SP Angel Morning View -Today’s Market View, Thursday 22nd August 2024

Gold ($2,500/oz) steady as Treasuries retreat following yesterday’s employment data revision

MiFID II exempt information – see disclaimer below

American West Metals (AW1 AU) – Preliminary drilling results from deep diamond drilling at Storm

Anglo Asian Mining* (AAZ LN) – FY24 production guidance

Ariana Resources (AAU LN) – Business reorganisation in Turkiye

Empire Metals* (EEE LN) – Mineralogical testing supports high-purity titanium feedstock potential

Goldstone Resources* (GRL LN) – £600k equity raise

Guardian Metal Resources (GMET LN) – Pilot Mountain drilling programme extended

Power Metals Resources* (POW LN) – (Power Metals* holds a 51% stake in Golden Metal Resources)

Lucara Diamonds (LUC CN) – Karowe yields another exceptionally large diamond

Patriot Battery Metals* (PMET CN) – Shaakichiuwaanaan spodumene project PEA results

Gold ($2,500/oz) steady as Treasuries retreat following yesterday’s employment data revision

• Gold prices have eased, having hit new record spot price highs of $2,532/oz.
• The metal was likely supported to new highs by Chinese bank buying, after import quotas were resumed.
• This likely triggered momentum fund buying, which seems to have stabilised now.
• Traders will be waiting for Powell’s speech tomorrow, with the Fed minutes showing an increasingly dovish consensus.
• US Treasuries rallied yesterday, after the Bureau of Labour Statistics revised private employment down by 818k jobs yesterday on a preliminary basis.
• The 10-year yield touched recent lows at 3.76% but has since bounced back up to 3.82% as traders take profits.
• The debate over the quantum of September’s rate cut continues, with the market currently pricing in a 30% chance of a 50bp cut, up 5% from yesterday.

EV growth rate slowdown to be countered by energy storage boom

• Li-ion batteries for grid-scale and domestic energy storage to take over from EVs as driver for demand soaking up much of the overcapacity issue that is coming online.
• Energy storage installations are up 61% in 2024, and in China energy storage applications overtook consumer electronics as the second-largest application for battery production last year.
• Global energy storage installations for a growing share of total battery demand, up from 6% in 2020 to an expected 13% this year.
• Tesla’s latest results also reflect this trend and whilst EV sales were down in the Q2, the energy generation and storage division deployed 9.4GWh, more than double the 4.1GWh installed in the Q1 and on pace for a huge increase over the 14.7GWh deployed in all of 2023.
• EVs have been the biggest driver for demand for Li-ion batteries but a slow-down in the growth of sales combined with reducing inventory has slowed EV demand.
• LG Energy Solutions and Samsung SDI both posted falling quarterly revenues and profits, while Panasonic also saw its battery division miss targets.
• Global battery leader CATL also reported a first drop in quarterly profit earlier this year.
• Battery manufacturing capacity in China alone reached 2.2TWh at the end of 2023, almost double the 1.2TWh of global demand that BloombergNEF is expecting for 2024.

Solar – $13.5bn power cable proposed to run 4,500km underwater to connect 6GW solar farm in Australia to Singapore

• The Australian government has approved plans for a sub-sea power cable to connect solar farms to in the North of Australia to Singapore.
• Sun Cable‘s AAPowerLink project could help drive demand for new solar farms and battery storage in the Outback
• The planned solar farm could power 3m homes and eventually connect to Singapore.
• SunCable sees a final investment decision is expected in 2027 with commission in early 2030s.
• Shifting tectonic plates suggest the cable may need to rest on the sea-bed with a degree of slack rather in a trench
• The project plans to supply and initial 900MW of power to Darwin by 2030 and to Singapore sometime after.
• While copper is generally preferred for subsea cables due to its heavier specific weight, we suspect the enormous distance and cost of this cable will lead to a greater use of aluminium.
• The total cable weight is 50kg/m for a 33Kv 3-core submarine cable heavy weighting towards copper. We see the tonnage of aluminium and copper required as substantial.
• We do wonder if this cable will ever be laid due to the sheer distance, cost and potential subsea.

China – PLA install laser weapon on amphibious vessel

• Lasers use Ytterbium, Neodymium, Holmium, Thulium, Erbium and Yttrium among other critical metals.
• PLA are not going to tell us anything about the critical metals used in their high-power lasers but China will see the PLA as a preferred customer for available Chinese REEs over any export.
• Moreover, the laser power amplifiers, capacitors, master oscillators etc. used to power military lasers are all likely to use REE elements.

