SP Angel Morning View -Today’s Market View, Thursday 21st September 2023

Hawkish Fed statement weighs on market risk sentiment as dollar hits metal prices

MiFID II exempt information – see disclaimer below

Philp Pascall, former founder and chairman of First Quantum Minerals passes away

• We are very sad to see news of the passing of Philip Pascall.
• Philip and the First Quantum Minerals team were largely responsible for the rehabilitation of the Zambian copper mining industry following its nationalisation in 1969.
• Few miners were prepared to venture into Zambia in the 1990s acquiring the Bwana Mkubwa project in 1996. Bwana Mkuba was the first new mining project in Zambia for 35 years.
• Pascal and the team made the mine work though tough times brining in ore from Lonshi and developing a new border post in the DRC.
• The team showed the world that mining in Zambia could flourish even after Anglo American withdrew from KCM and Zambia in 2002.

CAA Mining* (Private) – Preparing to drill Spodumene (lithium) discoveries close to Ewoyaa in Ghana

(Agreement to earn into 85% on six lithium licenses through expenditure of $8m on licenses)

(CAA holds 70% in Lithium Resources Ghana Limited (LRGL) in return for spending US$4 m and US$2 million already spent to date)

• Spodumene identified in surface and petrographic studies on licenses to the north and east of Atlantic Lithium’s, Ewoyaa resource.
• Petrographic analysis shows spodumene as large euhedral and idiomorph crystals also large and small subhedral grains in samples.
• Work done:
  • Petrographic studies on auger chip samples and surface outcrop both show spodumene,
  • >8k metres of follow up auger drilling,
  • >1,500 auger samples analysed,
  • >5k soil samples collected,
  • Abasaa corridor,  15-20km east of Ewoyaa deposit generating geochemical footprint interpreted to be analogous with lithium mineralisation at depth,
  • $2 million already spent by CAA on exploration.
• Assays: Full field laboratory equipped with PXRF and LIBS, for quick lithium assays recently installed
• Livista Energy:  Cross-shareholding and JV with Livista, a lithium refiner with plans to process lithium in Ghana.
• Target: to prove an initial exploration target offering >10mt @ >1% lithium oxide
• Funding: CAA is looking to raise £0.5-1m in pre-IPO funds for drilling and expenses at a Valuation of £5.85m at 30p/s pre-new money

*Certain SP Angel Partners and employees own shares in CAA Mining. SP Angel’s role is limited to making introductions and interested parties should be aware that investment in a private company can present certain risks not present in listed companies (e.g. limited or no liquidity and no rules compelling disclosure of information to investors).This offer is open to professional investors only and is not offered to retail investors.

Bluejay Mining* (JAY LN) – Bluejay downgrades resource at Dundas on inconsistent results on a portion of the Dundas deposit

Bluejay Mining* (JAY LN) – Progress from 2022 field programme at Disko-Nuussuaq in central Greenland with strong strategic interest around the project

Critical Metals (CRTM LN) – Molulu drilling results

Greatland Gold (GGP LN) – Land access agreed at Ernest Giles, WA

Neometals Ltd (NMT LN) – Grant of lithium-ion battery recycling patent with Primobius

Premier African Minerals (PREM LN) – Mill commissioning starts at the Zulu lithium project

Talon Metals (TLO CN) – Pentagon gives mine developer $20M to find nickel in Michigan

Copper futures sink on buoyant supply as hawkish Fed pushes dollar higher

• Copper prices fell close to 2% to $8,180/t after the dollar took another step higher against a number of currencies.
• The metal currently sits in contango as inventory levels remain high and spot demand is weak.
• China’s state research house expects a return below $8,000/t this year as global manufacturing continues to contract.
• LME inventories are sitting at their highest level since April 2022, up 50% in September.
• However, WoodMac is currently predicting a significant deficit of mined copper concentrate supply by 2025.
• Chinese smelters have ramped up capacity whilst mines remain constrained by grade decline, permitting issues, financing concerns and a lack of greenfield projects.
• WoodMac expects treatment charges to slide from current levels around $95/t to $60/t by 2025 as ore availability becomes increasingly scarcer.

