SP Angel . Morning View . Monday 11 04 22
Credit growth picks up in China with more monetary stimulus expected amid Covid lockdowns
MiFID II exempt information – see disclaimer below
BlueJay Mining PLC (AIM:JAY, OTCQB:BLLYF)* – Disko-Nuussuaq drill programme to commence June 2023
Bradda Head Lithium Limited (AIM:BHL, OTCQB:BHLIF) – Up to $12.5m equity raise
Lake Resources NL (ASX:LKE, OTCQB:LLKKF) – Non-binding MOU for 25ktpa offtake with Ford
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* – Q1 report highlights increasing development and production rates and confirms 2022 guidance of copper output doubling to 7000t
SolGold PLC (LSE:SOLG, TSX:SOLG, OTC:SLGGF)* – Results of Alpala pre-feasibility study to be released on 20th April
Thor Explorations Ltd (TSX-V:THX, AIM:THX, OTC:THXPF) – Q1 production of 21,000oz keeps Segilola on track for 2022 production guidance of 80-100,000 oz of gold
Graphene / high-grade graphite purification – private financing opportunity
- We are inviting investors to finance a private company which produces high-grade graphite and graphene from low grade graphitic material. The company also sells:
- Paints: The company already sells a range of graphene paint products and is working on concrete modifiers.
- Concrete modifier: developing distribution network.
- Li-ion battery anodes: project in development in Warwick
- Machinery uses cavitation waves mixture of water and graphite making the process environmentally friendly along with no detrimental grinding impact on graphite particles.
*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.
Dow Jones Industrials +0.40% at 34,721
Nikkei 225 -0.61% at 26,822
HK Hang Seng -3.19% at 21,175
Shanghai Composite -2.61% at 3,167
Economics
China – Consumer inflation picked up in March, although, remained well below levels seen in the Eurozone and the US suggesting the central bank will keep its focus on pro-growth initiatives.
- Credit and money supply growth accelerated last month reflecting government efforts to ease access to credit as the economy struggles with the worst Covid outbreak in two years.
- CPI (%yoy): 1.5 v 0.9 in February and 1.4 est.
- PPI (%yoy): 8.3 v 8.8 in February and 8.1 est.
- Aggregate Financing (CNY bn): 4,650 v 1,193 in February and 3,550 est.
- New Yuan Loans (CNY bn): 3,130 v 1,234 in February and 2,750 est.
- M2 Money Supply (%yoy): 9.7 v 9.2 in February and 9.2 est.
UK – Growth slows more than expected in February on the back of a contraction in industrial production and construction.
- The economy grew 0.1%mom compared to 0.8% in January and 0.1% forecast.
- “The U.K. economy was losing steam even before the impact of Russia’s invasion of Ukraine… February’s slowdown is likely to be the start of a prolonged period of considerably weaker growth,” the British Chambers of Commerce commented on the data.
- Soaring inflation seeing a decline in real earnings with the central bank seen to raise rates further is likely to weigh on consumer spending as well moving forwards.
- The pound dropped against the US$ on the news before recovering its losses and trading little changed this morning.
France – President Macron secures a narrow lead over nationalist contender Merine Le Pen in the first round ahead of a runoff planned for April 24.
- Macron got 27.6% of the vote compared to 23.4% for Le Pen, Blomberg cites interior ministry data based on 97% of registered voters.
- Three surveys show him leading by at least 54% to 46% while others pointing to a narrower lead.
- Sovereign bond yields were up only slightly this morning trading 2-3bp higher while local equity market index was marginally higher (+0.15% CAC 40).
Currencies
US$1.0893/eur vs 1.0853/eur last week. Yen 125.32/$ vs 124.07/$. SAr 14.662/$ vs 15.766/$. $1.301/gbp vs $1.303/gbp. 0.743/aud vs 0.746/aud. CNY 6.374/$ vs 6.362/$.
Commodity News
Palladium prices continue to rise as London market suspends two Russian refiners
- Palladium prices continued to rise this morning, following an 8.7% surge on Friday after the suspension of two state-owned Russian refiners by the London market and the CME Group (NASDAQ:CME).
- The London Platinum & Palladium market (LPPM) suspended Krastsvetmet and Prioksky Plant of Non-Ferrous Metals from its goods delivery and sponge accreditation lists.
