SP Angel Morning View -Today’s Market View, Tuesday 26th November 2024

Gold slides on signs of ceasefire in the Middle East, despite lower Treasury yields

MiFID II exempt information – see disclaimer below

Anglo Asian Mining* (AAZ LN) – BUY – 308p – Flotation circuit restarts

Ariana Resources (AAU LN) – Additional exploration potential at Dokwe

Atlantic Lithium* (ALL LN) – Statement on Sayona/Piedmont Merger

Beowulf Mining* (BEM LN) – Additional grant funding for graphite Project

Cobra Resources (COBR LN) – Additional metallurgical testing results from the Boland rare-earths project

Great Western Mining* (GWMO LN) – Placing to support processing mill ramp up and copper exploration

Guardian Metal Resources (GMET LN) – Pilot Mountain drilling results

Power Metals Resources* (POW LN) – (Power Metals* holds a 45% stake in Guardian Metal Resources)

Gold  ($2,625/oz) slides on signs of ceasefire in the Middle East, despite lower Treasury yields

1. Gold prices fell sharply yesterday, despite a rally in US Treasuries which saw the 10 year fall below 4.3% for the first time since October.
2. The dollar has also weakened, with the dollar index sliding below 107 again on fiscal hawkishness expected from Treasury Secretary elect Bessent.
3. The 3% sell-off likely reflected improved relations in the Middle East, with Israel and Lebanon set to discuss ceasefire options.
4. Gold was likely still quite heavily positioned to the bullish-side despite the recent sell-off, with momentum-driven funds expected to reduce positions given the rally’s pause.
5. We wonder whether renewed Central Bank buying, especially from China, may come into force now that the froth has been taken out of gold’s rally.

Aluminium pares gains after Rusal announces output cuts on record high alumina prices

1. Russian aluminium giant Rusal announced yesterday plans to cut output by 13% following the jump in alumina prices.
2. Rusal announced initial cuts of 250kt initially, with the option to cut a further 250kt unless alumina’s rally cools below $400/t vs $780 today.
3. Alumina hit record highs recently on supply disruptions in Guinea, Australia and Jamaica.
4. Meanwhile, Chinese refinery demand continues to rise, hitting record production levels this year.
5. Rusal produced 3.8mt of aluminium in 2023, second only to China.
6. Rusal sources c.30% of its alumina from the open market. (Bloomberg)
7. Rio resumed exports from their gladstone refinery in Australia recently after natural gas shortages triggered force majeure.

Economics

US – President Trump reiterated his hard stance on import tariffs in a post on his social media platform Truth Social.

• President elect said he will impost 25% tariffs on all imports from Canada and Mexico.
• An extra 10pp will be placed on Chinese inbound shipments.
• Tariffs will be put in place on the first day in office “on ALL products coming into the United States”.
• Charges will remain in place “until such time as Drugs, in particular Fentanyl, and illegal Aliens stop this Invasion of our Country”.
• The post may have been meant to undo the impact of the Bessent appointment that was considered by many as a potential softening of new US administration on trade tariffs.
• The US$ index strengthened on the announcement with Chinese offshore yuan down to a four month low, and the Mexican peso and Canadian dollar both down more than 1%.

Currencies

US$1.0483/eur vs 1.0450/eur previous. Yen 153.89/$ vs 154.52/$. SAr 18.150/$ vs 18.106/$. $1.255/gbp vs $1.256/gbp. 0.648/aud vs 0.650/aud. CNY 7.258/$ vs 7.246/$.

Dollar Index 107.10 vs 107.22 previous

Precious metals:         

Gold US$2,614/oz vs US$2,671/oz previous

Gold ETFs 83.2moz vs 83.1moz previous

Platinum US$930/oz vs US$949/oz previous

Palladium US$976/oz vs US$998/oz previous

Silver US$30.2/oz vs US$30.8/oz previous

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

Base metals:   

Copper US$8,987/t vs US$9,036/t previous

Aluminium US$2,617/t vs US$2,658/t previous

Nickel US$16,060/t vs US$16,030/t previous

Zinc US$3,028/t vs US$2,996/t previous

Lead US$2,010/t vs US$2,039/t previous

Tin US$28,860/t vs US$29,065/t previous

Energy:           

Oil US$73.3/bbl vs US$74.6/bbl previous

Natural Gas €47.4/MWh vs €47.2/MWh previous

Uranium Futures $77.2/lb vs $77.6/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$102.7/t vs US$102.2/t

Chinese steel rebar 25mm US$498.7/t vs US$500.2/t

HCC FOB Australia US$204.5/t vs US$204.5/t

Thermal coal swap Australia FOB US$143.0/t vs US$143.5/t

Other:  

