SP Angel . Morning View . Wednesday 01 02 23
Xi doubles down on push for consumption to fuel economic recovery
MiFID II exempt information – see disclaimer below
Pre-IPO investment opportunity in Zambian copper exploration company
- The company holds 100% of four licences in highly prospective areas close to existing mines.
- One license runs contiguous with First Quantum’s Sentinel copper and Enterprise nickel mine and close to Arc Minerals’ licences in the west of Zambia.
- Working technical cooperation agreement with First Quantum, under which FQM provided a comprehensive geological data package.
- Historic drilling on licence includes 0.7% copper over 1m and 0.2% nickel over 3m. Geophysics in 2021 & 2022 leading to identification of drill targets.
- Second large licence package offers multiple copper targets identified by recent geochemistry and other geophysics.
- Small artisanal mine on licence assayed at 15.8% copper and 0.57g/t gold. Second pit nearby but off licence ore assayed 18.3 g/t gold and 4.87% copper.
- Highly prospective licence acquired in 2022 on Western Foreland trend, which hosts the giant Kamoa-Kakula mine projected to be world’s second largest copper producer.
- All licences 100% owned with Zambian partners significant shareholders in the company.
- IPO documentation completed indicating near-term listing potential. Large scale IOCG potential identified.
*SP Angel’s role is limited to making introductions and interested parties should be aware that investment in a private company can present certain risks not present in listed companies (e.g. limited or no liquidity and no rules compelling disclosure of information to investors). This offer is open to professional investors only and is not offered to retail investors.
Anglo American PLC (LSE:AAL) – De Beers - First sales cycle of the year sees cautious optimism on returning demand from China despite lower YoY sales
Arkle Resources PLC (AIM:ARK)* – Review of 2022 Stonepark drilling programme
Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF, ASX:A11)* - BUY – Atlantic increase JORC lithium resource at Ewoyaa to 35.3mt grading 1.25% Li2O
Aura Energy Ltd (ASX:AEE, AIM:AURA)* – Thirty year agreement with the Mauritania Government for Tiris uranium project
Gem Diamonds Limited (LSE:GEMD, OTC:GMDMF) – Letšeng mine meets revised operational guidance targets in 2022
Glencore PLC (LSE:GLEN) – Glencore 2022 production largely in line with revised guidance
Glencore PLC (LSE:GLEN)* – Potential dual listing on the Saudi Exchange
Pathfinder Minerals (AIM:PFP) – Placing and sale Mozambique assets for £2m to Acumen Advisory Group
Southern Copper notes transport delays as Peruvian protests continue
- Southern Copper states its mines in Peru continue to operate normally.
- However, anti-government demonstrations are limiting the availability of supplies and products.
- Conversely, the Company notes that transport disruptions are marginal.
Gold regains strength on dovish market before J Powell’s press conference today
- Gold prices have strengthened back to $1,927/oz having closed in on $1,900/oz as the dollar weakened.
- The market is currently fully priced in for a 25bp hike from the Fed this evening, supporting optimistic signs of a Fed pivot as inflation cools, even faster than expected.
- Dovish market expectations have traditionally supported gold, which is aided by lower US Treasury yields and a weaker dollar.
- However, the US economy remains strong, with consumption showing minimal signs of slowing down in both real and nominal terms, and labour markets remain tight, muddying the Fed’s path forward and raising concerns of stickier inflation despite rapid rate hikes.
Dow Jones Industrials +1.09% at 34,086
Nikkei 225 +0.07% at 27,347
HK Hang Seng +0.93% at 22,045
Shanghai Composite +0.90% at 3,285
Economics
US – The Fed is expected to announce a 25bp rate hike later today reiterating its tightening monetary policy stance, albeit, at a reduce pace.
- Core inflation has been coming down lately, although, in absolute numbers it continued to run significantly above the 2% target (Core PCE 4.4%% December).
- Labour market remains strong with wages reported to have climbed 4.6% in December compared to 2.5-3.0% recorded in pre-pandemic years while continuing jobless claims are currently around mid-pre-pandemic 2019 range.
- Conference Board Consumer Confidence: 10.7 v 108.3 December and 109.0 est.
- S&P CoreLogic CS 20-City House Prices (%mom): -0.54 v -0.52 October and -0.65 est.
- S&P CoreLogic CS 20-City House Prices (%yoy): 6.8% v 8.6 October and 6.8 est.