- The LPPM’s announcement reverses its decision one month ago to continue letting the Russian plants supply precious metals to the trading hub.
- Russia produces about 40% of mined palladium, most of which is used in catalytic converters for gasoline-powered vehicles.
Indian authorities hunt gang accused of stealing 60ft bridge
- Police in India are seeking to arrest members of a gang who dismantled a 60-feet-long iron bridge and likely sold it off in parts as scrap metal.
- The robbers, posing as government officials attached with the irrigation department in the eastern state of Bihar, used gas cutters and earthmoving machinery to break down an abandoned bridge in Amiyawar village.
Precious metals:
Gold US$1,944/oz vs US$1,931/oz last week
Gold ETFs 106.1moz vs US$106.0moz last week
Platinum US$986/oz vs US$964/oz last week
Palladium US$2,509/oz vs US$2,262/oz last week
Silver US$24.77/oz vs US$24.64/oz last week
Rhodium US$18,900/oz vs US$19,000/oz last week
Base metals:
Copper US$ 10,223/t vs US$10,348/t last week
Aluminium US$ 3,273/t vs US$3,413/t last week
Nickel US$ 32,780/t vs US$33,575/t last week
Zinc US$ 4,241/t vs US$4,227/t last week
Lead US$ 2,380/t vs US$2,406/t last week
Tin US$ 43,625/t vs US$43,810/t last week
Energy:
Oil US$100.4/bbl vs US$101.1/bbl last week
Natural Gas US$6.285/mmbtu vs US$6.365/mmbtu last week
Uranium UXC US$63.50/lb vs $62.80/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$152.9/t vs US$157.7/t
Chinese steel rebar 25mm US$795.6/t vs US$804.7/t
Thermal coal (1st year forward cif ARA) US$230.0/t vs US$220.0/t
Coking coal swap Australia FOB US$415.0/t vs US$380.0/t
Other:
Cobalt LME 3m US$82,000/t vs US$82,000/t
NdPr Rare Earth Oxide (China) US$140,456/t vs US$142,244/t
Lithium carbonate 99% (China) US$71,797/t vs US$74,108/t
China Spodumene Li2O 5%min CIF US$2,840/t vs US$2,840/t
Ferro-Manganese European Mn78%$1,985/t vs US$2,167/t
China Tungsten APT 88.5% FOB US$343/t vs US$343/t
China Graphite Flake -194 FOB US$825/t vs US$825/t
Europe Vanadium Pentoxide 98% 11.9/lb vs US$12.0/lb
Europe Ferro-Vanadium 80% 56.25/kg vs US$56.75/kg
China Ilmenite Concentrate TiO2 US$397/t vs US$399/t
Spot CO2 Emissions EUA Price US$79.3/t vs US$76.9/t
Brazil Potash CFR Granular Spot US$1,250/t vs US$1,250/t
Battery News
Chinese battery manufacturers struggling under China’s zero-covid policy
- Chinese battery manufacturer Contemporary Amperex Technology (CATL) has implemented a "closed-loop management" system at its main factory to keep production going as the country battles an Omicron wave of the coronavirus.
- China has implemented a zero-covid policy while battling the Omicron wave which has led to a lock down of the financial hub of Shanghai as well as the northeastern manufacturing base of Changchun.
- “To ensure market supply to the best of our capabilities, we have adopted strict grid management measures for the orderly operation of Ningde production base," said CATL in a statement.
- Key workers, who do not usually stay in dormitories within the factory's premises, have entered a “closed-loop management” arrangement, in which workers sleep, live and work in isolation to prevent transmission of the virus.
- GM’s JV in Shanghai has kept production going through the lockdown’s by implementing a similar arrangement at its factory, but Tesla and VW's Shanghai joint venture with SAIC Motor has suspended operations.
Nissan and NASA to team up on EV battery technology
- Nissan has announced that it is working with NASA on a new type of battery for EVs that promises to charge more quickly and be lighter and safer, the Japanese automaker said Friday.
- The battery would be stable enough to be used in pacemakers, Nissan said, and when finished, it will be about half the size of the current battery and capable of being fully charged in 15 minutes.
- The collaboration with the NASA, as well as the University of California San Diego, will involve the testing of various materials as the companies look to avoid the current expensive materials used in li-ion batteries.
