SP Angel Morning View -Today’s Market View, Thursday 9th January 2025

Gold climbs as US and UK bond market sell-off on China buying and renewed inflation concerns

MiFID II exempt information – see disclaimer below

SP angel received great news this week from the LSEG StarMine commodities forecast polling team

• SP Angel – 1^st in LSEG StarMine Precious Metals poll for 2024
• SP Angel – 2^nd in LSEG StarMine Base Metals poll for 2024

Blencowe Resources (BRES LN) – Final phase of resource drilling underway at Orom Cross. Uganda

Central Asia Metals (CAML LN) – 2024 operations update

Equinox Gold (EQX CN) – Annual gold production boosted by Greenstone progress

Ferrexpo (FXPO LN) – 2024 Production Report

Ivanhoe Mines (IVN CN) – 2024 production results and 2025 guidance

Lundin Gold (LUG CN) – 2024 production results exceeds guidance

Savannah Resources* (SAV LN) – Phase 2 drilling commences

Gold ($2,666/oz) climbs as US and UK bond market sell-off on China buying and renewed inflation concerns

• Gold prices have edged higher out of their recent trading range between $6,600-6,630/oz.
• Prices have now climbed to $2,666/oz, following some major moves in international bond markets.
• The US Treasury yield has held the higher levels around 4.68%, despite ADP employment data coming in weaker than expected.
• Focus will be on Friday’s NFP data, which should act as a key catalyst either way following a sharp move higher in government borrowing costs.
• However, this has had a limited impact on gold, with the correlation between US rates, the dollar and gold continuing to fade.
• Instead, China is becoming the key driver of gold prices, and reports that China has now added gold reserves for the past two months is likely providing major support to gold amid a traditionally negative environment,
• Chinese retail are also likely supporting the price, with the CNY sliding against the dollar despite the PBoC continuing to intervene.
• The Yuan is sitting at its lowest level since September 2023, as the dollar strengthens against most currencies.
• Chinese investors have limited options for haven assets, with the property market slump extending and equities failing to rally despite government stimulus measures.

Uranium – Constellation Energy is in talks to acquire Calpine in a deal valued at up to $30bn.

• Constellation runs the largest fleet of conventional nuclear reactors in the US and seeking to gas fired generation capacities to benefit from forecasts for increased power demand.
• Calpine operates a fleet of 78 gas plants and other energy facilities across the US, FT writes.

Lithium – China reports another mineral discovery, ‘finding’ 2,800km lithium belt

• The Chinese Ministry of Natural Resources reported the discovery yesterday of a 2,800km lithium belt in the Songpan-Ganzi basin.
• This follows recent announcements of major copper and gold discoveries.
• The West Kunlun-Songpan-Ganzi lithium belt reportedly holds 6.5mt of proven lithium reserves, with the resource potential suggested at over 30mt LCE. We would be sceptical of such numbers.
• The belt is believed to host both salt lake brines and lithium mica (lepidolite) reserves.
• This follows reports of a major
• Media reports suggest that improved DLE technology in China and low-grade hard rock processing developments have bolstered the economics of the region’s deposits.
• China has previously boosted lithium production from major technological breakthroughs in the Qinghai salt lakes, processing lower-grade brines ‘economically.’
• The recent boom saw similar technology developments in in-country lepidolite processing capacity,
• We suspect China will continue to invest for the long-term in higher-grade and higher quality foreign orebodies, as seen in Ganfeng’s progression of Goulamina in Mali and Cauchari Olaroz in Argentina alongside Zijin’s advancement of the large-scale Manono deposit in the DRC.

Economics

Global selloff in government bonds as market edges close to Trump tariffs

• Global bond markets are recording seismic changes on investor concerns relating to Trump tariffs.
• The impact of substantial tariffs into the US from China, Japan, Canada, Mexico the EU etc… looks like a potentially catastrophic tax against the rest of the world.
• It will also raise inflation in the US hold interest rates higher and support the US dollar.

US – markets are closed today in remembrance of former president Jimmy Carter

China – Consumer prices inflation is drawing nearly to a halt in December while factory gate deflation extended into a second year

• CPI came in at 0.1%yoy, down from 0.2% in November and the weakest pace since Aprill.

