Today's Market View - Adriatic Metals; Beowulf Mining; Castillo Copper; Conroy Gold & Natural Resources and more...

SP Angel . Morning View . Monday 28 02 22

Inflation expectations rise as conflict escalates

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MiFID II exempt information – see disclaimer below

Adriatic Metals (Adriatic Metals PLC (LSE:ADT1, ASX:ADT, OTCQX:ADMLF)) – Comprehensive update shows Vares Project on track for completion Q2 23

Beowulf Mining* (Beowulf Mining PLC (AIM:BEM)) – Annual results show progress on three fronts

Diamond Fields Resources Inc (TSX-V:DFR) – John McGloin steps down from Caledonia to focus on CEO role at Diamond Fields Resources

Castillo Copper (Castillo Copper Ltd (LSE:CCZ, ASX:CCZ)) – Initial resource estimate for the ‘Big One’

Conroy Gold & Natural Resources (Conroy Gold and Natural Resources PLC (AIM:CGNR, OTC:CGDNF)) – Drilling results from Clontibret

Filo Mining Corp (OTCQX:FLMMF, TSX-V:FIL) (Filo Mining Corp (OTCQX:FLMMF, TSX-V:FIL)) (Filo Mining Corp (OTCQX:FLMMF, TSX-V:FIL)) - Filo Mining Corp (OTCQX:FLMMF, TSX-V:FIL) announces C$100m investment by BHP to advance Filo del Sol Project in northern Chile

Kavango Resources (Kavango Resources PLC (LSE:KAV, OTC:KVGOF)) – Drillhole completed at KSZ license

KEFI Gold and Copper* (KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF)) – Progress at Saudi Arabia VMS projects

Metal Tiger (Metal Tiger PLC (AIM:MTR, OTC:MRTTF, ASX:MTR)) – 2021 results announcement argues start of a new commodity ‘super-cycle’

Gold - $1,900/oz - continues to strengthen as investors shun bonds for safe haven metal

• Gold hit $1,928/oz this morning before settling around the $1,900/oz mark.
• Funds and asset allocators have turned to gold as a safe haven asset over government bonds lifting gold in preference to US sovereign bonds which fell 1.5%.
• Inflation: Analysts expect soaring energy prices and supply chain disruptions caused by Putin’s invasion of Ukraine to add to already-inflated consumer prices.

Gold – finds new value as Putin threatens west with nuclear war

• We hold very little hope in the peace talks as Putin has made it quite clear he wants Russia to control Ukraine and is going to struggle to back down.
• We suspect the invasion will continue while they talk hollow words in peace talks on the border with Belarus
• Russia will likely prevail and the question is more about how Russia will manage its expanded territory
• The Ukrainian people are clear in that they do not want to return to rule under Russia and its communist system but they do not have the supply lines to last long
• Questions
• Did President Putin think he would be welcomed into Ukraine by a population eager to re-join with their Russian cousins?
• Will Russia see EU funding of weapons for Ukraine and other FSU states as reason for war with the west?
• Will Russia treat its exclusion from SWIFT also as reason for war with the west?
• Will Russia use chemical weapons in the Ukraine or even in Europe?
• How can Russia back down if it is not able to easily take control of Ukraine?

China - China urges calm as any nuclear war in the West will also pollute China along with the rest of the Northern Hemisphere.

• China also sees war in the west as disrupting consumer demand for its products and the import of certain goods and raw materials.

Ukraine commodities – we suspect all production will be suspended due to the ongoing war across Ukraine

• Uranium – Ukraine produced 744t of uranium in 2020
• Titanium / ilmenite – exports of titanium in iron ores rose to $262m in 2021
• Manganese – Ukraine produced 1.2mt of manganese concentrates in 2018
• Iron ore – Ukraine exported 44.5mt of iron ore in 2021

Bank of Russia announces it will start buying gold on the domestic precious metals market

• Russia has announced an end to its 2-year gold buying hiatus following a consistent period of buying after the GFC.
• Russia is the 5th largest sovereign gold owner globally and gold accounts for 20% of its reserves.
• Russia was the largest sovereign buyer of gold for 6 years before stopping purchases amid rising prices in March 2020.
• Although analysts expect purchases to provide an initial tailwind to gold prices, a crashing ruble and an impending recession amid economic sanctions may force Russia to monetize its gold holdings.

