SP Angel Morning View -Today’s Market View, Thursday 14th September 2023

Base metals continue to post modest gains despite Moody’s cut on China property outlook

MiFID II exempt information – see disclaimer below

Andrada Mining (ATM LN) – Q2 results show increased output and AISC running below guidance

BeMetals (BMET CN) – Aircore drilling delivers additional copper targets at Pangeni

Cornish Metals* (CUSN LN) – Increased mineral resource estimate at South Crofty

First Tin (1SN LN) – Resource upgrade at Taronga Tin Project

Gemfields Group (GEM LN) – Expecting a decline in H1 after tax profit

Greatland Gold (GGP LN) – Wyloo provides A$50m loan facility

First Tin (1SN LN) – Resource upgrade at Taronga Tin Project

Ivanhoe Electric (IE US) – $160m equity issue to fund Santa Cruz copper pre-feasibility study

Leo Lithium (LLL AU) – Ganfeng agrees to sole fund US$137.2m of capex for Goulamina in Mali

Mkango Resources* (MKA LN) – HyProMag participation in rare earth magnet recycling in US

Sigma Lithium (SGML CN) – Management puts project up for sale as lithium M&A frenzy intensifies

Tungsten West (TUN LN) – Progress on plans to resume production at Hemerdon

Gold prices slide lower following inflation data as dollar strength persists against weakening euro

• Gold hit $1,905/oz following the US CPI report as inflation came in slightly higher than expected.
• Whilst the market did not make any major changes to its expectation of the Fed rate hike path, Treasury yields remained elevated, weighing on any upside move in spot prices.
• Retail sales due today at 1:30pm will be a primary catalyst for both the US treasury market and the dollar, giving some direction to bullion.
• The dollar index has rallied 6% since July, supported by weakness in its euro and yen counterparties, which make up close to 70% of the index weighting.
• The market has kept its expectation of a rate hike in November at 42%, unchanged since inflation data.

Copper prices hold lower as inventories rise to two-year highs on weak demand

• Copper prices are failing to climb above $8,400/t as LME stockpiles rise.
• Inventories have hit their highest since September 2021, up c.6% yesterday.
• Smelter refining charges are still elevated, suggesting there is a surplus of copper concentrate available.

Economics

US – CPI rose 0.6% mom for August vs 0.2% mom in July and 3.7% yoy in August and 3.2% yoy in July

• Core CPI rises 0.3% mom in August and 0.2% in July and came in at 4.3% yoy in August vs 4.7% yoy in July,
• Energy CPI fell to -3.6% yoy,
• Food index rose 4.3% yoy,
• Weekly 30-year mortgage rate hits 7.27% vs 7.21% previously
• Mortgage applications fell -0.8% vs -2.9%
• NY Fed global supply chain pressure index steadied at -0.86 in August from a high of +1.26 in Dec 2022.

China – Moody’s slashes China property outlook as sales decline expected to continue

• Moody’s as cut its outlook on China’s property sector to negative from stable.
• Sales are expected to fall by 5% over the next 6-12 months.
• The rating agency is pessimistic over Beijing’s efforts to stimulate the downtrodden sector.

EU – EU starts investigation into Chinese subsidies on Electric Vehicles

·         EU automotive manufacturers are watching with horror as China suddenly climbs to the world’s largest vehicle exporter with a 35% yoy rise in vehicle exports in August following a 63% rise in exports in July.

·         China already commands an 8% share of the EU market rising from 6% in 2022 and 4% in 2021.

·         The EU led by France and Germany will almost certainly impose new restrictions or tariffs to offset a flood of Chinese imports though we suspect European nations have subsidised automotive manufacturers over the years.

ECB rate decision at 12:15GMT seen to hike by 25bp

• The ECB is set to meet today to decide on an interest rate hike.
• The market is currently split over hike expectations, with a 63% weighed towards a 25bp hike.
• Inflation forecasts are expected to be raised for 2024 whilst growth forecasts are expected to be slashed for the next 12 months.
• A 25bp hike would take the ECB rate to 4%, highest since 1999.

·         Eurozone industrial production fell -1.1% mom in July – worse than market expectations for -0.7%

·         European Commission recently marginally adjusted Eurozone inflation rate to 5.6% from 5.8% for 2023

·         The Commission also raised inflation forecasts to 2.9% from 2.8% for 2024.

