SP Angel Morning View -Today’s Market View, Monday 16th December 2024

Metals cool after China economic forum fails to outline expected stimulus measures

MiFID II exempt information – see disclaimer below

Artemis Resources (ARV LN) – Funding to drill the Karratha gold project, WA

Aura Energy* (AURA LN) – Reserve growth at Tiris uranium project, Mauritania

Beowulf Mining* (BEM LN) – Update on portfolio

Bushveld Minerals* (BMN LN) SUSPENDED – Vametco and a going concern update

Cobra Resources (COBR LN) – Results of metallurgical testing from the Boland rare-earths project, South Australia

Jubilee Metals Group (JLP LN) – Electrical power disruption in Zambia puts Q2 production guidance in jeopardy

Oriole Resources* (ORR LN) – First hole completed at Mbe gold project, Cameroon

Rainbow Rare Earths (RBW LN) – Phalaborwa Interim Economic Study

Tertiary Minerals* (TYM LN) – Completion of drilling at Brunton Pass, Nevada

Metals cool after China economic forum fails to outline expected stimulus measures

• Copper has fallen back to around the $9,000/t mark, having risen over $9,200/t last week on expectations of fresh Chinese stimulus measures.
• Nickel, tin and aluminium are all down over 1% overnight.
• Iron ore is also weakening, with record supply out of Australia’s Port Hedland in November.
• Australian exports are due to overtake last year’s record iron ore output.
• Limited new information from China’s Central Economic Work Conference has seemingly disappointed metals traders hoping for more property support measures.

Gold ($2,655/oz) holds lower ground after US Treasury yields climb on surprise US inflation data

• Gold prices sold off last week after a combination of higher unemployment claims and higher inflation pushed yields higher.
• The 10 year rose to 4.37%, having hit 4.13% a week ago on a disappointing labour report from the US.
• Gold fell sharply last week after higher-than-expected PPI and a slight uptick in unemployment claims raised concerns over stagflation.
• We imagine China retail continues to buy amid weaker Yuan concerns and a reversal in the country’s equity rally.

Economics

China – Economic data released this morning highlight ongoing struggles in the property market with a mixed set of results for industrial production and retail sales in November.

• House prices continued to drop, albeit, at a reduced monthly pace.
• Real estate investment and property sales continued to decline at a double digit pace.
• Retail sales came in below estimates reflecting lacklustre domestic demand.
• Industrial production was in line with expectations.
• New Home Prices (%mom, Nov/Oct/Est): -0.2/-0.5/NA
• Property Investment (%yoy YTD, Nov/Oct/Est): -10.4/-10.3/NA
• Residential Property Sales (%yoy YTD, Nov/Oct/Est):  -20.0/-22.0/NA
• Retail Sales (%yoy, Nov/Oct/Est): 3.0/4.8/5.0
• Industrial Production (%yoy, Nov/Oct/Est): 5.4/5.3/5.4

Eurozone – Private sector ends the year in contraction with business activity falling for the second month in a row.

• Output fell on reductions in new orders while the pace of job cuts accelerated to the quickest in four years.
• Inflation in both input and output prices picked up at the end of the year with rates remaining above historical averages.
• Weak region wide PMIs were driven by falls in the largest two economies – Germany and France.
• The rest of the Eurozone posted a solid increase in output at the end of the year, with the rate of expansion reaching a six month high.
• Manufacturing PMI (Preliminary, Nov/Oct/Est): 45.2/45.2/45.3
• Services PMI (Preliminary, Nov/Oct/Est): 51.4/49.5/49.5
• Composite PMI (Preliminary, Nov/Oct/Est): 49.5/48.3/48.2

Germany

• Manufacturing PMI (Preliminary, Nov/Oct/Est): 42.5/43.0/43.1
• Services PMI (Preliminary, Nov/Oct/Est): 51.0/49.3/49.3.
• Composite PMI (Preliminary, Nov/Oct/Est): 47.8/47.2/47.5

France

• Manufacturing PMI (Preliminary, Nov/Oct/Est): 41.9/43.1/43.0
• Services PMI (Preliminary, Nov/Oct/Est): 448.2/46.9/46.9
• Composite PMI (Preliminary, Nov/Oct/Est): 46.7/45.9/46.0

UK – Preliminary PMI came in 50.5 pointing to a marginal expansion and matching November’s 13-month low.

