SP Angel Morning View -Today’s Market View, Thursday 23rd January 2025

Gold pauses on climb towards record high as US Treasuries resume sell-off

MiFID II exempt information – see disclaimer below

Allied Gold (AAUC CN) – Q4 production results

BeMetals* (BMET CN) – Latest drilling expands mineralisation footprint at Pangeni again

Empire Metals* (EEE LN) – Top mining executive joins Board

GreenX Metals (GRX LN) – GreenX to return majority of £252m award to shareholders

KEFI Gold and Copper* (KEFI LN) – Saudi Arabian Government exploration support

NGEx Minerals (NGEX CN) – 51m at 13.8% CuEq drilled at Lunahuasi, Argentina

Turaco Gold (TCG AU) – Drill results from Afema in Cote D’Ivoire

Gold ($2,747/oz) pauses on climb towards attempt on new record high as US Treasuries resume sell-off

• Gold prices had hit three-month highs last week, as the dollar reversed sharply on expectations of more moderate tariffs.
• US Treasuries rallied in unison, with the 10 year yield falling below 4.6% from recent highs of 4.8%.
• However, Trump has now reiterated intentions to impose tariffs on China and Mexico in February, refuelling inflationary concerns.
• This has capped gold’s recent upwards momentum, now sliding from recent highs of $2,761/oz, but off all time highs from October at $2,790/oz.
• We are watching China bond yields closely, with the steady rally pushing Chinese investors into gold.
• This trend has steadied over the past fortnight, as Beijing encourages capital into equities over bonds.
• However, consumption concerns married with deflationary pressures are expected to keep Chinese yields anchored lower, providing a positive tailwind to gold prices.
• This may coincide with a leg down in US Treasury yields, hurting the dollar and lifting gold prices over record highs.

Rio Tinto – Don’t bet on Rio Tinto mining at Resolution anytime soon

• Rio Tinto may get their mining license for Resolution, they may even get all the water, air and other permits required before breaking ground.
• But the the Apache and other tribes are very powerful in the US courts and will likely vigorously oppose any move to start mining.
• They won’t be swayed by Trump’s executive orders
• Look at Polymet (Glencore 100%), Twin Metals (Antofagasta) and Talon Metals (Rio Tinto 49%)
• Each of these companies has spent years of time and tens of millions of dollars on studies for permits.
• Polymet was even awarded a mining permit by the Democrat administration just ahead of Trump’s first inauguration.
• And despite huge efforts Polymet has yet to break ground on its Northmet mine in Minnesota.
• Same for the others, though Twin Metals is on the wrong side of the watershed so that is unlikely to ever get done.
• We suspect the US will have to be at War with Russia or China before these mines are allowed to start.

 Gold market comment (17/01/2025):     Podcast:  https://audioboom.com/posts/8639775-john-meyer-gold-is-good-solid-asset-to-own

Video:  

Economics

US – Trump Executive Orders sweep away and unwind Democrat policies

• Trump is in strong form with an impressive number of pre-inauguration, inauguration and post inauguration appearances.
• The signing of Executive Orders was a masterful display of showmanship and refocussing of the US towards Republican ideals and policies.
• Yet, the one thing the world was waiting for was absent.
• Trump Tariffs will be collected through an External Revenue Service suggesting there is opportunity for deal making and negotiation.
• Chinese companies are looking to work around direct tariffs into the US and EU through assembly factories in friendlier nations.
• We suspect many Chinese entrepreneurs are also happy to grow their businesses outside China in case China inc. implodes or Xi orchestrates another witch hunt against the rich.
• But manufacturing has been returning to the US from China for a multitude of reasons with component manufacturing also moving out of China into other, mainly Asian locations.
• China is treading carefully with Trump and is keen to maintain minimal tariffs if at all possible.
• We suspect China is also severely weakened by the state of its property market and the huge cost of 200-250 automotive manufacturing failures.
• Competition within China is so intense that most EV manufacturers appear to lose money on every car sold.
• Consumption in China through the Lunar New Year festival feels important. We expect a big push to sell more EVs, properties and domestic appliances.

