Today's Market View - Celsius Resources, Greatland Gold, KEFI Gold and Copper, and more...

SP Angel . Morning View . Thursday 02 02 23

Risk sentiment climbs as markets expect Fed pivot in H2/23

MiFID II exempt information – see disclaimer below

Indaba - The SP Angel team will be at the 121 Mining Investment conference in Cape Town on Monday and Tuesday

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) – Ramp up at Quellaveco drives 52% quarter-on-quarter rise in copper production

Celsius Resources Ltd (ASX:CLA, AIM:CLA)* – NED appointment

Conroy Gold and Natural Resources PLC (AIM:CGNR, OTC:CGDNF) – Step out drilling intersects narrow high grade mineralisation between Clontibret and Corcaskea

Greatland Gold PLC (AIM:GGP, OTC:GRLGF) – Exploration drilling results from Juri

KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF)* – Q4/22 update highlights progress at the multi asset precious/base metals portfolio

Kodal Minerals PLC (AIM:KOD)* – BUY, – Target 70p – Hainan deposits $7m into escrow account ahead of $100m investment into Bougouni lithium jv with Kodal

Lithium Americas Corp (TSX:LAC, NYSE:LAC) – General Motors commits $650m to Thacker Pass in Nevada to secure US lithium offtake

Mkango Resources Ltd (AIM:MKA, TSX-V:MKA, OTC:MKNGF)* – Additional investment from CoTec builds base for US rare earths technology opportunities

Oriole Resources PLC (AIM:ORR)* - CLICK FOR PDF – Assessing potential for lithium-bearing pegmatites at CLP Project in Cameroon

Power Metal Resources PLC (AIM:POW)* – Strategic uranium properties staked in Athabasca Basin, Canada

Gold soars to 9-month high as Powell looks to pause rate hike campaign

• Gold prices soared past $1,970/oz the mark today as the market continues to digest J Powell’s presser from yesterday evening.
• The dollar fell another 1.75% following Powell’s press conference and is now over 10% lower than peaks reached in October.
• Powell announced an expected 25bp rate hike, which the following several 50 and 75bp to tackle inflation and take the Fed Funds Rate to 4.75%.
• The market now expects the Fed Funds Rate to peak in June before easing to 4.2% by this time next year.
• Both risk and gold markets were buoyed by Powell’s surprisingly relaxed comments on financial conditions, which have been easing in recent weeks.
• The Fed has expressed increasing confidence that inflation is cooling alongside consistent disinflationary trends.
• US Treasury yields extended their downward trend, with the 10-year yield weakening to 3.393%, supporting gold’s multi-week rally to nine-month highs.

Copper - Las Bambas copper expected to halt production due to ongoing protests

• US Environment Agency set back the giant Pebble copper / gold project in Alaska by banning the dumping of mine waste in the Bristol Bay area.
• The mine’s 30year development is dampened again.

US holds Chinese aluminium over concerns of forced labour production

• US Customs agencies have started to detain aluminium products from the Chinese region of XinJiang over concerns of forced labour.
• Beijing responded that the US is destabilising trade ‘with the excuse of non-existing genocide in Xinjiang.
• Shipping giant Maersk reports that “Companies importing aluminium products, or commodities with aluminum components, should be proactive in
• ensuring compliance with the UFLPA” which may include conducting due diligence on their supply chain and implementing compliance programs.”
• Q1 Japanese primary premium set at US$85 / 86 / t over the daily LME cash settlement price

World’s longest underwater rail and road tunnel to connect Denmark with Germany by 2029 at €10bn cost

• The 18-km Fehmarnbelt tunnel will connect Denmark with Germany making it the longest combined rail and road tunnel in the world.(EuroNews)
• The tunnel will have two double-lane motorways and two rail lines and will take seven minutes by train and 10 minutes by car, avoiding a 160 km journey across the Danish mainland.
• Pre-fabricated sections are to be lowered to the sea bed and buried 40m below the Baltic Sea with 89 massive concrete sections
• Femern plans to immerse the first of these sections by 2024 with the concrete sections fitting together and other elements like railway tracks, ventilation and cameras will be installed.
• The Eu are contributing €1.1 bn towards the project cost.

