SP Angel . Morning View . Thursday 18 02 21
Copper climbs past $8,600/t as China returns post NY break
Altus Strategies* (LON:ALS) – Tabakorole mineralisation extended to over 3km along strike
Ariana Resources (LON:AAU) – New veins identified at Arzu North
Empire Metals* (LON:EEE) – Drill results confirm presence of parallel veins at Eclipse
Oriole Resources (LON:ORR) – Remote sensing identifies 12 priority gold targets in central Cameroon
Ormonde Mining* (LON:ORM) – New ROC deal structure required to attract support of Ormonde’s main shareholder
Tirupati Graphite (LON:TGR) – Stage II drilling commences at Madagascan operations
Ford to invest at least $22bn in electrification by 2025
Ford has announced that its entire passenger range in Europe will be all-electric by 2030, while also reporting that its commercial models would be 100% zero-emissions capable by 2024.
The firms huge investment commitment is more than double the company’s previous investment plans.
Metal Equities continue to gain on strong earnings and fundamental value growth as US Tech stocks take a breather as the market reassesses their value
Mining and metals equities continue to post strong gains as earnings from iron ore and copper propel miners into the big league for dividends.
Copper prices hit fresh 8-year highs as Chinese traders return
Copper prices in London rose above $8,500/t on Thursday, as Chinese traders retuned from holiday on positive footing due to improving sentiment over the recovery of economies aided by vast stimulus in major economies.
China’s return to the market has resulted in base metals rising across the board in both London and Shanghai, led by copper rising 2.1% on the LME to its highest since April 2012.
Goldman Sachs and Citigroup are said to have raised their 12-month copper price to US$10,000/t and ANZ Bank to US$9,000/t
Chinese traders return early from their Lunar New Year semi-quarantine staycations
Chinese traders and investors are said to have bid up all metals listed in Shanghai
The continue to buy up Platinum and palladium, the base and ferrous metals including iron ore, Steel rebar, Hot Rolled Coil
SQM to invest in Mt Holland lithium project
The board of SQM has approved the company’s investment in the Mount Holland lithium project in Western Australia (Fastmarkets MB).
The project is a 50/50 JV with Australian industrial group wesfarmers, with the project expected to deliver an initial production capacity of 50,000tpa of battery-grade lithium hydroxide when it starts production in H2 2024.
Preliminary work to evaluate an expansion of the production capacity will begin alongside construction works.
Recent Interviews:
IGTV: Is this a new Supercycle for commodities: https://youtu.be/BIWb-wqoLpM
Metals expected to continue the last-year gains into 2021 https://youtu.be/afrB9cJe8L0
Is 2021 the start of the new COVID-Supercycle or will Lockdowns delay the recovery? https://youtu.be/7LO0tDc-pNc
VOX Markets: 11/02/20 https://audioboom.com/posts/7798441-john-meyer-talks-about-the-commodities-super-cycle
03/02/20 https://www.voxmarkets.co.uk/media/601c12cc40dc224b8b88a9ec/?context=/listings/LON/IKA/multimedia/
121 Conference panel: Investment Leader’s Discussion: Van Eck, Qora Capital, Nedbank, SP Angel
https://www.youtube.com/watch?v=AGzK4iqwfGk&feature=emb_title&ab_channel=121MiningInvestmentTV
Africa set to gain from Covid stimulus as East and West compete for metals in the new COVID-Supercycle: https://www.theassay.com/the-assay-africa-edition-2021/
iiTV: Mining stock to own 2021: https://www.youtube.com/watch?v=4x7SuSLQwCI&t=11s. Mining share tips for 2021 - https://www.youtube.com/watch?v=G_6RKAp91k4
*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts.
We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.
Metals price forecasting through 2020 - 2020 was probably the most difficult year for forecasting anything
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
Dow Jones Industrials +0.29% at 31,613
Nikkei 225 -0.19% at 30,236
HK Hang Seng -1.56% at 30,602
Shanghai Composite +0.55% at 3,675
Economics
Global debt balance increased by more than $24tn in 2020 marking the largest annual growth on record in the wake of unprecedented stimulus measures taken by government to support the economy during the pandemic.
US – Retail sales climbed 5.3%mom in January helped by fiscal stimulus and relaxed curbs on businesses.
Retail Sales (%mom): 5.3 v -1.0 in December and 1.1 est.
EU new car registrations fell 24%yoy vs -3.3% in December.
