SP Angel Morning View -Today’s Market View, Friday 12th July 2024

Gold jumps as US inflation cools, US dollar falls and markets look for early rate cut

MiFID II exempt information – see disclaimer below

Atlantic Lithium* (ALL LN) – Application for grant of project mining lease submitted to Ghana parliament.

Galan Lithium (GLN AU) – Project update for Hombre Muerto

Glencore (GLEN LN) – Reports of job losses at Murrin Murrin

KEFI Gold and Copper* (KEFI LN) – NNED appointment

Triple Flag (TFPM US) – Q2 Results as Northparkes supports record quarter

Zinnwald Lithium (ZNWD LN) – Operational Update following updated MRE

Gold prices ($2,407/oz) soar as US inflation falls increasing chance of early interest rate cut

• Gold prices rallied 1.8% yesterday, hitting highs of $2,420/oz before settling this morning around $2,410/oz.
• The move followed US CPI data which showed inflation cooling faster than expected.
• US Treasuries rallied as a result, with the US 10 year yield sliding to lows of 4.16% before climbing somewhat to 4.22% today.
• ETF buying as continued as safehaven investors rotate from money market funds into gold.
• The market now expects three rate cuts this year, with the odds of a September rate cut increasing to 100%.

Uranium – Niger revokes some of GoviEx uranium license rights

• The new military government in Niger has revoked GoviEx’s rights over the perimeter of the Madaouela mining permit.
• GoviEx management intend to challenge the withdrawal and may seek international arbitration.
• The company has done a 650,000m drill campaign to define one of the world’s largest uranium mineral resources.
• Orano, a French nuclear fuel producer has also had licenses revoked on its operation of the Imouraren uranium mine on 11 June.

India looking to secure long-term uranium supply from Russia in nuclear fuel pact

• India is looking to secure a uranium fuel supply agreement for a new nuclear power plant in Tamil Nadu in the south of India.

Economics

US – Lower than expected inflation released Thursday see investors upping their expectations for the first rate cut in September with a total of two for 2024 forecast.

• Both headline and core CPIs hit the slowest rate since 2021.
• September move is now almost fully priced in while odds for three cuts through to January are now standing at 68%, up on 64% at the beginning of the week.
• DXY dropped nearly 0.8% with 10 year yields falling >12bp to 4.17% following the data release.
• CPI (%mom, Jun/May/Est): -0.1/0.0/0.1
• Core CPI (%mom, Jun/May/Est): 0.1/0.2/0.2
• CPI (%yoy, Jun/May/Est): 3.0/3.3/3.1
• Core CPI (%yoy, Jun/May/Est): 3.3/3.4/3.4

China – Trade surplus climbed to an all time high on strong exports and an unexpected drop in imports in June.

• Exports climbed to $308bn marking a third consecutive monthly increase and hitting the highest level in nearly two years.
• Imports dropped to $209bn, leaving a record trade surplus of $99bn for the month, Bloomberg reports.
• In search for new growth drivers and diversifying away from export led development model, a drop in imports is a disappointing print and highlights ongoing domestic demand challenges.
• Exports (%yoy, Jun/May/Est): 8.6/7.6/8.0
• Imports (%yoy, Jun/May/Est): -2.3/1.8/2.5

Japan – The yen sharply appreciated following softer than expected US inflation and on speculation that the government may have intervened in the FX market.

• The currency was up 2.7% at one point hitting sub 158.0 having previously traded just over 161.5.
• Authorities have not provided confirmation nor denied their involvement.
• “Our practice is basically not to say whether we have intervened or not,” Masato Kanda, Japan’s top currency official, said Thursday.
• “While some believe the move was a reaction to the CPI results, others say that other forces may have been at work.”

Currencies

US$1.0867/eur vs 1.0839/eur previous. Yen 159.23/$ vs 161.56/$. SAr 17.975/$ vs 18.089/$. $1.291/gbp vs $1.287/gbp. 0.676/aud vs 0.676/aud. CNY 7.265/$ vs 7.272/$.

Dollar Index 104.54 vs 104.97 previous.

