SP Angel Morning View -Today’s Market View, Monday 19th February 2024

Lithium stocks rally on rumours CATL is closing a major lepidolite mine

MiFID II exempt information – see disclaimer below

Alara Resources (AUQ AU) – Progress on Copper Project Commissioning

Anglo American (AAL LN) – Amplats results reflect weakness in US$ PGM prices

Beowulf Mining* (BEM LN) – Site reservation extended at GigaVaasa anode materials project

Oriole Resources* (ORR LN) – Update on Senala gold project Earn In Agreement

KEFI Gold and Copper* (KEFI LN) – Third discovery in the Hawiah Copper-Gold district, Saudi Arabia

Phoenix Copper* (PXC LN) – Securing pre-owned ball mills offers cost savings and potentially more rapid development of the Empire mine open pit, Idaho

Polymetal (POLY AIX) – Polymetal to sell its sanctioned Russian operations in a $3.7bn transaction with Kazak registered Polymetal International

to net $300m after adjustments for third party debt and intra group arrangements

SolGold* (SOLG LN) – Updated pre-feasibility shows a 13% increase in ‘Measured & Indicated’ resource tonnes

Russia – Alexei Navalny, a #1 Russian opposition leader, was reported dead in prison in Arctic circle jail

• Alexei was an active critic of Russian administration and President Putin with his team documentaries on corruption in the government collecting +100m views.
• Top three investigative documentaries on Navalny team youtube channel are currently ‘Putin’s Palace: History of world’s largest bribe’ (129m views), ‘Don’t call him “Dimon”’ (46m) and an investigation into his own poisoning in 2020 (20m views).
• Navalny was never allowed to register his party.
• Having survived an attempted murder with a Soviet era Novichok nerve agent and following a brief recovery, Navalny decided to fly back to Russia in early 2021 despite warnings that he is facing an imprisonment on his return.
• Navalny was arrested on his landing in January 2023 and remained in prison since then having spent around 300 days in solitary confinement.
• Navalny leaves behind his wife, Yuilia Navalnaya, and two children, Daria and Zakhar.
• Aleksei also leaves behind millions of supporters having paid the ultimate price for freedom and sharing his vision for an alternative way for his country, a “beautiful Russia of the future”.

Lithium equities rally on rumours of CATL closing major lepidolite mine amid unprofitable prices

• Pilbara Minerals, Liontown, Patriot and Sayona all rallied in Australian trading following reports of a major mine shutdown in China.
• Australian bank Barrenjoey suggests the mine is reluctant to produce below US$13k/t LCE.
• Analysts suggest the project accounts for near 3% of global supply.
• Lepidolite producers in China have been well documented to be selling above production costs, supported by their integrated position within larger battery makers such as CATL.
• We believe lepidolite is more expensive, more energy consumptive and less environmentally friendly to process than spodumene concentrate.
• The shutdown of Jianxiawo marks a clear signal that lithium prices are nearing a floor, with Australian spodumene reportedly trading c. US$850/t.

Gold prices recover despite Treasury sell off as dollar rally cools

• Gold prices have climbed from $1,990/oz last week to $2,020/oz today.
• The move has shrugged off a sell-off in US Treasuries, with the 10-year climbing to 4.3%.
• The climb in yields came after a series of hotter-than-expected inflation numbers, with CPI and PPI both beating expectations.
• The odds of a Fed rate cut in March currently sits at 11%, down from 80% at the beginning of the year.
• The dollar has sold off on weaker-than-expected retail sales prices in January, which showed a weakening consumer.
• The combination of weaker retail sales and higher inflation presents a tricky conundrum for the Fed, limiting their ability to cut rates to shore up the labour market.

Nickel – Nickel classed as a critical mineral in Australia to enable miners to access low-cost government loans

• The recent fall in nickel prices has caught many industry observers and miners by surprise causing some mines to close and others to seek support.
• Chinese companies have expanded nickel laterite operations in Indonesia beyond expectations to meet new demand for EV batteries flooding the market.
• At the same time, a stronger than expected, move to LFP battery chemistry which do not contain nickel or cobalt has reduced demand.
• LFP ‘Lithium Iron Phosphate’ batteries are cheaper and safer but are heavier and have lower power density, eg less mileage.
• The use of LFP batteries has dragged the average cell price down to ~$75/kWh with average pack prices down to ~$90/kWh. Well beyond most cost expectations

New cooling system claims to have >2x efficiency of air conditioning

• A new cooling device developed at the Luxembourg Institute of Science and Technology claims to be able to replace air conditioning at lower energy cost.
• The system is said to be >60% efficient, meaning it is twice as efficient as a typical single-room air conditioning unit.
• The system is made from lead, scandium and tantalum and uses electrocaloric cooling where an electric field is applied across a material to change the direction of electric charge.
• The system uses eight strips of electrocaloric lead scandium tantalate stacked and immersed in a heat-carrying fluid creating regions of hot and cold with a ~ 20°C differential in temperature.

