SP Angel Morning View -Today’s Market View, Thursday 21st November 2024

Copper prices hold steady whilst US charges Adani over $250m fraud

MiFID II exempt information – see disclaimer below

Cornish Metals* (CUSN LN) – Looking towards a busy 2025 as new CEO takes the helm for reopening South Crofty

Orosur Mining* (OMI LN) – Colombia update as drilling starts at Pepas

Power Metal Resources* (POW LN) – Update on Drake Lake-Silas Uranium project in Central Mineral Belt, Canada

Resolute Mining* (RSG LN) – Release of employees in Mali

Rome Resources (RMR LN) – Drilling results from Kalayi, DRC

Solaris Resources (SLS CN) – Leaving Canada and appointing new CEO

Sovereign Metals* (SVML LN) – Test results indicate Kasiya graphite should be suitable for refractory materials

SQM (SQM US)– 3Q results reflect a 67%yoy drop in lithium prices, production guidance and growth in 2025 reiterated

Copper prices hold steady whilst US charges Adani over $250m fraud

• Copper continues to hold just over $9,000/t, struggling to break above the $9,200/t mark.
• Chile expects copper production to rise 3% next year to 5.4-5.6mt.
• China output fell 1.3%yoy last month to 1.1mt.
• Meanwhile, Gautam Adani, who is building a $1.2bn copper smelter, has been charged by the US for bribery.
• The 500ktpa smelter holds supply contracts with Glencore and Hudbay and is in western India’s Gujarat.
• Adani’s eponymous conglomerate fell by $30bn in the wake of the charges, whilst its bonds also fell off.
• Meanwhile, the AFR reports that Glencore is supporting True North’s Cloncurry mine as it goes through administration procedures.
• Glencore held 100% of the copper offtake of the mine, with True North reportedly raising A$50-60m at an 83% discount.
• A$27m will be used to repay Nebari Holdings, whilst Tembo is reportedly adding A$15m in line with its 29.9% stake.

Gold prices ($2,667/oz) push higher despite stronger dollar

• Gold prices continue to recover having slumped to $2,560/oz last week.
• The move comes following the US election, which triggered volatility, with a major unwinding of bullish gold positions.
• Traders had likely been preparing for a less clear-cut result and potential volatility created in the aftermath.
• In addition, traders had been ramping up bearish US Treasury positions, bracing for a more inflationary environment under Trump.
• This momentum seems to have faded, with US Treasuries sliding below 4.4%.
• Higher US real yields traditionally pressure gold holders, with ETF investors rotating into Treasuries for their safe haven exposure.
• The dollar has been holding strong against a basket of currencies, with gold defying the elevated greenback.

Economics

US – Nvidia results came ahead of estimates, albeit, only marginally with guidance coming in close to median expectations.

• The stock is trading lower in the pre market and many saw results as a potential indication of waning AI related excitement.
• 3QFY25 revenues came in at $35.1bn with EPS amounting to 81c, compared to expectations for a $33.3bn and 74c, respectively.
• The Company had an outstanding track record of delivering expectations’ beating results missing market estimates on quarterly revenue only once in the past five years and exceeding forecasts by as much as 20% in recent periods.
• On Blackwell rollout, the Company said production experienced certain manufacturing challenges with the Company forecasting supply to trail demand for several quarters in FY26.
• Odds of another 25bp rate cut in December have been coming off and are currently less than 50%.
• Boston Fed President Susan Collins said that more interest rate cuts are needed but authorities should proceed carefully to avoid cutting too quickly or too slowly, Bloomberg reports.
• New York Fed President John Willians noted that while prices have come down there is still room to go for inflation to come into the Fed’s 2% target.

Japan – The yen gained 0.6% as BOJ Governor Ueda said authorities are monitoring FX impacts on the economy and inflation.

• He added that it is currently not possible to say what outcome of the December meeting will be.
• Markets see a more than 50% chance that the central bank will hike at the coming meeting.

