SP Angel Morning View -Today’s Market View, Thursday 28th November 2024

Metals slide whilst iron ore climbs on improving steel mill profitability

MiFID II exempt information – see disclaimer below

Amaroq Minerals (AMRQ LN) – First gold poured at Nalunaq, Greenland

Andrada Mining (ATM LN) – Interim results show operational and financial progress

Artemis Resources (ARV LN) – Rock chip results from the Thorpe prospect, WA

Great Western Mining* (GWMO LN) – Retail offer result

Hummingbird Resources (HUM LN) – A conditional binding refinancing agreement

Oriole Resources* (ORR LN) – Infill drilling results from Bibemi Phase 5 programme

Orosur Mining* (OMI LN) – Anzá deal completes and drilling continues at Pepas

Serabi Gold (SRB LN) – Strong cash generation from increasing production and buoyant gold prices

Strategic Minerals* (SML LN) – Continuing long-term access to Cobre secured

Oxford Mining Club Winter Drinks – next Monday 2^nd December, from 5:00pm

• Oxford Mining Club Winter Drinks
  • Waldorf Hilton Hotel, Aldwych, London
• There are a few miners in town and the evening promises to be a major event.
• We are sponsoring so please feel free to contact us for a discount code to the drinks.
• To register for Winter Drinks: https://www.eventbrite.co.uk/e/the-oxford-mining-club-winter-drinks-reception-tickets-1073600751749?aff=oddtdtcreator

Metals slide whilst iron ore climbs on improving steel mill profitability

• Copper again fell below $9,000/t overnight weighed down by global growth concerns and weak China demand.
• Zambia has approved two mining reform bills, to boost production from 800ktpa to 3mtpa by 2031.
• Zinc rallied then slumped $160/t after reports Trafigura was taking significant deliveries from the LME.
• Iron ore remains steady around the $104/t mark, with reports of improving steel mill margins in China,
• The next round of stimulus talks may come from the Politburo meeting in early December.

Gold ticks higher as yields slide on PCE data and revived concerns over growth slowdown

• Gold prices are holding around $2,650/oz, having touched $2,610/oz last week.
• The volatility has come amid a sharp dollar rally, which is now cooling.
• The rally was supported by renewed inflation concerns over Trump’s economic policies, which aligned with expectations of an acceleration in growth.
• Meanwhile, PCE data yesterday came in line with expectations, whilst continuing claims are rising steadily.
• The 10 year yield has fallen 25bp over the past few weeks to 4.25%.

Lithium Refinery dropped in Portugal

Galp, the major Portuguese energy company, has dropped plans to build the Aurora lithium refinery after the company could not find a new partner to replace Northvolt.

• Northvolt, which recently filed for bankruptcy has said that it will not invest in the 50/50 JV set up with Galp in November 2021.
• The JV planned to build a new lithium processing plant in Setubal, Portugal.
• The facility was estimated to cost €1bn and commence commercial production in early 2026.

Economics

US – October PCE numbers, a Fed’s preferred measure of inflationary pressures, came in line with estimates showing a little bit of a pick up in rates.

• Nevertheless, 10y sovereign bond rates pulled back yesterday with market continuing to see another rate cut in December.
• In a separate announcement durable goods came in below forecasts in October, although, previous month data was also revised higher.
• PCE (%mom, Oct/Sep/Est): 0.2/0.2/0.2
• PCE (%yoy, Oct/Sep/Est): 2.3/2.1/2.3
• Core PCE (%mom, Oct/Sep/Est): 0.3/0.3/0.3
• Core PCE (%yoy, Oct/Sep/Est): 2.8/2.7/2.8
• Durable Goods Orders (%mom, Oct/Sep/Est): 0.2/-0.4 (revised from -0.7)/0.5
• Capital Goods Orders ex Defence and Air (%mom, Oct/Sep/Est): -0.2/0.3 (revised from 0.7)/0.1

Germany – Regional inflation reports showed a sharp drop in consumer prices in November amid lack of economic growth momentum.

