SP Angel . Morning View . Wednesday 09 06 21
Copper, nickel and tin lead metals prices despite rising inflation in China
MiFID II exempt information – see disclaimer below - FCA looks to scrap MiFID research rules on small-caps in UK competitiveness drive (Investment Week)
We are raising funds for a private Graphene producer – EIS scheme approval applied for
The company is selling a number of graphene products to industrial and retail customers.
- Sales of certain products have sold out unexpectedly quickly.
- The company wishes to fund a ramp up in production to get ahead of demand and to develop markets for a number of new, graphene products
- The business is also able to upgrade graphite to a higher grade/specifications using its process – rolling out this process also requires funding
- The company has also applied for EIS scheme approval from HMRC
- Please let me know if you wish to invest in the company
*SP Angel’s role is limited to making introductions and interested parties should be aware that investment in a private company can present certain risks not present in listed companies (e.g. limited or no liquidity and no rules compelling disclosure of information to investors). This offer is open to professional investors only and is not offered to retail investors.
Beowulf Mining* (AIM:BEM) – Response to irrelevant leaked letter from UNESCO
Cornish Metals* (AIM:CUSN) – South Crofty updates mineral resources with increased tonnage at depth
KEFI Gold and Copper* (LON:KEFI) – Changes to the Executive Bonus Plan
Keras Resources* (AIM:KRS) – Keras commissioning new plant for high-grade organic phosphate at Diamond Creek, Utah
Metal Tiger (AIM:MTR) – Mining contract at Motteo and additional investment in Pan Global Resources
China – Factory gate prices climbed at the fastest pace since the financial crisis while final goods prices inflation is being contained.
- Input costs have rallied this year on strong property investment in China and record stimulus by governments around the world, combined with supply constraints caused by the pandemic, Bloomberg reports.
- So far, manufacturers are seen absorbing higher costs rather than passing them on to consumers.
- PPI (%yoy): 9.0 v 6.8 in April and 8.5 est.
- CPI (%yoy): 1.3 v 0.9 in April and 1.6 est.
- Chinese authorities reported to be looking at land development
- Private Chinese real estate companies have sold >$20bn of dollar bonds this year according to Refinitiv up 16% on last year.
- The bond sales continue despite defaults and official moves to calm the property market and reduce debt levels at developers..
- Banks have been instructed to cap their lending and to reduce debt at weaker players using a ’three red lines’ criteria for judging companies.
- The ‘three red lines’ regulations are designed to hold back strong growth in the property market while enabling firms to reduce debt levels.
Tesla China-made sales surge 29% in May compared to month prior
- Tesla sold 33,463 China made EVs in May, according to the China Passenger Car Association.
- China’s NEV sales surged 177% in May to 185,000 cars from a year earlier.
Port Hedland iron ore exports hit 11-month high in May
- Iron ore exports from Australia’s Port Hedland totalled 48mt in May, the highest level in 11 months and a record for the month of May.
- Of last month’s flows, 40.2mt were shipped to China, according to the Pilbara Ports Authority.
Peru – Socialist candidate Castillo hangs on to narrow lead with almost 98% of votes counted
- Castillo currently holds a slim lead of 50.3% ahead of right wing rival Keiko Fujimori on 49.7%, with almost 98% of votes counted.
- The lead amounts to approximately 88,000 votes.
- On Monday, Fujimori made unsubstantiated accusations of fraud, while electoral experts told Reuters that no fraud has been observed.
- Castillo took aim at mining companies in the early days of his campaign, with companies fearing expropriation of assets.
- Based on recent comments from his team, Castillo seems unlikely to try to do this, instead looking towards a tax overhaul of the sector which focuses on profits and royalties based on sales, while vowing to renegotiate tax stability contracts with large companies.
- A Castillo victory may well dissuade much further significant investment into mining in Peru
- Mining is worth at least 11% of GDP and 15% of total fiscal revenues in Peru.
Economics
Global new infections and deaths dropped for a sixth and fifth consecutive week, respectively, the WHO numbers show.
- Weekly data suggested there were 3m new cases and more than 73k deaths marking a 15% and 8% drop on the previous week.