Nickel, aluminium hit fresh highs on additional Russian sanctions and fuel supply concerns

• Nickel rallied to its decade high of $25,000/t before retreating slightly to $24,580/t.
• Aluminium at fresh highs of $3,493/t.
• Russia produces 6% of global aluminium and 7% of global nickel mine supplies.
• Soaring gas prices are adding to the rally, with Russia a key gas supplier to smelters of the metal.
• Supply concerns have been added to by the West’s removal of some Russian banks from the SWIFT payment mechanism.
• Vale has noted that nickel price speculation has ramped up following the invasion

Rare Earths and battery metals

• The west needs rare earth supply more than ever and to move away from its reliance on imported gas and oil.
• The situation is likely to speed up the move towards Wind and Solar power generation and to accelerate the move to electrify transport

Commodity trading houses brace for disruption as Western sanctions on Russia limit financing options

• Analysts expect major disruption to the financing of commodity flows following the West’s removal of various Russian banks from SWIFT.
• Both SocGen SA and Credit Suisse AG have stopped financing commodities trading from Russia. (Bloomberg)
• Glencore (GLEN LN) has long traded Russian commodities and will need to find metal supplies from elsewhere for Western, Chinese and other customers
• The two banks are major financiers to commodity trading houses, with their decision anticipated to hit already stretched supply dynamics.
• ING and Rabobank have also announced plans to restrict lending to commodity deals moving from Russia and Ukraine.
• Commodity and oil traders are expecting ‘severely disrupted or totally halted’ flows of Russian commodities to the west. (Reuters)
• Alongside 10% of global oil and 40% of Europe’s gas, Russia is a major supplier of fertilizers, nickel, coal, steel and wood.
• Analysts expect the f1urther supply disruptions to push inflation higher.
• Flows to Asia, particularly China, are expected to continue as normal.

Dow Jones Industrials +2.51% at 34,059

Nikkei 225 +0.19% at 26,527

HK Hang Seng -0.12% at 22,741

Shanghai Composite +0.32% at 3,462

Economics

Russia – Rouble hit nearly 105 against the US$ this morning compared to ~75 at the start of the year on the back of further escalation in the Russia/Ukraine war and new sanctions imposed.

• Western nations are planning to restrict ability of the Russia’s central bank to use its foreign exchange reserves.
• Reuters reports that around 45% of ~$630bn central bank reserves were in the US, UK, France, Germany and Japan at the end of 2020.
• While the central bank bank’s reserves typically enjoys sovereign immunity there were precedents when the US froze ~$2bn belonging to Iran’s central bank and $7bn held by Afghanistan central banks.
• A coordinated action by several nations will be unprecedented.
• Additionally, a number of Russian banks were ordered to be cut from SWIFT messaging system, crucial to international money transfers, in a similar fashion that Iranian banks were in 2021.
• We note Russia’s exclusion from the SWIFT payments system excludes payments for energy supplies into the West eg. Germany.
• In an attempt to reduce selling pressure on the national currency, the central bank hiked the main benchmark rate to 20% from 9.5%.
• It also banned brokers from selling securities on behalf of non-residents.
• Trading on local stock exchanges remains suspended this morning, although, dual listed names and companies with exposure to Russia posted further significant losses trading at fire sale levels.
• The central bank and the Finance Ministry are planning to order domestic exporting companies to sell 80% of all forex revenues they are receiving for their shipments.

China - Concerns over China’s slowing economy grow as fiscal stimulus fails to boost construction

• Recent data shows that Beijing’s push to boost growth with fiscal stimulus is failing so far, with the latest PMI survey showing a weakening construction sector.
• Equipment sales slumping and commodity stocks increasing also point to slowing construction activity.
• Excavator sales fell 48.3% in Jan yoy. (China Construction Machinery Association)
• Excavator usage fell 35% to yearly lows.
• Copper in Shanghai warehouses grew 28% in the week to Feb 18th and an additional 17% last week.
• Steel rebar inventories are at 10-month highs. (Steelhome)
• Local governments have issued $317bn worth of special bonds used for investing in projects since October to boost stimulus. (Bloomberg)
• Beijing’s imposition of restrictions on developer leverage last year has seen a major slowdown in construction activity as indebted developers struggle to finance projects.

