SP Angel Morning View -Today’s Market View, Thursday 25th April 2024

China likely to trump BHP offer for Anglo American

MiFID II exempt information – see disclaimer below

Anglo American (AAL LN) – £31.1bn (~US$39bn) conditional, all-share offer, from BHP

BHP (BHP LN) – Investors sell BHP shares on news of offer for Anglo American

Ariana Resources (AAU LN) – Rockover merger brings in 1.3moz Dokwe gold deposit in Zimbabwe

Beowulf Mining* (BEM LN) – Initiation Note – BUY – Supporting Scandinavia’s Green Transition

Empire Metals* (EEE LN) – Drilling completed at Pitfield on time and budget, assay results due in coming weeks

First Tin (1SN LN) – Latest metallurgical work from Taronga

Galantas Gold* (GAL LN) – FY23 results

Greatland Gold (GGP LN) – Doubling its exploration licence area in the Eastern Goldfields of WA

Shanta Gold (SHG LN) – FY24 guidance reiterated as production expected to pick up from a dip in Q1/24

Standard Lithium (SLI US) – First commercial scale DLE column commissioned in North America

Teck Resources (TECK CN) – Q1 Results as QB2 construction complete with first concentrate shipped

M&A – BHP / Anglo American – China likely to trump BHP bid to buy Anglo

• BHP’s offer for Anglo is highly conditional and looks like it won’t happen if the board at Anglo don’t want it and we suspect that means decent jobs for the Anglo boys in Melbourne
• While the offer looks highly speculative management distraction will degrade Anglo from the inside with any deal likely to be bogged with anti-competition and other regulators
• We reckon the best option for Anglo shareholders from here is for a better quality takeover offer possibly from a Chinese or Indian entity, remember Vedanta appeared to be interested a few years back.
• Glencore also holds obvious synergies with Anglo’s assets, alongside their appreciation for high-quality met coal. However their balance sheet may be restricted by their recent acquisition of EVR.
• More M&A in the sector looks assured as the majors compete to control limited number of large-scale mineral assets
• BHP don’t really want the South African mines hence the conditionality on the Anglo Platinum and Kumba Iron
• A combination of the two companies will no-doubt realise the usual balance sheet benefits but its unlikely to lead to the production of any more copper etc…
• The die is cast for China to come in and trump BHP’s offer with relatively little resistance from the South African authorities.

Copper – China spoofing copper market by dumping SRB copper into Shanghai as prices push back to two-year highs

• Copper prices are surging back towards $10,000/t, hovering now at $9,930/t, up 1.6% this morning.
• The move comes despite the Yangshan refined import premium slumping to zero, having hit $110/t in December.
• Higher premiums reflect increased appetite for imports from Chinese buyers.
• Shanghai copper warehouse stocks rose 94,803t (110%) to 181,323t last week with open stocks on the LME steady at 120,225t.
• We believe the CCP state planners are fully aware of China’s need for copper for the manufacturing of EVs, charging infrastructure and to connect new solar and wind farms.
• The SRB are well acquainted with enacting Chinese state policy through the movement of copper in Shanghai.
• We believe the SRB is moving to suppress prices as Chinese smelters struggle to acquire copper concentrates which will inevitably lead to lower copper metal output in China in the months ahead.

• Blackrock’s Global Mining Fund manager Olivia Markham has suggested that prices need to hold over $12,000/t to incentivise new projects.
• Nornickel is reportedly eyeing a major copper plant in China as it adjusts to Western sanctions.

Gold prices hover lower as traders eye US inflation data for guide to rate cuts

• Gold has been hovering around the $2,330/oz mark, following its slide from recent highs of $2,400/oz.
• Analysts have pointed to deescalating tensions in the Middle East, alongside the recent jump in real yields.
• However, the recent spike in gold prices has been primarily driven by Chinese buying, both central banks and individuals.
• This was likely supported by CTA funds, which trade off momentum, with profit taking likely occurring around the $2,400/oz mark.
• Positioning hit extended levels last week and has eased.

Tungsten – prices continue to rise as Europe ramps up machine tool and military equipment manufacturing

• Tungsten concentrates WO3 65%min EXW China are CNY138-139,000/t (~US$19,000/t).
• Tungsten 88.5%min EXW China CNY202-203,000/t (US$28/t).
• China represents around 80% of global tungsten production with most APT processing except for the HC Stark plant in Germany, Plansee in the US and Wolfram Bergbau (Mittersill) in Austria
• The charts below highlight the tight market for tungsten.

