SP Angel Morning View -Today’s Market View, Tuesday 10th December 2024

Iron ore climbs as steelmaker sentiment improves on Chinese monetary policy shift

MiFID II exempt information – see disclaimer below

Castillo Copper (CCZ LN) – Helicopter based geophysical survey for Harts Range project

Guardian Metal Resources (GMET LN) – Board appointments

Lundin Gold (LUG CN) – Three-year guidance as exploration remains a focus

MetalNRG (MNRG LN) – Metal NRG renamed to Atlas Metals Group to reflect acquisition of the Oumejrane copper mine in Morocco from Managem

Atlas Metals Group (AMG LN)

Power Metal Resources* (POW LN) – LoI signed for copper exploration in Saudi Arabia

South32 (S32 LN) – Withdraws Mozambique aluminium production guidance on civil unrest

Iron ore climbs as steelmaker sentiment improves on Chinese monetary policy shift

• Iron ore prices rose again overnight following China’s Monday monetary policy update.
• The Politburo has committed to taking a ‘moderately loose’ monetary policy alongside a ‘more proactive’ fiscal policy.
• The protracted slump in Chinese real estate sales has weighed on steelmaker margins and subsequent iron ore demand.
• 62% Fe China prices rose over $106/t while steel prices also edged higher.

Gold ($2,664/oz) holds higher ground as markets look to CPI data for next clues

• Gold is holding near its recent highs of $2,670/oz, but c.$100/oz lower than late-October levels.
• It enjoyed a small rally following signs of weakness in the Non-Farm Payrolls report, which pushed US Treasury yields lower.
• However, the rally in gold and government bonds has cooled recently, with focus now turning to the US CPI report due tomorrow.
• The US dollar is holding steady too, having eased from recent highs amid a rally in the Yen and cooling Treasury yields.

Copper – Panama poll on First Quantum’s Cobre mine shows continued opposition from public

• A Research firm conducted a poll across 1,600 Panamanians over the reopening of FQM’s Cobre Panama.
• 44% supported keeping the mine closed indefinitely whilst 27% backed a reopening under government supervision.
• 23% voted in favour of reopening to then manage an orderly closure.
• 57% believed a continued closure would deter international investors.

UNCTAD – Global trade on target to rise 3.3% to US$33tn this year

• UN trade & development, UNCTAD report global trade in goods and services is set to rise by $1tn and hit a record $33tn this year according to a UNCTAD update.
• Services are the primary driver of the growth with a strong 7% yoy increase and makes up over 50% of the overall trade expansion.
• Goods trade rose by 2% but is still short of the 2022 peak as the world emerged from the Covid pandemic.
• Developed economies led the growth in global trade in Q3 with a 3% increase in imports and a 2% rise in exports.
• Developing economies saw a fall in global trade of 1% in imports with a similar fall in South-South trade.
• A rise in exports from China into the US ahead of Trump’s promised tariff hikes may be skewing the figures.

Tesla China sales up 15.5% in November

• Tesla sales in China recovered in November, following a decline in October.
• Tesla China sold 78,856 vehicles in November, including those sold in China and those exported.
• This was up 15.49% from October, but down 4.34% yoy.
• In the January-November period, Tesla China sold 822,894 vehicles, which was down 3.6% yoy, according to data compiled by CnEVPost.
• Tesla’s main Chinese rival BYD sold 506,804 new energy vehicles (NEVs), surpassing the 500,000 mark for the second time and marking its sixth consecutive record month.

Trafigura – Swiss prosecutors looking for >US$156m in fines and compensation from Trafigura plus a four-year jail term for former COO as part of a corruption trial in Switzerland

• This is the first time a Swiss criminal court will rule on a company’s liability for alleged bribery of foreign officials with a former executive of a trading firm facing possible prison.
• Prosecutors allege Trafigura and three other defendants paid bribes of >US$5m via a network of intermediaries to an Angolan official to win oil deals from 2009-2011.

121 Mining Investment Conference – Investment Leaders – Alternative Finance Panel

• https://www.theassay.com/videos/panels-presentations/investment-leaders-panel-alternative-financing-strategies-whats-best-for-the-junior-market-at-this-moment/

Economics

China – Trade data misses estimates as markets look forward to developments on a potential for higher trade barriers led by new US administration.

