SP Angel Morning View -Today’s Market View, Tuesday 11th June 2024

Copper prices continue to slip on stronger US dollar as investors wait to see new consumption

MiFID II exempt information – see disclaimer below

Anglo Asian Mining* (AAZ LN) – Copper concentrate pre-payment agreement

Critical Metals Corp (CRML US) – Binding heads of agreement to acquire Tanbreez Rare Earth Project

Empire Metals* (EEE LN) – Results highlight progress towards delivery of JORC compliant ‘exploration’ targets at the Cosgrove and Thomas prospects Western Australia.

Golden Metal Resources (GMET LN) – Further geophysical programmes in the Walker-Lane Belt of Nevada

Oriole Resources* (ORR LN) – Drilling starts at Bibemi, Cameroon as cash received from Turkish assets

Vast Resources (VAST LN) – Baita Plai Update

Copper ($9,785/t) – prices continue to slip on stronger US dollar as investors wait to see new consumption

See yesterday’s note on copper:  CLICK FOR PDF

• Copper prices are trading near their month low as investors weighed weak Chinese fabricator purchases.
• Chinese manufacturers are reported to view current copper prices as too high and fabricators find it hard to pass on costs onto customers (Bloomberg).
• Shanghai Futures Exchange stockpiles are at their highest in more than four months.
• The US$ index holds onto its gains following a jump on stronger than expected US labour numbers that in turn also weighing on US$ denominated copper prices.

• The market remains long on speculative investor interest in copper with some speculators likely losing money following the current price run.
• Traders have yet to report evidence of on a marked increase in copper consumption in China causing copper prices to drift lower. Support should be around $9,650 to 9,700/t
• Strong Chinese refined imports reported on Friday are making up for slower concentrate imports and weakening smelter output but were insufficient to deplete visible physical stocks.
• China will almost inevitably need to raise copper imports to meet rising EV production targets.
• We suspect, current weak demand for copper in construction in China and Europe will also recover as new initiatives come through.
• President Xi’s focus on value-added, energy transition industries should continue to drive demand despite US and probable EU tariffs on Chinese EVs and Solar.

Iron ore ($106.3/t) – Iron ore prices fall to the lowest in two months on continuing concerns over the property market in China.

China imports rose to 102.3mt in May recording a third consecutive month at >100mt (Reuters)

• Iron ore inventories at Chinese ports are at the highest levels in more than two years, Bloomberg reports.
• Singapore futures were down 2.2% trading at $103.8/t with Dalian futures down 3.5%.

• Total iron ore imports rose 7% yoy to 513.75m for the first five months
• Steel output fell 7.2% yoy to 85.94mt in April with steel production down 3% yoy in the first four months of they year to 343.67mt.
• Port stockpiles climbed to 147.3mt last week to their highest level in 25 months according to consultants SteelHome SH-TOT-IRONINV
• The move appears to reflect restocking of iron ore and perhaps some anticipation for new construction stimulus.
• We also wonder if China is preparing to try to break iron ore pricing through the development of significant stocks.

Economics

US – The FOMC holds its two day monetary policy meeting with expectations for the central bank to leave rates unchanged at 5.25-5.50% tomorrow.

• The announcement will be preceded by inflation data Wednesday afternoon as markets expect gradual cooling down in inflationary pressures.
• Headline and core CPI measures are estimated to come in at 3.4% and 3.5% inn May compared to 3.4% and 3.6% recorded the previous month.

France – President Macron reported to be discussing potential resignation in the event of defeat

UK – The pound is pulling back slightly as jobs numbers dropped more than expected in April and unemployment rate increased to the highest in more than 2.5 years.

• Job vacancies, a gauge of labour demand, dropped by 12k marking the 23rd consecutive drop.
• Although, wages climbed strongly during the period.
• Employment Change (3M/3M, Apr/Mar/Est): -139k/-178k/-98k;
• Unemployment Rate (Apr/Mar/Est): 4.4%/4.3%/4.3%;
• Av Labour Earnings (3M %yoy, Apr/Mar/Est): 5.9/5.9(revised from 5.7)/5.7;
• Av Labour Earnings ex Bonus (3M %yoy, Apr/Mar/Est): 6.0/6.0/6.1.

