SP Angel . Morning View . Thursday 07 07 22
Copper prices climb on bargain hunting after hitting the lowest since late 2020
MiFID II exempt information – see disclaimer below
AngloGold Ashanti (ASX:AGG) – Guinea mine evacuated on safety concerns
Centamin PLC (LSE:CEY, TSX:CEE, OTC:CELTF) – Exploration at Sukari identifies satellite open-pit ore and underground ore shoots
Renascor Resources Ltd (ASX:RNU) – Best intersections to-date at Siviour project
Sovereign Metals Ltd (ASX:SVM, AIM:SVML) – Rutile marketing agreement
Dow Jones Industrials +0.23% at 31,038
Nikkei 225 +1.47% at 26,491
HK Hang Seng -0.11% at 21,564
Shanghai Composite +0.27% at 3,364
Economics
The IMF said the outlook for the global economy had “darkened significantly” since April and risks of a possible global recession next year increased.
- Among drivers behind deteriorating outlook, the IMF named high inflation, more substantial interest rate hikes, a slowdown in China’s economic growth, and escalating sanctions related to Russia’s war in Ukraine.
- IMF MD Kristalina Georgieva said the fund will downgrade its 2022 forecast in coming weeks marking the third downwards revision this year.
- “Its going to be a tough 2022, but maybe even a tougher 2023… recession risks increased in 2023”.
- The IMF will release its updated forecast for 2022 and 2023 in late July, after slashing its forecast by nearly a full percentage point in April, Reuters reports.
US – The Fed reiterated its commitment to raise rates by 50-75bp at the July meeting following a 75bp move in June, according to minutes of the FOMC latest meeting.
- “Many participants judged that a significant risk now facing the committee was that elevated inflation could become entrenched if the public began to question the resolve of the committee,” minutes read.
- “They recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.”
China – New cases in Shanghai hit the highest level since late May raising concerns that the city may find itself back in lockdown, Bloomberg writes.
- 54 local Covid infections were reported on Wednesday, including two that were outside of quarantine.
- Nationwide, 338 new cases were recorded, with most registered in a small county in the eastern province of Anhui that is already locked down.
- Beijing is set to introduce first mandatory vaccination limiting entry to a number of entertainment and cultural venues to inoculated people and requiring booster shots for several industries.
- In an effort to avoid a backlash from population, authorities carved out schools, hospitals and restaurants.
- The National Health Commission guided in 2021 that Covid vaccination cannot he forced and must boluntary.
UK – More than 50 ministers quit the government in less than 48 hours as pressure builds for PM to resign.
- Brandon Lewis, the Northern Ireland Secretary, became the latest Cabinet minister to quit early on Thursday following the resignations of the finance, health and Welsh ministers, Reuters reports.
- Lewis along with a group of other loyal ministers pleaded with Johnson to quit with dignity on Wednesday, FT writes.
- New Chancellor of Exchequer Nadhim Zahawi who was appointed to the role on Tuesday issued a statement this morning calling for the PM to go.
- “I am not going to step down,” Johnson told a parliamentary committee yesterday.
- The pound is trading close to a multi decade low against the US$ on the back of local political crisis as well as general strength of the US currency driven by risk off sentiment.
Australia – Mining companies contribute A$43bn in company tax last year
- The Australian mining sector’s tax contribution hit record highs last year, with a combined $43.2bn in company tax and royalties paid in financial year 2020-21, a 16% increase from the $37.3bn contributed in the previous period.
- Company taxes paid reached a new record high of $26.5bn and royalties also reached a high of $16.7bn in 2020-21.
Currencies
US$1.0187/eur vs 1.0261/eur yesterday. Yen 136.05/$ vs 135.65/$. SAr 16.825/$ vs 16.603/$. $1.195/gbp vs $1.198/gbp. 0.681/aud vs 0.682/aud. CNY 6.706/$ vs 6.704/$.