• Nationwide numbers are due later this afternoon with estimates for a -0.5%mom reading, down from 0.4% in October.

Coal – Chinese seaborne coal imports pulled back sharply over the past two years on the back of a ban of Australian coal imports compensated with increased Lambourne source from Russia and Mongolia.

• Share of seaborne imports dropped from 93% between 2015-22 to 76% in 2023-24.
• Share of Australian coal fell sharply from 26% to just 11% in 2023 after an unofficial ban was lifted in.
• Coking coal imports from Australia dropped 91% compared to pre ban levels.
• Share of Russian coal doubled from 11% in 2019 to 22% in 2023 as the nation redirected trading routes amid Western sanctions.
• Mongolia invested into infrastructure and more than doubled its coal shipments in 2023 hitting 70mt (or more than half of Chinese total coking coal imports) posting another ~27% increase in 2024.
• Nearly 75% of Mongolia’s coal shipments are coking coal making it the largest supplier of the steelmaking product to China.

Nickel – Ng Yu Zhi, a Singaporean businessman, faces 42 charges including fraud, forgery and money laundering, in relation to an alleged nickel trading scam.

• His Envy Group raised a total of S$1.5bn (US$1.1bn) promising investors a return from its nickel trading business involving purchasing metal from an Australian mine at a discount.
• The prosecution reports that the scheme was “pure fiction” and in reality no nickel was purchased, no purchasing agreement in place and no forward contracts for the sale of the metal.
• “The Envy companies paid earlier investors not with returns generated from physical nickel trading, but with the moneys invested by other investors,” prosecutor said.
• The scheme was running for six years with Ng’s companies securing funds from 947 investors while spending S$482m in raised funds for personal needs.

Ukraine/Russia – Russia picks up attacks on key infrastructure in response to hits of targets in Russian territories by Ukraine earlier in the week.

• Ukrenergo, the national electricity transmission operator, said it imposed emergency power cuts to manage the impact of strikes.

Currencies

US$1.0548/eur vs 1.0519/eur previous. Yen 151.81/$ vs 153.15/$. SAr 18.233/$ vs 18.089/$. $1.266/gbp vs $1.260/gbp. 0.650/aud vs 0.650/aud. CNY 7.250/$ vs 7.248/$.

Dollar Index 106.29 vs 106.66 previous

Precious metals:         

Gold US$2,644/oz vs US$2,652/oz previous

Gold ETFs 83.2moz vs 83.2moz previous

Platinum US$938/oz vs US$933/oz previous

Palladium US$986/oz vs US$991/oz previous

Silver US$30.0/oz vs US$30.6/oz previous

Rhodium US$4,575/oz vs US$4,600/oz previous

Base metals:   

Copper US$8,991/t vs US$9,037/t previous

Aluminium US$2,579/t vs US$2,628/t previous

Nickel US$16,075/t vs US$15,960/t previous

Zinc US$3,042/t vs US$3,129/t previous

Lead US$2,046/t vs US$2,038/t previous

Tin US$27,370/t vs US$28,300/t previous

Energy:           

Oil US$72.7/bbl vs US$73.1/bbl previous

• Crude oil prices are stable after the EIA reported US inventory draw of 0.7mb to crude, more than offset by builds of 3.3mb to gasoline and 0.4mb to diesel stocks, with refinery utilisation up 0.3% w/w to 90.5%.
• European energy prices were flat as EU natural gas storage levels fell by 2.9% w/w to 87% full (vs 89.2% 5-Yr average), with aggregate storage at 999TWh after large draws in France that reduced inventories by 10% w/w.
• Adnoc announced the planned 1Q25 launch of XRG, an independent international lower-carbon energy and chemicals investment company with an enterprise value of over $80bn that is driven by three megatrends: the transformation of energy, exponential growth of AI, and the rise of emerging economies.

