Today's Morning View - Base metals rise on ceasefire talks

SP Angel . Morning View . Tuesday 29 03 22

Base metals rise on ceasefire talks

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MiFID II exempt information – see disclaimer below

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• Paints: The company already sells a range of graphene paint products and is working on concrete modifiers.
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*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.

AfriTin Mining Ltd (AIM:ATM, OTC:AFTTF) – FY22 tin concentrate production increases by 70% with plant operating 12% above nameplate capacity

Atlantic Lithium Limited (AIM:ALL)* – Len Kolff appointed to board & as interim CEO

Beowulf Mining PLC (AIM:BEM)* – Board satisfied with Kallak exploitation concession

Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)* – Annual results report progress at La India with feasibility study expected during H1 2022

Power Metal Resources PLC (AIM:POW)* – Drill targets defined at Ditau REE project

Rio Tinto PLC (LSE:RIO) – Completion of Rincon acquisition

Shanta Gold Limited (AIM:SHG, OTC:SAAGF) – Updated West Kenya MRE delivers larger and higher confidence resource

Central Asian states fearful of Russia’s ambitions to recreate the USSR

• Many Central Asian states have nurtured close ties with Russia as their economies recovered from the collapse of the Former Soviet Union.
• But many also remember the near-starvation, sudden poverty and complete withdrawal of any assistance as Russia withdrew almost all industry and support into the motherland.
• Independence enabled puppet leaders to grow super-rich through the acquisition of state enterprises, construction and development as their economies recovered.
• A recent disturbance was quashed by Russian special forces at the request of the president who has also offered a series of reforms in an effort to appease ongoing dissent.
• Stalin shipped Russians, Finns, East Germans and other nationalities into the Central Asian states for his own reasons creating mixing nationalities in their communities.
• For example, nearly every Central Asian company has a mix of local directors and Russian technical leaders working well together.
• These states are not keen to return to centralised control from Moscow and we reckon they are less keen to swap their local government for Russian authoritarianism.

Gold eases as cease-fire talks sees improving risk sentiment

• Gold has steadied around the $1,925/oz mark on the prospect of additional talks between Russia and Ukraine in Turkey today.
• Gold’s rally has been softened by a strong dollar and rising US treasury bond yields.
• Geopolitical analysts are pessimistic that the peace talks will result in notable progress, with Ukraine’s initial objective to improve the humanitarian situation.
• Cooling oil prices are also weighing on gold prices – the metal had rallied on expectations of soaring energy costs adding to inflationary pressures.
• Gold remains up over 5% this year and ETF holdings at 12-month highs suggest investors remain bullish on the metal over the long term.

Copper rangebound as traders weigh up Shanghai lockdown implications

• Copper continues to trade around the $10,300/t mark as Beijing continues to crack down on rising Covid cases.
• Traders are weighing up demand implications from Shanghai’s 25m-person lockdown and its impact on China’s economic recovery vs. supply chain disruptions from the commodity hub.
• Analysts are noting dwindling trade in physical copper as Shanghai warehouses are placed under lockdown. (Shanghai Metals Market)
• The Yangshan copper premium, which measures China’s import levels, has hit a 5-year low, with analysts pointing to lockdowns limiting banking operations. (SMM)

Nickel prices cool on wafer-thin LME trading volumes

• Nickel prices down 3% on LME to $32,500/t, tracking Shanghai declines.
• The nickel market is suffering from extreme illiquidity following the unprecedented price squeeze earlier this month – only 420 contracts were trading in 4 hours of trading today.
• Traders are reducing exposure on the exchange as extreme volatility triggers margin calls.
• Commodity trading houses, smaller firms in particular, are suffering increasing margin requirements from creditors amid the volatility, further reducing their ability to partake in the market.
• Volumes are sliding in other LME metals, including copper, aluminium, zinc, tin, and lead.