EQR Resources (EQR AU) A$0.53, Mkt cap A$99m

• EQR acquired Saloro’ Barruecopardo mine in Spain last year. The mine was formerly owned by Ormonde Mining in the UK.
• Barruecopardo is the West’s most recent tungsten mine and currently produces around 1,680tpa and is backed by Oaktree Capital which holds some 16% of EQR.

*An SP Angel mining analyst formerly built and commissioned the Los Santos tungsten mine in Spain. SP Angel formerly acted for Ormonde Mining and visited the Barruecopardo mine.

Global electric car sales to hit 17m by year-end

• EVs continue strong growth globally, with 2024 sales projected to reach 17m vehicles according to the IEA’s Global EV Outlook 2024 report.
• In Q1 2024, global EV sales grew around 25% yoy, similar to Q1 2023 but from a larger base.
• In 2024, China’s EV sales are forecast to leap to 10m units, capturing 45% of the country’s total car sales.
• The US is projected to see 1 in 9 cars sold as EVs in 2024, while Europe is expected to reach 1 in 4 EV sales despite subsidy phase-outs.
• Continued policy support, supply chain investment, and declining EV/battery prices are driving adoption, with EVs potentially reaching 50% of global car sales by 2035 under current policies.
• However, the sharp rise in EV numbers could add strain on power grids if charging infrastructure does not keep pace.
• The IEA highlights the need for sufficient public charging networks and careful planning to prevent overloading electricity grids as EV demand surges, with networks needing to grow sixfold by 2035 to meet projected EV demand.

IG TV:              Gold and Copper. 10/04/2024:      https://youtu.be/KuGSbDqWglk?si=-8iikkOHxbbLSnPZ

Sharepickers TV:  Shortage of Copper. 19/04/2024:  https://www.youtube.com/watch?v=-LGCV1ccFOM

Podcasts: 19/04/2024  https://audioboom.com/posts/8493157-john-meyer-this-signifies-there-s-a-shortage-of-copper

    12/04/2024  https://audioboom.com/posts/8489836-john-meyer-dismisses-bulletin-board-rumours-of-dead-sheep-cows-in-mine-as-rubbish

*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. SP Angel acts as Broker/Nomad or both for Anglo Asian Mining, Kodal Minerals, Power Metals Resources.

Economics

Currencies

US$1.0716/eur vs 1.0693/eur previous. Yen 155.65/$ vs 154.89/$. SAr 19.183/$ vs 19.130/$. $1.250/gbp vs $1.244/gbp. 0.652/aud vs 0.651/aud. CNY 7.247/$ vs 7.246/$.

Dollar Index 105.70 vs 105.83 previous.

Precious metals:         

Gold US$2,322/oz vs US$2,324/oz previous

Gold ETFs 81.2moz vs 81.3moz previous

Platinum US$909/oz vs US$918/oz previous

Palladium US$1,003/oz vs US$1,027/oz previous

Silver US$27.31/oz vs US$27/oz previous

Rhodium US$4,725/oz vs US$4,725/oz previous

Base metals:   

Copper US$ 9,861/t vs US$9,804/t previous

Aluminium US$ 2,585/t vs US$2,596/t previous

Nickel US$ 18,925/t vs US$19,230/t previous

Zinc US$ 2,834/t vs US$2,818/t previous

Lead US$ 2,211/t vs US$2,205/t previous

Tin US$ 32,000/t vs US$32,095/t previous

Energy:           

Oil US$88.2/bbl vs US$88.5/bbl previous

• Crude oil prices edged higher after the EIA reported a larger than expected w/w draw of 6.4mb to crude and 1mb to gasoline stocks, offset by a 1.6mb build in distillates, with refinery utilisation 0.4% higher at 88.5%.
• Namibia’s petroleum commissioner Maggy Shino said she targets first oil production from TotalEnergies’ Venus field in 2029/2030 and is seeking to accelerate the timeline to first production.
• SP Angel analyst David Mirzai discusses the influence of global politics on energy policy and pricing, as well as what we look for in new investment stories and managements in the latest All Points West Podcast (link).

