SP Angel Morning View -Today’s Market View, Friday 15th March 2024

Tin prices climb as supply remains constrained from Indonesia and Myanmar

MiFID II exempt information – see disclaimer below

Atlantic Lithium* (ALL LN) – Interims highlight Ewoyaa Mining Lease grant

Beowulf Mining* (BEM LN)– Update on Vardar

Cornish Metals* (CUSN LN) – Departure of the CEO

Lithium Americas (LAC US) – Construction update following conditional funding from US DoE

Savannah Resources* (SAV LN) – Major shareholder increases his stake

Wishbone Gold* (WSBN LN) – Drilling results from Cottesloe helps endorse the exploration model

Tin prices climb as supply remains constrained from Indonesia and Myanmar

• Tin prices have broken through the $28,000/t mark following supply disruptions.
• Indonesia exported have exported 55t of tin this year, down from 4,700t over the January-Feb period last year.
• The Country produced 78kt in 2023, 20% of global demand.
• Indonesia is looking to crack down on concentrate exports across metals, with tin no exception.
• There is also an unfolding illegal mining scandal including some of PT Timah’s executives, likely adding to permit delays.
• Ma State in Myanmar is also suffering production complications, with operations at the world’s largest tin mine, Man Maw, suspended. (Reuters)
• Tin prices are climbing despite strong Chinese inventories, sitting at their highest since 2015. LME stocks are down 30% ytd, however.

Iron ore prices continue to struggle on sliding China rebar prices

• Iron ore prices have been sliding, with the Mysteel 62% index down to $104/t.
• Rebar prices in China have fallen 8% this month, and Dalian coking futures are down 10%.
• Steel mill activity is slowing on weak margins, with major mills slashing output by 20-50%.

Copper prices break $9,000/t as smelters cut production on low fees

• Copper prices broke through the key $9,000/t mark following a statement from the China Nonferrous Metals Industry.
• The Group, representing some of the largest Chinese copper interests, has vowed to trim smelter output amid rock-bottom fees.
• TCRCs hit single digits, raising alarm bells in the China smelting industry following years of capacity expansion.
• The removal of Cobre Panama from global concentrate supplies played a role, alongside other mine disruptions and Indonesia’s insistence on Grasberg smelting domestically.
• Copper has been range-bound for the best part of a year, with the sharp move higher taking traders by surprise.

Economics

US – Producer prices climbed more than expected in February (0.6%mom v 0.3% est.) with the increase largely driven by a surge in the cost of goods including gasoline and food.

• PPI was up 1.6%yoy compared to a 1.0% increase in January.
• Hotter than forecast inflation saw markets dialling back their expectations for a rate cut as early as June.
• Odds of a rate move come down to 60% from 73% last week, Reuters cites CME FedWatch Tool.
• The Fed will hold its two day policy meeting next week with an announcement due Wednesday.

China – House prices continued to slide in February with average primary market prices across a 70-city sample down 0.36%mom in primary market and 0.62%mom for secondary properties, similar to declines recorded in January.

• Primary market prices dropped 4.9% for primary properties and 10.1% for secondary homes from respective peaks in 2021.
• Prices in Tier 1 cities were down 1%yoy for new properties and 6.3%oy for second hand homes last month.

Russia – Voters head to polls for three day presidential elections with President Putin looking to secure his fifth term.

• Putin served as President for 20 years now with a break between 2008-2012 when the country was head by Dmitry Medvedev and Putin serving as Prime Minister.
• 2020 constitutional reform now allows Putin to seek two more six year terms.
• Political commentators are saying the government are targeting an increase in absolute number of votes supporting Vladimir Putin from 56-57m recorded in the last presidential campaign and constitutional referendum as a reflection of a general support for latest policies including Ukraine invasion.
• Opponents who called for a ceasefire and start of peace talks while avoiding mentioning an option of a complete withdrawal of Russian troops from Ukraine have not been registered for coming elections.
• Opposition are calling people who do not support the war and oppose current government to take part in a peaceful protest called “Noon against Putin”.
• The plan is to capture the size of discontent with Putin’s policies asking people to turn up en masse to polling stations at noon on the last day of elections (17 March) and vote against Putin or spoil the ballot.

Currencies

US$1.0881/eur vs US$1.0941/eur previous. Yen 148.72/$ vs 147.86/$. SAr 18.750/$ vs 18.602/$. $1.274/gbp vs $1.281/gbp. 0.655/aud vs 0.662/aud. CNY 7.197/$ vs 7.191/$.

Dollar Index 103.45 vs 102.93 previous.

