Copper extends gains on signs of improving Chinese domestic demand
MiFID II exempt information – see disclaimer below
American West Metals (AW1 AU) – Latest drilling suggests potential for sediment hosted copper mineralisation at the Storm project
Cornish Metals* (CUSN LN) – Valuation 48p/s – Quarterly report shows accelerating activity at South Crofty ahead of the start of dewatering
Firering Strategic Minerals (FRG LN) – Soil anomalies encourage auger drilling programme at Atex Lithium-Tantalum Project, Côte d’Ivoire
Galantas Gold* (GAL LN) – Omagh surface drilling launched to update the mine plan
Copper extends gains on signs of improving Chinese domestic demand
- Copper returned to >$8,600/t levels as markets tightened on sliding inventories and strengthening demand dynamics.
- Chinese domestic premiums have risen to October highs, when copper prices were well above $9,000/t.
- The market flipped into backwardation this week, a move which signals weakness in supply and strength in demand.
- Analysts point to restocking efforts in advance of China’s two-day national holiday, in addition to strong fabricator demand.
- Prices may also be frontrunning a more buoyant Chinese manufacturing sector following a series of rate cuts by the PBoC.
- CCP VP He Lifeng noted that China’s manufacturing industry is picking up alongside services. (Reuters)
- Traders have been disappointed with Beijing’s stimulus measures over the past week.
Gold – $1,927/oz – Prices slide again following Powell’s hawkish testimony to Congress
- Gold prices have fallen close to a three-month low at $1,927/oz.
- The downwards momentum was supported by Powell’s comments to Congress yesterday, where he stated that additional hikes were a ‘pretty good guess.’
- He emphasised that June’s FOMC lack of hike was a ‘pause’ as opposed to the end of the hiking cycle.
- Gold’s progress going forward will likely focus on US jobless claims as opposed to inflation data, with the US labour market now the Fed’s primary focus when considering further rate hikes.
Russia – Ukraine spy chief accuses Russia of ‘mining’ cooling pond at Zaporizhzhia nuclear plant (Reuters)
- Russia is competing hard for the war crime of the millennium through the alleged mining the cooling pond at the Zaporizhzhia nuclear plant.
- Blowing up the cooling ponds at Zaporizhzhia could lead to a meltdown of the nuclear reactors causing a Chernobyl-like radioactive fire spreading radiation across Ukraine, Russia and Europe depending on which way the wind is blowing.
- Putin would likely blame any meltdown on NATO and the Ukrainians and is unlikely to be bothered about poisoning Russian people.
- The six nuclear reactors at Zaporizhzhia have been under Russian occupation since February last year.
- The loss of the Kakhovka reservoir presents an additional risk for the Zaporizhzhia nuclear plant.
Recommendation: Stock up on iodine and make sure the batteries work in your Geiger counter and prepare your cellar for longer term accommodation.
VOX Markets Podcast: https://audioboom.com/posts/8318505-taking-stock-featuring-russ-mould-on-ipo-s-john-meyer-on-resource-co-s
- *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.
| Dow Jones Industrials | -0.30% | at | 33,952 | |
| Nikkei 225 | -0.92% | at | 33,265 | |
| HK Hang Seng | -1.98% | at | 19,218 | |
| Shanghai Composite | -1.31% | at | 3,198 |
Economics
US – Fed Chairman Jerome Powell address to Congress highlighted the need for rates to go higher to contain price pressures.
- It may make sense to continue moving rates higher in the coming months, but at a more moderate pace, Bloomberg quoted Powell responding to questions from lawmakers over Fed plans.
- Markets continued to price in a >80% chance that the Fed will lift its policy rate by 25bp at the next meeting in July.
- Atlanta Fed President, Raphael Bostic, is arguing for a pause rate rises and is looking for 5.00-5.25% to the year end.
UK – BOE rate decision later today with expectations for a 25bp increase to 4.75%.
Ukraine – Europe looks at how to fund US$411bn reconstruction of Ukraine
- Europe is planning the reconstruction of Ukraine while Putin’s forces continue to destroy large parts of the country.
- Ukraine hit the Chonhar bridge overnight in an effort to cut off Russian supply lines.