UK - CPI fell 0.2% in January vs +0.3% in December and 1.3% yoy in January and 0.6% yoy in December
Input PPI rose 0.7% in January vs 1.2% in December and rose 1.3% yoy in January vs 0.6%
Output PPI rose 0.4% in January vs 0.2% in December and -0.2% yoy in January vs -0.5%
US – Retail sales rose 5.3% in January vs -0.7% in December and gained 7.4% yoy in January vs 2.9% in December
Retail sales ex auto rose 5.9% in January vs -1.4%
PPI rose 1.3% in January vs 0.3% and rose 1.7% in January vs 0.8%
Industrial production rose 0.9% in January vs 1.6% and fell -1.8% in January vs -3.6%
Manufacturing output climbed 1.0% in January vs 0.9% but fell -1.0% yoy in January vs -2.8%
Capacity utilisation raised to 75.6% in January vs 74.5%
Business inventories rose 0.6% in Decmber vs 0.5%
UK – COVID-19 infections drop significantly with lockdown measures in place as positive tests were now less than one-third the level reported three weeks ago, according to a survey led by Imperial College.
The rate of decline has been faster than expected by researchers.
However, the researchers found no evidence that vaccination was yet having an effect with the decline in positive tests in the over 65yo group matching (no steeper) than the vast majority of vaccinations so far.
Indonesia – Authorities are making COVID-19 vaccination compulsory for eligible individuals involving fines as well as suspension to termination of social assistance or government services for those who refuse to participate in the inoculation programme.
This may be the first case a government made the jab mandatory, FT reports.
The nation struggled to contain the pandemic reporting the highest number of cases and deaths (1.2m and 34,000, respectively) in the region.
Her immunity plan would require vaccination of 182m, or ~70% of the world’s fourth largest population.
Indonesia vaccinated 1.2m people so far with half of those receiving two jabs.
Brazil – The government slows down the vaccination on supply bottlenecks prioritising those who waited for a second shot.
Taiwan - Biden administration engages with Taiwan over global semiconductor shortage
President Biden’s top economic advisor, Brian Deese, has sought the Taiwanese government’s help in resolving the global semiconductor shortage that is idling auto manufacturing plants.
Taiwan is home to the largest semiconductor manufacturing industry in the world and also relies on the US to defend against China.
Deese has engaged with Taiwan’s Ministry of Economic Affairs and relayed concerns from US automotive companies over the shortages, while acknowledging that more will have to be done to prevent similar shortages in the future.
US administrators have previously sought meeting with Taiwanese government officials to press them to ramp up the supply of semiconductors, as thousands of Americans could face cuts to their hours and wages as plants halt production.
Leaders around the world are realizing just how dependent they are on Taiwan for chips, mostly due to the worlds largest producer, Taiwan Semiconductor Manufacturing Co.
IHS Markit estimate that nearly 1m fewer light vehicles will be produced in Q1 21 as a result of the shortage.
Currencies US$1.2052/eur vs 1.2076eur yesterday. Yen 105.77/$ vs 105.99/$. SAr 14.657/$ vs 14.745/$. $1.388/gbp vs $1.388/gbp. 0.776/aud vs 0.775/aud. CNY 6.471/$ vs 6.458/$.