Xi doubles down on push for consumption to fuel economic recovery
- Xi states in a national address yesterday that people should be able to ‘consume based on a stable income, dare to consume without worries, and have a good consumption environment with a strong sense of gain and strong willingness to consume.’
- He stated that investment would be targeted at new infrastructure, high-tech industries and ‘strategic emerging industries.’
- He emphasised the importance of science and technology for the future of China’s economy.
- Despite this, Xi stated Beijing’s commitment to continue to control monopolies and ‘unfair competition,’ in line with his common prosperity drive which has been the Politburo’s primary concern in recent years.
- The statement follows Xi’s second in command, Li Keqiang’s statement on Tuesday that ‘boosting consumption is a key step to expand domestic demand,’ and that China needs ‘to restore the structural role of consumption in the economy.’
- Although these statements have been a consistent theme in Chinese governmental policy for over a decade, household spending in 2021 stood at 38% vs the US’ 70% of GDP.
- Chinese saving rates have soared to $2.6tn in 2022 vs $1.47tn in 2021.
- CAT raises concerns over muted Chinese demand in sign property sector not out of the woods yet
- Caterpillar, the major supplier of excavators and bulldozers to the Chinese property sector, notes a ‘softening’ of demand in 2022.
- Furthermore, the Company notes that 10-ton-and-above excavator sales will be weaker this year than last.
- However, the Company notes ‘healthy mining demand to continue as commodity prices remain above investment thresholds.’
- Caixin Manufacturing PMI: 49.2 v 49.0 December and 49.8 est.
Japan -The central bank bought a record $182bn worth of government bonds in January after the decision to widen the allowance band around the 10y yield target led to a sell off in government debt.
- Governor Haruhiko Kuroda is set to step down in April with expectations that new leadership will see a change in the monetary policy, Reuters reports.
- The 10-year bond yield stood at 0.480% on Wednesday, remaining close to the BOJ's 0.5% cap.
Eurozone – HICP inflation falls to 8.5% in January from 9.2% in December. The market had been looking for 9% inflation
Eurozone economy marginally avoided contraction in Q4 / 22 thanks to an outsized expansion in Ireland during the period (Bloomberg).
- Irish GDP figures have long been regarded as painting an overly positive view of the economy’s performance due to the disproportionate role of global heavyweights such as Google, Twitter and Pfizer.
- Better than expected numbers from France, the second largest economy in the region, also helped.
- GDP (%qoq): 0.1 v 0.3 Q3/22 and -0.1 est.
- GDP (%yoy): 1.9 v 2.3 Q3/22 and 1.7 est.
Spain - S&P Global Manufacturing PMI: 48.4 v 46.4 December and 48.0 est.
Italy - S&P Global Manufacturing PMI: 50.4 v 48.5 December and 49.5 est.
UK – Teachers, train drivers and civil servants are staging the biggest day of strike action in the UK since 2011 on demands for higher pay increases as inflation pressures mount.
- Education minister earlier ruled out any further pay increases.
- Around 150,000 teachers are expected to walk out across England and Wales today affecting more than eight in 10 schools, FT writes.
- Property prices declined for a fifth consecutive month in January marking the longest losing streak since the financial crisis on the back of higher mortgage rates and falling real incomes.
- Prices were down 0.6%mom last month , according to Nationwide data.
- The average price dropped to £258k, down from a peak of ~£275k hit in August.
- YoY prices remain higher (+1.1%yoy).
South Korea – Trade deficit hit a record high in January as exports dropped 16.6%yoy amid a slowdown in overseas markets.
- In particular, shipments of semiconductors were down 44.5%.
- Exports should improve in coming months helped by reopening in China.
Russian troops secure gold-rich region in Central African Republic
- Russian forces have agreed a pact with the CAR, Chad and Sudan to help fight armed rebel groups in the mineral-rich region on the CAR, Sudanese and Chadian border.
- The Pact to ‘achieve security and stability’ in the region, highlights Moscow’s growing influence in Sub-Saharan Africa, alongside an increasing appetite for bullion access.
- Putin has been developing relations with Libya, Sudan, Mali and Burkina Faso increasingly over recent years.
- The Kremlin-backed Wagner Group has focused on securing control of various diamond and gold mines across the CAR before Putin’s invasion of Ukraine.
Currencies
US$1.0874/eur vs 1.0820/eur yesterday. Yen 130.18/$ vs 130.32/$. SAr 17.396/$ vs 17.424/$. $1.232/gbp vs $1.232/gbp. 0.707/aud vs 0.702/aud. CNY 6.744/$ vs 6.757/$.
