Today's Market View - Atlantic Lithium, Great Western Mining, Savannah Resources, and more...

SP Angel . Morning View . Wednesday 09 11 22

US$ index picks up weighing on metals on mixed US election results

MiFID II exempt information – see disclaimer below

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.

• Drilling shows 0.7% copper over 1m and 0.2% nickel over 3m. Geophysics in 2021 & 2022 advanced project toward identifying drill targets.
• Samples from small artisanal mines assayed 15.8% copper, 0.57g/t gold and 4.87% copper, 18.3 g/t gold. IPO documentation has been prepared for listing when market conditions improve.

*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

Atalaya Mining (AIM:ATYM, TSX:AYM) – Q3 financial results hit by inflation and lower copper prices. 2022 Production guidance maintained as Riotinto plant continues to exceed its rated capacity

Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF, ASX:A11)* – Latest drill results continue to extend known mineralisation at Ewoyaa

Culpeo Minerals Ltd (ASX:CPO, OTCQB:CPORF)* – Visible copper mineralisation intersected over 170m

Europa Metals Limited (LON: EUZ) – Additional drilling results from Toral

Great Western Mining Corporation PLC (AIM:GWMO) – Mineral resource estimate and exploration targets achieved in Nevada, USA

OreCorp Ltd (ASX:ORR) – Management changes ahead of project financing

Savannah Resources PLC (AIM:SAV, ETR:SAV, OTC:SAVNF) – BUY, 17.9p – Binding HoA signed with MRG to divest its last remaining mineral sands license area in Mozambique

Vulcan Energy Resources (ASX:VUL) – Vulcan and Enel Green Power eye geothermal brines in Italy for lithium extraction

Zijin Mining (SHA: 601899) – Zijin Mining eyes 500,000t copper smelter in Sichuan province alongside 160kt Julong mine

China Battery Electric Vehicle sales jump 75% YoY in October

• Sales of new-energy vehicles in China rose 75% in October to 556k vehicles, though sales were down 9% on the month.
• Sales of BEVs in the first 10 months of the year was 4.43m

Rare Earths – Hydropower drought this hits rare earth processors in China as rains struggle to refill resevoirs

• Hydropower shortages from dams in Sichuan has restricted and sometimes cut power exports to neighbouring provinces.
• Reports suggest Sichuan is suffering the worst drought in 60 years with power generation cut in half in the summer causing power to be cut to manufacturers.

Gold jumps to monthly highs as dollar weakens into tomorrow’s inflation reading

• Gold rallied 3% from yesterday’s lows to touch $1,716/oz before settling around the $1,710/oz mark.
• The move followed a rush of inflows as traders ramp up bets on a weaker dollar. Bloomberg reports over one million ounces was bought in under 2 minutes, according to a NYC precious metals trader.
• The dollar has now fallen 3.9% from its September highs.
• US 10-year yields have also fallen 2.33%, supporting gold, as traders consider the likelihood of a cooler inflation print tomorrow
• If the CPI date comes in hotter than expected, gold will likely erase gains made over the past 3 days.
• Traders have also been weighing up the implications in a shift in the US Congress’ balance of power, with a potential debate of expanding the debt ceiling weighing on the dollar and supporting gold prices.

Copper prices climb again as global inventories continue to slide alongside dollar

• Copper prices rallied again this morning in Asian markets by 1.3% to hit yesterday’s highs of $8,123/t before paring gains to closer to $8,000/t.
• Copper prices have been supported by a major draw on global inventories, with physical stocks on exchanges down 34% since October-end.
• Backwardation on the major copper future spread jumped 165% from lows hit on Monday, showing traders are paying increasing premiums for physical supply
• Codelco hiked the premium it charges Chinese buyers to its highest in a decade vs LME prices, up 33% vs 2022 levels. (Shanghai Metals Market)

Chinese copper producers and smelters call on miners to boost output as supply tightness concerns mount (Reuters)

• The China Nonferrous Metals News reports a major Chinese copper lobbying group has urged authorities to boost copper exploration and expand production capacity as soon as possible.
• Jiangxi Copper, Zijin Mining and Tongling Nonferrous Metals are behind the calls.
• Major Peruvian mine operated by Chinse firm MMG has been forced to reduce production on indigenous blockades and grade depletion.
• China relies on imports for 25% of consumption.

