SP Angel Morning View -Today’s Market View, Tuesday 30th April 2024

Copper prices push past two-year highs as Codelco struggles to ramp up production

MiFID II exempt information – see disclaimer below

Artemis Resources (ARV LN) – Quarterly activities as lithium exploration continues

Bluejay Mining* (JAY LN) – Disko-Nuussuaq survey to help refine targets for drilling in 2025 as directed by KoBold’s AI and HI processes

Celsius Resources (CLA LN) – Quarterly report outlines progress at the Philippines projects at MCB and Sagay

Galantas Gold* (GAL LN) – Issue of options

Gem Diamonds (GEMD LN) – Letšeng mine delivers another large diamond

Glencore (GLEN LN) – Q1 production confirms 2024 production guidance

Goldstone Resources* (GRL LN) SUSPENDED – All resolutions passed with trading expected to be resumed next week

Greatland Gold (GGP LN) – A solution identified to managing water inflow in the main access decline at Havieron

Kodal Minerals* (KOD LN) – Spodumene offtake right of first refusal amendment

Mkango Resources* (MKA LN) – FY23 results

Resolute Mining (RSG LN) – Maintaining 2024 guidance after solid Q1 production performance

Sovereign Metals* (SVML LN) – Quarterly report highlights scale of Kasiya rutile resource and its importance to the people of Malawi

Sylvania Platinum (SLP LN) – Q3 Report as $100m cash position supports shareholder returns

Tianqi Lithium (002466 CN) – Founder resigns on record quarterly loss as lithium bear market continues

Zanaga Iron Ore (ZIOC LN) – Results from 2024 Feasibility Study

Copper prices push past two-year highs as Codelco struggles to ramp up production

• LME prices hit $10,215/t yesterday, before easing somewhat to $10,115/t today.
• The move was supported by more positive Chinese factory data, having climbed 15% in April on a concentrate squeeze.
• Rock bottom TC/RC fees have fuelled speculation of production cuts from China’s smelter groups, which produce over 50% of global refined copper.
• Concentrate availability has been thin owing to Cobre coming offline and production hits from Anglo American and MMG.
• Positivity is coming from China’s property sector, with developer equities climbing yesterday on rumours of easing home purchase restrictions in major cities.
• However, fabricators, a major downstream source of demand, are reporting thin margins, suggesting fundamentals still remain weak for Chinese copper buyers.
• This is reflected in weak Yangshan premiums, which hit zero last week as import demand remains stagnant.
• A PWC report suggests 54% of copper output is exposed to climate change-driven drought.
• Chile and Zambia have both recently suffered from water shortages, which weigh on processing plants and hydroelectric power availability.
• Codelco announced yesterday it is looking forward to a recovery in production, expecting a rise in production into H2 following a Q1 decline.
• Conversely, sliding inventories suggesting restocking has picked up as downstream users look to lock in supply as prices continue to rally.

• Copper demand is currently made up of:
  • Construction 28%, Power 16%, Consumer goods 13%, Transport 13%, Industrial equipment 12%, HVAC ‘Heating Ventillation and Air conditioning’ 7.5% and Other 10%
• New demand drivers:
  • AI Artificial Intelligence – use of energy requires bigger copper cables
    • Datacentres for Gig economy continue to expand and to multiply 1GW = 25-50,000t est. of copper in cabling in total
    • US may add 8GW in 2024, 12GW in 2025 and 16GW in 2026 after 3GW in 2023 according to GS.
  • EVs – require Over two times as much copper 53.2kg vs 22.3kg according to the IEA
    • EV chargers – a 200 kW charger uses 8kg of copper. Smaller 3.3kW charger uses 0.7kg of copper (ICA)
    • Electric busses use 129-292kg of copper in their batteries representing 85% of the total vehicle content (ICA)
  • Solar, wind, hydropower, nuclear power cabling
    • Solar uses 2,450-6,985kg /MW of power generation (cuspuk)
    • Hydropower 4,000 kg / MW
    • Wind power, onshore 2,500 – 6,400 kg / MW
    • Wind power, offshore 10,500 kg / MW
  • Grid cabling – high tension overhead cables are made of aluminium, buried cables are almost always copper.
  • China state stimulating the finishing of apartments. This should drive copper demand for domestic cabling and appliances
  • China state also looking to stimulate demand for consumer goods. Again driving demand for a range of metals.
• Supply side disruption:
  • Shortage of concentrates:
    • Cobre Panama – shut down indefinitely
    • Grasberg – export license runs out in May. Freeport’s new Indonesian smelter currently expected to commission by the year-end
  • Copper concentrate Tc/Rcs have been seen at negative levels for the first time in our recollection.
  • Shortage of new mines: There are no new large copper mines in development
  • Existing giant copper mines struggling
    • Increased risk of slope failure
    • Falling grades
    • Capacity being stretched as mines strain under the pressure to produce more copper.
  • Zambia, drought, and lack of hydropower may curtail copper production in Zambia and DRC
  • Peru – Las Bambas communities likely to disrupt supplies further on unapproved expansion of copper mine
  • Chile – suffering lack of investment at Codelco and elsewhere due to government threats to raise taxes
• Other influences:
  • Investors are generally long with many now focussed on copper as a longer-term investment on substantial expansion in demand
  • China SRB ‘State Reserve Bureau’ may have dumped metal into Shanghai warehouses to suppress prices and to fulfil local demand
• Contango levels are easing in copper spreads, although remain in deep negative territory suggesting that spot demand is not as strong as current prices would suggest.
• We suspect a major driving force in copper’s recent move has been macro-economic speculators and momentum-driven CTA funds, with positioning extended on most major exchanges.

