from NOAA

Inventories during the injection season rose

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$120.8/t vs US$119.2/t

Chinese steel rebar 25mm US$617.0/t vs US$619.7/t

Thermal coal (1st year forward cif ARA) US$55.7/t vs US$54.1/t –

Toshiba stops taking orders for coal fired power plants

Toshiba will stop taking orders for new coal-fired power plants and boost revenue from renewables by 242% over the next ten years.

Siemens Energy has also stated that it will no longer take part in new tenders for coal fired power plants, General Electric said a similar thing in September.

This move was driven by the global shift towards renewables and Biden’s pledge to put clean energy at the centre of the 2tn plan to revive the US economy.

However, Toshiba will honour existing contracts with customers and complete work for 11 coal fired power stations. Despite this, as part of Japan’s pledge to reduce fossil fuels, it will not longer finance new coal power stations in developing countries.

the economy ministry has said it wants to phase out old and inefficient coal fired power plants.

This will be difficult considering Japan’s reliance on coal. Coal has gone from 28% of electricity supply in 2010 to 32% in 2018.

Coking coal swap Australia FOB US$117.3/t vs US$117.3/t

Other:

Cobalt LME 3m US$32,835/t vs US$32,835/t

NdPr Rare Earth Oxide (China) US$52,031/t vs US$52,211/t

Lithium carbonate 99% (China) US$5,580/t vs US$5,524/t

Spodumene 6% Li2O min, cif (China) US$385/t vs US$375/t

Ferro Vanadium 80% FOB (China) US$27.0/kg vs US$27.0/kg

Antimony Trioxide 99.5% EU (China) US$5.4/kg vs US$5.4/kg

Tungsten APT European US$220-225/mtu vs US$220-225/mtu

Graphite flake 94% C, -100 mesh, fob China US$440/t vs US$440/t

Graphite spherical 99.95% C, 15 microns, fob China US$2,300/t vs US$2,275/t

Battery News

UK public charging network expands 7% in Q3 adding 1,200 charging points according to the Department for Transport (DoT) (Energy Live News).

DoT figures show there were 19,487 public EV charging devices up 18% YTD at 1st October. 18% of these devices are rapid charge points. (Fleet World)

Across the UK there are 35,185 connectors across 12,695 locations as of Nov 12, 2020. (Zap Map)

Greater London has the greatest number of charge points, 25.6% of total (69 devices per 100,000 people) while Polar is the largest charging network with a 12.5% share.

Total SE has bought German EV charging infrastructure company, Charging Solutions for integration into Total Deutschland from 1st November.

Charging solutions has a network of 2000 charge points across Germany.

Total recently acquired Source London which operates the largest charging network in the capital, with 1600 on-street charge points.

The network will be 100% powered by renewable electricity generated by its subsidiary Total Gas & Power Limited.

Total has partnered with ChargePoint in 2019 to install charging infrastructure across the UK using its own facilities.

The Company is targeting operating 150,000 charge points across Europe by 2025.

SK IE building separator capacity in China for the battery market

SK IE Technology (SKIET), subsidiary of SI Innovation has begun operating its separator facility in Changzhou China. (Economic Times)

The Company is in the process of building an additional plant in China (870m sqm) and one in Poland (340m sqm) to meet growing demand in the market. Capacity is set to reach 1.8b sqm by 2023.

SKIET is to commence mass production of its separators in 2021, targeting a 30% share of the wet separator market by 2025.

The battery separator market is set to grow at a CAGR of 11.51% over the next 5yrs, from US$2.69bn in 2019 to US$5.17bn by 2025.

Company News

AfriTin (LON:ATM) – 2.31p, Mkt cap £18.8m – Uis tin mine in Namibia remains on track for 60tpm by end of 2020

AfriTin report the ongoing ramp-up of production a the Uis Tin mine in Namibia.

The mine reports production of tin concentrate of 48.2t in October highlighting its progress towards 60tpa by end 2020

The concentrate appears to be running at 67% tin with 32.2t of tin-in-concentrate produced in October.

