Today's Market View - Andrada Mining, Aura Energy, Bushveld Minerals, and more...

SP Angel . Morning View . Tuesday 31 01 23

Copper eases off 6m high ahead of FOMC meeting kick-off

MiFID II exempt information – see disclaimer below

Andrada Mining Ltd (AIM:ATM, OTC:AFTTF) – Additional results from infill drilling at the Uis mine, Namibia.

Antofagasta PLC (LSE:ANTO) – US Department of the Interior bans mining in northeast Minnesota for a minimum of 20 years.

Aura Energy Ltd (ASX:AEE, AIM:AURA)* – Accelerating towards an investment decision on the Tiris project at the end of the year

Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF)* – Vanadium production growth to continue despite Eskom loadshedding

Celsius Resources Ltd (ASX:CLA)* – Quarterly report highlights progress at MCB and AIM Admission

Gemfields Group Limited (AIM:GEM) – Operational market update for year ended 31 December 2022

GoldStone Resources (AIM:GRL)* – Issue of shares in lieu of fees to preserve cash within the Company

Resolute Mining Ltd (ASX:RSG, LSE:RSG) – Q4 2022 delivers 5th consecutive quarterly production increase

Sovereign Metals Ltd (ASX:SVM, AIM:SVML) – Quarterly results to 31 December 2022

URU Metals Ltd (AIM:URU)* SUSPENDED – Trading suspension to get lifted following the release of FY22 annual and FY23 interim results

Copper eases from 6-month highs as supply remains buoyant and Chinese economic recovery muted

• Copper prices have eased closer to $9,000/t having touched $9,550/t earlier, with concerns of market tightness on China’s recovery failing to materialise to date.
• The metal had enjoyed a sustained rally from November doldrums on a combination of optimism over China’s rapid reopening, Beijing infrastructure measures to shore up the property sector and supply concerns from Peru.
• However, numerous indicators are pointing to buoyant current supply. The Yangshan copper cathode premium continues to slide, suggesting Chinese buyers continue to have access to ample refined copper.
• Similarly, futures remain in contango, another traditional signal of ample supply.
• Global copper inventories have jumped 44% since the end of December, however these have begun to tick down coming out of Lunar New Year.
• Chinese home sales during the Lunar New Year fell 14%, suggesting the property sector continues to struggle, although we expect peak pessimism to have passed with signs of recovery across the board month on month.
• Las Bambas, which supplies 2% of global copper, has warned it may halt production this week as protests and blockades continue to disrupt operations.
• Freeport-McMoRan warned they were struggling to find US workers with 1,300 vacancies in a warning that this could constrain output across their seven mines.
• Cochilco report forecasts Chilean copper production to peak at around 7.14mt in 2030 well below its prediction a decade ago of 7.62mt in 2028.

Zijin Mining moves to ramp up lithium output by 40 times from 2025

• Chinese major Zijin is looking to boost Lithium Carbonate production to 120kt in 2025, aiming to become a top 10 supplier by the end of the decade.
• The Company is looking to build a lithium refinery in Hunan province and has invested in lithium projects across China, Africa and South America.
• Zijin expects to produce 3,000t lithium carbonate this year.
• The announcement highlights the continued rush of capital into the lithium space as elevated prices continue to draw investment.

Nickel supply threatened as Philippines considers Indonesia-style export fees

• The second largest nickel producer, the Philippines, may potentially follow Indonesia’s lead in a push for increased refining and down-streaming of its nickel reserves.
• Philippines represented 11% of global mine supply last year.
• The Country’s Environment and Natural Resources Secretary is eyeing fees on exports to encourage more processing plants and enable a role in the ‘value chain’, not ‘just part of the supply chain.’