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

NdPr Rare Earth Oxide (China) US$57,246/t vs US$56,578/t

Lithium carbonate 99% (China) US$10,540/t vs US$10,557/t

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

Ferro-Manganese European Mn78% min US$985/t vs US$985/t

China Tungsten APT 88.5% FOB US$338/mtu vs US$338/mtu

China Graphite Flake -194 FOB US$440/t vs US$440/t

Europe Vanadium Pentoxide 98% US$4.8/lb vs US$4.8/lb

Europe Ferro-Vanadium 80% US$25.6/kg vs US$25.6/kg

China Ilmenite Concentrate TiO2 US$307/t vs US$307/t

China Rutile Concentrate 95% TiO2 US$1,123/t vs US$1,125/t

Spot CO2 Emissions EUA Price US$64.9/t vs US$64.9/t

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

Germanium China 99.99% US$2,825.0/kg vs US$2,825.0/kg

China Gallium 99.99% US$430.0/kg vs US$430.0/kg

Battery News

Honda targeting 1000km range by 2030

• Honda is hoping to be producing EVs with a range of 1000km by 2030.
• The automaker is aiming to reduce the size of its EV batteries by 50%, weight by 35% and the cost by 25%.
• Honda has invested $277m to build a production line dedicated to solid-state batteries, which it hopes will help it reach these targets.
• By 2029, Honda expects to be producing over 2m EVs per year, accounting for 40% of its total sales.

Tesla generated significant greenhouse credits in 2023 as other automakers struggled

• Tesla generated nearly 34m metric tons of greenhouse gas credits in 2023
• Despite this, the industry was in a 11m metric ton deficit for that period.
• Excluding Tesla, carmakers generated a deficit of 43.5m credits in 2023, by contrast in 2022, the industry earned a net positive of 3m credits.
• In the Environmental Protection Agency report, seen by Reuters, the EPA said the industry as a whole has a surplus of 123m credits to meet future requirements.
• In March, the EPA finalised new rules requiring carmakers to cut emissions by 49% by 2032 over 2026 levels compared with 56% under the proposal last year after dramatically tightening 2024 through to 2026 requirements.

New Mercedes technology could enable EV batteries with mixed cell chemistries

• Mercedes have been developing micro-converters that could see future EV batteries using mixed cell chemistries wired in parallel.
• The converters could enable a pack to have LFP cells, NMC cells, and solid-state cells all together, and they could call upon different types of cells for different conditions and situations to work in their optimal operating windows.
• The new approach could translate to faster charging rates, longer driving range, and more flexibility in pack design, according to Mercedes’ engineers.

CATL launches new batteries for heavy-duty commercial vehicles

• CATL has launched new batteries under its commercial vehicle battery brand, Tectrans, to further expand its product portfolio.
• Tectrans was launched by CATL in July this year, with the first batteries tailored for the logistics industry.
• The company followed this up by releasing bus-specific batteries in September.
• The new batteries for the heavy commercial vehicles are said to address issues with rapid life decay and performance issues for this type of vehicle moving at speed.
• The battery has a long life of up to 1.2m kilometers, with a maximum capacity of 600kWh and a range of up to 500 kilometers.

Company News

 Anglo Asian Mining* (AAZ LN) 100p, Mkt Cap £114m – Flotation circuit restarts

BUY – 308p

• Flotation circuit at the Gedabek Gold/Copper Mine restarted normal production.
• The mill is fed with both stockpiles and freshly mined ore from the open pit.
• The news follows resumption of the agitation leaching plant earlier in September.
• Additionally, the first tailings dam wall raise at Gedabek was also completed.

Conclusion: In line with previous guidelines, the Company has now restarted all processing operations at Gedabek allowing the operations to ramp up recovering from a temporary suspension though 2023-24.

FY24 production forecast is for 15.0-19.0koz GEO with 2H24 accounting for most of it with 5.3koz GEOs produced in 1H24.

*SP Angel acts as nomad and broker to Anglo Asian Mining

Ariana Resources (AAU LN) 2.55p, Mkt Cap £45m – Additional exploration potential at Dokwe

