SP Angel Morning View -Today’s Market View, Thursday 6th March 2025

Copper prices rise ongoing tariff concerns as Trump suggests 25% levy on imports

MiFID II exempt information – see disclaimer below

Kenmare Resources (KMR LN)– Rejection of 530p offer from Oryx and founder

Lithium Americas (LAC US) – Orion $250m investment

Mkango Resources* (MKA LN) – BUY – Commercial scale Tyseley HPMS facility development update

Premier African Minerals (PREM LN) – Financing update for Zulu Lithium, Zimbabwe

Rio Tinto (RIO LN) – Extending mine life at Brockman and accelerating lithium carbonate production capacity

Triple Flag (TPFM US) – Streams acquired on ex-Hochschild assets

West African Resources (WAF AU) – Strong cash generation over 2024 as Kiaka first gold due 3Q25

Xtract Resources (XTR LN) – Zambian exploration updates

Copper prices rise ongoing tariff concerns as Trump suggests 25% levy on imports

• LME copper broke through $9,620/t overnight amid mounting optimism over China’s stimulus programmes.
• Meanwhile CME copper is weakening, after touching $4.83/lb, a $1,000/t premium to LME prices.
• The ongoing US Section 232 investigation into the US’ dependence on foreign copper is boost expectations of White House support for domestic projects.
• This could accelerate the permitting and development of major projects like Resolution, which can produce up to 454ktpa (25% of domestic demand).
• The copper market is currently relatively well supplied, and the return of Cobre Panama,  the introduction of projects like Resolution, and an acceleration of sulphide-leaching technology, could flip this further into surplus.
• However, long term copper demand is expected to exceed supply, so any oversupply is expected to be short-lived.

Gold ($2,893/oz) edges lower as ETFs cut holdings whilst dollar falls

• Gold prices continue to bounce from below their recent record highs of $2,950/oz and $2,890/oz.
• We are noting a sea change in gold’s trading strength, with 2024 seeing strong buying in Asian sessions whilst 2025 is seeing more strength in US trading hours.
• The physical shortage concerns that mounted in January/February as gold moved to New York seems to be fading, with premiums narrowing.
• We suspect the rally in gold mining equities yesterday (GDX up 3.5%), despite a relatively subdued spot price, likely reflects a weaker dollar and lower oil prices, both tailwinds for miners.
• ETFs sold 45.5koz from holdings yesterday, c.$133m worth, with holdings now up 3.5% ytd.
• The dollar is selling off amid strength from the Euro, GBP and Japanese Yen, with their respective yields all jumping yesterday.
• Whilst dollar pair currencies are seeing higher bond yields, Treasury yields having been sliding on growth slowdown concerns.
• European yields rose yesterday on the back of increased defence spending expectations, whilst JGB yields rose on expectations of further rate hikes.

US –Trump exempts automakers from 25% tariffs places on imports from Canada and Mexico for one month following discussions with two nations

• Additionally, the administration is weighing similar exemptions for agricultural products.
• ADP employment numbers came in half of numbers expected with final NFPs due this Friday.
• ADP Employment Change (Feb/Jan/Est): 77k/186k(revised from 183k)/140k.
• Looks like Trump will cut tariffs for industries that lobby hard and can present a solid case for lower tariffs. We suspect allot of tariffs will be reduced in this way.

China vs Trump and the US

• It is interesting to note that China has had a quiet ‘China first’ strategy for many years.
• The difference is that China doesn’t telegraph their tariffs as dramatically or publicly as President Trump.
• China has long imposed import and export tariffs on metals and mineral feedstocks to protect its domestic industry.
• Examination of WTO tariff data on China shows thousands of duties and tariffs, see: http://tariffdata.wto.org/ReportersAndProducts.aspx
• China also forces technology transfers and state subsidies to directly support its industry violating the spirit of WTO regulations.
• A 2023 report to the US Congress on China’s WTO compliance in February 2024 describes China’s long record of “violating, disregarding and evading existing WTO rules”.
• “China has also sought to frustrate WTO oversight and accountability mechanisms, such as through its poor record of adhering to its WTO transparency obligations. “

https://ustr.gov/sites/default/files/USTR%20Report%20on%20China%27s%20WTO%20Compliance%20(Final).pdf