Major Japanese smelter forecasts 25% increase in nickel use in batteries this year

• Japan’s largest smelter, Sumitomo Metal Mining Co., expects EV demand to see nickel use in batteries jump by a quarter this year.
• The Company forecasts consumption of nickel used in batteries to climb to 410,000t in 2022 vs 330,000t in 2021.
• It estimates a nickel market deficit of 68,000t in 2022 vs 2021’s 135,000t deficit.
• The Company predicts nickel demand will exceed supply over the next 5-10 years.
• It also predicts that non-nickel containing LFP batteries will account for 50% of consumption in 10 years.

Dow Jones Industrials +0.27% at 34,956

Nikkei 225 +1.10% at 28,252

HK Hang Seng +1.02% at 21,905

Shanghai Composite -0.33% at 3,204

Economics

China - China’s 3rd largest property developer shares crash 20% as unable to meet reporting deadline

• Sunac, a major Chinese property developer, will be unable to meet its reporting deadline.
• The company claims the auditing work on its finances are uncompleted.
• Sunac is in the process of negotiating with offshore creditors to extend a yuan-denominated bond maturity date.
• Sunac follows Evergrande and Kaisa in delaying its reporting deadline.
• Similar moves are expected from other major cash-strapped developers Fantasia, Yuzhou, and Zhenro Properties.

EU files dispute against UK to the WTO for support on renewable energy projects

• Maybe the EU would like to file a dispute with Russia for threatening to restrict Russian gas supplies into Germany ?
• Perhaps they might also file a dispute with Russia for creating excessive CO2 in Ukraine through the bombing and rubblising of cities as well as the cremation of their soldiers in mobile morgues.

Ukraine – unprotected Russian soldiers disturbing dust near Chernobyl plant

China – Shanghai Stock and Commodity Exchange staff living in offices to keep trading going

• The lockdown of the Pudong New Area has led many staff to live in their offices to keep the exchanges trading.

South Korea – Russian buyers unable to pay for ships being built in Korean shipyards

• Samsung Heavy Industries is reported to be most exposed.
• Russia accounts for around 2.5% of the total global order book but represents a far larger share of South Korean orders due to construction of LNG carriers.

Currencies

US$1.0979/eur vs 1.0951/eur yesterday. Yen 123.95/$ vs 123.59/$. SAr 14.593/$ vs 14.621/$. $1.315/gbp vs $1.316/gbp. 0.751/aud vs 0.752/aud. CNY 6.369/$ vs 6.372/$.

Commodity News

Precious metals:

Gold US$1,923/oz vs US$1,935/oz yesterday

Gold ETFs 105.7moz vs US$105.8moz yesterday

Platinum US$989/oz vs US$996/oz yesterday

Palladium US$2,288/oz vs US$2,303/oz yesterday

Silver US$24.90/oz vs US$25.09/oz yesterday

Rhodium US$19,000/oz vs US$18,800/oz yesterday

Base metals:

Copper US$ 10,313/t vs US$10,225/t yesterday

Aluminium US$ 3,634/t vs US$3,619/t yesterday

Nickel US$ 32,500/t vs US$33,500/t yesterday

Zinc US$ 4,119/t vs US$4,060/t yesterday

Lead US$ 2,373/t vs US$2,353/t yesterday

Tin US$ 42,405/t vs US$42,360/t yesterday

Energy:

Oil US$111.6/bbl vs US$116.3/bbl yesterday

• Oil prices remain elevated ahead of a scheduled OPEC+ meeting on March 31 to discuss supply policy for the month of May, amid expectations that the group will stick to its current plan.
• Dutch front-month gas futures rose over 10% in early trading to 112.9 euros per megawatt-hour as expectations of colder weather over the next fortnight in Europe combined with a dip in flows from Norway.
• Bloomberg reports that European gas storage was 26% full on March 27 vs the 5-yr seasonal norm of 34% for this time of year.
• Gazprom reported that gas nominations stood unchanged at 109.5mcm, in line with its LT contracts.

