SP Angel Morning View -Today’s Market View, Monday 4th March February 2024

Gold soars to two-month high as traders reconsider June rate cut potential

MiFID II exempt information – see disclaimer below

Amur Minerals* (AMC LN) (Suspended) – RTO of UK-based pharmaceutical company

Beowulf Mining* (BEM LN) – Update on capital raise and Vardar consolidation

Caledonia Mining (CMCL LN) – Inflation and cost pressures on 2023 financial performance

Celsius Resources (CLA LN) (ASX HALT) – Announcement expected on the MCB project

Cornish Metals* (CUSN LN) – BUY, Target – 48p/s– Cornish Metals start shaft refurbishment early as mine dewatering runs ahead of schedule

Galantas Gold* (GAL LN) – Gairloch exploration and marketing contracts update

Lake Resources (LKE AU) – Operational update amid cost cutting and project delay

Pensana (PRE LN) – Longonjo project development update

Phoenix Copper* (PXC LN) – Completion of short term loan refinancing

Rockfire Resources (ROCK LN) – Germanium intersected in Molaoi drilling

Savannah Resources* (SAV LN) – BUY, 21.1p – Strategic partnership update

SolGold* (SOLG LN) 6p, Mkt Cap £181m – Renewable clean power initiative for Cascabel

Gold US$2,083/oz – Gold soars to two-month highs as traders reconsider June rate cut potential

• Gold bounced suddenly on Friday to $2,085/oz, consolidating those levels this morning.
• Several data releases on Friday from the US showed a weaker economy, supporting bets on Fed rate cuts into the summer.
• US manufacturing weakness and construction data coincided with easing price pressures.
• June rate cuts are now pricing in a 74% chance of a rate cut in June vs 65% priced in last week.
• However, Treasury yields continue to hold around the 4.2% mark, a far cry from January’s 3.8% level.
• The sharp move on Friday likely reflects several short positions being covered.

China’s lithium-ion battery output up 25% in 2023

• China saw its total output of lithium-ion batteries exceed 940GWh for 2023, up 25% yoy, according to the Ministry of Industry and Information Technology
• Output of lithium-ion batteries for power storage stood at 185GWh and capacity of power batteries exceeded 435GWh.
• Exports of lithium-ion batteries jumped 33% yoy.

Copper – Indian Supreme Court rejected Vedanta’s bid to reopen its 400,000tpa copper smelter in Tamil Nadu

• The smelter was ordered to shut down in 2018 due to groundwater contamination.
• Vedanta built a state-of-the art IsaSmelt smelter at Tuticorin which we believe was running very efficiently.
• Having visited the smelter we are unsure as to why Vedanta have not been able to resolve the groundwater contamination issue.

Economics

US – Labour numbers week with markets expecting a slowdown in the number of new jobs created and a pull back in the pace of labour earnings growth in February.

• NFPs: 200k v 353k January.
• Unemployment Rate: 3.7% v 3.7% January.
• Av Hourly Earnings (%mom): 0.2  v 0.6 January.
• Av Hourly Earnings (%yoy): 4.3 v 4.5 January.

Turkey – Inflation picked up ahead of expectations in February putting pressure on monetary authorities to do more to anchor inflation expectations.

• Consumer prices growth hit 67% last month, up from just under 65% in January.

China – CCP meet at NPC for their CPPCC

• This week sees the ‘CCP’ at their NPC ‘National People’s Congress’ for the ‘CPPCC’ Chinese People’s Political Consultative Conference
• We expect more rhetoric on transitioning the economy towards high-tech industries and pulling of economic levers
• We do not expect to see any particular form of QE but we do see policies to acquire and finish the construction of many property developments.
• It will be interesting to see what compensation if any is paid to Evergrande, Country Garden and other troubled property developers.
• How far will China go with its new-found courting of tech entrepreneurs eg. Capitalists to regain economic momentum and push towards 4-5% GDP growth?
• Maybe we can create a new abbreviation: CHTCs ‘China High-Tech Capitalists’.
• But there will be less information on offer as Premier Li Qiang will not meet the press after their ‘two sessions’ meeting and the press conference will be scrapped for future years unless there are exceptional circumstances
• We suspect the move is designed so Xi can better control the narrative and information coming out of the conference.
• In the meantime the market awaits news of Premier Li Qiang’s work report at the China Congress, assuming that the information is allowed to come out.
• Premier Li succeeded Li Keqiang, who died of a sudden heart attack last October, but may not have as much influence in policy as his precedessor.
• Growth target may be revised to a range of 4.5-5.0%, FT cites Oxford Economics estimates.

