SP Angel . Morning View . Thursday 27 10 22
Copper rallies alongside Dollar-denominated commodities as Greenback weakens
MiFID II exempt information – see disclaimer below
Private Zambian copper exploration opportunity
- We are looking for investment into a private copper explorer with four highly prospective licences in Zambia, near major mines or significant exploration targets.
- One license is contiguous with First Quantum’s Sentinel copper and Enterprise nickel mines with whom they have a Technical Cooperation Agreement.
- Historic drilling on the licence includes 0.7% copper over 1m and 0.2% nickel over 3m. Geophysics in 2021 & 2022 advanced project toward identifying drill targets.
- A large licence with multiple copper targets. Samples from small artisanal mines assayed 15.8% copper, 0.57g/t gold and 4.87% copper, 18.3 g/t gold.
- A highly prospective licence acquired in 2022 on the Western Foreland trend which hosts the giant Kamoa-Kakula mine.
- IPO documentation has been prepared for listing when market conditions improve.
- All licences are 100% owned with Zambian partners significant shareholders in the company.
Anglo American PLC (LSE:AAL) – Production guidance maintained following Q3 2022 production report
Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF, ASX:A11)* – Quarterly update underpinned by delivery of PFS
Glencore PLC (LSE:GLEN) – Glencore staff may face bribery charges
Fortescue Metals Group (ASX:FMG) – Record Q1 production
Greatland Gold PLC (AIM:GGP, OTC:GRLGF) – Havieron feasibility study extended to help capture growing resource expansion potential shown in recent drilling
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* suspended – Pressure mounts to resolve the financial restructuring
Resolute Mining Limited (ASX:RSG, LSE:RSG) – Quarterly results & analyst call indicate strong progress at Syama
Copper rallies alongside Dollar-denominated commodities as Greenback weakens
- Copper rallied 6% yesterday to $7,790/t as the Dollar weakened significantly against a basket of major currencies.
- The Dollar has fallen over 2.8% on the week as traders weigh up a potential shift in Fed policy away from aggressive rate hikes.
- The Greenback is also seeing pressure from major currencies, with the Euro and Pound both strengthening.
- The LME metal index climbed 3.4% yesterday as the Dollar-denominated currencies enjoyed some respite from a weaker Greenback.
- Market expectations of a 75bp in December have fallen in recent weeks below 40%, suggesting traders expect the Fed to cool its efforts to tackle inflation.
- Copper inventories eased slightly this week, down 3% this week and remain 39% lower than the seasonal average.
- Chinese traders have been ramping up bullish positions on Chinese copper miners, with Jiangxi Copper seeing double the average long option bets this week.
Gold steadies despite sliding Dollar as Treasury yields rebound
- Gold prices have remained flat around the $1,660/oz mark despite a major downwards move in the dollar.
- Whilst the Dollar has now weakened 3.8% from its 20-year high in September, gold prices remain somewhat subdued.
- Although the Dollar has been one of gold’s primary adversary, soaring Treasury yields have been the main driver in gold’s downward trend this year.
- Whilst US 10-year Treasury yields fell 7.4% this week from 2007 highs, they rallied 1.6% from below the key 4% mark.
- The easing in Fed hike expectations has been driven by several US datapoints showing a weaker US economy, with consumer confidence data missing expectations and manufacturing data also showing weakness.
- A 75bp hike next week is all-but priced in, whereas markets now show a 55% likelihood of a 50bp hike in December.
Mining majors point to easing inflationary pressure during Q3 earnings calls in boost to sector
- First Quantum’s CFO stated ‘some input costs started to fall later in the end’ of Q3.
- Similarly, Lundin’s CFO stated inflationary pressures seem ‘certainly to be flattening out and potentially even dropping down a bit in certain jurisdictions.’
- Mining production globally has been impacted by soaring diesel price, exacerbated by Putin’s invasion of Ukraine.
- However, First Quantum’s CFO stated he does not expect ‘the full effect of this reduction’ to be felt until 2023.
Dow Jones Industrials +0.01% at 31,839
Nikkei 225 -0.32% at 27,345
HK Hang Seng +0.83% at 15,445
Shanghai Composite -0.50% at 2,985
Economics
Inflation - Unilever, one of the world’s largest consumer goods companies, reported a 12.5%yoy increase in prices for its goods in Q3/22 as the Company aims to transfer cost inflation onto consumers.
- That was the highest hike in quarterly prices on record, although, the Company warned over falling sales volumes as consumers switch to cheaper goods.
