EVs, hybrids exceed 50% of China car sales for first time
MiFID II exempt information – see disclaimer below
Allied Gold (AAUC CN) – $53m streaming agreement with Triple Flag
Arc Minerals (ARC LN) – Questions on drilling
Galileo Resources (GLR LN) – Drilling starts on exploration licence in the Western Foreland, Zambia
Jubilee Metals Group (JLP LN) – Roan plant expansion completed and ramping up
Metals One plc (MET1 LN) – PEA to form basis of application for Strategic Project Status under EU Critical Raw Materials Act
Premier African Minerals (PREM LN) – Shares issued to settle liability
Vulcan Energy Resources (VUL AU) – Pre commercial lithium hydroxide facility commissioning
Copper ($8,770/t) prices on course to hit a 20% correction from highs recorded earlier in May amid a deteriorating economic outlook.
- Increased fears over a potential US recession added to concerns over weak economic activity in China.
- A sell off in risky assets seen earlier in the week further add to downside risks.
Gold ($2,398/oz) – is consolidating in the $2,380-2,400/oz following a period of profit taking driven by prices hitting record highs of ~$2,480/oz earlier this month.
- The precious metal is up 16% YTD supported by central bank buying and expectations of the start of an monetary policy easing cycle in the US.
- Geopolitical tensions in the Middle East also increased demand for the safe haven, according to Bloomberg.
China PBoC holds off buying gold
- The PBoC reports a third month of zero gold buying maintaining holdings at 72.8moz.
- China’s PBoC bought just over 1moz (29t) in the first half as markets looked forward to US interest rate cuts
- State-backed demand for gold buying fell to 39% of the market in Q2 vs Q1 as central banks stepped back from rising gold prices.
- Q2 gold demand rose 4% yoy to 1,258t with a strong 53% yoy increase in transactions at 329t.
EVs, hybrids set to exceed 50% of China car sales for first time
- EVs and plug-in hybrids surpassed 50% of all vehicle sales in China in July for the first time, with 879,000 units sold, making up 50.8% of total sales (Bloomberg).
- This milestone highlights the strong momentum of the EV industry in China, even as global demand slows with overall car sales dropping 2% to 1.73m.
- The decline in overall sales was attributed to annual production breaks and reduced discounts following an industry price war.
- Spending on autos remains weak, but Beijing is boosting consumption with subsidies and promoting EVs in smaller cities and rural areas.
Conclusion: We suspect the slow and rather cautious restocking of the lithium chemical and battery materials supply chain will have to play catch up later in the year if Beijing continues to stimulate EV sales.
EV Sales Poised to Surge in Southeast Asia–Study
- The EV market in Southeast Asia is poised for significant growth due to favourable regulations, strong local brands, and a rising presence of Chinese carmakers, according to a Maybank report (AfMA).
- Key factors include government plans to reduce fuel subsidies in Malaysia, partnerships with Chinese manufacturers, and abundant local battery minerals.
- Chinese carmakers are expected to produce around 750,000 cars annually in Thailand within two years, while Japanese manufacturers like Honda and Suzuki reduce their capacities.
- This shift, combined with a global surplus of battery cells, is making EVs more competitively priced than petrol vehicles.
- EV sales are already rising in the region, with Malaysia seeing a 142% year-on-year increase to 10,663 units in the first half of the year.
- Indonesia’s sales rose 104% to 11,943 units, Singapore’s registrations jumped 218% to 6,019 units, and Thailand’s sales increased 41.8% to 26,377 units from January to April.
M&A – Bombardier considers whether M&A could alleviate supply chain woes
- Supply Chain Dive reports that Bombardier is looking to improve its supply chain issues.
- While engine availability remains a major issue, we also reckon the sourcing of titanium metal and metal alloys is a significant risk.
- China remains dominant in the supply of titanium metal raising its share of titanium sponge, eg metal to 66% this year from 48.7% in 2020 and 8.4% in 2025 (Nature.com).