- The bridge, which is one of many connecting Crimea with Ukraine was damaged but not collapsed.
Turkey – Central bank is expected to reverse its loose policy and start lifting rates to anchor inflation expectations down.
- Bloomberg median estimates are for a 1,150bp increase to 20%.
Switzerland – Swiss National Bank raises rates by 25bp to 1.7%
- Inflation in Switzerland is also proving rather more sticky than expected and further rate rises are not being ruled out.
Currencies
US$1.0986/eur vs 1.0913/eur yesterday. Yen 141.90/$ vs 142.00/$. SAr 18.366/$ vs 18.413/$. $1.275/gbp vs $1.276/gbp. 0.678/aud vs 0.677/aud. CNY 7.180/$ vs 7.194/$.
Dollar Index 102.12 vs 102.65 yesterday.
Commodity News
Precious metals:
Gold US$1,928/oz vs US$1,936/oz yesterday
Gold ETFs 93.5moz vs US$93.6moz yesterday
Platinum US$942/oz vs US$960/oz yesterday
Palladium US$1,339/oz vs US$1,364/oz yesterday
Silver US$22.56/oz vs US$23.09/oz yesterday
Rhodium US$5,750/oz vs US$5,900/oz yesterday
Base metals:
Copper US$ 8,616/t vs US$8,567/t yesterday
Aluminium US$ 2,230/t vs US$2,221/t yesterday
Nickel US$ 21,290/t vs US$22,100/t yesterday
Zinc US$ 2,442/t vs US$2,385/t yesterday
Lead US$ 2,184/t vs US$2,145/t yesterday
Tin US$ 27,500/t vs US$26,905/t yesterday
Energy:
Oil US$76.9/bbl vs US$76.3/bbl yesterday
- Crude oil prices edged higher as the API reported a 1.2mb draw in US crude oil and fuel stocks (vs 0.4mb draw expected) for the week ended 16 June 2023.
- European energy prices fell as natural gas storage levels rose 2% w/w to 74.9% full (vs 58.3% 5-year average), with strong builds in Germany, Italy, the Netherlands and France contributing to aggregate storage of 844TWh.
- Media sources reported comments from Ukraine’s Energy Minister that Russia will likely halt natural gas transport through Ukraine to Europe (currently stable at 41.9mcm/d) at YE24 when the contract expires.
Natural Gas US$2.611/mmbtu vs US$2.500/mmbtu yesterday
Uranium UXC US$56.50/lb vs US$57.75/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$113.1/t vs US$114.3/t
Chinese steel rebar 25mm US$531.7/t vs US$530.6/t
Thermal coal (1st year forward cif ARA) US$117.0/t vs US$116.5/t
Thermal coal swap Australia FOB US$134.5/t vs US$135.0/t
Coking coal swap Australia FOB US$220.0/t vs US$220.0/t
Other:
Cobalt LME 3m US$29,525/t vs US$29,525/t
NdPr Rare Earth Oxide (China) US$67,971/t vs US$68,248/t
Lithium carbonate 99% (China) US$42,412/t vs US$42,325/t
China Spodumene Li2O 6%min CIF US$4,090/t vs US$4,090/t
Ferro-Manganese European Mn78% min US$1,225/t vs US$1,217/t
China Tungsten APT 88.5% FOB US$315/mtu vs US$315/mtu
China Graphite Flake -194 FOB US$735/t vs US$735/t
Europe Vanadium Pentoxide 98% 7.3/lb vs US$7.3/lb
Europe Ferro-Vanadium 80% 31.75/kg vs US$31.75/kg
China Ilmenite Concentrate TiO2 US$306/t vs US$305/t
Spot CO2 Emissions EUA Price US$99.6/t vs US$99.2/t
Brazil Potash CFR Granular Spot US$325.0/t vs US$325.0/t
Battery News
NIO receive $1.1b backing from Abu Dhabi
- The Chinese EV manufacturer signed a share subscription agreement with Abu Dhabi investment firm CYVN Holdings, which will invest a total of about $1.1 billion through an additional new share issue and share transfer of an existing shareholder, according to a statement.
- The strategic investment gives the fund a 7% stake in Nio.