Dow Jones Industrials +0.02% at 34,093

Nikkei 225 +0.20% at 27,402

HK Hang Seng -0.50% at 21,962

Shanghai Composite +0.02% at 3,286

Economics

JP Morgan global composite manufacturing PMI 49.1 in January vs 48.6 in December

US – The FOMC raised rates by 25bp, in line with expectations, while Chairman Powell hinted at a “couple” more rate increases before pausing further tightening.

• “We’ve raised rates four and a half percentage points, and we’re talking about a couple of more rate hikes to get to that level we think is appropriately restrictive,” Jerome Powell said.
• Markets closed higher with the US$ index and Treasury yields pulling back on more dovish than feared monetary policy outlook.
• Powell acknowledged the period of “disinflation” with price pressures cooling but have not indicated how long before the central bank would be ready to cut rates.
• “We think we’ve covered a lot of ground,” Powell commented on the monetary policy to date. “Even so, we have more work to do.”
• Markets are expecting a cut in H2/23 with expectations building up for a 50bp move.
• FOMC Rate Range: 4.50-4.75% v 4.25-4.50% before and 4.50-4.75% est.
• ADP private employment data fell to 106k in January vs 253k December due to weather disruption
• Q4 employment cost index qoq 1% in Q4 vs 2% in Q3
• S&P Case Schiller house price yoy 6.8% in November vs 8.7% in October
• Construction spending -0.4 in December vs 0.2% in November
• Chicago Fed PMI 44.3 in January vs 44.9 in December

Eurozone – Monetary policy day with expectations for the ECB to go through with a 50bp hike to 3.0% in refinancing rate and 2.5% for the deposit facility.

• That would mark the second consecutive 50bp move following he decision in December when the central bank said that borrowing costs “will still have to rise significantly at a steady pace”.
• The ECB statement will be closely watched for the policy outlook with some members of the Governing Council previously arguing for a couple of 50bp moves more, Bloomberg writes.
• Bloomberg poll of economists points to a 50bp hike next month followed by a 25bp move in May taking refinancing and deposit rates to 3.75% and 3.25%, respectively.
• EU CPI 120 in January vs 120.52 in December

Germany – A further evidence of poor end to the year released this morning with trade data showing a collapse in exports/imports in December.

• Sharp decline reflect both a continued weakness in global demand as well as deteriorating domestic growth momentum.
• The data comes in line with previously released GDP report that confirmed a contraction in Q4/22.
• Exports (%mom): -6.3 v -0.3 November and -3.0 est.
• Imports (%mom): -6.1 v -3.3 November and -1.8 est.
• Unemployment was unchanged at 5.5% in January

UK – The Bank of England is expected to deliver a 50bp hike this afternoon taking the key policy rate to 4.0% in the quickest series of hikes in over three decades.

• An increase to 4% on Thursday would be the fourth half-point hike in this cycle.
• Brexit: Michel Barnier said the door is open for Britain to rejoin the EU “any time”, before warning the UK not to tear up Brussels regulations after Brexit.
• Mr Barnier, the former Brexit negotiator, said diverging too far from EU rules now would make it more difficult for Britain to rejoin the bloc in future. (The Telegraph)
• National Grid interconnectors transported a record 2.6TWh of power in January up 12% on January 2021 and 39% higher than two years ago.
• National Grid control five five subsea interconnectors connecting the UK with France, Belgium, Holland and Norway carrying 91GWh per day.
• National Grid has confirmed that the UK has currently more interconnector capacity than ever before as its IFA cable has returned to full service on 27th January, taking overall capacity to 8.4GW.
• Increasing interconnector capacity over the past decade has shown its worth in protecting the UK grid from power outages despite a lack of natural gas in Europe

Russian-linked ransomware gang, Lockbit, hits Ion Group with ransomware attack

• Ion Group reports that 42 42 clients are affected with disruption in its cleared derivatives division.
• The attack is reported to have had a knock-on effect on some other trade processing systems with some firms forced to process trades manually.
• The gang is thought to have extorted around $100m from its victims in recent years

Ukraine – US to send longer range 93-mile missiles to Uraine

• The longer range missiles should be able to hit any Russian target within Ukraine. HIMARS by comparison have a 50 mile range.
• The rockets can be fired from Himars and M270 rocket launchers
• Crimea is currently out of range from the 93-mile missile.

