SP Angel . Morning View . Thursday 18 11 21
Lithium spodumene prices continue to rise on strong EV battery demand
AfriTin (AfriTin Mining Ltd (AIM:ATM)) – Afritin to add tantalum concentrate circuit to Uis tin mine
Hochschild (Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF)) – Proposed listing of REE project on TSX
Lithium Americas (Lithium Americas Corp (TSX:LAC, NYSE:LAC)) - Millennial Lithium (TSX-V:ML) bought by Lithium Americas for $400mn, CATL loses out
Rambler Metals and Mining* (Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)) – Well attended investor conference call highlights strength of higher grades and new mine plan
Tertiary Minerals* (Tertiary Minerals PLC (AIM:TYM)) – Strategic update on exploration
Covid fails to stop miners getting together at the Mining conference in London yesterday and today
The event looked well packed yesterday with companies busy with investor and analyst meetings as if Covid never happened
There seemed to be a great sense of relief with the mining community getting together again – like a big meeting of long-lost friends
Strong commodity prices are driving new investment into the sector along with a particularly positive outlook for metals for batteries, EVs, wind farms, nuclear etc….
Chinese copper exports fall to 8-month low
China’s copper exports fell 4.1% in October from the month prior, hitting the lowest level since February.
Exports of unwrought copper and copper products last month were 69,285t – down from 72,257t in Sept but still up 8.1% YoY.
The world’s largest copper consumer and importer rarely exports large volumes of the metal, however the the spread between Shanghai copper prices and London Metal Exchange (LME) prices recently allowed companies to profit from shipping metal overseas
LME copper prices pulled back to $9,337/t – lowest since Oct. 11 as On-warrant LME stocks rose to 62.1kt, their highest since Oct. 11.
Net-long positions from fund managers on copper lowest since Sept. 21. (Reuters)
Alongside rising copper stocks, the dollar’s strength and increasing risk-off sentiment has hit prices of the red metal.
Demand for copper in China appears to be weakening as China’s property/manufacturing sectors slow though metals stocks remain tight due to smelter restrictions.
Smelters are suffering restricted production due to the impending Winter Olympics and power shortages.
China to guide lithium battery makers to improve product quality
China’s Ministry of Industry and Information Technology has announced plans to boost technological innovation in its lithium battery industry.
It plans to enhance product quality. (Reuters)
Chinese lithium stocks: Tibet Summit, Tianqi Lithium and Chengxin Lithium up 5-10%.
Colombia to open bidding for gold mining areas in 1Q22
Head of Colombia’s national mining agency will auction gold exploration contracts early 2022.
Areas on offer are spread over the country.
The Colombian government will look to open dialogue with local communities to help companies progress with projects.
Miners in Colombia have been held back by illegal mining operations and environmental permitting delays.
Dow Jones Industrials +0.15% at 36,142
Nikkei 225 -0.40% at 29,688
HK Hang Seng -0.41% at 25,608
Shanghai Composite +0.44% at 3,537
Economics
EU new car registrations dropped 30%yoy in October as manufacturers hope the protracted shortage of chips weighing on production is finally easing, Bloomberg reports.
This marks a fourth consecutive month of decline this year with YTD registrations largely flat (+2.2%yoy).
Most EU markets suffered double digit losses, including the four largest ones – Italy (-35.7%), Germany (-34.9%), France (-30.7%) and Spain (-20.5%).
“We’re getting by… we’re trying to deal with it… I hope we’re through the worst,” Volkswagen CEO said during the conference this week.
Volkswagen reported a 42%yoy drop in deliveries in October.
Japan – The government is planning to announce a new $488bn stimulus package to help revive economic growth, the Nikkei newspaper reported this morning.
The package will exceed two big programmes announced last year and underscores new PM Fumio Kishida’s resolve to focus on reflating the economy.
The size amounts to >10% of real GDP.
GDP posted another quarterly contraction in Q3/21 (-3.0%qoq annualised), the second one for the year, amid reintroduction of Covid-19 restrictions and supply chain challenges.
Equities reacted positively with the Topix index regaining most of earlier losses of as much as 1% and ending the day down 0.1%.