- The highest numbers of new cases were reported from India (915k), Brazil (450k), Argentina (213k), Columbia (175k) and the US (99k).
G7 Summit in Cornwall this weekend but will their ideas and proposals gain traction with the G20
- Guest countries make it a sort of G11 with the inclusion of Australia, India, South Africa and South Korea
US – Global equity indices trade near record highs while US bond yields continue to drift lower amid weaker than expected employment data.
- 10y bond yields fell to 1.51%, the lowest level in a month, and down a quarter of a percentage point from a 14-month peak of 1.78% hit in March.
- Market commentators suggest more evidence of strong job growth would be require for the Fed to start tapering.
- US trade deficit fell to US$68.9bn in April vs $75bn from a record deficit in March
- The US trade deficit totalled $281.7b in the first four months of the year 50.4% yoy.
- Biden Administration sets up ‘supply chain trade strike force’ to combat Chinese unfair trade practices.
- The strike force is looking for specific violations contributing to the hollowing out of supply chains which may be addressed with tariffs or other action.
- Officials are also considering initiating a Section 232 investigation into the national security impact of neodymium magnet imports used in motors which mainly come from China.
- US government put together working groups to advise on the best way to lift travel ban with the UK, EU, Mexico and Canada.
- The travel rules are some of the last remaining Covid-19 related restrictions in the US with a rapid vaccination drive seeing reducing case numbers to ~15,000 per day, a level not seen since March last year.
- FBI – well done to the FBI for distributing some 12,000 hacked devices to criminal gangs
- The arrest of 800 people in >100 countries is a major coup against drugs and other crime.
- The operation is reported to have prevented the killing of 10 people in Sweden suggesting those Swedish crime dramas may be more real than we realise.
Japan – Q1 GDP fell 1% qoq vs 2.8% in Q4 and -0.1% in Q1 yoy vs -0.2% in Q4 yoy
- Eco Watchers Outlook survey rose to 47.6 in May vs 41.7 in April
EU - ZEW economic sentiment index pulled back to 81.3 in May vs 84.0in April
Germany – Trade data showed exports growth rate slowed more than expected in April highlighting logistical bottlenecks in securing components that weigh on manufacturing.
- Exports (%mom): 0.3 v 1.3 (revised from 1.2) in March and 0.5 est.
- Imports (%mom): -1.7 v 7.1 (revised from 6.5) in March and -1.1 est.
- ZEW sentiment fell to 79.8 in May vs 84.4in April
- Industrial production fell 1% in April vs 2.2% in March as chip shortages and logistics held back production lines
Greece – The parliament approves the Covid-19 digital certificate on Tuesday.
- The certificate is obtained if the applicant finished their vaccination schedule, or if he had the virus and recovered or if he has recently had a negative molecular or rapid antigen test.
Currencies
US$1.2179/eur vs 1.2169/eur yesterday. Yen 109.43/$ vs 109.47/$. SAr 13.575/$ vs 13.567/$. $1.418/gbp vs $1.414/gbp. 0.775/aud vs 0.774/aud. CNY 6.394/$ vs 6.394/$.