Precious metals:         

Gold US$2,168/oz vs US$2,170/oz previous

Gold ETFs 81.8moz vs 81.8moz previous

Platinum US$942/oz vs US$943/oz previous

Palladium US$1,103/oz vs US$1,064/oz previous

Silver US$25/oz vs US$25.00/oz previous

Rhodium US$4,525/oz vs US$4,575/oz previous

Base metals:

Copper US$9,022/t vs US$ 8,908/t previous

Aluminium US$2,274/t vs US$ 2,267/t previous

Nickel US$18,298/t vs US$ 18,230/t previous

Zinc US$2,581/t vs US$ 2,577/t previous

Lead US$2,141/t vs US$ 2,163/t previous

Tin US$28,065/t vs US$ 28,345/t previous

Energy:

Oil US$84.9/bbl vs US$84.3/bbl previous

Natural Gas €26.1/MWh vs €24.9/MWh previous

Uranium Futures $83.0/lb vs $83.1/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$104.1/t vs US$105.5/t

Chinese steel rebar 25mm US$556.2/t vs US$556.4/t

Thermal coal (1st year forward cif ARA) US$105.3/t vs US$105.8/t

Thermal coal swap Australia FOB US$131.0/t vs US$130.0/t

Other:

Cobalt LME 3m US$28,550/t vs US$28,550/t

NdPr Rare Earth Oxide (China) US$48,810/t vs US$48,372/t

Lithium carbonate 99% (China) US$15,088/t vs US$14,942/t

China Spodumene Li2O 6%min CIF US$1,120/t vs US$1,120/t

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

China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu

China Graphite Flake -194 FOB US$535/t vs US$535/t

Europe Vanadium Pentoxide 98% 5.6/lb vs US$5.6/lb

Europe Ferro-Vanadium 80% 27.25/kg vs US$27.25/kg

China Ilmenite Concentrate TiO2 US$327/t vs US$327/t

Spot CO2 Emissions EUA Price US$55.4/t vs US$55.4/t

Brazil Potash CFR Granular Spot US$297.5/t vs US$297.5/t

Battery News

Company News

Atlantic Lithium* (ALL LN) 19.3p, Mkt Cap £125m – Interims highlight Ewoyaa Mining Lease grant

(Ewoyaa Ownership: 40.5% Atlantic, 40.5% Piedmont, 6% MIIF Sovereign Wealth fund, 13% government of Ghana)

• The Company released interim results for six months to December 2023 highlighting progress at the flagship Ewoyaa Lithium Project in Ghana.
• The team secured the mining lease in October providing fiscal terms for the Ewoyaa project and paving the way for the issuance of the Mine Operating Permit.
• Construction start is targeted for Q4/24.
• The Company continued with infill and step out drilling to support start of development works as well as continued to expand its license area securing new ground in the eastern part of the Cape Coast Lithium Portfolio.
• The Company completed Flotation Scoping Study exploring an option to complement the Dense Media Separation Facility with another circuit to treat fines and middlings.
• EPA to diversion of two transmission lines running through the project area secured.
• Offtake discussions for the remaining 50% of Ewoyaa production are ongoing (Piedmont holds the remaining 50%).
• Cash flow wise, the Company recorded a A$13.1m FCF outflow (H1/FY23: -A$7.5) reflecting a ramp up in pre development and exploration spend at the project.
• The Company recorded a A$5.9m loss during the period (H1/FY23: -A$4.4m)
• Closing cash balance stood at A$9.6m as of Dec/23 with no bank debt.
• The balance does not include US$5m subscription by Ghanaian sovereign wealth fund (MIIF) representing the first stage of the agreed $32.9m strategic investment.
• Assore acquired a ~4% stake in Atlantic off market taking its interest in the Company to ~28%.
• The Company earlier rejected two conditional and non-binding offers from Assore offering 33p for remaining shares.
• Piedmont remains a ~5% shareholder in the Company with a 50% interest in the Ewoyaa project under the earn in agreement.

Conclusion: Interims highlight the grant of the Ewoyaa Mining Lease setting the project on course for securing necessary permits to start construction in Q4/24. The team is progressing with offtake discussions as well as funding negotiations with most of $185m capex covered by its project partners including Piedmont and MIIF.

*SP Angel acts as Nomad to Atlantic Lithium. Two mining analysts from SP Angel recently visited the Ewoyaa mine site in Ghana and drove onto Takoradi to check the quality of the road to port. Our analysts also visited the Ministry of Minerals Commission and MIIF, the Ghana Minerals Income Investment Fund.

