31 October 2020
We can only assume the surprise from the Blytheweigh team that the clocks were going back was one shared by most people when we spent all of last Sunday comparing the actual time to our body’s perceived time (“why am I so well-rested, its only 8am?”). It came around lightening quick this year. Just like that, we’ve finished trading staycation tips and pining over pub gardens and instead we’re carving pumpkins and pulling out our favourite woolly hats.
In this Big Picture, we’ll be sharing our clients’ activities over October, including a defining deal for Pantheon Resources which will be the subject of our ‘focus on’ piece. We’ll also dig a little deeper into the notable topics from the natural resources sector from the last few weeks, which included the discovery of an asteroid worth more than the global economy.
The month closed with the usual October finale of pointy black hats and fake blood – which got us thinking and reading about why we started adorning our windowsills with anthropomorphised pumpkins in the first place, findings that we’ll share in our zoom in section.
If there’s anything we share that you’d like to hear more about, discuss or feedback on, please get in touch by emailing firstname.lastname@example.org or reach out to us on twitter - @blytheweigh.
This month saw the price of iron ore gain momentum reaching around $120 a tonne – a seven year high for this year’s best performing commodity - which was met with reports from iron ore giants, BHP and Vale, of increased production and strong financial positions. Credit ratings agency, Fitch, foresee a future boom in China’s demand for steel – as well as copper – owing to the country’s new infrastructure projects including the construction of high-speed rail, 5G network base stations and urban mass transit.
On the topic of iron, an asteroid made of predominantly iron and nickel, found orbiting between Mars and Jupiter, was discovered by Nasa. The object is thought to be worth more than the global economy. The rare finding, which measures 140 miles, has been named ‘16 Psyche’ and is assumed to be the leftover core of a planet that had its mantle and crust removed through a collision with another celestial object.
Copper also saw a rise in price during October, hitting in excess of $7,000 a tonne, as the focus on the investment in carbon-neutral energy solutions continued to gain traction. Investors have progressively shifted their attention to copper due to the metal being fundamental to the wiring found in wind and solar power applications, as well as electric vehicles and for use in the resurgence of Chinese construction.
The spotlight was cast on ESG measures this month, with the FT reporting that a record number of resolutions with an environmental or social focus were passed during global annual meetings this year. Proposals varied from measures to tackle deforestation, diversity in the workplace and emissions reduction and made up 233 resolutions, of which over half received 20 per cent support. This is thought to signal a union of words and action concerning asset managers’ policies on ESG matters and their voting decisions.
The CEO of Polymetal, Vitaly Nesis, vocalised his thoughts on the reporting of ESG measures by mining companies this month, calling for a standardised system to remedy the inconsistency and inaccuracy of procedures currently in place. He questioned how truthfully the current ‘tick-box’ style framework reflects the ESG risks faced by a businesses’ operations, especially in areas such as relationships with host communities. Vitaly suggested the ESG investment drive would benefit from a more objective reporting system to allow investors to compare like for like when viewing the ESG activity of mining companies.
Blytheweigh zooms in… Halloween
Halloween’s usual reputation as being one of the busiest nights of the year for police/emergency services, due to the merrymaking found on the nation’s moonlit streets, had a rather subdued edition this year. There may have been less ‘Monster Mash’ playing nightclubs, but there were still little witches and miniature skeletons to be seen trick or treating around neighbourhoods.
On the Blytheweigh team chat, talk turned to which horror film we had watched on the 31st with Rachael opting for Hocus Pocus and Maddy telling us she watched Netflix’s Nurse Ratched behind a pillow. The conversation got us pondering why this tradition of watching jumpy films - where the characters make misguided, unrelatable decisions - and turfing out the fake blood we bought from Hawkin’s Bazaar when we were 14 exists in the first place.
After doing some reading, we found that Halloween is a culmination of a few different festivities from over the centuries, with its first roots dating 2,000 years ago to the Celtic festival of ‘Sahmain’. The Celts celebrated their new year on November 1st, marking the summer gone by and the beginning of a cold winter ahead. They associated the long, dark winter months with human death as the period posed challenges to their survival, which relied heavily on the flourishing natural world. They believed the night before Sahmain represented a blurring of the worlds of the living and the dead and would celebrate with bonfires, burning sacrifices to the Celtic deities and wearing costumes consisting of animal skulls and skins.
A few centuries on, Pope Gregory III named November 1st ‘All Martyrs Day’, a day that would honour all Cristian martyrs, which was later expanded to be a day to celebrate all martyrs and souls. By the 9th century, this celebration was blended with the Celtic Sahmain day as a day to honour the dead and was celebrated the night before with bonfires and parades, with people dressing up as devils and saints. The celebrations occurring on the eve of the saints day, often called ‘All-Hallows’, was termed ‘All-Hallows eve’ and over time, Halloween.
As with most traditions, the original meaning has been translated and adapted over time but throughout history the common thread was fear for the looming short, dark winter days and the shortages of food that the end of October signalled. Many civilisations believed this period of time beckoned the spirits, leading people to dress up in ghost-like costumes to try and trick the dead into mistaking them for fellow spirits.
Now of course, the tone of the evening has lightened a tad and we mainly use the evening as an excuse to dress up as a pale, zombie version of *insert name of fashionable pop culture figure here*, buy adorable munchkin pumpkins and chip our teeth on toffee apples.
