SP Angel Morning View -Today’s Market View, Thursday 9th May 2024

Lithium sentiment continues to improve as Albemarle auction highlights rising prices

MiFID II exempt information – see disclaimer below

Aura Energy* (AURA LN) – Restructured offtake agreement enhances the economics of the Tiris project in Mauritania

Ariana Resources (AAU LN) – PFS economics of the Dokwe Project

Artemis Resources (ARV LN)– High grade lithium rock chip samples from the Pilbara

Great Western Mining* (GWMO LN) – Final Results as summer exploration programme accelerates and processing looms

KEFI Gold and Copper* (KEFI LN) – Hawiah drilling progresses in line with expectations on course to deliver >30mt MRE by Q4/24

Keras Resources* (KRS LN) – Togo invites contractor bids for management of Nayega

Strategic Minerals* (SML LN) – Acceleration of the UK programme with additional sampling at Redmoor and initial exploration of the TVLA area

Tertiary Minerals* (TYM LN) – Environmental approval enables exploration to start at Mupala

Lithium sentiment continues to improve as Albemarle auction highlights rising prices

• Albemarle reportedly auctioned 100t of battery-grade carbonate for CNY111k/t vs CNY107k/t on April 17.
• The Company plans to auction spodumene on the 22nd which should provide additional transparency into current pricing dynamics.
• A report out of Beijing last night has guided lithium battery companies to reduce projects over concerns of overcapacity.
• The report suggests companies reduce costs and boost innovation as opposed to capacity.
• Equinor has taken stakes in two of Standard Lithium’s DLE assets in the US.
• China lithium miners rallied overnight, with Sinomine and Ganfeng up 4% and Tianqi also rallied 3%.
• Shanghai metals market reports plant operating rates have improved, with output climbing 12% ytd.
• Projects continue to get delayed on low pricing, with Albemarle pushing back its North Carolina Kings Mountain spodumene operation, noting it requires carbonate prices over $20,000/t.

Vale positive on China property sector following rout

• Vale’s marketing manager notes that iron ore demand from China ‘is very likely’ to pick in in 2H24, given ‘all the stimulus that the government is putting in place.’
• Iron ore prices eased overnight on reports major developer Country Garden is struggling to pay two small coupons.
• China imports ytd have climbed 7.2% for iron ore, with steel exports jumping 27% yoy.

Lead miners agree multi-decade processing fees for concentrate

• South32 and Teck have agreed improved terms for their annual contracts for concentrate as smelters struggle for product.
• The TCRCs are reportedly the lowest since the 1970s according to WoodMac data.
• Smelter overcapacity has hit zinc, copper and now lead, with smelters struggling with low fees.
• Cannington TCRCs reported at $91/t and 60c/oz.

Economics

UK – The BOE is expected to keep rates unchanged at a 16-year high of 5.25% later today.

• Investors will be looking for comments around policy outlook and any signs from the bank for a possible cut as early as next month, FT writes.

China – Trade data for April beat market expectations with exports and imports posting 1.5%yoy and 8.4%yoy growth recovering from a fall in the previous month.

• Shares of Chinese property developers are rising this morning on the news that the city of Hangzhou is lifting all buying restrictions that were put in place to limit speculative demand.
• Qualifications for purchasing a property will no longer be subject to review, FT cited Hangzhou authorities.
• Hangzhou is not a separate case and follows other large Chinese cities that also decided to drop restrictions earlier.

Japan – Real wages are seen posting a 24^th consecutive decline as high inflation continues to weigh on labour earnings restricting consumer spending.

• Real wages were down 2.5%yoy in March.
• Inflation has bee running above the BOJ 2% target since April 2022.

Currencies

US$1.0732/eur vs 1.0742/eur previous. Yen 155.84/$ vs 155.21/$. SAr 18.526/$ vs 18.574/$. $1.248/gbp vs $1.248/gbp. 0.658/aud vs         0.657/aud. CNY 7.226/$ vs 7.226/$.

Dollar Index 105.67 vs 105.55 previous.