Gold prices ease as traders look to Fed meeting tomorrow for Powell’s guidance

• Gold fell to weekly lows of $1,908/oz as traders take stock in advance of the Fed’s rate meeting tomorrow evening.
• The dollar has climbed 90bp in recent days, weighing on gold prices which are also seeing pressure from rising US Treasury yields, with the 10-year climbing back above 3.53% from lows of 3.3% mid-January.
• The US economy remains strong, with Visa’s earning report showing an uptick in consumer spending for December.
• Meanwhile, the US labour market has stayed hot despite c.4.5% worth of rate hikes.
• A 25bp hike is essentially priced in for tomorrow, but traders will focus on Powell’s rhetoric in the following presser, with attention paid to his ‘higher for longer’ message that has been a central Fed theme in recent months.
• A major leg higher in gold prices likely requires a change in direction for the Fed, with many betting on this in recent weeks following more consistent easing in US CPI data.
• Central banks raised gold holdings through 2022, with purchases hitting a 55-year high, 12x higher than in 2022.

Dow Jones Industrials -0.77% at 33,717

Nikkei 225 -0.39% at 27,327

HK Hang Seng -1.03% at 21,842

Shanghai Composite -0.42% at 3,256

Economics

China – Economic growth swung back to growth in January as the government lifted its Covid Zero policy controls.

• Official PMIs jumped past the 50.0 mark indicating growth in both manufacturing (albeit, marginal) and services suggesting disruptions of the pandemic wave may fade faster than was expected.
• On a less positive side, overseas demand is reported to have contracted under pressure from rising rates.
• Manufacturing PMI: 50.1 v 47.0 December and 50.1 est.
• Services PMI: 54.4 v 41.6 December and 52.0 est.
• Composite PMI: 52.9 v 42.6 December.

Germany – December retail sales posted sharp decline reflecting weak consumer sentiment amid strong inflation and high borrowing costs.

• On the positive side, labour numbers for January showed an unexpected decline the number of unemployed reflecting labour market resiliency despite macroeconomic and geopolitical challenges.
• Retail Sales (%mom): -5.3 v 1.1 November and -0.2 est.
• Unemployment Change (‘000): -22.0 v -13.0 December and 5.0 est.

UK – Grocery price inflation hit 16.7%yoy in the four weeks to January marking the highest level since the start of the data in 2008, FT quotes market researcher Kantar data.

• That was a 2.3pp increase on the rate in December.
• Prices are reported to have been driven by milk, eggs and dog food.
• High food prices saw the share of discount chains expanding strongly with Aldi and Lidl sales climbing 26.9% and 24.1% this month.

France – GDP growth came in stronger than expected in Q4/22 while inflation rate picked up again in January suggesting the central bank to continued with strong rate hikes.

• A positive surprise may have been enough to see the Eurozone avoiding a quarterly decline in output.
• Eurozone GDP data is out later this morning with estimates for a 0.1%qoq decline following a 0.3% gain in Q3/22.
• Inflation picked up as the government eased its energy support, FT reports.
• GDP (%qoq): 0.1 v 0.2 Q3/22 and 0.0 est.
• GDP (%yoy): 0.5 v 1.0 Q3/22 and 0.5 est.
• CPI (%mom, EU Harmonised): 0.4 v -0.1 December and 0.4 est.
• CPI (%yoy, EU Harmonised): 7.0 v 6.7 December and 7.0 est.

Guinea – The government announced the resumption of works to develop Simandou, the world’s largest untapped deposit of high grad iron ore.

• Rio Tinto, Winning Simandou Consortium and China Baowu Steel Group agreed to restart infrastructure development at the site in March, Bloomberg quotes Guinean military government.
• The announcement follows a trip of Guinean officials to China in mid January to meet with all stakeholders and funding partners as well as China tries to reduce its reliance on Australian iron ore shipments.
• Efforts to develop the $15bn project have been challenged for years by a series of disputes over ownership and infrastructure as well as political changes in the country.

South Africa - Julius Malema calls for National Shutdown on 20th March

• Malema plans to bring down the ANC and President Rhamaphosa starting with his National Shutdown on 20th March 2023.
• Malema says he is going to ‘switch on the lights’ because he is going to ‘remove the man who switches off the lights’.
• We are not sure that Malema’s power base will be that effective as we suspect much of it is unemployed and we suspect that his policies might not lead to a revival of ESKOM.

