SP Angel – Morning View – Friday 08 02 19
Green New Deal resolution offers major stimulus for battery metals
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SolGold (LON:SOLG) – Response to Cornerstone
Democrats unveil Green New Deal resolution
- Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Ed Markey, D-Mass. formally introduce the proposed Green New Deal, which call for a 10-year “national mobilisation” to fight both climate change and act as an economic stimulus.
- These include: “meeting 100% of the power demand in the United States through clean, renewable, and zero-emission energy sources,” repairing and upgrading the infrastructure of the U.S., building smart power grids, and a number of projects concentrated around the reduction of eliminating pollution and greenhouse gas emissions, among many other goals.
- The resolution also seeks to overhaul transportation systems in the U.S. “as much as is technologically feasible.” It calls for investment in “zero-emission vehicle infrastructure and manufacturing,” “clean, affordable and accessible” public transportation, and high-speed rail.
- While the resolution is a long way towards actual legislation, at least 60 House Democratic co-sponsors as well as 9 Senate Democratic co-sponsors support the transition.
- States are also making similar independent drives towards decarbonisation, with New York Governor Andrew Cuomo announcing the Green New Deal initiative with its first transaction in large-scale renewables.
- A drive to 100% clean, renewable energy will create a fundamental shift in commodity demand. Battery and renewable energy metal exploration and development projects, including copper, nickel, manganese, vanadium, graphite, lithium and rare earths, will demand significant investment to sustain supply.
UK’s first ‘fully open’ EV network piloted in Suffolk
- Plug In Suffolk, the UK’s first ‘fully open’ EV charging network could be rolled out nationwide if it proves to be a success. The network allows drivers to pay with their contactless card rather than being a member of a club or an app.
- The network is expected to grow rapidly, with four hundred charging points to be fitted over the next year at Suffolk car parks and businesses, and will rent the stations and then fix their own prices for drivers, creating a new way to earn money or attract customers.
- Difficulties and inconvenience in existing infrastructure are discouraging mass adoption. "The Plug In Suffolk network will play a vital role in increasing the density of publicly available fast EV chargers and will ensure that driving electric in Suffolk is hassle-free," said EO Charging founder Charlie Jardine.
- Discussions are already under way with other authorities "north, south, east and west".
Dow Jones Industrials
HK Hang Seng
FTSE 350 Mining
AIM Basic Resources
UK - Bank of England states one in four chance UK could fall into recession
- The Bank of England has reduced its 2019 growth forecast from 1.7% to 1.2%.
- UK economic growth slowed in 4th quarter 2018 and weakened further in 2019 according to the bank
- A slowing global economy coupled with concerns over Brexit were blamed for the reduction in growth forecasts.
- The UK economy was ranked 5th globally in 2017 with a GDP of $2.6tr (source: World Bank).
- The Bank unanimously voted to leave interest rates unchanged at 0.75%.
- UK employment is at the lowest level since 1975.
US$1.1332/eur vs 1.1351/eur yesterday Yen 109.79/$ vs 110.05/$ SAr 13.637/$ vs 13.602/$ $1.293/gbp vs $1.291/gbp 0.709/aud vs 0.710/aud CNY 6.745/$ vs 6.745/$
Gold US$1,309/oz vs US$1,304/oz yesterday
- Gold remains on track for its first weekly loss in three, following a strengthening dollar amid concerns that the Trump administration won’t reach a trade deal with China before further tariff hikes kick in.
- Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin head to Beijing next week for trade talks. However, Lighthizer told reports last week it was not certain a deal could be reached.
- President Donald Trump has also said he won’t meet Chinese President Xi Jinping before a March 1 deadline to avert higher U.S. tariffs on Chinese goods, intensifying fears the two won’t strike a deal before the end of a 90-day truce.
- Despite falling away this week, central banks are expected to maintain strong purchases of gold in 2019, underpinned by elevated geopolitical tensions and less pressure on emerging market currencies.