• Authorities launched an antitrust investigation into Nvidia in what is considered a retaliation to earlier US initiatives to limit shipments of key semiconductor technologies to China.
• Chinese regulators are also reviewing potential violations of commitments the US chipmaker made during its $6.9bn acquisition of Mellanox, an Israeli-American supplier of networking products.
• The news comes a week after the US tightened export controls on advanced high bandwidth memory chips and chipmaking equipment shipped to China.
• Chinese sovereign bond yields are hitting record lows as authorities pledged more monetary policy support.
• State media reported Politburo officials arguing for “monetary loose” policy as opposed to “prudent” declared before.
• Exports (%yoy, Nov/Oct/Est): 6.7/12.7/8.7
• Imports (%yoy, Nov/Oct/Est): -3.9/-2.3/0.9
• CPI fell 0.6% in November vs -0.3% in October but rose 0.2% yoy vs a rise of 0.3% yoy in October. The move shows deflationary impact in China
• Food prices fell 2.7% in November though prices remain 1% higher yoy.
• Pork prices remain 13.7% higher yoy.
• PPI remains negative 2.5% yoy in November vs -2.9% yoy in October.

Brazil – President Luiz Lula da Silva is in intensive care after brain surgery and is recovering ‘well’, the government said.

• President underwent a craniotomy procedure to drain a haematoma after an MRI scan showed an ‘intracranial haemorrhage’.

South Korea – Monetary authorities held an emergency meeting today saying that latest market volatility was somewhat excessive” and meant to provide reassurance to investors “that all necessary measures to stabilise the market” will be offered.

• The won is trading lower while regional Kospi equity index closed 2.4% higher.
• SK prosecutors banned President Yoon Suk Yeol from travelling abroad following a brief marshal law imposed last week and after parliament failed to gather enough support for impeachment.
• PM Han Duck-soo, a Yoon appointee and the leader of Yoon’s conservative People Power party, said that the president would step back from managing affairs of state, FT writes.

UK – Panorama – The Water Company’s Murky Business

• In North America there is a rat snake that will eat itself under certain conditions
• In fact, one captive rat snake was observed attempting to consume itself twice, though it died on the second attempt having consumed around two-thirds of its body.
• Similarly, in the water industry Severn Trent has been asking for permission for an extraordinary increase in water rates to its customers.
• Well done to the BBC’s Panorama team for exposing the creative accounting to enhance dividend payments to shareholders at the expense of its own balance sheet.
• https://www.bbc.co.uk/iplayer/episode/m0025wt9/panorama-the-water-companys-murky-business
• We note the CEO has a recorded total pay and benefits to £3.18m including £0.4m in LTiP value.
• See P 184 in the annual report: https://www.severntrent.com/content/dam/stw-plc/shareholder-resources/2024-reports/severn-trent-ara-2024-bookmarked-web-full-report.pdf
• Severn Trent does indeed look like a rat snake consuming itself to pay shareholders while asking water rate payers for ever more.

Russia welcomes Bashar al-Assad from Syria – stay away from windows

• 95% of Syrian’s reportedly voted for al-Assad in the 2021 election!

Currencies

US$1.0547/eur vs 1.0560/eur previous. Yen 151.58/$ vs 150.42/$. SAr 17.835/$ vs 17.901/$. $1.275/gbp vs $1.276/gbp. 0.639/aud vs         0.643/aud. CNY 7.249/$ vs 7.274/$.

Dollar Index 106.32 vs 106.05 previous

Precious metals:         

Gold US$2,662/oz vs US$2,650/oz previous

Gold ETFs 82.9moz vs 83.0moz previous

Platinum US$934/oz vs US$943/oz previous

Palladium US$972/oz vs US$978/oz previous

Silver US$31.7/oz vs US$31.3/oz previous

Rhodium US$4,575/oz vs US$4,575/oz previous

Base metals:   

Copper US$9,175/t vs US$9,215/t previous

Aluminium US$2,578/t vs US$2,618/t previous

Nickel US$15,840/t vs US$16,075/t previous

Zinc US$3,117/t vs US$3,129/t previous

Lead US$2,063/t vs US$2,091/t previous

Tin US$29,730/t vs US$29,310/t previous

Energy:           

Oil US$72.0/bbl vs US$71.8/bbl previous

• bp and JERA plan to combine their offshore wind businesses to form a new standalone 50:50 joint venture, JERA Nex bp, with 1GW net generating capacity, 7.5GW of development projects, and further secured leases with 4.5GW of potential capacity, as well as up to $5.8bn of capital funding committed to before end of 2030.
• Equinor and its partners Var Energi and Petoro expect first oil at the offshore Norway Johan Castberg field to be delayed from this month into January or February due to adverse weather conditions in the Barents Sea.
• From next year, Norway’s export credit agency will no longer grant funding for oil and gas projects with no operational carbon capture and storage or equivalent electrification technologies, with prioritisation now given to development financing for renewable energy projects.

