SP Angel Morning View -Today’s Market View, Wednesday 29th May 2024

Copper rallies alongside base metals as China stockpiles ahead of potential Yuan devaluation

MiFID II exempt information – see disclaimer below

Ariana Resources (AAU LN) – US$20m finance agreement to complete Tavsan

Beowulf Mining* (BEM LN) – Financial Results show well capitalised balance sheet for project progression

BHP (BHP LN) – BHP boosts Socioeconomic terms of offer to help sweeten potential offer from a South African perspective

Anglo American (AAL LN) – Anglo refuse to extend timeline for BHP in rejection of potential offer

BHP / Anglo American overview

Cora Gold (CORA LN) – Madina Foulbe 2,000m of RC drilling completed

Cornish Metals* (CUSN LN) – Filing of the South Crofty PEA

First Tin (1SN LN) – Additional exploration licence in the Taronga area

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

Thor Explorations (THX LN) – Q1 results confirm 2024 production guidance for Segilola mine

Copper rallies alongside base metals as China stockpiles ahead of potential Yuan devaluation

• Copper has strengthened again to hover around the $10,500/t mark.
• The metal was victim to a short squeeze on COMEX last week, pushing prices to $11,000/t before sharply correcting to $10,200/t.
• We note that China inventory levels remain buoyant whilst the Renminbi continues to weaken.
• Onshore yuan hit its weakest level since November, with Beijing refraining from intervention against the strong dollar.
• Similarly, the Japanese Yen is at multi-year lows alongside the Thai baht and Indonesian Rupiah.
• We suggest China may be boosting metal coffers, both base metals like copper and zinc alongside precious metals like silver and gold, to reduce longer term implications of a weaker currency.
• Xi is looking to shore up China’s domestic economy by prioritising employment and job creation in advance of the July plenum.
• Aluminium is pushing past two-year highs as traders look for positivity in China’s homebuying policy support.
• Iron ore is defying expectations at $120/t, despite supply from Brazil and Port Hedland hitting all time highs in April.
• Strong metal prices have come despite weak demand indicators from main market China.
• For example, Yangshan refined premiums remain weak and scrap discounts to refined copper have risen to their highest levels in eight years.
• The current dichotomy between apparent demand and price is intriguing. Perhaps the Yuan may provide the answer as Beijing seeks alternative ways to support its currency.

Precious metals weaken as yields climb on strong consumer data and diminishing rate cut expectations

• Spot gold prices have eased off recent highs of $2,361/oz, easing to $2,345/oz.
• Focus is turning to US inflation data due on Friday, alongside next week’s NFP employment data.
• Rate cut hopes have cooled in recent weeks, with traders now pushing back expectations, causing bonds to sell-off.
• The 10-year yield has risen to near 4.6%, having touched 4.35% in mid-May.
• This has weighed on ETF demand, which saw net outflows over the past five days.
• Chinese silver imports are expected to jump over the next fortnight as traders take advantage of arbitrage opportunities between international markets.
• The metal hit 11-year highs last week.

Lithium prices stagnate as inventory levels remain high

• China batter-grade carbonate prices are hovering around $14,640/t .
• Industrial grade carbonate at $14,116/t.
• Shanghai Metals Market reports downstream buyers are holding off on purchases as their inventory levels remain buoyant.
• Market activity is reportedly subdued in China, with requirements covered by long-term contracts, meaning limited spot buying.
• The longer current prices persist, the less likely new projects are to be brought online, exacerbating future supply deficits if EV demand grows as expected.

