SP Angel . Morning View . Thursday 10 03 22
China PBoC issues CNY1tn to meet Beijing growth ambitions
MiFID II exempt information – see disclaimer below
Atlantic Lithium Limited (AIM:ALL)* – Passing of Vince Mascolo, CEO and founder of Atlantic Lithium
Atlantic Lithium Limited (AIM:ALL)* – Piedmont PEA for LiOH production plant likely to take Ewoyaa spodumene
Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)* – Infill drilling results from Mestiza
Greatland Gold PLC (AIM:GGP, OTC:GRLGF) – Progress of the expansion drilling at Havieron
Orosur Mining Inc (AIM:OMI, TSX-V:OMI)* – Flash Note – Multiple high-priority targets set to be explored in exploration ramp up at Anza
Nickel - Shanghai Futures Exchange halts nickel contract trading amid rising price volatility
- The SHFE is freezing 50% of its nickel contracts today following the total halt by the LME and an increase in margins on trading imposed by the SHFE yesterday.
- The move comes as the benchmark SHFE nickel contract jumped 17% to $42,000/t.
- The exchange has reported ‘violent fluctuations’ in markets and the suspension is the next step in easing volatility following a hike in margin requirements and trading limits yesterday.
- The decision highlights contagion from the LME short squeeze on Tsingshan’s major hedge positions triggered by the supply shock resulting from Russia’s invasion of Ukraine.
- Similarly, ICE Clear Europe, Europe’s largest commodities clearing house, has hiked margin requirements for a range of commodities.
- The Nickel in a US 5c nickel coin is now worth 12c per coin. The coin is 25% nickel.
Gold price retreats from 19-month high on improved risk-off sentiment as focus turns to CPI data
- Gold prices pulled back to $1,995/oz from a peak of $2,070/oz.
- Gold ETFs have seen sustained inflows of 152t this year as investors rush to protect capital amid increasing volatility. (Bloomberg)
- Inflation and ongoing geopolitical risk continue to drive gold as policymakers push out interest rises and vote through increasing expenditure related to Ukraine.
- The consumer inflation data will provide a key point of consideration for the Federal Reserve’s rate hike schedule going forward.
Dow Jones Industrials - +2.00% at 33,286
Nikkei 225 - +3.94% at 25,690
HK Hang Seng - +1.25% at 20,886
Shanghai Composite - +1.22% at 3,296
Economics
US – The House passed a long-delayed $1.5tn spending bill that would fund the government through the rest of the fiscal year, Bloomberg writes.
- Inflation is due later today with estimates for both headline (7.9% v 7.5% in Jan) and core measures (6.4% v 6.0% in Jan) climbing in February.
US House of Representatives approves $13.6bn in emergency spending for US response to war in Ukraine
US moves to limit Russia’s ability to bypass sanctions with crackdown on gold sales
- A bipartisan group of US Senators are looking to pass a bill for secondary sanctions on the purchase or sale of Russian ‘blood’ gold. (Rep. Senator John Cornyn)
- Russia has a gold stockpile valued at $132.4, with lawmakers looking to limit Putin’s ability to utilise the strategic bullion reserves.
- Analysts expect the move is particularly targeting China and India, with Russian gold already cut off from London and New York markets.
- Lawmakers pointed to Venezuela’s ability to bypass US sanctions and launder money through gold sales.
China – PBoC to pay CNY1tn ($158bn) to help GDP growth to 5.5% this year
- The sudden CNY1tn fiscal expansion by the PBoC is rare and perhaps reflects concerns to counter potential impact from the Russian / Ukraine situation
- Though we also suspect the payment is to promote growth with Russia and to take commercial advantage of Russia’s invasion of Ukraine
- CPI rose 0.6% in February vs 0.3% in January and 0.9% yoy in February vs 0.9% in January
- PPI pulled back a little to 8.8% yoy in February vs 9.1% in January
- Official inflation target is 3% for this year in line with last year
ECB – The central bank is expected to largely avoid any changes to the pace of the monetary policy tightening today amid all the uncertainty in the market driven by the war in Ukraine and sanctions placed on Russia.