• China has developed in recent years buying consortia to reduce input costs for raw materials.
• Trump’s statements are dramatic, and his statements fall far short of normal diplomatic language, but the US is, in effect, simply catching up on what China has been imposing for years in a far more subtle and quiet manner.
• We hope the tariffs against Canada are a ‘Red Herring’ as we don’t see why Canada is such a target unless Trump is serious about absorbing Canada into the 51^st state.
• We suspect Tariffs on Mexico will result in the rapid onshoring of manufacturing into the US.
• Tariffs against China will help Trump to reduce Federal taxes and hopefully reduce US government debt.
• The world would be less concerned if the US simply matched Chinese tariffs and used diplomatic language but after many years of trying to encourage globalisation the US is done with this one-sided game.
• Unfortunately, Trump’s Tariff Catchup and Tarriff Leapfrog will be disruptive, inflationary and likely to slow the economic growth that Trump is so keen to promote.
• Fortunately, the UK appears to have escaped the Tariff Tsunami for now. Let’s hope it stays that way!

Economics

Germany – 10y bund yields are up 8bp to 2.9%, the highest since late 2023, following the announcement that new administration is planning to raise spending on defence and infrastructure.

• The yield climbed 31bp yesterday marking the biggest one day move since 1997.
• The euro is trading higher while local infrastructure and defence sector companies were among biggest gainers.
• Market commentators estimate increased government spending may see GDP growth accelerating to as much as 2% to GDP in 2026 when approved.

Japan – Japanese sovereign debt joined a global selloff in bons with 10y yields adding 9bp to hit 1.5%, the highest level in more than a decade.

ECB – The central bank is expected to announce another 25bp cut later this afternoon taking the deposit rate to 2.50%.

• Markets are pricing in three cuts for the remainder of the year taking total to four when the January decision is included.

President Macron is calling to step up defensive efforts against Russia and will be discussing with other leaders on potential extension of its nuclear shield to tis European allies.

• “Our nuclear deterrence protects us… It is complete, sovereign and entirely French… However, in response to the historic call of the future German chancellor, I have decided to open the strategic debate on the protection of our European continental allies through our deterrence,” Macron said.
• European leaders will be meeting for an emergency summit in Brussels today to discuss new ways of financing European defence spending as US presses the region step up NATO contributions as well as putting pressure on Ukraine to start ceasefire talks.

Trump warns Hamas to “release the hostages or face total destruction”

• US Secretary of State warns Hamas “He doesn’t say these things and not mean it, as folks are finding out around the world. If he says he’s going to do something, he’ll do it.”
• Trump also declared, “Shalom Hamas” meaning ‘Hello and Goodbye’ – You can choose.
• Release all of the Hostages now, not later, and immediately return all of the dead bodies of the people you murdered, or it is OVER for you.
• We suspect this is a prelude to Israel clearing people out of Gaza with US support.

Currencies

US$1.0804/eur vs 1.0683/eur previous. Yen 148.14/$ vs 149.53/$. SAr 18.352/$ vs 18.429/$. $1.290/gbp vs $1.284/gbp. 0.634/aud vs 0.627/aud. CNY 7.243/$ vs 7.258/$.

Dollar Index 104.194 vs 105.099 previous.

Precious metals:         

Gold US$2,907/oz vs US$2,919/oz previous

Gold ETFs 85.9moz vs 85.8moz previous

Platinum US$963/oz vs US$972/oz previous

Palladium US$943/oz vs US$961/oz previous

Silver US$32.5/oz vs US$32.3/oz previous

Rhodium US$5,000/oz vs US$4,875/oz previous

Base metals:   

Copper US$9,628/t vs US$9,502/t previous

Aluminium US$2,682/t vs US$2,636/t previous

Nickel US$16,050/t vs US$16,100/t previous

Zinc US$2,909/t vs US$2,852/t previous

Lead US$2,037/t vs US$2,032/t previous

Tin US$32,050/t vs US$31,865/t previous

Energy:           

