SP Angel . Morning View . Friday 11 12 20
ECB expands stimulus by €500bn and US nears agreement on +$900bn package
Kefi Gold and Copper* (LON:KEFI) – GM completed and plans for a busy 2021 laid out
Panthera Resources (LON:PAT) – Labola Project data offers quick route to potential >1moz JORC resource
Power Metal Resources* (LON:POW) – Exploration underway at Alamo Gold Project
Vast Resources* (LON:VAST) – Chairman acquires ~£20k worth of shares in the market
Scotch Egg deficit as pubs scramble to secure supply
British pubs are scrambling to secure Scotch Eggs
A Scotch Egg is a meal in its self and should qualify as a meal under new COVID drinking restrictions
Not every police officer agrees with our analysis but we believe the coppers have softened their stance after Michael Gove described Scotch Eggs with a pickle on the side as a starter but later changed his tune to agree that a Scotch Egg does in fact count as a substantial meal.
Wholesalers report a 10x increase in demand. We expect an immediate supply / demand deficit.
China passenger vehicle sales rise 11.6% YoY
November sales rose to 2.77m last month, up from 2.57m in October.
Electric passenger car sales rose 137% YoY to 186,000.
European ferro-titanium prices hit seven-year high
European ferro-titanium prices are currently at $6.25-6.75/kg – an increase of almost 20% from $5.25-5.65/kg a week earlier.
Several spot deals were reported both for prompt and longer-term delivery contracts, with spot deals as high as $6.70/kg ddp.
The market is being driven by a lack of material, over-reaction, pre-emptive buying and trader speculation; an alloy supplier told Fastmarkets MB.
Ferro-vanadium prices rose 1.9% this week in China to $25.5-28/mtV (Fastmarkets MB)
IGTV: As traders continue to bid up Tesla, is the EV sector approaching a bubble? https://youtu.be/LaDWBpTZ7SQ
Copper price rise: https://youtu.be/mdPXTup15VY
VOX - 10/12/20: https://www.voxmarkets.co.uk/media/5fd228d9bc74c922485f501e/?context=/listings/LON/ARCM/multimedia/
US Election, China growth policies Solgold*, Mkango*, Rainbow Rare Earths*: https://youtu.be/YKk5-kVpVGE
EV revolution, gold and other ideas (Interactive Investor): https://www.youtube.com/watch?v=ja0IdjszfCc
Metals Markets: Are they totally dependent on stimulus? (IG TV): https://youtu.be/TOiSwRpgfKM
*SP Angel act as nomad or broker or nomad and broker to companies mentioned in the above videos.
Dow Jones Industrials -0.49% at 30,070
Nikkei 225 -0.30% at 26,467
HK Hang Seng -0.76% at 26,305
Shanghai Composite -0.19% at 3,410
Economics
EU - The ECB expanded the emergency aid programme capacity by €500bn to €1.85tn, in line with expectations, and extended it by nine months to at least the end of March 2022.
This takes our Stimulus tally to around $20.4 trillion including expected US new stimulus and infrastructure funding
Reinvestments of maturing debt proceeds will be carried until at least the end of 2023.
The central bank expects the Eurozone to have reached sufficient herd immunity by the end of the next year allowing the economy to return to normal.
The latest central bank forecasts show the economy to grow 3.9% in 2021 after contracting 7.3% in 2020.
US – A jump in weekly unemployment claims to a nearly two months’ high put pressure on lawmakers to accelerate fiscal support programme talks.
Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi have offered no sign that hey are ready to engage in negotiations on a COVID-19 relief package, Bloomberg reports.
McConnell is reported to be in support of a $916bn proposal made earlier by US Treasury Secretary while Pelosi sees a rival $908bn plan drafted by a bipartisan group of lawmakers as a better option.
House Republican Leader Kevin McCarthy expects the deal to be completed next week.
Weekly Jobless Claims: 853k v 712k in the previous week and 725k est.
Continuing Claims: 5,757k v 5,520k in the previous week and 5,210 est.
Sanofi/GSK vaccine rollout will be delayed at least until the final quarter of 2021 after results showing poor immune response in the elderly, FT reports.
Early test results showed “an immune response comparable to patients who recovered from COVID-19 in adults aged 18 to 49 years, but a low immune response in older adults likely due to an insufficient concentration of the antigen”, according to companies.
A committee of experts recommended the FDA to approve the Pfizer/BioNTech COVID-19 vaccine agreeing that the benefits of the treatment outweighed its risks.
17 members of the panel voted in favour, four voted against and one abstained.
The vote paves the way for a final decision from the FDA that is expected to be ready in the “next couple of days”, according to the director of the FDA’s vaccine research office.
The vaccine has been authorised in the UK, Canada, Bahrain and Saudi Arabia so far.