Natural Gas €29.5/MWh vs €29.1/MWh previous

Uranium Futures $88.0/lb vs $89.4/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$119.2/t vs US$113.3/t

Chinese steel rebar 25mm US$517.9/t vs US$517.5/t

Thermal coal (1st year forward cif ARA) US$115.3/t vs US$116.6/t

Thermal coal swap Australia FOB US$135.5/t vs US$136.5/t

Hard Coking Coal Australia FOB US$326.0/t vs US$326.0/t

Other:  

Cobalt LME 3m US$27,830/t vs US$27,830/t

NdPr Rare Earth Oxide (China) US$53,953/t vs US$53,686/t

Lithium carbonate 99% (China) US$15,109/t vs US$15,112/t

China Spodumene Li2O 6%min CIF US$1,240/t vs US$1,240/t

Ferro-Manganese European Mn78% min US$972/t vs US$972/t

China Tungsten APT 88.5% FOB US$330/mtu vs US$330/mtu

China Graphite Flake -194 FOB US$480/t vs US$480/t

Europe Vanadium Pentoxide 98% 5.0/lb vs US$5.0/lb

Europe Ferro-Vanadium 80% 26.25/kg vs US$26.25/kg

China Ilmenite Concentrate TiO2 US$328/t vs US$328/t

China Rutile Concentrate 95% TiO2 US$1,414/t vs US$1,415/t

Spot CO2 Emissions EUA Price US$64.4/t vs US$68.9/t

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

Battery News

Samsung SDI unveils battery that charges in 9 minutes and will last 20 years

• The battery maker will showcase its future battery technologies at the Electric Vehicle Symposium & Exhibition (EVS), to be held in Seoul.
• Samsung will focus on its solid-state batteries which it hopes to have in mass production by 2027.
• The company claims that their batteries will charge in 9 minutes and will last up to 20 years, tackling two of the barriers to mass adoption of EVs.
• We will be following news from EVS closely to see what other technologies might be unveiled.

Tailan New Energy claims major breakthrough with 1,300 mile range battery

• According to a press release, Talian New Energy have developed the world’s first ultra-high energy density all-solid-state lithium metal battery suitable for use in EVs.
• The company claims that the new battery technology double the energy density of current high density batteries.
• The Tailin battery is claimed to have a density of 720Wh/kg – compared to Tesla’s current 4680 cells which measure between 250-300Wh/kg.
• The all-solid-state lithium battery uses a high-gram capacity, long-cycle lithium-rich manganese-based material for the positive electrode, and an ultra-wide, ultra-thin lithium composite with high cycle stability and high rate for the negative electrode, according to the companies statement.

Influx of Chinese models to drive EV sales amid global surge

• China accounted for nearly 60% of global EV sales in 2023, followed by Europe at 25% and the US at 10%.
• The EV market in Africa, Eurasia and the Middle East is still nascent at under 1% of total sales, but entry of Chinese automakers could drive growth.
• Chinese automakers like BYD and Chery are establishing EV production partnerships in countries like Uzbekistan and Saudi Arabia.
• In July last year, Saudi Arabia’s Ministry of Investment signed a $5.6bn deal with Chinese EV maker Human Horizons to collaborate on the development, manufacture, and sale of vehicles.
• Jordan has the highest EV sales share in the Middle East at over 45%, followed by the UAE at 13%.

UK receives largest shipment of EVs

• 4,694 EVs have arrived at the Port of Bristol, the largest shipment of vehicles to the UK in a single journey.
• The majority of the vehicles in the shipment were Chinese-made MG EVs.

China EV insurance registrations for w/c 15^th April: Chinese automakers gain, Tesla sees big fall off

• For the week of April 15-21, Nio’s EV insurance registrations in China were 2,990 units, up 19.12% from the previous week.
• Tesla’s Model 3 registrations in China were 540 units, down 65% week-over-week, after Tesla cut prices across its lineup on April 21.
• BYD saw 59,470 insurance registrations last week, up 11.93% from the prior week.
• Li Auto’s registrations were 4,460 units, down 37.36% week-over-week.
• Xpeng’s registrations rose 55.7% to 2,460 units compared to the previous week.
• Xiaomi had 1,690 insurance registrations for its EVs in the week ending April 21.
  • Xiaomi have had over 75,000 orders for their first EV, the SU7 and hope to deliver 10,000 vehicles in June.