China – Economists at Davos highlight need for strong manufacturing in China to maintain economy

• Trump says he is considering 10% tariffs on China imports starting February 1
• Former PBoC deputy governor says ‘Made in China’ must mean ‘cheap, good and hi-tech’ (SCMP)
• ~40% of businesses in China are considered unprofitable

• A significant portion of listed Chinese companies report losses
• China manufacturing currently accounts for around 30% of global output.

Japan – Trade exports rise 2.8% yoy to Y9.91tn in December to record first trade surplus in six months at Y130.9bn

• Imports also rose 1.8% yoy in December to Y 9.8tn.

• • Exports to China fell -3.0% yoy.
  • Exports to the US also fell by 2.1% yoy.

• Seasonally adjusted trade deficit is Y33bn.

• • Seasonally adjusted exports rose 6.3% mom to Y9.44tn while seasonally adjusted imports rose 2.2% mom to Y9.47tn

• 2024: The trade deficit fell 44% yoy in 2024 to Y-5.33tn

• • Exports rising 6.% to a record Y107.1tn in 2024 driven by strong demand for vehicles and semiconductor-related products.
  • Imports rose 1.8% yoy in 2024 to Y112.4tn.

Ukraine – Trump’s demand for an end to Russian aggression against Ukraine might just work

• We suspect Putin needs to rebuild and restructure his military forces before any future campaigns.
• Trump’s rhetoric might just do the trick and give Putin an off-ramp. But maybe we are just being hopeful!

Currencies

US$1.0396/eur vs 1.0419/eur previous. Yen 156.56/$ vs 155.58/$. SAr 18.558/$ vs 18.490/$. $1.230/gbp vs $1.232/gbp. 0.626/aud vs 0.627/aud. CNY 7.288/$ vs 7.278/$

Dollar Index 108.333 vs 108.12 previous

Precious metals:         

Gold US$2,753/oz vs US$2,753/oz previous

Gold ETFs 83.3moz vs 83.6moz previous

Platinum US$945/oz vs US$946/oz previous

Palladium US$982/oz vs US$968/oz previous

Silver US$30.6/oz vs US$30.9/oz previous

Rhodium US$4,675/oz vs US$4,675/oz previous

Base metals:   

Copper US$9,176/t vs US$9,231/t previous

Aluminium US$2,614/t vs US$2,623/t previous

Nickel US$15,590/t vs US$15,835/t previous

Zinc US$2,854/t vs US$2,894/t previous

Lead US$1,956/t vs US$1,971/t previous

Tin US$30,150/t vs US$30,165/t previous

Energy:           

Oil US$78.9/bbl vs US$79.1/bbl previous

• Crude oil prices edged lower after the API estimated a 1mb/d w/w build to US crude inventories, which marked the first build after five weeks of draws.
• European energy prices edged lower as EU natural gas storage levels fell by 5.7% w/w to 64.2% full (vs 66.3% 5-Yr average), with aggregate storage at 671TWh after a large 20.6TWh weekly draw in Germany.

Natural Gas €49.2/MWh vs €50.2/MWh previous

Uranium Futures $73.4/lb vs $73.9/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$103.9/t vs US$103.7/t

Chinese steel rebar 25mm US$484.9/t vs US$485.6/t

HCC FOB Australia US$190.5/t vs US$194.0/t

Thermal coal swap Australia FOB US$121.3/t vs US$124.0/t

Other:  