Anonymous, the hacker collective declares war on Russia

• The Anonymous hacking collective has already taken down websites of the Defense Ministry, Russia Today and the Kremlin.
• Can Anonymous disable the command codes for the rest of Russia’s military system?

UK – road in Wiltshire buckled by unexplained forced

• Geotechnical engineers have been called to explain the very severe buckling of a road in Wiltshire.
• The road which looks like it has been subject to a severe earthquake appears to have been subject to forces from underground.

Currencies

US$1.1176/eur vs 1.1186/eur last week. Yen 115.55/$ vs 115.31/$. SAr 15.357/$ vs 15.357/$. $1.336/gbp vs $1.339/gbp. 0.720/aud vs 0.719/aud. CNY 6.311/$ vs 6.315/$.

Commodity News

Precious metals:

Gold US$1,898/oz vs US$1,912/oz last week

Gold ETFs 100.3moz vs US$100.3moz last week

Platinum US$1,057/oz vs US$1,063/oz last week

Palladium US$2,460/oz vs US$2,453/oz last week

Silver US$24.24/oz vs US$24.25/oz last week

Rhodium US$20,000/oz vs US$20,000/oz last week

Base metals:

Copper US$ 9,920/t vs US$9,816/t last week

Aluminium US$ 3,452/t vs US$3,315/t last week

Nickel US$ 24,580/t vs US$24,240/t last week

Zinc US$ 3,654/t vs US$3,600/t last week

Lead US$ 2,371/t vs US$2,351/t last week

Tin US$ 44,875/t vs US$44,750/t last week

Energy:

Oil US$101.7/bbl vs US$101.8/bbl last week

• Oil prices ticked higher in early trading today as Western allies imposed more sanctions on Russia and blocked some Russian banks from a global payments system, which could cause severe disruption to its oil exports
• The massed Russian assault by land, sea and air was the biggest attack on a European state since World War II, prompting tens of thousands of people to flee their homes
• Ministers of Arab oil-producing countries announced that OPEC+ should stick to its current agreement to add 400,000bopd each month to output, rejecting calls to pump more to ease pressure on prices
• Tight supply was seen in US crude oil stockpiles which unexpectedly fell 4.8MMbbls in the week to 4 February to 410.4MMbbls as overall refined product demand reached an all-time record
• This compares with a consensus forecast of a 369kbbl rise
• OPEC has forecasted that world oil demand might rise even more steeply this year
• The group has forecast an increase of 4.15MMbopd this year, as the global economy posts a strong recovery from the pandemic

Natural Gas US$4.590/mmbtu vs US$4.599/mmbtu last week

• UK and continental Europe gas futures dropped more than 30% on Friday on relief that western sanctions had not dealt a major blow to Russia’s ability to sell energy and other commodities
• Russia supplies 40% of Europe’s gas supplies, and concerns that flows could be disrupted after Moscow’s invasion of Ukraine saw the price surge almost 70% on Thursday
• But prices cooled on Friday as traders analysed US president Joe Biden’s decision to include in his sanctions package a carve-out for energy payments, a crucial source of revenue for Moscow
• Russian forces fired missiles at several cities in Ukraine and landed troops on its coast after President Vladimir Putin authorised what he called a special military operation in the east
• Russia has warned European gas prices will more than double after Germany puts the Nord Stream 2 pipeline on hold
• Former Russian President Dmitry Medvedev threatened a “brave new world” where Europeans would pay €2,000/Mcm
• Benchmark European prices are currently trading at around €79/MwH, equal to about €830/Mcm
• Germany had been reluctant to include Nord Stream 2 in sanctions as the move would hurt its own gas supplies
• However, Chancellor Olaf Scholz said Russia had gone a step too far and the project should not be approved

Uranium UXC US$46.65/lb vs $45.05/lb last week

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$136.5/t vs US$139.1/t

Chinese steel rebar 25mm US$764.7/t vs US$764.3/t

Thermal coal (1st year forward cif ARA) US$127.0/t vs US$145.0/t

Thermal coal swap Australia FOB US$251.3/t vs US$237.0/t

Coking coal swap Australia FOB US$430.0/t vs US$419.0/t

Other:

Cobalt LME 3m US$74,000/t vs US$74,000/t

NdPr Rare Earth Oxide (China) US$173,501/t vs US$172,781/t

Lithium carbonate 99% (China) US$71,698/t vs US$71,085/t

China Spodumene Li2O 5%min CIF US$2,720/t vs US$2,710/t

Ferro-Manganese European Mn78% min US$1,794/t vs US$1,784/t

China Tungsten APT 88.5% FOB US$335/t vs US$335/t

China Graphite Flake -194 FOB US$805/t vs US$805/t

Europe Vanadium Pentoxide 98% 11.0/lb vs US$10.8/lb

Europe Ferro-Vanadium 80% 44.75/kg vs US$43.75/kg

China Ilmenite Concentrate TiO2 US$397/t vs US$395/t

Spot CO2 Emissions EUA Price US$97.3/t vs US$98.3/t

Brazil Potash CFR Granular Spot US$820/t vs US$815/t

Battery News

• Fortescue breaks ground on 2GW electrolyser factory
• Fortescue Future Industries (FFI) have started construction of their planned electrolyser factory
• Owner, Andrew Forrest unveiled plans to build the 2GW electrolyser factory in October 2021 – the initial capacity of 2GW per year would double current global production.
• Production of electrolysers is expected to start in early 2023.
• FFI will be its own biggest initial customer, with plans to produce 15mt of green hydrogen by 2030, rising to 50mt by 2040.
• “FFI’s goal is to become the world’s leading, integrated, fully renewable energy and green products company, powering the Australian economy and creating jobs for Australia as we transition away from fossil fuels,” said its chief executive, Julie Shuttleworth.
• Several other companies are developing or building their own gigawatt scale electrolyser production facilities, including ThyssenKrupp in Germany (5GW), Nel in Norway (2GW), ITM Power in England (1GW), among others.

ICE cars produce more supply chain emissions than EVs

• A recent Yale University study has found that the total indirect emissions from electric vehicles are significantly lower in comparison to the indirect emissions from fossil fuel-powered vehicles.
• One concern with EVs has been how green the EV industry is – focusing particularly on indirect emissions caused within the supply chains of the vehicle components and the fuels used to power electricity that charges the vehicles.

New York Bight lease sale ends with over $4bn raised

• The US Bureau of Ocean Energy Management (BOEM) has completed the country’s biggest offshore wind auction after three days and 64 rounds of bidding.
• The six offered lease sites gathered a total of $4.37bn that will go to the US Treasury.
• The largest site, with a minimum 1,387MW of installed capacity, was bought for a $1.1bn by Bight Wind Holdings, a joint venture between RWE (ETR:RWE) Renewables and National Grid.
• RWE (ETR:RWE) believe the site has the potential to accommodate 3GW of offshore wind capacity due to technological advancements in the industry.

Company News

Adriatic Metals (ADT1) 113p, Mkt cap £307m – Comprehensive update shows Vares Project on track for completion Q2 23

• Adriatic provides an update on the construction of Vares Silver project, which on track for first production in Q2 2023.
• Ausenco was appointed as the engineering and procurement contractor for the project, having worked with the company on completion of the 2020 PFS and 2021 DFS – therefore benefitting from the prior knowledge and experience gained undertaking these studies.
• Further refinement and test work on the backfill engineering has been ongoing since the completion of the 2021 DFS, with recent test results suggesting there will be a significant increase in tailings content used in the backfill.
• If the final test work results are successful, this will reduce mining costs and the quantity of tailings deposited on the dry stack tailings storage facility.
• The company has selected suppliers and started issuing purchase orders for mechanical equipment – this has been done early due to the long lead times seen globally across sectors.
• Five out of the six Long-Lead Order Equipment packages have been ordered, with the purchase order for the flotation cells expected to be placed in late March.
• Access road construction at the Rupice Surface Infrastructure site commenced in November 2021.
• Modifications have been made to the layout of the Rupice Surface Infrastructure site, reducing the volume of earthworks required by approximately 50% to 800,000m3.
• Adriatic has also been active in hiring project staff, hiring a project director in July 2021 while the current headcount of the team is 29.
• Adriatic has signed a Letter of Intent with Ciftay as the appointment of the project’s sole underground mining contractor.
• Ciftay are a Turkish mining operations and underground construction contractor who operate a number of open pit and underground sites across operations in Turkey and Central Asia.
• Construction of the Vares Processing Plant is expected to commence in late Q2 2022.
• The Company has confirmed its plans for exploration activities during the coming year, with a phase 1 budget of €5m covering approximately 22,000m of drilling.

