Gold continues to test higher ground as traders brace for today’s employment data
MiFID II exempt information – see disclaimer below
Kavango Resources* (KAV LN) – First gold production to begin generating revenue in April
Lake Resources (LKE AU) SUSPENDED – Suspension ahead of equity raise
Resolute Mining (RSG LN)– Reserves update as exploration offsets mining depletion
Zinc prices climb to six-week highs as traders cover sort positions and supply tightens
- Zinc prices have climbed to their highest levels since mid-January at $2,600/t.
- Short positions reportedly hit record highs last week, with the spike reflecting traders covering bearish bets.
- A smelter in South Korea has slashed production, likely supporting market balances going forward.
- Traders had been expecting a flood of mined supply which has so far failed to materialised disappointing grades from LatAm mines.
Iron ore continues to climb despite sliding BF capacity
- Iron ore China benchmarks have risen to $117/t as China steel output resumes.
- Mysteel reports 247 mills totalled capacity at 139ktpd, with BF capacity sliding for a third week to 83%.
- However, China continues to ramp up steel exports, up 33% for the period Jan-Feb yoy at 15.91mt and the highest in four years.
Gold continues to test higher ground as traders brace for today’s employment data
- Gold prices are holding around the $2,170/oz mark, pushing past all-time highs.
- The dollar extended losses after Powell’s comments yesterday pushed Treasury yields lower.
- The 10 year is sitting at 4.07%, down from 4.3% in later February.
- Analysts suggest algorithmic hedge funds (CTAs) have been adding to the rally, with physical ETF holdings yet to increase notably.
- US Nonfarm payroll data is due today, expected to be a key factor in whether gold can continue this rally.
Zambia begins loadshedding next week as drought continues
- Zambia’s ZESCO MD has announced that load shedding will begin over 8-hours throughout the day from Monday.
- The ongoing drought continues to weigh on water levels in the Kafue and Zambezi basins.
- Zambia is largely dependent on hydropower.
- The Government has stated miners will be shielded from the impacts to maximise forex revenue, however this may prove politically challenging.
| Dow Jones Industrials | +0.34% | at | 38,791 | |
| Nikkei 225 | +0.23% | at | 39,689 | |
| HK Hang Seng | +0.76% | at | 16,353 | |
| Shanghai Composite | +0.61% | at | 3,046 |
Economics
US – Labour numbers are out this afternoon with markets to focus on the pace of growth in new jobs and labour earnings.
- Earlier, Jerome Powell said that the central bank was “not too” far from having the confidence to start easing the policy, FT reports.
- Comments saw sovereign bond yields and the US$ pulling back pushing gold prices higher.
- NFPs: 200k est v 353k January.
- Av Hourly Earnings (%mom): 0.2 est v 0.6 January.
- Av Hourly Earnings (%yoy): 4.3 est v 4.5 January.
Japan – The currency continued to strengthen sliding below 147 level briefely as BOJ rate hike bets increase.
- The yen is up more than 2% this week marking its best run since the start of the year.
- The move is supported by reports that labour unions are making strong pay demands as well as a number of central bank officials appear to be in favour of a rate hike on March 19, Bloomberg writes.
Eurozone – The central bank left rates unchanged, in line with expectations, despite cutting its inflation forecasts for this year.
- Monetary authorities are not yet “sufficiently confident” in the trajectory of prices to start cutting interest rates, President Chirstine Lagarde said.
- “We will know a little more in April, but we will know a lot more in June,” Lagarde commented on the policy outlook.
- The ECB cut its inflation forecast for this year to 2.3% from 2.7% with a further slowdown to 1.9% due in 2025.
- Estimates are for four cuts this year with the first one expected not before June.
- Deposit Facility Rate: 4.0% v 4.0% previously and 4.0% est.
Currencies
US$1.0936/eur vs 1.0893/eur previous. Yen 147.88/$ vs 147.85/$. SAr 18.653/$ vs 18.793/$. $1.282/gbp vs $1.274/gbp. 0.664/aud vs 0.659/aud. CNY 7.192/$ vs 7.199/$.
Dollar Index 102.85 vs 103.25 previous.