Ukraine/Russia – Kyiv reported that Russia launched an intercontinental ballistic missile during an overnight attack on the country.

• It appears to be the first reported use of the missile since the beginning of the war.
• The news follows reports of strikes of Russia by Ukraine using US supplied ATACMS and UK made Storm Shadow.

Currencies

US$1.0527/eur vs 1.0572/eur previous. Yen 154.48/$ vs 55.63/$. SAr 18.169/$ vs 18.104/$. $1.264/gbp vs $1.269/gbp. 0.652/aud vs 0.652/aud. CNY 7.241/$ vs 7.242/$.

Dollar Index 106.66 vs 106.42 previous

Precious metals:         

Gold US$2,670/oz vs US$2,622/oz previous

Gold ETFs 82.9moz vs 82.9moz previous

Platinum US$965/oz vs US$966/oz previous

Palladium US$1,040/oz vs US$1,028/oz previous

Silver US$31.2/oz vs US$30.9/oz previous

Rhodium US$4,600/oz vs US$4,625/oz previous

Base metals:   

Copper US$9,111/t vs US$9,137/t previous

Aluminium US$2,635/t vs US$2,685/t previous

Nickel US$15,960/t vs US$16,105/t previous

Zinc US$2,973/t vs US$2,995/t previous

Lead US$1,997/t vs US$2,028/t previous

Tin US$29,125/t vs US$29,400/t previous

Energy:           

Oil US$73.6/bbl vs US$73.6/bbl previous

Natural Gas €47.8/MWh vs €45.4/MWh previous

Uranium Futures $79.3/lb vs $80.3/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$102.3/t vs US$101.1/t

Chinese steel rebar 25mm US$503.4/t vs US$504.6/t

HCC FOB Australia US$205.0/t vs US$204.5/t

Thermal coal swap Australia FOB US$142.3/t vs US$141.5/t

Other:  

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

NdPr Rare Earth Oxide (China) US$56,281/t vs US$57,859/t

Lithium carbonate 99% (China) US$10,566/t vs US$10,564/t

China Spodumene Li2O 6%min CIF US$790/t vs US$790/t

Ferro-Manganese European Mn78% min US$985/t vs US$985/t

China Tungsten APT 88.5% FOB US$338/mtu vs US$338/mtu

China Graphite Flake -194 FOB US$440/t vs US$440/t

Europe Vanadium Pentoxide 98% US$4.8/lb vs US$4.8/lb

Europe Ferro-Vanadium 80% US$25.6/kg vs US$25.55/kg

China Ilmenite Concentrate TiO2 US$307/t vs US$307/t

China Rutile Concentrate 95% TiO2 US$1,139/t vs US$1,139/t

Spot CO2 Emissions EUA Price US$64.9/t vs US$64.9/t

Brazil Potash CFR Granular Spot US$277.5/t vs US$277.5/t

Germanium China 99.99% US$2,865.0/kg vs US$2,865.0/kg

China Gallium 99.99% US$430.0/kg vs US$430.0/kg

Battery News

Ford to cut European jobs amid challenges in EV shift

• Ford will cut around 14% of its European workforce, citing weak EV demand, poor support from governments in the EV shift and difficulty competing with subsidised Chinese EVs.
• Ford said 4,000 jobs were expected to be cut, which represents 2.3% of the global workforce, with the majority coming in the UK and Germany (800 and 2,900 job cuts respectively)
• The US automaker becomes the latest to cut costs, following Nissan, Stellantis and GM, as the sector faces challenges.
• Ford said the layoffs should take place by the end of 2027, pending union discussions.

Victoria to build $370m solar and battery storage

• The Victorian government will spend $370m to build a solar and battery farm able to power more than 50,000 homes, the first state government-owned energy project since the electricity grid was privatised in the 1990s.
• The SEC Renewable Energy Park will include a 119MW solar facility and a 100MW battery.
• The project iss expected to generate 242,000MW hours of renewable energy a year once complete in 2027 and will have a lifespan of 30 years.

