SP Angel . Morning View . Tuesday 07 06 22
Eurozone construction pulls back as inflation, logistics and uncertain outlook slow projects
MiFID II exempt information – see disclaimer below
Amur Minerals Corporation (AIM:AMC, OTC:AMMCF)* – Kun Manie TEO details released
Atlantic Lithium Limited (AIM:ALL)* – Positive metallurgical tests show potential for lower operating costs at Ewoyaa
Castillo Copper Ltd (LSE:CCZ, ASX:CCZ) – Progress report on Australian and Zambian projects
Eurasia Mining PLC (AIM:EUA)* – Accounts delayed due to geopolitical circumstances
Karelian Diamonds (LON: KDR) – Geophysics identifies kimberlites in Finland
Liontown Resources (ASX:LTR) – Binding lithium offtake signed with Tesla
Nickel - Jane Street follows Elliot in suing LME over nickel market turmoil
- US trading firm Jane Street is seeking around $15m in damages over the LME’s decision in March 2022 to cancel nickel trades after a massive short squeeze.
- The move follows activist hedge-fund Elliott’s claim of $456m over the cancelling of trades.
- Jane Street commented that the firm “has undertaken this action to recoup its losses caused by the LME’s illegal action”
- The cancelling of trades was essentially the LME bailing out a market participant known as “Big Shot” – owner of Tsingshan Holding Group, a major nickel and stainless-steel producer.
- Some market participants reported that Tsingshan had 200,000t of futures contracts in short position, while others suggested losses could be as much as $12bn.
- The LME received widespread criticism for halting & cancelling trading and is currently also facing a review by the UK regulators for its decision.
- We know of another US hedge fund which is also likely to also make a substantial legal claim against the LME
Dow Jones Industrials +0.05% at 32,916
Nikkei 225 +0.10% at 27,944
HK Hang Seng -0.32% at 21,584
Shanghai Composite +0.17% at 3,242
Economics
World - JP Morgan global services index held steady at 52.2 in May
- Global composite rose slightly to 51.5 in May vs 51.2 in April
US - Biden suspends SE Asia import tariffs in boost to solar industry
- President Joe Biden will allow solar panel components to be imported free of tariffs from Cambodia, Malaysia, Thailand and Vietnam, offering a cost reprieve to US renewable developers.
- The move comes in a series of measures designed to boost the transition to clean energy in the US, including triggering the Defence Production Act to spur domestic production.
- The blockage of trade barriers for imports from the south-east Asian countries comes amid debate within the US administration over whether to further ease tariffs on Chinese goods to fight inflation.
- Biden’s decision will “temporarily” allow US solar developers to source modules and cells from the four countries, “by providing that those components can be imported free of certain duties for 24 months”, the White House said.
- There has been caution that reliance on imported solar panels, minerals and metals, could leave the US exposed to political and supply chain risks.
- However, many renewable developers have complained that the administration’s efforts to break that dependency by creating domestic supply chains threaten to slow clean energy transition and compromise the target of fully decarbonising US electricity by 2035.
Eurozone - Construction PMI pulled back to 49.2 in May vs 50.4 in April, the first contraction in the construction sector in nine months
- Rising inflation in the construction industry, led by higher steel prices and disruption to raw materials supply has created uncertainty and dampened demand.
- Ongoing high rates of sickness from Covid infection along with an uncertain economic outlook has led housebuilders to slow projects.
- The flip side is that I might be able to get a builder to extend my hovel sometime in the next few years.
Germany – Factory orders unexpectedly continued to slide in April amid lockdowns in China and ongoing war in Ukraine.
- Monthly reading was down 2.7%mom marking a third consecutive decline driven by a drop in foreign orders.
- A separate report y the German Machinery Industry Trade Association showed machinery orders were down 7% in April citing same reasons.
- Factory Orders (%mom): -2.7 v -4.2 (revised from -4.7) and 0.4 est.
- Factory Orders (%yoy): -6.2 v -2.9 (revised from -3.1) and -4.1 est.
- New car registrations fell 10.6% yoy in May vs (-21.5% yoy in April
UK – Retail sales fell 1.1%yoy with big ticket items like furniture and electronics hit hardest as people reduced spending amid soaring inflation.
- UK new car sales fell -20.6% yoy in May vs -15.8% yoy in April
Russia - Vehicle sales collapse -83.5% yoy in May vs -78.5% in April
Australia – The central bank raised rates by 50bp compared to a 25bp forecast and marking the strongest move in 22 years.
- The RBA cited expectations that inflation would increase further to explain the decision to hike rates to 0.85%, FT writes.
- The announcement sent bond prices lower with yields on 2y and 10y debt climbing 17bp and 7bp to 2.76% and 3.55%, respectively.