Commodity News
Precious metals:
Gold US$1,782/oz vs US$1,785/oz yesterday
Gold ETFs 105.8moz vs US$105.0moz yesterday
Platinum US$1,259/oz vs US$1,242/oz yesterday
Palladium US$2,377/oz vs US$2,386/oz yesterday
Silver US$27.19/oz vs US$27.10/oz yesterday
Base metals:
Copper US$ 8,592/t vs US$8,393/t yesterday
Aluminium US$ 2,142/t vs US$2,090/t yesterday
Nickel US$ 18,865/t vs US$18,745/t yesterday
Zinc US$ 2,857/t vs US$2,838/t yesterday
Lead US$ 2,123/t vs US$2,112/t yesterday
Tin US$ 25,345/t vs US$24,630/t yesterday
Energy:
Oil US$65.0/bbl vs US$63.9/bbl yesterday
Oil prices continue to tick up despite overall weak global demand
Saudi Arabia, through its extra cut of 1MMbopd in February and March has helped the efforts of the OPEC+ alliance to tighten the oil market in the first quarter, while demand is still relatively weaker, especially outside Asia
Current pricing is supported on the back of the cuts, the weakening US dollar, investors piling into oil for reflation trade, and expectations of a rebound in oil demand everywhere in the latter part of 2021
The oil price rally, however, comes just two weeks before the OPEC+ group meets in the first week of March to decide how to proceed with the pact from April onwards
The market hasn’t forgotten last March’s debacle when Russia and Saudi Arabia disagreed on how to tackle the crashing demand at the start of the pandemic and broke up the OPEC+ pact for a month
The global oil market is balanced, and the current price of oil fully reflects this market situation, Russia’s Deputy Prime Minister Alexander Novak remarked a few days ago
The comment has been interpreted by analysts that Russia could be pushing for more aggressive easing of the cuts from April
Elsewhere, the robustness of Asian demand remains a key gauge for Middle Eastern NOCs
China and India have been leading the continent with fuel consumption almost returning to pre-COVID levels in both
On the other hand, insular economies such as the Philippines, Indonesia or Taiwan have been running their refineries below maximum capacity or temporarily halting several units amidst poor margins
At the same time, turnaround season is just around the corner and Japan’s month-on-month import drop in February is the first of many to come
Albeit smaller in terms of overall output, refinery maintenance in Thailand, Taiwan and Sri Lanka will also tighten the markets a bit
February turnaround will blaze the path for next month’s large-scale works, China alone will have at least 0.9MMbopd of refinery capacity going offline in March 2021
Currently, the oil market is in backwardation, which occurs when spot prices are higher than further-dated contracts
Backwardation does suggest however a near-term bullish market structure with tightening inventory levels
This may encourage refiners to tap deeper into storage as they ramp up production to take advantage of higher prices
Natural Gas US$3.256/mmbtu vs US$3.107/mmbtu yesterday
Natural gas prices surged again on Wednesday but settled off the trading session’s highs after running into resistance
The frigid weather in Texas and throughout the US midwest has generated an enormous demand for natural gas and cash prices continued to surge
Even at Henry Hub, where the NYMEX contract is traded, the cash values were more than double the price of the future contract
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$167.8/t vs US$164.0/t
Chinese steel rebar 25mm US$666.6/t vs US$668.0/t
Thermal coal (1st year forward cif ARA) US$64.1/t vs US$64.3/t
Coking coal swap Australia FOB US$154.5/t vs US$155.0/t
Other:
Cobalt LME 3m US$48,000/t vs US$47,000/t
NdPr Rare Earth Oxide (China) US$72,395/t vs US$72,543/t
Lithium carbonate 99% (China) US$10,585/t vs US$10,607/t
Spodumene 6% Li2O min, cif (China) US$455/t vs US$395/t
Ferro Vanadium 80% FOB (China) US$30.5/kg vs US$30.5/kg
Ferro-Manganese high carbon 78% Mn US$1,610/t vs US$1,575/t
Tungsten APT European US$250-255/mtu vs US$250-255/mtu
Graphite flake 94% C, -100 mesh, fob China US$560/t vs US$560/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,625/t vs US$2,625/t
Battery, Hydrogen and Renewable News
UK nuclear industry launches ‘hydrogen roadmap’
Nuclear power could produce one-third of the UK’s clean hydrogen needs by 2050, according to the Hydrogen Roadmap agreed by the Nuclear Industry Council last week.
The Climate Change Committee estimates that the UK needs to generate four times as much clean power by 2050, as well as 225TWh of low-carbon hydrogen to complete its decarbonisation.
The Hydrogen Roadmap will be published tomorrow and outlines how large scale and small modular reactors can produce both the power and heat necessary to produce emissions-free hydrogen. It estimates that 12-13GW of nuclear reactors of all types could use electrolysis, steam electrolysis using waste heat and thermochemical water splitting to produce 75TWh of green hydrogen by 2050.
The most common method, steam methane reformation, is low cost, but emits 10kg of CO2 for every 1KG of hydrogen.
Research helps solar energy become more affordable
Scientists at The University of Manchester have found a way to accelerate the uptake of solar technology, by increasing the environmental safety of perovskite solar cells. They contain lead, a cumulative toxin, and if the cells get damaged, lead ions may leak.
Using a bioinspired mineral called hydroxyapatite, they have created a ‘failsafe’ which captures the lead ions in an inorganic matrix. As a result, if cells are damaged, toxins are stored in an inert material, rather than released in the environment.
In a dual success, The Engineering and Physical Sciences Research Council funded project found that through the addition of hydroxyapatite, the efficiency of perovskite solar cell increased to 21%. This compares to 18% efficiency for control cells with no added hydroxyapatite. An increased efficiency in panels means more energy can be generated and at a lower cost.
