SP Angel Morning View -Today’s Market View, Tuesday 10th September 2024

Gold climbs as traders wait for US inflation data

MiFID II exempt information – see disclaimer below

We are very sorry to report the passing of Richard Morecombe, President and director at Panmure Gordon

• Richard ran the trading businesses at Numis Securities and latterly Panmure Gordon.
• Morky was well respected, well liked and known to be very fair in his dealing. He also worked harder and lived more of a life than most people.
• The City will be a lesser place without him and we are personally very sorry to hear to hear of his passing. We offer our deepest condolences Richard’s family, friends, colleagues and horses.

Artemis Resources (ARV LN) – Collaboration with ANAX Metals in the Pilbara, WA

Aterian plc* (ATN LN) – Field exploration targets identified in Botswana for copper and lithium brines

Bushveld Minerals* (BMN LN) – Cost saving initiatives

Centamin* (CEY LN) – Recommended US$2.5bn offer from Anglogold Ashanti

Central Asia Metals (CAML LN) – Robust interims driving with 9p dividend announced

Empire Metals* (EEE LN) – Drilling to support metallurgical testwork in anatase weathered cap

Orosur Mining* (OMI LN) – Successful re-acquisition of Anzá gold project in Colombia

Power Metal Resources* (POW LN) – Letter of Intent signed with Saudi miner for exploration agreement

Sovereign Metals* (SVML LN) – ASX price move query

Sylvania Platinum (SLP LN) – Annual results show healthy cash balance despite PGM downturn

Gold ($2,505/oz) climbs as traders wait for US inflation data

• Gold prices continue to hover around the $2,500/oz mark, having fallen to $2,475/oz last week.
• The price has been supported by a rally in US Treasuries, with the 10 year falling below 3.7% yesterday before ticking higher.
• The US dollar is strengthening higher, whilst the Yen rally pauses.
• Traders will be watching the US election debate tonight, whilst CPI data due tomorrow should highlight progress on inflation.

Economics

Fed Rate Cuts: Has the Fed waited too long to avert a soft landing and will rapid rate cuts hit confidence?

• Previous rate cuts:
  • 1990 recession – 0.25% cut,
  • 1995 Mexican peso crisis – 0.5% cut,
  • 1998 Asian crisis – 0.75% cut,
  • 2001 dot-com collapse – 1.25% cut,
  • 2007 Global Financial Crisis – 1.25% cut,
  • 2019 Covid crisis – 1.25% cut.
• The market expects rates to fall 1% this year in four 0.25% rate cuts this year
• The market expect a total of 10 rate cuts by 2026 to take rates down to 2.75-3% from 5.25-5.50% now
• The Dot Plot, representing differing Fed member views is looking nine rates cuts to take the market to 3.00-3.35% in 2026
• The market appears to be looking for more rate cuts than the Fed Dot Plot is forecasting suggesting marked slowdown in US employment.
• Fed Governor Waller yesterday mentioned prospect of front loading rate cuts
• We expect the Fed to cut rates by 0.25% next week and possibly 0.5% shortly after the election.
• While the Fed Dot Plot signaling looks to be behind the times, we suspect the Fed is keen to cut rates to lower than long-term averages to support new mortgage applications and the property market in general.
• Inflation does not present the risk seen yesterday with unemployment now seen as the new challenge to be tackled. Fortunately, the ongoing process of the reshoring of manufacturing.

China – Exports hit a two-year high while imports disappoint in August.

• Overseas shipments reached $309bn, the highest level since September 2022, strongly beating estimates.
• Increasing trade tensions and slowing growth in the West may weigh on the outlook.
• Meanwhile, domestic market demand appears to be struggling amid ongoing property market crisis and rising deflation risks.
• The market reacted to the news negatively with regional equity index CSI 300 down and Chinese 10 year yields hitting a new record low.
• Exports (%yoy, Aug/Jul/Est): 8.7/7.0/6.6
• Imports (%yoy, Aug/Jul/Est): 0.5/7.2/2.5

UK – Wages growth slowed to a two year low in the three months in July in a sign of slowing wage pressures.

