SP Angel Morning View -Today’s Market View, Thursday 2nd May 2024

Copper holds below $10,000/t as China’s physical demand indicators pick up

MiFID II exempt information – see disclaimer below

African Pioneer (AFP LN) – £1m loan facility

Arc Minerals (ARC LN) – Resumption of field exploration in Botswana and Zambia

Atlantic Lithium* (ALL LN) – Approval to list on the Ghana Stock Exchange

Arkle Resources* (ARK LN) – £270k raised to progress lithium exploration

Cornish Metals* (CUSN LN) – Investor call on South Crofty PEA highlights added value by upgrading ore grade through X-Ray and DMS plant

Endeavour Mining (EDV LN) – Q1 results as guidance maintained and new projects come online

First Tin (1SN LN) – Taronga DFS highlights the world’s need for additional tin production

Kavango Resources* (KAV LN) – Successful equity placing and Zimbabwe update

Savannah Resources* (SAV LN) – NOA resource update increases confidence in the resource

Tertiary Minerals* (TYM LN) – Encouraging geophysical anomaly identified at Brunton Pass, Nevada

Copper holds below $10,000/t as China physical demand indicators pick up

• Copper has pulled back from recent highs of $10,200/t, where speculative positions pushed the metal to two year highs.
• Bloomberg highlights China’s downstream semi-fabricated operating rates have increased somewhat, but remain below 2023 rates, suggesting end user demand in the major market is yet to pick up.
• Rod and wire operating rates and improving slightly.
• Smelters are operating at 88% in China despite likely negative margins, with smelter cuts yet to materialise amid rock bottom TCRCs.
• Scrap demand is improving as refiners are less incentivised to buy concentrate given the minimal fees.
• Contango levels have eased, suggesting physical demand is improving, although negative spreads still suggest weak physical demand.
• China copper premiums tracked by Bloomberg are negative, suggesting demand is still weak, with South East Asia premiums also cooling.
• Inventories in Asia have bounced significantly, again pointing to weak demand in the region.

Gold climbs following Yen intervention and Fed meeting

• Gold prices have strengthened back over $2,300/oz following a slightly more dovish Fed presser from J Powell.
• Yields ticked lower, down 10bp from recent lows of 4.7% for the 10 Year.
• Powell noted that inflation progress has stalled, but downplayed market concerns of an additional rate hike.
• Analysts assume the BOY intervened to support the Yen yesterday, with the Japanese currency 3% stronger vs the dollar over night.
• Chinese speculative buying seems to have eased this week, with strong Asian trading less noticeable than during the $200/oz rally seen through April.

US Senate approves Russian uranium import ban

• The US Senate has passed a bill to Biden, banning the import of enriched uranium from Russia.
• Biden is expected to sign the bill into law imminently.
• Temporary waivers will be allowed until January 2028.
• US uranium mining stocks rallied on the news, with NexGen and Cameco up 10% and 6% respectively.
• Over 90 commercial US reactors source c.25% of their enriched uranium supply from Russia.

Economics

OECD lifts 2024 growth forecast from its February estimate driven by upwards revisions to the US, China and India

• Growth proves more resilient and inflation is set to cool faster than previously forecast in many countries, OECD wrote.
• Global GDP is expected to expand 3.1% in 2024, 0.2pp up on its February estimate and little changed from 3.1% recorded in 2023.
• Growth is forecast to accelerate to 3.2% in 2025 on stronger real income growth and lower policy interest rates.
• Although, monetary policy in developed economies is expected to remain restrictive.
• Inflation in G20 economies is projected to gradually ease coming down from 5.9% in 2024 to 3.6% in 2025 and hitting central bank targets in most major economies by the end of 2025.
• Among risks to forecasts are geopolitical tensions, particularly, in the Middle East, stickier inflation leading to a delay in rate cuts, more severe impact from higher borrowing costs on indebted sectors and companies as well as smaller than anticipated fiscal support in China.
• 2024 growth in the US (+0.5pp to 2.6%), China (+0.2pp to 4.9%) and India (+0.4pp to 6.6%) was revised higher from earlier estimates while Germany (-0.1pp to 0.2%), Japan (-0.5pp to 0.5%) and the UK (-0.3pp to 0.4%) were downgraded.