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

NdPr Rare Earth Oxide (China) US$56,944/t vs US$56,675/t

Lithium carbonate 99% (China) US$10,085/t vs US$10,099/t

China Spodumene Li2O 6%min CIF US$815/t vs US$805/t

Ferro-Manganese European Mn78% min US$1,005/t vs US$1,005/t

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

China Graphite Flake -194 FOB US$430/t vs US$430/t

Europe Vanadium Pentoxide 98% US$4.5/lb vs US$4.5/lb

Europe Ferro-Vanadium 80% US$24.6/kg vs US$24.8/kg

China Ilmenite Concentrate TiO2 US$294/t vs US$295/t

Global Rutile Spot Concentrate 95% TiO2 US$1,588/t vs US$1,588/t

Spot CO2 Emissions EUA Price US$65.1/t vs  US$65.1/t

Brazil Potash CFR Granular Spot US$305.0/t vs US$305.0/t

Germanium China 99.99% US$2,725.0/kg vs US$2,725.0/kg

China Gallium 99.99% US$385.0/kg vs US$385.0/kg

Battery News

Mexico to introduce federally subsidised EV

• The Mexican government will push ahead with plans to introduce an affordable EV subsidised by the government.
• The plan was announced in October last year but no details have been revealed until now.
• The project, called Olinia, is aiming to produce an “ultra-compact” electric car with a base price between approx. US$4,400 and $7,300.
• Mexico hopes the Olinia EV will compete against entry level EVs from India and China as the country begins its electrification.

China exports over 15,000 electric buses in 2024

• According to data from China Bus, Chinese manufacturers exported 15,444 NEV buses in 2024, up 28.3%.
• BYD topped the export figures with 3,582 vehicles exported.
• Yutong Bus saw exports increase 84.5% yoy, with 2,700 vehicles exported.
• Higer Bus exported 1,897 vehicles.

South Korean battery firms made record investments in 2024 despite EV slowdown

• South Korea’s three major battery makers are believed to have made all-time-high investments in R&D activities last year despite a slowdown in EV sales, according to industry sources.
• LG Energy Solution (LGES), Samsung SDI and SK On are estimated to have invested more than 2.5 trillion won (US$1.7bn) in R&D projects in 2024, up from 2.47tr won in 2023.
• These record R&D investments are likely pre-emptive for the recovery in battery demand following the lull currently.

Company News

Allied Gold (AAUC CN) C$3.55, Mkt Cap C$1.2bn – Q4 production results

• Allied Gold report Q4 production of 99.6koz vs guidance of 98-102koz.
• Sadiola production increased to 54.2koz, whilst the Cote D’Ivoire complex produced 45.4koz.
• ‘Pro-Forma AISC’ over the quarter improved to $1,780/oz from Korali, reported on an ounces sold basis.
• Cash balance expected at c.C$340m.
• Kurmuk production in Ethiopia progressing on time and on budget alongside the Phase 1 expansion of Sadiola.
• Company in discussion with SOREM, the Mali state-backed mining company, to explore mining opportunities.
• Guidance for 2025 to be released Feb 20^th.

BeMetals* (BMET CN) – C$0.04, Mkt cap C$9.2m – Latest drilling expands mineralisation footprint at Pangeni again

• Yesterday, BeMetals reported that its recently completed core drilling programme at Pangeni in western Zambia has extended the known area of mineralisation, including the new F4-C3 zone over an overall trend of approximately 3km.
• “In addition, this recent core drilling has intersected a relatively lower-grade but wide zone of 31.50 metres at the Central Target, approximately 8 kilometres to the southeast of the D-Prospect, motivating follow up drilling at this satellite prospect”.
• Among the results highlighted in the announcement are:

• • An intersection of 21.52m of the Nkala Zone from a depth of 264.88m in hole D12-C1 at an average grade of 0.3% copper “including 7.70 metres grading 0.35% Cu and including 6.96 metres grading 0.34% Cu” and;
  • An intersection of 9.10m of the Nkala Extension Zone from a depth of 151.50m in hole F4-C3 at an average grade of 0.11% copper including 2.70 metres grading 0.20% Cu.

• John Wilton, CEO, explained that recent drilling had had shown “the overall scale of the D-Prospect copper mineralization and its target footprint are now comparable to that of the Lumwana Copper Mine’s Chimiwungo Deposit”.
• Commenting on the identification of the lower grade zone around 8km SE of the D prospect in hole CT4 in a 31.50m wide intersection averaging 0.1% copper from 86.5m depth, Mr. Wilton said that BeMetals’ “geological team will compile its existing data since 2016 for this prospect with the new drill information to guide future targeting. The Company expects to update its detailed geological interpretation of both the D-Prospect and Central Target with the recent drilling results shortly and plans to conduct a fully funded follow-up phase of core drilling to commence in Q1, 2025”.
• He summarised by saying that “the 2024 results have increased the scale potential and improved our understanding of the discovered copper mineralization at the Pangeni Project, and we look forward to commencing drilling shortly”.
• We note that the expansion of the footprint at Pangeni announced yesterday comes after a similar announcement in October 2024 that drilling had extended the Pangeni target.

