SP Angel Morning View -Today’s Market View, Monday 24th April 2023

Strong economic data lifts rate hike expectations

MiFID II exempt information – see disclaimer below

Caledonia Mining (CMCL LN) 1,200p, Mkt Cap £244m – Annual production guidance maintained despite dip in Q1 gold output at Blanket Mine

Empire Metals* (EEE LN) 2.3p, Mkt Cap £11m – Completion of Maiden RC Drilling Programme at Pitfield

Beowulf Mining* (BEM LN) 2.1p, Mkt Cap £24m – CEO Interview and Presentation provides strategic outline for 2023

Horizonte Minerals (HZM LN) 141p, Mkt Cap £378m – Araguaia ferronickel project remains on schedule and on budget

Shanta Gold (SHG LN) 13.1p, Mkt Cap £138m – Q1/23 update: FY23 NLGM guidance reiterated at 66-72koz and first gold pour at Singida; Management changes

Thor Energy (THR LN) 0.3p, Mkt Cap £7.2m – Vanadium results from exploration in south-western Colorado

Gold – $1,980/oz – Gold eases further as traders hold fire before central bankers meet

• Spot gold prices have continued to slide from recent highs of $2,040/oz to $1,980/oz.
• US Treasury yields have held higher following several datapoints last week, including PMI data on Friday which stood at its highest level since May.
• Stronger signals from the US economy weigh on gold which has been fuelled by expectations of imminent recession encouraging the Fed to cut rates.
• In line with this, the dollar has bounced from recent 1-year lows, adding further pressure to gold prices.
• The market has all but dismissed hopes of the Fed holding rates at their May meeting, with futures now suggesting an 89% chance of a 25bp hike come the 2^nd.
• Central banks continue to provide a floor for gold prices, with their bullion purchases climbing 152% to 1,136t in 2022 yoy.

Investors look for alternative lithium plays as Chile’s socialist agenda triggers capital outflows

• Chilean President Boric’s national address last week on the country’s lithium reserves has seen an exodus of investors from the country’s lithium equities.
• SQM’s share price has fallen 20% whilst Albermarle has sold off by 15% since the address.
• As a result, investors are looking to alternative jurisdictions with less threat of resource nationalism.
• For example, Australian lithium equities are seeing inflows following the address, with Pilbara Minerals hitting six-week highs and more junior explorers also seeing buying activity.
• Robert Friedland commented that the move will be ‘quite challenging for international capital,’ ‘making it harder to invest in Chile.’ He followed this by stating that ‘money is a coward – it runs away at the first sign of trouble.’
• Lithium prices jumped 15% in Wuxi, China this morning, suggesting improving demand fundamentals. (Reuters)
• Concerns are mounting that Argentina may follow Chile’s lead, with Argentine-exposed lithium equities also seeing selling pressure following Boric’s address.
• We highlight Ghana as a prime lithium jurisdiction, where Atlantic Lithium is developing the Ewoyaa Project, alongside Portugal, where Savannah Resources is developing its Barroso Lithium Project.*
• Additionally, Kodal Minerals is fully funded for its Bougouni project in Mali, with backing from Hainan Mining*

*SP Angel acts as Nomad and Broker to Savannah Resources, *SP Angel acts as Nomad to Atlantic Lithium *SP Angel acts as financial advisor and broker to Kodal Minerals.

Iron ore leads base metal sell-off as China’s steel demand remains depressed

• Iron ore prices continued to slide, falling close to $10/t over the weekend to $107/t in China.
• Steel mill demand in China remains muted, adding fuel to concerns over a recovery in the Country’s property market, despite being in a historically peak construction season.
• Analysts are expecting steelmaking production cuts, weighing on iron ore prices.
• Adding to this is increased supply, with Fortescue bringing on the Iron Bridge Magnetite Project to flood an already buoyant market.
• HRC and Rebar prices fell 2% and sit at five-month lows.
• Copper prices are weakening by association, with the metal falling to two-week lows.