Natural Gas €46.5/MWh vs €46.4/MWh previous

Uranium Futures $77.1/lb vs $77.2/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$103.8/t vs US$103.8/t

Chinese steel rebar 25mm US$496.2/t vs US$497.6/t

HCC FOB Australia US$204.0/t vs US$203.5/t

Thermal coal swap Australia FOB US$138.0/t vs US$138.5/t

Other:  

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

NdPr Rare Earth Oxide (China) US$57,103/t vs US$57,093/t

Lithium carbonate 99% (China) US$10,345/t vs US$10,343/t

China Spodumene Li2O 6%min CIF US$790/t vs US$790/t

Ferro-Manganese European Mn78% min US$985/t vs US$985/t

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

China Graphite Flake -194 FOB US$440/t vs US$440/t

Europe Vanadium Pentoxide 98% US$4.9/lb vs US$4.9/lb

Europe Ferro-Vanadium 80% US$26.3/kg vs US$26.3/kg

China Ilmenite Concentrate TiO2 US$304/t vs US$307/t

China Rutile Concentrate 95% TiO2 US$1,124/t vs US$1,124/t

Spot CO2 Emissions EUA Price US$64.9/t vs US$64.9/t

Brazil Potash CFR Granular Spot US$287.5/t vs US$282.5/t

Germanium China 99.99% US$2,825.0/kg vs US$2,825.0/kg

China Gallium 99.99% US$430.0/kg vs US$430.0/kg

Battery News

UK auto industry body says weak demand for EVs will cost the industry almost £6bn in 2024

• New analysis by the Society of Motor Manufacturers and Traders (SMMT) reveals that weak demand for EVs and the effect on fulfilling sales quotas will cost the industry around £6bn in 2024.
• When the Zero Emission Vehicle (ZEV) mandate was announced in January, industry anticipated that 457,000 electric cars would be registered in 2024, which should have accounted for 23.3% of all new car registrations.
• The latest industry outlook shows approx. 94,000 fewer cars will be registered, totalling just 363,000 with a market share of 18.7%, below the 22% quota for 2024.
• Automakers are expected to see a £1.8bn compliance bill for the number of vehicles they have missed the targets by.
• That is after it has been estimated that automakers have lost around £4bn in revenue, by offering significant subsidies to incentivise sales in order to meet the ZEV targets.

Pony AI debuts on Nasdaq at $5bn valuation

• Chinese autonomous driving startup Pony AI raised $413m in its US offering, making it the largest IPO in the autonomous driving space on the US stock market this year.
• Pony AI aims to create virtual drivers for different car models and scenarios, with robotaxi, robotruck, and personally-owned vehicles (POV) businesses.
• Pony AI was valued at just over $5bn in the IPO, down significantly from $8.5bn two years ago.

Company News

Amaroq Minerals (AMRQ LN) 86p, Mkt Cap £307m – First gold poured at Nalunaq, Greenland

• Amaroq Minerals reports that it completed its first gold-pour at its Nalunaq mine in southern Greenland on 27^th November.

• A total of 39oz of gold was produced “after a 10-hour processing period … [and the company confirms that it] … will continue to optimise the processing plant during Phase 1 Commissioning and aims to conduct a gold pour on a weekly basis”.
• The 2^nd phase of the commissioning “is due to complete in Q2 2025 … [ramping up to] … nameplate plant capacity of 260-300 tonnes per day of material between 12-16 g/t Au is expected to take place in Q4 2025”.
• Thanking the team for their work “throughout the construction and commissioning to deliver first gold on time … [CEO, Eldur Olafsson said that the initial gold from Nalunaq] … signifies a major step on our journey, triggering initial cash flow generation”.

• He thanked the host community and Greenland’s Government for their support and confirmed that Amaroq Minerals’ future focus “turns to resource, mine life extension and further exploration to unlock the full mineral potential of our Greenland portfolio”.

Conclusion: The production of the first gold from Nalunaq as part of the commissioning process is a milestone on the route to delivering full scale 260-300tpd treatment capacity by the end of 2025.

