Today's Market View - Bushveld Minerals, Thor Mining, and more...

SP Angel . Morning View . Thursday 28 07 22

Risk sentiment climbs post FOMC monetary policy meeting

MiFID II exempt information – see disclaimer below

Very sadly we report the passing of Lucas Lundin after a two-year battle with cancer

• Lucas worked with his father Adolf Lundin to build one of the world’s more successful mining companies.
• Lundin Group companies have a combined market capitalisation of >$11bn directly employing >15,000 people and creating opportunities for very many more.

Call for Private financing - Lithium prospects (Africa)

We are raising funds for a highly experienced geological team who have access to a number of prospective lithium licenses in Africa

• We are looking for very early-stage funding to support the discovery and delineation of a number of potential spodumene occurrences on these licenses.
• The licenses are close to another successful lithium project company and are believed to contain spodumene occurrences.
• Please contact us if you are interested in investing in this early stage and highly speculative venture

*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.

Anglo American PLC (LSE:AAL) – Interim results deliver second largest EBITDA behind H1 2021 result

Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF)* – Vametco exceeds guidance as Vanchem suffers load shedding and Kiln 1 issues

Pilbara Minerals Ltd (ASX:PLS) – June quarter results highlight continuing strong momentum for LIB feedstock

SolGold PLC (LSE:SOLG, TSX:SOLG, OTC:SLGGF)* – Business activity update highlights financing for Cascabel DFS alongside further exploration at Porvenir and Helipuerto

Southern Copper Corporation (NYSE:SCCO) – Interims highlight 88% cost increase YoY

Syrah Resources Ltd (ASX:SYR) – $102m loan from US Dept of Energy

Thor Mining PLC (AIM:THR, OTC:THORF, ASX:THR) – Drilling results from the Molyhil Tungsten-Molybdenum Project

Ukraine – Tide turns as Himars knocks out Russian ammunition and supply depos

• Ukraine’s solid determination looks poised to turn the war in Eastern Ukraine against the Russian invaders.
• Himars missiles hit key bridges yesterday cutting off supply routes to Russian forces in the South.
• Ukraine is preparing a million-man army to retake the South and coastal areas as Russian forces run out of munitions and other supplies.
• Russia’s war crimes and indiscriminate bombing has turned many sympathetic Russian supporters within the population against Russia’s aggression boosting the Ukrainian army.
• If Ukraine is able to surround Russian forces and cut off their escape, then Ukraine may be able to take large numbers of Russian soldiers as Prisoners of War and use this to order the withdrawal of Russia from its territory.
• The detention of significant Russian POWs would significantly weaken Russia’s ability to threaten other nations on its target ‘occupation’ list.

Markets poised to recover despite inflation dragging earnings lower in some sectors

• Almost all the bad news in the world is out there.
• News agencies have so over dramatized that it’s hard to imagine that things could get worse – though life tells us that just when you thought it couldn’t get any worse, it does!
• Investors are so over-fuelled with negative news that the official declaration of a ‘ mild recession’ will likely raise equities and lift commodity prices.
• For now, we are hopeful that the worst is over and some form of recovery should come to pass as policymakers stimulate home and EV auto sales in China and the West.
• The drive to generate more power from wind and solar will accelerate and increasing battery storage should give nations better resilience against energy supply shocks.

Gold rises on Fed Chair’s comments on slowing rate hikes

• Gold moved higher following comments from the Fed that it may slow the pace of interest rate increases.
• The language used by Powell indicated that the 75bp hike was not something investors should get used to, calling it a “unusually large increase”
• The announcement moved both the US dollar and treasury yields lower, both of which is bullish for gold.
• Bullion hit a two-week high following the announcement, although the price is still down ~5% year-to-date.

Copper prices continue to recover, helped this time as Fed eases recession worries

• Copper prices jumped this morning, rising as much as 2.5% in early trade on the LME before trading just below the $7,800/t level.
• Fed Chair Powell rejected that the US economy is in recession – comments that sparked a rally in virtually all industrial metals.
• Elsewhere, copper remains supported on optimism that the Chinese state is going to prop up domestic property developers currently in crisis.
• Beijing is looking to deploy as much as $148bn in the form of loans to aid stalled property developments, the FT reports.
• Multiple developers in China have defaulted on domestic and foreign debts after Beijing implemented tighter credit controls.
• China accounts for over 50% of global copper demand and the price is sensitive to material news form the Chinese construction sector.
• Three-month copper prices are now 12% higher than they were two weeks ago, although still significantly lower than the $9,500/t level they were trading at for much of last year.

