SP Angel Morning View -Today’s Market View, Thursday 31st October 2024

Gold holds after yesterday’s record high as traders look to tomorrow’s NFP data

MiFID II exempt information – see disclaimer below

American West Metals (AW1 AU) – Further drilling results from the Storm Project

Aston Bay Holdings (BAY CN) – Further drilling results from the Storm Project

Artemis Resources (ARV LN) – Drilling underway at the Lulu Creek project, WA

BeMetals* (BMET CN) – Expanding the footprint at Pangeni

Beowulf Mining* (BEM LN) – €530k grant funding project completed for Finnish graphite

BHP (BHP LN) – Response to reports of another run at Anglo

Champion Iron (CIA AU) – Quarterly results as fires weigh on iron ore production

First Quantum (FQM CN) – Saudi Arabia’s Ma’aden state mining company in discussions to take stake in First Quantum

First Tin (1SN LN) – Progress at the Taronga and Tellerhäuser tin projects

Great Southern Copper (GSCU LN) – Exploration mapping and sampling at Mostaza, Chile

Guardian Metal Resources (GMET LN) – Option to acquire a historic tungsten mine in Nevada

Power Metals Resources* (POW LN) – (Power Metals* holds a 45% stake in Guardian Metal Resources)

Kore Potash* (KP2 LN) – Q3 operations update highlights finalisation of the PowerChina EPC contract with completion due next month

Syrah Resources (SYR AU) – US$150m loan for Balama from US Government

Gold ($2,780/oz) holds steady below record highs as traders look to tomorrow’s NFP data

• Gold prices hit all time highs of $2,790/oz yesterday before easing again this morning.
• The metal has been on a tear since September 2023 and is up over 30% this year.
• The move comes amid geopolitical tensions, BRIC countries diversifying their foreign reserve holdings away from the dollar, and concerns of fiscal largesse in the United States.
• ETFs have begun buying, although remain underweight, with ETF holdings still well below the 2020 scramble.
• NFP data tomorrow will be closely watched, with US Treasuries having sold off significantly since the Fed cut rates by 50bp.
• The 10 year now sits at 4.3%, with some speculating that a weak jobs number may provide another tailwind to gold, amid lower yields.
• However, the traditional correlation of higher US treasury yields and subsequently higher dollar weighing on gold seems to have broken.
• This comes as Central Banks boost gold holdings, although purchases have cooled in recent months.

Tesla sees record deliveries in Q3 2024

• Tesla delivered 463,000 EVs globally in the Q3 2024, setting a new quarterly delivery high.
• In China, the Model Y became the best-selling model.
• The Model Y was also the best-selling model in Europe for September.
• Following positive results, Elon Musk estimates that in 2025 Tesla’s EV deliveries will increase by 20% to 30%.
• Tesla China has also extended its 5-year zero-interest loan program which is expected to continue to drive demand in the country.

Prototype Chinese EV sets record lap time at Nurburgring

• Xiaomi chief executive Lei Jun said on the Chinese social media platform Weibo that its SU7 Ultra prototype completed the circuit in just over 6m46s – the fastest lap a four-door car has achieved on the track.
• In comparison, Tesla’s Model S Plaid completed a lap in 7m25s.

Economics

US – 3Q GDP growth came in at 2.8% (annualised), slightly below estimates, albeit, consumer spending beat expectations strongly.

• Headline number was pulled back by volatile trade figures with net exports subtracting 0.6pp while destocking also reduced the headline number by 0.2pp.
• Personal consumption that accounts for the largest share of economic activity climbed with increases relatively broad based across goods, including autos, household furnishings and recreational items.
• Odds of a rate cut per meeting before year end have not changed much with November decision remaining almost fully priced in.
• The focus now shifts to NFPs due tomorrow in the last piece of major economic news ahead of elections and FOMC meeting both next weel.
• GDP (%qoq annualised, 3Q/2Q/Est): 2.8/3.0/2.9
• Personal Consumption (%qoq annualised, 3Q/2Q/Est): 3.7/2.8/3.3
• Core PCE Price Index (%qoq annualised, 3Q/2Q/Est): 2.2/2.8/2.1

China – Official PMI numbers are out pointing to a slightly improving growth momentum among businesses.