- Bloomberg estimates are for asset purchases to end in Q3/22 with money market expecting a first 25bp hike by the ECB only in December.
- The understanding is the ECB officials broadly agree that the war will delay, rather than derail, the normalisation of monetary policy.
- Inflation hit 5.8% last month marking the quickest pace since the euro was introduced and may accelerate further on the back of higher energy and commodity prices.
Russia/Ukraine – The war enters its third week with no stated objectives achieved by Russia with thousands of people killed and more than 2m made refugees.
- Ukraine estimates more than 12k Russian soldiers lost their lives since the start of the invasion while Russia hesitant to admit any casualties on its side at first cited ~500 troops to have been killed during the first week of fighting.
- Foreign Affairs Ministers rom Ukraine and Russia are meeting in Tukey today in the fist high-level talks between two nations since the start of the invasion.
- Ukraine side is reported to be seeking a ceasefire, liberation of its territories and addressing all humanitarian issues.
- Moscow demands that Kyiv takes a neutral position and drops plans to join the NATO alliance.
Rio Tinto is the first major mining company to announce it is cutting all ties with Russian businesses.
- Corporates have been announcing plans to leave the Russian market in droves from Coca Cola and PepsiCo (NASDAQ:PEP) to Microsoft, Nvidia, Oracle and SAP.
Russia Claims the bombing of the maternity hospital in Ukraine is fake news
Norway – Core inflation jumps to 2.1% vs 1.7% estimate (Bloomberg)
Supply chains facing further disruption as land, air and maritime trade all hit by Russia-Ukraine conflict.
- The logistics industry expects considerable supply-chain disruptions going forward.
- Commercial shipping firms are avoiding the Black Sea and the Sea of Azov, with both cargo and vessels stranded at ports following Russian strikes on 5 vessels.
- Maersk has led the charge in halting shipments from Russian ports.
- The shipping industry expects maritime trade with Russia to face disruption for ‘years to come.’ (ContainerxChange)
- Asia-Europe rail and road routes through Belarus and Russia are reportedly disrupted by military use and EU border closures.
- Air space across Russia and Europe is hitting air freight capacity, with North East Asia to Europe air capacity down 22% wow.
- Japan to Europe air rates are up 15%.
- Tanker rates are also rising, further fuelling inflationary pressures.
Brazil moves to ramp up mining on indigenous lands on fertilizer concerns
- Brazilian President Bolsonaro is pushing a low through to enable the mining of indigenous reservations.
- The administration is looking to bypass committee hearings, claiming its reliance on 85% potash imports (c. 25% coming from Russia) is threatening the country’s economy as prices rise.
- The Amazon rainforest contains substantial potash reserves currently inaccessible because of rules protecting indigenous communities.
- However, only 11% of Brazil’s proven potash reserves are under indigenous community-claimed lands. (University of Minas Gerais)
Currencies
US$1.1042/eur vs 1.0925/eur yesterday. Yen 115.88/$ vs 115.86/$. SAr 15.075/$ vs 15.191/$. $1.317/gbp vs $1.313/gbp. 0.734/aud vs 0.730/aud. CNY 6.322/$ vs 6.317/$.