National Burger Day today

• It’s National Burger Day today ranking alongside Russian Flag Day and National Tooth Fairy Day, and, no, we didn’t make it up.

Economics

US – Labour market is likely to have created 818k less jobs than previously estimated according to preliminary Bureau of Labour Statistics data.

• That marked the largest downward revision since 2009.
• Equity markets closed slightly higher while 10y sovereign bond yields climbed back up following a brief dip.
• Expectations for the size of a rate cut at the September meeting were also little changed with markets continuing to price in four 25bp moves before YE.

Japan – Robust growth recorded in August in the private sector led by the services sector.

• Selling prices inflation slowed to the lowest since November 2023 despite strong increase in the input costs that climbed at the fastest pace in 16 months.
• Flash Manufacturing PMI (Aug/Jul/Est): 49.5/49.1/NA
• Flash Services PMI (Aug/Jul/Est): 54.0/53.7/NA
• Flash Composite PMI (Aug/Jul/Est): 53.0/52.5/NA

Eurozone – Services sector growth picks up in August with a strong increase registered in Olympic Games driven French data while manufacturing continues to struggle, according to preliminary August PMIs.

• New orders were down for a third consecutive month with a most increase in services outweighed by the largest reduction in manufacturing new orders since the end of last year.
• Employment pulled back slightly ending a seven month run of growth with services showing only a modest increase and a solid drop in manufacturing workforce.
• Interestingly, output prices inflation accelerated this month to the quickest pace since four months with prices in the services sector rising at the sharpest pace in three months.
• Flash Manufacturing PMI (Aug/Jul/Est): 45.6/45.8/45.8
• Flash Services PMI (Aug/Jul/Est): 53.3/51.9/51.7
• Flash Composite PMI (Aug/Jul/Est): 51.2/50.2/50.1

Germany

• Flash Manufacturing PMI (Aug/Jul/Est): 42.1/43.2/43.3
• Flash Services PMI (Aug/Jul/Est): 51.4/52.5/52.3
• Flash Composite PMI (Aug/Jul/Est): 48.5/49.1/49.2

France

• Flash Manufacturing PMI (Aug/Jul/Est): 42.1/44.0/44.5
• Flash Services PMI (Aug/Jul/Est): 55.0/50.1/50.3
• Flash Composite PMI (Aug/Jul/Est): 52.7/49.1/49.2

UK – Higher growth, stronger labour market and slower inflation based on flash PMIs.

• Both services and manufacturing registered robust output growth and increased job gains.
• Inflationary pressures moderated including notably in the service sector, an area that is likely closely watched by the central bank.
• “The latest survey data therefore help lower the bar for further interest rate cuts, although the still-elevated nature of inflation in the service sector suggests that policymakers will move cautiously,” the S&P Global report read.
• Flash Manufacturing PMI (Aug/Jul/Est): 52.5/52.1/52.2
• Flash Services PMI (Aug/Jul/Est): 53.3/52.5/52.8
• Flash Composite PMI (Aug/Jul/Est): 53.4/52.8/53.0

Sterling at one-year high vs US dollar

• The rise in the value of Sterling makes commodities and related producers cheaper on a relative basis.

Currencies

US$1.1135/eur vs 1.1128/eur previous. Yen 145.14/$ vs 145.72/$. SAr 17.927/$ vs 17.822/$. $1.309/gbp vs $1.303/gbp. 0.675/aud vs 0.674/aud. CNY 7.134/$ vs 7.130/$

Dollar Index 101.18 vs 101.46 previous

Precious metals:         

Gold US$2,508/oz vs US$2,516/oz previous

Gold ETFs 82.6moz vs 82.6moz previous

Platinum US$961/oz vs US$954/oz previous

Palladium US$953/oz vs US$930/oz previous

Silver US$29.42/oz vs US$29.57/oz previous

Rhodium US$4,750/oz vs US$4,750/oz previous

Base metals:   

Copper US$ 9,259/t vs US$9,246/t previous

Aluminium US$ 2,511/t vs US$2,486/t previous

Nickel US$ 16,780/t vs US$17,035/t previous

Zinc US$ 2,865/t vs US$2,829/t previous

Lead US$ 2,090/t vs US$2,076/t previous

Tin US$ 32,790/t vs US$32,380/t previous

Energy:           

