SP Angel Morning View -Today’s Market View, Thursday 1st June 2023

Copper price climb on better than expected Chinese manufacturing data and US debt ceiling bill resolution

MiFID II exempt information – see disclaimer below

Atlantic Lithium* (ALL LN) – Board appointments

Chaarat Gold (CGH LN) – Conditional Preliminary Agreement for a $250m equity investment

Greatland Gold (GGP LN) – Newcrest Mining to assume management of the Juri Joint Venture

Phenom Resources (PHNM CN) – MOU with a Japanese vanadium sold state battery technology company

Scotgold Resources (SGZ LN) – CEO resignation and operational update

Shanta Gold (SHG LN) – Commercial production declared at Singida

Tertiary Minerals* (TYM LN) – Insight into the Mushima North project as Zambia moves centre stage

Economics

US – The House passed the debt ceiling bill in a 314-117 vote yesterday evening with the legislation now sent to the Senate for approval.

• The deal includes caps on federal spending for the next two years, accelerates the permitting for big energy projects, cuts new funding for Internal Revenue Service and introduces new requirements for food stamps and other social safety net programmes, FT reports.
• Expectations are the bill will get through the Senate and signed by President Biden before the June 5 deadline.

China – Private sector manufacturing PMI ticked up in May, although, remained close to the 50.0 breakeven level.

• The release follows weaker than expected official numbers tracking activity among larger companies.
• Contradictory reports released this week imply the outlook remains uncertain with more calls from market commentators for more government stimulus.
• A separate report released yesterday showed Chinese property market growth momentum weakening considerably.
• New home sales by the 100 biggest developers rose 6.7%yoy in May, down on more than 29% recorded in the previous two months.
• MoM sales were down 14.3% last month.
• Caixin Manufacturing PMI: 50.9 v 49.5 April and 49.5 est.
• Official Manufacturing PMI: 48.8 v 49.2 April and 49.5 est.
• Official Services PMI: 54.5 v 56.4 April and 55.2 est.
• Official Composite PMI: 52.9 v 54.4 April.

Eurozone – Inflation slowed down more than expected in May in a welcome news to monetary authorities that are trying to balance out weakening growth outlook with restrictive monetary policy.

• Although, on absolute terms, inflation still remains quiet strong.
• Headline CPI came in at 6.1%yoy in May, down on 7%yoy recorded in April and marking the lowest level since Feb/22.
• Core CPI (ex energy and food) dropped to 5.3%yoy from 5.6%yoy.

UK – House prices are reported to have come down 0.1%mom and 3.4%yoy in May, according to Nationwide data.

• Nationwide expects property market headwinds to strengthen in the near term on the back of high borrowing costs.

South Korea –Exports dropped for an 8^th consecutive month in May, although, the decline was less than expected.

• Overseas shipments were down 15.2%yoy implying global growth momentum remains subdued.
• Semiconductor exports dropped 36.2%yoy.

Currencies

US$1.0669/eur vs 1.0680/eur yesterday. Yen 139.86/$ vs 139.70/$. SAr 19.863/$ vs 19.787/$. $1.242/gbp vs $1.237/gbp. 0.649/aud vs 0.648/aud. CNY 7.119/$ vs 7.107/$.

Dollar Index 104.40 vs 104.47 yesterday.

Commodity News

Precious metals:

Gold US$1,955/oz vs US$1,957/oz yesterday

   Gold ETFs 94.2moz vs US$94.2moz yesterday

Platinum US$1,003/oz vs US$1,021/oz yesterday

Palladium US$1,381/oz vs US$1,409/oz yesterday

Silver US$23.34/oz vs US$23.28/oz yesterday

Rhodium US$6,900/oz vs US$6,900/oz yesterday

Base metals:   