• This is the first official economic indicator for the month post interest rate cuts and stimulus measures announced in September that hopefully points to a momentum turnaround.
• Private sector PMIs are due in the next couple of days.
• Stimulus measures are now expected to help China reach its growth target for around 5% expansion with Bloomberg median estimates suggesting 4.8% growth in 2024.
• US elections’ results is a risk with Trump promising a step up in tariffs on Chinese exports, the sector of the economy that has been the driving force behind expansion this year.
• Manufacturing PMI (Oct/Sep/Est): 50.1/49.8/49.9
• Services PMI (Oct/Sep/Est): 50.2/50.0/50.3
• Composite PMI (Oct/Sep/Est): 50.8/50.4/NA

Eurozone – Inflation picked up in October on a slower decline in energy costs with core measure holding at the 2.7%yoy mark.

• The data supports the ECB decision to proceed gradually with further rate cuts, Bloomberg writes.
• CPI (%mom, Oct/Sep/Est): 0.3/-0.1/0.2
• CPI (%yoy, Oct/Sep/Est): 2.0/1.7/1.9
• Core CPI (%yoy, Oct/Sep/Est): 2.7/2.7/2.6

Germany

• Retail Sales (%mom, Sep/Aug/Est): 1.2/1.2(revised from1.6)/-0.6
• Retails Sales (%yoy, Sep/Aug/Est): 0.9/2.5(revised from 2.4)/1.2

UK Budget – Government takes a further £40bn in taxes but most feel the budget could have been worse

• 10-year Gilt yield rose to 4.37% on the budget.
• £40bn of tax rises were put in place to fund additional spending -the highest amount since Norman Lamont’s budget in 1993.
• The government kept their promise of not raising income tax, NI for employees and VAT but did hit employers with an increase in NI (both percentage increase-13.8% to 15%- and lowering of threshold).
• Key changes:
• Freeze on main tax thresholds will now come off from April 2028 when it will return to moving up with the rate of inflation.
• NI – a 1.2% rise in NI from employers is a concern for smaller businesses and will hit costs along with the increase in the minimum wage.
• Capital gains: top rate tax raised to 24% from 20%
• Corporation tax remains and will be left unchanged at 25% (for the life of this parliament)
• IHT: Inheritance Tax thresholds left as they were with some changes to relief for land and business owners and for holders of AIM shares.
• AIM IHT: the Chancellor halved the tax relief available on AIM shares above £1m effectively taxing eligible shares at 20%. Labour does not see shareholders and property owners as working people.
• The AIM all share index closed 4% higher after the budget reversing the last month of losses.
• Pensions and ISAs appeared to escape with no changes to pension tax relief and also no changes to ISA limits.
• Non-spent pension pots are now exposed to IHT which may now remove the rationale for moving out of  defined benefit schemes into SIPPs with the hope of passing on to dependents tax free on death.
• Second homes: rise in stamp duty on second homes and ‘buy to let’ properties, from 3% to 5% with lower thresholds due to come in next year.
• Non-Dom status abolished with effect from April 2025 so anyone in the UK as a resident for more than four years will be now subject to tax on worldwide income and capital gains. More like in the US but with higher taxes in the UK.
• Fuel duty frozen but private jets will be hit by 50% duties along with small £2 rise in air passenger duty for short haul flights.
• Energy Profits Levy i.e the windfall tax on North Sea oil and gas companies was also lifted to 38% from 35%
• Tobacco tax rose 2% along with a new vape levy
• Alcohol duty will now rise in line with RPI but there was a cut in draught beer duty by 1.7% so dig your flat cap out and get down the pub with the union men people
• Investment: £100bn increase in investment over the next 5 years, funded by borrowing.