Commodity News
Precious metals:
Gold US$1,892/oz vs US$1,896/oz yesterday
Gold ETFs 100.9moz vs US$100.8moz yesterday
Platinum US$1,161/oz vs US$1,168/oz yesterday
Palladium US$2,803/oz vs US$2,826/oz yesterday
Silver US$27.59/oz vs US$27.72/oz yesterday
Base metals:
Copper US$ 9,974/t vs US$9,926/t yesterday
Aluminium US$ 2,452/t vs US$2,425/t yesterday
Nickel US$ 18,145/t vs US$17,845/t yesterday
Zinc US$ 3,029/t vs US$3,007/t yesterday
Lead US$ 2,196/t vs US$2,149/t yesterday
Tin US$ 31,110/t vs US$30,680/t yesterday
Energy:
Oil US$72.6/bbl vs US$70.9/bbl yesterday
Natural Gas US$3.119/mmbtu vs US$3.114/mmbtu yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$200.5/t vs US$192.6/t
Chinese steel rebar 25mm US$798.4/t vs US$798.3/t
Thermal coal (1st year forward cif ARA) US$81.0/t vs US$81.2/t
Coking coal swap Australia FOB US$148.0/t vs US$151.0/t
Other:
Cobalt LME 3m US$42,535/t vs US$43,535/t
NdPr Rare Earth Oxide (China) US$73,595/t vs US$73,904/t
Lithium carbonate 99% (China) US$12,670/t vs US$12,669/t
China Spodumene Li2O 5%min CIF US$640/t vs US$640/t
Ferro-Manganese European Mn78% min US$1,809/t vs US$1,795/t
China Tungsten APT 88.5% FOB US$270/t vs US$270/t
China Graphite Flake -194 FOB US$515/t vs US$515/t
Europe Vanadium Pentoxide 98% $8.3/lb vs US$8.3/lb
Europe Ferro-Vanadium 80% $39.75/kg vs US$39.75/kg
Battery News
Northvolt raises $2.75bn to expand battery factory
The Swedish lithium-ion battery manufacturer has raised $2.75bn to expand the capacity at their gigafactory from 40GWh to 60GWh to meet the increasing demand for EV batteries.
“Northvolt has now raised more than $6.5b in equity to enable the expansion plan leading up to and beyond 150GWh of deployed annual production capacity in Europe by 2030”, Northvolt said in a statement.
Northvolt has also secured more than $27bn worth of contracts, to date, from key customers including BMW, Fluence, Scania and Volkswagen.
Production at the gigafactory is expected to commence later this year.
Company News
Beowulf Mining* (AIM:BEM) 3.8p, Mkt cap £33m – Response to irrelevant leaked letter from UNESCO
- Beowulf Mining have responded to a leaked letter form UNESCO which comments on the company's application for an Exploitation Concession for the Kallak Iron Ore Project in Sweden.
- UNESCO has suggested that the Swedish Government seek a 'revised and extended In-Depth Assessment which provides a more secure basis for assessing the impact of the proposed development on the World Heritage Property…prior to any decision being taken to approve the mining exploitation'.
- The company see the comments as UNESCO operating outside of its remit, given that Beowulf’s Kallak project is ‘not’ in Lapponia nor is it in a buffer zone around the Heritage site.
- The closest point from the planned mine to Lapponia is 33.8km, while the planned mine at Kallak will cover an area of 13.6km2 – significantly less than the 80km2 IUCN stated in 2016, when it recommended a revised Environmental Impact Assessment needed preparing.
- Laponia covers 9,400km2, meaning the planned mine is 0.14% in comparison to the area covered by Laponia.
- Northern Sweden has a track record of mining and reindeer herding operating successfully, and Beowulf has considered the proposed mine's potential impacts on reindeer herding activities.
- Beowulf notes that Reindeer migrate over a huge area and their presence on and around the Kallak area is days in the year and not permanent. The company has also committed to work more closely with reindeer herders in order to plan together mutual activities.
- UNESCO’s comments regarding Kallak were released last week highlighting a lack of regard to the impact on Beowulf’s share price by UNESCO.
- Regarding Kallak’s benefits to the local area, CEO Kurt Budge commented: "Jokkmokks Kommun is one of the poorest municipalities in Sweden. It has been forced to cut its budget by SEK 28 million over the last two years, impacting public services and infrastructure which it can no longer afford to provide for the benefit of the community.”
- The Kallak project should bring substantial investment into the Jokkmokk area creating 250 direct jobs and 300 indirect jobs in the town >SEK 1 billion in tax revenues over its 25-year mine life.
- Mr Budge also commented: "Importantly, UNESCO does not conclude that Kallak cannot be mined. It is an easy recommendation to suggest the Company could provide more information, but the checks and balances already exist in Sweden's laws and permitting processes, granted they need to function effectively, for everything that needs to be done, to get done.”
- Sweden has recently made pledges to build large-scale fossil-free steelmaking facilities in northern Sweden. The push towards green manufacturing in Sweden by the government is at odds with the lack of decision towards Kallak, given the exceptionally high-grade ore produced from testwork, with high-grade magnetite concentrate at 71.5% Fe with minimal detrimental components.