Copper US$ 8,195/t vs US$8,086/t yesterday

Aluminium US$ 2,251/t vs US$2,226/t yesterday

Nickel US$ 20,800/t vs US$20,605/t yesterday

Zinc US$ 2,284/t vs US$2,281/t yesterday

Lead US$ 2,012/t vs US$2,051/t yesterday

Tin US$ 25,600/t vs US$25,400/t yesterday

Energy:           

Oil US$72.9/bbl vs US$73.5/bbl yesterday

• Crude oil prices edged lower as the API reported a 5.2mb build in US crude oil and fuel stocks (vs 1.2mb draw expected), but has opened higher as the US debt ceiling deal was voted through by the House.
• European energy prices spiked by 15% yesterday following news of an outage at Equinor’s Hammerfest LNG export plant in Norway to repair a leak, before giving up most of those gains by market close.
• EU natural gas storage levels rose 2.1% w/w to 68.6% full (vs 50.6% 5-year average), with strong builds in Germany and Italy contributing to aggregate storage of 776TWh.

Natural Gas US$2.270/mmbtu vs US$2.310/mmbtu yesterday

Uranium UXC US$54.60/lb vs US$53.60/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$99.3/t vs US$100.9/t

Chinese steel rebar 25mm US$507.9/t vs US$508.8/t

Thermal coal (1st year forward cif ARA) US$98.0/t vs US$98.0/t

Thermal coal swap Australia FOB US$136.0/t vs US$131.5/t

Coking coal swap Australia FOB US$224.0/t vs US$230.0/t

Other:  

Cobalt LME 3m US$29,525/t vs US$29,525/t

NdPr Rare Earth Oxide (China) US$70,095/t vs US$71,200/t

Lithium carbonate 99% (China) US$39,402/t vs US$39,470/t

China Spodumene Li2O 6%min CIF US$4,030/t vs US$4,030/t

Ferro-Manganese European Mn78% min US$1,264/t vs US$1,265/t

China Tungsten APT 88.5% FOB US$323/mtu vs US$323/mtu

China Graphite Flake -194 FOB US$760/t vs US$760/t

Europe Vanadium Pentoxide 98% 7.1/lb vs US$7.2/lb

Europe Ferro-Vanadium 80% 32.05/kg vs US$32.15/kg

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

Spot CO2 Emissions EUA Price US$84.2/t vs US$86.1/t

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

Battery News

Company News

Atlantic Lithium* (ALL LN) 31.85p, Mkt Cap £194m – Board appointments

• Atlantic Lithium reports the appointment of Keith Muller, the newly appointed CEO, to its Board.
• Mr. Muller, who joined Atlantic Lithium in November 2022, as Chief Operating Officer has “over 20 years of operational and leadership experience and a background in hard rock lithium mining and processing, specifically in dense medium separation spodumene processing … [and his] … appointment as CEO reflects the Company’s focus on delivering its Ewoyaa Lithium Project … as Ghana’s first lithium mine”.
• The company also announces the appointment of Patrick Brindle, currently Executive Vice President & Chief Operating Officer at Piedmont Lithium as a non-executive director “as detailed in the agreement between the Company and Piedmont … which sees Piedmont fund Ewoyaa to production”.
• “Mr Brindle has more than 20 years’ experience in senior management and engineering roles and has completed EPC projects in diverse jurisdictions including, but not limited to, the United States, Canada, China, Mongolia, Australia and Brazil. Before joining Piedmont, he was Vice President of Engineering for DRA Taggart, a subsidiary of DRA Global, an engineering firm specialising in project delivery of mining and mineral processing projects globally”.
• Executive Chairman, Neil Herbert, welcomed the appointments saying that they “add considerable engineering and mine management experience to the Atlantic Lithium Board as we proceed towards production at Ewoyaa”.
• He explained that Keith Muller’s “key role in the operation of the Mt Cattlin mine … provides invaluable lithium mine operating experience and insight”.
• Mr. Herbert also commented that through his role on the Ewoyaa project’s Technical Committee Patrick Brindle “contributed significantly to Ewoyaa’s development to date … [and brings] … global mining and mineral process project delivery expertise”.