• New orders decreased for the first time in 13 months on weaker business and consumer spending patterns.
• Employment fell at the sharpest pace since January 2021.
• Survey suggested weaker jobs numbers were driven by a combination of softer demand, rising employment costs and lower margins.
• Manufacturing PMI (Preliminary, Nov/Oct/Est): 47.3/48.0/48.5
• Services PMI (Preliminary, Nov/Oct/Est): 51.4/50.8/51.0
• Composite PMI (Preliminary, Nov/Oct/Est): 50.5/50.5/50.6

Currencies

US$1.0513/eur vs 1.0468/eur previous. Yen 153.66/$ vs 153.18/$. SAr 17.857/$ vs 17.864/$. $1.265/gbp vs $1.263/gbp. 0.637/aud vs 0.641/aud. CNY 7.283/$ vs 7.288/$.

Dollar Index 106.79 vs 106.61 previous

Precious metals:         

Gold US$2,658/oz vs US$2,672/oz previous

Gold ETFs 82.9moz vs 83.0moz previous

Platinum US$928/oz vs US$939/oz previous

Palladium US$957/oz vs US$979/oz previous

Silver US$30.7/oz vs US$31.2/oz previous

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

Base metals:   

Copper US$9,064/t vs US$9,101/t previous

Aluminium US$2,594/t vs US$2,605/t previous

Nickel US$15,845/t vs US$16,168/t previous

Zinc US$3,085/t vs US$3,112/t previous

Lead US$2,018/t vs US$2,009/t previous

Tin US$29,220/t vs US$29,957/t previous

Energy:           

Oil US$74.1/bbl vs US$73.5/bbl previous

• The US Baker Hughes rig count was unchanged at 589 units last week (-34 or 6% y/y), with oil rigs flat at 482 units (-19 y/y) and gas rigs up 1 to 103 units (-16 y/y), as the Eagle Ford lost 2 rigs to 46 units (-7 y/y).
• Natural gas prices retreated further from recent highs due to forecasts for above-average temperatures in north-west Europe and continental US.
• Venture Global has reached first LNG production at the 20mtpa Plaquemines LNG facility in Louisiana, which was completed 30M from taking a Final Investment Decision (FID) with an expected cost of $21-$22bn.

Natural Gas €39.6/MWh vs €43.2/MWh previous

Uranium Futures $76.4/lb vs $76.6/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$105.6/t vs US$106.0/t

Chinese steel rebar 25mm US$487.1/t vs US$488.3/t

HCC FOB Australia US$205.3/t vs US$204.5/t

Thermal coal swap Australia FOB US$131.5/t vs US$133.5/t

Other:  

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

NdPr Rare Earth Oxide (China) US$56,298/t vs US$56,516/t

Lithium carbonate 99% (China) US$10,024/t vs US$10,050/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$299/t vs US$299/t

China Rutile Concentrate 95% TiO2 US$1,092/t vs US$1,108/t

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

Brazil Potash CFR Granular Spot US$292.5/t vs US$290.0/t

Germanium China 99.99% US$2,765.0/kg vs US$2,775.0/kg

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

Battery News

Global EV sales rise for seventh consecutive month in November

• Global sales of fully electric and plug-in hybrid vehicles rose for a seventh consecutive month in November, jumping 32% yoy.
• China continued to lead sales growth, accounting for almost 70% of total EV sales in the month, while registrations in Europe showed a marginal decline.
• Sales in China were up 50% at 1.27m vehicles.
• In the United States and Canada, EV sales were up 16.8% at 0.17m.
• Europe had sales of 0.28m, down slightly year on year but up 7.7% from October.

Company News

 Artemis Resources (ARV LN) 0.45p, Mkt Cap £8.6m – Funding to drill the Karratha gold project, WA

Artemis Resources reports that it has firm commitments for an A$4m fundraising priced at A$0.007/share to advance its Karratha gold project

The additional funds “will primarily be used to drill multiple targets across the Karratha Gold Project starting in early 2025”.

The company confirms that its “Offer … [of around 571.4m additional shares representing ~23% of the enlarged company] … was strongly supported by existing shareholders and new investors and was heavily oversubscribed”.