Andrada Mining (ATM LN) 2.33p, Mkt cap £38m – Interim results show operational and financial progress

• In its interim report for the 6 months to 31^st August, Andrada Mining reports improvements in financial and operating performance as well as the completion of restructuring to deliver full ownership of its Uis mine and Lithium Ridge project in Namibia.
• Andrada Mining reports a 22% improvement in revenue to £10.8m (H1 FY FY 2024 – £8.9m) and a 70% rise in gross profit to £2.6m (H1 FY 2024 -£1.5m with a 42% improvement in operating losses to £1.5m (H1 FY 2024 – loss of £2.5m).
• The company says that the “net loss increased to £3.2 million (H1 2024: £2.8 million) primarily due to finance expenses … [£2.1m from £0.3m] …. A significant portion of these expenses are related to the interest on the convertible note obligation that was settled in shares at the election of the supportive shareholders”.
• Andrada Mining reports a 31^st August cash balance of £6.1m with long-term debt of £16.2m and current borrowings of £1.5m.
• The financial results reflect the production of 752t of tin concentrate containing 462t of metal at an average cost (C1) of US$18,690/t net of tantalum credits (H1 FY 2024 – 758t of concentrate containing 454t of metal at a net cost of US$18,161/t).
• By-product tantalum concentrate production of 16t containing 1,731kg of metal during the quarter brings H1 concentrate output to 25t with a metal content of 2,596kg with recoveries doubling from 3% to 6% quarter-on-quarter.
• Tin sales realised an average of US$31,397/t; 21% above the US$25,912/t for H1 of FY 2024.
• The company also highlights its announcement, in September, of its “three-stage earn-in agreement with SQM” (Sociedad Química y Minera de Chile) on the Lithium Ridge project which it describes as “a potential world-class resource”.
• CEO. Anthony Viljoen, described the six month period as one of “significant progress”.  He described the ramp up of tantalum production “Despite an unforeseen mechanical breakdown at the processing plant, which marginally increased costs … [and said that Andrada Mining expects] … significant performance improvements in FY 2026 as we begin to reap the benefits of various capital projects”.
• He also confirmed that recent drilling results at the Brandberg West project “confirmed significant mineralisation within the historical pit, and the extensions to the north … [and said that the] … exceptionally high-grade veins have added tungsten and copper to our portfolio of critical minerals”.

Conclusion: Andrada Mining reports operational and financial improvements as well as encouraging results from initial drilling at Brandberg West.

Artemis Resources (ARV LN) 0.55p, Mkt Cap £10.1m – Rock chip results from the Thorpe prospect, WA

• Artemis Resources reports rock-chip sample results from the Thorpe prospect located in the southeast of its Carlow licence area southeast of Karratha.
• A total of 52 samples taken from “three interpreted structures, each trending SW-NE and East-West for approximately 2km strike length” during recent ground reconnaissance in the area “included the following high-grade assays …”

• • 45.8 g/t Au, 3.7% Cu & 38.6 g/t Ag … [in sample] … (24AR22-020)
  • 12 g/t Au, 1.1% Cu & 3.7 g/t Ag … [in sample] … (24AR22-014)
  • 5.9 g/t Au, 1.0% Cu & 17.8 g/t Ag … [in sample] … (24AR22-006)
  • 3.4 g/t Au, 2.5% Cu & 4.2 g/t Ag … [in sample] … (24AR22-031)
  • 3.0 g/t Au, 2.1% Cu & 24 g/t Ag … [in sample] … (24AR22-026)
  • 6.2% Cu, 0.8 g/t Au & 5.6 g/t Ag … [in sample] … (24AR22-016)
  • 6.1% Cu, 1.6 g/t Au & 13.5 g/t Ag… [in sample] … (24AR22-009)
  • 10.3% Cu, 0.4g/t Au & 69.4 g/t Ag… [in sample] … (24AR22-013)

• Today’s announcement explains that “Mineralisation is associated with stockwork quartz-iron oxide veining within shear and fault structures ranging in width from centimetres up to approximately 12m.  The associated country rock is predominantly altered basalt & dolerite”.
• Welcoming the results of the reconnaissance sampling, Executive Director, George Ventouras, said that “While several of these prospects have had minor drilling programs, the exploration team continues to compile data to identify the source of the widespread gold discovered at surface. Combined with the Titan prospect and other targets in the immediate Carlow area, the future looks very bright for the Karratha Gold Project”.
• “Artemis plans to commence drilling of key targets within the Carlow tenement starting early 2025, subject to heritage clearance and other regulatory requirements. The Company has commenced the process for surveys of areas not already cleared”.

