SP Angel Morning View -Today’s Market View, Friday 28th June 2024

Commodities drift ahead of US inflation data today and US holiday next week

MiFID II exempt information – see disclaimer below

BeMetals* (BMET CN) – C$7m placement to fund drilling program to extend newly discovered mineralisation at Pangeni

Eurasia Mining* (EUA LN) – Annual accounts update and suspension

Keras Resources* (KRS LN) – Keras starts to commission the integrated granulator plant at its Delta processing facility in Utah

Lundin Mining (LUN CN) – Speculation over a potential sale of zinc operations in Sweden and Portugal

Eight out of 10 largest EV markets see growth in May with global sales up by 23 percent for the year to May

• Eight of the ten largest EV markets saw ongoing growth in the year to May, led by China and the US, which together account for over 75% of global EV sales.
• Global EV sales increased by 23% to 10.5 million in the year to May, with potential for market share to double by 2028.
• Germany and Sweden were the only top ten markets not to see growth, with Germany impacted by the withdrawal of EV incentives.
• The UK outperformed France to become the leading European EV market, and Norway’s petrol and diesel vehicle sales dropped to less than 4% of new vehicle sales.
• Significant EV market growth was also observed outside Europe, with Brazil, Thailand, and India showing substantial increases in EV adoption.

Economics

US – May inflation numbers are in focus today with expectations for both headline and core PCE measures slowing down in May.

US markets becalmed ahead of US July 4^th holiday next Thursday

• Metals likely to drift sideways subject to economic news and political development
• Separately, Biden/Trump debate aired last night raised concerns that President Biden should continue the campaign.
• The Biden team argued for an early presidential debate in June, more than four months before November’s election, trying to dissuade concerns over incumbent fitness to hold the office for further four years and reinvigorate the president’s failing campaign.
• However, the calculation seems to have backfired, FT reports.
• A number of top Democrats have called on Joe Biden to halt his bd for re-election.
• PCE (%yoy, Est/Apr): 2.6/2.7
• Core PCE (%yoy, Est/Apr): 2.6/2.8

Japan – The yen weakened past the 161 mark for the first time since 1986 as authorities delay a potential market intervention.

• Earlier, Masato Kanda, the nation’s top currency official said that authorities stand ready 24 hours a day if necessary, according to Bloomberg.
• Finance Minister Shunichi Suzuki expressed his concerns over the impact of rapid and one-sided currency moves on the economy.

Eurozone – Inflation slowed in both France and Spain with the latest ECB survey showing that inflation expectations declined over both the next 12 months and the next three years.

• France CPI (%mom, Jun/May/Est): 0.1/0.1/0.1
• France CPI (%yoy, Jun/May/Est): 2.5/2.6/2.5
• Spain CPI (%mom, Jun/May/Est): 0.3/0.2/0.3
• Spain CPI (%yoy, Jun/May/Est): 3.5/3.8/3.5

Germany – Labour numbers come in weaker than expected in June.

• Unemployment Change (‘000, Jun/May/Est): 19/25/15
• Unemployment Rate (Jun/May/Est): 6.0/5.9/5.9

Saudi Arabia – allows fictional Petrodollar agreement with the US to expire after 50 years on 9^th June

• But the Petrodollar agreement never really existed.
• An agreement established on 8^th June 1974 by Henry Kissinger and Prince Fahd had a five-year term and was extended till it wasn’t earlier this month.
• More importantly is the key currency for Saudi Arabian foreign reserves which remains the US dollar.
• Maybe this is why the Fed is keen to maintain higher US interest rates for longer and ensure the US dollar remains a strong currency ahead of most or all others?
• Capital Economics recently highlighted ongoing US economic growth driven by strong US earnings growth largely led by the ‘Magnificent 7’ and the US tech sector.
• “China’s stash of U.S. Treasuries and agency bonds in the first quarter of this year fell by just under $40 billion and $10 billion, respectively, on a valuation-adjusted basis.” Reuters
• “experts reckon no more than 60% of that is in dollars.”

Currencies

US$1.0701/eur vs 1.0696/eur previous. Yen 160.88/$ vs 160.52/$. SAr 18.274/$ vs 18.317/$. $1.265/gbp vs $1.264/gbp. 0.664/aud vs 0.667/aud. CNY 7.266/$ vs 7.269/$.