- CYVN Holdings is an Abu Dhabi government majority-owned investment vehicle focused on strategic investment in the advanced, smart mobility sector and is committed to partnering with global industry leaders.
Heathrow EV chargers switched off
- Heathrow’s 25 strong network of Pod Point chargers has been switched off for an unknown reason, with neither the airport nor Pod Point confirming why.
- An airport spokesperson added, “Heathrow is developing plans to meet the growing demand.”
Heavier EVs could cause problems for ageing multi-story car parks
- Experts have warned that ageing carparks, most built according to guidance based on the weight of popular cars of 1976, could be at risk of collapse due to the weight of EVs.
- On average, EVs are almost twice as heavy as standard models and could cause serious damage to car park floors, especially to older structures.
- New guidance is now being developed recommending higher load bearing weights to accommodate the heavier vehicles.
Company News
American West Metals (AW1 AU) A$0.12, Mkt Cap A$38.9m – Latest drilling suggests potential for sediment hosted copper mineralisation at the Storm project
- In a release to the ASX, American West Metals has published drilling results from drilling of the 4100N Zone at the Storm copper project on Somerset Island in northern Canada.
- Reporting the continuation of “thick intervals of copper mineralisation hosted within predictable stratigraphic horizons”, the company highlights:
- A 29m wide intersection at an average grade of 1.2% copper from a depth of 62.5m in hole SR23-13 which also penetrated a lower mineralised zone of 3m at an average grade of 5.0% copper from 86.9m depth, including 1.5m at an average grade of 8.2% copper from 82.3m; and
- A 25.9m wide intersection at an average grade of 1.3% copper from a depth of 61m in hole SR23-14, including 9.1m averaging 2.1% copper from 76.2m depth; and
- A 10.7m wide intersection at an average grade of 1.3% copper from a depth of 76.2m in hole SR23-07, including 2.9% over an interval of 4.6m from a depth of 76.2m; and
- A 10.6m wide intersection at an average grade of 1.0% copper from a depth of 67.1m in hole SR23-09 and including 4.6m averaging 2.0% copper from 71.6m depth.
- Managing Director, Dave O’Neill, explained that “Our drilling this year has significantly increased the volume of near surface mineralisation at Storm, and the scale of this alone is quickly shaping up to be what we believe will be a globally significant low cost copper project”.
- He also outlined the potential of the recently announced deeper geophysical targets saying that the “largest of the geophysical targets is located directly below the 4100N Zone, and immediately adjacent to the large fault that we interpret as the main conduit for the copper mineralisation coming to surface”.
- The company says that the recent drilling is aiding its geological understanding of the copper mineralisation at Storm and is “revealing a laterally extensive zone of mineralisation that displays many of the features of a typical sediment hosted copper deposit, including multiple stacked copper horizons”.
- Outlining the positive attributes of the project the company says that the “geology of the area displays all the elements required in the sediment-hosted ore forming process: permeable carbonate rocks to act as a fluid conduit and host mineralisation, hydrocarbons to reduce metal-bearing fluids and force metal precipitation, sulphur source from bitumen and sour gas, proximity to faults known to be an effective source for plumbing, all within a favourable structural setting”.
- Future exploration plans include drilling of the 2200N and 2750N Zones after completion of the 4100N programme as well as further geophysical interpretation and diamond drill testing of the deeper geophysical targets.
Conclusion: Recent drilling and geophysics is showing encouraging signs of deeper mineralisation beneath the relatively shallow targets currently being tested and supporting the interpretation of sediment hosted copper. We look forward to further evidence as the exploration advances.
*SP Angel has previously raised funds for Aston Bay Minerals
Cornish Metals* (CUSN LN) – 11.25p, Mkt cap £60m – Quarterly report shows accelerating activity at South Crofty ahead of the start of dewatering
Valuation 48p/s
- Cornish Metals’ reports for the three months ending 30th April 2023 reflects an increasing level of activity as work progresses on the dewatering of the historic workings at the South Crofty mine and on its feasibility study work for the resumption of mining.
- The company reports a loss of C$206,802 for the quarter (2021 – loss of C$979,427) but increased levels of both cash outflow from operations of C$1.03m (2021 – C$0.63m) and investment of C$7.03m (2021 – C$1.18m) demonstrate the increasing effort to reinstate the mine.
