SP Angel Morning View -Today’s Market View, Thursday 22nd February 2024

China EV price war sparked by BYD announcements

MiFID II exempt information – see disclaimer below

Anglo American (AAL LN) – Weaker commodity prices hit 2023 results

Ariana Resources (AAU LN) – Drilling results from Kizilcukur

Calidus Resources (CAI Au) – Maiden reserve and PFS at Bulletin deposit

First Quantum (FM CN) – Refinancing following Panama shutdown

Great Southern Copper (GSCU LN) – Especularita project expansion

Mineral Resources (MIN AU) – Half year results as iron ore funds lithium development

Sayona Mining (SYA AU) – Piedmont sells its stake

Sylvania Platinum (SLP LN) – Remaining profitable in the face of lower PGM prices

China EV price war sparked by BYD announcements

• BYD this week announced its new EV priced from 79,800 yuan (USD $11,000)
• The affordable EV has been launched to lure customers away from petrol-powered rivals like Volkswagen and Toyota.
• Following the announcement, SAIC-GM-Wuling, Changan Automobile and Hozon New Energy Automobile have cut prices of budget models to below the 100,000 yuan (USD $13,894) mark.
  • SAIC-GM-Wuling have reduced the price of its Xingguang hybrid by 6000 yuan to 99,800 yuan.
  • Changan have reduced the price of its Qiyuan Q05 SUV by 12,000 yuan to 73,900 yuan.
  • Hozon discounted its Neta X SUV by 22,000 yuan to 99,800 yuan.
• 2024 is seen as a critical year for NEV manufacturers.
• “It is a critical year for new-energy vehicle companies in 2024 because of harsh competition,” said Cui Dongshu, general secretary of the China Passenger Car Association (CPCA). “Most car assemblers are set to offer discounts and engage in price wars to retain market share.”

EU saw record downturn in EV sales in December

• EU Battery-EV and plug-in hybrid EV registrations were 294,166, down 29% yoy – the worst decline in 10 years.
• Battery EVs were down 25%, excluding April 2020 (start of Covid pandemic), this was the first drop in sales since December 2016.
• For the year, EVs accounted for 24% of new vehicle registrations in Europe.

Iron ore futures continue to slide as government stimulus fails to prop up prices

• Iron ore prices in China fell below $120/t for the first time since October.
• Beijing has been issuing minor stimulus slowly, with ‘bazooka’ style funding yet to be released to prop up the beleaguered property sector.
• 62% Fe prices are down nearly 10% this week since the reopening after Lunar New Year holiday.
• Steelmaking has been supported by China’s exports, however ample iron and steel stockpiles are weighing on prices.

Gold rally holds as dollar weakens despite hawkish Fed comments

• Gold prices are holding around the $2,030/oz mark, having regained ground from the inflation-triggered sell-off last week.
• Fed comments in the minutes highlighted concerns over inflation risks, but cuts are expected to come before 12m change in PCE inflation gets to 2%.
• US 10 year has sold off to over 4.3%, although the dollar index has weakened.

Copper rallies as traders look to looming deficits and stronger Yuan

• Copper is holding around $8,550/t, climbing for a third day this week.
• Chinese traders are expected to pick up buying following the Lunar New Year break.
• Earnings calls this week showed Majors continue to stick to their long-term expectations of higher copper prices, committing further CAPEX investments.
• Analysts expect deficits to return this year following Cobre’s closure.
• WoodMac estimate c.1.37mt of copper mine supply forecasts between January 2023 and January 2024,
• The Yuan has been strengthening against the dollar, supporting Chinese buyers in the international market.
• However, we note Glencore’s short to long term copper price assumptions at $8,200-8,500/t.

