SP Angel Morning View -Today’s Market View, Monday 30th September 2024

Iron ore limit up as China stimulates further over the weekend, boosting sentiment

China lithium stocks continue to rally as stimulus alleviates oversupply concerns

MiFID II exempt information – see disclaimer below

African Pioneer (AFP LN) – Interim report updates exploration projects in Namibia, Botswana and Zambia and confirms focus on delivering production

Ariana Resources (AAU LN) – Interim results highlight the move into Africa at Dokwe, Zimbabwe and planned ASX listing

Aterian plc* (ATN LN) – Copper, silver drill results from Agdz prospects in Morocco show near surface mineralisation

Beowulf Mining* (BEM LN) – Consultation Process begins at Gállok Iron Ore project

East Star Resources (EST LN) – Copper exploration in Kazakhstan

Empire Metals* (EEE LN) – Placing raises £2.5m to accelerate Pitfield titanium project

Goldstone Resources* (GRL LN) – Interims point out targeted ramp up at Homase

GreenRoc Strategic Materials Plc (GROC LN) – Filing for exploitation license

Katoro Gold (KAT LN) – Interim reports highlights transition into uranium exploration

KEFI Gold and Copper* (KEFI LN) – Interims

Oriole Resources* (ORR LN) – Wide and abundant gold in Mbe trenching

Power Metal Resources* (POW LN) – Uranium JV update, new acquisition and field work update

Savannah Resources* (SAV LN) – Interims highlight AMG investment, drilling progress and revisions to DFS/permits timeline

Versarien* (VRS LN) – Cash sale of AAC Cyroma for £550,000 helps focus on graphene sales

Iron ore limit up as China stimulates further over the weekend, boosting sentiment

• Iron ore prices rallied sharply overnight, with the 62% Singapore contract rising to $110/t.
• The move followed news that Shanghai, Guangzhou and Shenzhen loosened property rules in a bid to support the sector.
• Guangzhou will remove all restrictions on homebuyers, whilst Shanghai and Shenzhen have reduced downpayment ratios.
• Beijing also announced plans to support refinancing of mortgages.
• Iron ore has been depressed by weak steel mill margins and steadily increased supply from Brazil and Australia.
• Copper also rallied, climbing past $10,000/t on renewed China demand optimism.

Gold ($2,654/oz) rally pauses ahead of busy US data week

• Gold prices bounded off $2,670/oz last week, settling around the $2,650/oz mark.
• The metal has been supported by rising rate cut sentiment, ETF inflows, and Central Bank buying.
• Recent tensions in the Middle East are also likely supporting gold, with Israel’s incursions into Lebanon raising concerns over an Iranian retaliation.

China lithium stocks continue to rally as stimulus alleviates oversupply concerns

• Chinese lithium stocks rallied sharply again overnight, with Ganfeng, Tianqi, Qinghai Saltlake and Sinomine all up 10%.
• Australian equities also rallied, with Pilbara up 3.5% and MinRes up 6%, although iron ore’s rally likely played a role.
• CME Group is launching cash-settled spodumene futures in October, which will provide further clarity on the still-opaque lithium market.
• Carbonate futures in China have risen above $10,300/t but remain depressed on a three-year average basis.

We recommend investors buy: Atlantic Lithium*, Kodal Minerals* and Savannah Resources* as undervalued lithium equities

*SP Angel acts as Nomad or broker for Atlantic, Kodal and Savannah

Vanadium – New mandatory standard for rebar steel involving higher loadings of vanadium came in to force 25 September in China.

• The ruling replaces voluntary compliance with the standard and mandate that all rebar products sold, manufactured, imported or used in construction across China will need to comply with the standard.
• Vanadium is used as an alloy in steel improving its strength.
• Steel accounts for ~90% of vanadium demand and China is ~50% of global consumption.
• Coupled with expansive monetary and fiscal easing announced by Chinese authorities last week, new mandatory compliance with new standards are expected to provide strong tailwind for prices.
• Vanadium is currently trading at its lowest since early 2017 and is 23% down YTD.

US EV sales remain strong despite industry setbacks and slower growth

• BEVs accounted for 8% of new vehicle sales in June and July 2024, with expectations to stay above 8% in September. (S&P Global Mobility)
• Market share for BEVs rose from 7% in the first quarter of the year, despite overall new vehicle sales projected to decline by 12% in September.
• The rapid BEV growth previously led by Tesla has slowed, with Tesla’s US market share falling below 50% due to an aging product lineup and CEO Elon Musk’s behaviour affecting the brand
• Automakers like General Motors and Ford are shifting focus from BEVs toward plug-in hybrids, with GM facing technical problems and Ford cancelling battery plants and electric SUVs.
• Despite these challenges, BEV sales are projected to continue growing through 2024, driven by new models like the Chevrolet Equinox and Volkswagen ID. Buzz.