India’s two-wheeler market continues shift to EVs

• India’s two-wheeler industry currently produces around 18m vehicles annually, and is expected to experience significant growth, with projections estimating that production will reach 30m by 2031.
• India’s semiconductor industry is also undergoing significant growth, with the country currently importing $40bn worth of semiconductors, and this figure is expected to grow 7% annually.
• With the two industries showing strong growth, it is likely the EVs will play a big role in the two-wheeler space.
• It is a different picture with electric cars, which have been losing momentum.
• Prime Minister Modi wants EVs to account for 30% of the countries new car sales by 2030.
• Sales of EVs grew 7% in the first eight months of the year, lower than petrol and diesel cars that grew 20% in the same period.

South Africa announces two battery storage projects from first bid window

• Two battery storage projects with 360MW/1,440MWh of storage capacity, have been announced by the South African government as part of the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP).
• Oasis Aggeneis will have a total capacity of 77MW/308MWh and Oasis Nieuwehoop will have a total capacity of 103MW/412MWh in Phase 1 of the projects.
• The two projects will total R4.7bn in investment and capacity is expected to be available to the grid by 2026.

Company News

Cornish Metals* (CUSN LN) 7.7p, Mkt Cap £44m – Looking towards a busy 2025 as new CEO takes the helm for reopening South Crofty

• In its report for the 3 and 9 months ending 30^th September, Cornish Metals reports a quarterly profit of C$4.61m for the quarter bringing the total profit for the first nine months of 2024 to C$0.48m.
• The company’s closing cash balance “decreased by $23.6 million to $3.3 million at the period end mainly due to ongoing development activities at the South Crofty tin project”.
• The profit arises largely from a C$4.68m gain on disposal of royalties over the Cantung and Mactung tungsten deposits in Canada and the C$8m sale of the Nickel King property.
• Cornish Metals highlights the “US$9.1 million … credit facility arranged with Vision Blue Resources Limited … on October 15, 2024 … [which ] … has a maturity date of 31 March 2025. As a consequence, additional financing will be required before the end of March 2025”.
• Under the leadership of newly appointed CEO, Don Turvey, Cornish Metals is continuing to progress its plans to reopen the South Crofty tin mine with refurbishment of the New Cook’s Kitchen Shaft and dewatering underway.
• The company confirms that the shaft “refurbishment is progressing and now forecast to be completed in Q4-2025”.
• Among other operational highlights is the completion of the 9,000m, 14-hole exploratory drilling programme investigating the “the geometry and continuity of tin mineralization within a 2,500 meter by 800 meter extent of the Wide Formation … [including intersections of tin mineralisation on] … the Great Flat Lode and the Great Flat Lode Splay, as well as the interpreted eastern extension of the Great Condurrow Mine’s Main Lode, and several strongly mineralized steeply dipping zones”.
• Cornish Metals also highlights its recently announced “Near-mine Exploration Target at South Crofty … [including] … potential additional mineralisation upside of 6Mt to 13Mt, at a tin grade of 0.5% to 1.8%, above the current South Crofty Mineral Resource in the Lower Mine area”.
• Looking ahead, by December 2025 Cornish Metals is aiming to:
  • “Complete dewatering of South Crofty mine and refurbishment of NCK shaft;
  • Advance basic and detailed project engineering studies;
  • Place deposits for long lead items of plant and equipment;
  • Commence early project works, including initial construction of the groundworks for the processing plant; and
  • Arrange project financing for the South Crofty tin project”.
• Welcoming the opportunity to “take South Crofty to production” the new CEO explained that “Activity levels on-site are high as the NCK shaft refurbishment and mine dewatering progress, further derisking the project”.
• Mr. Turvey also confirmed that “We have also commenced the project finance process to secure the optimal funding solution for the construction of South Crofty”.