Turkey – The lira hits new lows after President Erdogan continued to advocate for lower rates with central bank widely expected to deliver on his demand later today.
Estimates are for the benchmark rate to be reduced by 1pp to 15.0%.
CPI growth reached nearly 20% in October marking the strongest pace of inflation in more than two years.
The lira was down 3.1% earlier this morning and lost nearly a third of its value since the start of the year.
Currencies
US$1.1335/eur vs 1.1304/eur yesterday. Yen 114.08/$ vs 114.94/$. SAr 15.497/$ vs 15.497/$. $1.350/gbp vs $1.344/gbp. 0.729/aud vs 0.729/aud. CNY 6.378/$ vs 6.387/$.
Commodity News
Precious metals:
Gold US$1,867/oz vs US$1,857/oz yesterday
Gold ETFs 97.9moz vs US$97.7moz yesterday
Platinum US$1,064/oz vs US$1,071/oz yesterday
Palladium US$2,180/oz vs US$2,162/oz yesterday
Silver US$25.11/oz vs US$25.04/oz yesterday
Rhodium US$14,350/oz vs US$14,350/oz yesterday
Base metals:
Copper US$ 9,337/t vs US$9,542/t yesterday
Aluminium US$ 2,596/t vs US$2,593/t yesterday
Nickel US$ 19,205/t vs US$19,440/t yesterday
Zinc US$ 3,154/t vs US$3,215/t yesterday
Lead US$ 2,235/t vs US$2,278/t yesterday
Tin US$ 37,915/t vs US$37,610/t yesterday
Energy:
Oil US$79.4/bbl vs US$82.1/bbl yesterday
Oil prices fell materially in early trading today as China confirmed it was moving to release strategic reserves after a report that the US was asking large consuming nations to consider a coordinated stockpile release to lower prices
The bid by the US to move markets, asking China to join a coordinated action for the first time, comes as inflationary pressures, partly driven by surging energy prices, start to produce a political backlash, as the world recovers from the pandemic
Prices hit seven-year highs in October as the market focused on the swift rebound in demand that has come with lockdowns to halt the coronavirus spread being lifted while OPEC+ have slowly brought back supply after large cuts last year
US oil producers have also been reluctant to overspend on drilling after they were punished by investors for leveraging up to pay for new exploration
The IEA and OPEC confirmed in recent weeks that more supply will be available in the next several months
OPEC+ is maintaining an agreement to boost output by 400,000bopd every month so as not to flood the market with supply
The US and allies have coordinated strategic petroleum reserve releases before, for example in 2011 during a war in OPEC member Libya
But the current proposal represents an unprecedented challenge to OPEC, the cartel that has influenced oil prices for more than five decades, because it involves China, the world's biggest importer of crude
China's strategic reserve bureau confirmed it was working on a release of crude oil reserves although it declined to comment on the US request
A Japanese industry ministry official said the US has requested Tokyo's cooperation in dealing with higher oil prices, but he could not confirm whether the request included coordinated releases of stockpiles
In its weekly stockpile report, the US Department of Energy confirmed that crude inventories fell unexpectedly last week as refineries, enjoying profitable processing rates, ramped up output before the winter heating season
Natural Gas US$4.904/mmbtu vs US$5.020/mmbtu yesterday
European gas prices have surged again after a delay in the approval process for a major new pipeline from Russia, which German government sources said might not now be commissioned until March next year
Germany's energy regulator suspended the process for getting the Nord Stream 2 pipeline up and running, dimming hopes that it will provide any significant gas supplies to Europe in the crucial winter months
Futures gained more than 15% in Europe
US prices added 3.2%
The EIA expects Henry Hub prices will decrease after the first quarter of 2022, as production growth outpaces growth in LNG exports, and will average US$4.01/mmbtu for the year
US exports of LNG are establishing a record high this year, a new record high anticipated for next year
The EIA expects LNG exports to average 9.7Bcf/d this year (3.2Bcf/d more than the 2020 record high of 6.5Bcf/d) and to exceed annual pipeline exports of natural gas for the first time
The year-on-year increase in LNG exports coincides with slight growth in US natural gas production
US dry natural gas production is expected to average 92.6Bcf/d this year, which is 1.1Bcf/d more than in 2020 but 0.3Bcf/d less than in 2019
Uranium UXC US$48.05/lb vs $48.1/lb yesterday - Gates-backed $4bn nuclear reactor planned for Wyoming coal-site
Bill Gates’ TerraPower plans to build its $4bn advanced nuclear reactor demonstration plant in Wyoming, with 50% funding from the US gov.
