SP Angel Morning View -Today’s Market View, Thursday 2nd January 2025

Gold shrugs off surging dollar and higher Treasury yields as Asian buyers continue to accumulate

MiFID II exempt information – see disclaimer below

Emmerson PLC (EML LN) – Litigation and working capital funding secured for up to US$11m

Griffin Mining (GFM LN) – Recommencement of operations at Caijiaying polymetallic mine, China

Ironveld (IRON LN) – Suspended pending publication of its company accounts

Jervois Mining (JRV AU) Suspended – Recapitalisation following Chapter 11 procedure after weak cobalt price environment

Marimaca Copper (MARI CN) – Drilling extends Pampa Medina deposit

West Red Lake Gold (WRLG CN) – US$35m credit facility with Nebari for gold mine restart

Gold shrugs off surging dollar and higher Treasury yields as Asian buyers continue to accumulate

• Gold prices have bounced back over $2,630/oz, having been hovering around $2,615/oz for the past week.
• Prices have been flatlining since mid-November, having sold off into the Trump election victory on positioning unwind and higher US Treasury yields.
• Whilst the 10 year rising over 4.5% has weighed on ETF buying, gold has remained strong.
• This likely reflects Asian, primarily Chinese buyers looking for safe have assets as the Yuan depreciates against a strong dollar and property and equity markets see sustained weakness.

Copper leads metals’ sell off as dollar rally continues against most major currencies

• Another leg higher in the dollar has pressured base metals, with copper weakening to $8,783/t.
• Nickel, zinc and tin have all also weakened, whilst aluminium is showing some signs of strength.
• The move follows a sharp sell-off in Chinese equities, with the Yuan also weakening, likely reflecting renewed pessimism among traders over a recovery in China’s economy.
• We suspect 2025 will continue to see copper dictated by China’s property market decline alongside potential for supply disruptions out of Chile and Peru.
• Electrification continues and China’s grid spending is expected to be a primary driver of incremental demand like last year.

KoBold Metals – Private value $2.96bn – Kobold raises $537m for copper and other metal exploration

• KoBold Metals which claims to use AI in its exploration, reports the raising of US$537bn in new funding from investors for exploration.
• The funding round was led by T Rowe Price, Durable Capital Partners.
• Bill Gates and Andreessen Horowitz and StepStone a private capital group also participated.
• The group also has explorations partnerships with BHP and Rio Tinto and 80 Mile (formerly Bluejay Mining*)
• While KoBold claims to use AI the company also employs some of the world’s better respected geologists to help with its exploration.
• Mingomba: KoBold is working on the Mingomba mine site with a view to potentially producing 300,000tpa of copper.
• The Mingomba project is projected to become Zambia’s largest mining project according to the Zambian government Presidential Delivery Unit
• Zambian government Presidential Delivery Unit estimates Mingomba resources at:
  • 100mt @ 8% copper
  • 200mt @ 4.8% copper
  • 300mt @ 3.8% copper
• Mingomba, formerly knows as the Konkola West project, is a jv between the ZCCM-IH (20%) and KoBold Metals (80%)
• KoBold published a resource estimate of 247mt @ 3.64% copper in September 2023.
• The Mingomba orebody is at ~1.2km depth and will require substantial infrastructure for its extraction.

 Economics

China – Caixin Manufacturing PMI fell to 50.5 in December from 51.5 in November

• The market will be disappointed but perhaps not surprised at the at the pull back in the Chinese manufacturing PMI today
• Economists had been forecasting a small rise to 51.6 but we suspect manufacturers and buyers are now hungering down in preparation for Trump tariffs and a markedly slower EU.
• There was some expansion in domestic demand but this is tempered by slower demand for exports
• Weakening sales prices combined with a contraction in the jobs market will worry policymakers
• Operating margins for manufacturers are being squeezed with a weaker CNY raising input prices, albeit in a low-inflation environment.
• Policymakers will need to ramp up domestic demand and local pricing to offset any increases in input pricing.
• Fortunately, inflation is so low in China the economy should easily withstand lower interest rates and reflation.
• If anything they should, perhaps be more wary of the threat of deflation as local consumers hold back on new purchases.
• The authorities appear to see the effect of recent policy adjustments as still coming through, eg they are not going to rush to bring in new Stimulus!
• We expect to see new issuance of ‘discount coupons’ in specific regions to help drive domestic demand.
• Critically, any stimulus to help new buyers for unsold apartments should be a big driver for consumption as apartments are fitted out for completion.