Conclusion: Encouragement from early stage rock-chip sampling leads Artemis Resources to plan future drilling.  We await further news on progress of the exploration with interest.

Great Western Mining* (GWMO LN) 0.018p, Mkt Cap £1.5m – Retail offer result

1. Great Western, who announced on Tuesday a £300k placing, has raised a further £45k via a retail offering.
2. Use of Funds:
   • Complete commissioning of process mill for pilot production
   • Delineate drill programme for West Huntoon copper porphyry project
   • Analyst and report soil and grab sampling programme from various projects over the 2024 field season.
   • Explore tungsten potential from Black Mountain project

*SP Angel act as Broker to Great Western Mining, an SP Angel Analyst has visited Great Western’s Nevada claim blocks.

Hummingbird Resources (HUM LN) 1.9p, Mkt Cap £16m – A conditional binding refinancing agreement

• The Company signed a conditional binding subscription agreement with CIG and Nioko Resources following the proposed debt-to-equity conversion announced earlier this month.
• Under the agreement, the Company will issue 863m shares at 2.68p each to convert £23.1 in outstanding loan facilities held with CIG.
• Subscription is conditional on shareholders’ and regulatory approvals among other things and will be carried in two tranches:
• First Tranche involving such number of shares that will take Nioko respective interest to 49.9% of the enlarged share capital.
• Second Tranche including the balance of new shares taking the respective interest to 71.8%.
• The offer also remains conditional on ongoing due diligence.
• Nioko currently holds 42% in the Group.

Oriole Resources* (ORR LN) 0.3p, Mkt cap £11m – Infill drilling results from Bibemi Phase 5 programme

• Oriole report drilling results from their Phase 5 programme, which is intended to upgrade and expand the Bakassi Zone 1 MRE.
• Highlights include:
  • 2.00 metres (‘m’) at 8.57g/t Au including 1.00m at 15.90g/t Au, 1.00m at 7.01g/t Au, 1.10m at 4.84g/t Au and 2.00m at 2.38g/t Au (BBDD075)
  • 4.60m at 0.52g/t Au (BBDD077)
  • 1.00m at 3.37g/t Au (BBDD078)
  • 1.00m at 3.96g/t Au (BBDD079)
  • 1.00m at 1.40g/t Au and 1.00m at 1.93g/t Au (BBDD080)
• 5,024m over 43 holes have now been drilled at Bakassi Zone 1, of the 7,060m programme.
• The Company notes that the infill drilling ‘provides scope for resource expansion outside of the current wireframes at BZ1-MRE.’
• 10 additional holes are planned at BZ1, which are intended to support upgrading the current MRE from inferred to measured/indicated.
• Additionally, two holes were reported from step-out drilling at BZE-NE, which is not part of the MRE.
• These yielded:
  • 1m at 1g/t Au from 42m
  • 1m at 1.7g/t Au from 41m
• Management states they hope the results outside of the BZ1-MRE wireframes ‘will lead to an increase in the existing resource MRE, and potentially a partial upgrade of the resource to Measured/Indicated categories.’

