SP Angel Morning View -Today’s Market View, Thursday 6th April 2023

China eyes ban on exporting rare-earth Processing and refining technology

MiFID II exempt information – see disclaimer below

Anglesey Mining (AYM LN) – Progress of the Parys Mountain Planning Application.

Harmony Gold (HAR SJ) – MOU signed with Papua New Guinea Government to proceed with Wafi-Golpu Gold Project alongside Newcrest

Kenmare Resources (KMR LN) – Increased dividend as revenue increases faster than costs despite slightly lower production volume.

Rockfire Resources (ROCK LN) – Identification of new zone of gold mineralisation at the Lighthouse exploration project.

Talga Group (TLG AU) – Environmental permit for the graphite mine at the Vittangi Anode Project

China eyes ban on exporting rare-earth processing and refining technology

• Chinese officials are weighing up a potential ban on exports of various rare-earth magnet production and process/refining technologies. (Nikkei)
• The move would be seen as a direct response to US measures to target the Chinese chip-making industry.
• Changes are expected to go through this year.
• The last major official rare earth policy shift by Beijing saw NdPr prices skyrocket when exports to Japan were suspended in 2010 over the Senkaku Islands.
• China controls over 90% of the rare earths refining and processing industry, with various techniques considered patented.

 Copper ticks higher as inventories continue to slide and Chilean supply deteriorates

• Copper prices added $200/t to $8,850/t from yesterday’s lows.
• The move came as on-warrant stocks on LME exchanges hit their lowest levels since 2021, nearing 2005 lows.
• The metal has also been lifted by a weaker dollar, which fell to two-month lows yesterday.
• The Yangshan premium, which reflects Chinese import demand for refined copper cathodes, has held higher following a 50% jump in January,
• Codelco and Enami’s Llurimagua project saw its operations suspended yesterday by the Ecuadorian government, adding strain to already weak mine production forecasts.
• Copper prices were also supported by the Caixin services activity survey for March, which hit its highest level since November 2020, beating expectations.
• Recessionary concerns from the US continue to pressure base metals.

 Gold prices hold near 12-month high in lead up to tomorrow’s US labour data release

• Gold prices ticked lower from 12-month highs of $2,020/oz overnight but remain at elevated levels.
• The metal is being supported by extended US Treasury buying, which has pushed yields down and increased the appeal of non-interest-bearing gold.
• A sell-off in the dollar is also helping the greenback-denominated metal.
• Gold has jumped 2.3% over the course of the week on the back of weaker US economic data and OPEC+’s surprise cut.
• Yesterday’s US service data also suggested signs of a weakening economy, alongside the ADP private sector jobs miss.

 Economics

 Japan – Governor Haruhiko Kuroda is leaving the central bank following a decade of ultra loose monetary policy seeing the BOJ accumulating 1.55 quadrillion yen ($11.7tn).

Germany – Industrial production and factory orders surprise on the upside in February as manufacturing recovers following a pull back in energy prices.

• The data may be enough to allow the nation to avoid a recession over the winter after a 0.4% contraction in Q4/22.
• Industrial Production (%mom): 2.0 v 3.5 January and -0.1 est.
• Factory Orders (%mom): 4.8 v 1.0 January and 0.3 est.

UK – House prices rose 0.8%mom and were up 1.6%yoy in March led by the latest reduction in borrowing costs, Halifax said.

• The data does not reconcile with earlier report from Nationwide showing that prices were down 3.1%yoy in March.

South Africa – Spain is planning to work with development finance institution, Cofides, and South Africa’s Industrial Development Corp.

• €15m will be granted for feasibility studies while the rest of funds will come in the form of loans at about half the cost of commercial credit.
• Capital commitments will need to have clear exit prices and dates with a requirement for 30% of spending to go to Spanish companies in the form of equity or procurement.
• The programme is a separate initiative to the $8.5bn Just Energy Transition Partnershhip between SA and most of Group Seven nations including France, Germany, the US, UK and the EU.
• The nation previously estimated it needs 1.5tn rand ($87bn) to move away from coal over the next five years with more than 80% of electricity currently coming from coal fired plants.

Ukraine/Russia – Kyiv is prepared to discuss the future of Crimea with Moscow if Ukrainian forces reach the Russia-occupied peninsula in the course of a counteroffensive, a top adviser to President Zelensky, FT reports.

• “If we will succeed in achieving our strategic goals on the battlefield and when we will be on the administrative border with Crimea, we are ready to open (a) diplomatic page to discuss this issue,” Andriy Sybiha said.
• The comment addresses a number of concerns among western officials that an attempt to reclaim Crimea may trigger President Putin to escalate potentially engaging nuclear weapons.
• Another President Zelensky adviser, Mikhailo Podolyak suggested that Ukrainian forces would be on Crimea’s doorsteps in “five to seven months”.

