The Kangari African Review #4

I cannot resist starting these round-ups with a diamond story... It is usually doom and gloom and that continues this week too.

Sociedade Mineira de Catoca, the Angolan company which runs the worlds 4th largest diamond mine, Catoca, has cut production due to COVID-19. Advice from Alrosa (who own a share of Catoca) has suggested that Angola’s rough diamond output will be around 2 million carats for 2020, compared to 9.2 million last year. Before the pandemic, Angola planned to ramp up production to 14 million carats.

Sticking with COVID-19, Impala Platinum (JSE:IMP) in South Africa have closed all operations at its Marula mine. This is due to a ‘cluster’ of cases within the mine workers. Impala have stated that they believe that infection rates in their host community are higher than expected and are monitoring the situation. Harmony Gold (JSE:HAR) also confirmed 2 COVID-19 cases at it Kalgold Mine in South Africa. Workers from a contracting company tested positive on Wednesday. Kalgold represents 3% of Harmony’s gold production and is largely suspended.

As a follow up from 2 weeks ago, Kinross (TSX:K) announced that the workers strike at their Tasiast Mine in Mauritania is over and there will be no material effect on 2020 production guidance.

From the DRC, China Moly (SHA:603993) has maintained its copper and cobalt output for 2020 despite COVID-19 disruptions at Tenke Fungurume. Last year TF produced 177,956 tonnes of copper and 16,098 tonnes of cobalt. Supply chain issues in taking concentrate out of the country, and the continent, will still remain an issue for this coming year.

Further good news this week for Danakali (ASX:DNK/LON:DNK) for their Colluli potash project in Eritrea. The company has initiated its front end engineering design (FEED), and will be complete in June. Colluli is touted as a world class deposit and being a 50/50 JV with the Eritrean National Mining Corporation (read government), will be a massive boost for the country.

Eritrea has massive mineral potential being on the Nubian Shield, at one point there were over 8 international mining and exploration companies exploring for the next Bisha. Sadly now most of the internationals left are Chinese, excluding long term Eritrea advocate Alasdair Smith who runs Alpha Exploration (private co). Maybe with the planned production of Colluli in 2022 there will be renewed interest in the Red Sea State.

A little low on the Africa exploration results from this week, with only 2 companies reporting drill results. 2 companies have managed to release PEA studies this week though.

As many of you may have seen, due to their aggressive marketing, Deep-South Resources (TSX.V:DSM) released a PEA for their Haib Copper project in Namibia, working on a resource of 456.9Mt @ 0.31% Cu, the PEA results include a post-tax NPV (7.5%) of US$611m & IRR of 22.7%. This project has some good infrastructure links which could help propel this project into production in the not too distant future.

In Niger, Global Atomic Corp (TSX:GLO) updated their PEA on the 26.3Mt @ 1,752ppm U3O8 Dasa Project, including a post-tax (8%) NPV of US$210.7m and IRR of 26.6%.

In terms of drilling result this week, in Mali at the Sikasso Project, Compass Gold Corp. (NEX:CVB) released a couple of drillholes including 10m @ 1.67 g/t Au. In Mozambique, Force Commodities (ASX:4CE) reported small intercepts including 1m @ 528ppm Pb, 46.7ppm Cu and 64,800ppm Fe.

Now everyone will agree that exploration has taken a little bit of a hit during the COVID-19 pandemic, this is despite the rally of gold price that has been seen in Q1. With this, S&P Global Market Intelligence is predicted that there will be a drop in exploration spending of 29% this year, down from $9.3B in 2019 to just $6.6B in 2020.

At Kangari we have seen a number of smaller explorers struggling to raise money, access project and advance past early stage work, is this trend likely to continue or will the post-pandemic money turn back to mining, gold especially?

To finish off, we note that 5 expatriates from SL Mining in Sierra Leone were arrested this week for instigating unrest in the local town of Lunsar, this is apparently connected to the Sierra Leonean government’s decision to cancel SL Mining’s Marampa Iron ore mining license.  Having been to Lunsar, I am not sure there is much scope for causing unrest, although anyone that has been to Sierra Leone will know - the Double Punch Pineapple Spirt can bring out the worst in people...!

OUT OF AFRICA UPDATES

  • Kore Mining (TSX.V:KORE) released a PEA on their 50.4Mt @ 0.0174oz/t Imperial Project. PEA results include a post tax (5%) NPV of USD$343m and IRR of 44%.
  • Mountain Boy Minerals (TSXv:MTB) Confirm District Scale Silver-Gold Potential of the American Creek Project - NR
  • Our friend in Vienna, Ronni Stoerferle, is due to publish his 2020 'In gold we trust' report shortly, highly recommended reading - Website