Oil US$76.1/bbl vs US$77.2/bbl previous

• Crude oil prices moved lower despite the EIA reporting a 4.6mb draw to crude inventories in the US, augmented by draws of 1.6mb to gasoline and 3.3mb to distillate stocks, as refinery utilisation rose 0.8% w/w to 92.3%.
• European energy prices remain elevated due to geopolitical risk as EU natural gas storage levels rose 2% w/w to 90.3% full (vs 82.3% 5-Yr average), with all countries over 86% full and aggregate storage now at 1,028TWh.
• Hystar has awarded a contract to Thyssenkrupp to supply a 4.5GW automated electrolyser production line to the Company’s factory in Hovik, as part of expansion plans to grow current manufacturing capacity of 100MW.

Natural Gas €37.3/MWh vs €38.3/MWh previous

Uranium Futures $79.9/lb vs    $80.3/lb previous         

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$99.0/t vs US$94.3/t

Chinese steel rebar 25mm US$478.3/t vs US$478.6/t

Thermal coal (1st year forward cif ARA) US$124.5/t vs US$127.0/t

Thermal coal swap Australia FOB US$146.3/t vs US$153.3/t

Coking coal Dalian Exchange futures price US$186/t vs US$188.3/t

Other:  

Cobalt LME 3m US$24,900/t vs US$24,900/t

NdPr Rare Earth Oxide (China) US$54,732/t vs US$54,698/t

Lithium carbonate 99% (China) US$9,951/t vs US$9,747/t

China Spodumene Li2O 6%min CIF US$780/t vs US$790/t

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

China Tungsten APT 88.5% FOB US$333/mtu vs US$330/mtu

China Graphite Flake -194 FOB US$462/t vs US$462/t

Europe Vanadium Pentoxide 98% 4.7/lb vs US$4.7/lb

Europe Ferro-Vanadium 80% 24.8/kg vs US$24.8/kg

China Ilmenite Concentrate TiO2 US$322/t vs US$322/t

China Rutile Concentrate 95% TiO2 US$1,395/t vs US$1,395/t

Spot CO2 Emissions EUA Price US$72.4/t vs US$72.4/t

Brazil Potash CFR Granular Spot US$295.0/t vs US$295.0/t

Germanium China 99.99% US$2,365/kg vs US$2,315/kg

China Gallium 99.99% US$445/kg vs US$445/kg

Battery News

Swedish EV owners driving longer distances than traditional cars

• A study by Sifo and EV charger manufacturer Zaptec reveals that EV drivers in Sweden take more long trips compared to drivers of ICE vehicles. (Zaptec)
• According to the study, 54% of EV owners report rarely or never experiencing range anxiety, while 45% of ICE drivers cite it as a key reason for not switching to EVs.
• 31% of EV drivers in Sweden take trips longer than 20 miles one way at least 11 times per year, compared to only 19% of ICE drivers.
• Similar trends are seen in Norway, where EV owners drive an average of 1,311 miles annually, more than gasoline car owners who drive an average of 878 miles annually, but slightly less than diesel car owners (1,364 miles).
• EVs are preferred for long trips due to their quiet operation, comfortable cabins, and features like Tesla’s Autopilot, which reduce driver fatigue.

UK faces slowing of EV sales due to shortage of skilled technicians

• The UK saw its 1 millionth EV sold earlier this year, but has been warned future growth is threatened by a lack of skilled EV technicians. (EVMechanica)
• Only 24% of the UK automotive workforce is qualified to service EVs, with a projected shortfall of 16,000 technicians by 2035.
• The shortage could lead to longer repair times, higher costs, and dissatisfied EV owners, potentially stalling EV adoption.
• Lawrence Whittaker, CEO of Warrantywise, has urged coordinated efforts between the government, educational institutions, and the automotive industry to address the skills gap.
• Emphasis on training a new generation of EV technicians is crucial to support the UK’s transition to electric vehicles and ensure continued growth in the EV market.

Number of EV fires linked to ‘non-genuine’ lithium-ion batteries on the rise

• According to the Japanese National Institute of Technology and Evaluation (NITE) there has been a rise in the number of fires caused by ‘non-genuine’ lithium-ion batteries in consumer goods. (The Japan Times)
• Lithium batteries are favoured for their ability to deliver sufficient power in compact sizes and for their rechargeable capabilities and are often the go to power source for such items.
• When batteries are sourced from companies unrelated to the original device manufacturers, the risk of fire increases, NITE warns.
• Data released by NITE shows that, over the past decade, 235 incidents involving non-genuine batteries were reported, with 227 resulting in fires.
• Of the 235 incidents, 182, or 78%, took place while the battery was charging, and 53% of the cases took place within the first year of use.

