Premier African Minerals shares were trading down over 10% on Tuesday after announcing the results of a placing. 

Premier has completed yet another placing to keep hopes for success at its Zulu lithium mine alive as the company ploughs ahead with a schedule of works designed to bring the plant up to the standards required by an offtake agreement with Chinese partners.

The company has raised £1.25m at 0.16p per share to fund the optimisation of the Zulu plant which has been dogged by delays and questions about the grade of its offtake.

Premier African Minerals shares were down 9% at the time of writing, trading at the placing price of 0.16p.

“The Company provided a full discussion on the Zulu plant performance in our announcement of 8 May 2024. The Company expects that periodic updates will be provided on the overall plant performance until such time as a steady of state of continuance production has been achieved, Premier expects thereafter to begin providing quarterly production reports for Zulu from Q3 of 2024,” said

“Over and above this, we are encouraged with mining operations and the ROM ore grades that consistently exceed our resource estimate and this is mitigating for the moment, the ore sorter deficiencies. This also supports the review of overall operations and production costs and the likely reduced production costs discussed below.

“Inspections required as a prelude to export have commenced, and this precedes any export. We do not expect any delays in regard to export permits required.

“This was confirmed in recent meetings with Government of Zimbabwe when the issue of RHA Tungsten Private Limited (“RHA”) was also discussed and we are encouraged that there is now likely resolution of this issue. The rising price of Tungsten is noted”.

Kingfisher was one of the pandemic’s winners. The company’s sales grew as people spruced up the homes they were confined to over an 18-month period.

Unfortunately for Kingfisher, we are now in a very different world, and sales are suffering. Its B&Q and Screwfix outlets are at the mercy of higher interest rates, rising commodity prices and general consumer concerns. That said, UK & Ireland sales grew 2.7% with Screwfix doing a lot of the heavy lifting.

Investors may take some positives from the company maintaining profit guidance, but today’s results are very difficult to get excited about.

Q1 group sales slipped 0.3% on a reported basis and 0.9% on a like-for-like constant currency basis. Sales fell 8.1% in France, but this was partially offset by strength in the rest of Europe, where sales grew 7% from a much lower base.

Kingfisher shares were down 0.9% at the time of writing.

“It’s a much tougher market these days for Kingfisher in comparison to the pandemic DIY boom,” said Adam Vettese, analyst at investment platform eToro.

“The Screwfix and B&Q parent company reaped the benefits of consumers stuck at home with a few extra pounds in their pocket and now we have the opposite in that people are returning to the office and feeling the pinch in terms of cost of living. Full year profit outlook has been maintained so it may not be time to panic just yet but there are indications of tougher trading conditions in other key markets such as France.

“As the macroeconomic situation begins to ease and consumers start to see some relief in terms of high interest rates and high inflation, conditions should start to improve for retailers such as Kingfisher as a home improvement budget is back on the table for many households.”

Admittedly it has larger situations on hand currently, so the matter of whether the Australian-based mining group BHP will take up its option to buy another 19.25m shares in SolGold (LON/TSX:SOLG) is almost certainly on the back-burner.

We already know that it has until 5pm on Wednesday of this week whether to make its third offer for its FTSE-100 rival Anglo American, and as for its interest in SOLG it does have until Monday 15^th November to decide about exercising its option.

BHP wants control

What we do know is that BHP has had it eyes on taking significant or total control of the Brisbane-based mineral exploration and development company for some time.

Way back in September 2018 the major miner acquired 103.1m shares from Guyana Goldfields, representing 6.0% of SolGold’s equity, paying 26.6p per share at a total cost of £27.42m.

A month later it paid out another £43.0m at 45p per share.to take its stake up to 11.2%.

At that time, it is said that SolGold rejected an offer from BHP for a big stake in the Brisbane company’s interest in its Cascabel Project.

Not chilies nor cannon muzzles

This Project is not concerned with cultivating the Cascabel Chilli, nor is it anything to do with the cascabel projection behind the breech of a muzzle-loading cannon.