20MW BESS granted in Gloucestershire

• Developer Exagen have had plans for a 20MW / 40MWh approved by Tewksbury Borough Council.
• The project will be connected up to the grid and each cycle of the battery will be equivalent to the daily usage of 5000 homes.
• It is the companies second project that has been granted approval this year, following the approval of a 500MW / 1000MWh in Leicestershire, in January.

Company News

Anglo American (AAL LN) 2,481.5p, Mkt Cap £29.5bn – £31.1bn (~US$39bn) conditional, all-share offer, from BHP

BHP (BHP LN) 2,296p, £120bn

• Anglo American confirms that it has been approached by BHP concerning a possible combination of the two companies through an all share offer by BHP to acquire Anglo American.
• The proposal from BHP envisages demergers of Anglo American’s “entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to Anglo American shareholders” prior to its offer for the rest of Anglo American.
• Describing the proposal as “unsolicited, non-binding and highly conditional” Anglo American says that it is considering the proposal with its advisors and recommends its shareholders to “take no action” at this stage.
• In a separate announcement, BHP confirms its proposal to offer 0.7097 of its shares for every share in Anglo American representing a “total value of approximately £25.08 per Anglo American ordinary share including £4.86 in Anglo Platinum shares and £3.40 in Kumba shares, valuing Anglo American’s share capital at £31.1 billion”.
• BHP’s statement expresses the view that combining with Anglo American “would bring together the strengths of BHP and Anglo American in an optimal structure … [with] … a leading portfolio of large, low-cost, long-life Tier 1 assets focused on iron ore and metallurgical coal and future facing commodities, including potash and copper … [while delivering] … meaningful synergies, including from sharing best practice, creating procurement, operational and marketing synergies and eliminating duplication, which would enhance profitability and value for Anglo American shareholders”.
• BHP says that “Anglo American’s other high quality operations including its diamond business would be subject to a strategic review post completion”.
• BHP also warns that their announcement today “does not amount to a firm intention to make an offer and there can be no certainty that an offer will be made. There is no certainty that any form of agreement or transaction will be reached or concluded”.
• In our opinion, the initial approach by BHP could be the start of a protracted process which may possibly draw in other suitors for Anglo American and which could see Anglo American either lose its independence or reinvigorate it as a stand-alone force in the industry.
• Although they may reach an amicable agreement quickly, if BHP and Anglo American are drawn into lengthy hostilities management resources in both the target and predator, and possibly among other potential offerors, could come under pressure to the detriment of the operational needs of the respective businesses.
• Although consolidation of two major forces in the mining industry has scope to generate cost savings through the generation of synergies, it also consolidates control of key commodities which may attract the scrutiny of regulators and spark concerns on competition grounds.
• We also comment that consolidation of industry control may not necessarily increase either the overall output of key commodities or encourage exploration to replenish depleting mineral resource inventories.
• Readers with a long memory or an historical interest will hear echoes of the late 1980’s when the Anglo American’s subsidiary, Minorco, launched an ultimately unsuccessful hostile year-long battle – said to have been the largest hostile offer ever launched on the LSE up to that time, for Consolidated Gold Fields which ultimately saw the world’s second largest gold producer acquired and dismembered by Hanson plc.

Conclusion: Initial approaches by BHP to acquire Anglo American may be the start of a long process which may draw others into the fray.  A speedy resolution is desirable for operational reasons but may not be achievable if regulators and competition authorities are drawn into the process.

Ariana Resources (AAU LN) 2.7p, Mkt Cap £32.4m – Rockover merger brings in 1.3moz Dokwe gold deposit in Zimbabwe

• Ariana Resources confirms that it has reached a conditional agreement for a merger with Rockover Holdings which owns the 1.3moz Dokwe gold project in Zimbabwe.
• The planned merger, through Ariana Resources’ wholly owned subsidiary, Asgard Metals, which currently owns 2.1% of Rockover, will be via shares “based on a merger ratio in the enlarged entity of 62.5% Ariana existing shareholders and 37.5% Rockover existing shareholders”.
• “Based on the merger ratio, Ariana would issue 687,817,998 new ordinary shares … to acquire the shares in Rockover not already owned”.
• Ariana Resources says that it expects the merger to “be implemented by 28 June 2024 … [and that it] … intends to seek a dual-listing on the Australian Securities Exchange (“ASX”) to promote the opportunity to a broader range of potential investors”.
• The Dokwe North deposit “contains 1.21Moz in JORC 2012 … Measured, Indicated and Inferred Resources, including 0.8Moz in Proven and Probable Reserves; Dokwe Central contains 80,000oz in JORC 2004 Indicated and Inferred Resources … [and the company reports that a 2022 pre-feasibility study, currently being revised, shows] … a mine life of 13 years at a post-tax NPV₁₀ of US$72 million and an IRR of 25% at a gold price of US$1,650/oz”.