How the world has changed

• Seemed only a short while ago when the over 50s were being encouraged to retire early to allow the new, social-media, generation to rise through the ranks.
• Now the newspapers are calling for recent retirees to come back into the workplace.
• Somehow, politicians, economists and employers suddenly appreciate the experience and expertise of a generation born in the 60s amid great music and a degree of flower power.
• Maybe it’s because kids in their 20s haven’t yet developed robust immune systems, or maybe it’s because in their rush to be the best at everything they forgot to learn a few things along the way.
• It is also sad to report that the Camborne School of Mines is waving goodbye to its last year of undergraduates, following all other UK mining schools into oblivion. Data mining is not quite the same vocation.

Currencies

US$1.0821/eur vs 1.0888/eur yesterday. Yen 130.31/$ vs 129.91/$. SAr 17.422/$ vs 17.227/$. $1.232/gbp vs $1.239/gbp. 0.702/aud vs 0.708/aud. CNY 6.756/$ vs 6.749/$.

Dollar Index 102.49 vs 101.91 yesterday.

Commodity News

Precious metals:

Gold US$1,908/oz vs US$1,922/oz yesterday

Gold ETFs 93.3moz vs US$93.5moz yesterday

Platinum US$998/oz vs US$1,012/oz yesterday

Palladium US$1,612/oz vs US$1,644/oz yesterday

Silver US$23.20/oz vs US$23.62/oz yesterday

Rhodium US$12,000/oz vs US$12,000/oz yesterday

Base metals:

Copper US$ 9,081/t vs US$9,223/t yesterday

Aluminium US$ 2,558/t vs US$2,621/t yesterday

Nickel US$ 29,480/t vs US$29,485/t yesterday

Zinc US$ 3,385/t vs US$3,436/t yesterday

Lead US$ 2,139/t vs US$2,195/t yesterday

Tin US$ 29,000/t vs US$30,250/t yesterday

Energy:

Oil US$84.3/bbl vs US$86.2/bbl yesterday

• Crude oil prices moved lower ahead of market expectations that the leading central banks plan to raise interest rates this week to the highest levels since the financial crisis.
• European energy prices edged higher on expectations for the weather to turn cooler next week than previously forecast.

Natural Gas US$2.634/mmbtu vs US$2.663/mmbtu yesterday

Uranium UXC US$50.80/lb vs US$50.50/lb last week

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$128.1/t vs US$126.6/t

Chinese steel rebar 25mm US$635.4/t vs US$634.4/t

Thermal coal (1st year forward cif ARA) US$146.0/t vs US$146.5/t

Thermal coal swap Australia FOB US$217.0/t vs US$266.0/t

Coking coal swap Australia FOB US$333.0/t vs US$338.0/t

Other:

Cobalt LME 3m US$49,000/t vs US$49,000/t

NdPr Rare Earth Oxide (China) US$108,421/t vs US$107,048/t

Lithium carbonate 99% (China) US$66,236/t vs US$66,303/t

China Spodumene Li2O 5%min CIF US$5,970/t vs US$5,970/t

Ferro-Manganese European Mn78% min US$1,336/t vs US$1,344/t

China Tungsten APT 88.5% FOB US$327/mtu vs US$325/mtu

China Graphite Flake -194 FOB US$885/t vs US$885/t

Europe Vanadium Pentoxide 98% 9.3/lb vs US$9.0/lb

Europe Ferro-Vanadium 80% 37.25/kg vs US$36.75/kg

China Ilmenite Concentrate TiO2 US$344/t vs US$344/t

Spot CO2 Emissions EUA Price US$94.0/t vs US$94.3/t

Brazil Potash CFR Granular Spot US$510.0/t vs US$510.0/t

Battery News

Company News

Andrada Mining Ltd (AIM:ATM, OTC:AFTTF) 5.4p, Mkt cap £81m – Additional results from infill drilling at the Uis mine, Namibia.