Among the additional exploration the new funds will enable are:

• • Follow up drilling in the Carlow area where the company has previously announced “a current JORC 2012 compliant Mineral Resource of 374,000oz Au (Au Eq total mineral resource of 704,000 oz AuEq)”; and
  • Drill testing of a “highly conductive electromagnetic (EM) anomaly … [at Marillion] … which is approximately 500m x 350m in size and is situated only approximately 350m to the east of the Carlow deposit”; and
  • “follow up exploration based on the drill assay results … [from a 1,450m reverse circulation drilling programme at the Lulu Creek prospect] … which are pending”; as well as
  • Work to obtain heritage clearance and other regulatory approvals at the Titan and Europa prospects.

Confirming that drilling was expected to start in late January, Executive Director, George Ventouras, said that “The targets that the Company intends to drill in this program covers only a small percentage of the tenement package, providing further opportunity and potential upside for the exploration over the greater tenement areas”.

Conclusion: Artemis Resources has raised additional funds to drill in WA starting in late January. We await news on the exploration progress with interest.

Aura Energy* (AURA LN) 7.25p, Mkt Cap £62m – Reserve growth at Tiris uranium project, Mauritania

(Aura Energy hold 100% of Tiris Uranium and 100% of the Häggån Project in Sweden, Häggån hosts 2.5bnt of vanadium, SOP ‘sulphate of potash’ and uranium resource)

• Aura Energy has announced a new ore-reserve estimate for its Tiris uranium project in Mauritania.
• The new estimate of 62.8mt at an average grade of 243ppm U₃O₈ is 49% higher than the previous, March 2023. Estimate totalling 40.4mt at an average grade of 254.ppm U₃O_8.
• Approximately 44% of the new estimate (27.8mt at an average grade of 249ppm U₃O₈) is classed as Proven compared to 47% (19.3mt at an average grade of 257ppm U₃O₈) in the March 2023 estimate.
• The company explains that “The updated Ore Reserve estimate has been completed on the recently reported Mineral Resource Estimate (MRE), which included growth of Measured and Indicated Resources of 35% … [and is] … based on pit optimisation and mine schedules reported as part of the September 2024 Production Target update”.
• Aura Energy says that the new estimate “has seen incremental growth in the Ore Reserve estimate in the Lazare North, Lazare South, Sadi and Hippolyte resource areas, mainly due to increased classification of resources as Measured and Indicated in the June 2024 MRE update”.
• The new reserve estimate includes:

• • 12.0mt at a grade of 273ppm U₃O₈ at the Lazare North deposit (previously 8.9mt at a grade of 256ppm U₃O₈): and
  • 12.3mt at a grade of 244ppm U₃O₈ at the Lazare South deposit (previously 9.2mt at a grade of 271ppm U₃O₈): and
  • 15.0mt at a grade of 270ppm U₃O₈ at the Hippolyte deposit (previously 12.8mt at a grade of 248ppm U₃O₈): and
  • 23.6mt at a grade of 209ppm U₃O₈ at the Sadi deposit (previously 9.5mt at a grade of 242ppm U₃O₈).

• Although somewhat lower grade than the other deposits, Sadi, with around 38% of the overall reserve tonnage is the largest individual component of the new reserve estimate with around 39% of tonnage classed as ‘Proved’.
• Managing Director, Andrew Grove, commented that “64% of the Production Target is now within the Proved and Probable Reserve categories, further reducing Project Delivery risk as we move towards Final Investment Decision in 2025 and operations in 2027”.
• He also welcomed the “engagement of Wood as engineering partners for basic engineering and early works package definition … [as] … a significant step towards project execution”.
• Mr. Grove also commented on progress with water well drilling and pump testing of water flow rates saying that a “final report should be completed in Q1 CY2025”.
• Today’s announcement also outlines progress on funding project development saying that Aura Energy has “received confidential, non-binding proposals from a number of investors and debt providers and other parties continue to contact us expressing willingness to co-invest”.
• The company is “actively engaging with potential funding partners and anticipate being in a position to make a Final Investment Decision on the Tiris Uranium Project in Q1 CY2025 … [followed by] … an 18-month final design and construction program will commence, targeting production start-up in late 2026 to early 2027”.