US – The Fed left rates unchanged, in line with expectations, while signalling that they remain higher for longer amid “a lack of further progress” towards the 2% target.

• Jerome Powell ruled out a rate hike.
• At the same time, the Fed will reduce the amount of US Treasury bonds that are allowed to mature each month without buying them back essentially reducing the pace at which its balance sheet is coming down.
• Monthly cap will be brought down to $25bn from $60bn previously.
• Bond yields dipped on the announcement before recovering most of the move with equities closing lower on the day.

Debt to China

• The Visual Capitalist have published a top 20 ranking of debt owed to China by other nations
• Pakistan leads the way at $26.6bn followed closely by Angola at $21.0bn and Sri Lanka at $8.9bn.
• Pakistan and Angola are way ahead in indebtedness to China with Ethiopia at $6.8bn, Kenya at $6.7bn and Zambia at $6.1bn.
• It would be interesting to know how much of these funds were spent with Chinese contractors building local infrastructure and how much has passed through the system into Swiss bank accounts.
• While Pakistan’s debt is huge the sums owed by most other nations do not seem particularly large in terms of GDP.

Japan – The yen jumped 3% within minutes hitting 153 in late trading hours yesterday fuelling speculation of another authorities’ intervention.

• Nation’s top currency official Masato Kanda said that he could not comment on the matter.
• Bloomberg estimates that authorities may have spend about 5.5tn JPY to support the currency on Monday.

Currencies

US$1.0724/eur vs 1.0659/eur previous. Yen 155.37/$ vs 157.95/$. SAr 18.523/$ vs 18.738/$. $1.254/gbp vs $1.248/gbp. 0.654/aud vs 0.648/aud. CNY 7.241/$ vs 7.241/$.

Dollar Index 105.62 vs 106.39 previous.

Precious metals:         

Gold US$2,311/oz vs US$2,287/oz previous

Gold ETFs 81.1moz vs 81.0moz previous

Platinum US$960/oz vs US$937/oz previous

Palladium US$956/oz vs US$940/oz previous

Silver US$26.52/oz vs US$26/oz previous

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

Base metals:   

Copper US$ 9,958/t vs US$9,919/t previous

Aluminium US$ 2,586/t vs US$2,582/t previous

Nickel US$ 18,880/t vs US$19,160/t previous

Zinc US$ 2,910/t vs US$2,886/t previous

Lead US$ 2,193/t vs US$2,212/t previous

Tin US$ 31,025/t vs US$31,165/t previous

Energy:           

Oil US$84.0/bbl vs US$85.5/bbl previous

• Crude oil prices edged lower after the EIA reported a larger than expected w/w build of 7.3mb to crude and 0.4mb to distillates stocks, partly offset by a 0.7mb build in gasoline, with refinery utilisation down 1% to 87.5%.
• European energy prices were stable on reports that EU natural gas storage levels rose just 0.4% w/w to 62.3% full (vs 47% 5-Yr average) following a cold snap in northern Europe, with aggregate storage now at 706TWh.
• Canada’s $25bn Trans Mountain pipeline expansion (TMX) project has begun commercial operations that will almost triple throughput capacity to 890kb/d from Alberta to the Pacific West Coast, which is also expected to reduce the current WTI discount of ~$13.5/bbl on benchmark Canadian heavy crude to less than $10/bbl.