• Employment came in stronger than expected with jobless rate ticking down.
• The pound was little changed with the market continuing to heavily discount chances of a rate cut at the coming meeting in September and expecting a potential 25bp reduction in November instead.
• Av Wages (pp, Jul/Jun/Est): 4.0/4.6(revised from 4.5)/4.1
• Av Wages ex Bonus (pp, Jul/Jun/Est): 5.1/5.4/5.1
• Unemployment Rate (pp, Jul/Jun/Est): 4.1/4.2/4.1
• Employment Change (3m, Jul/Jun/Est): 265k/97k/123k

EU – Mario Draghi presented a report commissioned by the EU outlining a “new industrial strategy to Europe”.

• The report highlights changes to economic policy of the block involving €800bn in annual investments to fund necessary reforms.
• Key recommendations include relaxing competition rules for market consolidation in sectors such as telecoms, integration of capital markets by centralising market supervision, greater use of joint procurement in the defence sector and a new trade agenda to increase regional economic independence, FT reports.
• Draghi warned during the presentation to the European Commission that without an increase in investment and improved productivity, Europe would fall further behind the US and China.
• €750-800bn in required investments would amount to 4.4-4.7% of EU GDP, the level not seen since 1970s.

Ukraine – A massive drone attack was launched by Ukraine overnight with Moscow claiming 144 drones to have been recorded including 20 over Moscow.

• Dozens of flights were suspended with main international airport in Moscow closed.

Currencies

US$1.1042/eur vs 1.1060/eur previous. Yen 143.52/$ vs 143.26/$. SAr 17.863/$ vs 17.940/$. $1.310/gbp vs $1.310/gbp. 0.666/aud vs 0.667/aud. CNY 7.119/$ vs 7.115/$

Dollar Index 101.62 vs 101.48

Precious metals:         

Gold US$2,505/oz vs US$2,494/oz previous

Gold ETFs 83.0moz vs 83.0moz previous

Platinum US$946/oz vs US$934/oz previous

Palladium US$964/oz vs US$926/oz previous

Silver US$28.5/oz vs US$28.1/oz previous

Rhodium US$4,800/oz vs US$4,750/oz previous

Base metals:   

Copper US$ 9,111/t vs US$9,101/t previous

Aluminium US$ 2,350/t v US$2,342/t previous

Nickel US$ 15,860/t vs US$15,930/t previous

Zinc US$ 2,711/t vs US$2,733/t previous

Lead US$ 1,966/t vs US$1,960/t previous

Tin US$ 30,900/t vs US$31,000/t previous

Energy:           

Oil US$71.6/bbl vs US$72.1/bbl previous

• Crude oil prices stabilised as Tropical Storm Francine continues to strengthen towards hurricane strength as it moves across the Gulf of Mexico.
• India announced plans to convert one-third of the existing heavy-duty vehicles and ensure that one-third of new trucks use LNG rather than diesel as fuel over a period of five to seven years.

Natural Gas €37.6/MWh vs €76.7/MWh previous

Uranium Futures $79.6/lb vs $79.7/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$90.9/t vs US$91.8/t

Chinese steel rebar 25mm US$470.2/t vs US$470.6/t

Thermal coal (1st year forward cif ARA) US$119.3/t vs US$120.5/t

Thermal coal swap Australia FOB US$138.3/t vs US$139.5/t

Coking coal Dalian Exchange futures price US$171/t vs US$174.8/t

Other:  

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

NdPr Rare Earth Oxide (China) US$62,226/t vs US$61,280/t

Lithium carbonate 99% (China) US$9,762/t vs US$9,768/t

China Spodumene Li2O 6%min CIF US$740/t vs US$740/t

Ferro-Manganese European Mn78% min US$995/t vs US$995/t

China Tungsten APT 88.5% FOB US$333/mtu vs US$333/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$320/t vs US$320/t

China Rutile Concentrate 95% TiO2 US$1,370/t vs US$1,370/t

Spot CO2 Emissions EUA Price US$72.4/t vs US$72.4/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$290.0/t

Germanium China 99.99% US$2,575.0/kg vs US$2,575.0/kg

China Gallium 99.99% US$445.0/kg vs US$445.0/kg

Battery News

Panasonic Energy begins mass production of new ‘groundbreaking’ 4680 EV batteries

