SP Angel Morning View -Today’s Market View, Friday 22nd November 2024

Antimony prices rocket as China restricts exports

MiFID II exempt information – see disclaimer below

Artemis Gold ( ARTG CN) – Blackwater commissioning as first pour looms

Filo Corp (FIL CN) – Drilling results show 1,270m at 0.92% CuEq

Gemfields Group (GEM LN) – Auction results disappoint on weak luxury market

Gratomic (GRAT CN) – Strategic repositioning

Kavango Resources* (KAV LN) – New gold process plant commissioned for Prospect 4 in Zimbabwe

Antimony prices rocket to >U$37,500/t as China restricts exports.

• Antimony prices rocket as China restricts exporets with antimony trioxide prices in the US rising to $37,500/t from $18,300/t (asianmetals.com).
• US antimony oxide stocks are expected to last just 6-8 weeks prompting substantially higher than normal bids in the market on small lots.
• China produces a>48% of global antimony according to the Lowy Institute with aroudn 32% of global antimony resources.
• Tri-Star Resources’* antimony roaster in Oman is offline due to its inability to secure antimony concentrate supply.
• Perpetua in the US is not yet on line
• Consumers are faced with the prospect of shortages or finding antimony alternatives

*SP Angel formerly acted for Tri-Star Resources

Gold ($2,705/oz) continues to push higher, on track for biggest rise in a year

• Gold is on track for its best week since October 2024, having climbed from $2,545/oz in the wake of the US election.
• Trump’s victory saw a major sell-off in gold, which fell 7% on expectations of runaway inflation and soaring Treasury yields.
• Treasury yields did soar, with the 10-year hitting 4.5% however, they seem to have settled now c.4.4%.
• Gold is up 30% this year on have demand, expectations of a Fed cutting cycle continuing into 2025 and Central Bank buying.
• Bulge bracket banks have reiterated their calls for higher prices into 2025.
• Gold has shrugged off a stronger dollar, which has soared since Trump’s victory against a basket of currencies.
• China reported a major gold discovery in Hunan province, with Hunan Gold reporting potential resources of 9.6moz at 2000m depths.
• The Geological Bureau of Hunan Province also reports an additional potential resource at the site of 32moz Au, at 3000m depths.
• We wonder about the feasibility of Hunan’s supposed gold ‘discovery.’

Exxon Mobil signed a non binding MOU with LG Chem for supply of lithium carbonate from its Arkansas Project.

• Exxon last year announced plans to recover lithium from the Smackover Formation using DLE technology.
• Exxon and other oil companies such as Occidental Petroleum and Equinor are increasingly investing in lithium project, Mining.com reports.
• The offtake covered up to 100kt over several years supplying LG Chem’s cathode plant in Tennessee.
• LG Chem’s Tennessee cathode plant broke ground in December 2023.

Czech coal tycoon buys steel-recycling facilities in Europe

• Sev.en Global Investments is reportedly buying Celsa Steel UK and Celsa Nordic.
• Pavel Tycak holds coal assets across the US, Australia and VIetman and has gas-fired power plants in the UK.
• The Group is boosting EAF steel production capacity with the acquisitions, alongside scrap-metal processing.
• The Spanish Celsa Group was placed into administration last year, with Bloomberg reporting the deal is valued at US$3.2bn.

Metals pare gains as dollar strength outweighs hints of China stimulus optimism

• Copper has fallen back to the $9,000/t mark, sliding below the key level this morning.
• The move follows a sell-off in China, with the Hang Seng down 1.9% and the Shanghai exchange down 3%.
• The Yuan has fallen amid dollar strength, limiting Chinese metal buyers in international markets.
• Tin fell to four-month lows while nickel slumped to four year lows.
• Meanwhile, iron ore has weakened following a brief $4/t rally this week, hovering again around the $100/t mark.
• Bloomberg reports that steel output in China rose in October, with average daily production in the first 10 days of November rising year on year.
• Hints of optimism are bubbling regarding the December policy meeting, following the previous 10tn CNY disappointment.

Economics

Japan

• Preliminary Manufacturing PMI (Nov/Oct/Est): 49.0/49.2/NA
• Preliminary Services PMI (Nov/Oct/Est): 50.2/49.7/NA
• Preliminary Composite PMI (Nov/Oct/Est): 49.8/49.6/NA

Eurozone – Services contract in November joining struggling manufacturing sector according to latest PMI numbers.