• £22bn will be going into the NHS  and further investment will go into roads , rail , schools and hospitals.
• £5bn will be spent on housing investment in 2025/26 and further commitments to upgrading rail routes including TransPennine and HS2.
• £2.9bn will be spent on an increase for military spending and £1.3bn for local government ,including social care.

• Compensation schemes such as the Infected blood (£11.8bn) and Post Office (£1.8bn) – with taxpayers paying for the mistakes of past governments.
• Bank of England 2% inflation target maintained
• Inflation will average 2.5% in 2024 rising to 2.6% in 2025 before slowly dropping to 2% in 2029 (according to OBR forecasts)
• GDP: The OBR also see GDP at 1.1% for 2024 and 2% next year, then 1.8%,1.5% ,1.5% and 1.6% through to 2030
• The market is looking for the BoE to cut rates by 25bp next week and potentially by a further 25bp in December though we wonder if the Guvnor has sufficient balls for the second cut.
• It is fortunate for the Chancellor the UK continues to grow through the OBR reckons the budget is unlikely to increase economic growth over the next five years.
• The government is planning to nationalise the railways as franchises end and, surprise!  The budget has increased rail fares by 4.6%.
• Pimco, the giant US Bond fund says they continue to like Gilts, but we wonder if they are getting rid of UK government paper as fast as they can.

Conclusion: Overall some big numbers and big spending plans along with big tax rises. Markets have taken it reasonably well with the view that it could have been worse and the AIM market has recovered after big concerns about an abolition of IHT relief. More tax rises to come unless growth surprises on the upside!

Spain – Death toll to rise in Spanish flooding as rescue workers search for missing

• Spain saw biblical flooding in Valencia yesterday as flooding sweeps cars off roads and destroys bridges.
• Farmland which produces two-thirds of Spain’s citrus fruits were submerged.
• The region is an important exporter of fruit and vegetables into Europe with the flooding expected to disrupt crops.
• Spain is no stranger to flash flooding but this seems to be on a greater scale than anyone has seen before with weather warnings just 30 minutes ahead of the disaster.
• Exceptionally heavy rain was caused by a ‘gota fria’ or ‘cold drop’ where cold air collides with warmer air over the Mediterranean leading to atmospheric instability.
• Warmer water in the Mediterranean may have increased evaporation making the rains more frequent and severe.
• Florida, the UK and now Spain have all experienced severe flash flooding in recent weeks. A tropical storm hit the Philippines last week killing close to 130 people with another 30 missing.

Currencies

US$1.0856/eur vs 1.0818/eur previous. Yen 151.92/$ vs 153.32/$. SAr 17.734/$ vs 17.708/$. $1.298/gbp vs $1.298/gbp. 0.658/aud vs 0.657/aud. CNY 7.116/$ vs 7.141/$.

Dollar Index 103.94 vs 104.33 previous

Precious metals:         

Gold US$2,778/oz vs US$2,751/oz previous

Gold ETFs 83.9moz vs 84.0moz previous

Platinum US$1,004/oz vs US$1,048/oz previous

Palladium US$1,137/oz vs US$1,237/oz previous

Silver US$33.5/oz vs US$34.0/oz previous

Rhodium US$4,675/oz vs US$4,700/oz previous

Base metals:   

Copper US$9,538/t vs US$9,605/t previous

Aluminium US$2,629/t vs US$2,664/t previous

Nickel US$15,810/t vs US$16,005/t previous

Zinc US$3,105/t vs US$3,140/t previous

Lead US$2,001/t vs US$2,022/t previous

Tin US$31,200/t vs US$31,250/t previous

Energy:           