- Given China’s move to manufacture commercial and more military aircraft its move to produce more titanium metal is unsurprising as China likes to ramp up supply chains ahead of its increase in domestic demand.
- This should be worrying Western aircraft manufacturers which used around 38% of all titanium-based alloys in 2020.
- While buying the whole supply chain might be off the cards for Bombardier it would make sense for someone to consolidate more western supply to protect Western aerospace manufacturers when China ramps up its own demand.
| Dow Jones Industrials | -0.60% | at | 38,763 | |
| Nikkei 225 | -0.74% | at | 34,831 | |
| HK Hang Seng | -0.01% | at | 16,877 | |
| Shanghai Composite | 0.00% | at | 2,870 | |
| US 10 Year Yield (bp change) | -4.3 | at | 3.900 |
Economics
Japan – BoJ member suggests the BoJ should raise rates to at least 1%
- The BoJ member suggests rates should rise if the price stability target is achieved in the second half of FY 2025.
- Any suggestion of near term rate hikes in Japan will likely send markets into a tailspin.
UK – Vacancies jumped to the highest level in more than a year in July pointing as employers picked up hiring following July 4 general elections.
- Vacancies for professional jobs in the private sector increased to almost 37k last month, the most since March 2023, according to Bloomberg quoting data from recruiter Robert Walters.
- That is up by a third from last month and nearly 14%yoy higher on annual basis.
- Separate report from the Recruitment & Employment Confederation showed starting salaries continued to climb in July.
- Tight labour market and increasing wages are likely to see the central bank to delay further rate cuts.
Middle East – President of Iran told his French counterpart Emmanuel Macron that the US and Europe must urge Israel to accept a truce in Gaza.
- The call was the latest in a series of diplomatic efforts by Western and Arab states to reduce tensions in the region, Bloomberg reports.
- Iran previously pledged to avenge the assignation of the Hamas leader while Israel said that it may react disproportionately to any attack from Iran or Hezbollah.
Qatar invests $180m in TechMet, a critical minerals investment company
- The QIA, Qatar Investment Authority is investing US $180m into TechMet the critical minerals investment company.
- The investment raises TechMet’s funds commitments to >$300m with follow-on investments of $50m each from S2G Ventures and The US DFC Development Finance Corporation.
- TechMet has invested >$450m into mining projects in North and South America, Europe and Africa, including: Brazilian Nickel, Cornish Lithium, EnergySource Minerals, US Vanadium, Trinity Metals, Xerion Advanced Battery Corp.
Burkina Faso – The government presented new mining code replacing the previous one that was in force since 2015.
- Key changes to the code include increasing government free carried inte4rest to 15% from 10%.
- The maximum tenure of initial mining licenses will be reduced to 10 years from current 20.
- The term of existing mining permits issued under the 2015 mining code may be reduced to five years.
- Renewal of mining licensees will continue to be renewable for periods of five years which is consistent with the current 2015 code.
- New code should come into force eight days following publication in the Official Journal, however, the timing on that is currently unknown.
- Burkina Faso focused West African Resources (WAF AU) is down 10% on the news this morning.
Currencies
US$1.0936/eur vs 1.0922/eur previous. Yen 145.73/$ vs 146.48/$. SAr 18.432/$ vs 18.356/$. $1.269/gbp vs $1.270/gbp. 0.655/aud vs 0.655/aud. CNY 7.162/$ vs 7.181/$.
