SP Angel Morning View -Today’s Market View, Monday 25th September 2023

Metal prices pull back as Evergrande struggles with refinancing plans

MiFID II exempt information – see disclaimer below

Empire Metals* (EEE LN) – Equity placing raises £3m for expansion of Pitfield drilling programme

Kavango Resources (KAV LN) – Expansion of exploration area in the KCB

Tertiary Minerals* (TYM LN) – BUY– Term Sheet signed with mining company for earn-in agreement at Konkola West

VOX:    https://audioboom.com/posts/8372001-john-meyer-discusses-heat-pumps-the-energy-transition-plus-bluejay-jay-kodal-kod-savannah-sav


*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts. We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.

Copper slides as China smelters hold fees higher on abundant concentrate supply

  • Copper prices slid to $8,140/t over the weekend following a meeting among Chinese smelters.
  • The group met to set guidance for Q4 on treatment and refining charges, deciding to hold TCs at $95/t.
  • The rate was last this high in 2017.
  • Higher charges usually point to higher supply of mined ore.
  • The inflows from Tenke Fungurume and Peru alongside the ramp up of Teck’s QB2 in Chile are some of the reasons for the increase in concentrate supply.
  • A copper surplus is expected by analysts next year before shifting into deficit from 2025.
  • Chinese smelters have also been boosting capacity, despite a reduction in downstream demand following the slowdown in the property sector.
  • Shanghai premiums are bouncing from a discount ten days ago, although remain far depressed from the 640CNY/t levels seen earlier this year.
  • LME stockpiles climbed again over the weekend, to their highest level since May 2022.

Iron ore sells off on concerns over weak steel sales and production cuts

  • Dalian iron ore fell 2% to $115/t.
  • Singapore iron ore down 4% to $116/t.
  • Analysts expect demand to have overstretched for the steelmaking ingredient as pre-holiday stockpiling comes to an end.
  • Coking coal and coke both sold off too.
  • China is set to go on a week-long holiday for the Mid-Autumn festival from September 29th.
  • Developers struggling with liabilities add to concerns, with Evergrande warning it is unable to issue new debt as authorities investigate a subsidiary.

Gold slides as higher treasury yields push ETF holdings to multi-year lows

  • Gold prices are struggling to climb above $1,930/oz in the spot market.
  • US Treasury yields climbed again following last week’s bond rout, with the 10-year rising to 4.49%.
  • The dollar is also weighing on gold prices, with the DXY index sitting at 6-month highs.
  • ETFs have sold off physical holdings to January 2020 lows.
  • COMEX data suggests hedge funds are ramping up bullish gold bets, although analysts suggest this is likely short covering.
  • PCE inflation data due on Friday will likely be this week’s key data point for gold traders.

UK – The real reasons why the UK is not able to ban the sale of ICE engine cars in favour of Zero-emission cars by 2030

  • Rishi Sunak has delayed the ban on the sale of petrol, diesel and hybrid vehicles till 2035.
  • In fact we wonder if the UK will even be able to meet the 2035 deadline given the slow progress in developing the required infrastructure.
  • As Sukak says, the rate of adoption by consumers is good enough for now, but we suspect the nation is barely keeping up with the infrastructure required.
  • Long delays are already being reported on grid connections for new charging infrastructure and this could get worse as the nation moves towards heat pumps for offices and housing.
  • Yes, heat pumps are energy efficient but they still used electricity, lots of electricity.
  • Yes, you can install a 12Kw or 16Kw heat pump suitable for 3-4 bedroom houses and run a trickle charger for an Electric Vehicle on a Single-Phase grid connection.
  • Fortunately, heat pump manufacturers say they can make heat pumps that run at up to 80C though regular heat pumps run at 45-55C meaning the average household should not have to replace all its radiators. The downside is that heat pumps that run at 80C cost ~20% more to run with an efficiency rating of ~250% vs 300%.
  • But if you want a fast charger you are going to need to install a 3-phase power line which is going to require new cabling into your property.
  • The complexity of installing heat pumps alongside fast car chargers alongside current lead times for three-phase grid connections suggest to us the that the nation could struggle to meet its 2035 targets when all new gas and oil boilers will need to be replaced by heat pumps.
Dow Jones Industrials -0.31% at 33,964
Nikkei 225 +0.85% at 32,679
HK Hang Seng -1.71% at 17,749
Shanghai Composite -0.52% at 3,116


US – Composite preliminary PMI numbers came in slightly below estimates hitting a seven month low reflecting muted demand conditions in September.

