SP Angel . Morning View . Tuesday 07 03 23
Copper prices ease as Peru sees wave of delayed copper shipments
MiFID II exempt information – see disclaimer below
Ariana Resources PLC (AIM:AAU) – Loan conversion moves Ariana to 58% holding in Venus Minerals.
Beowulf Mining PLC (AIM:BEM)* – Rights issue raises additional funds as underwriters accept SDRs in lieu of cash
Cornish Metals Inc (AIM:CUSN, TSX-V:CUSN, OTC:SBWFF)* – Valuation 48p/s – Link to BBC program on South Crofty tin mine in Cornwall
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* Suspended – Court decision expected today following ‘Comeback Hearing’ in Canada
Power Metal Resources PLC (AIM:POW)* – Issue of Equity for Molopo Farms 2022/2023 Drill Contract
Rio Tinto PLC (LSE:RIO) – Resolution of SEC investigation of Simandou payments.
Sibanye-Stillwater* (JSE: SSW) – Sibanye increases stake in New Century Resources to 70%
Copper prices ease as Peru sees wave of delayed copper shipments
- Copper eased below $8,880/t overnight as inventories remain high and Peruvian authorities expect a ramp up in exports.
- Peru’s Minister of Mines stated that ‘the mining corridor is now open,’ with Las Bambas set to resume shipments of copper.
- Commodities shipments from the world’s second largest copper producer are expected to ‘normalise’ this week.
- Global copper inventories are ticking lower, sliding 2% from recent 16-month highs.
- Chinese import demand for refined products remains weak, with Yangshan premiums ticking lower again to $19.50/t, down 87%.
- The LME copper contract remains in contango, suggesting ample supply.
- First Quantum declared force majeure on concentrate exports to Asia
Gold holds flat as traders hold fire before Powell testimony today
- Gold prices remain rangebound around the between the $1,855-1,840/oz mark.
- Spot prices have bounced from recent lows of $1,810/oz but remain $100/oz off highs reached in early February.
- Traders are waiting for Powell to testify before a Senate panel this afternoon.
- Expectations are for the Fed chair to reiterate the Central Bank’s current message of higher rates for longer to temper persistent inflation.
- The metal has enjoyed some respite over the past week as investors, drawn by higher yields, buy bonds, putting pressure on yields.
- Like US Treasuries, the Dollar has also seen some short-term weakness, lifting gold higher following its 5% rally last month.
- Expect record levels of central bank buying to continue, with China increasing its gold reserves for the fourth straight month to a total of 2,050t.
Iron ore flat despite looming peak season as China growth targets prompt concern
- Iron ore prices are hovering around $124/t, following a two-day decline following the key Beijing policy meeting this weekend.
- However, iron ore imports to China rose 7.3% in Jan/Feb yoy, albeit from low levels in 2022.
- Analysts note China is approaching its peak construction season, with hot rolled coil and rebar prices both advancing higher.
- Traders remain concerned over Beijing’s criticism of iron ore prices rising ‘overly fast’ in Q1 this year.
Dow Jones Industrials +0.12% at 33,431
Nikkei 225 +0.25% at 28,309
HK Hang Seng -0.39% at 20,523
Shanghai Composite -1.11% at 3,285
Economics
US - Factory orders fell 1.6% in January vs 1.7% in December
- Factory orders ex transport up 1.2% in January vs -1.2% in December
- US slowdown now predicted as interest rates are now forecast to rise again
- US real estate collapse causes Blackstone and PIMCO funds to default despite some stabilisation of the housing market after significant deterioration.
- US labour participation is 62% vs 67% a decade ago.
- Inflation is persistent and rising oil prices are likely to arrest its slide
Chinese exports and imports slide adding further concern over economy
- China exports fell 6.8% in Jan/Feb yoy, vs December’s fall of 9.9%, although better than economists expected.
- Imports fell 10.2% in Jan/Feb yoy, vs a 7.5% fall in December and far worse than expectations.
- China’s trade surplus in Jan/Feb stood at $117bn, the largest trade surplus for the period in Chinese history and 2% larger than last year.