Dollar Index 102.98 vs 103.01
Precious metals:
Gold US$2,398/oz vs US$2,390/oz previous
Gold ETFs 82.7moz vs 82.6moz previous
Platinum US$925/oz vs US$920/oz previous
Palladium US$894/oz vs US$883/oz previous
Silver US$26.80/oz vs US$26.88/oz previous
Rhodium US$4,625/oz vs US$4,625/oz previous
Base metals:
Copper US$ 8,770/t vs US$8,809/t previous
Aluminium US$ 2,265/t vs US$2,267/t previous
Nickel US$ 16,110/t vs US$16,330/t previous
Zinc US$ 2,578/t vs US$2,551/t previous
Lead US$ 1,944/t vs US$1,953/t previous
Tin US$ 29,800/t vs US$29,580/t previous
Energy:
Oil US$77.9/bbl vs US$76.6/bbl previous
Natural Gas €38.8/MWh vs €35.9/MWh previous
Uranium Futures $81.4/lb vs $81.5/lb previous
Bulk:
Iron Ore 62% Fe Spot (cfr Tianjin) US$101.0/t vs US$102.6/t
Chinese steel rebar 25mm US$496.7/t vs US$497.0/t
Thermal coal (1st year forward cif ARA) US$126.0/t vs US$125.5/t
Thermal coal swap Australia FOB US$145.0/t vs US$146.0/t
Coking coal Dalian Exchange futures price US$195/t vs US$195.0/t
Other:
Cobalt LME 3m US$26,500/t vs US$26,500/t
NdPr Rare Earth Oxide (China) US$52,011/t vs US$52,074/t
Lithium carbonate 99% (China) US$10,263/t vs US$10,373/t
China Spodumene Li2O 6%min CIF US$920/t vs US$940/t
Ferro-Manganese European Mn78% min US$995/t vs US$995/t
China Tungsten APT 88.5% FOB US$325/mtu vs US$325/mtu
China Graphite Flake -194 FOB US$465/t vs US$465/t
Europe Vanadium Pentoxide 98% 4.7/lb vs US$4.7/lb
Europe Ferro-Vanadium 80% 25.2/kg vs US$25.2/kg
China Ilmenite Concentrate TiO2 US$320/t vs US$320/t
China Rutile Concentrate 95% TiO2 US$1,403/t vs US$1,399/t
Spot CO2 Emissions EUA Price US$67.6/t vs US$67.6/t
Brazil Potash CFR Granular Spot US$297.5/t vs US$297.5/t
Germanium China 99.99% US$2,145/kg vs US$2,145/kg
China Gallium 99.99% US$440/kg vs US$440/kg
Battery News
Australia EV sales in July: On track for 100,000 in 2024
- In July, EV sales in Australia fell to a 6.3% market share, despite numerous price cuts, but are still on track to surpass last year’s sales (NRMA).
- Of the 106,229 cars sold, 6,743 were electric, with Tesla accounting for 2,592 of these, a significant drop from March’s high of 6,017.
- Overall, 57,648 EVs have been sold in 2024, a 15.4% increase from 2023.
- Hybrid and plug-in hybrid vehicle sales doubled compared to last year, making up 19% of the market in July.
- The upcoming New Vehicle Efficiency Standard (NVES) in 2025 will impose stricter emissions targets, pushing carmakers to enhance their EV offerings to meet these requirements
CATL new honeycomb battery could out-perform solid-state batteries
- Chinese battery giant, CATL, unveiled its Shenxing PLUS, the first LFP battery with a range of over 1000km, earlier this year.
- The Shenxing PLUS, uses granular graduation technology, which places every nanometer particle into a 3D honeycomb-like structure to create an ultra-high energy density – the Shenxing PLUS boasts an energy density of 205Wh/kg.
- Aside from offering long range, Shenxing PLUS also charges fast – delivering a 600km range in just 10 minutes of charging.
Australian Government to spend AUD$100m to expand EV fast-charge network
- The Australian Government announced a $100m investment to expand EV fast-charging infrastructure nationwide, with the Clean Energy Finance Corporation (CEFC) awarding the funding to Ampol.
- Ampol will implement over 200 new public DC fast-charging bays at its service stations by 2025 – the expansion aims to accommodate the growing number of EVs on Australian roads, which currently exceed 200,000.
- This investment will also support other sustainable initiatives, including hydrogen refuelling infrastructure, solar PV, and the development of low-carbon liquid fuels.
