SP Angel Morning View -Today’s Market View, Wednesday 27th March 2024

Lithium auctions detach from spot prices in sign market is strengthening

MiFID II exempt information – see disclaimer below

Andrada Mining (ATM LN) – Production rises over 50% last year

Asiamet Resources (ARS LN) – Biomass energy study for the BKM copper project

Centamin (CEY LN) – Sustainability report describes the cost benefits of emission mitigation measures

Empire Metals* (EEE LN) – Pitfield Development Plan outlines route to production

Endeavour Mining (EDV LN) – Quarterly results as expansion projects near completion

European Metal Holdings (EMH LN) – Cinovec DFS timetable extended

Great Western Mining* (GWMO LN) – New gold targets generated through encouraging exploration work

Hastings Technology Metalts (HAS AU) – Equity raise of up to A$22m equity raise

Metals Exploration (MTL LN) – Last mezzanine debt facility payment completed establishing a nearly debt free status

Power Metal Resources* (POW LN) 13p, Mkt cap £18m – 20 to 1 consolidation of shares today

Sovereign Metals* (SVML LN) – Drilling restarts at Kasiya rutile and graphite project in Malawi

IGTV: Copper:  https://www.ig.com/uk/news-and-trade-ideas/beat-the-street–megacaps-and-chips-higher-ahead-of-us-data–tes-240326

https://www.ig.com/uk/news-and-trade-ideas/_copper-likely-to-stay-above–9-000–meyer-240315

Sharepickers – on Gold, Copper, Arc Minerals, Atlantic Lithium, Cornish Metals, Empire Metals & Sovereign Metals

Podcast: https://audioboom.com/posts/8477440-john-meyer-on-gold-copper-arc-atlantic-cornish-empire-sovereign.

Youtube: https://www.youtube.com/watch?v=PcmKx065aWw.

Lithium auctions detach from spot prices in sign market is strengthening

• The West Australian reports Albemarle has auctioned 10kt of spodumene concentrate at $1,200/t.
• Shanghai Metals Market’s avg SC6 index currently sits at $1,092/t CIF China.
• Pilbara recently auctioned a cargo at $1,200/t in Australia.
• The WA also reports that MinRes has sold spodumene concentrate for $1,300/t for 20kt from Mt Marion.

Forget Tesla, here comes BYD – BYD announce further cuts to Seagull EV, taking price below $10,000

• BYD have slashed the price of its Seagull EV by 5% to less than $10,000.
• The EV maker has also lowered the price of its Qin Plus sedan by almost 20% to a start price of $11,000.
• It is one of the most aggressive price cuts the automaker has made.
• BYD’s annual output of around 3m vehicles allows it to use this aggressive pricing strategy whilst maintaining profitability.
• BYD has sold 7m vehicles since it started in 2005 and will become the first company to produce >2m vehicles in a single year.

Base metals weaken as inventory rises on subdued Chinese demand

• Copper prices fell to $8,800/t as traders digested the recent spike in Shanghai inventories.
• Nickel prices fell close to 2%, moving below the $17,000/t.
• Zinc prices have weakened following a Singapore dump of lead and zinc, filling warehouses and raising inventories to 2013 highs.
• Spreads continue to sit in contango across base metals, suggesting physical demand is weak.

Cadbury has provoked a rare case of anger within the Christian community by selling ‘gesture’ egg while appearing to drop the word Easter

• But eggs were previously used by Pagans celebrate the Spring Equinox and the festival of the Goddess Eostra which represents sunrise, fertility and the renewal of life.
• Eggs were adopted from Pagan traditions by Christian missionaries to celebrate the resurrection of Jesus, as a way to encourage conversion.
• The bunny is a symbol of fertility, eggs represent renewed life and coloured eggs represent the sunlight of spring.
• Cadbury’s being a venerable Quaker company is simply promoting egg giving over this festival period.
• So, we are really celebrating a pagan festival, converted into a Christian tradition, promoted by a Quaker company using a recipe first developed by the Olmec who used chocolate during rituals 4,000 years ago Mexico.