Natural Gas US$5.444/mmbtu vs US$5.592/mmbtu yesterday

Uranium UXC US$59.20/lb vs $59.05/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$153.7/t vs US$152.0/t

Chinese steel rebar 25mm US$792.1/t vs US$788.1/t

Thermal coal (1st year forward cif ARA) US$187.0/t vs US$187.0/t

Thermal coal swap Australia FOB US$253.5/t vs US$263.0/t

Coking coal swap Australia FOB US$480.0/t vs US$480.0/t

Other:

Cobalt LME 3m US$82,000/t vs US$82,000/t

NdPr Rare Earth Oxide (China) US$155,414/t vs US$155,365/t

Lithium carbonate 99% (China) US$74,018/t vs US$74,151/t

China Spodumene Li2O 5%min CIF US$2,810/t vs US$2,810/t

Ferro-Manganese European Mn78% min US$2,183/t vs US$2,174/t

China Tungsten APT 88.5% FOB US$340/t vs US$340/t

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

Europe Vanadium Pentoxide 98% 12.2/lb vs US$12.3/lb

Europe Ferro-Vanadium 80% 61.75/kg vs US$62.25/kg

China Ilmenite Concentrate TiO2 US$398/t vs US$398/t

Spot CO2 Emissions EUA Price US$87.7/t vs US$83.1/t

Brazil Potash CFR Granular Spot US$1100/t vs US$1100/t

Battery News

UK Gigafactory start-up eyes venture to secure nickel supply

• Britishvolt, the UK Gigafactory start-up based in Northumberland, is set to agree terms with the Bakrie family for a secure nickel supply.
• The agreement will see both sides develop a plant able to produce battery grade nickel in Indonesia.
• Britishvolt will then assist the Bakrie family in building a 15GW Gigafactory in Indonesia.
• The deal follows VW-backed Northvolt, an alternative battery start-up, who announced a nickel supply deal with Vale.

UK aims to triple solar capacity by 2030

• UK Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng, will put forward ambitious targets for the expansion of renewable energy.
• The plans include increasing solar capacity from 14GW to 50GW, offshore wind from 11GW to 50GW, onshore wind from 15GW to 30GW and nuclear power from 7GW to 16GW.
• Targets for solar and onshore wind would be the first for these technologies.
• These targets would be the most ambitious renewable targets to date – the “10-point plan” set out by Boris Johnson in November 2020, as well as the National Infrastructure Strategy, both referenced 40GW of offshore capacity by 2030.

China’s 2GW offshore wind farm reaches major milestone

• China’s first gigawatt-scale offshore wind farm, the 2GW Three Gorges Yangjiang Shapa, has produced 1TWh of electricity in the first three months since it was fully commissioned.
• China Three Gorges fully connected three offshore wind projects to the Chinese grid, including the Three Gorges Yangjiang Shapa offshore wind farm, in December 2021.
• Yangjiang Shapa comprises 315 offshore wind turbines, four offshore substations, and nearly 1,000 kilometres of submarine cables and was the first in the world to use floating turbines connected to fixed bottom turbines.

Company News

AfriTin Mining Ltd (AIM:ATM, OTC:AFTTF) 7.6p, Mkt Cap £94m – FY22 tin concentrate production increases by 70% with plant operating 12% above nameplate capacity

• Afritin reports that in the year ending 28th February 2022, tin concentrate production from its Uis mine in Namibia rose by 70% to 804t with output running 12% ahead of the plant’s nameplate capacity.
• Ore processed during the year rose by 55% to 543,601t (2021 – 350,736t) and though processed grades declined to 0.147% tin (2021 – 0.190%), improvements in recovery rates to 62% (2021 – 46%) resulted in a 61% rise in the tin content of the concentrate produced to 497t (2021 – 309t).
• Operating costs reduced by 11% to US$25,209/t of contained tine (2021 – US$28,253/t) while on an all-in-sustaining basis costs declined by 3% to US$27,715/t (2021 – US$28,253/t).
• Benefiting from a 72% higher received average tin price of US$38,604/t, Afritin reports a year-end cash balance of £7.37m.
• CEO, Anthony Viljoen, said that “Uis has performed strongly with production exceeding nameplate capacity by 12%, an excellent achievement particularly given the backdrop of record tin prices. The Company ended the year in a strong financial position that will allow for the rapid deployment of the various growth initiatives, including expanded exploration, metallurgical test work on by-product extraction, specifically lithium, ore sorting test work and development of regional mining licence areas, that will be rolled out over the course of 2022”.
• Afritin’s exploration drilling “to increase the resource classification for Li and Ta over the areas where Sn is presently classified within the measured and indicated categories” on the V1/V2 pegmatite is currently in progress with 1,674m drilled so far.