Economics

US – Growth picks up to the highest rate in 11 months in April beating expectations in April as demonstrated by the latest set of flash PMI numbers.

• Stronger business activity has been driven by better demand conditions with both manufacturing and services sectors recording an expansion.
• New orders registered the sharpest increase in 11 months predominantly led by the services sector while manufacturing posted only a marginal increase, albeit the first one in seven months.
• Growth in demand was driven by the local market while new export orders continued to contract in April.
• Labour market remained strong with employment climbing at the quickest pace since last July.
• Inflation in output prices registered the strongest increase in seven months.
• Manufacturing PMI: 50.4 v 49.2 March and 49.0 est.
• Services PMI: 53.7 v 52.6 March and 51.5 est.
• Composite PMI:53.5 v 52.3 March and 51.2 est.

Falling commercial property rates and valuations present risk to balance sheets and lenders.

• The commercial property market has been doing its best to talk up the market in a post-Covid environment.
• Companies and senior management are cajoling staff back into their offices but with little real success in a world where staff will easily move to more flexible employers.
• Many staff found they were more effective, relaxed, happy and less stressed working from home during lockdowns and few missed their gruelling daily commutes.
• I was at a funeral on Friday where it was stated in the eulogy how happy the diseased was to give up his daily commute into the City.
• A lack of new investment into commuter rail lines has done little to draw workers to return to their offices.
• Downsizing is increasingly common with increasing hot-desking
• The result is more empty offices as leases expire, and tough negotiations for landlords faced with reducing rents or losing long-term tenants.
• None of this is helped by rising ‘poundage’ rates demanded by local councils who seem unsympathetic to the cost running an office.
• Incomes and occupancy for commercial property are now falling with a risk that this might now spread into other real estate markets with retail already hit by online competition.
• “Wells Fargo reported that its non-performing commercial real estate loans had jumped nearly 50 per cent since December to $1.5bn, while Morgan Stanley cited commercial property and a deteriorating economic outlook as reasons for a sharp rise in its provisioning compared with last year. (FT)
• One real estate portfolio manager at California State Teachers’ Retirement System, estimated that office values in the US had fallen by 20% and was bracing for steep losses.

US debt ceiling $1.5tn plan needs 218 Republican votes. Just five votes in opposition could sink the bill

China – Unemployment amongst 16 to 24-year-olds is 19.6% in March vs national unemployment at 3.5%

• The Communist Party is unimpressed and is telling unemployed university graduates to roll up their sleeves and take up manual jobs.
• The youth may also be unimpressed as the CCP has not created the jobs to meet their university aspirations.
• The CPC is now advertising case studies of graduates who have made fortunes in more manual roles
• Chinese Ambassador to France tells French network that the ex-Soviet states don’t have sovereign status as independent nations.
• The statement appears to ignore internationally recognized borders in Eastern and Central Europe and has caused strong rebuttal from Estonia, Latvia and Lithuania.
• The US has also criticised President Macron’s reaching out to China which appears to undermine the US and EU anti-communist stance.
• The Czech president has called for a joint and balanced strategy between the US, Europe and other democracies to address China’s increasing economic, political, and financial power.
• The EU plans to develop a means to sanction Russian proxies in Moldova today targeting people responsible for the destabilisation of Moldova which is an EU candidate.
• ING claiming $170m in damages from the ICBC alleging breaches of contract terms in the release of export documents for copper without payment.
• The breach happened ahead of Maike, a Chinese trader which also used ICBC, declaring a liquidity crisis.