Oil US$72.4/bbl vs US$71.6/bbl previous

• Crude oil prices edged higher after the EIA reported US inventory draws of 0.5mb to crude, 2.7mb to gasoline and 0.9mb to diesel stocks, with refinery utilisation also falling 0.4% w/w to 89.1%.
• European energy prices edged lower as aggregate EU natural gas storage levels fell for the first time in 2H24 by 0.1% w/w to 95.2% full (vs 92.5% 5-Yr average), with aggregate storage at 1,093TWh.
• The UK confirmed a 3% increase in the rate of the Energy Profits Levy to 38%, which brings the total headline rate of tax on upstream oil and gas activities to 78% and extended the end date by one year to 2030.
• Expand Energy guided a preliminary plan of ~7bcfe/d in 2025 based on ~$2.7bn capex, as well as identifying 25% higher annual synergies from the Chesapeake – Southwestern merger of $500m per annum by YE27.

Natural Gas €40.8/MWh vs €42.8/MWh previous

Uranium Futures $80.0/lb vs $80.5/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$104.1/t vs US$103.9/t

Chinese steel rebar 25mm US$537.9/t vs US$538.8/t

HCC FOB Australia US$207.0/t vs US$204.0/t

Thermal coal swap Australia FOB US$145.5/t vs US$146.5/t

Other:  

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

NdPr Rare Earth Oxide (China) US$59,515/t vs US$59,233/t

Lithium carbonate 99% (China) US$9,908/t vs US$9,872/t

China Spodumene Li2O 6%min CIF US$750/t vs US$750/t

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

China Tungsten APT 88.5% FOB US$340/mtu vs US$340/mtu

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

Europe Vanadium Pentoxide 98% 4.6/lb vs US$4.6/lb

Europe Ferro-Vanadium 80% 24.55/kg vs US$24.55/kg

China Ilmenite Concentrate TiO2 US$314/t vs US$313/t

China Rutile Concentrate 95% TiO2 US$1,216/t vs US$1,211/t

Spot CO2 Emissions EUA Price US$63.9/t vs US$63.9/t

Brazil Potash CFR Granular Spot US$280.0/t vs US$280.0/t

Germanium China 99.99% US$2,875.0/kg vs US$2,875.0/kg

China Gallium 99.99% US$455.0/kg vs US$455.0/kg

Battery News

China tells automakers to stop investments in countries who supported EU tariffs

• The new European Union tariffs of up to 45.3% on Chinese-made EVs came into effect yesterday after a year-long investigation.
• Ten EU members including France, Poland and Italy supported tariffs in a vote earlier this month, in which five members including Germany opposed them and 12 abstained.
• In a meeting with the Ministry of Commerce, automakers including BYD, SAIC and Geely were told they should halt investment plans in countries that backed the new tariffs.
• The move by Chinese authorities to suspend some investment in Europe would suggest the government is seeking leverage in talks with the EU over an alternative to tariffs, keen to avoid a sharp fall in EV exports to the key market.
• Europe accounted for more than 40% of EVs shipped from China in 2023, according to calculations using data from the China Passenger Car Association. (Reuters)

Porsche reconsidering all-electric strategy

• In 2022, Porsche said it expected EVs to make up 80% of all its sales by 2030, and it confirmed that it only planned to keep the 911 as a combustion model.
• In a Q3 earnings call, board member Lutz Meschke highlighted that the company had observed the “slowdown in the BEV transition and the customer demand is not satisfying overall.”
• On the same call Meschke said “[Porsche] will refresh our combustion engine cars, including the Panamera and the Cayenne, and of course, we will continue to rely on plug-in hybrids,”
• Porsche CEO Oliver Blume had hinted at the change of direction earlier in the year in an interview with Reuters, saying, “The transition to electric cars is taking longer than we thought five years ago.”

Malaysia to double EV charging stations to support government plans to use EVs as official vehicles.

• Malaysia will double the number of EV charging stations in the country to 4,000 next year said the deputy Prime Minister.
• “The plan is to promote more EVs, and one step is to increase the number of charging stations. Our target is to have 10,000 stations nationwide by 2030, along with providing incentives for EV ownership,” the deputy Prime Minister said.