Nickel – prices jump as US considers further sanctions against Russia

• Nickel is always a wild beast of a metal and this year is proving the point with a sharp upturn in prices as the US considers further sanctions against Russia.
• While many sanctions against Russia do not appear to be working, the disruptive impact of sanctions could potentially cause temporary shortages.
• We note LME warehouse stock levels are relatively buoyant at 70,296t vs 41,292t five months ago.
• Prices have fallen as Chinese Gigafactories move increasingly to LFP battery chemistries which do not use nickel while Chinese production of nickel in Indonesia from laterite soils has continued to ramp up in the expectation of
• A recent investigation has shown that many sanctioned goods continue to end up in Russia including parts for drones and other weapons with Western manufacturers exporting to non-sanctioned but Russian friendly nations.
• Increases in exports from nations such as Armenia and Kyrgyzstan into Russia appear to mirror increased trade from the west into these nations rendering the US and EU sanctions regimes ineffective.

Economics

US – Estimates beating Nvidia results drive risk sentiment higher with S&P 500 and Nasdaq 100 futures trading nearly 1% and 2% higher, respectively.

• Both revenues and earnings came ahead of expectations with the Company releasing market beating outlook on a continuing growth in AI driven demand for semiconductors.
• “Accelerated computing and generative AI have hit the tipping point… demand is surging worldwide across companies, industries and nations,” Nvidia CEO said in a statement.
• Strong Nvidia results saw share prices for other chipmakers like AMD, Broadcom and Marvell Technology picking up in late trading, Bloomberg reports.

China is offering to work with the EU to protect free trade and is offering to practice multilateralism to promote an equal and multi-polar world and inclusive economic globalisation.

• The move comes as a BYD car carrier with >7,000 new EVs steams into Europe.
• The next four car carriers each have capacity for 9,400 vehicles.
• BYD plans to operate seven car carriers by 2025 .
• BYD production is expected to rise to >629,000 vehicles in 2028. The company is produced >3m EVs last year exceeding sales by Tesla in Q4 2023
• France has effectively barred Chinese EVs from its local EV subsidy scheme with other nations likely to follow.
• The EU recently opened an anti-subsidy investigation against CRRC, the China-state owned train manufacturer which has agreed to sell electric locomotives to Bulgaria.
• We suspect there will be a great deal of political negotiation to enable China to sell its vehicles across Europe.

MAN Group says China equity market collapse mirrors 2007 US meltdown

• China banned one major fund from short selling last week in an effort to stem the rout in Chinese equities (SCMP).
• Many Quantitative funds sold out of the market causing many smaller companies to collapse by historic margins.
• The rout wiped >$6tn off the value of Chinese equities with the authorities freezing the accounts of at least one major hedge fund for three days after it dumped around $360m of equities.
• State-backed funds have been seen supporting small-cap stocks putting a floor into the market and enabling the CSI 300 to recover 9% from its recent five year low

China has invested >$1tn into Belt & Road initiatives

• The initiative has led to $634bn in construction contracts, mainly with Chinese companies doing the work, $419bn into related enterprises.

Eurozone – Business activity contracted at the slowest pace in eight months in February with a stabilisation in services output offsetting a further steep downturn in manufacturing, PMIs data showed.

• A deeper contraction in Germany was countered by a slower drop in France and faster growth in the rest of the region.
• Employment increased for a second month running while final goods prices inflation accelerated for a fourth month hitting the highest since last May.
• Flash Manufacturing PMI: 46.1 v 46.6 January and 47.0 est.
• Flash Services PMI: 50.0 v 48.4 January and 48.8 est.
• Flash Composite PMI: 48.9 v 47.9 January and 48.4 est.

Germany – Manufacturing sector contraction unexpectedly accelerated in February amid falling domestic and foreign demand, according to latest PMI data.

• Interestingly, business costs increased at a faster pace partially driven by strong wage pressures in the service sector.
• The overall rate of output prices trended sideways with higher charges in the service sector contrasting to declines in the manufacturing sector.
• Businesses reported limited impact on supply chains from the Red Sea shipping disruption.
• New orders, a good indicator of demand, fell at the quickest pace for four months.
• Flash Manufacturing PMI: 42.3 v 45.5 January and 46.0 est.
• Flash Services PMI: 48.2 v 47.7 January and 48.0 est.
• Flash Composite PMI: 46.1 v 47.0 January and 47.5 est.