• Panasonic Energy has finalised preparation for mass production of 4680 cylindrical lithium-ion batteries for EVs, the company said in a press release.
• The 4680 cells offer five times the capacity of its conventional 2170 cells, extending EV driving range, reducing required cells per pack, and lowering EV production costs.
• The Wakayama factory in Japan has been revamped to serve as the primary facility for 4680 production.
• Panasonic Energy aims for carbon neutrality, using renewable energy sources like solar and wind power at the Wakayama factory, with plans to achieve this at all global bases by 2029.
• The company views the 4680 battery as a key innovation to expand EV adoption and promote a more sustainable society.

Northvolt to consider job cuts as it scales back rapid expansion

• The battery maker Northvolt has announced it will suspend cathode active material production at its gigafactory in Sweden and cut costs under a plan that could lead to job losses as the company scales back its rapid expansion.
• The company, had been developing a complete supply chain for their battery cell production, but will now just focus on large-scale cell manufacturing.
• Following strategic review, the company dropped plans for another cathode active material production plant in Borlange, Sweden.
• Northvolt’s decision to pause cathode active materials (CAM) production at its Skelleftea gigafactory means the company will need to import it instead.
• Northvolt’s first gigafactory has an annual capacity of 16GW, but is producing just 1GWh per year.

EVs see 20% share in German sales for August

• August saw plugin EVs take 20.6% share in Germany, down from 37.0% share yoy.
• August 2023 sales were an outlier, distorted by a rush to purchase EVs before incentives for commercial buyers ended in September 2023.
• BEVs are now around the level they were in 2022, but PHEV share has halved since then.

Electric pickup trucks and SUVs reshaping the US auto landscape

• The US electric truck market reached nearly 58,000 vehicles sold in the first half of 2024, reflecting a growing niche in the US auto industry.
• Tesla, GM, Rivian, and Ford have introduced high-priced, luxury electric pickups, some selling for over $100,000, reshaping consumer expectations.
• Five years ago, six-figure pickup trucks were rare, but advanced battery technology and features have now changed consumer perspectives and helped justify higher price points.
• Tesla Cybertruck, Ford F-150 Lightning, Rivian R1T, and GM models (GMC Hummer EV, Sierra Denali, Chevrolet Silverado) are the top sellers in the market and all cost over $100,000.
• Electric truck sales represent less than 1% of US light-duty sales but grew by 35% from the previous quarter.
• The average traditional truck price is $65,713, but electric versions target wealthier demographics.
• The electric truck market is expected to grow, redefining pickup truck performance and pricing norms.

Company News

Artemis Resources (ARV LN) 0.68p, Mkt Cap £12.9m – Collaboration with ANAX Metals in the Pilbara, WA

• Artemis Resources has secured a Memorandum of Understanding (MoU) with ASX-listed ANAX Metals (ANX AU) to investigate the potential for treating copper ore from Artemis Resources’ open-pit Carlow project at ANAX Metals’ proposed and permitted Whim Creek processing facility approximately 115km southwest of Port Hedland in the Pilbara region of WA.
• The Whim Creek hub which aims to establish a “substantial” West Australian copper production hub which “will consist of a new 400,000 tonnes per annum concentrator, and a refurbished heap leach facility capable of treating oxide, transitional and supergene ore”.
• Agreement on copper may also “potentially include … [the] … Whim Creek, Sulphur Springs Oxide, Whundo and Carlow Castle” projects.
• The MoU also sets a framework for cooperation on “gold exploration … [on ANAX Metals’ tenements] … in close proximity to De Grey Mining’s Hemi gold project”.
• Today’s announcement describes how the cooperation between Artemis Resources and ANAX Metals “allows each company to focus on its strengths” harnessing Artemis Resources’ exploration expertise and ANAX Metals’ mining and processing skills to help deliver lower “fixed costs due to economies of scale … [as well as reduced] … project cost and environmental footprint due to utilisation of single processing facility”.
• The MoU covers a 12 months period during which both companies “will commence relevant assessments and provide market updates” with options for processing of Artemis Resources’ Carlow copper ore including “an outright asset sale/purchase agreement, joint venture or joint mining and funding agreements”.