  • A pullback in the services sector growth led a general slowdown.
  • New business orders fell at the strongest pace since Dec/22 on the back of high borrowing costs and inflationary pressures.
  • Total export orders were also down reflecting general weakening growth momentum overseas and recession concerns in key export markets like Europe.
  • Oddly, employment climbed at the fastest rate since May with stronger labour market reported in both manufacturing and services sectors.
  • Higher wages and fuel costs added to input cost inflation, although, subdued end demand conditions limited firms’ ability to pass through additional costs onto final consumers.
  • Manufacturing PMI: 48.9 v 47.9 August and 48.2 est.
  • Services PMI: 50.2 v 50.5 August and 50.7 est.
  • Composite PMI: 50.1 v 50.2 August and 50.4 est.

China – Bloomberg gauge of Chinese property developers dropped more than 6% Monday on the back of negative newsflow from troubled real estate companies.

  • Evergrande shares plunged as much as 25% this morning after the developer announced of its inability to meet regulator conditions to issue new bonds as part of its planned restructuring of at least $30bn of offshore debt, Bloomberg writes.
  • Separately, China Oceanwide Holdings, a Chinese property investor, reported that it faces court ordered liquidation as lenders seek to recover $175m in unrepaid loans

Germany – Business sentiment continued to slide in September, albeit, at a slightly slower rate than expected.

  • “Once again, companies were less satisfied with their current business situation… however, pessimism regarding the coming months dissipated slightly… the German economy appears to have bottomed out,” Ifo president commented on the data.
  • Faced with waning export demand, higher interest rates and stronger energy prices the economy has been struggling to regain growth momentum with estimates for a 0.3%yoy drop in GDP in 2023 (2022: +1.8%).
  • Ifo Business Climate: 85.7 v 85.8 August (revised from 85.7) and 85.2 est.
  • Ifo Current Assessment: 88.7 v 89.0 August and 88.0 est.
  • Ifo Business Expectations: 82.9 v 82.7 August (revised from 82.6) and 83.0 est.


US$1.0649/eur vs 1.0665/eur previous. Yen 148.36/$ vs 148.38/$. SAr 18.800/$ vs 18.887/$. $1.224/gbp vs $1.228/gbp. 0.642/aud vs 0.643/aud. CNY 7.309/$ vs 7.300/$.

Dollar Index 105.61 vs 105.50 previous.

Commodity News

Precious metals:

Gold US$1,923/oz vs US$1,926/oz previous

Gold ETFs 88.8moz vs 89moz previous

Platinum US$927/oz vs US$931/oz previous

Palladium US$1,245/oz vs US$1,277/oz previous

Silver US$23.50/oz vs US$24/oz previous

Rhodium US$4,100/oz vs US$4,100/oz previous

Base metals:

Copper US$ 8,189/t vs US$8,232/t previous

Aluminium US$ 2,231/t vs US$2,229/t previous

Nickel US$ 19,425/t vs US$19,230/t previous

Zinc US$ 2,537/t vs US$2,541/t previous

Lead US$ 2,194/t vs US$2,189/t previous

Tin US$ 26,140/t vs US$25,515/t previous


Oil US$93.8/bbl vs US$93.7/bbl previous

  • Crude oil prices were stable over the weekend as OPEC+ supply cuts continue to outweigh demand uncertainty in the markets.
  • European gas prices moved higher despite union workers suspending industrial action after accepting a proposed settlement on pay and conditions put forward by Australia’s labour regulator.
  • The US Baker Hughes rig count was down 11 units to 630 rigs last week (-134 or 17% y/y), with oil rigs falling by 8 to 507 units (-95 y/y) and gas rigs down 3 to 118 units (-42 y/y), including a 5-rig drop in Texas (312).
  • Media reports that TotalEnergies is looking to sell its 40% stake in the gas field development of the Greater Laggan Area of the UK North Sea, which is expected to produce 25kboe/d this year.

Natural Gas €40.050/MWh vs €38.700/MWh previous

Uranium UXC US$65.50/lb vs US$65.50/lb previous


Iron ore 62% Fe spot (cfr Tianjin) US$118.1/t vs US$118.1/t

Chinese steel rebar 25mm US$538.1/t vs US$538.4/t

Thermal coal (1st year forward cif ARA) US$130.0/t vs US$128.0/t

Thermal coal swap Australia FOB US$158.0/t vs US$159.8/t

Coking coal swap Australia FOB US$324.0/t vs US$324.0/t


Cobalt LME 3m US$33,420/t vs US$33,420/t

NdPr Rare Earth Oxide (China) US$71,280/t vs US$71,370/t

Lithium carbonate 99% (China) US$21,001/t vs US$21,301/t

China Spodumene Li2O 6%min CIF US$2,370/t vs US$2,370/t

Ferro-Manganese European Mn78% min US$1,033/t vs US$1,035/t

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

China Graphite Flake -194 FOB US$645/t vs US$645/t

Europe Vanadium Pentoxide 98% 6.6/lb vs US$6.6/lb

Europe Ferro-Vanadium 80% 29.25/kg vs US$29.25/kg

China Ilmenite Concentrate TiO2 US$315/t vs US$316/t

Spot CO2 Emissions EUA Price US$87.2/t vs US$87.3/t

Brazil Potash CFR Granular Spot US$350.0/t vs US$355.0/tBattery News

Company News

Empire Metals* (EEE LN) 4.13p, Mkt Cap £20m – Equity placing raises £3m for expansion of Pitfield drilling programme