Economics

US – A mixed set of results released yesterday with durable goods orders recovering in February following a sharp slump in the previous month and consumer sentiment pulling back in March failing to maintain improving growth momentum.

• Durable Goods (%mom): 1.4 v -6.9 (revised from-6.2) January and 1.0 est.
• Durable Goods ex Transportation (%mom): 0.5 v -0.3 (revised from -0.4) January and 0.4 est.
• Conference Board Consumer Sentiment:  104.7 v 10.48 (revised from 106.7)) February and 107.0 est.

Baltimore Port disruption to delay vehicles for delivery into the US

• Baltimore has been the busiest US port for the import and delivery of vehicle components, cars and light trucks for 13 years.
• It has the farthest inland position up Chesapeake Bay with good rail connections to automakers in the Midwest.
• The port handled a record 847,158 cars and light trucks in 2023.

Japan – The yen fell to the lowest in 34 years despite rising concerns voice by officials pointing to a potential market intervention.

• Finance Minister previously said that the government “would not rule out any steps against any excessive moves” in the yen.
• A number of commentators see a level of 152 per dollar as the “line in sand” that would trigger an intervention, FT reports.

Germany – Five of top economic institutes cut their growth forecasts for Germany to 0.1% this year, down from 1.3% estimated six months ago, FT writes.

• Economists highlighted lacklustre consumer spending that underperformed expectations as well as falling exports as local manufacturers struggle with high gas and electricity costs.
• Growth is expected to pick up to 1.4% next year, down slightly on 1.5% forecast previously.
• The economy contracted 0.3% in 2023.

Spain – Inflation growth picked up to 3.2% in Marh, rebounding from 2.9% int eh previous month, driven by higher prices on electricity and fuel.

• Core measure that excludes volatile food and energy components slowed down to 3.3% from 3.5%.
• CPI (%mom, EU Harmonised): 1.3m v 0.4 February and 0.6 est.
• CPI (%yoy, EU Harmonised): 3.2 v 2.9 February and 3.3 est.

Currencies

US$1.0824/eur vs 1.0841/eur previous. Yen 151.66/$ vs 151.29/$. SAr 18.965/$ vs 18.906/$. $1.263/gbp vs $1.265/gbp. 0.653/aud vs 0.654/aud. CNY 7.229/$ vs 7.219/$.

Dollar Index 104.38 vs 104.20 previous.

Precious metals:

Gold US$2,181/oz vs US$2,176/oz previous

Gold ETFs 82,225,922.7moz vs 82,180,663.9moz previous

Platinum US$906/oz vs US$903/oz previous

Palladium US$993/oz vs US$1,004/oz previous

Silver US$24.46/oz vs US$25/oz previous

Rhodium US$4,625/oz vs US$4,600/oz previous

Base metals:

Copper US$ 8,838/t vs US$8,836/t previous

Aluminium US$ 2,293/t vs US$2,323/t previous

Nickel US$ 16,590/t vs US$16,855/t previous

Zinc US$ 2,422/t vs US$2,476/t previous

Lead US$ 2,008/t vs US$2,028/t previous

Tin US$ 27,330/t vs US$27,390/t previous

Energy:

Oil US$85.5/bbl vs US$86.7/bbl previous

• Energy prices edged lower after the API reported a 9.3mb w/w build to US crude stocks and French nuclear reactor operating levels were reported up 1% w/w to 68% of 61.4MW capacity.

Natural Gas €27.5/MWh vs €27.4/MWh previous

Uranium Futures $88.9/lb vs $88.9/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$104.4/t vs US$109.0/t

Chinese steel rebar 25mm US$533.9/t vs US$536.6/t

Thermal coal (1st year forward cif ARA) US$112.3/t vs US$111.5/t

Thermal coal swap Australia FOB US$129.0/t vs US$126.0/t

Other:

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

NdPr Rare Earth Oxide (China) US$48,971/t vs US$49,314/t

Lithium carbonate 99% (China) US$14,456/t vs US$14,614/t

China Spodumene Li2O 6%min CIF US$1,210/t vs US$1,210/t

Ferro-Manganese European Mn78% min US$975/t vs US$975/t

China Tungsten APT 88.5% FOB US$310/mtu vs US$310/mtu

China Graphite Flake -194 FOB US$490/t vs US$490/t

Europe Vanadium Pentoxide 98% 5.2/lb vs US$5.2/lb

Europe Ferro-Vanadium 80% 26.45/kg vs US$26.45/kg

China Ilmenite Concentrate TiO2 US$330/t vs US$329/t

China Rutile Concentrate 95% TiO2 US$1,446/t vs US$1,448/t

Spot CO2 Emissions EUA Price US$61.9/t vs US$63.6/t

Brazil Potash CFR Granular Spot US$305.0/t vs US$305.0/t

Battery News

CATL in talks with Tesla over licensing battery technology in the US

• The Chinese battery maker is in talks with various automakers, including Tesla, to license its battery technology instead of building its own plant in the country.
• The scale of cooperation and details about what technology Tesla would license from CATL are still being discussed.
• CATL is also working on faster charging batteries for Tesla and supplying machinery to the automaker’s factory in Nevada.

Toyota to mass produce electric Hilux by 2025

• Toyota plans to mass-produce a battery electric Hilux pickup truck by the end of 2025, the president of its Thailand unit said.
• The Thai government had recently announced rival Japanese automaker would manufacture its battery D-MAX pickup in Thailand by 2025.

Company News

Andrada Mining (ATM LN) 4.4p, Mkt cap £67m – Production rises over 50% last year

• Andrada Mining reports a 54% increase in tin concentrate production and a 51% rise in overall contained tin output from its Uis mine in Namibia during the year to 29^th February 2024,
• The increased production reflects a 60% rise in the volume of ore treated to 915,999t (2023 – 573,818t) delivering 1,474t of tin concentrate containing 885t of tin (2022 – 960t of concentrate containing 587t of metal).
• Tin recovery rates improved to average 72% for the year (2023 – 69%.
• Average C1 production costs of US$17,640/t of contained tin fell within the company’s guidance range of US$17-20,000/t and all-in-sustaining costs of US$26,223/t met the guidance range of US$25-30,000/t.
• The company says that costs all “decreased by double digit percentage points in Q4 due to higher tonnages and enhanced efficiencies … AISC declined from USD30 452 per tonne in Q3 to USD26 616 in Q4, mainly due to the decrease in the stripping ratio from 4.51 at the end of November 2023 to 3.21 at the end of February 2024”.
• Andrada Mining confirms that it “is implementing a production expansion project at the existing tin processing plant to 2 600 tpa (or 1 600 tpa of tin metal) in line with the Orion tin royalty requirements. The production expansion will be facilitated through the installation of a pre-concentration circuit that incorporates ore-sorters”.
• Plans to produce a tantalum concentrate, generating a revenue increase of 3-5%, progressed with production of 7.4t of concentrate during the final quarter with the “current concentrate production rate … [of] … 48tpa …  expected to increase to approximately 83tpa after implementation of the ore-sorting facility”.
• The company’s lithium pilot plant has now produced a 40t stockpile of “saleable, technical-grade lithium concentrate … [with the] … production rate … expected to increase to 100 tonnes per month by the end of March 2024”.
• “Internal test work confirms that this technical-grade material meets the specifications for the glass-ceramics market, and Andrada is exploring additional offtake agreements with both industrial and battery chemical markets”.
• Looking forward, CEO, Anthony Viljoen, said that “the exposure of the orebody’s grade, diversity of minerals including lithium, and scale at depth according to our geological model, will start to become glaringly apparent placing the operations in a robust position to capitalise on the rebound in the commodities markets for all our products”.

Conclusion: Production increases at the Uis mine are delivering cost reductions as the company pursues a wider product range adding tantalum and lithium to the principal tin concentrate production.