Conclusion: While this looks like a new use for scandium, lead and tantalum it is difficult to know if the device is able to be commercialised and if the device will use copper.

Economics

US – Yields closed higher on Friday on the back of a beat in PPI data pointing to continuing inflationary pressures.

• Both headline and core measures came in stronger than expected.
• Markets are now pricing in around 90bp in Fed rate cuts in 2024, down from more than 150bp at the start of February.
• Many investors are looking for four rate cuts by the end of 2024
• But it is possible the Fed might prefer to hold rates for longer with inflation running at a higher than expected and positive employment figures.

US PPI rise 0.3% mom and 0.9% yoy from 1.0%

• PPI (%mom): 0.3 v -0.1 December and 0.1  est.
• PPI (%yoy): 0.5 v -0.1 (revised from 0.0) December and 0.1 est.
• Core PPI (%mom): 0.9 v 1.0 December and 0.6 est.
• Core PPI (%yoy): 2.0 v 1.7 (revised from 1.8) December and 1.6 est.
• PPI Goods fell -0.2% mom
• PPI Services rose 0.6% mom
• PPI less foods, energy, and trade services rose 0.6% mom – its largest rise since last January.
• PPI less food, energy, and trade services remained unchanged at 2.6% yoy.
• Price rises are typical in January with manufacturers and retailers looking to catch up with other inflation where product prices have stood still.
• Given that inflation is still being driven by ongoing wage growth it is not surprising that manufacturers, services and retailers are looking to compensate for cost increases.
• Strikes, higher absenteeism, ongoing Covid 19 infection is helping to drive wages and inflation higher.

Central Banks waiting for Fed to make the first move

• Any central banker which dares to cut rates ahead of the Fed needs to be sure their currency will not collapse on the move.
• Only nations with already strong currencies, like Japan, might dare to do this

China – Expectations are for the central bank to cut its 1y and 5y prime lending rates by 5bp and 10bp, respectively.

• The 5y rate is used as a reference for mortgages.
• Separately, travel and spending during the Chinese Lunar New Year holiday exceeded pre-pandemic levels for the first time.
• Around 474m tourist trips were recorded during the eight day period, up 19% on 2019, with tourism related spending up nearly 8% to CNY 633bn ($88m).

UK – Asking prices for homes have increased for first time since July

• Average asking prices increased 0.9% in January from December
• Lower mortgage rate offers from banks at around 5.18% from 6.37% are helping.
• Buyer confidence in falling interest rates may also be driving the market.
• Local councils have notified AirBnB renters of 100% Council Tax increases on properties which are rented out on short term rentals for >90 days a year.
• We suspect this will add ~£2,000 to the average Council tax bill for an AirBnB.
• This combined with rising property costs and falling bookings will likely cause many AirBnB landlords to sell.
• If the government want more people to holiday in the UK they have a funny way of showing it.

Argentina – Inflation continues to run high at 20.6% in January vs 25.5% in December

• Annualised inflation is 254% yoy in January vs 211% in December

Ukraine – Denmark donates its entire arsenal of artillery to Ukraine

Currencies

US$1.0783/eur vs 1.0767/eur previous. Yen 149.97/$ vs 150.25/$. SAr 18.900/$ vs 18.897/$. $1.262/gbp vs $1.258/gbp. 0.654/aud vs 0.652/aud. CNY 7.198/$ vs 7.194/$.

Dollar Index 104.16 vs 104.40 previous.