The plant processed 36,796t in October for 32.2t of tin metal implying a recovered grade of 0.0875% tin vs 0.0892% in September.

AfriTin is targeting a consistent 45,000tpm for 60tpm of tin concentrate and 36tpm of tin-in-concentrate indicating that plant production and concentrate grades are exceeding expectations through Stage 1 of the construction.

The mine and plant remain on track to achieve nameplate production of 60tpm of tin concentrate by the end of 2020 implying some further improvement in grade or recovery rate or both as the plant settles into steady state production.

The Uis mine has a Measured, Indicated and inferred JORC resource of 71.54mt of ore grading 0.134% with some 95,539t of contained tin.

The mine also has an inferred grade of 85ppm of tantalum for 6,091t of material. Tanatalum 25% Ta2O5 sells for $50-52/lb (~$112/t).

Conclusion: AfriTin is making good progress towards the commissioning of the Uis tin mine in Namibia. We look forward to news of the next expansion and for better reconciliation of the JORC resource grade in time.

Bushveld Minerals* (LON:BMN) 12.75p, Mkt cap £147m – Ferro-vanadium prices post welcome gains as China continues to import metal

Ferro-Vanadium prices rise 3.8% in Western Europe as prices rise to $23.5-24.9/t

Ferro-Vanadium prices rise 2% in China as prices rise to $24-26.5/t.

News of new VRFB ‘Vanadium Redox Flow Battery’ developments should also take significant material out of the market.

Bushveld is to supply 25t of vanadium oxide for the 1MW / 4MWh VRFB battery for the Vametco solar mini-grid project.

Invinity Energy Systems recently announced the sale of a 1.8MWh VRFB battery to Orkney Flow for a Tital flow and Hydrogen project.

Bushveld has an 8.71% stake in Invinity

Conclusion: It is good to see Ferro-Vanadium prices picking up for sales into Europe and into China for structural steel. We also see new demand from the infant VRFB market as the use of Vanadium Flow batteries becomes better accepted by power utilities and grid systems.

*SP Angel acts as Nomad and broker to broker to Bushveld Minerals

Caledonia Mining* (LON:CMCL) 1295p, Mkt Cap £158m – Blanket remains largely on track despite the challenges of Covid19

Caledonia Mining reports a 34% increase in EBITDA during the quarter ending 30th September 2020 to US$11.2m (Q3 2019 – US$8.3m) at a margin of 44% (Q3 2019 – 42%).

Revenues, based on gold production of 15,155oz of gold during the quarter (Q3 2019 – 13,646oz) , increased by 27% to US$25.4m (Q3 2019 – US$20.0m).

Cash costs “increased from $686 in Q3 2019 to $758 due to costs associated with COVID-19, a share-based payment expense and increased use of the diesel generators” while costs on an all-in-sustaining basis “increased from $872 in Q3 2019 to $1,119 due to a higher insurance premium and an increased share-based payment expense”.

Chief Executive, Steve Curtis, explained that “a comparison of the costs for the Quarter to costs in the third quarter of 2019 is complicated by factors which somewhat increased the costs in this Quarter.  The on-mine cost per ounce in the Quarter was $758 compared to $686 in Q3 2019.  However, the costs in Q3 2020 include approximately $73 per ounce of costs relating to COVID-19, a non-cash charge in respect of share-based payments and the cost of increased usage of the diesel generators.  After adjusting for these items, the on-mine cost per ounce of the Quarter was $685 per ounce – virtually unchanged from Q3 2019 and lower than budget”.

Mr. Curtis also explained that the increased AISC cost included “a higher royalty charge, which reflects the increased gold price, increased administrative expenses, which is largely due to higher insurance premiums and an increased charge for share-based payments, which reflects the increased share price”.

Electricity supply disruption continued during the quarter and was addressed with the use of diesel generators however, during the quarter Caledonia Mining announced plans for the construction of a 12MW solar power plant “at a cost of approximately $12 million, which is expected to provide 100 per cent of Blanket’s baseload electricity demand during daylight hours and approximately 27 per cent of Blanket’s total daily electricity demand”. The new plant is expected to be operational by the end of 2021.

