SP Angel . Morning View . Tuesday 28 02 23
Stellantis takes $155m stake in copper mine as automakers move upstream for EV supply chain
MiFID II exempt information – see disclaimer below
Lithium exploration opportunity – Ghana – private financing
- Hard rock spodumene outcrop on licenses indicate good potential for lithium discovery in highly prospective region of Ghana
- Drilling to start shortly to test for lithium below surface of weathered outcrop
- Company is also looking at additional downstream processing in Ghana in co-operation with European lithium refinery company
- Potential for joint venture with listed company or LSE IPO
*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
Beowulf Mining PLC (AIM:BEM)* – Preliminary financial results and outcome of capital raise
Celsius Resources Ltd (ASX:CLA, AIM:CLA)* – Further drilling confirms extension of shallow mineralisation at the MCB project.
Kavango Resources PLC (LSE:KAV, OTC:KVGOF) – Updated Botswana strategy and potential portfolio expansion
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* – Commencement of Creditors Arrangement Act and update on strategic process
Stellantis takes $155m stake in Argentine copper mine as automakers continue to move upstream for EV supply chain
- Stellantis has acquired a 14.2% stake in McEwen Copper, which owns the Los Azules project in Argentina.
- The mine produces 100kt pa of cathode copper.
- Stellantis is the third-largest automaker globally by sales, and is looking to shift to 100% EV sales in Europe by 2030 and 50% in the US.
- The move follows Stellantis’ bid to secure nickel sulphate supplies last month with Terrafame,
Copper prices climb following seven-week low as dollar weakens
- Copper prices bounced from seven-week lows below $8,800/t, climbing $100/t on a reversal in the Dollar’s recent bullish momentum.
- Concerns over Cobre Panama’s suspension by FQM have weighed on supply confidence, despite the lifting of blockades in southern Peru.
- Copper giant Freeport has noted the likelihood of M&A activity in the copper sector, owing to minimal organic growth opportunities and strong market dynamics.
Gold weakens again as Fed holds hawkish rhetoric as the US economy steams ahead
- Spot gold fell to $1,808/oz this morning following some temporary respite on a slightly weaker dollar.
- Gold has fallen close to 6% since February peaks, having rallied on investor confidence of a Fed pivot amid peaking inflation.
- Stickier inflation data and a robust US consumer has weighed on gold by pushing real US Treasury yields higher alongside the dollar.
- ETFs added the most gold in eight months to their holdings yesterday, with close to $552.5m bought yesterday.
- ETFs had been selling consistently before that.
Chinese lithium miners resume output following government crackdown
- Production at Chinese lithium hubs Yichun and Jiangxi has resumed following a government-led inspection last week.
- The crackdown looked to target illegal mining for lithium, however bigger operations were hit whilst the investigation took place.
- The region accounts for 10% of global lithium production.
Iron ore climbs as traders look to major Chinese meeting for demand outlook
- Iron ore futures climb 1.4% having weakened yesterday on market ambiguity over Chinese steel demand outlook.
- The government is set to meet next week for the annual parliament session, with reports of funding concerns set to be raised by local officials.
- Analysts note an uptick in finished steel product sales in recent weeks, whilst home sales in major Chinese cities rose last week.
Dow Jones Industrials +0.22% at 32,889
Nikkei 225 +0.08% at 27,446
HK Hang Seng -0.64% at 19,817
Shanghai Composite +0.66% at 3,280
Economics
Australia: Retail sales rise 1.9% mom in Jan (1.6% expected)
New Zealand: Business confidence rises from -52 to -43.3, Export intentions climbs from -5.4 to -5.2
Japan: Industrial production falls -4.6% mom in Jan (-2.6% expected)
US: Durable goods orders -4.5% in Jan mom (-4% expected)
Europe: Economic sentiment falls to 99.7 in Feb vs 99.8 in Jan.
Currencies
US$1.0600/eur vs 1.0553/eur yesterday. Yen 136.82/$ vs 136.18/$. SAr 18.476/$ vs 18.388/$. $1.203/gbp vs $1.196/gbp. 0.671/aud vs 0.672/aud. CNY 6.943/$ vs 6.964/$.
Dollar Index 104.81 vs 105.12 yesterday.
Commodity News
Precious metals:
Gold US$1,808/oz vs US$1,818/oz yesterday
Gold ETFs 92.7moz vs US$92.5moz yesterday
Platinum US$936/oz vs US$922/oz yesterday
Palladium US$1,418/oz vs US$1,404/oz yesterday
Silver US$20.46/oz vs US$20.82/oz yesterday
Rhodium US$10,450/oz vs US$11,500/oz yesterday
Base metals:
Copper US$ 8,804/t vs US$8,726/t yesterday
Aluminium US$ 2,352/t vs US$2,355/t yesterday
Nickel US$ 25,205/t vs US$24,579/t yesterday
Zinc US$ 2,962/t vs US$2,978/t yesterday
Lead US$ 2,086/t vs US$2,113/t yesterday
Tin US$ 25,295/t vs US$25,651/t yesterday
Energy:
Oil US$83.0/bbl vs US$82.8/bbl yesterday
- Crude oil prices continue to trade within a tight $10/bbl range in 2023 as sentiment swings between the trajectory of US monetary policy, China’s improving demand and the outlook for Russian oil supply.