Eurozone – PMI Manufacturing held relatively steady at 45.1 in December from 45.2 in November

• Eurozone manufacturing has been contracting for 30 months now, highlighting the impact of the Ukraine war, higher energy prices and increasing competition from China.

• Unemployment continues to rise as companies restructure to survive the severe downturn.
• France is suffering the most at 41.9
• Germany is following closely behind at 42.5
• Italy is faring batter but is still contracting 46.2
• Spain came in with a stronger 53.3 with greater energy supply from solar and wind and lesser trade with China
• Greece came in at 53.2 and is also better placed.

UK – Manufacturing PMI falls to 47.0 in December from 48.0 in November

• The slowdown in the EU combined with uncertainty over Trump tariffs are causing manufacturers to take a more cautious approach to production.
• Weaking export sales combined with rising costs lifted by higher NI taxes imposed by the new Labour government are slowing industrial output.
• Manufacturers now need to either produce more goods with the same level of staffing or reduce staff and output to maintain margins.
• With uncertain and weaker export and domestic demand many manufacturers will look to protect margins through more focussed operational practices.
• Unemployment is likely to rise fast in this environment while inflation particularly if new year price rises are offset by energy, labour and commodity price inflation.
• Ongoing highish interest rates will hold back domestic consumption while pushing back manufacturing expansion plans.
• We suspect the BoE dares not to cut rates till after the US as a weaker Sterling would import inflation.

Currencies

US$1.036/eur vs 1.041/eur previous. Yen 156.83/$ vs 156.94/$. SAr 18.780/$ vs 18.808/$. $1.249/gbp vs $1.255/gbp. 0.623/aud vs 0.622/aud. CNY 7.324/$ vs 7.312/$.

Dollar Index 108.44 vs 108.06 previous

Precious Metals

Gold US$2,637/oz vs US$2,606/oz previous

Gold ETFs 82.6moz vs 82.6moz previous

Platinum US$911/oz vs US$920/oz previous

Palladium US$908/oz vs US$903/oz previous

Silver US$29.7/oz vs US$29.4/oz previous

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

Base metals:   

Copper US$8,797/t vs US$8,941/t previous

Aluminium US$2,571/t vs US$2,554/t previous

Nickel US$15,876/t vs US$15,876/t previous

Zinc US$2,974/t vs US$3,021/t previous

Lead US$1,957/t vs US$1,947/t previous

Tin US$29,083/t vs US$28,810/t previous

Energy:           

Oil US$74.9/bbl vs US$74.1/bbl

Natural Gas €49.0/MWh vs €47.6/MWh

Uranium Futures $72.8/lb vs $72.8/lb

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$103.6/t vs US$103.9/t

Chinese steel rebar 25mm US$487.6/t vs US$487.2/t

HCC FOB Australia US$203.0/t vs US$204.0/t

Thermal coal swap Australia FOB US$127.0/t vs US$128.3/t

Other:  

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

NdPr Rare Earth Oxide (China) US$53,776/t vs US$54,323/t

Lithium carbonate 99% (China) US$9,933/t vs US$9,933/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$435/t vs US$440/t

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

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

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

China Rutile Concentrate 95% TiO2 US$1,089/t vs US$1,089/t

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

Brazil Potash CFR Granular Spot US$295.0/t vs US$292.5/t

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

China Gallium 99.99% US$415.0/kg vs US$420.0/kg

Company News

Emmerson PLC – (EML LN) – Litigation and working capital funding secured for up to US$11m