Company News
Altus Strategies* (LON:ALS) 87p, Mkt Cap £61m – Tabakorole mineralisation extended to over 3km along strike
BUY
The Company released results from the first eight holes of the 6,300m RC drilling programme (39 holes) at the Tabakorole gold project in southern Mali.
The programme has been funded and completed by Marvel Gold, a JV partner, with a goal to both expand the MRE testing along strike extensions (NW and SE) as well as infill drill areas of plunging high grade shoots within the resource.
Selected intersections include:
2.0 g/t over 23m from 178m
1.24 g/t over 24m from 13m
0.81 g/t over 25m from surface
Higher grade intersection extends the Tabakorole mineralisation by 150m along strike to over 3km now.
Remaining assay results that including from the northwestern extension are expected over coming weeks.
Meanwhile, Marvel started a high resolution magnetic survey and is planning to shortly commence an AC drilling programme designed to test on strike extensions as well as potential parallel targets.
Altus holds 49% interest in the project along with 2.5% NSR royalty on the project with Marvel having an option to earn up to 80% interest by sole funding four stages of exploration and delivering a DFS.
Conclusion: First results from the Tabakorole drilling programme extends mineralisation along strike by at least 150m to over 3km now with the mineralisation remaining open in all directions implying upside potential to the current mineral resource of 24mt at 1.2g/t for 910koz. More results are due in coming weeks.
*SP Angel acts as nomad and broker to Altus Strategies
Ariana Resources (LON:AAU) 4.8p, Mkt Cap £51.1m – New veins identified at Arzu North
Ariana Resources reports that recent geochemical sampling and geological mapping has identified new gold silver veins extending over 1,190m of strike length within the Arzu North area of its Kiziltepe mine.
The company says that the veins, 23 in number, are between 0.5-4m wide and contain grades of up to 14.5g/t gold and 260g/t silver in particular samples.
The largest of these veins is reported to be approximately 150m long and between 1-4m wide.
The current drilling programme is “being adjusted to intercept new veins at depth and strike beyond the current pit designs”.
The newly identified veins are located on the northern side of the Arzu North pit in an area “which was originally modelled as containing a larger quantity of low-grade and waste material”.
Managing Director, Dr. Kerim Sener, explained that the newly discovered structures were partially obscured beneath an ignimbrite cap rock and that “To the northwest, beyond the limits of the current Arzu North pit, is an area 600m x 200m which largely obscured by the same cap rock. Evidence suggests that the vein system, though buried, remains well-developed in this area and requires drill testing. A similar situation also occurs on the eastern end of the Derya vein. The current two-rig diamond drilling programme is well underway and is now being refined to test additional areas along strike of the Arzu North vein system in particular and in the Arzu Central area near the Derya vein”.
Conclusion: The identification of additional mineralisation beneath cover at Arzu North is being followed up with amendments to the current drilling programme and we await further news with interest.
Empire Metals* (LON:EEE) 3.9p, Mkt cap £12m – Drill results confirm presence of parallel veins at Eclipse
(Empire has acquired 75% of the Eclipse project)
Empire Metals report the completion of 4,589m of drilling at the Eclipse gold project north of Kalgoorlie in Western Australia.
Results confirm the presence of a number of parallel veins in addition to the main Eclipse vein and alongside a stockwork style of mineralisation .
The results show:.
24m @ 1.44 g/t Au from 46m downhole
including 2m @ 2.86 g/t Au; and 3m @ 5.08 g/t Au
8m @ 2.83 g/t Au from 118m
3m @ 2.61 g/t Au from 134m
8m @ 2.32 g/t Au from 70m
6m @ 5.52 g/t Au from 33m
5m @ 4.77 g/t Au from 49m
Conclusion: Confidence in the potential for the Eclipse gold project continues to grow as the results come in. We now see this as a potentially mineable gold prospect.
*SP Angel act as Nomad and Broker for Empire Metals
Oriole Resources (LON:ORR) – 1.5p, Mkt cap £22.0m – Remote sensing identifies 12 priority gold targets in central Cameroon
Oriole Resources reports that an independent remote sensing study over its recently acquired 3,592km2 licence area in central Cameroon has identified an initial 12 gold targets for priority follow-up.