Conclusion:  While it is possible 3-month copper may dip below $10,000/t longer-term fundamentals appear to indicate markedly higher prices and the market can smell the blood of a number of short sellers.

Gold slides again as traders look to Fed meeting for guidance over rate cuts

• Gold prices eased to $2,320/oz, with traders positioning ahead of the FOMC meeting this week.
• Analysts expect the Fed to reiterate a hawkish tone following a pick up inflation since Powell’s dovish pivot in December.
• This saw yields climb to recent highs of 4.7%, having touched 3.8% in the wake of Powell’s December comments.
• The correlation between US Treasury yields and gold seems to have further decoupled on the back of sustained buying from China, both the central bank and private buyers.
• Traders are now pricing in two cuts this year, having been as high as 7 in January.
• We would expect lower yields, in the scenario of cooling inflation and a weakening labour market, to stimulate ETF buying and a bullish catalyst for gold prices.
• To date, ETFs have been neutral to sellers of gold in the US, with funds rotating into more attractive government bonds.

Iron ore hovers higher as China steel outlook improves

• Iron ore prices in China continue to hold around the $118/t mark, up from $100/t lows hit last quarter.
• Chengu authorities have suggested they will ease restrictions on homebuyer qualifications to prop up the property market.
• China’s HangSeng Property Index is up nearly 20% over the past week.
• Analysts have also increased their long-term iron ore price to $100/t on the back of sustained Indian buying, filling the void from China’s slowdown.

IG TV: Gold and Copper. 10/04/2024: https://youtu.be/KuGSbDqWglk?si=-8iikkOHxbbLSnPZ

Sharepickers TV:  It’s all about copper. 26/04/2024 podcast:  https://audioboom.com/posts/8496588-john-meyer-it-s-all-about-copper

         Video: https://www.youtube.com/watch?v=MV9_8K494rY

*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts. We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate. SP Angel acts as Broker/Nomad or both for Anglo Asian Mining, Kodal Minerals, Power Metals Resources.

Economics

China – April PMIs point to a slowdown in growth with both manufacturing and services posting weaker growth.

• In the manufacturing sector both domestic and overseas demand gauges recorded a slower pace of expansion.
• The drop in the services PMI was steeper than the typical seasonal pullback pointing to an ongoing weakness in consumer sentiment and property slump, Bloomberg writes.
• Manufacturing PMI (Apr/Mar/Est): 50.4/50.8/50.3
• Services PMI (Apr/Mar/Est): 51.2/53.0/52.3
• Composite PMI (Apr/Mar/Est): 51.7/52.7
• Caixin Manufacturing PMI (Apr/Mar/Est): 51.4/51.1/51.0

Eurozone

• CPI (%yoy, Apr/Mar/Est): 2.4/2.4/2.4
• Core CPI (%yoy, Apr/Mar/Est): 2.7/2.9/2.6

Germany – GDP is seen slowly recovering in Q1/24, albeit from a sharper than previously expected drop in the previous quarter.

• Market estimates are for the economy to barely grow this year (+0.1%) with officials offering a slightly more optimistic growth forecast (+0.3%).
• GDP (%qoq, Q1/Q4/Est): 0.2/-0.5(revised from-0.3)/0.1
• GDP (%yoy, Q1/Q4/Est): -0.2/-0.2/-0.2
• CPI (%mom, EU Harmonised, Apr/Mar/Est): 0.6/0.6/0.6
• CPI (%yoy, EU Harmonised, Apr/Mar/Est): 2.4/2.3/2.3

France

• GDP (%qoq, Q1/Q4/Est): 0.2/0.1/0.1
• GDP (%yoy, Q1/Q4/Est): 1.1/0.8(revised from 0.7)/0.8
• CPI (%mom, EU Harmonised, Apr/Mar/Est): 0.6/0.2/0.5
• CPI (%yoy, EU Harmonised, Apr/Mar/Est): 2.4/2.4/2.2

Italy

• GDP (%qoq, Q1/Q4/Est): 0.3/0.1(revised from 0.2)/0.1
• GDP (%yoy, Q1/Q4/Est): 0.6/0.7(revised from 0.6)/0.3

Currencies

US$1.0707/eur vs 1.0718/eur previous. Yen 156.81/$ vs 155.26/$. SAr 18.673/$ vs 18.741/$. $1.254/gbp vs $1.253/gbp. 0.653/aud vs 0.656/aud. CNY 7.244/$ vs 7.246/$.