Iron ore prices climb to 2-week high on sustained optimism of an imminent China reopening

• Singapore iron ore prices climbed 2.1% to $88/t as hopes of a gradual Chinese reopening will commence going into next year,
• Rising reported covid infections in Guangzhou among other manufacturing hubs have damped any major upward move in the steelmaking ingredient.
• Coking coal and coke rose 1.4% and 2.2% respectively.

Dow Jones Industrials +1.02% at 33,161

Nikkei 225 -0.56% at 27,716

HK Hang Seng -1.62% at 16,289

Shanghai Composite -0.53% at 3,048

Economics

China – PPI fell to -1.3% in October vs rise of 0.9% in September and 13.5 yoy in October 2001 as zero-covid policies hit demand from wholesalers

• Chinese Producer Price Index fell for the first time in nearly two years as wholesalers cut back on prices for factory products.
• Chinese factory gate inflation hit a 26-year high of 13.5 a year ago as it recovered from the disruption of lockdowns in Wuhan and other provinces in 2020.
• The fall in demand was partially hit by the National Day holiday in October with experts predicting a soft fourth quarter.
• US restrictions on semiconductor sales into China, which are designed to impede Chinese military drone and missile development may also be having some impact though they are not designed to hurt China economically.
• CPI rose 2.1% yoy in October vs 2.8% yoy in September – well within the government target of 3%.
• Core consumer inflation rose by 0.6% yoy in October excluding fruit and veg.
• CPI food prices rose 7% yoy in October vs 8.8% yoy in September.
• Non-food prices rose by 1.1% yoy in October vs 1.5% yoy in September.
• Pork prices rose by 51.8% yoy in October.
• Fruit prices fell to 12.6% yoy in October vs 17.8% tot in September.
• Vegetable prices fell to -8.1% yoy in October vs 12.1% in September reflecting recovery from drought conditions.

Guangzhou sees surge in Covid infections as air show kicks off

• Guangzhou, capital of Guangdong province has seen a substantial increase in covid cases warranting speculation on further lockdown.
• Zhengzhou, capital of central Henan province also reported >700 new cases marking a 100% increase on the previous day highlighting how fast Omricon spreads.
• Beijing, is also seeing a number of new cases.
• Lockdown’s now threaten to disrupt around 10% of China’s GDP as cases mount and as the population becomes increasingly frustrated with being locked into factories and homes.
• There is little stopping Omicron unless China’s CCP cave into buying or copying Western MRNA covid vaccines or AstraZeneca’s nCoV-19 modified adenovirus-type vaccine.
• The combination of MRNA and the AstraZeneca vaccine is thought to have been effective in protecting much of the population in the UK.
• Rich Chinese scramble for visas following Xi cementation of

Relaxation of zero-covid rules could cause more disruption to manufacturing and supply chains as zero covid if Omicron sweeps through nation

• We do not expect China to suddenly relax its zero covid policy though increasing non-compliance and civil disobedience may move the economy in that direction
• Some investors see relaxation of this policy as driving inflation through increasing demand for oil, gas and other energy sources.
• If this happens we feel the rise in demand and prices could be short lived as factory workers alongside truck and train drivers take time out to recover or support relatives.

Xi tells Peoples Liberation Army forces to be ready for war in uncertain and stable times (SCMP)

• The comments come on Xi’s first trip to PLA headquarters since the CCP congress.
• While many of the comments refer to defense the world is wary of the ‘One China’ and its intention to reunify Taiwan.

US – Republican wave fails to materialise as votes are being counted in the US midterm elections that appear to be too close to call, FT reports.

