SP Angel . Morning View . Wednesday 08 02 23
Gold holds on Powell’s confidence in disinflation over his commitment to further rate hikes
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.
Conroy Gold and Natural Resources PLC (AIM:CGNR, OTC:CGDNF) – Step out drilling at Clay Lake Gold Target
GreenRoc Mining PLC (AIM:GROC)* – Amitsoq Graphite Project receives official support from European Raw Materials Alliance
Libero Copper & Gold Corporation (TSX-V:LBC, OTCQB:LBCMF) – Further expansion of Mocoa Porphyry Copper Molybdenum Project through ongoing field programme
URU Metals Ltd (AIM:URU)* – Identification of higher-grade nickel mineralised zone at Zeb Project, South Africa
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 +0.78% at 34,157
Nikkei 225 -0.29% at 27,606
HK Hang Seng -0.07% at 21,284
Shanghai Composite -0.49% at 3,232
Economics
US – Trade deficit widened to -$67.4bn in Dec
Container shipping giant Maersk warns of 2.5% global trade contraction this year
- Maersk notes expectations of ‘muted’ global economic growth will push container shipping volumes down 2.5% this year.
- Maersk ships close to 1/6th of global containers and notes the ‘overconsumption of goods’ during the Pandemic has led to a ‘sharp correction’ in demand.
Currencies
US$1.0746/eur vs 1.0713/eur yesterday. Yen 130.93/$ vs 132.11/$. SAr 17.520/$ vs 17.671/$. $1.209/gbp vs $1.201/gbp. 0.698/aud vs 0.692/aud. CNY 6.781/$ vs 6.788/$.
Dollar Index 103.17 vs 103.73 yesterday.
Commodity News
Gold holds ground as market looks to Powell’s confidence in disinflation over his commitment to further rate hikes
- Gold prices have found a trading range around the $1,885/oz mark, although it fell sub-$1,870/oz in the wake of Powell’s interview.
- Despite comments from Powell that Fed rates will likely hit a higher level than the market is currently anticipating, the 10 year yield fell slightly, but remains 30bp higher than pre-non-farm payroll release on Friday.
- The market seemingly focused on Powell’s reiteration of the current trend of disinflation, despite reiterations of further rate hikes to come, and no pivot in 2023.
- The dollar weakened from its one-month high during the speech.
- Fed’s Kaskhari expects the Fed funds target to hit 5.4%, above market expectations, on the back of Friday’s 517k
Copper bounces as Powell soothes concerns and South American supply disruptions regain market focus
- Copper prices rallied 1.1% following J Powell’s speech to $9,020/t.
- Despite an emphasis on further rate hikes, traders took a degree of dovishness from the Fed Chair’s comments, with the dollar easing and UST yields sliding again.
- China is seeing a major inventory build-up coming out of the Lunar New Year Holiday, with global inventories, primarily driven by Shanghai stocks, now up 88% since the end of December.
- Further signs of ample copper supply and muted demand in China can be seen in the Yangshan copper premium, which continued to slide to $22/t vs LME spot prices, having stood over $130/t in Autumn last year. A higher Yangshan premium traditionally signals stronger import demand.
- Supply concerns from LatAm continue, with FQM suspending loading operations at a major port in Panama. Cobre Panama, operated by FQM, shipped 361kt of Cu in 2022.
- Chilean copper sales have fallen to 2.5 year lows for January, down 22% yoy and 30% lower than December 2022. Although seasonal, this major move highlights the Country’s current setbacks and longer term issues including ore depletion and water restrictions.
- However, Glencore notes the resumption of normal operations at its major Antapaccay copper mine in Peru following 11 days of closures on violent protests.
- Interestingly, Peruvian copper production jumped 20% in December yoy, 12% higher mom as Las Bambas output jumped 85%, despite
- In signs of weakening concentrate shipments to China, domestic smelters have slashed Treatment and Refining Charges for seaborne ore in Q1 – higher TCs suggest more buoyant market supply.
- Speculators are currently the longest they’ve been in copper for 21-months, with short positions hitting 5-week lows.