This is Why Gold is Rising and It Will Probably Continue: https://www.youtube.com/watch?v=EsA7ICSVku8

• Podcast: https://audioboom.com/posts/8547593-john-meyer-this-has-one-of-the-lowest-risk-profiles-i-ve-seen-for-a-long-time

Economics

US – NFPs are due this week with estimates for the economy to have added 146k jobs, little up on 142k recorded in August.

• Unemployment is expected to come little changed at 4.2% and wages growth to hold at 3.8%yoy.
• PCE inflation released on Friday delivered little in the form of a surprise showing a pullback in headline measure and little change in the core gauge.
• Markets are pricing a total of three rate cuts over remaining two Fed meetings before year end.
• PCE (%mom, Aug/Jul/Est): 0.1/0.2/0.1
• Core PCE (%mom, Aug/Jul/Est): 0.1/0.2/0.2
• PCE (%yoy, Aug/Jul/Est): 2.2/2.5/2.3
• Core PCE (%yoy, Aug/Jul/Est): 2.7/2.6/2.7

China – Major stimulus announced last week see regional equity markets rise the most since 2008 entering bull market.

• CSI 300 index that lost more than 45% since 2021 highs through mid September jumped more than 20% through last week and this morning.
• The rally recorded last week was the strongest in 16 years with the gauge closing 8% up today.
• Trading volumes on both the Shanghai and Shenzhen exchanges hit a record of ~2.6tn CNY today.
• Bloomberg gauge of Chinese property companies jumped as much as 14% today.
• The central bank allows homeowners to refinance existing mortgages with their lenders effective November 1.
• Property owners will be able to cut their rates even for fixed rate mortgages for both first as well as second homes, Bloomberg reports.
• Major banks were ordered to provide detailed rules no later than October 12 and compete refinancing before October 31.
• Banks will also provide state owned firms with 100% loans, up from 60% announced in May, to purchase unsold property inventories.
• Three of the nation’s largest cities rolled out measures to revive growth in the property market following up on government led stimulus.
• Guangzhou became the first Tier 1 city to remove all restrictions on homebuyers including the number of homes owned.
• Shanghai and Shenzhen said they will allow people to buy more homes as well and lowered minimum downpayments for first and second homes to 15% and 20%, respectively.
• Separately, PMIs released this morning ahead of a week long holiday pointed to slowing growth momentum, although, the data is not accounting for the latest round of monetary and fiscal stimulus.
• Official Manufacturing PMI (Sep/Aug/Est): 49.8/49.1/49.4
• Official Services PMI (Sep/Aug/Est): 50.0/50.3/50.4
• Composite PMI (Sep/Aug/Est): 50.4/50.1/NA
• Caixin Manufacturing PMI (Sep/Aug/Est): 49.3/50.4/50.5
• Caixin Services PMI (Sep/Aug/Est): 50.3/51.6/51.6
• Caixin PMI (Sep/Aug/Est): 50.3/51.2/NNA

Germany – September regional inflation data showed the economy emerged from deflation recorded in the previous month.

• Nationwide CPI will be released later today with expectations for slowdown in the headline annual measure sub 2% mark.
• CPI EU Harmonised (%mom, Sep/Aug/Est): TBC/-0.2/-0.1
• CPI EU Harmonised (%mom, Sep/Aug/Est): TBC/2.0/1.8

UK – Q2 GDP growth was revised down 0.1pp to 0.5%qoq on downwards adjustments to government spending and net trade.

• Consumer spending was left unchanged at 0.2%qoq.

Currencies

US$1.1164/eur vs 1.1132/eur previous. Yen 142.05/$ vs 143.26/$. SAr 17.067/$ vs 17.197/$. $1.339/gbp vs $1.336/gbp. 0.693/aud vs 0.688/aud. CNY 7.015/$ vs 7.014/$.