Dollar Index 105.88 vs 105.61 previous.

Precious metals:         

Gold US$2,318/oz vs US$2,332/oz previous

Gold ETFs 81.0moz vs 81.2moz previous

Platinum US$943/oz vs US$917/oz previous

Palladium US$961/oz vs US$953/oz previous

Silver US$26.69/oz vs US$27/oz previous

Rhodium US$4,725/oz vs US$4,725/oz previous

Base metals:   

Copper US$ 10,112/t vs US$10,008/t previous

Aluminium US$ 2,571/t vs US$2,559/t previous

Nickel US$ 19,150/t vs US$19,260/t previous

Zinc US$ 2,928/t vs US$2,870/t previous

Lead US$ 2,225/t vs US$2,214/t previous

Tin US$ 32,440/t vs US$32,500/t previous

Energy:           

Oil US$88.5/bbl vs US$88.6/bbl previous

• Crude oil prices edged lower as international efforts continue to advance a cease-fire between Israel and Hamas, which would reduce geopolitical risk in the region.
• Repsol’s CEO announced plans to maintain its rig in the Eagle Ford Shale but to drop another rig on the Marcellus Shale in June and reduce capex in the play due to the current US natural gas price environment.
• Chevron signed an agreement with NAMCOR to farm-in to an 80% operated interest in PEL82, which is located in the Walvis Basin, offshore Namibia.

Natural Gas €28.3/MWh vs €28.3/MWh previous

Uranium Futures $87.7/lb vs $87.3/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$118.5/t vs US$119.2/t

Chinese steel rebar 25mm US$523.2/t vs US$522.5/t

Thermal coal (1st year forward cif ARA) US$108.8/t vs US$112.3/t

Thermal coal swap Australia FOB US$138.8/t vs US$133.5/t

Hard Coking Coal Australia FOB US$326.0/t vs US$326.0/t

Other:  

Cobalt LME 3m US$27,830/t vs US$27,830/t

NdPr Rare Earth Oxide (China) US$55,700/t vs US$55,477/t

Lithium carbonate 99% (China) US$15,116/t vs US$15,111/t

China Spodumene Li2O 6%min CIF US$1,240/t vs US$1,240/t

Ferro-Manganese European Mn78% min US$972/t vs US$972/t

China Tungsten APT 88.5% FOB US$333/mtu vs US$333/mtu

China Graphite Flake -194 FOB US$480/t vs US$480/t

Europe Vanadium Pentoxide 98% 5.0/lb vs US$5.0/lb

Europe Ferro-Vanadium 80% 26.25/kg vs US$26.25/kg

China Ilmenite Concentrate TiO2 US$326/t vs US$326/t

China Rutile Concentrate 95% TiO2 US$1,415/t vs US$1,415/t

Spot CO2 Emissions EUA Price US$64.4/t vs US$65.9/t

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

Battery News

Indonesia see strong EV sales at start of 2024

• In Q1 2024, EV sales in Indonesia were more than 30% of total EV sales for 2023.
• If the positive sales trend continues, electric car sales in Indonesia could reach 20,000 units in 2024.
• The best-selling EV model in Q1 2024 was the Wuling Binguo with 1,990 units sold, followed by the Chery Omoda 5 (881 units) and Hyundai Ioniq 5 Signature Extended (347 units).
• Low operational/maintenance costs and environmental benefits are key factors driving EV attractiveness in the Indonesian market.
• EV operational costs are only around 25% compared to gasoline vehicles due to cheaper electricity costs.
• High battery replacement costs (30-50% of new car price) remain a challenge, but domestic battery production could make EVs more affordable.

Chinese EV makers have been gearing up to begin production in Indonesia which would also see a jump in sales.

• BYD launched three models in Indonesia in January this year.
• An official form the Ministry of Maritime Affairs and Investment has also announced that four other Chinese EV makers are keen to start production in Indonesia.
• According to the source, the arrival of the four new EV manufacturers will help Indonesia in reaching their production target of 600,000 EVs by 2030.

UN: Production of minerals for clean energy is insufficient

• A report by the United Nations Conference on Trade and Development (UNCTAD) states that current production levels of key minerals needed for clean energy technologies are insufficient to meet global climate goals.
• The demand for lithium could rise by over 1,500% by 2050, with similar increases projected for other minerals required for solar panels, wind turbines and EV batteries.
• Global investments in critical minerals for the energy transition are not keeping pace with the escalating demand, according to the UNCTAD report.
• To achieve net-zero emissions by 2050, the UN estimates 80 new copper mines, 70 new lithium mines, 70 nickel mines, and 30 new cobalt mines would be required.
• The report identified 110 new mining projects worth $39bn globally, with $22bn invested in 60 projects in developing countries.