Company News
BlueJay Mining PLC (AIM:JAY, OTCQB:BLLYF)* 7p, Mkt cap £74m – Disko-Nuussuaq drill programme to commence June 2023
Bluejay reports that the exploration drill programme at the project is to be deferred until early summer 2023, at which point a much more comprehensive schedule will take place.
The Disko-Nuussuaq project is a joint venture between Bluejay Mining and Kobold Metals, with Kobold owning a 51% controlling stake.
The revised drill programme will consist of twice as much sampling as originally planned, giving the JV a better chance of a major discovery, and refining the geological model at Disko-Nuussuaq.
We also expect that Kobold will continue to refine its AI-led exploration software, which may be an even more effective exploration tool by next year, given how rapidly this new technology is developing.
Whilst Bluejay expected the JV to be drilling this summer, the deferring of drilling enables the JV to determine the best drill targets at Disko, and for Bluejay to focus on its wholly-owned Dundas ilmenite project – with a refined feasibility study expected by the end of the year according to SP Angel estimates.
*SP Angel acts as nomad and broker to Bluejay Mining
Bradda Head Lithium Limited (AIM:BHL, OTCQB:BHLIF) 14.1p, Mkt Cap £45m – Up to $12.5m equity raise
- The Company raised ~$10m at 13.5p with investors in North America and is raising further ~$2.5m with investors in the UK via an accelerated bookbuild.
- Each share has one warrant attached to it with an exercise price of 21p.
- Proceeds will be used for exploration at its portfolio of lithium projects including clay and pegmatite assets in Arizona and brine prospects in Nevada as well as general working purposes.
Lake Resources NL (ASX:LKE, OTCQB:LLKKF) A$2.0, A$2.6bn – Non binding MOU for 25ktpa offtake with Ford
- The Company signed an offtake for ~25ktpa of lithium from the Kachi Project under the non-binding MOU with Ford Motor.
- The news comes on the back of a non-binding MOU with Japan-based trading house Hanwa Co for an up to 25ktpa offtake signed earlier in March this year.
- The Company is developing the Kachi lithium brine deposit located in the Catamarca Province, Argentina, hosting 1.0mt LCE at 289mg/L in the Indicated category and 3.4mt LCE at 209mg/L in the Inferred Resource.
- The team partnered with Lilac Solutions for development of Direct Lithium Extraction circuit at Kachi with Lilac earning up to 25% into the project via performance based milestones.
- Lilac prepared a modular demonstration pilot plant to be delivered from California, US, to site in Argentina in March that will help to test the process and produce lithium carbonate samples for shipment to potential offtakers.
- The Company is planning to complete a DFS and an expansion to 50ktpa study in H1/22 with permits secured and construction planned to start later in 2022.
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* – 28.5p, Mkt cap £47m – Q1 report highlights increasing development and production rates and confirms 2022 guidance of copper output doubling to 7000t
NPV Valuation: 168p/s
- In its quarterly report for the 3 months ending 31st March 2022, Rambler Metals & Mining amplifies the preliminary information on the operating performance of its Ming mine and Nugget Pond mill released last week.
- At the mine, ore production of 89,053t is now 33% higher than the 67,002 produced in Q4 2001 and, with ore now “being produced from both the LFZ 760/735 levels and UFZ 790/770 levels” Rambler Metals confirms that it has achieved it target “of having four sources of ore by the end of Q1 2022. This is a major milestone in our turnaround plan and a first for the Ming Mine”.
- The company reports that “Total development during the quarter increased 14% over Q4 2021 … [to 1,242m] … and exceeded levels from the previous four quarters, supplemented with the continued presence of contractors”.
- In our opinion, the increased levels, in particular of operating development (1,086m compared to 809m during Q4 2021), underpins the increased production levels and provides a platform for a sustainable and continuing production increase in mined ore production.
- Despite the previously reported breakdown in the secondary crusher, which “reduced throughput in the short term” the Nugget Pond Mill processed 75,577t of ore (Q4-2021 66,651t), albeit at a lower head grade of 1.52% copper (Q4-2021 – 1.75%) to produce 4,191t of concentrate containing 1,066t of saleable copper and 424oz of gold (Q4-2021 4,109t of concentrate containing 1,090t of copper and 155oz of gold).