Dollar Index 102.01 vs 102.46 yesterday.
Commodity News
Precious metals:
Gold US$1,925/oz vs US$1,907/oz yesterday
Gold ETFs 93.2moz vs US$93.3moz yesterday
Platinum US$1,013/oz vs US$998/oz yesterday
Palladium US$1,648/oz vs US$1,617/oz yesterday
Silver US$23.58/oz vs US$23.15/oz yesterday
Rhodium US$12,000/oz vs US$12,000/oz yesterday
Base metals:
Copper US$ 9,199/t vs US$9,084/t yesterday
Aluminium US$ 2,635/t vs US$2,558/t yesterday
Nickel US$ 30,250/t vs US$29,480/t yesterday
Zinc US$ 3,420/t vs US$3,388/t yesterday
Lead US$ 2,174/t vs US$2,138/t yesterday
Tin US$ 29,760/t vs US$28,650/t yesterday
Energy:
Oil US$85.8/bbl vs US$84.3/bbl yesterday
- Crude oil prices strengthened despite the API reporting that US crude stocks increased by 6.3mb last week (vs expected 1mb draw).
- European energy prices edged lower as Gazprom surprisingly increased gas supplies by 20% to 29.4mcm/day via the Sudzha gas pumping station in Ukraine.
- Exxon remains on track to boost its US Permian Basin volumes from 0.6mboe/d in 2023 to 1mboe/d in 2027 and argued that the Company’s level of capital spending relative to competitors would be an advantage.
Natural Gas US$2.720/mmbtu vs US$2.630/mmbtu yesterday
Uranium UXC US$50.80/lb vs US$50.80/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$128.0/t vs US$128.1/t
Chinese steel rebar 25mm US$634.5/t vs US$635.3/t
Thermal coal (1st year forward cif ARA) US$146.0/t vs US$146.0/t
Thermal coal swap Australia FOB US$245.0/t vs US$217.0/t
Coking coal swap Australia FOB US$325.0/t vs US$333.0/t
Other:
Cobalt LME 3m US$49,000/t vs US$49,000/t
NdPr Rare Earth Oxide (China) US$110,475/t vs US$108,401/t
Lithium carbonate 99% (China) US$65,321/t vs US$66,225/t
China Spodumene Li2O 5%min CIF US$5,970/t vs US$5,970/t
Ferro-Manganese European Mn78% min US$1,343/t vs US$1,337/t
China Tungsten APT 88.5% FOB US$327/mtu vs US$327/mtu
China Graphite Flake -194 FOB US$885/t vs US$885/t
Europe Vanadium Pentoxide 98% 9.4/lb vs US$9.3/lb
Europe Ferro-Vanadium 80% 37.45/kg vs US$37.25/kg
China Ilmenite Concentrate TiO2 US$345/t vs US$344/t
Spot CO2 Emissions EUA Price US$95.3/t vs US$94.0/t
Brazil Potash CFR Granular Spot US$510.0/t vs US$510.0/t
Company News
Anglo American PLC (LSE:AAL) 3,402.5p, Mkt Cap £46bn –De Beers - First sales cycle of the year sees cautious optimism on returning demand from China despite lower YoY sales
- Anglo American reports that, provisionally, the first De Beers sales cycle of 2023 realised US$450m and that the previously reported provisional sales of US$410m for the tenth sales cycle of 2022 have now been confirmed as US$417m.
- The initial provisional sales for 2023 are around 30% lower than the US$660m achieved during the first sales cycle of 2022 and the announcement says that “the provisional rough diamond sales figure quoted for Cycle 1 represents the expected sales value for the period 16 January and 31 January and remains subject to adjustment based on final completed sales.”
- Bruce Cleaver, CEO, De Beers Group, said that "Consumer demand for diamond jewellery over the 2022 end-of-year holiday season performed well. As expected, given the macroeconomic outlook at the time, Sightholders took a cautious approach in late 2022 in planning their 2023 allocation schedule, with a greater weighting of goods to be purchased as the year progresses.”
- He also commented that “While there is still some uncertainty over the macroeconomic environment, we see cautious optimism for demand to increase as China continues to reopen and inflation rates start to decrease in many major economies”.
Arkle Resources PLC (AIM:ARK)* 0.6p, Mkt Cap £2m – Review of 2022 Stonepark drilling programme
- Arkle Resources’ 76.56% interest, Group Eleven Resources, completed 2,316m of drilling in 2022 at the Stonepark licences in Limerick.