Commodity News
Precious metals:
Gold US$1,984/oz vs US$2,045/oz yesterday
Gold ETFs 102.8moz vs US$102.8moz yesterday
Platinum US$1,082/oz vs US$1,161/oz yesterday
Palladium US$2,915/oz vs US$3,016/oz yesterday
Silver US$25.60/oz vs US$26.43/oz yesterday
Rhodium US$19,700/oz vs US$21,500/oz yesterday
Base metals:
Copper US$ 10,062/t vs US$10,158/t yesterday
Aluminium US$ 3,378/t vs US$3,522/t yesterday
Nickel US$48,048/t vs US$48,063/t yesterday – All LME contracts SUSPENDED and 50% of SHFE contracts SUSPENDED
Zinc US$ 3,877/t vs US$4,126/t yesterday
Lead US$ 2,407/t vs US$2,502/t yesterday
Tin US$ 41,575/t vs US$47,660/t yesterday
Energy:
Oil US$115.1/bbl vs US$129.7/bbl yesterday
- Oil prices steadied as UAE officials walked back on earlier comments that it would call on OPEC+ members to boost oil production faster than previously planned
- The US EIA estimates that commercial oil inventories in the OECD ended February at 2.64 billion barrels, which is the lowest level since mid-2014.
- Its current projections forecast US production of 12mmb/d in 2022, rising to a record-high of 13mmb/d in 2023.
- Prices have rallied c.30% since Russia invaded Ukraine on 24 February, and has led to another shock to global price pressures already at their highest levels in decades
- European Central Bank policy makers meeting later this week to discuss the ramifications on consumers
- Elsewhere, US oil inventories continued to decline
- Inventories at Cushing are at their lowest since 2018, while US strategic reserves dropped to a near 20-year low
- According to the latest report from the EIA, US energy consumption is forecast to grow set 5-30% by 2050 under a range of scenarios, with parallel growth forecast in domestic supply for both oil (for transportation) and natural gas (for LNG export)
- Renewables will be the fastest growing energy source, but still contributes a smaller share to US energy needs in 2050 than oil or gas, out with a significant change in policy
- US energy-related CO2 emissions are forecast to be stabilised over the next 15 years before emissions begin to trend upward as increasing energy consumption outpaces continuing reductions in energy intensity and CO2 intensity
Natural Gas US$4.552/mmbtu vs US$4.548/mmbtu yesterday
- European gas prices eased as the Russian Foreign Ministry declared “Russia does not intend to give up its position as a reliable supplier of gas in the European market”
- The US EIA estimates that U.S. consumption of natural gas will average 84.6 Bcf/d in 2022, up 2% y-o-y, largely due to rising demand in the industrial sector as a result of increased manufacturing activity
Uranium UXC US$54.05/lb vs $53.15/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$163.6/t vs US$167.3/t
Chinese steel rebar 25mm US$780.0/t vs US$789.3/t
Thermal coal (1st year forward cif ARA) US$251.0/t vs US$251.0/t
Thermal coal swap Australia FOB US$425.0/t vs US$430.0/t - China to maintain record coal output as prices continue to climb
- The NDRC has announced plans to keep China’s domestic daily coal production at 12mt.
- Efforts will also be made to increase new mining projects.
- Newcastle thermal coal prices up 35% this week as supply from Russia, the 6th largest coal producer globally and China’s second largest supplier, saw disruption.
- Chinese coal buyers have rejected Russian cargoes amid global sanctions.
- 60% of China’s power is generated at coal-fired power plants.
Coking coal swap Australia FOB US$420.0/t vs US$420.0/t
Other:
Cobalt LME 3m US$82,000/t vs US$81,795/t
NdPr Rare Earth Oxide (China) US$173,207/t vs US$173,421/t
Lithium carbonate 99% (China) US$73,949/t vs US$74,041/t
China Spodumene Li2O 5%min CIF US$2,730/t vs US$2,730/t
Ferro-Manganese European Mn78% min US$2,202/t vs US$1,906/t
China Tungsten APT 88.5% FOB US$340/t vs US$335/t
China Graphite Flake -194 FOB US$805/t vs US$805/t
Europe Vanadium Pentoxide 98% 12.2/lb vs US$12.0/lb
Europe Ferro-Vanadium 80% 55.75/kg vs US$51.25/kg
China Ilmenite Concentrate TiO2 US$399/t vs US$400/t
Spot CO2 Emissions EUA Price US$77.4/t vs US$67.6/t
Brazil Potash CFR Granular Spot US$820/t vs US$820/t
Battery News
Europe’s EV battery pipeline to reach 790GWh by 2030
- A new report from Benchmark Mineral Intelligence shows that annual capacity is expected to reach 789.2GWh by 2030 – a 6-fold increase from the 120GWh prediction from 2018.