Natural Gas €44.7/MWh vs €45.6/MWh previous

Uranium Futures $76.4/lb vs $76.4/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$106.0/t vs US$105.4/t

Chinese steel rebar 25mm US$489.2/t vs US$487.2/t

HCC FOB Australia US$205.0/t vs US$205.0/t

Thermal coal swap Australia FOB US$133.3/t vs US$132.3/t

Other:  

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

NdPr Rare Earth Oxide (China) US$56,838/t vs US$56,638/t

Lithium carbonate 99% (China) US$10,071/t vs US$10,035/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$5.0/lb vs US$5.0/lb

Europe Ferro-Vanadium 80% US$26.3/kg vs US$26.3/kg

China Ilmenite Concentrate TiO2 US$300/t vs US$299/t

China Rutile Concentrate 95% TiO2 US$1,124/t vs US$1,120/t

Spot CO2 Emissions EUA Price US$65.1/t vs US$64.9/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$290.0/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

Stellantis to partner with CATL on €4.3bn LFP battery facility in Spain

• In a joint announcement, the companies will work together on a joint venture to produce LFP batteries at a Stellantis’ facility in Zaragoza, Spain.
• The project is targeting production to start by end of 2026 and the facility could reach up to 50GWh capacity.
• Stellantis is looking to employ a dual-chemistry approach across its range of vehicles – lithium-ion nickel manganese cobalt (NMC) and lithium iron phosphate (LFP).

Company News

Castillo Copper (CCZ LN) 0.58p, Mkt Cap £8m – Helicopter based geophysical survey for Harts Range project

• Castillo Copper reports that it has appointed a contractor to undertake a helicopter based “radiometric and magnetic survey over the Harts Range project, located 140km northeast of Alice Springs in the Northern Territory”.
• The survey, which is expected to be completed in January, will seek to “accelerate exploration over untested areas of the … [uranium, niobium, and heavy rare earth elements] … project” and to assist in the identification of “high-priority drill targets or advance ground geophysics”.
• Commenting on the forthcoming geophysical survey, Chairman, Ged Hall, said that the results “will not only expedite our exploration programs but also ensures we remain thorough and strategic in our approach”.

Conclusion: The company is focussing on its Harts Range project in the Northern Territory and the geophysical work should help provide a base of information to guide further exploration.

Guardian Metal Resources (GMET LN) 30.5p, Mkt Cap £36.6m – Board appointments

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 resignation of non-executive director, David Ovadia who has served Chairman since September 2021.
• He will be replaced as Chairman by independent director JT Starzecki who is described as bringing “almost 20 years of mineral exploration and development experience, including on the AIM, FTSE, ASX and Nasdaq exchanges”.
• Mr. Starzecki said that “This is a pivotal time in the Company’s growth as our flagship Pilot Mountain … [tungsten] …Project moves through the next very important development steps including the pre-feasibility study, a process I have been involved with multiple times in my career”.
• He added that the company looks forward to “playing an important role“ in progressing “a domestically mined supply of tungsten” in the United States.
• The company also announced the appointment of “Mr Benjamin (“Ben”) James Hodges as Financial Director”.  He is described as “a Fellow of CPA Australia with 25 years’ experience in both the accounting profession and in industry, including over sixteen years’ experience in natural resources”.

Conclusion: The company is refreshing its Board with a new Chairman and Finance Director.

*SP Angel acts as Nomad and Broker for Power Metals

Lundin Gold (LUG CN) C$35, Mkt Cap C$8.5bn – Three-year guidance as exploration remains a focus

• Lundin Gold, who operate the Fruta del Norte mine in Ecuador, are guiding 475-525koz in 2025.
• Cash operating costs expected at US$730-790/oz, whilst AISC guided at US$935-995/oz.
• Increased costs year on year
• Head grade expected at 9.2g/t Au, recoveries at 90% and throughput at 5,000tpd.
• SUSEX guided at US$75-85m, including 15,000m of drilling in the resource conversion programme.
• Additionally, 65,000m worth of regional exploration drilling is planned.
• 2026 guided at 475-525koz from 5,500tpd throughput, with marginally higher cash operating costs of US$750-810/oz.
• Company is exploring routes to debottleneck operations and boost throughput to 5,500tpd, with most focus on optimisations of the processing plant.
• Company expects to publish a maiden Resource on Bonza Sur by mid-2025.
• Company to maintain a US$0.2/sh quarterly dividend.