Japan – Reuters Tankan manufacturing index falls to 4 in September vs 12 in August

• PPI rises to 0.3% in August vs 0.1% in July and 3.2% yoy in August vs 3.4% yoy in July

UK – House prices fall to 14-year low

• An ongoing shortage of housing in London continues to make life difficult for renters
• More landlords are giving notice to tenants while preparing flats for sale
• This is raising rental rates to extraordinary levels as tenants are forced to find new properties in an increasingly tight market
• The situation is forcing renters into buying despite a relatively negative outlook due to challenging affordability levels.

Zambia Eurobonds rally and US eyes rail link to support copper miners

• Zambian Eurobonds rallied yesterday for biggest jump since March as Fitch marked up the country’s credit rating.
• Vedanta and ZCCM are close to resolving a dispute following a four-year dispute.
• Vedanta is expected to invest $1bn over five years to boost copper production.
• The US is studying options for a rail line between the Zambian Copperbelt and Angolan port Lobito.
• Trafigura is also considering investing $555m into the rail route, although this has hit roadblocks.
• The Biden Administration is looking to boost investment into Africa, with the mining sector poised to benefit.

Currencies

US$1.0737/eur vs 1.0737/eur previous. Yen 147.18/$ vs 147.29/$. SAr 18.808/$ vs 18.946/$. $1.248/gbp vs $1.246/gbp. 0.643/aud vs 0.641/aud. CNY 7.277/$ vs 7.287/$.

Dollar Index 104.68 vs 104.76 previous.

Commodity News

Precious metals:

Gold US$1,907/oz vs US$1,910/oz previous

Gold ETFs 89.1moz vs 89moz previous

Platinum US$902/oz vs US$908/oz previous

Palladium US$1,255/oz vs US$1,238/oz previous

Silver US$22.52/oz vs US$23/oz previous

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

Base metals:

Copper US$ 8,394/t vs US$8,383/t previous

Aluminium US$ 2,233/t vs US$2,199/t previous

Nickel US$ 20,210/t vs US$19,915/t previous

Zinc US$ 2,536/t vs US$2,480/t previous

Lead US$ 2,222/t vs US$2,210/t previous

Tin US$ 25,820/t vs US$25,390/t previous

Energy:

Oil US$92.5/bbl vs US$92.3/bbl previous

Natural Gas US$2.722/mmbtu vs US$2.748/mmbtu previous

Uranium UXC US$62.10/lb vs US$60.75/lb previou

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$118.6/t vs US$118.3/t

Chinese steel rebar 25mm US$536.4/t vs US$535.5/t

Thermal coal (1st year forward cif ARA) US$128.5/t vs US$126.0/t

Thermal coal swap Australia FOB US$166.0/t vs US$163.0/t

Coking coal swap Australia FOB US$305.0/t vs US$275.0/t

Other:  

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

NdPr Rare Earth Oxide (China) US$72,140/t vs US$73,418/t

Lithium carbonate 99% (China) US$23,703/t vs US$24,084/t

China Spodumene Li2O 6%min CIF US$2,610/t vs US$2,630/t

Ferro-Manganese European Mn78% min US$1,036/t vs US$1,036/t

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

China Graphite Flake -194 FOB US$650/t vs US$650/t

Europe Vanadium Pentoxide 98% 6.5/lb vs US$6.6/lb

Europe Ferro-Vanadium 80% 29.75/kg vs US$29.75/kg

China Ilmenite Concentrate TiO2 US$313/t vs US$312/t

Spot CO2 Emissions EUA Price US$86.8/t vs US$86.0/t

Brazil Potash CFR Granular Spot US$355.0/t vs US$355.0/t

Battery News

EU and China clash over anti-subsidy probe into Chinese EVs

• It was announced yesterday that the EU will launch an investigation into Chinese subsidies for EVs as Europe struggles to compete.
• European Commission President Ursula von der Leyen announced the probe, saying that “the global market is flooded with cheap Chinese cars and their price is kept artificially low by huge state subsidies [which] is distorting our market.”
• The probe is being opened despite concerns about retaliation from China, which is indicative of the growing alarm over the ability of European manufacturers to compete with China’s industry.
• Beijing has since warned that a probe into Chinese state subsidies would negatively impact economic and trade relations with the EU.
• EU officials believe Chinese EVs are undercutting the prices of local models by around 20% in the European market, piling pressure on European automakers to produce lower-cost EVs.
• The European Commission said China’s share of EVs sold in Europe has risen to 8% and could reach 15% in 2025 – in 2022, 35% of all exported EVs originated from China