Dollar Index 100.38 vs 100.72 previous

Precious Metals

Gold US$2,658/oz vs US$2,665/oz previous

Gold ETFs 83.5moz vs 83.5moz previous

Platinum US$999/oz vs US$1,003/oz previous

Palladium US$1,011/oz vs US$1,031/oz previous

Silver US$31.6/oz vs US$31.8/oz previous

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

Base metals:   

Copper US$10,053/t vs US$10,037/t previous

Aluminium US$2,643/t vs US$2,639/t previous

Nickel US$17,170/t vs US$16,885/t previous

Zinc US$3,105/t vs US$3,092/t previous

Lead US$2,128/t vs US$2,136/t previous

Tin US$33,270/t vs US$32,295/t previous

Energy:           

Oil US$73.0/bbl vs US$71.4/bbl previous

Natural Gas €39.0/MWh vs €37.3/MWh previous

Uranium Futures $81.9/lb vs $81.7/lb previous

Bulk:    

Iron Ore 62% Fe Spot (cfr Tianjin) US$111.9/t vs US$101.6/t

Chinese steel rebar 25mm US$488.3/t vs US$488.4/t

Thermal coal (1st year forward cif ARA) US$124.3/t vs US$121.3/t

Thermal coal swap Australia FOB US$144.5/t vs US$143.8/t

Other:  

Cobalt LME 3m US$24,300/t vs US$24,300/t

NdPr Rare Earth Oxide (China) US$61,016/t vs US$60,597/t

Lithium carbonate 99% (China) US$10,336/t vs US$10,337/t

China Spodumene Li2O 6%min CIF US$740/t vs US$740/t

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

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

China Graphite Flake -194 FOB US$445/t vs US$445/t

Europe Vanadium Pentoxide 98% 4.6/lb vs US$4.6/lb

Europe Ferro-Vanadium 80% 24.55/kg vs US$24.55/kg

China Ilmenite Concentrate TiO2 US$321/t vs US$322/t

China Rutile Concentrate 95% TiO2 US$1,347/t vs US$1,347/t

Spot CO2 Emissions EUA Price US$62.9/t vs US$62.9/t

Brazil Potash CFR Granular Spot US$282.5/t vs US$285.0/t

Germanium China 99.99% US$2,775.0/kg vs US$2,775.0/kg

China Gallium 99.99% US$455.0/kg vs US$455.0/kg

Battery News

US auto sales could suffer significantly with the introduction of new measures that bar Chinese vehicles.

• The US Commerce Department has said auto sales could drop by up to 25,841 vehicles a year and see prices rise if proposed rules go ahead that would ban Chinese vehicles that connect to the internet and key Chinese software and hardware.
• The measures, set to address potential national security vulnerabilities that could be exploited by China, could bar $1.5bn to $2.3bn in vehicle inputs from Chinese or Russian companies for vehicles sold in the United States.

BYD predicts mass adoption of solid-state batteries in affordable EVs by 2030

• EV and battery maker, BYD, forecasts widespread use of solid-state batteries in EVs by the end of this decade, with up to 500Wh/kg energy density. (CNEVPost)
• Solid-state batteries are expected to appear in premium EVs within the next three years, with adoption in mid-range and budget EVs by 2030.
• This timeline marks an improvement over earlier predictions from battery manufacturer CATL, which initially did not expect mass use of solid-state batteries before 2030.
• Global battery leader, CATL, now expects solid-state battery technology to be commercially viable by 2027, aligning with Toyota’s plan to introduce its first solid-state EVs under the Lexus brand.
• NIO is already selling vehicles with semi-solid batteries (95% solid electrolyte) that offer up to 650 miles of range.

Jaguar Land Rover launch battery recycling project to protect British EV production

• The project between Jaguar Land Rover (JLR) and UK critical metals supplier Altilium, will produce and validate EV battery cells using materials recovered from EV batteries that have reached end-of-life.
• It is estimated that this could cut carbon emissions from EV cell manufacturing by 60%.
• Altilium says the project will demonstrate battery cells produced with cathode active materials (CAM) – including lithium, cobalt and nickel – recovered using the company’s EcoCathode process.

Dürr launches new GigaGoater machine for efficient battery electrode production

• Global engineering firm, Dürr, has unveiled GigaCoater, a faster, wider two-sided coating machine for battery OEMs, reducing costs while maintaining quality. (Batteries News)
• Its streamlined design, features two coating stations and a non-contact flotation drying system, and reduces energy consumption, prevents edge curl, and ensures uniform drying and quality.
• Significant operating cost reductions come from lower energy use, fewer personnel needs, minimized material waste, and a smaller manufacturing footprint.