• Expectations that President Biden’s low approval rating, the worst of any modern US leader, would drag down his party appear exaggerated.
• Early results from the midterm elections on Tuesday showed many races across the country were too close to call with control of the Senate remaining in the balance and Republicans struggling to secure victories in swing districts in the House of Representatives.

US companies moving manufacturing out of China as potential for resumption of US-China trade war rises

• We expect more reshoring of manufacturing out of China and into other low-cost nations.

Ukraine – President Zelensky said he was open to “genuine peace talks” with Russia amid pressure from Western backers to signal readiness for negotiations, the Wall Street Journal wrote.

• Conditions for talks included returning Ukrainian control over its territories compensating Kiyv for Moscow’s invasion and trials over those who committed war crimes.
• Meanwhile, Russia’s insistence that its territorial integrity including new areas that were recently annexed are non-negotiable suggest there is little scope for talks at present.

UK – Chancellor’s Autumn Statement to increase tax take on income tax, NI, inheritance tax and pensions lifetime allowances

• Inflation is a useful thing when it helps to lift more people into higher tax bands.
• Doing nothing effectively raises taxes for millions and could raise around £10bn in extra revenue.
• The chancellor is also expected to halve the tax-free allowance on capital gains.
• The Treasury will be looking to cut over £30bn in public spending despite the impact of inflation on costs.
• This still leaves a £10-20bn hole to fill to balance the books.

Currencies

US$1.0079/eur vs 1.0002/eur yesterday. Yen 145.32/$ vs 146.60/$. SAr 17.676/$ vs 17.765/$. $1.156/gbp vs $1.148/gbp. 0.652/aud vs 0.646/aud. CNY 7.242/$ vs 7.256/$.

Dollar Index 109.69 / -1.50% on week

Commodity News

Precious metals:

Gold US$1,715/oz vs US$1,670/oz yesterday

Gold ETFs 94.4moz vs US$94.3moz yesterday

Platinum US$1,008/oz vs US$984/oz yesterday

Palladium US$1,934/oz vs US$1,879/oz yesterday

Silver US$21.51/oz vs US$20.66/oz yesterday

Rhodium US$13,350/oz vs US$13,500/oz yesterday

Base metals:

Copper US$ 8,079/t vs US$7,950/t yesterday

Aluminium US$ 2,375/t vs US$2,344/t yesterday

Nickel US$ 23,990/t vs US$23,445/t yesterday

Zinc US$ 2,928/t vs US$2,898/t yesterday

Lead US$ 2,039/t vs US$2,023/t yesterday

Tin US$ 19,815/t vs US$19,285/t yesterday

Energy:

Oil US$95.4/bbl vs US$97.6/bbl yesterday

• Crude oil prices fell as US API data estimated that crude inventories rose by 5.6mb last week (+1.1mb exp.), adding to existing concerns that ongoing Covid-19 restrictions in China would dent demand growth.
• US HH natural gas prices fell after energy consultant Wood Mackenzie cautioned that the Freeport LNG plant in Texas might not restart until December, following a fire in June. Three vessels are reportedly headed for the plant, and a Freeport LNG spokesperson said the facility plans to restart this month.

Natural Gas US$6.174/mmbtu vs US$6.544/mmbtu yesterday

Uranium UXC US$50.25/lb vs US$50.00/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$88.1/t vs US$86.6/t

Chinese steel rebar 25mm US$529.6/t vs US$527.9/t

Thermal coal (1st year forward cif ARA) US$208.0/t vs US$208.0/t

Thermal coal swap Australia FOB US$325.0/t vs US$335.0/t

Coking coal swap Australia FOB US$327.0/t vs US$316.0/t

Other:

Cobalt LME 3m US$51,955/t vs US$51,955/t

NdPr Rare Earth Oxide (China) US$90,077/t vs US$89,201/t

Lithium carbonate 99% (China) US$79,723/t vs US$79,558/t

China Spodumene Li2O 5%min CIF US$6,110/t vs US$6,110/t

Ferro-Manganese European Mn78% min US$1,244/t vs US$1,234/t

China Tungsten APT 88.5% FOB US$31.7/kg vs US$31.7/kg

China Graphite Flake -194 FOB US$880/t vs US$880/t

Europe Vanadium Pentoxide 98% 7.5/lb vs US$7.5/lb

Europe Ferro-Vanadium 80% 31.95/kg vs US$31.95/kg

China Ilmenite Concentrate TiO2 US$310/t vs US$309/t

Spot CO2 Emissions EUA Price US$77.6/t vs US$77.1/t

Brazil Potash CFR Granular Spot US$600.0/t vs US$600.0/t

Company News

Atalaya Mining (AIM:ATYM, TSX:AYM) 275p, Mkt Cap £400m – Q3 financial results hit by inflation and lower copper prices. 2022 Production guidance maintained as Riotinto plant continues to exceed its rated capacity

• Atalaya Mining (AIM:ATYM, TSX:AYM) reports a loss of €7.2m for the 3 months ending 30th September (2021 - €38.2m profit) bringing year-to date profit to €22.9m (2021 - €104.2m).
• The financial results reflect production of 13,453t of copper in concentrate at Proyecto Riotinto in Spain bringing year-to-date output to 38,300t and keeping the operation on track to meet the 52-54,000t guidance for 2022.
• The mine treated 3.9mt of ore at an average grade of 0.41% copper which is marginally higher than the 0.40% of the preceding quarter and also higher than the 0.39% achieved in Q3 2021.
• Realised copper prices of US$3.52/lb during the quarter (2021 – US$4.24/lb) generated revenues of €82.3m during the quarter (2021 - €107.2m) bringing year-to date revenues to €262.0m (2021 - €304.3m) with revenues also impacted by the sale of “lower copper concentrate volumes sold in YTD 2022 compared to the YTD 2021 period”.
• Cash costs of US$3.34/lb (Q3 2021 – US$2.19/lb) of payable copper during the quarter bring the YTD average cost to US$3.26/lb (2021 – US$2.16/lb) with the company reiterating that it was subject to “very high inflationary pressures, most notably the price of electricity including extremely severe spikes in August and September 2022”.
• More positively, CEO, Alberto Lavandeira explained that “since the end of Q3, electricity prices have decreased by around 40%, due to mild weather and growing wind generation in Spain, reduced industrial demand and a good supply of LNG cargoes”
• Looking to the future, he commented that “we expect that costs will moderate in Q4 2022 and look forward to 2023, when we will also benefit from our new long-term power purchase agreement and the start-up of the 50 MW solar plant, which will together provide around 50% of our electricity requirements at highly competitive rates”.
• Atalaya Mining “Maintained a strong balance sheet with net cash of €55.6 million” and Mr. Lavandeira pointed out that this enables the company to maintain its targeted growth “Through greenfield exploration, the development of higher-grade orebodies and Touro, and operating a commercial scale E-LIX plant, we are confident that Atalaya will transform into a growth oriented and diversified multi-asset copper producer.”
• Production and cost guidance for 2022 remains intact with copper production expected within the range 52-54,000t and “Cash costs and AISC for 2022 are expected to be in the range of $2.95 - 3.25/lb copper payable and $3.25 - 3.45/lb copper payable, respectively”.
• Atalaya Mining maintains its expectations for capital expenditure of which include
• “€11.9 million for the 50 MW solar plant, out of the total budget of ~€28 million
• €15.0 million for the Phase I E-LIX plant
• €12.5 million for expansion of the Riotinto tailings facility”
• The originally planned exploration budget of €10m has been reduced to less than €5m as a result of “previously disclosed, equipment availability issues and high temperatures during the summer … [which] … have delayed drilling campaigns”.
• In the Riotinto area, Preliminary Economic Assessment (PEA) is underway to assess the opportunity to combine “Cerro Colorado reserves with higher grade material from San Dionisio, targeting an uplift to copper production by increasing the blended head grade” to the plant at Proyecto Riotinto.
• Exploration continues at Masa Valverde with drilling focussing on resource definition along the Campanario trend as well as “infill and step out drilling at the Masa Valverde … [and] … drill testing of Fix Loop Electromagnetic ("FLEM") anomalies at the Mojarra Trend, located 1km north and parallel to the Campanario Trend”.