Company News

American West Metals (AW1 AU) A$0.072, Mkt Cap A$46m – Further drilling results from the Storm Project

Aston Bay Holdings (BAY CN) C$0.085, Mkt cap C$22m – Further drilling results from the Storm Project

• Yesterday, American West Metals and Aston Bay released the latest batch of drilling results from their exploration programme at the Storm Project on Somerset Island, Nunavut.
• The drilling tested “the stratigraphy and structure in the southern areas of Storm, south of the Southern Graben Fault” in hole ST24-02 while hole ST24-23 which is testing a geophysical anomaly has not yet reached its target because of drilling problems and will remain “a high-priority drill target for early 2025”.
• The results include “thick intervals of low-grade copper sulfide mineralization with multiple thin higher-grade horizons” in hole ST24-02 which intersected a “significant zone of mineralization, from 292m to 324m downhole, is hosted within a bituminous, vuggy, coral dolopackstone-doloboundstone sequence with blebby to veinlet chalcopyrite, chalcocite and bornite with assays up to 0.53% Cu (from 322.5 – 323.5m downhole)”.
• Thomas Ulrich, CEO of Aston Bay, said that the drilling confirms its geological model with hole ST24-02 encountering a “significant amount of sediment-hosted style copper mineralization”.

Artemis Resources (ARV LN) 0.65p, Mkt Cap £12.5m – Drilling underway at the Lulu Creek project, WA

• Artemis Resources reports the start of drilling at its Lulu Creek gold project in WA where it is targeting IRGS (intrusive related gold system) mineralisation.
• Lulu Creek is located around 20km west of the company’s Carlow Castle project which hosts a 704koz AuEq gold-copper-cobalt project.
• The company “plans to drill a series of reverse circulation (RC) holes to test both … IP targets and zones of elevated gold mineralisation intersected in … 2020 shallow drilling. It is expected approximately 5 holes for around 1,500 metres will be drilled”.
• Executive Director, George Ventouras, said that “drilling at Lulu Creek is only the beginning in a series of exploration initiatives to test the prospectivity of our tenements which extend 20km along a major east-west structural corridor with numerous surface gold occurrences”.
• Mr. Ventouras explained that the company has “several other compelling targets already identified along this structural corridor which is only lightly explored”.

Conclusion: We await results from the new phase of exploration drilling at Lulu Creek with interest.

BeMetals* (BMET CN) – C$0.09, Mkt cap C$20m – Expanding the footprint at Pangeni

• Yesterday, BeMetals reported that its 4,502m programme of aircore drilling at the Pangeni project in Zambia has extended the Nkala copper zone and identified “four new important targets”.
• The new targets “include a wide copper anomaly 1.3-kilometres southwest and along the trend of the Nkala Zone at the D-Prospect”
• Welcoming the outcome of the aircore drilling programme CEO, John Wilton, confirmed that the “Nkala Zone Extension target will be core drilled by the ongoing program”.
• The announcement details the following new targets:

• • A 400m wide anomaly with “copper in bedrock 1.3 kilometres along the southwestern trend from the currently known Nkala Zone at the D-Prospect”; and
  • A “copper in bedrock anomaly some 0.8 kilometres northwest of D11-C3 Nkala Zone intersection of 0.54% copper over 23.20 metres” at Nkala Northwest and
  • A “copper in bedrock target some 300-metre-wide within a 1.2-kilometre long anomalous zone” at CT Southwest located “approximately 7-kilometres from the D-Prospect” and
  • A “1.2-kilometre long anomalous zone approximately 1-kilometres southeast of the Nkala Zone at the D-Prospect” at the T Target

• The announcement comments that a “similar spatial distribution of mineralized shoots and deposits is seen at the Lumwana Copper Mine, with its centralised processing plant, as the Equinox, Chimiwungo, and East Shoots with the Malundwe deposit some 9 kilometres from the Chimiwungo deposit”.