Conclusion: Work is accelerating to resume tin production at South Crofty with a busy 2025 ahead including the completion of the current work to dewater the historic mine and refurbish the shaft, securing finance for the project, detailed engineering work and initial construction work for the treatment plant.

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

Orosur Mining* (OMI LN) 2.7p, Mkt Cap £6m – Colombia update as drilling starts at Pepas

(Anzá 100% indirect ownership proposed)

• Orosur provides an update on their ongoing progress in Colombia.
• Today, the Company announces it expects to complete the acquisition of MMA, which includes the Anza Project in Colombia, in ‘in the next few weeks.’
• Whilst the process completes, Orosur has reassumed control of the site.
• Drilling at Pepas has now begun, with a small programme planned over six-seven holes and 800m in total.
• The programme is expected to take six weeks.
• The priority in this drilling programme is to better understand the orientation and litho-structural controls of the previously identified mineralisation.
• Previous drilling yielded highlights of:
  • 150m at 3g/t Au from surface
  • 36m at 2.1g/t Au
  • 81m at 3g/t Au
• However, step-out drilling did not intersect substantial mineralisation, with the Company now focused on understanding the nature of mineralisation in the first three holes.
• Orosur will collar the first hole near a high-grade artisanal tunnel, drilling to scissor the previous, successful hole.
• This will then guide the azimuth and location of future holes.

Conclusion: At a time of record-high gold prices, Orosur has reassumed control of the prospective Anza project and has begun drilling at the Pepas target, which previously yielded results including 150m at 3g/t Au from surface. The first hole, now underway, will scissor this hole and be used to guide the programme, with the Company believing Pepas retains potential for a significant discovery in an underexplored region of Colombia.

*SP Angel acts as Nomad and Broker to Orosur Mining

Power Metal Resources* (POW LN) 14p, Mkt cap £16m – Update on Drake Lake-Silas Uranium project in Central Mineral Belt, Canada

CLICK FOR PDF

• Power Metals provides an update on its 1750ha uranium licence package in Newfoundland and Labrador, Canada.
• The licences lie contiguous to ATHA Energy’s Central Mineral Belt Project, which hosts 14.5mlb U3O8 in historical indicated and inferred resources.
• Exploration work to date leaves the POW team believing their project holds distinct geological similarities to the neighbouring ATHA Energy Resource.
• Work to date has identified two uranium occurrences along trend of the ATHA resource, with soil samples recording 800ppm U and a drilled intersection of 0.27% U3O8 over 0.2m.
• POW has now finished a phase 1 field programme on the Project and will also take advantage of gravity/magnetic surveys flown over the Project by Xcaliber.

Central Mineral Belt

• The Central Mineral Belt covers 100km and 30km wide, with varying styles of uranium mineralisation within varying rock units.
• Paladin dominates claim block holdings, alongside ATHA Energy.

Drake Lake Silas

• The Drake Lake and Silas tenements host predominantly sedimentary rocks, from the Helikian age, alongside Aphebian mafic volcanic rocks and metasedimentary lithologies.
• An historical resource within 1km hosts similar geology, with uranium mineralisation held within ‘strongly brecciated and altered mafic volcanic rocks and shear zone.’
• Uranium identified at Drake Lake-Silas is believed to be part of the Moran Lake zone mineralisation corridor, ‘and likely represents the extension of mineralisaiton developed in the area of the Armstrong deposit.’
• Additional targets lie to SW and show a ‘significant radiometric anomaly.’

• Gravity and magnetic survey results using FALCON have been provided for free to POW.
• We recommend reading today’s announcement for a comprehensive overview of the Project – CLICK FOR LINK

Conclusion: The Power Metals team have been busy laying the foundations in Canada in advance of the funded exploration programme as part of their newly formed JV. Whilst the majority of their uranium claim blocks lie in the Athabasca Basin, the Drake Lake-Silas project is in Labrador, and sits contiguous to a defined resource which bears distinct geological similarities to those under POW’s JV.

