SP Angel Morning View -Today’s Market View, Friday 25th October 2024

Gold and copper slide following BRICs summit as traders take profits and US dollar strengthens 

MiFID II exempt information – see disclaimer below

80 Mile Plc* (80M LN) – Rod McIllree appointed as an executive director following acquisition of White Flame Energy

Adriatic Metals (ADT1 LN) – Permits received for Veovaca TSF

Atlantic Lithium* (ALL LN) – Assore supports A$9m placing adds funds for ongoing work on Ewoyaa lithium project in Ghana

Arc Minerals (ARC LN) – Arc Minerals shares mysteriously jump higher

Eramet (ERA FP) – Suspension of battery recycling project and buy out of lithium partner

Griffin Mining (GFM LN) – Q3 production results

Ioneer (INR AU) – Final permits secured for Rhyolite Ridge

Power Metal Resources* (POW LN) – Copper exploration begins in Oman

PYX Resources (PYX LN) – Operational update

Sayona Mining (SYA AU) – Quarterly update

Talga Group (TLG AU) – €70m EU grant for the Lulea Anode Refinery

Tribe Technology* (TRYB LN) – Appointment of SP Angel as broker as company adjusts software for fully autonomous drill rig in Australia

Copper ($9,515/t) slides alongside base metals as dollar strength continues

• Base metals sold off again, with copper back below $9,600/t and aluminium, zinc and lead all sliding.
• US Treasury yields remain elevated, lifting the dollar to 6-month highs and weighing on metals.
• Zinc is sitting near 20-month highs, up 20% ytd on bushfires in Australia and lower output from Teck in Canada.
• Iron ore fell below $100/t for some 62% Fe contracts, with focus turning to the National Peoples Standing Committee meeting over the next fortnight.

Gold ($2,720/oz) slides following BRICs summit as traders take profits

• Gold bounced off higher levels of $2,740/oz again, settling around the $2,720/oz mark.
• The metal has rallied sharply into the BRICs summit, with traders positioning for de-dollarisation expectations.
• The Summit, hosted by Putin, saw members look to enhance financial cooperation between other BRIC countries.
• Emphasis on de-dollarisation was consistent, however gold bulls likely disappointed by the lack of emphasis on the metal.
• Meanwhile, US Treasuries continue to sell off, with the 10 year sitting at 4.2% after jobless claims came below expectations.

Economics

US – Preliminary PMI numbers came in ahead of expectations in October suggesting private sector continued to perform well in a robust start to 4Q24.

• Services sector led growth compensating for a continuing contraction in manufacturing.
• New orders climbed at the quickest pace in 17 months.
• Employment fell for a third month, although, the decline was only marginal and less than reported in August and September.
• Inflation pressures cooled especially in the services sector where inflation slowed to its lowest in nearly four-and-a-half years.
• Preliminary Manufacturing PMI (Oct/Sep/Est): 47.8/47.3/47.5
• Preliminary Services PMI (Oct/Sep/Est): 55.3/55.2/55.0
• Preliminary Composite PMI (Oct/Sep/Est): 54.3/54.0/53.8

Japan – Tokyo CPI (%yoy, Oct/Sep/Est): 1.8/2.1(revised from 2.2)/1.8

• Tokyo CPI ex Fresh Food, Energy (%yoy, Oct/Sep/Est): 1.8/1.6/1.6

Germany – Ifo Business Climate (Oct/Sep/Est): 86.5/85.4/85.6

UK – Consumer confidence hit the lowest level this year ahead of the an eagerly awaited Labour budget due October 30.

• The GfK consumer sentiment gauge fell 1p to -21 in October matching lows recorded in February and March.

Currencies

US$1.0820/eur vs 1.0782/eur previous. Yen 151.94/$ vs 152.50/$. SAr 17.686/$ vs 17.553/$. $1.297/gbp vs $1.297/gbp. 0.663/aud vs         0.667/aud. CNY 7.125/$ vs 7.130/$.