Commodity News

Precious metals:

Gold US$2,020/oz vs US$2,005/oz previous

Gold ETFs 82.9moz vs 83.1moz previous

Platinum US$908/oz vs US$899/oz previous

Palladium US$957/oz vs US$956/oz previous

Silver US$23.13/oz vs US$23/oz previous

Rhodium US$4,375/oz vs US$4,350/oz previous

Base metals:

Copper US$ 8,423/t vs US$8,385/t previous

Aluminium US$ 2,204/t vs US$2,224/t previous

Nickel US$ 16,205/t vs US$16,360/t previous

Zinc US$ 2,373/t vs US$2,367/t previous

Lead US$ 2,036/t vs US$2,051/t previous

Tin US$ 26,600/t vs US$27,350/t previous

Energy:

Oil US$82.9/bbl vs US$82.7/bbl previous

• Crude oil prices moved higher ahead of the weekend as traders sought to shield positions against Middle East geopolitical headwinds ahead of the US market closure for Presidents’ Day.
• The US Baker Hughes rig count was down 2 units to 621 rigs last week (-138 or 18% y/y), with oil rigs down 2 to 497 units (-110 y/y) and gas rigs flat at 121 units (-30 y/y) as Texas fell 2 units to 299 rigs (-71 y/y).
• Saudi Aramco’s CEO, Amin Nasser, expects global oil demand to grow by 1.5mb/d to 104mb/d in 2024, which is in line with major traders such as Vitol and Gunvor, but below the official OPEC forecast for 2.25mb/d growth.
• Occidental joined peers in planning a two-rig reduction in the Permian Basin during 2024 and to halve its inventory of drilled but uncompleted (DUC) wells in the Rockies region from the mid-60s to about 35.

Natural Gas €24.5/MWh vs €25.3/MWh previous

Uranium Futures $101.8/lb vs $102.3/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$129.7/t vs US$128.8/t

Chinese steel rebar 25mm US$569.9/t vs US$569.9/t

Thermal coal (1st year forward cif ARA) US$91.3/t vs US$91.9/t

Thermal coal swap Australia FOB US$122.5/t vs US$123.5/t

Coking coal swap Australia FOB US$310.0/t vs US$310.0/t

Other:

Cobalt LME 3m US$28,550/t vs US$28,550/t

NdPr Rare Earth Oxide (China) US$55,434/t vs US$55,466/t

Lithium carbonate 99% (China) US$12,295/t vs US$12,303/t

China Spodumene Li2O 6%min CIF US$1,000/t vs US$1,000/t

Ferro-Manganese European Mn78% min US$1,062/t vs US$1,060/t

China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu

China Graphite Flake -194 FOB US$560/t vs US$565/t

Europe Vanadium Pentoxide 98% 5.8/lb vs US$5.8/lb

Europe Ferro-Vanadium 80% 27.55/kg vs US$27.55/kg

China Ilmenite Concentrate TiO2 US$320/t vs US$320/t

Spot CO2 Emissions EUA Price US$61.3/t vs US$61.2/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$290.0/t

Battery News

Octopus to borrow £550m to accelerate its EV leasing scheme

• Octopus Energy will look to double the size of its fleet from around 14,000 vehicles to 30,000 vehicles.
• The energy provider’s car leasing divisions decision to expand the fleet can be seen as a vote of confidence in EVs during a period where consumer confidence is at a low.
• Over 4000 workplaces use Octopus EV to offer leasing schemes to employees

New cooling system could replace air con and cut energy use

• Most current air conditioning systems rely on compressing and expanding liquids which is very energy intensive and use environmentally harmful refrigerants.
• The Luxembourg Institute of Science and Technology has developed a coolant-free refrigeration device that uses lead, scandium and tantalum.
• In testing the device reached 60% efficiency, almost double that of current single room air con units.
• The technology relies on a electrocaloric cooling, which is when an electric field applied across a material changes the direction of electric charges, causing a temporary increase in temperature and a subsequent decrease when the electric field is removed.
• Using layers of lead scandium tantalate in a heat-carrying liquid and a small electrical current, the device can create temperature variation of about 20°C.
• 99.99% Scandium costs between USD $3194-3339.

Company News

Alara Resources (AUQ AU) A$0.033, Mkt Cap A$26m – Progress on Copper Project Commissioning

• Alara announces an update on its hot commissioning of the 1mtpa copper-concentrator plant in JV in Oman.
• Hot commissioning began this month.
• Both the tailing dewatering circuit and the concentrator circuit have now been tested with a full load of materials.
• A technical issue was reported when commissioning the tailings filter press, with engineers working to rectify the defects before the copper ore is fed into the plant.
• Low-grade copper ore between 0.4-0.6% is expected to be fed on or before Feb 25^th.

