SP Angel Morning View -Today’s Market View, Friday 21st February 2025

Gold bounces off record highs as Bessent dismisses Treasury revaluation

MiFID II exempt information – see disclaimer below

Allied Gold (AAUC CN) – Guidance and resources/reserves update

Anglo American (AAL LN) – Anglo writes down value of De Beers by a further $2.9bn

Founders Metals (FDR CN) – High-grade intercepts from new targets in Suriname

Newmont Corporation (NEM US) – 2024 results show strong cash generation from asset divestments and climbing gold prices

Power Metals Resources* (POW LN) – Confirmation of sale of £9.2m worth of GMET stake

Savannah Resources* (SAV LN) – BUY, 18.1p – Barrosso fieldwork resumes following positive Portuguese State decison

West African Resources (WAF AU) – 2025 production guidance supported by Kiaka

Gold ($2,930/oz) bounces off record highs as Bessent dismisses Treasury revaluation

• Gold prices hit record highs yesterday, over $2,955/oz in the spot market, before sliding overnight.
• The metal has been supported by increased attention over the Trump Administration’s approach to the metal.
• Trump insisted he would ‘make sure the gold is there’ when asked about concerns over the Fort Knox gold supply.
• Gold’s rally had gained additional steam after Treasury Secretary Bessent commented on monetising the US balance sheet.
• However, he dismissed revaluing the US gold reserves as an option yesterday, also ruling gold out as an asset for the new US sovereign wealth fund.
• Consistent buying by Chinese consumers has continued to support gold with Poland also seen a major likely buyer given its proximity to Russia.
• Many other nations are also thought to be holding onto their gold.
• Major banks have been returning to the gold market indicating a substantial increase in business.

Copper rises again as dollar weakens and China boosts imports from the DRC

• Copper prices have been supported by a weaker US dollar, signs of improving demand from China and tariff concerns.
• Anglo American announced plans to jointly develop the $5bn Los Bronces and Andina operations with Codelco to produce c.130kt Cu pa over 21 years.
• Meanwhile Reuters report that DRC refined copper shipments to China have risen 71%yoy to 1.48mt in 2024, now the largest supplier of refined copper to China.
• CMOC’s copper output from the DRC rose 55%yoy to 650kt.
• Indonesia continues to restrict concentrate exports from Freeport’s Grasberg operation, also supporting prices.

Iron ore climbs to four-month highs on signs of steel consumption recovery in China

• China iron ore contracts rose to $116/t, to their highest levels since October 2024 and climbing to $108/t in Singapore.
• The steelmaking ingredient has now climbed 3% this week.
• The move followed Mysteel data showing downstream steel consumption jumped 44%wow, following the Lunar New Year break.
• Analysts are pointing to improved rebar demand amid the upcoming peak construction season this spring.
• The PBoC also stated plans to provide continued support to the private economy.

China’s EV price war leaves behind a trail of ‘zombie cars’

• China’s intense price war has seen dozens of smaller car makers quit the sector leaving customers with vehicles that are no longer supported by software updates.
• Generous government subsidies sparked frenetic growth in China’s EV market as hundreds of startups, and their sophisticated tech-forward models, flooded the market.
• The government has started to reign in subsidies and competition for customers intensified with rounds of aggressive price discounting that has given more power to industry giants like BYD and left smaller manufacturers to fall by the wayside.
• A Shanghai resident who bought a Weltmeister EX5 EV in 2022 saw the company collapse in 2023 ending software updates that keep smart features working.
• Even automakers who are still operational are struggling to keep up with maintenance updates for consumers.
• Dealerships and after-sales services have been closed as the automakers try to stay afloat, but this has led to difficulties in providing repairs and updates for users.
• Issues have also led to insurers demanding significantly higher premiums or refusing insurance coverage for vehicles that are no longer supported by their manufacturers.

Rare Earths – Chinese government indicates taking control of all REE mining and processing

• China has moved a step further in its control of the rare earth market.
• The new regulations suggest REE concentrate imports into China may be stopped to reduce pollution, this will also limit REE production.
• Miners looking to continue or start REE concentrate trade into China will only be allowed to do so if their Chinese counterparty has the relevant permit.
• REE concentrate or intermediate product producers are advised to find processors outside of China. There are very few.

