SP Angel Morning View -Today’s Market View, Friday 28th February 202

US dollar rally suppresses metals prices as Trump threatens extra 10% tariff on China

MiFID II exempt information – see disclaimer below

C3 Metals (CCCM CN) – C$10m private placement to fund exploration in Jamaica and Peru

Entrée Resources (ETG CN) – Hugo North Extension drill results

Patriot Battery Metals* (PMET CN) – Ore Reserve drilling completed with further high-grade zones intercepted

PYX Resources (PYX LN) – Royalty increase

Resolute Mining* (RSG LN) – FY24 hit by Malian royalty and tax payments

Copper ($9,350/t) slides as focus shifts to China’s National People’s Congress for stimulus support

• Copper prices fell on either side of the Atlantic amid renewed pessimism over the Chinese economy and housing market.
• The recent rally in the US dollar alongside rising concerns over economic slowdown in the US are also weighing on copper prices.
• The CPC met last night and emphasised their commitment to ‘economic stability, innovation and social harmony.’
• Xi’s party has been emphasising support for high-value industries, and tech over renewed stimulus measures for the property sector in his bid to boost consumption.
• China continues to boost its grip on the copper market amid a wider push across the metals spectrum.
• A major Chinese expansion of smelter capacity has pushed TCRC fees to near record lows, leaving many higher-cost smelters unprofitable.
• Focus remains on Panama’s decision over FQM’s Cobre mine, with the Company working to release 120kt of copper in concentrate currently.
• The recently elected president Mulino stated that he would make a decision regarding the mine in 1Q25.
• It is expected to take six months to ramp to full production on a restart.

Gold ($2,862/oz) prices extend losses as traders take profit amid dollar rally

• Gold prices have slid c.$100/oz since last week’s record highs.
• The move lower likely reflects wider profit taking in recent market outperformers, including gold, bitcoin and US Tech.
• Funds continue to flow into US Treasuries, reflecting renewed expectations of a growth slowdown in the US.
• This is being fuelled by Trump and Musk’s efforts to trim government spending with Federal employee layoffs.
• Combined with this is the expectations that tariffs will weigh on economic activity before they spark a resurgence in inflation.
• The failed move to breach $3,000/oz likely pushed traders to take some profits on the metal, which was one of the best performing asset classes in 2024.
• However, Chinese gold ETF holdings rose by 17.7t over the first three weeks of February, near October’s record monthly inflow.
• Sentiment had been supported by reports that Beijing was encouraging major insurance companies to add gold to their balance sheet.

Crypto currencies collapsing into liquidity vortex as investors move to reduce risk

• Momentum has reversed across most if not all cryptocurrencies.
• While gold prices are also pulling back, we feel holding hard metal assets is a safer and better way to go.

India – government takes 9,000sqkm in Zambia as it explores for copper, cobalt and other critical minerals

• The government of India has joined the race to develop new resources to ensure supply against restrictions from China.
• India has identified >20 minerals which it sees as critical for its energy transition with Dehli approving US$1.8bn for their development.

Platinum & palladium – Impala Platinum evaluating the Lac des Iles mine in Canada with a view to its closure

• The Lac des Iles mine produces some 250kozpa and is likely to see some form of closure.
• The PGM industry has been waiting for its next mine closure with the potential for further oversupply into the market.
• Some South African material has come offline but none of the major mines have closed as yet.
• PGM demand and prices have been given some respite with the rise of hybrid vehicles but we suspect this is a temporary reprieve.

Sharepickers: Video – Last Time this Happened Gold went up by 180%:  

• Podcast: https://audioboom.com/posts/8658123-john-meyer-last-time-this-happened-gold-went-up-by-180

Economics

US – Trump threatens to raise tariffs on China to 20%

The move risks descendancy into a global trade war, raising inflation, damaging trade and requiring the movement of manufacturing

• High Fed interest rates are also slowing the US economy as households pay higher mortgage rates.
• Trump is now threatening to raise tariffs on China to 20%.

Risk appetite drops on as President Trump steps up his tariffs rhetoric.