- The capacity would be enough for almost 15m EVs annually.
- By the end of 2022, Europe is set to have 7 active li-ion battery producers,
- According to the report, Europe is on track for 27 gigafactories from 18 different battery producers.
- Tesla’s Giga-Berlin is on track to be Europe’s largest factory by some way – starting production in 2023, it is expected to reach annual production of 125GW by 2030.
- China is on course to have 3733GWh of lithium-ion battery cell capacity by 2031, more than double the total capacity (1721GWh) expected in the rest of the world.
GM and PG&E launch pilot to use EVs for powering homes
- GM and PG&E have announced the launch of a new pilot program that will allow California residents to use their GM electric vehicles to act as on-demand power sources for their homes.
- GM and PG&E will test the first vehicle-to-home capable EV by summer 2022.
- The program will use bidirectional hardware coupled with software-defined communications protocols that will enable the vehicle to transmit power back to the home.
Gogoro unveils first solid-state swappable battery
- Gogoro, who have become the standard for swappable batteries in light electric vehicles, has unveiled the world’s first swappable solid-state EV battery prototype.
- The battery was co-developed with ProLogium Technology, a solid-state battery industry leader with expertise in Lithium Ceramic Batteries.
- The company has produced over 1m of its batteries, which can be swapped in seconds at thousands of battery swap stations to instantly “recharge” light electric vehicles like electric scooters and motorcycles.
- The new solid state Gogoro battery pack, which is still undergoing development, is said to be capable of boosting Gogoro’s current capacity of 1.7kWh per battery to 2.5kWh – a 40% increase in energy density would result in a comparable increase in range.
- Solid-state batteries also offer big safety improvements as well – in LCBs, the ceramic layer makes it impossible for dendrites to puncture the plastic separator, a leading cause in lithium-ion battery fires.
Company News
Atlantic Lithium Limited (AIM:ALL)* 36p, Mkt cap £207m – Passing of Vince Mascolo, ceo and founder of Atlantic Lithium
- We regret to report the sudden and unexpected passing of Vince Mascolo, ceo and founder of Atlantic Lithium.
- Vince was one of a kind and will be missed by all who knew him.
- Our thoughts are with his family and friends.
*SP Angel acts as nomad to Atlantic Lithium
Atlantic Lithium Limited (AIM:ALL)* 36p, Mkt cap £207m – Piedmont PEA for LiOH production plant likely to take Ewoyaa spodumene
- Piedmont Lithium has released details of the Preliminary Economic Assessment (PEA) for a proposed merchant lithium hydroxide plant (LHP-2) to expand Piedmont’s planned U.S. manufacturing capacity to 60,000tpa of lithium hydroxide.
- Piedmont comment that the company’s partnership with Atlantic Lithium means that LHP-2 will have dedicated material supply from Ewoyaa along with further spodumene supply from North American Lithium in conjunction with Sayona Mining.
- First spodumene production is expected at North American Lithium in 2023 and at Ewoyaa in 2024 – with both companies committing to long-term supply agreements with Piedmont.
- In July 2021, Piedmont signed an agreement with Atlantic Lithium to fully fund the Ewoyaa lithium project.
- Piedmont to earn-in to up to 50% of IronRidge's Cape Coast Lithium Portfolio in Ghana through the following stages:
- Stage 1 - Piedmont has subscribed for 54,000,000 new ordinary shares in the Company at a price of 20p per share (£10.8m). Piedmont has committed a further £720,000 increasing its stake to 9.91% via placing of a further 2.88m shares at 25p.
