SP Angel . Morning View . Monday 01 08 22
Weak Chinese PMI numbers signal challenging growth outlook
MiFID II exempt information – see disclaimer below
American West Metals (PRIVATE-AU:AW1) – A$2.7m equity placing to fund Storm copper project
Tirupati Graphite PLC (LSE:TGR, OTCQX:TGRHF) – CFO appointed
Zamare Minerals* (private) – Zamare Minerals licenses border First Quantum’s new Trident mining complex
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.
Electric van sales climb as new electric vans prove to be 19-25% cheaper to run that diesel equivalents
- Sales of electric vans rose 60% yoy through the first half as fleets increasingly move to lower cost vehicles.
- 8,100 electric vans were registered in the first half vs 5,061 in the same period last year.
- Overall, new van registrations fell to 144,384 from 191,513 over raising the market penetration of electric vans to 5.6% from 2.6%.
- A study by ‘Transport & Environment’ found electric vans were between 19-25% cheaper to own and run in the UK than diesel models.
- Their analysis was completed before the recent spike in fuel and energy costs so electric vans should be look even better relative to diesel at current fuel prices.
Oil prices have substantially lagged inflation over the past 10 years
- Inflation has averaged 1.7%pa since 2012 in the UK according to the Bank of England
- The equivalent Oil prices which was at $112/bbl in 2012 should now average around at $126/bbl today if it had simply kept the same rate of inflation.
- Fuel duty is 52.95p.lts of petrol + 20% VAT charged on both the product price and the duty. Eg the government take is 90p.
- While the percentage of UK duty has fallen according to the RAC Foundation with the government taking c. 45% today vs 56% in 2021 the VAT on fuel for transport has risen to 20% from c. 14% in 2012 more than making up for any loss to the exchequer.
Codelco copper production falls 9.3% YoY in Q2 22
- The world’s top supplier Codelco produced 371kt vs 409kt in Q2 21.
- Revenues fell 30% amid falling prices and lower sales.
- On the same day, the South American country’s copper commission projected a 3.4% annual drop in domestic production amid declining ore quality, water restrictions and union protests.
Dow Jones Industrials +0.97% at 32,845
Nikkei 225 +0.69% at 27,993
HK Hang Seng +0.30% at 20,216
Shanghai Composite +0.21% at 3,260
Economics
China – Official July PMI numbers pointed to a further slowdown in growth momentum with manufacturing sector slipping into a contraction.
- New orders and new export orders for both manufacturing and non-manufacturing all contracted in July.
- “Insufficient market demand is the main difficulty faced by manufacturing enterprises at present,” the bureau collecting the data said in a statement.
- Property sales by 100 biggest developers in China fell 39.7%yoy in July following a 43% drop in the previous month.
- Sales are down 49%yoy in the first seven months of the year weighed by slowing economic growth and Covid related restrictions.
- “Industry confidence is… at a low level… in the short term, there is still a lot of pressure on companies to sell,” the China Real Estate Information (NASDAQ:CRIC) Corporate commented on the data.
- Manufacturing PMI: 49.0 v 50.2 in June and 50.3 est.
- Services PMI: 53.8 v 54.7 in June and 53.9 est.
- Composite PMI: 52.5 v 54.1 in June.
- China steel industry PMI falls to lowest level since 2008
- China Steel industry fell to 33 in July from 36.2 the month prior.
- Steel mill activity has now fallen for the sixth straight week – the longest stretch of declines since Dec 2020.
- Rock bottom confidence in China’s property sector is responsible for low confidence in the Chinese steel market, with many fearing that a serious debt crisis could unfold.
Germany – Retail sales unexpectedly post a drop in June adding further evidence to struggling personal spending amid rapid inflation pressures.
- On annual basis, retail sales fell 8.8% marking the largest drop in nearly 30 years.
- Market commentators suggested weak June retail sales may drag Q2 GDP headline number sub 0.0% reported earlier when numbers are revised.
- Retail Sales (%mom): -1.6 v 1.2 (revised from 0.6) in May and 0.3 est.
UK – The central bank will hold its monetary policy meeting this week with markets pricing in a 70% chance of a 50bp rate increase to 1.75%.
- Monetary authorities are also expected to provide details for unwinding some of the £895nm of stimulus it delivered over the past decade.
Ukraine – First grain ship (corn) has left the port of Odesa this morning following the export deal between Russia and Ukraine to resume shipments through the Black Sea.
