SP Angel Morning View -Today’s Market View, Thursday 11th May 2023

Commodity prices step down as China’s growth further slows

MiFID II exempt information – see disclaimer below

Antofagasta* (ANTO LN) – Chairman’s AGM address highlights measures to meet demand, environmental, and political challenges and Antogagasta’s commitment to deliver more copper

Chalice Mining  (CHN AU) – Suspension on reports of A$60m equity raise to fund exploration at Gonneville nickel sulfide project

Largo Inc (LGO CN) – Q1 results highlight operational challenges with 2023 guidance cut

Power Metal Resources* (POW LN) – Successful IPO of Golden Metal Resources PLC

Serabi Gold* (SRB LN) – Copper exploration partnership with Vale.

Copper weakens further as China’s manufacturing activity remains sluggish

  • Copper prices took another step down to $8,330/t overnight as the market continues to reflect weaker Chinese demand.
  • LME copper orders hit their lowest on record, with cancelled warrants hitting 225t, their lowest since 1997.
  • Asian warehouses are seeing rapid inventory builds.
  • Chinese import data for April showed sustained weakness in the manufacturing economy. Exports also slowed.
  • The Yangshan premium, which reflects import demand for refined copper products, is sitting at its lowest level in two months at $21/t, a far cry from over $130/t levels seen last year.
  • Chinese consumer prices are rising at their slowest pace in two years and factory gate deflation accelerated.
  • The ICSG expects a 114kt deficit this year vs a 431kt deficit last year.
  • It also expects supply growth from mine production hit 3%, whilst 3% growth is also expected for this year.
  • Kamoa Kakula, Quellaveco, QBII and Spence SGO are all ramping up output.
  • The world’s top producer, Chile, approved a new mining royalty bill yesterday in the Senate, with a tax rate cut to 46.5% from 47% for producers over 80ktpa and to 45.5% for 50-80ktpa.
  • Taxes will also be established depending on operating margins and an ad valorem tax on copper sales over 50ktpa of fine copper has been introduced.

Gold – $2,024/oz holds steady following US inflation data as traders continue to take profits

  • Gold spot prices rallied to $2,045/oz yesterday on the back of US CPI data.
  • Traders were quick to take profits, with the metal settling around the $2,020-$2,030/oz mark.
  • The market is currently pricing in 95% expectations of a Fed rate pause in the June meeting, although a surprise hike would likely weigh on gold prices.
  • Gold prices have been supported since Tuesday when US 10-year Treasury yields weakened.
  • Focus now turns to the US debt ceiling debate, with Biden calling on Republican lawmakers yesterday to reach a resolution.

China’s major steelmakers slash prices again whilst Thyssenkrup reports weaker demand

  • Boashan cut ex-factory base prices for its steel products by $29/t this week as demand remains weak from industry players. (Mysteel)
  • June orders are reportedly weaker than May, which itself saw a marked step-down in demand.
  • Mysteel expects weaker prices going forward.
  • Iron ore continues to tick below $100/t, now down over 15% this year.
  • Thyssenkrup stock sold off on losses in its steel business.
  • Coal consumption is also highlighting Chinese weak manufacturing sentiment, with benchmark coal prices down 16% since January

Lithium deals continue as China competes with West for dominance in battery metals supply chain