Asiamet Resources (ARS LN) – 0.6p, mkt cap £16m – Biomass energy study for the BKM copper project

• Asiamet Resources has announced the completion of a comprehensive study into the provision of sustainable, biomass, power to its BKM copper cathode project in Kalimantan, Indonesia.
• The study, which was undertaken in collaboration with Britmindo Mining Services Singapore Pte Ltd, has “identified ample biomass feedstock sourced primarily from palm oil mills within a 100km radius of the proposed power plant location that could feed a biomass power station dedicated to the BKM Copper Project … [and established that] … biomass power … offers a reliable, renewable energy solution for producing copper cathode at BKM”.
• The study indicates that biomass power generation is likely to be “operated by a third party who will be responsible for its construction, operation and maintenance. Asiamet is actively engaged in advanced discussions with potential partners interested in fully financing the dedicated biomass power plant for the BKM Copper Project”.
• The study is reported to address a comprehensive array of issues relating to the proposed power plant, including the costs of transporting biomass feedstock “to minimise carbon footprint and optimise logistical efficiency” as well as the construction and potential route of the power transmission line.
• Emphasising Asiamet’s commitment to “sustainable mining practices and renewable energy initiatives” CEO, Darryn McClelland stressed that “Asiamet aims to set a benchmark for responsible resource development in remote mining regions”.
• Mr. McClelland said that Asiamet is “encouraged by substantial interest from potential partners in financing the power plant”.

Conclusion: A sustainable biomass power solution for the development of the BKM copper cathode project is likely to be developed in collaboration with a third-party operator.

Centamin (CEY LN) 108.8p, Mkt Cap £1,252m – Sustainability report describes the cost benefits of emission mitigation measures

• Presenting the company’s 2024 Sustainability Report, Centamin’s CEO, Martin Horgan, highlighted the company’s commitment to responsible mining practices and sustainability.
• He commented on measures to reduce greenhouse gas emissions at the Sukari mine in Egypt and “an increased level of conformance of our tailings management system to the Global Industry Standard on Tailings Management” (GISTM).
• Describing the impact of securing a grid power connection in 2024, Mr. Horgan said that it “will continue our recent success in delivering our near-term decarbonisation targets, while also taking costs out of the business”.
• He also confirmed that Centamin “will also continue to increase our conformance to the GISTM, targeting full conformance during 2025”.

Empire Metals* (EEE LN) 7p, Mkt Cap £42m – Pitfield Development Plan outlines route to production

(Empire holds 70% of Pitfield, Century Minerals, which is run by two geologists holds the other 30%. One of these geologists works for Empire.)

• Empire Metals provides an update on its planned route to the potential commercialisation of the Pitfield Titanium Project.
• The Company is currently undertaking the Phase 3 RC drilling campaign over 40 holes, targeting two high-grade, shallow zones of mineralisation for potential open pit development.
• Management is guiding towards a 2025 construction for the Demonstration Plant.
• However, in the meantime, several milestones will be targeted over the next six to twelve months to further derisk the project.
• Mineralogical Studies:
  • Empire has to date established that a calcium titanite silicate mineral is the most abundant titanium mineral in the orebody.
  • Going forward, Empire has engaged with Curtin University and CSIRO to further develop their understanding of the titanium mineralisation, alongside grade control, hydrothermal alteration and formational conditions.
  • This work is expected to start over the next month and provide results in 4Q24.
• Metallurgical Testwork
  • Preliminary metallurgical testwork has suggested potential for conventional leaching through low temperature sulphuric acid/hydrochloric acid to dissolve titanite and liberate the Ti ‘titanium’ into solution.
  • Today Empire announces a process development programme, intended to test various favourable options for processing titanium ore and produce a maximum value Ti product.
  • Focus of the programme will target ore characterisation, grain size, breakage properties, hardness, and leachability.
  • Beneficiation tests will explore options for separation, including gravity and magnetic separation alongside froth flotation.
  • Hydrometallurgy tests will explore the route to bringing the Ti-bearing and gangue minerals into solution, before optimising leach solution chemistry for final product finishing.
  • Final Product testwork will explore optionality for providing TIO2 product designed for the pigment industry, with the programme intended to select one optimal product for Pitfield to produce.
• Demonstration Plant
  • The demonstration plant, targeted for next year, is intended to confirm the potential for successful titanium extraction through an economic process.
  • This will collect data to be used towards full-scale design and provide optionality for the optimisation of the Pitfield flow sheet in the lead up to DFS-level work.
• Exploration Target and maiden MRE
  • Empire also announces today it will work towards providing a JORC-code Exploration Target for the two high-grade, shallow lying bedded sandstone zones currently subject to Diamond and RC drilling.
  • These programmes are set to finish in June, which will support resource progression.
  • Management states that the project is ‘well on its way to being able to provide a maiden MRE at Pitfield.’
  • Over 100 RC holes across 15,000m and seven diamond core holes over 2,000m will have been completed by June.
  • Today’s plan accounts for an additional 36,000m of RC drilling and 2,000m of Diamond Core drilling set to begin in 4Q24, providing a necessary drill data for an MRE.
• As regards mining studies, Empire will look to examine various mining techniques as part of today’s development plan, commencing later this year.
• Permitting and Government Funding Support
  • Empire has begun a review of permitting requirements for the Demonstration Plant, which may potentially require a small-scale mining permit.
  • Engagement with stakeholders and relevant government authorities has been initiated.
  • Management will look to tap into government grants and rebates, including the $1.25bn worth of low-cost non-recourse loans available from the Federal Government.
• Empire has hired three titanium experts to progress the Development Plan, including development manager Narelle Marriott.