Gold – Powell puts pause to gold’s rally as hawkish FOMC lifts Treasury yields and dollar

• Gold saw its rally peter out following the FOMC meeting yesterday evening, with spot prices sliding to $1,925/oz.
• The meeting saw 12 officials back another rate hike this year vs 7 against the proposition whilst the first rate cut was pushed back to September 2024 by market players.
• The higher-for-longer mantra continued to dominate the Fed presser as Powell stuck to the Fed’s guns of 2% inflation target.
• US Treasury yields pushed higher, with the 10-year climbing past 4.4%.
• Gold has an inverse correlation with Treasury yields and the dollar, with the latter climbing to its highest level against the Yen since October 2022.

Tin inventories rise as electronics sector demand softens as hedge funds slash bullish bets

• LME tin stocks are at their highest level since April 2020.
• Cash premiums slipped from a backwardated premium to a heavy discount last month.
• Shanghai stocks are also rising, with visible global inventories now at double the level of last year. (Reuters)
• The elevated levels come despite a lack of supply from Myanmar, suggesting the buoyant stocks are more reflective of a weak consumer electronics sector.
• Semiconductor sales are also weak, down 17% yoy in Q2 of 2023, improving recently for a 12% yoy decline in July.
• Hedge funds reduced bullish bets by 75% in London since June.
• We expect this trend of market surplus to reverse as smelters cut output on a lack of ore from Myanmar as Wa state officials complete a widespread audit on the industry.
• We are long-term bullish on tin as supply dynamics are weak and electrification continues.
• The fact that Indonesia’s tin mining giant PT Timah is producing at a breakeven cost close to $30,000/t as alluvial and subsea supplies weaken.

Lithium prices ease as China peak seasonal demand period disappoints

• Lithium carbonate prices have eased to US$21,289/t, now down over 62% this year.
• Spodumene prices have weakened to $2,440/t, although the level still presents extremely attractive margins to hard rock producers.
• The recent price weakness reflects disappointment over what is usually a seasonally elevated period for demand from Chinese cathode producers.
• Downstream users traditionally stockpile in China in advance of the National Day Holiday and the ramp up in output to hit targets before year end.
• Battery inventory surpluses are being reported in China, with production to August end in 2023 sitting at c.420GWh vs installation rates of 220GWh. (China Automotive Battery Innovation Alliance)
• Battery makers are suffering from limited margins, weighing on their appetite for lithium products.
• Fastmarkets reports two lithium refiners are putting facilities on care and maintenance on weak order volumes.
• Lepidolite producers in China’s Jiangxi, which contribute to China’s 12% share of global lithium production,  are suspending production on weak sales prices.

VOX Markets Podcast:   https://audioboom.com/posts/8368469-john-meyer-on-chinese-stimulus-plus-arc-bushveld-cornish-metals-empire-metals-tertiary-min

*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts. We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.

Economics

US – The FOMC voted to leave rates unchanged at 5.25-5.50%, in line with estimates, although revised its rates outlook higher as seen in updated dot plots chart.

• Rates outlook from policymakers see fewer cuts in 2024 expecting the fed funds rate to hover between 5-5.25% next year, up from 4.6% expected in June.
• 2025 outlook was also revised higher to 3.9%, up from 3.4%.
• Expectation remains that the Fed will hike rates by at least 25bp before year end.
• Hawkish statement was supported by observations of resilient economic activity expanding at a “solid pace” with jobs gains coming in “strong”.
• Policymakers median estimates for GDP revised higher to 2.1% from 1% for 2023 and to 1.5%, up 0.4pp, for 2024.
• Yields climbed to multi year highs while stocks pulled back following the central bank press conference.
• 2y and 10y notes peaked at 5.20% and 4.45%, highest levels seen mid-2000s, respectively.