UK – Government looking to fund a 2p cut in National Insurance but needs to find £9m to fund the cut

• Having ramped up NI costs for employees the government is now looking to cut NI by 2p (The Times)
• But where is the government going to find the extra £9bn needed to balance the books.
• The Chancellor appears to be planning to use a series of stealth taxes to fund up to £4bn including the removal of tax breaks for second-home owners who rent property for holiday rentals.
• Non-dom tax relief is also likely to go while the government is also looking to extend taxes on profits from North Sea Oil & Gas.
• While we doubt these stealth taxes will bring in the desired funding we do wonder if the current Chancellor is setting up the next government for a bit of a fall.

Ukraine – Ukraine says it has shot down three more Russian Su-34 fighter-bombers

Solar panels – One in six fires in Johannesburg area caused by solar instillations

• Fire Ops South Africa estimates that around one in every six fires is solar panel related (The Daily Maverick).
• They warn that if panels and their inverters are not properly installed that insurance claims may be rejected.
• We have not come across this as an issue in the UK so assume there are a few dodgy electricians in the Gauteng area.

Currencies

US$1.0854/eur vs 1.0813/eur previous. Yen 150.28/$ vs 150.66/$. SAr 19.058/$ vs 19.232/$. $1.268/gbp vs $1.264/gbp. 0.653/aud vs 0.650/aud. CNY 7.199/$ vs 7.199/$.

Dollar Index 103.77 vs 104.12 previous.

Commodity News

Precious metals:         

Gold US$2,083/oz vs US$2,040/oz previous

Gold ETFs 82,4moz vs 82.5moz previous

Platinum US$895/oz vs US$873/oz previous

Palladium US$970/oz vs US$939/oz previous

Silver US$23.16/oz vs US$23/oz previous

Rhodium US$4,450/oz vs US$4,400/oz previous

Base metals:   

Copper US$ 8,545/t vs US$8,431/t previous

Aluminium US$ 2,239/t vs US$2,209/t previous

Nickel US$ 17,700/t vs US$17,475/t previous

Zinc US$ 2,447/t vs US$2,402/t previous

Lead US$ 2,048/t vs US$2,046/t previous

Tin US$ 26,885/t vs US$26,370/t previous

Energy:           

Oil US$83.7/bbl vs US$81.9/bbl previous

Henry Hub Gas US$1.88/mmBtu vs US$1.88/mmBtu yesterday

• WTI oil prices have breached the $80/bbl level after the OPEC+ producer group agreed yesterday to extend voluntary output cuts until the end of June, with Russia agreeing to cut production by an extra 471kb/d in 2Q24.
• The US Baker Hughes rig count was up 3 units to 629 rigs last week (-120 or 16% y/y), with oil rigs up 3 to 506 units (-86 y/y) and gas rigs down 1 to 119 units (-35 y/y) as 2 rigs were removed from the Haynesville Basin
• EQT, the largest US gas producer with ~5.5bcf/d of current production, announced a strategic decision to curtail c.1bcf/d of gross production beginning in late February through March in response to the current low natural gas price environment resulting from warm winter weather and consequent elevated storage inventories.

Natural Gas €24.9/MWh vs €25.5/MWh previous

Uranium Futures $94.1/lb vs $94.5/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$113.9/t vs US$115.8/t

Chinese steel rebar 25mm US$566.0/t vs US$566.8/t

Thermal coal (1st year forward cif ARA) US$103.8/t vs US$101.5/t

Thermal coal swap Australia FOB US$136.0/t vs US$132.5/t

Other:  

Cobalt LME 3m US$28,550/t vs US$28,550/t

NdPr Rare Earth Oxide (China) US$50,144/t vs US$50,424/t

Lithium carbonate 99% (China) US$13,821/t vs US$13,405/t

China Spodumene Li2O 6%min CIF US$1,070/t vs US$1,040/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$560/t vs US$560/t

Europe Vanadium Pentoxide 98% 5.7/lb vs US$5.8/lb

Europe Ferro-Vanadium 80% 27.45/kg vs US$27.55/kg

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

Spot CO2 Emissions EUA Price US$55.1/t vs US$54.9/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$285.0/t

Battery News

Ola Electric sees record month of sales

• The electric two-wheeler maker saw almost 35,000 registrations of its vehicles – almost a 100% increase in sales yoy
• The company recently introduced an industry-first eight-year or 80,000km extended battery warranty.