Iron-air battery maker to build 8,500 MWh battery in US

• Form Energy, who specialise in iron-air battery technology are progressing with plans to build an 8,500 MWh battery in Maine. (SAUR Energy)
• The company is pitching its technology as a cheaper alternative to lithium-ion batteries that are commonly used for battery energy storage systems.
• Iron-air batteries are built and use basic materials: iron, water, and air and uses the principle of oxidation for its operation.
• When the battery discharges, it uses oxygen from the air to convert the metallic iron into iron oxide and during the charging process the iron oxide is converted back into iron and oxygen.

Company News

American West Metals (AW1 AU) A$0.14, Mkt Cap A$72m – Preliminary drilling results from deep diamond drilling at Storm

• The Company reports preliminary results from the ongoing diamond drilling programme at the Storm Copper Project, Canada.
• Drillholes were completed within the Central Graben area, and to the south of the Southern Graben Fault, below the Thunder Prospect and the Chinook and Corona Deposits.
• Visual examination shows wide intersections of copper sulphide mineralisation.
• The drill holes were designed to test key geological targets at Storm and the potential for new zones of copper mineralisation within the ‘Deep Copper Horizon’ that was discovered during 2023.
• Drillhole ST24-01 was located to the south of the Cyclone Deposit, completed to a depth of 407intersecting a combined total of 21.3m of visual copper sulphide mineralisation between ~294m and 324m including:
  • 6.37m of visual copper sulphide from 293.7m downhole, and
  • 2.43m of strong visual copper sulphide from 302m downhole
  • 2.5m of visual copper sulphide from 311m downhole, including
    • 4.6m of strong visual native copper and copper sulphides from 315.4m downhole.
• Drillhole ST24-02 was located to the south of the Southern Graben Fault, completed to a depth of 455m and intersected a total of 99.2m of visual copper sulphide mineralisation including:
  • 1.1m of strong visual copper sulphide from 195.5m downhole, and
  • 1.3m of strong visual copper sulphide from 204m downhole, and
  • 17.1m of moderate to strong visual copper sulphide from 404.3m downhole.
• The third diamond drillhole is now being competed at the electromagnetic anomaly defined over a 1,300x500m area at depth below the Cirrus Deposit and the Gap Prospect.

Anglo Asian Mining* (AAZ LN) 89p, Mkt Cap £97m – FY24 production guidance

BUY

• The Company released FY24 guidance after having started construction of the tailings dam wall raise.
• FY24 is guided for 15.0-19.5koz GEOs including:
  • 14.06-16.0koz gold;
  • 250-850t copper.
• The agitation leaching plant has undergone extensive maintenance programme over the last 12 months is expected to restart in mid-September.
• The flotation plant will restart in November on standalone basis processing fresh ore from the open pit.
• Gilar development is ongoing wit first ore to be treated in December.
• The plan is to process 35-40kt of Gilar ore containing 1.6g/t gold and 2% copper for that month with the leaching plant recovering gold and tailings sent to flotation to recover copper in concentrate.
• The first 2.5m of the planned tailings dam wall raise is expected to be completed within three months.

Conclusion: The team is released guidance for the restart of agitation leaching and flotation circuits as operations may now resume after securing necessary permits to raise Gedabek tailings dam wall. 2H24 production is expected to be 2-3x 1H24 levels (1H24: 5.3koz GEOs) as operations are set to ramp up towards YE with maiden material from the high grade Gilar deposit to be processed in December. Record high gold prices should also help the topline in 2H24.

*SP Angel acts as Nomad and Broker to Anglo Asian Mining

Ariana Resources (AAU LN) 2.23p, Mkt Cap £42m – Business reorganisation in Turkiye

• Ariana Resources reports that the Turkish companies, Zenit Madencilik, which operates the Kiziltepe and Tavsan gold mines and the Salinbas project, and Pontid Madencilik, the owner of the Salinbas project have merged.
• As Ariana Resources “held a 23.5% interest in both Zenit and Pontid via its 100% owned subsidiary, Galata Mineral Madencilik San. ve Tic. A.S … [it continues] … to hold a 23.5% interest in the Assets through its ongoing 23.5% of the enlarged Zenit”.
• The company also confirms that “Gold and silver production from Kiziltepe and Tavsan continues as planned with c. 8,500 ounces of gold and 66,300 ounces of silver produced to the end of June”.
• Ariana Resources’ Managing Director, Dr. Kerim Sener, confirmed that “Trucking operations from Tavsan to Kiziltepe have intensified in recent months and are now running at a rate of 50 trucks per day. Meanwhile, a major pre-strip operation has accelerated at the Arzu South pit at Kiziltepe, with the expectation of ore production to recommence from this pit in early 2025”.
• Dr. Sener said that the merger “substantially simplifies the way we hold our interests in Türkiye and helps prepare the ground ahead of our planned ASX listing later in the year”.