Labour union wage negotiations are getting started at the Escondida copper mine in Chile.

• The main union submitted its proposal to BHP yesterday with the Company now having timed until June 21 to respond, after which talks for an early deal can be launched.

South Africa – ANC can form government without MK party

• It appears increasingly likely that the ANC will form a new government with the DA ‘Democratic Alliance’
• The ANC share of the vote fell to 40.2% from 57.5% of the vote in 2019 while the DA rose to 21.8% from 20.8%
• The MK party led by Jacob Zuma gained 14.6% mainly from KwaZulu-Natal taking many votes away from the ANC
• MK have reported to be refusing to attend parliament in an attempt to block the ANC from forming a government
• Fortunately, reports published by the Daily Maverick indicate First National Assembly will sit on Friday with or without MK party MPs
• ANC President Cyril Ramaphosa that the 29 May election was “an opportunity to forge a more inclusive, cooperative and effective approach to governance”.
• Parliament have cancelled flights and accommodation for MK MPs, so “as not to incur fruitless and wasteful expenditure in contravention of the Financial Management of Parliament and Provincial Legislatures Act, 2009”, according to Parliament’s chief legal adviser, advocate Zuraya Adhikarie’s letter to the MK party’s lawyers on 8 June.
• Read more at: https://www.dailymaverick.co.za/article/2024-06-10-first-national-assembly-sitting-is-on-friday-with-or-without-mk-party-mps/?utm_source=Sailthru&utm_medium=email&utm_campaign=first_thing

South Africa – Transnet ports rank as world’s worst performing and least competitive ports

• Transnet ports in Cape Town and Ngqura (in the Eastern Cape) rank 405th and 404th, respectively (Business Maverick).
• The disastrous performance and ranking are put down to logistics operations and infrastructure

Malawi – Plane carrying vice president goes missing on 45 minute flight from Lilongwe to Mzuzu

• The turboprop plane was carrying seven passengers and three military crew and was operated by the Malawi armed forces.
• Some 600 personnel were involved in the search in Viphya Mountains, a high plateau towards the north of Malawi near the city of Mzuzu.
• The northern Viphya region is used for military training. The southern Viphya hosts extensive pine plantations.

Currencies

US$1.0764/eur vs 1.0758/eur previous. Yen 157.28/$ vs 156.99/$. SAr 18.643/$ vs 18.863/$. $1.272/gbp vs $1.272/gbp. 0.660/aud vs 0.659/aud. CNY 7.254/$ vs 7.248/$.

Dollar Index 105.17 vs 105.21 previous.

Precious metals:         

Gold US$2,305/oz vs US$2,295/oz previous

Gold ETFs 81.1moz vs 81.1moz previous

Platinum US$964/oz vs US$973/oz previous

Palladium US$897/oz vs US$919/oz previous

Silver US$29.20/oz vs US$30/oz previous

Rhodium US$4,650/oz vs US$4,675/oz previous

Base metals:   

Copper US$ 9,785/t vs US$9,802/t previous

Aluminium US$ 2,553/t vs US$2,566/t previous

Nickel US$ 17,900/t vs US$17,940/t previous

Zinc US$ 2,809/t vs US$2,771/t previous

Lead US$ 2,186/t vs US$2,181/t previous

Tin US$ 32,175/t vs US$31,500/t previous

Energy:           

Oil US$81.5/bbl vs US$80.0/bbl previous

Natural Gas €34.8/MWh vs €32.9/MWh previous

Uranium Futures $83.3/lb vs $86.4/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$106.3/t vs US$108.9/t

Chinese steel rebar 25mm US$537.6/t vs US$538.5/t

Thermal coal (1st year forward cif ARA) US$117.0/t vs US$117.3/t

Thermal coal swap Australia FOB US$133.5/t vs US$133.3/t

Hard Coking Coal Australia FOB US$326.0/t vs US$326.0/t

Other:  