- A slight improvement in copper cathode consumption this week has seen copper cathode premiums rise, as downstream consumption begins to improve
.
Iron ore slides for third day as Chinese steel demand remains muted
- Singapore iron ore futures fell 2.5% to a three-week low, with the China reopening rally now fading following a 64% climb.
- Analysts are noting that significant activity on Chinese construction sites is yet to pick up, weighing on steelmaking optimism, however this is expected to pick up towards the middle of February.
- Iron ore prices fell despite BHP announcing the suspension of all Pilbara operations following a fatality on Tuesday.
Precious metals:
Gold US$1,883/oz vs US$1,875/oz yesterday
Gold ETFs 93.0moz vs US$93.0moz yesterday
Platinum US$989/oz vs US$979/oz yesterday
Palladium US$1,676/oz vs US$1,596/oz yesterday
Silver US$22.47/oz vs US$22.42/oz yesterday
Rhodium US$12,050/oz vs US$12,050/oz yesterday
Base metals:
Copper US$ 9,039/t vs US$8,917/t yesterday
Aluminium US$ 2,528/t vs US$2,532/t yesterday
Nickel US$ 27,715/t vs US$26,955/t yesterday
Zinc US$ 3,198/t vs US$3,122/t yesterday
Lead US$ 2,118/t vs US$2,106/t yesterday
Tin US$ 27,900/t vs US$27,100/t yesterday
Energy:
Oil US$84.1/bbl vs US$82.7/bbl yesterday
- Crude oil prices strengthened further following yesterday’s 2.2mb API inventory draw and comments from President Biden’s State of the Union address that “we are still going to need oil and gas for a while”.
- The EIA expects US natural gas prices to remain under pressure from reduced demand due to lower power demand, as more renewables come online, and lower industrial demand from a slowdown in manufacturing.
- TotalEnergies anticipates that the oil price will stay above $80/bbl with strong refining margins this year and that “tensions on European gas prices” will continue due to limited LNG growth and rising demand.
- Equinor’s portfolio of renewables projects is progressing well towards the ambition of 12-16GW of installed capacity by 2030 with project base returns of 4-8%. Capex is forecast to grow by $1bn to $13bn for 2024-25.
- Vestas admitted that mistakes were made by the wind industry in 2022 as issues with the global energy crisis were intensified by cost increases, logistical challenges, outdated market designs and permitting processes.
Natural Gas US$2.629/mmbtu vs US$2.393/mmbtu yesterday
Uranium UXC US$50.65/lb vs US$50.50/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$120.0/t vs US$121.9/t
Chinese steel rebar 25mm US$617.3/t vs US$619.3/t
Thermal coal (1st year forward cif ARA) US$153.0/t vs US$153.0/t
Thermal coal swap Australia FOB US$252.0/t vs US$244.0/t
Coking coal swap Australia FOB US$325.0/t vs US$325.0/t
Other:
Cobalt LME 3m US$38,920/t vs US$38,920/t
NdPr Rare Earth Oxide (China) US$108,971/t vs US$109,749/t
Lithium carbonate 99% (China) US$62,301/t vs US$62,977/t
China Spodumene Li2O 5%min CIF US$5,970/t vs US$5,970/t
Ferro-Manganese European Mn78% min US$1,327/t vs US$1,323/t
China Tungsten APT 88.5% FOB US$333/mtu vs US$333/mtu
China Graphite Flake -194 FOB US$885/t vs US$885/t
Europe Vanadium Pentoxide 98% 9.7/lb vs US$9.6/lb
Europe Ferro-Vanadium 80% 37.75/kg vs US$37.75/kg
China Ilmenite Concentrate TiO2 US$346/t vs US$346/t
Spot CO2 Emissions EUA Price US$94.7/t vs US$95.5/t
Brazil Potash CFR Granular Spot US$510.0/t vs $510.0/t
Battery News
Company News
Conroy Gold and Natural Resources PLC (AIM:CGNR, OTC:CGDNF) 19p, Mkt Cap £8.4m – Step out drilling at Clay Lake Gold Target
- Conroy Gold, an explorer and developer in Ireland and Finland, announces details of an eight hole drill programme planned for the Derryhennet section of the Clay Lake Gold Target.