• Andrada Mining (formerly Afritin Mining) reports further results from its infill drilling programme for lithium and tantalum at its Uis tin mine in Namibia.
• The 50-hole programme aims to increase “the confidence of the existing lithium and tantalum Mineral Resource estimates in the V1/V2 pegmatite”.
• The company says that the pegmatite was intersected in all holes and “at the depths and apparent widths predicted by the geological model”.
• Results from fifteen are still awaited but among the results released today are:
• An intersection of 28m at an average grade of 0.147% tin, 127ppm tantalum and 0.77% Li2O from 15m depth in hole V1V2-033; and
• An intersection of 21m at an average grade of 0.144% tin, 107ppm tantalum and 1.03% Li2O from 65m depth in hole V1V2-030; and
• An intersection of 22m at an average grade of 0.150% tin, 98ppm tantalum and 1.34% Li2O from a depth of 85m in hole V1V2-041; and
• An intersection of 19m at an average grade of 0.188% tin, 72ppm tantalum and 0.72% Li2O from 111m depth in hole V1V3-041
• CEO, Anthony Viljoen said that “We are particularly encouraged by the lithium grades intersected in drill holes V1V2041 and V1V2056, up to 1.34% lithium oxide, which further demonstrate the unrealised potential of the V1/V2 orebody. We look forward to updating the Mineral Resource Estimate in support of our by-product development projects for tantalum and lithium”.

Conclusion: Infill drilling at UIs shows continuity and consistency of the mineralised pegmatites and we look forward to the results contributing to an updated mineral resources estimate in due course.

Antofagasta PLC (LSE:ANTO) 1,707, Mkt cap £16.8bn – The US Department of the Interior has banned mining in northeast Minnesota for a minimum of 20 years.

• The prohibited area includes the Antofagasta’s Twin Metals Cu-Ni project.
• Antofagasta’s geological team did a great job finding the deposit and defining the resource but at the end if the day, this is a known areas of great environmental sensitivity.
• The mining ban affects around 240,000 acres of mineral title within the Superior National Forest.
• Teck’s Mesaba deposit and PolyMet’s Northmet project are not impacted as they are not federal licenses.

Aura Energy Ltd (ASX:AEE, AIM:AURA)* 18.5p, Mkt Cap £103m – Accelerating towards an investment decision on the Tiris project at the end of the year

• Aura Energy’ quarterly report for the three months to 31st December 2022 highlights the completion of its 11,600m infill drilling programme at the Tiris uranium project in Mauritania and progress on advancing Tiris towards feasibility and project development.
• The company confirms a 31st December 2022 cash balance of A$6.3m and that it expects to spend a further A$3.2mon exploration and evaluation during the quarter.
• The infill drilling is part of plans to upgrade the project’s mineral resources to a level where 50% is within the ‘Measured’ and ‘Indicated’ classes “to identify further exploration targets within the tenure” and to support “our long-term goal of expanding the Tiris to 3-5 Mlbs U3O8 per annum within five years of initial production”.
• Expressing confidence in the achievability of the expanded production target, Aura Energy reiterates that its 2021 “Tiris Feasibility Study update … demonstrated that Tiris is a low-capital and low-operating-cost project, with a simple, proven flowsheet. … [and that the project ] … has a first-mover opportunity with a capital estimate of US$74.8m and a C1 operating cost of US$25.43/lb U3O8”.
• Work is underway on the front-end-engineering design (FEED) study to establish “the engineering detail of the leaching, ion exchange, and precipitation work areas of the project” and “Similar engineering on the beneficiation circuit and infrastructure will commence next quarter … a precursor to the Board’s final investment decision targeted for Q4 2023”.
• The company also highlights the previously announced pilot plant test work undertaken by the Australian Nuclear Science and Technology Organisation which confirms that yellowcake’ uranium oxide product from concentrate material from Tiris conforms to ASTM (American Society for Testing and Materials) international standards.
• Discussions continue with potential off-takers for the Tiris production and Aura Energy says that it expects to pursue these discussions “in the coming weeks with a view to entering into one or more commercial agreements that will de-risk the first phase of development of the Tiris Project”.
• Elsewhere, Aura Energy comments that the Swedish elections have produced a Government “that looks to fast-track the development of new mining operations, especially those with a focus on battery metals, such as vanadium and nickel” which it sees as welcome for the Häggån Project, and says that “Aura will continue to progress the work required to deliver an exploitation permit in 2024”.