Dollar Index 104.12 vs 104.33 previous

Precious metals:         

Gold US$2,730/oz vs US$2,754/oz previous

Gold ETFs 84.1moz vs 84.0moz previous

Platinum US$1,012/oz vs US$1,037/oz previous

Palladium US$1,137/oz vs US$1,078/oz previous

Silver US$33.5/oz vs US$34.7/oz previous

Rhodium US$4,750/oz vs US$4,750/oz previous

Base metals:   

Copper US$9,523/t vs US$9,521/t previous

Aluminium US$2,610/t vs US$2,637/t previous

Nickel US$16,255/t vs US$16,195/t previous

Zinc US$3,093/t vs US$3,116/t previous

Lead US$2,057/t vs US$2,060/t previous

Tin US$31,150/t vs US$30,985/t previous

Energy:           

Oil US$74.8/bbl vs US$75.6/bbl previous

Henry Hub Gas US$2.52/mmBtu vs US$2.39/mmBtu yesterday

• US Henry Hub prices moved higher on forecasts for cooler weather as the EIA reported an 80bcf w/w build to 3,785bcf, with US gas storage levels falling w/w to 2.9% above last year and 4.6% above the 5-year average.
• Media reports that the US-listed offshore driller Transocean is in merger talks with rival Seadrill, which follows Noble’s $1.6bn deal to buy Diamond Offshore Drilling in order to realise $100m in annual pre-tax cost synergies.
• TechnipFMC 3Q24 results commentary pointed to continued growth in the subsea development division, especially in new frontiers, with the Front-End Engineering and Design (FEED) pipeline remaining at a record level, many of which are for projects advancing toward final investment decision in the latter half of the decade.

Natural Gas €42.4/MWh vs €40.8/MWh previous

Uranium Futures $81.9/lb vs $82.6/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$103.7/t vs US$103.1/t

Chinese steel rebar 25mm US$537.5/t vs US$534.6/t

HCC FOB Australia US$202.0/t vs US$203.3/t

Thermal coal swap Australia FOB US$145.5/t vs US$144.0/t

Other:  

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

NdPr Rare Earth Oxide (China) US$59,508/t vs US$59,331/t

Lithium carbonate 99% (China) US$9,754/t vs US$9,748/t

China Spodumene Li2O 6%min CIF US$750/t vs US$750/t

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

China Tungsten APT 88.5% FOB US$340/mtu vs US$340/mtu

China Graphite Flake -194 FOB US$440/t vs US$445/t

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

Europe Ferro-Vanadium 80% 24.55/kg vs US$24.55/kg

China Ilmenite Concentrate TiO2 US$314/t vs US$315/t

China Rutile Concentrate 95% TiO2 US$1,256/t vs US$1,269/t

Spot CO2 Emissions EUA Price US$63.9/t vs US$63.9/t

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

Germanium China 99.99% US$2,875.0/kg vs US$2,875.0/kg

China Gallium 99.99% US$455.0/kg vs US$455.0/kg

Battery News

Tesla will make cheapest battery in US with 4680 technology

• It was only earlier this year when Elon Musk revealed production of Tesla’s 4680 battery wasn’t going to plan.
• If the company could not lower the production cost of its 4680 cells then it would throw in the towel and source batteries from Panasonic or LG.
• Following a breaktrough, Tesla demonstrated its first 4680 cells in a Cybertruck, using a dry cathode method that significantly reduces cost.
• Tesla expects to produce dry cathode batteries en masse in 2025, and may soon hit the promised 50% cost reduction goal that it announced on Battery Day in 2020.
• Musk said during the Q3 earnings call that the Tesla-made 4680 cells will soon go into the cheapest battery packs ever produced in the US when accounting for import taxes on supplier cells, as well as the federal incentive of $45/kWh of made-in-USA batteries.

CATL develops first hybrid battery with ‘EV-like’ range

• Leading battery maker CATL has announced its Freevoy hybrid battery which it claims has a pure electric range of over 400km and can add 280km in 10 minutes of charging.
• Current PHEVs in the US have a pure electric range of 50-80km depending on the make and model.
• The battery will be used by Li Auto and Avatr by next year, and some 30 hybrids from EV giants like Geely, Chery and GAC are expected to launch or deliver models equipped with the Freevoy pack.

China’s first all-solid-state lithium battery goes online with 1000 unit per day capacity

• According to local news reports, China’s first all-solid-state battery production line has begun production.
• The facility is owned by Beijing Pure Lithium New Energy Technology Co.
• It is reported that the all-solid-state lithium battery will be suitable for a range of use cases including energy storage systems and two-wheeler batteries.
• The mass production line of pure lithium new energy has a designed production capacity of up to 200 megawatt hours, which is enough to meet the charging needs of approximately 200,000 two-wheeled vehicles.

Researchers discover way to restore lost battery capacity

• One of the main issues with all rechargeable batteries is that they lose capacity over time.
• Researchers at Stanford University have discovered a method that can partially restore the capacity of silicon batteries.
• The method involves exposing the battery to targeted current pulses for around five minutes, and these pulses cannot exceed 4 volts (otherwise the capacity will actually be reduced).
• In initial tests, this method was able to recover a battery’s capacity by 30%.