- The Company notes the discovery of a potential mineralised fault structure which may relate to the Carrickittle West discovery hole.
- Low grade zinc was intercepted alongside a potentially significant fault structure, with the Company suggesting the fault has appears to be ‘part of a larger structural trend 40-50km long.’
- The Company notes a second trend with 10km in length to the north.
- Group Eleven has applied for permits to drill the Carrickittle West deep hole.
- Arkle’s Chairman, John Teeling, is confident that ‘The Stonepark block increases in strategic importance as more information is acquired on the potential for zinc lead in the Limerick Volcanic Complex ("LVC")."
*SP Angel are Nomad and broker to Arkle Resources
Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF, ASX:A11)* 40.7p, Mkt Cap £246m – Atlantic increase JORC lithium resource at Ewoyaa to 35.3mt grading 1.25% Li2O
BUY
- Atlantic Lithium have raised the total defined JORC resource at Ewoyaa to 35.3mt grading 1.25% Li2O within the Cape Coast Lithium Portfolio, Ghana, West Africa
- Recent drill results have raised the defined MRE ‘Measured and Indicated Resource’ to an impressive 93% of the total resource.
- Measured - 3.5Mt at 1.37% Li2O
- Indicated - 24.5Mt at 1.25% Li2O
- The upgrade is based on 137,153m of drilling including 47,000m drilled last year with 120,845m Reverse Circulation and 16,308m Diamond Drilling.
- Atlantic have, so far, covered a relatively small proportion of their license area with just 15km2 on their 560km2 Cape Coast lithium portfolio
- The license portfolio also includes a non-JORC 1.48mt grading 1.67% Li2O at Egyasimanku Hill
- DFS: a Definitive Feasibility Study is due for release in the second quarter.
- We expect the enlarged resource to significantly improve the DFS economics through increased throughput and extended mine life.
- The former PFS delivers exceptional economics at 255,000tpa of 6% Li2O spodumene concentrate from a 2mtpa throughput over a 12.5-year operation:
- LOM revenues >$4.84bn,
- NPV8 of US$1.33bn Post-tax,
- IRR of 224%
- LoM 12.5 years
- Capex $125m
- Payback <5 months
- C1 cash operating costs $278/t of 6% spodumene concentrate per tonne of 6% lithium spodumene concentrate FoB
- EBITDA $248m pa average
- Based on the former 18.9mt at 1.24% Li2O ore reserve
- Assumes a spodumene price of $1,359/dmt SC6% with US$1,200/dmt long term pricing
- Assay results for ~26,400m received during the quarter confirmed good mineralisation continuity helping to potentially convert Inferred tonnages into higher confidence category and ultimately expanding the life of mine.
- Drilling results outside of the current MRE showed wide high-grade results across the Ewoya Main, Grasscutter East and West, Anokyi and Kaampakrom West deposits.
- The plant Front End Engineering Design contract was awarded to Primero Group, an industry leading engineering group that was engaged by a number of lithium developers (Pilbara, Core, Covalent, Sigma and Alliance), in December.
- Keith Muller was also recently as Atlantic’s new Chief Operating Officer and Roux Terblanche as Project Manager for the Ewoyaa project.
- Exploration and evaluation cash spend amounted to A$5.9m during the quarter with Piedmont Lithium covering A$4.8m with A$1.5 to be reimbursed in Q1/23 as part of the project earn in agreement.
- The Company held A$19.1m in cash and no debt at the year end.
Valuation: Atlantic’s PFS valuation is so far ahead of its market capitalisation. We believe the stock’s discount to its project NPV is likely to widen and rate the stock a BUY based on this apparent undervaluation.
Conclusion: The world needs substantially more spodumene concentrate than is currently available to feed growing demand from the world’s gigafactories. Atlantic Lithium is in the well placed close to the coast in Ghana where substantial mining and processing contractors and services are available.
*SP Angel acts as Nomad to Atlantic Lithium. An SP Angel mining analyst recently visited the Ewoyaa Lithium Project in Ghana
Aura Energy Ltd (ASX:AEE, AIM:AURA)* 18.75p, Mkt Cap £103m – Thirty year agreement with the Mauritania Government for Tiris uranium project
- Aura Energy has reported an agreement with the Mauritanian Government for the development of its Tiris uranium project.
- The approval of the Mining Convention and the completion of the front-end-engineering design that is in progress and was highlighted in yesterday’s quarterly report should facilitate the key tasks related to the Board’s consideration of a final investment decision, expected in Q4 2023.
