SP Angel . Morning View . Friday 17 04 20
Speculation over gradual reopening helps the risk sentiment
Amur Minerals* (LON:AMC) 1.0p, Mkt Cap £8m – £750k equity raise
Rio Tinto (LON:RIO) – Guidance largely unchanged despite Covid19
W Resources (AIM:WRES) – Quarterly production report
Vast Resources* (AIM:VAST) – £600k equity raise
SP Angel Healthcare team
Moderna Therapeutics awarded $483m BARDA grant for Covid-19 vaccine development
ANGLE plc (AIM:AGL): Study published by University of Athens
A wave of mine suspensions is cutting production as manufacturers withdraw metal from Shanghai warehouses
Shanghai withdrawals: copper -14,562t, aluminium -25,450t, zinc -6,352t, lead -437t, nickel -179t, tin -259t,
LME: Aluminium -2325t, zinc -850t and tin -85t all saw withdrawals from LME warehouses.
Copper +4,600t, lead +75t and nickel +240t continue to see inflows.
Tin producers close as coronavirus locks-down major tin producing regions
Mine closures and supply chain disruption may cause a significant supply-side shock for the tin market affecting >40% of production.
According to Reuters at least four of major tin producers have either suspended or reduced operations, not including Chinese producers which often take material smuggled in from Myanmar
Chinese tin production is also expected to have suffered during the lockdowns in February and March.
Peru, suspension of Minsur which produced 19,600t of tin in 2019
Brazil –Taboca suspended. Produced 6,500t in 2019
Malaysia - MSC suspended. Produced 24,300t iin 2019
Bolivia - EM Vinto suspended. Produced 11,500t in 2019
Indonesia - PT Timah cut production by 20-30%. Was 76,400t in 2019
South Africa - Mines to reopen at 50% capacity as restrictions ease
President Ramaphosa has extended the country's lockdown to the end of this month, however has allowed mines to reopen as long as they observe strict heath protocols.
Protocols include screening and testing workers for coronavirus, and distancing workers where possible.
The industry expects that mines won't be fully operational until next month, with Implats announcing that it may take as much as four weeks to ramp up operations fully.
The move to partially reopen was not supported by the Association of Mineworkers and Construction Union, who said the move was premature as the government lacks the capacity to monitor and enforce stringent health regulations.
South Africa's index of miners climbed 2.9% this morning as a result of the announcement (Bloomberg).
UK-based planarTECH launches graphene-enhanced face masks
PlanarTECH has announced an extension to its existing agreement with Thailand-based IDEATI to market and distribute its graphene-enhanced antibacterial face masks.
The antibacterial face mask is patent-pending design which has a unique coating which leverages both the antistatic and known antibacterial characteristics of graphene.
The coating of the mask reduces staphylococcus aureus bacteria by 99.95% within a 24 hour period, and is effective against PM2.5 airborne particulate matter.
China revises Wuhan Coronavirus mortality by 50% to 1,290
New research warns the UK faces 8-10 waves of coronavirus before the population achieves herd immunity.
New research warns the UK faces eight to 10 waves of coronavirus before the population achieves herd immunity (The Telegraph).
UK, face masks may need to be worn after lockdown according to minister.
People should be wearing cloth face coverings to prevent the spread of COVID-19, the Centers for Disease Control said Friday.
Trump says US state governors can re-open businesses in a staggered, three-stage process, probably because he can’t control what they do.
Return to normal plans may involve intermittent social distancing till 2022 according to the Harvard School of Public Health.
Communities may still have to be prepared to switch social-distancing on if cases pass 35 / 10,000 people
Or communities may ask for some limits to social interaction as the number of cases approaches this number.
Much regular testing will be required and may become a weekly of monthly requirement
Masks could become mandatory or pervasive as masks are now shown to help limit the number and rate of new infections particularly when worn by infected people.
Work-from-home may become more normal than not and schooling may be more on line than in the classroom
Much depends on how long immunity last for and how many people in the population have been infected without knowing itX
Dow Jones Industrials
+0.14%
at
23,538
Nikkei 225
+3.15%
at
19,897
HK Hang Seng
+1.62%
at
24,394
Shanghai Composite
+0.62%
at
2,837
Economics
European car sales fell 55%yoy in March with all markets posting declines as the majority of car dealerships closed during the second half of March.