Commodity News
Gold prices supressed at nine-month low as US dollar remains resilient
- Gold prices have fallen 4% in the past two days, with investors favouring the US dollar and treasuries for safe havens.
- The US Fed is expected to hike rates at a faster pace than the ECB or BoE which is causing the dollar to strengthen against its peers.
- A strong dollar is bearish for gold as it makes bullion more expensive for holders of other currency.
- Treasury yields are also rising, with the US 10-year currently sitting at 2.96% vs 1.50% in January.
- Rising yields reduce investors’ incentive of holding non-interest yielding gold.
Precious metals:
Gold US$1,743/oz vs US$1,768/oz yesterday
Gold ETFs 103.4moz vs US$103.7moz yesterday
Platinum US$864/oz vs US$870/oz yesterday
Palladium US$1,927/oz vs US$1,947/oz yesterday
Silver US$19.34/oz vs US$19.24/oz yesterday
Rhodium US$13,650/oz vs US$13,450/oz yesterday
Base metals:
Copper US$ 7,667/t vs US$7,546/t yesterday
Aluminium US$ 2,393/t vs US$2,381/t yesterday
Nickel US$ 21,355/t vs US$22,300/t yesterday
Zinc US$ 3,051/t vs US$3,078/t yesterday
Lead US$ 1,985/t vs US$1,944/t yesterday
Tin US$ 24,610/t vs US$25,350/t yesterday
Energy:
Oil US$101.1/bbl vs US$105.1/bbl yesterday
Crude oil prices fell again as recession fears continue to overshadow global markets.
European energy prices moved higher ahead of the Nord stream closing for annual maintenance next week, while in the background governments continue to scramble in defence of their domestic energy suppliers
The European Parliament voted yesterday to recognise some gas and nuclear energy projects as ‘green’, thereby allowing them to potentially access hundreds of billions of euros of subsidised funding.
Natural Gas US$5.545/mmbtu vs US$5.658/mmbtu yesterday
Uranium UXC US$49.25/lb vs US$51.05/lb last yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$111.1/t vs US$112.8/t
Chinese steel rebar 25mm US$649.2/t vs US$649.4/t
Thermal coal (1st year forward cif ARA) US$251.0/t vs US$251.0/t
Thermal coal swap Australia FOB US$397.0/t vs US$393.0/t
Coking coal swap Australia FOB US$276.0/t vs US$286.0/t
Other:
Cobalt LME 3m US$60,460/t vs US$65,445/t
NdPr Rare Earth Oxide (China) US$135,312/t vs US$136,855/t
Lithium carbonate 99% (China) US$67,917/t vs US$67,942/t
China Spodumene Li2O 5%min CIF US$4,500/t vs US$4,500/t
Ferro-Manganese European Mn78% min US$1,574/t vs US$1,585/t
China Tungsten APT 88.5% FOB US$327/t vs US$327/t
China Graphite Flake -194 FOB US$815/t vs US$815/t
Europe Vanadium Pentoxide 98% 9.1/lb vs US$9.1/lb
Europe Ferro-Vanadium 80% 36.25/kg vs US$36.25/kg
China Ilmenite Concentrate TiO2 US$362/t vs US$362/t
Spot CO2 Emissions EUA Price US$84.8/t vs US$85.2/t
Brazil Potash CFR Granular Spot US$1,100.0/t vs US$1,100.0/t
Battery News
China’s NEV ownership exceeds 10m units
- China's new energy vehicle (NEV) ownership has surpassed the 10m milestone.
- At the end of June 2022, China had 310m registered vehicles, of which 10.1m were NEVs (3.2% of registered vehicles), according to data released today by China's Ministry of Public Security.
- Of the 10.1 million NEVs, 8.1 million are pure EVs, accounting for 80.9% of the total number of NEVs.
- In H122, a record 2.21m NEVs were registered in China, according to the data.