Conclusion: The merger of the Zenit and Pontid simplifies Ariana Resources’ relationships in Turkiye while leaving its 23.5% holdings in the mining and development projects intact.

Empire Metals* (EEE LN) 8.6p, Mkt Cap £51m – Mineralogical testing supports high-purity titanium feedstock potential

• Empire provides an update on its large scale Pitfield titanium dioxide project in Australia.
• The Company continues to evaluate its recent discovery, having previously identified a strongly weathered, near-surface saprolite titanium dioxide bearing cap.
• Today, Empire announces that the weathered cap is dominated by anatase, bearing up to 98.5% TiO2 and accounting for over 5% of the weathered bedrock.
• X-Ray Diffraction results:
  • The team has conducted XRD analysis from an RC drillhole at the Cosgrove prospect, which was chosen given it contained up to 13.5% TiO2 alongside some lower grade content.
  • XRD was used to establish the relative presence of anatase versus rutile in the weathered zone, confirming anatase as the dominant TIO2 mineral.
  • 20 pulp samples from the top 40m of the drillhole were ground to <75µm.
  • Results show anatase to have formed from the weathering of titanite, with a notable absence of titanite in the weathered zone between 0-22m depth.
  • Hematite, quartz and kaolinite are noted as dominant gangue minerals in the weathered sandstones.
  • Empire suggest that the weathering has effectively leached the titanium from titanite, into ‘a more concentrated titanium mineral product, anatase.’
  • The Company suggests that ‘titanium can be simply leached from titanite to… a more concentrated, higher value commercial titanium product.’
• CSIRO Microprobe Results:
  • Empire has also completed microprobe testing on Pitfield’s weathered zone samples.
  • Results show TiO2 contents ranging between 85-98.5%.
  • Minimal impurities:
    • Al2O3 – 0.03 to 2.89%
    • FeO – 0.865 to 4.65%
    • SiO2 – 1.48 to 8.67%
    • V2O3 – 0.07 to 0.99
  • The Company highlights the unique nature of the Pitfield deposit vs other anatase, which traditionally derive from weathered carbonatites and host significant impurity levels.
  • Furthermore, very limited deleterious elements have been noted from the testing to date, with ‘negligible radionuclides, niobium, chromium, phosphorous.’
• Testing to date has boosted Empire’s confidence in their ability to produce high grade anatase ore comparable to rutile and suitable as a titanium feedstock mineral.
• Industry expert Gerry Colamarino, currently consulting Empire, notes that further test work is ‘required to explore the variables required by the chloride process, including particle size, bulk density and the digestibility of the anatase products.’
• Given the consistency and near-surface nature of the weathered anatase section, Empire anticipates potential economics to be boosted by low-cost strip-mining methods.
• The material is also supported by its soft, friable nature, further reducing potential OPEX once a processing route is established.
• Next steps for Pitfield include the definition of a maiden MRE.

Conclusion: Empire continues to develop their understanding of their Pitfield titanium discovery through crucial mineralogical testing. This has highlighted the dominance of high purity anatase with minimal deleterious elements or impurities near surface. The Team will now look to further progress the route to develop a novel feedstock suitable to the TIO2 pigment manufacturing industry. This will require further test work; however, Empire continues to derisk the asset as it works to define potential end products. Given the limited global project pipeline for high quality natural rutile assets, Empire’s Pitfield is strategically positioned to develop an alternative feedstock supply from its high purity anatase.

 *SP Angel acts as nomad and broker to Empire Metals

Goldstone Resources* (GRL LN) 1.3p, Mkt Cap £12m – £600k equity raise

• The Company announced yesterday a £600k conditional equity raise to progress ramping up at its Homase Gold Mine in Ghana.
• The Company is issuing 57m new shares at 1.05p, implying a 45% discount to the previous close.
• Proceeds to be used for taking production at Homase towards targeted 1kozpm as well as general working capital purposes.