Conclusion: If the US, NATO and other nations want guaranteed availability of REE metal oxides they will need to fund the development of REE processing facilities.

Few companies have the know-how to process REE metal oxides and nobody has the capacity to produce REEs at substantial losses to current prices.

The only solution is for governments to fund loss-making processing, subsidise the metal and develop production despite likely environmental opposition.

We recommend:  Mkango*, Ionic and Rainbow Rare Earths as three beneficiaries of the current situation as they each have scaleable REE oxide processing technologies.

Mkango* (MKA LN) have the HyProMag REE recycling technology and recently signed a land lease agreement with Grupa Azoty Pulawy for a RE Separation Plant in Poland.

Ionic Rare Earths (IXR AU) are planning a REE wind farm magnet recycling facility in Belfast, UK

Rainbow Rare Earths (RBW LN) are testing and upscaling K-Tech REE oxide processing technology at Mincon in Johannesburg for use on the Phalaborwa gypsum residues

Economics

Eurozone – Private sector recorded marginal growth in February, although, details of the Preliminary PMI report raise outlook concerns amid domestic as well as external challenges.

• New orders continued to fall while confidence fell to a three month low with sentiment suffering across both manufacturing and services.
• Input cost inflation accelerated to the fastest in almost two years pushing output prices higher.
• Output inflation hit the highest level in ten months and more importantly growth was driven by the service sector while manufacturing recorded a marginal reduction.
• Employment pulled back at a faster rate in February marking the seventh consecutive decline amid muted demand.
• Preliminary Manufacturing PMI (Feb/Jan/Est): 47.3/46.6/47.0
• Preliminary Services PMI (Feb/Jan/Est): 50.7/51.3/51.5
• Preliminary Composite PMI (Feb/Jan/Est): 50.2/50.2/50.5

France

• Preliminary Manufacturing PMI (Feb/Jan/Est): 45.5/45.0/45.3
• Preliminary Services PMI (Feb/Jan/Est): 44.5/48.2/48.9
• Preliminary Composite PMI (Feb/Jan/Est): 44.5/47.6/48.0

Germany

• Preliminary Manufacturing PMI (Feb/Jan/Est): 46.1/45.0/45.5
• Preliminary Services PMI (Feb/Jan/Est): 52.2/52.5/52.5
• Preliminary Composite PMI (Feb/Jan/Est): 51.0/50.5/50.8

Japan – Inflation accelerated to 4%yoy in January, up from 3.6%, supporting the case for more hikes.

• Consumer inflation excluding fresh food came in at 3.2% marking the biggest gain since June 2023.
• Latest data show around 65% of surveyed households feel the burden of inflation up from just under 50% in October 2023, according to a poll by the Yomiuri newspaper and news network NNN this month.
• Economists surveyed last month expected next hike in rates coming around July. (Bloomberg)
• Separately, better than expected flash PMIs were released this morning.
• The yen is little changed this morning trading around 150 mark.
• Preliminary Manufacturing PMI (Feb/Jan/Est): 48.9/48.7/NA
• Preliminary Services PMI (Feb/Jan/Est): 53.1/53.0/NA
• Preliminary Composite PMI (Feb/Jan/Est): 51.6/51.1//NA

UK – Slow growth recorded in February as a contraction in manufacturing was outweighed by higher levels of activity in the services sector.

• On a less positive side, new business orders fell for the third month in a row, employment registered a steep drop in response to higher payroll costs and weak demand while wage pressures contributed to the fastest increase in input costs.
• Higher material costs and energy bills also contributed to inflation.
• Robust increases in prices charged by both manufacturers and service providers reported.
• “Early PMI survey data for February indicate that business activity remained largely stalled for a fourth successive month, with job losses mounting amid falling sales and rising costs… the lack of growth alongside rising price pressures points to a stagflationary environment which will present a growing dilemma for the Bank of England,” PMI report read.
• Preliminary Manufacturing PMI (Feb/Jan/Est): 46.4/48.3/48.5
• Preliminary Services PMI (Feb/Jan/Est): 51.1/50.8/50.8
• Preliminary Composite PMI (Feb/Jan/Est): 50.5/50.6/50.6
• Retail Sales (%mom, Jan/Dec/Est): 1.7/-0.6(revised from -0.3)/0.5
• Retail Sales ex Auto Fuel (%mom, Jan/Dec/Est): 2.1/-0.9(revised from -0.6)/0.9

Mali – Barrick reached an agreement with Mali to end the dispute agreeing to pay a total of CFA 275bn (~$438m). (Reuters)

• In return, the government will release detained employees, return seized gold inventories and allow to resume operations at the Loulo-Gounkoto complex.
• The resolution comes as Barrick said last week that the Company is considering to place the operation on care and maintenance.