- European energy prices edged lower helped by a further 5% increase in Russian gas supplies for transit through Ukrainian territory via the Sudzha gas pumping station to 42.2mcm/d.
Natural Gas US$2.703/mmbtu vs US$2.628/mmbtu yesterday
Uranium UXC US$51.0/lb vs US$51.70/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$124.1/t vs US$130.4/t
Chinese steel rebar 25mm US$637.2/t vs US$648.6/t
Thermal coal (1st year forward cif ARA) US$160.0/t vs US$144.0/t
Thermal coal swap Australia FOB US$196.0/t vs US$199.0/t
Coking coal swap Australia FOB US$340.0/t vs US$370.0/t
Other:
Cobalt LME 3m US$34,180/t vs US$34,180/t
NdPr Rare Earth Oxide (China) US$98,805/t vs US$99,544/t
Lithium carbonate 99% (China) US$50,627/t vs US$52,475/t
China Spodumene Li2O 5%min CIF US$5,800/t vs US$5,820/t
Ferro-Manganese European Mn78% min US$1,309/t vs US$1,311/t
China Tungsten APT 88.5% FOB US$333/mtu vs US$333/mtu
China Graphite Flake -194 FOB US$835/t vs US$845/t
Europe Vanadium Pentoxide 98% 10.1/lb vs US$10.1/lb
Europe Ferro-Vanadium 80% 40.25/kg vs US$39.75/kg
China Ilmenite Concentrate TiO2 US$341/t vs US$342/t
Spot CO2 Emissions EUA Price US$100.0/t vs US$101.2/t
Brazil Potash CFR Granular Spot US$480.0/t vs US$495.0/t
Battery News
Tesla orders $2.9bn worth of cathode materials for EV production
- Tesla has ordered $2.9bn worth of high-nickel cathode materials from L&F Co.
- Automakers continue to wrestle for supplies of vital battery ingredients, especially following Biden’s IRA which encourages automakers to reduce reliance on Chinese exports.
Company News
Beowulf Mining PLC (AIM:BEM)* 2p, Mkt Cap £18m – Preliminary financial results and outcome of capital raise
- Beowulf announces the outcome of its capital raise via Swedish Depository Receipts and a UK PrimaryBid retail offer.
- The SDR Rights issue saw total subscription requests of c.£5m (73.5% subscription rate) – underwriting commitments will not be activated.
- The UK PrimaryBid offer raised gross proceeds of c.£800k. The Company also received demand totalling £400k for the Placing, taking the aggregate raise under the UK issue to £1.3m, following an agreed amount of £181,000 for the Additional Subscription.
- Subsequently, Beowulf will receive c. £6.4m gross from the raise, with which it intends to finance the development of Kallak North with a PFS and the vital environmental permit application.
- The Company will use net proceeds to repay bridge loan financing alongside advancing the Grafintec and Vardar projects.
- Beowulf announces its unaudited financial results for the year today.
- The Company reported £1,776,556 in cash at the end of the reporting period.
- Over the course of 2022, Beowulf was awarded an Exploitation Concession for its flagship Kallak North Iron Ore project, following a release of its Base Case Scoping Study.
- In Finland, the Company continues to develop its Grafintec project, having formed a collaborative agreement with graphite and anode specialist Hensen and site agreements with Korsholm officials.
- Beowulf has developed the Räpysjärvi flake graphite prospect with additional EM surveys and trenching programmes highlighting flake graphite mineralisation across significant intersections.
- In Kosovo, Beowulf discovered a polymetallic epithermal system which offers potential gold and base metals targets. The Company continues to secure prospective licenses in Kosovo.
Conclusion: Gross proceeds of c.£6.4m will enable the Beowulf team to continue to improve and develop the Kallak iron ore project, with hopes of first production in 2026. Whilst the team progresses Kallak, it will look to enhance its Grafintec graphite assets with the ambition of becoming a natural flake graphite supplier to Europe. In Kosovo, Beowulf’s management notes the possibility of a spin out of the Vardar Minerals asset following last year’s exploration successes.
*SP Angel acts as Nomad and Broker to Beowulf Mining
Celsius Resources Ltd (ASX:CLA, AIM:CLA)* 0.95p, Mkt Cap £17.6m – Further drilling confirms extension of shallow mineralisation at the MCB project.