UK – The central bank announcement midday is expected to deliver a 25bp hike taking rates to 5.50%, the highest since 2008.

• Focus is on the MPC statement regarding policy outlook following weaker than expected inflation print released yesterday.
• Preliminary PMIs for September are due tomorrow morning and are expected to show business activity remained in contraction for a second consecutive month.
• Next, a major UK retailer, raised its profit guidance for the year as consumers prove to be more resilient than expected, FT writes.
• Pretax profit is expected to come in at £875m for the year up from already revised estimates of £845m guided previously.

Poland – Prime Minister Mateusz Morawiecki said Poland will no longer send weapons to Ukraine and keep modern equipment for itself in a major escalation of tensions, FT reports.

• The announcement comes amid increasing dispute between five eastern EU countries and Ukraine over grain shipments.
• The European Commission earlier cleared Ukrainian grain sales across the block ending restrictions on grain imports imposed by Poland, Hungary, Slovakia, Romania and Bulgaria.
• In response, Poland, Hungary and Slovakia imposed unilateral banks on imports violating EU’s internal market rules while Kyiv responded by filing lawsuits against the three countries in the WTO.
• “Ukrainian authorities do not understand the degree to which Poland’s farming industry has been destabilised,” PM Morawiecki said.
• Poland is heading into parliamentary elections on 15 October with the ruling Law and Justice government seeking a record 3^rd term.

Azerbaijan – Government forces took full control of Nagorno Karabakh region after local forces agreed to lay down weapons.

• Discussions over reintegration of the region with a number of ethnic Armenians living in the area into Azerbaijan are due to start today.
• Protests were reported in Yerevan, the Armenian capital, as people criticised Armenian government for lack of response form authorities regarding the conflict in Nagorno-Karabakh and calling for resignation of PM Nikol Pashinyan.

UK Heat pumps – the UK is far from ready for heat pumps and millions of new EVs

• We reckon the power draw for a million new EVs and heat pumps could break the UK power grid
  • National Grid is not ready for additional power load required
  • Power generators will not be able to keep up with new demand
  • Much UK housing stock also needs improved insulation
• But the National Grid has a simple system for preventing its overload and collapse, it is incredibly slow at any new instillation.
• It will take many years for the UK to develop the necessary national and local grid infrastructure to manage the increased load of replacing gas boilers with heat pumps.
• This is on top of the changes required for heating systems to work efficiently in homes and offices across the nation.
• New high-temperature heat pumps which can reach 60-80C are coming available. They use superior refrigerants (R32) which work better if you don’t want to install larger radiators.
• Regular heat pumps can work up to 60C or 65C though they lose efficiency at these levels and work more efficiently on lower heat settings particularly when the outside temperature is lower.
• Unfortunately, the paperwork and sequencing for homeowners looking to install 3-phase power as required for the simultaneous charging of an EV alongside a heat pump is simply beyond most people.
• National Grid is also said to be quoting timelines for the installation of new EV charging infrastructure of several years out for commercial premises.
• Add it all up and it’s not surprising that Rishi Sunak has pushed out Boris Johnson’s ill-conceived commitment to ban the sale of new oil and gas boilers along with the banning of ICE passenger cars.

Currencies

US$1.0643/eur vs 1.0678/eur previous. Yen 148.30/$ vs 147.94/$. SAr 18.844/$ vs 18.947/$. $1.232/gbp vs $1.234/gbp. 0.641/aud vs         0.646/aud. CNY 7.304/$ vs 7.299/$.

Dollar Index 105.52 vs 105.22 previous.