  • M&A continues at a pace in the lithium sector with a new deal every few weeks in the space.
  • Allkem, headquartered in Argentina, has struck a deal to merge with Livent another, similar lithium chemicals group.
  • The combined company has a value of around $11bn with Allkem shareholders owing some 56% of the merged company.
  • The combined companies plan to produce 250,000tpa of Lithium carbonate by 2027 potentially making it the world’s third largest lithium producer with around 14% of global lithium production.
  • Total demand for Lithium carbonate equivalent is forecast to rise to around 1.8mt on 2027 CRU projections with over 40% of new supply either classed as possible, probable or committed though we feel that much of the ‘committed’ category may still be subject to substantial extraction technology risk.
  • China currently controls around 70% of global lithium production. 44% of global lithium chemical production, 78% of cathode production and 70% of cell manufacturing according to The Meghalayan.
  • Recent lithium deals:
    • Allkem merger with Livent $10.6bn valuation.
    • Arcadia $422m acquisition by Huayou Cobalt (China) for its lithium mine in Zimbabwe
    • Albemarle’s US$3.7bn offer for Liontown has so far been rejected.
    • Kodal Minerals deal with Hainan Mining (Fosun).
    • Ganfeng acquiring Lithea with assets in Argentina
    • Ganfeng takeover of Bacanora with assets in Mexico
    • Rio Tinto $825m acquisition of Rincon
    • Galan acquisition of Greenbushes South
    • IGO acquisition of 49% of Tianqi (Chinese) giving it a 24.99% stake in the Greenbushes spodumene mine for A$1.4bn (Albemarle holds the other 49%)
    • IGO and Tianqi $136m acquisition of Essential Metals
    • CATL (China) acquired Millennial Lithium for $945m. CATL is also looking to develop lithium in Bolivia despite the chemical challenges Bolivian brines present
    • CATL recently acquired
    • Zijin Mining acquired NeoLithium for $1.51bn. Zijin also agreed to acquire Dunan Holdings Group’s 70% stake in the Tso Salt Lake
    • Sibanye Stillwater acquired 50% of Rhyolite Ridge in Nevada from Ioneer for $490m
    • Sibanye Stillwater also raised its stake in Keliber in Finland to 85%
    • Sinomine Resources acquired Bikita Minerals for $192m for assets in Zimbabwe
Dow Jones Industrials -0.09% at 33,531
Nikkei 225 +0.02% at 29,127
HK Hang Seng -0.66% at 19,632
Shanghai Composite -0.29% at 3,310


US – Markets grow increasingly concerned over risks of failing to agree a debt ceiling increase.

  • Treasury Secretary Yellen warned lawmakers that the government will hit the ceiling as soon as June 1.
  • Earlier, House Speaker Kevin McCarthy said he opposed a short-term debt limit extension that allow the Treasury to borrow through the end of the fiscal year on September 30, Bloomberg writes.
  • US CDS climbed considerable over the last week with 1y rate hitting 176bps, more than double the level recorded in 2011 when S&P cut US sovereign rating.
  • A more liquid 5y market shows rates at 72bps, still above ~60bps in 2011, although, not by same extent.
  • US CPI (%mom): 0.4 v 0.1 March and 0.4 est.
  • Core CPI (%mom): 0.4 v 0.4 March and 0.4 est.
  • US CPI (%yoy): 4.9 v 5.0 March and 5.0 est.
  • Core CPI (%yoy): 5.5 v 5.6 March and 5.5 est.

China – Unlike in other major economies, weak inflation in China is reported to have slowed down further raising concerns over the strength of local demand.

  • CPI (%yoy): 0.1 v 0.7 March and 0.3 est.
  • PPI (%yoy): -3.6 v -2.5 March and -3.3 est.
  • Food prices slowed to 0.4% yoy in April having risen 2.4% yoy in March,
  • Non-food prices, rose 0.1% yoy in April vs 0.3% yoy March.
  • Consumer demand appears to be recovering in China
  • PPI fell due to weakening local and global demand and lower commodity prices.

 UK – The central bank is expected to hike rates by 25bp to 4.5% later today marking the 12th consecutive increase since Dec/21.

  • Inflation continues to run at the highest pace compared to the US and the Eurozone with headline and core CPI measures coming in at 10.1% and 6.2% in March.


US$1.0926/eur vs 1.0957/eur yesterday Yen 134.46/$ vs 135.22/$. SAr 18.925/$ vs 18.818/$. $1.258/gbp vs $1.262/gbp. 0.673/aud vs 0.676/aud. CNY 6.937/$ vs 6.929/$.

Dollar Index 101.82 vs 101.59 yesterday.