Ford recalls nearly 500,000 vehicles over battery problems

• Ford is recalling more than 456,000 Bronco Sport SUVs and Maverick pickup trucks due to a potential battery issue.
• The issue is that the vehicles might fail to detect a low battery charge, which could lead to the engine and electrical features being cut off while driving.
• To address the problem, Ford will recalibrate the control modules responsible for detecting battery charge at dealerships at no cost to owners.

Could Diamond Battery be the answer to EV battery concerns?

• A new type of battery called a “diamond battery” has been invented that could provide extremely long-lasting power for EVs.
• Diamond batteries harness the energy released from radioactive diamond crystals made from carbon-14 atoms, which decay by emitting beta particles over an exceptionally long period.
• Diamond batteries are claimed to have a functional lifespan of around 28,000 years, far exceeding traditional battery technologies like lithium-ion.
• To ensure safety, the radioactive carbon-14 diamond is encased in a second protective non-radioactive diamond layer.
• While still in early research stages, diamond batteries could potentially revolutionise energy storage for EVs by providing ultra-long range without recharging.
• However, challenges remain in scaling up production and ensuring the technology is cost-effective compared to other battery advancements.

2018 Tesla Model S has driven 413,000 miles with original battery

• The owner, Nigel Raynard from Australia, driven around 350 miles (563 km) daily in the Model S.
• The car started giving error messages and losing power at low states of charge after 413,000 miles, prompting the battery replacement.
• Despite regularly DC fast-charging, charging to 100%, and running down to very low states of charge – factors that can degrade batteries faster – the original pack lasted over 400,000 miles.
• Under Tesla’s 8-year/unlimited mile battery warranty, the owner received a brand new 90kWh battery pack instead of a refurbished one.
• Getting over 400,000 miles out of the original battery is consistent with or above average for other high-mileage Tesla Model S sedans.
• The longevity demonstrates the robust battery technology in Tesla’s vehicles, even under heavy usage conditions.

Beijing dismisses bogus overcapacity claims from US

• Beijing dismissed the US claims of China having overcapacity in industries like new energy vehicles and lithium batteries as a false narrative.
• China stated its advantages in these fields result from global market demand, technological innovation and fair competition, not government subsidies.
• China stated its high-quality new energy products have contributed to green transformation, combating climate change and alleviating inflation in other countries.
• Beijing questioned whether the US Chips and Science Act and Inflation Reduction Act, involving subsidies and discriminatory provisions, constitute market behaviour and fair competition.
• China also criticised the US for illegally sanctioning over 1,500 Chinese entities and individuals under various pretexts, questioning if that is fair competition.
• The remarks were made by Yang Tao, Director-General of the Foreign Ministry’s North American and Oceanian Affairs Department, during a briefing on the US Secretary of State’s visit to China.

Company News

Artemis Resources (ARV LN) 0.9p, Mkt Cap £16m – Quarterly activities as lithium exploration continues

• Artemis reports its quarterly results for the period to 31^st March 2024.
• Lithium prospecting continues, with their 49% JV Osborne showing promising rock chip samples.
• These included 2.36% Li2O, 1.64% Li2O, 1.22% Li2O, 1.15% Li2O.
• At the 100% owned Karratha project, pegmatites have been identified, with rock chip Li2o results reaching highs of 4.67% Li2O.
• The project neighbours Azure’s Andover project and shows coarse grained spodumene crystals on the tenement.
• The Company suggests that the Mt Marie prospect occurs along a mirrored NE structural trend to that of Azure Minerals’ Andover asset, which lies 20km east.
• Drilling is being prepared at Karratha, a gold prospect 100% held by Artemis which has geophysics has highlighted three anomalies.

Bluejay Mining* (JAY LN) 0.30p, Mkt cap £4.42m – Disko-Nuussuaq survey to help refine targets for drilling in 2025 as directed by KoBold’s AI and HI processes

(Bluejay Mining holds 100% of the Hamerslhati ex state owned copper mine in Finland as well several major resources in Greenland)

• The relationship with KoBold Metals has been reconfirmed with Bluejay’s JV partner at jv with KoBold Metals in Greenland after a period of some uncertainty.
• The jv team is leveraging KoBold’s proprietary AI ‘artificial intelligence’ and ML ‘machine learning’ along with its substantial in-house geological expertise.
• The very substantial work done to date has resulted in the identification of seven initial priority targets within the project area.
• The multiple large scale targets identified to date “exhibit spatial characteristics indicative of deposits comparable to renowned mining operations such as Norilsk, Voisey’s Bay, or Jinchuan.”
• The JV will now run ground based electromagnetic to refine drilling locations on previously wide spaced search parameters and prioritize each target for intended drilling in 2025.
  • “Under Stage II of the joint venture agreement, KoBold was required to incur US$11.6 million in drilling-related expenditures or completing 15 pre-agreed diamond drill holes within the licensed areas by December 31, 2024. Due to a breakdown in relationship with the previous management Kobold decided as the end of 2022 not to persue the JV and therefore Bluejays interest in Nikkeli will increase from 49% to 51% due to this non-performance at the end of the year. 
  • Prior to the December 2023 board re-structuring, JV discussions were focussed around Kobold’s early withdrawal from the joint venture due to poor management performance by the previous team.
  • Interestingly the new management seem to have found a floor in the relationship and it seems the support of Kobold for reinvigorating the Disko JV.
• The team have also picked up an additional of 112sq km mineral exploration licence on Disko Island bringing the total area to 3,015 km2.
  • “This licence was strategically obtained as a natural extension of exposed sedimentary rocks, which represent the prime geological environment for hosting potential ultramafic intrusions.”