Conclusion: BeMetals’ continuing exploration at Pangeni in western Zambia has again extended the mineralised footprint which is now reported to be similar in scale to that of the Chimiwungo Deposit at Barrick’s Lumwana mine located around 200km northeast of Pangeni.

*SP Angel formerly acted as UK broker to BE Metals. An SP Angel analyst holds shares in BE Metals

Empire Metals* (EEE LN) 7.9p, Mkt Cap £50m – Top mining executive joins Board

• Empire reports that Phillip Brumit will join the Empire board as Non-executive Director.
• Mr Brumit held leadership positions at Freeport-McMoRan, Lundin Mining and Newmont.
• Operationally, Mr Brumit was VP Projects and Operations at Josemaria, which is currently under JV between BHP and Lundin.
• At Freeport, he was President of the African Division focused on Tenke-Fungurume, and at Newmont he was General Manager of Operations at the Batu Hijau Mine.
• He views Pitfield as a ‘truly world class deposit that can become a globally significant mine capable of producing large tonnages of high-purity titanium, a critical mineral essential to the world’s manufacturing industry and transition to green renewable energy.’
• Mr Brumit will receive 2,000,000 share options, expiring January 2030, at an exercise price of 10p.

Conclusion: Mr Brumit’s appointment as Non-executive Director of Empire is a strong vote of confidence in the development potential of the Pitfield titanium project. Recent roles within the Lundin group, including at Filo Corp (sold to BHP/Lundin for C$4.1bn, leave Mr Brumit well positioned to support Pitfield’s progression to pilot plant and feasibility studies.

 *SP Angel acts as nomad and broker to Empire Metals

GreenX Metals (GRX LN) 38p, Mkt cap £108m – GreenX to return majority of £252m award to shareholders

• GreenX Metals report their intention to return to shareholders the majority of the £252m award in compensation (net of disbursements i.e., litigation funder return on invested capital) and interest due to be paid by the Republic of Poland.
• The Award rendered by the UNCITRAL Tribunal is compensation for Poland’s breach of its obligations under the Australia-Poland Bilateral Investment Treaty and the Energy Charter Treaty.

• • “the Tribunal unanimously held that Poland breached its obligations under the Treaties“

• The full amount under the BIT award was £252m, plus post award interest at the rate of SONIA + 1%, which equates to approximately 6% pa, or £15m accruing to GRX; since the Award was issued in October 2024 an additional  ~£3.2m in interest has accrued to the Company.
• The litigation funding drawn down from Litigation Capital Management’s (AIM:LIT) facility was US$11.3 million, with funders entitled to a 6x return on invested capital payable from Award proceeds, and then annual interest of 30% on the amount drawn of USD11.3m only from January 2025 until payment is received from Poland; interest of ~USD3.4m pa (£2.8m pa) will accrue on the Litigation Capital Management facility for calendar year 2025.

 Poland has lodged a request to set-aside the BIT award in the courts of England and Wales and has now lodged a request to set-aside the ECT award in the courts of Singapore

• • “The threshold to succeed on a set aside motion in either the Singapore or English courts is very high, with the courts rejecting set-aside applications in the vast majority of cases.
  • It is important to note that a “set-aside” motion is different from a general “appeal” since a set-aside motion can in general only relate to a lack of jurisdiction on the part of the Tribunal or procedural unfairness. Under both set-aside motions, the actual merits of the Claim cannot be revisited by the courts.
  • The Company is strongly defending the set-aside motions and will update the market, if required, in line with its continuous disclosure requirements.”
• GreenX Metals continues to explore at its Tannenberg Copper Project in Germany with financial support from the BHP Xplor program.
• The team are targeting a prolific subtype of sediment-hosted, Kupferschiefer-style copper mineralisation.