Dow Jones Industrials +1.37% at 32,198

Nikkei 225 +0.36% at 27,815

HK Hang Seng -0.19% at 20,632

Shanghai Composite +0.21% at 3,283

Economics

US – The Fed delivered a 75bp hike taking rates to the 2.25-2.50% range, in line with expectations, while also highlighting that further large rate hikes will be data dependent suggesting the of rate increases may slowdown.

• “While another unusually large increase could be appropriate at our next meeting, that is a decision that will depend on the data,” Powell said.
• Fed chair comments saw a revision in the risk sentiment sending equity indices higher and the US$ lower.
• S&P and Nasdaq closed 2.6% and 4.1% higher yesterday while weaker US$ lifted gold and copper prices.
• Rate futures price in 3.3% Fed funds rate by the end of the year implying 3-4 more 25bp hikes over the remaining three meetings for 2022.
• Q2 GDP numbers are due later that may show if the economy slipped into recession or not following a -1.6%qoq (annualised) print in Q1/22.
• GDP (%qoq, annualised): 0.5 est. v -1.6 in Q1/22.

China – The government is considering providing up to CNY1tn ($148bn) in loans to troubled property developers as borrowers boycott mortgage repayments after construction delays, FT writes.

• This follows the news earlier in the week of a CNY300bn real estate fund planned by the government.
• The central bank will issue about CNY200bn of low interest loans charging about 1.75% per annum, to state commercial banks, according to people involved in the discussions.
• The government hopes that banks will be able to leverage its initial fund by up to five times to raise a total of around CNY1tn to lend to troubled property developers.
• Housing accounts for around 1/3 of total economy and Beijing is committed to fight the liquidity crunch in the sector that may evolve into full blown financial crisis.

Germany – Regional inflation data point to continuing inflationary pressures in the economy with estimates coming in the 7-8% range driven by higher energy and food costs as well as logistics chains’ disruptions.

Turkey – The central bank revised its year end inflation forecast to 60.4% from 42.8% reported in April on the back of rising cost of imports and food as as the impact of a weak lira.

• Official estimates suggest inflation will slow to 19.2% at the end of next year before reaching 8.8% in 2024.
• The bank’s official target is 5%.
• The lira is down 26% YTD and nearly 70% down from 2019 when the central bank despite failing to reach target inflation continued to cut rates and was less aggressive with tightening in following years.

Currencies

US$1.0188/eur vs 1.0138/eur yesterday. Yen 137.77/$ vs 137.03/$. SAr 16.731/$ vs 16.884/$. $1.216/gbp vs $1.205/gbp. 0.699/aud vs 0.693/aud. CNY 6.745/$ vs 6.764/$.

Commodity News

Precious metals:

Gold US$1,741/oz vs US$1,719/oz yesterday

Gold ETFs 101.5moz vs US$101.5moz yesterday

Platinum US$898/oz vs US$878/oz yesterday

Palladium US$2,038/oz vs US$2,008/oz yesterday

Silver US$19.33/oz vs US$18.63/oz yesterday

Rhodium US$14,550/oz vs US$14,750/oz yesterday

Base metals:

Copper US$ 7,799/t vs US$7,574/t yesterday

Aluminium US$ 2,462/t vs US$2,425/t yesterday

Nickel US$ 21,813/t vs US$21,660/t yesterday

Zinc US$ 3,122/t vs US$3,040/t yesterday

Lead US$ 2,039/t vs US$2,020/t yesterday

Tin US$ 24,620/t vs US$24,395/t yesterday

Energy:

Oil US$107.9/bbl vs US$104.9/bbl yesterday

Crude oil prices strengthened today as traders shrugged off the Fed’s 75 basis point rise on the back of an EIA report showing a 4.5mb draw (vs 1mb draw exp.) in US crude stockpiles.

The WTI commodity price continues to trade at a steep ~$9/bbl discount to Brent, making purchases of U.S. crude grades more attractive which is reflected in the 50% increase in US crude exports in the last fortnight to 4.5mb/d.

European energy markets remain at record levels as the Nord Stream 1 pipeline continues to flow gas at just 20% of its capacity.

Centrica, Britain’s largest energy supplier and owner of British Gas, reported a huge increase in 1H22 earnings, boosted by E&P asset sales and soaring energy prices, enabling it to resume its dividend at 1p/sh.