- Having a domestic, untapped, market-leading resource of iron ore which can be constructed to operate under a stringent environmental remit would ensure that the carbon footprint of Swedish-made steel is kept to a minimum.
- At the moment, Sweden’s commitments to fossil-fuel steel seem somewhat superficial, given the huge environmental costs associated with shipping iron ore to Northern Europe from mining hubs such as Australia, when the material is available within ~100km of the proposed site.
- LKAB which runs the giant Kiruna iron ore mine in the far north of Sweden has suffered a significant seismic event last year which caused underground rock falls closing the mine. Given the reducing resource at Kiruna we would expect the Swedish government to be more interested in helping the development of the next high-grade iron ore mine in the country.
*SP Angel acts as nomad and broker to Beowulf Mining
Cornish Metals* (AIM:CUSN) – 14.75p, Mkt cap £40m – South Crofty updates mineral resources with increased tonnage at depth
- Cornish Metals has reported a revised mineral resources estimate for its South Crofty mine following its 2020 surface drilling campaign which intersected tin mineralisation beneath the former workings.
- The estimate, which has been prepared in compliance with the JORC (2012) Code and reviewed by AMC Consultants, covers both the Upper Mine where mineralisation is hosted in metamorphosed sediments and the Lower Mine, granite-hosted, mineralisation.
- As a result of the drilling, the resources within the Lower Mine area have been increased substantially from those reported in the 2016 estimate to an indicated 2.08mt at an average grade of 1.59% tin with a further 1.94mt classed as inferred at an average grade of 1.67% tin. The resource is contained within a total of nine individually identified lode structures.
- The previous estimate reported 1.66mt of indicated resources at an average grade of 1.81% tin with an additional 0.74m inferred tonnes at an average grade of 1.91% tin in the Lower Mine area.
- As a result, the new estimate highlights a 10.2% increase in the contained tin within the Lower Mine’s indicated resource and a 129.8% increase in inferred resources..
- Within the Upper Mine, indicated resources of 277,000t at an average grade of 0.67% tin, 0.78% copper and 0.57% zinc (1.01% tin equivalent) are supplemented by inferred resources of 493,000t at an average grade of 0.64% tin, 0.63% copper and 0.63% zinc (0.93% tin equivalent) contained within nine lodes.
- The previous estimate for the Upper Mine area reported 464,000 indicated tonnes at average grade of 0.67% tin, 0.62% copper and 0.63% zinc with a further 721,000 inferred tonnes at 0.68% tin, 0.68% copper and 0.61% zinc.
- The latest estimates are reported at a cut-off grade of 0.6% tin equivalent calculated using a tin price of US$24,000/t, US$9,000/t for copper and US$2,800/t for zinc.
- CEO, Richard Williams welcomed the outcome of the new resources estimates which he said show “a material increase in both tonnage and contained tin in the ground at South Crofty. Following on from our successful surface drilling campaign in 2020, where we intersected high-grade tin mineralisation below the historical workings, this new Mineral Resource Estimate confirms our belief in the resource expansion potential at South Crofty”.
- Cornish Metals is currently drilling to confirm the discovery of high-grade copper and tin at United Downs close to South Crofty. We are hopeful that a new resource at United Downs may prove to be economic and easily accessible from a decline at the Wheal Maid mine which we believe to run close to the original discovery drill hole at United Downs.
Conclusion: The increased resources within the Lower Mine area at South Crofty demonstrates the continuation of tin mineralisation at depth beneath the historic working area and the potential for further resource growth.
* SP Angel acts as broker and financial advisor to Cornish Metals.
KEFI Gold and Copper* (LON:KEFI) 1.9p, Mkt Cap £42m – Changes to the Executive Bonus Plan
- The Company amends cash bonuses proposed for the Executive Chairman Harry Anagnostaras-Adams aligning it more with shareholders.
- Following received feedback from certain shareholders the package has been amended with changes highlighted below:
- Tranche 1 ($0.5m): Arranging a long term project finance facility for the Tulu Kapi Project and, not later than 31 December 2021, receipt by the Company of at least the first US$20 million of project funding. Additionally, Tranche 1 will only be paid when the closing mid-price of the Company's shares is above 3.0p for five consecutive trading days.