Israel – Threat of military escalation between Israel and Gaza stepped up this week with forensic autopsies showing hostages killed while in Hamas captivity

• Hamas plan for mass murder using bus bombs came close to a further atrocity giving Israel further reason to cancel the ceasefire.
• We believe, Trump’s threat to clear Gaza came a step closer with the parading of hostage bodies prior to their handover.
• The arrival of US B52s in the Middle East ramps up the potential for more serious conflict and gives Trump a big stick to wield.
• Remember, if the Commander in Chief says bomb Gaza, the US military machine is committed to follow the order.
• Israel government needs no more convincing of the ongoing threat from Gaza and appears to have strong support from Trump and the Republican party.
• US envoy says Trump’s Gaza plan is not about evictions. So what is the plan?
• We suspect Israel will hit Iran first and then clear out Gaza with full support from the US.

Currencies

US$1.0481/eur vs 1.0438/eur previous. Yen 150.48/$ vs 150.37/$. SAr 18.338/$ vs 18.500/$. $1.267/gbp vs $1.261/gbp. 0.639/aud vs         0.638/aud. CNY 7.253/$ vs 7.264/$.

Dollar Index 106.620 vs 106.923 previous.

Precious metals:

Gold US$2,922/oz vs US$2,953/oz previous

Gold ETFs 84.2moz vs 83.9moz previous

Platinum US$973/oz vs US$978/oz previous

Palladium US$973/oz vs US$979/oz previous

Silver US$32.8/oz vs US$33.0/oz previous

Rhodium US$4,675/oz vs US$4,650/oz previous

Base metals:   

Copper US$9,470/t vs US$9,524/t previous

Aluminium US$2,711/t vs US$2,709/t previous

Nickel US$15,490/t vs US$15,670/t previous

Zinc US$2,892/t vs US$2,913/t previous

Lead US$1,988/t vs US$2,006/t previous

Tin US$33,135/t vs US$33,190/t previous

Energy:           

Oil US$76.1/bbl vs US$76.2/bbl previous

• Crude oil prices were flat as the EIA estimated a US inventory w/w build of 4.6mb to crude, partially offset by draws of 0.2mb to gasoline and 2.1mb to diesel stocks, with refinery utilisation down 0.1% w/w to 84.9%.
• US Henry Hub natural gas prices edged higher after the EIA reported a 196bcf w/w draw to 2,101bcf (-191bcf exp), with storage inventories falling further to 15.5% below last year and 5.3% below the 5-year average.
• The president of Japan Petroleum Exploration (Japex) said it would prioritise E&P investment and reverse a plan to expand its renewables business through 2030, as rising costs challenged renewable returns. In Norway, Japex is seeking to boost profit by expanding production at an existing project and with further exploration.

Natural Gas €47.6/MWh vs €47.2/MWh previous

Uranium Futures $65.4/lb vs $65.3/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$107.7/t vs US$107.6/t

Chinese steel rebar 25mm US$488.1/t vs US$487.1/t

HCC FOB Australia US$187.5/t vs US$187.5/t

Thermal coal swap Australia FOB US$106.5/t vs US$107.0/t

Other:  

Cobalt LME 3m US$21,550/t vs US$21,550/t

NdPr Rare Earth Oxide (China) US$61,288/t vs US$59,749/t

Lithium carbonate 99% (China) US$9,996/t vs US$9,981/t

China Spodumene Li2O 6%min CIF US$815/t vs US$815/t

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

China Tungsten APT 88.5% FOB US$343/mtu vs US$343/mtu

China Graphite Flake -194 FOB US$430/t vs US$430/t

Europe Vanadium Pentoxide 98% US$4.5/lb vs US$4.6/lb

Europe Ferro-Vanadium 80% US$24.3/kg vs US$24.8/kg

China Ilmenite Concentrate TiO2 US$297/t vs US$295/t

Global Rutile Spot Concentrate 95% TiO2 US$1,543/t vs US$1,543/t

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

Brazil Potash CFR Granular Spot US$317.5/t vs US$317.5/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