- RBA Rate: 0.85% v 0.35% before and 0.60% est.
Currencies
US$1.0690/eur vs 1.0728/eur yesterday. Yen 132.67/$ vs 130.64/$. SAr 15.458/$ vs 15.441/$. $1.248/gbp vs $1.252/gbp. 0.7109/aud vs 0.721/aud. CNY 6.666/$ vs 6.653/$.
Commodity News
Precious metals:
Gold US$1,845/oz vs US$1,854/oz yesterday
Gold ETFs 105.0moz vs US$105.1moz yesterday
Platinum US$1,008/oz vs US$1,029/oz yesterday
Palladium US$2,016/oz vs US$2,019/oz yesterday
Silver US$21.97/oz vs US$22.16/oz yesterday
Rhodium US$14,800/oz vs US$15,000/oz yesterday
Base metals:
Copper US$ 9,635/t vs US$9,727/t yesterday
Aluminium US$ 2,762/t vs US$2,792/t yesterday
Nickel US$ 28,800/t vs US$29,705/t yesterday
Zinc US$ 3,812/t vs US$3,909/t yesterday
Lead US$ 2,195/t vs US$2,211/t yesterday
Tin US$ 35,350/t vs US$34,500/t yesterday
Energy:
Oil US$120.1/bbl vs US$120.0/bbl yesterday
Natural Gas US$9.332/mmbtu vs US$8.814/mmbtu yesterday
Uranium UXC US$51.30/lb vs $50.70/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$144.0/t vs US$143.3/t
Chinese steel rebar 25mm US$722.7/t vs US$725.8/t
Thermal coal (1st year forward cif ARA) US$229.0/t vs US$229.0/t
Thermal coal swap Australia FOB US$386.0/t vs US$391.0/t
Coking coal swap Australia FOB US$385.0/t vs US$385.0/t
Other:
Cobalt LME 3m US$73,895/t vs US$74,000/t
NdPr Rare Earth Oxide (China) US$142,8881/t vs US$143,164/t
Lithium carbonate 99% (China) US$67,878/t vs US$67,261/t
China Spodumene Li2O 5%min CIF US$4,500/t vs US$4,500/t
Ferro-Manganese European Mn78% min US$1,855/t vs US$1,861/t
China Tungsten APT 88.5% FOB US$333/t vs US$335/t
China Graphite Flake -194 FOB US$815/t vs US$815/t
Europe Vanadium Pentoxide 98% 9.6/lb vs US$9.6/lb
Europe Ferro-Vanadium 80% 37.25/kg vs US$37.25/kg
China Ilmenite Concentrate TiO2 US$372/t vs US$372/t
Spot CO2 Emissions EUA Price US$89.1/t vs US$90.1/kg
Brazil Potash CFR Granular Spot US$1,200.0/t vs US$1,200.0/kg
Battery News
Solid Power aims to ship first solid-state battery cells by end 2022
- Solid Power, a developer of solid-state batteries for EVs, will aim to ship pre-production battery cells by year-end for validation testing by partners BMW and Ford, the company announced on Monday.
- The US-based company has set up the pilot production line to provide validation samples to automakers while it searches for a manufacturing partner in the hope of beginning production in 2026.
- Long-term, Solid Power, do not endeavour to be a cell producer, according to CEO Doug Campbell and view SK Innovation as a prospective partner.
- Solid Power has sufficient pilot production capacity to provide prototype battery cells to other vehicle manufacturers but declined to provide specific detail.
Company News
Amur Minerals Corporation (AIM:AMC, OTC:AMMCF)* 0.9p, Mkt Cap £13m – Kun Manie TEO details released
- The Company released details of the TEO Project (a Russian feasibility level study) on the Kun Manie nickel/copper sulphide project located in the Russian Far East.
- The TEO compiled by Oreoll, mining consultants, and Russian GKZ (State Committee on Reserves) underpins the GKZ Approved Mineral Reserve estimate comprised of
- 172mt at 0.71% Ni, 0.20% Cu, 0.14g/t Pt and 0.16g/t Pd across B, C1 and C2 categories for In Balance Reserves (above 0.2% Ni cut off grade);
- 24mt at 0.51% Ni, 0.15% Cu, 0.14g/t Pt and 0.16g/t Pd across B, C1 and C2 for Out of Balance Reserves (below 0.2% Ni cut off grade).
- The study is based on more than double flotation plant capacity that is projected to run at 12.4mtpa producing two concentrates (nickel and copper) with minor payable amounts of gold, platinum and palladium compared to a single bulk concentrate envisaged previously.
- The Kun Manie mine is expected to supply 187mt of ore grading 0.66% Ni, 0.18% Cu, 0.14g/t Pt and 0.14gt/t Pd over 19 year mine life.