Conclusion: Completion of the infill drilling and progress on engineering design and product acceptance accelerates the Tiris uranium project towards an investment decision in the final quarter of 2023

*SP Angel acts as Nomad and Broker to Aura Energy

Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF)* – 4.59p, Mkt cap £59m – Vanadium production growth to continue despite Eskom loadshedding

• Bushveld Minerals reported a strong end to the financial year with a 23.1% increase in vanadium production in Q4 and a 7% increase in production year-on-year
• Management commissioned the new Kiln 3 at Vanchem replacing Kiln 1 where the refractory lining had reached the end of its useful life.
• Ongoing loadshedding should have less of an impact at Vanchem due to agreement on curtailment rather than full load shedding with the local municipality which determines which power users get priority.
• Vametco continued to improve its performance despite the loadshedding due to its direct connection to the Eskom grid and is due to commission its new ‘mini grid’ within months.
• Group:
• Production rose 23.1% yoy to 1,184mtV in Q4 and 7.0% yoy to 3,842/mtV for the full year.
• Sales rose 8.1% yoy to 3,584mtV indicating that sales are running some 258mtV behind production for the full year.
• Sales of rose 2.8% yoy to 905mtV in Q4 and were 279mtV behind production in the fourth quarter.
• Unsold inventory rose by 258 mtV. While it is normal for sales to lag production by around four to six weeks due to the supply chain is locking up around $11m worth of metal.
• Q4: C1 cash costs fell 5.7% yoy to $25.1/kgV
• FY: C1 cash cost rose just 6.4% to $27.7/kgV vs guidance of $26.1 - 27.0/kgV as a result of increased output.
• Guidance: Group production guidance remains at 4,200 -4,500 mtV along with a steady state target run rate of 5,000 - 5,400 mtV pa assuming no loadshedding
• Vametco:
• FY: production of ferrovanadium (Nitrovan) rose 10.3% to 2,705 mtV vs guidance of 2,550–2,650mtV.
• Q4 production rose 16.1% yoy to 812 mtV highlighting a good quarter for Vametco.
• Management expects the Vametco to be broadline in line with 2022 production and are guiding to around 2,705 mtV for 2023.
• Q4 C1 Cash costs fell 7.9% qoq to $21.1/ kgV in the quarter highlighting the positive impact of strong performance for the month.
• FY C1 Cash costs 1.3% yoy to $23.7 / kgV driven lower by higher production and positive performance.
• C1 cost guidance is expected to be between 23.6-24.0/kgV
• Capex 2023: expected to be solely sustaining capital at $3.7-3.9m
• Vanchem:
• Vanchem continues to ramp up performance at the refurbished Kiln 3, though the plant remains vulnerable to total power loss due to loadshedding by the local municipality
• The unit had a difficult quarter due to load shedding and while this will continue negotiations with the local municipality could help.
• The loss of Kiln 1 while Kiln 3 was ramping up reduced production for the full year.
• Production of vanadium in chemical, flake and FeV form fell 0.1% to 1,137 kgV though the year.
• Q4 production rose 42% yoy and 6.2% qoq at 372kgV as Kiln 3 ramped up production.
• C1 Cash cost rose 21.7% yoy to 37.2/kgV but fell 7.6% qoq to $33.8/kgV.
• Vanchem can support higher production costs as it produces higher value Flake and Chemical products.
• Kiln 3 has now replaced Kiln 1 where the refractory lining had reached the end of its useful and safe life.
• Guidance: Production should rise with C1 cash costs estimated to be $29.7-30.8k gV
• Capex 2023: Sustaining capital of $3.2-3.4m is forecast