Biden administration to invest $100m to improve EV charger reliability

• $100m in Federal funding will be made available to repair and replace existing but non-operational, EV charging infrastructure.
• A recent report from EY has ranked the US 3^rd in readiness for an EV future, overtaking Sweden, Germany and the UK.
• EY’s report evaluated the top 20 vehicle markets based on various criteria, including supply, demand, and regulation, to assess their preparedness for the electric vehicle era.

Company News

Andrada Mining (ATM LN) 7.35p, Mkt cap £120m – Q2 results show increased output and AISC running below guidance

• In its quarterly report for the three months to 31^st August, Andrada Mining reports an 86% year-on-year increase in tin concentrate production to 398t (Q2 2023 – 214t) resulting in a 79% year-on-year improvement in contained tin output to 238t (Q2 2023 – 133t).
• The company says that average cash costs “for Q2 2024 and H1 2024 are within management guidance for the year, of between USD17 000 and USD20 000 per tonne of contained tin, at USD19,560 and USD18,161 respectively”.
• “All-in sustaining cost (“AISC”) for Q2 2024 within and H1 2024 below management guidance for the year of between USD25,000 and USD30,000 per tonne of contained tin, at USD26,671 and USD24,662 respectively. The stripping ratios have begun to decrease as the new ore is reached through the push-back”.
• The company also confirms the completion of commissioning for its tantalum recovery circuit with production of 225kg as well as the completion of its lithium pilot plant.
• Andrada Mining says that initial test campaigns of the lithium pilot plant “have commenced to produce a consistent saleable grade of lithium concentrate”.
• The company reports a 31^st August cash balance of US$7m.
• CEO, Anthony Viljoen said that “The operational team has been performing extremely well on the existing plant annually. Therefore, the potential additional lithium revenue credits from the integration of the lithium plant to the main production circuit, could substantially enhance total revenue.”
• He also commented that “The conclusion of several work streams as well as the completion of key financing partnerships this quarter, has notably strengthened the Company’s balance sheet for a transformational period of growth and development”.

BeMetals (BMET CN) – C$0.155, Mkt cap C$27.5m – Aircore drilling delivers additional copper targets at Pangeni

• In an announcement to the Canadian market yesterday, BeMetals reported that its shallow aircore drilling at the ‘D’ Prospect within its Pangeni project area in Zambia has identified three new copper targets.
• Target 1 lies beneath Kalahari cover was identified in four holes over an area approximately 400m long and 100-125m wide and remains open laterally to the noth and south.
• Target 2, also beneath cover was identified in two holes and, although it is“open to the North and potentially at depth to the South” currently is thought to extend “some 250 metres in length and 100 metres in width”.
• The third target, also observed in two holes, “is some 200 metres in length and 100 metres in width and remains open to the South”.
• “The orientation of these target zones is also generally supported by the interpretation of detailed structural core logging of the drill holes completed to date at this prospect… [and the] … target zones are expected to plunge relatively shallowly to the South and South South-West … [which] … likely explains why the aircore holes in the southern area of the prospect do not return elevated copper values, as the target zones are likely below the depth sampled by the shallow aircore in that direction”.
• President and CEO, John Wilton, explained that the “results include some of the highest-grade copper aircore sample values returned to date at the Pangeni Project, and as such generate exciting priority targets for core drill testing”.
• He explained that the “aircore drilling at the D-Prospect was designed to specifically identify, structurally controlled, potentially higher-grade copper zones within the mineralization, as observed at certain, large scale, copper mines in this region of the Zambian Copperbelt”.
• Mr. Wilton confirmed that “Core drill testing of these target zones is planned to commence during September, 2023”.
• In a separate announcement, BeMetals confirms the closing of its previously announced C$3.3m convertible debenture funding supported by its major shareholder, B2Gold.
• “The Debenture matures on September 8, 2028 and bears an interest rate of 7% per annum calculated and compounded annually in arrears on each anniversary date”.