Japan – PMI manufacturing 49.5 in April vs 49.2 in March

• Services 54.9 in April vs 55.0 in March
• composite 52.5 in April 52.9 in March
• CPI 3.2% yoy in March vs 3.3% in February
• Core steady at 3.1% in March

South Korea – PPI 3.3% yoy in March vs 4.8% in February

Germany – Businesses are unexpectedly growing more optimistic regarding the economic outlook the latest IFO survey for April shows

• Results come in a contrast to survey results from analysts and economists carried by ZEW released last week that pointed to a deteriorating sentiment.
• IFO Business Climate: 93.6 v 93.2 (revised from 93.3) March and 93.4 est.
• IFO Current Assessment: 95.0 v 95.4 March and 96.0 est.
• IFO Expectations: 92.2 v 91.0 (revised from 91.2) March and 91.1 est.

UK – Growth in property prices slowed again in April as higher borrowing costs weigh on demand, Rightmove data shows

• London and the North East of England were the only regions to see prices fall on monthly basis.
• Rightmove House Prices (%mom): 0.2 v 0.8 March.
• Rightmove House Prices (%yoy): 1.7 v 3.0 March.
• CPI 10.1% yoy in March vs 10.4% in February
• Core CPI steady at 6.2% in March

EU – Consumer confidence improved slightly to -17.5 in April vs -19.1 in March

Currencies

US$1.0977/eur vs 1.0945/eur last week. Yen 134.28/$ vs 133.94/$. SAr 18.170/$ vs 18.064/$. $1.243/gbp vs $1.240/gbp. 0.668/aud vs 0.669/aud. CNY 6.901/$ vs 6.895/$.

Dollar Index 101.89 vs 101.98 last week.

Commodity News

Precious metals:

Gold US$1,980/oz vs US$1,985/oz last week

Gold ETFs 93.4moz vs US$93.5moz last week

Platinum US$1,101/oz vs US$1,093/oz last week

Palladium US$1,577/oz vs US$1,590/oz last week

Silver US$24.92/oz vs  US$24.97/oz last week

Rhodium US$7,900/oz vs US$7,900/oz last week

Base metals:   

Copper US$ 8,785/t vs US$8,806/t last week

Aluminium US$ 2,378/t vs US$2,400/t last week

Nickel US$ 24,250/t vs US$24,760/t last week

Zinc US$ 2,693/t vs US$2,746/t last week

Lead US$ 2,145/t vs US$2,153/t last week

Tin US$ 26,225/t vs US$26,215/t last week

Energy:           

Oil US$80.5/bbl vs US$80.5/bbl last week

• The US Baker Hughes rig count was up 5 units to 753 rigs last week (+58 y/y), with oil rigs up 3 to 591 and gas rigs up 2 to 159 units, with the number of frac spread units also estimated down 4 units w/w to 283 (+14 y/y).
• Schlumberger told markets that it expected tangible market growth in North America in 2023, but at a lower rate than originally anticipated at the start of the year, mainly as a result of ongoing weakness in gas prices.

Natural Gas US$2.189/mmbtu vs US$2.218/mmbtu last week

Uranium UXC US$51.00/lb vs US$51.00/lb last week

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$107.0/t vs US$116.4/t

Chinese steel rebar 25mm US$558.7/t vs US$578.1/t

Thermal coal (1st year forward cif ARA) US$134.0/t vs US$132.0/t

Thermal coal swap Australia FOB US$189.0/t vs US$196.0/t

Coking coal swap Australia FOB US$286.0/t vs US$286.0/t

Other:  

Cobalt LME 3m US$34,930/t vs US$34,930/t

NdPr Rare Earth Oxide (China) US$68,981/t vs US$69,329/t

Lithium carbonate 99% (China) US$22,100/t vs US$22,844/t

China Spodumene Li2O 5%min CIF US$4,190/t vs US$4,290/t

Ferro-Manganese European Mn78% min US$1,356/t vs US$1,352/t

China Tungsten APT 88.5% FOB US$325/mtu vs US$325/mtu

China Graphite Flake -194 FOB US$780/t vs US$780/t

Europe Vanadium Pentoxide 98% 8.5/lb vs US$8.7/lb

Europe Ferro-Vanadium 80% 34.25/kg vs US$35.25/kg

China Ilmenite Concentrate TiO2 US$344/t vs US$344/t

Spot CO2 Emissions EUA Price US$96.5/t vs US$98.9/t

Brazil Potash CFR Granular Spot US$405.0/t vs US$415.0/t

Battery News

Tesla to offer cheaper Model Y cars in Canada that are $10,000 cheaper than the long range model

• The Canadian government is also offering C$5,000 or a four-year lease incentive on the Model Y and more expensive long-range variant which costs C$69,000.