Natural Gas US$8.548/mmbtu vs US$8.955/mmbtu yesterday

Uranium UXC US$48.05/lb vs US$47.30/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$112.4/t vs US$112.1/t

Chinese steel rebar 25mm US$602.3/t vs US$593.0/t

Thermal coal (1st year forward cif ARA) US$292.0/t vs US$292.0/t

Coking coal swap Australia FOB US$200.0/t vs US$215.0/t

Other:

Cobalt LME 3m US$50,460/t vs US$50,460/t

NdPr Rare Earth Oxide (China) US$122,676/t vs US$122,337/t

Lithium carbonate 99% (China) US$67,972/t vs US$67,636/t

China Spodumene Li2O 5%min CIF US$4,720/t vs US$4,720/t

Ferro-Manganese European Mn78% min US$1,340/t vs US$1,343/t

China Tungsten APT 88.5% FOB US$329/t vs US$327/t

China Graphite Flake -194 FOB US$815/t vs US$815/t

Europe Vanadium Pentoxide 98% 7.4/lb vs US$7.6/lb

Europe Ferro-Vanadium 80% 33.75/kg vs US$34.25/kg

China Ilmenite Concentrate TiO2 US$355/t vs US$356/t

Spot CO2 Emissions EUA Price US$78.0/t vs US$77.4/t

Brazil Potash CFR Granular Spot US$1,040.0/t vs US$1,040.0/t

Battery News

• Northvolt to make ‘wood-based’ batteries
• Swedish battery start-up Northvolt has signed a joint development agreement with Finnish forestry company Stora Enso to make lithium batteries using lignin-based carbon from Nordic forests.
• The aim is to develop the world’s first industrialised battery featuring anode sourced entirely from European raw materials, to lower both the carbon footprint and the cost.
• Lignin is a plant-derived polymer found in the cell walls of dry-land plants (trees are composed of 20-30% of lignin) – it is one of the biggest renewable sources of carbon.
• Stora Enso produces 50,000t of lignin annually at their plant, making it the largest lignin producer in the world.
• “With this partnership, we are exploring a new source of sustainable raw material and expanding the European battery value chain, while also developing a less expensive battery chemistry. It is an exciting demonstration of how our pursuit of a sustainable battery industry goes hand-in-hand with creating a positive impact both on society and cost,” said Emma Nehrenheim, Chief Environmental Officer at Northvolt.
• Northvolt has to date secured more than $55bn worth of contracts from key customers, including BMW, Fluence, Scania, Volkswagen, Volvo Cars and Polestar.

GM secures multi-year supply agreements as it targets 1m EVs annually by 2025

• General Motors has signed multi-year agreements with LG Chem Ltd and Livent Corp to secure key raw materials used in manufacturing batteries for EVs.
• In the announcement GM said it had lined up supplies for all battery raw materials, including lithium, nickel, cobalt and cathode active material, and was on course to reach its goal of producing 1m EVs annually in North America by 2025.
• LG Chem will supply GM with 968,000t of cathode material from H222 through to 2030, enough for about 5m EVs, GM said.
• The automaker will receive battery-grade lithium hydroxide from Livent over six years starting in 2025, but neither company has specified the quantity of the deal.

Company News

Anglo American PLC (LSE:AAL) 2,927p, Mkt Cap £37.1bn – Interim results deliver second largest EBITDA behind H1 2021 result

