14 Mining Companies to follow in 2021 (Part I)
What a year!! With the brutal global sell off for Equities earlier this year mining stocks got particularly slaughtered as fears for economies throughout the land were under the spotlight. This saw some of the largest UK and international Mining companies lose anywhere from 40%-50% in a matter of weeks.
With that said, most of these losses have since been recovered and now certain commodities are having their biggest moves up for over a decade. What this means for you as an investor is that there are potentially some really good companies still out there if you do your homework, look at their balance sheets and work out the size and scale of their operations, now and potentially in the future.
Precious metals such as gold, silver, platinum, and palladium are all very newsworthy. Industrial metals like iron ore, copper, aluminium, nickel, lithium, cobalt, and zinc are always required as are construction materials such as sand, crushed stone, and limestone, and don’t forget the “Girls best friend” in diamonds.
Investors need to choose mining stocks very carefully. There are potentially some really good companies still out there if you do your homework and maybe these 14 Companies can reward you well over the coming months and should look to be considered individually or as part of a basket of a balanced portfolio.
As our New Year gets under way, there’s still plenty of uncertainty about what the next 12 months may hold for investors, but here at @TMsreach we look at 14 Companies that should be worth following over the next 12 months.
Companies covered in Part I include : #JAY #BRD #CHF #CGO #ECR #EEE #GUN
Bluejay Mining
Bluejay Mining (LON:JAY) has firmly established itself as a first mover in the competition to realise Greenland’s vast potential reserves of gold, iron ore, zinc, uranium and rare earths.
Three quarters of the world’s largest island are permanently covered by ice, but as global temperatures warm the cover recedes for longer during the brief Arctic summer, opening up coastlines and shipping lanes, and bringing the island’s economic significance into sharp focus.
Bluejay’s mining licences make it the single largest operational landholder in Greenland, with its flagship asset, the Dundas Ilmenite Project that runs along the island’s north-west shoreline, having the potential to become highest-grade ilmenite sand project in the world. According to the current Pre-Feasibility Study the mine has an onshore Mineral Reserve of 67 million tonnes within a JORC compliant, indicated Mineral Resource of 117 Mt, and has a potential life of some 11 years. Ilmenite is the most important titanium ore, most of it currently supplied from Africa. But as sealanes open there is now a viable passage to market from Greenland.
This December Bluejay made its keenly anticipated announcement that the Dundas exploitation licence has been granted by the Greenland authorities, allowing the company to progress towards procurement, construction and ilmenite production. Bluejay CEO Rod McIllree said: ‘The extendable 30-year licence allows us to now implement the initial 440,000 tonnes ilmenite concentrate per annum operation and we anticipate reaching a commercial agreement very soon with a large multinational commodities group for Dundas product, allowing us to move further forward towards production.’
Bluejay has other interesting prospects on the island. The Disko-Nuussuaq project, covering an area the size of Luxembourg, may host similar mineralisation to the world’s largest nickel-copper sulphide mine, in Norilsk, Siberia. The Kangerluarsuk project targets known zinc, lead, silver and copper occurrences. And in November the company commenced a fieldwork and drilling programme at its 100pc owned Hammaslahti copper-zinc-gold-silver project, one of three interests in Finland.
Bluejay also announced recently that it has signed a Master Distribution Agreement with a large, long established Asian Conglomerate with global interests in Metals and Mining for the sale of up to 340,000 tonnes per annum of ilmenite from the Company’s flagship Dundas Project.
With a resource as significant as Dundas, and a net cash balance as at 30 June 2020 of more than £7m, Bluejay has huge potential, reflected in the steep rise in its share price from 6p – when we last covered the company in July – to more than 13p.
Blue Rock Diamonds
Blue Rock Diamonds (AIM:BRD) operates the Kareevlei Diamond mine near Kimberley in South Africa, the historic home of diamond mining. Kareevlei consists of five known kimberlite pipes and produces diamonds ranking in the top ten in the world in terms of average value per carat: diamonds sold from Kareevlei sell on average at more than $300.
Blue Rock is emerging with some momentum from a year in which it was hit hard by the pandemic. The onset of Covid-19 caused the closure of the mine in March 2020 for 50 days, just when the company was hoping to recover lower production due to heavy rainfall in the first three months of the year.
Blue Rock estimates the revenue impact has been approximately £700,000 to £800,000. In the first half of 2020, the company made an operating loss of £1,498,000 on turnover of £1,292,000, compared with a loss of £471,000 on turnover of £1,366,000 in the first half of 2019.
In the second half the company fought back, establishing a new sales channel through a relationship with the Bonas Group in Antwerp allowing it to sell Kareevlei diamonds on a ‘mine to market basis’. And a July fundraise of £1.25m, following a £1.9m placing in February, shored up finances: cash as at September 2020 was £2,100,000.