• Mini grid: Vamchem is looking to develop its own mini-grid to offset the impact of loadshedding.
• Inflation: We expect South African inflation to be between 14-15% with Eskom due to hike power tariffs further by 18.65% from 1 April 2023.
• Maintenance: Annual maintenance will affect Vametco in Q2 and Vanchem in Q3
• Forex: The South African rand depreciated by 10.6% through the year to average 16.4:USD with the fourth quarter seeing 17.6:USD. The rand is at 17.48:USD today.
• We expect the rand to depreciate again against the US dollar as Eskom loadshedding continues to disrupt mining and manufacturing across the nation.
• Capex: Group capital expenditure was reduced to $9.2 - 9.7m vs our expectation for $20.5m of expenditure as management cut back on non-essential costs
• Bushveld Energy: BELCO, the Bushveld Electrolyte Company should commission within the next six months alongside the Vametco hybrid mini-grid.
• We see the BELCO plant and other investments into the VRFB sector as potentially leading Bushveld’s valuation higher as VRFB battery construction expands worldwide.
• BELCO production targeted capacity 8m ltrs pa. 1 ltr electrolyte contains 82-92g of vanadium. The plant should use >1,100t of vanadium oxide equivalent at full production.
• BELCO capex: $2.3-2.4m. (BELCO is 55% owned by Bushveld Energy, and 45% by the Industrial Development Corporation.)
• News and developments at Largo Physical Vanadium support our view for expansion in this area.
• The carve-out of Bushveld Energy should enable Bushveld to realise value from the growth and expansion in this area.
• BELCO has capacity for 200MWh pa of electrolyte.
• Debt: Loan notes: Management continue discussions for the replacement or repayment of the $35m Orion convertible loan note due November 2023
• Vanadium prices:
• The LMB ferrovanadium price averaged $39.2 / kgV in 2022 vs S$38.2 / kgV in 2021
• CRU Ryan's Note averaged $52.7 / kgV vs $37.7 / kgV in 2021
• Asian Metals averaged $34.3 / kgV vs $36.5 / kgV in 2021
• Q4 LMB Ferrovanadium was $33.2 / kgV v $33.8 / kgV in Q3
• CRU Ryan's notes averaged $42.9 / kgV vs $50.9 / kgV in Q3
• Asian Metals averaged $32.68 / kgV vs $30.4 / kgV in Q3
• European vanadium prices are now around $10.08/lb for vanadium pentoxide
• Chinese prices for V2O5 are at $7.9-8.0/lb.
• China: Rising demand for VRFB batteries combined with probable new demand for steel in China as the stalled property market restarts following the abandonment of their ‘Zero Covid’ policy.
• US: We also see ongoing growth in the US for vanadium due to new infrastructure spend particularly on grid and renewable energy projects.
• Europe: If Europe is able to restart the reconstruction of Ukraine later this year then we would expect substantial new demand from this area.
• Bushveld and it trading partners are directing sales into the US for higher prices while a significant discount on ferrovanadium will also increase priority for chemical and flake sales.
• Inventory: relatively high stock levels of around 250mtV should be sold in the year as group sales catch up on the rise in production.
• Demand remained steady for vanadium in the steel and chemical sectors with aerospace and VRFB battery sectors seeing strong growth.
• Loan notes: Management have a long standing and healthy relationship with Orion and are fully confident on a resolution for the repayment or replacement of the $35m concertible.
• Bushveld was able to repay the Nedbank revolving credity facility earlier in the year with strong cash flows from Vanchem and Vametco able to support substantial borrowing if needed.