Conclusion: Ariana Resources’ all-share merger with Rockover Holdings is expected to be concluded by the end of June bringing in the 1.3moz Dokwe gold project in Zimbabwe.

Beowulf Mining* (BEM LN) 0.6p, Mkt cap £12m – Initiation Note – BUY – Supporting Scandinavia’s Green Transition

Valuation: 5.4p/sh Price Target, BUY

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• We provide an initiation note on Beowulf Mining following their recently completed equity raise, leaving them funded for the progression of their flagship iron ore and graphite anode material projects.
• Beowulf’s flagship Kallak Project has a completed scoping study highlighting its potential to service rising demand for high-grade iron ore concentrate to Europe’s growing green steel sector. Test work to date shows Kallak can produce a high-grade magnetite concentrate of up to 71.5% Fe with minimal impurities and detrimental components.
• Kallak is excellently positioned given the supportive local infrastructure in the surrounding area, fundamental for bulk-scale projects.
• Kallak benefits from a neighbouring hydroelectric power station, which will further support green credentials of the iron ore concentrate targeting the low-carbon steel industry.
• The project is accessed by national roads with all-weather gravel roads passing through the project area, the Inlandsbanan railway line is positioned 40km east of the project which provides access to ports both in the Baltic and Narvik in Norway.
• The Kallak scoping study, released in January 2023, was generated purely using the PERC categorised Mineral Resource Estimate from Kallak North.
• This ‘Base Case’ includes 111mt of Measured and Indicated MRE at 28% Fe alongside a 25mt Inferred Resource at 28.3%.
• However, the Company is confident that further exploration at the Kallak South North and Kallak South South deposits, which currently contain Indicated and Inferred MRE of 35mt @ 26% Fe, will extend the project’s mine-life.
• Beowulf’s Grafintec delivered positive preliminary economics as part of a PFS for the final Coating Stage of the Grafintec GAMP plant showing an:
  • NPV8 of US$242m and a post-tax IRR of 39%.
• The project is set to benefit from a combination of stimulated demand for natural flake graphite products fuelled by the EU’s Critical Minerals Act, alongside supply-side disruptions triggered by China’s renewed export controls on December 1^st, 2023.
• Using a DCF-style valuation provides us with a NPV8 of US$327m for Kallak North. Discounting this by 60% suggests an asset value at 5p/share, which factors in its unfunded status.
• The project is highly levered to the iron ore price, with current spot prices increasing the NPV8 to $446m.
• Our conservative valuation of $24m for Grafintec using a 60% discount to our EV/EBITDA-based valuation of $60m, equates to 0.9p/share.
• We reach a sum of the parts valuation of 5.4p/share for Beowulf on a fully diluted and discounted basis. Beowulf successfully recapitalised following its April 2024 equity raise and remains funded for its project progression towards its key milestones, including an optimised PFS for both Kallak and GAMP.
• This should provide ample opportunity for a rerate and we initiate coverage with a BUY.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Empire Metals* (EEE LN) 7.7p, Mkt Cap £46m – Drilling completed at Pitfield on time and budget, assay results due in coming weeks

(Empire holds 70% of Pitfield, Century Minerals, which is run by two geologists holds the other 30%. One of these geologists works for Empire.)