- Stage 2 - Regional Exploration and DFS Funding to earn in up to an initial 22.5%. US$5m towards an accelerated regional exploration programme to enhance the current Ewoyaa resource; and US$12m towards completing the DFS for the project. The minimum "DFS criteria" is to deliver a 1.5 mtpa to 2mtpa run-of-mine operation for a 10-year to 8-year life of mine respectively.
- Stage 3 – CAPEX funding of $70m to earn a further 27.5% of CCLP.
- Highlights from the recently completed updated scoping study at Ewoyaa, based on a 2.0mtpa include:
- Pre-tax NPV8% of US$1,227m
- Pre-tax EBITDA of US$2,024m
- Post-tax NPV8% of US$789m
- Post-tax IRR of 194%
- Average EBITDA of US$178m per annum
- Keith Phillips, ceo commented: “With long-term supply agreements in place with our partners Atlantic Lithium and Sayona Mining, we have locked in the raw material we require for this expansion, enabling us to control our own destiny while capturing the economics of the integrated production process.”
*SP Angel act as Nomad to Atlantic Lithium
Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)* 30p, Mkt Cap £43m – Infill drilling results from Mestiza
- Condor Gold reports results from an 8,004m programme of infill drilling at its Mestiza open-pit site located some 3km from the permitted process plant at La India, Nicaragua.
- The programme, comprising 96 diamond drill holes closes the drill-hole spacing from “50 m to 100 m spacing to a 25 m along strike and 50 m down-dip in the areas that that are considered to have the highest potential to support open pit mining” and should aid the upgrading of the existing inferred resources to the higher, indicated, level which would support inclusion in the future mine-plan.
- The existing Mestiza open-pit resource of 92,000 indicated tonnes at an average grade of 12.1g/t gold (36,000oz) and 341,000 inferred tonnes at an average grade of 7.7g/y (85,000oz) forms one of the high grade satellite pits planned for mining during the early years of mining at La India and Condor Gold explains that the infill drilling has shown “excellent continuity in gold mineralization demonstrated between
- adjacent drill holes in the high grade zones adding confidence to the geological model”.
- The company confirms that the veins at Mestiza, which are found within “an 800 m wide corridor and striking along a distance of 1,500 m to 2,000 m in north-northwest to south-southeast direction along the top of a broad ridge” remain “open down dip and along strike in both directions” and that additional, parallel veins, which offer the potential for further resource expansion, have been “identified by rock chip sampling and trenching”.
- Among the results highlighted in today’s announcement are:
- An intersection of the Tatiana Vein of 3.6m true width between 105.70m and 109.60m depth in hole LIDC-471 at an average grade of 29.09g/t gold and 51g/t silver; and
- A 2.4m true width, also of the Tatiana vein which averaged 28.34g/t gold and 39g/t silver from a depth of 76.70m in hole LIDC-344; and
- A 4.1m true width intersection of the Tatiana vein which averaged 14.23g/t gold and 23g/t silver from a depth of 47.80m in hole LIDC-514; and
- A 6.3m true width, also of the Tatiana vein which averaged 6.84g/t gold and 24g/t silver from a depth of 31.45m in hole LIDC-568; as well as
- A 1.0m true width, of the Buenos Aires vein which averaged 46.04g/t gold and 19g/t silver from a depth of 60.30m in hole P-076
- Condor Gold confirms that it has now received all of the assay results from the infill drilling and that “the Company's geologists are working with independent geological consultants SRK (UK) Consulting Limited to update the Mineral Resource Estimate for La Mestiza”.
- Commenting on the significance of the 6.3m wide intersection in LIDC-568, Chairman & CEO, Mark Child, said that this represented the type of mineralisation “targeted for early mill feed” and he said that “it has long been recognised that the Mineral Resource on the Mestiza Vein Set has the potential to double with additional drilling beyond the current mineral resource”.
- We find the company’s comment that “In 1991 the La Mestiza Vein Set was assigned a mineral resource of 2,392 kt at 10.2 g/t gold for 785,694 oz gold (Soviet-style C and P category mineral inventory classification), emphasising the possibility to expand the mineral resource” a helpful Illustration of the resource expansion potential at Mestiza.