- 23% of Australia’s greenhouse gases are generated by the transport sector, so it is channelling funding to reduce this by 2030.
Tesla sees 15% growth in China-made EV sales
- According to data from the China Passenger Car Association (CPCA), Tesla saw a 15.3% yoy growth of its Chinese-made models in July.
- The automaker saw 74,117 units sold in the month, continuing the growth trend following weaker sales figures in H1.
Tesla Taiwan to partner with Costco to promote EV sales
- The partnership is offering three charging benefits to the first 50 buyers – 5,000km of free supercharging, a Type 2 travel charging case, and wall-mounted charging equipment for their home.
Honda sees FYQ1 profit jump 23% on back of strong hybrid vehicle sales
- The Japanese automaker reported a 23% increase in first-quarter profit on Wednesday as the automaker benefited from a weaker yen, higher pricing and growing hybrid vehicle sales in the US and its home market.
- Quarterly operating profit grew to 484.7bn yen for April-June.
- Honda said last week its global vehicle sales grew 2% to 1.9m over the first six months of the year, despite slashing sales outlook in China by 21%, thanks largely to a 9% rise in sales in the US.
- Honda is struggling in China due to heavy competition from new Chinese brands and will close one factory and halt vehicle production at another plant in the world’s biggest auto market.
- The automaker plans to start production at two new EV plants in China run through two joint ventures with Chinese automakers later this year.
Company News
| Overnight Change | Weekly Change | Overnight Change | Weekly Change | ||
| BHP | -2.0% | -5.4% | Freeport-McMoRan | -3.7% | -13.0% |
| Rio Tinto | -2.1% | -4.6% | Vale | 0.2% | -6.7% |
| Glencore | -2.8% | -5.4% | Newmont Mining | -2.5% | -5.4% |
| Anglo American | -2.9% | -7.9% | Fortescue | -1.8% | -4.7% |
| Antofagasta | -2.6% | -8.1% | Teck Resources | -3.7% | -8.9% |
Allied Gold (AAUC CN) C$2.8, Mkt Cap C$712 – $53m streaming agreement with Triple Flag
- The Company signed a streaming agreement with Triple Flag over production from its Agbaou and Bonikro mines in Cote d’Ivoier for US$53m.
- Triple Flag will have the right to purchase 3% of payable gold from each mine paying 10% of the spot gold price.
- The percentage will go down to 2% on a delivery of 29koz at Agbaou and 39.3koz at Bonikro.
- The agreement is subject to a period of minimum deliveries over the 2024-2027 period including:
- A minimum of 2.50-2.75kozpa to be delivered into Agbaou Stream;
- A minimum og 3.50-4.25kozpa to be delivered into Bonikro Stream.
- $53m will come in upfront cash payment.
- The Company targets a sustainable production from two mines of 180-200kozpa over more than 10 yeas.
- The Company adds that given competitive cost of capital of the streaming deal and strong market feedback it will be looking to arrange a minimum $250m Kumuk funding package to cover part of the ~$500m total development capex using a gold stream and gold prepay facility.
Arc Minerals (ARC LN) 1.77p, Mkt cap £25.5m – Questions on drilling
(Anglo American holds 70% of the jv with Unico Minerals Limited with Arc Minerals holding the other 30% through Unico Minerals. Unico Minerals is a 67% jv with 33% held by Kopara Investments. Arc also holds 75% in Alvis-Crest (Proprietary) Limited which holds two licenses in the Kalahari Copper Belt, known as Virgo covering >210km2, around 10km south east the recently commissioned Khoemacau Copper in Botswana.)
- Arc Minerals released a statement yesterday to say the Anglo American / Arc joint venture has started drilling. But that is all it says.
- It does not offer any of the usual comments on:
- Number of drill holes,
- Meters to be drilled,
- Reasoning behind the location of the holes
- Structural geology
- Cost of the drill program
- Cost per meter to be drilled
- Timing for assay results or if the assay results will even be reported
- Etc…
- Arc reported that a single drill hole was drilled last year with no assay results, no photos of core and no real explanation. They just said it was stratigraphic after it was drilled.