Company News

African Pioneer (AFP LN) 1.8p, Mkt Cap £4.1m – Interim report updates exploration projects in Namibia, Botswana and Zambia and confirms focus on delivering production

• African Pioneer reports a loss of £0.32m for the six months to 30^th June (H1 2023 – £0.30m) and a closing cash balance of £86,000.
• The company review its Ongombo copper/gold project near Windhoek, Namibia where it has secured a two year extension to its exploration licence where it is in “Advanced discussions with multiple parties about project level funding of the Ongombo Project” which hosts an ‘Indicated’ mineral resource of 23mt at an average grade of 0.95% copper and 0.24g/t gold.
• Work is continuing “to re-evaluate the open pit resource in light of the positive ore sorting results achieved”.
• In Botswana, African Pioneer is continuing to “to evaluate the scope for smaller scale deposits within the group of 5 prospecting licences … [focussing] … on near-term production opportunities and improved likelihood of major discoveries on other projects”.
• In Zambia, “First Quantum has exercised its option over the … Zambian licences” where initial drilling, including 4 diamond-drill holes at the Turaco target and 9 reverse-circulation holes at the Chipopa target, has shown “the right lithology confirming Congo-style mineralisation”.
• The company describes how the “geological environment classified as the Fold and Thrust Belt … adjoining … [the] … Western Foreland … [is] … currently the focus of intense exploration and speculation from exploration companies of varying size”.
• African Pioneer confirms its “short to medium term strategic objectives … to enhance the value of its mineral resource Projects through exploration and technical studies conducted by the Company or through joint venture or other arrangements … with a view to establishing the Projects can be economically mined for profit”.

Ariana Resources (AAU LN) 2.03p, Mkt Cap £37m – Interim results highlight the move into Africa at Dokwe, Zimbabwe and planned ASX listing

• Ariana Resources reports an after-tax profit of £0.7m (H1 2023 – £0.1m) and a closing cash balance of £1.2m for the six months ending 30^th June.
• The company explains that its 23.5% holding in the Kiziltepe gold mine in Turkey amount to £2m (H1 – 2023 £0.7m).
• The company highlights the continuing financing, by its partner, Zenit Madencilik, of mine construction at Tavsan where, following a US$20m loan facility from a Turkish bank, project completion is expected by the end of 2024.
• Ariana Resources also highlights the acquisition of the Dokwe gold project in Zimbabwe following the approval, in June, of an all share merger with Rockover Resources where a revised pre-feasibility study describes an after-tax NPV10% of US$160m and IRR of 41% at a gold price of US$2,000/oz at Dokwe North.
• Development of the recently updated mineral resource at Dokwe allows “examination of an expanded mining scenario of 75,000 to 100,000 ounces of production over 10 to 15 years as part of the Definitive Feasibility Study”.
• Ariana Resources also describes continuing exploration at its Salinbas project “including the results of a 115-hole drilling programme … and a 10-hole drilling programme along with geophysics at the Hizarliyayla prospect”.
• While acknowledging the “dedication and hard work of our team”, Managing Director, Dr. Kerim Sener, described how the acquisition of Dokwe expanded the company’s activities into “a new continent”.
• He also referenced Ariana Resources’ plans to “list the Company on the Australian Securities Exchange in the coming months and … [confirmed that] … over the last several months, a large body of work has been underway to support this effort”.

Conclusion: The merger with Rockover Resources brings an advanced 1.8moz gold project at Dokwe in Zimbabwe.

Aterian plc* (ATN LN) 53p, Mkt Cap £5.1m – Copper, silver drill results from Agdz prospects in Morocco show near surface mineralisation

(Rio Tinto jv has the option to invest US$7.5m in two stages to earn up to 75% in the HCK lithium and tantalum hard rock prospect in Rwanda)

(Rwanda: Aterian holds a 70% interest in Kinunga Mining Limited which holds the HCK licence alongside HCK Mining Company Limited which has a 30% interest.)

(Botswana: Aterian also holds a 90% in Atlantis Metals which holds its licenses in Botswana). (Morocco: Aterian holds 100% on all licenses held in Morocco)

• Aterian report an operational update on work on the Agdz Copper-Silver prospects in the eastern Anti-Atlas Mountains of Morocco.
• The team completed 1,080m of drilling in 13 reverse circulation drill holes with copper, silver mineralisation encountered near surface.
• Drill chippings from the holes show copper and silver mineralisation in six of the holes on three separate prospects indicating potential for further discovery.
• Agdz Copper-Silver Project:
  • Makarn (north) prospect:
    • Silver grades of 154 g/t Ag and 124 g/t Ag >1 m intervals seem
    • 1.24 % Cu and 101 g/t Ag over 3 m from 8 m (downhole) – warrants further investigation
    • 0.45 % Cu and 3 g/t Ag over 11 m from 32 m (downhole)
  • Amzwaro prospect
    • 0.79 % Cu and 5 g/t Ag over 6 m from 6 m (downhole)
  • Daoud prospect
    • 0.27 % Cu and 3 g/t Ag over 4 m from 16 m (downhole)
• Management will plan a step-out drilling campaign at Makarn (north) to follow up on the unusually high-grade intercept.
• The press release contains maps and cross sections highlighting the interaction of geophysics and drilling and the enormous amount of work done on their Moroccan prospects.
• Aterian has an extensive portfolio of mineral licenses across Morocco with significant prospectivity.
• Morocco is increasingly viewed as an investment grade destination with substantial investment going into the region in relation to electric vehicle manufacturing.
• The nation has ratified 72 investment treaties for the promotion and protection of investments and 62 economic agreements, including the US and most EU nations to eliminate the double taxation of income or gains.
• Morocco has a Free Trade Agreement with the US eliminating tariffs on more than 95% of qualifying consumer and industrial goods.