Cobalt LME 3m US$27,150/t vs US$27,150/t

NdPr Rare Earth Oxide (China) US$50,179/t vs US$50,223/t

Lithium carbonate 99% (China) US$13,441/t vs US$13,591/t

China Spodumene Li2O 6%min CIF US$1,180/t vs US$1,180/t

Ferro-Manganese European Mn78% min US$972/t vs US$972/t

China Tungsten APT 88.5% FOB US$360/mtu vs US$360/mtu

China Graphite Flake -194 FOB US$470/t vs US$470/t

Europe Vanadium Pentoxide 98% 5.2/lb vs US$5.2/lb

Europe Ferro-Vanadium 80% 26.85/kg vs US$26.85/kg

China Ilmenite Concentrate TiO2 US$316/t vs US$318/t

China Rutile Concentrate 95% TiO2 US$1,413/t vs US$1,414/t

Spot CO2 Emissions EUA Price US$69.4/t vs US$70.1/t

Brazil Potash CFR Granular Spot US$310.0/t vs US$310.0/t

Company News

Anglo Asian Mining* (AAZ LN) 64.5p, Mkt Cap £74m – Copper concentrate pre-payment agreement

BUY

• Anglo Asian Mining reports that it has concluded a prepayment agreement with Trafigura for sales of copper concentrate.
• Prepayments of US$5m “will be settled by the delivery of copper concentrate to Trafigura under the existing contract”.
• Anglo Asian Mining will receive an initial US$3m immediately with “a further $2 million upon resumption of flotation processing”, with the agreement covering the balance of 2024 “by which time the Company expects sufficient concentrate will have been delivered to Trafigura to settle the advance payments”.
• The agreement also grants “Trafigura the exclusive right to purchase 50 per cent. of the first year of future production from the Demirli mine”.
• The company says that the agreement “provides additional flexibility to the Company to finance its operations during the next few months whilst operations are restarted”.
• Welcoming the agreement with Trafigura, CEO, Reza Vaziri, explained that it “provides another source of financing for the Company and again demonstrates our strong relationships with our business partners”.

Conclusion: Trafigura’s support via US$5m of prepayments for copper concentrate to be delivered later in 2024 provides additional flexibility for the resumption of operations on receipt of permits for additional tailings disposal capacity.

*SP Angel acts as Nomad and Broker to Anglo Asian Mining

Critical Metals Corp (CRML US) $10.8, Mkt Cap $883m – Binding heads of agreement to acquire Tanbreez Rare Earth Project

• The Company signed binding heads of agreement with Rimbal Pty, a company controlled by geologist Gregory Barnes, to acquire Tanbreez Rare Earth Project in Greenland.
• The project hosts 4.7Bt at 0.60% REO, 2.0% ZrO2, 0.20% Nb2O5.
• Four magnetic rare earth elements (Pr/Nd/Tb/Dy) account for ~20% of the headline REO grade.
• The project is reported to have been issued Exploitation License by Greenland Government in 2020.
• European Lithium (EUR AU A$0.05, Mkt Cap A$74m) holds a 83% interest in Critical Metals Corp that is developing the Wolfsberg Lithium Project in Austria.

Empire Metals* (EEE LN) 11.56p, Mkt Cap £69m – Results highlight progress towards delivery of JORC compliant ‘exploration’ targets at the Cosgrove and Thomas prospects Western Australia.

(Empire holds 70% of Pitfield, Century Minerals, which is run by two geologists holds the other 30%. One of these geologists works for Empire.)

