SP Angel . Morning View . Monday 12 04 21
Equities ease off record highs ahead of earnings reports
AfriTin* (LON:ATM) – By-product potential at the Uis tin mine
Alba Mineral Resources (LON:ALBA) – Phase 2 drilling underway at the Clogau St David’s mine
ITM Power (LON:ITM) - First Green Hydrogen for Glasgow Project planned capacity doubled to 20MW
India gold sales jump to 98.6t in March from 7t yoy
Imports into India hit 190t in Q1 driven by strong demand for the jewellery season
The implementation of new Covid-19 restrictions in certain states may have brought gold sales and potentially some weddings forwards families rush to beat new lockdown controls
India is suffering a dramatic and very terrible wave of Coronavirus infections with field hospitals full in many areas and more younger people hospitalised than expected
COVID-19 – Senior Chinese Health official admits level of protection from Chinese vaccines are not high
Over the weekend, the Chinese Centre for Disease Control and Prevention acknowledged concerns over the effectiveness of local vaccines arguing mixing jabs and varying doses may boost efficacy.
Sinovac Biotech Ltd.’s vaccine appears to show efficacy of just over 50% in Brazil, though another test in Turkey reports efficacy of 83.5%.
A change in inoculation strategy will involve mot than 20 countries that China supplied its vaccines to with 40m of deliveries completed in countries including Brazil, Serbia and the UAE.
China has not published phase 3 trials data on its coronavirus vaccines in the past, FT reports.
Pfizer vaccine may not give much protection against South African variant of COVID-19
An Israeli report says that out of 400 people who had tested positive for COVID-19 14 or more days after receiving one or two doses of the Pfizer vaccine that the prevalence rate for the South African variant was 8 times higher than higher than for those who were unvaccinated. Eg 5.4% vs 0.7%.
The report marks a worrying turn in the ability of certain variants to evade protection by key vaccines
Recent Interviews:
IGTV: Improved global economic forecasts from the IMF provides trading opportunities: https://www.youtube.com/watch?v=_GXKPqzuCG0
VW expansion driving battery metals prices: https://youtu.be/7vqSrONBaWw
VOX Markets: 24/03/20: https://audioboom.com/posts/7829467-john-meyer-on-arc-minerals-cornish-metals-rainbow-rare-earths-altus-stategies
12/03/20: https://www.ig.com/uk/market-insight-articles/volkswagen_s-electric-vehicle-expansion-plans-drive-a-record-hig-210317
*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.
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 +0.89% at 33,801
Nikkei 225 -0.77% at 29,539
HK Hang Seng -0.99% at 28,414
Shanghai Composite -1.09% at 3,413
Economics
US – Fed Chairman sounded upbeat on the US economic growth outlook during an interview on CBS’s “60 Minutes” on Sunday.
“We feel like we’re at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly.”
Jerome Powell has also downplayed prospects of an increase in rates pledging to support the economy for as long as needed and bring unemployment down as well as highlighting the importance of increasing the labour force participation rate.
US – proposal for 21% global corporate tax rate
US Government seeking to negotiate an international tax treaty at the OECD including a tax based on profits generated within each country’s borders
The proposal sounds like it is seeking to head of individual revenue taxes imposed unilaterally by countries on the dot.com giants
The US Adiminstration has sent details of its proposal to 135 countries for agreement at the OECD
The treaty would also remove tax breaks from tax havens and profit-shifting
The new treaty could raise a further $300bn in taxes with the UK estimates to receive a further $ bn
US PPI rose 1% in March vs 0.5% in February
PPI rose 4.2% yoy in March vs 2.8% yoy in February
US national security and economic advisers will be meeting with semiconductor and auto companies to discuss global shortage of microprocessors (Bloomberg)
IMF expect China will make up 20% of global GDP growth over the next five years.
China – Credit growth accelerated in March as economic activity picked up after the Lunar New Year holiday.
Aggregate financing came in at CNY 3.34tn compared to CNY 1.7tn in February and CNY 5.2tn last year.