Anglo American (AAL LN) 1,777p, Mkt Cap £24.1bn – Amplats results reflect weakness in US$ PGM prices

• Anglo American reports that its 79% owned Anglo American Platinum (Amplats) has reported a n adjusted EBITDA of R24.4bn (~US$1.3bn) for the year to 31^st December 2023 which, after adjusting for corporate costs is expected to contribute ~US$1.2bn to the results of Anglo American which are to be reported on 22^nd February.
• The adjusted EBITDA is around 70% lower than the R70.5bn achieved in 2022 as a result of “weakness in the macro-economic environment and lower PGM prices” in US$, particularly for palladium and rhodium.
• The results reflect the production of 3.8moz of PGMs (2022 – 3.8moz) including 1.7moz of platinum (2022 -1.8moz), 1.3moz of palladium (2022 – 1.2moz) and 226koz of rhodium (2022 – 249koz).
• Production for the year achieved the company’s published guidance despite the impact of Eskom’s ‘load-shedding’ and a 5% decline in the contribution from Mogalkwena “due to expected lower grades, resulting from mining extraction sequence changes” and the impact of plant breakdowns at Baobab and at the North concentrator.
• Commenting on the performance, Amplats CEO, Craig Miller, said that “Despite these operational challenges,  there were some noteworthy developments in 2023, including Unki’s 14% year-on-year improvement in concentrator throughput following the debottlenecking project, and Mototolo’s  improved concentrator throughput by 50% versus the prior year because of the debottlenecking interventions”.
• In 2024, Amplats expects “metal-in-concentrate and refined production to be between 3.3 and 3.7 million PGM ounces in 2024, while unit cost is forecast between R16,500 and R17,500 per PGM ounce”.
• Amplats “has declared a total dividend of R5.7 billion, or R21,30 per share, for 2023. This represents a total pay-out ratio of 40% of headline earnings”.

Beowulf Mining* (BEM LN) 1.3p, Mkt Cap £15m – Site reservation extended at GigaVaasa anode materials project

• The Company announces it has advanced its site reservation at GigaVaasa by another six months.
• The site is now reserved until 31^st July 2024, with an option to extend further.
• Beowulf/Grafintec secured the site a year and continue to progress the site through the necessary feasibility studies towards FEED.

*SP Angel acts as Nomad and Broker to Beowulf Mining

KEFI Gold and Copper* (KEFI LN) 0.68p, Mkt Cap £34m – Third discovery in the Hawiah Copper-Gold district, Saudi Arabia

• The Company announces another VMS discovery in the Hawiah district, Saudi Arabia.
• The Abu Salal VMS prospect is located 50km south of the Hawiah Copper-Gold Project running across Abu Salal North and South exploration licenses.
• First pass 18 hole (~2,000m) scout drilling programme intersected massive and semi-massive sulphide mineralisation hosting gold/silver/copper/zinc in multiple horizons.
• Selected intersections include:
  • ASD_004: 11.2m at 0.94% copper, 1.03% zinc, 0.33g/t gold and 14.96g/t silver from 27.9m;
  • ASD_008: 7.0m at 0.91% copper, 0.4% zinc, 4.0g/t silver from 36.0m; and
  • ASD_009: 7.1m at 0.6% copper, 1.0% zinc, 0.2g/t gold and 10.9g/t silver from 72.0m.
• The mineralisation was traced over a 2,600m strike length with true widths of up to 11m recorded.
• Surface gossan structure trending north south remains open at depth, along strike and down plunge.
• Current drilling was only carried to a maximum vertical depth of 80m with follow up programme to test mineralisation at depth and along strike.
• ARTAR, a Company’s partner in GMCO JV, has previously agreed to temporarily fund exploration spending as KEFI is focused on finalising Tulu Kapi development funding with the JV intense exploration activity seeing ~$20m pa in exploration spending for the past few years.
• In addition, the Company is reporting that Ivanhoe Electric and Ma’aden JV secured licenses in and around Hawiah not held by GMCO committing to >$60m in an exploration budget to test regional targets highlighting strong prospectivity of the area.

Conclusion: Active exploration programme driven by the Company’s Saudi JV partner delivered a third discovery in the Hawiah area speaking to a high prospectivity of the area. Another discovery suggests that the Hawiah deposit may one of many in the area which is typical of the VMS mineralisation.

*SP Angel acts as Nomad and Broker to KEFI Gold and Copper. The analyst has previously visited the Tulu Kapi gold mine. A SP Angel corporate finance partner recently attended a meeting of finance partners in Addis Ababa.