France – Flash Manufacturing PMI: 46.8 v 43.1 January and 43.5 est.

• Flash Services PMI: 48.0 v 45.4 January and 45.6 est.
• Flash Composite PMI: 47.7 v 44.6 January and 45.0 est.

UK – Business activity expanded for the fourth month and at the fastest pace since May 2023 largely supported by growing services sector.

• New business expanded at the fastest pace since May 2023 driven by services.
• Employment increased only slightly while inflationary pressures persisted with final goods prices marking the steepest increase since July 2023.
• Flash Manufacturing PMI: 47.1 v 47.0 January and 47.5 est.
• Flash Services PMI: 54.3 v 54.3 January and 54.1 est.
• Flash Composite PMI: 53.3 v 52.9 January and 52.9  est.

DRC – DRC Prime Minister resigns dissolving government possibly SANDF involvement in North Kivu

• DRC, PM, Jean-Michel Sama Lukonde resigned on Tuesday prompting the dissolution of the DRC government.
• The resignation comes after France said earlier in the day it was “very concerned” about the situation in the eastern part of DRC.
• France has asked Rwanda to stop funding theTutsi-led M23 rebels who have killed scores of people and displaced hundreds of thousands. The conflict risks sparking war between the DRC and Rwanda.
• The M23 rebels are said to have captured cobalt-rich mines in North Kivu following the detention of Edouard Mwangachuchu, a Tutsi from Rwanda who is reported to be aligned to President Kagame.
• A DRC military court charged Mwangachuchu for treason late last year along with charges relating to ownership of war weapons, and ammunition.
• The South African National Defence Force SANDF is reported to have been deployed to the Masisi area north of Kivu with instruction to recapture the area and its mines from the M23 rebels.
• Commentators are concerned the SANDF force may capture and keep the cobalt mines in North Kivu dividing the spoils amongst themselves.
• The DRC is also reported to have made South Africa its preferential contractor for a new Gigafactory in the DRC.
• DRC president, Felix Tshisekedi recently delayed the Great Inga Dam hydropower project backed by Andrew Forrest on the pretext of bringing African companies into the project.
• Unfortunately for SANDF some 85% of its equipment is reported to be inoperable due to lack of maintenance and spares.

Argentina – Glencore CEO praises Argentina and Javier Milei’s administration as it advances copper projects

• Glencore, which holds the Mara and El Pachon Projects in Argentina, reiterated their commitment to the country in yesterday’s earnings call.
• Gary Nagle described the ‘very business-friendly administration in place in Argentina.’
• He noted that ‘they’re looking for investment, they want to give certainty to investors, and they want to see investors come and spend their money in country and be able to take the money out.’

Russia – West breaks Russian Lockbit Ransomware gang

• The National Crime Agency of the UK has taken control of a website run by the Lockbit Ransomware gang. (AsiaFinancial)
• NCA UK in close cooperation with the FBI has broken the ransomware ring and issued indictments for two Russians behind the operation.
• The NCA is reported to have infiltrated the group, acquired its data and taken the site off the dark web.
• Police in Poland and Ukraine have made two arrests.

Currencies

US$1.0883/eur vs 1.0808/eur previous. Yen 150.13/$ vs 150.18/$. SAr 18.833/$ vs 18.889/$. $1.271/gbp vs $1.262/gbp. 0.659/aud vs 0.656/aud. CNY 7.186/$ vs 7.189/$.

Dollar Index 103.48 vs 104.06 previous.

