SP Angel . Morning View . Monday 06 02 23
Gold slides as Dollar jumps on strengthening US labour market and easing recessionary concerns
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
- Normal service will resume from Monday 13th February.
Andrada Mining Ltd (AIM:ATM, OTC:AFTTF) - Updated lithium tin, rubidium, and tantalum upgrade at Uis Mine
CAA Mining* – PRIVATE – CAA Mining forms partnership with Livista Energy for lithium processing in Ghana
Cora Gold Ltd (AIM:CORA) – Fundraising to commence development of Sanankoro Gold Project
Savannah Resources PLC (AIM:SAV, ETR:SAV, OTC:SAVNF) BUY – 17.9p – Update on Decarbonisation Strategy for Barroso Lithium Project
Shanta Gold Limited (AIM:SHG, OTC:SAAGF) – Changes to Executive Management and Directorate
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.
Dow Jones Industrials -0.38% at 33,926
Nikkei 225 +0.67% at 27,693
HK Hang Seng -2.05% at 21,215
Shanghai Composite -0.76% at 3,238
Economics
UK PMI construction falls to 48.3, weakest in 2.5 years
Eurozone retail sales fell 2.7% mom in December, EU fell 2.6% mom
US ISM services climbed to 55.2
US non-farm payrolls jumped 517k in Jan vs 185k expected
US unemployment rate falls to 3.4% vs 3.5% vs 3.6% forecast
Currencies
US$1.0776/eur vs 1.0891/eur last week. Yen 131.98/$ vs 128.62/$. SAr 17.505/$ vs 17.107/$. $1.204/gbp vs $1.218/gbp. 0.692/aud vs 0.706/aud. CNY 6.781/$ vs 6.745/$.
Dollar Index 103.13 vs 101.08 last week
Commodity News
Gold slides as dollar jumps on strengthening US labour market and easing recessionary concerns
- Gold fell over $100/oz on Friday to $1,875/oz following the release of US Nonfarm Payrolls.
- Payrolls came in at 517k added in December vs 185k forecasted by economists.
- The surprisingly strong labour market caused spikes in both the dollar and US Treasury yields as fears of a recession eased traders considered the implications for Powell’s slowing rate hike strategy.
- The US Dollar index rallied 2% and the US 10 Year yield bounced 20bp – both have traditionally moved in an inverse fashion to bullion.
- The jobs data pushed the markets expectations of the Fed’s first rate hike back to November-December, having priced in a Q3 pivot beforehand.
- Powell finds himself stuck between a rock and a hard place given financial conditions continue to ease, inflation remains well above the Fed’s 2% target and the US economy continues to run hot despite widespread expectations of recession.
China a net exporter of zinc and lead for first time since 2007 in boost to Western deficits
- China exported 116,500t of refined lead in 2022 and imported 1,500t.
- Net exports of refined zinc stood at 1,700t as the country ramped up exports to 80,900t, their highest since 2015. (Reuters)
- Imports of refined zinc fell from 434kt in 2021 to 79kt in 2022, with Turkey, Mexico and the US ramping up purchases.
- European smelters have been hit by high power prices, raising refined demand.
- LME stocks remain low, although off-market shadow supply remains ample, according to LME time-spreads.
- Shanghai lead and zinc inventories remain buoyant.
- Analysts expect smelter operating rates to increase from 71% to 87% in H2-2023.
Strong dollar weighs on copper prices as bullish Chinese recovery bets cool
- Copper prices fell to a monthly low of $8,935/t following a major rally past $9,500/t as optimism over China’s reopening soared.
- However, the dollar’s rally on the back of US nonfarm payroll data dampened the rally, with a more hawkish Fed also weighing on global manufacturing expectations.
- Copper supply remains fairly buoyant in China, with the metal still in Contango on LME and SHFE exchanges and premiums for refined goods yet to highlight major supply tightness.
- Concerns over Peruvian output remain, with protests continue to disrupt the supplier of 10% of the world’s copper.
- The DRC is currently in a dispute over mining royalties from Tenke Fungurume with Gecamines, whilst FQM remains in discussions with Panamanian officials over the Cobre Panama mine.
- Although mined supply is expected to climb 5% this year as Quellaveco ramps up, a forecasted surplus in 2023 may be threatened as disruptions continue across major producing nations.
Precious metals:
Gold US$1,891/oz vs US$1,926/oz last week
Gold ETFs 93.0moz vs US$93.0moz last week
Platinum US$9,83/oz vs US$1,035/oz last week
Palladium US$1,605/oz vs US$1,659/oz last week
Silver US$22.62/oz vs US$23.43/oz last week
Rhodium US$12,000/oz vs US$12,000/oz last week
Base metals:
Copper US$ 8,959/t vs US$9,081/t last week
Aluminium US$ 2,543/t vs US$2,594/t last week
Nickel US$ 28,072/t vs US$29,936/t last week
Zinc US$ 3,210/t vs US$3,331/t last week
Lead US$ 2,130/t vs US$2,138/t last week
Tin US$ 28,379/t vs US$28,813/t last week
Energy:
Oil US$80.58/bbl vs US$83.27/bbl last week
- Crude oil prices closed below $80/bbl last week after strong US jobs data heightened concerns that the Federal Reserve would keep raising interest rates.