• Composite PMI dropped sub 50 level indicating a contraction for the second time in three months.
• New business orders fell for the sixth month running with firms scaling back workforce, albeit, only marginally.
• Preliminary Manufacturing PMI (Nov/Oct/Est): 45.2/46.0/46.0
• Preliminary Services PMI (Nov/Oct/Est): 49.2/51.6/51.6
• Preliminary Composite PMI (Nov/Oct/Est): 48.1/50.0/50.0

Germany – Contraction in the private sector activity dropped at the fastest rate in nine months in November.

• Services sector is also in a contraction now marking the first sub 50 reading in nine months.
• Preliminary Manufacturing PMI (Nov/Oct/Est): 43.2/43.0/43.0
• Preliminary Services PMI (Nov/Oct/Est): 49.4/51.6/51.7
• Preliminary Composite PMI (Nov/Oct/Est): 47.3/48.6/48.7

France – Private sector business activity contracted for a third consecutive month in November falling at the quickest pace since January

• Businesses are increasingly worried about “crises both domestically and internationally”.
• “Politically, there is no sign of relief given the deadlock over the country’s 2025 budget, which remains unresolved due to internal political disputes… now, even Prime Minister Michel Barnier’s government is at risk of collapsing, which could jeopardize efforts to reach a budget agreement,” S&P Global report read.
• Preliminary Manufacturing PMI (Nov/Oct/Est): 43.2/44.5/44.5
• Preliminary Services PMI (Nov/Oct/Est): 45.7/49.2/49.0
• Preliminary Composite PMI (Nov/Oct/Est): 44.8/48.1/48.3

UK – The pound briefly touched 1.25 mark as retail sales and preliminary PMIs disappoint.

• Private sector slipped into a contraction ending a 12-month run of sustained growth.
• New order growth slowed to the weakest level in a year amid reports of fragile business confidence.
• A marginal reduction in private sector employment was recorded as firms often cited the non-replacement of voluntary leavers to help offset expected increase in payroll costs.
• Retail Sales ex Auto Fuel (%mom, Oct/Sep/Est): -0.9/0.1(revised from 0.3)/-0.4
• Retail Sales ex Auto Fuel (%yoy, Oct/Sep/Est): 2.0/3.2(revised from 4.0)/3.3
• Preliminary Manufacturing PMI (Nov/Oct/Est): 48.6/49.9/50.0
• Preliminary Services PMI (Nov/Oct/Est): 50.0/52.0/52.0
• Preliminary Composite PMI (Nov/Oct/Est): 49.9/51.8/51.7

Currencies

US$1.0473/eur vs 1.0527/eur previous. Yen 154.41/$ vs 154.48/$. SAr 18.033/$ vs 18.169/$. $1.257/gbp vs $1.264/gbp. 0.652/aud vs 0.652/aud. CNY 7.245/$ vs 7.241/$.

Dollar Index 107.04 vs 106.66 previous

Precious metals:         

Gold US$2,700/oz vs US$2,670/oz previous

Gold ETFs 83.0moz vs 82.9moz previous

Platinum US$972/oz vs US$965/oz previous

Palladium US$1,044/oz vs US$1,040/oz previous

Silver US$31.4/oz vs US$31.2/oz previous

Rhodium US$4,600/oz vs US$4,600/oz previous

Base metals:   

Copper US$9,028/t vs US$9,111/t previous

Aluminium US$2,622/t vs US$2,635/t previous

Nickel US$15,775/t vs US$15,960/t previous

Zinc US$3,001/t vs US$2,973/t previous

Lead US$2,025/t vs US$1,997/t previous

Tin US$28,800/t vs US$29,125/t previous

Energy:           

Oil US$74.8/bbl vs US$73.6/bbl previous

• Crude oil prices edged higher on increased geopolitical tensions after Russia launched its first intercontinental ballistic missile at Ukraine in response to the sanction of long range missile attacks by the latter.
• US Henry Hub prices were flat after the EIA reported a 3bcf w/w draw to 3,969bcf, with w/w gas storage levels falling to 3.7% above last year and 6.4% above the 5-year average as it enters the winter withdrawal season.
• A BP-led JV has sanctioned a $7bn investment in the enhanced gas recovery of 3Tcf from the Ubadari field to the existing 11.4mtpa Tangguh LNG facility in Indonesian West Papua via a carbon capture, utilisation and storage (CCUS) and onshore compression project, which involves the potential sequester of 15mtpa CO2 from 2028.