Commodity News

Precious metals:

Gold US$2,033/oz vs US$2,028/oz previous

Gold ETFs 83.0moz vs 83.0moz previous

Platinum US$896/oz vs US$906/oz previous

Palladium US$968/oz vs US$983/oz previous

Silver US$23.13/oz vs US$23/oz previous

Rhodium US$4,550/oz vs US$4,550/oz previous

Base metals:

Copper US$ 8,597/t vs US$8,559/t previous

Aluminium US$ 2,226/t vs US$2,262/t previous

Nickel US$ 17,140/t vs US$16,655/t previous

Zinc US$ 2,415/t vs US$2,414/t previous

Lead US$ 2,085/t vs US$2,065/t previous

Tin US$ 26,545/t vs US$26,700/t previous

Energy:

Oil US$83.4/bbl vs US$82.1/bbl previous

• Crude oil prices edged higher despite the API reporting a larger than expected 7.2mb w/w build (+4.3mb exp) to US crude stocks.
• European energy prices remain were flat as EU natural gas storage levels fell just 1.3% w/w to 64.9% full (vs 48.4% 5-Yr average), with Germany reporting levels at 71.3% full and aggregate storage at 740TWh.
• Repsol announced plans to return €10bn to shareholders (54% buyback) over the next four years, based on distributing 25%-35% of cash flow from operations, and spending €16-19bn on investments (35% low carbon).
• Chord Energy announced it would acquire Enerplus for $3.8bn in cash and shares to create a 287kb/d Williston basin-focused producer with an enterprise value of $11bn and expected post-tax synergies of over $750m.

Natural Gas €24.1/MWh vs €23.8/MWh previous

Uranium Futures $99.3/lb vs $101.3/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$117.4/t vs US$119.6/t

Chinese steel rebar 25mm US$570.7/t vs US$570.5/t

Thermal coal (1st year forward cif ARA) US$90.0/t vs US$90.0/t

Thermal coal swap Australia FOB US$124.3/t vs US$122.0/t

Coking coal swap Australia FOB US$307.0/t vs US$310.0/t

Other:

Cobalt LME 3m US$28,550/t vs US$28,550/t

NdPr Rare Earth Oxide (China) US$53,924/t vs US$54,667/t

Lithium carbonate 99% (China) US$12,246/t vs US$12,241/t

China Spodumene Li2O 6%min CIF US$1,000/t vs US$1,000/t

Ferro-Manganese European Mn78% min US$1,072/t vs US$1,065/t

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

China Graphite Flake -194 FOB US$560/t vs US$560/t

Europe Vanadium Pentoxide 98% 5.8/lb vs US$5.8/lb

Europe Ferro-Vanadium 80% 27.55/kg vs US$27.55/kg

China Ilmenite Concentrate TiO2 US$322/t vs US$321/t

Spot CO2 Emissions EUA Price US$57.8/t vs US$56.1/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$290.0/t

Battery News

SQM – SQM venture arm invests $9.4m in UK EV battery recycling firm Altilium

• SQM Lithium Ventures has invested $9.4m into Altilium, a British electric vehicle battery recycler  (Reuters).
• Altilium is looking to expand its recycling capacity in the UK to avert the shipment of back mass to China for processing.

Powin and Pulse Energy partner to build 50MW battery storage in UK

• The agreement will see a 50 MW/110 MWh Battery Energy Storage System (BESS) deployed on project Overhill, located in Scotland.
• By 2030, the UK will require nearly 40GWh of BESS to help integrate renewable energy, enhancing the stability and security of the UK electricity system.
• Powin will provide its Stack750 energy storage system with integrated StackOS software, while Pulse will oversee asset delivery and manage operations across the project lifecycle.

Thailand to push EVs with new incentives and grants

• Thailand’s National Electric Vehicle Policy Committee (EV Board) has approved incentives to encourage companies to transition their commercial fleet of trucks and buses to EVs.
• The EV Board also approved cash grants to entice EV battery manufacturers.