Kimberlite grades have improved through the year as the company has upgraded facilities at one of its new mines, recovering to an average grade of 5.1 cpht in August, boosting the company’s confidence it will be able to meet or exceed its long term guidance of between 4.0 cpht and 4.6 cpht.
And in December the company completed a drilling programme to establish a new provisional resource estimate. A final updated Resource Statement is scheduled for January, but the December estimate showed increases – over 2018 figures – in terms of tonnes – up by 43pc from 7,009,000 to 10,009,000, carats, up by 52pc from 338,500 to 513,500, and grade, up by 6pc from 4.83 to 5.13. The provisional resource estimate would provide for a mine life of at least 10 years operating at a targeted annual rate of 1,000,000 tonnes of material a year.
Blue Rock’s share price has dipped through the year, falling by more than half. But it has now stabilised at around 50p, and may well be set to rise as the company consolidates its recovery through 2021.
Chesterfield Resources
Chesterfield Resources (LSE:CHF) is a copper-gold exploration company focused on Cyprus, with a dozen 100pc owned permits covering 50 km2 and applications covering a further 186 km2, making it the country’s largest mineral rights holder.
The company is currently running remote sensing, mapping, archive, geochemical and geophysics programmes across some of the country’s most ancient mines, which have not previously been explored with modern technology able to locate undiscovered deposits not visible from the surface.
Chesterfield’s primary focus is the Troodos West group of licences, where it is exploring several VMS (Volcanognic Massive Sulphide) deposits at around 30 defined targets, aiming to develop a mining project with a centralised processing unit. Other projects include Troodos North and Discovery South, each of which have nine prospecting permits.
In November Chesterfield took a great leap forward with the announcement that gold mining giant Polymetal International Plc is to take a 22.5% strategic stake in the company, investing £2,100,000 to finance its next phase of exploration.
Chesterfield is currently completing its first pass diamond drilling and geophysics exploration campaign at Troodos West. Five AMT geophysics surveys were completed through September and October, with preliminary results confirming mineralisation where expected, and indicating new areas of sulphide mineralisation. The survey results data will now undergo more detailed processing to inform a diamond drilling campaign scheduled for Q2 2021.
Chesterfield has been one of AIM’s best mining performers through 2020, its share price rising from 3p at the start of the year to more than 16p. With a fully-funded exploration programme ahead it’s definitely one to watch in 2021.
Contango Holdings
Contango Holdings (LSE:CGO), which floated as a cash shell in 2017, completed the reverse takeover of a 70pc interest in the Lubu Coal Project in Zimbabwe this June.
Contango acquired the asset for an implied value of £6.4m, with the remaining 30pc stake held by local partners. Lubu offers more than 12,000 metres of drilling through 100 holes, with investment of more than $20m by previous owners enabling a total resource estimated at above 1bn tonnes of coal identified under the NI 43-101 standard.
Contango is aiming to produce of metallurgical coal for sale to international industrial consumers in the southern Africa region. Formal negotiations for 32,000 tonnes per month coal off-take agreements from Lubu are currently underway.
The company’s other interest is the Garalo gold project, a permit spanning 62.5km2 in the Sikasso region of southern Mali. Garolo is surrounded by multi-million ounce gold deposits operated by miners including AngloGold Ashanti, IAMGOLD, Barrick, B2 Gold, Endeavour Mining and Hummingbird Resources.
Garolo’s potential was highlighted by the publication of a highly encouraging technical report in December, estimating a potential gold resource of 1,800,000 oz at average grade of 1g/t, more than 460pc better than the previous estimate. In light of the estimate the company is considering expanding its planned operations to allow for the mining of more than 30,000 oz per year, rather than the original 10,000 target. First gold is earmarked for Q4 2021.
Executive Director Carl Esprey said: ‘With an estimated profitability of circa $1,000 oz at current gold prices, this would enable not only capital returns to shareholders potentially as early as 2022, but also fund a comprehensive exploration campaign focused on realising the asset’s multi-million ounce potential.’
The company also announced a very positive update on operations at its Lubu Coking Coal project in Mali, and advises it expects to be able to open the pit next month.
Contango’s share price has risen from 4.25p to more than 7p on the back of the company’s very recent positive news flow, and may well have higher to go if the good news keeps coming.
ECR Minerals
ECR Minerals (AIM:ECR) is well positioned at the heart of the current gold exploration boom in Victoria, Australia, through 100pc ownership of the Bailieston and Creswick gold exploration projects held by its Australian subsidiary Mercator Gold Australia Pty Ltd.
The Bailieston project is targeting epizonal or epithermal gold mineralisation of the Melbourne Zone, which hosts successful modern gold mines including the world-class Fosterville gold mine owned by Kirkland Lake Gold. The Creswick project is within the Dimocks Main Shale, considered highly prospective for gold mineralisation.
ECR has ended the year on a high, announcing delivery of a diamond drill rig to the Bailieston project area, with permissions in place for drilling within the licence’s HR3 prospect, which comprises at least four closely-spaced lines of reef, together with several cross-structures providing drill-ready targets. The company is now in a position to accelerate its exploration work and drill HR3 and other key targets.