- Condor Gold has previously indicated that it expected to complete the La India Feasibility Study in Q1 next year and hence today’s announcement provides helpful confirmation that the process remains on schedule
Conclusion: Completion of the infill drilling at Mestiza provides the opportunity to upgrade some of the existing inferred mineral resource to the indicated level and confirms the continuity of mineralisation targeted for early processing at the La India plant site. With mineralisation known to remain open both laterally and at depth and historic drilling information from the early 1990s indicating the possibility that high grade mineral resources could be doubled we await the forthcoming resource update with interest.
*SP Angel act as a broker to Condor Gold
Greatland Gold PLC (AIM:GGP, OTC:GRLGF) 14.4p, Mkt Cap £623m – Progress of the expansion drilling at Havieron
- Greatland Gold has issued new drilling results from its continuing programme of drilling aimed at expanding the footprint of known mineralisation at its Havieron project in the Paterson district of WA.
- The company confirms that it has six drill rigs in operation targeting the Eastern Breccia Zone, the South East Crescent Zone and the Northern Breccia Zone as well as additional targets located within the joint-venture area but beyond the immediate Havieron area.
- The company says that an intersection of 52.7m averaging 7.1g/t gold and 0.04% copper from a depth of 1,074m in hole HAD-089-W4 from the “NW Pod on the northwest margin of the Havieron Breccia system confirms the potential for further high-grade sulphide mineralisation outside the SE Crescent Zone”.
- Hole HAD-145A, drilled in the Eastern Breccia Zone, intersected 70.2m at an average grade of 0.82g/t gold and 0.22% copper from a depth of 1,654.8m. The intersection is located “on the southern flank of the recently announced Initial Mineral Resource of 14Mt @ 1.2 g/t Au and 0.09% Cu or 1.3 g/t AuEq in the Eastern Breccia”.
- Drilling on the Northern Breccia Zone “continues to assess the extents of higher-grade mineralisation within the core of the Havieron Breccia, with results in HAD145A intersecting a zone of copper dominant sulphide mineralisation that is currently open at depth”. Hole HAD-145A intersected 69m at an average grade of 0.72g/t gold and 1.1% copper from a depth of 1,300m, including a higher grade section of 31.7m averaging 1.16g/t gold and 1.6% copper from 1,311.5m depth.
- The company confirms that “Feasibility study work by Newcrest … [is] … continuing along with concurrent studies assessing broader growth options for Havieron. Upside opportunities are being evaluated to increase the scale and life of Havieron, as well as presenting the opportunity to adopt alternative, lower cost, mining methods. The Feasibility Study is still forecasted to be delivered in the December 2022 quarter”.
Conclusion: As drilling proceeds to assess the expansion opportunities at Havieron, Greatland Gold continues to report wide mineralised intersections at depth which should underpin the Feasibility Study due for completion during the final quarter of 2022. We look forward to the feasibility study to provide greater insight into the scale of the opportunity.
Orosur Mining Inc (AIM:OMI, TSX-V:OMI)* 10.4p, Mkt Cap £19.5m – Flash Note – Multiple high-priority targets set to be explored in exploration ramp up at Anza
- Orosur has started 2022 strongly by adding two highly prospective assets to its exploration portfolio situated in South America, as well as the Anza Project.
- While the company progresses exploration at both assets following a review of historical data, exploration at the Anza will continue through operator Monte Águila (Newmont - Agnico Eagle JV).
- Expect elevated news flow from all three assets as the company remains well-funded to achieve its near-term exploration goals.
- Near-term share price catalysts:
- Exploration results from the wider Anza license area which would provide insight into the broader mineralised system beyond the APTA target.
- Further exploration of the deeper, mineralised region discovered by Monte Águila in the latest round of results.
- News flow from the recently secured JV projects in Argentina and Brazil.
*SP Angel act as Nomad and Broker to Orosur Mining
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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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