UK – PM Johnson suggested there is a “strong possibility” the UK will fail to agree a post-Brexit trade deal with the EU.
PM said “now is the time” for firms and people to prepare for a no deal outcome.
The pound is off this morning against the € trading at 1.0898.
South Korea – Exports surged 26.9%yoy in the first 10 days of December on robust demand for chips and mobile devices highlighting a strong recovery from the pandemic, according to FT.
Overseas shipments of memory chips and wireless devices including smartphones increased 52.1%yoy and 59.6%yoy, respectively.
Deliveries of automobiles and auto parts gained 22.4%yoy and 34%yoy.
Exports to China and the US, nation’s two largest trading partners, climbed 12.1%yoy and 23.1%yoy.
Peru – Total mining exports rose 13% to $2.76bn in October compared to a year earlier
Copper exports rose 6% to 242,000t.
Gold exports fell 12% to 434,000oz.
Silver exports rose 18% to 440,000oz.
Zinc exports fell 39% to 74,000t.
New infrastructure – badly needed in the West to repair and upgrade existing roads, rail and bridges, improve connectivity and restore economic growth
China continues to promote videos of its recent infrastructure developments with pride but what have we done in recent years?
We have the rusting Angel of the North and the new, but substantially delayed £14bn Crossrail (Versarien* will hopefully help solve the signalling issues).
China continues to build new bridges, dams, suburban housing along with substantial new road and rail infrastructure
Ok, China is partly driven by a system of kleptocratic patronage but also by the CCP’s need to urbanise millions of peasants still living on subsistence farms.
Maybe the latter is a convenient excuse to enrich the princelings and other patrons of the politburo through ongoing discounts on prime development land in state sales.
Whatever the reasons China is able to fast-track road and rail projects due to the virtual non-existence of legal, social and environmental opposition to government projects. Swampy would have been re-educated about swamps some years ago.
While China suffered 50 years economic devastation it is catching up fast and is challenging the West in terms of connectivity and industrial efficiency.
Western infrastructure needs much rebuilding with many US bridges in a terrible state, horrible airports and near non-existent rail systems.
Elon Musk’s Boring company may be part of the solution offering Hyperloop ultra-high-speed underground public transportation systems at 600mph
The advantage of tunnelling is it has minimal impact on the environment and should be much easier to plan.
UK roads and rail lack are woefully short of capacity given the rise in population and increased travel.
The main road from London to Heathrow Airport is a national disgrace and there are still no plans to reinstate the rail ripped up by Dr Beaching in 1963.
The EU has funded many new roads into Eastern Europe to better connect new markets for European manufacturers and European rail is of good standard excepting suburban rail systems so it’s less easy to see where the EU is going to spend its stimulus Euros though we are sure the Greeks will think of something.
Our Stimulus tally is now at $20 trillion including $2.8tn of expected US emergency support and $2tn of new infrastructure funding
A study shows that each Chinese financed infrastructure project yields a 0.41-1.49% increase in economic activity according to the American Economic Association.
We have to hope that US, UK and EU infrastructure projects will have similar impact.
Currencies
US$1.2126/eur vs 1.2093/eur yesterday. Yen 104.07/$ vs 104.55/$. SAr 15.124/$ vs 14.969/$. $1.335/gbp vs $1.332/gbp. 0.742/aud vs 0.747/aud. CNY 6.527/$ vs 6.549/$.
Commodity News
Precious metals:
Gold US$1,866/oz vs US$1,836/oz yesterday
Gold ETFs 106.7moz vs US$106.8moz yesterday
Platinum US$1,024/oz vs US$1,011/oz yesterday
Palladium US$2,336/oz vs US$2,291/oz yesterday
Silver US$24.65/oz vs US$23.87/oz yesterday
Base metals:
Copper US$ 7,695/t vs US$7,736/t yesterday - Copper
Bloomberg analysts forecast a -200,000 deficit in the copper market in 2021, revealed in yesterday’s BI Materials Webinar.
Aluminium US$ 2,012/t vs US$2,046/t yesterday
Nickel US$ 16,395/t vs US$16,815/t yesterday
Zinc US$ 2,795/t vs US$2,833/t yesterday
Lead US$ 2,085/t vs US$2,083/t yesterday
Tin US$ 19,150/t vs US$19,375/t yesterday
Energy:
Oil US$48.7/bbl vs US$49.1/bbl yesterday
Natural Gas US$2.460/mmbtu vs US$2.419/mmbtu yesterday
Uranium US$29.70/lb vs US$29.75/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$144.0/t vs US$146.4/t
Chinese steel rebar 25mm US$613.7/t vs US$617.2/t
Thermal coal (1st year forward cif ARA) US$62.8/t vs US$63.8/t
Coking coal swap Australia FOB US$125.0/t vs US$120.0/t
Other:
Cobalt LME 3m US$32,390/t vs US$32,000/t
NdPr Rare Earth Oxide (China) US$67,025/t vs US$65,274/t
Lithium carbonate 99% (China) US$6,434/t vs US$6,566/t -
Savannah Resources holds a 100% stake in the Mina do Barroso Lithium Project and not a 75% interest as mentioned yesterday.