Gold ETFs 72.8moz vs US$73.0moz yesterday
Platinum US$796/oz vs US$804/oz yesterday
Palladium US$1,398/oz vs US$1,369/oz yesterday
Silver US$15.70/oz vs US$15.67/oz yesterday
Copper US$ 6,234/t vs US$6,246/t yesterday
Aluminium US$ 1,892/t vs US$1,905/t yesterday
Nickel US$ 12,810/t vs US$12,890/t yesterday
Zinc US$ 2,708/t vs US$2,716/t yesterday
Lead US$ 2,081/t vs US$2,082/t yesterday
Tin US$ 21,025/t vs US$21,015/t yesterday
Oil US$61.4/bbl vs US$62.3/bbl yesterday
Natural Gas US$2.594/mmbtu vs US$2.609/mmbtu yesterday
Uranium US$28.90/lb vs US$28.95/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$90.3/t vs US$87.3/t
Chinese steel rebar 25mm US$596.9/t vs US$596.9/t
Thermal coal (1st year forward cif ARA) US$78.4/t vs US$81.6/t
Coking coal futures Dalian Exchange US$196.1/t vs US$196.1/t
Cobalt LME 3m US$33,000/t vs US$33,000/t
China NdPr Rare Earth Oxide US$46,182/t vs US$46,182/t
China Lithium carbonate 99% US$10,007/t vs US$10,007/t
China Ferro Vanadium 80% FOB US$70.9/kg vs US$70.9/kg
China Antimony Trioxide 99.5% EU US$7.0/kg vs US$7.0/kg
Tungsten APT European US$260-270/mtu unchanged from previous week
Gem Diamonds (LON:GEMD) 103.5p, Mkt Cap £143.8m – Trading update Q4 2018
- Diamond recovery from the Letšeng mine included three greater than 100 carats, bringing the number of diamonds greater than 100 carats during the full year 2018 to fifteen – a company record.
- Total carats recovered also rose, climbing 13% to 126,875 carats (2017 – 111, 811 carats)
- Sales of diamonds also climbed for the quarter, rising 9% from Q3 2018 to 33,140 carats.
- The Company also sold nine diamonds for more than US$1m each, generating revenue of US$14.6m. The total 2018 sales hit 44 diamonds for more than US$1.0m each, generating revenue of US$137.2m
- The average sales prices during 2018 climbed from US$1,930/carat to US$2,131/carat, which has remained strong through early 2019 to hold an average price of US$2,004/carat.
- The manufacturing of the pilot plant has commenced, and the project remains on target to be commissioned at the end of Q2 2019. This project employs innovative technology to identify diamonds within kimberlite, in line with the continuing strategy of early detection of large diamonds and diamond damage reduction.
- The Company also remain on track to achieve its cumulative target of US$100m in incremental revenue, productivity improvements and cost savings for the 4-year period to end 2021.
- At the end of the Period, the Group had US$ 50.8m of cash on hand of which US$43.3m is attributable to Gem Diamonds.
- The Group’s net cash position was US$17.5m (of which US$ 14.0m was attributable to Gem Diamonds). At Period end, US$33.3m of available facilities had been drawn down, with undrawn and available facilities of US$57.8m.
- During the Period, Letšeng paid dividends of US$17.4m, resulting in a net cash flow of US$11.0m to Gem Diamonds and a cash outflow from the Group for withholding taxes of US$1.2m and payment of the Government of Lesotho’s share of dividend of US$5.2m.
SolGold* (LON:SOLG) 35.2p, Mkt Cap £649.9m – Response to Cornerstone
- Following review of announcement by Cornerstone Capital Resources, Directors of SolGold respond by saying they are surprised and disappointed on the quick dismissal of the intention to offer its shareholders and warrant holders 0.55 SolGold shares for every Cornerstone share.
- The SolGold offer would represent a 20% premium over Cornerstone's closing price before SolGold's statement, which SolGold believes is a compelling offer to Cornerstone shareholders and warrant holders and a premium that is in line with comparable recent transactions in the sector.
Positive market reaction to the SolGold offer was believed to reflect:
- Present all equity classes in Cornerstone with a significant premium equal to the highest price Cornerstone has enjoyed in 2years;
- Remove the financing risks to equity value imposed by the current structure of Cornerstone's 15% interest in Cascabel;
- Enhance the value of a SolGold control premium for Cornerstone shareholders (which they currently do not enjoy);
- Provide impressive pan Ecuadorean exploration value upside from the multi target first mover copper gold project portfolio in SolGold's four wholly owned subsidiaries covering the entire length of the Ecuadorean sector of the Andean Copper belt.
- Probably see the bid succeed, in contrast to the statements by the Cornerstone Board in its release.
- SolGold also reject Cornerstone’s misleading assertion in respect to current interest or ability to earn an interest of the Blanca vein project, as the relevant prospect is outside of the Area of Mutual Interest pursuant to the governing agreements.
- SolGold advises that Cornerstone's interpretation of the agreements with SolGold is also misleading. In fact, SolGold owns 85% of the beneficial and registered title in the shares in ENSA, which holds 100% of the Cascabel concession.
- Further, the interest SolGold and Cornerstone hold in ENSA are in the nature of shareholdings - the parties have not entered into a joint venture and no fiduciary obligation by SolGold in favour of Cornerstone exists.
- SolGold reiterate it presently intends to proceed with its offer in accordance with the terms announced, believing all Cornerstone shareholders and warrant holders should be given the opportunity to make an informed decision.
*SP Angel acts as broker and advisor to Solgold. SP Angel have raised funds for SolGold on eight previous occasions.
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+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.