Company News

Caledonia Mining (CMCL LN) 1,200p, Mkt Cap £244m – Annual production guidance maintained despite dip in Q1 gold output at Blanket Mine

• Caledonia Mining reports the production of 16,036oz of gold from its Blanket gold mine in Zimbabwe during the three months to 31^st March 2023.
• Output is 13% below the “18,515 ounces produced in the first quarter of 2022 … due to several individually insignificant mechanical breakdowns and logistical issues which have now been resolved”.
• The company confirms that “production in the early part of April 2023 has been better than expected”.
• Commenting on the production performance at Blanket, CEO, Mark Learmonth, explained that “production at Blanket is usually lower in the first quarter of each year and increases in the following quarters. This trend is in evidence this year, albeit production in the first quarter of 2023 was below our target due to a series of issues including equipment failures and logistical issues”.
• Caledonia Mining also reports that it produced 105oz of gold from oxide material from its pre-stripping to access sulphide ore at the Bilboes project in Zimbabwe “in the last few days of the Quarter”.
• Production from Bilboes “has been slower than anticipated, having been adversely affected by inconsistent grades, mechanical breakdowns and the poor availability of spare parts and alternative equipment”.
• Mr. Learmonth clarified that the “small-scale low margin oxide operation at Bilboes is effectively a pre-stripping exercise for the larger sulphide project in respect of which we have commenced work on an updated feasibility study”. 
• In the meantime, Caledonia Mining has “withdrawn guidance on the low-margin oxide production” at Bilboes which it regards as part of the pre-stripping for the sulphide ore
• Caledonia Mining confirms its 2023 production guidance range of 75-80,000oz of gold production

Conclusion: Despite a slow start to the year, Caledonia Mining is maintaining its full year production guidance.  We look forward to the updated pre-feasibility study for the Bilboes project.

*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe

Empire Metals* (EEE LN) 2.3p, Mkt Cap £11m – Completion of Maiden RC Drilling Programme at Pitfield

• Empire Metals have completed their first drill programme at Pitfield in Western Australia with 3,206m of RC drilling.
• Samples of the reconnaissance RC drilling programme have been sent to the assay lab.
• The campaign targeted the Mt Scratch prospect area which showed the highly chargeable-highly resistive anomaly.
• The campaign was completed over 21 RC holes with an average downhole depth per hole of 150m.
• The team is looking to determine the significance of the anomaly announced in February through drilling.
• The Company is also expecting soil sampling and further DD-IP results to be available shortly.

*SP Angel acts as nomad and broker to Empire Metals. The analyst holds shares in Empire.

Beowulf Mining* (BEM LN) 2.1p, Mkt Cap £24m – CEO Interview and Presentation provides strategic outline for 2023