• Emmerson PLC is looking to progress its legal dispute with the Government of Morocco over
• Boies Schiller Flexner LLP has been confirmed as Emerson’s litigation counsel.
• Emmerson completed a scoping study on it’s 100% owned Khemisset Potash Project in Morocco in February 2024.
• The study proposes the use of a new and proprietary processing process to treatment potash brine to remove magnesium and iron chlorides through the addition of phosphate and ammonia.
• This allows the residual brine to be recycled offering significant environmental benefits through the elimination of deep well injection and halving of water consumption.
• The new process claims to increase the recovery rate of MOP to 91% from 85% along with the production of two new slow-release fertiliser products, struvite and vivianite.
• Scoping Study economics:
  • Post-tax NPV8 US$2.2bn from NPV8 US$1.0bn previously
  • Post-tax IRR of 40% from 26%
  • EBITDA US$440mpa vs US$258mpa previousl
  • CAPEX US$525m vs US$539m previousl
  • AISC: US$163/t

Conclusion:  The securing of litigation funding lends some credibility to the claims by Emmerson over its Khemisset project in Morocco.

While the Kingdom of Morocco trades extensively with the US and EU other miners and explorers will be watching this case with close interest.

Griffin Mining (GFM LN) 160p, Mkt cap £293m – Recommencement of operations at Caijiaying polymetallic mine, China

• Griffin reports the receipt of approval from the Emergency Response Bureau to recommence mining at the Caijiaying mine as of Monday 30^th December.
• Mining recommenced yesterday.
• The shutdown followed an accident.

Ironveld (IRON LN) Suspended – Suspended pending publication of its company accounts

• Ironveld shares have been suspended following delays to the publication of its accounts.
• Giles Clarke retired from the board as a NED on 29 November.
• Ironveld raised £2.5m in November.
• Kristoffer Andersson, the new CEO is working with John Wardle, Chairman to establish a strategy to enable the Company to realise the value from their High Purity Iron, Vanadium, and Titanium project.

Jervois Mining(JRV AU) Suspended – Recapitalisation following Chapter 11 procedure after weak cobalt price environment

• Jervois reports it has reached a funding and recapitalisation agreement with Millstreet Capital.
• The deal will see a US$145m new equity recapitalisation to restart the Sao Miguel Paulista nickel cobalt refinery in Brazil.
• A debt reduction of US$170m will be conducted, including a debt to equity conversion of the US$100m ICO bonds and US$25m convertible notes alongside a US$44.5m repayment of the JFO working capital facility.
• Millstreet will extend its current US$150m working capital facility to March 2026 on extended terms.
• Jervois will be delisted and equity holders are not anticipated to receive any return.
• Management had been trying to enter JV, asset sales or alternative equity capital raises but these negotiations fell through on low cobalt pricing.

Marimaca Copper (MARI CN) C$5.3, Mkt cap C$534m – Drilling extends Pampa Medina deposit

• Marimaca reports results from drilling at its Pampa Medina project, which lies 26km from the flagship Marimaca oxide project.
• Hole SMR-01 was drilled north of the defined Pampa Medina deposit, yielding highlights of:
  • 400m at 0.49% Cu from 250m in oxides, including
    • 102m at 1.2% Cu from 250 and 18m at 5.1% Cu from 320m.
• The hole was oriented to target perpendicular intersections of the manto-hosting lithological units.
• Three additional holes yet to receive results, targeting west and north step-outs.
• Marimaca will look to expand the Pampa Medina Norte programme in 2025.

West Red Lake Gold (WRLG CN) C$0.6, Mkt cap C$191m – US$35m credit facility with Nebari for gold mine restart

• Guistra-backed gold mine restart Company West Red Lake reports a funding update.
• The Company has secured a credit agreement with Nebari Natural Resources for US$35m.
• The Company has now drawn down the initial US$15m tranche.
• West Red Lake is aiming to restart the Madsen Mine in 2025.
• Funds will be used to complete remaining capital costs for the Mine restart, alongside corporate, exploration and working capital expenses.
• Rate based on a floating rate equal to SOFR plus 8% assuming SOFR is less than 4%.
• The Company will also issue bonus warrants giving the holder rights to purchase one common share until 42 months following the issuance of Tranche 1.
• Warrants exercisable at C$0.73 for Tranche 1.

 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

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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