Conclusion: BeMetals’ continuing exploration at Pangeni in western Zambia is extending the mineralised footprint with the recent results identifying a further 4 targets for future investigation.  We look forward to further news as the exploration progresses.

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

Beowulf Mining* (BEM LN) 21p, Mkt cap £8m – €530k grant funding project completed for Finnish graphite

• Beowulf reports that it has completed the Business Finland funded project, ‘Spheronisation and Purificatoin of Natural Graphite for the European Lithium-Ion Battery Market.’
• The Project receives €530k grant funding, or 50% of the three-year budget.
• The Project was intended to support the BFS for a commercial anode plant, whilst also delivering a marketing and commercialisation plan.
• The results suggest that a process flowsheet for battery-grade spheronised graphite will be utilised for the ongoing PFS for the Grafintec anode plant.
• The optimised PFS is due 1Q25, with results fed into an EIA, due within a few months of PFS completion.
• The optimised PFS will include coating process, which improves the anode material physical performance.
• Beowulf will apply for EU Strategic Project status in early 2025, which accelerates permitting and boosts capital availability.

*SP Angel acts as Nomad and Broker to Beowulf Mining

BHP (BHP LN) 2,160p, £110bn – Response to reports of another run at Anglo

• BHP provided an update last night that comments made during the general meeting over Anglo American were not intended to carry consequences under the UK Code.
• The comment in question was Chair Ken MacKenzie stating that BHP had moved on from the deal. Reports suggest he later walked back on the comments.
• The clarification essentially enables them to lodge another bid for Anglo American under UK takeover law.
• BHP has to wait six months from its previous attempt before bidding again.
• That six month period is due to expire next month.

Champion Iron (CIA AU) A$5.86, Mkt cap A$3bn – Quarterly results as fires weigh on iron ore production

• Canadian high-grade iron ore miner Champion reports EBITDA of C$75mm from revenues of C$351m.
• 9mt of ore milled at a head grade of 29% produced 3.2mt concentrate grading 66.3%.
• Ore milled fell 18%qoq on the back of forest fire impacts, with concentrate production down 18%qoq and 8% vs same period last year.
• Gross selling price reported at US$119/t, vs 65% Fe index of US$114.t.
• Net realised selling price down 20%qoq at $79/t, with C1 costs of US$57/t, up 5%yoy.
• Increase in costs reflect lower volumes of concentrate produced and higher maintenance costs on semi-annual shutdown.
• Higher stripping expected to continue in line with the mine plan over the next quarters.
• Cash balance fell C$111m over the period to C$184m.
• Company reports liquidity at C$760m in credit facilities.
• DRPF project, which is being built to boost Bloom Lake’s higher value DR quality pellet feed to 69%, is reportedly on schedule for 2H25.
• C$218m has been spent on DRPF of the estimated total CAPEX of C$471m.

Market Outlook

• High-grade iron ore premiums impacted by weak global steel demand, with elevated supply from Brazil and Australia.
• P65 premiums over P62 index near historical lows, but up 1.6%qoq.
• Freight index elevated on Red Sea conflict and higher exports from Brazil.

First Quantum (FQM CN) – Saudi Arabia’s Ma’aden state mining company in discussions to take stake in First Quantum

• Manara a joint venture between Ma’aden and the $925bn Public Investment Fund is close to finalising a deal to acquire 15-20% of First Quantum’s Zambian copper assets.
• The stake is estimated to cost $1.5-2bn.
• Manara holds 10% in Vale Base Metals and is investing in Saudi Arabia and to expand the sector in general.

*One of our mining analysts formerly worked on a joint venture with Ma’aden to reopen the Mahd adh Dahab gold mine some years ago.