• Beowulf’s CEO, Kurt Budge, has been interviewed last week alongside presenting on the Company, we summarise both below.
• Notes that Beowulf is seeing rising attention from the iron ore concentrate market following its receipt of the exploitation concession.
• Highlights Kallak’s vicinity to both rail and port infrastructure, alongside renewable energy sources.
• Notes the value upsides with the initial scoping study by increasing the scale of the resource, extending the mine life alongside processing modifications and improvements.
• As regards Grafintec, Kurt highlighted the compelling market structure dynamics of flake graphite and the ‘strong case of developing primary raw material supply in Finland.’
• Comments on the prime location Beowulf has secured with its GigaVaasa site agreement, enabling Beowulf to create a sustainable supply chain from Finland.
• On Kosovo and Vardar Minerals, Kurt noted the compelling geological and geoscientific properties of the Tethyan Belt.
• Vardar’s two exploration licences in Kosovo, commenting on the Red Lead target as a current priority alongside potential for porphyry discoveries at Majdan Peak.
• Concluding, Kurt notes the progression towards PFS and environmental permitting for Kallak to derisk and increase the value of the project.
• With Grafintec, Beowulf will focus on completing the PFS for the Finnish anode materials hub by the end of this quarter and optimising the Aitolampi scoping study for downstream processes.
• With Vardar, Beowulf will examine spin-off opportunities whilst progressing current exploration targets.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Horizonte Minerals (HZM LN) 141p, Mkt Cap £378m – Araguaia ferronickel project remains on schedule and on budget

• Horizonte Minerals reports on the progress of its Araguaia ferronickel project in Brazil where, with 90% of project capital now awarded and more than 50% of the construction completed, the Phase 1 project remains on schedule and on budget.
• The company says that the Feasibility Study for Phase 2 of the project which doubles output from 14,500tpa to 29,000tpa of contained nickel is “on track for publication in H2 2023”.
• Work on the Vermelho project, which is expected to produce 24,000tpa of nickel and 1,250tpa of cobalt is concentrating on permitting and on completion of the Feasibility Study which should be completed in H1 2024.
• CEO, Jeremy Martin, confirming that Araguaia remains on course to deliver its first metal in Q1 2024, said that “There is currently a key focus on operational readiness as we build out the operational team and establish the systems, processes and training required for the start-up phase”.
• Among the highlights of project development at Araguaia;
  • “Early pre-stripping activities have begun at site along with the delivery of mining equipment ahead of initial mineralised ore stockpiling”;and
  • “solid progress has been made on the construction of the electric arc furnace, the core of the Araguaia RKEF processing facility … with the erection of the furnace baseplate and the lower and upper side walls of the furnace now interlocked with welding near complete”; and
  • Construction of the “230kV powerline construction continues to advance on schedule. To date, 152 pylons have been erected with 213 foundations concluded out of a total of 260”.
• Feasibility work for Phase 2 at Araguaia, in addition to doubling the ferronickel production capacity also considers an option to “allow a portion of the furnace product from Line 2 to be converted to nickel matte allowing Araguaia not only to produce high-grade low impurity ferronickel, but also matte that can be upgraded to feed directly into the electric vehicle battery chemistry supply chain”.
• The company explains that the second furnace line “is expected to deliver greater production flexibility, lower capital intensity and increased operating margins”.

Conclusion: We expect that investors will welcome confirmation that Phase 1 at Araguaia remains on budget and on schedule for initial metal production in Q1 next year and look forward to the completion of the feasibility study on the second furnace line at Araguaia in the coming months and to the pre-feasibility work on Vermelho next year.

Shanta Gold (SHG LN) 13.1p, Mkt Cap £138m – Q1/23 update: FY23 NLGM guidance reiterated at 66-72koz and first gold pour at Singida; Management changes