Company News

Allied Gold (AAUC CN) C$4.5, Mkt Cap C$1.5bn– Guidance and resources/reserves update

• The Company released 2025 guidance and medium term outlook including update Resources/Reserves yesterday.
• 2025 production and costs are expected to come in at 375-400koz, up from 358koz in 2024, and US$1,690-1,790/oz AISC ($2,500/oz gold price basis) including:
  • Sadiola at 200-205koz and $1,650-1,735/oz;
  • Bonikro at 98-105koz and $1,500-1,585/oz;
  • Agbaou at 77-90koz and $2,050-2,160/oz.
• Production is expected to be 2H weighted with the split being ~45%/55% between two halves.
• This is explained by mine sequencing at Bonikro as well as the completion of the first phase of expansion at Sadiola.
• First phase of expansion at Sadiola will increase throughput for primary ore to 5.7mtpa, will come online in 4Q25 and is expected to allow the operation to run at 200-230kozpa.
• Phase two is expected to be completed in late 2028 raising production to 400kozpa over the first five years and 300kozpa over the LOM.
• 2025 capex is for $472m including:
  • $352m in DEVEX including $70m at Sadiola and $280m at Kurmuk;
  • $100m in SUSEX;
  • $20m in exploration capex.
• At Kurmuk, earthworks and structural fills are near completion, while civil works contractor mobilizations are in progress.
• Mining to start later in 1Q25 with first gold targeted 1H26.
• Kurmuk is expected to deliver 175koz in 2026 and run at 290kozpa in the first four years of operation (240kozpa over LOM at $950/oz AISC).
• Updated Reserves amounted to 237mt at 1.42g/t for 10.8moz.
• Updated Mineral Resource stood at 327mt at 1.49g/t for 15.7moz in the Measured and Indicated category and 344mt at 1.33g/t for 1.4moz in the Inferred resource.

Anglo American (AAL LN) 2436p, Mkt cap £33bn – Anglo writes down value of De Beers by a further $2.9bn

• Anglo have finally bitten the bullet and written down the value of DeBeers to $4bn following several years of trying to find a buyer for the business.
• DeBeers has been hit by:
  • An extortionate deal with the government of Botswana for sales of diamonds out of its mines in the region
  • Markedly lower diamond sales volumes and prices
  • Losses of close to $3bn last year
  • Lower than expected Chinese buying
  • Synthetic, lab-grown diamonds lowering natural diamond demand and prices and damaging confidence in the longer-term store of value for natural diamonds
• While the poor performance of DeBeers is not unexpected, its impact on Anglo is severe helping to push the group to a $3.1bn net loss for 2024.
• Anglo claims a formal process has not started but it appears to be common knowledge that Anglo has been looking for a buyer for some time.
• We would not be surprised to see Anglo take 50c in the $ just to offload the liability.
• In the meantime, BHP waits in the wings as Anglo works to jettison the less attractive parts of its mining portfolio.

Results: Anglo American reported an underlying EBITDA of US$8.46bn for the year 31st December 2024 yesterday vs US$9.96bn in 2023.

• Underlying earnings declined by US$1bn to US$1.94bn vs US$2.93bn in 2023 with a Loss attributable to equity shareholders of $3.1bn following net impairments of $3.8bn vs US$0.28bn in 2023.
• Closing net debt of US$10.6bn is comparable with the US$10.6bn reported at the end of 2023.
• The US$3.81bn (45%) contribution from copper dominates the underlying EBITDA vs US$3.23bn (32%) in 2023 at an overall margin of 50%
• US$2.66bn from iron-ore vs US$4.01bn in 2023 representing 31% at a 40% margin.
• Anglo plans to demerge the platinum mines after approval at the group’s April’s AGM. They represent just US$1.11bn (13%) to the EBITDA vs US$1.21bn in 2023.