MetalNRG (MNRG LN) 40.25p, Mkt Cap £5.96m – Metal NRG renamed to Atlas Metals Group to reflect acquisition of the Oumejrane copper mine in Morocco from Managem

Atlas Metals Group (AMG LN)

• MetalNRG is changing its name today to Atlas Metals Group.
• The company has two direct investments:
  • Oumejrane copper mine in Morocco
  • Gold Ridge gold mine and prospect in Arizona
• Indirect projects:
  • Uranium in Kyrgyzstan with a total JORC resource of 5.512mlbs U3O8 made up of 3.657mlbs indicated and another 1.854mlbs of inferred uranium.
  • Gold: Lake Victoria Gold project in Tanzania (Imwelo). Plans to start mining and processing for 12,000ozpa from an estimated 200,000oz resource
    • ~50% of this in measured and indicated. FS shows an economic open cut Reserve of 44,000 oz. at 2.9g/t, for the 2 ore zones.
• Oumejrane copper mine in Morocco
• Management recently agreed to acquire 100% of the Oumejrane Copper mine in Morocco from Managem for US$30m with an additional US$2m payable on the first anniversary of completion of the Acquisition.
• The deal uses an initial US$25m convertible note from OMF Fund IV SPV K LLC (Orion Resource Partners) to be topped up with an additional US$5m of other funding.
• Oumejrane copper mine sales to end -December 2023 were US$28.0m.
• Drilling has identified further copper mineralization at a depth of 296m with the current mining activities currently limited to 140m.
• The mine is in the Eastern Anti-Atlas about 90km northeast of Zagora starting with vein mining in the Middle Ages and later by BRPM.
• Managem restarted the mine in 2014 having worked up a reserve of around 2mt grading 2.7% copper but with >10mt in the Boukerzia district to the east of the Central deposit.
• A central processing plant at Oumejrane derives feed from four operational sites processing mainly chalcoipyrite-rich sulphide ores.
• The group also “expect to enter into a strategic partnership with Managem to explore additional opportunities to collaborate on mining projects in Morocco and elsewhere.”
• The mine owns four exploitation licenses covering >200sqkm with just 10km so far explored.
• The district consists of copper vein swarms hosted in sandstone sedimentary formations.
• The acquisition is classed as a Reverse Takeover under the listing rules.

Power Metal Resources* (POW LN) 14p, Mkt cap £16m – LoI signed for copper exploration in Saudi Arabia

• Power Metals provides an update on its previously announced exploration agreement with AMAK.
• AMAK is a Saudi Arabian listed exploration company.
• The LoI outlines a binding agreement where POW spend US$3m to earn a 49% stake in the Qatan exploration licence in southern Saudi Arabia.
• Both parties have now extended the formal agreement signature date deadline for a further three months, with formal binding agreement set to be finalised in the coming weeks.
• POW’s technical team is reportedly ready to start work as soon as a binding agreement is signed.
• Qatan Licence
  • The Qatan tenements are prospective for base metals and precious metals and cover 72.247 km².
  • It lies 70km of AMAK’s mines and 32km south of Yudamah.
  • Qatan has seen limited exploration activity since 2017, when SRK conducted a data review on the Habdah prospect.

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

South32 (S32 LN) 179p, Mkt Cap £8.3bn – Withdraws Mozambique aluminium production guidance on civil unrest

• South32 has withdrawn production guidance for their Mozal Aluminium operations.
• The Company reports ‘escalating civil unrest,’ impacting ‘the transport of raw materials.’
• The Company has initiated contingency plans and reports no security incidents.
• Bloomberg reports c.100 fatalities reported since protects began over disputed elections in October.
• Mozal was guided to produce 360kt Al in FY25, 370kt in FY26 and produced 314kt in FY24.
• The Company had been guiding a return to nameplate capacity in 1H26.
• Mozal reported a unit operating cost of US$2,371/t in FY24.

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

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