The plant will use uranium enriched up to 20%. (Reuters)
Congress has mandated a 2028 open date for the 345Mw plant.
Biden’s new infrastructure bill assigned $2.5bn for advanced nuclear reactor – the Wyoming project will receive $1.5bn of that with an additional $0.4bn from the federal gov.
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$88.6/t vs US$88.4/t - Iron ore extends losses as China port inventories hit 31-month high
China iron ore down 1% to $84/t – 4th straight session of losses.
Imported iron ore stocks at Chinese ports hit 147.6mt – highest since April 2019. (SteelHome)
62%-grade iron ore nears an 18-month low of $90/t.
China crude steel output down 23.3% vs October 2020.
Analysts see an increase in stimulus from the PBOC in 2022 to boost growth as the likeliest positive catalyst for iron ore going forward.
Chinese steel rebar 25mm US$732.0/t vs US$731.6/t
Thermal coal (1st year forward cif ARA) US$111.5/t vs US$111.5/t
Thermal coal swap Australia FOB US$152.3/t vs US$151.5/t
Coking coal swap Australia FOB US$332.0/t vs US$333.0/t
Other:
Cobalt LME 3m US$61,550/t vs US$61,500/t
NdPr Rare Earth Oxide (China) US$122,684/t vs US$122,541/t
Lithium carbonate 99% (China) US$28,300/t vs US$28,267/t
China Spodumene Li2O 5%min CIF US$2,060/t vs US$2,010/t
Ferro-Manganese European Mn78% min US$2,023/t vs US$2,052/t
China Tungsten APT 88.5% FOB US$313/t vs US$313/t
China Graphite Flake -194 FOB US$655/t vs US$655/t
Europe Vanadium Pentoxide 98% 7.5/lb vs US$7.5/lb
Europe Ferro-Vanadium 80% 31.75/kg vs US$31.75/kg
China Ilmenite Concentrate TiO2 US$388/t vs US$388/t
Spot CO2 Emissions EUA Price US$74.8/t vs US$74.6/t
Wind Farm News
Pilot project to develop UK’s first wind turbine blade recycling plant
A consortium, led by Aker Offshore Wind, is set to launch a pilot project to develop the UK’s first wind turbine blade recycling plant, after securing a £1.3m grant from the UK government.
Aker Offshore Wind has pledged its support to WindEurope’s call for a Europe-wide landfill ban on decommissioned wind turbine blades by 2025.
Aker will contribute more than £500,000 on top of the £1.3m grant to make the project a reality.
The new project will have huge environmental benefits, as waste from wind turbine blades alone are expected to reach around 2mt globally by 2050 – UK volumes of composite waste already exceed 100,000t per year.
Company News
AfriTin (AfriTin Mining Ltd (AIM:ATM)) – 4.85p, Mkt cap £55.6m – Afritin to add tantalum concentrate circuit to Uis tin mine
AfriTin report success in their test work for production of a high-grade tantalum concentrate from feedstock at the Uis tin mine in Nambia.
The team will now add a small tantalum concentrating circuit to the process plant.
AfriTin are also testing the production of LiO2 petalite concentrates in the form of petalite from ores in the Uis mining area.
So far the team have concentrated to >4% LiO2 in petalite concentrate suggesting further test work will need to be done.
Petalite is not normally used as a feed source for lithium battery manufacturing but is used for glass and ceramics.
The planned pilot plant for testing the production of petalite concentrate is expected to cost £2.2m and is being designed to process 20t per hour.
Hochschild (Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF)) 172.9p, Mkt cap £891m – Proposed listing of REE project on TSX
Hochschild reports that it has launched the demerger and listing process of Aclara Resources on the TSX.