Company News

80 Mile Plc* (80M LN) – 0.31p, Mkt cap £6.5m – Rod McIllree appointed as an executive director following acquisition of White Flame Energy

(Formerly Bluejay Mining. 80 Mile Plc holds 100% of the Hammaslahti and Enonkoski projects and all its Greenland prospects)

• 80 Mile Plc, formerly Bluejay Mining reports the appointment of Rod McIllree as an executive director following the acquisition of White Flame Energy.
• McIllree founded Bluejay but left in 2022, handing over to another management team to develop the Dundas ilmenite project and other exploration in Greenland.
• Following which, unfortunately, RTIT (aka Rio Tinto) failed to follow through on its smelter test of ilmenite from Dundas and commit to offtake, though it did spend $12m in jv with Bluejay in Finland.
• Some subsequent and improperly done work by the new team at Dundas also caused a loss of confidence in the asset which has since been corrected.
• While company is now examining the potential for industrial gasses it also continues to advance its evaluation of Dundas, Disco (KoBold jv) and Kangerluarsuk in Greenland.
• The principal focus is now on hydrogen and helium in drill holes in Finland alongside the potential for helium and industrial gasses in Greenland.
• The company is also issuing 64.5m options to directors and employees, exercisable at 1p/s over 5 years bringing the total number of options to 175.9m representing 8.61%.
• While that’s a whole heap of options we would rather have management incentivised alongside shareholders than taking large salaries and cash bonuses out of company funds.

*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.

Adriatic Metals (ADT1 LN) 183p, Mkt cap £701m – Permits received for Veovaca TSF

• Adriatic reports that it has received all permits for Phase I of the Veovaca Tailings Storage Facility.
• The Veovaca is an alternative TSF at the former Veovaca open pit mine, which sits 2km from the processing plant.
• The original TSF was curtailed owing to state forestry legal complications.
• Workstreams have commenced for first tailings disposal in December 2024.
• Phase 1 will be functional for 4-5 years of production and Veovaca is expected to be operational for over 10 years of production.
• CAPEX estimated at US$5m over a six-month period.
• Current tailings expected to be full by mid 1Q25.
• No impact on planned ramp up expected despite the disruption.

Atlantic Lithium* (ALL LN) 11.97p, Mkt Cap £78m – Assore supports A$9m placing adds funds for ongoing work on Ewoyaa lithium project in Ghana

(Ewoyaa Ownership:  Atlantic 62.9% falling to 40.5% if Piedmont fund their share of Ewoyaa, Piedmont 18.2% rising to 40.5% on project funding, MIIF Sovereign Wealth fund 6%, Ghana 13%)

(Piedmont are contracted to pay $70m + 50% of the total Capex to raise their stake to 40.5%. Total cost would be $135m to Piedmont on a $200m capex.)

• Atlantic Lithium report the raising of A$9m at A$0.23 (11.73p/s). The company also reserves the ability to accept oversubscriptions for another A$3.0m (£1.5m) should they be offered.
• Assore International, the South African based mining holding company has subscribed for up to A$7.5m (£3.9m).
• Assore recently acquired a further 24.3m shares in ALL from Piedmont in September and offered to acquire Atlantic Lithium for 33p in November last year.
• Three of the Atlantic directors have also indicated they will invest A$290,000 in the placing.
• Use of proceeds:
  • DFS optimisation and technical refinement,
  • FID related expenditure including remaining permitting activities,
  • Site preparation, HSE reports Community Development Funding and monitoring of project impact processes.
  • Exploration of Rubino and Agboville licences in the Ivory Coast,
  • General working capital requirements.

Conclusion: It is great to see Assore continuing to support Atlantic Lithium through further funding. We wonder if this may be a precursor to a third offer by Assore to acquire the business?

*SP Angel acts as Nomad to Atlantic Lithium. Two mining analysts from SP Angel have visited the Ewoyaa mine site in Ghana. Our analysts also visited the Ministry of Minerals Commission and MIIF, the Ghana Minerals Income Investment Fund which has invested in Atlantic Lithium and the Ewoyaa project.

Arc Minerals (ARC LN) 1.99p, Mkt cap £28.82m – Arc Minerals shares mysteriously jump higher

(Anglo American holds 70% of the jv with Unico Minerals Limited with Arc Minerals holding the other 30% through Unico Minerals.  Unico Minerals is a 67% jv with 33% held by Kopara Investments. Arc also holds 75% in Alvis-Crest (Proprietary) Limited which holds two licenses in the Kalahari Copper Belt, known as Virgo covering >210km2, around 10km south east the recently commissioned Khoemacau Copper in Botswana.)