Currencies

US$1.0908/eur vs 1.0962/eur yesterday. Yen 131.24/$ vs 131.49/$. SAr 18.111/$ vs 17.882/$.  $1.248/gbp vs $1.251/gbp. 0.671/aud vs 0.673/aud. CNY 6.877/$ vs 6.879/$.

 Dollar Index 101.83 vs 101.50 yesterday.

Commodity News

 Precious metals:

Gold US$2,017/oz vs US$2,028/oz yesterday

Gold ETFs 93.2moz vs US$93.1moz yesterday

Platinum US$1,011/oz vs US$1,026/oz yesterday

Palladium US$1,427/oz vs US$1,459/oz yesterday

Silver US$24.94/oz vs US$24.91/oz yesterday

Rhodium US$7,850/oz vs US$7,350/oz yesterday

 Base metals:   

Copper US$ 8,857/t vs US$8,686/t yesterday

Aluminium US$ 2,350/t vs US$2,349/t yesterday

Nickel US$ 22,490/t vs US$22,995/t yesterday

Zinc US$ 2,803/t vs US$2,807/t yesterday

Lead US$ 2,114/t vs US$2,114/t yesterday

Tin US$ 24,535/t vs US$24,600/t yesterday

 Energy:           

Oil US$84.6/bbl vs US$85.5/bbl yesterday

• Crude oil prices drifted lower despite the EIA reporting a 3.7mb US crude inventory draw last week, together with 4.1mb gasoline and 3.6mb distillate stock draws, with refinery utilisation falling by 0.7% to 89.6%.

Natural Gas US$2.134/mmbtu vs US$2.079/mmbtu yesterday

• European gas prices were stable with EU natural gas storage levels flat w/w at 55.6% full (vs 34.9% 5-year average), as draws in Poland and Germany were offset by builds in Italy and the Netherlands.
• The UK’s largest oil and gas producer, Harbour Energy, has told staff it expects to shed 350 of its 1,200 UK onshore staff, blaming the UK government’s windfall tax that levies an effective tax rate of 75%.

Uranium UXC US$50.35/lb vs US$50.35/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$117.5/t vs US$118.5/t

Chinese steel rebar 25mm US$601.9/t vs US$605.9/t

Thermal coal (1st year forward cif ARA) US$142.0/t vs US$142.0/t

Thermal coal swap Australia FOB US$209.0/t vs US$204.0/t

Coking coal swap Australia FOB US$286.0/t vs US$294.0/t

           Other:  

Cobalt LME 3m US$34,930/t vs US$34,930/t

NdPr Rare Earth Oxide (China) US$77,365/t vs US$77,333/t

Lithium carbonate 99% (China) US$27,412/t vs US$27,401/t

China Spodumene Li2O 5%min CIF US$4,610/t vs US$4,610/t

Ferro-Manganese European Mn78% min US$1,347/t vs US$1,354/t

China Tungsten APT 88.5% FOB US$325/mtu vs US$325/mtu

China Graphite Flake -194 FOB US$785/t vs US$785/t

Europe Vanadium Pentoxide 98% 9.3/lb vs US$9.4/lb

Europe Ferro-Vanadium 80% 37.25/kg vs US$37.55/kg

China Ilmenite Concentrate TiO2 US$345/t vs US$345/t

Spot CO2 Emissions EUA Price US$102.4/t vs US$102.6/t

Brazil Potash CFR Granular Spot US$420.0/t vs US$420.0/t

 Battery News

Company News

Anglesey Mining (AYM LN) 2.2p, Mkt Cap £6.5m – Progress of the Parys Mountain Planning Application.

• Anglesey Mining, which published an updated mineral resources estimate for its historic Parys Mountain site in Anglesey on Monday, has now provided a progress report on its Planning Application for mining.
• The company explains that, yesterday, it held a “Pre-Application Inquiry meeting with the Mineral Planning Authority and a number of statutory consultees including Natural Resources Wales, Cadw, Anglesey County Council Departments (including Environmental Health, Highways & Transportation, Ecology & Environment and Heritage), Archaeological Planning Services, local councillors and members of both Westminster and Welsh governments … on site and in the local town of Amlwch”.
• Anglesey Mining explains that the meeting is part of a process to enable the statutory bodies to consider its application which was submitted in 2022 and which presents a development plan with “mined output increasing to 1Mtpa with an initial 12-year life”.
• Chief Executive, Jo Battershill, said that “for a large number of the statutory consultees that attended the Pre-Application Consultation on site yesterday this was their first exposure to the project and the Company’s proposal”.
• Anglesey Mining said that it “anticipates it will be required to complete an Environmental Impact Assessment”.  Baseline “surveys and ecological studies are both well advanced and understood. The work required to further advance these programmes will continue over the course of this year”.