Conclusion: Today’s Development Plan provides a path for Empire to progress and derisk the Pitfield titanite project following the its discovery within a large, sedimentary titanium mineralised system.

Drilling set to be completed in June will open the door to a JORC Exploration Target supported by 51,000m of RC and 4,000m of diamond core drilling. Note, no cut-off grade is applied to JORC Exploration Targets.

Management has reiterated their target of a 2025 delivery of the demonstration plant, which is intended to further derisk the project by proving a route to commercial production of the titanite, likely through low temperature acid leaching.

This will be followed by a JORC maiden MRE ‘Mineral Resource Estimate’ when the team are  able to justify a suitable cut-off grade as required for the estimation of the JORC MRE.

We look forward to further updates as the Company, recently bolstered by an expert titanium metallurgical team, progresses the asset with metallurgical testwork.

*SP Angel acts as nomad and broker to Empire Metals

Endeavour Mining (EDV LN) 1,500p, Mkt Cap £3.7bn – Quarterly results as expansion projects near completion

• Endeavour reports full year results for 2023.
• The Company produced 280koz in Q4, bringing total production to 1,072koz, towards the lower end of their 1,060-1,125koz guidance.
• The Company generated $292m in Q4 and full year EBITDA at $1bn.
• Operating cash flow (before working capital) at $246m in Q4 and full year operating cash flow of $746m.
• The Company spent $448m on growth capital over the period, with exploration spend from continuing operations at $101m.
• Growth CAPEX is being directed towards Sabodala-Massawa and the Lafigue development project, reporting that both are ahead of schedule and on budget.
• $66m spent on share buybacks over the period vs $99m in 2022.
• Dividends increased to $200m from $170m the year prior.
• The Company’s cash position fell by $434m over the period to $517m from $951m.
• Endeavour reports a $967/oz AISC, higher than their $895-950/oz guidance on ‘higher royalty costs associated with a higher than budgeted gold price.’
• Management expects the Sabodala-Massawa expansion project to begin process plant commissioning in 2Q24, with the BIOX expansion project pouring first gold in early May.
• 10% of the project budget is remaining, having spent $290m to date.
• The Project holds a post-tax NPV5 of $861m at $1,700/oz gold price.
• The Lafigue project expects processing plant commissioning in 2Q24, with first gold poured the same quarter, three months ahead of schedule.
• 8% of the spend remains, having committed $448m for the project, which holds a post-tax NPV5 of $732m at $1,700/oz. Expects to produce 90-110koz in FY24.

