SP Angel Morning View -Today’s Market View, Friday 17th January 2025

Copper holds higher ground as China economic data supports sentiment

MiFID II exempt information – see disclaimer below

SP angel received great news last week from the LSEG StarMine commodities forecast polling team

• SP Angel – 1^st in LSEG StarMine Precious Metals poll for 2024
• SP Angel – 2^nd in LSEG StarMine Base Metals poll for 2024

80 Mile Plc* (80M LN) – Stage 2 of Hydrogen Valley acquisition completed taking stake to 24%

Atlas Metals Group (AMG LN) – Evaluation of other opportunities as Oumejrane Copper mine is bought by third party

Keras Resources* (KRS LN) – Russell Lamming steps into the ceo role as interim executive for organic phosphate business in Utah, USA

Lundin Mining (LUN CN) – 2024 production results and 2025 guidance following transformative year

Metals Exploration (MTL LN) – Results from internal study on La India gold project, Nicaragua

Premier African Minerals (PREM LN) – Fundraising conditional on raising £2.3m via Retail Offer to fund Zulu Lithium in Zimbabwe

Zijin Mining (2899 HK) – Zijin acquire 25% stake in Chinese lithium miner for US$1.9bn

Copper ($9,266/t) holds higher ground as China economic data supports sentiment

• Copper has climbed over 5% ytd, after sinking to eight month lows in December.
• The metal is being supported by concerns over tariff implications in the US from the incoming Trump administration.
• This is being reflected in the CME/LME copper premium, which has risen to $575/t for March 2025 contracts.
• Reports that China’s 2024 GDP grew at its fastest pace in six quarters boosted sentiment.
• Retail sales and industrial production data from China also supported sentiment.
• Various demand indicators, including the Yangshan import premium, are showing strengthening copper fundamentals in China, whilst speculative money is yet to flow.
• This presents the potential for a sustained rally into the China New Year holiday as buyers restock before the break.

Gold ($2,704/oz) eases whilst Kazakhstan plans bullion sale to boost currency

• Gold prices have eased from recent $2,720/oz highs to settle at $2,704/oz.
• The move comes following a sustained rally as China bond yields continued to slide and US inflation data allayed fears of runaway prices.
• The dollar rally has cooled following a sharp jump higher post-US election.
• Kazakhstan is reportedly selling down gold holdings alongside their dollar reserves to support the Tenge.
• Kazakhstan reportedly buys all gold mined in country, with bullion accounting for c.50% of reserves, valued at US$23.8bn.
• US Treasury yields fell yesterday after Fed official Waller raised the prospect for a cut in March, should inflation cool further.

Rio Tinto / Glencore merger talks end

• We are really not surprised to hear that merger talks have ended between Rio Tinto and Glencore.
• Yes, the two companies are in the mining business and they both have trading businesses for the effective sale of their product.
• Internally, they have structures to evaluate new mining opportunities and acquisitions and they are disciplined in how they allocate their resources.
• But that is where it ends. Glencore acquired Xstrata which was initially incubated by Glencore and then built by Mick Davis but always with Glencore in the background.
• Rio Takes pride in operating Tier 1 assets whereas Glencore/Xstrata was always much more of a ‘street fighter’ acquiring Tier 2 assets, devolving operational management to the mine sites and improving their output and value.
• For Glencore, it was as much about acquiring metal for trading as it was about enhancing the underlying assets.
• Impressively, the team at Xstrata did a great job on the acquisition and value front and was acquired by Glencore for an effective US$39bn in 2012.
• While co-joining Glencore and Xstrata made sense the cultural differences between Rio Tinto and Glencore would be like mating a tiger with a hippopotamus.
• Other potential merger candidates are Freeport, BHP, Anglo, Vale and Teck. We do not believe regulators would allow a Chinese company to acquire Glencore.

Economics

China – Economic growth averages 5.0% for the year on a strong final quarter helped by government stimulus and front loading overseas shipments ahead of potential tariffs in the US.