First Tin (1SN LN) 6.25p, Mkt Cap £19.9m – Progress at the Taronga and Tellerhäuser tin projects

• Reporting its results for the 18 month period to 30th June, First Tin reports a loss of A$3.1m and a closing cash balance of A$1.3m.
• Chairman, C Cannon Brookes, highlighted the completion of the Definitive Feasibility Study for the company’s Taronga tin project in New South Wales which, he said, delivers a “low risk, and high margin project … [and confirms] … its potential as a major tin resource”.
• He said that improved metallurgical recoveries were among “multiple opportunities to extend the mine life and … enhance the overall project value” at Taronga.
• Permitting at Taronga is progressing and “since the period end we have received the New South Wales (NSW) Planning Secretary’s Environmental Assessment Requirements … [which] … brings us closer to submitting Taronga’s Environmental Impact Statement (EIS) and then receiving in the second half of 2025 the project’s Development Approval”.
• He also explained that the company’s Tellerhäuser tin project in Germany had “also made substantial progress during the period with respect to permitting and preparation for its DFS” including the publication, in April this year of “an updated MRE for the project … which incorporate data from historic drilling”.
• The new estimate for Tellerhäuser shows an ‘Indicated’ resource of ~10mt at an average grade of 0.45% tin  with an additional ‘Inferred’ resource of ~18mt at an average grade of 0.52% tin increasing the previous estimate by around 35% compared to the earlier, 2019, estimate.
• Progress at the company’s other tin project in Germany, at Gottesberg, “has been relatively constrained as the Company has focused on Taronga and Tellerhäuser … [however it] … has a large resource base and excellent mineral processing characteristics and could benefit from lessons learned at Taronga. It is proposed to more closely evaluate this project over the next 12-24 months”.

Great Southern Copper (GSCU LN) 1.43p, Mkt Cap £6.4m – Exploration mapping and sampling at Mostaza, Chile

• Great Southern Copper reports that initial geological mapping and rock-chip sampling at its Cerro Negro project in Chile has shown the Mostaza mineralisation extending at least 1.5km to the south while remaining open laterally.
• In addition, “high-grade vein breccia mineralisation … [has been] … confirmed up to 400m to the east”.
• Results from 162 grab and channel samples “range up to 4.64% Cu with 20% of samples >0.1%Cu and 30% of anomalous samples >1.0% Cu. Silver ranges up to 177g/t Ag with 20% of samples assaying >25.0g/t Ag”.
• The company confirms that “Preparation for drilling at Cerro Negro is advanced, with a land access proposal having been presented to community landowners and which is expected to be finalised in the coming weeks”.
• Commenting on the results, CEO, Sam Garrett, said that they “confirm that high-grade, structurally-controlled copper-silver mineralisation extends up to 1.5km further south along trend of the Mostaza copper-silver mine and up to 400m further to the east”.
• He also explained that the presence of “anomalous barium and lead” in the assay results “is a strong indicator for the potential of a larger disseminated type porphyry copper type system at depth beneath the lithocap … [which] … reinforces confidence in our targets for the Mostaza deposit”.

Conclusion: Early-stage exploration mapping and sampling at Cerro Negro has provided encouraging extensions to the mineralisation at Mostaza and indications of potential porphyry copper mineralisation.  Preparations for drilling are at an advanced stage.

Guardian Metal Resources (GMET LN) 25.5p, Mkt Cap £30m – Option to acquire a historic tungsten mine in Nevada

Power Metals Resources* (POW LN) 13p, Mkt cap £15m – (Power Metals* holds a 45% stake in Guardian Metal Resources)