Global electric vehicle sales

• Global EV sales grew 35.2% year-on-year in 2023, reaching 14.2 million units.
• The electric vehicle industry has seen substantial growth, with sales increasing from 6,500 units in 2010 to 14.2 million units in 2023, at a compound annual growth rate of 80.8%.
• Analysts predict higher penetration of BEVs compared to PHEVs in the coming years.
• Key factors driving the growth of the EV industry include: Development of product technology, especially batteries. Tax and financial incentives, environmental awareness, development of EV supply infrastructure.
• Perceptions of quality, safety, design, performance, and cost. Competitive ability against ICE vehicles, and technological innovation.
• In China, policies aim to support more than 20 million EVs by the end of 2025 through upgraded charging and support facilities.
• Chinese local governments are encouraged to establish quality service-based subsidy standards and expand subsidies for high-power charging facilities and vehicle-grid interaction to promote industry transformation and improvement.

Economics

US – Some positive economic numbers released yesterday with consumer sentiment improving for the first time in four months in May.

• Present conditions index climbed for the first time since January while the measure of expectations jumped the most since July, Bloomberg reports.
• The increase is welcome news amid a downbeat backdrop with the central bank keeping rates at a two decade high and households reported to hold record amounts of debt.
• Conference Board Consumer Confidence (May/Apr Revised (Apr Previous)/Est): 102.0/97.5(97.0)/96.0
• Neel Kashkari, Minneapolis Fed President (non voting FOMC member), offered a hawkish monetary policy outlook arguing that the central bank haven’t entirely ruled out additional interest rate increases.
• “I want to get all the data I can get before the next FOMC meeting before I reach any conclusions… But I can tell you this, it certainly won’t be more than two cuts.”
• Expectations are for the Fed to leave rates unchanged at 5.25-5.50%  during the coming 11-12 FOMC meeting.
• 12 jurors are expected to start deliberations today in the ‘hush money’ case against Donald Trump who faces 34 felony counts of falsifying business documents to cover up payments to Stormy Daniels.
• There are no rules blocking Trump from running presidential campaign and getting elected with the legal team likely to launch the appeal process in case of a guilty verdict.

Germany – Regional inflation data showed a slowdown in the headline monthly gauge in May with nationwide numbers due later this afternoon.

• CPI (EU Harmonised %mom, Est/Apr): 0.2/0.6;
• CPI (EU Harmonised %yoy, Est/Apr): 2.7/2.4.

Australia – The A$ is trading slightly higher this morning as headline inflation came ahead of expectations in April.

• CPI climbed slightly as opposed to estimates for a slow down suggesting price pressures remain and the central bank is likely to leave rates at 12-yea high next month.
• The RBA held its cash rate at 4.35% since a surprise increase in November.
• CPI (%yoy, Apr/Mar/Est): 3.6/3.5/3.4.

India – Manufacturing, EV sectors propel Indian PE-VC investments to $39 billion in 2023

• Private equity and venture capital (PE-VC) investments in India totalled $39 billion in 2023, aligning with pre-COVID-19 levels.
• Traditional sectors such as manufacturing, healthcare, and energy accounted for about 75% of total investments in 2023, up from around 60% in 2022.
• The manufacturing sector in India attracted roughly $2 billion in investments, growing at a CAGR of about 20% over the last two years.
• The EV sector saw substantial investments, with major OEMs responsible for over 70% of the deal value, including significant transactions involving Ola Electric, Ather Energy, Mahindra EV, and TI Clean Mobility.
• The EV market is expected to see robust deal activity, especially among OEMs planning capacity expansions or new product introductions, and in charging infrastructure, including battery-swapping players.

Currencies

US$1.0854/eur vs 1.0877/eur previous. Yen 157.11/$ vs 156.90/$. SAr 18.250/$ vs 18.344/$. $1.277/gbp vs $1.277/gbp. 0.666/aud vs 0.666/aud. CNY 7.248/$ vs 7.247/$.

Dollar Index 104.60 vs 104.46 previous.