- The Company will execute the programme in association with Demir Export, the Company’s JV partner.
- The targets lie across a 65km gold trend, with a JORC resource of 517koz Au on a part of the Clontibret gold deposit.
- 2,000m of step out drilling is planned across eight holes at the Clay Lake target, which lies over 3km long and 2km wide.
- Previous trenching at the target yielded 5m at 3g/t Au and a continuous gold intersection of 100m at 0.6g/t.
GreenRoc Mining PLC (AIM:GROC)* 4.80p, Mkt Cap £6.35m– Amitsoq Graphite Project receives official support from European Raw Materials Alliance
- GreenRoc announces that a detailed evaluation process by the ERMA has led to the alliance announcing their official support for the Amitsoq Graphite Project
- The ERMA’s primary role is to secure raw materials and supply chains to support EU industrial ecosystems.
- Both the ERMA and EIT RawMaterials, a global raw materials consortium, have stated that the Amitsoq Project is a project of ‘global importance.’
- GreenRoc announced a near tripling of Amitsoq’s MRE to 23mt at an average Graphitic Carbon grade of 20.41%, and a total graphite content of 4.71Mt.
- The ERMA has the ability to introduce potential investment partners to GreenRoc alongside financial support for technical development.
*SP Angel acts as broker to GreenRoc Mining
Libero Copper & Gold Corporation (TSX-V:LBC, OTCQB:LBCMF) C$0.20, Mkt Cap C$15m – Further expansion of Mocoa Porphyry Copper Molybdenum Project through ongoing field programme
Anglo Asian Mining PLC (AIM:AAZ, OTC:AGXKF)* holds a 20% interest in Libero Copper & Gold
- Libero announces that recent field exploration work has identified new leached cap occurrences, consistent with those directly over the Mocoa deposit.
- The newly identified leached cap outcrops extend over 500m east-northeast and 300m east of previous drill collar locations.
- Other additional leached cap outcrop areas extend 500m to the south and 1km to the southeast of previous dill collar locations.
- Furthermore, an additional leached cap lies 2km southeast of the Mocoa deposit.
- The Company is confident this highlights the potential for a new undiscovered copper-molybdenum porphyry deposit in the immediate area.
- Libero’s CEO, Ian Harris, notes that ‘the Mocoa porphyry system may represent a clustered porphyry system’, with the team anticipating ‘discovering additional leached cap outcrops and related hydrothermal porphyry copper-molybdenum mineralization adjacent to the Mocoa deposit.’
*SP Angel act as Nomad and broker to Anglo Asian Mining
URU Metals Ltd (AIM:URU)* 225p, Mkt Cap £3.7m – Identification of higher-grade nickel mineralised zone at Zeb Project, South Africa
- URU provides an update on its 74.28% interest in Zeb Nickel (TSX-V:ZBNI, OTC:ZBNIF) Corp, where the Company serves as a technical adviser.
- Further analysis of previous deep holes drilled at the Zeb Project highlight a higher-grade nickel mineralised zone, below the historical nickel resource estimate.
- Previous drilling, 3D modelling and assays at the site suggest, upon re-examination, that historical drilling likely stopped short of testing a higher-grade zone of the ore body.
- The team has now updated the Zeb exploration model and provided a 3D geological model of the project area.
- The Company hopes that deeper drilling into the Lower Zone lithologies will enable an increase in the resource’s grade.
- Going forward, the Company is aiming to produce a current NI43-101 resource statement on the historical nickel resource hosted within Lower Zone lithologies.
- Following this, the Zeb team hopes to increase the ‘indicated’ category of the resource in the Lower Zone lithologies and upgrade some material to the ‘measured’ category.
- The Company will target the serpentinite and poikilitic harzburgite units with the hope of increasing both the grade and tonnage of the resource.
- The gold discovery announced last year will also be explored through infill diamond drilling.
*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
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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 - Steelhome
Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite - Asian Metal
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