A regional geological structure known as the Tchollire Banyo shear-zone “been interpreted to cross at least six of the licences. It is believed to be one of the significant structural controls for gold and other mineralisation in the region”.
Follow up work and a licence-wide programme of stream sediment sampling and geological mapping during 2021 is expected to “identify many more areas of interest for detailed follow up in later exploration phases”.
The company says that “We have already had encouraging indications from our team's initial reconnaissance visit on the licences just last week, with evidence of alluvial gold in streams being identified.”
Ormonde Mining* (LON:ORM) 1.9p, Mkt Cap £11.3m – New ROC deal structure required to attract support of Ormonde’s main shareholder
Ormonde Mining reports that, having been unable to obtain the support of its major shareholder for the authority to issue shares as part of its proposed transaction to acquire up to 80% of two exploitation licenses at Moubiri and Mindouli in the Republic of Congo (ROC), today’s AGM is to be dissolved.
Today’s EGM, which will consider the migration of electronic settlement from CREST to Euroclear, will proceed.
A previous announcement indicated that Ormonde might pay up to US$800,000 in shares on future milestones thereby helping to conserve more cash for exploration and project development. Today’s announcement reaffirms that “While the transaction could be completed as an all-cash transaction without any shareholder approvals, the Company believes the optimal formula is a milestone-based mix of cash and Ormonde shares as consideration for the acquisition, as do the counterparties”.
The company says that it “has been considering alternative structuring options for the ROC Transaction” but it cautions that “Were any such option to continue to include Ormonde share based consideration, shareholder approval would be required as part of a General Meeting”.
The projects are relatively under-explored high-grade copper and polymetallic development and explorational projects which are described as “a transformational deal for all shareholders” including a high-grade copper/zin/lead deposit which could deliver direct shipping ore as well as a high-grade copper silver deposit “with significant high-grade resource potential” and “several other recognised historical mine sites or exploration prospect areas providing an exciting project pipeline across this underexplored land package”.
Conclusion: Ormonde Mining’s management continue to proclaim the merits of the proposed deal in the Republic of Congo but it appears that the structure of the deal will need to be adjusted to reduce or eliminate the issuing of shares in order to attract the support of the company’s principal shareholder. We await further news with interest
*SP Angel acts as Broker to Ormonde Mining
Tirupati Graphite (LON:TGR) 82p Mkt Cap £59.1m – Stage II drilling commences at Madagascan operations
Tirupatt Graphite reports that its Stage II drilling and exploration programme has begun across its primary flake graphite projects in Madagascar. The programme will include c.10,000m of auger drilling, pitting and c.1,000m of trenching alongside diamond core drilling of c.5,000m in each project over a 6-month period, in order to update and upgrade the company’s current Mineral Resource Statement.
SRK have been appointed to oversee the programme, designing a comprehensive xploration programme aiming to upgrade the geological confidence in the areas previously reported as Exploration Targets.
The programme will enhance the global resource base by increasing geological confidence in areas currently categorised as Indicated and Inferred Mineral Resources and establishing additional Mineral Resources in areas previously identified by SRK as Exploration Targets and open extensions.
The Company's Stage I exploration and drilling programme represented around 25-30% of the mineralised zone across the two projects and allowed SRK to produce a geological model leading to the Mineral Resource statements in accordance with the JORC Code as follows:
Vatomina – Indicated: 3.2mt @ 4.3 TGC2%, Inferred: 15.2mt @ 4.7 TGC2%.
Sahamamy – Indicated: 1.4mt @ 4.1 TGC%, Inferred: 5.7mt @ 4.2 TGC2%.
SRK’s identified various exploration targets as defined by JORC in Vatomina and Sahamamy, are presented below:
Vatomina - Exploration Target estimated to be 8Mt-10Mt with an average grade of 3-4%GC.
Sahamamy - Exploration Target estimated to be 5Mt-7Mt with an average grade of 4-5% GC.
Shishir Poddar, CEO of Tirupati Graphite, said, "In line with our rigorous step by step strategy, we continue to multitask work programmes and progress the development timelines of our primary flake graphite projects in Madagascar in a cost effective and time efficient manner across our portfolio. Through engaging SRK to oversee the implementation of our Stage II Programme, as well as aid us in carrying out a Resource Definition Exploration Programme, we have committed to enhancing our Mineral Resource base at Vatomina and Sahamamy, which will further underpin our ambitious development plans for our primary operations in Madagascar.
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
Prince Frederick House
35-39 Maddox Street London
W1S 2PP
*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