A focus on...Pantheon Resources
October has been a busy month for Pantheon Resources, the AIM listed oil and gas company with several conventional assets on the prolific North Slope, Alaska, as the Company announced a significant resource upgrade for its Talitha project. Management’s recent analysis focused on the “Kapurak”, the deepest of the three horizons at the project, and estimated it to contain a Prospective Resource (Recoverable) of 341 million barrels of oil (MMBO), which yields a potential NPV10 of over US$1.48 billion.
This announcement followed receipt of an Independent Expert Report, confirming that the upper portion, approximately 20,000 acres out of 44,0000, of the shallowest horizons at Talitha, the “Shelf Margin Deltaic” (SMD), contains 302 MMBO and yields an NPV10 of over US$2.7 billion. Combined, the Kapurak and SMD gives Pantheon’s Talitha project an NVP10 of > US$3 billion, with resource estimates for the middle zone, the "Slope Fan System", and the whole of the SMD, still to come.
The Talitha prospect is off the historic Pipeline State #1 well, originally drilled by ARCO in 1988. Although the well encountered hydrocarbons, it was plugged and abandoned that same year as the technology at the time was insufficient to extract the discovered oil economically from these sands. Advancements in extraction techniques over the last 40 years have now made it possible for Pantheon Resources to unlock the value of these resources.
In what has been a turbulent year for oil and gas, Pantheon Resources has felt the support of its investors, with the Company ranking as the best trading stock on AIM. With the prospect of a second wave of lockdowns, the oil price is likely to tumble again. Despite this, the Company’s competitive break-even of around $30 per barrel makes it an attractive prospect, even in hard times. Pantheon Resources remains hopeful that its strategic location, adjacent to the Dalton Highway & underneath the Trans-Alaska Pipeline (TAPS), along with its world class assets will secure a successful farmout, ready to drill this winter. If successful, Jay Cheatham, CEO of Pantheon Resources, expects the Talitha well to be one the most impactful wells not only of 2020, but of his career.
Despite the days getting shorter, October has been packed with updates from our clients. The month kicked off news from Alien Metals (AIM: UFO) which announced it had acquired, subject to granting and ministerial consent, 117km2 of tenure surrounding the Company's Elizabeth Hill Silver Project in Western Australia. According to the Company, the licence adds considerable exploration potential to its portfolio, with numerous new and exciting targets to develop (view release).
Later in the month, the Company revealed the conclusion of the geological mapping and sampling programme at its Hamersley iron ore projects (view release).
Some exciting news was released from Oriole Resources (AIM: ORR) this month, which announced that Thani Stratex Djibouti Limited, where Oriole have an 11.80% interest, had received Phase 1 drilling results for the Hesdaba epithermal gold project. The programme delivered a number of significant intersections, including 16.00 meters grading 3.84 grammes per tonne gold (view release).
Oriole also announced it had raised £1.576 million through the issue of, in aggregate, 463,402,941 new ordinary shares (view release). The Company also raised a further £0.293 million through the NR private market platform which is owned and operated by Minexia (view release). The funds will be predominantly used to advance its Bibemi project in Cameroon, where the Company shared its licences had been renewed with them earning-up to a 90% interest (view release).
Meanwhile, Caledonia Mining (AIM: CMCL) had a positive month. It released the news that it would be raising its dividend for the third time since October 2019, by 18% to 10 United States cents (US$0.10) on each of the Company's common shares (view release). The Company also reported a gold production increase for Q3, producing 15,164 ounces of gold which is an increase of 11.1 per cent on the production of the corresponding quarter of 2019. It also announced an increase to the production guidance for the year to December 31, 2020 to between 55,000 and 58,000 ounces (view release).
It was also announced that having raised the funds, Caledonia appointed Voltalia as the contractor for the solar power plant which would supply electricity to the Blanket Mine in Zimbabwe (view release). Rounding off a busy month for the Company, an announcement was made in regards to the signing of an agreement with the Government of the Republic of Zimbabwe under which Caledonia will evaluate potential gold mining opportunities currently under the Government’s control, opening the door to a host of new investment opportunities for the Company (view release).
Central Asia Metals (AIM: CAML) stated that production had been resumed at its Sasa mine after a short closure following the small leak at one of the tailings storage facilities. The Company reported that the environmental fine had been paid and an investigation into the cause and extension recommendations for the future, was underway (view release). CAML also released an operations update in October with highlights including zero LTIs and an increased copper production guidance (view release).
A pivotal deal was announced by Asiamet Resources (AIM: ARS) which is selling its Kalimantan Surya Kencana (KSK) contract of work in Indonesia – which includes the BKM copper project – to PT Wasesa Indo Nusa, an Indonesian private company, for US$163.4 million (view release).
Hummingbird Resources (AIM: HUM) shared an update on its 2020 drilling programme at Yanfolila, where it is nearing the end of a US$5 million drilling and exploration programme to expand the potential at the licence. Results so far have increased the Company’s confidence for an upgrade in the mineral resource estimate at Yanfolila (view release).
Elsewhere, Cornish Lithium had another busy month launching a crowd-funding round which resulted in the Company raising over £5 million in just three days. The funds will be used to accelerate Cornish Lithium’s plans to build an environmentally responsible lithium extraction industry in Cornwall (view article).
Lastly, Progress was made at Bluejay Mining’s (AIM: JAY) Dundas project this month with the acceptance of the Navigational Safety Investigation (“NSI”) study. The investigations proved that navigation could be carried out safely and effectively from the proposed shipping route at Dundas in the summer and early fall season. The acceptance of the NSI, a prerequisite for the exploitation licence and therefore is a positive step forward for the project (view release).