China’s EV price war continues as automakers slash prices further

• BYD and Tesla both announced new sale incentives towards the end of last week.
• BYD announced on Weibo that it would lower the price of its Song Pro compact SUV by RMB20,000 ($2,780)
• Tesla also announced sales promotions – its third of the year – on the Model 3 and Model Y with total savings of up to RMB18,000 ($2,500)
• It is believed that the rest of 2024 will see a similar trend as demand continue to grow and raw material price falls

Sosteneo buys 49% of Enel’s battery business for €1.1bn

• Enel, Italy’s largest utility, will sell 49% of its battery storage business, Enel Libra Flexsys to Generali’s Sostenio for €1.1bn.
• Enel Libra currently has 23 battery energy storage systems with 1.7GW of capacity.

Ireland EV sales drop in February as market starts to slow

• Sales figures showed only 1,866 EVs were registered in February, a 15.5% drop yoy for the month as demand cools.
• Conversely, new car sales were up 25% in the month.
• The sales figures are slight setback to plans to get more EVs on Irish roads in line with government plans.
• We could see EV makers slash prices in an attempt to get consumers back on board.

Company News

Amur Minerals* (AMC LN) (Suspended) – RTO of UK-based pharmaceutical company

• Amur provides a company update following its reclassification as an AIM Rule 15 cash shell.
• The Company has entered into a Heads of Terms agreement for the acquisition of a UK-based healthcare Company.
• The HoT were agreed on the 25^th January.
• The Target is developing an ‘innovative drug delivery technology to improve the clinical performance of cancer treatments for solid tumours through the local delivery of chemotherapy.’
• As the Agreement stands, Amur will acquire the entire issued share capital of the Target in return for new shares in Amur.
• The RTO process is expected to be completed before the end of April, but no assurance is made of completion.

*SP Angel act as Nomad and Broker to Amur Minerals

Beowulf Mining* (BEM LN) 1p, Mkt Cap £12m – Update on capital raise and Vardar consolidation

• Beowulf provides an update on its intended capital raise via a rights issue of SDRs and a PrimaryBid offer in the UK.
• The Company is looking to raise £6.3m through SDR issue and £1.6m through the UK PrimaryBid route.
• Beowulf announces today the SDRs will be offered at SEK 0.08, whilst the UK shares will be offered at an issue price of 0.61p.
• The Company reports it has received underwriting commitments for c.60% of the Rights Issue. Note the UK issue is not being underwritten.
• Net proceeds from the capital raise are expected at £6.8m.
• Funds will be used to continue development of the Kallak Iron Ore project to PFS and EIA, optimised PFS for the GAMP plant and the repayment of the bridging loan.
• The subscription period will be held between 13^th March to the 27^th March.
• A maximum of 1,301,835,895 new ordinary shares will be issued.
• Vardar Exploration Update
• The Company also announces it has consolidated ownership of Vardar Minerals from 61.1% to 100% ownership through an all-share transaction.
• 52.3m shares will be issued to Vardar minority holders.
• The Company has submitted applications for new licences over the original Viti East, Mitrovica and Vita North licences, which were expired on 27^Th January.
• The Sampling programme continues at Vardar’s Shala East, which encouraging rock chip samples including 3.8g/t u, 117g/t Ag, 5.5% Zn, 5.4% Pb.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Caledonia Mining (CMCL LN) 660p, Mkt Cap £152m – Inflation and cost pressures on 2023 financial performance

• Caledonia Mining reiterates its previous announcement, issued in January, that its Blanket gold mine in Zimbabwe performed well during 2023 producing a total of 75,416oz of gold, however it cautions that the mine experienced “several significant one-off, non-operating costs in the final quarter of the year”.
• The company says that increased costs comprise “higher than expected overtime payments and power costs at Blanket Mine” as well as increased non-operating “general and administrative costs … [which] … rose with global inflation and these also included higher than expected staff termination costs”.
• The company says that as “a result … [it] … now expects to report an adjusted profit before tax for the year ended December 31, 2023 materially below market expectations” and that it will provide further information on the cost increases when it reports results for the final quarter and full year 2023 “on or before March 28, 2024”.
• Caledonia Mining provided reassurance that “a significant proportion of these cost increases are not expected to be carried through into 2024” and that “costs associated with … [the]… Bilboes … [project] … are now reduced to care and maintenance only and the project was cash neutral in the fourth quarter of 2023”.
• Caledonia Mining also confirms that “Production and costs at Blanket in 2024 to-date are also within expectations of full year guidance, and the Company is introducing measures aimed at reducing electricity costs over the medium term … [and confirms that on 31^st December it] … had cash on hand of $6.7 million and overdrafts and term loans of $17.7 million”.
• To provide some context, we are aware of accelerating inflation rates in Zimbabwe with reports of rates reaching 47.6% in February (December 2023 – 26.5%) influenced by currency weakness. These macro-economic circumstances will no doubt have exacerbated any company specific factors experienced by Caledonia Mining.