- Operating costs are estimated at ~$42/t ore including $6.7/t depreciation charge and using 4.6m3/t was stripping ratio.
- Capital cost includes $1.2bn (including working capital) project development cost and $0.7bn in maintenance costs.
- Higher development capital cost is attributed to more than doubling plant capacity (12.4mtpa from 6mtpa) as well as higher infrastructure costs including development of a dual carriage way road able to handle increased volume of concentrate shipments.
- GKZ used significantly lower nickel and copper prices ($6.56/lb Ni and $3.07/lb Cu) in project valuation to arrive at NPV10% of $333m and IRR of 15.6%.
- Study results will be used for the approval of mine plans and design by authorities.
Conclusion: The TEO results highlight the case for a larger scale more straightforward open pit only operation running two flotation separate concentrate streams (nickel and copper) securing better payability terms. Kun Manie is envisaged as a 12.4mtpa operation producing +40ktpa and +10ktpa of payable Ni and Cu. GKZ estimated Kun Manie NPV10% and IRR and $333m and 15.6% using significantly lower nickel and copper prices (~$14,500/t and $6,800/t, respectively) which given larger scale and lower grade nature of the deposit underestimates value potential in the current strong nickel/copper prices environment.
*SP Angel act as Nomad and Broker to Amur Minerals
Atlantic Lithium Limited (AIM:ALL)* 50.8p, Mkt Cap £289m – Positive metallurgical tests show potential for lower operating costs at Ewoyaa
- Atlantic Lithium has provided an update for ongoing metallurgical test work in support of the PFS underway for the Ewoyaa Lithium Project.
- Results have shown that Atlantic can produce its low contaminants 6% Li2O SC6 spodumene concentrate at a coarse 10mm crush, which is much coarser than previously projected in the Scoping Study, providing potential for lower operating costs.
- Heavy Liquid Separation at the coarser 10mm delivers primary lithium concentrate recoveries of up to 80% in the dominant P1 material, with results replicated on a pilot scale with a Dense Media Separation circuit.
- Testing shows that economic primary grades and mass yields, typically at >5.5% Li2O SC6 can be achieved at 10mm crush size which is more favourable in a DMS gravity plant than at 6.3mm crush size
- The results also show that recoveries are indicative of the amount of P2 mineralisation in the feed and that the finer 6.3mm crush size has delivered a better result.
- This is to be expected as the finer P2 mineralisation requires finer crushing to liberate the spodumene crystals while the total P1 to P2 deportment in the current mineral resource model is 80% P1 and 20% P2.
- SC6 quality: The combined alkali (combined K2O + Na2O) levels in SC6 were less than 3%, which is the nominal upper limit imposed by off-takers.
- Feldspar Quality: The feldspar quality produced in the first pass DMS250 tests for Ewoyaa Starter exceeded the bottom limit of 10% alkalis (combined K2O + Na2O) at 9% mass yield.
- Timeline: These met-testing results support the completion of the PFS study currently underway with a targeted completion of Q3 2022.
- Atlantic continues to drill at Ewoyaa, with recent results offering the potential to significantly expand the resource, with multiple drill holes indicating a widening of spodumene at depth.
- A link to last week’s SP Angel can be found here: LINK
*SP Angel acts as nomad to Atlantic Lithium. An SP Angel mining analyst recently visited the Ewoyaa Lithium Project in Ghana
Castillo Copper Ltd (LSE:CCZ, ASX:CCZ) 1.08p, Mkt Cap £13.3m – Progress report on Australian and Zambian projects
- Castillo Copper has provided a progress report on its Australian and Zambian projects.
- At the BHA project in New South Wales, where the company recently announced an inferred mineral resource for cobalt, the company’s geologists are “finalising planning and approvals for two RC drilling campaigns across the BHA Project”.
- The first of these campaigns aims at “extending known cobalt mineralisation within the East Zone, while the second will test targets identified in the West Zone which is proximal to Cobalt Resources' (ASX: COB) Broken Hill Project”.
- Also in Australia, the company is also planning further drilling of the ‘Big One’ deposit in NW Queensland where it has previously announced inferred resources of 2.1mt at an average grade of 1.1% copper. The new drilling “will focus on extending known mineralisation and elevating confidence in the MRE” [Mineral Resource Estimate}.
- Castillo Copper confirms that it is in discussions with potential off-take partners in relation to both the BHA project and the ‘Big One’ as well as with “with several prospective development partners to further advance the Cangai Copper Mine” in Queensland which is described as “one of Australia's highest grading historic copper mines” with a copper resource estimate of “3.2Mt @ 3.35%”.