- The agreement gives “fiscal certainty for an initial 30 year period“ of the Tiris Project and provides for “stability for tax, royalties, and customs” along with securing a 25% tax rate and clarity on the import of equipment and supplies and the rights to export mineral produced by the project and commitments to employment, training and development of local personnel.
- It also provides for a “Defined State participation of up to 20%” and a royalty of “3.5% FOB value”.
- The agreement with the Mauritanian Government's Agence Nationale de Recherches Géologiques et du Patrimoine Minier ("ANARPAM") gives it a 15%, non-dilutable, Free Participation in Tiris and a “right to an option to acquire a further 5% at an independently determined value”.
- Terms also include “An early annual dividend to ANARPAM in the first three years of the Project - dependent on the uranium price - of between US$500,000 and US$800,000, and a mechanism for the recovery of early dividend payments in future years”.
- Managing Director, David Woodall, described the agreement with Government as an exciting step and said that it provided the opportunity “to work with Director General Mr El Hachmy Cheikh Sidatty Moulaye Abdallah and the ANARPAM team in partnership to develop the Tiris Project and deliver our objective to grow production to more than 3.0 Mlbs U3O8 per year, with both Aura and the people of Mauritania sharing ownership of the project.”
- He also highlighted the project’s scope to “increase the diversity of global uranium supply at a time when the market is predicting a supply deficit, and as the world responds to the need for more sources of low-emissions energy”.
- Describing the Tiris Project as “one of the most important mining projects in Mauritania”, the Director General said that, as the first uranium project in North Africa, it “will make Mauritania a supplier of energy, particularly in the particularly difficult global context, marked by the period after COVID-19 and the impacts of the Russia-Ukraine war around the world among others”.
- Mr. El Hachmy Cheikh Sidatty Moulaye Abdallah also commented on Mauritania’s “significant expectations in terms of revenues for the State, in terms of employment, training and technology transfer … [and he said that] … the signing of the shareholder pact between Aura Energy and ANARPAM demonstrates the great mark of trust between the two partners, now united together for the development of Mauritania's major uranium project "Uranium de Tiris" through a win-win partnership”.
Conclusion: The conclusion of a long-term agreement with the Mauritanian Government provides a secure framework for the development of the Tiris uranium project where a final investment decision is expected to be taken by the end of this year.
*SP Angel acts as Nomad and Broker to Aura Energy
Gem Diamonds Limited (LSE:GEMD, OTC:GMDMF) 29.75p, Mkt Cap £41m – Letšeng mine meets revised operational guidance targets in 2022
- Gem Diamonds reports that it produced 26,530 carats of diamonds from its Letšeng mine in Lesotho during the 3 months to 31st December bringing the total for 2022 to 106,704 carats (2021 – 115,335 carats) and exceeding the most recent production guidance of approximately 104,000carats issued in the wake of the Lesotho elections in November.
- Other operational guidance was achieved during 2022 with direct costs of US$264/t processed falling within the guidance range of US$250-270/t, operating costs of US$340/t within the US$330-350/t and ore treated, at 5.5mt exceeding the indicated 5.45mt.
- CEO, Clifford Elphick explained that “Despite Letšeng continuing to be impacted by Eskom-driven power outages which not only interrupt the production cycle but also impact costs significantly due to the increased alternative power generation costs, it was pleasing to meet planned operational metrics in 2022” and he said that “Long-term alternative power supply options are being actively investigated”.
- The company says that its diamond sales tenders were “well attended” realising an average of US$1,755/carat sold during the year.
- The Letšeng mine continues to yield large, high value stones with a single 42.98 carat white diamond realising a total US$1.47m or US$34,170/carat and with four individual diamonds realising in excess of US$1m. The company comments, however, that the “recovery of four >100 carat diamonds during the year … was lower than the 14-year average of eight”.
Glencore PLC (LSE:GLEN) 540.2p, Mkt cap £69bn – Glencore 2022 production largely in line with revised guidance
- Reporting on its production performance for 2022, Glencore describes operations performing “in line with our revised guidance from October 2022, with final quarter sequential production increases delivered across most of our key commodities, including copper, zinc, nickel and coal”.
- Lower copper production of 1.06mt of copper during the year (2021 – 1.20mt) is attributed to “the sale of Ernest Henry in January 2022 (44,800 tonnes) … [and] … the ongoing geotechnical constraints at Katanga (44,300 tonnes)”.