- The 30th April cash balance stands at C$49.08m.
- As previously reported, work on pump installation continues and the wet-commissioning of the water treatment plant (WTP) is expected to “commence in August 2023, with commencement of mine dewatering expected shortly thereafter”.
- Cornish Metals says that it expects the “cost of construction for the WTP … to be between £6.5 million and £7.0 million”.
- In January this year, the company announced the discovery of a previously unknown zone of high-grade tin mineralisation known as the ‘Wide Formation’ as a result of drilling at Carn Brea located on the southern edge of its South Crofty licence area and ESE of the mine.
- Cornish Metals is now planning further drilling, starting in early July after current metallurgical drilling is completed, to “determine the continuity of mineralization and to better define the geometry and extent of the Wide Formation”.
- The company also confirms that “Subject to the availability of financing, consideration will also be given to continuing with the Company’s exploration program at United Downs and evaluating other near-surface, high potential, exploration targets within transport distance of the planned processing plant site at South Crofty”.
Conclusion: We look forward to the start of the dewatering of the old South Crofty mine later this summer and to results from the follow-up drilling of the recently identified ‘Wide Formation’ tin mineralisation and further exploration of the United Downs area.
*SP Angel acts as Nomad and Broker to Cornish Metals. An SP Angel analyst formerly worked in the South Crofty tin mine in the 1980s and holds shares in Cornish Metals.
Firering Strategic Minerals (FRG LN) 7.4p, Mkt Cap £6.6m – Soil anomalies encourage auger drilling programme at Atex Lithium-Tantalum Project, Côte d’Ivoire
- Firering reports the completion of its large-scale Phase II soil sampling programme at its Atex Lithium-Tantalum Project in Côte d’Ivoire.
- Firering is exploring the project alongside Ricca Resources*, which holds an option to acquire up to 50% of Atex after a $18.6m investment to progress the project towards DFS.
- The JV undertook grid soil geochemistry and mapping, which identified six high-priority soil anomalies and a north-north-east striking orientation in line with previous mapping of outcropping pegmatites.
- Soil anomalies identified by the JV lie adjacent to the Spodumene Hill occurrence, where drilling hit an oblique intersection of 64m apparent width @ 1.24% Li20, 25m @ 1.39%.
- The anomalies hold Li, Rubidium and Niobium anomalies, which suggest ‘the presence of fractionated pegmatite.’
- As a result of the encouraging soil anomalies, Firering and Ricca have planned 11,000m of Phase 1 auger drilling over a 160 x 20m grid.
- Upon a successful Phase 1 auger programme, the Companies will look to undertake an 80 x 20m grid to define drill targets.
- Firering and Ricca are aiming to develop a maiden lithium resource at Atex alongside building a tantalum/niobium pilot scale production plant for early revenues to fund exploration.
*Ricca Resources was spun out from Atlantic Lithium* and is looking to list on the ASX. *SP Angel acts as Nomad to Atlantic Lithium
Galantas Gold* (GAL LN) 14.8p, Mkt Cap £16m – Omagh surface drilling launched to update the mine plan
- The Company is planning to complete eight surface exploration drillholes at the flagship Omagh Gold Project.
- Infill drilling will target the Inferred Resource area at the main Joshua Vein testing dilation zones and the potential for higher grade and tonnage in the project area.
- The dilation zones identified to date at the Joshua Vein, located ~400m away from the Kearny Vein, will be incorporated into an updated mine plan.
Conclusion: Infill surface drilling launched at the Omagh Project testing dilation zones with a potential to grow tonnage and add higher grade material into the mine plan currently being
updated.
*SP Angel acts as Broker to Galantas Gold
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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
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Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
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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.
| Sources of commodity prices | |
| Gold, Platinum, Palladium, Silver | BGNL (Bloomberg Generic Composite rate, London) |
| Gold ETFs, Steel | Bloomberg |
| Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt | LME |
| Oil Brent | ICE |
| Natural Gas, Uranium, Iron Ore | NYMEX |
| Thermal Coal | Bloomberg OTC Composite |
| Coking Coal | SSY |
| RRE | Steelhome |
| Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite | Asian Metal |
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