Currencies

US$1.1001/eur vs 1.0874/eur yesterday. Yen 128.63/$ vs 130.18/$. SAr 17.062/$ vs 17.396/$. $1.238/gbp vs $1.232/gbp. 0.715/aud vs 0.707/aud. CNY 6.723/$ vs 6.744/$.

Dollar Index 101.08 vs 102.01 yesterday

Commodity News

Precious metals:

Gold US$1,958/oz vs US$1,925/oz yesterday

Gold ETFs 93.0moz vs US$93.2moz yesterday

Platinum US$1,015/oz vs US$1,013/oz yesterday

Palladium US$1,683/oz vs US$1,648/oz yesterday

Silver US$24.14/oz vs US$23.58/oz yesterday

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

Base metals:

Copper US$ 9,134/t vs US$9,199/t yesterday

Aluminium US$ 2,632/t vs US$2,635/t yesterday

Nickel US$ 29,225/t vs US$30,250/t yesterday

Zinc US$ 3,332/t vs US$3,420/t yesterday

Lead US$ 2,142/t vs US$2,174/t yesterday

Tin US$ 29,380/t vs US$29,760/t yesterday

Energy:

Oil US$83.2/bbl vs US$85.8/bbl yesterday

• Crude oil prices fell after the EIA reported a 4.2mb US crude inventory build for last week, compounded by c.2.5mb products builds to both distillate and gasoline stocks, despite refinery utilisation of just 85.7%.
• US Henry Hub gas prices fell on expectations for milder weather and, given that today marks Groundhog Day in North America, we expect that US natural gas producers will hope the rodent sees its shadow and scurries back into its hole, which seemingly foreshadows six more weeks of winter weather.
• Shell reported record profits of $40bn in 2022 and announced a $4bnshare buyback with unchanged FY23 capital expenditure guidance of $23-$27bn.
• Mexico’s state-owned oil company Pemex has reportedly completed a $2bn 10Y bond sale priced with a yield of 10.375%, implying a 1.6% premium for investors over 10Y Mexican government bonds.

Natural Gas US$2.504/mmbtu vs US$2.720/mmbtu yesterday

Uranium UXC US$50.80/lb vs US$50.80/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$126.0/t vs US$128.0/t

Chinese steel rebar 25mm US$634.6/t vs US$634.5/t

Thermal coal (1st year forward cif ARA) US$156.5/t vs US$146.0/t

Thermal coal swap Australia FOB US$240.0/t vs US$245.0/t

Coking coal swap Australia FOB US$325.0/t vs US$325.0/t

Other:

Cobalt LME 3m US$41,685/t vs US$49,000/t

NdPr Rare Earth Oxide (China) US$111,566/t vs US$110,475/t

Lithium carbonate 99% (China) US$65,080/t vs US$65,321/t

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

Ferro-Manganese European Mn78% min US$1,359/t vs US$1,343/t

China Tungsten APT 88.5% FOB US$330/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$9.4/lb

Europe Ferro-Vanadium 80% 37.45/kg vs US$37.45/kg

China Ilmenite Concentrate TiO2 US$346/t vs US$345/t

Spot CO2 Emissions EUA Price US$96.4/t vs US$95.3/t

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

Company News

Anglo American PLC (LSE:AAL) 3395p, Mkt Cap £45.3bn – Ramp up at Quellaveco drives 52% quarter-on-quarter rise in copper production