Conclusion:  The Makarn (north) result is particularly high grade and warrants further investigation. This is the sort of result Geologists live for.

*SP Angel acts as Broker to Aterian Plc

Beowulf Mining* (BEM LN) 25p, Mkt cap £10m – Consultation Process begins at Gállok Iron Ore project

BUY – 270p NPV

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• Beowulf announces it has begun the Consultation Process for Gállok.
• This forms a key part of Environmental Permitting, highlighting views on those stakeholders who may be affected by the development.
• Beowulf may be requested for additional information by the Land and Environmental Court.
• A hearing will be held upon completion, followed by a Court judgement.
• Consultation will continue until mid-November, followed by additional investigation work before submitting the Environmental Permit application in Spring 2025.
• The review process by the Court is expected to take two years.

*SP Angel acts as Nomad and Broker to Beowulf Mining

East Star Resources (EST LN) 1.15p, Mkt Cap £4.3m – Copper exploration in Kazakhstan

• East Star Resources’ interim report for the six months to 30^th June reports a profit of £30,000 (H1 2023 – £0.32m loss) after the inclusion of £394,000 received from BHP’s Xplor programme to expedite exploration for copper porphyry mineralisation in Kazakhstan.
• Initial exploration is underway on the Balkash Ili volcanic arc including the 79km² Ayagoz licence which hosts a “3km long silica lithocap located ~80km north of the large Aktogay copper mine (~2.5Bt @ 0.39% copper)” as well as the Snowy licence with “a 6km long and 3km wide silica lithocap, located ~150km north of the large Kounrad copper mine and smelter”.
• The exploration includes “extensive soil sampling and spectral analysis of samples taken from both licences – analysis ongoing”.
• The company also highlights Exploration of the Rudny Altai mineral belt for volcanogenic massive sulphide copper where it has defined a “maiden JORC Inferred Mineral Resource for the Verkhuba Copper Deposit of 20.3Mt @ 1.16% copper, 1.54% zinc and 0.27% lead using a whole deposit cutoff grade of 0.86% copper equivalent” where it is soliciting third party interest “.for a potential joint venture, farm-out, or sale of Verkhuba”.
• In joint venture with Getech, work is also analysing the potential for “sediment-hosted copper deposits in Kazakhstan”.
• Non-Executive Chairman, Sandy Barblett, confirmed that, following summer field exploration work, “our attention is turning to forthcoming high-impact drilling on new VMS targets in addition to further drilling at Verkhuba”.
• He commented that, against the background of a search for new sources of copper supply, “East Star has over the past couple of years positioned itself as a go-to explorer, with boots on the ground, for accessing this opportunity in Kazakhstan”.

Conclusion: Supported by BHP’s Xplor programme, East Star Resources is taking a pathfinder role in copper exploration in Kazakhstan.

Empire Metals* (EEE LN) 7.3p, Mkt Cap £43m – Placing raises £2.5m to accelerate Pitfield titanium project

• Empire reports it has raised gross proceeds of £2.5m via an equity placing at 7p/share.
• Use of funds includes resource drilling, mineralogical and metallurgical studies, alongside environmental baseline studies.
• The Company’s current focus is on studies regarding the higher purity weathered anatase cap that lies near surface.
• Empire sees this section of the large Pitfield project to be more suitable for a potential high-quality Tio2 concentrate.