Commodity News

Precious metals:

Gold US$1,928/oz vs US$1,929/oz previous

Gold ETFs 88.8moz vs 89moz previous

Platinum US$927/oz vs US$940/oz previous

Palladium US$1,269/oz vs US$1,264/oz previous

Silver US$23.25/oz vs US$23/oz previous

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

Base metals:

Copper US$ 8,188/t vs US$8,311/t previous

Aluminium US$ 2,235/t vs US$2,228/t previous

Nickel US$ 19,340/t vs US$19,940/t previous

Zinc US$ 2,497/t vs US$2,506/t previous

Lead US$ 2,183/t vs US$2,223/t previous

Tin US$ 25,970/t vs US$26,015/t previous

Energy:

Oil US$92.4/bbl vs US$93.4/bbl previous

• Crude oil prices edged lower as the EIA reported a 2.1mb w/w US crude draw, together with a 0.8mb draw in gasoline and 2.8mb draw in distillate stocks, with refinery utilisation falling by 1.8% to 91.9%.
• European energy prices edged higher as EU natural gas storage levels rose just 0.05% w/w to 94.3% full (vs 85.3% 5-Yr average), with most EU nations reporting storage levels above 95% full to lift overall storage to 1,074TWh.

Natural Gas €36.220/MWh vs   €38.100/MWh previous

Uranium UXC US$65.50/lb vs US$62.10/lb previous

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$121.8/t vs US$121.4/t

Chinese steel rebar 25mm US$537.3/t vs US$537.6/t

Thermal coal (1st year forward cif ARA) US$129.7/t vs US$130.0/t

Thermal coal swap Australia FOB US$164.0/t vs US$168.0/t

Coking coal swap Australia FOB US$313.0/t vs US$313.0/t

Other:  

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

NdPr Rare Earth Oxide (China) US$71,467/t vs US$71,924/t

Lithium carbonate 99% (China) US$21,289/t vs US$21,577/t

China Spodumene Li2O 6%min CIF US$2,440/t vs US$2,460/t

Ferro-Manganese European Mn78% min US$1,033/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$645/t vs US$645/t

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

Europe Ferro-Vanadium 80% 29.25/kg vs US$28.95/kg

China Ilmenite Concentrate TiO2 US$316/t vs US$316/t

Spot CO2 Emissions EUA Price US$87.2/t vs US$87.4/t

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

Battery News

Sunak confirms plans to push back net zero policies

• Rishi Sunak has announced measures to relax several net zero policies to ‘save money for families.’
• The ban on the sale of ICE vehicles by 2030 has been pushed back to 2035.
• The phase-out of gas boilers by 2035 has been reduced to an 80% phase-out by that date.
• Sunak has also announced that homeowners and landlords would not be fined for not meeting energy efficiency targets.
• The announcements have been met by a lot of criticism from industry experts, and some Labour and Conservative party members.
• The Office for Budget Responsibility recently found that the costs of continued gas reliance were more than double those of reaching net zero.
• The Prime Minister has reiterated that the UK will still reach it 2050 targets.

VinFast EVs to reach European markets this year

• Vietnamese EV maker VinFast plans to ship its first EVs to Europe this year after receiving regulatory approval. (Reuters)
• Under the plan, about 3,000 of its VF8 crossovers would be delivered to France, Germany and the Netherlands in Q4 ‘24 from VinFast’s factory in northern Vietnam.
• The expansion into Europe would represent a four-fold increase from a previous unmet target of delivering 700 cars by last July.

Company News

Bluejay Mining* (JAY LN) 0.71p, Mkt cap £8.5m – Bluejay downgrades resource at Dundas on inconsistent results on a portion of the Dundas deposit

(Bluejay Mining holds 100% of the Hammaslahti and Enonkoski projects)