• Anglo American reports production increases during Q4 2022 across most commodity groups with a 52% increase in copper output as production ramps up at Quellaveco taking centre stage in today’s announcement.
• Commenting on the quarterly production report, CEO, Duncan Wanblad, also highlighted increased output of diamonds and steel-making coal “and improved operational performance at Minas-Rio and Kumba, our iron ore businesses” although “Metal in concentrate production from our Platinum Group Metals (PGMs) operations decreased by 10%, due to the impact of lower grades at Mogalakwena and planned infrastructure closures at Amandelbult”.
• Copper production of “more than 80,000 tonnes” during Q4 from Quellaveco helped deliver a 3% rise in Anglo American’s 2022’s annual copper production to 664,000t (2021 – 647,000t) achieving the company’s most recent guidance of 640-680,000t.
• Anglo American’s 2023 copper production guidance range of 840-930,000t of copper output at a cost of $1.56/lb represents an increase of over 25% as output from Quellaveco builds to full capacity by mid-2023 following the start of the 2nd processing line in September 2022.
• The company explains that among other factors, its guidance is subject to water availability in Chile where the “central zone continues to face severe drought conditions. … and these conditions place pressure on water availability” and challenge management “to improve water efficiency and secure alternative sources of water … to mitigate the impact on production”. The company also highlights that production in Peru is “subject to any socio-political effects”.
• Strong operational performance at the Jwaneng mine in Botswana “partially offset by the planned completion of the final cut at Venetia's open pit” helped deliver a 6% rise in quarterly diamond output bringing the annual total to 34.6m carats, exceeding the guidance range of 32-34m carats and increasing annual output by 7% compared to 2021.
• The company explains that “Midstream polished diamond inventories continued to build in the fourth quarter, as retailers restocked more cautiously amidst the growing economic uncertainty. This led to downward pressure on wholesale polished prices. However, demand for De Beers' rough diamonds remained steady”.
• Anglo American’s 2023 guidance envisages 2023 production in the range 30-33m carats of diamonds.
• Planned maintenance at the Barro Alto plant, “as well as the impact of high rainfall in December” reduced quarterly nickel output “by 4% to 10,200 tonnes” with annual production declining by 5% to 39,800t (2021 – 41,700t). Guidance for 2023 in the range 38-40,000t of nickel indicates continuing stability.
• A 10% quarterly decline in PGM concentrate output to 990,000oz left annual output 6% lower at 4,024,000oz *2021 – 4,299,000oz) and refined PGM output 25% lower at 3.8moz (2021 – 5.1moz).
• Anglo American attributes the reduction in PGM output to “lower grades at Mogalakwena, as well as planned infrastructure closures at Amandelbult, partially offset by a strong performance at Mototolo”.
• The company explains that the lower production at Mogalakwena resulted from “mining in a lower grade area” while “Production at Amandelbult decreased by 17% to 176,600 ounces, primarily due to planned infrastructure closures and the closure of the Merensky Concentrator”.
• “Refined production … [of PGMs] … decreased by 37% to 877,200 ounces, as the Polokwane smelter was decommissioned for its first full structural rebuild in twelve years. The rebuild was completed at the end of Q4 2022 and by the end of January 2023, the ramp-up was largely completed”.
• Production guidance for both metal in concentrate and refined PGM production of 3.6-4.0moz in 2023 implies output stabilising at or slightly below 2022 levels though the company caveats that guidance levels are “subject to the impact of Eskom load-shedding”.
• “Iron ore production increased by 4% to 15.7 million tonnes … [in Q4]… , reflecting a 7% increase at Minas-Rio and a 3% increase at Kumba” bringing 2022 production to 59.3mt (2021 6.8mt). Guidance for 2023 is in the range 57-61mt with Kumba contributing 35-37mt and Minas Rio a further 22-24mt.
• Steel-making coal output rose by 6% quarter on quarter “primarily due to the ramp-up of the Grosvenor longwall operation following its restart in February 2022” bringing 2022 output to 15mt (2021 – 14.9mt). Guidance for 2023 is within the range 16-19mt.
• The company says that coal output saw “Production from the new Aquila longwall operation, which began operations in February 2022, was offset by the planned end of production at the Grasstree operation in January 2022. Tight labour markets, as well as unseasonal wet weather at the open pits, continued to impact production through the fourth quarter and into early 2023”.
• Exploration continued to focus on copper while “Evaluation expenditure increased by 15% to $63 million, driven by higher spend in iron ore and platinum group metals”.