Oil US$69.5/bbl vs US$70.9/bbl previous

• Crude oil prices fell on trade war fears as the EIA estimated a US inventory w/w build of 3.6mb to crude, offset by draws of 1.4mb to gasoline and 1.3mb to diesel stocks, with refinery utilisation down 0.6% w/w to 85.9%.
• European natural gas prices moved lower even as EU natural gas storage levels fell by 2.6% w/w to 37.3% full (vs 48.7% 5-Yr average) with aggregate inventory now at 428TWh and Germany falling to 32.5% full.
• The EU has proposed to prolong the 1 November gas storage filling target of 90% until the end of 2027, which comes despite concerns that the target has a distortive effect on gas markets due to market speculators.

Natural Gas €41.6/MWh vs €43.6/MWh previous

Uranium Futures $64.1/lb vs $64.2/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$106.9/t vs US$106.9/t

Chinese steel rebar 25mm US$487.0/t vs US$486.2/t

HCC FOB Australia US$184.7/t vs US$185.5/t

Thermal coal swap Australia FOB US$104.3/t vs US$103.5/t

Other:  

Cobalt LME 3m US$25,225/t vs US$24,420/t

NdPr Rare Earth Oxide (China) US$61,370/t vs US$61,239/t

Lithium carbonate 99% (China) US$9,941/t vs US$9,919/t

China Spodumene Li2O 6%min CIF US$815/t vs US$815/t

Ferro-Manganese European Mn78% min US$1,005/t vs US$1,005/t

China Tungsten APT 88.5% FOB US$343/mtu vs US$343/mtu

China Graphite Flake -194 FOB US$430/t vs US$430/t

Europe Vanadium Pentoxide 98% US$4.8/lb vs US$4.8/lb

Europe Ferro-Vanadium 80% US$23.8/kg vs US$23.6/kg

China Ilmenite Concentrate TiO2 US$300/t vs US$300/t

Global Rutile Spot Concentrate 95% TiO2 US$1,543/t vs US$1,543/t

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

Brazil Potash CFR Granular Spot US$322.5/t vs US$322.5/t

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

China Gallium 99.99% US$385.0/kg vs US$385.0/kg

Battery News

Trump delays auto tariffs as automakers exempt for month

• President Donald Trump has given automakers a temporary reprieve from the tariffs imposed on Mexico and Canada.
• In a statement from Press Secretary Karoline Leavitt, the US will “give a one-month exemption on any autos coming through USMCA.”
• The tariffs will still go into effect on 2^nd April, but Trump has granted the temporary exemption “so they are not at an economic disadvantage.”
• Auto industry leaders have vocally opposed the tariffs, with Ford CEO Jim Farley saying the tariffs would be “devastating” for US automakers.

VW to focus on affordable EV strategy in Europe

• Volkswagen unveiled its new €20,000 EV yesterday, with sales expected to begin in 2027.
• The ID.EVERY1 is the German automakers first car in the VW line-up to use software from its JV with US EV maker Rivian.
• The system requires fewer electronic control units and significantly less wiring, reducing vehicle weight and simplifying manufacturing.
• VW is planning to launch eight affordable EVs by 2027, with the ID.2 rumoured to be priced around €25,000 and coming to market this year.
• Affordable EVs are high priority for automakers in such a competitive industry.
• Currently there are only a couple of models in Europe that sell for under €20,000, but 11 new models under €25,000 are expected to come to market this year from a number of automakers.