European Metal Holdings (EMH LN) 12.75p, Mkt Cap £27m – Cinovec DFS timetable extended

• European Metals Holdings reports that work on the Definitive Feasibility Study (DFS) for its 49% owned Cinovec lithium project in the Czech Republic has identified areas “that may significantly improve the lithium processing component of the DFS”.
• European Metals is currently reviewing “these … [currently undisclosed] … matters … [with its technical advisors, DRA Global and says that it] … expects to make a further announcement before the end of April 2024 detailing some of the more significant issues”.
• The company announced in December 2023 that “the delivery of the DFS for the Project had been pushed back and was expected to be completed in Q1 2024”.
• Today’s announcement confirms that “the process flowsheet remains as announced on 31 October 2022 and confirmed in pilot testing results announced on 9 November 2023”.
• It also explains that the “review process could significantly improve the economic and social/community outcomes … [which it considers] … to be an important development in the Project and makes a further delay in the DFS well justified”.
• The company also confirms that it “does not expect that the extension of the study period will impact the overall Project timeline … [and that the] … previously published physical and hydrometallurgical process flowsheets have been confirmed to be viable for engineering and construction purposes with high levels of lithium recovery from run-of-mine ore to battery-grade end-products”.
• Executive Chairman, Keith Coughlan, explained that “Whilst it is unfortunate not to be able to provide a fully completed DFS at this stage, I am confident that the developments currently being finalised will add significantly to the Project. In particular, permitting and timelines are expected to be positively impacted by the team’s additional work”.
• In our opinion, the company is sensible to pursue its studies in an effort to secure the best operating and economic outcome for its Cinovec project, particularly if further review does not derail the overall project development timetable.
• We wonder, however, what the issues are and why they were not identified until so late in the preparation of the DFS.  Perhaps the promised announcement in April will shed some light.

Conclusion: The Cinovec DFS is taking longer than originally expected as the company considers what may be important economic and technical improvements to the project.  We await further news in April.

Great Western Mining* (GWMO LN) 0.047p, Mkt Cap £2.5m – New gold targets generated through encouraging exploration work

• Today Great Western provides an update on its Rhyolite Dome gold target in Mineral County, Nevada.
• Rhyolite Dome lies 2km SE of the historic OMCO mine site, and 15km SE of the Paradise Peak gold deposit.
• Having digitised historical soil results, Rhyolite showed strong anomalisms, exceeded those at the OMCO and Trafalgar sites, where drilling has confirmed mineralisation.
• New sampling over 100m x 30m spacing showed positive gold results, with the northwest side of the target showing encouraging prospectivity.
• This yielded results including 61ppb, 58ppb and 51ppb.
• Low sulphidation epithermal mineralisation indicators including silver, arsenic and mercury have been noted.
• Stockwork veins, which often appear above low-sulphidation systems, have also been reported.
• The prospect lies along trend of the Warrior, Hillside, Cute Maid and Lou epithermal gold deposits, which all lie on the north-northwest trend.
• Geological features including a silica sinter, a mapped placer and chalcedony veins also provide the GWM with encouragement as to the epithermal prospectivity of the site.
• Going forward, GWM will look to conduct IP surveys to produce drill targets.

Conclusion: Great Western continues to conduct low-cost exploration work across its expansive and prospective licence package in Mineral County, Nevada. Rhyolite Ridge remains underexplored and today’s results warrant further follow up with IP to generate drill targets. Gold prices remain strong at $2,180/oz and Great Western has a host of highly prospective precious metals targets, alongside their processing mill which awaits final permit approvals before starting to generate revenue from mineralised waste material.

*SP Angel act as Broker to Great Western Mining, an SP Angel Analyst has visited Great Western’s Nevada claim blocks.