- Arc does say that a number of holes are planned at Cheyeza and at Muswema and that there has been extensive geological work over their tenements but it does not state if any new work has been recently done.
- Arc has previously claimed two significant early discoveries at Cheyeza East and Muswema North but have not published any assays since then so it is difficult to form a view.
- Cheyeza: Somehow we suspect we would know had the results shown significant intersections of copper at Cheyeza but we live in hope.
- Muswema: on 15 February 2021 Arc reported “we continue to have extremely exciting results over the past year principally at Fwiji and at Muswema” where they drilled 3,000m.
- Arc did release three intersections from Muswema on 9 December 2020 but nothing since then. Arc reported the following from Muswema but nothing since:
- 4.5m grading 0.22% copper from 34m down hole and
- 4m grading 0.42% copper from 175m in one hole and
- 4.5m grading 0.39% copper from 215m in another.
Conclusion: We would normally expect to see results starting to come through within 4-6 weeks of drilling in this end of Zambia but given Arc’s virtual monastic silence on drill results in recent years we are not hopeful for anything meaningful. We suspect “The dead hand of Anglo” may be at work again.
*The analyst holds shares in Kavango Resources
Galileo Resources (GLR LN) 1.13p, Mkt Cap £13.1m – Drilling starts on exploration licence in the Western Foreland, Zambia
- Galileo Resources reports that it has started drilling on its 52,083 hectares 28001-HQ-LEL licence in the ‘Western Foreland’ along the Angolan border in northwest Zambia.
- The company had previously announced its intention to run an initial 700m programme to test targets in a geological environment similar to that at the Kamoa-Kakula deposit which lies around 100 miles northeast along strike and across the border in the DRC.
- Today’s announcement confirms that drilling will test targets on a “number of potential lithological contacts … that could provide suitable conditions for the development of redox fronts and associated copper mineralisation … in the coming weeks”.
Conclusion: Initial drilling to test the possibility of a similar geology to the Kamoa Kakula deposit in the DRC has started in northwest Zambia. We await news as the drilling progresses.
Jubilee Metals Group (JLP LN) – 5.95p, Mkt cap £180m – Roan plant expansion completed and ramping up
- Jubilee Metals reports that the upgraded ‘front-end’ of its Roan copper plant in Zambia is now operational following the installation and commissioning of the electrical control system.
- Production is now ramping up to the 13,000tpa combined design capacity of the plant and the “existing sulphide concentrate capacity at Roan”.
- CEO, Leon Coetzer, said that he expected “an accelerated ramp-up of operations during the coming month”.
- The Roan expansion, combined with expansion at the Sable refinery, drive Jubilee Metals’ Zambian strategy to “reach a combined processing capacity of 25,000tpa of copper over the coming 12 months”.
- Reporting its interim results in February, the company confirmed that its Munkoyo Project near Sable in Zambia was “progressing to schedule with the first feed material from this exciting copper resource expected to be delivered to Sable during Q4 FY2024”.
Metals One plc (MET1 LN)– 0.8p, Mkt cap £2.6m – PEA to form basis of application for Strategic Project Status under EU Critical Raw Materials Act
- Metals One report the contracting of work for the PEA to Wardell Armstrong with completion due in November.
- The PEA is to incorporate the two JORC Black Schist resources in the Kainuu schist belt including:
- Rautavaara (R1) – JORC inferred: 28.1mt at 0.19% Ni, 0.10% Cu, 0.01% Co, and 0.38% Zn
- Paltamo (P5) – JORC inferred: 29 Mt at 0.18% Ni, 0.08% Cu, 0.01% Co, and 0.33% Zn
- The work will include:
- Probable mining and processing schemes
- Technical parameters requiring additional examination or test work
- General features and parameters
- Capital and operating cost estimates
- “The PEA report is expected to form the basis of the Company’s application for Strategic Project status under the EU Critical Raw Materials Act and therefore the project will be classified according to the United Nations Framework Classification for Resources.“
- The two resources are located between the regional mining and processing centre at Sotkamo which is around 90km north of Rautavaara and 50 km south of Paltamo in the east of Finland.