Conclusion: The company is expecting cost and inflationary pressures to impact its 2023 results when they are announced later this month. The previously announced decision to put the Bilboes project on care and maintenance should help curb some of the continuing cost pressure in 2024.

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

Celsius Resources (CLA LN) 0.6p, Mkt Cap £13m (ASX HALT) – Announcement expected on the MCB project

Click Link for SP Angel research report PDF note – MCB project NPV@8% US$463m, IRR of 34.3%

BUY

• Trading in Celsius Resources has been halted on the ASX pending an announcement on its flagship Maalinao-Caigutan-Biyog Copper-Gold Project in the Philippines.
• Trading on London’s AIM market is not affected.
• The announcement says that Celsius Resources requested the halt to ASX trading pending “the issuance of project sensitive documents by the Philippine National Government” relating to the MCB Project.
• The company’s plan envisages development of an underground mine to develop the 338mt resource at MCB over a 25 year mine life and produce a copper/gold concentrate.
• Initial investment of US$253m is expected to deliver an after-tax NPV8% of US$464m and IRR of 31% at a copper price of US$4.00/lb (~US$8,800/t) and a gold price of US$1,695/oz.
• The plan is to process an average of around 2.3mtpa of ore at an average grade of 1.14% copper and 0.54g/t gold during the initial 10 year of the project delivering cash costs of cash costs of US$0.73/lb net of gold credits.

Cornish Metals* (CUSN LN) 10p, Mkt Cap £54m – Cornish Metals start shaft refurbishment early as mine dewatering runs ahead of schedule

BUY – 48p/s

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• Cornish Metals have amended their mine dewatering plan so they can get stuck into the refurbishing the shaft timbers in NCK ‘New Cooks Kitchen’ shaft ahead of schedule.
• We recently visited the South Crofty mine and had a chance to look at the shaft timbers which were being inspected and adjusted at the time.
• Despite being underwater for over 20 years the timbers appeared to have been well preserved in the anoxic environment.
• As a result the team start refurbishing the main NCK shaft.
• The team will also slow the rate of dewatering, partly from being ahead of schedule and partly to save £4m which can be spent on the shaft refurbishment.
• Both the Shaft refurbishment and mine dewatering are expected to complete by Q3 2025.
• This will also allow the team to lower drill rigs and other machinery to the dewatered levels to accelerate infill drilling for the resource for the BFS and its funding.
  • “A Preliminary Economic Assessment (“PEA”) for South Crofty remains on schedule to be published in Q2 2024”
• The PEA will help direct the work required for the BFS while updating the capital cost estimate for the mine refurbishment and new process plant with first production due by end2026.
• The company remains fully funded through 2024 with ‘no anticipated impact on the overall cost of re-opening South Crofty arising from this rephasing.’
• X-Ray Sorting: We have been watching developments in XRT sorting with testwork showing better than expected results.

Conclusion: Confirmation of the state of the shaft timbers and acceleration of the shaft refurbishment program are great news for the company.

The ability to lower drill rigs and other machinery into the mine earlier than expected should accelerate the BFS and could speed up the timeline to production.

X-Ray Sorting technology should reduce the scale of capex for the process plant, reduce operating costs and enhance economic returns.

*SP Angel acts as Nomad and Broker. The SP Angel analyst formerly worked in the South Crofty tin mine in the 1980s and holds shares in Cornish Metals.