• Bluejay management have downgraded the resource on the Dundas project in Greenland following the analysis of drill assays from the 2022 field season.
• The work done by Palaris gives a new JORC compliant M&I ‘Measured and Indicated Resource’ at Moriusaq West now stands at 29.7mt grading 1.99% in situ TiO2.
• The new estimate appears to replace the 67.1mt JORC resource grading 3.45% TiO2 (7.3% in-situ ilmenite) on which the PFS was based in 2019.
• While the PFS would have always needed updating after with the passing of time, the downgrade of the resource would require substantial more work before refreshing.
• There is no change to the Maiden ‘offshore’ JORC (2012) ‘Exploration Target’ estimated at 300-530mt with a potential grade of between 0.4-4.8% ilmenite in situ.
• The original PFS was done on the 67.1mt JORC resource meaning that more work will need to be done to evaluate the tonnage needed to justify the development of the Dundas mine.
  • key changes from the MRE 2019 to the MRE 2023 (Table 2) related to:
    • Exclusion of major streams, bedrock outcrops and archaeological sites.
    • Improved topographic and bedrock surfaces, with tighter areal constraints along the high-lying scarp zone along the northeastern edge of the deposit.
    • Definition of new domains, each with unique geological, physical and grade characteristics.
    • Density and grade estimation per domain to constrain the impact of high-grade outliers in the geostatistical interpolation of grades within each domain
• Extrapolation of the new drilling results has had a substantial impact on the mineral resource
  •  “high TiO2 grades from previous drilling disproportionately biased grades across lateral and vertical extensions of the search ellipsoids used for the MRE 2019 grade modelling. This largely explains the lowering of the overall TiO2 grade estimates between the MRE 2019 and the MRE 2023 from 3.26% TiO2 to 1.99% TiO2”
• Bluejay also state:
  • “A correction of the in-situ bulk density, based on the established developed geological domaining, was applied to the MRE 2023 modelling compiled by Palaris”
• Management comment: “the downgrade in tonnage and grade of the partial resource inventory provided by the MRE 2023 led the Bluejay Board and management to make a prompt conclusion that the Dundas Ilmenite Project does not present a viable commercial development opportunity for Bluejay alone”.

Conclusion:  Time constraints mean Palaris were only able to remodel the Moriusaq West part of the mineral resource with no time left to assess Moriusaq East, Iterlak West and Iterlak East.

We are surprised to hear of poor correlation in results between the Palaris drilling program and the previous program organised by SRK.  Palaris used direct push and diamond drilling for their survey as opposed to the Sonic Vibracore drill recommended by SRK in the previous drill program leading us to wonder if a change in the drill method is partly responsible for the downgrade in the resource.

*SP Angel acts as nomad and broker to Bluejay Mining. The analyst has visited the Dundas project and holds shares in Bluejay Mining

Bluejay Mining* (JAY LN) 0.71p, Mkt cap £8.5m – Progress from 2022 field programme at Disko-Nuussuaq in central Greenland with strong strategic interest around the project

(Bluejay Mining holds 100% of the Hammaslahti and Enonkoski projects)