Conclusion: The new Board appointments strengthen Atlantic Lithium’s senior level engineering and project delivery capacity as the Ewoyaa Project moves towards development.

*SP Angel acts as Nomad to Atlantic Lithium

Chaarat Gold (CGH LN) 11p, Mkt Cap £76m – Conditional Preliminary Agreement for a $250m equity investment

• The Company signed a conditional Preliminary Investment Agreement for $250m equity investment with Xiwang International Company.
• The agreement follows the news over a Letter of Intent signed with Xiwang earlier this year.
• Under the agreement Xiwang will potentially subscribe for new shares in Chaarat at 20p taking a 60% interest in the Company.
• The finalisation of the deal is contingent on a number of terms including both parties completing due diligence, Xiwang completing its financing, securing all corporate and regulatory approvals as well as shareholder approvals.
• The deal is expected to be completed by 30 July 2023.

Greatland Gold (GGP LN) 7.7p, Mkt Cap £405m – Newcrest Mining to assume management of the Juri Joint Venture

• Greatland Gold reports that Newcrest Mining, its 51% partner in the Juri exploration JV in the Paterson Range East and Black Hills exploration licences in WA will assume management of the JV from 1^st July.
• Greatland Gold, which is already working with Newcrest Mining at the Havieron Project, also in the Paterson district, confirmed its intention to “continue as an active and supportive joint venture participant … [in the Juri JV] … given the potential for the discovery of new intrusion-related gold-copper deposits similar to its world class Havieron gold-copper deposit, Newcrest’s Telfer gold-copper mine and Rio Tinto’s Winu copper-gold deposit”.

• Managing Director, Shaun Day, said the collaboration with Newcrest Mining is “central to unlocking the full potential of the Paterson Province … [and that the] … shift of Juri Joint Venture management to Newcrest provides Greatland’s exploration team the opportunity to put greater focus on our 100%-owned portfolio of highly prospective tenure together with our responsibilities as the new manager of the farm-in and joint venture arrangement with Rio Tinto Exploration on the Paterson South Project”.

Conclusion: The transfer of management responsibility for the Juri JV to Newcrest follows their successful JV at the Havieron Project and provides the Greatland Gold team greater flexibility to focus on earlier stage, wholly-owned exploration projects and to focus its management on running the recently agreed farm-in with Rio Tinto on the Paterson South project.

Phenom Resources (PHNM CN) C$0.4, Mkt Cap C$32m –MOU with a Japanese vanadium sold state battery technology company

• Phenom Resources, a TSX listed vanadium developer, signed a Memorandum of Understanding to gain 5% equity in vanadium Japanese solid-state battery firm MK Plus.
• The conditions of the MOU detail an Off-Take Agreement between MK Plus and Phenom whereby Phenom will commit to providing 20% of its future Carlin Vanadium Project production concentrates to MK Plus at fair market value.
• In exchange for this commitment, MK Plus will, on signing a Definitive Off-Take Agreement, issue to Phenom 5% of MK Plus’s issued and outstanding shares.
• According to MK Plus their solid-state battery provides higher performance at lower cost over vanadium redox flow batteries, Their claims include:
  • Rapid charging in minutes (C-rate of between 100 and 300 versus C-rate of 20 in VRFB), achieving massive charging speeds 100 times faster.
  • Use one tenth of the amount of vanadium than VRFB use for an equivalent charge.
  • Have +100,000 deep cycle life without heat dissipation (no fire risk) or degradation (long life).
  • Have been tested at ambient operating temperatures between 100oC and -40oC without loss of performance.
• MK Plus’s vision is to be the number one provider of high-performance, stationary, low-cost utility-scale batteries that are made 100% in North America.