Company News

Kenmare Resources (KMR LN) 397p, Mkt Cap £355m– Rejection of 530p offer from Oryx and founder

• Mineral sands producer Kenmare has rejected a possible cash offer for the Company at a price of 530p/share (c.93% premium to yesterday’s close).
• The offer was made by Oryx Global Partners and Michael Carvill, Kenmare’s previous managing director and founder.
• Kenmare’s Board unanimously rejected the offer ‘on the basis that it undervalued Kenmare’s business and its prospects.’
• However, the Board has offered the bidding party access to limited due diligence information.
• Under Irish Takeover Rules, Oryx is required to either announce a firm intention to make an offer or withdraw by 17^th April 2025.
• 17% of Kenmare’s current outstanding shares are held by the State General Reserve Fund of the Sultanate of Oman, following a $100m equity investment in 2016.
• M&G hold another 14% alongside Perpetual with 7%.
• Kenmare was previously approached by Australian mineral sands producer Iluka in 2014 who offered £470m before walking away.
• Oryx is an Abu Dhabi-based investment group focused on the ‘global energy transition.’

Conclusion: This strikes us as an opportunistic bid for Kenmare. An ongoing $341m CAPEX programme for WCP A, combined with weaker ilmenite and zircon prices, has limited the capital return programme at Kenmare, weighing down the current equity value of the business. Kenmare’s Moma accounts for 7% of global feedstocks supply and, amid rising trade tensions between the West and China, is likely to continue to be considered a globally strategic asset. Rio Tinto is focused on Sovereign Metals’* Kasiya project in Malawi and we see them as an unlikely interloper into Mozambique.

*SP Angel acts as Nomad and Broker for Sovereign Metals

Lithium Americas (LAC US) US$2.8, Mkt Cap US$627m – Orion $250m investment

• Orion Resources Partners are investing US$250m for development and construction of Phase 1 of the Thacker Pass Lithium Project in Nevada, US.
• Investment comes in the form of a $195 convertible and a $25m royalty.
• Additionally, Orion committed to invest further $30m in convertible notes within two years upon request by the Company.
• Orion also agreed, on a non-binding basis, to evaluate the potential to support up to $500m of financing for the construction and development of Phase 2.
• Convertible notes terms include 2030 maturity, US$3.78 conversion price representing a 43% premium to 5d VWAP, 9.875% interest.
• Royalty terms include a  fixed US$128/t pa lithium processed ($152/t if further $30m is drawn) for a period of 18y.
• Additionally, a variable 0.96% of total gross revenue (1.14% if $30m is drawn) will be paid to Orion for the life of the Project.
• Both fixed and variable payments will only apply to the first 41,500 tonnes of lithium processed each year and are subject to certain adjustments relating to total Phase 1 project costs.
• Thacker Pass Stage 1 construction completion is targeted for late 2027.

Mkango Resources* (MKA LN) 10p, Mkt Cap £38m – Commercial scale Tyseley HPMS facility development update

BUY

• The Company released a development update for the UK based HPMS production facility at the Tyseley Energy Park, Birmingham.
• Initial commercial production is guided for late 2Q25, subject to completion of the required infrastructure.
• HPMS vessel shipment from Germany is expected by the end of the month with factory acceptance tests are ongoing this week.
• Magnet alignment presses fully commissioned and the powder processing plant construction completed.
• Data, battery and electrical rooms completed and electrical and gas pipe installation works advancing well.
• HPMS pilot production continues providing powder and magnet product samples to potential customers ahead of commissioning of the commercial plant at Tyseley.
• The Company also hosted representatives from the UK’s Department for Business and Trade and the Office for Investment last month highlighting continued government support for the project.
• Mkango holds a 79% interest in the project along with CoTec (~21%) through its shareholding in Maginito that holds 100% in the asset.

Conclusion: Encouraging update from the Company progressing development works at the Tyseley Energy Park of the commercial scale HPMS facility (commissioning due late 2Q25) for recycling and efficient recovery of rare earth magnets from end of life equipment.