Conclusion: 2023 promises to be a positive year for Bushveld. The team have worked hard to continue to grow the business despite the impact of inflation and loadshedding through the year. The group has significant inventory to sell and should now be running at a better rate at Vanchem. Bushveld owns two of the world’s four operating primary vanadium processing facilities making its operations strategically significant for steel and VRFB production and a critical supplier if a shortfall develops in the supply of vanadium pentoxide or Ferrovanadium.

*SP Angel act as nomad and broker to Bushveld

Celsius Resources Ltd (ASX:CLA)* 1p, Mkt Cap £14.8m – Quarterly report highlights progress at MCB and AIM Admission

• Celsius Resources, which was admitted to the AIM Market yesterday, reports today on progress at its Maalinao-Caigutan-Biyog (MCB) Project in Luzon, Philippines in its quarterly report covering the three months to 31st December 2023.
• The company highlights the completion of its resource drilling programme at MCB with a total of 447.30m completed in three holes for its resource estimation and geotechnical investigation and underground mining studies.
• The company says that the drilling “results continue to extend the envelop of the near surface mineralisation to the east complementing previous drill results from holes completed at MCB from 2021 to 2022, and validating the historical drilling information completed by Freeport-McMoRan”.
• Celsius Resources says that drilling “confirmed the presence of a more extensive shallow copper mineralisation than previously understood … [and that] … Testing of the extents of the shallow copper mineralisation will continue as assay results from drill holes MCB-042, MCB-043, and MCB-044 are received”.
• The company highlights its updated mineral resources estimate for the MCB project which was released in December and showed a total JORC compliant resource of 338mt at an average grade of 0.47% copper and 0.12g/t gold including 296mt classed as ‘Measured and Inferred’ at an average grade of 0.47% copper and 0.12g/t gold.
• The company also discusses the progress on securing regulatory approvals for the MCB project with interim approval of its Social Development and Management Program and Care and Maintenance Program secured and other documents, including “Social Development and Management Program and Care and Maintenance Program … [are] … undergoing technical review”.
• The company also highlights the release, in November 2022, of its mineral resources estimate for the Sagay project, also in the Philippines, which showed “a Global Mineral Resource Estimate of 302 million tonnes of 0.41% copper and 0.11g/t gold, at a lower cut-off grade of 0.2% copper”.
• Further drilling at Sagay is temporarily suspended while a “desktop review and study of recent drilling results were undertaken, along with previous drilling and exploration data, to reinterpret the geologic and mineralisation models and resource evaluation to improve exploration and future development strategies”.

Conclusion: Recent drilling at MCB has identified shallow copper mineralisation over a wider area than originally thought.

*SP Angel are acting as broker to Celsius Resources with respect to its AIM IPO.

Gemfields Group Limited (AIM:GEM) 17.3p, Mkt Cap £217m – Operational market update for year ended 31 December 2022

• Gemfields, which has a 75% ownership of the Kagem emerald mine, the Montepuz ruby mine and 100% owned Fabergé brand, reports a year-end operational market update.
• The Company’s total auction revenues set a new annual record of $316m – a 32% increase on 2021.
• The Company reports $104m in net cash, excluding $55m in outstanding auction receivables.
• Funding costs for the Fabergé brand has decreased from $14.1m in 2014 to $2m for the 12 months ending December 2022.

GoldStone Resources (AIM:GRL)* – 3.65p, Mkt cap £18m – Issue of shares in lieu of fees to preserve cash within the Company

• Goldstone has issued in aggregate, 2,323,286 new ordinary shares, in lieu of fees to an advisor of the Company, major shareholder Bill Trew and a senior employee of the Company.
• 1,442,465 ordinary shares will be issued to Bill Trew at a conversion price of 3.65p in lieu of accrued and unpaid fees totalling £52,650.
• These Director Fee Conversion Shares are set to be issued to Oxus Mining Ltd, owned solely and controlled by Bill Trew.
• Bill Trew’s resultant shareholding will amount to 131,099,040 or 26.3% of the Company.
• 332,876 shares will be issued to a senior employee of the Company and 547,945 shares will be issued to an adviser of the Company in lieu of fees.

*SP Angel act as Broker to GoldStone Resources (AIM:GRL)

Resolute Mining Ltd (ASX:RSG, LSE:RSG) 15.3p, Mkt Cap £357m – Q4 2022 delivers 5th consecutive quarterly production increase