Italy (-85%), France (-72%) and Spain (-69%) were among the hardest hit.
YTD registrations are now down 26% with all three months of the year posting declines (-8% in January and -7% in February).
US – Equities climbed yesterday as President Trump laid out guidelines to reopen the US economy and on reports that patients taking Gilead Sciences’ drug remidivir demonstrated “rapid recoveries in fever and respiratory symptoms”.
“We are not opening all at once, but one careful step at a time,” President Trump said.
President suggested state governors will be allowed to tailor the approach to the own jurisdictions and if they need to remain close, the should do so, Reuters reports.
One of conditions for lifting restrictions would be a “downward trajectory” in COVID-19 cases for 14 days or in positive tests for the same time period.
Testing and tracing infected cases will be crucial to the plan with Google and Apple are now working on software to make contact tracing easier.
Phase 1 involves maintaining social distancing while allowing businesses to reopen but discouraging meeting of more than 10 people; schools and daycare facilities to remain closed; non-essential travel and visits to senior living facilities should remain suspended.
Phase 2 that would be exercised after another 14-day decline in positive cases involves lifting the ban to non-essential travel; schools can resume and bars can reopen with minimised standing room areas; sporting venues can restart under “moderate” physical distancing.
Phase 3 following another 14-day period of declining cases allows businesses to resume “unrestricted staffing” and visits to senior homes can resume.
S&P 500 closed up 0.58% while Nasdaq 100 gained back all of its losses for 2020.
Property market is dropping as well with housing start down 22.3%mom and building permits off 6.8%mom in March.
Weekly jobless claims amounted to 5.2m in the week through April 12 taking the total to over 22m people in the last four weeks.
China – The economy recorded the first contraction in decades.
In a sign the drop was largely priced in by markets, Chinese equities are trading higher today with the Shanghai Composite Index (SSE) up 0.66%.
Industrial Production (%ytd): -8.4 v -13.5 in Feb and -10.0 est.
Retail Sales (%ytd): -19.0 v -20.5 in Feb and -12.5 est.
FAI (%ytd): -16.1 v -24.5 in Feb and -15.0 est.
GDP (%qoq): -9.8 v 1.5 in Q4/19 and -12.0 est.
GDP (%yoy): -6.8 v 6.0 in Q4/19 and -6.0 est.
France – President Macron expressed support for the issuance of the so-called coronabonds to help ailing countries fight consequences of the COVID-19 pandemic.
France is among Italy, Span and other six countries supporting the idea of a joint European debt finance clashing the governments of Germany and Netherlands that oppose the proposal.
Currencies
US$1.0835/eur vs 1.0890/eur yesterday. Yen 107.73/$ vs 107.78/$. SAr 18.789/$ vs 18.605/$. $1.246/gbp vs $1.251/gbp. 0.634/aud vs 0.630/aud. CNY 7.077/$ vs 7.076/$.
Commodity News
Gold US$1,698/oz vs US$1,723/oz yesterday - AngloGold returns to full production except in South African where lockdown remains
AngloGold operations are subject to a five-week total lockdown in South Africa ending 2nd May.
AngloGold has restarted gold production from surface gold dumps at West Wits and Vaal River regions (Miningmx).
AngloGold operations continue in Australia, Tanzania, DRC, Guinea, Ghana and Mali.
DRD Gold report partial resumption of production in South Africa
Gold ETFs 94.0moz vs US$93.9moz yesterday
Platinum US$779/oz vs US$793/oz yesterday
Palladium US$2,196/oz vs US$2,232/oz yesterday
Silver US$15.16/oz vs US$15.53/oz yesterday
Base metals:
Copper US$ 5,208/t vs US$5,137/t yesterday – Chinese copper inventories fall for fifth week straight
Copper inventories fell 4.6% in Shanghai to 303,366t on the week.
On warrant metal stocks also fell by some 15,854t to 161,568t as Chinese industry returns to a new normal.