Natural Gas €29.4/MWh vs €29.2/MWh previous

Uranium Futures $91.8/lb vs $90.0/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$116.6/t vs US$116.8/t

Chinese steel rebar 25mm US$523.4/t vs US$523.4/t

Thermal coal (1st year forward cif ARA) US$110.0/t vs US$110.0/t

Thermal coal swap Australia FOB US$147.0/t vs US$143.0/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$55,724/t vs US$55,724/t

Lithium carbonate 99% (China) US$15,122/t vs US$15,122/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$333/mtu vs US$333/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$327/t vs US$327/t

China Rutile Concentrate 95% TiO2 US$1,416/t vs US$1,416/t

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

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

Battery News

Could Diamond Battery be the answer to EV battery concerns?

• A new type of battery called a “diamond battery” has been invented that could provide extremely long-lasting power for EVs.
• Diamond batteries harness the energy released from radioactive diamond crystals made from carbon-14 atoms, which decay by emitting beta particles over an exceptionally long period.
• Diamond batteries are claimed to have a functional lifespan of around 28,000 years, far exceeding traditional battery technologies like lithium-ion.
• To ensure safety, the radioactive carbon-14 diamond is encased in a second protective non-radioactive diamond layer.
• While still in early research stages, diamond batteries could potentially revolutionise energy storage for EVs by providing ultra-long range without recharging.
• However, challenges remain in scaling up production and ensuring the technology is cost-effective compared to other battery advancements

Tesla halts ‘giga-casting’ manufacturing plans (Reuters)

• Following the report yesterday that Elon Musk has disbanded Tesla’s EV charging team, it has been reported that the automaker will now put a hold on its plans to fully develop its giga-casting manufacture method.
• The decision to put a hold on the potential manufacturing breakthrough is another example of Tesla slashing short-term spending as it adjusts to falling sales and profit margins.
• Tesla has been a leader in giga-casting, a new manufacturing technique that uses huge presses with thousands of tons of clamping pressure to die-cast large sections of the car’s underbody.
• Tesla will stick to its more proven method of casting vehicle underbodies in three pieces.

Indonesian government eyes 50,000 electric cars in 2024

• The Indonesian government has set a target to sell 50,000 battery electric cars in 2024.
• This target represents a three-fold increase compared to electric car sales of 17,051 units in Indonesia in 2023.
• The government is providing various incentive programs for electric cars until the end of President Joko Widodo’s administration to encourage industry growth.
• The Chairperson of Periklindo, Indonesia’s premier EV Show, assessed the 50,000 unit target as achievable, citing an increase in the number of EV brands available from just 1-2 previously to 10 brands now.

Volkswagen’s electric car orders double in Europe

• Volkswagen’s orders for electric vehicles more than doubled in Europe in the first quarter of 2024 compared to a year ago.
• In Q1 2024, Volkswagen’s EV deliveries declined 16% in Europe due to supply bottlenecks, despite the surge in orders.
• In China, Volkswagen’s EV deliveries nearly doubled to 41,033 units, but the company is struggling to defend market share against Tesla and local EV makers.
• Volkswagen plans to reduce battery and material costs to be cost-competitive with Chinese rivals by 2026 and enable EV price reductions in China.
• The company aims to launch four new models in China over three years, two of which will be electric, to maintain a 15% market share by 2030.
• Volkswagen’s Q1 2024 profit plunged 20% due to lower sales and higher costs, but it remains confident in achieving its 2024 financial targets.

Electric car and SUV sales in India rise 22% yoy to 6,577 units in April

• India’s entire auto market saw growth in the month, spurred by growth in EV and SUV sales
• Tata Motors maintained its lead in the EV market with 4,701 units and a 71% market share.
• MG Motor India secured a 12% share, while Mahindra had a 9% share.
• Luxury carmakers sold 225 units, accounting for a 3.42% market share.
• Mercedes-Benz India led luxury EV sales with 119 units, followed by BMW India (51 units) and Volvo Auto India (36 units).
• BYD India rose to the fourth position by selling 127 units of its Atto 3 SUV, e6 MPV, and recently launched Seal sedan.

Is EV depreciation boost demand for ICE vehicles?