• Empire Metals reports results for 2023.
• Administrative expenses of £2.3m
• Total loss for 2023 to £2.8m vs £1.2m in 2022. This reflects a marked increase in exploration activity through the year.
• Directors fees are a relatively modest $0.5m in total vs £0.3m yoy with relatively modest employee expenses at £0.15m
• Impairment: Empire also wrote down “previously capitalised exploration costs related to Gindalbie totalling £528,838”
• FOREX: Negative Foreign exchange differences of £0.2m raised the total comprehensive loss for the year rose to £3m from £1.1m yoy.
• Target: Empire Metals are aiming to deliver a JORC compliant ‘exploration’ targets on the Cosgrove and Thomas prospects within the Pitfield license area.
• The targets are rich in titanium minerals with the company stating:
  • “titanite, a calcium titanium silicate, was confirmed as the most abundant titanium-bearing mineral, accounting for approximately 67% of the total contained TiO2 and approximately 20% of the potential Pitfield ore by mass.”
  • “This confirmation that the titanium mineralisation is dominated by titanite, in such quantities as to set Pitfield apart from any previously reported world class titanium resource, has further reinforced our belief that we are dealing with an unprecedented discovery, one that could provide a path for Empire to become a major supplier of rutile equivalent product’ or even a significant TiO2 pigment producer in our own right.“
  • “Titanite is a non-refractory mineral and is amenable to a simple low temperature acid leaching process to liberate the titanium, unlike igneous hard rock ilmenite ores which frequently require on-site smelting to produce a lower value titanium-rich slag product.  The conceptual processing flowsheet that is being tested consists of beneficiation stages to generate a titanium-rich heavy mineral concentrate and to remove acid-consuming gangue minerals, followed by a simple acid leaching stage. It will therefore not require an energy intensive, on-site smelting process, which will be highly beneficial from a commercial perspective.  The final product from the leaching stage is expected to have a very high TiO₂ concentration, approaching the same content as natural rutile (>95%), which would make it a highly desirable feedstock for a titanium dioxide pigment producer.”
  • “Earlier this month, we announced a major new titanium dioxide mineral discovery which has provided a highly positive new dimension to the Project, and which is expected to accelerate timescales and further enhance the economics of Pitfield.  This newly identified, potentially high-value titanium dioxide deposit, which features naturally occurring rutile and anatase, is located within the near-surface, strongly weathered saprolite zone of bedrock which covers the extent of the giant, 40km long, titanium-rich mineral system at Pitfield.  Rutile and anatase are both highly valuable titanium dioxide minerals that contain >95% TiO2 and are both important feedstocks for the titanium pigment and titanium metal markets.”
  • “Our analysis shows that the strongest weathering, found within the top 10m from surface, has resulted in the disintegration of the parent bedrock and has completely altered the titanite (the principal titanium ore mineral in the unweathered bedrock) to titanium dioxide minerals, rutile and/or anatase.  Simply put, Mother Nature has assisted us with altering this bedrock, through simple weathering, to form high-value titanium dioxide minerals which is highly positive development in isolation, but importantly, provides strong support for the Company’s view that TiO2 products can be derived from the titanite bedrock ore source.”
• Rutile concentrates grading 65% TiO2 currently sell for $1,420-1,462/t in port in China vs Ilmenite concentrates grading 50% TiO2 at around $390/t in port in China.
• There are no current producers of titanite or anatase in the world to our knowledge.
• The sheer scale of the titanium resources at Pitfield may be sufficient to attract attention from titanium converters which may potentially help support the capital and operating costs of converting anatase and potentially titanite into their high grade rutile equivalents.
• Empire also report the company will be presenting at the Shares/AJ Bell Investor evening on Tuesday 18 June and at the Proactive One2One investor forum on Wednesday 19 June.
• We recommend investors who are interested in the processing and value of titanite, rutile and anatase use these events to ask questions.
• Please register using:
  • https://www.sharesmagazine.co.uk/events/event/shares-investor-evening-london-live-event-180624
  • https://www.proactiveinvestors.co.uk/register/event_details/445

*SP Angel acts as nomad and broker to Empire Metals. Partners of SP Angel hold shares in Empire Metals

Golden Metal Resources (GMET LN) 27p, Mkt Cap £26.7m – Further geophysical programmes in the Walker-Lane Belt of Nevada