Precious metals:         

Gold US$2,403/oz vs US$2,380/oz previous

Gold ETFs 81.6moz vs 81.5moz previous

Platinum US$995/oz vs US$990/oz previous

Palladium US$972/oz vs US$989/oz previous

Silver US$30.74/oz vs US$31/oz previous

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

Base metals:   

Copper US$ 9,725/t vs US$9,877/t previous

Aluminium US$ 2,466/t vs US$2,490/t previous

Nickel US$ 16,805/t vs US$17,120/t previous

Zinc US$ 2,917/t vs US$2,983/t previous

Lead US$ 2,178/t vs US$2,189/t previous

Tin US$ 33,805/t vs US$35,285/t previous

Energy:           

Oil US$85.9/bbl vs US$85.5/bbl previous

Natural Gas €31.1/MWh vs €30.5/MWh previous

Uranium Futures $86.0/lb vs $86.0/lb previous           

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$107.8/t vs US$105.3/t

Chinese steel rebar 25mm US$514.7/t vs US$514.3/t

Thermal coal (1st year forward cif ARA) US$108.5/t vs US$110.4/t

Thermal coal swap Australia FOB US$134.5/t vs US$134.0/t

Coking coal Dalian Exchange futures price US$216/t vs US$214.0/t

Other:  

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

NdPr Rare Earth Oxide (China) US$50,104/t vs US$49,784/t

Lithium carbonate 99% (China) US$12,044/t vs US$12,033/t

China Spodumene Li2O 6%min CIF US$990/t vs US$990/t

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

China Tungsten APT 88.5% FOB US$335/mtu vs US$340/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% 26.75/kg vs US$26.75/kg

China Ilmenite Concentrate TiO2 US$315/t vs US$313/t

China Rutile Concentrate 95% TiO2 US$1,397/t vs US$1,396/t

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

Brazil Potash CFR Granular Spot US$307.5/t vs US$307.5/t

Battery News

Global EV sales up 13% in June, Europe sees 7% downturn

• According to Rho Motion’s latest report, global sales of electric and plug-in hybrid vehicles were up 13% in June yoy.
• Growth has been driven by strong sales in China, which accounted for 60% of global sales in that period.
• PHEV sales reached 1.4m in June, of which 860,000 were in China alone, up 25% yoy.
• Monthly sales in Europe were down 7% to around 300,000 vehicles.
• Finland, Ireland, and the Netherland saw the largest decline, but Italy recorded a 34% uptick on the back of new government incentives.
• US and Canadian sales were up 6% to 140,000 vehicles.

Hybrid car sales up 43% as electric car slump continues

• The number of newly-licensed EVs in Ireland dropped by 25% in the first half of the year compared to last year.
• Hybrid car sales increased by 43% during the same period.
• The proportion of new cars licensed that are electric decreased from 19% last year to 14% this year.
• The downturn in the electric car market is influenced by new EU tariffs on electric car imports from China.

BMW pips Mercedes and Audi thanks to strong EV sales

• BMW reported the strongest sales among Germany’s top three premium carmakers in H1 2024, with a 2.3% rise to nearly 1.1m vehicles.
• BMW’s BEV vehicle sales surged 34% to almost 180,000 cars.
• Mercedes-Benz sold 93,400 BEVs, a 17% drop from a year ago, and total sales fell 6% to 960,000 vehicles.
• Mercedes attributed the slowdown to reduced demand in key markets and a focus on healthy growth amid heavy discounting.
• Audi’s sales dropped 8% to 833,000 vehicles, with BEV sales increasing by just 1.3%.
• Porsche’s sales fell 7% to 155,900 vehicles, with a significant one-third decline in China.
• Porsche’s revenue is expected to improve in Q2 2024, with a margin forecast of 15% to 17%, as availability of top-end models increases.

Cambodia aims to increase EVs to 30,000 units by 2030

• Cambodia aims to have 30,000 EVs by 2030 as part of its National Policy on the Development of EVs 2024-2030.
• The country plans to increase the number of electric scooters to 720,000 and three-wheeler electric vehicles to 20,000 by 2030.
• The government’s vision is to transform Cambodia into a country with optimal EV usage to support sustainable development and improve people’s well-being.
• EVs are becoming popular in Cambodia due to their lower fuel costs and environmental benefits, costing only $2.35 for 100km of range compared to $8.71 for petrol or diesel cars.
• Currently, Cambodia has 1,614 registered electric cars, 914 electric scooters, and 440 three-wheeler electric vehicles, supported by 21 EV charging stations.

Company News

Atlantic Lithium* (ALL LN) 20.12p, Mkt Cap £130m – Application for grant of project mining lease submitted to Ghana parliament.

(Ewoyaa Ownership:  Atlantic 62.9% falling to 40.5% if Piedmont fund their share of Ewoyaa, Piedmont 18.2% rising to 40.5% on project funding, MIIF Sovereign Wealth fund 6%, Ghana 13%)

(Piedmont are contracted to pay $70m + 50% of the total Capex to raise their stake to 40.5%. Total cost would be $135m to Piedmont on a $200m capex.)