Aluminium US$ 1,531/t vs US$1,516/t yesterday – Low prices force further smelters to cut uneconomic production in China
Chinese data shows production fell to 95,800tpd from 97,450tpd
Nickel US$ 12,020/t vs US$11,680/t yesterday
Zinc US$ 1,948/t vs US$1,940/t yesterday – zinc stocks fell 4.1% in Shanghai on the week to 146,966t
Lead US$ 1,694/t vs US$1,700/t yesterday – lead stocks fell 5.2% in shanghai to 7,88t on the week
Tin US$ 15,215/t vs US$15,150/t yesterday – tin inventories fell by 6.3% (259t) in Shanghai on the week to just 3,828t
Energy:
Oil US$28.0/bbl vs US$27.6/bbl yesterday
Natural Gas US$1.708/mmbtu vs US$1.597/mmbtu yesterday
Uranium US$32.40/lb vs US$32.00/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$82.5/t vs US$82.3/t
Chinese steel rebar 25mm US$530.7/t vs US$530.0/t - Chinese crude steel output falls 1.7% year-on-year
China produced 79.98mt of crude steel last month, down from 80.33mt in March 2019 according to the National Bureau of Statistics.
Average daily output in March dropped to 2.55mt compared with 2.58mt in the first two months of this year, hitting the lowest daily average since February (Reuters).
China produced 234.45mt of crude steel in Q1 2020, up 1.2% compared to the same period in 2019.
Thermal coal (1st year forward cif ARA) US$55.2/t vs US$54.0/t
Coking coal swap Australia FOB US$130.5/t vs US$128.5/t
Other:
Cobalt LME 3m US$30,000/t vs US$30,000/t
NdPr Rare Earth Oxide (China) US$36,739/t vs US$36,745/t
Lithium carbonate 99% (China) US$5,440/t vs US$5,441/t - Argentina’s lithium industry hit hard by coronavirus (Reuters)
President Alberto Fernandez who imposed a lockdown in mid-March has since moved mining onto the list of essential sectors.
This has had little effect due to the reduction in transport and movement.
President of the Argentinian Mining Chamber highlighted that lithium companies have made efforts to export cargo, but demand is low and movement paralysed.
Livent reopened its Argentinian facility in April but withdrew 2020 guidance.
Eramet has scrapped plans for a $600m Argentinian lithium project.
Lithium Americas has suspended work on its plant in northern Argentina.
Ferro Vanadium 80% FOB (China) US$26.5/kg vs US$26.5/kg – no change in vanadium prices this week
We are encouraged by Rio Tinto’s report on the outlook for iron ore
Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.0/kg
Tungsten APT European US$240-245/mtu vs US$240-245/mtu
Graphite flake 94% C, -100 mesh, fob China US$540/t vs US$540/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,450/t vs US$2,550/t
Battery News
Judge rules Tesla could be sued over Musk tweet misleading shareholders
A US district judge has ruled investors can push ahead with a lawsuit filed alleging Elon Musk attempted to defraud them with his 2018 tweet about taking the company private. (City AM)
Musk famously tweeted on August 7, 2018 that “Am considering taking Tesla private at $420. Funding secured”.
Tesla CEO Musk has argued there was no wrongdoing as directors would still have been required to approve any transaction. Judge Chen has rejected this argument.
The judge also said in his address that shareholders could try to prove the tweet was the ‘proximate cause’ of volatility in Tesla’s share price. (Reuters)
The US Securities and Exchange Commission has already fined Musk $20m and forced him to step down as Chairmen over the tweet. The company was hit with an additional $20m fine.
In addition to reducing employee pay checks and furloughing employees Tesla has emailed its landlords stating it will be reducing its rent obligations given the restrictions on its ability to do business. (Silicon Valley Business Journal)
Tesla is yet to respond about either the lawsuit or rent email.
Hondo Motor Europe expands battery recycling partnership
Honda Motor Europe is to expand its battery recycling project with SNAM for its traction batteries. (AutomotiveEV)
SNAM will collect and recycle batteries from Honda’s hybrid and electric vehicles and prepare them for second life or extract materials for recycling.
