SP Angel . Morning View . Friday 29 04 22
Pilbara Minerals sells 5.5% spodumene for US$5,650/dmt
Nickel and tin prices rise on continued support for battery metals
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AEX Gold Inc (AIM:AEXG, TSX-V:AEX) – 2021 report describes progress de-risking Nalunaq Project and additional exploration targets in Greenland
Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF)* – BUY, 111p – Transformational 2021 described as Caserones delivers royalty
Galantas Gold Corp (AIM:GAL, TSX-V:GAL, OTC:GALKF) – New exploration license awarded
Orosur Mining Inc (AIM:OMI, TSX-V:OMI)* – Quarterly update highlights entry into new jurisdictions in South America
Pilbara Minerals Ltd (ASX:PLS) – Pilbara sells 5.5% spodumene concentrate shipment at US$5,650/dmt eq. $6,163.6/dmt for 6% LiO
US Dollar surges to highest level in 20 years on Fed tightening outlook
- The dollar index climbed as much as 0.9% to just under 104 on Thursday on bets that aggressive interest rate rises from the Federal Reserve will outpace other central banks.
- The dollar has risen 8% so far this year, weighing on bullion as a strong dollar makes gold more expensive for holders of other currencies.
- Markets are pricing in half percentage point interest rate rises from the Fed at each of its next three meetings, as the central bank tries to curb the highest inflation rate in decades
Gold prices bounce from yesterday’s low of $1,873/oz to $1,916/oz this morning
- Prospects for rising US interest rates are driving the US dollar higher and gold generally lower.
- But, while the US Federal Reserve might like to shock consumers to drive inflation lower, is unlikely to raise interest rates to overly high levels.
- The very high level of US debt is likely to persuade policy makers to tolerate a degree of inflation while raising interest rates modestly.
Dow Jones Industrials +1.85% at 33,916
Nikkei 225 closed at 26,848
HK Hang Seng +3.05% at 20,894
Shanghai Composite +2.41% at 3,047
Economics
UN Secretary General stunned as rockets strike Kiev during his visit to the capital and to meet Zelenskyy
- Antonio Guterres is no stranger to war zones having organised the evacuation of civilians from many war zones.
- But the Secretary General of the UN was left stunned when cruise missiles hit Kyiv during his visit to the city and surrounding towns.
US economy contracts -1.4% in Q122 on huge rise in trade deficit
- The US economy shrank for the first time since 2020 in Q1, with GDP falling a -1.4% following a 6.9% pace of growth at the end of last year.
- A Bloomberg survey of economists forecast a 1% increase.
- Trade and inventories subtracted about 4pp from headline growth, while government spending also shrank which weighed on GDP.
- Kansas City Fed manufacturing index slipped to 28 in April vs 46 in March
- Weekly jobless claims pulled back to 180k from 185k
- Advanced Q1 GDP qoq fell 1.4% vs 6.9% in Q4
- Real consumer spending rose 2.7% vs 2.5%
- PPI rose came in at 8% vs 7.1%
Amazon Q1 sales gain 7.3% marking its slowest quarter of growth for 21 years
- Is Amazon becoming mature, has the Ukraine war hit consumer demand or is it a bit of both.
China – China aims for more realistic 5.5% growth and CPI rise of 3%
Japan – BoJ left rates unchanged at -0.1%,
- Retail sales rose 0.9% yoy vs -0.9% in February
- Industrial production gained 0.3% vs 2%), yoy-1.7% (0.5%).
Taiwan – S&P raises Taiwan rating to AAA from AA+
- S&P see strong exports and do not expect tensions with China to seriously disrupt the economy for the next 3-5 years.
- The firm sees Taiwan as growing at 2.8% this year vs the government’s 4.4% forecast.
Eurozone - GDP figures are expected later today
- CPI hits 7.5% in April YoY, highest reading on record
- Euro-area inflation hit a fresh all-time high last month, raising pressure on the ECB to hike rates.
- Inflation breakdown:
- Food, alcohol and tobacco +6.4%
- Energy +38%
- Non-energy industrial goods +3.8%
- Services +3.3%
European energy majors planning to work around EU Sanctions
- Gas distributors are preparing pay Gazprombank in Switzerland through rouble accounts.
- The workaround is certainly against the spirit of the sanctions if not wholly against the sanctions.
- Putin’s long prepared plan to use European dependence on Russian energy to divide the EU appears to be working.
- Gazprom reports record profit of RUB2tn (£22bn) in 2021.
France – economy stalls in Q1 as inflation hits new record
- The French economy stalled in the first quarter following a rise of 0.8% in Q4 2021.
- Consumer spending fell 1.3% as high energy prices and the war in Ukraine hit confidence.