- Glencore also comments that Collahusai, which produced 26,100t less copper at 251,100t was affected by “planned mining sequence changes” and that there was a 21,000t “lower contribution from Mount Isa … reflecting Covid-19 related absenteeism and loss of a high-grade stope due to ground conditions and a damaged orepass.”
- In 2023, Glencore’s guidance is for copper production in the range 1.04mt ±30,000t.
- Glencore produced 43,800t of cobalt during 2023 and is guiding for lower production in 2023 of 38,000t ±5,000t.
- Disposals of S American operations and mine closures at Matagami, coupled with reduced production volumes at Mt Isa and Lady Loretta saw internally sourced zinc production decline by 16% to 938,500t in 2022.
- Glencore expects 2023 zinc production of around 950,000t ±30,000t.
- Internally sourced nickel production for the year increased by 5% to 107,500t “reflecting Murrin Murrin’s scheduled major maintenance shut in the prior year and Koniambo running two production lines for the majority of 2022, partially offset by lower production at INO due to strike action in Canada and Norway”.
- Glencore expects increased nickel production in 2023 of around 112,000t ±5,000t.
- “Attributable ferrochrome production of 1,488,000 tonnes was in line with 2021” and Glencore’s 2023 guidance indicates a decline to 1,310,000t ±30,000t.
- “Coal production of 110.0 million tonnes was 6.7 million tonnes (6%) higher than 2021, reflecting higher attributable production from Cerrejón, following the acquisition in January 2022 of the remaining two-thirds interest that Glencore did not already own”.
- Glencore says that on “a like for like basis, overall Group production declined by 8.9 million tonnes (7%), primarily due to wet weather challenges and an extended community blockade in Colombia” and guides towards 2023 coal production being maintained at 110mt ±5mt.
- Glencore’s CEO, Gary Nagle, said that 2022 “saw a mixed overall production performance. Copper and zinc volumes reflect the base effect of asset sales (notably Ernest Henry and Bolivia), Katanga’s geotechnical constraints and supply chain headwinds in Kazakhstan. Nickel volumes benefitted from operating two lines at Koniambo for the majority of the year, partially offset by Canadian industrial action.”
KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF)* 0.81p, Mkt Cap £32m – Potential dual listing on the Saudi Exchange
- The Company is considering a dual listing on the Saudi Exchange, based in Riyadh, Saudi Arabia.
- The Company appointed advisers to prepare for a potential dual listing.
- The team highlights increased interest from local and regional investors in domestic mining and metals sectors as the country is aiming to diversify its economy away from the oil and gas sector.
- Should the team proceed with the listing, KEFI would be the first pre-production miner and only the third mining company to list on the exchange.
Conclusion: KEFI is considering tapping into regional sources of capital given its strong links with the jurisdiction as two of its three projects including Hawiah Copper Gold Project (PFS ongoing) and Jibal Qutman (FS ongoing) are located in Saudi Arabia.
*SP Angel act as nomad and broker to KEFI Gold and Copper
Pathfinder Minerals (AIM:PFP) £0.67p, mkt cap £3.55m – Placing and sale Mozambique assets for £2m to Acumen Advisory Group
- Pathfinder Minerals (AIM:PFP) shares jumped 59% this morning on news that it has sold its Mozambique ilmenite assets to Acumen Advisory Group for £2m in cash
- The company which has been in dispute with General Valoso and the Mozambique government reports the sale of its Mozambique holding company, IM Minerals, to Acumen Advisory Group.
- AAG ‘Acumen Advisory Group’ is a litigation and asset recovery company and has committed to bring a substantial claim against the Government of Mozambique with regard to the loss of its titanium mineral sands licenses in 2011.
- AAG has agreed to pay Pathfinder £2m in cash and to bring legal proceedings against the Government of Mozambique in respect within three months of completion of the SPA with AAG confirming that it has secured at least US$15m and will use its best endeavours to pursue the Claim to a satisfactory conclusion within five years.
- AAG is also committed to a contingent payment by AAG to Pathfinder of US$24m or 20% of net recoveries, whichever is greater, from any award or settlement of the Claim.
- Pathfinder also reports the placing of 100m new shares at 0.5p/s raising £500,000 along with 5m warrants exercisable at 0.5p/s.
- Funds will be used to repay a £160,000 loan facility and associated interest. The facility was due for repayment tomorrow. 2nd February.
Conclusion: AAG is expert in calling governments to account and is better placed than Pathfinder in this role. The sale of the dispute to AAG brings £2m into the company and should hopefully lead to a substantial settlement with the Government of Mozambique in time.
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%