*SP Angel acts as Nomad to Savannah Resources
Ferro Vanadium 80% FOB (China) US$27.2/kg vs US$27.2/kg
Ferro-Manganese high carbon 78% Mn US$1,320/t vs US$1,265/t
Tungsten APT European US$220-225/mtu vs US$220-225/mtu
Graphite flake 94% C, -100 mesh, fob China US$510/t vs US$510/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,475/t vs US$2,475/t
Spodumene 6% Li2O min, cif (China) US$380/t vs US$375/t
Battery News
Hyundai hope that flying taxis take off
Hyundai reveals details regarding its flying taxis that it plans to have them running by 2028.
At CES, the company showed an air taxi prototype with Uber. The electric vehicle is designed to lessen street congestion.
However, Hyundai has a flying taxi suited for cargo equipped with a hybrid powertrain that it wants to be in the skies by 2026. It will fly autonomously.
The company also recently bought Boston Dynamics, famous for its robot dog.
China converting EV fleet into fuel cell vehicles
Colder temperatures in the Northern regions of China are driving momentum behind hydrogen fuel cell vehicles.
Temperatures in the northern provinces experience dry, freezing winters and short summers. EVs struggle in these conditions as Li-ion batteries are very temperature sensitive, loosing approx. 18.5% of their official range.
The government aims to have 1m fuel cell vehicles on the road by 2030, providing subsidies up to 160,000 yuan per fuel cell car and 400,000 yuan per commercial fuel cell vehicle..
As of July 2020 there were 7,200 fuel cell vehicles on China’s road according to the Chinese NEA, the government has an interim target is 50,000 FCEVs by 2025.
The central government will halt FCEV and EV subsidies in 2022.
EV start-up Re-Fire operating out of Guangdong will have the capacity to produce 50,000 FCEVs when it second factory in Changshu is complete. The Company has seen traction in the commercial vehicle market where durability and fuel cell economy are prized characteristics.
EV buyer intention continues to improve in the UK
Recent survey by British pub and retail business Marston’s and rapid EV charging network Osprey shows 42% of Brits expect to be driving an EV in the next 5yrs. This would put an additional 16m EVs on the road by 2025.
59% of respondents would prefer to use rapid charging facilities.
Buying intention data has fluctuated with around 10% saying their next car would be an EV in February, pre pandemic. This rose with lockdowns in full effect in April to 17% saying their next car would be an EV (Electrek).
Other surveys provide a less positive outlook: A Savana ComRes survey on behalf of the SMMT shows nearly 50% of drivers were not ready to switch to an EV and they felt the 2035 ban was to immediate.
While the Telegraph reported in September than nearly 50% of respondents said they would never buy an EV due to charging fees.
Company News
Kefi Gold and Copper* (LON:KEFI) 1.8p, Mkt Cap £36m – GM completed and plans for a busy 2021 laid out
The Company held a General Meeting today passing all resolutions as well as highlighting plans for the coming year.
At the Tulu Kapi gold project in Ethiopia, the team is planning to complete project related funding in Q1/21 paving the way for the start of relocation programme, bulk earthworks for on-site infrastructure and fabrication of plant components.
Senior loan drawdowns are expected to follow in H2/21.
Production start target reiterated for Q4/22.
Additionally, the Company is planning to secure exploration licenses in the Tulu Kapi District and start field programmes in H1/21.
In Saudi Arabia, the Company is planning to complete the second drilling programme at the Hawiah VMS project focusing on growing the resource and collecting data ahead of a PFS targeted for completion in 2021.
Preliminary results from the first 3,600m completed as part of the currently running 13,000m programme returned copper sulphide mineralisation intersections offering good potential to improve on the maiden mineral resource estimate with mineralisation envelope extended both along strike and down dip.
After completion of the drilling programme, the team is planning to update the PEA released this September that envisaged a 2mtpa underground operation generating NPV8% (post-tax) $96m.
Conclusion: The Company laid out plans for 2021during the General Meeting focusing on closing of the Tulu Kapi funding paving the way for the start of construction works of a 190kozpa operation while advancing the drilling programme at the Hawiah VMS project in Saudi Arabia to grow the resource and collect data for the PFS. KEFI portfolio of gold and copper assets offer exposure to two metals that saw a significant cyclical upturn in prices.