Conclusion: Atalaya Mining is maintaining its annual production and cost guidance for 2022. Electricity price pressures are easing with mild weather and increasing wind generation helping to deliver a 40% decline since the end of September.

Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF, ASX:A11)* 48p, Mkt Cap £292m – Latest drill results continue to extend known mineralisation at Ewoyaa

• Atlantic Lithium has released its latest round of drill results from its Ewoyaa Lithium Project in Ghana, this time for a further 4,709m of exploration and infill reverse circulation drilling completed at the Grasscutter West, Ewoyaa North and Ewoyaa Main deposits.
• Highlights outside of the current MRE include:
• GRC0744: 24m at 1.54% Li2O from 100m
• GRC0738: 21m at 1.41% Li2O from 88m
• GRC0752: 23m at 1.23% Li2O from 183m
• GRC0753: 16m at 1.48% Li2O from 133m
• Highlights within the current MRE, at the Ewoyaa Main deposit, include highlights:
• GRC0741: 57m at 1.49% Li2O from 24m
• GRC0728: 52m at 1.33% Li2O from 26m
• GRC0737: 25m at 1.08% Li2O from 29m
• These latest results are part of a wider 47,000m programme with approximately 26,000m of assay results reported to date.
• Atlantic Lithium is targeting a resource upgrade by the end of the year or Q1 2023, subject to lab timings.
• The company has currently defined 30.1Mt @ 1.26% Li2O Ewoyaa JORC MRE and a Maiden Ore Reserve 18.9Mt at 1.24% Li2O.
• The current drill programme aims to increase the size of the MRE and also Resource to Reserve conversion which we would expect to extend the LOM form an initial 255kt of SC6 for 12.5yrs.
• Highlights from the PFS at Ewoyaa, based on a 2.0mtpa include:
• 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 costs US$1,359/t

Conclusion: Atlantic Lithium continue to report broad, high grade intersects at its Ewoyaa Lithium Project. We expect results from the 47,000m programme to an increase in scale and improvement in confidence when the company updates their MRE. Aside from further drill results, we look froward to news on progress regarding the recently submitted Mining License.

*SP Angel acts as nomad to Atlantic Lithium

Culpeo Minerals Ltd (ASX:CPO, OTCQB:CPORF)* A$0.11, Mkt cap A$7.6m – Visible copper mineralisation intersected over 170m

• Culpeo reports that the second hole of the Phase-2 exploration programme at its Lana Corina Project in Chile has intersected 170m of visible copper sulphide mineralisation.
• Phase-2 drilling will consist of 9-10 holes totalling 5,000m aiming to test several of the 13 near surface magnetic low targets hosted within a structural corridor spanning 1km x 0.4km.
• The hole was drilled 100m south of the main Lana Corina mineralised system, at the T10 geophysical anomaly where historic drilling had intersected 207m @ 0.41% Cu and 124ppm Mo.
• It is Culpeo’s view that the high-grade copper and molybdenum mineralisation encountered in CMLCD011 represents a new, fifth mineralised zone discovered at Lana Corina.
• Highlights from the Phase-1 programme include:
• 104m @ 0.74% Cu & 73ppm Mo in CMLCD001 from 155m
• 257m @ 0.95% Cu & 81ppm Mo in CMLCD002 from 170m
• 173m @ 1.05% Cu & 50ppm Mo in CMLCD003 from 313m
• 89m @ 1.06% Cu & 145ppm Mo in CMLCD005 from 302m
• 113m @ 0.60%Cu & 122ppm Mo in CMLCD009 from 331m
• We expect Culpeo to release further assay results in the coming weeks.