Since 2013 the pair have worked in partnership to trace and dispose of end of life batteries in accordance with European Environmental Standards. (Automotive World)
Dealers can request collection using SNAM’s dedicated online platform. Collection can be arranged from centralised storage hubs within 15 days so dealers don’t have to store batteries on site.
Company News
Amur Minerals* (LON:AMC ) 1.0p, Mkt Cap £8m – £750k equity raise
The Company raised £750k by issuing 75m shares at a price of 1p.
Proceeds to be used to repay the first tranche of the convertible loan note received from Plena Global Opportunities LLC in March. As well as for general working capital purposes.
The team is continuing to work on parts of the Kun Manie Permanent Conditions TEO ahead of the 1 December 2020 deadline for the submission of the report.
Key employees of the Company are currently working remotely in line with official guidelines and is planning to update the market on progress as appropriate.
The Company is confident the report will be ready on time, although, should the lockdown be extended indefinitely it may affect the completion schedule and if Russian authorities do not grant an extension it may put the license at a significant risk.
The scope of work for this year outlined previously included
Metallurgical testwork for the copper concentrate;
Development of an optimised production schedule;
Update of the current economic model including all latest technical data;
*SP Angel act as Nomad and Broker to Amur Minerals
Rio Tinto (LON:RIO) 3905p, Mkt cap £46.1bn – Guidance largely unchanged despite Covid19
In its Q1 production report Rio Tinto leaves most of its 2020 production guidance intact with the exception of a lower level for its copper operations where the company is now expecting mined copper production of 475-520,00t compared with the previous guidance of 530-570,000t and refined copper output in the range of 165-205,000t compared to the previously announced 205-235,000t.
The lower copper guidance results from ʺdue to a potential reduction in second half output at Escondida from Covid-19 measures and the earthquake repairs at Kennecottʺ.
Rio Tinto stresses the paramount importance of the safety of its employees and their communities but says that ʺAll of our assets continue to operate and we achieved a very robust production performance in the first quarter.ʺ
As part of its response to Covid19, the company has ʺchanged rosters at our Iron Ore operations, construction and exploration projects meaning fewer crew changeovers at our sites and in our operations centre to reduce the risk of transmission.ʺ
Rio Tinto explains that although the market outlook for the rest of the world is uncertain, it is seeing demand recover in China and the company says that ʺDemand for the high-quality iron ores we produce remained strong in the first quarter of 2020, mainly driven by a combination of seaborne supply disruptions and solid demand from China's steel mills despite Covid-19 impactsʺ.
Among the main product groups, Rio Tinto reports a 5% increase in shipments of Pilbara iron-ore compared to Q1 2019 at 72.9mt although shipments are 16% below those of the final quarter of 2109. On a production basis, the quarterly output of 77.8mt is 2% above that recorded in Q1 2019 and 7% lower than that reported in Q4 2019.
The company highlights the robust recovery of its iron ore operations during March following the flooding and associated damage, in February, caused by tropical cyclone Damien on its operations. Rio Tinto also says that ʺThe portside trading trial continues in China with the 1 millionth tonne of ore sold.ʺ
Guidance for 2020 remains unchanged at 324-334mt of iron ore shipments from the Pilbara iron-ore operations and cost guidance is similarly unchanged at US$14-15/t.
Copper production declined by 8% compared with Q1 2019 to 133,000t ʺreflecting anticipated lower copper grades, partially offset by higher throughputʺ. The company also confirms that it is ʺworking to resume normal operations following a 5.7 magnitude earthquake on 18 March. The mine, concentrator, tailings storage facility and refinery have all resumed safe and stable operations. There was some damage to the furnace, which impacts full year copper guidanceʺ.
The company says that ʺAlthough copper demand remained reasonable in the quarter, the decline in the price reflects deteriorating industrial growth expectations globallyʺ.
Rio Tinto’s bauxite output of 13.8mt is 8% higher than for Q1 2018, reflecting the ramp-up of production at Amrun during 2019 although 9% below the levels achieved in Q4 2019. Guidance for the full year remains unchanged at 55-58mt.
