SP Angel Morning View -Today’s Market View, Monday 2nd September 2024

Base metals hold steady whilst speculation over China mortgage support resurfaces

MiFID II exempt information – see disclaimer below

Blencowe Resources (BRES LN) – Commercial scale metallurgical testing progresses DFS and provides potential off-takers product for assessment

Eurasia Mining* (EUA LN) SUSPENDED – FY23 accounts update

Lithium Americas (LAC US) – GM Second Tranche investment update

Northam Platinum Holdings (NPHJ SA) – Annual results show continued pressure from low PGM price environment

Predictive Discovery (PDI AU) – Bankan permitting update

Sayona Mining (SYA AU) – FY24 Results as NAL nears steady state spodumene production

Stellar Resources (SRZ AU) –Heemskirk Tin Project Scoping Study

WIA Gold (WIA AU) –Drill results from Côte d’Ivoire

Base metals hold steady whilst speculation over China mortgage support resurfaces

• Copper prices continue to hover around the $9,250/t mark, in steady trading.
• Aluminium slid slightly overnight, alongside nickel and zinc.
• Chinese news outlets are reporting potential for $5.4tn worth of mortgage refinancing as Beijing continues to seek a solution to the property slump.
• BHP is looking to boost Olympic Dam production from 320kt worth of cathode to 500kt by 2030, before ramping up again to 650kt.
• Meanwhile, Argentina is looking to boost copper exports, with a promising project pipeline backed by BHP, Lundin Mining, Glencore and FQM.

Australia and US boost trade relations with critical minerals financing agreement

• Export Finance Australia and the Export-Import Bank of the US have agreement a single point of entry for critical minerals.
• The agreement is a confirmation of Biden and Albanese’s previous ‘open for business’ agreement.
• Australian and US critical mineral companies will now be able to approach both banks to gain access to financing support.

Economics

China – Official PMIs showed a marginal increase in the services sector outweighed by a sharper than expected contraction in the manufacturing sector.

• Surprisingly, private sector gauge of the manufacturing sector climbed past the threshold separating contraction from growth in a better than forecast release.
• The CSI 300 Index and Hang Send fell 1.3% and 1.8% on the release of PMIs.
• Sub index of Chinese mainland developers trading in Hong Kong fell 4.9%.
• Official Manufacturing PMI (Aug/Jul/Est): 49.1/49.4/49.5
• Official Services PMI (Aug/Jul/Est): 50.3/50.2/50.1
• Official Composite PMI (Aug/Jul/Est): 50.1/50.2/NA
• Caixin Manufacturing PMI (Aug/Jul/Est): 50.4/49.8/50.0

Germany – The Alternative for Germany wins elections in the eastern region of Thuringia according to preliminary results marking the first time a far right securing victory in the nation’s postwar history.

• Initial estimates suggest the AfD secured 32.8% votes with the centre right Christian Democratic Union (CDU) coming in second at 23.6%.
• In the neighbouring state of Saxony Afd came second with 30.6% missing CDU (31.9%) only by a small margin.
• Three way coalition parties led by Olaf Scholz’s Social Democrats (SPD) managed to garner only single digits support per member in both states.
• SPD had its worst result in a regional election in postwar Germany in Thuringia scoring only 6.1%.
• A new far left party also gathered strong support with the Sahra Wagenknecht Alliance (BSW) winning 15.8% in Thuringia and 11.8% in Saxony.
• Both the AfD and BSW benefited from their opposition to the war in Ukraine as Germany saw large amounts of financial and military help provided to Ukraine while registering high inflation rates driven by high energy prices that weigh on regional economic growth.

Currencies

US$1.1065/eur vs 1.1078/eur previous. Yen 146.16/$ vs 144.96/$. SAr 17.858/$ vs 17.718/$. $1.314/gbp vs $1.317/gbp. 0.678/aud vs 0.680/aud. CNY 7.104/$ vs 7.091/$.