Commodity News

Precious metals:

Gold US$2,026/oz vs US$2,030/oz yesterday

Gold ETFs 93.8moz vs US$93.7moz yesterday

Platinum US$1,107/oz vs US$1,105/oz yesterday

Palladium US$1,591/oz vs US$1,573/oz yesterday

Silver US$25.04/oz vs US$25.65/oz yesterday

Rhodium US$7,400/oz vs US$7,600/oz yesterday


Base metals:   

Copper US$ 8,529/t vs US$8,555/t last week

Aluminium US$ 2,298/t vs US$2,316/t last week

Nickel US$ 23,535/t vs US$24,800/t last week

Zinc US$ 2,639/t vs US$2,621/t last week

Lead US$ 2,125/t vs US$2,139/t last week

Tin US$ 25,705/t vs US$26,020/t last week



Oil US$77.0/bbl vs US$76.7/bbl yesterday

Natural Gas US$2.193/mmbtu vs US$2.240/mmbtu yesterday

Uranium UXC US$53.70/lb vs US$53.70/lb yesterday


Iron ore 62% Fe spot (cfr Tianjin) US$103.4/t vs US$101.9/t

Chinese steel rebar 25mm US$543.1/t vs US$549.6/t

Thermal coal (1st year forward cif ARA) US$131.0/t vs US$131.0/t

Thermal coal swap Australia FOB US$161.5/t vs US$167.0/t

Coking coal swap Australia FOB US$245.0/t vs US$245.0/t


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

NdPr Rare Earth Oxide (China) US$66,163/t vs US$66,247/t

Lithium carbonate 99% (China) US$27,316/t vs US$26,629/t

China Spodumene Li2O 5%min CIF US$3,990/t vs US$3,990/t

Ferro-Manganese European Mn78% min US$1,327/t vs US$1,331/t

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

China Graphite Flake -194 FOB US$775/t vs US$775/t

Europe Vanadium Pentoxide 98% 7.8/lb vs US$7.9/lb

Europe Ferro-Vanadium 80% 32.25/kg vs US$32.25/kg

China Ilmenite Concentrate TiO2 US$332/t vs US$333/t

Spot CO2 Emissions EUA Price US$93.3/t vs US$91.3/t

Brazil Potash CFR Granular Spot US$385.0/t vs US$385.0/t

Battery News

Glencore to build largest EV battery recycling plant in Europe

  • Glencore and Li-Cycle sign letter of intent, to jointly study the feasibility of, and develop, the first European fully closed-loop solution from lithium-ion battery material inputs to battery-grade products.
  • The recycling hub would be the largest source of recycled battery grade lithium as well as recycled nickel and cobalt in Europe.
  • The expected new Hub processing capacity of 50,000-70,000t of black mass input per year.
  • The definitive feasibility study is expected to be completed by mid-2024. Subject to a final investment decision, the project will proceed to construction with commissioning of the hub, in Portovesme, Italy, expected to commence in late 2026 to early 2027.

Toyota to focus push on China EV market

  • Toyota, the world’s largest carmaker, is aiming to sell a record number of vehicles this year on the back of the easing chip crunch.
  • New chief executive, Koji Sato, has promised to accelerate its EV push, with annual global sales of battery-powered vehicles expected to rise from 38,000 units last year to 202,000 units.
  • Japanese automakers have experienced the sharpest sales decline in China among foreign brands due to the slow rollout of battery-powered vehicles.
  • Toyota’s 2022 vehicle sales in China, where it has roughly a 9% market share, fell for the first time in a decade.
  • Nissan has also warned that the rapid pace of production of Chinese carmakers is piling pressure on international manufacturers as they struggle to compete for market share.