- Economists pointed to the weakness of the US dollar as a primary cause.
- Exports to the US fell by 21.8% yoy and imports fell 5.5%.
- Exports to Russia climbed by 20% and imports jumped 31%.
- Analysts expect China’s trade surplus to remain high in 2023, as the government provides manufacturing and investment subsidies to the supply side of the economy.
- Chinese National Peoples Congress sees Li Qiang replace Li Keqiang as the second in command to President Xi
- We see a 5% GDP target in China as a relatively positive development considering the scale of the economy.
- While we reckon most Chinese statistics are relatively accurate we view regional and central GDP figures as manipulated to suit the central government narrative.
- Capital Economics normally knock a healthy percentage off the official GDP figures to get to a more realistic estimate of Chinese GDP growth
South Korea - CPI 0.3% in February vs 0.8% in January and 4.8% yoy in February 5.2% yoy in January
Japan – Labour cash earnings rise to 0.8% yoy in Jan vs 1.9% expected.
EU – Retail sales volumes rise 0.3% mom in Feb vs 1% expected
- Bond sales in Europe exceed €500bn at fastest ever rate
- ECB - Governing council member Robert Holzmann calls for four more 50bps rate hikes
- Holzmann reckons it will now take longer to control inflation and that monetary policy needs to be restrictive to return inflation to 2%
- Only a 4% interest rate will start to restrict growth according to Holzmann
Germany – Construction PMI rose to 48.6 in February vs 43.3 in January
- New vehicle registrations rose 2.8% in February vs -2.9% in January
France - Construction PMI fell to 45.2 in February vs 46.1 in January
- French retail sales recovered to 0.1% in February vs -1.6% in January but were still lower at -2.9% yoy in February vs -2.0% yoy in January
UK - Coal plants on standby in UK as National Grid warns of low supplies
The UK Grid has warned over a potential 980MW shortfall, higher than the current 700MW contingency requirement.
Wind generation fell to just 14% of the UK power capacity, with the Grid calling on coal plants to stand by.
UK - New car sales rose 26.2% yoy in February vs 14.7% yoy in January
- Used and new car prices are forecast to collapse by my local garage in Long Compton this summer as semiconductor supplies bring on a surplus of new vehicles
Australia – RBA hikes 25bp, to 3.6% (expected) but states that ‘inflation has peaked in Australia.’
Ukraine - Russian officers mutiny after Wagner Group warns Putin over weapons (The Times)
- Senior Russian officers are said to have mutinied on the battlefields of eastern Ukraine.
- Yevgeny Prigozhin, head of the Wagner warns frontline positions could collapse if they do not receive new munitions.
- The Times indicates that up to 300 marines from Russia’s 155th Brigade were killed each day last month as they tried to storm Vuhledar,
- Russia is also believed to have lost at least 130 tanks and armoured personnel carriers during the three-week battle for the city.
Peru - Local communities to resume road blockades to Las Bambas, Antapaccay and Constancia mines according to Defence Front leaders in Chumbivilcas.
FRAUD – Three Canadians fined pathetic C$956,000 for scheme promising large returns on non-existent gold mining operations in Africa and Brazil
- The three have been banned from participating in British Colombia’s capital market for varying terms (Mining.com).
- The three raised >C$15m through a Ponzi-type scheme promising ‘extraordinarily high, no-risk returns’ on supposedly lucrative gold mining operations in Mali and Brazil.
- None of the money was used for gold mining with the funds only source of money was investors according to the BCSC investigation.
Currencies
US$1.0672/eur vs 1.0647/eur yesterday. Yen 135.78/$ vs 135.93/$. SAr 18.306/$ vs 18.198/$. $1.202/gbp vs $1.203/gbp. 0.668/aud vs 0.674/aud. CNY 6.929/$ vs 6.923/$.
Dollar Index 104.26 vs 104.41 yesterday.