Conclusion: BeMetals has identified additional copper targets at Pangeni and is planning follow up exploration with core drilling starting in September.  We await results from the continuing exploration with interest.

Cornish Metals* (CUSN LN) – 12.88p, Mkt cap £66m – Increased mineral resource estimate at South Crofty

Valuation 48p/s

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• Cornish Metals has released a new mineral resources estimate (MRE) for the historic South Crofty mine in Cornwall where the company is dewatering historic workings and progressing a feasibility study on the possibilities for a resumption of mining.
• The new, JORC (2012) estimate for the ‘Lower Mine’ area shows increases of over 30% in the tin content of the ‘Indicated’ resources and of over 15% in the contained tin within the ‘Inferred’ part of the resource compared with the June 2021 estimates.
• The new estimates are:
  • Indicated Resource – 2,896,000t at an average grade of 1.50% tin (2021 – 2,084,000t at an average grade of 1.59% tin); and
  • Inferred Resource – 2,626,000t at an average grade of 1.42% tin (2021 – 1,937,000t at an average grade of 1.67% tin).
• Both the previous and current estimates are reported at a cut-off-grade of 0.6% tin.
• The company says that the “majority of new Mineral Resources are contained within the central part of the mine in No. 1, No. 2, No. 3, Main, Intermediate, North and Great Lodes following digitization and modelling of historical data”.
• We note that, the No. 1 and No.2 Lodes now represent around 14% of the contained tin classed as ‘Indicated’ and around 19% of the ‘Inferred’ tin and that, in the 2021 estimate the contribution of the No.1 Lode was not reported as a significant component indicating the additional value recognition of the remodelling of the historical information.
• The new estimate shows around 54% of the contained tin within the ‘Indicated’ part of the resource with the balance as ‘Inferred’.
• The company also updates the estimates for the ‘Upper Mine’ area showing an:
  • Indicated Resource of 260,000t at an average grade of 0.69% tin, 0.78% copper and 0.59% zinc – reported as 0.99% on a tin equivalent basis (2021 – 277,000t averaging 0.67% tin, 0.78% copper and 0.57% zinc- 1.01% SnEq); and
  • Inferred Resource of 465,000t at an average grade of 0.66% tin, 0.63% copper and 0.63% zinc – reported as 0.91% on a tin equivalent basis (2021 – 493,000t averaging 0.64% tin, 0.63% copper and 0.63% zinc- 0.93% SnEq).
• Describing the new estimate as “another positive development for South Crofty as we advance the project through to delivery of a Feasibility Study … by the end of 2024 … [CEO, Richard Williams said that it continues] … to demonstrate the potential to increase the Mineral Resource and extend the potential mine life”.
• The opportunity for further resource expansion is highlighted in the company’s comment that “The major lode structures that comprise the Mineral Resource remain open along strike and at depth”.
• We note that, in July, the company reported assay results from its metallurgical drilling programme on the No.4, No. 8 and Roskear Lodes at the South Crofty which represent around 43% of the ‘Indicated’ and 35% of the new ‘Inferred’ resources reported today, including;
• Results from the No.4 Lode of
  • A 2.44m true width intersection at an average grade 1.27% tin of the No 4 Lode in hole SDD20-001-C1 between 984.17m and 986.77m down hole; and
  • A 1.66m true width intersection at an average grade 1.15% tin in hole SDD20-001-D between 981.65m and 983.46m down hole; and
  • A 2.12m true width intersection at an average grade 3.24% tin in hole SDD20-001-between 980.44m and 982.74m down hole.
• Results from the No.8 Lode of:
  • A 0.89m true width intersection at an average grade 1.80% tin in hole SDD20-001-C1 between 1,039.78m and 1,040.68m down hole; and
  • A 2.77m true width intersection at an average grade 1.09% tin in hole SDD20-001-D between 1,031.15m and 1,033.97m down hole; and
  • A 0.95m true width intersection at an average grade 0.03% tin in hole SDD20-001-E between 1,030.00m and 1,030.95m down hole.
• And from the Roskear Lode of:
  • A 1.34m true width intersection at an average grade 1.27% tin in hole SDD22-001 between 924.67m and 926.21m down hole; and
  • A 1.46m true width intersection at an average grade 4.66% tin in hole SDD22-001C! between 920.11m and 921.73m down hole.