Company News

Antofagasta* (ANTO LN) 1,436p, Mkt Cap £14bn – Chairman’s AGM address highlights measures to meet demand, environmental, and political challenges and Antogagasta’s commitment to deliver more copper

  • Reflecting on events during 2022 and looking towards the future in his address to shareholders at yesterday’s AGM, the chairman, Jean Paul Luksic commented upon the continuing impact of Chile’s drought and the forthcoming commissioning of the new desalination plant at Los Pelambres which is expected to become operational during the current quarter.
  • He explained that, when completed, plans to double the desalination capacity would mean that “over 95% of Los Pelambres’ water will be either sea or recirculated water … [and that by] … 2025 we expect that 90% of the Group’s water usage will either be from the sea or recirculated water”.
  • He also commented that, by the end of 2022. Antofagasta had reached its planned carbon emission reduction targets “three years ahead of the originally planned date … [and that the company is ] … now in the process of defining new emission reduction targets that will help us to achieve our goal of being carbon neutral by 2050”.
  • Mr. Luksic addressed the expansion of Los Pelambres, which is now nearing completion and progress on the $4bn plans to increase copper output at Centinela by a further 140,000tpa through the addition of a second concentrator and flagged that a final investment decision on the expansion is expected “during the second half of the year, once there is clarity on the Royalty taxation changes in Chile and progress on the new Constitution”.
  • Beyond the existing operations, Antofagasta has “several exploration projects that are in different phases of evaluation, which will generate organic growth for the Company. During 2022, we increased our mineral resources by over 900 million tonnes of copper ore, with over half of this increase coming from two recent exploration discoveries in Chile”.
  • The Chairman commented on the rejection of the new draft Constitution for Chile in September’s referendum pointing out that the capital intensive and long term nature of the mining industry and its risks require “long-term certainty and predictability for investment” and expressed the hope that the new Constitution, to be drafted during 2023 and subject to a referendum in December, will “unite Chileans and provide the clarity and stability that will help attract investments to Chile”.
  • Mr. Luksic also commented on the impact on copper demand of global environmental mitigation measures, with some forecasters suggesting increased demand of “6 to 7 million additional tonnes over the next decade alone … [at a time when] … global copper supply is constrained by declining resource quality and long lead times for project development and permitting”.
  • He confirmed that Antofagasta’s focus “remains on being a leading, responsible and reliable producer of copper that the low-carbon world requires”.

*An SP Angel mining analyst has previously visited a number of Antofagasta’s copper mines.

Chalice Mining  (CHN AU) A$7.7p, Mkt cap A$2.9bn – Suspension on reports of A$60m equity raise to fund exploration at Gonneville nickel sulfide project

  • Chalice Mining has suspended trading on ASX ‘pending it releasing an announcement.’
  • Reports suggest the Company has raised A$60m in equity financing at a small discount at $7.3/share vs $7.74 at close yesterday.
  • Chalice has employed Macquarie and Standard Chartered to court potential JV partners.
  • Chalice’s Julimar Project at Gonneville in 2020, which holds an MRE of 560mt @ 0.88g/t Pd+Pt+Au (3E), 0.16% Ni, 0.09% Cu, 0.015% Co (3mt NiEq)
  • The Company is exploring options for resource definition and step-out drilling and study work for initial development stage.
  • Metallurgical testwork to explore grind-size-flotation recovery options are being explored, with Chalice producing 50kg of nickel concentrate for midstream testwork.

Largo Inc (LGO CN) C$6.9, Mkt Cap C$440m – Q1 results highlight operational challenges with 2023 guidance cut