Precious metals:         

Gold US$2,353/oz vs US$2,344/oz previous

Gold ETFs 80.6moz vs 80.6moz previous

Platinum US$1,059/oz vs US$1,050/oz previous

Palladium US$973/oz vs US$985/oz previous

Silver US$32.09/oz vs US$31/oz previous

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

Base metals:   

Copper US$ 10,548/t vs US$10,466/t previous

Aluminium US$ 2,773/t vs US$2,690/t previous

Nickel US$ 20,675/t vs US$20,415/t previous

Zinc US$ 3,138/t vs US$3,096/t previous

Lead US$ 2,345/t vs US$2,328/t previous

Tin US$ 34,170/t vs US$33,905/t previous

Energy:           

Oil US$84.5/bbl vs US$83.1/bbl previous

Henry Hub Gas US$2.60/mmBtu vs US$2.51/mmBtu yesterday

• Crude oil prices moved higher following reports of a Houthi attack on a Greek-managed bulk carrier in the Red Sea and further violent clashes in Gaza.
• A majority (no tally provided) of Hess shareholders voted in favour of the Company’s proposed $53bn merger with Chevron, which is still subject to regulatory approval and an arbitration dispute with its partners in Guyana.

Natural Gas €34.2/MWh vs €34.3/MWh previous

Uranium Futures $90.6/lb vs $91.7/lb previous       

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$120.0/t vs US$121.3/t

Chinese steel rebar 25mm US$540.9/t vs US$540.6/t

Thermal coal (1st year forward cif ARA) US$121.0/t vs US$121.8/t

Thermal coal swap Australia FOB US$139.5/t vs US$140.0/t

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

Other:  

Cobalt LME 3m US$27,150/t vs US$27,150/t

NdPr Rare Earth Oxide (China) US$52,494/t vs US$52,918/t

Lithium carbonate 99% (China) US$14,279/t vs US$14,282/t

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

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

China Tungsten APT 88.5% FOB US$365/mtu vs US$365/mtu

China Graphite Flake -194 FOB US$470/t vs US$470/t

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

Europe Ferro-Vanadium 80% 26.85/kg vs US$26.85/kg

China Ilmenite Concentrate TiO2 US$321/t vs US$321/t

China Rutile Concentrate 95% TiO2 US$1,400/t vs US$1,401/t

Spot CO2 Emissions EUA Price US$73.9/t vs  US$74.9/t

Brazil Potash CFR Granular Spot US$310.0/t vs US$310.0/t

Battery News

Tesla has slashed production of its best-selling EV in China

• Tesla has reduced production of its best-selling Model Y in China by a third last month due to slowing demand.
• The reduction in Model Y production is attributed to lower demand and competition with cheaper domestic rivals, such as BYD’s Seagull hatchback.
• Tesla has instructed suppliers to start making components outside China and Taiwan due to rising geopolitical tensions.
• U.S. tariffs on some EV imports from China are set to increase from 25% to 100%, which could lead to a potential trade war.
• Elon Musk has expressed surprise at the tariff increase and advocates for no tariffs or incentives for EVs or oil and gas.
• Tesla has begun building its Shanghai Megafactory, the company’s first dedicated energy storage facility outside the U.S.

New Car Sales Get A Healthy Boost In EU, EVs Account For 11.9% Of Registrations

• 3.7 million new cars were registered in the EU from January to April, a 6.6% increase from the previous year.
• Significant growth in new car registrations was observed in Germany and Spain (7.8% increase), France (7% increase), and Italy (6.1% increase).
• The market share of petrol and diesel vehicles dropped from 52.8% in April 2023 to 48.9% in April 2024.
• Sales of traditional hybrid vehicles rose by 33.1% in April, with notable increases in France (+48.1%), Spain (+38.5%), and Germany (+25.9%), totaling 265,992 hybrids sold.
• Plug-in hybrid sales increased by 3.7% to 62,148 units.
• Battery-electric car registrations increased by 14.8% to 108,552 units in April, with significant growth in France (45.2%) and Belgium (41.6%).
• Between January and April, 441,992 new battery-electric cars were registered in the EU, a 6.4% increase.