Conclusion: Aura Energy is progressing towards an FID in Q1 of 2025.  The near 50% increase in the Tiris project’s mineral reserves reported today underlines its merits and reinforces confidence as the project moves towards construction and production targeted for late 2026/early 2027.

*SP Angel acts as Nomad to Aura Energy

Beowulf Mining* (BEM LN) 16p, Mkt cap £6m – Update on portfolio

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• Beowulf provides an update on their portfolio as they progress their critical mineral assets in Scandinavia.
• The Company is progressing the Kallak iron ore project in Sweden, having appointed a lead Project Director.
• They are progressing Kallak towards PFS and Environmental permitting, following a positive verdict from the Supreme Administrative Court over the Exploitation Concession.
• Met-testwork has further derisked the project, highlighting the potential for a high-premium concentrate up to 70% Fe.
• In Finland, Beowulf is progressing their Graphite Anode Materials Plant, currently upgrading the process.
• Beowulf continues to explore routes to reduce energy and reagent consumption, supported by grant funding from the Finnish government.
• In Kosovo, Beowulf continues to engage in low-cost exploration activities to generate and refine targets.
• Beowulf reiterates expectations of submitting the Kallak Environmental Permit by 1Q25, and completing the PFS by mid-year 2025.
• The GAMP PFS is due for completion 1Q25.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Bushveld Minerals* (BMN LN) SUSPENDED – Vametco and a going concern update

• Appointed business rescue practitioners started an extended plant maintenance shutdown at Vametco.
• The shutdown is expected to last until end March 2025.
• The shutdown will allow sufficient time to procure and install critical components for the maintenance and sustainable operation of the plant.
• Meanwhile, the Board is consulting with business rescue practitioners with regards to any potential realisable value within the remaining group assets attributable to equity holders.
• In the absence of sufficient value realised from the assets or new capital being raised, it is unlikely that the Company can be considered a going concern.

*SP Angel act as nomad and broker to Bushveld Minerals

Cobra Resources (COBR LN) 1.18p, Mkt cap £9.2m – Results of metallurgical testing from the Boland rare-earths project, South Australia

• Cobra Resources reports that further bench-scale metallurgical testing of material from its Boland rare-earths project in South Australia has shown high and rapid recovery rates with low reagent consumption and high productivity.
• The testing showed that 22% of the magnetic rare-earths and 31% of the heavy rare earths could be recovered within 24 hours using sulphuric acid at relatively low consumption rates of 15kg/t.
• Overall recovery rates of 68% for the magnetic rare-earths improved on the 57% achieved in earlier tests while heavy rare-earth recovery rates improved from 50% to 62% in the latest tests.
• The company confirms that the sulphuric acid consumption rates and low levels of impurities are expected to lead to “a simple flowsheet, requiring low capital intensity” and low extraction costs.
• Cobra Resources confirms it is preparing resource drilling plans “aimed at testing the scale of the mineralisation footprint”.
• CEO, Rupert Verco, said that “We have demonstrated a significant mineralised footprint, but this drilling will enable the Company to estimate a resource that will support initial economic evaluations in the form of a scoping study.

Conclusion: Encouraging metallurgical test results from Boland are prompting plans for additional drilling to establish a mineral resource and progress scoping level studies.

Jubilee Metals Group (JLP LN) – 3.8p, Mkt cap £145m – Electrical power disruption in Zambia puts Q2 production guidance in jeopardy

• Jubilee Metals reports that instability in Zambia’s electricity supply, including unplanned power cuts, is hitting its Roan operations in particular.
• The company says that it is currently unable to determine “how long these outages will continue … [and that] … Given the uncertainty of power supply at present there is uncertainty whether guidance production volumes will be met for Q2 FY2025”.
• In November, when it announced its Q1 operational results, the company said “Copper: Guidance remains on track with the successful ramp-up at Roan and Munkoyo as the Company expects to deliver significantly increased copper production for the remainder of the financial year, to reach production guidance of between 5 850 and 7 500 tonnes”.
• “The Jubilee Team is liaising closely with Zambian officials to try to manage, as far as possible, the timings of outages and recommencements of power. This allows for some costs to be avoided”.
• The company also takes the opportunity to advise that it has extended the ‘due diligence’ period for its assessment of the 260mt “Large Waste Project … [until] … the end of January 2025”.
• “In addition, Jubilee was successful in securing significantly enhanced commercial terms for the outright acquisition of the Large Waste Rock Project. The total acquisition value of a 100% interest in the project has been reduced to US$18 million payable over 12 months to December 2025 (originally announced a target acquisition value of US$30 million) of which approximately US$11.5 million remains payable”.