- Sotkamo, formerly known as the Talvivaara mine processes its ore through a bio-heap leaching process using bacterial leaching where metal sulphides are recovered from the pregnant leach solution as CuS, ZnS and (Ni-Co)S precipitates.
- The existing Sotkamo mine has capacity to produce around 30,000tpa of nickel in nickel sulphate and 55,000tpa of zinc and is ramping up to 200tpa of uranium in 2026.
- Terraframe reported net sales of €264m for H1 2004 with €65m of battery chemical sales and €181m of ‘metal intermediates’.
- Terrafame, is 64.4%-owned by Finnish Minerals Group, a special-purpose company wholly owned by the State of Finland and 32.9% by Galena funds (Trafigura) and 2.7% by Mandatum.
- The company appears somewhat shy on the production of actual contained metal numbers preferring to refer to the value of sales of battery chemicals.
- Geology: The Paleoproterozoic Kainuu Schist Belt, and the correlated North Karelia Schist Belt to the southeast, are economically important as they are the host sequences similar to the Terrafame and Outokumpu mines.
- Metals One is working towards the development of a number of Black Schist resources in Talvivaara-style shale-hosted nickel-zinc-copper-cobalt deposits.
- The team may also expand their exploration work to include Outokumpu-style copper-cobalt-zinc-nickel VMS ‘volcanogenic massive sulphide’ deposits.
- Processing: heap leaching normally carries relatively low capital and operating costs and is easily scalable if sufficient land is available.
- The bacterial leaching process is now well established at Sotkamo on this type of ore though there may be some variability between deposits.
Conclusion: The PEA will give investors a good guide as to the potential to replicate the Sotkamo mine and process plant in relation to the Rautavaara (R1) and Paltamo (P5) inferred resources. Metals One hold a number of other Black Schist prospects which could also be potentially drawn into future development plans.
Premier African Minerals (PREM LN) 0.06p, Mkt Cap £19m – Shares issued to settle liability
- Premier African Minerals reports that it has issued 2bn shares to China Zenith Capital “in settlement of the £1,383,092.27 liability (excluding interest) owed by the Company to China Zenith Capital Ltd”.
- The shares, which represent around 5.8% of the enlarged company, will be held in trust for China Zenith Capital and “sold under orderly market conditions over a period of time”.
- Today’s announcement confirms that if the proceeds of the “sale of the Settlement Shares are insufficient to meet the Zenith Liability, either additional ordinary shares will need to be issued by the Company (and sold for the account of Zenith), or the Company will make a payment in cash of any outstanding balance”.
- Conversely, sale proceeds in excess of the liability due will “be retained by the Company”.
Vulcan Energy Resources (VUL AU) A$3.7, Mkt Cap A$702m – Pre commercial lithium hydroxide facility commissioning
- The Company commenced commissioning of the lithium hydroxide optimisation plant (CLEOP) located just outside Frankfurt.
- The facility is a pre-commercial size plant that will process lithium chloride produced at Vulcan’s upstream operations recovering lithium from geothermal brines.
- The CLEOP plant will produce battery grade LHM and is planned to be used for training personnel, process optimisation works and product qualification required by offtake partners.
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
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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.
| Sources of commodity prices | |
| Gold, Platinum, Palladium, Silver | BGNL (Bloomberg Generic Composite rate, London) |
| Gold ETFs, Steel | Bloomberg |
| Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt | LME |
| Oil Brent | ICE |
| Natural Gas, Uranium, Iron Ore | NYMEX |
| Thermal Coal | Bloomberg OTC Composite |
| Coking Coal | SSY |
| RRE | Steelhome |
| Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite, Rutile | Asian Metal |
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