Dollar Index 101.61 vs 101.33 previous

Precious metals:         

Gold US$2,497/oz vs US$2,520/oz previous

Gold ETFs 82.9moz vs 82,811,268.9moz previous

Platinum US$929/oz vs US$945/oz previous

Palladium US$969/oz vs US$986/oz previous

Silver US$28.45/oz vs US$29/oz previous

Rhodium US$4,700/oz vs US$4,750/oz previous

Base metals:   

Copper US$ 9,208/t vs US$9,318/t previous

Aluminium US$ 2,426/t vs US$2,490/t previous

Nickel US$ 16,565/t vs US$17,060/t previous

Zinc US$ 2,840/t vs US$2,914/t previous

Lead US$ 2,046/t vs US$2,046/t previous

Tin US$ 31,725/t vs US$32,545/t previous

Energy:           

Oil US$76.4/bbl vs US$80.3/bbl previous

Natural Gas €39.3/MWh vs €39.0/MWh previous

Uranium Futures $79.2/lb vs $79.5/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$100.8/t vs US$101.7/t

Chinese steel rebar 25mm US$474.8/t vs US$476.6/t

Thermal coal (1st year forward cif ARA) US$125.5/t vs US$125.3/t

Thermal coal swap Australia FOB US$143.0/t vs US$143.3/t

Coking coal Dalian Exchange futures price US$179/t vs US$172.8/t

Other:  

Cobalt LME 3m US$24,300/t vs US$24,300/t

NdPr Rare Earth Oxide (China) US$57,432/t vs US$56,763/t

Lithium carbonate 99% (China) US$10,065/t vs US$10,083/t

China Spodumene Li2O 6%min CIF US$770/t vs US$770/t

Ferro-Manganese European Mn78% min US$995/t vs US$995/t

China Tungsten APT 88.5% FOB US$333/mtu vs US$333/mtu

China Graphite Flake -194 FOB US$447/t vs US$447/t

Europe Vanadium Pentoxide 98% 4.7/lb vs US$4.7/lb

Europe Ferro-Vanadium 80% 24.75/kg vs US$24.75/kg

China Ilmenite Concentrate TiO2 US$323/t vs US$324/t

China Rutile Concentrate 95% TiO2 US$1,387/t vs US$1,389/t

Spot CO2 Emissions EUA Price US$72.4/t vs US$72.4/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$292.5/t

Germanium China 99.99% US$2,545.0/kg vs US$2,545.0/kg

China Gallium 99.99% US$445.0/kg vs US$445.0/kg

Battery News

Chinese EV sales figures for August

• BYD sold a record 373,083 cars in August, up 35.97% yoy and 8.97% increase on July sales figures.
  • 222,384 PHEVs were sold, the 6^th consecutive record month.
• Nio delivered 20,176 vehicles, the fourth consecutive month above the 20,000 mark.
• Xpeng delivered 14,036 vehicles, up 26% from July.
• Zeekr sales were 18,015 cars up 15% from July.
• Leapmotor delivers record 30,305 cars, surpassing 30,000 monthly sales or the first time, thanks to strong new C16 model sales.
• Xiaomi saw deliveries of its first EV SU7 exceed 10,000 units for 3^rd consecutive month, although did not provide a specific figure.
• Li Auto delivered 48,122 vehicles, a 5.64% decrease in July’s sales

Samsung unveils 600-mile solid-state battery with rapid charging

• Samsung announced a solid-state battery with a 600-mile range at the SNE Battery Day expo in Seoul, in August. (Top Speed)
• The battery maker also revealed the battery can charge to 80% in just nine minutes, potentially revolutionizing the EV industry.
• The battery uses a solid electrolyte instead of a liquid one, offering more energy storage, better safety, and a 20-year lifespan.
• Samsung plans to mass-produce these solid-state batteries in the next few years, with more affordable options also in development.

eVTOL with CATL batteries to make maiden flight in 2024

• CATL is expected to see a major advancement in the flying car space within this year, as the battery giant expands its business reach.
• Last month, Autoflight, which specialises in automated eVTOL technology, announced an investment from CATL, marking the battery maker’s first investment in a startup in the space.
• It is not just the eVTOL space that CATL are tackling, with the company’s Condensed battery expected to be used in electric aeroplanes.
• Speaking at the 2024 World Power Battery Conference, CEO Robin Zeng, revealed the company has successfully test-flown a 4-ton electric aircraft last year and is working towards an 8-ton aircraft by 2027 or 2028.
• The 8-ton aircraft can support a range of about 2,000 to 3,000km, Zeng said.