Beowulf Mining* (BEM LN) 12.75p, Mkt Cap £110m – Annual results show progress on three fronts

• Beowulf has released its unaudited preliminary financial results for the year ended 31 December 2021, while also providing a summary of events over the year from its operations in Sweden, Finland, and Kosovo.
• Beowulf reported a consolidated loss of £1.49m in 2021 vs £1.29m in 2020.
• Administration expenses increased to £1.50m vs £1.00m a year prior, due to an expense in relation to the exercise of share options, national insurance increases, and FX-related losses.
• Beowulf’s cash position at the period-end was £3.3m.
• Sweden: Beowulf continued to try and engage the now-former Minister of Enterprise and Innovation, Ibrahim Baylan, concerning the status of Beowulf's Kallak application.
• The board continued to emphasise the calibre of the Kallak deposit, being one of Europe’s most prominent untapped iron ore resources, well positioned to service the nascent green steel industry in Europe.
• Beowulf received a brief response from the government, explaining that the case was currently being prepared.
• The company also published an updated Mineral Resource Estimate and exploration target upgrade, with the MRE increasing the size of the resource by 12.5%.
• Beowulf also wrote to the new Minister of Enterprise and Innovation regarding Kallak, following positive comments by the new Swedish Prime Minister about the need for more mines in Sweden and Minister Thorwaldsson about 'taking action' in the matter of Kallak.
• Mr Thorwaldsson has previously worked for steel group SSAB, where he closely followed the company's transition to fossil-free steel.
• Finland: Strong progress was made progressing Beowulf’s Finnish assets, with the company announcing the signing of a MoU with EAMPL.
• The purpose of the MoU is to develop the concept of a strategic processing hub for both natural flake and recycled graphite to be located in Finland, to target the market for pre-cursor anode material for the lithium-ion batteries in the Nordics and Europe.
• A Head of Terms was signed following this for the establishment of the production facility, with an initial 10ktpa of anode material scaling up to 50ktpa eventually.
• Grafintec was granted €791,000 by Business Finland, the equivalent of 50% of a three-year €1.6 million budget for Grafintec's 'Spheronisation and Purification of Natural Graphite for the European Lithium-Ion Battery Market' project.
• Kosovo: Beowulf continues to increase its ownership in Vadar Minerals, currently at 49.4%, with funds to be used to preparatory works for drilling.
• Vadar submitted a new exploration licence application for an area covering 87km2, extending to the north and northeast of the Mitrovica Project. The new area encompasses the extension of a distinct northwest trending zone of lead-zinc-silver mineralisation from the Stan Terg deposit through the Wolf Mountain target.
• Vadar was unable to drill in 2021 as it awaits final approval of its license renewal applications due to changes in the Commission of Mines and Minerals, although this has now been completed and the company are confident that the license will be forthcoming.
• Kurt Budge, Chief Executive Officer of Beowulf, commented: "We finished the year with strong prospects for 2022 across our three business areas; the future development of an anode materials plant in Vaasa, Finland; the restart of drilling in Kosovo; and a new Minister talking about making a decision on our Kallak application.”

*SP Angel acts as nomad and Broker to Beowulf Mining

Diamond Fields Resources Inc (DFR VN) – John McGloin steps down from Caledonia to focus on CEO role at Diamond Fields Resources

• John McGloin, a former mining analyst, has stepped down as an NED of Caledonia Mining to focus his CEO role at Diamond Fields Resources.
• McGloin, a geologist, was previously Chairman and CEO at Amara Mining, developing the Yaoure gold project in the Ivory Coast from 20,000oz to >6moz.
• Perseus Mining acquired Amara Mining for $85m in an all share issue in 2016.
• Diamond Fields Resources and Archean Resources found and developed the giant Voisey’s Bay nickel deposit in Canada.
• Voisey’s Bay was acquired by Inco for $4.5bn in Inco stock with the deal worth $4.3bn on closing.
• Diamond Fields Resources is producing diamonds in Namibia and is also working on the potential development of the Beravina zircon project in Madagascar.