Scotgold Resources (SGZ LN) 15p, Mkt Cap £12m – CEO resignation and operational update

• Phil Day, CEO, is resigning and provided notice under his employment contract.
• The process of finding new CEO begins immediately with Phil Day remaining in post at this time.
• Operationally, stoping continues at the 430m level as operations progressed to Block 2 with blasting targeted for around a week’s time.
• Development of the 445m level continues with the development ore currently being fed into the process plant and grades coming in line with expectations.
• The feed grade averaged 8.3g/t from the 445m level.

Shanta Gold (SHG LN) 12p, Mkt Cap £122m – Commercial production declared at Singida

• The Company reports that Singida reached commercial production following the first gold pour on 30 March.
• All key commercial production metrics including processing rate (nameplate capacity 1ktpd), plant availability, gold recovery, and plant utilisation have been achieved.
• The plant operated at >95% of nameplate capacity for consecutive 30 days with plant utilisation and gold recoveries exceeding 95% and plant availability above 90%.
• Mining operations are progressing well with positive grade reconciliation and six months’ worth of material stockpiled on site.
• The Company is expecting to release 2023 production guidance along with a 5 year forecast later this month.

Conclusion: Commercial production declared in two months from the first gold pour at the end of March is a good result and reflects hard work of the Company’s team and contractors. The mine is expected to take Group output to ~100kozpa adding the second operation into the portfolio and diversifying the production base.

Tertiary Minerals* (TYM LN) 0.12p, Mkt cap £2.4m – Insight into the Mushima North project as Zambia moves centre stage

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• Tertiary Minerals has provided a summary of its Mushima North exploration project located to the east of the former Kalengwa mine in Zambia which Tertiary Minerals says produced 4mt of ore grading 5.2% copper and 40g/t silver.
• The project, which benefits from “the technical cooperation and data sharing agreement with leading copper producer First Quantum Minerals”, draws on an extensive technical archive of data “from the 1970s onwards by Roan Consolidated Mines, African Minerals, Zamanglo Prospecting Ltd and BHP Billiton”.
• Today’s announcement, which is accompanied by a presentation on the company’s website PowerPoint Presentation (tertiaryminerals.com) discusses two specific targets:
  • The C1 Target which consists of a “prominent gravity high defined by BHP Billiton’s Falcon airborne gravity survey with a coincident copper soil anomaly” which was generated as part of BHP Billiton’s exploration for iron oxide copper gold (IOCG) targets; and
  • The A1 Target which is described as “conventional Copperbelt style mineralisation” defined by a “1.7km long copper soil anomaly… defined by 500m spaced samples and supported by coincident arsenic and zinc anomalies”.
• Earlier this week, Tertiary Minerals reported an operating loss of £253,089 for the six months to 31^st March 2023 and a 31^st March cash balance of £217,967.
• Commenting on the interim results, Chairman, Patrick Cheetham, highlighted the value of the technical cooperation agreement with First Quantum Minerals which, he said, “has saved us hundreds of thousands of dollars in exploration expenditures and will harness the experience of FQM’s technical staff for the benefit of our projects”.

• Mr. Cheetham said that “We anticipate that 2023 will be a busy year for the Company in Zambia with fieldwork planned on most of our projects in the country … [and he defined the company’s objective as defining] … targets at all our Zambian projects in the next few months and to drill test priority targets within the current field season”.
• Mr. Cheetham also confirmed Tertiary Minerals’ continuing commitment to “testing our projects in Nevada … [but said that] … Nevada is, at least in the short term, taking a backseat to Zambia where we have immediate expenditure commitments to the Government and to our local partner, Mwashia Resources”.

Conclusion: Tertiary Minerals is stressing its commitment to its Zambian exploration projects where it plans to drill-test priority targets during the current field season. We await further news as the target definition develops.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

No.1 in Copper:  “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”

No1. In Gold:  “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”

The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020

Analysts

John Meyer – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474

Sales

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

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+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

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