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

Resolute Mining* (RSG LN) 22p, Mkt Cap £472m – Release of employees in Mali

• Resolute Mining reports that Terry Holohan and two other employees have been released from ‘the Economic Financial Centre of Bamako.’

*SP Angel analysts hold shares in Resolute Mining

Rome Resources (RMR LN) 0.39p, Mkt Cap £19m – Drilling results from Kalayi, DRC

• Rome Resources reports results from the first two of a twelve-hole diamond drilling programme at its Kilayi prospect in North Kivu Province, DRC.
• Hole KBDD-005 intersected 4.05% tin over an interval of 0.6m from 87m depth and a second 0.6m interval averaging 3.05% tin from 111.9m depth “downdip of KBDD003 (12m at 1.06% Sn from 40.5m and 2.3m at 1.92% Sn from 70.7m)”.
• Hole KBDD-006 intersected a wider, 6.5m zone at an average grade of 1.03% tin from 31.5m depth and a “second zone of 3.5m at 0.25% Sn from 48.5m” depth.
• The company also reports that visual tin mineralisation has been observed in holes KBDD-009-016 “from surface to depths exceeding 150m”.
• Commenting on the initial results from Kilayi CEO, Paul Barrett, explained that “it is becoming increasingly clear that we are unlocking a simple, open pit, high-grade tin resource. The pinch and swell geometry suggests potential for even greater widths of high grade mineralisation both at depth and along strike”. 
• In the light of this observation we hope that the geometry of the mineralisation swells more than it pinches.
• Drilling at the Mont Agoma prospect, also in North Kivu, has intersected “visual tin in conjunction with copper and zinc mineralisation intersected in the two southernmost holes” and additional drilling is planned “to test the mineralisation model down to 250m vertical depth and 400m of additional strike to the southeast”.
• Mr.Barrett also said that “At Mont Agoma, holes MADD016A and MADD017 look to be potential game changers for the Company with 50m of visible tin across three main zones, with grade increasing at depth. This is in addition to further high-grade copper and zinc intercepts”. Assay results are awaited, however.

Conclusion: We look forward to assay results from the later holes drilled at Kiyali and the recent drilling at Mont Agoma.

Solaris Resources (SLS CN) C$4.2, Mkt cap C$690m– Leaving Canada and appointing new CEO

• Ecuadorian copper developer Solaris, which holds the Warintza project, provides an update on its move away from Canada.
• The Company reports that it is set to establish an office in Zug, Switzerland from January 1, 2025.
• Solaris intends transition its head office in Quito, Ecuador, but does not intend to change stock-exchange listings.
• The Company has appointed ex Head of Copper Business Development at Glencore, Matthew Rowlinson, as CEO.
• Rowlinson will subscribe for C$500k shares in a private placement.
• The Company is also aiming to spin-out their ‘non-core assets,’ including La Verde, Capricho and Paco Orco.
• Warintza 2024 MRE: 1,426mt at 0.37% CuEq at a 0.25% COG.
• Company targeting MRE update by mid-2025 with +60km drilling.

Conclusion: Solaris had previous difficulty finalising an investment from Chinese miner Zijin due to Canadian regulatory authorities. As a result, the Company is emigrating and will move its head office to Ecuador, whilst its CEO will be based in Zug, Switzerland. The Company emphasises that it will have ‘no assets in Canada… and will otherwise not carry on any part of their operations in Canada.’ Stock rose 25% on the announcement.