Castillo Copper (CCZ LN) 1.03p, Mkt Cap £13.8m – Initial resource estimate for the ‘Big One’

• Castillo Copper has reported an initial mineral resource estimate for its ‘Big One’ deposit in Queensland.
• The estimate, which is based on reverse-circulation and diamond drilling undertaken in 2020/21, comprises 2.1mt of inferred material at an average grade of 1.1% copper including both in-situ oxidised and fresh ore material as well as 7,000t of oxidised material, classified as indicated, from mine dumps at an average grade of 1.2% copper.
• The company says that the mineralisation remains “open to the north, east and down dip” and that its “next drilling campaign will focus exclusively on extending the known orebody”.
• Drilling will also test “a significant bedrock conductor, north of the line of lode, which is larger than the known orebody along strike”.
• We note that Castillo Copper says that the “timing for the next campaign getting underway is contingent on a significant improvement in ground conditions”.

Conclusion: A relatively small initial, inferred, mineral resource of 2.1mt at 1.1% copper leaves the ‘Big One’ with some tonnes to find before it lives up to its name, however, with

mineralisation from surface and mineralisation remaining open laterally and at depth we await results from the next phase of drilling with interest.

Conroy Gold & Natural Resources (CGNR LN) 22.75p, Mkt Cap £8.8m – Drilling results from Clontibret

• In its report for the six months to 30th November 2021, Conroy Gold reports a loss for the six months of €0.28m (2020 – loss €0.70m) and a 30th November 2021 cash balance of €0.74m.
• The company highlights continuing technical progress on its exploration, including the discovery of a new old-in-soil target that lies between the Company’s Derryhennet-Clay Lake gold target, as well as the successful conclusion of its agreement with Demir Export which was signed on 31st December 2021.
• The newly discovered anomaly “covers an area of approximately 40 acres (c.700 metres by c.250 metres) and trends north northwest – south southeast. It is aligned on a similar trend to the gold lodes in the Clontibret gold deposit where the Company has a (JORC 2012) gold resource of 517,000 ounces Au (320,000 oz Au indicated and 197,000 oz Au inferred)”.
• Commenting on the agreement with Demir Export, Chairman, Prof. Richard Conroy, said that he looked forward to working with Demir “on the accelerated development and exploration programmes along the 65Km gold trend the Company has discovered, with the objective of bringing into operation a gold mine, initially at Clontibret”.

Filo Mining Corp ( FIL CN) C$14.30, Mkt Cap C$1.65bn - Filo Mining Corp announces C$100m investment by BHP to advance Filo del Sol Project in northern Chile

• BHP will invest C$100m in Filo Mining Corp. via a non-brokered private placement.
• The investment comes from BHP Western Mining Resources International, a wholly owned subsidiary of BHP Group.
• The C$15.95 price per Common Share issued by Filo to BHP represents a 12% premium to the 20-day volume weighted average share price.
• The investment will see BHP take a 5% stake in Filo’s issued and outstanding Common Shares.
• The funds will be used for exploration and development of the Filo del Sol project.
• Filo plans to have eight drills active on the project by the end of this month.

Kavango Resources (KAV LN) 3.8p, Mkt cap £20m – Drillhole completed at KSZ license

• Kavango reports that it has completed drilling Hole KSZDD002 to target depth of 650m and a successful Downhole Time Domain Electromagnetic survey to 640m.
• Analysis suggests that the Borehole has passed through a gap between two distinct conductors, as is evident by the EHEM data.
• A Karoo intrusive was intersected at the target depth. This rock type is correct for Kavango's Karoo intrusive hosted nickel/copper ("Ni/Cu") exploration model.
• There is at least one very strong conductor detected 150m off the Borehole with a time constant in the range of 450msec to 560msec and a high conductance of 16,000 Siemens – indicating the possibility of Ni/Cu sulphides.
• A second conductor of 2,500 Siemens has also been detected which is more vertically inclined and appears to conform to an idealised model for net textured sulphides in a possible Karoo feeder dike.
• Kavango will now evaluate and remodel data and plan to drill up to two further holes based on the refined geophysical models.