 *SP Angel acts as nomad and broker to Empire Metals

Goldstone Resources* (GRL LN) 1.0p, Mkt Cap £7m – Interims point out targeted ramp up at Homase

• The Company produced 1.3koz in 1H24 and post period output run at 250 ounces per month.
• August production came in at 236 ounces.
• Stacking operations are currently running at 150tph on a 12h shift with the team targeting to ramp it up to 24h operation reaching 48ktpm throughput rate by YE24.
• The Company is aiming to hit 1,000 ounces pcm run rates from January 2025 assuming 68% recoveries and processed grades of 1g/t
• Revenues amounted to US$2.6m (1H23: $0.2m).
• EBIT was -$1.0m (1H23: -$3.1m).
• Loss totalled -$2.4m (1H23: -$3.7m).
• FCF came in at -$1.2m (1H23: -$2.8m) mostly reflecting negative operating CF (-$1.2m) with little in the way of capex (-$0.1m).
• Net Debt stood at $8.1m (YE23: $8.0m) with $0.8m in cash and $8.9m in outstanding debt including £2.4m convertible loan facility with Blue Gold International (due 30 November 2024) and 1.9koz gold loan due to Asian Investment Management (due 31 December 2025).
• The Company raised £600k post period end to help with working capital as the team ramps up operations at Homase Gold Mine in Ghana.

*SP Angel acts as broker to Goldstone Resources

GreenRoc Strategic Materials Plc (formerly GreenRoc Mining) (GROC LN) 1.58p, Mkt Cap £3.12m – Filing for exploitation license

• GreenRoc has submitted its application for an Exploitation Licence for the Amitsoq Graphite Project in South Greenland.
• The process should enable GreenRoc to fast-track the Amitsoq graphite mine into production to hopefully meet new demand for Li-ion battery manufacturing in the West.
• The Greenland government will now consider the application and, subject to approval, it will then be sent for public pre-consultation for 35 days.
• Amitsoq graphite mine awarded ‘Project’ status by the international MSP ‘Mineral Security Partnership’, a collaboration of 14 countries, inc. the US, UK and EU.
• The MSP is designed to catalyse public and private investment in responsible critical minerals supply chains.
• GreenRoc will be talking to the EU mission to Greenland this week which should help with future funding via government-sponsored funds.
• Graphite purification:
• Testing to achieve >99.9wt% graphite from alternatives to hydrofluoric acid leaching have been done with positive results.
• Almost any alternative route to the use of hydrofluoric acid should reduce capital and operating costs while improving ESG and reducing risk within the project.
• Amitsoq PFS (11 July 2024):
  • NPV of US$621m vs $545m – post tax
  • IRR 26.5% vs 25.3%
  • Capex $340m vs $321m
  • Opex $1,872/t vs $2,211/t
  • Production 80,000tpa of concentrate – remains the same
  • Production 39,700tpa active anode material – remains the same
  • Includes: onsite production of de-ionised water and construction of a plant for the production of nitrogen.
• Potential to cut OPcosts to US$1,662 using sodium hydroxide (NaOH) instead of hydrofluoric acid (HF) could increase Capex cutting post-tax NPV8 to US$601m with an IRR of 23.7%.
• The West is desperately trying to command better control on its battery material supply chains through the development of projects in the EU and North America. So far progress has been slow but a number of new initiatives should now speed up developments in critical materials.
• We believe the market will move further towards the use of flake graphite due to its higher carbon content and lower greenhouse gas emissions.
• China currently produces >60% of the world’s flake graphite and ~80% of global synthetic graphite.

Conclusion:  GreenRoc has one of few near-development ready projects within Europe. While certain European battery manufacturers are struggling many other gigafactories are planned in the US and the West.

Katoro Gold (KAT LN) 0.09p, Mkt Cap £1.4m – Interim reports highlights transition into uranium exploration

• In its interim report for the six months to 30^th June, Katoro Gold reports a loss of £0.21m (H1 2023 – loss of £0.31m) and a cash balance of £0.25m.
• Interim CEO, Patrick Cullen, described “a new direction with a refinancing that enabled the elimination of historical creditor balances and liabilities which had placed obvious limitations on the business … [with a restructuring of its] … management team”.
• Mr. Cullen highlighted the company’s move into “uranium exploration …with the acquisition through staking of the White Pine Uranium Project in Ontario, Canada”.
• The exploration at White Pine focusses on the uranium potential of lacustrine sediments which reports by the Ontario Geological Survey indicate contain “very highly anomalous uranium concentrations in a geologically prospective setting”.
• Setting the context for a move into uranium exploration, the company describes the emergence of demand for uranium to support “new dynamic demand emerging for nuclear power generation … [and Mr. Cullen said that the White Pine project] … is a first example of … Katoro’s move into uranium exploration”.

Conclusion: Katoro Gold’s interim report underlines its’ strategic shift into uranium exploration.