- “We expect the challenges of high inflation to persist in 2023… the delivery of consistent growth remains our first priority,” CEO commented on results.
500% inflation in UK railway fines
- Inflation is coming at us in many forms with penalties fare dodging on the railways 500% to £100 in January.
- Given the way GWR arbitrarily change the fare designation on their off-peak trains we suggest travellers should be particularly careful to check their tickets before boarding.
- We wonder what is coming next, fines for wearing a loud shirt in a built-up area?
US – First reading of Q3 GDP is this afternoon with estimates for the economy to have growth 2.4%qoq (annualised) during the quarter, ending two consecutive quarters of declines.
- US GDP is expected to rise to 2.4% in Q3 from -0.6% in Q2 despite the Fed 0.75% rate rise in September.
- Fed officials see GDP growing by 0.2% through 2022 and 1.2% in 2023.
- The Fed is forecast to raise rates by another 0.75% on 2nd November according to a Reuters poll of economists.
- The Fed is planning on smaller rate rises from December according to Nick Timiraos at the Wall Street Journal.
Expect the US dollar to continue to cool despite forecast Q3 growth of 2.4% as run in US dollar strength runs its course
- We expect the tide to start to turn soon in terms of US dollar strength as the Fed’s determination to control inflation starts to give way to other considerations.
- Pain in the US mortgage market is expected to slow property transactions and reduce the government take from closing costs which are 3-6% of transaction values.
- US mortgage applications fall to 24-year low as mortgage rates rise to 7.2% for 30-year fixed and 6.59% for 10-year fixed
- Higher rates may turn voters away from Biden and the Democrats as Trump reiterates populist slogans on draining the swamp, etc…
- 5-year US Treasury Note auction fixed at 4.19% slightly down from last month's 4.23%
China – Industrial profits remained down in the first nine months of the year reflecting Covid disruptions and a slump in the property market.
- Firms continued to be affected by high costs and some businesses face operational challenges, Bloomberg cited comments by the National Bureau of Statistics.
- Industrial Profits (%yoy): -2.3 v -2.1 August.
- NPC ‘National People’s Congress’ deliberating on new nominations for leadership reshuffle (SCMP) .
- The NPC will approve vice premiers to work on the economy, pandemic control, overseas trade and science and technology.
Taiwan – Igor Sechin, a close ally of Putin says Taiwan will return to China on schedule
- We believe the comment is intended to distract US attention away from Ukraine and bears little credibility
- Sechin also claims that BP remains Rosneft (LSE:ROSN)’s shadow shareholder following the transfer of $700m of H2 dividends into special accounts.
Europe - Euro is holding onto its gains against the US$ ahead of the ECB rate announcement later today.
ECB warns of ‘serious negative consequences’ if it tightens loan terms on its low-rate loan program
- Markets are expecting a second consecutive 75bp hike followed by a fully priced in 50bp move at the next meeting and a 50% chance of an additional 25bps increase in December, Bloomberg writes.
- Inflation has been on an ascending trend through the year hitting a high of 9.9% in September.
- The ECB decision is due 12.15pm followed by a news conference at 12.45pm.
Germany – Consumer sentiment remained depressed in November reflecting higher energy costs and interest rates.
- The gauge came a little better than a record low posted in the previous month.
- GfK Consumer Confidence: -41.9 v -42.5 October and -42.3 est.
Turkey - Turkish central bank raises inflation view to 65.2% (Reuters)
- Turkey continues with Erdogan’s drive for growth fuelling ongoing and rising inflation.
- The central bank governor saw inflation peaking at 85%.
- Turkish inflation came in at 83.45% in September
- The Turkish lira has fallen to 18.6/USD from 9.5/USD a year ago.
Egypt - Egypt moves to end perceived Dollar peg in favour of gold alongside other currencies
- Egypt’s Central Bank Governor is looking to end its currency’s US dollar peg in favour of a wider basket of currencies.
- He announced plans to ‘change this concept’ as the country is currently negotiating with the IMF for an economic boost. The IMF has encouraged Egypt to ensure a more flexible FX rate.
- The soaring dollar has been a major hit to emerging markets, however Egypt’s pound has strengthened against the Euro, GBP and Turkish lira since the invasion.
- The Central Bank’s governor stated they will ‘make an index for the Egyptian pound through a group of other currencies in addition to gold in order to change the culture that we are linked to the dollar.’