• Q1/23 production totalled 15.3koz (Q4/22: 16.7koz) reflecting lower availability of underground equipment in February as well as unusually wet weather.
• The team said issues have been rectified the following month and NLGM operations are on track to hit 6koz in production in April.
• Plant processed 217k at 2.52g/t recovering 87.1% of gold (Q4/22: 227kt at 2.60g/t and 88.0%).
• AISC averaged $1,429/oz (Q4/22: $1,347/oz) on the back of lower production and higher royalty payments due to stronger gold prices.
• Gold sales amounted to 16.0koz at an average realised gold price of $1,918/oz (Q4/22: 16.6koz and $1,731/oz).
• Adjusted EBITDA came in at $7.4m (Q4/22: $5.9m) helped by stronger gold prices.
• Q1/23 closing cash and available liquidity was $11.5m with gross debt at $29.1m (Q4/22: $13.0m and $24.1m) reflecting development capital expenditures related to Singida.
• During the quarter the Company claimed $4.6m in VAT offsets on 2022 tax bill as well as $1.1m cash refund, although, total VAT receivables continued to increase now stand at $32.0m (Q4/22: $29.3m).
• FY23 guidance for NLGM reiterated at 66-72koz.
• Singida first gold pour announced on 30 March and ramp up process is ongoing with 2.2koz produced in the first 22 days of April.
• Group wide guidance that includes production from recently commissioned Singida operation as well as an updated five year plan are expected to be released later Q2/23.
• Separately, the Company announced this morning that Eric Zurrin, CEO, will be stepping down after spending six years with the team but help with management transition to new leadership throughout Q3/23.
• Eric Zurrin has overseen a strong period in the Company’s history diversifying the production base with Singida having poured its first gold last month, adding the high-grade West Kenya Project to the portfolio and expanding the Group resource base.
• The Board has initiated a search process for a new CEO.
• Additionally, Matthieu Bos is expected to join the Board as an Independent NED subject to completion of regulatory due diligence.
• Mr Bos is a trained metallurgist and former mining investment banker with experience across Africa.

Conclusion: NLGM production reported slightly weaker than expected with issues reported to have been rectified and operation’s FY23 guidance reiterated at 66-72koz. The highlight of the quarter is first gold pour at Singida with ramp up going well and 2.2koz produced in just over three weeks in April.

Thor Energy (THR LN) 0.3p, Mkt Cap £7.2m – Vanadium results from exploration in south-western Colorado

• Thor Energy (formerly Thor Mining) reports vanadium assay results from drilling at its Wedding Bell and Radium Mountain exploration projects in the Uravan mineral belt of SW Colorado.
• The company explains that initial drilling of “15 shallow rotary air drillholes”, completed in November 2022, confirmed “uranium mineralisation along strike of historical workings at Rim Rock and Groundhog Prospects, and within the newly tested Section 23 prospect”.
• Thor Energy says that the uranium deposits of the Uravan area “are considered unique amongst the sandstone-hosted type of deposits, as the amount of vanadium generally exceeds uranium”.
• Vanadium results reported in today’s announcement include:
  • 1.5m at an average grade of 0.27% V₂O₅ (vanadium pentoxide) from a depth of 83.8m in hole 22WB012A at the Groundhog prospect; and
  • 3.0m at an average grade of 0.16% V₂O₅, also from a depth of 83.8m, in hole 22WB012 at the Groundhog prospect; and
  • 1.5m at an average grade of 0.18% V₂O₅ from a depth of 59.4m in hole 22WB014 at the Rim Rock prospect; and
  • 1.5m at an average grade of 0.10% V₂O₅, again from a depth of 83.8m in hole 22WB011 at the Section 23 prospect.
• Managing Director, Nicole Galloway-Warland, confirmed that the “assay results confirm the uranium mineralisation determined by downhole gamma and highlight broader enriched vanadium haloes of up to 0.27% vanadium. These vanadium-rich halos are typical of this style of ‘Salt Wash’ sandstone-hosted uranium mineralisation”.
• She also explained that “Drill permitting is underway for our next round of drilling at Wedding Bell, and initial drilling at Vanadium King, Utah, following the airborne geophysical survey. A close-spaced airborne radiometric and magnetics survey is planned over all three projects area once the conditions are suitably dry given there is still a small amount of snow and water at present on the ground”.

Conclusion: Further drilling is planned to follow up the initial results from the Uravan Belt licences where a known historical association between vanadium and the uranium mineralisation in the region has been demonstrated by the company’s 2022 drilling.

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 – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474

Sales

Richard Parlons –[email protected] – 0203 470 0472

Abigail Wayne – [email protected] – 0203 470 0534

Rob Rees – [email protected] – 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.

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins ([email protected]).

SPA research ratings – Based on a time horizon of 12 months: Buy = Expec