• Trump said 25% tariffs on Canada and Mexico would come into force from March 4 blaming countries for failing to reduce flow of drugs through the border.
• China that is already facing 10% US tariffs on its products will be charged an additional 10% rate from same date.
• China promised “all necessary measures” in response to the US moves.
• S&P 500 and Nasdaq closed 1.6% and 2.8% respectively erasing YTD gains.
• Brent, copper and iron ore are trading off while the US$ is up this morning.
• On a separate note, second reading for the Core PCE showed an acceleration in pricing pressures in 4Q24 with the index coming in at 2.7%yoy, +0.2pp on previous estimate and +0.5pp on 3Q24.
• Odds for two rate cuts this year remain little changed with the first one expected in July.

China – State Grid guides to raise expenditure to CNY 650bn from CNY 600bn last year

• Grid stability is an increasing concern as nations move towards more renewable power.
• PV installations expected to fall to 215-255 GW from 277 GW last year according to the China Photovoltaic Industry Association

Germany – Regional inflation data showed slowing pressures in February with nationwide data due later today.

• Retail Sales (%mom, Jan/Dec/Est): 0.2/-0.9(revised from -1.6)/0.5
• Unemployment Change (Feb/Jan/Est): 5k/11k/14k
• Unemployment Rate (Feb/Jan/Est): 6.2%/6.2%/6.2%

France – Inflation slowed to the lowest in four years raising chances of rate cut by the ECB as early as next week.

• Markets expect at least three cuts this year.
• CPI (%mom, Feb/Jan/Est): 0.0/-0.2/0.2
• CPI (%yoy, Feb/Jan/Est): 0.9/1.8/1.1

Chile – Chile’s near total grid collapse this week serves as a stern reminder on the impact of grid collapse with virtually every miner and manufacturer across the country losing production.

• Even the guys with alternative back-up power will see some financial impact from this grid collapse which hit all electrical infrastructure and households affecting 98.5% of the nation.

Ukraine – President Trump softens tone as President Zelenskiy is expected to arrive to Washington later today to finalise minerals deals.

• Zelenskiy hopes to use a minerals agreement with the US as starting point for broader discussions about US security guarantees. (Bloomberg)
• President Trump is welcoming his Ukrainian counterpart despite calling Zelenskiy a “dictator” just last week.
• “Did I say that? I can’t believe I said that,” Trump told reporters Thursday.
• “We’re going to get along really well,” he added later.

DRC – Conflict in eastern DRC broadens as M23 threats to push onto Kinshasha

• The M23 rebels which are allegedly backed by Rwanda have confined many SADC forces to their barracks.
• The rebels now control most of Kivu having taken Goma, Bakavu and Kamanyola.
• DRC government forces are little resistance to the M23, Burundian forces are reported to be withdrawing.
• Ugandan forces have also taken Bunia, the capital of Ituri province.
• There is some suggestion that Rwanda, Uganda and M23 forces may be coordinating with ~7m people now displaced in the region.
• The M23 rebels are partly funded by gold and cobalt mining and may be about to redraw the map of the DRC.
• Given the situation it looks all too easy for Uganda and Rwanda to expand their territories into the mineral-rich regions of the DRC with relatively little opposition.
• President Felix Tshisekedi‘s position appears vulnerable given their loss of control of the major cities in Kivu province.

Panama – Government looking for solution for reopening of Cobre Panama copper mine

• Irony of ironies, The Panama government having stirred up so much opposition to the Cobre Panama mine and having extracted an extortionate tax and royalty deal, is now looking for solutions so it can reopen the mine.
• The Panama President Jose Mulino sounds keen to reopen the mine but is also focussed on the nation’s social security policy
• First Quantum are seeking damages from Panama of US$30bn. Remember they are quite good at compensation claims after ENRC was forced to pay $1.25bn for the receipt of assets which were seized from FQM in the DRC by 2009.
• Unfortunately, local Panamanian environmental opposition, supported by one or two Hollywood stars who can’t recall how electricity is delivered to their screens are still supporting the closure.
• The government wants the Royalty and the power from the Cobre Panama power station which supports much of Panama city.
• What a bunch of Chumps!

Currencies

US$1.0402/eur vs 1.0477/eur previous. Yen 150.65/$ vs 149.50/$. SAr 18.509/$ vs 18.469/$. $1.260/gbp vs $1.267/gbp. 0.622/aud vs 0.630/aud. CNY 7.284/$ vs 7.270/$.