Conclusion: The Uis plant operated at 12% above its nameplate capacity in FY 2022 coinciding with a surge in tin prices over the last year. Drilling aimed at expanding and upgrading the resource base is in progress

*SP Angel act for Bushveld Minerals which holds around 9.5% of AfriTin

Atlantic Lithium Limited (AIM:ALL)* 50p, Mkt Cap £300m – Len Kolff appointed to board & as interim CEO

• Atlantic Lithium reports that Len Kolff has been appointed to the board and as interim CEO, following the proposal on the 21st of March.
• The move follows the sudden passing of Vincent Mascolo on the 9th of March.
• Kolff worked closely with Vince Mascolo over the past seven years and was instrumental in the discovery and evaluation of the Ewoyaa lithium project in Ghana.
• Len has been working on the ground in Ghana and is well placed to ensure ongoing continuity in the development of the Ewoyaa project.
• Len was with Rio Tinto for 16 years working on Simandou in Guinea and Northparkes Copper-Gold mine in Australia. He has a BSc from the Royal School of Mines, Imperial College, London and a Masters of Economic Geology from CODES, University of Tasmania.
• Mr Kolff currently holds a beneficial interest in 1,607,344 ordinary shares in the Company, held by his spouse Melissa Kolff van Oosterwijk.

*SP Angel acts as Nomad to Atlantic Lithium

Beowulf Mining PLC (AIM:BEM)* 9.75p, Mkt Cap £87m – Board satisfied with Kallak exploitation concession

• Beowulf reports that it has reviewed the Government’s decision to offer Beowulf with an exploitation concession for the Kallak North project, and are satisfied that the award include matters the Company would naturally expect to address in project development and the Environmental Court process.
• CEO Kurt Budge also provides outlines his plans to progress the project, including “the completion of a Scoping Study, before the year end, the creation of a roadmap for environmental permitting and updating options for investment and partnering, following-up on interest shown previously”
• Mr Budge is also exploring collaboration opportunities which could involve building local partnerships critical to maximising benefits for Jokkmokk.
• The awarding of an exploitation concession at Kallak follows the appointment of Karl-Petter Thorwaldsson as Minister of Trade and Industry, who is widely viewed as pro-mining and someone who sees value in developing domestic, word class natural resources for the benefit of the Swedish people.
• Kallak’s particularly clean magnetite concentrate should enable steel makers to reduce carbon emissions further, improve energy efficiency and reduce waste leading to cleaner and greener steel production.
• The Kallak North area concession is also designated as an Area of National Interest for minerals and is located just 80km southwest of the major iron ore mining centre of Malmberget.
• The project is also ~120km southwest of the giant Kiruna iron ore mine which LKAB claims to be the first source of green iron in the Europe.
• The Norrbotten county administration also see Kallak as economically beneficial through the creation of around 250 direct and 300 indirect jobs along with >SEK1bn in taxes and demand for local and national services over a 25-year period.
• Resources: Kallak North hosts an estimated 389mt of iron ore which can be concentrated to a rich 71.5% iron content concentrate which is better than LKAB’s 70.7% target specification.
• Finland: Mr Budge also details the strong progress being made with Grafintec, including the company’s partnership with Epsilon Advanced Materials and joint plans for an anode materials production facility in the GigaVaasa area.
• Kosovo: The announcement also comments that exploration drilling is set to commence with Vadar Minerals in Kosovo, of which Beowulf owns a 51.4% stake.
• The programme is expected to include 3,400m of drilling at lead-zinc targets at Wolf Mountain, gold targets at Majdan Peak and a possible lithium target at Viti for up to £1.0m.