Company News

Anglo American (AAL LN) 1,784p, Mkt Cap £23bn – Weaker commodity prices hit 2023 results

• Reporting results for the year to 31^st December 2023, Anglo American reports a decline of over 90% in attributable earnings to US$283m (2022 -US$4.5bn)and a halving of its annual dividend to US$0.96/share (2022 – US$1.96/share).
• Anglo American says that “underlying EBITDA decreased by $4.5 billion to $10.0 billion (2022: $14.5 billion) … impacted by lower prices in PGMs, as well as diamonds, which were predominantly driven by mix. As a result, the Group Mining EBITDA margin of 39% was lower than the prior year (2022: 47%)”.
• The lower EBITDA reflects a “$5.5 billion revenue impact of PGMs and diamonds at cyclical lows … [which outweighed a] … 2% volume increase and unit costs held to +4% despite high inflation”.
• Iron-ore was the largest contributor to EBITDA delivering around 40% (US$4.0bn vs US$3.5bn in 2022) of the total followed by copper at 32% (US$3.2bn vs US$2.2bn in 2022).
• Performance of the copper operations was boosted by the completion of the ramp-up at Quellaveco which “produced 319,000 tonnes of copper at unit cost of 111 c/lb”.
• The magnitude of the weaker PGM and diamond markets on EBITDA saw the contribution of PGMs decline from US$4.4bn in 2022 to US$1.2bn and that of De Beers drop to US$72m from US$1.4bn in 2022.
• The company’s analysis shows that prices delivered a US$4.8bn hit to EBITDA with inflation impacts adding a further US$0.7bn impact although foreign exchange effects added a positive US$1bn.
• “Net debt …of $10.6 billion increased by $3.7 billion since 31 December 2022” while capital expenditure of US$5.7bn during the year was at a similar level to that in 2022.
• “Growth capital expenditure of $1.3 billion primarily related to the Woodsmith project and the remaining spend on completing Quellaveco”.
• Commenting on the Woodsmith project, the company says that shaft sinking progressed well with the “service shaft is now c.745 metres deep, having reached the expected depth for the year” with sinking of the production shaft having started in January 2023 “now at a depth of c.510 metres”.
• In 2024, shaft sinking rates at Woodsmith are expected “to decrease due to the expected hardness of the rock and potential water fissures” in a “strata called the Sherwood sandstone … [which the company expects to reach] … around mid-2024”.  The company is budgeting US$0.9bn for Woodsmith in 2024 “the bulk of which will continue to be invested on shaft sinking and tunnel boring activities”.
• Today’s announcement includes a 3-year production forecast for Anglo American’s main commodity groups:

• • Copper production of 730-790,000t in 2024 (2023 – 862,000t) expected to decline to 690-750,000t in 2025 before increasing to 760-820,000t in 2026;
  • Nickel production in the range 36-38,000t in 2024 (2023 – 40,000t) and 35-37,000t in each of 2025 and 2026;
  • PGM (metal in concentrate) between 3.3-3.7m oz in 2024 (2023 – 3.8moz) and between 3.0-3.4moz in both 2025 and 2026;
  • Diamonds production of 29-32m carats in 2024 (2023 – 31.9m carats), 30-33m carats in 2025 and 32-35m carats in 2026;
  • Iron Ore production of between 58-62mt in 2024 (2023 – 59.9mt), 57-61mt in 2025 and 58-62mt in 2026; and
  • Steelmaking coal output of 15-17mt in 2024 (2023- 16mt), 17-19mt in 2025 and 18-20mt in 2026