Conclusion:  KoBold’s CEO, Kurt House’s comment is very telling. “We are thrilled to have Eric back at the Bluejay helm; he’s a great technical operator, and with his leadership, we look forward to unlocking the full potential of our partnership.”

“The foundational prospectivity of Disko remains compelling, and we’re keen to figure out the most effective way to deploy our technology for the project’s advancement. “

It’s a huge shame that it is too late to book logistics for drilling in this year’s field season in Greenland. Data from the new, planned, ground-loop electromagnetic survey along with further thought on the project will help to refine drill targets and will hopefully give sufficient confidence to book drilling for the 2025 field season.

Importantly, Kobold is back with what looks like a significant set of potential Magmatic Massive sulphide targets where we hope drilling will start within the next 12 months

*SP Angel acts as nomad and broker to Bluejay Mining. The analyst has visited Dundas in Greenland and the Hammaslahti and Enonkoski projects in Finland.

Celsius Resources (CLA LN) 0.63p, Mkt Cap £15m – Quarterly report outlines progress at the Philippines projects at MCB and Sagay

Click Link for SP Angel research report PDF note – MCB project NPV@8% US$463m, IRR of 34.3%

• In its report for the 3 months to 31^st March Celsius Resources highlights the granting of a mining licence for its 40% owned flagship MCB copper/gold project in the Philippines as well as its updated mineral resource estimate for the wholly-owned Sagay project, also in the Philippines.
• The MCB mining licence grants 25 years (renewable for a further 25 years) for a planned underground mine processing 2.28mtpa of ore over a 25 years mine to produce an average of around 16,000tpa of copper and 19,000oz pa of gold in concentrate with production weighted towards the initial 10 years of the project.
• A 2021 study described an initial investment of US$253m delivering a post-tax NPV_8% of US$464m and an IRR of 31%. The study was based on lower commodity prices than currently prevail with an assumed copper price of US$4:00/lb and a gold price of US$1,695/oz.
• Today’s announcement confirms that the company “will undertake the necessary work streams to proceed with the MCB mine development … [and that] … potential investors who have shown … interest … [in participating] … and will now proceed to continue discussion to advance funding and partnership options to proceed with the development of the MCB project”.
• At Sagay, the publication of ‘Measured, Indicated & Inferred’ supergene copper ore resources of 312mt at an average grade of 0.39% copper and 0.11g/t gold “largely based on the results of the 2023 drilling program at a shallow copper position located ~500m to the west of the main body of mineralisation … offers Celsius the opportunity to investigate a low-cost start-up opportunity which was the basis of the feasibility study that was submitted to the Philippine Government”.
• “The approval of the Declaration of Mining Project Feasibility (DMPF) along with the issuance of the Environmental Compliance Certificate, which are currently ongoing government evaluation procedures, triggers the next stage of the permitting process leading to a mining permit that would enable the development and operations of the Sagay Project”.
• The company also confirms the previously announced £922,000 fundraising and the subsequent raising of a further £117,000, on the same terms, via a Subscription Agreement with its major shareholder, Silvercorp Metals.

Galantas Gold* (GAL LN) 12.5p, Mkt Cap £14m – Issue of options

• The Company granted 3.2m options to directors, employees and consultants.
• Options are exercisable at C$0.23, equal to yesterday’s close, and expiring in five years.
• Options vest one third immediately and the rest in two one third tranches on each of April 29 2025 and April 29 2026.
• This brings total number of incentive stock options outstanding to ~9.0m or 7.8% of outstanding shares.

*SP Angel acts as Broker to Galantas Gold

Gem Diamonds (GEMD LN) 8.32p, Mkt Cap £11.6m – Letšeng mine delivers another large diamond

• Gem Diamonds reports the recovery of a 118.74 carat Type II white diamond from its Letšeng mine in Lesotho.
• The diamond, which was recovered on 28^th April is the fifth stone exceeding 100 carats recovered so far this year and follows the announcement earlier this month of a169 carat diamond of similar ‘Type II white’ class.
• The Letšeng mine has an established history of producing large, high-quality white diamonds and the discovery of a fifth stone within the first 4 months of 2024 matches 2023’s full year total.