Conclusion: Beowulf is making strong progress on three fronts, directly as a result of the hard work of Kurt Budge and his team. Development of other assets while waiting for the Kallak North Exploitation Concession has meant that the company has added value and diversified appropriately, which is now set to benefit shareholders.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)* 31.25p, Mkt Cap £48.5m – Annual results report progress at La India with feasibility study expected during H1 2022

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• Condor Gold reports a loss of £2.33m for the year ending 31st December 2021 (2020 – Loss £1.31m) as it advances its La India gold project in Nicaragua towards production.
• The company reports a 31st December 2021 cash balance of £2.07m following the completion of a £4.1m fund-raising in November 2021 which supplemented an earlier £4m placing in February 2021.
• The company describes progress at La India including the findings of September’s Preliminary Economic Assessment (PEA) which outlined 2 development routes;
• a 1.225mtpa open-pit mining operation producing an average 120,000oz pa of gold over the initial 6 years of a 9 year mine life; and
• a larger, 1.4mtpa operation in which a combination of open-pit and underground mining produces an average 150,000oz pa of gold over the first nine years of a12 year life.
• The smaller, open-pit development option an “Internal Rate of Return ("IRR") of 58% and a post-tax Net Present Value ("NPV") of US$302 million, at a discount rate of 5% and gold price of US$1,700/oz” while the ‘hybrid’ option of combined open-pit and underground mining generates an “IRR of 54% and a post-tax NPV of US$418 million, after deducting upfront capex, at a discount rate of 5% and gold price of US$1,700/oz”.
• During 2021, in addition to completion of the PEA, Condor Gold has sought to de-risk aspects of the project development with additional infill drilling to firm up resources and provide increased confidence in the characteristics of ore to be processed during the early part of La India’s production phase as well as through the purchase of a new, pre-owned, SAG (Semi-Autogenous Grinding) mill which shortens the lead time on ordering this equipment from a manufacturer.
• Further work on the geotechnical, hydrogeological and tailing management aspects of project development and on detailed engineering and process plant design is intended to advance the feasibility study (due during H1 2022) , smooth the path of mine development and assist the transition from mine development into production.
• The company explains that “The primary purpose of the FS is to secure debt to finance the upfront capital cost of approximately US$125M for stage 1 of construction. The FS Study has been conducted solely on La India open pit, however the plan is to mine from the 3 permitted pits to achieve a quick pay back and target 100,000 oz gold production per annum before expanding to 150,000 oz gold per annum by adding the underground material to the mine plan”.
• Condor Gold also reports positively on its developing programme of engagement with its host communities where its’ “main local focus is the drinking water programme, implemented in April 2017. A total of 740 families are currently benefiting from the program and currently receive five-gallon water dispensers each week. In May 2021, the Company installed a water purification plant manufactured in Israel at a cost of approximately US$200,000 to double the drinking water provided to the local communities”.
• The company describes constructive relations with key agencies of the Government and explains that, having operated in Nicaragua since 2006 it “continues to add value to the local communities and environment by generating sustainable socio-economic and environmental benefits. The new mine would potentially create approximately 1,000 jobs during the construction period, with priority to be given to the local community. The upfront capital cost of approximately US$125 million will have a significant positive impact on the economy”.
• Condor Gold confirms that its capacity to operate has not, so far, “been materially affected by the on-going Covid-19 pandemic. The situation is kept under close review by management and the Board; certain measures have and will be taken as appropriate to ensure the health and safety of employees in this regard and to reduce the potential spread of the virus within the local community”.
• Summarising, Chairman and CEO, Mark Child, described a bright outlook for 2022 and said that “The La India Project is substantially de-risked and nearing a construction-ready status. A FS Study is due in the first half of 2022, the Project is fully permitted for construction and extraction with a target of 100,000 oz gold p.a. in stage 1. A new SAG Mill has been purchased and is in a warehouse in Managua. The Project economics are robust with low AISC, a high IRR and a payback period of 12 months”.

Conclusion: Key milestones on Condor Gold’s continuing progress towards the development of La India are the completion of the feasibility study during H1 2022 which will then support discussions for debt funding of the US$125m stage1 capital development. We look forward to further news on the progress of both aspects over the coming months.