Dollar Index 105.96 vs 105.92 previous.

Precious metals:         

Gold US$2,327/oz vs US$2,301/oz previous

   Gold ETFs 81.0moz vs 81.0moz previous

Platinum US$1,002/oz vs US$1,008/oz previous

Palladium US$963/oz vs US$924/oz previous

Silver US$29.22/oz vs US$29/oz previous

Rhodium US$4,700/oz vs US$4,725/oz previous

Base metals:   

Copper US$ 9,596/t vs US$9,507/t previous

Aluminium US$ 2,515/t vs US$2,500/t previous

Nickel US$ 17,230/t vs US$17,005/t previous

Zinc US$ 2,973/t vs US$2,928/t previous

Lead US$ 2,199/t vs US$2,187/t previous

Tin US$ 32,980/t vs US$32,060/t previous

Energy:           

Oil US$87.0/bbl vs US$85.2/bbl previous

• US Henry Hub natural gas prices edged lower as the EIA reported a 52bcf w/w build to 3,097bcf, with storage levels declining w/w to 11.3% above last year and 20.6% above the 5-year average.
• The Equinor-operated Argerich-1 wildcat exploration well in the deepwater northern Argentina Basin block 100 is a duster, with all collected data and information to be analysed in the coming months.
• SM Energy (80%) and Northern Oil and Gas (20%) agreed to acquire 37,200 net acres producing 55kboe/d in Utah’s Uinta basin from XCL Resources (backed by PE-players EnCap and Rice) for ~$2.6bn in cash.
• Media reports that China Three Gorges, Masdar, Engie and TotalEnergies are expected to make final offers to buy Spanish renewables firm Saeta Yield from Brookfield, with an estimated enterprise value of ~$1.8bn.

Natural Gas €33.9/MWh vs €33.9/MWh previous

Uranium Futures $84.5/lb vs $83.5/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$106.3/t vs US$107.0/t

Chinese steel rebar 25mm US$521.9/t vs US$523.1/t

Thermal coal (1st year forward cif ARA) US$115.5/t vs US$117.8/t

Thermal coal swap Australia FOB US$131.5/t vs US$132.3/t

Hard Coking Coal Australia FOB US$249.0/t vs US$249.0/t

Other:

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

NdPr Rare Earth Oxide (China) US$49,821/t vs US$49,801/t

Lithium carbonate 99% (China) US$12,042/t vs US$12,038/t

China Spodumene Li2O 6%min CIF US$1,060/t vs US$1,060/t

Ferro-Manganese European Mn78% min US$995/t vs US$995/t

China Tungsten APT 88.5% FOB US$350/mtu vs US$350/mtu

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

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

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

China Ilmenite Concentrate TiO2 US$313/t vs US$313/t

China Rutile Concentrate 95% TiO2 US$1,397/t vs US$1,410/t

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

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

Battery News

Sony Readies to Sell Afleela Electric Car

• Sony Honda Mobility (SHM), a partnership between Sony and Honda, is launching the Afeela brand of electric vehicles.
• The first Afeela model, a high-tech, screen-heavy sedan, will be available for order in 2025 and on sale in 2026.
• Afeela plans to sell its cars directly to consumers, bypassing traditional dealership networks similar to Tesla’s sales model.
• The car will support Level 2 and Level 2+ driving assistance, with aspirations for Level 3 autonomous driving under certain conditions, and will remain connected to the cloud for continuous updates.
• Afeela chose the U.S. market, especially targeting California, for its initial launch, believing it can support the new product due to the region’s tech-savvy consumer base.

Zeekr’s sales jump as Chinese dominate Russian EV market

• Chinese carmakers have captured over half of Russia’s car market since Western companies exited after Russia’s invasion of Ukraine in February 2022.
• The growth in sales is notable in the EV sector, with Zeekr, a Chinese premium brand, leading the market despite having no official representation in Russia.
• From May 2023 to April 2024, EV sales in Russia surged by about 350%, with Chinese brands making up over half of these sales.
• Zeekr has sold over 8,000 cars in Russia since June last year, and despite no official market entry, it dominates alongside Evolute and Moskvich, which rely on Chinese kits for assembly.
• Russian officials and industry leaders have mixed feelings about Chinese dominance, with calls for protecting the domestic market from Chinese carmakers.
• The perception of Chinese cars in Russia is improving, with a significant increase in the number of Russians willing to consider buying Chinese vehicles compared to previous years.
• Zeekr, owned by Geely, has emphasized it has no official presence in Russia and offers no support for vehicles sold through unapproved channels.