Dollar Index 107.371 vs 106.580 previous.

Precious metals:         

Gold US$2,855/oz vs US$2,885/oz previous

Gold ETFs 85.5moz vs 85.4moz previous

Platinum US$949/oz vs US$970/oz previous

Palladium US$919/oz vs US$932/oz previous

Silver US$31.1/oz vs US$31.7/oz previous

Rhodium US$4,700/oz vs US$4,700/oz previous

Base metals:   

Copper US$9,353/t vs US$9,432/t previous

Aluminium US$2,622/t vs US$2,639/t previous

Nickel US$15,765/t vs US$15,760/t previous

Zinc US$2,780/t vs US$2,832/t previous

Lead US$2,000/t vs US$1,999/t previous

Tin US$31,365/t vs US$32,030/t previous

Energy:           

Oil US$73.4/bbl vs US$72.8/bbl previous

• WTI crude oil prices narrowed its differential to Brent after President Donald Trump reiterated plans to impose tariffs next week on Canada and Mexico, which together supply ~4.5mb/d of heavy crude to US refiners.
• US Henry Hub natural gas prices edged lower despite the EIA reporting a large 261bcf w/w draw to 1,840bcf (-261bcf exp), with storage inventories falling to 23.4% below last year and 11.5% below the 5-year average.

Natural Gas €46.2/MWh vs €43.7/MWh previous

Uranium Futures $65.0/lb vs $65.0/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$106.9/t vs US$107.0/t

Chinese steel rebar 25mm US$485.3/t vs US$486.2/t

HCC FOB Australia US$187.5/t vs US$187.7/t

Thermal coal swap Australia FOB US$100.3/t vs US$101.5/t

Other:  

Cobalt LME 3m US$23,030/t vs US$22,880/t

NdPr Rare Earth Oxide (China) US$61,661/t vs US$61,896/t

Lithium carbonate 99% (China) US$9,888/t vs US$9,903/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$4.8/lb vs US$4.7/lb

Europe Ferro-Vanadium 80% US$23.8/kg vs US$23.8/kg

China Ilmenite Concentrate TiO2 US$299/t vs US$299/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$320.0/t vs US$320.0/t

Germanium China 99.99% US$2,775.0/kg vs US$2,775.0/kg

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

Battery News

Baidu and CATL to jointly develop autonomous vehicles

• Global battery leader, CATL, and Chinese search engine and autonomous driving giant Baidu have entered into a partnership to collaborate in areas including the joint creation of autonomous vehicles.
• CATL and Baidu will collaborate around the areas of unmanned driving, digitalization, and intelligence to promote the development of driverless mobility services, as well as the application of AI in manufacturing, according to the announcement.
• CATL will contribute its power batteries, battery swap products and services, and skateboard chassis to driverless vehicles.
• Baidu will bring its AI capabilities and years of experience in the autonomous driving space through its subsidiary Apollo which was launched in 2013.
• Apollo has launched six generations of autonomous robotaxis in China.
• We wonder if you will be able to choose AI driver options, such as Careful Chauffeur, Angry White Van man or Crazy Teenager?

Company News

C3 Metals (CCCM CN) C$0.54., Mkt Cap C$41m – C$10m private placement to fund exploration in Jamaica and Peru

• Explorer C3 Metals, who have an earn-in agreement with Freeport, have raised C$10m at $0.5/share.
• The raise is being executed via a bought deal, with the underwriters holding an option to purchase an additional 3,000,000 shares at the Issue Price.
• Funds will be used for exploration at the Company’s Khaleesi Copper-Gold project, alongside development activities at their Jamaican Super Block project.
• Khaleesi is a 100% owned porphyry, skarn, epithermal system prospective for copper and gold in Peru.
• C3’s recent soil sampling programme has identified a zone of 1,900m x 650m averaging 650ppm copper in soils at Khaleesi.
• The Company suspects this area may cover a porphyry, based on outcrops and alteration.
• C3 has identified a significant geophysical anomaly under the glacial till connecting two copper-in-soil zones.
• The Company had been aiming to begin drilling in late 2Q25 before today’s equity raise.
• The funds will also support further exploration at C3’s Super Block project in Jamaica, where the Company is in a 50/50 partnership with Geophysx Jamaica.
• The Project hosts the former Pennants Gold Mine, with focus on identifying higher grade deposit potential.
• Meanwhile, C3 are in joint venture with Freeport McMoRan at their Jamaican Bellas Gate project, where FCX are earning a 75% stake through a US$75m exploration spend.