*SP Angel acts as Broker to Oriole Resources

Orosur Mining* (OMI LN) 4.5p, Mkt Cap £12m – Anzá deal completes and drilling continues at Pepas

(Anzá 100% indirect ownership proposed)

• Orosur has now completed the reacquisition of their Anzá project from the Newmont/Agnico Eagle partnership.
• The project has seen 48,000m of drilling and holds a large exploration camp.
• Orosur are now targeting the underexplored Pepas project on the licence package, where previous drilling intersected 151m at 3g/t Au from surface.
• The Company is currently drilling Pepas, with the intention of better understanding the structural geology of the mineralisation.
• The first hole of six/seven holes has been completed with assay results ‘expected soon.’

*SP Angel acts as Nomad and Broker to Orosur Mining

Serabi Gold (SRB LN) 94.5p, Mkt Cap £67m – Strong cash generation from increasing production and buoyant gold prices

1. Announcing results for the three- and nine-months ending 30^th September, Serabi Gold reports an after-tax profit of US$17.8m for the nine-month period (2023 – US$4.6m), EBITDA of US$24.7m (2024 – US$8.8m) and a closing cash balance of US$20.0m.
2. The result reflects the nine-month production of 27,499oz of gold at a cash cost of US$1,405/oz and sales of 28,912oz at an average price of US$2,338/oz (2023 – 25,262oz produced at cost of US$1,253/oz and sales of 23,733oz at a price of US$1,940/oz).
3. Gold output for the first nine months of 2024 results from the processing of 164,292t of ore at an average grade of 5.42g/t gold.  The company has previously confirmed its 38-40,000oz gold production guidance range for 2024.
4. CFO, Clive Line, described the September quarter as “another excellent quarter for Serabi, in particular for cash generation”.
5. He commented that “We benefited from inventory realisation to the sum of approximately $3.0M, boosting quarter sales, and whilst I do not expect similar additional inventory sales for Q4, I do anticipate cash growth to continue to the end of the year”.
6. Today’s announcement confirms that “Final commissioning of the ore sorter and crushing plant for Coringa is almost complete, with the crushing plant operational during October and the ore-sorter starting up during November”.
7. Processing of lower grade ore stockpiled at Coringa is expected to deliver “an additional boost to gold production in the remainder of the fourth quarter … [continuing] … the pattern of increasing production quarter on quarter that we have so far experienced in 2024”.

Conclusion: Increasing gold production and rising gold prices are driving cash generation and the company remains optimistic of further production improvements in Q4.

*An SP Angel analyst has visited the Serabi’s gold mining operations in Brazil

Strategic Minerals* (SML LN) 0.25p, Mkt Cap £4.4m – Continuing long-term access to Cobre secured

• Strategic Minerals has confirmed that it has now secured access to the Cobre magnetite stockpile in New Mexico until 31^st March 2029.
• The access extension appears to renew a previous arrangement, announced in March 2022 which extended access at Cobre until March 2027 and the company explains that it “has repeatedly extended access to the magnetite stockpile at Cobre, New Mexico, through its wholly owned subsidiary Southern Minerals Group … providing a long-term revenue stream for the Company”.
• Strategic Minerals also says that the “timing of the extension also coincides with the receipt of a new purchase order for 2025 of up to 30,000 tonnes from one of SMG’s major clients, which contributes substantially to the forward-looking revenue profile”.
• To put the scale of this purchase order into context, we note that during the first half of calendar year 2024, Cobre sold ~31,000t of product.

• The company takes the opportunity to express confidence that its “full year sales … [are expected to exceed] … US$4.5m”.
• Executive Director, Mark Burnett, welcomed the access agreement at Cobre and said that in conjunction “with a significant new purchase order, this should underpin the revenue profile for SML into 2025 and beyond and provide scope to expand operations across the portfolio of SML assets”.

Conclusion: Continued long-term access to the magnetite stockpiles should ensure continuity of the cash flows generated at Cobre and underpin Strategic Minerals’ capacity to deliver on a new purchase order from an existing client for up to 30,000t in 2025.

*SP Angel acts as Nomad and Broker to Strategic Minerals

 LSE Group Starmine awards for Q3 commodity forecasting:

No.1 in Precious Metals: SP Angel mining team awarded No 1. ranking for Previous Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q3 2024

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q3 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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