Conclusion: Power supply issues in Zambia may curb Jubilee Metals’ capacity to achieve Q2 production guidance. More positively, the acquisition price for the ‘Large Waste Rock’ project has been reduced to US$18m from an original US$30m, subject, we assume, to the satisfactory completion of ‘due-diligence’ which will now continue until the end of January.

Oriole Resources* (ORR LN) 0.27p, Mkt cap £11m – First hole completed at Mbe gold project, Cameroon

• Oriole has now drilled its first diamond hole at Mbe over 358m.
• The hole is part of a 6,590m programme over 24 holes.
• Samples will be sent to Ghana for analysis, with results due 1Q25.
• The drilling has encountered the amphibolite-gneiss host rocks intruded by felsic porphyries.
• The team is encouraged by this, as it correlates with the lithologies noted during trenching.
• Silica alteration is noted throughout the hole, with pyrite and chalcopyrite sulphides present as disseminations within the host rock and porphyries.

Conclusion: Oriole has now drilled the first hole at Mbe, targeting the main target generated from trenching and soil sampling which identified a large gold anomaly over a wide area. The exploration team is reassured by the consistency in lithology of the core with the successful trenching programme. We look forward to first assay results due 1Q25.

*SP Angel acts as Broker to Oriole Resources

Rainbow Rare Earths (RBW LN) 12.5p, Mkt Cap £79m – Phalaborwa Interim Economic Study

• The Company released results from the Interim Economic Study for the Phalaborwa RE Project.
• The goal of the study was to update the economics of the project and incorporate changes to the primary flowsheet recovering REE from the phosphogypsum stacks at Phalaborwa.

• • 2.2mtpa throughput for production of 1.9ktpa MREOs (NdPrDyTb) over a 16y LOM (extra 2y versus PEA);
  • 65% recoveries (unchanged from PEA);
  • OPEX US$40.8/kg MREOs (incl Ecora royalty) primarily reflecting cost inflation including a 34% increase in power costs in South Africa ($33.9/kg PEA);
  • OPEX $12.9/kg in TREO terms;
  • Lower OPEX is attributed to the nature of the feed derived from historic phosphoric acid production tailings that has been already crushed, grinded and cracked eliminating a number of processing steps seen in a conventional hard rock RE deposit preceding.
  • CAPEX $326m ($296m PEA);
  • NPV10 (post tax) US$611m ($627m PEA) using $138/kg MREOs basket price, equivalent to price assumptions used for PEA 2022 ($110/kg Nd, $113/kg Pr, $340/kg Dy, $1,875/kg Tb)..

• At close to spot depressed MREOs prices ($60/kg NdPr, $250/kg Dy, $800//kg Tb) the project is estimated to still generate positive EBITDA of $63mpa.
• The Interim Study is reported to have used a much higher confidence level parameters to the original PEA.
• In particular, the study incorporates results from the largescale pilot testwork to recover REE from phosphogypsum into a high grade intermediate product.
• Work related to separation of REOs from the intermediate product is ongoing.
• The team will study the potential for separating out other LREEs including SEG oxide product that is currently not included in economics.
• The Company will hold a presentation to discuss results of the study and forward plans on Tuesday 21 January.

Conclusion: Updated economic study adjusts PEA 2022 for additional testwork completed over the last two years and inflation guiding for a potential to run the highest margin rare earth project outside China processing phosphogypsum tailings and delivering separate MREOs capitalising on lower processing costs and high payabilities for final product. MREOs separation testwork is onoing.

Tertiary Minerals* (TYM LN) 0.07p, Mkt Cap £2.6m – Completion of drilling at Brunton Pass, Nevada

• Tertiary provides an update on its progress in Nevada, where it is exploring for copper and gold.
• The Company has now completed its first drilling programme at Brunton Pass, Nevada.
• Tertiary drilled four holes and results are due January 2025.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

 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

SP Angel                                                            

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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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