- In Zambia, Castillo Copper says that “comprehensive geochemistry and geophysical campaigns undertaken at the Luanshya and Mkushi Projects in Zambia have identified multiple high quality copper targets for drill-testing”.
- The company confirms that “several prospective development partners have expressed an interest in forming a Joint-Venture to advance these two projects … [in Zambia] … via funding drilling campaigns”.
- Managing Director, Dr. Dennis Jensen, said that the company’s priority “is to extend known mineralisation across the BHA Project's East & West Zones via targeted drilling campaigns and formalising a clear path to market”.
- He also confirmed that Castillo plans to also intends to identify a path to market for “the Big One Deposit within the NWQ Copper Project … [and] … intends to align with development partners to advance Cangai Copper Mine and four prospective copper projects in Zambia”
Eurasia Mining PLC (AIM:EUA)* 6.79p, Mkt Cap £194m – Accounts delayed due to geopolitical circumstances
- Eurasia Mining report the company’s annual audit is running behind schedule but that the directors still expect the report and accounts to be published before end June.
- An AGM notice will also follow, with the statutory notice period for the AGM being observed.
- The Russian sanctions do not prevent the Company from executing on its M&A strategy as announced.
- Management have previously stated that having reviewed European and US sanctions documentation they expect no impact on their operations and activities in Russia.
- Eurasia have previously released resources and reserves on the Monchetundra Project (Loipishnune and West Nittis deposits), the NKT area as well as areas covered by the agreement with Rosgeo.
- The data, reported under the Russian reserves/resources categories, is provided in the form of total contained metal without offering details on ore tonnages or grades on the underlying deposits.
- Reserves are estimated at ~293kt Cu, 388kt Ni, 14kt Co, 4.8moz Pd, 1.5moz Pt, 2.2moz Ag and 0.3moz Au.
- Resources are estimated at ~1,807kt Cu, 1,859kt Ni, 115kt Co, 34.7moz Pd, 8.9moz Pt, 12.7moz Ag and 2.4moz Au.
- Reserves are based on B, C1 and C2 categories under the Russian mining code.
- Resources include P1 and P2 categories and exclude P3.
- Total, reserves and resources are estimated at >184moz PtEq.
- The mix of metals runs at an estimated ~50% Pd, ~30% Ni, ~10% Cu with other metals accounting for the balance.
- Eurasia has been working with Wardell Armstrong on a JORC MRE for the Monchetundra Project.
Conclusion: We look forward to Eurasia completing on the sale of its Russian assets in the relative near term and on the transformation of its business through the acquisition of new mineral assets outside of Russia.
*SP Angel act as Nomad and Broker to Eurasia Mining
Karelian Diamonds (LON: KDR) 2.45 pence, Mkt Cap £1.6m – Geophysics identifies kimberlites in Finland
- Karelian Diamonds has announced that aeromagnetic data generated from a drone-based survey has identified 23 kimberlite targets in eastern Finland.
- The targets, which are reported to range “from 0.5 hectare to 4.7 hectares in size”, are located ‘up-ice’ of a “previous green diamond discovery in … [glacial] … till” which was announced in January 2017.
- “Previous work on the licence area included Kimberlite indicator mineral sampling, during which the green diamond was discovered.”
- “Further Kimberlite indicator mineral sampling encountered highly anomalous kimberlite indicators, including G9 and G10 garnets, which are known indicators of diamond prospectivity. Follow-up drilling resulted in the discovery of a Kimberlite dyke, confirming the presence of Kimberlites in the immediate area”.
- The company confirms that, unspecified, “Follow-up work on the twenty three kimberlite targets identified will commence in the near future”.
- Chairman, Prof. Richard Conroy, described the identification of the additional targets as “a very significant encouragement in our quest to discover the origin of the green diamond and/or any other diamond deposits in the area and in our overall objective of discovering, in the Finnish sector of the Karelian Craton, diamond deposits comparable to the world class diamond discoveries of Lomonosov and the Grib pipe in the Russian sector of the Craton”.
Conclusion: We await the results of the follow-up exploration in Finland and initial confirmation of whether any kimberlites encountered exhibit the indicator mineral assemblage and geochemistry associated with diamonds.
Liontown Resources (ASX:LTR) A$1.2, Mkt Cap A$2.6bn – Binding lithium offtake signed with Tesla
- Liontown and Tesla have agreed binding terms for the supply of spodumene concentrate from the Kathleen Valley Lithium Project in WA
- The deal follows on from the company’s announcement in February 2022, with Tesla purchasing 100,000dmt of lithium in the first year of the deal and increase the order by 150,000 DMT per year in the following years, over five initial years.
- Maiden production from Kathleen Valley is expected in 2024, with the deal stipulating that Liontown must be producing no later than 1 December 2025.
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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)
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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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