Reporting on the impact of the Covid19 pandemic, Caledonia Mining says that the equipping of the new Central Shaft has continued “at an increased rate as operations returned to normal following the relaxation of measures to prevent the spread of COVID-19” which entailed restrictions on travel and transport.

The company confirms that “Central Shaft is expected to be fully equipped by the end of 2020 and to be commissioned in the first quarter of 2021 – approximately three months later than expected due to the delays arising from COVID-19”.

Caledonia Mining also confirms that “Production guidance for 2021 is 61,000 to 67,000 ounces; guidance for 2022 is approximately 80,000 ounces”.

Conclusion: The Blanket mine has weathered the Covid19 pandemic while largely achieving its production targets. Costs have risen with an additional US$73/oz attributed to the impact of the virus which has also delayed the commissioning of the new Central Shaft by 12 weeks. In our view, it reflects great credit on the professionalism of the company’s operational team that under the additional challenges of the pandemic its long established production guidance target of 80,000oz pa of gold production by 2022 remains intact and that the project has suffered only comparatively minor delays.

*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe

Condor Gold* (LON:CNR) 42p, Mkt Cap £49.5m – Detailed geotechnical investigations underway at La India

Click here for Initiation note pdf

Condor Gold reports a loss of £0.38m for the three months to 30th September 2020 (2019 – £0.32m loss) bringing the year to date loss in 2020 to £0.73m (2019 – £0.97m loss).

The company reports a 30th September cash balance of £5.5m and describes the progress it has made on advancing its La India gold-mining project in Nicaragua where it has increased the  previously reported acquisition of 85% of the land required in and around the permitted La India open pit mine site area ”including that required for processing plant, tailings storage, waste dump and explosives storage” to an overall 93% of the required land.

Tailings storage design to the level required for final engineering design is well advanced and a detailed geotechnical ground investigation comprising drill holes and test-pits is being progressed to provide data for the design work on the tailings storage area and the La Simona water reservoir.

The company also describes that “Mine and waste dump schedules for a number of mining scenarios have been completed … [and that] … Preliminary designs for the layout of the mine site infrastructure including, in some detail, the designs for the location of the processing plant have been completed”.

Commenting on the progress and expressing confidence that the balance of the necessary land acquisition will be completed successfully, Chairman and Chief Executive, Mark Child, explained that “During the third quarter 2020 Condor Gold continued to de-risk La India Project, advancing the Project to a shovel-ready status”.

Mr. Child also clarified that “Several engineering studies are being taken beyond that of a feasibility study to a final design for construction. In summary, the Project is being fast tracked to production. In-filling drilling programmes in the open pits have been designed, drilling is expected to commence in the near future”.

Conclusion: Design work and detailed supporting studies is accelerating as Condor Gold moves towards the development of its La India project where it has defined a gold resource of 1.1moz within the already permitted La India, Mestiza and America open pits.

*SP Angel act as sole broker to Condor Gold

Goldstone Resources (LON:GRL) 8.25p, Mkt Cap £19.8m – Mineable Resource at Homase South significantly extended

Reverse Circulation drilling followed by metallurgical work has resulted in a substantial increase in the mineable resource at the Homase South Pit, at the Company’s Akrokeri-Homase Gold Project, Ghana.

The drilling programme confirmed the potential to expand the Homase South Pit at depth, exploiting both the oxide ore and the underlying fresh ore whilst further demonstrating continuous gold mineralization within the Homase Trend.

RC drilling at Homase South consisted of 22 holes totaling 2,444m, defining and extending the mineable resource down-dip to a vertical depth of approximately 60m- a significant extension on the vertical depth of 30m defined in the company’s Definitive Economic Plan (DEP).

The recent drilling programme confirmed continuous mineralization well below 30m, where it also returned multiple grades of up to 2.5g/t in both the transitional ore zone and the underlying fresh ore zone.

21 out of 22 RC holes intersected the targeted mineralized zone, with visible gold more common in the deeper parts of the zone, which the board believes will lead to the cumulative head grade exceeding the modelled resource.