• Empire provide an update on their Pitfield drilling programme, where they have received assay results from 18 RC holes at Pitfield.
• The Company has been aiming to boost its understanding of the high-grade zones of Tio2 mineralisation as it works towards a JORC Exploration Target at the asset.
• RC intercepts from the recent programme include highlights of:
  • 148m at 6.5% Tio2 from surface
  • 148m at 6.3% Tio2 form surface
  • 136m at 6.1% Tio2 from 12m
  • 154m at 5.3% Tio2 form surface
• Additionally, Empire has completed four diamond drillholes, reporting strong core recovery.
• Diamond drill core suggests consistent geology through the high-grade prospect areas, with sandstone zones hosting the higher grade Tio2 mineralisaton.
• Going forward, Empire are looking to utilize the diamond core sections to better understand the mineral assemblage, informing the metallurgical team and supporting their processing testwork.
• The Company is progressing towards an Exploration Target at the Cosgrove and Thomas prospects in line with JORC, which will be accelerated following the completion of the current drill programme.
• Assay results from 22 RC holes are due, alongside the four diamond drill holes.

Conclusion: Empire continues its major drilling campaign at Pitfield, where it has identified an expansive area of Tio2 mineralisaton. The Company is now targeting two higher-grade zones for an initial Exploration Target, with a combination of RC and diamond holes being conducted to achieve this. Mineralisation is hosted within titanite primarily, and the Company is exploring optimal processing methods with their recently  expanded metallurgical team. Today’s drilling highlights consistent ore geology with limited cross faulting or igneous intrusions, simplifying ore modelling and geotechnical engineering.

*SP Angel acts as nomad and broker to Empire Metals

First Tin (1SN LN) 6.5p, Mkt Cap £17.5m – Latest metallurgical work from Taronga

• First Tin has provided a progress report on metallurgical test work at its Taronga tin project in New South Wales.
• The work, which forms part of the current programme for a definitive feasibility study, shows that “Conventional crushing recovers 72.5% of tin into 46.5% of mass grading 0.16% Sn in the minus 2.8mm fraction … [with subsequent] … crushing of the plus 2.8mm fraction from the above conventional crushing … [recovering] … an additional 11.7% of tin into 11.0% of the initial mass, grading 0.08% Sn, to the minus 2.8mm fraction”.
• Overall, crushing and gravity results show recovery of 60.2% of the tin from material designated LG (presumably low-grade).
• CEO, Bill Scotting, said that the “60% overall recovery rate for the LG material closely aligns with the data obtained by Newmont, substantially de-risking the project by demonstrating that recoveries are good for this below average grade material”.
• He also said that “If the gravity results from the second high grade sample are shown to be similar to those obtained for the LG sample, the overall recovery for the deposit will be significantly better, positively bolstering the project’s economics”.
• In a December 2023 presentation on the company’s website, First Tin describes the Taronga deposit as the “fifth largest undeveloped tin reserve globally”.

Conclusion: First Tin’s latest test work, as part of its DFS for the Taronga deposit verifies previous results from Newmont.  We look forward to the forthcoming Taronga DFS.

Galantas Gold* (GAL LN) 12.9p, Mkt Cap £15m – FY23 results

• No revenues recorded during the period reflecting no production from the Omagh Gold Mine.
• Annual loss amounted to C$8.6m (FY22: -C$16.6m) largely driven by general and administrative costs of C$4.2m (FY22: -C$5.4m) and Omagh impairment of C$3.6m (FY22: -C$10.1m).
• FCF totalled a cash outflow of C$5.1m (FY22: -C$12.1m) including C$3.8m in capitalised development and exploration costs at Omagh and Gairloch.
• Closing cash balance stood at C$2.6m with outstanding debt of C$16.8m with most of that due to G&F Phelps and Ocean Partners implying a C$14.2 net debt position (FY22: C$10.0m).
• Post reporting period in February, the Company refinanced US$2.7m worth of debt owed to Ocean Partners issuing new unsecured convertible notes.

*SP Angel acts as Broker to Galantas Gold

Greatland Gold (GGP LN) 5.55p, Mkt Cap £292m – Doubling its exploration licence area in the Eastern Goldfields of WA

• Greatland Gold reports that it has been awarded a new 555km² exploration licence at its Ernest Giles Project in the Eastern Goldfields of WA.
• The new, Mount Smith licence covers “more than 50km of strike length of the highly prospective Ernest Giles Yilgarn Craton Archean greenstone belt, with very limited previous exploration”.
• Managing Director, Shaun Day, said that the new licence, “more than doubles our exploration ground in the underexplored and highly prospective Eastern Goldfields of Western Australia … with only four reverse circulation (RC) holes drilled throughout the entire 555km² area. Three of these were logged as not reaching bedrock and therefore not testing the target, while the depth of cover in the one effective hole was logged as 369m. No significant bedrock mineralisation was identified”.
• The company says that it intends to undertake ground geological reconnaissance and additional geophysical interpretation during 2024 to help identify “likely dilational areas and fluid pathways … prior to drilling”.