Oriole Resources* (ORR LN) 0.37p, Mkt cap £14m – Update on Senala gold project Earn In Agreement

• Oriole Resources provides an update from its Senala gold project in Senegal.
• Oriole’s earn-in partner, Managem, reports that it has now completed a six-year earn-in at the project, increasing its ownership to 59% of the Project.
• This has been achieved through the expenditure of US$5.8m on the Project,
• Oriole will now undertake a review to confirm this reported expenditure and ratify the percentage ownership change.
• To dilute Oriole’s interest below the 10% mark, triggering a 2.5% NSR royalty conversion, Managem will be required to spend an additional US$31m on the Project.
• The Groups are currently discussing the next steps for the Project.
• These range from forming a JV company, Managem submitting a work plan and budget and Stratex/Oriole’s decision to either contribute or dilute going forward.

*SP Angel acts as Broker to Oriole Resources

Phoenix Copper* (PXC LN) 11.75p, Mkt Cap £17m – Securing pre-owned ball mills offers cost savings and potentially more rapid development of the Empire mine open pit, Idaho

Phoenix holds 80% of the Empire mining property in Idaho)

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• Phoenix Copper confirms that it has concluded an agreement for the previously announced purchase of two ‘pre-owned’ ball mills for its Empire open pit mining project in Idaho.
• The company says that “the purchase of these mills at a significant discount to the price of the same equipment when new, should have a material positive impact on the Empire mine project economics, as well as reducing the time required to purchase these long lead-time items”.
• Phoenix Copper also “confirms that it has agreed terms to refinance the Existing Facility into an 18-month term loan (the “Term Loan”), and is currently finalising the legal documentation … [and also that ] … the lender has agreed to waive its conversion rights on the Existing Facility until 1 March 2024”.

Conclusion: The purchase of ball mills for its Empire mine project in Idaho at a discount to the manufacturer’s price provides Phoenix Copper with an opportunity to reduce the capital required for the project and also to shorten the development timetable.  Using equipment not supplied directly from a manufacturer may, however, require Phoenix Copper’s engineers to be particularly diligent in its installation as OEM warranties may not be available.

*SP Angel acts as nomad to Phoenix Copper

Polymetal (POLY AIX) US$3.9, Mkt cap US$2bn – Polymetal to sell its sanctioned Russian operations in a $3.7bn transaction with Kazak registered Polymetal International

• Polymetal sale of sanctioned Russian operations to net $300m after adjustments for third party debt and intra group arrangements

• The Company is planning to continue using Amursk POX refractory ore processing capacities located in Russia until a separate POX facility is established in Kazakhstan.
• Polymetla is in contact with the US authorities to ensure that will not lead to secondary sanctions.
• The buyer is Mangazeya Plus, a subsidiary of a Russian group controlled by Sergey Yanchukov.

SolGold* (SOLG LN) 6.72p, Mkt Cap £202m – Updated pre-feasibility shows a 13% increase in ‘Measured & Indicated’ resource tonnes

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• Solgold’s revised pre-feasibility study for its Cascabel underground copper/gold project in Ecuador, includes an updated mineral resource estimate containing 3.01bn  tonnes of ‘Measured and Indicated’ resources at an average grade of 0.35% copper, 0.28g/t gold and 0.94g/t silver (reported as 0.52% on a copper equivalent basis).
• We estimate that this represents around a 13% increase in the 2.663bn tonnes ‘Measured & Indicated’ resource tonnage reported in April 2022 which averaged 0.37% copper, 0.25g/t gold and 1.08g/t silver – reported as 0.53% on a copper equivalent basis.
• In addition, there are a further 607kt of ‘inferred’ resources at an average grade of 0.26% copper, 0.19g/t gold and 0.56g/t silver reported as 0.36% on a copper equivalent basis.  The 2022 estimate showed an inferred resource of 544mt at an average grade of 0.31% CuEq implying that the resource base across all categories is expanding as work proceeds.
• The new estimate also includes reserve estimates of 540mt at an average grade of 0.60% copper, 0.54g/t gold and 1.6g/t silver containing 3.2mt of contained copper, 9.4moz of gold and 28moz of silver, with 85% of the reserve tonnage fallin within the high-confidence, ‘Proven’ classification of the CIM reporting codes.
• The high proportion of the highest confidence level, ‘Proven’ reserves should mitigate development risk and, we infer, should also have provided additional valuable data on the hydrogeological and structural geological conditions which will have assisted in the design of the block caving method to be employed at Cascabel.