• Guardian Metal Resources reports that it has secured, subject to due-diligence, an option to acquire a former tungsten mine in Nevada around 240km north of Las Vegas.
• The “Tempiute Tungsten Mine & Mill … also formerly known as the Emerson Tungsten or Black Dog Mine … [was ] … a significant tungsten producer as recently as the late 1980s”.
• The company explains that the mine was “mined for tungsten, silver and zinc intermittently over the last century, most recently being in operation by United Carbide from 1977 to 1987, ceasing operations due to a crash in tungsten prices following market flooding by Chinese producers”.
• Although they are unlikely to comply with current reporting standards “Multiple historical resource estimates have been reported on the Project … however, an internal report by a previous owner outlined a combined Measured, Indicated and Inferred estimate of 8,000,000 tons grading 0.43% W0₃”.
• Our research on data from the USGS indicates that the Emerson mine produced ~0.5m short tonnes of tungsten ore between 1938 and 1982 making it the 2nd largest producer of the 20 Nevada operations included in the USGS data.
• Following payment of an initial US$5,000, Guardian Metal Resources will have 90 days to conduct its due diligence on the project.  If it goes ahead, the company pay a further US$50,000 in cash and issue 150,000 shares to Hinkinite Resources LLC.
• “Following execution of the Definitive Agreement and until such time as the Option is exercised or the Definitive Agreement is terminated, Guardian Metal will pay the Optionor a cash payment of US$25,000 at the end of each six month period following the date of the Definitive Agreement.”.
• Guardian Metal Resources must then exercise its option within three years and establish “a “mineral resource” of tungsten trioxide (WO3) with a minimum cut off grade of 0.4%”.
• Announcement of a maiden resource estimate triggers a bonus payment to the vendor of “US$100,000 for each 3,100 tons WO3 of such Maiden Resource (the “Bonus Payment”), equal to US$1,000,000 for a 31,000 ton WO3 Maiden Resource, up to a maximum Bonus Payment of US$2,000,000” in order to acquire 100% ownership of the project.
• The company is also working on the Pilot Mountain tungsten project, also in Nevada, which is reported to be the United States’ largest resource of a strategic metal not currently produced in the US

Conclusion: An option to evaluate a former tungsten mine may provide Guardian with a second Nevada tungsten project in addition to its Desert Scheelite deposit the Pilot Mountain project area.

*SP Angel acts as Nomad and Broker for Power Metals

Kore Potash* (KP2 LN) 3.2p, Mkt Cap £141m – Q3 operations update highlights finalisation of the PowerChina EPC contract with completion due next month

• The Company released SepQ operations update highlighting development progress at the Kola Potash Project in Republic of Congo.
• The team reached a final agreement with PowerChina regarding the Kola EPC contract on 28 October.
• Both parties are now working towards putting together a signing ceremony with the Minister of Mines and other officials of the RoC in Brazzaville.
• The ceremony is expected to take place on 19 November.
• The Company owes US$3m to PowerChina covering additional contract related design and engineering work with $0.8m payable within six weeks of the d completion of the final version of the contract agreed on by both parties.
• The balance of $2.2m is to be paid subject to Kore completing its fund raise and no later than 12m post signing of the EPC contract.
• On project funding, financing parties of the Summit Consortium reiterate their interest in the project awaiting the execution of the EPC contract.
• The commitment is to provide the financing term sheet for the construction of Kola including royalty and debt funding within 3m of signing the EPC contract (previously six weeks).
• The Company reported -$0.7m in FCF during the quarter including $0.6m in capitalised costs.
• The Company had $1.3m in cash and no debt (apart from $3m due to PowerChina) as of SepQ end.
• The team said it will need to conduct a small equity raise in November to cover working capital as the project moves closer to the EPC finalisation and onto project funding stage.

*SP Angel acts as Nomad and Broker to Kore Potash

Syrah Resources (SYR AU) A$0.3, Mkt Cap A$315m – US$150m loan for Balama from US Government

• Mozambique graphite producer Syrah signed a binding agreement yesterday with the US International Development Finance Corporation yesterday.
• The loan is intended to fund capital commitments at the Balama graphite project.
• Company reports the funding will help Syrah manage ‘near-term volatile natural graphite market conditions and continued operations in preparation for increased sales to ex-China anode customers.’
• The DFC has a mandate to fund upstream operations in Africa.
• Interest rate fixed at US 20-year T rate + 400bp.
• Repayment allowed any time after commitment penalties, with premium penalties applicable for accelerated repayment.
• Security ranks over Twigg’s assets. Twigg is the holding company for Balama.
• The loan matures in May 2037.

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

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*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