Glencore (GLEN LN) 470p, Mkt cap £58bn – Q1 production confirms 2024 production guidance

• Glencore reports its Q1 2024 copper, zinc and production was in line with Q1 2023 while nickel output recovered by 14% compared to the strike-affected performance of the Raglan mine in Q1 2023,
• Production of cobalt and ferrochrome declined reflecting “the previously announced market-related production adjustments in the DRC and the decision to idle our Rustenburg ferrochrome smelter in the current price environment”.
• Like-for-like copper production, after allowing for the June 2023 disposal of the Cobar mine, decreased by 2% to 239,700t (Q1 2023 – 244,100t) and Glencore is maintaining its full year guidance range of 950-1,010kt of copper production.
• Cobalt output of “6,600 tonnes was 3,900 tonnes lower than Q1 2023, mainly reflecting planned lower run-rates at Mutanda in the current weak cobalt pricing environment and mill downtime at KCC”.
• The ramp up of production at Zhairem to 14,300t, offset by “lower zinc tonnes from Antamina (10,300 tonnes), on account of its expected mining sequence and zinc Australia (3,500 tonnes), due to a tropical cyclone and flash flooding” resulted in overall zinc output of 205,600t (Q1 2023 – 205,300t).
• Zinc guidance is maintained at 900-950,000t compared to 2023’s 919,000t.
• Nickel output rose to 23,800t (Q1 2023 – 20,900t) contributes to the maintenance of guidance in the range 80-90,000t.
• Suspension of operations at Rustenburg in response to the “price/cost environment” led to “ferrochrome production of 297,000 tonnes … 103,000 tonnes (26%) below Q1 2023”.
• Coal production guidance is maintained in the range 105-115mt following Q1 output of 26.6mt (Q1 2023 – 26.9mt).

Goldstone Resources* (GRL LN) SUSPENDED – All resolutions passed with trading expected to be resumed next week

• All proposed resolutions were passed during the Annual General Meeting held yesterday.
• The vote approves the issue of new equity including £1.8m in fresh capital as the team is looking to ramp up production at Homase Gold Mine in Ghana.
• Trading in shares is expected to be resumed next week on or around 7 May.

*SP Angel acts as broker to Goldstone Resources

Greatland Gold (GGP LN) 5.75p, Mkt Cap £285m – A solution identified to managing water inflow in the main access decline at Havieron

• In its quarterly progress report on its Havieron project in WA Greatland Gold reports that underground development of over 3,060m, including over 2,110m on the main access decline leaves a further 80m of vertical development reaches the base of the overlying Permian Age cover and the top of the orebody at around 420m below surface.
• “As previously announced, there is a pause in decline development prior to development through the third and final lower confined aquifer … that the decline passes through before reaching the Havieron orebody”.
• Evaluation of the hydrological conditions ahead of the decline has now identified “the optimal location for the underground decline to pass through the aquifer where the Permian layer is shallower, and the decline design is being modified accordingly. This reduces the remaining development metres required through the Permian layer”.
• Managing Director, Shaun Day, said that knowledge of the aquifer has improved “our understanding and confidence in managing the lower confined aquifer. Measured flow rates are at the low end of the range previously anticipated and water management infrastructure requirements have been confirmed”.
• Mr Day said that this information “significantly de-risks development through the aquifer”.
• The company also confirms that Havieron’s “Feasibility Study continued to progress through the quarter, with several value enhancing options being assessed to maximise value and de-risk the project. The Feasibility Study is examining an expanded throughput rate of 3 million tonnes per annum (Mtpa) compared to the 2Mtpa scenario modelled in the Pre-Feasibility Study completed in October 2021”.
• Today’s announcement also addresses Newmont Mining’s confirmation that, following its acquisition of Greatland Gold’s 70% partner in the project, Newcrest Mining, that it considers “Havieron non-core … which it intends to divest”.
• Greatland Gold confirms that it “holds a last right of refusal in respect of that interest and considers itself strongly positioned should there be an opportunity to consolidate ownership of Havieron”.
• “Ore from Havieron is presently contemplated to be processed at … [the former Newcrest mine at] …Telfer … [located ~45km west of Havieron] … subject to a positive Feasibility Study, decision to mine and entry into a toll processing agreement”.

Conclusion: Water flow investigations at Havieron have identified an effective solution to driving the underground decline through the lowest aquifer before reaching the mineralisation at Havieron located around 420m below surface.  Following Newmont Mining’s acquisition of Newcrest, Havieron may seek to consolidate its interest in the project which Newmont intends to divest.

Kodal Minerals* (KOD LN) 0.46p, Mkt Cap £93m – Spodumene offtake right of first refusal amendment

BUY – Target 0.97p

(Hainan Mining holds a 51% stake in KMUK which holds the Bougouni Lithium Project in Mali with Kodal holding 49%. The Mali government has the right to a free carry on 10% of the project and an option to acquire a 10% stake)

• Kodal Minerals and Suay China International have announced an amendment to the $14m termination fee on their first right of refusal of 80% of the Bougouni Spodumene offtake.
• The $14m termination fee will now be paide in three instalments by KMUK ‘Kodal Mining UK Limited’ which is 51% owned by Hainan Mining Co.
  • US$3.5m – now paid triggering the termination of the ROFR and associated term sheet;
  • US$3.5m – to be paid within 10 business days of the signing of an offtake agreement between KMUK and Hainan Mining Co Ltd;
  • US$7m – to be paid within 10 business days of the first shipment of spodumene concentrate from the Bougouni Lithium Project, or on 31 October 2024, whichever date is earlier.
• Kodal and KMUK continuing to work on the offtake agreement whereby Hainan Mining will take 100% of Bougouni’s spodumene product based on market prices for spodumene and will initially relate to spodumene production from the Stage 1 DMS plant.
• Cash:  Kodal has previously reported amounts due from subsidiary undertakings of US$14.2m plus 0.5m investments in subsidiary undertakings along with US$0.44m in cash and cash eq plus other receivables.