Conclusion: The latest MRE for the ‘Lower Mine’ area at South Crofty shows increases in the tin content of both the ‘Indicated’ and ‘Inferred’ resource since the 2021 estimate and highlights that the mineralisation remains open both laterally and at depth.  The increased resource should help underpin the current feasibility study work on resuming production with the study remaining on track for completion by the end of 2024.

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

First Tin (1SN LN) 7.48p, Mkt Cap £19m – Resource upgrade at Taronga Tin Project

• First Tin have provided an updated Mineral Resource Estimate for the Taronga Tin Project in Australia.
• The MRE shows:
  • 133mt @ 0.10% Sn for 138.3kt contained tin.
  • 61mt @ 0.09% Sn for 61kt in the inferred category and 71.9mt @ 0.12% Sn for 86.2kt in the Measured and Indicated category.
• The update marks an increase of 240% from the MRE provided in 2014, however the First Tin are now using a 0.05% Sn cut-off vs the 2014 0.1% Sn cut off grade.
• Using the same cut-off, the increase is 40%.

Gemfields Group (GEM LN) 13.25p, Mkt Cap £180m – Expecting a decline in H1 after tax profit

• Gemfields has announced that it “is reasonably certain that its net profit after tax¹ will be USD 18.1 million for the six months ended 30 June 2023”.
• The comparable figure for the six months to June 2022 amounted to US$56.7m.
• The company comments on a “step-change in market pricing seen in 2022 … [which] … saw robust demand for coloured gemstones, alongside June’s higher-quality emerald auction setting a new record for any Kagem auction”..
• Gemfields says that it has written down the value of its Sedibelo Resources shareholding by US$13.3m to US$18..7m reflecting “reduced public market valuations for comparable platinum group metals companies and the reduced operating and financial results for Sedibelo over the period”.

Greatland Gold (GGP LN) 6.35p, Mkt Cap £309m – Wyloo provides A$50m loan facility

• Greatland Gold reports that its 8.5% shareholder, Wyloo Consolidated Investments has provided an A$50m unsecured standby debt facility.
• The announcement explains that “the Facility provides enhanced financial flexibility for Greatland while the Havieron Feasibility Study, underground development at Havieron and exploration in the Paterson Province continue to progress”.

• The funding provides Greatland additional liquidity to the A$59m in cash held at 30^th June to support the Havieron Feasibility study, underground development and Paterson Province exploration efforts.
• The Facility is currently undrawn and remains available to December 2024.
• Wyloo commented that ‘Havieron is an outstanding orebody that we are keen to see developed to its full potential.’
• Welcoming the support, Managing Director, Shaun Day, also confirmed that Greatland Gold believes that it “can achieve a better outcome for existing shareholders by deferring the proposed ASX cross-listing to a later date”/
• Mr Day also said that “we look forward to completing an updated Mineral Resource Estimate for the … Havieron gold-copper deposit later this year, which will incorporate 80,000 metres of additional growth drilling since our previous MRE update in March 2022”.
• The company reported a total resource of 92mt in 2022 at an average grade of 1.9g/t gold and 0.24% copper of which the indicated resource stands at 35mt at an average grade of 2.8g/t gold and 0.42% copper with the balance classified as inferred and includes 33mt at an average grade of 3.28g/t gold and 0.48% copper (3.5moz of gold and 158,000t of contained copper), of which 26mt at an average grade of 3.3g/t gold and 0.52% copper is classified as indicated, within the South East Crescent Zone.
• Greatland is looking to advance a cross-listing on the ASX, but has delayed the timeline as they look to complete an updated MRE through 80km worth of drilling.