KEFI Gold and Copper* (KEFI LN) 0.6p, Mkt Cap £37m – Interims

• The Company released interim results this morning.
• Loss totalled -£6.1m (1H23: -£3.4m) reflecting higher administration and finance costs.
• Net CFO was -£2.3m (1H23: -£0.3m).
• FCF amounted to -£3.9m (1H23: -£2.7m) including capex of £1.7m (1H23: £2.4m).
• Net Debt stood at £2.0m (1H23: £1.9m) including £1.0m in cash and £3.0m short term bridge financing.
• Amount of trade creditors and payables increased to £9.0m as of quarter end (1H23: £7.3m).
• The team is progressing flagship Tulu Kapi Gold Project through project funding targeting completion 4Q24.

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

Oriole Resources* (ORR LN) 0.31p, Mkt cap £12.3m – Wide and abundant gold in Mbe trenching

• Oriole Today Oriole announces results from its ongoing trenching programme at their highly prospective Mbe gold project.
• Today’s trenching results regard the MB01-S sub-prospect, following on from the previously reported MB01-N trenching results, which reported highlights of 50m at 1.1g/t Au, 68m at 0.77g/t Au (inc. 24m at 1.2g/t Au).
• MB01-S lies c.1km southeast of MB01-N, with both lying within the 12.5km long gold-in soil anomalism.
• Highlights include:

• • MBT006: 10m at 0.86g/t Au, including 6m at 1.13g/t Au
  • MBT007: 51m at 1g/t Au, 32m at 1.3g/t Au, including 8m at 2.2g/t Au and 6m at 3.46g/t Au, 36m at 0.8g/t Au, including 15m at 1.33gt Au
  • MBT008: 88m at 0.71g/t Au, inc. 30m at 1.18g/t Au, 48m at 1.23g/t Au, 27m at 0.7g/t Au, inc. 9m at 1g/t A, 19m at 0.8g/t Au, inc. 12m at 1.12g/t Au
  • MBT009: 28m at 0.36g/t Au, 18m at 0.39g/t Au

• Trenches MBT005 and MBT004 targeted a smaller gold anomaly, and returned gold up to 7m at 0.6g/t Au.
• Mineralisation was present over the entire 540m and 532m MBT007 and MBT008 trenches respectively.
• Previously reported highlights from the first three trenches include best channel intersections of:

• • MBT001 – 50m at 1.11g/t Au, including 20m at 2.23g/t Au
  • MBT002 – 38m at 0.55g/t Au
  • MBT003 – 68m at 0.77g/t Au, including 12m at 1g/t Au, 24m at 1.18g/t Au

• The exploration team notes a dominance of sulphide-rich quartz veins and veinlets, alongside sections of lower grade gold mineralisation.
• The wider sub-1g/t Au envelopes will likely support the economics of the project should mineralisation continue at depth.

Conclusion: Today’s results reinforce the initial trenching results impression that Mbe holds significant gold potential. Trenching at both MB01-S and MB01-N has yielded highly encouraging results at promising grades (highs of 6.33g/t) and wide intercepts (i.e. 51m at 1g/t Au). Results will now guide a maiden drilling programme, which will start in the 2024/25 field season

*SP Angel acts as Broker to Oriole Resources

Power Metal Resources* (POW LN) 15.5p, Mkt cap £17m – Uranium JV update, new acquisition and field work update

• Power Metal Resources provides an update on their Uranium-focused Joint Venture.
• The Company will not extend the period of exclusivity of the transaction given the advanced nature of proceedings.
• The Investor, UCAM, is currently finalising certain administrative tasks.
• Completion is expected to be announced imminently.
• Power Metals also announces today it has acquired the Drake Lake-Silas uranium project.
• The project covers 12.5km2 and lies alongside an MRE containing 5mlb U₃O₈ indicated and 5.82 million lbs U₃O₈ inferred.
• Early-stage exploration work has revealed two uranium-in-soil anomalies up to 798ppm U₃O₈ and an intersection showing 0.2m at 0.27% U₃O_8.
• Power Metals are acquiring the project for £500k through the issue of 3100m new shares at 0.16p. (30 day VWAP to 19^th September).
• The Project will form part of the new Uranium JV with UCAM.
• Power Metals have conducted ground-based surveys over seven of their uranium properties, comprising soil, radon, helium and biogeochemistry sampling.
• The team were targeting prospective areas where radiometric and helium hyperspectral anomalies had been identified.
• Results from magnetic and radiometric surveys at Soaring Bay and Thibault Lake are expected soon.
• Soil sampling results from Drake Lake-Silas are also due soon.
• POW is now working on next stage electromagnetic surveys across four uranium prospects, expected to begin in early October.