• In general, the cost of EVs is shifting, reaching parity with or are cheaper to own than ICE vehicles.
• The depreciation rate of EVs, however, is outpacing that of ICE vehicles.
• In Q1 2024, the depreciation rate of EVs in the US jumped by nearly 30% from the previous year, almost tenfold higher than ICE vehicles.
• Rapid EV depreciation may dampen demand for new EVs, potentially leading to further price reductions and inhibiting EV market share growth.
• As EVs depreciate faster, ICE vehicles experiencing slower depreciation might see an uptick in market share and sales volume.

Global electric car sales estimated to reach 17m in 2024

• The International Energy Agency (IEA) estimates that global electric car sales could reach around 17m units in 2024.
• The projected EV market share in 2024 could be up to 45% in China, 25% in Europe, and over 11% in the United States.
• In Q1 2024, electric car sales grew by around 25% compared to Q1 2023, similar to the yoy growth in the same period in 2022.
• China saw nearly 1.9m electric cars sold in Q1 2024, a 35% increase from Q1 2023.
• In the US, electric car sales are projected to rise by 20% in 2024 compared to 2023.

Company News

African Pioneer (AFP LN) 2p, Mkt Cap £4.6m – £1m loan facility

• African Pioneer reports that it has agreed a £1m unsecured convertible loan with its long-term shareholder, Sanderson Capital Partners.
• The facility comprises 4 tranches, each of £250,000 and convertible at a price of 2.8p/share, and can be drawn within six months of 1st June 2024, 7^th July 2024, 31^st August 2024 and 31^st October 2024.
• The company says that a further £500,000, convertible at 4p/share is also available “if the Company draws down in full or in part against all 4 tranches of the Facility”.
• If the loan is not converted, it is repayable “on the first anniversary of the advance” with a fee of 5% for repayments in cash.
• We estimate that full conversion of the £1m loan at 2.8p/share would result in the issue of ~35.7m new shares or around 16% of the 228m shares in issue at 31st December 2023 as disclosed in the company’s Annual Report.
• The Loan Facility is described as “a standby facility as a potential additional source of working capital for the Company in a period when the funding market for junior exploration companies can be subject to market volatility”.

Arc Minerals (ARC LN) 1.75p, Mkt cap £25m – Resumption of field exploration in Botswana and Zambia

• Arc Minerals reports that it expects a geophysical ground IP (induced polarisation) survey of its Virgo prospect in the Kalahari Copper Belt in Botswana to be completed over the next week.
• The company then intends to start a 2,000m reverse-circulation (RC) programme to follow up the geophysical targets.
• “Drilling contractors have been invited to tender for the eight- to ten-hole drill programme, which is expected to commence this financial quarter and take approximately one month to complete”.
• The 210km² Virgo licences are “surrounded on three sides by the prospecting licences of Khoemacau Copper Mining Limited” in the Kalahari Copper Belt and in “a similar geological setting to that recently drilled by Khoemacau at their recent Mawana Fold Discovery and the Zone 9 exploration target … located at the north-western and south-eastern margins of the Company’s prospecting license, respectively”.
• Arc Minerals explains that “Khoemacau’s Mawana fold discovery has defined a possible economic zone of copper mineralisation that appears to trend towards and into the Company’s PL 135/2017 license” and that its own work “intersected anomalous grades of copper mineralisation close to this apparent trend and confirmed an east-west trending DKF-NPF … [D’Kar Formation – Ngwako Pan Formation] … contact position approximately 5km long running through the license”.
• This geological setting has proved fruitful elsewhere in the Kalahari Copper Belt including at Khoemacau and Sandfire’s Motheo mine.
• Arc Minerals also reports that, following the end of the wet season, its joint venture partner, Anglo American, is resuming fieldwork on its extensive, 870km² licence in the North-Western Province of Zambia.
• Activities planned in Zambia include detailed geological mapping and sampling to gain “a deeper understanding of the geological context of the area in relation to the stratigraphic horizons of interest … [as well as] … Core Diamond drilling in areas that are deemed prospective to host copper and nickel mineralisation”.