Ivanhoe Electric (IE US) $15.4, Mkt Cap $1.6bn – $160m equity issue to fund Santa Cruz copper pre-feasibility study

• The Robert Friedland-backed Ivanhoe Electric announces plans to issue 11.85m shares at a price of $13.5/share in an equity raise.
• Gross proceeds of $160m will be used to fund a preliminary feasibility study for the Santa Cruz copper project.
• Santa Cruz is located in Arizona, US and is a large-scale copper porphyry project, owned 100% by Ivanhoe Electric.
• It holds a mineral resource estimate of 274mt @ 0.91% Cu for 2,255kt contained copper.
• The project’s initial assessment suggests potential LOM copper production of 1.6mt over 20 years at C1 cash costs of $1.36/lb.
• It holds an NPV8 of $1.32bn and an IRR of 23% using $3.8/lb copper.
• The company also holds the proprietary Typhoon technology used to identify deep copper-gold porphyry deposits, used to discover their Tintic asset.

Leo Lithium (LLL AU) – A$0.5/s, Mkt cap A$498m – Ganfeng agrees to sole fund US$137.2m of capex for Goulamina in Mali

• Leo Lithium reports the agreement with Ganfeng Lithium whereby Ganfeng will sole fund US$137.2m of the capital cost of the Goulamina project in Mali.
• Ganfeng will earn an additional 5% in the project taking its overall ownership of Goulamina to 55%.
• Leo Lithium has also started to draw down on its US$40m debt facility with Ganfeng.
• The agreements mean that Goulamina should be fully funded to first production with Leo Lithium contributing 45% of all capex and ongoing costs after that point.
• The equity investment of US$137.2m is worth around A$0.81c/s in terms of Leo Lithium’s valuation.
• Offtake: The quid-pro-quo is that Ganfeng will now have the right to take 55% of all offtake from Goulamina’s Stage 3 expansion leaving Leo Lithium to control 45% of the offtake.
  • “Ganfeng will control  100%  of  Stage  1  offtake, 70%  of  Stage  2  offtake  and  the  full  proceeds  of  spodumene sales always flow to the Project.”
• Leo Lithium / Ganfeng roadmap for Goulamina:
  • Stage 1 – 500,000tpa capacity
  • Stage 2 – 1mtpa total capacity
  • Stage 3 – “both companies agree to form a jointly funded exploration joint venture (JV) to focus on Australia initially. This agreement is not exclusive and will not interfere with Ganfeng’s exploration ventures.”

Conclusion:  We believe Leo Lithium is currently in discussions with Mali’s military-led government over proposed changes to its mining legislation which could see its interest in new projects rise to 35% from 20%. The government currently holds a 10% free carry on all mines in Mali entitling the nation to 10% dividend payments. A proposal for the new legislation could allow the government to buy an additional 20% within the first two years of commercial production, possibly through a newly created state mining entity. Companies may also be required to cede a 5% stake to local groups. The new legislation may or may not apply to existing mining operations but with Wagner operatives thought to be potentially influencing political change across Africa anything is possible.

Mkango Resources* (MKA LN) 10.25, Mkt Cap £27m – HyProMag participation in rare earth magnet recycling in US

• Mkango Resources announced that its HyProMag subsidiary is to participate in a 50:50 joint venture with CoTec to “roll-out of HyProMag’s rare earth magnet recycling technology” in the United States.
• Today’s announcement explains that HyProMag which “is owned on a 90:10 basis by Mkango and CoTec .… is commercialising rare earth magnet recycling using Hydrogen Processing of Magnet Scrap (HPMS) technology in the UK, Germany and United States, with first production expected in the UK in 2023 and in Germany in 2024”.
• The joint venture “will initially be focused on completing a scoping study and a bankable feasibility study (“Feasibility Study”) for the deployment of three HPMS vessels utilizing the HyProMag technology and one magnet manufacturing facility in the US” with the feasibility study “expected to be completed in 2024”.
• “CoTec will fund the initial operations of the Joint Venture, including the costs of the Feasibility Study. If the Joint Venture proceeds with the construction of the US Project, CoTec will also be responsible for funding all the development costs of the US Project, with a total expected funding of £30 million to £50 million during the first three years post completion of the Feasibility Study, subject to results of the Feasibility Study”.
• CEO, William Dawes, explained that Mkango sees “ very significant opportunity in the US market and look forward to working with CoTec and HyProMag as we move into the next phase of growth”.
• He said that “Less than 5 per cent of rare earth magnets are currently recycled from end-of-life products. Increasing recycling rates via HyProMag’s HPMS technology solution to unlock this new potential source of rare earths, thereby avoiding waste to landfill and significantly reducing the carbon footprint, can make a major contribution to creating more sustainable and robust rare earth supply chains across multiple jurisdictions”.