- It is the first major shipment since late February when Russia invaded Ukraine and its navy blocked Ukraine’s commercial sea routes, launched missile strikes on its ports and grain storage infrastructure, and attacked civilian grain transport ships, FT writes.
- Another 16 ships are reported to be awaiting departure carrying wheat, corn and other grains accumulated in the country.
Currencies
US$1.0238/eur vs 1.0188/eur last week. Yen 132.42/$ vs 137.77/$. SAr 16.521/$ vs 16.731/$. $1.220/gbp vs $1.216/gbp. 0.701/aud vs 0.699/aud. CNY 6.749/$ vs 6.745/$.
Commodity News
Precious metals:
Gold US$1,764/oz vs US$1,766/oz last week
Gold ETFs 101.3moz vs US$101.3moz last week
Platinum US$905/oz vs US$900/oz last week
Palladium US$2,129/oz vs US$2,076/oz last week
Silver US$20.22/oz vs US$20.11/oz last week
Rhodium US$14,350/oz vs US$14,350/oz last week
Base metals:
Copper US$ 7,919/t vs US$7,810/t last week
Aluminium US$ 2,463/t vs US$2,478/t last week
Nickel US$ 24,770/t vs US$22,040/t last week
Zinc US$ 3,299/t vs US$3,215/t last week
Lead US$ 2,050/t vs US$2,021/t last week
Tin US$ 25,300/t vs US$24,375/t last week
Energy:
Oil US$103.4/bbl vs US$108.1/bbl last week
Crude oil prices were tempered this morning by disappointing Asian economic activity data ahead of an OPEC+ meeting on Wednesday to decide on September output.
European energy markets showed little sign of easing as Australia announced it will decide whether to curb 2023 exports of LNG after a watchdog urged restrictions to divert gas to the domestic market to avert shortfalls.
The US Baker Hughes rig count rose by 9 to 767 rigs last week (up 55% y/y), with oil rigs adding 6 units to 605 rigs, gas rigs adding 2 units to 157 rigs, and one rig miscellaneous. A separate industry data provider estimated that the number of frac crews completing unfinished wells was up 19% y/y to 290 last week.
Natural Gas US$7.942/mmbtu vs US$8.191/mmbtu last week
Uranium UXC US$49.50/lb vs US$49.20/lb last week
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$113.9/t vs US$119.0/t
Chinese steel rebar 25mm US$624.9/t vs US$610.9/t
Thermal coal (1st year forward cif ARA) US$283.0/t vs US$292.0/t
Coking coal swap Australia FOB US$200.0/t vs US$200.0/t
Other:
Cobalt LME 3m US$50,460/t vs US$50,460/t
NdPr Rare Earth Oxide (China) US$119,601/t vs US$121,623/t
Lithium carbonate 99% (China) US$67,910/t vs US$68,130/t
China Spodumene Li2O 5%min CIF US$4,720/t vs US$4,720/t
Ferro-Manganese European Mn78% min US$1,314/t vs US$1,316/t
China Tungsten APT 88.5% FOB US$329/t vs US$329/t
China Graphite Flake -194 FOB US$815/t vs US$815/t
Europe Vanadium Pentoxide 98% 7.4/lb vs US$7.4/lb
Europe Ferro-Vanadium 80% 33.55/kg vs US$33.75/kg
China Ilmenite Concentrate TiO2 US$353/t vs US$354/t
Spot CO2 Emissions EUA Price US$79.9/t vs US$80.5/t
Brazil Potash CFR Granular Spot US$1,000.0/t vs US$1,040.0/t
Battery News
Tesla signs battery material supply deal with two Chinese groups
- Tesla has signed long term supply deals with Zhejiang Huayou Cobalt Co and CNGR Advanced Materials Co until 2025.
- The two suppliers note that the deals are for the supply of ‘ternary precursor materials’ – with pricing subject to market pricing for nickel, cobalt and manganese.
- Zhejiang Huayou sources cobalt from sites in Zhejiang, as well as the DRC, while CNGR owns sites in Congo, Zambia, and Canada.
Nio to make power products at first overseas plant
- Nio has plans to open its first overseas plant in September to develop and manufacture ‘power products’ such as battery-swapping stations to serve European users.
- The battery and EV manufacturer is speeding up construction of battery swapping stations in Europe with a view to expanding sales of its cars in countries including Germany, the Netherlands, Sweden and Denmark in the second half of this year.