• Ariana Resources reports that exploration within the Dokwe project area in Zimbabwe has identified additional areas of mineralisation potential south of the existing gold resources at Dokwe North (1.56m oz) and Dokwe Central (175koz).
• The newly identified Maboe Prospect, located around 7km south of the Dokwe North deposit hosts “a quartz vein breccia along a subtle east-west ridge that is intermittent over a strike length of approximately 600m” with seven of 22 rock chip samples taken at the site returning “>10.0g/t silver, and the highest returning 35.2g/t silver”.
• Although today’s announcement cautions that as “the in-country laboratory used is not yet accredited for silver assays, and some uncertainty is to be expected with the silver results” it also explains that the area covers “an area of broad gold, copper and silver anomalism delineated during the original Dokwe soil sampling programmes in the early 2000s”.
• A “broad zone of gold anomalism is identified from the soil sampling programmes at Siduli Pan” located northeast of Maboe and follow-up geophysical work and limited drilling in the early 2000s identified “narrow (5cm) quartz vein with significant chalcopyrite which returned an intercept of 81.1g/t Au over 0.5m from 243m down-hole depth” in hole DSD2.
• Ariana Resources explains that “Given that the Dokwe North and Central deposits extend from such depths to surface, this area represents an exploration target worthy of further investigation”.
• Explaining that although “exploration work across the Dokwe Project is at an early stage … A regional soil sampling programme has commenced” Ariana Resources comments that this “will ultimately provide full cover over the Dokwe claims area for a range of pathfinder elements and focused low-level gold and silver detection”.
• Since acquiring Dokwe earlier this year, Ariana Resources has increased the resource base from ~1.3moz of gold to around 1.8moz and Managing Director, Dr. Kerim Sener explained that “Our recent exploration work across the Dokwe Project is already yielding positive results which is continuing to build on the exploration upside of this opportunity. Work undertaken near Dokwe North and Central has identified the potential for resource blue sky and the broader prospectivity of the project area has increased following the exploration results outlined here”.

Conclusion: Systematic exploration of the Dokwe licence is continuing to identify additional exploration opportunities at Dokwe.  We await further news as the programme proceeds.

Atlantic Lithium* (ALL LN) 12.5p, Mkt Cap £84m – Statement on Sayona/Piedmont Merger

1. Atlantic provides an update on the recent merger between Sayona Mining and Piedmont Lithium.
2. The merger was announced on 19^th November.
3. Atlantic reports they have held positive discussions with the intended CEO and MD of the MergeCo, who have reiterated their ‘commitment to support the continued development of the Project towards production.’
4. Under their previous agreement, Piedmont was required to sole fund US$70m towards development expenditure of the Project, sharing cost overruns between the Company and Piedmont.
5. Piedmont also held the right to to earn up to 50% of the Company’s interest in the Project, alongside a 50% offtake agreement of the Project’s spodumene concentrate production.
6. The MergeCo will assume Piedmont’s prior obligations.
7. Management considers the Merger will ‘significantly de-risk the funding of the Project.’
8. Ewoyaa staff will spend time at Sayona’s NAL project in Canada, which is currently ramping up production, supporting the leveraging of skills and expertise in lithium mining and processing.

Conclusion: It is positive to see the combining Sayona and Piedmont management continuing to prioritise the development of Ewoyaa, with the MergeCo taking on Piedmont’s former obligations. We share Management’s belief that the merger will further de-risk the Project as it progresses towards construction.

*SP Angel acts as Nomad and Broker to Atlantic Lithium

Beowulf Mining* (BEM LN) 18p, Mkt cap £7m – Additional grant funding for graphite Project

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• Beowulf reports it has received additional grant funding from Business Finland.
• The Company has been granted €232k, or 50% of the three year budget for the Group’s ‘‘Management and Valorisation of Waste Streams in the Coated Spherical Graphite Production Process’ project.’
• The funding forms part of a wider Aalto University funding package of €13.4m to support a Finnish battery metal ecosystem.
• Grafintec has already received €530k in grant funding for its graphite anode material processing plant project.
• Today’s funding will support development of utilising wastewater and other waste streams from the GAMP process.
• It will also support wider ‘Life Cycle Analysis’ of the process.

Conclusion: Beowulf and their Grafintec subsidiary continue to take advantage of their strategically positioned GAMP project in Finland, securing further grant funding. The additional €232k will be used to investigate waste management optimisation and explore further optionality of the processing plant business model.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Cobra Resources (COBR LN) 1.2p, Mkt cap £9.5m – Additional metallurgical testing results from the Boland rare-earths project

• Cobra Resources reports that further bench scale testing of material from its Boland rare-earths project in the Eyre Peninsula of South Australia has supported the potential to use low impact ISR (in-situ-recovery) techniques.
• The test work has shown improved “exceptional permeability … [which is described as] … a key productivity driver of ISR that can influence critical cost factors such as acid consumption, wellfield design and metal recovery”.
• Today’s announcement indicates that the latest results “suggest that the sample preparation of the initial bench scale study impacted permeability as the mineralised interval contained underlying saprolite … [and that the] … excellent permeability observed in the second bench scale ISR study is expected to result in improved metal recoveries with implications for potentially lower recovery costs than were inferred from the results of the first test – which was, itself, successful”.
• Managing Director, Rupert Verco, commented that “permeability rates far exceed our internal baseline expectations. Our initial bench scale study demonstrated the ISR process, highlighting that high recoveries can be achieved with low-cost inputs, but this second test scales our opportunity by an order of magnitude”.
• He said that “Our strategy has been to address investment risk first which, in the case of rare earth projects, is normally associated with the cost of extraction. These extraordinary permeability results further highlight the unique nature of Boland mineralisation in this regard”.
• The company also confirms that it “has raised proceeds of £1.7 million before expenses through placements … at a price of 1.15p per share, representing a discount of approximately 11.5% to the closing price on 25 November 2024”.
• Mr. Verco thanked investors for their support and explained that the “ funds being raised will help accelerate the development of the Boland Project where we believe that, through materialising low-cost ISR mining, we will demonstrate the cost competitive advantage that Boland presents over other ionic rare earth clay projects”.