Precious metals:         

Gold US$2,313/oz vs US$2,311/oz previous

Gold ETFs 80.6moz vs 80.7moz previous

Platinum US$983/oz vs US$976/oz previous

Palladium US$954/oz vs US$966/oz previous

Silver US$27.68/oz vs US$27/oz previous

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

Base metals:   

Copper US$ 9,862/t vs US$9,877/t previous

Aluminium US$ 2,557/t vs US$2,532/t previous

Nickel US$ 18,755/t vs US$18,765/t previous

Zinc US$ 2,875/t vs US$2,913/t previous

Lead US$ 2,220/t vs US$2,229/t previous

Tin US$ 32,265/t vs US$31,835/t previous

Energy:           

Oil US$84.2/bbl vs US$82.3/bbl previous

Natural Gas €30.7/MWh vs €30.6/MWh previous

Uranium Futures $93.2/lb vs $93.6/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$114.6/t vs US$118.1/t

Chinese steel rebar 25mm US$533.5/t vs US$532.0/t

Thermal coal (1st year forward cif ARA) US$112.0/t vs US$113.5/t

Thermal coal swap Australia FOB US$145.5/t vs US$146.5/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$56,188/t vs US$56,051/t

Lithium carbonate 99% (China) US$15,016/t vs US$15,154/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$340/mtu vs US$335/mtu

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

Europe Vanadium Pentoxide 98% 5.1/lb vs US$5.1/lb

Europe Ferro-Vanadium 80% 26.35/kg vs US$26.35/kg

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

China Rutile Concentrate 95% TiO2 US$1,405/t vs US$1,405/t

Spot CO2 Emissions EUA Price US$69.6/t vs US$69.6/t

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

Battery News

European automakers warn against EU tariffs on Chinese EVs

• Top executives at BMW Group and Volkswagen Group have warned against imposing new EU tariffs on Chinese EVs.
• The EU commission launched an investigation into Chinese subsidies and is weighing up imposing new import tariffs on EVs.
• European Commission President Ursula von der Leyen said in Berlin on Wednesday that Europe needed to take steps to prevent China from flooding the bloc’s market with subsidised EVs.
• The executives have warned that this move could upend the bloc’s Green Deal plan and harm automakers that import cars made in China.
• BMW CEO Oliver Zipse said European automakers have “dependencies not only on the final product, but on the component side and raw material side.”
• The introduction of new duties could backfire as new EU CO2 emission standards will require more EVs, that are reliant on Chinese battery materials.
• Zipse followed up saying that, tariffs would undo the EU’s industrial plan to ensure the bloc is a frontrunner in cutting carbon emissions and developing the technology required to do so.
• Both BMW and VW import Chinese-made EVs and rely heavily on revenues from its Chinese business.

Fire bombs found at Northvolt Quebec site

• The Swedish battery maker said it found potential fire bombs under heavy machinery at its plant site under construction near Montreal.
• Police removed several Molotov cocktail-style devices on Monday morning and have started an investigation.
• Northvolt temporarily suspended work on the $7bn project which is entering a stage to build roads and sewers on the 170-hectare site.
• The plant is planned to start production by late 2026 to make 60GWh of batteries a year, enough to power 1m vehicles.

Fortescue buys UK testing site for battery and electric drive technologies

• Australian mining and green energy giant Fortescue announced this week that it has acquired a state-of-the-art test, research, and engineering facility in England.
• The 2,339sqm testing facility contains a number of test cells, a workshop, battery prototype and development area, as well as a range of test control centres.
• Fortescue is looking to roll out its own battery and EV charging technology as it seeks to electrify its mining fleet, including large haul trucks and trains, and other machinery including excavators.

US – used EV market sees strong growth

• According to US used vehicle platform, Carvana, used EV sales are seeing strong growth across the US.
• One of the leading factors in this is the narrowing price difference between used EVs and used ICE vehicles – the average difference has reduced to $7000 difference from $13,000 in Q1 23.
• Carvana also saw used EV sales share reach a new peak in Q1 24 at 4.3%.
• Used EVs have been made more affordable thanks to the Federal Used Clean Vehicle Credit.