*SP Angel act as a broker to Condor Gold

Power Metal Resources PLC (AIM:POW)* 1.35p, Mkt Cap £20m – Drill targets defined at Ditau REE project

(The Ditau Project is held by Kanye Resources a Botswana joint venture company in which Power Metal and Kavango Resources PLC (LSE:KAV, OTC:KVGOF) each hold a 50% interest.)

• Power Metal reports that it has identified 12 airborne magnetic targets at Ditau, and a diamond drill rig is now being mobilised to the first drill location and drilling is expected to commence within the next few weeks.
• Of the 12 targets, 9 are clear ring structures that are believed to represent possible carbonatites that are considered by the Company to be prospective for rare-earth element mineralisation.
• Kanye is now commencing on a diamond drilling campaign which will include up to 6 deep drillholes (up to 2,400m estimated in total) targeting three of the highest priority targets identified to date:
• The target depth horizons at all targets are less than 400m for each drillhole, and the estimated Kalahari sand cover is between 60m-120m thick based on estimates from the recently completed AMT surveys at Ditau.
• The 12 airborne magnetic targets identified at Ditau are not known to have been tested for either REEs, base or precious metal mineralisation historically.

*SP Angel acts as Nomad and Broker to Power Metal Resources

Rio Tinto PLC (LSE:RIO) – 5,934p, Mkt cap £73bn – Completion of Rincon acquisition

• Rio Tinto reports that it has completed the $825m acquisition of the Ricon lithium project in Argentina.
• Rincon is described as “a large undeveloped lithium brine project located in the heart of the lithium triangle in the Salta Province of Argentina, an emerging hub for greenfield projects. The project is a long life, scaleable resource capable of producing battery grade lithium carbonate … [and it] … has the potential to have one of the lowest carbon footprints in the industry”.
• Chief Executive, Jakob Stausholm, explained that “Rincon strengthens our battery materials business and positions Rio Tinto to meet the double-digit growth in demand for lithium over the next decade, at a time when supply is constrained. We will be working with local communities, the Province of Salta and the Government of Argentina as we develop this project to the highest ESG standards”.
• Extraction of lithium at Rincon is expected to use direct lithium extraction technology which “has the potential to significantly increase lithium recoveries as compared to solar evaporation ponds. A pilot plant is currently running at the site and further work will focus on continuing to optimise the process and recoveries”.
• Explaining the lithium market, Rio Tinto says that the “fundamentals for battery grade lithium carbonate are strong, with lithium demand forecast to grow 25-35% per annum over the next decade with a significant supply demand deficit expected from the second half of this decade”.

Shanta Gold Limited (AIM:SHG, OTC:SAAGF) 9.8p, Mkt Cap £102m – Updated West Kenya MRE delivers larger and higher confidence resource

• The Company issued an updated MRE for the West Kenya Project in Kenya.
• Updated MRE is estimated at 7.8mt at 6.2g/t for 1.6moz including:
• 1.0mt at 11.7g/t for 378koz in the Indicated category;
• 6.8mt at 5.4g/t for 1,173koz in the Inferred resource.
• The resource is split between three deposits including:
• 1.1mt at 7.1g/t for 243koz at Bushiangala (~110koz in the Indicated category)
• 2.2mt at 12.6g/t for 874koz at Isulu (~270koz in the Indicated category)
• 4.6mt at 2.9g/t for 434koz at Ramula (all Inferred).
• Ramula is located 35km away from the Liranda region hosting Bushiangala and Isulu.
• Estimates above compare to 2.9mt at 12.6g/t for 1.2moz as per the previous MRE from May/18.
• The Company continues with infill drilling programme to convert more ounces into higher confidence Indicated category to assist in mine planning and development with ~700koz of additional Inferred resources being targeted for conversion in 2022 (split between ~400koz at Isulu-Bushiangala and ~300koz at Ramula).
• The Company completed 37% of total planned drilling at West Kenya by the end of 2021.
• Additionally, the Company released re-modelled MRE based on relogging of historic drillholes for the Bumbo polymetallic VMS deposit located 20km to the east of Isulu-Bushiangala.
• Bumbo MRE is estimated at 0.4mt at 2.29g/t Au and 46g/t Ag in the gold zone and additionally 2.1mt at 3.3% Zn, 1.4% Cu, 0.3% Pb, 0.4g/t Au and 29g/t Ag in base metal zone.
• This resource is in addition to the West Kenya MRE reported above.
• The resource is based on ~5,500m of drilling in early 1990s as well as 16 diamond holes for ~2,300m and 5 RC holes for ~400m completed between 2010 and 2012.
• The resource is hosted within two man identified lenses of massive to disseminated sulphides striking over 500m east-west and dipping steeply to the north with exploration carried up to 180m depth.