Natural Gas €48.2/MWh vs €47.8/MWh previous

Uranium Futures $78.6/lb vs $79.3/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$100.8/t vs US$102.3/t

Chinese steel rebar 25mm US$499.1/t vs US$503.4/t

HCC FOB Australia US$204.5/t vs US$205.0/t

Thermal coal swap Australia FOB US$144.0/t vs US$142.3/t

Other:  

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

NdPr Rare Earth Oxide (China) US$56,450/t vs US$56,281/t

Lithium carbonate 99% (China) US$10,558/t vs US$10,566/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$4.8/lb vs US$4.8/lb

Europe Ferro-Vanadium 80% US$25.6/kg vs US$25.55/kg

China Ilmenite Concentrate TiO2 US$307/t vs US$307/t

China Rutile Concentrate 95% TiO2 US$1,139/t vs US$1,139/t

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

Brazil Potash CFR Granular Spot US$277.5/t vs US$277.5/t

Germanium China 99.99% US$2,865.0/kg vs US$2,865.0/kg

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

Battery News

Northvolt filed for bankruptcy as refinancing talks fell through with Peter Carlsson resigning as CEO.

• Northvolt, announced it has filed for Chapter 11 bankruptcy protection in the US this week.
• Northvolt is reported to have raised more than $15bn from investors and governments but had just $30m in cash at the time of Chapter 11 filing (FT).
• Northvolt says it has only enough cash to support operations for about a week and said it has secured $100m in new financing for the bankruptcy process.
• Europe has been hoping that Northvolt would reduce Western car makers’ reliance on Chinese rivals.
• EV demand has slowed in Europe and the company also saw a $2bn contract with BMW cancelled.

Pakistan seeing rapid growth of solar projects

• Imports of solar equipment to Pakistan from China in the first nine months of 2024 are well ahead of figures for the whole of 2023. (BloombergNEF)
• $1.7bn has been spent on solar equipment from China, which equates to approx. 17GW of capacity, around 30% of Pakistan’s total energy capacity.
• The rapid solarisation has seen state-owned utilities accumulate losses of 2.4tr Pakistani rupees ($8.6 billion) between 2014 and 2023, according to government data.
• Pakistan is now the third largest destination for Chinese solar panels after it lifted import curbs at the end of 2023.

Honda to begin manufacture of solid-state batteries for testing

• The automaker has built a demonstration production line to figure out how to make affordable, high-density solid-state batteries for EVs.
• The facility has all the equipment needed to start the verification phase of each production process in preparation for the move to solid-state
• Honda says it will begin making actual batteries on this demo line in January 2025, but it won’t be until later in the decade that the batteries make it into their vehicles.

Company News

Artemis Gold ( ARTG CN) C$13, C$3bn – Blackwater commissioning as first pour looms

• Canadian gold developer Artemis provides an update from their Blackwater mine.
• The Company notes that first ore has been fed to the crushing circuit.
• Mining operations in the open pit began this quarter.
• Grid power line and substation now commissioned and feeding the site, with diesel generation expected to shutdown by 2024 end.
• TSF construction complete and ready for production.
• First ore to ball mill expected to be fed in the next few weeks.
• Blackwater holds reserves of 8moz Au, and resources of 11.7moz.
• Year 1-5 expected to see average annual gold production of 321koz and AISC at US$578/oz.
• Phase 2 ramps up to 381kozpa at US$698/oz with phase 3 at 438kozpa and US$651/oz AISC at a 20mtpa throughput.

Filo Corp (FIL CN) C$33, C$4.45bn – Drilling results show 1,270m at 0.92% CuEq

• Filo Corp, which is currently under takeover offer from BHP and Lundin Mining, reports drilling results.
  • FSDH107: 1,270m at 0.92% CuEq from 298m
  • FSDH112: 1,282m at 0.61% CuEq from 96m
  • FSDH113: 834m at 0.64% CuEq from 532m
  • FSDH116: 610m at 0.39g/t Ag, 0.15% Cu and 2.2g/t Ag from 22m
• The Company notes that hole FSDH112 lies 1.5km NE of the FSDH107 hole.
• The FSDH116 hole lies 4.3km SW of the FSDH112 hole.
• Company suggests that the Aurora Zone now has a ‘minimum east-west width of 700m, remaining open in both directions.’
• The Bonita area is believed to host a high-grade corridor that runs through several; deposits.
• A gold-rich porphyry has been identified in hole 116, named the Tamberias area.
• Company states that they have ‘now drilled continuous mineralisation over 5.5km between holes 116 and 114, with hole 107 expanding the width, and still the deposit is open in all directions.’
• The BHP/Lundin agreement is set to be completed in 1Q25.
• Nine rigs are currently active on site.