• Chief Executive, Duncan Wanblad said that measures to combat “the effect of high inflation on our costs, while facing a cyclical downturn in PGMs and diamonds … [are expected to reduce] … annual run rate costs by $1 billion and capital spend by $1.6 billion over the next three years, while also cutting out unprofitable volumes”.
• He characterised this “value over volume mindset represents our biggest margin lever to enhance returns … [and said that Anglo American is] … systematically reviewing our assets and will take further actions as needed to ensure their competitiveness”.
• In a separate announcement today, Anglo American says that it is to acquire Vale’s Serra da Serpentina iron ore resource and integrate it with its contiguous Minas Rio iron ore operation in Brazil.
• “Under the Transaction’s terms, Vale will contribute Serpentina and US$157.5 million in cash to acquire a 15% shareholding in the enlarged Minas-Rio”.
• “Serpentina¹ contains a Mineral Resource of 4.3 billion tonnes of iron ore, with a significantly larger total endowment upside that reflects the total strike length of the orebody of more than twice that of Minas-Rio. Serpentina is also of a higher iron ore grade than Minas-Rio’s already high grade ore and contains predominantly softer friable ore that together are expected to translate into lower unit costs and capital requirements for its extraction”.
• Anglo American says that the “combination of the two resources also offers considerable expansion opportunities, including the potential to double production, which Anglo American and Vale will assess under the Transaction’s terms”.

Conclusion: Anglo American is looking for sustainable capital and operating cost savings and reviewing its assets in the face of weaker commodity prices, particularly for diamonds and PGMs

Ariana Resources (AAU LN) 1.73p, Mkt Cap £19.8m – Drilling results from Kizilcukur

• Ariana Resources has released drilling results from its programme of infill and extension drilling at the 23.5% owned Kizilcukur project in Turkey.
• The company highlights:
  • An intersection of 1.9m at an average grade of 30.56g/t gold and 37.7g/t silver from a depth of 99.7m in hole KCR-D54-23; and
  • 17.2m at an average grade of 1.99g/t gold and 153.4g/t silver from 14m in hole KCR-D40-23; and
  • 2.9m at an average grade of 9.62g/t gold and 25.3g/t silver from 27.2m depth in hole KCRD32-23
• Ariana Resources says that the, now completed, “drilling programme revealed the complex multi-phase mineralisation characteristic of the Kizilcukur deposit. Three different mineralisation phases have been identified and are now being evaluated in further detail. These represent epithermal quartz veins, manganese-rich zones, and a deeper massive sulphide lead and zinc-rich zones, which are suggestive of a low to intermediate sulphidation type system”.
• The company plans two phases of further drilling at Kizilcukur in 2024:
  • A first phase of ~1,000m “will focus on potential extension zones close to the currently defined mineralisation and will also include infill holes to increase our confidence in areas where the data density requires improvement” and
  • A second phase of up to 2,500m of exploration drilling “testing the extent of surface anomalies at depth and drilling below historic workings seen at surface”
• Managing Director, Dr. Kerim Sener, said that the final results from the 2023 drilling programme at Kizilcukur “bodes well for the work currently underway on our revisions to the geological model and ultimately the updated resource”.
• He said that the “most interesting result is the 17m intercept at almost 2g/t gold and 150g/t silver … from 14m downhole depth on the Zafer Vein. This is a vein that was not particularly well drill-tested previously and represented part of the Inferred Resource. We are now confident that this vein demonstrates further potential along strike and at depth”.
• He also explained that “Kizilcukur is continuing to shape up very well as a potential source of satellite feedstock for the Kiziltepe Sector. Drill spacing has already been reduced to an average of 20m laterally and 25m vertically, which is sufficient for conversion of most of the Resource to the Measured category”.

Conclusion: We look forward to the incorporation of the 2023 drilling results into an updated resource estimate for Kizilcukur and to results from the continuing programme in 2024.

Calidus Resources (CAI Au) A$0.16 Mkt Cap A$187m – Maiden reserve and PFS at Bulletin deposit

• Calidus reports a maiden reserve at Bulletin alongside a PFS, targeting production later this year.
• Reserves of 600kt at 2.86g/t Au for 55koz. Inferred resource of 100kt at 2.55g/t Au for 8koz.
• PFS shows LOM of 2 years, AISC of $1,140/oz and upfront CAPEX of $11.2m.
• The introduction of the Bulletin pit is intended to support existing ore from the Klondyke pit as Calidus looks to ramp up Warrawoona to 100koz pa.
• Bulletin was previously mined in 2004 and sits on the Warrawoona Supergroup greenstone belt.
• The PFS suggests a strip ratio of 12.2:1, ore loss of 7%, dilution of 37% and will seek to use a two stage pit approach.
• The ore will be processed at the existing Warrawoona CIL plant.