• Estimates were for a 4.9% growth for the year with headline measure coming down from 5.2% in 2023 and marking the slowest pace since 1990 (ex coronavirus period).
• Industrial production growth accelerated in 2024 to 5.8%, up from 4.6% in 2023, while exports also helped registering a 5.9% increase, up from a 4.6% contraction in the previous year, while retail sales and fixed asset investment growth rates were either down or flat.
• The economy expanded 5.4%yoy in 4Q24.
• Expectations are for the government to set a 5% growth target for 2025 when officials meet in March.
• CSI 300 and Hang Seng equity indices climbed 0.3% on the day.

UK – Retail sales unexpectedly fell in December adding to a list of economic headwinds faced by the new government.

• Volume of goods sold dropped 0.3%mom compared to 0.1%mom increase forecast (Retuers).
• In three months to December covering a seasonally strong period sales volumes fell 0.8% compared to the previous three months.
• CY24 sales were up 0.7% following a 2.9% drop in 2023 and a 4.1% in 2022 but remained below pre pandemic levels in volume terms.
• In nominal terms sales are 18% up compared to pre pandemic reflecting strong inflationary pressures.
• The pound pulled back 0.5% while 10y gilt yields fell 5bp to 4.64% on the news.

Canada – Mark Careny announced his candidature of the Liberal leadership.

• The vote is to be held on March 9 and if won would allow Carny to become Canada’s next PM while not being an elected official.
• He would lead the party into general elections that must be held on or before October 20.
• Mark Carney previously was head of the Canadian central bank between 2008 and 2013 before moving to the UK to head the BOE between 2013 and 2020.
• Lately he was chair of Toronto based fund manager, Brookfield Asset management with close to $1tn in AUM.

Israel – The government is meeting today to discuss the approval of the Gaza ceasefire.

• Earlier PM Netanyahu accused Hamas of reneging on the deal that involves an initial 42 day truce and an exchange of 33 hostages for Palestinian prisoners held in Israeli jails.
• The cabinet also faces some objections to the deal from coalition members that may see the government lose its majority in parliament if two far right parties pull out of the deal paving the way for early elections.

Currencies

US$1.0296/eur vs 1.0295/eur previous. Yen 155.62/$ vs 156.06/$. SAr 18.741/$ vs 18.840/$. $1.219/gbp vs $1.221/gbp. 0.621/aud vs 0.622/aud. CNY 7.328/$ vs 7.332/$.

Dollar Index 109.079 vs 109.16previous.

Precious Metals

Gold US$2,710/oz vs US$2,700/oz previous

Gold ETFs 83.3moz vs 83.2moz previous

Platinum US$942/oz vs US$946/oz previous

Palladium US$944/oz vs US$957/oz previous

Silver US$30.6/oz vs US$30.8/oz previous

Rhodium US$4,650/oz vs US$4,650/oz previous

Base metals:   

Copper US$9,286/t vs US$9,226/t previous

Aluminium US$2,673/t vs US$2,631/t previous

Nickel US$15,950/t vs US$15,845/t previous

Zinc US$2,927/t vs US$2,878/t previous

Lead US$1,979/t vs US$1,956/t previous

Tin US$29,715/t vs US$29,790/t previous

Energy:           

Oil US$81.7/bbl vs US$82.1/bbl previous

• Crude oil prices were stable as media reported Saudi Aramco has received inquiries from Indian and Chinese buyers for as much as 0.75mb/d of extra crude to make up for any shortfalls caused by the Russian sanctions.
• US Henry Hub natural gas prices rose as the EIA reported a 258bcf w/w draw to 3,115bcf (vs -259bcf exp), with storage inventories falling to 3.4% below last year and 2.5% above the 5-year average.
• BP announced to its 90,000 employees that 4,700 (5%) roles would be cut over the course of 2025, along with the loss of 3,000 contractors, as part of plans to cut costs.