- Celsius Resources reports that a further three drill holes at its Maalinao-Caigutan-Biyog (MCB) Project in Luzon, Philippines, have extended the footprint of shallow, high-grade mineralisation identified by Celsius Resources’ drilling over the last two years and by historical drilling undertaken by Freeport McMoRan between 2006 and 2013.
- The new holes tested “the shallow extents of the defined higher-grade mineralisation which appears to have developed as a relatively horizontal blanket over the MCB deposit area … [and which] … was previously poorly defined, due to a lack of drill hole collar locations available at earlier stages of exploration”.
- The results reported today are:
- A 51.3m wide intersection at an average grade of 0.93% copper and 0.06g/t gold from a depth of 7.70m in hole MCB-042; and
- An intersection of 101.50m at an average grade of 0.90% copper and 0.18g/t gold from a depth of 9m in hole MCB-043; and
- An intersection of 131.10m averaging 0.93% copper and 0.23g/t gold from 11m depth in hole MCB-044.
- Celsius Resources confirms that the ”full impact of this additional drill hole information will be assessed during the optimisation of the MCB mine plan”.
- The current mineral resource estimate for the MCB project is 338 million tonnes @ 0.47% copper and 0.12 g/t gold defined at a 0.2% copper cut-off.
- Today’s announcement describes the relatively inaccessible terrain with steep slopes which restricted available drilling locations during earlier exploration and resulted in sparse drilling coverage and poor definition of the mineralisation in the area which “are initially defined at depth plunging steeply to the west underneath the high-grade copper-gold mineralisation, and also to the west of the Maalinao-Panyaw fault.”
- “The location for the possible high-grade copper-gold to the west include at depth, due to the interpretation that the fault has downthrown the geology on its western side, or toward the north-west, as a possible trend exists to the mineralisation in this direction which has not been tested”.
- Executive Director, Peter Hume, welcomed the continuing identification of “higher-grade sections defined over a broad area now at shallow levels … continuing into 2023 … [and said that] … We still have further tests to carry out on the possible extensions to these higher-grade copper zones which we believe will continue to improve the proposed production schedule, specifically during the early years”
- Currently, the Scoping Study envisages a 25-years mining life for the MCB project and a treatment rate of 2.28mtpa of ore.
Conclusion: Drilling at the MCB project continues to identify shallow copper mineralisation over a more extensive area than originally thought. We look forward to further details of the implications for the mine plan as Celsius Resources’ Feasibility Study progresses.
*SP Angel acted as broker to Celsius Resources with respect to its AIM IPO.
Kavango Resources PLC (LSE:KAV, OTC:KVGOF) 1.3p, Mkt cap £9m – Updated Botswana strategy and potential portfolio expansion
- Kavango reports the results of its in-house Strategic Review on its path to delivering a maiden economic resource.
- Going forward, Kavango will focus its exploration efforts on the Great Red Spot asset in the Kalahari Suture Zone with plans to drill the B Conductors at the asset
- Additionally, Kavango will look to execute additional fieldwork in the Kalahari Copper Belt over its Karakubis block.
- Kavango’s management will look to gain direct project funding for financing the 2-year exploration programmes across the KSZ, KCB and Ditau projects.
- Envisioned exploration campaigns in Botswana will incolve more widespread surveying, including geophysical and geochemical exploration, alongside more targeted and extensive drilling.
- The Company is hoping to secure a project finance partner.
- Kavango is also looking to expand its portfolio of exploration assets in Southern Africa, noting ‘liquidity weakness in the global exploration sector.’
- A ‘pipeline of possible acquisition targets’ has been developed, with the team currently at advanced stages of due diligence regarding two potential targets.
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* Suspended – Commencement of Creditors Arrangement Act and update on strategic process
- Rambler’s subsidiaries have received a Supreme Court-approved Initial Order, enabling them to begin CCAA proceedings, which offer the Company protection against its creditors.
- This enables Rambler to continue operations during the CCAA proceedings, providing time and stability to implement a strategic process.
- The Company continues to discuss options with its secured lenders following the defaults announced in November and February.
- Rambler is engaging in a strategic process with Grant Thornton, to implement a ‘sale and investment solicitation process.’
- This is designed to generate maximum potential value for shareholders, the Company, and its subsidiaries.
- Rambler will resume operations from today, with Rambler Canada having secured a DIP loan of up to $5m by its general partner, RMM General Partner Inc.
- The loan will be utilised to fund the CCAA proceeding, provide cash for operations and implement the Strategic Process.
- The Company expects that ongoing operations will be funded from cash from operations, with the DIP loan offering additional cash as required.
Conclusion: CCAA proceedings offer Rambler the necessary time and protection to continue to operate, enabling the Company to develop strategic options which are currently under review. CEO Toby Bradbury notes that the Rambler team is working ‘towards achieving a transaction that is in the best interests of Rambler and all of its stakeholders.’
*SP Angel act as Nomad and Broker to Rambler Metals & Mining. An SP Angel analyst holds shares in Rambler Metals & Mining
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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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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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