*An analyst at SP Angel holds shares in Culpeo Minerals

Europa Metals Limited (LON: EUZ) 3.35p, Mkt Cap £2.5m – Additional drilling results from Toral

• Europa Metals has reported what the Chairman and Acting CEO, Myles Campion, describes as the highest-grade intersection it has drilled to date at its Toral lead/zinc/silver project in Castilla y Leon, Spain.
• Hole TOD-042 intersected 5.25m at an average grade of 17.87% zinc, 4.46% lead, 55.69ppm silver and 0.03% copper which the company presents as 23.24% on a zinc equivalent (ZnEq) basis from a down-hole depth of 866.35m.
• The intersection contains a higher grade section of 2.50m, from 868.7m depth, averaging 36.82% zinc, 5.77% lead, 101.01ppm silver and 0.05% copper (44.55% ZnEq).
• The intersection in hole TOD-042 follows an intersection, announced in September, of 3.20m of mineralisation at an average grade of 9.41% zinc, 5.14% lead 48.1g/t silver and 0.11% copper (reported as 15.16% ZnEq) from a depth of 799.40m in hole TOD-041.
• The mineralisation in hole TOD-042 is “adjacent to existing, previously reported, indicated resources and down dip and along strike from the previously reported results for hole TOD-041 … [and] … in conjunction with hole TOD-041 could link together the current indicated resource estimate to a part of the inferred resource at depth which demonstrates continuity”.
• The current drilling, undertaken in conjunction with the University of Salamanca, and “facilitated by the grant of up to €466,801.50 by way of a loan from Spain's Centre for the Development of Industrial Technology” aims to “expand on the existing indicated resource envelope of 5.9Mt @ 7.1% ZnEq (including Pb credits) and 27 g/t Ag at depth”.
• Mr. Campion explained that Europa Metals’ drilling programme “targeted this area of the deposit in order to increase our confidence in a potential extension to the indicated resource and also from the concept that it could be a higher grade "channel" within the resource. Both concepts have been proven which is an excellent result for the team and Toral's future”.

Conclusion: The most recent results from the resource expansion drilling at Toral may indicate continuity between the existing indicated resources and deeper inferred mineralisation. We await a possible revision of mineral resources estimates incorporating the recent additional drilling information, with interest.

Great Western Mining Corporation PLC (AIM:GWMO) 0.14p, Mkt Cap £5.01m – Mineral resource estimate and exploration targets achieved in Nevada, USA

• Great Western Mining has announced the results of its independent Mineral Resource Estimate for the Olympic Gold Tailings project in accordance with JORC.
• The Company also reports, in accordance with JORC, Exploration Targets for its stockpile and spoil material assets from the previously producing Olympic Gold and Mineral Jackpot Projects, both in Nevada.
• The Olympic Mine’s low sulphidation epithermal OMCO gold vein was mined between 1916 and 1942.
• The MRE is based on 23 auger drillholes totalling 93m and 33 surface grab samples.
• The Olympic Mine’s tailings recorded an Inferred Mineral Resource Estimate of:
• 31,000t at 1.6g/t Au and 3g/t Ag for both the main tailing bad and the minor tailing pad.
• 1,600oz Au and 3,000oz Ag.
• The material underlying the Olympic Mine’s tailings recorded exploration targets of:
• 3,400-6,400t at 0.5-1.2g/t Au and 1.2-2.1g/t Ag.
• The Olympic Mine’s coarse stockpile saw an exploration target of:
• 9,000-12,000t grading between 0.9-2.4g/t Au, 2.0 and 5.1g/t Ag.
• The Mineral Jackpot spoil heaps recorded an exploration target of:
• 4,200-7,700t at 40-140g/t Ag and 0.3g/t Au.