River Secures Investment from Mitsui & Marubeni to Propel Electric Scooter Revolution

• Electric vehicle startup River has secured investment from global trading companies Mitsui & Co., Ltd. and Marubeni Ventures Inc.
• The investment supports River’s ambitious expansion plans, including a nationwide presence in over 50 cities by year-end.
• This financial boost is part of River’s Series B funding round, reinforcing its position as a leading innovator in the electric scooter market.
• Mitsui & Marubeni, prominent Japanese trading entities, see River’s potential to revolutionize the electric scooter landscape.
• River launched its first product, Indie, in 2021 and has since established a large manufacturing facility capable of producing 100,000 units annually.
• River opened its first retail store in Bengaluru earlier this year, with plans for rapid expansion across India.
• Co-founder and CEO Aravind Mani emphasized that the partnership with Mitsui & Marubeni strengthens River’s position in the Indian market and facilitates global expansion plans.

Volkswagen wants to use tech from Rivian with new joint venture

• Volkswagen plans to invest up to $5 billion in Rivian for access to its software and electrical architecture and to collaborate on next-generation systems.
• Volkswagen’s investment of $5 billion will be made between now and 2026, with the joint venture expected to be finalized in the fourth quarter of 2024.
• The companies have already ensured compatibility between Rivian’s electrical architecture and Volkswagen’s vehicles.
• The aim is to create “best-in-class software technology” and accelerate software development.
• Rivian’s zonal hardware design will be the foundation for new technology in Volkswagen and Rivian products later this decade.
• Volkswagen shares fell amid investor concerns over the cost of the joint venture, while Rivian shares increased by over 24%..

Company News

BeMetals* (BMET CN) – C$0.095, Mkt cap C$23m – C$7m placement to fund drilling program to extend newly discovered mineralisation at Pangeni

• BE Metals report the placement of C$7m of stock at at C$0.10/s plus a warrant at an exercise price of C$0.18/s

• B2Gold which supports BeMetals will be subscribing for C$1.4m of the offering to maintain a ~19% stake.
• Funds will be used to advance the Pangeni Copper Project in Zambia, where multiple drill intersections have encountered extensive copper mineralization of similar style to major mines and projects in the Domes Region of the Zambian Copperbelt.
• The copper mineralization at Pangeni bears many comparable hallmarks in terms of width, grade, and geology to large-scale operating mines in the Domes Region.
• Use of funds: the majority of the funds raised will pay for a second phase of drilling this year due to start in August.
• The focus will be on extending the discovered copper mineralization at the D-Prospect to the southwest, and northeast, with additional exploration drilling at other priority targets in close proximity to the D-Prospect area.
• Recent results include:

• • 16.16m grading 0.74% copper and 533ppm cobalt from 302.21m

• • • Inc. 5.50m averaging 0.93% copper and 701ppm cobalt from 312.00m depth;

• • 23.20m grading 0.54% copper and 263ppm cobalt from a depth of 275.80m

• • • inc. 7.90m grading 0.92% copper and 453ppm cobalt from 275.80m depth;

• • 14.78m grading 0.42% copper and 62ppm cobalt from a depth of 200.00m

• • • Inc. 4.88m averaging 0.65% copper and 63ppm cobalt from 208.03m depth;

*SP Angel formerly acted as UK broker to BE Metals. An SP Angel analyst holds shares in BE Metals

Eurasia Mining* (EUA LN)2.3p, Mkt Cap £66m – Annual accounts update and suspension

• The Company reported yesterday it will not be in a position to release FY23 annual accounts in time before the 30 June deadline.
• As a result, trading in the Company’s shares on AIM will be suspended from Monday next week.
• Auditors advised that they will need four more weeks to complete the audit.
• The delay is attributed to complex procedures in relation to concentrate stock confirmation and an upgrade of local accounting systems.