The company says that ʺChina's demand for imported bauxite continued to grow in the first quarter, as domestic reserves continue to decline in quality and quantity, and mine production was disrupted by Covid-19 restrictionsʺ.
Production of titanium dioxide slag was 1% lower than Q1 2019 ʺpartly due to Covid-19 restrictions in Quebec and South Africaʺ. The Richards Bay mineral sands operations are operating at reduced mining rates, in compliance with the South African Government’s measures for the containment of Covid19, although the company makes clear that ʺThe rail and port remain open for product shipments.ʺ In Quebec, the company is working with the Provincial Government to ʺslow down non-critical projects and activitiesʺ.
The company expects that ʺTitanium dioxide slag guidance is expected to be at the lower end of the prior guidance range [1.2-1.4mt] due to Covid-19 restrictions instructed by the governments in Quebec and South Africaʺ.
While confirming that Covid19 is expected to have an impact on the timetables for some of its major projects, Rio Tinto also explains that ʺCapital expenditure is now expected to be $5 to 6 billion in 2020 (down from the previous guidance of $7 billion) partly due to Covid-19 constraints, and partly due to the favourable currency impact from the strong US dollar. Capital expenditure originally planned for 2020 may subsequently flow into 2021 and 2022ʺ.
Rio Tinto’s exploration activities covering seven commodities across 17 countries ʺare likely to be affected by Covid-19 restrictions including the ability to move people and gain access to sites.ʺ Advanced base-metals projects include the Resolution copper/molybdenum project in the US and Winu copper in Australia while the Canadian Falcon Diamond project and further bauxite projects at Cape York in Australia and the Jadar lithium project in Serbia are also currently at the stage of detailed study and evaluation.
The company reports that its exploration and evaluation activities spent US$144m during the quarter of which ʺ54% of this expenditure was incurred by central exploration, 32% by Copper & Diamonds, 11% by Energy & Minerals and 3% by Iron Ore and Aluminium.ʺ
Conclusion: Rio Tinto is seeing Chinese demand recover, particularly for iron-ore and bauxite. Elsewhere, the impact of Covid19 makes the situation more uncertain and some slippage is expected on the timing of major projects as the ability to move personnel and materials is impaired by virus control measures. The operations remain open, however, and the strength of the US$ is benefitting both capital and operating costs.
Vast Resources* (AIM:VAST) 0.16p, Mkt Cap £17m – £600k equity raise
The Company raised £600k through an equity placing at a price of 0.153p.
Funds will be used to cover working capital incurred in anticipation of the Chiadzwa Community Diamond Concession JV completion and drilling at Baita Plai among other things.
The team remains confident the Chiadzwa JV will be completed shortly with the progress being hampered by the coronavirus outbreak.
The Company reiterated its target to launch production at Baita Plai within six months of securing the funding (ie through July).
Drilling at Baita continues with the team planning to acquire additional drilling equipment to support the programme focused on producing the JORC resource.
*SP Angel acts as Broker to Vast Resources
W Resources (AIM:WRES) 0.2p, Mkt Cap £12.4m – Quarterly production report
W Resources reports its La Parilla mine in Extremadura, Spain treated approximately 274,000t of ore to produce 3,306mtu of WO3 in concentrate and 12.1t of tin in concentrate during the quarter ending 31st March 2020.
The throughput has improved since the preceding quarter ended 31st December 2019 where the company reported treating approximately 113,000t to produce 968mtu of WO3 in concentrate and 3.9t of tin in concentrate suggesting that concentrate grades are improving, to around 56% WO3as the operation settles down.
Chairman, Michael Masterman, explained that ʺProduction at La Parrilla is building, albeit not at the pace we had anticipated due to early stage plant challenges having an impact on production levels for Q1 2020, as a result of a combination of unplanned downtime with mechanical issues with the jig and the crusher plants, which have now been resolved, and planned shut downs to implement important production improvement initiatives.ʺ
He also confirmed that ʺWe are mindful that production levels are not where we or our stakeholders expected them to be, however we are still very much in the early stages of the ramp-up and the team is well set to achieve significantly stronger results in the June quarter as a result of the improvement initiatives implemented in Q1. The increase in tungsten and tin production demonstrates progress in a very difficult external environment and we remain focussed on the works in hand and are confident of making the solid progress needed in order to reach design capacity.”