Conclusion: It is encouraging to see Power Metal Resources’ JV with UCAM is nearing completion, with final administrative checks being conducted. The Company has boosted the JV with an additional acquisition, Drake Lake-Silas, which lies contiguous to an existing indicated and inferred MRE. Field work is ongoing, and we look forward to both the completion of the JV and exploration updates from the current field season.

*SP Angel acts as Nomad and Broker for Power Metal Resources

Savannah Resources* (SAV LN) 3.9p, Mkt Cap £88m – Interims highlight AMG investment, drilling progress and revisions to DFS/permits timeline

BUY – 18.1p (from 18.3p)

• The Company released interim results highlighting progress at the flagship hardrock Barroso Lithium Project in Portugal.
• Key development was AMG Critical Materials’ $20m equity investment for a 16% interest in the Company in June.
• AMG, a specialty metals Group with a hardrock lithium mine in Brazil and LHM refinery in Germany, singed a binding offtake for 45ktpa SC (~25% of forecast 190ktpa) for 5 years at market prices.
• AMG holds an option to grow the offtake to 90ktpa over 10 years should AMG present “full project financing solution” and the Company accepts it.
• As a result, the Company retains 100% in the project and at least 50% of SC production offering optionality with project funding discussions.
• Mike Connor joined the Board as Non Executive Director representing AMG interest in the Company.
• The Company completed Phase 1 of DFS drilling programme involving 6,000m.
• Programme mostly focused on infill, geotechnicaland hydrogeological drilling to convert Inferred resources into higher confidence categories and ultimately into maiden reserves.
• A number of step out holes also intersected lithium mineralisation outside of existing resource.
• Rick Anthon joined the Company as new Chairman bringing a wealth of experience to the Board having previously worked at Orocobre and Allkem.
• The Company updated planned development timeline for the Barroso Project.
• Phase 2 drilling involving 13,000m required to finalise the DFS will commence 4Q24.
• As a result, the DFS and mining license are now expected to be completed in 2H25 with first production planned for 2027.
• This compares to previous guidance of DFS for YE24 and permitting for 1H25 with first production 2026.
• The delay is attributed to progress at securing access to land for Phase 2 drilling.
• In an effort to remain project timeline on track, the Company started legal process securing temporary access to land not currently owned using national government.
• While changes in the government led to some delays in the process, the Company now expects temporary access to be secured shortly allowing to kick off drilling in 4Q24.
• 1H24 loss amounted to £1.9m (1H23: -£1.5m) with £1.8m (1H23: £1.4m) in admin costs, an increase reflecting larger staff levels amid ongoing FS and permitting related work.
• Capex totalled £2.4m (1H23: £0.7m).
• The Company is debt free with latest cash balance standing at £19.6m (YE23: £9.7m).

Conclusion: Main points highlighted in 1H24 results are $20m equity investment from AMG taking cash balance to ~£20m and no debt on the balance sheet, Phase 1 drilling completion and updated project timeline accounting for delays in accessing land to start Phase 2 drilling. Regarding the latter, the Company is expecting to secure temporary access in 4Q24 allowing it to proceed with FS and permitting related workstreams. The six months’ delay is disappointing, however, fundamentally the story remains little changed given low technical risk of conventional hardrock Barroso Lithium Project, the largest in Europe, strategic location and strong lithium demand outlook. A slight revision in the target price accounts for adjustments to the cash balance with project NPV remaining unchanged.

*SP Angel acts as Nomad and Broker to Savannah Resources

Versarien* (VRS LN) 0.059p, Mkt Cap £1.6m – Cash sale of AAC Cyroma for £550,000 helps focus on graphene sales

• Versarien has completed a binding agreement for the sale of AAC Cyroma, it’s plastics manufacturing business to Harper Bennett for £550,000 in cash.
• The deal remains subject to any adjustments arising from completion accounts.
• The £550,000 is payable in 16 equal quarterly instalments of £34,375, starting three months from completion.
• Versarien will retain a charge over the assets of AAC Cyroma and Harper Bennett Limited to cover any outstanding consideration payable.
• AAC Cyroma incurred a losses of £146,350 to 30-September 2023 and had net assets of £411,142.
• The disposal is in line with Versarien’s strategy to focus on its core graphene technology and divesting of its mature businesses.

Conclusion:  Versarien continues to streamline its business to enable better focus on the development of graphene inks for wearable technology, CementeneTM admixtures and novel mortars for 3D printing in construction. Management are working towards securing BS934 accreditation for concrete admixtures.

*SP Angel acts as Nomad and Broker to Versarien

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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