- Inflation hit 5.4% but is likely to rise further as the impact of the war takes hold.
- The French government is proposing €25bn of support for consumers to protect from higher energy prices.
- The Chinese Yuan Renminbi reversed 18 months of gains this week falling to 6.65/USD this morning from 6.5USD a week ago .
Germany - Preliminary German CPI gained 7.4% yoy in April vs 7.3% in March
UK - UK car production fell -33.4% yoy in April vs -41% in February as dealers struggle with stock and consumers put off new purchases
Sweden - Riksbank raised rates 0.25% from 0%
Brazil - PPI rose 18.3% yoy in March vs 20.1% yoy in February
Portugal – GDP rises 11.9% in Q1 yoy and 2.6% on last quarter
- CPI falls 2.2% mom but rises 7.2% yoy .
Zimbabwe - Trafigura seeks control of state-affiliated Zimbabwean mines for unpaid debts
- Trafigura and Zimbabwe’s government have discussed a dal that would give the company control over output from some of the nation’s mines as repayment for its debt.
- Trafigura will be paid $225.6m by nickel and mining subsidiaries of the state-run Kuvimba Mining House in return for unpaid fuel bills dating back to 2016.
- According to the deal, Kuvimba would pay Trafigura $6m a month and retain 40% of the payments to the Freda Rebecca and Shamva gold mines, as well as the nickel mines owned by Bindura Nickel.
- Trafigura would also have the right to approve buyers of the metal selected by Bindura and also have right of first refusal on the metal.
- Zimbabwe has racked up in excess of $10bn in external debt, Bloomberg reports.
British Virgin Islands premier arrested after he inspected bags of cash for allegedly helping drug traffickers.
- The premier was arrested on drug trafficking charges and detained at Miami airport.
Currencies
US$1.0549/eur vs 1.0538/eur yesterday. Yen 130.31/$ vs 130.21/$. SAr 15.928/$ vs 15.925/$. $1.253/gbp vs $1.256/gbp. 0.715/aud vs 0.714/aud. CNY 6.596/$ vs 6.594/$.
Commodity News
Precious metals:
Gold US$1,911/oz vs US$1,884/oz yesterday
Gold ETFs 106.7moz vs US$106.7moz yesterday
Platinum US$931/oz vs US$924/oz yesterday
Palladium US$2,269/oz vs US$2,287/oz yesterday
Silver US$23.44/oz vs US$23.26/oz yesterday
Rhodium US$18,200/oz vs US$18,200/oz yesterday
Base metals:
Copper US$ 9,835/t vs US$9,849/t yesterday
Aluminium US$ 3,054/t vs US$3,118/t yesterday
Nickel US$ 33,870/t vs US$33,465/t yesterday
Zinc US$ 4,158/t vs US$4,257/t yesterday
Lead US$ 2,272/t vs US$2,288/t yesterday
Tin US$ 40,610/t vs US$39,800/t yesterday
Energy:
Oil US$108.1/bbl vs US$104.77/bbl yesterday
Oil prices strengthened yesterday as political rhetoric was stepped up for an EU-wide ban on crude imports from Russia, even as evidence mounted for a global diesel supply crunch.
European energy prices fell again as concerns eased that Russian gas would continue to flow despite the unilateral action taken against Poland and Bulgaria this week.
This week’s US natural gas storage report was up 40bcf to 1,490bcf, according to EIA estimates, but continues to linger near the bottom of its five-year range.
Natural Gas US$6.876/mmbtu vs US$7.315/mmbtu yesterday
Uranium UXC US$53.05/lb vs $53.40/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$142.0/t vs US$140.2/t
Chinese steel rebar 25mm US$765.6/t vs US$765.9/t
Thermal coal (1st year forward cif ARA) US$225.0/t vs US$225.0/t
Thermal coal swap Australia FOB US$311.0/t vs US$317.0/t
Coking coal swap Australia FOB US$465.0/t vs US$465.0/t
Other:
Cobalt LME 3m US$82,000/t vs US$82,000/t
NdPr Rare Earth Oxide (China) US$127,7710/t vs US$129,228/t
Lithium carbonate 99% (China) US$65,560/t vs US$65,592/t
China Spodumene Li2O 5%min CIF US$3,510/t vs US$3,510/t
Ferro-Manganese European Mn78% $2,041/t vs US$2,092/t
China Tungsten APT 88.5% FOB US$340/t vs US$340/t
China Graphite Flake -194 FOB US$815/t vs US$825/t
Europe Vanadium Pentoxide 98% 11.1/lb vs US$11.4/lb
Europe Ferro-Vanadium 80% 45.25/kg vs US$46.25/kg
China Ilmenite Concentrate TiO2 US$377/t vs US$378/t
Spot CO2 Emissions EUA Price US$85.8/t vs US$86.0/t
Brazil Potash CFR Granular Spot US$1,250/t vs US$1,250/t
Battery News
VW and BP to deploy 8000 EV chargers across the Europe and UK
- BP has announced a strategic partnership VW with to expand its EV charging network across the EU and UK.