Currencies
US$0.9984/eur vs 0.9861/eur yesterday. Yen 147.57/$ vs 148.94/$. SAr 18.140/$ vs 18.470/$. $1.150/gbp vs $1.129/gbp. 0.644/aud vs 0.633/aud. CNY 7.264/$ vs 7.306/$.
Dollar Index 109.84 / -2.8% on week
Commodity News
Precious metals:
Gold US$1,662/oz vs US$1,649/oz yesterday
Gold ETFs 95.5moz vs US$95.5moz yesterday
Platinum US$949/oz vs US$923/oz yesterday
Palladium US$1,972/oz vs US$1,993/oz yesterday
Silver US$19.41/oz vs US$19.20/oz yesterday
Rhodium US$14,100/oz vs US$14,100/oz yesterday
Base metals:
Copper US$ 7,725/t vs US$7,523/t yesterday
Aluminium US$ 2,328/t vs US$2,176/t yesterday
Nickel US$ 22,450/t vs US$21,960/t yesterday
Zinc US$ 2,997/t vs US$2,950/t yesterday
Lead US$ 1,908/t vs US$1,881/t yesterday
Tin US$ 18,810/t vs US$18,340/t yesterday
Energy:
Oil US$95.4/bbl vs US$93.1/bbl yesterday
Natural Gas US$5.680/mmbtu vs US$5.173/mmbtu yesterday
Uranium UXC US$53.35/lb vs US$53.35/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$86.3/t vs US$90.5/t
Chinese steel rebar 25mm US$544.3/t vs US$541.3/t
Thermal coal (1st year forward cif ARA) US$270.0/t vs US$270.0/t
Thermal coal swap Australia FOB US$376.0/t vs US$383.0/t
Coking coal swap Australia FOB US$320.0/t vs US$311.0/t
Other:
Cobalt LME 3m US$51,955/t vs US$51,955/t
NdPr Rare Earth Oxide (China) US$93,117/t vs US$91,377/t
Lithium carbonate 99% (China) US$75,809/t vs US$73,991/t
China Spodumene Li2O 5%min CIF US$5,900/t vs US$5,800/t
Ferro-Manganese European Mn78% min US$1,243/t vs US$1,218/t
China Tungsten APT 88.5% FOB US$32.0/kg vs US$32.0/kg
China Graphite Flake -194 FOB US$870/t vs US$860/t
Europe Vanadium Pentoxide 98% 7.4/lb vs US$7.4/lb
Europe Ferro-Vanadium 80% 30.65/kg vs US$30.65/kg
China Ilmenite Concentrate TiO2 US$311/t vs US$307/t
Spot CO2 Emissions EUA Price US$76.4/t vs US$67.9/t
Brazil Potash CFR Granular Spot US$620.0/t vs US$620.0/t
Battery News
Baosteel’s dire results highlight China’s insatiable appetite for renewables as electrical steel sales surge
- Major steelmaker Baosteel’s quarterly report highlights a ramp up in silicon steel consumption key to renewable power.
- Silicon/electrical steel sales rose 11% ytd for power consumers, as China boosted its investment in renewables equipment and the grid.
- Silicon steel for the EV sector saw sales rise over 61% as Chinese consumers continue to ramp up purchases.
- Analysts expect the global electrical steel market to grow at over 6.5% over the next decade, expected to hit a total market size of $70bn from $30bn. (FMI)
- Cleveland Cliffs also noted ‘very strong demand’ both grain-oriented and non-oriented electrical steels this quarter, according to their earnings call yesterday.
- Grain-oriented electrical steel is key to static machinery, for example transformers, whilst non-oriented electrical steel is utilised in consumer appliances ranging from dishwashers to industrial motors for EVs and power generation.
- S&P Global Platts currently forecast a shortage of EV-grade electrical steel by 2028.
Fortescue suggest potential lithium mining push alongside $3bn renewables investment
- Fortescue Future Industries CEO Mark Hutschinson stated the Company is ‘looking at lithium longer term’, pointing to the Company’s ‘mining capabilities.’ (Bloomberg)
- Chairman Andrew Forrest does not foresee a shortage of lithium but highlighted Fortescue’s ability as ‘a fantastic explorer, developer and acquirer of assets’ when referencing the key battery metal.
Company News
Anglo American PLC (LSE:AAL) 2,708.5p, Mkt Cap £37.1bn – Production guidance maintained following Q3 2022 production report
- Anglo American is largely maintaining its 2022 production guidance following its Q3 operational results delivered in what the company describes as a “challenging operating environment”.