As well as its 100%-owned Bailieston and Creswick fields, the company has interests in the Avoca, Moormbool and Timor projects, from which it has an agreement to earn up to A$1,000,000, a 25pc interest in the Danglay epithermal gold project in the Philippines, and the SLM gold project in La Rioja Province, Argentina.
ECR has a robust underlying cash position of £1.65m, strengthened earlier this year through a £500,000 equity financing. It should be noted that its Mercator Gold Australia subsidiary has accumulated tax losses of some A$66m from past trading, expected to be available for offset against any taxable profits made in future.
Keen interest in ECR’s prospects is reflected in the sharp rise of its share price this year, which has soared from 0.68p at end of June to more than 3.5p. With a fully-funded exploration programme ahead this is a prospect to keep an eye on.
Empire Metals
Empire Metals (AIM:EEE) has been busy this year switching its focus from interests in a set of Georgian mines to projects in Western Australia.
In the summer Empire announced it had entered into an option to purchase a 75pc interest in the Eclipse Gold Project, a large, high-grade and previously producing mining licence located 55km north-east of Kalgoorlie, Western Australia. The historic mine produced 954 tonnes at 24.6 g/t Au for 754.25 oz Au from the Eclipse shaft which operated up to 1910. Recent geophysics and geochemistry work has highlighted further potential mineralisation at two additional targets north-west of Eclipse. In December new drill results in Eclipse’s uppermost 50 metres confirmed its promise.
In October Empire sold its interest in the Bolnisi Copper and Gold Project in Georgia for CAD$7m, to Candelaria Mining (CVE:CAND). Under the deal Equity will hold equity in Candelaria, allowing it to retain exposure to the asset, which is situated on the prolific Tethyan Belt, a well-known geological region host to many high-grade copper-gold deposits and producing mines. Empire’s stake will also give it access to Candelaria’s gold assets in Mexico, which include the Pinos Gold Project.
Earlier in the year Empire acquired a 41pc interest in the Munni Munni Palladium Project in the West Pilbara, Western Australia. Munni Munni comprises four granted mining leases and an exploration licence covering a 64km2 tenement area. It is the largest unexploited primary Platinum Group Element (PGE) resource in Australia and contains a significant intrusion in the West Pilbara hosting a JORC-compliant 2004 PGE Resource of 24Mt @ 2.9 g/t PGE and gold (12.4Mt Measured, 9.8Mt Indicated, and 1.4Mt Inferred), containing 1,140,000 ounces palladium, 830,000 ounces platinum, 152,000 ounces gold and 76,000 ounces rhodium.
Empire has undertaken placings this year to fund the deals, £600,000 for Munni Munni in February, and £2m in November for Eclipse. Another £1,250,000 was raised in September both for Eclipse and future acquisitions. The company’s net cash balance as at 30 June 2020 was £364,369 (year ended 31 December 2019: £50,840).
Empire’s positive news flow has seen its share price rise from 1.65p at the outset of the year to around 3.6p. It spiked at 4.5p in the autumn, and may have further to rise as the company continues to develop the promise of its new Australian assets.
Gunsynd
Gunsynd Plc (AIM:GUN) seeks to identify promising natural resources assets and companies with potential, and offer seed capital, convertible loans, straight equity, and IPO and reverse takeover management.
The company has a growing set of international gold, nickel and copper interests, the most significant being a 28pc stake in Rincon Resources, a gold and base metals exploration company with rights to three prospective projects in Western Australia, the largest at South Telfer, a 50,000-hectare field a few miles south of the Newcrest Mining Limited Telfer mine which has produced 27 million ounces of gold over the past 45 years. Rincon is due to begin drilling at South Telfer subject to achieving final compliance with Australia’s Native Title regulations.
Another of Gunsynd’s copper and gold interests, Eagle Mountain, is focused on the exploration and development of advanced and greenfield projects in Arizona. Eagle’s Oracle Ridge and Silver Mountain Projects fall within the Laramide Arc that hosts the copper porphyry deposits mined by BHP, Rio Tinto, Freeport McMoRan and Hudbay. Eagle is working to begin a surface diamond drilling programme at Oracle Ridge by the end of the year.
The company also has interests in gold and copper projects in Nevada and Chile, and moved into nickel exploration earlier this year when another company in which it has an interest, Malachite Resources Limited, acquired high grade nickel assets in the Solomon Islands with the potential for near term mining.
Gunsynd has succeeded in maintaining a busy news flow through the pandemic, consolidating its investments in Rincon and Eagle Mountain, and adding new interests. Three fundraisings undertaken through June and July brought in £1,169,000, ensuring the company is funded to take advantage of an emerging green economy highly dependent on copper and nickel . With a share price that has hovered between 1p and 1.5p for the past year Gunsynd, named after the celebrated Australian racehorse of the 1970s, looks like a decent bet.