• Bluejay Mining report results and progress from the 2022 field programme on the Disko-Nuussuaq nickel exploration project in central Greenland.
• The program was managed by Bluejay and funded by Kobold metals who are processing the field data using Artificial Intelligence, machine learning and more traditional geological processes.
• Kobold dedicated vastly more time, funding and effort than initially planned into the Disko-Nuussuaq exploration program, largely due to the collection of a very broad range of geochemical and geophysical survey data.
• The acceleration of the field program brought in an enormous amount of data resulting in the confirmation of a number of targets for drilling at Disko-Nuussuaq.
• Kobold is now in a position to decide on the expenditure of US$11.6m by end 2024 or cede control of the project to Bluejay through the reversion of 2% of the jv company to Bluejay.
• In the meantime, the jv company has applied for a new 116.6sqkm exploration license has been submitted to the government of Greenland.
• The hugely long press release is a geological masterpiece on the use of exploration for targeting nickel sulphide deposits and highlights the techniques being used by the Kobold / Bluejay team.
• Falcon AGG Surveys, HeliSAM and SAMSON EM Surveys, UAV-borne magnetic surveys, Hydrographic and Bathymetric and Photogrammetric, soil geochemistry using MMI, stream sediments and rock geochemistry.
• Analysis of the surveys show an abundance of primitive, high-Mg olivine-rich magma with picrites and olivine basalts which look similar to Norilsk.
  • “The Vaigat Formation at Disko-Nuussuaq is recognised as the most voluminous picrite succession known on Earth, exceeding that of Noril’sk.”
• The analysis shows three important structures in the Disko-Nuussuaq in Eastern Boundary fault, the ‘K-Q’ fault and the Itilli fault systems.
  • “A clustering of mapped volcanic eruption sites along the N-S orientated K-Q fault system, within Nikkeli’s licence areas, demonstrates its deep-seated nature as a preferred pathway for magmas.”
• Sulphur-rich sedimentary wall rocks have been identified with several excellent sources of sulphur including black shales, coals, other organic-rich sediments, as well as hydrocarbons.
  • “Lithogeochemical modelling including isotope geochemistry reveals significant degrees of crustal assimilation “
  • “Sulphide segregation from the magmas as shown by the 28 tonne Igdlukunguaq boulder of high-grade massive Ni-Cu-Co-PGE sulphides and an Accumulation of both Ni-Cu-Co-PGE sulphides and mineralised native iron cumulates at the base of sills seen within Nikkeli’s licences.
  • Strong chalcophile and siderophile element depletion in volcanic rocks in contaminated lavas of the Vaigat Formation.
  • Proximity to magma conduit systems within Nikkeli’s licences areas along with similar intrusive bodies interpreted at depth based upon various geophysical surveys within the Kuugannguaq and Aaffarsuaq valleys.
  • Large-scale conductive bodies within the Kuugannguaq and Aaffarsuaq valleys interpreted as intrusions, the largest being c. 10.0 km long and around 2.0 km wide and another being c. 4.8 km long and 800m wide. Both are comparable in footprint to the intrusions that host the world-class Noril’sk-Talnakh ore bodies in Siberia.
  • Erosion is sufficiently deep to expose the base of the volcanic pile on Disko-Nuussuaq and therefore the magmatic conduit systems beneath the volcanics; positioned at a similar erosional level to Noril’sk.2

Conclusion:   There is strong strategic interest in the Disko-Nuussuaq project with other majors encircling some areas of the prospect. Kobold and Bluejay have done an enormous amount of work at Disko-Nuussuaq as shown in the press release. We hope Kobold will press ahead with the close identification of key targets for drilling.

*SP Angel acts as nomad and broker to Bluejay Mining. The analyst has not visited the Disko-Nuussuaq site but has visited the nearby town of Ilulissat in Greenland and holds shares in Bluejay Mining

Critical Metals (CRTM LN) 18.5p, Mkt Cap £12m – Molulu drilling results

• Critical Metals has reported results from the first drillhole (DD-1-01) at its Molulu exploration in the DRC’s Katangan Copper Belt where it holds an indirect interest of 70% through its wholly-owned Madini Occidental Limited.
• The company reports results of “high grade copper mineralisation of 13.02%, 6.77% and 5.42% from 10.80 meters to 15.83 meters deep” although it is unclear in the announcement the width and depths of the individual reported copper grades.
• The initial drilling is focussed on “three areas identified by mapping and geophysics analysis completed earlier in the year … [and] … consists of 1000 meters of drilling the oxide zone and is aimed to increase the understanding of the Molulu Project, identify other potential targets and increase the mineral resource”.
• Critical Metals says that it expects results from a further 9 holes “imminently”.
• Although the company mentions resource potential increases, CEO, Russell Fryer’s comment that “Further work is needed to fully understand the potential of our ore body, which has been accelerated by our decision to bring in a second drill rig this week” hints that the company may still be some way from resource definition.