Commodity News
Precious metals:
Gold US$1,846/oz vs US$1,853/oz yesterday
Gold ETFs 92.1moz vs US$92.5moz yesterday
Platinum US$972/oz vs US$974/oz yesterday
Palladium US$1,431/oz vs US$1,436/oz yesterday
Silver US$21.04/oz vs US$21.18/oz yesterday
Rhodium US$10,100/oz vs US$10,100/oz yesterday
Base metals:
Copper US$ 8,887/t vs US$8,918/t yesterday
Aluminium US$ 2,365/t vs US$2,382/t yesterday
Nickel US$ 24,300/t vs US$24,520/t yesterday
Zinc US$ 3,027/t vs US$3,040/t yesterday
Lead US$ 2,092/t vs US$2,134/t yesterday
Tin US$ 24,380/t vs US$24,500/t yesterday
Energy:
Oil US$86.5/bbl vs US$85.5/bbl yesterday
- Energy prices continue to drift around the $80/bbl equivalent level for both gas and oil, which though down from their peak levels seen last year, remain elevated compared to before Russia’s invasion of Ukraine.
Natural Gas US$2.564/mmbtu vs US$2.702/mmbtu yesterday
Uranium UXC US$50.60/lb vs US$50.45/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$124.4/t vs US$125.8/t
Chinese steel rebar 25mm US$643.6/t vs US$643.7/t
Thermal coal (1st year forward cif ARA) US$139.0/t vs US$139.0/t
Thermal coal swap Australia FOB US$190.0/t vs US$194.5/t
Coking coal swap Australia FOB US$340.0/t vs US$340.0/t
Other:
Cobalt LME 3m US$34,180/t vs US$34,180/t
NdPr Rare Earth Oxide (China) US$90,557/t vs US$92,720/t
Lithium carbonate 99% (China) US$46,541/t vs US$46,576/t
China Spodumene Li2O 5%min CIF US$5,580/t vs US$5,580/t
Ferro-Manganese European Mn78% min US$1,318/t vs US$1,315/t
China Tungsten APT 88.5% FOB US$331/mtu vs US$331/mtu
China Graphite Flake -194 FOB US$815/t vs US$815/t
Europe Vanadium Pentoxide 98% 10.2/lb vs US$10.2/lb
Europe Ferro-Vanadium 80% 40.95/kg vs US$40.95/kg
China Ilmenite Concentrate TiO2 US$341/t vs US$342/t
Spot CO2 Emissions EUA Price US$95.1/t vs US$94.9/t
Brazil Potash CFR Granular Spot US$480.0/t vs US$480.0/t
Battery News
Hybrid Electric Vehicle sales have risen by 40% this year to 28,609 units vs a 23% rise for Mild Hybrid Electric Vehicles and a 19% yoy rise in Battery Electric Vehicles
- Petrol vehicle sales also rose by 21% yoy to 91,281 vehicles vs a 13% fall in Diesel vehicle sales to 8,628 (The Times).
- Petrol remains the dominant fuel-type at 57% of the market and diesel at just 7.7%.
Company News
Ariana Resources PLC (AIM:AAU) 2.63p, Mkt Cap £29m – Loan conversion moves Ariana to 58% holding in Venus Minerals.
- Ariana Resources reports that conversion of its existing £500,000 loan plus an additional £200,000 loan which “is expected to convert simultaneously on the same terms” will increase Ariana Resources’ holding in Venus Minerals to 58%.
- Venus Minerals, which is working towards a London IPO, holds a portfolio of exploration projects in Cyprus “including the newly acquired Margi Prospect and the recently discovered Troulli Prospect at the Mariner Project in eastern Cyprus”.
- Ariana’s Managing Director, Dr. Kerim Sener, expressed unequivocal support for Venus Minerals’ exploration team and said that “copper discoveries such as Troulli and at the newly acquired Margi prospect demonstrate the opportunities available in Cyprus for copper-gold deposits”.
- The company describes the Mariner Project as “the first significant new copper discovery in Cyprus for the past two decades” where anomalous levels of copper in soil have been identified over more than 600m of strike length.