Conclusion: The magnet recycling JV in the US is a further roll-out of the HPMS technology which is expected to deliver initial production in the UK this year and in Germany during 2024.

*SP Angel acts as nomad and broker to Mkango Resources

Sigma Lithium (SGML CN) C$49.5, Mkt Cap C$5.4bn – Management puts project up for sale as lithium M&A frenzy intensifies

• Sigma Lithium is currently conducting a ‘strategic review’ following ‘multiple strategic proposals.’
• Sigma holds the Groa do Cirilo Project.
• Grota do Cirilo is expected to produce 270kt of lithium pa for 36.7kt LCE before expanding to 766ktpa for 104.2kt LCE.
• Sigma shipped 15kt of its ‘triple zero green lithium’ marking its first shipment on July 27^th.
• The spodumene project expects a CIF AISC of $523/t and is distinguished by its dry and coarse spodumene.

Conclusion: Spodumene frenzy continues following Albemarle’s offer for Liontown for $4.3bn. It is yet to be seen whether Sigma has received any concrete offers from suitors, however cash-rich lithium producers are scouting for deals given the attractive long-term supply demand dynamics in the lithium sector and hard-rock, lithium spodumene mines remain the most attractive option given the simple mining process and established supply chain.

Tungsten West (TUN LN) 2.58p, Mkt cap £7m – Progress on plans to resume production at Hemerdon

• Reporting on year to 31^st March 2023. Tungsten West highlights the production of an updated JORC compliant mineral reserve estimate to 101.2mt positioning its Hemerdon deposit as “the second largest reported … tungsten reserve globally”.
• The company also highlights its updated feasibility study, released in January 2023, which envisages average annual production of 2.900tpa of tungsten trioxide in concentrate from Hemerdon over a 27 years mine-life.
• Highlights of the revised feasibility study show a “post-tax Net Present Value (“NPV”)_5% of £297 million (base case) with an Internal Rate of Return (“IRR”) of 25%” based on a 3.5mtpa mining operation.
• Addressing developments since March, Tungsten West confirms that “Following the completion of Low Frequency Noise (“LFN”) Trials, the Company made a formal submission to the Environment Agency to secure the Mineral Processing Facility (“MPF”) permit”.
• The company announced in August that following investigations of the low-frequency noise (LFN) issues which became apparent under the stewardship of the mine’s previous owners it had worked with the Environment Agency and the Devon Count Council and was optimistic of a favourable decision on “the permit approval … within the coming months”.
• Tungsten West also confirms that it has applied for permission to “vary the tonnage cap on truck movements from site”.
• Chairman, Mr. David Cather, commented on enhancements to the processing plant “designed to increase efficiency, reduce future downtime and reduce future maintenance, all of which were key factors that caused the previous operator to incur significant downtime”.
• CEO, Neil Gawthorpe, provided insight into these improvements which include implementation of a “revised crushing strategy” incorporating a semi-mobile crushing plant and overhauls and improvements to chutes, conveyors, pumps and separation equipment within the plant.
• He explains that the “revised plant design introduces two stages of Ore Sorting. This provides operational flexibility … [reducing]… the capital and operating costs downstream …[and reducing] …. the ratio of iron to tungsten leading to the elimination of the reduction kiln, significantly reducing diesel consumption and associated Opex”.
• Commenting on the world’s tungsten market, Tungsten West highlights “efforts to diversify tungsten supply sources and reduce reliance on Chinese and Russian production … [which makes Hemerdon] … a strategic asset, with a project of significant importance to the UK and the West”.
• Mr. Gawthorpe confirms that Tungsten West “will remain actively engaged with financial and strategic partners to explore all available funding options. Once the permitting process is complete, the Board is confident in their ability to secure the optimal funding package for successfully executing the project”.
• Mr Cather elaborated on the permitting and financing saying that “By 31 January 2024 the board plans to have obtained the necessary permits and as a result additional finance”.

Conclusion: Tungsten West is aiming to secure approval for its refurbished plant at Hemerdon over the coming months and is targeting having the additional finance required by the end of January for the resumption of 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

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%