China considering extending vehicle tax break as it seeks to spur demand for cars
- China has announced several potential steps to spur consumer demand for cars, saying it would consider extending a tax break for electric vehicles and outlining plans to build more charging stations and encourage lower charging fees.
- The world's largest car market has been hit hard by stringent lockdowns in Shanghai and other parts of the country to curb the spread of the Omicron coronavirus variant.
- As part of the new efforts, authorities last month halved the auto purchase tax to 5% for cars priced under 300,000 yuan with 2.0-litre or smaller engines.
- Buyers of certain fully electric and partly electric vehicles have not had to pay the purchase tax since 2014 – a plan to reinstate it next year may now be scrapped.
Rivian deliveries accelerate thanks to production ramp up
- Rivian Automotive Inc (NASDAQ:RIVN) delivered 4,467 vehicles in the second quarter, nearly four times more than the preceding quarter, as the EV maker benefited from a ramp-up in production and strong demand.
- The company also announced that it was on track to meet its annual production target of 25,000 units after output jumped 72% sequentially to 4,401 vehicles in the quarter.
- While the general shift to electric vehicles and surging fuel prices due to the Russia-Ukraine war have fed demand for Rivian's vehicles, the company has struggled to boost output in the face of industry-wide supply chain shortages.
- In March, Rivian halved its planned production target for 2022 from 50,000 to 25,000/
Company News
AngloGold Ashanti (ASX:AGG) ZAR24,214, Mkt cap ZAR101bn – Guinea mine evacuated on safety concerns
- AngloGold Ashanti (ASX:AGG) reports that it has evacuated all staff at its Siguiri mine in Guinea in precaution to an imminent attack by uncontrolled groups.
- The company halted operations at the mine on June 29th following violent protests over local employment.
- Separately, AngloGold has named Ian Kramer as the company’s interim CEO effective July 1 after the early retirement of Christine Ramon.
Centamin PLC (LSE:CEY, TSX:CEE, OTC:CELTF) 78.08p, Mkt Cap £880m – Exploration at Sukari identifies satellite open-pit ore and underground ore shoots
- Centamin has provided a progress report on its exploration activities so far this year at its Sukari mine, elsewhere in Egypt and at its pre-feasibility project at Doropo in Cote d’Ivoire.
- Underground drilling at Sukari has investigated all areas of the mine including “Horus Deeps where drilling intersected the highest-grade mineralisation in that zone to date” where hole UGRSD4561A “intercepted 54m at 15.09g/t Au”.
- “Horus Deeps remains open to the north, south and down dip and represents the long-term future of the operation”.
- The Horus mineralisation is located “beneath the Amun zone”, which along with the Ptah zone is the “main current production … [area] … of the underground mine” and where drilling is directed at upgrading existing inferred resources to the indicated level and at “the development of strike extensions to known mineralisation”.
- Today’s announcement describes intersections of the Amun zone of 17m at an average grade of 9.55g/t gold in hole UGRSD2304 and 8.55m at an average grade of 7.64g/t in hole UGRSD2303.
- Additional underground drilling intersections highlighted today include 23m of the Ptah zone at an average grade of 7.24g/t gold in hole UGRSD3445.
- Drilling of the Bast Zone, originally identified in 2021, is yielding “yield high grade intercepts including 4.5m at 276.94g/t Au consisting of 2 to 4 metre wide quartz veins or milled breccias on the contact of an east dipping felsic porphyry and carbonaceous sediments hosted within a shear zone”.
- Additional drilling around 80m to the south, within the Bast Zone structural corridor “recent drilling intersected 7.5m at 10.66g/t Au including 0.3m at 215g/t Au in hole UGRSD3485. Drilling continues in this area to bring these ounces into the mine plan in the short term”.
- Surface exploration at Sukari “has identified multiple shallow open pit gold satellite targets within the mining concession which have the potential to supplement Sukari mill feed, in the short to medium term, improving operational flexibility”.