• Atlantic Lithium have submitted their application for the grant of the mining lease on the Ewoyaa project to the Ghana parliament.
• The parliament is expected to ratify the mining lease in good order.
• The Minerals Commission has also released the project site back to Atlantic management following an investigation into a fatality on Tuesday.
  • “The Company is taking a steady approach to resuming operations since the incident, ensuring alignment with the recommendations made by the Minerals Commission.”
• The investigation was led by the Chief Inspector of Mines.

*SP Angel acts as Nomad to Atlantic Lithium. Two mining analysts from SP Angel recently visited the Ewoyaa mine site in Ghana and drove onto Takoradi to check the quality of the road to port. Our analysts also visited the Ministry of Minerals Commission and MIIF, the Ghana Minerals Income Investment Fund

Galan Lithium (GLN AU) A$0.2p, Mkt Cap A$92m – Project update for Hombre Muerto

• Galan reports the Hombre Muerto Project is 40% close to completion. Pond systems at 60% capacity.
• In situ lithium mining continues, with 2,800t LCE accumulated in ponds.
• The Company is seeking to preserve cash whilst in construction, whilst brine flow rates, grades and evaporation rates are in line with Phase 1 DFS.
• Galan reports their offtake partner shortlist has progressed towards a definitive sales agreement and associated funding package.
• Galan now expects first production in 2H25 following the slowdown in construction activities.
• The current operation rates are believed to see inventory levels rise utilising only brine pumps to operate.
• Management states that ‘sales and funding arrangements… are progressing well.’

Glencore (GLEN LN) 480p, Mkt Cap £58bn – Reports of job losses at Murrin Murrin

• Glencore is reportedly warning of layoffs at their nickel and cobalt operations in Australia as labour and energy costs rise. (AFR)
• Glencore is monitoring the Murrin Murin mine in WA, with news following BHP’s suspension of nickel operations this week.
• Reports suggest that sulphuric acid supply limitations from the closure of Kwinana may also weigh on Glencore’s HPAL operation.

KEFI Gold and Copper* (KEFI LN) 0.61p, MKt Cap £37m – NED appointment

• Addis Alemayehou is joining the Board as an independent Non-executive Director from 22 July.
• Mr Addis Alemayehou, who is based in Ethiopia, is the Chairman of Kazana Group, a diversified investment firm.
• Addis launched a number of Africa based venture businesses in the communications industry and is currently providing advisory services for investors in East Africa as well as serving on the Board for Dangote Industries, the largest cement producer in Africa.

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

Triple Flag (TFPM US) $16, Mkt Cap $3.2bn – Q2 Results as Northparkes supports record quarter

• Triple Flag royalty and streaming company reports Q2 results of $64m following sales of 27.2k GEO.
• Higher gold grades from processing at E31 and E31N open pits at Northparkes has supported the record quarter.
• The Company generated $37.7m from gold and $25.9m from silver.

Zinnwald Lithium (ZNWD LN) 7.8p, Mkt Cap £37m – Operational Update following updated MRE

• Zinnwald provides an operational update following their recent MRE upgrade.
• The Company suggests the MRE supports a phased development.
• Zinwald’s updated MRE significantly grows the scale of the project albeit at a materially reduced cut-off grade.
• The MRE and now stands at 193.5mt at 0.48% Li20 in Measured and Indicated and 33.3mt at 0.46% Li20 in Inferred supported by 26,911m of new drilling across 84 holes.
• The latest MRE stands at 2.3mt LCE at 0.48% LiO2 in the Measured and Indicated category and 0.4mt LCE at 0.46% LiO2 in the Inferred category.
• Phase 1 is believed to support a 16-18ktpa 99.5% LiOH output at the Zinnwald Lithium Project in Germany.
• That marks a50% increase on production of 12ktpa in the 2022 PEA.

• Zinnwald is now looking to optimise a PFS for the larger scale project expected for completion in Q1 25 replacing the previous plan to publish a completed FS by YE24.

• The PFS will explore potential for a second phase of expanded capacity.
• Mining is anticipated to use large scale sub-level stoping and backfill as opposed to Room and Pillar.
• Zinnwald doesn’t expect to suffer delays from permitting as a result of the new phased development plan.
• Zinnwald reports strong support for the project from the German authorities.
• Current cash balance stands at €9.3m.

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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