Conclusion: Kodal are working towards the development of the Bougouni Lithium mine in Mali with long lead items being ordered and infrastructure and early earthworks in progress. It will be interesting to see if Hainan Mining will want the full mine offtake and how much they will pay.

*SP Angel acts as financial advisor and broker to Kodal Minerals.

Mkango Resources* (MKA LN) 7.0p, Mkt Cap £18m – FY23 results

• FY23 highlights included consolidation of 100% interest in HyProMag by Maginito (Mkango/CoTec ~80%/20%) focused on commercialisation of patented Hydrogen Processing of Magnet Scrap (HPMS) technology.
• Maginito holds a 100% interest in HyProMag Ltd advancing so called short loop rare earth magnet recycling technology at Tyseley, UK, a 90% direct and indirect interest in HyProMag GmbH looking to develop a recycling facility in Germany , a 50% in HyProMag JV with CoTec and a 100% interest in Mkango Rare Earths UK working on a more traditional chemical process to extract REOs from permanent magnets.
• First commercial sales of recycled NdFeB magnets from the Tyseley HyProMag facility is targeted for H2/24.
• Feasibility Study on the US HyProMag project developed under JV with CoTec is expected to be completed in H2/24.
• The US project currently envisages three HPMS treatment facilities feeding one magnet manufacturing hub in Texas for a potential production of
• HyProMag Germamy is expected to be commissioned in 2025.
• Commissioning of the chemical route recycling facility to produce rare earth carbonates and oxides at Tyseley Energy Park is targeted for H1/24.
• The Company has also launched a strategic review of its upstream and midstream business segments amid depressed REO prices.
• The team completed a significant cost cutting exercise in recent months streamlining operations to focus on recycling allowing to cut ongoing operating cost requirements by 35%.
• Financially, the Company reported a US$4.2m loss in FY23 (FY22: -$6.1m) most of which relates to general and administrative costs.
• FCF amounted to -$4.6m (FY22: -$5.3m) covered by equity placing proceeds and CoTec investments in Maginito.
• Closing cash balance stood at $1.0m with ~$3.1m due under contingent consideration relating to HyProMag consolidation transaction.
• The Company raised a further £750k in April this year to support development of its recycling business unit.

*SP Angel acts as nomad and broker to Mkango Resources

Resolute Mining (RSG LN) 23p, Mkt Cap £468m – Maintaining 2024 guidance after solid Q1 production performance

• Resolute Mining reports production of 76,351oz of gold during the 3 months to 31^st March at an all-in-sustaining cost of US$1,487/oz (Q4 2023 – 80,307oz at US$1,480/oz).
• The company explains that production was “in line with expectations at both Mako and Syama given the scheduled fourteen-day shutdown on the sulphide plant – representing approximately 7,000oz of gold production”.
• The Syama mine in Mali contributed 48,459oz of gold at an AISC of US$1,418oz with the Mako mine in Senegal delivering 27,892oz at a cost of US$1,451/oz.
• Cautioning that production will be weighted towards the second half of the year, Resolute Mining is maintaining its 345-365,000oz production guidance for 2024 with full-year costs expected within the range US$1,300-1,400/oz.
• Managing Director/CEO, Terry Holohan, described the quarterly result as “a promising start to 2024 for Resolute with all operations performing in line with expectations”.
• Mr. Holohan also confirmed that by “the end of Q1 we had fully repaid our senior financing facility and are now completely unhedged leaving us able to take full advantage of the strong gold price environment”.
• Strong cash-flow during the quarter left a closing net cash balance of “$34m compared with $14m at the end of December 2023. We anticipate further strengthening of the balance sheet as production increases throughout the remainder of the year and we start to fully benefit from the healthy gold price”.
• Commenting on the company’s Senegalese exploration he said that progress on “three prospects aimed to extend the life of our Mako operation” had been encouraging with an initial inferred resource estimate for the Tomboronkoto prospect issued in January and “where drilling will continue through the year with an updated Mineral Resource expected to be published in Q3 2024”.
• Currently, the Tomboronkoto resource is 10.4mt at an average grade of 1.2g/t gold containing 403,000oz with mineralisation still “open in all directions”.
• Exploration also continues around the Syama mine in Mali with drilling at Syama North “focussing on expanding the high-grade gold mineralisation which lies below the currently planned open pit design. These high-grade shoots have higher grades than the open pit resource and could be suitable for underground mining”.
• Diamond drilling is continuing at the Mansala prospect in Guinea “to increase the geological knowledge on the mineralisation style and geometry to support a robust geological model” with a mineral resource estimate expected in H2 following completion of the current programme.