Galantas Gold* (GAL LN) 7.0p, Mkt Cap £8m – Gairloch exploration and marketing contracts update

• The Company engaged the University of Edinburgh to assist with a sampling programme of drill core and outcrop at the Kerry Roay deposit of the Gairloch VMS Project in Scotland.
• The work will include petrology, scanning electron microscope (SEM) and electron microprobe (EMP) analysis on selected rock samples.
• The programme will help to identify new targets for follow up exploration including drilling.
• The work is supported by grants from the Geological Society of London and Geological Society of Glasgow to the University of Edinburgh PhD student Cendi Dana.
• Separately, the Company provided an update regarding two marketing campaigns previously paid for using mostly shares and warrants.
• The TSX Venture Exchange ruled that two companies engaged in a marketing campaign in March 2023 should have been paid only in cash.
• As a result, the Company is cancelling 306k shares and an equal number of warrants.

*SP Angel acts as Broker to Galantas Gold

Lake Resources (LKE AU) A$0.12, Mkt Cap $178m – Operational update amid cost cutting and project delay

• Lake Resources, an Australian Company developing the Kachi DLE brine project in Argentina, provides an update.
• The Company is reducing global headcount by 50%, expecting to cut costs 30% qoq.
• The Company continues to progress the EIA alongside its strategic partner selection process.
• Lake have also delayed the production timeline for Kachi to 2028 from 2027 as announced in June 2023.
• The FID has been pushed back to 2025.

Pensana (PRE LN) 31p, Mkt Cap £89m – Longonjo project development update

• The Company is updating on the progress of the Longonjo REE Project development in central Angola.
• An order for the $2.3m ball mill for delivery from Johannesburg has been placed with NCP International, a global supplier of comminution equipment.
• Design and procurement documentation for other long lead time or critical path items including thickeners and flotation columns, key equipment in the recovery/MREC section such as sulphuric acid plant, have been completed.
• Orders will be placed shortly.
• Site access roads have been completed.
• Community relations programmes ongoing in particular in relation to the future resettlement action and livelihood restoration plans.
• Concrete has been poured for the 316-person modular camp manufactured in SA for despatch to site later this month.
• The $1.3m camp has been fabricated and is ready for shipment from Johannesburg.
• The Company released planned capex spending ($196m in total) schedule showing the start of civil and earth works in May-July this year with plant commissioning in February-April 2026.
• The team updated development plans last year opting for a modular expansion of operations starting off with a 20ktpa MREC from 2026 before expanding operations (~$100m capex) to 40ktpa MREC (~5ktpa NdPr) from 2029.

Phoenix Copper* (PXC LN) 12.38p, Mkt Cap £18m – Completion of short term loan refinancing

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

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• Phoenix Copper confirms that it has now completed the refinancing of its US$2m short term loan facility,
• The refinancing, which was previously announced in February, is part of “a new facility of up to US$10 million”.
• The “Existing Facility, plus accrued interest, is being treated as the first drawdown on the New Facility as at 2 March 2024” and the company explains that “Further drawdowns under the New Facility are subject to the Company having first received at least US$25 million from its proposed corporate copper bond financing”.
• While Phoenix Copper cautions that “there can be no certainty … [today’s announcement confirms that] … the Directors remain confident that the bond financing will close”.

Conclusion: Refinancing the short-term loan facility forms part of a broader debt financing to develop Phoenix Copper’s open-pit copper mine development in Idaho.  We await news on the progress of the copper bond with interest.

*SP Angel acts as nomad to Phoenix Copper

Rockfire Resources (ROCK LN) 0.27p, Mkt Cap £6.5m – Germanium intersected in Molaoi drilling

• Rockfire Resources reports that drilling at its wholly-owned Molaoi zinc project in Greece has intersected high grades of germanium.
• The intersections in holes MO-GTK-0010 and 00011 described as “the final holes drilled as part of our twinning program to replicate historical holes … [include] … the highest germanium grade drilled by Rockfire so far” with highlighted results of:
  • An intersection of 0.67m at an average grade of 9.9% zinc, 23.0g/t silver and 26g/t germanium from a depth of 76.30m in hole MO-GTK-010 which intersected a “second, deeper zone at 79.10m” at an average grade of 4.6% zinc, 1.4% lead, 23.0g/t silver and 22.4g/t germanium over an interval of 1.22m; and
  • The highest germanium grade intersected so far during the company’s drilling at Malooi with 0.6m averaging 136.5g/t germanium from a depth of 155m in hole MO-GTK-0011 with 34.4% zinc and 95.6g/t silver.
  • The company says that the mineralisation in hole MO-GTK-0011 “occurs within a broader zone of 2.3m @ 11.6% Zn, 54.94g/t Ag and 50.88g/t Ge” and that the hole “also intersected a deeper interval starting from 197m depth, which averages 13.44m @ 4.37% Zn, 1.62% Pb, 32.54g/t Ag and 20.85g/t Ge”.
• Rockfire Resources confirms that “drilling is continuing, with the third resource expansion hole in progress”.
• The company says that the drill core shows “visible zinc mineralisation is being intersected in holes drilled deeper than historical drilling … [and that] … visible zinc mineralisation is being intersected in holes drilled further to the north of historical drilling. This may result in the resource being expanded towards the north once the analyses are completed at the laboratory”.
• The current, JORC ‘Inferred’ resource at Molaoi is “.3 million tonnes @ 11 % ZnEq”, containing 250,000t on a zinc equivalent basis.
• CEO, David Price confirmed that the company is hoping “to increase the resource to between 400,000 and 450,000 tonnes of zinc equivalent metal content, which would provide a 10-year mine life for a modest underground mining operation”.