Conclusion: Evaluation of the benefits of cooperation with ANAX Metals provides both companies with an opportunity to deploy their specific skills while sharing the cost and operational benefits of a potentially larger scale project.  We await further news with interest.

Aterian plc* (ATN LN) 59p, Mkt Cap £5.6m – Field exploration targets identified in Botswana for copper and lithium brines

(Rio Tinto jv has the option to invest US$7.5m in two stages to earn up to 75% in the HCK lithium and tantalum hard rock prospect in Rwanda)

(Aterian holds a 70% interest in Kinunga Mining Limited which holds the HCK licence alongside HCK Mining Company Limited which has a 30% interest.

Aterian also holds a 90% in Atlantis Metals which holds its licenses in Botswana)

• Aterian reports progress in work on its lithium brine and copper-silver exploration license portfolio in the Makgadigadi and Kalahari regions of Botswana.
• The company acquired the portfolio through the acquisition of a 90% interest in Atlantic Metals in April this year.
  • Three licenses cover 2,517sqkm over the Makgadikgadi salt pans. These are prospective for lithium brine.
  • Seven licenses are held over the KCB Kalahari Copper Belt region for copper-silver covering 1,969sqkm.
• Exploration:  the team are working with data from the BGO ‘Botswana Geoscience Institute’ to understand the underlying geology and select targets based on mapping the contact between the D’Kar Formation and the underlying red beds of the Ngwako Pan Formation which is the stratigraphic target for copper-silver mineralisation in the KCB.
• So far the geophysics within the KCB has identified three priority areas and a further four areas withing the KCB “will be explored after the initial work on the priority areas has been completed”.
• Blind targets:  satellite imagery with interpreted bornite, chert, goethite and illite are also being used to select targets along with anomalous gas emissions of CO2 and He ‘helium’.
• One licence is situated approximately 50 km east of MMG’s KCM ‘Khoemacau Copper Mine’ Zone 5 deposit which hosts 92.9mt @ 2.0 % Cu and 21 g/t silver.
• Zone 9 Cu-Ag is also within 30 km of this license area while another is just 7 km west of the KCM Banana Zone, which hosts 157mt @ 0.86% Cu and 11 g/t silver.
• MMG acquired Cuprous Capital’s Khoemacau Copper Mine for US$ 1.73 bn.
• Lithium brines: “Sua Pan marks the southern end of the East Africa Rift System and is situated on the eastern edge of the Magondi Belt.
  • Faulting in the pans parallels the northeast-southwest Magondi trend.“
  • “Two blocks  (Sua 1 and Sua 2) have been selected for possible follow-up.
  • These have been chosen as they appear to be fault-bounded blocks, which may have the potential for entrapment of brine solutions.”
  • Management are: “evaluating a gravimetric survey of selected areas to model the main structures controlling brine placement or containment.
  • While the gravimetric survey is being conducted, a technician will also locate the existing boreholes identified in the national database and report their location and condition for potential water/brine sample collection”.
• Makgadikgadi Pans region officially declared a ‘Lithium Zone’ by the Ministry of Mines and Energy since 2022 due to a history of known lithium brine occurrences.
  • “Historical data reported in a 1980s study of the Sua Pan brines by the US Trade and Development Program indicated anomalous lithium values.“
• The Kalahari is semi-desert in the south-west and receives some 5-10 inches of rainfall a year with high evaporation rates in the summer.
• The North east Kalahari receives much more rainfall with this water seeping fast through the sand into aquifers below. We expect any brine project in the region to require the use of DLE technology.

Conclusion: Aterian has completed its early evaluation of the Botswana licences identifying 3 prospective targets for copper exploration in the KCB and a further three prospective lithium brine targets.