Conclusion: New West Kenya MRE delivered larger and higher confidence resource. Updated Isulu-Bushiangala resource was little changed in total ounces but infill drilling converted ~380koz in the higher confidence Indicated category that now stands at ~30%. Growth in contained ounces was driven by Ramula MRE located 35km away from Isulu-Bushiangala delivering ~430koz at 2.9g/t (all Inferred) modelled as an open pit project. The latter reflects high exploration potential of the area with the team planning to test new early stage targets this year to convert more of those into the Inferred resource.

SP Angel and Digbee ESG joint initiative for mining companies

https://www.uploadlibrary.com/SPAngel_JohnMeyer/DIGBEE_Press_release.pdf

• SP Angel and Digbee, a specialist ESG group, wish to announce their joint initiative in bringing ESG accreditation to mining companies in their drive to meet institutional investment and rapidly evolving ESG standards and regulatory requirements.
• We are rapidly approaching a point where a company’s ESG profile will not simply be a positive investment factor but will become a precondition to investment by many investment funds.
• The guidance and ratings process developed by Digbee is specifically designed to assist mining companies meet the new expectations and ensure directors meet their ESG compliance objectives.
• The initiative will not only quantify and score the ESG profile of qualifying companies but will also highlight ESG improvements and positive performance as companies develop.
• Importantly, the process will enable investment funds to demonstrate the positive results of their investments to their underlying investors and stakeholders which can, in turn, lead to further funding.
• It is imperative that any ESG Rating is seen to be credible. Digbee’s solution was developed to address this: it is mining specific, right sized and future looking, based on an independent assessment of a submission that is supported by evidence and approved by the company’s board of directors. It will also address investor frustration at a lack of comparable or meaningful data.
• For companies at an earlier stage of their ESG journey, recording improvements over time through the Digbee initiative is likely to prove attractive to investment funds as a demonstration of their ESG commitment permitting institutional investment at an earlier stage.
• The direction of travel is now firmly towards renewable sources of energy and a transition to environmental sensitivity. Historically, regardless of the individual facts, miners have collectively been identified as bad actors in this regard. Digbee engagement and ratings should improve the visibility of the good work being done.
• For example, installing, wind and solar generation to displace oil and gas should not only cut energy costs but also reduce carbon emissions. Sharing this energy with a local community may further reduce emissions, strengthen community engagement and lead to long-term sustainable benefits well beyond the end of the mine life. Similarly, a mine closure, thoughtfully done, can leave a positive community legacy that will stand a company in good stead when it is seeking new mining opportunities. Having a third party ESG specialist incorporate these initiatives into a rating accepted by investors will help secure the credit such initiatives deserve.

Jamie Strauss, Founder & CEO, Digbee Ltd: “We are delighted with this joint initiative with SP Angel, the number one ranked advisor to the AIM Mining sector*. SP Angel has acknowledged the importance of presenting their corporate clients to institutional investors with credible ESG disclosure as an increasing prerequisite to encourage new investment. We look forward to working together to achieve a more sustainable mining industry that is recognised for its positive actions ”

John Meyer, Mining Analyst & Partner at SP Angel “Working with Jamie Strauss and Digbee will help prepare our corporate clients for ESG-orientated investment. Mining, exploration, and development companies contribute much to local communities which combined with the potential benefits of increasingly sustainable operations is worthy of recognition. Quantifying the benefits, improvements and legacies of these operations should act a catalyst to further improvement to the benefit of all stakeholders.

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

SP Angel

Prince Frederick House

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.

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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

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.

MiFID II - Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).

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%