*SP Angel acts as nomad and broker to Mkango Resources

Premier African Minerals (PREM LN) 0.02p, Mkt Cap £8.4m – Financing update for Zulu Lithium, Zimbabwe

• Premier African Minerals has provided details of its plans to refinance the Zulu lithium project in Zimbabwe following the failure to complete its planned £3.5m fundraising in January.
• The company confirms that it “is actively seeking a fully funded solution for Zulu and actively engaging with all existing stakeholders, in particular Zulu’s prepayment and offtake partner with whom detailed discussions continue”, as well as making overtures to “other new potential investors”.
• “Premier may need to consider alternative options for Zulu in the interests of its creditors and shareholders, which may include raising financing at the subsidiary level, a sale of Zulu whilst keeping it in a state of care and maintenance, the liquidation of the assets of Zulu, or other options available under Zimbabwean laws including a corporate rescue of Zulu”.
• Referring to the operational issues at the Zulu plant which has “not run since July 2024 “, CEO, George Roach, expressed the view that the company has “attended to the issues associated with the comminution circuit and … [will] … be able to supply the required tonnage to the float sections, we have dealt with the major and potentially most costly components of the plant and to not complete the final commissioning and optimisation of the float section now would not make any sense”.

Conclusion: Premier African Minerals has yet to secure the required finance for its Zulu lithium project and is now considering options including sale or liquidation of the assets.  The plant’s operational issues are reported to be now largely resolved – it remains to be seen whether existing shareholders will be the beneficiary

Rio Tinto (RIO LN) – 4884.5p, Mkt cap £61bn – Extending mine life at Brockman and accelerating lithium carbonate production capacity

1. Rio Tinto is to invest $1.8bn to extend the life of its Brockman iron ore mine in WA.
2. The company explains that the funds will be used “to develop the Brockman Syncline 1 mine project (BS1) … located approximately 8 kilometres north of Brockman 4 … [which] … produced 43 million tonnes of iron ore in 2024”.
3. “Construction of the project begins this year and includes a new primary crusher and overland conveyor, a Non-Process Infrastructure precinct and a temporary camp for construction workers” and is expected to deliver the first ore in 2027, ahead of the original 2028 timetable.
4. The planned BS1 operations “have capacity to process up to 34 million tonnes per annum (Mtpa) of iron ore” and “is one of a tranche of replacement projects, with total annual capacity of ~130Mtpa, that underpin Rio Tinto’s ongoing commitment to the Pilbara”.
5. These include the Western Range development which is now “more than 90% complete, with first production due in the first half of 2025. The Hope Downs 1 and West Angelas sustaining projects are progressing through approvals processes … [and] … work continues on the pre-feasibility study for Rhodes Ridge, one of the world’s largest and highest quality undeveloped iron ore deposits, which is targeting an initial capacity of up to 40Mtpa and first ore by 2030”.
6. In a separate announcement today, Rio Tinto confirms the completion of its $6.7bn acquisition of Arcadium Lithium which, together with the Rincon lithium project, will become Rio Tinto Lithium which aims to build production capacity “to over 200 thousand tonnes per year of lithium carbonate equivalent (LCE) by 2028”.
7. Welcoming Arcadium, CEO Jakob Stausholm confirmed the acceleration of “our efforts to source, mine and produce minerals needed for the energy transition. By combining Rio Tinto’s scale, financial strength, operational and project development experience with Arcadium’s Tier 1 assets, technical and commercial capabilities, we are creating a world-class lithium business”.

Conclusion: Continuing to invest in the Pilbara iron ore business and on building lithium carbonate production capacity.

Triple Flag (TPFM US) $17.7, Mkt Cap $3.6bn – Streams acquired on ex-Hochschild assets

• North American streaming company Triple Flag has acquired a 5% silver and gold stream over the Arcata and Azuca mines in Peru.
• The operations were acquired by private operator Sierra Sun Precious Metals,
• Triple Flag will pay US$35m, expected to deliver 5-6kozpa GEO to the streamer by 2028, following ramp.
• Triple Flag will pay 10% of the spot silver or gold price for each ounce delivered under the stream.
• Arcata is fully permitted for restart, due 2H25, with Azuca expected to start by EOY2029.
• The Streams cover 34,827 hectares and Azuca covers 13,492 hectares.
• Arcata was developed by Hochschild, with first silver contrate produced in 1964.
• Arcata holds a 2,500tpd concentrate processing plant, with Azuca ore expected to be trucked 116km to Arcata.
• The Arcata M&I Resouece notes 2.1mt at 523g/t AgEq for 35.9mozoz AgEq, alongside 3.5mt inferred at 465g/t AgEq.
• Azuca’s M&I Resource notes 7.1mt at 246g/t AgEq for 55.7moz AgEq.
• Sierra Sun’s GEMIN provided engineering and mining contractor services to Triple Flag investment Cerro Lindo.
• Company expects both Azuca and Arcata have ‘excellent exploration upside,’ and note that Sierra Sun’s team has ‘extensive experience in Peru and have provided mining and engineering services to some of the top mining companies operating in country.’