*SP Angel acts as Broker to Aterian Plc

Bushveld Minerals* (BMN LN) 0.6p Mkt Cap £14m – Cost saving initiatives

• The Company announced a series of turnaround measures aimed at reducing costs and improving Vametco competitiveness.
• The team expects initiatives to potentially generate savings of $8-10m on an annualised basis by the end of 2025.
• Proposed initiatives include:
  • Reducing headcount at both Vametco a Head Office;
  • Transferring procurement of selected goods and services onto longer term contracts offering an opportunity to negotiate lower prices with preferred OEM suppliers;
  • A number of initiatives for yield improvement in the processing plant from kiln to finished goods reducing unit costs:
  • Expanding the barren dam capacity at Vametco with works to commence 1Q25.
• The Company is focusing on ramping up Vametco production rates to sustainable 240mtV per month by 4Q24 while divesting Vanchem, Mokopane and downstream energy business.

Conclusion: The team is aiming to reach run rates of $8-10mpa in costs savings by the end of 2025 as the Group reduces the scale of operations focusing on ramping up production at Vametco to sustainable 240mtV per month rates. Initiatives will help the Group competitiveness and reduce the cash burn ahead of a potential turnaround in the vanadium market.

*SP Angel act as nomad and broker to Bushveld Minerals

Centamin* (CEY LN) 149p, Mkt Cap £1.4bn – Recommended US$2.5bn offer from Anglogold Ashanti

• Centamin reports that it is recommending a US$2.5bn offer to acquire the company from Anglogold Ashanti.
• The offer comprises 0.06983 New AngloGold Ashanti Shares; and $0.125 in cash for each Centamin share and post-transaction, Centamin shareholders will own ~16.4% of the enlarged Anglogold Ashanti.
• Centamin shareholders will retain their interim dividend entitlement of US¢2.25/share which is payable on 27^th September.
• Anglogold Ashanti says that the “addition of … [production from Centamin’s Egyptian mine at] … Sukari immediately increases AngloGold Ashanti’s annual gold production by circa 450koz to over 3Moz for the 12 months ended 31 December 2023 … [and that it] … expects the Transaction to be accretive to free cash flow per share in the first full year post-Completion” .
• Centamin’s CEO, Martin Horgan, said that “Centamin stewardship of the Sukari mine from discovery through development and into continual operation since 2009 is a demonstration of the world-class mining potential of Egypt. Completion of the reinvestment phase alongside consistent operational delivery underlines the Tier 1 status of Sukari as a safe, low-cost and large-scale gold producer”.
• Centamin also recently reported the highlights of its Definitive Feasibility Study (DFS) for the Doropo gold project which describes an investment of US$373m delivering a mine delivering an average of 167,000oz pa of gold (and 207,000oz pa over the first 5 years) over a 10 year mine life and generating an after tax NPV_8% of US$426m and IRR of 34%.
• A final investment decision on the development of Doropo is expected during H1 2025 although Anglogold Ashanti will no doubt have their own timetable and capital allocation priorities.
• Centamin has also issued an announcement describing the current operating status in which it confirms that so far in Q3 the Sukari mine has produced 93,278oz of gold at a cash cost of US$715/oz and US$1,290/oz of the 102,563oz sold on an all-in-sustaining-cost basis.
• Year to date gold sales stand at 311,832oz at a cash cost of US$900/oz of production and AISC of US$1,318/oz sold.
• The company also confirms capital expenditure of US$36.1m and US$125.5 YTD as well as adjusted free cash-flow of US$75.5m during the quarter to date and US$118.3m so far in 2024.
• Centamin also reconfirms its full year production guidance range of 470-500,000oz with cash costs of US$700-850/oz and all-in sustaining costs between US$1,200-1,350/oz sold.
• Capex guidance for the year is maintained at US$215m including US$112m to sustain operations and a further US$103m “of which US$58 million is allocated to growth projects” although the guidance excludes “US$91 million of sustaining deferred stripping reclassified from operating costs”.