- The first phase of the roll-out will see up to an additional 4,000 charge points at bp’s Aral retail sites in Germany and BP retail sites in the UK over the next 24 months.
- By end 2024, up to 8,000 charge points could be available across Germany, the UK and other European countries.
- Volkswagen’s innovative Flexpole 150kW charging units, feature two charge points, have an integrated battery storage system, overcoming one of the biggest obstacles to the rapid roll-out of fast charging infrastructure in Europe today – the need for high-powered grid connections.
Company News
AEX Gold Inc (AIM:AEXG, TSX-V:AEX) 43.5p, Mkt Cap £77m – 2021 report describes progress de-risking Nalunaq Project and additional exploration targets in Greenland
- AEX reports a loss of a net loss of C$24.8 million in 2021 (2020: C$12.3 million), as it continues to advance its Nalunaq project with a focus on optimising project costs and de-risking the project schedule.
- The company reports that exploration results received so far from its 11,000m, 51 drillholes completed during the 2021 programme have “delivered ahead of our expectations, with further results expected to be announced shortly”.
- The drilling was “was designed to assess the along strike and down dip extensions of the mineralized Main Vein structure away from the previously explored South, Target and Mountain Blocks mined between 2004 to 2013 … [and] … provided further evidence that the Valley Block is a new high-grade zone, unrecognized or developed by previous operators and corroborating the Dolerite Dyke Model. The Valley Block is now a key target for initial resource growth at Nalunaq.”
- In addition to the exploration, an independent 3rd party engineering study examined the costs of development, “including the process plant, mobile equipment, surface infrastructure, permanent camp and associated logistics and engineering … and concluded that] … the advanced engineering of the overall project is now to Feasibility Study level based on the Canadian Standards of Disclosure for Mineral Project NI43-101 requirements”.
- Further exploration was undertaken on other targets, including the “Sava target where initial assessments suggest the potential for IOCG mineralization” where remote-sensing, geological mapping and sampling and ionic geochemical results “confirmed the presence of three key significant and coherent multi element anomalies potentially indicative of IOCG mineralization with grab sample grades of up to 0.9% copper”.
- The company confirms that, having spent approximately C$14.3m on exploration during 2021 (2020 – C$7.1m) it ended the year with a cash balance of C$27.3m (2020 – C$61.9m).
- Confirming the progress at Nalunaq and potential for a further zone along strike [from the Valley Block … [in an area known as the] … 'Welcome Block” CEO, Eldur Olaffson said that “On the wider exploration front, we acquired more land in 2021 which has increased our total land package to 4,090 km2, mostly focusing on land that has potential for Strategic Minerals. Strategic minerals are essential for electrification as the world transitions from hydrocarbon energy sources. The results of our exploration program conducted in 2021 have exceeded expectation and lead us to believe that we hold potential resources [of a scale] that could be of global significance.”
Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF)* 53p, Mkt Cap £62m – Transformational 2021 described as Caserones delivers royalty
BUY – 111p
- Altus Strategies reports a pre and post-tax loss of £5.7m for 2021 (2020 – loss of £2.1m) and a cash balance of £6.4m at 31st December 2021.
- Non-executive Chairman, David Netherway, highlighted the acquisition of the cash-generating royalty at the Caserones copper mine in northern Chile as the most significant development of the year and Altus Strategies’ first move outside Africa.
- Mr. Netherway also describes the opening of a branch office in Cairo following the success of Altus Strategies’ bid for approximately 1,550km2 of exploration licences covering four projects in the Eastern Desert of Egypt.
- The project areas offer “a fantastic opportunity for the Company to make some exciting discoveries. The exploration bid process in Egypt has attracted major industry players including Barrick Gold, Centamin and B2 Gold amongst others”.
- Chief Executive, Steven Poulton, described that following the acquisition of the Caserones royalty, Altus Strategies acquired “a portfolio of primarily precious metal royalties from Newcrest Mining Ltd for US$24 million. The portfolio includes two current gold mines and one near-production gold mine as well as 21 near-term development and exploration stage projects. All but one of the projects are located in Australia, further diversifying Altus' portfolio and adding another Tier-1 jurisdiction” to Cote d’Ivoire where “Altus already holds royalties on two self-generated projects, one for gold and one for nickel-cobalt”.
- Mr. Poulton described the company’s objectives for 2022 as continued revenue growth through the acquisition of further royalties and said that “Altus has never had a stronger asset base, team or outlook and I very much look forward to the year ahead”.