*SP Angel acts as broker to Goldstone Resources

Guardian Metal Resources (GMET LN) 36.5p, Mkt Cap £43m – Pilot Mountain drilling programme extended

Power Metals Resources* (POW LN) 17.9p, Mkt cap £19m – (Power Metals* holds a 51% stake in Guardian Metal Resources)

• Guardian Metal Resources reports that it has now completed 2,396m of a planned 2.000m programme at its Pilot Mountain tungsten project in Nevada.
• The company confirms that it has complete 17 holes, is currently drilling the 18^th hole and that “the diamond drilling rig will remain on site to continue drilling …”.
• Assay results from the earlier part of the drilling campaign“ are expected shortly”.
• The drilling campaign includes 13 holes in the Desert Scheelite zone, all of which were successful in intersecting skarn mineralisation, “to support the Pre-Feasibility Study, successfully intersected the mineralised skarn zones where expected based within the existing block model, as well as locally within the hanging wall and footwall, supporting further resource expansion potential”.
• The company has also drilled at the Desert Scheelite Parallel West (DSPW) zone where the first hole ever drilled on the property, PM24-03 intersected an altered skarn/marble zone between 11m and 158.8m depth.
• Follow up drilling in hole PM24-05 interested a similar skarn/marble zone from a depth of 18.3m to the end of the hole at 197.8m depth.
• CEO, Oliver Friesen, welcomed the results from Desert Scheelite and the DSPW zones and highlighted that these are “only two of the Company’s multiple exploration targets … [and that the drilling in both has confirmed]… new mineralised and altered zones”.

Conclusion: Drilling at Pilot Mountain has been extended beyond the original planned metreage and a rig retained on site as it encounters new skarn and alteration zones.  We await the initial assays for information on grades.

*SP Angel acts as Nomad and Broker for Power Metals

Lucara Diamonds (LUC CN) C$0.33, Mkt Cap C$152m – Karowe yields another exceptionally large diamond

• Lucara Diamonds has announced the recovery of a 2,492-carat diamond from its Karowe mine in Botswana.
• The diamond was “recovered from the processing of EM/PK(S) kimberlite … [which is described as] … the dominant ore type that Lucara will continue to target during the first years of the Company’s underground mining operations”.
• CEO, William Lamb, commented that the “ability to recover such a massive, high-quality stone intact demonstrates the effectiveness of our approach to diamond recovery”.
• The world’s largest rough diamond was the 3,107 carat Cullinan diamond recovered in 1905 in South Africa, however the Karowe mine has already produced several of the 10 largest diamonds ever recovered including a 1080 carat diamond in late 2023 as well as the 1,109 carat ‘Lesedi La Rona’ diamond in 2015, the 1,758 carat ‘Sewelo’ diamond in 2019, and an 1,174-carat stone in 2021.

Patriot Battery Metals* (PMET CN) C$4.7, Mkt Cap C$660m – Shaakichiuwaanaan spodumene project PEA results

• Patriot, which holds the Shaakichiuwaanaan Project in Quebec, reports results from their PEA.
• The Company envisages a staged production scenario, via both underground and open pit methods.
• Stage 1 will target production capacity of 400ktpa spod concentrate for CAPEX of US$487m, which includes proposed tax credits.
• The Company will then look to fund a doubling of capacity to 800ktpa for net CAPEX of US$310m, also including tax credits.
• CAPEX requirements expected to be supported by CMT-ITC tax credits, with the Canadian government proposing 30% investment credits for clean technology manufacturing.
• The 24 year LOM considers the CV5 deposit only, and uses an open pit COG of 0.4% and an underground COG of 0.6%.
• Plant feed rate after stage two expansion estimated at 4.5mtpa.
• The project is DMS only and expects LOM lithia recovery at 69.5%, producing a concentrate grade of 5.5%.
• LOM average strip ratio of 3.7, average feed grade of 1.31%.
• Average LOM site cash operating cost for 5.5% concentrate at US$387/t, with FOB costs at $560/t.
• SC6 break-even FOB costs expected at US$587/t.
• Post-tax NPV8 of US$2.2bn and IRR of 34% using a $1,375/t SC5.5 FOB Becancour price.
• At spot prices, post-tax NPV8 shows a negative C$302m result. At $2000/t, this rises to C$4.97bn.

*A member of the SP Angel research team holds shares in Patriot Battery Metals

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.

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Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).

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