Sovereign Metals* (SVML LN) 42p, Mkt Cap £234m – Test results indicate Kasiya graphite should be suitable for refractory materials

(Sovereign currently holds 100% of the Kasiya project. Malawi has 10% free carry right. Rio Tinto acquired an initial strategic interest of 15% for A$40m mid 2023 and has recently invested a further A$19.2 to move up to 19.9%)

STRONG BUY – Valuation 55p

• Sovereign Metals report results from test work on graphite material from the Kasiya rutile and graphite project in Malawi.
• Graphite from Kasiya indicates suitability for refractory materials which currently account for around 24% or ~306,000t of global graphite demand.
• Refractory materials normally demand large flake graphite with high oxidation resistance with Kasiya’s course flake, >180-um material showing no oxidation below 400°C.
• The material also shows only 6.4% mass loss after 4 hours at 650°C and very low oxidation rate of 1.6% per hour at 650°C.
• The material was tested at ProGraphite GmbH in Germany with initial positive initial test results.
• Management are hoping the high resistance to oxidation and low levels of sulphur in the >180um flake graphite will ensure sales of a premium graphite product for refractory and foundries.
• Over half the Kasiya graphite is seen as large flake enabling the material to be used in multiple applications.
• Optimisation work on the fine <180um fraction should confirm its suitability for Li-ion anode material with positive initial results seen so far.
• The proportion of fixed carbon is good in the >180um fraction at 97.1% with 97.5% loss on ignition and just 0.11% moisture and 0.29% volatiles according to the ProGraphite test.
• China export controls: newly proposed tightening of controls on graphite exports for graphite are of significant concern in the west as China commanded around 94% of all graphite exports in 2023.
• Kasiya’s graphite products compare well vs Syrah Resources’ Balama graphite mine which produces just 8.5% Super-Jumbo and Jumbo flake (>300um) vs 29.8% at Kasiya in test work.
• Kasiya also appears to produce 27.1% large flake vs 12.0% at Balma and 23.9% medium flake vs 34% at Balma.

Conclusion: Test work done by ProGraphite appears to show good results for the Kasiya graphite product sizes. These are more positive than we would have ventured to previously estimate.

*SP Angel act as Nomad and broker to Sovereign Metals. The analyst has recently visited the Kasiya mine site. We highly recommend the Malawi coffee beans sold in Lilongwe airport.

SQM (SQM US) US$39, Mkt Cap $11.1bn – 3Q results reflect a 67%yoy drop in lithium prices, production guidance and growth in 2025 reiterated

• 9M revenue down 44%yoy at US$3,455m.
• Gross profit margins fell to 29.9% (9M23: 43.4%).
• 9M Adjusted EBITDA was down 58%yoy at $1,155m.
• 9M earnings came in at -$525m and -$1.84/sh, compared to $1,810m and $6.33/sh in 2023.
• Numbers were weaker than median market estimates.
• On lithium front, 3Q and 9M sales amounted to 51.2kt and 146.9kt of lithium products, respectively, marking 18%yoy and 24%yoy growth.
• Revenues totalled $497m and $1,709m, respectively, both down 61%yoy for the quarter and nine months of the year reflecting a drop in prices.
• 3Q24 average realised lithium prices amounted to $9,700/t, down 24%qoq and 67%yoy.
• The team expects prices to continue a downtrend with 4Q prices to come in lower than 3Q.
• Production guidance reiterated for FY24 sales to amount to 190-195kt.
• First revenues recorded from the Mt Holland Lithium Mine in Australia with the refinery under commissioning and firs production expected mid-2025.
• The 50ktpa (100% based) Kwinana refinery commissioning is currently 41% complete.
• 3Q23 lithium hydroxide sales amounted to 900t with 4Q24 forecast at 1,000-1,200t.
• Prices remain pressured by an oversupply that persisted in the market despite a number of curtailments seen over the past few weeks.
• The Company notes a continuing robust demand mainly driven by strong EV sales growth in China.
• The team reiterated SQM’s strong competitive position in the lithium market with the Company well prepared to press on with development of projects in Chiel and abroad.
• 2025 guidance is for production to grow with no curtailments planned at the moment.

LSE Group Starmine awards for Q3 commodity forecasting:

No.1 in Precious Metals: SP Angel mining team awarded No 1. ranking for Previous Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q3 2024

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q3 2024

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

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

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

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

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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