Company News

Aura Energy* (AURA LN) 9.5p, Mkt Cap £69m – Restructured offtake agreement enhances the economics of the Tiris project in Mauritania

• In a release to the ASX today, Aura Energy reports that it has restructured the Tiris uranium project’s offtake agreement with Curzon Uranium in a move which “materially increased the price receivable for planned uranium production”.
• Although the pricing details are not disclosed, Aura Energy says that the “restructured offtake agreement improves the Project NPV8 by US$22M to US$388M and increases the IRR by 2% to 36% compared to Front End Engineering Design … delivered in March 2024”.
• Curzon Uranium has also agreed to receive its restructuring fee in Aura Energy shares and also to “take a US$3.5M (A$5.4M) placement of Aura shares at A$0.18 per share”.
• The announcement confirms that “Restructuring fee shares will be escrowed until first production” and that “50% of the placement shares will be escrowed until the earlier of 30 June 2025 or Final Investment Decision”.
• The share-based transactions leave Curzon Uranium holding around 8% of Aura Energy.
• Welcoming Curzon Uranium as a long-term shareholder, CEO, Andrew Grove described them as “a leading global uranium trader and … [and said that] … their deep market insight and networks will be of significant benefit to the development and successful operation of the future Tiris Uranium Mine”.

Conclusion: The restructured offtake agreement for the Tiris uranium project enhances economic returns and leaves the project’s offtake partner as an 8% shareholder

*SP Angel acts as Nomad and Broker to Aura Energy

Ariana Resources (AAU LN) 2.55p, Mkt Cap £28.7m – PFS economics of the Dokwe Project

• Ariana Resources has released interim economic information on the revised pre-feasibility study (PFS) for the 1.3moz Dokwe gold project in Zimbabwe.
• Dokwe is owned by Rockover Holdings which is the subject of a conditional all share merger with Ariana Resources which would leave Ariana Resources’ shareholders holding ~62.5% of the enlarged company.
• Today’s announcement says that over a 13-year mine-life the development of the Dokwe North project would produce an average of 60,000oz of gold annually at an all-in sustaining cost of US$1,144/oz by processing 1.5mtpa of ore from an open pit mine feeding a CIL plant.
• Peak capital funding requirement is expected to be US$82m.
• The project generates an after tax NPV10% of US$160m and an IRR of 41% at a gold price of US$2,000/oz.
• Managing Director, Dr. Kerim Sener, confirmed that “the revised PFS only includes the Dokwe North area and there is significant scope to enhance the economics further if Dokwe Central is included”.
• Dr. Sener said that Ariana Resources is working “hard to expand the opportunity at Dokwe … [and anticipates] … positive developments through further project optimisation of the Dokwe Project, which require ongoing assessment”.

Conclusion: The economics of the Dokwe North gold project in Zimbabwe provide the opportunity for Ariana Resources to evolve into a mid-tier gold producer following the merger with Rockover Resources which is expected to be completed by the end of June.

Artemis Resources (ARV LN) 0.83p, Mkt Cap £14m – High grade lithium rock chip samples from the Pilbara

• Artemis Resources has reported high lithium grades in rock chip samples from its Mt Marie prospect in the Pilbara Region, WA.
• The samples, taken as part of early-stage reconnaissance exploration, include “multiple assays” of over 4% Li₂O.
• Among the assay results highlighted in the announcement are results as high as 4.63% Li₂O in sample 24AR-04-07 with 5 samples exceeding the 3.45% Li₂O of sample 24AR-04-04.
• The company says that its “ground crew revisited the Mt Marie prospect region in April and secured additional high-grade samples to confirm the mineralisation. These results have provided an even higher level of confidence in the grade and potential scale of Mt Marie”.
• “The outcropping strike length of the Mt Marie prospect has now increased to more than 230m”.
• Executive Director, George Ventouras welcomed the results of the reconnaissance sampling and said that the “Mt Marie prospect is fast becoming a priority one target which will be ripe for drilling once heritage clearances are completed”.
• The company also confirms “multiple rock chip assays >0.50% Li₂O” from its Osborne East prospect located south of Mt Marie.
• The recent sampling at Osborne East has shown “multiple zones of pegmatite extending across an area of 500mx350m”.

Conclusion: Early-stage reconnaissance rock-chip sampling has yielded encouraging results and we look forward to the results of follow-up exploration work.