Conclusion: Resolute Mining remains on track to deliver its 2024 production and cost guidance with production weighted towards H2.  Exploration in Senegal and Guinea is expected to result in mineral resource estimates while high grade shoots detected beneath the open-pit at Syama offer potential for future underground mining.

Sovereign Metals* (SVML LN) 26.3p, Mkt Cap £150m – Quarterly report highlights scale of Kasiya rutile resource and its importance to the people of 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’s quarterly report shows ongoing progress on the world class, Kasiya rutile, graphite project in Malawi in collaboration with Rio Tinto.
• The team have now shipped and delivered a 30t sample designed to represent the metallurgical characteristics of the Kasiya project over its first 10 years of mining.
• Sovereign report net cash used in operating activities of A$2.7m and A$8.9m for 9-months for the year to date.
• Cash and cash equivalents stand at A$36.6m at end March.
• The quarterly report highlights the work being done to establish meaningful extensions to the Kasiya project along with a number of key appointments and the conservation farming program.
• The conservation farming program is particularly important with participating farmers reporting significant increases in crop yields despite recent drought conditions which have caused Malawi to declared a state of disaster in 23 out of the country’s 28 districts.

Conclusion:  Kasiya appears to host an exceptional Rutile and graphite resource with the world’s largest accumulation of rutile. Rio Tinto’s close involvement with the project belies the significance of the discovery and its potential to become a new world class rutile and graphite mine.

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

Sylvania Platinum (SLP LN) 70p, Mkt Cap £184m – Q3 Report as $100m cash position supports shareholder returns

• Sylvania Platinum, which operates PGM dump processing assets in South Africa, reports its third quarter results to March 31^st.
• The Company produced 17.2kt 4E PGM ounces vs 18.2kt in Q2.
• Production hits from a wage strike in February were offset by higher feed grades from third party sources.
• Cash costs for the period increased 15% in dollar terms, further impacted by lower production.
• Guidance of 74-75koz 4E PGM maintained for FY24.
• Revenue generated of $20.3m and EBITDA of $3.2m.
• Cash at period end of $101m.
• The Company began a share buyback programme on 4^th March 2024, buying 1.7m shares at an average price of 57/shr.
• The Company has also declared an interim cash dividend of 1p/shr for 1H24, of $3.3m in total. The Company announces an additional 1p/shr special dividend payable on 7^th June.
• As regards growth options, Sylvania has appointed SRK Consulting to provide a PEA for the combined North and South ore bodies at Volspruit, enabling the commencement of a PFS.
• The PEA is due Q4, with met testwork for the PFS ongoing.
• Management reports the Thaba JV remains on schedule, with first production expected FY25.

Tianqi Lithium (002466 CN) CNY40, Mkt Cap CNY62bn – Founder resigns on record quarterly loss as lithium bear market continues

• Tianqi Lithium, one of China’s largest lithium producers, reported a quarterly loss of over $538m.
• The Company’s founder has resigned, handing over leadership to his daughter, Jiang Anqi.
• Lithium prices have fallen over 80%, but have recovered somewhat, with carbonate prices hovering over $15,000/t.
• Tianqi had issued a profit warning on April 24^th, sending its shares down 20%.
• However, both Tianqi and Ganfeng have reiterated their intentions to boost their long term lithium reserves, highlighting their confidence in the longevity of the market as EV demand grows.

Zanaga Iron Ore (ZIOC LN) 8.1p, Mkt Cap £50m – Results from 2024 Feasibility Study

• Zanaga Iron Ore provides results from its 30mtpa staged Zanaga Iron Ore Feasibility Study.
• The Study was completed with a Chinese iron ore technical engineering team for the magnetite project in the Republic of Congo.
• The staged project includes an initial 12mpta operation.
• This yielded results of a $1.9bn CAPEX, OPEX of US$31.5/dmt over LOM for a NPV of $3.68bn and an IRR of 26%.
• This compares to a CAPEX budget of $2.2bn in the 2014 FS, with OPEX at $32.1/dmt for 12mtpa.
• The updated feasibility includes a second stage bringing production to 30mtpa.
• This suggests a $1.87bn CAPEX bill, OPEX at $25/dmt, NPV of $7.4bn, IRR of 28.2%.
• The 2014 FS for 30mtpa yielded a CAPEX budget of $2.5bn, OPEX of $25.7/t.
• The Company does not publish the discount or iron ore price used in the study.
• OPEX excludes royalties.
• The Company will now look to progress the asset alongside potential strategic investors for the FEED phase.
• Zanaga are exploring options for hydro-electric power for the FEED phase.

No.1 in Base Metals: SP Angel mining team awarded No 1. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q1 2024

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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*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%