Conclusion: Rockfire Resources’ drilling at Molaoi is continuing and aiming to expand the existing ‘Inferred’ resource by around 60-80% to 400-450,000t on a contained zinc equivalent basis.

Savannah Resources* (SAV LN) 2.1p, Mkt Cap £37m – Strategic partnership update

BUY – 21.1p

• The Company updated on the progress of the Strategic Partnership Process launched in November last year and designed to secure funding for the Barroso Lithium Project in Portugal.
• The team identified a shortlist of potential partners with the process now moving into a second phase.
• Selected interested parties will be carrying further due diligence in coming weeks.
• Further updates on the progress of partnership process will be provided as they become available.
• In addition, the Company reports that additional sources of public funding have become available with the EU designating lithium as a critical raw material in its 2023 CRM list.

Conclusion: The team is carrying strategic partnership discussions for funding of the largest spodumene deposit in Europe with FS and permitting related activities run in parallel. The Company reports good progress on both fronts so far with a number of tier one groups engaged along the lithium battery value chain happy to conduct further due diligence on the project ahead of a potential deal.

*SP Angel acts as Nomad and Broker to Savannah Resources

SolGold* (SOLG LN) 6p, Mkt Cap £181m – Renewable clean power initiative for Cascabel

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• Solgold has announced a Memorandum of Understanding with an Ecuadorian construction company, Grupo Empresarial Semaica, and an American hydro-power specialist, Enerhydra, which aims to deliver 200MW of clean and renewable hydro and solar energy to its Cascabel project in northern Ecuador.
• Solgold confirms that it “will not be directly responsible for financing, building, or operating the power project” but that “as an end-user … [it aims] … to qualify for discounted power rates upon Project completion”.
• The MoU addresses “a potential Power Purchase Agreement (PPA), financing arrangements, construction responsibilities, technical aspects, project operation, and the ultimate end-user of generated energy … [and] … sets the stage for further technical assessments” for the power project.
• CEO, Scott Caldwell, outlined how the project could “position Cascabel as one of the world’s largest copper-gold mines aiming to achieve a carbon-neutral footprint … [and said that] … Cascabel is already a remarkable project, but the prospect of harnessing clean hydroelectric and solar energy elevates its potential even further”.
• He explained that in addition to providing Cascabel with “significant potential cost savings over traditional energy sources, ensuring long-term operational efficiency and sustainability … [the power project] … is expected to have a profound positive impact on local communities surrounding the Cascabel. Through job creation, skill development, and infrastructure improvements, the Project will support economic growth and enhance the overall quality of life for residents in the region”.
• The updated pre-feasibility study for the Cascabel project, released in February, indicated an average cost of copper production over the mine’s 28-year life to be US$0.25/lb with life-of-mine costs on an all-in-sustaining (AISC) basis of US$0.69/lb net of by-product credits for precious metals.
• We assume that any further potential cost savings at Cascabel as a result of the power project would enhance the published economics which envisages the pre-production investment of US$1.55bn generating an after-tax NPV_8% of US$3.2bn and IRR of 24% from the production of an average of 123,000tpa of copper, 277,000ozpa of gold and 794,000ozpa of silver with peak annual copper output of 216,000 tonnes.

Conclusion: Large scale, secure power generation from hydro and solar sources could establish Cascabel as a major carbon-neutral copper mine in the future providing additional cost and economic benefits to the project and its host communities in northern Ecuador.

*SP Angel acts as broker to Solgold

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

SP Angel                                                            

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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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SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%