Natural Gas €46.1/MWh vs €45.7/MWh previous

Uranium Futures $73.9/lb vs $73.8/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$103.8/t vs US$102.7/t

Chinese steel rebar 25mm US$482.3/t vs US$482.3/t

HCC FOB Australia US$195.5/t vs US$193.7/t

Thermal coal swap Australia FOB US$115.3/t vs US$113.3/t

Other:  

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

NdPr Rare Earth Oxide (China) US$55,946/t vs US$55,786/t

Lithium carbonate 99% (China) US$10,029/t vs US$10,025/t

China Spodumene Li2O 6%min CIF US$800/t vs US$795/t

Ferro-Manganese European Mn78% min US$1,005/t vs US$1,005/t

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

China Graphite Flake -194 FOB US$435/t vs US$435/t

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

Europe Ferro-Vanadium 80% US$25.3/kg vs US$25.3/kg

China Ilmenite Concentrate TiO2 US$293/t vs US$290/t

China Rutile Concentrate 95% TiO2 US$1,071/t vs US$1,071/t

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

Brazil Potash CFR Granular Spot US$300.0/t vs US$300.0/t

Germanium China 99.99% US$2,725.0/kg vs US$2,725.0/kg

China Gallium 99.99% US$385.0/kg vs US$385.0/kg

Battery News

Fully autonomous cars not close to production, Nvidia auto boss says

• Fully autonomous cars are “not close” and unlikely to go into full use on public roads until well into the next decade, according to the automotive boss of tech giant Nvidia, Ali Kani.
• Speaking to Autocar, Kani said that although some vehicles currently offer limited autonomous features, for them to be truly autonomous will require significant advancements in computing power and technology.
• Kani said that while the current generation of driver assistance systems works through planning software that pre-defines actions in certain situations, truly autonomous cars will be required to behave more naturally.
• It was also stressed by Kani that “the industry needs to go slowly with this. If one firm makes one mistake, the whole industry gets pushed back a few years.”

Gartner report shows European and North American car factories at risk of closure

• A new report from research and advisory firm Gartner has stated that several European and North American auto factories are at risk of closure or being sold this year.
• Legacy automakers are struggling with overcapacity and with a deepening price war.
• Automakers will likely cut production capacity on the two continents in 2025 as they face emissions targets and tariffs, while China’s EV dominance will increase due to its edge in software and electrification, according to the report.
• The report also predicts that Chinese brands could be the ones to buy plants in order to overcome trade barriers, or open new factories in lower-cost European countries and free-trade partners like Morocco or Turkey.

Company News

80 Mile Plc* (80M LN) – 0.31p, Mkt cap £8.07m – Stage 2 of Hydrogen Valley acquisition completed taking stake to 24%

(Bluejay Mining holds 100% of the Hammaslahti and Enonkoski projects and all its Greenland prospects)

• 80 Mile plc report the completion of Stage 2 of Hydrogen Valley Ltd taking its interest to 24% for £800,000 and 423,957,023 shares (eg 14.5% of the company.
  • 80 Mile can move up to a 49% stake in Hydrogen Valley for a total of £2m in cash and ~29% in new 80 Mile plc shares.
  • 80 Mile can move to 100% ownership for an aggregate consideration of £6.05m in cash and shares.
• Management raised £1.5m in December at 0.27p/s through the issue of 557,258,228 new shares.
• Greenswitch: Hydrogen Valley has the Greenswitch biofuels and chemical production complex within a Special Economic Zone in Italy.
• The plant is fully permitted for biodiesel, epoxidized soybean oil and glycerine, with a capacity of up to 140,000 tonnes/year.
• Sales should start this quarter with production due grow and with expansion into Sustainable Aviation Fuels and hydrogen.
• The business should align with EU and Italian government initiatives with applications for grant funding now underway.
• Offtake: “80 Mile expects to be able to finalise offtake agreements for 100% of the anticipated Greenswitch production.”
• Short and Medium Term Targets for Greenswitch:
  • Q1 2025: Restart ESO and biofuels production at expected initial capacities of 5,000 tonnes/year and 10,000 tonnes/year respectively.
  • Q2 2025: Aim to ramp up biodiesel production to 50,000 tons/year following maintenance and supply chain formalisation.
  • Secure approval of green hydrogen government grant of up to €10 million.
  • Initiate planning for a SAF plant in conjunction with an international offtaker, with the aim to secure EU energy transition grants to support this.
• Pictures of the process plant facilities show:
  • Glycerin distillation column and extraction plant,
  • Epoxidized soybean oil storage and extraction facilities,
  • onsite cogeneration and backup power,
  • biofuel plant and distillation column
  • finished product storage park and loading area.
• The deal with Hydrogen Valley is transformational for 80 Mile plc and should propel the company into sales and cash flow within the next few months.