Conclusion: It is encouraging to see C3 Metals completing an upsized raise to fund exploration in Peru and Jamaica. The Company recently secured backing from Freeport for deep copper porphyry exploration at their Bellas Gate, and today’s funds will be focused on their large-scale copper prospect at Khaleesi in Peru, alongside their gold targets at Super Block in Jamaica. We look forward to updates on planned drilling programmes going forward.

Entrée Resources (ETG CN) C$2.48, Mkt Cap C$515m – Hugo North Extension drill results

• Entrée, who are in JV at Oyu Tolgoi in Mongolio, report drilling results.
• The Company has recently drilled one diamond drill hole at the western edge of Heruga and five diamond holes from the regional drilling campaign.
• 2024 drill results include:
  • UGD806: 411m at 1.18% Cu, 0.2g/t Au from 111
  • UGD852: 351m at 1.31% Cu, 0.36g/t Au from 125m (including 104m at 2.06% Cu)
  • UGD85: 332m at 0.7% Cu from 92m
  • UGD855A: 64m at 1.16% Cu from 420m
• The underground holes were intended to infill at Lift 2 for the next MRE update, geotechnical purposes and metallurgical purposes.
• Company suggests that drilling at Heruga is further west than any previous holes and ‘demonstrates that more work is needed to fully understand the deposit’s true potential.’

Patriot Battery Metals* (PMET CN) C$2.51, Mkt Cap C$400m – Ore Reserve drilling completed with further high-grade zones intercepted

• Canadian lithium explorer/developer Patriot have now completed their current drill programme at CV5 spodumene project.
• The Company reports assay results for 98 holes over 31,513m from CV5, having now drilled 431 holes over 128,000m in total 2024.
• 783 holes over 233,884m have now been drilled across the Company’s Shaakichiuwaanaan project.
• The Project currently holds an MRE of 80.1mt at 1.44% li2O Indicated and 62.5mt at 1.31% Li2O inferred.
• The drill dataset is expected to support a maiden Ore Reserve for CV5, declared upon completion of the FS due 3Q25.
• Assay highlights from yesterday’s announcement include:
  • 153.8 m at 2.00% Li2O, including 55.4 m at 3.42% Li2O (CV24-733) from 182m
  • 142.9 m at 1.77% Li2O, including 35.2 m at 3.36% Li2O (CV24-719) from 144m
  • 186.0 m at 1.08% Li2O, including 11.3 m at 4.27% Li2O (CV24-704) from 114m

*An SP Angel analyst holds shares in Patriot Battery Metals

PYX Resources (PYX LN) 2.0p, Mkt Cap £9m – Royalty increase

• Indonesia raises royalties on exports of premium zircon, rutile, and ilmenite.
• Royalties increased from 4%5 of the base price adopted in 2022 to 20% of a newly defined base price.
• The Company estimates the change increases the rate from ~US$8/t to ~US$59/t.
• The team is in consultation with regional authorities to seek a reversal of the decision or change the perimeter of application of the royalty increase and eligibility criteria for exemptions.

Resolute Mining* (RSG LN) 18.5p, Mkt Cap £389m – FY24 hit by Malian royalty and tax payments

• Preliminary FY24 accounts show a US$13m loss led by higher royalty and tax related payments.
• Revenue climbed to $801m (FY23: $631m) reflecting higher sales (336koz +2%) and realised gold prices ($2,383/oz +24%).
• EBITDA doubled to $320m (FY23: $161m).
• NPAT amounted to -$13m (FY23: $92m) reflecting a $155m charge for indirect tax incurred in both Mali and Senegal.
• The Company signed an MOU with Malian authorities late last year that involved a $160m tax settlement payments.
• Net CFO (post tax and interest) of $113m post $160m payment (FY23: $107m).
• Capex of $103m (FY23: $72m) including investments into Syama Sulphide Conversion Project, tailings facilities and capitalised stripping.
• Net cash stood at $27m (FY23: net debt $26m) with ~$70m in cash as of YE24.

*SP Angel analysts hold shares in Resolute Mining

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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