March 2020 data is being distorted by high base effect as the government ramped up credit support amid heights of the pandemic.
China will strengthen controls on the raw materials to help manufacturers limit costs amid rising inflationary pressure, China National Radio reported citing Premier Li Keqianq.
PPI data released last week showed producers price inflation gauge climbed to 4.4%yoy in March v 1.7% in February and 3.6%yoy forecast.
CPI fell 0.5% in March vs 0.6% in February
CPI rose 0.4% yoy in March vs -0.2% yoy in February
Q1 Auto sales rose 75.6% in March vs -42.4% in February last year when many dealerships were closed due to Coronavirus restrictions
EV sales rose 279% yoy due to the impact of ongoing strong EV sales and the collapse of auto sales a year ago
Chinese regulators fined Alibaba a record CNY 18.2bn ($2.8bn) arguing the Company had abused its market dominance.
Authorities concluded that the Company used its “market position, platform rules and data, and algorithmic methods” to force merchants to sell exclusively on its Tmall and Taobao online shopping platforms.
Germany – The government is planning to impose a countrywide curfew rules for the first time with rules to apply automatically if infections rise above a certain threshold for three consecutive days.
So far, each of Germany’s 16 states are reported to have imposed their own lockdown restrictions and some areas have loosed them even as the number of infections increased, FT writes.
Meanwhile, the nation ramps up its vaccination programme with a record 0.7m people vaccinated on a day last Thursday and the number of people with at least one shot reported at ~13m as of last weekend.
German industrial production fell 1.6% in March vs -2%
France – The government will increase the gap between the two doses of the mRNA jabs to speed up basic protection, making the Oxford/AstraZeneca vaccine available to anyone over 55 and rolling out the first supplies of the new J&J product this week, according to FT.
Industrial output -4.7% (3.2%).
UK – Business outlook climbed to an all-time high with strong expectations for hiring and investment, CFO survey at UK firms carried by Deloitte showed.
Respondents anticipated a strong recovery in profits over the next year.
Positive outlook is driven by mass vaccination programme and hopes for disruptions from the UK leaving the EU to be shortlived.
Businesses held back on hiring and investment in the previous year amid the pandemic and Brexit risks.
“Pent-up business and consumer demand are set to power a strong profits recovery, one already anticipated by the surge in equity markets since February,” Deloitte wrote.
The UK is lifting some of restrictions today including allowing pub gardens, shops, hairdressers, restaurants and gyms to reopen.
Brazil – Local researchers published phase 3 trials data for the Chinese-made CoronaVac vaccine showing an overall efficacy rate of just above 50%.
Australia – The government drops its plans to vaccinate nearly all of its 25m people by the end of the year amid slow rollout of the programme.
The nation has administered just ~1.2m doses so far.
Ecuador - Presidential Election sees victory for pro-mining banker, Lasso in run-off for presidency
The victory of a pro-mining former banker, Guillermo Lasso in the run-off for Ecuador’s presidency is likely to be welcome news to mining companies operating in the country and to their investors. Mr. Lasso , who will assume the Presidency on 24th May defeated his opponent, Andres Arauz by a margin of 52.5% to 47.5% with Mr. Arauz conceding defeat overnight. Mr. Lasso is seen as keen to attract overseas investment, including from the mining industry which he has pointed out contributed 46% of direct foreign investment between 2017-20, to Ecuador as well as to stimulate the local growth of small businesses through tax incentives.
Peru – Castillo to face Fujimori in run-off for presidential election
As voting stations closed last Sunday, Pedro Castillo, a union leader who was sixth on the polls just a week ago was leading the race with 18.6%.
Castillo secured 18.6% of the vote vs Fujimori at 14.5% according to a poll of 69% of the vote
Keiko Fujimori’s father was previously president and was jailed for corruption and human rights abuses following a corruption scandal.
Keiko Fujimori has previously been accused of receiving a $1.2m payment from a Brazilian construction company
Myanmar – soldiers using rifle grenades kill >80 protesters in Myanmar
The move marks a major escalation in the security crackdown.