*SP Angel acts as nomad and broker to 80 Mile Plc (formerly Bluejay Mining). The analyst has visited Dundas in Greenland and the Hammaslahti and Enonkoski projects in Finland.

Atlas Metals Group (AMG LN) 9.90p, Mkt Cap £1.46m – Evaluation of other opportunities as Oumejrane Copper mine is bought by third party

Formerly MetalNRG (MNRG LN)

• Atlas Metals report “discussions with a number of other potential acquisition targets, which are primarily producing assets focused on copper and gold in Africa.”
• The team also “continue to explore options to maximise the value to its shareholders of Atlas Metal’s existing portfolio of assets.”
• Management say their “strategy remains unchanged” and they are “fully committed to building a global natural resources business to deliver industry leading returns to shareholders through a consolidation of tier two assets over the next five years.”
• We believe the Atlas team were on the right track with the proposed acquisition of the Oumejrane Copper mine in Morocco from Managem for US$30m.
• While the mine’s  acquisition by a third party is disappointing for the Atlas team, it does highlight the popularity of the asset.

Keras Resources* (KRS LN) – 2.3p, Mkt cap £2.2 – Russell Lamming steps into the ceo role as interim executive for organic phosphate business in Utah, USA

(Keras holds 100% of the Diamond Creek phosphate mine in Utah, USA)

• Keras Resources reports the resignation of ceo, Graham Stacey who is reported to be leaving for family reasons.
• Russell Lamming, the non-exec Chairman has stepped forward to cover Graham’s departure as the company looks for a new ceo.
• The team recently joined forces in joint venture with PhoSul Utah LLC to produce PhoSul®, a sophisticated brand of organic phosphate which should enable greater sales going forward.
• Keras completed the jv with PhoSul last year along the acquisition of a new site in Utah for the processing of rock phosphate into PhoSul®.
• PhoSul® reduces nutrient runoff and improving soil health enhancing crop production while reducing environmental impact. It is organic, non-water-soluble, and provides plant-available P2O5.
• PhoSul® sells for $40 per 25lb (11kg) bag on the internet and is used by organic farmers in the US and elsewhere.
• Manganese:  we continue to await news on the restart of the Nayéga manganese mine by the Togo government.
  • Keras hold a 1.5% royalty advisory fee plus 6.0% of gross revenue from the Nayéga mine over the lesser of 3.5 years or 900,000t of beneficiated manganese ore sold.
  • The deal with the Togo government should give nearly $0.9m a year at a price of $3.5/dmt for manganese and production of 7,480tpa equating to some $2.6m over three years.
  • Manganese ore prices for 38%min FOB South Africa have fallen to US$2.90-3.05/dmt from $3.65-3.80/dmtu in October.

*SP Angel acts as nomad and broker to Keras

Lundin Mining (LUN CN) C$12.4, Mkt Cap $11bn – 2024 production results and 2025 guidance following transformative year

• Lundin Mining produced 369kt Cu over 2024 on a 100% basis.
• Guidance had been for 366-400kt revised to 366-389kt.
• Gold production stood at 158koz vs original guidance of 155-170koz
• 2025 guidance:
  • 303-330kt Cu at C1 costs of US$2.05/lb-2.30/lb/
  • 135-150koz Au.
  • Sustaining CAPEX of US$530m and expansionary CAPEX of US$205m.
  • Exploration expenditure at US$40m.
• 2026 guidance of 320-348kt Cu, 144-159koz Au.
• 2027 guidance for 300-328kt Cu, 132-147koz Au.
• Over 2024,Lundin Mining increased their stake in Caserones from 51% to 70%, alongside closing the joint acquisition of Filo Corp with BHP yesterday.
• Additionally, they have agreed to sell their European assets to Boliden for US$1.52bn, supporting the long-term growth strategies.