Conclusion: Solgold’s revised pre-feasibility study for Cascabel has increased the overall deposit size and increased the confidence level of resource and reserve estimates while achieving a US$1.2bn saving in the cost of pre-production expenditure and around US$0.75bn of savings in the life of mine capital cost compared to the earlier, March 2022, study, helping to deliver an enhancement of ~10% in project NPV.

*SP Angel acts as broker to Solgold

Friday, 16 February, 2024

SolGold* (SOLG LN) 6.58p, Mkt Cap £181m – Revised Cascabel pre-feasibility study delivers capital cost savings and enhanced NPV compared to study in March 2022

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• Solgold has released highlights of its revised pre-feasibility study for the development of its Cascabel copper/gold project in Ecuador by a phased, underground block-caving operation with an initial 28-year mine life.
• The new study, which updates an earlier pre-feasibility level study released in March, 2022 describes the pre-production investment of US$1.55bn generating an after-tax NPV_8% of US$3.2bn and IRR of 24% from the production of an average of 123,000tpa of copper, 277,000ozpa of gold and 794,000ozpa of silver with peak annual copper output of 216,000 tonnes.
• On a net cash cost basis, including the by-product credits from gold and silver, the average cost of copper production over the mine’s life is reported to be US$0.25/lb with life-of-mine costs on an all-in-sustaining (AISC) basis of US$0.69/lb.
• Sustaining capital costs over the mine’s life amount to an additional US$2.57bn.
• The new plan is based on a revised mineral resource and reserve estimate containing 3.01bn ‘Measured and Indicated’ resource at an average grade of 0.35% copper, 0.28g/t gold and 0.94g/t silver (reported as 0.52% on a copper equivalent basis).
• The resource includes a ‘Proven and Probable’ ore reserve of ~540mt at an average grade of 0.60% copper, 0.54g/t gold and 1.6g/t silver containing 3.2mt of contained copper, 9.4moz of gold and 28moz of silver.
• The company explains that 85% of the reserve tonnage falls within the high-confidence, ‘Proven’ classification of the CIM reporting codes.
• Solgold also clarifies that the “Mineral Reserves have been estimated for a block caving method and take into account the effect of mixing indicated material with dilution from low-grade or barren material originating from within the caved zone and the overlying cave backs … [and that the reserve] … represents only 18% of the Measured and Indicated Resource estimate”.
• The company confirms that its Tandayama America (TAM) project, located 6km NE of the Alpala deposit at Cascabel “is not at a PFS level and is, therefore, not included in the Cascabel Project economics presented … or in the PFS mine plan. The Company will begin the additional metallurgical testing, waste rock characteristic testing, geotechnical, hydrogeology, and detailed mine planning required to finalize planning efforts”.
• Following a two-year ramp-up, the new, phased, mine plan “the initial cave will achieve a production rate of 12Mtpa. The initial cave will extract high-grade ore, averaging 1.5% CuEq for the first ten years of operation.  Extraction of this high-grade material will not sterilize surrounding lower-grade ore. The mining operations will be expanded by an additional 12Mtpa, increasing to a total annual production rate of 24Mtpa in year 6 of mine production”.
• We note that this phased approach is more nuanced than previous development plans which envisaged a mining rate of 25mtpa in the earlier, March 2022 pre-feasibility study and of 50mtpa in the Preliminary Economic Assessment of March 2019.
• The latest analysis is based on higher commodity prices than the March 2022 study of US$8,488/t for copper (previously US$7,937/t) and US$1,750/oz for gold (previously US$1,600/oz rising to US$1,700/oz in 2029).
• The new study delivers on its objective of reducing the project’s initial capital cost with pre-production expenditure of US$US$1.55bn (previously US$2.75bn) and overall capital costs of US$4.12bn (previously US$4.88bn).
• The combination of higher, but in our view, realistic, metal prices and lower capital costs contributes to an increase of around 10% in the projects NPV_8% to US$3.2bn (previously US$2.9bn).
• We expect that, in line with normal practice, the full detailed study will be available within 45 days, and we look forward to the opportunity to examine the detailed analysis behind the headlines released today.

Conclusion: Solgold’s revised pre-feasibility study, incorporating a phased development approach and new mineral resource and reserve estimate at Cascabel’s Alpala deposit, has achieved a US$1.2bn saving in the cost of pre-production expenditure and around US$0.75bn of savings in the life of mine capital cost compared to the earlier, March 2022, study, helping to deliver an enhancement of ~10% in project NPV.

*SP Angel acts as broker to Solgold

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 2023

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

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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35-39 Maddox Street London

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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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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%