• Arc Minerals shares have been trading around 1.6p/s for over a month but suddenly jumped higher yesterday to 1.97p/s.
• There is no news from the company and no particular reason for the shares to mysteriously jump in the current market environment that we are aware of.
• We suspect Anglo American, Arc’s jv partner in Zambia is distracted by the prospect of a further approach by BHP.
• We also suspect Arc and Anglo are still working through some license issues with the Ministry of Mines in Zambia.
• There is speculation that assays from the Virgo license in Botswana are about to be reported but we note there is reason to describe this as any form of deposit unless someone has found a substantial pile of animal dung and no hurry for any of Arc’s neighbours in the region to take more than a cursory interest.

Conclusion:  Given the excessive and shameful salaries and bonusses paid to and owed to board members we urge caution in Arc Minerals shares. It is our view that the majority of shareholder funds should be spent on the ground and not on lining the pockets of company directors, ref: our note of 1 August.

*The analyst holds shares in Kavango Resources

Eramet (ERA FP) €54, Mkt Cap €1.5bn – Suspension of battery recycling project and buy out of lithium partner

• Eramet reported turnover of €809m for the quarter, down 17%yoy.
• Weak market conditions for manganese ore demand in China, with sales down 37%yoy.
• The Company has reacquired full ownership of Centenario, their DLE project in Argentina, from Tsingshan, adding $699m to net debt.
• The Company has suspended their battery recycling project and will work towards an economic model.
• Manganese market conditions expected to remain weak in 4Q24, notably for manganese.
• CAPEX reduction of €250m to preserve cash in 2024, with FY24 guidance at €450-500m.

Griffin Mining (GFM LN) 147p, Mkt cap £275m – Q3 production results

• Chinese polymetallic miner Griffin produced 11.8kt zinc in concentrate produced, vs 12.8kt same period last year.
• 4.11koz Au produced over the September quarter, up yoy from 3.95koz.
• 337.5kt of ore mined, down from 363.4kt same period last year.
• Tonnes processed at 396.8kt, up from 367kt same period last year.
• 95.3koz Ag produced, vs 69.7koz same period last year.
• Higher throughput at Caijiaying stronger whilst lower grade stopes accessed during the quarter.
• Operations currently suspended following fatality of an employee.
• Zone II development work ongoing, with a new third portal and ventilation shaft being developed.

Ioneer (INR AU) A$0.3, Mkt Cap A$643m – Final permits secured for Rhyolite Ridge

• The Company secured final permit approvals for the Rhyolite Ridge Lithium-Born Project in Nevada, US.
• The project was issued federal permits by the Bureau of Land Management.
• The Company began federal permitting process in early 2020 entering final stages of the National Environmental Policy Act (NEPA) review in December 2022.
• The final design accounts for modifications of open pit footprint to avoid Tiehm’s buckwheat, an endangered species adjacent to the project.
• The team will update reserves and project capital costs by December 2024 ahead of a FID in 1Q25.
• Construction to start in 2025 and last 36 months for first production 2028.
• 2020 FS envisaged a 26y open pit operation producing 22ktpa LC/LHM and ~174kt of boric acid at $2,510/t LCE AISC (post boron by products).
• Capex was estimated at ~$860m (incl $74m for the LHM plant commissioned post Y3) delivering NPV8 and IRR of $1,.3bn and 21% both post tax using $11,740/t lithium and $710/t boric acid prices (boric acid accounts for ~30% of annual revenues).
• Reserves are estimated at 60.2mt at 1,797pp Li (0.39% Li2O) and 15,415ppm boron.
• Mineral resources are standing at 146.5mt at 1,600ppm Li (0.34% Li2O) and 14,200ppm boron.

Power Metal Resources* (POW LN) 13.8p, Mkt cap £16m – Copper exploration begins in Oman

• Power Metals has finalised and signed a formal and legally binding agreement with Alara Resources and Awtad Copper for exploration in Oman.
• Today’s announcement is a follow up from the 11^th September announced proposed terms.
• POW earn into the Block 8 concession by spending US$740k for a 12.5% stake.
• The concession is prospective for base metals, with workstreams planned to commence in the coming week:
• Workstream includes:
  • Stream sampling across outcropping ophiolite sequence, alongside mapping and rock chip sampling.
  • Orientation soil sampling over a known copper anomaly.
  • General geological reconnaissance work
  • Trenching to 2m depths over Al Mansur copper target identified from satellite data review

Conclusion: Power Metals continues to secure prospective stakes in exploration concessions, with today’s announcement marking a further interest secured in the Gulf. Exploration work is set to begin imminently, targeting an encouraging copper anomaly.

