SP Angel Morning View -Today’s Market View, Friday 5th January 2024

Gold heads for weekly fall as Treasuries weaken on fading rate cut optimism

MiFID II exempt information – see disclaimer below

Core Lithium (CXO AU) – Mining operations suspended amid weak spodumene prices

Endeavour Mining (EDV LN) – CEO sacked on $5.9m irregular payment

Oriole Resources* (ORR LN) – Bibemi Earn-In Agreement executed with BCM

Phoenix Copper* (PXC LN) – Update on corporate bonds and short-term loan facility

PYX Resources (PYX LN) – Ilmenite Shipment Update

Gold heads for fall as Treasuries weaken on fading rate cut optimism

• Gold prices sitting at $2,037/oz, are heading for the first fall in four weeks.
• The move follows a rise in US Treasury yields triggered by more hawkish Fed minutes and job openings.
• The 10-year climbed over 4% for the first time since the 12^th December, lifting the Dollar to three week highs.
• Focus turns to today’s non-farm payroll data, where economists predict 170k jobs added vs 199k in November.
• Expect a beat of that 175k number to add further fuel to the Treasury and gold price sell off, whilst a miss may support a return over $2,050/oz.

Container rates pause momentum following blockbuster rally on Red Sea crisis

• Container freight futures have cooled 5% this morning having soared to 12-month highs this week.
• Spot rates have risen by 80% through the 11 days to January 2^nd, hitting October 2022 highs. (Freightos Baltic Index)
• The basket index climbed to 2440 on Wednesday vs 1340 on 22^nd December.
• Forty foot container rates from Asia to Europe have risen 150% to $4,000/feu vs $2,452/feu in December.
• Asia to Mediterranean increased from $2775/feu to $5,175/feu over the same period.
• The Shanghai index has increased 40% over the same period.
• 262 container ships have been diverted via the Cape as of 31 December. (Linerlytica)
• These represent 12% of global capacity.
• Asia to the US West Coast rates have jumped 60% to $2,713/feu.
• Vessels have also been directed away from Panama where low water levels are causing congestion.

Conclusion: Continued Houthi aggression in the Red Sea towards commercial shipping vessels may trigger an unwelcome spike in global inflation. Bloomberg’s Global Supply Chain Pressure index has jumped from -1.5 to 0.11 at a time when global bond markets have rallied into cooling inflation.

Economics

US – Non farm payrolls day with estimates for a 175k reading, down on 199k in November.

• Labour earnings growth is expected to slow down to 0.3%mom/3.9%yoy from 0.4%/4.0% the previous month.
• The data will be closely watched as the market is assessing outlook for the number of rate cuts this year with investors pricing in a more aggressive unwinding of tight monetary policy compared to the Fed (at least five cuts versus three under Fed estimates).

Germany – Nationwide inflation rate picked up in December, slightly underperforming expectations for a larger increase.

• The increase was driven by higher energy costs as government subsidies offered last year brought the base lower.
• Core inflation is expected to continue its downward trend into the new year.
• EU Harmonised CPI (%mom): 0.2 v -0.7 November and 0.3 est.
• EU Harmonised CPI (%yoy): 3.8 v 2.3 November and 3.9 est.

UK – Property prices climbed to a nine month high of £287k in December marking a third consecutive monthly increase, according to Halifax data.

• Prices ended the year 1.7% on the year contrasting from a 1.8% decline reported by another mortgage lender, Nationwide.
• “The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand,” Halifax said.
• “That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.”

Currencies

US$1.0911/eur vs 1.0939/eur previous. Yen 145.06/$ vs 143.63/$. SAr 18.769/$ vs 18.651/$. $1.267/gbp vs $1.268/gbp. 0.669/aud vs 0.674/aud. CNY 7.158/$ vs 7.153/$.

Dollar Index 102.67 vs 102.30 previous.

Commodity News

Precious metals:

Gold US$2,042/oz vs US$2,047/oz previous

Gold ETFs 85.3moz vs 85.5moz previous

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

Palladium US$1,031/oz vs US$1,067/oz previous

Silver US$23.03/oz vs US$23/oz previous

Rhodium US$4,400/oz vs US$4,425/oz previous

Base metals:

Copper US$ 8,460/t vs US$8,506/t previous

Aluminium US$ 2,265/t vs US$2,296/t previous

Nickel US$ 15,935/t vs US$16,235/t previous

Zinc US$ 2,544/t vs US$2,558/t previous

Lead US$ 2,060/t vs US$2,041/t previous

Tin US$ 24,140/t vs US$25,360/t previous

Energy:

Oil US$77.9/bbl vs US$79.0/bbl previous

Natural Gas €32.6/MWh vs €33.5/MWh previous

Uranium UXC US$91.00/lb vs US$82.30/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$141.1/t vs US$142.8/t

Chinese steel rebar 25mm US$578.9/t vs US$579.1/t

Thermal coal (1st year forward cif ARA) US$98.3/t vs US$111.8/t

Thermal coal swap Australia FOB US$130.3/t vs US$127.0/t

Coking coal swap Australia FOB US$317.0/t vs US$317.0/t

Other:

Cobalt LME 3m US$29,135/t vs US$29,135/t

NdPr Rare Earth Oxide (China) US$58,819/t vs US$60,468/t

Lithium carbonate 99% (China) US$12,085/t vs US$12,094/t

China Spodumene Li2O 6%min CIF US$1,090/t vs US$1,090/t

Ferro-Manganese European Mn78% min US$1,064/t vs US$1,056/t

China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu

China Graphite Flake -194 FOB US$600/t vs US$600/t

Europe Vanadium Pentoxide 98% 6.0/lb vs US$6.0/lb

Europe Ferro-Vanadium 80% 26.75/kg vs US$26.25/kg

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

Spot CO2 Emissions EUA Price US$81.4/t vs US$83.6/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$290.0/t

Battery News

Largest offshore windfarm in Massachusetts goes online

• The Vineyard Wind project, just off the coast of Martha’s Vineyard, Massachusetts, went online this week
• Currently the project only has one turbine online and produces 5MW of power.
• 62 further turbines will be connected to the grid this year, with the wind farm producing a total of 800MW of power (enough for 400,000 homes) by the end of the year.
• Vineyard is the second utility-scale wind farm to start producing in the US.
• The offshore wind industry is struggling with soaring costs, local opposition, and supply chain issues.
• Several large contracts in the US have already been terminated by developers, saying that the deals were signed before rising inflation and interest rates upended the profitability of those projects.
• BloombergNEF predicts that due to this only 15,000MW of offshore wind will be installed by 2030, almost a third less than predictions made in June 2023.

BYD begin production of its 1^st sodium-ion battery facility

• BYD announced on WeChat that ground had been broken at the site for it first sodium-ion battery production facility.
• The project, located in the Xuzhou Economic and Technological Development Zone, will involve a total investment of $1.4bn and will produce sodium-ion battery cells and battery packs, with a planned annual capacity of 30GWh.

Tesla recalls 1.5m vehicles in China over software issue

• Tesla is recalling a total of 1,610,105 vehicles with production dates between August 26, 2014, and December 20, 2023.
• An issue with the automatic assisted steering function and driver assist function increase the risk of vehicle crash.

Company News

Core Lithium (CXO AU) A$0.2, Mkt Cap A$492m – Mining operations suspended amid weak spodumene prices

• The Company announced a temporary suspension to open pit mining operations at the Finnis Lithium Project in Northern Territory.
• The Grants open pit will remain on care and maintenance for an orderly ramp up once market conditions allow.
• Processing will continue from existing stockpiles of 280kt ore feeding the plant until mid-2024.
• The team is planning to provide opex, capex, exploration and studies guidance for FY24 with December quarterly update scheduled for January 2024.
• The BP33 underground development will be also placed on care and maintenance to preserve cash.
• Works on BP33 updated feasibility study and the Carlton scoping study will continue.
• Spodumene concentrate prices are reported to have dropped more than 85% in the last 12 months and 50% since the end of October.

Endeavour Mining (EDV LN) 1,500p, Mkt Cap £3.65bn – CEO sacked on $5.9m irregular payment

• Endeavour announced the termination of CEO and President Sébastien de Montessus yesterday afternoon for serious misconduct.
• The Board had instigated an investigation over an irregular payment issued by de Montessus relating to an asset disposal.
• Alongside the irregular payment, allegations had been made over de Montessus regarding to personal conduct with colleagues.
• Ian Cockerill will take over as CEO and Executive Director with immediate effect.
• Mr. Cockerill’s CV includes time as CEO of Gold Fields and Anglo Coal.

Oriole Resources* (ORR LN) 0.21p, Mkt cap £8m – Bibemi Earn-In Agreement executed with BCM

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• Oriole reports that it has now signed a definitive earn-in agreement with BCM international regarding its Bibemi project in Cameroon.
• BCM will now pay a $450k signature payment to Oriole which is currently being processed. $50k has already been paid as an advance payment.
• BCM will earn up to a 50% interest in the Bibemi project through a $4m exploration expenditure budget.
• Resource-expansion drilling is set to begin this quarter, with the Group planning to release a planned programme in ‘due course.’
• $72k has already been paid towards the $4m through camp upgrades and support for technical studies.
• Oriole expects to complete the Mbe earn-in agreement signing later this month.

*SP Angel acts as Broker to Oriole Resources

Phoenix Copper* (PXC LN) 18.2p, Mkt Cap £22.5m – Update on corporate bonds and short-term loan facility

Phoenix holds 80% of the Empire mining property in Idaho)

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• Phoenix Copper provides an update on its financing solutions for the construction of the Empire open-pit mine in Idaho,
• Management reports that discussions remain ‘at an advanced stage with a number of interested bond investors.’
• Documentation for the creation of the bonds is being finalised, and the security has been recorded with the County Recorder in Idaho.
• However, any issue of the bonds remains dependent on current ongoing discussions with various bond investors.
• As regards the $2m short-term loan facility, management is negotiating with the creditor to roll the loan into a larger note to support working capital requirements.
• Management is confident that both the bond financing will close, and that the Facility will be rolled over.

*SP Angel acts as nomad to Phoenix Copper

PYX Resources (PYX LN) 14.6p, Mkt Cap £22m – Ilmenite Shipment Update

• Pyx provides an update on its previously announced licence to export rutile and ilmenite in Indonesia.
• The Company reports a change has been made to exporting rules, requiring exports to use either loading ports or export ports.
• The original licence issued only stated the loading port in Banjarmasin.
• Pyx has requested to modify the licence, expected to be approved imminently.
• Ilmenite orders will be delayed until the licence amendment is granted.
• 10kt of Titanium Dioxide material has been stockpiled by Pyx since 2022.

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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