• A 28% decline in underling EBITDA to US$8.7bn during the first six months of 2022 is still the second highest performance on record following the US$12.1bn performance recorded in H1 2021.
• The company attributes US$1.5n of the reduction to the impact of lower prices with a further US$1.4bn of the decline resulting from lower PGM sales volumes, reduced copper sales from its Chilean operations where lower grades and water supply constraints impacted the performance of Los Bronces as well as the “lower sales volumes at Iron Ore Brazil due to maintenance and unusually heavy rainfall impacting production”.
• The US$1.5bn interim dividend, equivalent to US$1.24/share, is “in line with our 40% payout policy” on the US$3.7bn (US$3.03/share) of attributable profit.
• Anglo American comments that “strong prices in the first quarter … declined towards the end of the period in tandem with increasing cost inflation” to leave attributable free cash flow over 70% down at US$1.6bn (H1 2021 – US$5.6bn) after sustaining capital expenditure of US$1.8bn (H1 2021 – US$1.4bn) and growth capital investment of US$0.9bn (H1 2021 -US$0.8bn).
• Chief Executive, Duncan Wanblad, commented that “As we progressed through the first half, we began to regain operational momentum while also adjusting to the considerable challenges posed by Covid-19 related absenteeism, disrupted supply chains and logistics corridors, weather extremes and geopolitically-led economic volatility”.
• EBITDA was led by the US$2.7bn contribution of the PGM business (H1 2021 – US$4.4bn) with a further US$2.3bn from iron ore (H1 2021 - US$4.9bn) and US$1.4bn from the steel-making coal operation which turned around from the US$94m loss in H1 2021.
• Anglo American’s copper business generated US$1.2bn of EBITDA (H1 2021 - US$1.9bn) with the diamond business of De Beers contributing a further US$0.9bn (H1 2021 - US$0.6bn).
• Mr. Wanblad said that “growing the value of our business by progressing asset development options is the foundation of our organic margin-enhancing volume growth potential of 30% over the next decade”.
• He said that the, 300,000tpa Quellaveco of copper mine in Peru, which produced its first copper concentrates earlier this month is expected to deliver more than “a third of this growth” while the expansion of the 44% owned Collahuasi mine in Chile is expected to deliver during 2023 with “Further phase expansions … in early stage study to increase production by up to an additional 100 ktpa”.
• De Beers new diamond recovery ship “is now contributing to marine production … [from offshore Namibia] …, having been successfully commissioned ahead of schedule and below budget in Q1 2022”.
• Longer term projects include the development of the Woodsmith polyhalite mine in Yorkshire where the project is “Subject to development timeline review”, as well as the potential for expansion of the Mogalakwena platinum operation and the potential expansion of the Moranbah Grosvenor steel-making coal operation in Australia where “Project approval … [is] … expected … [in]… 2023, dependent on progress of longwall operations post-restart of Grosvenor mine”.
• Projects to extend the lives of existing operations include the development of an underground mine at Venetia to replace the current open-pit as well as the replacement capacity at the Jwaneng diamond mine. The 4mtpa Kolomela iron ore project is expected to start production in 2024 “to help sustain output of c.13 Mtpa and extend the remaining life of mine to 2034”.

Conclusion: Tailing off of the commodity price rises seen earlier in the year coupled with inflationary pressures on costs and reduced volumes reduced EBITDA to just the 2nd highest half-year performance on record after that achieved during H1 2021. Anglo American has a pipeline of expansion and capacity replacement projects which are expected to deliver 30% volume growth over the next decade.

Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF)* – 5.69p, Mkt cap £72m – Vametco exceeds guidance as Vanchem suffers load shedding and Kiln 1 issues

Valuation under review

• Bushveld Minerals report a 4% yoy increase in vanadium production through the first half.
• Production rose to 1,641mtV vs 1,574mtV despite exceptionally heavy rains across South Africa which affected so many miners.
• Sales rose 2% through H1 to 1,644/t despite logistical disruption to roads and ports through the period due to flooding.
• Vametco:
• Vametco raised ore production by 47% in H1 with an impressive 18% increase in V2O5 grade
• Concentrate production rose 9.7% to 184,650t .
• Kiln recoveries rose 5.5% to 74% in H1 with 77% seen in Q2.
• Production of Nirovan (FeV) rose 24% to 1,226t meeting high prices in the first half.
• Costs fell 9.3% in H1 on higher production to 23.5KgV helped, in part, by a weaker South African rand.
• Vametco guidance: Management expect Vametco to achieve the upper end of their 2,450-2,550mtV guidance.
• Vanchem:
• Vanchem fared less well as a slower than expected commissioning of Kiln 3 combined with the impact of Eskom load shedding on Kiln1 where the refractory has reached the end of its useful life.
• Production at Vanchem fell 29% to 415mtV through the first half.
• Cash costs rose 46% to 43.2kgV as a direct result of the slowdown.
• Kiln 3 remains on track to meet its 2,600mtVpa run rate with around 222mtV by the year end.
• Vanchem guidance: under review due to slow ramp-up of Kiln 3 and need to refurbish Kiln 1. Expected increased load shedding in South Africa in the short term is also expected to slow production through Q3.
• Management are reviewing former guidance of 1,750-1,850mtV for the year and cost guidance of US$27.7-28.4/kgV.
• Load shedding:
• Vametco is connected directly to the South African grid but has been able to manage periods of lower power with no loss to performance.
• Vanchem, unfortunately, is not directly connected to the grid and gets its power from the Emalahleni municipality which cuts power during load shedding causing the plant to switch to higher-cost diesel generation.
• Vanadium market:
• Ferrovanadium prices rose 22% yoy in Q2 to $43.8/kgV according to the Metal Bulletin with CRU Ryan's notes and Asian Metals averaged $67.5/kgV and $33.7/kgV though the second quarter.
• YTD MB prices of US$44.3/kgV, CRU Ryan's Note US$58.3/kgV and Asian Metals of US$42.1/kgV as at 22 July 2022.
• Vanadium Nitride prices continue to pull back in China as the property crisis unfolds with >300,000 property buyers withholding mortgage payments in China due to unfinished properties.
• While the Chinese authorities are stepping in to encourage banks to help developers finish approved projects there are less new projects starting up on the ground.