- Ariana says that Venus Minerals has “developed a robust geological model for the exploration of Cyprus-type Volcanogenic Massive Sulphide ("VMS") systems based on its recent exploration successes” and also says that it has defined “a significant drilling target … following detailed mapping and pXRF soil sampling” at the Margi Prospect where it has “identified an extensive copper anomaly associated with broad zones of chloritisation occurring along a structural discontinuity”.
Conclusion: Venus Minerals has identified several promising copper targets in Cyprus and is moving towards a London IPO. Listing is likely to provide greater technical detail of the specific projects and increase awareness of Cyprus as an exploration destination.
Beowulf Mining PLC (AIM:BEM)* 2.2p, Mkt Cap £17.5m – Rights issue raises additional funds as underwriters accept SDRs in lieu of cash
- Beowulf’s recent Swedish Depository Receipts raise has returned an additional c.£500,000.
- The additional cash is a result of the Company’s underwriters, Formue Nord Markedsneutral A/S and Buntel AB, accept SDRs in lieu of underwriting fees.
- Bruntel AB chose to receive an underwriter fee of both SDRs and Cash.
- As a result of the underwriters’ decision, Beowulf will issue an additional 23,276,121 in SDRs.
- Following the raise, the Company’s issued share capital in terms of Ordinary Shares will increase to 1,157,187,463.
*SP Angel acts as Nomad and Broker to Beowulf Mining
Cornish Metals Inc (AIM:CUSN, TSX-V:CUSN, OTC:SBWFF)* – 14.99p, Mkt cap £80m –Link to BBC program on South Crofty tin mine in Cornwall
Valuation 48p/s
- BBC: The South Crofty tin mine was featured on Monday morning on the BBC spotlight program yesterday.
- See link: https://www.bbc.co.uk/sounds/play/p0f6zn3s
- Cornish Metals plans to restart production in 2026 making South Crofty Europe’s only primary tin mine.
- Drilling is ongoing at the mine for the collection of samples for metallurgical test work and process plant optimisation.
- Three drill rigs are working with two rigs developing the North Pool Zone from surface, and an underground drill rig working targeting Dolcoath North from the Tuckingmill Decline.
*SP Angel acts as Nomad and Broker to Cornish Metals. The analyst holds shares in Cornish Metals.
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* Suspended – Court decision expected today following ‘Comeback Hearing’ in Canada
- Rambler Metals and Mining report today on:
- 1) Application for Extension of Stay and Amended and Restated Initial Order
- http://www.rns-pdf.londonstockexchange.com/rns/0776S_1-2023-3-6.pdf
- 2) Draft Amended and Restated Initial Order
- http://www.rns-pdf.londonstockexchange.com/rns/0776S_2-2023-3-6.pdf
- 3) List of Creditors as at January 31, 2023
- http://www.rns-pdf.londonstockexchange.com/rns/0776S_3-2023-3-6.pdf
- 4) Memorandum of Fact and Law for Amended and Restated Initial Order
- http://www.rns-pdf.londonstockexchange.com/rns/0776S_4-2023-3-6.pdf
- 5) Monitor's First Report dated March 3, 2023
- http://www.rns-pdf.londonstockexchange.com/rns/0776S_5-2023-3-6.pdf
- 6) Rambler Metals and Mining Canada Limited Re CCAA dated Mar. 3, 2023
- http://www.rns-pdf.londonstockexchange.com/rns/0776S_6-2023-3-6.pdf
- Please note the materials in item five contain unaudited profit and loss accounts for the company up to 31 December 2022.
- Management are targeting mine production to meet mill capacity of 1,350/t with a target grade of 2% contained copper.
- Rambler also holds the Little Deer mining complex which is approximately 150km south of the Ming Mine.
- Accounts 2022 (US$): .
- Revenues: $54.4m vs $28.2m in 2021
- Operating costs: $53.5m vs $35.7m
- Operating Profit: $1m vs a loss of $7m
- Balance Sheet Liabilities (US$):
- Loans and borrowings: $15.8m vs $8.2m in 2021
- Total current liabilities: $39.5m vs $28.5m.