First Quantum (FM CN) C$13.4, Mkt cap C$14.2bn – Refinancing following Panama shutdown

• First Quantum has announced a major recapitalisation of its balance sheet.
• The Company has secured a $500m prepayment, amended existing $2.2bn worth of bank facilities revising its covenant and intents to issue $1bn worth of equity and $1.6bn worth of senior secured second lien notes.
• Upon completion, the refinancing will boost liquidity to $2bn and reduce net leverage to 2.3x.
• $1bn of equity has been underwritten at a placing price of C$11.10/share.
• The $1,600m in senior secured second lien notes will be due 2029, with the interest rate set to be agreed at the time of the pricing of the offering.
• The loandholder’s covenant headroom will be increased to 5.7x to 2Q25, ,5x from 3Q35, <4.25x 1/2Q26 and < 3.75x thereafter.
• FQM had previously announced plans to reduce CAPEX by $400m in 2024 and $250m in 2025.
• They are also seeking to sell the Cobre Las Cruces asset, which they suggest is ‘well advanced with broad interest.’
• They note that there is ‘strong interest in a minority stake in the Zambian business.’
• FQM’s Zambian operations include Kansanshi (LOM to 2045), Sentinel (LOM to 2035) and Enterprise (LOM to 2034).
• Production guided for 2024 at 370-420kt Cu, 22-27kt Ni and 95-115koz Au.
• Copper guidance increases to 400-460kt Cu for 2025 and 2026.

Conclusion: First Quantum has been working hard to recapitalise its balance sheet following the unexpected closure of the Cobre Panama mine. The Company is keen to restart operations at the mine, but believes their ‘comprehensive refinancing strategy means we have a sustainable business even prior to a restart of Cobre Panama.’ Elections are due to be held on 5^th May, in the meantime, FQM has launched international arbitrations in Miami and Washington, seeking up to $20bn from the Panamanian government.

Great Southern Copper (GSCU LN) 2.7p, Mkt Cap £8.9m – Especularita project expansion

• Great Southern Copper has announced letters of intent to expand its Especularita project in Chile through the acquisition of two further properties.
• The company is securing options to earn 100% of the Cerro Negro and Artemisa properties over the next 4-5 years.
• “Cerro Negro includes the high-grade Mostaza Cu-Ag deposit previously mined by Antofagasta Minerals” with option payments totalling US$2m, weighted towards a final US$1.5m payment within 5 years of the signing of the agreement.
• The agreement for Artemisa, which “includes the Viuda, Brecha Amarilla, Paclas and Los Rulos prospects that include additional porphyry copper+gold and skarn targets”, will earn the company 100% of the property over 4 years for option payments totalling US$2.2m over 4 years with payments again weighted towards the latter years of the agreement with US$1.5m payable in the 4^th year.
• Explaining that the agreements had “taken years of patient work”, CEO, Sam Garrett, said that “the Cerro Negro and Artemisa prospects provide us with key geological insights into the potential for porphyry copper-type mineralisation occurring at depth beneath the Colorada lithocap and expand the area available for exploration”.
• Explaining that the company plans “to assess rapidly both properties with detailed sampling, geophysics and metallurgy programmes with a view to completing proof-of-concept scout drilling of both targets within the next 12 months, including possible deep-drilling targeting buried porphyry copper systems … [Mr. Garrett said that the] … Colorada lithocap is vast, one of the largest under-explored lithocaps in Chile’s coastal metallogenic belt, and could potentially conceal one or more porphyry copper centres”.