Metals Exploration (MTL LN) 6p, Mkt Cap £104m – Results from internal study on La India gold project, Nicaragua

• Gold producer Metals Exploration reports the results from an internal study conducted on the recently acquired La India Gold Project.
• The results are based off a number of operational and financial performance studies intended to optimize the 2022 BFS from SRK.
• The study envisages a combination of open pit and underground mining vs Condor’s previous open pit-only study.
• LOM increased to 12.4 years from 8.4 years previously.
• Annual production increased to 145koz vs 71.6koz previously.
• Ore processed at 1.4mtpa vs 0.9mtpa previously, with feed grade of 3.53g/t Au vs 2.56g/t Au before.
• Initial CAPEX increased marginally to US$122m vs US$116m before.
• AISC also increases slightly to US$1,176/oz vs US$1,058/oz before.
• Using a $2,500/oz gold price, NPV6 increases to US$882m vs previous US$338m, whilst IRR decreases from 71% to 54%.
• The Company intend to begin production at La India by 2026-end.
• They are currently in discussions to purchase a second-hand plant to support the increased throughput rate.
• An engineering firm set to be appointed February 2025 to begin construction drawins.
• Exploration and definition drilling due April 2025, with civil works expected May 2025.

*SP Angel acted as Broker to Condor Gold

Premier African Minerals (PREM LN) 0.028p, Mkt Cap £9.3m – Fundraising conditional on raising £2.3m via Retail Offer to fund Zulu Lithium in Zimbabwe

• Premier African Minerals report the raising of £1.2m through the placing of 4.3bn ordinary shares at 0.0275p/s.
• The funds are conditional on the rasing of a total of ‘not materially less’ than £3.5m of total funding.
• The team are seeking a further £2.3m via a Retail Offer.
• PREM have an offtake prepayment agreement with Canmax for spodumene from the Zulu Lithium project in Zimbabwe.
• Should Premier not deliver the required product or cash plus interest by April 1^st 2025, Canmax will gain a direct interest in the Zulu Project based on a project valuation of US$100m or accept settlement in PREM ordinary shares.
• Canmax also has a a fixed charge over the shares of Zulu Lithium.
• Canmax has a right to buy participate in equity raises to maintain its current 13.4% interest in Premier African.
• Use of funds:
  • “Completion of the 3-to-5-day flotation plant test run and purchase and commissioning of the Secondary Flotation Plant.
    • estimated cost is $800,000 inclusive of the Purchase of the Spodumene float plant.
  • Part payment to the Government of Zimbabwe in respect of deferred VAT and other statutory requirements of $250,000.
  • Part payment in respect of arrears of salaries and wages to employees of $400,000.
  • Part payment to specific suppliers of plant spares and maintenance of $180,000.
  • Any remaining balance will be used in part payments to contractors and other creditors to enable ongoing commercial operations.
• Negotiations regarding certain creditors of the Company and Zulu accepting new shares of the Company in settlement in full or part settlement of the liabilities due to them have been taking place for several weeks. It is expected that agreement will be reached with certain of these parties once the terms of the Placing (including the Issue Price) are notified to them.“
• PREM struggled to achieve consistent grade and recoveries at the Zulu spodumene flotation plant in Zimbabwe last year.
• Issues related to inadequate reagent dosing of reagents and excessive residence time of the feed in the cleaning circuit.
• Adjustments to the reagent dosing are expected to improve recoveries while a reduction in the residence time should minimise the flotation of gangue minerals.
• Some new parts costing <$50k for the cleaning stage are expected to reduce residence times.
• PREM also reported to have had an alternative option offered by a Chinese EPCM firm to provide new flotation facility last October.

Conclusion:  We expect lithium prices to rise again after a tough year in 2024 and hope management can raise the required funds to settle their debts and improve plant performance.

Zijin Mining (2899 HK) HK$15, Mkt Cap HK$400bn –Zijin acquire 25% stake in Chinese lithium miner for US$1.9bn

• Zijin Mining, Chinese copper, gold and lithium major, acquire 25% of Zangge Mining.
• The stake was bought for US$1.9bn.
• Zangge already owns a minority stake in Zijin’s Julong copper mine in Tibet.
• The Company is primarily a fertilizer producer, mining potash from the salt lakes of Qinghai.
• However, Qinghai has become a major lithium producing region, enhanced by proprietary DLE technology.
• Zijin is already progressing two brine operations, Tres Quebrados and Lakkor Tso , with the latter set to use ‘Adsorption + membrane separation + electrodialysis (titanium-based adsorbent’
• Company filings stated that the deal will also boost operational management efficiency at Julong and accelerate expansion of the project.

LSE Group Starmine awards for 2024 commodity forecasting:

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

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

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

Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476

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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