Conclusion: Anglo American reports improving production across most commodities although PGMs output declined in 2022 and is expected to remain lower in 2023. The build up of production from Quellacveco pushed copper output higher in 2023 and is expected to lift output higher as the mine builds to capacity in mid-2023.

Celsius Resources Ltd (ASX:CLA, AIM:CLA)* 1p, Mkt Cap £18.6m – NED appointment

• Celsius Resources, which made its AIM Market debut this week, has announced the appointment of Mr. Paul Dudley as a non-executive director.
• Mr. Dudley, who is a Chartered Accountant, and a Member of the UK's Chartered Institute of Securities and Investment has “over 25 years' business experience, working across various sectors” will chair the Audit Committee.
• Celsius Resources’ Chairman, Julito Sarmiento, welcomed the appointment and said that Mr. Dudley’s “experience and financial expertise in the UK markets complements well with the competency of the Board and will be instrumental in propelling the Company to greater heights, especially now that we have listed on the AIM”.

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

Conroy Gold and Natural Resources PLC (AIM:CGNR, OTC:CGDNF) 13p, Mkt Cap £6m – Step out drilling intersects narrow high-grade mineralisation between Clontibret and Corcaskea

• The Company released assay results from a drill hole driven ~200m to the south of the Corcaskea gold target.
• The drillhole (269m deep) intersected three gold lode zones offering further evidence of mineralisation continuity between the Clontibret gold deposit (517koz JORC MRE) and the Corcaskea gold target.
• Drill hole intersections include:
• 2.0m at 2.1g/t from 27.5m including 0.5m at 6.7g/t from 28.5m;
• 1.5m at 3.2g/t from 40.0m including 0.5m at 8.3g/t from 41.0m;
• Drilling tested good gold intersection previously recorded at surface in trenches including 16.5m at 6.5g/t and 12m at 4.9g/t.

Greatland Gold PLC (AIM:GGP, OTC:GRLGF) 7.45p, Mkt Cap £374m – Exploration drilling results from Juri

• Greatland Gold reports results from its 2022, second, exploration drilling campaign at the Juri Joint Venture (Greatland Gold – 49% & Newcrest Mining 51%) located in the Paterson Ranges, WA.
• The early-stage drilling, comprising 2,086m in 5 holes tested “three targets including two holes each at Tama and A9 on the Paterson Range East licence and one hole at the Black Hills North / A27 target on the Black Hills licence”.
• The company explains that regionally, bismuth “has been identified as an important economic gold-copper mineralisation pathfinder element including at Greatland's Havieron deposit (joint venture with Newcrest, 70%) and Rio Tinto's Winu deposit” and that anomalous levels of it had been intersected in hole BRHD-004, including:
• “4m @ 0.42g/t Au from 381m (incl. 1m @ 1.09g/t Au & 253ppm Bi from 384m)”; as well as
• A 6m wide intersection averaging 0.15g/t gold from 38m depth; and
• A 3m wide intersection at 0.19g/t gold from a depth of 249m; and
• A 4m wide interval at an average grade of 0.11g/t gold from a depth of 397m
• The company concludes that the “2022 exploration confirms merit of follow-up drilling campaign with a particular focus on Black Hills”.
• Confirming that the results of the 2022 drilling at Juri, which follow an earlier, 2021, programme of almost 5,000m in 4 holes, “further enhance our understanding of the geology of the Juri Joint Venture ground and confirm the merits of follow-up work”, Managing Director, Shaun Day, said that “The importance of bismuth as a pathfinder in the Paterson region is particularly significant with geochemistry at Black Hills similar to what we have seen at Havieron”.