Conclusion: Geophysical work, due to be completed shortly in Botswana, is expected to identify drilling targets in a favourable geological setting within the Kalahari Copper Belt.  We look forward to results of the initial drilling results and also of results from further exploration by the JV partner on the company’s Zambian exploration licences.

Atlantic Lithium* (ALL LN) 19.3p, Mkt Cap £125m – Approval to list on the Ghana Stock Exchange

(Ewoyaa Ownership: 40.5% Atlantic, 40.5% Piedmont, 6% MIIF Sovereign Wealth fund, 13% government of Ghana)

• Atlantic Lithium report the receipt of approval to list on the GSE ‘Ghana Stock Exchange’ in Accra.
• MIIF, the Ghana sovereign wealth fund invested US$5m by way of a share subscription in January as part of a larger US$32.9m investment into the company.
• The MIIF fund will invest US$27.9m in Atlantic’s local subsidiary to acquire a 6% direct interest in the Ghana portfolio including the Ewoyaa lithium project.
• Atlantic is not issuing or placing any new shares in connection with the GSE listing.
• Black Star Brokerage Limited is acting as Sponsoring Broker, Arranger and Transaction Advisor to the GSE listing.
• There are currently 37 companies listed on the GSE which trades between 10:00am to 3:00pm in Accra.

*SP Angel acts as Nomad to Atlantic Lithium. Two mining analysts from SP Angel recently visited the Ewoyaa mine site in Ghana and drove onto Takoradi to check the quality of the road to port. Our analysts also visited the Ministry of Minerals Commission and MIIF, the Ghana Minerals Income Investment Fund

Arkle Resources* (ARK LN) 0.28p, Mkt Cap £1.3m – £270k raised to progress lithium exploration

• Arkle Resources has successfully completed an equity raise.
• The Company has raised £270k gross through a placing of 108m shares at 0.25p.
• Each placing share holds a warrant with the right to subscribe for one new share at 0.35p exercisable for a period of two years.
• Funds will be used to advance the Company’s lithium exploration programme.
• Arkle’s recent exploration efforts at Aughrim in Ireland have revealed anomalous lithium readings in 26/59 samples, with evidence of spodumene crystals in some pegmatites.

*SP Angel are Nomad and Broker to Arkle Resources

Cornish Metals* (CUSN LN) 11.7p, Mkt Cap £56m – Investor call on South Crofty PEA highlights added value by upgrading ore grade through X-Ray and DMS plant

Valuation under review

• Cornish Metals ran an investor call yesterday to discuss the results of the new PEA on the reopening of the South Crofty tin mine in Cornwall.
• The PEA is enhanced by a 30% increase in the indicates portion of the MRE ‘Mineral Resource Estimate’ in the Lower Mine area combined with X-Ray and DMS plant enhancement.

• Main differences between the new PEA and the 2017 study are the increase in size of the resource, the full redesign of the mine to a fully trackless modern mining operation and the incorporation of X-Ray and DMS pre-concentration.

• While the general variability of a PEA is typically in the order of +/-30-35% we feel the work done is reasonably rigorous and well founded.