BHP and Rio Tinto to fast-track battery electric haul truck trials in Pilbara

• Rio Tinto and BHP, two major Australian mining companies, will collaborate to fast-track testing of large battery electric haul trucks at their iron ore mines in the Pilbara, Western Australia.
• Rival Fortescue is already trialling battery electric and hydrogen fuel cell haul trucks and introducing electric excavators.
• BHP and Rio Tinto aim for net zero emissions by 2050, while Fortescue targets “real zero” emissions by 2030.
• BHP’s Jimblebar Mine is completing upgrades to electrical transmission and distribution for high power charging infrastructure.
• BHP and Rio Tinto will share learnings on performance and productivity to accelerate deployment of battery vehicles.
• Simon Trott, CEO of Rio Tinto, stresses the importance of collaboration to solve the challenge of zero-emissions haulage and accelerate learning through combined efforts.

Company News

Ariana Resources (AAU LN) 2.8p, Mkt Cap £32.4m – US$20m finance agreement to complete Tavsan

• Ariana Resources reports that its 23.5% owned Zenit Mining operations in Turkey have secured a US$20m credit facility with the country’s largest bank, Türkiye Cumhuriyeti Ziraat Bankasi A.S.
• The facility, which “is non-recourse and comprises no hedging or currency swap requirements” carries “an effective interest rate of 8.5%” with loan repayments “over three years, with a one-year principal repayment holiday following drawn-down”.
• The facility will “support operations in western Türkiye, and particularly, the completion of construction of the Tavsan Gold-Silver Mine”.
• Managing Director, Dr. Kerim Sener, explained that the “funding facility will enable the partnership to accelerate the construction of the Tavsan mine with the expectation that the mine build will be completed in the latter part of 2024”.
• Thanking Türkiye Cumhuriyeti Ziraat Bankasi for its support, Dr. Sener, said that it “is primarily testament to the strength of our partner, Özaltin Holding …[which owns 53% of Zenit Mining] … for us to have achieved this significant funding milestone”.

Conclusion: The new banking facility puts completion of the Tavsan mine development on course for late 2024.

Beowulf Mining* (BEM LN) 0.7p, Mkt cap £14m – Financial Results show well capitalised balance sheet for project progression

Valuation: 5.4p/sh Price Target, BUY

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• Beowulf reports their quarterly results to 31^st March 2024.
• The Company completed a £4.3m gross capital raise over the period, raising net proceeds of £3m.
• Beowulf is now well funded to progress their European assets.
• Namely, their high-grade iron ore project in Sweden, Kallak, and the Graphite Anode Material Plant in Finland.
• In Sweden, the Company is preparing a PFS for the Kallak project.
• Additionally, the Government reiterated their decision to grant Kallak an Exploitation Concession in relation to an ongoing Supreme Administrative Court appeal process.
• In Finland, Beowulf is updating its GAMP PFS to incorporate a more complete CSPG process, expected to be completed by year end.
• In Kosovo, Beowulf has consolidated its ownership of Vardar Minerals, and has received promising assay results from Shala East sampling, showing highlights of 3.8g/t Au, 117g/t Ag, 5.5% Zn and 5.4% Pb.

Conclusion: Beowulf is making solid progress in developing their European energy transition asset portfolio. The Company is now well-funded following their Q1 equity raise, and we note a positive reduction in administration expenses. The Company is set to deliver updated PFSs for Kallak and Grafintec whilst generating early-stage exploration results from Kosovo as it continues low-cost programmes.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Anglo American (AAL LN) 2,543p, Mkt cap £34bn – Anglo refuse to extend timeline for BHP in rejection of potential offer

BHP (BHP LN) 2,385p, Mkt cap £120bn – BHP boosts Socioeconomic terms of offer to help sweeten potential offer from a South African perspective