  • Q1/23 revenues came in at US$57.4m (Q1/22: US$42.7m) driven by higher sold volumes (+28%yoy) and realised prices (+5%).
  • Average realised prices and operating cash costs (ex royalties) were $9.14/lb and $5.15/lb (Q1/22: $8.67/lb and $3.97/lb).
  • Average spot prices averaged $10.39/lb V2O5 in Europe (Q1/22: $10.72/lb) for pentoxide and $39.5/kg V (Q1/23: $46.2/kg) in Europe for ferrovanadium reflecting good demand from the aerospace sector and weak dynamics in the steel sector.
  • Production totalled 2.1kt V2O5 (Q1/22: 2.4kt) constrained by heavy rains in December last year weighing on high grade ore availability as well as reflecting planned maintenance and refractory refurbishment in the kiln.
  • Higher unit costs are attributed to lower processed grades as well general inflation in critical consumables including sodium carbonate, as well as increased consumption of ammonium sulphate.
  • Sold volumes amounted to 2.8kt V2O5 including 0.2kt from third party (Q1/22: 2.2kt and 0.1kt) as logistical challenges and transport costs eased from their highs.
  • EBIT was little changed at $0.7m (Q1/22: $0.8m) implying weaker margins amid higher unit costs.
  • Net loss came in at $1.2m (Q1/22: -$2.0m).
  • FCF is estimated at -$18.5m (Q1/22: -$8.4m) reflecting heavy capital outlays (-$23.4m v -$4.3m Q1/22) on the back of investment in ilmenite project and purchases of vanadium by Largo Physical Vanadium Corp of $8.6m.
  • Installation of our 6.1MWh VRFB battery in Spain continued during Q1 2023 with final provisional acceptance scheduled for Q3 2023.
  • 2023 production and sales guidance cut to 9.0-11.0kt V2O5 (eq to 5.0-6.2kt V) and 8.7-10.7kt excluding third party material, down from 11.0-12.0kt and 10.3-11.3ktm respectively.

Conclusion: Operational challenges and general inflation weighed on results in Q1/23 with the Company cutting its annual guidance by ~15%. Vanadium prices pulled back post Q1/23 reflecting weakening steel related demand.

Power Metal Resources* (POW LN) 0.9p, Mkt cap £15m – Successful IPO of Golden Metal Resources PLC

  • Golden Metal Resources, spin-off entity from Power Metal Resources, has listed on AIM.
  • POW holds 52,248,756 in Golden Metal Resources, equivalent to a 62.06% interest.
  • Golden Metal listed at 8.5p, valuing POW’s stake at IPO at £4,441,144.
  • Golden Metal raised c.£2m in IPO funding.
  • POW will be subject to a 12-month lock in of its Golden Metal shares.
  • Golden Metal holds the 100%-owned Pilot Mountain Tungsten Project, which holds a 12.5mt MRE at 0.27% W03, with 34,290t Tungsten tri-oxide, alongside silver, copper and zinc credits.
  • Sean Wade, POW’s CEO, highlights the company’s total investment value in Golden Metal, Kavangango Resources and First Class Metals, all publicly listed, is valued at £7.7m, pointing to POW’s reinforced balance sheet.

*SP Angel acts as Nomad and Broker for Power Metal Resources

Serabi Gold* (SRB LN) 32.5p, Mkt Cap £26m – Copper exploration partnership with Vale

  • Serabi Gold reported yesterday that it had formed a strategic exploration alliance with the major Brazilian mining company, Vale, to progress “large-scale copper projects within Serabi’s Palito Complex tenement area” where, in July 2022, Serabi reported the discovery of porphyry style mineralisation at the Matilda prospect, located around 5km WNW of its Sao Chico mine.
  • Under the agreement, Vale will fund the initial US$5m of exploration and “may elect to continue exploration activities and to sole fund one or more selected copper projects to Pre-feasibility Study (“PFS”) stage”.
  • Following a PFS, on a project it wishes to develop,Vale “will incorporate a JV Company into which it will transfer the mineral rights relating to that copper project … [and] … will pay to Serabi US$5 million, for a 75% share of the JV Company”.
  • Subsequent expenditure will be on a pro-rata basis although, “Vale has a call option to acquire from Serabi a further 15% interest in the JV Company for a payment of the higher of US$5 million or 1.5% of the net present value of the project”.
  • CEO, Michael Hodgson, described the Matilda discovery as “a major milestone for Serabi” but he explained that “bringing in a partner with the expertise and resources of Vale, will enable us to properly evaluate Matilda and the other significant targets within our tenement area, and move them forward more quickly. The Exploration Alliance is focused on large scale copper projects and allows Serabi to maintain its attention on its gold exploration targets”.

Conclusion: Alliance with Vale to progress exploration of the Matilda and other copper opportunities should accelerate exploration at minimal cost to Serabi Gold while allowing them to maintain their focus on expanding gold production.

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 – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474


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


*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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