Aclara is seeking to raise US$100m on IPO, giving an expected market capitalisation of approximately US$237m based on the midpoint of the estimated price range.
Hochschild and Pelham Investment Corporation (controlled by Eduardo Hochschild) have agreed to maintain their pro rata equity ownership in Aclara on completion of the primary offering.
Upon completion of the Demerger and the listing of Aclara on the TSX, Hochschild and Pelham Investment Corporation will hold approximately 20.0% and 30.7%, respectively, of the listed entity.
Hochschild will have the right to designate nominees for election to Aclara's board of directors and be granted pre-emptive rights in relation to future distributions or issuances, as long as Hochschild retains at least 10% of the Aclara shares.
Both Hochschild and Pelham will agree not to sell any Aclara Shares for a period of 12 months after the closing date of the Aclara IPO.
Hochschild bought Aclara, based in Chile, for about $56m in 2019.
Aclara is an ionic clay rare earth project which will produce heavy rare earth elements (HREE) Terbium and Dysprosium.
Dysprosium and Terbium have been proven to complement LREE in order to enhance performance to operate permanent magnets at higher temperatures
Lithium Americas (Lithium Americas Corp (TSX:LAC, NYSE:LAC)) C$41.57, Mkt Cap C$5bn - Millennial Lithium bought by Lithium Americas for $400mn, CATL loses out
Lithium America has won its $400mn bid on Argentina-focused Millennial Lithium.
CATL failed to respond to Lithium America’s bid.
Lithium America’s chief executive Evans believes ‘critical mineral strategies by the US, Canadian and Australian governments’ played a part due to less ‘regulatory risk’. (Reuters)
The winning bidder hopes to begin construction on Millennial’s Pastos Grandes brine project within 2 years – expects 24kt of LCE pa for 40 years.
Rambler Metals and Mining* (Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)) 38.75p, Mkt Cap £52m – Well attended investor conference call highlights strength of higher grades and new mine plan
(Rambler owns 100% of the Ming Copper-Gold Mine)
Rambler Metals and Mining held a long and comprehensive conference call yesterday for investors and analysts.
Presentation: https://www.ramblermines.com/files/rumble-ii-investor-presentation-october-2020-for-rns.pdf
Rambler management described in detail their mine plan and robust outlook for production growth.
Drilling continues to intersect high-grade copper with strong grades reported in the Lower Footwall and Ming North zones.
The mining process is significantly improved and the team are looking at adding an ore sorter to reduce costs and expand production capacity
Conclusion: Toby Bradbury has moulded the company into an effective team who can be proud of an effective turnaround.
We will comment further on our analysis from the call in the next few days
*SP Angel act as Nomad and broker to Rambler Metals & Mining
Tertiary Minerals* (Tertiary Minerals PLC (AIM:TYM)) – 0.19p, Mkt cap £2m – Strategic update on exploration
Tertiary Minerals has provided a progress report on its exploration activities in Nevada and Zambia
The company highlights plans to commence drilling at the Pyramid precious metals project in Nevada during Q1 2022 and to undertake trenching at the Brunton’s Pass prospect, also in Nevada at the same time.
Tertiiary Minerals also explains that it “will exercise its option to earn a joint venture interest in the remaining four Mwashia licences in Zambia at … Lubuila)… Mukai… Konkola West … [and] … Mushima North”.
Managing Director, Patrick Cullen, said that “We are looking forward to drilling the North Ruth target at the Pyramid silver-gold project” and also said that “We are also very pleased to be moving ahead with the option agreement with Mwashia in Zambia. We have had enough time to consider and examine the prospectivity and strategic value of the additional four licences in the original agreement”.
He also said that he had “recently visited Zambia and met with our partners, Mwashia, and with our local representative. Mwashia has made excellent progress in advancing permits for the Jacks licence. I also made site visits to both Jacks and the Konkola West licences. We have gathered more information, including further detailed historic documentation which is aiding our exploration planning, at Jacks in particular where we look forward to drilling in 2022."
Conclusion: We look forward to the start of the new exploration in North America and Zambia next year.
*SP Angel act as Nomad and Broker to Tertiary Minerals
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
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