• Resource: The team plan to mine 80% of estimated resource due to proximity to core infrastructure and previously mined areas.
• Management are very confident tin veins continue beneath the deepest point of the mine at 870m where the mine stopped in 1998.
• Material within the newly discovered Wide Formation mostly sits within mine permission area and should be relatively simple to add into the mine plan in future years.
• Pre-concentration of ore from the South Crofty mine has been tested using X-ray separation and DMS ‘Dense Media Separation
• The pre-concentration process upgrades the ore to 1.83% from an average mined ore grade of 0.94%.
• This reduced the process plant throughput to 250,000tpa from 350,000tpa while producing 4,728tpa of tin from years 2-6 significantly cutting both capex and opex costs.
• X-Ray sorting:  testing using TOMRA sorting systems is successfully applied at the Renison Bell and San Rafael mines with ore at San Rafwel being directly analogous to that previously mined at South Crofty
• The plant uses standard rod and ball milling with spirals and shaking tables with an ultra-fine gravity circuit using falcon concentrators to pick up smaller particles of tin.
• X-Ray power can be varied according to TOMRA algorithms to optimise ore grade and recoveries.
• Power costs have potential for reduction through the use of hydro turbines, solar and the extraction of heat from the mine water which runs at a constant 24^oC.
• Exploration: Recent exploration indicates strong potential to expand tin production and extend mine life beyond the initial 14 years.
• Sensitivity analysis: 10% rise in tin price increases the Post-tax NPV8% by >30% to US$263m.
• Jobs: The mine will create 320 direct jobs and 1,000 indirect jobs
• Tailings: will be backfilled into historic voids using a paste backfill process. This vastly reduces the surface footprint and removes the requirement to permit a substantial tailings dam.
• First production due in 2027 depending on financing.
• Fast-track: early ground works and civils are being advanced and are on the critical path along with dewatering and refurbishment of the New Cook’s Kitchen shaft.
• Surface winders are on site so can work can continue to advance on the critical path without delay.
• Mining: The mine is expected to produce some 500,000tpa grading 0.94% tin with 700,000tpa at peak production including waste rock.
• New Cooks Shaft full capacity is >1mtpa if hoisting 24/7.
• Long-hole stoping was pioneered and used at South Crofty in the 1990s reducing the risk of bringing in this process
• Financing:  Management are talking to providers of debt and equity at present for the full project financing though these are at an early stage.
• Permitting: South Crofty is a permitted restart and should come into production much faster than any new greenfield mines.
• Water: Treated water discharge via a 2km adit to the Red river. Quality of the discharge is better than the quality of the water in the river
• PEA financials:
  • Tin price assumption: US$31,000/t
  • Post-tax NPV_8% US$201m, pre-tax US$264m
  • IRR of 29.8% post-tax and 33.4% Pre-tax
  • Payback within 3 years.
  • Production: 4,728 t tin in concentrate from years 2 to 6
  • Grade 0.94% mined
  • Cash costs of US$12,705/t for life of mine
  • AISC $13,661 /t payable tin.
  • Margin: 30% rate of return after tax
  • Post-tax Free Cash Flow US$65mpa.
  • EBITDA US$83mpa from years 2–6 average.
  • Total post-tax cash flow of US$626m from start of production
  • Operating costs of ~US$103/t of ore
    • include mining costs of ~US$65/t
    • processing costs of ~US$25/t.
  • Capex: US$177m
    • inc. US$25.7m contingency
    • US$40.5m on capitalised mining costs
    • US$59.7m for the process plant
  • + An additional US$54m of post-production capital over the mine life includes process plant upgrade in year-4
  • Mining rate rises to 500ktpa from 350ktpa in the 2017 PEA. Total LOM tonnes mined 5,955,000t
  • Processing 250,000tpa @ 1.83% tin due to pre-concentration technology
  • Recovery: 87.8%
  • Concentrate 3mt of pre-concentrated ore av. 1.83% tin from 1-3mm ore sizing.
  • Reject 55% of the mass for 3% mass loss
  • Concentrate 58-60% tin. The model does not include a premium on the high-grade concentrate
  • By-product copper and zinc production of 3,444t and 3,255t respectively.
• Tin market:
• Demand is forecast to grow by 30% by 2034 with strong new demand for tin in EV batteries and other soldered components.
• New AI datacentres and a substantial increase in Solar Panel production should also help drive demand
• Supply: Myanmar is producing much less tin this year with a ban on tin mining reaffirmed. Myanmar was a top-3 tin producer.
• Indonesia can see potential for further down streaming of metal in Indonesia, eg requiring new smelters and even production of solder.