*SP Angel acts as Nomad and Broker for Power Metal Resources

PYX Resources (PYX LN) 4.5p, Mkt cap £22m – Operational update

• Zircon producer PYX reports a 47% decrease in mineral sands production ytd, at 6.2kt.
• Zircon production down 51% to 4.8kt.
• Reduction in production reflects heavy rains and a collapse of a bridge providing access to the mine.
• Export licence award enabled shipping of stockpiled mineral sands, with sales up to 14.1kt over the period, vs 9.4kt same period 2023.

Sayona Mining (SYA AU) A$0.03, Mkt Cap A$340m – Quarterly update

• The Company released September quarter operational update.
• Production climbed 5%qoq to 52.1kt of SC5.3 as the processing plant reached a new high of 91% utilisation rates (JunQ: 49.7kt SC5.3).
• Higher utilisation rates were slightly offset by lower feed grade and lower recovery rates (67% vs 68% JunQ).
• The mill processed 359kt at 1.16% Li2O.
• Concentrate sales amounted to 49.0kt at a realised price of A$1,067/t (US$975/SC5.3 or ~US$1,100/SC6.0) FOB Vancouver (JunQ: 27.7kt at A$885/t).
• Cash costs averaged A$1,335/t on sales FOB basis (JunQ: A$1,506/t) reflecting lower process plant downtime.
• The Company had 34kt of concentrate stockpiled or in transit as of SepQ end.
• The team also reports putting in place a limited hedging programme to secure higher prices currently offered in the forward market.
• Separately, Piedmont holds an offtake on production from NAL for the greater of 113kt or 50% annual production paying a market price subject ot a floor of $500/t and a ceiling of $900/t (SC6.0).
• SepQ EBITDA amounted to -A$18m with FCF coming in positive thanks to contribution from working capital of A$46m and after accounting for $A14m in capex.
• Closing cash balance stood at A$104m, up from A$91m as of JunQ.
• FY25 (June YE) guidance reiterated at 190-210kt at A$1,150-1,300/t cash costs.

Talga Group (TLG AU) A$0.4, Mkt Cap A$174m – €70m EU grant for the Lulea Anode Refinery

• The Company has been selected for an EU Innovation Fund grant for the commercial scale Lulea Anode Refinery.
• The grant is for €70m and is part of an EU driven programme providing funding to 85 innovative net zero projects in the clean technologies sector.
• The grant is provided by the EC and selected projects re to receive a total of €4.8bn in grant funding under the EU Innovation Fund.
• Grant agreements are due to be signed in 1Q25.

Tribe Technology* (TRYB LN) 3.3p, Mkt cap £8.1m – Appointment of SP Angel as broker as company adjusts software for fully autonomous drill rig in Australia

• Tribe Tech has appointed SP Angel as joint broker with immediate effect.
• The company is also convening a Geneal Meeting in 13 November.
• The autonomous TTDS GC 700 drill rig has arrived at the Australian Automation & Robotics Precinct.
• Reasons for GM are: .
  • Review of the rig shows further software development and systems integration work is required for its operation before dispatch to the customer’s mine site in Q2 2025.
  • “The Company now expects to engage further specialist technical resources which will result in the need for additional resources and will increase the costs associated with the completion of the Drill Rig system.”
  • Cost savings to cut ~20% of fixed costs in Q4 to enable Tribe Tech to conserve funds for use towards its critical path prioritie
  • “The Board is pursuing additional funding for its nearer term working capital requirements.”
  • “The Board believes that it is in the best interests of the shareholders of the Company as a whole to pre-emptively obtain the requisite authorities to, inter alia, allot new ordinary shares of £0.0005 each in the capital of the Company (“Ordinary Shares”) or grant rights to subscribe for or convert any securities into new Ordinary Shares.”
• A recent report on Tribe Tech’s sampling technology by Master Drilling and a major mining company showed a remarkable improvement in geological sample quality.
• This sampling technology can be retrofitted to other drill rigs with 94% of the samples recovered falling within 10% of the average sample mass giving greater consistency.

Conclusion: The development of such an autonomous drill rig was never going to be easy.

We have reviewed the work and progress at Tribe Tech and believe the team have done a good job with the mechanics of the RC rig.

We see these rigs as substantially aiding health and safety, increasing the speed of drilling and rig availability, cutting costs and also improving the quality of sample collection.

While the reworking of some of the software is a chore, we see this as a secondary consideration to the quality of the engineering achieved by the Tribe Tech team.

*SP Angel acts as joint broker to Tribe Technology

No.1 in Base Metals: SP Angel mining team awarded No 1. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q1 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                                                            

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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