UK – Sterling falls to 14-month low while bond yields rise to their highest level since the global financial crisis

• UK 10-year Gilt rates rose this morning, resting at 4.89%. 30-year gilt yields are now 5.45% a new high since Liz Truss’ disastrous short tenure.
• The move indicates the UK Chancellor is going to struggle to balance the books and will need to come to the market for more finance.
• Sterling also fell to a 14-month low against the USD and is also falling against the euro.
• While the UK performed much better than officially forecast last year, the outlook is challenged by the slowdown in Europe.
• Trump tariffs, if imposed on the UK, will also hit business hard..
• The sell off was driven by increasing worries about the government’s high borrowing needs, the cost of supporting the national debt and increasing risks of stagflation.
• Increasing interest rates risk Chancellor’s headroom against the current budget rules that in turn might see additional borrowing or further budget adjustments.

Chile – Government rejects environmental permit for $2.5bn Andes Iron, Dominga iron and copper mine

• The mine has been rejected on unique mix of species in the area, including the Humboldt penguin and other aquatic mammals.
• The rejection claims Andes Iron has failed to take account of two plants which help sustain tricahue, an endangered parrot.
• The Cruz Grande port was recently given an environmental permit despite being closer to the penguins.

Munich Re estimates hurricanes, storms, floods and other natural disasters caused an estimated $140bn in insured losses in 2024 vs $106bn in 2024

• 2024 was one of the most expensive years on record according to Munich Re today (Reuters).
• The insurer said “climate change is showing its claws” as global temperatures continue to rise, contributing to more frequent and extreme weather events.
• “One record-breaking high after another – the consequences are devastating. The destructive forces of climate change are becoming increasingly evident,” according to a Munich Re management board member.
• Total losses from natural catastrophes, including those not covered by insurance, were $320bn in 2024 vs $268bn in 2023.
• Hurricanes’ Helene and Milton in the US caused the biggest losses.
• The question is, are there more and worse natural disasters than before, or is the press simply reporting more with the added impact of live video footage of disasters as they unfold?
• Having suffered the impact of a sudden and severe flood on the River Glyme during Storm Bertie, I feel concerned at the broader impact of so many natural disasters disrupting lives and economic development.
• Never will we look at a natural disaster in the same way again!

Currencies

US$1.0300/eur vs 1.0330/eur previous. Yen 158.12/$ vs 158.22/$. SAr 18.927/$ vs 18.808/$. $1.228/gbp vs $1.245/gbp. 0.619/aud vs 0.623/aud. CNY 7.332/$ vs 7.332/$.

Dollar Index 109.22 vs 108.839 previous.

Precious Metals

Gold US$2,665/oz vs US$2,652/oz previous

Gold ETFs 82.9moz vs 82.8moz previous

Platinum US$956/oz vs US$952/oz previous

Palladium US$927/oz vs US$925/oz previous

Silver US$30.2/oz vs US$30.1/oz previous

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

Base metals:   

Copper US$9,066/t vs US$9,010/t previous

Aluminium US$2,527/t vs US$2,517/t previous

Nickel US$15,420/t vs US$15,435/t previous

Zinc US$2,849/t vs US$2,855/t previous

Lead US$1,946/t vs US$1,960/t previous

Tin US$30,080/t vs US$30,050/t previous

Energy:           

Oil US$76.2/bbl vs US$77.6/bbl previous

• Crude oil prices fell as the EIA reported a US inventory draw of 1mb to crude, offset by builds of 6.1mb to diesel and 6.3mb to gasoline stocks, with refinery utilisation up 0.6% w/w to 93.3% and output at 13.6mb/d.
• Energy prices edged lower as EU natural gas storage levels fell by 3.3% w/w to 68.8% full (vs 74.9% 5-Yr average), with aggregate storage at 790TWh after a large 8.7TWh draw in Germany.
• US Henry Hub natural gas prices were stable as the EIA reported a 40bcf w/w draw to 3,373bcf (vs -39bcf exp), with storage inventories falling to 0.1% below last year and 6.5% above the 5-year average.
• Norway announced average FY24 oil & gas production of 4.1mboe/d, which is the highest level since 2009 and included a record high of ~12bcf/d of natural gas. Moving forward, the Norwegian Offshore Directorate expects production to remain at a stable, high level before a gradual decrease toward the end of the 2020s.