Conclusion: Early-stage exploration drilling at the Juri joint-venture project demonstrates the significance of bismuth as a pathfinder for copper/gold mineralisation and justifies follow-up exploration in the future. We await news of the follow-up plan with interest

KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF)* 0.7p, Mkt Cap £28m – Q4/22 update highlights progress at the multi asset precious/base metals portfolio

• At the Tulu Kapi Gold Project, the Company agreed the ~$320m project financing in principle with draft agreements to be finalised for approval by syndicate members and regulators in due course.
• Lenders that are expected to contribute $190m of the total and are key to finalising the funding re-affirmed the plan in principle and formally set out their indicative terms and conditions including the necessary remaining Government approvals.
• The government is clarifying the outstanding matters and is also reorganising its systems around the Project including upgraded security and assisting with community resettlement programme.
• The Company reiterated its commitment to finalise funding and secure credit committee approvals as soon as possible paving the way for the start of community resettlement and project development works on course for first production in 2025.
• At the Jibal Qutman Gold Project, the team is focused on completing the DFS and project funding.
• Field programmes are progressing since re-establishing site access in Nov/22, including the construction of the pioneer’s camp and environmental baseline studies along with geotechnical and metallurgical diamond drilling.
• The team is planning to apply for the mining license and launching funding discussions in H2/23
• At the Hawiah Copper-Gold Project, the Company is progressing the PFS and the reginal exploration programme.
• The team released an updated MRE in January expanding the resource by 16% with higher grade reported for gold and zinc.
• New MRE stands at 28.9mt at 0.89% Cu, 0.67g/t Au, 0.94% Zn and 10g/t Ag for 258kt Cu, 620koz Au, 272kt Zn and 9,408koz Ag.
• New MRE increases total tonnage by 16% with higher grades reported for zinc (+11%) and gold (+7%); silver (+3%) and copper (-1%) grades were little changed.
• An increase is driven by increased density used in the Oxide zone, expansion of Crossroads Extension Lode at depth as well as new tonnages added from increased drill density.
• Additionally, the team expanded its exploration portfolio in the region securing five new license areas taking the total number of ELs to 15 covering an area of 1,035km2.
• Drilling at Al Godeyer located only 13km away from Hawiah is underway ahead of a maiden MRE in Q1/23.

*SP Angel act as Nomad to KEFI Gold and Copper

Kodal Minerals PLC (AIM:KOD)* 0.39p, Mkt Cap £67m – Hainan deposits $7m into escrow account ahead of $100m investment into Bougouni lithium jv with Kodal

BUY – Target 70p assuming permission is granted by the authorities in Mali and China.

(Kodal Minerals holds 100% of the Bougouni lithium project. The Mali government has the right to a free carry on 10% of the project and an option to acquire a further 10%)

• Hainan Mining have deposited the first $7m of their agreed financing with Kodal Minerals into an escrow account.
• If Hainan withdraw from the deal they will forfeit the $7m.
• Hainan are effectively buying 51% of the jv for $94.34m in cash + a $5.66m loan to the jv which is being partially used to compensate Kodal for its expenses to date on the project.
• Suay Chin, the Chinese lithium company which has backed Kodal for many years has decided not to take up their pre-emption rights to maintain their shareholding at 14.18%.
• Suay Chin’s stake will now fall to 12.08% following the issue of new stock to Hainan.
• Hainan’s stake in Kodal will rise to 14.8% on subscription of $17.75m in cash at a price of 0.5 pence per share.
• Hainan Mining is backed by Fosun which holds a 45.9% alongside the province of Hainan which holds around 20%.
• The transaction remains subject to Mali authority approvals for the necessary restructuring of Kodal's existing Mali subsidiary in Mali to a new joint owned company with Hainan as a 51% stakeholder.
• Kodal is continuing with the required engineering, environmental and project social work required to fast track the mine into development.
• The team are running one RC reverse circulation drill rig and one diamond drill rig at site for engineering related drilling for water bore monitoring drill holes, geotechnical drilling for final open pit design, metallurgical drilling to provide additional samples for variability testing along the strike length of the orebody and exploration infill, extension, and additional pegmatite vein testing.
• Drilling: The RC drilling has completed 806m since 18 January with results pending. The diamond drill rig has done 385m of geotechnical drilling since 22 January.
• Valuation: The deal effectively values the joint venture company at $188.68m with Kodal holding a 49% stake worth $92.45m on the Hainan valuation.
• Valuing the jv company on its estimated cash flow shows :
• Sales of >$1bn of revenues over 4 years .
• NPV $420m at a 7% discount rate on a post-tax basis.
• Assumptions:
• $2,080/t for 5.5% spodumene concentrate.
• Production of 120,000tpa
• Trucking: 10 trucks carrying 350t per day at a cost of under $100/t.
• Valuation: Kodal’s 49% of $420m is estimated to be worth some $206m (£166m) at a spodumene concentrate price of $2,080/t spodumene concentrate.
• Kodal shares at 0.37p represent around a third of the value offered in the NPV estimate indicating to us that Kodal shares should be worth at least 0.42p based on 50% of the value of the NPV.
• When the $100m + $17.75m lands in Kodal’s jv and corporate bank accounts the funding will be secured we should then reduce our 50% discount to NPV to around a 25% discount to account for potential construction, commissioning and trucking issues.
• Adding the $17.75m cash subscription into the Kodal valuation then raises our valuation to around 0.70p/s representing a significant uplift on the share price.
• We therefore rate the shares as a buy on the assumption the deal will consummate.
• Management: Kodal are managing the joint venture with Steve Zaninovich (Kodal operations directo) running the day-to-day activities
• Break fee: Hainan are paying US$7m into an escrow account within 10 days of their signing as a non-refundable deposit.