Conclusion: We await news from the continuing exploration programme at Especularita and the results of the initial work at the new properties with interest..

Mineral Resources (MIN AU) A$61 Mkt Cap A$12bn – Half year results as iron ore funds lithium development

• MinRes, West Australian miner and mining services provider.
• EBITDA reported at A$675m from A$2,515m. Net debt at A$3,550m.
• The Group issued a US$1.1bn worth of senior unsecured notes over the period, with cash on hand at A$1,400m.
• Mining services delivered EBITDA of A$254m.
• Iron ore EBITDA at A$266m with average prices achieved of US$111/t, increased from US$84/t.
• Lithium EBITDA of A$271m, noting weak lithium prices but improved plant recoveries and increased volumes.
• Wodgina pre-stripping continues, Mt Marion shipped 99kt SC6 equivalent.
• The Company continues to invest in the Onslow Iron Ore project, spending A$1.5bn on CAPEX over the period, majority of which went to Onslow.
• The Company expects Wodgina costs of A$875-950/t SC6 equivalent on a FOB basis, with Mt Marion at A$800-900/t SC6 equivalent.
• Spodumene grade for Mt Marion expected at 3.8% for 2024, Wodgina at 5.5%.
• CAPEX guided at A$544m for lithium, including A$280m sustaining. Iron Ore CAPEX for Onslow at A$1,955m for the period, A$330m excluding Onslow. Total CAPEX guided at A$3,228m.
• The Company sold their 14.5% stake in Azure, which is currently under offer from SQM and Hancock.
• CEO and Founder MinRes Chris Ellison called out balance sheet critics, describing them as ‘a few cowboys.’

Sayona Mining (SYA AU) A$0.046, Mkt Cap A$474m – Piedmont sells its stake

• Piedmont Lithium sold ~$60m worth of stock in an off-market block trade.
• Piedmont sold 1,152m shares (~11%) at A$0.052 per share reducing its stake in the Company to zero.
• Piedmont retains 25% in North American Lithium (NAL) operations on a project level as well as a long term offtake agreement for NAL concentrate.
• Sayona is trading nearly 30% down this morning

Sylvania Platinum (SLP LN) 51p, Mkt Cap £140m – Remaining profitable in the face of lower PGM prices

• In its financial report for the six months to 31^st December 2023, Sylvania Platinum reports lower revenues of US$40.8m (H1 FY2023 – US$79.9m) as a result of a “drop in basket price in USD terms” which also reduced Group EBITDA to US$7.3m (H1 Fy2023 – US$45.6m).
• Sylvania Platinum reports H1 net profit of US$3.1m (H1 2023 -US$32.6m).
• The financial results reflect the production of 38,405 PGM oz (38,471oz) and the company explains that “Improved PGM recovery efficiencies and reduction of work-in-progress stock assisted in maintaining the PGM ounce production, while PGM feed grades were 9% lower and PGM feed tons marginally up”.
• The company also highlights the previously reported mineral resources for the Volspruit North and South deposits with
  • A 10% increase in indicated resources at Volspruit North to 16.42mt at an average grade of 2.52g/t (4E) and inferred resources of 1.23mt at an average 4E grade of 2.45g/t; and
  • An ‘Inferred’resource of 10.6mt at an average grade of 2.1g/t at Volspruit South
• The company maintains its FY 2024 production guidance of 74-75,000 oz (4E).
• CEO, Jaco Prinsloo commented that “While many PGM producers in the industry are faced with challenges relating to the current market environment, revenue and net profit for the Company remain respectable despite the significantly lower PGM basket price”.
• He confirmed that “Sylvania’s low-cost strategy has ensured that the SDO … [Sylvania Dump Operations] … remain cash generative even at lower basket prices. Enabled by our cash generating operations and disciplined operating cost and capital control, the Company has sufficient cash reserves to continue to fund capital and optimisation projects, as well as advancing our exploration projects and returning value to shareholders”.

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

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