Conclusion: The strong performance at Vametco highlights the impact of management initiatives and investment at the plant. Kiln 3 at Vanchem is ramping up slower than expected and will take over from Kiln 1 which has been hit by load shedding and now needs a new refractory lining.

*SP Angel act as nomad and broker to Bushveld

Pilbara Minerals Ltd (ASX:PLS) A$2.7, Mkt Cap A$8.1bn – June quarter results highlight continuing strong momentum for LIB feedstock

• The Company released its quarterly update highlighting a continuing strong market for its spodumene concentrates.
• Pilbara produced ~127kt of concentrate from its Pilgan and Ngunagaju plants in the Pilbara region taking FY22 output to 378kt (FY21: 281kt).
• Q4/22 average spodumene concentrate reference sales price totalled US$4,267/dmt (SC6.0 CIF China) marking a 61%qoq and compares to $875/dmt reported in the first quarter of the financial year (Sep/21).
• Lower volume spot sales through its BMX auction reported prices of $4,267/t for 5kt sale in May and $7,017/t for another 5kt sale in June.
• Market demand for battery raw materials “remained exceptionally strong” with China reporting an increase in EV sales to ~550k units last quarter, accounting for ~30% of total vehicle sales.
• The Company approved capacity expansion programme to 580-680ktpa in June that is estimated to cost ~A$300m with first production in Q4 CY23.
• Additionally, detailed engineering, procurement, site preparation and road works commenced during the quarter on the 43ktpa LiOH refinery JV (with POSCO) in South Korea.

SolGold PLC (LSE:SOLG, TSX:SOLG, OTC:SLGGF)* 25.54p, Mkt Cap £593m – Business activity update highlights financing for Cascabel DFS alongside further exploration at Porvenir and Helipuerto

• SolGold report the company are investigating a number of strategic initiatives to provide the Company with funding options for the development of Cascabel and progression of regional projects.
• “SolGold continues to consider, and has had discussions with its major shareholders regarding possible financing structures and options to obtain funding to further progress the Cascabel development, including a potential equity raise."
• SolGold also continues to assess potential alternative funding structures which may involve strategic investors. The funds raised would be allocated to financing the completion of the Cascabel DFS, regional exploration and general corporate purposes through to the second half of 2023 to maintain momentum on development plans.
• The purpose of the proposed funding exercise is to finance completion of the Cascabel DFS, further de-risk the project and realise its world class, Tier 1 potential. The Company is targeting total potential pre-tax NPV uplift of approximately US$1-1.8bn at the Cascabel project from the continued evaluation of optimisations and other upside opportunities to be incorporated within the upcoming studies.”
• SolGold has cash resource of ~US$26m at end-June,.
• The team report that Porvenir is the company's second priority after Cascabel and SolGold has engaged M3 to progress the Porvenir project PEA that is on track for completion by year-end.
• Field programmes continue at numerous satellite targets to the Cacharposa deposit (indicated resource 397mt at 0.44% CuEq which contains 1.40mt Cu and 1.80moz gold)
• The next most important target is at Helipuerto, close to the Solaris Resources (CSE:SLS) discovery at Warintza where Solaris has published an in-pit indicated mineral resource of 579Mt at 0.59% CuEq.

*SP Angel acts as Financial Advisor to SolGold

Southern Copper Corporation (NYSE:SCCO) $48.32, Mkt Cap $37bn – Interims highlight 88% cost increase YoY

• Southern Copper, the Mexican and South American focused producer, released results for the six months to 30th June 2022.
• Copper production fell 11% vs H1 21 to 423kt.
• Adjusted EBITDA in the first half of this year was $2.7bn – 21% lower than the same period last year.
• Southern’s operating cash cost rose 88% YoY to $1.10/lb in Q2 22.
• Rising costs were attributed to lower production compounded by increases in costs for fuel, power and some other operating materials due to inflation.