- The US Baker Hughes rig count was down 12 to 759 rigs last week, with oil rigs down 10 to 599 units and gas rigs down 2 to 158 units, and the spotlight on US Shale companies reporting over the next fortnight where we expect production targets to be in focus, as will supply-chain issues, labour shortages and rising costs.
Natural Gas US$2.393/mmbtu vs US$2.650/mmbtu last week
Uranium UXC US$51.20/lb vs US$50.80/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$125.26/t vs US$123.9/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
Battery News
Company News
Andrada Mining Ltd (AIM:ATM, OTC:AFTTF) 5.3p, Mkt cap £80m – Updated lithium tin, rubidium and tantalum upgrade at Uis Mine
- Andrada reports an upgraded Mineral Resource Estimate in accordance with JORC following 7,000m of drilling at its Uis Mine.
- The 2022 drilling campaign was undertaken to expand the main V1/V2 pegmatite deposit currently in production at Uis.
- Average Lithium grade increased to 0.73% Li20 from 0.63% Li2O declared in 2019, total contained Li2O tonnes have increased by 30% to 587 000 tonnes.
- Updated resource of LCE stands at 1.45mt.
- Measured and Indicated lithium resources up 47% to 38mt.
- Average grade Sn increased to 0.15% from 0.134% Sn – total contained tin metal now stands at 120kt.
- Maiden resource declared for rubidium – 109.4kt at an average grade of 0.14% Rb.
- Total MRE over the V1/V2 Deposit inclusive of mining depletion increased to 81mt from 72mt.
CAA Mining* – PRIVATE – CAA Mining forms partnership with Livista Energy for lithium processing in Ghana
- Major European lithium refiner Livista Energy announced today that it has formed a partnership with CAA Mining to set up a conversion facility in western Ghana for lithium processing.
- Livista is looking to convert spodumene produced in Ghana into an exportable intermediary lithium chemical before shipping to Europe for additional refining.
- CAA holds a selection of licences contiguous to the Ewoyaa Lithium Deposit, in development by Atlantic Lithium.
- Livista expects to begin production at its European facility by 2026.
- Martin Kwaku Ayisi, Chief Executive of Ghana’s Minerals Commission, states that building local lithium refining capacity in Ghana would provide employment opportunities and deliver new sources of GDP for Ghana.
*SP Angel act as an Advisor to CAA Mining
*SP Angel acts as Nomad to Atlantic Lithium.
Cora Gold Ltd (AIM:CORA) 4.5p, Mkt Cap £13m – Planned fundraising to commence development of Sanankoro Gold Project
- Cora Gold announces it is launching a $19.566m fundraising using a combination of equity and convertible loan notes to fund the development of its flagship Sanankoro Gold Project in Mali.
- Cora reports binding commitments received for aggregate investments of US$19.566m pursuant to the Fundraising comprising commitments to subscribe for:
- 76,200,559 ordinary shares at £0.0394 issue price for $3.711m.
- Convertible loan notes for a total of US$15.855m.
- Cora is offering investors to subscribe for up to $10m through equity or convertible financing on the same term agreed with the Binding Commitments.
Savannah Resources PLC (AIM:SAV, ETR:SAV, OTC:SAVNF) 2.8p, Mkt Cap £47m – Update on Decarbonisation Strategy for Barroso Lithium Project
BUY – 17.9p
- Savannah Resources provides an update on its decarbonisation strategy at the Barroso Lithium Project.
- The Company has completed the initial study phase by ECOPROGRESSO, Portugal’s environment, sustainability and climate change consultants.
- The study aims to update the pre-carbonisation estimate for the Barosso Project’s greenhouse gas inventory alongside targeting opportunities to limit greenhouse gas emissions.
- The study has also aimed to create a strategy to reach net zero Scope 1 and Scope 2 emissions over the Project’s LOM.
- Scope 2 baseline emissions for the Project have been reduced by 54% vs 2019 foreasts, when factoring in a reduced estimate for the plant power requirements, alongside a 41% reduction when considering the utilisation of Portugal’s grid power.
- Battery Electric Mining Equipment will provide a major reduction to zero for the Project’s Scope 1 emissions.
- Viable options for the Project to be 100% secured by renewable energy were identified.
- Going forward, Savannah will look to incorporate more detailed analysis of the study into the DFS, alongside identifying site specific solutions for a battery operated mining fleet and electrified infrastructure
*SP Angel act as Nomad and Broker to Savannah Resources
Shanta Gold Limited (AIM:SHG, OTC:SAAGF) 10.5p, Mkt Cap £112m – Changes to Executive Management and Directorate
- Shanta Gold reports Honest Mrema has been promoted to COO with immediate effect.
- Michael Devine has been promoted to CFO with effect from 23rd March.
- Shanta’s previous CFO, Luke Leslie, will step down from his role to pursue other opportunities.
- Neither Michael nor Honest will become members of the board at this 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
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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.
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 -0 Steelhome
Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite - Asian Metal
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