West African Resources (WAF AU) A$2.11, Mkt Cap A$1.9bn – Strong cash generation over 2024 as Kiaka first gold due 3Q25

• Burkina Faso-miner WAF reports a summary of 2024 annual results.
• The Company produced 206.6koz at US$1,240/oz AISC>
• The Company generated cash flows from operating activities of A$252m.
• WAF ends the year with A$392m in cash.
• Ore reserves of 6.2moz due to be updated 2Q25.
• Company reports that Kiaka construction is nearing completion, with production expected to double to 420koz, with first gold due 3Q25.

Xtract Resources (XTR LN) 0.55p, Mkt Cap £4.3m – Zambian exploration updates

• Xtract Resources reports the start of drilling at the Silverking copper mine and associated exploration areas in the Mumbwa District of the Central Province of Zambia.
• The drilling fulfils part of its option agreement with Oval Mining enabling Xtract Resources to earn up to 70% of the project.
• Drilling aims to test the depth extension of mineralisation and will include testing of “wall rock alteration around the more massive high-grade copper sulphide body to establish the scope for future lower grade bulk tonnage copper-bearing mineralisation”.
• It will also test “second pipe structure where very limited historic drilling failed to intersect the pipe structure … [and try to identify] … the source of ground magnetic anomalies locate close to the main pipe which may represent mineralised offshoots from the main structure”.
• The announcement explains that the “former Silverking open pit and underground mine extends to a mining depth of only 70m and based on underground mapping and historic diamond and reverse circulation (“RC”) drilling is believed to remain open both down-dip and along strike”.
• Mineralisation also shows characteristics similar to “the nearby Kitumba deposit” Historic resource estimates issued by Intrepid Mines in 2015 showed Kitumba hosting a ‘Measured & Indicated’ resource of ~25mt at an average grade of 2.3% copper with 232ppm cobalt and minor precious metals plus an ‘Inferred’ resource of 3mt at an average grade of 1.2% copper and 247ppm cobalt.
• Executive Chairman, Colin Bird, explained that “the final depth of mineralisation on the main pipe is unknown and the purpose of this first hole is to determine the trending shape and depth continuity for a guide to potential future mine development which we intend to fast-track”.
• He said that “We perceive a simple high-grade open pit to be the outcome and if practical depth is exceeded, we will consider underground extension from the open pit … driven principally by grade, tonnage and the orebody morphology”.
• Xtract Resources has also issued a progress report on its exploration of the Western Foreland fold and thrust belt of NW Zambia and the company explains that the Western Foreland fold and thrust belt in the DRC hosts “recent discoveries … [of stratabound mineralisation] … by Ivanhoe”.
• The company plans to recommence exploration “at the end of the rainy season” including “Detailed ground electro -magnetic (EM) and magnetic surveys … [to help identify] … potential redox boundaries inferred from the defined stratigraphy … [with suitable anomalous target ] … followed up with diamond core drilling”.
• Mr. Bird said that the “Western foreland in Zambia remains largely under-explored and we are excited to be at the forefront of exploration in this potential emerging copper district. We are completing our detailed exploration programme and logistical planning, so we are ready to launch a new campaign after the rainy season”.

Conclusion: Xtract Resources is starting to drill at the former Silverking mine in Zambia as part of its earn-in to the project.  Field exploration is to be resumed on the Western Foreland after the end of the rainy season with geophysical work aimed at identifying drilling targets.  We await results from the exploration of both projects, with interest.

LSE Group Starmine awards for 2024 commodity forecasting:

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

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

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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+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

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