It is difficult to know what is motivating the generals to take such a hard line against their own people other than their own extensive business interests.
Myanmar was a significant and growing source of tin and tungsten concentrates, often smuggled into and processed in China.
Trafigura sets up carbon trading team in Geneva, Houston and Singapore to run alongside its oil trading
The carbon trading market is expected to grow 15 fold by 2030 (Reuters).
CME has launched a voluntary carbon futures contract in March
Currencies
US$1.1884/eur vs 1.1895/eur last week. Yen 109.53/$ vs 109.47/$. SAr 14.650/$ vs 14.575/$. $1.372/gbp vs $1.370/gbp. 0.762/aud vs 0.760/aud. CNY 6.552/$ vs 6.559/$.
Commodity News
Precious metals:
Gold US$1,742/oz vs US$1,747/oz last week
Gold ETFs 99.4moz vs US$99.4moz last week
Platinum US$1,197/oz vs US$1,218/oz last week
Palladium US$2,632/oz vs US$2,636/oz last week
Silver US$25.16/oz vs US$25.23/oz last week
Base metals:
Copper US$ 8,820/t vs US$8,944/t last week
Aluminium US$ 2,254/t vs US$2,273/t last week
Nickel US$ 16,210/t vs US$16,625/t last week
Zinc US$ 2,787/t vs US$2,828/t last week
Lead US$ 1,964/t vs US$1,981/t last week
Tin US$ 25,500/t vs US$25,685/t last week
Energy:
Oil US$62.6/bbl vs US$63.0/bbl last week
Oil prices have ticked up slightly in early trading today on reports that the largest oilfield in Libya, the 300,000bopd Sharara field, could see crude oil exports from it disrupted if members of the Petroleum Facilities Guard (PFG) follow through with their threat to shut down exports if their demands for pay are not met.
Last week, the PFG issued an ultimatum demanding they be paid field allowance compensation
The Sharara oilfield was pumping crude oil near its capacity, at a rate of 280,000bopd as of the middle of March, according to internal memos of the Akakus Oil joint venture operating the oilfield
The threats of guards disrupting exports over unpaid wages or other allowances are nothing new in Libya’s oil industry, which has been suffering for ten years now from fighting since Muammar Gaddafi was toppled in 2011
In February this year, a tanker had to leave Libya’s Hariga export terminal without oil after members of the Petroleum Facilities Guard stopped the vessel from loading crude amid a strike over delayed salary payments
In March, a new cabinet was sworn in, the first unity government of the war-torn country since 2014, reviving hopes that Libya could see more stability in oil production going forward
Libya, exempted from the OPEC+ cuts, surprised many oil market observers, and probably the OPEC+ group itself, after managing in just a few months to restore its oil production back to 1.5MMbopd from less than 100,000bopd in September 2020, when an eight-month-long blockade on its oil ports ended
Libya may be able to maintain its current level of oil production of around 1.2MMbopd until the end of this year as the oil sector is finally receiving enough funding for field maintenance and development, In March, Mohamed Oun was sworn in as the first oil minister of the country since 2014
Natural Gas US$2.562/mmbtu vs US$2.510/mmbtu last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$164.9/t vs US$165.9/t
Chinese steel rebar 25mm US$772.9/t vs US$778.8/t
Thermal coal (1st year forward cif ARA) US$70.8/t vs US$71.0/t
Coking coal swap Australia FOB US$149.0/t vs US$148.5/t
Other:
Cobalt LME 3m US$49,750/t vs US$49,750/t
NdPr Rare Earth Oxide (China) US$87,679/t vs US$87,595/t
Lithium carbonate 99% (China) US$12,667/t vs US$12,655/t
China Spodumene Li2O 5%min CIF US$605/t vs US$600/t
Ferro-Manganese European Mn78% min US$1,575/t vs US$1,577/t
China Tungsten APT 88.5% FOB US$267/t vs US$267/t
China Graphite Flake -194 FOB US$515/t vs US$515/t
Company News
AfriTin* (LON:ATM) – 6.6p, Mkt cap £55.1m – By-product potential at the Uis tin mine
AfriTin has provided a progress report on its metallurgical test-work assessing the potential to recover lithium oxide and tantalum by-products from its Uis tin mine in Namibia.