*SP Angel act as Nomad and Broker to Eurasia Mining

Keras Resources* (KRS LN) – 3.45p, Mkt cap £2.7m – Keras starts to commission the integrated granulator plant at its Delta processing facility in Utah

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

• Keras Resources reports the hot commissioning of its integrated granulator plant at its Delta processing facility in Utah, USA.
• The ‘hot commissioning’ process involves the testing of each plant component under progressively increasing load conditions until the design capacity is reached.
• High-pressure grinding rolls are milling the rock phosphate material to initially blend and then reduce feed ingredients to ~90mesh (160 micron) for optimal granulation.
• The material then goes for granulation where an organic liquid binder is applied before drying in cooler rotary kilns.
• Connection to 3-phase power will replace 600kW of diesel generation as soon as is practicably possible reducing power costs and CO2 emissions.
• Granules have now been produced proving the operation of the plant marking a significant milestone for PhoSul Utah LLC joint venture
• The operation of the jv marks a new era for Falcon Isle Resources which holds the Diamond Creek Phosphate mine for Keras.

• • “PhoSul®’s formulation allows for improved Phosphorous availability in the soil, results from field tests have demonstrated significant yield and quality improvements over competitor rock phosphate sources. “
  • “PhoSul® further helps to solve Phosphorous run-off, a key component of the Company’s organic identity.”
  • “Graham Stacey, CEO of Keras, commented, “Constant progress towards full load commissioning and refinement of an integrated circuit is always a challenging phase of plant construction and build-up to steady-state production.
  • We’re very pleased to have progressed to hot commissioning and production of first organic granules without any material flaws to-date which speaks to the commitment of the construction and commissioning team given the intricacies of the move from Spanish Fork and the integration of the HPGR and granulator circuits in an entirely different configuration. “

• See photos of hot commissioned product on: https://twitter.com/kerasplc
• Phosul® consists of 80% of 50 mesh ore from Keras’ Falcon Isle Diamond Creek mine.
• Plant capacity: 5tph with a 520t/month running a single shift operation.

• • Double shift capacity ~ 920tpm of saleable bulk Phosul® granules expected in Q4.

• Stockpile: ~4,250tons of 50 mesh product which will cover the operation through 2024 with all mining and crushing costs already expensed.
• The Phosul jv should consume ~10,500tpa of 50 mesh phosphate when running at steady state.
• Keras’ Diamond Creek can produce ~25,000tpa of rock phosphate.
• Keras recently restructured short-term debt of US$900,000 incurred through the acquisition of the remaining 49% of Falcon Isle Resource Corp into a US$1,525,000 four-year loan and convertible loan, with US$1,325,000 of new cash funds and US$200,000 in capitalised Directors outstanding fees.  (see RNS on 28/05/24)

• Phosul® granules are currently quoted at $40 for a 25lb bag or $75 / 50lb bag on Amazon in the US.

• Manganese:  The Government of Togo are working towards the restart of mining at the Nayega manganese mine in Togo.
• Keras’ agreement with the government of Togo should give it a“1.5% royalty advisory fee plus 6.0% of gross revenue generated from the Nayéga mine for the lesser of 3.5 years or 900,000t of beneficiated manganese ore produced and sold from Nayéga”.
• The deal with the Togo government should give nearly $0.9m a year at a price of $3.5/dmt for manganese and production of 7,480tpa equating to some $2.6m over three years.
• Manganese ore prices for 38%min FOB South Africa are steady at 3.47-3.62/dmtu.
• Manganese and cobalt ores and concentrates are subject to a 25% import tariff into China from this year resulting in higher local manganese prices.
• The 25% tariff will also be applied to permanent magnets and natural graphite from 2026.

*SP Angel acts as nomad and broker to Keras

Lundin Mining (LUN CN) C$14.9, Mkt Cap C$11.6bn – Speculation over a potential sale of zinc operations in Sweden and Portugal

• The Company is considering a potential sale of two European zinc mines and doubling down on its copper assets in Chile and Argentina, Bloomberg writes.
• Lunding is gauging interest for its Zinkgruvan mine in Sweden and Neves-Corvo mine in Portugal.
• Discussions are at an early stage and there is no certainty the Company will proceed with a sale.
• European mines  are the oldest assets in the Group’s portfolio and accounted for ~19% of its revenues in 2023.
• The Company did not comment on speculation saying that the Group has “a strong balance sheet today, and (we) are not in a position where we need to divest out of any of our assets in our portfolio” according Jack Lundin CEO.

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                                                            

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35-39 Maddox Street London

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

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

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