Significant intersections that will be used to increase the mineable resource at Homase South include:

Hole 20HMRC003 7m @ 2.18g/t from 65-72m.

Hole 20HMRC005 2m @ 1.77g/t from 31-33m.

Hole 20HMRC011 17m @ 2.53g/t from 64-81m.

Hole 20HMRC012 18m @ 2.09 g/t from 30-48m.

GoldStone’s DEP completed in June 2019 defined an existing JORC resource of 602,000oz of gold with an overall grade of 1.77g/t with a mineable resource of 33,800oz Au. The Board believe that taking into account price and cost of production, the minable resource now stands at 120,700oz Au – an increase of 257%.

The increased mineable resource comprises 304,000t of oxide and and 421,000 tonnes of fresh ore. The oxide ore is naturally non-refractory, and the original test work on the largely sulphidic mineral zone within the fresh by AGC in 2001 demonstrated that it is also predominantly non-refractory.

The fresh ore was subjected to metallurgical testing which leached satisfactorily, yielding 80-85% gold recovery compared to the AGC Feasibility Study, where the oxide ore leached very rapidly – returning gold recoveries of 85-93%.

The Company is still waiting for an Environmental Permit in order to commence production at Homase South, delayed due to Covid-19, and the Board continue to liaise with the EPA and the Minerals Commission in order to obtain the required operational permits.

Upon receipt of the permits, the Company is in a position to immediately commence production with an estimated timeline for the first goal pour being within two months from the grant date.

GoldStone have also submitted an additional application for the expansion of the mining lease area within the existing exploration licence areas. This follows Ministerial approval announced in June 2020 to accommodate the North and Central pits defined in the DEP, which will take the existing mining lease area from 1.6km to 6.8km.

Emma Priestley, CEO of GoldStone, commented: “We are very pleased with the results from the drilling programme at the Homase South Pit, which has increased the mineable resource by over 250% and gives us the potential to expand the pit to a depth of 80 metres.”

Conclusion: The GoldStone team have significantly increased the mineable resource at Homase South, taking full advantage of the time spent waiting for the necessary environmental permitting to commence production. The short lead time between receipt of relevant permitting and the predicted gold pour shows how GoldStone are fully prepared, and fully expect to receive the permit. The expansion of the exploration license to cover the North and Central pits will allow the company to undertake future exploration funded by cash flow from Homase South.

Rainbow Rare Earths* (LON:RBW) 5.65p, Mkt Cap £24m – Phalaborwa chemical carbonate offers potential to double rare earth payability

(Rainbow deal for 70% of Phalaborwa jv, 30% to be held by Bosveld. There is no BEE holding as this is a processing operation)

Rainbow Rare Earths report that the Rare Earths contained within the Phalaborwa gypsum stacks are in chemical form having been ‘cracked’ by the Foskor and Sasol processes for phosphate extraction.

The Foscor process creates a gypsum along with other concentrated elements with the residue stacked over 50 years to leave some 35mt of concentrated material

This means operating and capex for the commercial plant costs should be significantly lower from a mining and processing perspective.

The value of the Rare Earth Carbonate product should also be significantly higher than for normal spodumene carbonate products due to its chemical state.

The company estimate the product should sell for around 80% of the total contained REE metal value compared with just 30% of metal value as seen with other REE mines and projects producing a standard TREO concentrate.

Rainbow proposes treating some 2mtpa of gypsum for around 10,000tpa of mixed rare earth carbonate containing ~3,100t of Neodymium and Praseodymium equivalent metal oxide for an around 17 years.

We had previously assumed the carbonate product would fetch around 40% of contained metal value in the market.

Conclusion: This is exciting news if Rainbow is able to realise a doubling of the payability ratio for the carbonate chemical product.

Raising the payability rate of the carbonate concentrate could potentially add more than $1bn to the potential sales value of the REE product.

*SP Angel act as broker and financial advisor to Rainbow Rare Earths

www.proactiveinvestors.co.uk