Nio opens 2,500^th battery swap station in China

• Nio’s 2,500th battery swap station in China went live today, the company announced on Weibo.
• The company also has 2,332 supercharging stations in China, with 10,628 superchargers and 1,637 ‘destination’ charging stations offering 12,573 charging piles.
• It also has 54 stations in Europe, with Germany and Norway having 18 stations each.

CATL have also announced its battery swap station plans as it aims to have 500 swap stations in China by 2025.

• The battery giant is targeting 3000 swap stations by 2027 and eventually reach 10,000 stations.

Company News

Blencowe Resources (BRES LN) 5.5p, Mkt Cap £12m – Commercial scale metallurgical testing progresses DFS and provides potential off-takers product for assessment

• Blencowe Resources reports that metallurgical test work by specialist spheronised purified graphite (SPG) producer, Qingdao TaiDa Carbon, has successfully upgraded material from its Orom Cross deposit in Uganda to a battery-ready 99.95% product.

• The work, based on a 600t sample from the deposit has produced material for testing by potential customers in South Korea, Japan and China, described as “the final step for qualification of Orom-Cross material for commercial use by these potential customers and is the pathway toward securing future offtake agreements”.
• Blencowe Resources confirms that members of its “Senior management are currently visiting the testing firms along with various Asian OEMs to advance discussions towards offtake agreements”.
• Commenting that the company expected the product testing by potential customers to take “approximately one month to complete”, Executive Chairman, Cameron Pearce, said that the company would then be “able to discuss offtake agreements”.
• He added that “Once we have assembled a range of customers and offtake agreements, we have effectively de-risked the project ahead of project financing and construction”.
• The company also reports that additional test work is being undertaken “with leading US graphite expert American Energy Technologies (“AETC”) in Chicago to further beneficiate fines concentrate into a range of high value specialised micronised products … [which could yield] … up to 10 times the value of basic fines concentrate”.
• In Uganda, the company has now submitted its updated Environmental and Social Impact Assessment (ESIA) to the regulatory authorities and has also completed water well drilling to ensure “sustainable life-of-mine water supply for the project and local communities”.
• The company also confirms that it is progressing its definitive feasibility study “including plant design, power supply studies, and infrastructure development”.
• The Orom-Cross project holds a 24.5mt at 6% tgc JORC resource and a PFS suggesting a post-tax NPV8 of US$482m and an IRR of 48%.
• Blencowe will incorporate the results from the various studies in the DFS.

Eurasia Mining* (EUA LN) SUSPENDED – FY23 accounts update

• FY23 audit is near completion.
• FY23 accounts are expected to be released by the end of the week.
• Trading in stock remains suspended since 01 July pending the release of FY23 accounts

*SP Angel act as Nomad and Broker to Eurasia Mining

Lithium Americas (LAC US) US$2.5, Mkt Cap US$536m – GM Second Tranche investment update

• The Company agreed to extend the date for the General Motors Second Tranche investment for $330m until the December 20 this year.
• The second tranche is conditional on the Company closing the loan agreement for the $2.3bn from the US Department of Energy.
• The Company reiterates it continues to work with the US DOE and GM closely regarding respective investments that are expected to be completed by the end of the year.
• GM invested $320m for 10% in Lithium Americas pre separation in early 2023 with proceeds used for Thacker Pass Project, a lithium clay deposit in Humboldt County, Nevada.
• The Company is exploring alternative structures for the second tranche.