Hastings Technology Metalts (HAS AU) A$0.43, Mkt Cap A$83m – Equity raise of up to A$22m equity raise

• The Company announced an up to A$22m renounceable partially underwritten rights issue to fund ongoing development at the Yangibana Rare Earths Project in Australia, WA.
• New shares will be issued at A$0.36 per share, a ~42% discount to the closing price on Friday pre suspension.
• Additionally, investors will be granted 1-for-3 option with an exercise price of A$0.50 and an expiry data of two years.
• Board members and management intend to participate in the placing.
• The raise is underwritten for A$8.8m.
• The funding will be directed towards working capital, long lead equipment, advance engineering an professional services fees as well as acting a bridge finance to the planned completion of the project funding.
• FS completed on the 100% owned fully permitted Yangibana Rare Earths Project in 2023 with study highlights including:
• Staged project development with Stage 1 involving mining operations and flotation facility to produce 37ktpa of RE concentrate (27% REO grade) and Stage 2 for hydrometallurgical plant upgrading it to 15ktpa MREC (59% REO grade).
• Stage 1 and Stage 2 capex are estimated at A$470m and A$478m, respectively, with some A$112m incurred already.
• Stage 1and Stage 2 generate A$538m and A$1,018m in post tax NPV11 as well as 28% and 51% in post tax IRR.
• The study used US$129/kg NdPr price assumptions.
• The project hosts 20.9mt at 0.9% TREO in reserves (37% NdPr) and 29.9mt at 0.9% in total resource.

Metals Exploration (MTL LN) 4.5p, Mkt Cap £96 – Last mezzanine debt facility payment completed establishing a nearly debt free status

• The Company reports repayment of the mezzanine debt facility implying a nearly debt free status.
• The outstanding amount in the amount of $3k relates to a legacy agreement with lenders since Nov/22 maintained allowing to maintain the security package on assets while mezzanine facilities were being negotiated.
• The final repayment brings total principal and interest payments made to just over $170m since Sep/20 supported by robust operations and strong gold prices.
• Supported by nearly debt free balance sheet, the team is aiming to direct generated Runruno cash flow to funding new growth opportunities.
• The Company is expecting to produce 74-80koz this year at an average AISC of $1,175-1,275/oz (FY23: 85koz at $1,126/oz).

Power Metal Resources* (POW LN) 13p, Mkt cap £18m – 20 to 1 consolidation of shares today

• Power Metal Resources share price has changed today due to the 20 to 1 share consolidation as approved at the General Meeting and announced yesterday.

*SP Angel acts as Nomad and Broker for Power Metal Resources

 Sovereign Metals* (SVML LN) 24.0p, Mkt Cap £138m – Drilling restarts at Kasiya rutile and graphite project in Malawi

(Sovereign currently holds 100% of the Kasiya project. The government has a right to a 10% free carry in the project. Rio Tinto acquired an initial strategic interest of 15% for a $40.6m with an option to increase it to 19.99% within 12 months from 17 July 2023)

STRONG BUY – Valuation 55p

• Sovereign Metals continue to work on the definition and future development of the Kasiya project in Malawi.
• The team are working with support from Rio Tinto which is a 15% shareholder and is assisting in the optimisation of the current project plan.
• New drilling on 400m wide spacings to the north of Kasiya could show meaningful extension to the current Kasya mineral resource with results expected within weeks.
• Drilling to the south also shows >8km of mineralisation which should extend the current 1.8bnt mineral resource which currently grades 1.0% rutile and 1.4% graphite
• Four hand-auger drill teams are working on the low-cost 70-hole program targeting known mineralisation.
• Results will be processed at Sovereign’s Lilongwe lab and shipped for final certified analysis.
• Newly defined mineralisation in the south remains open at depth and is expected to continue to the saprock boundary at around 20-30m depth.
• The company held A$39.4m of cash at end December with no debt.

Conclusion: Sovereign are working to understand and expand the overall scale of the resources around the Kasiya project. While Kasya is already the largest known rutile resource in the world, expanding the scale of the resource should add meaningful value through the ability to plan larger titanium dioxide operations on its feedstock. In short, the project has the potential to dominate the industry for many years in terms of production, value and longevity.

While it is not guaranteed that Rio Tinto will buy the project we feel Rio Tinto’s involvement is a good indicator of greater value to come.

*SP Angel act as Nomad and broker to Sovereign Metals.

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

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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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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This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

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Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

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SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

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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%