Conclusion: The payment of the $7m into an escrow account shows serious intent by Hainan Mining. The deal remains subject to approvals by the authorities in Mali and China.

*SP Angel acts as financial advisor and broker to Kodal Minerals.

Lithium Americas Corp (TSX:LAC, NYSE:LAC) $24.7, Mkt cap $3.3bn – General Motors commits $650m to Thacker Pass in Nevada to secure US lithium offtake

• General Motors is investing $650m into Lithium Americas Thacker Pass project as part of a deal to secure lithium offtake
• Thacker Pass is an open pit lithium-rich clay deposit.
• Phase 1: Production 40,000tpa lithium carbonate Li2Co3
• Phase 2: Production 80,000tpa
• Strip - 1.51:1. Pit depth - 122m max
• Capex - $2.2bn
• Op Cost - $6,743/t
• EBITDA - $1.18bn
• NPV 8% - $4.95bn.
• IRR - 21.2%.
• Price - $24,000/t of Lithium carbonate
• Mine life - 40 years
• Offtake to GM for 10 years with further 5 year extension for supply of lithium carbonate at market pricing
• First production scheduled for H2 2006
• Thacker pass could produce lithium for >1m EVs a year. GM is on track to produce 400,000 EVs in H1 2023

Conclusion: It is interesting to see GM throwing significant funding a lithium-rich clay project in the US. This indicates to us considerable ongoing uncertainty over the multitude of lithium brine projects being touted. Many of these are struggling with the DLE ‘Direct Lithium Extraction’ chemistry / technology and associated costs. The deal again highlights increasing desperation by auto manufacturers to secure raw material supplies for Li-ion battery gigafactories.

Mkango Resources Ltd (AIM:MKA, TSX-V:MKA, OTC:MKNGF)* 15.25p, Mkt Cap £32m – Additional investment from CoTec builds base for US rare earths technology opportunities