Conclusion: The Cornish Metals team have added significant value to the South Crofty project through the smart use of X-Ray and DMS sorting and the redesign of the mine. The PEA highlights the global significance of the mine and its importance in the production of tin to meet estimated for a marked increase in global tin demand.

*SP Angel acts as Nomad and Broker. An SP Angel analyst formerly worked in the South Crofty tin mine in the 1980s and holds shares in Cornish Metals

Endeavour Mining (EDV LN) 1,670p, Mkt Cap £4bn – Q1 results as guidance maintained and new projects come online

• Endeavour report their financial results for the period to 31^st March.
• The Company produced 219koz over the period at an AISC of $1,186/oz.
• Adjusted EBITDA of $213m reported over the period, down 27% qoq.
• Operating cash flows reported at $137m, down 44%.
• Cash position decreased $56m over the period.
• Net debt position of $831m at quarter end, $481m in cash and liquidity.
• $100m worth of dividends paid over the period, with $13m of share buybacks completed.
• Management reports the Sabodala-Massawa BIOX expansion saw first gold poured in April with nameplate capacity expected in Q3.
• Guidance reiterated at 1,130-1,270koz over the period, with AISC expected at $955-1,035/oz.
• Costs increased over the period on lower volumes from Houndé and Sabodala-Massawa, with higher power costs, harder ore blend and commissioning expenditure also impacting costs.

First Tin (1SN LN) 6.75p, Mkt Cap £16.7m – Taronga DFS highlights the world’s need for additional tin production

• First Tin has announced the results of the Definitive Feasibility Study (DFS) for its wholly-owned, Taronga tin project in northeast New South Wales which is expected to produce an average of 3,600tpa of tin in concentrate over a 9 year mine life.
• Using a conservative base case tin price of US$26,000/t, the study shows that pre-production capital expenditure of US$116m generates a pre-tax NPV_8% of A$143m (~US$94m) and IRR of 24% and an after tax NPV_8% of A$98m (~US$65m) and IRR of 20%.
• The company says that, at the current tin price of US$33,097/t the after-tax NPV_8% more than doubles to A$230m(~US$150m) and delivers an IRR of 34%).
• First Tin also explains that the International Tin Association (ITA) is forecasting “an inducement price of US$33,800 per tonne is required to encourage new capacity”.
• Capital costs include A$28m (~US$18m) for “a behind the grid solar facility with gas generators, which will substantially lower the energy costs and CO₂ emissions over the life of the project”.
• The study shows life of mine on-site operating costs of US$ of US$9.26/t treated, US$12.22/t on an all in sustain cost basis (AISC) plus depreciation equivalent to US$2.70/t treated equating to US$15,843/t of tin produced on an ASIC basis which First Tin describes as “firmly in the lower half of production costs worldwide and close to the lowest quartile”.
• Today’s announcement says that current work has identified the potential to increase recovery rates above the 57-63% reported in recent testing and to extend the “mine life from revised pit optimisations, higher tin prices and near pit exploration potential, including conversion of Inferred Resources” and add a fine tin flotation circuit to enhance recovery rates “by 5-10%”.
• Commenting on the results of the DFS, CEO, Bill Scotting, said that they “confirm that we have an extremely valuable and robust project that can deliver a much-needed secure tin supply into a world undergoing an energy transition and digital transformation”.
• He explained that “Tin is a critical mineral in many jurisdictions with structural demand growth arising from its fundamental role as the glue in electronics.  With low global inventories, geopolitical tensions and supply-side issues, there is a clear need for new tin mines”.