Shanta Gold (SHG LN) 14.7p, Mkt Cap £155m – FY24 guidance reiterated as production expected to pick up from a dip in Q1/24

• Q1/24 production amounted to 21.7koz at $1,422/oz AISC (Q1/23: 15.3koz at $1,429/oz) including
  • 13.0koz at $1,696/oz at NLGM (Q1/23: 15.3koz);
  • 8.7koz $1,173/oz at Singida (Q1/23: -).
• NLGM production has been impacted by lower grade feed and lower recoveries on poorer quality of reagents and weaker grinding efficiency.
• Singida production was relatively stable with costs coming in below budget levels on the back of a consistency in good grades and recoveries as well as lower than expected drilling, blasting and administrative costs.
• FY24 guidance reiterated at 100-106koz at $1,300-1,350/oz in AISC (FY23: 100.6koz at $1,138/oz) including:
  • 70-74koz at $1,300-1,350/oz at NLGM (FY23: 71.2koz);
  • 30-32koz at $1,275/1,325/oz at Singida (FY23: 29.3koz).
• The Company is going through the approval process of the Saturn Resources cash offer with completion expected on 10 May.
• Saturn Resources is paying 14.85p per share offering a ~17% premium to the closing price prior to the first offer announcement in December and valuing equity at ~$200m and ~$210m including net debt.

Standard Lithium (SLI US) US$1.1, Mkt Cap US$200m – First commercial scale DLE column commissioned in North America

• The Company reports a successful commissioning of a commercial scale DLE column at its demonstration plant near El Dorado, Arkansas.
• The column uses Koch Technology Solutions Li-Pro Lithium Selective Sorption proprietary technology to recover lithium from brines.
• The column is same size, design and construction with the same type of sorbent media used to recover lithium as planned for commercial scale plant.
• The column achieved average lithium recoveries of 97.3% treating 90 gallons of brine per minute.
• Average grade of incoming brine is estimated at 208mg/L.
• The facility is reported to have been running over two weeks this month.
• The facility rejected 99% of key contaminants like sodium, calcium, magnesium and potassium and 95% of boron.
• Resulting lithium chloride solution is expected to be treated and purified further for eventual final production of lithium carbonate or hydroxide.
• Results from the commercial scale DLE column run tests will be used to validate the design assumptions for the Phase 1A Project.
• Phase 1A feasibility study released in 2023 is planning a 5.4ktpa battery grade LC production with flow rates reaching 3,000gpm treating 227mg/L brine over 25y mine life.
• The plant is estimated to cost US$365m to build and run at $6,810/t LCE opex generating NPV8% and IRR of $550m and 24.0% (post tax) using $30,000/t LCE

Teck Resources (TECK CN) C$62, Mkt Cap C32bn – Q1 Results as QB2 construction complete with first concentrate shipped

• Teck reports EBITDA of C$1.7bn for the quarter, with pre-tax profit of C$741m.
• C$1.6bn held in cash.
• Copper production up 74% for the period to 99kt, QB producing 43.3kt.
• QB reporting first concentrate loaded, with the molybdenum plant expected to ramp up in 2Q24.
• QB2 final CAPEX guided at US$8.6-8.8bn, unchanged.
• Zinc concentrate produced fell 10% to 160kt.
• Steelmaking coal generated C$1.4bn in gross profit before D&A on an average steelmaking coal price of US$297/t.
• 20% of EVR sold to Nippon Steel.
• Copper guidance for 2024 at 465-540kt, zinc at 565-630kt, steelmaking coal at 24-26mt.
• Costs guided at US$1.85-2.25/lb Cu, C$95-110/t for steelmaking coal site cash costs with C$47-51/t transportation costs.
• Ongoing EVR transaction with Glencore for US$6.9bn in cash, with Teck to continue operating until closure of sale.

No.1 in Base Metals: SP Angel mining team awarded No 1. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q1 2024

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

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

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

Analysts

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

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

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

Sales

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

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

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

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

SP Angel                                                            

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.

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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%