KEFI Gold and Copper* (KEFI LN) 0.48p, Mkt Cap £38m – Saudi Arabian Government exploration support

• Kefi Gold and Copper has announced that its 15% owned exploration joint venture in Saudi Arabia (Gold and Minerals SLA) has been selected from 49 applicants to be one of six for government support under the Saudi Government’s Exploration Enablement Programme.
• The SR685m (~US$183m) Programme aims to encourage exploration for “strategic minerals in underexplored regions, mitigate investment risks in the mining sector, and improve the reliability of technical data”.
• Gold and Minerals SLA (GMCO) “is the only private sector company in Saudi Arabia to have achieved significant discoveries … [at Jibal Qutman and Hawiah as well as a series of regional targets] … and advanced them into development studies since its incorporation in 2008. GMCO has one of the largest exploration teams in the Kingdom and has built a large proprietary database”.
• Executive Chairman, Harry Anagnostaras-Adams, welcomed the “prestigious and valuable award of government support for exploration … [saying that it] … is a testament to the exceptional quality of the team’s work and performance”.
• Today’s announcement “coincides with KEFI’s recently announced strategic review of its investment” in GMCO and dilution of its original 25% interest to 15% following its partner, ARTAR, funding recent exploration.
• The company confirms that it “has received interest from a number of parties who are now exploring the acquisition of the Company’s 15% shareholding”.
• The deadline for submission of proposals to acquire the holding is 28th February and previous announcements indicate that GMCO has spent $80m to date on the portfolio of projects to date.

Conclusion: Selection as one of 6 recipients of Saudi Arabian Government exploration support may sharpen third-party interest in Kefi’s 15% interest in GMCO.  We await further news as the end of February deadline approaches.

*SP Angel act as Nomad and Broker to KEFI Gold and Copper

NGEx Minerals (NGEX CN) C$14.8 Mkt Cap C$3.1bn – 51m at 13.8% CuEq drilled at Lunahuasi, Argentina

• Lundin-backed NGEx reports further drill results from their Phase 3 drill programme from Lunahuasi in San Juan, Argentina.
• The Company currently has six diamond drill rigs active on the Project, with two additional rigs set to be added, boosting the programme from 20,000m to 25,000m.
• Highlights today include:

• • DPDH024 : 7.4m at 5.81% CuEq from 715m
  • DPDH025 : 29.8m at 4.8% CuEq from 369m
  • DPDH026 : 21.5m at 3.07% CuEq from 529m
  • DPDH028 : 2m at 11.82% CuEq from 230m and:

• • • 205m at 5.08% CuEq from 378m

• • • • Including 51m at 13.84% CuEq from 464m
• Management notes DPDH028 as a ‘remarkable hole which is a significant step-out below previous drilling’ with results for the final 1,000m still pending.
• Lunahuasi gold grades have surprised to the upside, with management also noting that ‘the deposit remains open in all directions and step-out drilling to expand the known zones and test for a porphyry source to the west remains a top priority.’
• Company raised C$175m in October and expects to report results into the mid-year.

Turaco Gold (TCG AU) A$0.32 Mkt Cap A$277m – Drill results from Afema in Cote D’Ivoire

• Ivorian gold explorer Turaco provides drill results from the maiden 28 hole programme at the Baffia prospect within their Afema licence.
• Turaco currently holds a JORC MRE of 2.52moz across Woulo Woulo, Jonction, and Anuiri within the wider Afema.
• Baffia results today returned highlights of:

• • BAFRC0005: 32m at 1.69g/t Au from 12m
  • BAFRC0005: 21m at 1.79g/t Au from 104m
  • BAFRC0013: 10m at 1.95g/t Au from 22m
• Company states hole 04 ended in mineralisation within the fresh rock, whilst 05, drilled up dip, returned gold in oxide.
• 10 remaining holes drilled at 200-600m wide spaced traverses to the southwest.
• The Company believes today’s results will support further ounce additions to the current Afema resource.
• An updated JORC MRE is due by the end of 1Q25.
• The Company is also conducting a soil sampling and geophysical programme.

LSE Group Starmine awards for 2024 commodity forecasting:

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

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

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

Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476

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

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