KEFI Gold and Copper* (KEFI LN) 0.75p, Mkt Cap £22m – Progress at Saudi Arabia VMS projects

• A drilling programme is ongoing at the Hawiah Copper-Gold Project providing data for the PFS.
• A 3,700m RC drilling programme launched in Jan/22 is aimed at infilling the oxide portion of the MRE growing the Indicated Resource category for open pit mining.
• A metallurgical testwork is planned for the sulphide mineralisation to design the preferred processing flowsheet for production of copper and zinc concentrates.
• The team also started 1,800m geotechnical DD programme while a 1,350m hydrogeological drilling and pump testing programme is scheduled to start in early March.
• PFS completion is scheduled for later this year.
• At Al Godeyer Explorations Licenses secured in Dec/21 and located immediately west of the Hawiah EL work is focused on identified at surface gossans running for over a 2km strike.
• Gossans are believed to be the weathered surface expr3ession of a VMS deposit and a direct geological analogue of the Hawiah deposit.
• Exploration programme included mapping and rock chip sampling (some samples returned up to 7.2g/t gold and 1.8% copper) as well as trenching (13 of the planned 28 completed) and preparation for geophysical survey.
• Drilling is planned for Q2/22.

Conclusion: PFS related work continues at Hawiah while the team is carrying initial exploration at recently secured Al Godeyer Explorations Licenses believed to host similar to Hawiah VMS mineralisation. "VMS deposits typically form in clusters and Al Godeyer is only one of the many VMS prospects in the G&M pipeline of exploration targets,” the Company commented on the announcement.

*SP Angel act as Nomad and Broker to KEFI Gold and Copper

Metal Tiger (MTR LN) 18.75p, Mkt Cap £31.8m – 2021 results announcement argues start of a new commodity ‘super-cycle’

• In its report for 2021, Metal Tiger reports an attributable profit of £4.58m (2020 - £3.97m), a year end cash balance of £0.65m and net debt of £10.3m.
• Metal Tiger reports that, despite the continuing challenges of the Covid19 pandemic, “Arguably, 2021 was the beginning of another commodity super cycle” and that it was a “very active” year for the company.
• The company says that its’ “largest commodity exposure by investment value, via its project and equity investments were to copper and gold”.
• Metal Tiger reports the 34% increase in mineral resources reported by ASX-listed Sandfire Resources at its A4 copper/silver deposit in the Kalahari copper belt of Botswana and Sandfire’s pre-feasibility study for the “5.2Mtpa, Motheo production hub, mining operation combining T3 and A4” deposits. Metal Tiger holds equity and royalty interests in Sandfire Resources arising from its former holdings in MOD Resources which was acquired by Sandfire in 2019.
• Elsewhere in the Kalahari copper belt, diamond and percussion drilling at Kitlanya West “highlight the relatively shallow cover thickness across the project areas which is considered encouraging … [however] … Following the negative drill results, a thorough review and target generation exercise was undertaken across the properties. Results from this review have identified a number of prospective targets for stratigraphic limb and structurally hosted Cu-Ag mineralisation in the Kitlanya West Project”.
• Drilling at Kitlanya East, “identified several prospective areas with favourable target stratigraphy, alteration and trace base metal mineralisation” at the Endurance Prospect and subsequent diamond-core drilling “identified significant alteration, vein stockwork development and accompanying Cu mineralisation … [and demonstrated the] … potential for the Endurance Prospect to host Cu-deposits at a relatively shallow depth”.
• Referring to its investment portfolio, Metal Tiger reports that in 2021, it “acquired investments at a total cost of £18,676,000 and disposed of investments for £13,434,000 and a realised profit of £1,979,000. After considering the revaluation of the investments the net assets of the segment increased by £6,181,000 during the year to £35,524,000 (2020: £29,343,000)”.

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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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, Tungsten, Spodumene, Ferro-Manganese, Graphite - Asian Metal

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

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SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%