Gemfields Group (GEM LN) 9.6p, Mkt Cap £111m – Auction results disappoint on weak luxury market

• Gemfields reports auction results for higher-quality rough emeralds between 4-21^st November 2024.
• The Company generated $16m in revenues, offering 43 lots and selling 30.
• 141kct of 200.5kct offered were sold.
• The Company reports an average sale price of $114/ct.
• For reference, the May 2024 auction saw 240kt offered and 209kt sold, with average carat sales value at $167.5/ct.
• Management notes that the ‘overall result for this auction is very disappointing, driven by fewer and poorer bids for lesser quality grades.’
• They state that ‘the wider luxury and gemstone markets are undeniably facing challenging times.’
• The Company has ‘taken proactive steps to support the market by withholding certain lots that did not achieve satisfactory bidding.’

Gratomic (GRAT CN) – C$0.05, Mkt cap C$10m – Strategic repositioning

• Gratomic report the appointment of Hermanus ‘Manie’ Silver as COO and a director of the company.
• Manie Silver is currently Mine Manager and Head of Namibian Operations and has previously held positions as COO and CEO and remains instrumental in starting and managing several mining projects across Africa.
• Manie is consulted as a Senior Engineer in mining metals and minerals in African and has acted as a senior engineer for the Highland Group in Eritrea, Angola, and Zambia on gold, copper, and diamonds.
• He was responsible for improving mine capex and opex and training senior management at Zambian Copper, DRC Copper, and Angola Diamond Mines and also served as CEO for Miranda Coal.
• Bruno Baillavoine, is stepping down from his role as chairman for personal reasons and will remain as a consultant with his formal position being absorbed by the board.
• Kobus La Grange, a professional metallurgist, has joined to consult on and act as head of processing. Kobus has 34 years of experience in the Southern African steel and mining industries.
• Gratomic recently sold certain non-essential assets including a residential property in Windhoek for ~CAD $712,000 in cash.
• Royalty agreement: Gratomic is negotiating a royalty agreement with a private company which together with the sale of assets should enable the completion and restart of the Aukem graphite mine in Namibia.
• Graphite marketing: Gratomic is in advanced discussion on the marketing of graphite production to a trading company with the two companies are nearing completion of a partially pre-paid long-term marketing agreement.

Conclusion: Gratomic is making progress towards the resart of the Aukem graphite mine and process plan in Nambia. There appears to be substantial new interest in graphite since China threatened to restrict the export of high-quality graphite synthetic and natural graphite products. Gratomic’s Aukem mine hosts a high-grade, high-carbon content natural graphite vein. The vein is bench mined due to its proximity to surface.

*SP Angel is acting as financial advisor for Gratomic. The SP Angel analyst has previously visited the Aukem mine and process facilities in Namibia.

Kavango Resources* (KAV LN) 0.75p, Mkt Cap £11m – New gold process plant commissioned for Prospect 4 in Zimbabwe

• Kavango Resources report identifies manufacturer to build a 100-200tpd gold process plant for its Prospect 4 .
• Prospect 4 currently hosts artisanal workings with contract miners currently feeding Kavango’s process plant at Hillside some 20km away.
• The area shows at least 8 mineralised vein shears currently being mined with visible gold in surface stocks from 4 of these vein shears.
• The modular plant can easily be moved to other areas once Prospect 4 has been worked out.
• Prospect 4 exploration assays show:
  • 582 surface soil samples were taken over 1.5km² with a peak value of 8.21g/t
    • 19 samples returning grades >0.5g/t (announced >>> 19 August 2024).
  • 2.53m intersection grade 29.08g/t from 97.47m, associated with visible gold and a peak grade of 212.07g/t over 0.34m
• The current contractors are working to less than 30m depth with the above drillhole potentially indicating more ore to be won below this level.
• The current process plant at Hillside can process 40-50 t/d (~13,000tpa assuming 24/7 working and 80% availability).
• Prospect 4 drilling: 4 holes planned to 500-600m depth to test the continuity and depth extent of visible gold bearing quartz-vein shears
  • >12 sub-parallel vein sets have been identified with a 2.53m mineralised section grading at 29.08g/t in Hole SKDD001
  • Extensive surface sampling also returns positive results.
• Prospect 3: two rigs currently drilling.
• TEA ‘Technical Economic Assessment’: assays will guide a ne TEA for the project
• Management are confident Prospect 4 can sustain a minimum 100t/d plant and potentially a 200t/d plant based on current activity and observed vein sets.

Conclusion: Kavango are pressing ahead to increase exploration at production at Prospect 4. Management are also looking at exercising their option to acquire the Nara deposit which is around the historic Nara gold mine.

*An SP Angel Analyst holds shares in Kavango. The analyst holds shares in Kavango.

 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 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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