• Anglo American have refused to extend the timeline for discuss BHP proposed offers for the company.
• Under the Takeover Code BHP should now withdraw for at least six months though the prohibition can be set aside in certain circumstances eg. if Anglo agrees to set this aside.
• If a third party makes an offer for Anglo American, the UK Takeover Panel may determine there is a material change in cirumcstances etc and allow a new offer by BHP for Anglo.
• Anglo have swiftly rejected each of BHP’s successive unsolicited offers indicating they are not overjoyed at the prospect of the deal.
• Press reports indicate certain key funds including BlackRock persuaded Anglo to hold discussions with BHP last week.
• BlackRock and many other investors hold Anglo and BHP shares in passive index funds where the only real joy the asset managers get is when they can play a role in the occasional takeover.
• The question for Duncan Wanblad and the Anglo board is will these funds continue to support their tenure now they have rejected the deal.
• BHP have effectively lit a fire under the Anglo board mandating Wanblad into restructuring the group and pressing ahead with further expansion in the copper business.
• We believe BHP want to buy Anglo as a relatively cheap way into more large-scale copper production in a world where building new large-scale copper mines is both expensive and risky.
• The challenge is for Wanblad to improve Anglo’s rating so that investors will be happy to stick with an independent Anglo and so BHP can’t afford to come back for another run at the group.
• Today’s statement from BHP offered a series of socioeconomic inducements to appease South African regulators and concerns which may persuade South African stakeholders to put pressure on Anglo to talk to BHP on future asset sales.
• Socioeconomic inducements offered by BHP today:

• • if required to secure regulatory approvals, BHP sharing in the costs of increased South African employee ownership of the listed South African businesses;
  • establishing a Mining Centre of Excellence to support R&D, training and promotion of South Africa as a premier mining destination;
  • maintaining current employment levels at Anglo American’s Johannesburg office to provide ongoing support to the South African assets to be acquired and other assets in the combined group, as well as to Anglo Platinum and Kumba as a third party service provider;
  • ​maintaining funding for Anglo American’s charitable commitments in South Africa at the current level;
  • supporting local South African procurement and engagement across mining industry sectors and regions;
  • ensuring continued access for South African investors through the listing of BHP on the Johannesburg Stock Exchange; and
  • maintaining Anglo American’s existing South African Reserve Bank (SARB) and National Treasury undertakings, to the maximum extent practicable.
  • These proposed measures are expected to be maintained for a period of at least three years.

• If a deal was agreed it could have taken 18 months to consummate tying the share prices of the two groups to each other through the period.
• DeBeers was already up for sale before the BHP offer and few investors will shed tears if AmPlats and Kumba are cast off making Anglo more of a bid target.
• Ironically, we see the market for diamonds as turning away from LGD ‘Lab Grown Diamonds’ and back towards natural stones particularly in China where buyers are looking for better stores of value.

Conclusion:  Management teams are defined by the value they create and the legacy they leave.

The majority of the value in BHP and Anglo is from organic growth where projects have been acquired and built out by their respective teams.

We reckon an independent Anglo will help develop more copper mines and production capacity to meet new forecast demand from ongoing electrification.

We also reckon investors will continue to benefit from the greater choice within the market for major mining companies.

BHP offer for Anglo American key points:

• All-share offer

• • Initial offer: 0.7097 BHP shares for each Anglo offering £25.08/Anglo share including £4.86 in Anglo Platinum and £3.40 in Kumba shares valuing Anglo at £31.1bn
  • Second offer: 0.8132 BHP shares
  • Third offer: 0.886 BHP share for each Anglo share represented an offer of 18% of BHP shares and 2635 on yesterday’s valuing BHP at £31.11/share, although the stock sold off on yesterday’s news by 4%.

• Third offer is 25% higher than the first offer in terms of shares offered but is greater since the BHP share price fell.