Greatland Gold (GGP LN) 6.95p, Mkt Cap £355m – Land access agreed at Ernest Giles, WA

• Yesterday, Greatland Gold reported that it has secured an access agreement to the Ernest Giles project, located around 250km northeast of Laverton, WA, with the Manta Rirrtinya People representing the Native Title holders.
• The company explains that “Prior to the discovery of Havieron in 2018, Ernest Giles was Greatland’s highest priority project. The Company has previously completed 62 RC holes for ~17,000m and 4 diamond holes for ~1,300m of diamond drilling”.
• The project area, totalling over 1,950km²,“covers a folded belt of magnetic greenstone rocks (Figure 2) typical of the highly gold and nickel endowed Archean Goldfields of Western Australia”.
• Geophysical work is underway to “better understand the geology of the entire Ernest Giles belt and prioritise targets, prior to systematic drill testing of the resultant priority targets”.

Neometals Ltd (NMT LN) 22p Mkt cap £117m – Grant of lithium-ion battery recycling patent with Primobius

• Neometals reports it has received a patent for a key step in its lithium-ion battery recycling process.
• The Group has filed 17 national patent applications for the LiB Recycling technology across a number of jurisdictions globally.
• Neometals owns 50% of the project alongside SMS group.
• The technology is designed to recover materials from Lithium-ion batteries and end-of-life cells.
• They aim to recover cobalt, nickel, lithium, and manganese.
• The first stage sees shredding and separation, displacing casings, foils, plastics, and anode materials.
• The second stage sees leaching, purification, precipitation, and solvent extraction through hydrometallurgical refining.
• Neometals is also looking to produce high-purity vanadium pentoxide from steelmaking slag.
• It also has an electrolysis process backed by MinRes for producing lithium hydroxide from low quality brine operations.

Premier African Minerals (PREM LN) 0.53p, Mkt Cap £123m – Mill commissioning starts at the Zulu lithium project

• Premier African Minerals reports that it is starting the commissioning of the ball mill at its Zulu lithium project in Zimbabwe.
• The company says that it expects to start processing material through the mill on Monday 25^th September and that it expects “production of up to 1,000 tons per month of spodumene from November 2023 at Zulu”.
• The mill was relocated from Premier African Minerals’ RHA tungsten mine, also in Zimbabwe.
• “Open pit mining operations at Zulu are expected to resume next week and while there is already substantial material on the run-of-mine pad, it remains critical that the plant has sufficient ore for current processing”.
• Earlier this year, it emerged that the 40tph pilot plant at Zulu had suffered construction delays and reports were issued that the plant required modifications to achieve its design performance, so it is encouraging to see progress on rectifying these issues.

Conclusion: The commissioning of the mill at the Zulu lithium project should help to address the shortcomings identified earlier this year.  We await news on the effectiveness of the mill as the commissioning process proceeds.

Talon Metals (TLO CN) C$0.29, Mkt cap C$247m – Pentagon gives mine developer $20M to find nickel in Michigan

• Talon Metals reports the award of $20.6m from the federal government to accelerate exploration for nickel on licenses which include parts of Minnesota and Michigan’s Upper Peninsula.
• Talon has a new proprietary down hole geophysics process for nickel which they are using with their own drill rigs to discover more nickel.
• The grant is authorized under the Defense Production Act and paid by a supplemental funding bill passed by Congress to supply aid to Ukraine.
• Talon has agreed to spend $21.7m in matching funds on a cost-share basis over 39 months.
• Talon mineral processing options:
  • Humboldt Mill that will be winding down at Eagle which is the closest to the new prospects
  • NorthMet / NewRange process plant facilities in Minnesota
• Talon also received a $114m award from the US Department of Energy in 2022 from the DOE to build a new processing plant in South Dakota for the Tamarack mine.
• Talon has a deal to supply Tesla with 165mlbs of nickel from its Tamarack mine in jv with Rio Tinto.
• Talon is moving exploratory drilling rigs from Minnesota to Michigan as it progresses the Tamarack mine permitting process.

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                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

*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.

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).

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%