Natural Gas €45.1/MWh vs €47.5/MWh previous

Uranium Futures $72.9/lb vs $72.9/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$97.1/t vs US$96.8/t

Chinese steel rebar 25mm US$485.2/t vs US$486.0/t

HCC FOB Australia US$195.0/t vs US$197.0/t

Thermal coal swap Australia FOB US$117.0/t vs US$120.4/t

Other:  

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

NdPr Rare Earth Oxide (China) US$54,555/t vs US$54,763/t

Lithium carbonate 99% (China) US$9,820/t vs US$9,821/t

China Spodumene Li2O 6%min CIF US$790/t vs US$790/t

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

China Tungsten APT 88.5% FOB US$338/mtu vs US$338/mtu

China Graphite Flake -194 FOB US$435/t vs US$435/t

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

Europe Ferro-Vanadium 80% US$25.6/kg vs US$25.6/kg

China Ilmenite Concentrate TiO2 US$290/t vs US$290/t

China Rutile Concentrate 95% TiO2 US$1,084/t vs US$1,084/t

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

Brazil Potash CFR Granular Spot US$295.0/t vs US$295.0/t

Germanium China 99.99% US$2,725.0/kg vs US$2,725.0/kg

China Gallium 99.99% US$385.0/kg vs US$390.0/kg

Company News

Blencowe Resources (BRES LN) 3.98p, Mkt Cap £11m – Final phase of resource drilling underway at Orom Cross. Uganda

• Blencowe Resources reports that it has started a planned 6,700m resource drilling campaign at its Orom Cross graphite deposit in Uganda.
• Drilling is aimed at upgrading the existing ‘Inferred’ resources to ‘Indicated and Inferred’ as the DFS “to support the expanded mining operations at Orom-Cross”.
• “A 21-year Mining Licence for the project was issued by the Ugandan Government in 2019 following extensive historical work on the deposit and Blencowe is now within the Definitive Feasibility Study phase as it drives towards first production”.
• The drilling programme “will involve drilling over the identified Camp Lode and Northern Syncline deposits, where the Company has already established an existing JORC Resource of 24.5Mt @ 6% … [and will also] … target extensions to the Northern Syncline (Western Limb) as well as the exciting new prospective Southern GT-01 target”.
• In addition to the resource drilling “several holes will be drilled to provide the necessary geotechnical information for the confirmation of pit design parameters and slope stability parameters for the project”.
• Additional work will also “include trenching and mapping on additional areas outlined from aeromagnetics, designed to identify further areas for future resource expansion”.
• The company notes that “the existing JORC Resource sits on just ~2% (as drilled to date) of the broader Orom-Cross licence”.
• Executive Chairman, Cameron Pearce said that the “extensive campaign will be one of the last key components to wrapping up the DFS … [which is expected to be completed during H1 2025 ]… and we aim to deliver considerably larger Resources and Reserves to support the higher production levels expected, as well as a longer life of mine”

Conclusion: Additional infill drilling to firm up the mineral resources at Orom Cross as part of the DFS is now underway. We await the DFS, expected during H1 2025, with interest.

Central Asia Metals (CAML LN) 158p, Mkt Cap £277m – 2024 operations update

• Copper zinc and lead producer CAML reports full year 2024 operations update.
• The Company met guidance at Kounrad, producing 13.4kt Cu over the year.
• Sasa zinc and lead production to the lower end of guidance, with 18.6kt Zn and 26.6kt Pb produced in concentrate.
• Company guides FY25 production at 13-14kt Cu, 19-21kt Zn and 27-29kt Pb.
• Cash balance stood at US$68m at 31^st December 2024 with no debt.
• Sasa transition to paste-fill method underway, whilst DST Plant completed and Central Decline also complete.
• 2024 CAPEX expected to the lower end of US$22-25m
• Total CAPEX for 2025 guided at US$18-21m, with US$4-5m directed at Kounrad and US$14-16m to Sasa.
• Exploration spend expected at US$2-3m.
• Company remains focused on building a project pipeline, and assay results from Aberdeen Minerals (CAML holds a 28.4% stake) due 1Q25.

Equinox Gold (EQX CN) C$8.35, Mkt Cap C$3.8bn – Annual gold production boosted by Greenstone progress

• Canadian gold producer Equinox produced 622koz over 2024, with 213koz produced in 4Q24.
• 2024 guidance stood at 590-675kz Au, although guidance was revised during the year.
• Greenstone produced 111.7koz Au over the year and is expected to ramp up further to hit nameplate at 390kozpa.
• Company held US$240m in cash and reduced debt by US$180m over 4Q24, with convertible loan note holds converting US$140m worth of equity.