• Golden Metal Resources has provided a progress report on its Nevada exploration projects at Pilot Mountain and Garfield.
• At the Pilot Mountain project, where drilling is currently underway, the company explains that it is following up existing low-resolution airborne magnetic data with a programme of high-resolution ground magnetic surveying.
• The low-resolution data shows “a very large (circa 2km x 2km) magnetic anomaly which is directly coincident with the Project’s Garnet and Gunmetal skarn-type tungsten-copper-silver-zinc zones” and Golden Metal Resources says that “given the spatial relationship between this magnetic anomaly and the Garnet and Gunmetal skarn-type mineralised zones, the anomaly could represent a potential buried porphyry system at depth”.
• At Garfield, where previous geophysical work “confirmed multiple ‘Magnetic Bullseye’ geophysics anomalies (often associated with intrusive porphyry centres) identified beneath the project’s High-Grade and Power Line Zones” follow-up work, including high-resolution induced-polarisation (IP) work over the ‘High Grade’ and Power-Line’ zones and ground magnetic surveying over the recently staked eastern extension zone. Is now underway.
• Golden Metal Resources says that the new phase of geophysical work at Garfield, which is expected to take two weeks, “will be the last exploration step that should be required prior to delineation of drill targets”.
• CEO, Oliver Friesen, confirmed the company’s commitment to “advancing our very exciting additional exploration targets at Pilot Mountain and Garfield”.

Conclusion: Golden Metals is deploying recently raised funds to follow-up targets at its Pilot Mountain and Garfield projects in Nevada with additional geophysics. We await the results, which may include the identification of drilling targets at Garfield, with interest.

Oriole Resources* (ORR LN) 37p, Mkt cap £14m – Drilling starts at Bibemi, Cameroon as cash received from Turkish assets

CLICK FOR PDF

• Oriole provides an update from Cameroon, where it is developing the Bibemi gold project.
• The Company also announces that it has received the final $80k payment from their Hasançelebi and Doğala mining projects in Turkey.
• In Cameroon, Oriole has now begun drilling at the Bakassi Zone 1 target on the Bibemi project, where it delivered Cameroon’s first JORC MRE.
• The Bakassi Zone 1 MRE stands at 375koz at 2.3g/t Au, however management believes it remains open along strike and at depth for additional tonnage.
• Drilling over 7,060m has been planned across 62 holes, targeting two main strike areas. Holes will be drilled to a max downhole depth of 160m from surface, both 50 degree inclines and vertical.
• The majority of metres will be drilled to expand and upgrade the current MRE, whilst 2,500m will test along strike of Bakassi Zone 1 to target prospects identified via the recent field programme.
• Exploration has identified geochemical and geophysical anomalies which are supporting Oriole’s belief in additional mineralisation potential.
• The Company notes that drilling was delayed by logistical challenges, however the team has put in place provisions to progress drilling through the rainy season.
• See the link attached above for a more expansive overview of the Phase 5 drilling programme.
• Results are expected in the third and fourth quarters of this year.
• Oriole continues to progress technical studies for open pit mining at Bibemi, with an Exploitation Licence application set to be submitted later this year.
• Mapping and rock chip sampling has been completed whilst the drill rigs were mobilised to site, with results expected soon.

Conclusion: To date, Oriole has completed 6,685m of drilling at Bibemi over 54 holes. Today, the Company announces it is has begun drilling a further 7,060m over 62 holes. This is an exciting stage in Oriole’s progression, having delivered a maiden pit-constrained MRE containing 375koz. The Company is confident of adding further ounces at Bakassi Zone 1, with mineralisation open at depth and along strike. Recent exploration has identified several high priority targets which this programme will drill test within one to two kilometres of the current MRE. We look forward to more updates from Cameroon as the programme progresses.

*SP Angel acts as Broker to Oriole Resources

Vast Resources (VAST LN) 0.21p, Mkt Cap £2.5m – Baita Plai Update

• The Company takes Vast Baita Plai, a 100% owned subsidiary and the operator of the Baita Plai Polymetallic Mine, into a period of voluntary reorganisation under the Insolvency Act.
• The reorganisation allows the Company to deal with a dispute with the labour unions at the site.
• The Company reports that the reorganisation will not affect running of the mine.

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

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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.

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