(Empire holds a 70% interest in the Pitfield prospect 313km north of Perth, WA)

  • Empire Metals reports an oversubscribed placing of 75m new ordinary shares at 4p/share, raising £3m before expenses.
  • Empire is currently executing a 1,500m diamond core programme.
  • The placing will precede an RC drilling campaign to confirm the size and scale of the titanium-enriched mineral system.
  • A second programme has now been scheduled for early 2024, following the Phase 1 RC programme due before the end of this year.
  • Mineralogical and metallurgical studies will also be enabled by the additional funds.
  • An updated presentation on the Company website highlights the potential for the sediment-hosted hydrothermally altered titanium-mineralised system at Pitfield.

Conclusion: Today’s equity raise supports Empire’s ambitions of conduction a large-scale drilling programme across much of the 40km x 8km magnetic anomaly at Pitfield. Drilling results so far have shown extensive mineralised widths of titanium-hematite alteration. TIO2 accounts for 90% of pigment production and the current supply outlook from diminishing beach sand projects presents an interesting opportunity for ‘soft rock’ sedimentary-hosted deposit development. Metallurgical studies will provide additional clarification as to the extent of the opportunity at Pitfield for future economic development.

*SP Angel acts as nomad and broker to Empire Metals

Kavango Resources (KAV LN) 0.65p, Mkt cap £5.1m – Expansion of exploration area in the KCB

  • Kavango Resources reports that it is to acquire additional Prospecting Licences in the Kalahari Copper Belt (KCB) of Botswana consolidating its land position around its existing licences in the South Ghanzi Block.
  • The company will acquire a 90% interest in licences between its existing Karakubis Block and the South Ghanzi licences for a total of A$2.5m, to be paid in stages “giving Kavango a single, contiguous project area to explore”.
  • Under the agreement with two subsidiaries of Global Exploration Technologies (Icon Trading and Ashmead Holdings) Kavango will pay an initial A$1.5m in cash upon completion of the acquisition followed by two further cash payments, each of A$500,000, after 90 days and 180 days.
  • The Ashmead licences are due for renewal in June 2024 and those currently held by Icon are renewable in September 2025.
  • The additional licences are believed to host the contact zone between the D’Kar and Ngwako Pan Formations which hosts economic mineralisation elsewhere within the Kalahari Copper Belt, including at the T3 deposit of Sandfire Resources and at Khoemacau Mining’s Zone 5 deposit where, in February, mining reached the targeted 300,000tpm rate.
  • The new licences also give Kavango Resources coverage of “a single regional system that incorporates notable domal structures, which are key exploration targets in the search for large-scale copper/silver mineralisation”.
  • Chief Executive, Ben Turney, expressed confidence that “uninterrupted control of the single system in this portion of the Kalahari Copper Belt … significantly increases our chances of making a discovery here”.
  • He said that the company will now review “exploration data for the new licence areas and the results of our recently completed IP surveys at the Karakubis project area. Our goal is to identify high-confidence drill targets to pursue in Q1 next year”.

Conclusion: The additional licences consolidate Kavango Resources’ position over a stratigraphically and structurally promising part of the Kalahari Copper Belt in Botswana.  We await news from the continuing exploration with interest.

Tertiary Minerals* (TYM LN) 0.14p, Mkt cap £3.25m – BUY– Term Sheet signed with mining company for earn in agreement at Konkola West


  • Tertiary and its JV partner Mwashia Resources have signed a non-binding term sheet with a Third Party at the Konkola West project in Zambia.
  • The Company reports that the Third Party is a ‘well-resourced mineral exploration and mining company.’
  • The Term Sheet suggests the Third party commits to an initial drill programme at Konkola which offers it the right to earn an initial 51% interest in the licence.
  • The Third Party would old the option to then acquire up to 70% of the licence through the sole funding of a cumulative $6m on exploration within 48 months of the initial signing.
  • The initial earn in agreement would reduce Tertiary’s holding to 39% and Mwashia’s to 10%, with Stage 2 to reduce this to 20% and 10% respectively.

Conclusion: The non-binding agreement presents an exciting opportunity for Tertiary to progress Konkola West alongside a deeper-pocketed and experienced operating the partner. Given the expected scale and depth of Konkola West – Stage 1 holes expected to extend further than 1km deep – the cooperation via an earn-in agreement is a wise approach by the Tertiary team to generate value from the asset. Konkola West lies down strike from the Konkola-Lubambe mining area, with the team’s geologists hoping to target a deep extension of these deposits.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

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


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


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


*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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