• • BHP was 2364p the day before the offer and is now 1.2% lower at 2385p
  • Anglo was 2205p the day before the offer and is now 16% higher at 2543p

BHP / Anglo American overview

• Anglo is already putting some of BHP’s strategy into place
• BHP’s conditions can be met through the distribution of Kumba and AmPlats shares to Anglo investors
• Regulators could impose tough conditions.

• • China might want Anglo or BHP to sell a copper mine to a Chinese mining company as with Glencore / Xstrata
  • US and EU regulators could also impose conditions
  • Canada: regulators have already blocked Chinese acquisition of mines outside Canada

Anglo American – Anglo need to convince shareholders they can create greater value as an independent entity

• 1 million tonnes of copper production potential – make the group 50% copper
• Strong margins to rise to 46% EBITDA from 31%
• Three of the world top 10 copper mines

• • Collahuasi 252,000tpa
  • Quellaveco 319,000tpa
  • Los Bronces 215,000tpa

• Cost cutting potential $1.7bn
• Diversified sales:

• • South Africa 25%
  • Chile 28%
  • Brazil 26%
  • Peru 20%

• New Anglo corporate structure to create new value

• • South Africa:

• • • DeBeers (85%),
    • Kumba iron ore (70%),
    • Anglo Platinum (79%),
    • Samancor (40%),
    • Anglo American Finance (100%)

• • UK: Woodsmith polyhalite mine
  • Australia: metallurgical coal. Brazil: iron ore inc. port of Acu.
  • Latin America: Chile, Collahuasi (44%) & Los Bronces (50.1%). Peru: Quellaveco (60%). Brazil (100%) nickel

• Kumba Iron Ore market cap: £7.24bn x 70% = £5.1bn. Kumba shares have risen 14% since the offer
• Anglo Platinum market cap: £7.57bn x 79% = £5.97bn. AmPlats shares have fallen 3.2% since the first offer

Capex: Anglo are cutting capex spend by $1.8bn through 2025 and 2026

Alternatively BHP could buy one of the existing pure copper producers

Cora Gold (CORA LN) 2.1p, Mkt Cap £9.3m – Madina Foulbe 2,000m of RC drilling completed

• The Company completed ~2,000m of RC drilling at the Madina Foulbe Gold Permit within the Kenieba Project Area in east Senegal.
• All samples have been delivered to the laboratory with assays expected in Q3/24.
• The programme comprised 40 holes focusing on areas not previously drill tested within the 3km by 1.6km Tambor gold in soil anomaly.

Cornish Metals* (CUSN LN) 6.9p, Mkt Cap £37m – Filing of the South Crofty PEA

Valuation under review

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• Following the publication of highlights earlier this month, Cornish Metals reports that it has filed its Preliminary Economic Assessment (PEA) for the reopening of the South Crofty tin mine with the SEDAR archive.
• Access to the detail of the PEA provides an opportunity to gain insights into the company’s plans to resume tin production at the mine and we look forward to improving our understanding of the project.
• The previously published highlights describe a project, which generates production of ~49,310t of tin over a 14-year period and, at a tin price of US$31,000/t, delivers an after-tax NPV_8% of US$201m and IRR of 29.8% from the investment of US$177m pre-production capital.
• The project is already permitted for development and preliminary works, including the de-watering and treatment of water from the historic workings and refurbishment of the New Cook’s Kitchen shaft, is already underway.
• The study shows a LOM cost of tin production of US$13,661/t on an all-in-sustaining (AISC) basis with pay-back of capital within 3 years.
• The recently announced purchase of an additional 7.7 acres of land adjacent to the mine provides “additional space for future site works as well as opportunities for potential operating cost savings, renewable energy initiatives and improved overall property security”.
• The company highlights the long mining history dating from the late sixteenth century until closure in 1998 and the mineral resource’s position as “one of the highest grade tin Mineral Resources globally”.

Conclusion: The filing of the PEA provides access to the technical information underlying the plans to resume production at South Crofty.  We welcome the opportunity to expand our understanding of the project.