- The company is also partnering with oil giant Shell to build battery swapping stations globally, starting with China and Europe this year, according to a statement from Nio – the first NIO-Shell battery swap and supercharging station opened in Xiamen, Fujian province in Southeast China.
- Shell will also open its charging network in Europe to Nio users
Company News
American West Metals (PRIVATE-AU:AW1) A$0.13, Mkt Cap A$21.0m – A$2.7m equity placing to fund Storm copper project
- American West Metals have completed a private placement for A$2.7m at A$12.5 to fund exploration programmes in the US and Canada.
- The placing price represents a ~17% discount to the closing price last week.
- Investors will receive one option for every two subscribed shares with an exercise price of A$0.20 and an expiry date of 2 years.
- Commenting on near term catalysts, the Company highlighted:
- At West Desert Project, maiden JORC MRE is expected in H2/22 with metallurgical testwork on oxide and transitional ores is ongoing.
- At Storm/Seal Projects, resource definition drilling to support a potential JORC MRE with beneficiation and initial mining studies for a potential DSO operation at Storm will be ongoing in H2/22.
- Two holes drilled at Storm recently intersected extensive widths of visible copper sulphide mineralisation from near the surface with a further 15-20 holes planned “to test priority high-grade copper targets, including a number of new electromagnetic (EM) conductors that have the potential to deliver new sulfide copper discoveries”.
- Visual inspection of drill core shows the copper sulphide mineral, chalcocite with:
- Hole ST22-01 intersecting “over 72.1m of chalcocite and chalcopyrite mineralization hosted within dolomite of the Allen Bay Formation” and
- “over 81m of similar mineralization visible in ST22-02”.
- “Laboratory assays are pending and required to confirm the copper content in the drill core”.
- Previous drilling of the 2750N Zone “encountered significant copper mineralization, including 110m core length at 2.45% copper (Cu) from surface (drill hole ST97-08), and 56.3m core length @ 3.07% Cu from 12.2m (drill hole ST99-19)” with the mineralisation remaining open both laterally along strike and at depth.
- American West has an option to earn an 80% interest in the Storm and Seal projects from Aston Bay Minerals*.
*SP Angel has previously raised funds for Aston Bay Minerals
Tirupati Graphite PLC (LSE:TGR, OTCQX:TGRHF) 41p Mkt Cap £36m – CFO appointed
- Tirupati reports that Mr. Ameya Gogate, previously in the position of Financial Controller since April 2019, has been promoted to Chief Financial Officer.
- Mr. Gogate holds a Bachelor's degree in Commerce from University of Pune, India and a Global MBA degree from S. P. Jain School of Global Management in Sydney, Australia.
Zamare Minerals* (private) – Zamare Minerals licenses border First Quantum’s new Trident mining complex
- Zamare Minerals, a private UK company, reports historic drill results on ground adjacent to First Quantum’s new Enterprise nickel mine.
- Enterprise, part of the Trident mining complex plans to produce 30,000tpa nickel in concentrate making it Africa’s largest nickel mine.
- The mine is part of the Trident complex which includes the Sentinel copper mine (232,688t in 2021).
- Zamare’s Ntambu licence immediately borders the Trident complex on the mines' southern side.
- Historic drilling on Ntambu returned:
- 0.7% Cu and 0.1% Ni over 1m including short interval of 6% Cu in borehole NTODD0007.
- 0.2% Ni over 7m and 0.19% Ni over 2m in borehole NTODD0006.
- Ni enrichment along strike in hole NTODD004
- A significant part of Western Zambia is covered by Kalahari sand and several companies including Zamare, Arc Minerals*, Anglo American and BeMetals* which are using different geological and geophysical techniques to try to look through the sand for potentially prospective mineralisation beneath.
- Unlike Trident Zamare’s Ntambu is also covered by a relatively shallow layer of wind-blown Kalahari sand which deepens to the west making the underlying mineralisation increasingly difficult to find.
- Zamare is actively exploring the Ntambu licence now using AMT (audio frequency magneto-tellurics), a geophysical technology which identifies electrical "conductors” in the subsurface.
- The technology identifies more conductive layers of rock, frequently shales, which can host copper and nickel mineralisation
- Zamare is using the AMT work to generate drill targets for both copper and nickel and is also guided by historic drill results.
- Zamare is intending to list in London with the support of SP Angel
*SP Angel are acting as advisor and broker to Zamare and to BeMetals* and as nomad and broker to Arc Minerals*
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
Prince Frederick House
35-39 Maddox Street London
W1S 2PP
*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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