Northam Platinum Holdings (NPHJ SA) ZAR10,470, Mkt Cap ZAR41bn – Annual results show continued pressure from low PGM price environment

• Northam Platinum reported a 22% slide in revenue to ZAR30.8bn ($1.7bn)
• Operating profit at ZAR of 4.bn or $267m whilst EBITDA at ZAR6.3bn or $347m.
• Operating profit down 69%, EBITDA down 62%, whilst operating margins fell 60% and EBITDA margins fell 51%.
• The Company declared a cash dividend of 60c/share, down from 600c/share last year.
• Northam management expects South African platinum output to fall 10% over the next five years to 3.5moz vs 3.9moz today.
• Northam output is expected to stabilise at 1mozpa over the longer term, vz 900koz over the past 12 months.
• Dunne expects the current challenging environment for PGMs to trigger supply rebalancing, as demand increases from the hydrogen economy.
• The Company held c.$420m in cash on hand, and $690m in undrawn facilities.
• Company guides to 880-910koz 4E for FY25 equivalent refined metal production, and 980-1,020koz for group sales.
• Unit cash costs guided at $25.5k-26.5koz 4E, or c.$1,400-1,454/oz.
• Platinum futures are currently c.$950/oz, palladium futures at $965/oz.

Predictive Discovery (PDI AU) A$0.22, Mkt Cap A$513m – Bankan permitting update

• The Company was notified by the Ministry of Mines & Geology in Guinea that the Cadastre was temporarily closed and the processing of all permit applications and renewals is suspended.
• The suspension is related to maintenance of the system and a review of all mining titles in the Cadastre.
• The Company completed the ESIA for the Bankan Gold Project in April this year and submitted it to the Ministry for the Environment and Sustainable Development for review in June as part of the Mining Permit application.

Sayona Mining (SYA AU) A$0.042, Mkt Cap A$410m – FY24 Results as NAL nears steady state spodumene production

• Sayona reports their NAL spodumene mine in Quebec produced 156kt of concentrate to 30^th June 2024.
• Record monthly production of 19.3kt hit in May.
• Lithium recoveries hit 68% in June quarter.
• CAPEX upgrades on the crushed ore dome and TSF 1 expected to boost mill utilisation, now hitting 90%.
• Continued exploration programmes at Tabba Tabba and Moblan.
• EBITDA loss of A$54m, with -A$23m coming from NAL.
• Cash position at A$91m at end of the year, having invested A$102m in NAL ramp up.
• Unit operating cost of A$1,417/t for FY24 vs an average selling price of A$1,272/t.
• Company guides at 200-230kt concentrate sales for FY25, A$50m in CAPEX and exploration expenditure.
• Unit operating costs for FY25 guided at A$1,150-1,300/t.

Stellar Resources (SRZ AU) A$0.017, Mkt Cap A$35m –Heemskirk Tin Project Scoping Study

• Stellar reports an updated scoping study for their Heemskirk Tin Project in Tasmania.
• The results suggest a post-tax NPV8 of A$75m at $28k/t tin price, with CAPEX of A$71m.
• Post tax NPV8 of $123m at current tin spot prices, for an IRR of 46%.
• The study suggests the potential for a 12-year mine life, average production rate of 350ktpa to produce 22.8kt in concentrate over LOM.
• The study does not incorporate the inferred resource of 3.96mt at 1.03% Sn.
• PFS work will explore production rates at up to 750ktpa, ore sorting, paste/fill mining and further conversion of inferred Resource to indicated.
• The Company is currently completing a 9,500m drill programme to upgrade the inferred resource and support metallurgical testwork.
• Company expects PFS completion in 2H25.

WIA Gold (WIA AU) A$0.11, Mkt Cap A$125m –Drill results from Côte d’Ivoire

• WIA Gold, which holds the Kokoseb gold project in Namibia, reports results from their Boufle Project in Côte d’Ivoire.
• The Company reports intercepting two gold intercepts from an altered contact zone with a gabbro.
• Highlights include:
  • BFRC0037: 4m at 87g/t Au from 79m
  • BFRC0039: 10m at 4.54g/t Au from 96m
  • BFRC0033: 6m at 8.5g/t Au from 93m
  • BFRC0030: 16m at 1.6g/t Au from 69m
• The Company now intends to conduct a 2,000m RC programme next month.
• Hole BFRC0039 and BFRC0037 are believed to have both intercepted the same contact zone with a gabbro, 200m apart. Mineralisation remains open along strike and at depth.
• Management highlights the discovery lies 30km from Perseus’ Yaoure mine.

No.1 in Base Metals: SP Angel mining team awarded No 1. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q1 2024

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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