• Resolute Mining reports that production of 91.777oz of gold during the 3 months ending 31st December 2022 brought full year 2022 gold output to 353.069oz.
• The company explains that the final quarter of 2022 was “the fifth consecutive quarter of increased production” and that annual production exceeded its guidance of 345,000oz.
• The company is expecting 2023 output of 350,000oz at an all-in-sustaining cost (AISC) of US$1,480/oz (2022 – US$1.498/oz).
• CEO, Terry Holohan welcomed the results for 2022 and commented that “sulphide gold production at Syama of 161,479 ounces was at its highest level since the main open pit operations ceased in 2015. This is a significant achievement, capitalising on the improvements made to the sulphide processing circuit undertaken in the first quarter of 2022”.
• He commented on the inflationary costs pressures within the mining industry which he blamed for 2022 AISC exceeding guidance and said that Resolute Mining “continues to focus on systematic improved performance, with production guidance for 2023 of 350,000oz at an AISC of $1,480/oz. The pre-feasibility study (PFS) into low capital expansion options for the Syama North project is progressing well. The results of this are expected to be released in the second quarter of 2023”.
• The quarterly report also highlights the previously announced 58% increase in the size of its mineral resources estimate at the Syama North project in Mali where a new estimate of 34mt at an average grade of 2.9g/t gold totals 3.18m oz of gold with approximately 58% (19.17mt at a grade of 3.0g/t) classified as ‘Measured and Indicated’ and the balance of 14.86mt averaging 2.8g/t ‘Inferred’.

Conclusion: The fifth consecutive quarterly increase in gold output saw Resolute Mining exceed its 2022 production guidance although industry-wide inflationary cost pressures saw the cost guidance target missed. 2023 guidance sees gold output of 350,000oz at an AISC of US$1,480/oz.

Sovereign Metals Ltd (ASX:SVM, AIM:SVML) 26p, Mkt Cap £128m – Quarterly results to 31 December 2022

• Sovereign continues to advance the PFS for its Kasiya Rutile Project in Malawi, hoping for completion in 1H-23.
• The Company hopes to boost the Expanded Scoping Study for the natural rutile and natural graphite project.
• Sovereign has completed an infill drilling programme in order to update the Kasiya MRE, with an update expected in Q1-23.
• The Company hopes the 4,666m drilling campaign will add new blocks of Indicated material to the resource.
• Sovereign has signed a non-binding MoU for supply of 20kt of rutile pa from Kasiya to Chemours, a titanium dioxide pigment producer in the US.
• The Company notes its plans to demerge its Nanzeka, Malingunde, Duwi and Mabuwa standalone graphite projects into a 100% owned subsidiary, NGX. It plans to do an in-specie distribution following this demerger.
• At the end of the period, Sovereign had A$11.1m in cash and cash equivalents.

URU Metals Ltd (AIM:URU)* SUSPENDED – Trading suspension to get lifted following the release of FY22 annual and FY23 interim results

• The Company released FY22 annual financial statements as well as FY23 interim results this morning.
• According to interim results, the Company recorded a US$0.4m loss in six months to Sep/22 (H1/FY22: -US$1.1m) largely reflecting $0.4m in administrative expenses.
• FCF amounted to -$0.6m (H1/FY22: -$1.2m) reflecting corporate expenses as well as $0.3m in exploration related costs.
• Closing cash balance stood at $1.1m with $0.5m in convertible loan note and $0.7m in debt to related parties outstanding.
• The Company holds a 75% interest in Zeb Nickel (TSX-V:ZBNI, OTC:ZBNIF), an owner of the Zebediela Nickel Project located in the Bushveld Complex in South Africa, a world class PGE-Ni district.
• The team is focused on confirmatory and exploration drilling at the project to potentially revise the historical resource (485mt at 0.25% Ni in Indicated and 1,115mt at 0.25% Ni in Inferred mineral resource) and revise the PEA.
• Trading in shares are expected to resume now that the Company released its FY22 annual and FY23 interim results.

*SP Angel acts as Nomad and Broker to URU Metals

No.1 in Copper: “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”

No1. In Gold: “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”

The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk - 0203 470 0474

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk - 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk - 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk - 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

SP Angel

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.





Sources of commodity prices

Gold, Platinum, Palladium, Silver - BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel - Bloomberg

Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt - LME

Oil Brent - ICE

Natural Gas, Uranium, Iron Ore - NYMEX

Thermal Coal - Bloomberg OTC Composite

Coking Coal - SSY

RRE - Steelhome

Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite - Asian Metal

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II - Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).

SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%