*A member of the SP Angel research team holds an interest in Centamin shares

Central Asia Metals (CAML LN) 179p, Mkt Cap £308m – Robust interims driving with 9p dividend announced

• Revenues up 4.2% at $97.5m (1H23: $93.6m) on higher copper sales and better prices for copper (+6%yoy) and lead (3%yoy).
• EBITDA little changed at $49.1m (1H23: $48.9m) as higher cost inflation nearly compensated for better realised commodity prices.
• Kounrad C1 cash costs averaged $0.78/lb Cu (1H23: $0.67/lb Cu) delivering 72% EBITDA margins.
• Sasa C1 cash costs averaged $0.70/lb ZnEq (1H23: $0.77/lb ZnEq) translating into 37% EBITDA margins.
• Group C1 cash costs on CuEq basis averaged $1.70/lb (1H23: $1.56/lb).
• FCF climbed to $22.0m (1H23: $12.8m).
• Interim dividend announced of 9p (1H23: 9p) equivalent to ~10% DY (annualised) on current spot price.
• The Company had $56.3m in cash along with $2.0m in debt/leases as of period end.
• The Company reiterated production guidance at 13-14kt Cu at Kounrad and at lower end of the guidance for 19-21kt Zn and 27-29kt Pb at Sasa.

Empire Metals* (EEE LN) 7.4p, Mkt Cap £44m – Drilling to support metallurgical testwork in anatase weathered cap

• Empire Metals has started diamond drilling at its high-priority Thomas and Cosgrove prospects at the Pitfield titanium project.
• 1000m of diamond drilling will be completed next month.
• The core will be used both to gain an understanding of the geological structure of the weathered cap, and for metallurgical test work.
• The weathered cap contains a dominance of anatase, which Empire has identified as a high-purity, higher value feedstock potential.
• Five large diameter holes will be drilled at PQ size at each of the prospects to a depth of 100m downhole.
• Titanite is believed to increase at depth as sandstone transitions from weathered to fresh.
• Empire has hired a Senior Geologist, Tsog Batsaikhan, to support their Exploration Manager.
• Metallurgical testing will be accelerated as focus shifts to the anatase-rich ore.
• Previous core drilled has been submitted for crushing/grinding to begin mineral concentration testwork.
• Empire will conduct gravity separation testing over the coming weeks.

Conclusion: Empire is exploring the potential for various mineral processing and hydrometallurgical options for processing both the anatase and titanite ore at Pitfield. There remains limitations in long-term supply of high-grade rutile-grade feedstock, and Empire’s management is looking to offer an alternative source of supply to the pigment industry. Today’s drilling programme will provide additional core for metallurgical testing, whilst also further boosting the team’s understanding of the geological structure of the two high-grade Tio2 zones. Pitfield remains a flowsheet story and Empire si taking the necessary steps to derisk the project and progress it towards a development story.

*SP Angel acts as Nomad and Broker for Empire Metals

Orosur Mining* (OMI LN) 3.8p, Mkt Cap £4.6m – Successful re-acquisition of Anzá gold project in Colombia

(Anzá 100% indirect ownership proposed)

• Orosur Mining provides an update on its Colombian transaction over the flagship Anzá project.
• The Company has now signed a Share Purchase Agreement to reassume 100% ownership of Anzá from Newmont and Agnico Eagle.
• The agreement sees a 1.5% NSR on all future mineral production, alongside Fixed Royalties of an aggregate amount of $75/oz au for the first 200koz GEO.
• Orosur will hold the right to buyback a 0.25% interest of each of the respective 0.75% royalties, with a subsequent option to buy back an additional 0.25% interest. Each 0.25% interest will be $5m.
• The asset had been subject to a 50/50 JV between Orosur and a Newmont/AEM split.
• The asset has seen 48,000m of drilling at the APTA prospect.
• Recent drilling was undertaken at Pepas, north of Anzá, where high grade gold has been drilled from surface.
• Orosur will now focus on Pepas, and the technical team have been out to site to begin permitting for a ramp up in exploration activities.

Conclusion: Orosur has been in negotiations with Newmont and Agnico for some time to regain control of their previous flagship gold asset in Colombia. This has now been secured, providing Orosur with a highly encouraging prospect in the Pepas discovery, which showed thick intercepts of gold mineralisation over 80m at 3g/t Au from surface, including 42m at 5g/t Au.