Kavango Resources* (KAV LN) 1.2p, Mkt Cap £16m – Successful equity placing and Zimbabwe update

• Kavango Resources has completed its accelerated bookbuild.
• The Company has raised £3m through the issue of 257m shares at 1.2p.
• Purebond Limited underwrote the bookbuild, subscribing for 221m new shares.
• CEO Ben Turney has subscribed for 2m shares, with NED Peter Wynter Bee subscribing for 16.75m new shares.
• The Company will use the funds raised for advancing their exploration efforts in Zimbabwe and Botswana.
• Diamond drilling will be conducted to test potential for an economic gold ore body at the Hillside/Nara projects in Zimbabwe.
• 5,000m of drilling is planned at the Kara Anticline copper target on the Kalahari Copper Belt in Botswana.
• Funds will also be invested into Kavango’s gold production at Hillside, where management is looking to produce 1kg/month over the course of 2024.
• Kavango also announced today it has exercised an option over the Hillside project, becoming the sole owner over a Hillside and Leopard South, for cash considerations totalling $650k.

*An SP Angel Analyst holds shares in Kavango

Savannah Resources* (SAV LN) 3.5p, Mkt Cap £64m – NOA resource update increases confidence in the resource

BUY – 21.1p

• The Company released an update on the NOA deposit following a drilling programme.
• The campaign increased confidence in the resource with 93% of total now in the Indicated category, up from 67% previously.
• Tonnage wise the resource is little changed and is the smallest within the Barroso Project accounting for just 2.5% of total 28.1mt resource.
• Updated resource now stands at 0.7mt at 1.03% for 6.8kt Li2O including 0.6mt at 1.03% in the Indicated category.
• Potential for an expansion of the resource remains with mineralisation still open along strike to the west and at depth to the north.
• Separately, the team received drilling results from Reservatorio (15% of total resources) and Grandao (63%).
• At Reservatorio, a couple of step out holes (50-100m out of the last drillhole) showed extension of the mineralisation at depth with intersecting:
• 26m @ 0.85% Li2O from 155m in 23RESRC040
• 21.8m @ 1.37% Li2O from 132.3m and 9.2m @ 1.08% Li2O from 157m in 23RESRC041
• An infill drillhole confirmed continuity of the mineralisation over 100m between previously completed two holes returning
• 36m @ 1.28% Li2O from 151m in 23RESRC039
• At Grandao, results from two RC drillholes received that targeted southern and northern margins of the main pegmatite showed that only northern hole intersected lithium mineralisation including
• 18m @ 0.93% Li2O from 35m in 24GRARC132
• Phase two of the current drilling programme will target Reservatorio, Pinheiro and Grandao to upgrade the resource at these deposits by the end of Q3/24.

Conclusion: NOA resource update increased confidence in the resource following an infill drilling programme largely focused on confirming continuity of the mineralisation allowing to release maiden reserve and estimate mining inventory for the feasibility study. In addition, step out drilling at Reservatorio and Grandao showed a potential to add more tonnages into the resource with mineralisation remaining open in multiple directions.

*SP Angel acts as Nomad and Broker to Savannah Resources

Tertiary Minerals* (TYM LN) 0.1p, Mkt Cap £2.5m – Encouraging geophysical anomaly identified at Brunton Pass, Nevada

• Tertiary provides an exploration update from its Brunton Pass project in Nevada.
• The Company has completed a geophysical survey, using Induced Polarisation, over a 7.2km range using four lines, targeting a 700m strike.
• The survey highlighted a ‘coherent electrical chargeability anomaly,’ which management believes may indicate potential sulphide mineralisation prospective for copper and gold.
• The anomaly bears relation to Tertiary’s previous exploration work, which highlighted copper-mercury-arsenic soil anomalies, and a surface alteration zone from trenching.
• Trenching at the target had highlighted a gold-bearing zone with samples yielding gold values up to 2.7g/t Au, and pathfinder elements including arsenic and mercury.

Conclusion: Tertiary has been able to generate a high priority drill target at Brunton Pass through a geophysical survey, which corroborates with previous trenching and soil sampling. This presents an exciting alternative target in parallel to their Zambian copper assets, where drilling is currently taking place at the Konkola West Project.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

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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