Instead SolGold’s Cascabel Project is all about developing a ‘world-class’ copper mine in northern Ecuador, around three hours’ drive from the capital of Quito.

It is sited within the Cordillera Occidental part (or Western Cordillera) of the Ecuadorian Andes.

The property is situated at the margins of a large regional batholith and in the middle of the confluence of a major northeast trending fault zone.

Global interest in Cascabel

SolGold aims to develop Cascabel as one of the lowest carbon intensive copper mines in the world, which is why, no doubt, BHP wants/needs to get control of such a potentially massive asset, especially as copper prices have reached record highs in London and New York amidst a trading frenzy driven by looming supply shortages. 

And that is also why investors across the globe are taking a much closer interest in just what this £288m capitalised group is doing.

Pre-Feasibility Study

In mid-February this year the group announced that it had successfully completed its Pre-Feasibility Study of the Cascabel Project, which highlighted an excellent economic viability for the company’s Phased Approach Block Cave Mine.

The current mine plan reflects the profitable exploitation of only 18% of the Alpala measured and indicated mineral resource through a 28-year mine life – the size of the entire resource indicates the mine’s potential to be a multi-generational mining asset.

At that time CEO Scott Caldwell declared that:

“Cascabel is not just a mining project; it’s a promise of responsible mining, lasting value for all stakeholders and a sustainable legacy for the planet.

With reduced capital needs and lower risk compared to previous approaches, together with our ongoing commitment to sustainability and responsible mining, Cascabel is more than copper and gold; it’s a story of innovation, collaboration and a vision for a greener and more prosperous tomorrow for the people of Ecuador.

This Study was conducted with the best outcomes for all our stakeholders in mind.” 

The new pre-feasibility study managed to slash upfront costs.

Pre-production capital used for initial mine development, first process plant module and infrastructure is now estimated at $1.55bn, compared to $2.75bn from the PFS issued in April 2022.

The Alpala Deposit

The main target in the Cascabel concession is the Alpala deposit.

The deposit’s equigranular to sub-porphyritic, hornblende-bearing intrusions are defined as narrow, and they become thinner upwards, and are geometrically similar to grade models of Cu, Au and Ag mineralisation.

The mineralisation has been identified as a prolate body approximately 2,400m northwest by 1,200m northeast and 2,800m in vertical extent.

Alpala, the largest deposit found at the Cascabel concession so far, has measured and indicated resources of 2.7bn tonnes grading 0.53% copper-equivalent (0.37% copper, 0.25 grams gold per tonne, and 1.08 parts per million silver) for 9.9m tonnes of contained copper, 21.7m oz. gold and 92.2m oz. of silver. 

Once fully developed, Cascabel is expected to produce an average of 150,000 tonnes of copper, 245,000 ounces of gold and 913,000 ounces of silver in concentrate per year during an estimated 55-year life-of-mine. 

Over the first 25 years of mining, the average annual production is expected to be 207,000 tonnes of copper, 438,000 ounces of gold and 1.4m ounces of silver. 

Management capability

In the last year there have been strong doubts about whether the SolGold management team had the ability to progress further such a major undertaking.

There was even a market whisper that the group had considered selling off its Cascabel Project.

However, the junior mining group, which is one of the largest exploration property owners in Ecuador, reached an agreement in April with the Ecuadorian government covering certain financial terms and conditions, along with a 33-year renewable permit to develop a copper, gold and silver mine at its Cascabel concession.

New loan facility

Last Tuesday the company announced that it had secured a $10m loan facility for its flagship Cascabel copper-gold project, while also adding that it was in talks with several capital providers that have shown strong interest.

The loan provides an immediate cash infusion to support ongoing operations and gives the company flexibility to finalise the more comprehensive financing arrangement that is required.

My View

The size of the entire resource indicates that the mine’s potential to be a multi-generational asset, with mine construction set to start next year, it could potentially be one of the 20 largest copper-gold mines in South America.