Beowulf Mining* (BEM LN) 0.77p, Mkt Cap £9m – Update on Vardar

• Beowulf announces the planned consolidation of Vardar Minerals announced on 4^th March has been delayed.
• The Company had expected to complete the transition today, however, due to administrative delays, this is now expected to be completed over the next two weeks.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Cornish Metals* (CUSN LN) 11.2p, Mkt Cap £60m – Departure of the CEO

BUY – 48p/s

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• Cornish Metals has announced that its Chief Executive, Richard Williams, is to leave the company and its Board although he will “remain available to the Company on a consulting basis”.
• The company explains that “Ken Armstrong, Non-Executive Director will step in as Interim CEO and Patrick Anderson, Chairman of the Board, will become the Executive Chairman of the Company during the transition and search for a permanent CEO to lead the Company through the next stage of development of South Crofty”.
• Refurbishment, exploration and development work is accelerating at South Crofty with de-watering of the flooded historic mine workings now well underway and a Preliminary Economic Assessment for the resumption of production due later this year ahead of a full feasibility study and formal investment decision for first production by the end of 2026.
• Under Richard Williams’ stewardship, Cornish Metals has made significant progress towards a reopening of the South Crofty tin mine and on exploration at the nearby United Downs project and provided significant impetus for a rejuvenation of the Cornish mining industry and we wish him well for the future.

Conclusion: Leadership changes come as work at South Crofty accelerates with de-watering well underway and technical studies and additional exploration enhancing the reopening potential for the next operational phase of a mine which has operated intermittently since the 16^th century.

*SP Angel acts as Nomad and Broker. An SP Angel analyst formerly worked in the South Crofty tin mine in the 1980s and holds shares in Cornish Metals.

Lithium Americas (LAC US) $6, Mkt Cap $974m – Construction update following conditional funding from US DoE

• Lithium Americas, developer of clay project Thacker Pass in Nevada, provides an update.
• The Company received conditional funding this week for the construction of Phase 1 of the Thacker Pass project’s processing facilities..
• The ‘Conditional Commitment’ from the DoE stands at $2.26bn.
• Thacker Pass had previously received development funding commitments from General Motors for $650m, securing 100% of offtake from Phase 1 for up to 15 years.
• The GM funding alongside the DoE funding is ‘expected to provide the vast majority of capital necessary to fund Phase 1.’
• The Department of Energy’s funding is conditional on ‘certain technical, legal and financial conditions, including negotiation of definitive financing documents.’
• Thacker Pass phase 1 targets 40ktpa lithium carbonate production, with Phase 2 seeing a ramp up to 80ktpa LCE.
• CAPEX has been revised to $2.93bn for phase 1, with mechanical completion for Phase 1 aimed at 2027, following a three year construction period expected to start in 2H24.
• Thacker Pass’ 2022 FS showed OPEX at $6,473/t, unlike CAPEX, however, this was not updated in 2024. Comparatively, American Lithium’s OPEX stands at $7,700/t, albeit with lower CAPEX requirements. Bacanora’s Sonora feasibility study from 2018 showed OPEX at c.$4,000/t.
• The 2022 Feasibility Study showed an IRR of 21.4% using a price forecast of $24,000/t LCE price.

Savannah Resources* (SAV LN) 2.9p, Mkt Cap £52m – Major shareholder increases his stake

BUY – 21.1p

• Mario Ferreira increased his stake in the Company to 5.0% up from 4.3% reported earlier this month.
• Ferreira is the Chairman of Media Capital, a major Portuguese media company.

*SP Angel acts as Nomad and Broker to Savannah Resources

Wishbone Gold* (WSBN LN) – 1.45p, Mkt Cap £3.3m – Drilling results from Cottesloe helps endorse the exploration model

See link for recent note: CLICK FOR PDF

• Wishbone Gold reports that drilling at its Cottesloe exploration project in Western Australia has demonstrated that its exploration model is valid and provided encouraging evidence that the project could host a large-scale ‘sediment-hosted’ base metal system.
• The company explains that the recent drilling took place in the southern part of the 165km2 Cottesloe project area and that the “next phase of drilling will be in the northern part of Cottesloe where the Company believes there to be more promising mineralisation”.
• Today’s announcement follows one in December which explained that “it had visually encouraging results showing zones with 10-20% base metal sulphides and scans from portable X-ray fluorescence reading elevated base metals”.
• Chairman, Richard Poulden, explained that the drilling had shown “mineralisation, and zonation of minerals, from surface to 700m” and had vindicated “our original belief that Cottesloe has significant potential”.
• The company explains that anomalous levels of lead, zinc and silver shown by the XRF scanning and geological work “point to the clear presence of hydrothermal fluids circulating through this basin sequence … [and that the drilling information to date is}… highly encouraging, confirming the overall exploration model for a major sediment hosted system”.
• The company explains that “density data from the drilling will be used to reinterpret the gravity” information and help to “locate where there was enough replacement/ precipitation of these fluids that are evident within the Cottesloe syncline”.

Conclusion: The drilling results from the Cottesloe project provide support for the company’s geological exploration model and should help guide the future programme.  We will be interested to see results from exploration in the northern part of the licence in due course as the company indicates that it considers this to have the potential to host more promising targets.

*SP Angel acts as a Broker for Wishbone Gold

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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