Great Western Mining* (GWMO LN) 0.04p, Mkt Cap £2.2m – Final Results as summer exploration programme accelerates and processing looms

• Today Great Western report their full year financial results for the period to 31^st December 2023.
• The Company is exploring and developing precious metal assets in Nevada, including a processing mill which is awaiting imminent final permitting approval.
• Over the year, GWM has built the mill with their JV partner, which is now production ready.
• On the exploration side, the Company’s copper prospects were materially improved with the identification of a potential porphyry system at the West Huntoon Prospect.
• Anomalous gold has also been identified at the M5 prospect, over a 1km trend.
• The Company held €0.1m in cash at the reporting period, but has subsequently raised £1.3m through equity raises.
• Following the reporting period, GWM has received a permit for the removal of pre-mined material to deliver to the mill site.
• Drilling has been fast tracked at West Huntoon through an agreement with neighbouring explorer Crowne Point LLC.
• Additional gold exploration prospects have been identified at Rhyolite Dome, where anomalous grades of precious metals warrant further exploration.

Conclusion: Great Western is well capitalised to advance its exploration programme in Mineral County, Nevada following equity raises in post-reporting period. The Team is currently undertaking induced polarisation and resistivity surveys at their exciting West Huntoon copper porphyry target and M5 gold target. Shareholders should look forward to key catalysts including permitting approval to begin processing ore at the mill alongside exploration results going forward.

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

KEFI Gold and Copper* (KEFI LN) 0.66p, Mkt Cap £38m – Hawiah drilling progresses in line with expectations on course to deliver >30mt MRE by Q4/24

• The Company released an updated on rapidly advancing exploration programme in Hawiah Copper Gold Project in Saudi Arabia.
• Over 50,000m of the 65,000m of infill and expansion drilling was completed at Hawiah to date.
• Two intersections extended the vertical depth of known mineralisation to 740m and down plunge extent by a further 270m.
• Intersections referred above include:
  • HWD_222 intersecting 8.6m (7.5m ETW) of massive sulphide averaging 0.8% copper, 0.4% zinc, 0.5 g/t gold and 8.1g/t silver from 970.2m; and
  • HWD_246 intersecting 9.3m (8.4m ETW) of massive sulphide averaging 0.7% copper, 1.0% zinc, 0.6 g/t gold and 10.2 g/t silver from 872.7m.
• In general, infill drilling at Hawiah is reported to be in line with expectations confirming 2022 MRE results.
• Current Hawiah MRE stands at 29.0mt at 0.9% Cu, 0.9% Zn, 0.7gpt Au and 10gpt Ag (~40% in the Measured&Indicated category) including an open pit domain for 11.1mt at 0.9% Cu, 0.8% Zn, 0.8gpt Au and 10gpt Ag.
• Additionally, 4,500m infill and stepout drilling programme is being carried at the satellite Al Godeyer deposit located only 12km from Hawiah.
• The programme follows up on first phase drilling results that included:
  • AGD_024: 7.0m (6.1m ETW) at 1.8g/t gold, 1.0% copper, 0.1% zinc and 4.1g/t silver from 123.0m;
  • AGD_018: 3.1m (2.3m ETW) at 1.1g/t gold, 0.6% copper, 3.3% zinc and 15.5g/t silver from 114m.
• Drilling is expected to be completed mid-June 2024.
• Current Al Godeyer MRE stands at 1.4mt at 0.6% Cu, 0.5% Zn, 1.4gpt Au and 7gpt Ag (all Inferred).
• Drilling results will be used to update existing MRE delivering >30mt mineral inventory with at least 90% upgraded into the Indicated category to be used to estimate maiden mineral reserves.
• MRE update targeted for late 2024 that should trigger the start of DFS work.

Conclusion: Partner funded drilling programme is advancing fast in Hawiah, Saudi Arabia, with nearly 75% of planned ~70,000m drilling completed with a target to deliver >30mt resource most of which expected to be in the higher confidence Indicated category ahead of start of FS related work.

*SP Angel act as Nomad and Broker to KEFI Gold and Copper

Keras Resources* (KRS LN) – 2.15p, Mkt cap £1.6m – Togo invites contractor bids for management of Nayega

(Keras holds 100% of the Diamond Creek phosphate mine in Utah, USA)