- Rambler Metals confirms that while the crusher problem “has reduced throughput in the short term, a crushing plant has been sourced and set up at the mine to allow plant throughput to return to targeted levels”.
- The continuing programme of delineation drilling in 21 holes totalled 3,571m, to investigate the Lower Footwall Zone and the Ming North Zone, during the quarter (Q4-2021 1,030m in 8 holes).
- Exploration drilling totalled 2,450m in 11 holes (Q4-2021 460m in 2 holes) also to investigate the Lower Footwall Zone and the Ming North Zones.
- Signs of encouraging results from the exploration drilling are implied by the company’s previous announcement of the discovery of the LP East and the Jennings Zone within 100m of existing underground infrastructure and today’s comment that “Infill drilling will be conducted to outline a potential minable shape to provide another source of ore closer to surface which could leverage off existing development”.
- President and CEO, Toby Bradbury, confirmed “our guidance for 2022 of 7000 tonnes of salable copper” production in 2022 and explained that the “diamond drilling work continues to deliver outstanding results which confirm the quality of what we plan to mine and the new discoveries are adding to the exciting prospectivity of our deposit, providing an indication of the potential and just how under explored the Ming Mine really is”.
- He also explained that “Where in the past, cash constraints may have led to choices that were not always optimal, we now have the time to build in the most cost-effective solutions across all our processes. In the mine, we are about to start backfilling the first stope on the 735-760 level in the Lower Footwall Zone. Similarly, the cut and fill stope in the Ming North Zone is about to enter a "fill" stage. This means we will reduce the amount of waste rock that must be brought to surface”.
Conclusion: Continuing increases in underground development at the Ming mine have given the operation 4 separate ore sources and are establishing the platform for sustaining the increased levels of production required to achieve Rambler Metals 2022 target of doubling annual copper output to 7,000t. The infill and exploration drilling programme has already identified 2 new zones of mineralisation close to underground workings so far this year and continuing work demonstrates the under-explored character and resource-addition potential available.
*SP Angel act as Nomad and Broker to Rambler Metals & Mining)
SolGold PLC (LSE:SOLG, TSX:SOLG, OTC:SLGGF)* 39.7p, Mkt Cap £879m – Results of Alpala pre-feasibility study to be released on 20th April
- Solgold has announced its intention to release the results of its pre-feasibility study for the development of its flagship, Alpala project in Ecuador on 20th April, which is in line with earlier indications that results would be available during Q2 2022.
- We look forward to learning more of Solgold’s plans to develop the 2.6bn tonne (measured and indicated) resource at Alpala which grades 0.37% copper and 0.25g/t gold.
*SP Angel acts as advisor to SolGold
Thor Explorations (THX LN) 17.75p, Mkt Cap £112m – Q1 production of 21,000oz keeps Segilola on track for 2022 production guidance of 80-100,000 oz of gold
- Thor Explorations, which declared commercial production at its Segilola gold mine in Nigeria in October 2021, reports that the mine produced 21,343oz of gold during the three months ended 31st March 2022.
- Production was generated by treating 221,920t of ore at an average grade of 3.18g/t gold.
- Thor Explorations says that it expects to produce between 22-24,000oz of gold during Q2 and that “production guidance for the full year 2022 is maintained at 80,000 to 100,000 ounces”.
- The company says that “As the mining plan moves into the fresh ore, mined ore tonnes and grade are reconciling well to the reserve model and process recoveries are in line with the metallurgical recovery model”.
- President & CEO, Segun Lawson said that there “continues to be production improvements in all aspects, in particular, with recoveries continuing to improve and averaging 95.1% for the month of March. We look forward to the second quarter where we expect further improvement in production and additional newsflow from exploration drilling results from both Nigeria and the Douta Project in Senegal.”
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
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*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
Sources of commodity prices
Gold, Platinum, Palladium, Silver - BGNL (Bloomberg Generic Composite rate, London)
Gold ETFs, Steel - Bloomberg
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt - LME
Oil Brent - ICE
Natural Gas, Uranium, Iron Ore - NYMEX
Thermal Coal - Bloomberg OTC Composite
Coking Coal - SSY
RRE - Steelhome
Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite - Asian Metal
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