Spain has been particularly badly affected by the Covid19 virus and it is encouraging to hear that ʺNo W Resources personnel or contractors have been affected by COVID-19 and strict workplace procedures remain in placeʺ.
ʺW Resources is shipping all its Tungsten and Tin concentrate to customers but the volatility and changes in COVID-19 regulations in Spain and Europe have led to longer lead times to organise and effect deliveryʺ.
Prices for the benchmark ammonium paratungstate (APT) remain subdued at US$240-245/mtu although ʺSupply disruptions appear to have reduced Chinese exports of APT to Europe and the US providing some solid support to pricesʺ.
SP Angel Healthcare team - Vadim Alexandre, Liam Gascoigne-Cohen
Moderna Therapeutics awarded $483m BARDA grant for Covid-19 vaccine development
mRNA developer, Moderna Therapeutics (MDRNA.NQ), was awarded up to $483m from the Biomedical Advanced Research and Development Authority (BARDA), a US federal agency, to accelerate development of its mRNA vaccine candidate (mRNA-1273) against Covid-19.
mRNA-1273 is currently in a Phase 1 study which has enrolled 45 healthy adult volunteers and aims to evaluate the safety and immunogenicity of the vaccine candidate at different dosage levels.
If there is adequate data from the Phase 1 trial, Moderna aims to initiate a Phase 2 study in Q220 with a Phase 3 study as early as Autumn 2020.
The BARDA funding will support these late-stage clinical development programs, as well as manufacturing scale-up of mRNA-1273 if a vaccine is approved by the regulator.
The grant is a substantial amount but given the circumstances the successful development of a vaccine would be a positive return on investment. Moderna aims to hire 150 new staff and is targeting the supply of ‘millions of doses per month in 2020 and with further investments, tens of millions per month in 2021’. mRNA-1273 is an mRNA-based vaccine, which encodes for the SARS-CoV-2 Spike protein. The rationale for using an mRNA-based approach is that it better mimics the natural viral infection mechanism (SARS-CoV-2 has an RNA based genome) and may stimulate a more potent immune response, however, there have been no RNA vaccines approved to-date. Sanofi and GSK are collaborating on a more conventional route; developing a protein-based vaccine which relies on a proven, scalable technology used in FluBlok (Sanofi), an approved vaccine for influenza.
Company Update
ANGLE plc (AIM:AGL): Study published by University of Athens
Share price: 53.5p; Market Capitalisation: £92.5m
ANGLE plc announced that the University of Athens, Greece, published a study evaluating the analytical performance of Parsortix, the Group’s proprietary liquid biopsy in head and neck squamous cell carcinoma (HNSCC).
The researchers compared the performance of Parsortix against an antibody-based circulating tumour cell (CTC) detection system and captured samples from 50 HNSCC patients and 18 healthy volunteers.
The Parsortix system out-performed the alternative approach with key advantages including a higher CTC harvesting rate and purer samples.
The research was published in the International Journal of Molecular Sciences (Link: https://angleplc.com/library/publications/).
Independent research, such as this study, builds clinical acceptance of the Group’s technology in different indications as it advances Parsortix through the US regulatory approval process for use in metastatic breast cancer patients. The Group met with the FDA in January as part of a Q-submission meeting and is working on completing its FDA submission. The Group remains well capitalised with cash of £15.5m at 30 March 2020 which is sufficient for planned operations until mid-2021. Liquid biopsies (blood tests) could enable early diagnosis of cancer via a simple test and is becoming a highly competitive area. CTCs represent promising biomarkers for early prediction of cancer and treatment response monitoring.
Analysts
John Meyer – 0203 470 0490
Simon Beardsmore – 0203 470 0484
Sergey Raevskiy – 0203 470 0474
Sales
Richard Parlons – 0203 470 0472
Abigail Wayne – 0203 470 0534
Rob Rees – 0203 470 0535
SP Angel
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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, Antimony
Asian Metal
Tungsten
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