- Anglo American’s 2022 guidance is maintained for its diamond, platinum group metals and copper operations and is expected to be towards the lower end of the guidance ranges for its nickel, iron-ore and steelmaking coal divisions.
- Production of rough diamonds at 9.6m carats during the quarter is 4% higher than the 9.2m carats of Q3 2021 and brings year-to-date output to 26.5m carats (2021 – 24.6m carats) and reflects “the treatment of higher grade ore at Orapa (Botswana) as well as continued strong performance in Namibia”.
- Diamond production guidance for the year remains intact in the range 32-34m carats at a cost of around US$65/carat implying that final quarter output will need to be between 5.5-7.5m carats.
- Copper output, which includes the continuing ramp-up of the new Quellaveco mine in Peru, was 147,000t (2021 – 157,000t) for the quarter bringing YTD output to 420,000t (2021 – 487,000t) with the reduced levels attributed to “planned lower grades at all our operations in Chile, as well as unfavourable ore characteristics at Los Bronces, partly offset by the first production of copper from Quellaveco in Peru”.
- Copper production guidance for the year is maintained in the guidance range of 640-680,000t with costs expected to be around US$1.59/lb with Chilean costs of ~US$/lb and those in Peru at ~US$1.50/lb “based on progressing the ramp-up of production volumes”.
- Brazilian nickel production declined by 4% to 10,000t (Q3 2021 – 10,400t) bringing YTD output to 26,600t (2021 – 31,100t) mainly as a result of lower grades. Full year nickel output is expected to meet the lower end of the 40-42,000t guidance range at a cost of around US$4.95/lb and the company cautions that this is “subject to the extent of further Covid-19 related disruptions and weather related impacts”.
- PGM output of 1.046moz during the quarter is 6% lower than the 1.12moz of Q3 2021 and brings the total so far in 2022 to 3.03moz (2021 – 3.20moz) with the operations adversely affected by Eskom load-shedding (power outages) primarily in September, infrastructure closures at Amandelbult and lower grade at Mogalakwena.
- Lower production at Amandelbult, Mogalakwena and Kroondal “were partially offset by a 41% increase in production at Unki to 59,900 ounces, following the debottlenecking project at the concentrator, completed in Q4 2021. Production at Mototolo increased by 9%, reflecting the benefit of higher grade”.
- Guidance for the full year of 3.9-4.3moz remains intact with costs expected to be around US$950/oz.
- The impact of Eskom load shedding contributed to a 5% decline in iron ore output from Kumba, which was also “impacted by the slow ramp-up after the safety intervention in the second quarter … while production at Minas-Rio was flat” at 6.1mt.
- Overall, iron-ore output declined by 5% to 16.1mt during the quarter (2021 – 16.9mt) bringing YTD output to 43.6mt (2021 – 48.8mt) with full year output now expected to be towards the lower end of the 60-64mt guidance range with costs of ~US$40/t. Both operations are expected to be at the lower end of guidance ranges of 38-40mt at Kumba and 22-24mt at Minas Rio.
- Steel-making coal “production increased by 28%, reflecting the ongoing ramp-up of the longwall operations” to 5.5mt (Q3 2021 – 4.3mt) bringing the total for YTD to 10.4mt, in line with the 10.5mt last year. Full year output is expected to be towards the lower end of the range 15-17mt with costs of around US$110/t for the year “subject to the extent of further unseasonal wet weather, continued tight labour markets and Covid-19 related disruptions”.
- Chief Executive, Duncan Wanblad, said that “As we move through the final quarter, we are focused on maintaining this operational momentum to deliver our full year guidance. The continued safe ramp-up of our steelmaking coal operations, as well as further performance improvements at our iron ore businesses, are priorities to set the platform for delivery into next year”.
- Exploration and evaluation expenditure rose by 21% to US$87m with evaluation spending increasing by 34% to US$47m with exploration spending rising by 8% to US$40m mainly on “platinum group metals and base metals, generally reflecting increased access following the recovery from previous Covid-19 disruptions.”
Conclusion: Anglo American is largely maintaining its 2022 guidance ranges though some commodity groups are now expected to come in towards the lower part of the indicated ranges .
Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF, ASX:A11)* 36.2p, Mkt Cap £219m – Quarterly update underpinned by delivery of PFS
- Atlantic Lithium has released its quarterly activities and cash flow report for the three months to 30th September 2022.
- A highlight and key milestone for the company, was the delivery of a Pre-Feasibility Study for the Ewoyaa Lithium Project.