*SP Angel acts as Nomad and Broker. An SP Angel analyst formerly worked in the South Crofty tin mine in the 1980s and holds shares in Cornish Metals

First Tin (1SN LN) 6.03p, Mkt Cap £15.7m – Additional exploration licence in the Taronga area

• First Tin reports that it has extended is exploration licences in the Taronga area of New South Wales by acquiring an additional licence over palaeo-alluvial (deep lead) targets.
• The “new licence, EL9200, covers the majority of the known deep lead deposits in the district … [which] … have been the source of around half the tin historically mined in the district and represent an attractive target to supplement tin production from the Taronga hard rock deposit”.
• The company also reports a tin-in-soil geochemical anomaly at its nearby Pound Flat property, located ~15km south of Taronga.  The anomaly exhibits a “similar intensity to that seen at Taronga, over a strike length of around 1.8km”.
• Mineralisation at Pound Flat is “interpreted as a series of en-echelon NE trending dilation zones in an overall ENE trending shear system. This new interpretation opens up the project for additional drill testing in areas with previously untested high tin in soil values”.
• CEO, Bill Scotting, explained that the “final soil sampling results for Pound Flat appear to have extended the target slightly and to have now closed off the anomaly”.
• He said that Pound Flat is considered “a high priority target for future follow-up work” with the possibility of extracting the weathered part of the mineralisation and using jigs to upgrade it “for transport to the Taronga processing facility without any significant crushing being required”.
• Earlier this month First Tin published a DFS for the Taronga deposit which showed that production of around 3,600tpa of tin in concentrate over a 9-year mine life was expected to generate a pre-tax NPV_8% of A$143m and an IRR of 24% from pre-production capital investment of A$116m.

Gem Diamonds (GEMD LN) 13.1p, Mkt Cap £17.5m – Letšeng mine delivers another large diamond

• Gem Diamonds reports the recovery of a 212.49 carat Type II white diamond from its Letšeng mine in Lesotho.
• The diamond was recovered on 28^th May and is the sixth stone exceeding 100 carats recovered so far this year and follows the announcement on 28^th April of a119 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 sixth stone within the first 5 months of 2024 beats 2023’s full year total of five diamonds exceeding100 carats.

Thor Explorations (THX LN) 15.5p, Mkt cap £102m – Q1 results confirm 2024 production guidance for Segilola mine

• Thor Explorations reports a net profit of US$12.4m for the three months to 31^st March 2024 (Q1 2023 – US$3.0m profit) and a closing net debt balance of US$14.3m.
• During the quarter, the company’s Segilola mine in Nigeria produced 19,589oz of gold from the processing of ore at a grade of 2.85g/t
• The financial results reflect the sale of 17,420oz of gold at a cash operating cost of US$418/oz and an all-in-sustaining cost of US$632/oz sold.
• Production guidance for 2024 is for 95-100,000oz “weighted towards the second half of the year, with an AISC guidance of US$1,100 to US$1,200 per oz”.
• CEO, Segun Lawson, explained that “we have now commenced follow up drilling programmes targeted at extending the Segilola mine life, with the priority being the Segilola Underground Resource”.
• Commenting on progress at its Douta project in Senegal, Mr. Lawson said that “we have ramped up exploration following the acquisition of the Douta-West licence. With the PFS workstreams ongoing, we believe we can grow the shallow oxide component of the resource which will be value accretive to the overall project and have committed to 15,000 metres of drilling on this project”.
• Confirming that production and cost guidance remains intact, Mr. Lawson said that “In the remainder of the year, our main objective in Nigeria is to extend the Segilola mine life and being completely deleveraged from our senior debt facility”.

Conclusion: Thor Explorations confirms 2024 production guidance of between 95,000to 100,000oz of  gold production from it Segilola mine and that it is working towards extending the mine’s life as well as oi its pre-feasibility study for its Douta gold project in Senegal

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

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

DISCLAIMER

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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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%