Conclusion: Great Western’s further exploration work at their Nevada assets helps support their ambitions of generating initial revenues and cash flow from Olympic’s pre-mined material. This will be aided by an agreement struck in September with Muletown for the development of a first stage gravity separation project.

OreCorp Ltd (ASX:ORR) A$0.33, Mkt Cap A$132m – Management changes ahead of project financing

• Matthew Yates, current CEO and MD, will assume the role of Executive Chairman following the previously announced retirement of Craig Williams on 16 November.
• Henk Diederichs, current COO, will replace Yates as CEO and MD of the Company.
• Mr Diederichs has an extensive experience in the African mining industry having been involved in development and operation of the Lumwana copper mine in Zambia with Equinox Minerals as well as operations at Bonikro, Sadiola and Agbaou gold mines with Allied Gold.
• Henk holds a degree in Mechanical Engineering from the University of Stellenbosch, SA.

Savannah Resources PLC (AIM:SAV, ETR:SAV, OTC:SAVNF) 2.5p, Mkt Cap £41m – Binding HoA signed with MRG to divest its last remaining mineral sands license area in Mozambique

BUY – 17.9p

• The Company signed a Binding Heads of Agreement with MRG Metals (ASX:MRQ), an ASX mining junior, in relation to an option agreement to sell its last remaining mineral sands’ concession (ML 9735C) in Mozambique.
• Under the agreement, MRG will have 45 days to complete due diligence commencing on 8 November.
• Following completion of due diligence, both parties will execute a 16-month long Option Agreement giving MRG an option to acquire the license on the following terms:
• US$0.8m payable in cash, MRG shares or a combination of both (MRG discretion);
• MRG to make a 1% annual royalty payment to the Company on revenues from the mineral property (capped at no more than 50% of PAT) once the operation turns a net profit after tax.
• MRG will also need to cover ~US$0.5m to complete a work programme by mid-October 2013 including commitments to the Instituto Nacional de Minas during the Option Period.
• The announcement follows a divestment of the minority stake in its mineral sands licenses in Mozambique to Rio Tinto last year that was estimated to host 4,280mt at 3.85% THM (60% ilmenite).
• The 9735C was the last remaining mining concession in the country hosting 65mt at 4.20% THM.

Conclusion: The agreement allows the Company to potentially divest the last remaining mineral sands licenses in return for cash/equity and to focus entirely on development of the flagship Barroso Lithium Project in Portugal.

*SP Angel act as Nomad and Broker to Savannah Resources

Vulcan Energy Resources (ASX:VUL) A$7.86, Mkt cap A$1,12b - Vulcan and Enel Green Power eye geothermal brines in Italy for lithium extraction

• The Times reports Italian firm Enel Green Power and Australia’s Vulcan Energy are surveying the area of Cesano, near Rome, for potential lithium extraction.
• The firms are looking to extract lithium from underground geothermal brines.
• The team suggest that 1970s testing pointed to lithium deposits in the brines, with Enel’s Rossi stating ‘data makes us confident there is a certain concentration of lithium,
• Enel states that Cesano’s brines contain brines of 380mg lithium vs the Rhine valley’s 200mg where Vulcan is focused. Geothermal vapour currently provides over 30% of Tuscany’s electricity needs, according to the Times.

Zijin Mining (SHA: 601899) HK$9.19 mkt cap HK$260bn (US$33bn) – Zijin Mining eyes 500,000t copper smelter in Sichuan province alongside 160kt Julong mine

• Zijin Mining has announced plans to develop a 500kt pa copper smelter in Sichuan, alongside the adjacent 160kt Julong mine in the neighbouring Tibet region.
• Zijin hopes to boost the smelter’s capacity to 1.8mt by 2027-28, the Chairman stated.
• The interview also saw Zijin’s chairman express his regret at not foraying into a lithium investment or two.
• The announcement comes alongside calls from China’s copper smelting industry for lawmakers to ‘reasonably control’ domestic smelting capacity.
• This request comes after a major ramp up in smelting capacity over the past decade, diluting quality.

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.

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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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