Commodity News
Gold US$2,165/oz vs US$2,157/oz previous
Gold ETFs 82.3moz vs 82.3moz previous
Platinum US$918/oz vs US$911/oz previous
Palladium US$1,039/oz vs US$1,033/oz previous
Silver US$24.46/oz vs US$24/oz previous
Rhodium US$4,500/oz vs US$4,500/oz previous
Base metals:
Copper US$ 8,679/t vs US$8,586/t previous
Aluminium US$ 2,261/t vs US$2,242/t previous
Nickel US$ 18,060/t vs US$17,860/t previous
Zinc US$ 2,552/t vs US$2,519/t previous
Lead US$ 2,135/t vs US$2,090/t previous
Tin US$ 27,735/t vs US$27,445/t previous
Energy:
Oil US$83.7/bbl vs US$82.7/bbl previous
Natural Gas €26.6/MWh vs €26.4/MWh previous
Uranium Futures $91.3/lb vs $91.8/lb previous
Bulk:
Iron Ore 62% Fe Spot (cfr Tianjin) US$117.4/t vs US$116.0/t
Chinese steel rebar 25mm US$561.4/t vs US$562.7/t
Thermal coal (1st year forward cif ARA) US$107.5/t vs US$113.3/t
Thermal coal swap Australia FOB US$137.8/t vs US$139.3/t
Other:
Cobalt LME 3m US$28,550/t vs US$28,550/t
NdPr Rare Earth Oxide (China) US$49,358/t vs US$49,454/t
Lithium carbonate 99% (China) US$14,112/t vs US$14,100/t
China Spodumene Li2O 6%min CIF US$1,070/t vs US$1,070/t
Ferro-Manganese European Mn78% min US$985/t vs US$985/t
China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu
China Graphite Flake -194 FOB US$540/t vs US$540/t
Europe Vanadium Pentoxide 98% 5.7/lb vs US$5.7/lb
Europe Ferro-Vanadium 80% 27.45/kg vs US$27.45/kg
China Ilmenite Concentrate TiO2 US$323/t vs US$323/t
Spot CO2 Emissions EUA Price US$58.1/t vs US$58.9/t
Brazil Potash CFR Granular Spot US$290.0/t vs US$290.0/t
Battery News
Nikola delivers first fuel sell electric trucks at end of 2023
- Nikola carried out its first line of production of hydrogen fuel cell electric trucks at the end of 2023, delivering 35 vehicles in Q4.
- The vehicles were purchased by Biagi Bros., IMC Logistics, Coyote Container and 4 Gen, Nikola CEO Steve Girsky said on an earnings call on February 22nd.
Samsung SDI outlines roadmap for solid state batteries by 2027
- Samsung SDI will aim to mass produce solid state batteries with an energy density of 900Wh/l by 2027.
- SDI also announced its ultra-fast charging which charges from 8% to 80% in nine minutes.
- The company will also be looking to develop a battery solution with a life span of longer than 20 years by 2029.
Volvo reaches 44% plug-in share in February
- 21.7% of Volvo’s global sales were fully electric in February 2024
- 44% of Volvo’s global sales had plug-in charging capabilities.
Chinese overseas EV investment likely hit record in 2023
- According to a report from Rhodium Group, Chinese firms spent $28.2bn into EV-related industries last year which falls short of the $29.7bn spent in 2022.
- This amount does not include a number of projects with no known value, such as BYD’s Hungary plant and Gotion’s 25% stake in a Slovakian battery producer.
Company News
Kavango Resources* (KAV LN) 0.76p, Mkt Cap £10m – First gold production to begin generating revenue in April
- Kavango Resources has formed a subsidiary in Zimbabwe to begin small scale gold mining at their Hillside Project.
- Kavango reports gold production has been profitable from Hillside for the past three years.
- The Project holds two stamp mills, with Kavango looking to add a third stamp mill, with production capacity currently 600tpm.
- Four prospects have been identified by Kavango’s exploration team for processing.
- The Company will aim to double production to 1kg/month through 2024.
- Revenue is expected at $30k a month.
- Kavango will look to invest in the plant and is aiming at ‘enhancing local community-led gold extraction to increase near-term production.’
- Management believes that limited capital investment at Hillside provides opportunities for expansion of production, including potential small-scale underground mining.
- Hillside holds five historic underground mines.
*An SP Angel Analyst holds shares in Kavango
Lake Resources (LKE AU) SUSPENDED – Suspension ahead of equity raise
- Shares are suspended pending an equity raise announcement.
- The Company recently released a DFS on its flagship Kachi Lithium Project in Catamarca Province in Argentina.
- The project is designed to use DLE technology developed by its partner (Lilac Solutions, owns 20% in the project) to produce 25ktpa lithium carbonate in Phase One.
- The project hosts 10.6mt LCE at 223mg/l delivering US$2.3bn and 20.9% in NPV8 and IRR (both post tax) using $33,000/t LCE price.
- DFS estimated opex and capex at ~$6,000/t LCE and $1.4bn.
- The Company recently announced a series of cost cutting measures aimed at reducing cash burn rate amid low lithium prices and as the team is looking to secure funding for ongoing development and permitting work ahead of FID targeted in mid/late 2025.
Resolute Mining (RSG LN) 21p, Mkt Cap £440m – Reserves update as exploration offsets mining depletion
- Resolute provides an updated Mineral Resource Estimate for its combined projects.
- Mineral Resources maintained at 11.2moz Au.
- Reserves fell from 4.6moz Dec.2022 to 4.4moz today as mining continues.
- Syama total reserves at 48mt at 2.6g/t for 3.96moz.
- Mako reserves at 8mt at 1.5g/t for 400koz.
- Syama resources at 128mt at 2.5g/t Au for 10.3moz.
- Mako resources at 21.5mt at 1.4g/t for 940koz.
- Drilling has been targeted at infilling the Syama North Project, with first mining due to begin later this year.
- Mako drilling continues, targeting three satellite targets, with Tomboronkoto first with a defined resource of 403koz.
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
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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.
| Sources of commodity prices | |
| Gold, Platinum, Palladium, Silver | BGNL (Bloomberg Generic Composite rate, London) |
| Gold ETFs, Steel | Bloomberg |
| Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt | LME |
| Oil Brent | ICE |
| Natural Gas, Uranium, Iron Ore | NYMEX |
| Thermal Coal | Bloomberg OTC Composite |
| Coking Coal | SSY |
| RRE | Steelhome |
| Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite | Asian Metal |
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