Ferrexpo (FXPO LN) 97.5p, Mkt cap £555m – 2024 Production Report

• Ukrainian iron ore pellet and concentrate producer Ferrexpo reports Q4 and 2024 production data.
• The Company increased Q4 production by 18% to 1.5mt of pellets (Q3 1.27mt) bringing full year output to 6.07mt (2023 – 3.85mt).
• Interim Executive Chairman, Lucio Genovese welcomed the increased production which he said was “our best annual production performance since the start of the full-scale invasion in 2022”.
• He said that “The higher production reflects our ability to access Ukrainian Black Sea ports again and resume exports to customers in MENA and Asia. In total, 37 ocean going vessels were loaded in 2024, comprising 32 vessels from Ukraine and five from other ports, compared to just 19 (from Romania) in 2023”.
• He highlighted the “new annual record for the production of DR pellets” which amounted to almost 490kt for the year which, he said, “generate a higher revenue for the business, which is particularly relevant as we continue to experience high input costs”.
• Mr. Genovese welcomed the contribution of Ferrexpo’s employees who have “worked tirelessly to achieve this outcome … [and reminded his readers of] … the 700 of our employees who are serving in the Armed Forces of Ukraine. We pay our respects to the ten colleagues that were killed during 2024, bringing the total to 45 since the full-scale invasion. We mourn their passing and honour their brave strength”.

Ivanhoe Mines (IVN CN) C$16.9, Mkt Cap C$22.6bn – 2024 production results and 2025 guidance

• DRC copper producer Ivanhoe milled 8.9mt of Kamo Kakuka Phase 1 and 2 ore over 2024, at an average grade of 4.95%.
• Recoveries stood at 87% and copper in concentrate over the year from Phases 1 and 2, producing 382kt Cu in concentrate.
• From Phase 3, Ivanhoe milled 2.5mt of ore at an average grade of 2.7%, with recoveries of 83% for 55kt Cu in concentrate.
• Q4 combined production of 437kt Cu in concentrate marked a quarterly record.
• Ivanhoe guides for 520-580kt Cu for 2025 and 180-240kt Zn from Kipushi.
• The Company is then targeting 600kt for 2026 following improvements to power generation and optimisation initiatives.
• Kipushi is targeting 250kt Zn production in 2026.
• Kamoa Kakula CAPEX guidance for 2025 of US$1,420m – 1,670m vs $1,590m-1,990m guided for 2024.
• Ivanhoe plans to publish an updated PEA for the Platreef Phase 2 optimisation project and a new Phase 3 addition this quarter.

Lundin Gold (LUG CN) C$31, Mkt Cap $7.5bn – 2024 production results exceeds guidance

• Lundin Gold reports annual production results, producing 502koz in 2024 from Fruta del Norte in Ecuador.
• The results compare to 450-500koz guided for 2024.
• 4Q24 saw Fruta del Norte mill 427kt of ore at 11.3g/t Au, recovering 87%.
• FY24 saw 1,690kt ore processed at an average grade of 10.5g/t Au, recovering 87.8%.
• Average gold price realised in 2024 was $2,462/oz vs $1,958/oz in 2023.
• The Company is aiming to boost average mill throughput to 5,000tpd in 2025 vs 4,620tpd in 2024, also boosting recoveries to hit guidance of 475-525koz Au.

Savannah Resources* (SAV LN) 4.2p, Mkt Cap £95m – Phase 2 drilling commences

BUY – 18.1p

• The Company started Phase 2 of the DFS drill programme at the Barroso Lithium Project in Portugal.
• The programme will include 117 drillholes for ~13,000m including 9,000m in RC and 4,000m of diamond drilling.
• The programme is focused on infill, metallurgical and geotechnical at Grandao, Reservatorio and Pinheiro.
• Infill will aim to convert Inferred resource into the higher confidence category to be used in the mine plan.
• The team is mobilising 2 RC and 2 DD rigs operated by three contractors that have previously worked on the project.
• Lab assays are expected to start coming in from 1Q25 onwards.
• Resource updates are expected for Grandao, Reservatorio and Pinheiro that host ~80% of total 9.3mt currently included in the Inferred segment.

Conclusion: The team is mobilising four drilling rigs to start Phase 2 drilling after securing the temporary land access necessary to complete DFS. The study and environmental permitting are both expected to be completed in 2H25 with the Company remaining well capitalised reporting ~£18m as of November end.

*SP Angel acts as Nomad and Broker to Savannah Resources

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

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

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

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