Conclusion: The Caserones royalty is Altus Strategies’ first move outside its African origins. The successful acquisition of a large exploration area in the Eastern Desert of Egypt and further royalties in Australia provides additional geographical diversification
*SP Angel acts as nomad and broker to Altus Strategies
Galantas Gold Corp (AIM:GAL, TSX-V:GAL, OTC:GALKF) 36p, Mkt Cap £30m – New exploration license awarded
- Galantas Gold reports that it has expanded its exploration licences in Co. Leitrim by a further 48km2 with the award of additional licences which bring the total held, in addition to the Northern Irish holdings comprising the Omagh Gold project, to 159km2.
- The licence, which is valid for six years from 28th April 2022, covers base metals., gold and silver.
- Galantas Gold also reports its results for the year ending 31st December 2021 with a loss of C$5.3m (2020 – C$3.2m loss) and a year end cash balance of C$1.1m.
- The company describes the completion of 2.2km of underground development at the Omagh Gold project and says that it is recruiting key operating management as it moves towards restoring the mine to full production.
- Underground drilling work is underway on the Kearney Vein and surface drilling on the Joshua Vein is also expected to assist resource expansion and mine-planning.
- Additional process plant equipment is being prepared for installation and development of the secondary mine egress is expected to be completed by the end of Q2-2022.
Conclusion: Galantas has acquired additional exploration licences in the Irish Republic and is continuing to progress the resumption of production at its Omagh gold mine in Northern Ireland.
Orosur Mining Inc (AIM:OMI, TSX-V:OMI)* 11.25p, Mkt Cap £19m – Quarterly update highlights entry into new jurisdictions in South America
- Orosur reported a loss of US$444k for the three months to 28 Feb 2022 vs a loss of $377k for the same period last year.
- Orosur had a cash balance of $4.79m at the end of the period.
- Colombia: Prior to the quarter, Orosur reported that it had been served notice by its Colombian JV partner Minera Monte Águila that it has elected to exercise its right to assume operatorship of the Anzá Project in Colombia.
- Orosur reported that it had been served notice by its Colombian JV partner Minera Monte Águila that it has elected to exercise its right to assume operatorship of the Anzá Project in Colombia.
- The company has previously drilled extremely encouraging holes at Anza, including 59.55m @ 9.61g/t Au.
- Post period, expect a ramp up in exploration at Anza as multiple high-priority targets are set to be explored through drilling.
- Brazil: Orosur entered into a JV agreement with Meridian Mining to earn a 75% interest in the Ariquemes tin project in Brazil through a phased investment of US$3m over four years.
- The Ariquemes project comprises a large collection of granted tenements and applications, totalling almost 3,000km2, in Rondônia State, western Brazil and that the project represents the dominant land position in the Rondônia Tin Province, one of the world's most significant tin regions.
- Argentina: Post-period, the company entered into an exploration & joint venture agreement with private Argentinean company DESEADO DORADO in relation to the Pantano Gold Project in the Province of Santa Cruz, Argentina.
- The agreement covers nine licenses for a combined total area of 607km2 in the Deseado Massif region of Santa Cruz Province in southern Argentina.
Conclusion: Orosur has made solid progress picking up highly-prospective, promising projects in South America following the handover of the Anza project to Monte Aguilla – a JV vehicle run by Newmont and Agnico Eagle. The company has a strong cash position enabling it to add value through exploration activities at Ariquemes and Pantano.
*SP Angel acts as nomad and Broker to Orosur Mining
Pilbara Minerals Ltd (ASX:PLS) A$2.85, Mkt Cap A$8.5bn – Pilbara sells 5.5% spodumene concentrate shipment at US$5,650/dmt eq. $6,163.6/dmt for 6% LiO
- Pilbara produced 81,431dmt of spodumene concentrate during the three months to March 31st 2022 vs 83,476 dmt Dec quarter.
- Shipments of spodumene concentrate fell to 58,383 dmt (December Quarter: 78,679 dmt), impacted by a port delay in loading a ~20,000 dmt cargo which arrived outside of the quarter.
- The average realised price for sales in the quarter was US$2,650/dmt on a SC6 basis.
- Pilbara’s fourth spodumene concentrate auction saw 5,000mt spodumene concentrate with 5.5% lithium oxide, loading between June 15 and July 15, sold at $5,650/dmt on an FOB Port Hedland basis, equivalent to $6,163.6/dmt for 6% lithium oxide.
- The auction reflects the disconnect between ‘official’ quoted prices and actual realised prices for producers, and also highlights how incredibly tight the spodumene market is at the moment.
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The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
Analysts
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Sales
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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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