- Atlantic’s cash position at the end of the period was A$23.4m.
- The company spent A$5.8m on exploration and evaluation during the period.
- Administration and staff costs during the three months were A$1.5m.
- The company continued to progress its comprehensive 47,000m drill programme during the quarter, with approximately 15,000m of assay results reported to date.
- Highlights and key assumptions from the PFS at Ewoyaa, based on a 2.0mtpa include:
- LOM 12.5 yrs at 255,000tpa SC6
- Capex $125m
- C1 and AISC costs are estimated at $278/t and $460/t SC6 after by-products.
- Post-tax NPV8% of US$1,328m
- Post-tax IRR of 224%
- LOM average EBITDA of $248m
- Payback 4.9 months $278/t
- Average long-term SC6 price US$1,359/t
- Atlantic Lithium continues to progress the design phase of the project while also targeting a MRE upgrade before delivering a DFS in 2023.
- The company also notes the appointment of Mr Keith Muller as its new Chief Operating Officer, commencing in November 2022.
*SP Angel acts as nomad and broker to Atlantic Lithium
Glencore PLC (LSE:GLEN) 510p, Mkt cap £66bn – Glencore staff may face bribery charges
- The UK SPO may be about to bring fraud charges against a significant number of employees in the commodity trading and mining areas.
- The Times reports that ‘fraud investigators are considering charging up to 11 former Glencore employees at Glencore for paying around $28m in bribes in Africa.
- Glencore previously estimated it may pay around $1.5bn to settle UK and US investigations into bribery and commodity price manipulation.
ASX:FM A$16.07, Mkt cap A$50bn – Record Q1 production
- Fortescue Metal’s has reported a record 47.5mt of iron ore shipments during the first quarter of its 2022/23 year.
- According to the trade publication “Australian Mining”, the shipments resulted from increased production from the Western Australian operations but were also impacted by rising diesel and labour costs which “pushed Fortescue’s direct costs 16 per cent higher year-on-year to $17.69 per wet metric tonne”.
- The news item also points out that “Iron ore prices have also taken a hit over the past year, dropping from $US119.65 per tonne in October 2021 to $US87.80 in October this year”.
- Fortescue is currently maintaining its full-year guidance range of 187-192mt of ore shipments.
Greatland Gold PLC (AIM:GGP, OTC:GRLGF) 8.3p, Mkt Cap £415m – Havieron feasibility study extended to help capture growing resource expansion potential shown in recent drilling
- Greatland Gold draws attention to the Quarterly Exploration Report of its partner at the Havieron project in Western Australia, Newcrest Mining (70% interest) which was issued today and details progress on resource expansion potential as well as the underground development of the exploration decline and the feasibility study.
- The company says that there a currently six drilling rigs operating at Havieron “as drilling continues to identify and expand the high-grade extensions to the mineralisation in the Eastern Breccia, South East Crescent Zone and Northern Breccia” zones as well as to “test regional geophysical targets outside of the main Havieron system on the Havieron mining lease”.
- Among the new drilling results highlighted in today’s announcement are:
- An 81.3m wide intersection of the Northern Breccia zone averaging 3.2g/t gold and 0.29% copper from a depth of 1,357.2m in hole HAD-098W5 which included a higher grade section of 53.3m at an average grade of 3.5g/t gold and 0.30% copper from 1,360.5m depth; and
- A 12.9m wide intersection, also of the Northern Breccia zone, at an average grade of 3.5g/t gold and 0.49% copper from 1,356.1m depth in hole HAD-086W6 which also contained a deeper intersection of 20.7m averaging 4.4g/t gold and 0.10% copper from 1,380.3m depth; and
- Intersections of the Eastern Breccia in hole HAD-145AW5 with 11.3m at an average grade of 2.4g/t gold and 0.53% copper from 1,686m depth as well as 38m averaging 1.9g/t gold and 0.17% copper from 2,038m depth and including 23m at an average grade of 2.5g/t gold and 0.16% copper from 2,053m
- As a result of the recent drilling, the footprint of the Eastern Breccia zone has now been extended “over 500m in strike, up to 200m in width, and over 250m in vertical extent”. Assay results for a further 3 exploration holes within the zone are still awaited.
- Greatland Gold says that the results from hole HAD-145AW5 “represent one of the recently defined northwest trending internal higher-grade sulphide dominated domains in the Eastern Breccia. This mineralisation, along with much of the Eastern Breccia system, remain open at depth”.