*SP Angel acts as Nomad and Broker to Orosur Mining

Power Metal Resources* (POW LN) 17p, Mkt cap £19m – Letter of Intent signed with Saudi miner for exploration agreement

• Power Metal Resources has signed a letter of intent to enter a binding agreement with Al Masane Al Kobra Mining (AMAK).
• The agreement sees POW offered to spend $3m to earn a 49% stake in the Qatan exploration licence in Saudi.
• AMAK currently holds two producing copper/zinc and gold/silver mines in country, alongside 21 exploration tenements.
• AMAK currently produces 25-35koz Au in dore, 40-50koz Ag in dore and 30-40kt copper in concentrate and 60-80kt zinc in concentrate.
• The Qatan tenements are prospective for base metals and precious metals and cover 72.247 km².
• It lies 70km of AMAK’s mines and 32km south of Yudamah.
• Qatan has seen limited exploration activity since 2017, when SRK conducted a data review on the Habdah prospect.
• AMAK will support POW in stakeholder relations, technical activities, and tenement obligations.
• POW will design, conduct and fund all exploration to the earn-in amount.
• POW will target defining an accredited maiden MRE for the Habdah prospect within the Qatan licence block.
• Both parties expect a binding agreement within 90 days of executing the LoI.

Conclusion: Power Metals entered Saudi Arabia in search of strategic partnerships and joint venture agreements last year and today’s announcement validates this decision. The Company has formed a strategic partnership with an in country producer, providing leverage to Saudi’s underexplored and highly prospective geology. Whilst this is non-binding currently, both parties expect to sign the JV within 90 days. Power joins Robert Friedland’s Ivanhoe Electric and Barrick Gold in looking to take advantage of the Arabian Shield’s prospectivity.

*SP Angel acts as Nomad and Broker for Power Metal Resources

Sovereign Metals* (SVML LN) 30.9p, Mkt Cap £200m – ASX price move query

(Sovereign currently holds 100% of the Kasiya project. The government has a right to a 10% free carry in the project.

Rio Tinto acquired an initial strategic interest of 15% for a $40.6m and has also bought another A$0.7m of stock to raise its stake to 19.9%)

STRONG BUY – Valuation 55p

• Sovereign Metals has responded to a price query by the Australian Stock Exchange
• Sovereign’s shares fell 22% to A$0.51/s on the ASX this morning recovering to finish down 9.85% on the day. The shares have fallen 7.76% on the AIM market of the LSE today.
• Management state the company is not aware of any information regarding the recent trading in their shares.
  • “the Company is not aware of any information that has not been announced which, if known, could be an explanation for recent trading in the securities of the Company. 
  • “The Company has no other explanation of the recent trading in the securities of the Company.
  • The Company confirms that it is in compliance with the listing rules, in particular, Listing Rule 3.1.
  • The Company confirms that its responses to the questions above have been authorised and approved in accordance with its published continuous disclosure policy or otherwise by its board or an officer of the Company with delegated authority from the board to respond to ASX on disclosure matters.”

Conclusion: This is an unusual and uncharacteristic share price movement. We speculate it could be the result of a poorly executed trade or the rapid sale of a financially distressed shareholder.

We can not see any news within or from Malawi that might affect the shares. The share move may prove to be an opportunity to buy the shares.

*SP Angel act as Nomad and broker to Sovereign Metals. The analyst has recently visited the Kasiya mine site. We highly recommend the Malawi coffee beans sold in Lilongwe airport.

Sylvania Platinum (SLP LN) 49p, Mkt Cap £128m – Annual results show healthy cash balance despite PGM downturn

• Sylvania recorded EBITDA of $13.5m over the year, down from $66m in FY23.
• The Company produced 72.7k 4E PGM ounces vs 75.5koz same period last year.
• Average 4E Gross Basket price of $1,340/oz vs $2,090/oz last year.
• Thaba JV reportedly on track, with PGM beneficiation plants progressing.
• Volspruit Scoping Study delivered, showing a pre-tax NPV of $70m and a 14 year LOM.
• Company expects Thaba JV to begin production 2H25, with steady state expected in June 2025.
• Annual production guidance of 73-76koz 4E PGM for FY25.
• Regarding CAPEX, management states that ‘with material expansion and CAPEX projects planned this year and next, and set against the on-going price environment, we will continue to prioritise capital returns…. Alongside value creation.’
• Cash balance at period end stood at $98m with no debt.

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

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.

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

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Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

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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