*SP Angel act as Nomad and Broker to KEFI Gold and Copper
Panthera Resources (LON:PAT) xxp, Mkt Cap £xxm – Labola Project data offers quick route to potential >1moz JORC resource
(Panthera hold 2.5m shares in Moydow representing 42% of Moydow share capital, moving to 46% upon the sale of the Kalaka project to Moydow. Moydow have the right to buy 100% of the Labola project through additional cash payments of US$1-2 million)
Panthera Resource’s associated company, Moydow Holdings Limited, has secured all the previous drilling, geological, geochemical and geophysical data on the Labola Project.
The data was collected by High River Gold Mines Limited, and later acquired by Nordgold with the data now passed onto Moydow and Panthera.
The Labola gold exploration project is located on the Banfora greenstone belt, Burkina Faso, approximately 370km west-southwest of Ouagadougou.
The data obtained includes 40,518m drill logs and assay results from some 282 RAB, RC and Diamond drill holes, 84 rock chip and 3316 soil sample assays, 495km2 of regional geophysics, 260km2 of detailed airborne geophysics, 25km2 of ground geophysics, 165km2 geological and regolith mapping, along with high definition topographic survey data and metallurgical testwork.
Drilling: Previous historic drill record include intercepts of:
2m @ 130.6g/t Au from 66m
11m @ 8.2g/t Au from 147m
6.5m @ 7.26g/t Au from 318m
Preliminary Metallurgical testwork suggests the mineralisation is likely to be directly amenable to gravity and CIL extraction in both the oxide and sulphide zones.
Samples grinds show of 80% passing between 75 and 150 micrometres, the oxide sample returned between 90.2% and 97.5% recovery and the sulphide sample returned between 82.4% and 85.4% recovery.
Panthera are currently formulating an exploration strategy using the historic data, notably infill drilling in areas with limited drill coverage and areas with good intercepts, along with extending areas drill tested where drilling has shown mineralisation has not been closed off.
Exploration potential away from the currently drilled areas is also considered to be high, with notable potential drill targets along strike which has not been tested to date, along with using other exploration techniques such as IP surveys and geochemical testing.
Mark Bolton, Managing Director of Panthera, commented: “Securing the combined drilling, geological, geochemical and geophysical data for the first time, with an estimated replacement value of over US$10 million, is a major step forward to the ultimate development of Labola. The extensive database requires comprehensive interpretation before significant further investment in the field, particularly the many additional targets which may expand the resource potential at Labola.”
Conclusion: The Lebola project has a JORC Target resource of 0.5-1.5moz of gold based on the existing work done. We expect this to substantially convert into a JORC Resource of 0.5-1moz grading >1.3-1.4g/t on check drilling verification with the number likely to expand well above this from further drilling around some of the less well drilled targets.
Power Metal Resources* (LON:POW) 2.4p, Mkt cap £20m – Exploration underway at Alamo Gold Project
The December 2020 work programme at the Alamo project in Arizona has commenced with a camp established and geologists active on site as of Monday.
Power Metal intend to focus on six areas where geological mapping has identified conglomerate units which are prospective for hosting coarse gold- as numerous findings of native gold nuggets characterise the area. The conglomerates and coarse grained sedimentary units unconformably overlie older intrusive and metamorphic rocks, are interpreted to represent depositional environments resulting from the erosion of those older rocks.
The Company more specifically are planning to focus on the examination of the basal contacts in the six areas with the objective of identifying geological environments favourable for transport and subsequent dispersal of coarse gold and gold nuggets as palaeoplacer deposits in the younger rocks.
This work has the objective of delineating focus areas for the planned mini-bulk sampling programme which is due to follow-on from the current field investigations subject to permitting, with bulk sampling determining potential gold grade and distribution, and future work to determine whether the sediments hold potential for economic exploitation.
Paul Johnson Chief Executive Officer of Power Metal Resources plc commented: "We are very pleased to report that the geological field team commenced the planned December work programme at the Alamo Project in Arizona this week. The local exploration team are focusing detailed investigations on six specific areas which are considered to be prospective for hosting potential palaeoplacer coarse grained gold deposits and which are linked to the areas where coarse gold and gold nuggets have already been identified."
*Power Metal has the right to earn-in up to a 75% interest in the Alamo Gold Project. SP angel act as Nomad and Broker for Power Metal Resources.
Vast Resources* (LON:VAST) 0.14p, Mkt Cap £22m – Chairman acquires ~£20k worth of shares in the market
Brian Moritz, Chairman of the Company, acquired 15m shares at a price of 0.1395p in the market.
This brings his total beneficial ownership in the Company to 25m shares or ~0.1% of total number of shares in issue.
Conclusion: Acquisition of shares by the Company’s Chairman in the market is a welcome news as the Company is finalising loan facilities and ramping up production at the recently commissioned Baita Plai polymetallic mine in Romania.
*SP Angel acts as Broker to Vast Resources
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
Joe Rowbottom – Joe.Rowbottom@spangel.co.uk - 0203 470 0486
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
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
Metal Bulletin