- Drilling continues in order to test the:
- “Extension of the South-East Crescent Zone at depth below the Updated Mineral Resource;
- Potential for additional material in the Eastern Breccia, including higher grade "Crescent" like material,
- Incremental expansion of multiple higher-grade zones including Northern Breccia and North-West Pod; and,
- Additionally, drilling is continuing to test geophysical targets outside of the main Havieron system”
- The company says that the exploration decline has now completed 916m of development with improving ground conditions helping to deliver “the highest daily average advancement rates … during September after the transition to drill and blasting of the development face … [although the company says that further] …. progress continued to be constrained by geotechnical and hydrogeological conditions”.
- Work on the feasibility study is continuing and the completion “will be extended beyond the December 2022 quarter to allow further time to maximise value and de-risk the project”.
- The company says that the extended timetable will help it “to de-risk the project by capturing the ongoing successful growth drilling campaign and allow potential resource conversion to increase production potential and mine life of Havieron”.
- Commenting on the progress, Managing Director, Shaun Day, said that the “New intersections between the South East Crescent and the Eastern Breccia increases the potential for a continuous high grade mineralised zone linking these two previously separate areas”.
- He also explained that the extension of the feasibility study will help to “maximise value and further de-risk … the project as our understanding of the Havieron ore body continues to evolve”.
Conclusion: Continuing drilling at Havieron is extending the deposit envelope and prompting an extension to the feasibility study timetable to allow the inclusion of the additional mineralisation and evaluate the appropriate scale and mine life.
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* suspended – Pressure mounts to resolve the financial restructuring
NPV Valuation: Under review
- Rambler Metals reports that its shares are to be suspended from trading at 7:30am today “pending clarification of the Company's financial position”.
- The company reiterates the information contained in its interim results announcement of 26th September that it has “been in active discussions with NewGen … [NewGen Resources Lending] … to defer or reschedule the repayment of its … [US$16.4m] … loan, which is intended to form part of a wider restructuring of the Company's finances”.
- Loan repayments are “due to commence on 31 October 2022 … [but] … an agreement has not yet been reached to defer or reschedule such capital repayments”.
- Today’s news follows the announcement last week of operating results showing that the company’s Ming mine delivered the highest quarterly copper output since 2014 during the quarter ending 30th September 2022 and that key operational elements of the company’s turn-around plan for the mine are now in place.
Conclusion: The suspension of Rambler Metals shares from trading appears to be a response to the, as yet unresolved, loan and financial restructuring negotiations with NewGen. We await a speedy resolution to clarify the issue.
*SP Angel act as Nomad and Broker to Rambler Metals & Mining. An SP Angel analyst holds shares in Rambler Metals & Mining.
Resolute Mining Limited (ASX:RSG, LSE:RSG) 11.4p, Mkt Cap £125m – Quarterly results & analyst call indicate strong progress at Syama
- Resolute has released its quarterly activities report for the three months to 30th September 2022, along with an update call earlier this morning with CEO Terry Holohan and CFO Doug Warden.
- Resolute poured 90.4koz during the quarter, vs 89.1koz in Q2 22 and 76.3koz in Q3 21.
- This production increase came despite the wet season in Mali.
- All in sustaining costs fell to $1,513/oz from $1,540/oz in Q2, benefiting from lower open pit mining and processing costs at Syama and higher production.
- Cash costs fell 6% on the quarter to $1,389/oz.
- On the call, CEO Mr Holohan said that although some costs increased as a result of inflationary pressure, the CFA franc is pegged to the Euro which prevented runaway inflation.
- Syama: The mining rate from underground operations reduced 3% due to the wet season, though this was offset by a 9% increase in the Sulphide ore grade to 2.71g/t.
- Tonnes milled continue to be high with another consecutive record quarter of 52kt roasted with 92-94% availability.
- Mako: Ore mined continued to increase on the quarter, though grade reduced 11% in line with expectations.
- Tonnes processed increased by 5% due to increased plant uptime and mill efficiency improvements.
- Exploration: Discovering more high-grade ore sounds relatively straight forward with plenty of sulphide mineralisation sitting below the mined-out oxides in numerous open pits as well as along strike underground at Syama.
- Total exploration spend for the September quarter was $3.1m – with accelerated drilling programs continuing in Mali and Senegal throughout the Quarter.
- The Group maintains its full year 2022 production guidance of 345,000oz and cost guidance at an AISC of $1,425/oz.
- Net debt decreased by $26.3 million to $156.5 million at 30 September 2022.
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
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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.
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%