- Surface drilling results include:
- A 22m wide intersection averaging 2.9g/t gold from a depth of 41m in hole WA004 at Wadi Alam; and
- A 10m wide intersection also averaging 2.9g/t gold from a depth of 41m in hole VSE004 at the V Shear East Zone
- Centamin’s website shows a total current mineral resource of 9.8m oz classed as ‘Measured & Indicated’ at an average grade of 1.05g/t gold plus an additional 600,000oz of inferred resources at an average grade of 1.4g/t.
- The current underground mineral reserve at Sukari is 7.8m proven & probable tonnes at an average grade of 3.6g/t gold within a total reserve, including the open-pits and stockpiles, of 5.8moz at an average grade of 1.2g/t gold.
- Centamin confirms that it has started fieldwork in the Eastern Desert of Egypt and has already identified six high-priority areas within the Nugus Block where geological sampling and mapping is leading to identification of targets for drill testing in an area containing “in excess of 20km of alluvial artisanal workings and over 300 hard rock artisanal sites”.
- At Doropo, where a pre-feasibility study is due by the end of 2022, “Drilling has been completed and was focussed on converting a significant proportion of the Inferred Resource to the Indicated Resource category, and on exploring newly identified areas of mineralisation which have the potential to deliver further resource growth”.
Conclusion: Centamin’s exploration is identifying and firming up the underground potential at Sukari. We look forward to seeing the recent drilling results incorporated into a revision to Sukari’s mineral resources in due course.
Renascor Resources Ltd (ASX:RNU) A$0.155, Mkt Cap A$344m – Best intersections to-date at Siviour project
- New drill assays from recent drilling at Renascor’s Siviour Graphite Deposit in South Australia have confirmed intersections within the project area that are amongst the thickest and highest grade to date.
- Highlights include:
- SIVRC264 – 45m at 9.4% TGC from 23m including 10m at 6.6% TGC
- SIVRC266 – 25m at 13.7% TGC from 17m
- SIVRC267 – 20m at 7.5% TGC from 7m
- SIVRC273 – 17m at 7.6% TGC from 48m
- The drill results will be incorporated into a revised pit design and mining schedule as part of Renascor’s optimised Battery Anode Material Study, with an aim to reduce mining costs and increase the volume of graphitic ore mined.
- Drilling confirms the continuity of high-grade graphite within the targeted Inferred Resource zone and have the potential increase the confidence of the Siviour Resource and the scale of the Siviour Ore Reserve.
- Siviour is currently the second largest reported Proven Graphite Reserve in the world and the largest Graphite Reserve outside Africa, with a current LOM of 40 years with production of 150,000tpa of graphite concentrate.
Conclusion: Renascor continues to enjoy success with the drill bit at Siviour, and we look forward to t the calculation of revised Mineral Resource Estimate expected later this quarter.
Sovereign Metals Ltd (ASX:SVM, AIM:SVML) 26p, Mkt Cap £107m – Rutile marketing agreement
- Sovereign Metals reports that it has reached a non-binding agreement with the Japanese global trading company, Mitsui, for the marketing and offtake of 30,000tpa of rutile from its Kasiya rutile and graphite project in Malawi.
- Mitsui “has shared samples of rutile product from Kasiya with Asian end-users that have confirmed its premium chemical specifications should be suitable for use in their titanium sponge and pigment processes, as a precursor for high-grade, high-specification titanium metal and pigment production”.
- Today’s announcement confirms that the Memorandum of Understanding with Mitsui “is non-exclusive and non-binding with no pricing terms” and “can be extended by agreement by both parties should a definitive agreement not have been reached by” 31st December 2023.
- Managing Director, Dr. Julian Stephens, pointed out the significance of the Asian market in the global natural rutile business and said that the “marketing alliance with a very high-calibre partner in Mitsui will assist Sovereign to penetrate these ever-growing markets”.
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%”
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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
John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
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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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