- Tranche 2 ($0.5m): Completion of the Project within the Project budget approved by the senior lenders. Additionally, Tranche 2 will only be paid when the closing mid-price of the Company's shares is above 4.0p for five consecutive trading days.
- Tranche 3 ($0.5m): Upon the sale and physical delivery of 35,000 ounces of gold equivalent. Additionally, Tranche 3 will only be paid when the closing mid-price of the Company's shares is above 5.0p for five consecutive trading days.
*SP Angel act as Nomad and Broker to KEFI Gold and Copper
Keras Resources* (AIM:KRS) 0.12p, Mkt cap £7.5m – Keras commissioning new plant for high-grade organic phosphate at Diamond Creek, Utah
- (Keras also hold an 85% interest in Societé General des Mines which holds the Nayéga manganese project license in Togo. Keras also holds 51% of Falcon Isle Holdings which holds 100% of the Diamond Creek phosphate mine which is operating in Utah, USA)
- Keras Resources is now commissioning the high-grade organic phosphate at Diamond Creek, Utah, USA
- Steady-state capacity is expected by end-June to supply into a range of premium organic phosphate products for sale directly into the growing North American organic fertiliser market.
- The new plant removes the need for external toll treatment and should enhance margins.
- The Mosaic share price which has more than doubled over the past year gives an indication of the strength of the fertilizer market in North America
- Rock phosphate prices have risen to around $88/t from $70/t a year ago though this is still far off the peak of $450/t .
- The US produces around 28mt pa of rock phosphate market at grades of around 28.5-29.0%.
- Diamond Creek is the highest grade organic phosphate mine in the US containing a 28% Phosphorus pentoxide ‘P205' premium product with minimum 14% available phosphorous.
- The mine’s first batch of organic phosphate fertilizer product for around $260/t last year with sales expected to rise to 48,000tpa in 2024.
- US diammonium phosphate (DAP) rose 58% last year to $388.50 from $245/t with prices averaging US$273 in the second half.
- Costs at the mine are estimated to fall to around $92/t from an initial $229/t.
- Operating profits should therefore rise to around $8mpa with $4m of this attributable to Keras through its 51% stake assuming an average sales price of $260/t.
- If organic rock phosphate prices follow DAP pricing then margins could be significantly higher going forward
- Keras continue to wait on a mining license for the Nayéga manganese mine in Togo, West Africa. The mine is ready to start production once the license is received.
- Manganese ore prices from Gabon are running at around Rmb37-38/t (US$5.9/t) having risen about 4% over the past six months.
*SP Angel act as Nomad and Broker to Keras Resources
Metal Tiger (AIM:MTR) 30p, Mkt Cap £47m – Mining contract at Motteo and additional investment in Pan Global Resources
- Metal Tiger draws attention to the release by Sandfire Resources to the ASX of the award of an US$496m open pit mining contract for the Motteo copper mine in Botswana which is developing the deposit formerly known as T3.
- Metal Tiger hold approximately 3.5% of Sandfire Resources as well as a US$2m capped 2% NSR, over Sandfire’s T3-Motheo deposit in the Kalahari Copper Belt of Botswana
- “The award is subject to the grant of the Mining Licence and subsequent execution of the final contract”.
- In a separate announcement today, Metal Tiger ahs also announced a C$450,000 investment in TSXV-listed Pan Global Resources which is exploring “the Escacena Project located within the highly prospective Iberian Pyrite Belt” in Southern Spain.
- Metal Tiger subscribed for 750,000 shares in Pan Global Resources at a price of C$0.6/share takings its interest to approximately 1.18m shares.
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The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
Analysts
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Sales
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Sources of commodity prices
Gold, Platinum, Palladium, Silver - BGNL (Bloomberg Generic Composite rate, London)
Gold ETFs, Steel - Bloomberg
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt - LME
Oil Brent - ICE
Natural Gas, Uranium, Iron Ore - NYMEX
Thermal Coal - Bloomberg OTC Composite
Coking Coal - SSY
RRE - Steelhome
Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite - Asian Metal
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