Conclusion: On-site consultation with representatives of statutory bodies relating to the Planning Permission application for Parys Mountain is an important step in what could be a protracted process including the completion of an EIA. We look forward to a pre-feasibility study incorporating the updated MRE for Parys Mountain.

Harmony Gold (HAR SJ) ZAR 8,333, Mkt Cap ZAR51bn– MOU signed with Papua New Guinea Government to proceed with Wafi-Golpu Gold Project alongside Newcrest

• Harmony’s Wai Mining and Joint Venture partner Newcrest have signed a Framework MoU with the State of Papua New Guinea.
• The Agreement confirms all parties’ intentions to proceed with the Wafi-Golpu Project.
• The project still requires final permitting procedures and approvals from both JV party boards.
• The Wafi-Gold project has been granted an environment permit for deep-sea tailings placement.
• The announcement follows Barrick’s agreement signed last month with the State of Papua New Guinea to resume operations at its Porgera gold mine.

Kenmare Resources (KMR LN) 460p, Mkt Cap £436m – Increased dividend as revenue increases faster than costs despite slightly lower production volume.

• Kenmare Resources has declared a final dividend for 2022 of US¢43.33/share bringing the total for the year to US¢54.31/share (2021 – US¢32.71/share).
• During the year, revenues increased by 18% to US$498.4m (2021 – US$420.5m) outstripping rises in cash costs which grew by 13% to US$216.7m (2021 – US$191.8m) “as a result of higher prices for fuel and labour costs as well as increased electricity consumption”.
• On a unit cost basis, cash operating costs rose by 16% to US$180/t reflecting “higher total cash operating costs and a 2% decrease in finished product production”.
• Overall production of heavy mineral concentrates increased by 2% to 1.59mt (2021 – 1.56mt) but ilmenite output was 3% lower than in 2021 at 1.09mt (2021 – 1.12mt).
• Guidance for 2023 ilmenite production is in the range 1.05-1.15mt, broadly in line with 2022 levels.
• The company explains that “Shipments of finished products of 1,075,600 tonnes in 2022, a 16% decrease compared to record tonnes shipped in 2021, reflecting four months planned maintenance on a transshipment vessel”.

Rockfire Resources (ROCK LN) 0.23p, Mkt Cap £3.1m – Identification of new zone of gold mineralisation at the Lighthouse exploration project.

• Rockfire Resources reports that ASX-listed Sunshine Gold, which is farming-in to Rockfire’s Lighthouse exploration project in Queensland, has identified what it describes as a new zone of gold mineralisation located approximately 500m south of a previously identified area of anomalous gold at Cardigan Dam.
• A rock-chip sample from the new area returned an assay of 9.58g/t gold and 9.9g/t silver while the “best gold result … [from the Cardigan Dam area] … assayed 13.20 g/t Au, 4.8 g/t Ag”.
• The company also reports that rock-chip sampling around 250m NE of the gold anomaly at Cardigan Dam returned an assay of 0.62% cobalt, 0.48% copper, 0.92% barium and 185ppm nickel.
• Rockfire Resources’ CEO, David Price, expressed approval of the “thorough appraisal being undertaken by Sunshine and … [and said that Rockfire Resources is] … delighted to see new, high-grade targets being identified”.
• He confirmed that “Sunshine Gold states that further investigation of the cobalt-enriched gossan is required, but it is also extremely exciting to see the high-grade gold in the rock samples being collected at Cardigan Dam Prospect, within the Lighthouse tenement”.
• Sunshine Gold can earn up to a 75% interest in the Lighthouse tenement, which lies within the Plateau prospect in Queensland and adjoins Sunshine Gold’s existing Ravenswood West project, by spending A$2.2m over 3 years.

Conclusion: Rock-chip sample results from the Lighthouse project are encouraging but they are a very early-stage exploration tool and will require more detailed follow-up work to gain a clear understanding of their significance.

Talga Group (TLG AU) A$1.7, Mkt Cap A$615m – Environmental permit for the graphite mine at the Vittangi Anode Project

• The Company secured the environmental permit for the Nunasvaara South natural graphite mine in Sweden.
• The positive decision by the Swedish Land and Environment Court was issued yesterday.
• The decision starts a three week period for potential appeals.
• Exploitation concession application as well as remaining local approvals are progressing.

Conclusion: The environmental permit is a major step for the Company in building a vertically natural graphite anode production in Sweden.

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 – [email protected] – 0203 470 0490

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474

Sales

Richard Parlons –[email protected] – 0203 470 0472

Abigail Wayne – [email protected] – 0203 470 0534

Rob Rees – [email protected] – 0203 470 0535

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

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