In addition to the primary tin mineralisation, in today’s announcement CEO, Anthony Viljoen, says that Uis contains an inferred mineral resource of 71.5mt at an average grade of 71.54ppm tantalum and 71.5% Li2O and that “Successful implementation of by-product streams may significantly increase our profit margin and allow us to realise the goal of positioning the company in the lowest quartile of the world tin producer cost curve”.
Tantaum is currently recovered within the tin concentrate generating no additional revenue for Afritin. The work currently underway is assessing the possibility of recovering a separate tantalum concentrate and is said to be “at an advanced stage” and that the “test work … [is] … focused on roasting and leaching the Company's concentrate to suppress the magnetic response of cassiterite and this process has delivered encouraging results. Further investigation and process flow development aims to optimise a combination of leaching and roasting techniques to improve the efficiency of magnetic separation”.
Test-work is also investigating the recovery of the lithium-bearing mineral, petalite, using dense media separation and magnetic separation processes currently in operation at Uis to recover a saleable product.
Conclusion: Uis Stage 1 achieved nameplate capacity in November and the company is now looking at boosting revenue opportunities through the recovery of by-product tantalum and lithium.
*SP Angel act for Bushveld Minerals which holds around 9.5% of AfriTin
Alba Mineral Resources (LON:ALBA) 0.32p, Mkt cap £19.9m – Phase 2 drilling underway at the Clogau St David’s mine
Alba Minerals reports that a second phase of its surface drilling programme, comprising around 2,000m in 9-10 holes, is now underway at the historic Clogau St David mine in north Wales.
The drilling is expected to target extensions to the Main Lode towards the west as indicated by underground drilling last year.
The company explains that the Main Lode was “the source of most of the historic gold production at the Mine” and that the underground drilling has indicated the possibility of a further 550m extension which it will now be testing.
Executive Chairman, George Frangeskides, explaining the rationale for the further exploration of the Main Lode said that “finding a continuation of the Main Lode which has never previously been exploited would constitute the most important discovery at the Mine in many decades”.
The new drilling will also “seek to intersect the projected depth extensions of certain historically worked lodes, namely Grandfathers Lode and the 7-10 Lode … thereby testing the continuation of mineralisation at depth and identifying currently undeveloped resource potential”.
Today’s announcement explains that “Once this further phase of surface drilling targeting the Main Lode extension has been completed, infill drilling will be undertaken from underground”.
Conclusion: We await results from the new phase of surface drilling and indications as to whether the expectation of a westerly extension of the Main Lode has been demonstrated.
ITM Power (LON:ITM) 479p, Mkt Cap £2.6bn - First Green Hydrogen for Glasgow Project planned capacity doubled to 20MW
ITM Power doubled its planned electrolysed capacity at First Green for Glasgow Project to 20MW that is to be located at ScottishPower Renewables’ Whitelee Wind Farm near Glasgow, the UK’s largest onshore wind farm.
Increased capacity is driven by strong market demand with a respective planning application submitted with regulators.
A decision on the planning application is expected by the end of autumn 2021 paving the way for the project to supply hydrogen to the commercial market before 2023.
The green hydrogen facility at Whitelee will feature a 20MW electrolyser with a capacity to produce 8t of green hydrogen per day, enough to fuel 550 roundtrip bus trips between Glasgow and Edinburgh.
The facility will be powered by the 40MW solar farm as well as involve a 50MW battery energy storage scheme, both are also part of the planning submission.
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
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*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
Sources of commodity prices
Gold, Platinum, Palladium, Silver
BGNL (Bloomberg Generic Composite rate, London)
Gold ETFs, Steel
Bloomberg
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt
LME
Oil Brent
ICE
Natural Gas, Uranium, Iron Ore
NYMEX
Thermal Coal
Bloomberg OTC Composite
Coking Coal
SSY
RRE
Steelhome
Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite
Asian Metal