- Total non-current liabilities: $19.1m vs $24.6m.
- Equity US$:
- Total equity $64.3m vs $74.2m .
- Total equity fell due to an increased loss in the Translation reserve to $21.0m vs $77.2m and a fall in the retained profits to $84.0m vs $77.2m in 2021.
- The DIP Lender’s Charge ranks in priority to the following known secured creditors of the Rambler Group (as described in detail in the Bradbury Affidavit):
- NewGen Asset Management Ltd. 17,874,506
- Elemental Royalties Corp. 12,090,420
- Transamine S.A. 4,448,407
- Sandstorm Gold Ltd (TSX:SAND). 1,642,589.
- Further materials publicly filed in the CCAA Proceedings, including the Application for Extension of Stay and Amended and Restated Initial Order, and additional information with respect to the Strategic Process, will be available shortly on the Monitor's website at www.GrantThornton.ca/Rambler.
Conclusion (Grant Thornton):
Since the date of the Pre-Filing Report, the Monitor is of the opinion that the Rambler Group has continued to act in good faith and with due diligence in respect of exploring various options which would enable it to restructure its business and operations.
As at the date of this First Report, nothing has come to the attention of Monitor that would require the Monitor to report that a material adverse change has occurred or that these CCAA Proceedings should be changed to proceedings under the Bankruptcy and Insolvency Act, pursuant to sections 23(1)(d)(i) and 23(1)(h) of the CCAA, respectively.
For the reasons set out in this First Report, the Monitor is of the view that the relief requested by the Applicants is reasonable and respectfully recommends that this Court make the Order granting the Applicants’ requested relief.
*SP Angel act as Nomad and Broker to Rambler Metals & Mining. An SP Angel analyst holds shares in Rambler Metals & Mining
Power Metal Resources PLC (AIM:POW)* 1p, Mkt cap £18.6m – Issue of Equity for Molopo Farms 2022/2023 Drill Contract
- Power Metal Resources announces it has issued equity as payment for drill costs.
- The drill contract regards the recently completed Molopo Farms Complex diamond drill programme in Botswana.
- The final total payable amount under the equity component of the drill programme has been agreed at £257,824.62, payable through the issue of 11,458,872 POW shares at an issue price of 2.25p.
*SP Angel acts as Nomad and Broker for Power Metal Resources
Rio Tinto PLC (LSE:RIO) – 5,987p, Mkt cap £75bn – Resolution of SEC investigation of Simandou payments.
- Rio Tinto reports that, while it neither admits or denies the findings of the US Securities and Exchange Commission’s findings, it has “agreed to pay a $15 million civil penalty for violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act” in relation to “certain contractual payments made to a former consultant over a decade ago in 2011, relating to the Simandou project in the Republic of Guinea”.
- Welcoming the resolution of the long-standing issue at the Simandou iron-ore project, Chairman, Dominic Barton, explained that “When Rio became aware of the issue, an internal investigation was immediately launched, and we proactively notified the appropriate authorities”.
- He emphasised Rio Tinto’s commitment to “conducting business to the highest standards of integrity, and ensuring that our projects benefit communities, host governments, shareholders, and customers” and confirmed that the current leadership is “taking action to build a culture guided by our values of care, courage and curiosity; an environment where every team member feels comfortable to speak up if something is not right”.
Sibanye-Stillwater* (JSE: SSW) ZAR 3,677, Mkt cap ZAR 105bn – Sibanye increases stake in New Century Resources to 70%
- Sibanye has opened their takeover offer to acquire 100% of New Century for acceptance by the target’s shareholders.
- Sibanye has increased its stake in the Company to 70.55%, meaning the offer is final and likely will not be increased.
- Shareholders of New Century will receive a A$1.1/share consideration from Sibanye, marking a 43% premium to the Company’s shares on Feb 20th and a 22% premium to its one month VWAP at the same date.
*An SP Angel mining analyst has visited Sibanye’s Montana operations.
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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
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+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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