Great Western Mining* (GWMO LN) 0.017p, Mkt Cap £1.4m – Placing to support processing mill ramp up and copper exploration

1. Great Western, who holds precious metal and copper processing and exploration in Nevada, has raised money via a placing.
2. The Company raised £300k via a placing at 0.0165p.
3. Additionally, the company has initiated a retail offer, at the same price as the placing price.
4. The retail offer is open to existing shareholders and is expected to close by 5pm on 27^th November 2024.
5. Use of Funds:
   • Complete commissioning of process mill for pilot production
   • Delineate drill programme for West Huntoon copper porphyry project
   • Analyst and report soil and grab sampling programme from various projects over the 2024 field season.
   • Explore tungsten potential from Black Mountain project

Conclusion: Great Western has raised funds via a placing to support the final phase of their precious metal processing mill operation. This should generate revenue by processing easily accessible spoil heaps across the Company’s claim blocks. A gravity-derived concentrate will be sold initially, while the JV permits the leaching phase of the flowsheet. Additionally, the Company holds a prospective copper porphyry target within what they believe is a larger mineralised system spanning their Huntoon claims. Funds will enable the delineation of drill targets, with the exploration team having laid strong ground-based and geophysical foundations over the recent field seasons.

*SP Angel act as Broker to Great Western Mining, an SP Angel Analyst has visited Great Western’s Nevada claim blocks.

Guardian Metal Resources (GMET LN) 34p, Mkt Cap £39m – Pilot Mountain drilling results

Power Metals Resources* (POW LN) 16.25p, Mkt cap £18m – (Power Metals* holds a 45% stake in Guardian Metal Resources)

• Guardian Metal Resources has announced the latest results from its drilling at its Pilot Mountain project in Nevada which is understood to be the United States’ largest tungsten project.
• Announcing results from holes PM24-014 to 017, today’s announcement highlights:
  • An intersection of the Desert Scheelite deposit over 15.1m at an average grade of 0.141% tungsten trioxide plus ~1.3% copper and 0.65% zinc between 20.4m and 35.5m depth in hole PM24-014; and
  • An intersection of 46m, also of  the Desert Scheelite deposit, at an average grade of 0.413% tungsten trioxide plus ~0.25% copper and 0.37% zinc between 66.4m and 112.4m depth in hole PM24-017.  The intersection included higher grade sections of 10.8m at 0.681% tungsten trioxide from 66.4m and 7.6m at 0.917%  from 101.2m.
• The company says that the “vast majority of the intercepts above are located entirely within the planned pit shell and locally represent a significant upgrade from the low grade block model that occupied the area beforehand”.

• Guardian Metals Resources confirms that “37 drillholes have been completed, the 38^th drillhole is currently underway … [and also that the intersection in hole PM24-017 is] … one of the longest mineralised intervals ever drilled at Pilot Mountain”.

• Today’s announcement comments that “Company geologists have completed a further review of assays previously reported from PM24-004. Significantly, high-grade copper was intersected within a mineralised quartz monzonite (porphyry). Mineralisation includes disseminated chalcopyrite and molybdenite in the quartz monzonite as well as an approximately 0.4m wide chalcopyrite-pyrite-quartz vein. Assays across this interval returned 2.8m @ 1.00% Cu & 18.7 g/t Ag, including 0.4m @ 2.96% Cu & 47.3 g/t Ag”.
• These findings from hole PM24-004 are said to increase “the prospect of copper enrichment within Porphyry South as well as other porphyry targets across Pilot Mountain”.
• Commenting on the latest drilling results, CEO, Oliver Friesen, said that “we are one step closer to updating the Mineral Resource and mine plan for inclusion in our pre-feasibility study and to the Company’s ultimate goal of supporting the United States’ onshoring efforts for this very important Dual-Use metal”. The company defines a dual use metal as one with “both modern industrial and military applications, making it critical for U.S. national and economic security”.

Conclusion: The latest drilling results from Pilot Mountain show continuing wide and potentially economic grades of tungsten trioxide in the Desert Scheelite Zone.  We look forward to seeing these results reflected in a revised mineral resource estimate.

*SP Angel acts as Nomad and Broker for Power Metals

LSE Group Starmine awards for Q3 commodity forecasting:

No.1 in Precious Metals: SP Angel mining team awarded No 1. ranking for Previous Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q3 2024

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q3 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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