Yesterday some 13m shares were traded in SolGold, at around the current 9.61p price.

Unless there is a string of very positive pieces of corporate news emanating from the company, I cannot imagine that BHP, which now holds 10.36% of the equity, will take up its option.

However, it could well make an outright bid for the company.

That would certainly gain the attention of the group’s second biggest shareholder, Newcrest Mining with a 10.31% stake and the Jiangxi Copper Company with 6.02%.

The FTSE 100 was on the front foot on Monday as the mood around China improved, helping to lift mining companies which were also boosted by a rally in precious metals.

London’s leading index was 0.25% higher at 8,441 at the time of writing.

“Investors have plenty to keep them occupied, with geopolitical uncertainty butting up against China growth hopes and a few domestic nerves ahead of Wednesday’s inflation figures,” says AJ Bell head of financial analysis Danni Hewson.

“Optimism still seems to be the primary driving force with mining stocks up significantly after copper prices hit fresh record highs, thanks in part to new measures designed to prop up China’s ailing property sector.”

Precious metal prices also helped the case for the FTSE 100’s miners as worries about Iran sent gold to a record high.

“Nervousness about the direction of geopolitics has pushed gold to fresh record highs, reaching $2,438 per ounce. Demand for the safe-haven asset has surged as investors have been digesting news of the death of Iran’s President Ebrahim Raisi who is believed to have been killed with others including foreign minister Hossein Amir-Abdollahian in a helicopter crash,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Demand for the metal has also likely to have been pushed up by renewed speculation that the Federal Reserve will be minded to cut interest rates a couple of times this year.”

Interest rate expectations have been the core driver of precious metals in 2024 seeing gold consistently break to fresh highs.

Fresnillo was the FTSE 100’s top gainer as the silver-focused miner tracked prices higher. Fresnillo was up 4.2% at the time of writing.

Glencore added 1.6% and Antofagasta ticked 0.8% higher as copper prices rose.

Rolls Royce shares added 2.4% and the rip-roaring bull run looked to remain intact as the stock bounced of a key trend line.

Ryanair shares slipped on Monday as investors chose to focus on the missed opportunity of delayed Boeing aeroplane deliveries rather than record profits amid the travel boom.

Ryanair Holdings today reported a 34% growth in full-year profit after tax, as traffic grew by 9% to 184 million passengers, which is 23% more than the pre-Covid levels, despite delays in the delivery of new aeroplanes from Boeing.

“The pandemic hangover seems to be truly over for Ryanair as the low cost carrier posted record profit of €1.95bn. A milder winter and early Easter helped boost the slow season as demand for travel shows no signs of letting up,” said Adam Vettese, analyst at investment platform eToro.

Increased revenues helped offset a significantly higher fuel bill, as hedged oil prices rose from $65 per barrel in the fiscal year 2023 to $89 per barrel in the fiscal year 2024. Despite Boeing delivery delays, traffic grew by 9% to 183.7 million passengers.

Revenue per passenger increased by 15%, with average fares rising by 21% and ancillary revenue increasing by 3%. The fuel bill rose by 32%, amounting to an increase of €1.25bn, reaching €5.14bn.

Although the financials were broadly strong, load factor underperformed, while airlines focused on higher fares for growth.

“Ryanair slightly underperformed its 92-93% load factor target for the winter 2023-24 travel season. Third Bridge experts believe airlines are consciously not prioritising load factor to keep fares slightly higher,” said Olly Anibaba, Analyst at Third Bridge.

Ultimately, Ryanair shares fell on Monday due to disappointment around the outlook for earnings in the revised scenarios caused by a small fleet than previously thought.

“The Boeing delivery delays will be a huge problem for Ryanair. Third Bridge experts expect Ryanair to receive only half of what was promised, potentially reducing passenger volumes by 5-10 million. Ryanair can offset some of the impact on profits by removing the worst-performing routes from their network,” said Anibaba