Founders Metals (FDR CN) C$5.75, Mkt cap C$464n – High-grade intercepts from new targets in Suriname

• Suriname explorer Founders provides assay results from recent drilling at the new Van Gogh project.
• Drilling yielded 28.5m at 7.1g/t Au from 18.6m from the first hole.
• Pending drill holes reportedly hold ‘similar quartz-sulphide mineralisation [which[ suggest continuity of mineralised body over >150m.’
• The hole was drilled 3.8km from the nearest previous drill hole on Antino.
• The Company notes potential for multiple parallel zones.

Newmont Corporation (NEM US) $48, Mkt cap $55bn – 2024 results show strong cash generation from asset divestments and climbing gold prices

• Newmont reported $6.3bn in cash from operating activities, and $2.9bn in free cash flow.
• 6.8moz Au produced over the year.
• Company divested several assets, including Akyem, Cripple Creek & Victor (CC&V), Éléonore, Musselwhite, Porcupine and Telfer, along with its 70% interest in the Havieron project.
• Divestments expected to generate up to $4.3bn, with $2.5bn due 1H25.
• Cash balance currently $3.6bn, with debt reduced by $1.4bn
• Company guides for 5.9moz Au production in 2025, with 5.6moz from their ‘Tier 1 portfolio.’
• Portfolio AISC guided at $1,630/oz.
• Sustaining CAPEX of $1.8bn guided in 2025 and $1.3bn worth of development CAPEX guided for near-term development projects.

Power Metals Resources* (POW LN) 14p, Mkt cap £16m – Confirmation of sale of £9.2m worth of GMET stake

• Power Metal Resources confirmed yesterday that it has sold 29.8m share in GMET and 0.99m worth of warrants.
• The sale to UCAM will provide before cost proceeds of $9.2m.
• The Company will use the funds to redeem their ACAM loan note of £2m and accrued interest from 10^th June 2024.
• POW retains a 19.5% stake in GMET, valued at £8.2m as of 19^th February.

Conclusion: The GMET stake sale underlines POW’s strategy as a project generator. The funds will be used to shore up the balance sheet by paying down the UCAM convertible loan note, leaving POW with a healthy cash position to pursue their uranium-focused opportunities in Canada and base metal exploration efforts in the Middle East. POW retains a significant stake in GMET, providing further flexibility for growth and value creation opportunities going forward.

*SP Angel acts as Nomad and Broker for Power Metals

Savannah Resources* (SAV LN) 4.4p, Mkt Cap £95m – Barrosso fieldwork resumes following positive Portuguese State decison

BUY – 18.1p

• The government allows the Company to resume fieldwork and drilling with immediate effect at the Barroso Lithium Project in Portugal.
• The state issued a “Reasoned Resolution” in response to the “Precautionary Measure” entered at the Administrative and Fiscal Court of Mirandela by three local landowners earlier in February.
• Landowners disputed government order to provide the Company with a temporary access to land that it does not own for FS and permitting related work including drilling.
• The resolution read “we believe that any postponement of the execution of the administrative act (the Order) being challenged in court is more costly and seriously detrimental to the public interest, and that its full effectiveness should be maintained”.
• The Company is now able to return to work and will be looking to make up time lost during the two week stoppage.

Conclusion: Government decision to support its earlier order to provide the Company with a temporary access to site is a positive, confirming administrative support for the project and allowing the team to resume necessary fieldwork following a two week stoppage. FS and permitting targets reiterated for 2H25.

*SP Angel acts as Nomad and Broker to Savannah Resources

West African Resources (WAF AU) A$1.76, Mkt Cap A$2bn – 2025 production guidance supported by Kiaka

• West African resources provide guidance of 290-360koz Au for 2025.
• AISC in 2025 not currently guided, but Sanbrado guided at <US$1,350.
• Kiaka and group cost guidance to be provided on Kiaka steady state production.
• Kiaka construction is 90% complete and first pour due 3Q25 and commercial production 2H25.
• The Company produced 207koz in 2024 at an AISC of $1,240/oz.
• Growth CAPEX over 2024 was US$336m, guided at $215-235/oz for the period.
• Company to invest in Sanbrado for ‘continued long-term low-cost gold production,’ investing in the M5 underground expansion and Toega open pit.
• Company aims to drill >115,000m

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

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

*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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SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return