Syrah Resources Ltd (ASX:SYR) A$1.45, Mkt cap A$974m - $102m loan from US Dept of Energy

• Syrah reports that it has received a loan to for the initial expansion of Syrah’s Vidalia facility in Louisiana, USA to a 11.25ktpa of active anode material (AAM).
• The loan will be made available under the DoE’s Advanced Technology Vehicles Manufacturing loan program, which has US$15.1bn in uncommitted loan authority to support the manufacture of eligible advanced technology vehicles.
• Interest on the loan is pegged to long-dated US Treasury rates, with the US 10-year currently at 2.8%.
• Given Syrah recently completed an equity raise, surplus funds will be used for the DFS into further expanding Vidalia to at least 45ktpa AAM.
• The company is aiming to be the first major integrated ex-China producer of natural graphite that is battery ready for electric vehicles.
• Once the facility is fully developed, it will be fed from Syrah’s Balama mine in Mozambique.

Thor Mining PLC (AIM:THR, OTC:THORF, ASX:THR) 0.48p, Mkt Cap £10.1m – Drilling results from the Molyhil Tungsten-Molybdenum Project

• Thor Mining has released results from two of the three holes drilled in late 2021 to examine the extension potential of its wholly-owned Molyhil tungsten-molybdenum Project, in the Northern Territory, Australia.
• The drilling has demonstrated that “disseminated scheelite-molybdenite-chalcopyrite mineralisation hosted in a massive magnetite skarn … extends along strike, to the south of the Molyhil Resource”.
• The company says that the assay results “were lower than visible grade estimates and this resulted in the samples being resubmitted for analysis using two different analytical techniques, with further follow up using the coarse reject material”.
• The results reported today include:
• A 46m interval from a depth of 249m in hole 21MHDD-002 which averaged 0.06% WO3, 0.05% molybdenum and 0.04% copper, including 11m at an average grade of 0.05% WO3, 0.13% molybdenum and 0.06% copper from 272m; and
• A 4m interval from 255m depth in hole 21MHDD-003 which averaged 0.13% WO3, 0.08% molybdenum and 0.06% copper
• A third hole, designated 21MHDD-001, “intersected the edges of the magnetite skarn drilling over the top into a granite, with negligible mineralisation”.
• Acknowledging what Manging Director, Nicole Galloway Warland, described as disappointing assay results, the company suggests that the analysis “of the tungsten and molybdenum is significantly impacted by the coarse nature of the scheelite crystals in half core, combined with the malleable nature of the molybdenite when pulverised; thus, sample size is critical to the representivity of assay grades”.
• In our opinion, while this is a plausible reason for the results achieved, it suggests that the Molyhil deposit holds challenges to the development of a mineral resources estimate which will need to address several issues:
• Skarn geometry can be complex, which may explain why hole 001 missed the mineralisation.
• Coarse grained mineralisation increases the difficulty of obtaining representative samples for resource estimation.
• This issue can be addressed in part by drilling large diameter core at closer than usual spacings but at depths of over 200m this could prove expensive. [Note: The drilling at Molyhil recovered ‘HQ’ sized core with a diameter of 63.5mm – the next larger core size ‘PQ’ has a diameter of 85mm which would potentially require larger and more powerful equipment]
• On the positive side, the tungsten mineral scheelite is prone to abrasion in the milling process which can impact recovery rates by creating fine grained particles which are difficult to recover through conventional gravity circuits. Coarse grained mineralisation is less susceptible to these potential losses as it does not require fine grinding to liberate the scheelite grains.
• Thor Mining says that it has “identified further high priority targets for drill testing along strike”.
• In April 2021, Thor Mining announced a mineral resource estimate for Molyhil of 4.4mt at an average grade of 0.27% WO3, 0.10% molybdenum and 0.05% copper. Over 77% of the resource, 3.4mt at an average grade of 0.27% WO3, 0.010% molybdenum and 0.05% copper, is classified as within the JORC (2012) ‘measured and indicated’ categories with the balance classed as ‘inferred’.

Conclusion: Drilling conducted in late 2021 confirmed the strike extension of the Molyhil mineralisation but produced lower grades than those seen in the April 2021 mineral resource estimate and estimated from visual inspection of the drill core. Additional targets have been identified at Molyhil and we look forward to results as they become available.

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.

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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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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%