• Keras Resources reports that activities at the Nayega manganese mine in northern Togo have resumed under the management of the State-owned investment company Société Togolaise de Manganèse (STM).
• Tendering for “the management of all mining and processing activities at Nayéga and a total logistics solution from mine to port … closes on 7 June 2024 and requires the successful applicant to be fully mobilised within 6 months of the tender award”.
• Today’s announcement says that the “timing of the Tender process is very advantageous with regards the manganese market which has rebounded recently from a prolonged low price environment and the Nayéga mine, which is effectively production ready will be able to produce into this rebound in a short period of time”.
• Under the terms of its “cooperation agreement … with the Republic of Togo … Keras has advisory and brokerage agreements with the State where the Company will be paid an advisory fee of 1.5% of gross revenue generated from the Nayéga mine for the provision of advisory services for 3 years and 6.0% of gross revenue generated from the Nayéga mine for the provision of brokerage services for the lesser of 3.5 years or 900,000 tonnes of beneficiated manganese ore produced and sold from Nayéga”.
• CEO, Graham Stacey, said that “progress at Nayéga is very positive for Keras from an additional cashflow perspective and will underpin what has been a hugely productive 6 months at the Company’s flagship operation in Utah, USA where its subsidiary Falcon Isle Resources Corp, now operating from its 100% owned facility in Delta, is finalising the construction of a fully integrated granulator plant to produce Phosul® granules under the joint venture with partners, Phosul LLC”.

Conclusion: Production of manganese from Nayega under Togo Government ownership should trigger advisory and brokerage fees for Keras as it advances its Utah phosphate project in joint-venture with Phosul.

*SP Angel acts as nomad and broker to Keras

Strategic Minerals* (SML LN) 0.23p, Mkt Cap £4.5m – Acceleration of the UK programme with additional sampling at Redmoor and initial exploration of the TVLA area

• Strategic Minerals has issued a progress report on its continuing exploration at its Redmoor project in Cornwall and on the recently acquired additional exploration ground in the Tamar Valley.
• Relogging and additional sampling of ~3,800m of historic drill core from Redmoor has identified previously unrecognised mineralisation which may assist in upgrading the February 2019 ‘Inferred’ mineral resource of 11.7mt at an average grade of 0.56% tungsten trioxide, 0.16% tin and 0.5% copper reported as 1.17% on a tin equivalent basis or 0.82% in terms of tungsten trioxide equivalence.
• An initial batch of 129 samples has been sent for analysis “with results expected within 2 months” and the company confirms that “Re-logging and sampling continue with additional samples in preparation for dispatch”.
• Project Manager, Dennis Rowland, said that the additional sampling and the relogging would aid “both our understanding of the mineralised zones and the structural geology within the Redmoor deposit” providing resource expansion potential “prior to further drilling”.
• Strategic Minerals also confirms that reconnaissance mapping of the new Tamar Valley Licence Area (TVLA) is underway and that “previously unidentified mineralised zones at surface have been located and sampled”.
• One area of interest, identified from analysis of historical information on the TVLA is the Plantation Vein which the company describes as “a historical Tin-Tungsten (Sn-W) target … [saying that between] …. 1967 and 1970, 22 diamond drill holes were drilled targeting the Plantation Vein that established this target, followed by minor underground exploration of the lode in early 1970’s”.
• Additional follow-up exploration of the TVLA is expected to include geochemical stream and soil sampling to aid “the delineation of potential new targets”.
• Executive Director, Peter Wale, described the initial work on the TVLA as “very encouraging” and said that the economics of the wider Redmoor project “have been bolstered by recent upward moves in Tin, Tungsten and Copper prices even prior to the likely impact of material exploration upside from the existing area and the TVLA”.

Conclusion: Additional sampling at Redmoor may enhance the existing mineral resource while early exploration on the TVLA has identified encouraging targets including tin/tungsten potential on the Plantation Vein which was drilled and explored in underground workings during the 1960s/70s. We await results of the continuing exploration with interest.

*SP Angel acts as Nomad and Broker to Strategic Minerals

Tertiary Minerals* (TYM LN) 0.1p, Mkt Cap £2.8m – Environmental approval enables exploration to start at Mupala

• Tertiary has received the approval of their Environmental Project Brief for their Mupala Copper Project licence.
• Mupala lies 12km west of Tertiary’s Mukai project and borders the Anglo/Arc JV where Anglo is earning up to 70% in the asset through $88.5m in exploration expenditure.
• Mupala is strategically positioned in the Domes Region of Zambia, where major operators include First Quantum.
• Limited exploration work at the licence has highlighted copper-in-soil anomalies across the Licence.
• Going forward, Tertiary is now able to begin exploration on site, which is expected next month.
• The initial work programme will utilise soil sampling to identify anomalies and aid regolith mapping.
• Previous work conducted by Mwinilunga Mines will support Tertiary’s programme.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

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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