• Mkango reports that, following previously announced investments totalling approximately £1.5m, CoTec has invested a further £452,500 in Mkango.
• CoTec and Mkango have “entered into a convertible loan agreement providing for a two-year, £2 million secured convertible loan from CoTec to Mkango … with 5% interest, convertible into Mkango shares at 27p each or into Maginito shares”.
• CoTec will be investing £1.5m to acquire a 10% stake in Mkango’s subsidiary, Maginto and “Subject to the Magnito Investment Closing, Mkango and CoTec will enter into a co-operation agreement regarding future investments in rare earth processing technology opportunities in the United States”.
• The investment will entitle CoTec to “one Maginito Board seat for so long as CoTec continues to hold at least a five percent (5%) shareholding in Maginito, increasing to two Maginito Board seats if CoTec holds at least a twenty percent (20%) shareholding in Maginito”.
• The £452,500 investment in a 5% convertible loan note in Mkango brings CoTec’s total investment to £2m and, subject to the closing of the Maginto Investment, “CoTec has the option to convert the Principal Amount and interest into Maginito Shares giving it an effective interest, post conversion, of 20.6% of Maginito”.
• Maginto focusses on “developing green technology opportunities in the rare earths supply chain, encompassing neodymium (NdFeB) magnet recycling as well as innovative rare earth alloy, magnet, and separation technologies” while Mkango is developing “new sustainable primary and secondary sources of neodymium, praseodymium, dysprosium and terbium to supply accelerating demand from electric vehicles, wind turbines and other clean technologies” including developing the Songwe Hill deposit in Malawi based on its July 2022 Feasibility Study.

Conclusion: CoTec’s additional investment is a tangible endorsement of Mkango’s integrated rare-earths green technology strategy.

*SP Angel acts as nomad and broker to Mkango Resources

Oriole Resources PLC (AIM:ORR)* 0.14p, Mkt cap £3.8m – CLICK FOR PDF – Assessing potential for lithium-bearing pegmatites at CLP Project in Cameroon

• Oriole Resources has been completing early-stage exploration at its recently acquired Ndom and Gamboukou licences over Q4-22.
• Lithium-in-soil anomalies had been identified earlier in December across 9km at Ndom, with the Company now reporting the confirmation of a number of pegmatite units.
• Although lithium-bearing minerals have not been visually identified yet, the abundance of white mica and current geochemistry accessible causes the Company to suspect spodumene, petalite and lepidolite, all common lithium-bearing minerals.
• Gamboukou, a licence acquired by Oriole in November 2022, hosts similar lithium-prospective geology to Ndom. Reconaissance mapping and sampling at Gamboukou is currently underway, alongside a first-pass sediment sampling programme.
• Multiple pegmatitic veins within granitoids and older basement rocks have been confirmed from reconnaissance exploration at both licences.
• The team has taken 64 rock-chip samples at Ndom, with 55 targeted to further analyse the pegmatite veins running up to 1.5m wide.
• Oriole’s CEO, Tim Livesey, notes that "Whilst lithium was not an original target for Oriole, the anomalies highlighted by the earlier programmes seem to be associated with the correct granitic host units and this has created a great opportunity for additional value add in this extensive package of ground.’

*SP Angel acts as Broker to Oriole Resources

Power Metal Resources PLC (AIM:POW)* 1.24p, Mkt cap £21m – Strategic uranium properties staked in Athabasca Basin, Canada

• Power Metal has acquired the Haresign Bay and Kernaghan uranium properties through direct mineral claim staking.
• Haresign Bay covers 32km2 and is located 35km south of the Athabasca Basin. Uranium-focused companies F3 Uranium Corp, Baselode Energy Corp (TSX-V:FIND, OTCQB:BSENF), CanAlaska Uranium Ltd (TSX-V:CVV, OTCQX:CVVUF) and Skyharbour Resources Ltd lie in the property’s vicinity.
• The licence lies 43km south of Cameco Corporation (TSX:CCO)'s Key Lake Uranium Mine which has an average mineable grade of just over 2% U308 (ASX:UTO).
• The Kernaghan property covers 45.6km2 and lies to the north-eastern edge of the Athabasca Basin. Uranium-focused companies Standard Uranium Ltd (TSX-V:STND, OTCQB:STTDF)., IsoEnergy Ltd., and Purepoint Uranium Group Inc (TSX-V:PTU, OTCQX:PTUUF) lie within the area.
• The licence hosts multiple anomalous Radon222-in-lake water results.
• The Company has also staked an additional 20km2 area extending its Thibault Lake uranium property to the west. Historical trenching at the extension shows results of 1.09% U308 over 10.7m.

*SP Angel acts as Nomad and Broker for Power Metal Resources

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

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

SP Angel

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35-39 Maddox Street London

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*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.

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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

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